Headlines – Week of January 3, 2010
January 7, 2010
South Florida Foreclosure Filings Top 97,000 In 2009
According to a report from CondoVultures.com, more than 97,000 foreclosure filings were initiated in 2009 in the tri-county South Florida region (Miami-Dade, Broward, and Palm Beach counties) representing a 29 percent increase compared to nearly 76,000 actions in 2008.
In 2007 there were more than 32,000 foreclosure filings.
Peter Zalewski, a principal with Condo Vultures® LLC stated that, “The newfound willingness of lenders to suddenly work with borrowers to modify mortgages or approve short sales has undoubtedly had an effect on the number of foreclosure filings in South Florida.”
More than 200,000 foreclosures actions have been filed in the tri-county South Florida region since 2007, with 46 percent of the actions occurring in the last 12 months.
On a county-by-county basis, Broward County, where Fort Lauderdale, Hollywood, and Pompano Beach are located, has experienced the greatest number of foreclosure actions with more than 87,000 filings since 2007. This represents 43 percent of all foreclosure actions filed in South Florida.
Palm Beach County, where Boca Raton, Delray Beach, and West Palm Beach are located, ranks second with nearly 59,000 foreclosure filings in the last three years. Palm Beach County accounts for 29 percent of the actions filed in South Florida.
Miami-Dade County, where Miami Beach, Coral Gables, and Sunny Isles Beach are located, ranks third with more than 54,000 foreclosure actions filed since 2007. This represents 27 percent of the regional total, according to CondoVultures.com.
2009 Costliest Year for FDIC (from FDIC, Wall Street Journal, CNBC)
Regulators seized 140 banks in 34 states in 2009, generating a loss of nearly $36.5 billion for the Federal Deposit Insurance Corp. See FDIC Failed Bank List
By comparison, there were 25 bank failures in 13 states in 2008, producing losses of at least $10.4 billion.
South Florida’s BankUnited, based in Coral Gables, produced the greatest estimated loss for the FDIC in 2009 at $4.9 billion. Texas’ Guaranty Bank ranked second with an estimated cost of $3 billion to the FDIC. Alabama-based Colonial Bank ranked third with a loss of $2.8 billion for regulators.
At the end of 2009, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 in 2009.
According to a Wall Street Journal article, the deposit insurance fund dropped by $18.6 billion during the third quarter of 2009 to negative $8.2 billion, as the Federal Deposit Insurance Corp. set aside $21.7 billion in provisions for additional bank failures. This is only the second time in the agency’s history that the balance has fallen into negative territory.
Speaking on CNBC Squawk Box, John Kanas stated that the US banking system will lose some 1,000 institutions over the next two years. His private equity firm bought BankUnited of Florida in May.
Of the 81 failed banks this year, two have been successfully acquired by private equity, he said. Regulators also allowed the sale of IndyMac Bank of California earlier this year to another private equity firm.
CMBS Delinquencies Reach New All-Time High (from Trepp)
Commercial real estate delinquency rates continue to climb, with Trepp reporting that overall delinquency rates on CMBS reached 6.07% in December, 2009, up from 5.52% in November, and a far climb from 1.21% from December of 2008. The lodging industry led all real estate types in November, 2009 at 13.47%. Recent reports by Deutsche Bank and other institutions suggest that office property delinquencies will continue to climb through 2010 even as the worst of the problems in retail and lodging begin to abate. According to a recent Cushman & Wakefield Sonnenblick Goldman Capital Markets Report, $55M loan on Palm Beach Mall in West Palm Beach, FL is currently appraised at a value which represents a loan loss exceeding 85% while the recent sale of a Chicago hotel generated a net loan loss in excess of 95%.
Industry observers say a majority of loans due through 2014 may be underwater, meaning more banks will be forced to restructure loans to avoid costly foreclosures.
U.S. banks had a historic $1.3 trillion of commercial mortgages outstanding as of Sept. 30, with about $60.5 billion of them delinquent. Approximately $650 billion in banks’ boom-time CRE loans are coming due over the next four years, with more than $150 billion maturing in 2010.