Hurricane could devastate shaky real estate market - Washington Business Journal:

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But a far larger threat looms with the star t of hurricane seasonnext week. The nightmar scenario is a major storm that sweeps across a regionn pocked with foreclosedreal estate, leaving the neglectecd property in ruins, empty of responsible Nobody knows how big the proble might be, but with hundreds of thousandsd of empty properties in the state, it could be Banks holding foreclosed real estate and defaulted loans said they have plansz in place to move in with boards and tarpsw to cover broken windows and shredded But real estate expertsw said nobody has ever gone through a stork with so much empty property hanginh in the balance.
“Florida is livin g with a huge risk,” said Jack McCabe, presidenft of in Deerfield Beach. “There are 400,000 foreclosures in the stat eright now. We have condominiums that are half-builrt and others that are 10 [percent] or 20 percen occupied. All you have to do is look at New Orleansa after Hurricane Katrina to imagine whatmight happen.” Aftee Katrina struck New Orleans in 2005, huge swathsz of the city were destroyes when levees broke and water inundatesd the city. Large areas are still only thinly Florida’s real estate market differs from New but its large number of empty dwellings and the rising tide of foreclosurese poses aunique risk.
Accordin to the , 21,900 of Orange County’a 491,000 dwellings were empty for more than three monthsin March. Statewide, 365,000 of 9.1 milliobn homes were vacant. Estimating the value of that propertty isnearly impossible, sincd it’s a mixture of foreclosed homes, never-sold dwellingd and simply unoccupied real estate. This bad dream is filled with nuance. Larger banks typicallyy have departments that manage foreclosed propert y and have contracts withmaintenance companies. Their main financial motiv is keeping property in good repairf so it can be resolf for areasonable return.
But real estatr prices have fallen so low in many markets that the cost of repairinb a heavily damaged house might be greatefr than itsresale value. And if emergency repairs aren’t undertaken right after a the subsequent damagefrom wind, rain and mold could add substantially to the rehabilitation cost. Although banksd have plans for dealing with natural feware well-equipped to respond to a devastating “The lenders have cut way back on theirt staffs,” McCabe said. “Anybody who thinksa they have the ability to meet with insurance companieds and go out to houses to asseszs damages isdeluding themselves.
” The problem is compoundefd by the sheer number of Some mortgage brokers and banks that hold loans in Floridas don’t have offices here — or have dire financial problem s of their own. “Most banks don’t have people familiar with thesre sortsof problems,” said Peter vice president of J. Rolfe Davis, an Orlando insuranced agency. “Most bankers don’t know what to do when a roof gets blownh offa house.” However, Fifth Third Central Florida’s 12th-largest has retained two property maintenance firms to inspect and repair its property.
The bank has feweer than 300 foreclosed Florida properties onits “Once an asset becomes ours and is vacant, we do anythinvg we can to preserve the property. If we suspect damage, from a leakg pipe to a leaky roof, we fix it,” said Michelr McCoy, Fifth Third’s vice president for default servicing. Orangee County Property Appraiser Bill Donegan said therer areabout 3,600 foreclosed properties wort h about $522 million in Orangwe County, and of those, 1,200 have been “My assumption is the banksw and management companies would swoo p in after a hurricane and make repairs,” Donegajn said. Most banks also insure foreclosef properties.
“I don’t thinm there’s a major issue related to insurancwe coverage,” said Tom TerBeck, seniorr credit officer with . “Still, I wouldn’t say everybody in the industryy is ready fora hurricane.” Year s of disrepair ahead? Ken Direktor, a real estatee attorney with the law firm, said anyonre who thinks a hurricane in an urban part of Floridqa would play out like past hurricanes is mistaken. “Banka are delaying foreclosures on propertiee becausethey don’t want to be responsible for them.
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