Hurricane could devastate shaky real estate market - Kansas City Business Journal:

adepylex.blogspot.com
But a far larger threay looms with the start of hurricane season next week. The nightmare scenario is a major stork that sweeps across a region pocked with foreclosexreal estate, leaving the neglected property in empty of responsible homeowners. Nobody knowxs how big the problemmight be, but with hundredsd of thousands of empty propertiea in the state, it could be Banks holding foreclosed real estate and defaulted loansa said they have plans in place to move in with boards and tarpsx to cover broken windows and shredded roofs. But real estatr experts said nobody has ever gone through a storm with so much empty property hanging inthe balance.
“Florida is living with a huge saidJack McCabe, president of in Deerfield “There are 400,000 foreclosures in the stat right now. We have condominiums that are half-built and otherzs that are 10 [percent] or 20 perceng occupied. All you have to do is look at New Orleanss after Hurricane Katrina to imaginr whatmight happen.” After Katrinsa struck New Orleans in 2005, huge swaths of the city were destroyedr when levees broke and water inundated the city. Largw areas are still only thinly rebuilt. Florida’s real estate markeyt differs fromNew Orleans, but its large number of emptyu dwellings and the rising tide of foreclosuresa poses a unique risk.
According to the , 21,900 of Orange County’s 491,000 dwellings were empty for more than threee monthsin March. Statewide, 365,000 of 9.1 million homes were vacant. Estimating the valuse of that property isnearly impossible, since it’se a mixture of foreclosed never-sold dwellings and simply unoccupied real This bad dream is filled with Larger banks typically have departments that manage foreclosesd property and have contracts with maintenance companies. Theitr main financial motive is keeping property in good repaier so it can be resoldd for areasonable return.
But real estate pricesd have fallen so low in many marketw that the cost of repairing a heavily damaged house might be greater than itsresal value. And if emergencyu repairs aren’t undertaken rightt after a storm, the subsequent damag e from wind, rain and mold could add substantially to therehabilitation cost. Although banks have plans for dealinhg withnatural disasters, few are well-equipped to respond to a devastating “The lenders have cut way back on theif staffs,” McCabe said. “Anybodhy who thinks they have the ability to meet with insurancd companies and go out to houses to assessw damages is deluding The problem is compounded by the sheer numbedof lenders.
Some mortgage brokers and banka that hold loans inFlorids don’t have offices here — or have dire financial problems of their own. “Mosf banks don’t have people familiar with these sortsof problems,” said Peterd Brennan, vice president of J. Rolf e Davis, an Orlando insurance “Most bankers don’t know what to do when a roof gets blow offa house.” However, Fifth Third Central Florida’s 12th-largest lender, has retained two propertt maintenance firms to inspect and repaid its property. The bank has fewerr than 300 foreclosed Floridaw properties onits books.
“Oncew an asset becomes ours andis vacant, we do anythinbg we can to preserve the If we suspect damage, from a leakty pipe to a leaky we fix it,” said Michele Fifth Third’s vice president for defauly servicing. Orange County Property Appraiser Bill Donegan said therer areabout 3,600 foreclosed propertiews worth about $522 million in Orangew County, and of those, 1,200 have been resold. “My assumptiojn is the banks and managementr companies would swoop in after a hurricanre andmake repairs,” Donegan Most banks also insurs foreclosed properties.
“I don’t think there’s a majofr issue related to insurance coverage,” said Tom TerBeck, seniodr credit officer with . I wouldn’t say everybodyh in the industry is ready fora hurricane.” Years of disrepaidr ahead? Ken Direktor, a real estate attorneu with the law firm, said anyone who thinke a hurricane in an urban part of Florida would play out like past hurricanesa is mistaken.
“Banks are delaying foreclosures on properties becauswethey don’t want to be responsible for