Have Condo Auctions Peaked?

Have Condo Auctions Peaked? MIAMI, FL - Since the wave of condo foreclosure auctions started in 2007, nearly 6,000 condo units in major condominium projects have been sold at foreclosure auctions through the first quarter of 2009. Foreclosure auctions represent the final step in the foreclosure process where local governments force the sale of the property to pay off debtors.

In the second quarter of 2007 there were 316 condo units sold in foreclosure auctions. The number of foreclosure auctions nearly doubled by the fourth quarter of 2007 to 620 units as more foreclosures were making their way through the court system. The number nearly doubled again by the second quarter of 2008 to 1,063 units, representing a 240 percent increase from the second quarter of 2007.

"The number of units being sold at foreclosure auctions may have peaked in the second quarter of 2008. While there are certainly many more foreclosures auctions to come, whether or not that quarter holds as the peak is dependent on lenders willingness to participate in short sales and loan modifications before completing the final stage of the process and having the property be forced into auction," says Adam Cappel, President of CondoReports.com www.condoreports.com and author of the report.

One potential major wildcard that Cappel notes in the drop of foreclosure auctions is also the affect of the foreclosure moratorium championed by national mortgage giants Fannie Mae and Freddie Mac that took effect in late November of 2008. The moratorium did not stop lenders from filing early stage foreclosure proceedings, but did curtail the number of foreclosure auctions taking place.

Very few buildings have been spared from the wave of foreclosures. Over 60 percent of major condo buildings in Miami Dade County have had units sold at foreclosure auctions within the past 2 years. Hundreds more have had units enter the foreclosure process that have not yet made it to the auction.

The foreclosure process can take as little as 4 to 6 months under normal conditions but has increasingly taken more than 12 months for properties to be auctioned off. In some cases, borrowers that have stopped paying their mortgage have been able to fight foreclosures for up to two years before the lender has been able to force the sale, creating huge financial strains on condominium associations.

"Some delinquent borrowers have no intention of ever paying and are simply using stall tactics to delay the foreclosure process and live for free while their lenders and condo associations are stuck holding the bag. As an association you want to replace these zombie owners as fast as possible. They are not paying their mortgage or their association dues and are creating hardships for other owners in the association," says Cappel.

To view free reports on these buildings or any of nearly 2,000 other buildings or 90 markets in Miami-Dade County, please visit www.CondoReports.com
Source: CondoReports.com

More Stories

Get The Newsletter

Get The Newsletter

The latest multifamily industry news delivered to your inbox.