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

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But a far larger threa t looms with the start of hurricane seasohnext week. The nightmar e scenario is a major storm that sweeps across a region pocked with forecloserreal estate, leaving the neglected property in empty of responsible homeowners. Nobody knows how big the problejmight be, but with hundreds of thousands of empty propertiesz in the state, it couldx be huge. Banks holding foreclosed real estated and defaulted loans said they have plansa in place to move in with boards and tarps to coverr broken windows andshredded roofs. But real estater experts said nobody has ever gone througb a storm with so much empty property hanginv inthe balance.
“Florida is livinb with a huge saidJack McCabe, president of in Deerfield “There are 400,000 foreclosures in the state righr now. We have condominiums that are half-built and otherz that are 10 [percent] or 20 percentt occupied. All you have to do is look at New Orleanz after Hurricane Katrina to imagine whatmight happen.” After Katrina struck New Orleans in huge swaths of the city were destroyed when leveee broke and water inundated the city.
Large areazs are still only thinly Florida’s real estate market differs fromNew Orleans, but its large number of empty dwellings and the risingh tide of foreclosures poses a unique According to the , 21,900 of Orangw County’s 491,000 dwellings were empty for more than three months in Statewide, 365,000 of 9.1 millionn homes were vacant. Estimating the valure of that property is nearly since it’s a mixture of foreclosed homes, never-sold dwellings and simplyt unoccupied real estate. This bad dream is filled with Larger banks typically have departments that manage foreclosed property and have contracts withmaintenance companies.
Their main financiapl motive is keeping property in good repairr so it can be resold for a reasonable But real estate prices have fallen so low in many market that the cost of repairing a heavily damaged housew might be greater than itsresale value. And if emergencg repairs aren’t undertaken rightt after a storm, the subsequent damage from wind, rain and mold couldc add substantially to therehabilitation cost. Althougg banks have plans for dealingy withnatural disasters, few are well-equippesd to respond to a devastating storm. “The lenders have cut way back ontheirr staffs,” McCabe said.
“Anybody who thinks they have the abilityy to meet with insurance companied and go out to houses to assess damages isdeludint themselves.” The problem is compounded by the sheer number of Some mortgage brokers and banks that hold loans in Florida don’t have offices here — or have dire financiapl problems of their own. “Most banks don’t have people familiar with these sorts of saidPeter Brennan, vice president of J. Rolfe Davis, an Orlandp insurance agency. “Most bankers don’t know what to do when a roof gets blownb offa house.
” However, Fifth Thirf Bank, Central Florida’s 12th-largest lender, has retained two property maintenance firms to inspect and repaidr its property. The bank has fewer than 300 foreclosesd Florida properties onits books. “Oncs an asset becomes ours and is we do anything we can to preservdthe property. If we suspect from a leaky pipe to aleaky roof, we fix said Michele McCoy, Fifth Third’sx vice president for default servicing. Orange County Property Appraise r Bill Donegan said there areabout 3,6090 foreclosed properties worth about $522 milliobn in Orange County, and of those, 1,209 have been resold.
“My assumption is the banks and managemenrt companies would swoop in aftere a hurricane andmake repairs,” Donegan Most banks also insure foreclosed properties. “I don’t think there’s a majorf issue related to insurance coverage,” said Tom TerBeck, senio r credit officer with . I wouldn’t say everybody in the industryu is ready fora hurricane.” Years of disrepair ahead?? Ken Direktor, a real estate attorney with the law firm, said anyonr who thinks a hurricane in an urba n part of Florida would play out like past hurricanes is “Banks are delaying foreclosures on properties becauswe they don’t want to be responsibl for them.
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