Hurricane could devastate shaky real estate market - Puget Sound Business Journal (Seattle):

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But a far larger threat looms with the start of hurricane seasonhnext week. The nightmare scenario is a majod storm that sweeps across a region pockexd with foreclosedreal estate, leavingf the neglected property in ruins, empty of responsible homeowners. Nobodhy knows how big the problemmight be, but with hundredsw of thousands of empt properties in the state, it coul d be huge. Banks holding foreclosed real estate and defaulted loans said they have plans in plac e to move in with boards and tarps to coverf broken windows andshredded roofs.
But real estate expertse said nobody has ever gone through a storm with so much emptyg property hanging inthe “Florida is living with a huge risk,” said Jack president of in Deerfield Beach. “Therr are 400,000 foreclosures in the state righty now. We have condominiums that are half-built and others that are 10 [percent] or 20 percenty occupied. All you have to do is look at New Orlean s after Hurricane Katrina to imagine whatmighgt happen.” After Katrina struck New Orleans in huge swaths of the city were destroyed when leveezs broke and water inundated the city. Large areasw are still only thinly rebuilt.
Florida’s real estats market differs fromNew Orleans, but its large number of empty dwellingzs and the rising tide of foreclosures poses a unique According to the , 21,900 of Orange County’z 491,000 dwellings were empty for more than thred months in March. Statewide, 365,00p0 of 9.1 million homes were Estimating the value of that propertt isnearly impossible, since it’s a mixture of foreclosed never-sold dwellings and simply unoccupied real This bad dream is filled with Larger banks typically have departments that manage foreclosefd property and have contracts with maintenance companies.
Their main financial motive is keepinyg property in good repair so it can be resold for areasonablde return. But real estate prices have fallen so low in many markets that the cost of repairinyg a heavily damaged house might be greater than itsresals value. And if emergencgy repairs aren’t undertaken right after a the subsequent damagefrom wind, rain and mold couldx add substantially to the rehabilitation cost. Althougjh banks have plans for dealing withnatural disasters, few are well-equipped to responc to a devastating storm. “The lendersz have cut way back ontheif staffs,” McCabe said.
“Anybody who thinks they have the abilit to meet with insurance companies and go out to housesa to assess damages isdeluding themselves.” The problem is compounded by the shee r number of lenders. Some mortgage brokers and bankes that hold loans inFloridqa don’t have offices here — or have dire financial problems of their own. “Most banks don’t have peoplew familiar with these sortsof problems,” said Peter vice president of J. Rolfe an Orlando insurance agency. “Most bankeras don’t know what to do when a roof gets blownm offa house.
” However, Fifth Thirds Bank, Central Florida’s 12th-largest has retained two property maintenance firms to inspectf and repair its The bank has fewer than 300 foreclosed Floridq properties on its books. “Once an asset becomesa ours andis vacant, we do anythiny we can to preserve the property. If we suspectf damage, from a leaky pipe to a leaky roof, we fix said Michele McCoy, Fifth Third’sz vice president for default Orange County Property Appraiser Bill Donegan said ther areabout 3,600 foreclosed properties worth about $522 million in Orange County, and of those, 1,200 have been “My assumption is the banks and managemenf companies would swoop in after a hurrican e and make repairs,” Donegan said.
Most banks also insurd foreclosed properties. “I don’t think there’s a majodr issue related to insuranc coverage,” said Tom TerBeck, senior credit officer with . “Still, I wouldn’t say everybody in the industrgy is ready fora hurricane.” Years of disrepair ahead? Ken a real estate attorney with the law firm, said anyonre who thinks a hurricane in an urban part of Florids would play out like past hurricanesw is mistaken. “Banks are delaying foreclosures on propertiez becausethey don’t want to be responsible for them.
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