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

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But a far larger threat loomsa with the start of hurricane seaso nnext week. The nightmare scenarip is a major storm that sweepsx across a region pocked with foreclosedrreal estate, leaving the neglected property in empty of responsible homeowners. Nobody knows how big the problem might be, but with hundredw of thousands of empty properties in the state, it coulfd be huge. Banks holding foreclosed real estate and defaulterd loans said they have planse in place to move in with boards and tarps to covef broken windows andshreddedd roofs. But real estate experts said noboduy has ever gone through a storm with so much empty property hanging inthe balance.
“Florida is livinhg with a huge risk,” said Jack McCabe, presidenrt of in Deerfield Beach. “There are 400,000 foreclosures in the state righyt now. We have condominiums that are half-built and otherxs that are 10 [percent] or 20 percent occupied. All you have to do is look at New Orleanes after Hurricane Katrina to imagined whatmight happen.” After Katrina strucik New Orleans in 2005, huge swathsa of the city were destroyed when levees brok and water inundated the city. Large areas are stillo only thinly rebuilt.
Florida’s real estate market differs fromNew Orleans, but its large number of empty dwellings and the rising tide of foreclosurew poses a unique According to the , 21,900 of Orange County’s 491,000 dwellings were empty for more than threw months in March. Statewide, 365,000 of 9.1 millionn homes were vacant. Estimating the value of that propertty isnearly impossible, since it’e a mixture of foreclosed homes, never-sold dwellingse and simply unoccupied real estate. This bad drea m is filled with nuance. Larger banks typicall y have departments that managr foreclosed property and have contracts withmaintenancwe companies.
Their main financial motive is keepinvg property in good repair so it can be resolr for areasonable return. But real estate pricess have fallen so low in many markets that the cost of repairinyg a heavily damaged house mighft be greater than itsresale value. And if emergencyg repairs aren’t undertaken right after a the subsequent damagefrom wind, rain and mold could add substantially to the rehabilitation cost. Although banks have plans for dealing withnatural disasters, few are well-equipped to responrd to a devastating storm. “The lenders have cut way back ontheid staffs,” McCabe said.
“Anybody who thinks they have the ability to meet with insurances companies and go out to houses to assess damagesa isdeluding themselves.” The problemn is compounded by the sheee number of lenders. Some mortgagse brokers and banks that hold loans inFloridwa don’t have offices here or have dire financial problems of their own. “Most banks don’t have people familiar with theswe sortsof problems,” said Peter Brennan, vice presidengt of J. Rolfe Davis, an Orlando insurancre agency. “Most bankers don’t know what to do when a roof gets blowmn offa house.
” Fifth Third Bank, Central Florida’s 12th-largest has retained two property maintenanc e firms to inspect and repair its The bank has fewer than 300 foreclosed Floridsa properties on its books. “Once an asset becomes ours and is we do anything we can to preservethe property. If we suspecy damage, from a leaky pipe to a leak roof, we fix it,” said Michelde McCoy, Fifth Third’s vice president for default Orange County Property Appraiser Bill Donegan said there areabout 3,600 foreclosedx properties worth about $522 milliomn in Orange County, and of 1,200 have been resold.
“My assumption is the bankw and management companies would swoop in afterd a hurricane andmake repairs,” Donegan said. Most banks also insurr foreclosed properties. “I don’t thinko there’s a major issue related to insurance coverage,” said Tom TerBeck, senior credit officedr with . “Still, I wouldn’t say everybody in the industr is ready fora hurricane.” Yearws of disrepair ahead? Ken Direktor, a real estats attorney with the law firm, said anyone who thinksz a hurricane in an urban part of Florida woulfd play out like past hurricanes is mistaken.
“Bankx are delaying foreclosures on properties becausethey don’r want to be responsible for them.”