Florida real estate: Life among the toxic assets

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When I moved to Florida to be closer to my mom after my dad died, I never expected to be buying into what would become a toxic asset waste dump. Luckily, I bought my home in 2004, before the housing bubble inflated between 2005 and 2007. Surprisingly, I still have a paper profit in Central Florida, but if I lived in South Florida I'd probably be under water.

Broward County homeowners have seen a drop of 48 percent with median home values back to where there were in 2002, and Miami median home prices are back to what they sold for in 2003. Most who bought homes in South Florida in the past seven years are under water. In Miami-Dade County, 35,000 houses were listed for sale in February, which is about a 35 month supply of homes. In a stable real estate market, the supply of homes on the market would be six to 12 months.

The Orlando area, where I live, is number 13 on the RealtyTrac foreclosure list with one in every 50 homes in foreclosure. But the section of the area where my development is located, Poinciana, has one in every seven homes in some stage of foreclosure. Luckily, the development I live in has many less homes facing foreclosure -- 30 out of about 3500. But, other area homeowners associations are near collapse with about 40 to 50 percent of the homeowners (many of them the banks who now own the homes) not paying homeowners' association fees.

While the loss of a home is devastating, so is the carnage so many foreclosures create in a neighborhood. As I drive around the streets in Poinciana it appears that only half of the homes are being lived in and taken care of. Poinciana was built primarily by selling to investors, many of them have walked away now that their tenants are gone. Many of the tenants worked in the building industry that died here more than a year ago. They've moved to find jobs elsewhere. Friends that live in area neighborhoods tell me stories of people walking away from mortgages $50,000 to $100,000 underwater and moving into a home on the same block for just $600 a month rent.

Very few if any homes are being built. Occasionally I'll see a new home going up in the community I live in. When I rode around this week with my husband we saw five homes under construction versus 30 to 50 homes being built at any one time in its heyday.

This same story is being told all over Florida. People who want to vacation here are finding weekly rentals for 50 percent to 60 percent less than two years ago. When they get here they find nearly empty condo developments with wonderful amenities and almost no people. I went to one of those for a vacation about a month ago in Panama City, Florida, where construction has come to a screeching halt. Two more buildings are planned but all construction was put on hold.

If you do plan to vacation in Florida this year, take time to search the Internet for condos available. Why spend your time in a hotel room when for the same price you can probably find a two or three bedroom condo? Condo.com is one good place to start. Extra Holidays by Wyndham is another possible source. But I'm sure you'll find other options as well.

So what got Florida into this mess? Overbuilding, excessive speculation, record numbers of foreclosures and unscrupulous lending. Florida's lax oversight has a lot to do with the mess Florida needs to clean up. Florida officials allowed just about any crook to become a mortgage broker. Now Florida's top cop, Attorney General Bill McCollum, is finally starting to fight back. He's starting to file suits alleging loan-modification scams, but it's a little bit too late to help most of the people who got caught up in mortgage fraud.

Time magazine writes about an $83 million Tampa, Florida, mortgage fraud scheme that bought up dozens of properties using false information to buy homes in excess of their true value. These type of schemes helped to inflate the bubble that just burst. While the perpetrators of these schemes walked away with millions, they leave ruined communities in their wake.

Now these scam artists are coming back for a second wave in Florida with mortgage modification schemes. The U.S. Attorney's office in the Middle District of Florida told Time they're already are working on exposing these schemes and expect more than 200 indictments in the Tampa area alone. "The idea is to do as many cases as we can at one time to clearly send a message that this is not going to be tolerated," U.S. Attorney Brian Albritton told time.

Isn't it a shame more aggressive action wasn't taken to stop the fraudulent activity that created the bubble and helped to fuel the abuses that have resulted in the financial mess we all face? What I describe in Florida is going on in many of the top foreclosure states including California, Arizona, and Nevada. Real estate speculators, working with mortgage brokers and bankers who were willing to look the other way, walked away with lots of gains, leaving the rest of us to pick up the pieces.

Luckily, I'm happy where I'm living and have no plans to sell. But I have neighbors who've been trying to sell for more than a year with little prospect of doing that any time soon. Those whose portfolios have been hit hard by the financial carnage on Wall Street or whose pensions were cut back as their companies went bankrupt, are now facing foreclosure. I wonder how many more of us will face foreclosure or bankruptcy before we see any kind of a turnaround?

Lita Epstein has written more than 25 books including "Working After Retirement for Dummies."

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