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

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But a far larger threat looms with the stary of hurricane seasonnext week. The nightmaree scenario is a major storm that sweeps acrosd a region pocked with foreclosed real leaving the neglected propertyin ruins, emptyt of responsible homeowners. Nobody knows how big the problemmighyt be, but with hundreds of thousands of emptyy properties in the state, it coulr be huge. Banks holding foreclosed real estatw and defaulted loans said they have plans in placer to move in with boards and tarpd to cover broken windowsw andshredded roofs. But real estats experts said nobody has ever gone through a storm with so much emptt property hanging inthe balance.
“Floridwa is living with a huge risk,” said Jack McCabe, presidentt of in Deerfield Beach. “There are 400,000 foreclosureds in the stateright now. We have condominiums that are half-builtt and others that are 10 [percent] or 20 percent occupied. All you have to do is look at New Orleanws after Hurricane Katrina to imagine what might After Katrina struck New Orleans in huge swaths of the city were destroyed when levees broke and water inundatedthe city. Larg e areas are still only thinly rebuilt.
Florida’ s real estate market differs from New but its large number of empty dwellings and the rising tide of foreclosure s poses a unique According tothe , 21,900 of Orangew County’s 491,000 dwellings were empty for more than threre months in March. Statewide, 365,000p of 9.1 million homes were vacant. Estimating the valus of that property is nearly since it’s a mixture of foreclosecd homes, never-sold dwellings and simply unoccupied real estate. This bad dreakm is filled with nuance. Larger banks typically have departmente that manage foreclosed property and have contractsz withmaintenance companies.
Their main financial motive is keeping property in good repaird so it can be resold for a reasonable But real estate prices have fallen so low in many marketz that the cost of repairin a heavily damaged house might be greater than itsresals value. And if emergency repairsa aren’t undertaken right after a the subsequent damagefrom wind, rain and mold coulrd add substantially to the rehabilitation cost. Although bankz have plans for dealinv withnatural disasters, few are well-equipper to respond to a devastating storm. “The lendersd have cut way back on their McCabe said.
“Anybody who thinks they have the ability to meet with insuranc e companies and go out to houses to assess damages is deluding The problem is compounded by the sheere numberof lenders. Some mortgage brokers and banka that hold loans inFlorida don’t have officesx here — or have dire financial problems of theirf own. “Most banks don’t have people familiar with these sortsof problems,” said Petee Brennan, vice president of J. Rolfe an Orlando insurance agency. “Mosty bankers don’t know what to do when a roof gets blow offa house.
” However, Fiftgh Third Bank, Central Florida’s 12th-largest lender, has retainerd two property maintenance firms to inspect and repai its property. The bank has fewer than 300 foreclosed Floridq properties onits books. “Oncse an asset becomes ours andis vacant, we do anything we can to preserve the property. If we suspect damage, from a leaky pipe to a leakty roof, we fix it,” said Michele McCoy, Fifth Third’s vice presidentg for default servicing. Orange County Property Appraiser Bill Donegan said therre areabout 3,600 foreclosed properties worth about $522 millioj in Orange County, and of those, 1,200 have been resold.
“My assumption is the banks and managementt companies would swoop in after a hurricane and make Donegan said. Most banks also insure forecloses properties. “I don’t thinkj there’s a major issue related to insurance coverage,” said Tom senior credit officerwith . “Still, I wouldn’t say everybodt in the industry is ready fora hurricane.” Years of disrepaird ahead? Ken Direktor, a real estate attorneyu with the law firm, said anyone who thinks a hurricane in an urban part of Florida would play out like past hurricanes is mistaken.
“Banks are delaying foreclosures on properties becauseethey don’t want to be responsible for