Some states are still struggling with high home foreclosure rates. Home foreclosure typically occurs because the owner can’t afford to keep up with the mortgage payments and the value of the home is less than the balance due on the mortgage. In those circumstances, it is virtually impossible to sell the property as a means of alleviating the debt. However, some see a confusing trend in Florida when it comes to home foreclosure and home equity.
Recent statistics point to 26 percent of the homes in Florida that are in foreclosure as having equity. This essentially means the home is worth more than the borrower owns on it. In one Florida county alone, 22 percent of the foreclosed homes have some equity.
Some commentators are surprised by the numbers because they would expect homeowners who have equity in the homes would have other options aside from foreclosure. If the home has equity, a refinance might offer a lower rate and monthly payment. Moreover, the opportunity exists to sell the home, pay off the mortgage and still walk away with some funds to apply toward another living situation.
It is thought that some of the people who simply walked away from their property may not even know the home has equity. Nevertheless, home foreclosure remains a very real threat to many families. Those facing these proceedings typically have a number of alternatives to consider. Bankruptcy relief may offer a lifeline that, in some circumstances, allows the filer to keep their home as they work to resolve outstanding debt issues.
Source: The Palm Beach Post, “Quarter of Florida foreclosures have equity, confounding experts”, Kim Miller, April 18, 2014