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More Than 45 Percent of Florida Loans Underwater, Causing Massive Foreclosures in Miami

The number of underwater mortgages in Florida has reached a crisis level. One report indicates 45 percent are in that category, which has led to strategic defaults, short sales and foreclosures in Miami.

Homeowners simply cannot be asked to continue making payments on houses that aren’t worth the price. An underwater loan is one where what the homeowner owes is more than the value of the house. Florida has been hit hard because of plummeting housing prices, based largely on the glut of foreclosures throughout South Florida.

In many cases, a person may consider a strategic default, which means simply walking away from the house — mailing in the keys, in an effort to save face. This is a decision that must be made with great thought and planning and advice from an experienced Miami foreclosure defense lawyer.

The reason for this is that banks can attempt to come after the homeowner for the difference, called a deficiency judgment. While banks won’t say which homeowners they attempt this on and which they don’t, some experts believe people who have walked away from investment homes or whom they believe could actually afford the house are targets.

If a judgment is levied against the homeowner, they would be on the hook for the difference between the loan amount owed and what the house sold for at auction after foreclosure.

Another option is a short sale. However, a short sale requires help from the banks, which may not be willing to work with a homeowner. In a short sale, the homeowner finds a buyer for the house and then brings the amount that person would be willing to pay to the bank for negotiation. The goal is to get the bank to agree to that purchase price and sale — and in the process relieve the homeowner of the remaining debt.

In either case, there is a risk involved and in both cases, it’s almost guaranteed that the motivation for the move is an underwater mortgage. If successful, however, these moves can pay off greatly, as getting out from an albatross of a home can be important.

According to, 45.1 percent of homes in Florida are underwater in their mortgage and another 4.2 percent are near underwater, meaning they are in negative equity or within 5 percent of being in a negative equity position.

That means that 1,970,756 homes are underwater and another 182,389 are classified as near underwater. That puts Florida as one of only three states where more than 45 percent of homes are underwater.

In Nevada, 60.4 percent of homes are underwater and in Arizona, 48.7 percent hit the mark, according to creditsesame. But Florida has far more homes underwater than either of those states. In fact, Florida’s underwater homes equal twice that of both states combined.

Only California, with 2.06 million homes underwater, has more than Florida nationwide. Florida is clearly in a different position that any other state because there are so many vacation and speculative homes here. This has put our state in a perilous position.

And this has not only affected the homeowners whose houses have gone into foreclosure, but also those that haven’t. Foreclosures affect everyone, even those making monthly mortgage payments.

If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991.

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