No one can have failed to have noticed the news about America's fourth-largest investment bank, Lehman Brothers, over the last couple of days. The knock-on question from this is - how does it affect us? For those with an interest in southeast Florida property, the collapse of Lehman Brothers may be greater than you think. The bank invested in large-scale projects across the region, including the expansion of Aventura Mall; Donald Trump's new venture in Hollywood Beach; and Canyon Ranch resort on Miami Beach.
Such larger scale projects may not suffer too badly - another lender may simply swoop in any buy off the loans at a discounted rate. Borrowers, assuming they're not making losses, would continue making repayments to the new loan company.
It's with Lehman's investments in condo units in the area that there is an issue. If selling off such projects won't pay off loans, units may be sold as quickly as possible for well below what their actual value may be.
Article: Lehman was major force in S. Florida (15th September 2008, The Miami Herald)
Foreclosures in America increased at a slower rate in August than in previous months. August saw a 27% increase to the same month in 2007; less than in July and June. In total, over 90,000 properties across the country were repossessed in August 2008.
The top U.S. states for foreclosures are Nevada, California and Arizona. Florida comes fourth.
Article: US foreclosure rates up 27 percent in August, slower than July and June (12th September 2008, Sun Sentinel)
Meanwhile, nearly 14% of Florida property owners are behind in their mortgage payments or are facing foreclosure. This compares to 9% of property owners nationwide. Interestingly, the cause of foreclosures may now be shifting from the subprime crisis to those who had good credit history but took out crazy mortgages with tough repayment plans.
Article: 14 percent of Florida facing mortgage crisis (6th September 2008, Sun Sentinel)
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