Half of all securitized non-agency mortgage loans in Florida are 60 days or more delinquent, according to Fitch Ratings.
The firm’s study found that Florida ranks the worst among all states in mortgage delinquencies across all product types and that the state has a disproportionate number of non-prime loans, with 85% of loans being categorized as Alt-A or subprime.
A substantial decline in home prices coupled with a worsening rate of unemployment have fueled Florida’s delinquency rate, Fitch said. A total of 81% of all loans are “underwater,” and the average mark-to-market, loan-to-value ratio of Florida loans is 138%.
While half of Florida’s borrowers are current on their mortgage payments, they owe 120% of their home values on average. An increase in economic stress brought on by the oil spill in the Gulf, leading to a decline in the state’s tourism and fishing industries, is likely to increase the default rates, according to the credit rating agency.
Florida has been one of the hardest hit states in terms of unemployment rates, showing a peak of 12.3% in February before falling to its current rate of 11.2%. It also accounts for 10% of all non-agency mortgage loans, following California as the second largest state. Fitch continues to monitor the Gulf Coast for potential after-effects stemming from the oil spill on areas dependent on fishing and tourism.
Although home prices and loss severities on securitized deals in Florida have generally showed stability recently, the situation could change and the impact of the oil spill may differ across the state, Fitch said.
