Based upon recently published census data, a dangerously high percentage of mortgage holders in Sarasota, Florida and all of Southwest Florida are in danger of future default and possible foreclosure. In Sarasota County, 41% of mortgage holders spend more than 35% of their income on housing payments (mortgage, insurance, taxes and home maintenance expenses).
Real estate consultant Jack McCabe indicates that this statistic is a warning that a significant number of future mortgage defaults are on the horizon. He states that "before the boom, the rule of thumb was that banks would make mortgage loans only to borrowers who would pay no more than 28 percent of their income on monthly payments." With more 5 and 7 year teaser rate loans resetting to higher interest rates in the next few years, even more mortgage holders will be exceeding this 35% rule.
As homeowners run through their savings to keep up with their housing payments, or just simply give up trying, more foreclosures are certain to come. However, foreclosure can be avoided and a strategic default and short sale may be the solution to solving these types of real estate problems.