While Collier and Lee counties both saw a rise in new foreclosure filings last year, this year could reverse that trend.
Some local experts have dubbed 2013 as the "year of the short sale," expecting to see banks negotiating more with homeowners to avoid drawn-out and costly foreclosure battles in court.
"I think we are going to stabilize and the good news for us, both Collier and Lee — certainly Lee — is we are no longer the ground zero for foreclosures. We are actually in much better shape than many other counties in Florida," said Kevin Jursinski, a Fort Myers real estate attorney.
Last year, Collier saw 2,892 new foreclosure filings. That was up more than 27 percent from 2,270 in 2011, but down more than 48 percent from 4,395 in 2010, county clerk records show. In 2009, there were 8,203 filings — the most seen in the county since the foreclosure crisis hit.
Lee County finished 2012 with 7,606 new foreclosure filings, up more than 40 percent from 5,417 in 2011, according to county clerk records. That compared to 10,481 in 2010 and 21,277 in 2009.
New filings slowed locally and nationally in 2011 after a so-called "robo-signing" controversy caused banks to pull back on foreclosures amid criticism of the methods mortgage service providers and law firms were using to pursue delinquent borrowers in court.
In Collier, December saw the fewest new filings of any month in 2012 — at 184. The peak for filings last year came in August, when they swelled to 295.
In Lee, new filings dropped to 461 in December, down from 543 in November and 554 in December 2011. Last year, the busiest month for filings in the county came in March, when they spiked to 799. After that, only one month, August, saw more than 700 new cases filed.
When it comes to new foreclosure cases, at least in Lee, the "new normal" for monthly filings is expected to be somewhere between 350 and 550, said Jeff Tumbarello, director of the Southwest Florida Real Estate Investment Association.
If the trend since November continues in Collier, its monthly filings this year could stay near 200 or below as the local real estate market continues to slowly recover. They've been under 300 a month since October 2010, clerk records show, and they hit a high of 797 in July 2009.
"Everybody has been waiting for the second wave now for over two years. There's no second wave coming," Tumbarello said of filings.
The Mortgage Forgiveness Debt Relief Act was extended as part of the last-minute effort to avoid the so-called fiscal cliff that would have automatically brought tax increases and government spending cuts on Jan. 1. The relief act, which now expires at the end of this year, allows homeowners to avoid paying tax on the difference between their mortgage debt and the sale price if lenders forgive their debt. It has spurred more short sales and some rushed to complete those sales before the end of last year because they feared the act wouldn't be renewed.
"Short sales will take the place of a lot of foreclosures," Jursinski said. "Most lenders would rather get a short sale and try to negotiate the difference, rather than take the property back and try to sell the property themselves."
Well into the foreclosure crisis, banks are better equipped to handle short sales — sales made for less than what's owed on the mortgage to avoid foreclosure.
Cape Coral-Fort Myers once held the top spot in the country for its foreclosure activity, based on reports by RealtyTrac, headquartered in Irvine, Calif. Naples-Marco Island also made the top five list years ago, but both metros have since seen a turn around.
RealtyTrac's rankings are based on counting three foreclosure-related filings: defaults, scheduled auctions and bank repossessions.
Naples-Marco Island ranked No. 74 in the country for its foreclosure activity in 2012. Cape Coral-Fort Myers came in at 26.
"These areas got hurt. But we've come back faster than most other counties in Florida," Jursinski said.
A year-end report for 2012 by RealtyTrac shows 11,440 properties in Cape Coral-Fort Myers getting the three types of foreclosure-related filings that it tracks, down nearly 5 percent year-over-year. In Naples-Marco Island there were 4,132 properties with the filings last year, up more than 45 percent from 2011.
In 2012, foreclosure activity nationally increased in 25 states, including Florida — with a 53 percent jump in the state over the year. Florida posted the nation's highest foreclosure rate last year, with one in every 32 households receiving a foreclosure-related filing, according to RealtyTrac.
The other states in the top five were Nevada, Arizona, Georgia and Illinois.
"2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state — Florida — posting the nation's highest state foreclosure rate for the first time since the housing crisis began," said Daren Blomquist, vice president of RealtyTrac, in a statement.
"Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined nonjudicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose."
He said he expects to see continued increases in judicial foreclosures nationwide in the beginning of the year as lenders continue to catch up with a backlog of cases. That could mean a few months of increased activity in Lee and Collier before filings become more stable or drop off again.
In December, there were 1,093 foreclosure-related filings in Cape Coral-Fort Myers, up 21 percent over the month, but down 2 percent from a year ago, according to RealtyTrac. There were 143 of those filings in Naples-Marco Island last month, down more than 70 percent from November and by about 60 percent a year ago.
The nation's 10 largest banks have no reason not to move ahead with foreclosures after recently reaching an $8.5 billion settlement stemming from regulators' allegations the banks wrongfully foreclosed on homeowners, said Michael Schneider, a Naples foreclosure attorney who represents homeowners.
"They seem to be full steam ahead. Basically that's what I've noticed," he said.
Like Jursinski, however, he said, he doesn't see a second wave of foreclosures coming. He expects more short sales and loan modifications, especially with home prices starting to edge up in Southwest Florida.
The first step for troubled borrowers should be to ask for a modification before payments are missed, he said.
"Be prepared, if you can't get it, to be foreclosed on," Schneider said. "And it's going to be faster than it was in the past."
Going forward, there are other reasons for hope on the foreclosure front in Southwest Florida.
"We are pretty optimistic about our area simply because of the number of homes that were sold for cash, which is amazing and makes our economy pretty solid," Jursinski said. "Basically there is going to be no foreclosure if there are no mortgages. I think we've come back pretty well."