Struggling homeowners in Florida will have limited ability to face any additional economic challenges brought on by the Gulf oil spill, according to Fitch Ratings.
Given the significant negative equity, further economic stress brought on by the Gulf oil spill and declines in the tourism and fishing industries would be likely to further increase default rates.
A recently completed study by Fitch shows half of all securitized non-agency mortgage loans in Florida are 60 days or more delinquent. Also among the study’s more notable findings, ‘Florida already ranks the worst among all states in mortgage delinquencies across all product types,’ said Managing Director Roelof Slump. ‘Additionally, Florida contains a disproportionate amount of non-prime loans, with 85% of loans being categorized as Alt-A or Subprime.’ Such products have become associated with weaker performance in general. This is especially meaningful in Florida where severe home price declines have impacted most areas of the state.
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