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Mar 17, 2008 11:29 pm US/Eastern
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South Florida's Secret Blacklists
MIAMI (CBS4) ―
South Florida often finds itself on many lists; from top places to vacation to top cities for road rage.
More recently, however, the area has earned a spot on a new set of lists that could impact the South Florida real estate market for years to come. While banks will be quick to say they're not blacklists, making one could be one of the worst things that could happen to our local economy.
One such list from
BankUnited is five pages of condominiums from across South Florida that they won't finance; 160 plus condos, that if you wanted to buy in, you couldn't get a loan.
"Every lender out there has a list," said Marybet Vallina of
Popular Mortgage.
Mortgage brokers say these lists, which began about 15 months ago, have exploded in the last few months. Most cite South Florida's condo market as one of declining market value and high investor concentration.
"We're talking about every condo. Every condo conversion. Even existing condos today. A condo built 30 years ago could be on this list," said Vallina.
Most condo owners, like Stefan Moczarski, have no idea their properties have been listed on a blacklist.
"I figured since this building has been here for a long time and it's been established and most of the units have been lived in for several years, I wouldn't find myself in that situation," said Moczarski.
Alejandro Diaz-Bazan, who operates the South Florida Foreclosure Group, said he's been able to find clients bargains, but has run into problems 'sealing the deal'. People with perfect credit, even hundreds of thousands of dollars to put down, are being turned away by banks, said Diaz-Bazan.
"It's very frustrating to me to tell my clients that want to buy. They love the unit, they have 20% down that we can't get them approved," said Diaz-Bazan.
With a limited number of interested buyers, South Florida's condo market is now being forced into a cash only market and a catch 22 for sellers.
"I don't want to sell for $50,000 under my asking price because the guys got cash. And then again the people who are willing to pay what I'm asking they wont get approved with 40% down!" said Moczarski.
Many market watchers say the real fallout won't just be sinking prices, but condo owners who become trapped in their own buildings.
"If they are not going to allow us to lend in these buildings, then how do you stop it from going from a 20% foreclosure rate to 100 percent," said Vallina.
Blacklists, also called redlines, are technically illegal. Banks are not allowed to ban condos in South Florida as whole; that's why they have created lists of specific properties. These lists are being duplicated by other banks and new properties are added weekly if not daily.
(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)
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