Foreclosure sales surpass 100 in 2016 for 2nd straight year

Realtors say numbers reflect a backlog of foreclosed properties which are now starting to be sold

Foreclosure sales in the Cayman Islands from 2011 through 2016.

More than 100 foreclosed properties were sold in the Cayman Islands in 2016, the second year in succession that forced sales have reached three figures.

The statistics for 2016 reflect a marginal drop on 2015, though both years saw far higher numbers of foreclosure sales than at any time in recent memory.

However, realtors say the numbers reflect a backlog of foreclosed properties which are now starting to be sold. Kim Lund of RE/MAX Cayman Islands said there were significantly fewer new listings for foreclosure properties.

He said the sales figures, from the Cayman Islands Real Estate Brokers Association’s multi-listing system, represent a lagging economic indicator.

“We can have many foreclosures listed for a year or two on the market before they sell, sometimes longer. Although we are still seeing a lot of them selling, these are older listings that were still on the market.

“New foreclosure listings are way down, and we seem to be at the end of selling through the glut of them that had accumulated over the last several years from the recession.”

The data, which reflects the time the property is sold rather than the date the bank puts it into foreclosure, shows the number of forced sales more than quadrupled over the past five years, from 33 in 2012 to 112 last year.

That figure for 2016 represents 80 residences, 19 land parcels, seven multi-family properties and six commercial properties.

Wayne Panton, the minister for financial services, said the raw data from the banks showed that foreclosures were starting to come down.

He said the foreclosure rate had peaked at 2.13 percent in 2015 and dipped to 1.27 percent by the third quarter of last year.

The last publicly available data from the Cayman Islands Monetary Authority comes from its June 2016 second-quarter ESO report.

It states, “At end-June 2016, data from CIMA shows that there were 118 properties in the local commercial banks’ foreclosures inventory amounting to US$34.7 million. This represents a decrease compared to the 175 properties valued at $44.1 million in the comparative period in 2015.”

Mr. Panton said the overall numbers had been coming down since 2015.

“What we are seeing is that the foreclosure rate is going down. The economy is growing at 3 percent, unemployment is down to 5.6 percent. The macro financial perspective has improved over the last few years and that must at some point translate to reductions in the foreclosure numbers.

“Those loans that were in default and where the owners were not in a position to restructure will eventually go through the process and there will be less new ones coming online.”

Mr. Lund said the overall economic picture in the real estate industry is improving, and he expects the foreclosure sales numbers to fall back to pre-recession levels over the next couple of years.

He believes the upward trend of the last few years will begin to reverse, once the 138 foreclosure properties currently listed are sold.

He said there was a time lag between cause and effect with the impact of the global recession showing up in statistics several years down the line. Similarly, he believes the improvement in the economy will take its time to show up in the statistics, which reflect completed sales only.

“The reason for the fewer listings of foreclosures in 2017 is twofold. Firstly, the economy has improved and thankfully, distressed homeowners now have better income to start paying their mortgages again. Secondly, the glut of bank foreclosure properties has now been mostly listed and sold, so the impact of the financial crisis has mostly worked its way through the foreclosure process.”

He said banks had been reluctant, in the aftermath of the 2008 economic crash, to foreclose on homeowners, moving to call in loans only after consistent nonpayment over a period of time.

“The banks were fairly cautious, and I think that is why, so long after the financial crisis, we are seeing the foreclosure figures rising.

“The good news is that there aren’t many new foreclosure properties coming on the market. We expect to see the numbers back to what they were four or five years ago or even lower within the next few years.”

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1 COMMENT

  1. I wonder if Government see the real problems that’s getting worse year by year with all the foreclosures . To have a good stable economy people needs to have a home and a job and money . By the scale in this article don’t look too good for people who are trying to own a home or business in Cayman Islands.

    I am also reading alot of excuses like the global recession which happened in 2008 , but the foreclosures didn’t start till 2011 and got worse every year after .

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