Archive for August, 2010
$656.8 million to help struggling homeowners on hold
Florida has $656.8 million to help struggling homeowners, but distribution of the federal aid is likely on hold statewide until early 2011. The money, awarded through the Obama administration’s “Hardest Hit” program will pay the mortgage of unemployed or underemployed borrowers for up to 18 months as they seek new jobs or training. Originally announced in February, Florida got another infusion of hardest hit money last week that will increase those helped from 12,000 to 20,000. The Florida Housing Finance Corporation is now working to amend its plan for the money and hopes to submit it to the Treasury Department for approval by Sept. 1. The original plan had relied on lenders to waive or delay nine months of mortgage payments if a homeowner received nine payments from Florida’s hardest hit money. On Thursday, Florida housing officials said they could not get lenders to sign on for the state program. A federal plan that requires banks to forgive, temporarily or permanently, 90 days worth of mortgage payments for unemployed homeowners who seek a loan modification was announced after Florida had developed its plan. Banks didn’t want to agree to both mortgage forgiveness plans. “With that intervening federal program, we were unable to get the match from the lenders we were looking for,” said David Westcott, director of homeownership programs for the Florida Housing Finance Corporation. Florida’s new plan will pay up to the full 18 months for eligible borrowers, but the delay to get approval means a required 90-day trial program is also being pushed back. That trial, expected to begin this fall, will be held in Lee County, with only Lee County residents eligible. Despite the holdups, Westcott said the state is happy to have the money. “This means more money to help more people for a longer period of time,” he said. For information on the hardest hit fund, go to www.floridahousing.org. Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Buy Owner service is in liquidation
The Buy Owner broker-free real estate firm, known for its familiar “Thanks, Buy Owner” advertisements, has filed for liquidation as the housing market continues to struggle. The Deerfield Beach-based company will continue to operate with a reduced staff as a buyer is sought for its assets, which could include the purchase of the firm in its entirety, minus its debt. “The phones, as far as people interested in the service, remain very active, and we are signing up new clients everyday,” said Philip J. von Kahle, managing director for Michael Moecker & Associates, which is the assignee for Buy Owner. “There is still a very valuable core business here.” Buy Owner president and CEO Scott A. Eckert lives in Boca Raton. The company filed last month for an assignment for the benefit of creditors in Broward County, which is similar to a Chapter 7 federal bankruptcy but in state court. As assignee, the Fort Lauderdale-based Michael Moecker & Associates, is responsible for maximizing the assets of the company so creditors can get paid. Von Kahle said the combination of a down real estate market and a large Bank of America loan that recently required payment led to the liquidation filing. According to court documents, Buy Owner owes about $3.9 million to Bank of America, and $1.2 million in back pay to its executives, including Eckert. It has 33 shareholders. Buy Owner, founded in 1984, charges fees to sellers based on how much exposure they want on its website, and what features, such as custom fliers or talking yard signs, they choose. It is free to buyers. The company has franchises in Atlanta, Chicago, Dallas, Jacksonville, New Orleans, Orlando, Philadelphia and Tampa. “I don’t think the company could scale down quick enough because it got so big,” said von Kahle. “It appears to me the loan from Bank of America was the straw that broke the camel’s back.” A 2009 Florida Realtors report found about 10 percent of homes sold last year did so without the help of a Realtor. Leyza Blanco, an attorney with Miami-based GrayRobinson, P.A. who is representing Michael Moecker & Associates, said she has filed a motion to allow for liquidation of the business as a whole, rather than its parts. Because Buy Owner is a service-based company, that could maximize profits, Blanco said. “There’s not a lot of tangible assets that you can just take apart and sell,” she said. Creditors have until Nov. 23 to file claims against the company. Copyright © 2010 The Palm Beach Post, Fla. Distributed by McClatchy-Tribune Information Services.
Average mortgage rates hit low of 4.42%
Mortgage rates fell to the lowest level in decades for the eighth time in nine weeks, a sign that investors are concerned about the weak economy. The average rate for 30-year fixed loans this week was 4.42 percent, down from 4.44 percent last week, mortgage buyer Freddie Mac said Thursday. That’s the lowest since Freddie Mac began tracking rates in 1971. The average rate on 15-year fixed loans dropped to 3.9 percent, down from 3.92 percent last week and the lowest on records dating back to 1991. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields. Falling rates have pushed refinancing of home loans to the highest level since May 2009. But it’s still lower than during the first three months of that year, when rates first fell to around 5 percent. Low mortgage rates, however, have failed to spark home sales. They remain hobbled by the weak economy and tight credit standards. Rates have fallen since spring as investors sought the safety of Treasury bonds, lowering their yield. Mortgage rates tend to track those yields. To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day. Average rates on five-year adjustable-rate mortgages were unchanged at 3.56 percent. Rates on one-year adjustable-rate mortgages also were unchanged at an average of 3.53 percent. The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 a point for 30-year and 1-year mortgages. They averaged 0.6 of a point for 15-year and 5-year mortgages. Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Mortgage Bailout: Government Spin Accelerates
I don't envy the folks over at Treasury and HUD who, month after month, are forced to report lackluster statistics on the Administration's mortgage bailout and find something positive to say about them. Unfortunately they painted themselves into a corner by inventing a "Housing Scorecard" this summer, which only forces them to report more troubling numbers.
South Florida homeowner associations get tough collecting delinquent fees
Homeowner associations throughout South Florida are becoming more assertive in the fight to maintain property values and their own bottom lines amid one of the worst housing collapses since the Great Depression. A new legal strategy and a sweeping condominium reform bill are empowering boards hit hard by budget shortfalls after a deluge of foreclosures in recent years. Associations now are attempting so-called reverse foreclosures, which force lenders to seize homes more quickly than they otherwise would. Banks often delay taking back these troubled properties to avoid having to pay past-due assessments. Meanwhile, new legislation that went into effect July 1 gives condo boards statewide more authority in dealing with delinquent tenants and unit owners. Plantation City Council member Bob Levy commends associations for aggressively dealing with the crisis, but Fort Lauderdale lawyer Donna DiMaggio Berger said they had little choice. "Many of these associations have had their eyes opened," said Berger, executive director of the Community Advocacy Network, a statewide group for common-interest ownership communities. "They've seen that inaction makes the situation worse." The crash in home prices during the past few years pushed thousands of owners into foreclosure, although banks have been slow to take back the properties. Widespread vacancies left the state's 50,000 community associations starving for cash to pay for such services as cable, water and maintenance. Many boards felt they had little recourse, except to charge higher fees to the remaining owners. Last fall, though, the Association Law Group in Miami decided to try something different for one of its clients. The firm, representing the Keys Gate Community Association in Homestead, maneuvered to force a lender into court for a hearing that resulted in the bank seizing a home within the development. The association, which already had taken title when the owner stopped paying fees, asked a judge to assign a certificate of title to the lender on the same day as the hearing. The judge granted the request, making the bank the legal owner. And with that came the responsibility of paying association fees. Since then, the firm has completed at least 10 reverse foreclosures in Miami-Dade and Broward counties and has dozens more in the pipeline, said Ben Solomon, co-founder of the Association Law Group. "We came up with this new legal strategy to address the flagrant stalling of lenders," Solomon wrote in an e-mail. "Each month of delay by the bank in its foreclosure process will typically turn into an additional month of bad debt to the association, which then must be paid unfairly by the owners." Alex Sanchez, president of the Florida Bankers Association, said lenders aren't dragging their feet but instead are trying to work with borrowers to keep them in their homes. "If that's wrong," he said, "go ahead and accuse us of that." The Jacaranda Lakes Homeowners Association is facing $45,000 in total delinquencies at the 1,150-home development in Plantation. In two cases, the board took title to run-down homes after the owners stopped paying fees, said Nathan A. Tarler, secretary-treasurer. The lenders still have mortgages on the two properties but have yet to initiate foreclosure proceedings. To get the lenders to take back the homes and assume responsibility for renovating them and paying past-due fees, the association filed for reverse foreclosure. A Broward judge last week denied one of the requests, but another judge could rule differently at a later date, said Robert Kaye, Jacaranda's lawyer. Despite delays and uncertainty, Jacaranda residents say they're thrilled that the association is trying to address the situation. The two homes have mold problems and need new roofs. "Whether you live next door or not, it impacts all of our values," homeowner Lynn Albertelli said. The condo reform legislation, SB 1196, allows associations to demand rent from tenants if the owners are delinquent. If the tenants don't pay, the boards can evict them with court approval. The law also gives homeowner associations the right to restrict common-area uses and suspend voting privileges for owners who are 90 days delinquent. Critics argue, however, that parts of the bill are poorly worded and leave too much open to interpretation. The Verano at Delray Beach Condominium Association Inc. is gaining possession of five units and evicting those tenants, said Steve Cohen, a receiver hired by the association. It also may gain control of an additional 20 vacant units. Many of the individual unit owners owe more on their condos than they're worth and aren't paying association dues even though they're still collecting rent from tenants. That resulted in a shortfall for the board of about $10,000 a month, Cohen said. In two months on the job, he said his firm, Community Concepts, has boosted Verano's collectibles by about 20 percent. The situation at the 242-unit development will improve even more once the association takes possession of the units and is able to renovate and lease them to new tenants. "What we want to do is improve the quality of life of the condo for all the residents," Cohen said. Sharon Dodge, board president of Venetia Condominium Association in Miami, said her 382-unit development on Biscayne Bay was plagued by squatters and non-paying unit owners. "Lots of people were taking a free ride," Dodge said. "When some stopped paying, others said, 'Why should I pay?'" Outraged, the board fought back, Dodge said. It moved to foreclose on 140 units, which prompted some owners to pay past-due fees. The association still has title to 23 of the condos and is renting those. At one point, the Venetia homeowners association was $3 million in debt, but it has since reduced that to about $900,000, she said. "We're really in good shape," Dodge said. "And we did it strictly by being tough." Copyright © 2010, Sun Sentinel, Fort Lauderdale, Fla., Paul Owers and Lisa J. Huriash. Distributed by McClatchy-Tribune Information Services.
1 out of 4 renters never plans to own a home
According to Trulia.com’s American Dream survey on attitudes toward homeownership, 27 percent of renters do not plan to buy a home – ever. Of those renters who do plan to purchase someday, 68 percent said it would be more than two years before they do. “Large numbers of people delaying their plans to buy a home, or not planning to buy at all, could have an enormous domino delaying effect on economic recovery in the U.S.,” says Pete Flint, CEO of Trulia. “Renters converting into buyers are crucial to turning around the housing slump, but the current economic crisis is causing people to become very hesitant to get off the fence and buy a home.” According to the study, many Americans still maintain a core belief in the inherent value of owning a home: 72 percent believe homeownership is part of their American Dream. While it’s a decline from 77 percent six months ago, it shows that the American Dream of homeownership is still alive. Nearly one in five Americans (19 percent) said that their attitude toward homeownership has grown more negative over the last six months; however, more Americans – 23 percent – said that their attitude toward owning a home has grown more positive in the same time frame. Tipping factors: From renter to buyer in one year Seventy-nine percent of renters who plan to buy homes one day said something could inspire them to buy a home within the next 12 months. The changes in circumstance most frequently cited as the “tipping factors” were: being able to save enough money for a downpayment, getting a new job, getting a promotion/raise, and interest rates staying low or getting even lower. The McMansion Era is over According to the survey, Americans are also veering away from the “McMansions” that grew popular before the recession. Adults who might buy a house displayed a preference for smaller homes, with only 9 percent saying their ideal home size is more than 3,200 square feet – the same number of who said they’d like their home to be between 800 and 1,400 square feet. Fifty-five percent of Americans would prefer a home between 1,401 and 2,600 square feet. Harris Interactive conducted this July 2010 survey online within the United States via its QuickQuery online omnibus service on behalf of Trulia between July 22-26, 2010, among 2,055 U.S. adults aged 18 years and older. The sample included 1,345 homeowners and 663 renters. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was used to adjust for respondents’ propensity to be online. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
Fed: Give borrowers time to change their minds
The Federal Reserve released a proposal Monday to give mortgage applicants three days to change their minds. The proposal was part of a 930-page document that clarifies and finalizes the new financial reform law. The Fed’s document says that for closed-end loans secured by real property or a dwelling, a creditor must: • Refund any appraisal or other fees paid by the consumer (other than a credit report fee) if the consumer decides not to proceed with a closed-end mortgage transaction within three business days of receiving the early disclosures (fees imposed after this three-day period would not be refundable). • Disclose the right to a refund of fees to consumers before they apply for a closed-end mortgage loan. The Fed says this proposal will make it easier and cheaper for consumers to comparison shop. It also acknowledged that borrowers who want to close a transaction in a hurry would be handicapped because most lenders will delay sending out an appraiser for a few days. Other proposals affecting homebuyers included: • A ban on yield-spread premiums, which encourage mortgage brokers to push buyers toward more profitable mortgages. • A requirement for lenders to tell borrowers when their mortgage is sold or transferred. • An explanation of the effects of balloon payments, adjustable loan payment fluctuations and minimum payments on loan balances. Source: Bankrate.com, Holden Lewis
Are housing tax breaks in jeopardy?
Federal housing policy offers the wealthiest Americans billions in tax breaks without delivering much bang for the buck in increased homeownership, critics told government policymakers Tuesday. “We aren’t getting our money’s worth,” Mark Zandi, chief economist of Moody’s Analytics, said at a government conference on reforming housing policy. The government spent $230 billion last year to promote homeownership through tax breaks and spending programs. The biggest chunk – $80 billion – went toward the mortgage interest deduction, according to the Congressional Budget Office. Michael Stegman, housing policy specialist at the MacArthur Foundation, said the mortgage tax break goes primarily to the wealthiest households. A study this year by the Tax Policy Center of the Brookings Institution and the Urban Institute noted that the mortgage deduction was worth just $91 a year to families earning less than $40,000 – and $5,459 a year to those making more than $250,000. The government, seeking to overhaul the housing market after the collapse of mortgage giants Fannie Mae and Freddie Mac, is unlikely to touch the politically sacrosanct deduction anytime soon. But analysts suggested that the government’s debt – $8.8 trillion and growing – meant that housing subsidies might one day face the knife. “We can’t afford it,” Zandi said. The U.S. homeownership rate (66.9 percent) is about the same as Canada’s and is lower than Australia, Ireland, Spain and Britain’s even though “these countries provide far less government support for homeownership,” Michael Lea of San Diego State University wrote this year. For now, the government is neck-deep in housing. Private money has fled the market in the wake of a housing-market meltdown. Fannie, Freddie and other government agencies have filled the gap, guaranteeing more than 90 percent of new mortgages. “Without government guarantees, mortgage rates would be hundreds of basis points higher, resulting in a moribund housing market,” said William Gross, managing director of bond fund Pimco. “We don’t want government in the housing market, but it’s a necessity.” Treasury Secretary Timothy Geithner told the conference “there’s no clear consensus yet” on reforming the way mortgages are financed. He promised “fundamental change” in the way Fannie and Freddie do business: They used an implicit government guarantee to borrow cheap money and make big bets in the housing market. When their gamble went bad, taxpayers picked up the tab. Copyright © 2010 USA TODAY, a division of Gannett Co. Inc., Paul Wiseman.
Florida Supreme Court considers Amendment 3
The Florida Supreme Court heard arguments yesterday supporting, and also opposing, the ballot wording of a proposed amendment to the Florida Constitution, Amendment 3. Created by the Florida Legislature in 2009 to boost home sales, Amendment 3, if added to the constitution, would give homebuyers who have not owned a primary residency in the previous eight years an additional property tax break; it would also lower the yearly tax appraisal cap for rental property and commercial real estate from 10 percent to 5 percent. The point of dispute, however, is not over what the amendment would do; rather, it's about the wording voters would read in the ballot box and whether it adequately explains what would happen should it become effective. A lower court judge earlier removed Amendment 3 from the ballot, saying the wording misled voters. The key point of contention focused on the effective date of the property tax break – Jan. 1, 2010 – which is not mentioned in the amendment. The judge feared some voters would opt to approve it thinking, incorrectly, that they would get the tax break if it passed. Florida Realtors earlier filed an amicus brief supporting the amendment, prepared by attorneys Vicki Weber and David Powell of Hopping, Green, and Sams. While the Supreme Court justices did not issue a decision yesterday, few of the six justices present for oral arguments seemed inclined to place the amendment back onto the ballot. Trey Price, a Florida Realtors public policy representative, said lawyers advocating removal of Amendment 3 presented a strong case before the Supreme Court due to the omission of the effective date. A decision is expected by early September before the state prints absentee ballots. "If Amendment 3 does, in fact, not appear on the November ballot, Florida Realtors' State and Local Taxation Subcommittee is ready to discuss the next steps and plan for a better amendment for 2012," Price says. "Economists are telling us that commercial property assessments are unlikely to exceed 5 percent in the coming two years, so that is somewhat good news." © 2010 Florida Realtors®
Housing Double Dip is Not Just Tax Credit Hangover
There's no question that the home buyer tax credit, which expired at the end of April, pulled home buying demand forward and thus created an inevitable drop-off afterward. It would be wrong, however, to blame the current lull in home buying/selling entirely on the tax credit hangover.
