Posts Tagged ‘Palm Beach’
Foreclosure legal problems could clog market
On Florida’s west coast, where the housing bust has flooded courts with foreclosure filings, the chief judge of the 6th Judicial Circuit has little sympathy for lenders who have routinely submitted flawed and possibly fraudulent foreclosure cases. J. Thomas McGrady, whose jurisdiction includes two hard-hit counties with more than 1 million people in the Tampa area, said Monday that foreclosures based on improper paperwork should be tossed out. Judges “are going to have to vacate that judgment and start over again,” he said. Across the country, judges facing pressure from homeowners and their attorneys are beginning to reexamine old cases and dismiss pending ones. The trend could lead to overturned evictions, and it could stall foreclosure cases for years and scare away buyers of millions of seized properties clogging the real estate market. “We’ve never been inundated to this extent with this number of cases alleging fraudulent paperwork,” said Peter D. Blanc, chief judge of the 15th Judicial Circuit Court, in West Palm Beach. “We’re in new territory, and we’re struggling to determine what the proper solution is.” Judges nationwide have broad latitude in deciding whether to accept new paperwork and whether to charge the lenders with fraud for submitting problematic documents in the first place. Even before three of the nation’s largest lenders – Bank of America, J.P. Morgan Chase and Ally Financial – announced moratoriums on foreclosures in the 23 states that require a court order to evict a borrower from a home, some judges were beginning to push back against banks with sloppy or fraudulent filings. The lenders have acknowledged that a handful of employees signing off on hundreds of thousands of files may not have read them, but they have insisted that the problem amounts to a technical issue that can be fixed easily by replacing old documents with new ones. They say that the facts proving that borrowers missed their payments are sound and that the procedural errors might delay foreclosures but won’t change the outcome. As the situation in Florida shows, it’s unlikely to wind up so simple. Armies of consumer attorneys and homeowners are seizing on the paperwork issues to try to protect individual homes from foreclosure and bring into question the legitimacy of the millions of foreclosures undertaken since the housing crisis began in 2007. The recent moratoriums have made life easier for people such as Michael Gaier, a Philadelphia lawyer who has taken on 130 clients hoping to fight their foreclosures. Before, he said, judges churning through foreclosure cases tended “to roll their eyes, because they’ve heard every story in the book,” he said. But now, “I don’t have to convince them on my own. I don’t have to start from scratch,” he said, because the moratoriums show that the banks “know that something is wrong.” Gaier and other lawyers say they have been flooded with calls from new clients who had lost hope of keeping their homes but now see an opportunity to stay. In addition, homeowners who had been complaining of flawed or forged paperwork for years feel they are finally getting traction. “My reaction is, it’s about time. In the past, people thought we were crazy; the judges laughed at us. Now everyone knows there is a serious problem,” said Denise McMillan, 51, who was evicted from her four-bedroom home in Pikesville, Md., in July and has been coordinating online with others fighting foreclosure. The collective decisions of judges across the country could turn a foreclosure slowdown into a far larger mess if they determine that homes were wrongly seized and resold by lenders. Foreclosed homes accounted for nearly one-fourth of all residential sales in the second quarter, according to a report by RealtyTrac released last week. That possibility already is driving away potential buyers of bank-owned properties who don’t want to get caught in legal battles between banks and borrowers. At least one company that provides title insurance, Old Republic Title, has refused to work on homes foreclosed by Ally’s GMAC mortgage unit. Travis John, a broker in central Florida who specializes in distressed sales, said buyers in recent weeks have seen the headlines about problems in the foreclosure process and have shied away. “If buyers continue to have this fear – if we have even 30 percent less sales – that would be traumatic,” he said. “We’re already in a traumatic market.” Across Florida, which has the most foreclosure filings of any state, mortgage companies are already submitting formal requests to judges for the withdrawal of documents that they say were “not properly verified.” Such actions show that the flawed paperwork is “a serious problem,” said veteran circuit court judge Lynn Tepper, who has presided over foreclosure cases in Pasco County, north of Tampa. “They’ve conceded that the affidavit is flawed,” Tepper said. That means the judgment based on the affidavit must have been problematic as well – and that the decisions should be reversed. Tepper sent a chill through law firms working for lenders this spring when she threw out a request for a foreclosure and ruled that U.S. Bank perpetrated fraud by submitting backdated documents that purported to show the lender owning the loan at the time of the foreclosure. The homeowner, Ernest E. Harpster, got his home back despite the fact that he owed $190,000 on the loan. Tepper also ruled that U.S. Bank could not refile the case. These days, Tepper is plodding slowly through the pending cases, looking closely at signatures and notarizations, making sure the names and numbers look accurate and legitimate. “You have to be careful,” she said. “It used to be such a pro forma thing; it was a no-brainer. That’s surely not the case now.”
Mistakes widespread on foreclosures, lawyers say
Paperwork mistakes that led one of the nation’s largest mortgage servicers to halt foreclosure evictions in 23 states last week have happened elsewhere and affect tens of thousands of foreclosures, say lawyers for homeowners. Ally Financial’s GMAC Mortgage acted after manager Jeffrey Stephan gave a statement to opposing lawyers that he had signed off on legal documents for 10,000 foreclosure papers a month without following verification procedures. Those lawyers say they’ve obtained similar statements from employees at JPMorgan Chase and OneWest Bank – formerly IndyMac Federal Bank – that court papers weren’t properly verified before being filed. “We’ve taken depositions at other servicing companies that take these documents without reviewing them,” says Christopher Immel, a lawyer at Ice Legal in West Palm Beach, Fla. “They were filing fraudulently. It’s rarely done correctly.” In one case, Erica Johnson-Seck, a vice president at OneWest, said she signed 750 foreclosure documents a week and didn’t read each document before signing it, according to a 2009 deposition obtained by Ice Legal. She also said they were signed without a notary present. In a May 17 deposition, also taken by Ice Legal, Beth Cottrell, a supervisor at Chase Home Finance, a division of JPMorgan Chase, said she was among eight managers who signed off on about 18,000 foreclosure papers a month. Cottrell said she only reviewed the entire foreclosure document if another employee raised a question about it. JPMorgan Chase declined to comment. “How can a judge rely on something when the person who is signing it doesn’t even know what they’re signing?” says Ice Legal lawyer Dustin Zacks. “I find it very hard to believe it’s limited to the few depositions we’ve taken.” In many states, servicers must file a motion in court to take possession of a home in a foreclosure. To support their motion, a representative has to verify they’ve reviewed the supporting documents, checked who owns the mortgage note and had a notary public witness their signature. Ally Financial said Friday that delays in completing foreclosures should be resolved before year’s end. It also said it’s confident that processing errors did not result in any inappropriate foreclosures. Fannie Mae and Freddie Mac are reviewing foreclosures on GMAC-serviced mortgages they own and have halted evictions on them until the review is done. Fannie Mae says it is also reminding servicers to follow proper procedures. Copyright © 2010 USA TODAY
Tampa woman will be featured on ‘House Hunters’
Tina James said she had never seen HGTV's "House Hunters" before she started a quest to find her first home. But after a friend suggested she apply to be on the popular series, James became a fan. Now she's going to be featured on an episode. "It was a good experience because I was looking for a home anyway," said James, who is an education programs manager for the Patel Conservatory in Tampa. The episode, which was taped last year (with a follow-up visit in February), airs at 10 p.m. Tuesday. James, 33, who is single, said she started looking for a home after landing a job at Patel. She was bouncing back after being laid off from her previous job as the community relations director for the Tampa Bay Buccaneers. The layoff was a tough blow and she was out of work for about 10 weeks, she said. She had been saving for her first home. "I couldn't decide if I wanted a townhouse or a condo or a home," she said. "It was a big step for me but my parents were willing to help if I needed it." James' real estate agent, Sean Ready, of ReMax, showed her two townhomes and a single-family home. "She wanted to be as close to downtown as possible," he said. Scenes were taped in Ready's office and at the homes. "I am impressed at how popular the show is because every client that I ask has seen it," Ready said. James, who grew up in West Palm Beach, is a 2000 graduate of the University of South Florida where she majored in mass communications. She worked for the Orlando Magic for two years and at Nickelodeon Games and Sports in Orlando. She also was communications manager for United Arts of Central Florida. Although the depressed housing market presents a lot of bargains for home buyers, the downturn in the economy doesn't inspire confidence in job security, she said. She was on a tight budget when the home search began. The film crew returned after she had been in her new home a few weeks. "Everything has worked out fine so far," she said. "House Hunters" is HGTV's top-rated series, averaging 28 million viewers per month. The series takes viewers behind the scenes as individuals, couples and families learn what to look for and decide whether or not a home is meant for them. For nearly three years, "House Hunters" and its spin-off, "House Hunters International," have ranked among the top five programs on the network. Reporter Walt Belcher
To rent or buy? How to weigh it out
West Palm Beach resident and Realtor Laura Pearlman is selling her historic, Spanish-style home, and – gasp – considering renting. It may go against every instinct for a Realtor to tout the benefits of renting over buying, but from about 2005 until just recently, it’s made more financial sense in many markets to rent as housing prices skyrocketed. Now, following the epic housing crash and with interest rates at record lows, economists and financial planners say it might be time to rip up that annual rental lease for a more long-term, at least eight-year, commitment to buy. But the decision often has as much to do with personal circumstance as real estate’s financial ups and downs, and individuals have many issues to weigh when considering the benefits of buying over renting. Of course, it’s also all predicated on whether a potential buyer can even get financing from banks still struggling with bad boom-time loans. In Pearlman’s case, the rigors of keeping up an 84-year-old home have become a burden, and she and her husband eventually want to move west to Wellington where they hope to find a larger piece of land. An unsure market, however, is also a driving force in making the couple renters again. Pearlman said the argument against renting is always “you’re throwing money away” while earning no equity, but she figures there’s no harm in renting for a year to see where the market settles out. “My husband wants to rent because he just doesn’t want to take a chance right now,” Pearlman said. “Look, you can get a nice house for $1,250 a month, no homeowners association payment, no property taxes, no lawn care, no responsibility.” Doing the math Andres Carbacho-Burgos, a Moody’s economist, said there’s little doubt that renting in South Florida was a better bet during the peak years of 2005 and 2006. “What has happened since then is the housing prices have come down by a lot more than the costs to rent an apartment,” he said. To illustrate that, Carbacho-Burgos looks to a price-rent ratio that considers the buy-versus-rent question in a more mathematical way. The ratio is calculated by taking the median cost to buy a home and dividing it by the annual cost to rent. A price-rent ratio less than 20 is generally considered a sign that it is better to buy. For example, if the annual rent on a three-bedroom, one bathroom home is $15,000, and a similar home is selling for $200,000, the rent ratio is 13, favoring buying as the better option. According to Moody’s, the average price-rent ratio using apartment rents in 2006 in Palm Beach County peaked at 31 but was down to 18 in the first quarter of this year. But that number isn’t perfect. Theoretically, the calculation should use home rental rates, which aren’t easily available in a uniform format for specific areas. Also, the 18 ratio is based on using median home prices from the National Association of Realtors, which can be fickle and quick to change depending on the volatility of the market. Carbacho-Burgos said if the S&P/Case-Shiller home price index is used, Palm Beach County’s price-rent ratio today is about 15. The S&P/Case-Shiller index calculates prices monthly using a three-month moving average. It also uses data on properties that have sold at least twice in order to capture the true appreciated value of each home. “I can’t answer the question in absolute terms, but the ratio is much closer to the norm now than at the peak of the housing market bubble,” Carbacho-Burgos said. A more complex evaluation of whether it’s better to rent or buy in today’s market can be completed using one of many online calculators. Most of these calculators consider mortgage rates, down payments, tax breaks and closing costs when figuring the ratio. Some go as far as calculating annual maintenance on a home, monthly rental insurance and your personal rate of savings. At Lendingtree.com, the calculation favors buying a $200,000 home as opposed to renting at $1,100 a month under the following circumstances: the buyer puts 20 percent down on a 30-year loan with a fixed 4 percent interest rate, and plans to stay in the home for at least five years. Thinking long term While the total cost to own the home in the first year far exceeds the rental payments, after five years the net cost to own is about $51,000 compared with paying $66,900 to rent. “You should look at a house as something you want to live in, not a get rich quick thing,” said Barry Rabinowitz, a certified financial planner and principal of BER Financial Group, LLC in Plantation. Rabinowitz recommends buying a home now if a person plans to stay in it for five to eight years. “The days of houses going up in value 25 to 30 percent is not realistic, but neither is the other extreme of them going down that much either,” he said. In July, Palm Beach County’s median sale price for a single-family home was $226,000, an 8 percent decrease from July last year, but down 42 percent compared with the price in 2006 of $390,100. Rabinowitz’s recommendation is also based on itemizing deductions on a tax return, which allows a homeowner to claim mortgage interest and property taxes. The mortgage-interest tax deduction doesn’t eliminate the cost of borrowing money, but it does reduce it. “When you rent a house, nothing is deductible,” Rabinowitz said. How much can be deducted depends on the mortgage interest paid each year. It is also important to consider what your standard deduction is for the year depending on age, marital status and income bracket. For example, the standard deduction for married couples in the 25 percent tax bracket and filing a joint return is $11,400 for 2010. If your mortgage interest was $11,520, for example, you get a slightly higher deduction, but you have to pay $11,520 in interest to receive it. The standard deduction for single filers for 2010 is $5,700. House vs. condo Answers to the rent vs. buy question also vary dramatically depending on whether it is a condominium or single-family home. Peter Zalewski, a principal with Miami research and brokerage firm Condo Vultures, said you can buy an average condominium today in Palm Beach County for about as much as it would cost to rent it. Single-family homes in neighborhoods on the upswing, however, are going to be more expensive in the first several years. “If a buyer is looking at a five- to eight-year hold and understands different neighborhoods, buy today,” Zalewski said. “The likelihood is that single-family homes will recover quicker than a condo.” And contrary to what conventional wisdom might say, Zalewski and Pearlman agreed that owners are not so desperate that they are offering rock-bottom rates on rental properties. Renters should expect rates to go up between 3 percent and 5 percent each year, something that doesn’t happen with a fixed interest rate mortgage. “If a tenant squeezes a landlord when the market is down, when it recovers, that landlord is going to squeeze back,” Zalewski said. Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
$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.
Property tax appeals favor wealthy at expense of everyone else
The annual tax notices going out this month will bring a double whammy of bad news for many Florida property owners – lower values and higher taxes. But a small minority will get a break by challenging the county’s value of their homes, businesses and land. Tax appeals have been pouring into government offices throughout Florida, fueled by the real estate boom and crash and a highly profitable cottage industry of tax representatives. So far this year, Broward and Palm Beach counties have reduced property values by more than $2.5 billion as a result of appeals. The process is available to all property owners, but less than 5 percent typically file appeals in South Florida. When they win, it means higher taxes, less government services or both for everyone else. The Sun Sentinel performed an extensive analysis of appeals in Broward and Palm Beach counties since 2006 and found the system favors high-end businesses and residences. Owners of homes and condos assessed at more than $1 million were four to five times more likely to get a reduction than owners of lower-priced homes. The co-founder of Mattress Giant, Richard Nilsen, challenged the county’s $14 million value on his newly built Weston mansion in 2008 and got it cut in half. The change saved Nilsen $124,000 in property taxes. On the exclusive island of Palm Beach, the wife of disgraced Ponzi king Bernie Madoff got the value of her waterfront estate pared by 9 percent, saving more than $14,000 in taxes. Using a tax rep or agent generally improves the chances of winning an appeal, the Sun Sentinel found. Hired to get the biggest reductions for their clients, reps often work for the well-to-do and charge up to 50 percent of any tax savings they win. The biggest agents file thousands of appeals every year. “The system was set up to correct errors, but the tax reps have turned this into a money-making operation,” said Jeffrey Mann, an appraiser for the Broward County property appraiser. “They send out mass mailings, and it’s become a big, big, big business.” The stakes behind tax appeals have never been higher. Cities and counties depend on property tax revenue to pay for police, firefighters and other services. Many local governments are already battling budget deficits caused by plunging property values from the real estate decline. Every time a tax appeal is successful, the gap widens that much more. Record reductions Property values are set by county property appraisers based on sales from the prior year and other factors such as location and size. The county does not inspect each property every year or take into account the interior of buildings. Sometimes, the property appraiser’s information about a property is factually wrong. Other disputes arise from differences of opinion. Owners can challenge the assessed value and present evidence that their property is actually worth less. If the property appraiser does not agree to a reduction, hearings are held before special magistrates – licensed real estate appraisers who are paid $90 an hour by county taxpayers. Reduction requests, called petitions, have soared in many counties. Property owners are looking for ways to cut their taxes and see more of an opportunity to challenge assessments now, with business down and home prices at or near rock bottom. Palm Beach County reduced a record $1.3 billion in property value last year. “We had the highest number of petitions in the county that we’ve ever had in 2009,” said Property Appraiser Gary Nikolits. Broward is still working through its 2009 appeals and has already knocked more than $1.2 billion off the tax rolls. “It’s double what I’ve seen before,” said Property Appraiser Lori Parrish. The biggest winners are owners of the highest-priced real estate – large hotels, businesses and mega-homes, where even a slight percentage change in value can translate to large tax savings. A disproportionate share of wealthy property owners use the system and therefore win more reductions, the Sun Sentinel’s review of appeals filed since 2006 found. Among homeowners in Broward, Nilsen got the largest reduction, shaving more than $7 million off his nine-bedroom mansion in Weston’s Windmill Ranch Estates. Nilsen and his partners transformed Mattress Giant from a few locations in Florida to a national bedding retailer before selling the company in the 1990s. He contested the county’s 2008 value of $14.2 million. Nilsen presented his own appraisal showing the home was worth less than half that, and the property appraiser agreed to a reduction over two years that brought the assessed value to $7 million. On Fort Lauderdale’s east side, a lawyer helped billionaire Wayne Huizenga, former owner of the Miami Dolphins, save about $125,000 in property taxes through appeals on the value of his estate on the New River and nearby vacant land that he bought for a family member. The waterfront estate belonging to Linda and Doug Von Allmen in the Harbor Beach area of Fort Lauderdale got a $1.6 million value reduction in 2008. In Palm Beach, Ruth Madoff got a break because the lot on her Intracoastal Waterway estate was narrower than the county’s records showed. An attorney for Madoff appealed in 2008, and the property appraiser agreed to a reduction of nearly $900,000 that December, a week before Bernie Madoff was arrested in the nation’s largest Ponzi scheme. The system is skewed toward wealthy property owners because they have the resources to file appeals and know what it takes to make a good case, Nikolits said. “People with more expensive properties can bring to the table appraisal reports. They can bring expert witnesses with them. They’ll hire attorneys,” he said. “It’s just much harder to defend our values against those type of professionals.” Appeals also benefit owners of more modest homes, though they make less use of the system. In Broward, for instance, 5 percent of all homes and condos valued at less than $1 million sought reductions the past three years versus 37 percent of the multimillion-dollar residences. In Oakland Park, more than 350 units in the Lake Emerald condos, each valued at under $200,000, used a tax rep in 2008 and got reductions of about 12 percent. Some of the biggest savings are on commercial properties. Many corporations file tax appeals every year as a routine course of business. In Broward, Home Depot got reductions of more than $11 million since 2006. Hotels knocked a combined $153 million off their assessments and racetracks and casinos had their property values reduced by $57 million. The Westin Diplomat Resort & Spa in Hollywood appealed its 2008 property tax assessment and got a $7.3 million value reduction. In Palm Beach County, the world-famous Breakers Palm Beach got a $24 million value reduction in April. Nikolits said the resort presented evidence that its income and occupancy were down. ‘Making a killing’ “You wouldn’t dream of letting the IRS figure out how much income tax you owe ... so why assume that your property tax assessment is correct?” says the website for Tax Savers of Miami Inc., one of dozens of companies that specialize in representing business and property owners in appeals. Tax reps are unregulated in Florida. Some are lawyers, others have backgrounds in real estate or appraisals, and they often file appeals in multiple counties. Many reps target commercial properties and high-end residences with the most potential for savings. Their arguments can be creative. M.J. Stone is representing the owner of a waterfront home in Fort Lauderdale, arguing that the value should be lower in part because it’s under Interstate 95, where a docked boat could be subject to vandalism from debris tossed from vehicles above. “A car going 70 mph is going to do some damage to a $4 million yacht,” Stone said. Reps typically work on contingency – they’re paid only if they win, and take a cut of the owner’s tax savings, 25 to 50 percent. Tax Savers of Miami files about 15,000 appeals a year, mostly in Broward and Miami-Dade counties, and charges a 35 percent commission, said President Larry Puyanic. He said he’ll represent anyone. “I don’t discriminate against big people, little people,” he said. “I think a lot of my competitors shy away from the small stuff.” Reps often withdraw appeals they believe are not likely to succeed. Because they have a short window to file, many reps pay the $15 filing fee on multiple properties, then decide later which ones to drop. Of the cases they pursued in Broward and Palm Beach counties since 2006, reps won reductions about half the time, the Sun Sentinel found. Nikolits estimates that in Palm Beach County, the top five reps were paid commissions of about $100,000 to $650,000 each, just in 2009. “In some cases, they make an absolute killing,” he said. A better system? A new policy manual and training requirements for magistrates went into effect this year in an effort to make the process more uniform throughout the state. County property appraisers say the Legislature now needs to turn its attention to regulating tax reps. “You have some that come in and lie about the square footage, lie about the rent, lie about the vacancy,” said Dan Hafner, of the Broward Property Appraiser’s Office. “Oftentimes, you don’t find out until after the fact.” Nikolits said tax reps should be treated like licensed appraisers and not be allowed to work on contingency or commission – a suggestion that reps strongly oppose. “It’s anti-democratic, to me it’s Communist,” said Gary Appel, a lawyer with Property Tax Adjusters Inc. “Most people would not be able to hire [...]
Inventory of homes for sale shrinks in South Florida
The number of homes and condominiums for sale across South Florida has steadily declined over the past two years, an encouraging sign for the region’s battered housing market. Still, industry observers worry about a sizable “shadow inventory” of foreclosed homes that could complicate any real estate recovery. Broward County had 19,869 properties on the market in July, down 35 percent from July 2008, according to a multiple listing service report compiled by the Keyes Co. Palm Beach County’s inventory of homes and condos slid 31 percent to 23,947 during the same period. The supply of new homes being built in the two counties also has decreased sharply in the past two years, said Brad Hunter of the Metrostudy research firm in Palm Beach Gardens. In 2005, sellers rushed to list their homes, hoping to fetch record prices during the housing boom. But the frenzy led to a collapse and prices plummeted. Thousands of foreclosures and short sales have clogged the market ever since, giving buyers plenty of choices and little reason to pay top dollar. “You won’t get price appreciation until you get the inventory in balance,” said Mike Pappas, president of Keyes. “We’re making great strides.” Declines in homes for sale already have helped stabilize prices recently. The median price in Broward rose 7 percent during April, May and June to $209,800 from a year ago, the Florida Realtors said Wednesday. Palm Beach County’s median increased at the beginning of the year but dipped 2 percent in the second quarter to $235,500. Pappas said his firm is handling fewer transactions involving foreclosed homes, and he thinks that’s an indication the foreclosure market has peaked. But some analysts disagree, pointing to a recent surge in homes repossessed by lenders that is pushing inventory levels higher in recent months. Banks are on pace to take back nearly 50,000 properties in Palm Beach, Broward and Miami-Dade counties this year, according to CondoVultures.com, a real estate consulting firm. Many lenders are careful to hold off listing those properties for sale all at once to prevent widespread price declines. Sean Snaith, an economist at the University of Central Florida, expects more foreclosures to result from homeowners losing their jobs. And he said the sagging labor market likely will discourage potential homebuyers. “You have to have a healthy labor market as a foundation for a healthy housing market,” Snaith said. Another concern is the expiration of the federal homebuyer tax credits. Buyers who signed contracts by April 30 and close by the end of September are eligible for the $8,000 and $6,500 tax rebates. But people who put homes under contract after April 30 don’t qualify. While pending sales still are robust, demand for homes is expected to wane in the second half of the year. Fewer sales would keep the supply of homes elevated and ultimately hurt pricing, said Chris Lafakis, an economist covering Florida for Moody’s Economy.com in West Chester, Pa. “Our forecast is that ... demand won’t be strong enough to work off the excess inventory fast enough to stave off future price declines,” Lafakis said. “But by this time next year, the worst of the declines will be over.” Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
Mortgage assistance group’s loan rates are low but take effort to get
In addition to helping homeowners modify their loans, the Neighborhood Assistance Corp. of America will offer its own low-interest mortgages during its Aug. 27-30 West Palm Beach event. The no-money-down, zero-closing-costs loans are meant for low- to moderate–income families, but come with caveats and application requirements that go beyond traditional mortgages. On Friday, the group’s website was advertising a 4 percent, 30-year fixed-rate mortgage. To qualify for NACA’s guaranteed fixed interest rate of 1 percent below the prime marketplace, prospective borrowers must participate in workshops where they will be evaluated for their competency as homeowners. A 2009 report from the conservative-leaning Capital Research Center says applicants may be required to show over a three-month period that they are able to save the difference between their current rent and their desired mortgage. Consumers with poor credit may be asked to submit budgets showing they are changing spending patterns and have begun to repay delinquent loans. “How long the process takes depends on the borrower,” the 2009 report says. “Those with a history of financial difficulty will face more scrutiny.” Once granted a NACA loan, borrowers must pay a monthly $50 membership fee for between five and 10 years, and participate in at least five NACA activities each year. Also, borrowers must live in the home they purchase. To ensure that happens, the group takes out a lien on the property for the life of the loan. “Serious actions and remedies are in place to prevent the abuse of the NACA program,” the group’s website says. NACA is most recently known for its nationwide blitz of loan modification programs. But the organization’s 1988 founding was done in part to stabilize neighborhoods by giving families a chance to own their own homes. “First and foremost, we’re a nonprofit mortgage broker,” said NACA spokesman Darren Duarte. For more information about NACA’s event at the Palm Beach County Convention Center and to register, go to www.naca.com. Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Lawson: Repeal septic tank requirement
A bill (SB 550) passed earlier this year meant to protect springs, in part by requiring septic tank inspections every five years, is too expensive in a tight economy and should be repealed, Sen. Al Lawson said Tuesday. Lawson (D-Tallahassee), a candidate for Congress, sent a letter to Senate President Jeff Atwater (R-North Palm Beach) asking that legislation to repeal the requirement be brought up if lawmakers return later this year to address economic issues. Lawson claims the new septic tank inspections could set homeowners back as much as $500 every five years, though backers of the springs protection bill say the law will cost much less. “Tallahassee simply cannot impose such a high financial burden on homeowners at this time,” Lawson said. “To do so would likely push a great many of them over the edge.” The sponsor of the septic tank legislation, Sen. Lee Constantine, said the inspections, which will be phased in, would cost less because of the requirement itself – if a greater number of homes must have an inspection, the number of companies will expand and prices will become more competitive. Constantine believes a number of companies will aggressively offer deals to get inspection business. Beyond cost, Constantine says Florida needs the inspections to protect the state’s water supply from pollution. “We will be protecting Florida waters, that is something people are forgetting about – so we continue to have economic development and growth,” said Constantine, R-Altamonte Springs. He said the measure passed earlier this year and signed into law by Gov. Charlie Crist was a consensus product pushed by environmentalists but agreed to by a wide range of constituencies. Even Lawson voted for the bill, which passed the Senate 34-4. “We got every group that could possibly be affected by this and got them to agree that this septic tank inspection program was extremely important,” Constantine said. “When you get the home builders and the Sierra Club to agree, (that’s consensus). This was landmark legislation.” The idea was vetted, and the cost issue thoroughly explored. “We had 12 or 14 different public hearings all over the state of Florida. It went through a number of different committees including the full appropriations committee,” Constantine said. The consensus ended up that “the economy of scale would dictate that the cost would go down.” Constantine, who is leaving the Legislature, also argued that without additional protections for springs, the federal Environmental Protection Agency might eventually make the requirement anyway – or impose more expensive mandates. “We have the EPA over us and very onerous restrictions could be placed on us,” Constantine said. “The was clearly something that would help us in our relationship and working with the EPA.” There are 2.6 million known septic tanks in Florida, and the Department of Health said at least 15 percent aren’t adequately keeping sewage out of groundwater. Constantine said only 17,000 were inspected last year. The new requirement would be phased in starting next year, but many people wouldn’t be required to have an inspection for a few years. Lawson said he worries that most people on septic systems live in rural areas, and many of them tend to be poor. “We hear the Republicans talking a lot about government ‘living within its means,’” Lawson said. “They need to stop forcing Florida homeowners to live beyond theirs.” Legislative leaders have said they intend to call a special session to deal with financial issues that have arisen out of the Gulf of Mexico oil spill, though there has been no definitive date set. Source: News Service of Florida, David Roys
South Florida home values see nation’s biggest drop in a year
South Florida home values suffered the worst decline of 25 large metropolitan areas in the second quarter of this year, falling 15 percent compared with 2009, according to a national real estate report. The data, released Monday by analysts at Zillow, found that the median home value in Palm Beach, Broward and Miami-Dade counties fell to $146,500, down nearly 7 percent from the beginning of this year and a whopping 52 percent from housing’s peak values in 2006. Nationally, median home value, including townhomes and condominiums, dipped 3.2 percent from the same time in 2009. Zillow’s chief economist, Stan Humphries, called Monday’s study a “mixed bag,” with several areas in California seeing a continued increase in values. In Los Angeles, home values jumped 5 percent compared with 2009. San Diego homes saw a 7 percent increase. “Markets in other parts of the country, like Miami and Phoenix, are not yet showing signs of reaching a bottom in home values,” Humphries said. “High supply continues to be a challenge in states like Florida and Arizona.” A separate report released Monday by analysts at Miami-based Condo Vultures showed a 4.6 percent increase in housing inventory in South Florida since May, with 68,254 single-family houses, condos and townhomes on the market. Humphries predicts home values will bottom out nationally during the latter half of this year. “But we continue to be cautious about the impact of declining home sales,” Humphries said. The Phoenix area showed a 12 percent decline in median home value compared with last year, while Detroit values plummeted 14 percent. The Zillow Home Value Index measures the median value of all homes, not just sales. In Palm Beach County, values for single-family homes showed only a 1 percent decline, while Martin and St. Lucie had declines of 5 percent and 4 percent, respectively. South Florida’s homes are treading water in one measurement, managing so far this year not to sink further into negative equity. Zillow found that 44 percent of South Florida single-family homes with mortgages are underwater – real estate slang for owing more on a loan than the home is worth. That’s about the same percentage as the beginning of the year and just below the second quarter of 2009, when 47 percent of homes were underwater. In the Treasure Coast, 55 percent of homes with mortgages were underwater during the second quarter of this year, compared with 56 percent earlier in 2010. Nationally, 21.5 percent of homes with mortgages had negative equity in the second quarter. Humphries said foreclosures and bank takeovers help clean out the inventory of negative equity homes, but the typically lower sale prices of those homes also continues to weigh down values of neighboring properties. Peter Zalewski, a principal for Condo Vultures, is more optimistic about Florida’s market turning around even with rising inventories. He believes financing opportunities are increasing, meaning more people will be able to buy. “I think that 2009 will be the year most people realize was the bottom,” he said. “I would be surprised if there was another big increase in underwater homes.” Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
