April 3, 2013
By Sarah Parr
The real estate industry and the consumer economy have some recent, positive news. CoreLogic published a report last week indicating that the shadow inventory of homes is down 28 percent from when it peaked in 2010. CoreLogic determined the shadow inventory figure by calculating the number of very delinquent homes, properties in foreclosure and homes held as REOs (real estate-owned) by mortgage servicers, but are not yet listed on multiple listing services (MLS).
As of January 2013, the shadow inventory includes 2.2 million housing units, or in real estate terms, nine months of supply. Florida currently has 16 percent of the total shadow inventory in the United States.
Defining the shadow inventory
In real estate, the shadow inventory refers to all of the homes held by banks, but not offered for sale, and homes that people are waiting to put on the market when prices increase even more. Vacant houses in some stage of foreclosure, known as “zombie foreclosures,” also comprise about half or more of the shadow inventory. Many homeowners anticipate foreclosure and move out of the house, leaving it vacant for a period of time.
What creates the shadow inventory?
The finalization of the National Mortgage Settlement in April 2012 caused the shadow industry to grow because of a 59 percent spike in properties in some stage of foreclosure, according to RealtyTRAC. Because of the settlement, banks have been required to work with homeowners on loan modifications, and their homes are kept off the market. The states in which the shadow inventory grew are mostly judicial process states since these states are more prone to having court backlogs of foreclosure cases. Foreclosure cases in these states typically take much longer to process.
The effects on real estate
Real estate professionals initially feared properties in the shadow inventory would be listed all at once and depress surrounding property values. Reuters reported that properties in the shadow inventory have been listed in miniature spurts, though, and the small inventory has actually caused an increase in prices in some areas. Investors have also helped mitigate potential flooding of the market by buying up some of the shadow inventory, according to a TIME article. These investors are a part of firms that buy out distressed real estate when it first hits the market. They often beat individual buyers with cash offers, sometimes before properties are listed.
All the same, a shadow inventory can create ambiguity for homeowners looking to sell their homes and for predicting when a local market can expect full recovery in the housing market. The shadow inventory can also affect overall housing inventory data.
Sarah Parr is a Central Florida-based writer who blogs about foreclosure issues for Altamonte Springs foreclosure lawyers.
March 8, 2013
Today I had to explain to a new seller of mine that you cannot toss a case or two of wine into a sinkhole and call it a wine seller.
March 6, 2013
NEW YORK – March 6, 2013 – A very tight mortgage lending environment “promises improvements this year as the drivers of tough credit standards reverse,” according to Moody’s Analytics ResiLandscape Report. Still, lending will remain tight by historical standards, the report notes.
Tight underwriting conditions have been one of the main obstacles to a housing market recovery. But the credit agency says that those conditions began to ease somewhat this year and likely will continue to do so.
“Rising house prices give lenders more breathing room to extend credit,” the analysts at Moody’s noted.
Over the past year and a half, large lenders have loosened up or, at least, held standards stable on prime loans for mortgage originations, according to the Survey of Senior Lending Officers.
Aiding lenders’ confidence is that mortgage delinquencies have fallen to pre-recession rates.
“Being right-side up on the mortgage improves a borrower’s credit profile. It also lowers the risk of default and increases the likelihood of trade-up buying,” according to Moody’s report.
Mortgage supply will remain constrained, but “improved consumer credit quality combined with steady growth in jobs, low mortgage interest rates and modestly rising house prices makes it clear that more households will be able to qualify for a mortgage,” Moody’s said. “Greater credit availability will, in turn, help drive stronger home sales and stronger price appreciation.”
Source: “Slight opening of credit spigot aids housing outlook,” HousingWire (March 4, 2013)
March 5, 2013
BRADENTON, Fla. – March 5, 2013 – As first time buyers begin coming back into the real estate market, we take a look at what is going on in the mortgage industry since last year’s $25 billion settlement with the country’s five largest mortgage lenders.
Under the settlement, mortgage lenders agreed to make unprecedented changes in how they service mortgage loans and handle foreclosures. With the backing of a federal court order and the oversight of an independent monitor, the agreement created dozens of new consumer protections, making the servicing process substantially more transparent.
The protections range from requiring a single point of contact for borrowers, establishing case review and paperwork processing requirements and deadlines, and restricting practices such as “dual tracking” in which banks pursue a loan modification while simultaneously pursuing a foreclosure.
The $25 billion settlement was with the country’s five largest mortgage lenders including Bank of America, Citi, JPMorgan Chase, Wells Fargo, and Ally/GMAC. The settlement raised hopes for a real estate recovery. It’s especially urgent in Florida, the state that leads the nation in foreclosures yet which also posted strong across-the-board improvements in 2012.
If you have or want a home loan or refi from Bank of America in Florida, the person ultimately responsible is 54-year-old Tampa-based senior vice president Sandy Robertson. The Bradenton Herald’s Stephen Frater caught up with Robertson on Friday for an exclusive interview with the banking giant’s go-to-guy for mortgages in the Sunshine State, “the nation’s most troubled real estate market.”
Q: What is Bank of America’s portion of the housing debt market?
A: The bank is the fourth largest bank in the country and has the largest share of the market in Florida.
Q: Currently in Florida, 11 percent of the housing stock is distressed by some definitions, and 40 percent of the market is underwater. Some underwater owners take a calculated decision to walk away and take the credit hit. Does that concern you?
A: Much of the distressed housing stock is due to a backlog in the foreclosure process. The bank is working more on proactive short sales and CACs are located in Tampa Bay to help people make the transition easier. People should contact their lender and talk with them when they are underwater. I have a more bullish outlook on the topic. The bank has been able to do more proactive short sales and I’m excited to see the appreciation in home prices. The numbers are trending in a new direction.
Q: Recent “bank-owned” data shows that 45 percent of homeowners believe owning is more affordable than renting. What is the buy-versus-rent calculus in the Florida market following the great recession?
A: The rise in rents relative to home prices may encourage buyers to enter the housing market. Interest rates are also at historic lows, and affordability is high due to lower home prices and low interest rates. Rental prices are dramatically increasing in the Florida market which is another reason why purchasing a home is a more affordable option in many cases.
Q: Please describe Bank of America’s program for low-to-moderate income buyers.
A: The bank offers quarterly programs and seminars in the market, which educates buyers on the home-buying process. The goal is to provide a realistic view of a buyer’s true budget versus what they think they can afford. A buyer should focus on paying themselves first and save for a down payment. Customer Assistance Centers (CAC) are also available in the market to help find resolutions.
Q: With the recession and many people taking hits to their credit score, what is the “new” normal?
A: The standard has not changed much except what we are seeing now is more documentation being needed in terms of income earnings and bank statements. The loan process has changed over the last few years – it takes longer now. Borrowers must be prepared to fully document income and expenses.
Q: Fifty-percent of deals in the Miami market were cash-only in 2012. Is this a new trend? Will it continue?
A: This is not necessarily an increase or something new. We’ve been seeing this in the market over the past two years. In 2012, there was a range of 30-70 percent of cash buyers in any market depending on where in the state they were located.
Q: How is the prominence of cash buyers affecting first-time homebuyers?
A: We believe over time we will see less cash buyers as inventory continues to shrink and new development emerges. The best thing for a potential home buyer to do is to work with a lender upfront. It is important to note that more construction will go into the first-time homebuyer market going forward.
Q: What can a potential buyer with a credit score of 600 and a regular job expect? Can this person buy a home?
A: The best thing for someone in this situation to do would be to come in and talk with a lender. We may have some work to do, but they should come in and have a talk with us.
Q: President Obama touched on difficulties people are having with refinancing and mortgage availability during his State of the Union address. How will this be fixed?
A: The relation of loan to value is the biggest issue right now, along with unemployment. The unemployment rate is even higher in Florida. Job growth will be critical in fixing the current state of housing and refinancing options. The state of Florida had a rate of about 50% of the market being underwater homeowners; this has now dropped to approximately 38%. Through the HARP Program (a federal program for homeowners not behind on mortgage payments but unable to get traditional refinancing because the value of the home has declined, they may be eligible to refinance through the U.S. HUD Home Affordable Refinance Program with a new, more affordable, more stable mortgage.) Bank of America has been able to provide help to many underwater homeowners with HARP.
Q: What are some of the bank’s Web-based tools used to educate homeowners or would-be buyers?
A; I would refer your readers to our online Home Loan Guide. It is a comprehensive tool for potential home buyers and current homeowners on mortgages, refinancing, and home equity. It is located at, https://www.bankofamerica.com/home-loans/home-loan-guide.go.
Much of the information used in our local market seminars is also included in this guide.
Copyright © 2013 The Bradenton Herald (Bradenton, Fla.), Stephen Frater. Distributed by MCT Information Services.
March 4, 2013
FORT LAUDERDALE, Fla. – March 4, 2013 – Melvin Montesino endured the full brunt of the Great Recession: A lost job, then foreclosure and even bankruptcy.
Since then Montesino has been on the rebound, working two jobs while improving his damaged credit. “It wasn’t easy. Some banks even turned me down for a prepaid credit card,” he said.
But his efforts have paid off. Despite the foreclosure and bankruptcy, he will close on a three-bedroom, two-bath home in Coral Springs later this month. “It’s pretty spacious,” he said.
The South Florida housing market is filled with thousands of others trying to start over after the recession left them with severe dings to their credit. Many are making good progress. In fact, South Florida is second only to the Los Angeles metro area in the number of people who have improved their once sub-prime credit scores in the year that ended Sept. 30, according to Equifax, the national credit reporting agency.
Some 40,000 people in Broward, Palm Beach and Miami-Dade counties raised their credit scores to 620 or above in a year, removing them from the Subprime/Risky category that meant they had to pay the highest interest rates – if they could get credit, Equifax found. That netted a 3.6 percent decline in the number of South Floridians with bad credit, a substantial improvement.
“People are getting back on their feet and improving their credit,” said Howard Dvorkin who founded the Fort Lauderdale-based nonprofit, Consolidated Credit Counseling Services. More people are optimistic about starting over – calls for help in improving low credit scores are up about 25 percent from just a year ago, he said.
In January, consumers in the three counties had an average credit score of 645, just three points below the national average, the consumer website CreditKarma.com reported.
Many South Florida lenders are trying to help out. Deerfield Beach senior mortgage specialist Adam Cohn said his company, The Mortgage Firm, provides free counseling to help people improve their credit scores so they can better qualify for a home loan.
Cohn, who helped Montesino get a loan for his Coral Springs house, said some South Floridians just need a little nudge, such as encouraging them to pay off credit cards with balances less than $500 to boost their credit score.
One woman took his advice and recently raised her score 30 points to 650. That got her a conventional loan for a home in Davie, Cohn said, a loan she otherwise would not have been eligible for.
Cohn said he also was able to help a man qualify for a loan on a Boynton Beach house after improving his credit score despite filing for bankruptcy five years ago.
“He’ll be closing in the next couple of weeks,” Cohn said.
Some who were forced into bankruptcy or a short sale of their home because of extenuating circumstances beyond their control – and not because of overspending – can qualify for a mortgage in as little time as 24 months, said secondary lender Freddie Mac spokesman Brad German. Those who are foreclosed on have to wait longer – at least three years – to get a Freddie Mac loan, German said.
In Parkland, contractor Ken Viviano sees his recent truck loan from Miramar-based Tropical Financial Credit Union as the start toward rebuilding his damaged credit and eventually buying a new home. He now is trying to short sale his Parkland home that he can’t afford.
“Life was good for many years. Then someone flipped the switch,” Viviano said. Large construction companies could not even pay his company for assignments already finished, Viviano said. “That wiped out my savings and caused me to go into bankruptcy,” he said.
But now the economy is better, he said. Viviano said he and his workers are concentrating on individual homeowners’ kitchen and bathroom remodeling projects.
He is grateful Tropical Financial gave him a chance.
Credit union staffers are aware of the financial trauma that South Florida went through and are willing to take a risk on members who are working again and have the money to pay on debts, said Tropical Financial’s chief lending officer, Helen McGiffin. “We’ll look at their alternate payments, such as utility bills, to see if they have been paying.”
To get a mortgage on the Coral Springs house, Montesino said he was able to improve his credit score to above 700. His break: A bank agreed to give him a prepaid credit card. He said he paid that and other bills faithfully and in the last two years was able to get other credit.
“It was pretty rough in 2008,” said Montesino who has since gone on to work in air conditioning and as a courier. “But you keep working hard.”
Credit score levels
A credit score reflects your creditworthiness to lenders. Increase your score by paying bills on time; using no more than 30 percent of your available credit; obtaining your credit report and disputing errors. Here’s what the scores mean:
720-850 (Excellent) – Earns the best financing terms.
700-719 (Very Good) – Favorable financing.
620-699 (Average) – Qualifies for most loans at higher interest rates
500-619 (Subprime/Risky) – Highest interest rates, credit uncertain.
Copyright © 2013 the Sun Sentinel (Fort Lauderdale, Fla.), Donna Gehrke-White. Distributed by MCT Information Services. Staff writer Richard Burnett contributed to this report.
February 26, 2013
WASHINGTON (AP) – Feb. 26, 2013 – U.S. new-home sales jumped in January from the previous month to the highest level since July 2008, a sign that the housing recovery is accelerating.
The Commerce Department said Tuesday that new-home sales rose nearly 16 percent in January to a seasonally adjusted annual rate of 437,000. The percentage increase was the largest in nearly 20 years. And December’s sales were revised higher to 378,000 from 369,000.
Steady job creation and near-record-low mortgage rates are spurring more Americans to buy houses. Sales of previously occupied homes rose to the highest level in five years last year.
At the same time, the number of previously occupied homes for sale is at a 13-year low. That shortage creates more demand for new homes. Builders began construction on the most houses and apartments in four years last year.
The supply of new homes for sale was unchanged last month at 150,000. That’s barely above August’s total of 143,000 – the smallest supply of new homes on records dating back to 1963.
At the current sales pace, it would take just 4.1 months to exhaust the number of new homes for sale, the lowest in eight years. Low inventories should encourage more construction.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Homebuilders.
The increase in home building has helped boost construction hiring. The industry has gained 98,000 jobs since September, the best stretch since the spring of 2006.
Still, the increases in new-home sales are coming from depressed levels. Sales plummeted to a record low in 2011. And sales are still well below the 700,000 annual level that economists consider healthy.
The biggest gain in new-home sales was in the West, where they soared 45.3 percent. The supply of previously occupied homes in that region has fallen sharply. Sales jumped 27.6 percent in the Northeast, 11.1 percent in the Midwest but only 3.2 percent in the South.
A separate report Tuesday showed that home prices accelerated in December. The Standard & Poor’s/Case-Shiller 20-city home price index rose 6.8 percent in December compared with the same month a year earlier. That’s up from November’s 5.5 percent gain over the previous November.
Rising home prices can fuel the housing recovery by encouraging people to buy before prices increase further. They can also bring more sellers off the sidelines.
Higher home values also make homeowners feel wealthier, building confidence and encouraging more spending. And banks are more likely to provide mortgage loans if they are confident that home prices are rising.
AP Logo Copyright © 2013 The Associated Press, Christopher S. Rugaber, AP economics writer.
February 21, 2013
NEW YORK – Feb. 21, 2013 – Short sales are increasing this year, and these transactions can take up to three times longer than a traditional transaction. A lot can go wrong in that timeframe.
These are the most common delays, according to a recent article by George “Gee” Dunsten, a real estate broker and president of Gee Dunsten Seminars.
Title issues: Be sure to do a title exam at the beginning in order to identify all individuals on the deed and mortgages – and determine all lien holders.
Lack of communication with the lender: Lost documents and misunderstandings commonly cause delays. Make it a habit to follow up with the mortgage servicer twice a week to avoid avoidable problems.
Delaying the start: Some short sales don’t begin until a contract to purchase has been initiated, but this can add up to two extra months to the process. The lender won’t even look at a buyer contract until a seller candidate for a short sale is approved and the market value has been determined, Dunsten says.
Incomplete packages: Make sure you carefully submit all documents completely and accurately. Submitting incomplete packages is another common culprit of delays. All homeowner financial information needs to be kept current and forwarded to the servicer every 30 days, says Dunsten.
Source: “Avoiding the Dirty Dozen Barriers to Short Sale Success,” RISMedia (Feb. 20, 2013)
© Copyright 2013 INFORMATION, INC. Bethesda, MD (301) 215-4688
February 18, 2013
ORLANDO, Fla. – Feb. 18, 2013 – Given the improvement in local and state residential real estate demonstrated by last week’s 2012 Florida Realtors statistics, there’s a lot of positive buzz, and possibly a bit of wishful thinking taking place among would-be sellers, Realtors, mortgage brokers, appraisers, developers and contractors.
But a reality check still shows a murky future: Up to a tenth of Florida homes, and almost a fifth of Manatee-Sarasota area homes are in some state of distress, raising concerns that a tsunami of bank sales could increase inventory, depress prices and lengthen closing times for residential sales in 2013 or even longer.
That view is “overly pessimistic,” said Florida Realtors chief economist John Tuccillo. But, he concedes, Florida has “a third of the nation’s ‘shadow inventory,’ a term used to define homes more than 90 days delinquent, or already in foreclosure, and that is very, very high.”
After the misery and displacement of the Great Recession, everyone, including President Obama, wants to believe that a broad-based real estate recovery is well and truly under way. In his State of the Union message, Obama announced that “the housing market is finally healing from the collapse of 2007. Home prices are rising at the fastest pace in six years, home purchases are up nearly 50 percent and construction is expanding again.” So far, so good.
But then, Obama put his finger right onto the tricky bit when he said, “Even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected. Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it.”
Banks and mortgage lenders – many of whom received federal assistance to the tune of $700 billion in the controversial 2008 Troubled Asset Relief Program (TARP), which was designed to address the subprime mortgage crisis – are simply not lending to would-be buyers.
And maddeningly, sellers, frequently the very same banks themselves, clearly prefer cash buyers to avoid burdensome, messy and uncertain mortgage applications, and all-but-frozen secondary mortgage markets.
In fact, the big banks and other financial institutions that, in the heyday of mortgage madness, shoveled money out the door to “anyone with a heartbeat who could also fog a mirror,” are today part of the obstacle to a sustained real estate recovery, says Jack McCabe, CEO of McCabe Research & Consulting, a Florida-based real estate and economic analyst.
He pointed to the February 2012 joint state-federal settlement with the country’s five largest mortgage servicers Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, in which roughly $25 billion in relief was earmarked for distressed borrowers and various local and federal jurisdictions.
“Since the lawsuit has been settled, those banks are no longer holding back on foreclosures, which is one reason why real estate inventory levels were limited, and why prices rose in 2012,” said McCabe.
“Of the 475,000 completed Florida foreclosures since 2006, banks, realty funds and other financial players still hold an estimated 200,000 housing units,” said McCabe. That is roughly equivalent to the total number of 2012 statewide single-family home sales as reported on Monday by the Florida Realtors.
“There are currently 377,000-plus open foreclosures in Florida state courts, and 80 percent of them will become distressed transactions in the coming two to three years,” McCabe estimated. “The remainder will likely get loan modifications and possibly some relief from the lenders.”
But that is the tip of the iceberg, says McCabe.
“Another 550,000 additional Florida homeowners are 90 days-plus delinquent and thus subject to future foreclosure filing,” he said. “Taken together, there are 1.1 million distressed residential properties in the state.”
Given that the U.S. Census shows Florida has 9 million housing units in total, that means about 11 percent of the state’s housing stock is experiencing some level of distress.
The 11 percent distressed figure sounds “entirely plausible” to Anne Ray, Florida Housing Data Clearing House manager at the Shimberg Center for Housing Studies at the University of Florida, the official repository for state housing data. Ray estimated more than 320,000 open foreclosures statewide, close to McCabe’s figure.
Ray also pointed out that the Manatee-Sarasota MSA, one of the state’s best performers in sales increases, “had a foreclosure rate of 13.77 percent as of September 2012, and a ‘pending’ rate of an additional 3.36 percent.” Taken together, it means more than 17 percent of the area’s homes are in some state of distress.
But Florida Realtors argue that those statewide figures might be double-counted.
According to Sept. 30, 2012, estimates from CoreLogic, a leading provider of real estate and financial data, 562,664 homes have mortgages delinquent by 90 days or more, 389,149 are in foreclosure and 36,284 are REO (Real Estate Owned) loans, property in the possession of a lender as a result of foreclosure, says Florida Realtors research economist Brad O’Connor.
“Loans that are counted in foreclosure and REO estimates can also be counted in the 90-day plus delinquency estimate, so it would be erroneous to add them together to obtain a count of distressed loans,” O’Connor said. “Unfortunately, the statistics we receive from CoreLogic do not provide us with any counts of how many loans are both 90-plus delinquent and in foreclosure/REO status.”
One reason many banks are not lending is that with undigested and often unsavory inventory in their bellies, many may be at or near the regulatory threshold for the portion of their portfolios dedicated to residential lending, said McCabe.
Charles “Charlie” Brown III, chairman and CEO of Insignia Bank, a Sarasota-based community bank which includes Manatee in its core market, says “there’s a big difference between what the large institutions may be contemplating, and what’s going on at locally owned and operated community banks, where I’m seeing a flood of portfolio lending nationwide.”
“Insignia is making portfolio loans, typically five- to 15-year fixed mortgages, has excess capacity and could double its current mortgage portfolio on top of its total of $113 million, 200-plus loan portfolio,” Brown said.
A portfolio mortgage is one that the bank itself holds to maturity, as opposed to secondary mortgages that are usually sold to government-sponsored enterprises, including mortgage giants Fannie Mae, Freddie Mac and others. That secondary market is where the squeeze, and most of the money and problems are, says Brown. He’s in a position to know, since he recently completed his second two-year term as one of 14 members of the Federal Deposit Insurance Corp.’s Community Bank Advisory Board in Washington, D.C.
Brown said that getting loan approvals in the secondary market where the GSE’s set the base standards is an ever-shifting and increasingly difficult process.
“They are continually tightening, tweaking and revising performance standards,” Brown said. “It’s very difficult to get a ‘conforming’ GSE mortgage and many banks have thrown up their hands altogether. I’m sensing both tension in the GSEs, as well as political pressure.”
But real estate attorney Anne Weintraub of Sarasota’s Band Weintraub says the larger banks are tired of being sued and are starting to cooperate with homeowners.
“They are tired of spending monies on attorneys to fight borrowers and realize owning a home is not ideal,” she said. “Most homes are abandoned, left in a state of disarray and the volume of abandoned homes is so enormous some banks don’t even realize they own the homes.”
In either scenario, banks can be both lenders and sellers, and typically hire the appraiser.
“Until the banks get the foreclosures off their books, they are sellers who want to get the best possible prices,” McCabe said. “Due to the legal wrangling, foreclosure sales in 2012 were basically ‘on the shelf’ while banks saw prices increasing, so now, after the settlement in a ‘perceived recovering market,’ I’d expect foreclosure filings and bank sales to accelerate this year and next.”
Bank-retained private appraisers also can be part of the problem, he contends, if their low valuation compared to the contract sales price inhibits lending.
Uncertainty surrounds issues
Additional flies in the recovery ointment are state and federal issues that may have adverse impacts on sustainable realty recovery.
In Tallahassee last week, a bill designed to speed up the foreclosure process passed the Florida House Civil Justice Subcommittee on a 10-3 vote. Foreclosure monitoring service RealtyTrac reported that “House Bill 87 allows third-party lienholders to start foreclosure proceeding and rushes final judgment of foreclosure if a homeowner doesn’t file a defense. The bill aims to streamline and expedite the foreclosure process.” RealtyTrac termed the bill a controversial piece of legislation in Florida – the state that leads the nation in foreclosure filings.
Immediately, more than a half-dozen law firms and attorneys aligned to defeat the bill, including St. Petersburg’s Matt Weidner, Mark Stopa and Charles Gallagher, a member of Florida Consumer Justice Advocates, a self-funded consumer lobbying group.
“Our fear is the current due-process rights of homeowners are being further diluted by the provisions of HB 87 and if passed, this bill would further handicap homeowners from defending their foreclosure and provide banks with little judicial resistance from the speedy foreclosure of their homes,” said Gallagher.
Tuccillo, the Florida Realtors’ chief economist, says the bill has “its pros and cons, and while I’m not a raving fan of HB 87, I would like to see it passed.” He called the slow judicial process a primary contributing factor to the huge build-up of the state’s shadow inventory.
“It’s been a long, long time” that banks have held onto the troubled mortgages, and “it’s time to get all this garbage out of the way,” he said.
In Washington, the Consumer Financial Protection Bureau – the agency that holds primary responsibility for regulating consumer protection with regards to financial products and services in the United States – is viewed by some as part of the problem.
The CFPB, in its attempt to protect consumers, is creating a “bigger mess” as compliance and risk escalate with every new rule they put out, Charlie Brown says. CFPB sends out revised guidelines “almost every 30 days that are scaring off mortgage lenders due to litigation and compliance risk.” The situation with the secondary market and the CFPB is “extremely difficult, and very much worries me,” said Brown.
It could get uglier.
“About 40 percent of Floridian mortgage holders who are current on payments are nonetheless underwater,” meaning that their current mortgage balance is greater that the market value of their property, says McCabe. That portends an expanding horizon of potentially distressed properties coming onto the market.
Veteran Florida real estate analyst Lewis Goodkin agrees.
“There used to be a stigma attached to foreclosures, but no more,” Goodkin said. “I know people making good money, professionals, whose homes are underwater and they have decided to simply stop making payments and put the money into the bank instead.
“In one case, fully 21 months after not getting payments, the bank finally foreclosed. When banks unload property, they are so leery of mortgage availability that they only take cash offers, which means they sold at prices 20 percent lower than they normally could have,” he said.
Those buyers are either large specialized Wall Street funds that have been snapping up distressed property, or foreign buyers.
“Over half of the (2012) transactions in the Miami market were cash-only deals, which means that a normal person with a steady job is unable to compete, or even to buy at all,” Goodkin said.
So what do the numbers mean?
“Bottom line is that, if you only pay attention to Realtor data, everything looks great,” summarized McCabe. “However, if you remove the blinders and consider underlying financial market activity and data, there’s still trouble in paradise and it’ll take another two to three years to achieve a normal healthy real estate market.”
Goodkin echoes that time frame.
“It’s not a very dynamic situation and we’re not out of the woods yet, and probably won’t see a normally functioning market until mid-2014, unless we have a depression, God forbid,” he said.
Realtors and hopeful sellers and buyers who cheered 2012’s rose-tinted Florida housing report as an indicator of better things to come in the short term are “smoking Hopium,” said McCabe, adding tongue-in-cheek that he “trademarked the term” for the duration of the Great Recession.
© 2013 The Bradenton Herald (Bradenton, Fla.), Stephen Frater, The Bradenton Herald. Distributed by MCT Information Services
October 8, 2012
#1 – It protects YOU from rising property taxes
Did you know that under Florida property tax law, your property tax bill can go up, even if the value of your home goes down? It’s true. Every year your home’s taxable value is re-assessed. That value can increase by as much as 3% every year, and that affects how much you pay in property taxes, even if your millage rate doesn’t change.
But what if the real value of your home stays the same, or even goes down? Shouldn’t your assessed value go in the same direction? Not as the law is written. Even if your home’s value goes down, your assessed value can still increase by up to three percent. That’s right – your millage rate can stay the same or even go down – and your property tax bill will still go up.
It’s called recapture, and it’s an unfair tax trap that Amendment 4 will allow the legislature to do away with if supported by the people of Florida. It’s just the right thing to do, and it’s one way we can help many Floridians keep more of their precious assets.
#2 – It helps small businesses and renters
Do you own a small business? Do you have a second property that you rent out to a family or local business? Are you a renter? Then you know all about the taxes you pay without a homestead exemption. (Yes renters, you pay it too – your landlords pass it on in your rent.) Under current laws, your assessed property value can go up by as much as 10% each year!
Amendment 4 helps non-homestead property owners by lowering that cap to 5% rather than 10%. The result will be lower property taxes over time, and a more predictable property tax environment for businesses.
That’s great for Floridians who are already getting their assets taxed off, and it can help attract more investment in vacant properties that were sold off during the recession. That will help boost property values and attract more jobs and prosperity to our state at a time when we need more of both.
#3 – It will encourage first-time home-buyers
Maybe you’re looking to buy your first home on your own or with your spouse. Or maybe you and your family had to sell your old home and rent for a while because your mortgage and property taxes got too costly in the recession. Or maybe you lost your job and needed to downsize.
After a few very tough years here, Florida’s housing market is a much friendlier place for first-time home-buyers. But SPRS is the threatening condition that could keep all of that from happening. After all, nobody who has dealt with a recession like the one Florida has faced would want to buy a new home, only to get their assets taxed off – again.
So Amendment 4 takes a key step to address SPRS here as well. Under Amendment 4, any Floridian who has never had a homestead exemption, or who has not claimed an exemption in the last three years can receive an additional homestead exemption of half your home’s value up to $150,000 or half the median home price in the county you live. And that property tax exemption can stay in place for up to five years. This will mean serious tax relief for any Floridians looking to get on their without having to worry about getting their assets taxed off.
#4 – It will create jobs and stimulate the economy
According to a Taxwatch study, Amendment 4 will create nearly 20,000 new jobs, over 315,000 home sales more than would have otherwise occurred AND add nearly $5.3 billion dollars to the personal income of Florida residents. What more do you need to know?
September 25, 2012
Don’t put up with telemarketing calls from spoofed phone numbers. When you get one of those calls and the number is blocked, fake or simply missing the telemarketer is actually breaking US law. They are required by the FCC to give accurate Caller ID information so that their calls can be blocked or returned as desired by the recipient of the unwanted call.
Tons of telemarketers don’t follow the law. They will also ignore “Do Not Call” lists. If this happens to you read this page and file a complaint with the FCC!