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Many improving their bad credit as economy improves

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.

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Short sale approvals pre-default are on the rise

March 1, 2013

MIAMI – March 1, 2013 – Banks are increasingly willing to approve short sales before borrowers go into foreclosure, a bright spot for struggling homeowners hoping to escape an underwater mortgage with the least damage to their finances.

About 27 percent of home sales in Palm Beach, Broward and Miami Dade counties last year were short sales where the lender had not filed foreclosure papers against the homeowner, according to a distressed property report released today by the Irvine, Calif.-based RealtyTrac.

It’s a turnaround from a time when borrowers had to default on their mortgages before persuading their bank to do a short sale, which is where the lender agrees to accept less for the home than what is owed on the mortgage. In South Florida, the average difference between the unpaid mortgage balance and non-foreclosure short sale price last year was $116,505, the RealtyTrac report said.

South Florida Realtor Joanne Epstein said the paradigm shift by banks is a reaction to federal rules that went into effect Nov. 1 allowing homeowners to qualify for a short sale even if they are current on payments. Banks also earn credits to satisfy their obligations under the $25 billion National Mortgage Settlement by approving short sales.

“Some people are so scared to not pay their mortgage because they don’t have bad credit and don’t want bad credit,” said Epstein, who works for the Keyes Company/Ragbir Team. “But they can’t afford to pay anymore and are just throwing out good money.”

The federal rule changes only affect loans backed by Fannie Mae and Freddie Mac.

Under the November changes, borrowers who are current on their mortgage but suffer a hardship such as a death, divorce, or a job change requiring them to move more than 50 miles from their home can be qualified for a short sale by their loan servicers without additional approval from Fannie or Freddie.

The RealtyTrac report notes that the number of South Florida short sales conducted in 2012 before a foreclosure was filed increased 30 percent from the previous year.

Statewide, 33 percent of all home sales last year were short sales completed before a foreclosure was filed. The average difference between the unpaid principal balance and non-foreclosure short sale price was $94,950.

Housing experts say short sales benefit homeowners and lenders. A homeowner suffers a lighter ding to his or her credit than if a foreclosure was completed. Lenders save the cost of a lengthy court proceeding.

An increase in short sales may also lead to a quicker housing recovery, said RealtyTrac Vice President Daren Blomquist. South Florida short sales had a higher average sale price last year – $133,816 – than bank-owned homes, which went for an average of $129,320.

“Allowing these homes to change hands more quickly will put them with new homeowners who have loans they can afford, which means they are more likely to maintain the property,” Blomquist said. “They’ll be more motivated to be responsible homeowners.”

Kevin Kent, a broker-associate with Platinum Properties in Palm Beach County, questions RealtyTrac’s numbers. He said the percentage of non-foreclosure short sales seems high and that many lenders remain stalwart about having homeowners go into default before considering a short sale.

“Until someone misses payments, the lenders aren’t paying a lot of attention,” Kent said.

But banks are more amenable in general to doing short sales because “they get hurt a lot less,” Kent said.

Copyright © 2013 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

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U.S. new-home sales jump to highest in 4½ years

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.

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4 big short sales hang-ups

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

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Investment firms buying up Florida foreclosures

February 19, 2013

EW YORK – Feb. 19, 2013 – Hedge funds and investment firms are buying up Florida foreclosures, beating out homebuyers and local flippers, while steering the state into what some fear is another real estate bubble.

The companies, including New York-based Blackstone Group and Lake Success Rentals, a partner of Toronto-based Tricon Capital Group, purchased an estimated 5,300 Florida homes last year that were in some stage of foreclosure, according to a report from RealtyTrac.

In Palm Beach County, RealtyTrac measured 425 purchases by firms buying multiple properties out of foreclosure and usually with the intent to rent them out until increasing property values can offer a substantial return on investment.

RealtyTrac Vice President Daren Blomquist said the buying trend accelerated around the second quarter of 2012 after billionaire business magnate Warren Buffett said he would buy up “a couple hundred thousand” single-family homes if he had a way to manage them.

But Blomquist warned that prices jacked up by the increased competition could lead to an artificial inflation.

“There is some potential for locally based housing price bubbles because of this almost frenzy on the part of these big-money folks to purchase as many properties as they can,” he said. “They’re paying cash, so it shouldn’t result in a lot of foreclosures, but it may be that down the road, they decide the gamble isn’t paying off and flood the market with properties.”

Florida’s biggest buyer last year was Malibu, Calif.-based American Homes for Rent, with more than 260 purchases, according to RealtyTrac. The Blackstone Group-related company THR Florida, LLC, had more than 160 purchases.

But both of those companies focused their efforts mostly in areas outside of South Florida.

Heavy hitters locally include Lake Success Rentals, based in Fort Lauderdale, and Southeast Florida Rental Housing (Sfrh SF Rental), which shares the same Fort Lauderdale address as Lake Success.

In July, Tricon Capital Group announced its partnership with Lake Success in an aggressive push to buy more distressed real estate. Tricon, which says it has $1.2 billion of assets under management, provides financing to local companies to buy the homes.

“I expect Miami to be one of the fastest-growing cities in the next decade, and the opportunity to purchase homes for rental housing in the surrounding areas at a fraction of peak prices and replacement cost was very attractive to me,” said Lake Success co-founder Barry Bergman in a news release announcing the partnership.

Last month, Tricon announced the purchase of 550 homes in Charlotte, N.C., for $26 million.

Blomquist said RealtyTrac’s study compared active foreclosures against sales deed data and may not include all bulk buyers in an area.

Don Cameron, a real estate investor who owns a South Florida franchise of We Buy Ugly Houses, said he bought more than 100 homes last year, many of which were at foreclosure auction, but he is not included in RealtyTrac’s report.

Also not included is a Greenwich, Conn.-based company called SRP SUB, LLC, which has bought about 40 Palm Beach County homes at foreclosure auction since November.

Cameron said he noticed an increase in competition from the big-time investment firms and hedge funds about eight months ago. His company buys homes, renovates them and then sells them. He said he’s lost out on homes because the larger firms pay asking price, or higher.

“They just have loads of money and are paying maximum dollars for the properties then renting them out,” Cameron said. “Some people are really inflating the market right now.”

Copyright © 2013 The Palm Beach Post (West Palm Beach, Fla.), Kimberly Miller. Distributed by MCT Information Services.

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4.3 Million Foreclosure Victims Offered Independent Case Reviews With Focus On Proper Processes

November 10, 2011


While I’m not so sure I agree with the word “victims” in this article title I still think it holds some merit and deserves to be shared. So many people have either already been kicked out of their homes or are in the process of being given the boot. I agree that improper processes need to be identified and addressed.

Here is the article from yesterday’s NotaryBulletin presented by the National Notary Association.

In what is being considered the first meaningful response to the foreclosure crisis, the federal government has ordered 14 mortgage lenders involved in the “robo-signing” scandal to send letters to 4.3 million consumers who may have been victimized by foreclosure errors and misconduct, paving the way for a massive number of individual case reviews and potential compensation.

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Check out this scary satellite view of Tampa Bay FL foreclosures!

November 9, 2011

The national average is depressing enough at 1 in 46 homes being in foreclosure but things get even more bleak when you look at our situation here in Florida. Literally 1 out of every 20 homes in the Tampa Bay area is currently in foreclosure. On the below map the red dots show homes currently in foreclosure.

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U.S. ‘Underwater’ Homeowners Increase to 28.6%, Zillow Reports

November 8, 2011

Underwater HomesNov. 8 (Bloomberg) — The number of U.S. homeowners who owe more than their properties are worth climbed in the third quarter as lenders repossessed fewer houses, Zillow Inc. said.

The share of borrowers with negative equity rose to 28.6 percent, up from 26.8 percent in the second quarter and 23.2 percent a year earlier, the real estate data provider said today. Last quarter’s portion was the biggest since Seattle- based Zillow began tracking the measure in the first quarter of 2009, when 22.3 percent of households were underwater.

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Housing survey shows link between consumer attitudes, experience

November 5, 2011

WASHINGTON – Nov. 4, 2011 – Fannie Mae’s third quarter National Housing Survey provides in-depth findings on attitudes of consumers who know of people in their area or neighborhood that have defaulted on their mortgage. This latest survey shows that those exposed to default have similar attitudes about buying a home as those who do not know people that have defaulted.

However, the survey also finds greater pessimism about the economy and personal finances among consumers who know defaulters.

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Wells Fargo: Government aid won’t help housing market

November 4, 2011

FORT LAUDERDALE, Fla. – Nov. 4, 2011 – The Obama administration’s plan to help more homeowners refinance underwater mortgages may be a big deal in South Florida, but the lifeline won’t have a significant effect on the nation’s housing market, Wells Fargo Securities predicts.

Nearly half of homeowners with mortgages in Broward and Palm Beach counties are underwater, according to research firm CoreLogic. They’re hoping an expansion of the Home Affordable Refinance Program will help them refinance at current interest rates and get them out from under burdensome mortgages.

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