Florida Realtors and Gov. Crist agree: ‘Now’s the time to buy’ a home in Florida

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TALLAHASSEE, Fla. – April 15, 2009 – Ten Realtors from across Florida met with Gov. Charlie Crist this morning to discuss increased home sales and other positive trends in their markets, as well as offer insight into some current issues facing the real estate industry. It’s part of this year’s Great American Realtor Days, April 14-15, when about 1,000 Realtors from throughout the state join forces at the state capital to meet with their legislators and discuss concerns affecting all Florida residents.

Representing markets from Miami to Jacksonville and all points in between, Realtors reported an upswing in existing home sales in the past three to six months, when comparing year-to-year activity and also month-to-month sales figures. John Sebree, vice president of public policy for the Florida Association of Realtors® (FAR), kicked off the Real Estate Roundtable meeting with Gov. Crist by noting that February’s statewide existing home sales rose 20 percent over the same period last year, according to FAR data. He also reported that February’s home sales were about 17 percent higher than January’s statewide sales activity.

Realtors also told the governor about other positive indicators such as: mortgage interest rates under 5 percent; reduced housing inventory levels as buyers take advantage of current, more affordable housing opportunities; and encouraging market reaction to the federal economic stimulus package, especially the new $8,000 first-time homebuyer tax credit.

Upon hearing these reports from around the state, Gov. Crist said, “It doesn’t get much better than this. [Housing] supply and demand is going to come into balance here. Two to three years from now, people will be saying, ‘Back in April 2009 I could have gotten that home for so many dollars’ – so you don’t want to wait.

“Prices have gotten as low as they can. Now is the time to buy, while the deals still exist,” the governor said.

Discussing some of the challenges in today’s market, many Realtors pointed to difficulties with so-called “short sales,” where the bank or lender agrees to accept less money on a home sale than the seller owes on the mortgage. They said that short sales are problematic not only because of how long it actually takes to finalize the sale, but also because of the inconsistencies in information and documents required by lenders. Streamlining the short-sale process and providing consistency in required documentation among the lenders would boost the recovery of Florida’s real estate market.

Solutions to ease lenders’ restrictions on the state’s condo market are also needed, said Edgewater Realtor Robert Clinton. “Not only is the prospective condo buyer having to be approved for a mortgage, but the condo owners association itself has to be approved and qualified, which is causing problems,” he said.

Largo Realtor Alan Riley told Gov. Crist that 50 percent of buyers involved in recent home sales in the Tampa Bay area paid cash for their purchases, a strong indicator that investors have returned to the housing market.

“Savvy investors have returned to our market as well,” added Eric Sain, a West Palm Beach Realtor. “But we’re also seeing a lot of young families buying a home to settle down and establish roots in the community. That’s a sign that people aren’t leaving the area, aren’t leaving Florida.”

Gov. Crist agreed, saying, “Of course they are [establishing roots] – it’s Florida. Why would they go anywhere else?”

Not only is it a great time to buy a home in Florida, it’s also a great time for businesses to move to the Sunshine State, noted Suzanne Sherer, a Fort Myers Realtor. Commercial and business properties are readily available in a range of price options, she said, providing prime opportunities for entrepreneurs. She asked the governor and state leaders to take steps to encourage the relocation of businesses and industries to Florida.

At noon today on the steps of the old Capitol, Gov. Crist addressed the crowd of nearly 1,000 Realtors participating in Great American Realtor Days, applauding their perseverance and dedication to their profession despite challenges posed by the economy and the marketplace. Amid reports of increased home sales and other positive signs, the governor said that the “changing landscape” for Florida’s real estate markets is “nothing short of remarkable.”

Other participants in Gov. Crist’s Real Estate Roundtable included: Jacksonville Realtor Millie Kanyar; Fort Lauderdale Realtor Jesse Acevedo; Miami Realtor Carlos Cruz; Port St. Lucie Realtor Scott Wingfield; Panama City Realtor Katie Patronis; and Orlando Realtor Les Simmonds.

© 2009 FLORIDA ASSOCIATION OF REALTORS

 

Source: http://www.floridarealtors.org/NewsAndEvents/n1-041509.cfm

Low prices lure Orlando-area home buyers

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ORLANDO, Fla. – April 14, 2009 – The Orlando area’s huge backlog of existing homes for sale shrank to a 26-month low last month as local Realtors sold 48 percent more houses and condominiums than they did a year ago.

The year-over-year improvement in resales, which extends back seven consecutive months to last September, was given a boost again in March by foreclosure-driven bargain prices. March sales of homes and condominiums in the core Orlando market rose to 1,653 this year from 1,120 a year ago, even as the median price fell nearly 38 percent to $137,000 from $220,000 in March 2008.

For the first time, the Orlando Regional Realtor Association examined “distress sales” in detail and found that 49 percent of the homes sold by its members last month were either owned by banks already or had been sold under financial pressure of some kind.

The report released Monday also revealed a wide disparity in market prices because of the large number of foreclosed properties:

• Bank-owned homes – those already through foreclosure – sold for a median price of $95,000.

• Homes for which lenders had agreed to take less than the amount owed on the mortgage – known as pre-foreclosure or “short” sales – sold for a median of $143,500.

• Homes marketed by owners not under financial duress sold for a median of $174,995.

Jeffri Moore and her husband, Alex, are among a growing number of local house hunters trying to snap up properties for deep discounts of 50 percent or more – sometimes, substantially more. For example, the east Orange County couple just submitted an offer for a condo unit in a former apartment complex near their home that was listed through a discount brokerage for $21,500. It had once been appraised for $131,000.

“We saw it, and it does need some work,” Jeffri Moore said. But the couple is planning to pay cash to avoid financing costs and to speed the process, she said, and they’re willing do most of the repair work on their own to save more money.

“We’re doing this for a family member who’s about to be homeless because they’re out of work. We don’t want to see that happen,” she said.

Mortgages prove elusive

Getting standard bank financing to buy a condo unit – particularly in a project with multiple foreclosures – is difficult if not impossible these days, even for buyers with excellent credit, incomes and steady jobs, the Moores and other prospective buyers are discovering.

The rising unemployment rate nationally and locally has added to the pressure on real-estate prices, driven downward for more than a year now by soaring foreclosure rates, which began with the meltdown of the subprime-mortgage market but spread to other financial sectors and the economy overall. Conventional mortgage lenders have tightened their lending standards as a result, particularly for condominiums and for second homes or “investment” properties.

The number of residential properties listed for purchase through the Orlando Realtors’ Multiple Listing Service, which covers mainly Orange and Seminole counties, peaked in late 2007 at more than 26,000. Last month, the local inventory stood at 21,448 homes, down by 720 from February and 15.8 percent lower than in March 2008. The last time the inventory was lower: January 2007.

Combined with the improvement in monthly sales, that means the inventory, as measured by “months of supply,” is shrinking even faster: It fell from 16.77 months in February to 12.98 months in March – far below its peak of 31.64 in January 2008 and the lowest it has been since December 2006.

Prices at 2003 levels

The March median sale price of $137,000 in the Orlando Realtors’ core market is the lowest for that measure since January 2003. The 1,653 sales in March are the most since May 2007. Pending sales, meanwhile, were up more than 100 percent last month, with 4,906 homes under contract compared with 2,398 a year ago.

“Orlando home buyers are getting back into the market and taking advantage of improved affordability,” Les Simmonds, president of the Orlando Realtors group, said in Monday’s report.

Simmonds, president of L.G. Simmonds Real Estate Corp. in Longwood, said record-low mortgage rates are helping fuel the improved sales. The 4.67 percent average in March for 30-year fixed-rate loans was the lowest on record, Simmonds noted, though rates inched up slightly last week.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-041409.cfm

Hopeful signs emerge at end of ugly quarter

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CHICAGO (AP) – April 2, 2009 – Even with a promising finish, the best thing that can be said about the first quarter is it’s over. Even a dramatic rise in March wasn’t enough to prevent the market from falling for the sixth consecutive quarter.

Despite intensive government efforts to stem the decline, the U.S. recession deepened in the first three months of 2009, unemployment surged to a 25-year high and consumer confidence hit an all-time low. And the Standard & Poor’s 500 index ended the quarter down 11.7 percent from the start of the year.

“It was a terrible quarter,” said Alan Skrainka, chief market strategist for St. Louis-based investment Edward Jones. “All indications are the economy dropped just as much in the first quarter as in the fourth quarter of last year.”

Yet whether or not the slump deepens, there may be some comfort in the statistical likelihood that the downturn is closer to the end than the beginning. The recession that began in December 2007 was 15 months old at quarter’s end, a month shy of the postwar-record recessions of 1974 and 1981. What’s more, April 9 will mark 18 months since the start of the bear market.

“The passage of time is important,” said Art Hogan, chief market analyst at Jefferies & Co. in Boston. “We’ve gotten through 15 to 18 months of this down cycle, and that’s been something that doesn’t get enough attention.”

There are other hopeful signs.

The Associated Press asked three market strategists to review the first quarter and provide their outlooks. Here are some highlights:

Economy

The consensus of economy-watchers can be summed up by the baseball fan’s byword, “Wait ‘til next year.”

The experts don’t expect any meaningful recovery this year. Liz Ann Sonders, chief investment strategist for brokerage Charles Schwab & Co., thinks the recession will end in the third quarter. But putting the brakes on the downturn isn’t the same as hitting the accelerator.

Similarly, Hogan doesn’t see actual growth in the gross domestic product, the broadest measure of the nation’s economy, until the first half of 2010.

Nevertheless, they were heartened by the fact that the onslaught of negative economic news slowed a bit toward the quarter’s end.

Glimmers of hope that emerged amid the gloom: Orders for costly manufactured goods and new-home sales both registered unexpected gains in February, and retail sales dipped less than expected. Consumer spending turned back up in January and February.

“The outlook for the economy is getting better,” said Hogan. “That’s the first quarter we can say that in quite some time. It certainly wasn’t the case in the third and fourth quarters of last year.”

Some economic indicators such as income and industrial output slipped lower in February. But the overall picture for key measures, while still weak, wasn’t as bad as it had been.

“We’re still in the basement, but we may be on the steps out of the basement,” Sonders said.

The three strategists also think the Obama administration removed uncertainty hanging over the market by laying out its major economic recovery plans by the quarter’s end.

Unemployment and consumer confidence

High joblessness and a lack of consumer confidence are linked, and there’s a long way to go for both before the economy stabilizes.

The unemployment rate reached 8.1 percent in the quarter, the highest in more than 25 years, and many economists expect it to reach 10 percent by year’s end.

Hogan thinks the rate could keep rising until the second half of 2010, especially if GDP doesn’t show sustained strength until next year.

“It’s important to remember that the unemployment situation, as in all down cycles, will get worse even as the economy gets better,” he said. “Corporate America is reluctant to start new hires unless they’ve seen a string of quarters put together where we’re seeing improvement in the economy.”

The consumer confidence index, seen as a critical factor in turning the economy around, fell to an all-time low during the quarter.

A recent uptick in sales has laid the foundation to improve confidence, Skrainka said.

“It helped that we had our bank CEOs coming out and talking about how they’ll be profitable this year, (Federal Reserve Chairman) Ben Bernanke saying forcefully that he’ll do everything it takes, President (Barack) Obama saying it’s a good time to buy stocks,” he said. “I think as confidence spreads, people will spend a little more.”

Housing

The long-moribund housing market showed signs of life as the quarter came to a close.

Government intervention in credit markets helped nudge rates on fixed-rate 30-year mortgages to a record-low 4.85 percent, spurring a refinancing rush and new interest in home purchases. House prices rose 1.7 percent in January to end a months-long losing streak.

Housing starts and sales of new and existing homes all fared better than expected in the latest reports, although the slump can’t be declared over.

Hogan said there still are plenty of pending foreclosures left to hit the market, adding to an already-large inventory of residential real estate. But he said it’s noteworthy just that the housing market is not getting worse.

Nationwide, housing prices probably still have another 10 percent to 15 percent to fall, Sonders estimated.

Still, she said: “We’re starting to see a light at the end of the tunnel.”

Stock market

When the S&P 500 sank to 676 on March 9, it marked a 58 percent drop in the index since the bear market began — and a stunning 25 percent drop since the start of the year.

A sharp rebound in the following days left market-watchers hesitant to declare the bear’s demise, but somewhat confident the bottom had been reached.

“We’ve had a volatile year already and we’ve only gone through a quarter,” said Hogan. “We have probably seen the lows in the marketplace.”

He predicted the S&P will finish the year up 5 percent to 10 percent from where it began, albeit only after the market endures more fits and starts.

Sonders put the chances at “better than even” that the March 9 low turns out to be the bottom. She cited more promising technical signs than existed previously and a “mountain” of cash that investors have parked on the sidelines that stands ready to be to put back into equities.

Still, Skrainka said investors shouldn’t get too caught up in stocks’ short-term outlook.

The market’s potential looks more appealing now, particularly for the long haul. Skrainka said he likes to look at the S&P’s returns over 10-year periods, and it is certainly due to rise after declining by 1.4 percent from 1999 through 2008. The historic average return is a return of 6 percent to 7 percent after inflation.

“It wouldn’t surprise me if we were positive for the year,” he said. “But we really try to emphasize the importance of investing for the long term.”

 

Source: http://www.floridarealtors.org/NewsAndEvents/n1-040209.cfm

Economic woes slow U.S. migration to Sun Belt region

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WASHINGTON – March 19, 2009 – Strapped by the nation’s economic crisis, fewer Americans are migrating to Sun Belt hot spots in Nevada, Arizona and Florida, instead staying put for now in traditional big cities.

Census data released Thursday highlight a U.S. population somewhat locked in place by the severe housing downturn and economic recession, even before the impact of rippling job layoffs after last September’s financial meltdown.

The population figures as of July 2008 show growth slowdowns in once-booming metropolitan areas such as Atlanta, Las Vegas, Phoenix and Tampa, due mostly to a rapid clip of mortgage foreclosures as well as frozen lines of credit that made it harder for out-of-staters to move in.

As a result, rust-belt metro areas such as Buffalo, N.Y., Pittsburgh and Cleveland stanched some population losses, and Boston, Los Angeles and New York saw gains. Well-to-do exurbs around Washington, D.C. saw growth slowdowns as people weary of costly commutes moved closer to federal jobs in the nation’s capital.

“It’s the bursting of a ‘migration bubble,’” said William H. Frey, a demographer at the Brookings Institution think tank who analyzed the numbers. “Places that popped up in migration growth in the superheated housing markets earlier in the decade are now just as quickly losing their steam.”

“It’s the constraint of not being able to buy or sell a home that is keeping people from moving long distances,” he said.

The latest population trends come as state and local governments are deciding where to pour billions of dollars in federal stimulus money to develop schools, roads, bridges and other infrastructure. The nation’s decennial head count, used to apportion House seats and redraw congressional districts, also is fast approaching.

Las Vegas, known for its warm climate and wide spaces, had its smallest annual population gain in nearly 20 years.

Despite its pricier housing market, San Francisco was back to its heyday growth of the 1990s, having formerly shriveled when the tech boom went bust in 2000.

Economists explain that because housing in San Francisco was so expensive for so many years, only the wealthy were able to buy. As a result, the area was less affected by mortgage foreclosures than other cities. San Francisco’s tech industry also has been slower to lose jobs so far in the current recession, but officials aren’t sure how long that will hold up given California’s double-digit unemployment.

California had the biggest net loss from people moving to other states. The declines in its interior regions put it at risk of losing a House seat. Los Angeles had major gains, but partly at the expense of Riverside, a sprawling exurb nearby.

In the months ahead, jobs are expected to be a growing factor in U.S. migration.

The population in the nation’s distressed counties, or areas with unemployment rates of 6 percent or higher in 2007, grew by 0.3 percent, compared to a 1.2 percent growth rate in areas with relatively low unemployment.

The overall nationwide growth rate was 0.9 percent, according to the Population Reference Bureau.

In Michigan, where the struggles of the auto industry led to the nation’s highest unemployment rate, 60 of the state’s 83 counties lost population. Florida and Rhode Island are facing similar pressures.

Despite slowing migration, the South and West continued to account for the most growth from 2007 to 2008.

Raleigh-Cary, N.C., and Austin-Round Rock, Texas, were the nation’s fastest-growing metro areas, registering growth rates of 4.3 percent and 3.8 percent, respectively. Both high-tech centers, the two metros are also sites of major college campuses that helped cushion them from the housing slowdown.

Other findings:

-Metros registering the biggest numerical gains were Dallas-Fort Worth and Houston. Despite housing slowdowns in 2008, Phoenix and Atlanta ranked third and fourth in growth, respectively, followed by Los Angeles.

-The New Orleans area grew 2 percent to more than 1.1 million, still lagging its pre-Hurricane Katrina level of 1.3 million. St. Bernard Parish and neighboring Orleans Parish were the nation’s first and third fastest-growing counties.

-The Washington, D.C., region was among the top 10 numerical gainers, due partly to federal government jobs. Far-flung D.C. exurbs such as Virginia’s Loudoun and Prince William counties had flat or declining growth rates, victims of the housing bubble and a spike in gasoline prices.

-Out of the nation’s 100 fastest-growing counties, the majority were in Texas (19), Georgia (14), North Carolina (11) or Utah (nine).

The census estimates used local records of births and deaths, Internal Revenue Service records of people moving within the United States, and census statistics on immigrants. The estimates were for both counties and metropolitan areas, which generally include cities and surrounding suburbs.

On the Net:

Census Bureau: http://www.census.gov/

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-031909.cfm

Questions, answers on bankruptcy mortgage rewrites

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WASHINGTON – March 6, 2009 – With foreclosures continuing at a rapid pace, the House has passed a measure to let debt-strapped homeowners seek reduced monthly mortgage payments by filing for bankruptcy. The legislation, passed Thursday, is not yet final and more changes may be made. Some questions and answers about the bill:

Q. Who is eligible?

A. Any homeowner who can show he can’t afford his mortgage and can prove he has sought new terms from the company holding the mortgage. Congressional budget analysts have estimated that it could help 350,000 families over the next 10 years. Senators are discussing limiting the legislation still further, to only certain types or sizes of loans.

Q. What would a borrower have to do before filing for bankruptcy?

A. The borrower would have to call the mortgage holder – known as the loan servicer – seeking a change in terms, and provide his financial information including income, expenses and debts.

Q. How long would it take?

A. The homeowner would have to wait 30 days to give the mortgage company time to offer new loan terms. Then he could file for bankruptcy under Chapter 13.

Q. If the mortgage company offered a workout, can a homeowner still seek one under Chapter 13?

A. Yes, but the judge could consider whether the loan servicer already offered a reasonable rewrite. The bill defines that as a deal that would bring the homeowner’s monthly payment down to about one-third of his gross income.

Q. Can’t bankruptcy judges already change the terms of home mortgages?

A. No. Under current law, bankruptcy judges can restructure any type of loan – including for cars, college and vacation property. They cannot now restructure mortgages on primary residences.

Q. What if you lied on your mortgage application?

A. The measure doesn’t bar people who got their loans in the past without submitting complete or accurate financial documentation. However, the homeowner would be required to give the bankruptcy court a good-faith plan, including proper documentation, for repaying his debts.

Q. What if the homeowner sells his home soon after declaring bankruptcy?

A. The lender would get a substantial cut of the proceeds from a sale of the home if the homeowner sold soon after finalizing his bankruptcy plan. The mortgage company would get 90 percent for a sale within one year, 70 percent after the second year, and half after three years. The amount falls over time to 10 percent in the fifth year.

Q. Does the bill help people who aren’t bankrupt but are having a hard time making their mortgage payments?

A. No. The bill offers no direct help to people who can afford their monthly mortgage payments. Proponents believe it will help all homeowners by prodding lenders to negotiate with borrowers rather than let a bankruptcy judge rewrite the terms. Critics argue that it will hurt homeowners and would-be homeowners by prompting mortgage companies to raise interest rates to cover losses they might suffer if their loans are subject to judicial changes.

The House bill is HR 1106.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n3-030609.cfm

Citigroup to lower some mortgage payments

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NEW YORK – March 3, 2009 – Struggling bank Citigroup Inc. said Tuesday that it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed.

The struggling bank makes the move as President Barack Obama looks to lenders to adjust the way loans are handled.

Citigroup’s new mortgage efforts also come on the heels of the latest attempt to bail out the company, which includes the U.S. government’s exchange of up to $25 billion in emergency bailout money given to Citigroup for as much as a 36 percent equity stake in the company. The deal between the Treasury Department and Citigroup represents the third rescue attempt for the bank in the past five months.

Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer’s primary residence, with homeowners meeting all insurer and guaranty requirements.

“Our Homeowner Unemployment Assist program is intended to serve as a bridge toward a longer-term solution, helping homeowners stay in their homes and in their communities while they get their feet back on the ground,” CitiMortgage Chief Executive Sanjiv Das said in a statement.

Citigroup predicts thousands of homeowners may be eligible for the program over the next two years.

Those that partake in the program and are still without jobs after three months will have their mortgages handled on a case-by-case basis to come up with the best payment option, Citigroup said. Others that find work within the three-month period can go back to paying their original mortgage amount or receive a long-term loan modification if qualified.

The program may also be expanded to include customers that are in early delinquency stages or are current on their mortgage at a later point in time once an initial evaluation of the program is complete.

Homeowner Unemployment Assist is part of the bank’s existing Citi Homeowner Assistance, which tries to help customers avoid foreclosure.

One of the hardest hit banks by the ongoing credit crisis, Citigroup is in the process of shedding assets and cutting staff as it looks to reduce costs and streamline operations ahead of splitting its traditional banking businesses from its riskier operations. In January the company reached a deal to sell a majority stake in its Smith Barney brokerage unit to Morgan Stanley.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n4-030309.cfm

Troubled homeowners may get help from judges

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MIAMI – Feb. 24, 2009 – In Judge A. Jay Cristol’s bankruptcy court, the bench shakes and a deep thud reverberates throughout the room as he stamps one of many documents that mark the steady progress of a case.

It’s a sound that is sure to be heard more often if Congress gives him and judges around the country the power to renegotiate a homeowner’s mortgage. The process, known as a “cram-down,” is part of President Barack Obama’s $75 billion plan to stem the soaring rate of foreclosures that helped ignite the recession.

The proposal, which could be voted on by Congress in a month or two, is already drawing fire from the mortgage industry. The move would force lenders to the negotiating table and could hurt the coffers of banks and investors holding mortgages.

But a growing number of people – from housing advocates to bankruptcy attorneys to judges like Cristol – believe it may be the best hope to keep people in their homes.

“We can’t help them all, but we can help a lot of them ameliorate the situation somewhat,” Cristol said.

Obama’s plan is part of a carrot and stick approach to dealing with a crisis in which 2.3 million households received foreclosure filings last year.

About one in four with a mortgage owes more to the bank than their properties are worth, according to Mark Zandi, chief economist at economic forecasting firm Moody’s Economy.com.

Mary Reyes, a consumer bankruptcy attorney in Miami, keeps a list of people who are anxiously waiting for the cram-down idea to become law.

“It’s extremely necessary,” Reyes said. “It will keep people from just walking away from their homes.”

Marta Lopez is on Reyes’ list. Lopez has not paid her $1,232 monthly mortgage payment since October after losing one of her two jobs. She had been making more than $2,000 per month before losing a job cleaning offices. Now, she brings in around $1,080 a month working at BJ’s Wholesale Club.

Her apartment was valued at $186,000 when she bought in May 2007, but now she can’t make the payments on her 30-year-fixed mortgage at 8.5 percent interest. She’s looking for another job, but Lopez wants quick action from Congress so she can enter bankruptcy and stay in her apartment.

“It will save me,” said Lopez, 58, of Hialeah, Fla. “They might be able to lower my interest rate and my principal and have me start paying for what the house is actually worth, and I’ll be able to stay there.”

Congress is already being lobbied heavily on both sides of the issue. While many Democrats in the House and Senate support the plan, it’s not clear if Senate Democrats have the 60 votes they need right now for the measure to pass.

Ten groups in the lending industry oppose the legislation. The Mortgage Bankers Association has said that new home buyers will pay higher interest rates and down payments if lenders face the risk that a judge could change mortgage terms.

Meanwhile, homeowners who have kept up with mortgage payments in a recession have balked at attempts by the government to use time and money to help people who, for whatever reason, have wound up in default.

But supporters of the cram-down contend that everyone can benefit because removing foreclosures from the market could stabilize prices and help the economy.

Henry Sommer, a bankruptcy attorney in Philadelphia, said going to court makes the lender act, rather than voluntarily agree to modify a loan.

“It gives the homeowner some rights,” said Sommer, past president the National Association of Consumer Bankruptcy Attorneys. “In every other program, the homeowner is essentially begging.”

While many lawyers have altruistic motives, it’s also clear that bankruptcy attorneys will make more money with more cases.

Under current bankruptcy law, judges can remove some items, including second mortgages. Or, they can “cram down” a loan on investment properties, or personal property such as a car or boat, to the property’s current value. But existing code does not allow adjustments for a debtor’s primary residence.

One group of property owners which will not get relief if the bill passes – investors who bought homes during the housing boom with the goal of selling them quickly for a profit.

A judge would determine a property’s value and an interest rate, based on an appraisal, and the parties could settle the bankruptcy before trial. Lenders could appeal a judge’s decision.

“The standard generally is, ‘What would a willing lender give to a debtor today?’” said Paul G. Hyman, chief bankruptcy judge in the Southern District of Florida.

One main concern is whether the cram-down will create an avalanche of new filings and jam up bankruptcy courts around the country.

“There probably would be an increase in filings: We think we’re equipped to handle them,” said U.S. Bankruptcy Judge Gregg Zive in Reno, Nev., adding that it’s difficult to guess the number of cases until the bill is passed.

Zive, president of the National Conference of Bankruptcy Judges, did say it would help if Congress accepts a recommendation from the governing body of U.S. courts to add nine new bankruptcy judges and make 22 temporary judgeships permanent.

Hyman said cases likely won’t be delayed significantly in his district – which includes Miami – because many will be settled before trial, once the parties see how the court values the property and sets an interest rate.

In Cristol’s court Wednesday, the judge said that banks’ resistance to reach settlements with mortgage holders is “somewhat stupid” because they are incurring costs related to a foreclosure while getting no payments in return.

Things move quickly and rather seamlessly in the 14th-floor courtroom, where Cristol addressed three cases in the span of two minutes Wednesday and discussions between attorneys and Cristol can last 10 seconds. A 79-year old Chief Judge Emeritus, Cristol has a wealth of experience in dealing with people in financial trouble – he spoke clear Spanish to one man in court Wednesday – and said judges should be willing to help.

“We’re here to work,” Cristol said. “If we have to work an extra one or two hours a day we will.”

 

Source: http://www.floridarealtors.org/NewsAndEvents/n4-022409.cfm

Government expands national program to buy foreclosures

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IRMO, S.C. – Feb. 23, 2009 – The federal government is spending $4 billion to buy and fix up foreclosed homes despite concerns over how the money is being distributed, questions about oversight and fears that the program amounts to a windfall for banks that repossessed the properties.

Now, even before the first dollars are spent, another $2 billion is on the way under the economic stimulus package signed this week by President Barack Obama.

Last month, the Department of Housing and Urban Development signed off on hundreds of grants to all 50 states. The Neighborhood Stabilization Program, as it’s known, was passed last year as part of a housing rescue plan that was regarded at the time as the most significant housing legislation in a generation.

But critics have assailed the program for the lack of money it will send some hard-hit communities and the discontent stirring among residents who want a say in what happens to their neighborhoods.

“What houses are gonna be involved? We still don’t know that and we’re a month away from the funds arriving,” said Mike Aaron, president of the Livingston Avenue Area Commission, a group in a foreclosure-ridden area of Columbus, Ohio. “That’s what’s making us uneasy right now.”

The total amount coming into Ohio, for example, is $258 million, and Columbus is getting $23 million of that. Those figures do not include new money from the stimulus package and HUD has said it has not yet decided what the guidelines for the new grants will be.

Aaron said Columbus has rebuffed his group’s attempts to talk about the best ways to use money, which has already been awarded to the state.

“We need to be involved in the process,” said Aaron, who is pressing for an oversight board comprised of city officials and residents.

And then there’s back biting about who gets how much.

The first round money is being divvied up based on the number and percentage of foreclosures, number and percentage of homeowners behind on their mortgages, and the concentration of subprime mortgages.

While the formula sounds fair, some of the results aren’t. California and Florida are both getting more than $500 million in federal help, even though California has 500,000 foreclosures – around twice the number as Florida.

Vermont, meanwhile, is getting the minimum of $20 million, even though the state had less than 150 foreclosures last year and the lowest foreclosure rate in the nation, according to RealtyTrac Inc.

Some city and county officials are also questioning the government’s math.

Almost one in 10 houses in Merced County, Calif., are in foreclosure, one of the highest rates in the country. Yet the county will get just $2 million of the money going to California.

The city, which has a foreclosure rate of 12 percent, will get just $1.4 million.

“Someone stopped me on the street and said, ‘Oh good you got the funding. So what can you do with this money? Buy like four homes?’“ city housing manager Masoud Niromaud said, adding that there are more than 1,300 homes in foreclosure in Merced. “Seems that they (HUD) could paid more attention to the formula – ran it a couple of times. They didn’t do that.”

Economists say lenders will surely benefit from the plan, though it doesn’t include enough money to be considered a significant backdoor bailout for banks.

“In terms of bailing out lenders it’s hardly the biggest thing out there but surely there will be cases where the land purchases will be at least in part to help politically connected lenders,” said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington-based think tank.

In many cases, government officials plan to dole out the money to nonprofit organizations and smaller government entities that will purchase homes.

Critics and local housing officials are shaking their heads over the carte blanche grantees have in how they spend the federal funds. One South Carolina county said it would consider proposals to put homeless or HIV/AIDS patients in foreclosed homes eligible for the grant, while officials in Florida’s Miami-Dade County said they plan to snap up foreclosed apartments with grant money despite staunch public comment against it.

Many of the proposals called for renting out the homes to low- to moderate- income families.

On the streets of neighborhoods pockmarked with vacant houses, many residents said they’d welcome new neighbors no matter how they got into the homes.

“I would want to put somebody in it, whether they’re renting it or not. That’s a house that somebody could be in,” said Cheryl Poole, a 51-year-old Irmo resident worried about home values and the empty house across the street from her one-story ranch.

On the other extreme is Debra Oakley, a 55-year-old woman who said she isn’t so sure she wants a new neighbor.

The two houses to the left of her home are vacant, including one that nonprofits are being encouraged to buy using stabilization grant money.

“I’ve often wondered about what kind of people would move over there,” said Oakley. “I like it just like that: vacant.”

Susan Popkin, a researcher at the nonprofit Urban Institute, said many homeowners have grave concerns about their changing neighborhoods and how that might affect their already declining property values.

In major cities nationwide, tensions have risen recently as federally subsidized renters move from housing projects and violence-ridden neighborhoods to nicer communities in suburban areas.

“The fear is real. The reality isn’t,” Popkin said. “The thing they’re anxious about is what’s already happening in their neighborhoods.”

That’s true in Columbus, Ohio, where 84-year-old Walt McKinley said he’d welcome any help to rescue their neighborhoods.

McKinley, who lives in the city’s downtrodden Linden neighborhood, said he worries the spread of foreclosures in his neighborhood will drive up crime and wants the city to use the grant to demolish the house next door to his, which has been vacant since it was foreclosed upon and the owners abandoned it over the summer.

“I told ‘em at work that if possible, I would even drive a bulldozer myself and bulldoze it,” McKinley said. “I would be happy to.”

But critics say there’s no guarantee that McKinley’s neighborhood or other hard-hit communities will benefit from the grants. No one is tracking just how the money will be spent and grantees have been tightlipped on their plans.

HUD will monitor how states and cities spend neighborhood stabilization money, but leave it to local governments to monitor how pass-through grants are used by nonprofits and other, smaller government groups.

Many Republicans opposed the first round of stabilization grants and don’t want to increase the program. They say additional money will just give more slush funds to disreputable nonprofit groups.

“Instead of trying to work out troubles in the existing funds, we’re basically doubling the size of the program and potentially doubling the size of the problem, said Frederick Hill, spokesman for the Republican Oversight and Government Reform Committee, about the House’s plan to double neighborhood stabilization grant money.

Some economists also have expressed concerns over a lack of oversight.

“The record of housing authorities is not very good. It’s certainly reasonable to be concerned that the money will end up going to politically connected lenders and developers and not do very much for communities,” Baker said.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-022309.cfm

Homeowners’ rallying cry: Produce the note

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ZEPHYRHILLS, Fla. – Feb.18, 2009 – Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.

And just like that, the foreclosure proceedings came to a standstill.

Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.

Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

“I’m going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I’ll try everything I can because it’s all I have left.”

In interviews with The Associated Press, lawyers, homeowners and advocates outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.

More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. On Wednesday, President Obama will unveil a plan to spend at least $50 billion to help homeowners fend off foreclosure.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network Web site offers the free court documents Lovelace used to file her request, has played a major role in promoting the produce-the-note strategy.

“We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”

Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what’s likely to be inevitable.”

Deutsch said the original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge’s satisfaction takes time, which to homeowners is the point.

Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure – no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.

A University of Iowa study last year suggested that companies servicing mortgages are often negligent when it comes to producing the documentation to support foreclosure. In the study of more than 1,700 bankruptcy cases stemming from home foreclosures, the original note was missing more than 40 percent of the time, and other pieces of required documentation also were routinely left out.

The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.

Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

“From the perspective of the person who’s in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

“Don’t leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don’t have that mortgage, and you are going to find they can’t find the paper up there on Wall Street.”

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

“This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”

On the Net: Consumer Warning Network: http://www.consumerwarningnetwork.com
American Securitization Forum: http://www.americansecuritization.com

 

Source: http://www.floridarealtors.org/NewsAndEvents/n2-021809.cfm

NAR: Implement stimulus package quickly

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WASHINGTON – Feb. 16, 2009 – Now that the American Recovery and Reinvestment Act has been sent to President Obama for his signature, the National Association of Realtors® (NAR) looks forward to swift implementation.

“We are pleased that Congress and the administration have taken prompt action to address the current economic crisis,” says NAR President Charles McMillan. “Job creation and tax cuts are going to help families recover and prosper, and these initiatives will help more people keep their homes and help others become homeowners.”

The legislation contains two important housing provisions advocated by NAR. The final stimulus bill increases the first-time homebuyer tax credit to $8,000 and eliminates the repayment requirement of earlier legislation. In addition, the credit availability has been extended until Dec. 1, 2009.

“These important provisions will help bring first-time homebuyers to the market and reduce housing inventory,” says McMillan. NAR estimates that the homebuyer tax provisions could stimulate up to 300,000 additional home sales, helping stabilize home values and potentially preventing some homeowners from being “underwater” on their mortgage, which can often lead to foreclosure.

The bill also reinstates the 2008 higher loan limits for FHA, Fannie Mae and Freddie Mac. “These … make mortgages affordable regardless of where you live,” McMillan says. “ This will also help reduce inventory and improve liquidity in the overall mortgage market.”

NAR commended President Obama and Congress for including neighborhood stabilization efforts to help communities purchase and rehabilitate foreclosed and vacant properties. Realtors also praised the provision to help America’s wounded soldiers who need to move or relocate.

In addition to federal bailout measures, NAR’s also advocates better foreclosure mitigation efforts and lower interest rates for homeowners and buyers. NAR expects these components to be addressed in the coming days.

 

Source: http://www.floridarealtors.org/NewsAndEvents/n1-021609.cfm