JPMorgan Chase won’t put any more homes into foreclosure for the next 90 days while it implements a plan to help borrowers stay in their homes, the company announced Friday.
The plan will include proactive offers to refinance mortgages to more affordable terms and a network of 24 regional counseling centers – one likely in Florida – that will help homeowners. Chase spokeswoman Nancy L. Norris said a Florida location hasn’t been picked.
Chase will hire 300 loan counselors and 150 people to review mortgages before they are placed into foreclosure to ensure homeowners were offered modifications first.
With the customers of the newly acquired Washington Mutual in the fold, Chase’s program could help about 400,000 families with $70 billion in loans, the company said. It didn’t estimate a cost.
Norris wasn’t able to say how many customers and loans would be helped in Florida.
Democratic presidential candidate Barak Obama is among those who have called for a national moratorium on foreclosures to give time for banks to renegotiate loans.
Chase received $25 billion through the U.S. Treasury Department, which became a shareholder in the bank.
The plan will pay particular attention to WaMu’s payment option adjustable-rate mortgages (ARMs), where borrowers can pay less than the monthly interest. This allows the balance of the loan to grow, which is called negative amortization.
On June 30, WaMu had $3.9 billion of its $52.9 billion in option ARMs in South Florida. Miami’s 12.84 percent delinquency rate was WaMu’s highest nationally. Many of those loans will reset with dramatically higher payments through 2012.
Chase will offer borrowers with payment option ARMs alternatives such as 30-year, fixed-rate loans with affordable payments, principal deferral and interest-only payments for 10 years.
“All the offers will eliminate negative amortization and are expected to be more affordable for borrowers in the long term,” Chase stated in a press release.
Other Chase and WaMu borrowers that could experience problems also will receive help through interest-rate reductions and principal forbearance, in which the bank would forgive part of the principal.
As another part of the program, Chase said it plans to discount or donate 500 homes to community groups, non-profits or government programs.
WASHINGTON – Oct. 31, 2008 – Just how far will the Federal Reserve go in lowering interest rates to save the country from a long and painful recession?
Ratcheting its key rate from the current 1 percent all the way down to zero can’t be ruled out. But there are risks in taking such an unprecedented step: namely, that it wouldn’t work in turning around the economy and breaking through a stubborn credit clog.
Eventually, a zero percent rate – virtually “free” loans for banks – could trigger a speculative investment frenzy that could feed a bubble that pops, wreaking havoc on the economy. Former Fed Chairman Alan Greenspan – now partly blamed for the current problems – has called today’s crisis a “once-in-a-century credit tsunami.”
Emphatic as it was, the bold rate reduction the Fed ordered Wednesday and the possibility of even lower rates ahead are no panacea. Even lower rates won’t necessarily entice skittish Americans to spend and squeezed banks to lend more freely – forces at the heart of the economic woes.
With any luck, though, the Fed’s action will cushion the blow to the country, which is on the brink of – or already in – its first recession since 2001.
The Fed slashed its key rate by half a percentage point to 1 percent, a rate not seen since 2003 and part of 2004. The rate hasn’t been lower since 1958.
In a gloomier assessment of the economy, Fed policymakers said “the pace of economic activity appears to have slowed markedly” as consumers and businesses cut back on spending, and economic slowdowns in other countries sap demand for U.S. exports, which have helped keep the economy afloat.
Moreover, the “intensification of financial market turmoil” is likely to weigh on consumers and businesses, further reducing their ability to borrow money, the Fed said.
Underscoring the Fed’s sense of urgency is this fact: It took just 13 months for Fed Chairman Ben Bernanke, a student of the Great Depression, to ratchet down rates to the 1 percent mark. It took his predecessor, Greenspan, 2 1/2 years.
Many economists predict Fed policymakers will drop the rate again to half a percentage point, which would mark an all-time low, on or before Dec. 16 – its last scheduled meeting of the year. The Fed left the door wide open to more rate cuts, pledging to “act as needed” to revive the economy.
“We are in a crisis situation and everything is on the table,” said Richard Yamarone, an economist at Argus Research. “If conditions deteriorate considerably, the Fed could go down to zero. It is absolutely a possibility, but I don’t believe it is likely.”
Yet even if the Fed were to lower its key rate to zero, that might not reverse the bunker mentality of consumers and lead them to ramp up spending.
More than in recent recessions, consumers have retrenched as vanishing jobs, shrinking paychecks and nest eggs, and sinking home values have made them feel less wealthy and less inclined to spend. Consumer spending – the single biggest chunk of overall economic activity – probably fell in the July-to-September quarter. That would mark the first quarterly drop since late 1991, when the country was emerging from a recession.
And just because borrowing costs are cheaper doesn’t mean banks will feel more inclined to increase lending to people and businesses.
“The problem is not the interest rate,” said Sean Snaith, an economics professor at the University of Central Florida. “It is that no one is willing to loan, regardless of what the rate is. Lower rates will not make the problem go away. The credit crunch will take time to resolve. This is another action to just chip away at the gridlock in this economy, but we shouldn’t expect a miraculous turn of events from this.”
The Fed’s move Wednesday meant the prime lending rate used to peg rates on home equity loans, certain credit cards and other consumer loans dropped to 4 percent. Even if the Fed were to cut its main rate to zero, the prime rate would fall to 3 percent but no lower.
The Fed’s previous rate reductions, in fact, were blunted by the credit crunch. The Fed slashed rates by a whopping 3.25 percentage points, from 5.25 percent to 2 percent, between September 2007 and April 2008, one of the most aggressive campaigns in decades. On Oct. 8, the Fed lowered rates again to 1.5 percent in a coordinated action with other central banks around the world.
The Fed probably would want to stop short of zero, so it saves precious ammunition – meaning additional rate cuts – should the economy take a turn for the worse later on, some economists said.
Others believe the Fed would want to avoid the fate of Japan, which failed to revive its economy even after its central bank slashed rates to zero in 1999 and kept them there for six years before bumping them up again. Japan became mired in a decade of lost growth in the 1990s after real-estate prices collapsed. That caused a severe bout of deflation, which is a destabilizing drop in prices.
“Cutting rates to zero is a fairly desperate measure, and a lot of stigma is attached to it,” Snaith said. “It would bring on comparisons to Japan.”
There’s also the worry that dropping rates to all-time lows would feed the type of speculative boom and painful bust that the country is now suffering through. Greenspan lowered rates to 1 percent in summer 2003 as he sought to aid the economy’s slow recovery from the 2001 recession and fend off a remote – but dangerous – risk of deflation. He kept rates at that historically low level for a year.
Critics contend that those low rates fed the housing bubble and lax lending standards that eventually burst and imperiled the economy. The meltdown drove up foreclosures and forced financial companies to rack up huge losses on soured mortgage investments, laying low storied Wall Street firms and causing banks to fail.
Instead of dropping rates to zero, the Fed probably will turn to other weapons to battle the crisis.
The Fed has already created first-of-its-kind programs, such as getting cash directly to companies by buying up mounds of “commercial paper,” the short-term debt firms use to pay everyday expenses such as payroll and supplies. That program, which started Monday, is helping to relieve credit stresses, economists said. The Fed also is providing loans to banks, has moved to provide a financial backstop to the mutual fund industry and has injected billions of dollars in financial markets here and abroad.
The Fed could opt to expand programs by enlarging loans it’s now making, providing loans to other types of companies, or buying more and different types of debt. The Fed’s balance sheet has doubled to $1.8 trillion in recent months, reflecting those other activities to get credit flowing again.
Because the Fed has wide latitude in these areas, many economists believe Fed policymakers are more likely to continue this route than to lower its key rate to zero.
No matter the relief tactics, though, the economy is due for more pain. The unemployment rate, now 6.1 percent, could hit 8 percent or higher by next year. Home prices are likely to keep sinking for some time, and nest eggs will continue to be battered.
“We’ve been in pain, and it will get much more severe over the next six months,” predicted Mark Zandi, chief economist at Moody’s Economy.com. “The economic damage of the financial panic has already been done, and the Fed is trying to limit the damage as best it can.”
WASHINGTON – Oct. 31, 2008 – Here’s a shocker: almost half of Nevada homeowners with a mortgage owe more to the bank than their homes are worth.
Here’s another: If you add in the homeowners like them in California, Arizona, Florida, Georgia and Michigan, together they account for nearly 60 percent of all homeowners who are “underwater” on their mortgages.
Nationwide, almost one out of every five homeowners with a mortgage owes more to their lender than their properties are worth. But if you subtract those states, the rate drops to about one in 10, according to a report released Friday by First American CoreLogic.
The new data underscore the staggering scope of the U.S. housing recession, but also the challenges that government officials face in designing a massive new program to help homeowners avoid foreclosure, with layoffs soaring and the economy sinking.
Some experts predict the problem will get much worse.
Nationally, home prices are already down about 20 percent from their peak in mid-2006. By the time the housing market hits bottom, prices may be down 40 percent from the top, leaving 40 percent of homeowners underwater, according to Nouriel Roubini, economics professor at New York University.
“There is a huge incentive to walk away from your mortgage,” said Roubini, who has attracted attention for his gloomy – and accurate – predictions of the U.S. financial market meltdown. He gave no forecast for when the real estate market would bottom out.
Another pessimistic analyst, Desmond Lachman of the American Enterprise Institute, said that “unless there’s government intervention on a big scale ... we’re really not going to bottom.”
The problem is much worse in far-flung suburban neighborhoods where builders flooded the market with new homes and buyers put down small, or no, downpayments, said Mark Fleming, First American CoreLogic’s chief economist. In desirable urban neighborhoods and close-in suburbs, “a lot of people bought their homes years ago. It’s much more difficult for them to be in a negative equity situation.” Fleming said.
Rising mortgage rates are also making matters worse for prospective borrowers. The rate on a 30-year, fixed-rate mortgage averaged 6.46 percent this week, up sharply from 6.04 percent last week, Freddie Mac reported Thursday.
Higher rates coupled with lower home values means fewer people can tap their home equity. The percentage of U.S. homeowners who pulled cash out of their homes remained at a four-year low in the third quarter, Freddie Mac said.
While some underwater borrowers certainly will lose their homes to foreclosure absent a massive - and successful - government refinancing plan, many will continue to make their payments and wait for values to recover. And of course roughly 30 percent of Americans own their homes outright.
Still, it remained unclear whether the government would be able to do much for many borrowers in trouble, especially given the amount of time to start up a new program.
“Certainly it can’t hurt,” Bernard Baumohl, chief economist at the Economic Outlook Group in New Jersey. “How much it’s going to help is an open question.”
On Thursday, White House press secretary Dana Perino tried to dispel reports that the Bush administration is near agreement on a plan to help about 3 million homeowners avoid foreclosure. Perino said several different ideas are on the table, and that no announcement is imminent.
The plan, widely expected to be run by the Federal Deposit Insurance Corp., would be the most aggressive effort yet to limit damage from the U.S. housing recession.
Despite all the pessimism, even some bearish analysts see modest signs of encouragement. Home sales have stabilized this fall as bottom-fishing buyers snapped up bargain properties in places like Las Vegas and Southern California. New foreclosures, currently flooding the market, are likely to taper off by the middle of next year, said UBS mortgage securities analyst Thomas Zimmerman.
“There may be some turning points not that far away,” Zimmerman said. “The really severe part of this collapse in the housing market may be behind us.”
after they criticised the airline's safety standards and insulted passengers on a social networking website, it has been revealed. Skip related content Related photos / videos Virgin sacks 13 over Facebook use
The airline said the employees' behaviour was "totally inappropriate" and "brought the company into disrepute".
In a statement, the airline said: "Virgin Atlantic can confirm that 13 members of its cabin crew will be leaving the company after breaking staff policies due to totally inappropriate behaviour.
"Following a thorough investigation, it was found that all 13 staff participated in a discussion on the networking site Facebook, which brought the company into disrepute and insulted some of our passengers.
"It is impossible for these cabin crew members to uphold the high standards of customer service that Virgin Atlantic is renowned for if they hold these views."
A spokesman for the airline said: "There is a time and a place for Facebook. But there is no justification for it to be used as a sounding board for staff of any company to criticise the very passengers who ultimately pay their salaries.
"Virgin Atlantic staff are known for their world-class customer service and there is no place in our business for anyone who behaves otherwise.
"We have numerous internal channels for our staff to feed back legitimate and appropriate issues relating to the company."
Orlando – The foreclosure crisis continues to affect everyone from homeowners and mortgage brokers to real estate agents and communities, especially in Central Florida. To serve as a forum for homeowners facing foreclosure and looking to sell their homes, and for real estate industry professionals who are involved in foreclosure-related transactions, the first-ever Orlando Foreclosures Expo (www.foreclosuresexpo.com) will be held on February 7-8, 2009.
A licensed Realtor who helps British and international clients buy and sell vacation homes in Central Florida, Phil Peachey is the founder of the Expo. He started buying and selling foreclosed properties in 2006 and quickly found it challenging to locate available foreclosed homes that are not included in the MLS. This sparked the idea for an event that brings buyers and sellers in the foreclosure industry under one roof.
When the Orlando Foreclosures Expo takes place at the International Plaza Resort & Spa, it will bring everyone from real estate agents and brokers, real estate attorneys and REO department representatives from banks to lenders, investors, wholesalers, builders and others in the foreclosure industry to the International Plaza Resort & Spa. The Expo will also allow homeowners in danger of foreclosure to list their properties and the minimum price they need.
Before the Expo begins, there will be a VIP breakfast where guests can get a preview of foreclosure listings prior to the general public. Also, a foreclosed home will be given away at the Expo. The inaugural event will feature workshops conducted by experts on how to avoid foreclosure and what to do if you are facing foreclosure. The networking among professionals in the industry can lead to immediate transactions and future business, Peachey says. Investors will be able to find listings of foreclosed homes for as little as $18,000. For homeowners in danger of losing their homes to foreclosure, the Expo will give them access to a pool of several qualified buyers.
“The Orlando Foreclosures Expo was born out of the need for people in the real estate industry to promote their services to the public,” Peachey explains. “This will be the first event of its kind where real estate industry professionals and the public can learn about the foreclosure industry, network and links buyers and sellers of foreclosed properties.
“Most people, even real estate professionals, do not have access to foreclosure listings or to the people who regularly buy and sell them. Wholesalers typically offer their foreclosure properties to a very select few. Also, most REO (Real Estate Owned) departments of banks will not deal with the general public,” Peachey adds. “The foreclosure industry has been more like a private club where the public cannot obtain a membership. The Orlando Foreclosures Expo will break down those barriers.”
Peachey says that the Expo has room for as many as 50 vendors. At the moment, 25 vendors have booked booths. The Expo is being sponsored by the Orlando Sentinel, Luxautica, Aston Martin, Orlando Magic and ICEBAR Orlando.
After this initial Orlando Foreclosures Expo is held, Peachey plans to organize similar events across Florida in areas like Tampa/St. Petersburg, Miami, Jacksonville and Tallahassee.
“There is undoubtedly a great need for an event like this,” Peachey says. “It will benefit every professional associated with the foreclosure industry, and it will also help those people who are trying to avoid foreclosure.”
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Jeff Louderback 407-474-6149 jlouderback@cfl.rr.com
WASHINGTON – Oct. 30, 2008 – Even homebuyers with good credit are having trouble getting mortgages with terms they find attractive.
Lenders are demanding much higher downpayments, often about 20 percent, and sometimes even higher. Jumbo home loans, ranging from $417,000 up to $750,000, depending on the local market, are particularly hard to find because private banks are no longer investing in them.
Properties, as well as buyers, are facing extra scrutiny. Some lenders now require a second appraisal to reassure them of a property’s true value, slowing the buying process and increasing closing costs by hundreds of dollars.
Plus, the wave of consolidation among financial institutes has led to confusion and further delays over mortgage processing.
OCALA, Fla. – Oct. 30, 2008 – After looking at five houses in the past several months, Matt and Carrie Geiger made an offer on a home in the Ashton neighborhood in Gainesville a day after it came on the market.
They were motivated to buy in the neighborhood near Carrie Geiger’s job at Talbot Elementary School and wanted a neighborhood with less traffic after having their second child. The seller was motivated to sell after getting a job transfer. The sale closed a week and a half ago for $340,000.
Matt Geiger, who works in the Alachua County Tax Collector’s Office, figures they bought the house at about market value – it appraised for $345,000 – but still below the $360,000 to $370,000 that houses in the area were selling for a year or two ago, he said.
Since the housing market started its slide in 2006, home buyers are finding that prices are down from historic highs, interest rates are near historic lows, and high inventory and low sales means more homes to choose from and more time to shop around.
It may be, as Realtors are fond of saying, a good time to buy.
Whether more buyers do take advantage of prices depends on how the financial crisis plays out.
Florida real estate experts have serious concerns about the availability of financing, according to Wayne Archer, executive director of the University of Florida’s Bergstrom Center for Real Estate Studies. And stock market volatility will likely delay plans for baby boomers to retire and move to the state.
For buyers waiting for the market to hit bottom – not unlike trying to time the stock market and nearly as futile – there are signs that housing may have started a comeback. Nationwide, buyers snatched up short sales and foreclosures in September, taking advantage of median prices that were 9 percent below a year ago to drive up closings of existing single-family homes 1.4 percent, according to the National Association of Realtors. It was the first year-over-year sales increase in nearly three years.
In Florida, one of the states hit hardest by the housing bubble, September sales were up 24 percent from a year ago as buyers took advantage of median prices that were down 22 percent, according to the Florida Association of Realtors.
But J. Parrish, president of Coldwell Banker/M.M. Parrish Realtors and the Gainesville-Alachua County Association of Realtors, said whether buyers are getting deep discounts depends on individual buyers and sellers.
And, of course, location.
While sales of existing homes were on the upswing statewide, sales were down 37 percent in Gainesville in September from a year ago. The median price – with half selling for more and half for less – was down 8 percent, compared to the 22 percent statewide decline, to finish at $175,100.
While the median price can indicate a shift in prices of individual homes, it is often more indicative of a shift in the price level of what is selling, industry professionals say.
For example, while the Florida association reports that Gainesville’s median price was down 7 percent in the second quarter of this year, the price of individual homes resold or refinanced during the same period was down 4.2 percent, according to the Office of Federal Housing Enterprise Oversight.
That shows a market shift toward lower priced homes from the previous year. And since demand has shifted to the lower end of the market, the best bargains are at the higher end, especially for homes of $600,000 or higher, according to Parrish.
At the rate of sales this year through September, there is a 20-plus month supply of homes for sale at $600,000 or more, according to Steve Elwood of Elwood Realty Services Inc. It would take 9.7 months to work through the homes listed below $250,000 and 13.5 months for homes between $250,000 and $600,000.
The Ocala market continues to be more reflective of state trends, with sales up 10 percent in September, but median prices down 16 percent. At $136,500, Ocala is the lowest priced market in the state. Prices in Ocala have been among the lowest in the state throughout the market ups and downs.
While median prices were down 13 percent to 18 percent between April and June, the price of individual resales and refinancings was down 11.4 percent, indicating a market shift to lower priced homes and discounts on individual homes.
Karen Grider of Coldwell Banker/Ellison Realty and president of the Ocala/Marion County Association of Realtors, said the drop in prices in the Ocala area is slowing, and Realtors’ interest from buyers is up. She also said they are seeing people taking their money out of the stock market to invest in real estate.
“If people want to get a good bargain, they’d better not wait,” she said. “I think we’ve seen the prices as low as they’re going to go.”
In Gainesville, Elwood said he’s had three times as much activity in terms of good-faith deposits and closings in October compared to any other month this year, and appraisals are starting to come in at the selling price or better – good signals that the market is starting to turn.
Parrish said there is still downward pressure on prices, however, with more new homes coming on the Gainesville market than are being sold.
New home construction has been harder hit by the housing bubble, and prices are down, but Parrish said there’s only so far builders can go because of labor and materials costs.
Andrew Hodor is building single-family attached town homes at Villas at West End near the golf course in Jonesville.
He said he started offering the homes $30,000 to $40,000 below market value at the height of the market two years ago to get the project started. After bringing up the initial prices closer to current market values, he said the homes are still $15,000 to $20,000 below what they could have fetched a couple years ago.
Hodor said he sees some signs that could drive up new home prices.
Buyers are starting to deplete the new home inventory. There also are very few new projects in the planning process and with the time it takes to get approvals, new home buyers may find a lack of inventory before new projects can come online.
Grider said Ocala is still working its way through a building boom inventory with 7,000 new homes on the market along with foreclosures on subprime borrowers.
“I think we’re back to a nice, stable market, or we will be pretty soon,” she said. “There’s good buys out there everywhere, but everyone’s afraid of what’s going to happen in the market and if we can’t get past the fear, it’s going to stay the same.”
Geiger said because of concerns about the banking industry, they went ahead and locked in an interest rate of 6.125 percent ahead of time.
“I would have liked lower, but that’s not a bad rate,” he said.
Now they are on the other side, needing to sell their old house. They’ve already come off their original asking price – from $238,000 to $234,000 – and within a range his Realtor said is doing better than higher-priced homes.
“We kind of stepped out on a little bit of faith and risk,” Geiger said.
“I don’t think it’s a great time to sell, but we’re thinking positively.”
TALLAHASSEE, Fla. – Oct. 30, 2008 – Three recent home buyers who moved to Florida from other states will appeal a judge’s ruling that dismissed their challenge to property tax breaks offered by two state constitutional amendments, one of their lawyers said Tuesday.
Circuit Judge Charles Francis of Tallahassee rejected the suit Monday. It challenged the 1992 Save Our Homes Amendment, which caps yearly assessment increases at 3 percent for primary homes, and an amendment voters adopted in January.
The recent change lets homeowners take Save Our Homes benefits with them if they move, known as “portability.” The amendment also gives all primary homeowners a tax cut expected to average $240 and includes some breaks for businesses.
“This is the first round of a 10-rounder,” said Douglas Lyons, an attorney for the challengers. “We’re exploring some ways to go directly to the Florida Supreme Court.”
If that doesn’t work, the case next will go to the 1st District Court of Appeal.
It’s one of three similar lawsuits challenging one or both of the amendments.
Another Tallahassee judge last year dismissed the first lawsuit by three out-of-state residents who own second homes in Florida. It challenged the Save Our Homes Amendment, and an appeal is pending in the 1st District.
The third lawsuit also was filed by nonresidents who own Florida property, and it challenges both amendments. That case is pending in circuit court here.
Three Alabama residents argued in the first case that Save Our Homes unfairly has shifted the property tax burden from primary homes, known as homesteads, to all other types of real estate including their vacation homes in Destin.
Circuit Judge John C. Cooper rejected their argument that the amendment violates equal protection and right to travel provisions in the U.S. Constitution. It serves a legitimate public interest in promoting primary permanent homes, Cooper wrote. He also noted the Alabama residents could get the tax break by making their primary homes in Florida.
That’s what the recent home buyers did in the case decided Monday. They still argued their travel rights have been violated because longtime Florida residents get a bigger tax break than they do.
Francis, though, wrote that all residents who buy a home for the first time are treated the same way whether they were born and raised in Florida or just moved here.
He also echoed Cooper’s ruling by writing there’s a rational basis for treating new and older residents differently in the interest of “neighborhood preservation, continuity and stability.”
Center for Export and Investment (CEI-RD) director Eddy Martinez says that according to business experts from New York University and The Economist magazine, the DR's economy is not at risk from the international financial crisis. In fact, according to Martinez, the experts claim the Dominican economy will continue to grow. During the closed-door seminar, "Global Business Today; Different Perspectives For The Dominican Republic", President Leonel Fernandez said the Dominican economy would grow 3% in 2009. Fernandez said that the DR has been able to maintain its stability despite the current turbulence in the global financial market. "Our country continues to enjoy the highest levels of growth in Latin America: with a 5.4% growth rate projection for 2008 it will among the four with most growth in the region." Fernandez says that foreign direct investment has increased due to confidence in the country and added that the DR has a potential 40 investment opportunities worth upwards of US$8 billion. These investments included renovating the Duarte Highway, building the train from Haina to Santiago and the second line of the Santo Domingo Metro.
Economy, Planning and Development Minister Temistocles Montas and Central Bank Governor Hector Albizu Valdez were present at the event. Dean Anthony Davidson from New York University, Anna Szterenfeld from the Economist, Larry Marciano from Financial Markets, Marjorie Kalter from Global Marketing, Denis Garritan from Global Business Strategies and Bruce Baulch from Global Operations also attended the event, which was sponsored by CEI-RD and the Foundation for Global Democracy and Development (FUNGLODE).
Japanese tourists Several tour operators have started to bring Japanese tourists to the DR, opening up the country to a new tourist market. Since April operators have brought tourists to the provinces of Pedernales and Barahona where they have taken part in ecological activities in Bahia de las Aguilas and visited Lago Enriquillo. Dominican Ambassador in Japan Jose Urena said that Japanese tourists spend a good portion of their salaries on travel, which could be beneficial for the DR tourism sector. Urena says that the DR's diplomatic mission in Japan has been promoting Dominican tourism to Japanese citizens for three years.
There's one hot-button issue Miami Beach leaders had hoped to tackle next week: short-term rentals.
But the controversial topic won't come up at the Nov. 5 city commission meeting since lawyers for property owners asked for an extension earlier this month, First Assistant City Attorney Gary Held said. The issue is expected to be heard at a December meeting.
Homeowners in Miami Beach are forbidden to rent out their houses for less than six months under the city's zoning rules, a ban that has created opposition from those who say they rely on the extra income. The rule applies mostly to single-family homes; condos located in parts of the city zoned for hotel use and whose condo boards allow short-term rentals are not affected, said Jorge Gomez, the city's planning director.
The rental debate has been an ongoing issue in the city, prompting a lawsuit last year from a management company that rents out luxury homes.
After several homeowners complained that short-term tenants made for unruly neighbors, some city officials pledged to crack down.
While the single-family home rentals are forbidden under city zoning rules, some homeowners are willing to risk fines of several hundred dollars to rent out their property, especially during popular events such as the Super Bowl and Art Basel Miami Beach.
Gomez said adding the ban to the city code -- rather than just in a list of zoning rules -- will help officials enforce the rules.
''There's a unique character of single-family neighborhoods that we want to protect,'' Gomez said. ``It is easier to enforce the six-month rule if it's in the code.''
Commissioners are expected to weigh in on two other proposals at their Dec. 10 meeting. One would allow 30-day rentals up to three times a year; the other would permit 90-day rentals up to three times a year.
Settling the controversy has become increasingly thorny as Beach residents grapple with a sluggish housing market, local job losses and higher costs.
''People are hurting now with taxes and insurance,'' said Tidra Staples, a North Beach resident who used to lease out her home on a short-term basis. ``The city is basically taking away our right to rent our property.''
But those against short-term rentals said the practice encourages irresponsible behavior in residential neighborhoods such as tenants playing loud music, ignoring parking rules and littering the streets with beer cans and liquor bottles.
''The major fear in our neighborhood are the partygoers,'' said Sylvia Winitzky, who lives in the Bayshore neighborhood in Mid Beach, where people rent out detached cottages next to their 1920s homes.
''The noise is the worst,'' she said. ``People play loud music and residents have to call code enforcement to get them to stop.''
While commissioners will have to decide on whether to change the existing rules, the city is dealing with a lawsuit over the rental issue.
Villazzo, a hospitality company that manages luxury homes, sued the city in September 2007. The company contends that the planning department's administrative guidelines, which prohibit owners from renting their single-family homes for less than than six months and one day, is ''unconstitutional.'' The lawsuit says the city places illegal restrictions leasing Villazzo properties, such as a mansion at 10 Palm Ave.
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Some of the nicest new homes at Ginn Resorts in Florida are going up for auction on November 8, and bidding will take place online and in person in Orlando. These homes are located in three Ginn properties in the Sunshine State: Reunion Resort is located in the town of Reunion, just outside of Orlando; Bella Collina Golf Club, which is in Montverde just minutes to the west of Orlando; and Hammock Beach Resort is situated on the Atlantic Ocean in Palm Coast, between St. Augustine and Daytona Beach.
These auctions are not a dumping ground for private owners to offload secondary real estate rubbish. In this market they are also a sales platform for top US developers to turn their newly completed luxury homes into much-needed cash.” The three resorts being represented at the November auction are prime destinations for holiday and retirement home buyers and are top-quality properties.
These auctions are a great place to get bargains on new homes. In a previous auction Sheila Harrison of Luton, Bedfordshire snapped up a new three-bedroom apartment at Lely Landings in upmarket Naples, West Florida for £100,000 ($200,000). The list price was double that at $399,000 and a near identical apartment at Lely Landings was independently valued in November 2007 for $397,000.
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WASHINGTON – Oct. 28, 2008 – Each day from July through September, more than 2,700 Americans lost their homes in foreclosure.
That number, up from 1,200 per day a year ago, is a sign that the mortgage industry and government programs have done little to help troubled homeowners.
The mortgage market’s troubles have proved to be far more serious and intractable than most in government or the private sector had predicted a year ago.
“We are behind the curve. We are falling behind,” Sheila Bair, head of the Federal Deposit Insurance Corp. told a Senate hearing Thursday. “There has been some progress, but it’s not been enough, and we need to act. And we need to act quickly, and we need to act dramatically to have more wide-scale, systematic (loan) modifications....”
More than 4 million homeowners with a mortgage were at least one month behind on their payments at the end of June, according to the latest data from the Mortgage Bankers Association, and a record 500,000 had entered the foreclosure process.
A massive speculative bubble in housing prices caused millions of Americans to think of their homes as an investment, rather than a place to live.
Now prices are plummeting, especially in once-sizzling markets like California, Florida and Nevada. And the bleeding might not stop until the end of next year.
The median home price in the U.S. dropped 9 percent in September from a year ago to $191,600, and is down 17 percent from the peak in July 2006, the National Association of Realtors said Friday.
Already, 23 percent of homeowners with a mortgage owe more on their loans than their homes are worth, and that figure is expected to rise to 28 percent by this time next year, according to Moody’s Economy.com.
While the majority of homeowners will continue to make their payments and wait for values to recover, some will mail their keys to their lender and walk away, leaving the lender with no choice but to foreclose.
Sophie Lapointe, a mortgage broker and owner of Five Star Mortgage in Las Vegas, has found there’s little that can be done to help people who owe more than their homes are worth. “The biggest problem is negative equity,” she said.
When homeowners in that position ask her about refinancing, Lapointe tells them to contact their current lender and ask about a loan modification because she already knows no new lender will give them a loan.
Loan modifications vary depending on many conditions, but can include deferring payments, allowing partial payments, lowering the interest rate and lowering the principal balance.
Investor speculation
Plunging prices have had even more impact on investors than on homeowners because investors have less emotional attachment to a house. They’re even more likely to walk away, especially if they’ve put little money into a property.
Investors purchased one of every five homes last year, and almost one of every three when the market peaked in 2005, according to the Realtors trade group.
They flocked to hot markets like California, Florida, Nevada and Arizona, as television shows such as A&E’s popular reality series “Flip This House” touted the easy money that could be made buying and selling homes.
They took advantage of risky loan products that didn’t require downpayments or proof of income. Other loans allowed the borrower to pay only the interest on the loan, or even less, and none of the principal for a certain time.
Now, more than 30 percent of properties in the foreclosure process are owned by someone with a different address, indicating the home is likely owned by an investor, according to foreclosure listing service RealtyTrac Inc.
Government programs to help homeowners are specifically designed not to help such investors, though in reality it may be hard to weed them out.
Complex investments
Traditionally, lenders evaluated borrowers carefully because they held onto the mortgages for the life of the loan. That process started to change in the late 1980s, as Wall Street found new ways to package the loans into securities to sell to investors.
Investors were attracted to these new mortgage-backed securities because they paid better returns than government bonds.
At the beginning of this decade, the Federal Reserve started cutting interest rates to historic lows. So investors poured money into the U.S. mortgage market, particularly into securities made up of high-interest mortgages made to borrowers with poor credit records.
The high-interest, risky mortgages, called “subprime,” boomed, from $160 billion in new loans in 2001 to more than $600 billion in both 2005 and 2006, according to Inside Mortgage Finance, a trade publication.
Lenders stopped worrying about the creditworthiness of borrowers and offered them ever-riskier mortgages. Most of those loans were made by commission-driven mortgage brokers, who had nothing to lose if the mortgage went bad because it had been resold.
“By the time it defaults, it’s somebody else’s headache,” said Barry Ritholtz, CEO of research firm FusionIQ.
When mortgages are packaged into securities, borrowers’ monthly payments are divided up and sent to thousands of investors around the world. With so many owners, helping troubled borrowers is tougher. Many of these investors have been reluctant to agree to drastic loan modifications, such as reducing the principal balance, because they don’t want to take a big loss.
“We and others have gone to these investors, and they’re just not having it,” said Evan Wagner, spokesman for Pasadena, Calif.-based IndyMac Federal Bank, which has been run by the FDIC since July. “They don’t want to take more losses than they have to.” Without such modifications, many homeowners can’t avoid foreclosure.
Democrats on Capitol Hill are frustrated.
On Friday, six House Democrats, including Rep. Barney Frank, D-Mass., accused hedge fund investors in a letter of blocking loan modifications and called them to a hearing on the issue next month.
“For the hedge fund industry, which has flourished for much of the past decade, to take steps so actively in opposition to what is currently in the national economic interest is deeply troubling,” they wrote.
Job losses
The No. 1 reason people fall behind on their mortgage is loss of a job, or some source of income, perhaps from a divorce or death of a spouse. If a borrower is unemployed, lenders don’t have many options but foreclosure.
Two years ago, about 36 percent of mortgage delinquencies were caused by loss of income or unemployment, according to research by mortgage finance company Freddie Mac. But that number has risen to 45 percent this year as the unemployment rate has ticked up to a five-year high of 6.1 percent.
Jon Falen, 33, put his four-bedroom house in Olathe, Kan., with high-end appliances, granite kitchen countertops and a landscaped lot, on the market more than two years ago after health problems forced him to leave his job as an air traffic controller.
Falen and his wife, now delinquent on their two home loans, are finally scheduled to sell their house next month.
But there’s a big catch: The buyer has agreed to pay only $490,000, which is $70,000 less than what the couple paid for it in 2002.
Making matters worse, Falen and his wife owe $675,000 to two lenders because they used their home equity – which soared during the housing boom – to pay off student loans and remodeling expenses.
Though Falen and his family seem to have avoided becoming another foreclosure statistic by cashing out on retirement plans and dipping deeply into savings, he is chastened by the drawn-out experience.
“Any debt right now scares me to death,” he said.
Falling behind again
It’s hard to fix something that keeps breaking. Roughly one-third of all subprime loans modified in the third quarter of last year were delinquent again within 10 months, according to a Credit Suisse report released this month.
Maria Martinez, 57, an administrative worker at the county jail in Stockton, Calif., is typical of homeowners who have gotten help, but not enough. She is three months behind on her mortgage, even after receiving a loan modification earlier this year.
Though Martinez bought the house more than a decade ago for only $76,000, she now owes about $230,000 because she refinanced her home loan several times.
“I was trying to borrow some money to pay some bills,” said Martinez, who is on leave from her job this month after being diagnosed with cancer. “I didn’t really think … that I would get into a bind like this.”
Until the summer, she was paying an interest rate of about 8.5 percent on her mortgage. The modification lowered that amount to 7.75 percent.
If she had been given a more generous loan modification, she might be in a better situation. But most efforts to help homeowners have been slow and weak.
So what has and should be done?
The scale of the mortgage crisis became clear in July 2007 when Countrywide Financial, then the nation’s largest mortgage lender, reported an unexpected surge in defaults in high-quality mortgages.
Three months later, the Bush administration announced a new mortgage industry coalition – dubbed the Hope Now alliance. The coalition had an “aggressive plan to reach more homeowners and help them find a way to stay in their homes,” Treasury Secretary Henry Paulson said at the time.
The Hope Now group says the industry has modified 765,000 loans since last July, and put 1.5 million borrowers on temporary repayment plans. There are no data on how many of those homeowners have fallen behind again.
Faith Schwartz, the coalition’s executive director, said the effort was never meant to be the only solution to the foreclosure crisis. She says there “has been a tremendous effort” on the industry’s part, noting that 1.9 million households have received letters urging them to call a housing counselor.
Industry and government responses have also drawn fire from consumer advocates for being too slow and too narrow.
The Federal Housing Administration, a government agency that backs loans to borrowers with weak credit, says it has helped about 400,000 borrowers refinance over the past year, though only about 1 percent were behind on their loans.
This month, the FHA started the “Hope for Homeowners” program, included in legislation passed over the summer by Congress. It is designed to let another 400,000 troubled homeowners swap their mortgages for traditional 30-year fixed rate mortgages, but only if lenders agree to reduce the value of a loan and take a loss.
But there are still questions about how eager lenders will be to participate.
Faced with public outrage that they passed a $700 billion plan to rescue the financial industry, politicians in Washington are going to keep trying to find ways to fix the foreclosure crisis. One promising approach came this month when 11 states entered into a more than $8 billion settlement with Countrywide Financial and its new parent Bank of America Corp.
The settlement, which goes into effect Dec. 1, is projected to help an estimated 400,000 Countrywide borrowers by allowing them to replace risky loans with ones at substantially lower interest rates.
And in Washington, the FDIC’s Bair has proposed a plan in which the government would provide guarantees for mortgages that have been reworked by banks, lowering payments to more affordable levels.
All eyes now are on Bair, Paulson and other top officials to see if the government can craft a plan that gets at the heart of the global financial meltdown – the U.S. foreclosure crisis.
CHICAGO – Oct. 28, 2008 – A redesigned Realtor.com launched yesterday. Realtor.com is the official Web site of the National Association of Realtors (NAR) and operated by Move Inc. The Web site currently hosts over 4 million property listings, and reached more than 5.4 million consumers in August 2008.
“Realtors pride themselves in being industry innovators, and the all-new Realtor.com site reflects how we add value to the real estate transaction. I’m sure our members will be very happy with the upgrades because the new features give us more of what we want, especially more traffic to our listings, and all of it is more attractively displayed,” says NAR President Dick Gaylord. “Consumers, too, will be pleased with the redesign. The site is more user-friendly, contains more listing data including neighborhood and school reports, and shows home value comparisons – and a new search function will make it easier to find what they want.”
Move’s research found that, more than anything, consumers want “more and better quality photos.” The site now includes more photos of higher quality – 140 percent larger than before; a photo carousel on the homepage; and photo galleries, virtual tours and videos that are easier to find and provide an “insider’s view” of properties.
According to Move statistics, homebuyers visiting the new version of the site are five times more likely to go from the homepage to a listing detail page compared to the old site. They view 40 percent more properties and click through 12 percent more often to view details. In addition, visitors are 37 percent more likely to e-mail an agent and 10 percent more likely to click through to their Web site. Compared to the classic version of the Web site, 45 percent more visitors downloaded informational brochures on properties, and they forwarded listings to friends 10 percent more often.
All Realtors receive greater visibility for their free listings. Each basic listing now includes up to four free photos, community maps and more information on local demographics, schools, and amenities.
Metro Orlando's apartment market tightened a tiny bit this past spring and summer, as the vacancy rate declined slightly to 10.4 percent by September, according to a recent local survey.
That could mean higher rents in coming months, though there are signs the trend may not last because the region's population growth is stalled and job creation is all but flat.
In March, the area's vacancy rate was 10.6 percent; a year ago, it was 9.2 percent, according to the twice-yearly survey by Charles Wayne Consulting Inc., a Maitland-based real-estate research and consulting company.
The Apopka area was the tightest of the 12 submarkets studied, with a 3.7 percent vacancy rate.
The survey targets commercial apartment complexes of 50 units or more in Orange, Seminole, Osceola and Lake counties. It also includes complexes in northeast Polk County that are near the Lake County line.
The September survey found 604 complexes in Metro Orlando with 144,659 rentable units, compared with 567 complexes and 136,987 units a year ago.
Another 3,699 units were under construction -- well below the average of about 5,000 units that have been under way at any given time during the past five years.
Charles Wayne President Jim Lewis said that, during the past six months, another 11 condominium-conversion projects -- "most with low occupancies" -- had returned more than 1,300 unsold condo units to the area's rental pool. That has kept the overall vacancy rate from shrinking much, he said. Another factor contributing to vacancies: The metro area's "anemic employment gain" of the past year has resulted in "fewer new employees moving into area rental apartments," he said
The survey did not report on rental rates, but Forbes magazine recently rated the Orlando market as one of the best for renters among the nation's large metro areas.
Orlando's March vacancy rate of 10.6 percent was the first to exceed 10 percent since March 2002, according to the Charles Wayne survey. The closely watched report dates back to March 1987, when Metro Orlando had only 293 apartment complexes and 55,572 rentable units. The vacancy rate at that time was, from a landlord's perspective, an uncomfortable 12.7 percent.
The tightest apartment market on record for the region was in March 2006, when the vacancy rate sank to 3.6 percent. At the time, thousands of rental units were being converted to condominiums and put up for sale as complex owners sought to cash in on the soon-to-end boom in housing sales.
Many of those condo projects have since returned to the apartment market as sales collapsed.
Latest figures show over 3% increase in visitor arrivals to Nueva Esparta, Venezuela
The latest figures released by the state of Nueva Esparta in Venezuela show that Europeans, and especially the British, are increasingly falling in love with the best kept secret in South America. Located off the North East Caribbean coast of the country, it comprises three picturesque islands with a total population of less than half a million. Figures from the Nueva Esparta tourism corporation, Corpotur, show a 3.42% increase in visitor arrivals (2,045,143) to the state for the period Jan – September 2008.
'State of New Sparta' as it was named in 1864 measures 50 miles by 12 and its main land mass is Isla Margarita founded in 1525. The state’s name comes from the heroism shown by its people during the Venezuelan War of Independence, thought similar to that of the Spartan soldiers of Ancient Greece. Isla Margarita, known widely as the “Pearl of the Caribbean”, benefits from being outside the hurricane belt with an average climate of 27 degrees Celsius. It boasts little rain, a variety of natural scenery from mountainous terrain to lush vegetation and over 200 miles of sandy beaches. The area around the main town, Porlamar, offers a large number of facilities and activities for visitors including an 18 hole golf course, shopping, windsurfing, scuba diving, snorkeling and hiking. For this reason it has been a popular vacation destination for around 30 years.
These once undiscovered islands and their rich history is something more and more people are travelling to experience. In 2007 2.5 million people visited Isla Margarita alone, over five times its population. However, this masks the full story. Nueva Esparta has remained largely hidden to those from outside the area as most visitors come from mainland Venezuela. 91% of visitors in 2008 thus far arrived from Venezuela, suggesting a still traditional destination unspoiled by western tourism. Nevertheless, word of mouth about the islands and their status as an undiscovered haven is increasingly reaching more and more potential visitors further afield.
Since 2001, the percentage of hotel rooms occupied by visitors to Nueva Esparta has more than tripled to 76%. Europeans are the most enamoured by the islands, making up the vast majority of international visitors. 60,000 Europeans make the journey compared to only 25,000 from the rest of the world. The tourism figures also revealed the love affair an increasing number of Britons are having with Nueva Esparta. Now the third major international tourist market, nearly 10,000 British tourists visited the islands during the last year. This represents a 38% increase on the previous 12 months when around 6,500 Britons visited.
In addition, other northern European countries have also discovered Nueva Esparta and Isla Margarita. The Dutch, Danish and French are nearly as eager as the British, with the keenest Europeans coming from Germany with around 15,000 visitors. Like their ancestors hundreds of years ago, Europeans are increasingly interested in Nueva Esparta. This is particularly the case with northern Europeans looking for an alternative sunny island retreat from the Mediterranean norm, with a Caribbean style twist as well.
Significantly, a further reason accounting for the increase in British and European visitors to the islands is their accessibility from major cities and airports. The third most popular of all charter flights to Nueva Esparta is the First Choice flight from either Gatwick or Manchester airport which in the first eight months of 2008 brought almost 9,000 people. With its activities, facilities, views and beaches it offers a competitive and distinctive alternative to the familiar European destination. Whether it is for holidaying, visiting or retiring it represents an interesting new location as well as an untapped buy to let opportunity.
Mark Andrew, Managing Director of Emerging Earth who is marketing the Caracola Beach & Spa Resort near Porlamar, said:
“Isla Margarita in Nueva Esparta has remained undiscovered for most tourists across the world but this will not be the case for long. Over the last five years Europeans have become increasingly attracted to this unspoiled part of the world, a part that reminds them of the best of sunny island living. Demand among Venezuelans for accommodation sees no sign of abating either and their continued fascination with the islands demonstrates the reason why more and more outsiders keep returning, particularly those from Europe. We expect demand for property and accommodation over the next few years will continue to grow, above all for apartment resort developments where facilities and close by tourist attractions are plentiful”.
Caracola Beach & Spa Resort, Isla Margarita
The Caracola Beach & Spa Resort comprises of a variety of apartments and duplexes spread across 15 floors, most with stunning views of the beautiful Caribbean beach. The development boasts excellent facilities that include restaurants, bars, swimming pools, chill-out areas, spa, gymnasium, beauty salon, high end retail outlets and beautifully landscaped gardens. All apartments are 1 or 2 bedroom and have air conditioning, are spacious with large terraces, fully furnished and come with a guaranteed rental return of 7% pa net for 10 years. This investment purchase is SIPP qualifying and offers tax efficient freehold ownership. Prices start from €79,000/ £63,000 for a one-bedroom apartment.
For more information on this project email us at homes@totallyflorida.com
Nothing Barbara West has done in her 22 years at WFTV-Channel 9 has generated the attention of her interview last week with Sen. Joe Biden, Barack Obama's running mate. The contentious chat has become an Internet sensation -- 1.2 million hits on YouTube over the weekend and more than 500,000 on WFTV.com -- and generated controversy about how journalists question their subjects.
"The thing that stuns me is that this has become about me," said anchor West, 60. She appeared Monday night on The O'Reilly Factor on Fox News Channel and Larry King Live on CNN and plans to be on three more national shows today.
"It's not a good thing. I am not trying to seek the limelight in any way," she said. "I did not do the interview to make headlines, but to get answers that people in the street want to know. When I'm doing fund-raisers, I see vast numbers of people. My questions were reflective of what they're asking about."
In the Biden interview, West quoted Karl Marx and asked, "How is Sen. Obama not being a Marxist if he intends to spread the wealth around?"
"Are you joking?" said Biden.
"No," West said.
West later asked Biden about his comments that Obama could be tested early on as president. She wondered if the Delaware senator was saying America's days as the world's leading power were over.
"I don't know who's writing your questions," Biden shot back.
Sentinel readers described the interview as the best or the worst they have seen. "Barbara must be the last honest reporter in America," wrote one.
"West was asking the most idiotic questions I've seen from a professional reporter," countered another.
"I was trying to get to the heart of things, not lob softballs," West said. "We are a hard-breaking news station. Our job is to challenge people and ask probing questions."
Jill Geisler, who teaches ethics and management at the Poynter Institute journalism school, said West has a right to ask any question she wants. "Depending on where you sit, you may say, 'Somebody finally asked the question I had,'. " Geisler said. "Others would say it's loaded language."
Geisler found some of West's language hyperbolic and described the anchor as coming from a point of view similar to talk radio hosts Sean Hannity's or Rush Limbaugh's.
"I can ask you 'Have you stopped beating your wife?' and say it's just a question, but there's an assumption embedded in it," Geisler said. "There was a world view in those questions."
WFTV news director Bob Jordan supported West's approach. "I'd rather be known as aggressive than pulling punches," he said. "We ask questions on behalf of viewers."
West received 10,000 e-mails about the Biden interview -- she estimated they were 9 to 1 positive.
After the Biden interview, West's bio was the next most-requested item, Jordan said. "I've never seen anything like this," he added.
The station posted West's Monday interview with Sen. John McCain on the Web before evening newscasts.
"I think I asked just as tough questions of him," West said.
Obama's campaign was critical of West. "Let's be clear: This station's interview with Joe Biden wasn't tough -- it was just absurd," said Adrianne Marsh, Florida spokeswoman for the campaign. "Republicans and their allies are looking for any excuse they can find to change the subject because, by their own admission, if they keep talking about the economy, they're 'going to lose.'. "
In a release, McCain's campaign noted: "Senator McCain sat down with Barbara West today, the same reporter that Biden is now criticizing."
Several readers questioned how objective West could be because her husband, Wade West, was a Republican strategist, who contributed $2,250 to Republican candidates from 2000 to 2006. Barbara West said he was no longer a strategist and instead runs America Fundraising Auctions, which stages charity auctions.
"That's his business, his full-time business and his only business," West said.
Asked her political affiliation, West said, "I don't think I should say." Voting registration records show she is a Republican.
In Collier County, it’s the more affordable communities that have been hurt the most.
From Jan. 1 to Oct. 8, the county had 1,500 final judgments for mortgage foreclosures on single-family homes, with a total mortgage balance of more than $522 million, according to a report by the Bidder’s Broker in Naples. More than half of those homes are in Golden Gate Estates or Golden Gate, where working people live.
“It looks like working families get hurt worse in this process,” said Naples real estate expert Ross McIntosh, founder of the Bidder’s Broker.
In Golden Gate Estates, there are 676 judgments on single-family homes. There are another 261 in Golden Gate.
Most of those homes are likely to be primary, year-round residences, McIntosh said.
Golden Gate and Golden Gate Estates have traditionally been among the most affordable places to live in the county. They’ve been a draw for hourly blue-collar workers, many of whom have seen their jobs or hours cut in a tough economy.
The unemployment rate in Collier County in September stood at 8.4 percent, up from 5.9 percent a year ago.
With a housing slump, construction workers and real estate agents have been hard hit in Southwest Florida. They are among the hundreds who have lost their homes this year in Golden Gate and Golden Gate Estates.
“By and large you have a lot of your labor pools come from Golden Gate. Well, when the job market dries up, they are in trouble,” said Rick Parlante of the Parlante Group with Coldwell Banker Residential Real Estate in Southwest Florida.
Job cuts and exotic loans — including adjustable-rate mortgages — are blamed for many of the foreclosures across the country. It’s the same story here.
In 2004, interest-only loans made up 42.4 percent of loans for home purchases in the Naples area, higher than the national average of 30.9 percent, according to mortgage tracker LoanPerformance, a division of First American CoreLogic Inc. With these loans, borrowers pay a lower monthly payment initially, but a higher one later on.
Tony Perez, a real estate agent with VIP Realty Group Inc. in Naples, is working with a seller in Golden Gate Estates who has seen his work dry up with a pool company and has fallen behind on his mortgage payments. They hope for a short sale — or sale for less than the banks is owed — to avoid foreclosure.
With creative financing, many buyers put no money down and got into homes they couldn’t really afford, Perez said. Now they are paying the price.
“If you lose your job and you have 100 percent financing on your house, your chances of staying in the house are pretty slim,” Parlante said.
With home prices plunging, many have found themselves owing more than their home is worth.
“They are walking away from it. That is what is happening,” Parlante said.
Investors in Golden Gate and Golden Gate Estates have also been hurt by plummeting values and sluggish sales. They are abandoning mortgages they can’t or don’t want to pay.
“A lot of people got caught up in this. A lot of good Realtors got caught up in this,” Parlante said.
Other working-class communities share in the pain of foreclosures in Collier County.
From Jan. 1 to Oct. 8, there were 44 mortgage foreclosure judgments for single-family homes in Naples Park and 37 in Naples Manor. Working families and investors, who got caught up in the buying frenzy in 2004 and 2005 that led to skyrocketing values, have been hit in these communities too.
“We have been seeing more empty homes and more rental signs and more ‘For Sale’ signs. So far we haven’t seen any vandalism or anything like that and hopefully we won’t,” said Mildred Lucanegro, president of the Naples Park homeowners association.
When times were good and real estate values were rising, some refinanced their homes and took money out to pay off credit cards or to buy a new car or wide-screen TV, said Glenn Ginsburg, broker and owner of A Delta Realty of Naples.
“Some people thought their house was an ATM. Well, eventually you are going to pull so much equity out of your house that when values start dropping you are going to be in trouble. That may have been what happened in Naples Manor,” he said.
Also in the top 10 for single-family mortgage foreclosure judgments are Marco Beach with 65, Lely with 17, and Leawood Lakes with 14. Waterways and Valencia both have 12. Valencia Lakes, Indigo Lakes, and Orange Tree each have 10. There are another 10 on unplatted, scattered lots, according to the Bidder’s Broker.
High-end communities are not immune to foreclosures. There have been four in Pine Ridge and three in Quail Creek, according to the Bidder’s Broker.
Some wealthier owners got caught with two mortgages when they were trying to move up to a new home and couldn’t sell their old one, McIntosh said.
Still, there haven’t been any judgments this year in such wealthy communities as Port Royal or Aqualane Shores, where there are multimillion-dollar mansions, he said.
If the economy doesn’t improve soon, however, more expensive homes could fall into foreclosure.
“People aren’t prepared to go five years without any income, whether they make $50,000 or $500,000 a year. When the spigot gets shut off, sooner or later you lose your house,” McIntosh said.
WASHINGTON – Oct. 27, 2008 – U.S. mortgage lenders are showing more willingness to rewrite loans for troubled homeowners, a trade organization said.
“There’s really no reluctance anymore,” said Chairman-elect of the Mortgage Bankers Association David Kittle. “Lenders lose $40,000 to $50,000 on every loan that goes into foreclosure,” he said.
Kittle said some lenders were sending staff door-to-door to engage homeowners in discussions about rewriting their contracts, USA Today reported Wednesday.
Kathleen Day of the Center for Responsible Lending said the door-to-door maneuver may just be a publicity stunt, the newspaper reported.
Many banks lack the extra staff needed to help homeowners renegotiate or systematically review mortgages to see if they qualify for federal programs.
Hope Now, a national alliance of lenders, financial counselors and investors, said 2.26 million homeowners avoided foreclosure since July 2007 by changing repayment plans.
As many as 400,000 homeowners could benefit from a new Federal Housing Administration program, while another 400,000 could find relief through Bank of America, which purchased Countrywide Financial and then settled a complaint against it with terms that include helping qualified homeowners.
MIAMI – Oct. 27, 2008 – The glitterati of global real estate are descending on Miami this week, amid a worldwide credit crisis sparked by reckless lending in the U.S. property market.
More than 5,000 professionals from around the world – Tokyo developers, German bankers, San Francisco architects, Saudi Arabian property owners, among them – are attending the fall meeting of The Urban Land Institute.
The four-day conclave puts industry leaders and public policymakers together to discuss everything from the art of transit-oriented development to navigating the ongoing financial turmoil.
This year the group is exploring what cities should look like in 2050.
It’s the first time Washington, D.C.-based ULI, a nonprofit research and educational group with offices around the world, has held its annual gathering in Miami. Former U.S. Federal Reserve Chairman Paul Volcker and former Mexico president Vicente Fox are keynote speakers.
ULI president Richard Rosan sat down with The Miami Herald recently to talk about the conference and some of the challenges the real estate industry now faces.
Q. What needs to be done to resolve the current financial crisis?
A. It’s a big ditch. The way out is we need a huge amount of government intervention because there has been a complete loss of confidence in the ability to trade money and finance things. I was in New York with finance guys recently and they are just sitting there and nothing is happening.
No one had any idea how global the money world had become. Trillions of dollars were circling around the world. It wasn’t very long ago, 12 or 14 months ago, when people said the U.S. will go into a recession, and everyone said we’re delinked. Asia is separate and they will survive. We’ve delinked Europe. Baloney, everything is tied together.
It looks like we are on the right track now. But the answer is continued government intervention to do it, and stimulus.
Q. What do you make of the South Florida real estate market?
A. You have something that is not pervasive around country; you have a huge amount of empty condominiums because of overbuilding or whatever it is. The silver lining in Miami is that it’s here; you have them built. Once you have them built, they’re available and as the world changes, it will become an asset rather than a liability. It doesn’t mean the guys who own them right now are going to be doing too well.
I think your downtown development is brilliant here. I think the policies in Miami have been terrific – making it a dense urban environment. Longer term it has got to be a positive thing.
Q. Does the ULI embrace the idea of creating densely built urban centers, and has it taken a position on the sprawl we have seen in so many U.S. metropolitan areas?
A. We believe that the whole issue of climate change and energy has brought everyone together to make us realize we can’t continue to let this country sprawl out forever and ever.
We can’t have people driving an hour to work, using up all this fuel and time. We have long, for many years, been in favor of transit-oriented development and denser building.
That doesn’t mean to say you won’t have to build a lot of new buildings in places that maybe aren’t in downtown. Because there are not enough places in downtowns around country to house the population that is going to hit us. But it should be close to downtown and there should be ways to get there.
The whole urban fabric needs to be thought of in a different way, in that you have centers of people being together and they are linked with other centers. It’s sort of like a quilt.
Q. You are doing an exhibit called The City in 2050 at the conference. What should cities of the future look like?
A. We thought of making a blueprint, but we decided it was premature to make such a blanket statement. So this exhibit City 2050 is saying what are the options. It is a program that will continue and we’re going to then explore how different options would look.
But I think some principles are pretty clear. You want options for transit in addition to cars. You want to have options for housing that is different from the suburban single-family house on a small lot. You need to do that because our population has changed, our demographics have changed, and we need to create a richer environment. We think mixed-use development is much better.
How you do that is more specific and there are different ways of doing it. For instance, you can do very dense low-rise development or do very dense high-rise development.
Q. What are the cities today that illustrate the model of better practices?
A. A lot of cities are trying to do the right thing. Miami is trying to do the right thing. Mayor Diaz is doing the right thing. Mayor Diaz’s whole program, with the zoning changes, is the right direction. I think Miami 21 is the right direction.
The problem it has: It is just the city of Miami. Unless we think regionally you are in trouble. You have to go beyond the city limits. I see some real horrors where counties are anxious to get dollars and allow all sorts of things to happen. You have to pay the piper eventually. I think states should take a bigger role in how urban areas are developed.
WASHINGTON – Oct. 27, 2008 – As the economic wreckage piles dangerously higher, the Federal Reserve is prepared to ratchet down interest rates – perhaps to their lowest point in more than four years – with the hope of relieving some of the pain felt by many Americans.
The convergence of a housing collapse and a lockup in lending has created the worst financial crisis in more than a half-century. Alan Greenspan, who ran the Fed for 18 1/2 years, called it a “once-in-a century credit tsunami,” and conceded that he made mistakes that may have aggravated the economy’s slump.
With a recession seen as inevitable, if not already under way, any Fed rate cut would be aimed at cushioning the fallout.
Vanishing jobs and shrinking paychecks have forced consumers to cut back sharply. Millions of ordinary Americans have watched their 401(k)s and other nest eggs shrink and the value of their homes drop, making them feel in even worse financial shape. In turn, businesses have cut back on hiring and other investments as customers hunker down and credit problems make it harder and more costly to get financing.
“These are sobering times,” said Paul Kasriel, chief economist at Northern Trust Co.
All the problems have been feeding on each other. So far, Fed Chairman Ben Bernanke and his colleagues haven’t been able to break the vicious cycle, despite hefty rate reductions and a flurry of unprecedented steps aimed at getting credit flowing more freely again.
Bernanke says he’ll use all tools to battle the crisis.
To that end, Fed policymakers are widely expected to lower the central bank’s key interest rate at the conclusion of a two-day meeting Wednesday - their last session before the November elections.
Investors and some economists predict the central bank will drop the rate by half a percentage point to 1 percent. If that happens, it would mark the lowest rate since the summer of 2004. Others, however, think the rate will be cut by a smaller, quarter-point to 1.25 percent.
In turn, rates on home equity, certain credit cards and other floating-rate loans tied to commercial banks’ prime rate should drop by a corresponding amount. A half point reduction would leave the prime rate at 4 percent; a quarter-point cut would drop the rate to 4.25 percent. Either way, the prime rate would be the lowest in more than four years.
The Fed hopes that lower rates will spur people and businesses to spend again, helping to brace the wobbly economy.
“I think it would be a good faith psychological move,” said Richard Yamarone, economist at Argus Research. However, Yamarone and others doubt that another rate reduction will entice people – many buried under piles of debt – to ramp up spending. But it might help a little, they said.
Consumer spending – which accounts for the single-biggest chunk of overall economic activity – probably fell in the July-to-September quarter. That would mark the first quarterly drop since late 1991, when the country was coming out of a recession, economists said.
Given that, many predict the national economy contracted in the third quarter. The government releases the report on gross domestic product on Thursday.
GDP measures the value of all goods and services produced within the United States and is the broadest barometer of the country’s economic health. Many also believe the economy will continue to contract through the rest of this year and into next year. All that would more than meet a classic definition of recession – two straight quarters of shrinking GDP.
Bernanke has repeatedly warned that the country’s economic weakness could last for some time – even if the government’s unprecedented $700 billion financial bailout package and other steps do succeed in getting financial and credit markets to operate more normally.
Many expect the unemployment rate – now at 6.1 percent – to hit 7.5 percent or higher by next year. Employers have cut jobs each month so far this year. A staggering 760,000 jobs have disappeared.
Whether Democrat Barack Obama or Republican John McCain, the next president will inherit a deeply troubled economy and a record-high budget deficit that could cramp his domestic agenda.
Kasriel thinks another rate reduction could help squeezed banks.
Lowering rates would increase the difference between the rate banks charge each other to borrow overnight and the rates they are paid on investments in super-safe Treasury securities, a popular investment these days given the chaos in credit markets and on Wall Street, he said. “That will improve profits and will enable banks to restore their capital,” Kasriel said.
To unclog credit, the Treasury Department recently announced a historic step, saying it would inject up to $250 billion into banks in return for partial ownership. The hope is that banks will use the capital infusions to rebuild their reserves and boost lending to customers. The money also can be used by a bank to buy another bank, strengthening both to better weather the financial storms.
Earlier this month, the Fed and other central banks joined together to slash rates, the first coordinated move of that kind in the Fed’s history. That dropped the Fed’s key rate down to 1.50 percent and marked an about face in policy. The Fed in June had halted an aggressive rate-cutting campaign that had started in September, aimed at shoring up the economy.
The Fed had moved to the sidelines out of fear that its rate cuts would worsen inflation. Since then the inflation threat has lessened. The threat of a global recession has dampened once surging prices for energy, food and other commodities.
Now a few economists are starting to worry about deflation – a widespread and dangerous bout of falling prices – if the U.S. and world economy get stuck in a long and painful recession.
The remote but powerful concern about deflation was among the reasons why the Greenspan Fed held rates at very low levels for so long in the aftermath of the last recession, in 2001. By the summer of 2003, Greenspan had ratcheted down the Fed’s rate to 1 percent, which was the lowest since 1958. The Fed held rates at those historically low levels for one year before beginning to bump them up to fight inflation.
Critics contend that those low rates fed the housing bubble and lax lending standards that eventually would burst and imperil the economy. The meltdown drove up foreclosures and forced financial companies to wrack up huge losses on soured mortgage investments, laying low storied Wall Street firms and causing banks to fail.
While prices of homes in Orlando have fallen over the past year, some respite is in sight with the government passing measures to try and fix the existing home mortgage situation. While prices in Orlando have fallen, they might not continue to do so for long.
Traditionally, homes associated with foreclosures sell for lesser than other homes within the same neighborhood. This, therefore, is a good time to buy a home associated with foreclosures in Orlando.
Bank foreclosure homes can be bought at three different stages. Homes that are facing foreclosure are sold as short sales. Once a house has been foreclosed upon, it sells at a public auction. If the house still does not sell, it becomes an REO property and can be bought directly from the bank.
A home can sell at the pre foreclosure stage as a short sale, when the existing homeowner wishes to avoid foreclosure. While buying a home at this stage, make sure you check for any unpaid property taxes or existent second liens on the property. Since the primary concern of a majority of the home owners opting for short sales, is paying back to the lender what is owed on the property, these homes can sell for substantially lesser than their market values.
Homes that are foreclosed upon are first put up for sale at courthouse auctions. Buying a home during this stage can be a risky proposition as these homes are not open to inspection, and any costs involved in repairing the house post the auction need to be borne by the buyer. However, some very good deals can be obtained if a good amount of research is put into the process. Ideally, the auction you decide to bid at should not be the first auction you attend.
When a home passes the auction stage, it passes on to the lender who holds the mortgage on the property. It is then referred to as a Real Estate Owned (REO) property. While buying a foreclosure home through a bank, previous arrears associated with the property need not be worried about. Also, the previous home owners would have been evicted before you buy the home. The primary concern of the bank, in these cases, is to recover the balance on the unpaid mortgage associated with the foreclosure including the costs they had to incur during the process. This, therefore, leaves good room for bargaining.
Lists of homes that are involved in foreclosures in Orlando can be found in local newsletters, the internet, local estate agents and lending institutions that deal with home loans. Make sure you explore all possible avenues before reaching a decision.
A foreclosure is when a home owner is unable to pay on his mortgage over a period of time and the lender takes over the property. With the entire country reeling under the current mortgage crisis, many people are seeing this as a good time to buy property. These include investors and people wanting to buy their first homes.
Traditionally, a foreclosed property sells for lesser than a property that has stayed clear of foreclosures. What this means is that you could end up buying a foreclosed property that looks exactly like the one next to it at a much cheaper price.
Orlando is set to witness over hundred homes being auctioned on the 17th of August, 2008. These would come with the sellers having paid title insurance for them. A deposit of $2,500 dollars will need to be paid by the bidder who wins, either as cash or as certified funds.
Auctions are often a good place for investors to buy property because they are viewed as good business opportunities. If you are a first time home owner, make sure you go through the property, with a tooth comb if required, because most of the houses sold at auctions are sold on an ‘as-is’ basis.
Listings for government foreclosures, which take place mostly when the home owner fails to pay taxes on the property, are available with government authorized estate agents. Since the government doesn’t spend on the up-keep of these properties, they too are sold on an ‘as-is’ basis. If you do decide to buy a government foreclosures property, expect a good deal, and bargain hard.
Other options for buying Orlando Foreclosures would include getting in touch with banks, or going through local newspapers and the internet for listings of short sales. Short sales take place before the foreclosure process has been completed, where both the home owner and the lender work in accordance to get the best possible price. Despite this, short sales have been known to cough up some very good deals for buyers.
Irrespective of the option one chooses, through research is suggested before that signature along the dotted line is made.
Repossessed homes are also referred to as foreclosed property or Real Estate Owned (REO) property. It means that if a homeowner fails to pay the mortgage, the lender can repossess the home and resale it. Such properties prove to be less expensive as compared to other properties. If you want to buy or invest in real estate and don’t want to invest much money then repossessed houses for sale is the best option for you.
Lots of people these days go for purchasing repo homes through banks. When a person fails to give back loan money to bank then bank is strained to repossess the property which was used as security in exchange of the loan. Banks get worried of the frozen assets so, they sell the properties to the interested buyers at lesser rates. Lots of people believe that rather than purchasing a new house, repossessed or repossed houses for sale are a better option. The traders enjoy purchasing repo homes because they are best opportunity for them to buy homes at lesser rates. After purchasing repossessed houses these traders try to give an aesthetic look to the house so that it becomes easier to sell the home. You can also negotiate a lot while purchasing repossessed houses. Repo houses are said to be the real investments.
Repossessed houses offer good investment opportunities since the lender wants to get rid off the property, therefore sells the property at comparatively low costs than its real market value. However, before purchasing repo homes you must inspect everything about the property. You must also add the cost of repairs to determine whether you are getting sound deal or not.
Purchasing USA government repossessed houses for sale in states like Florida, California or in cities like Dallas is a great way to save lot of money and is secured deal too. The basic reason for purchasing government repo homes is that they provide very cheap properties. Repossessed houses basically are sent for auction sale and these auctions are done in a quite manner. These repossessed foreclosures can be remodeled and re-sold in order to get huge profits. For finding the auctions for government repossessed houses you much keep regular eye at the local newspapers. Purchasing repossessed houses from USA government is the best way to invest into real estate business and you would definitely get a good start. The risk and investment in this business is little and it is guaranteed that you can get good deal by re-selling the government repossessed houses.
Therefore, reposessed houses are the best available real estate where people can invest their money and get profitable returns.
Florida is the top most tourist attraction place and destination around the world and the locals of Florida have number of reasons on settling down in this pleasant state. Florida bank repos are the finest opportunity for people as well as real estate investors, since one can easily obtain house at lesser price. Bank repos are those properties which are mainly auctioned or are being put for sale by banks. When the owner of the property in Florida fails to pay the mortgage loans, then these properties are being taken over by the bank and becomes a bank repossessed home. Florida repos at present are at towering demand and are being owned by the real estate people as well as the home seekers.
If you are short of money and have limited budget for purchasing new home or own a home in Florida then Repo Property in Florida is the perfect option for you. Many get attracted towards Florida bank repos because one can easily get access to these repossessed homes in Florida at comparatively lower cost than the market value. As bank wants to liquefy their assets they tend to sell these bank repo properties as soon as they can. Florida is known as sunshine state and its economy is mainly based on the tourism industry thus, real estate people try to invest more in Florida bank repos in order to get maximum profits out of it. These repos are basically sold at the auctions that are conducted by the banks and through this procedure banks can easily derive their losses by the mortgagers.
Acquiring Florida bank repo can make you save a lot of money and therefore, the repo auctions that are put up by the banks not just draw attention of potential home seekers but also people involved in business activities. People who seek to gain maximum profit by means of real estate buy repossessed homes in Florida and finally resell the repo houses along with high price tags. Since there are many people interested in investing in these bank repossessed homes one must have proper knowledge and tricks concerning Florida bank repos.
One may also face problems while purchasing Florida bank repo, therefore before investing in repossessed homes it is better to research all the aspects in order to obtain best residential property, which suits your requirements. There are many lenders who wait for improved deals come their way concerning Florida bank repos as some of the banks propose price which is close to actual market price. If you are keen on purchasing bank repos in Florida then the trick is to find out lender who is very eager in selling the property.
When judicious property investment is considered, then certainly repo homes are the best options. Repo homes are considered as great property as they can be availed at very affordable prices. In fact, the price of the repo homes is far cheaper than what the actual price of the concerned real estate might be. To add to it, they are pretty accessible as well as they can be located in various towns and cities of the state very easily.
Basically, these repo homes are those properties that get repossessed by the financial institutions. They get seized when the borrower of the monetary loan fails to repay the capital amount or several of the monthly installments consecutively. As there is non repayment of the loan he availed from the financial institution concerned in his case, be it a bank or any other local money lender giving out money privately, the financial institution confiscates his real estate. The property is seized so that the banks or the money lenders can recuperate their losses. These repossessed properties thus are then refereed to as the repo homes.
Once seized, the repo homes are auctioned and made available to all the prospective buyers and potential investors. The one, who makes the highest bid for the repo homes concerned, gets the authority of the house.
The repo homes are so cheap due to several reasons. The first and the foremost reason is that the banks and money lenders are simply bothered about the recovering of the principal amount that they loaned to the borrower and not in making any profits from the sale of the repo homes. Then, they are in quite a hurry to sell the repo homes in order to concentrate on their major businesses that might be going in to loss due to their diverted attention. More so, they sell these amazing repo homes at such low rates in order to escape the property taxes that might levy on the repo homes concerned and the repairs that they repo homes may be in need off.
If you are new in the field of property investment and want to make a safe deal, then nothing but repo homes can be the best option for you. You can get in touch with some good real estate agents or log in to some good website as they have al the listings of the repo homes concerning various town and cities of the state. More so, they can also provide you with immense information about the repo homes you might be interested in like their brief history, location, tenant’s information and also carries some of the pictures of the house from various angles. Just remember before you make any payments of the repo homes, check that the documents are complete and the entire repo homes transaction happens legally.
TALLAHASSEE, Fla. – Oct. 24, 2008 – Citizens Property Insurance, the state-run insurer, may face losses of more than $223 million from investments – mainly in asset-backed securities that have declined sharply in value as the mortgage and credit markets have fallen apart in the past year.
Sharon Binnun, Citizens’ chief financial officer, told the company’s board of governors meeting in Tampa on Thursday that there is about $500 million in troubled securities on its books right now. Market value is about half of that amount, she added.
The insurer has a total of $8 billion available to pay claims, including money it has borrowed and invested until needed.
Binnun said the insurer “has tightened our investment policies over time” and “we have mitigated” the negative impact of the market’s decline by limiting the amount of any one type of security Citizens can invest in. It invests only in short- and long-term U.S. Treasury, agency and corporate securities as well as money market funds.
Still, Citizens hasn’t been able to avoid the market’s slide. It has unrealized losses of more than $36 million in the Treasury, agency and corporate securities it holds.
But the biggest losses – $186 million – are in asset-backed commercial paper, supported by mortgages including some sub-prime loans, that were purchased by the State Board of Administration, a state agency that manages a number of funds that include private and public money. In early 2007, Citizens had given the board the bulk of its cash and funds from bond financings to manage, hoping the agency would earn a higher return than other money managers and charge the insurer a lower fee.
“There really isn’t a market for these securities right now,” she said. “We don’t have the ability to take our losses [on these securities] and move forward.”
Likely markdowns
Binnun said it was likely that Citizens will permanently write down the value of these securities when it completes its Sept. 30 financials in a few weeks. She said Citizens already took an $88.9 million write-down on these securities in December. The remainder will be written down in the Sept. 30 quarter. That leaves the remaining unrealized loss at $134.5 million.
“This is money Citizens could have used to pay claims,” said Barney Bishop, president of Associated Industries of Florida. He has been concerned about Citizens’ large size – it’s the biggest insurer in the state – and the risky coastal policies it has on its books.
Citizens also has more than $94.9 million invested in the short-term Local Government Investment Pool Fund “B” that also is managed by the State Board of Administration. This fund was frozen last fall after concerns about the mortgage market sparked a run on the fund. Binnun said the securities held in the frozen portion of the fund have declined significantly in market value and will see a write-down in value on the insurer’s books.
Binnun also told the board that Citizens’ net premium earned – which included premiums directly booked on policies minus premiums passed on to “takeout” companies that take over policies from the state-run insurer – is down 8 percent to $1.43 billion. Its net underwriting through June 30 was $747 million, down 9 percent from its budget projections at the beginning of the year.
Binnun said net premium was lower than expected because the company is writing fewer policies, takeouts have been more aggressive and it has been required to double the mitigation credits offered to homeowners who harden their homes against future storms.
Citizens anticipates that 50 percent of its policyholders will apply for mitigation credits next year, gaining an average of 42 percent off the premiums they pay. This means Citizens anticipates crediting back about $640 million to these homeowners.
So far this year, 46 percent of policyholders have applied for credits and the company has credited back $470 million.
WASHINGTON – Oct. 24, 2008 – Federal regulators told Congress Thursday they’re working on a plan that could help many distressed homeowners escape foreclosure in a global financial crisis that Federal Reserve Chairman Alan Greenspan warned will get worse before it gets better.
Greenspan called the banking and housing chaos a “once-in-a-century credit tsunami” that led to a breakdown in how the free market system functions.
Accused of contributing to the meltdown, but denying that it was his fault, Greenspan told a House panel the crisis left him – an unabashed free-market advocate – in a “state of shocked disbelief.”
The longtime Fed chief acknowledged under questioning that he had made a “mistake” in believing that banks, in operating in their self-interest, would be sufficient to protect their shareholders and the equity in their institutions. Greenspan called it “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”
His much-anticipated appearance came as committees in both the House and the Senate held competing hearings on the financial crisis. At one such forum, a senior Treasury official said the Bush administration intends to get a program to help struggling homeowners revise mortgages up and running soon.
Neel Kashkari, who is overseeing the government’s $700 billion financial rescue effort, told the Senate Banking Committee that the new plan could include setting standards for changing mortgages to make them more affordable and giving loan guarantees to banks that meet them.
“We are passionate about doing everything we can to avoid preventable foreclosures,” he said.
Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the same Senate panel that the government needs to do more to help tens of thousands of home borrowers avert foreclosure, including setting standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them.
“Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.”
The FDIC is working “closely and creatively” with the Treasury Department on such a plan, she said.
Greenspan told the House Oversight Committee he was wrong in believing that banks would be more prudent in their lending practices because of the need to protect their stockholders.
Greenspan, who stepped down in February 2006 after serving as Fed chairman for 18 1/2 years, was asked to explain his role in the crisis.
Some critics have blamed him for contributing to the problem by leaving interest rates too low for too long and for failing to regulate risky banking practices.
Committee Chairman Henry Waxman, D-Calif., suggested that Greenspan contributed to “irresponsible lending practices” by rejecting appeals that the Fed intervene to regulate a surging subprime mortgage industry.
“The list of regulatory mistakes and misjudgments is long,” Waxman said of oversight by the Fed and other federal regulators.
“My question for you is simple,” Waxman told Greenspan. “Were you wrong?”
“Well, partially,” Greenspan said.
But he went on to assign the blame on soaring mortgage foreclosures on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.
He said what had been “a critical pillar to market competition and free markets did break down. And I think that, as I said, shocked me. I still do not fully understand why it happened.”
Committee members accused present and past federal regulators for not doing more to stop abusive practices or to go after wrongdoers.
Christopher Cox, chairman of the Securities and Exchange Commission, acknowledged to the House panel that “somewhere in this terrible mess, laws were broken.”
He said the government was doing the best it could to identify and pursue lawbreakers.
In the hearing before the Senate panel, Kashkari, the Treasury official overseeing the government’s $700 billion bailout program, said the administration was making “tremendous progress” in carrying out the bailout program enacted earlier this month.
As a result, there have been “numerous signs of improvement in our markets and in the confidence in our financial institutions,” he asserted.
Still, Kashkari cautioned that “while there have been recent positive developments, the markets remain fragile.”
The administration must move to resolve the deepening financial crisis swiftly and aggressively, said Banking Committee Chairman Sen. Christopher Dodd, D-Conn. Otherwise, “volatility and paralysis” will reign in the markets, he warned.
So far, the government has dealt only with the symptoms of the debacle, Dodd argued.
Sen. Charles Schumer, D-N.Y., said that by not setting conditions on banks in return for the government injections of money, “We’re feeding them a little too much dessert and not making them eat their vegetables.”
Schumer said he’s “still not convinced” that banks receiving the government money should continue paying dividends to their shareholders
TALLAHASSEE, Fla. – Oct. 24, 2008 – Florida’s housing market – and in turn, its economy – may not fully recover until 2011, state economists said Thursday.
That’s up to a year later than the economists forecast this summer, when they predicted a rebound in January 2010, and normal growth rates by July. The new forecasts call for bad economic news until then in everything from unemployment to auto sales to wages.
“In response to the credit market, and the fact that that’s causing some global disruption and global recession, we’ve essentially started pushing back the recovery,” said Amy Baker, coordinator of the Legislature’s Office of Economic and Demographic Research.
Florida’s economic recovery depends most on its housing market, she said. That market is now expected to rebound in April 2010; total recovery could take a full year after that.
As long as Florida weathers heavy job losses, home sales will suffer, said Clyde Diao, economic analyst for Gov. Charlie Crist. “A lot of people are losing jobs in the state of Florida,” he said. “If you don’t have a job, you don’t have many options.”
The economists were still fine-tuning their analyses Thursday night for indicators such as income levels, jobs and home construction. Already, however, they were painting a gloomy picture.
Unemployment, for example, may exceed 8 percent by 2010. Vehicle sales are predicted to nose dive this fiscal year by about 18 percent. Tourism will decline 1.2 percent before crawling back slowly in 2009-2010.
“What we didn’t have in July was the credit freeze,” Baker said. “What we didn’t have in July that we have today is the involvement of the global economy ... international travel, tourism, expenditures in Florida when they’re here – those kind of things, we’re saying, because of the global recession that’s in the mix now, is going to have a spillover effect on Florida.”
The analyst cited record numbers of unknowns that could dampen the economy’s performance even more.
“We are assuming a resolution to the credit crisis; we’re assuming that it’s going to occur in the next couple of quarters, which is relatively fast. We’re assuming that the global recession has an impact but that it’s not devastating,” Baker said. “We’re basically saying it’s going to be a pretty orderly recovery ... certainly in the last month, we’ve seen anything but orderly.”
She predicted confidently, however, that Florida’s revenue shortfall will be steeper than predicted in August. Based on that forecast, lawmakers are already expecting a budget hole of up to $3.5 billion next fiscal year.
Asked about calling lawmakers back to the Capitol for a special budget-cutting session, House Speaker-designate Ray Sansom, R-Destin was noncommittal.
But Democratic Rep. Ron Saunders, a former House appropriations chairman, said lawmakers must return before the regular legislative session to carve into the state budget “with a scalpel” rather than sign off on across-the-board reductions.
“I don’t think across-the-board cuts are very smart because it rewards inefficient agencies and penalizes the efficient ones,” said Saunders, D-Key West. “I think we should come back in December.”
WASHINGTON (AP) – Oct. 24, 2008 – Rates on 30-year U.S. mortgages dropped sharply this week, falling to the lowest level in five weeks.
Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.04 percent this week, down from 6.46 percent last week. The sharp decline pushed 30-year rates down to the lowest level since they stood at 5.78 percent the week of Sept. 18.
Analysts attributed the decrease to an easing of inflation concerns, which now have been replaced with rising worries that the country could be headed for a prolonged recession. Interest rates generally fall in periods of economic weakness.
Rates on 30-year mortgages hit a high for the year of 6.63 percent in late July and then dropped below to a seven-month low of 5.78 percent the week of Sept. 18.
According to the Freddie Mac survey, rates on other types of mortgages were mixed this week.
Rates on 15-year fixed-rate mortgages, which are popular with people who are refinancing, fell to 5.72 percent, compared to 6.14 percent last week.
Rates on five-year adjustable-rate mortgages fell to 6.06 percent, down from 6.14 percent last week. However, rates on one-year adjustable-rate mortgages rose to 5.23 percent, up from 5.16 percent last week.
The mortgage rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.6 point. One-year mortgages averaged 0.5 point.
A year ago, the nationwide average rate on 30-year mortgages stood at 6.33 percent, 15-year mortgage rates averaged 5.99 percent, five-year adjustable-rate mortgages were at 6.03 percent and one-year adjustable-rate mortgages stood at 5.66 percent.
Florida’s existing home, condo sales increase in September 2008
ORLANDO, Fla., Oct. 24, 2008 – For the first time in almost three years, Florida’s existing home sales rose in September, noting a 24 percent increase in activity in the year-to-year comparison; last month’s sales of existing condos statewide increased 11 percent in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR).
A total of 10,817 existing homes sold statewide last month, up 24 percent over the 8,725 homes sold in September 2007, according to FAR. The last time Florida Realtors reported higher statewide existing single-family home sales was for year-end 2005, FAR records found. In July of this year, six more homes sold statewide than in July 2007, but that increase was statistically insignificant.
Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in September; nine MSAs also showed gains in condo sales, marking the third month in a row that a number of markets have noted higher sales activity.
“The September sales report from the Florida Association of Realtors shows a 24 percent increase in the sales of existing homes in the state; this represents the sixth month in a row that the sales figure has exceeded its 12-month moving average (average of the previous 12 months),” says Dr. Sean Snaith, economist and director of the University of Central Florida Institute for Economic Competitiveness. “This is a clear sign that the significant price declines that have occurred across the state are leading to a more rapid absorption of the housing inventory.”
Snaith noted that September 2007 was a volatile time for the housing industry. “The large percentage increase of sales this September versus September 2007 is inflated by the sharp decline in sales that took place in September 2007,” he explained. “That was the month following the initial wave of global fallout precipitated by the subprime mortgage meltdown that roiled markets in August 2007.”
Florida’s median sales price for existing homes last month was $175,100; a year ago, it was $224,700 for a 22 percent decrease. But, looking back to September 2003, the statewide median sales price for single-family homes was $158,800 – an increase of 10.3 percent over the five-year-period, according to FAR records. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in August 2008 was $201,900, down 9.7 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $350,140 in August; in Massachusetts, it was $325,000; in Maryland, it was $295,283; and in New York, it was $225,000.
The latest housing outlook from NAR points out the importance of available credit to the mortgage market. “Home sales will be constrained without a freer flow of credit into the mortgage market,” says NAR Chief Economist Lawrence Yun. “The faster that happens, the sooner we’ll see a broad stabilization in home prices that in turn will help the economy recover.”
In Florida’s year-to-year comparison for condos, 2,878 units sold statewide compared to 2,595 sold in September 2007 for an 11 percent increase. The statewide existing condo median sales price last month was $153,800; in September 2007 it was $197,000 for a 22 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $212,600 in August 2008.
Last month, interest rates for a 30-year fixed-rate mortgage averaged 6.04 percent, down from the average rate of 6.38 percent in September 2007, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s large to medium-size markets, the Daytona Beach MSA reported a total of 536 homes sold in September compared to 478 homes a year ago for a 12 percent increase. The existing home median sales price was $160,000; a year ago, it was $193,200 for a 17 percent decrease. In the year-to-year comparison for the existing condo market, a total of 74 units sold in the MSA last month, up 1 percent compared to 73 condos sold the previous September. The market’s existing condo median price was $237,500; a year ago, it was $277,100 for a 14 percent decrease.
SANTO DOMINGO, Dominican Republic - The bankruptcy of US investment bank Lehman Brothers has forced developers to fire 500 workers and suspend construction at an unfinished Dominican resort, developers said Wednesday.
The $1 billion Cap Cana resort was relying on a $250 million loan from Lehman Brothers Holdings Inc., which went bankrupt last month.
The first $50 million never arrived to Sinercon, the company overseeing the project, and construction will be delayed until a new revenue source is found, Project spokesman Ellis Perez said.
Reeling from $60 billion in toxic real-estate debt, the Wall Street lending firm filed for bankruptcy protection on Sept. 15. Following Lehman's fall, credit markets seized up, generally sending stocks plunging.
Earlier this month, the Lehman Brothers crisis troubled another Caribbean coast when it paralyzed work on a 125-room hotel, marina and condominium project in the Turks and Caicos Islands, a nearby British dependency.
Ashtrom Group Ltd. said 60 Chinese laborers owed back wages had prevented employees of the Israeli company from leaving a work site on the tiny island of West Caicos.
The dispute arose after Logwood Hotel Development Co., the developers of a Ritz-Carlton Molasses Reef project financed by Lehman Bros., suspended construction.
Ashtrom, which was hired by Logwood to build the resort, was about two months from finishing it when construction was halted.
The dispute was resolved when the company agreed to pay the wages.
Survey expects commercial real estate to hit bottom in 2009
WASHINGTON – Oct. 23, 2008 – Real estate industry investors and professionals expect U.S. financial and real estate markets in the United States to bottom in 2009 and flounder for much of 2010, with ongoing drops in property values, more foreclosures and delinquencies, and a limping economy that will continue to crimp property cash flows, according to the “Emerging Trends in Real Estate 2009” report from PricewaterhouseCoopers LLP and the Urban Land Institute (ULI).
“Commercial real estate faces its worst year since the wrenching 1991-1992 industry depression,” conclude industry experts interviewed for the report, which projects losses of 15 percent to 20 percent in real estate values from the mid-2007 peak.
Now in its 30th year, the Emerging Trends report is the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 600 leading real estate experts, including investors, developers, property company representatives, lenders, brokers and consultants.
In general, interviewees believe that financial institutions will continue to be pressured into moving bad loans off balance sheets, using auctions to speed up the process. Investors will be discouraged until the “bloodletting” is over, states the report. When that occurs, cash and low-leverage buyers will be “king;” surviving banks will impose strict lending guidelines; commercial mortgage-backed securities will revive, but in a more regulated form; and opportunity funds will need new investment models.
“The industry is facing multiple disconnects,” said ULI Senior Resident Fellow for Real Estate Finance Stephen Blank. “Many property owners are drowning in debt, lenders are not lending, and for many industry professionals, property income flows are declining. There is an unprecedented avoidance of risk. Only when financing gets restructured will pricing reconcile, giving the industry a point from which to start digging out of this hole.”
“The cyclical real estate markets always come back, and they will this time too, but not anytime soon,” said Tim Conlon, partner and U.S. real estate sector leader, PricewaterhouseCoopers. “Commercial real estate was the last to leave the party, will feel the pain in 2009, and may be the last to recover. In the meantime, smart investors are going to hunker down and manage through these tough times. We expect to see patient, disciplined, long-term investors rewarded and return to a back-to-basics approach to property management, underwriting and deal structure.”
Distress in the housing market is benefiting the apartment market, which the report lists as the No. 1 “buy.” Moderate-income apartments in core urban markets near mass transit offer the best buy, a trend that carried over from the previous year.
The report acknowledges that commercial markets will recover more quickly than most housing markets, and homebuilders may have to sell land tracts for “cents on the dollar” or face foreclosure on their holdings, adding to the already high rate of mortgage defaults and foreclosures.
The main beneficiaries of the real estate downturn in the U.S. are cash-rich offshore buyers, whom the report predicted will continue to take advantage of the weak dollar and will buy trophy properties in major 24-hour cities.
One silver lining: Interviewees agreed that eventually, savvy investors will be able to cash in on the inevitable recovery, which some see occurring as early as 2010. “Money will be made on riding markets back to recovery and releasing properties, not on … financing structures,” finds the report.
Before a rebound, the Emerging Trends report says the following needs to happen:
• Private real estate markets need to correct – lenders must force distressed owners to become motivated sellers.
• Debt capital needs to flow – lenders will need to learn to deal in a more stringent regulatory landscape. The commercial mortgage-backed securities (CMBS) market must “reformulate.”
• Regulators need to restore confidence in the securities market. The government will insert itself into overseeing mortgage securitization markets. Systemic overhaul promises more measured debt flow.
• The economy needs to improve. Falling demand for space won’t affect real estate markets severely until 2009.
• The housing condition is no better and shows no signs of recovering quickly. For lenders, the “subprime mess is the tip of the iceberg.” Stricter lending standards and the weak economy will continue to drain the homebuyer market. “Forget the quick fix!”
Markets to watch
In terms of investment, Seattle and San Francisco take the top two rankings, beating out New York City, which has traditionally been ranked at the top for investment prospects. For 2009, New York slips to fourth place, ranking after Washington D.C. Los Angeles “holds its own” in fifth place, but suburban areas outside that city, specifically the housing market in Riverside and Orange County will suffer.
Las Vegas and Phoenix get “blown out,” while Florida markets are described as in “disarray.” Markets in the Midwest continue to lose more ground; however, Chicago manages a “fair” ranking in the region-wide decline. Meanwhile, the relative position of Texas markets has improved due to the oil industry.
Among property sectors most promising for investment, apartments take top position in the report, with distribution/warehouse coming in second. Downtown office space is expected to outperform suburban markets. Retail development, notes the report, may have bottomed out but could decline further, while the housing industry faces more foreclosures and no rebound in values for 2009.
WASHINGTON (AP) – Oct. 23, 2008 – Lawmakers have called key players from the past and present to congressional hearings in an effort to find out what caused the biggest U.S. financial crisis since the 1930s and determine how the government plans to get the country out of the mess.
Alan Greenspan, the chairman of the Federal Reserve for 18 1/2 years, was to be the star witness Thursday before the House Oversight and Government Reform Committee. He faces questions about actions the government took or didn’t take that might have contributed to the boom in subprime mortgages and the subsequent housing market collapse that has led to the loss of billions of dollars in investments.
Meanwhile, Neel Kashkari, the interim head of the government’s $700 billion rescue effort, and other government officials were going before the Senate Banking Committee to lay out their plans for implementing the massive program.
Both hearings were expected to be contentious as lawmakers, already upset about having to vote for the biggest bailout in U.S. history, seek answers to what went wrong and try to determine why the government’s rescue effort, which just cleared Congress on Oct. 3, already has undergone a radical overhaul.
All the action in Washington was taking place against a backdrop of continued turbulence on financial markets around the world. The Dow Jones industrial average plunged by 514 points Wednesday amid fears that the government intervention will not be enough to prevent a serious global recession.
Asian stocks fell for a second consecutive day Thursday, with South Korea’s market sinking 7.5 percent. Japan’s Nikkei 225 stock average closed down 2.5 percent, and Hong Kong’s Hang Seng Index was down 4.7 percent. European stock markets were modestly lower.
While conducting major hearings so close to an election is unusual, House Oversight Committee Chairman Henry Waxman, a Democrat, said the current crisis was so serious that Congress could not wait until a new president and administration arrives in January to find out “what went wrong and who should be held accountable.”
Democrats see the prime culprits as greedy Wall Street executives and lax government regulations under a Republican administration, a view that the administration and Republicans in Congress dispute strongly.
Once praised as the “maestro” of the U.S. financial system during the 1990s economic boom, Greenspan, who was succeeded in 2006 by Ben Bernanke, was likely to find himself defending actions he took that are being blamed for contributing to the current crisis.
Critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed’s powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that triggered the current crisis.
Greenspan, true to his Republican free-market principles, successfully opposed attempts to impose tighter controls on complex financial contracts known as derivatives, which are largely unregulated and which some see as a contributing factor in the current problems.
Greenspan recently described the current episode as the type of wrenching financial crisis that comes along only once in a century. He has defended the use of derivatives, so-named because their value is derived from the value of an underlying asset. He said they were useful in helping to spread risks.
Lawmakers in particular want government officials to explain why the emphasis in the rescue package has switched from a program that initially was aimed at buying billions of dollars of troubled mortgage-related assets from banks as a way to spur them to resume more normal lending.
A week ago, Treasury Secretary Henry Paulson announced that the program now would have as a major component the purchase by the government of $250 billion in stock in hundreds of U.S. banks, including $125 billion that would go to nine of the largest institutions. Paulson has said that the fast-moving nature of the crisis convinced him that money needed to get out more quickly as a way to encourage banks to start lending again.
But questions have been raised about whether the huge infusion of government money will actually spur more lending, especially after several banks have said they planned to employ the new capital to help finance purchases of weaker rivals.
Democratic Senators Charles Schumer, Jack Reed and Robert Menendez sent a letter to Paulson on Wednesday complaining that Treasury had failed to establish adequate standards “to assure that banks put this capital to good use in the lending markets.”
WASHINGTON (AP) – Oct. 23, 2008 – The number of homeowners ensnared in the foreclosure crisis grew by more than 70 percent in the third quarter of this year compared with the same period in 2007, according to data released Thursday.
Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier, said foreclosure listing service RealtyTrac Inc.
By the end of the year, RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.
That’s bad news for anyone who lives nearby and wants to sell their home. While foreclosure sales are booming in many areas, those properties are commanding deep discounts and pulling down neighboring property values. “It has a pretty significant impact in terms of pricing,” said Rick Sharga, RealtyTrac’s vice president for marketing.
RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 250,000 properties were repossessed by lenders nationwide in the third quarter, 81,000 of which were taken back last month.
Six states – California, Florida, Arizona, Ohio, Michigan and Nevada – accounted for more than 60 percent of all foreclosure activity in the quarter, with California alone making up more than a quarter of all U.S. foreclosure filings.
Detroit and Atlanta were the only cities outside California, Florida, Nevada and Arizona to make RealtyTrac’s list of the 20 hardest-hit metropolitan areas.
The combination of sinking home values, tighter mortgage lending criteria and an economy that many economists think has already slipped into recession has left hundreds of thousands of homeowners with few options. Many can’t find buyers or owe more than their home is worth and can’t refinance into an affordable loan, with the global credit crisis making loans far less available.
For those who can qualify for a loan, or have cash to invest, there are bargains to be had, especially in ravaged markets like Nevada and California. Last month, foreclosure resales accounted for more than half of existing home sales in California, as home sales jumped 65 percent from a year ago, while the statewide median home price fell 34 percent to $283,000, according to MDA DataQuick.
RealtyTrac, however, reported foreclosure filings in September were actually down 12 percent from August. But much of that decline was the result of new state laws that delay the foreclosure process. In California, for example, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.
Still, that’s not likely to be enough to save homeowners who owe more on their mortgages than their homes are worth. Nearly 12 million of the 52 million Americans with a mortgage – that’s 23 percent of them – are in that position, according to Moody’s Economy.com.
It remains to be seen how much the government’s intervention will stem the housing crisis. Earlier this month, the Federal Housing Administration launched a program that aims to prevent foreclosures by allowing homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan. The bill is projected to help about 400,000 households.
Meanwhile, the Federal Deposit Insurance Corp., which took over Pasadena, Calif.-based IndyMac Bank over the summer, has been aggressively modifying troubled home loans since August in an effort to stave off foreclosures. Congressional Democrats are calling for that approach to be expanded as the Treasury Department buys billions in troubled mortgage debt as part of a $700 billion financial industry bailout.
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ORLANDO, Fla. – Oct. 21, 2008 – Real estate agent Sharon Zunkley has taken some unusual steps this past year to sell houses:
She hired a cleaning lady to teach one male client how to clean his house before showings. She paid to have a stove fixed when the buyer and seller couldn’t agree on who was responsible for the repair. She hung artwork from her own home in a client’s house to make it more attractive.
Despite her efforts, her median selling price has dropped $20,000, to $180,000.
“We’re all taking a hit,” said Zunkley, whose office is in Mentor, Ohio. “We’re hoping when this is over and things start to go back up, we’ll have survived.”
Real estate agents across the country have to work harder in one of the worst markets in years. They often must spend more to secure a deal at a time when houses are on the market longer and selling for less.
Rande Friedman in Tampa, Fla., creates expensive promotional videos for the houses he has for sale.
Brian Copeland in Nashville, Tenn., has a feature on his Web site that lets potential buyers send instant messages to his phone.
“The more you can do to generate interest in a property the better,” said J. Parrish, a director with the Bergstrom Center for Real Estate Studies at the University of Florida in Gainesville.
U.S. home prices decreased 9.5 percent in the last year, according to the National Association of Realtors in Washington, D.C.
“This is the year of how creative can you be,” said Zunkley, who has sold real estate for 22 years. “It’s also the year of going back to the basics.”
That means “pricing and presentation,” said Elizabeth Blakeslee, a Realtor and a vice president of the national association.
Real estate agents need to warn sellers that overpriced houses will get overlooked when there’s a glut of properties for sale, she said, and they need to be firm about what must be done to prepare a house to go on the market. Buyers have no use for dirty or cluttered homes, she added.
That’s why Friedman, in Tampa, pays professionals to help sellers ready their homes. He has a cadre of interior designers, photographers and videographers who help him produce the videos of each property. He spends $2,000 to $3,000 for those services per home, but it pays off, he said.
“Yes, it’s into my bottom line,” he said. “But when you’re selling houses, at least your bottom line is there.”
Friedman also uses creative open houses to try to attract buyers. When he has waterfront properties for sale, he provides fishing poles or kayaks for potential buyers to use during the showings.
Copeland concentrates on making himself accessible to buyers and making his sellers visible on the Internet.
“I’m finding it’s taking a lot longer, which creates more work,” he said. “If it were a different market my days on the market would go down.”
It takes about 10 to 12 weeks to sell a house in today’s market compared to 4 weeks during the peak sales of 2004 and 2005, according to the Realtors association.
When Copeland receives queries about his Web site, he responds right away.
“I’ll pull over on the side of the road and talk with you immediately,” he said.
He also tries to attract buyers by posting high-end photos and videos of properties on Web sites frequented by house hunters.
“There’s no room for poor photography,” Copeland said. “We are now in a beauty pageant and a pricing war.”
He recently paid to have a gas line installed in a fireplace, and said he does everything he can to keep buyers and sellers at the table.
“You have to be nicer than you used to be,” he said. “Your goal is keep people in the deal.”
Recent financial crisis fails to hurt confidence in Florida real estate
GAINESVILLE, Fla. – Oct. 21, 2008 – The national economic crisis has failed to rattle Florida real estate experts, who, despite serious concerns about the availability of financing, remain surprisingly calm about market conditions within the state, a new University of Florida survey finds.
The most recent quarterly survey of Florida real estate trends, which was completed in September, shows the investment outlook for various types of properties remains steady, according to Wayne Archer, executive director of UF’s Bergstrom Center for Real Estate Studies.
“People who have responded to our surveys have not lost their faith in Florida as a place to be and a place to invest,” he says. “We have 40 pages of comments from our respondents, and although the dominant theme is the disruption of financing, perhaps the second theme, as one person put it, is people being on the sidelines with full pads and helmets just waiting to jump back in.”
Although Florida’s housing crisis is worse than other states, over the long term Florida stands to benefit from the migration of new residents, particularly as baby boomers age, Archer said. The Sunshine State’s mild climate and outdoor amenities make it an attractive retirement destination, despite high property taxes, insurance rates and hurricanes, he said.
Unfortunately, the plunging stock market combined with the fall in housing prices and tightening of home financing requirements will likely temporarily delay plans baby boomers may have to retire and move to the state, he said.
For the state’s real estate market to recover at all in the short term, banks and other financial institutions must ease credit restrictions, Archer said.
“If the financial crisis continues, that would really change the picture,” he said. “Our respondents, I think, are keeping the faith that they may have seen the worst and the shock will not be overwhelmingly severe.”
One sign of optimism is the trend in the latest survey toward a more favorable view of new single-family home development, Archer said.
“The respondents actually moved in a somewhat guarded but positive direction,” he said. “It suggests to me that they believe we may have already reached the bottom in that category.”
Although the survey does not include the market for existing single-family homes, one respondent said houses were beginning to sell in Lee County, once dubbed the foreclosure capital of the world, indicating perhaps the market is beginning to stabilize, he said.
Several neighboring counties in southwest Florida are likely to be in trouble for a long time, however, along with the Miami condo market, where an estimated 40,000 units are for sale, Archer said. Prospects are particularly bleak for higher-end condos in the city’s downtown, he said.
The weak dollar and general confidence in the United States as a safe harbor for investment could lure international investors to Miami, but that would be unlikely if the economic crisis deepens into a worldwide recession, he said.
While condo markets throughout the state face problems, which are likely to persist in the foreseeable future, the outlook for apartment rentals bounced back a little from the last survey in June, Archer said. “There was an expectation that occupancy rates would be falling, and while they’re not great, they are viewed as stable,” he said.
The weakest rental markets are in retail, which has been particularly hard hit by the economy as consumers spend less money, Archer said.
“After seeing what’s happening to their home values and watching the news, they are deferring purchases,” he said. “As a result, most retail organizations are curtailing their expansions and consolidating their operations and stores, which is creating higher vacancies.”
Perhaps the most negative survey result was that respondents’ perceptions of their own business outlook, which has declined steadily for 11 quarters, took an even larger downturn this quarter, Archer said.
“This is in marked contrast to their views of the market as a whole,” he said. “Although keenly aware of the downturn in the availability of capital, they remain surprisingly calm.”
The latest survey is based on 392 responses and is 12th in a series. It is the only Florida-centered survey of leaders and professional advisers in the real estate industry. The largest group of respondents was appraisers, about 51 percent, followed by brokers and other service providers.
MIAMI (AP) – Oct. 21, 2008 – Tita Mendoza and her husband moved into their Miami Beach condo in June and have been dutifully paying the $1,800 rent on time every month. And yet, they could be evicted any day now.
Last month, the Mendozas were served with court papers notifying them that their landlord was being foreclosed on, meaning the couple could be turned out on the street.
“It’s unbelievable to me that people could be so irresponsible,” said Mendoza, who moved to Miami Beach from Chicago, where the couple had owned a home. “We’re just waiting to see what happens next.”
Across the country, thousands of renters have become innocent victims of the mortgage crisis: They have been forced to move because the owner of the property was in foreclosure. Security deposits have been lost and lives turned upside-down as people scramble to find a new place to live on short notice.
A few states recently passed or proposed laws to protect renters by requiring mortgage holders to provide sufficient notice for tenants living in foreclosed properties. Sheriffs in Illinois and Michigan also have stepped in to help.
“It’s a huge issue, and it’s one that until recently has flown under the radar,” said Danilo Pelletiere, research director at the National Low Income Housing Coalition. “Renters haven’t been addressed by some localities because they have been focusing on homeowners.”
In Ohio last week, state Reps. Ted Celeste and Mike Foley, both Democrats, proposed the Ohio Renter’s Protection Act. The law would require landlords to tell potential tenants if the rental property is in foreclosure and notify current tenants of a foreclosure within 30 days of the filing. The bill also calls for 30-day notice to the tenant before a sheriff’s sale. It could reach a vote by the end of the year.
“You want to protect the tenant to the degree that they have some notice, should there be a need to have them leave,” Celeste said.
Almost 15 million renters, or 40 percent of all renters, live in single-family homes, townhouses, condos or duplexes, according to Census data. While there are no national figures on foreclosure-related evictions, these types of rental properties have been vulnerable to foreclosure because they tend to be owned by small investors.
According to RealtyTrac, about one-third of the 378,250 properties with valid mailing addresses that were in default or waiting for a foreclosure sale in May were not occupied by the owner. That would indicate they are investment properties or rentals.
Last week, Tom Dart, the sheriff in Chicago’s Cook County, drew the ire of landlords and lenders everywhere when he announced he would no longer send his deputies on court-ordered foreclosure evictions because many of the people being turned out on the street were tenants who had faithfully paid the rent.
(On Thursday, Dart announced that his deputies will resume taking part in foreclosure evictions next week, but only with stringent legal safeguards worked out with the courts. Among other things, a bank that is foreclosing on a property must prove it informed all tenants of a state-mandated grace period designed to allow them to look for new housing.)
In Michigan, Genesee County Sheriff Robert Pickell put a two-week moratorium into effect Monday on evicting renters living in foreclosed homes.
“My sheriff doesn’t wring his hands and gnash his teeth very long,” said Undersheriff James Gage. “He looks at the situation, sees it’s wrong and takes action.”
In July, California Gov. Arnold Schwarzenegger signed a law giving a tenant 60 days to leave a rental housing unit after the property is sold in foreclosure.
Illinois passed a measure in August that calls for 90 days’ notice before an eviction takes place — a law that apparently was not being followed too closely because Dart told a judge that his deputies were often evicting renters who had not been given proper notification.
When it comes to tenant laws and renter’s rights, each state has its own rules, and each state legislature is free to add further protections for tenants.
But there are no state or local laws in Miami to prevent the eviction of the Mendozas. They have asked a real estate agent to start planning for that possibility.
Other states – Indiana, Minnesota, Rhode Island and Washington – considered bills strengthening tenants’ rights in foreclosures, but they apparently died in their legislatures, according to the National Conference of State Legislatures.
In Michigan, a bill was introduced to require landlords to notify tenants at least 30 days before a property is put up for auction. But the measure has been in committee since last December.
Renters can forget help from the federal government, at least for now. The National Low Income Housing Coalition tried to get the government to spend $200 million for relocation assistance for renters who lose their homes to foreclosure, but the request didn’t make it into the big bailout of the financial industry.
Sheila Crowley, the coalition’s president, said she will continue to press the issue: “If we spent $700 billion, can’t we spend a chintzy $200 million?”
What to Expect When Buying Foreclosed Homes The Myteries of buying REO Repo property explained We are your source for Inside information about buying bank owned homes:
Banks are forbidden from selling their homes on the market themselves so, ultimately a broker will be involved. Want to go direct to the source? An experienced REO agent can provide all of the “inside information” you will ever need.
There is no mystery to the REO market. There is no one with a secret “in” or “system” that you need to buy. REO agent (Both listing and sales) and developing a good relationship with them is your best way to buying the best homes at the best price. They will be able to provide access to REO properties as they come available and provide advance notice of properties soon to be made available.
What about Auctions? The only “real” auction is the one that happens at the end of the foreclosure process (Trustees Sale). The lender offers the property for sale on the County Courthouse steps. You can find information about upcoming trustee’s sales in the classified section of your local paper or, from the County Courts. The information is free and there is no reason to pay for this public information as many would lead you to believe.
Buying on the Courthouse steps can be the riskiest way to purchase property, and should never be attempted by a first-time buyer. Inspections of the property are usually not an option; payment for the property will usually have to be made in cash or, with a large deposit in cash up front and the balance due within hours. Even after the sale, you may end up owing any unpaid property taxes and liens against the property. The foreclosure auction also comes with the possibility that the homeowner might redeem the home by coming up with the cash to buy the house back within a specified period of time. The Internal Revenue Service (IRS) also has the right to redeem the property within 120 days if back taxes are owed. A local real estate lawyer can fill you in on the redemption laws in your state and advise you of further legal issues if you are still interested in a true foreclosure auction.
Often, the price offered at the foreclosure auction will be higher than the price it will be ultimately offered at on the open market (REO (Real Estate Owned)). When buying as an REO through a real estate agent, you will typically be provided free and clear title, title insurance and also have the ability to have the property inspected and appraised. You will also have the ability to finance the property and take advantage of other incentives that may be offered by the lender-owner.
You have undoubtedly seen advertisements in the paper, the mail or online that advertise properties being sold to the public at “auction”. These are not true foreclosure auctions at all. They are nothing more than advertising schemes designed to entice buyers into participating in the “auction experience”. The more that attend these “auctions”, the more excitement, the more excitement, the higher the bidding. Auctions are great for the seller or to create huge profits for the auction company yet, rarely prove advantageous for the average buyer. They often entice buyers to attend by advertising unrealistically low prices and then, only when you have registered, disclose that the price advertised is simply a suggested starting bid. What they don’t reveal is that the seller’s reserve price is substantially higher (The lowest price they will sell for). Are these “auctions” complete scam? Some claim them to be but, you would have to make that determination for yourself. Other considerations would be that you may also be required to make a non-refundable deposit immediately after bidding and pay an additional “buyers premium” that could add 3-6% or more to your purchase price. The fact is that you could buy a similar, and sometimes the exact same property, without the hype, circus atmosphere, and additional cost, directly from a real estate agent. No buyers premiums, no additional fees to pay for the advertising and circus tents and, you may get the bank to pay for your closing costs, pay for repairs or other credits and provide for inspection periods during which time, your initial deposit is fully refundable.
Writing your offer for a bank owned (REO) property:
Patience is the name of the game when entering the bank owned property market. If you lack patience, REO homes are not for you. Long wait times, little communication and competition for the best homes is routine. Choosing the right agent to represent you will alleviate some of the problems associated with the process. Even the best, and most experienced, reo agents can not speed the process. It is important to understand that, when offering on bank owned homes, you are dealing not only with a listing and or selling agent, you are dealing indirectly with an “asset manager” who may, or may not be, affiliated with the financial institution, lender or investor who has completed the foreclosure process.
When an offer is submitted, your information and offer terms - conditions will be submitted to the “asset manager” via the listing agent. You can search for homes right here and then submit an initial intent to purchase a bank owned home right here. Simply click here to get started.
What does this mean to your offer(s)?
If making offers on multiple homes (With the intention of maybe buying only 1): If you are making multiple offers, even through different agents, the asset manager may likely be the same. Although you may think that this is a great way to pick and choose after an acceptance, you may be actually undermining your own efforts. Once agents and asset managers see this happening, you will probably find it difficult, if not impossible for any offer you make to be taken seriously. If you offer is considered at all. Lenders have no interest in playing games. Their job is to complete the sale, not process make believe offers from “gamers”. Making offers at far less than listed price:
Lenders and their asset managers price their homes according to their market indicators. By the time the property is listed for sale, most will have obtained 3 BPOs (Broker Price Opinions) and 1 appraisal for a licensed real estate appraiser. 2 BPO orders and 1 appraisal will be completed in advance of the listing being placed with an agent and 1 by the listing agent before a price is ultimately determined. What does this mean to you? When making an offer, the owner-lender has already done their homework (Right or wrong). The price listed will typically be less than the value determined by 4 separate individuals. Could their price still be wrong? Certainly but,lenders seldom accept or counter offers that are far less than the price they have already determined to be less than fair market value especially in the first 30 days of listing. If you are making many offers and have yet to receive a response from a lender or, one that you deem to be agreeable, you may have already been banned. Banned? Yes, some asset managers will notify their agents to no longer submit offer from certain individuals unless they meet certain criteria.Again, asset managers are overwhelmed with “investors” who have no real intention of completing a sale.
Although lenders expect some negotiation, their pricing does not seem to have any relationship with this expectation. Understand that the “bank” has no emotional attachment to the property and are only interested in disposing of the asset at the highest and best price with the best terms….for them. A “cry letter” included with your offer explaining why you are making a “ridiculous” offer will not be seen by anyone other than your agent. Asset Management systems are very basic and the “lender” will not see your written offer during the initial process. Offers are transmitted through an online system that asks for offer price, concession costs (Closing costs or other items requested by the buyer), the name of the buyer and room for very brief comment, from the listing agent, about the offer.
How much should I offer?
This is a tough question to answer without knowledge of the property, the price it is offered for, the bank involved and the region.
As a general rule of thumb, offers will be entertained somewhere between 5-10% of the currently listed price. In the case of multiple offers, bank owned homes can sell for well over their listed price.
Hiring an experienced, local REO agent will be able to guide you in the right direction. Offering far less than the asking price will not typically result in an acceptable counter or even a response. There are situations that warrant a substantial difference between the listed price and your offer. A good agent will guide you through the process and provide the information you need before jeopardizing your future efforts. Lenders and their asset managers price their homes according to their market indicators. By the time the property is listed for sale, most will have obtained 3 BPOs (Broker Price Opinions) and 1 appraisal for a licensed real estate appraiser. 2 BPO orders and 1 appraisal will be completed in advance of the listing being placed with an agent and 1 by the listing agent before a price is ultimately determined. When listing a home for sale, the owner-lender has already done their homework. You can agree with their homework and make an offer close to their asking price ( +-5 to 10% ) or, move on to the next property and save the frustration and potentially labeling yourself as a “gamer”. Offering at far less than the current asking price, unless the home has been on the market for many months and no activity, is typically fruitless. Even then, 50% off list offers may do you more harm than good.
It is not unusual to see price drops on homes that have been on the market for some times to exceed $100,000.00. Good agents will watch potential listings and have clients ready for a potential, and significant price drop. When this happens, being the first to offer is your best bet to securing the property. Don’t go in with the idea that, sine the price has been reduced that they will now take even less. If you, and you agent, see a good deal, it is time to act.
Only an experienced REO Realtor, familiar with the area and local real estate market will be able to guide you in the right direction when making an offer.
Finding the Right REO agent. Inspect what you expect!
The very best deals are long gone before most even know they are available. The properties that remain are left for everyone else to sift through. How do you get access to the best properties? Finding an experienced REO agent is your first step to your success.
Finding the right agent to represent you may be the most difficult part of the process. Keeping a good agent is even harder. Good agents, that ARE truly familiar with the REO market, will typically have a long list of clients looking for a particular property types. y. The very best homes, at the very best prices go to, wouldn’t you guess, their very best clients. It takes a huge investment of their time to scour through all of the properties entering the market and these agents, and their clients, will need to make immediate, educated decisions or…. you may end up last in a long list of offers. The early bird gets the worm! If your agent has called you about multiple properties and you have not responded immediately or are indecisive, you may just end up on the bottom of their list of clients to call. An experienced REO agent WILL ask you more questions than you ask them so, be prepared. Having a pre-approval through a direct lender or, proof of available cash will be on the top of the list. Other factors they will consider is whether the home will be your own residence, a rental or even a “flip”.
If a potential buyer’s agent does not interview you before taking you on as a client, you may want to stop and ask why. Even if you are their only client, they need to know what to be looking for. The time to ask questions of your motivation and goals is not during the process. A well qualified REO agent knows this.
Looking for rental property to add to your investment portfolio?
Sometimes, all it takes is some simple math to see if you have found a great deal on a lender owned foreclosure. Your agent should have a good understanding of the current rental market (Another reason that a local agent is necessary to your success) and will be able to provide information about current and projections of future market rents. Knowing the direction future rents may take is an aspect often overlooked by potential investors.
If you are able to acquire a property, after your initial investment (Typically 20% for non-owner occupied investment property), and the market rents for the area are enough to cover debt service ( Monthly mortgage payment for a conventional, fixed rate, fully amortized loan with principle and interest payments each month), property taxes (Anywhere from 1.3% to over 2%) and insurance and, you still retain monthly positive cash flow to cover a pre-determined vacancy factor and deferred maintenance, you know that you are on the right track. If you had a mortgage payment of $1300.00 including PITI and market rents were at $1500.00 it would leave $2400.00 per year applied to vacancy and repairs. Hard to do? Not right now but, competition for these properties is becoming greater every day. The ideal situation for an investor is to have someone else make their monthly mortgage payment and pay for all repairs over the life of the mortgage. The idea is that in 20-30 years, you will have a substantial estate to draw upon for needed income or, live from the income realized from the paid for property and leave the asset to your heirs.
If all you purchased were 10 properties and market rents did not increase over the next 20 years,you would have over $13,000.00 per month in income. Of course, you would have to pay taxes on this income and $13,000.00 will not mean as much 20 years from now as it does today but, rents do increase over time. $13,000.00 per month is still quite a bit of income coming in from something that someone else paid for!
You should consult with your Realtor and accountant or tax attorney to establish a plan that meets with your investment goal.
Are you a Flipper?
This is one of the most volatile areas of the market and there are many different opinions on the viability of flipping. Flipping is not for the faint of heart, financially unstable or uneducated investor. You must have knowledge of the market, rehab costs and processes, a well developed plan, budgeting skills and the financial ability to complete the process. Even the most experienced “flippers” run into unforeseen obstacles that can add thousands to your bottom line. Going over budget and estimated time frames is common and must be avoided through thorough cost, budget and time estimating. If you are weak in any of these areas or lack general knowledge of construction methods, you need to bring someone on board to assist you before even considering flipping a home.
Casey Serin, one of this countries most notorious flipping flops, has become the poster child for the wrong way to flip. A quick Google of his name will provide a wealth of information and a long list of what to avoid. Why reinvent the wheel when you can learn from the king of the flip flop?
This market could still bring a good return on your investment (Think 10% as a potential profit goal). Looking to the rental market, as a contingency plan in case you are unable to sell within 90 days or so, should be part of a well developed strategy. If, after all of your initial costs and re-hab work, you are still able to rent and cover all of your expenses, you may be able to avoid a potential disaster while still building future wealth. Barring a rental contingency plan, you will have to have enough capital to cover holding costs for as long as it takes to sell (Think potential Loss). If you do not have the ability to do either and must rely on selling within a short time frame to avoid financial disaster, there are other, less risky, investment strategies to consider. If you are still ready, able and willing to flip, a Realtor who is experienced in the REO market is an absolute must and, will help establish a plan that meets your goals. They will also have the experience necessary to advise you on the right direction to proceed. Keep in mind that no one can predict the future. Your Realtor is only able to be your guide though the process yet, ultimately all of the potential risks are yours, and yours alone. Fail to plan and….plan to fail.
The Offering Process:
Asset managers have their own process that must be followed in order to make a successful offer. Listing agents are given instructions that are conveyed directly to brokers. These instructions are displayed in the MLS system along with required addendums where required. This information is only visible to participating Realtors or their brokers and not displayed on the public MLS system.
Your offer will need to be submitted on the proper forms along with a copy of your deposit check (Typically 1% of the purchase price), a pre approval letter from a direct lender (Not your everyday loan broker) or proof of funds when paying cash. Your Realtor will also attach any required addendums with your offer. All forms will usually be sent via e-mail and fax to speed the process.
After your offer is transmitted and received by the listing broker, your offer will be entered into an asset management system online or, in some rare instances where the asset manager (The banks representative) does not utilize management systems; your offer is forwarded on directly to the asset manager. In most cases, they will not see your actual offer. What is transmitted to them is only your name, the purchase price offered and the general terms of your offer (Whether there is financing involved, the amount of your deposit, the amount of your down payment and any other contractual provisions ). There is no need to explain your offer or provide additional details, they will not see it. The simpler your offer is, the better.
Once transmitted, received and entered or forwarded to the bank, all you can do is wait. It is typical to hear nothing at all for a few days or, up to a week or more. Sometimes a response will be received in a matter of hours. Patience is a virtue. Hounding your Realtor will not speed the process. Nothing will speed the process at this point other than a clean and easy to accept offer. Even then, there is no guarantee your offer will receive a quick response. When responding to your offer, the banks asset manager will do so using a counter offer. Even if they agree on all of the terms as submitted, they will provide a counter offer that must be retuned to them within a specified period of time (Usually 1-3 days) after which their offer will be null and void. Time is of the essence so, be prepared to respond. If they are not in agreement, the counter offer will contain the terms that they are willing to accept unless another, more desirable offer, is received before your acceptance. You can either accept their terms or, have your Realtor complete a counter offer in return. Rarely will an asset manager complete more than 2-3 counter offers. If you can not reach an agreement after 2-3 counter offers, it is usually time to move on.
After the offer is accepted:
Once the terms are agreed upon and the counter offers and addendums are returned, your original offer and counter offer(s) will then be returned to the bank for signatures. It may take an additional week or more for them to be returned and escrow opened. It is imperative that all the terms and conditions contained within their final counter offer are followed regardless of being returned and escrow being opened. Some counter offers will state that your contingency time frames start from your signature and others will state that these periods start only after escrow receives the signed documents from the owner-bank. Although rare, it is possible for the lender to accept another, more desirable offer, before your contact is signed. If this does happen, there is nothing you can do other than leave your offer as a back up or, move on. Contracts are not fully ratified until signed by the banks representatives.
Once escrow is opened, the escrow officer will forward initial documents for your review and completion. These documents need to be completed and returned as soon as possible and within the time frames allowed by the bank. When obtaining a loan, you will also need to complete all of the required paperwork that they require as soon as possible. The closing dates set by the bank are firm and their contract will usually contain a per diem charge for each day beyond the closing date specified ($100.00 per day or more). During this time you will also need to complete your home inspection, termite inspection or other agreed upon inspections contained in the contract. Failure to complete your inspections or other required conditions within the specified time frames could put your deposit at risk. Time is of the essence. Your Realtor will help you through the process but, ultimately, it is your responsibility to follow the contract. When you have completed your inspections, your loan has been fully approved, an appraisal has been completed and all other conditions have been complete and accepted, your lender will order loan documents or, when paying cash, escrow will provide a closing estimate which will include the total amount that will need to be deposited by wire or certified funds to escrow and will then, after receipt of funds, record and close within 24-48 hours. Once loan documents are received back to your lender or to escrow, you will need to sign the loan documents before a Notary Public. This happens either at the escrow office chosen by the bank, at the lenders office or, on occasion, at your home or office. When returned to escrow, your lender will review the documents, complete final verifications and then prepare for funding of the loan.
Loans will typically fund, if no issues exist, within 24-48 hours after received and approved. Any conditions of funding must be completed prior to actual funding. Once funded, escrow will record and close within 24-48 hours. Before close of escrow, no work should ever commence on the property. Attempting to start repairs or, moving into the property prior to confirm closing could void the contract.
After you receive notification of closing, the property is yours. Congratulations.
LOS ANGELES – Oct. 20, 2008 – Real-estate Web site Zillow.com is slashing its work force by a quarter to cut expenses and gird against the ailing U.S. economy, the company announced Friday.
It plans to lay off 40 employees Tuesday, with most of the cuts in Seattle, where the company is based, said Zillow spokeswoman Amy Bohutinsky. About 107 employees will remain after the cuts, she said.
“This was an incredibly painful decision for me and the leadership team, but in the end, we concluded that we had no choice but to securely batten down the hatches as we sail into a major economic storm,” Chief Executive Rich Barton wrote on the company Web site Zillowblog.com.
Barton said the company has “sizable cash reserves” but determined the cuts were needed to help it weather the economic downturn.
Zillow, launched in 2006, hosts real estate listings and helps visitors find competitive mortgage rates, among other features. Its revenues come from online ad sales.
Despite the housing slump, the company said it had attracted 5.4 million unique visitors to the Web site last month – a 42 percent jump from a year ago.
While revenue has been growing, it doesn’t yet cover Zillow’s expenses, Barton said.
The layoff announcement comes only a few weeks after the company disclosed it had expanded a revenue-sharing partnership with 282 newspapers.
JACKSONVILLE, Fla. – Oct. 20, 2008 – In an unusual legal move that could become more common if Florida’s housing market continues to falter, a Jacksonville community development district (CDD) is trying to foreclose on its own developer.
Under Florida law, local governments, on behalf of developers, can create community development districts that issue bonds to fund roads and other infrastructure in new communities. The developer pays the debt on the bonds until residents move in and take over assessments, which can stretch out as long as 30 years.
In 2005, the Jacksonville City Council created Tison’s Landing Community Development District at the request of Yellow Bluff Development. In 2006, the district issued $37 million in bonds to develop the property, which was to have 680 homes. Today, the wooded area off Yellow Bluff Road in northeast Jacksonville has roads, water and a recreation center. But the developer has yet to build a single home.
When Yellow Bluff missed its annual assessment earlier this year, the development district filed a foreclosure lawsuit. The situation is a bit odd, says the district’s lawyer, Jonathan Johnson of Hopping Green & Sams in Tallahassee, because most of the district’s board members are affiliated with the developer in some way. “It can be an awkward conversation when you tell someone that they have to foreclose on their employer or their acquaintance,” says Johnson. “But in this case it’s been very positive. It’s simply the duty of the board.”
The idea is to foreclose on the land and find a buyer to repay bondholders. (CDD bonds are generally held by institutional investors) “I expect that what will happen is that someone will make a deal here, perhaps that the developer will sell the property,” says Johnson.
If not, the CDD could end up holding the land, with the bondholders going unpaid until it sells.
That outcome can be tough for local districts. In 1991, Sun ‘n Lake of Sebring Improvement District foreclosed on several thousand lots when its developer declared bankruptcy. The district had to pay taxes even though no market existed for the property in the economic downturn. In 2003, Sun ‘n Lake was able to attract another developer, bring bonds current and pay off outstanding taxes. But now, that developer has stopped paying – again due to the economy.
Sun ‘n Lake “still struggles with unsold lots and unpaid fees,” says the district’s lawyer, John K. McClure, “although it is solvent and surviving.”
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Orlando – The foreclosure crisis continues to affect everyone from homeowners and mortgage brokers to real estate agents and communities, especially in Central Florida. In fact, many real estate professionals are so negatively impacted by the sluggish economy that they have either moved to another profession or they cannot pay their membership dues to the Orlando Regional Realtor Association along with MLS fees. Because of the slower economy and the current issues affecting real estate agents, organizers of the first-ever Orlando Foreclosures Expo (www.foreclosuresexpo.com) have changed the date of the event from November 15-16 of this year to February 7-8, 2009.
“Orlando area real estate agents are experiencing financial woes, especially this time of the year when they are trying to increase their business and facing ORRA and MLS fees. One well known local brokerage has lost a third of its agents because they could not afford to renew their ORRA fees,” says Phil Peachey, who is the founder of the Orlando Foreclosures Expo. “Since we have received so much positive feedback from real estate professionals who want to participate in the Expo but cannot at the moment, we felt it would be best to postpone the event until February 7 and 8.”
A licensed real estate agent who helps British and international clients buy and sell vacation homes in Central Florida, Peachey started buying and selling foreclosed properties in 2006. He quickly found it challenging to locate available foreclosed homes that are not included in the MLS. This sparked the idea for an event that brings buyers and sellers in the foreclosure industry under one roof.
When the Orlando Foreclosures Expo take place on February 7-8 at the International Plaza Resort & Spa, it will bring everyone from real estate agents and brokers, real estate attorneys and REO department representatives from banks to lenders, investors, wholesalers, builders and others in the foreclosure industry to the International Plaza Resort & Spa. The Expo will also allow homeowners in danger of foreclosure to list their properties and the minimum price they need.
There will be workshops conducted by experts on how to avoid foreclosure and what to do if you are facing foreclosure. The networking among professionals in the industry can lead to immediate transactions and future business, Peachey says.
“The Orlando Foreclosures Expo was born out of the need for people in the real estate industry to promote their services to the public,” Peachey explains. “This will be the first event of its kind where real estate industry professionals and the public can learn about the foreclosure industry, network and links buyers and sellers of foreclosed properties.
“Most people, even real estate professionals, do not have access to foreclosure listings or to the people who regularly buy and sell them. Wholesalers typically offer their foreclosure properties to a very select few. Also, most REO (Real Estate Owned) departments of banks will not deal with the general public,” Peachey adds. “The foreclosure industry has been more like a private club where the public cannot obtain a membership. The Orlando Foreclosures Expo will break down those barriers.”
Peachey says that the Expo has room for as many as 50 vendors. At the moment, 25 vendors have booked booths. The Expo is being sponsored by the Orlando Sentinel, Luxautica and ICEBAR Orlando. Peachey says that rescheduling the event will allow more sponsors to get involved and offer more time to promote the Expo.
For homeowners in danger of losing their homes to foreclosure, the Expo will give them access to a pool of several qualified buyers.
After the inaugural Orlando Foreclosures Expo is held, Peachey plans to organize similar events across Florida in areas like Tampa/St. Petersburg, Miami, Jacksonville and Tallahassee.
“There is undoubtedly a great need for an event like this,” Peachey says. “It will benefit every professional associated with the foreclosure industry, and it will also help those people who are trying to avoid foreclosure.”
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Media Contact:
Jeff Louderback
407-474-6149
jlouderback@cfl.rr.com
If you've entertained the idea of purchasing property anytime in the last 360 days than I'd be willing to make a bet that you've come in contact with the term "Short Sale". A short sale, in essence, is nothing more than a glorified term for a pre-foreclosure but with a twist. It's important to be able to recognize a short sale and what to expect when purchasing one. It's been speculated by many U.S. experts in the real estate industry that over the next year to two years there won't be very many listing on the market that are NOT short sales. So what do you say we get aquainted with our new buddy?
What Is A Short Sale Situation?
A short sale situation occurs when a property owner has suffered a financial hardship and finds themselves unable to continue making payments on their home. To avoid a possible foreclosure the seller contacts the bank and submits a letter of hardship to let them know of their financial situation. In most cases, the lender is willing to consider accepting less for the property than what is owed on the UEmortgage under the assumption the property is listed at an appropriate price for a certain length of time. The banks will generally not accept extremely low and unreasonable offers when the property is first listed. They want to see that the home has been aggressively marketed at a fair price first and if it just won't sell then they start to consider lower offers.
Once an offer has been submitted to the bank it is very common that the bank will take anywhere from one to four (and sometimes longer) months. . . yes, I said months. . . to approve or reject your offer. The banks will not counter offer. They will either go with it or not. If you waited three months for a response and they said no, you have the option of either submitting a higher offer or walking away. Please keep in mind that the bank does NOT even have to respond to your offer at all. So you may want make sure in your contract you have some type of clause that states how long you are willing to wait for a response otherwise you could be putting your escrow deposit at risk if you decide to walk.
Recognizing a Short Sale
Recognizing a short sale is an absolute MUST in this market because they are not for everyone and many people are just simply not interested in waiting. Here is a list of common phrases that you might see in a listing description online or on a flyer:
"Subject to bank approval" This basically means that your offer is either going to be accepted or rejected by the bank and the seller does not have any control over it. So if you want to low-ball your offer that's fine and dandy but please keep in mind it's not up to the seller once it's submitted, it's the bank that will be making the decision and they are not known to make quick decisions!
"Third Party Approval Required" This is just a different term variation for the phrase above. It means the exact same thing. The bank is the "Third Party" and must approve your offer. Pull up a chair, make yourself comfortable and be prepared to wait up to four months for a response.
"Listing price may not be sufficient to pay the total of all liens and costs of the sale" As you can clearly see this phrase is letting you know that it's possible you may be responsible to pay extra closing costs at closing that the seller can't pay. I recommend negotiating this in your contract up front and putting some type of limit on what exactly you're willing to pay.
Tips To Help The Process Move Faster
If you are the buyer or buyer's agent it's wise to submit an updated or recent pre-approval letter with the offer as well as a copy of the escrow deposit check so the bank can see they have a serious buyer. It is encouraged to complete all inspections as if it were a normal transaction and have your lender complete the loan package subject push to final appraisal. Other than that your main role is to just wait it out and be a trooper and continue to follow up with the listing agent.
If you are the listing agent you should be aggressively contacting the bank at least once a day to follow up. It would be wise to notify the title company or closing attorney of the short sale and request to accelerate payoff demands. Get from them as soon as possible an estimated HUD 1 statement including payoffs for all liens and distribute a copy to all parties on the contract as well as the contact at the bank.
These are just a few tips to help speed up the process. Remember to be patient, this isn't an overnight transaction. If the price is right it will have been well worth the wait. Now that you know what to expect you can go short saling with confidence!
Margarita (Caribbean) tourism up by 15% When it comes to investment opportunities in the Caribbean, Margarita is something of an undiscovered jewel. Its huge potential arguably owes more to geography than simple economics. It is the largest of three islands in the state of Nueva Esparta, its smaller neighbours being Coche and Cubagua. Margarita sits off the north east coast of Venezuela in the Caribbean Sea. With over 160 Km of coastline there are a plethora of unspoilt beaches for tourists to enjoy all year round. This is great news for investors looking to profit from high-end holiday rental. The large Santiago Marino airport makes this particular piece of paradise extremely accessible; with regular flights from Europe, North America and beyond. Furthermore, ferries to the mainland and flights to-and-from Venezuela add to the convenience. This does not only assist with the practicalities of owning a property in Margarita but also allows continued expansion of the tourist industry. The tourist industry is indeed expanding and this is reflected in the latest statistics. Tourism to the island increased by approximately 14% in 2007 and current figures suggest a further increase in excess of 15% for 2008. Overall, traveller entry between January and April has increased steadily by nearly 300,000 since 2004. All this strongly points towards the prospect of dependable tourist income for those investing in property on Margarita. In short, with blue seas, sandy beaches and money to be made; Margarita is surely the very place every property investor is dreaming about. For more information about investing in Margarita please contact:
A pre-foreclosure is when the owners are not making their mortgage payments and get a notice of default from the bank. They have a very limited amount of time to try selling the house or get caught up in their payments before the bank forecloses on the property. Every investor dream is buying a pre-foreclosed home in Miami and then selling it for a huge profit. The dream also includes that the property requires little or no work and that you use little or none of your own money.
The dream has become a nightmare for thousands of investors who were not able to sell the property fast enough and were caught in the middle of the biggest drop of homes values in recent history. Usually pre-foreclosures are reserved for the very savvy and astute of Miami real estate investors. Pre-foreclosures require a lot of work, research, determination, and negotiation.
These are several reasons why you should buy a pre-foreclosed home in the Miami real estate market.
1. Motivated seller. The seller is desperate and has to sell right now. When a seller is faced with a foreclosure he/she does not want to lose everything and is willing to negotiate price, terms and everything else.
2. Sellers under huge pressure. Since time is of the essence, the seller does not have the luxury or the time to be playing games. The negotiating process is fast and the decision making is immediate. The seller can not afford to have the house in the market for six months as he/she has to sell now.
3. Huge price discounts. Pre-foreclosure buyers are usually getting excellent discounts. Make sure you find out everything about the property including mortgage owed, liens, tile problems, taxes owed before starting the negotiation process.
4. Little risk. Make sure you do your homework including comparables, market analysis, recent sales, pending sales. Find out exactly how much the asset is worth and then there is risk of making a big mistake is minimized.
5. No credit. In many of theses cases no credit and no money is required since the buyer will try to find a buyer right away and unload the property at a profit in the Miami real estate market.
6. Little competition. Not too many investors are involved in pre-foreclosures as they simply wait for the bank to foreclosure on the property. For many investors the amount of time and effort of putting one of these deals together is just overwhelming.
7. Fast growth. Just by taking over delinquent payments investors can establish a substantial portfolio in a relatively short time. In this market investors are advised that they will have to rent the house for at least a year before selling it.
8. Instant equity. Since the price is heavily discounted an investor will realize instant equity at closing making these deals very rewarding right away for the experienced investor.
In today's market the number of pre-foreclosures is staggering as more and more homeowners struggle to make their monthly payments. It is now a tremendous opportunity for Miami real estate investors to buy pre-foreclosed properties and take advantage of this short term financial market disaster. Soon the Miami real estate market will rebound and the sheer numbers of these deals are not going to be available.
Obama And McCain Disagree Over The Reasons Of And Remedy For Foreclosure Crisis
The two presidential candidates Obama and McCain disagreed over the reasons of and remedy for foreclosure crisis. This was the gravest financial crisis since the last eight decades. The debate was of vital importance considering that the foreclosure issue could make or take votes in the presidential race. Of three scheduled debates this was the second one between the two rivals. It was the only one in which the listeners were allowed to ask questions. Both McCain and Obama tried to present themselves as reformers in these foreclosure-ridden times when voters were anxious and demanding about change.
Hitherto Obama had declined many calls from the Republicans for a joint appearance. The debate was held inside Belmont University against the background of Obama gaining ground in survey polls. The audience was chosen by a polling organization named Gallup. It consisted of three sections, those who were for and against the candidates and those who claimed to be neutral. The queries were screened by Tom Brokaw of NBC who acted as moderator. Some questions coming online were also included.
Republican Senator McCain called for sweeping new remedial measures and stressed, “It’s my proposal. It’s not Senator Obama’s proposal.” The focus is on keeping house owners safe from foreclosures.
Democrat Senator Obama bluntly stated that the present foreclosure related crisis was the “final verdict on the failed economic policies of the last eight years.” He added that these are being “supported by Senator McCain” and would in all probability be continued if he came to power. He said that Bush as well as McCain had opted for deregulation of the financial system so that the markets were allowed to go wild. It was hoped that by this prosperity would rain down on all and sundry. But this did not occur.
McCain alleged that Obama ranked the second highest as regards donations from individuals of disgraced Fannie Mae and Freddie Mac. Obama shot back by saying that Rick Davis, the campaign manager of McCain had an interest in a Washington firm that had received generous amounts from Freddie Mac in the very recent past.
The two rivals pointed at each other on issues ranging from foreclosures to energy, taxes, spending and health benefits.
While the mudslinging was going on both were aware that the mood of the voters were tensed against the background of the foreclosure crisis.
Foreclosures Closely Linked to Savings and Spending Habits
Foreclosures are linked closely to savings and spending habits. It is associated with the carefully cultivated credit culture. It almost became a fashion to be sitting with loans – from cars, grocery bills to houses. Invariably this doomsday culture led to the hell of foreclosures.
The Japanese save and avoid spending. Their exports are more than imports. Japan enjoys a trade surplus of more than $100 billion. In America it is the reverse. Americans have not been taught to save and it imports more than it exports. It has a trade deficit of more than $400 billion. Yet all over the world people are made to believe that the America economy can be relied and trusted upon.
The Americans get their spending money by borrowing from Japan, China and also India. The international savings are largely invested in USA. The result is that America has taken from the rest of world more than $5 trillion. To keep the American spending from continuing the other countries are remitting $180 billion each quarter. It calculates to $2 billion per day. If this were not done the American economy would collapse.
It is this habit of spending that easily led sup-prime peddlers of loan to foist unmanageable mortgages on the gullible. Nobody thought that one day loans would have to be paid back. Nobody thought that their income would not permit them to keep up with increased interest. Due to this lack of thinking foreclosures took them by surprise and today they are out on the streets. Their spending power has gone. This is causing worry to not only America but also to those countries who pump in money from outside to keep the Americans from spending. The more they spend the more America imports to meet demands. And this keeps the other countries happy. So the fate of the other countries is linked with the spending of America.
Americans have used up their credit cards to spend from their future income. Because the Americans spend, it makes it attractive for China and Japan to export to USA. Year after year this has been going on – American imports more than what it exports.
Bluntly put this cycle has made the world dependent on the spending habits of America. It has become a habit with the world to survive on American consumption. So in the days following the foreclosure crisis the world has stepped in vigorously to provide America with spending money.
Underwater Owners in Southwest Florida; Third Wave Coming
News out of Lee County shows an increasing number of homeowners facing negative equity situations. The News-Press shares a Zillow bar graph showing the percent of homeowners who are upside down in their mortgages by year of purchase. Those who bought at the market peak in 2006 are hurting the most (78%), while 2005 and 2007 buyers aren't faring much better, at 60% and 64%, respectively. Today's buyers are breathing a little easier considering the median sales price of an existing single family home in Florida has fallen a dramatic 54% from the peak of $322,00 in December 2005 to $146,900 in August of this year. Chris Lafakis, Florida analyst for Moody's, sees more foreclosures on the horizon, "The third wave is coming from people who are underwater who are suffering disruptions to income. That includes losing your job or repairing your car or a death in the family. It’s a combination of declining home prices and a weakening job market."
S.S.D.C.: Same Story, Different County
Brevard County homeowners are also wrestling with negative equity situations, and the pain distribution is identical with Lee County, leaving one to believe this scenario is playing out statewide. Just look at the similarities between the distribution of underwater homeowners in Brevard County by year and the Lee County numbers. 2006 was the worst year in Brevard County from a homebuyer's standpoint, while 2005 was the best year to be a mortgage broker. In 2005, when lax lending standards and interest-only ARMs reigned supreme, 11,749 new mortgages were issued in Brevard County. Since then, only 12,609 new mortgages have been issued during 2006, 2007 and 2008 combined. Some homeowners like Maria Acevedo feel trapped, "The only thing keeping us here in Florida is our house." Acevedo probably would have broken even considering she purchased her home in 2004. It was her cash-out refi that finally put Acevedo underwater.
Canada's Elites Eyeing Florida Bargains
Kelvin Browne, a columnist for Canada's National Post, is one of those buyers who pulled the trigger on a Florida condo in 2006. Browne doesn't believe he is underwater...yet: "I suspect these paper profits will soon evaporate. I worry what happens when all those new towers with units to sell go on the market. Oversupply of new units isn't going to make my place more attractive." Still, Browne says many upper-class Canadians are weighing both the 30-40% drop in Florida home prices and the relative (although easing) strength of the Canadian dollar versus the dollar, "For months, the theme at the dinner tables of the well-heeled has been whether now was the time to buy property in the U. S. (And) while most of foreclosure land isn't what elite Canadians covet, there are wonderful properties in Florida, Arizona and California that have plummeted, too."
The Totally Florida team is always looking to purchase Foreclosure properties. Please contact us if you are in Foreclosure and want to sell your house. We will assist you quickly and fairly. Please visit us at our booth at the upcoming Orlando Foreclosure Expo on the 15th & 16th of November at the International Plaza Resort & Spa at 10100 International Drive Orlando.
Congratulations! You have already made it to the first step of your journey by visiting our website! The information included on this site should help to answer some questions and provide you with an introductory overview of buying a villa in Florida. Further information such as builder brochures, pricing, financing, availability, etc. can be forwarded to you upon request. We are one of Orlando's most established vacation home companies and our membership in many local, state, and national associations embodies our commitment to professionalism and the highest industry standards.
Step Two:
You’re Visit to Florida. Once you have chosen Totally Florida Plus, you can now arrange a visit to Florida. We offer daily departures through all scheduled airlines and would be happy to tailor a viewing trip for you. We feel that four to five days will allow you sufficient time to view the various properties, arrange proper finances and make a final selection. Upon your arrival, one of our licensed Real Estate professionals will meet you at the location of your choice and assist you in the search for the perfect home. Alternatively, you may be traveling on your vacation and we would welcome the opportunity to arrange an appointment with you at your convenience. Our Realtors are available seven days a week.
Step Three:
Thinking Things Over. Our Experienced Realtors will guide and arrange site visits of various properties that fit your specific needs. It is at this point that you will begin to understand the aspects of home buying, including location, prices, square footage and more.The first day of viewing may send your head spinning, but try to relax! Once you have pinpointed a few specific homes that you are interested in, we can revisit them at your convenience.
Step Four:
Contract. Once you have made your final decision, the builder's representative will calculate the basic cost of the home to include your selected upgrades, pool design, lot selection etc. At this time, you will sign a sales contract and move forward with your purchase. The sales office will produce a price sheet and schedule of deposits and mortgage payments based on the total purchase price and an estimated date of completion. Generally the builder will require an initial deposit to secure your price and reserve your lot. Although each builder has different requirements, another deposit will be required within 10-30 days, usually equaling 15-20% of the total price. In the unlikely event that your mortgage is not approved, all deposits paid are fully refundable. Generally, the final cash deposit is not due until closing when your home is complete. However, each builder will differ and each contract may change the payment structure.
Step Five:
Decorating and Furniture. Should you require help in choosing color selections for your new home, matching tile, carpet, cabinets etc., our Recommended Interior Decorator will be happy to assist you. This service is free of charge to you. Should you wish to purchase Custom Furnishing Package, we will arrange a meeting with the interior Designer/Furniture Company. Your furniture package will include everything your need for your home to be a turn-key operation, including linens, plates, utensils and more. Furnishings included in the packages are tasteful and classy, providing a very comfortable setting for your guests.
Step Six:
Financing. If you require a Mortgage, we will introduce you to a mortgage broker who will prepare an application for your financing (we can of course make an appointment for you prior to a contract for a discussion). As a guide, most Florida home purchases are financed through a US mortgage. Although you are able to finance from the UK, the US mortgages tend to be flexible, making them more attractive to the buyer. Financing from 80% of the total purchase price may be obtained, although opting for 70% which requires less financial documentation is easier for approval. Interest rates may currently be fixed for up to 30 years and have generally no redemption penalties should you decide to repay the mortgage early.
Step Seven:
Bank Account. It is essential that you obtain a US bank account. We have no particular preference of the institution and will assist with this process. A bank account may be opened with photo identification and as little as $20 to get you started.
Step Eight:
Management Companies. During your stay we will introduce you to a management company to discuss the management and rental services on offer for your investment home. Who looks after your house is one of the most important factors in owning a home in Florida. You will need to decide if you want a Full Service Management Company, that have contracts with Tour Operators etc and take care of everything including providing bookings etc, or what is known as a “Caretaker Manager” that just makes sure the house is cleaned and your grass cut and pool cleaned for your own guests that you have booked through your own efforts.
Step Nine:
Construction Process. During the construction we will communicate with you on a regular basis, sending you photographs so you can track the building progress. We will also ensure your mortgage company processes your loan as smoothly and quickly as possible. Throughout this time, it is so important that you maintain communication with us. With our experience, we can help to ensure the process is moving along smoothly. The County Building Inspector is required to pass each stage of construction so don't worry because he is also watching out for you. Prior to closing or completion, we are requested by the builder to conduct a walk through (snagging) on your behalf - assuming you are not in Florida yourself. At this meeting with the builder we will check the finish of the home and document any items requiring attention for the builder. Most times there will be another scheduled walk of the home to show that the items have been completed. We will make every effort to ensure the house is finished to a high standard that would meet with your approval. The builders we work with are very good with regard to repairs or replacements of all items under warranty during the first year, and normally no job is too small for the eager Customer Service Department.
Step Ten:
Prior to Closing. Your closing date will be scheduled by the builder and you should be notified about one month prior to that date. There are few small items that need to be addresses at this time. A Homeowners Insurance policy must be in place before you close. You will need to contact an insurance agent and request that a policy be drawn up for your property. There are a few basic questions that you will need to answer. You will then have to sign and pay for the policy before it becomes active. A Totally Florida representative will help you with this. You will also need to be sure that your money for closing has been transferred over to your US bank account. Be aware that it may take up to four business days for the wired amount to reach your US account. Stay in close contact with your mortgage company and inform them of the date of the closing. If there is any additional information that is requested of you from the lender, you will want to be forthcoming and send required documents over as quickly as possible so as not to delay your closing. Contact your furniture company, informing them of your closing date and pay any outstanding balances to allow for a quick installation time. Finally, now is the time to work closely with your chosen Management Company to get everything in order for the management and rental of your property. You will want to be sure that all of the required documents are signed and that your initial deposit has been made. Their professional staff members will coordinate with the necessary companies to prepare your home for rentals or for your arrival.
Step Eleven:
The Closing. You may choose to arrive in Florida to close on your home or the title company will mail a closing package to you at home. Your mortgage company will have ensured the property is appraised (valued) and meets the lenders required valuation. The Title Company (who acts as an impartial third party between the builder and the buyer) will have conducted title searches to ensure you receive a clear title. You will incur closing costs of approximately 2 to 5% of the purchase price. This will include Government Taxes, Title Registration, Mortgage Registration and Title Insurance. You are often required to contribute toward a mortgage escrow for taxes and insurance. This contribution will be applied to taxes and insurance in the future, thus preventing unexpected out-of-pocket expenses. A full statement of costs detailing the purchase price, mortgage, fees, etc., will be issued to you. If you require a mortgage, you will need to make an appointment with a certified notary as the documents need to have an official stamp. It is a good idea to locate a notary in your area before you receive the closing documents and ask if they have any special requirements. Please be aware that your closing documents are dated and extremely time sensitive. It is a valuable lesson to ask any questions that you may have and be sure that you understand the process and what is expected of you. This will make your closing process a simple one. After your signature is applied to the relevant papers, the documents are returned to the title company and your closing costs have been made, the keys are yours!
The Florida Property Buying Process - Frequently Asked Questions
When considering the purchase of a Florida property, it is a good idea to first determine its purpose. Will it be a holiday home for your use only, or will you want to rent your property when it's not being used by you, your family or friends to help towards the running costs?
RENTAL RESTRICTION - ZONING Question : I have been told to ensure that the villa I purchase can be used for short term Rentals.
Answer : If you want to rent your property to holiday-makers you will need to be sure that you buy on a community that is zoned for short term rentals. All new and most featured properties on the Totally Florida Plus web site fall into this category. Properties on communities which are not zoned for short-term rentals will probably restrict you from renting the property to the holiday market.
DEPOSITS Question : How much money is required for a deposit?
Answer : When buying "off plan" (ie; new build/pre-construction) the payment amount of the initial deposit will vary from builder to builder. Most will require $5,000 at contract stage. A deposit will enable you to write the contract, thus fixing the price and protecting your chosen "lot" or home from a price increase. A total of 10% based on the contract price will be required 30 days after signing the contract.
BANK ACCOUNT Question : Do I require a US Bank Account?
Answer : A US Bank Account is desirable to facilitate the transfer of funds. We will be happy to introduce you to one of the major banks and assist you in opening a suitable account. An initial deposit of $100 should be adequate to open your account.
CLOSING AND RENTAL SETTING-UP CHARGES
Question : Are there any hidden costs or extra charges?
Answer : Many are concerned about hidden extras and have heard stories about buyers being saddled with unexpected charges for closing costs long after it has become too late to withdraw from the purchase. This is not our experience - at the outset you will be provided with a Good Faith Estimate detailing all costs and charges.
RESALES Question : Should I purchase New or Resale?
Answer : The availability of resale property changes daily. We will be happy to include a tour of appropriate resale properties within your viewing program should this be of interest to you. Good resale properties will not generally be on the market long, while there is always a possibility that a "bargain" may become available, a true bargain in a prime location can be difficult to find. One of the benefits of buying a new home is that you have the opportunity to customise certain elements of the property to reflect your own taste.
SPEC HOMES Question : I want to purchase a new home but don't want to wait 12 months for Construction - what option do I have?
Answer : Some builders will build one or more "spec" homes in anticipation of a buyer wishing to buy a house that is ready to occupy. This is a great way to see the finished product before completing the purchase. The inventory obviously varies on a regular basis, and we will be happy to show you the current availability.
FURNITURE PACKS Question : Do all new homes come with furniture?
Answer : While you may like to furnish and equip your home yourself, this can be somewhat time-consuming. Some builders offer a furniture package that is purchased outside of the mortgage or provide a "furnishing voucher" for a pre-selected supplier. We also have links with furnishing companies/interior designers that are very experienced in making the most of vacation homes and we are happy to introduce you to them.
FINANCIAL MORTGAGE INFORMATION Question : How easy is it to obtain a mortgage?
Answer : While Florida property purchases can often be financed from one's home country, US mortgages will frequently be more attractive and are readily available, subject to approval. Advances of 75% of the cost (house, lot and pool) are relatively simple to obtain, 80% advances will require more detailed financial information. We are more than happy to introduce you to licensed mortgage brokers specialising in the vacation home market.
AFTER SALES SERVICE Question : What happens after I have signed a contract and have gone home?
Answer : We will:- 1. Be available to answer all your questions and queries regarding mortgages, closing dates and rentals.
2. Send you photographs on a regular basis to show you the progress of the construction of your property and assist you with any correspondence you receive from the US.
3. Arrange for a "walk through" just prior to closing. This avoids the necessity of you having to return to Florida to "close" the purchase. 4. Advise and assist with the "closing" documentation upon completion of the property.
5. Co-ordinate the delivery of your furniture package, should you choose to use the services of a furnishing supplier. 6. Advise on selecting a Management Company to manage your Florida property and its rentals.
7. Advise on how to promote your own rentals.8. Introduce you to US Accountants to assist you with your US tax returns, if necessary.
THE ORLANDO FORECLOSURES EXPO February 7th & 8th 2009 International Plaza Resort & Spa Sponsored by the Orlando Sentinel
Real Estate Brokers and Associates now also have a platform to present their foreclosure listings to a public that may not always have access to the MLS (Multi Listing Service). The timing is perfect, there is a definite need and the response from Exhibitors and the public alike has been incredible. The people behind the Foreclosure Expo have a combined 25 years experience in the Real Estate market and are very committed to this project and this industry.
If you are a wholesaler, Bank REO dept, Realtor with Foreclosure listings, Rehabber or investor, this is the expo for you. If you are a seller, come and exhibit your house to people with hard money and can move very quickly to help you avoid the hassle of foreclosure.
We are pleased to announce a truly unique networking opportunity, The Foreclosures Expo, will be held on Saturday and Sunday, November 15th, 2008 and Sunday, November 16th, 2008 at the International Plaza Resort & Spa on International Drive, Orlando, FL. This the only event of its‚ kind in Central Florida.
This is an inaugural opportunity for buyers, sellers, re-habber‚s, real estate agents, hard money lenders, and investors to gather together with like-minded, qualified individuals to get the deals done. There will be properties exhibited along with the most vital component, the interested party. The Foreclosures Expo will welcome anyone who is interested in capitalizing on the tremendous opportunity and abundance of inventory in the foreclosure and/or short sale market. The Foreclosures Expo will allow buyers and sellers to communicate one on one and eliminate the endless emails and telephone tag.
Many are interested in investing in the potential of the foreclosure market but may not know how to get started. We are here to assist you in accomplishing that goal. We will have expert investors on hand who have invaluable experience in this developing market. The Foreclosures Expo is designed to attract the serious and curious.
If you are looking to buy an Investment home to keep or rehab and flip, you need to attend this show.
Due to the demand, we have now added more space with 100 seat presentation area where people can listen to a variety of Foreclosure experts.
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