High court's foreclosure ruling means more mediators needed

Lawyers and others are scrambling to become mediators after Monday's Florida Supreme Court order that foreclosure mediation be available for certain troubled homeowners.
Chief Justice Peggy Quince issued the order to help handle Florida's glut of foreclosures. With an estimated 465,000 cases clogging the courts system, mediation may help resolve some cases early in the process. The order applies to new foreclosure lawsuits and requires that homeowners of primary residences be given the opportunity to have their case go to mediation with a third party. The goal is to work something out between the homeowner and the lender to avoid foreclosure.

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Buyer Tax Credit Could Be Renewed Again

Will the housing tax credit be extended again – past the current April 30 deadline? Sen. Johnny Isakson, a Georgia Republican and former real estate practitioner, swore in October that there would be no more extensions, but some observers predict that the answer is yes. Jaret Seiberg, a managing director at research firm Concept Capital, predicts that Congress will choose to phase the credit out over six to 12 months. “We believe a phase-out is most likely because it would benefit housing markets but let Democrats argue they are fiscally responsible because they have designed an exit strategy that weans consumers off the subsidy,” she says.

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Report Shows Tampa Recorded Largest Price Drop In October

Home price gains earlier this year flattened out in October, according to a report issued Tuesday. The S&P/Case Shiller Home Price index, covering 20 of the largest metropolitan areas in the nation, was unchanged in October, after four consecutive months of gains. The index is down 7.3% from 12 months earlier. Just seven of the 20 cities recorded gains from a month earlier. Prices are down from their all-time highs set in 2006 by 29% for the 20-city index. Among the 20 cities, the worst tumble was taken by Tampa during the month. Prices fell 1.6% from September. Chicago and Atlanta recorded 1% losses. The biggest gainers were Phoenix, up 1.3%, and San Francisco, up 1.2%. Las Vegas sellers continued to bleed. Prices there fell just 0.1% but that marked the 38th straight monthly decline. The market in Sin City is off 55.4% from its peak. You can buy a home in Las Vegas for the same price it sold for in October of 2000.

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Company bails out condo associations

A Tampa-based company, LM Funding LLC, purchases delinquent receivables from condo associations. In this volatile real estate market, hundreds of condominium boards across Florida face budget shortfalls and are struggling to pay their bills. They typically have few options other than hiring an attorney and pursuing foreclosure. LM's business plan is unique. It's sort of a bailout for associations on the brink of financial disaster. Associations are eligible for up to 80 percent of the past-due assessments upfront, depending on the severity of the shortfall. All they have to do is give up the rights to collect fees on the account, said Frank Silcox, founder and CEO. That's how the company makes its money. It has an attorney who goes after the owners, which in some cases are lenders.

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Long-Term Mortgage Rates Inch Up To Just Over 5 Percent

The 30-year fixed-rate mortgage (FRM) averaged 5.05 percent with an average 0.7 point for the week ending December 24, 2009, up from last week when it averaged 4.94 percent. Last year at this time, the 30-year FRM averaged 5.14 percent.

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Higher Rates Will Require Lender Explanation

Under new rules from the Federal Reserve Board and the Federal Trade Commission, borrowers who are loaned money at less-favorable rates because of their credit ratings must be notified and given a free copy of their credit scores. Currently, lenders don’t have to offer any explanations. These rules apply to mortgage lenders as well as other sorts of financing firms. It takes effect Jan.1, 2011. Consumers who are given terms “materially less favorable” than “a substantial proportion” of the lenders’ other customers must receive the information, according to the report in the federal register.

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Report: US Home Prices Likely to Hit Bottom in March

Home prices in 45 of the largest housing markets are expected to fall another 4.2 percent before they hit bottom in March, according to First American CoreLogic’s LoanPerformance Home Price Index. By October 2010, prices are expected to be heading upward again by about 1 percent compared to 2009. The report warned that this progress could be jeopardized by an increasingly large “shadow inventory” of homes owned by banks but not yet on the market. The problem is particularly acute in Michigan and Ohio cities, the report said. It projected a 12.7 percent further decline in values in Detroit, an 11.4 percent decline in most of the rest of southeast Michigan, and a 6.3 percent fall in Cleveland.

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On Track For Home Price Increase In January

Based on sales data from the Pinellas Realtor Organization from the last two years, it appears that the decline in home prices will stop by the end of the year and that the beginning of 2010 will see the first increase in the year over year median home sales price since 2006. The graph below shows that by next month, the price declines will zero out if the latest median home sales price of around $139,100 holds. The median price has been increasing since January so, barring any surprising economic bad news, this is not unreasonable. The market hit bottom in January with a median home sales price of $122,400 and a year over year decline of 33%. I expect the news media will pick up on this in the fourth quarter and if a price increase occurs at the beginning of the year, we will see a wave of buyers who have been sitting on the fence waiting for the good news. My advice: Buy now and if you are looking to sell, wait until February of 2010.

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November Tampa Area Home Sales Up 34%, Prices Decline 7%

The Tampa-St. Petersburg-Clearwater MSA reported a total of 2,282 homes sold in November compared to 1,701 homes a year ago for a 34 percent increase. The existing home median sales price was $139,100; a year ago, it was $149,800 for a 7 percent decrease. The median home price is up 14% from the low point in January 2009 of $122,400 and on track to show the first increase in the median price since 2006 this January. In the year-to-year comparison for the existing condo market, a total of 665 units sold in the MSA last month, up 80% from a year ago when 370 condos sold. The market’s existing condo median price was $104,500; a year ago, it was $121,800 for a 14 percent decrease.

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US November home sales soar 7.4 percent

Home resales surged last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression. Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress decided to extend and expand the credit to ensure the housing market could sustain its recovery. The National Association of Realtors estimated that about 2 million homebuyers have taken advantage of the credit so far and forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record jump. Sales are now up 46 percent from the bottom in January, but down 10 percent from the peak more than four years ago. The median sales price was $172,600, down 4.3 percent from a year earlier, and up 0.2 percent from October.

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For Floridians, gap grows between home prices, incomes

Home prices may be falling, but many Americans are spending a bigger portion of their incomes on housing, especially in Florida. The Sunshine State ranked second among all states for its share of severely cost-burdened working families, according to the Washington, D.C.-based Center for Housing Policy. Thirty percent of the state's working families with low-to-moderate incomes spend more than half of their income on housing. The only state less affordable was California, where working families pay 32 percent of their income on housing. Nationwide, working families spend about 20 percent of their incomes on housing, according to the report.

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4 out of 10 Recent Buyers Used FHA Loans

According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

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More Home Owners Walk Away

A growing number of home owners in Arizona, California, Florida, and Nevada—where prices have fallen the most—are walking away from their properties. They are leaving the deal behind not because they can’t pay but because they don’t want to. A study by researchers at Northwestern University and the University of Chicago concludes that as many as 25 percent of defaults are driven by strategy, not necessity. If many other people follow suit, “It’s going to be really difficult to prevent a cascade effect," says Paola Sapienza, a professor of finance at Northwestern.

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Walking away from Florida mortgage doesn't always clear debt

No Florida law compels lenders to go easy on defaulters. Some homeowners are finding out that housing debt can be like flypaper if they get on a bank's bad side. In some cases banks have docked homeowners' bank accounts and paychecks for mortgage debt they assumed was forgiven. Others have sold their homes by short sale and amicably parted ways with the bank only to receive letters that the lender would hound them for the shortfall. Florida is a "recourse" state. That means a lender can hit you for extra payments even after it has seized the house as collateral for the delinquent mortgage. Many Web sites mistakenly label Florida a "nonrecourse" state. One fact has tended to help Tampa Bay homeowners, however: Florida law leaves much of the discretion up to judges. Strapped homeowners are popularly viewed as victims of the banks, and few judges grant lenders carte blanche to seize assets aside from the home in question.

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Florida unemployment leaps to 11.5%; bay area to 12.3%

The Tampa Bay area's jobless rate jumped half a percentage point to 12.3 percent, making it the most job-challenged major metropolitan area in Florida. The region's most sluggish county remained Hernando, which saw its unemployment rate rocket to 14.7 percent, up from 14.0 percent the prior month.

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"Shadow Housing Inventory" Put At 1.7 Million In 3rd Quarter

As of September 2009, First American CoreLogic estimated there was a 1.7-million-unit pending supply of residential housing inventory, up from 1.1 million a year earlier. Pending supply, sometimes referred to as “shadow” inventory, estimates real estate owned (REO) by banks and mortgage companies, as a result of foreclosures and other actions, such as deeds in lieu, as well as real estate that is at least 90 days delinquent. Normally shadow inventory would not be included the official measures of unsold inventory. At the current sales rate, the pending months’ supply is 3.3, up from 2.4 months a year ago. The months’ supply measures how quickly the inventory will run off given the current sales rate.

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Tampa to create registry of foreclosed properties

A proposed ordinance, set for a vote by the city council Thursday, would require property owners, whether a bank or other lending institution, to register the property with the city within 10 days of filing for foreclosure proceedings and pay a yet-to-be-determined fee. City officials said the intent is to hold banks, mortgage firms and other foreclosed property owners responsible for the condition of their homes.

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Mortgage Rates up But Still Below 5 Percent

The 30-year fixed-rate mortgage (FRM) averaged 4.94 percent with an average 0.7 point for the week ending December 17, 2009, up from last week when it averaged 4.81 percent. Last year at this time, the 30-year FRM averaged 5.19 percent.

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Debtor's Dilemma: Pay the Mortgage or Walk Away

A growing number of people in Arizona, California, Florida and Nevada, where home prices have plunged, are considering what is known as a "strategic default," walking away from their mortgages not out of necessity but because they believe it is in their best financial interests. Walking away isn't risk-free. A foreclosure stays on a consumer's credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card. In addition, many states give lenders varying degrees of scope to seize bank deposits, cars or other assets of people who default on mortgages.

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State Farm stays with property coverage in Florida

State Farm Florida Insurance Co. will continue providing property insurance coverage in Florida, although the company will insure fewer homeowners and will charge more for its insurance. State Farm Florida, headquartered in Winter Haven, withdrew its plan to drop property insurance coverage under a consent order with the Florida Office of Insurance Regulation. Under the consent order, State Farm Florida will non-renew no more than 125,000 policies of its 810,416 residential property policies reported as of October. State Farm Florida has to give 180 days notice of non-renewal, and the process will take place over a one-year period. Even after these non-renewals, State Farm will remain the largest private insurer of property insurance risk in the state, a release from insurance regulators said. The consent order also grants State Farm Florida a 14.8 percent rate increase for all homeowners’ and condominium unit owners’ policies. The order concludes a series of events that began when insurance regulators denied State Farm’s July 2008 request to raise rates an average 67.1 percent.

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Citi to suspend foreclosures for 30 days

Citigroup Inc. will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season. The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck.

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New FHA Guidelines Could Aid Condo Sales

New Federal Housing Administration condo-loan guidelines that took effect Dec. 8 could make it much easier for condo buyers to get a loan. Under previous guidelines, half the units in a new condo development had to be sold before the FHA would underwrite a mortgage in the complex. New guidelines cut the requirement to 30 percent and raise the ceiling on FHA loans in a development to 50 percent from 30 percent. The new rules also allow condo associations to turn down an accepted offer if they agree that it’s too low—unless they will be violating the Fair Housing Act. This is expected to motivate many associations to seek FHA-approved status for their buildings.

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HUD fix for China drywall questioned

The federal government says it's close to unveiling a plan to help homeowners stuck with tainted drywall from China. But a proposal on the table would tap money that's typically set aside for low-income communities. The U.S. Department of Housing and Urban Development will make an announcement soon about federal money that could be used to help remediate homes with bad drywall, according to a letter HUD Secretary Shaun Donovan sent to Florida Sen. Bill Nelson. HUD will issue guidance "making it clear that actions to remediate drywall can be eligible for assistance under the Community Development Block Grant program," Donovan wrote. This is welcome news for thousands of homeowners - most in Florida - who are grappling with problems associated with China-made drywall that emits corrosive gases. Homeowners complain the gases put off a rotten-egg stench, damage wiring and appliances and make them sick. But unless the government allocates more money for the grant program, other services would suffer, say representatives from Tampa and Hillsborough County government.

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Tampa foreclosure pace improves for second month

Tampa Bay continued its trend of declining foreclosure activity in November, despite rising foreclosures in the rest of the state. Area filings dropped 9 percent on a yearly basis and 1 percent from the previous month, according to RealtyTrac, the Calif.-based company that tracks mortgage activity. Tampa Bay's foreclosure rate in November was one filing for every 214 households. A filing is considered any default notice, scheduled foreclosure auction or bank repossession. Florida, on the other hand, saw an 8 percent increase in filings from the same month last year and an increase of 2 percent from the October. Florida edged out California as the state with the second-highest foreclosure rate in the nation.

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Most Mortgage Rates Follow Bond Yields Higher This Week

The 30-year fixed-rate mortgage (FRM) averaged 4.81 percent with an average 0.7 point for the week ending December 10, 2009, up from last week when it averaged 4.71 percent. Last year at this time, the 30-year FRM averaged 5.47 percent.

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Foreclosure filings fall 8 percent in November

The number of homeowners on the brink of foreclosure fell in November, the fourth straight monthly decline, as mortgage companies evaluated whether borrowers were eligible for help. Nearly 307,000 households, or one in every 417 homes, received a foreclosure-related notice in November, down 8 percent from a month earlier, RealtyTrac Inc. said Thursday. Banks repossessed about 77,000 homes last month, down slightly from October. Millions of borrowers are still being evaluated for the Obama administration's foreclosure prevention effort. States are also trying to delay the foreclosure process, temporarily lowering foreclosure numbers. But the foreclosure crisis is likely to get worse before it gets better.

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Pasco's Connerton development shuts down operations

Connerton, one of the largest residential developments around Tampa Bay, has gone out of business. On Friday, developer Terrabrook closed its offices and welcome center on U.S. 41 in Land O'Lakes and let go six full-time and four part-time employees. Developers envisioned Connerton as a mid to upscale "new town" similar to Disney's Celebration near Orlando. Unfortunately for Terrabrook, construction on the 3,500-acre project began just as the Tampa Bay housing market crested in 2005. Terrabrook aimed to sell 700 to 800 homes a year, but sales barely topped 225 after four.

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Condo rules could shut out buyers, hit builders

New lending rules for condominium buyers are already forcing some developers to change or scrap plans for new projects for fear too many buyers will be shut out. On Monday, the Federal Housing Administration started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals. The tighter lending standards are designed to protect the financial health of the FHA. Roughly 18 percent of loans insured by the FHA are either delinquent or in foreclosure, and the agency’s financial cushion has dipped below the federal minimum. But the move is a blow to condo buyers because the FHA has become a key source of mortgage financing. The agency insures roughly one in four new loans today because buyers need only a 3.5 percent downpayment.

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IRS Sets New Rules for Tax Credit

The IRS has spelled out guidelines for eligibility for the home buyer credit when co-borrowers purchase a property. When a home-owning parent of an adult child co-signs for a mortgage and both names appear on the note, the IRS says that under some circumstances, the first-time home buyer can qualify for the whole amount. The IRS says the parent doesn’t qualify for any portion of the credit, but if the child hasn’t owned a home during the three years preceding the current purchase and can qualify based on income, he or she can be allocated the entire $8,000 credit. When unmarried individuals co-purchase a home and only one of them is eligible for the credit, then the full $8,000 can be allocated to the eligible buyer.

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Banks Start to Embrace Short Sales

Even before the government put pressure on them to embrace short sales, more banks were starting to take their lumps, do the short-sale deals and move on. Three years into the housing meltdown, short sales have tripled to 40,000 in the first six months of 2009, compared to the same time period a year ago, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency. Wells Fargo, Bank of America Corp., and JPMorgan Chase & Co. this year have hired and trained more staff to handle short sales and also developed software for expediting them. “It’s really finally dawning on banks that they’re better off with a short sale,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. “I think banks were in denial.”

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CDD Developments In Tampa That Are In Trouble

These Tampa Bay developments have defaulted on repaying community development district bonds. Some will successfully renegotiate deals with bondholders. Others will fall further behind.

PINELLAS COUNTY

Clearwater Cay Club: $33.8 million

HILLSBOROUGH COUNTY

Highlands: $29.5 million
Heritage Isles: 8.8 million
Grand Hampton: $13.9 million
Live Oak Preserve No. 2: $27.3 million
K-Bar Ranch: $5.6 million
Cordoba Ranch: $10.2 million
Belmont: $30 million
South Bay: $57.4 million
South Fork East: $23.8 million
River Bend: $19.6 million
Palm River: $6.6 million
New Port Tampa Bay: $49.6 million
Oak Creek: $79.4 million
Cypress Creek of Hillsborough: $22.7 million

PASCO COUNTY

Bella Verde Golf Community: $10.6 million
Concord Station: $19.7 million
Chapel Creek: $27.5 million
Lakeshore Ranch: $10.7 million
Longleaf: $23.7 million
Country Walk: $13.6 million
Meadow Pointe IV: $28.7 million
Zephyr Ridge: $10.4 million
New River: $27.3 million
Riverwood Estates: $23 million

HERNANDO COUNTY

Spring Hill Killarney: $12.2 million
Sterling Hill: $47.3 million
Southern Hills Plantation: $12.4 million

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CDD defaults may be disaster for a swath of homeowners

More than 50 of Tampa Bay's community development districts are in or near default, a condition that could have serious ramifications for thousands of homeowners across Tampa Bay and accelerate the decline of already troubled Florida banks. Developers use CDD bonds, or "dirt bonds," to build roads, utilities and clubhouses. Of Tampa Bay's 115 community development districts, 28 have already defaulted and another 25 could be teetering toward insolvency. That's 46 percent of the total. They include some of the biggest names in Tampa Bay residential real estate: New River and Longleaf in Pasco County; SouthBay and Live Oak Preserve in Hillsborough County; and Sterling Hill and Southern Hills Plantation in Hernando County.

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Tampa Ranks No. 8 On Forbes' List Of Most Overpriced

Despite having no luck selling their properties, home owners in some parts of the country have clung tenaciously to their notions of the value of their homes. Forbes magazine ranked markets it considered the most overpriced based on the ratio of the median initial list prices compared to the median list prices at the time the properties actually sold. It also factored in how long the properties stay on the market. In addition, the magazine considered expert forecasts of price increases in the areas, which could be what were encouraging home owners to price high. The top 10 areas where Forbes found the most over-priced properties were:

1. Orlando
2. Miami-Fort Lauderdale-Pompano Beach
3. Jacksonville, Fla.
4. Baltimore-Towson
5. Chicago-Naperville-Joliet
6. San Antonio, Texas
7. Denver-Aurora
8. Tampa-St. Petersburg-Clearwater
9. Indianapolis-Carmel
10. Austin-Round Rock

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It’s OK to Walk Away Law Professor Argues

Millions of homeowners in the United States are “underwater” on their mortgages, meaning that they owe more than their homes are worth. Yet, despite all the uproar over homeowners who are simply “walking away” from their homes, the vast majority of underwater homeowners continue to make their mortgage payments - even when they are hundreds of thousands of dollars underwater and have no reasonable prospect of recouping their losses. This includes underwater homeowners that live in “non-recourse states” such as California and Arizona, where lenders cannot pursue defaulting homeowners for a deficiency judgment.

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HUD Considers Tightening FHA Requirements

U.S. Housing and Urban Development Secretary Shaun Donovan on Wednesday asked Congress for authority to raise borrower premiums and down payments in order to bring the Federal Housing Administration’s reserves above the mandated 2 percent minimum. The agency plans to reduce the maximum permissible seller concessions from 6 percent to 3 percent. The minimum borrower FICO score will be raised above the current 500, although the final number has not yet been determined. It also will likely increase the down payment to 5 percent, but that number hasn’t been decided either.

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Long-Term Rates Set Another Low in Freddie Mac Weekly Survey

The 30-year fixed-rate mortgage (FRM) averaged 4.71 percent with an average 0.7 point for the week ending December 3, 2009, down from last week when it averaged 4.78 percent. Last year at this time, the 30-year FRM averaged 5.53 percent. The 30-year has never been this low since Freddie Mac began its weekly survey in 1971.

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Tampa Bay area unemployment dips slightly

Unemployment figures for Tampa Bay dropped slightly in October, according to figures released Wednesday by the Bureau of Labor Statistics. Not seasonally adjusted, Tampa-St. Petersburg-Clearwater reported 153,3000 people, or 11.7 percent of the work force, were unemployed in October, a mild decrease of 0.1 percent from September. However, this still represents a year-over-year increase of 4.2 percent.

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Nine Consecutive Gains for Pending Home Sales

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the NATIONAL ASSOCIATION OF REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

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Snell Isle Mansion Listed For $18 Million, Sold In 2006 For $5 Million

Got $18 million to spare for new digs? That's the asking price for a historic 1920s-style mansion that sits on Snell Isle and has a panoramic view of Tampa Bay. The last time the property changed hands, in 2006, the price was only $5.1 million. Even now, the fair market value, according to the Pinellas County Appraiser's Office, is even less -- $4.62 million.

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Should Underwater Borrowers Stay or Go?

Increasing numbers of home owners are struggling with the decision to walk away from their homes because their mortgages are so far underwater. Whether it is a good idea or not is an open question with strong arguments on both sides of the decision. Leaving a home and a mortgage ruins a credit score, complicating future transactions, and makes it more difficult to rent another residence and buy a car. Despite this potential pain, Glenn Kelman, chief executive of Zillow.com, believes that people should consider giving up. "I think there are a lot of people who don't walk away from their house for moral reasons that are economically irrational," he said. Some experts believe that credit-evaluation companies will view foreclosures differently in this era. "This is a once-in-a-century real estate market. The question that FICO will be asking itself is, is a foreclosure in 2008 and 2009 the same as a foreclosure in 1998, 1999 or 2003 and 2004?" said Todd J. Zywicki, a bankruptcy expert at George Mason University School of Law in Arlington, Va.

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