If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare.
“Case No. 06-19776,” intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.
Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac.
His research sheet told the story: Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.
“They borrowed themselves right out of a home,” said Lawrence, 46, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.
The Florida housing market has more foreclosures in the pipeline than any other state - 19,144 in February - according to RealtyTrac, a national firm that tracks the numbers.
Much of the coming misery will be concentrated in South Florida, where homeowners have been socked by high prices, high property taxes, soaring insurance premiums, along with gimmick mortgages that have blown up in their faces.
The crowd of about 50 in the cramped room was mixed with lawyers, Florida mortgage lenders, savvy old pros and curious newcomers eager to pounce on others’ misfortunes.
The auctions are held every Wednesday and Thursday at 11 a.m. Those losing homes usually don’t show up. But their broken dreams are always here. There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.
The same thing happened with most of the 88 properties up for auction last week.
The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling.
“Would you buy a property for $420,000 if you could only sell it for $400,000?” said Adnan Kabbara, 55, of Weston, a developer and contractor who has bought homes at auction for four years.
Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.
“The party’s over,” said Lawrence.
It’s over for homeowners who used their homes as ATM machines, got maxed out on home equity loans and refinancing, and now have nowhere to turn. It’s over for lenders who gave credit to almost anybody, offering zero-down, adjustable-rate mortgages to risky borrowers. And it’s over for the investors who thought they could make an easy killing on real estate.
You’d think with more foreclosures, there’d be more opportunities for the opportunists. But the auctions have become ultra-conservative, with only a handful of properties triggering bids.
When a property does get action, a high-stakes poker game erupts.
“There’s an enormous amount of competition,” said Lawrence. “There are so many people trying to get the few viable properties, they get bid up to the point of razor-thin margins.”
Click here to read the rest of this Sun-Sentinel article.
Posted by Jed Moss on Apr 02 2007 under Florida
If the rising price of real estate didn’t do enough to discourage homeownership, then future tighter lending restrictions will certainly place it out of reach for many.
What some are calling a meltdown in the subprime Florida mortgage industry will affect more than just the companies issuing these type of loans.
The surviving subprime lenders are changing their policies and making it harder for people with lower credit scores to receive approval on such bad credit home loans, says Nate Morris, past president of the Mortgage Bankers Association of Central Florida.
“I would say home ownership is going to get more difficult.”
A key factor in the meltdown is skyrocketing foreclosures, says Morris, who is also branch manager at First Horizon Home Loans in Longwood. “Industrywide, credit restrictions are getting stricter,” he says.
The subprime lenders, who specialize in loans for people who have lower credit scores and unverified income, became overzealous with “exotic” loans. When those short-term low home mortgage rates hit their limits, borrowers’ payments rose, and mortgage payment delinquency and foreclosures ensued, Morris explains.
At least one Orlando housing market company already has been affected: Ivanhoe Mortgage suddenly shut down last month when parent company Central Pacific Mortgage went out of business, as previously reported in Orlando Business Journal.
Now, subprime lenders are dropping like flies, and others in the industry are feeling the aftershocks, he says.
Foreclosures abound
A recent report by the Mortgage Bankers Association notes a nearly 5 percent delinquency rate on all outstanding home loans in the fourth quarter of 2006. About 1.2 percent of outstanding loans were in the foreclosure process at the end of 2006, the study says.
Meanwhile, Florida was No. 2 in the nation for foreclosures at the end of 2006, according to foreclosures.com.
For the first quarter of this year, the four-county region of Orange, Osceola, Lake and Seminole reported 1,692 foreclosures, down slightly when compared with 1,833 in the same period last year, says the California-based real estate investment advisory firm. Statewide, however, 19,076 defaults were reported in the first quarter of this year, up from 18,439 in the same period in 2006.
“A lot of risky loans had been made to people with very little down payments,” says Stanley Smith, professor of finance at the University of Central Florida. “The less equity in the house, the more the incentive for them to default.”
Until practices and approval standards are changed, this may be a pattern the Sunshine State is stuck with for awhile.
Posted by Jed Moss on Mar 26 2007 under Florida
WMC Mortgage Corp., a unit of GE, will be closing down its Jacksonville office and laying off 68 employees, the Florida Times-Union reports.
The announcement from the Florida mortgage company, which recently decided to discontinue some of its subprime lending operations, comes as subprime home loan operations across the country face increasing loan defaults and skittish investors and creditors.
Jacksonville, in addition to facing high Florida mortgage foreclosure rates, contains a wide base of home mortgage processing centers for financial services companies. The closure is part of a company-wide restructuring that will eliminate 463 employees, or 20 percent of its workforce.
In addition to the office closing its doors, WMC Mortgage as a whole will no longer give home loans with no down payments.
WMC Mortgage originated about $9 billion in subprime (or bad credit home loan mortgage) volume in the fourth quarter of 2006, making it the fourth most prolific in the country.
In 2004, the Jacksonville Economic Development Commission approved $420,000 in city and state incentives to entice the company to open a mortgage loan servicing center in Jacksonville. But the company never hit the thresholds required to receive the tax rebates, and no money was paid to it.
The company’s struggles mirror those of other bad credit mortgage loan originators nationwide, as higher-interest mortgages intended for the thousands of borrowers with less-than-ideal credit continue to cause problems.
As adjustable-rate mortgages have begun to reset on those loans and the housing market has softened, the number of bad credit mortgage defaults have soared.
On Thursday, executives from subprime lender New Century Financial Corp. said that its creditors had forced it to stop making new loans.
Wachovia senior economist Mark Vitner said that Jacksonville’s exposure to the contraction being experienced by the mortgage market is greater than average but that he didn’t expect the difficulties experienced by subprime lenders to carry over into the rest of the home mortgage industry.
“It’s not driven by a deterioration in credit quality but by fraud,” said Vitner, adding that many subprime borrowers exaggerated incomes to receive a home loan.
Although Jacksonville has many financial services, they are spread out over different sectors, reducing the city’s risk for large job losses, Jerry Mallot, executive director of the Chamber of Commerce, stated.
Mallot said other companies, which are struggling with Jacksonville’s low jobless rate, should absorb the workers. What remains to be seen is whether one mortgage company after another will continue along this destructive path, or if the industry will tighten regualtions.
SOURCE: Florida Times-Union
After a dose of optimism at the end of 2006, the Broward County housing market backpedaled to start 2007, the South Florida Sun-Sentinel reports.
The county had 458 sales of existing homes last month, down 17 percent from 552 in January 2006, the Florida Association of Realtors said Tuesday.
The median price was $364,500, off 2 percent, or $6,000, from $370,500 a year ago. The data shows clearly that the South Florida housing market remains very much unsettled, and it could be several years before the market comes close to the windfall that was 2000-2005.
“The market is trying to find a bottom, and it could take awhile,” said David Dabby, a real estate analyst in Coral Gables. “I don’t see any significant appreciation in prices for at least a few years to come.”
Condominium prices had a year-over-year decline, according to the Orlando-based Realtors’ group, which started tracking the sector early last year.
The median price in the condo market in January declined by 6 percent, or $12,300, to $199,200 from $211,500 a year ago. Condo sales, meanwhile, fell 26 percent, to 556 from 753.
Some analysts predict improvement in South Florida’s housing market in the spring as some take advantage of the buyer incentives (which include home loan payments for a year, free cars and more) available as of now. Others expect it to founder until the second half of the year and perhaps 2008.
One major reason: the growing inventory of unsold homes.
Broward County has nearly 36,000 homes and condominiums for sale, up by 24 percent from last year, according to the Keyes Co. of Miami. At the current sales pace, it would take several years to sell that inventory.
What’s more, frustrated owners who pulled homes off the market in 2006 are expected to re-list them as the spring selling season heats up. This will give prospective home mortgage applicants more choices, but keep the problem of inventory absorption front and center at the same time.
Not to mention the fact that getting a loan from a mortgage lender could become a lot harder as many have started to tighten standards, which may reduce people’s borrowing power.
But for sellers in a time crunch or in a similar bind, take notice: properly-priced properties are still selling without delay.
Marian Goodbread sold her Fort Lauderdale in 11 days. She and her husband took their agent’s advice and did a little home staging, painting with neutral colors and clearing clutter out of the house.
“The No. 1 thing, I think, is to have your house clean,” she said. “You want buyers to see where their things could go, not admire what you have.”
Across South Florida, real estate agents say they’ve seen more potential buyers in recent weeks. Whether that translates into greater numbers of Florida mortgage applications and actual closings remains to be seen.
In January, state legislators took steps that to lower homeowners insurance costs. They also seem certain to address the property-tax crunch during the legislative session beginning Tuesday.
“People’s confidence is coming back around,” said Christine Hansen, president of the Realtor Association of Greater Fort Lauderdale.
Hansen figures legislators will find a solution to soaring real estate tax bills, although she doesn’t think voters will ultimately endorse a new property tax proposal to eliminate property taxes on homesteaded properties.
SOURCE: South Florida Sun-Sentinel
Posted by Richard Barber on Mar 05 2007 under Florida
Although single-family sales and prices posted significant declines over the month of January, the condo market in Palm Beach County, Fla., continues to show resilience, the Palm Beach Post reports.
In fact, Palm Beach County existing condos have now posted year-over-year price appreciation - except for a month when prices stayed the same - for 13 straight months.
In January, the Post reports, the median price of an existing condo rose 2 percent to $213,100 in January from $209,100 in January 2006.
By comparison, the median price of existing single-family homes in Palm Beach County was $388,000, down 1 percent from $393,700 in January 2006.
“With condos generally lower in cost, this market is getting attention from first-time home buyers and second home buyers,” said Nigel Fullick, vice president and branch manager for HomeBanc Mortgage in Palm Beach Gardens.
Across the U.S., new home buyers typically are 32 years old and earn about $58,000 a year, according to a recent study conducted by the National Association of Realtors.
Such buyers spend an average of $165,000 on their first home purchase, the association said - making Palm Beach County one of the worst destinations for housing affordability.
And there’s no relief in sight. Even with Florida mortgage rates remaining low, the average existing condo prices in PBC will rise to nearly $300,000 in 2009, economists believe.
One expert thinks the glut of inventory of unsold condos for sale in Palm Beach County could shoot up in a couple of years when all units currently under construction are reaching completion.
Existing condo prices for January also jumped in the nearby Treasure Coast - at three times the rate of Palm Beach County’s price increase, and to a higher median price, making it even more of a stretch for potential home mortgage applicants to make a purchase.
The median price of an existing condo in Martin and St. Lucie counties rose 6 percent in January, to $225,000 from $211,500 in January 2006. Treasure Coast condo sales, however, declined sharply in January compared with the same month a year ago - to 51 sales from 62, an 18 percent drop.
Statewide, as mortgage costs continue to price people out of the market, the median price of existing condos fell 1 percent, to $209,000. The number of condo sales throughout Florida fell 30 percent.
SOURCE: Palm Beach Post
The Florida housing market continued its decline in January, as the Jacksonville area was hit as hard as the rest of the state.
Sales of existing single-family homes fell 17 percent in the Jacksonville housing market, while the median price dropped 5 percent to $185,000. The numbers, from the Florida Association of Realtors, did not include data from the Amelia Island-Nassau County Association of Realtors.
The drop in sales was not as severe as the 27 percent drop across the state, but the median price decline was steeper than the state’s 2 percent drop to $239,300. While this is bad news for sellers, it does open up the door to those seeking Florida mortgage loans. You can find a great deal today.
One of the few bright spots was a livelier market in existing Florida condominiums. While sales of condos fell 30 percent across the state, sales in Northeast Florida rose 10 percent.
However, the median price fell 13 percent to $147,600. The statewide median price of condos dropped 1 percent to $209,000. This follows the same line of reasoning as houses, therefore: home loan borrowers are in the unique position of negotiating for lower prices.
Take advantage of it today.
Posted by Jed Moss on Feb 28 2007 under Florida
Real estate agents throughout Florida are cautiously embracing a proposed plan to eliminate all property taxes on primary residences, at the same time limiting the amount of tax local governments could collect.
The controversial new plan, sparked by soaring Florida mortgage, insurance and local tax costs hampering the real estate market, was unveiled by the Florida House earlier this week, the Sarasota Herald Tribune reports.
“For Realtors, and people who market the state, the lack of a state income tax is a marketing tool, no question,” opined spokesman Trey Price of the Florida Association of Realtors.
“If the House proposal were passed, and there were no property tax, that would be a very strong marketing tool, as well.”
House leaders propose a sweeping plan that would jack up the state’s sales tax rate to the highest in the nation, in exchange for reduced or no real estate taxes. They feel that reducing property taxes would ease the burden homeowners already feel from soaring home mortgage loan costs.
In most areas of the Sunshine State, the sales tax would be pushed to 8.5 percent. By comparison, the California state tax on consumer purchases is now the highest in the U.S., at 7.25 percent.
House lawmakers estimate the change would generate nearly $8 billion in new Florida sales tax in the first year the measure was in effect. At the same time, residents and taxpayers would save almost $6 billion.
It sounds too good to be true, and it may be. Though there’s no escaping the fact that the average homeowner - whose property is protected by Save Our Homes legislation - would save nearly $2,300 annually.
Although the concept of halting the escalations in mill rates that have taken a toll on homeowners since 2002 isn’t new - Gov. Charlie Crist revealed his own plan a few weeks ago - the plan was both surprising and dramatic.
But not to Realtors. House leaders approached the Florida Association of Realtors a few weeks ago about the concept. Price said the group is “very intrigued.”
Other prominent Realtors, however, said they aren’t ready to endorse the House concept.
“It’s short-term thinking vs. long-term,” said Budge Huskey, president and chief operating officer of Coldwell Banker Residential Real Estate, among the largest groups of real estate agents in Southwest Florida.
“There’s no question that if you announce a rollback in taxes, it’ll spark additional investment and purchases,” Huskey said.
“On the other side of the table, sometimes when projections are made on how much money could be raised, you can’t always rely on accuracy. Eventually, it becomes a quality of life issue.”
Local Realtors agreed that property taxes are among several factors having the most severe impact on the state’s languishing housing market, which is not picking up steam in 2007 even as home loan rates remain low.
“We recognize something needs to be done about both taxes and homeowners insurance, because they are dramatically affecting how people look at home ownership,” said Joe Hembree of the Sarasota Association of Realtors.
“That said, sometimes things that look good on the surface often have unforeseen complications.”
“The fact that the Florida State Legislature is looking to do something is a great thing,” said May Aston of Manatee Association of Realtors. “We all want something to happen with runaway taxes, but it has to be the right thing.”
Aston said the Manatee Realtors, like their counterparts in Sarasota and throughout the state, intend to study the issue further before deciding whether to back the House proposal.
Will this alleviate any of the strain faced by would-be mortgage loan applicants in Florida? Is it just a quick fix or potentially a solid, long-lasting solution? It will be interesting to watch.
SOURCE: Sarasota Herald-Tribune
Two years ago, the Miami housing market was hot — red hot — and the hype was contagious.
When ABC News shot a story about it in the fall of 2005, it referred to it as “Boomtown Miami.” Old buildings were falling to make way for new condo towers that were selling out in just a few days.
“It was very exciting. It was an adrenaline rush,” Kari Fernandez, a condo sales agent, says. “We’re talking almost 1,000 units sold in a week.”
Investors, speculators, flippers, everyone seemed to be making significant profits in a matter of weeks.
Across the country, the real estate market has gone flat, but nowhere quite like Miami. Not that Miami is suddenly at a standstill: In the skies, flocks of building cranes compete with birds as condos race to completion. There is still a demand for Florida mortgage loans in the region.
Look around, and you can see a skyline transformed, with more than 100 new condo buildings now under construction, representing about 25,000 condo units due to be completed and delivered in the next 18 months or so.
But developers are avoiding new projects, focusing instead on completing construction and sales for all those buildings already under way. It’s a far cry from the booming Florida housing market of just two years ago.
A Cautionary Tale
Back when this was Boomtown — in 2005, when ABC News did that first story — there was a young real estate lawyer and speculator named Richard DeNapoli. He’d bought four condos worth $1 million with a $200,000 down payment. DeNapoli was banking on a $400,000 profit for his four condos.
Today, those condos are nearing completion, and his expectations are more modest.
DeNapoli has flipped his four units to other buyers, but for less than he’d hoped. Because he bought in early enough he’ll make a $275,000 profit — maybe. The worst-case scenario, he said, would be to break even or have to buy and then rent the units he speculated on because no home purchase loan applicant made an offer.
“It’s a stalemate right now,” DeNapoli said, “between buyers who have a lot of supply to look at and sellers who don’t want to budge on their asking prices.”
Back in 2005, Jack Winston, an analyst with Goodkin consulting, saw a boom based on shaky foundations.
“The equation is that you have speculators buying units, and they’re trying to flip their contract to other speculators who in turn are trying to flip their contract to other speculators,” he said at the time. “Somewhere along the line, you are going to run out of speculators.”
Now, Winston is saying: I told you so.
“Basically, we predicted at that time it was pretty close to a Ponzi scheme,” he says. “And the last person is the one who gets hurt. And that’s basically what happened here.”
Winston and others estimate that 70 percent of the Miami condo market was driven by those speculators in search of quick profits.
“Probably some time around September or November of 2005, it was as if someone turned off the spigot,” he says. “Since that time, new sales at condominium projects have come to a halt, practically a stand still.”
Whom To Blame?
Though there is an overabundance of supply, the eight hurricanes that battered this state in 2004 and 2005 can also take credit. Hurricane insurance rates have doubled, tripled. And with the inflation of property prices, so have property taxes.
To continue reading this ABC News report, click here.
The fact that Florida mortgages are heading further and further into default isn’t the only piece of bad news in the Sunshine State right now.
Florida’s housing market continued to mirror the national trend in fourth quarter 2006, reflecting slower sales, stabilizing median home prices and higher inventory levels of homes available for sale in many markets.
Statewide, sales of single-family existing homes totaled 37,177 during the three-month period, a decrease of 28 percent compared to 51,310 homes sold during the same time a year earlier, according to the Florida Association of Realtors.
In the Tampa Bay housing market, sales dropped 40 percent, to 7,039 for the period. Sarasota-Bradenton reported an 11 percent decrease in sales, with 1,861 existing homes sold.
The statewide existing-home median sales price remained stable at $242,100 in the fourth quarter; a year ago, it was $245,600 for a slight 1 percent decrease. However, the median price was $247,900 at the end of the third quarter, indicating that the bottom of the market has yet to be reached. Perhaps Florida mortgage applicantsare waiting to buy until this point is hit.
Tampa Bay prices were at $228,400, an increase of 2 percent from the fourth quarter last year, but down nearly $6,000 from $234,000 in the third quarter of 2006.
“One important indicator of the real estate market is occupancy rates, and these appear to be stable or increasing in most markets, including apartments, office buildings, retail space, and industrial warehouse and distribution space,” said Dr. Wayne Archer, director of University of Florida’s Bergstrom Center for Real Estate Studies.
The latest industry outlook from the National Association of Realtors calls for a steady rise in existing home sales following the fourth quarter. Spring is typically a popular time for mortgage loans to be applied for.
“While home sales may appear weak in comparison with the record surge in 2005, they will be sustained at historically high levels that are in line with long-term demand,” said David Lereah, NAR chief economist, in a release.
Posted by Jed Moss on Feb 16 2007 under Florida
Foreclosure filings in Palm Beach County, Fla., plunged in January, according to a report released Tuesday - but the good news will be short-lived as home prices fall and inventory climbs, the Palm Beach Post reports.
“Buyers are not solvent enough to carry their houses with a negative cash flow for months on end,” said Jack McCabe, owner of McCabe Research. “They’re choosing to turn in their keys.”
Nationally, foreclosure filings in January climbed to the highest monthly total since RealtyTrac began reporting them two years ago, said James Saccacio, the company’s CEO.
In recent weeks, both home builders and Florida mortgage lenders have begun citing ballooning inventories of homes and bad loans as the primary cause of disappointing profits - and downgraded forecasts.
In Palm Beach County, the number of homes in some stage of foreclosure fell to 680 in January, from 1,173 in January 2006 - a 42 percent decline.
Despite the drop, the county’s foreclosure rate - one filing for every 818 households - remains above the national rate of one filing for every 886 households. In addition, January marked Palm Beach County’s third consecutive monthly increase for foreclosure filings.
Foreclosures in the once-booming Treasure Coast was a mixed bag. In Martin County, new foreclosure filings fell 14 percent last month, to 48 from 56 in January 2006. That’s one filing for every 1,364 households.
But in St. Lucie County - whose boom-time growth once prompted front-page stories in the New York Times and USA Today - RealtyTrac says that new foreclosure filings in January more than quadrupled.
The number of new foreclosure fillings in St. Lucie County rose to 236, not a huge number until you consider that the county reported 54 new filings in the same month a year ago - making this year’s total a whopping 337 percent increase.
What’s more, the number of monthly foreclosure filings in the county has been trending upward since last summer, when home loan woes started becoming widespread among residents.
Powered by record low home mortgage costs, speculators fueled the St. Lucie County run-up in single-family home and condo prices, as they did in Palm Beach County and throughout the South Florida housing market.
McCabe estimates as many as 50 percent of St. Lucie County buyers were “investors buying to flip homes like a share of stock.”
Markets such as St. Lucie County, which had a lot of speculative buying, are experiencing the biggest increases in delinquencies and foreclosures. As the housing market cools, mortgage payments rise and home prices continue to tumble, those buyers are now hurting.
“Where falling home prices have been good for buyers, they have not been good for people needing equity to for debt consolidation or to restructure their finances,” said mortgage broker Jim Sahnger, vice president of Palm Beach Financial Network in Sewall’s Point.
Some homeowners now owe more than their homes are worth. Nevertheless, St. Lucie County’s rate of one filing for every 1,901 households is far and away the best Florida foreclosure rate in the region.
Such good news is expected to be short-lived, though, as most housing experts forecast that the worst is yet to come as far as foreclosures are concerned, as more adjustable-rate mortgages reset this year.
“We’re going to see that 2007 may be the largest year that we’ve seen for foreclosures in a long, long time,” said McCabe, whose firm tracks South Florida real estate trends.
“There are $2 trillion in these highly volatile mortgage loans adjusting in the next two years around the country,” he said, “and we will see the foreclosure rate multiply, exponentially.”
Analyst Larson agrees, predicting that the current buyers’ and renters’ markets will last through this year.
“That will keep the pressure on overextended borrowers, especially those who put little or no money down,” Larson said. “Foreclosures should climb for the foreseeable future as a result.”
In January, Florida - nearly always in the top 10 among U.S. states for new foreclosure filings - ranked No. 3 in the nation as 11,709 properties entered some stage of foreclosure. That’s up 13 percent over a year ago.
SOURCE: Palm Beach Post
