Florida Attorney General Pam Bondi asked for public input on how to spend part of foreclosure fraud settlement from robosigning. If you’ve got an idea, click here to tell her. In the meantime, here’s a couple of suggestons from me:
We have a lot of our Florida folks who are in homes they cannot afford, that they will never be able to afford and that they need help to get out of. Some are good folks and some not so much; but in helping those who need the help the most, we will inevitably help Florida’s housing—the one idea that will provide a positive step ahead for us all.
It is too late for counseling. It is time for action. We can't depend on the government entities such as Fannie Mae and Freddie Mac that got us into this mess. To avoid tossing great handfuls of cash down the same housing hole we’ve fed for the past five years, I'd pull together regional teams of honest, independent-minded Floridians who are familiar with the foreclosure process, have a keen eye for finances, and who actually want this mess cleaned up. Working on a reasonable timeline (Bank of America can complete a file in three weeks now!), they’ll need to separate the stacks of files into three honest piles:
(1) Those who can be helped to save their homes and have the ability to make the payments in the future. Let them refi at today's rate. If their mortgage is criminally underwater, renegotiate.
(2) Those who have made good faith efforts to stay in their home but the economic crisis changed their circumstances harshly enough to stop their ability to make the payments on their existing mortgage. The Cash for Keys program is ready.
(3) Those who can’t be helped. Our system allowed them to stay but it's borrowed time. They (and Florida) can't start over until they do.
For those who can be helped to save their home (the first category), loan modifications must be pursued between the lender and the homeowner to allow the homeowner to reinstate the mortgage, if delinquent, or give the homeowner a second chance to pay any deficiency and to reinstate and subsequently pay the mortgage on time. Homeowners who have done the right thing need the opportunity to keep their home.
Those homeowners who have defaulted but are now in a situation where the mortgage payments can be made and a workable plan can be established to reinstate delinquent payments must have an opportunity to keep their home. The truth is that there is no system that will mete out absolute fairness to every homeowner. Letting this group refinance at today’s low rate is simple common sense. The tough part is to figure out who fits the criteria to be able to do it. Tapping non-government entities who understand the process and the problem and can eliminate governmental red tape would help.
The second group of homeowners is those folks who simply cannot afford their current home. These folks have attempted to do the right thing, they are upside down in value and the monthly payments are simply not affordable. These folks need a place to live comfortably, and they comprise a significant portion of the active foreclosure cases. They need an opportunity to short sale the home and failing that option, they need to move out of the home in a “cash for keys” program funded by the settlement.
Any program we offer needs to include help for these homeowners in the form of a “restart,” such as a rental home at a rate they can afford. The cash for keys program would provide them the funds for such a restart. Neither the lender nor the homeowners receives any benefit by dragging out the foreclosure process, and both ultimately lose. Let’s get it done, help these homeowners get a new start and move forward for Florida.
The third group of homeowners is those who are now “squatting” and simply biding their time until the foreclosure is complete and they are forced to leave the home. They have no interest in doing a short sale because they are not interested in vacating the home until forced to by Court Decree. Basically, they are taking advantage of Florida’s long and arduous foreclosure process to live for free as long as possible. While these folks have every right to take whatever action is allowed by law, helping them stave off foreclosure will simply prolong the problem—they are in a house/situation they cannot afford and real help is to get them out of that situation and into an affordable one.
Florida’s economy is stuck in neutral, in a large part because Florida real estate is hovering. A large part of our economic issues relate to housing and specifically, the foreclosure crisis. We’ve spent a lot of effort and money crying foul and trying to place blame, but it’s time to help those who can be helped to save their homes, relocate those who can’t but have made efforts to do the right thing and are willing to relocate. The “cash for keys” program is a tremendous start for homeowners ready to get a fresh start. It’s time to allow Florida lenders to proceed with dignity and diligence to complete the foreclosures, obtain title to the property and sell these properties back to the public. Once all three groups have been handled with old-fashioned common sense, housing can become a driver of our state economy rather than a drag on it.
That's all for now,
Rick
According to Fiserv, average home prices should rise almost 4 percent a year for the next five years. The market watch company predicts prices will stabilize by the end of summer and then climb, providing a boost to the economy through housing. As the buying and selling of homes picks up, investors will lead the charge, followed by first time buyers and trade-up buyers.
There’s plenty of room for price inflation, given that U.S. home prices have fallen 30-40 percent over the last 6 years. The markets that fell the hardest by foreclosures will show the biggest appreciation in home values over the next 5 years. (How do you spell Florida real estate and Polk County?!)
Fannie Mae homebuyers give thumbs up on home prices
More Americans believe home prices and opportunities for buyers and sellers will increase over the next 12 months according to mortgage giant, Fannie Mae. The survey found that
- Americans expect home prices to rise over the next year;
- The percentage of Americans who think now is a good time to sell a home rose 15 percent in April; and
- Confidence in the economy's overall direction hit a new high of 37 percent in April
Buying a home won't get much cheaper
Experts are predicting that this year will be the last chance for bargain hunters to cash in on great deals in the housing market.
Stuart Hoffman, chief economist for PNC services expects home prices to flatten out by the 3rd quarter and climb soon thereafter. Another economist, Trulia's Jed Kolko, expects home prices to jumpstart more quickly. In some markets hit hard by foreclosures, the turnaround is well underway. Phoenix, Miami and Tampa markets have already seen gains in excess of 4 percent. Bottom line—if you’re waiting to buy, consider making a move.
Barclays bullish on housing
Analysts at Barclays Capital conclude that the housing market is no longer a drag on the economy. Residential construction contributed positively to GDP growth for four consecutive quarters. Housing is, or will soon be, a boost to the economic growth we’ve been waiting for.
That’s all for now,
Rick
For 31 years I’ve concentrated on Florida real estate market and the laws that govern it. I like land, I like Florida and I’ve invested a lot of time and effort learning and staying up to date on every nuance of the real estate laws that govern how we buy, trade and sell the stuff here in our state. For me, that practice starts with realtors because they are the folks who typically control where a transaction closes, and thus, what agency examines the title and issues the Title Insurance in every real estate transaction.
Over the years I’ve seen a lot of realtors view attorneys as "deal breakers," and run to title agencies for their closings. As near as I can tell, their reasoning came from a few used-car-salesmen type attorneys who handled real estate contract issues only a few times a year, insisted on making unnecessary changes and either drove costs up or dragged out the timeline for closings. I’d be mad, too.
But as a real estate attorney, I want your deal to close as much as you do. Like you, I typically don’t get paid unless and until a deal is closed, and frankly, I want you happy with my work. I pay a high price for malpractice insurance because I close real estate transactions and issue Title Insurance safely. I practice real estate law, because I am committed to it, and to the realtors, buyers and sellers with whom I work. I am paid by writing the title insurance and in most cases, my services do not add to the cost of your deal.
And unlike trial attorneys, I face competition from non-lawyers. Realtors can draft contracts from forms, and Title Insurance companies are allowed to examine title and issue Title Insurance. It is certainly common for parties to close on a residential real estate purchase without any involvement of an attorney. It is amazing to me that what may be the largest purchase of a person's lifetime, more often than not in Florida, is handled without a real estate attorney. (I know because I see a lot of those deals post-closing, to straighten out what went wrong—just so you know.)
The Bottom Line
Too many times you don’t actually need me until you need me—when it's too late. That’s because using me prevents you from actually needing me, if you follow that rather convoluted thought. Like most areas of life, it costs a lot more to unravel and fix a problem than it does to prevent it from happening. And the simple truth is that I am better trained to handle the unique problems that may arise in a real estate transaction, and my services typically don't cost the parties any more than closing at a Title Company.
But, on occasion, I am indeed, a deal breaker—because what I will always do and what you can absolutely rely on me to do, is to follow the law, and to do the right thing—every single time. Sometimes I wish it were different, because sometimes, a really great deal just doesn't turn out to fit the law. That doesn't happen often, and when it does, it's gut wrenching when it's my client that misses out. In those cases I lose, too, because I take my clients' deals just as personally as I would my own. It happened twice last week. Hang in there till Thursday while I get my thoughts together for the next segment of Deal Breakers or Right Makers.
That’s all for now,
Rick
Bank of America now leads in short sales of homes
Bank of America (BOA), the U.S. lender with the most housing-related write downs, is coming out of its robo-signing black cloud. It now holds the record for the most properties sold as short sales. BOA's new three-week-to-answer policy shows a real commitment to taking the losses in order to move forward. For that, they deserve credit. (BOA approved 5,276 short sales in January, nearly as many as the two lenders (JPM and Wells Fargo) behind them).
BOA’s emphasis on short sales and deeds-in-lieu as the preferred alternative to foreclosure, makes absolute sense. The average U.S. short sale takes a 21 percent loss over a non-distressed sale, while a foreclosure sale averages a 34 percent loss (over non-distressed property). Kind of makes you wonder what took ‘em so long to figure that out.
Not surprising, other lenders are jumping on board. Effective June 1, Fannie Mae and Freddie Mac will accelerate their short sale process, requiring loan handlers to make a final decision within 60 days of receiving an offer to purchase. That's just good business.
Homeowners with well maintained properties in good locations don’t want to sell at today’s prices so inventory hovers, but with 12.5 million homeowners owing at least 25 percent more than their properties are worth, short sales are available and more are coming. Bottom line? There are great home deals out there and homes are buying and selling.
Multi family homes to increase 30 percent in 2012
BTW, Fannie Mae predicts that the multi family home sector (apartments) will expand by 33 percent in 2012. Single family home starts continue to bump up and down, but as the rental market builds, the rush to make a buck follows the market. Look for continued growth through 2013.
That's all for now,
Rick
As Foreclosures Flood In, Rents Jump Higher
In the home mortgage news, look for 50 percent more foreclosure filings in Florida in 2012 than in 2011. The number of short sales and REOs will increase significantly and the price of homes will likely go down another 3-5 percent. BUT Foreclosures to Rent are still a hot investment. The market for foreclosed homes that are turned into rentals will be worth more than $100 billion this year. Rents are on the rise as home prices fall.
Short sales surpass foreclosures
U.S. home short sales just beat out foreclosure deals; this is big—banks are finally more agreeable to selling houses for less than the amount owed on the mortgages.
Check the Numbers
January short sales accounted for 23.9 percent of home purchases; foreclosures accounted for 19.7 percent. Last year 16.3 percent of transactions were short sales and 24.9 percent were foreclosures.
Clearly, lenders have realized that short sales bring more money than foreclosed homes and they save legal fees and court costs. But the economy gets a boost when folks are buying and selling homes, and short sales clearly help make that happen.
Of course, to be honest, fraud was a big issue with short sales in the past. Banks have added staff to address the problem, and the floodgates are open.
Sellers’ asking prices rose in March
Want a sign that sellers are feeling better about their chances of peddling their home? Median asking prices in March leaped 5.6 percent from a year ago and up 1 percent from February. The jump coincides with a sharp drop in the number of homes listed for sale from a year ago. Inventories of homes are down 21.5 percent from last year.
March housing starts fall but new permits surge
Groundbreaking on homes did fall in March, but permits for future construction hit their highest level in three and a half years. The March decline was the biggest percentage drop since April of last year though most of the decline was in the multi-unit category.
Fannie, Freddie set 30-day short sale timelines
Fannie Mae and Freddie Mac are set to require faster decisions on short sales beginning in June. Their servicers must review and respond to a borrower within 30 days of receiving all documentation. Kudos to them for figuring out that holding on to an un-performing asset simply increases the loss.
That’s all for now,
Rick
Bank of America is modifying its short sale system (through Equator, it's short sale management platform). Their goal is to reduce the time for a short sale to 3 weeks! An extra consequence is that it cannot help but boost the economy by getting rid of lingering housing inventory.
Here's how it works
Beginning April 14, real estate professionals will be required to submit 5 documents for short sales initiated with an offer: (1) a sales contract including a buyer's acknowledgement and disclosures; (2) HUD-1; (3) IRS form 4506-T; (4) Bank of America short sale addendum; and (5) Bank of America third party authorization form.
BOA forms on line
The Bank of America forms are available at its online agent resource center. If you’re an underwater homeowner, now is a good time to apply!
Bank of America expects short sales to increase, and the bank is moving to assure fast decisions and communications.
Bank of America has been under scrutiny for the past few years and rightly so. It has been one of the tougher lenders to work with for short sales. Mostly they just said no. This new program is a breath of fresh air and will help move properties and eliminate long, expensive foreclosures. Just as important, BOA’s action will ramp up the pressure on other large lenders to enact similar programs. Everyone (buyers, sellers and lenders) and the economy wins when short sales are simplified and moved along. Let’s get ‘em gone so we can move forward. Thanks, BOA. We owe you one.
That’s all for now,
Rick
1. Investors are snapping up bank homes.
With residential prices down more than a third over the past 6 years and the market swamped with foreclosures, large investors are now gearing up to buy in large numbers for one reason—ROI (return on investment). In today's market, rental income can deliver returns well above that offered by traditional investments, and there are a lot of good folks out there that no longer have the credit or the down payment to buy, but will be steady, reliable renters.
Private equity firms nationwide have committed tens of millions of dollars to buying foreclosures and REOs to turn into rentals. Give ‘em a shout out because these investment firms could help stabilize home prices. A home occupied by a tenant is better than one owned by the bank sitting empty.
2. Home prices are dropping 10 percent on foreclosures.
As many as 1.25 million homes are headed to the auction block after the year-long probe into bank fraud (robo-signing, etc.) has ended. It’s not pretty. The longer a home is in foreclosure or a part of shadow inventory, the greater the loss to the lender, and we are seeing action in the real estate recovery market at last.
FYI
In truth, homes stockpiled less than a year sell for about 35 percent below the value set by banks and for homes idle for two years, the loss climbs to 60 percent. Dump ‘em now is the word, and this surge of cheap foreclosures will erode prices in the broader real estate market, at least for a little while longer. Sales are good, progress is clear but we are like salmon swimming upstream--tough credit, a new wave of foreclosures and even rising gas prices are pushing against recovery. Think recovery for sure, just know that in Florida, we'll have a longer, more gradual recovery.
Too bad for us, ours is one state where homes have sat idle longer than two years in many cases. Our laws have extra protections for owners (Florida's average foreclosure timetable is the nation’s longest, with an average of 206 days). Lots of the homes that will be going on the market in 2012 have been vacant for years due to a combination of Florida laws and the self imposed foreclosure moratorium by the banks in 2011. The good news is buyers are waiting to buy these homes at bargain prices and finally, the banks are willing to sell. That was not true from 2008-2010. Let the recovery begin.
3. The Urband Land Institute says “Go!”
The panel of experts at the Institute predicts single family housing starts this year will nearly double from the starts in 2011 and home prices should rise by 3.5 percent in 2013.
In a recent CNBC survey, 73 percent of Americans still believe owning a home is an essential part of the American dream. .
That’s all for now,
Rick
Bank of America Testing New Home Foreclosure Program
B of A is launching a pilot program to allow homeowners facing foreclosure an opportunity to remain in their homes while transitioning to tenant status. Under the program known as Mortgage to Lease, participants will transfer their property titles to the Bank and have their outstanding mortgage forgiven. Select customers in Arizona, Nevada and New York have been selected to participate in the program initially but the program may well expand if the benefits to both parties work out. Every little bit helps, and yes, I know it's an election year!
We Are Rebound Ready!
After falling 34 percent over the past 6 years, U. S. home prices will soon bottom nationwide. It appears the nightmare for American homeowners really is in the final stages and home prices will have made the turn back up by the spring of 2013. Not much comfort if you’re living it now, but hitting bottom at least means that there’s no way to go but up. The combination of low interest rates, an improving job market, increasing consumer sentiment, pent up demand and incredible value in housing prices are predicted to move the market into positive territory, and that time is now. Eleven forecasters surveyed this year by the Federal Reserve Bank in Philadelphia predicted that, on average, the Case-Shiller Index* would fall .2 percent this year and would rise 1.2 percent in 2013.
*Case-Shiller Index: If you’re looking for numbers and facts, Robert Shiller, the co-creator of the Case-Shiller index has studied prices for many years. While he is reluctant to predict definitively when the housing bust will officially end (probably because everybody’s definition of “end” is different), his track record is good enough that I’m willing to stand real close to him! Nearly 7 years ago he boldly stepped out on a limb (in Barron's magazine) to predict that the U. S. market was on the verge of a collapse that would see prices fall and inflation adjusted 50 percent. Guess he was right.
HARP 2.0 is finally here. Effective March 17, 2012, those with Fannie Mae or Freddie Mac mortgages who owe more on their home than it is worth, can refinance their mortgage at today's rates and potentially save hundreds of dollars in interest monthly. That is an old fashioned economic boost via real estate. To qualify, you must be current on your loan, have no late payments in the past 6 months and have taken out your current mortgage prior to May 31, 2009. In most cases, no appraisal is needed and in all cases, the loan to value ratio is not a factor for approval. (What are you waiting for?)
This is a great program
Responsible homeowners who have made their payments while underwater now have the opportunity to refinance at today's historically low rates.
1) it rewards those homeowners who have continued to do the hard thing by making their payments,
2) it puts more money in the hands of the borrower in the form of lower payments, and
3) it reduces the risk of foreclosure by making the home more affordable to the borrower.
Who cares that it's an election year. Kudos to the folks in Washington for finally making this happen!
That's all for now,
Rick
CNN Money recently published an article outlining the cities in the U.S. due for a housing turnaround. Number 9 on the list is Lakeland, Florida! If that doesn't boost consumer confidence, at least locally, what will? (Other than some strong election news, I mean.)
The article had this to say about Lakeland:
"Lakeland's location along Interstate 4 has long made it a pit stop for travelers driving between Orlando and Tampa. Lately, however, the area has become a destination, thanks to the opening of Legoland in October. For those who do not reside there, the cost of living is low, as are the taxes. The median home price during the three months ended September 30 was just $89,000, down 56 percent from the peak."
The CNN article listed 10 cities in the U.S. for a housing turnaround. Eight were located in Florida. The Florida cities are Miami, Ft. Lauderdale, Naples, Sarasota, Orlando, Ft. Myers, Punta Gorda and Lakeland.
The good news doesn't end here. Yahoo Finance states that the smart money is "betting on housing." So am I. Last week's housing starts data came in slightly weaker than expected, at 698,000 units. But January's tally was revised up, and building permits jumped 5.1 percent, the highest level since October 2008.
The bullish cash for housing rests largely on record levels of affordability, thanks to the low rates and price drop since 2006. In addition, that pent up demand for housing from new families and recent graduates is on the mind of investors. But banks need security, so buyers need jobs. Once we get that wave started, the economy will take care of itself, the American way. Housing really is the key to boosting the economy.
Housing starts come in strong!
Monday's housing market index, which tracks homebuilder sentiment and serves as a leading indicator for Housing starts and permits, reached its highest level since the summer of 2007 when starts were nearly double the current level.
All in all, great news for the housing market, although this will not be a boom. There are too many headwinds for that, but the worm has turned and the data reflects it. There has not been a better time to buy a home in many years and there are real estate deals out there. Prices are low, interest rates have never been lower and the costs of owning a home are lower than in years.
That's all for now,
Rick