The BP oil spill threatens to swamp a shaky Florida real estate industry that had been bottoming out because of repeated economic blows, the latest University of Florida survey finds.
“The devastating effect of the spill on the Panhandle’s economy has created a giant cloud of uncertainty that is affecting all markets across the state,” said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies, which issues its survey for second quarter 2010 earlier this week.
“Our respondents indicate that the effect of the oil spill is being felt across Florida despite the fact that oil is currently only showing up on beaches in the Panhandle.”
The oil disaster’s effects are a worry second only to poor job growth in what is already a precarious condition for Florida’ real estate markets, he said.
“Until we start seeing improvements in job rates, I don’t think things are going to get much better than they are right now,” Becker said. “Unemployment drives everything for the real estate market, and while unemployment has gotten slightly better this past quarter, it’s not a significant difference.”
Florida’s unemployment rate, which dropped from 11.7 percent in May to a seasonally adjusted average of 11.4 percent in June, continues to be the nation’s fifth highest, he said.
The two biggest changes since the last real estate survey is an increasingly positive outlook for investment in industrial properties and a more pessimistic one for apartments, Becker said. It’s unclear why the industrial sector has become more favorable; however, the appeal of apartments has waned because aggressive purchasing has snapped up the most desirable properties, he said.
“For the past year and a half apartments have been the star performer if there is a star performer among property groups,” he said. “But our respondents have seen that good assets coming into the marketplace have been bought up, so the possibility of finding quality pieces of properties in the future is not as good.”
The outlook for single-family housing development and sales declined this quarter as a result of the oil spill, stagnant job growth, expiration of government tax credits and continued high foreclosure rates, Becker said. While the number of foreclosed homes in Florida has declined, it is still high, ranking third behind Nevada and Arizona, he said.
“Our respondents remain negative about new home construction, although builders are continuing to buy finished lots on which to build on,” he said.
The vitality of both the residential and commercial sectors is brightest in South Florida, particularly Miami-Dade and Broward counties, Becker said. “It’s not a great market, but it’s the best market in the state,” he said. “It has the advantage of international diversification, with a lot of money coming in, and it’s very vibrant culturally.”
Even Miami’s condo market, with thousands of empty units, has improved, with investors purchasing large chunks of condo properties downtown and placing them on the rental market, Becker said.
“Across the rest of the state condos are still bad news,” he said. “Sales are not very good because it’s difficult if not impossible to get bank financing to purchase them.”
With so many condos in Florida located on beachfront property, there are new fears that things could get worse, depending on how widespread the oil spill is, he said. He also noted other financial and political uncertainties loom.
A large group of commercial mortgages are coming due and it’s unclear whether the loans will be extended or they will come to market with large numbers of foreclosures, Becker said. These properties, which are bundled together, would have to be paid off with additional financing, but none is available, he said.
“Over the next few years there is close to a trillion dollars in real estate loans coming due that will need to be refinanced and there is just not the money to do that,” he said.
Politically, perhaps the biggest concern statewide is voters’ decision in November on Amendment 4, a constitutional amendment that would require a taxpayer-funded referendum for changes to local government comprehensive plans, he said.
“Our respondents believe that passage of Amendment 4 could be the nail in the coffin of the real estate industry in Florida,” Becker said. “Several respondents indicated that the uncertainty of its outcome is affecting purchase decisions even on entitled land, with potential buyers backing out of contracts.”
Nationally, Congress’s decision on the extension or expiration of the Bush era tax cuts and the passage of the financial reform bill is likely to affect real estate markets, although how is not known yet, he said.
Source: Florida Realtors®
Friday, July 30, 2010
Congress restores rural mortgage help
The restoration of the single-family rural housing program that would guarantee home loans for rural buyers was passed by the Senate today and is on its way to President Obama.
The National Association of Realtors has vigorously lobbied to restore funding for the rural program since last March, and hailed this development as a great victory for rural homebuyers.
“This is going to be a great lift for thousands of rural home buyers who need to close on their home purchases before Sept. 30 to take advantage of the home buyer tax credit,” said NAR President Vicki Cox Golder. “Many rural families would have been left out in the cold without these guaranteed loans. Increasing the commitment authority will help rural families, support local housing markets, create jobs and generate new tax revenues.”
“The rural housing program is a good example of the kind of program needed for responsible and qualified home buyers who bring common sense to the housing market,” said Golder. The legislation increases the guarantee fee for borrowers, but allows the fee to be financed. “This change will make the program completely self-sufficient,” she said.
Golder thanked Sen. Michael Bennet (D-Colo.), and Reps. Paul Kanjorski (D-Pa.) and Shelley Moore Capito (R-W.Va.) for moving the bill to passage in both houses.
The legislation was part of H.R. 4899, “The Emergency Supplemental Appropriations Act” that the Senate passed this week. The measure increases the Rural Housing Service commitment authority allowing guaranteed loans; previously, RHS has been providing conditional commitments. The RHS is expected to announce new guidelines shortly after the president signs the bill.
Source: Florida Realtors®
The National Association of Realtors has vigorously lobbied to restore funding for the rural program since last March, and hailed this development as a great victory for rural homebuyers.
“This is going to be a great lift for thousands of rural home buyers who need to close on their home purchases before Sept. 30 to take advantage of the home buyer tax credit,” said NAR President Vicki Cox Golder. “Many rural families would have been left out in the cold without these guaranteed loans. Increasing the commitment authority will help rural families, support local housing markets, create jobs and generate new tax revenues.”
“The rural housing program is a good example of the kind of program needed for responsible and qualified home buyers who bring common sense to the housing market,” said Golder. The legislation increases the guarantee fee for borrowers, but allows the fee to be financed. “This change will make the program completely self-sufficient,” she said.
Golder thanked Sen. Michael Bennet (D-Colo.), and Reps. Paul Kanjorski (D-Pa.) and Shelley Moore Capito (R-W.Va.) for moving the bill to passage in both houses.
The legislation was part of H.R. 4899, “The Emergency Supplemental Appropriations Act” that the Senate passed this week. The measure increases the Rural Housing Service commitment authority allowing guaranteed loans; previously, RHS has been providing conditional commitments. The RHS is expected to announce new guidelines shortly after the president signs the bill.
Source: Florida Realtors®
Thursday, July 29, 2010
Tips to stand out through value-added selling
When dealing with a competitor willing to cut costs, real estate agents have to match the price, show why their services are worth the extra money, or accept that they will lose some business if they opt not to slash their commission.
Although matching the price will generate more business, agents will earn less money for taking on extra work. Those who want to engage in value-added selling must prepare a listing presentation that touches upon the benefits they offer that make clients willing to pay more.
They should focus on their sale-to-list ratio, percent expirations, days on market, average sale price and unique services, among other information, emphasizing that the gain in net equity and a quicker sale will offset the higher commission fee.
If a home seller balks at paying more, the agent should ask them who they would hire if the fees were the same and whether the additional benefits are worth the added cost.
Finally, agents must be willing to let some business go, keeping in mind that standing firm when it comes to commission fees will cost them up to 15 percent of listings they attempt; however, a 1 percent reduction in fees will shave up to 33 percent off their profits.
Source: RISMedia (07/28/10)
Source: INFORMATION, INC. Bethesda, MD
Although matching the price will generate more business, agents will earn less money for taking on extra work. Those who want to engage in value-added selling must prepare a listing presentation that touches upon the benefits they offer that make clients willing to pay more.
They should focus on their sale-to-list ratio, percent expirations, days on market, average sale price and unique services, among other information, emphasizing that the gain in net equity and a quicker sale will offset the higher commission fee.
If a home seller balks at paying more, the agent should ask them who they would hire if the fees were the same and whether the additional benefits are worth the added cost.
Finally, agents must be willing to let some business go, keeping in mind that standing firm when it comes to commission fees will cost them up to 15 percent of listings they attempt; however, a 1 percent reduction in fees will shave up to 33 percent off their profits.
Source: RISMedia (07/28/10)
Source: INFORMATION, INC. Bethesda, MD
Foreclosure activity up across most U.S. metro areas
Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of this year than in the first half of 2009, new data shows.
The trend is the latest sign that the nation’s foreclosure crisis is worsening as homeowners battling high unemployment, slow job growth and an uneven rebound in home prices continue to fall behind on their mortgage payments.
In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June, foreclosure listing firm RealtyTrac Inc. said Thursday.
The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home eventually being lost to foreclosure.
The latest figures show the threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis.
Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.
“The face of foreclosure is driven much more now by unemployment than in the past, and it’s moving out from the places where we’ve been focusing on in the last few years,” said Rick Sharga, a senior vice president at RealtyTrac. “The combination of a weak job market and a weak housing market is making it difficult in some of these areas.”
The Miami-Fort Lauderdale-Pompano Beach metropolitan area in Florida received more foreclosure-related warnings in the first half of this year than any other, the firm said.
Florida accounted for nine of the top 20 metro areas with the highest foreclosure rates.
The latest data echo broader, national foreclosure trends.
The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009, RealtyTrac said in a report issued earlier this month.
In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.
More than 1 million American households are likely to lose their homes to foreclosure this year, the firm said.
The latest data included one bright spot: Nine of the top 10, hardest-hit metropolitan areas saw their foreclosure rates drop from a year ago. That could suggest foreclosure trends in those cities, including Las Vegas, Cape Coral, Fla., and Modesto, Calif., may have peaked.
“We probably won’t know that for sure for another six months,” Sharga said.
Still, those areas continue to see foreclosure rates that are as much as five times higher than the national average.
The top 10 metropolitan areas with the highest foreclosure rates has remained fairly unchanged over the past 12 months.
The Las Vegas-Paradise, Nev., metropolitan area topped the list with one in every 15 homes receiving a foreclosure warning in the first half of the year - five times the national average. But foreclosure filings declined nearly 9 percent versus the first six months of 2009.
Rounding out the rest of the top 10 metros with the highest foreclosure rate in the first half of 2010 were Cape Coral-Fort Myers; Modesto; Merced, Calif.; Riverside-San Bernardino-Ontario, Calif.; Stockton, Calif.; Phoenix-Mesa-Scottsdale, Ariz.; Orlando-Kissimmee, Fla.; Vallejo-Fairfield, Calif.; and Miami-Fort Lauderdale-Pompano Beach, Fla.
The Miami-area metro was the only one among the top 10 to register an annual increase in its foreclosure rate.
Source: The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
The trend is the latest sign that the nation’s foreclosure crisis is worsening as homeowners battling high unemployment, slow job growth and an uneven rebound in home prices continue to fall behind on their mortgage payments.
In all, 154 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity between January and June, foreclosure listing firm RealtyTrac Inc. said Thursday.
The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home eventually being lost to foreclosure.
The latest figures show the threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada and Arizona, which have borne the brunt of the fallout from the housing crisis.
Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.
“The face of foreclosure is driven much more now by unemployment than in the past, and it’s moving out from the places where we’ve been focusing on in the last few years,” said Rick Sharga, a senior vice president at RealtyTrac. “The combination of a weak job market and a weak housing market is making it difficult in some of these areas.”
The Miami-Fort Lauderdale-Pompano Beach metropolitan area in Florida received more foreclosure-related warnings in the first half of this year than any other, the firm said.
Florida accounted for nine of the top 20 metro areas with the highest foreclosure rates.
The latest data echo broader, national foreclosure trends.
The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009, RealtyTrac said in a report issued earlier this month.
In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.
More than 1 million American households are likely to lose their homes to foreclosure this year, the firm said.
The latest data included one bright spot: Nine of the top 10, hardest-hit metropolitan areas saw their foreclosure rates drop from a year ago. That could suggest foreclosure trends in those cities, including Las Vegas, Cape Coral, Fla., and Modesto, Calif., may have peaked.
“We probably won’t know that for sure for another six months,” Sharga said.
Still, those areas continue to see foreclosure rates that are as much as five times higher than the national average.
The top 10 metropolitan areas with the highest foreclosure rates has remained fairly unchanged over the past 12 months.
The Las Vegas-Paradise, Nev., metropolitan area topped the list with one in every 15 homes receiving a foreclosure warning in the first half of the year - five times the national average. But foreclosure filings declined nearly 9 percent versus the first six months of 2009.
Rounding out the rest of the top 10 metros with the highest foreclosure rate in the first half of 2010 were Cape Coral-Fort Myers; Modesto; Merced, Calif.; Riverside-San Bernardino-Ontario, Calif.; Stockton, Calif.; Phoenix-Mesa-Scottsdale, Ariz.; Orlando-Kissimmee, Fla.; Vallejo-Fairfield, Calif.; and Miami-Fort Lauderdale-Pompano Beach, Fla.
The Miami-area metro was the only one among the top 10 to register an annual increase in its foreclosure rate.
Source: The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
You can sell your house – if the price is right
Emily Rennie’s three-bedroom house in Oakland was a beauty in a sweet location. Walking distance to the lakeshore. Close to shops. A refurbished patio in the back. Inside, a modern kitchen with granite countertops.
Listed at $539,000 when she put it on the market, the Excelsior Avenue house was missing one crucial thing: The right price. After a few weeks with no offers, she cut the price to $499,000 in May. Then she cut it to $475,000 in June. She is still hoping for an offer.
Rennie is discovering the cold reality of post-housing-bust prices: No matter what she thinks her house is worth, what matters is what buyers are willing to pay. That can be a lot less in areas where the supply of houses for sale is swollen by foreclosures and short sales, often priced 20% to 30% below the ones being sold by financially healthy owners. Nationally, such properties account for a third of all sales three years after a historic chill blew over an overheated housing market.
Foreclosures “do make it harder to sell,” acknowledges Rennie, who works in marketing communications. “People can get a really good deal.”
Real estate professionals say Rennie is in good company. Nationally, 30% of the houses for sale were reduced in price in June, according to Zillow.com, an online real estate site. Plenty of sellers have trouble pricing their home against the foreclosed houses that lenders are trying to unload.
“It’s one of the hardest things for sellers to do. They have an emotional attachment to their house,” says Amy Bohutinsky, a spokeswoman for Zillow.com. “For sellers to understand how they should price, they should deeply understand their market and competition -- what’s on the market now, not just what’s sold.”
Those who do that successfully don’t have a problem.
“People who price their homes to the market are selling them in a reasonable amount of time, but people who cling to 2004 or 2005 prices aren’t,” says Richard Smith, president and CEO of Realogy, the parent company of Century 21, ERA, Coldwell Banker and Sotheby’s International Realty. “If you take into account (bank-owned property) pressures, you’ll sell pretty quickly.”
Competition for bargains
Oakland and nearby San Francisco are two markets where foreclosures have a strong influence.
Nearly three of every 1,000 homeowners in Oakland lost their homes to foreclosure in May, according to Zillow. Foreclosure resales made up 36% of all sales in May, although that’s down from a peak of 66% in March 2009.
Sellers have had to adjust. In June, 20% of the properties for sale in Oakland made price cuts, according to Zillow.com, compared with 15% in May. Drawn by falling prices, young professionals from San Francisco are coming across the bay to snap up homes in Oakland, and most of the stiffest competition for properties is in the top tier, around $808,000.
At that price, sellers in May paid 0.1% less than the asking price, according to Zillow. In all price ranges, they paid 0.3% less than asking price. Based on the median list price, that’s $1,080 less than the last listing price.
But some agents are seeing bidding wars.
“We’re seeing multiple offers; we’re seeing above asking price,” says David Kerr, a ZipRealty agent who represents buyers and sellers in Oakland. “People are buying foreclosures, fixing them up and selling them and getting offers.”
Those who do take foreclosures into account and price their homes right cannot only find a buyer, but sometimes one who will pay well above what they’re asking.
One such buyer was Rosa Verdin, 40, who bought a restored Victorian in north Oakland from a developer in May. The asking price was $450,000, which was well-priced, she says. She and her partner, Kelly Helms, 32, a nurse, offered $50,000 more, outbidding at least two other parties.
“We had been looking for six to eight months,” says Verdin, 40, who works in graphic arts. “The location was centrally located to our work, the house was move-in ready and within our price points. Timing just seemed right, and the decision was relatively easy.”
Not all offers go so smoothly. Even when owners find willing buyers, getting their price isn’t a sure thing. Lenders generally require appraisals before giving a mortgage, and appraisers often take into account what foreclosed properties in the area sell for when determining how much a home is worth. If a home is being sold at too high a price, the sale can fall apart.
“Every day, sales fall apart,” says Leslie Sellers, with the Appraisal Institute. “Smart sellers get appraisals done before they sell the home.”
Neighborhoods buck trend
Other neighborhoods also show just how well good prices pull in successful offers.
In the heart of San Francisco, Noe Valley is home to dot-com millionaires and working professionals. The streets are lined with Edwardian and grand Victorian row houses built in the late 19th century, and the neighborhood, flanked by hills, features an eclectic array of coffee shops, sushi restaurants and lively bookshops.
The real estate market in San Francisco is struggling to regain its footing, with home prices down 0.7% from the third quarter of 2009 to the first quarter of this year. But in Noe Valley, most homes are going just above listing price. In May, homes sold for an average of 0.02% more than the last listing price, according to Zillow.com. Based on median list price, that translates into $218 more.
“It’s crazy,” says Brendon DeSimone, a Realtor with Paragon Real Estate in San Francisco, who represents buyers and sellers in Noe Valley. “I had one house with five offers, and it went from $1.4 million to $1.7 million. The valley has just popped. It’s not uncommon for one open house to have 200 people come through.”
Nationally, the average property takes eight to nine weeks to sell, down from 10 to 11 weeks a year ago, according to the National Association of Realtors. In Noe Valley in May, there were 25 listings that sold after averaging five weeks on the market.
As the overall housing market has tumbled, Noe Valley has take a hit, with home values down 17% from their peak in June 2008, according to Zillow.com. In the neighborhood, about 5% of home sales in March were foreclosure resales.
But Noe Valley remains a hot neighborhood for several reasons. Other neighborhoods such as Pacific Heights and the Marina District have already been in such demand that prices are often out of reach for younger families, DeSimone says. Noe Valley remains more affordable but still has the kind of row houses desired by families.
It’s also closer to Silicon Valley than other neighborhoods in northern San Francisco, which shaves off about 20 to 30 minutes of commuting time (Google and Apple both have bus stops in Noe Valley). And many buyers want historic Victorians, so demand for homes in the neighborhood is strong.
That’s why, when homes are priced well, they can set off a bidding frenzy -- even in an anemic real estate market.
Source: 2010 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour.
Listed at $539,000 when she put it on the market, the Excelsior Avenue house was missing one crucial thing: The right price. After a few weeks with no offers, she cut the price to $499,000 in May. Then she cut it to $475,000 in June. She is still hoping for an offer.
Rennie is discovering the cold reality of post-housing-bust prices: No matter what she thinks her house is worth, what matters is what buyers are willing to pay. That can be a lot less in areas where the supply of houses for sale is swollen by foreclosures and short sales, often priced 20% to 30% below the ones being sold by financially healthy owners. Nationally, such properties account for a third of all sales three years after a historic chill blew over an overheated housing market.
Foreclosures “do make it harder to sell,” acknowledges Rennie, who works in marketing communications. “People can get a really good deal.”
Real estate professionals say Rennie is in good company. Nationally, 30% of the houses for sale were reduced in price in June, according to Zillow.com, an online real estate site. Plenty of sellers have trouble pricing their home against the foreclosed houses that lenders are trying to unload.
“It’s one of the hardest things for sellers to do. They have an emotional attachment to their house,” says Amy Bohutinsky, a spokeswoman for Zillow.com. “For sellers to understand how they should price, they should deeply understand their market and competition -- what’s on the market now, not just what’s sold.”
Those who do that successfully don’t have a problem.
“People who price their homes to the market are selling them in a reasonable amount of time, but people who cling to 2004 or 2005 prices aren’t,” says Richard Smith, president and CEO of Realogy, the parent company of Century 21, ERA, Coldwell Banker and Sotheby’s International Realty. “If you take into account (bank-owned property) pressures, you’ll sell pretty quickly.”
Competition for bargains
Oakland and nearby San Francisco are two markets where foreclosures have a strong influence.
Nearly three of every 1,000 homeowners in Oakland lost their homes to foreclosure in May, according to Zillow. Foreclosure resales made up 36% of all sales in May, although that’s down from a peak of 66% in March 2009.
Sellers have had to adjust. In June, 20% of the properties for sale in Oakland made price cuts, according to Zillow.com, compared with 15% in May. Drawn by falling prices, young professionals from San Francisco are coming across the bay to snap up homes in Oakland, and most of the stiffest competition for properties is in the top tier, around $808,000.
At that price, sellers in May paid 0.1% less than the asking price, according to Zillow. In all price ranges, they paid 0.3% less than asking price. Based on the median list price, that’s $1,080 less than the last listing price.
But some agents are seeing bidding wars.
“We’re seeing multiple offers; we’re seeing above asking price,” says David Kerr, a ZipRealty agent who represents buyers and sellers in Oakland. “People are buying foreclosures, fixing them up and selling them and getting offers.”
Those who do take foreclosures into account and price their homes right cannot only find a buyer, but sometimes one who will pay well above what they’re asking.
One such buyer was Rosa Verdin, 40, who bought a restored Victorian in north Oakland from a developer in May. The asking price was $450,000, which was well-priced, she says. She and her partner, Kelly Helms, 32, a nurse, offered $50,000 more, outbidding at least two other parties.
“We had been looking for six to eight months,” says Verdin, 40, who works in graphic arts. “The location was centrally located to our work, the house was move-in ready and within our price points. Timing just seemed right, and the decision was relatively easy.”
Not all offers go so smoothly. Even when owners find willing buyers, getting their price isn’t a sure thing. Lenders generally require appraisals before giving a mortgage, and appraisers often take into account what foreclosed properties in the area sell for when determining how much a home is worth. If a home is being sold at too high a price, the sale can fall apart.
“Every day, sales fall apart,” says Leslie Sellers, with the Appraisal Institute. “Smart sellers get appraisals done before they sell the home.”
Neighborhoods buck trend
Other neighborhoods also show just how well good prices pull in successful offers.
In the heart of San Francisco, Noe Valley is home to dot-com millionaires and working professionals. The streets are lined with Edwardian and grand Victorian row houses built in the late 19th century, and the neighborhood, flanked by hills, features an eclectic array of coffee shops, sushi restaurants and lively bookshops.
The real estate market in San Francisco is struggling to regain its footing, with home prices down 0.7% from the third quarter of 2009 to the first quarter of this year. But in Noe Valley, most homes are going just above listing price. In May, homes sold for an average of 0.02% more than the last listing price, according to Zillow.com. Based on median list price, that translates into $218 more.
“It’s crazy,” says Brendon DeSimone, a Realtor with Paragon Real Estate in San Francisco, who represents buyers and sellers in Noe Valley. “I had one house with five offers, and it went from $1.4 million to $1.7 million. The valley has just popped. It’s not uncommon for one open house to have 200 people come through.”
Nationally, the average property takes eight to nine weeks to sell, down from 10 to 11 weeks a year ago, according to the National Association of Realtors. In Noe Valley in May, there were 25 listings that sold after averaging five weeks on the market.
As the overall housing market has tumbled, Noe Valley has take a hit, with home values down 17% from their peak in June 2008, according to Zillow.com. In the neighborhood, about 5% of home sales in March were foreclosure resales.
But Noe Valley remains a hot neighborhood for several reasons. Other neighborhoods such as Pacific Heights and the Marina District have already been in such demand that prices are often out of reach for younger families, DeSimone says. Noe Valley remains more affordable but still has the kind of row houses desired by families.
It’s also closer to Silicon Valley than other neighborhoods in northern San Francisco, which shaves off about 20 to 30 minutes of commuting time (Google and Apple both have bus stops in Noe Valley). And many buyers want historic Victorians, so demand for homes in the neighborhood is strong.
That’s why, when homes are priced well, they can set off a bidding frenzy -- even in an anemic real estate market.
Source: 2010 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour.
Fannie, Freddie overhaul moving ahead gingerly
The Obama administration on Tuesday tiptoed closer to overhauling Fannie Mae and Freddie Mac, announcing a conference next month to begin a public discussion on how to remake the nation’s system for funding home loans.
In a departure from the bold declarations that accompanied the unveiling of its proposed overhaul of financial regulations, the administration has been taking an incremental approach to housing reform.
Administration officials say they fear that any specific proposal could rattle the extremely fragile housing and mortgage markets, which today are supported to a great extent by government programs.
“It’ll be very irresponsible of us to jump out with some bold declaration of where we want to be if that were going to result in large segments of the marketplace panicking,” said an administration official who spoke on the condition of anonymity because the discussions are still preliminary. “We’re not that removed from a time when the market was in panic, and we have to be extra guarded . . . to make sure we don’t get back to that place.”
But whatever officials might think about the timing, the administration faces a looming deadline of January 2011, imposed by the new financial regulatory reform law, to come up with a clear plan for overhauling housing finance.
Three months ago, the Treasury and Department of Housing and Urban Development released seven broad questions to guide thinking on how to reshape housing finance. They received more than 300 comments by last week’s deadline.
The housing conference, scheduled for Aug. 17 at the Treasury, will bring together academics, consumer and community groups, industry representatives and other stakeholders for discussions on housing reform.
“The future of our housing finance system is critical not only to our economic recovery, but also to millions of American homeowners in every corner of our country,” said Treasury Secretary Timothy F. Geithner, who will lead the effort with HUD Secretary Shaun Donovan. “Now is the time to build on the foundation we laid with the historic Wall Street reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system.”
Since 2008, the federal government has committed hundreds of billions of dollars to keep the housing market afloat and ensure that borrowers can get loans.
Fannie Mae and Freddie Mac, the mortgage-finance giants seized by the government in September 2008, and the Federal Housing Administration have been nearly the only sources of backing for new loans.
Now the Obama administration is starting to look for ways to slowly unwind the huge government programs supporting homeownership and to restore the traditional role of the private sector. But it is not an easy transition.
“We want the private sector back in,” said another administration official, who also spoke on the condition of anonymity. “There are signs, but it’s very minor, I have to say.”
Jeffrey Goldstein, under secretary for domestic finance at the Treasury, wrote in an essay on the White House Web site Tuesday that it will be very difficult to totally unwind the government’s role in covering losses related to the housing crisis.
“The losses that the federal government has had to backstop are virtually all attributable to bad loans that Fannie and Freddie took on between 2005 and 2007 -- during the height of the housing bubble,” he wrote. “Unfortunately, we still need to manage the continuing consequences of those poor credit choices.”
Although officials are just getting started with the overhaul, some subtle shifts are already becoming clear.
The administration is pursuing a policy overhaul that could break from the emphasis on homeownership embraced by previous administrations.
The Obama administration has a narrower view of who should own a home and what the government should do to support homeowners. For example, the administration might seek to wind down some government backing for home loans and increase the focus on affordable rentals.
Geithner has said he favors government support of homeownership in general and of low-income borrowers in particular.
Source: washingtonpost.com
In a departure from the bold declarations that accompanied the unveiling of its proposed overhaul of financial regulations, the administration has been taking an incremental approach to housing reform.
Administration officials say they fear that any specific proposal could rattle the extremely fragile housing and mortgage markets, which today are supported to a great extent by government programs.
“It’ll be very irresponsible of us to jump out with some bold declaration of where we want to be if that were going to result in large segments of the marketplace panicking,” said an administration official who spoke on the condition of anonymity because the discussions are still preliminary. “We’re not that removed from a time when the market was in panic, and we have to be extra guarded . . . to make sure we don’t get back to that place.”
But whatever officials might think about the timing, the administration faces a looming deadline of January 2011, imposed by the new financial regulatory reform law, to come up with a clear plan for overhauling housing finance.
Three months ago, the Treasury and Department of Housing and Urban Development released seven broad questions to guide thinking on how to reshape housing finance. They received more than 300 comments by last week’s deadline.
The housing conference, scheduled for Aug. 17 at the Treasury, will bring together academics, consumer and community groups, industry representatives and other stakeholders for discussions on housing reform.
“The future of our housing finance system is critical not only to our economic recovery, but also to millions of American homeowners in every corner of our country,” said Treasury Secretary Timothy F. Geithner, who will lead the effort with HUD Secretary Shaun Donovan. “Now is the time to build on the foundation we laid with the historic Wall Street reform legislation President Obama signed last week and aggressively move forward to improve our nation’s housing finance system.”
Since 2008, the federal government has committed hundreds of billions of dollars to keep the housing market afloat and ensure that borrowers can get loans.
Fannie Mae and Freddie Mac, the mortgage-finance giants seized by the government in September 2008, and the Federal Housing Administration have been nearly the only sources of backing for new loans.
Now the Obama administration is starting to look for ways to slowly unwind the huge government programs supporting homeownership and to restore the traditional role of the private sector. But it is not an easy transition.
“We want the private sector back in,” said another administration official, who also spoke on the condition of anonymity. “There are signs, but it’s very minor, I have to say.”
Jeffrey Goldstein, under secretary for domestic finance at the Treasury, wrote in an essay on the White House Web site Tuesday that it will be very difficult to totally unwind the government’s role in covering losses related to the housing crisis.
“The losses that the federal government has had to backstop are virtually all attributable to bad loans that Fannie and Freddie took on between 2005 and 2007 -- during the height of the housing bubble,” he wrote. “Unfortunately, we still need to manage the continuing consequences of those poor credit choices.”
Although officials are just getting started with the overhaul, some subtle shifts are already becoming clear.
The administration is pursuing a policy overhaul that could break from the emphasis on homeownership embraced by previous administrations.
The Obama administration has a narrower view of who should own a home and what the government should do to support homeowners. For example, the administration might seek to wind down some government backing for home loans and increase the focus on affordable rentals.
Geithner has said he favors government support of homeownership in general and of low-income borrowers in particular.
Source: washingtonpost.com
In the future, houses will look more like a home
The house of the near future could look more like, well, a home.
After the economic recession and collapse of the housing market, “smaller, better, smarter” may win out over grand, oversize showpieces, said Jacksonville architect Michael Dunlap. “That’s what I think they’ll be.”
Adds Kermit Baker of the American Institute of Architects: “The era of the McMansion could well be over.”
Baker, chief economist for the AIA, said the recession and an interest in lowering utility costs has already changed how houses are designed and built.
“As the housing boom has passed, there seems to be a renewed interest in investing in properties to make homes more livable, as opposed to real estate that can be resold quickly for a profit,” he wrote in an AIA report.
We interviewed architects and builders to try to figure out what new houses -- both mass-production and custom -- might look like in the next decade or so.
The consensus was that they might not appear that much different, at first glance. But here’s a way to picture the future home: Take a house built during the past 20 years, then start scaling back -- or just plain taking away -- some of the features.
All those different roof pitches, scattered over gable after gable? That big two-story vestibule? The formal dining room? Gone. That three-story garage? Down to two. That 3,500-square-foot house? Perhaps you’ll have to do with just 2,800.
It’s hardly deprivation though, say the experts. Instead, they say, think of it as more practical -- and perhaps even more livable.
“The formal living room, the formal sitting room, the big grand open entry with huge stairwell and a 28-foot vault to the ceiling?” said Robert Leinenweber, owner of Eastern Shores Construction in Atlantic Beach. “All that’s going away.”
Jacksonville architect Richard Skinner said changes will be dictated by a more uncertain -- and more realistic -- approach to the house in which you live.
“It’s the ongoing cost of a house that kills you, the mortgage and the utility payments,” he said. “So if you can figure a way to cut those, you’re on the way to solving the problem.”
Baker compiles quarterly reports on home design trends for the AIA, based on information from architectural firms. He’s reluctant to predict what will be happening 10 or 15 years from now, but says you can get clues based on what’s been happening in the recent past.
The smaller house trend has been bubbling for some time. Factors include the influence of Sarah Susanka’s “The Not So Big House” books, increasing land and utility costs, and the fact that families aren’t as big as they used to be.
Last year, USA Today reported that U.S. Census data shows the average size of a new house dropped for the first time in more than a decade. It went from 2,629 feet in the second quarter of the year to 2,343 in the fourth.
“It was gaining some traction even before this downturn,” Baker said. “We don’t really need a 5,000- or 6,000-square-foot home with a big formal dining room, a big formal living room. That doesn’t really reflect us.”
Still, that doesn’t mean houses built in the next 10 or 15 years will be anything like the 1,100-square-foot houses put up after World War II. Those were considered just fine by returning G.I.s and their families, but Americans have grown to expect more.
Baker said lot sizes have been shrinking for a while, but that entry-level homebuyers often want houses that are as big as they can get -- and that won’t change.
“I do believe that when the housing market recovers, those home sizes will begin to inch back up again,” he said. But it might take a long time to get back to as big as they were in the go-go years.
Andy Chambers has seen the boom and the bust. He’s president of both MasterCraft Builder Group and the Northeast Florida Builders Association. “Are people going to build bigger, higher-cost houses for the most part?” he said. “I think not.”
Rooms that encourage just a single use -- formal living rooms and dining rooms, isolated media rooms --will be the first to go.
“People are just looking more carefully at the space that’s useful,” said Skinner.
In coming years, look for multi-use rooms of flexible design, featuring lots of open space. That central living area is more spacious, tied into a kitchen that’s functional but not over-the-top.
The family area will be focused even more so around the TV screen, which will be even larger, said Skinner: “The TV has taken the spotlight, and people aren’t as ashamed of it as they used to be.”
He also expects kitchens to be more practical than extravagant. And bathrooms? They won’t be the “palaces” of past years. They’ll be nice, sure. But who really needs a palace for a bathroom?
Skinner said there’s plenty of room in the future for modern-looking houses, but he expects something of a return to a more traditional look. “I think there’s this sense of what a home looks like,” he said. “Proportions will become closer to something that looks classically driven; the scale of homes will be more pleasing to the eye. There’s been a lot of movement in the directions of neighborhoods that are more into the Avondale, Riverside, San Marco design.”
For years, people have been envisioning smart “Jetsons”-style houses packed with centralized high-tech systems that will run the whole building.
Those predictions were likely overblown, said Chambers, the builders association president. “The high-tech houses, quite honestly, have never taken off, and I think that’s because technology has exceeded the high-tech houses, because of wireless for the most part.”
And the much-ballyhooed green house?
People are slowly moving that way, though Leinenweber points out that most green construction methods remain too expensive for widespread use. Better insulation and more efficient windows, however, have come down in price enough to be popular.
Leinenweber said he’s also seeing less reliance on conventional building materials. Instead, there’s more cement composite siding and recycled plastic and PVC trim.
Where will the houses be?
Looking at Northeast Florida, there still seems to be plenty of room and interest in development that keeps sprawling farther and farther from the city center.
Jacksonville itself, though, will soon run out of room to expand.
That’s what William “Bill” Killingsworth, director of the city’s Planning and Development Department, has said. He foresees a future in which aging areas of the city are redeveloped into new higher-density developments, ones close to shopping and public transit.
Baker said different parts of the country take different approaches to where to build. But trends seem to indicate one thing. “There seems to be more interest in proximity to something else rather than splendid isolation,” he said.
Source: The Florida Times-Union, Jacksonville, Matt Soergel. Distributed by McClatchy-Tribune Information Services.
After the economic recession and collapse of the housing market, “smaller, better, smarter” may win out over grand, oversize showpieces, said Jacksonville architect Michael Dunlap. “That’s what I think they’ll be.”
Adds Kermit Baker of the American Institute of Architects: “The era of the McMansion could well be over.”
Baker, chief economist for the AIA, said the recession and an interest in lowering utility costs has already changed how houses are designed and built.
“As the housing boom has passed, there seems to be a renewed interest in investing in properties to make homes more livable, as opposed to real estate that can be resold quickly for a profit,” he wrote in an AIA report.
We interviewed architects and builders to try to figure out what new houses -- both mass-production and custom -- might look like in the next decade or so.
The consensus was that they might not appear that much different, at first glance. But here’s a way to picture the future home: Take a house built during the past 20 years, then start scaling back -- or just plain taking away -- some of the features.
All those different roof pitches, scattered over gable after gable? That big two-story vestibule? The formal dining room? Gone. That three-story garage? Down to two. That 3,500-square-foot house? Perhaps you’ll have to do with just 2,800.
It’s hardly deprivation though, say the experts. Instead, they say, think of it as more practical -- and perhaps even more livable.
“The formal living room, the formal sitting room, the big grand open entry with huge stairwell and a 28-foot vault to the ceiling?” said Robert Leinenweber, owner of Eastern Shores Construction in Atlantic Beach. “All that’s going away.”
Jacksonville architect Richard Skinner said changes will be dictated by a more uncertain -- and more realistic -- approach to the house in which you live.
“It’s the ongoing cost of a house that kills you, the mortgage and the utility payments,” he said. “So if you can figure a way to cut those, you’re on the way to solving the problem.”
Baker compiles quarterly reports on home design trends for the AIA, based on information from architectural firms. He’s reluctant to predict what will be happening 10 or 15 years from now, but says you can get clues based on what’s been happening in the recent past.
The smaller house trend has been bubbling for some time. Factors include the influence of Sarah Susanka’s “The Not So Big House” books, increasing land and utility costs, and the fact that families aren’t as big as they used to be.
Last year, USA Today reported that U.S. Census data shows the average size of a new house dropped for the first time in more than a decade. It went from 2,629 feet in the second quarter of the year to 2,343 in the fourth.
“It was gaining some traction even before this downturn,” Baker said. “We don’t really need a 5,000- or 6,000-square-foot home with a big formal dining room, a big formal living room. That doesn’t really reflect us.”
Still, that doesn’t mean houses built in the next 10 or 15 years will be anything like the 1,100-square-foot houses put up after World War II. Those were considered just fine by returning G.I.s and their families, but Americans have grown to expect more.
Baker said lot sizes have been shrinking for a while, but that entry-level homebuyers often want houses that are as big as they can get -- and that won’t change.
“I do believe that when the housing market recovers, those home sizes will begin to inch back up again,” he said. But it might take a long time to get back to as big as they were in the go-go years.
Andy Chambers has seen the boom and the bust. He’s president of both MasterCraft Builder Group and the Northeast Florida Builders Association. “Are people going to build bigger, higher-cost houses for the most part?” he said. “I think not.”
Rooms that encourage just a single use -- formal living rooms and dining rooms, isolated media rooms --will be the first to go.
“People are just looking more carefully at the space that’s useful,” said Skinner.
In coming years, look for multi-use rooms of flexible design, featuring lots of open space. That central living area is more spacious, tied into a kitchen that’s functional but not over-the-top.
The family area will be focused even more so around the TV screen, which will be even larger, said Skinner: “The TV has taken the spotlight, and people aren’t as ashamed of it as they used to be.”
He also expects kitchens to be more practical than extravagant. And bathrooms? They won’t be the “palaces” of past years. They’ll be nice, sure. But who really needs a palace for a bathroom?
Skinner said there’s plenty of room in the future for modern-looking houses, but he expects something of a return to a more traditional look. “I think there’s this sense of what a home looks like,” he said. “Proportions will become closer to something that looks classically driven; the scale of homes will be more pleasing to the eye. There’s been a lot of movement in the directions of neighborhoods that are more into the Avondale, Riverside, San Marco design.”
For years, people have been envisioning smart “Jetsons”-style houses packed with centralized high-tech systems that will run the whole building.
Those predictions were likely overblown, said Chambers, the builders association president. “The high-tech houses, quite honestly, have never taken off, and I think that’s because technology has exceeded the high-tech houses, because of wireless for the most part.”
And the much-ballyhooed green house?
People are slowly moving that way, though Leinenweber points out that most green construction methods remain too expensive for widespread use. Better insulation and more efficient windows, however, have come down in price enough to be popular.
Leinenweber said he’s also seeing less reliance on conventional building materials. Instead, there’s more cement composite siding and recycled plastic and PVC trim.
Where will the houses be?
Looking at Northeast Florida, there still seems to be plenty of room and interest in development that keeps sprawling farther and farther from the city center.
Jacksonville itself, though, will soon run out of room to expand.
That’s what William “Bill” Killingsworth, director of the city’s Planning and Development Department, has said. He foresees a future in which aging areas of the city are redeveloped into new higher-density developments, ones close to shopping and public transit.
Baker said different parts of the country take different approaches to where to build. But trends seem to indicate one thing. “There seems to be more interest in proximity to something else rather than splendid isolation,” he said.
Source: The Florida Times-Union, Jacksonville, Matt Soergel. Distributed by McClatchy-Tribune Information Services.
Foreclosure vs. short sale: pros and cons
With today’s reduced property values and increased unemployment, it’s tempting for some homeowners to just throw their hands up in defeat, allow the bank to take their home in foreclosure and rid themselves of the monthly mortgage burden.
Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.
But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.
“I want to be very clear on this, short sales are a better solution than a foreclosure, even when all the options in a situation where you lose your house are not great,” said Mark Greene, owner and president of Short Sale Operations LLC in North Palm Beach.
The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.
While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.
In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.
Greene said in 90 percent of the cases he handles, the bank has waived its right to seek a deficiency.
That was the case with Jupiter resident Kathryn Lorello, who in 2008 found herself in a home she couldn’t afford.
Following a divorce, and with three children, Lorello bought a $408,000 home that she lived in comfortably for a year. But then she lost her job as a manager of a real estate company.
She remembers the day the bank served the notice of foreclosure.
“I cried my eyes out,” Lorello said. “That’s when I panicked because I really didn’t want it to happen.”
Lorello got advice from Greene on doing a short sale.
Her bank, Wells Fargo, waived its right to seek a deficiency even though it ended up taking $200,000 less than what was owed on the loan.
Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.
In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.
“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim,” said Paul Baltrun, director of loss mitigation at the LaBovick & La-Bovick law firm.
“I think people are more aware now about what can happen after the fact and that their nightmare can continue.”
Another consideration is the effect of a foreclosure or short sale on credit.
According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is only marginally worse than a short sale.
But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years.
Daniel Poulos, a mortgage broker with Elite Lending in North Palm Beach who has studied the effect of foreclosures and short sales on credit, said unless a borrower pays off the deficiency, it may be 20 years before someone is eligible for another mortgage.
“That’s the kind of information that’s not getting out in Florida,” Poulos said.
There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale.
To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.
“Now the lender knows everything about your finances and they can better decide whether they will go after you or not,” said Jon Maddux, CEO of YouWalkAway.com, a company that advises people on strategic defaults.
If a lender doesn’t know your finances, Maddux argues, it reduces the chances it will go after you following a foreclosure.
“You might fly under the radar,” he said. “With the millions of people going through this, they are probably going to go after the low-hanging fruit.”
Source: The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.
But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.
“I want to be very clear on this, short sales are a better solution than a foreclosure, even when all the options in a situation where you lose your house are not great,” said Mark Greene, owner and president of Short Sale Operations LLC in North Palm Beach.
The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.
While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.
In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.
Greene said in 90 percent of the cases he handles, the bank has waived its right to seek a deficiency.
That was the case with Jupiter resident Kathryn Lorello, who in 2008 found herself in a home she couldn’t afford.
Following a divorce, and with three children, Lorello bought a $408,000 home that she lived in comfortably for a year. But then she lost her job as a manager of a real estate company.
She remembers the day the bank served the notice of foreclosure.
“I cried my eyes out,” Lorello said. “That’s when I panicked because I really didn’t want it to happen.”
Lorello got advice from Greene on doing a short sale.
Her bank, Wells Fargo, waived its right to seek a deficiency even though it ended up taking $200,000 less than what was owed on the loan.
Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.
In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.
“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim,” said Paul Baltrun, director of loss mitigation at the LaBovick & La-Bovick law firm.
“I think people are more aware now about what can happen after the fact and that their nightmare can continue.”
Another consideration is the effect of a foreclosure or short sale on credit.
According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is only marginally worse than a short sale.
But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years.
Daniel Poulos, a mortgage broker with Elite Lending in North Palm Beach who has studied the effect of foreclosures and short sales on credit, said unless a borrower pays off the deficiency, it may be 20 years before someone is eligible for another mortgage.
“That’s the kind of information that’s not getting out in Florida,” Poulos said.
There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale.
To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.
“Now the lender knows everything about your finances and they can better decide whether they will go after you or not,” said Jon Maddux, CEO of YouWalkAway.com, a company that advises people on strategic defaults.
If a lender doesn’t know your finances, Maddux argues, it reduces the chances it will go after you following a foreclosure.
“You might fly under the radar,” he said. “With the millions of people going through this, they are probably going to go after the low-hanging fruit.”
Source: The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Tuesday, July 27, 2010
Citizens Property Insurance board approves rate hike
Citizens Property Insurance’s board approved an average 8.4 percent statewide rate hike Monday. That includes an average increase of as much as 11.3 percent in parts of South Florida and a 9.3 percent statewide rate hike for policies that cover homes, condominium units, renters, mobile homes and vacation or rented property.
Some policyholders’ rates would decrease under the proposal, which still needs approval from the Office of Insurance Regulation.
A 3.8 percent average decrease is proposed for Miami Beach and a 10 percent decrease for coastal parts of Broward and Palm Beach counties. Individual policyholders’ premiums can vary from the average rate change in a neighborhood.
Four of Citizens’ eight board members approved the proposal. Two board members were absent and two others -- Tom Lynch of Plastridge Insurance Agency in Delray Beach and Carol Everhart, vice president of BB&T in Tampa -- recused themselves because they’re insurance agents and they said voting to increase rates could potentially benefit them personally.
Citizens officials said that their current overall rates aren’t high enough to offset costs, including claims payouts that have increased dramatically in recent years for damage from fires, sinkholes and other issues not related to hurricanes.
A report prepared by Citizens says insurance rates in some of parts of Broward, Palm Beach, Miami-Dade and Orange counties should be much higher than what is proposed -- as much as 193 percent higher -- but a 2009 state law caps the annual premium increases to 10 percent.
Some of the proposed rate hikes are slightly higher than 10 percent because an additional charge is allowed for costs related to reinsurance, or back-up coverage.
The Legislature froze Citizens’ rates from 2007 to 2009. Regulators allowed rates to rise this year, including an average increase of nearly 12 percent for homeowners in coastal Broward and Palm Beach counties.
State regulators will hold rate hearings Tuesday for Allstate Insurance Co.’s Florida subsidiaries and on Aug. 5 for Royal Palm Insurance. The Allstate Floridian Insurance companies, which changed their names to Castle Key last year, have about 250,000 policies, making them Florida’s third-largest private home insurer.
Nearly three-fourths of those policies are with Castle Key Insurance, which proposed raising rates by a statewide average of 33 percent, and the rest are with Castle Key Indemnity, which asked for an average 18 percent statewide rate hike.
Moore said the increases are needed to build the companies’ claims-paying reserves because premiums aren’t keeping pace with expenses, including backup coverage costs and claims for fires, theft and storms.
Regulators already approved a 10 percent average statewide rate hike for Gainesville-based Royal Palm Insurance Co.’s homeowners policies and the company, the tenth largest private residential insurer, is now requesting a 22 percent average rate hike for policies that covered rented properties or vacation homes.
Most of Royal Palm’s policies are former Allstate policies. In 2006, less than two months after Royal Palm started selling insurance, it announced that it was partnering with Allstate to take over about 120,000 of the Illinois-based insurance giant’s policies.
Source: Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
Some policyholders’ rates would decrease under the proposal, which still needs approval from the Office of Insurance Regulation.
A 3.8 percent average decrease is proposed for Miami Beach and a 10 percent decrease for coastal parts of Broward and Palm Beach counties. Individual policyholders’ premiums can vary from the average rate change in a neighborhood.
Four of Citizens’ eight board members approved the proposal. Two board members were absent and two others -- Tom Lynch of Plastridge Insurance Agency in Delray Beach and Carol Everhart, vice president of BB&T in Tampa -- recused themselves because they’re insurance agents and they said voting to increase rates could potentially benefit them personally.
Citizens officials said that their current overall rates aren’t high enough to offset costs, including claims payouts that have increased dramatically in recent years for damage from fires, sinkholes and other issues not related to hurricanes.
A report prepared by Citizens says insurance rates in some of parts of Broward, Palm Beach, Miami-Dade and Orange counties should be much higher than what is proposed -- as much as 193 percent higher -- but a 2009 state law caps the annual premium increases to 10 percent.
Some of the proposed rate hikes are slightly higher than 10 percent because an additional charge is allowed for costs related to reinsurance, or back-up coverage.
The Legislature froze Citizens’ rates from 2007 to 2009. Regulators allowed rates to rise this year, including an average increase of nearly 12 percent for homeowners in coastal Broward and Palm Beach counties.
State regulators will hold rate hearings Tuesday for Allstate Insurance Co.’s Florida subsidiaries and on Aug. 5 for Royal Palm Insurance. The Allstate Floridian Insurance companies, which changed their names to Castle Key last year, have about 250,000 policies, making them Florida’s third-largest private home insurer.
Nearly three-fourths of those policies are with Castle Key Insurance, which proposed raising rates by a statewide average of 33 percent, and the rest are with Castle Key Indemnity, which asked for an average 18 percent statewide rate hike.
Moore said the increases are needed to build the companies’ claims-paying reserves because premiums aren’t keeping pace with expenses, including backup coverage costs and claims for fires, theft and storms.
Regulators already approved a 10 percent average statewide rate hike for Gainesville-based Royal Palm Insurance Co.’s homeowners policies and the company, the tenth largest private residential insurer, is now requesting a 22 percent average rate hike for policies that covered rented properties or vacation homes.
Most of Royal Palm’s policies are former Allstate policies. In 2006, less than two months after Royal Palm started selling insurance, it announced that it was partnering with Allstate to take over about 120,000 of the Illinois-based insurance giant’s policies.
Source: Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
Housing choices show erosion in downturn
More Americans say they moved because they were evicted or wanted to spend less money and now live in a worse house with more people, new Census data show.
The 2009 American Housing Survey shows the stark effect the recession and housing crisis have had on some people’s lifestyles in just two years. The survey, last conducted in 2007, captures the brunt of the downturn’s impact on housing.
“It seems to mark some erosion in the standard of living of Americans,” says James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “It’s not surprising given the depths of the recession. ... Some portions of Americans are now in survival mode.”
In 2009, when the USA suffered the worst job losses since statistics were created, 8.5 million jobs vanished.
“That’s a lot of housing buying power that disappeared,” Hughes says.
The Census survey is based on a sample of about 60,000 housing units, 45,000 of them occupied. It shows:
The number of households that moved in the past year because they were evicted soared 127% to 191,000.
3.1 million households, or 18% of those who moved in the past year, said they’re in a worse home, up 10% from 2007; 2.3 million, or 13%, said they’re in a worse neighborhood, a 12% increase. “It’s a reduction of the American Dream,” says Robert Lang, urban sociologist at the University of Nevada-Las Vegas.
In 2007, 12% of households that moved did so for a better home, and 4% moved for lower rent or maintenance. In 2009, only 10% moved to upgrade; 5% moved to reduce costs.
Large households with five or more people inched up to 11.3 million, or 10% of occupied houses, and homes shared by two families grew slightly to 2.6 million. The number of homes that are co-owned or co-rented went up 26% to 3.4 million.
The number of households that had more people move in went up 10% to 6 million.
“Some of this is immigration,” Lang says. “Some is the boomerang kid who would’ve gotten an apartment but stays at home” because of the economy and high unemployment.
More worked from home, an 11% jump from 2007.
“They don’t need a formal office,” Lang says. “All you need is a kitchen table and an iPad.”
Houses continue to shrink. The number of homes that are 4,000 square feet or larger dropped 14%.
“It’s come down, no question,” says Stephen Melman, director of economic services at the National Association of Home Builders.
The group’s consumer confidence survey shows that buyers are cautious and practical. Two-story foyers are out. Laundry rooms are in.
“Maybe when we have the choice, we’ll go to one less bedroom, one less bathroom,” Melman says. “They view housing as shelter. Energy efficiency is important. It’s really back to the basics.”
The share of homes with central air conditioning has caught up with the share of homes with dishwashers: 65%.
“That shows how big the shift to the Sun Belt has been,” Lang says. “Parts of the United States are unlivable without air conditioning. You can live in Phoenix without a dishwasher. Try living in Phoenix without air conditioning.”
Source: USA TODAY, a division of Gannett Co. Inc., Haya El Nasser. All rights reserved.
The 2009 American Housing Survey shows the stark effect the recession and housing crisis have had on some people’s lifestyles in just two years. The survey, last conducted in 2007, captures the brunt of the downturn’s impact on housing.
“It seems to mark some erosion in the standard of living of Americans,” says James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. “It’s not surprising given the depths of the recession. ... Some portions of Americans are now in survival mode.”
In 2009, when the USA suffered the worst job losses since statistics were created, 8.5 million jobs vanished.
“That’s a lot of housing buying power that disappeared,” Hughes says.
The Census survey is based on a sample of about 60,000 housing units, 45,000 of them occupied. It shows:
The number of households that moved in the past year because they were evicted soared 127% to 191,000.
3.1 million households, or 18% of those who moved in the past year, said they’re in a worse home, up 10% from 2007; 2.3 million, or 13%, said they’re in a worse neighborhood, a 12% increase. “It’s a reduction of the American Dream,” says Robert Lang, urban sociologist at the University of Nevada-Las Vegas.
In 2007, 12% of households that moved did so for a better home, and 4% moved for lower rent or maintenance. In 2009, only 10% moved to upgrade; 5% moved to reduce costs.
Large households with five or more people inched up to 11.3 million, or 10% of occupied houses, and homes shared by two families grew slightly to 2.6 million. The number of homes that are co-owned or co-rented went up 26% to 3.4 million.
The number of households that had more people move in went up 10% to 6 million.
“Some of this is immigration,” Lang says. “Some is the boomerang kid who would’ve gotten an apartment but stays at home” because of the economy and high unemployment.
More worked from home, an 11% jump from 2007.
“They don’t need a formal office,” Lang says. “All you need is a kitchen table and an iPad.”
Houses continue to shrink. The number of homes that are 4,000 square feet or larger dropped 14%.
“It’s come down, no question,” says Stephen Melman, director of economic services at the National Association of Home Builders.
The group’s consumer confidence survey shows that buyers are cautious and practical. Two-story foyers are out. Laundry rooms are in.
“Maybe when we have the choice, we’ll go to one less bedroom, one less bathroom,” Melman says. “They view housing as shelter. Energy efficiency is important. It’s really back to the basics.”
The share of homes with central air conditioning has caught up with the share of homes with dishwashers: 65%.
“That shows how big the shift to the Sun Belt has been,” Lang says. “Parts of the United States are unlivable without air conditioning. You can live in Phoenix without a dishwasher. Try living in Phoenix without air conditioning.”
Source: USA TODAY, a division of Gannett Co. Inc., Haya El Nasser. All rights reserved.
Homebuyers frustrated with flood insurance lapses
Local real estate professionals are hopeful Congress will soon extend the National Flood Insurance Program for five years – a move that could take some anxiety out of the home-buying process.
The program – the only way homeowners can obtain flood insurance – has lapsed three times this year and is set to expire again in September. During those lapses, many potential homebuyers in flood zones have been unable to close on deals.
“It’s infuriating to us that this continues,” said Bonnie Davis, managing broker for ReMax Metro in downtown St. Petersburg. “Congress flat out didn’t do its job.”
The latest lapse came in June, as buyers rushed to close on homes in time to take advantage of federal tax credits.
The tax credits were to lure buyers into the struggling real estate market. Real estate agents say the credit worked, but thousands of buyers nationwide were unable to close because they couldn’t get flood insurance.
Mortgage companies require borrowers in flood zones to have flood insurance. Without it, lenders won’t fund the loan.
Davis said she had numerous buyers in that situation last month.
“You’re talking about people with moving trucks and lives on hold,” she said.
Even some homeowners who already have flood insurance have been affected. Those with existing policies have been unable to renew policies during lapses in the program.
The House recently approved legislation to extend the program through 2015. The legislation also allows for some premium and deductible increases.
The flood program, an arm of the Federal Emergency Management Agency, has for more than four decades offered affordable insurance to more than 20,000 communities that participate in flood damage reduction efforts and to residents in federally designated flood zones. It was created in 1968 because of the reluctance of private insurers to cover flood damage.
Congress has not updated the program since 1994. In the ensuing years the once-solvent program had to pay out some $17 billion in Katrina-related claims and had to deal with FEMA flood zone remapping that has thrust thousands of homes and businesses into areas where they are required to buy flood insurance.
The program now has some 5.6 million policies with an insured exposure of $1.2 trillion. The legislation goes to the Senate, where its fate is uncertain.
Source: Tampa Tribune, Fla. Distributed by McClatchy-Tribune Information Services.
The program – the only way homeowners can obtain flood insurance – has lapsed three times this year and is set to expire again in September. During those lapses, many potential homebuyers in flood zones have been unable to close on deals.
“It’s infuriating to us that this continues,” said Bonnie Davis, managing broker for ReMax Metro in downtown St. Petersburg. “Congress flat out didn’t do its job.”
The latest lapse came in June, as buyers rushed to close on homes in time to take advantage of federal tax credits.
The tax credits were to lure buyers into the struggling real estate market. Real estate agents say the credit worked, but thousands of buyers nationwide were unable to close because they couldn’t get flood insurance.
Mortgage companies require borrowers in flood zones to have flood insurance. Without it, lenders won’t fund the loan.
Davis said she had numerous buyers in that situation last month.
“You’re talking about people with moving trucks and lives on hold,” she said.
Even some homeowners who already have flood insurance have been affected. Those with existing policies have been unable to renew policies during lapses in the program.
The House recently approved legislation to extend the program through 2015. The legislation also allows for some premium and deductible increases.
The flood program, an arm of the Federal Emergency Management Agency, has for more than four decades offered affordable insurance to more than 20,000 communities that participate in flood damage reduction efforts and to residents in federally designated flood zones. It was created in 1968 because of the reluctance of private insurers to cover flood damage.
Congress has not updated the program since 1994. In the ensuing years the once-solvent program had to pay out some $17 billion in Katrina-related claims and had to deal with FEMA flood zone remapping that has thrust thousands of homes and businesses into areas where they are required to buy flood insurance.
The program now has some 5.6 million policies with an insured exposure of $1.2 trillion. The legislation goes to the Senate, where its fate is uncertain.
Source: Tampa Tribune, Fla. Distributed by McClatchy-Tribune Information Services.
Monday, July 26, 2010
State Farm sheds 125,000 Florida homeowner policies
State Farm Insurance will drop 125,000 homeowners’ insurance policies as the insurer reduces its exposure to hurricane risks in Florida. Agents say that State Farm is not only cancelling some residential policies – it’s dropping some commercial property policies as well.
Some of Florida’s smaller, new insurers that entered the market have already failed, and policyholders are discovering that insurance policies from other carriers have higher premiums. Some smaller insurers have only up to $6 million in assets, and consumers should consider whether their insurer could pay claims. And if so, they should assess how many events an insurer can cover annually either through reserves or reinsurance coverage.
Many more policyholders are taking policies with state-run Citizens Property Insurance Corp.; but if the state fund cannot cover claims, the costs would be shared with state taxpayers.
Source: Naples Daily News (FL) (07/25/10) Layden, Laura
Source: 2010 INFORMATION, INC.
Some of Florida’s smaller, new insurers that entered the market have already failed, and policyholders are discovering that insurance policies from other carriers have higher premiums. Some smaller insurers have only up to $6 million in assets, and consumers should consider whether their insurer could pay claims. And if so, they should assess how many events an insurer can cover annually either through reserves or reinsurance coverage.
Many more policyholders are taking policies with state-run Citizens Property Insurance Corp.; but if the state fund cannot cover claims, the costs would be shared with state taxpayers.
Source: Naples Daily News (FL) (07/25/10) Layden, Laura
Source: 2010 INFORMATION, INC.
Viral email raises real estate tax fears
A viral email that keeps circulating seems to die out but then returns with a vengeance. Florida Realtors and the National Association of Realtors have received numerous calls from concerned members.
The email incorrectly states that “all real estate transactions will be subject to a 3.8% sales tax.” It then goes on to blame Democrats for inserting the language at the last minute into the recent health care package. To back up the email’s message, it includes an attachment that looks like a newspaper article from the Spokesman-Review, a Spokane, Wash., publication.
Part of the email is true: There is a new real estate tax that will help pay for Medicare, but it impacts a very small number of people. It applies only to sellers making more than $200,000 per year or $250,000 for couples.
The email fails to include information on the article, however, which is actually an editorial opinion of an outside writer and not a news piece. It was written by a representative of The Washington Policy Center (http://www.washingtonpolicy.org/Centers/healthcare/index.html), which includes a link on its website outlining the group’s stance on health care reform.
The National Association of Realtors has created a page explaining the new law that includes rebuttals of the false email. It can be found here.
A Washington Post article created a fictional couple with a joint income of $300,000 (over the $250,000 limit) that made a $600,000 profit on a home sale. In the example, the couple could pay a new real estate tax equal to about $1,900. Read more about the Washington Post example.
Source: Florida Realtors®
The email incorrectly states that “all real estate transactions will be subject to a 3.8% sales tax.” It then goes on to blame Democrats for inserting the language at the last minute into the recent health care package. To back up the email’s message, it includes an attachment that looks like a newspaper article from the Spokesman-Review, a Spokane, Wash., publication.
Part of the email is true: There is a new real estate tax that will help pay for Medicare, but it impacts a very small number of people. It applies only to sellers making more than $200,000 per year or $250,000 for couples.
The email fails to include information on the article, however, which is actually an editorial opinion of an outside writer and not a news piece. It was written by a representative of The Washington Policy Center (http://www.washingtonpolicy.org/Centers/healthcare/index.html), which includes a link on its website outlining the group’s stance on health care reform.
The National Association of Realtors has created a page explaining the new law that includes rebuttals of the false email. It can be found here.
A Washington Post article created a fictional couple with a joint income of $300,000 (over the $250,000 limit) that made a $600,000 profit on a home sale. In the example, the couple could pay a new real estate tax equal to about $1,900. Read more about the Washington Post example.
Source: Florida Realtors®
Report finds most complaints allege disability discrimination
The Department of Housing and Urban Development (HUD) released the Obama Administration’s first annual “State of Fair Housing Report” on the status of fair housing in America. HUD’s Fiscal Year 2009 annual State of Fair Housing Report highlights the agency’s progress in enforcing the Fair Housing Act, identifies challenges that remain, and demonstrates its commitment to acting now to end housing discrimination.
Discrimination based on a person’s disability status continues to account for the largest single category of complaints. Of the 10,242 complaints filed with HUD and its partners during fiscal year 2009, 44 percent alleged disability discrimination, while 31 percent alleged discrimination based on race, and 20 percent based on family status. The number and type of complaints received are consistent with the previous two years.
“Despite much progress and hard work, Americans continue to face housing discrimination because they’re in a wheelchair, are a different color, or background, or have children,” says John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity. “This report is a stark reminder that HUD and our fair housing partners must redouble our commitment to end housing discrimination.”
This year’s report highlights some of HUD’s enforcement efforts, including ones that led to a change of policy. The Department also handled discrimination cases that resulted in compensation for the victims. For example:
• HUD charged two Tallassee, Ala., landlords with violating the Fair Housing Act for allegedly forcing a white family to move out of the house they rented to them after the landlords saw the family talking with African-American neighbors in their front yard. Three months after charging the case, HUD obtained a settlement that required the landlords to pay $63,000.
• HUD charged a Puerto Rico condominium association with violating the Fair Housing Act for denying a disabled couple the use of two handicap accessible parking spaces. A HUD Administrative Law Judge subsequently ordered the association to pay $25,000 in damages to the couple and $10,000 in civil penalties for violating the couple’s fair housing rights.
• HUD charged an Atlanta condominium association and a local real estate company and its agent with discrimination for refusing to sell to families with children. The agent advertised a unit and conditioned the sale to those without children.
The report also highlights HUD’s recent efforts to ensure that the agency’s core housing programs are open to all, regardless of sexual orientation or gender identity. Last month, HUD announced that it will now require all applicants for Fiscal Year 2010 grant funding to certify that they have not been charged with a systemic violation of state or local laws based on a person’s lesbian, bisexual, gay or transgender status.
For additional information about Fair Housing, log onto HUD’s Web site: www.hud.gov/fairhousing. To read the annual report, go to: http://www.hud.gov/content/releases/fy2009annual-rpt.pdf
Source: Florida Realtors®
Discrimination based on a person’s disability status continues to account for the largest single category of complaints. Of the 10,242 complaints filed with HUD and its partners during fiscal year 2009, 44 percent alleged disability discrimination, while 31 percent alleged discrimination based on race, and 20 percent based on family status. The number and type of complaints received are consistent with the previous two years.
“Despite much progress and hard work, Americans continue to face housing discrimination because they’re in a wheelchair, are a different color, or background, or have children,” says John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity. “This report is a stark reminder that HUD and our fair housing partners must redouble our commitment to end housing discrimination.”
This year’s report highlights some of HUD’s enforcement efforts, including ones that led to a change of policy. The Department also handled discrimination cases that resulted in compensation for the victims. For example:
• HUD charged two Tallassee, Ala., landlords with violating the Fair Housing Act for allegedly forcing a white family to move out of the house they rented to them after the landlords saw the family talking with African-American neighbors in their front yard. Three months after charging the case, HUD obtained a settlement that required the landlords to pay $63,000.
• HUD charged a Puerto Rico condominium association with violating the Fair Housing Act for denying a disabled couple the use of two handicap accessible parking spaces. A HUD Administrative Law Judge subsequently ordered the association to pay $25,000 in damages to the couple and $10,000 in civil penalties for violating the couple’s fair housing rights.
• HUD charged an Atlanta condominium association and a local real estate company and its agent with discrimination for refusing to sell to families with children. The agent advertised a unit and conditioned the sale to those without children.
The report also highlights HUD’s recent efforts to ensure that the agency’s core housing programs are open to all, regardless of sexual orientation or gender identity. Last month, HUD announced that it will now require all applicants for Fiscal Year 2010 grant funding to certify that they have not been charged with a systemic violation of state or local laws based on a person’s lesbian, bisexual, gay or transgender status.
For additional information about Fair Housing, log onto HUD’s Web site: www.hud.gov/fairhousing. To read the annual report, go to: http://www.hud.gov/content/releases/fy2009annual-rpt.pdf
Source: Florida Realtors®
7 Tips for a Profitable Home Closing
Be sure you're walking away with all the money you're entitled to from the sale of your home.
When you're ready to close on the sale of your home and move to your new home, you may be so close to the finish line that you coast, thinking there's nothing left for you to do. Not so fast. It's easy to waste a few dollars here and for mistakes to creep into your closing documents there, all adding up to a bundle of lost profit. Spot money-losing problems with these seven tips.
1. Take services out of your name
Avoid a dispute with the buyers after closing over things like fees for the cable service you forgot to discontinue. Contact every utility and service provider to end or transfer service to your new address as of the closing date.
If you're on an automatic-fill schedule for heating oil or propane, don't pay for a pre-closing refill that provides free fuel for the new owner. Contact your insurer to terminate coverage on your old home, get coverage on your new home, and ask whether you're entitled to a refund of prepaid premium.
2. Spread the word on your change of address
Provide the post office with your forwarding address two to four weeks before the closing. Also notify credit card companies, publication subscription departments, friends and family, and your financial institutions of your new address.
3. Manage the movers
Scrutinize your moving company's estimate. If you're making a long-distance move, which is often billed according to weight, note the weight of your property and watch so the movers don't use excessive padding to boost the weight. Also check with your homeowners insurer about coverage for your move. Usually movers cover only what they pack.
4. Do the settlement math
Title company employees are only human, so they can make mistakes. The day before your closing, check the math on your HUD-1 Settlement Statement.
5. Review charges on your settlement statement
Are all mortgages being paid off, and are the payoff amounts correct? If your real estate agent promised you extras-such as a discounted commission or a home warranty policy-make sure that's included. Also check whether your real estate agent or title company added fees that weren't disclosed earlier. If any party suggests leaving items off the settlement statement, consult a lawyer about whether that might expose you to legal risk.
6. Search for missing credits
Be sure the settlement company properly credited you for prepaid expenses, such as property taxes and homeowners association fees, if applicable. If you've prepaid taxes for the year, you're entitled to a credit for the time you no longer own the home. Have you been credited for heating oil or propane left in the tank?
7. Don't leave money in escrow
End your home sale closing with nothing unresolved. Make sure the title company releases money already held in escrow for you, and avoid leaving sales proceeds in a new escrow to be dickered over later.
Other web resources
(http://www.realtor.com/home-finance/sellers-basics/closing.aspx) Closing costs explained (http://www.homeclosing101.org/costs.cfm)
G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Source: houselogic.com
When you're ready to close on the sale of your home and move to your new home, you may be so close to the finish line that you coast, thinking there's nothing left for you to do. Not so fast. It's easy to waste a few dollars here and for mistakes to creep into your closing documents there, all adding up to a bundle of lost profit. Spot money-losing problems with these seven tips.
1. Take services out of your name
Avoid a dispute with the buyers after closing over things like fees for the cable service you forgot to discontinue. Contact every utility and service provider to end or transfer service to your new address as of the closing date.
If you're on an automatic-fill schedule for heating oil or propane, don't pay for a pre-closing refill that provides free fuel for the new owner. Contact your insurer to terminate coverage on your old home, get coverage on your new home, and ask whether you're entitled to a refund of prepaid premium.
2. Spread the word on your change of address
Provide the post office with your forwarding address two to four weeks before the closing. Also notify credit card companies, publication subscription departments, friends and family, and your financial institutions of your new address.
3. Manage the movers
Scrutinize your moving company's estimate. If you're making a long-distance move, which is often billed according to weight, note the weight of your property and watch so the movers don't use excessive padding to boost the weight. Also check with your homeowners insurer about coverage for your move. Usually movers cover only what they pack.
4. Do the settlement math
Title company employees are only human, so they can make mistakes. The day before your closing, check the math on your HUD-1 Settlement Statement.
5. Review charges on your settlement statement
Are all mortgages being paid off, and are the payoff amounts correct? If your real estate agent promised you extras-such as a discounted commission or a home warranty policy-make sure that's included. Also check whether your real estate agent or title company added fees that weren't disclosed earlier. If any party suggests leaving items off the settlement statement, consult a lawyer about whether that might expose you to legal risk.
6. Search for missing credits
Be sure the settlement company properly credited you for prepaid expenses, such as property taxes and homeowners association fees, if applicable. If you've prepaid taxes for the year, you're entitled to a credit for the time you no longer own the home. Have you been credited for heating oil or propane left in the tank?
7. Don't leave money in escrow
End your home sale closing with nothing unresolved. Make sure the title company releases money already held in escrow for you, and avoid leaving sales proceeds in a new escrow to be dickered over later.
Other web resources
(http://www.realtor.com/home-finance/sellers-basics/closing.aspx) Closing costs explained (http://www.homeclosing101.org/costs.cfm)
G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.
Source: houselogic.com
Sunday, July 25, 2010
Commercial real estate turned a corner?
U.S. commercial real estate prices rose 3.6 percent in May, according to Moody’s/REAL Commercial Property Price Indices CPPI. This is the second consecutive month of increases – prices were up 1.7 percent in April.
“The positive news of increasing prices over the past two months is tempered by low transaction volumes, forecasts for slowing macroeconomic growth and the rising risk of a double dip recession,” said Moody’s managing director Nick Levidy in a statement.
Prudential Financial executives, speaking at a market outlook discussion, said they were “reluctant optimists” about commercial real estate. “As it cranks up, it’s going to start going pretty quickly in the next three, four years,” he predicted.
Sources: The Wall Street Journal, A.D. Pruitt (07/19/2010) and CNBC.com, Jeff Cox (07/21/2010)
Source: INFORMATION, INC. Bethesda, MD
“The positive news of increasing prices over the past two months is tempered by low transaction volumes, forecasts for slowing macroeconomic growth and the rising risk of a double dip recession,” said Moody’s managing director Nick Levidy in a statement.
Prudential Financial executives, speaking at a market outlook discussion, said they were “reluctant optimists” about commercial real estate. “As it cranks up, it’s going to start going pretty quickly in the next three, four years,” he predicted.
Sources: The Wall Street Journal, A.D. Pruitt (07/19/2010) and CNBC.com, Jeff Cox (07/21/2010)
Source: INFORMATION, INC. Bethesda, MD
Amendment 3 off Nov. ballot for now
A Tallahassee judge on Friday removed Amendment 3 from the November ballot, saying the summary that voters would see is misleading. An appeal and eventual hearing in the Florida Supreme Court is expected.
Amendment 3, approved by lawmakers in 2009, would give buyers who haven’t owned a home for eight years a homestead exemption on some new property, but only if purchased it after Jan. 1, 2010. However, the ballot title and summary don’t mention the effective date.
Representing the Florida AFL-CIO and a Jacksonville homeowner who doesn’t qualify for the exemption, Tallahassee attorney Barry Richard urged Circuit Judge John Cooper to throw out the ballot question, saying it leads voters to believe the benefits will be extended to some homeowners who are not eligible.
Russell Kent, an attorney representing the Florida Department of State, said the Jan. 1 date represents a “detail” that did not need to be in the ballot title and summary because it would not rise to a level of importance that would make the proposal misleading.
The amendment would offer qualified homebuyers an additional 25 percent homestead exemption in the first year and a declining exemption schedule for four more years.
Another provision would reduce the cap on taxable value increases of commercial and non-homestead properties to 5 percent a year, down from a 10 percent cap now in place.
Source: Florida Realtors®; News Service of Florida contributed from Tallahassee.
Amendment 3, approved by lawmakers in 2009, would give buyers who haven’t owned a home for eight years a homestead exemption on some new property, but only if purchased it after Jan. 1, 2010. However, the ballot title and summary don’t mention the effective date.
Representing the Florida AFL-CIO and a Jacksonville homeowner who doesn’t qualify for the exemption, Tallahassee attorney Barry Richard urged Circuit Judge John Cooper to throw out the ballot question, saying it leads voters to believe the benefits will be extended to some homeowners who are not eligible.
Russell Kent, an attorney representing the Florida Department of State, said the Jan. 1 date represents a “detail” that did not need to be in the ballot title and summary because it would not rise to a level of importance that would make the proposal misleading.
The amendment would offer qualified homebuyers an additional 25 percent homestead exemption in the first year and a declining exemption schedule for four more years.
Another provision would reduce the cap on taxable value increases of commercial and non-homestead properties to 5 percent a year, down from a 10 percent cap now in place.
Source: Florida Realtors®; News Service of Florida contributed from Tallahassee.
Help is out there for homeowners
From a busy office in Commerce, Calif., Isabel Duran sits at a desk with a heaping bowl of chocolates and counsels clients on the brink of losing their homes. The financial specialist talks on the phone to homeowners about options that will help them avoid foreclosure.
Most clients still believe that their best hope is a well-known government-supported program that lowers their monthly mortgage payments. Many seem surprised when Duran tells them that’s often not the solution.
She tells them they’re far more likely to qualify for an alternative modification with their lender that also lowers monthly mortgage payments.
“They’re just now aware of what’s out there. They don’t know about these alternative modifications,” says Duran at ClearPoint Credit Counseling Solutions. “They can’t sleep, they’re very worried. You can hear the tiredness in their voices. It feels so good to me that we’re able to get some kind of modification.”
Despite the attention given to the federal government’s $50 billion Home Affordable Modification Program (HAMP), a program to lower monthly mortgage payments for five years, the majority of financially distressed homeowners are getting alternative modifications through their lenders without any government involvement. In 2010, servicers completed more than 800,000 alternative modifications with borrowers, according to Hope Now, a consortium of counseling agencies, servicers and investors. Since its start in spring 2009, HAMP has produced only 389,198 permanent modifications through June.
Unlike HAMP modifications, which the government reports on monthly, far less is known about their alternatives, because they are done privately by lenders using different criteria and methods.
Recent reports by the government and private analysts show the modifications that servicers make on their own are growing compared with a year ago. The vast majority now do reduce borrowers’ payments, often by reducing interest rates and extending loan terms. That’s a change from the past couple of years when banks offered delinquent borrowers modifications that rolled past-due payments and fees into the new mortgages, leaving borrowers with higher monthly payments.
As a result, the changes that servicers are making now may be less prone to redefaults and more successful in keeping borrowers in their homes than what was previously done. Yet, several recent reports suggest a mixed record of incremental success, slow progress and questions about both mortgage servicers’ performance and the government’s oversight of mortgage modifications, inside and outside HAMP. Some findings:
• Lower monthly payments reduce default rates. When modifications left loans’ monthly payments unchanged or higher, close to 70 percent were more than 60 days delinquent a year later, according to a June report by two federal bank regulators, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. But when loans were modified to reduce monthly payments, about 40 percent were seriously delinquent a year later. A recent report by Fitch Ratings found similar results.
• Newer modifications are showing better results. Of the 590,000 modifications done in 2009, nearly 52 percent were current at the end of March, the bank regulators said in their June report. Only 27 percent of the modifications done in 2008 were current. While delinquency rates predictably increase over time, the regulators say data suggest more recent vintages of modifications may perform better over time. Those include private modifications as well as those done under the Obama plan.
A recent report by Barclays Capital made the same point. Newer modifications result in “meaningful reductions” in monthly principal and interest payment, reduce borrower debt burden and lead to better redefault performance, Barclays wrote.
• Redefault rates on modified mortgages could remain high. Fitch projects 65 percent to 75 percent of modifications on subprime and so-called Alt-A mortgages – a category between subprime and prime – will redefault within 12 months, and 55 percent to 65 percent of modified prime loans will redefault within a year.
• Eligibility standards for HAMP modifications aren’t clear-cut or applied consistently. That could help explain why servicers’ alternative modifications are outpacing HAMP modifications. In a report last month, the Government Accountability Office criticized the Treasury Department for not doing enough to ensure that servicers treated all borrowers the same in deciding who would be eligible for a modified mortgage under HAMP.
Diane Thompson, a lawyer at the National Consumer Law Center, says there is a concern that homeowners who should qualify for HAMP are frequently being steered into alternative modifications.
“The concern is that the private loan modification is inferior. The interest rate is not as low, as some point it goes back to the contract rate, and it doesn’t reduce the payment as low (as HAMP).”
Some borrowers may have to pay fees to get an alternative modification, she says.
Servicers make more money doing short-term modifications than they do under HAMP, she says. If they don’t reduce principal, which they have to do under HAMP, they get more money. If they do a short-term forbearance, they don’t have to report the loan as delinquent, Thompson says.
Other differences between an alternative modification and a HAMP modification also can be significant. Under HAMP, participating servicers are required to reduce the mortgages to 31 percent of borrowers’ gross monthly income, and if they keep up their payments for a three-month trial period, they’re supposed to be able to keep that modified mortgage for five years. Some alternative modifications may help the borrower for only a period of months.
Crucial differences
A common reason for rejecting borrowers from HAMP is if they can’t document their income or had a temporary loss in income. But servicers losing track of borrowers’ documents – which counselors such as Duran say happens – may be behind some of those decisions.
There are about 4.3 million loans in default or headed toward default, according to Moody’s Analytics. Of the 2 million mortgages expected to be modified, servicers are expected to do 1.25 million outside HAMP, it predicts. Moody’s expects another 2 million to go through the foreclosure process or the homes otherwise will be lost through short sales or deeds in lieu through 2011. Moody’s forecasts the redefault rate on those 1.25 million modifications will be about 25 percent over three years, a rate that chief economist Mark Zandi says is better than in years past.
“This is off every chart. I don’t think there’s ever been anything like this before, with private servicers making their own modifications like this,” Zandi says. “Servicers have come to realize they have to reduce payments and do principal write-downs in a targeted way.”
The lenders’ independent modifications are making a difference, others say.
“There’s more solutions than ever before to avoiding foreclosure,” says Faith Schwartz, senior adviser at Hope Now. “Proprietary modifications have picked up quite a bit. Foreclosures cost a lot more, so (servicers) will work hard to modify mortgages.”
David Schoolfield is one homeowner who got a stop-gap plan from his servicer, Wells Fargo. Schoolfield, 40, works in road construction and has owned his home in Greensboro, N.C., for nine years. Last November, he paid a company that promised to get him a modification and told him to stop making his payments.
Schoolfield never got the modification and wound up several months behind on his mortgage.
“I was a big sucker is what I was,” he says. “My fiancee woke me up at 7 a.m. and said the sheriff brought foreclosure papers and what was going on?”
So he called Wells Fargo, and representatives agreed to work with him on a modification plan.
They dropped the interest rate on his second mortgage, cutting his payment by $100 to $225 a month for at least six months. He’s still on that plan and is trying to get his first mortgage modified.
Now he owes $90,000 on a house he says is worth $130,000. He’s paying $713 a month on the two mortgages, which is just over 32 percent of his monthly take-home pay.
What banks are doing on their own varies depending on the lender, but many have patterned their programs after the Obama administration plan.
At Citigroup, like other servicers, homeowners are first considered for the federal program, but many don’t qualify, according to a recent report by the bank.
They are then considered for Citi’s alternative modification programs. Those with a short-term financial problem may be able to get a deferral on their loan that lowers their monthly payments for 90 or 120 days or an extension that allows missed payments. Payments the borrower missed may be tacked on to the end of their loan term.
Those who don’t qualify for the federal plan due to documentation reasons may get an alternative modification with the same terms as an Obama plan modification – that is, Citi will adjust the monthly mortgage payment to 31 percent of their pretax monthly income.
First, Citi reduces the interest rate to as low as 2 percent. Next, if necessary, it extends the loan term to 40 years. And finally, if necessary, it will defer a portion of the principal until the loan is paid off and waive interest on the deferred amount.
“Sometimes, modifications in early years resulted in higher payments (for homeowners) as they made up for delinquent payments or escrow was established to pay taxes and insurance,” says Harold Lewis, managing director of Citi’s homeowners assistance program. “As we have begun to address the needs of consumers in this cycle, virtually all the payments are even less on a principal and interest basis.”
Redefault rates for loans serviced by Citi and modified between the fourth quarter of 2008 and 2009’s fourth quarter did not exceed 32 percent and showed some improvement in last year’s fourth quarter, the bank said in a recent report.
And at Bank of America, about 560,000 alternative modifications have been made since January 2008. It has extended 405,861 offers of three-month trial modifications under the Obama plan and done 72,232 long-term modifications. Homeowners who don’t qualify for the federal plan may qualify for a blend of deferred payments and principal reduction.
Those who owe significantly more on their homes than they are worth on the market may be able to get the principal on their loan reduced over five years. Unemployed homeowners may be able to defer payments for three months and then go into a modification plan if they’ve gotten a job.
Bank of America declined to share information on redefault rates, but Rebecca Mairone, national servicing default executive, says, “We are very, very interested in making sure redefault rates are low so our customers can remain in their homes.”
JPMorgan Chase declined to share information about its alternative modification efforts.
Saving $1,000 a month
Some homeowners say the banks’ alternative programs have saved their homes. Marilyn Johnston, 78, of Plantation, Fla., had an adjustable-rate mortgage with a 7.25 percent interest rate on her home. Her husband died four years ago and she began worrying about how to afford the house they built 11 years ago after payments went up in 2012.
She applied to her servicer, Wells Fargo, for a mortgage modification. She got one in May that gave her a fixed 4 percent interest rate for the life of the loan. Her payments dropped from about $5,500 a month to $4,500.
“I feel so much more relaxed about being able to keep my home. I’m able to sleep at night,” Johnston says. “I love my house, and I didn’t want to lose my home.”
Source: USA TODAY, a division of Gannett Co. Inc., Stephanie Armour. All rights reserved.
Most clients still believe that their best hope is a well-known government-supported program that lowers their monthly mortgage payments. Many seem surprised when Duran tells them that’s often not the solution.
She tells them they’re far more likely to qualify for an alternative modification with their lender that also lowers monthly mortgage payments.
“They’re just now aware of what’s out there. They don’t know about these alternative modifications,” says Duran at ClearPoint Credit Counseling Solutions. “They can’t sleep, they’re very worried. You can hear the tiredness in their voices. It feels so good to me that we’re able to get some kind of modification.”
Despite the attention given to the federal government’s $50 billion Home Affordable Modification Program (HAMP), a program to lower monthly mortgage payments for five years, the majority of financially distressed homeowners are getting alternative modifications through their lenders without any government involvement. In 2010, servicers completed more than 800,000 alternative modifications with borrowers, according to Hope Now, a consortium of counseling agencies, servicers and investors. Since its start in spring 2009, HAMP has produced only 389,198 permanent modifications through June.
Unlike HAMP modifications, which the government reports on monthly, far less is known about their alternatives, because they are done privately by lenders using different criteria and methods.
Recent reports by the government and private analysts show the modifications that servicers make on their own are growing compared with a year ago. The vast majority now do reduce borrowers’ payments, often by reducing interest rates and extending loan terms. That’s a change from the past couple of years when banks offered delinquent borrowers modifications that rolled past-due payments and fees into the new mortgages, leaving borrowers with higher monthly payments.
As a result, the changes that servicers are making now may be less prone to redefaults and more successful in keeping borrowers in their homes than what was previously done. Yet, several recent reports suggest a mixed record of incremental success, slow progress and questions about both mortgage servicers’ performance and the government’s oversight of mortgage modifications, inside and outside HAMP. Some findings:
• Lower monthly payments reduce default rates. When modifications left loans’ monthly payments unchanged or higher, close to 70 percent were more than 60 days delinquent a year later, according to a June report by two federal bank regulators, the Office of the Comptroller of the Currency and the Office of Thrift Supervision. But when loans were modified to reduce monthly payments, about 40 percent were seriously delinquent a year later. A recent report by Fitch Ratings found similar results.
• Newer modifications are showing better results. Of the 590,000 modifications done in 2009, nearly 52 percent were current at the end of March, the bank regulators said in their June report. Only 27 percent of the modifications done in 2008 were current. While delinquency rates predictably increase over time, the regulators say data suggest more recent vintages of modifications may perform better over time. Those include private modifications as well as those done under the Obama plan.
A recent report by Barclays Capital made the same point. Newer modifications result in “meaningful reductions” in monthly principal and interest payment, reduce borrower debt burden and lead to better redefault performance, Barclays wrote.
• Redefault rates on modified mortgages could remain high. Fitch projects 65 percent to 75 percent of modifications on subprime and so-called Alt-A mortgages – a category between subprime and prime – will redefault within 12 months, and 55 percent to 65 percent of modified prime loans will redefault within a year.
• Eligibility standards for HAMP modifications aren’t clear-cut or applied consistently. That could help explain why servicers’ alternative modifications are outpacing HAMP modifications. In a report last month, the Government Accountability Office criticized the Treasury Department for not doing enough to ensure that servicers treated all borrowers the same in deciding who would be eligible for a modified mortgage under HAMP.
Diane Thompson, a lawyer at the National Consumer Law Center, says there is a concern that homeowners who should qualify for HAMP are frequently being steered into alternative modifications.
“The concern is that the private loan modification is inferior. The interest rate is not as low, as some point it goes back to the contract rate, and it doesn’t reduce the payment as low (as HAMP).”
Some borrowers may have to pay fees to get an alternative modification, she says.
Servicers make more money doing short-term modifications than they do under HAMP, she says. If they don’t reduce principal, which they have to do under HAMP, they get more money. If they do a short-term forbearance, they don’t have to report the loan as delinquent, Thompson says.
Other differences between an alternative modification and a HAMP modification also can be significant. Under HAMP, participating servicers are required to reduce the mortgages to 31 percent of borrowers’ gross monthly income, and if they keep up their payments for a three-month trial period, they’re supposed to be able to keep that modified mortgage for five years. Some alternative modifications may help the borrower for only a period of months.
Crucial differences
A common reason for rejecting borrowers from HAMP is if they can’t document their income or had a temporary loss in income. But servicers losing track of borrowers’ documents – which counselors such as Duran say happens – may be behind some of those decisions.
There are about 4.3 million loans in default or headed toward default, according to Moody’s Analytics. Of the 2 million mortgages expected to be modified, servicers are expected to do 1.25 million outside HAMP, it predicts. Moody’s expects another 2 million to go through the foreclosure process or the homes otherwise will be lost through short sales or deeds in lieu through 2011. Moody’s forecasts the redefault rate on those 1.25 million modifications will be about 25 percent over three years, a rate that chief economist Mark Zandi says is better than in years past.
“This is off every chart. I don’t think there’s ever been anything like this before, with private servicers making their own modifications like this,” Zandi says. “Servicers have come to realize they have to reduce payments and do principal write-downs in a targeted way.”
The lenders’ independent modifications are making a difference, others say.
“There’s more solutions than ever before to avoiding foreclosure,” says Faith Schwartz, senior adviser at Hope Now. “Proprietary modifications have picked up quite a bit. Foreclosures cost a lot more, so (servicers) will work hard to modify mortgages.”
David Schoolfield is one homeowner who got a stop-gap plan from his servicer, Wells Fargo. Schoolfield, 40, works in road construction and has owned his home in Greensboro, N.C., for nine years. Last November, he paid a company that promised to get him a modification and told him to stop making his payments.
Schoolfield never got the modification and wound up several months behind on his mortgage.
“I was a big sucker is what I was,” he says. “My fiancee woke me up at 7 a.m. and said the sheriff brought foreclosure papers and what was going on?”
So he called Wells Fargo, and representatives agreed to work with him on a modification plan.
They dropped the interest rate on his second mortgage, cutting his payment by $100 to $225 a month for at least six months. He’s still on that plan and is trying to get his first mortgage modified.
Now he owes $90,000 on a house he says is worth $130,000. He’s paying $713 a month on the two mortgages, which is just over 32 percent of his monthly take-home pay.
What banks are doing on their own varies depending on the lender, but many have patterned their programs after the Obama administration plan.
At Citigroup, like other servicers, homeowners are first considered for the federal program, but many don’t qualify, according to a recent report by the bank.
They are then considered for Citi’s alternative modification programs. Those with a short-term financial problem may be able to get a deferral on their loan that lowers their monthly payments for 90 or 120 days or an extension that allows missed payments. Payments the borrower missed may be tacked on to the end of their loan term.
Those who don’t qualify for the federal plan due to documentation reasons may get an alternative modification with the same terms as an Obama plan modification – that is, Citi will adjust the monthly mortgage payment to 31 percent of their pretax monthly income.
First, Citi reduces the interest rate to as low as 2 percent. Next, if necessary, it extends the loan term to 40 years. And finally, if necessary, it will defer a portion of the principal until the loan is paid off and waive interest on the deferred amount.
“Sometimes, modifications in early years resulted in higher payments (for homeowners) as they made up for delinquent payments or escrow was established to pay taxes and insurance,” says Harold Lewis, managing director of Citi’s homeowners assistance program. “As we have begun to address the needs of consumers in this cycle, virtually all the payments are even less on a principal and interest basis.”
Redefault rates for loans serviced by Citi and modified between the fourth quarter of 2008 and 2009’s fourth quarter did not exceed 32 percent and showed some improvement in last year’s fourth quarter, the bank said in a recent report.
And at Bank of America, about 560,000 alternative modifications have been made since January 2008. It has extended 405,861 offers of three-month trial modifications under the Obama plan and done 72,232 long-term modifications. Homeowners who don’t qualify for the federal plan may qualify for a blend of deferred payments and principal reduction.
Those who owe significantly more on their homes than they are worth on the market may be able to get the principal on their loan reduced over five years. Unemployed homeowners may be able to defer payments for three months and then go into a modification plan if they’ve gotten a job.
Bank of America declined to share information on redefault rates, but Rebecca Mairone, national servicing default executive, says, “We are very, very interested in making sure redefault rates are low so our customers can remain in their homes.”
JPMorgan Chase declined to share information about its alternative modification efforts.
Saving $1,000 a month
Some homeowners say the banks’ alternative programs have saved their homes. Marilyn Johnston, 78, of Plantation, Fla., had an adjustable-rate mortgage with a 7.25 percent interest rate on her home. Her husband died four years ago and she began worrying about how to afford the house they built 11 years ago after payments went up in 2012.
She applied to her servicer, Wells Fargo, for a mortgage modification. She got one in May that gave her a fixed 4 percent interest rate for the life of the loan. Her payments dropped from about $5,500 a month to $4,500.
“I feel so much more relaxed about being able to keep my home. I’m able to sleep at night,” Johnston says. “I love my house, and I didn’t want to lose my home.”
Source: USA TODAY, a division of Gannett Co. Inc., Stephanie Armour. All rights reserved.
Hungry for homes, buyers are edged out
When Joel Flores learned that his girlfriend was pregnant, he decided it was time to get serious about buying his first home. After 12 years of saving up, the 38-year-old computer technician set his eye on South Florida’s depressed foreclosure market, certain he could land a steal.
But like many other middle-income Floridians looking to buy, he found savvy investors were beating him to the punch on foreclosures in the under-$150,000 market he could afford.
As South Florida’s home sales have continued to outpace national trends, distressed properties are still dominating the market, with more than half of all homes and condos sold last month at some stage in the foreclosure process. And cash-happy investors have been scooping up these bargain basement deals at a fast clip, often before middle-income buyers can get financing.
According to figures released Thursday by Florida Realtors, South Florida’s sales of existing homes and condos saw increases in June compared to the same month last year, even as national sales slumped with a post-tax-credit hangover. Miami-Dade sales of single-family homes increased 1 percent to 686, and condo sales jumped 33 percent to 855.
In Broward, single-family home sales were down 2 percent year-over-year to 862 in June, and 1,003 condo sales represented an 8 percent increase for the year.
Year-over-year prices are down nearly across the board, and a deeper look offers up one reason for the ever-falling home values: Most of sales taking place these days involve distressed, discounted properties. Short sales and purchases of bank-owned home accounted for 60 percent of home sales in Miami-Dade last month, and 56 percent of sales in Broward. Nationally, distressed properties have accounted for about 30 percent of sales this year.
With plenty of properties still defaulting – South Florida has had 95,357 foreclosures in the first six months of 2010 – investors from across the country and abroad have decided to come to the rescue, cash in hand, and often to the detriment of people needing a mortgage to buy a primary residence.
“It’s outrageous,” Flores said. “Investors have a pretty good monopoly on it.”
Since foreclosures sell at an average discount of about 25 percent, their dominance of the local real estate market – and the presence of investors negotiating all-cash deals – have put additional downward pressure on average home prices.
Median sales prices for single-family homes in Miami-Dade were $203,300 in June, down about 4 percent from June 2009. That price represents an increase of 3.4 percent from May. For Miami-Dade condos, median sales prices were $128,800 in June, down 9 percent from the same month a year earlier.
In Broward, the median single-family home sold for $209,600 in June, up 2 percent from the year before, but down 3 percent from May. Broward condos saw their median prices slip to $78,600 last month, down 6 percent for the year and 3.5 percent for the month.
Statewide, median home prices were at $143,400 in June, down 3 percent for the year. Florida condo prices found a median at $95,000, down 16 percent for the year.
The low prices and deluge of foreclosure filings have given Miami-based investor Julian Dominguez plenty of properties to choose from as he decides where to invest his money and the funds of clients who have hired him.
Tough deals
Dominguez, president of Foreclosure Investment Systems, said market forces are at play, and while those forces tend to prefer investor cash over the often-uncertain financing of the average buyer, the market may actually be protecting the novices from themselves.
He said he has watched many unprofessional buyers try to take advantage of a foreclosure deal, only to be frustrated by how difficult and unpredictable the process is. Many inexperienced buyers, he said, have had to learn the hard way that along with deep discounts, foreclosures often come with baggage – huge repair bills, complex contracts and other unexpected problems.
“It’s a very dangerous thing to do,” he said of buying foreclosures without having full knowledge of the process. “But it’s a fair competition. Whoever [offers] the most takes it. If you don’t know what you’re doing, you could end up spending a lot of money.”
Flores said the discounted prices – and his girlfriend’s upcoming delivery date – encouraged him to take the plunge into homeownership after more than a decade of preparing for it financially. But each time he tries to pick up a low-priced home, he said, he finds savvy, well-connected investors standing between him and his property of choice. One investor even offered to buy Flores’ property of choice at auction and sell it to him at a 20 percent premium.
Condo-mania
Vanessa D’Souza, a sales associate with Coral-Springs based Exit Team Realty, said the swarm toward Broward County condos has intensified this year.
“We’ve seen a lot more with investor interest,” she said, pointing to Broward County’s off-peak prices as the main draw. “I’d say on average they’re getting between 10 and 12 percent return.”
While some investors, like Dominguez, aim for a quick flip, the Broward buyers D’Souza has worked with are using acquisitions to generate rental income.
In Miami-Dade, investor interest has sparked bidding wars in the under-$100,000 market, an analysis from Esslinger-Wooten-Maxwell Realtors shows. Single-family homes selling at five-figure prices account for 20 percent of all sales and spend an average of 67 days on the market, down from 98 days last year and less time than any other price bracket. Short sales are up astronomically, with 562 single-family short sales in the second quarter of 2010, compared to just 10 in the same period last year.
The average short sale is purchased after about five months on the market, down from about 10 months a year ago. Bank-owned properties are being scooped up after an average of 37 days on the market, compared with 77 a year ago.
Flores, who has about seven months until his first child is born, said he plans to continue his search for a high-quality, low-cost foreclosure deal.
“I’m going to keep trying,” he said. “But from what I see my chances of getting a foreclosure deal are pretty low.”
Source: The Miami Herald, Toluse Olorunnipa. Distributed by McClatchy-Tribune Information Services.
But like many other middle-income Floridians looking to buy, he found savvy investors were beating him to the punch on foreclosures in the under-$150,000 market he could afford.
As South Florida’s home sales have continued to outpace national trends, distressed properties are still dominating the market, with more than half of all homes and condos sold last month at some stage in the foreclosure process. And cash-happy investors have been scooping up these bargain basement deals at a fast clip, often before middle-income buyers can get financing.
According to figures released Thursday by Florida Realtors, South Florida’s sales of existing homes and condos saw increases in June compared to the same month last year, even as national sales slumped with a post-tax-credit hangover. Miami-Dade sales of single-family homes increased 1 percent to 686, and condo sales jumped 33 percent to 855.
In Broward, single-family home sales were down 2 percent year-over-year to 862 in June, and 1,003 condo sales represented an 8 percent increase for the year.
Year-over-year prices are down nearly across the board, and a deeper look offers up one reason for the ever-falling home values: Most of sales taking place these days involve distressed, discounted properties. Short sales and purchases of bank-owned home accounted for 60 percent of home sales in Miami-Dade last month, and 56 percent of sales in Broward. Nationally, distressed properties have accounted for about 30 percent of sales this year.
With plenty of properties still defaulting – South Florida has had 95,357 foreclosures in the first six months of 2010 – investors from across the country and abroad have decided to come to the rescue, cash in hand, and often to the detriment of people needing a mortgage to buy a primary residence.
“It’s outrageous,” Flores said. “Investors have a pretty good monopoly on it.”
Since foreclosures sell at an average discount of about 25 percent, their dominance of the local real estate market – and the presence of investors negotiating all-cash deals – have put additional downward pressure on average home prices.
Median sales prices for single-family homes in Miami-Dade were $203,300 in June, down about 4 percent from June 2009. That price represents an increase of 3.4 percent from May. For Miami-Dade condos, median sales prices were $128,800 in June, down 9 percent from the same month a year earlier.
In Broward, the median single-family home sold for $209,600 in June, up 2 percent from the year before, but down 3 percent from May. Broward condos saw their median prices slip to $78,600 last month, down 6 percent for the year and 3.5 percent for the month.
Statewide, median home prices were at $143,400 in June, down 3 percent for the year. Florida condo prices found a median at $95,000, down 16 percent for the year.
The low prices and deluge of foreclosure filings have given Miami-based investor Julian Dominguez plenty of properties to choose from as he decides where to invest his money and the funds of clients who have hired him.
Tough deals
Dominguez, president of Foreclosure Investment Systems, said market forces are at play, and while those forces tend to prefer investor cash over the often-uncertain financing of the average buyer, the market may actually be protecting the novices from themselves.
He said he has watched many unprofessional buyers try to take advantage of a foreclosure deal, only to be frustrated by how difficult and unpredictable the process is. Many inexperienced buyers, he said, have had to learn the hard way that along with deep discounts, foreclosures often come with baggage – huge repair bills, complex contracts and other unexpected problems.
“It’s a very dangerous thing to do,” he said of buying foreclosures without having full knowledge of the process. “But it’s a fair competition. Whoever [offers] the most takes it. If you don’t know what you’re doing, you could end up spending a lot of money.”
Flores said the discounted prices – and his girlfriend’s upcoming delivery date – encouraged him to take the plunge into homeownership after more than a decade of preparing for it financially. But each time he tries to pick up a low-priced home, he said, he finds savvy, well-connected investors standing between him and his property of choice. One investor even offered to buy Flores’ property of choice at auction and sell it to him at a 20 percent premium.
Condo-mania
Vanessa D’Souza, a sales associate with Coral-Springs based Exit Team Realty, said the swarm toward Broward County condos has intensified this year.
“We’ve seen a lot more with investor interest,” she said, pointing to Broward County’s off-peak prices as the main draw. “I’d say on average they’re getting between 10 and 12 percent return.”
While some investors, like Dominguez, aim for a quick flip, the Broward buyers D’Souza has worked with are using acquisitions to generate rental income.
In Miami-Dade, investor interest has sparked bidding wars in the under-$100,000 market, an analysis from Esslinger-Wooten-Maxwell Realtors shows. Single-family homes selling at five-figure prices account for 20 percent of all sales and spend an average of 67 days on the market, down from 98 days last year and less time than any other price bracket. Short sales are up astronomically, with 562 single-family short sales in the second quarter of 2010, compared to just 10 in the same period last year.
The average short sale is purchased after about five months on the market, down from about 10 months a year ago. Bank-owned properties are being scooped up after an average of 37 days on the market, compared with 77 a year ago.
Flores, who has about seven months until his first child is born, said he plans to continue his search for a high-quality, low-cost foreclosure deal.
“I’m going to keep trying,” he said. “But from what I see my chances of getting a foreclosure deal are pretty low.”
Source: The Miami Herald, Toluse Olorunnipa. Distributed by McClatchy-Tribune Information Services.
Thursday, July 22, 2010
Administration opposes adding windstorm cover to NFIP
In a formal statement of administration policy, the White House announced that it opposes the inclusion of windstorm coverage in the National Flood Insurance Program (NFIP).
The move comes at a pivotal time. The U.S. House is set to vote today on the Multiple Peril Insurance Act (HR 1264), and it’s generally expected to approve it. However, the bill must then go to the Senate, where the National Association of Realtors® (NAR) considers a passing vote unlikely.
NAR President Vicki Cox Golder wrote a letter to U.S House Representatives pushing support for HR 1264.
“After Hurricane Katrina, property insurance policyholders expected to be reimbursed for the full damage suffered – including damage caused by hurricane-speed winds,” Golder wrote in the letter. “Yet, insurers denied many claims because they attributed some of the damage to flooding and then assigned these claims to the NFIP, which covers only flood-related damage. Property owners who had been paying for years for full insurance coverage found themselves caught in the middle of a legal dispute between the NFIP and insurers over wind versus water.”
In voicing its disagreement with the bill, the administration said HR 1264 would expand the government’s role in providing windstorm coverage that is “already readily available in the private sector … At a time when the NFIP is already facing serious challenges, the administration cannot support such an expansion.”
The insurance industry has also lobbied against adding windstorm coverage through the National Flood Insurance Program.
Source: Florida Realtors®
The move comes at a pivotal time. The U.S. House is set to vote today on the Multiple Peril Insurance Act (HR 1264), and it’s generally expected to approve it. However, the bill must then go to the Senate, where the National Association of Realtors® (NAR) considers a passing vote unlikely.
NAR President Vicki Cox Golder wrote a letter to U.S House Representatives pushing support for HR 1264.
“After Hurricane Katrina, property insurance policyholders expected to be reimbursed for the full damage suffered – including damage caused by hurricane-speed winds,” Golder wrote in the letter. “Yet, insurers denied many claims because they attributed some of the damage to flooding and then assigned these claims to the NFIP, which covers only flood-related damage. Property owners who had been paying for years for full insurance coverage found themselves caught in the middle of a legal dispute between the NFIP and insurers over wind versus water.”
In voicing its disagreement with the bill, the administration said HR 1264 would expand the government’s role in providing windstorm coverage that is “already readily available in the private sector … At a time when the NFIP is already facing serious challenges, the administration cannot support such an expansion.”
The insurance industry has also lobbied against adding windstorm coverage through the National Flood Insurance Program.
Source: Florida Realtors®
Florida’s existing home, condo sales rise in June 2010
Sales of existing homes in Florida rose 15 percent in June, marking 22 consecutive months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.
A total of 18,038 single-family existing homes sold statewide last month compared to 15,732 homes sold in June 2009, according to Florida Realtors. June’s statewide existing home sales increased 7.7 percent over statewide sales activity in May. Meanwhile, last month’s statewide existing-home median price of $143,400 was 2.1 percent higher than May’s statewide existing-home median price of $140,400. It marks the fourth month in a row that the statewide existing-home median price has increased over the previous month’s median.
Fifteen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in June, while 16 MSAs posted increased existing condo sales. A majority of the state’s MSAs have reported increased sales for 24 consecutive months.
Florida’s median sales price for existing homes last month was $143,400; a year ago, it was $147,700 for a decrease of 3 percent. 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 May 2010 was $179,400, up 2.7 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $324,430 in May; in Massachusetts, it was $299,000; in Maryland, it was $249,177; and in New York, it was $194,900.
More jobs are key to the continued recovery of the housing market, according to NAR’s latest industry outlook. “If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions,” said NAR Chief Economist Lawrence Yun. “We’ll also keep a close eye on market conditions on the Gulf Coast.”
In Florida’s year-to-year comparison for condos, 6,916 units sold statewide last month compared to 5,215 units in June 2009 for an increase of 33 percent. The statewide existing condo median sales price last month was $95,000; in June 2009 it was $112,800 for a 16 percent decrease. The national median existing condo price was $181,300 in May, according to NAR.
The interest rate for a 30-year fixed-rate mortgage averaged 4.74 percent in June, down from the 5.42 percent averaged during June 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the Tampa-St. Petersburg-Clearwater MSA reported a total of 3,226 homes sold in June compared to 2,848 homes a year earlier for a 13 percent increase. The market’s existing home median sales price was $138,400; a year earlier it was $139,400 for a decrease of 1 percent. A total of 912 condos sold in the MSA in June compared to 671 units sold in June 2009 for an increase of 36 percent. The existing condo median price was $99,100; a year earlier, it was $113,300 for a decrease of 13 percent.
Source: Florida Realtors®
A total of 18,038 single-family existing homes sold statewide last month compared to 15,732 homes sold in June 2009, according to Florida Realtors. June’s statewide existing home sales increased 7.7 percent over statewide sales activity in May. Meanwhile, last month’s statewide existing-home median price of $143,400 was 2.1 percent higher than May’s statewide existing-home median price of $140,400. It marks the fourth month in a row that the statewide existing-home median price has increased over the previous month’s median.
Fifteen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in June, while 16 MSAs posted increased existing condo sales. A majority of the state’s MSAs have reported increased sales for 24 consecutive months.
Florida’s median sales price for existing homes last month was $143,400; a year ago, it was $147,700 for a decrease of 3 percent. 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 May 2010 was $179,400, up 2.7 percent from a year earlier, according to the National Association of Realtors® (NAR). In California, the statewide median resales price was $324,430 in May; in Massachusetts, it was $299,000; in Maryland, it was $249,177; and in New York, it was $194,900.
More jobs are key to the continued recovery of the housing market, according to NAR’s latest industry outlook. “If jobs come back as expected, the pace of home sales should pick up later this year and reach a sustainable level of activity given very favorable affordability conditions,” said NAR Chief Economist Lawrence Yun. “We’ll also keep a close eye on market conditions on the Gulf Coast.”
In Florida’s year-to-year comparison for condos, 6,916 units sold statewide last month compared to 5,215 units in June 2009 for an increase of 33 percent. The statewide existing condo median sales price last month was $95,000; in June 2009 it was $112,800 for a 16 percent decrease. The national median existing condo price was $181,300 in May, according to NAR.
The interest rate for a 30-year fixed-rate mortgage averaged 4.74 percent in June, down from the 5.42 percent averaged during June 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the Tampa-St. Petersburg-Clearwater MSA reported a total of 3,226 homes sold in June compared to 2,848 homes a year earlier for a 13 percent increase. The market’s existing home median sales price was $138,400; a year earlier it was $139,400 for a decrease of 1 percent. A total of 912 condos sold in the MSA in June compared to 671 units sold in June 2009 for an increase of 36 percent. The existing condo median price was $99,100; a year earlier, it was $113,300 for a decrease of 13 percent.
Source: Florida Realtors®
Finding real estate success – Selling to the four temperament styles
Real estate agents may lose sales if they can’t adjust to buyer’s temperaments, which fall into one of four categories: Aggressive, Expressive, Passive, or Analytical.
Clients who have aggressive temperaments struggle with anger management issues. They generally want agents to be prepared, on time, and to immediately focus on business. They typically make quick decisions; and because they like to be in control, agents should offer them options.
Expressive individuals have trouble managing their emotions and tend to talk a lot, so agents should keep their presentations fast-paced and enthusiastic. These “talkers” make quick, impulsive decisions. Agents should keep them focused and give them a chance to discuss their feelings.
Clients with passive temperaments have issues with self-esteem management. They do not like feeling pressured or making decisions. Agents should give them time to warm up before getting down to business and offer plenty of reassurance along the way.
Finally, clients with analytical temperaments have problems with stress management, worry about paying too much, and conduct prior research. Agents would be wise to provide detailed information to assure them that they are not making a mistake.
Source: RISMedia (07/21/10) Boe, John
Source: INFORMATION, INC. Bethesda, MD
Clients who have aggressive temperaments struggle with anger management issues. They generally want agents to be prepared, on time, and to immediately focus on business. They typically make quick decisions; and because they like to be in control, agents should offer them options.
Expressive individuals have trouble managing their emotions and tend to talk a lot, so agents should keep their presentations fast-paced and enthusiastic. These “talkers” make quick, impulsive decisions. Agents should keep them focused and give them a chance to discuss their feelings.
Clients with passive temperaments have issues with self-esteem management. They do not like feeling pressured or making decisions. Agents should give them time to warm up before getting down to business and offer plenty of reassurance along the way.
Finally, clients with analytical temperaments have problems with stress management, worry about paying too much, and conduct prior research. Agents would be wise to provide detailed information to assure them that they are not making a mistake.
Source: RISMedia (07/21/10) Boe, John
Source: INFORMATION, INC. Bethesda, MD
HUD investigation: Pregnancy discrimination
The U.S. Department of Housing and Urban Development announced yesterday that it will launch multiple investigations into the lending practices of some mortgage lenders to determine if they illegally denied mortgages because the mother was pregnant or a family member had a short-term disability. The action follows a report published this week in the New York Times outlining lending practices that possibly violate the Fair Housing Act.
“Denying a mortgage to people just because they’re having a baby is flat wrong,” says Vice President Joe Biden, chair of the White House Task Force on Middle Class Families. “Mothers on maternity leave have jobs, they have income, and they shouldn’t have to lose their deal to close on a house because they had a baby.”
“Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan, but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for,” says HUD Secretary Shaun Donovan. “Having a child should be a time for a family to celebrate and must not be a cause for unfair lending practices.”
HUD enforces the Fair Housing Act that prohibits discrimination in lending based on sex, familial status (pregnancy or children in the family), or disability. The Act protects consumers from discrimination based on a borrower’s maternity leave if the borrower can demonstrate that she intends to return to work and otherwise continues to meet the income requirements to qualify for the loan.
However, a published report in the New York Times indicated that some mortgage lenders may be denying credit to borrowers because of a pregnancy or maternity leave.
“This report is profoundly disturbing and requires immediate action,” says John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, the office that will direct the investigations. “Lenders must not carry out due diligence responsibilities in ways that have the practical effect of discriminating against recent or expectant mothers.”
HUD’s Federal Housing Administration (FHA) requires its approved lenders to review a borrower’s income to determine whether they can reasonably be expected to continue paying their mortgage for the first three years of the loan. FHA-insured lenders cannot, however, inquire about future maternity leave.
If a borrower is on maternity or short-term disability leave at the time of closing, lenders must document the borrower’s intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave.
Meanwhile, HUD is also reviewing Fannie Mae and Freddie Mac’s underwriting guidelines to determine if they satisfy the Fair Housing Act, including income verification of persons taking parental or disability leave.
Source: Florida Realtors®
“Denying a mortgage to people just because they’re having a baby is flat wrong,” says Vice President Joe Biden, chair of the White House Task Force on Middle Class Families. “Mothers on maternity leave have jobs, they have income, and they shouldn’t have to lose their deal to close on a house because they had a baby.”
“Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan, but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for,” says HUD Secretary Shaun Donovan. “Having a child should be a time for a family to celebrate and must not be a cause for unfair lending practices.”
HUD enforces the Fair Housing Act that prohibits discrimination in lending based on sex, familial status (pregnancy or children in the family), or disability. The Act protects consumers from discrimination based on a borrower’s maternity leave if the borrower can demonstrate that she intends to return to work and otherwise continues to meet the income requirements to qualify for the loan.
However, a published report in the New York Times indicated that some mortgage lenders may be denying credit to borrowers because of a pregnancy or maternity leave.
“This report is profoundly disturbing and requires immediate action,” says John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity, the office that will direct the investigations. “Lenders must not carry out due diligence responsibilities in ways that have the practical effect of discriminating against recent or expectant mothers.”
HUD’s Federal Housing Administration (FHA) requires its approved lenders to review a borrower’s income to determine whether they can reasonably be expected to continue paying their mortgage for the first three years of the loan. FHA-insured lenders cannot, however, inquire about future maternity leave.
If a borrower is on maternity or short-term disability leave at the time of closing, lenders must document the borrower’s intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave.
Meanwhile, HUD is also reviewing Fannie Mae and Freddie Mac’s underwriting guidelines to determine if they satisfy the Fair Housing Act, including income verification of persons taking parental or disability leave.
Source: Florida Realtors®
Wednesday, July 21, 2010
Pregnant women have trouble getting mortgages
Some lenders are balking at approving loans when a new parent has temporary lost income because she is home taking care of the baby.
Even if a parent expects to be back at work in weeks, banks still may deny the mortgage. “If you are not back at work, it’s a huge problem,” says Rick Cason, owner of Integrity Mortgage, a mortgage firm in Orlando, Fla. “Banks only deal in guaranteed income these days. “
Lenders will not consider disability payments as income because they don’t last for three years.
A spokesperson for Fannie Mae said that a borrower on maternity or paternity leave could qualify for a mortgage by providing a letter from a doctor with the approved return-to-work date and a letter from the employer confirming the acceptability of the return date.
But mortgage brokers and practitioners say lenders aren’t interpreting the guidelines that way.
“There is no real assurance that the new mom will come back to work after she has the baby,” says Marc Savitt, president of the Mortgage Center, a brokerage in Martinsburg, W.Va. “It’s just prudent underwriting to go ahead and approve the loan, but she has to be back before closing.”
Source: The New York Times, Tara Siegel Bernard (07/19/2010)
Source: INFORMATION, INC. Bethesda, MD
Even if a parent expects to be back at work in weeks, banks still may deny the mortgage. “If you are not back at work, it’s a huge problem,” says Rick Cason, owner of Integrity Mortgage, a mortgage firm in Orlando, Fla. “Banks only deal in guaranteed income these days. “
Lenders will not consider disability payments as income because they don’t last for three years.
A spokesperson for Fannie Mae said that a borrower on maternity or paternity leave could qualify for a mortgage by providing a letter from a doctor with the approved return-to-work date and a letter from the employer confirming the acceptability of the return date.
But mortgage brokers and practitioners say lenders aren’t interpreting the guidelines that way.
“There is no real assurance that the new mom will come back to work after she has the baby,” says Marc Savitt, president of the Mortgage Center, a brokerage in Martinsburg, W.Va. “It’s just prudent underwriting to go ahead and approve the loan, but she has to be back before closing.”
Source: The New York Times, Tara Siegel Bernard (07/19/2010)
Source: INFORMATION, INC. Bethesda, MD
Firms embrace cloud computing
For the past several years, cloud computing has been the buzz in tech circles. Now mainstream South Florida companies are catching on, using the cloud to trim technology costs, share files from remote locations and even run their phone systems.
“It just makes life easier,” says Bob Berkowitz, president of Multivision Video and Film in South Miami, who uses cloud computing to back-up data, collaborate on projects and manage his accounting.
But what, exactly, is “it”?
In simple terms, the “cloud” is the Internet. Traditionally, companies have stored and processed data on a company-owned server in a company-owned location. Cloud computing allows firms to store and process data via the Internet on servers owned and maintained by someone else.
At its most basic is Google Docs, a free service for anyone with a Gmail account that allows users to create, store and share files. On the complex end of the spectrum are government files secured on private servers dedicated to their exclusive use.
In between are the services used by most businesses – company payroll systems run by third parties like Peoplesoft, back-ups of company files, or online shopping systems like PayPal. Even Apple’s new iPad owes its sleekness to the idea that massive memory isn’t required when a machine can connect to the cloud.
The advantages are clear: Instead of spending money to upgrade hardware and increase capacity as needs change, a company can simply pay for increased computing power – like a utility.
And because data is stored in “the cloud” of the Internet, it serves as a disaster recovery solution – a serious concern in hurricane-prone South Florida.
That’s one reason why data centers that sell cloud services, such as Terremark Worldwide, Peak 10 and Host.net, say South Florida clients are leaping into cloud technology.
“Not only is it our fastest growing segment line, but it’s growing at an increasing rate,” said Monty Blight, vice president of managed services at Peak 10, a data center with an office in Fort Lauderdale.
Still, cloud computing is a small percentage of Peak 10’s business. Some companies aren’t familiar with its advantages; others are concerned about the loss of control that comes when they depend on software that isn’t customized for their use. Others aren’t comfortable about having their back-up data co-mingled with the data from other companies.
Those fears are no different than those about using your credit card on the Internet, said analyst Ben Pring of the technology research firm Gartner.
“People said, ‘Oh, I’ll never put my credit card on the Internet. It’s not secure.’” Pring said. Today, “we put our credit cards on the Web without batting an eyelid.”
Over time, the cost and convenience of having a business managed on the Web will win over security skeptics, Pring predicted. In fact, in 2009, questions about cloud computing ranked No. 1 as the most popular topic among Gartner clients.
Berkowitz’s experience at Multivision shows why.
Since moving to Basecamp, a Web-based program for collaborating and managing projects, his team no longer wonders where to find a particular digital video file; project files and details are stored online. Some accounting is managed via online software. Data is backed up on multiple platforms, including one at Terremark Worldwide’s data center in Miami.
“It saves you time,” Berkowitz said, “because a lot of the time you’re screwing around with the computer in the backroom instead of doing your work.”
Even his phone system has gone to the cloud. Instead of using a phone storage closet to manage the lines for his 20 employees, Multivision outsources to IPFone, based in North Miami. Its services include access to advanced technology, such as answering his work phone from an iPhone app, and having all work voicemail translated to his e-mail as both text and an audio file.
The area that used to be his phone room now can serve as a break nook. “It’s the perfect place to put a refrigerator,” he said.
The cost brings a bonus too: Set up for the IPFone system costs about $6,000 for 30 lines, compared to installing a traditional business telephone system at $21,000. The monthly fees for 30 lines would be about $500 less on IPFone, according to the company.
Saving money was also the spur for Fame Inc., a Fort Lauderdale-based financial aid service provider for small to medium-sized private collages. In the past, when Fame updated its financial aid software every year, the firm had to manually manage the change for each of its 1,200 clients.
A year and a half ago, the company started making its software accessible to clients via the Web – joining the $8 billion a year industry of other software makers that put subscription-based applications online. Now, instead of buying more computers when Fame grows or hiring manpower to install software for additional clients, the company uses services from Host.net’s data center in Boca Raton.
The savings are eye-popping. Fame’s Chief Executive Cid Yousefi, said the company spends about $30,000 a year on various cloud services rather than the $1 million-plus price tag he estimated it would cost to do the work internally.
But for large organizations, running all systems on a hosted cloud system can be more costly than using the same technology in house.
When the Miami-Dade school district needed an upgrade, instead of installing and powering 702 physical servers, it consolidated to 61 servers housed in a central location that share the burden of tasks like payroll and grades. A hosted service would have charged a separate fee for every student’s file.
“It’s kind of like leasing or buying,” said Debbie Karcher, chief information officer for Miami-Dade County Public Schools.
Her team converted the district’s system to a virtual system, meaning it uses the same wizardry as a hosted cloud service, but is all done at a district office. The cost for creating the system was about $1.2 million – but presented a savings of $440,000 per year in energy bills and payroll.
The district’s cloud solution was a plus for the environment, too. The carbon emissions saved with less servers equates to taking 63 cars off the road, or planting 825 trees.
Karcher said the biggest challenge in going virtual came from vendors, who insisted their programs would not work this way. But her team proved it would.
For Miami Jewish Health Systems, the money savings and convenience are critical as they move patient charts to a digital format to meet the healthcare reform deadline and qualify for Medicare and Medicaid incentives.
Chief Information Officer Shubho Chatterjee found that doing so via the cloud saved about 7-10 percent over making the change internally.
But Chatterjee didn’t want to trust medical records in a public cloud – meaning the data is housed with that of other companies on a single server. To assure the information couldn’t co-mingle with another company, he chose to spend more to have dedicated servers hosted at centers in Texas and Georgia.
“Quite honestly, the risk issue will always be there for quite some time,” Chatterjee said. “The system is only as strong as its weakest link. To mitigate the risk, you have to be very vigilant with your service provider.”
Still, cloud computing depends on human input – and humans can make mistakes, as Realtor Rex Hamilton of Coral Gables almost learned the hard way.
For years, Hamilton has used Mozy to access his work from any computer in the world. He always uses the service to back-up personal and work data.
As a back-up to his back-up, he also stores his information on an external hard drive. That hard drive saved him when a file name mix-up left him backing up a demo file to the Web rather than his client database.
“You need to realize that things happen,” he said.
Source: The Associated Press, Bridget Carey.
“It just makes life easier,” says Bob Berkowitz, president of Multivision Video and Film in South Miami, who uses cloud computing to back-up data, collaborate on projects and manage his accounting.
But what, exactly, is “it”?
In simple terms, the “cloud” is the Internet. Traditionally, companies have stored and processed data on a company-owned server in a company-owned location. Cloud computing allows firms to store and process data via the Internet on servers owned and maintained by someone else.
At its most basic is Google Docs, a free service for anyone with a Gmail account that allows users to create, store and share files. On the complex end of the spectrum are government files secured on private servers dedicated to their exclusive use.
In between are the services used by most businesses – company payroll systems run by third parties like Peoplesoft, back-ups of company files, or online shopping systems like PayPal. Even Apple’s new iPad owes its sleekness to the idea that massive memory isn’t required when a machine can connect to the cloud.
The advantages are clear: Instead of spending money to upgrade hardware and increase capacity as needs change, a company can simply pay for increased computing power – like a utility.
And because data is stored in “the cloud” of the Internet, it serves as a disaster recovery solution – a serious concern in hurricane-prone South Florida.
That’s one reason why data centers that sell cloud services, such as Terremark Worldwide, Peak 10 and Host.net, say South Florida clients are leaping into cloud technology.
“Not only is it our fastest growing segment line, but it’s growing at an increasing rate,” said Monty Blight, vice president of managed services at Peak 10, a data center with an office in Fort Lauderdale.
Still, cloud computing is a small percentage of Peak 10’s business. Some companies aren’t familiar with its advantages; others are concerned about the loss of control that comes when they depend on software that isn’t customized for their use. Others aren’t comfortable about having their back-up data co-mingled with the data from other companies.
Those fears are no different than those about using your credit card on the Internet, said analyst Ben Pring of the technology research firm Gartner.
“People said, ‘Oh, I’ll never put my credit card on the Internet. It’s not secure.’” Pring said. Today, “we put our credit cards on the Web without batting an eyelid.”
Over time, the cost and convenience of having a business managed on the Web will win over security skeptics, Pring predicted. In fact, in 2009, questions about cloud computing ranked No. 1 as the most popular topic among Gartner clients.
Berkowitz’s experience at Multivision shows why.
Since moving to Basecamp, a Web-based program for collaborating and managing projects, his team no longer wonders where to find a particular digital video file; project files and details are stored online. Some accounting is managed via online software. Data is backed up on multiple platforms, including one at Terremark Worldwide’s data center in Miami.
“It saves you time,” Berkowitz said, “because a lot of the time you’re screwing around with the computer in the backroom instead of doing your work.”
Even his phone system has gone to the cloud. Instead of using a phone storage closet to manage the lines for his 20 employees, Multivision outsources to IPFone, based in North Miami. Its services include access to advanced technology, such as answering his work phone from an iPhone app, and having all work voicemail translated to his e-mail as both text and an audio file.
The area that used to be his phone room now can serve as a break nook. “It’s the perfect place to put a refrigerator,” he said.
The cost brings a bonus too: Set up for the IPFone system costs about $6,000 for 30 lines, compared to installing a traditional business telephone system at $21,000. The monthly fees for 30 lines would be about $500 less on IPFone, according to the company.
Saving money was also the spur for Fame Inc., a Fort Lauderdale-based financial aid service provider for small to medium-sized private collages. In the past, when Fame updated its financial aid software every year, the firm had to manually manage the change for each of its 1,200 clients.
A year and a half ago, the company started making its software accessible to clients via the Web – joining the $8 billion a year industry of other software makers that put subscription-based applications online. Now, instead of buying more computers when Fame grows or hiring manpower to install software for additional clients, the company uses services from Host.net’s data center in Boca Raton.
The savings are eye-popping. Fame’s Chief Executive Cid Yousefi, said the company spends about $30,000 a year on various cloud services rather than the $1 million-plus price tag he estimated it would cost to do the work internally.
But for large organizations, running all systems on a hosted cloud system can be more costly than using the same technology in house.
When the Miami-Dade school district needed an upgrade, instead of installing and powering 702 physical servers, it consolidated to 61 servers housed in a central location that share the burden of tasks like payroll and grades. A hosted service would have charged a separate fee for every student’s file.
“It’s kind of like leasing or buying,” said Debbie Karcher, chief information officer for Miami-Dade County Public Schools.
Her team converted the district’s system to a virtual system, meaning it uses the same wizardry as a hosted cloud service, but is all done at a district office. The cost for creating the system was about $1.2 million – but presented a savings of $440,000 per year in energy bills and payroll.
The district’s cloud solution was a plus for the environment, too. The carbon emissions saved with less servers equates to taking 63 cars off the road, or planting 825 trees.
Karcher said the biggest challenge in going virtual came from vendors, who insisted their programs would not work this way. But her team proved it would.
For Miami Jewish Health Systems, the money savings and convenience are critical as they move patient charts to a digital format to meet the healthcare reform deadline and qualify for Medicare and Medicaid incentives.
Chief Information Officer Shubho Chatterjee found that doing so via the cloud saved about 7-10 percent over making the change internally.
But Chatterjee didn’t want to trust medical records in a public cloud – meaning the data is housed with that of other companies on a single server. To assure the information couldn’t co-mingle with another company, he chose to spend more to have dedicated servers hosted at centers in Texas and Georgia.
“Quite honestly, the risk issue will always be there for quite some time,” Chatterjee said. “The system is only as strong as its weakest link. To mitigate the risk, you have to be very vigilant with your service provider.”
Still, cloud computing depends on human input – and humans can make mistakes, as Realtor Rex Hamilton of Coral Gables almost learned the hard way.
For years, Hamilton has used Mozy to access his work from any computer in the world. He always uses the service to back-up personal and work data.
As a back-up to his back-up, he also stores his information on an external hard drive. That hard drive saved him when a file name mix-up left him backing up a demo file to the Web rather than his client database.
“You need to realize that things happen,” he said.
Source: The Associated Press, Bridget Carey.
Tuesday, July 20, 2010
New 1099 rules aimed at curbing tax cheaters
Self-employed real estate practitioners should expect a host of new paperwork beginning in 2012.
That will be the first year that whenever a firm buys more than $600 a year in goods or services from a vendor – whether it is a giant company or a one-person show – the vendor will be due a 1099 from the purchaser at the end of the year.
Lawmakers passed the provision to help fund healthcare changes by closing the “tax gap” created by cheaters. An estimated $300 billion of revenue is lost to tax evasion every year.
Critics say the new rules expand current reporting requirements significantly, with the burden falling on sole proprietors and other very small businesses. The new rules require tracking payments throughout the year to see if they fall into the over-$600 category.
If the vendor fails to supply his or her tax ID number, then the payer is required to withhold 28 percent of the payment and send that amount to the IRS.
There is a way around this. Businesses that pay with credit or debit cards are excused from sending 1099s.
Source: The Wall Street Journal, Laura Saunders (07/17/2010)
Source: INFORMATION, INC. Bethesda, MD
That will be the first year that whenever a firm buys more than $600 a year in goods or services from a vendor – whether it is a giant company or a one-person show – the vendor will be due a 1099 from the purchaser at the end of the year.
Lawmakers passed the provision to help fund healthcare changes by closing the “tax gap” created by cheaters. An estimated $300 billion of revenue is lost to tax evasion every year.
Critics say the new rules expand current reporting requirements significantly, with the burden falling on sole proprietors and other very small businesses. The new rules require tracking payments throughout the year to see if they fall into the over-$600 category.
If the vendor fails to supply his or her tax ID number, then the payer is required to withhold 28 percent of the payment and send that amount to the IRS.
There is a way around this. Businesses that pay with credit or debit cards are excused from sending 1099s.
Source: The Wall Street Journal, Laura Saunders (07/17/2010)
Source: INFORMATION, INC. Bethesda, MD
Fannie Mae reviews last-minute credit checks
Fannie Mae announced last week that it is reviewing the rule it put in place earlier this year requiring lenders to do a second credit check shortly before closing.
The goal of the rule is to identify new debt that might undermine an applicant’s ability to pay, but for both homebuyers and lenders, the second check is problematic. The search can uncover a short-term debt – medical bills that insurance is likely to pay – that would nevertheless derail a purchase.
“We keep telling people: ‘Don’t open new accounts. Don’t close existing accounts. Don’t do anything whatsoever that will alter your credit situation,’” says Eric Gates, a mortgage broker for Apex Home Loans. “But there will be people who can’t avoid increasing their credit card balances, or already have, and that’s where the problems will crop up.”
Lenders are particularly concerned about the rule because Fannie can require them to buy back loans in default up to two years after closing if there is evidence that the borrower had more debt than was disclosed at the time of closing.
Source: Washington Post, Dina ElBoghdady (07/16/2010)
Source: INFORMATION, INC. Bethesda, MD
The goal of the rule is to identify new debt that might undermine an applicant’s ability to pay, but for both homebuyers and lenders, the second check is problematic. The search can uncover a short-term debt – medical bills that insurance is likely to pay – that would nevertheless derail a purchase.
“We keep telling people: ‘Don’t open new accounts. Don’t close existing accounts. Don’t do anything whatsoever that will alter your credit situation,’” says Eric Gates, a mortgage broker for Apex Home Loans. “But there will be people who can’t avoid increasing their credit card balances, or already have, and that’s where the problems will crop up.”
Lenders are particularly concerned about the rule because Fannie can require them to buy back loans in default up to two years after closing if there is evidence that the borrower had more debt than was disclosed at the time of closing.
Source: Washington Post, Dina ElBoghdady (07/16/2010)
Source: INFORMATION, INC. Bethesda, MD
Amendment 3 proposed tax relief under attack
Labor unions and a taxpayer are challenging a proposed state constitutional amendment that would give an extra property tax break to some homebuyers.
A Tallahassee judge has scheduled a final hearing Thursday in the lawsuit seeking to remove Amendment 3 from Florida’s November ballot.
The proposal, which the Legislature approved last year, would give people who have not owned a home for at least eight years an added – but temporary – homestead exemption on primary residences purchased on or after Jan. 1, 2010.
The Florida AFL-CIO and Jacksonville resident Brian K. Doyle say in their lawsuit that the title and summary are flawed because they don’t mention the purchase date.
The plaintiffs also argue the title says the added exemption is for “new homestead owners” and the summary refers to “a first-time homestead” despite the eight-year provision that allows previous homeowners to qualify.
Doyle would not qualify for the tax break and many union members are government employees paid from property taxes that would be cut by the amendment.
In a written response, the state says the title and summary accurately describe the proposal’s chief purpose and that the purchase date is the kind of detail not required by law.
The state also contends the terms “new homestead owners” and “first-time homestead” are commonly understood and that the eight-year provision is cited in the summary so it’s clear who can qualify for the tax break.
The amendment would give those homeowners an additional exemption of at least 25 percent in the first year. It would continue for four more years but be reduced incrementally each of those years.
The purpose is to reduce some of the disparity in taxes paid by recent purchasers and longtime homeowners who get more benefit from the Save Our Homes Amendment. That 1992 constitutional provision caps annual assessment increases at 3 percent for owners of primary homes, also known as homesteads.
The disparity only increased after voters approved another tax relief amendment in 2008 that lets homeowners take at least part of their Save Our Homes benefits with them when they move.
Another provision in Amendment 3 would lower a cap on annual assessment increases for businesses and other non-homestead properties from 10 percent to 5 percent.
It is one of five proposed amendments, out of nine slated for the Nov. 2 ballot, that are being challenged.
The Florida Supreme Court is considering two cases involving three proposals dealing with legislative and congressional redistricting. Two of those, Amendments 5 and 6, are citizen initiatives designed to curtail gerrymandering. The other, Amendment 7, was proposed by the Legislature to counteract the initiatives.
Amendment 9, which would block requirements for citizens to buy health insurance, also is being challenged. A Circuit Court hearing is set for July 29 in Tallahassee.
The Republican-controlled Legislature offered the proposal in response to passage of Democratic President Barack Obama’s national health care overhaul. Legal experts, though, say it cannot stand in the way of the new federal law although it could prevent the state from implementing a similar program.
That case and the tax relief challenge also are likely to end up in the Supreme Court.
Source: The Associated Press, Bill Kaczor, Associated Press writer.
A Tallahassee judge has scheduled a final hearing Thursday in the lawsuit seeking to remove Amendment 3 from Florida’s November ballot.
The proposal, which the Legislature approved last year, would give people who have not owned a home for at least eight years an added – but temporary – homestead exemption on primary residences purchased on or after Jan. 1, 2010.
The Florida AFL-CIO and Jacksonville resident Brian K. Doyle say in their lawsuit that the title and summary are flawed because they don’t mention the purchase date.
The plaintiffs also argue the title says the added exemption is for “new homestead owners” and the summary refers to “a first-time homestead” despite the eight-year provision that allows previous homeowners to qualify.
Doyle would not qualify for the tax break and many union members are government employees paid from property taxes that would be cut by the amendment.
In a written response, the state says the title and summary accurately describe the proposal’s chief purpose and that the purchase date is the kind of detail not required by law.
The state also contends the terms “new homestead owners” and “first-time homestead” are commonly understood and that the eight-year provision is cited in the summary so it’s clear who can qualify for the tax break.
The amendment would give those homeowners an additional exemption of at least 25 percent in the first year. It would continue for four more years but be reduced incrementally each of those years.
The purpose is to reduce some of the disparity in taxes paid by recent purchasers and longtime homeowners who get more benefit from the Save Our Homes Amendment. That 1992 constitutional provision caps annual assessment increases at 3 percent for owners of primary homes, also known as homesteads.
The disparity only increased after voters approved another tax relief amendment in 2008 that lets homeowners take at least part of their Save Our Homes benefits with them when they move.
Another provision in Amendment 3 would lower a cap on annual assessment increases for businesses and other non-homestead properties from 10 percent to 5 percent.
It is one of five proposed amendments, out of nine slated for the Nov. 2 ballot, that are being challenged.
The Florida Supreme Court is considering two cases involving three proposals dealing with legislative and congressional redistricting. Two of those, Amendments 5 and 6, are citizen initiatives designed to curtail gerrymandering. The other, Amendment 7, was proposed by the Legislature to counteract the initiatives.
Amendment 9, which would block requirements for citizens to buy health insurance, also is being challenged. A Circuit Court hearing is set for July 29 in Tallahassee.
The Republican-controlled Legislature offered the proposal in response to passage of Democratic President Barack Obama’s national health care overhaul. Legal experts, though, say it cannot stand in the way of the new federal law although it could prevent the state from implementing a similar program.
That case and the tax relief challenge also are likely to end up in the Supreme Court.
Source: The Associated Press, Bill Kaczor, Associated Press writer.
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