TALLAHASSEE, Fla. – July 1, 2009 – Florida created a program to help first-time homebuyers get their federal tax credit early, allowing them to use up to $8,000 toward a downpayment. The effective date for the program is July 1; however, it will probably be another few weeks before the funds are available. As a result, some Realtors struggling to help homebuyers find the system confusing. While most first-time homebuyers qualify for the tax credit (given by the government as an income tax rebate regardless of tax owed), they once had to buy a home first, submit the info to the IRS through their tax return, and wait for the $8,000 rebate. To help these buyers get the money early enough to use it as a downpayment, the State of Florida created a program of bridge loans, the Florida Homebuyer Opportunity Program (FLHOP), where money can be borrowed from the state and then paid back after the new homeowner receives his tax credit.Under a different federal program, the Federal Housing Administration (FHA) has done something similar, yet with a significant difference: The federal program applies to FHA loans only, and buyers must still come up with a minimum downpayment of 3.5 percent. “FAR’s Office of Public Policy has been getting a lot of questions from across the state regarding downpayment assistance for those who qualify for the federal first-time homebuyer tax credit,” says Florida Association of Realtors (FAR) Vice President of Public Policy John Sebree. “Given that there is a state downpayment plan and a federal downpayment plan (and at least one special exemption), it definitely gets confusing, and details have been slow to emerge. Many Florida Realtors say local housing authorities don’t have all the information they need to move forward with the state program, and some Realtors report that bankers are steering clear of the downpayment assistance programs altogether.”Florida Homebuyer Opportunity Program (FLHOP)The Florida Legislature created the state program during the recent legislative session, and it’s part of the 2010 budget effective July 1, 2009. Many details remain sketchy, but Sebree reports the following:• Money for homebuyers may not be available until the first week of August. Lawmakers funded the program through doc stamp taxes applicable in the new fiscal year rather than through a lump sum commitment; and since today is the start of the new fiscal year, the program won’t be fully funded until the state collects new doc stamp taxes. • Florida’s downpayment loan program can work with FHA loans. Florida Housing Finance Corporation (FHFC) – the state agency that funnels housing money to local housing agencies – received confirmation from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5 percent downpayment, unlike the FHA downpayment loan program through private lenders.• Florida’s local housing administrators will oversee the downpayment funds at the local level. (To find the administrator in your area, go to: http://apps.floridahousing.org/StandAlone/FHFC_ECM/AppPage_SHIPLGContacts.aspx). For local housing authorities, the program is similar to the SHIP program (State Housing Initiatives Partnership) with one major difference – the income limits. Currently, SHIP uses Area Median Income (AMI) and those are typically lower, and calculated differently, than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer ($150,000 for joint filers) will be used for FLHOP. • Realtors can start to promote the program to potential homebuyers. It takes time to close on a home, and local housing authorities should be taking applications now. • FHFC says they’ve trained local administrators on procedures for the Florida downpayment program. Local housing authorities will have flexibility over the $8,000 loan, be able to include penalties, and create a structure dictating how the new homebuyer will pay back the money.“It’s important to note that this money is a bridge loan to buyers; but once it’s repaid, local governments and housing authorities can keep the money and use it locally for affordable housing projects,” Sebree says. “This is a win/win for them. If the offices seem unwilling to work with Realtors, they probably don’t understand the program themselves yet.”For specific questions about the $8,000 tax credit, homebuyers should consult a tax professional.Resources for understanding the tax credit and bridge loansFAR’s Homebuyer Center: http://www.floridarealtors.org/AboutFar/homebuyercenter/index.cfmNAR’s The Basics: 2009 First-Time Home Buyer Tax Credit: http://www.realtor.org/home_buyers_and_sellers/2009_first_time_home_buyer_tax_credit?lid=ronav0019.© 2009 FLORIDA ASSOCIATION OF REALTORS®
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MIAMI – July 24, 2009 – On the surface, South Florida’s home prices appear to be bottoming out, but a dip in the number of bank-owned properties for sale is leading analysts to conclude that lenders may be slowing the flow of foreclosures to the market as a way of stanching further price declines.Monthly numbers from the Florida Association of Realtors show that South Florida existing-home sales continued to rise in June, as bank-owned homes and short-sales attracted bargain hunters from across the country. Figures released Thursday showed single-family home sales were up by 54 percent in Miami-Dade and 35 percent in Broward, compared to last year.Median single-family home prices were down again since June of last year, falling 28 percent in Miami-Dade and 33 percent in Broward. But they have strengthened from April prices. The median price is the point at which half the homes sold for more and half for less.The apparent leveling out of prices is being attributed to two things: a shrinking number of distressed homes entering the market and a larger share of high-priced homes changing hands, according to real-estate analysts and brokers.Condo sales were up in both counties, too – by 19 percent in Miami-Dade and 58 percent in Broward. Median condo prices, however, fell by 49 percent in Miami-Dade to $141,000 from $275,600 the previous year and by 46 percent in Broward to $83,900 from $156,200 a year ago.Over the past six months, however, intriguing trends have begun to emerge in the month-to-month numbers.The median single-family home price in Miami-Dade has, in fact, risen for the past three months, climbing from $177,000 in April to $194,700 in May and $211,400 in June. In Broward, the median in April was $191,300, followed by $190,000 in May and $204,800 in June.Beneath the surfaceOn the condo front, the median price in Broward has bounced between $85,000 and $80,000 since January and between $149,000 and $140,000 in Miami-Dade, a trend that would appear to suggest prices may be hitting a bottom.However, listings of bank-owned homes and short-sales – in which a home is sold for less than the mortgage owed – fell from 44 percent in May to 39 percent in June, according to Ron Shuffield, a Coral Gables-based real-estate analyst and president of Esslinger Wooten Maxwell Realtors.And sales of these so-called distressed properties dropped from roughly 60 percent in May to 54 percent in June.Brokers say fewer well-priced foreclosures on the market are now routinely sparking bidding wars. Bank-owned homes in hot condos and neighborhoods are going under contract within days.Anthony Askowitz, a real-estate broker in Kendall, said his bank-owned listings had fallen from about 150 last June to just 37 today.“I am getting less foreclosure listings, but, at the same, time, I am selling them so much faster. I can’t replace them as fast as I am selling them,” said Askowitz, adding that he had listed a unit in the Club at Brickell Bay at $174,900 on Thursday and received an all-cash offer the same day.Lenders, some real-estate lawyers and analysts believe, may be behind the trend as they either inadvertently drag out the foreclosure process or hold back the release of foreclosures for sale to the public.Either way, the smaller numbers could be curbing further price declines, since analysts say home prices will not recover until the high numbers of distressed properties are cleared from the market.Lenders repossessed 756 homes in Miami-Dade in June, up from 434 in May, according to foreclosure tracking firm RealtyTrac. In Broward, they took back 1,365 homes last month and 738 in May. But properties don’t necessarily hit the market immediately.“There is less distressed inventory being distributed to brokers for sale,” said Doug DeWitt, a Miami-based real-estate broker. “I think they are trying to establish a bottom by not flooding the market, which seems to have worked a little bit.”Julian Dominguez, owner of Foreclosure Information Systems, a company that publishes reports about foreclosure auction sales in Miami-Dade, said he is seeing the hold-back firsthand.“They are canceling a lot of sales at the auction. That’s mainly because they don’t want to take title,” said Dominguez, who has been attending the now thrice-weekly auction sales.Ross Toyne, a Miami-based lawyer who represents condo associations in disputes with lenders, said he thinks lenders are deliberately dragging their feet – both in the foreclosure process and in bringing the properties to market for resale.“They are doing themselves a favor. They’re afraid they would have to drop the price not enormously, but ginormously to get the market to clear,” Toyne said.Condo associations have alleged that the feet-dragging is a ruse to avoid having to assume the maintenance cost of properties – including association fees.SpeculationsKen Thomas, a Miami-based banking analyst, said it all makes sense. Once a bank takes back a home at the end of the foreclosure process, it has to value the property at its current market value – and take a hit to its bottom line. Some banks, he said, may be holding off that day of reckoning.“Some of them simply can’t afford to recognize the loss,” Thomas said. He also said there was no rule or law requiring banks to immediately sell a property once it had been taken back through foreclosure.Not everyone is convinced that’s the case.Mark King, an attorney with the Miami office of Jones Walker who represents banks in commercial foreclosures, attributed any decrease in bank-owned inventory more to the inability of lenders to effectively manage the huge volume of homes being reclaimed through foreclosure. They don’t have the manpower or know-how to handle the volume.“To say banks have a devious, brilliant strategy for controlling the market is probably giving them more credit than they deserve,” King said, adding that it may differ from lender to lender. “Maybe some are doing it for strategic reasons. When you digest so many of these assets so quickly, inevitably there will be some indigestion and you may not want to continue consuming at the same pace.”But foreclosures certainly haven’t been worked out of the system. Rising unemployment will only exacerbate the trend, analysts predict.There are more than 750 auction sales scheduled for the first two weeks in August.“We just put out our [foreclosure listing] book for August and it has 216 pages; normally, it’s 170 pages long,” Dominguez said.Copyright © 2009 The Miami Herald. Distributed by McClatchy-Tribune Information Services.
MIAMI – July 23, 2009 – U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan yesterday approved plans for 45 communities in Florida to receive $21.7 million in federal grants to help stabilize and revive local neighborhoods, rehabilitate affordable housing, and improve key public facilities. Funded through the American Recovery and Reinvestment Act of 2009, HUD’s Community Development Block Grant (CDBG) Program oversees disbursement.“The President’s Recovery Act allows us to invest in local solutions to the many challenges our cities and counties are confronting,” says Donovan. “Today, I’m pleased to stand with the people of Florida as they work to build a real and lasting recovery for themselves and their children.”The Recovery Act includes $1 billion in CDBG funding to assist state and local governments to promote a wide range of community development activities. HUD wants the funds used to stabilize property values, prevent neighborhood blight, and create and preserve jobs.Florida communities receiving funding are:• Boynton Beach: $142,780• Bradenton: $129,679• Broward County: $1,033,000• Clearwater: $251,549• Cocoa: $61,643• Delray Beach: $156,617• Escambia County: $559,361• Gainesville: $371,003• Hialeah: $1,134,113• Hillsborough County: $1,607,994• Homestead City: $212,274• Lakeland: $207,943• Largo: $126,511• Lee County: $576,497• Manatee County: $415,584• Margate: $112,890• Marion County: $475,454• Melbourne: $150,772• Miami: $2,218,946• Miami Gardens City: $371,207• North Miami: $332,001• Ocala: $130,577• Orange County: $1,650,606• Orlando: $602,733• Palm Bay: $166,081• Palm Beach County: $1,846,758• Pasco County: $690,059• Pembroke Pines: $240,099• Pensacola: $260,376• Pinellas County: $809,226• Plantation: $139,863• Polk County: $799,727• Pompano Beach: $332,012• Port St Lucie: $183,507• Punta Gorda: $21,877• Sarasota: $151,705• Sarasota County: $380,487• Seminole County: $648,202• St Petersburg: $598,343• Sunrise: $198,522• Tallahassee: $512,812• Tamarac: $113,751• Titusville: $91,178• Venice: $24,506• Volusia County: $526,815Total: $21,767,640© 2009 FLORIDA ASSOCIATION OF REALTORS®
FORT LAUDERDALE, Fla. – July 21, 2009 – Bidding wars are returning to South Florida’s housing market, as investors and first-time buyers compete for homes and condominiums listed at $200,000 or less.The race for properties is reminiscent of the boom years from 2000 to 2005, when multiple offers on all types of dwellings helped push prices to record highs.Back then, a dearth of properties for sale had buyers rushing to scoop up anything they could find, for fear that prices would keep rising. Now, frustrated with a bloated inventory of foreclosed homes in disrepair, buyers go to great lengths when they spot a house or condo in pristine condition.“When they find a good listing, people are pouncing,” said Terry Story, a real estate agent for Coldwell Banker in Broward and Palm Beach counties.Agents say the heated competition has been building in recent months, a result of low mortgage rates and the $8,000 tax credit for first-time buyers that expires Nov. 30.Steady sales increases during the past year gradually have worked off the inventory of available homes. Real estate agents are convinced that the overall market has hit bottom or is close to one.Housing market researchers have a different take.Because of mounting job losses and the lingering recession, the bidding wars are mostly confined to homes offered at deeply discounted prices. Also, housing experts say, the market needs more than investors and first-time buyers taking the plunge for a rebound to occur.Analysts don’t expect across-the-board price increases soon and predict that prices in Broward and Palm Beach counties will keep falling, albeit at a slower rate, through this year and into 2010.The bidding wars “are a good sign, but I don’t think it’s the sign that we’re at the bottom,” said Brad Hunter, a housing analyst with Metrostudy, a market research firm with an office in West Palm Beach.Rising unemployment is sure to lead to more foreclosures and property sales later this year, which almost certainly will lower prices, Hunter and other analysts say.Some observers suspect that lenders are holding back the supply of foreclosed homes, promoting bidding wars to increase prices now before the flood of new listings further depresses prices.Banks dispute that notion. They say they’re overwhelmed with foreclosures and try to market them for sale as quickly as possible.“The longer we hold them, the more money it costs us,” said Nancy Norris, a spokeswoman for banking giant Chase.The bidding wars in South Florida are giving sellers more leverage after three years of buyers calling the shots.Investor Greg Bales bought a three-bedroom home in Lauderdale Lakes three months ago for $65,000 – $1,900 less than what it sold for in 1985.Bales, 41, beefed up the curb appeal with a new paint job, trees and other landscaping. Inside, he installed laminate floors, granite countertops, new kitchen appliances and an alarm system.He put the home back on the market July 10 for $139,900 and fielded 10 offers, three for more than the asking price.He selected a bid from a first-time buyer for $145,000, and the deal is expected to be complete next month.“We would have had a bunch more offers, but my real estate agent told the people it really wasn’t worth their time if they weren’t submitting a full-price offer,” Bales said.Eric Cormier of Philadelphia is searching for a small home for his sister-in-law in Delray Beach. He offered $120,000 cash for a house listed for $152,000, only to be out-bid by a few thousand dollars.Another home he considered received four offers in one day.“I was surprised,” said Cormier, 47. “I thought there was a fire sale going on in Florida.”In some cases, first-time buyers are losing homes because sellers prefer dealing with cash investors who don’t have to fiddle with financing.Meanwhile, some real estate agents are creating “drama pricing” – listing properties for far less than the market value to attract bidders and drive up the eventual selling price.“It’s like ‘Ta-da’,” said Douglas Rill, an agent for Century 21 America’s Choice in West Palm Beach. “It creates so much of a buzz that it results in a bidding war.”Drama pricing typically happens with short sales. Those homes aren’t as much in demand because buyers know that it can take months for the deals to close. In a short sale, a lender accepts less than what’s owed on the mortgage and forgives the remaining debt.Tony Thomas, 44, is looking for a home in the $200,000 range in central Palm Beach County. He made three offers, only to be told each time that another buyer out-bid him.His agent, Liz Golub, told him to “run like a bunny” to make strong offers as soon as properties come on the market. The strategy paid off recently when the owner of a home near Lantana accepted his offer. But because it’s a short sale, the bank must approve the deal, and that could take months.“It’s frustrating,” Thomas said. “I have not seen the benefits of this buyer’s market right now.”Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.
Five months after the Obama administration unveiled a sweeping initiative designed to reach 9 million struggling homeowners, home foreclosures continue to rise at an alarming rate. Foreclosure filings were reported on more than 1.5 million properties in the first six months of the year, a 15 percent increase over the same period of last year, according to RealtyTrac. All told, 1 in 84 American homes--or 1.19 percent--received a foreclosure filing during the period. "We talk about green shoots or about things getting worse at a slower rate, but this is one thing that is getting worse month by month," says Patrick Newport, an economist for IHS Global Insight.
Here are six things you need to know about the rise in home foreclosures:
1. Unemployment: The erosion of the labor market--the unemployment rate recently hit 9.5 percent--is the key factor in the rise of home foreclosures, says Celia Chen, an economist at Moody's Economy.com. "Employers continue to shed jobs, and that makes it difficult for even people with good credit who were doing fine to keep up with their mortgage payment," Chen says. For example, a recent report issued by federal bank regulators found that home loans to borrowers with solid credit histories were going bad at a rapid clip. "Prime loans, which represented two thirds of all mortgages in the portfolio, experienced the highest percentage increase in serious delinquencies, climbing by more than 20 percent from the prior quarter to 2.9 percent of prime mortgages," the report stated.
2. Plunging home values: Nearly three years after its peak, the painful decline in home prices continues. Although the pace of decline moderated slightly from the previous month, home prices in 20 major metro areas dropped 18.1 percent in April from a year earlier. Falling home values have dragged more than 20 percent of American homeowners "underwater"--meaning they owe more on their mortgages than the property is worth--as of the first quarter. By sucking equity out of homes, the price declines have also evaporated much of a homeowner's financial incentive for paying their mortgage bill, Chen says. "When somebody doesn't have equity in their house and they are struggling to pay their mortgage, the likelihood of a foreclosure is much higher," she says. In addition, home owners with less equity in their homes will have a more difficult time refinancing their mortgage.
3. End of foreclosure moratoriums: The end of certain foreclosure moratoriums-including those of Fannie Mae and Freddie Mac, which were lifted in late March-also contributed to the rise in foreclosures during the period, Chen says. As these efforts unwound, lenders and servicers put additional properties into their foreclosure pipelines, she says.
4. Is Obama's plan working?: A key component of Obama's housing rescue plan is an effort to restructure--or modify--as many as 4 million troubled loans. So far, about 325,000 modification offers have been made through the program, according to Bloomberg news. Chen says the program is having an impact for certain individual borrowers, but the efforts--at least so far--have not put much of a dent into the national foreclosure epidemic. "The program is making progress. It's just that there are a large number of distressed borrowers out there," she says. "It's so hard to process all of those loans, and then second of all, not all of those borrowers will qualify for the program." Borrowers have complained of long delays and bureaucratic hurdles in their efforts to modify their mortgages.
Though the administration's effort includes incentive payments to convince servicers to modify the loans, Newport says some may find it less costly to foreclose on the property. "My understanding is that there is going to be some pressure from the administration to get banks to start renegotiating more loans," he says. "But if [modification is] not in [the servicer's] self-interest, I don't think that they are going to do much."
5. Mounting political pressure: Mortgage services appear to be facing mounting pressure from Washington to redouble their efforts. "We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," Treasury Secretary Tim Geithner and HUD chief Shaun Donovan said in a recent letter to 25 mortgage servicingfirms. In a hearing last week, Senate Banking Committee Chairman Christopher Dodd, a Democrat from Connecticut, expressed his frustration more directly. "Why am I still reading about lost files, understaffed and undertrained servicers, and hours spent on hold on the phone?" Dodd said in a prepared opening statement. "Why are servicers and lenders refusing to accept principal reduction so that homeowners can start building equity and get the housing market moving again?"
6. Foreclosure outlook: Despite this pressure, Newport expects foreclosure rates to creep higher for the next year or so. "It's going to keep on getting worse until the unemployment rate peaks, which we think will happen in about the middle of next year," he says. For her part, Chen argues that a successful mortgage rescue program could expedite a housing recovery. "The hope is that we will be able to push through enough mortgage modifications to prevent home prices from falling too much more," she said.
by Luke Mullins, USNews.com
Jul 20th, 2009
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