Signs of the Times
April 20, 2009
I was driving around South Miami and happened to see this truck with its blazoned advertising from a Lawyer. Interesting…. Nice way to get attention?
Foreclosure and Fraud Distorting Home Values
April 19, 2009
Homeowners who want to appeal their property taxes based on distorted home values are having a hard time. Before the peak of the market, many properties were under contract with not only overinflated prices. Fraudulent groups were contracting properties much higher than the actual purchase price. If you look at MLS data from three years ago, it is easier to pinpoint. All you had to do was see for example a tax record sale of say $400,000. But when you look at the list price in the MLS at that current time, it was much lower.
Of course, this mortgage fraud was being done without notice and now in the past year it is all being revealed. Condo associations bring these properties to the attention of the FBI and in the past year some mortgage fraud rings were arrested. Check out the story here in the Miami Herald.
Combine that with the speculation in this Miami Real Estate market that went fizz and now most are in foreclosure.
Water Shut Off on A Condominium Building
April 19, 2009
Water was shut off on Mirassou Condominium because of an outstanding water bill of over $124,000. There are 310 units in the building. One third of the building or 104 units are in foreclosure. This is a serious problem not only for potential renters but owners of condominiums in tese buildings with high rates of foreclosure.
Banks Ramp Up On Foreclosures
April 15, 2009
Now that the moratorium has lifted on March 31st, banks are gearing up to foreclose on properties. Once they go through the process to make sure the homeowner doesn’t qualify for loan modification, or refinance, the evictions will start again.
Link to partial article today in Wall Street Journal
Here is the full story:
Some of the nation’s largest mortgage companies are stepping up foreclosures on delinquent homeowners. That will likely lead to more Americans losing their homes just as the Obama administration’s housing-rescue plan gets into gear.
J.P. Morgan Chase & Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks. Those companies say they have lifted internal moratoriums which temporarily halted foreclosures.
Some mortgage companies had stopped foreclosing on borrowers as they waited for details of the Obama administration’s housing-rescue plan, announced in February, which provides incentives for mortgage companies and investors to reduce borrowers’ payments to affordable levels. Others had temporarily halted foreclosures while they put their own programs in place, or in response to changes in state laws.
Now, they have begun to determine which troubled borrowers are candidates for help, and to move the rest through the foreclosure process.
The resulting increase in the supply of foreclosed homes could further depress home prices and put additional pressure on bank earnings as troubled loans are written off.
Some of the mortgage companies are themselves receiving funds under the government’s financial-sector bailout, which could make their actions politically sensitive. But mortgage companies say they are taking steps to keep borrowers in their homes, and are only resorting to foreclosure when there are no other options.
Foreclosure sales had dropped in the second half of 2008 as mortgage companies delayed taking action against delinquent borrowers. But sales have been edging up this year, according to LPS Applied Analytics, which tracks loan performance. Foreclosure-related filings increased by nearly 6% in February from the month earlier, and were up almost 30% from February 2008, according to RealtyTrac. The backlog of seriously delinquent loans has been growing.
In California, notices of trustee sales, which are preludes to foreclosure sales, climbed by more than 80% to 33,178 in March, from February, according to data from ForeclosureRadar.com and the Field Check Group. The increase reflects both the expiration of foreclosure moratoriums and a California law enacted late last year that temporarily delayed default and foreclosure notices, says Mark Hanson, president of the Field Check Group, a research firm.
Ronald Temple, co-director of research at Lazard Asset Management, expects home prices to fall 22% to 27% from their January levels. More than 2.1 million homes will be lost this year because borrowers can’t meet their loan payments, up from about 1.7 million in 2008, according to Moody’s Economy.com.
Mortgage-servicing companies, such as J.P. Morgan Chase and Wells Fargo, collect mortgage payments and work with troubled borrowers, both for loans they own and those held by investors.
J.P. Morgan Chase has increased foreclosure actions since the expiration of a moratorium on new foreclosures that began on Oct. 31, and a later moratorium put in place at President Obama’s request. The Oct. 31 moratorium delayed foreclosures on more than $22 billion of Chase-owned mortgages involving more than 80,000 homeowners.
“We had stopped putting additional loans into the foreclosure process so we could be sure that delinquent borrowers would have every opportunity to take advantage of new initiatives that we were putting in place,” a Chase spokesman says. Borrowers who are now receiving foreclosure-sale notices, he said, “own vacant properties, have not been in contact with us and/or do not qualify for the modification programs.”
Citigroup Inc. says it stopped all foreclosures until March 12, at the Obama administration’s request, on loans serviced for Fannie and Freddie. Since then, says a spokesman, it has “reverted to our previous business-as-usual moratorium.” Under that policy, it will not initiate a foreclosure sale for any borrower who is working with Citigroup and is a good candidate for a loan modification, provided Citigroup owns the loan or has investor approval. “For borrowers who do not qualify under these criteria and where no other options are available, we will move forward with foreclosures,” the spokesman says.
Both Fannie and Freddie have stepped up sales of foreclosed properties since their moratoriums ended on March 31. Freddie says it has started to complete some foreclosure sales, such as those involving investment properties or second homes, though it continues to delay foreclosures on loans that may be eligible for modification under the Obama plan.
Fannie has told servicers that “a foreclosure sale may not occur on a Fannie Mae loan until the loan servicer verifies that the borrower is ineligible” for a loan modification under the Obama administration’s plan, “and all other foreclosure prevention alternatives have been exhausted,” a Fannie spokeswoman says.
GMAC’s mortgage division, which had temporarily halted foreclosures while awaiting details of the Obama plan, is now reviewing loans to see which ones will qualify under the program. So far, about 10% of borrowers in some stage of foreclosure appear to be eligible for the federal program, a company spokeswoman says. Although GMAC may be able to work with investors who own these loans to come up with another solution, she says, many borrowers who don’t qualify for help under the federal program are likely to wind up in foreclosure.
Mortgage companies are sorting through loan files to determine which borrowers are candidates for help. “At the time a moratorium expires, we have a team of folks who will pore through all of those loans where borrowers have not paid before we will take the next step in the process,” says Jim Davis, executive vice president for American Home Mortgage Servicing Inc. “If there is any borrower contact, we will hold off on the foreclosure process until we’ve exhausted every effort to assist that borrower.”
Still, some borrowers who are currently talking to their mortgage companies are also likely to wind up in foreclosure once their files are reviewed. “We are getting so many of these cases where people don’t fit the new [Obama] program,” says Michael Thompson, director of Iowa Mediation Service, which works with troubled borrowers. Many borrowers are unemployed or underemployed or have credit problems that go well beyond their mortgage troubles, he says.
Many have been “playing for time” while the moratoriums have been in place, he says. But the delays have only increased the amount of interest and fees they owe, making their loans “nonviable in the long run.”
Many troubled loans will ultimately wind up in foreclosure because the borrower doesn’t have sufficient income to make even a reduced mortgage payment, or doesn’t respond to the mortgage company’s requests for information. “Certainly half of the loans that would have wound up in foreclosure before the foreclosure moratoriums went in place” will ultimately wind up in foreclosure, says Michael Brauneis, director of regulatory risk consulting at Protiviti Inc., a consulting firm.
While many troubled loans are held by hedge funds, pension funds and other investors, the expiration of foreclosure moratoriums could also put a dent in bank profits, says Frederick Cannon, an analyst with Keefe, Bruyette & Woods. The moratoriums “have to some degree postponed the realization of problems” and “may help bank earnings in the first quarter” by delaying charge-offs of some troubled loans, he says.
Write to Ruth Simon at ruth.simon@wsj.com
Obama’s Plan to Unload Assets
April 2, 2009
Here is a short video of Obama’s plan for the banks to unload assets that are in foreclosure.
Certificate of Use For Foreclosed Homes
April 1, 2009
I attended a meeting at the Department of Planning and Zoning the day before yesterday. Today, April 1, 2009, a New Certificate of Use (CU)Requirement for the Sale of Foreclosed Properties is in effect. This is only for unincorporated Dade County. That means it applies only to properties with folio’s starting with 30.
The purpose is to protect the consumer when a foreclosed property is purchased. It included a preparation of a disclosure of findings report which identifies building or zoning code violations for each property and contains a good faith estimate to remedy any deficiencies. The report must be completed by an architect or a professional engineer licensed and registered in the State of Florida.
The meeting got very heated with many realtors, attorneys and architechts voicing their opposition for this new requirement. First of all, this is going to cost the title holder, which is the bank additional fees before the property is listed. Since an architecht or engineer is required for the report, this cost could be in the thousands. Besides that is the fee that is required to be paid to the county for the CU which is $250 plus a $50 recording fee and 8% tax which adds up to $324.00.
The CU has to be obtained prior to signing a contract. There is no requirement of the title holder to take remedial action. But, if any violation is shown on the report, the county then has the legal right to subsequently enforce the violations or else the title holder may have to pay initial fine of $500 plus $100 per day until the infraction is corrected.
The sentiment amongst the public who had a chance to express their opinions was that this ordinance was going to fail. Since most of the banks which own title to these foreclosed properties are out of state, it might delay sales and delay the absorption of the unsold inventory. This can further drag the bottom much longer. Additionaly, who wants to be entangled in more legal liability with properties not up to code. We might end up with more boarded up properties and therefore more vandalism.
There is going to be another meeting in Downtown next Tuesday for more deliberation.
Florida Bar Issues Ethic Alert
March 27, 2009
With the proliferation of loan modification companies offering services to help a homeowner who is in pre-foreclosure, there will always be scams. Some companies are legitimate. Attorneys are the only ones legally to charge a fee.
Read this article from the Florida Bar which sent out an ethics alert to all Attorneys warning them that they cannot pay a referral fee to non-lawyers.
Miami is Top in Mortgage Foreclosures
March 9, 2009
According to Mortgage Bankers Association Chief Economist, only 40% of mortgages in the state of Florida are current. That means that six out of ten are behind on payments. I do not see the bottom in the next six months.
Obama Signs the Stimulus Plan
February 17, 2009
Today Obama signed the stimulus plan. The statistics for foreclosures looming ahead in the next two years look pretty bad. Let’s hope this will help. I know it is alot of money and the next generation is going to pay a big price for this. But hopefully, we can create a turnaround, even though it will not be right away.http://news.yahoo.com/s/ap/20090217/ap_on_go_pr_wh/obama_stimulus.
Link to Mortgage Debt Forgiveness Act
November 13, 2008
Here is a link on the Internal Revenue Service page which explains the Mortgage Debt Forgiveness Act passed December, 2007. The lender that forgives a portion of the debt owed on a mortgage will issue a 1099 to the homeowner. For example if you owe 300,000 and the property is sold for $250,000, the lender will issue to a mortgage holder a 1099 for the difference, their loss. In this case it would be $50,000. http://www.irs.gov/individuals/article/0,,id=179414,00.html [Read more]
Blanca has 24 years of Real Estate expertise in the Miami area. She is a certified Luxury Home Specialist. Because of current market conditions, she has acquired additional certifications as an REO Specialist(RDC Pro) and Certified Foreclosure Prevention Specialist(CREO). Her education of a Bachelors in Finance/International Business gives her an edge in assisting buyers & sellers in today's market. She is passionate about living in Miami, her home town since childhood. 