Citizens Board approves Rate Hike

TALLAHASSEE, Fla. – July 27, 2010 – 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.

Copyright ©) 2010, Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.

Tampa Existing Homes Sales June 10

Tampa Existing Home sales rose by 13% in June at a rate of 3,226 compared to last year’s number of 2,848.  While sales have improved sales price was basically flat year-over-year at $138,400. 

Florida Existing Home sales for the month of June were up 17%.  The numbers came in at 18,371 homes sold from 15,732  in June of 2009.  From a sales price perspective the median sales price was $141,00, which was basically flat from April’s number of 141,100.

National Sales of Existing Home (Single-Family & Condo) for the month of June.  The numbers came in at an annual adjusted rate of 5.37 million down (5.1%) from an upwardly revised level of 5.66 million in May.  However, this decrease was still 9.8% better than the 4.89 million units in June of 2009.

Our Perspective:  As we stated last month we have turned cautious in our outlook for the Summer Buying Season going into the Fall.  While individuals are still purchasing, we have concerns that with the continued high unemployment rate, weakening stock market and higher future inventories (due to short sales and REO’s), the real estate market is looking cloudy.

Florida Existing Home Sales May

Tampa Real Estate Market/National Real Estate Market

Florida Existing Home sales for the month of May were up 18%.  The numbers came in at 16.745 homes sold from 14,172  in May of 2009.  From a sales price perspective the median sales price was $140,400, which was up from April’s number of 141,100, marking the third month over month increase  this year.

National Sales of Existing Home (Single-Family & Condo) for the month of May.  The numbers came in at an annual adjusted rate of 5.66 million up 2.2% from an upwardly revised level of 5.79 million in April.  However, this decrease was still 19.2% better than the 4.75 million units in May of 2009.

Our Perspective:  We have had a reevaluation of the current market situation.  We have turned cautious in our outlook for the Summer Buying Season.  While individuals are still purchasing, we have concerns that with the continued high unemployment rate, weakening stock market and higher future inventories (due to short sales and REO’s), the real estate market is looking cloudy.  We will not know until mid July how things are progressing, so a cautious outlook we have taken.

SIGNIFICANT PRICE REDUCTION – 1527 Pleasant Harbour Way – Tampa, FL

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Short sale? Get an experienced agent or it could cost you later

FORT LAUDERDALE, Fla. – June 3, 2010 – Before Larry Thomas unloaded his Pompano Beach, Fla., home last fall for a fraction of what he paid, he cut a deal that will keep him from worrying about a huge debt hanging over his head.

Thomas insisted that his lender, American Home Mortgage Servicing, agree not to come after him for the estimated $174,000 he still owed on his two mortgages. “I feel incredible relief,” the 32-year-old restaurant manager said last week.

Others may not be as fortunate.

Lenders will file a tidal wave of lawsuits against homeowners in the next few years as a way to recoup losses when home sales or foreclosure auctions don’t result in enough money to pay the mortgages in full, real estate and legal analysts say.

“It will be a dramatic problem because the borrowers will not know it’s coming,” said Frank Alexander, a law professor at Emory University in Atlanta.

Laws vary from state to state. In Florida, banks have five years from the date of the sale to file for so-called deficiency judgments and up to 20 years to collect. Lenders can garnish wages or make claims on borrowers’ assets.

Before the housing meltdown, few lenders filed these lawsuits. Foreclosures and short sales – selling for less than the mortgage amount – were relatively rare at the time, and many of the homeowners didn’t have sufficient assets to make it worth the banks’ time and expense.

But following the heady days of the housing boom that spawned millionaire investors seemingly overnight, it’s not uncommon for borrowers to default on mortgages while still holding lucrative investments.

As the next wave of the housing crisis plays out, those most in danger of getting slapped with lawsuits include angry homeowners who ransack properties they’re losing in foreclosure and borrowers who walk away from “underwater” mortgages. In both cases, analysts say, banks will want to discourage other people from such behavior.

More than four in 10 homeowners said they would consider abandoning properties that are underwater, or worth less than the mortgages, according to a national online survey released last week by real estate firms Trulia and RealtyTrac.

Mortgage companies typically won’t sue homeowners who negotiate in good faith or those who default on their loans because of job losses or other unforeseen circumstances, said Anthony Manno, an executive with Steelbridge Real Estate Services. The Miami-based company works with lenders on the resale of foreclosed homes.

Still, borrowers shouldn’t rely on a lender’s verbal commitment, Manno said. “Get something in writing.”

Critics insist that spite will play a role in some of these lawsuits. Lenders deny it.

“We certainly would not do that,” said Russell Greene, president of Grand Bank & Trust of Florida in West Palm Beach. “It’s a business decision – not an emotional decision. It’s very time-consuming to take someone to court.”

Even if lenders don’t pursue the judgments, they could sell mortgage debt to collection agencies at deep discounts. And it will be those debt collectors that will hound borrowers, said Shari Olefson, a Fort Lauderdale real estate lawyer.

“They paid money to be able to hassle you,” she said.

Thomas, the former Pompano Beach homeowner, said he didn’t have money for a downpayment but was approved for 100 percent financing on two loans in spring 2006. He bought a three-bedroom home for $245,000.

Thomas said he soon became responsible for the entire mortgage after his roommate lost his job. That became even more difficult after Thomas took a pay cut.

So he attempted a short sale, eventually finding plenty of prospective buyers interested in a property that had plummeted nearly 70 percent in value. He and American Home Mortgage accepted one offer for $80,000. After closing costs, the lender netted about $71,000, said his Fort Lauderdale lawyer, Joe Kohn.

But before the sale closed, Kohn had American Home Mortgage waive its right to collect on the remaining mortgage debt.

Christine Sullivan, a spokeswoman for the lender, wrote in an e-mail that she can’t discuss Thomas’ case because of privacy issues. But when homeowners seeking short sales demonstrate legitimate hardship, “we provide a full release of liability, and we do not pursue deficiency judgments.”

Some banks say they won’t file a lawsuit, though they aren’t willing to put that in writing, Kohn said.

“I have no choice but to accept that,” he said. “Even when you play by the rules, banks don’t always do what we’d like.”

Under new government guidelines for short sales that took effect this spring, lenders aren’t supposed to hold homeowners responsible for any remaining mortgage debt. But not all short sales fall under the guidelines, while some lenders choose not to implement them, Kohn said.

A forgiven mortgage balance through 2012 is not considered taxable income on a primary residence as long as the debt was used to buy or improve the house. But borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount.

Homeowners who hand their properties back to the bank through so-called deeds in lieu of foreclosure also should make sure they won’t be on the hook for any mortgage debt.

With friends facing deficiency judgments, Thomas said he’s grateful he sought legal advice on how to avoid a lawsuit. He now rents a home west of Boca Raton, but he just found out the owner is in foreclosure.

“I’ve escaped my own problem, only to inherit someone else’s,” Thomas said. “But this is nothing. It’s just a matter of picking up the pieces and moving on to the next rental.”

© 2010 Sun Sentinel, Paul Owers. Distributed by McClatchy-Tribune News Service.

Foreclosure has oft-unforeseen risk: lawsuits from lenders

FORT LAUDERDALE, Fla. – June 3, 2010 – Before Larry Thomas unloaded his Pompano Beach, Fla., home last fall for a fraction of what he paid, he cut a deal that will keep him from worrying about a huge debt hanging over his head.

Thomas insisted that his lender, American Home Mortgage Servicing, agree not to come after him for the estimated $174,000 he still owed on his two mortgages. “I feel incredible relief,” the 32-year-old restaurant manager said last week.

Others may not be as fortunate.

Lenders will file a tidal wave of lawsuits against homeowners in the next few years as a way to recoup losses when home sales or foreclosure auctions don’t result in enough money to pay the mortgages in full, real estate and legal analysts say.

“It will be a dramatic problem because the borrowers will not know it’s coming,” said Frank Alexander, a law professor at Emory University in Atlanta.

Laws vary from state to state. In Florida, banks have five years from the date of the sale to file for so-called deficiency judgments and up to 20 years to collect. Lenders can garnish wages or make claims on borrowers’ assets.

Before the housing meltdown, few lenders filed these lawsuits. Foreclosures and short sales – selling for less than the mortgage amount – were relatively rare at the time, and many of the homeowners didn’t have sufficient assets to make it worth the banks’ time and expense.

But following the heady days of the housing boom that spawned millionaire investors seemingly overnight, it’s not uncommon for borrowers to default on mortgages while still holding lucrative investments.

As the next wave of the housing crisis plays out, those most in danger of getting slapped with lawsuits include angry homeowners who ransack properties they’re losing in foreclosure and borrowers who walk away from “underwater” mortgages. In both cases, analysts say, banks will want to discourage other people from such behavior.

More than four in 10 homeowners said they would consider abandoning properties that are underwater, or worth less than the mortgages, according to a national online survey released last week by real estate firms Trulia and RealtyTrac.

Mortgage companies typically won’t sue homeowners who negotiate in good faith or those who default on their loans because of job losses or other unforeseen circumstances, said Anthony Manno, an executive with Steelbridge Real Estate Services. The Miami-based company works with lenders on the resale of foreclosed homes.

Still, borrowers shouldn’t rely on a lender’s verbal commitment, Manno said. “Get something in writing.”

Critics insist that spite will play a role in some of these lawsuits. Lenders deny it.

“We certainly would not do that,” said Russell Greene, president of Grand Bank & Trust of Florida in West Palm Beach. “It’s a business decision – not an emotional decision. It’s very time-consuming to take someone to court.”

Even if lenders don’t pursue the judgments, they could sell mortgage debt to collection agencies at deep discounts. And it will be those debt collectors that will hound borrowers, said Shari Olefson, a Fort Lauderdale real estate lawyer.

“They paid money to be able to hassle you,” she said.

Thomas, the former Pompano Beach homeowner, said he didn’t have money for a downpayment but was approved for 100 percent financing on two loans in spring 2006. He bought a three-bedroom home for $245,000.

Thomas said he soon became responsible for the entire mortgage after his roommate lost his job. That became even more difficult after Thomas took a pay cut.

So he attempted a short sale, eventually finding plenty of prospective buyers interested in a property that had plummeted nearly 70 percent in value. He and American Home Mortgage accepted one offer for $80,000. After closing costs, the lender netted about $71,000, said his Fort Lauderdale lawyer, Joe Kohn.

But before the sale closed, Kohn had American Home Mortgage waive its right to collect on the remaining mortgage debt.

Christine Sullivan, a spokeswoman for the lender, wrote in an e-mail that she can’t discuss Thomas’ case because of privacy issues. But when homeowners seeking short sales demonstrate legitimate hardship, “we provide a full release of liability, and we do not pursue deficiency judgments.”

Some banks say they won’t file a lawsuit, though they aren’t willing to put that in writing, Kohn said.

“I have no choice but to accept that,” he said. “Even when you play by the rules, banks don’t always do what we’d like.”

Under new government guidelines for short sales that took effect this spring, lenders aren’t supposed to hold homeowners responsible for any remaining mortgage debt. But not all short sales fall under the guidelines, while some lenders choose not to implement them, Kohn said.

A forgiven mortgage balance through 2012 is not considered taxable income on a primary residence as long as the debt was used to buy or improve the house. But borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount.

Homeowners who hand their properties back to the bank through so-called deeds in lieu of foreclosure also should make sure they won’t be on the hook for any mortgage debt.

With friends facing deficiency judgments, Thomas said he’s grateful he sought legal advice on how to avoid a lawsuit. He now rents a home west of Boca Raton, but he just found out the owner is in foreclosure.

“I’ve escaped my own problem, only to inherit someone else’s,” Thomas said. “But this is nothing. It’s just a matter of picking up the pieces and moving on to the next rental.”

© 2010 Sun Sentinel, Paul Owers. Distributed by McClatchy-Tribune News Service.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=240792

Florida Chinese Drywall Tax Relief

Foreign Buyers return to Florida Real Estate

Foreign buyers are flocking to Florida condos again

TORONTO – June 1, 2010 – Nearly 800 Canadians jammed a hotel ballroom near the Toronto airport Sunday to hear the gospel of Florida real estate.

High-end Brazilian buyers prefer to be wooed more intimately – perhaps at a cocktail party or a small private dinner – but they are just as pumped.

Lured by rock-bottom prices, international buyers are now flocking to buy Florida properties. It’s especially true in countries where the currency is strong against the dollar.

“We’re telling Canadians this is a once-in-a-lifetime opportunity – the perfect storm,” said Brian Ellis, who heads Toronto-based Florida Home Finders of Canada. “The prices are just incredible and the Canadian dollar has been so strong.”

At least three of five buyers in the Greater Downtown Miami condo market are coming from abroad, estimates Jenny Huertas, international sales director for Condo Vultures, a real estate advisory and research firm.

The stampede from overseas is “kind of like a foreign subsidy helping us resolve our real estate problems,” said Peter Zalewski, a Condo Vultures principal. “This time the assistance isn’t coming from Washington. It’s coming from Caracas, London, Milan, Bogota.”

The buying frenzy was set off by developers lowering prices on new units to below what it costs to build in today’s market, Huertas said.

“There were many people on the sidelines watching for the floor. In the last three or four months there’s the perception that we’re there,” said developer Edgardo Defortuna, president and chief executive of Fortune International.

Cash customers

Most of the foreigners are cash buyers like Leroy Jean Francois, who has snapped up 47 properties since January for the two real estate firms he works for in France and Switzerland. The plan, he said, is to buy, fix up if necessary, rent out for the next five years, then sell – for a profit.

The Frenchman has already made a paper profit on a unit he closed on in January at Marquis Residences, a 67-story luxury tower in downtown Miami where prices for a one-bedroom apartment start at $375,000. His unit cost $317 per square foot – “a great price, incredible,” he said.

A recent plunge in the euro – it’s now worth $1.23, down from its high of more than $1.60 in 2008 – could cool things off a little. To buy a $1 million condo, it now takes around 814,000 euros compared to 625,000 euros under the old exchange rate.

Meantime, prices at Marquis Residences also have strengthened to around $400 per square foot.

But even the declining euro has barely given Francois pause.

“I think the euro will weaken more. But even if the exchange rate is $1 to 1 euro, South Florida real estate is still a great bargain for us,” said Francois, who is president of The Bridge, a real estate fund consultancy.

Average Joes

Luxury condos are once again popular among Latin America buyers who purchase them as investments but also as a home base. While their children attend school here, they attend to business interests or escape strife at home.

But for his Canadian buyers, Ellis scours South Florida for condo units at around the $150,000 price point. “We’re basically the Wal-Mart. We’re for the average Joe.”

And these days average Joe Canadian can afford much more. For decades the U.S. dollar was worth more than the Canadian dollar and buying in the U.S. was always more expensive for Canadians. But in September 2007, the Canadian dollar reached parity with the greenback for the first time in 31 years. It fell back again, but now the Canadian loonie, which takes its name from the loon pictured on the one-dollar coin, is near parity at around 95 cents.

So Ellis has been offering his Florida real estate seminars to packed houses in Ontario and is thinking about taking the show on the road to Montreal. There was so much interest in the latest seminar that he had to schedule two sessions for 400 people each this Sunday.

Most of his Canadian buyers are what Ellis calls “end-vestors,” meaning they plan on renting a unit out for now with an eye toward using it themselves down the road.

Since Home Finders is licensed as a brokerage only in Canada, it works with Florida brokers who complete the sales and pay the Canadian firm referral fees. By year’s end, Ellis said he expects to have facilitated 500 Florida closings.

Prices halved

Though Home Finders is now working with one Sunny Isles Beach property where condos are listed for up to $350,000, the Sun Vista Gardens in Tamarac is a more typical offering.

There, buyers can find a one-bedroom for under $75,000 and a two-bedroom for under $100,000. That same one-bedroom used to cost $190,000, according to Florida Home Finders’ website.

Ellis said he’s actually having a hard time coming up with enough Florida properties in the $150,000 range. Of course, he’s picky. He’s looking for good value, a good location and properties without legal complications. Most of the Canadians want condos, but Ellis said he has some requests for single-family homes.

Though buyers from Europe, Latin America – most from Argentina, Brazil, Colombia, and Venezuela – and Canada predominate in the South Florida market, a smattering of Chinese investors and African buyers also are starting to make purchases.

“We recently sold a $7.5 million penthouse at Jade Ocean to a Nigerian buyer,” said Defortuna. “They were here and they loved it.”

China, too

At Fortune’s 237-unit Artech building, Defortuna said 11 condos were sold to Chinese investors. Units in the building are selling for almost half the original asking price.

“I think China is still a marginal market,” said Defortuna. “The Chinese are more focused on the West Coast and New York, but small pockets [of Chinese buyers] can make a big difference in a building.”

With international offices in Mexico and Argentina, Fortune can tap directly into those markets, and it frequently holds seminars on the legal and financial aspects of owning property in the United States. At one recent event in Buenos Aires there was space for just 200 people, so Fortune decided to charge a $60 fee. “We still had to close reservations,” said Defortuna.

One big concern of foreign buyers is what happens to their properties when they lock up after a vacation, said Defortuna. But Fortune International’s property management division will take care of things like paying utilities and condo fees – and even turn over a client’s car engine once a week so the battery doesn’t die.

A number of local brokerages have country specialists on staff who work with their counterparts abroad to bring in buyers.

Elite Global Reality, for example, has sales associates who specialize in the French, Italian and Chilean markets, said Thiago Costa, executive director and sales associates.

Costa, who is Brazilian, travels frequently to his homeland where local partners have set up meetings with potential buyers in Sao Paulo, Rio de Janeiro or Belo Horizonte who are “willing and able to buy.”

He prefers to present one South Florida project at a time to 10 to 20 people at a cocktail party or even a dinner at the home of a potential buyer.

With Miami prices so low, the Brazilian currency (the real) strong, the Brazilian economy robust and real estate prices on the rise in cities like Sao Paulo, where a luxury property might cost $800 to $1,000 per square foot, Brazilians like what they see in South Florida.

‘Impossible to lose’

“They feel it’s almost impossible to lose money,” said Costa.

Africa Israel USA, the New York-based developer of the 292-unit Marquis Residences, also works with the brokerage community in target markets like Venezuela, the South of France, Mexico and Brazil. Working with brokers, it has put on events ranging from fashion shows to invitation-only cocktail parties and dinners, said Lori Odover, the managing director.

“It needs to be someone they know, that they have a one-on-one relationship with,” she said. So that means even an event at a synagogue or someone’s uncle’s pool party can be a selling opportunity.

Though most international buyers pay cash, there’s an international financing program at Marquis that has proven popular. Some 57 percent of Marquis’ foreign buyers have chosen it.

While the program’s 45 percent down payment for a five-year ARM seems steep, Bob Wuan, managing director of Americore Mortgage/Vacation Finance, said, “We find international buyers are more than willing to put 50 percent or more down. They want to put money in U.S. real estate as a currency hedge or an inflation hedge.”

Meanwhile, Ellis keeps telling Canadians what a great deal Florida is: “We believe Florida is in for quite a rebound. We just don’t know when.”

Copyright © 2010 The Miami Herald, Mimi Whitefield. Distributed by McClatchy-Tribune Information Services.

Have a safe Memorial Day

We would like to wish each of you a safe and relaxing Memorial Day weekend.  As we enjoy time with our family and friends lets also take a moment to remember those that have served our country to the fullest throughout the years.  Click for a quick summary on the history of Memorial Day

Tampa Home Prices March 2010

Today the S&P/Case-Shiller Home Price Index has been released.  For Homes in Tampa we saw a (-.1%) decrease from February 10/March 10.  This was a nice increase from January 10/February 10 decrease of (-1.2%).  In a year over year perspective in the Tampa Real Estate Market we saw a (-3.5%) decline.

At this point in the real estate cycle we are not surprised that prices are tending to stay flatten.  This being said, we believe the expiration of the tax credit and belief that numerious foreclosures and short sales will begin hitting the market in the 3rd/4th quarters, we don’t believe prices will substantially improve in the near future.

BUYER PERSPECTIVE

More homes will be coming down the pipeline, particularly in newer development and less desirable areas.  On the other hand highly desirable areas we see prices holding.  If the area you are persuing is highly desirable and you see the property well price, don’t let it pass after it.

SELLER PERSPECTIVE

If you are selling homes in Tampa you need to price right to attract attention.  We continue to see many homes that receive multi-offers if the agent properly prices the property to sell.  For those sellers waiting on the sidelines or do not have to sell, we recommend waiting it out.

Florida Existing Home Sales April 2010

Tampa Real Estate Market/National Real Estate Market

Florida Existing Home sales for the month of April were up 27%.  The numbers came in at 16,781 homes sold from 13,244  in April of 2009.  From a sales price perspective the median sales price was $140,100, which was up 1% from last year, and up 2.3% from up from March’s number of 137,000

National Sales of Existing Home (Single-Family & Condo) for the month of April.  The numbers came in at an annual adjusted rate of 5.77 million up 7.6% from a level of 5.35 million in March.  However, with this increase (which was primarily due to the expiration of the tax credit) we saw a sharp surge in Inventories by 11.5%, suggesting that supply is beginning to increase again.  This increase in supply most certainly will have downward pressure on prices over the remainder of the year.

Our Perspective:  While existing home sales improved for during April from March due to the home buyer credit, we feel this will continue going into the summer months.  Summer is typically a strong selling season and we should continue to see improvements through August.  After August we will again see pricing pressures as well as sales pressue.  The # of foreclosures and short sale homes are only going to increase in our opinion, making it still a buyers market.

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