The Housing Bubble

The Press Telegram reports from California. “If you want a consistent opinion about the real estate market, talk to Leslie Appleton-Young. The chief economist of the California Association of Realtors will often use one of her favorite words: ‘Cyclical.’”

“Foreclosures are up, sales are down, prices are stagnant. It happened before, it will happen again, Appleton-Young has often said, and continues to say. ‘We’re still in the midst of a slowdown,’ said the Wilson High School graduate, who for the last several years has had to battle the perception there was a real estate bubble about to burst.”

“In 2004 and 2005, home sales peaked, with roughly 625,000 homes sold each of those years. Then came a 23.6 percent drop to 477,400 sales in 2006. ‘We think we’re going to drop another 7 percent this year to 443,900,’ she said of 2007. ‘The last time we were at that level was 1997.’”

“Then, 446,500 units were sold, and that was the end of the last downturn.”

“In California there were 31,434 foreclosure filings reported for March, the most of any state and an increase of 36 percent from the previous month, according to RealtyTrac.”

“In the Inland area, San Bernardino and Riverside, where new construction took place at a blistering pace during the real estate boom, there’s now an overhang in demand, Appleton-Young said. Those buyers went in search of affordable prices, and many were low- to middle-income families taking advantage of adjustable rate and interest-only loans to get into a home, Appleton-Young said.”

“‘That’s where you had a lot of the subprime market, households that were facing affordability hurdles being forced inland, and a lot of speculative demand for housing,’ she said. ‘The supply is there, but the demand is not.’”

“In Los Angeles County, CAR’s housing inventory measurement for February was 7.7 months. In San Diego County, there was a 10.2-month supply, and in Orange County the supply was measured at 12.5 months. In the Riverside and San Bernardino areas there is a 17-month supply, according to CAR.”

The Recordnet. “San Joaquin County’s soaring foreclosure rate shows in no uncertain terms that the residential real estate slide we’ve read about, talked about and feared is here.”

“In the first quarter, 1,721 foreclosure notices arrived in the mailboxes of county homeowners. That’s the highest level in about 15 years.”

“Home sales have slowed as the market has turned from a sellers’ market, (remember multiple offers and soaring prices?), to a decidedly buyers’ market. We now have a market where sellers are abundant, buyers are fewer and prices are soft (or in some cases, sliding).”

“In the fourth quarter of 2006, only 26 percent of the households in San Joaquin County could afford the median priced home of $337,840. That’s a pretty good indication why the subprime mortgage market ballooned.”

“Indeed, more than 40 percent of mortgages originated last year in this county were subprime, according to First American LoanPerformance, the highest level of any of the markets surveyed.”

“Are you starting to get a feeling for the slope some homebuyers might be standing on? And growing mortgage defaults are one of the reasons mortgage lenders are getting out of the subprime business and tightening loan requirements.”

“Some people who could get loans 30 days ago can’t get them today, and likely it’s going to get worse for them before it gets better.”

“Home sales decreased 14 percent across the Bay Area, year-over-year, according to a first quarter report released today by Prudential California Realty. New listings continued to accumulate, growing by ten percent across the region, year-over-year.”

“‘The first quarter analysis shows the market is continuing to contract from the height of sales activity two years ago, however it still falls within a normal range,’ said Scott Kucirek, general manager.”

“The entry-level segment of the market was struggling in parts of the Bay Area, including Alameda and San Mateo counties where first-time buyers were approaching purchases with caution.”

“While overall home sales decreased in all counties, there were significant differences between areas. The sharpest downturn occurred in Solano County where unit sales fell 25 percent across all housing types.”

Roseville & Rocklin. “According to a story from DataQuick, the number of default notices sent to California homeowners in the first quarter increased to the highest level in almost ten years.”

“Looking at our local market reveals that with the exception of Placer County the foreclosure activity here is higher than the State levels. In Sacramento there was an increase of 184.7 percent in the first quarter compared to the same period last year with a total of 3,234 Notices of Default filed.”

“El Dorado County saw an increase of 305.6 percent with a 219 NoD’s filed. In Yuba County there was 151 Notices filed which amounted to a 214.6 percent increase from the first quarter of 2006. Placer County was below the State percentage increase of 148 percent with 518 notices filed compared to 239 a year ago or a 116.7 percent increase.”

The Orange County Register. “Where’s the spring home-buying rush? Not here yet, says the math of Steve Thomas at Re/Max Real Estate Services in Aliso Viejo.”

“It would take 7.75 months for buyers to gobble up all homes listed for sale at the current pace of deals vs. 6.57 months two weeks earlier and vs. 3.83 months a year ago.”

“And Thomas notes: ‘Demand, the number of new escrows within the prior 30 days, dropped by 208 homes in two weeks to 1,925. Last year at this time, demand was at 2,942 homes, 1,017 additional homes. That’s 35% less than last year. Two year ago demand was at 4,324 homes.”

The Sacramento Bee. “The red-hot housing market, both new construction and resales, was a major factor in California’s booming economy during the early years of the decade, offsetting the negative impact of the dot-com industry’s implosion.”

“The downturn began last year and in the first three months of this year, mortgage foreclosures reached nearly 47,000, up 23 percent from the previous quarter and up 148 percent from the first quarter of 2006, according to DataQuick.”

“At the same time, DataQuick reported, home sales in March were 31 percent lower than those in March 2006.”

“Upward of a million new single-family homes, condominiums and apartments were built during the early 2000s. But many of those homes were sold either to speculators seeking double-digit annual percentage gains or to marginal buyers lured by low- or no-down payment loans with artificially low payments.”

“Anyone who knew anything about fundamental economics knew that the housing bubble would eventually burst, just as the dot-com boom collapsed, or the tulip bulb mania in 17th century Holland, for that matter, ensnaring those on the wrong side of the feeding frenzy.”

The Cantonrep reports from Ohio. “Nancy Niarchos and her husband bought (a) Jackson Township condo for $137,900 in 2003. They had it painted. They put on a new roof, and they installed a new kitchen counter and a backsplash. Then they realized the condo was too small. So the Niarchos bought a larger house in Jackson and put the condo on the market in November.”

“Recognizing a slow market, they asked for $139,000, just 0.8 percent more than they paid for it four years ago. Five months later, no offers. ‘I just think the market is really bad right now,’ said Nancy Niarchos, who now has two mortgages. ‘We’ve already moved. We just really want to sell it and move on.’”

“‘Buyers have such a large inventory to choose from,’ said Linda Wise, a local ReMax real estate agent. ‘It’s like a candy store.’”

“Real estate professionals say subprime borrowers are running out of time. Many got adjustable-rate mortgages. The catch: If interest rates went up, payments would significantly increase.”

“That wasn’t a big worry at a time when people were betting housing prices would always rise. Many lenders didn’t even bother to ask prospective borrowers for documentation of income. Nor did they require a down payment.”

“‘You could tell (them) you make whatever amount of money, and they would just take your word for it,’ said Jim Fox, the manager (of) Realty One’s offices in Stark and Carroll counties. ‘It was lax, and we’re paying the price.’”

“Many would-be sellers, some of whom took out big second-mortgages to fund home improvements, are in denial that their homes have not appreciated, Fox said. When real estate agents suggest a selling price, many sellers ‘look at us and tell us, ‘My gosh, that’s a terrible number,’ he said.”

“Realty One President Barbara Reynolds added, ‘There’s a feeling literally that a house should appreciate every year. It doesn’t always. It depends on supply and demand.’”

“As unrealistic, said Fox, are some would-be buyers; they expect sellers to practically give their homes away. ‘Some people, … they want us to help them steal a home,’ Fox said.”

The MD Times from Indiana. “Indianapolis in the first two quarters of 2006 had the highest metro foreclosure rate in the United States, according to Realtytrac. ”

‘”Certain people were getting loans then that they can’t get now,’ said Wayne Ready of FC Tucker-Wayne Ready & Associates. ‘Indiana is in the top five or six in repossessed homes.’”

“The Midwest’s industrial-based workforce is linked to bad credit and mortgage defaults, he said. Midwestern states are among the worst-hit areas in the nation when the housing market has a slump.”

“Investors will buy properties at bargain prices from the banks before the market is on the rebound, he said, so foreclosed properties don’t lead to any slowdown overall. ‘What’s mostly selling now is those (foreclosures) and high-end homes right now,’ he said.”

The Ann Arbor News from Michigan. “Washtenaw County homeowners are facing foreclosures in record numbers, the result of a weak economy, a glutted housing market, and adjustable rate mortgages that have bit homeowners hard as interest rates jumped.”

“‘I used to do five or six foreclosures a week. Now I do 19 to 30,’ said Special Deputy Jimmy Moore, who auctions off mortgage foreclosures every week at the Washtenaw County Courthouse.”

“The Washtenaw County Clerk’s office recorded 99 deed sales of foreclosed properties in February, more than any other month in more than two years. The combined total for the first two months of 2007 increased by 117 percent from the same time in 2006.”

“Livington County has also seen a huge leap in foreclosures since 2000 when there were a total of 85. That number jumped to 280 in 2005; to 614 in 2006 (a 120 percent increase); and in the first quarter of this year, there were 243 foreclosures, county Register of Deeds Sally Reynolds said.”

“In Washtenaw County, most of the foreclosures used to come from Ypsilanti and Superior townships, Moore said. Now, Ann Arbor’s being hit just as hard, along with Chelsea, Manchester and other outlying areas. ‘That’s where all the new homes were built,’ he said.”

“‘Some people who really didn’t qualify for a loan in the first place, but a smart salesman sold them something they couldn’t afford,’ he said. ‘They don’t have any equity built in their homes and attorneys are telling people, ‘Call your mortgage company. Say the key’s inside. And walk away.’”

The Cadillac News from Michigan. “Most sellers…may be forced to accept less for their properties than they ever anticipated. ‘It’s not in someone’s best interest to sell unless they have to,’ said Shirley Schafer, broker (in) Cadillac. ‘But it’s a great time to buy.’”

“‘We probably have a three-year supply on the market of homes priced over $100,000,’ Schafer said.”

“The uncertainty of the future causes agent Sheila Richardson concern. ‘In another five years, we could be worse off,’ she said. ‘We all might be selling our homes for 50 cents on the dollar.’”

The Pantagraph from Illinois. “It’s a scary time for hundreds of thousands of American homeowners, some of whom live in your own back yard. The number of new foreclosure cases filed in McLean County during the first three months of the year has risen about 15 percent from the same time period last year.”

“Attorney Chuck Erickson in Bloomington represents banks in foreclosure cases and acts as an agent for the Intercounty Judicial Sales Corporation out of Chicago when it schedules an auction in town.”

“‘I’ve done more foreclosures in the last year than I probably have in the last several,’ Erickson said.”

The Star Tribune from Minnesota. “Spring is the time of year when Twin Cities-area home builders itch to put holes in the ground that will become someone’s American Dream. But consumers aren’t feeling so springy leading into the housing market’s prime selling season.”

“‘And lo and behold, the subprime market comes forward and just causes another issue that descends on the housing market and raises questions that we don’t need,’ said Michael Noonan, division president with Toll Brothers Inc. ‘I’d love a period without news about housing.’”

“‘It has sent a shudder through the housing and mortgage industries,’ said Noonan, who is also president of the Builders Association of the Twin Cities.”

“According to the FDIC, the amount of noncurrent real estate construction and development loans increased by $1 billion, or 15.5 percent, during the fourth quarter of 2006. That increase represented nearly a quarter of the $4.2 billion increase in all noncurrent loans and leases during that period.”

“‘When you have something that shakes the confidence of the finance markets, that’s a concern for us,’ Noonan said. ‘If access to financing or capital becomes more and more difficult, we’ll have a greater challenge selling homes.’”

“Amy Crews Cutts, deputy chief economist for mortgage funder Freddie Mac, said that although this slowdown and all the mortgage drama that has surrounded it has been painful, it was inevitable and necessary to bring the market into balance and to prevent excess price inflation or the kind of overbuilding that happened in the early 1980s.”

“She believes the market has hit bottom in terms of the number of transactions, though not necessarily in terms of prices.”

“‘That said, I don’t think the upward slope will be very strong,’ she said. ‘It’s a bad thing if you are a homebuilder or investor in homebuilding, but it’s a fabulous thing if you care about the health of the overall housing market.’”

Some housing bubble news from Wall Street and Washington. “KPMG LLP sued former auditing client Fannie Mae, the biggest source of money for US home loans, for ‘fraudulent deception’ that prevented KPMG from uncovering $6.3 billion in overstated earnings. Fannie Mae from 1998 until 2004 withheld and distorted its accounting, engaging in ‘breach of contract, fraudulent misrepresentation, fraudulent inducement’ and other wrongdoing, New York-based KPMG said.”

The Atlanta Journal Constitution. “The two biggest sources of mortgage money in the United States just stuck their fingers into a dike to hold back a flood of home foreclosures. The response of Freddie Mac and Fannie Mae to a crisis for subprime borrowers is welcome. It won’t be enough to save the houses of every consumer who took out one of the enticing but risky loans.”

“‘We can’t solve all the problems, but we can’t wash our hands of them, either,’ Daniel Mudd, the CEO of Fannie Mae, told the House Financial Services Committee last week.”

“The unfortunate truth is that some families will lose their homes regardless of what the lenders or Freddie Mac and Fannie Mae do. There are ‘borrowers who can be ‘rescued’ and those who cannot,’ Freddie Mac CEO Richard Syron told the House committee.”

From Briefing.com. “NVR Inc., one of the nation’s largest homebuilding and mortgage banking companies, reported a 36% decline in first quarter earnings, due to lower revenue and continued pricing pressure in many of its markets.”

“While NVR saw new orders climb during the latest quarter, offering hope for a housing rebound, it is attracting customers at a substantial cost. Profit margins were weighed down by lower prices and increased use of discounts and incentives. NVR, like other homebuilders, is likely to continue to feel the pinch of lower prices and higher costs in the coming year.”

From USA Today. “About 15% of KB Home’s already-built homes remain unsold; the firm’s goal is 10%. Nationally, KB owns more than a three-year supply of undeveloped lots. And it saw an 84% drop in first-quarter earnings.”

“In what he describes as a ‘realistic,’ not a ‘gloomy,’ outlook, CEO Jeff Mezger says he doesn’t see the market improving much before next year. About 13% of loans for KB properties, many of them offered through a partnership with Countrywide Financial, were subprime in 2006, Mezger says.”

“‘In retrospect, (the high-end) markets were hit the hardest (in the current downturn),’ he says. ‘We’ve reverted to focus on first-time buyers and the first-time move-up buyer.’”

“Already, Mezger says, he’s seen attitudes of buyers change in response to the new market conditions. ‘People are now looking at homes as a residence, not buying and flipping,’ Mezger says.”

From Bloomberg. “Cemex SA, the world’s third-largest cement producer, may report profit fell for the first time in three quarters as a slump in U.S. housing hurt sales.”

“U.S. housing starts fell 31 percent during the first quarter from a year earlier. ‘The biggest risk we see for Cemex is the slowdown in the U.S.,’ analyst Luis Martinez said.”

“Cemex’s cement sales measured by tons probably dropped 19 percent, while ready-mix concrete sales probably fell 26 percent in the quarter because of reduced housing construction in Florida and California.”

The Register Guard. “Three years after the U.S. housing boom reached its crescendo, mortgage rates remain at historically low levels. Northwest lumber and plywood manufacturers, which had to modernize their mills to keep up with demand during the building spree, are operating more efficiently than ever.”

“The music of buzz saws and nail guns has quieted. And despite continuing favorable conditions, or maybe because of them, the wood products industry has become a dancer without a partner.”

“‘Right now, we’re just going through an economic adjustment of overproduction (of houses) and underconsumption,’ says Paul Ehinger, a Eugene-based wood products analyst with a long history in the industry. ‘We’ve been there before, and we’re there again.’”

“At least nine sawmills or plywood plants in the United States and Canada have closed or reduced shifts in recent months due to the nationwide construction slowdown, including five in Oregon.”

“‘Statewide and locally, we’re looking at about a 10 percent decline,’ says Brian Rooney, regional labor economist for the state Employment Department. ‘Pretty much as soon as prices started dropping, in the last quarter of last year, employment started dropping, too. These are looking to be permanent layoffs at this point.’”

From Origination News. “Sovereign Bancorp Inc., Philadelphia, has reported that its mortgage banking business incurred a loss of $107 million in the first quarter, in large measure due to a $120 million charge related to the sale of correspondent home equity loans.”

“Banking regulators may push more homeowners into foreclosure by making it tougher to refinance subprime mortgages, said Angelo Mozilo, head of the largest U.S. home-loan lender. The plan is an ‘inadvertent attack on liquidity exactly when it shouldn’t happen,’ said Mozilo, CEO of Countrywide Financial Corp.”

“Mozilo recommends that regulators exempt subprime borrowers replacing adjustable mortgages from the guidelines. ‘These people bought houses under one set of rules and the rules have changed on them mid-stream,’ he said. ‘The simplest thing to do is to permit programs so we can refinance them.’”

“About 20 percent to 30 percent of people who took out subprime mortgages in 2005 and 2006 won’t meet the financial thresholds regardless of whether the new guidelines are adopted because lenders aren’t lending as much against property values, according to debt strategists at Lehman Brothers Holdings Inc.”

“The main cause of delinquencies and defaults has been ‘`flippers, speculators and people knowingly stretching themselves without the capability to get past any bump in the road,’ Mozilo said.”

From MarketWatch. “Investment bank Goldman Sachs is increasingly concerned about the health of California’s real estate market and reckons mortgage giant Countrywide Financial could be harder hit than other lenders because of its big exposure to the state.”

“Mortgage delinquencies jumped 46% in California last year, vs. a 5% increase nationally, Goldman said. Delinquencies on prime and subprime adjustable-rate mortgages in California soared by 78% and 60% respectively, vs. 33% and 24% across the U.S., the bank added, citing recent data from the Mortgage Bankers Association.”

“Now that lenders are cutting back some of these types of loans and regulators are beginning to crack down, California home prices could begin falling later this year, especially in high-price cities and towns, Goldman said.”

“‘Many metros in California have home prices that are not justified by the underlying fundamentals,’ Goldman analysts James Fotheringham, Daniel Zimmerman and Monica Gabel, wrote. ‘Instead house price trends have been driven by the availability of subprime and non-traditional credit.’”

“Ten of the top 12 metropolitan areas for subprime mortgages last year were in California, with Stockton topping the list. More than 40% of home loans in that town, nestled in the state’s central valley east of San Francisco, were subprime in 2006, the analysts noted.”

“With fewer subprime loans available and more delinquencies likely, California home prices will probably weaken further in 2007, the analysts said.”

“Option ARMs are one of the few types of ‘prime’ home loans that have begun to deteriorate, Goldman said. About 46% of the principal from Countrywide’s mortgage portfolio is from option ARMs, and many of these loans were probably originated in California, Goldman noted, adding that this is a ‘risky combination.’”

National Mortgage News. “Merrill Lynch, in its first-quarter earnings statement, noted a ‘difficult environment for the origination, securitization and trading of nonprime mortgage loans and securities in the U.S.’ Merrill, of course, has been one of the toughest Street firms on loan buybacks.”

“Meanwhile, we continue to hear buyback horror stories from funders that are getting raked over the coals by Wall Street. Here’s the latest via a source: ‘The loan was good for two years and then did not pay.’ The source said the Street firm cited a $1,000 discrepancy on the verification of deposit as a reason for the buyback.”

“In recent months National Mortgage News has published a handful of stories/columns about the growing secondary market for delinquent loans, including second liens. A few weeks ago the ‘going price’ for delinquent seconds was in the range of 15 to 25 cents on the dollar. One mortgage executive, a former trader, told us the going price is now four to five cents on the dollar which will not help subprime lenders that are saddled with bad seconds.”

The Palm Beach Post reports from Florida. “How about an early peek at March sales of existing homes, which come out this week? You’ll have an insider’s position for a day, the official Realtors report comes out Tuesday. An early report gives us a heads-up on what Wednesday’s headlines are probably going to say.”

“‘The combination of plunging sales and rising inventories is a symptom of a very, very sick housing market,’ said housing economist Thomas Lawler.”

“Single-family homes: Inventory: 15,028 for sale, compared with 12,737 in March 2006. Sold: 716, compared with 956 in March 2006. Backlog: 21 months, compared with 13 months in March 2006. Condos: Inventory: 17,368 for sale, compared with 13,413 in March 2006. Sold: 640, compared with 1,082 in March 2006. Backlog: 27 months, compared with 12 months in March 2006.”

“‘There is a high likelihood that prices will decline fairly significantly during the remainder of this year,’ Lawler said.”

The Sun Sentinel. “Just three years ago, Port St. Lucie was America’s fastest-growing city. But now, as builders, investors or other owners leave homes empty and unkempt in the slumped housing market, some council members say the city should consider actively marketing its real estate.”

“Empty houses, which account for less than 5 percent of the city’s homes, make up about 15 percent of the code enforcement violation cases, according to city officials.”

“At least 683 homes are vacant in Port St. Lucie, according to information from the Realtors Association of St. Lucie County. That number likely is significantly higher because real estate agents often do not list a home as vacant for security or marketing reasons, association representative Curtis Lowe said.”

“‘If we have a poor appearance, then that’s what we’re going to attract,’ Councilman Christopher Cooper said.”

The Herald Tribune. “CCI left hundreds of investors with unfinished homes around the state, but by far the largest concentration was in North Port. Jesse Battle III’s company, which has since filed for bankruptcy protection from its creditors, collapsed late last year, leaving 482 homes that had loans with Coast Bank in various stages of construction, some with no work done at all.”

“Juan Cruz says he is out about $100,000 on two CCI homes he contracted for that were funded by Coast through mortgage originator American Mortgage Link. On one of the properties, CCI drew $80,000 from the loan and ‘never even turned a single shovel of dirt,’ Cruz said.”

“‘We’ve had three large builder failures in the city: CCI, Jade Homes and Avalon,’ City Commissioner Fred Tower said. ‘We were the fastest-growing community and were affected by builders who saw an opportunity here.’”

“Tower said the city has been monitoring all the abandoned projects by builders within North Port and recording violations.”

The News Press. “A stalled real estate market is exposing the masters of an age-old Southwest Florida art: scheming on home sales to make big and fast bucks. The News-Press has uncovered almost 70 Southwest Florida home sales in which sellers or government officials say people either were duped or appraisals inflated so people could pad their profits.”

“‘The problem is as bad as I’ve seen it here,’ said Douglas Molloy, chief assistant U.S. attorney in Fort Myers.”

“The deals in Cape Coral involved a group of business people selling homes among themselves at inflated values, a Lee County official said. In Collier County, a Naples businessman worked independently, piling up millions of dollars in mortgages from sellers, with many of the loans past due or due this year and more than half the homes now in preforeclosure, according to county records.”

“‘There’s something really wrong going on out there,’ said Tony Iannotta, owner of a Marco Island mortgage brokering firm.”

“In conditions like those of the boom years, it can be difficult for lenders not only to keep pace but to keep watch for potentially bad deals, said consultant Jack McCabe.”

“‘There’s so much speculative activity, banks are so overworked they’re too overwhelmed to even analyze it well,’ McCabe said. ‘It’s not until things slow down that it becomes apparent.’”

“The Cape sales were financed by banks or other lending institutions that require appraisals. ‘There are appraisers who will pretty much appraise a house for anything,’ said Cindy Franklin, of the Lee County Property Appraiser’s Office.”

“All 47 Cape deals have been reclassified by the county property appraiser as not being based on the property’s actual value, Franklin said.”

“For example, Miami lawyer Julio Rodriguez bought a house in Cape Coral for $196,400 in June 2005 and sold it to Mario Fernandez, who was involved in other deals, in June 2006, months after the local market had peaked, for $305,000.”

“From June 2005 to June 2006 the median price of a single-family-home resale in Lee County dropped 5 percent from $281,000 to $268,000. The house is assessed at $167,620 by the county appraiser, whose assessments typically trail market value.”

“Rodriguez, who was the closing attorney on many of the 47 Cape deals, pointed to the market when asked about claims that appraisals had been inflated. ‘I guess the market did what it did,’ he said. ‘The market went up and up.’”

“Douglas Lee Carter of Naples, put together all of the Collier County deals. He owes more than $4 million on those loans and an additional $12.7 million in mortgages from lenders or private investors, according to county records.”

“Carter vowed to pay his debts and blamed his problems on real estate’s stumble since the end of the boom. ‘Everybody will get their money,’ Carter said. ‘If you really want to do something, fix the market.’”

“‘In the end the public ends up picking up the tab,’ said Woody Hanson of Fort Myers-based Hanson Real Estate Advisors, which specializes in resolving high-stakes disputes over appraised values.”

“Appraisers who stay on the straight and narrow can find themselves out in the cold if lenders, mortgage brokers and real-estate agents stop using their services, Hanson said. ‘They soon find themselves in a situation where they cannot say no.’”

“‘Banks could stop this if they wanted to,’ said Wayne Archer, director of the University of Florida’s Bergstrom Center for Real Estate Studies. ‘When we talk about laws or appraisers, we really need to remember that banks have more of the power than anybody because they’re the ones with the money. Good lending practices would do a lot to stop this.’”

“‘Let’s face it,’ Archer said, ‘there was a lot of money to be made.’”

“Part of the problem in enforcement is that it’s sometimes a fine line between out-and-out fraud and the general atmosphere of carelessness in the mortgage industry now, said Mark Mathosian, regional director for the Florida Department of Financial Services.”

“‘There’s a heck of a lot of creative financing out there, some of which is sure to be found to be illegal,’ he said. ‘I remember at one time it took two months to get a mortgage loan. It took two months to get everything verified. Then it got competitive, and the market dictated the lenders couldn’t take that time. Before you know it, there’s almost no verification taking place.’”

The Miami Herald. “Though a booming real estate market sparked the upgrade wave in the Keys, a cold housing market may help reverse the tide. Developers planned to finance the majority of the new resorts with condominium sales, but demand for the pricey units has gone south.”

“‘All I’m seeing are projects getting canceled right now,’ said Robert Boykin, whose was to convert Marathon’s Banana Bay motel into a condo-hotel resort.”

“Nearby, at the Coconut Cay motel, owner Jim Rhyne had envisioned converting all 66 rooms into condo-hotel suites. ‘We didn’t get started on it, thank goodness,’ he said.”

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