It Was A Little Strange The Way It All Happened
The Orlando Sentinel reports from Florida. “Central Florida’s flood of foreclosures is swamping one of the area’s fastest-growing minority groups. That’s because Hispanic homebuyers, as the nationwide housing bubble expanded and then deflated earlier this decade, wound up with a disproportionate number of the high-risk, high-interest loans known as subprime mortgages. ‘It was cultural greed. … They were overselling the American dream,’ said Orlando mortgage lender José Hoyos, an expert witness in foreclosure cases. Lenders were telling prospects, ‘You’re Hispanic — you deserve the best. You deserve that house in Windermere. You are a janitor? Oh, no, no, no — you own a janitorial business. No, you don’t have to put any money down.’”
“Arturo Fernandez moved his family here from Colorado in 2002. Seven years later, the Walt Disney World bus driver is financially ruined, having filed bankruptcy in February. His wife of 35 years is prepared to leave him and live with their son, if the son moves to Colorado for employment opportunities. They have lost their rental home in Poinciana and worry about being evicted from their main residence near Kissimmee.”
“‘We came for the dream of America,’ Arturo Fernandez said, ‘but I lost everything. I’m living right now check by check.’”
The Herald Tribune in Florida. “A yearlong Herald-Tribune investigation into thousands of suspicious Florida flip deals found that lenders of all kinds approved risky deals and ignored obvious red flags for mortgage fraud. Using public records and Internet searches, the Herald-Tribune identified hundreds of deals that exhibited classic red flags for fraud. They include sales between family members and business partners in which prices increased $100,000 or more overnight. In other cases, flippers repeatedly traded properties from their company to their own name, each time increasing the price and the amount they borrowed.”
“Lenders knew they were writing bad loans, but did it anyway because they were making so much money on underwriting fees, said Jack McCabe, a Deerfield Beach-based real estate consultant who has been studying Florida housing fraud for years.”
“‘There’s no doubt during the boom years in Florida there were lenders who were fully knowledgeable of rings of people who were acquiring loans without any plans to pay them back and were out to pocket as much money as they could,’ McCabe said. ‘They knew in the pit of their stomachs that what they were doing would bring the system crashing down. But they didn’t say anything because they did not want to be blamed for ending the gravy train.’”
The Daily Business Review in Florida. “Boca Developers’ ambitious plan to convert a former landfill in North Miami into a mixed-use community has come to an end. Wells Fargo Bank, trustee for Credit Suisse and First Boston, plans to foreclose on the delinquent developer within two weeks. In 2002, Boca Developers signed a ground lease with the city to build 5,999 condos, a 200-room hotel and 400,000 square feet of retail space on the land. Boca Developers only built 373 units before the real estate market collapsed.”
“Deerfield Beach-based Boca Developers owes the lenders $198.5 million, according to Peter Hoelzle, vice president of TriMont Real Estate Advisors in Atlanta. TriMont is the trust’s special servicer, which manages default loans for the lenders. He said Boca Developers won’t challenge the foreclosure suit.”
“‘It will be a consensual, an agreed foreclosure … if you will,’ he said.”
The Lehigh Acres Citizen in Florida. “Lehigh Acres Fire Board commissioners have voted to support a resolution asking legal counsel to pursue a special election to ask the voters to pay a $100 special assessment on each of the 128,000 parcels in Lehigh Acres. That is in addition to the 3 mils they have voted on.”
“Several people spoke before the fire board, including Kevin Shea, recognized in Lehigh for his knowledge of being able to analyze numbers. ‘Lehigh Acres is in a mini-depression. My parents lived through the Great Depression as adults. RealtyTrac a national firm that tracks foreclosures noted today that Lehigh had 17,978 properties in pre foreclosure 9,457 defaults, 4,888 Sheriff sales, 3,167 bank owned, and others. The foreclosure activity in Lehigh Acres has skyrocketed. Since July 10 the numbers have doubled. The situation is very bad, he said.”
The News Journal in Florida. “Nationally, at the current sales pace, there’s about a 40-month supply of homes on the market for $750,000 or more, according to the National Association of Realtors. That’s more than double the stock in mid-2007. ‘Obviously, the smaller homes are selling more,’ said Rachel McGrath, a Realtor in the Port Orange office of high-end broker Stirling Sotheby’s International Realty. ‘There is some resistance in the $500,000 and above market.’”
“A $2.8 million home and land in Bunnell has been on the market for more than 1,100 days, according to Realtor.com. An 8,200-square-foot home in Edgewater selling for almost $4 million has been for sale for more than 1,000 days, almost three years. In Ponce Inlet, a $2.6 million home has been listed for more than 900 days and it’s been almost 900 days since a $3.9 million New Smyrna Beach home went on the market.”
“‘Two years was normal for a seven-figure home sale before,’ said Sheriff Guindi, founder and owner of Prudential Transact Realty.”
The State in South Carolina. “Lenders were foreclosing on Charleston-area homes at a record pace in the second quarter of the year until the state’s highest court issued a rule that slowed the trend, leading to fewer foreclosures throughout South Carolina. Though the drop is probably not a sign of an economic rebound, it shows that the S.C. Supreme Court’s order has kept hundreds of local homeowners out of immediate danger of losing their homes.”
“When the economy began to sour, Family Services counselors often met with low-income residents who used risky mortgages to buy their homes. Now, their typical client is more affluent. ‘This is someone who was making $200,000 to $250,000 a year, never needed help from anyone, had all the toys and a big house,’ said Debbie Kidd, who oversees foreclosure counseling for the nonprofit Family Services Inc. in North Charleston. ‘And someone in that household has lost a good job, … and getting another job like that is tough right now.’”
“While the Supreme Court order could help struggling homeowners, housing market analysts say the rule could prolong the real estate market’s recovery. Wachovia economist Mark Vitner said the ruling could buy time for homeowners who are able to find a job or reorganize their finances. But for other homeowners, it simply delays the inevitable loss of a home, which will later be put up for sale in a time when many houses are on the market.”
“‘We have an oversupply of houses, and the market is not going to balance until the number of qualified buyers equals the number of homes,’ Vitner said.”
The Birmingham News in Alabama. “Regions Financial Corp. Chief Executive Dowd Ritter said Tuesday he will urge the company’s board to reinstate the dividend as soon as loan losses subside, which he said is hard to predict. Regions said Tuesday it continues to be vexed by bad loans stemming from the 2001 through 2005 housing boom and the recession that economists now say started late in 2007.”
“Ritter said there is no magic in raising the company’s share price, which has fallen 89 percent since Regions and crosstown rival AmSouth Bancorp combined in November 2006 in a blockbuster same-city deal that has so far disappointed investors. ‘The issue is when do credit losses begin to subside?’ Ritter said in an interview after the Birmingham-based bank reported a $244 million second-quarter loss Tuesday. ‘Right now, they are continuing to deteriorate.’”
“Morgan Keegan & Co., the brokerage arm of Birmingham-based Regions Financial Corp., improperly sold risky auction-rate bonds to customers who thought they were buying safe investments, according to state and federal regulators. The SEC suit and Alabama securities sanction is the latest trouble for Morgan Keegan. This month, the SEC notified Morgan Keegan that its mutual funds sales practices are under scrutiny for possible violations. The company is facing dozens of lawsuits and hundreds of arbitration cases over mutual funds that were tied to subprime mortgage bonds.”
“Auction-rate securities are bonds whose interest-rate payout to investors resets at periodic auctions where investors bid against each other in a competition to see who will accept the lowest rate. Auction securities were devised to give investors the time horizon of a long-term bond, with the liquidity and interest-rate payout of a short-term one. Auctions for such securities collapsed in 2008 after the credit crunch, the housing market collapse and the start of the recession.”
“‘Morgan Keegan was clearly aware that the ARS market was deteriorating, but it went so far as to actually accelerate its ARS sales even after other firms’ ARS auctions began to fail,’ Robert Khuzami, director of the SEC’s enforcement unit, said in a statement.”
The Augusta Chronicle in Georgia. “It wasn’t hard last week for Donny Moore to decorate his new office at Brenau University’s Augusta office on Davis Road. After all, it was just 13 months ago that he had moved all the furniture out of it. Mr. Moore retired last year from his job with plans to ride his Harley Davidson through the north Georgia mountains and to buy a new home in Alabama with his wife. But those plans were foiled when the country’s housing market collapsed.”
“‘Unfortunately we just didn’t see the crystal ball that talked about the most devastating economic turn since the Great Depression,’ said Mr. Moore, who resumed his job at the school last week after failing to sell his Columbia County home.”
“Mr. Moore’s replacement had housing troubles of her own. Angela Elkowitz moved to Augusta to fill his position at the university, but she was also unable to sell her home back in Gainesville, Ga., despite putting it on the market for a year. Nationally, builder confidence in the market for new single-family homes rose two points to 17 in July, according to the National Association of Home Builders/Wells Fargo Housing Market Index. While it still hovers at historically low levels, that number is the highest since September 2008.”
“But confidence was in short supply for Ms. Elkowitz, at least when it comes to the market. She is now living with her husband near Fort Campbell, Ky. When he deploys to Afghanistan in January, Ms. Elkowitz said, she will move back to the house in Gainesville. And when he’s done, she doesn’t think she’ll put it on the market again. Renting, she said, sounds so much better.”
“‘It was kind of a little strange the way it all happened,’ she said.”
