It’s Kind Of Like Being In A Long-Term Investment
The Wall Street Journal reports on Florida. “The financial clouds hovering over the Monteverde condominium development in Boynton Beach, Fla., were driven away in late spring when an investor bought 118 of the project’s 219 units in a ‘bulk sale.’ But Dan Berwitz, who paid $204,000 for a unit in the Monteverde in 2007, has mixed feelings about the deal. He is pleased that the sale will bring financial stability to his building, but he isn’t happy that the bulk-sale buyer plans to sell the units far below what he paid, in some cases as low as $100,000. ‘But unfortunately, right now, there’s nothing we can do,’ he said.”
The District Chronicles on Florida. “Lynn Thompson quit paying the mortgage on her investment property — not because she couldn’t afford the payments, but because she thinks walking away is better for her long-term financial health. Thompson bought the property here for $175,000 in January 2007. At the time, she planned to rent the house and eventually sell it for a profit. Today, she estimates the house is worth $85,000, maybe less.”
“Unable to find renters to help cover the mortgage, she tried to convince her lender to allow a ’short sale’ - selling below the loan amount, with the lender forgiving the balance. When the lender declined, Thompson decided to walk away. ‘I would have basically no money left every month if I made the payments,’ said Thompson. ‘If I tried to sell the house in, say, 10 years from now, I still would have to come up probably with, say, $75,000.’”
“Mike Booth and his wife bought their first home in 2008, two years after they married, for $205,000 - a bargain since the house was appraised at $240,000. Today, he estimates the house would sell for $165,000, but the 30-year-old engineer is taking the long view on what he and his wife call ‘our little castle.’ ‘We’ve entered into a binding moral contract,’ said Booth, who lives in suburban Orlando. ‘Really we don’t think about it being underwater. It’s kind of like being in a long-term investment, and tracking it daily doesn’t make sense.’”
The Palm Beach Daily News. “‘Property values are down,’ Palm Beach County Property Appraiser Gary R. Nikolits acknowledged in his talk to real estate agents and brokers. The preliminary 2010 ‘taxable-value’ appraisals for properties in Palm Beach’s 28 designated areas showed a drop of 12.7 percent from last year, Nikolits said.”
“The total ‘market value’ of properties in the town — residential, commercial and business equipment — has declined from a high of $18.1 billion in 2008 to $14.1 billion in 2010, one chart presented by Nikolits showed. In contrast, the town’s total market value for 2006 was $15.5 billion.”
The Palm Beach Post. “Two senior judges and six case managers have been added to tackle Palm Beach County’s foreclosure backlog, with salaries paid for by $640,000 from state coffers. The new 15th Judicial Circuit employees, including four clerical assistants, last week began to whittle down the estimated logjam of 52,000 foreclosures in county courts.”
“Peter Blanc, chief judge of the 15th circuit, said it is important to clear the foreclosure cases so that vacant and dilapidated homes can go back on the market, presumably increasing neighborhood property values. Blanc estimated the number of foreclosure summary judgments heard in the county each week will increase initially from 1,000 to 2,000. Palm Beach County had just 3,049 foreclosures in 2005. That shot up to 30,227 last year, records show.”
“Homeowner advocates fear the courts may be in too much of a rush to clear the cases, possibly overlooking details such as proof that the lender holds the mortgage note. ‘It seems like the goal of the judicial system is to process these cases as fast as possible,’ said Lisa Epstein, a West Palm Beach homeowner who is fighting a foreclosure. ‘Doing a rush job at this point is benefiting one party and one party only, and that’s the foreclosure entities.’”
“Beginning Monday, Palm Beach County homeowners facing foreclosure will be guaranteed a chance to negotiate a different ending with their lenders as the courts try to reduce a foreclosure overload. All foreclosures filed on or after Monday are subject to a new state Supreme Court order requiring mediation on homesteaded properties before a foreclosure hearing is held.”
“Hobe Sound attorney Trent Steele does foreclosure mediations in the 19th Circuit Court, which includes Martin and St. Lucie counties. The 19th Circuit began requiring mediations this year. ‘I have been very frustrated with the process,’ Steele said. ‘In my opinion, the lenders have no motivation to settle.’”
“Anthony DiMarco, executive vice president for government affairs for the Florida Bankers Association, said bankers worry that the mediation will become a way for borrowers to further stall the process. ‘If we can have meaningful information exchange, then we’re all for it,’ DiMarco said. ‘If it’s just a delaying tactic, it’s not helpful.’”
The News Press. “The backlog of foreclosure cases clogging the Lee County court system dropped below 20,000 in June even as lenders continued a steady flow of filings against family homes. It was the first time the number dipped below 20,000 since 2008. The backlog reached its peak of about 29,000 in late 2008, just before the start of the ‘Rocket Docket’ that lets judges crank out hundreds of foreclosure judgments in a day.”
“But even as the backlog and overall pace of foreclosures has fallen, foreclosures of homesteaded properties - primary residences - have not. Homesteaded primary residences were 55 percent of June’s filings, for example, about what they’ve been running in recent months. Unemployment and continuing harsh economic conditions are to blame for the continuing hemorrhaging of home ownership, said Eddie Felton, executive director of the nonprofit Home Ownership Resource Center in Fort Myers, which helps people in danger of losing their homes.”
“‘We had a class this past Tuesday in which there were 10 people and everyone was there because of the fact they’ve lost employment or their income’s been cut,’ he said. ‘This is what we’re seeing, completely across the board.’”
“For the people coming in now, Felton said, gone are the reckless subprime mortgages that were causing foreclosures two years ago. ‘Now we just have people who want to keep their house,’ he said.”
The Orlando Sentinel. “Jim Kimpel…the fraud investigator for the Lake County Property Appraiser’s Office credits neighborhood busybodies for assisting him in his pursuit of homestead-exemption cheaters, which has added $14.9 million in property value to the county’s tax rolls this year. Their tips and info help the appraiser-turned-gumshoe determine whether a home is rented, abandoned or a snowbird’s winter place — none of which qualifies the property for the tax break.”
“‘Neighbors tell us a lot,’ said Kimpel, who became Lake’s first full-time fraud investigator in January. He’s one of a dozen investigators working for elected property appraisers in Central Florida who have stepped up efforts to ferret out homestead cheats. ‘Nobody who’s paying property taxes likes it when the guy next door is getting a tax break they don’t really deserve.’”
“By law, Florida residents who own a home in the state are entitled to shield up to $50,000 of the property’s value from tax assessment…The property-tax exemption can be doubled to $100,000 for some seniors. To qualify for a homestead exemption, homeowners must prove the property is their permanent residence, a key distinction that begs proof — a drivers license, voter-registration card or vehicle-registration paperwork, for example.”
“Homeowners also cannot claim ‘homestead’ on rentals, second homes and vacant houses. But people try. ‘Oh, do they ever try,’ said Volusia County Property Appraiser Morgan Gilreath. Last year, his two investigators examined more than 700 cases and levied 289 homestead tax liens, which will be worth about $3 million in back taxes, penalties and interest to the county when they are collected.”
From Florida Today. “Merritt Island contractor Sergio Novo was forced to leave the country to make ends meet. The 50-year-old has been taking construction jobs throughout the Caribbean and in Central America. He may head off to Hawaii soon, after bidding on work there. Peaking at 50 to 60 full-time employees, and up to 500 total workers, in the boom years earlier this decade, Novo’s work force has dropped to about five trusted foremen, some of whom also take on the duties of construction worker.”
“‘I’ve got four foreman doing the work of one foreman and three helpers,’ he said. ‘I can’t get any smaller. My thing right now is survival.’”
“By 2007, Novo and other Brevard contractors began to suffer as the credit crisis burst the housing bubble. Work became scarce in Brevard, so Novo began to reach out to contacts he made in the Caribbean during the 1980s and 1990s. The overseas work is welcomed because, with very little construction work in Central Florida, desperate contractors are bidding so fiercely that profit margins have vanished. And commercial construction starts in Florida, estimated at less than $1 billion in 2010, will be less than half the average for the previous five years, according to McGraw-Hill Construction.”
“Novo believes he will be forced to rely on working overseas for at least another year. He sees the benefits of the stimulus funding beginning to fade although the U.S. economy has not yet recovered. In Brevard, building permits for May show only slight improvement in rebounding from historic lows. ‘I don’t see it getting better any time soon,’ he said. ‘The profit margins aren’t there. It’s just survival.’”
