December 19, 2011

Beyond Bailouts To Handouts

The Herald Tribune reports from Florida. “Much of the slippage in Florida’s share of older residents can be linked to the economic downturn and housing crisis. Census Bureau projections had predicted a 17.8 percent share for Florida in 2010, anticipating a wave of early retirees that did not materialize. The recession’s effect on stock portfolios and housing prices forced many would-be Florida retirees to delay moving, said Pat Neal, president of the Lakewood Ranch development company, Neal Communities. The average age of his customers, he said, has gone from 59 to 63.”

“‘People postponed everything,’ Neal said. ‘It’s now six years later and the biological clock has continued to tick. You know how it goes: denial, acceptance, resignation. People are resigned to the fact that their home in Cincinnati will never have the value it did in 2005.’”

“The total number of bankruptcy filings in the Middle District of Florida is trending down for the first time since the onset of the Great Recession in 2007. At least one bankruptcy attorney said the number of filings might increase in 2012. ‘A lot of the people who were over-leveraged on their credit card debt have already washed through the system,’ said Mark Hildreth, a bankruptcy attorney with Shumaker Loop & Kendrick, in Sarasota. ‘That’s one reason for the drop. But another reason is that banks pulled back on foreclosure filings for much of 2011.’”

“Now that banks have begun ramping up their foreclosure filings again, bankruptcies could follow. Real estate investors, developers and builders are the biggest casualties, according to data tracked by the Herald-Tribune’s Inside Real Estate blog.”

The Orlando Sentinel. “Through the first 11 months of the year, bankruptcies in the Orlando area are down 16 percent from the same period last year, according to the latest federal-court figures. People are working overtime or multiple jobs to make ends meet, keep creditors at bay and avoid bankruptcy. Gwen Donovan, a Cocoa fitness instructor, said she was working seven days a week at three different YMCA locations until she was laid off in June. Now searching for jobs, working part-time and facing foreclosure, Donovan said she is determined not to declare personal bankruptcy.”

“‘I really don’t want to do that — it’s just not right for me,’she said. ‘But my creditors won’t work with me, and the bank is not really working with me. I feel like I’m being forced into bankruptcy, and I don’t want it. I really can make things work if they’ll just stop raking me over the coals.”‘

“‘One of the things we’ve seen is that there has been an incredible increase in the amount of payments that people have made on their credit-card debt,’ said Richard Schram, a senior executive at CredAbility of Central Florida, a consumer-counseling operation. ‘You also have a lot of unemployed people who have depleted their 401(k) funds to pay down their debt and fend off creditors.’”

‘Many people simply have nothing left, Schram said. ‘If you’re unemployed and delinquent on your mortgage or in foreclosure, and you have no savings left, no equity in your house, no resources to pay down your debt, there’s really no incentive to declare bankruptcy,’ Schram said. ‘It’s really a no-win situation: They know they owe, but there’s nothing they can do about it.’”

“As attorneys general in other foreclosure-battered states step up their investigations into fraudulent mortgage practices by large U.S. banks, some Florida groups are accusing state Attorney General Pam Bondi of being soft on the giant lenders. ‘We wanted to convey the idea that we want her to put pressure on the banks to be positive and forthright with their clients,’ said Jerry Pena, a community organizer. ‘… Her stance was that she didn’t feel the banks were as liable as the media portrayed them to be, and people shouldn’t have gone ahead and signed the mortgage paperwork, and that they knew what they were getting into.”

The Destin Log. “Destin resident Randolph Branham was convicted Dec. 15 of conspiracy to commit bank fraud and bribery of a loan officer. Prior to the trial, four others indicted in the scheme pled guilty, which included Crestview attorney Chris Cadenhead, two Destin residents, Jackie T. Fair Jane M. McDonald, and former loan officer Larry J. Malone, of Bainbridge, Ga.”

“During the trial, it was proven that in order for McDonald and Fair to obtain a penthouse condominium located in Destin, Cadenhead, Branham, and Fair conspired to defraud the financial institution, Southwest Georgia Farm Credit, ACA, located in Bainbridge. As a part of the conspiracy, Branham contacted Southwest Georgia Farm Credit’s then-Chief Lending Officer, Malone, to ask that he assist Cadenhead in obtaining a $500,000 loan from the bank, which was going to be used to help purchase the penthouse condominium. With the understanding that Malone would receive a financial benefit in the form of a bribe, Malone agreed to assist and, thereafter, authorized the $500,000 loan to Cadenhead.”

“Three months later, Malone approved a second loan for $700,000 to refinance the first loan and a $150,000 check was sent to Cadenhead. The evidence showed that, from the proceeds of that second loan, Malone was given a $50,000 check, which represented the payment of the bribe originally negotiated by Branham, Branham received a $25,000 check, Cadenhead took $25,000 for himself, and another individual also received some of the money.”

“Thereafter, McDonald obtained loans through fraud in her name for the penthouse condominium with the assistance of Fair and Cadenhead. As a result of Branham’s conviction, Branham faces a maximum sentence of 30 years in prison on both Counts One and Two.”

From TC Palm. “As a way to help clean up neighborhoods, city officials are looking to require foreclosed properties be registered in a database and the mortgage holders pay an annual fee. City commissioners and staff met at a workshop to discuss the possibility of mirroring a St. Lucie County ordinance that generates money to pay for fixing up foreclosed properties falling into decay, such as by mowing overgrown lawns. The registration holds someone accountable for a foreclosed property.”

“Mayor Bob Benton said registration wouldn’t solve the problem of blight on the city due to foreclosed properties, but it would help. Police Chief Sean Baldwin said he likes the idea of registration as a crime prevention tool. Blight and crime have a direct connection, Baldwin said. The latest crime related to foreclosed properties is the theft of recyclable materials, such as copper and aluminum. He said criminals are stealing $25,000 to $30,000 worth of materials from electrical wiring and plumbing to get $50 to $60.”

“Baldwin said people don’t check on foreclosed properties and don’t know when materials have been stolen, which causes problems for the Police Department when it comes to enforcement.”

The News Chief. “Polk County’s total foreclosure filings - default notices, scheduled auctions and repossessions - were down 15 percent in November compared with the year before, and fell 33 percent from October, according to RealtyTrac. Lakeland Realtor Gate Arty said there is still intense local demand for foreclosure properties because of the ongoing supply issues. ‘Any time a foreclosure listing hits now, it almost harkens back to the market of ‘05 and ‘06, where you have multiple offers almost instantly,’ said Arty, of Keller Williams Realty.”

The St Petersburg Times. “From July 2010 through November 2010, Tampa Bay lenders recorded 2,971 short sales with a median price of $112,000. In the same period this year, banks recorded 3,700 short sales with a median price of $89,900 in Pinellas, Hillsborough and parts of Pasco and Hernando counties, according to My Florida Regional MLS data. While short sales have risen, foreclosure sales in the bay area plummeted from their peak of 1,549 in March to 505 last month, a 67 percent drop. The 505 sales last month is 23 percent lower than November 2010.”

“Hungry investors are now entering bidding wars on short sales because the supply of bank-owned homes is so low. ‘The investors are all over these,’ said Craig Beggins, owner of Century 21 Beggins Enterprises in Apollo Beach. ‘They have no choice. This is going to cause the average prices to go up. The cheap houses are going away.’”

The Star. “The U.S. housing market remains in such a state of crisis that homeowners and banks have moved beyond bailouts to handouts — they’re donating unwanted properties to charity. This year alone Real Estate Donations has been handed the keys to over 100 homes from folks who can no longer afford them. That’s a ’significant’ jump from the six to 12 properties that used to be donated to the non-profit agency each year before the subprime mortgage crisis and the collapse of the U.S. housing market, says Charles Konkus who started the charity 11 years ago.”

“Many are in such bad shape, or have been stripped bare during the months they sat empty during the lengthy bank foreclosure process, Konkus has had to turn them down.”

“The program has allowed folks such as New Jersey resident Ellie May, 86, to escape ongoing taxes and upkeep on the dilapidated Florida bungalow she and her now deceased husband hadn’t used in years. When it proved impossible to sell given all the distressed homes up for sale in Florida, her son, Victor Tagliaferro, contacted Real Estate Donations.”

“By April the home should be renovated and ready for an aged vet who has first gone through counselling around how to budget and live within their means, says Konkus. ‘We’re a long way from a recovery, but programs like this may help,’ says Tagliaferro. ‘At least they get people into houses and back into neighbourhoods.’”

“More than two years ago, Chase Magnuson was hired to create George Washington’s ‘real estate gifting program’ because other charities were refusing to accept real estate donations from homeowners just looking to walk away. So far it has closed on 13 properties, from a retail complex to office buildings, rental homes, condos and parcels of land, says Magnuson. ‘I get a number of calls every week on all types of properties. Too often I have to tell them, ‘You have more mortgage than the property is worth and there’s no ‘gift’ in that.’”




Bits Bucket for December 19, 2011

Post off-topic ideas, links, and Craigslist finds here.