“Florida’s Burst Bubble Has Bled On To Residents”
The News Press reports from Florida. “One Cape Coral homeowner left an auction sponsored by the Miloff Aubuchon Realty Group elated her home fetched a $400,000 bid. Then the bottom fell out. ‘The bid came over the Internet. They said there was a computer glitch,’ said Rosemarie Leibert. ‘They put it back on auction and the bid was $250,000.’ Leibert declined to take the bid.”
“‘One glitch out of 850 bids isn’t that bad,’ said Marty Higgenbotham, owner of Higgenbotham Auctioneers. ‘We said we’d like to have seller answers to the bids by Tuesday, but that doesn’t mean negotiations don’t continue. We probably won’t know the results until Friday or Saturday.’”
“At both days of the auction everyone spoken to said the bids came in too low and no one expected them to be accepted. Leibert was upset with the auction, calling it a ‘farce.’ She believes the bids were too low and the auction didn’t deliver serious bidders.”
“‘I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers.’ Jeff Miloff said. ‘The auction tells me we are in a market correction.’ The bids were so unrealistic the auction showed people didn’t do their homework, Miloff said.”
The Herald Tribune. “The stalled real estate market turned Stoneybrook at Venice into a very different community than its residents paid for: a half-built subdivision dotted with slow-moving construction sites and ‘For Sale’ signs.”
“The latest news, that mega-developer Lennar will dump more than $6 million in costs on homeowners, has Stoneybrook residents crying foul and preparing a lawsuit. The residents believe Lennar is trying to make up for the fact it has sold less than half of the complex’s 998 homes.”
“Lennar contends it acted properly. But the meltdown between the developer and the homeowners is perhaps the starkest example of how Southwest Florida’s burst real estate bubble has bled on to private residents.”
“‘What it boils down to is they didn’t sell as many homes as they thought they could sell as quickly as they thought they were going to sell,’ said resident Gary Natiss, who heads a local homeowners group.”
“The residents’ grief came to a head Tuesday when the County Commission granted Lennar the ability to tax its residents for $6.6 million in infrastructure costs. The commission’s vote was 3-2 in favor of Lennar’s request. The tax will add more than $700 a year to some residents’ yearly payments.”
“Commissioner Jon Thaxton, who voted against the decision, chalked up the residents’ hand-wringing to the real estate market boom of 2004 and 2005, a time when ‘we had a lot of anxious purchasers and a lot of anxious sales people that were processing disclosures at light speed.’”
“The decision, coupled with Lennar recent increase in some homeowner’s dues by $200 a year, another move residents say wasn’t properly announced, has a group of more than 150 Stoneybrook residents ready to take Lennar to court.”
“During Tuesday’s meeting, Stoneybrook residents loudly applauded a speech by Natiss, in which Natiss threatened a lawsuit and said the ‘only thing Lennar could be building in this county are license plates while they are wearing their little orange uniforms.’”
“Sales took a dive at Stoneybrook when the real estate market tanked across the region. Today, the complex is about 43 percent sold, which county staff said is less than two-thirds as far along as Lennar hoped. County staff said Lennar will fall almost $8 million short of its revenue goals for its first two years if the sales trend keeps up.”
“Indeed, Stoneybrook is only 54 percent built, and at mid-day is nearly as quiet as the nearby Carlton Reserve.”
“Signs along North Port’s Toledo Blade Boulevard reflect the downturn in the housing market. Builders have turned to touting affordability and hurricane protection, among other things, in their advertising.”
“Some billboards and signs seen at model home sites on Toledo Blade: ‘$139,900,’ ‘$150,000s,’ ‘Homes for Working Families,’ ‘Withstands Category 5,’ And the ever-present ‘Spec Homes Available.’”
The Sun Sentinel. “If you think you’re paying more to live in your condo, townhouse or gated community, consider this: It may get worse before it gets better.”
“Experts fear that with homes selling slowly, owners who can no longer afford payments may soon abandon them. If that happens, those left behind in communities run by associations must make up the missing share of money to maintain roofs, roads, landscaping and pools.”
“‘We’re seeing a 100 percent increase in the number of files turned over to us [by associations] for lien and foreclosure,’ said Gary Poliakoff, whose Fort Lauderdale-based law firm represents 4,200 associations in Florida.”
“In Broward County, his firm has more than 900 active collection files. The Palm Beach County office has 200 active cases.”
“An association’s expenses are constant, so budgets are based on the community’s number of homes and apartments. ‘Other owners have to make up the shortfall because service providers aren’t going to say, `We feel sorry for you and will reduce the cost,’ said Poliakoff.”
“He said a similar situation existed in the late 1970s and early 1980s and ‘it took two or three years for the market to absorb all units.’”
“Another contributing factor to the foreclosure problem is creative financing. ‘A significant number of first-time condo buyers acquired them during the boom of the last decade by financing 90 percent or 100 percent and [using] adjustable-rate mortgages,’ Poliakoff said.”
“Attorney Bill Carneal explained that as interest rates rise, those buyers are ‘having to refinance or get rid of their property.’”
“Poliakoff encourages associations to foreclose as a way to beat out lenders. If a bank assumes title to a condo in a foreclosure, the association likely will lose six months of maintenance, money that everyone else will have to make up.”
“By beating the bank to the punch, associations can at least get some income by renting the unit, collection foreclosure specialist Adrian Marchisio said. Then, when the market corrects itself, the unit can be sold.”
‘ Property Appraiser Gary Nikolits has slammed Palm Beach County commissioners in a blistering letter, kindling an already-hot dispute between top county political leaders. ‘Attacking my professionalism and that of my staff is their perverted attempt to divert attention away from the culture of corruption that seems to permeate the 12th floor of the Governmental Center,’ Nikolits said, referring to the commission offices.’
Nikolits has a point. I haven’t read the statute itself, but…
Nikolits has taken a strict interpretation of state statutes, which he says requires properties to be appraised at the price they would fetch on the market, at their “highest and best use.” This means a marina is valued at the price it could yield as a condo development.
And if that’s all correct, then he’s doing his job. Any less, and he’d be up for malfeasance. I don’t envy him, but that’s the job he signed up to do, and he’s doing it.
It’s up to the free-spending commissioners to adjust their spending and mill rates downwards, or perhaps for the legislature to reword the laws. But of course they find it easier to blame the assessor rather than their own free-spending ways. What on earth are they spending all that windfall on down there, anyways?
Now the real test will come when property prices plummet, and let’s see if Nikolits starts REDUCING the assessments! Oh my, he thinks the commissioners hate him now? Just wait for THAT to happen!!!
In government, no one wants the credit nearly so much as he/she wishes to avoid the blame.
But what is the “value” of a condo development of mostly unsold/sale canceled/vacant units?
“Experts fear that with homes selling slowly, owners who can no longer afford payments may soon abandon them. If that happens, those left behind in communities run by associations must make up the missing share of money to maintain roofs, roads, landscaping and pools.”
New York in the early 1990s all over again. Of course, it was worse for co-ops with common mortgages, since a large part of the actual cost of the housing unit is covered by the maintenance and not just the owner’s mortgage.
You had a rolling default — as each owner walked away, the burden became heavier on those who remained, until all went bust.
Or you had a sudden collapse, when the co-op converter/sponsor who had failed to sell many (or most) of the units as the market turned walked away, wrecking the co-op finances. The equilvalent is your half-built development that requires infrastructure.
Yes ,and look at the wonderful planning commissions that were approving any permits asked for by the builders who were selling to a bunch of flippers/speculators . One of the first things a flipper in trouble does is stops paying the Homeowners association fees .
This is why you can’t have a builder selling out huge portions of a tract to investors . Usually lenders in prior lending cycles would limit the number of non-owner occupied purchases in a project . With the builders connections with “special sub-prime lenders “,prudent rules went out the window .
Now all that is left in some of these project are a bunch of vacant homes with owners that let the association fees go first .
So go ahead people , buy in a new home tract ,and end up going to homeowners meeting to bitch about the high % of vacant houses that will stop paying the dues . Also you can complain about everything the builder didn’t build that was shown on the cute little pictures you thought you were going to get (better read the small print ).
In New York the mortgage lender or the new buyer must pay for the maintenance arrears when they assume the shares of the coop. The coroporation has absorbed the delinquent maintenance fees between the time the shareholder stop paying and the shares are reassigned. Eventually the coop boards recover their costs. gordo nyc
Wait until this phenomenon hits San Francisco … Much of the housing purchased in the last few years have been “Tenancies in Common” or “TICs” … An old Victorian converted into anywhere from 2 to 6 separate flats, and the “owners” contract with each other as owners of the entire building … The big problem is they all have one, single mortgage. When prices are going up 20% a year, if someone defaults on their portion of the mortgage payment, no problem … Simply sell the unit at a big profit and get out. But with housing prices falling, if the owner of one unit of a TIC defaults on the mortgage, and cannot readily sell the unit, then the other residents of the building are screwed. Someone has to make that payment, and they’re all on the mortgage!! THere are hundreds and hundreds of these TIC units that were created in the past 5 years or so in San Francisco, and once the market starts to really turn south… watch out!! The heavy presence of TICs is going to accellerate the slide downwards…
Wow, all the negatives of a regular partnership without even minimum ability to control who you are being partnered with.
Of course not. Housing discrimination is illegal! screw the 1st amendment..
Interesting comment, foreclose_me.
You must be a critical thinker. ONLY Free people discriminate.
Totalitarian states dictate lifestyles to their servants.
First amendment guarantees freedom of association. That would, of course, allow freedom of dis-association, since without that right, you really wouldn’t have the other, would you? So, discrimination is our RIGHT.
How did the courts decide otherwise?
I believe that would include race, color, creed, or national origin, and of course, sexual orientation What a concept.
Exactly, diogenes. Apparently some idiots in this country think “housing discrimination” can be translated to “contract discrimination” in that you are forced to go into business, a sales agreement, partnership, etc. with anyone who comes along. WRONG. At least for now — not that people aren’t trying; for instance, the meritless lawsuit against Craig’s List for people putting ads in for roommates “strongly preferring” professionals, Christians, etc. What’s next? Is the gov’t. going to tell us who we can and can’t live with?
I’m noticing short sales and REO’s in CA as the new ‘comp crushers’.
I found a 33% real price decline last night that sold as a short sale for $650,000 less than original asking price by the flopper!!
Its real and its here!
http://realestatehaircuts.blogspot.com
“I remember 2005 like it was yesterday (it was!) it seemed like every single home was 1 mill or more. It was awful. I sold my house that year to a realtor whose husband was a mortgage broker for 950k. They are the ultimate FB couple! I’m waiting patiently to see them as a short sale or REO this year, they were dicks in escrow! It will be awsome.”
Excuse me but how can this poster say “it was awful” and then in the next breath say he pocketed 950k on the sale of his home that year.
I am really miffed by the double sided coin mentality here. How one moment you are selling your home for a huge profit and the next one you are excited about the possibility of a short sale and someone losing their YOU sold them, because they were “dicks” in escrow.
Bad Karma to me
SKB
It’s pure business: buy low, sell high. Imagine NASDAQ in 2000.
He is not forcing the couple to sell, the bank is. The couple bought
into this bubble, now they pay the price.
Yeah, I agree, bad karma and not cool at all.
One can think that something is awful for society as a whole while benefiting personally. Even those of us who deplore the deficit financing of the government aren’t lining up to pay extra taxes on April 15.
Are you watching real estate haircuts in California, only. Wish someone would do this for Fla.
At both days of the auction everyone spoken to said the bids came in too low and no one expected them to be accepted. Leibert was upset with the auction, calling it a ‘farce.’ She believes the bids were too low and the auction didn’t deliver serious bidders.”
lmao at these morons
what she can’t grasp is that there are no serious bidders at her asking price.
I know. Amazing how logic flies out the window in these situations.
Notice the negotiations after the auction? Can you say “Fake”? An auction is an absolute sale/no sale…..this is a sham put on by a real estate agent wannabe auctioneer.
Couldn’t agree more. I wonder how much longer auctioneers will tolerate this bs, cuz it can’t be too good for their bottom line.
The “negotiation” line is a slimey way of trying to snaggle puss their way out of a major fiasco.
F.I.A.S.C.O.
Frightened Imbeciles Asking Stupid Crazy Offers.
When is an “auction not an auction”..When the seller has a silent reserve..What’s with this BS about all the bidding, then refusal??? It’s a waste of everybody’s time & money!!!
The auctioneers should be patient. Perfect their marketing, and process.
When foreclosures spike, they may be able to sell their services to banks, who won’t have a silent reserve.
Prices are defined buy the buyers not the sellers. Sooner or later sellers will learn.
Suppy and demand at it’s finest.
Not really. Prices are determined by both buyers and sellers. The most able buyers (the ones who is able and willing to pay the most for a given good or service) and the most able sellers (the ones who are able and willing to part with a good or service at the lowest price) determine the price of something. When these parties find common ground, an equilibrium price at which the market may be cleared is established. Both buyers and sellers play a vital role in determining prices.
Prices are determined by buyers and sellers — but buyers, on the whole, have more power in a market with increasing inventory and fading prices. In a rising market (a seller’s market) — the sellers have more power to try and wring as much as they can out their property — whether it’s through soliciting multiple bids and playing buyers off each other.
When the market slows and inventory grows — buyers gain more power in determining the market by looking for the best deals — especially from investors who are squeezed or folks who have to move fast.
Well actually, it’s both. Until a buyer and seller agree there is no sale and therefore no price. Even if we assume that there were new end users bidding, they’re paying less per month to continue renting than the sellers are paying in interest and expenses. Two guesses as to who can wait out this impasse longer.
guess one: buyers??
Real Estate, Stocks, and Bonds, are “ALL” considered assets, and as a consequence the price is set in the marketplace…
They can be mispriced both over & under at any given time..
Right NOW it’s Howdy Doody Time, boys & girls!!!!
Well whoever has the rose colored glasses franchise must be making a killing, because the current valuations of ALL of these includes very little risk premium and seems to be based upon constant future appreciation.
I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers.
Whoops, my mistake. I’ll come back and bid when they’re desperate.
Then the term ‘market value’ might be better understood.
Don’t worry ,it won’t take sellers that long to become desperate .Toast is right ….You have to have a desperate seller to get rock bottom prices ,so apparently these sellers at this auction were just scr-wing around hoping they would get close to a market price that they wanted . The real bottom-feeder auctions haven’t started yet .
If the owner isn’t desprate enough, the bank gets to sell. If the bank can’t sell for enough, we’ll find out the attitude of FDIC/RTC2.
Agreed.
oh, they might not be desperate yet but I doubt many sellers really think they’re going to get top dollar at an auction…they may HOPE that but the reason they’ve picked an auction is because they WANT to move the property.
They use a reserve because they don’t want to “get screwed”. They know they’re screwed. They know it even better after a failed auction.
But admitting that? Forget it. Blame the auctioneer, the realtor, builders…..blame everyone but yourself.
Human nature.
Yeah - bottom feeding is “bad” — but, trying to wring the highest amount of profit out of a property by soliticing multiple bids and playing frantic buyers against each other (as was prevalent in the DC market from say 2001 through 2005) for houses in good, close-in neighborhoods (Chevy Chase, Bethesda, Falls Church, North Arlington, Del Ray, Capitol Hill, Glover Park) — that’s just fine. Lowball bids are evil, but dueling escalator clauses are just fine? Give me a break.
“Lowball bids are evil, but dueling escalator clauses are just fine? Give me a break.”
If someone bids more for something you were selling than you thought it was worth, are you going to step in and tell him or her they need not pay you as much? Please, that’s ignoring market fundamentals (and common sense) as much as the lady in the article.
There has been a paradigm shift in the buyers strategy from; buy at any price to, keep the powder dry or lowball your ass off. Hey, it’s strictly business, nothing personal.
There was a discussion about the very topic that the last article on condos addresses. Bottom line, condos are toast in places like No Va. Folks who bought in 2004/2005/2006 will be lucky to get 50 cents on the dollar when they try to sell, and then only if a GF wanders into the trap. A large number (dare I say majority) of these units will eventually go the REO route in the next 3 years, leaving the remaining owners with grotesque condo fees to support their boxes of air.
Yeah — sooooo much inventory still being built between Rosslyn and Ballston. The last funky parts of Clarendon look boarded up and ready for the wrecking ball. Not suprising that the area would do well for a while — close in to DC and Metro (subway for you non-DC area folks) availability — but there I see so much building around there when I drop in for a beer at one of the old funky bars (Iota and Galaxy Hut). And, of course, parking is a bitch.
Going to be a lot of units on the market for a looooong time. Great time to be a George Mason U. Law Student — lots of nice condos that will end up as rentals.
Is it possible to rename an REO to a BORE ( bank owned real estate)? It would be much easier for everybody to identify the status of the property with the acronym change.
Nice statement - “The bids were so unrealistic the auction showed people didn’t do their homework.”
WHAT? They ARE doing their homework, hense the low “REALISTIC” bidding price. Buyers DON’T have to buy. Sellers better get used to it. Welcome to investments 101, sellers.
That line is a classic indeed. I would’ve loved to have been the guy he told this to so I could’ve spit my coffe all over over his moronic mug.
Yeah, they only had like 850 bids so it must be a bad sample. I guess they got the same bidders that were being
“unreasonable” in Naples a month or so ago.
On second thought I am not sure if they got 850 bids. See if you see the discrepancy in following two paragraphs from the article:
“One glitch out of 850 bids isn’t that bad,” Higgenbotham said.”
“Bidders placed 33 bids on 44 lots, 64 bids on 66 homes and bids on three out of the seven luxury homes,” Higgenbotham said.
The details don’t foot the total. Hmm. Taking into account the auction was “sponsored” by a realty company I have a suspicion the auction was more about a marketing gimic than an auction.
So true….. a realtwhore double standard:
It’s ridiculous that it’s ok when sellers DON’T have to sell and put up some pie in the sky prices, but damn those unrealistic buyers who really want to buy a home at a reasonable, decent, realistic, and affordable price.
“Those damn buyers are ruining it for everyone.”
“The bids were so unrealistic the auction showed people didn’t do their homework.”
Yes, it showed that the SELLERS hadn’t done their homework. They’ll get ’schooled’ soon enough.
I thought the same thing. Funny when the shoe is on the other foot.
This is a repost from a couple days ago in regards to the Cape Coral foreclosure sale. The following quote is from an Sunday article about the sale.
The first two properties sold Saturday were waterfront Cape Coral homes. The first went for $385,000, well below the $690,000 value listed on the Lee County property appraiser’s Web site.
I did some research about the above mentioned home. The one sold at auction for $385k. According to public records, it was purchased in August 2005 for $569,900. The purchaser got 95% financing with an 80/15 combo loan. Here’s where it gets real stupid. Four months later, the borrower takes out a loan against the property for $697,600. Not only did the borrower pay off both loans, they also got an extra $150,000 out in cash. Needless to say, the borrower didn’t have much luck paying back a nearly $700k loan. The lender for this fiasco was New York Mortgage. I bet their depositors or investors must be real happy that this particular loan was approved. Somebody is out $310k. Unreal. If you want to know how things are so f’d up, here is exhibit A.
Ya gotta ralize that the “buyer” never planned to live in, or keep the house. Their goal was to extract as much cash as possible, and then walk away.
Well they accomplished that. How any mortgage company can rubber stamp a file like this and just assume a home has appreciated $120k in 4 months is beyond me. Are you that desperate for income to jeopardize your business license and possible jail time? Who does a cash out refinance on a property only sold 4 months ago? At least during saner times, you had to wait 12 months. This is as blatant as you can get with fraud.
Is this fraud? I haven’t seen the loan application (obviously), but if a bank was stupid enough to lend him that much money, and he didn’t lie on the application, then I don’t see how it’s fraud. Just a stupidly aggressive lender.
There had to be a fraudulent appraisal, one would have to think if it was a real value, it wouldn’t have tanked 45% in one year. The other part would have been the borrower’s intention to repay, it’s pretty evident the borrower took the money and ran, after all he did pocket $150k. He had the money available to handle payment for at least a couple of years before the money ran out.
Another variation on mortgage fraud. Why actually rob a bank when you can just ask them for money? Checks are so much lighter than bundles of cash and coin anyway.
Why would someone go through the expense and hassle of an auction if they can get a mortgage for 150% of the market value?
And you don’t have to deal with that pesky dye packet.
LOL.
Robber: “This is a stick-up !!! Put all your money in this bag, and be quick about it. !!! Stay away from that alarm and no funny business — I mean it — I’ll use this gun !!!”
Teller: “Look pal — we’ve only got about $15,000 in cash here today. That’s hardly worth the risk of doing 10 years up the river. If you’ve got a little time — I can get you $50 - $100 — hell, maybe $200 grand. First — here’s a realtor’s card. Now, let’s get you qualified. Occupation? Hmmmm …. let’s say independent financial contractor ……”
Youppi !A kind of stock option plan for the middle class and the mafia.
That is why lenders have to watch out for the fraud regarding refinances also . A flippers goes to a creep sub-prime lender shortly after a purchase and gets the “cash back’ by a inflated appraisal .
I said this a long time ago (hoping lenders would see my post ),you can’t give a refinance so shortly after a purchase because it needs to become a seasoned loan before you start handing out cash . Stupid sub-prime lenders ,of course flippers or crooks will try to get money out and walk .
Should we schedule New York Mortgage with an appointment on the Implode-O-Meter?
Yeah, speaking of 50% haircuts…
http://finance.yahoo.com/q/bc?s=NTR&t=1y
Check out their 5-year stock chart - not exactly a stellar performer.
http://finance.yahoo.com/q/bc?s=NTR&t=5y
What’s the over/under on when this hits 0 and is delisted? I give them 8 months.
I think that we can use the computer term FIFO (first in, first out) to describe the mortgage business. The newest entrants have the most exposure the the most recent, riskiest loans.
You mean LIFO, right? Last in, first out.
umm….Yeah, what you said (to self) Such an idiot!
LIFO?
Whoops, need to refresh more often!
And the unsold housing inventory can be described as FISH . . .
First In, Still Here
Their officers salaries are 500K each.
These people bought their stock:
TOP MUTUAL FUND HOLDERS
Holder Shares % Out Value* Reported
WASATCH MICROCAP FUND 382,308 2.11 $1,475,708 30-Sep-06
VANGUARD TOTAL STOCK MARKET INDEX FUND 227,300 1.26 $877,378 30-Sep-06
FIDELITY REAL ESTATE INCOME FUND 201,000 1.11 $777,870 31-Oct-06
Fidelity Strategic Real Return Fund 191,700 1.06 $739,962 30-Sep-06
Nuveen Investment Trust-Nuveen/NWQ Small Cap Value Fund 116,500 .64 $449,690 30-Sep-06
ING Small Cap Value Choice Fund 106,600 .59 $426,400 31-Aug-06
WASATCH MICRO-CAP VALUE FUND 57,625 .32 $222,432 30-Sep-06
Wasatch Strategic Income Fund 52,070 .29 $200,990 30-Sep-06
LOTSOFF CAPITAL MANAGEMENT EQUITY TR-MICRO CAP FD 35,300 .20 $108,371 30-Nov-06
FBR SMALL CAP FINANCIAL FUND 28,650 .16 $110,875 31-Oct-06
““‘I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers.’ Jeff Miloff said. ‘The auction tells me we are in a market correction.’ The bids were so unrealistic the auction showed people didn’t do their homework, Miloff said.””
Yes, they were bottom-feeders, and when these sellers finally do get desperate, they will be thankful there are bottom-feeders waiting to take their overpriced POS. And, as someone pointed out above, these people did do their homework, that is why the bids were so low.
Jeff acknowledges we are in a market correction, so the impression I get from his final comment is, “We expect people to buy all the way down this market slide”.
If a 400k property gets a 375k bid on Monday, good transaction. A like property gets a 350k bid on Tuesday, sounds good. By Saturday, a 250k bid will/should be accepted, but if you buyers think you’re going to “bottom-feed” on Monday ….. well, you haven’t done your homework. He, like many others in the business, want an orderly decline….. too bad.
“Poliakoff encourages associations to foreclose as a way to beat out lenders. If a bank assumes title to a condo in a foreclosure, the association likely will lose six months of maintenance, money that everyone else will have to make up.”
“By beating the bank to the punch, associations can at least get some income by renting the unit, collection foreclosure specialist Adrian Marchisio said. Then, when the market corrects itself, the unit can be sold.”
This way, besides having to take up the slack for the HOA dues on the defaulting property, the remaining condo owners can also be responsible for the mortgage. Brilliant!
Why would the bank be immune to homeowner fees? If they own it, they should pay.
Banks are responsible for the fees. I’m not sure why this is being discussed.
That’s why banks try to dump condos as fast as possible. They have to pay for upkeep and fees.
Back in the 1930’s, during the Great Depression, banks would often let people with good backgrounds live in houses for free, provided they maintained them in good condition.
I imagine that we’ll see the same sort of thing happen in the coming years, as banks simply will not be able to give away properties at any price. They’ll still need to be maintained, so it will be better for the bank to rent them out for almost nothing, rather than incur a netative cash flow on them, plus pay for the upkeep.
banks would often let people with good backgrounds live in houses for free,
Boy, that’ll have an impact on rents.
Where do I sign up for the free place to live? I would happily pay a couple hundred in dues each month for the privilege.
Unfortunately, I believe the signs will say “Irish and bubble-bloggers need not apply” :^)
sometimes we get a little carried away on this blog
And sellers haven’t gotten “carried away” (and ridiculously greedy) over the last seven years? I say, “why not?”
Not so fast, MDMG.
This boom has been characterized by “luxury condo towers” and gated McMansions, no? Both have been massively overbuilt. Who’s going to pay those HOAs??? I can easily see the banks leasing them to people for just fees (and possibly taxes). The alternative is section 8 or the bulldozer.
Then, when the market corrects itself, the unit can be sold.
I love how these people think that the market “correcting itself” means prices will start to soar again. Certainly not how I picture a “correction.”
“The bids were so unrealistic the auction showed people didn’t do their homework,” Miloff said.
Yes, I agree Miloff, the sellers didn’t do their homework; and they have failed miserably on the first exam.
if you have more than 20 buyers show then that’s the high bid , yo
“Poliakoff encourages associations to foreclose as a way to beat out lenders. If a bank assumes title to a condo in a foreclosure, the association likely will lose six months of maintenance, money that everyone else will have to make up.”
“By beating the bank to the punch, associations can at least get some income by renting the unit, collection foreclosure specialist Adrian Marchisio said. Then, when the market corrects itself, the unit can be sold.”
This guy must work for the bank. I am sure the bank would love the HOA’s to become bagholders early in the price collapse. These HOA’s will have to set up their own property management and sales programs while they wait 10-15 years for the market to correct itself, all while they are running negative cashflow on the rents for these units. Brilliant idea if you are the bank.
Homeowners associations should not be in the business of being
landlords that rent out property that they get in foreclosure for unpaid association fees . You would be forcing the association of homeowners to become landlords with all the liability that goes with that . This is a stupid idea . I don’t even know if the CCR’s allow such a recourse . Just put the lein on the property and wait for the bank to take the property .
Can you imagine buying into a tract and finding out your forced into becoming a landlord /investor holding a bunch of property that can’t cash flow . A scam a minute in this real estate cash .
Actually, Poliakoff is the general partner of one of the largest law firms in south Florida catering to Homeowners and Condo Associations. He and his firm have been the driving force behind defeat of legislation that hampers the ability of these associations to pile on fees to owners who fall behind in their “dues”.
Of course, if that happened, he couldn’t collect his big buck fees, which are collected from the homeowners, not the HOA’s.
For more see http://www.ccfj.net
There are plenty of comments about this firm
“‘One glitch out of 850 bids isn’t that bad,’ said Marty Higgenbotham”
The one ray of hope amongst the carnage turned out to be a “computer glitch”. Bwahahahahah. I haven’t heard “the dog ate my homework” excuse in many years.
Although the Cape Coral auction was a complete fiasco as an auction, it was an overwhelming success as content for HBB since we have been able to pull three hilarious threads out that FUBAR!
When’s the next Florida auction? I gotta go!
There will be an auction in Naples 4/21/07 probably at the Naples Beach Club. It will be for Bonita Beach and Naples property. Probably a lot of the junk they tried to sell which attracted bids 55% of Zillow appraisals last October. The last time they had free fresh orange juice. They will need too lace it with alchohol to make a sale.
If they’re expecting to $crew some fresh GFs, they’re going to have to drop some roofies in that punchbowl.
Another LOL.
There is an auction being advertised on TV for this coming Saturday. It is supposed to take place at the Seminole Hard Rock Casino in Hollywood. About 200 homes and lots according to the commercial.
I may try and go if I can get out of work early. I think it starts at 11:00 a.m.
“‘They put it back on auction and the bid was $250,000.’ Leibert declined to take the bid.”
…
“Leibert’s three-bedroom, two-bath, 2,200-square-foot home, valued at $255,810 on the Lee County Property Appraiser Web site Leepa.org, remains listed with Miloff Aubuchon.”
Ok, so a home appraised at $256k gets a bit at auction of $250k, and it’s declined? Does the owner think the county appraiser is DEFLATING their property out of spite?
No, it’s deflated ecause they called to complain their house wasn’t worth that MUCH! The want lower taxes you see.
“The residents’ grief came to a head Tuesday when the County Commission granted Lennar the ability to tax its residents for $6.6 million in infrastructure costs. The commission’s vote was 3-2 in favor of Lennar’s request. The tax will add more than $700 a year to some residents’ yearly payments.”
The number of articles in the past 3 or 4 months about financial losses for the average buyer are pretty staggering. Every time I read one I become more convinced that the 2nd half of 2007 will be a recession and a lot of unhappy people. There simply are too many people who are getting beat up in some way by the housing downturn (lost job, lost equity, increased payments as in the situation above). Total 180 from the euphoria most felt during the heady run-up of 2001-2005.
“The tax will add more than $700 a year to some residents’ yearly payments”
Would that be a “surprise-Mello-Roos” in California. Still, $700 a year is nothing compared to the Mello-Roos in some areas of California (try $700 a MONTH).
It boggles my mind that they refer to these bidders as “bottom feeders”, I guarantee these bidders are the same people who just 2 years ago were bidding up properties just to flip them later and are now trying to take advantage of the slowing market. Sellers at some point will be desperate enough to take these low-ball offers, the time2buy campaign screams of desperation and anyone who has even been paying even a little attention knows not to offer full (wishing) price for anything. IMO as that campaign ramps up the mortgage applications will increase and the “insulting” low bids of the “bottom feeders” are going to come rolling in like tidal waves. Each wave knocking the comps down lower. The same frenzy of greed and fear that built this bubble will knock it down.
Maybe the lucky flippers who got out in 2005. Auctions require a lot of cash down, something that most of the flippers probably don’t have a lot of, especially with all the cash drain from their unplanned for rentals.
They’re just waiting for prices to rise again this spring before they put their houses back on the market. They really think this is going to happen.
Every property I look at, the realtor quickly says “we’re entertaining all offers” or “just make an offer, you never know”. Far cry from full or”wishing” price. Amazing how things have turned!
I love the “entertaining all offers” line in the listings. What kind of entertainment are they providing?
it would be entertaining to me to watch em’ open my low ball bid.
Are they referring to personal gratuitious favors, for 20 years???
I still get the occasional “I’m not going to give it away,” to which I respond by walking away. The worse the news, the longer it takes to sink in. But it will.
True about the “bottom feeder” quote. If I go use a coupon somewhere or buy gas from a cheaper station, am I “bottom-feeding”? I guess everyone out there who choose not to flush their money down a toilet is a bottom-feeder. LMAO
Many buyers today are really miffed. The sellers forced them to write essays, feed the squirrels, and engage in bidding wars against each other, just to buy a house. Now the tables have turned. Now it’s the buyers turn to play hardball. Keep the powder dry or, lowball your ass off. If the sellers don’t like it, TFB.
“The bids were so unrealistic the auction showed people didn’t do their homework, Miloff said.”
The perceived values were so unrealistic that the auction falied to match buyers with sellers which is what an auction used to be for.
Screw Miloff. He can sit on inventory then, what a loser.
“One Cape Coral homeowner left an auction sponsored by the Miloff Aubuchon Realty Group elated her home fetched a $400,000 bid. Then the bottom fell out. ‘The bid came over the Internet. They said there was a computer glitch,’ said Rosemarie Leibert. ‘They put it back on auction and the bid was $250,000.’ Leibert declined to take the bid.”
OK…which one of you did this?
None of us. $250K was way too high. Check the SDCIA folks.
“These are eager but not desperate sellers”
Yet.
Well they’re not SELLERS of any kind until they’ve found buyers and agreed on a price. They just don’t want to be sellers badly enough.
Off topic, but check it out :
http://tinyurl.com/2fktqk
recent buyers demographics. Even for married couples , I think ,
wifes more often than not, push for purchases at any price and any loan terms.
Women drive recent purchases - nesting instinct at work.
Yeah, I’m about to do a rant about this. My friend condescendingly told me I need to do something about my “psychic homelessness” because hubby and I refuse to buy an overpriced house in this market!!! What a bunch of new age crap being gushed around by people with absolutely no financial literacy. She overdraws her checking account regularly & her husband comes behind and cleans up the mess. Why do people like this feel they have ANYTHING to contribute to the discussion regarding the largest financial decision most people will ever make?
“An association’s expenses are constant, so budgets are based on the community’s number of homes and apartments. ‘Other owners have to make up the shortfall because service providers aren’t going to say, `We feel sorry for you and will reduce the cost,’ said Poliakoff.”
Another reason HAO are to be run away from like the plague. It is a fixed cost that will only go up over the lifetime of your ownership, it can result in your property being seized for non payment of it. On top of idiotic “luxuries” you will never use. I have yet to use the Jaccuzi a single time after staying at the place where I am renting. That and the movie theater I was going to for monday night showings has been in disrepair for the last 2 months!!! In spite of a rent of about 1.6 k… But I am no FB, and I get to walk to work. Leave work at 5:10 and be home by 5:15… Last thing is I am on a month to month rent basis now, so free as the wind!!!
Like property taxes are not high enough people run out and join an HOA so they can flog themselves some more. I bet there is a higher percentage of people into S&M in HOA’s than in the general population. Of course that might not be a jeer for some people.
Minyanville’s daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
1. A Tale of Two Delinquency Rates?
Yesterday we ran into two starkly different views of homeowner mortgage payment stress.
According to data from Equifax/Moody’s published in the Wall Street Journal this morning, the mortgage delinquencies rate in the U.S. rose 0.5% year-over-year to 2.51% in 2006, the highest level in five years.
That’s about in-line with the rather pessimistic view of housing churning just below the surface of the National Association of Realtors spin (See: Existing home sales rose for the second consecutive months - implying that the worst in the
housing market is likely to have ended.)
But, what do we make of a separate release yesterday by mortgage purchasing giant Freddie Mac showing single-family delinquency rates have declined year-over-year?
According to Freddie Mac’s December 2006 Monthly Volume Summary, delinquency rates for all single-family loans declined from 0.69% in Dec. 2005 to 0.68% last month.
So why are we hearing a tale of two mortgage delinquency rates?
The face-value implication is that perhaps homeowner payment stress is overstated… that is, at least until we get to the footnotes… and until we remember we are, after all, dealing with Freddie Mac.
Footnote 12: “Excludes mortgage loans whose original contractual terms have been modified under an agreement with the borrower as long as the borrower complies with the modified contractual terms.”
In plain English, that means that if a homeowner is delinquent, or potentially delinquent, on his or her mortgage payment, but the contract is modified at all to avoid delinquency, then it doesn’t make the Freddie Mac cut for appearing in the delinquency rate.
That may not sound like such a big deal until we consider the lengths mortgage companies are going to these days to help bail out borrowers.
According to the Wall Street Journal, Bank of America is allowing some borrowers with Adjustable Rate Mortgages to refinance into a different loan at no cost.
As well, other kinds of loan modifications also are becoming more common, such as allowing a troubled borrower to refinance into a less costly loan or even lowering the interest rate on the mortgage for several years to make the payments more affordable.
Some lenders are even allowing a house to be sold at a loss and then forgiving the remaining debt.
Banks reaching out earlier to curb foreclosures is a good thing, but that is beside the point.
The larger point is that housing data is probably not as benign as it may appear, and stress on homeowners may be more widespread than believed.
2. Speaking of Real Estate
MBA Mortgage Applications fell 8.4% for the week of January 19.
The MBA’s seasonally adjusted purchase index fell 8.4% to 402.7 and is sharply below the year-ago level of 473.7.
As mortgage applications took back some of the 16.6% jump posted for the first week of the new year, borrowing costs on 30-year fixed-rate mortgages averaged 6.22 percent, edging up 0.03 percentage points from the previous week.
Interest rates remain above year-ago levels of 6.04 percent.
Year-on-year, purchases remained negative, falling 7%, which continues to point toward weakness in sales in the months ahead.
Also noteworthy, refinancing applications decreased 9.6 percent, the first decline in four weeks.
Refis are worth monitoring closely since they have been a primary driver of consumer liquidity.
3. And Speaking of Declining Mortgage Apps…
This morning homebuilder Centex (CTX) said it expects to layoff still more employees.
Centex (CTX) Chief Executive Tim Eller this morning, during the company’s quarterly earnings call, said the homebuilder expects to lay off more employees in the fiscal fourth quarter to rein in costs.
CTX has already reduced its headcount by 17% since the beginning of its fiscal year, Eller said.
“We’re taking the necessary steps to get our balance sheet and our organization to their fighting weight,” he said.
Are we really sure the worst in housing is behind us?
(According to Freddie Mac’s December 2006 Monthly Volume.
So why are we hearing a tale of two mortgage delinquency rates?)
Fan and Fred only deal with conforming loans, at least on purpose. Subprime, jumbo, and the “20″ poriton of “80/20″ are getting nailed. When the declines exceed 20%, you’ll have more Fan and Fred delinquencies.
“Are we really sure the worst in housing is behind us?”
Not even close, IMO, though the bulls are going down fighting.
It does not surprise me that Bank of America is going to be very flexible with their FB’s. The last thing any bank wants is to foreclose and have to sell the house for 50 cents on the dollar.
“The last thing any bank wants is to foreclose and have to sell the house for 50 cents on the dollar. ‘
Yep, it does not look good in the quarterly report, its much better to hide things since that way they can keep stock prices up and everyone gets their bonuses and the smarter ones can retire or move on before things get reported.
“The last thing any bank wants is to foreclose and have to sell the house for 50 cents on the dollar.”
…yet it seems to be unraveling ,and gaining momentum from unlikely places such as Colorado,and Tx. Me thinks it starts on the periphery where the bubble expanded,and implodes back to the epicenter. Even when I extrapolated out to the extent the bubble would affect certain people ,and institutions it is eery how this is developing…Re: legit owners with HOA’s getting stuck with the bill for flippers who are walking away.Even something as less obvious as that seems to be already having it’s affect.
It just seems to Crazy that the banks would have seen ahead, and run their business accordingly, “ONLY” loaning 50% of value, and “NOT” 100-115%…
“”The last thing a bank wants is to foreclose…????”"”
DID YOU EVER THINK THAT THEY MAY JUST “”NOT”"” FORECLOSE….better to have an non-performing loan than a loss.Happened in Japan, so they know it can be done here too!
Japan’s stock market dropped from about 38,000 to 10,000 during that time. Holding on to non-performing loans is not a good strategy.
“The bids were so unrealistic the auction showed people didn’t do their homework”
It’s actually the opposite. Bids are reality. The auctioner and sellers are the ones who didn’t do their homework.
>>>>”"People didn’t do their homework?????????????????????”"
“‘I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers.’ Jeff Miloff said. ‘The auction tells me we are in a market correction.’ The bids were so unrealistic the auction showed people didn’t do their homework, Miloff said.”
No, bidders just did their homework 6 to 9 months early. That’s all.
I see lots of discussions on how the bank manages the delinquincy, forclosure, REO, condo association commitment.
But what about all the mortgages, repackaged as MBS’s? I gather the originating lender has some obligations for some period of time, but ultimately how is the shareholder somewhere in Asia going to manage this process.
Perhaps all those ethical mortgage brokers who sold the creative loans, and recently were laid off, will find new opportunuities in profiting from the mess they helped create?