Bank of America, the nations’ largest mortgage servicer has just announced a new program that offers up to $20,000 to Florida homeowners who short sale their homes. While the program has several requirements, it could be a saving grace for homeowners who are behind on their mortgage payments yet want to avoid foreclosure.
To be eligible for the program homeowners must:
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- Submit a purchase agreement from a buyer to Bank of America by November 30, 2011 and close the transaction before August 31, 2012.
- The home must have a Bank of America first mortgage.
- There cannot be a previous or existing offer on the home.
For further information, homeowners are advised to contact Bank of America at 877-459-2852.
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While home prices nationally rebounded in April on the national level, South Florida did not follow.
According to the Standard & Poor’s/Case-Shiller Home Price Index released today, 13 cities posted price increases from March, but Palm Beach, Broward and Miami-Dade counties saw a 0.2% drop.
Prices in the three-county region fell 5.6% from a year ago and hit another new index low.
Overall, the April report was an improvement from recent months, but it’s too early to tell if this is a turning point, David M. Blitzer, chairman of the index committee for S&P, states: “For a real recovery, we would need to see several months of increasing home prices, large enough to shift the annual momentum to the positive side. In short, better news, but still a lot of questions and a long way to go.”
Sales of existing homes in South Florida have been robust since the beginning of 2011, helping to significantly reduce the number of homes for sale. Median prices in Broward and Palm Beach counties were up or stable earlier in the year, though they have declined more recently, according to the Florida Realtors trade group. The median price means half the homes sold for more and half for less.
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The nation’s homeownership rate slipped further during the first three months of this year due to the housing crisis. According to the latest U.S. Census Bureau report, homeownership has dropped to 66.4% at the end of the first quarter. It’s fallen back to 1998 levels. Further analysis of the numbers shows that the housing bust has more than reversed the increase in homeownership gained during the boom.
Economists at Capital Economics state the further decline in the homeownership rate in the first quarter “provides yet more evidence that Americans are now less able and less willing to buy a home.”
Paul Dales, the firm’s senior U.S. economist, states: “Part of this fall is due to foreclosures and the combination of high unemployment and tighter credit conditions preventing households from getting on the property ladder. It also seems likely that there has been a reduction in the desire to own a home now it’s clear that housing is not a one way bet.”
At the same time, the homeowner vacancy rate fell to 2.6% from 2.7%, but Dales thinks that there is still too much supply as this figures remains above the long-run trend. He explains, two million of the homes up for sale were sitting empty during the first quarter and another 4 million empty properties were not even listed.
Dales concludes: “The inevitable consequence of low demand and high supply is lower prices.”
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According to CondoVultures.com, developers built about 50,000 coastal condominium units in the seven largest markets across Palm Beach, Broward and Miami-Dade counties during the boom.
At year-end 2010, about 7,400 of those units are still waiting for buyers.
Peter Zalewski states: “Developers created the new South Florida condo inventory at a pace of more than 6,100 units annually during the boom. The reason lenders apparently permitted this widespread condo construction to occur is that buyers have been purchasing an average of 5,150 new South Florida coastal units annually since 2003.”
No surprise that downtown Miami had the most new condos built – roughly 22,500 units – followed by Sunny Isles Beach (6,400) and South Beach (5,600).
Here’s the rest of the list:
4. downtown Fort Lauderdale and the beach – 5,100
5. Hollywood/Hallandale Beach – 5,000
6. downtown West Palm Beach/island of Palm Beach – 4,500
7. Boca Raton/Deerfield Beach – 1,050
The number of South Florida homes worth less than their mortgages declined slightly in the third quarter – but not for the right reason.
According to CoreLogic, half of all homes with a mortgage in Broward County – 220,384 properties – were underwater, down from 52% and 229,006 in the second quarter. In Palm Beach County, 43% of homes with a mortgage – 146,426 — had so-called negative equity, off from 44% and 151,721 in the second quarter. CoreLogic says that’s due mostly to foreclosures of underwater properties rather than an increase in home values.
Underwater homeowners bought or refinanced during the peak of the housing boom in 2004, 2005 or 2006, before prices plummeted.
Many of these owners give up and walk away, unable to sell their homes without bringing tens of thousands of dollars to the closing table, sparking more foreclosures which lead to more price declines.
Mark Fleming, chief economist with CoreLogic, concludes: “Negative equity is a primary factor holding back the housing market and broader economy.”
Great news! Both Fannie Mae and Freddie Mac have instructed usto move forward with transactions involving foreclosed properties in cases where sales were suspended due to potential problems with the legal paperwork.
In a memo released last week, Fannie Mae told its REO selling agents to “proceed with scheduling and holding the closings” and to direct matters to the appropriate staff “if a title issue arises with respect to the potential defect of an affidavit used in the underlying foreclosure.”
Freddie Mac said in its own memo that agents should “resume all normal sales activity…. resume marketing, sales, and disposing of assets previously placed ‘on hold.’”
Fannie and Freddie were forced to temporarily halt the sale of certain properties two months ago when news surfaced that some of the nation’s largest servicers – including Bank of America, JPMorgan Chase, and GMAC Mortgage – had been employing robo-signers who failed to comply with clearly defined state laws when handling foreclosure documentation. Fannie and Freddie also employed the services of the so-called “foreclosure mill” law firm of David J. Stern in Florida, which is currently under intense investigation for forging foreclosure documentation. Both companiesterminated their business dealings with the Stern firm in early November.
Now that most of the servicers at the center of the paperwork mess have completed a large chunk of their case reviews and found no evidence of improper foreclosures, Fannie and Freddie are moving to proceed with foreclosures and REO sales as customary.
As of September 30, Fannie Mae’s inventory of single-family REO properties stood at 166,787. Freddie Mac’sREO inventory totaled 74,897 homes at the end of September. Together, the two GSEs hold about a quarter of all bank-owned residential properties in the United States.
Great news! We received the “Green-Light” from both Freddie Mac and Fannie Mae to proceed with closings that were on hold due to the affidavit issue. If there are any title defects, they will identify them and deal with them on a case by case basis. In other words, the “blanket” hold is being lifted, however, they will still be looking for title defects.
What does this mean for you? Stay tuned for a flood of new foreclosure inventory in the near future! =)
Yesterday, the Mortgage Bankers Association released a survey stating that one of four mortgages is in trouble.
As the huge number of loans already in trouble began to decline, the rate at which home loans fell into foreclosure in Florida in the third quarter increased.
Florida has the largest percent of loans in foreclosure – 13.68% – of any state. That’s down, slightly, from 14.04% in the previous quarter.
Additionally, 11.02% of mortgages in Florida are past due, 30 days or more. That is a small increase from 10.97% in the previous quarter.
Add it all up and in the third quarter, Florida had 813,652 loans either delinquent or in foreclosure, which is down from 849,002 in the second quarter.
Although major lenders including Bank of America and JPMorgan Chase began to halt foreclosures or foreclosure sales at the end of September, those announcements came at the end of the quarter and did not have a big impact on the numbers.
A most troubling point in the report was the percent of new foreclosures started, which rose both in Florida and in the nation. In Florida, that figure was 2.32% in the third quarter, up from 2.07% in the previous quarter.
Today, after almost two years of debt restructuring by developer Jorge Perez’s Related Group of Florida, lenders foreclosed on Trump Hollywood, a 200-unit luxury condominium project in Hollywood, Florida.
According to Matt Allen, the chief operating officer, the $225 million mortgage on the 41-story oceanfront tower, completed in 2009, was part of $2 billion in troubled loans at closely held Related Group as of early last year. The note was bought by an unidentified third party.Allen states: “We’ll be a healthy company now that we’ve restructured this debt.”
As of yesterday, sales had closed on 25 of the 200 units, which were listed at prices ranging from $900,000 to $7 million, said Patrick Campbell, the Trump Hollywood’s project manager.
Allen said he didn’t know how deeply prices will be cut on the condos, which all face the Atlantic Ocean and come furnished with granite countertops, Sub-Zero refrigerators and Miele ovens.
Perez, who owns about 75% of Related Group, has reached restructuring agreements with syndicates led by HSBC, Bank of America Corp. and Scotia Capital Inc. since banks stopped financing his condo sales in response to plunging prices and tightened lending standards.
According to industry experts at this weekend’s Fort Lauderdale Foreclosure Convention, the foreclosure freezes by big lenders won’t have a dramatic effect on the South Florida housing market. They stated that inventory may be tight, but plenty of distressed homes remain for sale even as JPMorgan Chase, Bank of America, and other institutions have pulled properties from the market during the past six weeks over concerns about paperwork errors.
Peter Zalewski, principal at CondoVultures thinks the banks likely will take the rest of the year to review filing procedures before resuming foreclosures at the beginning of 2011. He states: “Come January, they’re going to get very, very aggressive.” Even though questions have been raised about what might happen to properties that were improperly repossessed by lenders and later resold, Zalewski concluded he doesn’t envision investors losing their money. He maintains that investors and other buyers who get title insurance shouldn’t have any worries.
This past weekend at the convention, Boca Real Estate Investment Club founder David Dweck encouraged investors to be careful but insisted there is opportunity. He told them to buy inexpensive homes and hold the properties for three to five years while earning rental income. He states: “Do not get caught up in all the hype. If you overpay, you will pay later.”
