Help For Homeowners – Page 9 – Miami Real Estate Attorney Blog

Foreclosures Hit the Rich and Famous in Miami

Fisher Island is home to many of the rich and famous in Miami. Its residents have seen the likes of Oprah Winfrey, Mel Brooks, actress Sharon Gless, Florida first lady Carole Crist, and Boris Becker. Back in 2008, Fisher Island held the number one spot in Forbes magazine’s annual ranking of America’s most expensive postal zone.

The latest Forbes list, however, revealed that Fisher Island has dropped to No. 33, illustrating that no one is immune from the current economic and foreclosure crisis plaguing South Florida, and the nation as a whole.

Since 2009, at least 17 units have entered foreclosure and more than a dozen short sales – prospective deals in which the owner is willing to accept less than the amount owed – are listed. Smaller units have even been listed at the unbelievable price of $190,000. A recent report from Zillow.com shows that 97 percent of units on the island dropped in value since March of 2009.

Retired builder Arnold Schiller, finds that Fisher Island is not the only luxury community that is suffering during the current economic climate. Other pricy locations such as the Hamptons are feeling the effects of approximately 30 percent decreases in their home values.

However, residents and real estate agents are optimistic that Fisher Island will see signs of improvement in the near future. At the end of the day, Fisher Island is still a captivating place in an incredible location. Its privileged location, pristine beaches, views and unheard of prices will continue to draw attention.

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If you are facing a foreclosure, contact our office today to discuss your options. We can be reached at 305-263-7700.

Miami Real Estate Rebound is Short Lived

Despite a recent surge in the real estate industry, experts predict that sales will plummet this summer. This is mainly due to the expiration of the tax credit, the ongoing unemployment crisis, and the strict lending standards. “Potential home buyers are a little rattled by the state of the economy and what has happened in housing over the past two to three years,” said Wells Fargo economist Tim Quinlan. Plus, mortgage delinquencies continue to worsen in Miami.

This downturn follows a series of months where construction rates actually climbed. Single-family home-building increased by 10 percent last month. Although the home building rate remains 70% below the decade’s peak in January 2006, this figure still represents more than 40% above the April 2009 bottom. Home construction in April was at its highest in 18 months. The Commerce Department stated that the rate of construction last month for single-family homes and apartment buildings rose 5.8% to a seasonally adjusted annual rate of 672,000. The builders’ boost is attributed to the two tax credits that were available to buyers early this year: an $8,000 credit for new buyers and a $6,500 for current owners who buy and move into another home. According to the IRS, about 2.2 million households used those credits at a cost of $16 billion through late March. There is no sign that Congress will extend the tax credits in the near future.

Notwithstanding, it is evident that the pace of construction has slowed down as the latest readings on applications for new building permits reveal that applications sank 11.5% in April to an annual rate of 606,000. That’s the lowest since October. Some hope that the tame interest rates at the record lows help bolster the economy once again.
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If you wish to discuss this article, or your real estate needs in general, please contact our office today to discuss further. Our phone number is 305-263-7700.

Mortgage Delinquencies Continue to Worsen in Miami

In Miami, the mortgage crises continues its ugly march into the record books. According to the Mortgage Bankers Association, more than 10% of homeowners with a mortgage had missed at least one payment between January and March of this year. That is a record high and up from 9.1 percent from a year ago.

While many are predicting an improvement soon, the continued high number of homeowners in default or at risk of losing their home to a foreclosure will have a lingering effect on the economy as a whole.

Worse yet is the fact that a Wall Street Journal report reveals that one in four in the government’s loan modification program are dropped. According to the U.S. Department of the Treasury’s April update, the Making Home Affordable Program (HAMP) has 78,356 home loans under active modification, of which 30,923 are in Miami-Dade, Broward and Palm Beach counties.

On the other hand, we are starting to see some slow progress. For instance, while loan modifications got off to a slow start, housing officials have recently created incentives for lenders and servicers which have resulted in more modifications. Additionally, the number of homeowners starting to show signs of trouble is trending downward. As of March, nearly 3.5% of borrowers had missed at least one month of mortgage payments, down from 3.8% from a year earlier.

But the slow progress we are seeing is not enough to correct a bad situation. Therefore, should loan modifications fail to help, many homes will go up for sale either as a short sale or in a foreclosure sale. Therefore, many are forecasting that home prices will soon see yet another dip as more of these homes go up for sale at deeply discounted prices. While the mortgage crises was initially triggered by lax lending practices, today’s mortgage crises has many reasons other than just a home underwater.
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If you are facing a foreclosure, contact our office today to discuss your options. We can be reached at 305-263-7700.

Increase in Miami Homes Being Repossessed Due to Foreclosures

According to a recent news report, home repossessions increased to record levels and more than one fifth of all U.S. mortgage holders were underwater on their mortgages in that they owed more on their mortgage than their home was worth.

More than 1 in 1000 homes were repossessed by lenders in March. Twenty three percent of owners of homes with mortgages owed more than their home was worth, and that was up from 21 percent in the prior three month period.

Moreover, U.S. home values continue to drop. The values dropped 3.8 percent in the first quarter, and that is the 13th straight period of year over year declines. These trends make it increasingly difficult for home owners with homes underwater to move the homes. Thus, when they fall behind, their options are limited. This makes it more likely that those homeowners will lose their homes in a foreclosure.

The continued high number of homes, and homeowners, underwater will continue to place a downward pressure on home prices. Thus, it is likely that we will see home prices continue to fall a bit more during the course of the next 12 months.

Additionally, banks are repossessing homes at a greater rare. In the first quarter, bank repossessions rose by 35% in comparison to the same period of the prior year. Indeed, repossessed homes now account for 1/5 of all homes currently for sale.
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Please contact our office today to discuss your real estate options during these turbulent times.

Delinquent Mortgages in Florida, and Miami, Outpace the Rest of the Country Despite Rise in Home Sales

Florida had a higher mortgage delinquency rate than every other state in the country other than Nevada. However, nationally, less Americans were late with their mortgage payment. But more people in Miami were selling their homes at a loss.

As reported in the South Florida Business Journal, the ratio of borrowers 60 days or more past due declined to 6.77%, in the last quarter, compared with 6.89% in the fourth quarter of last year. This statistic is traditionally seen as a precursor to foreclosure filings.

Nevada had the highest delinquency rate, at 15.98%, followed by Florida, at 14.65%. However, Florida is expected to experience the highest mortgage delinquency rate by the end of the year, some say reaching as high as 18.2%.

As we previously noted, those that fell into foreclosure typically had one more reason other than a job loss or bad loan. Indeed, many are even pursuing ‘strategic defaults’ on their loans. And in certain situations, banks are pursuing the borrower for the deficiency.

As a result, the real estate market is seeing increased activity as many are actively trying to ‘unload’ their real estate. Coupled with the extension of the home tax credit, home sales in Miami-Dade County, Broward County, and Palm Beach County, combined, increased by 48.3% in a year over year comparison.

While the increase in home sales, coupled with the decrease in delinquencies, may appear to be all favorable news, it should be noted that more than half of all homes sold in Miami-Dade County last quarter were sold at a loss. Consequently, it comes as no surprise to learn that more than 40% of all single family homes in Miami were underwater with their mortgage at the end of the first quarter.

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Although the market for selling a home is slowly improving, the price a homeowner can get for that home continues to decline. Therefore, please contact our office today to discuss your real estate options during these turbulent times.

Changes Made to Rules of Procedure Alter Foreclosures in Miami and South Florida

fl sup ct building.jpg The Florida Supreme Court recently issued an opinion amending the Florida Rules of Civil Procedure and adopted several new forms to be used in connection with foreclosure cases filed in Miami-Dade County, and the state of Florida as a whole.

The most significant change is the amendment to Rule 1.110(b) of the Florida Rules of Civil Procedure. That rule was amended by the Florida Supreme Court to now require that all residential foreclosure complaints be verified. Verification requires that a bank representative sign the lawsuit under penalty of perjury attesting that all facts within the lawsuit are true to the best of the lender’s knowledge and belief. This new change is aimed at addressing the “lost note” defense, and potentially eliminating that defense all together.

Indeed, the Florida Supreme Court noted that this new requirement is being implemented in order to “(1) to provide incentive for the plaintiff to appropriately investigate and verify its ownership of the note or right to enforce the note and ensure that the allegations in the complaint are accurate; (2) to conserve judicial resources that are currently being wasted on inappropriately pleaded ‘lost note’ counts and inconsistent allegations; (3) to prevent the wasting of judicial resources and harm to defendants resulting from suits brought by plaintiffs not entitled to enforce the note; and (4) to give trial courts greater authority to sanction plaintiffs who make false allegations.”

The other changes made by the Florida Supreme Court include a change to the necessary affidavit of diligent search and inquiry, a form used by banks when they are unable to find or serve the lawsuit on the borrower. And an effort to have all motions to cancel the and re-schedule foreclosure sales uniform in an effort to potentially streamline the foreclosure process.
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These are significant changes to the legal foreclosure landscape. Therefore, if you are served with foreclosure papers, please contact our office today.

Foreclosures & ‘Strategic’ Defaults on the Rise in Miami

As we previously reported, foreclosures are on the rise. But so too are ‘strategic’ defaults.

What is a ‘strategic default’? It is a decision by a borrower to stop making payments on a debt despite having the financial ability to make the payment. For instance, the large financial firm, Morgan Stanley, recently made the calculated decision to give up five San Francisco towers it purchased at the peak of the booming real estate market.

Many individual borrowers are also turning to the same strategy used by Morgan Stanley, and others, and are seeking solutions to the problems brought in by the unstable real estate market. And the reason ‘strategic defaults’ are becoming so popular are for reasons we might consider, and for other reasons we might not necessarily consider.

The two primary reasons appears to be (1) negative equity in the property, and (2) a more borrower friendly environment. The second reason should be kept in mind as we consider the current administration’s continued push to encourage more banks to offer loan modifications, and principal reduction coupled with the Fed’s continued policy to keep interest rates low.

A recent Morgan Stanley report reveals that many U.S. homeowners are opting to walk away from mortgages that they can afford, and that these ‘strategic’ defaults are accounting for an increasing share of defaults. About 12% of all mortgage defaults in February were ‘strategic’, and that is up from 4% in mid 2007. The same report indicates that borrowers will likely stop paying their mortgages the higher their credit scores and the larger their loans.

This following report that ran on the NBC nightly news provides a snap shot into this growing trend.

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If you are in a difficult financial situation, contact us today to discuss your options.

Florida Mortgage Servicers Profit with Foreclosures

As reported by Bloomberg News, foreclosures are proving to be more profitable to mortgage servicers than Obama’s mortgage modification program.

The Treasury Department will begin this month to pay companies, including those here in South Florida, that collect mortgage payments and examine pleas for assistance a stipend of $1,500 for approving the sale of homes for less than the loan balance. This practice is known as a “short sale.”

The servicers will also get $1,000 for each completed modification under the government’s year-old mortgage modification program, and additional stipends over three years if borrowers stay current on their payments. These stipends can add up as there are currently 4.6 million homes that have payments more than 90 days overdue.

However, Diane Swonk, chief economist of Chicago-based Mesirow Financial, doesn’t think these stipends will be enough of an incentive for the mortgage servicers, who earn more money by foreclosing on a defaulted loan.

The current number of permanent loan changes through the government’s Home Affordable Modification Program (HAMP) seems to agree with Swonk’s rationale. There have only been 227,922 permanent loan changes and 780,951 trials as of March. HAMP “has made very little progress,” according to a report by Neil Barofsky, special inspector general for the Troubled Asset Relief Program.

HAMP’s lack of success may be due to servicers earning approximately $10,000 or more on a foreclosure of a $200,000 mortgage. “Servicers can easily make 10 times any of the government stipends being offered by simply foreclosing on the house,” Glen Russell, a real estate attorney in Fall River, Mass. said.
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According to Alan White, a law professor at Valparaiso University in Indiana, the only silver lining for the government program is that companies may “make more money in the short term through a foreclosure, but they could possibly make more money in the long term with a modification.” This is only the case if they are confident the mortgage will stay current, because servicers are paid between one-tenth of a percentage point and half a percentage point of the loan’s balance for administering the accounts. However, with more than 4 million defaulting loans currently in the market, there may not be enough servicing infrastructure to handle it all and produce a higher number of permanent modifications. “The servicing industry was designed to deal with only 100,000 to 200,000 defaulted loans a year”, said Paul Miller, a bank analyst at Friedman Billings Ramsey & Co. “There is not enough servicing infrastructure to handle the onslaught of loans,” he said.

Some critics believe that HAMP is simply delaying the unavoidable. According to Laurie Goodman, senior managing director at Amherst Securities Group LP in New York, approximately 7 million homes may still end up in foreclosure in the next three to four years even with the government programs. Her prediction is that some of those foreclosures will be by borrowers who re-defaulted after getting a modification. At the end of 2009, 48 percent of mortgages modified in the second quarter had missed at least on payment. This will only increase servicers profitability as they will then be able to proceed with a foreclosure and make-up their money when the property is sold.

Therefore, please contact our office today to discuss your legal options if your home is on the verge of foreclosure.

South Florida Real Estates Sales Are Up As Foreclosures Steady

According to the National Association of Realtors, sales of existing homes and condos in Miami-Dade, Broward and Palm Beach county rose 27% in April.

Additionally, and another positive trend, last month’s statewide existing home median price of $140,100 was 1% higher than the statewide median price in April of 2009. While the median price for single family homes also rose, the same can’t be said for condos. Statewide, condo prices fell 1%, to $79,300 from $79,000.

In the tri-county area, Miami saw the smallest increase in home sales in April. There were 594 sales, up 7% from 555 in April of 2009. The median price was up 8%, to $192,000 from $177,000.

There several factors behind these positive numbers. We previously anticipated this news, and discussed many of the many positive factors that are behind the recent news regarding the trends in the Miami, and South Florida, real estate market.

As for some of the reasons behind this trend, they include the following:

• The recent expiration of certain tax credits forced many to buy before the tax credit expired.
• We’re starting to see a stabilization of home prices.
• Home prices are starting to stabilize because inventory levels are starting to fall.
• Inventory levels are starting to fall because foreclosures are being absorbed in the market at manageable levels.

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If you wish to discuss this article, or your real estate needs in general, please contact our office today to discuss further. Our phone number is 305-263-7700.