Miami Real Estate Attorney Blog

The Era of the “No Docs” Mortgages is Over and Tougher Standards Today Makes it Harder to Secure a Mortgage

Following the greatest housing crash since the Great Depression, home lending standards have tightened to their strictest levels in decades.

Tight home loan credit is affecting everything from home sales to household finances. Many borrowers are struggling to qualify for loans to buy homes. Others can’t take advantage of some of the lowest interest rates in 50 years because they don’t have enough equity in their homes to refinance.

Those who can get loans typically need higher credit scores and bigger down payments than they would have in recent years. They face more demands to prove their incomes, verify assets, show steady employment and explain things such as new credit cards and small bank account deposits.

Even then, they may not qualify for the lowest interest rates.

Sometimes, even borrowers with seemingly pristine finances are struggling to close home loans.

Plus, nearly all borrowers are facing more documentation requests. In other words, the era of “no docs” is over.

Except for a few years leading up to the real estate crash — when some borrowers got loans while providing little if any documentation of their assets and income — borrowers have long had to supply two years of tax returns, pay stubs and financial statements when applying for home loans.

Now, lenders want tax records to come directly from the IRS, as well as from borrowers. The IRS releases the records after applicants sign forms giving it permission to do so. Instead of two months of bank statements and pay stubs, lenders may want them for each pay period until the loan closes.

Higher standards do appear to be reducing loan defaults, which means fewer foreclosures in the future.

Fewer than 1.3% of loans originated in 2009 that were resold to Freddie Mac and Fannie Mae went into default after 18 months, government data show. That’s down from more than 22% default rates for 2007 loans and about 3% default rates in 2002.

Yet, many argue that the tight standards are a drag on the economy.

Florida Appellate Court Ruling Significantly Favors Buyers in Condo Deposit Recovery Disputes

Florida’s Third District Court of Appeal recently handed developers a loss that some are describing as cataclysmic in the ongoing battle regarding deposit recovery disputes.

Since the real estate market went bust back in 2007, developers and pre-construction contract purchasers of condominiums (many of which were never built) have flooded South Florida’s court system with lawsuits. Many of the lawsuits focus on the purchaser’s effort to have their deposit returned. In most cases, those deposits were either 10 or 20 percent of the purchase price.

Many of those cases often settle out of court. But the Third District Court of Appeal’s recent decision handed a significant victory to purchasers, and a significant blow to developers.

The case centers on the interpretation of a Florida Statute. Specifically, Florida Statute Section 718.202. That statute states that the deposit shall be kept in separate escrow accounts. In other words, one account needs to be established for the 10 percent deposit to be spent on construction, and a second account needs to be set up for the 10 percent deposit to be held in escrow.

Before the Third District Court of Appeal made its ruling, a federal judge in Miami concluded that a purchaser had the right to rescind it sales contract if the developer failed to hold separate escrows.

After that federal court decision was decided, Florida’s legislature quickly cobbled together a revised version of Fla. Stat. 718.202 in an effort “clarify” existing law. That clarification was done in an effort to negate the potential impact of that federal ruling on existing disputes between developers and buyers.

However, the Third District Court of Appeal’s recent ruling cites to that federal ruling in support of its ruling that purchaser can rescind the sales contract. In so ruling, the Third District Court of Appeal stated that “[n]otwithstanding the Florida Legislature’s apparent intention that the 2010 amendment and new section be applied retroactively, we conclude that this would impermissibly impair each buyer’s pre-amendment contract rights.”

This ruling is a very significant ruling, and a ruling that alters the current landscape of pending deposit recovery cases. Of course, if the developer did in fact place the funds in two separate accounts, as required by Florida Statute, and this recent case, then the developer should be in a position to shield off attacks from purchasers.

However, one of the more interesting discussion points in this case is that the Third District Court of Appeal did not give any credence to an advisory opinion issued by the State of Florida providing guidance for developers with respect to this issue.

That advisory opinion suggests that separate accounting records was sufficient to comply with the statute at issue.

So it is likely that most, if not all, developers relied on that advisory opinion. And if they did, then this recent case from the Third District Court of Appeal concludes that such reliance was misguided. Indeed, this ruling from the Third District Court of Appeal could greatly alter the landscape of these ongoing disputes in favor of purchasers, and against developers.

Consequently, if the developer failed to comply with F.S. Sec. 718.202, by failing to establish separate escrow accounts, then purchasers have a strong argument to potentially secure the recovery of their deposit.

Florida Leads the Nation in the Number of Homes in Foreclosure

Florida currently has the nation’s highest inventory of homes in foreclosure. To be more exact 14.4 percent of mortgages in Florida are currently in foreclosure.

In addition, the Mortgage Bankers Association states that nearly one in four mortgages in Florida is either past due or already in foreclosure. There are currently 3.2 million mortgage loans in Florida and about 739,000, or 23.1 percent, are in foreclosure. Another 8.7 percent of properties are at least 30 days behind on payments. Nationally, the delinquency rate is 8.44 percent.

The subprime mortgage market has been blamed for the real estate crash we are currently experiencing. Accordingly, its no surprise that more than 50 percent of the state’s subprime loans are in default.

Although we’ve been able to find pockets of good news in this real estate market, we are still deep in this real estate recession. With Florida being the 4th largest state in the country coupled with the real estate boom we experienced in the mid-2000s, its no surprise that Florida ranks first in the number of homes in foreclosure.

Nevertheless, every cloud has a silver lining. The depressed market has led to low property prices. In turn, this is a great time to purchase property. As we’ve discussed, many, including foreigners, are taking advantage of Miami’s real estate market.

At Alvarez & Barbara, LLP, we represent buyers, sellers, lenders, borrowers, and developers with real estate matters. This experience allows us to understand legal issues from various angles to effectively advocate our clients’ interests. No matter what you or your business’s real estate needs are – think of Alvarez & Barbara, LLP, and contact us for a free consultation.
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About the Author – Gabriel de las Salas is an attorney with the law firm of Alvarez & Barbara, LLP. His practice is focused on general civil and commercial litigation, including personal injury, insurance claims and real estate disputes. Mr. de las Salas received his B.A., cum laude, from the University of Florida, and his J.D., from Stetson University College of Law.

Location, location, location – Miami’s Real Estate Attorneys Are Seeing a Drastic Correlation and Correction in South Florida’s Real Estate Market Depending on the Location

Location, location, location – that saying couldn’t be more true in South Florida’s real estate market. Some South Florida neighborhoods have seen 20 percent appreciation while other neighborhoods have seen 30 percent drops.

Unfortunately, the neighborhoods that are seeing depreciation outnumber the zip codes which are on the upswing. As a result, overall numbers are still on a downward trend. The zip codes in the negative territory are mostly low-income and inner-city locales.

According to a recent report in the Miami Herald, its tough to say whether Miami has hit the bottom of the real estate market. A major factor contributing to price depreciation is a concentration of foreclosures. Obviously, the greater the concentration of foreclosures, the greater the depreciation.

The biggest winners in this market are areas with large numbers of new luxury and waterfront condos, solid bedroom communities in well-established suburbs and the City of Miami Beach. The biggest losers are located in the southernmost parts of Dade County and inner-city neighborhoods like Brownsville, Opa-locka and Little River.

It seems like this news is just like South Florida’s real estate market. It has its ups and downs and its positives paired with negatives. We are fortunate to even see a sliver of good news in this market. In fact, South Florida’s real estate is being lauded by national media outlets as being the example of a community that may be nearing the bottom of the real estate market recession. This may be the time to take advantage of low prices, low rates, and purchase real estate.

At Alvarez & Barbara LLP, we have extensive experience handling all types of real estate issues. We can handle all aspects of your real estate transaction. A major part of our practice includes real estate litigation as well. So, whatever real estate legal issues you’re facing think of Alvarez & Barbara, LLP. Contact us today for a free consultation.
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Consider Your Options. Contact Us Today.

We are certainly in difficult times. At Alvarez & Barbara, LLP, we understand all of our client’s individual needs and pride ourselves in providing high quality service.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

About the Author – Gabriel de las Salas is an attorney with the law firm of Alvarez & Barbara, LLP. His practice is focused on general civil and commercial litigation, including personal injury, insurance claims and real estate disputes. Mr. de las Salas received his B.A., cum laude, from the University of Florida, and his J.D., from Stetson University College of Law.

Real Estate Sales Have Increased in Miami-Dade County

There were 2,628 sales of existing, single-family homes in Miami Dade County during the second quarter. That is a 30% increase from the same period last year.

The condo market in Miami Dade County saw an even bigger jump. In the second quarter. There were 4,140 sales compared with 2,550 during the same time last year. That is an increase of 62% year over year.

Of course, a major reason for the steady increase in sales has been a steady decrease in prices. In Miami-Dade County, for instance, single-family home prices slipped 9% to $178,800 and condo prices fell 6% to $119,800.

The outlook for the rest of the year is uncertain after the United States debt downgrade that could impact mortgage rates and investor confidence. Foreclosures are also on the rise again, although they remain far below year ago levels.

Moreover, international buyers have recently been rather aggressive purchasing distressed properties here in South Florida. However, if international purchasers shy away from these discounted opportunities because of the recent economic volatility in the United States market, it could make the real estate recovery here in south Florida last that much longer.

Nonetheless, today’s real estate market presents wonderful opportunities to purchase real estate. The combination of low prices and historically low interest rates makes it in a once in a lifetime buyer’s market.

If you are interested in either buying, or selling, your property, please contact us today. We are prepared to assist you with your transaction and your real estate needs.

Experts are Bullish on South Florida’s Real Estate Revival

While the rest of the Southeastern real estate market is suffering, it appears that Florida is only producing good news.

According to a recent report from the Federal Reserve in Atlanta, sales of homes in Florida are outperforming the rest of the South.

Apart from this good news from the Atlanta Fed, South Florida home prices rose in May.

Although the monthly report card used tempered language, it stated that the Atlanta district reported some growth in home sales over the prior year because Florida is driving the gains in the region. Outside of Florida, sales declined.

While sales are expected to stay weak elsewhere, Florida brokers are taking a positive outlook. The Federal Reserve Atlanta District is composed of Alabama, Georgia, Florida and parts of Tennessee, Louisiana, and Mississippi.

On a more local basis, we experienced nine straight months of falling prices in South Florida. However, this past May the spring buying season boosted values.

Nevertheless, prices are still down 5.3 percent compared May 2010. Currently, home prices are back on the level they were at in the summer of 2003.

We should all be happy to hear about this positive real estate news. However, the experts say we truly won’t see a recovery in the housing market until employment levels stabilize. Nevertheless, now is a good time to take advantage of current conditions and purchase real estate.

At Alvarez & Barbara LLP, we have extensive experience handling all types of real estate issues. We can handle all aspects of your real estate transaction. A major part of our practice includes real estate litigation as well. So, whatever real estate legal issues you’re facing think of Alvarez & Barbara, LLP.
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EXTENDED BODY:
Consider Your Options. Contact Us Today.

We are certainly in difficult times. At Alvarez & Barbara, LLP, we understand all of our client’s individual needs and pride ourselves in providing high quality service.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

Re-Finance? Purchase? Time is Now to Lock in Those Historically Low Mortgage Rates

If you’re thinking about buying a home or planning to refinance, act now so you can lock in a mortgage rate. Mortgage rates have been at historic lows for months. But if lawmakers can’t reach an agreement on raising the debt ceiling, rates could rise higher.

According to experts, a government default would cause US Treasury bond prices to drop. An analyst from Bankrate.com states that the federal government’s borrowing rate is the baseline from which all other borrowing rates are determined. In essence, if the government’s borrowing costs go up then everybody else’s borrowing costs will go up as well.

Even with a short-lived default, rating agencies have indicated that they will downgrade the federal government’s rating. As a result, consumer and business rates would go up because the government would be forced to pay higher rates to bond investors.

On our blog, we’ve talking about how it’s a good time to purchase real estate due to low prices. Well, now it seems that purchasers have another incentive to purchase real estate at this time.

So far, the debt ceiling debate hasn’t affected mortgage rates. However, if the government does default, it’s going to be real hard to lock in a rate.

Basically, if you don’t take action now, you could regret it 6 months from now.

With the ongoing foreclosure crisis, high unemployment rates, and now the debt ceiling issue, we are certainly living in troubled times. While there’s occasional good news related to the South Florida real estate market, it takes particular know-how and experience to safely navigate these troubled waters.

We are certainly in difficult times. At Alvarez & Barbara, LLP, we understand all of our client’s individual needs and pride ourselves in providing high quality service.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

Foreigners Fuel a Revival of Downtown Miami’s Real Estate Market

While most parts of the country are suffering from the ill-effects of the depressed real estate market, Miami’s condo market seems to be the exception. Amid the housing glut, Downtown Miami sat mostly empty. However, many young professionals and families have begun to fill up the once empty residential towers.

Another major driving factor for the sales boom is the recent surge in international buyers.

One major group of foreign nationals that are buying up a sizable portion of condos in South Florida are Brazilians. Brazilians purchased 9 percent of homes and apartments sold to international buyers. This places them only behind Canadians and Venezuelans. Many Brazilians are coming due to the surge in real estate prices back home and their currency’s 45 percent gain against the US dollar since 2008.

While many Latin Americans are purchasing in South Florida to seek safety from economic and social uncertainty, Brazilians are mostly coming to enjoy themselves and for investment purposes. Accordingly, some are buying vacation homes and other are buying multiple units at a time to capitalize on South Florida’s strong rental market.

The amount of homes being purchased by foreign nationals certainly signals that now is the time to buy in South Florida. Prices have dropped considerably in South Florida, and it doesn’t seem that prices have bottomed out either. If you’re looking to buy a vacation home or purchase real estate for investment purposes, you should take advantage of the low prices.

Although we’re hearing some good news, today’s current real estate market, and ongoing foreclosure crises presents all sorts of issues that must be properly navigated. Often, an attorney is needed to navigate these troubled waters. We currently represent lenders, borrowers, buyers, sellers, and developers. This broad array of experience allows us to effectively take a multi-faceted approach to our clients’ legal issues. No matter what you or your business’s needs may be when it comes to real estate, don’t hesitate to contact Alvarez & Barbara, LLP.
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EXTENDED BODY:
Consider Your Options. Contact Us Today.

We are certainly in difficult times. At Alvarez & Barbara, LLP, we understand all of our client’s individual needs and pride ourselves in providing high quality service.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

With Real Estate Prices Continuing to Drop, Cash is King

With real estate prices continuing to drop, cash is king. Nationwide cash buyers are purchasing homes at a record rate. In May, all-cash buyers accounted for 30% of existing home sales, which is up from 25% in May 2010 and 12% two years ago.

Economists believe that the cash buyers are lured by the low prices and potential rental income. Sure, cash buyers have helped slow the price drops, but price increases have yet to follow. Cash buyers have realized that now is the smartest time to buy. Without the cash buyers, the real estate market would be in a much worse position.

The cash buyers are most prevalent in the areas that have been hardest hit by the recession and with large numbers of foreclosures. In Miami-Dade and Broward County 63% of first quarter buyers paid in cash compared to 39% in 1997’s first quarter. Phoenix and Las Vegas are also seeing these similar figures despite the daunting number of foreclosures they are experiencing.

These numbers are good news because it shows that people are getting back into the market. Cash buyers also often get better deals because sellers know that a deal won’t fall through due to a lack of financing. A 5% discount is the norm.

Buyers, and especially cash buyers, have many wonderful investment opportunities available to them. Indeed, buyers continue to find bargains by purchasing foreclosed homes in record numbers. As a seller, it is all the more reason to make sure your that your property is in the best possible condition.

Given the historically low interest rates, coupled with the low prices for many properties, especially foreclosed properties, the timing may never be better to purchase a new a property. Our firm can certainly assist you in your real estate needs should you be interested in purchasing, or selling, your property.

Often, an attorney is needed to navigate these troubled waters. We currently represent lenders, borrowers, buyers, sellers, and developers.

This broad array of experience allows us to effectively take a multi-faceted approach to our clients’ legal issues. No matter what you or your business’s needs may be when it comes to real estate, don’t hesitate to contact Alvarez & Barbara, LLP today.
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EXTENDED BODY:
Consider Your Options. Contact Us Today.

We are certainly in difficult times. Not only can a foreclosure be daunting, it can break an individual’s spirit. However, there are solutions, and alternatives, to foreclosures. At Alvarez & Barbara, LLP, we understand all of our client’s individual needs and pride ourselves in providing high quality service. If you’re facing a foreclosure, don’t let it bring you down. Call us today so we can show you that the saying “every problem has a solution” is an undeniable truth.

Call us toll free at 1-866-518-2913 or at 305-263-7700.

Tips for Selling your Home in a Buyer’s Market

If you’re currently trying to sell your home, you know this is a tough market. You probably have some neighbors who are facing foreclosure and some other neighbors selling their home at an absurd discount. Apart from our neighbors, we’ve all seen the “For Sale” signs all around South Florida.

Indeed, there is no question that today’s market is a buyer’s market.

Not only is it a buyer’s market, this may be the toughest sellers’ market in years. Some experts say this is the toughest sellers market since the late ’70s and early ’80s.

On the flip side, selling your home in this market means that you get to look for your own bargain.

So, what should you do in this tough sellers’ market? Here are some tips to help sell your home:

1. Price your home aggressively. Holding out for a high price doesn’t work well in this market. In the last two years, the typical home is on the market for 8 to 10 weeks. This statistic doesn’t take into account homes that never sold or were pulled off the market. With this statistic in mind, its recommended that you ask for at least 1% less than competing homes.

2. Stage your home like a pro. It is difficult to compete with the price of homes in foreclosure or with short sales. While you might not be able to outshine your home price-wise, you definitely can outshine others when it comes to the appearance of your home. This process may be pain-staking, but the renovating, painting, and planting of flowers will pay off when your home is the nicest one on the block.

3. Use the internet to your advantage. Today, 90% percent of buyers start their search on online. Use high-resolution photos and place as much info as possible online. Show photos of the main areas of your home – kitchen, bathrooms, backyard. If you don’t, buyers will assume something is wrong.

4. Be flexible with buyers. The toughest part of this market is tighter financing. A requirement of 20% down is becoming the norm these days when all that was needed was 5% in some cases just a few years ago. Because of these factors, be conscious of how hard it is to qualify for a loan.

Buyers have many wonderful investment opportunities available to them. Indeed, buyers continue to find bargains by purchasing foreclosed homes in record numbers. As a seller, it is all the more reason to make sure your that your property is in the best possible condition.

Often, an attorney is needed to navigate these troubled waters. We currently represent lenders, borrowers, buyers, sellers, and developers.

Call us toll free at 1-866-518-2913 or at 305-263-7700.