New Mortgage Rules

A recent article release from Florida Realtors discusses whether the new mortgage rules are a positive change.  To read the article, click here, or read below.

________________________________________

 A coalition of 51 consumer organizations, civil rights groups, housing organizations, lenders, real estate professionals and insurers – a group that includes the National Association of Realtors® (NAR) – issued a white paper supporting the latest version of Qualified Residential Mortgage (QRM) rules currently in comment period.

Following the mortgage meltdown, lawmakers and federal agencies looked for a way to make sure toxic loans no longer harmed the market. To do that, they focused one eye on the qualifications a potential homebuyer must have to get approved for a mortgage. At first, some of the proposals caused concern among Realtor groups who feared a second real estate meltdown if buyers had to follow strict new rules, such as a minimum 30 percent down payment.

However, a white paper issued by the Coalition for Sensible Housing Policy finds that the current proposed mortgage rules generally find a fair balance between protecting the U.S. economy without making homeownership unavailable to many Americans – it “effectively limits the risk of default without excluding large members of creditworthy borrowers.”

The Coalition will submit the white paper to regulators during the rule’s public comment period that ends Oct. 30.

Analysis by The Urban Institute, which looked at current loans and how they would have fared under the QM proposed rules, found that the proposed QRM would reduce the risk of default and delinquency by more than half:

• Loans purchased by Freddie Mac and Fannie Mae that met the re-proposed QRM standard had default rates of 4.1 percent compared to 8.7 percent for mortgages that did not qualify for QM status.

• The delinquency rate for mortgages in private label securities that did not meet the re-proposed QRM standard was 30.6 percent. The delinquency rate for purchase and refinance loans that met the new QRM proposal was nearly two thirds lower at 12.6 percent.

“In synchronizing the definition of QRM with QM, the revised rule will encourage safe and financially prudent mortgage lending, while also creating more opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market,” the paper concluded. “Most importantly, it will help ensure creditworthy homebuyers have access to safe mortgage financing with lower risk of default.”

The white paper can be found online.
To read more about the Coalition for Sensible Housing Policy and its member groups, visit their website.

Condos in Orlando prices double in 3 years

A nice article was in the Orlando Sentinel this week regarding condo prices.  To read article, click here or see below. 

__________________________________________________________________________

Orlando-area condo prices have more than doubled in less than three years, a new report shows.

The median price for a condominium or townhouse in the four-county area during July was $104,000, according to a report released by Florida Realtors Wednesday. During 2010, the units traded for a median price of $50,400 -- making Orlando one of the cheapest condo markets in the state at the time.

"When the market went down so low, all of Florida was for sale," said Bethanne Baer, broker associate for Keller Williams Realty at the Parks. "The lenders have not been lending on units and the values dropped tremendously."

Real estate companies advertised cheap Florida condominiums to buyers in the Midwest and the Northeast, spurring a frenzy of cash buyers that quickly drove up prices from the market bottom, she added. By leasing out the units, many of the cash buyers were able to quickly get a 10 percent return. Historically, landlords have had to wait three years after purchasing a rental property before they might get a profit.

The Orlando-area condominium projects that have performed the best are established properties built before the real estate boom and bust, Baer added. Another issue has been that very few local condominium and townhouse developments have landed on the approval list for federal-backed mortgages -- killing buyers' chances of getting a loan. In many cases, she said, condominium associations have not filled out the paperwork required for the federal backing.

One area where condos seem to have struggled the most is the west Orlando community of MetroWest, which has had some crime issues.

Of all parts of the state, Orlando in particular experienced one of the most dramatic condo turnarounds. During just the last year, Metropolitan Orlando condo prices increased 29.5 percent during the last year while prices for Florida's 20 largest metro areas increased 22.9 percent. Statewide numbers do not reflect the most current Brevard County sales.

Consider that three years ago – during a time when darkened windows defined condo projects throughout the state – Orlando and Ocala had the lowest condo prices in the state. By July of this year, Orlando's condo prices had surpassed those of not only Ocala but also Gainesville, Tallahassee, Indian River County, Charlotte County, Polk County.

Boosted largely by relatively high-ticket condo prices in coastal counties, the median price statewide for the properties was $129,000 in July. The panhandle area of Okaloosa County, which includes Destin and Fort Walton Beach, had a median condo sales price of $202,000 during July – the priciest condo deals in the state.

mshanklin@tribune.com or 407-420-5538

Economic turns a psychological corner

An article from The Atlanta Journal - Constitution is a great discussion on the power of optimism in a struggling economy.  Have you noticed a difference in people's attitudes?  Enjoy the article.

_________________________________

NORCROSS, Ga. – June 28, 2013 – For Rizwan Peera, the feeling hit when he spotted “Sold” stickers slapped on “For Sale” signs in his Norcross, Ga., neighborhood.

Lisa Tilt noticed that she was hearing fewer “yeah … but” conversations among other small business owners, conversations laced with statements like, “Yeah, we’re getting by, but you never know these days.”

Maya Miller noticed that the kids’ party business her husband created while he struggled to find a good job was fully booked every weekend.

Call them “exhale moments” – the point at which a person finally feels a loosening of that knot of dread that has gripped people’s gut since the onset of the economic downturn.

The past several months have generated enough good (if not great) economic news to change many people’s perception, economic experts say. Those people have turned a psychological corner, recognizing that while there is a long climb ahead – and periodic jolts in the stock market – they no longer feel as though they’re being swallowed by a giant sinkhole.

“We’re off the floor,” said Mercer University economist Roger Tutterow.

Or, to adopt Miller’s personal economic indicator: “I can now get my toenails done.”

The collective psychological shift could have major economic consequences, as people’s spending habits are often driven by their view of the economy, said James MacKillop, associate director of the University of Georgia’s Owens Institute for Behavioral Research.

“Certainly a lot of economic activity is predicated on optimism or pessimism,” he said. “You don’t throw yourself into a 30-year mortgage if you feel that things are unstable or that the future is perilous.”

For today, though, the change in perception has yet to translate into a major change in behavior, said Dorsey Farr, a partner in the Atlanta investment management firm French Wolf & Farr. Even though consumer confidence has grown, consumer spending continues to “muddle along,” he said.

“People feel a little bit better, but it is not showing up in a real significant change in personal spending,” Farr said.

That’s likely because much of the pain caused by the recession is still very much with us. Millions of people are still beset by long-term unemployment, depressed housing values and the residual effects of foreclosures, bankruptcies and government spending cuts.

Marsha Belflower has heard the good-news stories, but she’s hardly optimistic.

During the pre-recession boom years, she abandoned her career in social work and eventually opened her own spa. As the economy worsened, business drained away. Two years ago she started looking for another job, but the search so far has been fruitless. Worse, she had to shut down her spa last month.

“I’m kind of a lost lamb,” said Belflower, 39, of McDonough, Ga. “I am taking an emotional sabbatical.”

She can’t even go back to her former career, because many good social work jobs now require a master’s degree that she doesn’t have.

“I do not have the sense that the economy is improving,” she said. “My house is not worth more. It still takes $50 to fill up my two-door Honda. I lost my job and my business. No, I don’t see it.”

Numerous economic indicators, however, show the economy is moving in the right direction, though in fits and starts.

As a result, consumer confidence reached its highest level in five years this month, according to the Conference Board. But don’t get too jazzed: The nation’s other major gauge of consumer confidence, Thompson Reuters and the University of Michigan, recorded an unexpected dip in consumer confidence this month.

The push-and-pull pace of this recovery has created a kind of hybrid optimism, said Emily Sanders, managing director of United Capital Financial Advisers of Norcross.

People see improvement, she said, but can’t shake the lessons of the recession. They see that the local mall is no longer a ghost town, they see houses being built again, but they’re not ready to splurge on major purchases.

“You don’t hear anybody talking about ‘staycations’ anymore,” said Sanders, referring to the term used for stay-at-home vacations. “People are not staying home, but they may not be taking as expensive a vacation as before.”

People make all kinds of decisions based on the economy, experts say: whether to get married, have kids, get divorced. Entrepreneurs gauge the economy when deciding whether to start or expand a business.

Peera, having seen the real estate market in his neighborhood improve, decided it was time to launch his own marketing business.

“I thought maybe I could make more opportunities for myself, instead of waiting for other people to create opportunities for me,” said the 24-year-old, who is now living in Tucker, Ga.

Tilt, after hearing more optimism among her small-business peers, decided to add another employee to her Marietta, Ga., communications consulting firm.

“That is a big leap,” she said. “It is very personal for me if I bring someone into the company and I become responsible for their income.”

Some economists suspect that the exhale moment is less about a surge in confidence than about people simply adjusting to a new normal. Farr, the investment manager, is one.

“The experience of dramatic declines in asset prices, home values and negative economic reports is far enough in the past; it’s faded from people’s memory banks,” he said. “They’ve become accustomed to these conditions.”

But Tutterow, the Mercer economist, believes hope is alive and well – enough, perhaps, to revitalize consumer spending and even revive the region’s aspirations.

“Collectively, the community’s confidence is coming back,” he said.

Copyright © 2013 The Atlanta Journal-Constitution (Atlanta, Ga.) Distributed by MCT Information Services.

First Time Buyers Checklist

A great first time buyer checklist was published on FloridaRealtors this week. If you are considering buying a home, we hope this article will assist you in the process. 

________________________________________

Need-to-know home buying info for first-timers

PROVIDENCE, R.I. – April 29, 2013 – Homeownership starts with a desire to achieve the American Dream – to have a home of one’s own. After that, however, pragmatic questions must be answered, such as how much a buyer can afford and whether a bank will be willing to lend them money.

“Buying a home can be one of the biggest purchases a consumer will make,” says Cheryl Nolda, president, Home Lending Solutions, RBS Citizens Financial Group. “A house is the foundation where individuals and families build their lives and make memories.”

Charter One Bank put together a list of home buying tips for consumers who have decided that homeownership is right for them:

• Determine purchasing power. Calculate how much you can afford to spend before you start looking to focus on houses in that price range. The answer depends largely on income and current monthly debt payments.

• Secure your credit report. If there are any credit issues, get them addressed before applying for a mortgage loan. A free annual credit report can be obtained by calling 1-877-322-8228 or going to:www.annualcreditreport.com.

• Do your mortgage homework. Take the time to learn important mortgage and home-buying terms; more importantly, understand what they mean. Investigate the details – What are the additional costs, such as origination or application fees?

• Get pre-approved. A mortgage pre-approval assessment tells you approximately how much money you can borrow from your lender. In addition, many sellers require a pre-approval letter before reviewing a buyer’s offer. (After applying, avoid doing anything that would negatively impact your credit score, such as opening a new credit card or making a large purchase until after the home closing.)

• Buyer’s checklist. Use a homebuyer’s checklist at each house to keep track of important features like amenities, neighborhood and schools. This helps you compare notes and remember the differences and characteristics of each house, especially if you visit several houses in different locations.

• Know the market. When you know local market and home values, you’re less likely to overpay for a property. Use the Comparative Market Analysis (CMA) and full MLS listing details of the most similar comparable properties to help you know how much you should offer. And be on the lookout for owners who are eager to sell and willing to negotiate – this can save you thousands of dollars.

• Home inspection. Hire a professional home inspector to determine if there are any potential problems that can be expensive to repair.

• Have a backup plan. You and a seller may reach a stalemate when negotiating. Consider developing a back-up plan, just in case you are unable to reach an agreement. Define your maximum offer and don’t go over it – there are almost always other homes that will meet your criteria.

© 2013 Florida Realtors®

To find the article, click here. 

Community Development Plan up for vote in Winter Park

One of the latest community projects in the Winter Park area, Ravaudage, and its Developer, Dan Bellows, is asking Winter Park leaders to establish a community development district for the remainder of the project.

Community Development Districts are a popular tool for financing development. 
The districts, known as CDDs, have become an extremely popular mechanism for financing development. A few of the successful CDDs in the area include The Villages, Baldwin Park, and Celebration.

The districts increase the tax base at no cost to municipal governments or citizens who don't live in the district. Those who move into the district pay assessments to the district to fund improvements. And after the developer completes the project and moves on, there's an entity in place — more powerful than any homeowners association — to deal with oversight and maintenance issues.

For developers, such as Bellows, the advantages include the ability to sell tax-free bonds and charge assessments.  This source of funding can lead to rapid infrastructure that might otherwise take years to build.

The 73-acre Ravaudage site at Lee Road and U.S. 17-92 currently has one tenant, Miller's Winter Park Ale House restaurant.  The Ravaudage project is envisioned to include 489 residential units, retail and office space, and a 320-room hotel.

U.S. housing starts dip but remain at solid pace

WASHINGTON – Feb. 20, 2013 – U.S. homebuilders began work at a slower pace in January, though the level was still the third highest since 2008. The pace of building was viewed as a sign of further strengthening in residential real estate.

The Commerce Department says builders started construction at a seasonally adjusted annual rate of 890,000 last month, down 8.5 percent from December, when activity had hit an annual rate of 973,000. The December performance was the best since June 2008.

Applications for building permits rose to an annual rate of 925,000 in January, 1.8 percent higher than December, which had been the high point since mid-2008.

The pace of construction of single-family homes rose 0.8 percent in January, but apartment construction, which is more volatile, dropped 24.1 percent.

The U.S. housing market is slowly regaining its health after stagnating for roughly five years after the housing boom collapsed. Steady job gains and near-record-low mortgage rates have encouraged more people to buy.

A steady rise in prices reflects, in part, fewer homes for sale. The supply of previously occupied homes for sale has reached its lowest level in more than a decade. And the pace of foreclosures, while still rising in some states, has slowed sharply on a national basis. That means fewer low-priced foreclosed homes are being dumped on the market.

Those trends, and the likelihood of further price gains, have led builders to step up construction. Last year, builders broke ground on the most homes in four years.

For all of 2012, builders started work on 780,000 homes. That was still only about half the annual number consistent with healthy markets. But it represents a 28 percent jump from 2011. And it was the most housing starts since 2008, when construction was still falling after the housing bubble burst more than six years ago.

Sales of new homes jumped nearly 20 percent last year to 367,000, the most since 2009. Still, many economists don’t foresee a full housing recovery before 2015 at the earliest.

The National Association of Home Builders said Tuesday that confidence among U.S. homebuilders slipped in February from a 6 1/2-year high in January. Many builders reported less traffic by prospective customers before the critical spring home-buying season begins.

The home builders’ sentiment index dipped to 46 in February from 47 in January. It was the first monthly decline in the index since last April.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006, when it was 51. It began trending higher in October 2011, when it was 17.

Many builders are facing higher costs for building materials and having trouble obtaining financing for construction. Some also are facing a shortage of workers in markets where residential construction has picked up sharply, such as Texas and Arizona.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the home builders.
Copyright © 2013 The Associated Press, Martin Crutsinger, AP economics writer. All rights reserved.

Fannie & Freddie have Good News for Underwater Mortgages

For homeowners with Fannie Mae and Freddie Mac loans, the much anticipated good news may have arrived this past week.  On March 1st, Fannie and Freddie will start allowing homeowners with underwater mortgages (they owe more than the property is worth) to give up the house and cancel their debt by a deed-in-lieu of foreclosure. 

Who qualifies for deed-in-lieu transactions?  Well according to the new rules:

• Homeowners must must be current or less than 90 days late on their mortgage payments. 
• Homeowners must by making payments of at least 55 percent of their monthly income for the house.
• Homewoners must be able to document a "hardship" that requires a move, such as loss of spouse.
• The home must be clean and not damaged.

Once a homeowner qualifies, they should know that it is not the perfect solution.  A few things to know about:

• Homeowners may have to surrender as much as 20 percent of personal assets, excluding retirement accounts, to partially meet the loan's unpaid balance.
• The program does not affect second mortgages.  Mortgage servicers can offer up to $6,000 for second-lien holders to release borrowers from the loans, but there's no requirement that the holders agree.
• A deed-in-lieu will still affect your credit, but not to the extent of a foreclosure.

Even with all of the restrictions, the new Fannie and Freddie program is a viable option and good news for homeowners who must move due hardship and have underwater mortgages.

For more information on the program, click here for the new rules.

.

Where is the Inventory?

Where is the inventory?  One of the factors for the decrease in December home sales was lack of inventory. The National Association of Realtors reported a 21.6 percent drop from one year earlier.  

A recent article by the Wall Street Journal highlighted several reasons behind the dropping inventories, including: 

• Sellers hesitant to sell: About 22 percent of homeowners with a mortgage remain underwater, owing more than their home is currently worth. These homeowners don’t tend to sell unless a life-changing event occurs because they don’t want to take a loss on the sale. CoreLogic data finds constrained inventories in areas with the highest number of underwater borrowers.

• Not enough equity to trade up: Homeowners often rely on equity from their current home to make a down payment on the next home. 10 million homeowners have less then 20% equity in their home. With fewer homeowners seeing equity, they may not have enough money to move into a pricier home – a constraint on the would-be “trade up” buyer.

• Investors continue to snatch up properties: Investors still snap up properties, but they’ve changed their strategy.  The original strategy was to purchase the home and flip it.  Now they are holding onto properties and turning them into rentals.  The result: fewer homes on the market.

• Banks slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace. Banks also are showing a preference for short sales and loan modifications, which curbs the number of foreclosed homes on the market.

• Builders doing less building: Housing starts were at record lows from 2009 through 2011, so there’s less inventory added to the market. A rebound in the new-home market has only recently started to occur.

Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013) 
To view the article, click here. 

NAR: Dec. pending home sales down but still uptrend

It's that time of the month to look at home sales trends.  A press release issued by the National Association of Realtors (NAR) this week reports pending home sales declined in December but have stayed above year-ago levels for 20 consecutive months.

NAR pointed to several factors involved in the decrease. One of the factors may be the supply - more buyers then sellers.  The study also pointed at current sales prices and the fact that first time buyers have fewer options available to them.

Still, Lawrence Yun, NAR chief economist, is forecasting existing-home sales to increase another 9 percent in 2013, following a 9 percent rise in 2012.

To read the press release, click here.

End of the Year Report - Florida leads in Foreclosure Filings

Today's RealtyTrac Foreclosure Market Report for 2012 was released.  According to RealtyTrac, Florida led the entire country in foreclosure filings started within the last twelve months.

The Release states:

1. Foreclosure activity in 2012 increased from 2011 in Florida by 53%
2. Florida’s foreclosure rate surpasses every other state in the country last year, as one in 32 homes in the State of Florida got a foreclosure filing during the year.
3. In 2012, a total of 279,230 Florida properties had a foreclosure filing, a 53% percent increase from 2011 but still 42% lower than 2010′s historic total of 485,000 Florida properties in foreclosure.
4. Florida had the biggest share of foreclosure inventory in the U.S., with 305,766 properties in some stage of foreclosure or bank owned (20 percent of the national total).
5. The average time to foreclose in Florida ranks 3rd highest in the country at 853 days (or 2.3 years).

So what lies ahead for Florida in 2013?  According to Daren Blomquist, Vice President of RealtyTrac:

“2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state — Florida — posting the nation’s highest state foreclosure rate for the first time since the housing crisis began,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined non-judicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose.

“That could mean that although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book-ended by two discrete jumps in foreclosure activity,” Blomquist added.  “We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states.”

The positive spin of the report - median home prices are on the rise.  To view the full report, click here. 

News of Another Big Settlement

The Federal Reserve and the Office of the Comptroller of the Currency issued a joint press release to announce news that 10 mortgage servicers around the country have entered into a settlement agreement with the federal government over allegations of bad acts in mortgage servicing and foreclosure activities.  The Settlement will release the 10 mortgage servicers from further federal prosecution in exchange for the payment of $8.5 billion in cash.  The Settlement money will be used to help those who have been hurt in the Foreclosure Crisis of the past few years

To view the press release, click here or read below:

Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance

WASHINGTON--Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
      
The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.
      
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.
      
This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.

As a result of this agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly. The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process. Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation.
      
A payment agent will be appointed to administer payments to borrowers on behalf of the servicers. Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In addition, the servicers' internal complaint process will remain available to borrowers.
      
The agencies continue to work to reach similar agreements in principle with other servicers that are not parties to the agreement announced today, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.
      
OCC and Federal Reserve examiners are continuing to closely monitor the servicers' implementation of plans required by the enforcement actions issued in April 2011 to correct the unsafe and unsound mortgage servicing and foreclosure practices.

Federal Estate & Gift Tax... Congress Answers

There has been much talk over the last few months on the "expiration date"  of exemptions pertaining to federal estate taxes, gift taxes and generation skipping transfer taxes created under Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act ("TRUIRJCA" or "TRA 2010" for short) that was enacted in December 2010. 

After much debate, the American Taxpayer Relief Act ("ATRA" for short) was signed into law by President Obama on January 2, 2013. This new law makes the changes made by TRA 2010 permanent with regard to federal estate taxes, gift taxes and generation skipping transfer taxes.

Below you will find a summary of the 2013 Changes:

1. New and more favorable exemptions on estate tax, gift tax and generation-skipping transfer taxes. ATRA set the lifetime gift and estate tax exemption at $5 million per person, with annual adjustments for inflation.  Married couples may combine their exemptions to allow for double that amount.  The 2012 federal estate tax exemption rate of $5.12 million increased to $5.25 million for 2013. 

2. Less favorable top tax rates. The Estate Tax Rate increased from 35% to 40% on taxable estates (estates valued over $5.25 million). 

3. Portability of the federal estate tax exemption between married couple now permanent. A married couple can pass on $10.5 million to their heirs free from federal estate taxes. Note, however, that even if the deceased spouse's estate will not be taxable (in other words, is valued less than $5.25 million), the surviving spouse will nonetheless be required to file IRS Form 706, United States United States Estate (and Generation-Skipping Transfer) Tax Return, in order to take advantage of the deceased spouse's unused estate tax exemption, otherwise the deceased spouse's exemption will be lost.

Highest Increase in 3 years for Orlando homes

As I look around my neighborhood, I have noticed an upward shift in sales and price.  It's great to see that the upward swing is being felt throughout Central Florida: 

November’s median price for existing homes in Orlando was $129,000, up 12 percent compared to last year, and the midpoint price reached its highest level in three years, the Orlando Sentinel reports.

The Orlando Regional Realtor Association reported that its members sold 2,430 houses last month – a 20 percent increase from the year-ago period – and the average interest rate paid by homebuyers in Orlando was 3.47 percent compared to 4.1 percent in November 2011.

To read the Orlando Sentinel article, click here.

Commercial/Multifamily Mortgage Delinquency Rates Down in Third Quarter

Our commercial lenders, buyers, and sellers have been hit hard over the last few years.  However, over the last few months, we have noticed commercial projects starting back up along 17-92 in Orlando and Winter Park.  A good sign that the economy is improving.  

The following press release from Mortgage Bankers' Association  continues the good news for all of us:
________________________________________________________
WASHINGTON, D.C. (December 6, 2012) – Delinquency rates decreased for commercial and multifamily mortgage loans in the third quarter, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. 

“Commercial and multifamily mortgage delinquency rates for loans held by life companies, Fannie Mae and Freddie Mac all remain extremely low,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “The delinquency rate on bank-held loans is at its lowest level since the beginning of 2009 and the delinquency rate for loans held in commercial mortgage-backed securities (CMBS) – while still elevated – continues to stabilize. If one removes the CMBS loans that are in foreclosure or REO, that delinquency rate is at its lowest since late 2009.” 

During the third quarter of 2012, the 60+ day delinquency rate for commercial and multifamily mortgages held in life company portfolios decreased 0.03 percentage points to 0.12 percent. The 60+ day delinquency rate for multifamily loans held or insured by Fannie Mae decreased 0.01 percentage points to 0.28 percent. The 90+ day delinquency rate for loans held by FDIC-insured banks and thrifts decreased 0.18 percentage points to 2.93 percent. The 30+ day delinquency rate for loans held in commercial mortgage-backed securities (CMBS) decreased 0.11 percentage points to 8.86 percent. The 60+ day delinquency rate for multifamily loans held or insured by Freddie Mac remained the same at 0.27 percent.

The third quarter 2012 delinquency rate for commercial and multifamily mortgages held in life insurance company portfolios was 7.41 percentage points lower than the series high (7.53 percent, reached during the second quarter of 1992). The delinquency rate for multifamily loans held by Freddie Mac was 6.54 percentage points lower than the series high (6.81 percent, reached in the fourth quarter of 1992). The delinquency rate for multifamily loans held by Fannie Mae was 3.34 percentage points below the series high (3.62 percent, reached during the fourth quarter of 1991). The rate for commercial and multifamily mortgages held by banks and thrifts was 3.65 percentage points lower than the series high (6.58 percent, reached in the second quarter of 1991). The rate for loans held in CMBS was 0.16 percentage points below the series high (9.02 percent, reached in the second quarter of 2011).

Please note: In March 2012, MBA released a DataNote covering the performance of commercial and multifamily mortgages at commercial banks and thrifts over the entire year 2011. The DataNote found that commercial and multifamily mortgages had the lowest charge-off rates of any major loan type and had delinquency rates lower than the overall book of loans and leases held by banks and thrifts. The DataNote can be found at:  www.mortgagebankers.org/research.

Construction and development loans are not included in the numbers presented here, but are included in many regulatory definitions of ‘commercial real estate’ despite the fact that they are often backed by single-family residential development projects rather than by office buildings, apartment buildings, shopping centers or other income-producing properties. The FDIC delinquency rates for bank and thrift held mortgages reported here do include loans backed by owner-occupied commercial properties.

The MBA analysis looks at commercial/multifamily delinquency rates for five of the largest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, Fannie Mae and Freddie Mac. Together these groups hold more than 80 percent of commercial/multifamily mortgage debt outstanding.

The analysis incorporates the same measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another.

Based on the unpaid principal balance (UPB) of loans, delinquency rates for each group at the end of the third quarter were as follows:

• Life company portfolios: 0.12 percent (60 or more delinquent);
• Freddie Mac:  0.27 percent (60 or more days delinquent);
• Fannie Mae:  0.28 percent (60 or more days delinquent);
• Banks and thrifts:  2.93 percent (90 or more days delinquent or in non-accrual);
• CMBS:  8.86 percent (30 or more days delinquent or in REO).

Differences between the delinquency measures are detailed in Appendix A.
___________________________________________________________
To view the report, please visit the following Web link: click here

Short Sales outpace Foreclosures

This recent news story is not a surprise to our office.  Our clients, both homeowners and banks, have been more successful and willing over the last year to "work it out" instead of pursuing the court ordered sale.  That is not to say that numbers are not still high in Florida for foreclosure-related sales.  Currently, RealtyTrac says Arizona continues to log the most foreclosure-related sales at 34% followed by Nevada (31%), Florida (26%), Illinois (24%) and Michigan (24%).

To view the official link, click here.
____________________________________________________________
LOS ANGELES (AP) – Dec. 6, 2012 – Sales of U.S. homes facing foreclosure are on the rise and outpacing sales of bank-owned homes, a reflection of stepped-up efforts this year by lenders to avoid foreclosing on homes with mortgages gone unpaid.

In the third quarter, sales of homes already in the foreclosure process jumped 22 percent compared to the previous quarter and a year earlier, foreclosure tracker RealtyTrac Inc. said Thursday.

Short sales, when a lender agrees to accept less than what the homeowner owes on their mortgage, accounted for 65 percent of those so-called preforeclosure sales in the quarter, the firm said.

Banks have become more amenable to short sales as an alternative to foreclosure, which can often end up leading to bigger losses, and mire lenders and borrowers in a time-consuming and expensive process.

“More and more, they’re seeing that they’re going to lose less by approving a short sale than by dealing with the foreclosure process,” said Daren Blomquist, a vice president at RealtyTrac.

Attempts to fast-track that process, particularly in states where the courts must sign off on foreclosures, led to allegations last year that many banks and mortgage servicers processed foreclosures without verifying documents. Five of the biggest U.S. banks agreed in February to pay $25 billion to settle the claims as part of a deal with federal and state officials.

In the months since, the banks have increasingly used short sales as a way to provide mortgage relief to borrowers.

The lenders have reported that they provided $26 billion in home-loan relief between March 1 and Sept. 30, with about half of that stemming from short sales.

Some banks, like JPMorgan Chase & Co., have been giving borrowers financial incentives to pursue a short sale. Others are trying to speed up the transactions, which in years past could easily take six months or more before being finalized.

“A lot of the banks right now are setting the expectation that it will take about 60 days to process, some even faster,” said Jenna Smith, a listing agent for real estate website Redfin in Chicago. “In prior years I’ve had them drag out for nine to 12 months.”

Banks also have been approving short sales for borrowers who have yet to enter the foreclosure process.

These types of short sales increased by 15 percent in the third quarter versus the previous three months, and were up 22 percent from the third quarter of last year, RealtyTrac said.

As short sales and other preforeclosure sales have become more common, they have begun to outpace sales of bank-owned homes.

Some 98,125 homes in some stage of foreclosure were sold in the third quarter, while 94,934 bank-owned homes were sold in the same period. Preforeclosures have outnumbered sales of bank-owned homes through the first nine months of the year, RealtyTrac said.

Sales of bank-owned homes rose 19 percent versus the second quarter, but fell 20 percent from a year earlier.

All told, foreclosure sales totaled 193,059 in the July-to-September period, an increase of 21 percent from the second quarter, but a drop of 3 percent from a year earlier, RealtyTrac said.

Despite the growth in short sales, foreclosure sales made up a slightly smaller share of all U.S. home sales in the third quarter. They accounted for 19 percent of all residential sales, down from 20 percent in the previous quarter, and unchanged from the third quarter of 2011.

Buyers who purchased a bank-owned home or a preforeclosure property in the third quarter got a bigger discount relative to other types of homes.

The average price of a foreclosure sale in the third quarter was 32 percent below the average sale price of non-foreclosure homes, RealtyTrac said.

That’s up from a 29 percent discount in the second quarter and a 31 percent discount in the third quarter of 2011.

Homebuyers who purchased a foreclosure sale in the third quarter paid an average of $177,430. That’s down 4 percent from the second quarter and up 3 percent from a year earlier.
Copyright © 2012 The Associated Press, Alex Veiga, AP real estate writer.

Attorney General Bondi Reminds Qualified Borrowers to Submit Claims

In a follow up to our recent post, National Foreclosure Settlement and the Big Banks, Florida borrowers who qualify and may be eligible for payment under the Settlement have been sent forms to return by January 18, 2013. 

 

This recent press release has me wondering if any of our clients will benefit from the recent $25 billion national mortgage foreclosure settlement. 

 

Read the actual News Release here.

________________________________________________________________________________

 

Attorney General Bondi Reminds Qualified Borrowers Who Lost Homes to Foreclosure to Submit Claims for Payment by January 18

TALLAHASSEE, Fla.—Attorney General Pam Bondi reminds Florida borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011 and who may be eligible for payment under the $25 billion national mortgage foreclosure settlement to file claims by Jan. 18, 2013.
Forms have been mailed to qualified borrowers, and they must be returned by Jan. 18, 2013. Borrowers should complete their claim forms and return them as soon as possible in the envelope provided, or file them online at www.nationalmortgagesettlement.com. Payment checks are expected to be mailed in mid-2013. Borrowers who believe that they may have missed their claim form because they changed their addressed recently may contact the settlement administrator at 1-866-430-8358.
Eligible borrowers had mortgages serviced by Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo, the nation’s five largest mortgage servicers that agreed to the settlement with the federal government and attorneys general for 49 states and the District of Columbia.
The settlement, which took effect in April, earmarked approximately $1.5 billion in payments for 2 million borrowers nationwide who lost their homes to foreclosure during that period and had their loan serviced by one of the settling servicers. The exact payment will depend upon the total number of borrowers who decide to participate.
Free claim form assistance available

Borrowers who have questions or need help filing their claims can contact the settlement administrator, toll-free, at 1-866-430-8358, or send questions by email to administrator@nationalmortgagesettlement.com. The information line is staffed Monday through Friday from (7 a.m. to 7 p.m. Central).
Payment won’t stop other legal claims

Eligible borrowers do not need to prove financial harm to receive a payment, nor do they give up their rights to pursue a lawsuit against their mortgage servicer or to participate in the Independent Foreclosure Review Process being conducted by federal bank regulators. More information about that program is available at www.independentforeclosurereview.com.
Eligible borrowers may get a payment from this settlement even if they participate in another foreclosure claims process. However, any payment received may reduce payments borrowers may be eligible to receive in any other foreclosure claim process or legal proceeding.
Eligible borrowers not notified should contact settlement administrator

Borrowers who believe they may qualify for a payment, but did not receive a notice because they have moved, should contact the settlement administrator directly to provide that information:
Call toll-free: 1-866-430-8358. The line is staffed Monday through Friday from (7 a.m. to 7 p.m. Central).
Email: administrator@nationalmortgagesettlement.com
Beware of scams

Borrowers should not need to pay anyone to file their claim. All homeowners should be aware of settlement-related scams. Do not provide personal information or pay money to anyone who calls or emails you claiming that they are providing settlement-related assistance. If you believe someone is conducting a settlement-related scam, contact the Florida Attorney General’s Office at 850-414-3990.
Settlement background

The national settlement followed state and federal investigations, which alleged that the five mortgage servicers routinely signed foreclosure-related documents outside the presence of a notary public and without personal knowledge that the facts contained in the documents were correct. This civil law enforcement action also alleged that the servicers committed widespread errors and abuses in their foreclosure processes.
Broad reform of the mortgage servicing process resulted from the settlement, as well as financial relief for borrowers still in their homes through direct loan modification relief, including principal reduction.
For more information about eligibility and filing a claim:

www.NationalMortgageSettlement.com
Email: administrator@nationalmortgagesettlement.com
Call toll-free: 1-866-430-8358 (hearing impaired: 1-866-494-8281). The line is staffed Monday through Friday from (7 a.m. to 7 p.m. Central).

Decisions, Decisions -Revocable Living Trust or Will?

At a recent Estate Planning consultation, we discussed the question of forming a Revocable Living Trust or a Last Will & Testament.  It's a common question and the discussion is necessary to forming the proper Estate Plan.  The answer depends on the individual, their estate, and their desires. Below is a brief discussion on the main differences of Revocable Living Trust and a Last Will & Testament.  It is not meant to be the "answer", but only a thoughtful examination. 


Revocable Living Trust 

A living trust is a written declaration and contract in which you ("grantor") transfer your property into a living trust for the benefit of yourself during your lifetime (lifetime "beneficiary") and then for the benefit of your heirs (remainder "beneficiaries"). During your lifetime, you will be the "trustee" of your living trust which means that you maintain complete control over the living trust's assets. The "successor trustee" will take control over your living trust in case of your death or incapacity. In addition, you maintain the power to change, amend or revoke your living trust at any time during your lifetime.

The main advantage for a living trust is the avoidance of probate. Probate is a state court proceeding in which your property is transferred to your heirs. A previous post, How long does it take to probate in Florida, discusses the time involved in the Florida Probate process.  Since probate only affects assets which you own at the time of your death, assets placed in a living trust are not owned by you, therefore, there is no probate on those assets. The cost to Probate will range from a percentage of the value of probate assets to an hourly fee. 

Further, probate is a court proceeding, your Will will be filed with the local Clerk and become part of the public record.  A living trust, however, is confidential and the transfer of assets from the living trust is kept from public view. When the grantor of a living trust dies or becomes incapacitated, the successor trustee administers the living trust without a "gap" period.   Under a probate proceeding, there is a "gap" period between the time of death and the appointment of an executor.

It may sound like the Revocable Living Trust is a great option for everyone.  However, in order for a Revocable Living Trust to work, all assets which are to be held in the living trust must be transferred into the living trust.  This list includes, but it not limited to:

• Real Property Deeds (lien holders must consent)
• Bank Accounts
• Partnership and Stock interests

The list can be exhausting for clients.  It is important to have a provision in the Revocable Living Trust that provides for a safety net for assets that have not been titled in the name of the living trust.  This is called a Pour-Over Will.  It provides that any assets not held in living trust will be placed into the living trust after the probate is completed.

A living trust is also more expensive in up front costs due to drafting the document and implementing it.   

Last Will & Testament

A will is a legal document that lets you tell the world who should receive which of your assets after your death. A will only takes effect upon death of the person, therefore, nothing is transferred or administered prior to death.   Without a will, the courts decide what happens to your assets and who is responsible for your kids in accordance with the Probate code.

An advantage of a will over a living trust is that probate estate is a separate taxpayer and can select a fiscal year end.   Also the decedent's creditors have a short statute of limitations time period to bring claims in a probate.  Once the period for claims has passed, those creditors are barred from asserting claims against the heirs. 



A will also allows you to name your executor, the person who will be in charge of your estate. Before you select an executor, make sure you understand the tasks he or she will need to perform, which include distributing your property, filing tax returns and processing claims from creditors. Your executor should be someone you trust completely and is willing to take on such a big responsibility.

There are limitations to wills.  It is important to know that the beneficiary designations on financial accounts, insurance policies and other assets take precedence over wills.  Make sure your beneficiary designations are up to date and reflect your current desires.

WRAP-UP

There is not one answer for everyone.  The important thing is to have a plan, seek the advice of an attorney, and make sure that your wishes will be carried through.  

***
There are many facets to a Revocable Living Trust and a Will that were not covered in the above post.  This post is meant to serve as a basic explanation of the difference between the two types of estate planning.  

The $300 Million Plan

A follow up post to our National Foreclosure Settlement and the Big Banks, Attorney General Pam Bondi announced the plans last week for Florida's $300 million.

To read the actual press release click here or the Frequently Asked Qustions section click here.
_____________________________________________________
TALLAHASSEE, Fla.—Attorney General Pam Bondi, President-designate Don Gaetz and Speaker-designate Will Weatherford today jointly announced their support for a plan for allocating the remaining $300 million that the Attorney General recovered for Floridians in the national mortgage settlement. The plan ensures that the entirety of these funds will be spent consistent with the terms of the settlement agreement, but also that the funds will be allocated through the legislative process. These settlement funds are in addition to the approximately $7.5 billion in expected relief that the national mortgage settlement provides directly to Florida homeowners.

At the next meeting of the Legislative Budget Commission, with the support of Gaetz and Weatherford, Bondi will seek approval for budget amendments to disburse $60 million of the settlement funds. Bondi anticipates proposing that the $60 million be used to fund down payment assistance for Floridians, foreclosure-related legal assistance and counseling, state court initiatives to ease the foreclosure backlog and Attorney General’s office enforcement efforts.

The balance of the funds will be allocated through the appropriations process in the upcoming legislative session. Gaetz and Weatherford have agreed to support the appropriation of approximately $200 million for housing-related purposes, consistent with the terms of the settlement agreement. Although the specific appropriations must be determined through the legislative process, possible uses of these funds include foreclosure prevention, neighborhood revitalization, affordable housing, homebuyer or renter assistance, legal assistance, counseling and other housing-related programs. Finally, consistent with the discretion afforded her under the settlement agreement, Bondi will designate approximately $40 million of the settlement funds as additional civil penalties.

“This plan gets much-needed assistance to the homeowners and communities suffering the effects of the foreclosure crisis, and ensures that the settlement funds are spent with the transparency, accountability and flexibility that comes from the legislative process,” said Bondi. “I thank President-designate Gaetz and Speaker-designate Weatherford for working together with me to implement the mortgage settlement in a way that’s in the best interests of our state.”

“I am grateful to Attorney General Bondi and Speaker-designate Weatherford for working with us on a proposal which ensures that these funds are appropriated by the legislature in a transparent and accountable manner,” said Senate President-designate Don Gaetz (R-Niceville). “Together with the approximately $7.5 billion in relief that will go directly to homeowners, this funding will play an important role in the multitude of state and federal efforts to provide relief for homeowners facing foreclosure.”

“I appreciate the hard work of Attorney General Pam Bondi and Senate President-designate Don Gaetz both in securing the settlement for distressed homeowners and for representing the interests of the state,” said Speaker-designate Will Weatherford (R-Wesley Chapel). The framework that has been outlined today will enable the Legislature to fulfill its important duty as appropriators while also directing these funds to those who have been negatively impacted. I look forward to working together in the upcoming legislative session.”

Attorney General Bondi formally entered a landmark $25 billion joint federal-state agreement with the nation's five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices. In addition to the funds described above, the agreement provides direct relief to homeowners and mandates extensive reforms of the banks' mortgage servicing practices. For more information regarding the settlement, please click here: http://myfloridalegal.com/pages.nsf/Main/C13C72583D0EF5BB8525799F00595D99

Jenn Meale
Phone: 850.245.0150
jennifer.meale@myfloridalegal.com

Fannie & Freddie - May deal with you afterall

Many of our clients are underwater with their home mortgages.  They come into our office to discuss their options - short sale, stay, try to do a work-out with lender- its a tough road.  If you have never missed a payment on your property and are not delinquent, not all lenders will deal with you. 

The following article is defintely newsworthy and interesting for those with Fannie and Freddie mortgages:
________________________________________

WASHINGTON – Oct. 25, 2012 – Mortgage giants Fannie Mae and Freddie Mac have issued new rules effective Nov. 1 that will allow short sales for underwater borrowers who have never missed a mortgage payment. Previously, Fannie and Freddie allowed only homeowners who had missed payments to qualify for a short sale.

However, eligible short-sale owners will need to show a hardship to qualify for a short sale under the new rules. Hardships may include unemployment or the death of a spouse.

The new rules won’t help credit scores, however. The non-delinquent short sellers will likely take just as big a hit to their credit score as delinquent homeowners who have missed loan payments and gone into foreclosure, according to Kenneth Harney, writing in Inman News.

“Under current national credit reporting practices, those non-delinquent borrowers are likely to be treated the same for credit scoring purposes as severely delinquent owners who go to foreclosure after months of nonpayment, or who simply toss back the house keys and walk away in strategic defaults,” says Harney.

Credit agencies have no special coding that indicates a short sale occurred without an accompanying delinquency. Therefore, homeowners could see their credit scores drop 150 points or more after a short sale.

However, officials at the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, say they are “in discussions with the credit industry” to explore ways to fix the credit score problem for people who haven’t missed a payment before undergoing a short sale.

Source: “Damage to Credit Scores Could Trip Up New Fannie, Freddie Short Sale Program,” Inman News (Oct. 23, 2012)

© Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688