Outrage

It was a Monday morning and I get a call from one my clients in France. A couple of years ago, he has bought a nice condo in a new building in South Florida.

He only financed about half of the value ($150,000) with one of the largest US banks at a fixed rate.

He is not complaining about the huge drop in the value of his property due to the terrible market. He pays in time his mortgage and the property taxes that the bank withdraws every month from his account. For the time being, he is renting his apartment since he can't travel. One day, he will eventually spend his vacations in Florida. I assist him in the rental , even though the rent hardly covers his taxes and condominium fees.

He calls me a week ago. All of a sudden, the bank is charging him about $550 more PER MONTH. He just noticed it from his statements, when he observed the dwindling balances. They have already charged him the extra amount for three months and he just found out.

I go through his file and find that the loan has a fixed interest rate for thirty years. So it can't be a rate adjustment. He pays directly his condominium fees, so I also discard a possible increase in these charges. Mystery!

I advise him to call the bank from France. I get another call from him the next day.

It appears that the bank claims to have sent him a couple of notices that they needed an update of his flood insurance policy and since he did not respond, they proceeded to contract a flood insurance which cost is what they were charging him on top of his usual monthly payment. He never received them, perhaps because he changed address in France a year ago.

$ 550 per month is about $ 6,600 per year, for Flood Insurance. The bank claimed that they had an insurance company issue a new flood policy covering any loss due to a flood in this new building.

The building policy actually covers this risk and it was exhibited when my client took the mortgage loan with this bank, and it was provided by the condominium association, as it is the usual procedure.

Apparently, the bank wants the condo association to provide them every year with the proof of renewal of the flood insurance.

Are they so careful with their stockholders' money? Are they so, but so attentive to every little detail that could avoid any loss to their bank?

Sure. So conscientious that the whole country's economy was almost busted by the mortgage crisis that these same great banks caused. So conscientious that billion after billion they lost most of their investors' money in "subprime" loans.

They are so diligent that, of all the delinquent borrowers, one of their few clients religiously paying his mortgage is suspected of negligence and summarily hit with this incredible charge.

I proceeded to call my own insurance agent to find out what it would cost for a similar condo to be insured against flood. He represents one of the largest insurance companies in the US. He quoted me an approximate cost of

$200 A YEAR.

Now, which is that company that the Bank chose to issue a flood insurance costing his customer 33 times as much as the normal premium?

Do I have a reason to suspect collusion and bad faith? Do I have a reason to be indignant as was my French customer?

In good mood he told me that French banks are not much better.

Of course he called the bank, and solved the problem. In a few minutes, the condo association faxed the bank their flood policy and the "problem" was cleared. I hope the bank will refund my client the abusive charges.

But the bottom line is that this kind of thing shouldn't happen in the first place.

Why? Why do we have to fight every day against these giants who are the beneficiaries of our business. These enormous corporations who get Federal money at unbelievably low rates, and pay ridiculously low interests to their depositors, only to lend it back to them, often at usury rates.

I asked my insurance agent if he knew an insurance company who would charge a $6500 premium to insure a small condominium. All I got was a hearty laugh and his suggestion that if I find out what insurer the bank is using to "protect his clients" please find him a job there; they must be making an awful amount of profit.

What a joke!

Outrageous?

No comments.

Henry B. Nathan is a Florida Licensed Real Estate Agent.

Please visit my website: http://www.condo-southflorida.com/ where you can search for Hallandale Beach Condos, Sunny Isles Condos

Sales Activity at the Ocean Four Condos in Sunny Isles Beach

REPORT

LISTINGS AND SALES ACTIVITY AT OCEAN FOUR CONDOS IN SUNNY ISLES

OCEAN FOUR CONDOS

As of: July 7th, 2009

Units available for sale: 51

Model E - 1301 Sq. Ft. 2 bedrooms, 2 bathrooms 5 Units, priced from $495,000 to $650,700

Model B - 1396 Sq. Ft. 2 bedrooms, 2 bathrooms 2 Units, priced from $749,000 to $769,000

Model D - 1583 Sq. Ft. 2 bedrooms, 2 bathrooms 7 Units, priced from $650,000 to $1,320,000

Model B- Mod. 1644 Sq. Ft. 2 bedrooms + Den, 2 bathrooms 5 Units, priced from $604,900 to $995,000

Model D 1886 Sq. Ft. 2 bedrooms, 2.5 bathrooms 14 Units, priced from $649,888 to $1,050,000

Model A - 2755 Sq. Ft. - 3 bedrooms, 3.5 bathrooms – 9 Units, priced $1,390,000 to $1,695,000

Model F - 3018 Sq. Ft. - 4 bedrooms, 3,5 bathrooms - 8 Units, priced $1,165,000 to $1,950,000

PH 4101 - 5239 Sq. Ft. - 4 bedrooms, 5 bathrooms- 1 unit, priced at $4,190,000

These are the specifications of the Ocean Four different floor-plans.

Model	Bedrooms	Baths	Living Area	Balcony	Total Area
A	3	3.5	2755	256	3011
B	2	2	1396	186	1582
B Mod	2+ Den	2	1644	186	1830
C	2	2.5	1886	391	2277
C Rev	2	2.5	1886	391	2277
D	2	2	1583	287	1870
D Rev	2	2	1583	287	1870
E	2	2	1301	264	1565
F	3	4.5	3018	569	3587

Least expensive available: Unit 706 - 1301 Sq. Ft. - $ 495,000

Most expensive available: Unit 4101 – 5239 Sq. Ft. - $4,190,000

No MLS sales recorded in the last 3 months

2 units have been sold in the last 6 months

- Unit 909 - 1,301 Sq. Ft. $485,000

- Unit 806 - 1,301 Sq. Ft. $396,000 (REO)

This is an average of 1 sale every 90 days at the Ocean Four Condominiums.

There are 51 Active Listings for Sale at the Ocean Four Condos as of July 7^th, 2009

Total of apartments at the Ocean Four Condos: 281

Percentage of Ocean Four Condos for sale as of July 7^th, 2009: 18.15%

This report is provided by Henry B. Nathan, a Florida Realtor at United Realty Group Inc. and a Florida Licensed Mortgage Broker. The accuracy of any information in this report is not guaranteed. Information was drawn from the MLS and other sources.

Visit my website: http://www.condo-southflorida.com/ where you can search for Hallandale Beach Condos, Sunny Isles Condos

Market bottom and Real Estate Inventories in South Florida

With my limited resources, and as almost anybody in this country at this time, I try to get some feelings about where the market is at this time and where it is headed.

Since we hesitate to believe the assessments of the realtors main organizations, which historically tend to be overly optimistic, and inject some hope within its members and the public at large, one of the simple but effective tool that we can use is our access to the MLS.

The multi-listing system, while it does not cover the entire of real estate commerce, is however sufficiently inclusive that we can interpolate its results and get generally reliable information.
Of course, there are people who do not use an agent to buy or sell a property. There are properties which have been withdrawn from the MLS but are still available for sale; there are expired listings wating to be placed again on the system.
But these are factors that are permanents and should not affect specific findings, opinions, or judgments.

It is very simple. I just take a note at specifics times of the quantity of homes available for sale in my main areas of interest. I split them between condos and single family homes.

The comparison in the active listings for sale between certain dates should give us an idea about how the inventory of properties for sale is evolving throughout the last months.

The last time I had compared these inventories was May 15, 2009. I had evaluated the changes since March 19, 2009, a period of about 8 weeks, or 2 months. I saw evident signs of inventory reduction.

I had all but forgotten about the whole thing. But then, on June 10th, 2009, it occurred to me that it would be worth to do the same comparison one more time. So I just pulled out all active listings on the MLS in the same locations. And guess what? The same trend continues. Correct me if I am wrong, but except the Brickell Avenue area, there is not one neighborhood or city in South Florida where the inventory has not gone down. OK, I might be exagerating since I didn't really cover all locations. But whatever I looked at confirmed these findings.

So again, I am asking:

Is this the bottom of the market?

Does this constant reduction in the listings announce the long-due recovery?

Prices are still falling, but at a much slower pace. In many area they appear to be stable. Of course that some foreclosure sales are being made at surprisingly low prices, but these are not the whole market. And in some of the most desirable areas, (like the beaches which are my specialty areas), I can feel some pressure on the prices.

How can I explain this? Perhaps less available bargains than ever during the last year or so? Less "steals" to offer to my buyers?

We can't deny that new construction is at a standstill all over South Florida. In the last two years, only the completion of some projects has added new properties on the market. New projects are almost non-existent.

The flow of out-of-town buyers, investors, new first-home-buyers must have done its job of eroding the inventory. It will go on. The assistance that the Federal authorities are putting in place to help middle-class homeowners is starting to show. Prices have made real estate more affordable.

Perhaps not as affordable as we would hope. We can't forget that the real price is the price at which a buyer can afford it without getting in trouble. Sacrifices have always been done in order to achieve the American dream of home ownership. But you still have to feed your family, pay your water, electricity and a minimum of inescapable expenses. (let's not talk about health-related bills which for many people have become another unattainable dream). If you can pay your mortgage, taxes and maintenance fees after saving as much as possible on the rest, then the property is affordable.

Fannie Mae has traditionally ruled that housing expenses for a homeowner shouldn't exceed about 30% of his gross income. That should be the criteria to determine a reasonable market price.

But all this is not what we really want to talk about.

We are analyzing the inventories of active listings of properties for sale.

There is a factor that we cannot ignore. Foreclosures and short sales can and will increase in the immediate future, due to the end of banks "moratorium" on foreclosures but, so far, we haven’t seen a sensible effect on increasing real estate inventory. Or perhaps the acceleration of market normalization would be much more evident if these new foreclosures wouldn't be feeding the market.

This comparison is significant. Not a lot of economics and theories. Just cold facts. As much as 10% less homes for sale in less than three months.

Are we reaching bottom? I am starting to give it some serious consideration.

These are the inventories of condos and homes in some of the most important areas of South Florida.

	As of March 19, 2009	As of May 15, 2009	As of June 10, 2009
Aventura Condos	1864	1769	1724
Bal Harbour Condos	270	283	255
Brickell Area Condos	810	714	772
Hallandale Beach Condos	1320	1260	1202
Hollywood Condos	1477	1608	1554
Fort Lauderdale Condos	2903	2918	2870
North Bay Village Condos	304	303	298
Pembroke Pines Condos	1096	971	926
Sunny Isles Condos	1495	1401	1367
Surfside Condos	189	172	168
Weston Condos	331	309	278
West Palm Beach Condos	2732	2510	2470
Aventura Homes	54	47	47
Coconut Grove Homes	156	156	152
Coconut Creek Homes	231	172	153
Coral Gables Homes	607	555	535
Coral Springs Homes	720	568	503
Hallandale Beach Homes	124	114	111
Hollywood Homes	1477	1288	1199
Fort Lauderdale Homes	1902	1733	1676
Miami Beach Homes	492	469	454
Pembroke Pines Homes	837	654	609
Surfside Homes	70	73	67
West Palm Beach Homes	1841	1665	1601
Weston Homes	545	487	473