Foreign Buyers make the difference

Upturn in Florida home sales a welcome surprise
 

The following story provides insight into the world’s positive view of Florida as a smart real estate investment. It was published by Xinhua, a Chinese news agency that claims over 800 million website visitors.

(Xinhua) – Sept. 1, 2011 – One of the first U.S. states to have its economy crushed by the U.S. housing market recession is now experiencing a rather happy surprise – its housing market is undergoing an upturn.

Despite an unemployment rate of 10.7 percent, which is higher than the national rate of slightly over 9 percent, enough people are buying houses in Florida, especially in the Miami area, so that the state’s housing market is no longer considered an imminent problem by housing and regulatory agencies.

What makes this even more unique is the fact that the status of Florida’s housing market seems to be in the opposite condition of the national housing market.

End of July statistics by the U.S. Department of Commerce show that total sales of newly built homes in the U.S. declined for the third consecutive month. Total sales in July fell almost one percent.

On another housing market matter, Standard and Poor’s (S&P), the rating agency which created a global storm by downgrading U.S. credit rating in early August, is currently being investigated by the U.S. Department of Justice to see whether or not S&P mis-rated home mortgage securities. S&P declined to be interviewed by Xinhua for this story.

With all of the above fiscal-related problems negatively affecting the U.S. housing market, how are the Miami and Florida housing markets now having success? Todd Nordstrom, a Realtor for Keller Williams Realty in Miami Beach, got the answers.

“The recent building boom has brought a tremendous increase in residents to the (Miami) downtown areas. At this time, approximately 85 percent of all condominiums built in the last boom are currently occupied, which is fueling new restaurant and entertainment options. Foreign nationals account for over 50 percent of all sales in the (Miami-Dade) county,” said Nordstrom.

According to Nordstrom, “foreign nationals with cash due to rising currencies” were attracted to Florida by its lower home prices. They are mostly nationals from Brazil, one of a few countries that have witnessed rapid economic expansion in the past decade despite the recession that hit the U.S. and other major industrialized countries.

A spokesman for RealtyTrac, which publishes the monthly U.S. Foreclosure Market Report, also gave its explanations for the housing boom in Miami and Florida.

“We believe a slowdown in foreclosure activity, that started 10 months ago because of problems with foreclosure paperwork and documentation, is actually helping the Miami and Florida housing markets to experience this upturn,” said Daren Blomquist of RealtyTrac.

Miami and Florida’s good-fortune housing market environments have happened elsewhere in the U.S. – most notably in Phoenix, Arizona – and “prices have passed the tipping point where buyers are willing to jump in, and the temporary lull in the foreclosure activity has helped to boost buyer confidence as well,” Blomquist said.

Yet there are two other possible reasons for Miami and Florida’s upturn in their respective housing, according to Brad Sullivan, a spokesman for the U.S. Department of Housing and Urban Development (HUD).

“Florida/Miami has a relatively high concentration of retirees that may contribute to the demand for housing, relative to states/metro areas with a higher share of unemployed persons. The Southeast in general was/is growing faster than many other parts of the country – the upper Midwest, for example,” noted Sullivan.

The Miami-Dade housing market has had 12 consecutive quarters of increased sales. Condominium and home sales in the Miami-Dade area rose almost 50 percent in the second quarter of 2011.

The Internet is another source for would-be homebuyers to refer to if interested in buying a house in Florida. RealtyTrac.com and Foreclosure.com, which has monthly charges for customers who are given a grace period of seven days without fees, allow Internet users to examine Florida foreclosure records. Another website, Equator.com, does the same, but for no charge at all to customers.

While the Federal Housing Finance Agency (FHFA) is considering making tens of thousands of government-owned foreclosed homes into rental units, the medium price for a single-family home in the West Central Florida region dropped 3.2 percent from June to July. The medium price for such a home is now 125,000 U.S. dollars.

According to S&P’s Case-Schiller home price index, from June of 2010 to June of 2011, Tampa had the largest decrease in the price of a single-family home than anywhere else in the U.S. In that time span, the price of a home in the region of Tampa declined by 9.5 percent.

When RealtyTrac released in late July its mid-year report of the 20 metropolitan areas in the U.S. that had the most foreclosures, only one Florida area – Cape Coral/Fort Myers, which rated at 12 – was listed. One year ago, Florida had nine areas and cities listed in the top 20 of RealtyTrac’s listing.

But in Washington D.C., a number of federal agencies have churned out data and reports about the housing market that seem to conflict – and the upturn in the Miami and Florida housing markets is no exception.

On Wednesday, the FHFA issued a 83-page report about the status of housing markets all throughout the country, which stated that Florida’s housing market was down 8 percent in the second quarter of 2011 compared with the same period of last year.

Yet Andrew Leventis, a senior economist for the FHFA, admitted that all is not glum for the Miami and Florida housing markets.

“The strength (of both housing markets) is that there are incredibly affordable price levels for houses and that interest rates are at historic lows. If you want to buy a house in Florida and you have good credit, there’s a good chance that you can get a 30-year loan, which Americans love to do. There’s a lot of inventory (i.e., unsold homes) out there,” noted Leventis.

Miami-Dade County is not the only area of Florida’s housing markets that is now experiencing robustness. In Orange and Seminole counties, both located in the middle of Florida, Realtors note that there is anywhere from four to five months of backlog inventory houses available – meaning that all types of homes, from single- family houses to mansions, are available to would-be buyers.

In Leon County, only 9 percent of all homes available for purchase were sold in 2010, yet 2011 figures showed that this statistic is on the rise.

DataQuick.com, a website which posts real estate news and custom data, reported that in the immediate Miami metropolitan area, the number of foreclosures decreased to it’s lowest level since 2007.

From FloridaRealtors.org  -  Sept. 1, 2011

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condos

This is what I'm talking about

A few days ago, I posted some comments regarding my new property tax bill.

In essence, the City of Hallandale Beach and Broward County have chosen to substantially increase their tax rate instead of trying to adjust their budget to a new reality.

Downgrading and thrift are the way to go. Continuously raising taxes to support an inflexible path of so called "growth" is irresponsible. 

It is sad to observe that citizens' response has been almost inexistent. We are sitting back, while our pockets are being sacked. Broward is our county and Hallandale Beach is our city.

We should be able to make our elected officers  work for us, not against us. 

We are tolerating that, while services provided are diminished and degraded, our taxes go up every year.

This year will mean for many "homestead" beneficiaries, an approximate 10% increase, in a time of zero-inflation. 

Is this ridiculous? Tragic would be more like it. People losing their jobs, their homes; retirees whose savings have been almost wiped out by the economy, shouldn't be confronted with this type of issue.

I am reading today on Heraldtribune.com  which covers Florida West Coast an article about how Venice, Fl. has addressed the issue. A good example to follow.

Venice tax rate held flat

BUDGET: 4-to-3 vote means city will have to use $3 million out of reserves

VENICE, FL.  Despite advertising a potential 29 percent property tax rate increase for the 2010-11 budget, the City Council voted Tuesday to keep the rate flat.  The decision marks a continuation of a decade-long streak of either lowering or maintaining the tax rate.

Property owners will continue to pay 2.77 mills, the equivalent of $2.77 per $1,000 of taxable property value. 

The council must approve the budget and tax rate at a second public hearing Sept. 21.  After two hours of spirited debate, the council voted 4-3 to maintain the current rate.  Council members Emilio Carlesimo, Kit McKeon and Mayor Ed Martin opposed the idea. Council members Sue Lang, John Moore, Jim Bennett and Ernie Zavodnyik voted for keeping the rate the same.

"I fear we are kicking the can down the road," said McKeon, before the vote, expressing concern about dipping into savings to fund the operating budget. "To be fiscally responsible, we have to maintain the proper fund reserve."  But Lang, who is up for re-election along with Zavodnyik, said with the economy struggling, residents cannot pay more. Reading tax statements from residents who have seen their properties decline in value while they are paying more in property taxes, Lang said the council needs to cut spending and use reserves.  "We have a reserve fund" that is in good shape, Lang said. "I would rather have people go and spend that money in our local economy." 

The council will have to use about $3.1 million of its $9.2 million or so in reserves to sustain its $22 million budget for the fiscal year beginning Oct. 1. It will collect about $800,000 less in taxes than last year because of declining property values.

 City Manager Isaac Turner has laid off four employees and left jobs unfilled to balance the budget. He expressed concern about deficit spending.  "We are below what your goal is for reserves," Turner said. "We will need to immediately identify where we are going to make that up."  Before the vote, Zavodnyik proposed eliminating city provided health insurance for council members. Carlesimo made a motion to eliminate council member pensions, provided by the state after six years.

City Attorney Bob Anderson said the council could not vote on the measures because they did not advertise them in advance.  Before the vote, some residents urged the council to not raise the property tax rate.  "It's been nothing but increases," said Mike Rafferty, a resident of Bay Indies, the city's largest mobile home community.

He said the county appraised the community about 18 percent higher than last year. A tax rate increase would mean his taxes would go up, he said.  "If you don't want to take it out of a rainy day fund, don't take it out of my pocket," he said. 

Venice Taxpayers League President Gary Budway said the city should have cut the budget across  the board and suggested Venice consider combining its fire department with the county and hiring a city attorney, rather than contracting with Anderson.

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com
 

GoldenIsles-homes.com
 

Golden-Beach-Homes.com

The Beach Club Condos

Florida Property Taxes - Millage Vs. The People

 I just received my 2010 proposed property taxes notice.  

I have lived in the same house for about 24 years. I am thus protected by the Homestead exemption which should not allow my taxes to be raised more than 3% per year.

The value of my home has been steadily decreasing during the last 3 or 4 years. 

However, my 2010 taxes will go up about 9.4 % in the best case and 14.4% in the worse.

How does this happen? 

a) My "assessed" home value goes up 3% to catch up on past years when I was protected.  When prices went artificially up 20% or 30% some years, they couldn't raise my taxes more than 3% per year, because I was a beneficiary of the homestead regulations. But now, even though prices have been going down every year, they still apply the 3% tax increase every time. Difficult to explain? I confess it is. 

b) The millage. Say your home is worth $100,000 and your taxes are $2,000 per year. Your millage is 2%. Figured it out? The millage is the percentage applied on your home value to calculate your tax. Of course it is on the net assessed value. The assessment is what the County Appraiser establishes as your home value. 

We have certain tax exemptions generally called Homestead which benefit residents' first home, and plus some minor additional benefits for some senior and low income or disadvantaged residents. The Homestead exemption reduces your assessed value by $50,000 for some tax components,  except for the school taxes which have a lesser exemption.

Let's analyze my specific property taxes, as an example.

Reading my 2010 proposed tax bill, (if the budget changes are approved)  I notice:

a) County taxes amount to 22.96% of the dollars total of the tax bill. 

Millage Last Year: 4.8889 - Millage  this year: 5.2256%  - 6.88% Millage  increase 

b) Public School taxes total a 33.61% of the dollars amount of my tax bill. 

Millage Last Year: 7.363% - This Year: 7.631% - 3.64% Millage  increase

c) South Florida Water management taxes amount to 2.16% of the tax bill. 

No changes in Millage rate  -  0.5346 % .

d) Everglades Construction Project taxes amount to 0.362% of the total tax bill. 

No changes in millage rate- 0.0894%

e) Florida Inland navigation taxes amount to 0.1396% of the total tax bill.

No changes in millage rate - 0.0345%

f) Children's Services Council amounts to 1.90% of the total tax bill.

Millage Last Year 0.4243% - Millage this Year 0.4696% - 10.68% Millage increase

g) Municipal (City Taxes) which amount for  31.15% of my total tax bill:

Millage Last Year 6.9934% - Millage This Year - 7.7% - 10.10% Millage increase!

h) South Florida Hospital District, which amounts to 5.90% of my total bill.

Millage Last Year - 1.2732% - Millage This Year 1.4572% - 14.45% Millage increase

i) Non ad-valorem assessments: 1.80% of the total dollars amount of the tax bill.

No change in millage rate.

 

I repeat:  Altogether, my 2010 taxes will go up between 9.4 % in the best case and 14.4% in the worse, depending on the budget discussions.

 *****

Is this fair? When property values have been plummeting  for four years now?

When inflation is close to zero? 

Can people hardly hit by this unending recession afford these increases?

Here is my analysis and my conclusions

The largest impact on my tax bill is by far the MUNICIPAL TAXES  item, followed by BROWARD COUNTY TAXES. Millage rates have increased a lot in one year on both counts.

Public School Taxes had a more moderate increase in the millage rate.

Hospital District Taxes had the highest millage rate increase (14.45% more). However it is only a 5.90% of my tax bill; so the impact is not so bad, and I can understand that in these recession times, hospital could be extending their services to more under-privileged citizens. 

What I can't easily swallow is the County and City tax increases. 

In spite of the present property values drops, the overall tax base (total of assessments for all properties) of my city has substantially increased since 2000. This increase is much higher than the rate of inflation in the same period.  How can be explained?  A couple of words may suffice: waste and mismanagement. 
Do I have actual proof of that? I do not follow these budgets and city commissioners'  decisions and meetings so closely.

On the other hand, services have not improved, and I have seen higher bills for my  sewer, water, trash services; In some cases, these services have been actually reduced.

But like any private corporation, what count for a shareholder at the end of the Business Year are the dividends of his investment.  And a conscious shareholder will compare them against previous years' returns and results, as well as similar corporations' results. According to this judgment, the CEO and Board of Directors will be confirmed or voted out.

Our taxes are a main consideration when assessing our governors' work. It's not quite the same as a corporation, but very similar. We can and should exercise our judgment and make our voices heard. 
It is done once every few years when voting for our commissioners.  

As a realtor, I am severely affected by the impact of property taxes (as well as insurance, maintenance expenses), on people's ability to sustain their home-ownership.  Foreign buyers often balk when confronted with the cost of maintaining a property in Florida. 

No doubt that, unleashed as it seems to be, this is a leading factor in the real estate recession.

This is the bottom line. 

**-**

I have read in The Palm Beach Post – August 27, 2010,  an article on the same subject.  That confirms it. I am not alone. This is what it says:

Home values way down but taxes often up; homeowners ask how it's possible

Many Palm Beach County homeowners may feel like they've been drop-kicked in the gut after opening their preliminary property tax notices this week.

Property values across the county have plummeted, leaving many owners owing more than they paid for their homes.

Even those who aren't under water felt the jolt. In many cases, not only did their property values fall, but they will pay more in property taxes next year.

"I thought to myself, 'How does that happen?' " said Bob Deacy, who is slated to pay about $100 more in property taxes next year for his home in West Palm Beach's historic Flamingo Park neighborhood. "I read it over three times."

The increase came despite a 22 percent drop in his home's market value.

Deacy bought his home $79,000 in 1997 and saw its value rise year after year. But to see it plunge this year from $189,143 to $147,296, is more upsetting than the proposed tax increase, he said.

"I am a realist, and I know that if you want improvements in your community you are going to have to pay," he said. " I didn't think in a neighborhood that is sought-after it would go down as much as it did."

By contrast, suburban Lake Worth resident Erna Altenor also watched her home's value plummet but has seen her tax bill fall. Altenor bought her home for $260,000 in 2007. Its market value is now $73,581, according to her preliminary tax notice.

"I couldn't take it no more," said Altenor, who stopped reading the notice after seeing the new value.

State law prevents homeowners from being taxed on more than their home is worth. As a result, Altenor's taxes have also plummeted to $1,055, down from $2,133 last year.

"That is good news," she said.

For those unhappy with the numbers in their preliminary notices, there is time to challenge them.

The county's value adjustment board can lower a property's assessed value after a hearing before a special magistrate. Petitions can be filed with the Palm Beach County Clerk and Comptroller's office.

And the county, cities, and other agencies won't finalize tax rates until next month. Before they do, they must hold public hearings on their budgets. Those who want to sound off about tax increases can speak out at those hearings.

The dates and locations are included on property owners' preliminary tax notices.

Property taxes rising

Many longtime homeowners will see their property taxes go up this year, even though the values of their homes have fallen. Here's one example:

West Palm Beach Year purchased: 1997

2009 market value $189,134

2010 market value $147,296

2009 property taxes $1,310

2010 proposed property taxes $1,413

Property taxes falling

Homeowners who bought during the boom will likely see property taxes fall this year, along with the values of their homes. Here's one example:

Suburban Lake WorthYear;  purchased: 2007

2009 market value $133,740

2010 market value $73,581

2009 property taxes $2,133

2010 proposed property taxes $1,055 

Henry B. Nathan is a Realtor at United Realty Group Inc.

Visit my websites:

Condo-southflorida.com

GoldenIsles-homes.com

Golden-Beach-Homes.com

The Beach Club Condos

Hallandale Beach Blues - 2010

The City of Hallandale is having a nasty dispute, that can be seen on several blogs, between some of its commissioners, residents, and some condo association societies.

The fact is that, after years of paying the City Manager incredibly high salaries and benefits, it appears that this Manager wasn't even going to work most of the time.

They have finally decided to fire him.

The dispute is apparently about paying him now 11 months of severance package, plus health insurance for life, I think, and some additional benefits. And that the total bill could be almost a million dollar.

Some time ago, and looking at the high property taxes in Florida which we had to endure during the last few years, due to the accelerated increase of assessed values, I wrote that our cities cannot understand that, since we are in a period of recession, they have to learn how to spend our money more wisely.

I wrote a few times, on how they found the turnaround way of avoiding what our legislators had mandated: reduction of taxes.

This is an example.

The City manager, recently fired, made apparently between $250,000 and $450,000 a year (depending on whose information you read).

If in fact he made these last figures, I bet that not even the City manager of Los Angeles, Tokyo, or Paris would match it. That's really something to brag about!

Hallandale Beach is a city of about 40,000 residents. Schools are some of the worst in the state.
Services are very expensive and considered inferior.

But the City Hall is impressive...

You just draw your conclusions.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos,

BP's disaster, Offshore Drilling, and Florida

In September 2009 I endorsed, on this blog, the opposition, by some Florida West Coast politicians, to offshore oil drilling outside Florida Gulf Coast.

For many people, and many of our elected officers, it might have seemed "sensible" to accept taking high stake risks to feed our appetite for fossil energy, as opposed to seeking renewable and non-polluting ways to power our vehicles, factories, and homes.

Is it the easiest way to go?
Nobody is saying so.

Will it work at once?
No

Is it the only long-term solution?
Hell yes!

Is it only about Global Warming?
Not really.


Is it about a healthier life in a less polluted environment?
Sure.


Is it economically practical? Won't it destroy our present way of life?
It might not work for a few years, until our present civilization adapts, but nobody can envision a different road to ensure human life for centuries to come.

Will it be a factor in world-wide human happiness?
I believe it will. Lack of adequate sources of energy is a large factor of poverty in many third world countries.

Will it make sense for the US?
It should. Unless you think that dependency on Middle East Sheikhs, Iran's Mullahs, Chavez & Co., is beneficial to our economy and world's democracy.

What is the cost associated to making these big changes happen?
If you factor in the costs of Irak,and other historical wars and conflicts originated in oil dependency, and oil business, it might actually be pretty cheap.

Will somebody lose in these proposals? Why are so many of our policy makers favoring the "drill-drill" ideology?

Actually somebody might have a problem with renewable energy. Perhaps the Big Oil conglomerates? But even these corporations could gradually switch to renewable-energy if they were willing to sacrifice for a few years part of their exorbitant profits.


Here is what I read today in the news, that provoked my thoughts:

From FloridaRealtors.org :

Oil issue dead in Florida for now

TALLAHASSEE, Fla. – May 4, 2010 – Gov. Charlie Crist declared the issue of drilling off the Florida coast effectively dead Monday as he monitored the latest news surrounding an oil spill caused by an explosion on a BP rig last month.

"It hasn't happened in Florida, but it happened in Louisiana and we may suffer as a result of it," he said. "But I think the timeliness of when this occurred is pretty extraordinary when you think about it because there may have been legislation in this last week that would have permitted it, but for this occurring."

Incoming Senate President Mike Haridopolos and House Speaker Designate Dean Cannon have pushed for offshore oil drilling in Florida for the past two years. The two have held hearings over the past year on the subject to garner support for the proposal. With the two of them set to lead the two chambers come November 2010, oil drilling was expected to become a major part of their platforms.

A committee led by Cannon had even released a report talking about the potential benefits of drilling.

But when the oil rig in the Gulf of Mexico exploded, the two incoming leaders were less fervent in their support of drilling, saying they needed to monitor the situation closely and tour the coastal areas.

"We're going to take the entire summer and fall to see, first and foremost, what happened in the Gulf," Haridopolos told reporters last week. "It gives me great pause. But a tragedy does not stop all progress."

Nearly every major candidate for office has weighed in on the issue. Chief Financial Officer and Democratic gubernatorial candidate Alex Sink called for disaster loans and an oil spill task force Monday afternoon. And Attorney General Bill McCollum said last week that he would veto Cannon's proposal if he were governor because it involved drilling too close to the shore.

"If I'm governor, he'll face a veto on my desk if he brings it up the way it is now," McCollum said last week.

State Sen. Dan Gelber, D-Miami Beach, who is running for attorney general, put out a release saying he was "inalterably opposed" to drilling. What potential Cabinet members think matters because under the proposal as it was last floated, the Cabinet would ultimately decide on new leases.

"I don't think we need to study it, I think we need to reject it outright and put the entire idea where it belongs: in our rear view mirror," Gelber said.

Scott Maddox, a Democratic candidate for agriculture commissioner, held a press conference Monday asking all candidates for Cabinet positions to sign a pledge saying they would not support offshore oil drilling in Florida.

"No state in the nation is dependent on its beaches for tourism the way Florida is," he said.

His Republican opponent, U.S. Rep. Adam Putnam, R-Bartow, also released a statement saying he was "deeply concerned" about the economic and ecological impact of the spill.

"It is clear to every elected official, from the President on down, that consideration of any new exploration closer to shore needs to be taken off the table and we need to have a thorough investigation into what happened and the inability of the industry to effectively respond," Putnam said.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos,

Which side are you on?

Hurray for Governor Crist!

Insurance Companies had it their way for too long. And they will keep having it unless you and me do something about it.

I have read some distressful news today and these are my thoughts:

As a realtor, I see every day the desperate situation of many homeowners.

It is a time of great distress in America. People are losing their homes, and losing their jobs.

But the aggressive greed of insurance companies (among others) is unlimited. Corporate profit, bonuses, monopoly games, you name it. This has become the standard.

Owning a home in Florida is more difficult now than it has ever been in the past few decades. Cities' greed, counties' greed, mortgage banks' greed. This undeniably is a substantial part of the problem.

Insurance companies are large entities dedicated to accumulate wealth at our expense, often to waste it on incredibly large bonuses on their directors (see AIG). How many real damaging hurricanes have we sustained in the last 20 years, and how much were their losses that can justify the rate increases? How much homeowner insurance rates have increased, compared to actuarial increase in these risks?

The uncompromising attitude of these companies contrast with everything their ads and publicity proclaim.

I totally agree with Governor Crist.

That how I got the news:

Read in the Sarasota Herald Tribune - April 14, 2010

Tussle in Tallahassee over insurance rates control

TALLAHASSEE - Call it Round 3 between the Legislature and Gov. Charlie Crist. Earlier in the session, Crist vetoed a campaign fundraising bill championed by top Republicans. This week, lawmakers and the governor are facing a showdown over a bill that would eliminate tenure for newly hired teachers and links future raises for teachers with student test scores. And now, another storm is building between the Republican Crist and the GOP-controlled Legislature. Legislation that would weaken the state's ability to control property insurance rates is moving through the Legislature. Crist again is threatening a veto.

The legislation is similar to a bill passed last year that would have largely freed major insurance companies from rate regulation for hurricane coverage -- but Crist vetoed that measure. Lawmakers have tempered the bill this year, partly in hopes of winning Crist's support. On Tuesday, the Senate General Government Appropriations Committee approved a bill (SB 876) that would allow property insurance companies to raise their rates an average of 10 percent a year without state approval. But that increase may still be too much for the governor.

Crist has voiced his opposition this spring to any legislation that increases property insurance rates, saying Floridians cannot afford it during a difficult economy. He said if he receives a bill that increases rates, "I will veto it and happily do so." It's another threat in a session that has been characterized by vetoes and anticipated vetoes. Crist has already said no to a bill that would have allowed lawmakers to create "leadership funds" with campaign contributions. Lawmakers say the rate legislation is necessary to revive Florida's property insurance market, arguing that giving companies more leeway in raising rates will attract more companies and spur competition.

Without more private competition, lawmakers say, the state will continue to rely heavily on Citizens Property Insurance, the government-backed insurer that covers more than a million Floridians. If Citizens runs into a deficit, it could result in a surcharge on all insurance policyholders in the state, auto insurance policies included. Sen. Mike Bennett, R-Bradenton, said the state's current regulatory structure has hurt the ability of Floridians to find coverage from private companies. "We've tried it their way for year after year after year and we have a market that is going down, down, down," said Bennett, who is sponsoring the Senate rate bill. Lawmakers have backed off their original plans for a more wide-open deregulation system for property insurers. And on Tuesday, they moved closer to the governor's position, dropping a plan that would have allowed a series of increases up to 15 percent a year and replacing it with the 10 +ercent limit. The House, which will take up a similar bill (HB 447) today in a policy council, is also expected to back a 10 percent limit. But the modified bill is opposed by the state Office of Insurance Regulation.

Monte Stevens, an OIR lobbyist, said state regulators believe the bill "still goes too far to the side of the companies."

If Citizens runs into a deficit, it could result in a surcharge on all insurance policyholders in the state, auto insurance policies included. Sen. Mike Bennett, R-Bradenton, said the state's current regulatory structure has hurt the ability of Floridians to find coverage from private companies. "We've tried it their way for year after year after year and we have a market that is going down, down, down," said Bennett, who is sponsoring the Senate rate bill. Lawmakers have backed off their original plans for a more wide-open deregulation system for property insurers. And on Tuesday, they moved closer to the governor's position, dropping a plan that would have allowed a series of increases up to 15 percent a year and replacing it with the 10 percent limit. The House, which will take up a similar bill (HB 447) today in a policy council, is also expected to back a 10 percent limit.

But the modified bill is opposed by the state Office of Insurance Regulation. Monte Stevens, an OIR lobbyist, said state regulators believe the bill "still goes too far to the side of the companies." Stevens also said regulators doubt giving companies an easier way to raise their rates will make hurricane-prone Florida more attractive to large national companies that could be risking their financial health if a major storm strikes. "It is a problem of geography," Stevens said. Sen. Mike Fasano, R-New Port Richey, who has been an opponent of the rate deregulation bills, said granting even a 10 percent average increase could lead to rate increases in the range of 20 percent or 30 percent in some coastal areas, since the cap was an average.

"That's totally intolerable," he said.

The Senate General Government Appropriations Committee on Tuesday also backed another major property insurance bill (SB 2044) that also gives insurers the ability to raise rates to pay for reinsurance and other costs as long as the overall rate does not exceed 10 percent a year. The bill also modifies the impact of discounts that insurers must give to residents who harden their homes against storm damage and changes the way consumers are reimbursed for property losses. Insurers have argued that the discounts, reinsurance and other factors that have undermined their ability to cover their costs with premium payments.

Henry B. Nathan is a Florida Realtor at United Realty Group Inc.
Visit my website: http://www.condo-southflorida.com
where you can search for Aventura Condos, Florida Condos, Sunny Isles Condos,

More on the Short Sales Saga

Read at Realtors.org (Florida Realtors website)

Government urges short sales, but experts aren’t sure they will help

With the highly touted federal mortgage-modification program falling short of its target numbers, the government has looked into alternatives to foreclosure and come up with a possible, though not original, solution: The short sale, a transaction in which the lender accepts less than the balance owed on the mortgage. Beginning April 5, under new Treasury Department rules, short sales will be presented as the potential next step for homeowners who are rejected by or fail to make the grade for the federal Home Affordable Modification Program (HAMP).

RealtyTrac chief economist Rick Sharga suggested that offering the short-sale program is the administration’s acknowledgment that its current mortgage-modification effort “can’t solve the foreclosure problem by itself.” Kevin Gillen, vice president of Econsult of Philadelphia, said there was both statistical and anecdotal evidence that lenders have been holding off on foreclosure proceedings. “No doubt that part of this is due to staff shortages relative to the volume of delinquencies, but it’s also due to uncertainty over near-term government policy,” he said. Sharga sees positive elements in the new guidelines: Both homeowners and mortgage servicers will have financial incentive to participate in short sales; there are limited payouts for second lienholders, “and paperwork is standardized, which makes it easier for everyone to comply.” The new Home Affordable Foreclosure Alternative program will run until Dec. 31, 2012. Among its provisions:

• The lender must offer a short sale in writing to the borrower within 30 days after the borrower either is ruled ineligible for mortgage modification under the HAMP program or has been ruled unable to sustain payments under a trial plan.

• A borrower may receive up to $1,500 to assist with relocation expenses.

• Incentives of $1,000 will be offered to lenders for each completed short sale. For each deed in lieu of foreclosure, in which the borrower voluntarily transfers the property to the lender, $1,000 will be paid to the lender.

• A lender with a second lien on the property will get up to $3,000 of the short-sale proceeds, or can pursue a short sale outside the program if it doesn’t agree to share.

• The lender will not be permitted to reduce the real estate agent’s commission after an offer on a property has been received.

Currently, short sales don’t make up a big piece of the real estate market, either regionally or nationwide, for a variety of reasons. One is they tend to be difficult and time-consuming.

“I handled a short sale of a condo in Bensalem (Pa.) that took a year,” said real estate broker Christopher J. Artur. Typically, there is “so much aggravation and red tape involved that some buyers get so fed up they walk away.” Nationally, just 14 percent of all existing-home transactions in January were short sales, the National Association of Realtors says. In the Philadelphia region, they made up 6.9 percent of total homes for sale at the end of January, said Art Herling, regional vice president at Long & Foster Real Estate. “I call short sales ‘organized chaos,’ “ said Noelle Barbone, office manager of Weichert Realtors’ Media office.

Each lender works short sales differently, “at their own pace, and it depends on how behind (the homeowners) are on mortgage payments, if the house is worth less than they owe, and whether or not foreclosure paperwork has been filed.” The new program is unlikely to make short sales easier, even as an alternative to foreclosure. “What one needs in a short sale is time,” Barbone said. But these days, as buyers race to meet the April 30 agreement-of-sale deadline for the federal tax credit, time is money. “I had first-time buyers this weekend with 20 percent down, and we found two houses they liked,” said Cheryl Miller of Long & Foster’s Blue Bell office.

Both were short sales, however, and neither the seller nor the agent could give a definite timeline for even seeing an executed agreement of sale, she said. “Timing is pretty critical for the first-time buyer, and viable houses that are short sales are remaining unsold” as a result, Miller said. Sharga doesn’t think the new short-sale program will be the answer the government seeks. “While we’ll likely see an increase in the number of short sales, I doubt that the reality will live up to the hype.”

From FloridaRealtors.org - March 12, 2010

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