Wednesday, April 22, 2009

Another assault on Florida?

There’s a move afoot in the Florida Legislature to lift the state’s ban on oil and gas exploration off Florida’s coast.

They never relent. They try again, and again, and again.

The "drill, baby, drill" philosophy is here again, a troubling affirmation of the never-ending purpose of the same old people and corporations to place their own monetary interest above all other values, such as the protection of nature, environment, our beaches, our coastline, our water, our health.

The hypocrisy of "drilling in an environmentally safe fashion" is flagrant. Everybody knows the results of offshore exploration, oil rigs, and spills

They keep insisting: "one more time,… just for a few years… till we put in place renewable energy, bla, bla, bla.

You don’t fool me, fellas. It's not about public interest. It's about lining your pockets.

They claim that they are investing in clean and renewable energy. But the percentage of these investments are minuscule, when compared to those dedicated to traditional oil and coal explorations.

So they say: let's forget the $ 150/a barrel prices. Just lay back, relax; everything will be fine and let the big boys take care of business. They know what they're doing.

Sure. The same way their colleagues and good friends at GM and Chrysler knew better and kept producing their gas-guzzlers for decades.

Do I think it's outrageous that they try to pull out this fast one on us? Hell yes.

Do I think that all their "statistics" about voters' supporting offshore drilling are fake and non-relevant? You bet.

The same considerations that have kept them from destroying our coast for 30 years have not changed today. Enough of our coral reefs are ailing or have been destroyed, and enough of our water is polluted enough to endanger ocean life; too many of our marine species are on the brink of extinction.

I have read too many articles published by the most qualified world-wide researchers , about how the critical damage caused by the abuse of our oceans and rivers is almost irreversible.

Don't tell me about "creating jobs" and "boosting the economy" and "generating revenues". Not when thousands and millions of our best jobs continue to be outsourced , without any relief in sight for the growing number of unemployed kids, while our authorities don’t seem to have a clue on how to stop this disaster.

We all know how tourism is one of the largest revenue-generator in Florida. Let's not forget how we could all be affected by this new threat.

The claim of additional revenue of about 1.5 billion, is nothing compared to the tourism revenue that we would be putting at risk.

I have seen so many times the tar-soiled sands in other beaches or the world, that the vision of this nightmare on our coastline makes me sick.

As a realtor, in addition to my personal love for Florida, I have to add my personal interest as a professional. I wouldn't like to sell the spoils of our nature to my clients. When I sell real estate here, I also sell the sun, the breeze, the water, the ocean, the fish and the blue marlin, and the Everglades. It is as much my own interest, as it is the public interest to preserve it for us, our kids, and grandchildren… and anybody who comes to visit.

And, my friends: don't you think that the time has come to get serious about renewable and clean energy? It is not something that we can afford to delay.


This is what I read in the South Florida Business Journal - April 21, 2009

Lawmaker pushes for offshore energy exploration

by Paul Brinkmann and Susan R. Miller

There’s a move afoot in the Florida Legislature to lift the state’s ban on oil and gas exploration off Florida’s coast.

It’s a proposal that proponents say would provide the state with the economic stimulus it so badly needs, but one that environmentalists fear could wreck havoc on the state’s tourism industry and beaches.

Florida’s speaker-designate, state Rep. Dean Cannon, R-Winter Park, on Tuesday unveiled the late-session proposal that would give the governor and Cabinet the power to consider applications to conduct offshore energy exploration.

With less than two weeks left in the session, the House Policy Council passed the bill Tuesday on a 17-7 vote. However, a similar measure has been stalled in the Florida Senate.

If passed by the legislature, the bill would result in the reversal of a ban on such drilling that’s been in place for three decades.

Environmental groups, including the Nature Conservancy, World Wildlife Federation, Sierra Club, Southern Alliance for Clean Energy and Audubon Society, vehemently oppose the plan and question Cannon’s motives of introducing it late in the session.

“A decision of this magnitude warrants robust discussion both legislative and public and the idea that it can be added to a bill at the last minute is troubling,” said Julie Wraithmell, wildlife policy coordinator for Audubon of Florida.

She said the fear is not only about a catastrophic spill, but the potential for the smaller, day-to-day leaks that can occur in transportation from rigs and through pipelines.

But, at least one business organization is backing the bill.

“Florida’s families and businesses are facing unprecedented economic challenges, and the potential for significant, new public revenues from oil and gas are immense,” said Barney Bishop III, president and CEO of Associated Industries of Florida (AIF). “I am confident that we can do this in a way that will protect our environment and our precious coastline, which is such a critical natural resource for our state.”

Bishop called the new drilling initiative an opportunity, but added it is not a guarantee that drilling will occur.

“It’s been our politicians that are pandering to other interests that have been against this,” he said. “As much as we all want to move in a green direction of renewable energy and nuclear, the truth is we’re all going to have to rely on fossil fuels for the next generation, at a minimum.”

Proponents argue that oil and gas leases could generate billions of dollars in new annual revenue – without raising new taxes.

AIF presented information about Cuba’s recent oil discoveries, and the revenue that neighboring states receive from oil operations. Florida’s waters don’t have nearly the amount of known oil deposits that Texas and Louisiana claim, but there are two known oil fields with millions of barrels of reserves – the northern Jay and Blackjack field and the southern Sunniland Field.

Henry Fishkind, an economist with Fishkind & Associates in Orlando, said the state could expect $31 billion in new revenue over 20 years with the current estimates of oil deposits.

AIF has pointed out that transporting oil is where the biggest risk for spills lies.

Proponents point to a recent Mason-Dixon poll that found 59 percent of Floridians generally support drilling off Florida’s coast. The survey found 79 percent would support drilling if it raises money for education, health care and environmental protection.

“Recent public opinion surveys document that Floridians have come to strongly support exploration and production of oil and gas resources off the Florida coast,” said Larry Harris, a principal with Mason-Dixon. “Nine in 10 voters (88 percent) support offshore production if it is done in an environmentally safe fashion and raises significant revenues, boosts the economy and creates jobs.


Henry B. Nathan is a real estate specialist in North Dade County, especially Sunny Isles, Aventura, and North Miami Beach.

We, at www.condo-southflorida.com are specialists in:


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Sunny Isles Real Estate

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Monday, April 06, 2009

Why International Buyers are interested in Sunny Isles Beach, Florida Real Estate.

By Henry B. Nathan.

I have seen since 2002 an accelerated influx of international investments in these areas. Even in the tough time the US economy is going through, our country is still considered a safe refuge for capital and investment. US real estate continues to attract foreign investors from France, Germany, Holland, the UK, and many other European countries. Asian buyers are less conspicuous, but are seeing more of them lately. Russia n investors are an increasing factor and they have a preference for some specific areas. One of them is Sunny Isles. Some of the reasons:

View of the Pinnacle Condos, built in 1998


a) The Beach. For Canadian and Russians, the fascination of the ocean, the sun, and the sand is a never ending joy. For many Floridians, the proximity of the beach as an every- day luxury, has become a habit. We occasionally open our eyes on the infinite luck of walking a few blocks, or driving a few minutes and being able to wet our feet and walk with no shoes on soft sand, enjoy a slice of pizza and a beer on the boardwalk on almost every day of the year. But whoever has endured the long and freezing winter days, the absence of sunshine for weeks and months, the claustrophobia of short days and long nights behind walls, is usually happy just by enjoying the warm rays of a Florida sun, the shorts and T-shirts, the sandals, or a drink on a restaurant deck alongside the waterways. So, we can never ignore the "Beach Factor".

b) The lowest prices since the peaks of 2004 and 2005. Nobody can deny that, in comparison with real estate values in most countries of the developed world, Florida is a bargain. We are not talking Paris or London or Moscow. We are talking about even small town in those countries; even in Canada. And South Florida hasn't lost at all its appeal.

c) To the contrary, more and more entertainment venues, attractions and facilities, are available each year. Multiple centers of interest in Fort Lauderdale and Hollywood Downtown, alongside the Sunny Isles Beach stretch, the Hollywood Broadwalk, Surfside and Bal Harbour areas, South Beach, Miami Downtown, its Art and Design Districts, you name it. Sports spectacles are of a startling variety. Professional NBA Basket Ball, Hockey. NFL Football, Professional Baseball; Florida is home of famous teams and the daily possibility of assisting to great shows is amazing. Offshore fishing, lake-fishing, canoes on the waterways are another wonderful option. Biking and running on our shaded streets and our many parks. The fashionable areas of Lincoln Road and Ocean Drive in South Beach, as well as Fort Lauderdale's Las Olas Boulevard, draw young and older crowds, with their infinite selections of bars, restaurants, night clubs and discotheques. The Latino area of Little Havana is a joy to visit. Well, this is not supposed to be a tourism brochure.

d) The weak almighty dollar. The strength of Euros, Pounds, Canadian Dollars do not inspire a total confidence to their owners. There is always this sense of the "come back of the dollar" sometime in the future. Meanwhile these currencies can be stretched at a maximum by the foreign consumer. And Real Estate is now considered a good investment, compared to Stock Market and Bank deposits.

e) The possibility of an eventual move to this area. Many buyers from the Northern part of the US, Canadians, Latin Americans and Europeans have the dream of being able one day to move to Florida. It is very common for me to hear: "a vacation home for now, maybe a second home later on and, who knows? Perhaps a place to retire one day." And buying the dream while making a good investment is quite a good reason.



f) Sunny Isles is located at the North limit of Dade County and the South of Broward County. This optimal setting allows enjoying both areas with a minimum driving time. Right in the middle between Fort Lauderdale and Miami Airports, very close to the "chic" shopping area of Aventura, with Bal Harbour shops just around the corner.

Sunny Isles has drastically changed during the last decade. From a row of older motels and hotels, the land has been redeveloped in luxurious high-rise buildings alongside the beach and the Intracoastal. Many open- air shopping plazas on the west side of Collins Avenue are home to a multiplicity of bakeries, restaurants, stores, offices, bars and all kind of business venues. This has added to the beach attraction.

Personally, I love walking to some Russian food stores and order some exotic plates at lunch time, or have a fast dinner on an outside table at an Argentine Pizzeria, or enjoy an Italian Ice Cream sitting out on a warm and breezy night.

g) There is a variety of real estate properties for all buyers.

Talk about the more affordable buildings such as Ocean View Condos, the Ocean Reserve, or the Arlen House, the Winston Towers Condos, and the Plaza of the Americas, to the newer construction at the Porto Bellagio, across the street from the ocean, where we can offer very affordable properties.

At the middle range point, let's mention the King David, some of the Oceania buildings, or La Perla Condominiums, which is a brand new building on the beach. Up in values, the Oceania, the Sayan, the Sands Pointe, the Meridien, then the Millenium, the wonderful Pinnacle which has become a landmark with its pretty architecture, the Meridien and the Ocean Point Condo-hotels.

At the top, the Ocean series, with my favorite Ocean Two building, the various Trump Condominium buildings, and I prefer the new built Trump Towers. Acqualina, the Jade Beach and Jade Ocean, and the superb Turnberry Ocean Colony, are perhaps the jewels of the crown. This is just a short mention of the many options available.

If you are still not completely convinced, just talk a walk on Collins between 150 and 190th Street at any time of the year, and let me have your comments.

Henry B. Nathan is a real estate specialist in North Dade County, especially Sunny Isles, Aventura, and North Miami Beach.

For more information, please call me at

(954) 296-6741

or





We, at www.condo-southflorida.com are specialists in


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Sunday, March 15, 2009

Ocean II, Unit 2804, Sunny Isles Beach, Florida

We proudly present this new listing at Sunny Isles Beach.
Unit 2804.

The Ocean Two Condominiums, built in 2001, have established a standard of elegance, discreet luxury, and architectural excellence.
Wonderful amenities, generous landscape, pool areas, restaurant, spa and fitness center; magnificent party rooms and social areas; a careful attention to every detail, a 24-hour staff providing unmatched service and security. Ocean II is indeed the place on the beach to live and enjoy.

Unit No. 2804 is definitely a crown jewel in an outstanding building. A gem. Perhaps the nicest unit in the building. No expense spared in upgrades. Marble floor throughout, only the best in designer crown moldings, wall treatments, built-in lighting, Italian kitchen,custom closets, window treatments.

Wonderful flow-thru unit. Surrounded by magnificent water views from every room. Direct Ocean, Intracoastal, and Bay panoramas. Separate laundry room. Private elevator.

For more information, please call:
Henry B. Nathan - United Realty Group Inc.
(954) 296-6741

or


We, at www.condo-southflorida.com are specialists in


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Sunny Isles Real Estate

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Saturday, March 07, 2009

On target for February 2010 - The Village at Gulfstream Park

The City of Hallandale gives a vote of confidence to a troubled but impressive project

The Village at Gulfstream Park

A February 2010 opening date was announced for this vast project which many expect to be the new center of attraction of the city of Hallandale Beach. So far, 13 restaurants, 17 retail stores, 2 night clubs have apparently committed; roughly about 50% of all the available space.

Hallandale Beach Commission voted 3-1 to approve funding to assist this project, which more than a year late in its completion. Conflictive opinions about the city involvement have been circulating. A majority of the city commissioners are strong advocates of a project that will create hundreds of jobs and attract tourism, visitors, and investment at a recession time, when they are much needed. The issue of taxpayers’ dollars being spent to support a private venue, is strongly debated, and the “City of Choice” ‘s majority belief is that it will be a gamble that will pay great dividends.

The Village at Gulfstream Park is a mix of fashion and home accessory shops, and signature restaurants, outdoor cafes, office space, and projected residential units. 70 stores will cover more than 410,000 square feet of premium retail space. The Village at Gulfstream Park is expected to compete the next-door Aventura Mall, which has been since its creation, the nucleus around which the City of Aventura has focused. Gulfstream, as an open-air Shopping Center, will differentiate itself enough from Aventura Mall to complement rather than compete.

Gulfstream Park, as a combination of Casino, Horse-track, entertainment, and shopping could quickly become the leisure, fashion and entertainment destination for South Florida. Centered in an the middle of a prosperous population, it could become a better alternative to the Hard Rock Casino in Davie.

Gulfstream is announcing some impressive committed restaurants, such as III Forks, Ola Cuba by Chef Douglas Rodriguez, Texas de Brazil, American Pie Brick Oven Pizza, Brio Tuscan Grille, Cadillac Ranch, Cantina Laredo, Häagen-Datzs, Lamborghini Café, The Cheese Course, The Playwright Irish Pub, PrimeBar, and many more.

Among stores who have committed, they count on Crate and Barrel, Pottery Barn and West Elm; designer clothing retailers Fender Rock & Roll Religion, Martier, Atelier and Vogue Couture. Two nightclubs: Santanera and Greenhouse Nightclub are expected to attract the young crowd, in search of an alternative to South Beach. Other expected tenants: Next Authentic, Pacific Paradise, Rock Star, Romeo and Juliet Couture, Scala, Scene, The Container Store, Vahalla Menswear, Venetian Salon, Williams-Sonoma, Z Gallerie, and counting.

Mayor Joy Cooper has been a strong endorser of the Gulfstream Park Village, and has brought the full support and partnership of the City of Hallandale Beach.

We, at www.condo-southflorida.com are specialists in


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Did I hear Bankruptcy?

More on the Village at Gulfstream Park

Read in The Miami Herald – March 6, 2009, by Michael Vasquez and Jim Freer

Gulfstream Park's owner seeks Chapter 11 bankruptcy

Magna Entertainment, which owns Gulfstream Park in Hallandale Beach and other premier racetracks, asked for protection from its creditors and said it would sell some assets.

Magna Entertainment, the nation's largest horse track operator -- and owner of South Florida's Gulfstream Park -- has filed for Chapter 11 bankruptcy protection and will sell Gulfstream as part of a deal to keep its racetracks open.

The Ontario-based company, which has lost hundreds of millions in recent years, said it plans to continue operating while it restructures.

Magna has struggled with massive debt. It was supposed to make a $40 million payment to the Bank of Montreal on Thursday.

In addition to horse racing, Gulfstream -- which last month celebrated its 70th birthday -- also offers slot machines and live poker.

''One hundred percent business as usual,'' said Steve Calabro, vice president of gaming at Gulfstream Park. ``Both on the casino side and the racing side.''

Nevertheless, Magna's bankruptcy filing does raise questions about Gulfstream's future. To keep its racetracks open, the company arranged a six-month, $62.5 million financing package through a subsidiary of MI Developments, Magna's largest shareholder.

That deal also calls for Magna to sell Gulfstream and other properties to either MI Developments or a third party that may emerge during the Chapter 11 process in Delaware.

Though South Florida's housing market is in a slump, Gulfstream's Hallandale Beach property is highly valuable, which could prompt interest from developers.

''The industry in Florida is going to be very, very concerned about losing Gulfstream, and they're obviously going to try to find solutions,'' said Timothy Capps, a University of Louisville equine-industry instructor who previously worked for Magna in Maryland.

Gulfstream's slots casino, Capps said, could help save racing at the park, as it makes the property more attractive to gaming interests than if it was just a racetrack alone. Any buyer could operate the slot machines only so long as racing continues, under Florida parimutuel guidelines.

After a bumpy introduction in late 2006, Gulfstream's slots have rebounded. In January, Gulfstream was the only one of Broward's three ''racinos'' to boast higher monthly slots revenues versus a year ago. This year's racing season also has been strong; through last Sunday, average daily wagering is up 3.6 percent over 2008.

Gulfstream has 420 year-round employees and 480 seasonal employees. None will be laid off because of Magna's bankruptcy, said Mike Mullaney, the track's media relations director.

The Village at Gulfstream Park, a $1.2 billion shopping and entertainment complex being built next to the racetrack, is still going forward. Target opening date: early 2010. The complex will bring in home retailers including Pottery Barn, West Elm and The Container Store. Restaurants will include Texas de Brazil, Brio Tuscan Grille and Ola Cuba by Chef Douglas Rodriguez. So far, the project is only 50 percent leased. Ultimately it will have 70 stores covering more than 410,000 square feet of retail and entertainment space, plus 80,000 square feet of office space. Magna partnered with Forest City Commercial Group on The Village. Brian Ratner, who heads Forest City's East Coast development team, said of Magna, ``They've honored their obligations and we expect them to continue to do that.'' Magna's other U.S. racetracks include Santa Anita Park in southern California and Baltimore's Pimlico Race Course, home of The Preakness Stakes.


Henry B. Nathan is a Real Estate Professional. Please visit our website and learn about:

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Monday, March 02, 2009

Hard to believe!

Associations want faster foreclosures


For condos, lenders are only responsible for six months' worth of back assessments. Policymakers in Washington, as well as at the state and local level, have been working feverishly lately to develop programs aimed at stemming the massive tide of foreclosures sweeping the housing market. Billions of dollars are aimed to be spent, with hundreds of billions more already used to help bail out ailing banks.


But in an ironic twist, as the government tries to get banks to hold off on seizing peoples' property through foreclosure, many of Florida's community associations are worried about the opposite: banks that are not foreclosing fast enough.


That is because the lender does not have to start paying the regular association assessments on a property until it formally takes title at the very end of the foreclosure process. Under current state law, they are only responsible for unpaid assessments going back a certain period of time -- meaning any process drawn out beyond that equals lost revenue for associations already struggling financially.


For condominiums, lenders are only responsible for six months' worth of back assessments, or up to 1 percent of the unit's value. Single-family homes are a little different, where banks have to pick up the tab for an entire year's worth.


Some community associations -- especially condo associations -- have been complaining that banks are initiating foreclosure proceedings against owners, but then taking their time when it comes to actually pulling the trigger to take title. In other cases, the courts are so backed up with foreclosure cases that getting to a resolution simply takes more time than ever before. As a result, the process frequently goes beyond the six-month liability period for condos, and leaves condo associations with months' worth of assessments that will never be repaid. For homeowners associations, the problem is less intense, but still a concern.


The Community Association Leadership Lobby, a lobbying group that represents about 4,000 community associations in Florida, plans to push for new laws during the upcoming legislative session that would shift more of the responsibility for unpaid assessments to lenders.


"The situation financially for many associations is bad, and it's getting worse," said CALL's co-executive director David Muller, a Sarasota lawyer. "They need help to relieve the strain of unpaid assessments from foreclosures that is eating away at their bottom lines."


Muller, also a community association attorney with Becker & Poliakoff, said at a time when banks are receiving hundreds of billions of dollars in federal bailouts from taxpayers, it was appropriate for some of those funds to be used to help aid associations. He did not advocate direct infusions of taxpayer money that would go to associations, but rather said indirect support would come by requiring banks to take on a larger share of unpaid assessments when they foreclose. Muller admitted that the state's banking associations would likely not be thrilled about his proposed initiative.


A new statewide survey CALL conducted of more than 1,500 of its members found considerable financial pressures being caused by the foreclosure crisis. More than 65 percent of respondents living in communities hit by mortgage foreclosures said they were "causing a revenue shortfall that is placing a burden on the association's finances," according to CALL. Nearly 38 percent said the foreclosure-related revenue losses resulted in "postponements of major capital investments in upkeep or repair" of buildings and other property.


The survey also found more than 50 percent of respondents reported more vacant units compared to a year ago thanks to foreclosures. Nearly 70 percent of those reported vacancy rates from 1 to 9 percent as a direct result of foreclosures, while 15 percent had such a vacancy rate greater than 10 percent. Nearly 60 percent of respondents said that getting lenders who had been slow to foreclose to pay unpaid assessments "has proven difficult." Looking ahead, things were not looking any better. Three-quarters of the CALL survey's respondents expected the foreclosure situation would not improve, and may even get worse, over the next year.


From the Sarasota Herald Tribune - March 2, 2009


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,

Wednesday, February 18, 2009

Curious twists in traditional law issues.

I read this in the Florida Business Review - February 13, 2009

Today's economy may produce a house divided

No one knows the disruptive force of a bad economy better than a divorcing couple facing foreclosure.

Take the case of Joaquin A and Indra B, who have been married for almost nine years. They bought their Biscayne Park home near the height of the housing boom for $231,000 in 2005. It fell into foreclosure with them owing $222,000 last year, and the house went on the market.

B hadn't worked in a year, and the couple fell about $8,000 in arrears on the mortgage with Wells Fargo Bank. Her lawyer, Miami attorney Peter Abraham, filed an emergency motion for contempt for nonpayment of the mortgage and child support shortly after the foreclosure filing, stating, "Petitioner and the parties' minor child resides in the marital home and will be rendered homeless upon foreclosure."

Miami-Dade Circuit Judge Bernard Shapiro held A in contempt in July but held off on jailing him so he could square the mortgage. A divorce settlement agreement is awaiting B's signature. B and A' attorney declined to comment. Calls to A and B's attorney were not returned.

The predicament of what to do about family homes in divorce during a recession is rippling through the field of family law. What traditionally was a couple's biggest asset to be divided in a divorce has quickly transformed into the biggest debt and a major headache. "Initially, we were fighting over the equity in the house," said Linda Jaffe, a Fort Lauderdale solo practitioner who specializes in family law. Now "we're being faced with questions that I don't know that we're necessarily equipped as divorce lawyers to answer."

Should clients try renegotiating the mortgage? Go along with foreclosure? Abandon the property? Try a short sale? In the past year, Jaffe said she has been saddled with this new set of questions repeatedly. "It's an absolute catastrophe we're dealing with right now," she said. Stephen Butter, who has practiced divorce law for 44 years in Miami, said his role has changed with the financial tides. He has helped clients fend off foreclosure just long enough to salt away a deposit and first month's rent. A client who was a married homeowner a year earlier ends up being a divorced tenant with the bank taking the house.

"Now, it's rampant. Now when somebody comes in for divorce, their house is either in foreclosure, or they're already three or four months behind," he said.

For homeowners who owe more than the value of their home, the new question is how to equitably divide the value of a house — when it's negative. "Is that a marital liability?" he asked.

Butter worked on a case that ended with something of a biblical solution that left ownership of the home untouched. One of Butter's clients — a mother of five — was afraid to unload the family home in an ice-cold real estate market. He brokered a deal allowing her to alternate weeks in the family home and weeks away with her family or friends. The children remain in the home while the parents alternate. He would not identify the clients.

For better or worse, more couples are staying together. Divorce filings dropped to 14,250 from 16,508 in Miami-Dade Circuit Court; to 8,729 from 9,651 in the Broward Circuit Court; and to 5,554 from 5,927 in Palm Beach Circuit Court in the year ended last June compared with the year before.

Davie appraiser Don Sarley of Advanced Research and Appraisals, said plummeting home values have affected divorces in other unforeseen ways — like not being able to tap a home's value to pay attorney fees. "People can't pay lawyers," he said. "You can't even look at the house to lien anymore."

In the past year, the median sale price of a single-family home dropped 27 percent in Miami-Dade County, 23 percent in Broward County and 18 percent in Palm Beach County, according to the Florida Association of Realtors. And while the median sales price of Miami-Dade condos fell 12 percent during the same period, it shot down 29 percent in Fort Lauderdale and 27 percent in Palm Beach County, according to association figures. With home values in broad decline, the strategy for dealing with homes in divorce has been turned on its head. "Two years ago, they'd be fighting tooth and nail to get the house," Sarley said. "Now they don't want it."

But not everyone has noticed the pinch. Collaborative divorce lawyer Rosemary Roth in Miami, for instance, hasn't seen her practice affected much, but she readily admits the parties are generally conciliatory in her area of the law. Pinched finances may be working to keep families unwillingly together. "People are holding onto an otherwise bad situation because of economics," said Alison Taylor, executive director of the Oregon Family Institute, a think tank that examines the relationships between households and the courts.

"Since we usually see divorces happen when the money situation is no longer advantageous, we're probably going to see fewer and fewer families file for divorce," she said. "Kids are going to be subjected to a lot of conflict."


Nothing new in the domain of Money and Love and their eternal and intricate relationship.

Not your usual romantic story? Why not? Sometimes hardship and adversity in times of need can bond, improve understanding and perhaps the sense of family and mutual responsibility.


I am an eternal optimist.

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,


Friday, February 13, 2009

Opportunities and market's bottom

For Some, It's Finally Time to Dive Into Housing Market

For years, even as her friends bought huge houses in the expensive Phoenix market, Elizabeth Child remained a renter.

But in January, the airline customer-service agent and her boyfriend closed on their first home. The three-bedroom, two-bath house, complete with granite countertops and a pool, had been listed for $340,000 in late 2007, but the couple bought it for $220,500. "Six months ago I didn't think I would own a home," says Ms. Child, 27 years old. "And now I do. It's so perfect." Elizabeth Child and William McGeary were able to buy their first home after prices in Phoenix dropped sharply.

The housing bust is creating a new group of winners: first-time home buyers. People who sat on the sidelines -- often watching wistfully as their friends became homeowners -- are suddenly in a position to grab some great deals. Indeed, first-time home buyers made up 41% of all buyers at the end of 2008, up from 36% in 2006, according to a recent survey from the National Association of Realtors. The new buyers are being lured in by home prices that are down about 25% from their peak levels in mid-2006, according to the S&P/Case-Schiller Index.


In some markets, prices have dropped even further -- slumping around 40% in Phoenix, Miami and Las Vegas. Lower mortgage rates have also helped make real estate more affordable, and as houses languish on the market longer, more homeowners are willing to negotiate. With Congress considering plans to sweeten a tax credit for first-time home buyers, the picture could get even brighter. "Buyers are now coming back into those hard-hit markets to take advantage," says Lawrence Yun, chief economist for the Realtors' association. "It's a buyer's market."

Ululani and Scott Larson looked for a house in the Seattle area several years ago, but held off from buying, deterred by the high prices. "I felt like we were missing out, because everyone knows it's the American dream to buy a home and build equity," Mrs. Larson says. The couple was shocked to discover recently that they could afford a four-bedroom home in Federal Way, Wash. The assessed value of the home in January was $400,000, Mrs. Larson says. Their offer of $315,000, with a down payment of $15,000 was quickly accepted by the relocation company, which had had the property on the market for six months. "Honestly, I didn't think we'd get as nice of a house as we did," Mrs. Larson says.

Of course, would-be buyers need decent credit scores and the money for a decent down payment. Also, finding the right property can be a challenge for first-time buyers, who tend to be seeking less-expensive homes. The typical first-time buyer purchased a home costing $165,000 last year, according to the National Association of Realtors. Yet some of the best bargains right now are in luxury condos and sprawling single-family houses. "The disproportionate McMansion inventory doesn't work," says Shari Olefson, a real-estate lawyer who works in southern Florida. "Even if you qualify for the loan, there are huge overhead costs to buying a larger home."

Still, real-estate agents and mortgage lenders are banking on first-time buyers to help stimulate the otherwise dreary housing market. Many are holding workshops and information sessions designed specifically for first-time buyers, addressing federal and state tax incentives for homeowners, local prices and ways to take advantage of low mortgage interest rates. Tim Epps, a mortgage adviser in Tulsa, Okla., runs rent-vs.-buying simulations for would-be buyers and recommends that other prospective buyers do the same long-term calculations.

Mr. Epps and many mortgage lenders recommend that buyers come up with as big a down payment as possible, even though Federal Housing Administration loans will allow some first-time buyers to enter the market with as little as 3% down. (Hud.gov has more information about FHA loan programs designed for first-time buyers.)

"Even if [a home owner] loses some paper equity, in the long run, there are some tax benefits," says Mr. Epps, referring to the deduction for interest paid on mortgages and the credit for first-time home buyers. The $7,500 tax credit for first-time buyers, which Congress passed last year, has had little effect on the market so far. Because the credit has to be repaid, buyers are viewing it as another loan, industry experts say. But the stimulus package that Congress is working on is likely to repeal the provision that requires buyers to pay the credit back and possibly enlarge the tax credit as well.

For many buyers, the biggest question is whether to hold out for even better conditions. Historically, recoveries in the housing market are slow, and most experts expect the prices to stay low for some time. That means people can take their time shopping for the right property, real-estate experts say. John Stratton, an agricultural engineer in Lisle, Ill., was serious about buying last summer but held off from making a bid. Some of the money he planned to use for a down payment suffered losses from mutual-fund investments. He's also waiting for prices in his area to go down further. "I can do better investing in things other than real estate," he says. "Right now, I'm not diving in."

Patience can pay off. Jen and Drew Rocky spent over a year tracking their prey before the price was right. In the summer of 2006, they saw the four-bedroom, 2½-bathroom home of their dreams in Sherman, Conn. The asking price was $565,000, "completely out of our price range," Mrs. Rocky says. But they didn't give up. The Rockys kept driving by the vacant house. They had online alerts to notify them of changes in the property's listings. They went to town hall to research the home's public records. As they suspected, the home was in foreclosure. "There were liens all over the place," Mrs. Rocky says. They bought the home in December 2007 for $410,000. "I felt so vindicated," Mrs. Rocky says. "We got a good deal, but I'm sure there are even better deals out there."

From: The Wall Street Journal; Feb. 11, 2009

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,

Monday, February 02, 2009

Bail-out blues

We have all read about the billions that our government keeps showering on failing banks, mortgage bankers, and GSE's (such as Fannie Mae).

The official explanation is that they "are too big to fail".

And, meanwhile, it's business as usual. Government "discovering" from time to time that CEO's and high-level executives are still pocketing bonuses and buying Lear Jets, while their troubled bank use the bailout money to buy out other more troubled financial companies and banks.

My opinion is that Federal Government should just let them fail, and take over their assets and liabilities, establish a Federal Trust fund, in the manner of the 1980's famous Resolution Trust, to market the thousands (or may be millions) of these properties, mortgages and securities.

It is a big tangle, for sure, and the F
eds might not be completely up to the task. But it is surely a better solution than bailing out the predators while they continue to feast on the corpse of a broken economy, eventually giving them the power to recover and come back to haunt us with another bubble of a new kind and invention.

A Federal Trust would try to put some order in the massive amount of borrowers' failures, organize and streamline some restructuring of these loans, decide on eventual foreclosures, short sales, and perhaps even the renting of troubled properties to their present bankrupt owners, avoiding unnecessary foreclosures and evictions.


A few months ago, I wrote about an obnoxious case of aborted short sale. I couldn't understand the outcome, and I thought of stupidity, or fraud. I have read an article today that might clarify this case. It might not be fraud or stupidity. It might just be another case of greed.

Let me tell the story one more time:

I had sent an offer to a listing real estate broker, regarding a property that was offered at $ 239,000. My offer was $ 199,000. The broker indicated that the lending bank had previously refused much larger offers. The last one refused was $ 239,000. But that was months ago, and he thought that, in view of the continuous market deterioration, the bank would probably accept it. I so informed my customer and here started the long wait. After a few months of periodically contacting the listing broker who didn't manage to get a response from the Bank, one day something happened. I called the broker and he was very upset. He told me that the bank has canceled his listing, foreclosed on the property, put it up for sale with another broker, and sold it in a couple of days for $ 155,000, a lot less that what my client had offered. The broker was on the brink of crying in desperation and swore not to get involved in any more short sales.

You can imagine my indignation. That's how I started suspecting fraud or plain stupidity.
I even thought of writing to newspapers and agencies. I informed my Realtor association and they told me to write to my congressmen, which I did. There was, of course, no further news, and it was another buried case.

I am reading now in an article from The Bradenton Herald, on February 2nd, 2009, an article, written by a Florida West Coast attorney, that had enlightened me, or at least provoked some thoughts. Here it is:

Why the lender may not OK your short sale

By Cynthia Ridell

At Riddell Law Group, we focus on real estate matters primarily. Thus most of my time is spent negotiating workouts, shorts sales and defending foreclosures. In the course of my practice we have had many success stories. Many short sale transactions are being approved and closed these days in Sarasota and Manatee counties. In fact NAR (the National Association of Realtors) stated that “Pending home sales activity surged as buyers took advantage of low home prices and affordable interest rates.”

Much of these sales are short sales. But what about the short sale offers presented to lenders that do not get approved. Many of these offers are substantially more than what the lender may see a year from now when they receive a property back in foreclosure.

Thus when a short sale approval does not occur, the question posed by many borrowers, real estate agents and the like is: “Are the lenders just crazy?”

Well, it may not be the soundest fiscal response when a lender rejects a short sale offer at first glance. Or it may just be that the offer is an insufficient offer. But what about the offers that are substantial and can be corroborated through comparables? One must look further for the answer to this question; one must look to the Pooling and Servicing Agreement (PSA) that a particular loan is part of.

As many of us know, most mortgages were sold on the secondary market the “day after” closing and pooled with a group of mortgages held in trust as collateral for the issuance of a mortgage-backed security. Some mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae are known as “pools” themselves. These are the simplest form of mortgage-backed security. These assets were pooled together so that Wall Street could package them as Mortgage Backed Securities. Each of the pools of mortgages are governed by this pooling and servicing agreement.

Most of the agreements have provisions for when an asset goes into default. The servicier, must elect to identify the asset as non performing and place it into the foreclosure process. Once this is done the servicer is now entitled to receive two times its servicing fees. It also opens up a multimillion dollar escrow fund that the servicer can reach to for payment of foreclosure attorney fees upfront. This may very well be the reason that borrowers that attempt a workout via short sale or a deed in lieu of foreclosure never get anywhere but foreclosure.

Another reason that the short sale process for approval stagnates is because of competing interests and private mortgage insurance at the investor level. Many of the securities sold have different terms for different beneficial interests or Tranche as they are known. Some are high risk with possible great returns and others are low risk conservative returns.

Investopedia defines a certain type of Tranche by writing: “A special type of bond class in a sequential pay collateralized mortgage obligation. This class of bond does not receive any interest or principal payments until all other Tranches have been completely paid off. In a Z-tranche, the interest that is not paid is accrued and added to the principal for future interest calculation purposes.”

Moreover, many of the more senior beneficial interests, or Tranches, may have mortgage insurance to look to for payment in the event of foreclosure. Thus for them a workout seems a moot point if they can look to insurance to make them whole. Whereas the lesser beneficial interests may not be able to look to insurance but rather a pro rata share of the proceeds from a sale. Thus within the pool there is conflict among the beneficial interests as to how to proceed: workout or foreclosure?

Cynthia A. Riddell, an attorney whose practice primarily focuses on real estate foreclosure, short sale and bankruptcy issues. is a member of the Florida bar and admitted to practice in the U.S. District Court for the Middle District of Florida. She practices in Sarasota, Manatee, Pinellas and Lee counties.


This clarifies somehow my confusion and perplexity. There might be an explanation for my aborted short sale, other than fraud or stupidity. It's all too familar:

GREED

It also make me start to believe that the way it's being done, this mess will be absolutely impossible to untangle. Can you imagine the thousands of package loans sold to foreign or American investors, hedge funds, and banks, serviced by multiple affiliated or non affiliated businesses, swapped, fractured and resold ad nauseam? Can anything but a centralized organization try to unravel and disentangle this disaster? And can we qualify the late and present actions of the creators of this catastrophe, other than plain, good-old, cold-blooded GREED?


Henry B. Nathan is a Florida Real Estate Professional. Please visit my website: http://www.condo-southflorida.com to search for

Florida Condos, Hallandale Condos, Aventura Condos, Hollywood Condos, Sunny Isles Condos






Sunday, January 04, 2009

Asbestos Removal Leads to Healthy Home

There a number of things worth considering in the real estate industry.

If you are a potential homeowner or are remodeling or foreclosing an older home, it is important to hire professionals to examine the property for toxic building materials. Homes built before 1980 have a strong chance of containing asbestos. Citizens of Florida should be aware that exposure to asbestos can produce significant health concerns. If you are interesting in saving money, remodeling or improving your carbon footprint, here is some valuable information to get you on that track.

Predominantly used throughout the 20th century in many industrial products such as insulation, roofing, piping, brake linings and flooring products, inhalation of asbestos fibers can cause a severe lung-ailment known as mesothelioma, a form of cancer that takes the lives of thousands every year. Medical research has suggested that symptoms of the disease may not appear for 20 to 50 years.

Florida has a large number of big cities, where asbestos problems have become a problem. In 1999, there were 125 reported deaths from mesothelioma. Further asbestos related lung-illnesses and respiratory problems have contributed to fatalities in Florida. Public service groups such as the Florida Department of State Health Services have initiated an asbestos program that provides services to prevent occupational and environmental illness through detection and control of asbestos materials.

The removal of asbestos in public facilities and homes must be completed by a professional asbestos abatement contractor. Once the removal is complete, green alternatives should be considered, such as: cotton fiber, Lcynene and Cellulose. Permits are required for the abatement of asbestos projects when levels exceed the normal trigger levels. The type of professional will depend on the type of product and what needs to be done to correct the problem.

With increasing technology and public initiatives, green alternatives exist which allow for an asbestos free environment. The United States Environmental Program states that the use of recycled building materials such as cotton fiber insulation can reduce energy use by 25 to 35 percent. These asbestos alternatives will not only reduce energy costs, but allow for a clean, healthy home, free of health damaging materials.


Henry B. Nathan is a Florida Real Estate Professional. Please visit my website: http://www.condo-southflorida.com to search for

Florida Condos, Hallandale Condos, Aventura Condos, Hollywood Condos, Sunny Isles Condos




Wednesday, December 24, 2008

More about banks and bailouts

Dec. 24, 2008

I read in the South Florida Business Journal:

BankUnited Financial expects $327M loss, gives cautions about future

BankUnited Financial Corp., the holding company for the largest bank based in Florida, expects to lose at least $327 million in the fourth quarter and warns of "substantial doubt" of its ability to operate as a going concern if it fails to raise capital.

In a notification of late filing with the Securities and Exchange Commission on Tuesday, the Coral Gables-based parent of BankUnited (NASDAQ: BKUNA) also acknowledged that the SEC’s Miami office began an informal inquiry into the company in October.

Bank United said it could not file its financial statements for the fiscal year ended Sept. 30 by Dec. 15, the SEC's usual 45-day window, because of adverse market conditions and an additional review of complex accounting and disclosure issues. That review is examining the company’s regulatory issues, liquidity and capital.

One discovery made by the bank is that it misclassified $449 million from securities sales as investing cash flows when they should have been classified as operating cash flows. The mistakes were made over a two-year period that ended Sept. 30, 2007.

The bank said it would restate its consolidated statement of cash flows if the mistake is determined to be a material event.

However, that accounting change would not impact cash, net income or earnings per share, the bank stated.

Bank United said it expects to file its annual report with the SEC sometime in January.

In a research note to clients Wednesday, Raymond James associate analyst Michael Rose said BankUnited appears to be in a "race against the clock in its efforts to survive." He maintained an underperform rating on its shares that encouraged investors to sell.

After signing a cease and desist agreement with the Office of Thrift Supervision in September, BankUnited has been working with federal regulators, who placed restrictions on its business practices and set a Dec. 31 deadline for the bank to raise its capital-to-asset ratios.

BankUnited, which previously said it was seeking $400 million, continues to seek more capital through an asset sale or an equity investment. The bank stated that if it does not raise the money by the end of the year, it doesn’t expect to meet the capital ratio requirement and could face “various enforcement actions regarding the bank” from federal regulators.

“We are in negotiations with a fund to raise capital and restructure our balance sheet,” BankUnited stated in the filing. “We cannot assure you that these negotiations will be successful. If such negotiations are not successful, there is substantial doubt about our ability to continue as a going concern.”

Philip van Doorn, senior banking analyst for The Street.com Ratings in Palm Beach Gardens, said BankUnited faces significant challenges in raising capital. It would be unlikely to receive federal aid, and it is hard for a potential investor to evaluate the bank's finances when it's having difficulty preparing financial statements, he said.

"A potential acquirer looking to expand its deposit footprint into BankUnited's territory might find other opportunities to acquire one or more healthier institutions," van Doorn said. "The potential acquirer could also wait until BankUnited or another local institution fails, so they could scoop up deposits and branches on the cheap, without being forced to take on the failed institution's bad loans."

After losing $209 million over the first three quarters of its fiscal year, BankUnited's holding company said it expects a loss of $327 million in its fourth quarter ended Sept. 30. That loss would be greater than the $261.6 million loss its BankUnited savings and loan subsidiary reported to the Federal Deposit Insurance Corp. for that quarter.

However, BankUnited cautioned that the holding company’s loss could grow “substantially larger” when it completes an analysis of how much it should reserve for loan losses to cover its payment option adjustable-rate mortgage portfolio.

These types of loans, where borrowers can pay less than the monthly accrued interest and let the balance grow, were major factors in the downfall of Washington Mutual and Wachovia Corp. this year.

“If the final earnings analysis results in a material level of additional losses and we are unsuccessful in our negotiations with a fund to increase capital, there is substantial doubt about our ability to continue as a going concern,” Bank United stated in its filing.

Bank United’s liquidity improved, as it had cash and equivalents of $1.2 billion as of Sept. 30. The bank’s management stated it believed there are enough liquid assets to meet the potential demands of customers “in an environment where financial institutions have experienced unexpected withdrawal rates.”

However, the holding corporation has a potential liquidity issue after pumping $80 million into the bank during the fiscal year and the cease and desist order prohibiting it from taking dividends from the bank. As of Sept. 30, the holding company had $28.4 million in liquid assets against $5.3 million in annual administrative expenses and $16.2 million in corporate debt that can’t be deferred.

The Bank United holding company has sufficient liquid assets to meet its obligations for about 16 months, but it can’t be assured that it can make debt payments once those assets are depleted, the company stated.

--000--


It seems like centuries ago, when I was called one day by a representative of Bank United who announced me that from that day on I wouldn't be able to send Bank United any more mortgage transactions.
I was at that time working as a mortgage broker, doing what I could to work honestly in an environment that I didn't seem to understand very well.

Bank United needed at least a deal every month, in order to accept to work with me! (or was it three deals? I don't remember exactly)

My frustration didn't last more than a few minutes, though.

I had in my lenders portfolio hundreds of other banks competing for my small business. Thousands of programs, conventional programs, Alternate-A, A-minus programs, B-lenders, C-lenders, sub-prime, hard lenders, you name it. A dizzying array of ways to lend money to all sectors of society; good credit, fair credit, bad credit, zero-down-payment, foreign national buyers, refinance, jumbo loans, investor loans, each lender with hundreds of possibilities.

The new denominations given to these new categories, as I understand it now, were some of the gimmicks used by many lenders to label and package their mortgage loans for sale to US and international investors. (do you mean suckers?)

I have been a bank manager in my youth. I thought I knew something about lending money to people and businesses. I have even studied this as a career.

I remember that there was a basic consideration when I was taught to underwrite, authorize or deny a loan: the borrower's capacity to repay the loan. Another element was the extent of the hard assets of the client, as well as the verification of the guarantees given by the borrower.

I guess the teachers of my generation didn't know anything about how to become a multimillionaire in a much easier way.

I wasn't a very successful mortgage broker during that period, I confess. It was the only time in my life when I wasn't one of the best at what I was doing.

Reading this kind of news is not a sweet revenge. Just a recollection.

Welcome to the Bailout era.


Henry B. Nathan is a Florida Real Estate Professional. Please visit my website: http://www.condo-southflorida.com to search for

Florida Condos, Hallandale Condos, Aventura Condos, Hollywood Condos, Sunny Isles Condos



Thursday, December 04, 2008

The Fallout of a condo conversion

Reflections on a case study.

Just two or three years ago, some of the hot products that we could offer as affordable housing were these condo conversion communities, so popular in Miami and Broward counties. There seemed the best deals available; the developers provided assistance by offering office space to loan officers from mortgage companies and banks, so they could directly assist their buyers in securing the loans.

These were the happy times of the 100% financing, with developers assuming all closing costs, countless “incentives” such as paying off the first six months or the first year of condo maintenance fees, “upgrading” the converted condos with stainless steel appliances, redoing the floors, the cabinets, you name it.

The condo conversions are basically rental properties with a few or hundreds of apartments, which are bought by a developer. Going through legal procedures, making some required physical work on the property, would allow the investors to change the legal status of the rental community from one property to many independently owned “condominium units”.

Starting around 2000/2001, this was one of the hottest markets for builders and real estate investors. Properties bought at an average of $ 60,000 or $70,000 per unit, (this is just an example), would be sold at prices hovering in the $ 200,’s to $250’s and even more. Commissions paid to real estate agents were attractive and everybody seemed quite happy with the situation. Key elements were the organizations put together by the developers to market and sell their products, as well as the surprising complacency of the lenders.

Buyers seemed happy. Buyers signed the developers’ contracts with small deposits, which often left no room for mortgage contingency after 30 days. But in general, everything moved smoothly and new homeowners were happily occupying these units by the thousands. Everybody thought that it was a wonderful way of “accomplishing the American dream of homeownership”. This went on till about the end of 2006, dragging through the first months of 2007.

Fast forward to November 2008. I get a call from a prospective client who wants to be shown a condo she located on my website. I review the listing and find out that it is situated in a well-known condo conversion in Pembroke Pines , which name I remembered from the height of the “bubble”. In 2006, a two-bedroom unit at this community was selling at around $ 250,000.

The prospective buyer pointed out three more listings in the same complex.
All four units are short sales or bank-owned foreclosures.
I set up the showings and meet my client at the place.
I notice immediately a profusion of signs on many units: mainly AUCTIONS posters, foreclosure notices, real estate “for sale” signs. It looked like almost everything there was for sale.
I show the condos and in many of them, close to the back doors, small ant’s mounds were the sign of blight and abandon. Some of the units hadn’t been occupied for months, as evidenced by the state of carpets and bathrooms.

The area is convenient; the general condition of the buildings is good. So what’s wrong?

The actual asking prices varied between around $ 90,000 to $ 110,000. After talking to the listing agents, I have the impression that they hadn’t received too many offers and my feeling is that these places could go for as low or even less than $ 80,000.

That’s about a third of what they were selling a little more than two years ago. Unbelievable? Not quite. That’s the point.

Who can afford these modest $ 80,000 homes? Traditionally, and as per the criteria of Fannie Mae, somebody whose family income hovers in the monthly gross $3,000. (No more than 28% of the gross income can be dedicated to pay for the monthly mortgage, insurance, taxes)
When they were valued at $ 250,000, this monthly income should have been in the $7,000. Otherwise, buyers could have been in trouble sooner or later. But nobody was paying attention, apparently

And this is the real problem.

People who can only afford $80,000 homes, living in $80,000 homes, but having to pay $250,000 mortgages.

Consequences? Many choose to run away. Not only because they feel cheated, but because they make just enough money to pay for an $80,000 home.

Did you get it yet?

Weird? As in most business transactions, when somebody loses, somebody else wins. Let’s analyze this.

The real winners:

- Investors, who purchased large rental properties and converted them to condos at the beginning of the “boom”, sold them very quickly, with high profits. Often after some basic improvements, and large amounts of paperwork, they would convert rentals previously valued at 60 or 80,000 dollars, into units that sold at $ 200,000 and more. These apartments were giving a fair return on their investments to their previous owners, who grabbed the chance to cash on the valuation of their property after many stagnant years.

- Other winners: Mortgage brokers, mortgage bankers, appraisers, who got fat fees and commissions.

In the second and third round of this “bubble”, things gradually changed. Developers started to increase their commissions to attract realtors, frantically arrange easy loans, and put together all kind of creative “incentives.”

Those developers who moved fast managed to sell out. The rest was stuck with a large percentage of their condos, and then their financing banks started to worry.
The last phase was fairly recent: banks foreclosing on developers of dozens of properties, or at least on the high percentage of unsold units.

Of course that due to many different situations I cannot generalize and simplify. Many appraisers, realtors, mortgage brokers, banks were the beneficiaries while it lasted. They had cooperated with these savvy developers who made most of the profit.

The big losers?

- Those homeowners who had bought and walked away, leaving the bank to foreclose on their mortgages, experienced an irreparable damage to their credit that will compromise for a long time their ability to purchase again a home.
- Real estate investors, who bought properties, hoping to get rich by “flipping” in the short term. Many of them let the banks foreclose. They have paid for some time the mortgage, the taxes, and the maintenance fees. At a certain point, they have given up.
- The banks and mortgage lenders, of course, who will recover only a small percentage of their loans.
- Fannie Mae, Freddie Mac and other GSE’s who bought these mortgages.
- The buyers of all the bonds and other real-estate-related financial instruments; which could be foreign banks, a hedge fund, a sovereign-fund from an oil-rich country, or a Singapore investor.

Who is guilty?

A key element was the acceptance by lending institutions of unreasonable increases in appraisal values, which had no basis other than speculation.
Nothing can explain that a home built 30 years ago increases 300% in value in a two-or-three-years period. Nothing can validate it.

Of course that the process fed on itself, causing inflationary building costs, but this was not at all sufficient to justify the incredible raise in the appraisals. Banks took the word of appraisers for granted, ignoring common sense. It was enough that two properties in the same neighborhood had sold at unusually and speculative high prices to allow an appraiser to use them in his “comparative analysis”. And from then on, every house in the area could automatically be the beneficiary of a new value based on this “analysis”, and so forth.

Banks would not object on the evident fallacy, and loans kept originating at a maddening pace. Buyers who had never saved a penny for a down payment, were granted homes they couldn’t afford, thanks to negative-amortization loans that would let them live in their new homes for a couple of years, until the inevitable happened. Naturally, mortgage brokers, lenders agents, everybody, would go along and perhaps encourage these appraisals. What about these “no-income-verification” loans? Did anybody doubt that they could sometime become the perfect instrument of deceit, fraud, and misrepresentation? Complicity? Collusion?

How many objections did we hear from Fannie and Freddie, the most expert institutions in the US on mortgage matter? How many voices of reason from Wachovia, Countrywide or Bank of America? Their executives were perhaps too busy showing their shareholders their prodigious short-term balance-sheet results, and cashing their even more prodigious bonuses, while ignoring the fundamentals.

It was a vicious and unending circle of madness, which results we are living now.


Henry B. Nathan is a Florida Real Estate Professional. Please visit my website to search for

Florida Condos, Hallandale Condos, Aventura Condos, Hollywood Condos, Sunny Isles Condos