Nearly Half of Tampa Bay Homeowners Underwater on Mortgages

Below is a recent article written by James Thorner of the St. Petersburg Times discussing Tampa Bays increasing population of underwater homewowners.

Three years of depreciation have left close to half of Tampa Bay homeowners owing more on their mortgages than their homes are worth.

In a September report put out by First American CoreLogic, a real estate information company, 46 percent of residential properties in the Tampa Bay area struggled with negative equity. That's 314,183 out of 684,822 homes.

In Florida, about 2 million of 4.6 million home mortgages were underwater, for a rate of 45 percent.

The number of upside-down homeowners has been rising in Tampa Bay and Florida. Eleven percent more Tampa Bay properties were underwater in September than in June, when First American's last report came out.

"The recent improvement in home prices this past spring and summer has slowed the increase in negative equity," said First American economist Mark Fleming. "But it will take a significant rebound in home prices, which we are not expecting, to offset the dampening effects."

Nevada had the highest rate of upside-down mortgages, affecting nearly two-thirds of home­owners. Arizona was next with 48 percent. Florida was third.

The bulk of distressed homeowners financed their properties in 2006 or 2007, close to the housing price peak in Tampa Bay. Altogether, bay area home­owners owe $104.6 billion on $116.3 billion worth of property, First American said.

First American admits it exaggerated negative equity earlier this year by assuming homeowners made fuller use of home equity loans than they actually did. But even after correcting those figures, negative equity is still rising.

James Thorner can be reached at jthorner@sptimes.com

FLORIDA

45 percent

2 Million of 4.6 Million homes

TAMPA BAY

46 percent

314,183 of 684,822 homes

If you owe more than your house is currently worth, contact the Tampa short sale attorneys at Yesner & Boss to find out what options may be available for you.

Commercial Real Estate Distress Will Have A Big Impact on Housing

Below is a recent article written by John Burns Real Estate Consulting Vice President, Lesley Deutch regarding the potential impact on the housing market as the Commercial Real Estate Market becomes distressed.

We were lucky enough to present at an all day Commercial Real Estate Symposium at the Fed, where the preeminent industry experts from each real estate sector shared what is occurring in their industry. Prior to the meeting, we had been estimating that banks would not recover 20% of the commercial real estate loans outstanding. Now, we feel that the recovery will even be less.

This distress will certainly have an impact on housing, and one that will be both good and bad at the same time.

• Good: As soon as commercial real estate distress hits the banks in full force, solvent banks will need to dispose of residential assets to concentrate on commercial real estate distress. This will create land buying opportunities in the next several months. Builders acquiring land for cheap means the beginning of a recovery.

• Bad: Banks with high commercial real estate exposure are unlikely to lend to the residential sector, and many of these banks will be lucky to survive at all. To determine whether or not your bank has significant commercial real estate exposure, check out their balance sheet, which is usually in the investor section of their website.

The Problem
Property values are now down 35% from the peak, according to Moody’s. We think prices will fall even more as leases expire and the tenants lease less space at a lower rent.

Why is this a problem? Commercial banks own nearly 45% of mortgage debt outstanding. By comparison, the banks own only 21% of the single-family mortgage debt outstanding.

The insolvency of several thousand banks will overwhelm the understaffed regulatory system and it will take at least 3 more years for a healthy banking system to emerge. We expect the government to intervene even more than it has in order to save the US banking system. When this occurs, it could indirectly benefit home builders by providing great distressed land buying opportunities, and by shoring up the banks so the better banks can start lending again soon.

The Tampa foreclosure attorney and Tampa bankruptcy attorney at Yesner & Boss, P.L. can answer any further questions you may have. Contact us today for a free consultation.

Rise In Foreclosures Ensures That Housing Supply Will Continue

According to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina, there are more than 6,600 home foreclosure filings per day in the US, and with two million this year alone, the flood shows no signs of abating. Foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment. Michael Barr, the Treasury Department's assistant secretary for financial institutions, said in congressional testimony last month that more than 6 million families could face foreclosure over the next three years.

As a result of the continued foreclosure increase, the housing market has a surplus of available properties. The shape of this second downturn is almost completely dependent on the level of government intervention that will take place.

For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market. This delay in REO sales, along with historically low mortgage rates and an $8,000 tax credit, has helped to stabilize the housing market - temporarily.

It is very clear that price stabilization is temporary unless something is done. Here are some facts to help project what housing will be like in 2010:

• 13.54% of the 44.7 million mortgages tracked by the Mortgage Bankers Association are delinquent.
• 7.57 million homeowners are delinquent, applying the same percentage to the 11.2 million mortgages not tracked by the MBA (55.9 million total mortgages in the U.S.). That means that 10% of all homeowners in the country are delinquent.
• Based on historical trend analysis by Amherst Securities, 6.94 million homes that are already delinquent will be liquidated, which is more than a one year supply of distressed sales poised to hit the market sometime in 2010 and 2011. During Q1 2005, that figure was only 1.27 million.
• Defaults continue to grow at the rate of approximately 300,000 per month, assuring that the number of distressed sales will grow and will continue through 2012.

2009 Government Intervention

Government intervention to date has been extremely helpful in preventing an even more dramatic decline in home prices. As shown in the chart at right, housing demand has only fallen to "normal" levels and stabilized there. Without historically low mortgage rates, support for Freddie Mac, Fannie Mae and FHA, and an $8,000 tax credit, how far would sales have fallen this year and what would that decline in demand have done to pricing?

Conclusion

Demand needs to continue to be stimulated to bring down supply, particularly while the country continues to lose jobs. Without continued government intervention, home prices will plummet, banks and the GSEs will continue to lose money, and the economy has virtually no chance of increasing overall employment in 2010.

The Tampa foreclosure attorney and Tampa bankruptcy attorney at Yesner & Boss, P.L. can answer any further questions you may have before or after after you file a petition for the VAB. Contact us today for a free consultation.

Property Owners Given the Opportunity to Challenge Their TRIM Notices Online

According to Ken Burke, Clerk of the Circuit Court for Pinellas County, as of Monday, August 31, 2009 property owners who disagree with their property value assessments can file petitions to go before the Value Adjustment Board (VAB) online via the Clerk’s website www.mypinellasclerk.org. Along with the online petitioning feature, the Clerk’s website will now offer petitioners the ability to submit any supporting documents online.

Property owners who disagree with their assessments are given the opportunity to meet with the property appraiser’s office to further discuss their notices. If the outcome of this meeting is still to the dissatisfaction of the owners then they may file a formal challenge with the VAB.

The Value Adjustment Board acts as the decision-making authority between the property owners and the property appraiser when a disagreement arises over exemptions, valuations and classifications. Once this petition has been filed, a quasi-judicial hearing is scheduled with a special magistrate.

Previous methods of petitioning to go before the VAB are still available however the forms can now be easily accessed online and then mailed or filed in person at the Clerk’s Board of Records department. The forms can also be dropped off at any one of the following three Clerk branch offices: the St. Petersburg Branch at 545 First Ave. N., St. Petersburg; the Tyrone Branch at 1800 66th St. N., St. Petersburg or the North County Branch at 29582 U.S. 19, Clearwater.

On Monday, August 24, 2009 the property Appraiser’s office mailed the Truth In Millage (TRIM) notices, giving property owners until Friday, September 18, 2009 to file a petition challenging their property tax notice.

The TRIM notice will include the homeowner’s property taxes, property assessments and proposed millage rates set by the various taxing entities. According to Pam Dubov, Property Appraiser the market values shown on the 2009 TRIM Notices are based on the current market conditions and ownership status of the property as of January 1, 2009 which is determined by analyzing sales that took place in 2008.

The st. petersburg foreclosure and bankruptcy attorneys at Yesner & Boss, P.L. can answer any further questions you may have before or after after you file a petition for the VAB. Contact us today for a free consultation.

The “Helping Families Save Their Homes in Bankruptcy Act of 2009″

The Bankruptcy Lawyers and Foreclosure attorneys at Yesner & Boss, P.L. posted a Real Estate law blog entitled “Foreclosure Prevention Programs Fail.” The article highlighted the National Association of Consumer Bankruptcy Attorney’s (NACBA) view that a court ordered process of loan modifying is necessary in order to solve the current mortgage crisis as opposed to the current voluntary loan modification process which is available. Several proposals have been made in this effort but the latest, a United States Senate Bill, seems to be gaining the most momentum and has been also endorsed by both the United States President-Elect Barack Obama and Vice-President Elect Joe Biden.

Currently, the Bankruptcy Code prohibits the modification of mortgage loans on primary residence. The proposed Senate Bill (S.61) seeks to amend certain provisions of the Bankruptcy Code in order to allow a Homeowner to be able to modify their mortgage loan in a bankruptcy proceeding through a judicial rather than voluntary process. The bill was introduced on January 6th, 2009 by Illinois Senator Dick Durbin. Senator Durbin’s view appears to be that the provisions of the Bankruptcy Code of which this bill seeks to amend are outdated, especially in today’s mortgage crisis. The goal of this Bill is to give Bankruptcy Judges the power to modify mortgage loans secured by principal residences during a bankruptcy proceeding possibly to reduce the balance to the current fair market value (cramdown), extend the payment period, modify the interest rate, convert an adjustable rate mortgage into a fixed rate mortgage, or any other modification the court may choose.

Proponents of this bill believe that it is the first viable step in a foreclosure prevention plan of some sort and that if passed this bill will help millions of homeowners stay in their homes and also help towards stimulating growth in the economy. We will be sure to keep our clients informed on the progress of this bill and other options or programs that are available to our clients so please check back routinely for any updates and contact us with any questions or for any further information regarding your particular situation to find out how we may be of assistance. Contact the Bankruptcy Attorneys at Yesner & Boss, P.L. for further information.

Loan Modifications and The “Making Homes Affordable Act”

The Obama administration’s recent bailout of the financial services industry now includes aid to homeowners facing foreclosure in their primary residential home. One important aspect of the bailout plan is the establishment of incentives for banks to modify loans through the “Making Homes Affordable” Act (MHA). Many commentators have pointed out that while banks have a method of disposing of REO properties, there are a lack of incentives for banks to complete short sale transactions and loan modifications. MHA seeks to make these transactions more advantageous for both banks and homeowners: mortgage servicers can receive $1,000 for successful completion of a short sale or deed-in-lieu of foreclosure , and $1,500 to borrowers for transferring title back to the bank.

MHA also provides $9.0 million worth of financial incentives to mortgage servicers to modify loans. It requires that the homeowner sign a financial hardship affidavit, and in exchange, the Servicer will decrease the interest rate and lengthen payment periods. The goal of the incentives are to reduce payments to 31% of homeowners’ pretax monthly income for residential, single family homes, and in which the principal balance is below $729K. It does not apply to individuals who bought properties for investment purposes. A second component of the plan is to allow for borrowers from Freddie Mac and Fannie Mae to refinance if they owe more than their home is worth, up to 105% of the deficiency between the value of the home and the amount owed. Between these two components, the Obama administration estimates that 1 out of 9 homeowners facing foreclosure will receive aid under the plan.

Since the enactment of MHA in February, mortgage industry analysts have pointed to the successes of loan modifications that reduce the principal amount of the mortgage. According to LPS Applied Analytics, modifications that reduce principal have a 25% lower re-default rate within 6 months than other types of loan modification. Further, Fitch Ratings has found in a recent report that homeowners who receive principal reductions are 20-30% less likely to re-default. Our Short Sale Lawyers & Debt Negotiation Attorneys at Yesner & Boss, P.L., will work with you and your lender in reaching a favorable modifications of the terms of your loan.

Foreclosure Prevention Programs Fail

In the last year in response to the rapidly growing foreclosure crisis in the United States many foreclosure prevention programs have been instituted which aim to prevent situations that would otherwise result in home foreclosure. Some of these programs include the Hope for Homeowners Act, Hope Now, and a recent effort by the FDIC and IndyMac. Recently the National Association of Consumer Bankruptcy Attorneys (NACBA) released a report based on findings primarily of Credit Suisse which projected that over 8 million foreclosures are expected in the U.S. in the next four years. This forecast exemplifies the need for the these types of programs. The only problem is that these programs have failed to yield the needed results and this failure has the NACBA pressing Congress and the new presidential administration to move for court administered loan modifications which promise to be more effective in remedying the current foreclosure crisis as opposed to these voluntary modification programs.

The main problem with all of the programs that have been instituted so far is that they are voluntary; the lenders must voluntarily agree to modify the existing mortgage loan when the lender usually has no financial incentive to do so. Secondly, the fact that most loans are securitized by bonds held by investors increases the difficulty of reaching a successful modification since several parties, which can be difficult to reach, must all agree to the modification. Additionally the mortgage servicer owes a duty to those investors to maximize their investment so modifying a loan often opens the mortgage servicer up to liability from the investors whereas simply foreclosing would be a safer option for the loan servicer. Additional roadblocks exist when a second or third mortgage is involved. All of these road blocks often lead to a gridlock in the voluntary loan modification programs prohibiting a successful foreclosure remedy.

The report issued by NACBA in December of 2008 states that less than ten percent of loan modifications through these programs actually result in a reduced principal balance of the loan and only about thirty five percent of the modifications actually reduce the monthly payment when in fact forty five percent of modifications have actually increased the homeowner's monthly payment. As NACBA urges, hopefully the upcoming Congress and presidential administration will to help institute a court administered modification process which will be effective in reaching the goals of remedying the foreclosure crisis.

Yesner & Boss, P.L. has been a member of NACBA since 2007. We have also helped many homeowners through the maze of loan modifications, short sales, deeds in lieu of foreclosure, bankruptcy, and other loss mitigation options. Contact us today for your free consultation.