Florida’s Foreclosure Fix?

by on April 18, 2013

I often have questions lead by much confusion from people inquiring about vacant homes in neighborhoods. “Patrick, what is going on with this house two doors down from my house?” Here is the latest “News you can use… from Chris that just might bring clarity to the subject. (Hint: It isn’t pretty.)

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Real Estate News by Chris McLaughlin

Faster Foreclosure Bill for Florida

A bill to speed up Florida’s groggy foreclosure process is headed to the House floor after a largely partyline vote in the House budget committee.  HB 87 creates new options for expedited foreclosures and tightens up filing standards for banks.  Bill sponsor Rep. Kathleen Passidomo, R-Naples, said the bill was a consumer-friendly attempt to clean up the foreclosure process, which has been plagued by fraud.  “The Florida Legislature…does not support fraud,” she said. “This bill is so fair, it’s so consumer friendly.”  It was Passidomo’s third attempt in three years to address the foreclosure issue, with previous attempts failing after heavy protests. A Senate companion bill is moving through the committee process.  This year’s bill offers a much more modest approach than previous years. Passidomo pointed out that the bill requires banks to certify they have the correct documents and shortens the period of statute of limitations for post-foreclosure lawsuits against homeowners.

Florida has the largest share of foreclosure inventory of any state in the nation, with more than 300,000 homes in foreclosure. With hundreds of thousands of additional homes are at risk of falling into foreclosure, one in five mortgages in Florida are currently distressed.  According to RealtyTrac, Florida ranks as the top state in the nation for foreclosures and seven of the top 10 cities in the US are in Florida.  Part of the reason for the high foreclosure rate is the lengthy judicial foreclosure process in Florida, where banks must go to court to repossess a delinquent property.  Florida’s average foreclosure process takes 853 days, ranking only behind New York and New Jersey. The national average is 414 days.

Bank of America misses earnings

Bank of America posted quarterly earnings excluding items of 20 cents per share, versus 3 cents per share in the same period a year ago, as expenses dropped and the bank set aside less money to cover bad loans.  Earnings in the year-earlier period were affected by a host of one-time items, including a $4.8 billion charge related to the value of its debt.  Revenue increased to $23.7 billion, from $22.28 billion a year ago. On a non-GAAP basis, the company posted revenue of $23.5 billion.  Analysts had expected Bank of America to report earnings per share of 22 cents per share on $23.41 billion in revenue, according to a consensus estimate from Thomson Reuters.

 Zandi – benefits to mortgage reductions

Mark Zandi, the chief economist at Moody’s Analytics, who’s reportedly the front-runner to become the White House’s next housing czar, said there were benefits to mortgage writedowns for underwater homeowners but admitted there were also risks from such a move.  “This is a very contentious issue(…) It’s very important to take the heat out of this. It’s a cost-benefit analysis and there are lots of costs, the most important is moral hazard,” Zandi told CNBC Europe’s “Squawk Box.”  “But there are also benefits, if you are able to do this in a very targeted, consistent way and you reduce the number of foreclosures, everyone would agree that’s a great thing because foreclosures are incredibly costly, not only to the homeowner but also to the community they’re in.”  Zandi said he had no comment on reports that he is set to become the next head of the Federal Housing Finance Agency, the regulator of the mortgage finance giants Freddie Mac and Fannie Mae, which were taken into public ownership in 2008 after their collapse during the subprime mortgage crisis.

Paulson loses billions

The tumbling gold price has personally cost billionaire hedge fund manager John Paulson at least $1.5 billion so far this year, as a decline in the price of the metal turned into a rout.  The estimated losses for Mr. Paulson, who has made and lost more money on gold than almost any other hedge fund manager, reflect a bold all-in bet on the precious metal While many investors hold some gold in case of financial calamity or a return of the rampant inflation of the 1970s, since 2009 Mr. Paulson has allowed clients of Paulson & Co to denominate their holdings in gold, rather than US dollars.  Mr. Paulson enthusiastically embraced the option, according to people familiar with the situation, and has about 85% of his personal capital in the firm linked to the gold price.  Mr. Paulson controls a little over half of the approximately $18 billion managed by his hedge funds, according to people familiar with the firm, so the more than 17% drop in the gold price this year equates to paper losses of around $1.4 billion. Gold on Tuesday rebounded $24 to $1,377 an ounce, recovering some of Monday’s steep losses.

 MBA – mortgage applications down

Mortgage applications increased 4.8% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 12, 2013.  The Market Composite Index, a measure of mortgage loan application volume, increased 4.8% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 5% compared with the previous week.  The Refinance Index increased 5% from the previous week and is at its highest level since mid-January of 2013.  The seasonally adjusted Purchase Index increased 4% from one week earlier is at its highest level since May of 2010 and the adjusted Conventional Purchase Index increased 3% to the highest level since October 2009. The unadjusted Purchase Index increased 5% compared with the previous week and was 20% higher than the same week one year ago.  The refinance share of mortgage activity was unchanged at 75% of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity was unchanged at 5% of total applications.

 NAHB – housing starts up

Soaring production of multifamily apartments pushed nationwide housing starts beyond the million-unit mark for the first time since 2008 in March, according to newly released figures from HUD and the US Census Bureau. The data show that total starts activity rose 7.0% for the month due entirely to a 31.1% increase on the multifamily side, while single-family production slipped 4.8% from a number that was revised strongly upward for the previous month.  While single-family starts declined 4.8% to a seasonally adjusted annual rate of 619,000 units in March, this was entirely due to a substantial upward revision to the previous month’s data, without which virtually no change would have been recorded. At the same time, multifamily housing starts surged 31.1% to a seasonally adjusted annual rate of 417,000 units – their fastest pace since January 2006.  Three out of four regions posted gains in combined single- and multifamily housing production in March, with the Midwest registering a 9.6% increase, the South posting a 10.9% gain and the West noting a 2.7% rise. The Northeast was the lone exception to the rule, with a 5.8% decline.  Following a large gain in the previous month, total permit issuance fell 3.9% to a 902,000-unit rate in March. That decline reflected a 0.5% reduction to 595,000 units on the single-family side and a 10% reduction to 307,000 units on the multifamily side.  In contrast to the regional starts report, the Northeast was the only part of the country to post a gain in permitting activity in March, with a 24.7% increase to 101,000 units. Meanwhile, the Midwest, South and West posted declines of 2.1%, 6.2% and 10.4%, respectively.

 

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