City of Bradenton to get $520,177 from HUD

The City of Bradenton has received notification from the U.S. Department of Housing and Urban Development that $520,177 is available for this fiscal program year for the City's Community Development Block Grant Program.

The CDBG program works to ensure decent affordable housing, services to the most vulnerable in the City, and job creation through the expansion and retention of businesses. The CDBG program is an important tool that helps local government tackle the challenges facing their communities. This program makes a difference in the lives of thousands of people throughout the City of Bradenton - and millions across the nation.

“The program’s success is the result of strong partnerships among the elected officials at all levels of government, neighborhood based nonprofit organizations, private sector, and HUD,” said Lesa Livingston, Manager, City of Bradenton's Housing & Community Development Division.

HUD awards grant money to communities to carry out a wide range of local development activities directed toward revitalizing neighborhoods, economic development, and providing improved community facilities and services.

Typically, activities funded include construction of public facilities and improvements, such as water systems, streets, and community centers; rehabilitation of houses and landmark structures; assistance to private, for profit entities to carry out economic development activities and the provision of public services.

For more information, please contact Lesa Livingston at (941) 932-9481 or lesa.livingston@cityofbradenton.com.

As housing languishes, mortgage write-downs gain appeal for banks

As housing languishes, mortgage write-downs gain appeal for banks RALEIGH, N.C. – Sept. 9, 2010 – Eager to avoid writing down the loans on their books, banks have been extending many of them with the hope that the market will improve. Even banks that foreclosed on properties have kept them on their books, reluctant to auction them in a market where investors offer as low as 10 cents on the dollar.

Now that appears to be changing, and it could have implications for property owners caught up in the sell-off.

“The proverbial logjam is beginning to break up,” said Jim Anthony, CEO of Anthony & Co., a Raleigh real estate services company.

As evidence, Anthony said BB&T plans to auction $1 billion of performing and nonperforming loans in the Southeast.

BB&T would neither confirm nor deny reports of the auction. “BB&T continues to evaluate opportunities to best execute our problem loan disposition strategy, which may or may not include bulk sales,” said spokeswoman Cynthia Williams.

BB&T has been more aggressive of late in writing down its troubled loans and moving to rid itself of some of them. The bank’s CEO, Kelly King, has indicated the strategy will continue as long as investor appetite for the loans remains at current levels.

Other regional banks, including Pittsburgh-based PNC Financial Services Group and Birmingham, Ala.-based Regions Financial, are pursuing similar strategies.

The move to deal with troubled real estate loans is driven partly by federal regulators who have increased pressure on banks whose capital ratios fall below a certain level.

“I think the banks are coming to terms with the fact that, particularly, commercial real estate is declining in value and it’s just not coming back in the next three months or six months,” said Tony Plath, a banking professor at the University of North Carolina-Charlotte. “It’s going to be a while before we’re out of the hole as far as real estate values are concerned.”

The auctions also are a sign that the gap between what the banks will take for the loans – and what investors will pay – is narrowing.

“I think all of the banks have reached the point where they realize they’re not going to get 80 cents on the dollar for the value of the loans they package,” Plath said. “They’re going to be looking at something like 35 or 40 cents on the dollar, which seems to be where these loan packages are selling.”

For property owners whose loans are included in these packages, the auctions could mean trouble.

If an investor buys a loan for 40 cents on the dollar, that means they can foreclose on the property, auction it off and still make a profit.

“The borrowers that are included in the package face much more rigorous collection efforts on behalf of the buyer,” Plath said. “(If you’re a borrower,) you really don’t want that loan sold.”

© 2010 The News & Observer (Raleigh, N.C.). Distributed by McClatchy-Tribune Information Services.

Fed governor: Turn REOs into rentals

Fed governor: Turn REOs into rentals WASHINGTON – Sept. 3, 2010 – Federal Reserve Governor Elizabeth Duke, speaking at a conference on vacant housing, called for more alternatives for the disposal of REO properties besides traditional homeownership.

Duke advocated an increase in rental housing, lease-purchase deals and converting foreclosed owners to renters.

“Homeownership, long promoted by federal policy and facilitated by local housing organizations, cannot and should not be the only alternative to REO properties,” Duke said. “Even in the best of times, homeownership limits mobility in the labor market.”

Source: Reuters News (09/01/2010)

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688

Have home prices hit bottom?

By Michael Braga

Published: Sunday, March 28, 2010 at 1:00 a.m.

The long drop may be over.

The great home price decline that began on the Gulf Coast more than four years ago finally shows signs of ending.

In the Sarasota-Bradenton market, the median price for single-family homes hit a low of $144,000 in February 2009. Since then, it has bounced around, creeping as high as $167,400.

Some skeptics warn that more bad news lurks, thanks to an expected flood of foreclosures and a paucity of bank lending.

But a growing number of market watchers see signs the price decline has ended.

• The number of for-sale properties continues to push toward a more healthy level. In the Sarasota market, there was a 10.6-month inventory last month -- the amount of time it would take to sell every home on the market at the current rate of sales -- down from 11.5 months in January. Six months is considered equilibrium between buyers and sellers.

• The lower end of the market -- homes selling for $200,000 or less -- has stabilized. Thanks to strong investor demand, there have been bidding wars for homes in that range. For the 12 months ended Jan. 31, the median price for low-end homes in Sarasota has risen no higher than $110,000 and fallen no lower than $99,000.

• The top of the market -- homes that sell for $500,000 and above -- may still face turmoil. More people than realized bought luxury homes they could not afford, says Jack McCabe, the real estate consultant who correctly called the top of the market in 2005. Those houses will be sold at deep discounts during the next two years, he predicts.

Still, all those bargains at the high end will help raise median prices.

"The sheer fact that more transactions will take place in the upper range will have the net effect of dragging up the median," McCabe said.

At low end: stability

Jeff Twigg, who spends his days driving the region checking out properties for sale through courthouse auctions, says there is considerably more competition among bidders these days -- so much so that he and his partner are passing on opportunities because they think competitors are bidding too much.

Eric Greenstein, an agent at Tarpon Coast Realty, says similar activity is affecting the short sale market, made up of sellers who owe more to banks than their properties are now worth.

"Six months ago, the market was still dipping," Greenstein said. "When a buyer made an offer on a property and the bank would come back six months later to accept, the end user would say, 'Forget it,' because values would be lower at that point. Now the banks are countering with higher offers and buyers are accepting because the price pendulum is swinging in the opposite direction."

Others market watchers, including Matt Augustyniak, the president of Manatee County's Horizon Realty, say a new wave of foreclosures may be avoided because of new federal rules governing short sales and the expansion of the Obama administration's mortgage-aid plan announced last week.

"The new rules will force banks to respond to short sale offers within 10 days," Augustyniak said. "They don't have to accept, but they have to come back with a number they would be willing to accept, and that might speed short sales and eliminate some foreclosures."

Because bank foreclosures usually sell for 20 percent less than short sales, overall prices will trend higher if the pace of short sales accelerates, he said.

At high end: uncertainty

Sales at the upper end of the market haven't yet picked up. Sales in the $500,000-and-above range actually fell by 30 percent in Sarasota and Manatee counties during the 12 months ended Jan. 31, compared with the same period a year earlier, statistics generated by TrendGraphix show.

It is also taking longer for luxury homes to sell -- 194 days on average in Sarasota County during the 12 months ended Jan. 31 compared with 171 days during the same period a year earlier. In Manatee County, it took 205 days to sell a home in the $500,000 and above range, compared with 156 days the year before.

"Days on the market only increase if properties are listed too high," said Hannerle Moore, a luxury agent with Michael Saunders & Co. "Many high-end sellers are still hoping for a return to 2005 prices and that's many, many, many years away. As I tell my clients, you can either be like the lady across the street who has had her house on the market for 936 days or you can price your property to sell."

For McCabe's theory about the median price to play out, more luxury homes must come to market during the next two years at much lower prices, and buyers have to snap them up with the same gusto being displayed at the low end.

National statistics show that adjustable-rate jumbo mortgages that high-end buyers obtained during the boom years from 2004 through 2007 are starting to reset, which should lead to more foreclosures, said Gordon Hester, who runs a high-end mortgage brokerage on Siesta Key.

"Banks are going to have more of these problems. They are bigger problems and they will want to get out of them as soon as they can," Hester said. "That will mean a huge fall in prices."

That has already happened in a small way in Sarasota County, court records show. Eleven of 129 properties that sold for more than $1 million during the 12 months ended Feb. 28 were foreclosure sales of unimproved homes. During the same period a year earlier, just one of the 151 sales was a foreclosure.

Prices of the 11 unimproved homes that were seized and sold by banks were 27 percent lower than the owners originally paid. The previous 12 months, high-end foreclosed homes sold for only 13 percent less than the owners originally paid.

The big question among market watchers is whether there is enough demand for high-end properties, even at greatly reduced prices.

"Those homes will be sold at a range where credit is still tight and there would have to be a lot of cash buyers, and I'm not sure that will be the case," said Sean Snaith, a University of Central Florida economist.

"It is not as if we haven't had foreclosures at the high end yet. That end has had foreclosures as well and we haven't seen the median go up."

Northern buyers return?

Add in the fact that it is still difficult for home buyers to get bank loans, and you have a recipe for a weak market heavily dependent on cash buyers.

But McCabe -- who predicts that prices will gradually move higher for two years before rising at a more normal 4 percent to 6 percent a year -- thinks there is plenty of pent-up demand.

Northern buyers who were priced out of the market during the boom have been waiting to buy ever since, he said.

When prices drop by 50 percent or more, those buyers will act quickly.

"They will see incredible opportunities toward the end of the year to pick up $2 million properties for under $1 million," he said.

When It's Ok to Walk Away From Your Home

Millions of Americans are now deeply underwater on their mortgage. If you're among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn't feel bad about it, and you shouldn't feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family's finances first.

How widespread is this? More than 11 million families are in "negative equity"—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That's a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That's true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

Are you in this situation? Are you still battling to pay the bills each month, even when it may make little financial sense to do so?

It's time for some tough talk.

Stop trying to chase your lost equity. That money is gone. Don't think like the gambler who blows more and more cash trying to win back his losses. That's how a lot of people turn a small loss into a big one.

And do the math. Even if you hope the real estate market is near the bottom—it's possible, but by no means certain—it may still take years to see any meaningful recovery. If you are 25% underwater, your home will have to rise by 33% just to get you back to even.

Is that likely? And over what time period? Even if home prices rose by 5% a year from here, that would still take six years. And during that time you could instead be building fresh savings elsewhere.

Bloomberg News

A real-estate agent moves a torn "Lender Foreclosure" sign outside a foreclosed home in Reno, Nev., last Monday.

If you are reluctant to give up on "your" home, realize that it isn't "yours." If you are in negative equity, it's the bank's home. You're just renting it. And right now you may be paying way above market rates. You need to be ruthless about your cash flow.

Are you worried about the legal consequences of walking away? Certainly, you should check with a lawyer before doing anything, but the consequences will probably be more limited than you think.

In "non-recourse" states, the mortgage lender may have no right to come after you for any shortfall. They may have no option but to take the home, sell it and eat the loss. According to a survey last year by the Federal Reserve Bank of Richmond, such states include negative-equity hot spots California and Arizona. Even in "recourse" states, lenders may have limited ability to come after you. Often they'd have to jump a lot of legal hurdles, and it's just not worth it for them. They're swamped with cases anyway.

"In my experience, right now they're not really going after anyone," says Richard Nemeth, a bankruptcy attorney in Cleveland. "They just don't have the resources."

If you've taken smart steps to protect your money, you may be safer still. For example, money held in a 401(k), Individual Retirement Account or pension plan is sheltered from creditors.

Sure, a strategic foreclosure may hurt your credit score. But if you're in financial difficulties, it's probably already suffered. And your credit score is not the only thing in life that matters.

Still, when it comes to the idea of walking away from debts, many people are held back by a sense of morality. They feel it's wrong to abandon their obligations. They don't want to be a deadbeat.

Your instincts, while honorable, are leading you astray.

The economy is fundamentally amoral.

Sometimes I think middle-class Americans are the only people who haven't worked this out yet. They're operating with a gallant but completely out-of-date plan of attack—like an old-fashioned cavalry with plumed hats and shining swords charging against machine guns.

Do you think your lenders would be shy about squeezing you for an extra nickel if they thought they could get away with it?

They knew what they were doing when they wrote your loan. Many were guilty of malpractice, but they pocketed good money and they've gotten away with it. And if they thought your loan was "risk free," how come they were charging you so much more than the interest on Treasury bonds?

If you're only a small amount underwater on your mortgage, it's probably the case that you're going to be better off staying put. But if you are deeply underwater, it's a different matter.

Whether we like it or not, walking away from debts is as American as apple pie. Companies file for bankruptcy all the time, and their lenders eat the losses. Executives and investors pocketed millions from the likes of Washington Mutual, Lehman Brothers and Bear Stearns when the going was good. They didn't have to give back one cent of that money when the companies went into bankruptcy.

Limited liability, after all, is one of the main reasons every business from your local dry-cleaner to a major multinational gets incorporated in the first place. They're not shy about protecting themselves if things go wrong. You shouldn't be either.

For Landlords, the Numbers are Starting to Look Better

By MP McQueen

Home prices are falling, rents are tumbling, and apartment vacancies are rising. So why are thousands of small investors becoming landlords?

Because real-estate prices have fallen much faster than rents, the math of buying a rental has actually improved substantially in most parts of the country. Money invested in an apartment complex today typically generates annual returns of 7% to 8% right off the bat, up from less than 6% at the peak of the housing bubble in 2006.

If your property appreciates in value or rents rise, you could end up with double-digit annualized returns when you sell it. But higher returns usually come with higher risks. If you overpay for a rental property or you buy in the wrong market at the wrong time, you can lose a lot of money.

In general, landlords should pick communities where real-estate prices and rents appear to have nearly bottomed out, and jobs are stabilizing. Some of the best deals are in places like Fort Worth, Texas, or Columbus, Ohio, where prices never went wild. Markets like Las Vegas and Phoenix, both plagued by overbuilding, and Detroit, hurt by auto-industry woes, still look dicey.

But other markets like San Francisco or Chicago can still be attractive for landlords who find the right neighborhoods. Fred Bertucci, 50 years old, has been investing in small apartment properties in the Chicago suburbs since 1990. In August, he and his business partner, Kevin Moriarty, 54, bought a six-unit apartment house out of foreclosure for $280,000. It brings in about $25,000 per year in net operating income, he says, or about a 9% yield on the dollars invested. That's up from roughly a 5% yield several years ago when prices were higher, he says.

Being a landlord now isn't easy. You need good credit and plenty of cash—as much as 50% of the purchase price—because banks are still skittish about lending. You need extra cash for handling repairs and vacancies, and you must have the patience to deal with difficult renters.

If you buy an investment property, you should expect to hold it for three to five years or more. Much of the big money from quickly flipping properties already has been made, and conditions now favor long-term owners who want an investment that will throw off income and slowly gain value over time.

"It's a great time for someone who is focused on increasing his net worth, rather than doubling his money in a short period of time," says John Burns, a real estate consultant in Irvine, Calif.

Geoffrey Koblick, 55, who has been investing in residential and commercial real estate for many years, recently scooped up two apartment buildings in Northern California. He didn't buy any properties from 2003 through 2007, when "prices were too high based on the income the properties were generating," he says.

Mr. Koblick says he and his partners paid $3.3 million in May 2009 for a 23-unit building in Berkeley that generates $199,500 in net operating income, for a 6% return. They are upgrading the property, and Mr. Koblick expects its value to increase dramatically over the next seven to 10 years, when he hopes to sell it. Since they bought the building with a 33% down payment, he projects the partners will end up with an annualized return of 15%.

Of course, things often don't go as planned in real estate. J.P. Botha, 33, bought a new one-bedroom condo in Manhattan for $775,000 in 2007. Property values were rising, and he figured he'd sell it for a profit. Instead, its value on completion fell more than 25%. So he rented it out. His first tenant bailed after five months when she lost her job. He had to make a price concession to find and keep a second tenant.

"I'm hemorrhaging over a grand a month," said Mr. Botha, who took out a 30-year mortgage to finance his investment. Still, he says he is taking the long view on his investment: "Once I pay off the loan I will have an income-generating property for the rest of my life."

Clearing up confusion regarding tax credits

Tax credit resources

To read more about the tax credit and find other materials, visit floridarealtors.org here.

TAMPA, Fla. – Jan. 26, 2010 – Federal tax credits for homebuyers have certainly boosted the Tampa Bay area real estate market.

The incentives have prompted nervous buyers to get off the fence, and that has helped the area shed thousands of homes from the region’s inventory of unsold properties.

But as these buyers prepare to cash in on their purchases by filing their tax returns, many are finding they may not qualify after all or don’t know how to file.

“There’s a lot of confusion,” said Greg Armstrong, a Coldwell Banker broker in Pasco County. “It’s so complex that if you’re not living it every day, like a CPA, you’re not in a position to direct someone.”

Even if the case seems straightforward, Armstrong encourages clients to seek guidance from an accountant.

There have been so many changes to the credit that IRS spokesman Michael Dobzinski had to consult his notes often to answer questions. Here are some helpful things the IRS wants you to know about the credits.

• The credits are available only to buyers purchasing primary residences. The IRS defines this has the residence where you spend most of your time.

• There are two credits available. One is for first-time buyers, or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and, unlike a previous credit, this one does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30.

• The government broadened the credit in November to include some buyers who already own houses. Those buyers are eligible for a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. In order to qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back.

• There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000.

• You don’t have to wait until 2010 to claim your credit, even if you buy this year. Purchase a home before the April 30 deadline and the credit can be claimed on this year’s taxes.

• If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Dobzinski said buyers can still use electronic forms, but must print them out and mail them in, along with form 5405.

• Unlike last year, buyers claiming the credit must prove they are eligible. This is because some people filed for the credit last year, even though they had not purchased a home. You’ll need to send the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records.

• Keep in mind that the credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid.

• Buyers claiming the credit will have to wait longer than usual to get the credit because of the need to file by paper. Expect to wait four to eight weeks, instead of the typical two weeks when filing electronically.

Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

FHA Seasoning Rules Lifted! Great News For Investors!

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

"As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers," said Donovan. "FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization."

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

"This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed," Donovan said.

In today's market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

"FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties," said FHA Commissioner David H. Stevens. "This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity."

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of "flipping" where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller's acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.