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Mar 21 - Apr 19    The stars would love nothing more than to reveal your future this week, but unfortunately, they're just large luminous balls of plasma held together by gravity in space

Homeowners Balk as Tax Bills Stay High

143,000 Miami-Dade property owners appealed their property tax bills last year. And Harvey Ruvin, the county’s clerk of courts, expects a similar deluge in 2010. Property tax appeals in the county hit 104,000 in 2008 compared with an average 40,000 in normal years.  From Florida beachfronts to Nevada deserts, fed-up homeowners are challenging property tax bills that have stayed high despite the housing crisis.  Angry homeowners say their tax assessments and tax bills haven’t come down as fast as real estate prices in the worst housing collapse since the 1930s.

They’re right: Despite a real estate implosion, property tax revenue collected by states and localities actually rose 2.7 percent last year to $421.8 billion, according to the U.S. Bureau of Economic Analysis.  Property taxes have been a lifeline for flailing local governments, which collect more than 96 percent of property taxes. Toss them out, and the remaining sources of state and local tax revenue – including sales and income tax receipts – sank more than 9 percent last year from 2008.

It takes three years for changes in housing prices to have an impact on property tax revenue. “The 2009 numbers reflect what was happening in city housing markets in 2007, maybe even 2006,” says Christopher Hoene, director of the National League of Cities’ Center for Research & Innovation. “They were still picking up some of the growth at the end of the boom.”

Most states limit how much property taxes can rise in a booming market. That keeps a house’s taxable value below its market value. In some cases, the gap remains even after housing prices have fallen. Which means some homeowners are seeing bigger tax bills for homes that are worth less than they were the last time their property taxes came due.

In 1995, for instance, Florida instituted a constitutional amendment limiting increases in the tax assessments on owner-occupied homes to no more than the consumer price inflation rate or 3 percent (whichever was lower).  After an exhilarating run-up and a gut-wrenching decline in housing prices, some homes’ taxable values are still below their market values, leaving room for higher tax bills. In Palm Beach County, for instance, 25 percent of properties will see an increase this year in their assessed values.  This at a time when existing homes in the county’s West Palm Beach and Boca Raton were selling for 4 percent less in February than they were a year earlier and 44 percent less than they were in February 2006.

The tax appeals are putting strains on local governments already coping with a weak economy, dwindling overall tax revenue and budget cuts. Clark County,  Nev., which includes Las Vegas, expects property tax appeals to reduce revenue by about $150 million in the next fiscal year, which starts July 1.

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Housing Costs Too High for Public Sector

Housing is still too expensive for most people employed in public service jobs, the Center for Housing Policy found in a study released Wednesday.

The study, which analyzed costs in more than 200 markets and wages in 60 occupations, concluded that nurses, teachers, police, and other key workers don’t make enough to afford either a median-priced home or a two-bedroom apartment in the communities in which they are employed.

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Stouffers To Include Suicide Prevention Tips On Single Serve Microwavable Meals - - -

Short-Sale Incentives Start April 5th

Potential buyers of short-sale homes might consider waiting until April 5th before making a formal offer. 

That’s the date the federal government will begin offering lenders financial incentives to hasten the process. Under the new rules, banks will seek a BPO before the property is listed for sale and let the sellers know a minimum number they are willing to accept. If the sellers bring a buyer with a good offer, the lender must accept it within 10 days.  Not all sellers are eligible for the program, dubbed the Home Affordable Foreclosure Alternatives (HAFA), but enough are that it is probably worth waiting.

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Geithner Refuses To Come Down Off Capitol Dome

BofA Reducing Mortgage Principal

Bank of America Corp. is giving some of its most troubled mortgage borrowers relief from the threat of foreclosure.  The bank will forgive up to 30 percent of some customers' total mortgage balances.  Homeowners must have missed at least two months of mortgage payments and owe at least 20 percent more than their home is currently worth.  The move has the potential of putting pressure on other banks to also forgive principal on loans that are in danger of failing.  The Treasury Department, is developing similar plans for principal reductions at other mortgage servicers.  Bank of America estimates that about 45,000 customers will qualify for its plan. The offer will cut total reduced principal by about $3 billion. 

The new plan begins in May.

Picture this -- Mortgage Problems

Mortgage rates could spike

As the spring real estate season kicks in and the tax-credit deadline for sale agreements approaches, the government is ending a program that has kept interest rates low and housing-affordability levels high for months.

On March 31, the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae and Freddie Mac, returning control of interest rates to private investors. For months, industry observers have predicted that once government supports are removed, interest rates will rise quickly, pushing many of the first-time buyers critical to housing’s recovery out of the market.

Moody’s Economy.com chief economist Mark Zandi said rates will “drift” higher in summer and fall, with the half a percentage point the Fed’s action cut working its way back in – mainly because investors believe the government would return if they got too high.

and more news on Interest Rates

Option-ARM Rates

Option-ARM loans represent fewer than 2 percent of all home loans, but those loans add up to nearly $300 billion because they were written to finance pricey homes.

So far, rates on many option ARMs haven’t risen because overall interest rates have stayed low. But if actions by the Federal Reserve push rates up, then option ARMs will go up as well.

Unless these option ARMS are quickly restructured, a large share of these borrowers may walk away.

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Arkansas seceded from the union for the second time 3 months ago - - -

Fed Says Keeping Rates Low Is Key

The economy remains in a slump, motivating a Federal Reserve official, who is said to be President Obama’s favored candidate for vice chair of the Fed, to say that keeping interest rates at record-low levels is important.

Janet Yellen, head of the Federal Reserve Bank of San Francisco, said in a recent speech that the Fed remains committed to doing what’s necessary to hold down interest rates.

"Any significant run-up in mortgage rates would create risks for a housing recovery," she said.

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Real Estate Investors Back in the Game

Investors made more than 17 percent of home purchases in January, with 26 percent of all sales transacted in cash.

"We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned," says Mark Fleming, chief economist at research firm First American CoreLogic. "It's a different type of investor going after foreclosed properties and expecting to hold on for longer time frames."

These buyers believe that the only direction housing values can go is up, because it costs more to build than it does to buy. Leonard Baron, a real estate professor at San Diego State University, says. "It's because prices have dropped so much and rents really haven't. The deals were unbelievable."

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No Parachute? Why They Won’t Modify Your Mortgage

There is no financial incentive for a servicer to modify a mortgage in many cases. What most people don’t understand is that once you stop paying your payments, your lender’s motivation quickly shifts from trying to make a profit to minimizing their losses. So, even though HAMP (Home Affordable Modification Program) offers financial incentives for them to modify your mortgage, they’ll often lose less on your property if they foreclose they they would by modifying it and accepting the incentive. It’s not that banks necessarily make money on a foreclosure (although they do in some cases), they just lose less.

Banks and servicers don’t have to explain why they deny a package. And if they do give a reason, they don’t have to explain how they determined you didn’t qualify. There’s nothing in HAMP that would motivate a lender to take the time and energy to explain what happened and why.

There’s little to no enforcement from the Treasury Department and the lenders know it. So while the procedures are well established now, it’s very easy for the lenders to skate the system and feign compliance when they really have no intent to modify loans.

Most servicers and lenders aren’t set up to handle foreclosure situations. They were organized to handle setting up loans and handling payments, not foreclosure counseling or the intensive mortgage modification process. Most servicers have made big strides in hiring people and improving their responsiveness, but they also have a long way to go and there’s no way to know how many of those new hires are actually working modifications as opposed to processing foreclosure. More than likely, servicers are hiring people to do both since the modification process doesn’t stop the foreclosure process.

In many cases (especially in the hardest hit markets), if a servicer were to reduce your monthly payment to the point it met the 31% debt to income ratio, they would have to reduce the principal balance in order for your payments to EVER pay the loan off. And they’re just not willing to do this because they’ll lose less by foreclosing in many cases.

Servicers are unsure of what Congress and the President are going to do. With so many changes in the past and talk of more changes coming, lenders don’t know what to expect so they’re waiting for the other shoe to drop. Uncertainty doesn’t go over well with Wall Street or bankers, so they’d prefer to wait and see how things pan out before they do too much changing.

HAMP’s Achilles Heel  One final reason the program is busted.

It was designed to solve a different problem than what lenders are experiencing today. HAMP was designed to help homeowners whose payments were adjusting because of unaffordable mortgage loans. It assumed your income would be stable.

But the reason for a growing number of defaults in recent days has been unemployment rather than recasting loans. And if you have unstable or no income, lenders have no way to figure out a modification.

Florida's foreclosure backlog among nation's worst

A crushing backlog of foreclosure cases has pushed Florida's courts to request a one-time payment of $9.6 million to help purge the system and quicken a market recovery. The Florida State Courts Administration estimates 500,000 property foreclosures are pending. Without additional resources to clear the cases, judges fear the bottleneck will continue to drag down home values, which aren't expected to stabilize until the glut of foreclosures moves through the system.

It's routine in Florida for foreclosures to take more than a year to settle.

A Barclays Capital report last week estimated that banks and mortgage investors held about 645,800 foreclosed US homes in January, up 4.6 percent from December. That is down significantly from the peak of 845,000 in November 2008.

States with the largest number of foreclosures are Florida, Arizona, Nevada, California, and Michigan.Florida has one of the highest foreclosure backlogs nationally, even singling out South Florida saying it is "remarkable" that the area may only be 18 percent finished with liquidating its delinquent property loans through foreclosure.

Florida's lawmakers are considering the court's appeal for more money, which would come from the State Courts Revenue Trust Fund, and pay for additional case managers and retired senior judges. The money would be doled out to district circuit courts based on their foreclosure case loads. They'll be more cases coming in while they're working on this, and there just doesn't seem to be any relief in sight.

Some housing analysts predict another wave of foreclosures this year as unemployment persists and interest-only and adjustable rate mortgages awarded in 2005 reset.


Two bills (HB 1523, SB 2270) would allow lenders to foreclose on properties without going through the courts.  According to RealtyTrac, a housing information provider in Irvine, Calif., 30 states allow non-judicial foreclosures.  The bills, sponsored in the House by Tom Grady, R-Naples, and in the Senate by Mike Bennett, R-Bradenton, are not identical, but are generally aimed at allowing lenders to skip legal proceedings unless the borrower requests that the foreclosure goes through the courts.

The lender must also meet with a borrower, if requested, and the borrower will not be liable for the unpaid portion of the loan if he or she acts in good faith during the non-judicial foreclosure. Under the proposal, a foreclosure could occur in as little as 90-days.

Homeowner advocates say the proposals would strip the borrower of due process.

Victor Tobin, chief judge of the 17th judicial circuit court in Broward County, said the legislation may have state constitutional conflicts.  Chief Judge Blanc said he doesn't want to give up due process for the sake of "expediency."  Both support the $9.6 million budget request.

"It's cataclysmic, to be honest with you," Tobin said about Florida's foreclosure crisis. "It's a catastrophe for everyone."

Virtual Real Estate is Selling.

Elaine Politis and partner Ariel Gonzalez say they are earning six figures annually from Beach Front Realty Inc., a business they have run since 2005 in "Second Life" the make believe online game.

They told CNNMoney.com that they buy simulated islands for $295 and divide them into 16 properties that they rent to other game participants for $25 per month. In all, they own 150 of these islands. That's $60,000 a month in real dollars.

The gross revenue on this appears to be enviable, but Politis says it’s not all profit because just like in the real world, they have expenses, including hiring sales agents and administrative help who help them provide 24/7 customer service and who each earn 10 percent commissions. Politis says that amounts to about $50 per agent per day.

Hard Stopping the Foreclosure Train!

The U.S. housing market witnessed its smallest annual increase in foreclosure activity in four years last month.   WooHoo!!

But - Foreclosure filings were reported on more than 308,000 American homes in February. That's a 2 percent decline from January but a 6 percent increase from a year earlier. All told, February represents the 12th consecutive month with more than 300,000 foreclosure filings.

The number of homes in foreclosure across the U.S. in 2009 climbed to 2.8 million, an increase of 21% over 2008 and a staggering 120% jump since 2007.

2.21% of all U.S. housing units—one in 45—received at least one foreclosure filing last year.

Don’t expect foreclosures to become rare any time soon.

The national unemployment rate now stands at an uncomfortably high 9.7 percent.

There are 5 million homes that are over 25 percent underwater.

Will Paying Homeowners to Short Sell Pass Bankers?

In an effort to end the foreclosure crisis, the Obama administration has now said it will take a new approach: paying some owners to sell.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

Efforts will be made to streamline and standardize the short sale process as well. To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in relocation assistance. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure. For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor-intensive process and were suspicious of it. Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan. “This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

Obama Considering New National Foreclosure Rule

President Obama is floating an idea to prohibit lenders from foreclosing on a home unless the borrower has been considered for the government’s Home Affordable Modification Program (HAMP). The proposal would require servicers to initiate contact with all borrowers who are 60 or more days behind on their mortgage payments and offer them access to the federal modification program. Only after the homeowner has been screened under the HAMP guidelines and it is

determined that the loan cannot be saved, could foreclosure proceedings commence. The proposal would also halt any foreclosures already in process once a borrower has been accepted into the trial phase of the program.

The proposal was reviewed by lenders during a teleconference last week.

In addition to preventing new foreclosures, the plan would also require lenders to stop foreclosure proceedings once you enter into the HAMP trial period.  They’re not currently required to do that! Right now, the processes can run concurrently so it’s possible (although fairly unlikely) that you could have your house sold at auction while you’re in the trial period…crazy, huh?

To be “somewhat” fair, though, there are lenders that already consider you for HAMP before they begin the foreclosure process…so it won’t be a change for them.

The Treasury proposal would require all borrowers who are 60 or more days delinquent on their mortgage to be sought out for participation in HAMP. Mortgage companies would need to try to contact the borrower at least four times by phone and twice by certified mail over 30 or more days before going to foreclosure.

Now...If you assume that the lenders aren’t doing anywhere near what they could be doing to try to modify mortgages, then this could help. The proposal would make them incapable of selling the home at a foreclosure sale until it has been appropriately considered under HAMP. If you think the lenders (in most cases) are evaluating cases and the reason more loans haven’t been modified is because it makes no financial sense to modify them, then this won’t help. It will just delay the inevitable.

The truth is probably in the middle somewhere. Just like with everything else concerning foreclosure.

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Housing Sales Partay!

According to the National Association of Realtors, housing sales are ahead of January 2009.

 Woo Hoo!

But before we head out to partay, let's take a look at a few other National real estate stats, shall we?  The picture we see, is not so pretty.

* Existing homes, in large part, are made up of foreclosed properties selling at vastly reduced   rates.

* On a month to month basis, sales of those existing homes actually fell in January by 7.2 percent.

* Applications for mortgages have tumbled, dropping (last week) to the lowest level in 13 years.

* The sale of new homes reached its lowest levels since 1963!

* The commercial real estate sector seems poised to implode any month now, with large numbers of commercial properties valued below their mortgage balance.

and looking ahead -

* The tax credit for first time home buyers is set to expire soon (the credit applies to sales occurring on or before April 30th. But, in cases where a binding sales contract is signed by that date, a home purchase completed by June 30th will still qualify for the credit).

* Fannie Mae has reported a loss of $16.3 billion for the fourth quarter and is asking the U.S. Treasury (translation: taxpayers) for another $15.3 billion to continue its operations. That brings the total going Fannie's way from the pockets of U.S. taxpayers to $76.2 billion with no end in sight.

* The federal government has signaled its desire to stop buying up all those mortgage-backed securities which have kept mortgage loan interest rates artificially depressed. If homes aren't selling now, when mortgage rates are still historically low (at least by post-Word War II standards) what happens when the rates jump up to above 6 or 6 and a half percent on a 30-year fixed rate?

bottom line - Many economists (including me) say no meaningful economic recovery will happen until the real estate market in the United States fully rebounds. We are sooooooooo far away from that, it's not even funny.

Scary Short Sale Language?

With so many distressed homeowners owing more than their homes are worth, short sales have become lifelines. These types of sales often make up more than half of the homes on the market now.  Generally, this means the mortgage lender has agreed to allow the home to sell for market value. The lender writes off the rest of the debt, and the homeowner walks away.

But is it really that simple?

Lenders are increasingly adding language to the approval package, reserving the right to pursue the deficiency later - that is, the difference between what you owed on the house and what it sold for. Some homeowners, so anxious to get out of a pending foreclosure, skip right over that part of the letter. Some understand but opt to take their chances, betting they won’t hear from the lender again.  For some lucky buyers, this has been the case – so far. They’ve sold their home as a short sale, moved on, and haven’t had any problems. But other lenders require the seller to agree upfront to pay back a set amount.

Lenders almost always ask clients to agree to pay at least some of the debt back in a payment plan.  Folks need to consider it could be much worse if the lender comes back for the full deficiency later.

Lenders don’t always go after short sale homeowners. But in Florida, lenders can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has 20 years to collect the cash. This is particularly frightening because lenders could wait until the debtor is back on their feet to act. The homeowner could recover financially only to discover years later that they owe the bank tens of thousands of dollars.

Homeowners are even more likely to be required to pay a deficiency if they have mortgage insurance.  (Borrowers who have less than 20 percent equity in their homes typically are required by their lenders to cover this insurance in case they default.)  Mortgage insurance companies are getting pretty strict about short sales.  They have to sign off on the short sale, too, and many are not only asking for promissory notes but are ordering their own appraisals.

Deficiency judgments aren’t only a problem in short sale cases. They can happen following a foreclosure, too.  A lender can take back the home, sell it and then come back after the borrower for the difference between that amount and the balance on the old mortgage. This is allowed in Florida and most other states.

So what can a homeowner do?

Not much, in the case of a foreclosure. But when negotiating a short sale, the homeowner must sign off on the paperwork too. Borrowers can ask to be released from the debt, and sometimes that works.  Negotiation might work. Some lenders detail how much money they might come after later. Others don’t specify, and that may mean the full amount. Anyone signing a short sale agreement insist the lenders be specific about deficiency plans.

Read the fine print, and ask lots of questions.