August Newsletter

Short Sales

Short sales are exceeding the number of foreclosure sales in South Florida, another sign that the region’s battered housing market is healing. Broward County had 1,831 short sales in the first three months of 2012, compared with 1,476 foreclosure deals, according to the RealtyTrac listing firm. RealtyTrac, of Irvine, Calif., noticed the trend with the release of January figures. On a quarterly basis, this is the first time short sales have outnumbered foreclosures in Broward since early 2008, the firm said.

“Banks are more motivated to do short sales because of the messiness and the risk of foreclosures,” said Daren Blomquist, a RealtyTrac spokesman. After a homeowner defaults on a mortgage, the bank files a foreclosure lawsuit, but the two sides often continue to negotiate a resolution. A short sale is when the lender allows the homeowner to sell for less than what’s owed on the mortgage.

Foreclosures can be lengthy. It takes an average of 861 days to complete a foreclosure in Florida, one of the longest timelines in the nation, RealtyTrac said. There’s a backlog of cases in Florida courts because in 2010 some bank employees admitted they had signed off on thousands of cases without proper review. As a result, some major lenders temporarily suspended foreclosures.

A short sale in the Sunshine State takes an average of 603 days, though many now are happening much faster — sometimes within a few months, real estate agents say. Short sales are helping the housing market recover because they more quickly put distressed homes in the hands of cash buyers or owners who can afford the mortgages.

Short sales also exceeded foreclosures in Palm Beach County and across Florida from January through March, RealtyTrac said. The number of Broward short sales in the first quarter of 2012 increased 30 percent from the same period a year ago. Statewide, short sales rose 18 percent from a year ago.

The average price of a Broward short sale was $127,618. The homes sold for an average of 13 percent less than properties that weren’t short sales. Homebuyers and sellers used to complain that lenders took too long to respond to offers. But the process is speeding up as banks realize the benefits and increase staffing to handle the workload, analysts say.

Some of the biggest lenders, including Bank of America and Chase, now offer thousands of dollars to homeowners to complete short sales. South Florida agent Beverly Rothstein said Wednesday that many of her clients are more willing to consider buying short sales because they know “it’s not going to take an interminable amount of time.”

sun-sentinel.com – June 2012

Bankruptcy Law

Fewer South Florida residents filed for bankruptcy in July, the fourth straight month of declining bankruptcies and an 18 percent drop from a year ago. There were 2,173 filings in the tri-county area compared with 2,654 in July 2011, the U.S. Bankruptcy Court in Miami said Wednesday.

Lawyers say struggling homeowners are putting off bankruptcy in hopes of saving their home through a loan modification or getting rid of it through a short sale. Bankruptcy filings for July decreased 3.5 percent from June, when 2,252 consumers filed bankruptcy.

Fort Lauderdale bankruptcy lawyer George Castrataro said bankruptcies may be slowing because struggling homeowners are waiting for a possible short sale — unloading the homes for less than the mortgage amount. Others who haven’t been able to reduce their mortgage rates are looking to the prospect of mediation to get their loans modified, he said.

Bankruptcy filings tend to follow foreclosures, which were in a bottleneck as major lenders reviewed possible paperwork errors. But there could be a new wave of foreclosures as lenders finally take action against homeowners in default, he said. That’s prompting local judges to take a closer look at mediation. If South Florida judges agree on a resolution, mediation could be an option for homeowners by year-end, he said.

Brian Cohen, a bankruptcy lawyer in Palm Beach County, said more clients are being approved for loan modifications and canceling their bankruptcy plans. “That’s rescuing a lot of people. They’ll contact us and say we’re not going to go through with this anymore because the bank approved us,” he said.

Cohen also said more debtors seem to be tightening their belts, reducing credit card and other debt to avoid bankruptcy. In July, bankruptcies ticked up in Palm Beach County with 371 filings compared to 331 in June. But filings fell in Broward and Miami-Dade counties to 655 and 1,147, respectively.

bizjournals.com – August, 2012

Mortgage Modification

Recent research indicates that South Florida ranks in the top three metro areas for permanent and trial loan modification approvals.  Third only to the Los Angeles and New York metro areas, South Florida remains an area where mortgage help is plentiful for distressed homeowners.  The government funded HAMP program continues to grant homeowners relief on mortgage expenses via loan modification, and to date over 40,000 homeowners have received either trial or permanent loan modifications in the South Florida area.

Coupled with the stabilization of the housing market and some promising housing inventory and pricing trends, South Floridians may begin to see a true improvement in the housing market in South Florida.  There is no doubt that loan modifications will continue; in fact, the South Florida area has seen a recent influx of loan modification approvals.

According to Paul Baltrun, director of the Homeowner Assistance Division (HAD) of  The Law Office of Paul A. Krasker, P.A., the firm has seen a recent significant increase in the number of modification approvals.  Baltrun believes that circumstances are highly favorable for distressed homeowners to receive a loan modification and he encourages his clients to seek a modification sooner rather than later.  It seems some promising housing market trends are on the horizon for the South Florida area.

Foreclosure Defense

South Florida foreclosure activity in August was down by more than 60 percent, which is about double the nationwide decrease, according to a new report. Miami-Dade County recorded 3,352 foreclosure-related actions in August, a 61 percent decrease from a year ago. Broward County had 2,806 foreclosure actions, a 63 percent decrease, while Palm Beach County recorded 2,035 foreclosure-related actions, a 66 percent decline, according to RealtyTrac.

But, when comparing August to July, each of the counties saw foreclosure-related actions rise, with Miami-Dade recording a 19 percent climb. In all, one out of every 292 homes in Miami-Dade, one of every 288 in Broward and one of every 315 in Palm Beach were dealing with a foreclosure-related action.

Overall, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 228,098 U.S. properties in August, a 7 percent increase from the previous month, but still down nearly 33 percent from August 2010. The report also shows one in every 570 U.S. housing units with a foreclosure filing during the month.

Downward pricing pressure is expected to continue, which will likely play a role in future foreclosure activity, especially as a significant number of mortgage holders remain upside down on their homes. Debt of all South Florida residences with a mortgage continued to outpace pricing in the second quarter, with nearly half of properties in the tri-county area having negative equity.

In Miami-Miami Beach-Kendall, 229,148, or 45.5 percent of all residential properties with a mortgage, were in negative equity in the second quarter. An additional 17,766, or 3.5 percent, were at near-negative equity, with less than 5 percent equity, according to CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services.

In Fort Lauderdale-Pompano Beach-Deerfield Beach, 205,045, or 47.9 percent of all residential properties with a mortgage, were in negative equity. An additional 17,658, or 4.1 percent, were at near-negative equity. In West Palm Beach-Boca Raton-Boynton Beach, 137,268, or 42 percent of all residential properties with a mortgage, were in negative equity. An additional 13,129, or 4 percent, were at near-negative equity.

Negative equity, often referred to as underwater or upside down, means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both. Nationwide, nearly 11 million, or 22.5 percent of all residential properties with a mortgage, were in negative equity at the end of the second quarter. That was down very slightly from 22.7 percent in the first quarter.

bizjournals.com – August 2012

Local and International News

The Publix-anchored Promenade Shopping Center in Palm Beach Gardens could be seized in foreclosure.

U.S. Bank, representing a commercial mortgage-backed securities (CMBS) trust, filed a foreclosure lawsuit against Gardens East Plaza LLC over a $21.5 million mortgage. It targets the 202,240-square-foot center at 9810 Alternative A1A, along with a 5,952-square-foot restaurant building housing a McDonald’s.

The largest tenants are Publix, with a lease for 42,112 square feet that runs until February 2014, Ben Franklin with 20,000 square feet and The A Team with 13,600 square feet.

The occupancy rate in Promenade has declined to 73 percent as of April, down from 100 percent in 2008, according to Trepp. Its average annual rents have fallen to $11 to $12 per square foot, from $16 to $17 per square foot several years ago. Rents were lowered to keep some tenants in the property.

On Sept. 1, the loan will go from interest-only to amortizing and the interest rate will be jacked up from 6.4 percent to 8.9 percent, according to Trepp. Even under the current terms, the income from the property is not enough to make the mortgage payments without the borrower contributing additional capital every month.

bizjournals.com – August, 2012

Short Sales

Short sales are exceeding the number of foreclosure sales in South Florida, another sign that the region’s battered housing market is healing. Broward County had 1,831 short sales in the first three months of 2012, compared with 1,476 foreclosure deals, according to the RealtyTrac listing firm. RealtyTrac, of Irvine, Calif., noticed the trend with the release of January figures. On a quarterly basis, this is the first time short sales have outnumbered foreclosures in Broward since early 2008, the firm said.

“Banks are more motivated to do short sales because of the messiness and the risk of foreclosures,” said Daren Blomquist, a RealtyTrac spokesman. After a homeowner defaults on a mortgage, the bank files a foreclosure lawsuit, but the two sides often continue to negotiate a resolution. A short sale is when the lender allows the homeowner to sell for less than what’s owed on the mortgage.

Foreclosures can be lengthy. It takes an average of 861 days to complete a foreclosure in Florida, one of the longest timelines in the nation, RealtyTrac said. There’s a backlog of cases in Florida courts because in 2010 some bank employees admitted they had signed off on thousands of cases without proper review. As a result, some major lenders temporarily suspended foreclosures.

A short sale in the Sunshine State takes an average of 603 days, though many now are happening much faster — sometimes within a few months, real estate agents say. Short sales are helping the housing market recover because they more quickly put distressed homes in the hands of cash buyers or owners who can afford the mortgages.

Short sales also exceeded foreclosures in Palm Beach County and across Florida from January through March, RealtyTrac said. The number of Broward short sales in the first quarter of 2012 increased 30 percent from the same period a year ago. Statewide, short sales rose 18 percent from a year ago.

The average price of a Broward short sale was $127,618. The homes sold for an average of 13 percent less than properties that weren’t short sales. Homebuyers and sellers used to complain that lenders took too long to respond to offers. But the process is speeding up as banks realize the benefits and increase staffing to handle the workload, analysts say.

Some of the biggest lenders, including Bank of America and Chase, now offer thousands of dollars to homeowners to complete short sales. South Florida agent Beverly Rothstein said Wednesday that many of her clients are more willing to consider buying short sales because they know “it’s not going to take an interminable amount of time.”

sun-sentinel.com – June 2012

Bankruptcy Law

Fewer South Florida residents filed for bankruptcy in July, the fourth straight month of declining bankruptcies and an 18 percent drop from a year ago. There were 2,173 filings in the tri-county area compared with 2,654 in July 2011, the U.S. Bankruptcy Court in Miami said Wednesday.

Lawyers say struggling homeowners are putting off bankruptcy in hopes of saving their home through a loan modification or getting rid of it through a short sale. Bankruptcy filings for July decreased 3.5 percent from June, when 2,252 consumers filed bankruptcy.

Fort Lauderdale bankruptcy lawyer George Castrataro said bankruptcies may be slowing because struggling homeowners are waiting for a possible short sale — unloading the homes for less than the mortgage amount. Others who haven’t been able to reduce their mortgage rates are looking to the prospect of mediation to get their loans modified, he said.

Bankruptcy filings tend to follow foreclosures, which were in a bottleneck as major lenders reviewed possible paperwork errors. But there could be a new wave of foreclosures as lenders finally take action against homeowners in default, he said. That’s prompting local judges to take a closer look at mediation. If South Florida judges agree on a resolution, mediation could be an option for homeowners by year-end, he said.

Brian Cohen, a bankruptcy lawyer in Palm Beach County, said more clients are being approved for loan modifications and canceling their bankruptcy plans. “That’s rescuing a lot of people. They’ll contact us and say we’re not going to go through with this anymore because the bank approved us,” he said.

Cohen also said more debtors seem to be tightening their belts, reducing credit card and other debt to avoid bankruptcy. In July, bankruptcies ticked up in Palm Beach County with 371 filings compared to 331 in June. But filings fell in Broward and Miami-Dade counties to 655 and 1,147, respectively.

bizjournals.com – August, 2012

Mortgage Modification

Recent research indicates that South Florida ranks in the top three metro areas for permanent and trial loan modification approvals.  Third only to the Los Angeles and New York metro areas, South Florida remains an area where mortgage help is plentiful for distressed homeowners.  The government funded HAMP program continues to grant homeowners relief on mortgage expenses via loan modification, and to date over 40,000 homeowners have received either trial or permanent loan modifications in the South Florida area.

Coupled with the stabilization of the housing market and some promising housing inventory and pricing trends, South Floridians may begin to see a true improvement in the housing market in South Florida.  There is no doubt that loan modifications will continue; in fact, the South Florida area has seen a recent influx of loan modification approvals.

According to Paul Baltrun, director of the Homeowner Assistance Division (HAD) of  The Law Office of Paul A. Krasker, P.A., the firm has seen a recent significant increase in the number of modification approvals.  Baltrun believes that circumstances are highly favorable for distressed homeowners to receive a loan modification and he encourages his clients to seek a modification sooner rather than later.  It seems some promising housing market trends are on the horizon for the South Florida area.

Foreclosure Defense

South Florida foreclosure activity in August was down by more than 60 percent, which is about double the nationwide decrease, according to a new report. Miami-Dade County recorded 3,352 foreclosure-related actions in August, a 61 percent decrease from a year ago. Broward County had 2,806 foreclosure actions, a 63 percent decrease, while Palm Beach County recorded 2,035 foreclosure-related actions, a 66 percent decline, according to RealtyTrac.

But, when comparing August to July, each of the counties saw foreclosure-related actions rise, with Miami-Dade recording a 19 percent climb. In all, one out of every 292 homes in Miami-Dade, one of every 288 in Broward and one of every 315 in Palm Beach were dealing with a foreclosure-related action.

Overall, foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 228,098 U.S. properties in August, a 7 percent increase from the previous month, but still down nearly 33 percent from August 2010. The report also shows one in every 570 U.S. housing units with a foreclosure filing during the month.

Downward pricing pressure is expected to continue, which will likely play a role in future foreclosure activity, especially as a significant number of mortgage holders remain upside down on their homes. Debt of all South Florida residences with a mortgage continued to outpace pricing in the second quarter, with nearly half of properties in the tri-county area having negative equity.

In Miami-Miami Beach-Kendall, 229,148, or 45.5 percent of all residential properties with a mortgage, were in negative equity in the second quarter. An additional 17,766, or 3.5 percent, were at near-negative equity, with less than 5 percent equity, according to CoreLogic (NYSE: CLGX), a leading provider of information, analytics and business services.

In Fort Lauderdale-Pompano Beach-Deerfield Beach, 205,045, or 47.9 percent of all residential properties with a mortgage, were in negative equity. An additional 17,658, or 4.1 percent, were at near-negative equity. In West Palm Beach-Boca Raton-Boynton Beach, 137,268, or 42 percent of all residential properties with a mortgage, were in negative equity. An additional 13,129, or 4 percent, were at near-negative equity.

Negative equity, often referred to as underwater or upside down, means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both. Nationwide, nearly 11 million, or 22.5 percent of all residential properties with a mortgage, were in negative equity at the end of the second quarter. That was down very slightly from 22.7 percent in the first quarter.

bizjournals.com – August 2012

Local and International News

The Publix-anchored Promenade Shopping Center in Palm Beach Gardens could be seized in foreclosure.

U.S. Bank, representing a commercial mortgage-backed securities (CMBS) trust, filed a foreclosure lawsuit against Gardens East Plaza LLC over a $21.5 million mortgage. It targets the 202,240-square-foot center at 9810 Alternative A1A, along with a 5,952-square-foot restaurant building housing a McDonald’s.

The largest tenants are Publix, with a lease for 42,112 square feet that runs until February 2014, Ben Franklin with 20,000 square feet and The A Team with 13,600 square feet.

The occupancy rate in Promenade has declined to 73 percent as of April, down from 100 percent in 2008, according to Trepp. Its average annual rents have fallen to $11 to $12 per square foot, from $16 to $17 per square foot several years ago. Rents were lowered to keep some tenants in the property.

On Sept. 1, the loan will go from interest-only to amortizing and the interest rate will be jacked up from 6.4 percent to 8.9 percent, according to Trepp. Even under the current terms, the income from the property is not enough to make the mortgage payments without the borrower contributing additional capital every month.

bizjournals.com – August, 2012