pcbeachcondos.net

An estimated 4.5 million homeowners owe more than their property is currently worth. That number is likely to peak at approximately 5.1 million in June of this year, affecting more than 10% of America’s homeowners and increasing the chances of them just walking away from their mortgage.

“We’re now at the point of maximum vulnerability,” says Sam Khater, senior economist with First American CoreLogic, the firm that conducted the recent research. “People’s emotional attachment to their property is melting into the air.”

Consultants at Oliver Wyman calculated that 17% of homeowners defaulted in 2008 (roughly about 588,000) chose to default even though they could make their payments. First American estimates that it would cost around $745 billion – about the same as the original 2008 bank bailout to restore all underwater borrowers to a break-even point.

Doing so would be seen as highly unfair by many taxpayers, says Michael S. Barr, assistant Treasury secretary for financial institutions, but doing nothing would be another blow to an already fragile economy.

At the end of 2009, Florida’s existing home and condo sales were higher than a year earlier, a continuing trend for statewide sales activity, according to the latest housing data released by Florida Realtors®.

Existing home sales rose 31 percent at year’s end, with a total of 163,148 homes sold statewide compared to 124,168 homes sold at year end 2008, according to Florida Realtors. Existing home sales activity at the end of 2009 also was 25.6% higher than the 2007 statewide sales level, records show. Statewide sales of existing condos increased 47% at year end 2009 compared to year end 2008’s sales figure; it was 33.7% higher than the year end 2007 statewide existing condo sales.

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales, while 18 MSAs had higher condo sales through the period. A majority of the state’s MSAs have reported increased sales for 18 consecutive months.

Florida’s median sales price for existing homes at year end 2009 was $142,600; a year earlier, it was $187,700 for a 24%. The national median existing single-family home price was $171,900 in November, down 4.4% from a year ago, according to the National Association of Realtors®. NAR housing industry analysts note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

NAR’s latest industry outlook predicts the housing recovery to gain momentum in the second half of 2010. Qualified buyers who have signed a contract to buy a primary residence by April 30, 2010, have until June 30, 2010, to close the transaction to be eligible for the federal tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

In Florida’s year-to-year comparison for condos, 55,985 units sold statewide at year end 2009 compared to 38,095 units at year end 2008 for an increase of 47%. The statewide existing condo median sales price at year’s end was $108,000; a year earlier, it was $164,200 for a 34% decrease. The national median existing condo price was $178,000 in November 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.04% in 2009, a significant drop from the average rate of 6.03% in 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Pensacola MSA reported a total of 3,389 homes sold at year end 2009 compared to 3,208 homes a year earlier for a 6% increase. The market’s existing home median sales price at year end 2009 was $145,800; a year earlier, it was $155,800 for a 6% decrease. A total of 497 condos sold in the MSA, up 22% over the 409 units sold at year end 2008. The Pensacola MSA’s existing condo median price at year end 2009 was $240,300; a year earlier, it was $239,000 for an increase of 1%.

Construction of new homes dipped unexpectedly last month in the U.S. as bad weather hit much of the country. Applications for future projects, however, soared in a sign the industry is ramping up after a debilitating bust.

The Commerce Department says construction of new homes and apartments fell 4% in December to a seasonally adjusted annual rate of 557,000 from an upwardly revised 580,000 in November. The results were lower than the 580,000 forecast by economists surveyed by Thomson Reuters.

Applications for new building permits, a gauge of future activity, rose 11 percent to an annual rate of 653,000, a far stronger showing than economists had predicted and the highest level of activity since October 2008.

The last thing many troubled homeowners want to hear is that they could be denied a car loan after they get a chance to modify their home loan.

But credit scores can get dinged after a home loan modification, making it more costly or tougher to get a loan or credit card.

Hundreds of thousands of homeowners find themselves in a financial squeeze, thanks to the recession and the meltdown in the housing market. Lenders have offered trial loan modifications to more than 700,000 eligible borrowers. As of late November, about 31,000 trial loans have been made permanent, which requires at least three on-time payments under the trial program and proof of income.

What these troubled homeowners don’t realize is that these attempts to avoid foreclosure may result in their credit scores taking a hit.

A potentially damaged credit score is one of those hidden costs of home loan modification – and it varies significantly depending on your lender, as well as when you received your loan modification, your credit history and how your loan was altered.

In this tough economy more seniors whose retirement funds have been sorely depleted by the downturn, are turning to the reverse mortgage. A reverse mortgage is a special home loan that let’s the a homeowner convert the equity in their home into cash. If you or an elderly parent are contemplating such a move, you have until December 31, 2010 to take advantage of higher loan limits which current top out at $625,000. Unless Congress extends the current legislation again, that limit reverts to $417,000 on January 1, 2011.

Reverse mortgages enable homeowners age 62 and older to get money from their home equity in three ways; (1) as a lump sum payment, (2) as a monthly payment over time; or, (3) as a flexible line of credit used when needed. Once the loan is in place, borrowers don’t have to make any more mortgage payments, and the loan’s balance doesn’t become due until they sell the house, move or die. New legislation also lets seniors use reverse mortgages to buy a new home, such as in a retirement community.

You must proceed cautiously, because reverse mortgages are governed by complicated rules and involve higher fees and interest rates that traditional mortgages. Some unsuspecting homeowners have found themselves in financial hot water as a result of not understanding the fine print. These loans target vulnerable seniors, some lawmakers and consumer groups are pushing for added protection to prevent potential abuse and fraud from lenders.

Before making any move involving a reverse mortgage, talk to a trusted financial adviser; or, find a housing mortgage counselor who specializes in working with seniors. If you think this plan might work for you, try the calculator at www.goldengateway.com.

A recent survey of Florida homeowners associations found them feeling beleaguered and discouraged.

More than 90 percent of the 777 associations surveyed by the Community Association Leadership Lobby say they expect their financial troubles will continue or deepen in 2010. About 60 percent of survey respondents increased assessments to cover budget shortfalls caused by delinquent owners. And about 66 percent of respondents say there has been an increase in the number of property owners who are more than 60 days late paying fees and assessments.

The results of this survey are likely to support calls for legislation that would allow associations to collect more late fees from investor-owned properties and collect payments directly from tenants renting properties.

The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency’s finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades. These measures are designed to increase the amount borrowers invest in the homes they buy, thereby making it less attractive for them to default on loans and walk away from properties, as many people have done during the current housing crisis.

Housing and Urban Development Secretary Shaun Donovan is scheduled to announce the agency’s policy changes when he testifies Wednesday before the House Financial Services Committee.

The FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market unraveled. Currently, the agency backs about 30 percent of all loans for home purchases and 20 percent of refinancings. In the past, the FHA has resisted raising down payments or insurance premiums for fear of shutting out qualified borrowers and stunting the housing market’s slow but steady recovery.

But Donovan plans to tell the House committee that the exploding volume of loans the FHA is now handling requires stricter risk controls than the previous administration had in place, according to a copy of his prepared testimony. A recent audit shows that the FHA’s financial cushion already has eroded below the level required by law.

If you’re in the market for a home, the world is your oyster. Interest rates are at record lows. Housing prices in many parts of the country are still depressed. And you may be eligible for a generous tax break, even if the home you buy is not your first.

On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time home buyers, scheduled to expire Nov. 30, until next spring. A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion.

Here are some answers to frequently asked questions:

Q: How do I qualify for the $6,500 credit?

A: This credit is available for home buyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time home buyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law does not require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.

Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?

A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.

Q: Does the home I buy have to be more expensive than the one I own now?

A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.

If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one does not slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.

The $800,000 cap also applies to first-time home buyers, but only those who purchase a home after Nov. 6. First-time home buyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.

Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?

A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home is not habitable by June 30, you won’t be able to claim the credit, he says.

Q: I bought a home in 2008 and claimed the old $7,500 first-time home buyers credit, which must be repaid over 15 years. Did the new law change that rule?

A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.

The $8,000 first-time home buyer credit, available for homes purchased after Dec. 31, 2008, does not have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.

Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time home buyer credit?

A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.

Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?

A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.

Florida’s existing home sales rose in October, marking 14 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. October’s statewide sales also increased over sales activity in September in both the existing home and existing condominium markets.

Existing home sales rose 45 percent last month with a total of 15,160 homes sold statewide compared to 10,444 homes sold in October 2008, according to Florida Realtors. Statewide existing home sales last month increased 5.1 percent over statewide sales activity in September. Florida Realtors also reported an 82 percent increase in statewide sales of existing condos in October compared to the previous year’s sales figure; statewide existing condo sales last month rose 6.1 percent over the total units sold in September. All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in October. A majority of the state’s MSAs have reported increased sales for 16 consecutive months.

Florida’s median sales price for existing homes last month was $140,300; a year ago, it was $169,700 for a 17 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in September 2009 was $174,900, down 8.1 percent from a year earlier, according to NAR. According to NAR’s latest industry outlook, the housing market is continuing its positive momentum. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” said NAR Chief Economist Lawrence Yun. “That, in turn, would help fully remove consumer fears, which would then revive the broader economy.”

In Florida’s year-to-year comparison for condos, 5,398 units sold statewide last month compared to 2,958 units in October 2008 for an 82 percent increase. The statewide existing condo median sales price last month was $105,200; in October 2008 it was $147,900 for a 29 percent decrease. The national median existing condo price was $175,100 in September 2009, according to NAR.

U.S. Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.

The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default. Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.

Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program. Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill. It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.

A Treasury Department spokeswoman declined to comment on Monday when asked about Frank’s proposal; and, on Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications. Reed said the Obama administration’s foreclosure assistance program hasn’t been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.

The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments. Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.

Sales of existing single-family homes in Florida rose 33 percent in third quarter 2009 compared to the same period a year earlier, according to the latest housing statistics from Florida Realtors®. A total of 44,345 existing homes sold statewide in 3Q 2009; during the same period the year before, a total of 33,311 existing homes sold. It marks the fifth consecutive quarter that Florida has seen higher existing year-to-year home sales.

Statewide sales of existing condominiums in the third quarter rose 56 percent compared to the same time the previous year. This marks the fourth consecutive quarter for increased statewide sales in both the existing home and condo markets compared to year-ago levels.

Statewide sales activity in 3Q 2009 also increased over 2Q 2009’s sales figure in both the existing home and existing condo markets. For 3Q 2009, statewide sales of existing homes rose 2.82 percent over the 2Q 2009 figure; existing condo sales statewide in 3Q 2009 increased 0.37 percent over the 2Q 2009 level.

All of Florida’s metropolitan statistical areas (MSAs) reported increased sales of existing homes in the third quarter compared to the same three-month-period a year earlier, while 17 MSAs showed gains in condo sales.

The statewide existing-home median sales price was $145,400 in the third quarter; a year earlier, it was $185,600 for a decrease of 22 percent. The 3Q 2009 statewide existing-home median sales price was 1.25 percent higher than 2Q’s statewide existing-home median sales price of $143,600. According to industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for condo sales, 14,797 units sold statewide for the quarter compared to 9,488 in 3Q 2008 for a 56 percent increase. The statewide existing-condo median sales price was $106,100 for the three-month period; in 3Q 2008, it was $160,100 for a decrease of 34 percent.

Low mortgage rates remain another favorable influence on the housing sector. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 5.16 percent in 3Q 2009; one year earlier, it averaged 6.32 percent.

Last Thursday, the U.S. Congress passed a congressional resolution to extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present, higher loan limits expire at the end of 2009 and revert to previous lower limits. The move still needs to be signed by President Obama, which is expected shortly.

The resolution would extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.

A Streamlined 203(k) provides extra money on top of a mortgage to help pay for various home improvements such as a new roof, appliances, furnace, energy-efficient windows, cosmetic improvements such as carpet, fresh paint, remodeled kitchens as well as baths.

The maximum rehab loan is currently $35,000, but the Streamlined 203(k) allows the money to be rolled into the entire borrowers mortgage, the repairs then can be paid off over time along with the house. Under the program, a seller is paid at closing, and the remaining money from the Streamlined 203(k) goes into an escrow account. As repairs are completed, money is then removed from the 203(k) escrow account to pay for those repairs.

However there are other rules. A licensed contractor, for example, must complete the work within a six month period, some lenders may allow the borrower to do some minor cosmetic work, such as painting, etc.

For more info on the Streamlined 203(k) program visit the Department of Housing and Urban Development website at: http://www.hud.gov/offices/hsg/sfh/203k/203kslrp.cfm

Data through August 2009, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indexes, one of the leading measures of U.S. home prices, show that the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading. This marks approximately seven months of improved readings in these statistics, beginning in early 2009. The annual returns of the 10-City and 20-City Composite Home Prices declined 10.6% and 11.3%, respectively, in August compared to the same month last year. Nineteen of the 20 metro areas and both Composites showed an improvement in the annual rates of decline with August’s readings compared to July. Cleveland was the only exception.

The index levels for the 10-City and 20-City Composite Indexes show that as of August 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003. From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. With the relative improvement of the past few months, the peak-to-date figures through August 2009 are -30.2% and -29.3%, respectively.

In terms of annual declines, all metro areas and the two composites remain in negative territory, most showing an improvement over the previous month’s figures. Dallas and Denver are continuing their trend from the past month, edging closer into positive territory with August figures of -1.2% and -1.9%, respectively. In addition, both New York and San Diego have emerged out of double-digit declines. New York was down 9.6% in August and San Diego was down 8.9%.

In the monthly data, only Charlotte, Cleveland and Las Vegas reported monthly declines in August over July. Minneapolis and San Francisco reported positive returns greater than +2.0%, and nine of the MSAs plus the two Composites reported monthly returns greater than +1.0%.

Leading Senate Democrats are pressing a plan that would extend the tax credit for first-time home buyers; but, gradually phase it out over the course of 2010. The proposal, which starts to expire Nov. 30 (2009) – through March 31 (2010), would extend the popular $8,000 tax credit. Its value however would drop by $2,000 for each of the subsequent three quarters of 2010.

The plan may be voted on in the Senate this week and appears aimed at countering a far more generous $17 billion bipartisan plan that would extend the $8,000 credit through June 30, 2010, boost the income cap for eligibility, and open the credit to all buyers rather than just first-timers. Senators are maneuvering to also add the home buyer tax credit extension to legislation extending unemployment benefits by up to 20 weeks. That bill faces a key test vote on Tuesday.

Supporters say the tax credit has helped revive the housing market slump. Some advocates say that if the tax credit is cut off as scheduled at the end of November, home sales would start to drop off again. Reid sought to schedule a vote on the opposing measures on Monday but was blocked by Senate Republican Mitch McConnell of Kentucky, who is demanding votes on unrelated Republican proposals. One proposal would require people receiving unemployment insurance to be processed through the E-Verify program to prove legal immigration status and would require all federal contractors to use E-Verify. E-Verify is an Internet-based system that employers use to check on the immigration status of new hires.

The Democratic plan also would extend the ability of money-losing businesses to claim refunds on taxes paid during the profitable times up to four years ago. All businesses could take advantage of the credit; when passed in February it was limited to smaller companies with annual revenues of $15 million or less. The provision is especially popular with homebuilders who made massive profits during the housing boom; but, are struggling today. Critics say it’s a giveaway to some of the very companies that helped cause the housing bubble.