Foreclosures dominate Broward home sales in 1st quarter
Prospective home buyers often complain that they can’t turn around without running into a foreclosed property. Now here’s proof:
Nearly half of the homes sold in Broward County during the first quarter of 2010 were in some stage of foreclosure, RealtyTrac Inc. said Wednesday.
The share of Broward sales that involved a home in distress was 44 percent, well above the national average of 31 percent.
Foreclosures — homes in default, bank-owned or scheduled for auction — made up 26 percent of sales in Palm Beach County during the first quarter.
The average sale price of a foreclosed home in Broward was $123,270, while Palm Beach County’s was $148,458.
Buyers in each county paid 22 percent less for a house or condominium if it was in foreclosure, according to RealtyTrac, an Irvine, Calif.-based research firm.
“First-time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” James J. Saccacio, RealtyTrac’s chief executive, said in a statement.
As lenders repossess homes in record numbers, they’ll have to be careful to manage the inventory to prevent more dramatic price declines, he said.
Foreclosure sales made up 39 percent of all transactions across Florida during the January-to-March period. In 2005, foreclosure sales accounted for less than 1 percent of all home sales nationally.
Home sales lag but prices steady across Broward, Palm
Home sales slowed in May across Broward and Palm Beach counties even as buyers rushed to beat a June 30 deadline for two federal tax credits.
Broward had 731 sales of existing homes last month, down 5 percent from April and 6 percent from May 2009, the Florida Realtors said Tuesday.
Palm Beach County reported 887 sales in May, off 3 percent from April, but up 20 percent from a year earlier.
Buyers who want to qualify for the $8,000 and $6,500 tax rebates needed to sign contracts by April 30 and must close by the end of June. A proposed extension to Sept. 30 has not yet been approved.
Some of the sales lag in May could be attributed to a lack of available flood insurance and closing delays caused by a crush of buyers. But analysts say demand will decline in the second half of the year as the government handouts disappear.
Still, prices in both counties remained steady last month. Broward’s median price of $216,400 was up 6 percent from April and 14 percent from a year ago.
Palm Beach County’s median was $235,200, down 2 percent from April but up 1 percent from a year ago.
Posted by Bill Siegel Florida Home Inspection Team Inc
New home sales plummet as tax credits expire
The expiring tax credits led to a record plunge in new home sales in May.
Sales tumbled 33 percent to an annual pace of 300,000 from April, the Commerce Department said Wednesday.
This follows Tuesday’s report of falling sales of existing homes.
From the Associated Press: The end of a tax incentive worth as much as $8,000 means the market will now be dependent on gains in employment, which are needed to lift incomes, brace confidence and contain foreclosures. A lack of inflation and concern over jobs and housing are among reasons Federal Reserve policy makers may reiterate a pledge to keep interest rates near zero.
Most analysts expected home sales to lose ground following the tax credits, but not by this much. What do you think the rest of the year holds for home sales?
The expiring tax credits led to a record plunge in new home sales in May.
Sales tumbled 33 percent to an annual pace of 300,000 from April, the Commerce Department said Wednesday.
This follows Tuesday’s report of falling sales of existing homes.
From the Associated Press: The end of a tax incentive worth as much as $8,000 means the market will now be dependent on gains in employment, which are needed to lift incomes, brace confidence and contain foreclosures. A lack of inflation and concern over jobs and housing are among reasons Federal Reserve policy makers may reiterate a pledge to keep interest rates near zero.
Most analysts expected home sales to lose ground following the tax credits, but not by this much. What do you think the rest of the year holds for home sales?
Posted by Bill Siegel Florida Home Inspection Team Inc
Inmates, IRS Employees Among Those Found to Abuse Homebuyer Tax Credit
I find this following article very troubling:
As incentives go, the first-time homebuyer tax credit was a strong one: if you bought your first house before April 30 of this year, the federal government would give you up to $8,000 for the trouble.
So good, in fact, that the government ended up paying more than $25 million in fraudulent claims, according to an audit released this morning by the Treasury Inspector General. Some 1,300 prison inmates – including 250 serving life sentences – received $9 million for homes that they could not have purchased while they were behind bars, the report found. Another 10,000 people received credit for homes that were also claimed as a first-time purchase by another taxpayer. In one case, 67 people used the same house as their qualifying purchase.
“This is very troubling,” said J. Russell George, the Treasury Inspector General for Tax Administration, in a statement. “Congress created and modified the Homebuyer Credit to stimulate the economy and help taxpayers achieve the American Dream, not to line the pockets of wrongdoers.”
Homebuyer fraud was rife within the IRS as well, the report found. At least 34 IRS employees claimed the first time homebuyer credit, despite evidence that they already owned real estate.
Since its inception, some 1.8 million Americans have claimed the homebuyer tax credit, totaling $12.6 billion in payments through the end of February 2010.
In a statement, the IRS stated that it is working to “aggressively recapture money improperly paid to prisoners” and will take strong action against any of its employees who were found to abuse the tax credit.
Treasury Department officials also stressed that the audit showed that the vast majority of claims were paid lawfully. “These fraudulent claims, which are being pursued to the fullest extent of the law, represent less than half a percent of the credits paid out under this program. As with all new and expanded programs, we are constantly working to improve implementation, and the IRS has already begun to take additional steps to prevent fraud in this program,” Assistant Treasury Secretary Michael Mundaca said in a statement.
Posted by Bill Siegel Florida Home Inspeciton Team Inc
This could just be the beginning in tax increases for Broward County
Even with that rate hike, the county is looking at cutting hours at the Main Library in downtown Fort Lauderdale, closing a jail tower in Pompano Beach, eliminating some bus service and mowing grass in regional parks less often.
Bus fares also would increase, and officials would pull money out of cash reserves set aside to deal with hurricanes and other emergencies.
Broward commissioners left open the possibility of a rate increase Tuesday after County Administrator Bertha Henry laid out her initial plans to tackle a projected $100 million budget shortfall. But they said that the sheriff, property appraiser and elections supervisor should shoulder the same size hit that other agencies take.
“Government grew, and now government has to contract,” Commissioner John Rodstrom said as he zeroed in on the fact that the proposals raise tax rates.
About half of all property owners would see their county taxes increase under Henry’s plans — mainly longtime Broward homeowners. Businesses and those who do not qualify for homestead tax exemptions such as landlords and snowbirds would see a decrease in their bill because of lower property values. So would about a fifth of homesteaded residents — primarily those who purchased homes during the real estate bubble of the last decade.
Henry agreed to send the commission by July 15 several budget options that differ in how severely they affect services. The nine commissioners will consider the proposals when they return from their summer recess, and hold public hearings in September before setting a tax rate.
Broward County, like other governments in Florida, faces another trying budget year because of the recession. Property values plunged 12 percent under the preliminary tax roll released this month, meaning the county will collect less money if tax rates remain the same.
More than 200 sheriff’s deputies and 50 arts advocates packed the Governmental Center for the budget discussion, demanding the county avoid cuts.
“It’s good for them to see the faces of the people being cut,” said Dan Reynolds of the AFL-CIO, who helped organize the turnout of Sheriff’s Office employees.
Henry laid out two tax scenarios for commissioners. The difference was whether they accept the contention of Sheriff Al Lamberti, Elections Supervisor Brenda Snipes and Property Appraiser Lori Parrish that they cannot cut more.
If the three make no further cuts, Henry suggested tax rates for general operations increase from $4.89 to $5.40 per $1,000 in property value. If the three cut the same as agencies under Henry’s command, then she suggests the tax rate increase to $5.23 per $1,000 in property value.
For the longtime resident who owns a home, the county portion of the tax bill would grow from an average of $593 last year to as much as $667. Those who more recently bought homes would see their tax bill drop as much as $131 from an average of $835 last year.
Henry said the public should view her plan as one that largely holds the line on taxes. She noted to commissioners that tax collections would decrease 5.4 percent.
About $32 million would be cuts from agencies that report to the county administrator, including libraries, parks, mass transit and social services. Employees would not receive raises and would have to take five days off without pay next year. Also, 137 jobs would be eliminated.
Libraries and transit each would take a hit under Henry’s plans. Hours would be cut at the Main Library and at the library the county shares in Davie with Nova Southeastern University.
Bus fares would increase from $1.50 to $1.75 in October. The time between buses on some routes would increase, and some weekend service would be eliminated. Under-used late-night routes also would be stopped.
The cuts come on the heels of two previous years of budget-trimming. Library and park hours were reduced and the minimum-security stockade closed last year.
Henry said if she were forced to make more cuts than proposed this year, she would not only look at closing branch libraries, but would have to consider ending some consumer protection programs and returning the licensing of child care centers to the state. Also, she said, health care for the indigent and children of poor families might have to be cut.
Commissioners largely said they remain committed to having Lamberti, Snipes and Parrish share equally in cuts. That would mean Lamberti must find an additional $18.8 million in cuts, and commissioners want to know what progress has been made on ensuring the county is not paying for law enforcement that should be the responsibility of each city.
“People are feeling the pain and lack of service and are beginning to say they may be willing to pay a little extra to keep service,” Commissioner Diana Wasserman-Rubin said in supporting Henry. “People are smarter than what we give them credit for, but we need to tell them where their money is going.”
Borrowers face foreclosure after Obama loan assistance program fails to provide help
Obama administration’s flagship effort to help people in danger of losing their homes is falling flat.
More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That’s more than the 27 percent who have managed to have their loan payments reduced to help them keep their homes.
Last month alone, 150,000 borrowers left the program — bringing the total to 436,000 who have exited since it began in March 2009.
Administration officials say borrowers will get help in other ways. But analysts fear the majority will still wind up in foreclosure.
A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.
Many borrowers complained that the banks lost their documents. The industry said borrowers weren’t sending back the necessary paperwork.
Treasury officials have directed lenders to shift to a new system. They are now required to collect two recent pay stubs at the start of the process. Borrowers have to give the Internal Revenue Service permission to provide their most recent tax returns to lenders.
The growing number of people leaving the program could lead to a new wave of foreclosures. If that happens, it could weaken the housing market and hold back the broader economic recovery.
Most of those leaving the program were rejected during a trial period lasting at least three months. More than 6,300 dropped out after having their loans modified.
Another 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.
Experts say more borrowers are likely to drop out in the coming months. Some homeowners who owe more on their loans than their properties are worth are likely to conclude that paying an oversized mortgage simply isn’t worth the cost.
Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.
“The majority of these modifications aren’t going to be successful,” said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. “Even after the permanent modification, you’re still looking at a very high debt burden.”
Obama administration officials contend that borrowers are still getting help — even if they fail to qualify for the program. The administration published statistics showing that nearly half of borrowers who fell out of the program received an alternative loan modification from their lender. About 7 percent fell into foreclosure.
Another option is a short sale — one in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.
A short sale results in a less severe hit to a borrower’s credit score, and is better for communities because homes are less likely to be vandalized or fall into disrepair. To encourage more of those sales, the Obama administration is giving $3,000 for moving expenses to homeowners who complete such a sale or agree to turn over the deed of the property to the lender.
Administration officials said their work on several fronts has helped stabilize the housing market. They cited government efforts to provide money for home loans, push down mortgage rates, and provide a federal tax credit for buyers.
“There’s no question that today’s housing market is in significantly better shape than anyone predicted 18 months ago,” said Sean Donovan, Obama’s housing secretary.
The mortgage modification was announced with great fanfare a month after Obama took office.
It is designed to lower borrowers’ monthly payments — reducing their mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Borrowers who complete the program are saving a median of $514 a month. Mortgage companies get taxpayer incentives to reduce borrowers’ monthly payments.
The Importance of Hiring a Qualified Home Inspector
Here is one reason why it is important to hire a qualified home inspector. I just came from a four point insurance inspection. Another inspector had done the regular inspection. I did see his report before going out and he did catch numerous items. The following is a list of items he did not catch:
The air conditioner is a package unit. The label on the unit states that the maximum service disconnect for this unit should be 30 amps. The breaker in the panel box is a 50 amp breaker and the disconnect by the unit is only a switch. This means that if the unit malfunctions and the breaker should trip, it will not, which will cause harm to the unit and most lilkely result in higher repair costs. It is also a fire hazard. This is a fairly simple repair that will cost about $150.00 to correct.
There are mis-matched breakers in the electrical service panel. This will usually void the manufacturers waranty on the box and could possibly result in the loss of a claim due to an electrical failure. While not a major item, it should have been mentioned. There were also missing knock out plugs on the distribution panel and improperly terminated ground and neutral wires noted.
On his report he lists the main water meter shut off as being at the meter. The first point of shut off is a valve at the rear of the house under the electrical service panel.
All of these items can cause problems for the homeowner. Each one of them should be listed in the report. How many other things did he miss. I don’t know because my inspection was limited to just these issues.
Posted by Bill Siegel Florida Home Inspection Team Inc.
Senate votes to extend homebuyer tax credit
The Senate voted 60 to 37 on Wednesday to extend the popular homebuyer tax credit until the end of September to allow more time to complete home sales.
Only buyers who signed contracts by April 30 could take advantage of the extension. Without it, buyers must close the deal by the end of June to get the $8,000 first-time credit or the $6,500 credit for certain people who already own homes.
The amendment was added to a bill that would extend the law that provides extra unemployment benefits.
Senate leaders had hoped to pass the bill by the end of the week but are struggling to round up enough votes to overcome opposition by Republicans and some Democrats. Opponents object to the cost of the bill during a time of rising federal deficits.
The House, which passed a different version of the unemployment bill, would have to approve legislation including the homebuyer provision.
The National Association of Realtors estimates that 180,000 buyers are at risk of not closing in time to receive the credits because of the long processing time for a crush of contracts.
Home inspection story
I was hired to conduct a home inspection for the lender on an FHA financing deal. The buyer already had one inspection done that showed no defects to the house according to the buyers agent. The inspection was ordered because the lender could not accept the report, as they had not ordered it. Here are some of the major items that we found:
- The master bathroom shower pan was leaking. The cold water shower handle was also leaking. Total repair cost approximately $3000.00.
- The air conditioner was new, probably not installed with permits, and was not cooling properly.
- There was no visible bond wire at the pool pump motor. This is a safety hazard that can result in shock or death.
- The bus bars in the distribution panel were under rated for the electrical system. This is a safety issue that could result in a fire.
The following is a list of other items:
- The cold water connection at the washing machine was leaking.
- The cold water handle at the guest bathroom sink was leaking and water was getting into the vanity because the backsplash was not sealed.
- The guest bathroom was remodeled and now there is only 24 inches of clearance for the toilet. There is supposed to be 30 inches, 15 on each side from the center of the bowl. This might seem a little picky, but a large person might have a hard time sitting on the toilet.
- There is a hydromassage tub in the guest bathroom. There was no access to the motor or to verify GFCI protection.
- The windows in the home were older and many of them did not shut properly.
- There were minor repairs needed to the roof.
- Gutter downspouts were missing.
- There was loose flooring at the lip of the sunken living room.
- There were various ungrounded and reverse polarity at the outlets.
This represents about $7000.00 to $9000.00 of total repair costs needed to the home. Of course when I walked in the seller, a contractor, told me there was nothing wrong with the house (he had bought it to flip it).
All of this goes with the importance of hiring a qualified home inspector. Most people today are only interested in the cost of the inspection. As this was done for the lender and not the buyer, I can only wait until the buyer contacts me about my findings.
Posted by Bill Siegel Florida Home Inspection Team Inc.
Now is a good time to inspect your home for roof leaks
Using binoculars, scan for evidence of roof damage, including shingles that are curling, broken, cracked or missing. Check for structural stability from across the street and look at the roof line. If it appears to sag, there could be damage to the roof supports, so get a professional to inspect it. Next, look for telltale signs of roof leaks. In the attic look at the ceiling, rafters and walls, particularly right beneath the roof, for discoloration or stains. Pay attention to skylights and chimneys, which are leak generators. Seepage is most likely at joints and openings or flashings. Outside, check the siding beneath the eaves for evidence of leaks. If you find leaks, repair them (or have it done). Don’t put it off; collected moisture can cause expensive rot and decay. (For DIY roof repairs, read “5 roof repair tips: How to fix leaks and broken shingles).