Sarasota Real Estate Market News

Which housing values have dropped most?

CAMBRIDGE, Mass. – June 8, 2011 – Lower priced homes have been harder hit than higher priced homes in the sluggish housing market, according to a study by Harvard University’s Joint Center for Housing Studies.

High-priced homes have lost 38 percent of their value since values peaked in 2006. Lower priced homes, on the other hand, have dropped 63 percent since peaking in 2007.

Why such a difference? Daniel McCue, senior research analyst for the Joint Center, says it’s because lower priced homes appreciated much more before reaching its peak and therefore had further to drop than higher priced homes.

For example, in San Francisco, lower end homes nearly tripled in price before peaking. High-end homes, meanwhile, did not even double before reaching its peak. McCue attributes this partially to lenders making more loans available to lower income households during the housing peak days, which increased demand and prices.

Foreclosures have also plagued low-income areas, more so than higher income areas, according to the study. Foreclosures in low-income neighborhoods are more than double that of high-income neighborhoods, according to the Joint Center for Housing Studies.

Prices range drastically among major housing market so what’s considered “high-priced” and “low-priced” in the study varies greatly from market to market. For example, in Atlanta low-tier homes were considered under $122,533 and high-tier homes above $221,679; in San Francisco, low-tier homes were considered $312,546 and high-tier homes over $573,577.

Source: “Falling Prices Whacked Low-Priced Homes Hardest,” USA Today (June 5, 2011)

June 8, 2011 Posted by | News related to Buyers, News related to Investors, News related to Sellers, News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Fannie revamps rules on delinquent loans

WASHINGTON – June 8, 2011 – Fannie Mae recently announced new rules that will require mortgage servicers to act more quickly and consistently in helping troubled homeowners avoid foreclosure.

Fannie told servicers they must strive to build a “strong customer service relationship,” better understand why the borrower is missing payments, and educate them on ways to prevent foreclosure.

“We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help them avoid foreclosure,” says Jeff Hayward, senior vice president of Fannie Mae’s national servicing organization.

Also among the revamped guidelines, Fannie told servicers they will be required to contact homeowners verbally and in writing within 120 days after a loan first becomes delinquent. They will need to try to complete a loan modification or other option that keeps the borrower in their home or helps the borrower avoid the foreclosure process.

If foreclosure is unavoidable, servicers will need to follow a clear timeline and must begin the foreclosure process once a loan has been delinquent for more than 120 days. Servicers also must make it clear when a property in the foreclosure process will be sold.

Source: “Fannie Mae Updates Rules on Delinquent Loans,” Associated Press (June 6, 2011)

June 8, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Short sale scam cheats banks, sellers

SANTA ANA, Calif. – June 8, 2011 – Banks and distressed home sellers stand to lose more than $375 million this year from a short sale scam that has sellers and banks agreeing to sell homes at very undervalued prices, according to a new study by CoreLogic.

In discovering the short sale fraud scam, CoreLogic analyzed 450,000 nationwide short-sale transactions in the last two years.

Here’s how the scam often works: Borrowers who are underwater or in financial distress are approached, often by an investment group, and persuaded to sell the property in a short sale at a low price. Soon after the bank accepts the lowball offer, the investment group then resells the house to legitimate buyers at a higher price.

Sixty-five percent of short sales resold within six months that net profits of 40 percent or higher were flagged “suspicious,” which means there is a high likelihood that the lender accepted a low offer, according to the CoreLogic study. These transactions often go undetected by banks, too.

Source: “A Short Way to Short-Sale Fraud,” The Real Deal (June 3, 2011)

June 8, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Foreclosures put workers’ security clearances at risk

ORLANDO, Fla. – June 7, 2011 – Foreclosure means more than losing a house and ruining a credit rating for a select group of Central Florida property owners who rely on federal security clearances for their livelihood.

“Losing your security clearance is like losing your most marketable aspect for employment,” said real estate broker Travis John, a local distressed-property specialist who already this year has worked with about a half-dozen sellers facing the loss of their security clearances if their banks foreclose on their properties.

Bank takeovers have particularly harsh consequences for employees of Lockheed Martin Corp., NASA and other federal contractors and agencies in Central Florida. Depending on how a foreclosure is handled, it can cost a wage earner his or her security clearance – and job. And it usually takes years for such people to obtain a new clearance so they can work again.

“There is a very good reason for them to be concerned,” said Virginia lawyer David P. Price, who specializes in security-clearance cases after serving 25 years in the U.S. Navy Judge Advocate General’s Corps.

Price said he has seen the number of financial-related security-clearance problems double in recent years. Though no reports have closely tracked security problems tied to mortgage defaults, federal officials have noted an increase in revocations and denials of security clearances for financial reasons, such as foreclosure.

Debt is one of more than a dozen potential pitfalls for someone with security clearances, along with problems such as criminal arrests and drug or alcohol use. They can prevent a prospective employee from gaining clearance, jeopardize the clearance of an existing employee or stand in the way of an employee seeking a higher-level clearance.

Personal finances come into play largely because of concerns that a contractor or employee could turn to selling confidential information to generate cash for unpaid bills, Price said.

Most employees with security clearances are required to report mortgage defaults and other financial and legal issues to their company’s or agency’s security officer. If they don’t volunteer the information relatively quickly, Price said, it can come back to haunt them during periodic reviews of their finances.

“If you fall behind on the house today, you don’t necessarily have to report today, but take action as soon as possible to mitigate any concerns the government may have,” he said.

Struggling homeowners are better able to keep their clearances if they can document that their mortgage was a sensible loan that didn’t overextend them at the time. They also need to demonstrate that they have taken reasonable and responsible steps to terminate the financial obligation – such as arranging a “short sale” of the property – and that they won’t be burdened with substantial debt once the process plays out.

“There are lending institutions that will write off debt on foreclosures, but the short sale is the better way to go,” Price said, though he cautioned that a short sale – selling a house for less than is owed on the loan – can take a long time, increasing the chances of a foreclosure.

John, the local broker, said his clients with security clearance have been able to sell their homes in short sales and walk away with little or no outstanding debt.

One of them, a 24-year Air Force veteran who spoke only on the condition of anonymity for fear of further damaging her clearance, said she and her husband live in Maryland but bought a vacant subdivision lot in Polk County several years ago with the intention of retiring there.

“It wasn’t necessarily that we couldn’t pay for it,” she said. The problem was that the developer gave them a deadline to start building a home, and by the time that date approached, the property had lost much of its value. Meanwhile, the couple’s Maryland house was “underwater,” meaning it was worth less than the mortgage on it.

“Basically, my livelihood was at stake, and I was looking at not taking care of my family and not making it to retirement,” said the woman, who has experience processing security clearances.

The couple worked with John to list the property as a short sale and continued making payments until they had a purchase offer. Expecting a sale, they stopped making payments, and their lender initiated foreclosure proceedings. At that point, the Air Force veteran said, she confided to John what was at stake if the bank took the property.

The land recently sold in a short sale, and the woman kept her clearance.

“I needed to take steps to prevent what could have happened,” she said during an interview last week. “I knew that nothing good could have come of it.”

According to a General Accounting Office report filed earlier this year, federal security officials have seen an increase in financial problems among workers with clearances, particularly problems with mortgages and foreclosures, though they did not report specific figures.

In Las Vegas, another U.S. metro area hard-hit by foreclosures, one survey found 740 airmen underwater with their mortgages. Two-hundred sixty-three reported they were unable to sell their homes, and 30 were in some stage of foreclosure.

The U.S. Defense Department’s Office of Hearings and Appeals is one of the few government agencies that report security-clearance revocations and denials. From January 2006 through June 2010, it reported considering about 70 security-clearance appeals involving foreclosures and other distress sales. Clearances were revoked or denied in 62 of those cases, according to one Washington lawyer.

Once a clearance is denied, the employee will lose his or her job, Price said, and must begin searching for a prospective employer that will sponsor that person for another security review.

“When your clearance is denied or revoked, it literally can be two years before you’re able to get clearance,” Price said – and that is under the best of circumstances.

Copyright © 2011, The Orlando Sentinel, Fla., Mary Shanklin; Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.

June 8, 2011 Posted by | News related to Sellers, News related to Short Sales and Foreclosures | Leave a comment

Fla. couple threatens bank with foreclosure

Man Bites Dog?

ST. PETERSBURG, Fla. – June 7, 2011 – Months after Bank of America wrongly foreclosed on a house Warren and Maureen Nyerges had already paid for, they were still fighting to get reimbursed for the court battle.

So on Friday, their attorney showed up at a branch office in Naples with a moving truck and sheriff’s deputies who had a judge’s permission to seize the furniture if necessary. An hour later, the bank had written a check for $5,772.88.

“The branch manager was visibly shaken,” attorney Todd Allen said Monday, recalling the visit to the bank last week. “At that point I was willing to take the desk and the chair he was sitting in.”

After the moving company and sheriff’s deputies get their share, the Nyerges should receive the rest of the money this week, ending a bizarre saga that started when they paid Bank of America $165,000 cash for a 2,700-square-foot foreclosed home in Naples in 2009.

About four months later, a process server knocked on their door and handed Warren Nyerges a notice of foreclosure.

“This is a big mistake,” he recalled saying. “You must have the wrong house. We bought a foreclosure and don’t have a mortgage.”

That started 18 months of frustrating phone calls, paperwork and court hearings. Whenever Nyerges called the bank, representatives told him to “come up to date” with his payments. When he called 25 different law firms, no attorney would take the case. When he went to court, the lawyers for the bank filed incorrect motions and were woefully unprepared for the hearings.

“It was mind boggling,” said Nyerges, a 46-year-old retired police officer. “To try to unscrew the screw up, it’s not as easy as it sounds.”

Eventually the Nyerges found Allen. They fought the foreclosure and won, proving that they owned the home outright.

During his research, Nyerges heard that his name got transposed from purchase agreements onto the prior foreclosure.

“I don’t know if that is a fact, because no one really had the facts,” he said.

In September 2010, a judge ordered Bank of America to pay the couple’s $2,534 attorney fees. But by last week, the bank hadn’t paid up, so Allen got a judge’s permission to seize assets.

In an email to the Associated Press on Monday, Bank of America spokeswoman Jumana Bauwens apologized to the couple about the “delay in receiving the funds.”

“The original request went to an outside attorney who is no longer in business,” she wrote.

The law office of David J. Stern, which handled the Nyerges’ case for Bank of America, told judges across Florida in March that it will end its involvement in 100,000 foreclosure cases.

The Florida attorney general’s economic crimes division is investigating three law firms, including Stern’s, over allegations that they created fraudulent legal documents, gouged homeowners with inflated fees, steered business to companies they owned and filed foreclosures without proving the bank actually had legal interest in the loans.

According to employee testimony filed with Florida authorities, Stern’s employees churned out bogus mortgage assignments, faked signatures, falsified notarizations and foreclosed on people without verifying their identities, the amounts they owed or who owned their loans.

The attorney general is also looking at whether Stern paid kickbacks to big banks.

This isn’t the first time that Bank of America has tried to foreclose on a property that was owned by a person without a mortgage. In 2009, a Fort Lauderdale man named Jason Grodensky bought a home in cash from Bank of America in a short sale. But in court, the foreclosure case continued and a judge ordered the property to be sold. Bank of America acknowledged the error and rescinded the foreclosure.

Allen sees the Nyerges case as symbolic of the foreclosure crisis. Courts are backlogged, and banks and their attorneys aren’t scrutinizing foreclosure paperwork.

And Nyerges said he’s still upset with Bank of America.

“They couldn’t even spell our name right in the apology,” he said.

Copyright © 2011 The Associated Press, Tamara Lush.

June 8, 2011 Posted by | News related to Short Sales and Foreclosures, Uncategorized | Leave a comment