Smith Farm Foreclosures...more detail

As of April 1st, 2010 there were 94 Smith Farm homes in some stage of foreclosure. Here is a breakdown by street, alphabetically:

• Ambleside - 3
• Ashburn - 5
• Boxleaf - 1
• Branchwood - 9
• Columbia - 6
• Copperfield - 3
• Downwinds - 2
• Great Oak - 6
• Greenville - 6
• Kingsley - 7
• Marbletree - 4
• Oak Bluff - 3
• Oak Grove - 12
• Prestwick - 1
• Ridgefield - 3
• Rockport - 8
• Sally Lynn - 4
• Squirewood - 2
• Stonehurst - 3
• Waterdance - 3
• Waverly - 3

Now this does not mean that next week there will be 94 bank-owned homes on the market for sale...but it is a good indicator that there is still a lot of distressed inventory to come...which will serve to further soften up prices.

Foreclosures: Housing defaults soar in Palm Beach County

From January to February of 2010, foreclosures increased 63% in Palm Beach County, and year over year they were up 68%.

Click here to read the full story

Smith Farm market activity report

 There are 20 homes currently on the market in Smith Farm as of 3/6/10.

• They range in price from $197k to $499K.
• The asking prices per sq ft range from $80/sq ft to $171/sq ft.
• The # of days on the market range from 8 to over 600
• Out of the 20, 8 are marketed as Short Sales
• 1 is a bank owned home.

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There are currently 14 homes with a pending contract

• Asking prices of these under contract homes range from $169k to $399k
• Asking price per sq ft range from $89/sq ft to $123/sq ft
• The days on the market range from 6 (for the $89/sq ft home) to 628 (the $399k home)
• 8 of the 14 homes are Short Sales
• 4 of the 14 homes are Bank Owned

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There have been 12 reported sales in the previous 90 days

• The sold prices range from $190k to $345k
• The sold price per sq ft ranged from $85/sq ft to $122/sq ft
• The 'average' sold price per sq ft is $105/sq ft
• The market time ranged from 13 days (the $85/sq ft home) to 303 days (the $122/sq ft home) 
• 6 of the 12 sold were Short Sales
• 2 of the 12 sold were Bank Owned

Thanks for reading our blog...

CNN Money reports 25% home price decline ahead for our area!!

Take a look at this eye-opening post on our Winston Trails blog...If you're a home owner, you NEED to read it.
 Just click right here

Thanks for reading our blog,

New credit card rules to take effect soon...H.R. 627

The Credit Card Act of 2009 phases in, with the majority of consumer protections kicking in Feb. 22, 2010. If you are into reading lengthy government documents, click on the blog post title ( or the link below) and you will be redirected to the 33 page, HR 627 document entitled: ‘‘Credit Card Accountability Responsibility and Disclosure Act of 2009’’

If you'd rather just see a brief summary... here you go:
Sec. 101. Prior notice of rate increases required. Prohibits increase in APR without 45 days= notice. Prohibits applying rate increases retroactively to existing balances. Requires clear notice of right to cancel credit card when APR is raised.

Sec. 102. Freeze on interest rate terms and fees on canceled cards. Prevents APR from being raised, or repayment terms being cancelled, if a cardholder cancels a card.

Sec. 103. Limits on fees and interest charges.

< Prohibits double cycle billing: Prohibits credit card issuers imposing interest charges on any portion of a balance that is paid by the due date.

< Over-the-limit fee restrictions: Cardholders must be given the option of having a fixed credit limit that cannot be exceeded, and card companies cannot charge overlimit fees on cardholders with fixed limits. Cardholders may elect to prohibit the creditor from completing overlimit transactions that will result in a fee or constitute a default under the credit agreement. Overlimit charges can only be charged when an extension of credit, rather than a fee or interest charge, causes the credit limit to be exceeded. Overlimit charges can only be applied once during a billing cycle.

< Prohibits charging interest on fees: Prohibits the charging of interest on credit card transaction fees, such as late fees and overlimit fees.

< Limits on charging certain fees: Prohibits credit card issuers from charging a fee to allow a credit card holder to pay a credit card debt, whether payment is by mail, telephone, electronic transfer, or otherwise. Requires fees to be reasonably related to cost. Foreign currency exchange fees may only be imposed in an account transaction if the fee reasonably reflects costs incurred by the creditor and the creditor publicly discloses its method for calculating the fee.

Sec. 104. Consumer right to reject card before notice is provided of open account. Gives cardholders who get preapproved the right to reject the card up until they activate it without having their credit adversely affected.

Sec. 105. Use of terms clarified. Prevents card companies from using the terms fixed rate and prime rate in a misleading way by establishing a single definition.

Sec. 106. Application of card payments. Prohibits credit card companies from setting early deadlines for credit card payments. Requires payments to be applied first to the credit card balance with the highest rate of interest, and to minimize finance charges. Prohibits late fees if the card issuer delayed crediting the payment. Prohibits card companies from charging late fees when a cardholder presents proof of mailing payment within 7 days of the due date.

Sec. 107. Length of billing period. Requires credit card statements to be mailed a least 21 days before the bill is due (current requirement is 14 days).

Sec. 108. Prohibition on universal default and unilateral changes to cardholder agreements. Prevents credit card issuers from increasing interest rates on cardholders in good standing for reasons unrelated to the cardholders behavior with respect to that card. Prevents credit card issuers from changing the terms of a credit card contract for the length of the card agreement. Allows penalty rate increases only for specific, material actions or omissions of the consumer specified in the card agreement. Requires issuers to lower penalty rates that have been imposed on a cardholder after 6 months if the cardholder commits no further violations.

Sec. 201. Payoff timing disclosures. Requires credit card issuers to provide individual consumer account information and to disclose the period of time it will take the cardholder to pay off the card balance if only minimum monthly payments are made. Also requires issuers to disclose the total amount of interest the cardholder will pay to pay off the card balance if only minimum monthly payments are made.

Sec. 202. Requirements relating to late payment deadlines and penalties. Requires full disclosure in billing statements of required payment due dates and applicable late payment penalties. Requires that cardholders be given a reasonable period to make payment. Requires that payment at local branches be credited same-day.

The above summary only details a small portion of what the bill regulates...if you have any credit cards (and who doesn't), it may pay to print out and read the entire bill.

I hope this is helpful to you.

The next chapter in the book entitled: The housing crisis..what they DON"T want you to know!

On our main blog, I just posted an eye-opening entry which details the reasoning behind the likelihood of a "second leg down" in local home values...rather than duplicate the entire post here, just click here or on the post title to read the entire post.

Thanks for reading.

Smith Farm homes currently under contract

There are currently 20 Smith Farm homes under contract...that's good news. Now for the bad news...

16 of the 20 homes currently under contract are either Bank-Owned homes or Short Sales. That leaves just 4 out of 20 as regular sales of all the Smith Farm homes currently under contract.

This does not bode well for property values going forward as short sales typically sell at a discount to non short sales. And with the ratio being 16 "under contract" homes being short sales or foreclosures and only 4 being non short sales, this could cause an appriasal problem with sales later this year...this is an excellent graphic backing up the advice that I have been giving to sellers/potential sellers in Smith Farm lately: the window of opportunity is small, try to get on the market, under contract, and sold in the next 3-5 months...BEFORE all of these distressed sales become your new comps!

Smith Farm market activity report

Ther have been 6 reported sales in Smith Farm in the previous 60 days. Three of the 6 were short sales.

1) A 738 on Oak Grove...Short Sale...$225,000
2) A 739 on Oak Grove...Short Sale...$228,000
3) A 739 on Oak Grove...$255,000
4) A 1602 on Marbletree...Short Sale...$345,000
5) A 1603 on Marbletree...$345,000
6) A 1603 on Squirewood...$365,000

You can see, just from this 60 day history sample, how short sales tend to sell at a discount to non short sales. When there are a lot of short sales in a neighborhood it can certainly impact property values and appraisals. Take a look at the post above this one to get a feel for what the upcoming closed sales may be...

Smith Farm Foreclosures...more detail

As of 1/15/10, there were 83 Smith Farm homes in some stage of the foreclosure process...below is a bit more of a breakdown by street:

• Oak Grove - 12
• Rockport - 9
• Columbia - 6
• Branchwood - 6
• Greenville - 6
• Marbletree - 5
• Ashburn - 5
• Sally Lyn - 4
• Great Oak - 4
• Kingsley - 4
• Ridgefield - 3
• Waterdance - 3
• Copperfield - 3
• Stonehurst - 3
• Squirewood - 2
• Oak Bluff - 2
• Waverly - 2
• Ambleside - 1
• Boxleaf - 1
• Prestwick - 1
• Downwinds - 1

IRS says "sorry, you can't file for your tax credit"!

 NEW YORK (CNNMoney.com) -- Did you purchase a home after Nov. 6? Don't expect your $8,000 homebuyer tax credit any time soon. Since Congress passed the initial tax credit last February... more than 1.4 million buyers have taken advantage of it...But that all changed on Nov. 6...it appears that the IRS has NOT ALLOWED ANYONE TO FILE since November 6th...

Congress extended the credit to include contracts signed by April 30 and closed by June 30. It also made a refund of up to $6,500 available to existing homeowners looking to buy something new. And that marked the start of a new IRS paperwork wrangle. Those homeowners who closed their sale before Nov. 6 use Form 5405 to claim the credit right away. But those closing after that date are in limbo because no form yet exists for them to file! The IRS had been expected to come out with a revised form by early January, but it has yet to release anything.

Also, with the new fraud-prevention regulation attached to the extension/expansion credit, there is no E-filing available for those claiming the extension...adding to the already extended timeframe for the tax credit refund.

If you are planning to buy within the timeframe guidelines of the tax credit and are hoping to receive the money quickly...don't count on it!
As always, check with your tax advisor...

Industry insiders expect market to resume fall...

NEW YORK (CNNMoney.com) -- After four months of gains, home prices flattened in October. Worse yet, industry insiders think that they'll soon start to fall.Prices have risen more than 3% since May, according to S&P/Case-Shiller. But most forecasts predict price declines in 2010, with possible losses ranging from anywhere from 3% on up.


Fiserv Lending Solutions, a financial analytics firm, forecasts that prices will fall in all but 39 of the 381 markets it covers, with an average drop of 11.3%."We've seen recent price stabilization because of low mortgage interest rates and the impact of the first-time homebuyers tax credit," said Pat Newport of IHS Global Research. "But there are really good reasons to think prices will now start going down."

There are three main reasons for the reversal: a coming flood of foreclosures, rising interest rates and the eventual end of the tax credits.The above is a snippet of a CNNmoney.com article from Friday, January 1st.

Take a look at this mortgage interest rate comparison I've done:
4.5% on a $400k loan = 2025.19/mo
8% on a $276k loan = 2026.74/mo

Right now...we are at about a 5%+ average mortgage rate...it has risen the past 3 weeks, and that is with the feds direct involvement with the rate mechanism. If the feds "backs away" from direct involvement some time this year, rates will surely increase. It is not too inconceivable that rates could rise to 8%, which, in the example above, reduces the buying power of the representative buyer $124,000!

If the "blame" for the housing bubble has been "low interest rates and loose lending standards" what effect will the opposite have? Couple higher rates, extremely tight/restrictive lending standards, the end of buyer tax credits and a wave of bank-owned homes...It's not a pretty picture being painted.

The Most Recent Sales in Smith Farm, Lake Worth Florida...

Going back 30 days...there have been 4 reported sales:

• Oak Grove, 4/2.5/2, 2428 sq ft, $225,000...Short Sale
• Oak Grove, 739 model, 3/3/2, 2225 sq ft, $255,000
• Marbletree, 5/3/3, pool, 1603, 3397 sq ft, $345,000
• Squirewood, 5/3/3, pool, 1603, 3397 sq ft, $365,000

If you extrapolate the numbers of 4-in-30 days out to an annualized figure, you have 48 home sales projected in a 12 month period...with the current Smith Farm inventory of 19 homes on the market, that gives us about a five month absorbtion rate...which is not high at all.

Six of the 19 are being marketed as short sales...Three are bank owned sales...

Hopefully, the expanded and extended homebuyer tax credit will keep a finger in the dyke long enough to give sellers who are not yet under water who want/need to sell to a chance to get out. But looking forward, as the tax credit expires, and if the Fed follows through on its plans to scale back its purchases of mortgage-backed securities (MBS), which will signal the end of these historically low interest rates, I sincerely believe that we will see a resumption of the decline in home values here in South Florida.

Sellers and those thinking of selling take heed…your window of opportunity is the next 6 months…

FHA, 1st time buyers, short sales and perceptions...

• Nearly 40% of existing homes purchased in November used an FHA-insured mortgage, according to a National Association of Realtors survey.

• As a result, the FHA is having to defend the program, saying that it is well enough capitalized to avoid any major losses in case of surging defaults. Earlier this month, Department of Housing and Urban Development secretary Shaun Donovan was before Congress defending the FHA, and ensuring the House Financial Services Committee that the single-family insurance program is “not the next subprime.”

• The increase in demand caused the capital reserve ratio at the FHA to drop below the Congressionally mandated 2% minimum, leaving HUD and the FHA scrambling to ensure the FHA program’s soundness.

• A number of proposals are being considered, including the raising of insurance premiums, raising the minimum FICO (credit score) requirements, raising the minimum required down payments and reducing the allowable seller contribution...all of which will make it more difficult for buyers to qualify for and obtain financing (and hence, not good for sellers).

• Other results from the Realtors survey showed first time homebuyers accounted for 51% of all transactions and are actively competing with investors for distressed properties...

• And, distressed properties aren’t just affecting transaction price, however. The presence of distressed properties is influencing buyers’ perceptions of other homes for sale and many buyers have pricing expectations that treat every property as if it were a distressed sale.

• Additionally, HUD issued a ruling that borrowers who were in default on their mortgage at the time of a short sale are not eligible for an FHA-insured mortgage for three years...

Sample of some of the video marketing we have done recently

This short video could mean money in your pocket...

President Obama signs the 1st time homebuyer tax credit extension into law AND expands it to include NOT only 1st time buyers

More home buyers get tax credit

President Obama signed into law a $24 billion economic stimulus bill providing tax incentives to prospective home buyers.

The tax credits center on extending the $8,000 credit for first-time homebuyers that was included in the stimulus package. The credit, which was to expire at the end of this month, will be available through next June as long as the buyer signs a binding contract by the end of April, 2010.

The program is expanded to include a $6,500 credit for existing homeowners who buy a new place after living in their current residence for at least five years.

The above is only the basic outline of the program…If you would like the full details just give me a quick call at 561-432-5202 or email TaxCredit@5614325202.com

New Govt. plan to delay, not cure, the foreclosure problem...

Fannie Mae to rent out homes instead of foreclosing


WASHINGTON (AP) — Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

The program will "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement.

However, the effort is likely to affect a relatively small number of homeowners. In the first half of the year, Fannie Mae took back about 1,200 properties through this process, known as a deed-in-lieu of foreclosure. That pales in comparison to the 57,000 foreclosed properties the company repossessed in the period.
While neither option is particularly attractive for the homeowner, a deed-in-lieu does less harm to the borrower's credit record.
The rental program is designed to help homeowners who don't qualify for a loan modification under the Obama administration's plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.
Fannie Mae has hired an outside company, which officials declined to identify, to manage the properties.(where's the transparency...Fannie is owned by the taxpayers for all intents and purposes)
To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which would be determined by the management company. The rent can't be more than 31% of their pretax income.

Expanded 1st time buyer $8000 tax credit headed to President Obamas desk for signature

And it's not just for 1st time buyers anymore!

Call me for the details.
561.432.5202

Short sale negotiation insider info...

Every day we are dealing with lenders and are involved with negotiations on short sales. A recent hurdle has been the negotiations with 2nd lien holders (2nd mortgages/home equity liens). We thought that the following may be of interest to a lot of folks currently contemplating how or even IF they should do a short sale...

These days many 2nd mortgage companies are now asking for 10% of their principal balance in order to release their lien. Prior to these recent changes, ALL 1st mortgage holders allowed a maximum of $1,000 to 2nd mortgages, period. Once 2nd mortgage holders started demanding 10%, it made obtaining approvals from both mortgages quite challenging. After all, 10% is quite a large number! And most 1st mortgages will only allow a maximum of $1,000 right?

Well luckily for our sellers, some 1st mortgage holders have paid attention to the changing trends and have started to change their policies to match. Now, more and more 1st mortgage holders are allowing a payoff of up to 10% to 2nd mortgages to avoid any complications. And for us short sale specialists, this is helpful to successfully navigating a short sale for our sellers! One of the lenders that have started to be more open to this policy change is ASC.

Keep in mind, not all 1st mortgage holders are doing this, and it is on a case-by-case basis, but, they are at least open to it and some will approve 10% to be paid to 2nd mortgage holders.

1st time homebuyer tax credit extension almost certain to pass this week...

After two weeks of delay, the Senate, last night, cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers... making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law.

A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years... it is virtually certain that the President will sign the legislative package, which contains an expansion of unemployment benefits as well as tax changes.

21% still to go?

I have recently read several news stories regarding predicted home values. The reports indicate that the 2 worst performing housing markets in the country in the next 12 months will be Miami with aprox a 30% drop in "median" value, then Orlando...but not far behind, and of little comfort that we're not number 1, is the report for West Palm Beach area home prices that predicts values to dip another 21.7 percent from a median price of $229,000 to $179,307. The report used the Case-Shiller index of home prices along with foreclosure data to formulate the prediction.

However, I always advise my readers and clients to keep in mind that the "median" can be easily skewed and is not an accurate predictive statistic for individual home values. Along those same lines, the property value sites like Zillow can be wildly innacurate. As it has always been, the undisputed most accurate way to determine a homes value at any point in time is by comparable sales and comparable offerings.

As is especially true in this market, buyers ultmately determine a homes value and they do this by "comparison shopping", as you most likely did when you purchased the home you now own.

Housing could take double dip down in 2010 - MarketWatch

Housing could take double dip down in 2010 - MarketWatch

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Govt. Foreclosure Rescue Plan losing ground...

18,300 property tax bill appeals break record

18,300 property tax bill appeals break record

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Pulling the rug out?

Since the initial decline of the housing market and associated collapse of the banking and mortgage industry, FHA loans have taken over a majority of the lending being done here.

 I have often thought that these FHA loans were going to be our next "wave of defaulting loans" for the following reasons: Most FHA loans made here are with only a 3.5% down payment and allow the seller to contribute up to 6% towards the buyers closing costs. And generally, a lot of the buyers go "FHA" for 2 main reasons...they don't have much cash AND they have lower credit scores than required by conventional lenders.

In essence, all of these newly issued FHA loans are the same "no money down" loans that are currently contributing to the explosion in defaults. It has been shown that homeowners are more likely to default when there is no equity in the home....this seem obvious.

Well, in a declining market, like we are in, it won't take long for all of the FHA loans made in the previous 12 months to be "upside-down". Combine "upside-down", with lower credit scores and what do you get? The recipe for more defaults!

I believe that the above reasoning has prompted the following:
The FHA Taxpayer Protection Act of 2009 — HR 3706 , introduced in Congress Monday would increase the minimum down payment for Federal Housing Administration (FHA)-insured mortgages from 3.5% to 5% and would also prohibit financing initial service charges, appraisals, inspections, or other fees or closing costs with any part of an FHA mortgage. (seller-paid closing costs)

 The bill’s author, Rep. Scott Garrett (R-NJ), said the current policy of allowing closing costs to be rolled into the mortgage effectively reduces FHA down payments to as low as 2.5% (and sometimes greater than 100% financing) because borrowers don’t have to have as much (any) cash on hand at closing.

 “As we have learned repeatedly throughout the mortgage crisis, the amount of equity a homeowner has in their home directly correlates to the credit risk associated to their mortgage.”

 The bill also calls for an examination of the housing market’s dependence on the fund (FHA) since the mortgage crisis began.

 The inspector general for HUD, Kenneth Donohue, also appeared before the House subcommittee calling for more resources. To illustrate the explosion of FHA’s presence in the market since the development of the near-third statistic often exchanged by industry players and media outlets, Donohue said data show the FHA’s endorsements (or guarantees of mortgages) rose from 24% of the single-family market in the first quarter of 2008, to 63% of the market in Q109, including home sales and refinance.

So, if the above bill does pass and the FHA lending criteria "tighten", then I believe that here, locally, the housing market will suffer. When you make it more difficult to obtain the loan that the majority of our buyers are utilizing...there is only 1 conclusion. Then, combine this change with the expiration of the 1st time homebuyer tax credit AND a potential rise in mortgage interest rates! Not good for us homeowners here in South Florida.

Shoot me an email and let me know which way you see the market heading.