Las Vegas Sun – A Las Vegas real estate agent who landed a prominent role in a Time magazine cover story is being scrutinized by state licensing officials because of her comments, has left her employer and is lying low.

The story by Joel Stein in the Aug. 24 issue, “Less Vegas,” is a high-spirited and high-altitude view of the troubles facing Las Vegas, which he calls both “our most American city” and “an entire city of John Dillingers.”

In the story, Brooke Boemio — “a bouncy, sweet, recently remarried 31-year-old mom” — is cast as one of the Dillingers. She helps Stein break into a foreclosed home and brags about helping clients who are underwater on their mortgages buy a second house on the cheap and stop making payments on their first mortgages, pressuring the bank into selling the houses for a loss. Everybody’s doing it, she says in the story. In fact, she said, she did it herself.

Since the story appeared, Boemio and her employer have, in the words of Coldwell Banker Wardley Real Estate President Jeff Sommers, “parted ways.”

Sommers also said his company has conducted an internal investigation and has been unable to find any cases of Boemio engaging in the behavior described in the story. The buy-and-bail tactics described in the story, he said, are serious allegations and “really just in direct opposition to everything in our policies.”

In a further statement released online, Sommers said Boemio told him she had been misquoted and misrepresented by Time.

Boemio did not reply to the Sun’s telephone, text and e-mail messages.

When the story was published, it referenced a video on Time’s Web site titled “Breaking and Entering,” of Stein and Boemio entering an unoccupied home on the west side of town. Since then, the video has been removed from the Web site for what Time spokeswoman Betsy Burton described as “some sensitivity with various issues.”

A Metro Police spokeswoman said Stein’s description of his and Boemio’s entrance into the home appears to meet the definition of misdemeanor trespassing.

Boemio could face further trouble with the agency that licenses Nevada real estate agents.

The Real Estate Division of the Business and Industry Department is “aware of the article and is taking appropriate action,” spokeswoman Elisabeth Daniels wrote in an e-mail. Real estate agents are required to deal fairly with and disclose relevant information to all parties in a transaction and by statute must have “a good reputation for honesty, trustworthiness and integrity.”

Sue Naumann, president of the Greater Las Vegas Association of Realtors, released a statement Tuesday saying that although Boemio had applied for membership, she is not a member of the association. Officials with the organization said Boemio had not taken its ethics class.

Buy-and-bail real estate purchases may not be as common as it sounds in the Time story.

Darren Welsh, general counsel for Prudential Americana Group, said the practice was common earlier in the recession but is rare these days. Lenders, having been burned by buy-and-bail real estate purchases, are more cautious today and won’t sell a buyer a second home unless the buyer can afford both homes.

“They’re on to it,” Welsh said.

HousingWire – As of the end of June, more than 15.2m US mortgages representing 32.2% — or roughly one-third — of all mortgaged properties in the country had fallen underwater in a negative equity position.

The proportion of US mortgages underwater in Q209 came in slightly below the 32.5% seen at the end of March, according to data released Thursday by First American CoreLogic.

The top five states in terms of a proportion of underwater borrowers included Nevada with 66% in negative equity and Arizona with 51% negative equity. Florida followed with 49% underwater while Michigan and California rounded out the top five with 48% and 42% respectively.

“Negative equity continues to be the dominant driver of the mortgage market because it leads to foreclosures in the event a borrower experiences some kind of economic shock such as a job loss, illness or other adverse situation,” chief economist Mark Fleming says.

“Given that negative equity did not increase this quarter and home prices declines are moderating or flattening,” Fleming adds, “we may be at the peak of the negative equity cycle. However, until negative equity recedes and unemployment declines, mortgage risk will continue to be very elevated.”

The aggregate property value for loans in a negative equity position and at risk for default reached $3.4trn in June. California claimed the highest share of underwater loans valued at $969bn, followed by Florida with $432bn. New Jersey and Illinois each held $146bn while Arizona followed with $140bn.

Bloomberg – Almost half of U.S. homeowners with a mortgage are likely to owe more than their properties are worth before the housing recession ends, Deutsche Bank AG said.

The percentage of “underwater” loans may rise to 48 percent, or 25 million homes, as prices drop through the first quarter of 2011, Karen Weaver and Ying Shen, analysts in New York at Deutsche Bank, wrote in a report today.

As of March 31, the share of homes mortgaged for more than their value was 26 percent, or about 14 million properties, according to Deutsche Bank. Further deterioration will depress consumer spending and boost defaults by borrowers who face unemployment, divorce, disability or other financial challenges, the securitization analysts said.

“Borrowers may also ‘ruthlessly’ or strategically default even without such life events,” they wrote.

Seven markets in states with the fastest appreciation during the five-year housing boom — including Fort Lauderdale and Miami, Florida; Merced and Modesto, California; and Las Vegas — may find 90 percent of borrowers underwater, according to the report.

The share of borrowers owing more than 125 percent of their property’s value will increase to 28 percent from 13 percent, according to Weaver and Shen.

Home prices will decline another 14 percent on average, the analysts wrote.

Chicago Tribune – After lowering the $4.2 million asking price of their Lake Bluff estate three times and by more than $1 million, Mike and Marti Palmer flirted with the idea of trading the still-unsold custom home for something smaller.

They own 70 percent equity in the 9,700-square-foot home perched on a wooded ravine near Lake Michigan, and are by no means “distressed sellers.” But they have been forced to think creatively about how to market the 15-room, English-style manse — now going for $3 million — amid a recession that has hit the upper bracket especially hard.

“Unfortunately, we put it up just before everything tanked,” said Mike Palmer, a financial consultant who is pragmatic about the competition. “Everything is on the table.”

Real estate agents say they have never seen prices drop so precipitously when dealing with opulent, often empty high-end homes along the North Shore that cost a small fortune to maintain and keep secure. Though homes in the $400,000-to-$700,000 range have weathered the financial storm better than expected, the glut of eye-popping mega-mansions has owners competing for the attention of a select few.

“It is a phenomenon we’ve never seen in our lifetime,” said real estate agent Jason Hartong with Rubloff Residential Properties, who has seen some multimillion-dollar price tags cut nearly in half.

Nationally, the scenario is much the same. The pool of people wealthy enough to afford such luxury already represented a small sliver of the marketplace. Home transactions priced at $750,000 or more made up 4 percent to 5 percent of transactions before the recession, said Lawrence Yun, chief economist of the National Association of Realtors.

Today, only 2 percent of housing transactions are taking place in the same upper-end price range, Yun said.

“Many of the wealthier people have their wealth tied to the stock market,” he said. “Given that the stock market is down 30 [percent] to 40 percent — even with the recent run-up — that has eaten into their financial resources.”

At the same time, lenders are hesitant to approve so-called jumbo loans that are necessary for some buyers to finance a million-dollar-plus property, said Terese Penza, president and CEO of the North Shore-Barrington Association of Realtors.

Developers, many now in bankruptcy, were caught by surprise, as well. Vacant and unfinished homes dot the Chicago suburbs, with for sale signs that tout the “New Price.”

For instance, a custom-built stone home at 750 Sheridan Rd. in Winnetka priced at $5.5 million in November 2007 is going for $3.3 million.

It’s enough to make builder Farhad Nikamal sick, as he describes the loving attention he paid to detail in planning the two-story reception hall with marble flooring, a Brazilian cherry staircase, hand-carved travertine marble fireplaces and a 1920s French chandelier.

“This has cost me almost $3.9 million,” said Nikamal, leading a tour through the house, protected with wrought-iron gates and a security system.

He believes that many potential buyers are bargain-shopping and have been brutal in taking advantage of the poor economy. “People should understand, right now, this is beyond a bargain,” Nikamal said.

He is considering raffling off the 6-bedroom, 8-bathroom luxury home, which sits across the street from Lake Michigan. “You are not going to see this again,” he said, shaking his head.

Less than a mile away in Glencoe, a renter occupies a 15-room white-brick monolith at 501 Greenleaf Ave. The home, owned by a developer and constructed in 2007, has dropped to $2.8 million from the original asking price of $4.3 million.

Like many other properties in its price range, it features a wine cellar and bar, exercise room with access to a sauna, heated marble bathroom floors and stainless-steel appliances.

“It’s been tough to keep deals together,” said Matthew Schneider, a real estate agent with Coldwell Banker, who slipped off his shoes before walking through the pristine house. “Buyers are really out for the best deal. There are definitely people taking advantage of the situation.”

The sluggish sales remind real estate agents of the last severe downturn in the 1980s, when inflation and interest rates that hit 16 percent contributed to a weak housing market.

Julie Morse with Griffith, Grant & Lackie Realtors views some leveling down of prices as a healthy adjustment after years of an upward spiral. “There has been a softness in the market coming up on two years,” she said.

The number of North Shore homes sold for $1 million or more dropped to 572 last year — down 39 percent from the 935 homes sold in 2005 — a peak year — according to statistics provided by the North Shore-Barrington Association of Realtors. As of June this year, only 154 homes in that category have sold.

Another affluent community, Barrington, has seen 17 homes priced at $1 million or more sell through June this year compared with the 55 sold during the same period in 2005, the data showed.

Those dismal figures could be welcome news for Sheldon Good & Co., a Chicago-based auction house that deals in upper-bracket home sales.

“As the market becomes more challenging, the sellers are more attracted to the auction,” said Michael Fine, executive vice president.

High-end, custom-built homes already are difficult to price because they can’t be easily compared with neighboring homes, he said. During a recession, other factors make it even tougher for sellers to figure out what the market will bear.

Over the last month, he said, he has fielded inquiries from home sellers on the North Shore and in the western suburbs, as well as from such vacation communities as Door County, Wis.

“I would expect we would do double or triple the numbers we have done the last few years,” Fine said.

As they try to sell their home in Lake Bluff, the Palmers are offering an added incentive — setting aside $20,000 for a buyer to help with the property taxes. The annual tax bill is now a whopping $60,000, but they believe that when the property is reappraised the taxes will be lowered, if appealed.

With only one of their four children still living with them, they are eager to downsize and move on with their lives. Meanwhile, they’re trying to be creative but realistic.

“Everyone is in the same boat,” said Marti Palmer, who has been looking at other homes. “You can’t buy if you can’t sell, so we’re open to ideas.”

I’m not sure if you can answer this question. I’ve been reading it to clear up my credit but I have a different question now.

I’ve been renting a house for about 8 years and for the last 5 years I’ve been paying the property taxes. We heard that you can sometimes get a house by paying the property taxes. Is this true?

Lenore (more…)

Daily Business Review – In a move an increasing number of condo associations are expected to follow, the Maison Grande in Miami Beach has filed for bankruptcy
 
Facing almost $1 million in claims by unsecured creditors, a troublesome recreational lease, and at least 100 unit owners delinquent on payments of their fees, the association filed a Chapter 11 petition last month in U.S. Bankruptcy Court in Miami.
 
As one of the first condo association bankruptcies of the current economic crisis, “it’s definitely cutting edge,” said attorney Mark Schorr, a solo practitioner in Fort Lauderdale who represents the Maison Grande association.
 
With residential foreclosures and personal bankruptcies soaring in South Florida, Maison Grande’s decision is expected to become more commonplace, said attorney Aleida Martinez Molina of Becker & Poliakoff in Coral Gables. She is not involved in the Maison Grande case.
 
The significant drop in property values is a key factor pushing associations toward bankruptcy filings, said attorney Robert Kaye of Kaye & Bender in Fort Lauderdale. He represents associations in Broward and Palm Beach counties that are considering bankruptcy. He declined to identify them.
 
“In prior times, there was enough equity in all the properties [in an association] so that assets would likely exceed liabilities,” he said. “Now, since a large percentage of associations are upside down, that’s changing their view about bankruptcy. Their debts have overtaken their assets.”
 
So many of Becker & Poliakoff’s association clients have inquired about filing for bankruptcy, that Martinez Molina has begun studying how a bankruptcy filing would impact associations.
 
“It’s not the answer for everyone,” she said. “It’s not a place to dump a situation to avoid other courts. But if there are special code sections or provisions that can help an association reorganize … it could be a very good forum.”
 
But associations shouldn’t go into bankruptcy without an exit strategy, she said. “They can’t hide under a rock. They have to have a game plan — what provision will you avail yourself of to weather the storm?” Martinez Molina said.
 
Typically, Chapter 11 petitioners are for-profit companies seeking financing as debtors-in-possession to bail themselves out of tough financial straits.
 
But associations are nonprofit organizations with limited budgets and funding. The severity of the recession means credit will remain tough to obtain for some time.
 
“The problem for everyone is the credit markets,” she said. “They are non-existent. But for that, there would be more bankruptcies.”
 
Unit owners’ maintenance fees are the only significant source of revenue for associations, but many owners are themselves filing for bankruptcy, she said.
 
In Maison Grande’s case, the board of directors is confident it can obtain financing to get out from under a burdensome recreational lease, Schorr said.
 
According to court documents, Maison Grande has to pay developer Dorten Inc. more than $112,000 a month for a 99-year lease of the pool and some parking spaces. The lease expires in 2074.
 
Miami-based Dorten, whose principals have included former executives of developer Avatar Holdings, sued the association in April for nonpayment of the lease. In May, Dorten sought to have a receiver appointed to collect the payments from the association. Shortly before a hearing on the receivership, Maison Grande filed for bankruptcy.
 
“If that pushed them into bankruptcy, so be it,” said Dorten attorney Norm Segall of Ruden McCloskey in Miami.
 
The association paid $15,000 in January and $75,000 before filing for bankruptcy but still owes Dorten almost $700,000, he said. 

The lawsuit is on hold while the bankruptcy action proceeds. The association plans to reject the lease and seek a cap on any damages that could result, according to the bankruptcy filing. If an agreement with Dorten can’t be reached to reduce the lease payment or buy the pool and parking spaces, Maison Grande will seek a loan, according to the bankruptcy filing.
 
Keeping the existing pool, even if the lease is rejected, is out of the question, said attorney Tom Messana of Messana & Stern in Fort Lauderdale, who represents Maison Grande in the bankruptcy.
 
A hearing is scheduled in bankruptcy court for July 15, but the parties have agreed to mediate.
 
Association president Ariel Melchor did not return phone calls.
 
Kaye represents a Tamarac condo association that is considering bankruptcy. With half of its 280 unit owners delinquent on their maintenance fees, the association is in the red to the tune of $50,000 per month, he said.
 
Kaye also represents a Palm Beach County condo association that is likely to file for bankruptcy after losing a court case against a roofing contractor.
 
A judgment of $130,000 could grow to more than $300,000 after attorney fees and court costs are added, he said.
 
“They can’t afford that, and 20 percent [of 120 unit owners] already are delinquent in paying fees,” Kaye said.
 
These associations, which he declined to name — and many more — are likely to file for bankruptcy protection as they run out of funding options, he said.
 
The state Legislature’s failure to amend the condo law this year to require lenders to pay a larger portion of past-due fees on foreclosed condos could force more associations into bankruptcy court, Kaye said.
 
State condo law currently caps lenders’ liability at the lesser of six months of unpaid fees or 1 percent of the original mortgage. But lenders don’t pay any association fees until a foreclosure is complete and they take title to a unit.
 
As foreclosure filings have soared in the wake of the housing and financial market bust, they can take almost two years to complete.
 
That means condo associations still must maintain the foreclosed units, and the remaining condo owners must pick up the tab of their non-paying neighbors.
 
“As long as lenders are extending foreclosures into 18 months and two years, the associations are pretty well stuck because there is no cash flow and they can’t raise funds necessary to operate,” Kaye said.
 
NO PAYMENT INCENTIVE
 
Meanwhile, unit owners in foreclosure have no incentive to pay their association fees, said Miami attorney Douglas Snyder, a solo practitioner who represents the 220-unit Greenwich condo in North Miami in its Chapter 11 bankruptcy filed in March.
 
Snyder said the association had been sued by service providers for non-payment of about $750,000. The court ordered the association to begin making payments “and it was bleeding them dry,” he said. “This way, they can handle everyone at the same time.”
 
About 20 percent of the unit owners are in foreclosure. Association president Lidia da Cunha did not reply to an e-mail seeking comment.
 
The financial crisis that is pushing condo associations toward bankruptcy is only going to worsen, said Martinez Molina.
 
“Bankruptcies are not the leading indicator of the economy, they are lagging indicators,” she said. “So people who were hurt with layoffs and cutbacks, those people won’t file for bankruptcy for some time. We haven’t even seen that wave of filings yet. And individual bankruptcy filings affect condo associations.”

What penalties may exist against First American Title, who after settlement, has held my funds for over two years. The issue begin after the checks were deposited, and the bank informed me of a stop payment on the check.

First AM, gave no reason except an investigation was necessary before releasing the funds.  Meanwhile, they refuse to cancel the loan or send the funds to my new loan. This went on for 7-months until a received in the mail an apologize letter, asking me to come back in to pickup the checks. I refused to do this unless they paid for the interest accrued over the 7-month period. It has been a stand off until recently, I received in the mail a check representing my disbursements of $150,000. There was no mention of, or a check for the interest paid over the 2-years without the funds.  Are title attorneys held to some of the same restrictions and compliance as lenders?

Valhola (more…)

MORTGAGEE LETTER 2009-15

TO:  ALL APPROVED MORTGAGEES

SUBJECT:  Using First-Time Homebuyer Tax Credits for the Downpayment 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) provides for as much as an $8000 tax credit to qualified first-time homebuyers.  FHA supports this important Administration initiative to promote homeownership.  This mortgagee letter provides:

• Basic information on the first-time homebuyer credit obtained from the Internal Revenue Service (IRS) website.  Complete information on how the first time homebuyer tax credit works, including the eligibility requirements for the tax credit, the amount of the tax credit that a first-time homebuyer may be eligible to receive, and how a homebuyer may claim the tax credit is available on the IRS website at irs.gov/newsroom/article/0,,id=204671,00.html?portlet7.
• Guidance on how Federal, state, and local government agencies, nonprofits instrumentalities of government and FHA-approved nonprofits may assist homebuyers that are eligible for the tax credit.

I.  About the First-Time Homebuyer Tax Credit (from the IRS website)
(Please check the IRS website to ensure you have up-to-date information)

Amount of the tax credit:

Generally, the credit is the smaller of:

• $8000 or
• 10% of the purchase price of the home
• A phase-out of the credit begins when the taxpayer’s modified adjusted income exceeds $75,000 or $150,000 if married filing jointly, and is eliminated completely at $95,000 or $170,000 if married filing jointly.
• As a “refundable” tax credit, taxes owed by or refunds due to the taxpayer are factored into the calculation.

Claiming the tax credit:

Filing form IRS 5405 [available at irs.gov/pub/irs-pdf/f5405.pdf ], “First-Time Homebuyer Credit” along with filing:

• The 2008 tax return (if not yet filed)
• An amended 2008 tax return (if already filed)
• The 2009 tax return

Eligibility for the tax credit

• First-time homebuyers, defined by IRS as those not having had any ownership, including that with a spouse if married, during the three-year period ending on the date of purchase.
• Owner-occupants who purchase a principal residence and close on the mortgage before December 1, 2009.
• First-time homebuyers must purchase the property from a source unrelated to them, i.e., they cannot purchase the house from a spouse, parent, grandparent, child, or acquire the property by gift or inheritance and obtain the tax credit.

II. FHA Guidance

The Tax Credit:  Secondary Financing: 

Entities that can offer tax credit advances with second liens.

• Federal, state, and local governmental agencies and nonprofit instrumentalities of government.
• FHA-approved nonprofits.

Additional information about these entities:

• Government agencies and instrumentalities of government are described in handbook HUD-4155.1 REV-5, paragraphs 1-13 A and B.
• FHA-approved nonprofits can be found, per each Homeownership Center jurisdiction, at: hud.gov/offices/hsg/sfh/np/np_hoc.cfm

How the secondary financing works:

• The tax credit advance, when combined with the FHA-insured first mortgage may not result in cash back to the borrower.  The second lien may not exceed the total needed for the downpayment, closing costs and prepaid expenses.
• The tax credit advance must provide that if the borrower does not repay the amount borrowed by the designated deadline, that principal and interest payments begin automatically.
• If payments on the tax credit advance are required, they must be included in qualifying the borrower and, when combined with the first mortgage, cannot exceed the borrower’s reasonable ability to pay.
• If payments on the tax credit are deferred, the deferment must be for a minimum of 36 months in order for the payment to not be included in the qualifying ratios.
• The tax credit advance second mortgage must not provide for a balloon payment before ten years.

The Tax Credit: Short-Term Loan: 

Entities that can offer the tax credit advance with short-term loans:

• Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.

How the short-term tax credit advance loan works:

• The amount that may be borrowed in this manner may not exceed the anticipated tax credit due the homebuyer based on the computations of form IRS 5405.
• Fees and charges for the tax credit advance loan are not to exceed a nominal amount necessary for preparing and administering the loan.

If you have any questions regarding this mortgagee letter, please call FHA’s Resource Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner

I am a realtor and recently wrote a contract on a listing that was a short sale but the seller’s son entered into an option contract with him to sell the property. The counter offer on the purchase agreement came back with not the seller’s signature but the land trust signature. They are now asking for a deposit of $5,000-$1500 of which they say is non-refundable and the remainder will be non-refundable unless the bank can’t close- What do you think?

Lise (more…)