The Orlando Sentinel reports from Florida. “Sorrento Springs, an upscale development amid the lush, rolling pastureland of rural Lake County…has an 18-hole golf course, a resortlike clubhouse, tennis courts, walking trails and neat rows of two-story, earth-toned homes with architectural flourishes. Now it is rife with foreclosures.”
“‘When we bought, there was this rumor going around that there was going to be a highway through there that would connect to Interstate 4,’ says Raza Dhanji, a 38-year-old Lake Mary businessman who bought four homes in the subdivision as investments. In fact, the proposed $2 billion Wekiva Parkway is at least 10 years away even now.”
“Dhanji assumed he could flip the houses quickly and make a tidy profit, so he didn’t worry about the interest rate on the loans. But two weeks after he closed, Engle Homes, the builder, dropped the price on the same models he bought by as much as $60,000. Dhanji not only couldn’t sell; he couldn’t find renters for two of his homes either.”
“Now he’s paying $10,000 out of pocket each month just to cover the mortgages, even as the homes’ market value plummets.”
“‘I can’t say it’s not my fault,’ he says. ‘I should have known better. But at the same time, I was misled. Now that I look back, the fact that the builders all of a sudden started dropping the prices tells me that they knew something I didn’t.’”
“Ufuoma Omosebi was pregnant with her second child in 2004 when she and her husband had their Terragona Drive house built. They got to live there just over a year and a half. Then Omosebi’s husband had to move to North Carolina for a job. She stayed behind to sell the house, which had been appraised at $425,000.”
“Six months later, after slashing the price to $330,000, she gave up and moved anyway. The payments were $2,000 a month.
“The worst thing was that the developer started selling the exact same home for a cheaper price — and they were giving the real-estate agent $10,000 bonuses and 10 percent commission,’ she says. ‘How could we compete with that?’”
“They rented the house, but their tenants broke the lease, and soon the couple had used up their $20,000 life savings and taken out another loan. Finally, in October of last year, the Omosebis declared bankruptcy.”
“‘I still can’t look at a picture of it without crying,’ Omosebi says. ‘I wouldn’t wish this experience on my worst enemy.’”
The Palm Beach Post. “Ameribank, the troubled West Virginia bank that saw a lucrative future for itself in Palm Beach County, is closing the branch it opened in 2003, conceding it should never have moved to Florida in the first place.”
“‘There was no reason to ever open a branch in Palm Beach County,’ said David Hartman, the bank’s chief financial officer, who was hired in October as part of an attempt to save the financially challenged bank. ‘We’re not a Florida bank. You shouldn’t go to areas outside your market that you don’t know.’”
“The loans were actually made by Lending One, a Boca Raton mortgage broker. The no-money-down one-year home mortgage and renovation loans were designed for speculators who wanted to buy fixer-uppers and flip them for sale at a higher price.”
“‘I am sorry I got involved,’ said Kim Knaisch, a New Orleans-area homeowner who borrowed around $300,000 from Lending One to renovate three houses in an area ravaged by Hurricane Katrina in 2005. Two of the houses are now in default.”
From Highlands Today. “It was like a slice of heaven for Gary and Bonnie King. A couple of years ago, they found the home they loved in a quiet subdivision of a rural town. Then, last year, trouble in paradise. Their next-door neighbors moved out, abandoning their $259,000 house, leaving it to the bank.”
“Months went by, said Bonnie King. The lawn went unmowed. The swimming pool turned black. ‘It’s a breeding ground,’ she said.”
“The two-bedroom, two-bath house next door to the Kings, said broker Chip Boring, is selling for $139,900. ‘In November 2005, it sold for $259,000.’”
“‘It’s got a screened pool and hot tub in the back,’ said Bonnie King, hoping someone will read this and realize it’s an incredible bargain.”
“What caused the foreclosures? ‘A lot of people bought houses who couldn’t afford the payments,’ said Boring.”
“And then there were the speculators. ‘They bought houses or built houses and never lived in them, and never intended to,’ he said. They were simply flipping houses for the profit.”
The Tampa Tribune. “Hillsborough County property owners may pay a little more in school taxes while the district’s budget shrinks. At the same time, the district is reducing its total budget by more than $46 million.”
“‘Property taxes are down, foreclosures are up, the value of houses is down,’ said Gretchen Saunders, the district’s budget director. ‘We’ve got a lot of property out there where people aren’t paying their taxes.’”
The St Petersburg Times. “After a three-year struggle that left them bankrupt and nearly $40-million in debt, the developers of Trump Tower Tampa still aren’t ready to wave the white flag.”
“At a creditors’ hearing in downtown Tampa on Friday, Frank Dagostino, head of tower developer SimDag, proposed partnering with an undisclosed cash-rich investor to resurrect the tower as a condo-hotel project.”
“The deal remains a long shot. Despite a letter of intent from the joint venture partner, SimDag representatives said the purchase offer has been too low to take seriously.”
“If the joint venture falls through, SimDag raised the possibility of auctioning off the riverfront lot. ‘If we have to do a fire sale, we won’t be able to maximize the value,’ said Dagostino, who added that the hunt for financing has brought him into contact with all varieties of scams and con men.”
The Herald Tribune. “As the once-tight office market recedes in the rear-view mirror, building owners throughout the region are having to negotiate on price and terms to land elusive tenants.”
“‘A lot is related to the construction industry,’ said Tom Streck, a commercial agent in Lakewood Ranch. ‘I don’t think people realize how much of our economy is related to construction. The slowdown has not only impacted builders and architects, but all their suppliers and vendors. Then there are interior decorators, furniture retailers, attorneys and mortgage brokers. We’re so tied to the new home industry that when it collapsed, there were a lot of ripple effects.’”
“In addition to the downturn, there also was some overbuilding. ‘A lot of the problem is new construction. It’s not just people leaving,’ Streck said. ‘Once permits are approved, people have a certain time to build and they often go ahead with their plans.’”
“Joe Hembree, who owns a Sarasota-based commercial brokerage, said he stopped building office condos two years ago. ‘It was such a hot market that a lot of people jumped in,’ Hembree said.”
My Sun Coast. “Can you get a loan? Coldwell Banker’s senior loan officer, Joan Marie Bazo, says it’s a lot harder than it used to be. ‘The lenders got really lax over the last few years. They didn’t verify anything, they were doing loans for people who could not verify income or couldn’t provide asset verification. They won’t do them anymore.’”
“Ray Suplee, chairman of the Landmark Bank, says no more 100% financing. ‘You basically need to put down 30%, and upon reflection, 30 years ago you had to put down 30%, so it’s not anything new. It’s just a cycle.’”
Although with mortgage insurance you might be able to reduce your downpayment. “You can get a conventional loan with 5% down, but you have to have at least a 680 credit score or higher because the mortgage insurance companies won’t insure them. If you have below a 680, they are requiring 10% down for a primary residence,” says Bazo.
“Bazo says says FHA loan limits in the Sarasota-Bradenton market are now $442,500, ‘Anyone can get a loan if they qualify. If they do not qualify for the loan, then they shouldn’t be taking it out in the first place. That’s how we got where we are now.’”
“Suplee says he doesn’t believe the real estate market has hit bottom yet, and neither do a lot of buyers.”
The News Press. “Lee County landlords have begun slashing rents and using other incentives to boost sagging occupancy rates brought on by a limp economy. ‘It’s a smorgasbord of concessions,’ said David Malt, broker for Malt Realty, a Fort Myers-based manager of multi-and-single-family home developments and homeowners’ associations.”
“The ante has been upped at the Lakes at College Pointe, a collection of 424, one-to-three-bedroom apartments in south Fort Myers. New tenants there receive what amounts to three months free rent for a 13-month lease and security deposits are just $300 instead of a month’s rent.”
“Given the bloated rental market and the slow economy, property manager, Tom Goodspeed predicted it will be a long time before rents return to pre-2008 levels.”
“‘If things don’t look better, we may have to go back in the other direction,’ he said. ‘It (rent) may go down. I don’t see it going up. We’re just trying to compete with everybody else and hang on to our small share.’”
“In an ironic twist, the economic slump and housing market woes are also providing some salvation for landlords, who can point to the rising number of foreclosures as a source of new tenants.”
“Daniels View was the crown jewel in rising real estate star Samir Cabrera’s ambitious group of investments in 2006, a chance for investors to get in on a hot land deal in Lee County. Two years later, investors are settling for pennies on the dollar and level allegations of fraud in a civil suit against Cabrera involving the 80-acre project in south Fort Myers.”
“‘I’m not saying Samir should be put to death, but he should go to jail,’ said Robert Caione, of New Jersey, who has a $25,000 investment in Daniels View. ‘I told him, ‘This is my life’s savings. ‘He told me, ‘Worst case, Mr. Caione, you’re going to make four times your money in a year.’”
“Now Caione…has been out of work for 18 months, in part, he says, because of the stress from his investment losses. He said he also lost about $40,000 in another land deal in Port Charlotte unrelated to Cabrera or Daniels View.”
“Caione said the cases may be complicated but the lesson he learned is simple. ‘I will never invest outside of New Jersey again,’ he said.”
The Daily Business Review. “Nearly 16 years after Hurricane Andrew devastated the city of Homestead, the town in South Miami-Dade is in the path of another potential storm: A deluge of residential foreclosures and accompanying economic turbulence.”
“One Homestead ZIP code – 33033 – leads Miami-Dade County with 263 homes in different stages of foreclosure. And 109 homes in that ZIP code have already been taken back by lenders.”
“Foreclosures are pushing prices down more than 50 percent of what they sold at during the height of the housing boom, said real estate broker Hagen Hendrix. He markets repossessed homes in Homestead for lenders. One of his lender clients dropped the price of a two-bedroom town house from $189,000 to $60,000, he said.”
“The town house is in move-in condition on a man-made lake and still isn’t selling, he said.”
“Homeowner Antonio Sueiras’ lender recently began foreclosing on his three-bedroom house near the Homestead Air Reserve Base, one of the few neighborhoods he could afford when he purchased it in 2003.”
“Sueiras paid $140,000 for the 1,564-square-foot house and put down $42,000. He comfortably paid close to $1,000 a month in mortgage and property taxes. But as property values began to rise, he made ends meet by refinancing his home several times, more than doubling his monthly housing expenses.”
“Suddenly, his mortgage payments became too expensive. He said his monthly mortgage payment is $2,200, but he makes only about $600 every two weeks. He plans to abandon the house by September. Sueiras said he owes close to $285,000, and the house is worth less than $250,000 so he won’t even try to sell it.’
“‘I am done with it,’ he said. ‘I just want this nightmare to end. The bank can take the house at once. I work and I work, but it never gets better.’”
“Carmen Miranda said he can barely afford the two mortgages he has on his five-bedroom, 6,062-square-foot home he shares with his wife and their 2-year-old daughter in the new Portofino Lakes subdivision.”
“When Miranda bought the house for $272,844 in 2004, he could easily afford it. As the housing market boomed, so did home prices, and he easily refinanced the house. Now, however, he’s had to tap into his savings to cover the second mortgage, he said.”
“‘I will be able to hang on for six to eight months,’ said Miranda.”
“Despite his troubles, Miranda is still betting on Homestead’s real estate market. In May, he purchased a bank-owned house in Portofino Estates. Miranda paid $212,000 for the four-bedroom home, a deep discount from the $285,000 the prior owner paid for it in March 2005. Miranda financed the deal with a $169,000 loan from Sky Investments in Deerfield Beach, according to public records.”
“He plans to rent out his investment property. ‘If I end up losing my home, at least I’ll have the house I just bought,’ said Miranda.”
The Miami Herald. “Amid mounting criticism of his leadership, Florida’s top mortgage industry regulator…Don Saxon, vowed to work with state Chief Financial Officer Alex Sink to tighten mortgage broker licensing standards.”
“Sink, however, has included Saxon’s resignation on a list of reforms she’s demanding to overhaul the embattled agency.”
“The call for Saxon’s ouster was prompted by a Miami Herald investigation that showed more than 10,000 criminals have been allowed to peddle home loans in Florida since 2000. Among them are bank burglars, cocaine traffickers and identity thieves who have gone on to commit at least $85 million in mortgage fraud, the newspaper found.”
“A Miami Herald analysis of the OFR’s database of mortgage professionals showed tens of thousands were denied for technical reasons, such as failing to submit a complete application.”
“But the agency issued only 28 final orders between 2000 and 2007 denying applicants based on their criminal records, the newspaper found.”
“The issues are expected to surface next Tuesday, when Crist, Sink, Attorney General Bill McCollum and Agriculture Commissioner Charles Bronson gather for an already scheduled meeting of the Financial Services Commission. Sink said she’ll also push for Saxon’s resignation — a demand she issued in a press release on Sunday.”
“‘When you’re licensing a high number of brokers, sure, you might expect a few to slip through the cracks. But not thousands. Somebody was asleep at the switch,’ Sink said.”
