Bush mortgage plan a modest bailout

President Bush extended a helping hand Friday to thousands of homeowners caught in the financial bind of escalating mortgage rates. It’s a limited offer to people with good credit and steady jobs, but it’s a sign that the federal government can no longer the ignore the growing tide of foreclosures -- nationwide but especially in Florida -- that has thrown the financial markets into turmoil and depressed real-estate sales. "What the president did today is provide the opening shot in what will be an extended debate that ultimately will result in some real money being put to work," said stock analyst Dick Bove of Lutz in Hillsborough County, who follows financial companies for the brokerage Punk Ziegel.

About 240,000 families would qualify for the program, according to the administration’s analysis, though some groups estimate as many as 2-million households face potential foreclosure.Those most vulnerable may benefit little from the administration’s offer.

"You’re talking about helping people who have relatively good credit and that’s not the problem," said Scott Brown, senior economist at Raymond James & Associates in St. Petersburg. The highest foreclosure rates have been among borrowers with "subprime" credit and investors who bought houses and condos expecting to resell them quickly at a profit. Investors are a huge part of the problem in Florida, where about a fourth of the investors with good credit are in default. They wouldn’t get a bailout from Bush.

Here are the key points of the president’s proposal:

•Launch "FHA-Secure" program to refinance loans for people who have good credit but fall behind on payments when their mortgage rates adjust.

•Allow FHA to reduce down payment requirements and insure larger loans.

•Change tax code so cancellation of mortgage debt on primary residence would no longer be considered taxable income.

•Work with lenders and nonprofit groups to provide mortgage education and expand refinancing options.

•Support efforts to improve mortgage lending standards and disclosure requirements.

-- Helen Huntley

Countrywide home loans: The inside story

HERE is a good story that ran in the New York Times this week digging into the business practices of Countrywide Financial Corp. Why is it important? Countrywide's the nation's top home mortgage lender and a big player in the Tampa Bay area. The recent credit crunch has forced the company to borrow billions of dollars in emergency funds.

Facts to consider about property tax reform

We're supposed to vote Jan. 29 to decide whether to create the option of a super homestead exemption that would cut Florida property taxes by billions of dollars.

If you've been listening to some local governments, the cuts will place them on a starvation diet when it comes to popular services like police, fire fighting and libraries.

So it's worth looking at the actual tax money local government took in during the housing boom that ran roughly from 2000 to 2006.

Decide for yourself whether public coffers are svelte or portly. Here's a selection of taxing bodies with their cumulative increase in tax income during those 6 years:

LARGO: 152 PERCENT

CLEARWATER: 93 PERCENT

ST. PETERSBURG: 78 PERCENT

PINELLAS COUNTY: 77 PERCENT

PINELLAS COUNTY SCHOOLS: 89 PERCENT

Group forms against mortgage bailouts

A group calling itself Tax Payers Against a Wall Street and Mortgage Bailout is urging the Democratic-controlled Congress to avoid bailouts for bad home loans. The thrust of the argument seems to be that many of these borrowers were gamblers buying above their means. Read the on-line petition yourself.

Cautiously optimistic news on home inventory front

The number of homes listed for sale in the Tampa Bay area keeps going down.

As of Monday, local home inventory dipped 2 percent from a month earlier. That improvement places Tampa-St. Petersburg-Clearwater in the top five among 55 real estate markets analyzed by New York consultant Zelman & Associates.

Zelman says our area has about 45,000 homes for sale. It's still an unprecedented amount, but its shrinking.

Why does it matter? An oversupply of homes relative to demand is depressing prices and hobbling an industry that accounts for thousands of jobs.

Other parts of Florida arent' so lucky. Jacksonville's growing inventory places it near the top of the list. Miami's inventory of homes for sale, about 113,000 according to Zelman, landed it in the middle of the pack.

One word of caution: Watch out for "hidden inventory." It includes unsold builders' models and foreclosed homes being sold at auction.   

Tampa, St. Petersburg escape list of most vulnerable housing markets

The folks at Forbes.com have done a decent job tracking the best and worst housing markets. Recently they published a list of "resilient" markets that singled out the Tampa Bay area for guarded praise.

They followed up with a list of vulnerable housing markets on which some of our venerable Florida sister cities fared poorly.

Nightmare scenario from local title company

Got a call from Jody Tutt. She runs Southern Title Services in Seminole.

She got stung badly when HomeBanc Mortgage Corp. declared bankruptcy on Aug. 9.

Tutt was handling a home closing and processing a $416,000 check from HomeBanc. Hours later came the bankruptcy announcement.

The HomeBanc check bounced. Tutt herself, as the funding agent, was legally obliged to make good on the missing $416,000.

She had to draw on her own line of credit and is now the mortgage holder for the new home buyer.

She's not alone. According to Tutt, HomeBanc's funding cutoff affected 136 other transactions in Florida, Georgia and North Carolina.

Word to the wise: If you're closing on a home, better have the money wired over. As Tutt can tell you, checks are risky business during the current credit crunch. 

Blaming the media for hurting housing

I couldn't resist addressing media culpability in helping sink the real estate market. Let's just say scribblers and newscasters are damned if they do and damned if they don't.

Run a positive housing story? We're labeled dupes of the Realtors and builders. A negative story is supposed proof of a conspiracy to scuttle a major local industry.

Here's a new take from Les Brown, a nationally renowned motivational speaker. He tattooed the media for its downbeat coverage at a recent rally in Orlando before Florida real estate people.

"Don't allow the mind virus communicated by the media to infect you," Brown proclaimed last week in what was meant to inspire Realtors to sell the pants off one another.

I supposed being accused of spreading viruses is better than being called pond scum. Thanks, Les.

Cause for hope in housing? Check out Sarasota

Last year Sarasota's housing market was the state's basket case.

But look what's happened: For several months running the real estate market to the south has been outperforming most of the state.

The area's house and condominium sales were up 7 percent from July 2006 to July 2007. It beat the stuffing out of the Tampa Bay area, where sales declined 28 percent the same period.

Here's the deal: Sarasota entered the slump about a half year ahead of Tampa-St. Petersburg-Clearwater. And it may be shaking off the doldrums sooner. Sarasota sales are now better than they were even in the early boom year of 2002.

"We were on the front end going in and appear to be on the front end going out," said Kathy Roberts, head of the Sarasota Association of Realtors.

Read HERE for more details about this development that might, just might, portend improvement for Tampa in another half year.

Nothing to cheer about: July housing numbers

Okay, July existing home sales numbers are in. While far from stellar, they could have been worse.

According to the Florida Association of Realtors, Tampa Bay area single family home sales dropped 28 percent year over year, from 2,871 to 2,068. Condos sales showed less of a drop, falling 5 percent, from 569 to 543.

Local median sales prices fell 7 percent on single family homes, but rose 3 percent for condos.

Here's a chart showing single family homes sales broken down by Florida metro areas. Here's a related chart showing condos.

Keep in mind that year-to-year drops in sales will probably appear less dramatic as the year progresses. We've reached the point where we're measuring 2007 against the weak tail end of 2006.

ONE FUNNY NOTE: Naples Realtors refused to release their numbers to the state association. Naples got singled out last year as the most overpriced real estate market in the United States. You're not trying to hide something, are you Naples?

Donald Trump vs. SimDag: The saga continues

New York's blustery mega-landlord Donald Trump hasn't eased up on his former partners in the busted deal to build a luxury condo tower on Tampa's Hillsborough River.

You'll recall The Donald agreed to lend his Trump brand to the $300-million, 52-story high rise, but left the nuts and bolts to a local team called SimDag LLC.

After more than a year of delays, Trump pulled his named from Trump Tower Tampa in May. He reinforced his displeasure by filing a lawsuit seeking more than $1-million.

Well, it's three months later. SimDag, led by developer Frank Dagostino, still hasn't answered the legal complaint from the orange coifed tycoon.

SimDag has hired the well-connected Fort Lauderdale law firm of Becker & Poliakoff. It's begged for more time to address Trump's lawsuit.

SimDag claims the project still has a heartbeat, but a Trumpless Tower probably isn't what many of the millionaire buyers bargained for.

   

The Mouse isn't roaring for Orlando condos

Tampa Bay area real estate getting you down?  We're not alone. Here's a story about the condo slump in Orlando.

Even Mouseville isn't immune.  Walt Disney is probably spinning in his cryogenic freezer.

Credit scores: Average Joes no longer need apply

Anyone got a lead lined suit? Don't think your good credit score protects you from the fallout from the mortgage meltdown.

After getting whacked by defaults on junk mortgages, lenders are requiring much higher scores for borrowers to qualify for the best rates.

Here's roughly how it works these days: Grade A borrowers now generally need credit scores of 750-760, up from 660-680 two years ago.

Borrowers slightly less credit worthy, the so-called "Alt-A" folks, will need scores of roughly 680, not 620 like before.

As for subprime borrowers, well, you probably know that story. Most of them won't be buying any houses for awhile.

All the toxic housing news that's fit to print

Speaking of shaky home loans, one national Web site tracks lenders tripped up by the slippery housing market. Keep in mind this site delights in accentuating the negative. For what it's worth, here's a link.

Builders just can't say no

Stunner from the Florida Association of Realtors convention that ended Sunday in Orlando: Almost two years after the housing boom ended, Florida builders are still force feeding houses and condos into the overstuffed market.

The news comes from Realtor's guest economist Ted Jones, who explained that new home construction permits in Florida are running at an annual clip of about 100,000 this year. That's half what it was in 2005, but Jones thinks it should be much lower.

"We're dramatically overbuilding this state still," he said.

Jones explained that many  builders overpaid for land at the top of the market and have little choice but to plow forward, hell or high water.

My take on the issue appeared in a column that ran Sunday in the St. Pete Times.

Realtors handing sellers pink slips

Better lower your home price or your Realtor might just fire you. Come again?

One of the hot topics of the just-concluded Orlando Realtors' convention was home sellers' inability to attract buyers. The biggest reason: Sellers set their prices unrealistically high, as if the boom never ended.

Here's Ted Jones The Economist talking to Realtors about homeowners who won't listen to the low-balling logic of the current market: "Lose them. There are times when it pays to fire a customer."

Here's his argument. If you divide the number of homes on the market by monthly home sales you can calculate what Realtors call "monthly supply." It's how long it would take, based on current sales, to exhaust the supply of homes on the market. Look at this chart:

More than a 12-month supply = Falling prices

Eight to 9 month-supply = Stable prices

Less than a 6-month supply = Rising prices

The Tampa Bay area's housing supply has been stuck well above 12 months. Draw your own conclusions.