Surprisingly, the Sun-Sentinel published one of the better articles on the foreclosure crisis I’ve seen. They report:
“Foreclosure filings across South Florida continue to rise, as hopes for a housing recovery have fizzled.”
“The number of people behind on their mortgage payments in July almost tripled in Broward County from a year ago, from 517 to 1,430, according to Plantation-based Realestat.com. In Palm Beach County, the number more than tripled from 298 to 1,063.”
“While actual foreclosure sales aren't increasing as fast, experts say lenders, court clerks and lawyers are having a hard time keeping up with all the filings. They expect a significant surge by the end of the year as more adjustable-rate mortgages come due.”
“Dozens of lenders nationwide have closed as borrowers default on loans. Just this week, American Home Mortgage Investment Corp. of Melville, N.Y., announced plans to shut down, becoming the second-largest residential lender to fail this year after Irvine, Calif.-based New Century Financial Corp.Many foreclosed homes will go back on the market, adding to the glut of properties. Palm Beach and Broward counties have roughly triple the number of homes for sale now compared with two years ago, according to the Miami-based Keyes Co.”
“As a result, some experts who had predicted a housing rebound this year now insist it won't happen until later in 2008 or even 2009.”
The Palm Beach Post reported on layoffs in Boca Raton in response to recent subprime losses:
“First NLC Financial Services is laying off nearly half of its 1,340 employees nationwide, including more than a third of the headquarters staff of 323, in what company officials say is an attempt to turn around the money-losing business.”
“Employees of the subprime lender were notified of the layoffs Wednesday, less than a week after Sun Capital Partners, a buyout firm based in Boca Raton, agreed to buy 80 percent of the business for $60 million.”
“It is the second financial firm in the area in less than a week to announce layoffs.”
“Most of the 100 people laid off July 27 by Lydian, the Palm Beach-based private financial services company, were employed in the mortgage originations area.”
“Tighter lending standards and Wall Street's avoidance of subprime securities have meant fewer loan originations overall. First NLC Financial estimated in paperwork filed with regulators in May that its loan originations this year would run about $2 billion, compared to $8 billion last year.”
In related news, the St. Petersburg Times reports:
“Jittery home-mortgage lenders are cutting off credit or raising interest rates for a growing portion of Americans, extending well beyond the market for subprime loans for people with the weakest credit records.”
“‘In the past half-dozen years, if you could fog a mirror, you could get a loan,’ said Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach. ‘Now we're starting to see that a lot of those loans that were made probably shouldn't have been made. Investors and lenders are taking a more conservative stance.’”
“A worsening credit crunch threatens to put further pressure on the struggling housing market, where prices are flat to declining in much of the country.”
“The short-term pain is that it shuts potential buyers out of the market, McBride said. ‘The long-term gain is that the delinquencies and foreclosure we're seeing now won't continue in the years to come,’ he added.”
“Lenders say what's making them run the fine-tooth comb on loan applications is the disappearing appetite of mortgage-bond investors for risky mortgages. That includes those dubbed ‘Alt-A,’ a category between prime and subprime that often involves borrowers who don't fully document their income or assets, or those buying investment properties. Lenders are tightening standards and ‘raising rates like crazy,’ said Melissa Cohn, chief executive of Manhattan Mortgage, a New York mortgage broker.”
Yet, despite the continued evidence of bad news, Ronald McGregor of Wellington, wrote a letter to the editor of the Sun-Sentinel where he declared:
“Now may be a great time to buy a home. The Florida Legislature has passed the largest property tax cut in history. According to a news release, lawmakers recently approved a five-year, $15.6 billion cut in property taxes for our state. When you rent rather than own a residence, the landlord gets all of the income tax benefits. These include deductions for mortgage interest and real estate taxes. These can be sizable amounts that will reduce your taxable income.”
“Right now we are in a buyers' market, with many motivated sellers. This will not last forever. The state Legislature's largest property tax cut in history should improve the housing market. Therefore, now may be the time to buy a home before prices start to go up again.”
Embarrassingly, the Palm Beach Post printed a nearly identical letter from Mr. McGregor, just one day earlier. I guess the two papers do not crosscheck their letters.
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5 comments:
There more and more layoffs due to the housing bubble.
I work in HR at a mid-sized company in Ft. Lauderdale. We have been absolutely flooded with resumes from realtors, mortgage brokers, and bankers.
It seems that they are all out of work.
I bet you $5 that Ronald McGregor is a starving Realtor.
I'll take your bet Gator Ted, but unlike the lenders I've been reading about, I will require some documentation in order to verify that you can indeed pay out, in the very unlikely event you lose ;)
But seriously, run the name through PB County Property Appraiser - 11 Properties all in Wellington!
It's none of my business (thankfully), but either he's a multi-multi-multi-millionare, or this is the best example ever of putting all your eggs in one basket.
I wonder if the Miami Herald and the Martin & Saint Lucie County rags have received the same letter?
I'm no CFA, but one word: DIVERSIFY
Stevenpatrick,
Very nice find!
That guy is really a F@CKED buyer. He owns a dozen houses in Wellington. No wonder he is busy writing letters to the editors begging them to continue their real estate cheerleading.
Acutally, he could have done really well. Half of his homes were bought before 2002 and probably are loaded with equity. Unfortunately for him, it looks like he went on a buying spree in 2005 and 2006 and is looking at some significant losses on those homes.
Kenny Rogers said it best, "You've got to know when to hold them, know when to fold them."
McGregror should have know when to "run away."
Since it turns out that McGregor is an investor and not a Realtor, I do owe you $5. I will submit my stated-income, 100% financing, 3/1 ARM with a 1% teaser-rate, loan application immediately. Did I mention that I make more money than Warren Buffet? Or, my wife Morgan Fairchild? Yeah, yeah, that's the ticket.
Hey Gator Ted,
I didn't look to closely at the purchase dates, but it's certainly time to "fold 'em" and "run away".
Still may be some upside, since some were purchased earlier. But, most people will probably hang on 'til the bitter end.
Please, keep the five-note (spend it at the purple porpoise). I've been renting in SoFla for the last several years, so thankfully the wolf isn't at the door.
I plan to eventually buy a house, and some of price discounts I've seen on the featured f@cked buyer reports on this blog are starting to make it a bit more tempting, as there are some rather substancial declines.
However, when you do some additional research and come across cases like this, I think I'll have to wait another year, if not two.
I'm sure this guy isn't the only one invested in a bunch of properties in one town or in SoFla in general.
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