Today's Local Real Estate News: "The renters are collateral damage in the mortgage crisis."

The Miami Herald reports on problem that will only get worse in 2008, tax deliquencies:

"The property-tax bill was the final blow for Astride Hercule -- $5,400 due April 1, on top of mortgage payments that were set to soar on her Miami duplex."

'''I absolutely could not pay it,' said Hercule, a mental-health technician at North Shore Medical Center."

"So, she didn't."

"Unpaid property taxes in Miami-Dade and Broward counties reached new highs this year, as thousands of homeowners tumbled into foreclosure, shrugged off bills on investment properties they couldn't unload, or, like Hercule, found it impossible to make lump-sum tax payments that their boom-era mortgages didn't require them to put in escrow. Total unpaid amount: $365 million."

"In Miami-Dade County, 41,544 residential property owners -- one of every 16 households -- failed to pay their 2006 property-tax bills. That's an increase of 41 percent from the year before, according to an analysis of county tax data. In Broward, the number grew 54 percent to 29,962 -- about one per 21 households."

"In both counties, roughly 65 percent of unpaid accounts were from investors, second-home owners, and others with no homestead exemption, the analysis showed."

The Palm Beach Post reports on a study of ARM resets:

“First American CoreLogic of Santa Ana, Calif., says this question is ‘probably the most important issue in the analysis of real estate today.’”

“Christopher Cagan, the company's director of research and analytics, wrote the report.”

“It looked at 26 million first mortgages throughout the country originated between 2004 and 2006 - and worth nearly $5.4 trillion in debt.”

“The study focuses on the 8.37 million adjustable-rate mortgages due to reset in the next five to seven years.”

“(Obviously, the mortgage meltdown mess is not going to be over anytime soon.)”

“‘Mortgage payment reset is expected to have its impact into the early years of the next decade," the report says.”

“The study predicts an estimated 1.1 million mortgage foreclosures spread out over the next seven years - about 13 percent of the ARMs originated through purchase or refinance from 2004 to 2006, representing $326 billion of debt.”

“‘After foreclosure and resale, it is projected that about $112 billion will be lost to remaining equity, lenders and investors over several years," the report says.”

The Sun-Sentinel reports on North Lauderdale’s efforts to avert foreclosures:

“With so many homes in North Lauderdale in foreclosure, city leaders are seeking to help financially troubled homeowners.”

“They plan to create a new staff position, Neighborhood Improvement Coordinator, who will advise residents how to avoid foreclosure, guide those about to lose their homes and deal with the rash of abandoned properties in the city.”

“‘If we take a proactive approach, we might be able to head it off at the pass,’ said Jesus Valdes, assistant director of community development.”

“Lenders have repossessed at least 57 homes, the owners of 90 foreclosed homes are trying to sell them and at least 325 additional homeowners are in danger of losing their homes, he said.”

Miramar is taking similar steps to assist troubled borrowers according to the Sun-Sentinel:

“The city is seeing an increase in homeowners applying for help with late mortgage payments through its foreclosure prevention program.”

“In September 2006, Miramar joined a growing number of cities setting aside state housing funds to help residents get caught up on their house payments.”

“Under the program, the city offers some homeowners a deferred loan of up to $10,000 to get current on their mortgages and cover interest, taxes and insurance fees.”

“But funding is limited. So far, 24 homeowners have applied for assistance, said Gus Zambrano, the city's director of economic development and revitalization. Of those, one was granted a $10,000 loan, the maximum allowed, and four applications are pending.”
“But Zambrano said not all homeowners will qualify for assistance. Zambrano said homeowners have to be able to show that with the assistance they would be able to afford their mortgage.”

“‘We find that there are a lot of bad loans that people could never really afford,’ he said. ‘We can't help those people because they can't pay the loan back. With our program you have to be able to get out of your situation. It has to be temporary.’”

The Herald Tribune reports on how foreclosures are affecting some renters:

“There are no exact figures for how many renters have been evicted because of foreclosures, but a survey taken this year by the Mortgage Bankers Association found that one in eight foreclosures was non-owner-occupied. This figure probably underestimates the problem, according to the association, because buildings receive tax benefits if they are registered as owner-occupied. More than one million properties are expected to enter foreclosure this year.”

“Many renters say they never even knew their buildings were heading for foreclosure.”

“‘This is an explosion,’ said Judith Liben, a lawyer at the Massachusetts Law Reform Institute. ‘This isn’t business as usual. These are investors that overleveraged themselves, and the renters are collateral damage in the mortgage crisis.’”

“Foreclosing lenders typically evict tenants in order to sell the property, said Vicki Vidal, senior director of loan administration and government affairs at the Mortgage Bankers Association.”

“Banks don’t want to be landlords,” Ms. Vidal said. “They’re in the business of making mortgages. You need to recoup the money to keep the process moving.’”

“Unlike owners who lose their houses, renters do not stand to forfeit years of equity. And many can find comparable rentals.”