House Keys

A tax break for Chinese drywall

Fri, 10 Jul 2009 11:40:33 -0500

This from the At-Least-It’s-Something department: The Internal Revenue Service says residents whose homes have been severely damaged by Chinese drywall may qualify for tax deductions. But first government agencies must determine that the drywall "emits an unusual or severe concentration of chemical fumes" that causes "extreme and unusual damage." For some people, the tax write-off could mean tens of thousands of dollars, U.S. Sen. Bill Nelson’s office said Friday. Nelson and three other politicians wrote to the IRS last month, asking that homeowners with the drywall be able to claim a casualty loss on their tax returns. Citing health-related concerns, homeowners have moved out of the properties and continue to pay their mortgages on top of rent for their new living quarters. With many builders saying they don't have the money to fix affected homes, these residents could be living in limbo indefinitely.

Survey says: 17 percent of buyers don't think they'll have to put any money down

Thu, 09 Jul 2009 12:04:55 -0500

Real estate firm Zillow.com has released the results of a buyer sentiment survey. Some interesting findings: • More than four in 10 respondents (41 percent) are first-timers or investors. • 17 percent say they will put nothing down, this despite the small problem of lenders all but doing away with 100 percent financing. • More than half of buyers (55 percent) say they want to buy a bigger home. For more on the survey, click here.

We want to hear about your short sale horror stories

Wed, 08 Jul 2009 11:52:50 -0500

Real estate agents and home sellers continue to gripe about short sales, saying banks are too slow to respond to offers. Lighthouse Point agent Ron Rosen on Wednesday took his frustrations to the office of U.S. Rep. Ron Klein, D-Boca Raton, a member of the Financial Services Committee. Rosen told a Klein associate that standardized guidelines are needed that would ensure short sales close within 60 days. As it is now, many of these deals drag on for months. Rosen said quicker responses from banks would grease the skids for more short sales, which would mean fewer distressed homeowners and a healthier housing market. “It is the answer to our crisis,” Rosen told me afterward. “I believe that, overnight, it would change the housing market.” Do you agree? And let’s hear your short sale tales of woe.

Are mortgage writedowns the key to solving the housing crisis?

Tue, 07 Jul 2009 11:37:21 -0500

Back from a week’s vacation to find that Fannie Mae and Freddie Mac are throwing a lifeline to struggling homeowners. But local mortgage brokers say it still isn't enough help. The government-run mortgage companies said last week they will refinance existing mortgages with loan-to-value ratios up to 125 percent. Under President Barack Obama’s foreclosure-prevention plan announced earlier this year, the loan-to-value ceiling had been raised to 105 percent from 80 percent. The loans will be eligible for delivery on or after Sept. 1. "This step aims to reach even more borrowers who would benefit from a lower payment," Michael J. Williams, president and chief executive officer of Fannie Mae, said in a statement. "Many borrowers in good standing have been shut out from the benefits of refinancing due to significant declines in property values across the country. By broadening the scope of the initiative, more borrowers will experience savings on their monthly mortgage payments and have a better chance of sustaining homeownership over the long term." Local mortgage brokers say they’re getting tons of calls about the change. Still, many South Florida homeowners can’t qualify because of income restrictions or because they’re “under water” on their loans by more than 125 percent. Louis Spagnuolo of WCS Lending in Boca Raton and others in the industry say the increase to 125 percent is a step in the right direction. Still, they insist that the only way to solve the housing mess is to write down the values of all these flawed mortgages. Do you agree?

Florida Citizens Insurance weighs rate hike this week

Mon, 06 Jul 2009 11:00:00 -0500

The board of Florida Citizens Property Insurance will consider a recommendation this week to increase all policyholders' premiums by 10 percent. The insurer's actuarial and underwriting committee recommends the blanket increase. As an alternative, the committee recommends increasing premiums up to 10 percent but zeroing out any premiums that would potentially decrease. But Citizens' staff members say the increase -- allowed under a broad property insurance law passed this year -- was intended to increase premiums by up to 10 percent with the statewide average being lower than 10 percent and with some premiums potentially decreasing. Citizens plans to submit the rate filing that is approved by its board to the Office of Insurance Regulation on July 15. The Citizens board meeting is Wednesday at 9 a.m.

FPL will discuss 300-mile pipeline today

Mon, 06 Jul 2009 09:00:00 -0500

Florida Power & Light will discuss its request to build a $1.5 billion underground pipeline today. The pipeline would stretch 300 miles from Palm Beach County to Bradford County near Gainesville and would be built as early as 2014. The Florida Public Service Commission will hold a pre-hearing on the pipeline today at 1:30 p.m. The pipeline would mostly pump natural gas to FPL's Riviera Beach and Cape Canaveral plants. The plants are being converted to use gas instead of oil to reduce their carbon-dioxide emissions to about half. FPL spokeswoman Jackie Anderson says customers' bills won't be impacted for at least five years and it's too early to tell how much it will cost individual customers.

Allstate Floridian gets a new name: Castle Key

Thu, 02 Jul 2009 14:20:49 -0500

Allstate Floridian insurance companies announced today that they will now go by Castle Key. Allstate Floridian Insurance Co. and Allstate Floridian Indemnity Co.'s roughly 225,000 customers will still deal with their Allstate agents to renew policies and file claims. The new names won't affect their policies, said company spokesman Nick Halliwell. Why would the insurers relinquish the national branding and reputation that comes with the name its companies have operated under for more than half a century? Halliwell said the name change is designed to better distinguish the subsidiaries from the parent, Allstate Insurance Co. Specifically, the company wants to clarify that the Florida subsidiaries are funded separately so that the parent isn't expected to help pay hurricane claims. That said, the parent has provided the subsidiaries with almost $1 billion since the mid-1900s when they were formed, Halliwell said. The parent has taken about $285 million for dividends and nothing since the 2004 and 2005 hurricane seasons, he said. Mike Sheely, Allstate Insurance's Florida field vice president, said that the Florida companies have enough backup coverage to pay claims. “While the names of these companies have changed, our commitment to Florida customers has not,” Sheely said in a statement. “We anticipate a seamless transition for customers." Another Allstate subsidiary that operates here under a separate name -- Encompass Floridian insurance -- announced earlier this year that it plans to shed its roughly 13,000 policies.

Florida residents ask for federal help with property insurance

Thu, 02 Jul 2009 12:02:10 -0500

Florida residents and business leaders told federal lawmakers today that the rising cost of property insurance is driving people out of the state and battering its economy. Dozens of homeowners, real estate agents and insurance agents gathered in West Palm Beach for a hearing hosted by the House Subcommittee on Oversight and Investigations. "Because of the possibility of a hurricane in our area...private property insurers are unwilling to insure" us, Fort Lauderdale resident Ivan Itkin said in his testimony. "We need another solution." Rep. Ron Klein, a Boca Raton Democrat, said Florida isn't alone in facing the kind of natural disasters that push insurance prices up. "There are 20-some states right now that have serious concerns because insurance companies have pulled back," he said. Klein has drafted legislation this year that would broadly expand the federal government’s role in addressing the property insurance crisis in Florida and other disaster-prone states. Critics of the Klein bill say it could further displace the private market, potentially force taxpayers to help pay claims and encourage people to continue building in disaster-prone areas.

Does the federal government pay hurricane claims that private companies should?

Wed, 01 Jul 2009 15:31:54 -0500

Do insurance companies improperly shift hurricane claims to the federal government's flood insurance program? Rep. Gene Taylor, D-Miss. says yes. That's why he's pushing a proposal to broaden the National Flood Insurance Program to cover hurricanes. His argument is that the federal flood program ends up paying for a lot of hurricane-related damage anyway so it should collect premium for that, not private companies. Taylor produced the video below using court testimony from a case against USAA insurance that was heard before the Mississippi Supreme Court earlier this month. USAA and Nationwide Insurance attorneys said that a so-called anti-concurrent clause buried in most insurance policies legitimately exempts companies from paying for windstorm damage when any water damage is involved. Here is an excerpt from the transcript, an exchange between Mississippi Supreme Court Associate Justice Randy Pierce and Nationwide Attorney Christopher Landau: JUSTICE PIERCE: I’m giving you -- the example is 95 percent of the home is destroyed, the flood comes in and gets the other five percent, and you know that. Does your interpretation of the word “sequence” mean you pay zero? MR. LANDAU: Yes, your Honor. Nationwide spokeswoman Nancy Smeltzer said the company's position on the anti-concurrent clause has been supported by courts across the country. "The anti-concurrent causation clause in our contracts means exactly what is stated, that is, if a covered cause/event and an excluded cause/event act together or in any sequence, there is no coverage," Smeltzer said in an e-mail. USAA Attorney Charles Copeland said in a letter last month to Taylor that USAA -- which provides coverage primarily to military-related families -- does not shift damage for wind coverage to the flood program. "USAA recognizes, and has recognized in adjusting its claims, that its homeowners policy covers damage caused soley by wind regardless of whether a property is, or is not, impacted by storm surge flooding," Copeland wrote. Post updated July 3.

Who cheats more on insurance claims - policyholders or insurers?

Tue, 30 Jun 2009 10:00:00 -0500

The Coalition Against Insurance Fraud posted this video on its Web site last week from the ABC channel in Pensacola about a Florida woman who allegedly asked her insurance company for more money than she owed on a Hurricane Ivan claim.

Insurance fraud accounts for about $30 billion a year - or 10 percent - of the insurance industry's property and casualty losses, according to the Insurance Information Institute. The losses cost the rest of us more on our premiums. But policyholders aren't the only ones accused of gaming the system. Paul Berger, founder of Coral Springs-based Claim Solvers, represents policyholders in claims disputes and says insurance companies regularly low-ball claims to save money. Almost 40 percent of the complaints that Florida insurance policyholders filed this year so far are for claims handling practices, including claims delays and denials, according to the National Association of Insurance Commissioners. That begs the question: are more insurance claims underpaid or overpaid? I haven't found any data yet for home insurance claims. But Automall Network recently did a study of cars that were written off and found that by their estimates, more than half of the claims were potentially overpaid (not necessarily due to fraud but because of inaccurate damage estimates) and about 38 percent were potentially underpaid. (Insurance companies write off -- or pay policyholders for the value of a car -- when the car is stolen or damaged to the extent that replacing or fixing it exceeds what it's worth.)

Mortgage mods, Miami and a 'prophylactic'

Fri, 26 Jun 2009 13:28:55 -0500

If you need a mortgage modification, it’d be a good idea to set the GPS for Miami today. Obama administration officials, city leaders and local housing types are starting a nationwide campaign to promote the Making Home Affordable Program, a plan to help millions of Americans reduce their monthly mortgage payments. The campaign begins in South Florida and then heads to nine other housing markets hit hard by foreclosures. Those who need help should head to the James L. Knight International Center, 400 S.E. Second Ave., from 2-8 p.m Tuesday. Bring financial documents, and you will meet with housing counselors or maybe even your lender to discuss getting a modification. Many borrowers, however, are jaded, arguing that banks aren’t willing to help them lower payments. Some folks complain that lenders won’t talk to them unless they’ve actually missed payments. I mentioned this to Seth Wheeler, deputy assistant secretary of federal financing for the U.S. Treasury. He was one of the bigwigs in town Friday for a press conference in advance of Tuesday’s event. Wheeler conceded that lenders so far have been “inconsistent” in helping borrowers and that banks have been overwhelmed with other issues, such as adding staff members and retooling computer systems to handle the onslaught of mortgage mods. But he insists that lenders are getting incentives to modify loans and that “they very much want to be doing the right thing.” As for those who aren’t behind on their mortgages but fear they soon could be, they appear to be out of luck. Wheeler described those people as “looking for a modification as a prophylactic.” Uh, he wasn’t trying to be funny. “That’s not the core focus of the program,” Wheeler said, stressing that borrowers who get help must be in imminent danger of default.

Realtors' group won't take new appraisal rules lying down

Fri, 26 Jun 2009 12:33:34 -0500

The National Association of Realtors is getting serious about what it calls “faulty” home appraisals. Charles McMillan, the association’s president, plans to hit the road next week to speak out against new rules governing appraisals that prevent mortgage brokers or real estate agents from selecting appraisers. In a letter to Realtors, he said he will meet Monday with the deputy attorney general in New York to discuss the rules spelled out in the Home Valuation Code of Conduct. New York Attorney General Andrew Cuomo pushed for the code, effective May 1, to clean up what he called rampant appraisal fraud. But agents and mortgage brokers in South Florida and across the nation complain that the code is causing home sales and mortgage refinancings to be delayed or canceled. Read our recent story here. On Tuesday, McMillan will travel to Washington, D.C., to meet with the Federal Housing Finance Agency to discuss with lenders and government-run mortgage companies Fannie Mae and Freddie Mac ways to ensure that appraisals are accurate.

New-home sales fall in May; Rebound slow in coming

Tue, 23 Jun 2009 16:29:23 -0500

A little good, a little bad in the new-home market report out Wednesday. A day after the Florida Association of Realtors said sales of existing homes rose last month in Palm Beach and Broward counties, the Commerce Department said new-home sales nationwide unexpectedly fell .6 percent in May, to a seasonally adjusted annual rate of 342,000. That was off 33 percent from a year ago. The median price of a new home last month was $221,600, down 3.4 percent from a year ago. Silver lining: The drop wasn’t as steep as expected. South Florida median prices for existing homes had much larger percentage declines, which drove sales up. There are no official new-home figures for South Florida. Builders, like regular sellers, are competing against a glut of foreclosed homes that are driving prices down. From Mike Larson, a housing analyst with Weiss Research in Jupiter: “The housing market is gradually stabilizing, but showing no sign whatsoever of a vigorous rebound. The biggest issues going forward remain unemployment and interest rates. The supply of new homes for sale is back in line with the long-term historical average. But if potential buyers are losing their jobs, and financing costs are going up, builders are going to have a tough time moving product.”

Two schools of thought on interest rates

Mon, 22 Jun 2009 17:06:54 -0500

The Mortgage Bankers Association forecasts increasing interest rates through the end of 2010. That's not what you wanted to hear if you didn't pull the trigger when rates were well below 5 percent in recent weeks. The average rate on a 30-year fixed mortgage was 5.38 percent last week. Here are two possible scenarios from the MBA. The trade group obviously is hitching its wagon to No. 2: * "Continued anemic growth and high unemployment will combine to hold down inflation and the demand for debt. ... The result will be long-term interest rates at approximately current levels through the end of 2010." * "Large increases in federal debt will put tremendous pressure on domestic and international investors to absorb this debt, and that the large increases in the money supply and declines in the dollar could trigger inflation, all leading to higher rates."

A normal housing market by 2012?

Mon, 22 Jun 2009 13:04:31 -0500

Check out this recent story from BusinessWeek magazine about the nation’s housing market. It forecasts falling prices for the next year or so, then a stabilization of prices and a return to normalcy by 2012. By the way, the magazine defines “normal” as “boring,” or “where supply just about matches demand, prices are steady, and real estate ceases to be a topic of daily conversation.”