DEERFIELD BEACH, Fla. – March 9, 2010 – Michael Keigans is “underwater” on his mortgage, owing $80,000 more than his Deerfield Beach house is worth.

Keigans figures it could take a decade or two to recover the lost equity, so he’s tempted to walk away, even though he has the money to pay. “Why keep putting money into a house that’s going down in value?” he asks.

It’s a question being debated in many households nationwide as the housing crunch continues. Some borrowers feel they have a moral obligation to pay the mortgage, but a growing number of homeowners and consumer advocates say walking away could be a smart business decision.

The scale of the problem is daunting: More than half of all residential mortgage holders in Broward County are underwater, California research firm First American CoreLogic said last week. In Palm Beach County, nearly half of mortgage holders fall in that category.

And there are several reason for the crisis: Homeowners who now are underwater have seen their property values plummet after they paid peak home prices from 2004 to 2006. Many of these borrowers bought with adjustable-rate mortgages, putting little or no money down. Some are underwater because they refinanced their homes at the market’s peak.

So should they walk? Hundreds of thousands of people are doing just that.

Keigans, 36, is considering it, too. First, he wants to try to unload the house in a short sale, in which a buyer would agree to pay current market value – probably no more than $200,000 – and his lender would forgive the remaining debt. If that doesn’t work, he sees little choice but to walk away.

But borrowers have to weigh several practical considerations of so-called strategic default. They risk being sued by the lender for the unpaid mortgage balance for up to 20 years. Their credit will take a huge hit, making it difficult to get a credit card or a car loan. And the poor credit rating could affect future employment and mean higher auto insurance rates.

Some homeowners, unable to strike deals with their lenders, are willing to face those consequences for the opportunity to shed burdensome mortgages.

“There is no easy way out,” said Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter.

In a recent study, global information services company Experian and consulting firm Oliver Wyman estimated that 588,000 borrowers nationwide chose to walk away from their mortgages in 2008, up 128 percent from 2007. The taboo of abandoning homes appears to be dissolving amid the mortgage meltdown, the report said.

Those who walk away and let their homes fall into foreclosure can expect to see their credit scores drop by 200 to 300 points, said Shari Olefson, a Fort Lauderdale real estate lawyer. Foreclosures stay on borrowers’ records for 10 years, and they won’t be able to get other mortgages for at least two or three years, she said.

“We should be encouraging people to meet their obligations,” said Olefson, author of Foreclosure Nation, a book about the housing downturn. “It’s the right thing to do. We should be setting a good example for our kids.”

Florida law allows lenders to seek personal judgments if homeowners default on the mortgage. The increase in homeowners walking away likely will result in more lawsuits from lenders seeking to recoup losses, credit counselors say.

There may be tax issues, too. If lenders forgive the mortgage debt, borrowers who walk away from investment properties risk having to pay federal income taxes on the forgiven amount. Forgiven mortgage debt through 2012 is not taxable income on a primary residence as long as the debt was used to buy or improve the house.

“We don’t think [walking away] is a good option for homeowners,” said Nancy Norris, a spokeswoman for banking giant Chase, which lends in all 50 states. “A mortgage is a contract. We expect you to pay the money back that you borrowed.”

But sometimes that doesn’t make financial sense, said Brent White, a University of Arizona law professor who wrote a research paper in December on underwater borrowers.

White contends that most underwater homeowners stay put to avoid the stigma of foreclosure and because of the “exaggerated anxiety over foreclosure’s perceived consequences.” Borrowers who have good credit before they walk away can rebuild their credit rating within two years of the foreclosure, White wrote.

He said homeowners should make decisions in their own best interests, without worrying about “unnecessary shame and guilt and fear.”

Lenders and other businesses break contracts without considering morals or ethics, White said.

He points out that securities giant Morgan Stanley announced plans in December to hand back to its lender five San Francisco office buildings to get out of the loan obligation.

“We have a double standard,” White said. “It’s indefensible.”

But legal, Cecala said. Businesses often buy assets by setting up corporate entities that protect them from liability. Generally, most underwriters for residential mortgages require borrowers to be on the hook personally.

Edward Sunshine, a theology professor at Barry University, says borrowers and businesses should honor their contracts if they have the financial means to do so. Deciding to walk away from a mortgage in anticipation of financial problems that have not yet happened is rationalization, he said.

“Our whole economic system is based on trust,” he said. “It is important for people to fulfill their obligations and do what they said they’d do.”

Keigans, the Deerfield Beach homeowner, bought the property for $327,000 in 2005. He didn’t make the February mortgage payment of about $2,100. And if he walks, he thinks he’ll be able to rebuild his credit faster than the house would regain the value of his mortgage.

He said he doesn’t feel the least bit guilty. He blames the banking industry for creating the mortgage mess by lowering lending standards to make homeownership attainable for many Americans who couldn’t comfortably afford it. The increased demand helped push prices to record highs.

“The financial minds that made these decisions had to know that someone making $40,000 a year couldn’t repay a $400,000 loan,” Keigans said.

Boca Raton resident Hilton Wiener said reaching out to lenders often is a waste of time.

Wiener, a Fort Lauderdale lawyer, has tried unsuccessfully to make deals with his lenders on 10 underwater investment properties he owns across Florida. But he said they wouldn’t work with him, either refusing to take back the properties or rejecting offers for short sales.

Unwilling to deplete his savings to cover the mortgages, Wiener has stopped making the payments. He said his first responsibility is to his family – not the banks.

“You have to make choices in life,” he said.
 
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla. Paul Owers. Distributed by McClatchy-Tribune Information Services.

WASHINGTON – March 8, 2010 – A key lawmaker says he is working with banks, regulators and the Obama administration on ways to boost the government’s struggling foreclosure prevention effort.

Rep. Barney Frank, D.-Mass, said he is in talks with several major lenders in an effort to remove a key obstacle: lenders who hold second mortgages like home equity loans. Those loans, in many cases, are now worthless, but banks are reluctant to release their claims.

Those lenders can block mortgage modifications that reduce the total loan amount owed, even in cases where lenders that have senior claims want to do so.

“Many investors have told us that they’re ready to get something instead of nothing,” Frank told a crowd of minority real estate agents.

Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

WASHINGTON – March 8, 2010 – A key lawmaker says he is working with banks, regulators and the Obama administration on ways to boost the government’s struggling foreclosure prevention effort.

Rep. Barney Frank, D.-Mass, said he is in talks with several major lenders in an effort to remove a key obstacle: lenders who hold second mortgages like home equity loans. Those loans, in many cases, are now worthless, but banks are reluctant to release their claims.

Those lenders can block mortgage modifications that reduce the total loan amount owed, even in cases where lenders that have senior claims want to do so.

“Many investors have told us that they’re ready to get something instead of nothing,” Frank told a crowd of minority real estate agents.

Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

TALLAHASSEE, Fla. – March 8, 2010 – Florida got more federal funds than any other state as part of a program to put new owners into foreclosed houses. But the state ranks below the national average for dedicating and spending that money.

As of Feb. 22, communities in Florida had earmarked 28 percent of more than $541 million they received last spring from the Neighborhood Stabilization Program. And they spent even less – 13 percent, according to the U.S. Department of Housing and Urban Development.

Even as communities struggle to use the first round of housing funds, Florida is set to get more than $270 million in additional Neighborhood Stabilization dollars next month.

With so much federal money sloshing around, some housing advocates say there’s a risk that a program intended to alleviate housing woes could turn into a taxpayer-funded boondoggle.

“We haven’t really heard of any abuses yet,” said Meliah Schultzman of the California-based National Housing Law Project. “But I understand the concern. It’s an enormous amount of money.”

Others say a bigger concern is that local governments won’t spend their current stabilization money before the September deadline, said Claire Duncan of the Washington, D.C.-based National Housing Coalition.

Any unspent money goes back to Washington.

“It is moving slowly,” Duncan said of the stabilization program.

HUD appears to have similar concerns. Last month, the agency dipped into $50 million to help short-handed communities use their stabilization money.

The first aid went to Las Vegas, one of the cities hit the hardest by the housing collapse. Las Vegas has spent about 6 percent of its $14.7 million in housing help so far.

HUD expected some lag between communities receiving stabilization funds and putting them to use, Sullivan said.

“Keep in mind that a lot of these programs had to first be designed,” Sullivan said. “Some of the communities are not used to seeing this kind of money.”

Sullivan said HUD will soon release the complete list of communities targeted for help.

Tampa ranks near the bottom both in the state and in the nation for using its stabilization funds. The city has spent a little more than 5 percent of its $13 million grant. City housing officials expect that to change soon as they gear up to funnel their money through for-profit and nonprofit contractors.

“We do expect to have all our dollars committed [by September],” said Cynthia Miller, the city’s housing director.

The nonprofit Tampa Housing Authority will get $38 million from the next wave of stabilization funding. Much of that will go into the Encore project, a mixed-use development on the site of the old Central Park Village public housing project. The rest will be spent on housing rehabilitation in conjunction with the city, Miller said.

Pasco and Pinellas counties will share $50 million from the same round. The next round of stabilization money must be spent in three years, Sullivan said.

Schultzman said she and other housing advocates have their fingers crossed that agencies won’t waste their money.

“My gut tells me that’s not going to be a problem,” said Ed Gramlich of the National Low Income Housing Coalition, also based in Washington, D.C. “Although, given the amount of money, it’s bound to happen someplace.”

Copyright © 2010 Tampa Tribune, Fla., Kevin Wiatrowski. Distributed by McClatchy-Tribune Information Services.

POMPONO BEACH, Fla. – March 8, 2010 – In many condominium complexes, units sit empty and association fees go uncollected when homeowners abandon their property. In many cases, banks initiate foreclosure but postpone the final order, effectively putting the condo in limbo because the bank doesn’t want to become responsible for the unit’s obligations generally and homeowner association fees specifically.

But some condos are trying a backdoor way of getting the banks to pay. Called a “reverse foreclosure,” the associations foreclose on the unit first.

The problem starts with struggling homeowners who can no longer pay their mortgage and who, in many cases, owe more on the mortgage than the unit is currently worth. In most cases, a homeowner who stops paying his mortgage also stops paying his association fees.

After months of no payments, banks may start the foreclosure process. However, that can take a few months or a few years, depending on a number of factors, many of which the bank controls. The unit, in financial limbo and usually empty, is not yet a draw on the bank because it’s not on their books; but it’s also not a revenue generator for the condo association.

To speed the process, condo associations are foreclosing first, which they may legally do when maintenance fees remain unpaid for a period of time. Under this reverse foreclosure, the association takes title to the unit; but since the bank has a lien on the property, the association cannot legally sell it. The association can, however, renounce its claim on the unit in court, effectively giving ownership – and an obligation to pay maintenance fees – back to the bank.

A reverse foreclosure is considered a hardball tactic, but condo associations with a large number of foreclosures have little choice if they hope to maintain common elements and keep the property safe. Without the power to make banks pay, condo owners current on their mortgage and dues could be assessed large special assessments to cover the unused units. Special assessments could then cause even more owners to go into default, compounding the problem.

Even with a reverse foreclosure, a bank does not have to pay all past-due maintenance fees. Florida statutes limit the obligation to the past 12 months of association fees – six months for condos – or 1 percent of the mortgage, which is less.

The cap is, in fact, a big reason why the banks aren’t in hurry. “There is no incentive for banks to foreclose” in a timely fashion, says Ben Solomon, an attorney with Association Law Group.

The Keys Gate Community Association in Miami-Dade survived a court challenge when it used a reverse foreclosure to take a four-bedroom home. After the foreclosure, the association found itself holding a vacant home it didn’t want with $5,320 in unpaid fees it couldn’t collect. The home lender, HSBC Bank USA, had also filed a foreclosure notice, but it had not done so not until two months later, and it was in no hurry to take back the property.

A Miami-Dade circuit judge, Jerald Bagley, upheld the reverse foreclosure. On Jan. 12, he ruled that the bank owed association fees, legal fees, court costs and taxes. The bank still avoided $3,819 on the maintenance fees, however, thanks to the cap in Florida law.

The Keys Gate Community Association now has 13 more reverse foreclosures in the pipeline.

Source: 2010 Miami Herald Media Company, Rachel Lee Coleman

© 2010 Florida Realtors®

POMPONO BEACH, Fla. – March 8, 2010 – In many condominium complexes, units sit empty and association fees go uncollected when homeowners abandon their property. In many cases, banks initiate foreclosure but postpone the final order, effectively putting the condo in limbo because the bank doesn’t want to become responsible for the unit’s obligations generally and homeowner association fees specifically.

But some condos are trying a backdoor way of getting the banks to pay. Called a “reverse foreclosure,” the associations foreclose on the unit first.

The problem starts with struggling homeowners who can no longer pay their mortgage and who, in many cases, owe more on the mortgage than the unit is currently worth. In most cases, a homeowner who stops paying his mortgage also stops paying his association fees.

After months of no payments, banks may start the foreclosure process. However, that can take a few months or a few years, depending on a number of factors, many of which the bank controls. The unit, in financial limbo and usually empty, is not yet a draw on the bank because it’s not on their books; but it’s also not a revenue generator for the condo association.

To speed the process, condo associations are foreclosing first, which they may legally do when maintenance fees remain unpaid for a period of time. Under this reverse foreclosure, the association takes title to the unit; but since the bank has a lien on the property, the association cannot legally sell it. The association can, however, renounce its claim on the unit in court, effectively giving ownership – and an obligation to pay maintenance fees – back to the bank.

A reverse foreclosure is considered a hardball tactic, but condo associations with a large number of foreclosures have little choice if they hope to maintain common elements and keep the property safe. Without the power to make banks pay, condo owners current on their mortgage and dues could be assessed large special assessments to cover the unused units. Special assessments could then cause even more owners to go into default, compounding the problem.

Even with a reverse foreclosure, a bank does not have to pay all past-due maintenance fees. Florida statutes limit the obligation to the past 12 months of association fees – six months for condos – or 1 percent of the mortgage, which is less.

The cap is, in fact, a big reason why the banks aren’t in hurry. “There is no incentive for banks to foreclose” in a timely fashion, says Ben Solomon, an attorney with Association Law Group.

The Keys Gate Community Association in Miami-Dade survived a court challenge when it used a reverse foreclosure to take a four-bedroom home. After the foreclosure, the association found itself holding a vacant home it didn’t want with $5,320 in unpaid fees it couldn’t collect. The home lender, HSBC Bank USA, had also filed a foreclosure notice, but it had not done so not until two months later, and it was in no hurry to take back the property.

A Miami-Dade circuit judge, Jerald Bagley, upheld the reverse foreclosure. On Jan. 12, he ruled that the bank owed association fees, legal fees, court costs and taxes. The bank still avoided $3,819 on the maintenance fees, however, thanks to the cap in Florida law.

The Keys Gate Community Association now has 13 more reverse foreclosures in the pipeline.

Source: 2010 Miami Herald Media Company, Rachel Lee Coleman

© 2010 Florida Realtors®

NEW YORK – March 8, 2010 – Will people who currently face foreclosure or short sales or who walk away from their underwater properties ever be able to get financing to buy another home down the road?

Banks haven’t been very forthcoming on this issue. However, knowledgeable observers of the situation say that while it may take some time, the situation will right itself for most people.

Because bankrupt borrowers have eliminated their debts, they should “constitute attractive fodder for mortgage lenders,” says University of Michigan law professor John Pottow, whose specialty is bankruptcy.

As home prices and the mortgage market stabilize, lenders will be motivated to lend to people who previously had financial troubles if they look like they can pay the next time around, says Alan Riegler, a consultant with CCG Catalyst, which advises banks.

“The lender who figures out how to do more of this case-by-case stuff cost-effectively is going to end up ahead of the pack,” Riegler says.

Source: Inman News, Matt Carter (03/05/2010)

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688

NEW ORLEANS (AP) – March 5, 2010 – U.S. Sen. David Vitter has called for federal officials to do a more thorough review of the deaths of several people who lived in homes that contained smelly, possibly toxic Chinese drywall.

Federal officials at the Consumer Product Safety Commission (CPSC) said they have investigated and found no link between the drywall and the deaths of eight people. They said one of the deaths did not even occur in a house with Chinese drywall.

Scott Wolfson, a spokesman for the safety commission, said the deaths were promptly investigated by staff toxicologists, epidemiologists and other experts by telephone, except for a case involving an asthmatic 9-year-old boy who died in Louisiana. Investigators went to his home and determined his death was not caused by the wallboard, Wolfson said.

“There is no evidence through investigations and follow-up of any correlation between Chinese drywall and the tragic fatalities reported to the CPSC,” Wolfson said.

Vitter asked the safety commission and the Centers for Disease Control and Prevention to do more, though he didn’t elaborate in his letter Wednesday to the agencies.

“A thorough review of all reported deaths would help instill confidence in your efforts and provide relief for many families,” the Louisiana Republican said.

CDC spokeswoman Bernadette Burden said the agency would review Vitter’s letter.

In November, the safety commission said it had found a possible link between respiratory irritation reported by homeowners and higher-than-normal levels of hydrogen sulfide gas emitted from the imported Chinese wallboard coupled with formaldehyde, which is commonly found in new houses.

The agency also said it was likely that wire and pipe corrosion in homes was caused by the imported wallboard.

About 3,000 homeowners, most of them in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall. The consumer commission has reviewed 800 homes, Wolfson said.

“This is the costliest investigation in our agency’s history and involves the most number of staff dedicated to one issue,” Wolfson said.

The vast majority of complaints involve Chinese-made gypsum board imported during the recent U.S. housing boom, when domestic building materials were in short supply, and after the catastrophic 2005 hurricane season.

Thousands of homeowners have been kept in limbo as hundreds of lawsuits against builders, contractors, suppliers and manufacturers are winding through the courts and the federal government develops aid plans.

Sen. Bill Nelson, a Florida Democrat, said affected homeowners deserve to know the extent of any health threat. “And what they can do to get the problem fixed so they can live in their own houses,” he said.

Dr. Patricia Williams, a toxicologist at the University of New Orleans hired by plaintiffs’ lawyers, said a more thorough probe was warranted.

“Each person needs to be looked at individually,” Williams said. She said her analyses of the Chinese drywall have found chemical compounds that can lead to death, particularly in people suffering from lung and heart disease.

Copyright © 2010 The Associated Press, Cain Burdeau, Associated Press writer. All rights reserved

NEW YORK – March 5, 2010 – Two years after swallowing the troubled mortgage giant Countrywide Financial, Bank of America trails other major U.S. lenders in resolving troubled home loans through short sales or modified loan terms.

The lender, one of the nation’s biggest banks, holds more than a million mortgages that are months behind on their payments – twice as many defaulting home loans as any other lender in the country. But it has given permanent mortgage modifications to only about 1 percent of those borrowers – one of the lowest rates among lenders nationally, according to a report released last month on the federal government’s Home Affordable Modification Program.

The issue is key in Metropolitan Orlando, which has the nation’s 11th-highest rate of mortgage modifications, with 18,000 homeowners in trial modifications and 2,468 in permanent ones, the report stated.

Loan modifications aren’t the only way of out a foreclosure. In January, about a quarter of all Orlando-area home closings were short sales, which occur when the lender allows a homeowner to sell the property for less than what’s owed on the mortgage.

But when it comes to short sales, Bank of America also lags other lenders, real-estate agents say, by taking too long to respond to offers.

“Realtors that I work with, if they hear Bank of America, they won’t even show the property,” said David Pruett, a broker for D.A. Pruett Properties.

The chairman of the Orlando Regional Realtor Association, Kathleen Gallagher McIver, said recently that Bank of America has the worst record for expediting short sales, “and there’s not anyone out there who will tell you otherwise.”

Bank of America acknowledges it needs help with its short sales.

“We clearly recognize the need to improve the short-sale process for both our customers and the real-estate professionals who are critical to a successful transaction,” said Jumana Bauwen, a bank spokeswoman.

The company said it has updated its training, enhanced its technology and established a short-sale team to help customers and real-estate agents navigate the process. It is piloting a short-sale program for owners who don’t qualify for new mortgage terms. And it has established a 24-hour phone line so agents, buyers and sellers can track the status of their short sales.

Bank of America is not alone in its struggles to deal with the avalanche of defaulting home mortgages, according to the February modification report by the U.S. Treasury Department and the U.S. Department of Housing and Urban Development.

Wachovia Corp., now owned by Wells Fargo & Co., has approved permanently modified terms for fewer than 1 percent of its 86,461 defaulting mortgage customers. American Home Mortgage Servicing Inc. has a similar track record with the 127,521 mortgages headed toward foreclosure that it holds. Among the nation’s largest lenders, GMAC Mortgage Inc. had the best rate: 17 percent of its 65,751 defaulting home loans have been permanently modified.

Bank of America, which inherited much of its mortgage portfolio from Countrywide, says part of the problem is that many homeowners have not been diligent about submitting the documents needed to convert a trial mortgage modification into a permanent one.

Clermont resident George Simmons said he is now totally frustrated, having tried for more than a year to get Bank of America to convert a series of trial modifications into something permanent.

“Let’s see, the last correspondence I had from them said they didn’t have my income-tax return and my Social Security records,” Simmons said. “I sent it to them so many times. I’ve got my fax receipts and my certified postal receipts. They just keep asking for the same paperwork over and over and over again.”

Overall, about a fifth of Bank of America’s defaulting-mortgage customers have received temporary, three-month trial modifications. To address the huge volume of troubled loans needing permanent solutions, the company has hired about 15,000 staffers. Workers knock on doors and call homeowners with trial modifications at least 10 times before the temporary terms expire in three months.

At one point, Bauwen said, Bank of America was behind in getting homeowners into trial loan modifications. But it has ramped up those efforts, she said, and many of those trials will be converted into permanent modifications.

More importantly, Bauwen added, the company is not ramping up its foreclosure efforts unnecessarily.
 
Copyright © 2010 The Orlando Sentinel, Fla., Mary Shanklin. Distributed by McClatchy-Tribune Information Services. 
 

WASHINGTON – March 4, 2010 – A batch of economic reports Wednesday depicted a broadening recovery, with services industries last month growing at the fastest pace in more than two years and job losses slowing despite snowstorms that hampered key sectors such as retail.

Growth remains relatively modest, held back at least partly by brutal slumps in commercial real estate and construction, and tight credit markets, according to a nationwide report from the Federal Reserve. Still, notable gains by finance, insurance and other services industries heartened economists who have lamented that the services sector – which makes up the bulk of the economy – had not kept pace with a more robust rebound in manufacturing.

A closely watched index of service-sector activity jumped from 50.5 to 53 in February, according to the Institute for Supply Management (ISM), solidly beating estimates and reaching its highest level since December 2007. Above 50 indicates expansion; below means contraction.

“Services are a big piece of the economy, and they hadn’t come to the party until last month,” says economist Brian Bethune of IHS Global Insight.

The index hovered around 50 for eight months, hindered by a shrinking labor force. But in February, the employment measure jumped from 44.6 to 48.6, indicating jobs fell at a far slower pace and are poised to rise in March, Bethune says. The trend was supported by a couple of wider job-market indicators. Employers across all industries shed 20,000 jobs in February, the least in two years, according to the ADP National Employment Report. Small businesses lost 18,000 jobs vs. 10,000 for large companies. Midsize firms added 8,000 jobs. The ADP report is considered a precursor to Friday’s more closely watched jobs survey from the Labor Department.

But economists expect severe weather across the USA in early February to inflate by tens of thousands the number of job losses in the government report. ADP, by contrast, counts all employees on a payroll even if they don’t make it to work in the survey period.

The stabilizing job market was further underscored in a report by outplacement firm Challenger Gray & Christmas that showed companies announced 42,090 layoffs last month, the least since July 2006.

Yet while layoffs have slowed, “hiring plans still remained generally soft,” according to the Fed’s “beige book” survey. The report said the economy “continued to expand” from mid-January to late February, a more upbeat tone than previous reports. But while nine of 12 Fed districts reported improvements, gains were “modest.”

Some of the roadblocks stemmed from severe weather. In Philadelphia, retail sales were rising until the early February snowstorms. Sales were “mixed” in Boston and Cleveland and below expectations in Atlanta and Kansas City. Auto sales, damped by the weather conditions, were “flat or down.” Generally, sales were strongest “for lower-priced items.”

Tourism ticked up some: Manhattan hotel occupancies were “up considerably” from a year ago, some ski resorts posted “at least modest rebounds,” and the Mardi Gras in New Orleans drew large crowds.

Services industries posted “generally positive” demand, particularly in health care and computers. Health care sales were brisker in Boston, St. Louis, Minneapolis and San Francisco. Transportation heated up in Cleveland, Atlanta and Kansas City.

Factories, meanwhile, continued their upturn, with growth in high-tech in the Boston, Dallas and San Francisco areas; auto making in Cleveland, Chicago, St. Louis and Dallas; and metals nationwide. Yet several manufacturers said many customers were “simply restocking inventories,” sparking concerns on whether the gains would last.

Other sectors continued to struggle. While housing sales improved in several regions, they stayed weak or softened in the New York, Atlanta and Chicago regions. And housing construction in most districts was “down or stagnant.”

Commercial real estate is also flailing. It weakened in the Minneapolis, Kansas City, Dallas and San Francisco regions. And banks in most areas “remained cautious about lending.”

Overall, economist Conrad DeQuadros, of RDQ Economics, expects modest economic growth of 2.5 percent in the first quarter. He predicts moderate growth of 3.5 percent for the year, with a pickup in consumer and business spending, as well as in home sales and construction.

“It’s extremely early,” he says.

© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Paul Davidson.

WASHINGTON – March 3, 2010 – Signs of a recovery in the real estate market indicate this may not be the “Winter of your Discount Tent.” Home sales, value and mortgage applications have risen slightly as mortgage rates stand at a historic low.

This slight glimmer of positive news is offset by estimates that about 48 percent of all U.S. mortgages will be underwater by 2011. Foreclosures and short sales continue to plague the market, keeping a lid on home prices. As a result, 2010 will continue to be a buyer’s market.

That doesn’t mean, however, that all hope is lost of selling your home this year. Here are nine tips to sell your home in 2010.

1. Don’t wait for a recovery

Home values aren’t likely to rebound to previous highs for several years, perhaps even a decade. While you may face a loss by selling now, that negative figure may only be a paper loss, particularly if you’ve owned your home for some time.

2. Make improvements

If you have access to credit, invest in improving and repairing your home before placing it on the market, rather than trying to go for a quick as-is sale. Rehabs are more affordable now, thanks to the availability of low financing, reduced construction materials costs and lower contractor charges. Focus on upgrades to kitchens and bathrooms, especially counters and cabinets, as these yield the highest returns. Get three different estimates from contractors and add another 10 percent for unexpected costs.

4. Hire professionals

You need professionals, not friends or relatives, to repair, upgrade and sell the biggest investment you’ll likely own. Ask for credentials, references and a history of recent performance. Your appraiser should have at least five years experience with an appropriate license or certification. The same applies to hiring a home inspector. Talk to at least two or three appraisers and inspectors before selecting one.

5. Get downpayment assistance

Federal and local governments offer several downpayment assistance programs for first-time home buyers. Look for other city, county and state programs that will piggyback on federal programs for assistance. Search for “downpayment assistance programs” with the name of your region.

6. Take Uncle Sam’s help

The $8,000 first-time homebuyer tax credit program that helped jump-start the real estate market in 2009 has been extended into 2010 and expanded. First-time homebuyers qualify if they sign a binding contract to buy a home by April 30 and close by June 30. The program’s maximum income limits have jumped from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for couples.

A separate $6,500 tax credit has been added for those who have owned their homes for at least five years and want to upgrade. Homeowners drowning in their present real estate loans are eligible for a loan-modification program with their current mortgage company or loan service through the Making Home Affordable Program (http://makinghomeaffordable.gov/).

7. Price accordingly

Listings move when a property is appropriately priced. Others gather dust because the owners haven’t adjusted their expectations to the present market. This doesn’t mean, however, you should severely drop your price on a well-maintained home to avoid extended problems. Research your market and price accordingly.

8. Energy tax credits

Through Dec. 31, homeowners who buy and install specific energy-efficient windows, insulation, roofs, doors and heating and air-conditioning equipment can apply for a 30-percent tax credit of up to $1,500 of their costs on each product.

Go one step further and earn a 30-percent tax credit through 2016 (without a spending limit) when you purchase such energy-saving products as solar energy systems, geothermal heat pumps, small wind systems, residential fuel cells and micro-turbine systems. Visit EnergyStar’s Federal Tax Credits for Energy Efficiency (http://www.energystar.gov/index.cfm?ctax-credits.tx-index) for a complete summary.

9. It’s not personal

Buyers want to imagine themselves in your house for years to come. Excess decor and knick-knacks distract from this vision. Ask your Realtor’s advice or hire a home stager to bring your house back to zero before beginning to show it. A general rule of thumb is to eliminate or store at least half the items in every room.

Don’t get defensive about colors, design patterns or flooring you installed. Just grit your teeth and think of the closing check while your agent serves as a buffer. Remember the customer is always right, unless, of course, they’re low-balling you.

© 2010 www.freeshipping.org. Distributed by McClatchy-Tribune Information Services.

WASHINGTON – March 3, 2010 – Signs of a recovery in the real estate market indicate this may not be the “Winter of your Discount Tent.” Home sales, value and mortgage applications have risen slightly as mortgage rates stand at a historic low.

This slight glimmer of positive news is offset by estimates that about 48 percent of all U.S. mortgages will be underwater by 2011. Foreclosures and short sales continue to plague the market, keeping a lid on home prices. As a result, 2010 will continue to be a buyer’s market.

That doesn’t mean, however, that all hope is lost of selling your home this year. Here are nine tips to sell your home in 2010.

1. Don’t wait for a recovery

Home values aren’t likely to rebound to previous highs for several years, perhaps even a decade. While you may face a loss by selling now, that negative figure may only be a paper loss, particularly if you’ve owned your home for some time.

2. Make improvements

If you have access to credit, invest in improving and repairing your home before placing it on the market, rather than trying to go for a quick as-is sale. Rehabs are more affordable now, thanks to the availability of low financing, reduced construction materials costs and lower contractor charges. Focus on upgrades to kitchens and bathrooms, especially counters and cabinets, as these yield the highest returns. Get three different estimates from contractors and add another 10 percent for unexpected costs.

4. Hire professionals

You need professionals, not friends or relatives, to repair, upgrade and sell the biggest investment you’ll likely own. Ask for credentials, references and a history of recent performance. Your appraiser should have at least five years experience with an appropriate license or certification. The same applies to hiring a home inspector. Talk to at least two or three appraisers and inspectors before selecting one.

5. Get downpayment assistance

Federal and local governments offer several downpayment assistance programs for first-time home buyers. Look for other city, county and state programs that will piggyback on federal programs for assistance. Search for “downpayment assistance programs” with the name of your region.

6. Take Uncle Sam’s help

The $8,000 first-time homebuyer tax credit program that helped jump-start the real estate market in 2009 has been extended into 2010 and expanded. First-time homebuyers qualify if they sign a binding contract to buy a home by April 30 and close by June 30. The program’s maximum income limits have jumped from $75,000 to $125,000 for individuals and from $150,000 to $225,000 for couples.

A separate $6,500 tax credit has been added for those who have owned their homes for at least five years and want to upgrade. Homeowners drowning in their present real estate loans are eligible for a loan-modification program with their current mortgage company or loan service through the Making Home Affordable Program (http://makinghomeaffordable.gov/).

7. Price accordingly

Listings move when a property is appropriately priced. Others gather dust because the owners haven’t adjusted their expectations to the present market. This doesn’t mean, however, you should severely drop your price on a well-maintained home to avoid extended problems. Research your market and price accordingly.

8. Energy tax credits

Through Dec. 31, homeowners who buy and install specific energy-efficient windows, insulation, roofs, doors and heating and air-conditioning equipment can apply for a 30-percent tax credit of up to $1,500 of their costs on each product.

Go one step further and earn a 30-percent tax credit through 2016 (without a spending limit) when you purchase such energy-saving products as solar energy systems, geothermal heat pumps, small wind systems, residential fuel cells and micro-turbine systems. Visit EnergyStar’s Federal Tax Credits for Energy Efficiency (http://www.energystar.gov/index.cfm?ctax-credits.tx-index) for a complete summary.

9. It’s not personal

Buyers want to imagine themselves in your house for years to come. Excess decor and knick-knacks distract from this vision. Ask your Realtor’s advice or hire a home stager to bring your house back to zero before beginning to show it. A general rule of thumb is to eliminate or store at least half the items in every room.

Don’t get defensive about colors, design patterns or flooring you installed. Just grit your teeth and think of the closing check while your agent serves as a buffer. Remember the customer is always right, unless, of course, they’re low-balling you.

© 2010 www.freeshipping.org. Distributed by McClatchy-Tribune Information Services.

NEW YORK – March 2, 2010 – Billionaire investor Warren Buffett predicted that the real estate market downturn would end by 2011 as the housing inventory declines.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote in his annual letter to the shareholders of Berkshire Hathaway, where he is chairman and CEO. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means.”

He also pinpointed what he sees as the cause of the downturn. “People thought it was good news a few years back when housing starts – the supply side of the picture – were running about 2 million annually,” wrote Buffett, “But household formations – the demand side – only amounted to about 1.2 million.”

Source: Bloomberg News, Andrew Frye (03/01/2010)

© Copyright 2010 INFORMATION, INC. Bethesda, MD (301) 215-4688

ORLANDO, Fla. – Feb. 26, 2010 – Florida’s existing home sales rose in January, marking 17 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.

Existing home sales increased 24 percent last month with a total of 10,465 homes sold statewide compared to 8,444 homes sold in January 2009, according to Florida Realtors. January’s statewide sales of existing condos rose 81 percent compared to the previous year’s sales figure.

Sixteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; all MSAs had higher condo sales. A majority of the state’s MSAs have reported increased sales for 19 consecutive months.

“Now is the time for anyone thinking of buying a home in Florida to make that decision,” said 2010 Florida Realtors President Wendell Davis, a broker and regional vice president with Watson Realty Corp. in Jacksonville. “Markets across the state are seeing increased sales, yet conditions remain very favorable with still-low mortgage rates, a range of housing inventory and attractive prices. As an added incentive, buyers need to accelerate their plans because a purchase contract must be in place by the end of April to take advantage of the extended and expanded federal tax credit. To find out more, consult a Realtor about options, qualification criteria and opportunities in your local housing market.”

Florida’s median sales price for existing homes last month was $130,900; a year ago, it was $139,400 for a 6 percent decrease. Analysts with the National Association of Realtors (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in December 2009 was $177,500, up 1.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $306,820 in December; in Massachusetts, it was $305,000; in Maryland, it was $244,820; and in New York, it was $222,000.

According to NAR’s latest outlook, homebuyers are taking advantage of the federal tax credit. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices,” said NAR Chief Economist Lawrence Yun.

In Florida’s year-to-year comparison for condos, 4,631 units sold statewide last month compared to 2,554 units in January 2009 for an increase of 81 percent. The statewide existing condo median sales price last month was $97,300; in January 2009 it was $113,300 for a 14 percent decrease. The national median existing condo price was $183,700 in December 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 5.03 percent last month, slightly lower than the average rate of 5.05 percent in January 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Fort Walton Beach MSA reported a total of 143 homes sold in January compared to 118 homes a year earlier for a 21 percent increase. The market’s existing home median sales price last month was $201,400; a year ago it was $188,300 for an increase of 7 percent. A total of 70 condos sold in the MSA in January compared to 25 units sold the same month a year earlier for an increase of 180 percent. The existing condo median price last month was $270,800; a year earlier, it was $268,800 for a gain of 1 percent.

© 2010 Florida Realtors

WASHINGTON – Feb. 25, 2010 – The rest of the U.S. economy may be bouncing back, but for the battered housing sector, the hopes of economists and real estate experts are still modest.

“Recovery is probably too strong a word,” First American Funds Chief Economist Keith Hembre says of recent housing data. Call it “stabilization at a lower level.”

Home prices and buying activity are coming back, but only from a disastrous 2009. In the first quarter of 2009, for example, the Standard & Poor’s Case-Shiller National Home Price index dropped 19 percent from the year before. In the last quarter of 2009 – for which data were released on Feb. 23 – the index was down just 2.5 percent from the year before.

“We’re showing signs of the housing market bottoming,” says Michael Strauss, chief economist at Commonfund. “The bad news is we still have a long way to go.” The widely watched S&P Case-Shiller 20-City Composite Home Price index rose 0.3 percent from November to December. But the figure only increased when adjusted for the winter slowdown. Without a seasonal adjustment, home prices fell 0.2 percent from month to month.

Government support to end

Improvements have occurred only after extraordinary efforts by the U.S. government to prop up the housing market. To lower mortgage rates and heal financial markets, the U.S. Federal Reserve has been buying up to $1.25 trillion in mortgage-backed securities. To bring more buyers to market, Congress approved, and then extended, an $8,000 first-time homebuyer tax credit.

“Even with these dramatic efforts to bolster home sales, they’re still languishing at recessionary levels,” says David Rosenberg, chief global economist at investment manager Gluskin Sheff & Associates.

And now comes 2010’s big test for the housing market: The Fed’s mortgage buying will end at the end of March, and the homebuyer tax credit expires at the end of April. What happens without government support?

“I see no evidence that this is a sector that has the capacity to stand on its own two legs,” Rosenberg says. Real estate professionals are worried, too.

Earl Lee is president of Prudential (PRU) Real Estate, which has 2,000 franchised real estate offices in North America and employs 62,000 real estate agents. “The first half of the year will be strong,” Lee says. “The question is what will [the second half] look like.” Without government support, he adds, “the economy is still not strong enough.”

Bright spots

There are bright spots in the housing market, and they’re often in places hardest hit by the bursting of the real estate bubble. In December’s Case-Shiller data, only five cities did not see prices decline before adjusting for the season: San Diego, Las Vegas, Los Angeles, Phoenix, and Detroit. In the upscale Detroit suburb of Birmingham, M. Michael Cotter, a real estate broker at SKBK Sotheby’s International Realty, says he has seen a “rather substantial improvement” in the housing market in the last three months. After local giants General Motors and Chrysler declared bankruptcy last year, Detroit’s already weak real estate market fell into the doldrums.

Now, “there is optimism that we didn’t have a year ago,” Cotter says. Though conditions could be much better, he says, “the economy is starting to right itself.”

Crucial for the housing market in 2010 is the jobs picture and the amount of homes coming onto the market. “At 10 percent unemployment, it’s difficult to think Americans are going to be out there on the market for homes,” says Brian Levitt, an economist at OppenheimerFunds. The U.S. unemployment rate was 9.7 percent in January, and economists expect it to edge up to 9.8 percent in February.

Foreclosure supply

Another concern is how many foreclosed houses will be pushed onto the market in 2010, flooding markets with unwanted supply. “There is a fair amount of shadow supply waiting in the wings,” Hembre warns.

A Feb. 16 analysis by Standard & Poor’s estimated the number of troubled mortgages “will likely take about 33 months – or nearly three years – to clear at the current rate of liquidations.”

A recent slowdown in foreclosed homes is temporary, the report said. The state of the housing market has large ramifications for the rest of the economy. Home Depot (HD) Chairman and Chief Executive Francis Blake often notes the impact of residential real estate spending on his company’s business. After the No. 1 home-improvement retailer reported earnings on Feb. 23, Blake told analysts such spending “has stopped its dramatic and historic decline.” However, he added, “the housing industry remains at distress levels, mortgage defaults continue to increase, unemployment remains high, and our pro customers” – contractors who buy supplies at Home Depot – “are still under pressure.”

Sales of furniture, appliances, and electronics all are linked to housing, economists note. And home prices can weigh on consumer confidence, which unexpectedly fell on Feb. 23 to its lowest level since April.

“It will be very difficult to have a strong economy without housing kicking into gear,” Rosenberg says.

Action Economics Chief Economist Michael Englund is not so gloomy. He says housing is “on a slow but steady recovery,” driven in part by the natural life cycle as people form families, move up, and retire and downsize their homes. After the rough conditions of 2009, “my assumption is we have nowhere to go but up from here,” he says.

Copyright © 2010 The McGraw-Hill Cos., Ben Steverman. All rights reserved.