Report: South Florida home prices rise in May
South Florida home prices continue to gain momentum, according to a report released Tuesday.
Prices in Palm Beach, Broward and Miami-Dade counties rose 1.4 percent in May from April and 3.4 percent from a year ago, figures from the Standard & Poor's/Case-Shiller home price index show.
It’s the fifth consecutive month that prices have increased annually in the three counties. Prices have risen on a monthly basis here since December. Besides South Florida, 11 other metro areas had year-over-year increases in the index that covers 20 major markets nationwide.
"The housing market seems to be stabilizing, but we are definitely in a wait-and-see mode for the next few months,” David M. Blitzer, chairman of the index committee, said in a statement.
Case-Shiller tracks prices of the same house over time. Analysts say that’s a better measure than releasing a median price for homes sold in a month, as local Realtor trade groups do. The index does not include condominiums and trails Realtor data by a month.
Real estate agents and analysts are optimistic that South Florida prices have hit bottom. Still, there is some concern that an increased number of foreclosures could stall the recovery.
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Why hasn't Gov. Rick Scott taken a stand on FPL's proposed rate hike?
Critics of Florida Power & Light's proposed $690 million base rate hike have questioned why Gov. Rick Scott hasn't publicly stated a position on it.
The increase would amount to $7.09 more a month on the base part of a monthly bill for customers who use 1,000 kilowatt-hours a month but FPL predicts lower fuel costs offset most of the increase, at least for the first year or two.
Alexandria Larson, an FPL customer in Loxahatchee who is formally participating in the state Public Service Commission's review of FPL’s base rate hike request, asked at a hearing last month in West Palm Beach if Scott hasn't taken a side because a political action committee he’s connected with received $250,000 from FPL this year: He "has decried high electric rates in Florida, and yet has been silent regarding this rate increase."
The contribution is among the "Let’s Get to Work" committee’s three largest this year and it makes up 6 percent of the donations it received this year.
Scott opposed programs to require FPL to beef up rebates and other programs for customers who want to save energy because of the cost: about $2 more a month for a typical FPL customer. He also opposed renewable energy legislation because would have cost customers of major utilities statewide up to $375 million a year for four years. Finally, he supported an FPL program that gives discounts of up to 25 percent to businesses that qualify but it may cost residential customers more after the utility’s rate freeze expires this year.
When asked for Scott's position on the proposed rate hike, a spokesman said in an email that he wasn't expecting to get a response last week because key people, including the governor, were out of town. Brian Burgess, another spokesman, said in an email this evening that Scott wants Florida to be affordable: He "is committed to keeping the cost of living in Florida low, he’s stated that position on multiple occasions and he has never identified any exceptions." Burgess did not say if that means the governor specifically opposes FPL's proposed rate hike.
Governor Scott is committed to keeping the cost of living in Florida low, he’s stated that position on multiple occasions and he has never identified any exceptions.
Florida Attorney General Pam Bondi also hasn't taken a position. The Attorney General's office was formally involved in 18 of 25, or nearly three-fourths, of the base rate hike requests by electric investor-owned utilities from 1994 to 2010, according to information from the state Public Service Commission.
Former Gov. Charlie Crist and former Attorney General Bill McCollum both opposed FPL's last base rate hike request.
Mike Sole, FPL's vice president of state governmental affairs, said the utility contributes to numerous organizations and that the PSC decides rate cases, not elected officials.
FPL, the state's largest utility with 4.5 million customers, said the increase would pay for inflation-related costs, grid improvements and a new power plant, among other things, and it would allow the company to earn a fair profit.
Rob Thormeyer, a spokesman for the National Association of Regulatory Utility Commissioners, said it's best to keep politics out of utility rate-making: "The last thing any PSC needs is a governor weighing in on any commission matter, let alone a rate case."
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Investment firm buys $33M in South Florida mortgages
A private investment firm that buys distressed real estate debt has acquired $33.4 million in residential and commercial mortgages across Palm Beach, Broward and Miami-Dade counties.
RER Equities bought the 51 notes from EuroBank, a Coral Gables-based subsidiary of Banco do Brasil. The cash deal was completed in 30 days.
Christopher Kallivokas, chairman of RER, said he couldn’t disclose the specific properties, but it was a mix that includes homes, offices, warehouses, shops and gas stations.
Some of the non-performing mortgages will be liquidated through deeds in lieu of foreclosure, while others may receive loan modifications or discounted payoffs, Kallivokas said.
“If the property is perceived by us to be operating with good integrity, we will work with them,” he said.
Herndon, Va.-based RER says it is interested in buying other bank portfolios in Florida. With the South Florida real estate market improving, banks are more willing to resolve their distressed portfolios, Kallivokas said.
“Regulators are putting pressure on the banks to dispose of these loans now that they can afford to take the hit,” he said.
Eurobank officials could not be reached for comment Monday.
Earlier this year, federal regulators ordered the bank to clean up its balance sheet.
Ken Thomas, an independent banking analyst in Miami, said he expects EuroBank to use the cash from the RER deal to open additional offices. It now has only three in Palm Beach, Broward and Miami-Dade counties.
“That’s a very inefficient way of doing things,” Thomas said.
Citizens insurance approves 10 percent rate hike, kills two controversial plans
Citizens Property Insurance’s board voted Friday to increase premiums by more than $250 million through a statewide average rate hike of more than 10 percent.
Board members killed two controversial proposals: To charge new policyholders much higher rates and reduce coverage for certain water damage to $15,000.
Premium increases for state-backed Citizens, Florida's largest property insurer with 1.4 million policies, are capped at 10 percent a year by state law.
Board members also approved a contract worth up to $210 million for managing policies and fielding calls, despite objections and questions from a couple of board members about the cost.
Rate hikes
Personal residential policies would receive a 10.2 percent statewide average increase, including 10.5 percent for homeowners and 9.7 percent for renters.
The vote was divided, 3 to 2, because the board decided to approve a higher increase, which includes a "risk load," instead of the 8.5 percent increase it was initially considering for personal residential policies.
Nearly all Floridians are subject to paying fees to offset Citizens' deficits and a "risk load" is meant to mirror the interest rates Citizens policyholders would have to pay in order to be guaranteed claims-paying money if it were coming from private investors, according to John Rollins, a Citizens board member.
Citizens will submit both sets of rates for regulators to consider. Citizens Board Chairman Carlos Lacasa voted against it because he didn’t want the board to pick between the two.
Premiums for most of Citizens’ 583,526 homeowners insurance customers in South Florida would increase by about 11 percent because of surcharges that are not subject to the rate cap.
For many Citizens' customers, the rate hike will come on top of premium increases Citizens has made in recent years after doing inspections and revoking discounts for hurricane-resistant features of homes. Citizens estimates premiums have increased by $137 million based on inspections done the past few years.
Board members didn't take up a proposal to increase premiums by more than the annual cap after drawing fire about the plan from legislators, policyholders, consumer advocates and others in recent months. The higher rates would have affected an estimated 132,136 new customers in the tri-county area, according to Citizens.
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Ask a real estate pro: The consequences of walking away from a mortgage
Board-certified real estate attorney Gary M. Singer writes about the housing market in this space each Friday. To ask him a question about short sales, mortgages, refinancing, homeowner's associations or any other residential real estate topic, click here.
Q: My mom lives in Florida and she is currently “underwater” on her mortgage. Due to other circumstances, the house is in poor condition. She is considering just letting the bank foreclose and walking away. Before she decides, though, what are the potential ramifications and legal fallout of her doing this? – Bill
A: The answer to this question depends on your mother’s financial circumstance. When you decide to walk away from a mortgaged home, you still actually own the home until the bank, or someone else, becomes the new owner. If you mother chooses to just up and leave the property, she would be legally and morally responsible for everything that happens there until there is a new owner. Any homeowner’s association dues and any mortgage deficiency after the foreclosure could be turned into judgments that could then be collected against any of her savings or other assets.
However, a lot of people do not have any savings or own anything else. These people are commonly referred to as “judgment proof” because they don’t have anything for the bank or association to take.
Some homeowners who walk away from an underwater mortgage don’t stop to consider how their move affects other people. The neighbors will have their home values reduced or association dues raised. Or teenagers could wander into the unattended property and get hurt. I strongly recommend that you pursue all available actions, such as a short sale or deed in lieu of foreclosure, instead of just walking away.
Q: I own a condo in Boca Raton and I want to apply for a reverse mortgage. I was told that the association needs to be approved by the federal government. How does that happen? – Barry
A: Condominium associations must meet certain guidelines in order to qualify for most government-insured (Federal Housing Administration) loans. In order to get your association approved for this sort of loan, you need to check to see if your condo meets the requirements. The Department of Housing and Urban Development, which oversees FHA, will look at certain factors to determine if it will allow FHA loans to be issued in your community. Those factors include: number of units and how current your neighbors are on their association dues. FHA will give only a certain amount of loans in one community, so if too many of your neighbors already have this type of loan, you will not get one. Applying to HUD for this approval is a fairly arduous process, but it can be done. You can get all the information about how to do this here.
The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.
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Proposals to transfer Citizens' policies to private insurers
A Citizens Property Insurance panel discussed proposals Thursday to have private insurers take over large batches of its policies.
Most of the proposals called for having Citizens provide cash, loans or other forms of funding to private insurers in exchange for taking policies. Critics raised questions about how the idea would create new claims-paying capital in Florida and whether insurers would pay back the loans.
"I'm less inclined to support a plan [involving] cutting a check to anyone," said Carlos Lacasa, Citizens' board chairman. Any money Citizens forks over would reduce its $6 billion claims-paying reserves.
State leaders have made it a priority to shrink state-backed Citizens, the largest home insurer in the state with 1.4 million policies. Nearly all Floridians are subject to paying fees to offset the insurer's deficits.
Citizens employees reported to the depopulation committee that the insurer managed to shed 84,339 policies representing $20 billion in maximum potential losses so far this year, up from 53,577 policies representing $12 billion for the full-year 2011.
Citizens' employees will analyze some of the proposals before having the committee review them again. Citizens' board plans to vote Sept. 7. The proposals would then be weighed by the Office of Insurance Regulation and implemented early next year.
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Consumer advocate slams Citizens insurance over inspections
Insurance Consumer Advocate Robin Westcott on Thursday criticized Citizens Property Insurance's push to inspect homes and revoke discounts for hurricane-resistant features.
Insurance Consumer Advocate Robin Westcott on Thursday criticized Citizens Property Insurance's push to inspect homes and revoke discounts for hurricane-resistant features.
“Hardening of homes is the only way Floridians have to help control...the spiraling cost of insurance in this state...The more they hear, 'I didn't get anything for doing that,' the less they're going to” make upgrades, she told Citizens’ consumer services committee. "We've got some [inspectors] out there that either aren't doing it correctly or are doing it under instructions to take the credit away."
Westcott said her office has heard from "a lot" of real estate agents that Citizens’ inspections are killing potential home sales: “You might get to the closing table [and find out] you can't afford to buy that house anymore because the insurance is going to be greater than you expected.”
Citizens' executives said the insurer is doing the inspections so premiums and discounts are based on accurate information, not to raise premiums. “We're trying to do all the right things” but Citizens employees have to balance what regulators, elected officials, and others want, said Yong Gilroy, Citizen's chief insurance officer.
Westcott recommended Citizens use “plain language” for anything sent to consumers about inspections; require inspectors to pull permits; provide space for policyholders' comments on forms filled out during inspections; and provide detailed information to policyholders before inspections and after so they can make the right upgrades.
Carol Everhart, a Citizens board member and the committee's leader, asked Westcott to help Citizens draft a brochure to make the process easier to understand. Citizens plans to look into some of Westcott's other recommendations.
Westcott said her office is also concerned about proposals to reduce coverage for certain water damage to $15,000 and raise new Citizens policyholders' rates by more than its current cap of 10 percent a year. The insurer's board plans to vote on the proposals at a meeting in Miami Friday.
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