- Traditional migration, which slowed to a crawl and actually briefly reversed itself during the Great Recession, will pick up again, with Baby Boomers moving from up North to Florida. In fact, sometime in the next few months, Florida’s population will eclipse that of New York. I recall, back in 1987 when I arrived in Florida, that possibility seemed improbable. So, to be clear, Florida will now be the third most populous state in the Union, only behind California, and Texas.
- Such in-bound Florida migration patterns will lead to long-term continued real estate price increases as homeowners from the Northeast will perceive better values and lower prices in Florida and will perceive a form of regional arbitrage by moving. Further, the lack of a state income tax will become even more paramount as wealth continues to be amassed by the upper one percent.
- Further, climate change on the one hand add fuel to the fire as severe and extreme weather events up North continue to become more common, encouraging migration to Florida. On the other hand, rising ocean levels will make waterfront property more dicey as insurance issues will, sooner rather than later, come into play. Flooding, will become more common in low-lying areas of Miami and coastal South Florida, which will make it, at times, the true Venice of America. The likelihood that climate change will be internalized into actual housing prices is probably still a few years out.
- Short sales will dry up if Congress does not renew the important tax breaks that it already extended once, last January, 2013, to the 2007 Mortgage Debt Relief Act. That being said, look for more bankruptcies should Congress not extend the Act.
- Unemployment statistics in Florida will continue to drop as jobs in construction, real estate, the cruise business, health care, and tourist and hospitality industries continue to improve.
- Parts of South Beach and Brickell will be valued as world-wide destinations and will disconnect from the local real estate market as foreigners from Europe, and South America continue to flock to these areas, particularly through cash closings.
- Builders will continue to be in the market for land for new projects, but they will need sufficient cash as the banks will not be able to take on risks in the same way they did before the economic crisis.
- New foreclosures will continue to slow, but will stay well above pre-2007 levels as the shock of the economic crisis will continue to have a residual impact on the economy. Further, many home equity lines will begin to mature, and homeowners will not find the banks willing to extend or refinance such loans.
- Courts will continue to dismiss foreclosures when the banks are not prepared for trial or where homeowners mount a good defense and can show the banks have not sufficiently established their cases.
- The Florida courts, including the appellate courts, will continue to grapple with the topics of mortgages that were accelerated more than 5 years ago, whether banks can then bring new foreclosure actions, and what will happen to those properties. Obviously, we will fight hard for our clients in these matters as we don’t believe the banks should be entitled to a second bite at the apple when the 5-year statute of limitations has expired.
So… It will be a busy but good year for everyone.
All the best for the New Year!
From the Trenches
WEST PALM BEACH — Florida homeowners received more than $9.2 billion in home loan help through the historic National Mortgage Settlement negotiated last year, exceeding expectations by $800 million, according to a final progress report released Thursday.
The payouts, which came in the form of reduced loan debt, lower interest rates and allowing for short sales, were shared by 119,411 borrowers statewide, resulting in an average savings of more than $77,000 per homeowner.
Florida Attorney General Pam Bondi was a lead negotiator on the settlement made with the nation’s five largest banks to atone for mortgage- and foreclosure-related offenses. It is heralded as a real estate rejuvenator by some _ allowing borrowers to stay in their homes with lower mortgages, or facilitating short sales.
But others in Palm Beach County said the awards seemed arbitrary and that success was like winning a golden ticket.
“In many cases, the clients didn’t need the help. In other cases, they had already lost the home,” said Kevin Maher, community outreach director for West Palm Beach-based DebtHelper.com. “To be honest, it seemed almost random.”
Still, the agreement was the broadest effort yet to help the nation’s struggling homeowners. Nationwide, $51.1 billion in mortgage relief was doled out to 642,130 borrowers with the average homeowner receiving $79,704 in savings.
The five banks in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial _ were responsible for awarding varying amounts of relief. Bank of America gave the most at $27.8 billion.
Much of the aid came in the form of forgiveness of second loans. In Florida, $3.4 billion in second mortgages was erased for 49,808 borrowers.
Banks faced criticism early on for focusing on the secondary liens because it was money they likely would have lost anyway in a foreclosure, but it also allowed borrowers to more easily negotiate a loan modification on their primary mortgage, said foreclosure defense attorney Roy Oppeheim.
“We had a lot of second mortgages wiped out and that was like manna from heaven for my clients,” said Oppenheim, who is still critical of the settlement for being too lax on banks. “They got credit for things they would have already done without really paying for the robo-signing fraud that they committed.”
Delray Beach homeowner Jerry Rappelets said he was shocked when Bank of America hacked $120,000 off his primary mortgage, reducing his monthly payment by $900.
In the construction business, Rappelets and his family suffered financially when he was laid off and then got into a car accident that kept him from working for eight months. The mortgage reduction allowed him to stay in his home.
“It’s the house that my son came home to when he was born,” Rappelets said. “We’ve been there eight years.”
Thursday’s report was the fifth from the settlement’s monitor Joseph Smith. It covered the period from March 1, 2012 to June 30.
Because lenders do not earn a dollar-for-dollar match on relief provided to borrowers, the nationwide $25 billion deal has provided much more in mortgage aid to homeowners. For example, for every dollar forgiven by a lender on a second mortgage, it receives only a 10-cent credit toward its required settlement amount.
Smith cautioned that Thursday’s numbers were self-reported and had yet to be confirmed by his office.
This summer, banks were scrutinized by attorneys general for failing to meet customer service requirements that are outlined in the settlement.
In June, Bondi wrote Bank of America that she was ready to go to court to enforce the customer service side of the agreement after hundreds of homeowner complaints and affronts to her own staff. She said her office is having to get involved in cases where there are common-sense solutions that should be easy to reach.
In one situation, Bank of America allegedly refused to speak with a homeowner’s Legal Aid lawyer because of a “simple dispute over a ZIP code.”
On Thursday, Bondi said she will remain “diligent” in her efforts to ensure banks meet their obligations.
Real estate attorney and foreclosure defense attorney, Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife Ellen in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title and creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel. Follow Roy on Twitter at @OpLaw or like Oppenheim Law on Facebook .
Last week, I attended “A View from the Bench,” a semiannual rite sponsored for the past several years by The Daily Business Review. For the past few years, the topic has been one that is near and dear to my heart: Foreclosures. The nice thing about these forums is that they bring together a number of judges, as well practitioners, who either represent banks or homeowners, for what I think is a lively discussion about the state of foreclosure jurisprudence in Florida and particularly in South Florida.
If I was asked to summarize the event, or provide a comment that represented the major takeaway from the four-hour seminar, I would suggest that it would be one of the remarks made by one of the jurists as it relates to the Abbott and Costello slapstick comedy team when they performed their well-known “Who’s on First?” routine. In that dialogue it becomes clear that no one knows who’s on first base, on second, or third and the whole discussion reflects a big mess.
That is the current state of foreclosure in Florida. The big issue that everyone was asking was whether the governor would sign a new foreclosure bill (HB 87) that in some ways would make it more difficult for the banks to foreclose and provide homeowners certain rights, while at the same time deny homeowners certain due process rights and have the law apply in many ways retroactively in a fashion that is unconstitutional. The proposed law would further enshrine the idea of a permanent class of retired judges who are not truly accountable to anyone.