Week in Review: Toxic Real Estate, Foreclosure Perks, Shrinking Inventory and Fat Cats

Roy Oppenheim in USA Today
Roy Oppenheim talked to USA Today in an article published this week on free falling home prices. It seems the real estate situation in Las Vegas is even worse than South Florida: two out of every three Las Vegas homeowners are upside down on their mortgage.

“I looked at our expenses like a corporation looks at their expenses, and the house was a toxic asset,” says one Vegas homeowner, who fashioned his own bailout with a strategic default.

As of yet, mortgage lenders nationwide have not been aggressive in pursuing deficiency judgments. But Florida foreclosure defense attorney Roy Oppenheim cautions that they still have time, and many will likely sell such cases to debt collection agencies. “I don’t think we’ve seen the end of this yet,” he warns in the USA Today Money section.

Florida foreclosure perks from Fannie Mae
Good news for Florida foreclosure buyers and real estate agents! Fannie Mae offers more incentives (up to 3.5 percent of the final sales price to use toward closing costs) for buyers who purchase a home listed on the company’s HomePath website. In addition, real estate agents who represent the buyer can receive a $1,200 bonus.

Palm Beach County leads state in home foreclosures, but buyers zero in
Paul Owers of the Sun-Sentinel noted Thursday that lenders repossessed 1,133 Palm Beach County homes in May, the highest total in Florida. This is a 56 percent jump from April and 38 percent increase from a year ago, according to RealtyTrac. However, as The Palm Beach Post’s Kimberly Miller reports, South Florida’s real estate inventory is shrinking as the number of homes for sale drops to its lowest number since the economy imploded in 2008.

About 49,900 residential properties in Palm Beach, Broward and Miami-Dade counties were listed for resale as of June 13, according to Condo Vultures; less than half of the nearly 108,000 homes for sale in November 2008.

Condo Vultures echoed South Florida Law Blog’s previous stance that delayed foreclosures and foreign investors are principally responsible for this inventory reduction.

“Buyers, especially foreign investors with strong currencies, are scooping up South Florida properties at dramatic discounts due to the lack of financing available for domestic buyers,” Condo Vultures said.

While the report indicates Palm Beach County carries the most inventory, another new report released found that Palm Beach County was the among the top ten real estate markets searched in May.

Obama, ‘fat cats’ and the myth of the new economy
Hmmmmmm. President Obama gathered a room full of the very financial executives he’d previously labeled ‘fat cats’ in an effort to win back many longtime campaign donors, The New York Times reported this week. Whether the current administration can convince Wall Street that its efforts to closely regulate big business was vital to the economy’s survival remains to be seen. In an earlier post, South Florida Law Blog provides extensive commentary on this issue, as well as an article in Time Magazine debunking five destructive myths of the New American economy.

Stay tuned for Monday’s post on how leading credit ratings companies (AKA “key enablers” of the financial meltdown) are being investigated for fraud, incompetence and deliberate neglect by the SEC.

Happy Fathers Day to all Fathers, Father figures and Fathers in your lives.

From The Trenches,
Roy Oppenheim