Tampa Bay home sales don't match Florida's 34% boost in Sept.

By James Thorner, St. Petersburg Times Staff Writer - Saturday, October 24, 2009

Florida home sales rose 34 percent in September compared with a year earlier, but Tampa Bay didn't share in that upsurge.

Tampa Bay Realtors reported a year-over-year sales increase of only 11 percent, far below sales spurts of 41 percent in Orlando and 42 percent in Sarasota.

Tampa Bay's underperformance left Realtors scurrying for answers. Earlier in the year, economists predicted the Nov. 30 deadline to use an $8,000 first-time home buyer tax credit would rev up sales in late summer and fall.

About 2,410 homes sold in September in Pinellas, Pasco, Hillsborough and Hernando counties. A year earlier, 2,174 homes changed hands.

Pinellas single-family home sales matched the state average, but the bay area's performance was dragged down by below-average activity in the other counties. But even Pinellas buyers were growing scarcer in September.

"We've heard appraisals didn't come in, banks dragged their feet too long and buyers got tired of waiting as reasons for the decline," the Pinellas Realtor Organization's Ann Guiberson said in a statement.

She could be channeling St. Petersburg Realtor Frank Malowany.
A specialist in the sale of million-dollar homes with Smith & Associates Real Estate, he grits his teeth as banks reject seven-figure, all-cash purchase offers for waterfront mansions facing foreclosure. What's worse, banks can take three to six months to decide.

"Nothing's smooth. If you're dying in a bed with cancer maybe they'll talk to you. Even then it's hard," Malowany said. "And we're talking cash buyers."

Nationally, home sales rose 9.2 percent from a year earlier, an increase that won guarded praise from the National Association of Realtors.

"Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home," said Lawrence Yun, economist with the national Realtor group.

Contrary to what Yun said, economists reported this week that the credit hasn't had a desired ripple effect by stimulating move-up home purchases.

Contrary to what Yun said, economists reported this week that the credit hasn't had a desired ripple effect by stimulating move-up home purchases.

Tampa Bay's median home price dipped nearly 5 percent from August to September, from $144,600 to $137,800. But prices have floated in a narrow range on both sides of $140,000 for most of this year, leading some to call a home price bottom.

A gathering of housing industry economists in Washington this week predicted that national home prices — as well as those in Tampa Bay — would drop a bit further as another wave of foreclosure homes enters the market over the next six to eight months.

Robert Denk, a forecaster with the National Association of Home Builders, rated Florida as one of the most overbuilt markets in the country and described a "long road back to normal."

Even September home prices might not tell buyers and sellers what's happening on the ground today, said Amy Crews Cutts, economist with government-backed mortgage lender Freddie Mac.

That's because people who closed on homes in September probably signed purchase contracts in July and August. That makes it hard, in a declining market, to know what a home's worth in October, she said.

If there has been one area of improvement, it has been in the number of surplus homes on the market.The inventory of homes for sale in and around Tampa — 14,433 — declined to its lowest level since spring 2006. In Pinellas, about 12,773 homes were listed for sale in September, down 36 percent from the 20,053 homes for sale a year earlier.

"We still have over 6,000 single-family listings on the market, when 3,000 to 4,000 would indicate a more balanced market as we had from 2001 through 2003," Guiberson said.

‘Underwater’ homeowners lead Sept. foreclosures

By DUANE MARSTELLER - dmarsteller@ bradenton.com

MANATEE — Most Manatee County homeowners who fell into foreclosure last month were financially “under water,” property and court records show.
Two out of every three owed more on their property than what it is worth, according to a Bradenton Herald analysis of property tax records and September foreclosure filings. The average deficit was $72,098.

The Herald’s findings didn’t surprise foreclosure experts, who said Monday that most Florida homeowners have been financially swamped by free-falling home values.

“I would have estimated it as closer to 100 percent,” said Shari Olefson, a Fort Lauderdale foreclosure attorney and author of “Foreclosure Nation: Mortgaging the American Dream.”

The average underwater homeowner in Manatee who was hit with a foreclosure suit in September owed $282,268 on a home valued at $210,170, the Herald’s analysis showed.

In the most extreme case, a bank claims a Michigan couple owes nearly $2.05 million on a Lakewood Ranch Country Club home that’s valued at $1.45 million. And it’s not just single-family homes: The owner of a Bradenton apartment complex valued at nearly $12.1 million is nearly $18.6 million in arrears, according to the lender seeking to foreclose on the property.

Two federal foreclosure-prevention programs have done little to help Florida homeowners because of the eligibility criteria, Olefson said.

With the average underwater homeowner in Manatee owing 134 percent of their home’s value, many don’t qualify for a refinancing program because it’s limited to 125 percent. Federal officials initially estimated as many as 5 million U.S. homeowners could benefit, but only 20,000 loans have been refinanced thus far, according to the Treasury department.

“Most of our properties are more than 25 percent underwater, so refinancing is out of the question for them,” Olefson said.

Another program requires mortgage modifications to cost homeowners no more than 38 percent of their income for the mortgage, taxes and insurance. “That option’s not available for many because our taxes and insurance are so high in Florida,” Olefson said.

The Herald’s analysis was based on each foreclosure case’s “estimate sheet” — the lender or servicer’s calculation of how much the borrower owes — and the subject property’s 2008 market value as determined by the Manatee County Property Appraiser’s Office. The number of underwater homeowners likely is higher, as home prices have fallen further since the property appraiser’s office calculated those values.

Lenders and servicers filed 534 mortgage foreclosure suits in Manatee County Circuit Court in September, eight more than they did in August. They have filed 4,829 such suits through the first nine months of 2009, or 16.5 percent ahead of last year’s record-setting pace.

More than 75 percent of September filings were against homesteaded properties, the highest percentage since the foreclosure surge began in late 2006. Among neighborhoods, Bayshore Gardens had the most foreclosure filings with 11, followed by Greenbrook Village with nine and Greyhawk Landing with eight.

The Case of the Missing REO Inventory

Rick Sharga - Realtytrac - October 7th, 2009

Certain things in life are simply meant to be mysteries. There are age-old philosophical questions that have kept philosophers busy for millennia: What is the sound of one hand clapping? If a tree falls in the forest and no one is there, does it still make a sound? Other mysteries hang heavy with intrigue: What really happened to Amelia Earhart? And who really kidnapped the Lindbergh baby? And still others simply defy logic: If Denny’s is open 24 hours a day, 365 days a year, why are there locks on the doors?

Now we can add another question to the list of ongoing mysteries: With foreclosure activity breaking records nearly every month, where are all the REOs?It’s a fair question. In normal market situations, a bank will repossess a home and usually process it through to a listing agent to put on the MLS within 30 days.

In a relatively short period of time, virtually every marketable REO property finds itself listed for sale on the local MLS. Today, that’s simply not the case; it’s likely that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. And with buyers hungry for housing bargains, and agents and brokers champing at the bit ready to sell the properties, it begs for a reasonable answer.

Lenders and servicers admit that it’s taking longer to process REOs than it has in the past, and they offer a number of legitimate reasons:

-Many of the properties have title issues that need to be resolved
-Many of the properties are in states of utter disrepair
-A number of states have strict redemption rights periods, which prevents the lender from reselling the property
-A few states have extended the length of eviction proceedings
-The sheer volume of REO activity has created a “pig in the python” phenomena, (to put this in perspective, there will be roughly four times the number of REOs this year as in the last “normal” year, 2005)

What else could be slowing things down? A popular theory is that many banks are holding the properties off the market in order to defer losses. There is some accounting logic to this theory, as in most cases banks aren’t required to adjust asset prices until the actual resale of the property.

Another idea is that the industry is holding back the inventory to create leverage with the government in order to force the creation of a “toxic bank” or RTC-like entity that would buy the distressed assets at 50 to 60 cents on the dollar rather than the 30 to 35 cents available on the market today.

This theory suggests that, seeing the threat of a massive inventory of distressed homes being released all at once, the government would “blink” rather than risk another housing market meltdown.

Whatever the reason — process issues or conspiracies — we’re going to continue to see record-breaking numbers of REOs for at least the next year, and will all be watching to see when these sought-after homes finally make their way to the market.

Owners believe homes worth more

By Aaron Kessler - Sarasota Herald Tribune - Published: Monday, August 31, 2009

SURVEY: Listing, and selling, prices continue to disappoint

A new survey by Calif.-based HomeGain shows that a disconnect still remains between what sellers in Florida think their homes are worth and what buyers are willing to pay.

The third-quarter survey of Florida real estate agents, released last week by HomeGain, found that the vast majority of sellers -- some 70 percent -- continued to believe their homes were worth more than even their own Realtors were telling them.

The percentage of buyers who believed that home prices were "fairly valued" increased in the third quarter, to 24 percent. That was up from 18 percent in the second quarter, and 15 percent in the first quarter of 2009.

But it would appear many Florida sellers have yet to come to grips with the reality of the market.

The HomeGain survey found that 35 percent of sellers thought their homes were worth 10 percent to 20 percent more than the listing price recommended by their Realtors.

Seventeen percent were even more bullish (or deluded, depending on your perspective) and thought their homes should fetch 21 percent to 30 percent more, and 6 percent thought their property should be priced 30 percent higher.
Conversely, only 1 percent of sellers thought their home was worth 10 percent to 20 percent less than their agents recommended; 3 percent of sellers, 21 percent to 30 percent less; and 4 percent, more than 30 percent less.

Only 15 percent of Florida homeowners in the third quarter agreed with the listing price their Realtors recommended. Though that number has been steadily rising all year -- up from 10 percent in the second quarter and 5 percent in the first quarter -- a possible indication that some sellers are more willing to listen to their sales agents when it comes to price.

Overall, however, an overwhelming 70 percent of Florida sellers thought their homes were worth more than their listing price.

Florida sellers were not alone in their sentiment -- the national numbers released by HomeGain found that 74 percent of sellers in the United States as a whole thought their homes were worth more than the recommended listing price.

In terms of what buyers are looking for, and getting, in the Florida market, it was almost always a discount from the asking price, the survey found. In fact, an average of only 5 percent of buyers purchased a home for its listed price in the third quarter.

Eighty-four percent of buyers paid less, in some cases considerably less. On average, half of the homes sold went for a discount of between 5 percent and 10 percent less than their listing prices, the survey found. Thirty-two percent of homes sold for between 11 percent to 20 percent off the listing price, and 2 percent went for a discount of 21 percent to 30 percent.

Florida's Realtors actually grew more pessimistic in the third quarter about where prices could be headed: Of the agents surveyed, nearly half, 46 percent, believed that home values will fall in the next six months. At the end of the second quarter, only 24 percent believed that.

In terms of how the value of their clients' home values have fared over the last year, 93 percent of the real estate agents said prices have decreased. That was up from 82 percent at the end of the second quarter.

The percentage of agents who reported their clients' home values have stayed the same in the last year shrunk to only 4 percent, down from 13 percent in the second quarter.

Only 3 percent of agents reported the values of the homes they had listed actually increased since last year.

New Home Valuation Code of Conduct cures some ills, creates new ones

By James Thorner, St. Petersburg Times Staff Writer, Sunday, August 23, 2009

Builder Charlie Hannah thought he was being generous when he agreed to sell a new 5,000-square-foot home for $1.15 million in the Tree Tops neighborhood near Tampa's Westchase.

But the appraiser returned an appraised value of $1 million on the lakeside house in June. Two months later, the sale remains in limbo and Hannah remains indignant.

Four other homes Hannah built in the same neighborhood recently sold for much more per square foot than the $1.15 million home. But the appraiser found a comparable home sale miles away in Odessa to justify what Hannah considers to be a low-ball valuation.

"I was floored by this. I still don't know how the appraiser could have done this," Hannah said. "I'm trying to rescue the deal now. But it's requiring 10 to 20 times the work it used to."

That message has reverberated through the Tampa Bay real estate community ever since the government's antifraud rules went into effect in May. The reform, though well intended, has inadvertently made it harder to sell and refinance homes in the Tampa Bay area. And it couldn't have come at a worse time as the housing market tries to shed the lead boots it has worn since 2006.

The new rules, called the Home Valuation Code of Conduct, forbid mortgage brokers, banks and Realtors from working directly or sharing information with appraisers. They typically work through appraisal management companies, middlemen whose job it is to hire appraisers from a pool.

Real estate professionals complain that appraisers have become discount commodities who are strangers to the neighborhoods they're evaluating. And since they're often allowed only 48 hours to complete an appraisal — about half the average time compared to before the reforms — the result can be hack work that ends up squelching a home sale.

"Appraisal management companies, with very few exceptions, select by price and turnaround times," said Frank Gregoire, a Pinellas appraiser with 30 years experience. "Rarely is their highest criteria the quality of the appraisal."

No one denies that reform was needed. Manipulation, and sometimes bribery, of appraisers helped doom the real estate market to its prolonged purgatory. By working too closely with appraisers, con artists stole billions of dollars through mortgage fraud during the years of the real estate boom. Tampa has ranked among the top 10 cities for mortgage fraud, represented by criminals such as Matthew Cox, serving a 26-year prison term for stealing $12 million from lenders.

"There was an egregious wrong perpetrated on the public," Hannah said. "The reforms were done for the right reasons. But we need a more thought-out system to do what it was intended to do.''

Residential appraisers work by tracking similar property sales — called comparisons or comps for short — to suggest the market value of a home that is for sale. Usually they use at least three comps; the more recent the sale the better. Factors weighed include age of the home, size, location and condition, but also whether the sale involved a foreclosed home or a non-distressed property.

Since the new rules took effect, the law of unintended consequences has upended real estate deals. St. Petersburg Realtor Nancy Riley blames sloppy appraisals. She had a buyer for a sixth floor Feather Sound condo overlooking the water and golf course. Both parties agreed to the $200,000 purchase price.
But the lender, using an appraisal management company, got an out-of-county appraiser. The disappointed buyer and seller learned the condo appraised at only $157,000. As two of his comps, the appraiser used a unit in a former assisted living facility and a single story condo without a view.

Riley tried to challenge the appraiser's findings — which included wrong photos attached to the wrong properties — but got a cold shoulder from the bank. She's still trying to salvage the deal.

"I sent them two pages of things wrong with the appraisal. They refused to listen," Riley said. "I got one or two snippy responses."

Mortgage refinancing — the centerpiece of the government's antiforeclosure efforts — has also suffered. Gregoire noted a case involving a house in upscale Tierra Verde. The home owner sought a reverse mortgage to pull cash from the home. Taking into account the recent depreciation, the home owner estimated the 2,000-square-foot home at $400,000. The initial quick-hit appraisal, using a $10 computer-generated valuation that isn't as good at distinguishing some of the nuances of real estate valuations like the differences between nearby neighborhoods, delivered a market price of $252,000.

When a real appraiser went to work on the house after driving up from Fort Myers, he, too, concluded the house was worth $252,000. Gregoire assumes the appraiser shoe-horned in comparable sales to make his numbers match the computer-generated price.

"That happens with appraisers who lack geographic confidence,'' Gregoire said. "I've been doing appraisals 30 years, but I don't go outside of Pinellas County. The most important thing is to know neighborhoods and submarkets.''

Safety Harbor-based appraiser Ed Walter blames part of the problem on rookie appraisers who work for peanuts. Walter charges $325 for his work. The appraiser management companies charge more, sometimes hundreds of dollars more. But they share only $150 to $200 of their fee with the appraiser from the pool. The consumer pays more but gets cut-rate work.

"The industry has lost a lot of good appraisers. There are lots of newbies willing to work for cheap and travel 50 to 100 miles," he said. "They're coming from Citrus County to do an appraisal in Hillsborough County. It's making a big difference.''

Disgruntled real estate professionals are proposing reforms to the reforms, including an 18-month moratorium on the Home Valuation Code of Conduct. Hannah would like to build a database, fed by Realtors, to ensure accuracy.
For example, some homes with dead lawns and ratty roofs sell cheaply, but by the time the appraiser uses them as comps they've been repaired. The appraiser might assume the home was pristine at the time it was sold, and that it's low price was reflective of the overall market.

One further wrinkle: To win the business of banks, some of the appraisal management companies offer clients guarantees that homes they appraise won't fall into mortgage default. That means it's sometimes better to err on the low side.

"It seems to me like the banks don't want to lend in Florida," Riley said. "We're being red-lined and boycotted.''

In Appraisal Shift, Lenders Gain Power and Critics

By David Streitfeld, New York Times, Published, August 18th, 2009

Mike Kennedy, a real estate appraiser in Monroe, N.Y., was examining a suburban house a few years ago when he discovered five feet of water in the basement. The mortgage broker arranging the owner’s refinancing asked him to pretend it was not there.

Brokers, real estate agents and banks asked appraisers to do a lot of pretending during the housing boom, pumping up values while ignoring defects. While Mr. Kennedy says he never complied, many appraisers did, some of them thinking they had no choice if they wanted work. A profession that should have been a brake on the spiral in home prices instead became a big contributor.

On May 1, a sweeping change took effect that was meant to reduce the conflicts of interest in home appraisals while safeguarding the independence of the people who do them.

Brokers and real estate agents can no longer order appraisals. Lenders now control the entire process.

The Home Valuation Code of Conduct is setting off a bitter battle. Mortgage brokers, lenders, real estate agents, regulators and appraisers are all arguing over whether an effort to fix one problem has created many new ones.

The agents, maintaining that the changes are effectively blocking home sales by encouraging the use of inexperienced appraisers, are asking Washington to suspend the code until 2011. For their part, appraisers acknowledge that the change may have been well intentioned but contend that it has no teeth and is undermining the economics of their profession.

“We’ve been begging for years for enforcement of existing state and federal laws regulating appraising,” said Mr. Kennedy, a leader in the appraisal community. “We thought we were finally going to get that. But the code is doing nothing except putting ethical appraisers out of business.”

Financial change is one of the most contentious issues in Washington, and efforts to fix even widely acknowledged problems seem stalled. The attempt to change the appraisal system is an example of how difficult it can be to adopt changes that are good in theory and also work in practice — while simultaneously winning support from warring interest groups.

“The real estate industry is incredibly complex,” said Josh Denney, a lobbyist with the Mortgage Bankers Association. “If you take one piece and tinker with it, it causes friction throughout the process.”

The Home Valuation Code of Conduct had an unusual origin. It was developed by the New York attorney general, Andrew M. Cuomo, who persuaded the big federal mortgage agencies, Fannie Mae and Freddie Mac, to adopt it. That has effectively made it national policy.

Putting appraisals completely in the hands of lenders may sound like a good idea in principle, because it is supposed to be lenders who are putting their money at risk in a home loan.

But the reality is that many companies that write home loans these days do not have much incentive to worry about the accuracy of appraisals. That is because the companies do not keep the loans on their own books, instead selling them to Fannie Mae or Freddie Mac.

“The code is a formula for continued problems with fraud,” said David Callahan, a senior fellow with the public policy group Demos who has studied appraisals. “Appraisers have been asking for a long time for a reliable firewall between themselves and lenders, and are further from it than ever.”

Appraisers Pressured

Before real estate prices went out of control, appraisal work was straightforward. The appraiser examined a property inside and out, judging it against the prices that similar properties in the neighborhood were fetching. If the appraisal value matched the sales price, the lender financed the loan.

As lending standards collapsed during the housing boom, appraisers were pressured from all sides. When the appraiser did not deliver a satisfactory price, the deal did not get done, and the broker, agent and lender did not get their fees. Homeowners also loved inflated appraisals, using them to take out as much as possible when they refinanced.

“I got daily calls from lenders and brokers saying, ‘Here’s the address. Can you get me $400,000?’ ” said Mr. Kennedy, who has been in the business since 1993.

When he responded that it was illegal for him to supply an unsupported value — or when he noted in his report defects that the client hoped he would ignore, like a flooded basement — the broker or lender dropped him for a more compliant appraiser.

Petition Notes Abuses

The honest appraisers saw that the situation was helping to drive housing prices beyond reason. A petition they started a decade ago, just as the long boom was getting under way, warned of “the potential for great financial loss” to the economy if the penalties for pressuring appraisers were not enforced. The petition also complained that honest appraisers were being blacklisted. It drew 11,000 signatures.

Regulators and lawmakers did nothing. A rising market covered all sins. Then the market turned, and the lawsuits began.

In late 2007, Mr. Cuomo filed suit in New York Supreme Court against the data company First American and its subsidiary eAppraiseIT for fraud.

EAppraiseIT is an appraisal management company, which means lenders hire it to hire appraisers. This method, First American stressed in its annual report, produced “unbiased valuations” that benefited “not only the homeowner and lender, but our nation’s economy.”

Washington Mutual, based in Seattle, was the biggest client of eAppraiseIT. (Mr. Cuomo could not sue Washington Mutual for jurisdictional reasons.) The suit, still in court, charges that eAppraiseIT let itself be pressured by Washington Mutual to revise appraisals upward to match the value of deals.
Washington Mutual collapsed last fall, the largest bank failure in the nation’s history.

Mr. Cuomo, convinced that the troubles with appraisals went far beyond a single case, began an inquiry into Fannie and Freddie’s role in the buying of fraudulent mortgages. Before that investigation could be concluded, the two finance companies agreed they would buy mortgages only from lenders that abided by a new code of conduct.

In its original draft, the code froze out brokers and agents and placed severe restrictions on lenders. They were forbidden from using their staff appraisers or an appraisal management company in which they had more than a 20 percent interest.

The American Bankers Association and the Mortgage Bankers Association fought the restrictions, saying they would increase costs to consumers. The lenders also argued that Mr. Cuomo had no jurisdiction over their federally chartered operations. Banking regulators, who saw their authority being usurped, agreed.

The final version of the code gives much greater leeway to lenders. For instance, lenders can hire their own appraisers if they “recognize” that complaints will be forwarded to regulators.

The appraisal world was stunned. Dave Biggers, the chief executive of A La Mode, a maker of software for appraisers, said, “It’s like telling me I can steal as long as I ‘recognize’ that complaints will be directed to the police.”

Benjamin Lawsky, a special assistant to Mr. Cuomo, defended the revised version. “Our goal was always for the code to eliminate the causes of appraisal inflation while minimizing any disruptive impact on the industry,” he said. “We believe we accomplished this.”

Since national lenders cannot maintain lists of appraisers in every community, they long ago began outsourcing the process to the management companies, who had claimed about 30 percent of the market before the code took effect. Now that the lenders are the ones ordering all the appraisals, the management companies are expanding their share.

Real estate groups say the management companies, with the competition from brokers and agents eliminated, are now trying to fatten their profit margins by hiring appraisers as cheaply as possible.

These inexperienced appraisers, often traveling many miles to a market they do not know well, are scuttling legitimate deals, the agents claim. This argument has resonated in Congress, where 55 legislators have sponsored a bill calling for an 18-month moratorium on the code.

Appraisal management companies and lenders say the agents’ charges are not true.

“We’re an easy scapegoat,” said Donald Blanchard, chief compliance officer of Lender Processing Services Inc., which works with 20,000 appraisers. “We’ve yet to see any quantifiable proof as to the problems that management companies are supposedly causing.”

The real source of trouble for independent appraisers, he suggested, is not the code but a changing economy.

“Appraisers want to go back to the way it used to be,” Mr. Blanchard said. “But it’s good business for us to demand more for less.”

Fees Decline

Terry and Andrea Hartlieb, longtime appraisers in Fort Collins, Colo., miss the old days.

Instead of developing relationships with brokers and agents, the Hartliebs must wait for a lender or appraisal management company to call. A year ago, they would make $350 for an appraisal that would take about five hours. Now the management companies offer as little as half that. The couple has laid off four appraisers who used to work for them.

One recent call was about a complex property that would take additional time. Mr. Hartlieb asked for a bigger fee. The response: “We can get it done faster and for less elsewhere.”

Mrs. Hartlieb said, “Buying a house is the largest expense of your life. Don’t you want the best professional advice about its value, not the cheapest?”

Appraisers might be earning less, but consumers are being asked to pay more. The cost of an appraisal is now about $500, up from $400, appraisers say, because of the management companies’ share.

Moreover, if the goal of the code is to lessen pressure on appraisers, it is not clear that is happening.

A memo from U.S. Bancorp, which is based in Minneapolis, was posted recently on Appraisers’ Forum, an online discussion group. The memo bluntly urged the lender’s appraisers to “try and get the value we need the first time.” (A U.S. Bancorp spokeswoman said the memo was “not an official document.”)
In an online poll of 2,250 appraisers by Working RE magazine, half the respondents said they sometimes felt that management companies were ordering them to come up with a value that would make the deal work.

Banks and appraisal management companies say appraisers can be hypersensitive. “To some appraisers, the fact that we call you and ask a question is pressure,” said Mr. Blanchard of Lender Processing Services.

Under the code, the role of deciding what is pressure is assigned to a new entity called the Independent Valuation Protection Institute. If appraiser complaints are deemed valid, the institute is supposed to forward them to regulators.

Seventeen months after it was announced, the institute has no staff and no appraiser complaint hotline. All that exists is a single Web page.

Mr. Callahan, who wrote about the trouble with appraisals during the boom, is dismayed that the problem cannot be fixed even during the bust.

“Appraisers play a key role in keeping real estate transactions honest,” he said. “But we as a society have done very little to support them and ensure their independence.”

Florida tops again in late mortgages

By DUANE MARSTELLER, Bradenton Herald, Friday, August 21st, 2009

Florida’s mortgage-delinquency rate remains the country’s highest, a national bankers group said in a report released Thursday.

More than one in five Florida mortgages either were at least one payment behind or in foreclosure as of June 30, almost twice the U.S. rate, the Mortgage Bankers Association said in a quarterly delinquency report.

“Florida continues to establish itself as the worst state in the union for mortgage performance,” said Jay Brinkmann, the trade group’s chief economist.
“Clearly we have not seen the bottom in Florida,” he said in a later interview.

The state led the nation with 12 percent of mortgages somewhere in the foreclosure process at the end of June. Another 10.8 percent were at least 30 days behind in payments, with nearly half of those more than 90 days overdue.
In contrast, just 4.3 percent of U.S. mortgages were in foreclosure and another 8.9 percent were delinquent but not yet in foreclosure. Still, the combined U.S. foreclosure/delinquency rate is the highest since the association began tracking it in 1972.

Observers attributed Florida’s weak showing to rising unemployment, falling home values and a higher percentage of non-primary homeowners.

“It’s getting to the point where we’re deeper into the recession, and people have hung on as long as they could possibly hang on and no longer can afford to keep paying their mortgages,” said Bob Stobaugh, a senior lender at Sentinel Mortgage Co. and president of the Gulf Coast Mortgage Bankers Association.

Some can’t pay because they’ve lost their jobs: Florida’s unemployment rate was 10.6 percent in June, the latest month for which figures were available.
For others, it’s because a foreclosure-fueled drop in home values has left them “under water” on their mortgages, Stobaugh said. Nearly half of Florida homeowners owed more than their homes are worth as of June 30, tracking service First American CoreLogic said in a recent report. Florida also is seeing more delinquencies and foreclosures involving second homes and investor-owned properties because it has more of them and foreclosure-relief efforts are focusing on primary homeowners, Stobaugh said. About 27.4 percent of single-family homes in Manatee do not have homestead exemptions, according to the Manatee County Property Appraiser’s Office.

The report said the mortgage crisis, which began with subprime loans taken out by those with spotty credit, also continued to spread. One in three new foreclosures between April and June was from a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans caused the largest share of foreclosures.

“The rise in prime delinquencies . . . is a clear indication that employment is the driver of mortgage performance, with the worst performance coming in those areas that are combining jobs losses with large drops in home values like California and Florida,” Brinkmann said. “We won’t see a turnaround in delinquencies until we see improvements in employment, most likely the middle of next year.”

Stobaugh agreed, but wasn’t sure when that would happen. “Sooner or later this downward spiral will stop,” he said. “When, no one knows.”

McClatchy and the Associated Press contributed to this report.