Mortgage Malaise is Spreading

St. Petersberg Times ^ | 7/22/2006 | James Thorner

[ex-Texan]

Many brokers thrived last year amid record home sales, but this year the industry has taken a turn for the worse.

TAMPA — The sneeze came first: Home sales in the Tampa Bay area dropped by a third from last year’s peak.

For symptoms of the developing head cold, plunge into the exhibition hall at the Tampa Convention Center, where the Florida Association of Mortgage Brokers is holding its annual trade show.

Puffed up to handle record-breaking home sales of last year, which poured money into savvy brokers’ pockets, the residential lending industry and affiliated businesses are mostly deflating this year.

On Friday, the first day of the trade show, one exhibitor, Eagle Title, issued a common refrain: The company’s nine Florida offices closed about 600 home sales a month last year. This year it’s about 150 a month.

“A lot of people are getting laid off. They’re cutting back the whole real estate industry,” said Julie Durkee of Eagle’s St. Petersburg office.

Cammie Aucoin of AmPro Mortgage in Tampa said the new buzzword in the industry is for people to dump their adjustable-rate mortgages in favor of fixed-rate mortgages. Anything to drum up more business.

“It’s not like it was. You sell what you have to sell,” Aucoin said. “Everything peaked out in November and December.”

Not that the 375 exhibitors weren’t bringing out all the gimmicks to keep the good times rolling.

Flick Mortgage Investors brought a steel drum-playing, dreadlocked reggae singer. Women in bikinis handed out literature.

One massive pile of man behind the kiosk of Madison Equity Corp. was none other than retired National Football League star William

“Refrigerator” Perry.

“Yeah, it’s me. How you doing?” the former Chicago Bear said, offering an oversized palm and autographed photo.

Phoenix Title Services cheerfully dispensed Amstel Light from beer kegs at 10:30 a.m., when many still munched breakfast muffins.

Foam desktop squeeze toys — shapes included piggy banks and beach balls — proliferated as giveaways for the estimated 6,000 attendees.

“Sir, do you have a squeeze ball? Who wants to relieve the stress?” microphone-wearing Dan Zink barked to passing brokers from the pavilion of lender First Franklin.

Les Merker of Clearwater’s Direct Lending Partners said business was fine. But he complained about a flood of half-trained brokers trying to turn a quick buck.

The Florida real estate boom created hordes of new mortgage brokers. The number of license holders grew from 28,140 in 2000 to 67,266 in 2006, according to the Florida Office of Financial Regulation. Only a fraction make a living in the field, however.

“Integrity is important. I’m here for the long run,” Merker said. “There’s people out there charging 7,000 bucks for a loan to make a quick killing.”

Fewer are making a killing this year. The Florida Association of Realtors reported a 35 percent dip in the sales of existing homes and condominiums from May 2005 to May 2006. New-home sales are similarly afflicted.

In Pinellas and Hillsborough counties, sales fell from 6,748 to 4,364, a trend repeated in Pasco and Hernando counties. Brokers said the anticipated summer uptick in home loan applications never occurred.

Rising interest rates catch most of the blame for the downturn, but brokers such as Rob Talley of Greenpoint Mortgage in Tampa insist the current 6.5 percent is a bargain, if anyone’s listening.

“It’s not as bad as the people think,” Talley said. “It just takes longer to sell homes this year.’’

But Durkee, the title company employee, is feeling the hurt. She cited a “massive slowdown” in former boomtowns like Spring Hill in Hernando County.

One female conventioneer passing Durkee’s display offered words of consolation: “We worked like dogs the last three or four years. Now we can slow down.”

Forget about that, Durkee replied. “I don’t like it,” she said. “I’d rather work.”

[ex-Texan]

" . . .the new buzzword in the industry is for people to dump their adjustable-rate mortgages in favor of fixed-rate mortgages. Anything to drum up more business."

For all the naysayers wearing pink booties out there, "Just cry me a river . . . Waaahh . . .!" You all know who your are, too. Watch the KEY WORD vandals strike again. They always vandalize key words when they want help. I call B.S. early this time. Unable to post decent replies, they just signal others to pile on. You know who they are, too. The same people everytime: They must be realtors and mortgage brokers. They repeatedly post the same type of jibes. Others egg them on by saying things like, "Great response." As if anybody is listening. Their actions are just like throwing garbage into a heavy wind.

[ex-Texan]

*Ping*!

[little jeremiah]

The real estate market in SW OR seems to have peaked...talked to a realtor today and she said a lot of the properties in this area have been reduced in price. A couple of months ago newspaper in the nearest town said a lot of the giant spec houses are not selling and builders are knocking the prices down.

Coincidentally (or not) I talked to an antique dealer today who runs an indoor market with some other stores in it and he said business is really bad. I asked him if it was just his niche or more general. He replied that a lot of the businesses in town are not doing well at all. They were hoping that a lot of the new residents who bought big fancy new houses would be spending money, but they aren't. And tourism, which is usually a mainstay in the summer, isn't happening either.

[SteveMcKing]

"They must be realtors and mortgage brokers."

For some reason there are certain people who think they are entitled to a good economy. Capitalism for them, communism for everyone else.

Most realtors and brokers are included in that category, as well as builders and farmers who hire illegal migrants.

[Porterville]

Wow, you must be a prophet... you only been saying there would be a down turn for the last 3 years...


I bet there will be an upturn next year...

But hey, I keep making money... so you must be wrong.

But then again, you are just an angry little man afraid to try because you are afraid to fail. Thus, you will always be a loser.

[I still care]

The bottom has fallen out of the real estate here in Tampa because of a homeowner's insurance crisis here. In this area of Pasco, right above Tampa, there are no companies writing new policies.

The state company has outrageous premiums; it almost pays to stay in places like NY. I had a house up there with $6500 a year taxes and $650 a month insurance; down here I have a house with $1500 taxes and $3500 a year insurance. Little 3 bedroom house.

At least two people have told me the insurance has made them change their plans to move to FL. People with mortgages are losing their homes. Older folks with no mortgages are just going without coverage.

[I still care]

whoops I meant to type $650 a year insurance.

[I still care]

State insurer has a fight on its hands
Homeowners across the state are banding together to protest Citizens and the high cost of property insurance.
By TOM ZUCCO, Times Staff Writer
Published May 24, 2006

---

They don't take over government offices or wave banners on street corners, and there are no plans to publicly burn their Citizens Property Insurance policies. But that may be next.
For the first time since Hurricane Andrew struck Florida in 1992, homeowners are banding together around the state, either through Web sites or through condo/homeowners associations, and protesting the soaring cost of property insurance.

Public Enemy No. 1 appears to be Citizens Property, the state-run insurer of last resort, which has swelled with high-cost policies dumped by private insurers who are cutting back or fleeing the market entirely.

People who have never before been involved in any kind of organized protests are finding themselves collecting petitions and joining groups whose sole aim is to present a united front to government leaders.

And some of those political leaders are starting to notice. Anti-Citizens Property groups, including one in Port Richey and one in Monroe County, are "popping up everywhere,'' said state Sen. Mike Fasano, R-New Port Richey.

"This was totally unexpected,'' Fasano added, "and it is surprising everyone.''

One group emerged after residents of the Green Dolphin condominiums in Tarpon Springs learned in January that Allstate was dropping their policy. When they found out that Citizens was the only insurer that would cover them - and that their yearly premium would jump from $22,000 to $69,000 for 84 units - panic set in.

The residents, most of whom are elderly and have limited incomes, have to come up with an additional $500 per unit by the end of this month to cover the cost.

"At first, I was very upset,'' said Dale Piskie, a 64-year-old widow who has lived at Green Dolphin since 1991. "Where was I getting this money? Then I got mad. I had to do something.''

What she did was write a letter to Gov. Jeb Bush and local government officials asking for help. Then she went door-to-door and got nearly 300 residents to sign it.

"They government officials aren't going to listen to just me,'' said Piskie. "I'd love to be able to get other associations to do the same thing, so something gets done.

"It isn't about what Citizens is doing. It's about what we need to do, and 300 voices is louder than one.

"We're fighting for our lives here.''

In western Pasco County, which has been hit particularly hard by rate increases because of the added burden of sinkhole risks, residents took to the Internet. The Web site Homeowners Against Citizens Insurance (web.tampabay.rr.com/hac/) was started in March by Barbara Polsky after a group of about 100 Pasco residents traveled to Tallahassee to protest insurance rates.

The site now has about 300 members and serves as a repository of information relating to the property insurance market. It's also a place to vent.

"One person doesn't get their voice heard,'' Polsky said. "We're losing our houses, everything we worked for. Now maybe people will start to listen.

"We're trying to take this statewide.''

Polsky, 64, saw the insurance on her 1,500-square-foot Port Richey home rise from $453 in 2002 to about $3,000 today. As her insurance rises, so do her mortgage payments.

When she and her husband bought their home in 2002, their mortgage payment was $550 a month. This year, it's $853.

"Next year, we figure it will be at least $1,200, and we can't handle that,'' said Polsky, who is disabled. "My husband brings home $820 a week. We'll have to leave, either face foreclosure or sell under market value.''

"I want Citizens dissolved,'' she said. "This is not working.''

Like most of the new activists, Polsky was never involved in any form of protest until now. "I always thought those people were stupid,'' she said.

Not any more.

"My husband and I put $35,000 down, everything we had, on this house,'' she said. "And we stand to lose it all. If that's not enough to infuriate you, something's wrong.''

Some days, she says, she's so busy working on the Web site she doesn't even get her dishes done. "But,'' she said, "I wanted to at least do something.''

Fasano, the state senator, thinks at least some of the anger grew out of what happened, or didn't happen, in the recent legislative session.

"I don't think we went far enough,'' said Fasano, who voted against the insurance package passed by the Legislature. "We should have paid off the entire deficit and overhauled Citizens.''

What people such as Piskie and Polsky are doing is a reaction to the feeling of being ignored by government, Fasano said, with more groups like theirs likely to emerge.

And it's not just homeowners who are speaking out. "You know who's contacting me now?'' Fasano asked. "Real estate agents, mortgage brokers, bankers and developers. They're not happy campers.''

The lack of affordable insurance is hitting the real estate market hard, Fasano said, leading to a ripple effect that touches a growing number of businesses, even those outside the market. "It isn't a bad idea,'' Fasano said, "to hold a special session of the Legislature to really address this even farther.''

The insurance industry blames eight hurricanes in the past two years that caused about $39-billion in insured losses.

And for its part, Citizens maintains it is not the bad guy. By law, Citizens has to charge the state's highest rates to avoid competing with private insurers and truly remain the "last resort.''

Most of Citizens' policies are in high risk areas where no other company would provide coverage.

Unlike private insurers, Citizens is a nonprofit corporation that does not reward its executives with huge salaries and bonuses.

And it has to play by the rules the state has set up. After Andrew, the state froze rates and issued a moratorium on policy cancellations. A private insurer could not drop more than 10 percent of its policyholders in a given county in a year.

Those laws, unpopular with the private insurance industry, have since expired.

But at least, Citizens officials say, someone is out there writing new homeowners policies.

"The good news is the Legislature has created a way for Floridians to have coverage where the private market doesn't provide it,'' said Citizens spokesman Justin Glover.

"If it weren't for Citizens, 850,000 homeowners would have nowhere to turn for insurance.''

That, however, is of small consolation to struggling property owners such as Dale Piskie.

"It's really sad,'' she said. "I thought I could stay here the rest of my life.''

[sharkhawk]

So, who is supposed to pay the insurance premiums for these people in these high risk areas? Taxpayers? People who live in lower risk areas in the midwest?

[MeneMeneTekelUpharsin]

Right no. I've also written this was going to happen and have been flamed. The people doing the flaming have been making outrageous profits selling real estate to a bunch of suckers. They don't like you touching their easy money. And, it's going to fall a lot further here shortly ... back to the 80's in the Texas real estate bust. Get ready.

[MeneMeneTekelUpharsin]

Most realtors and brokers are included in that category, as well as builders and farmers who hire illegal migrants.

Around here its one and the same...the builders are the farmers are the real estate agents.

[Wally_Kalbacken]

I find it more disturbing that William "The Refrigerator" Perry has been reduced to staffing the kiosk at a trade show than to see the downturn in this always cyclical industry. Fridge - yo' shoulda bin investin' yo' coin!

[BlackVeil]

You, ex-Texan, and anyone else who dares to point out onimous signs about real asset values and unsustainable debt can look forward to some rude and stupid responses. As we see even on this thread.

But that does not change the real situation.

Anyway, it is all part of the cycle. Buyers now have a better turn, and I predict it will be a buyers market for at least several years.

[ex-Texan]

*BINGO*!

[Triggerhippie]

The bottom has fallen out of the real estate here in Tampa because of a homeowner's insurance crisis here

Housing prices throughout the state have fallen because houses were WAY overvalued (Like what happened when Californians discovered Colorado... but that's a story for another day).

People started buying overvalued houses and "flipping" them until people got smart and said, "Holy Sh!t! I can't afford to make the payments; No one bought this house from me within the first 60-120 days."

Some investments just suck. That's all.

[Brad from Tennessee]

I'm old enough to remember the hula hoop craze in the late 1950's. Hula hoops, which consisted of about 15 cents worth of plastic tubing stapled into a circle sold for $2 to $4 in the beginning. I remember after the fade began to die down I was in a five-and-dime store with my father when I remarked that hula hoops were on sale for 25 cents. He told me that everyone willing to pay any more than 25 cents had already bought a hula hoop. Same way with the housing market but you can't live in a hula hoop.

[FRONTLINER]

The insurance companies have plenty of money . They have always tried to bail when it's time to deliver coverage on serious claims. Insurance companies only want to cover when there aren't serious claims being filed .

I'm all for the free market , but when people pay good money for insurance , the insurance companies should be forced to pay out on legitimate claims . Yet they are allowed to drop coverage or raise the rates without proper compensation to the insured .

True fair weather friends

[supercat]

Wow, you must be a prophet... you only been saying there would be a down turn for the last 3 years...

I have heard more ads on the radio for insane mortage products (Chicagoland area) than previously. Telling people they can buy a $300,000 house for something like $1500/month. I wouldn't expect people to buy such ads if they weren't selling such products, and I can't see any way such product sales can be at all sustainable--can you?

As one who has for a few years been expecting a major market correction, I don't look at whether the market's going down, but rather what it's doing to try to avoid going down.

[ex-Texan]

Was this you, Porterville? Caught you again . . . Hint: You are too obvious.

AHOLE; BLATHERSKITE; BUBBALOOS; EXTEXANSPAMS; EXTEXANSUCKS;HOUSINGBUBBLE; KEYWORDSOUTTOGETME; KEYWORDSUNDERMYBED; KEYWORDSUPONKEYWORDS; READMYBLOGPLEASE; SPAMMER; THESKYISFALLING; THEYALLLAUGHEDATME; THEYCALLMEMRDOOM; WRONGSINCE2003

By the way, posting hate speech is against the rules. Hate speech was highlighted in Red

[KellyAdmirer]

Two years ago, April 2004, we put a house (Colorado Springs) for sale above our realtor's recommendation and nicely above all the comps we could find in the neighborhood. Average house for the neighborhood, though we had put a lot into it inside and out. We had our buyer in five days at our full asking price, no questions asked.

A friend of mine now is trying to sell a somewhat similar house. Lots of foot traffic, no good offers. House has been on the market for a few months now. She's still waiting and getting antsy.

We also did some financing on a property back then. A mortgage broker we used said he was overwhelmed with work and that other people in his field also were swamped. I don't think that is the case today.

Sure, it's anecdotal evidence, but this is real life stuff that shows how the market has changed. It's all cyclical, give it a couple years and it will be a real good time to buy again.