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Bidders find bargains at foreclosed homes auction

Diana Alebord knew what she wanted – a three-bedroom, two-bath house – and she had three properties in mind.

The 45-year-old Sarasota woman drove to Tampa, hoping to find a bargain at an auction of foreclosed homes held Tuesday night at the Tampa Convention Center.

The auction, hosted by Real Estate Disposition Corp., a California-based company, drew 1,150 people. Many of them walked away with a steal, snapping up homes and condominiums, some valued at more than $300,000, for nearly half that price.

“I own a condo and I want to find a nice house,” Alebord said, before the auction began. “With this market, I’ll probably rent out my condo. Hopefully, I’ll be able to get a goo

d deal.”

Miami condo corridor’s woes create boon for renters

It’s not hard to get Regan Marock to gush about his rental unit in a twin-tower luxury building in the heart of Miami’s high-rise corridor. The two-bedroom condo has stainless steel appliances, a jetted tub and dazzling views of the city — not to mention the two pools, gym, spas, movie theater and game room in the building.

Renting straight from the developer, The Related Group, Marock pays $1,450 for the plush, spanking new digs at 500 Brickell. Monthy mortgage payments for the roughly $350,000 unit, bought with 20 percent down, at today’s interest rate would run about $1,482 — not including taxes, insurance and association fees, which could add a thousand dollars or more to the bill.

‘’It’s the most incredible thing,'’ said Marock, 24, a sales director at a Coral Gables property management company.

The costs and benefits of home ownership | Shelter, or burden?

In a scene from the film “It’s a Wonderful Life”, a happy couple is about to enter their new home. Jimmy Stewart, whose firm has sold them the mortgage, reflects that there is “a fundamental urge…for a man to have his own roof, walls and fireplace.” He offers them bread, salt and wine so “joy and prosperity may reign for ever”.

That embodies the Anglo-Saxon world’s attitude to home ownership. Owning your own roof, walls and fireplace, it is thought, is good for householders because it helps them accumulate wealth. It is good for the economy because it encourages people to save. And it is good for society because homeowners invest more in their neighbourhoods, engage more in civic activities and encourage their children to do better at school than do renters. Home ownership, in short, benefits everyone—not just the homeowner—and the more there is of it, the better. Which is why it is usually encouraged by the government. In America, Ireland and Spain, homeowners can deduct mortgage-interest payments from taxable income.

Yet the worldwide crash was bound up in this supposed miracle of social policy. The disaster began with defaults on American subprime mortgages, a financial instrument designed to spread home ownership among the poor. It gathered pace after the failures of Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide cheap home loans. As a result, the home-ownership rate in America has fallen for four years, the first time that has happened in a quarter of a century. In 2008, 2.3m families lost their homes or faced foreclosure—double the average before the crisis—reducing the home-ownership rate from 69% in 2004 to 67.5% at the end of 2008. The number of owner-occupied dwellings also slipped in Britain in 2007-08 for the first time since the 1950s.

Mortgage-Fraud Crackdown Is Gathering Steam in Florida

Florida’s Gulf Coast was crawling with shady real estate investors like Neil Husani during this decade’s housing boom. According to the U.S. Attorney’s office in Tampa, Husani and three co-conspirators working with his Sarasota-based Capital Force, Inc., bilked seven area banks out of $83 million in a mortgage fraud scheme. Between 2003 and 2006, they bought up dozens of properties, used false information to secure mortgages far in excess of the actual property values, then pocketed the difference, which amounted to more than $40 million. The properties went into foreclosure and the banks, as well as the surrounding communities, were left holding the bag. Two of Husani’s partners recently pleaded guilty to the conspiracy; another was convicted, and Husani, whose trial is pending in the U.S., has been arrested in Jordan, where he awaits extradition.

The Capital Force case is one of the largest mortgage frauds to date in Florida, but it’s just the tip of an iceberg of scams that have wrecked broad swaths of the state’s reeling housing and commercial real estate market. The situation is worst along the I-4 Corridor between the Tampa and Orlando areas, where almost 30,000 homes are in foreclosure. (Lee County, in fact, has one of the nation’s highest foreclosure rates, at about 12%.) In recent years, fraud — involving either property purchases like Capital Force’s, or schemes that falsely promise to help desperate homeowners hang on to their houses and then take the money and run — has mushroomed. Now, the U.S. Attorney’s office in the Middle District of Florida tells TIME, federal agents and prosecutors have embarked on a “surge” of mortgage and loan-modification fraud investigations that could result in more than 200 indictments this year in the Tampa region alone. “The idea is to do as many cases as we can at once,” says Tampa U.S. Attorney Brian Albritton, “to clearly send a message that this is not going to be tolerated.” (See 25 People to Blame for the Financial Crisis)

How to leverage your IRA property investments with mortgages

So you’d like to take advantage of depressed housing prices and buy a rental property, but you lack a down payment or can’t meet lending criteria for investment properties? Consider using your IRA assets — even if the purchase price exceeds their reach.

Little-known IRS rules allow retirement savers to take “nonrecourse” loans against IRAs and leverage their savings as a down payment to buy investment real estate. With 30% to 40% down, IRA borrowers can get loans on a condo or townhouse, a single-family home, a multiunit apartment building and even commercial property — so long as the rental income will yield positive cash flow.

While the market for these mortgages has been miniscule — recognized leader North American Savings Bank has closed about 850 residential IRA loans since 2005 — demand is expected to mushroom in coming years, especially among baby boomers seeking to diversify out of stocks and into income-producing investments.

Study Buoys Mortgage Modification - WSJ.com

Cutting financially troubled borrowers’ monthly mortgage payments by more than 10% reduces the chances that they will fall behind again after their loan is modified, a study found.

While modifications that result in lower payments are increasing, nearly half of all loan workouts still result in the same or higher payments, the study found.

The report, released Friday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision, comes as mortgage companies are preparing to modify loans under the Obama administration’s foreclosure-prevention plan, which provides financial incentives to encourage mortgage companies and investors to reduce borrowers’ mortgage-related payments to 31% of income.
[re-default rates]

It could help allay concerns that scores of borrowers whose loans are reworked will fall behind again on their mortgages, leading to higher losses for lenders and investors who hold these loans.