Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’

Housing Pain Gauge: Nearly 1 in 6 Owners ‘Under Water’

The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults — the very misfortune that touched off the credit crisis last year.

The result of homeowners being “under water” is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home’s value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody’s Economy.com.

Palm Ballroom in Palm Beach Hotel aiming to avoid foreclosure sale [South Florida]

Palm Ballroom in Palm Beach Hotel aiming to avoid foreclosure sale [South Florida]

Just last year, the Palm Ballroom’s cypress ceiling covered cabaret shows and big-name acts like The Drifters.

Today, the dusty space within the Palm Beach Hotel looks like it last boogied in the 1920s, when the ballroom was built.

Absent a $3.26 million mortgage payment from owner Palm Beach Resorts International LLC, the ballroom hits the auction block next week, according to an order signed Sept. 4 by Palm Beach County Circuit Judge Jeffrey J. Colbath.

Sumner G. Kaye, of Palm Beach, and Steve Schwendemann, a St. Louis attorney, bought the 11,500-square-foot ballroom and adjacent 3,000-square-foot kitchen for $2.8 million in January 2007 from caterer Cornelius Johannes “C.J.” Van Schaffelaar and his partner, Hamilton Morrison.

Financial advisers answer your questions

Financial advisers answer your questions

Question: I currently have 3 properties all with separate mortgages but with the same lender. If I was unable to continue paying on all 3 and decided to give the deed on one of the properties back to the lender, but continued to remain current on payments on the other 2, would the lender be able to foreclose on either of the 2 remaining? Would my ownership of the 2 remaining be jeopardized in any way?

Answer:No, it should not be. They’re being held with secured notes on the property itself. They can’t after additional assets to try to satisfy what’s owed. But foreclosing means your credit is going to be affected. That won’t affect you until you try to obtain new financing or change your financing. But it will not affect you if you continue making your payments on all your other bills.

FHA borrowers are soon

FHA borrowers are soon

Dear Mr. Myers: We started looking for a house to buy in August, and a mortgage broker preapproved us for an FHA loan. We haven’t found a home that we like yet, but the broker called us last week to say that FHA loan costs are going to rise. Is this true, or is the broker just trying to rip us off so he can make more money?

Answer: The broker isn’t trying to rip you off. The Federal Housing Administration, commonly referred to as the FHA, is boosting the upfront fees it charges to borrowers who use the program after Oct. 1.

The government-run FHA doesn’t loan money directly to borrowers, but instead insures loans for banks and other financial institutions that issue mortgages to buyers who cannot qualify for a traditional home loan. If the buyer later defaults, the FHA’s insurance coverage helps to pay for part of the bank’s losses.

Couple may face prison time in Southwest Florida real estate scam

Couple may face prison time in Southwest Florida real estate scam

A decade ago in New York, where Wall Street held the promise of riches, Ronald Luczak started selling securities.

He ended up in jail instead. He was one of 13 defendants in a stock-trading scam, pleading guilty to a federal fraud charge and receiving a 30-month prison sentence.

By the summer of 2005, he was on supervised release and settled with his family in Southwest Florida. This time the promised riches were in real estate.

With his wife, Lisa Luczak, who opened Cape Coral Equity and Development Group that fall, real estate ended up being his trade. But he continued his previous profession, too.

Joe Adams: New laws tackle flags, receiverships, liens

Joe Adams: New laws tackle flags, receiverships, liens

Today’s column is the 12th installment of our annual review of legislation affecting community associations. We shift gears today and discuss some new laws aimed specifically at homeowners’ associations:

• Flags: Section 720.304(2) of Florida’s statute applicable to homeowners’ associations has been amended effective July 1, 2008, to provide that any homeowner may erect a free-standing flagpole no more than 20 feet high on any portion of the homeowners’ real property, regardless of any covenants to the contrary. The flagpole cannot obstruct sight lines at intersections, or be erected upon easements. Homeowners are entitled to display from that flagpole, in a respectful manner, certain flags not larger than 4 feet by 6 feet. Permitted flags include: United States flag, one official flag of the state of Florida, and various armed services flags.