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Economy Personal Finance Real Estate

Mortgage-debt forgiveness preventing foreclosures

NEW YORK (CNNMoney) — Reducing the amount struggling homeowners owe on their mortgages is proving to be a more effective way to prevent foreclosures than other methods, such as reducing interest rates or postponing payments, a new report finds.
In a report presented this week, Amherst Securities Group said that when principal reductions brought mortgages near the home’s market value, borrowers were substantially less likely to fall behind on payments again and lose their homes.

Only 12% of borrowers who received principal reductions re-defaulted in 2011, Amherst found. That’s compared with 23% of borrowers who received mortgage modifications with interest rate reductions (but no principal reduction) and 30% who received forbearance, which postpones their debt repayment.
“[Modifications] with principal forgiveness are apt to be most effective, as the borrower no longer owes the money — so he is no longer hopelessly underwater,” said Laurie Goodman, Amherst’s housing market analyst and one of the authors of the report.

The success these principal reductions have had in turning delinquent borrowers back into paying clients has led many lenders to step up debt forgiveness on the loans in their own portfolios.

So far this year, principal reductions have accounted for 40% of the modifications done by the banks, up dramatically from 25% in 2011 and 11% in 2010, according to Amherst.

The mortgage servicers cannot forgive debt on loans that are owned or backed by one of the two government-controlled mortgage giants, Fannie Mae (FNMA, Fortune 500) and Freddie Mac (FRE), however, and they are limited in what they can forgive on loans owned by investors.

That means, of the vast majority of loans — 6 million since April 2009, according to the Treasury Department — only a fraction have received debt forgiveness. That may be changing, though.

The Federal Housing Finance Agency, which controls the majority of outstanding mortgages through its oversight of Fannie and Freddie, has thus far prohibited the mortgage giants from including debt forgiveness as part of their mortgage modifications.
See also: Most affordable cities to buy a home

Last month, however, Fannie and Freddie announced they would participate in two programs in California and Nevada that will use part of a $7.6 billion Hardest Hit Fund to pay down loans the companies own or back.

However, the move will not cost Fannie and Freddie anything and is a far cry from the principal reduction that private mortgage servicers are extending to borrowers.

“My guess is that eventually, [Fannie and Freddie will] go down that path, but there’s still a lot of reticence there,” said Mark Zandi, the chief economist for Moody’s Analytics. “People have problems with principal reduction. They think it’s unfair.”

Even if Fannie and Freddie remain on the sidelines, Amherst said it expects to see a continued increase in principal reductions.

Mortgage-debt forgiveness preventing foreclosures
source:http://money.cnn.com/

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Economy Investment Real Estate

Genting cools interest in buying Miami-Dade School District property

The cash-strapped Miami-Dade School District has several options to consider from developers interested in buying its prime downtown real estate, but interest has cooled from its biggest suitor — the Genting Group.

In December, the Malaysian investors told the School Board they were interested in buying the district’s downtown property, which spans more than 10 acres of parking lots and office buildings on eight separate parcels.

But on Monday, the group said it is pursuing scaled-back plans for a luxury development — for now without a casino — on The Miami Herald’s bayfront property, which Genting purchased last year from the newspaper’s parent company.

“Though we initially indicated interest in the School Board properties, we have since decided to move forward developing Resorts World Miami on the nearby Miami Herald site, independent of the school bpard land,” said Jessica Hoppe, vice president and general counsel for Resorts World Miami.

Starting with its purchase of The Miami Herald property, the Genting Group has invested about $500 million in real estate in the Omni area. The group is moving ahead with a luxury complex on the bay after its bid to build the world’s largest casino faded in February in the Florida Legislature.

“We understand Genting’s decision, and the matter remains under the cone of silence,” John Schuster, spokesman for the school district, said in an email.

Last fall, the district issued a request for letters of interest in the property, the first step in selling or developing it, and got some proposals.

Superintendent Alberto Carvalho has not recommended any option to board members, but released the letters in a Feb. 9 memo to the board for “informational purposes.”

“We have a structured process if we were to proceed,” said Jaime Torrens, the district’s chief facilities officer. “There’s no pricing at this point. It’s very conceptual.”

Among the proposals:

–One from 1550 The Chelsea to buy the district’s lot at 1535 NE Second Ave. The developers are working on a mixed-use tower near the Omni hotel. It owns the Brickell Flatiron, which includes the bar Baru, and has plans for a park and to build Park Lane Towers in a vacant area.

“We’re the natural purchasers,” said managing member Mallory Kauderer. “I’ll pay a good price because we’re on Biscayne Boulevard.”

–An offer to buy one of the district’s parcels, 1610 NE First Ct., for $908,440 in cash from Prince Albert, a company of the Kluger family, who own other properties in the area.

–A pitch to market and sell the district’s eight parcels separately by Ryan Shaw with Marcus & Millichap, a national real estate brokerage. In his letter, Shaw estimated the value of each of the district’s properties for a total of more than $40.7 million.

“It would be in the School Board’s best interest to bring these properties to market separately,” Shaw said. “They’re sitting on equity that could be better served in the school district by building more facilities more centrally located and getting out of downtown.”

–A conceptual plan from Town Square Neighborhood Development, a nonprofit focused on developing the area around the Adrienne Arsht Center. The group has no funds, but has a wish list to make over the performing arts area.

Any timeline to sell the district’s property would likely take at least a year, given the deal’s complexity and need to find a place for the district to relocate its headquarters, Torrens said. Atsthe nerve center of the fourth largest school district in the country, the district oversees more than 300 schools, 30,000-plus employees and nearly 350,000 students.

Torrens said the district could weigh other alternatives, too. “It isn’t just sell. There are different types of leases or developments,” he said.

Genting cools interest in buying Miami-Dade School District property
By Laura Isensee, Miami Herald

Categories
Economy

For Miami Real Estate, Better To Be A Foreigner

It’s not that Miami isn’t welcoming to Americans, or that developers prefer Brazilians. They don’t. But in this global city today, the big real estate buyers are all from abroad. And one of the reasons, especially when it comes to new developments, is the sales model.

“Latin Americans and Europeans are used to paying in cash for real estate. American’s are not. What we’re doing with our Brickell House property in Miami is telling people that they can pay us quarterly while the project is being built so that by the time it is done in two years, you have paid for almost 70% of your home,” says Harvey Hernandez, chairman of the Newgard Development Group, a luxury property developer in Miami.

“This is the best way to buy it. Or you can wait for the project to be complete, like Americans do, and pay about 40% more,” he says.

They pay-as-they-build sales model is popular in Latin America. It’s not unusual to see new residential high rises going up in São Paulo with floors being sold before the roof of the building is even in place. For Brazilians, in particular, Miami is their second or third home. Real estate prices in upscale beachfront property in Rio de Janeiro, for example, is more expensive than it is in Miami, a city in a developed country with all the bells and whistles.

Hernandez says that within just 90 days of trying to sell Brickell House’s 374 units, 190 of them have already gone, 90% of them to Brazilians, Venezuelans, Mexicans, Russians, Chinese and Europeans. One bedroom units cost around $300,000, chump change in Europe thanks to a favorable exchange rate.

The sales success at Brickell House is the result of the world’s rekindled love affair for South Beach and new, ultra-mod American luxury in a glam global city. South Florida is in the early stages of a new development wave to cater to the foreigners, with 22 newly-announced projects accounting for more than 4,000 units in a section of the city that’s basically sold out.

“The fact that Brickell House has reached the fifty percent sales mark in just four months is further proof that Miami’s condo market is back,” says Alicia Cervera Lamadrid, Managing Director of Cervera Real Estate.

Today, fewer than 1,500 condos in the Brickell Financial District are on the market, according to a June 2011 market study by the Miami Downtown Development Authority. With the continuation of this sales velocity, the remaining unsold inventory could be sold-out in the next year leaving an inventory gap in Miami.

“Miami’s existing condo inventory has been absorbed at a faster rate than anyone could have predicted,” says Hernandez. “We are still seeing strong interest from international buyers who appreciate Miami’s status as a global business and entertainment hub and see value in the city’s Brickell Financial District. We see our sales momentum continuing through our groundbreaking this summer and we expect to be sold out by the end of 2012.”

For Miami Real Estate, Better To Be A Foreigner

Categories
Economy

Avoiding Foreclosure Scams

At the end of the day, what many people crave most is the coziness of their homes and the company of family. It may take years to build your dream home and fill it with your family’s memories, but it only takes a few missed mortgage payments to take away your dream home. Foreclosure is every homeowner’s living nightmare. In this article, we will go through the essential steps required to prevent foreclosure and also how to stay away from being victimized by foreclosure scams. (For related reading, see Are You Living Too Close To The Edge?)

SEE: Mortgage Basics

The Foreclosure Nightmare

The ugly threat of foreclosure lurks in the minds of many homeowners. Sometimes unanticipated financial troubles, like losing a job, high medical bills, divorce or a death in the family can affect a homeowner’s ability to make his or her mortgage payments. Foreclosure occurs when you fall behind in your mortgage payments, thus authorizing your lender to repossess your property.

In some cases, the property is worth less than the total amount owed to the lender. This may complicate things, as it allows your lender to pursue a deficiency judgment, which represents the difference between the sold price of the property and the amount owed to the lender. If this happens, not only will you lose your home, but you will also be forced to fork out additional money to pay the lender. For instance, if your house is worth $200,000 at the time that a foreclosure occurs and you owe $220,000 to your lending company, a deficiency judgment of payment of $20,000 to your lender can totally knock you out.

Worst of all, foreclosures and deficiency judgments will usually have a negative influence on your credit score. A foreclosure stays put on your credit report for about seven to 10 years and will imply to other future lenders that you are a high risk borrower. This will make it more difficult for you to get a mortgage – or any other loan – in the future. (For more insight, read Consumer Credit Report: What’s On It.)

Preventing Foreclosure

The moment you receive foreclosure notice, the first thing to do is to contact your lender’s Loss Mitigation Department and let them know about your monetary problems and situation. If necessary, take along your personal financial statements/documents and explain your insufficient income and rising living expenses.

Get in touch with your local government-approved housing counseling agency. It will provide free information about the list of organizations ready to bail you out when the bank is threatening to foreclose.

That said, some of the best ways to prevent foreclosure start before you even receive your initial notice. It is never too late to start keeping an eye on your extravagant monthly expenses and begin following a tighter budget. The extra savings from a less expensive lifestyle will allow you to create an emergency mortgage fund that you can tap into if you run into problems down the road. Having a minimum savings of six to eight months’ earnings should give you a reasonable amount of slack until you can improve your financial situation. (To learn more, read Build Yourself An Emergency Fund.)

If the need arises, take the help of your local foreclosure service provider or loss mitigation consultant, provided you have made enough inquiries regarding the legitimacy of these organizations.

Beware of Foreclosure Scams

Unfortunately, there are a number fraudulent foreclosure-related companies ready to jump on you and prey on your unfortunate financial circumstances. The looming risk of foreclosure makes you susceptible to these foreclosure predators. These bogus companies may call themselves “foreclosure consultants” or “foreclosure specialists”. Before opting for any of these companies, make sure you take a close look at their credentials and business reputations by checking them out at sources such as the U.S. Department of Housing and Urban Development.

How do these foreclosure scam-artists find you? It’s rather simple. When your lender files your foreclosure notice with the public trustee, your community is alerted about it through the foreclosure listing in your local newspaper. Soon, phone calls, mail and people from these companies start hounding you.

There are many methods used by these fake companies to swindle homeowners. Let’s go through the tricks that you need to be aware of in case of a foreclosure:

1 Equity Skimming

In this scenario, a person who calls himself a buyer stops at your door and convinces you to sell your property to him (usually for less than market value) and promises to pay off your mortgage. The buyer is likely to advise you to transfer the deed of the property to him, move out of the house and stop interacting with your mortgage lender. The buyer will then rent out your property to a third party and start collecting monthly rental payments. Unfortunately, the buyer will make no effort to pay the mortgage payments, thereby allowing the lender to foreclose on your property. The skimming aspect comes into effect if you have a reasonable amount of equity in your property; the scammer will flip the property to pay off the debt and then make a profit by keeping the equity. Remember: signing a deed over to a third party does not relieve you from your mortgage obligations.

2 Equity Stripping

In an equity-stripping scam, an unscrupulous mortgage lender will come to you with an offer to get you a loan; this person is usually aware of your poor financial condition. The lender pushes you to exaggerate your income on the application form to get the loan approved. You accept the loan because you need the money, even though you aren’t entirely sure that you can afford the monthly payments. The moment you default on your mortgage payments, the lender will rush in to foreclose your property and strip you of your home’s hard-earned equity.

3 Phony Counseling Agencies

You may find a large number of phony counseling agencies that offer their services – for an outrageous fee. But all they do is make some inexpensive phone calls and complete paperwork. These agencies may negotiate a repayment plan with your lender or organize a pre-foreclosure house sale on your behalf. However, the jobs these companies perform can all be easily performed by the homeowner without the additional cost. The main aim of these agencies is to mislead and stop you from getting real help. So take care that you confirm that an agency is genuine before using its services and never undertake to pay up front for foreclosure services.

4 Lender Scams

When you are on the brink of foreclosure, a lender may claim to rescue you from this situation by refinancing your loan with lower mortgage payments. In the beginning, the mortgage payments are considerably low as you are paying the interest only. At the end of the term, you suddenly realize that the total amount you borrowed is still due in a lump sum balloon payment. If you can’t make the entire balloon payment or get your loan refinanced, you may lose your home to the lender.

5 Phony Loan Transaction

In a phony loan transaction, a lender introduces you to a refinancing loan document that claims to bring your neglected loan current. However, the document may have the hidden motive of transferring the title of your home to the company’s name for a very small part of its value. Many times the loan’s terms will include prepayment penalties, balloon or interest-only payments, huge fees and immediate rate adjustments. Therefore, it is prudent to get all legal documents assessed by your attorney before signing them. (For related reading, check out Mortgages: Fixed-Rate Versus Adjustable Rate and ARMed And Dangerous.)

6 Loan Flipping

In this type of scam, your lender may offer to refinance your loan and tempt you with some extra cash. If you fall for the trap and consent to get your loan refinanced, as soon as you make some payments, the lender will persuade you to refinance your loan again and offer you more cash for vacations or home renovations. You accept this attractive offer, take the cash and get your previous loan refinanced. In reality, this extra cash may be much less than the additional fees and costs your lender is charging for refinancing your loan. In this scam, your lender may not even make any attempt to explain to you that the increase in the loans imply added fees and points for refinancing, higher interest rates or even prepayment penalties on each time you take a loan. In short, repetitive refinancing could put you deep in debt and may ultimately lead to the foreclosure of your home. (To learn more, read Digging Out Of Personal Debt.)

7 Internet and Phone Scams

Some con lenders convince you to apply for a low interest mortgage loan on the phone or internet. They then extract vital information about your social security and bank account numbers. In this scam, the loan is immediately accepted, after which you start faxing the documents and sending wire transfer payments to the phony company without even meeting the lender. Unfortunately, this scam will put you in twice as much trouble – your personal details have been stolen or sold and your home is still at risk of foreclosure. (To learn more about avoiding this scenario, see Identity Theft: How To Avoid It and Identity Theft: What To Do If It Happens.)

The Bottom Line

Foreclosure is a grave issue and, if not taken care of immediately, can leave you evicted from your home with a damaged credit score. The best way to save your home is to learn everything about foreclosure and track down appropriate mortgage help companies that will help you out of this jam. The instant you stop giving proper attention to this predicament, fake foreclosure companies will start exploiting you unfairly. Other than your family, your home is your biggest asset and, certainly, you are not going to let a few missed mortgage loan payments, some phony company or even your even mortgage lender to take it away from you without a fight.

Avoiding Foreclosure Scams
by Pooja Dave
Read more: http://www.investopedia.com/articles/pf/07/foreclosure_scam.asp#ixzz1mzzY5X13

Categories
Real Estate

Louis Vuitton moving to the Design District

Louis Vuitton’s plans could play a major role in putting Miami’s Design District on the fashion map and helping raise Aventura Mall’s luxury profile.

Louis Vuitton is ready to redesign South Florida’s luxury retail market.
Executives of the French brand known for its trademark handbags and accessories said this week they will leave the Bal Harbour Shops at the end of June and move to Aventura Mall where they will eventually more than double the size of their store. Also on the agenda: opening a second store in the burgeoning Miami Design District by 2014.
The news is a blow to the dominance of the Bal Harbour Shops, which in 1965 created the concept of luxury retail in South Florida and has consistently ranked as one of the industry’s top performing malls.

Louis Vuitton’s arrival will help Aventura Mall continue to elevate its merchandise mix. For Miami’s Design District this could be the catalyst to turn the area into a fashion destination akin to SoHo or New York City’s Meat Packing District. Expected to follow Louis Vuitton’s lead are at least some—or possibly all—of the other brands owned by parent-company Louis Vuitton Moët Hennessy that currently have stores at Bal Harbour.

The chess moves begin when Louis Vuitton’s lease at the Bal Harbour Shops expires at the end of June. Louis Vuitton then opens a temporary store at Aventura on July 1, with plans to begin construction of a two-story flagship store at Aventura to open in Fall 2012. Plans for the Design District are still being finalized.

Geoffroy Van Raemdonck, president of Louis Vuitton North America, said the brand decided it needed a bigger store in South Florida than Bal Harbour could accommodate and also did not want to be limited to one store in the market. Bal Harbour’s leases prohibit tenants from opening a second store within 20 miles unless Bal Harbour’s owners receive a percentage of the additional store revenue.

“We believe that this market deserves more than one free-standing store,” Van Raemdonck said. “We feel that we are not reaching the customers if we have only one store in the market. We want to give them multiple chances to experience the brand in its full notoriety.”
The move is particularly dramatic because Louis Vuitton was one of Bal Harbour’s oldest and most successful tenants. The brand has been there for about 30 years, when it chose the site for its first U.S. location outside of New York.

Louis Vuitton’s Miami-Dade presence beyond Bal Harbour had been limited to departments within Bloomingdale’s in Aventura and Neiman Marcus at the Village of Merrick Park. By comparison, Palm Beach County has three stores: Worth Avenue, Town Center at Boca Raton and The Gardens Mall in Palm Beach Gardens.

Industry experts view Louis Vuitton’s decision as a sign of things to come with luxury brands under pressure to grow.

“It may not be as sexy today to have Aventura on your bag as it is to have Bal Harbour,” said Arthur Weiner, principal of AWE Talisman, a Coral Gables firm that handles retail leasing and development. “In these days sexy gets put in second place. Sales and profitability get in first place. If Louis Vuitton trades a single-store strategy for a North and South location, there is no doubt that their sales would increase by three or four fold.”

On a temporary basis, the Louis Vuitton store at Aventura will be located in the former Barney’s Co-Op store. The permanent Louis Vuitton store will be more than twice the size of the existing Bal Harbour location, with a grand staircase connecting the two floors.

But even more dramatic will be Louis Vuitton’s move to the Design District, which in recent years has grown its reputation as a destination for dining and upscale home décor. Yet, despite the best efforts of developer Craig Robins, the mix of luxury fashion brands has been limited with the most noteworthy being Christian Louboutin and Marni.

“We believe that the Design District has huge potential,” Van Raemdonck said. “We feel that we can be the first large brand to go in there and we have no doubt that others will follow.”
At least some of those followers are expected to come from among the nearly dozen other LVMH brands that currently have stores at Bal Harbour, a lineup that includes Dior, Marc Jacobs, Fendi, Celine, Emilio Pucci, Thomas Pink and De Beers.

Matthew Whitman Lazenby, one of the owners of Bal Harbour, says his family was told by LVMH executives that the company plans to pull all brands out of the shops as their leases expire. But Lazenby also said they have been told by individual brands that is not the case.

The only other LVMH brand with a lease expiring this year is Dior, whose lease expires at the end of May. Dior has not renewed its lease with Bal Harbour, and the mall is taking steps to find another tenant for the space, Lazenby said.
“We don’t really know what will happen until it happens,” Lazenby said. “We’re making provisions for both sets of circumstances. There has always been a long waiting list of tenants to get into Bal Harbour. The more LVMH brands that depart, the more opportunities we create.”

LVMH executives declined requests to talk about future plans for any of its other brands in South Florida.
Bal Harbour’s owners used news of Louis Vuitton’s imminent departure earlier this month when it presented plans for expansion to the Village Council. Bal Harbour claims it had no space for Louis Vuitton to expand. Stanley Whitman, who built the 46-year-old project, told the council that if he could not expand he ran the risk of losing tenants to Aventura Mall, South Beach and other locations around South Florida.

Preliminary plans call for adding another department store to the Bal Harbour Shops, as well as 50 luxury fashion retailers, an upscale movie theater and an event space by party impresario Barton G. The plans have not been officially submitted to the Village Council for review.

The last time Miami’s luxury retail market faced a potential shakeup along this order came with the construction of the Village of Merrick Park in Coral Gables. Merrick Park’s developers sued the Bal Harbour Shops’ owners over the radius restriction clause. The case settled, and Bal Harbour Shops agreed to waive the radius restriction with respect to Merrick Park. But for retailers like Gucci and Tiffany that opened second stores in Merrick Park, the owners of Bal Harbour Shops relocated them to the mall’s second, less desirable floor when their existing leases expired.

Industry experts say that just like with Merrick Park’s opening, Bal Harbour Shops will adjust even if it means its sales numbers come down from the stratosphere. The shopping mall’s sales in 2010 were $2,013 per square foot; that’s more than five times the national average and believed to be the highest at any mall in the country.
“Bal Harbour is not going anywhere,” Weiner said. “It’s a sparkling jewel. There will be brands that come and go. The difference is that those brands will now have choices.”

But the winners in all of this are Miami-Dade’s latest real estate power couple: Dacra’s Robins and Turnberry Associates’ Jackie Soffer.

“Having Louis Vuitton validate the Design District is a great step forward for the neighborhood,” Robins said. “I’m hoping it’s the beginning of several major international fashion brands committing to join the great businesses that are already in the neighborhood.”

For Soffer it’s the next step in the evolution of Aventura Mall, which has been gradually becoming more upscale over recent years. The mall’s most recent luxury addition is Burberry, which joined a mix that includes other newer stores like Lacoste, Michael Kors, M Missoni and Facconable. But additional proof of the market demand has also come from the success that Bloomingdale’s and Nordstrom have had with luxury brands.

“There’s a pent-up demand that we know exists,” Soffer said. “We’ve proven that when we put in these better brands they are producing the sales. Our customers like brand names. That’s what sells.”

By Elaine Walker
ewalker@miamiherald.com

Read more: http://www.miamiherald.com