Fed unveils plan to curb shady lending

WASHINGTON — The Federal Reserve endorsed new rules Tuesday that would give people taking out home mortgages new protections against shady lending practices.

The proposed rules, approved in a 5-0 vote by the board, are geared to providing safeguards to the riskiest “subprime” borrowers, already painfully stung by the housing and credit debacles. The proposal is expected to apply to new loans made by all types of lenders, including banks and brokers. The plan could be finalized next year.

The Fed, which has regulatory powers over the nation’s banking system, is proposing:

-- restricting lenders from penalizing certain subprime borrowers — those with tarnished credit or low incomes — who pay off their loans early. The restriction would apply to loans that meet certain conditions, including that the penalty expire at least 60 days before any possible payment increase.

-- forcing lenders to make sure subprime borrowers set aside money to pay for taxes and insurance.

-- barring lenders from making loans when they don’t have proof of a borrower’s income.

-- prohibiting lenders from engaging in a pattern or practice of lending without considering a borrower’s ability to repay a home loan from sources other than the home’s value.

“Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole,” said Fed Chairman Ben Bernanke in prepared remarks. “They have no place in our mortgage system,” he added.

Fed policymakers also are considering requiring financial disclosures to borrowers early enough to use while shopping for a mortgage. Lenders could not charge fees — except for a fee to obtain a credit report — until after the consumer receives the disclosures. The Fed also will consider prohibiting certain types of misleading or deceptive advertising for certain loans. It also would require that all applicable rates or payments be disclosed in ads with equal prominence as advertised introductory “teaser” rates.

In addition, the Fed is expected to propose barring lenders from paying mortgage brokers a fee that exceeds the amount the would-be borrower had agreed to in advance that the broker would receive.

And, the Fed would ban certain practices, such as failing to credit a mortgage payment to a borrower’s account when the company servicing the mortgage receives it. The Fed also would prohibit a broker or other company from coercing or encouraging an appraiser to misrepresent the value of a home.

Before taking effect, the rules must be voted on again following a period of public comment and possible revisions.

The Fed’s response has taken on heightened importance given the meltdown in the housing and credit markets that has led to record numbers of home foreclosures.

The crisis has raised the odds the economy might fall into a recession, roiled Wall Street, and given Democrats and Republicans much fodder to blame each other.

The plan, if ultimately adopted, offers Bernanke, who took over the helm in February 2006, an important opportunity to put his imprint on the Fed’s regulatory powers. Some critics have complained that Bernanke’s predecessor — Alan Greenspan, who ran the Fed for 18½ years — failed to act as a forceful regulator especially during the 2001-2005 housing boom, when easy credit spurred lots of subprime home loans and many exotic types of mortgages.

When the housing market went bust, subprime loans were most heavily affected.

Of the nearly 3 million subprime adjustable-rate loans surveyed by the Mortgage Bankers Association from July through September, a record 4.72 percent entered the foreclosure process during those months. At the same time, a record 18.81 percent of the subprime adjustable-rate loans were past due.

When home values weakened, borrowers were left with loan balances that eclipsed the value of their homes. They also were clobbered when their loans reset with much-higher interest rates.

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source: naplesnews.com

Is WCI selling lush Tuscany Reserve community at Lee-Collier line?

Financially troubled WCI Communities Inc. may have struck a megamillion-dollar deal to sell its luxury, Italian-inspired Tuscany Reserve community off Livingston Road near the Lee-Collier line to another developer.

The possible sale has created a buzz among residents. In recent days, it has been a hot topic on the public company’s online message board, stirring speculation about the selling price and the closing date.

Some say it’s a deal that’s already done, though it hasn’t been formally announced.

The golf course community is on a list of assets cash-strapped WCI has identified for possible sale as it struggles to stay afloat in a market where sales are sluggish and would-be-buyers are walking away from contracts in droves. The list was included in a slide show presented during the company’s third quarter earnings announcement in November.

Realtors, brokers and others say they know the buyer to be Anthony Salce, with Gulf Coast Development Group LLC in Naples. He’s also developing Naples Reserve Golf Club off Collier Boulevard, which has been approved for up to 1,154 units.

Salce couldn’t be reached for comment.

One prospective buyer received an e-mail on Dec. 15 from a community sales agent saying WCI had an offer from Gulf Coast Development and that the deal could close this week.

Letters were sent to buyers whose homes have yet to be built, saying another developer is taking over, said David Auston, a Realtor with Amerivest Realty in Naples and a member of the Tuscany Reserve golf club.

“Everybody knows,” he said. “There is a lot of buzz around it.”

But WCI, headquartered in Bonita Springs, isn’t talking about the sale publicly.

“I know there a lot of rumors, but I can’t confirm or deny that it might be sold,” said Jim Dietz, who recently announced his resignation as WCI’s chief financial officer. “The answer is it might be sold, or it might not be. We might own it forever.”

On the company’s online message board, one observer said he thought the selling price was about $50 million. Auston believes it’s higher than that.

Deborah Lamb, a Realtor with Sun Realty in Naples, said sales at the community have virtually come to a halt as word has spread that it’s under contract.

“Everybody has just shied so far away from Tuscany Reserve,” she said. “I don’t know anyone that is willing to show their clients there. I think we’ve all stopped paying attention to that community.”

WCI designed the community as its most exclusive golf course haven to date and expected to sell a limited number of homes for $2 million to $5 million, with golf membership in the range of $200,000.

But as the real estate market slowed across the region and state, the community never really took off.

Earlier this year, WCI announced a repositioning to offer more homes at a lower price. In the fourth quarter of last year, WCI had an $84.9 million write-down for the community, reflecting a market loss in value.

“The community never really gained traction,” CEO Jerry Starkey said at the time.

Starkey couldn’t be reached this week for comment on the possible sale.

Originally, the 480-acre community was to have 310 homes. Under a new plan, it could have more than 500. No change in zoning is required.

Now there are opportunities for homebuyers to get into the community for less than $1 million.

WCI has offered carriage homes from just under $500,000 to $800,000 in an enclave called Arezzo. It also has made smaller single-family homes available, with prices starting at less than $800,000.

Auston said he sold a few houses in Tuscany Reserve earlier this year and that he targeted the community for good deals because WCI has been so negotiable.

He said his clients have saved hundreds of thousands of dollars off the original price.

“One of my clients got $600,000 off and one got $400,000 off this year,” Auston said.

“Now there isn’t really anything left to buy in there,” he said. “There are only a couple of homes left. Everything else is going to be brand new construction.”

While some think the deal has already been signed, Auston said he believes the closing is set for Monday.

He doesn’t know what Salce plans _ if he is in fact the buyer.

“He’s been in the community and has been talking with everybody,” he said.

“There is a good amount to be developed, I would say over 80 percent left to still be developed,” Auston said.

Part-time resident Bill Adams, who purchased a home in Tuscany Reserve in October, said he heard the deal was finalized Thursday. He’s happy about it and about his move to the community.

“It’s second to none,” he said, adding that he shopped around in Naples for about a year before choosing to live in the community.

While many residents are anxious about the sale, most see it as a positive change, Auston said.

“It is a high-end luxury golf course community and one of the biggest drawbacks is that they haven’t finished the clubhouse. When that clubhouse is finished and people can actually have the full golf and country club experience, it’s going to be a completely different community,” Auston said.

WCI invested hundreds of millions in the community to create an authentic Tuscan village with arched stone bridges, towering fountains, pavers and lush landscaping, including an impressive barrier berm of bushes and trees facing Interstate 75.

Its 18-hole golf course was co-designed by Greg Norman and Pete Dye.

But some have questioned the community’s location because it backs up to the expressway and there are power lines running through it. Others have criticized the development as over the top.

Charles Richardson, regional senior vice president for Coldwell Banker Residential Real Estate LLC, said the possible sale should come as no surprise now that billionaire investor Carl Icahn is calling the shots as WCI’s board chairman.

Icahn is known for buying up companies and then forcing them to sell off underperforming assets.

Icahn won a seat on WCI’s board after a failed takeover attempt earlier this year. He offered $22 a share for the company, whose stock is now trading at less than $5.

“He’s got to raise that stock price,” Richardson said. “The shareholders are very uneasy about the fact that shares have dropped as far as they have.”

Richardson expects to see more asset sales.

WCI’s list of asset “opportunities” includes more residential and commercial developments in Southwest Florida, and others on the east coast of Florida, in Connecticut and in New Jersey.

In total, it represents 954 acres, 1,293 residential units, 592,957 square feet of commercial, 368 hotel units, 514 boat slips and 162 holes of golf.

“They’ve got assets but they don’t have a lot of sales activity,” Richardson said.

In the third quarter, WCI lost $69.7 million, or $1.66 a share, compared with profits of $10.7 million, or 25 cents a share, a year ago. The company primarily blamed a higher number of cancellations.

WCI’s shares closed up 83 cents Friday at $4.50 on the New York Stock Exchange.

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source: naplesnews.com

Soon Real Estate Will Be A Sizzling Market

In real estate market, prices remain high even homes sales have decreased. Some real estate experts stated that there may have be a way to get a price break and can earn money in a tough real estate market. CBS4’s Lisa Petrillo revealed those expect secrets as she shares the secret of foreclosure. Julian Dominguez which been buying properties on the courthouse steps for about three decades, stated that, “In 26 years of doing it, I still get surprises, and there is money to be made in it.”

In making money by bidding in foreclosure auctions requires skills and some risk. Bidders are competing with the mortgage holder, normally a lender who wanted to improve its loss and experienced invests who wishes to make money. So expects advice better watch few auctions in order to get some experience and knowledge, and to see how it works, prior to purchasing.

CBS4 attended to one auction, and a home appeared to close a deal for $100, though that is not the deal it looks to the inexperienced. Appraiser Bill Griffith stated that “The property that changes hands for 100 dollars is usually going back to the lender.”

Several of the homes that he appraises are in foreclosure. And some are actually in need of thousand dollars for repairs such roofing and roofing. If you were to purchase the home, then the responsibility of fixing it will be yours.

In order to not having such burdens, experts advice to let a professional make a home inspection, and this is possible if you buy a foreclosed home through an agent.

If you bid in an auction and win, you’ll have to make an immediate deposit to the clerk of courts of one-point-five percent of the purchase price and this deposits are substantial and non-refundable.

Some concrete advices are being offered by professionals if you decided the risk is worth the prize.

Come up with a practical budget and just stay with it. As well to the purchase price, you'll be required to such in repairs, inspections, legal fees, and a bit to cover the unanticipated..

Do some research. Research the properties that fit your interest.

You have to know what you’re really into, the legality and all the details. Better to hire the expertise of an attorney, do inspections and determine the resale value before you make a bid.



Experts stated that you need to make your purchase with your head, not with your heart. Dominguez said that, “Never fall in love with a property. Never think that you could solve everything.”

At the end, you’ll see that this is about money, and reason why the lender who's foreclosing might be ready to let a home go even below the balance of the mortgage.

So in order to have the home you ever wanted better to do your research and the math now.

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source: realestatepress.org

Mortgage proposal may whet appetites

WASHINGTON - Legislative efforts to address the housing crisis were overshadowed this week - but not stymied - by the Bush administration's promotion of an interest-rate freeze for some borrowers.

Analysts say the Bush plan, described by consumer groups and industry experts as limited in scope, will spur the Democratic-led Congress to more aggressively push proposals that have thus far stalled, including bills that would tighten lending standards and help bankrupt Americans keep their homes.

Sen. Christopher Dodd, D-Conn., is expected next week to introduce a long-awaited bill aimed at cracking down on lending abuses.

The Bush administration may have inadvertently re-energized Congress on the housing crisis by overselling the plan, said Bert Ely, a banking consultant based in Alexandria, Va., who is leery of government intervention.

"It's highly likely that we're going to hear a chorus of disappointment next spring," Ely said of the Bush plan. He worries that more far-reaching action - such as a mandatory, rather than voluntary, freeze on interest rates - could cut investment in the U.S. mortgage market, causing a flare-up of the credit crunch that hurt investors around the world this summer and fall.

When Congress returns from its break in January, "they're going to face a gravely deteriorating housing market" and the potentially severe economic fallout, which will provide more impetus for action, said Howard Glaser, a former housing official in the Clinton administration.

Plus, with an election coming next fall, both Democrats and Republicans will be under additional pressure to act, analysts said.

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source: enquirer.com