It’s official: Fed will start selling bonds

WASHINGTON – Sept. 21, 2017 – The U.S. economy is finally sturdy enough for the Federal Reserve to withdraw the extraordinary support it has provided it since the depths of the recession and financial crisis.

In a move that that could nudge consumer borrowing costs higher, the Fed agreed Wednesday to begin gradually shedding much of the roughly $3.5 trillion in bonds it snapped up during and after the downturn to lower long-term interest rates.

“We’re working down our balance sheet because we think in some sense it’s no longer needed,” Fed Chair Janet Yellen said at a news conference. “We feel the U.S. economy is performing well.”

And while the Fed held its key short-term interest rate steady, at a range of 1 percent to 1.25 percent, it maintained its forecast for a third rate hike in 2017 and three increases next year. But in a nod to weak inflation, the Fed cut its projection from three rate increases to two in 2019. By 2020, the Fed expects its benchmark rate to be 2.9 percent, and it trimmed its estimate of the rate over the longer run to 2.8 percent from 3 percent.

Higher interest rates would push up costs for everything from car loans and mortgages to business loans. Fed officials, however, have indicated they could forgo another rate increase late this year if inflation doesn’t accelerate. The Fed lowered its inflation forecast for this year to 1.5 percent from 1.7 percent in its June estimate and to 1.9 percent next year from its prior projection of 2 percent.

“If the (inflation) shortfall is persistent, it will be necessary to adjust monetary policy to address that,” Yellen said.

“Storm-related disruptions and rebuilding will affect economic activity in the near-term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term,” the Fed said in a statement following the meeting.

Despite the impact of the hurricanes, the Fed now expects the economy to grow 2.4 percent this year, up from its prior forecast of 2 percent.

The storms are expected to reduce third-quarter economic growth to about 2.2 percent from 2.7 percent, economists say, with much of the loss made up in the fourth quarter.

The Fed’s road map also could be redrawn if its leadership is overhauled. Fed Vice Chair Stanley Fischer has announced he’ll step down next month. And Yellen’s term expires in February, though President Trump has said he hasn’t ruled out reappointing the Democrat. Trump also must fill three other vacancies on the Fed’s board of governors.

Meanwhile, the widely expected shrinking of the Fed’s bloated balance sheet marks a milestone for the 8-year-old economic recovery. From 2008 to 2014, the Fed purchased more than $3.5 trillion in Treasury bonds and mortgage-backed securities in a campaign to lower long-term interest rates and stimulate a listless economy, swelling its balance sheet to $4.5 trillion.

The unprecedented program was widely credited with staving off a potential depression and has been mimicked by several major central banks around the globe. But with the U.S. economy on solid footing, Fed officials worry the low rates are encouraging investments in higher-yielding assets, increasing the risk of bubbles that eventually may pop.

Copyright 2017, USATODAY.com, USA TODAY, Paul Davidson

Advertisements

CoreLogic: Mortgage fraud on the rise

NEW YORK – Sept. 20, 2017 – A growing share of purchase-money and wholesale lending has helped to push up the risk of mortgage fraud. Also contributing were jumbo refinances.

There was some indication of mortgage fraud on an estimated 13,404 applications for single-family loans during the second quarter of this year. That worked out to 0.82 percent of all residential loan applications that were submitted during the three-month period.

Deterioration was noted compared to the second-quarter 2016, when just 12,718 applications – or 0.70 percent – were estimated to contain mortgage fraud.

Those were some of the findings from CoreLogic Inc.’s Mortgage Fraud Report.

The year-over-year deterioration was “relatively large,” according to Bridget Berg, principal, Fraud Solutions for CoreLogic.

“If the factors that influenced the increase continue, including a shift to purchase transactions and growing wholesale channel origination activity, it is likely that mortgage application fraud risk will continue to rise as well,” Berg said in the report. “Fraud on cashout refinance transactions and home-equity loans may become more of a factor in the coming years as home values and equity rise.”

CoreLogic’s Mortgage Application Fraud Risk Index jumped 17 percent on a year-over-year basis.

One factor behind the increase was the growing share of purchase financing, which widened to two-thirds from 55 percent a year earlier.

“Purchase transactions have higher risk due to the stronger motivations and increased opportunities to commit mortgage origination fraud,” the report stated.

Another factor was an increase in the share of business generated through the wholesale lending channel, which has broadened to 7.3 percent from 5.0 percent in the second-quarter 2016.

By loan type, jumbo refinance transactions had the biggest increase in fraud risk. Risk in this category soared 59 percent even as volume dropped 35 percent.

The risk of occupancy fraud rose 7.0 percent from a year prior, while transaction fraud risk was up 3.9 percent, and income fraud risk increased 3.5 percent.

But property fraud risk retreated 1.9 percent, while undisclosed real estate debt fraud risk was down 2.7 percent, and identity fraud risk tumbled 7.3 percent.

New York had the highest level of application fraud risk during the most-recent period. New Jersey was next, followed by Florida, the District of Columbia and California.

Copyright © 2017 Mortgage Daily. Distributed by Tribune Content Agency, LLC.

August Sales Numbers Are In

Closed sales decreased 7.1% for the same period last year with the median price increasing 18.2% to $236,000.

New listings decreased 6.4%.  Current Inventory increased .2% to 1,166 (we only have 1,200+ Realtors in Indian River County).

To see the full report click below.

Sebastian-Vero_Beach_MSA_Single_Family_Homes_2017-08_Detail

Homes built to stricter standards fared better during Irma

MIAMI – Sept. 19, 2017 – As homeowners in Florida begin to take stock of the damage from Hurricane Irma, industry observers note that homes built to the state’s stricter building codes seem to have fared better.

The feedback we’re hearing is positive,” says Rusty Payton, chief executive of the Florida Home Builders Association. “We’re all interested and there will be a deep dive. It appears that it did its job.”

Bill Wheat, executive vice president and chief financial officer at home builder D.R. Horton Inc., says his company’s early assessments “indicate that the more recent building standards post-Andrew over the last 20 years have held up relatively well.”

The evidence so far is preliminary, however. Insurance companies, home builders, city and county officials and local resiliency experts say they are still conducting assessments of how homes and commercial buildings built to different standards held up during Irma.

Florida has one of the strongest building codes in the country. Passed statewide in 2002 after Miami-Dade County beefed up regulations in the wake of Hurricane Andrew in 1992, the new rules required newly built homes to have stronger fasteners that prevent their roofs from blowing off, nails instead of staples, and impact-resistant windows in certain areas.

Florida passed a bill this spring that gives the Florida Building Commission flexibility to evaluate whether or not to make code changes to keep up with technological advancement and removed a requirement that it adopt International Code Council standards every three years.

Topics: Wall Street Journal (09/18/17) Kusisto, Laura; Campo-Flores, Arian

© Copyright 2017 INFORMATION INC., Bethesda, MD (301) 215-4688

NAR to Congress: Tax reform proposals threaten homeowners

Taxes are an interesting topic.  We use tax deductions to pay less taxes, so if you own a home and have a loan you get to deduct the interest on that loan.  The argument has always been if the mortgage interest deduction is eliminated then the cost of the home is increased and made less affordable.   I personally think Federal Income Taxes should be simplified to basic percentages 15%, 20% and 30% based on income bracket and 0 taxes if you make less than $25,000 with all deductions eliminated.  The article below state tax reform would harm homeowners.  What do you think?

WASHINGTON – Sept. 18, 2017 – Realtors® took their concerns over tax reform proposals to Capitol Hill last Wednesday when Iona Harrison, chair of the National Association of Realtors® (NAR)’ Federal Taxation Committee, warned the Senate Finance Committee that the proposals limit or nullify tax incentives for homeownership.

Harrison said the proposals would actually raise taxes on millions of middle-class homeowners and reminded senators that a drop in home values following tax reform is a significant risk.

“Real estate is the most widely held category of assets that American families own, and for many Americans, it’s the largest portion of their family’s net worth,” Harrison testified, adding that 64 percent of American households are owner-occupied. “We believe that homeownership is not a special interest, but is rather a common interest.”

Although there isn’t any current bill to reform the tax code, concepts have emerged over the past year that would affect homeownership. Changes being considered include the elimination of the federal tax deduction for state and local taxes, a proposal to double the standard deduction – which would effectively nullify the value of the mortgage interest deduction for all but the highest-earning families – and a cap on the amount of mortgage interest that could be deducted.

Some critics of the real estate deductions claim they benefit only a small number of wealthy individuals. But during Harrison’s testimony, she presented some of the following data to show that the deductions are important for a large number of homeowners:

  • 70 percent of the value of real property tax deductions in 2014 went to taxpayers with incomes less than $200,000
  • 53 percent of individuals claiming the itemized deduction for real estate taxes in 2014 earned less than $100,000
  • 32.7 million tax filers claimed a deduction for mortgage interest in 2015
  • Half of taxpayers with mortgages of more than $500,000 have an adjusted gross income of less than $200,000, according to research conducted for NAR

Harrison also reminded the Senate Financing Committee that tax reform in the past has brought unintended consequences for the economy. In 1986, Congress eliminated or significantly changed several tax provisions, including within real estate, in order to lower rates. But five years later, in 1991, the rates were increased.

“Most of the eliminated tax provisions never returned, and in the case of real estate, a major recession followed,” Harrison said.

Though NAR supports tax reform, the association has said any effort must protect homeownership incentives.

“Homeowners already pay 83 percent of all federal income taxes, and reform that raises their taxes is a failed effort,” Harrison testified. “NAR supports the goals of simplification and structural improvements for the tax system, and individual tax rates should be as low as possible while still providing for a balanced fiscal policy. We simply believe that to achieve these goals, Congress should commit first to doing no harm to the common interest that homeownership provides.”

Source: National Association of Realtors®

How does post-Irma damage affect tenants and landlords?

ORLANDO, Fla. – Sept. 14, 2017 – Florida law requires landlords to comply with all applicable building, housing and health codes that can vary by county, according to Meredith Caruso, manager of member legal communications for Florida Realtors.

However, Caruso says that there’s no simple or standard answer to the question “What rights do tenants and landlords have if Hurricane Irma damaged their rental unit?” since the answer could depend on terms within the lease.

If no applicable code exists, a Florida landlord must maintain the roofs, windows, doors, floors, steps, porches, exterior walls, foundations and all other structural components in “good repair and capable of resisting normal forces and loads,” and the plumbing in “reasonable working condition.” However, the landlord’s obligations under this subsection (83.051(1)(b)) may be altered or modified in writing with respect to a single-family home or duplex. It is therefore important to look at the lease language!

Additionally, unless otherwise agreed in writing, the landlord of a dwelling unit other than a single-family home or duplex (i.e. a condo or apartment) shall at all times during the tenancy make “reasonable provisions” for … “the clean and safe condition of common areas” … “garbage removal and outside receptacles therefore” … “functioning facilities for heat during winter, running water, and hot water.

Per Florida Statute 83.56, Termination of a Rental Agreement, assuming the landlord is unable to comply with obligations under the lease or the law due to “causes beyond the control of the landlord and the landlord has made and continues to make every reasonable effort to correct the failure to comply,” the rental agreement may be terminated or altered as follows:

  1. If issue renders the dwelling unit untenantable and the tenant vacates, the tenant shall not be liable for the rent during the period the dwelling unit remains uninhabitable.
  2. If the issue doesn’t completely render the dwelling unit untenantable and the tenant stays/continues to occupy the property, the rent for the period of noncompliance shall be reduced by an amount “proportionate to the loss of rental value caused by the noncompliance.”

Florida Statute 83.63, Casualty Damage, deals with rental units that are damaged or destroyed “other than by the wrongful or negligent acts of the tenant.” If “the enjoyment of the premises is substantially impaired, the tenant may terminate rental agreement and immediately vacate the premises.”

If the tenant only vacates part of the premises – the part rendered unusable by the casualty – then the rent “shall be reduced by the fair rental value of that part of the premises damaged or destroyed.”

Questions? Florida Realtors members may call or email the Legal Hotline, a free service as a member benefit.

© 2017 Florida Realtors

HUD offers help as Trump adds counties to disaster declaration

ORLANDO, Fla. – Sept. 14, 2017 – The Trump Administration expanded the number of Florida counties in its Major Disaster Declaration. The designation frees up federal funds for hurricane recovery, including an initiative by the Department of Housing and Urban Development (HUD) to help homeowners recover from the storm.

More counties could potentially be added, but the current Florida counties included in the Major Disaster Declaration for Florida are: Brevard, Broward, Charlotte, Citrus, Clay, Collier, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Marion, Martin, Miami-Dade, Monroe, Okeechobee, Orange, Osceola, Pasco, Palm Beach, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter and Volusia.

A major disaster declaration authorizes:

  • 100 percent federal reimbursement for 30 days for emergency protective measures, such as emergency operation center costs, evacuation costs, sheltering costs, and other costs associated with emergency response. After the 30 days, the federal government will reimburse 75 percent
  • 75 percent federal reimbursement for all counties for debris removal
  • Direct federal financial assistance for impacted Florida families

HUD disaster assistance for Florida storm victims

HUD says it will speed federal disaster assistance to the State of Florida and provide support to homeowners and low-income renters forced from their homes due to Hurricane Irma.

This week, President Trump issued a major disaster declaration for Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota and St. Johns counties. The President’s declaration allows HUD to offer foreclosure relief and other assistance to certain families living in this county. That includes:

Granting immediate foreclosure relief – HUD granted a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration (FHA)-insured home mortgages. There are approximately 280,000 FHA-insured Florida homeowners living in impacted counties.

Making mortgage insurance available – HUD’s Section 203(h) program provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of rebuilding or buying another home. Borrowers from participating FHA-approved lenders are eligible for 100 percent financing, including closing costs.

Making insurance available for both mortgages and home rehabilitation – HUD’s Section 203(k) loan program enables those who have lost their homes to finance the purchase or refinance of a house along with its repair through a single mortgage. It also allows homeowners who have damaged houses to finance the rehabilitation of their existing single-family home.

Information on housing providers and HUD programs – The Department will share information with FEMA and the State on housing providers that may have available units in the impacted counties. This includes Public Housing Agencies and Multi-Family owners. The Department will also connect FEMA and the State to subject matter experts to provide information on HUD programs and providers.

Assisting the State of Florida and local governments in re-allocating existing federal resources toward disaster relief – HUD’s Community Development Block Grant (CDBG) and HOME programs give the State and communities the flexibility to redirect millions of dollars in annual formula funding to address critical needs, including housing and services for disaster victims. HUD is currently contacting State and local officials to explore streamlining the Department’s CDBG and HOME programs in order to expedite the repair and replacement of damaged housing; and,

Offering Section 108 loan guarantee assistance – HUD will offer state and local governments federally guaranteed loans for housing rehabilitation, economic development and repair of public infrastructure.

Other HUD disaster resource information is posted online.

© 2017 Florida Realtors

Insurer: ‘File a claim. It won’t count against you’

TALLAHASSEE, Fla. – Sept. 13, 2017 – It might sound strange, but the founder and president of one of Florida’s major insurance companies has a message for anyone who thinks they might have sustained damage from Hurricane Irma:

“File a claim. It won’t count against you.”

Security First Insurance founder and president Locke Burt said he recently heard someone on TV urge property owners not to file claims for minor property damage because that could cause their rates to increase in the future.

For non-hurricane-related claims, that’s true, Burt said. Several non-weather-related claims filed within a few years will indeed place customers in a higher risk class, and thus, trigger higher insurance rates.

But the notion that filing an insurance claim for hurricanes will increase premiums in the future is an urban myth, Burt said.

“Hurricane Irma is an act of God,” Burt said. “Insurance companies handle acts of God differently. They don’t count against you. You need to file your claim. It doesn’t hurt you.”

Even if a claim is so minor – a broken window, lost roof tiles, or a dented garage door for example – that it won’t exceed a policyholder’s annual hurricane deductible, you should still report that damage, Burt said.

That’s because even if you receive no money from that $1,000 claim, if there’s another hurricane this year and your deductible is $2,000, “you only have $1,000 to go,” he said.

“You have to report your Irma claim now, because when Jose comes, you’ll have it on the record.”

Hurricane deductibles in Florida used to be assessed per hurricane. But the Florida Legislature established an annual deductible in 2004 after four hurricanes struck the state and many homeowners were forced to pay more than one deductible.

Plus, sometimes homeowners might not realize the extent of damage they consider minor, he said. A friend who said a tree bounced off his roof but caused no damage later learned major damage was caused to beams under his shingles, Burt said.

Burt said Security First had received about 7,000 claims as of 3 p.m. Tuesday.

Claims for Hurricane Irma damages were still coming in on Tuesday, and most insurers contacted by the Sun Sentinel declined to reveal how many have come in, or from where.

Kevin Mitchell, vice president of investor relations for HCI Group, which operates Homeowners Choice Insurance, said, “It’s too early to tell where claims are trending.”

A lot of policyholders, particularly those who evacuated from the Keys or Southwest Florida, haven’t returned to their homes yet, or are still struggling with loss of water and power.

“People with damage haven’t been able to call. We’ll have a better sense in a week or so,” he said.

Michael Peltier, spokesman for state-run Citizens Property Insurance Corp., said about 7,000 claims had come in as of 1 p.m. but stressed that is preliminary. Also preliminary, he said, is the company’s estimate that Irma will result in 150,000 claims statewide. When Irma’s eye wall was pointed at Miami-Dade County late last week, Citizens was bracing for more than 200,000 claims, he said.

Travis Miller, spokesman for Universal Property & Casualty, the state’s largest insurer, said claims calls to that company have been active over the past two days but “lower than expected and well within the company’s plans and preparation.” About a third of claims received so far have been from the tri-county region, he said.

The company has dispatched adjusters to inspect properties in the tri-county region as well as to the Tampa and Orlando areas, he said.

Logistical issues such as power outages, flooding and road closures are affecting adjusters’ ability to reach properties in Southwest Florida, he said. “Nonetheless, adjusters will be working in those areas as soon as it is safe to do so.”

Palm Beach County emergency managers on Tuesday said Hurricane Irma caused at least $19 million in damage to homes, businesses and government buildings. That is a preliminary estimate and the figure is expected to rise, said County Administrator Verdenia Baker and Emergency Management Director Bill Johnson.

The Federal Emergency Management Agency, which runs the National Flood Insurance Program, said it did not yet have any tallies for flood claims from storm surge or excessive rainfall – conditions not covered by traditional property insurance.

Meanwhile, Gov. Rick Scott issued a news release on Tuesday saying he has urged Insurance Commissioner David Altmaier to take steps to ease burdens on insurance customers as they recover from the storm.

They include providing an additional 90 days to policyholders to provide required information to their insurance companies, rescinding for 90 days all non-renewals or cancellations issued to policyholders in the days leading up to Hurricane Irma, and “freezing any and all efforts to increase rates” on policyholders for 90 days.

What the news release didn’t say was whether Altmaier has agreed to do what the governor is urging. Reached Tuesday evening, Altmaier spokeswoman Amy Bogner said the Office of Insurance Regulation planned to issue an emergency order on Wednesday.

Asked about the Scott news release, Burt said he had just received it and was seeking clarification from the governor’s office and the Office of Insurance Regulation.

Burt said policyholders having trouble reaching claims agents by phone can submit claims in a number of other ways: through his company’s online portal, its mobile app, by text, or email. “You can post it on Twitter or whatever,” he added.

Most insurers also allow online claims submissions.

Claims have been submitted online by Security First policyholders in 25 states – presumably property owners who evacuated and were told by friends, neighbors or family members that their properties sustained damage, Burt said.

And it’s OK that policyholders “get in line” by submitting claims before personally inspecting their properties, he said. “What’s the worst that could happen? We send someone out there and they say ‘you’ve got no damage.'”

Copyright © 2017 the Sun Sentinel (Fort Lauderdale, Fla.), Ron Hurtibise. Distributed by Tribune Content Agency, LLC.

Average mortgage rates fall again to new 2017 low

WASHINGTON (AP) – Aug. 31, 2017 – Long-term U.S. mortgage rates fell this week. It was the fifth straight weekly decline for the benchmark 30-year rate, which again reached a new low for the year.

Mortgage buyer Freddie Mac says the rate on 30-year, fixed-rate mortgages fell to 3.82 percent from 3.86 percent last week. A year ago, the rate stood at 3.46 percent. It averaged 3.65 percent for all of last year.

The rate on 15-year, fixed-rate home loans dipped to 3.12 percent from 3.16 percent last week. Those loans are popular with homeowners refinancing their mortgages.

AP Logo Copyright © 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Could Harvey push Fla. homeowner’s insurance rates higher?

MIAMI – Aug. 30, 2017 – Hurricane Harvey’s devastating property damage toll will easily be counted in the billions of dollars, but insurance industry experts say they shouldn’t have an impact on property insurance rates in hurricane-prone Florida.

AIR Worldwide, which advises companies on managing risk, estimates that Harvey caused between $1.2 billion and $2.3 billion in wind and storm damage. Another analytical firm, CoreLogic, forecasts between $1 billion and $2 billion. Risk Management Solutions says the total could be $6 billion but likely will be less.

But that’s just the hit for property and casualty insurers. Flood damage could be tens of billions more.

Lynne McChristian, spokesperson for the Insurance Information Institute, an industry organization, said that Florida homeowner insurance rates shouldn’t be affected for one simple reason: rates are set at the state level and are based on what happens within the state. “What happens in Florida stays in Florida, what happens in Texas stays in Texas and that is the way it works in every state,” she said.

The organization’s website, http://www.iii.org, includes a chart that shows average insurance rates across all states. Those reflect the risks inside each state’s borders.

The lowest insurance rates in the U.S. are Idaho and Utah, she said. “That’s primarily because you don’t have hurricanes there – or major flooding. And, there is not the population density of more disaster-prone states.”

That’s not the case for the struggling National Flood Insurance Program, because that is regulated at the federal level, she said.

Jay Neal, CEO of the Florida Association of Insurance Reform, also said he doesn’t expect Harvey’s toll to impact Florida homeowner rates. Still, he said, the devastation in Texas should be a wake-up call for the estimated 1.4 million Florida homes vulnerable to storm surge but not currently covered by flood insurance.

“People still don’t understand that storm surge is not covered by their homeowner policies,” he said. “People need to wake up and look at Texas. This could happen here.”

In a statement, William H. Stander, executive director of the Florida Property & Casualty Association, said the organization can’t speculate on how Texas losses could impact Florida rates: “More importantly, all Floridians should recognize the importance of buying flood insurance, which is not covered under your homeowner’s insurance policy,” he said.

© 2017 Miami Herald, Nancy Dahlberg. Distributed by Tribune Content Agency, LLC.