Weekly Economic Summary - December 25, 2009


OVERVIEW ~ Three subjects caught people’s attention during the week of Monday, December 14, through Friday, December 18. They underscored a sense of improvement in the U.S. economy, but raised the fear level about the economies and debt levels in many foreign countries.

First, though, was the sobering fact that the end of the year means lighter trading in all markets as investors enjoy the holidays. It also means buying and selling are affected by end-of-year portfolio repositioning, purchases and sales for tax purposes, and other seasonal factors that easily distort our view of the markets’ current direction. It is time to take current short-term forecasts with a bit of healthy skepticism, therefore.

Second, then, is the amazing recovery of the U.S. dollar’s exchange rate against the currencies of most other major economic powers. As of last week, the dollar had regained all losses against those currencies since September of this year. What has fueled this resilient strength? The primary force is a belief that the economy is moving toward an increasingly sustainable recovery. This belief has had its ups and downs in recent months, of course, creating something of a roller coaster ride for interest rates (within a relatively narrow channel) and for commodity prices.

But there is more at work here. The unavoidable issue, even for those who have been certain that the dollar would continue to lose its exchange value, is that many foreign currencies look far worse than does the dollar and their countries’ economies appear to be far more tentative than ours. By contrast, the U.S. economy looks relatively strong.

Dubai, threatening to suspend payments on $60 billions’ worth of borrowing for three months, blew the cover off of the growing problem of fiscal weakness in many countries. At present, Greece is sharing the spotlight as it faces a lowering of its credit rating unless it makes credible austerity moves. Just behind Greece on the crisis ladder are Portugal, Ireland, Italy and Spain. And news spread recently of trouble brewing in Austrian banks. The tremors among the currencies of these countries send investors to the safer haven of dollar-denominated investments, even as our Treasury rates have lately been rising.

The third thing to notice, perhaps playing itself out at present, is the fact that the spread between the 10-year Treasury note and the 30-year average fixed mortgage rate narrowed in recent weeks, probably to the point that it’s been predicting a possibly higher mortgage rate. And indeed, the Freddie Mac average rate on its 30-year fixed-rate mortgage climbed again for the week ending December 17 from 4.81% to 4.94% (which is still notably lower than last year’s 5.19%).

The markets seemed to indicate that our economy is continuing to strengthen last week. But they also warned of growing crises abroad.

12 tech predictions for 2010

NEW YORK – Dec. 18, 2009 – Joseph Ferrara of TheClozing.com, a real estate news aggregator site, predicts increased reliance on technology in the property industry in the coming year.

He expects more brokerages to go mobile or virtual to lower costs in a weak market; and he believes agents will take advantage of mobile video text-messaging to send virtual tours and slideshows to clients and Facebook’s “fan” feature to design pages for themselves, neighborhoods, and local events that target their fans in the hopes of generating new business.

Ferrara also believes a new cell phone from AT&T with an attachable projector will make it easy for agents to show slideshows, photos, and videos to clients in the field; and he expects a new iPhone or BlackBerry app for the National Association of Realtors’ (NAR) Realtors Property Resource will give members a competitive advantage

Among other trends, Ferrara predicts video e-mail, Web sites that allow agents to bid on listings, and services that allow buyers to quickly obtain home details by pointing cell phone cameras at a bar code on the For Sale sign or magazine ad will gain popularity next year.

Source: Inman News

Are fixed-rate mortgages the best loan?

WASHINGTON – Dec. 17, 2009 – The think-tank Center for American Progress is questioning the premise that a 30-year, fixed-rate mortgage is the best option for homebuyers.

The reason mortgage-backed securities looked so attractive to banks is that they solved the problem of a mismatch between low rates on mortgages and higher rates for deposits. Banks worried about getting stuck earning low rates on a mortgage for 30 years while having to pay higher rates on bank accounts to attract depositors. Their answer: unload their mortgages to investors and let them worry about the profitability of the loans. Those investors hedged their bets by purchasing interest-rate swaps and other derivatives. Now, even Fannie Mae and Freddie Mac are having a hard time getting a handle on what those hedges are worth.

In other parts of the world, variable rates are the norm. While borrowers face the risk of rates going up, lenders at least can ensure the rates they pay to depositors don’t outstrip what they receive in mortgage products. Homeownership rates in Canada and the European Union, where variable rate mortgages are the norm, are about what they are in the U.S.

And in any case, there are ways for borrowers to mitigate their interest-rate risk. They can take out loans with fixed initial periods, for example. For homeowners who typically hold their homes for seven years, a five-year fixed rate provides considerable security.

If the country persists in choosing fixed-rate mortgages, some observers say, lenders might consider the Danish model where mortgages are financed through the bond market rather than a separate securities market. That’s a system that has worked well for two centuries.

Source: The Wall Street Journal

November housing construction up 8.9 percent

WASHINGTON (AP) – Dec. 16, 2009 – Construction of new homes, helped by better weather, rebounded in the U.S. in November following a setback in the previous month.

The gain is a hopeful sign that the housing recovery is continuing, a development viewed as critical to lifting the overall economy out of recession.

The Commerce Department says construction of new homes and apartments rose 8.9 percent in November to a seasonally adjusted annual rate of 574,000 units. The gain represented strength in all areas of the country although the increase was slightly lower than economists had expected.

Applications for new building permits were also up, rising 6 percent to an annual rate of 584,000 units, a stronger showing than economists predicted.

Copyright © 2009 The Associated Press

Standoff ends: State Farm to remain in Fla.

TALLAHASSEE, Fla. – Dec. 16, 2009 – The Florida Office of Insurance Regulation today announced that State Farm Florida has agreed to continue serving the Florida property insurance market.

Insurance Commissioner Kevin McCarty issued a consent order that resolves pending litigation between State Farm Florida and the Office of Insurance Regulation over the company’s plan to abandon the state’s property insurance market. By the terms of the consent order, State Farm Florida will remain a significant player in the Florida residential property insurance marketplace.

“This agreement is the product of a long and arduous negotiation process,” says McCarty. “The final result is beneficial to the people of the State of Florida, and beneficial to the Florida insurance marketplace. The consent order satisfies the office’s requirements issued in our order dated Feb. 13, 2009, and allows State Farm Florida to remain a viable insurer in the Florida market.”

Under the terms of the consent order, State Farm Florida will drop no more than 125,000 policies. The insurer had 810,416 residential properties in Florida as of October 2009. Even after shedding the 125,000 policies, State Farm Florida should remain the largest private insurer of property in the Florida.

The consent order also grants State Farm a 14.8 percent rate increase for all homeowners’ and condominium unit owners’ policies. The Office of Insurance Regulation says the rate increase approval is based on information provided by State Farm.

The consent order concludes a series of events that began with Florida turning down a State Farm average rate hike request of 67.1 percent on Jan. 27, 2009. A few weeks later, State Farm announced that it would stop insuring property in the state. Recent news reports, however, indicated that the state, and to a lesser extent State Farm, had softened their stance on withdrawal.

“I would say this is a successful resolution of the problem,” McCarty says. “Having State Farm in Florida is better than no State Farm at all. That continues to be our position.”

© 2009 Florida Realtors®

Homebuyers need a good credit score even with 20% down

WASHINGTON – Dec. 15, 2009 – Five years ago, if your application for a mortgage included a 20 percent downpayment, your bank would have approved your loan by sundown and sponsored a parade in your honor.

But in this new era of tight credit, having a big downpayment no longer guarantees you’ll qualify for a mortgage. Starting this week, mortgage finance giant Fannie Mae will require borrowers with a 20 percent downpayment to have a credit score of at least 620. Previously, the cutoff was 580.

Fannie Mae buys loans, providing an important source of financing for lenders. For that reason, its guidelines are considered the gold standard for mortgage loans. Most banks are expected to adopt the new standards, if they haven’t already.

“Credit scores have never mattered quite as much as they do now,” says Bob Walters, chief economist for Quicken Loans.

In addition, Fannie Mae won’t approve loans for borrowers with a 20 percent downpayment if more than 45 percent of their gross monthly income goes toward debt. Fannie Mae didn’t disclose the previous debt limit, but it was higher than 45 percent, says Fannie Mae spokesman Brian Faith.

The higher standards could frustrate buyers hoping to take advantage of low interest rates, depressed home prices and generous tax breaks that were recently extended until next spring. Even buyers who qualify for a mortgage may find that they’re ineligible for the best rates because lenders have tightened their standards across the board, says Gerri Detweiler, credit adviser for Credit.com.

If you’ve already found a home you’d like to buy, there’s not much you can do to raise your score before you apply for a loan. But if you’re just starting to tour open houses, there are steps you can take to improve your credit profile, including:

• Review your credit reports for errors. Go to AnnualCreditReport.com and order your credit reports from the three main credit-reporting bureaus: Experian, TransUnion and Equifax. You’re entitled to a free credit report once a year from all three of the bureaus, but only if you go through this website.

Once you receive your credit reports, go through them and look for inaccurate information, such as accounts you never opened. All of the credit bureaus provide a process to dispute errors, says Craig Watts, spokesman for Fair Isaac, which created the widely used FICO score.

• Pay off credit cards and other debts. One of the factors used to calculate your credit score is your “credit utilization ratio,” which measures the amount of credit you have outstanding vs. your total available credit. This ratio accounts for 30 percent of your score. Paying off balances will increase the amount of unused credit you have available, which will help your score.

But even if you’ve decided never to use credit cards again, don’t close your accounts. Closing a credit card account won’t help your credit score and could hurt it, Watts says. When you close an account, you reduce the amount of your available credit, which could hurt your credit utilization ratio.

• Avoid opening any new accounts. “Every new account you open is likely to drop your credit score, at least a little,” Watts says.

Checking your score

When you order your free credit reports from AnnualCreditReport.com, your credit scores aren’t included; you’ll have to pay a fee to get them.

In recent months, though, several services, such as Quizzle, Credit Karma and Credit.com have launched programs that provide free credit profiles. These websites can provide a useful snapshot of your credit standing and provide tips on how to improve it, Detweiler says.

If you’re planning to buy a home a year from now, she adds, it doesn’t make sense to spend a lot of money to buy scores that could change by the time you apply for a loan.

But house hunters who plan to apply for a loan in the next few weeks should know their actual FICO scores, because that’s the score most potential lenders use, Detweiler says.

You can buy your FICO score and credit report from TransUnion and Equifax at www.myfico.com for $15.95 each.

Earlier this year, Experian stopped selling to consumers the FICO scores it provides lenders, Watts says. You can buy a credit score based on Experian’s own scoring model for $15 at www.experian.com. Experian’s website also promotes a “free credit report and score,” but to get this deal, you must enroll in a credit-monitoring service that costs $14.95 a month.

Copyright © 2009 USA TODAY

Where’s the refund?

WASHINGTON – Dec. 14, 2009 – First-time homebuyers who bought as long ago as last winter are still waiting for their $8,000 tax refund.

As of mid-September, more than 1.4 million taxpayers had requested the credit by amending their federal tax returns. The IRS announced in October that it expects 5.1 million claims by year-end. That count doesn’t reflect the extension and expansion of the credit in November.

IRS spokeswoman Carrie Resch says the agency is experiencing a higher-than normal number of amended returns and because amended returns are reviewed by hand, the process is delayed.

U.S. Sen. Amy Klobuchar (D-Minn.) has been fielding constituent calls for weeks from irate homebuyers. She sent a letter to the IRS that said in part: “The full and immediate economic impact of the tax credit is lost when it takes up to four months for people to get the money due to them ... such lengthy delays are unacceptable and erode the public’s trust in the competence of the government.”

Source: Minneapolis-St. Paul Star Tribune

Taxes 2009: Get it together now

WASHINGTON – Dec. 11, 2009 – For millions of Americans, “consultant” or “freelancer” is a euphemism for “unemployed.”

But whether you’re self-employed by choice or circumstances, there’s a lot you can do between now and year’s end to reduce your 2009 tax bill. One of the advantages of self-employment is that you have more control over your tax destiny than folks who have their taxes withheld from their paychecks. Some examples of tax-saving steps you can take before the end of the year:

Purchase needed materials. When you’re self-employed, everything you buy for your business, from manila envelopes to a new computer, is deductible. By making those purchases now, you can deduct the expense on your 2009 tax return instead of waiting until next year, says Mary Canning, dean of the school of taxation and accounting at Golden Gate University in San Francisco.

“If you’re thinking your laptop isn’t functioning very well or you need a new scanner, this might be the time to do that kind of purchase,” Canning says.

A purchase made with a credit card counts as a 2009 expense, even if you don’t pay the bill until 2010, Canning says.

Make sure you keep receipts and other records for these purchases, says Justin Ransome, partner in Grant Thornton’s National Tax Office. If you’re audited, the IRS will ask you to prove that these were legitimate business expenses, he says.

Delay income. If you’re employed, your company probably won’t agree to hold on to your last paycheck until Jan. 1 (although this sometimes works if you’re due a bonus or commission). But if you’re working for yourself, your clients may be happy to wait until next year to pay you for recent services.

Use health insurance tax breaks. Most workers who are covered by their employer’s health insurance can’t deduct their portion of the premium. Out-of-pocket expenses aren’t deductible unless they exceed 7.5 percent of adjusted gross income.

For the self-employed, though, 100 percent of health insurance premiums are deductible, says Mark Luscombe, tax analyst for tax publisher CCH. You can also deduct the cost of providing health insurance for your spouse and your dependents. However, the deduction can’t exceed the net income of your business.

If you purchased an individual insurance policy, you may be eligible to contribute to a health savings account. Contributions to a health savings account can be used to pay for deductibles and other costs that aren’t reimbursed by your insurance plan.

Unlike the flexible spending accounts offered by many employers, money remaining in HSAs at year’s end can be rolled over to future years. Self-employed workers can deduct contributions to an HSA, and withdrawals are tax-free as long as the money is used for qualified health care expenses, says Eddie Gershman, a partner with Deloitte Tax.

To qualify for an HSA, you must have a high-deductible insurance policy, which the government defines as one with a minimum deductible of $1,150 for an individual or $2,300 for a family.

The maximum you can contribute is $3,000 for an individual or $5,950 for family coverage.

Save for retirement. For the newly self-employed, saving for retirement may seem like an unaffordable luxury. But squirreling away even a small amount can reduce your 2009 tax bill.

There are several retirement-savings plans available to the self-employed, but the SEP-IRA is the easiest to set up, Gershman says. Contributions are deductible, and you can contribute up to 25 percent of your earned income, up to a maximum of $49,000 in 2009.

You have until the due date of your 2009 tax return to set up and fund a SEP-IRA, so you can wait until April 15, or even longer if you file for an extension. But the sooner you start saving, the sooner you’ll start earning money.

Start planning now. Finally, this is a good time to review your records and start planning for 2010, says Gale Northrop, a financial consultant for Schwab. If taxes aren’t withheld from your paychecks, you’re supposed to pay estimated taxes every quarter.

Tax tips for everybody else

While taxpayers who work for an employer have fewer options, there are year-end steps they can also take:

Give to charity. Donations are deductible as long as the charity or non-profit is qualified to receive deduction contributions (IRS Publication 78 includes a list of qualified organizations, but doesn’t include many religious groups that are also eligible.)

Timing is important if you want to claim the deduction on your 2009 tax return. Contributions made by check are considered delivered on the day they’re mailed, according to Grant Thornton. Contributions paid with a credit card are deductible in the year the charge occurs, even if you don’t pay the bill until next year. In general, pledges – no matter how heartfelt – aren’t deductible until you make the payment.

Buy a car. OK, you probably shouldn’t buy a car just to get a tax break. But if you’re in the market for a new vehicle anyway, buying one before year’s end could lower your taxes. You can deduct sales and excise taxes on new vehicle purchases of up to $49,500. You can claim this deduction even if you don’t itemize.

Harvest investment losses. Last year’s market meltdown and the economic downturn incinerated a lot of companies. If some of the securities in your portfolio are smoldering, you may be eager to ditch them and claim a loss for worthless securities. But if the stock continues to trade – even if it trades only infrequently in informal markets such as the Pink Sheets – it’s not considered worthless. In addition, the IRS requires you to claim the loss in the year the security becomes worthless, which is often difficult to figure out until well after the fact.

There are, however, other ways to claim a loss on securities that you believe are beyond redemption, says James Van Grevenhof, tax analyst for Thomson Reuters. One is to sell the security to an unrelated third party, which could include your broker, a cousin or a friend (you can’t sell it to a parent, child or sibling). You can claim the difference between the amount you paid and the proceeds from the sale as a loss on your tax return.

If no one is willing to buy your securities, you can abandon the stock, Van Grevenhof says. You must permanently relinquish all rights to the security, he says. You can accomplish this by contacting your broker or the company that issues the security.

Capital losses can be used to offset capital gains from the sale of securities.

If you had no capital gains this year, you can deduct up to $3,000 of your losses against ordinary income. Losses that exceed that amount can be carried over to future years.

Copyright © 2009 USA Today

In reality, those real estate shows are really fake

CHICAGO – Dec. 10, 2009 – Flip on your television and tune into HGTV’s “House Hunters” and you might see yet another set of Chicago homebuyers and a local real estate agent in action.

The popular cable TV program seems to like the local real estate market; it’s certainly been featured before. And with every show, another buyer and agent learn the skinny about what’s real and unreal on reality television.

“House Hunters” is one of those programs you can stumble across and then find yourself sitting down to watch, critiquing the three different properties being shown and the buyer’s tastes, and then guessing which one they’ll pick. It also provides a sense of property values in a given locale, as in “look how much more/less house we can get if we moved somewhere else.”

So hearing the behind-the-scenes details of several episodes that have been filmed here recently is a bit like pulling back the curtain to reveal the real Wizard of Oz.

A few months ago while they were looking for another set of homebuyers, the show’s producers stumbled across the blog of Chicago Realtor Eric Rojas (score another one for social marketing) and asked if he had a willing buyer.

He did. But Chicagoans Kurt and Kelly Schnakenberg had to be more than willing to appear on television. They had to have the financial wherewithal to actually close on a home, and they had to have the right personalities for the show, something they demonstrated in a videotape sent to the producers.

Rojas, meanwhile, had to fill out a questionnaire about how he does business.

For the show, the couple looked at three properties in Lakeview: a $415,000 loft, a $355,000 vintage condo with a kitchen that needed work and a $400,000 loft-style town house that needed updating.

Of those three, one of them was the unit the couple did indeed purchase in March. Another one was under contract to someone else so the listing agent had no problem showing it. The third unit was for sale, but the couple had never seen it before and had pretty much already made up their mind.

The conversations aren’t the same, either. Kurt Schnakenberg said he and his wife did debate the merits of various condos but it was never so serious and “usually over a bottle of wine.”

Chicago agent Carrie Georgitsis, who showed properties to her father for a different episode, had no idea how tiring it would be until she found herself involved in 40 hours of filming for what amounts to less than 25 minutes of programming. She found herself having to say the same things over and over, while the camera crew shot her conversations with her father from different angles, and had to be careful not to tip off viewers to which property was chosen.

Why can’t it be more real than it is? Here’s three good reasons: One, it’s a TV show and it’s meant to be entertaining. If it turned out that the buyers had bad credit and couldn’t close on a home, there’d be no happy ending and no “after” shot showing the new homeowners in their abode.

Two, sellers – and homeowners associations – have to agree to the filming and some don’t want to be bothered or don’t want to deal with the legal ramifications if a crew member gets hurt during filming. And three, if the buyers and the real estate agent are totally unlikable and mumble, do you want to watch them buy a house?
Rojas doesn’t think so.

“‘House Hunters’ is house candy,” Rojas said. “It’s not realistic. It’s directed. You don’t learn anything about buying. You learn about real estate values. You learn about how houses look.”

Despite all that, agents who’ve done it say they still watch the show, and they’d go back on it again. After all, it’s great marketing exposure, particularly because programs are repeated.

“It’s totally fake, but does anybody think reality TV is real? It’s all canned, but it’s fun to watch,” said real estate agent Karl Vogel, who also was featured in a recent episode helping a Boston native find a home in Chicago. “Who can say they don’t like to be on television, except you look fat?”

The Schnakenbergs, who’d never before seen the show, already plan to capitalize on their upcoming 30 minutes of fame when it comes time to sell their condo. “Listing it ‘as seen on HGTV’ couldn’t hurt us,” Kurt Schnakenberg said. “I’m not sure if it will get us more money, but it will help us get more showings.”

© 2009 Chicago Tribune

New FHA rules a mixed bag for condos

WEST PALM BEACH, Fla. – Dec. 9, 2009 – New guidelines from the Federal Housing Administration could increase sales in South Florida’s stalled condo market, making it easier, at least temporarily, to get FHA-backed mortgages.

The guidelines, which went into effect Monday, were written to address current market conditions and the glut of empty condominiums following the real estate bust.

Several of the policies, however, expire in December 2010, leaving some real estate experts to call the changes a mixed bag that will ultimately restrict sales.

Others contend the modifications are overall good for a market suffering from a lack of condominium financing.

Changes include reducing the number of units in a new condominium that must be owner-occupied, allowing condo boards to refuse buyers as long as it doesn’t violate the Fair Housing Act, and cutting the expensive requirement of having an attorney certify condominium documents before a sale.

“Palm Beach will definitely, definitely benefit from this,” said Grant Stern, president of Morningside Mortgage Corporation in Bay Harbor Islands, which does consulting work for developers. “It will allow local buyers to reenter the market with financing on good terms. It will also spur a lot of investor activity when they see the prices starting to creep back up.”

Most banks have shied from condo lending because the units are considered high risk. Those that still lend often want 20 to 30 percent down, a requirement that can eliminate the average buyer.

FHA-backed loans allow for smaller downpayments, but few condos are qualified for that kind of lending.

The Edge condominium at 300 South Australian Ave. in downtown West Palm Beach, which opened in 2007 with 307 units, is the only building in the 33401 area code approved for FHA financing, according to the agency’s Web site.

“Today, a new condo can be more affordable than paying rent, but people can’t buy because they don’t have the downpayment,” said Sarah Mazor, broker at Mazor Realty in Boca Raton, which specializes in new condo sales. “It slows down the market and the people who suffer are the middle class.”

Two big barriers to FHA financing have been a requirement that 51 percent of a condominium be owner-occupied, and a rule banning loans to buildings with “right of first refusal.”

The new temporary guidelines allow for 50 percent of units to be owner-occupied and doesn’t count units that are bank-owned, rented out, or vacant.

Allowing condos with “right of first refusal” access to financing is a permanent change.

Vicki White-Sklark, a government loan specialist with Sun Trust Mortgage in Sunrise, said she’s concerned about how new guidelines that tighten the approval process will ultimately restrict the market.

One change is that no more than 15 percent of total units can be more than 30 days behind on condo association fees.

Also, while other states are now allowed to independently approve FHA mortgages, Florida is still required to have projects submit applications to the U.S. Department of Housing and Urban Development.

“Right now, it’s a moving target,” White-Sklark said, about the guidelines. “I fully expect this to evolve over the next year as they realize the impact it’s going to have on the market.”

Copyright © 2009 The Palm Beach Post

Short sales: Playing by the new rules

WASHINGTON – Dec. 8, 2009 – The U.S. Treasury hopes to speed transactions under its new short sale rules, but details count, and Realtors should understand the process if they hope to avoid delays. While the new rules become effective no later than April 5, 2010, lenders have been encouraged to make them official as soon as possible.

The new rules, released Nov. 30, 2009, as the Home Affordable Foreclosure Alternatives Program (HAFA), provide financial incentives to spark short sale or deed-in-lieu (DIL) closings. The change was made to grease the wheels of a short sale transaction, giving potential buyers a shorter wait time from contract signing to lender approval of the contract. It also should make a short sale more attractive to buyers by reducing the number of problems.

The rules do not necessarily simplify the amount or complexity of short sale paperwork, however. The oversight doc, Supplemental Directive 09-09, devotes four pages out of 43 to the new short sale requirements. Real estate professionals working with short sales should review the Short Sale section of the Supplemental Directive (pages 5-9) and review the forms and letters in Exhibits A and B.

Supplemental Direction 09-09: https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf

© 2009 Florida Realtors®

Buyer tax credit effective but not available

WASHINGTON – Dec. 7, 2009 – With President Obama’s signature on Nov. 6, 2009, the first-time homebuyer tax credit was extended, and some move-up buyers became eligible for up to $6,500 starting on Dec. 1, 2009.

However, the new law changed the way a home sale must be documented to the Internal Revenue Service (IRS), including additional back-up information to minimize the chance of fraud. And that documentation change became effective immediately when the bill was signed.

But that new form is not yet available.

The homebuyer tax credit is claimed using IRS Form 5405, and that won’t change under the new program; however, Form 5405 must be revised to adhere to rules in the law signed Nov. 6.

Currently, the IRS has only the old version of Form 5405 on its website – the one that applies to sales that took place Nov 6, 2009, or earlier. The revised Form 5405 applicable to sales on Nov. 7, 2009, and later, will not be on the IRS website, according to IRS officials, until late December.

Buyers who close after Nov. 6 and use the old claim form may have trouble collecting their tax credit quickly.

For more information on the tax credit and Form 5405, visit the IRS website.

© 2009 Florida Realtors®

Banks start to embrace short sales

WASHINGTON – Dec. 7, 2009 – Even before the government put pressure on them to embrace short sales, more banks were starting to take their lumps, do the short-sale deals and move on.

Three years into the housing meltdown, short sales have tripled to 40,000 in the first six months of 2009 compared to the same time period a year ago, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Wells Fargo, Bank of America Corp. and JPMorgan Chase & Co. this year have hired and trained more staff to handle short sales and also developed software for expediting them.

“It’s really finally dawning on banks that they’re better off with a short sale,” says Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. “I think banks were in denial.”

Source: Bloomberg, John Gittelsohn and Margaret Collins (12/4/2009)

© Copyright 2009 INFORMATION, INC

30-year mortgages at new record low

Mortgage Rate Trend Index

The record-low rates won’t last long, say 62% of industry experts polled by Bankrate.com this week. Only 7% foresee an additional decrease over the next 30 to 45 days, while the remaining 31% expect no change.

WASHINGTON – Dec. 4, 2009 – The average interest rate for a 30-year mortgage dropped to a record low of 4.71 percent this week, pushed down by an aggressive government campaign to reduce borrowing costs.

The rate, published Thursday by Freddie Mac, is the lowest since the mortgage finance company began tracking the data in 1971. The previous record of 4.78 percent was set during the week ending April 30 and matched last week.

The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make homebuying more affordable and prop up the housing market.

Despite the government support, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent downpayment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders across the country. Rates often fluctuate significantly, even within a given day, often tracking yields on long-term Treasury bonds.

This week’s drop reflects a rush of investors into the security of government debt after concerns about financial trouble in Dubai drove investors to safe harbors. But rates climbed back later in the week, and analysts say they are likely to remain volatile.

“There are no guarantees that mortgage rates are going to stay at these low levels,” said Greg McBride, senior financial analyst at Bankrate.com.

And millions of American families have not been able to take advantage of them, particularly in the areas where home prices have fallen the most.

About 11 million households, or 23 percent of homeowners with a mortgage, owe more on their home loans than their house is currently worth according to First American CoreLogic, a real estate information company.

That makes refinancing difficult.

While the government has launched a program designed to help these “underwater” borrowers, only about 140,000 homeowners have used it so far.

In Orlando, mortgage broker Chris Brown says the low rates are a boon to first-time homebuyers who can qualify for a loan. But he says he isn’t getting much business from homeowners looking to refinance.

“Most of the people that could refinance probably have” done so, he said. “Rates have been artificially low for quite some time.”

The average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27 percent, from 4.29 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, up from 4.18 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.25 percent from 4.35 percent.

The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount.

The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.

Buyers and homeowners who want to refinance are picking up their phones. Mortgage applications rose 2 percent last week from a week earlier, the Mortgage Bankers Association said Wednesday, driven by a more than 4 percent increase in purchase applications and a nearly 2 percent increase in applications to refinance existing loans.

Copyright © 2009 The Associated Press

Fed economic report: Florida recovery lags

ATLANTA – Dec. 3, 2009 – The national economy is perking up, even as Florida and the Southeast continue to struggle with a weak job market, depressed lending and a gloomy commercial real estate sector, the government said Wednesday.

The economic snapshot was provided in the Beige Book – a compilation of economic anecdotes from the nation’s 12 Federal Reserve districts.

While the report found that in eight out of the 12 districts “economic conditions have generally improved,” four others – including the Atlanta District, which serves Florida – reported mixed economic news.

The bright spots in the Southeast: “The majority of retailers described activity as exceeding their modest expectations,” and new and used home sales were seen as improving, particularly in the lower-priced category.

Otherwise, the report painted a picture of continued weakness.

Manufacturers said orders were down, car sales have slipped since the days of the “cash for clunkers” program and “commercial real estate conditions were widely characterized as weak and, in many cases, deteriorating further,” the report found.

Of particular concern for Florida’s business community, banks said they were maintaining tight lending standards as they focus on repairing their balance sheets.

“Some financial contacts commented that increased lending was not anticipated given the current economic environment,” the report found.

The Beige Book is produced eight times a year, usually a few weeks before the Federal Reserve Open Market Committee meets to set monetary policy. Federal Reserve Chairman Ben Bernanke has suggested the government will keep interest rates low to spur the economic recovery.

Copyright © 2009 The Miami Herald

FHA to toughen rules for borrowers

WASHINGTON – Dec. 2, 2009 – The Federal Housing Administration is proposing to increase the up-front cash paid by borrowers as part of an effort to shore up the agency’s finances, which have been staggered by rising defaults in its flagship mortgage insurance program, according to FHA officials.

The changes also include raising minimum credit scores for borrowers who receive FHA-backed mortgages and limiting the amount of money sellers can kick in, including paying closing costs or giving free upgrades.

These measures are designed to increase the amount borrowers invest in the homes they buy, thereby making it less attractive for them to default on loans and walk away from properties, as many people have done during the current housing crisis.

Housing and Urban Development Secretary Shaun Donovan is scheduled to announce the agency’s policy changes when he testifies Wednesday before the House Financial Services Committee.

The FHA has played a critical role in propping up the housing market by insuring lenders against default after the mortgage market unraveled. Currently, the agency backs about 30 percent of all loans for home purchases and 20 percent of refinancings. In the past, the FHA has resisted raising downpayments or insurance premiums for fear of shutting out qualified borrowers and stunting the housing market’s slow but steady recovery.

But Donovan plans to tell the House committee that the exploding volume of loans the FHA is now handling requires stricter risk controls than the previous administration had in place, according to a copy of his prepared testimony. A recent audit shows that the FHA’s financial cushion already has eroded below the level required by law.

“We’ve learned from recent history that the market is fragile, and we have to plan for the unexpected,” Donovan’s prepared statement says. “That uncertainty is complicated by an organization we inherited that, to be honest, was simply not properly managing or monitoring its risk.”

By requiring that borrowers bring more cash to the table, the agency is seeking to ensure they have “more skin in the game and a stronger equity position in their loans,” Donovan says. But he does not specify the size of the proposed increase. FHA officials said they have yet to determine how much cash will be required.

“There are several ways to accomplish this, and so we are currently analyzing various options to determine which is the most effective and consistent with our mission,” Donovan says.

Up-front cash can include downpayments as well as other payments. For now, FHA borrowers can put down as little as 3.5 percent, a level that many FHA critics say is too low. One lawmaker has introduced legislation that would boost the minimum downpayment to 5 percent.

As for seller concessions, the agency now allows sellers to kick in 6 percent of the home’s value. Donovan said he wants the maximum permissible level to be lowered to 3 percent, in line with industry norms.

Agency staff is reviewing whether to increase the monthly insurance premiums charged to borrowers, officials said. These payments come on top of insurance paid up front.

The current up-front premium is set at 1.75 percent of the value of the loan. FHA may decide that an increase in that premium is needed also, officials said.

To protect itself against the riskiest borrowers, the agency has decided “for the time being” to raise its minimum credit score requirements for new borrowers. Again, FHA staff is still analyzing what the new threshold should be, Donovan’s prepared testimony says.

The minimum credit score requirement is now so low – 500 out of a possible 850 – that it’s basically irrelevant. Many lenders that make FHA-insured loans impose much tougher restrictions. The concern is that if FHA does not toughen up, abusive lenders will get away with financing risky, poor credit borrowers already rejected by more reputable lenders.

Most of the new initiatives do not require congressional approval. Many have previously been suggested by critics and even supporters of the agency.

These measures are meant to build on other actions the FHA has taken to curb its risk and beef up its eroding cash reserves.

An audit released last month found that the agency’s cash reserves have shrunk to a level far below what is required by law, and the agency could need taxpayer funding if worst-case scenarios play out.

The audit, designed to measure the agency’s financial health, examined the excess cash the agency must set aside to deal with unexpected losses and found that those reserves were at about $3.6 billion as of Sept. 30, a drop from the $12.9 billion available a year earlier. The current total represents 0.53 percent of all outstanding single-family-home loans insured by the FHA, well below the 2 percent threshold set by law. This is the first time reserves have fallen under that level since 1994.

To stop the financial erosion, the FHA has focused in part on weeding out abusive lenders. This year, the agency has suspended business with seven lenders, including the now-defunct Taylor, Bean and Whitaker. It has withdrawn FHA-approval for 270 others, including Lend America. On its Web site Tuesday, Lend America said it has ceased its loan origination and operations, effective immediately.

The FHA is currently working on a new rule that would require banks it does business with to have up to $2.5 million in capital that they can use to repay the agency for losses if they were involved in fraud. Now, they are required to hold only $250,000.

On Wednesday, Donovan will ask Congress to grant the agency more authority to close down abusive lenders.

Copyright © 2009 www.washingtonpost.com

Hurricane season ends with barely a whimper

SAVANNAH, Ga. – Dec. 1, 2009 – The Atlantic hurricane season ended Monday with barely a whimper: Not a single hurricane came ashore in the United States.

Since June, when the season began, just nine named storms developed. Only three of them became hurricanes, and those stayed out at sea or weakened before passing over land.

Two tropical storms made landfall in the U.S., causing little more than rain and some beach erosion.

“We had a great, great year,” said Chris Vecsey, a salesman at Top Gun Tackle in Orange Beach, Ala., near where Tropical Storm Ida slogged ashore in November. “Last year we had Gustav and Ike and a couple of other storms that didn’t even hit here. And with all the hype, it ruined us. It just didn’t happen this year.”

The 2009 season was on target with the lower end of forecasters’ predictions. Before the season began June 1, the National Hurricane Center had anticipated nine to 14 storms, with four to seven hurricanes – a prediction that the Miami-based center scaled back slightly in August before the arrival of the season’s first storm, Tropical Storm Ana.

James Franklin, the center’s chief hurricane specialist, credited much of the quiet season to El Nino, the periodic warming of the central Pacific Ocean. El Nino, he said, produced strong winds in the Atlantic that cut down storms before they could develop into hurricanes.

Franklin said forecasters also noticed drier conditions in the atmosphere, which limited the potential for storms.

“Lately we’ve had busy seasons,” Franklin said. “To get a year this quiet, it’s a little bit unusual.”

The 2009 hurricane season was the quietest since 2006, which also had nine total storms and five hurricanes, none of which made landfall in the U.S.

To find a season with fewer storms, you have to look back to 1997. That year, there were just seven storms, including three hurricanes. One of them, Hurricane Danny, killed at least nine people as it stalled over the Alabama coast and flooded parts of the Carolinas, causing $100 million in damage.

The 2009 season was not all mild. Tropical Storm Claudette poured up to 4.5 inches of rain when it made landfall at Fort Walton Beach on the Florida Panhandle in August, then quickly fizzled. Also in August, Hurricane Bill, a large Category 4 storm, was blamed for the deaths of two swimmers in Florida and Maine as it passed the East Coast.

Ida was a hurricane but weakened to a tropical storm before it came ashore in Alabama about three weeks ago. Its remnants swept up the East Coast, bringing heavy rain and flooding from the Carolinas to New Jersey.

The third 2009 hurricane, Fred, fizzled in the ocean without touching land.

Don Langham, emergency operations director for Jackson County on the Mississippi coast, said Ida’s late arrival was a good wake-up call for residents after what had proven to be a tranquil hurricane season.

“That’s why they say the season never ends until Nov. 30,” Langham said. “It was a good little test run.”

After suffering the brunt of punishing hurricanes such as Katrina and Rita in 2005 and Gustav and Ike in 2008, residents of the Atlantic and Gulf coasts were grateful for this year’s break. But not everybody is ready to declare the 2009 season over.

In Pensacola Beach, Fla., which was devastated by Hurricane Ike in 2004, Sam Boutwell said he’s not counting on a storm-free winter.

“There is always that chance,” Boutwell said Monday as he worked at the beachside pier renting fishing poles and tackle to tourists. “We have had out-of-season storms.”

Meanwhile, several state and local emergency officials said quiet hurricane seasons make them worry that coastal residents will take the threat less seriously in 2010.

“They’re going to be more complacent next year, and that’s something we need to keep in mind,” said Mark Cooper, director of the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness.

Still, the peaceful 2009 season turned out to be a well-timed blessing for Patrick Keene and his wife, Kathie, who are rebuilding a home in Pascagoula, Miss., that was demolished by Hurricane Katrina.

Ida passed without disrupting construction, and Keene said he expects to move in well before the next hurricane season. His newly fortified home is made of concrete rather than wood and sits six feet higher off the ground than his old house.

“We all realize that our days are numbered,” Keene said. “It’s just a matter of time before you get another one.”

Copyright © 2009 The Associated Press

Nine consecutive gains for pending home sales

WASHINGTON – Dec. 1, 2009 – Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing. “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the homebuyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.”

The PHSI in the Northeast surged 19.9 percent to 100.2 in October and is 44.2 percent above a year ago. In the Midwest the index rose 11.6 percent to 109.6 and is 36.6 percent higher than October 2008. Pending home sales in the South increased 5.4 percent to an index of 115.4, which is 31.6 percent above a year ago. In the West the index fell 11.2 percent to 127.7 but is 21.9 percent above October 2008.

Yun cautioned that home sales could dip in the months ahead.

“The expanded tax credit has only been available for the past three weeks, but the time between when buyers start looking at homes until they close on a sale can take anywhere from three to five months. Given the lag time, we could see a temporary decline in closed existing-home sales from December until early spring when we get another surge, but the weak job market remains a major concern and could slow the recovery process.

“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Yun said.

© 2009 Florida Realtors®

Administration plans new efforts on foreclosures

WASHINGTON – Nov. 30, 2009 – With the foreclosure crisis showing no signs of relenting, the Obama administration plans to expand a program aimed at helping people remain in their homes.

The goal of the announcement, expected Monday, is to increase the rate at which troubled home loans are converted into new loans with lower monthly payments, Treasury spokeswoman Meg Reilly said over the weekend.

Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.

The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.

Under a $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.

The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.

The program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.

Rising foreclosures depress home prices and threaten the sustainability of the fledgling economic recovery.

A report last week from the Mortgage Bankers Association found that 14 percent of homeowners with mortgages were either behind on payments or in foreclosure at the end of September, a record level for the ninth straight quarter.

The Congressional Oversight Panel, a committee that monitors spending under Treasury’s bailout program, concluded in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.

Treasury’s program, known as the Home Affordable Modification Program, “is targeted at the housing crisis as it existed six months ago, rather than as it exists right now,” the report said.

Treasury’s Reilly said the expanded program would, among other steps, make more aid available to struggling borrowers and expand the number of organizations providing help.

Copyright © 2009 The Associated Press

Q&A clears the air about homebuyer tax credits

McLEAN, Va. – Nov. 25, 2009 – If you’re in the market for a home, the world is your oyster. Interest rates are at record lows. Housing prices in many parts of the country are still depressed. And you may be eligible for a generous tax break, even if the home you buy isn’t your first.

On Nov. 6, President Obama signed legislation that provides a $6,500 tax credit for some current homeowners who buy another home. The law also extends the $8,000 tax credit for first-time homebuyers, scheduled to expire Nov. 30, until next spring.

A lot of people are interested in taking advantage of this tax break, but the expanded credit also has whipped up a lot of confusion. Here are some answers to frequently asked questions:

Q: How do I qualify for the $6,500 credit?

A: This credit is available for homebuyers who sign a binding contract on a new or existing home by April 30, 2010, and settle by July 1 (deadlines that also apply to the first-time homebuyer credit). You must have lived in your existing home for five consecutive years out of the last eight. The home you purchase must be your primary residence. However, the law doesn’t require you to sell your old home, says Bob Meighan, vice president at TurboTax, the tax software provider. You can use it as a second home or a rental and still claim the credit, he says.

Q: I sold a home I had lived in for more than five years and bought a new one in August. Do I qualify for a tax credit?

A: No. For existing homeowners, the $6,500 credit is limited to homes purchased after Nov. 6.

Q: Does the home I buy have to be more expensive than the one I own now?

A: No. While the real estate industry is hopeful that homeowners will use this credit to buy a nicer place, there’s no prohibition against using it to downsize, Meighan says. That makes this credit particularly useful for seniors who are interested in moving into a smaller home.

If you are planning to move up, keep in mind that you can’t claim the credit if the purchase price of the home exceeds $800,000. Unlike some other tax credits, this one doesn’t slowly phase out once you exceed the threshold, Meighan says. If you buy a home for more than $800,000 – and that refers to the purchase price, not the assessed value or the amount of your mortgage – you are ineligible for the credit, period.

The $800,000 cap also applies to first-time homebuyers, but only those who purchase a home after Nov. 6. First-time homebuyers who bought a home for more than $800,000 between Jan. 1 and Nov. 6 can still claim the credit, assuming they meet the other criteria, Meighan says.

Q: I’m an existing homeowner, and would like to build a new home. Can I claim the credit?

A: Yes, but make sure your builder is good at meeting deadlines. You can claim the credit as long as you have a binding contract in place by April 30 and close by July 1. In the case of a new home, the closing date is the day you move in, Meighan says. If your home isn’t habitable by June 30, you won’t be able to claim the credit, he says.

Q: I bought a home in 2008 and claimed the old $7,500 first-time homebuyers credit, which must be repaid over 15 years. Did the new law change that rule?

A: No. That credit, which was available for homes purchased between April 9, 2008, and Dec. 31, 2008, must still be repaid.

The $8,000 first-time homebuyer credit, available for homes purchased after Dec. 31, 2008, doesn’t have to be repaid as long as you remain in the home for at least three years. Existing homeowners who qualify for the $6,500 credit don’t have to repay that money, either, as long as they meet the three-year requirement.

Q: We have a rental home and would like to sell it to our son, who has never owned a home. Would he qualify for the first-time homebuyer credit?

A: No. The legislation specifically prohibits taxpayers from claiming the credit if the sale is between “related parties,” Meighan says. A home sale to a parent, grandparent, child or grandchild would fall into that category.

Q: I sold my home this year and have been renting since. If I buy a new home, do I qualify for the expanded credit?

A: Yes, as long as you meet all of the other requirements, says Mel Schwarz, partner with Grant Thornton in Washington, D.C. The eight-year period used to determine eligibility ends on the day you buy your new home, he says.

Copyright © 2009 USA TODAY

Real estate market FAQs

NEW YORK – Nov. 24, 2009 – Do you have buyers and sellers with questions about where real estate is headed? Based on industry experts’ advice, here are informed answers to some of the most frequently asked questions about today’s housing market.

When will housing hit bottom?

There isn’t any single answer to this question. It depends on where you live. Home prices are rising again in the most convenient suburbs of such cities as New York and Washington, D.C. In other places that are in less demand, prices continue to fall.

How can I figure out the value of my home?

Talking to a real estate professional and/or hiring an appraiser is the best idea. But even after getting a professional opinion, it is hard to tell what a home will sell for until you put it on the market.

Is now a good time for a renter to buy a home?

It could be. Prices in many areas are down significantly from their peak a couple of years ago. Plus, Congress has extended the tax credit for first-time homebuyers and added a $6,500 credit for many previous owners of homes who sign a contract to buy by April 30, 2010.

Should I invest in foreclosed homes?

A foreclosure can be a risky buy, even for the most experienced real estate investors. Use caution.

Source: The Wall Street Journal

Florida’s existing home, condo sales up in October 2009

Existing-home sales record another big gain, says NAR

ORLANDO, Fla. – Nov. 23, 2009 – Florida’s existing home sales rose in October, marking 14 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®. October’s statewide sales also increased over sales activity in September in both the existing home and existing condominium markets.

Existing home sales rose 45 percent last month with a total of 15,160 homes sold statewide compared to 10,444 homes sold in October 2008, according to Florida Realtors. Statewide existing home sales last month increased 5.1 percent over statewide sales activity in September.

Florida Realtors also reported an 82 percent increase in statewide sales of existing condos in October compared to the previous year’s sales figure; statewide existing condo sales last month rose 6.1 percent over the total units sold in September.

All of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in October. A majority of the state’s MSAs have reported increased sales for 16 consecutive months.

Florida’s median sales price for existing homes last month was $140,300; a year ago, it was $169,700 for a 17 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in September 2009 was $174,900, down 8.1 percent from a year earlier, according to NAR. In California, the statewide median resales price was $296,090 in September; in Massachusetts, it was $290,000; in Maryland, it was $261,718; and in New York, it was $213,900.

According to NAR’s latest industry outlook, the housing market is continuing its positive momentum. “We’re getting early indications of price stabilization, but we need a steady supply of qualified buyers to meaningfully bring inventories down and return us to a period of normal, steady price growth,” said NAR Chief Economist Lawrence Yun. “That, in turn, would help fully remove consumer fears, which would then revive the broader economy.”

In Florida’s year-to-year comparison for condos, 5,398 units sold statewide last month compared to 2,958 units in October 2008 for an 82 percent increase. The statewide existing condo median sales price last month was $105,200; in October 2008 it was $147,900 for a 29 percent decrease. The national median existing condo price was $175,100 in September 2009, according to NAR.

Interest rates for a 30-year fixed-rate mortgage averaged 4.95 percent last month, a significant drop from the average rate of 6.20 percent in October 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s smaller markets, the Gainesville MSA reported a total of 172 homes sold in October compared to 130 homes a year earlier for a 32 percent increase. The market’s existing home median sales price last month was $156,700; a year ago it was $173,300 for a 10 percent decrease. A total of 22 condos sold in the MSA in October, up 22 percent over the 18 units sold in October 2008. The existing condo median price last month was $116,700; a year earlier, it was $133,300 for a 12 percent decrease.

© 2009 Florida Realtors

Rates on 30-year mortgages remain below 5 percent

Mortgage Rate Trend Index

No expert polled by Bankrate.com this week expects further drops in the average mortgage rate as it flirts will all-time lows, but a hefty 55 percent also foresee no change over the next 30 to 45 days. The remaining 45 percent expect an increase.

McLEAN, Va. – Nov. 20, 2009 – Rates on 30-year mortgages stayed below 5 percent this week but remained above the record set earlier this year, Freddie Mac said Thursday.

The average rate for a 30-year fixed mortgage fell to 4.83 percent, down from 4.91 percent last week, the mortgage company said. Last year at this time, 30-year mortgages averaged 6.04 percent.

Rates hit a record low of 4.78 percent in the spring, and remain attractive for people looking to buy a home or refinance their existing mortgage. Still, credit standards remain tough, so the best rates usually are available only to borrowers with solid credit and a 20 percent downpayment.

The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.

Low fixed rates in the third quarter led to about $1.1 trillion in refinancing activity, saving borrowers about $10 billion in monthly payments over the first 12 months of their new loan, said Frank Nothaft, Freddie Mac’s chief economist.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage fell to 4.32 percent from 4.36 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.25 percent, down from last week’s 4.29 percent. Rates on one-year, adjustable-rate mortgages declined to 4.35 percent from 4.46 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.

Copyright © 2009 The Associated Press

Realtors help buyers attain short sales success

SAN DIEGO – Nov. 19, 2009 – Not all buyers are suited for a short sale. This was one of the messages delivered at “Short Sales from the Buyer’s Perspective” during the 2009 Realtors® Conference & Expo.

According to the latest Realtors Confidence Index, one out of 10 recent buyers purchased a home through a short sale. The survey also showed that Realtors are concerned about the hurdles buyers face in short sales.

“As short sales become more commonplace, both buyers and sellers need the help of seasoned, experienced professionals to help them navigate the complexities of a short sale transaction,” says National Association of Realtors President Charles McMillan. “As the first, best source for real estate information, Realtors provide valuable insights and experience that can help buyers realize their homeownership goals, whether through a short sale or other means.”

During the session, Realtor Lynn Madison, who co-authored NAR’s new Short Sales and Foreclosure Resource (SFR) Certification Program, detailed the primary reasons that short sales fail. Those include an incomplete short sale package, an offer that is too low and inaccurate appraisals. According to Madison, good short-sale buyer candidates are very patient – it can take some lenders four months or longer to approve a short sale – have their financing in order, and don’t have any contingencies in their purchase offer.

“Short sale buyers need to have the time to be able to wait for the lender’s approval; some lenders get several hundred contacts every day,” said Madison. “Buyers must also be willing to make an offer that has a reasonable chance of closing and take guidance from their agent. If the offered price is too low, there is a good chance the lender won’t approve the contract.”

To help Realtors address the evolving short sales market, NAR launched the SFR Certification Program (www.realtorsfr.org) earlier this year. Offered by the Real Estate Buyer’s Agent Council of NAR, the program includes training on how to manage short-sale, foreclosure and real-estate owned transactions; and provides resources to help Realtors stay current on national and state-specific information.

© 2009 Florida Realtors®

Court again upholds Fla. homeowner tax breaks

TALLAHASSEE, Fla. (AP) – Nov. 18, 2009 – An appeal court Tuesday rejected another challenge to state constitutional amendments that give property tax breaks to Florida’s primary homeowners, but not to owners of second homes.

A three-judge panel of the 1st District Court of Appeal disagreed with arguments that the amendments violate U.S. constitutional rights of travel and interstate commerce by favoring longtime Florida homeowners over those who have recently moved to the state.

The judges cited a July decision that also upheld the Save Our Homes Amendment, which limits annual assessment increases to no more than 3 percent for homesteads, in a case filed by out-of-state residents who own second homes.

In the new case filed by recently arrived Florida residents, the judges also for the first time upheld a new state constitutional amendment passed last year that includes a “portability” provision. It lets homeowners take at least part of their Save Our Homes benefits with them when they move.

The panel, though, returned a third appeal attacking both tax breaks to a trial judge for reconsideration because he erroneously dismissed the case on grounds that he lacked jurisdiction. That case also was filed by out-of-state residents who own second homes in Florida.

The appellate court in July ruled the tax benefit is based on the way the property is used, not on the status of the owner as a resident or nonresident. That case, now on appeal to the Florida Supreme Court, did not include the portability provision.

Former Florida State University President Tablot “Sandy” D’Alemberte, now a law professor at the school, represented the challengers in the two new cases. He argued the portability provision made Save Our Homes even more onerous and unfair to recent arrivals and nonresident owners.

D’Alemberte was disappointed but not entirely surprised by the ruling in the case filed by a Tallahassee couple and two other recent arrivals who had bought homes in Charlotte and Palm Beach counties.

“My guarded optimism may have been too guarded,” D’Alemberte said.

He had regaled the judges with a colorful oral argument last month that feature a “magic potion” tale and invitation to a “house of mirrors.” The court responded with two brief and dry but unanimous opinions that did not specifically address his portability argument.

D’Alemberte said his clients have not yet decided on a further appeal, but he said it’s likely they’ll also look to the Florida or U.S. supreme courts for relief.

He had been confident, though, the appellate court would reverse Circuit Judge William L. Gary’s dismissal of the nonresidents’ case.

“That’s not exactly a victory,” D’Alemberte said.

It now goes back to Gary’s Tallahassee courtroom for a decision on the merits with the other two appellate rulings serving as precedents.

Gov. Charlie Crist led the campaign for Amendment 1, which includes the portability provision. A Crist spokesman did not immediately return a call seeking comment.

Copyright © 2009 The Associated Press

Frank floats loan plan for unemployed homeowners

FALL RIVER, Mass. – Nov. 17, 2009 – Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.

The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default.

Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.

“These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment,” said Frank, D-Mass.

Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.

Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.

It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.

A Treasury Department spokeswoman declined to comment on Monday when asked about Frank’s proposal.

On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.

Reed said the Obama administration’s foreclosure assistance program hasn’t been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.

The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments.

Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.

Copyright © 2009 The Associated Press

Tax-credit extension renews buyer interest in buying a home

TAMPA, Fla. – Nov. 17, 2009 – Real estate agent Ken Brownlee’s phone stopped ringing last month once clients figured they would be unable to close before an $8,000 federal tax credit expired.

Most of his buyers were first-timers looking for a sweet deal on a short sale or foreclosed home.

“They all want to grab a deal,” said Brownlee, an agent with Keller Williams.

Those buyers now have another chance since Congress extended the program earlier this month. Real estate agents say it could mean a boon for sales.

First-time buyers can get a credit up to $8,000 and other buyers are eligible for a credit of $6,500, as long as they’ve lived in their home for at least five years. Congress also expanded it to include some buyers who already own homes.

Business picked up immediately, Brownlee said.

“As soon as it passed, I started to get a lot more phone calls and website hits on my listings,” he said. “This tax credit will likely carry us through the normally slow season.”

That’s good news for the Bay area’s fragile housing market. As the area continues to see improvement in home sales, real estate agents say the tax credit is essential in selling off inventory. Home prices have plummeted and that has enticed buyers to act, but many are still on the sidelines.

Home sales in the Tampa-St. Petersburg-Clearwater area increased 20 percent in the third quarter, which ended Sept. 30. Experts credit the increase mainly to first-time buyers trying to take advantage of the tax credit.

There were 7,795 sales in the quarter, up from 6,502 during the same period a year ago, according to the Florida Association of Realtors. At the same time, the median sales price fell 17 percent to $140,400.

One reason is that so many people feel stuck in their homes. They want to take advantage of deep discounts, but they have to sell their existing home in order to move up. With nearly half of Tampa Bay’s homeowners owing more than their home is worth, many can’t afford to move.

That’s why the tax credit will help, said Stephanie LeFew, a real estate agent with Tampa Home Buy Realty. She’s had a number of clients decide to stay in their homes because they couldn’t sell for enough to make a move worth it.

“For some people, the credit will be just enough of a boost,” she said.

Mike Larson, an analyst with Weiss Research, said home sales would likely continue to improve, even without the tax credit. Even so, he expects the credit to lure more people into the market.

“The credit is the icing on the cake, not the cake itself,” he said. “What’s really leading to improvement is that homes are affordable again. If you throw an expanded credit into a market that already has good fundamentals, the market will respond.”

To take advantage of the credit, a prospective buyer’s home has to be under contract by April 30 and the deal must close by June 30.

Copyright © 2009 Tampa Tribune

NAR Survey: First-time homebuyers set record in past year

SAN DIEGO – Nov. 16, 2009 – As a percentage of all buyers, first-time homebuyers reached 47 percent during the past year, its highest market share on record, according to a study released at the 2009 Realtors® Conference & Expo.

The 2009 National Association of Realtors® Profile of Home Buyers and Sellers is the latest in a series of national NAR surveys evaluating demographics, preferences, marketing and experiences of recent homebuyers and sellers.

Paul Bishop, NAR vice president of research, said several factors have been at play.

“Tax incentives, record high affordability conditions and pent-up demand brought a record share of first-time homebuyers into the market,” Bishop says. “These buyers are critical to housing and a general economic recovery because the market always heals from the bottom up – they absorb inventory, free existing owners to make a trade, and stimulate related goods and services.”

The number of first-time homebuyers rose to 47 percent of all home sales from 41 percent of transactions in last year’s study, and was the highest on record dating back to 1981. The previous high was 44 percent in 1991.

“It’s interesting to note the last cyclical peak of first-time homebuyers was during the last noteworthy economic downturn, with first-time buyers starting the chain reaction that led the nation out of recession,” Bishop says.

The profile shows the median age of first-time buyers was 30, and the median income was $61,600. The typical first-time buyer purchased a home costing $156,000, down from $165,000 in the 2008 study; and he or she plans to stay in that home for 10 years.

Fifty-five percent of entry-level buyers reported financing their purchase with an FHA loan, while another 8 percent used the VA loan program.

First-time buyers who made a downpayment used a variety of sources: 61 percent used savings and 22 percent received a gift from a friend or relative, typically from their parents. Six percent received a loan from a relative or friend, 6 percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds. Ninety-six percent chose a fixed-rate mortgage.

First-time buyers often make financial sacrifices to purchase a home: 39 percent cut spending on luxury items, 38 percent cut back on entertainment and 30 percent cut spending on clothes.

Only 12 percent said financing their first home was more difficult than expected, but 13 percent of successful buyers said they had experienced a purchase agreement that was canceled, terminated or fell through; and 8 percent had been rejected by a lender.

“This raises the question of how many potential buyers were unsuccessful because of problems with appraisals or loan qualifications,” Bishop says. “The market would be even stronger without these problems.”

“Some people were taking a housing recovery for granted, but we must acknowledge the abnormal situation from toxic loans that will keep foreclosures coming into the market over the coming year,” says NAR 2009 President Charles McMillan. “To help stem foreclosures we must first stabilize home prices, and the expansion of tax incentives should absorb enough inventory to restore balance. As the leading advocate for homeownership, NAR commends Congress for extending and expanding the tax credit because placing financially qualified buyers into affordable homes is the soundest way to heal our economy as fast as possible.”

Buyers searched a median of 12 weeks and viewed 12 homes. Among buyers who used an agent, 63 percent selected a buyer’s representative. Eighty-seven percent consider their home a good investment, and more than half see it as a better investment than stocks. Twelve percent of buyers own two homes, while another three percent own three or more homes.

The typical repeat buyer was 48 years old, earned $88,100, purchased a home costing $224,500 and plans to stay in that home for 12 years.

The median downpayment of all homebuyers was 8 percent, and the number purchasing with no money down fell from 23 percent in 2008 to 15 percent in the current survey; 8 percent of buyers paid all cash for their home.

The median age of home sellers was 46 and their income was $91,100. Typical sellers had been in their home for seven years, up from six years in the 2008 survey, moved a median distance of 19 miles, and their home was on the market for 10 weeks. Nearly half traded up in size, 30 percent bought a comparable home and 22 percent traded down.

Eighty-five percent of sellers used a real estate professional, and 64 percent of sellers chose their agent based on a referral or because they had used the same agent in the past. Eighty-one percent of sellers are likely to use the same agent again or recommend her to others.

Forty-two percent of sellers offered incentives to attract buyers, such as home warranties or assistance with closing costs. The typical home sold for 95 percent of the listing price, with a median increase over the seller’s original purchase price of $36,000. “Even with price declines in recent years, the typical home seller saw their equity increase 27 percent,” McMillan says.

Of sellers working with real estate agents, the study found that 80 percent used full-service brokerage, in which agents provide a range of services that include managing most of the process of selling a home from listing to closing. Nine percent of sellers chose limited services, which may include discount brokerage, and 11 percent used minimal service, such as simply listing a property on a multiple listing service.

All of these types of services are provided by Realtors as well as non-member agents and brokers, with comparable findings for each year since questions about brokerage services were added in 2006. Less than 1 percent of sellers chose an agent based on his or her commission.

Sellers largely want agents to price their home competitively, find a buyer, market the property and sell within a specific timeframe. Reputation was the most important factor in choosing an agent, cited by 36 percent of respondents, followed by trustworthiness at 21 percent.

Homebuyers thought the most important services agents offer are helping find the right house, and negotiating sales terms and price. The most commonly cited benefits of using an agent are helping buyers understand the process, pointing out unnoticed features or faults, negotiating better contract terms, and providing a better list of service providers. Comparable to sellers, buyers chose agents based on a referral or had used them in a previous transaction, with trustworthiness and reputation being the biggest factors in selecting an agent.

Buyers use a wide variety of resources in searching for a home: 90 percent use the Internet, 87 percent rely on real estate agents, 59 percent yard signs, 46 percent attend open houses and 40 percent look at print or newspaper ads. Although buyers also use other resources, they generally start the search process online and then contact an agent.

When asked where they first learned about the home purchased, 36 percent of buyers said a real estate agent; 36 percent the Internet; 12 percent from yard signs; 6 percent from a friend, neighbor or relative; 5 percent home builders; 2 percent a print or newspaper ad; 2 percent directly from the seller; and less than 1 percent a home book or magazine.

Eight out of 10 home buyers who used the Internet to search for a home purchased through a real estate agent, in contrast with 63 percent of non-Internet users who were more likely to purchase directly from a builder or from an owner they already knew in a private transaction.

Local metropolitan multiple listing service (MLS) Web sites were the most popular Internet resource, used by 60 percent of buyers; followed by Realtor.com and real estate company sites, each with 46 percent; real estate agent Web sites, 45 percent; other Web sites with real estate listings, 30 percent; for-sale-by-owner sites, 17 percent; and local newspaper sites, 9 percent; other categories were smaller.

Sixty percent of buyers are married couples, 21 percent are single women, 10 percent single men, 8 percent unmarried couples and 1 percent other. Fifteen percent are non-white, 9 percent were born outside of the United States, and 4 percent primarily speak a language other than English.

Seventy-eight percent of all respondents purchased a detached single-family home, 9 percent a condo, 8 percent a townhouse or rowhouse, and 5 percent some other kind of housing. Environmentally friendly features remain a significant factor: 88 percent of buyers said that heating and cooling costs were important, 72 percent desired energy efficient appliances, and 69 percent wanted energy efficient lighting.

Commuting costs continue to factor greatly in neighborhood selection, with 36 percent of buyers saying they were very important and another 42 percent saying transportation costs were somewhat important.

Fifty-four percent of all homes purchased were in a suburb or subdivision, 18 percent were in an urban area, 17 percent in a small town, 10 percent in a rural area and 1 percent in a resort or recreation area. The median distance from the previous residence was 12 miles. The typical home size was 1,800 square feet, ranging from 1,600 for first-time buyers to 2,100 square feet for repeat buyers.

The biggest factors influencing neighborhood choice were quality of the neighborhood, cited by 64 percent of respondents; convenience to jobs, 50 percent; overall affordability of homes, 43 percent; and convenience to family and friends, 37 percent. Other factors with relatively high responses include quality of the school district, 26 percent; convenience to shopping, 26 percent; neighborhood design, 23 percent; and convenience to schools, 21 percent.

The difficulty of for-sale-by-owner transactions increased with challenging market conditions over the past year. The level of FSBOs was a record low 11 percent, down from 13 percent in 2008. The share of homes sold without professional representation has trended down since reaching a cyclical peak of 18 percent in 1997.

Many of these properties were not placed on the open market – 42 percent were “closely held” between parties who knew each other in advance, such as family or acquaintances. Factoring out properties that were not placed on the open market, the actual number of homes sold without professional assistance was a record low 6 percent – the rest were unrepresented sellers in private transactions. The market share of open-market FSBOs is nearly half of what it was five years ago – 10 percent were sold on the open market in 2004.

The median home price for sellers who used an agent was $215,000 vs. $172,000 for a home sold directly by an owner, but there were important differences. The median income of unassisted sellers was $76,900, in contrast with $94,200 for agent-assisted sellers, and the homes were more likely to be in a rural area. Unassisted sellers also were more likely to be selling a mobile or manufactured home. These factors suggest a somewhat lower value for FSBO properties.

The most difficult tasks reported by unrepresented sellers are preparing and fixing the home for sale, getting the right price, understanding and performing paperwork, and selling within the planned length of time.

To conduct the study, NAR mailed an eight-page questionnaire in July 2009 to a national sample of 120,038 homebuyers and sellers who purchased their homes between July 2008 and June 2009, according to county records. It generated 9,138 usable responses; the adjusted response rate was 7.9 percent. All information is characteristic of the 12-month period ending in June 2009 with the exception of income data, which are for 2008. Because of rounding and omissions for space, percentage distributions for some findings may not add up to 100 percent.

The 2009 National Association of Realtors® Profile of Home Buyers and Sellers can be ordered by calling 800-874-6500, or online at www.realtor.org/newresearch. The study is free for NAR members but costs $125 for non-members.

© 2009 Florida Realtors

Texting, talking bans popular this year

TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.

Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.

But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.

The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.

“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”

An industry spokesman, though, said cell-phone companies generally support such bans.

“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”

Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.

“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”

Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.

By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.

Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.

According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.

Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.

Gardiner says he’d be willing to have the measure heard in his committee.

“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.

Source: News Service of Florida

Texting, talking bans popular this year

TALLAHASSEE, Fla. – Nov. 13, 2009 – Measures banning motorists from text-messaging and using cell phones are becoming one of the hottest topics this fall for Florida lawmakers intent on making a U-turn on legislation that formerly went nowhere.

Some kind of hand-held communication ban on has been proposed each of the past seven years; though the few bills filed last spring failed to draw even a committee hearing.

But as cell phone applications become more sophisticated and kids and adults appear increasingly tethered to keypads, a dozen bills have been filed in the House and Senate leading into the 2010 session of the Florida Legislature.

The measures spring from both Democrats and Republicans, with the latest two added to the pile earlier this month. Three of the bills’ sponsors are candidates for statewide office: Sens. Carey Baker and Paula Dockery, Republican contenders for agriculture commissioner and governor, respectively, and Sen. Dan Gelber, a Democratic candidate for attorney general.

“I would certainly hope that with the number of people interested in this legislation now, that we might at least get a hearing on these bills,” says Rep. Janet Long, D-Seminole, whose measure banning driving while texting (HB 323) recently came out of House bill-drafting. “But if we don’t, I think it’ll show how powerful the cell-phone lobby is.”

An industry spokesman, though, said cell-phone companies generally support such bans.

“We know that when people text while driving, you’ve got a recipe for serious disaster,” says Verizon spokesman Chuck Hamby. “A motorist’s first responsibility is to drive safely – that’s our position.”

Baker, R-Eustis, was an early advocate of banning texting while driving, introducing legislation two years ago. Legislation prohibiting cell-phone use without a headset was first proposed in Florida in 2002.

“It’s slowly been building,” Baker says of support for taking steps against hand-held devices behind the wheel. “But I think this year, something’s going to pass.”

Baker has two bills already filed (SB 324,326) that prohibit texting while driving, and he plans to come back with a repeat of earlier legislation that would ban motorists younger than 18 from using any kind of electronic wireless communications while driving – meaning no cell phones, laptops or handhelds. Baker doesn’t want young drivers to legally use headsets either.

By contrast, Sen. Frederica Wilson, D-Miami, has legislation (SB 244) that requires headsets for all drivers using cell phones and prohibits texting. She’s sponsoring the measure dubbed Heather’s Law, named after Heather Hurd, a 26-year-old woman killed in Polk County in 2008 when a texting driver’s tractor-trailer truck plowed into her vehicle at a stoplight.

Talking or listening on a cell phone is among the most frequently cited distractions affecting drivers involved in a serious auto accident, according to the Florida Department of Highway Safety & Motor Vehicles.

According to the National Conference of State Legislatures’ 14 states and Washington, D.C., have passed legislation banning texting while driving, while others have banned it for drivers with learner’s permits. Six states and the District of Columbia have banned hand-held phones while driving.

Sen. Andy Gardiner, R-Orlando, chairman of the Senate Transportation Committee, said he’s already spoken with some sponsors of hand-held legislation in the Senate about trying to converge on one bill addressing distracted driving.

Gardiner says he’d be willing to have the measure heard in his committee.

“I think if we can get together and work out one bill, we should at least have a vote on it,” Gardiner says.

Source: News Service of Florida