WASHINGTON – Oct. 9, 2009 – The Obama administration touted progress on its foreclosure-prevention program Thursday after hitting an interim target of signing up 500,000 borrowers three weeks ahead of schedule. But in a report to be released Friday, a congressionally appointed oversight panel questioned whether reaching that goal would be enough to slow down the foreclosure crisis.
The program, known as Making Home Affordable, got off to a bumpy start when it was launched in March with homeowners and consumer advocates complaining about the difficulty of reaching lenders, long telephone wait times and documents that were repeatedly lost. But senior administration officials said Thursday that the program is now gaining momentum.
Under the $75 billion government program, lenders are paid to lower borrowers’ mortgage payments; the administration has said the program was aimed at helping up to 4 million borrowers before expiring in 2012. It is part of a larger government effort to revive the housing market that senior administration officials said has also kept mortgage rates low and prompted millions of borrowers to refinance their loans.
“The broad signs that you see in the housing market … are encouraging,” said Treasury Secretary Timothy F. Geithner. It is still early, and “we’re still living with some risks that housing is going to be a source of weakness for the broader economy and that you still face a … large number of families across the country still at risk of losing a home they can afford to stay in.”
The industry trumpeted its progress so far. Wells Fargo nearly doubled the number of modifications it started last month to 62,989, or about 20 percent of its delinquent borrowers eligible for the program, according to government data released Thursday. Bank of America helped about 95,000, or 11 percent of its eligible borrowers, and company officials said the bank is on track to help 125,000 by November.
“We feel really good about the momentum,” said Steve Bailey, Bank of America’s home retention strategies and policy executive.
Despite the recent progress, economists expect millions of borrowers to lose their homes over the next few years. The government program has likely reduced the number of foreclosures by about 7 percent to 8 percent during the past six months, said Paul Dales, U.S. economist for Capital Economics. But some of the borrowers helped by the program may have been able to avoid foreclosure on their own while others may still default on their loans later, said Dales.
“What it won’t do is stop foreclosures from rising,” Dales said. “It will just rise by less.”
A draft report by the Congressional Oversight Panel, which is monitoring the government’s Troubled Assets Relief Program, noted that the foreclosure effort is not set up to tackle two of the most pressing causes of mortgage delinquencies: rising unemployment and risky home loans known as option adjustable-rate mortgages, which reset to significantly higher payments. Over the next few years, millions of those loans are scheduled to shift to potentially higher interest rates, creating the prospect of a new wave of foreclosures.
“It increasingly appears that [the government program] is targeted at the housing crisis as it existed six months ago, rather than as it exists now,” the report said. Acknowledging the Treasury’s near-term goal of reaching 500,000 borrowers, the report said, “The achievement is relatively small in relation to the magnitude of the foreclosure crisis.”
The modifications started so far have lowered borrowers’ median interest rates to about 2 percent from 6.85 percent, according to the report, and reduced their payments by $500, to $849.31.
In a statement, Treasury spokeswoman Meg Reilly said “constructive feedback” from the panel is welcome and noted that the administration is already studying more ways to help unemployed homeowners. “The housing crisis was never going to be fixed overnight. Instead, it requires a comprehensive strategy focused on providing sustained support for American homeowners,” she said. “We believe that the Making Home Affordable program is an important part of that strategy.”
Not all parts of the government program are operational. After announcing in April that borrowers with a second mortgage could see payments on those loans reduced significantly as part of the program, the administration has yet to sign contracts with lenders to implement it. Homeowners and consumer groups continue to complain that qualified borrowers are being rejected by lenders and that there isn’t a clear appeals process.
The government program “had many obstacles, problems, and operational and technological challenges getting started and . . . is just now gaining momentum,” Richard H. Neiman, superintendent of banks for the New York State Banking Department, said in a statement included in the report.
It is also unclear how many borrowers will make enough payments to survive the trial period of a modification, the first three months, or might redefault on their loans later. The conversion rate to permanent modifications has been low so far, according to the report, and the Treasury has not released data on how many redefaults it expects.
“Redefaults mean that foreclosures have been delayed, rather than prevented,” the report said.
Copyright washingtonpost.com
Friday, October 9, 2009
Thursday, October 8, 2009
NAR: Homebuyer tax credit best tool for sustaining housing recovery
WASHINGTON – Oct. 8, 2009 – The best tool for sustaining the still-fragile housing market is the $8,000 homebuyer tax credit, and it’s essential that Congress extend the credit into 2010, the National Association of Realtors® (NAR) testified at a hearing of the U.S. House Small Business Committee yesterday. The tax credit currently expires Nov. 30, 2009.
NAR Regional Vice President Joseph L. Canfora also told the panel that a major stumbling block for consumers has been the implementation of appraisal processes spurred by the Home Valuation Code of Conduct (HVCC), which is causing delays in closings. That delay, Canfora said, led to artificially low existing-home sales numbers for August because consumers cancelled sales.
“The credit is working,” Canfora said, pointing out that 355,000 to 400,000 transactions directly attributable to the credit made a significant dent in the housing inventory and will help to stabilize home prices. In addition, the credit has provided a huge indirect benefit to local governments, shoring up property tax bases in particularly hard-hit areas.
Further, NAR has estimated that every home purchase pumps into the recovering economy about $63,000 – the equivalent of one new job added to the employment figures.
But, Canfora said, the threat of more foreclosures coming to the market caused by mortgage rate resets, job losses, and by lenders’ unburdening themselves of additional properties to take advantage of today’s more stabilized prices could disrupt the fragile recovery.
In a “normal” market, optimal housing inventory is about six to seven months, he said. When the tax credit was enacted in February, inventory was 9.1 months. Because of the spurt in homes sales since then due to the tax credit, inventory declined to 8.2 months in August, closer to “normal” than at any time since 2007.
“The more robust the credit and the greater its duration, the greater the chance that the housing market can perform its traditional role of helping the economy move out of a recession,” Canfora said.
“But problems arising from the implementation of the HVCC may reverse the market’s positive momentum at a time when the real estate industry is just starting to show signs of a rebound in many markets,” Canfora added. According to an NAR survey of its members, approximately 40 percent of Realtors report losing at least one sale since May 1 because of appraisal problems due to the HVCC rules. Twenty percent say they have lost more than one sale.
The culprit, Canfora said, was that appraisal management companies, which have gained prominence because of the HVCC, have assigned appraisers to areas where they lack geographic competence. That has resulted in unreliable appraisals. It’s not uncommon that second and third appraisals have to be done to ascertain fair market value. Appraisal fees have also risen and are being passed on to consumers.
Both Fannie Mae and Freddie Mac have issued guidance on appraisals, but NAR is calling upon the mortgage giants and the Federal Housing Administration (FHA) to issue consolidated guidance codified and incorporated into existing policy so that information on appraisals is available to the real estate industry.
FHA Commissioner David H. Stevens has asked FHA staff to explore that recommendation with Fannie and Freddie. Last month, Stevens reaffirmed FHA appraisal policy, taking into consideration the unintended consequences that have burdened Fannie and Freddie, and issued two Mortgagee Letters focusing on appraisal changes. The policy reaffirms appraiser independence and geographic competence.
The FHA announcement also included timely steps to protect taxpayers: implementing credit policy changes to enhance risk management; hiring a chief risk officer for the first time in the agency’s history; and shifting responsibility for mortgage brokers away from taxpayers to the lenders who use mortgage brokers.
Canfora told the committee that FHA has performed remarkably well through the housing crisis compared to Fannie and Freddie. “That’s because FHA has never strayed from the sound underwriting and appropriate appraisals that have traditionally backed up their loans. The reason the FHA capital reserve ratio fell below 2 percent had nothing to do with FHA’s current business activities. It is simply a reflection of falling housing values in their portfolio.”
Canfora cited an FHA announcement that a 2009 audit will show that even if FHA does nothing, the cap reserves are expected to rise back to that required level within a few years.
© 2009 Florida Realtors
NAR Regional Vice President Joseph L. Canfora also told the panel that a major stumbling block for consumers has been the implementation of appraisal processes spurred by the Home Valuation Code of Conduct (HVCC), which is causing delays in closings. That delay, Canfora said, led to artificially low existing-home sales numbers for August because consumers cancelled sales.
“The credit is working,” Canfora said, pointing out that 355,000 to 400,000 transactions directly attributable to the credit made a significant dent in the housing inventory and will help to stabilize home prices. In addition, the credit has provided a huge indirect benefit to local governments, shoring up property tax bases in particularly hard-hit areas.
Further, NAR has estimated that every home purchase pumps into the recovering economy about $63,000 – the equivalent of one new job added to the employment figures.
But, Canfora said, the threat of more foreclosures coming to the market caused by mortgage rate resets, job losses, and by lenders’ unburdening themselves of additional properties to take advantage of today’s more stabilized prices could disrupt the fragile recovery.
In a “normal” market, optimal housing inventory is about six to seven months, he said. When the tax credit was enacted in February, inventory was 9.1 months. Because of the spurt in homes sales since then due to the tax credit, inventory declined to 8.2 months in August, closer to “normal” than at any time since 2007.
“The more robust the credit and the greater its duration, the greater the chance that the housing market can perform its traditional role of helping the economy move out of a recession,” Canfora said.
“But problems arising from the implementation of the HVCC may reverse the market’s positive momentum at a time when the real estate industry is just starting to show signs of a rebound in many markets,” Canfora added. According to an NAR survey of its members, approximately 40 percent of Realtors report losing at least one sale since May 1 because of appraisal problems due to the HVCC rules. Twenty percent say they have lost more than one sale.
The culprit, Canfora said, was that appraisal management companies, which have gained prominence because of the HVCC, have assigned appraisers to areas where they lack geographic competence. That has resulted in unreliable appraisals. It’s not uncommon that second and third appraisals have to be done to ascertain fair market value. Appraisal fees have also risen and are being passed on to consumers.
Both Fannie Mae and Freddie Mac have issued guidance on appraisals, but NAR is calling upon the mortgage giants and the Federal Housing Administration (FHA) to issue consolidated guidance codified and incorporated into existing policy so that information on appraisals is available to the real estate industry.
FHA Commissioner David H. Stevens has asked FHA staff to explore that recommendation with Fannie and Freddie. Last month, Stevens reaffirmed FHA appraisal policy, taking into consideration the unintended consequences that have burdened Fannie and Freddie, and issued two Mortgagee Letters focusing on appraisal changes. The policy reaffirms appraiser independence and geographic competence.
The FHA announcement also included timely steps to protect taxpayers: implementing credit policy changes to enhance risk management; hiring a chief risk officer for the first time in the agency’s history; and shifting responsibility for mortgage brokers away from taxpayers to the lenders who use mortgage brokers.
Canfora told the committee that FHA has performed remarkably well through the housing crisis compared to Fannie and Freddie. “That’s because FHA has never strayed from the sound underwriting and appropriate appraisals that have traditionally backed up their loans. The reason the FHA capital reserve ratio fell below 2 percent had nothing to do with FHA’s current business activities. It is simply a reflection of falling housing values in their portfolio.”
Canfora cited an FHA announcement that a 2009 audit will show that even if FHA does nothing, the cap reserves are expected to rise back to that required level within a few years.
© 2009 Florida Realtors
Wednesday, October 7, 2009
Private investors dominate foreclosure market
WASHINGTON – Oct. 7, 2009 – Cities and municipalities are having trouble spending money allotted by the federal government’s controversial Neighborhood Stabilization Program, which Congress passed last year to acquire houses in blighted neighborhoods.
The goal was to buy vacant properties at 1 percent less than appraised value, rehab them, and either sell or rent the homes to low-income residents. The stumbling block is that private investors and affluent homebuyers purchase the homes first at cheap prices.
Some people don’t see that as a problem. “If the private market is coming back and buying houses and crowding the government out, that’s not a bad thing,” says Joseph Pigg, senior counsel at the American Bankers Association.
In some areas, the nonprofit National Community Stabilization Trust is working with banks to give government access to foreclosed homes before they are put on the market. But that may be too little, too late.
“It’s very unclear when the dust settles how much real change in neighborhood stability and quality of life we’ll see,” says housing expert Alan Malachi of the Brookings Institution.
Source: CNNMoney.com
The goal was to buy vacant properties at 1 percent less than appraised value, rehab them, and either sell or rent the homes to low-income residents. The stumbling block is that private investors and affluent homebuyers purchase the homes first at cheap prices.
Some people don’t see that as a problem. “If the private market is coming back and buying houses and crowding the government out, that’s not a bad thing,” says Joseph Pigg, senior counsel at the American Bankers Association.
In some areas, the nonprofit National Community Stabilization Trust is working with banks to give government access to foreclosed homes before they are put on the market. But that may be too little, too late.
“It’s very unclear when the dust settles how much real change in neighborhood stability and quality of life we’ll see,” says housing expert Alan Malachi of the Brookings Institution.
Source: CNNMoney.com
Tuesday, October 6, 2009
Bathroom upgrades pay off
WASHINGTON – Oct. 6, 2009 – More than 80 percent of new single-family homes have at least two bathrooms, which occupy an average of 300 square feet of floor space, or 12 percent of the total area, according to a study by the National Association of Home Builders.
The home builders’ study reports a major return on value for extra bathrooms: “When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home’s value, and one additional bath adds about 19 percent.”
A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a homebuyer at least 100 percent of the outlay when the property is sold, the homebuyer study concludes.
Source: Chicago Tribune
The home builders’ study reports a major return on value for extra bathrooms: “When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home’s value, and one additional bath adds about 19 percent.”
A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a homebuyer at least 100 percent of the outlay when the property is sold, the homebuyer study concludes.
Source: Chicago Tribune
Monday, October 5, 2009
Age and makeup of your neighborhood can determine home value loss
TAMPA – Oct. 5, 2009 – It’s the million dollar question in real estate: what makes one home’s value plummet even when a similar home in another neighborhood remains stable?
Data show that home values can vary widely, depending on the neighborhood, the age of the home and the economic stability of neighbors. No Tampa Bay area neighborhood is immune to this housing downturn, but some neighborhoods are suffering more, housing professionals say.
“In general, areas that had minimal decreases have been around for some time and were not as susceptible to investors,” said David Teacher, a property appraiser with Superior Residential Appraisal Services Inc.
Even in those neighborhoods, however, there are exceptions.
Teacher, who has experience throughout the Bay area, looked at neighborhoods in Hillsborough and Pinellas counties that have been particularly hard-hit by depreciation. His research, which tracked home sales prices across the region since 2005, shows that some have fared better.
New developments in south Hillsborough County saw prices go up quickly during the housing boom and some have seen them drop fast during the bust.
For example, Symmes Grove in Riverview saw its average sales price fall from $188,621 in 2005 to $119,787 so far in 2009. That’s a drop of 36 percent.
Another neighborhood with newer homes, FishHawk Ranch, saw the average sales price of $332,027 fall 15 percent to $282,407 this year. Teacher said many homes in FishHawk have lost significant value, but since the neighborhood is diverse with homes that sold for less than $200,000 and homes that sold for half a million or more,” the average for the neighborhood was among the best ones he studied.
In many neighborhoods, he said, the less expensive homes are hit hardest.
Consider a home on Bridgewalk Drive in FishHawk: It sold for $380,500 in 2006 and $200,000 earlier this year. That’s a 47 percent drop, far more than the neighborhood’s average.
In general, homes in established neighborhoods have held value better. Part of the reason, Teacher said, is that fewer investors purchased during the housing boom, and the foreclosure rate is typically lower than in newer subdivisions.
One neighborhood that has remained fairly stable, Teacher said, is the area of South Tampa, west of Westshore Boulevard. The average sales prices of $662,634 in 2005 dropped 4 percent to $634,764 in 2009. Part of the reason may be that the neighborhood is established and hasn’t seen as much sales activity as some other areas.
Another South Tampa neighborhood, Beach Park, known for luxury homes, saw the average sales price of $646,891 drop 22 percent to $505,952 this year.
It’s not just the age of the neighborhoods that contributes to value changes. It is also relatively low prices in certain neighborhoods that attracted investors.
Pinecrest Villa in Tampa attracted investors during the housing boom who bought homes a handful at a time, Teacher said. Many of them have defaulted on loans and lost homes in foreclosure. The average sales price of $168,728 in 2005 has dropped to $73,500. The 56 percent drop is the highest neighborhood decrease Teacher observed.
One established neighborhood in Tampa, Westchase, had homes lose very little value, while others have seen prices drop.
The neighborhood’s average sales price of $361,140 in 2005 dropped 20 percent to $287,417 in 2009.
Maria Kletchka, a Coldwell Banker real estate agent who works in Westchase, said the neighborhood’s diverse mix of home prices has helped keep the neighborhood stable. It also hasn’t seen as many investors or foreclosures as some other neighborhoods, she said.
That said, it has still seen trouble.
“A bank-owned home sold for $211,000 just today,” he said. “During the boom, it would have sold for $350,000.”
Like every neighborhood, though, it all boils down to when you purchased.
“If you bought during the housing boom in 2005 or 2006, you’re likely upside down and owe more than your home is worth,” she said. “If you bought before then, you may still have some equity.”
Copyright © 2009 Tampa Tribune
Data show that home values can vary widely, depending on the neighborhood, the age of the home and the economic stability of neighbors. No Tampa Bay area neighborhood is immune to this housing downturn, but some neighborhoods are suffering more, housing professionals say.
“In general, areas that had minimal decreases have been around for some time and were not as susceptible to investors,” said David Teacher, a property appraiser with Superior Residential Appraisal Services Inc.
Even in those neighborhoods, however, there are exceptions.
Teacher, who has experience throughout the Bay area, looked at neighborhoods in Hillsborough and Pinellas counties that have been particularly hard-hit by depreciation. His research, which tracked home sales prices across the region since 2005, shows that some have fared better.
New developments in south Hillsborough County saw prices go up quickly during the housing boom and some have seen them drop fast during the bust.
For example, Symmes Grove in Riverview saw its average sales price fall from $188,621 in 2005 to $119,787 so far in 2009. That’s a drop of 36 percent.
Another neighborhood with newer homes, FishHawk Ranch, saw the average sales price of $332,027 fall 15 percent to $282,407 this year. Teacher said many homes in FishHawk have lost significant value, but since the neighborhood is diverse with homes that sold for less than $200,000 and homes that sold for half a million or more,” the average for the neighborhood was among the best ones he studied.
In many neighborhoods, he said, the less expensive homes are hit hardest.
Consider a home on Bridgewalk Drive in FishHawk: It sold for $380,500 in 2006 and $200,000 earlier this year. That’s a 47 percent drop, far more than the neighborhood’s average.
In general, homes in established neighborhoods have held value better. Part of the reason, Teacher said, is that fewer investors purchased during the housing boom, and the foreclosure rate is typically lower than in newer subdivisions.
One neighborhood that has remained fairly stable, Teacher said, is the area of South Tampa, west of Westshore Boulevard. The average sales prices of $662,634 in 2005 dropped 4 percent to $634,764 in 2009. Part of the reason may be that the neighborhood is established and hasn’t seen as much sales activity as some other areas.
Another South Tampa neighborhood, Beach Park, known for luxury homes, saw the average sales price of $646,891 drop 22 percent to $505,952 this year.
It’s not just the age of the neighborhoods that contributes to value changes. It is also relatively low prices in certain neighborhoods that attracted investors.
Pinecrest Villa in Tampa attracted investors during the housing boom who bought homes a handful at a time, Teacher said. Many of them have defaulted on loans and lost homes in foreclosure. The average sales price of $168,728 in 2005 has dropped to $73,500. The 56 percent drop is the highest neighborhood decrease Teacher observed.
One established neighborhood in Tampa, Westchase, had homes lose very little value, while others have seen prices drop.
The neighborhood’s average sales price of $361,140 in 2005 dropped 20 percent to $287,417 in 2009.
Maria Kletchka, a Coldwell Banker real estate agent who works in Westchase, said the neighborhood’s diverse mix of home prices has helped keep the neighborhood stable. It also hasn’t seen as many investors or foreclosures as some other neighborhoods, she said.
That said, it has still seen trouble.
“A bank-owned home sold for $211,000 just today,” he said. “During the boom, it would have sold for $350,000.”
Like every neighborhood, though, it all boils down to when you purchased.
“If you bought during the housing boom in 2005 or 2006, you’re likely upside down and owe more than your home is worth,” she said. “If you bought before then, you may still have some equity.”
Copyright © 2009 Tampa Tribune
Friday, October 2, 2009
Mortgages rates dip below 5 percent
Mortgage Rate Trend Index
Half (50 percent) of the mortgage experts polled by Bankrate.com expect no change in rates over the next 30 to 45 days. While 21 percent foresee an increase, the remaining 29 percent expect further reductions.
McLEAN, Va. – Oct. 2, 2009 – Rates on 30-year home loans dropped below 5 percent for the first time in four months, but still remained above this year’s record low, Freddie Mac said Thursday.
The average rate on a 30-year fixed mortgage was 4.94 percent, down from 5.04 percent last week, Freddie Mac said. The last time the 30-year home loan averaged less than 5 percent was the week ending May 28, when it was 4.91 percent.
Rates hit a record low of 4.78 percent hit in the spring, and remain appealing for people interested in buying a home or refinancing.
On Thursday, the National Association of Realtors said the number of signed sales contracts rose for the seventh straight month in August, as homebuyers rushed to take advantage of a tax credit for first-time owners that expires in November.
“Low mortgage rates are helping to stabilize home sales,” said Frank Nothaft, Freddie Mac’s chief economist.
But borrowers may want to consider the Federal Reserve’s announcement last week that it is slowing down a program intended to lower mortgage rates and boost the housing market. Analysts say mortgage rates should remain low for now but could eventually move higher, and homeowners who want to refinance mortgages shouldn’t delay.
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.
The average rate on a 15-year fixed mortgage fell to 4.36 percent from 4.46 percent last week, according to Freddie Mac. This week’s rate on 15-year mortgages was the lowest since Freddie Mac started tracking it in 1991.
Rates on five-year, adjustable-rate mortgages averaged 4.42 percent, down from 4.51 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.49 percent from 4.52 percent last week.
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 mortgages, and 0.6 point for 15-year and five-year loans. The fee averaged 0.5 point for one-year mortgages.
Copyright 2009 The Associated Press
Half (50 percent) of the mortgage experts polled by Bankrate.com expect no change in rates over the next 30 to 45 days. While 21 percent foresee an increase, the remaining 29 percent expect further reductions.
McLEAN, Va. – Oct. 2, 2009 – Rates on 30-year home loans dropped below 5 percent for the first time in four months, but still remained above this year’s record low, Freddie Mac said Thursday.
The average rate on a 30-year fixed mortgage was 4.94 percent, down from 5.04 percent last week, Freddie Mac said. The last time the 30-year home loan averaged less than 5 percent was the week ending May 28, when it was 4.91 percent.
Rates hit a record low of 4.78 percent hit in the spring, and remain appealing for people interested in buying a home or refinancing.
On Thursday, the National Association of Realtors said the number of signed sales contracts rose for the seventh straight month in August, as homebuyers rushed to take advantage of a tax credit for first-time owners that expires in November.
“Low mortgage rates are helping to stabilize home sales,” said Frank Nothaft, Freddie Mac’s chief economist.
But borrowers may want to consider the Federal Reserve’s announcement last week that it is slowing down a program intended to lower mortgage rates and boost the housing market. Analysts say mortgage rates should remain low for now but could eventually move higher, and homeowners who want to refinance mortgages shouldn’t delay.
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.
The average rate on a 15-year fixed mortgage fell to 4.36 percent from 4.46 percent last week, according to Freddie Mac. This week’s rate on 15-year mortgages was the lowest since Freddie Mac started tracking it in 1991.
Rates on five-year, adjustable-rate mortgages averaged 4.42 percent, down from 4.51 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.49 percent from 4.52 percent last week.
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 mortgages, and 0.6 point for 15-year and five-year loans. The fee averaged 0.5 point for one-year mortgages.
Copyright 2009 The Associated Press
Thursday, October 1, 2009
Florida home insurance rates on rise again
MIAMI – Oct. 1, 2009 – The respite from rapidly rising insurance rates is ending for Florida homeowners.
State regulators approved an average 19 percent statewide increase for Federated National Insurance. The insurer, a subsidiary of 21st Century Holdings in Lauderdale Lakes, has 30,889 policies in Florida.
Northern Capital Group was approved for a 10 percent hike on the policies it has taken out of Citizens Property Insurance, the state-run insurer.
Both companies said the rate increases will cover higher reinsurance costs and make up some of the revenue they’ve lost due to higher wind mitigation credits they must provide.
Nearly half a dozen companies have applied for rate increases or are working on filings.
United Property & Casualty has asked for a 12 percent average statewide increase. Southern Fidelity and its sister company, Capitol Preferred, have requested a 7.2 percent average statewide increase.
In July, Citizens began to submit its filing for its first rate increase in three years. Its rates have been frozen since 2007.
Citizens is limited to a 10 percent increase, due to a new law passed in May.
But its initial staff analysis found that some areas of the state could be due rate decreases.
“Insurance Commissioner [Kevin] McCarty told the governor and Cabinet last week that insurance companies now need to shore up their claims-paying abilities through modest rate increases,” said Lisa Miller, former deputy commissioner and consultant to many Florida-based insurance companies.
Copyright © 2009 The Miami Herald
State regulators approved an average 19 percent statewide increase for Federated National Insurance. The insurer, a subsidiary of 21st Century Holdings in Lauderdale Lakes, has 30,889 policies in Florida.
Northern Capital Group was approved for a 10 percent hike on the policies it has taken out of Citizens Property Insurance, the state-run insurer.
Both companies said the rate increases will cover higher reinsurance costs and make up some of the revenue they’ve lost due to higher wind mitigation credits they must provide.
Nearly half a dozen companies have applied for rate increases or are working on filings.
United Property & Casualty has asked for a 12 percent average statewide increase. Southern Fidelity and its sister company, Capitol Preferred, have requested a 7.2 percent average statewide increase.
In July, Citizens began to submit its filing for its first rate increase in three years. Its rates have been frozen since 2007.
Citizens is limited to a 10 percent increase, due to a new law passed in May.
But its initial staff analysis found that some areas of the state could be due rate decreases.
“Insurance Commissioner [Kevin] McCarty told the governor and Cabinet last week that insurance companies now need to shore up their claims-paying abilities through modest rate increases,” said Lisa Miller, former deputy commissioner and consultant to many Florida-based insurance companies.
Copyright © 2009 The Miami Herald
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