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ST Pete Times

Law erases penalty in debt forgiveness
By Helen Huntley, St. Pete Times Personal Finance Editor
Published January 6, 2008

ST. PETE-Homeowners whose mortgage lenders allow them to walk away from their debt got a big break from the new Tax Increase Prevention Act just passed by Congress. Under the old law, debt forgiveness was considered taxable income in many cases - pretty painful stuff when the reason you couldn't pay your mortgage was because you didn't have the cash.

"This is much needed," said Scott Stamatakis, an owner of UNITY ONE, a Tampa real estate company that specializes in "short sales," deals in which desperate homeowners sell property for less than what they owe on the mortgages to short circuit foreclosure proceedings. For the deal to close, the lender has to agree to accept the buyer's bid as payment for the mortgage. These situations have become more common as real estate prices have dropped.

"It's almost an insult for a person to be in a financial bind such as foreclosure and then, when it's over, not only did they lose the house but there's an extra $50,000 to $100,000 income they have to report. It's like being kicked when you're down."

Stamatakis said lenders typically have written off the remaining debt rather than chasing the borrower for the deficiency. The result was taxable income for borrowers unless they could show they were insolvent at the time. But if they had a positive net worth (what they owned was worth more than what they owed), they were out of luck.

Tampa Tribune

Tampa Home Price Fall Among U.S. Biggest
By SHANNON BEHNKEN The Tampa Tribune
Published: December 27, 2007

TAMPA - During the housing boom, prices in Miami and Tampa more than doubled, spurring builders and speculators to flock to the areas. Now, the two cities lead the nation in home price declines, and economists predict prices will continue falling through much of the new year.

In October, Miami and Tampa posted yearlong home price declines of 12.4 percent and 11.8 percent, respectively, according to Standard & Poor's/Case-Shiller home price index, released Wednesday.

Those were the largest drops among 20 cities tracked by the index and were nearly double the national average of 6.1 percent. It was the 10th consecutive month the index showed price declines in Tampa.

"After 15 years of growth, the Florida markets are in a large downturn right now," said Maureen Maitland, a vice president with S&P. "This is a reality check. Like stocks and bonds, home prices can't go up forever."

Even though home prices are falling, Maitland points out that Tampa homes are still selling for 106 percent more than they did in January 2000, so the earlier people bought, the more appreciation they're seeing. That's little consolation, though, for some sellers who bought toward the end of the boom and are now finding their homes valued less than they paid for them.

"Unfortunately for sellers, prices could drop another 5 to 10 percent, and there is a real need for sellers to get aggressive with pricing," said Mike Larson of Weiss Research in Jupiter.

The index tracks individual homes through repeat sales and takes a weighted average of the sales price differences for those homes. Some economists think the index more accurately reflects price trends than median prices reported by the national and state associations of Realtors.

The index does not include actual home prices, though. The Florida Association of Realtors is expected to release November sales data next week. The association's October data show that the median sales price of homes in the Tampa-St. Petersburg-Clearwater area was $209,000, down 7 percent from the same month last year.

Tampa and Miami are not alone. The S&P/Case-Shiller index painted a bleak picture of prices in other parts of the nation.

Nationally, home prices fell for the 10th consecutive month. Besides the Florida cities, Detroit, San Diego, Phoenix and Las Vegas also posted double-digit declines.

Among the 20 metropolitan areas, 11 posted record monthly declines. Tampa did not, but missed that distinction by only a tenth of a percent, Maitland said. August showed a slightly higher drop, she said.

Atlanta and Dallas, which had previously been posting price appreciation, fell in October compared with a year earlier. Prices fell 0.7 percent in Atlanta and 0.1 percent in Dallas.

Only three areas - Charlotte, N.C.; Portland, Ore.; and Seattle - posted year-over-year home price appreciation in October, with Charlotte posting the largest gain at 4.3 percent.

Those cities, however, saw declines when looking at October prices compared with September and August of this year.

"This shows we're in the middle of a housing recession, and it won't likely end until at least the middle of 2008 and maybe not until the next year," Maitland said.

The monthly index comes on the heels of September's S&P index that showed Tampa with the largest yearlong price drop, 11.1 percent.

Information from The Associated Press was used in this report. Reporter Shannon Behnken can be reached at (813) 259-7804 or

Tampa Tribune-Front Page

Financial Woes Drag Neighborhoods Down
By SHANNON BEHNKEN, The Tampa Tribune
Published: October 21, 2007

TAMPA - A grandmother strolls behind two toddlers navigating their tricycles down a sidewalk in Carriage Pointe, a new subdivision in Gibsonton.

They pass rows of two-story pastel homes with picture-book lawns and identical black-iron mailboxes. A neighbor waves as he pulls weeds out of his front yard.

One street over, the scenery is vastly different.

Vacant homes with 'For Sale' signs on lawns and 'For Rent' signs taped to windows line the block. Weeds are knee-high, and moldy newspapers, some dating back to June, are piled high on doorsteps.

Neighbors have vanished, some loading moving vans in the middle of the night. The homes are products of a mortgage and foreclosure wave leaving a lasting imprint on the Bay area. New neighborhoods such as Carriage Pointe, where speculators bought homes several at a clip and homeowners stretched their budgets with creative financing, are particularly hard-hit.

'It's depressing,' said Greg Gibbons, who has lived in the neighborhood 1 1/2 years and has a view of several empty houses. 'No one has ever lived in those two homes across the street. This is not where I wanted to live.'

As many as 69 percent of the 381 homes in Carriage Pointe are owned by people who don't live there, county officials estimate. This year, 31 of the homes have slipped into foreclosure, and many other homes are heading that way as owners struggle to make mortgage payments or just stop paying. Some investors drastically cut rents.

At the entrance of Carriage Pointe, on Symmes Road near Interstate 75, stands a wooden sign urging buyers to call about Phase Two, 'with homes starting in the low 200s.' That's the phase that was supposed to include a swimming pool and other amenities.

But the builder seems to realize the home-buying boom is over.

The phone number at the sales office is disconnected.

Foreclosures Skyrocket

Carriage Pointe is just one example of what's playing out in hundreds of neighborhoods throughout Florida and the Bay area.

The Sunshine State's foreclosure rate of one filing for every 248 households is second only to Nevada. In Hillsborough, Pasco and Pinellas counties, the number of foreclosure filings through September was 19,226, up nearly 131 percent compared with the same period last year, according to RealtyTrac, a California company that tracks foreclosures. That's up from 9,476 in 2005, the first year the company began its reporting.

Just last month, there were 4,365 filings in the three counties, and lenders took the keys back from 502 homeowners, RealtyTrac said.

The Tampa Tribune set out to find pockets of the Bay area that are feeling the foreclosure pinch more than others. The Tribune interviewed experts and homeowners, and analyzed public records and data provided by RealtyTrac and, a local company that sends researchers to courthouses daily.

The data show no neighborhood or price range is immune. Those in default are a mix of investors and people who bought primary residences. Neighborhoods with clusters of foreclosures were typically popular with speculators who purchased multiple homes. Many bought beyond their means with adjustable-rate and interest-only mortgages that fueled the 2005 real estate boom in Florida.

The idea was to sell or refinance before the low teaser rate went up. Now that the real estate market has slowed, that's no longer an option for many. Homes are sitting on the market for months, and prices are dropping.

The Bay area real estate market is expected to stabilize over the next two years, but experts say the neighborhoods where foreclosure rates are highest could suffer much longer.

'Those neighborhoods will have sharper drops in prices because you'll see more aggressive pricing to move homes,' said Mike Larson, a real estate analyst with Weiss Research in Jupiter. 'And when there are a lot of renters, prices could drop because renters don't typically take as good of care of the home as homeowners do.'

RealtyTrac's data show the ZIP codes with the most foreclosure activity were in Port Richey, New Port Richey, Wesley Chapel and Riverview. The areas tended to be more densely populated and, in most cases, had intense residential growth.

But out of 145 ZIP codes in Hillsborough, Pasco and Pinellas counties, the one for Port Richey in Pasco topped the list with 716 filings, RealtyTrac data show. As retirees have moved out in recent years, first-time homeowners have moved in, often using nontraditional financing. The area also was a hot spot among investors looking for rental property.

In Pasco, foreclosures in New Port Richey and Wesley Chapel, where hundreds of new homes were built during the boom, have risen dramatically in the past year, too.

In Hillsborough, ZIP codes with new subdivisions were hardest hit. The Riverview ZIP code had 573 filings, more than any other in the county. But it was followed closely by an area north of Ybor City and the Sulphur Springs area in Tampa, which had 528 and 538 filings, respectively.

Hillsborough and Pasco had ZIP codes with the highest total foreclosures, but Pinellas also has been susceptible. Some areas, such as neighborhoods in south St. Petersburg, have had a lot of foreclosures because of high investor activity.

Homeowners' Woes

It was May 2006, and Jesus and Hayley Torres had a baby and a newborn on the way.

They had never owned a home, and they wanted a nice neighborhood to raise their growing family. The Torreses were neither investors nor buyers of exotic mortgages; nevertheless, they were tripped up by Florida's other real estate phenomena: rising taxes and insurance.

They paid $203,000 for a three-bedroom, two-bath, 1,395-square-foot home overlooking a pond in Carriage Pointe. They got a 30-year, fixed-rate mortgage, even though friends urged them to buy a bigger home with an adjustable-rate mortgage.

'We budgeted for all our bills and had only about $10 to $15 left over each month,' Jesus Torres said.

The couple made it work until the property taxes shot up. The Torreses' tax bill went from $1,436 to $2,959. Combined with rising property insurance, Torres said, the monthly mortgage payment went up by $500.

'There's no way we could pay that,' Torres said. 'Some months, it really became, 'Do I pay my mortgage or feed my kids this month?''

They put the home on the market in March but have been unable to sell it. They haven't made a mortgage payment since April and received the foreclosure notice in late September.

Torres is hoping to work something out with his bank so he doesn't have a foreclosure on his record.

Banks don't want the inventory, and some are willing to take back the deed to the home without a foreclosure. Others do a short sell, meaning the bank sells the home at a low price and the homeowner owes the difference. However, this is typically offered only on primary residences.

The Torreses' neighbor, Walter Childress, hates to see all the foreclosures. He feels bad for people losing their homes, but the result has affected his life. He thinks there's more crime in the neighborhood and worries about his property value.

Childress bought his Carriage Pointe home in April 2006 and is the only resident on the board of the homeowners association. The board tries to enforce the area's deed restrictions, which require homeowners to take care of the property. But there is little the board can do, he said.

'If it doesn't get better in a couple of years, I'm out of here,' he said. 'I'll move back north or to a gated community.'

The Investor Factor

During the housing boom, investors camped outside new subdivisions and bought multiple homes. Builders, eager to meet demand, overbuilt in the Bay area, said Per Gunnar Berglund, senior economist at Moody's

For example, one investor in Carriage Pointe purchased six homes. All of them are now in foreclosure.

Of the 31 homes in foreclosure in the neighborhood, more than half were financed with nontraditional financing, according to and public records.

Many of those loans had adjustable rates that have caused mortgage payments to skyrocket.

Some Carriage Pointe residents blame the builder for the influx of investors. When the market slowed, they say, Lennar Homes cut prices and sold excess inventory to investors.

Mike Southward, division president, said Lennar typically limits investors to purchasing every fifth house.

'It was a good selling community for us,' Southward said. 'I don't remember that there was need to sell to investors. What's happened in Carriage Pointe is unfortunate, but I think it's still a nice neighborhood.'

No one can say for sure how many investors purchased homes in the Bay area, but Moody's recent report on loan origination data approximates likely investor purchases.

In 2006, 18 percent of loans in the Bay area were made to people who said they weren't going to live in the home. That was up from 8 percent in 2001. In Florida, the number of nonresident buyers was 19 percent in 2006, up from 12 percent in 2001. Across the nation, 12 percent of loans in 2006 were for non-owner-occupied homes, up from 7 percent five years earlier.

Doug Duncan, chief economist at the Mortgage Bankers Association, said the numbers still may underestimate investor purchases.

'One lender recently told us that many of their loans in foreclosure were supposed to be to people living in the home,' Duncan said. 'But when they investigated, they learned some were actually investors.'

Duncan said he expects foreclosures to peak during the fourth quarter of 2008.

'It won't surprise me if it's at least a couple more years before things turn around in Florida,' he said.

'We Can't Do This Anymore'

The effect of foreclosures can also be seen at local real estate sales offices. Of the 21 homes sold through Greg Armstrong's Coldwell Banker office last month, 12 had been foreclosed on by lenders.

'I've been in this business for 17 years, and I've never seen the bank be the No. 1 seller,' said Armstrong, president-elect of the West Pasco Board of Realtors.

Homeowners who want to move or those seeking to avoid foreclosure by selling can't compete, he said. And every time a lender cuts prices dramatically to move a home, values in the neighborhood go down, he said.

'Lenders can afford to go much lower in price than homeowners can,' Armstrong said. 'The banks don't want all these homes, so they'll sell them for whatever they need to.'

That's part of the reason Brianne and Robert Thompson have decided to file for bankruptcy and walk away from their first home, a three-bedroom in the Thousand Oaks subdivision in New Port Richey.

The couple bought the home four years ago and took out a second mortgage nearly two years later. They had equity at the time and wanted to upgrade their home. Two months after signing the paperwork, Brianne Thompson discovered she was seriously ill and no longer could work.

For a year and a half, they made it work, barely making mortgage payments each month. With their second mortgage and home prices falling all around them, however, the Thompsons now owe more than they can sell the home for.

Robert Thompson has decided to give up his job at a nursing home to re-enlist in the Army, in part so the family can get help with housing.

'We hate to just let this house go,' Brianne Thompson said. 'We love it, but we can't do this anymore.'

In Thousand Oaks East, a Lennar subdivision in New Port Richey, 128 of 191 homes are either listed for sale or have slipped off the listing after six months on the market without a sale. Of the 12 homes in the community in foreclosure, half are on Lenton Rose Court. All along this street, homes sit empty, with 'For Sale' signs beckoning buyers. '$60,000 under the appraised value,' one sign says. Still, the home has been on the market for months, a neighbor said.

Kelley Felicciardi and her husband have rented a home on the street for four months. They have an option to buy but have decided not to, she said, citing the foreclosures.

One house on the corner, where neighborhood children catch a school bus, appears abandoned. Neighbors take turns cutting the lawn, she said, so the children don't have to stand in the weeds.

A few doors down is another renter, Gary Pirie. His landlord was heading to foreclosure before Pirie's family moved in, he said.

'It looks like a perfect neighborhood on the surface,' he said. 'But even a beautiful neighborhood like this will eventually go bad when there are so many foreclosures.'

Reporter Shannon Behnken can be reached at (813) 259-7804 or

Foreclosure Disclosure

By Mitch Traphagen
Sep 13, 2007 - 11:36:26 PM

Tall grass and weeds choke out what was once the yard of this waterfront home in Ruskin. The home was purchased in 2006 for $428,000 - today it is in the process of foreclosure. Mitch Traphagen Photo
RUSKIN – The last echoes of the recent real estate boom have faded but for some homeowners, the explosion has just begun.  Across South Hillsborough and the nation, foreclosure properties are beginning to stack up.

"It's awful," said Josie D. of Ruskin, who lives across the street from a property currently in the foreclosure process.  "I knew the people who lived there, they bought another house but couldn't sell this one and now no one will buy it."

The waterfront home, complete with a view of downtown St. Petersburg across the bay, now sits empty with tall weeds choking out what was once the lawn.  On one window is a bright orange Hillsborough County violation sticker, citing the home for an overgrown yard, broken windows and for being unsecured.  According to the neighbor, the backdoor was until recently left open, and she witnessed various people going in and out.

Just a few short years ago, such a home in a prime location would have been a hot commodity - indeed, it was purchased in 2006 for $428,000.  Today, it would be difficult to imagine anyone buying it at any price.

In Hillsborough County, the number of homes foreclosed upon each month is approaching the number of homes sold.  In July, 1,328 homes were closed, according to the Greater Tampa Association of Realtors.  According to recent statements by Pat Frank, the Hillsborough County Clerk, nearly 900 new foreclosures were filed in August.  Most industry-watchers seem to feel the end is not yet in sight – for Hillsborough County or anywhere else in the country.

But as bad as things seem to be in Florida, they pale in comparison to California, often considered the poster child of the housing bubble.  Countrywide, the nation's largest mortgage company, currently holds more than 2,800 properties in that state with a combined value of more than a billion dollars.  Florida comes in third behind Michigan, with 680 properties held by that company alone., a website dedicated to listing foreclosed homes and other available properties, has more than 5,000 listings in Hillsborough County – with hundreds in Ruskin, Apollo Beach and Sun City Center alone.  According to the data, foreclosures are occurring in South County in virtually all categories of housing – from the oldest neighborhoods to gated communities such as Symphony Isles.

In Apollo Beach, a home purchased for $430,000 in 2004 is currently in foreclosure with a first mortgage balance of $387,000., a real estate appraisal Website, lists the market value of the property at $502,140. 

Another Apollo Beach home, with a value from Zillow at $535,000, was foreclosed upon for a first mortgage of $407,500.  The bank was the only bidder at the foreclosure auction.   In Ruskin, a home was purchased in 2002 for $83,000.  Late last month, the first lender filed for foreclosure on a loan balance of $165,000 – an indication the homeowner refinanced to cash in on equity during the booming market.  The reasons for such a refinance are varied and are often due to emergencies such as medical expenses.  But they could also be simply to buy a new car.  During the boom years, few homeowners recognized the risks – and few realized the day was coming when they would be upside-down in a mortgage.

A case in point of that can be found in a newly built condominium in Ruskin that was purchased in July 2007, for $459,900.  In May, the mortgage company began foreclosure proceedings on the property.  Selling it, however, may be difficult as there are a handful of other units on the property entering foreclosure and also because numerous units have yet to be sold from the original developer. considers the market value of the condo to be $163,879 – a considerable discount from the purchase price, assuming that estimate is accurate.

Foreclosures not only effect the homeowner, they also have an impact on the neighbors - and on Hillsborough County Code Enforcement which responds to complaints resulting from abandoned homes. the loan. A short sale gives a "We're seeing more and more of them all the time," said one Hillsborough County code enforcement officer, referring to foreclosed homes.

For code enforcement, the problem is much larger than mere aesthetics - it is a public safety issue. Homes abandoned to foreclosure tend to draw vagrants and criminal elements, thus destabilizing entire neighborhoods. Many in code enforcement expect the problem will get worse before it gets better.

The signs of the times are easily seen in many South County neighborhoods in the form of empty homes, some with realtor signs, others with 'for sale by owner' signs, and many more with overgrown lawns.  As interest rates ratchet up on adjustable rate mortgages and family changes take place, some homeowners apparently believe the only way out of the problem is to simply walk away.

That, however, isn't necessarily a simple solution to the problem.  The damage to credit ratings is extreme and long lasting; and in Florida, there is also the possibility of a deficiency judgment.  If a home is sold at a foreclosure auction for less than the amount that is owed, the lender often has the right to seek a court order for the remaining balance.  In such cases, savings could be seized and wages garnished.

As often happens in cases where people are in distress, there are those hoping to take advantage of the situation.  Some unscrupulous companies offer relief for homeowners facing foreclosure through a variety of means.  But instead of relief, the scams only increase the misery - and problems - for the already burdened homeowner.

There are, however, legitimate solutions to those facing foreclosure.  "Homeowners that find themselves in a hardship situation like a subprime loan, adjustable-rate mortgage, zero down loans, death, divorce, health or loss of job do have option is called a short sale."  In a short sale, a financially insolvent homeowner who is facing foreclosure sells his home for less than the value of his loan.  The lender accepts the sale as payment in full for the loan.  A short sale gives a homeowner a way out of foreclosure and is potentially financially advantageous for lenders."

Almost unheard of two years ago, short sales are beginning to gain acceptance within the mortgage industry.  The primary reason is that lenders have little interest in taking on even more foreclosed properties.   "We call this a win-win," "The seller won't have 'foreclosure' on his credit report, though it will show the missed mortgage payments.  A foreclosure is an automatic 100-120 point hit to a credit rating and stays on the report for 7-10 years.  Lenders could report the short sale in a number of different ways.  There could be a 40-50 point hit for the short sale but [that is] not as bad as foreclosure."

Area realtors acknowledge that many sellers are reluctant to face reality in pricing their homes – either out of disbelief that the market has changed or because they feel they have to price their home to cover what they owe.  As such, while prices have declined somewhat, the average number of days a home sits on the market has increased dramatically.  Increasingly, realtors are telling sellers to price their homes sensibly if they hope to sell.  In some cases, they will refuse to take on listings in which the seller cannot accept the new realities of pricing.
And for everyone involved, those realities are still fresh.

The tide appears to have turned for the entire housing industry.  Where once, just a few years ago, mortgages were available for nothing more than a promise to pay and a signature, today standards have tightened and mortgage companies have gone out of business.  According to one industry tracking Website, 151 companies have ceased operations since late 2006.

Where once numerous Websites offered plans and advice on ways to make a fortune buying and selling properties in the hot market, today dozens of Websites offer advice and sometimes even sympathy to distressed homeowners facing the loss of their homes.

Given the slow market and the seemingly endless stream of bad real estate news in the media, the situation may appear to be dismal - but that is not necessarily the case.  Some market watchers consider what is happening a necessary correction.  As property values rose spectacularly during the boom years, home prices steadily outstripped the abilities of the local job market – prices tended to rise beyond what typical area salaries could afford.  For buyers left behind during the recent run-up, the downturn could allow them to enter the market with more affordable home prices.

One realtor said, "It's never as bad as you think it is." That certainly applies to the current situation.  Interest rates remain historically low; home prices are returning to earth and the economy has thus far managed to shrug off the effects of the tumultuous real estate market.  As an example, Apple announced on Monday that it has sold one million iPhones in only 74 days – certainly an indication of consumer confidence.  And while there is little good news about the rate of foreclosures, increasingly there are solutions to prevent it from happening.

And such solutions are not only a win-win for the borrowers and the lenders but also for area neighborhoods.  Fewer foreclosures will translate to fewer abandoned homes left for banks – and the neighbors – to live with.

The Better Business Bureau offers tips for financially troubled homeowners.  Visit their Website at

Sally Thalji 813-282-8485 Email Sally