Miami Beach Real Estate: Lack of Progress on Loan Modifications Compromises Values

Real Estate Agent with The Kleer Team

The Obama administration has finally decided to crack down on loan servicers and mortgage companies that are failing to do enough to help borrowers at risk of foreclosure. Measures announced this week include sanctions and fines on those lenders and mortgage companies failing to ease the burden on the borrowers and these measures will be taken by the Treasury Department.  According to a random survey of approximately 50 of our investors who purchased property in Miami Beach after 2004, we have roughly estimated that only 25% of eligible borrowers who purchased premier waterfront properties in Miami Beach have been able to permanently modify their loans.

As part of the various Homeowner Relief Programs being advocated by policy makers in Congress, The Treasury Department, and The Obama Administration, over 35,000 homeowners received letters during the summer of 2009 from the Federal Regulators--offering them a new, more affordable mortgage payment. However, the real problem seems to be the bureaucratic bottleneck, disorganization, and lack of accountability on the part of loan servicers and banks.  In the past two weeks alone, I have had four separate clients tell me that their loan modifications have either been denied due to lost files, incomplete paperwork (because a form changed from time of application), and general lack of responsiveness and policy confusion from lenders.

The Federal Deposit Insurance Corporation (FDIC) is offering many delinquent borrowers significant concessions on past due mortgages--in many cases lowering interest rates to as low as 3%, extending loan amortizations schedules from 30 to 40 years, waiving traditional qualification requirements, and keeping payments under 38% of a borrower's gross income.  Many Miami Beach homeowners who currently find themselves "underwater", which is defined as owing more than the property is worth in today's market, are anxious to participate in the loan modification programs.

Our sampling of Fortune International's clients includes those that purchased a waterfront property as their primary residence on Sunset Island IV, Palm Island, Biscayne Island, and in Miami Beach condo buildings including The Murano at Portofino, The Portofino Tower, The Bentley Bay and The Continuum South Tower. Approximately 65% of those surveyed indicated a willingness to stay in their homes, as long as they were successful in lowering their monthly mortgage payments and bringing their cost of owning closer to the cost of renting a comparable property in Miami Beach (whether it be a condo or single family home).

Comments (1)

Christine Hynes
American Capital Corporation - Laguna Beach, CA
Orange County Senior Loan Consultant

Great Post Allan!

Its sad that even the best loan mod success rates for Lenders is under 50%. I'm glad the Fed has decided to punish these banks who are sitting back and taking tax payer money whille they do nothing to help homeowners. Luckily their new guidelines will be placed agents from the Fed in these Lending agencies to oversee their efforts and bring some accountability to the process!

Dec 02, 2009 07:05 AM