Monthly Archives: January 2019

1 in 10 borrowers now opting for an adjustable rate

NEW YORK – Jan. 29, 2019 – Fixed mortgage rates have been inching lower in recent weeks, but the percentage of borrowers tempted by the even-lower rates of adjustable-rate mortgages (ARMs) is rising.

ARMs posted their highest share of total originations in December since Ellie Mae, a maker of software used to process mortgage applications, began tracking them in 2011.

The share of ARMs reached 9.2 percent in December 2018, up from a 5.6 percent share a year earlier, according to the Ellie Mae’s December Origination Insight Report, according to Mortgage News Daily. With a fixed-rate mortgage, the interest rate does not change over the term of the loan; with an ARM, the interest rate is usually locked in for a set period, such as five to seven years, and then changes based on market conditions.

Last week, five-year ARMs averaged 3.90 percent, Freddie Mac reports.

“With the strong demand for housing and rapid increase in property value appreciation, more consumers are turning to adjustable-rate mortgages in order to gain additional flexibility when competing for a home,” says Jonathan Corr, president and CEO of Ellie Mae. “This is another key indication of how demand has outpaced supply in the housing market as consumers pursue their dream of homeownership.”

Overall, mortgages for home purchases comprised 70 percent of mortgage originations in December, according to Ellie Mae’s report. Closings moved faster, too. The time to close on a purchase loan fell to 47 days in December.

Source: “More Buyers Turning to ARMs to Achieve Ownership,” Mortgage News Daily (Jan. 24, 2019)

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Fed meets this week but no interest-rate hike expected

WASHINGTON (AP) – Jan. 29, 2019 – Chairman Jerome Powell is likely to refer this week to a word he’s been using to describe the Federal Reserve’s latest approach to interest rates: “Patient.”

With pressures on the U.S. economy rising – a global slowdown, a trade war with China, slowing corporate earnings, a nervous stock market – the Powell Fed has been signaling that it’s in no hurry to resume raising rates after having done so four times in 2018. And with inflation remaining tame, the rationale to tighten credit has become less compelling.

When its latest policy meeting ends Wednesday, the Fed is expected to keep its key short-term rate unchanged at a range of 2.25 percent to 2.5 percent. Its benchmark rate influences many loan rates for businesses and consumers, including mortgages.

It’s possible, too, that the Fed and Powell may signal that they’re at least considering taking another step soon to avoid exerting upward pressure on loan rates: The central bank may decide to slow the pace at which it’s shrinking the huge portfolio of Treasury and mortgage bonds it purchased after the 2008 financial crisis – purchases that helped keep long-term loan rates low.

The Fed has been gradually reducing its bond portfolio, a move that has likely contributed to higher borrowing rates. But at some point, to avoid weakening the economy, it could slow that process or end it sooner than now envisioned. Doing so would help keep a lid on loan rates and help support the economy.

The note of patience about rate hikes that the Fed has been signaling marks a reversal from a theme Powell had sounded at a news conference after the Fed’s previous policy meeting in December. In that appearance, he left open the possibility that the Fed would continue to tighten credit this year. The chairman’s message upset investors, who had expected a more reassuring theme, and sent stock prices tumbling.

Since then, Powell and others on the Fed’s policymaking committee have been clear in suggesting that they’re in no rush to raise rates again after having done so nine times over the past three years. Besides invoking the word “patient” to describe the Fed’s outlook toward future hikes, Powell has stressed there’s no “preset course” for rate increases. The Fed, in other words, will tailor its rate policy to the latest economic data.

“With the muted inflation readings we have seen coming in, we will be patient as we watch to see how the economy evolves,” Powell said this month in Atlanta.

His comments have since been echoed by several other Fed officials. Their assurances have helped allay fears that higher borrowing costs might depress corporate earnings and economic growth. They have also helped spur a stock market rally. With the turnaround, stocks are on pace for their best month since March 2016.

Still, in recent weeks the Fed has been hamstrung in its effort to assess the health of the economy. That’s because the partial shutdown of the government that has now ended – at least for three weeks – essentially closed the Commerce and Treasury departments, among other agencies. So key economic data that those departments normally issue – involving retail sales, home construction and factory orders, among other categories – hasn’t been available to the Fed.

The reopening of the government will restore the distribution of all economic reports. But it could be weeks before the staffers fully catch up in compiling, analyzing and distributing all key data.

The economic impact of the partial government shutdown will be among topics Powell will face at his news conference, in addition to the global slowdown, the U.S.-China conflict and Britain’s struggles to achieve a smooth exit from the European Union. All those threats could potentially jeopardize the Fed policymakers’ outlook for this year.

“They will have some serious deliberations among themselves about what they need to be doing for the rest of the year depending on how events unfold,” said Sung Won Sohn, chief economist at SS Economics.

Last month, Fed officials raised their benchmark rate for the fourth time in 2018 and the ninth time since they began gradually raising rates from record lows starting in December 2015. They did reduce their forecast for rate increases this year from three to two. But the financial markets still reacted with fear that the Fed might end up tightening credit too aggressively and possibly cause a recession.

The central bank’s new cautionary tone has significantly diminished expectations of further rate increases. The CME Group’s tracking of investor bets puts the likelihood that the Fed will raise rates this year – even once – at just 28 percent.

With his news conference Wednesday, Powell will begin a new phase in Fed communications: He now plans to hold a news conference after each of the eight policy meetings the Fed holds yearly, up from four news conferences a year. The idea is to give the Fed the flexibility to announce a policy change after any meeting – and to have the chairman explain it at a news conference. Until now, it was widely assumed that the Fed would make no major policy changes at the four meetings each year that hadn’t included a news conference by the chairman.

Still, no major announcements are likely this week. And Diane Swonk, chief economist at Grant Thornton, thinks the Fed will leave rates unchanged for all of 2019, in part because she foresees economic growth slowing to around 2.4 percent, down from what she estimates was 2.9 percent growth last year.

“I think the Fed wants to walk a fine line by acknowledging that the economy has slowed down and that things are less clear at the moment because of the lack of some government data,” Swonk said. “But at the same time, they do not want to sound too negative on the economy.”

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Energy-efficient home upgrades can save $1,000

NEW YORK – Jan. 29, 2019 – Want to pocket an extra $1,000 each year? Make your home “smarter” by installing devices that reduce energy usage.

Some of these six simple upgrades can be done without even hiring an electrician, and all will save money, make your home more comfortable and help the environment. Total energy savings will vary depending on the size of your home. An upfront investment is required.

Some changes cost as little as $4 each, while other upgrades will run as much as $300 apiece, plus labor costs from an electrician. But the savings in the first year and half will likely net back your investment. Everything after that is savings.

A low-investment, high-return upgrade is simply switching out all your old incandescent light bulbs with LED ones. Seven in 10 U.S. households don’t have any LEDs, according to a 2015 survey from the Energy Information Administration.

LEDs use 75 to 80 percent less energy than regular bulbs, and swapping out five bulbs will save you about $35 a year, says Tim Palange, operations manager for Mr. Electric, a Neighborly company in North Carolina. The average house has 30 to 60 light bulbs. These bulbs also have longer lifespans, which is convenient because you don’t have to change out as often those “out-of-the-way bulbs like outside flood lights or high hats in cathedral ceilings,” he said.

You don’t have to worry anymore about aesthetics, either. “LEDs have come a long way from inception,” Palange says. “They’re now dimmable, and you don’t look like you’re in an office with fluorescent lights.”

Savings potential: $210-$420 a year

Heat and cool better
An easy way to save money on your heating and cooling bills is to install smart thermostats, such as the Nest. These thermostats heat and cool your home more efficiently and can be controlled remotely, a great feature for vacation homes. Each one can save close to $200 a year, which can be big savings for large homes with multiple thermostats.

Savings potential: $200-$800 a year

Switch out your light switches
You can get more from your light switch than simply one that dims. Consider a Wi-Fi-enabled switch that allows you to turn the lights on and off remotely through an app on your cellphone. This can come in handy if you want lights on at night when you get home or you want people to think you’re home when you’re on vacation.

Each smart light switch can save $20 to $25 per year, Palange says, and most homeowners use at least two: one for outside lights in the front and one for outside lights in the back.

Savings potential: $40-$50 per year

Get plugged in
Most appliances, electronics and other equipment that are plugged in draw energy even when not in use or after they are fully charged. This idle-energy usage adds up to about 1,300 kilowatt-hours a year, according to a 2015 study by the National Resources Defense Council.

“Think about how often do you leave your cellphone plugged in all night long?” Palange says. Smart outlets can reduce that waste, by allowing a plugged-in device to use electricity only when it needs it.

Savings potential: $165-$440 a year

Use smart fans
Installing Wi-Fi-enabled ceiling fans can reduce your heating and cooling costs. These fans link up to smart thermostats and automatically adjust their speed and direction based on the ambient temperature of the room. The ceiling fan moves the air around in the room, which is cheaper than depending on the central heating or cooling system to do it, Palange says.

Savings potential: $140-$250 per year depending on the size of your home.

Mind your water
A typical electric water heater will heat the water in your home even when no one is there. If you install an occupancy sensor to your electric water heater, it won’t heat the water unless it knows someone is in the house.

“It’s similar to what hotel rooms use,” says Palange. “It can save anywhere from 30 to 50 percent off hot water costs.”

Savings potential: $200-300 per year for a family of four

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SandP CoreLogic: Home price gains slowed in Nov.

WASHINGTON (AP) – Jan. 29, 2019 – U.S. home prices rose at a slower pace in November, as sales have tumbled and affordability has deteriorated for many would-be buyers.

The S&P CoreLogic Case-Shiller 20-city home price index grew 4.7 percent from a year earlier, dropping off from a 5 percent annual increase in October, according to a Tuesday report.

Home sales drifted downward for much of 2018, causing homes to sit on the market longer and price growth to slip. Buyers have found it difficult to afford a home due to a shortage of properties at a median price of roughly $250,000, last year’s rising mortgage rates and roughly six years of home price growth exceeding wage gains.

“Home prices are still rising, but more slowly than in recent months,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “The pace of price increases is being dampened by declining sales of existing homes and weaker affordability.”

The Las Vegas metro area posted the largest price gains at 12 percent, followed by Phoenix at 8.1 percent and Seattle at 6.3 percent. All 20 of the metro areas tracked by the index reported price gains, with Washington, D.C., posting the slowest gain at 2.7 percent.

Still, 2019 has offered consumers some relief as the average 30-year mortgage rate has dipped to 4.45 percent from a recent peak of nearly 5 percent. This could help to boost demand after sales declined last year.

The National Association of Realtors said last week that sales of existing homes in 2018 fell 3.1 percent from the prior year to 5.34 million units, the lowest level since 2015.

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U.S. consumer confidence drops 6 points in Jan.

BOSTON – Jan. 29, 2019 – January’s Consumer Confidence Survey decreased following a decline in December. It now stands at 120.2 down from 126.6 one month earlier.

The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined marginally, from 169.9 to 169.6. The Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – decreased from 97.7 last month to 87.3 this month.

“Consumer confidence declined in January, following a decrease in December,” says Lynn Franco, senior director of economic indicators at The Conference Board. “The Present Situation Index was virtually unchanged, suggesting economic conditions remain favorable. Expectations, however, declined sharply as financial market volatility and the government shutdown appear to have impacted consumers.”

According to Franco, “Shock events such as government shutdowns (i.e. 2013) tend to have sharp, but temporary, impacts on consumer confidence. Thus, it appears that this month’s decline is more the result of a temporary shock than a precursor to a significant slowdown in the coming months.”

Current conditions
The percentage of consumers claiming business conditions are “good” was virtually unchanged at 37.4 percent, while those saying business conditions are “bad” decreased from 11.6 percent to 11.1 percent.

Consumers’ assessment of the labor market was mixed. Those stating jobs are “plentiful” increased from 45.5 percent to 46.6 percent, while those claiming jobs are “hard to get” also increased, from 12.2 percent to 12.9 percent.

Short-term future expectations
The percentage of consumers expecting business conditions to improve over the next six months decreased from 18.1 percent to 16.0 percent, while those expecting business conditions to worsen increased from 10.6 percent to 14.8 percent.

Consumers’ outlook for the labor market was also less favorable. The proportion expecting more jobs in the months ahead decreased from 16.6 percent to 14.7 percent, while those anticipating fewer jobs increased, from 14.6 percent to 16.5 percent.

Regarding their short-term income prospects, the percentage of consumers expecting an improvement declined from 22.4 percent to 18.2 percent, but the proportion expecting a decrease also declined, from 7.6 percent to 7.1 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen.

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Fla. consumer confidence fairly steady in Jan.

GAINESVILLE, Fla. – Jan. 29, 2019 – Consumer sentiment among Floridians fell three-tenths of a point to 97.8 in January from a revised figure of 98.1 in December. It’s down 3.5 points year-to-year.

Of the five components that make up the index, two decreased and three increased.

Current conditions
Floridians’ opinions about current economic conditions were mixed. Perception of one’s personal financial situation now compared with a year ago increased 6.1 points from 88.1 to 94.2 – the greatest increase of any reading this month. This opinion is shared by all Floridians across sociodemographic groups but is stronger among those with incomes under $50,000.

On the other hand, opinions as to whether now is a good time to buy a major household item, such as an appliance, showed the greatest decline in this month’s readings, moving from 109.6 to 99.8 – a change of 9.8 points. This opinion is shared by all Floridians but is stronger among women and those aged 60 and older.

“Although these two components of the index moved in opposite directions, together they showed that opinions regarding current economic conditions deteriorated among Floridians in January,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research.

Future conditions
Outlooks about future economic conditions were also mixed. Expectations of personal finances a year from now increased three points from 106 to 109, but anticipations of U.S. economic conditions over the next year decreased nine-tenths of a point from 94 to 93.1.

Finally, expectations of U.S. economic conditions over the next five years increased slightly, moving two-tenths of a point higher, from 92.8 to 93.

“The pessimistic views about the short-term outlook on the U.S. economy are not shared by all Floridians,” says Sandoval. “Those aged 60 and older and those with incomes under $50,000 maintain strong positive expectations. Furthermore, even though this component of the index decreased, overall expectations about future economic conditions increased in January. Most of the pessimism stems from the negative expectations regarding Floridians’ opinions as to whether now is a good time to buy a big-ticket item.”

During the last year, after seeing the realized and expected labor market conditions and inflation, the Federal Open Market Committee increased the target range for the federal funds rate. In June, the committee increased the range to 1.75 to 2 percent, in September to 2 to 2.25 percent, and in December to 2.25 to 2.5 percent.

“Although these changes in the federal funds rate might take time to spread through the economy, they are gradually increasing the cost of borrowing by affecting other interest rates such as bank loans, mortgages and credit cards,” says Sandoval. “As a result, they might explain some of the changes observed regarding the opinions as to whether now is a good time to buy a major household item.”

Forecast
Florida’s economic conditions remain favorable, with more jobs added in December.

According to the latest report from the Florida Department of Economic Opportunity, the state gained 231,200 jobs over the year in December, an increase of 2.7 percent. Among all industries, education and health services gained the most jobs, followed by leisure and hospitality, professional and business services, and construction. The unemployment rate was 3.3 percent, unchanged from the November rate, and closer to the historical observed minimum of 3.1 percent in March 2006.

“Despite the slight decline, consumer sentiment continued to be high in Florida. In view of the realized economic outlook, particularly in the labor market, it is unlikely that federal funds rate changes will undermine the current economic expansion,” says Sandoval.

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Fla. has many programs to help first-time homebuyers

ORLANDO, Fla. – Jan. 29, 2019 – U.S. News & World Report issued an extensive overview of programs in Florida that can help first-time homebuyers secure their first house – and in some cases, they don’t even need to be first-timers. A few programs consider anyone who has not owned a home within the past three years a first-timer.

There are three broad categories of aid for first-time buyers: home loan programs, some type of financial help to allow them to take out a mortgage, and buyer education programs that can teach them the basics of homeownership and help them understand the other aid packages available.

Many buyers and industry experts understand the national programs that can help first-timers – Federal Housing Administration (FHA) loans, Veteran Affairs (VA) loans and other programs – but the state also has the Florida Housing Finance Corporation (Florida Housing) that the Florida Legislature created to help provide affordable housing options statewide.

“Florida Housing’s programs provide assistance to eligible homebuyers by offering low-cost, 30-year, fixed-rate mortgages together with downpayment and closing cost assistance,” according to Taylore Maxey, press secretary for Florida Housing.

For an overview of first-time buyer options, read the full article in U.S. News & World Report.

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Retirement communities face growing demand for space, luxury

ORLANDO, Fla. – Jan. 29, 2019 – One of the hotter deals in the Orlando real-estate market is open only to people age 62 and older and comes with the guarantee of a nursing home bed should you need it.

As baby boomers age and seniors continue to retire to Florida, the state’s strong housing market has led to heightened demand for high-end continuing-care retirement communities – where residents can move from independent living to assisted living to skilled-nursing care.

“Now they have dining options and spa services and golf courses and wine rooms,” said Bruce Rosenblatt, owner of Senior Housing Solutions, which helps older adults navigate the sea of residency options based on their needs and finances. “This is not an old folks’ home.”

Earlier this month, when Westminster Communities of Florida broke ground on a second apartment development in pricey Baldwin Park, the nonprofit senior housing provider already had contracts signed on all 75 units – despite requiring entry fees that start at nearly $250,000 and don’t give residents actual ownership of any property.

“I would say this proves that there’s a lot of demand,” said Wes Meltzer, director of communications for the organization, which has more than 7,000 residents in developments around the state. “We’ve had very successful expansion at Westminster Baldwin Park – and in other parts of the state over the past few years, too. We have a new apartment building we’re going to be constructing at Westminster Shores in St. Petersburg that is currently 90 percent reserved without breaking ground yet. And we just opened a new apartment building, Westminster Oaks, in Tallahassee. We sold all 40 apartments there in about six weeks.”

Though the specifics vary from one development to the next, in general the continuing-care communities’ main selling point is peace of mind, which doesn’t come cheaply. Rosenblatt said entrance fees range from $150,000 to $2 million, depending on the amenities, living options and whether any of your money is refundable should you pass away or want to move out. The upfront sum prepays for care and provides the facility operating capital. On top of that, monthly fees range from $2,000 to $9,000 for a single occupant.

When residents start out, they live independently in apartments or villas, with maintenance, housekeeping and often meals and social activities taken care of by the provider. Many offer fitness centers, clubhouses, pharmacy services and transportation assistance.

If residents become sick or struggle with mobility, they can move to assisted living facilities or nursing homes within the same community, typically at reduced rates.

And in some cases – such as Westminster’s – if residents outlive their savings, the community will still take care of them – covering their monthly fees and the cost of long-term care.

“If anything happens to me, my wife is all squared away here,” said Troy Fletcher, 77, who lives in Westminster’s Winter Park community. “And the same if anything happens to her, I’m squared away. And we would be here together. That was the main thing for us. At this stage in life, the worst thing that could happen is to be alone, and here you’re never alone unless you want to be.”

Troy and Barbara Fletcher moved into their two-bedroom, two-bath apartment five years ago, leaving their 2,200-square-foot home for a place about half the size. They’ve never regretted the decision.

“Initially I thought we might be too young, but now I think the timing was just right, because I’ve seen how much the prices have increased,” Troy Fletcher said. “The place where we are, there’s a waiting list of two years.”

In Longwood, Village on the Green, another continuing-care retirement community, is also expanding. Before summer, workers will break ground on a $60 million health center with 48 skilled-nursing beds, 36 assisted-living apartments and 18 “memory-support” apartments that come with therapy for those with Alzheimer’s or other age-related cognitive disorders.

“It’ll have a state-of-the-art rehabilitation center and all of the modern amenities,” said Gail Wattley, the community’s administrator. “It’s not going to look like an institution. It will look very residential.”

In addition, the community is remodeling its clubhouse and hoping to add 2,500-square-foot villas to its development – a response to demand for more spacious and luxurious housing options. There is already a waiting list, though the plans haven’t been completed and the prices haven’t been set.

“Since the economy recovered, the villas are the hot ticket,” Wattley said.

Although the overall number of continuing-care retirement communities in the state is holding steady at about 70, many of the existing ones have expansion plans, Meltzer said.

Still, not everyone will get in. The most expensive of all long-term-care options, the communities cater to wealthier couples and individuals, and they carefully screen applicants for both their physical and financial health, rejecting those whose bank accounts are likely to be drained just as they need expensive round-the-clock nursing care.

And both the AARP and Rosenblatt strongly suggest consumers do some screening of their own – including reading financial reports, licensing and inspection reports and any complaint investigations, available through the Florida Office of Insurance Regulation and the state Agency for Health Care Administration.

“Check out the [skilled nursing] center. Talk to the staff. Talk to the families. Make sure that company is on solid financial footing,” he said. “For the right person, it usually works out very well. But it’s a big decision, and it requires a lot of money. So it’s critical to know what you’re getting into.”

© 2019 The Orlando Sentinel (Orlando, Fla.), Kate Santich. Distributed by Tribune Content Agency, LLC.

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Condo QandA: Can a neighbor nix my flooring plans?

STUART, Fla. – Jan. 29, 2019 – Question: I live on the second floor of my condominium building and want to replace the original flooring. There is currently a mixture of carpet and laminate. I asked the Association to approve new tile flooring, but the Association denied my request because the neighbor underneath my unit objected right away.

Can the Association take orders from my neighbor? – A.D., Stuart

Answer: The answer to this question requires a thorough review of the Association’s Declaration of Condominium and Rules. First, the Declaration of Condominium generally includes provisions on unit alterations and will generally discuss flooring requirements. I have seen some documents that require carpet in certain rooms with no alternate flooring materials. I have also seen documents that authorize hard surface flooring to cover only a certain percentage of the total floor area. I have also seen documents that allow the Board to approve alternate flooring materials provided the Owner complies with sound barrier requirements.

Assuming the Declaration allows you to install alternative flooring, the next question is whether the Board has adopted a standard sound absorbing underlayment. Florida Statutes section 718.112(2)(c) provides that any rule concerning the use of a unit must be adopted by the Board after providing at least 14 days mailed and posted notice.

At the end of the day, an underlayment requirement is a rule which involves the use of a unit. Most condominiums do not realize that this is a rule and that it requires special notice requirements. If the Board never properly adopted a specific underlayment, there would be very little objective measure to determine whether your proposed underlayment is adequate.

More broadly, I also do not believe that the Board can make a decision solely based on the subjective desires or objections of a neighbor. If the condominium documents provide that you have the right to make alterations, and assuming you comply with duly adopted underlayment requirements, any decision based on a neighbor’s objection would be arbitrary and therefore unenforceable.

I would highly recommend that you have the documents reviewed by a licensed Florida attorney and the attorney would then likely request to inspect the condominium documents, rules, meeting minutes and meeting notices to determine whether any flooring rule was appropriately adopted, and if so, whether you comply with the requirements.

Question: Our condominium association Board has three directors. We have an election every year because a number of people always want to serve on the Board, but it is very difficult for us to conduct business because two of us can never meet due to meeting rules. What can we do? – P.T., Fort Pierce

Answer: This is a common question. A Board meeting is any time a quorum of the Board is together conducting business. So yes, for a Board of three, all of your conversations would need to occur at duly noticed meetings with proper notice because any conversation would mean a quorum of the Board is conducting business.

One option is to increase the size of the Board. Some documents allow the Board alone to increase the size of the Board and it appears you have enough participation to justify an increase in the size of the Board. I would recommend you have the Bylaws reviewed by a Florida attorney to determine the mechanism, if appropriate, to increase the size of the Board to five or more.

Next, the statute prohibits voting by email, but it does not preclude conversing by email. Thus, the Board could pass information around via email without the communication violating the meeting requirements. There is a bigger discussion here with respect to email usage, but this is an option.

My recommendation is to pursue an increase in the number of Directors based on the fact that you can likely fill all five seats with volunteers and it allows for two Board members to discuss Association business without violating the meeting requirements.

Steven J. Adamczyk Esq., is a shareholder of the law firm Goede, Adamczyk, DeBoest & Cross, PLLC. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.

Editor’s note: Attorneys at Goede, Adamczyk, DeBoest & Cross, PLLC, respond to questions about Florida community association law. The firm represents community associations throughout Florida and focuses on condominium and homeowner association law, real estate law, litigation, estate planning and business law.

© 2019 Journal Media Group, Steve Adamczyk

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‘Modern’ and ‘contemporary’ aren’t the same thing?

NEW YORK – Jan. 28, 2019 – Buyers may say they want a “modern” or a “contemporary” home, but those two words aren’t interchangeable. So, what do they really mean?

Modern and contemporary styles share many of the same traits, but they’re two distinct styles – and they often get confused, according to an article by Marvin Windows and Doors that sets out to clarify the two styles.

Contemporary tends to refer to architecture of today and, as such, it’s constantly evolving. It could contain a mix of aesthetics, including traditional and even modern architecture. Contemporary homes are often characterized by asymmetrical shapes, mixed materials, open spaces, energy efficiency, curves or sweeping lines, abundant natural light and a combination of indoor-outdoor spaces that blurs the line where the indoor space ends and the outdoor space begins.

Modern, on the other hand, tends to center on straight lines and limited details. That’s the big difference from contemporary styles, which use curves and sweeping lines. Modern uses sharper, very sparse lines.

“Modern design is a more honest look at what a building is – load-bearing columns, beams that transfer the weight, and not putting things in for decoration,” says Rebecca Comeaux, an associate at Lake/Flato Architects in San Antonio. “It’s still beautiful, but there’s kind of a level of honesty and simplicity in the design.”

Modern design is marked by rectangular exteriors with flat roofs; clean, straight lines with limited detail; open floor plans; changes in elevation, like split-level spaces; monochromatic color palettes; and spaces that have minimal decoration.

Source: “Modern vs. Contemporary: Do You Know the Difference?” BUILDER (2019)

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Doing your taxes will look different

NEW YORK – Jan. 29, 2019 – Sitting down to do your taxes in the next few weeks – or talking with your tax preparer – will involve tackling the most sweeping changes in the federal income tax rules in more than 30 years.

You’ll need to keep in mind that more than 600 rule changes took place under the Tax Cuts and Jobs Act, which was passed by Congress in late 2017.

All those changes even drove some industry experts to raise concern early on about possible delays to the typical, late January start of the tax season – and that was long before the federal government shutdown hit on Dec. 22. President Donald Trump announced a deal on Friday to temporarily end that shutdown.

Even with that disruption, the Internal Revenue Service promises to kick off tax season as of Jan. 28, the earliest date you can file your returns.

Tax filers need to realize that it won’t be business as usual when it comes to filing their 2018 tax returns. Far from it.

“It’ll be a little bit of a surprise and a learning process as they file their first tax return under the new tax rules,” said Joseph Rosenberg, senior research associate at the nonpartisan Tax Policy Center in Washington, D.C.

Here are key questions to consider as you try to get the biggest possible refund – and hold down your bill – on the 2018 federal income tax returns:

Will the same 1040 work for everyone?

All individual taxpayers will use the same 1040 simple form. It replaces the old 1040, the 1040A and the 1040EZ, according to Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting in Riverwoods, Illinois.

But it doesn’t end there.

You may need to file supplemental schedules with your 1040 in certain cases, such as if you itemize deductions or qualify for a variety of tax credits other than the basic child tax credit.

Will I or won’t I need to itemize?

Logical question, given that many of us have heard about a much higher standard deduction under the new tax rules. But there’s no simple answer.

“You still want to run your numbers both ways,” said Jackie Perlman, tax research analyst at H&R Block’s Tax Institute, meaning you should try itemizing and comparing the outcome with just taking the standard deduction.

Roughly 10 percent of tax filers will itemize deductions, such as the interest paid on their mortgages or what they paid in property taxes, on their 2018 federal income tax returns, according to estimates by the Tax Policy Center. That’s down from about 30 percent in previous years.

Families who own a home, in particular, will want to review whether they’d still itemize to lower their tax bill. You’d need deductions to exceed the new higher, standard deduction, which is nearly double from a year ago. And you’ll face new limits relating to the deduction you can take on property and income taxes.

Married couples filing jointly are looking at a standard deduction of $24,000 on their 2018 federal income tax returns – that’s up $11,300 from the old amount of $12,700 on the 2017 tax returns.

Single filers are looking at a standard deduction of $12,000 – up by $5,650 from the old amount of $6,350 on 2017 returns.

But there also is an additional standard deduction for those who are 65 or older, or blind.

A married couple filing jointly, for example, might have a standard deduction as high as $26,600 if both meet the age requirements or both are legally blind.

If married filing jointly, and you or your spouse are 65 or older, you may increase your standard deduction by $1,300. If both of you are 65 or older, the additional standard deduction goes up to $2,600.

If you file under single or head of household and are 65 or older, you may increase your standard deduction by $1,600.

If legally blind, the standard deduction would go up by $1,600 if single or filing head of household.

The extra deduction goes to $2,600 if both you and your spouse are legally blind.

If you are married filing jointly and you or your spouse is blind, you may increase your standard deduction by $1,300.

For someone who is 65 or older and blind, both additional deductions would apply and the standard deduction would be $15,200.

Important point: If you are married filing separately and your spouse itemizes deductions, you may not claim the standard deduction. If one spouse itemizes deductions, the other spouse must itemize.

Will I get any tax break for having children?

Most parents across the country with young children or teens will be able to tap into the child tax credit on their 2018 federal income tax returns – even if they couldn’t use that credit in the past.

“The child tax credit got super-sized,” said Mark Steber, chief tax officer for Jackson Hewitt in Sarasota, Florida.

To claim the credit, the child must be 16 years old or younger, as of Dec. 31, and claimed as a dependent on your tax return. The child also must have a valid Social Security number.

The maximum credit has gone up to $2,000 from $1,000.

Another plus: Now, up to $1,400 per child is available as a refundable credit. Families can claim the credit if they earn income of $2,500 or more in income. As a result, some families can get refunds even if their taxes are $0.

Couldn’t take the credit last year? OK, but new rules apply and more people will be able to take the credit now.

The income threshold jumps all the way to $400,000 for married filing jointly and $200,000 for others before any phase out.

Under the old tax law, the adjusted income limits were far lower: $75,000 for singles; $110,000 if married filing jointly.

The super-sized credit, though, will be needed to offset the loss of personal exemptions for families with children.

“We lost the $4,050 dependent exemption,” Steber said.

In the past, taxpayers could take an exemption deduction for yourself, your spouse and each dependent you can claim. Each personal exemption reduced gross income by $4,050 on 2017 returns. The exemption phased out for higher earners.

A new credit, often called the Credit for Other Dependents, offers $500 for each qualifying child or other dependent relatives, such as older relatives in your household, if they do not qualify for the child tax credit.

For this credit for other dependents, the dependent does not need a valid Social Security number for this credit. An Individual Taxpayer Identification Number or Adoption Taxpayer Identification Number would work.

I’m confused about my property taxes. Am I losing that deduction?

No, but some will face new limits.

If you live in a high-tax state or possibly own both a home and a cottage at the lake, you’re going to want to pay extra attention to one major change on 2018 returns.

We’re looking at a new limit on how much you can deduct when it comes to what you paid in 2018 for state and local taxes.

For 2018 through 2025, the deduction is limited to $10,000 (or $5,000 if married filing separately) for individuals who paid state and local real estate taxes, personal property taxes and income taxes.

“If they haven’t been keeping up with the news, they might be in for a surprise,” Perlman said.

Middle-income and higher-income families who live in states such as California, New York, New Jersey and Illinois may be particularly vulnerable. Generally, states with both high average incomes and higher-than-average state tax burdens would be affected.

But remember, if you paid $12,000 in state and local taxes, you’re still looking at a $10,000 deduction – if you itemize. So you don’t want to entirely write off the possibility of itemizing deductions.

Does the dreaded Alternative Minimum Tax go away?

The AMT isn’t dead, but it’s not the monster threat that it was for so many well-off taxpayers. Many will no longer be subject to the AMT in 2018 and in future years.

The AMT was created in 1969 to ensure that high-income taxpayers paid a minimum amount of tax and didn’t benefit too heavily from deductions.

But over time, more households were caught in the tax mess. Essentially, your tax return is prepared under the regular tax rules. And then the alternative tax disallows many but not all common itemized deductions and other regular tax benefits.

The AMT tax is levied at two rates: 26 percent and 28 percent.

The Tax Cuts and Jobs Act raises the income cap so that fewer people will be affected.

The AMT taxable income exempted from AMT goes up to $109,400 for married filing jointly from $84,500. For single taxpayers, the income exempted goes up to $70,300 from $54,300.

An even more important change was that the new tax act significantly raised the income level at which the AMT exemption begins to phase out. Now the exemption from the AMT begins to phase out at $1 million of AMT taxable income for joint filers, compared with $160,900 on 2017 returns. The phase out is $500,000 now for single filers.

Now, the AMT will affect about 0.4 percent of households with incomes between $200,000 and $500,000 on 2018 returns – down from 27.2 percent on 2017 returns, according to the Urban-Brookings Tax Policy Center’s estimates.

Copyright 2019, USATODAY.com, USA TODAY, Janna Herron and Susan Tompor

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HUD sending Fla. $78.7M for homelessness programs

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WASHINGTON – Jan. 29, 2019 – The U.S. Department of Housing and Urban Development (HUD) awarded approximately $2 billion to renew support to thousands of local homeless assistance programs across the nation.

In Florida, 249 individual agencies serving the homeless will receive an average of $336,000 each as part of the $78,683,000 coming to the state. HUD’s Continuum of Care grants provide support to 5,800 local programs nationwide. The current round is renewal funding for previously funded local programs. HUD says it will announce new project awards at a later date.

“At this time of year, thousands of local homeless assistance providers receive federal funding to operate and maintain stable housing for those living in our shelter system and on our streets,” says HUD Secretary Ben Carson. “Renewing these grants will come as a huge relief to these providers, and it will allow them to continue their work to house and serve our most vulnerable neighbors.”

HUD Continuum of Care grant funding supports a broad array of interventions designed to assist individuals and families experiencing homelessness, particularly those living in places not meant for habitation, in sheltering programs or at imminent risk of becoming homeless.

Homelessness in the U.S.

Last December, local communities reported homelessness in the U.S. remained largely unchanged in 2018. Based on these local reports, HUD’s 2018 Annual Homeless Assessment Report to Congress found that 552,830 persons experienced homelessness on a single night in 2018, an increase of 0.3 percent since 2017.

The number of families with children experiencing homelessness declined 2.7 percent since 2017 and 29 percent since 2010. Local communities also reported a continuing trend in reducing veteran homelessness across the country – the number of veterans experiencing homelessness fell 5.4 percent since January 2017 and by 49 percent since 2010.

Florida metro homelessness grants

  • Tampa/Hillsborough County: $5,554,399 going to 10 agencies
  • St. Petersburg, Clearwater, Largo/Pinellas County: $4,002,824 going to 16 agencies
  • Lakeland, Winter Haven/Polk County: $1,599,336 going to 12 agencies
  • Deltona, Daytona Beach/Volusia, Flagler counties: $1,248,709 going to 12 agencies
  • Fort Walton Beach/Okaloosa, Walton counties : $621,070 going to 2 agencies
  • Tallahassee/Leon County: $1,338,151 going to 4 agencies
  • Orlando/Orange, Osceola, Seminole counties: $7,813,215 going to 14 agencies
  • Gainesville/Alachua, Putnam counties: $670,363 going to 7 agencies
  • Fort Pierce/St. Lucie, Indian River, Martin counties: $1,661,189 going to 16 agencies
  • Jacksonville-Duval, Clay counties: $5,012,167 going to 14 agencies
  • Pensacola/Escambia, Santa Rosa counties: $664,822 going to 4 agencies
  • St. Johns County: $121,214 going to 3 agencies
  • Palm Bay, Melbourne/Brevard County: $668,886 going to 5 agencies
  • Ocala/Marion County: $244,761 going to 5 agencies
  • Panama City/Bay, Jackson counties: $30,765 going to 1 agency
  • Hendry, Hardee, Highlands counties: $160,123 going to 2 agencies
  • Columbia, Hamilton, Lafayette, Suwannee counties: $321,607 going to 4 agencies
  • Pasco County: $850,289 going to 7 counties
  • Citrus, Hernando, Lake, Sumter counties: $323,344 going to 4 agencies
  • Miami-Dade County: $28,725,282 going to 58 agencies
  • Fort Lauderdale/Broward County: $9,916,663 going to 20 agencies
  • Punta Gorda/Charlotte County: $200,568 going to 3 agencies
  • Monroe County: $477,526 going to 6 agencies
  • West Palm Beach/Palm Beach County: $5,630,604 going to 14 agencies
  • Naples/Collier County: $119,616 gong to 2 agencies

HUD has a complete list of Florida metro areas and the names of the individual funded service providers (PDF format) posted on its website.

© 2019 Florida Realtors®

 


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Fla.’s housing market: Median prices, inventory up in Dec.

ORLANDO, Fla. – Jan. 22, 2019 – Florida’s housing market reported higher median prices and increased inventory (active listings) in December compared to a year ago, according to the latest housing data released by Florida Realtors®. However, buyer uncertainty from rising mortgage rates and the federal government’s shutdown may have impacted home sales, which were lower than the level of sales a year ago. Sales of single-family homes statewide totaled 20,633 last month, down 9.9 percent compared to December 2017.

“Florida’s housing sector is continuing to show signs that inventory levels are finally easing in many local markets after being constrained for a long time,” says 2019 Florida Realtors President Eric Sain, =””> statewide median price for condo-townhouse units was $185,000, up 2.8 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in November 2018 was $260,500, up 5 percent from the previous year; the national median existing condo price was $554,760; in Massachusetts, it was $395,000; in Colorado, it was $375,000; and in New York, it was $275,000.

Looking at Florida’s condo-townhouse market in December, statewide closed sales totaled 8,156, down 11.4 percent compared to a year ago. Closed sales data continued to show fewer short sales and foreclosures in November: Short sales for condo-townhouse properties declined 39.7 percent and foreclosures fell 33.7 percent year-to-year; while short sales for single-family homes dropped 49.8 percent and foreclosures fell 26.8 percent year-to-year. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

“Notably, this year-over-year decline in sales for December was felt across the nation, not just in Florida, which is evidence that interest rates played at least some role in dampening the number of closings,” says Florida Realtors Chief Economist Dr. Brad O’Connor. “Thirty-year fixed mortgage rates began to ramp up in September and had reached a multi-year high of close to 5 percent by mid-October, which is typically when financed sales closing in December go under contract.”

Interest rates likely will continue to play a role in determining the direction of Florida’s housing markets going forward, O’Conner adds. “Homebuyers considering sitting on the fence until prices come down might want to take note that we’re also likely to see significantly higher mortgage rates by that point. While there has been a slight softening in the pace of home price growth since mid-2018, there are currently no signs that Florida home values will experience any wholesale declines over the next year.”

Potential homebuyers should also note that Florida’s active listings – or inventory levels of for-sale homes – have been trending up across the state, according to O’Connor.

“Statewide, active listings of existing single-family homes have been on the rise since July, which has helped contribute to the softening of price growth, and they continued to climb in December,” he says. “At year’s end, inventory was up over 13 percent compared to the end of 2017. Importantly, inventory levels are now rising across most of the pricing spectrum, including in some of the more affordable ranges.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.64 percent in December 2018, up from the 3.95 percent averaged during the same month a year earlier.

To see the full statewide housing activity reports, go to Florida Realtors Research & Statistics section on floridarealtors.org. Realtors also have access to local market stats (password protected) on Florida Realtors’ website.

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Listing descriptions should have these 5 elements

NEW YORK – Jan. 22, 2019 – You don’t have to be an English Lit major to write dynamic listing descriptions.

Real estate agents can follow a simple formula to create inspiring listing descriptions that help sell properties quickly.

Perhaps most important is a creative, attention-grabbing headline that is short and sweet and uses powerful, descriptive words that evoke a response. A great headline may not sell a home, but it entices a home shopper to keep reading.

Since a headline is important, agents shouldn’t settle on the first headline that pops into their head. Start there but it can probably be improved with subsequent rewrites.

Next is the opening statement. This should get right to the point so readers immediately know what the ad is about; it should also give them a reason to continue reading.

This should be followed by a narrative description of the home’s features, starting with its primary features first followed by an inspiring and compelling description.

Agents should then include a special promotion that gives readers an incentive to take action. That promotion could be a small discount, an offer to pay part or 100 percent of the buyer’s closing costs, an option for seller financing or a rent-to-own offer.

Finally, the listing should include a call to action that tells buyers how to act, namely to call the agent immediately. The most effective listing descriptions avoid hype or overselling, and agents should never lie in their real estate ads.

Source: RISMedia (12/30/18) Davidson, Tom

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Reverse mortgages don’t always help older adults

JACKSONVILLE, Fla. – Jan. 22, 2019 – Mamie Rose wanted her last years to be simple. She was already in her 80s. She bought her Northside home 40 years earlier. Her husband had died. Her children were grown, leading lives of their own.

She didn’t want to worry about mortgage payments, repairs or insurance. Her daughter told her about a “reverse mortgage.”

It sounded ideal – a lender gives her money and pays off the mortgage. She just needed to pay insurance and taxes, and she couldn’t move. In exchange, when she died, the lender would take her home, unless her children decided it was worth it to pay back the mortgage.

Five years later, Mamie Rose is still alive at 90, and her sons are fighting to keep the lender from kicking her out of her home. Rose, like other elders before her, signed up for a reverse mortgage without knowing all the requirements. Now, she might lose her home.

Reverse mortgages allow people who are 62 and older to basically sell their homes to lenders, but remain living in and owning the home until they die. It’s an attractive deal, and for plenty of people it gives them increased financial security near the end of their lives.

The mortgages become problematic when the older people miss insurance or tax payments and the lenders foreclose, leaving them homeless and in debt. If lenders find that the grass isn’t mowed or no one answers the door, attorneys say, then the companies might foreclose, arguing the homeowner doesn’t live there anymore.

Plenty of people who sign up for reverse mortgages end up in court fighting to hold on to the house.

In October, 101 reverse mortgage foreclosures were active in Duval County, said Maren Hayes, who manages cases in the foreclosure division at the Duval County Courthouse. Reverse mortgage foreclosures were handled just like normal foreclosures until recently, so the courts don’t know how many cases existed before.

The attraction of reverse mortgages is easy to understand. They provide the elderly with money to supplement pensions or Social Security checks.

They also are advertised heavily. Former GOP Sen. Fred Thompson of Tennessee, a longtime actor before he turned to politics, pitches the reverse mortgages heavily in television ads.

Vague recollection

Mamie Rose said her original discussion with the lender’s representative is vague.

“I really don’t remember it right now,” she said about the day the woman from Live Well Financial came to her house.

Live Well senior vice president Lyn Niles didn’t answer voicemails left seeking comment.

Mamie Rose’s son, David Rose, recalled the visit. His mother had been sick, and she told the lender that she was sick. The woman said it was the best time for her to come over and explain the reverse mortgage, Rose’s son said. For two days, he said, the woman met with his mother, counseling her on the reverse mortgage.

“The lady said she’s free of rent and everything,” he said. “She [Mamie] just stays in her house.”

Mamie Rose didn’t know she needed to pay homeowners insurance every month. She said recently she doesn’t remember anyone ever telling her about it.

In 2012, after five years passed, another son, Ben Rose, noticed that the lender sent her a letter that told her she failed to keep insurance on the house. The lender charged her more than $6,000 for insurance that the company placed on her house.

The only money she had came from her Social Security benefits of $1,200 a month. The lender foreclosed on the house and sold it in April.

Hope for reversal

Ben and David Rose hired attorney Candyce King, and she persuaded the court to undo the sale and reconsider the case. The foreclosure case is in court now, and King hopes she can work out a repayment plan for Mamie Rose.

When the real-estate market crashed, King said, lenders suffered, and they tried to recoup the costs by seizing homes.

“Where a normal person would say, let’s try to work this out before we go ahead with foreclosure,” King said, “there’s a little more of a rush to proceed with foreclosure.”

The insurance that the lender charged, King said, was too high.

“They did not choose a fair price,” she said. “They could’ve sought a better insurance premium. They should’ve notified her.”

Foreclosures should not happen when the person who took out the reverse mortgage is alive, according to Michael Gelfand, the Florida Bar lawyer elected to lead the Bar’s special section on real estate law. But he said some cases confuse even lawyers and courts.

“The moment you get a foreclosure notice, you should call a lawyer,” Gelfand said.

Mixed reviews

Debate still exists on whether reverse mortgages should be permitted, but Gelfand said they’re not good or bad on their own. Yes, elders can lose their house when they die, but the mortgages can also give them greater financial independence, he said. It also can let the older people die in the homes where they’re most comfortable, instead of having to find a new apartment or assisted-living facility.

AARP supports reverse mortgages, said Lori Trawinski, the organization’s banking and finance director. The mortgages are supposed to allow the elderly to borrow against their home’s value without having to sell the house or pay back the loan.

The federal government insures the lenders, Trawinski said, so they don’t lose money if the house loses value or if the borrower lives longer than the lender expected. She also said the lenders have to wait 24 months before they can foreclose, which should give people enough time to fix whatever problems they face.

The biggest problem that she sees comes from people who use reverse mortgages to receive a one-time lump sum payment instead of choosing a monthly flow of money that will last them longer.

‘Don’t make it a band-aid’

Reverse mortgages can be extremely helpful, said Ramsey Alwin, vice president of economic security at the National Council on Aging. But the loans are best used as one tool in a toolbox, and not the only thing keeping someone financially afloat.

“It’s best to make a reverse mortgage part of your long-term planning,” she said. “Don’t make it a Band-Aid for all your problems.”

Lenders are required to counsel people before giving them a reverse mortgage, but Alwin said some loan companies try to skirt that requirement.

The U.S. Department of Housing and Urban Development created new rules last year, saying spouses couldn’t be evicted from a home after their husband or wife died. But spokesman Brian Sullivan conceded that wouldn’t impact the people who got the reverse mortgages before 2013.

Anyone who gets a reverse mortgage is supposed to be counseled on how it works, so they should understand the challenges and what needs to be done, Sullivan said.

People who take out reverse mortgages need to be careful and make sure they understand what they’re doing, said Jacksonville Senior Circuit Court Judge A.C. Soud. Soud said Jacksonville-area judges noticed an increase in reverse mortgage foreclosures in the last year or so and became alarmed.

Octogenarians in peril

They saw several octogenarians in danger of losing their homes because they didn’t pay property taxes, Soud said. Someone might owe $3,000 and still have $50,000 in credit from the mortgage. Many don’t realize they could use that credit to pay the property taxes, Soud said.

Rather than having half a dozen judges deal with the complicated issue, the judges decided to appoint one judge, Circuit Judge Michael Weatherby, to handle all cases. That way, Soud said, Weatherby could see the patterns and figure out how to help people in this situation.

Soud said Weatherby would not comment.

When lenders foreclose on a reverse mortgage, the court appoints an attorney to look into the situation and see what can be done to help.

“When you get to be 80 or 85 years old, just saying you have to learn how to manage your money doesn’t cut it,” Soud said. “The state Legislature should get involved and create a provision that says a customer service representative must call and tell someone that their taxes are past due. Customer service representative should also ask for permission to speak to a relative if someone is having problems, he said.

Weatherby likely will write to the Legislature spelling out the problems and making recommendations, Soud said.

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More S. Fla. owners using PACE for energy upgrades

MIAMI – Jan. 22, 2019 – Needing no money down, more people in South Florida are using a unique program to finance home improvements despite complaints when the bills come due.

Qualifying energy efficiency and storm-hardening projects include new roofs, air conditioning systems, water heaters, rooftop solar energy systems, hurricane-resistant impact windows and doors, and storm-hardened garage doors.

And credit scores don’t matter. Homeowners with sufficient income and equity in their houses will typically qualify.

The program is called PACE, for Property Assessed Clean Energy financing.

Despite the ease of entry, many homeowners say they were caught by surprise when it came time to start paying for the improvements.

Interviews with customers and a review of social media posts reveal that many didn’t fully understand their repayment obligations when they signed up. Some say their contractor deliberately misled them or omitted important information.

Will new federal rules slow PACE of energy-efficiency storm-hardening home upgrade program?

Consumers who don’t understand the program’s unusual repayment terms face increased risk of taking on more debt than they can handle, proponents acknowledge. And that risk grows as the program expands in South Florida.

Last year was the fourth year that the special financing program has been available to South Florida homeowners, and more consumers opted in.

Ygrene Florida, the largest provider in the state, completed 8,412 projects in Broward, Palm Beach and Miami-Dade counties in 2018 – 171 more than in 2017, according to data provided by the company. Although three other providers declined to release their project totals, a South Florida Sun Sentinel tally of notices and agreements filed in the three counties’ official records found all increased activities in the tri-county region.

The number of customers identified in records filed by RenewPACE increased from 629 in 2017 to 1,014 in 2018. Florida PACE filed records involving 401 homeowners in 2017 and 1,385 in 2018, while Renovate America entered the South Florida market in 2018 by recording agreements with 203 homeowners in Broward County, 63 in Palm Beach County, and 45 in Miami-Dade County.

Too good to be true

Mindy Ventimiglia, a Boynton Beach homeowner, said the program seemed too good to be true when she first learned about it. “And it was,” she said.

Ventimiglia said she was told she wouldn’t have to start making payments of $110 to $120 a month for her new air conditioning system for 17 months after the system was installed last spring. Instead, her property tax bill arrived in November with the first of 15 annual assessments of $1,824 – or about $150 a month – added to her normal tax bill.

“I feel foolish,” she said in an interview. “I’m an educated person. I check things out. I feel I asked the right questions, but the answers were not forthcoming.”

Program providers disagree that consumers aren’t fully informed about how they’ll be required to repay the money they are borrowing. Reforms instituted in recent years require representatives to repeatedly review terms of repayment, and require borrowers to affirm their understanding of those terms, said Mike Lemyre, senior vice president of Ygrene Energy Fund.

Despite the protections, wires still get crossed, program officials acknowledge.

Jennifer Jurado, chief resilience officer and director of the Environmental Planning and Community Resilience Division in Broward County, said county officials field several hundred phone calls a month from homeowners with questions about the program. They’ve also caught contractors claiming to be involved in the program when they weren’t, and contractors who were affiliated with it deliberately misleading consumers.

In the program’s first couple years in South Florida, consumers told of contractors claiming the financing was “free government money” or that PACE was a county government-run program, Jurado said.

Neither is true. Counties and cities authorized the program for their residents by agreeing to allow providers to set up repayment through assessments on their property tax bills, but they don’t run the programs, Jurado said. But because they authorized the tax bill assessments, cities and counties oversee the programs and can require more stringent disclosure terms.

Jurado and her staff plan to ask Broward’s County Commission to require that providers give borrowers a one-page fact sheet with payback obligations spelled out in large-size type, she said.

“One of the greatest concerns we have is whether individuals understand the full cost of the program,” she said.

Lemyre said it’s sometimes not clear to borrowers that assessments for projects completed prior to June 30 will show up just a few months later on their next property tax bill. If the project is completed after June 30, the assessment won’t show up until the following year’s tax bill.

Ventimiglia’s unhappy surprise at finding an earlier-than-expected assessment is not unusual, Jurado said. If the assessment shows up during the same year the project is completed, mortgage lenders may levy that charge in addition to having the borrower prepay the following year’s assessment through month to month escrow payments. When that happens, the homeowner is charged double during a year that no payment was expected.

Borrowers who don’t begin repaying the financing for more than a year and then seek to pay off the debt to remove the lien or sell their house can be surprised to find they owe several thousands of dollars in fees and interest.

Lemyre said that even though Ygrene no longer imposes a prepayment penalty, the interest that begins accruing as soon as a project is finished gets rolled into the principal debt. That’s called “capitalized interest” and it’s common for nearly all types of loans, including car loans and home loans, he said.

Is it worth it?

Overall though, the benefits of PACE’s unique financing programs to homeowners and their communities outweigh the problems, Jurado said.

“If you look around, you can really see the advancement of solar energy,” she said. “I’ve spoken with many solar providers who said there isn’t a solar project (in the county) not financed through PACE.”

In addition, she said, most of the money borrowed through the program is used for new roofs and hurricane-resistant windows and doors – improving residents’ ability to withstand storms and in many cases reducing their homeowner insurance costs.

Complaints about coercive marketing to elderly homeowners by contractors – which led to a crackdown in California on lending rules and sparked calls by consumer protection groups for federal oversight – haven’t surfaced in Florida.

“We are following PACE closely,” said Alice Vickers, director of the Florida Alliance for Consumer Protection. “We have not received complaints directly from consumers.”

Jurado and Lemyre said they are unaware of any foreclosure in Florida resulting from a homeowner’s inability to repay PACE financing.

Despite Ventimiglia’s ill feelings about her repayment schedule, she acknowledged she couldn’t have financed her new air conditioning system without the program.

Natacha Beasley, who used the program to finance a new roof, impact windows and hurricane-resistant door for her 42-year-old Hollywood home, said she felt misled because her contractor failed to tell her the program would result in a lien against the house. Now she and her husband must repay the debt before they can sell the house because few lenders will approve loans on homes with PACE liens.

Yet the improvements will make the house more attractive to a buyer, she said, and that made the program worth it.

Asked if she’d make the same choice again, she said, “I probably would.”

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Study: Mortgage discrimination hurts gay male couples

NEW YORK – Jan. 22, 2019 – Gay male couples – especially black gay couples – are at heightened risk of discrimination by mortgage lenders nationwide when they are seeking to purchase a home, according to an analysis published in the University of Chicago Law Review based on empirical data disclosed under federal housing law.

Overall nationwide, male same-sex couples have 2.5 to 7.5 percent less chance of getting a loan approved when compared to white straight couples with the same income who are seeking a home in the same county for the same amount of money and who pose the same risk to lenders.

The situation is worse for couples of color and interracial couples. Black male same-sex couples have a 7.5 percent less chance of being approved for a mortgage loan – the worst of any racial combination – while interracial couples with a black male being the main applicant are next in line with 6.8 percent less of a chance of being approved. Interracial couples with a white man being the main applicant are 4.3 percent less likely to be approved.

White male couples are the least affected: they are 2.5 percent less likely than straight couples to get approved.

Interracial couples suffer from more discrimination in the northeastern United States than elsewhere in the country. Those couples are 12.2 percent less likely to be accepted for a loan.

Lesbian couples face discrimination at much lower rates, but the same racial patterns existed when compared to gay men.

Interestingly, there are no differences between acceptance rates among lesbian and gay couples in rural versus urban areas, and there are no differences when it comes to swing states, Democratic states, or Republican states.

The authors even reviewed data to search for signs of the “contact hypothesis,” which is the theory that people are more tolerant of minority groups when they are in contact with them. Although people in urban areas are more likely to have established contact with gay people, the authors did not find better outcomes for male couples there.

The discrimination is not limited to the United States, either. The report mentioned a 2009 study from Sweden that revealed that straight couples had a 14 percent higher chance of being called back by a mortgage lender than gay couples. Another study based in Vancouver, Canada yielded similar results.

Where things are better

However, gay couples fare much better in states and localities with laws banning discrimination on the basis of sexual orientation, according to the report. In recent years, several federal appeals courts have ruled that Title VII of the Civil Rights Act of 1964 protects people from discrimination on the basis of sexual orientation, though the issue has not yet been decided by the Supreme Court.

The study did not square the findings on the relationship to nondiscrimination laws with the data on interracial couples in the northeast, which more than most areas of the country enjoy nondiscrimination protections.

Most of the data used in the report came from the Home Mortgage Disclosure Act, which gave the authors the opportunity to review the rate of home loan acceptance for every Fair Housing Administration (FHA) loan between 2010 and 2015. Lenders insured by the FHA are banned from considering perceived or actual sexual orientation, gender identity, or marital status of applicants, but the study indicates lenders still found ways around the rule because it can be difficult to prove discrimination and sometimes, for a variety of reasons, worthy cases are not pursued by the victims.

University of Alabama Professors Griffin Edwards and John Shahar Dillbary, the two authors of the report, did not respond to requests for comment on the information.

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NAR: U.S. home sales down 6.4% in Dec.

WASHINGTON – Jan. 22, 2019 – After two consecutive months of increases, existing-home sales declined in the month of December, according to the National Association of Realtors® (NAR). None of the four major U.S. regions saw a gain in sales activity last month.

Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 6.4 percent from November to a seasonally adjusted rate of 4.99 million in December. Sales are now down 10.3 percent from a year ago (5.56 million in December 2017).

Lawrence Yun, NAR’s chief economist, says current housing numbers are partly a result of higher interest rates.

“The housing market is obviously very sensitive to mortgage rates,” Yun says. “Softer sales in December reflected consumer search processes and contract signing activity in previous months when mortgage rates were higher than today. Now, with mortgage rates lower, some revival in home sales is expected going into spring.”

The median existing-home price for all housing types in December was $253,600, up 2.9 percent from December 2017 ($246,500). December’s price increase marks the 82nd straight month of year-over-year gains.

Total housing inventory at the end of December decreased to 1.55 million, down from 1.74 million existing homes available for sale in November, but that’s a year-to-year inventor increase from 1.46 million.

Unsold inventory is at a 3.7-month supply at the current sales pace, down from 3.9 last month and up from 3.2 months a year ago.

Homes also stayed on the market a bit longer before securing a contract. They typically stayed on the market for 46 days in December, up from 42 days in November and 40 days a year ago. However, 39 percent of homes sold in December were on the market for less than a month.

“Several consecutive months of rising inventory is a positive development for consumers and could lead to slower home price appreciation,” says Yun. “But there is still a lack of adequate inventory on the lower-priced points and too many in upper-priced points.”

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 4.64 percent in December from 4.87 percent in November. The average commitment rate for all of 2017 was 3.99 percent.

“The partial shutdown of the federal government has not had a significant effect on December closings, but the uncertainty of a shutdown has the potential to harm the market,” says NAR President John Smaby. “Once the government is fully reopened, I am hopeful that housing transactions will increase.”

First-time buyers were responsible for 32 percent of sales in December, down from November (33 percent), but the same year-to-year.

All-cash sales accounted for 22 percent of transactions in December, up from November and a year ago (21 and 20 percent, respectively). Individual investors, who account for many cash sales, purchased 13 percent of homes in December, which is unchanged from November but down year-to-year (16 percent).

Distressed sales – foreclosures and short sales – represented 2 percent of sales in December, unchanged from 2 percent last month and down from 5 percent a year ago.

Single-family and condo/co-op sales
Single-family home sales were at a seasonally adjusted annual rate of 4.45 million in December, down from 4.71 million in November, and 10.1 percent below the 4.95 million sales pace one year earlier. The median existing single-family home price was $255,200 in December, up 2.9 percent from December 2017.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 540,000 units in December, down 12.9 percent from last month and down 11.5 percent from a year ago. The median existing condo price was $240,600 in December, which is up 2.3 percent from a year ago.

Regional breakdown
December existing-home sales in the Northeast decreased 6.8 percent to an annual rate of 690,000 and also 6.8 percent below a year ago. The median price in the Northeast was $283,400, which is up 8.2 percent from December 2017.

In the Midwest, existing-home sales fell 11.2 percent from last month to an annual rate of 1.19 million in December, down 10.5 percent overall from a year ago. The median price in the Midwest was $191,300, unchanged from last year.

Existing-home sales in the South dropped 5.4 percent to an annual rate of 2.09 million in December, down 8.7 percent from last year. The median price in the South was $224,300, up 2.5 percent from a year ago.

Existing-home sales in the West dipped 1.9 percent to an annual rate of 1.02 million in December, and 15 percent below a year ago. The median price in the West was $374,400, up 0.2 percent from December 2017.

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It’s here: Florida Realtors Mid-Winter Business Meetings

Meetings start today and run through Sunday. Concerned about the environment, contracts, taxes, ad regulations or insurance? Register onsite and make your voice heard. https://www.floridarealtors.org/NewsAndEvents/2019-Mid-Winter-Meetings.cfm

 

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Fla. Supreme Court to take up ‘AOB’ insurance fight

TALLAHASSEE, Fla. – Jan. 4, 2019 – Amid continuing political and legal battles about the insurance practice known as “assignment of benefits,” the Florida Supreme Court has agreed to take up a closely watched case stemming from water damage to a St. Lucie County home.

The Supreme Court’s decision Thursday to hear the case could lead to resolving a conflict in lower courts about a restriction that insurers have tried to place on assignment of benefits. In a somewhat-unusual circumstance, attorneys on both sides of the St. Lucie County case asked the Supreme Court to take up the case and resolve the conflict.

Assignment of benefits, or AOB as it is widely known, has been one of the most-controversial insurance issues in the state Capitol in recent years and is expected to spur a fight during the 2019 legislative session. In assignment of benefits, homeowners in need of repairs sign over benefits to contractors, who ultimately pursue payments from insurance companies.

Insurers argue that the process has become riddled with fraud and litigation, driving up insurance rates. On the other side, contractors and trial attorneys contend that assigning benefits helps homeowners hire contractors quickly to repair damage and forces insurers to properly pay claims.

Much of the controversy has centered on water-damage claims for homes in South Florida, though it also involves other parts of the state and issues such as claims for damage to car windshields.

The St. Lucie County case focuses on a breach-of-contract lawsuit filed by the firm Restoration 1 of Port St. Lucie against Ark Royal Insurance Co. Policyholders John and Liza Squitieri sustained water damage to their home, and Liza Squitieri contracted with Restoration 1 of Port St. Lucie to do cleanup work and assigned the benefits to the firm, according to a September ruling by the 4th District Court of Appeal.

Ark Royal, however, refused to pay the full amount requested by the restoration firm, pointing to an insurance contract that required approval from the husband, wife and the Squitieri’s mortgage company, PNC Bank, for benefits to be assigned to the contractor. Restoration 1 sued the insurer for breach of contract but lost in circuit court and the 4th District Court of Appeal.

The 4th District Court of Appeal decision, however, conflicted with an earlier ruling by the 5th District Court of Appeal in a case that also focused on whether an insurer could require approval of mortgage companies and all people insured in policies before benefits could be assigned.

Security First Insurance Co. took the case to the 5th District Court of Appeal after the Florida Office of Insurance Regulation rejected a company proposal to add such AOB restrictions to policies. A panel of the appeals court upheld the position of the Office of Insurance Regulation. The 5th District Court of Appeal also reached a similar conclusion in a later case involving ASI Preferred Insurance Corp.

As is common, the Supreme Court on Thursday did not explain its reasons for agreeing to take up the St. Lucie County case. But in briefs filed in October, attorneys for Ark Royal and Restoration 1 pointed to a need to resolve the conflicting lower-court rulings.

“The exact same restrictive assignment language appears in each of the policies issued by Ark Royal, Security First Insurance Company, and ASI Preferred Insurance Corporation,” attorneys for Restoration 1 wrote. “Therefore, the conflicting decisions impact multiple insurance companies, insureds and assignees throughout the state. Thus, this (Supreme) Court should resolve the conflict and provide unity among the districts for insureds, insurers, mortgagees and assignees.”

Source: News Service of Florida

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Housing market will be slower, steadier in 2019

NEW YORK – Jan. 4, 2018 – Forget fevered bidding wars and snap home-buying decisions. Slower and steadier will characterize next year’s housing market.

That follows a 2018 that started off hot but softened into the fall as buyers – put off by high prices and few choices – sat out rather than paid up.

Affordability issues will remain a top concern going into 2019, exacerbated by rising mortgage rates. But some of 2018’s more intractable issues will begin to loosen up. The volume of for-sale homes is expected to rise and diversify, while the number of buyers is forecast to shrink.

“For home sellers, they need to recognize those days of frenzied market are over. They must price competitively to sell their home,” said Lawrence Yun, the chief economist at the National Association of Realtors. “For buyers, there will be challenges when it comes to rising interest rates, but they don’t have to make hurried decisions anymore.”

Still, some cash-strapped first-time buyers will simply be priced out, while a cohort of potential move-up buyers will decide to stay in their existing home, make renovations and enjoy their current low mortgage rate. Price increases will moderate, and everyone in the market will need to adjust.

Finally, more homes to choose from

One of the biggest complaints among buyers in the last several years is that there weren’t enough homes for sale. In fact, the supply of houses hit historic lows in the winter of 2017 and has yet to rebound substantially. That fueled bidding wars, price increases and frustration.

The supply crunch is expected to ease some in 2019 with inventory rising 10 percent to 15 percent, according to Yun.

But the increase will be skewed toward the mid-to-high end of the market – houses priced $250,000 and higher – especially when it comes to newly built houses, said Danielle Hale, chief economist of realtor.com. That’s good news for move-up buyers, but not so much for the first-time millennial buyer. “There’s still a mismatch on the entry-level side,” she said.

Houses in all shapes and sizes

If you’re a first-time buyer, you won’t be completely out of luck if you stay open-minded. If a single-family home is out of the question, consider a mobile home or townhouse as a starter home, both of which are on the rise.

The volume of shipments for manufactured houses – also known as mobile homes – is expected to finish above 100,000 this year, up from 93,000 in 2017, according to Robert Dietz, chief economist of the National Association of Home Builders. The trend is expected to continue next year.

These homes are also significantly cheaper than other home types. Not including land costs, the cost to buy a mobile home averages $70,600, compared with $257,900 for an existing single-family home and $309,700 for a new home.

You may also consider a townhouse, an attached single-family home located in a community of homes. Construction of townhomes also is experiencing year-over-year growth and is outpacing the single-family detached home market, Dietz said.

“The market is being supported by millennials moving from renting to their first-home purchase,” he said. “If you’re in a high-cost area with wage and job growth, townhouses are appropriate for entry-level. And they still get that suburban feel with their own front door.”

Affording a home remains hard

Housing values are still expected to increase next year, but not at the gang-buster pace seen in recent years. NAR’s Yun forecasts modest price growth between 2 percent and 3 percent, down from close to 5 percent this year and over 5 percent in 2017.

At the same time, mortgage rates are expected to hit 5.5percent by the end of 2019. Both factors make it more expensive for buyers to purchase a home. Hale estimates that the expected increase in prices and interest rates translates to an 8percent rise in the average monthly mortgage payment.

Interest rate trap

Shrinking affordability will convince some buyers – especially first-timers – to sit out the market altogether next year because they can’t make the numbers work. Homeowners considering selling their home may also stay put because of rising mortgage rates – a so-called interest rate trap. Most outstanding mortgages have an interest rate of 4.5 percent or less, according to a report this year from Black Knight, a data analytics firm.

“They have a nice low mortgage rate, lower than the current rate, so there’s no reason to move,” said Mark Fleming, chief economist of First American Financial Corp.

Tax worries linger

The first few months of 2019 will reveal how the new tax changes affect homeowners. One key rule is the new cap on the mortgage interest deduction.

Before, homeowners could deduct interest they paid on up to $1 million in mortgage debt – including interest on home equity loans and lines of credit – reducing their taxable income.

Now, you can only deduct interest on up to $750,000 in mortgage debt. Interest paid on home equity loans and lines of credit is deductible only if the funds were used to pay for home improvements or renovations.

The only taxpayers who will exceed those limits are high-end homeowners and buyers and those with multiple homes with mortgages.

The bigger question mark is if and how the $10,000 limit on state and local taxes deduction – known as SALT – will affect housing markets in high-tax states such as New Jersey, New York, Connecticut and California.

Buyers may be reluctant to purchase homes in those states – or choose a smaller house – if they calculate they will pay too much in non-deductible taxes. “These states may see softer housing markets compared to the rest of the country,” said Yun, if the SALT cap hurts enough homeowners.

­­­­

The bottom line

If you’re a seller: Price realistically and be ready to cut the listing price or offer other incentives to get a deal done. “It’s still a seller’s market, but not like it was,” Hale said. “Sellers need to be mindful of competition, especially for more expensive properties.”

If you’re a buyer: Don’t worry about going slow when making decisions. “There is less buyer competition and more inventory,” Yun said. “Buyers can take time to find the home that fits into their budget.”

Copyright 2019, USATODAY.com, USA TODAY, Janna Herron

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Mortgage rates drop – end year at 4.51%

WASHINGTON (AP) – Jan. 4, 2019 – U.S. long-term mortgage rates fell this week, starting the year with an inducement to prospective homebuyers.

Mortgage buyer Freddie Mac said Thursday the average rate on the benchmark 30-year, fixed-rate mortgage declined to 4.51 percent from 4.55 percent last week. Despite recent declines, home borrowing rates remain far above last year’s levels. The key 30-year rate averaged 3.95 percent a year ago.

The average rate for 15-year fixed-rate loans edged down to 3.99 percent this week from to 4.01 percent last week.

Mortgage rates began to spike after President Donald Trump signed broad tax cuts, financed by government deficits, into law in December 2017. But rates have eased in recent weeks amid steep declines in the stock market and tumbling interest rates on the 10-year U.S. Treasury note – which influences long-term mortgage rates.

The decline in mortgage rates could help boost home sales, which have stumbled last year as higher borrowing costs have eroded affordability.

Low mortgage rates and slowing growth in home prices “should get prospective homebuyers excited to buy,” Freddie Mac chief economist Sam Khater said. “However, it will be interesting to see how the recent turmoil in the stock market will affect home buying activity in the coming months.”

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates.

The average fee on 30-year fixed-rate mortgages was unchanged this week at 0.5 point. The fee on 15-year mortgages held steady at 0.4 point.

The average rate for five-year adjustable-rate mortgages declined to 3.98 percent from 4 percent last week. The fee fell to 0.2 point from 0.3 point.

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Florida Realtors in 2019: New CEO, new general counsel

ORLANDO, Fla., Jan. 4, 2018 – Florida Realtors® new Chief Executive Officer Margy Grant will help guide the state’s largest professional trade association to success.

“As our former chief operations officer and general counsel, Margy Grant brings to the table a wealth of knowledge, experience and expertise about Florida Realtors and our members,” says 2019 Florida Realtors President Eric Sain. “We’ve benefited from her dedication, her work ethic and her ability to connect with members across the state. We look forward to her leadership as Florida Realtors new CEO and the new opportunities it brings us.”

Grant, 43, is a Certified Association Executive (CAE) and also holds the Realtor Association Certified Executive (RCE) designation, earning recognition for specialized industry knowledge as well as association achievements and experience. She is a member of the American Society of Association Executives (ASAE).

Grant earned her Juris Doctor degree, cum laude, at the Suffolk University School of Law in Boston and her bachelor’s degree in political science at the University of New Hampshire in Durham, N.H. Grant is a member of the Florida Bar, Massachusetts Bar and the California Bar (inactive status). She joined Florida Realtors in 2005.

Looking to the future is key, Grant says: “The industry is constantly evolving, and Florida Realtors prides itself in providing products, tools and services that keep them moving forward.

“Florida Realtors is a truly member-centric association and I am honored to serve as its CEO. Florida Realtors’ legacy of promoting innovation and advocacy creates value for all of our members. I look forward to continuing to work with leadership, Realtor members and staff on many of the initiatives we currently have in place and new ones to come. I am proud that Florida Realtors has always had its focus on being the ‘Voice for Real Estate in Florida’ and the importance the industry has in moving the market forward.”

Grant and her husband, Matt, celebrated their 20th anniversary in 2018. They have a 14-year-old son and 12-year-old twins.

General Counsel Juana Watkins

Juana Watkins, J.D., will serve Florida Realtors as its new general counsel and vice president of law and policy.

For the past several months, Watkins, 45, served the state association as its associate general counsel. She brings more than 16 years of leadership experience in legal, real estate and regulatory fields to the job, and is looking forward to her new role.

“A year ago, I could not have imagined that I’d be here,” Watkins says. “I like to meet new challenges, and the role of Florida Realtors general counsel offers something new and exciting every single day. For example, the National Association of Realtors (NAR) – that scope – is very new to me. I know that I’ll continue to learn and grow professionally, which is important to me.”

Watkins built a career at the Division of Real Estate in the Florida Department of Business and Professional Regulation (DBPR), first as a senior attorney and then as the division’s chief attorney. From 2008-2011, Watkins was deputy director for DBPR’s Division of Real Estate; from 2011-2017, she headed the division as its director. In that capacity, she directed all regulatory operations for more than 370,000 real estate and appraiser licensees in Florida, including education, licensing, investigation and prosecution. She managed an operating budget of $5 million and led a team of more than 70 staff members located at the Orlando headquarters and across nine regional offices throughout Florida.

Watkins earned her Juris Doctor degree from the Florida State University College of Law in Tallahassee, Fla., and her bachelor’s degree in business administration from Florida A&M University in Tallahassee. She first joined Florida Realtors in 2005, serving as a senior counsel and advising Realtor members on legal issues from 2005-2008.

What challenges may lie ahead for Watkins in the next year?

“I have some really big shoes to fill – (Florida Realtors’ former general counsel, Margy Grant, is the new CEO) – and then there is the ever-changing real estate industry, of course,” she says.

But Watkins has learned that challenges offer new opportunities, she says – something her children show her every day. As the proud mother of a 16-year-old girl and an 11-year-old boy, she says her kids inspire her and humble her – and always remind her to be in the moment to just enjoy life’s journey.

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Fannie Mae issues work-around rules for mortgage approvals

WASHINGTON – Jan. 4, 2019 – Verification of employment, Social Security numbers, tax documents and more could prove problematic during the partial government shutdown.

Fannie Mae released guidance this week for lenders on how they can continue to originate mortgages in the absence of some normally standard paperwork.

The partial government shutdown is now 14 days old and could leave a rising number of home closings in jeopardy the longer Congress and the president fail to agree on a spending bill.

To keep the home lending process moving forward, Fannie Mae – a buyer of mortgages that helps keep banks lending – issued guidelines that deal with events out of buyers’ and lenders’ control.

Fannie also released guidance about obtaining IRS transcripts and information from the Social Security Administration during the shutdown. For example, Fannie will allow tax transcripts from the IRS to be received after closing, in some cases. According to the rules, however, a Social Security number must be validated prior to the sale or Fannie Mae will not purchase the loan.

The government shutdown also doesn’t mean government employees are ineligible for mortgages, according to Fannie Mae. “If a borrower is furloughed on or after closing of the mortgage loan due to the shutdown, the loan remains eligible for sale, provided the lender has been able to obtain all required documentation (for example, pay stubs, IRS W2s, verbal certifications of employments) prior to the delivery of the loan,” Fannie Mae says.

Some problems may arise in validating a government worker’s employment status during the shutdown. If lenders are unable to obtain verbal verification of employment during the shutdown, for example, the lender can obtain verbal verification of employment after the loan closing and up until the time of loan delivery. Fannie’s guidance states that military borrowers can use a Leave and Earnings Statement dated within 30 calendar days prior to the note date in place of a verbal verification of employment.

Fannie’s guidance to lenders involving how to proceed with originations in the government shutdown are temporary policies but effective immediately.

“They will automatically expire when the federal government resumes full operations,” according to Fannie Mae’s letter. “If the shutdown lasts for a prolonged period, we may provide additional guidance.”

Source: Fannie Mae Lender Letter LL-2018-06

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No interest-rate increases at all in 2019?

NEW YORK – Jan. 4, 2019 – Investors increasingly believe the Federal Reserve won’t raise interest rates even once in 2019 – a sign of fading confidence that the U.S. economic expansion will continue at the stable pace the central bank foresaw just two weeks ago.

Fed-funds futures on Jan. 2 showed a 91 percent probability that the central bank’s policy makers will finish the year with interest rates at or below their current level – a reversal from early November, when futures prices indicated a 90 percent probability that rates would end 2019 higher than they are now.

Futures even show a small chance that rates will fall this year, raising the possibility of a market shock or economic downturn by year’s end.

Central bank officials already expect the U.S. growth rate to moderate this year as it faces slower growth abroad, waning government stimulus measures and the continued effects of the Fed’s moves to drain its own monetary boost.

Growth would need to slow below the 2.3 percent rate Fed officials expected when they raised rates last month and penciled in two more increases for 2019 for investors’ bets to prove correct, and recent market turbulence could make investor skittishness a self-fulfilling prophecy.

Source: Wall Street Journal (01/02/19) Kruger, Daniel; Timiraos, Nick

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