This seems to be THE NUMBER ONE question I get.  Unfortunately there are several answers and which  is correct for you depends on the Circumstances.  I will address the common scenarios in this article.

Policy in my office is to never “tell” - as in “instruct” - our borrower client to pay or not to pay their mortgage.  Paying or not paying has a lot of collateral effects and the borrower needs to know what they are before making the decision.  We don’t make the decision for the borrower (our client) because the effects of paying or not paying are not going to affect me - but they will affect the client, so it is the client that must make the final decision.Let me make one issue clear - when we are hired to help facilitate a short sale or loan modification it is far easier for us to negotiate with the lender if the payments are late, but it is almost never a requirement.  The exceptions to which will be discussed later in this article.  Additionally, internal rules change at the banks constantly.  A new client came in totally frustrated. They called their bank to help with a modification and the bank said they could not address their situation until they were at least 60 days late.  So the near perfect (800+) credit score couple stopped paying for 60 days and then called the bank back. Now the bank says that because they are 60 days late they cannot speak to them about a modification!  The point is, if you don’t have to be late then why voluntarily create a late payment credit history that will adversely affect your credit-dependent life almost immediately and for years to come?SO LET’S GET INTO IT - Danger - this is a long article and it covers a lot of ground!Short Sale:A borrower that is current and contemplating a short sale wonders if they should stop paying their (first) mortgage. They are upside down and until now they have been current.  However they are paying the mortgage at a cost of not paying other bills. (Other or different facts may be that they are paying all their bills but taking the money from savings or a pension fund to make those payments, or they are borrowing money from another equity loan).Generally, it is not a good idea to get into debt to pay your mortgage, unless you have a solid plan to both (i) keep the mortgage current and (ii) repay the additional indebtedness you are creating.  It is not like taking from one pocket to put into another - it is more like taking from someone else’s pocket to pay your bills.  This would include credit card loans as the source of funds.  It all has to be paid back, so if you don’t have a plan to pay it back, don’t borrow it in the first place!  You are only digging a bigger hole for yourself and making it harder to get out of the hole.If you are taking from your pension or savings money, again you better have a rock solid plan to get that money back into those accounts, or there is no sense in giving up that hard earned and usually irreplaceable retirement money, especially considering these are monies that are usually protected from creditors’ judgments including those your mortgage lender could obtain (deficiency judgment)..Of course the “amount” of money you have “in reserve” comes into consideration.  If you have 2 million dollars in reserve and you decide to spend 10% of it to keep the loans current until you can short sale the property, that plan has a basis that the 10% is not going to make a difference in the way you run your life over the remaining time you have left as a mere mortal.Sometimes, but rarely, we run into a lender that says they won’t approve a short sale or modification because the borrower is current with his payments.  When we have encountered this it is in most cases associated with a government backed loan, (but later on we will show you why this may be motivated by plain greed on the part of a loan servicer).   A properly compiled financial snapshot of the borrower should show why they are current and what will happen if the short sale or modification is not approved.Your decision on how to proceed should be based on what goal you are trying to accomplish and how you plan to get to that goal (see how to determine your goal).Mortgage Modification:Apart for some voluntary government programs regarding (Fannie Mae or Freddie Mac) government involved mortgages, I know of no lender that absolutely will not deal with a borrower who is current with their mortgage payments. Lenders deal with all sorts of situations and “absolutely not” is just not in the vocabulary. A typical borrower calling a lender may hear that they must be late, but that is more of a “vetting” statement than an absolute policy.The exceptions are some government program guides for modification.  The first step to seeing if your loan comes within this exception is to see if it is a Fannie Mae or Freddie Mac loan.  You can do this online at the Making Home Affordable site.  Many servicers and lenders whose loans are not “government backed” are now choosing to follow this government plan (known as the Home Affordable Modification plan or more affectionately called the “Obama Plan” - see below) for the simple reason that they are being compensated by the government for each successful modification they execute within its guidelines, and either the servicer or lender receive a residual bonus for the loan staying current under the modification.  In these cases we have seen non-government backed loans insist on the borrower being late to qualify for modification as well.  What is confusing on this point is that when the plan was introduced it included modifications (and compensation for such) for current loans as well.  However, we are told time and time again from the lenders directly that they must be late to qualify. There is no such rule in the guidelines.While this is contrary to what has been published by the government about the plan, keep mind that following the plan and any of its various aspects is entirely voluntary and up to the Lender or servicer.  They can pick and chose from this plan as they see fit for their own internal reasons.  Here is a more interesting twist - a servicer that modifies a delinquent loan is paid more under this incentive plan than if the borrower were to modify while the loan is current!  If the borrower is current, the servicer can receive up to $3,500 in incentive fees from the government.  If the borrower is delinquent, the servicer can receive up to $4,000 in incentive fees from the government.  Thus it seems that it pays ($500 to)the servicer to encourage a borrower to be delinquent!We often see a client that fits the profile for modification under this government plan.  Some of these plans are said to require that to be qualified theborrower must be late 60 days (see Guidelines page 5 at bottom).  But in fact, being late is not a requirement, but only one factor of many (see Guidelines page 16 at the top - “However, a NPV (net present value) positive result is not necessary to qualify a loan for a Home Affordable Modification“).  If the goal is to qualify under such a plan as put in place by the lender at that time, then to accomplish that qualification the borrower may need to make themselves late, but that cannot be determined in a 2 minute telephone call with a lender representative.  I cringe when we go this route because just like these “plans” came into existence, I can see them change the plan thus leaving the now 60 day late borrower with ruined credit scores that occurred needlessly.Generally about a quarter of our modification clients never go late and still get a modification offer from the lender.  However, keep in mind that nearly all lenders put up as their first line of defense the policy that going late is a necessity to qualify.  We can only speculate this is done to deter the enormous inflow of loan modification requests from borrowers that would come in if this was NOT said to be a requirement.  It also helps address those in the most dire amount of need first.The Pro’s and the Con’s:The general rule of thumb we use is if you can pay your mortgage and maintain your life’s necessities, you may consider keeping the loan current, taking the points in this article into account.  However, if you need to choose between buying food or medications and paying the mortgage, the decision that should be made is clear: your life necessities take precedent.Here are the pro’s to consider when in the short sale or modification process.  Keeping the loan CURRENT has the following benefits:a) Your credit score is not dinged until the short sale transaction occurs (and not at all in most loan modifications) and your overall credit score reduction will be minimized, and b) You will remain in good standing with your lender without worry of penalties, fines, or a foreclosure.The “con’s” of keeping the loan current are that:(a) You will be out of pocket for the monthly mortgage payment (monies which you may or may not need to survive), and(b) Your lender may question the sincerity of your claimed hardship, and you may be spending funds that would otherwise be potentially (but rarely) forgiven by the lender.  In addition, occasionally the lenders in a short sale may require a lump sum payment above the sale amount from the borrower to forgive the debt. Coming up with that money is sometimes the difference between a deal or no-deal.  If you can put your mortgage payments aside and stockpile them, it will help you cover that potential lump sum.A similar pro/con approach applies to GOING DELINQUENT with your mortgage.  In favor of going late is being able to keep the unspent mortgage payments in your pocket (or applied towards other necessities as the case may be) in which event your hardship may appear more sincere to the lender.  On the other hand, there are very real consequences to going late with your mortgage payment:a) You WILL incur late fees and other penalties on the late interest.  Usually this is not a large issue as it is part of the forgiven debt in a short sale and usually forgiven in a modification, but it is something to consider,b) Your credit score downgrade will be harder as you will compound the short sale hit with a 30 day late, 60 day late, etc, (and if this is a modification you will make a non-negative credit score event turn into a negative credit score event), andc) You will eventually cross a threshold (typical industry standard of 90 days late) where the lender will  initiate a foreclosure action in State court.Going Late on Your Second Mortgage:Often a borrower comes to us and says that they are late on the first mortgage but current on the second mortgage.  The second mortgage is almost always totally upside down with no equity left in the property to secure that financial obligation.  The borrower says they paid the second mortgage because they had the money for the smaller payment (second) mortgage but not the larger amount first mortgage. Our answer - if you don’t pay the first mortgage they are going to foreclose it and then paying the second mortgage is not going to save your house.Lately we have seen second mortgage lenders with 90 day late mortgages skipping the foreclosure process (since if they cause a sale of the house it is sold subject to the first mortgage, and thus any buyer still has to pay the first mortgage, which usually makes no economic sense).  Instead the second mortgage lender sues the borrower on the promissory note only and gets a money judgment that they can keep for a long time (20 years in Florida).So if a client says they are paying the second mortgage but not the first mortgage, we usually suggest they look at the common sense approach and what are they likely to gain or lose by doing so.Effect of Non-Payment / Late Payment on Credit Score:This is a big question and nowhere is the answer clear cut.  Definitely if you get a report on your credit that you were “late” (in mortgages that means 30 days or more late) then your credit has been “dinged” and your credit score is adversely affected.Credit scores are used for many purposes, including the amount of credit you can get on a credit card, the interest rate you get on credit cards, car loans and mortgages, your ability and price of life and disability insurance and even car or house liability insurance, your ability to get a certain type of job, or to establish business relationships, and your ability to rent a place to live, to name a few.  So credit scores are important. If you want to better understand credit scoring you can see the Federal Reserve Board’s Report to Congress from April 2008.How much your credit score is affected by a 30, 60 or 90 day late report depends on a lot of other factors about your financial well being, your past credit history and myriad other issues.  Generally though we have our clients reporting drops of as little as 50 points for a no late payment short sale or up to 150 points for a short sale with multiple late payment reports.  We have seen an 800 go to 720 and we have seen a 740 go to 500.  It all depends on too many uncontrollable credit issues to be able to give a formula that works for everyone. For a discussion on credit scores this our past article.Confused?Rightfully so.  The fact of the matter is that we are in uncharted waters and there is no industry standard for Short Sales or Loan Modifications, which makes pinning down exactly what the Lenders may do near impossible.  Pile on the fact that there are a large number of lenders out there and each have their own internal policies which change as readily as the tides.  The best anyone can hope to do is make an educated decision, set a plan, and be ready for anything.Copyright 2009 Richard P. Zaretsky, Esq.Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make.  This article is for information purposes and is not specific advice to any one reader.Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660  RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide!  Shortsales@Florida-Counsel.com  New Websitewww.Florida-Counsel.com.  See our easy to find articles at SHORT SALE AND LOAN MODIFICATION TABLE OF CONTENTS

I just wanted to write a little blog about the past two weeks. Since this whole market in Brevard County Florida went silent in January 2006 (three and a half years ago) we have been in a very soft market. Let’s call is a recession or depression. Well in the past 2 weeks the tides seem to be turning. Out of the blue we are getting phone calls and offers from other agents. We’ll come into the office in the morning and there are fully signed offers in the fax machine. Ten (10) deals went under contract for me along just in this period. I’m getting a good feeling about this upswing. Now I know that 11% of all homes in the state of Florida are in the foreclosure process. But still, it’s a great time to buy and it seems as if a good number of people are looking right now. Will this continue throughout the summer? I don’t know. But even according to some conversations I’ve had with title companies: they are slammed too. So, for what it’s worth, I’m getting a good feeling about this upswing…. Feel free to comment on this blog post.Poll Results: When will the Market Recover?Over 1,500 LoopNet members responded to the LoopNet poll on when the commercial real estate market will recover. Over 40% of the respondents anticipate the market will pick up by 2010, with another 33% optimistic that commercial real estate transactions will pick up velocity later this year. While almost a quarter of respondents thought that the price expectations between buyers and sellers was the main hurdle, 46% cited the lack of available credit as the primary barrier to getting deals done.

This is a note to all of you tire-kickers. You can’t call it a buyer’s market if you don’t actually buy anything! It’s only when you actually buy something that the word “buyer” can be used in “Buyer’s Market”. So if you are sitting back, clenching your checkbook with white knuckles, and waiting for the media to tell you that it’s okay to buy, you are likely going to miss the best deals that are out there right now. For you it’s not a “Buyers Market” but a “Scared Stiff Market”. Now is a perfect time to “fish” or “lowball”. You don’t have a lot of competition. But if I know many of you, you are going to wait and actually miss the recession or depression (if you want to call it that). You’ll come running to buy something when it’s all over and then be in competition with everyone else who is scrambling to buy before prices go up and the most amazing deals will be gone.

You will go from being a “tire-kicker” to “self-kicker”, i.e. kicking yourself. Some people always seem to be on the wrong end of the curve in the real estate market, while others always seem to be at the right end of it. However, no one can fully predict the future. If I had seen any property owner with a significant inventory totally liquidate in 2005 and then clean up by buying three times as much for the same money in 2009, I would have been infinitely impressed. However, even the richest and smartest people in Brevard County didn’t do that. They still have the majority of their inventory, which is now worth a fraction of what is was worth in 2005.

We can’t predict the future, but opportunity is something that often leaves by the time you realize it is there. The Greeks had a mythological god named Caerus (Kairós, Opportunity) a god that leaves as soon as he arrives. The funny thing about Caerus is that he has lots of hair in the front of his face, hanging down and easily grabbed. But the back of his head is bald. Once he has passed, you can’t grab him anymore. A neglected occasion cannot be recovered.

I’m going out this afternoon to show houses to some friends and I sincerely hope they can get their financing for their first house. Everything my wife picked out for them on the MLS looks pretty good on the computer. The prices are amazingly cheap. I’m sure my friends are glad they didn’t buy anything three or four years ago, but that they are out to buy right now. This will make a huge difference for them in the long run.

I guess that’s one thing that differentiates people: some make their move when the time is right, while others spend their life regretting their inability to pull the trigger and view those who do as risk-takers or just plain “lucky”. The next time I see Caerus running my way, I’m grabbing him by the hair.

WASHINGTON – May 5, 2009 – The Department of Housing and Urban Development (HUD) yesterday announced a $5 billion program, in conjunction with the Department of the Treasury, to spur the development of affordable housing units; and a separate $2 billion HUD program to combat local problems resulting from foreclosures. Funded through the American Recovery and Reinvestment Act (The Recovery Act), the programs together provide approximately $5 billion to states for the acquisition and construction of affordable housing for working families.

Low Income Housing Tax Credit (LITC)

Through the Recovery Act, the Treasury Department will, for the first time, give state housing agencies funds that they, in turn, will grant to developers of qualified affordable housing developments to fill the Low Income Housing Tax Credit (LITC) gap. The program will increase the supply of newly constructed or recently renovated affordable housing units for families that otherwise may not have come to market due under current economic conditions.

“With this new program, we are not only creating new jobs through new construction, we are ensuring the availability of affordable housing, which is good for the nation’s economic stability and the economic security of millions of American families,” says Treasury Secretary Timothy Geithner. 

A by-product of the economic crisis has been a freeze of the investment in Low Income Housing Tax Credit, the federal government’s program for the development of affordable rental housing. Tax credits provide an incentive for investors to participate in the program, which in turn provides equity to developers to build multi-family rental housing for moderate and low income families. Developers depend on the equity to fill project financing gaps. In the current financial crisis, credit is tight, and as a number of traditional equity investors left the market, the value of tax credits have plummeted. Currently, up to 1,000 projects containing nearly 150,000 units across the country are on hold.

Tax Credit Assistance Program (TCAP)

In addition to Treasury’s new program, HUD will be awarding $2.25 billion in grants to state housing credit agencies through the Tax Credit Assistance Program (TCAP) so they may complete construction of qualified housing developments. The TCAP program will ultimately provide affordable housing to an estimated 35,000 low-income households.

Neighborhood Stabilization Program (NSP)

HUD Secretary Shaun Donovan also announced that HUD is soliciting grant applications under the Department’s Neighborhood Stabilization Program (NSP) to make nearly $2 billion available to states, local governments and non-profit housing developers to combat the problem of home foreclosures. Applications for NSP funds are due by July 17, 2009.

Funded under the American Recovery and Reinvestment Act of 2009, this round of NSP funding will award grants to applicants who target the areas with a lot of abandoned and foreclosed homes. HUD is also offering up to $50 million in technical assistance grants to help NSP grantees manage the inventory of foreclosed homes they purchase under the Neighborhood Stabilization Program. 

© 2009 FLORIDA ASSOCIATION OF REALTORS®

TALLAHASSEE, Fla. – May 5, 2009 – After two long years of recession, economists are beginning to see signs that the economy’s recovery is finally in sight. South Florida home sales are picking up, Wall Street has staged some solid rallies and even consumer confidence is rising.

But the road to recovery will be uneven. Economists say that an uptick in business spending will lead the way, followed by federal government stimulus projects that will create some jobs. Consumers, unfortunately, are likely to be the last to see good times return, because widespread unemployment – which is now just a notch below 10 percent – won’t start to go down until after the recovery is well under way.

It has been rough, but economists say it’s always that way for Florida.

“It performs better in good times, but during bad times, in recessions, it is one of the worst performing states in the nation,” said Moody’s Economy.com economist Chris Lafakis. “And during times of expansion it is one of the best.”

Some experts say they already see the early signs of such progress.

“The negative numbers just start getting smaller or they stop falling or they fall at a slower rate,” said SunTrust Chief Economist Gregory Miller. It’s like you tumbled out of a boat a while ago and “now we’re at the stage of swimming back to the surface.”

Other economists agree that the worst may be over as soon as this summer. Consumers surely have had enough, judging by the strong jump in Floridians’ consumer confidence this month.

Here’s how economists say the state will find its way out of the slump:

Business-led recovery 

Economists say the recovery will begin with an increase in business capital spending, as companies rebuild inventories or upgrade technology or send business travelers back out on the road.

At some South Florida companies, capital spending already has increased and begun to pay off. Last year, Stress Free Corporate Housing, which provides temporary living arrangements for executives, says the audio-visual equipment it installed in its new Weston office is helping to bring in new business.

The firm wanted to hold employee conferences and save on travel expenses. But it also began using the equipment for Webinars – seminars via the Internet – for its clients.

President and Chief Executive Officer Darin Karp said his firm is about to sign a deal with a Fortune 500 company to provide temporary housing for executives from Asia and the Middle East who need to come to Florida for training.

“We’re definitely seeing glimmers of hope off the first quarter and the beginning of this quarter,” Karp said. “We have some big stuff on our plate, and it’s attributed to doing the Webinars.”

Stimulus spending 

An increase in government spending is expected in the fourth quarter, as states and cities pump out the $787 billion in federal stimulus money to build roads and other projects. That influx of cash will lead to more jobs, at least in construction.

Even though the stimulus law was enacted in February, government is still crafting detailed plans and regulations for the federal package, so it’s unclear precisely how many millions will be earmarked for Florida.

“We will begin to see some impact of the stimulus legislation in the last quarter of this year,” said economist Antonio Villamil, dean of the School of Business at St. Thomas University.

Confidence rises 

Consumer confidence – a measure of how willing people are to spend on big-ticket items – is already rising. The University of Florida consumer confidence survey issued earlier this week showed the index jumped to 71 in April, up from 65 in March, which is close to the low reached during the last recession in 1991.

The importance of the jump is that consumer confidence is a forward-looking economic indicator, one that is often a sign that consumer spending will rise, too.

Employment to lag 

Employment rates aren’t expected to rise until recovery of other sectors is under way. Only after growth returns in the overall economy will businesses be comfortable enough to begin to create jobs again. Employment is key to consumers’ recovery. Don’t look for consumer spending to increase until after employment stabilizes, economists say.

“Every business cycle is unique, but they get going in fits and starts,” said economist Manuel Lasaga, president of Strategic Information Analysis in Miami. “This [recovery] will be weaker than normal.” Strong growth, he said, won’t appear until 2010.

And some sectors seem to be hurt so badly, their recovery is not at hand. Surely, housing remains deeply troubled. Manufacturing, too, is waiting for signs of recovery.

“We’re not seeing that [any increase in demand] yet frankly,” said Tom Kennedy, a CPA who is chairman of the South Florida Manufacturers Association. Kennedy is controller of R.L. Schreiber in Pompano Beach, which produces food products for the food service industry. The credit crunch, he said, is making the business environment even more difficult.

When will it end? The economy should begin to pull out of recession around the end of summer, according to several economists. At the latest, look for it early next year, others say.

“We are in the fourth phase of the recession,” said SunTrust’s Miller. That’s the pre-recovery phase, he said. Next is the turnaround.

It’s a little early yet, and the signs are still faint.

“You really have to look long and hard to find any signs of strength in the economy,” said Mark Vitner, Wachovia’s senior economist. “But it’s not so hard to find areas where the economy had been in a free fall and now is just merely declining.”

For those businesses looking forward to the turnaround, they’ve set their sights on year’s end.

“People are getting new budgets for purchasing at the end of the third quarter, the fourth quarter. A lot of lights are coming on,” said Joel Ledlow, chief executive officer of ScheduAll, a Hollywood firm that produces management software systems for broadcasters and media. “People are saying they have cut about as much as they can cut. Now they’re ready for some very strategic investments.”

Copyright © 2009 Sun Sentinel, Fort Lauderdale, Fla., Harriet Johnson Brackey. Distributed by McClatchy-Tribune Information Services.

Troubled homeowners know they should call their lender if they hit a bad patch and have trouble paying their mortgage. However, a call to a financial counselor willing to look at a family’s finances and offer a plan toward stability is just as important - but who do you trust with all the scam foreclosure schemes out there? There are several legit programs, most of them government-backed. HUD’s Housing Counseling Program hosts a list of approved counselors online at:www.hud.gov/offices/hsg/sfh/hcc/fc and click on “Florida.” Counselors can guide homeowners to appropriate aid programs. Those include: Hope for Homeowners (www.hud.gov/hopeforhomeowners or 800-225-5342) and Hope Now (www.hopenow.com or 888-995-4673).

NAR rolls out limited health insurance

WASHINGTON – May 7, 2009 – Realtors® without health insurance now have an affordable, guaranteed-issue option for coverage through a new Realtor Benefits partner program. Realtors Core Health Insurance (RCHI) from the National Association of Realtors (NAR) makes limited medical insurance available for Realtors, many of whom may not have access to quality, affordable health insurance.

“Given all that they do to build strong, vibrant, healthy communities, it’s just not fair that Realtors have limited choices for health care coverage – if they can get any at all,” says NAR President Charles McMillan. “While NAR continues to advocate comprehensive health care reform legislation for small businesses and the self-employed, we are pleased to be able to offer this new member benefit to help Realtors … right now.”

More than one out of every four Realtors have no health insurance, according to a recent NAR survey, and only 17 percent of real estate firms offer health care coverage for independent contractors, who are the largest segment of real estate agents.

RCHI is available to NAR members under age 65. Acceptance is guaranteed – no eligible member will be turned down. Though the plan is available throughout most of the country, Smart and Simple insurance development (SASid) and United States Fire Insurance Company are currently working with the departments of insurance to gain approval in a few states where it is not currently available.

The program’s three limited medical plans were designed to meet the diverse needs of Realtors, whether they don’t qualify for major medical health insurance due to pre-existing conditions, are on a limited budget, or need to supplement their current medical plan because of high out-of-pocket costs.

The program is underwritten by United States Fire Insurance Company, rated A (“Excellent”) by A.M. Best, and includes limited indemnity benefits such as doctor’s office visits, hospitalization, surgery, emergency room, accident medical and a prescription discount card. In many states, network discounts are available through a PPO option, providing additional savings. Realtors can enroll by phone or anytime online; next-day coverage is available.

RCHI is offered through NAR’s Realtor Benefits Program in partnership with United States Fire Insurance Company and SASid. “I’ve created many insurance programs for many clients, but I’ve never seen an association so committed to the well-being of its members,” says SASid President Shannon Kennedy. “This is a sophisticated, tailor-made, user-friendly solution that benefits Realtors today.”

For more information about the program go to: www.RealtorsCoreHealthInsurance.com. 

© 2009 FLORIDA ASSOCIATION OF REALTORS

GAINESVILLE, Fla. – April 29, 2009 – Consumer confidence among Floridians surged six points to 71 in April amid indicators of flattening housing prices statewide and news that the economy has not worsened, a new University of Florida survey finds.

“The size of the increase comes as somewhat of a surprise,” said Chris McCarty, director of UF’s Survey Research Center at the Bureau of Economic and Business Research. “We had expected confidence among Florida’s consumers to move up and down in a fairly narrow window.”

“In balance, consumers seem to have absorbed most of the bad news and are at least not seeing things getting much worse,” McCarty says. “Perhaps we really have seen the bottom in terms of Florida consumer confidence, which was back in June of last year.” In that month, consumer confidence sunk to 59, its lowest level in the index’s 25-year history.

All five of the index’s components rose in April. The biggest jump was in perceptions of whether it is a good time to buy big-ticket items, such as cars and appliances, which jumped 15 points to 77. 

Perceptions of U.S. economic conditions over the next year climbed nine points to 69, while perceptions of U.S. economic conditions over the next five years rose three points to 82. Perceptions of personal finances a year from now increased five points to 85, while perceptions of personal finances now compared with a year ago rose two points to 44.

Despite these positive signs, there is still enormous uncertainty surrounding the economic recovery, McCarty said.

Massive interventions by the federal government, the Federal Reserve and governments around the world have had obvious effects, McCarty said. At the same time, stock markets around the world have rallied, and some economic pundits characterize it as the beginnings of a recovery, though bad news could still derail the process, McCarty says. If housing prices nationally begin to stabilize, it would help establish the value of some the toxic assets held by banks and indicate how deeply the recession has hurt the global economy.

“Consumers seem to characterize the economy by those events in their personal lives and in the news that are changing the most, whether those be good or bad,” McCarty says.

There has not been much news recently about very large bailouts, nor have there been many notable bankruptcies of very large companies, although there is a strong possibility that General Motors Corp. and Chrysler may end up having to declare bankruptcy, McCarty says. Were that to happen, it would likely cause at least a temporary drop in consumer confidence, even in Florida.

Barring something of that magnitude, consumer confidence may continue to improve as various sectors of the economy begin to recover, McCarty says.

“For Floridians, the next big news will probably be the Florida state budget and the effect it will have on taxpayers who stand to pay more in various fees, and those who depend on state revenue for their employment,” McCarty says. “The effects of this may not be known well into May.”

The research center conducts the Florida Consumer Attitude Survey monthly. Respondents are 18 or older and live in households telephoned randomly. The preliminary index for April was conducted from 406 responses. The index is benchmarked to 1966, so a value of 100 represents the same level of confidence for that year.

© 2009 FLORIDA ASSOCIATION OF REALTORS®

Lots of people who have homes that are unoccupied, whether because of a move or some other reason are choosing to roll the dice as far as insurance goes. I always advise clients with empty houses to check with their insurance agent about vacant home coverage, but few do. The sad truth is that if anything happens to the home and they make a claim, the claim will likely be denied. Most insurance companies have provisions right in the policy that cover occupancy of the home and most do not cover unoccupied homes. 

There is good reason for those insurance company policies concerning vacant homes, since so many vacant homes are vandalized these days or suffer damage from improper winterization during the cold months. I suppose you can’t blame the insurance companies for wanting the house to be occupied. But you can blame the homeowners who abandon the homes to the vagrancies of the times. It’s likely not a big concern of someone who has been foreclosed, since they are unlikely to still be paying on the policy anyway. But what of the job transferee or the retiree who has moved on? Those folks are talking a big gamble if they don’t get honest with their insurance companies and get a vacant home rider or policy. Now I have to be honest here, these vacant home policies are more expensive than just your normal policy, so maybe that’s why so many homeowners avoid them. But think about it. Let’s say that they’ve moved on to their new job, leaving behind an empty house that is on the market. What if a pipe bursts and the basement floods and sits there for a couple of days before anyone notices water streaming out of the basement windows. Or, what if someone comes to look at the house with a Realtor and falls down the basement stairwell and hurts himself or herself. Or, what if the timer that they left with the lights on it to fool people about the house being empty shorts out and starts a fire that causes major damage. In all cases, they have a major financial problem on their hands and the insurance company will be quickly washing it’s hands of any responsibility, as soon as they find out that the house was unoccupied and that the owners had not notified them and made provisions for extra coverage. Welcome to the real world of insurance, my friend. One does not get coverage if they don’t pay for it and vacant house coverage is separate and distinct and at an extra cost from your normal homeowners policy. Don’t believe me. Call your homeowners policy company and ask them. There’s a good likelihood that they’ll tell you that they don’t even cover vacant homes and that your empty homes are in fact bare of coverage already. Are you willing to gamble with the largest single asset that you own? 

by

Norm Werner

Sales Agent at Real Estate One

It started over 3 years ago for us here in Brevard County Florida. We saw a boom beyond compare turn into total silence. We at Land O’ Lots Realty have worked hard to sell all of our listings, but it takes time for the market to full comprehend when it has changed so drastically. I believe that Brevard County Florida felt a clear “pop” of the bubble by January 1st 2006. Three years of recession is time enough for people to get tired of waiting and to come out looking for deals. 

Financing is still hard to come by, so only those who have cash or in some cases sellers who are willing to finance are making the deals work. Even “contract for deed” can work in this market.The nice news is that since January 1st 2009 we have had about 4 closings a week, and literally hundreds of leads to follow up on. We also have 200 vacant land listings right now. Just as clearly as we felt as if someone had flipped a switch in January 2006, so we have noticed someone flipping another switch in January 2009. Not a boom by any means, but still a silent message to people that it’s ok to buy vacant land. We sell only vacant land. I don’t need to read the newspaper to understand this change any more than the media needed to tell me that something was up in 2006. When you are in the trenches, and walking in the woods with buyers, you feel these things at least 6 months before the media even changes their tune. They try to hype up the news to sell a story. We feel the reality almost immediately. I’m hoping that the concept in the book Shift by Gary Keller is going to come true in my case. That this 3 years has starved out many of the realtors who would have otherwise been eating a piece of my pie, and once this market begins to turn, those of us who have survived will be in a strong position to really make some money. Those of you reading this are probably among the survivors. I am hoping that some time in 2009 that Shift takes place. Based on the past 8 weeks, that could be the case. I’m not looking to the media to tell me whether or not the time has come. They will again be 6 months late. Instead I’m checking my voicemail and my inbox. I’m streamlining my systems and automating everything to be ready to cash in when the next little upswing takes place. I’m tired of the recession and I’ve decided that I don’t want to be in it any more……. I’m sure some of you are feeling the same way.