Strategic Mortgage Defaulters Influenced by Social Persuasion

Unemployment and other economic difficulties have caused millions of homeowners to involuntarily default on their mortgages, but there are some borrowers who are induced to simply stop making their mortgage payments because their property value has fallen and they owe more than their home is worth.

According to a study commissioned by the Mortgage Bankers Association (MBA), oftentimes strategic defaulters are encouraged to walk away at the behest of so-called mavens, or prominent influencers within a borrower’s social network whose persuasive arguments convince the borrower that strategic default is the way to go.

The study, conducted by Michael J. Seiler of Old Dominion University; Andrew J. Collins of the Virginia Modeling, Analysis and Simulation Center; and Nina H. Fefferman of Rutgers University, examines the role that influential members of society play in people’s decision to stop paying their mortgage and the impact of strategic default on the broader housing market.

“Recently, the overwhelming media coverage of the current financial crisis has made homeowners aware – or at least alerted them to become aware – of their equity position in their home,” Seiler commented. “[T]he possibility to strategically default has certainly been brought to the attention of current homeowners like never before, with potentially negative consequences for housing markets.”

Through simulation modeling, Seiler and his co-authors demonstrate that because defaults and foreclosures lead to lower home prices, an epidemic of strategic defaults initiated by advice from those who might be considered experts could potentially spell detriment for the already ailing housing market.

“As social animals, humans knowingly or otherwise look to their peers before reaching financially life-altering choices,” the authors write in the report outlining their findings.

Seiler stresses that ideas can easily be transmitted through the population. He notes that housing pundits share their expert opinion with a large audience on a frequent basis through the media.

“These social networks create the potential for much faster spread [of strategic default] than in the past,” Seiler said, adding that those pundits with a far-reaching sounding board can greatly impact mortgage markets through behavioral advocacy.

“In fragile markets, advice by those considered to be experts can result in a flood of strategic defaults, causing a contagious downward spiral of home prices and potentially a market collapse,” according to Seiler.

The study notes that whether by choice or necessity, as foreclosures increase, they have an increasingly negative impact on the price of the healthy homes around them.

“One default does little to negatively impact the price of surrounding homes,” Seiler said. “However, as more and more mortgages in the neighborhood go into default, the negative impact is felt at an increasing rate. Much the same way as a disease spreads throughout a population, so, too, do decisions to ‘strategically’ default.”

Michael Fratantoni, MBA’s VP of research and economics, says research has clearly shown that a borrower’s inability to continue making mortgage payments is the most predictive of a mortgage default. However, it is much more difficult to predict or even detect a strategic default – a borrower who has the ability to pay, but simply stops in expectation of a financial gain, Fratantoni explained.

He says the consequences of strategic defaults can be destabilizing, particularly in markets that are already on the edge.

“From a policy standpoint, the research supports the contention that opinion and information (or disinformation) can move markets,” Fratantoni said. “More specifically, that policymakers and mavens have the ability to stabilize or de-stabilize markets.”

The study, entitled, “Strategic Default in the Context of a Social Network: An Epidemiological Approach,” received the Governor’s Technology Award for 2011 in Virginia in the category of “Cross-Boundary Collaboration in Modeling & Simulation.”

©2011 DS News. All Rights Reserved.

Flippers' role in housing flop larger than thought

More than 30 percent of Florida homebuyers during the boom year of 2007 had two or more mortgages, evidence of rampant investment that is partly blamed for real estate's ruination, a recent federal report says.

A Federal Reserve Bank of New York study released this fall uses previously undisclosed credit and loan information to show that home flippers played a bigger role than previously thought in bringing down the market.

In 1999, just 16 percent of Florida homebuyers had two or more loans.

Chronicled on the Fed's blog this month, the report singles out the hard-hit states of Florida, California, Arizona and Nevada to compare real estate purchases between 2000 and 2010 with the rest of the nation.

In 2006 in these so-called "sand states," the report reveals, 10 percent of home purchases were made by people with four or more mortgages on their credit reports. That's an increase from about 3 percent in 2000.

Nationally, about 5 percent of home purchases in 2006 were made by people with four or more homes.

"We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought," the report notes. "In the end, even the value of the 20 percent down payments made by responsible, prime borrowers was wiped out, leaving the housing market, and the economy, in the vulnerable state we find them in today."

But not everyone is ready to skewer investors, many of whom are now buying up the glut of foreclosures and turning them into rentals - a practice of buying and holding, rather than buying and flipping.

"In hindsight, we can point out a lot of demons, but I don't think flippers were any more responsible for the problems than anyone else," said Ken Johnson, a financial and real estate professor at Florida International University in Miami. "Flippers saw an opportunity to make an investment and get an abnormal return on what they were putting in."

Johnson's bigger concern, and one shared by the report's authors, is making sure the real estate bust is not repeated.

Johnson blames reduced underwriting standards for allowing unworthy borrowers to buy a home and investors to run up pricing.

"You could basically say anything on your loan application, and they weren't going to verify it," agreed Bill Richardson, president of the Realtors Association of the Palm Beaches.

"Flippers are partly responsible for what happened, but it was the government and their underwriting standards that made it possible for the flippers to flip."

The federal report notes that by 2006, 38 percent of the risky subprime loans nationwide went to homebuyers with little employment or salary documentation. The loans were sometimes called "liar loans" because of the ease in manipulating information to gain hefty mortgages.

In 2001, just 22 percent of subprime loans required little or no documentation, according to the report.

Subprime loans also came with higher interest rates. But because flippers had no intention of keeping a home, interest rates were of little concern. Because the return on investment was so high, they also cared little for how much they had to bid to make a purchase, the report says.

That led to average home prices that more than doubled in high-risk states between 2000 and 2006.

In July 2000, the median home price in Florida was $119,600, while Palm Beach County's price was $142,500, according to the Florida Realtors.

By July 2006, Florida's median price had risen 109 percent to $250,800. Palm Beach County's jumped to $390,100 - a 174 percent increase.

In November, Florida's median sales price was $130,100, while Palm Beach County's was $183,700.

"The problem now is it's very difficult to get a mortgage," Richardson said. "First they messed up the market by making it too easy to get a mortgage. Now they're messing up the recovery by making it too difficult."

Russian tycoon Fridman to invest $1 bln in U.S. real estate

Russian billionaire Mikhail Fridman, the owner of financial conglomerate Alfa-Group, is set to invest up to $1 billion in properties on the east coast of the United States, The Wall Street Journal reported on Wednesday.

Fridman is launching a real-estate fund together with New York-based property developer and manager Rosen Partners to focus on distressed properties from Boston to Miami, in the latest example of a deep-pocketed foreigner investing funds in the U.S. real-estate market, the paper said.

Russian tycoons consider U.S. real estate a relatively safe haven, especially at a time of political uncertainty in Russia triggered by street protests over the alleged mass fraud at December 4 parliamentary elections and the forthcoming presidential poll in Russia next year.

"It's obvious that in Russia there is some risk for political or economic volatility. The American market is the most well-regulated and liquid market in the world. It has the best protection for investor rights," the paper quoted Fridman as saying.

Steve Jobs : 20 Life Lessons

Don’t Wait

When the young Steve Jobs wanted to build something and needed a piece of equipment, he went straight to the source.

“He began by recalling that he had wanted to build a frequency counter when he was twelve, and he was able to look up Bill Hewlett, the founder of HP, in the phone book and call him to get parts.”

Make Your Own Reality

Steve Jobs learned early that when you don’t like how things are in your life or in your world, change them, either through action or sheer force of will.

“As Hoffman later lamented, “The reality distortion field can serve as a spur, but then reality itself hits.” – Joanna Hoffman, part of Apple’s early Macintosh team.

“I didn’t want to be a father, so I wasn’t,” Jobs later said, with only a touch of remorse in his voice.

Control Everything You Can

Steve Jobs was, to a certain degree, a hippie. However, unlike most free spirits of the 1960s-to-1970s love-in era, Jobs was a detail-oriented control freak.

“He wants to control his environment, and he sees the product as an extension of himself.”

Own Your Mistakes

Jobs could be harsh and even thoughtless. Perhaps nowhere was that more in evidence than with his first daughter. Still, as Jobs grew older and began to face mortality, he more readily admitted his mistakes.

“I’ve done a lot of things I’m not proud of, such as getting my girlfriend pregnant when I was twenty-three and the way I handled that,” Jobs said.”

Know Yourself

While not always aware of how those around him were reacting to his appearance or demeanor, Jobs had no illusions about his own formidable intellectual skills.

“Then a more disconcerting discovery began to dawn on him: He was smarter than his parents.”

Leave the Door Open for the Fantastic

Jobs was a seeker, pursuing spiritual enlightenment and body purification throughout his life. He wasn’t a particularly religious person, but did not dismiss the existence or something beyond our earth-bound realm.

“I think different religions are different doors to the same house. Sometimes I think the house exists, and sometimes I don’t. It’s the great mystery.” — Steve Jobs

Don’t Hold Back

Apple’s founder was famous for his outbursts and sometimes over-emotional responses. In product development, things were often amazing or sh_t.

“He was an enlightened being who was cruel,” she recalled. “That’s a strange combination.”– former girlfriend and mother of Jobs’ first daughter, Chrisann Brennan

Surround Yourself with Brilliance

Whether he was willing to admit it or not, Steve Jobs could not do everything. Yes, he could have a huge impact on every product and marketing campaign, but he also knew that there were others in the world with skills he did not possess. Jobs’ early partnership with Apple co-founder Steve Wozniak perfectly illustrated this fact. His early success with Wozniak provided the template for future collaborations.

“After a couple of months he was ready to test it. ‘I typed a few keys on the keyboard and I was shocked! The letters were displayed on the screen.’ It was Sunday, June 29, 1975, a milestone for the personal computer. “It was the first time in history,” Wozniak later said, “anyone had typed a character on a keyboard and seen it show up on their own computer’s screen right in front of them.”

Build a Team of A Players

Far too often, companies and managers settle for average employees. Steve Jobs recognized talent and decided that any conflict that might arise from a company full of “A”-level players would be counterbalanced by awesome output. He may have been right.

“For most things in life, the range between best and average is 30% or so. The best airplane flight, the best meal, they may be 30% better than your average one. What I saw with Woz was somebody who was fifty times better than the average engineer. He could have meetings in his head. The Mac team was an attempt to build a whole team like that, A players. People said they wouldn’t get along, they’d hate working with each other. But I realized that A players like to work with A players, they just didn’t like working with C players.”– Steve Jobs

“I’ve learned over the years that when you have really good people you don’t have to baby them,” Jobs later explained. “By expecting them to do great things, you can get them to do great things.”

Be Yourself

Steve Jobs was often so busy being himself that he had no idea how people saw him, especially in his early, dirty-hippie days.

“At meetings we had to look at his dirty feet.” Sometimes, to relieve stress, he would soak his feet in the toilet, a practice that was not as soothing for his colleagues.”—Mike Markkula, Apple’s first chairman.

Be Persuasive

While it’s true that early Steve Jobs was a somewhat smelly and unpleasant person to be around, this same Steve Jobs also trained himself to stare without blinking for long periods of time and found that he could persuade people to do the seemingly impossible.

“If it could save a person’s life, would you find a way to shave ten seconds off the boot time?” he asked. Kenyon allowed that he probably could. Jobs went to a whiteboard and showed that if there were five million people using the Mac, and it took ten seconds extra to turn it on every day, that added up to three hundred million or so hours per year that people would save, which was the equivalent of at least one hundred lifetimes saved per year.”

Show Others the Way

Jobs wasn’t truly a programmer or technologist, certainly not in the way that Microsoft founder Bill Gates is, yet he had an intuitive understanding for technology and design that ended up altering the world’s expectations for computers and, more importantly, consumer electronics.

“To be honest, we didn’t know what it meant for a computer to be ‘friendly’ until Steve told us.” — Terry Oyama, part of the early Macintosh design team.

Trust Your Instincts

I have, in my own career, navigated by gut on more than one occasion. Steve Jobs, though, had a deep and abiding belief in his own tastes and believed with utter certainty that if he liked something, the public would as well. He was almost invariably right.

“Did Alexander Graham Bell do any market research before he invented the telephone?” — Steve Jobs

Take Risks

Throughout his career, Steve Jobs took chances, first with the launch of Apple, then in walking away from it and then returning in 1997. In an era when most companies were figuring out ways to diversify, Apple — under Job’s leadership — shed businesses and products, and focused on relatively few areas. He was also willing to steer the entire Apple ship (or at least some aspects of it) in a single direction if he thought it would generate future success.

“One of Jobs’ management philosophies was that it is crucial, every now and then, to roll the dice and ‘bet the company’ on some new idea or technology.”

“I had this crazy idea that we could sell just as many Macs by advertising the iPod. In addition, the iPod would position Apple as evoking innovation and youth. So I moved $75 million of advertising money to the iPod, even though the category didn’t justify one hundredth of that. That meant that we completely dominated the market for music players. We outspent everybody by a factor of about a hundred.” — Steve Jobs.

Follow Great with Great

In everything from products to movies (under Pixar), Steve Jobs sought to create great follow-ups. He wasn’t so successful in the early part of his career (see Lisa), but his third acts to Pixar and Apple proved he had the sequel touch.

“There’s a classic thing in business, which is the second-product syndrome,” Jobs later said. It comes from not understanding what made your first product so successful. “I lived through that at Apple. My feeling was, if we got through our second film, we’d make it.”

Make Tough Decisions

Good managers and leaders are willing to do hard work and, often, make unpopular decisions. Jobs apparently had little concern about being liked and therefore was well-equipped to make tough choices.

“The most visible decision he made was to kill, once and for all, the Newton, the personal digital assistant with the almost-good handwriting-recognition system.”

Presentation Can Make a World of Difference

The Apple founder hated PowerPoint presentations, but perhaps somewhat uncharacteristically, believed elegant product presentation was critical.

“Packaging can be theater, it can create a story.” — Jony Ive, Apple designer.

Find a Way to Balance Your Intensity

It’s unclear if Steve Jobs ever truly mellowed, but he did learn that a buffer between him and the rest of Apple could be useful.

“In a company that was led by a CEO prone to tantrums and withering blasts, Cook commanded situations with a calm demeanor, a soothing Alabama accent, and silent stares.”

Live for Today

Even as Steve Jobs struggled with cancer, he rarely slowed down. If anything, the disease helped him focus his efforts and pursue some of his grandest dreams.

“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life.” — Steve Jobs

“Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.” — Steve Jobs

Share Your Wisdom

Steve Jobs was not a philanthropic soul. He had a passion for products and success, but it wasn’t until he became quite ill that he started reaching out and offering his wisdom to others in the tech community.

“I will continue to do that with people like Mark Zuckerberg too. That’s how I’m going to spend part of the time I have left. I can help the next generation remember the lineage of great companies here and how to continue the tradition. The Valley has been very supportive of me. I should do my best to repay.” — Steve Jobs


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Facebook Timeline: 9 things you need to know

Timeline, which CEO Mark Zuckerberg first showed off in September, is a complete rethinking off a user's profile page. It attempts to use the data already inside Facebook as a sort of digital scrapbook.

Facebook users can now easily scroll back to previous years and see what they were saying and what they were doing.

MORE: Facebook Timeline rolls out worldwide
For some, this will be a nostalgic trip through a social network that has captured much of who we are. For others, it will be a bit terrifying to see posts from the early days of Facebook, when it was limited to college students who often shared way too much.

Here's a look at nine things to know about the new Facebook.

There's a seven-day review period. Once upgraded, Facebook users will be able to work through their Timeline and get things ready before it goes public. During the seven-day review period, the Facebook user will be able to publish it at any time. If he or she chooses to wait, it will automatically go live after the week is up.

Your cover photo is your chance to make a splash. The most striking feature at the top of the new Facebook profile is the cover photo, which stretches across the page's width. The Facebook user's profile photo, which is seen across the site, is now just a small square. Most are using this opportunity to make the profile photo a simple face shot and have used the cover photo to show something more personal, like a pet or favorite vacation spot.

No new information is being shared. Yes, Timeline is bringing back a bunch of old posts. But these posts have long been viewable on Facebook. Before, a friend would have had to go to a profile and click again and again for more posts, but would eventually travel back in time.

Your privacy settings on old posts will remain. A post shared four years ago that was set to be viewable to just friends will continue to be viewable to just friends. The only concern here lies in how a user's definition of friend has changed. A photo or status update that in college that was OK for friends might not be OK for friends now, which might include coworkers.

Posts can be expanded. Timeline already tries to guess which of your posts will be the most interesting and it makes those viewable. It can try and guess here by how many likes or comments a post has received. If there is a post that should be expanded and is not -- like a new job or college graduation -- you can expand it.

The Activity Log is the best place to edit a Timeline. Facebook has built a very helpful new page called the Activity Log, which can be accessed from a profile page, that shows every single piece of content Facebook has from a user. Each item can be deleted or tweaked from this page.

For your eyes only. If there is a post in your Timeline that you don't want to zap completely from Facebook, but don't want anyone to see, you can change the post's visibility to "Only Me."

Users can add other life events. Facebook is hoping that users flesh out their Timeline with information from B.F. (Before Facebook), too. Anything added to the Timeline can now be given a date. So, if a user uploads an old photo from summer camp, he or she can set the date to June 1995 so that it appears chronologically in the Timeline.

There's no sense in holding out. Facebook Timeline will eventually go live for everyone on Facebook, whether or not the user has taken the time to prune and optimize the Timeline view. It's best to be proactive and make sure what people will see is what should be seen.

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Contact Mark W. Smith at msmith@freepress.com. Follow him on Twitter: @markdubya

Miami-Dade unemployment falls again

.Miami-Dade’s seasonally adjusted unemployment rate fell yet again in November to 10.2 percent, down signficantly from October’s 10.7 percent rate, and down 2.4 percent from a year ago, according to a report released Friday by Florida’s Department of Economic Opportunity. The numbers are in keeping with other signs that Miami’s economy is improving.

In Broward, the unemployment rate remained flat, at 8.9 percent.

The state’s overall unemployment rate was 10 percent, the lowest since May 2009, and down .04 percent over October 2011. It remains higher than the national jobless rate of 8.6 percent.

Jane Wooldridge

What went wrong with foreclosure aid programs?

Steven and Lisa Maultsby lost their Mississippi home to foreclosure this year.

At the time, they thought they were being reviewed for a loan modification through the U.S. government's foreclosure-prevention program.

A Realtor knocking on their door to tell them to vacate told them otherwise
I'm bitter," says Steven Maultsby, 51, who works with undersea robots in the oil industry. "We did everything they told us to do."

The Maultsbys are angry not only at their mortgage company, but also at the government, and they're two voices among a discontented chorus.

The Obama administration's initial foreclosure-prevention programs, launched in early 2009, were intended to help 7 million to 9 million people. So far, they've aided about 2 million, and not all of those are out of foreclosure danger.

Programs begun later have also faltered. One intended to help at least 500,000 has helped just a few hundred a year after its launch. Another initiative to extend $1 billion to help the jobless or underemployed avoid foreclosure ended in September, obligating less than half of its funds. The unused money went back to the U.S. Treasury.

As of Nov. 30, the government had spent just $2.8 billion of the $46 billion war chest it had in 2009 to devote to the housing crisis, the Treasury Department says. More has been committed, but only $13 billion will ultimately be spent, the non-partisan Congressional Budget Office estimated in March.

Meanwhile, 2.5 million homes have been lost to foreclosure since 2009, an additional 4 million are in the foreclosure process or seriously delinquent, and home prices are still falling in much of the U.S., shrinking household wealth for millions of Americans.

"Every program has fallen far short of goals. I can't think of one that's been largely successful," says John Dodds, director of the Philadelphia Unemployment Project, a non-profit that's been involved in foreclosure prevention for decades.

The administration's programs were hampered by design flaws, their reliance on a mortgage industry overwhelmed by the fallout from a historic collapse in home prices, and a brutal extended housing downturn. Nor could they always overcome the conflicting interests of borrowers with too much debt, mortgage investors unwilling to surrender profits and mortgage servicers with sometimes greater financial incentives to foreclose on loans than to permanently modify them, say housing and government policy analysts, consumer advocates and former administration officials.

Critics also say the administration failed to entice banks and mortgage-finance giants Freddie Mac and Fannie Mae to take bolder steps to address the crisis even though the institutions received billions in government bailout funds.

"There was nowhere near the effort to help Main Street as there was to help the banks," says former senator Ted Kaufman, D-Del., who chaired a congressional oversight panel that oversaw $475 billion in Troubled Asset Relief Program (TARP) funds. Most of that went to banks and the auto industry, but $46 billion in TARP money also funded foreclosure-prevention efforts.

Administration officials defend their response. They say the scope of the problem was unprecedented — and so were their actions. Federal programs prevented many foreclosures even if they didn't help as many people as expected, officials say. They say the administration's efforts will save homeowners billions in mortgage costs.

They also say the initiatives helped millions of other homeowners by driving service improvements in the mortgage industry and preventing an even worse collapse in home prices. Since the peak of the housing market in 2006, $3 trillion in home equity has been lost, researcher LPS Applied Analytics estimates.

"It's too easy to underestimate the scale and complexity of these issues," Shaun Donovan, secretary of Housing and Urban Development, said in a recent interview, while acknowledging that some administration programs "haven't reached as many people as we originally targeted."

Those shortfalls are most evident in the:

•Home Affordable Modification Program (HAMP). Through October, the biggest foreclosure-prevention effort has resulted in 883,076 homeowners getting permanent loan modifications that made their loans more affordable and improved their ability to avoid foreclosure.

But HAMP was targeted to help 3 million to 4 million homeowners, President Obama said when he announced it in 2009. When it expires next December, it will have prevented fewer than 800,000 foreclosures, Kaufman's congressional oversight panel estimated in December 2010.

HAMP "has been a failure," Neil Barofsky, the former special inspector general for TARP, told a congressional committee in October.

•Home Affordable Refinance Program (HARP). Through September, it's helped 928,570 homeowners get lower-interest loans even though they lacked the amount of equity usually needed for a new loan.

HARP was intended to help 4 million to 5 million homeowners. While it was recently overhauled to encourage more refinancings, federal officials now say it will help fewer than 2 million borrowers by the end of 2013, when it expires.

So far, those getting HARP refis also tend to be people who aren't deeply underwater — those who owe more on their homes than they're worth. HARP refis have gone largely to homeowners with some equity or who were only slightly underwater, government data show. It's unclear whether the recent revamping will significantly change that, says Alan White, law professor and mortgage lending expert at the Valparaiso University School of Law.

More than 11 million homeowners — more than a fifth of homeowners with mortgages — are underwater, says market researcher CoreLogic. Many are unable to take advantage of today's historically low interest rates and wring some relief from the ravages of the recession and weak economic recovery.

Rep. Dennis Cardoza, D-Calif., whose district encompasses Stockton, one of the nation's worst foreclosure hot spots, says more needs to be done and that the changes to HARP are "too little, too late."

•Federal Housing Administration Short Refinance program. Intended to help 500,000 to 1.5 million homeowners refinance into loans with a lower interest rate, the FHA program did fewer than 400 deals through September, a year after the effort's launch, government data show.

The program requires mortgage owners to forgive at least 10% of a borrower's unpaid principal before that loan can be refinanced into an FHA loan at a lower interest rate.

But mortgage owners have been reluctant to forgive principal, fearing that doing so for some would create a "moral hazard," leading other borrowers to default to get help, says James Parrott, a senior adviser to the White House's National Economic Council.

"The moral hazard concern was stronger than we realized," Parrott says.

One big bank says it warned of the program's limitations.

Bank of America, which services 12 million mortgages, gave federal officials data showing the program would benefit only 10,000 to 15,000 customers because of its design and the degree of support from investors who owned loans, says spokesman Dan Frahm.

Almost 1 million modifications

Administration officials say the programs' statistics alone don't fully reflect what's been accomplished. "You have to look at the ripple effect," Donovan says.

HAMP, which most often lowers mortgage payments through interest rate reductions, is approaching 1 million permanent loan modifications.

That is "not a negligible sum," Parrott says.

HAMP also "significantly changed the market," says Michael Barr, former assistant secretary at Treasury who worked on mortgage issues while in the Obama administration.

Before HAMP, mortgage servicers had no standard approach to modify loans. HAMP created one and streamlined the process, says Barr, who now teaches at the University of Michigan Law School.

Since HAMP's launch, lenders have independently offered more than 2.5 million loan modifications outside of HAMP, staving off foreclosures for many.

"The overall impact of the (HAMP) program has gone unnoticed," says Teri Schrettenbrunner, senior vice president of communications for Wells Fargo Home Mortgage.

HAMP was announced just weeks after Obama took office and at a time when home prices had fallen for 30 months in a row.

Given the short time the administration took to launch HAMP and HARP, "We knew they wouldn't be perfect. We knew they'd be as good as they could be given the time we had," Barr says.

He says a prime reason that government programs haven't reached more people is that mortgage servicers "were really bad at doing their jobs."

Servicers collect home loan payments for investor-owners. Big banks, such as Bank of America, Wells Fargo and JPMorgan Chase, are among the largest ones.

The servicers lacked adequate processes and enough employees to meet the crush of distressed borrowers, Barr says. They took too long to beef up staff. They couldn't do "basic blocking and tackling" in communicating with borrowers, he says.

The Government Accountability Office documented problems when it surveyed housing counselors who work with borrowers seeking HAMP modifications. Almost 60% complained that servicers lost documents, 54% said trial modifications took too long, and 42% said borrowers felt that they were wrongly denied modifications, according to the GAO's report in March.

The Maultsbys weren't the only ones who lost a house to foreclosure while thinking help was on the way. Others did, too, said Treasury official Darius Kingsley in congressional testimony in October. He called such situations egregious.

The administration casts much of the blame on the industry, but others blame the government.

Barofsky says Treasury had to have known that servicers were "totally unequipped" to handle HAMP when it launched. Still, it rushed out a "poorly designed program," he says.

Servicers say changing program guidelines made it tough to implement the government programs.

In a three-month period, Treasury made 100 changes to HAMP, making it "physically impossible" for servicers to keep up, said Barbara Desoer, president of Bank of America Home Loans, in a recent speech to community leaders in San Francisco.

HAMP provides financial incentives — generally about $4,000 a loan — to servicers to modify loans.

The goal is to make it more economical for servicers to modify a loan than to foreclose.

But the incentives weren't big enough to draw broader servicer participation, says Jared Bernstein, former economic policy adviser to Vice President Biden.

What's more, the government made HAMP a voluntary program for servicers, then failed to make sure that participating servicers followed HAMP's rules, consumer advocates say.

HAMP ran for two years before financial incentives were withheld from any uncompliant servicer, even though abuses were "widespread," Barofsky says.

"There's been no enforcement or accountability," says Diane Thompson of the National Consumer Law Center.

The $1 billion Emergency Homeowner Loan Program was open to homeowners in 32 states who were ineligible for aid from a $7.6 billion fund for homeowners in 18 states hardest hit by the recession and falling home prices.

HUD took too long to launch the program, which didn't leave enough time to get applicants through an onerous application process, consumer advocates say.

Instead of helping 30,000 homeowners as first intended, the program is on track to help fewer than 12,000, HUD's preliminary data show.

That "is an absolute disgrace," says Ira Rheingold, executive director of the National Association of Consumer Advocates.

HUD officials say it took time to identify contractors to run the program, set up fiscal controls and ensure the program was run fairly.

"We, too, are disappointed," Carol Galante, a senior HUD housing official, testified at a congressional hearing in October.

More but smaller plans to come

New efforts are underway, but none appear to have the scope of previous plans.

State attorneys general and federal officials are negotiating a multibillion-dollar settlement with major mortgage servicers to help more homeowners.

If a deal is struck, it will include principal forgiveness on more home loans, Donovan says. That may show loan owners that forgiving principal really does lead to fewer defaults, Rheingold says, and encourage more of it.

Most of the $7.6 billion in Hardest Hit Funds, too, have yet to reach the market. States have through 2017 to use those funds.

The Treasury Department also says there are still 1 million homeowners who could be eligible for HAMP.

"We're going to keep fighting to fix this housing market," Donovan says.

Networking for Referrals: Making a Good First Impression

It’s much easier to form a good first impression than to recover from a bad one, says Michelle Tillis Lederman, author of The 11 Laws of Likability (AMACOM, 2012). From that first handshake and introduction, you’re forming an opinion of that person and they’re forming an opinion about you too. Everything from spoken words to posture and facial expressions contribute to that first impression.

“We are judgmental people. Our instinct is to make decisions and assumptions about other people in a minute-and-a-half or so of meeting them, maybe before you shake hands or even say ‘hello,’ ” says Lederman, founder and CEO of Executive Essentials. “It’s hard not to make a first impression.”

For real estate professionals, making a good first impression isn’t important just for building customer relationships but also for building relationships among your peers — which can bring referrals to your business and earn you some extra cash. Whether networking at industry events, conferences, or around your community, you want to make sure you’re making a lasting, memorable impression so that it’s your name others will pass along to customers. Those first 90 seconds when meeting someone new can be critical in establishing likability, Lederman says.

She offers some of the following tips on how to make a good first impression while “relationship networking”:

1. Watch what your body language says.
Your body language can send a lot of signals to whom you’re speaking — it can reveal your disinterest or show attentiveness and confidence, Lederman says. Here are some important things to remember in your body language while networking:

• Smiling: “It’s the most important thing you can do in a conversation,” Lederman says. A smile can communicate openness, approachability, and trustworthiness, and it can be warm and comforting. “A smile is the No. 1 way to reduce misinterpretation and judgment in the wrong direction on a first impression,” Lederman says.

• Eye contact: Consistent eye contact can make the other person feel understood, respected, and heard. But don’t stare, which can make others feel uncomfortable. Between extended periods of eye contact, take breaks of two to five seconds.

• Nodding: Women and men tend to use “the nod” differently in conversations: Men tend to nod when they agree with something while women tend to nod to show they’re listening, research shows. Using a nod when communication to show both agreement and attentiveness can be effective.

• Stand tall: Rolling your shoulders down can make your body appear smaller and send the message you’re closed off or lack confidence. Posture is important — broaden your shoulders and pick them up to open up your body frame and exude more confidence.

• Tone: Your voice tone also contributes to your first impression. If you’re not naturally peppy, then don’t be — you’ll come off as insincere. Have a confident voice. Avoid mumbling, using too many “um”s and “ah”s, or raising your voice at the end of your sentence like if you were asking a question.

2. Curiosity.
Start the conversation by being curious about the other person — what do you really want to know about her? Where is he from? How long has she been working in real estate? Is there any professional advice you would like to ask her? People love doling out advice, it makes them feel valued.

Keep your questions open-ended — beginning with “what,” “how,” “how come,” and “why,” Lederman suggests. For example, the question “What brings you here?” will encourage people to open up more than asking a yes or no question such as “Did your company send you?” Just be careful not to bombard people with question after question or they may feel guarded, Lederman warns.

“Showing genuine curiosity about a person’s job, life, interests, opinions, or needs is a great way to start a conversation, keep it going, and create connections,” Lederman says. But the conversation doesn’t always have to be work-related. Ask about hobbies, sports, interests, or vacations. “Be able to shift from professional topics to talking about anything,” Lederman says. “It’s over the more personal things that people bond.”

3. Listen closely.
So you’ve demonstrated curiosity — now listen carefully. There are three main levels of listening; a combination of the three can be effective in networking, Lederman says.

• Inward listening: Find a way to relate the information the person is telling you to your own life and experiences. This is how most people tend to listen, and it can be effective because you’re relating to other person. That said, be careful you don’t take advantage and make the conversation all about you.

• Outward listening: Listen in a way to understand more, with probing follow-up statements like “tell me more about that” or “how come?”

• Intuitive listening: Focus not just on what the person is saying but also the person’s body language (facial expressions, tone, and so on) and general “vibe.” With this form of listening, you’re going a step further by interpreting what you’re hearing. But watch out: “It could seem off-putting to people you just met to feel like they are being ‘read,’” Lederman says. “Be thoughtful with your tone of voice to make it clear that you are proposing and not assuming.”

4. ‘You too? Me too!’
People like people like them. Finding similarities and areas of common ground will go far in establishing instant rapport. Discover similarities in your professional experiences, people you know, beliefs, education, or work histories. “When we discover similarities, you form deeper and more lasting connections,” Lederman says. “You build a foundation of trust. If we have someone in common or a common interest, that makes me like you a little more and want to chat more.”

5. Authenticity rules.
Let’s say you’re looking for more connections to grow your referral business. If that’s your chief motivator when making initial contacts, then you’re doomed to fail — people can read insincerity. Passing out your business card before a relationship is even formed and coming across as self-serving in your interactions is going to do more harm than good.

“Make a shift from ‘It’s all about me’ to ‘It’s all about the relationship,’” Lederman says. “You need to network for a relationship, not just for now or to fulfill a need.”

Make the First Impression Count
So maybe you’ve survived the first 90 seconds and beyond of the conversation by sending off positive body language, being genuine and curious, listening, and finding common ground — but you’ll want to keep the relationship going beyond that first meeting. The key to follow-up is giving, Lederman says.

“One of the strongest ways to increase likability and foster a connection is to demonstrate that we understand someone else’s needs and are happy to help fulfill them,” Lederman says. “Extending a helping hand is one of the best ways to follow up, and it also opens the door for continued contact going forward.”

“Giving” could include extending an invitation to a future event, introducing that person to others, or providing resources such as links to information that the person might find engaging (just be careful that it won’t be viewed as spam), Lederman says.

“You can still stay in their mind without getting in their face,” Lederman says. “Look for genuine reasons to reach out to someone. Whatever you talked about, try to think of a quick follow-up to start building the relationship.”

Can Renters Solve the Housing Crisis?

Residential real estate is not rocket science. We know that this housing crisis is:
1. Explainable – bad lending, mad speculation, wild expectations, government meddling
2. Isolated – bad mortgages, negative equity, strategic default, government meddling
3. Temporary – demand for housing always catches up to supply eventually
Anyone with any experience and perspective will agree that this market will recover over the next 10 years, but what will this particular recovery look like? Since the root of the problem was unprecedented, the solution might be as well.

My belief is that renters are going to solve the housing crisis.

Homeownership rates have fallen by a few percentage points, which has translated into more than four million new rental households in just the past few years. According to the Census, 1.4 million of those were added between July 2010 and June 2011, showing that this trend is accelerating.

As a result, rental rates are growing at more than 5% per year, and this trend is also accelerating.

As a result of this, investors are pouring capital into American housing with a long-term mindset, kicking this trend into hyperspeed.

This crisis will not be solved by enticing home buyers. Their confidence is waiting for unemployment to come down and government to act responsibly, which could take a while.

But investors are confident right now. Why? Because they see the big picture. Rental demand equals stable cash flow. So what can be done to encourage them?

How about eliminating archaic waiting periods for investors who want to buy foreclosures? How about eliminating waiting periods for investors who paid cash and want to tap it with a refinance? Today they have to wait months to put that money back to work. Why not eliminate the overall bias against investors in FHA, Fannie Mae and Freddie Mac and require big down payments to make it safe to lend, and lend.

Better yet, keep your eyes peeled for a private sector player to seize this opportunity to create America’s first national investor mortgage brand. The estimates are that half a million investor loans close every year, and who owns that niche? No one.

The Martial Arts teach you how to use the weight and momentum of your opponent against them (or so they say in the movies). This is the same thing. This drastic increase in rental demand is a by-product of the foreclosure crisis. Use it against the crisis by turning it into positive cash flow investments for those willing to be confident and take a risk in this environment.

Burn off that shadow inventory and create housing options for newly minted renters, which will, in turn, stabilize rental rates, and everybody wins. Good credit renters and buy-hold investors will be the heroes at the end of this saga.

Greg Rand is CEO of OwnAmerica.com and former managing partner of Better Homes and Gardens Rand Realty.

For more information, please visit www.ownamerica.com [2].

Seven Essential Apps for Your Sales

Salespeople need not only charm and have a strong nerve, but also be extraordinarily organized. That first meeting with a client might not go anywhere if you don't remember to follow up in a timely manner. And if you forget a key name or conversation, forget about closing the deal.

For salespeople juggling all manner of critical information, we've assembled a list of seven of the most useful online and mobile apps that can help your sales team become more organized and, most importantly, more productive.

1. Salesforce or 37 Signals
A salesperson's anchor application should be cloud-based customer relationship management (CRM) software to record interactions with clients and prospects. One option is Salesforce.com, which offers a variety of ways for big and small firms to track client information. Large companies employing IT pros could program additional functions, such as connecting the service to their expense tracking system to show in the client record how much money and time you spent to close a deal. At the other extreme, small companies with five or fewer salespeople can utilized a basic version of Salesforce for just $5 per user each per month.

Companies with larger sales teams might consider cloud-based 37 Signals, says Wayne Spivak, founder of Bellmore, N.Y.-based financial advice firm SBA Consulting. For $100 per month, Spivak's 11-person team uses the Highrise app to manage contracts and track deals, as well as the free Writeboard app for document collaboration. But while the fees are manageable, Spivak says the service has some limitations. The iPhone app provides limited access to Highrise, for example, and Writeboard doesn’t limit which members of a business team can view a document, he says.

2. Scan Biz Cards
A business card reader, the Scan Biz Cards app for Android ($4.99) and iPhone ($6.99) -- and soon for Windows Phone 7 -- converts photos of business cards into address book entries that can be exported to CRM apps. For $9.99 a year, the app provides online backup

Scan Biz Cards also allows users to add notes and reminders. "You can say, 'A week from now, I'll give you a call,'" says Gabrielle Carsala, who uses it for her Chesapeake Beach, Md.-based startup LocalBucks, which is developing a universal gift card for local merchants.

If you use the Android version, be prepared for extra finagling. After installation, select the app's "Settings" menu, then check "Use Device Camera." Otherwise, the app could crash.


3. Tout
This Web-based app lets users create templates for common messages such as meeting follow-ups. Tout also tracks emails, showing who viewed them, clicked on a link or responded.

A browser plugin automatically scans for any email addresses listed on a Web page, helping you quickly find the person you need. “Click the [contact] you want, click the template button and you're sending an email in two minutes,” says Beth Morgan, vice president of marketing for Palo Alto, Calif.-based healthcare tracking site Simplee.

A free iPhone app sends template-based emails and displays the status of mailings. Pricing for Tout ranges from free for a barebones account to $199 per month for 25 users

4. FreeConferenceCall.com
Just what it sounds like, FreeConferenceCall offers unlimited calls, as long as six hours each, for up to about 100 people. The Web-based interface makes it simple to set up a conference call without paying for a dedicated service. It also provides free recording of calls, which are stored online and can be downloaded. Users pay standard long-distance charges, but no additional fees.

The company recently added service to 10 European countries, along with Australia, Canada, South Africa and Japan.

5. Tripit
This Web service acts like a travel manager, consolidating travel itineraries, reservations and appointments. Tripit parses confirmation emails from airlines and hotels to create a calendar you can view online or export to Microsoft Outlook and other apps.

For $49 a year, Tripit Pro adds features including flight-delay alerts and frequent flier account tracking. Tripit also is accessible from apps for the iPhone, iPad, Android, BlackBerry and Windows 7 phone.

6. Grasshopper
This call router helps free you from a landline and routes calls to any phone you choose. A client's call to your company can be automatically redirected to the cellphone of a sales rep who might not necessarily be at his or her desk.
Grasshopper's monthly fees range from $9.95 with a six-cents-per-minute charge that could add up fast, to $199 for 10,000 minutes.

7. Pocket Mileage HD
This app allows you to track sales travel by filtering entries based on criteria such as vehicle, driver or purpose. Carsala of LocalBucks uses Pocket Mileage HD to have travel information broken down weekly, monthly or quarterly, and to export the data to a PDF, HTML file or CSV file (for use with Microsoft Excel).

At $4.99, the app is limited to iPhone, iPod Touch and iPad. App developer BlueTags says it has no plans to create Android or BlackBerry versions of the app.


Copyright © 2011 Entrepreneur Media, Inc. All rights reserved

Stay In Front of Your Past Clients

As the holidays approach, our team is gearing up to get our holiday greeting cards created, signed and out the door on time! As a team of Real Estate Virtual Assistants, we have unlimited resources for our holiday card fiasco, but even so it is one of those things that usually is put on the back burner until it’s crunch time! This has me wondering how the typical real estate agent without an assistant and/or staff is handling this. I fear that many of your clients and past clients simply won’t hear from you at all.

Time and time again when I’m consulting with an agent and I ask ‘where does the majority of your new business come from?’ hands down, the answer is almost always ‘past client referrals and repeat business’. If this is the case, then why is so little time, effort and attention spent on these important influencers? Agents spend so much time and money on garnering internet leads and typically very little when it comes to past clients. Is it because it is too easy to touch base with our past clients and if it doesn’t feel like “work” then we don’t feel that it will pay off? Or perhaps you just don’t know what to do? Whatever the reason, you must change your paradigm, because you’re missing out on easy referrals from people that already want to advocate for you!

Stay In Front of Your Past Clients:
This is a no brainer. I hear this phrase in real estate all the time. Stay in front of your leads, sphere of influence, past clients, web leads, etc. This is easily accomplished with leads we don’t know – put them on a customized drip, send them postcards, newsletters, etc. However, when staying in front of your past clients, it needs to be more personal. Sure a monthly newsletter is great (as long as it is customized and not completely a template and also offers something of value), but let’s get personal:

•Find them on Facebook, Twitter, LinkedIn. Friend them, tweet them and connect with them! Make it easy for them to refer business to you, after all EVERY FRIEND AND ACQUAINTANCE they have is in their Facebook account!!!!
•Send them a personal holiday card – Yes, the one with your family’s photo on it! Make them feel warm and fuzzy, not stuffy with a business holiday card, save those for your other leads.
•Offer something of value to them consistently year after year. Consistency is the key here. Every year on the anniversary of their home sale/purchase, send them a personalized note with a complimentary market analysis. If they get this every year, they will come to expect it and rely on you for this information. They will also talk about their knowledge with friends, family AND NEIGHBORS and I’m certain they will acknowledge that the only reason they are so knowledgeable is because of you!
•Make sure they know you want to help their friends and family. Sounds silly right? Of course you want them to refer their friends and family, but never assume anything! My husband happens to be a real estate agent that “focuses” on first-time homebuyers and I can’t tell you how many close friends have said, “oh, I didn’t know he would help them since they aren’t a first time buyer.” Ouch. Make sure you let them know you want to help anyone they know!
Reward Them:
Everyone loves free stuff. I was recently at NAR and I was astounded by the junk that people were fighting to get just because they were freebies…. Everyone loves something for nothing. Why not reward your past client for their referrals, and sometimes just because. You’ll obviously need to check on the rules and laws in your area to make sure you’re not offering something you shouldn’t, but rewarding your past clients for their referrals is not only a way to motivate them but also a way to say thank you for thinking of me!

Port of Miami plans marina

A new plan calls for "a unified waterfront global destination" at the Port of Miami featuring a mix of commercial development including a marina to berth mega-yachts, ferry service to the Caribbean, and hotel, retail, restaurant and office space.
The ambitious projects for the future are outlined in the latest Port of Miami Master Plan, which Miami-Dade commissioners approved Tuesday. Seaport officials were planning a presentation of the plan Wednesday at the port.
The master plan, which runs through 2035, calls for development of a mega-yacht marina complex at the southwest corner of the port.
"Immediately adjacent to the marina would be a waterfront promenade with retail and restaurant areas," the document states.
"This development would ideally work in conjunction with the cruise area to provide early arriving passengers the opportunity to spend quality time in Miami prior to their cruise," the plan states.
At this point, there are no specific proposals for a marina or other commercial development at the port, but seaport officials see such development as a key to diversifying the port's businesses and staying competitive in the future, said Port of Miami spokeswoman Paula Musto.
"These are just ideas," Ms. Musto said. "The important thing to keep in mind is that the master plan is just a guide as proposals and opportunities [for development] are identified."
Ms. Musto said the port's largely vacant southwest corner — with its premier views of downtown Miami and high property value potential — seems ripe for development someday.
She added, "A market study has to be done before we look at specifics."
Miami city officials a decade ago gave Flagstone Development Group the OK to build a mega-yacht marina and hotel complex near the port on city-owned Watson Island. Work has not begun. Flagstone could not be reached Tuesday.
Other elements of the port master plan:
nDesign and development of cruise ferry service from the port to the Caribbean. The service, which could capitalize on the anticipated opening of cruises to Cuba and elsewhere, could be based at the southwest port property.
nDevelopment of hotel, retail, restaurant and office space to serve cruise passengers and the community. Such development could cluster around the southwest port property.
nErecting 23 super-sized gantry cranes by 2034 to handle more cargo. Currently, the port has two of the so-called "Post-Panamax" cranes and is in the process of getting four more.
The seaport's last master plan, completed in 1999, included several infrastructure projects now underway.
With the new plan, port officials want to augment their significant cruise and cargo business with commercial development.
"One of the new strategic elements of the Port of Miami will be the introduction of commercial aspects to the business portfolio," the plan states.
The port "has spare land assets that allow for commercial development opportunities," the plan adds. The port's current "weakness as a central business district "downtown' port can be exploited as a major strength in this regard."

By Scott Blake

Buy a house for half a million dollars and get a visa

Buy a house for half a million dollars and get a visa to stay in the United States for three years.

That's part of a bill in Congress that aims to stoke the weak U.S. real estate market by luring more wealthy foreign buyers. But the plan is getting mixed reviews in South Florida, one of the country's hardest-hit housing markets.

Critics say the incentives for foreign investors, as written, won't attract many buyers. For example, the bill does not let foreigners work while they're here, and it does not offer them a path to permanent residency. That's what many Chinese investors want, said developer Lon Tabatchnik, who is luring Chinese investors to his Margaritaville hotel project in Hollywood with a different visa program.

"The Chinese aren't coming here for a three-year vacation," Tabatchnik said. "They're coming here to work and educate their children."

The bill also would classify the housing investors as full-time residents, requiring them to pay U.S. taxes on their worldwide income. Many Latin Americans and Europeans now buy U.S. real estate as an investment, but don't stay full-time, so they won't be taxed on their global holdings, said immigration lawyer Larry Behar, of Fort Lauderdale.

The provisions are part of a bill co-sponsored by Sens. Charles Schumer, D-New York, and Mike Lee, R-Utah, that would change travel visa programs to lure more foreigners to America. Its real-estate portion would let foreigners stay in the country for three years if they invested at least $500,000 in housing, including at least $250,000 for what would become their principal residence. The travel visa could be renewed.

Many Florida lawmakers are still studying the bill, dubbed VISIT-USA. Some say they're encouraged by creative efforts to reduce the state's glut in housing.

"In Florida, if we can help the real-estate market, we can help the general economy," said Rep. Ted Deutch, D-Boca Raton. He said the terms of the bill could be tweaked to boost its effectiveness.

Travel leaders in South Florida give rave reviews to provisions that would modernize the visa process. It now can take three months for qualified applicants in Brazil and China to get U.S. travel visas.

The bill would let foreigners pay extra to get their visas processed within three business days and let U.S. officials interview applicants by video conference to speed approvals, among other measures.

But details of the travel visa-for-homes proposal are prompting the most concerns locally. Behar said the new bill might distract Congress from extending a different law that brings foreign investment to job-creating ventures. The employment-based visa program, known as EB5, is helping fund Miami's Life-Science Technology Park and other regional projects. EB5 will expire Sept. 30 unless renewed.

"At the end of the day, it really has to be about job creation for Americans," Behar said. The Schumer-Lee bill does not require that new jobs be created.

Said developer Mo Abbas, who promotes EB5 projects in Hollywood: "In my opinion, the bill will result in sellers' inflating residential prices so their homes qualify for the proposed three-year tourist visa. What we need is long-term investment, not a quick fix."

dhemlock@tribune.com, 305-810-5009 or Twitter @dhemlock


Copyright © 2011, South Florida Sun-Sentinel

House bill proposes 1-year limit on foreclosure deficiencies

A bill introduced in the U.S. House of Representatives would limit the time frame for deficiency judgments against single-family homes and give protection to low-income households.

House Resolution 3566, also known as the Fairness in Foreclosures Act of 2011, would put a one-year limit on any judgment except in states that have shorter restrictions. Existing law would take precedence in those states.

Rep. Ed Towns, D-N.Y., introduced H.R. 3566 [1] on the House floor Tuesday.

"A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to homeowners after they have gone through the arduous foreclosure process," Towns said in a release. "Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely."

The bill would also prohibit deficiency judgments against a borrower in a "low-income family," and any deficiency would not be reported to credit agencies.

Deficiency judgments typically come about after a short sale or foreclosure sale when homes are sold at a price lower than the amount left on the mortgage. Rules and limitations vary by state, though often a first loan, or purchase-money mortgage, is free from deficiency actions.

California, through two separate laws in the last year, barred lenders and servicers from seeking deficiencies in residential mortgages. Nevada enacted a law in June eliminating them in specific circumstances, notably for homeowners who have not refinanced.

U.S. pre-foreclosure sales, often short sales, totaled 102,704 in the second quarter according to data firm RealtyTrac. Short sales made up 12.1% of all sales in the quarter in the most recent data available.

H.R. 3566 was referred to the House Judiciary Committee after its introduction Tuesday.
Posted By ANDREW SCOGGIN

2012 mortgage delinquencies seen dropping sharply

NEW YORK – Dec. 8, 2011 – If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion.

Mortgage delinquency rates – the ratio of borrowers 60 or more days behind on their payments – will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday.

But by the end of next year, it could drop to 5 percent, TransUnion said. That’s well off the peak of 6.89 percent seen in the fourth quarter of 2009.

Chicago-based TransUnion’s forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year.

Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting.

Banks are still working through a backlog of foreclosures created by issues including the robo-signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order.

That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates.

Economic uncertainty has also contributed. In the third quarter of 2011, mortgage delinquencies saw their first uptick in six quarters, largely fueled by concerns over the economy as lawmakers were debating the U.S. debt ceiling and Europe’s debt crisis was unfolding.

Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market.

While the drop will be significant, the rate will remain well above the pre-recession average of 1.5 to 2 percent.

“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.

The situation with credit cards is much stronger. Card delinquencies – payments late by 90 days or more – dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows.

TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank-issued cards should fall again.

One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were opened by people with less-than-stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top-tier credit histories.

“Lenders are willing to lend, but are still pursuing the best customers,” said Chaouki.

TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has wobbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009.

The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far.

Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more practical.

“People were protecting their home equity,” he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it’s common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them.

He said he expects the equation will shift again if housing prices rebound and people go back to building home equity.
Copyright © 2011 The Associated Press, Eileen A.J. Connelly, AP personal finance writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed

Barclays analyst sees housing rebound coming in 2012

Barclays Capital (BCS [1]: 11.98 +6.96%) analyst Stephen Kim predicts a housing recovery buoyed by improving jobs numbers and the fact prices for nondistressed homes will have stabilized without government support.

"In the absence of a government homebuyer incentives, prices for non-distressed home sales have stabilized for almost a year," Kim said. "This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices."

Barclays said recent economic data — including higher job creation in November, housing starts and improved homebuyer traffic — point to some improvement potential in the sector.

In mid-2010, the federal homebuyer tax credit expired, leaving the housing market without training wheels for the first time since the 2008 economic meltdown. Yet, prices in some housing markets remained stable on the back end.

With its new outlook in the market, Barclays upgraded D.R. Horton's (DHI [2]: 12.565 +2.74%) stock to buy and raised price targets for D.R. Horton, Lennar (LEN [3]: 19.60 +3.05%), Toll Brothers (TOL [4]: 20.7503 +1.77%) and Meritage Homes (MTH [5]: 22.85 +2.05%).

At the same time, the investment bank raised its 2012 earnings-per-share estimates for D.R. Horton, Lennar, Meritage Homes, Pulte (PHM [6]: 6.32 +4.12%) and Toll Brothers, while lowering its estimates for KB Home (KBH [7]: 8.09 +2.53%).

"Thus, the key to timing housing’s recovery depends primarily on when these first-time buyers decide it is safe to buy a house," Kim concluded.

Write to Kerri Panchuk [8].




Posted By KERRI PANCHUK On December 5, 2011 @ 11:34 am | 2 Comments
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Article printed from HousingWire: http://www.housingwire.com

Future Home Seller profile

The 2011 National Association of Realtors® Profile of Home Buyers and Sellers recently surveyed 5,708 home buyers and sellers and found not only that home sellers are staying in their homes longer (now 9 years up from 6 just two years ago), but home buyers are expecting to stay longer in their homes (15 years, up dramatically from 10 in recent years).

The National Association of Realtors (NAR) study also revealed that 87 percent of home sellers sold their home with the assistance of a real estate agent, compared to the 89 percent of home buyers that used a real estate professional, which is at a ten year high. Most consumers transacting real estate this year use the services of a real estate professional, likely welcome news to Realtors.

The share of home sellers working with an agent was highest in the Northeast at 90 percent and lowest in the Midwest at 85 percent.

The study showed that 10 percent of sales were for sale by owner (FSBO) and that FSBO sales were highest in the Midwest at 13 percent and lowest in the West at just 6 percent.

According to the trade association, “The method of sale tends to differ in conjunction with the relationship between the buyer and seller. If the buyer and seller know each other, the sale can be either an armslength transaction consistent with local market conditions or it may involve considerations that would be not be relevant in the absence of a prior relationship.”

Of all home sellers, 6 percent say they knew the buyer of their home, down 2 percent from last year. Among sellers who used a Realtor, only 3 percent knew the buyer.

The story is very different for FSBO sellers – over one in three knew the buyer of their home prior to the transaction.

Most people now use a Realtor, and fewer people know the buyer of their home than last year. FSBOs account for roughly one in ten home sellers, and of those FSBOs, one in three knew the seller before the transaction. The sales method differed depending on what region a seller is in, with real estate professionals being most widely used in the Northeast.

Prices Mostly Stabilize: Why Aren't More Talking About It?

An improving job picture and prices stabilizing for non-distressed homes are all signs that point to a housing recovery taking shape, Barclays Capital analyst Stephen Kim told HousingWire.

"In the absence of a government home buyer incentives, prices for non-distressed home sales have stabilized for almost a year," Kim said. "This is the most important trend in the housing industry right now, and we are amazed at how little attention it has been getting from the media and the street. This stability on the part of nondistressed prices has occurred despite a very high share of distressed activity and continued declines in overall prices."

The key to when the housing recovery will largely take off “depends primarily on when these first-time buyers decide it is safe to buy a house," Kim told HousingWire

Are You Ready to Be a Landlord?

Are You Ready to Be a Landlord?

The pitch is compelling: Buy a vacant house or apartment building and rent it out to some of the throngs of Americans who have lost their homes to foreclosure. With interest rates near record lows and property values still slumping, getting into the landlord business is cheaper than it has been in years.

Investors turned off by paltry bond yields and the mercurial stock market are intrigued. Kimberly Foss , president of Empyrion Wealth Management in Roseville, Calif., says she has seen a surge of clients looking to purchase distressed homes and apartment buildings. Her clients have an average net worth of about $4 million, she says.




"Many of my clients are looking to use part of their portfolios to scoop up properties," she says. "They see it as an alternative retirement plan."

But aspiring property owners need to watch out for a slew of traps. Among them: prolonged vacancies, surprise costs, deadbeat tenants, difficulty refinancing and overestimating the rental potential.

It is easy to overlook those risks when the market conditions appear so ripe. Home prices have fallen to 2002 levels nationwide, according to the latest data from the S&P/Case-Shiller index, and financing remains cheap. For the week ending Nov. 10, the average rate on a 30-year fixed-rate loan was 3.99%, not far from the Oct. 6 record low of 3.94%, according to Freddie Mac data going back to 1971.

Rents are improving, too. The average monthly rent for all categories, including apartments and single-family homes, was $846 nationwide in the third quarter, up 2.5% from the same period a year earlier, according to Local Market Monitor, a Cary, N.C., firm that analyzes real-estate trends. That is lower than the long-term average gain of 3.5% a year, but better than the 3% decline in calendar year 2009.

Even the Obama administration is considering getting involved in the rental markets. Government officials have been soliciting ideas for how to convert some of the foreclosed homes owned by Fannie Mae and Freddie Mac into rentals, in order to cut the mortgage giants' losses on those homes.

All of this is attracting interest among investors. Brian Davis , who runs ezLandlordForms.com , a website for property investors, says traffic is up 20% this year.

"Most people think I'm crazy to buy now," says Jason Walker, a marketing director in Washington. But the numbers were too good to pass up, he says. Mr. Walker is closing this week on a town house in Baltimore, for which he paid $275,000. He says he put down 20% of the purchase price, locked in a 4.5% rate on a 30-year fixed mortgage and expects to net $1,000 a month in profit.

Here is what you need to know before taking the plunge.

Cheaper homes aren't always a good investment. Even if a property is selling for half the price it fetched during the boom, that doesn't mean it will generate enough income to make the deal pay off, says Wayne Copelin , a financial planner in Sugar Land, Texas.

The key is to figure out how much rental income the property will generate. A good rule of thumb: Make a deal only if you can collect at least 1.25% of the purchase price each year in rental income, says Jason Reed , a real-estate agent in St. Paul, Minn., who works exclusively with investors.

Determining the rental potential can be tricky. Some properties already have been rented out, and the owner can furnish records. Others have no rental history.

One way to examine the rental market is to use websites like FinestExpert.com , which tracks occupancy rates and rents across the country.

In certain sweet spots, rents are rising even as home prices fall. Take Nashville, Tenn., where rents have jumped 6% over the past 18 months, while home prices have dropped 3%, according to Local Market Monitor. Other markets where that is happening: El Paso, Texas; Houston; Omaha, Neb.; Raleigh, N.C.; Pittsburgh; and Washington.

Markets in areas that have been battered by foreclosures, such as Las Vegas and Phoenix, remain unstable. They might have low prices, but they also are suffering from high unemployment. That could leave aspiring landlords with empty homes, which then could fall even further in value, according to Local Market Monitor President Ingo Winzer .

Local Market Monitor cites Austin, Texas; Akron, Ohio; and Dallas as among the most attractive markets overall, and calls Detroit, Las Vegas and West Palm Beach, Fla., "dangerous."

When looking at properties, act like a renter, says Jeff Cronrod , president of the Boulder, Colo.-based American Apartment Owners Association. Tour the neighborhood to see if landlords seem desperate to lure tenants. Are there lots of vacancies? Are buildings offering deals like living rent free for a couple of months in order to drive up demand? If so, be wary, Mr. Cronrod says.

Carrying costs add up. Another pitfall for real-estate investors: not accounting for unexpected expenses.

Besides closing costs, which generally average between 3% and 6% of the purchase price, general maintenance expenses like taxes, insurance and repairs can be much higher than many investors expect, says Jason Post , president of Los Angeles based Post Investment Group, a boutique real-estate investment firm that buys and operates apartment buildings.

You should allot roughly $2,000 a year for insurance, taxes and any association fees for neighborhood pools and the like, Mr. Reed says. To ensure that a major repair doesn't break you, set aside at least six months' worth of expected rent, he says.

"You can't even fathom some of these strange costs," says Jerry Garretty , who runs a property-management firm in San Jose, Calif. Six months ago, Mr. Garretty says, he found a nasty surprise after overseeing the eviction of tenants who were three months behind on rent in a Cupertino, Calif., home: They had poured quick-drying cement into the sewer pipes—a $1,000 repair—and defaced the walls with graffiti scrawls, he says.

Jumps in property insurance premiums also can dent your investment profits, says Jason Holtz , a real-estate lawyer with Kevin Jursinski & Associates in Fort Myers, Fla. This is particularly common in states like Florida that are prone to tropical storms.

Kathleen Farmakidis , owner of a three-unit apartment building in Winter Haven, Fla., says she has seen her property insurance jump 50% this year, to $110 a month.

Venturing far from home can be dicey. It is a good idea to buy rental properties only in your immediate geographical area, Mr. Cronrod says. Although it might be tempting to venture far from where you live for better deals, those properties can be difficult to manage.

As an owner, you need to be ready to repair leaky faucets, collapsed roofs and all other middle-of-the-night disasters—or pay someone to do it.

Hiring a local property manager can help. Such managers perform maintenance, collect rent and even screen tenants. But they typically charge 8% to 10% of the annual rent for their services.

And some are much better than others. Michael Epstein bought a single-family home in Pompano Beach, Fla., in 2009 even though he lived more than an hour's drive away in Jupiter and the house needed work.

Mr. Epstein, a small-business owner, hired a property manager to rehab the house, which he scooped up at a foreclosure sale, and maintain it. But because Mr. Epstein didn't visit often, it took him months to discover the manager hadn't been overseeing construction and that the work was botched. He had to spend an additional $40,000 to bring the property up to building codes.

"That was a risk I didn't even factor in," Mr. Epstein says.

It pays to plan conservatively. Don't assume you will be able to attract renters immediately. If a neighborhood is littered with foreclosures, those properties aren't going to be any more attractive to would-be renters than they are to buyers, says Jim Evans , president of real-estate investment firm Bruce G. Pollack & Associates and president of the nonprofit Institute of Real Estate Management.

The best tactic, say financial advisers, is to build in a cushion. Assume you need at least three months to find a tenant, and keep that much cash in reserve.

John Interdonato wishes he had foreseen the dry spell he would suffer after buying an investment property in Cape Coral, Fla., for $280,000 in 2005. The electrical engineer planned to rent it out for enough to cover the $2,200 mortgage payments. But after the property sat empty for more than a year, starting in 2009, Mr. Interdonato fell behind.

Last December, after having sunk 50% of his savings into the property, he was forced to sell.

"It felt like I was staring down the barrel of a shotgun," he says.

Refinancing can be difficult. With interest rates so low, many homeowners have been able to refinance their mortgages recently. But lenders are reluctant to take on refinances of investment properties, says Matt Englett , a real-estate lawyer in Orlando, Fla.

Banks view such owners as more of a risk, he says, because they can walk away from the property more easily than owners of primary residences can.

Mark Cheplowitz, the owner of an international event-planning firm in Aurora, Ohio, says he is losing roughly $24,000 a year on two properties in Collier County, Fla. Last week, a lender declined his applications to refinance the mortgages.

Mr. Cheplowitz says he despairs whenever he flies down to check on the properties.

"Here I am, staying in a crappy motel," he says, "as tenants live in these beautiful carriage houses I am losing money on."

Screen tenants with care. Renting out your property to unreliable people can be a costly mistake. Eviction proceedings can take months, and owners can't rent out the property until the eviction is final.

Chris Ourand, a chief marketing officer for a technology company, says he battled for nearly 10 months to evict a tenant who had stopped paying rent in February on a four-bedroom town house in Arnold, Md.

Mr. Ourand, who lives in nearby Severna Park, says he trekked to court three times to get the tenant to pay up. In October, he says, he was able to oust the delinquent tenant, whom he says trashed the place.

Mr. Ourand says the ordeal cost him roughly a third of his annual investment income on the property. "This is the worst experience with investment properties I have ever been through," he says. "It was a nightmare."

Even tenants with clean credit can turn out to be unsavory. Attorney Rachell Horbenko says she had to boot tenants from her Chicago building after waking up in the middle of the night to the smell of marijuana. The tenants were consuming so much, she says, that the smoke had seeped into her six-month-old daughter's room.

"The room was cloudy," she says. "I could barely see the crib." The eviction process took more than three months, she says.

Write to Jessica Silver-Greenberg at jessica.silver-greenberg@wsj.com

Miami's billion-dollar real estate boom

Even by the standards of the city that put the "over" in overbuilding, the projects announced this year for Miami are colossal:

Swire Properties, a global real estate company based in Hong Kong, unveiled plans for Brickell CitiCentre, a $700-million retail, office, hotel and condo tower project totaling 4.6 million square feet on nine acres off Brickell Avenue in downtown Miami.

Then, Malaysia's largest conglomerate, casino-resort developer Genting Group, paid more than $400 million to secure more than 30 acres on the bayfront for its $3.8-billion Resorts World Miami. The project will include four hotels that total 5,200 rooms; a casino; 1,000 condos; a pool more than three football fields long; and a column-free convention ballroom that will be one of the largest in the nation.

Both developers have such deep pockets that they won't have to worry about the credit markets. And Genting says it will build regardless of how the legislative scrum plays out on casino gambling.

Meanwhile, the construction crane has returned to the city's skyline with an Argentine company's new condo tower. Foreign developers — and projects backed by foreign investors — have emerged in force ["Foreign-Backed Projects," page 44], and more may be in the offing. "There are a lot that have invested — and it's not even public — that are of equal financial strength and stature as Genting and Swire," says a land-use attorney for those two firms, former Miami Beach Mayor Neisen Kasdin, managing shareholder for Akerman Senterfitt's Miami office.

"This is completely different in quality and quantity and depth and staying power than anything we've ever seen before, and it bodes very well for us," says Kasdin. "It's a recognition that Miami has arrived as a major global gateway city."

What a change for a downtown that was ground zero for the real estate recession. Beginning in 2003, developers put up 22,250 condo units in 80 projects downtown, begetting excess inventory, foreclosures, falling prices and

discounted sales. As recently as 2009, it was projected to take a decade to

absorb. Instead, the last of those units will be sold by next year, projects Peter Zalewski, principal of Bal Harbour-based real estate firm Condo Vultures.

Seven of 10 new buyers, says Zalewski, come from abroad, and the wider Miami area is on pace to pass the sales volume at the height of the boom in 2005, according to the Miami Association of Realtors.

A bustling, more densely populated downtown is emerging. Women feel comfortable jogging alone. Parents exit condo lobbies with kids in strollers. Spanish, Portuguese, Russian and German are spoken.

The foreign buyers and investors are responding to multiple draws: The city's location and appeal, a new strength in the arts, the widening of the Panama Canal, a strong market for renting out units, a weak dollar, fears of political developments in home countries and real estate that's cheap relative not only to New York but also to São Paulo. Prolific condo developer Jorge Perez says South Americans "have effectively saved the real estate market."

And they've prompted new building. Zalewski counts eight towers totaling 2,800 units planned for downtown Miami alone. Melo Group, an Argentina family business, has an 18-story, 96-unit condo tower rising in the city's arts district. Another condo developer, Harvey Hernandez, hopes to break ground in the second quarter on Brickell House, a 46-story condo tower he's building with backing from U.S. and foreign investors. He has his eye on foreign buyers. They pay cash and, as is customary back home, put 70% down during construction.

Jobs will be welcome in Miami. Unemployment countywide in September was 11.5% — higher than both state and national averages. Construction employment has fallen by 45% — 25,300 jobs — from the 56,200 who were working in 2007, the market's peak.

Condos aside, direct foreign investment in Miami commercial real estate also has rebounded, hitting $472 million this year. That marks a huge jump from 2010's $16 million, though well off the recent peak of $1.5 billion in 2008, according to Real Capital Analytics, a New York research and consulting firm. Market analysis director Ben Thypin says the $472 million figure is almost certainly understated because the firm tracks only direct commercial investments of more than $2.5 million, not individual condo purchases or investments through conduits. "A lot of people in the industry have been shocked by how less volatile Miami was in the last few years," Thypin says.

Hernandez, a native of Venezuela who has built in Florida for 20 years, says "what you're seeing nowadays is unprecedented." Miami always has drawn foreign investors interested in a condo or two or a single commercial property. "Now what we're seeing is a lot of the tier-one investors," Hernandez says. "They see Miami has all the potential to be at another level in three or five years, and they're paying top dollar. These guys from Asia are grabbing everything."

One of those guys is Tan Sri Lim Kok Thay, 60, executive chairman of Genting, who Forbes reckons is worth $665 million. (In Miami, he goes by the westernized K.T. Lim. Tan Sri is a title awarded to select Malaysians.)



Genting purchased the Miami Herald property on Biscayne Bay


Lim's late father, Lim Goh Tong, a native of China, emigrated to Malaysia in the 1930s. The elder Lim owned the only casino in Malaysia and built a conglomerate from the proceeds. His son first came to Miami 40 years ago, "literally backpacking," while on break from studying civil engineering at the University of London. He went on to Orlando — "I only wish I had bought real estate. I should have followed Walt Disney." And he enjoyed a grandstand seat for an Apollo night launch. "I felt the earth shake and the heat. It was one of the incredible experiences."

Lim joined his father in business and took Genting international with casino resorts and Genting Hong Kong, the world's third-largest cruise line. "K.T. Lim is a brilliant man, a visionary, a strategic thinker," says Walter Revell, a former Florida Secretary of Transportation who has known Lim for 12 years through serving on the board of Norwegian Cruise Line, of which Genting now owns 50%. Lim broke the cruising mold at Norwegian with the introduction of freestyle cruising.

Genting's "crowning achievement," according to a six-minute promotional video it plays for community leaders, will be Resorts World Miami. "Approach from any direction and prepare to be awed," a narrator intones. A seven-story terraced base will hold 50 restaurants and bars. Atop that will sit a four-acre pool stretching from Biscayne Boulevard to Biscayne Bay. Rising above that will be towers with the hotel rooms and condos. "A $3-billion investment in Florida, an engine for more than 15,000 direct and indirect construction jobs and another 30,000 jobs for the years to come," the narration concludes. "A vacation hot spot, an economic catalyst, an architectural icon, the heart of the city of Miami, a source of pride for all Floridians. This is Resorts World Miami."


Genting's project will include a seven-story terraced base that will hold 50 restaurants and bars. Atop that will be towers with hotel rooms and condos. [rendering: Resort World Miami]

Not to mention — which the video doesn't — a casino, perhaps the largest in the world. Genting says that if Florida rejects casino gambling, it still will build its resort, but over the course of up to 15 years rather than in three to five years after groundbreaking. Genting U.S. principal Colin Au told a Greater Miami Chamber of Commerce audience in October that the Genting tide will lift all ships. In contrast with local "racinos" that attract local customer bases with a mix of horse or dog racing and slot machines, Genting's casino aims to attract gamers from outside the state and country. "Gaming cannot be parasited on the local economy around it because it is never sustainable. In Asia, we have what we call an export mentality. We want to get people from far away from us, as far as possible."

Namely, Latin America and its 560 million people. "Miami is our proxy for Latin America," Au said. Between Latin America and the northeast U.S., he says, Miami will draw 5 million more tourists a year, with windfalls for airport concessions, local attractions, venues and hotels, shops and tax coffers.

Plenty of other gambling industry players, however, don't want Genting to be the only game in town. Potential competitors include Fortune 500 casino company Las Vegas Sands, Wynn Resorts and others.

More than a few in Miami worry that the city could end up as Vegas on the bay. In their view, Miami is doing just fine, thank you, as an international city without gambling. Already, nearly eight of 10 city residents speak a language other than English at home. Approximately 1,000 multinational companies and 41 international banks have a Miami-Dade County presence as well as 71 foreign consulates and 20 trade offices. Two of the 10 largest Florida-based banks, City National Bank and Sabadell United, both based in Miami, are owned by Spanish banks.

Some of the most concerned about casinos are business people historically eager for economic development. "God forbid we be like Las Vegas," says Miami businessman and developer Armando Codina.

Codina, who led an anti-gambling effort in the past, plans no role in the latest contest but hasn't changed his personal views that gambling is a regressive tax, "like the lottery," a magnet for social ills and a siphon from local business. "Traditionally, casinos are very selfish businesses," Codina says. "They encourage you to spend all your money inside their establishment. As a result, very little tends to grow in the shadow of a casino. I will be happy and pleased should Genting break with that pattern if they come to Miami."

The Florida Chamber of Commerce opposes expanded casino gambling. The board of the Beacon Council, the local economic development group, hasn't taken a position, but in October President Frank Nero urged caution and creation of a task force that would take up to a year to study casino impacts, including the effect on diversifying Miami beyond tourism into an international business center.

Perez says he could be open to a couple of casinos but rejects a shift to a Vegas-like identity for the city. Without a doubt, he says, Miami will join the ranks of Hong Kong and Singapore but asks, "Did you see those cities become great cities because of gambling? The answer is no."

Lim says it's natural, but a mistake, for Americans to think of Vegas when they hear casino. He says he sees the casino as just one attraction within a resort, a means to the end of enticing people here who may wind up investing in Miami as he did.


"I came here 40 years ago, and I enjoyed the city and I came back again and again and again and now that has resulted hopefully in investing billions of dollars into the place. We hope to play a catalytic role to stimulate the right sort of development to come and build up this city as a living city where people can come to work, can come to play, can come to enjoy themselves and also to live in. Ten, 15 years I like to think I see another Singapore here — that city-state, which is a more modern version of New York City. It's better planned, well laid out and it's safe, it's interesting, it's diverse. It is in my interest to try to move that city-state model to proceed," he says.

Whether big-time gambling comes to Miami or not, says Raul Valdes-Fauli, CEO of Professional Bank in Coral Gables, the new international investments are a "game-changer" for Miami.

Valdes-Fauli, who chairs a chamber committee devoted to downtown, says the "safety valves" of Brazil, Venezuela, Argentina and the like have helped the community recover economically faster than it otherwise would have — and faster than other parts of Florida — from the downturn and condo boom.

"I'm just absorbing now that maybe Miami is a more unique and special place than I ever thought possible," says Valdes-Fauli, "and we're attracting some real unique and special developers to downtown."

Says Valdes-Fauli, "Miami's ready for a new chapter."