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So this should serve as my first person testimony. I am going to write here about what I see is happening and what I think we should do about it. It will mainly talk about issues of architecture and construction and sometimes overflow into the local political scene.
I hope that you will leave me comments as well.
If you want to subscribe, leave me your name and email in the boxes in the right hand column. Then, click the "Submit" box.
Enjoy,
Maria Luisa Castellanos, R.A., LEED AP
President
United Architects, Inc.
Miami, Florida
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In my previous blog I was very excited for those who may be in serious jeopardy of losing their homes, but then I read an interesting letter to the editor in the Miami Herald, February 21, from Professor Donal Jones, law professor at the University of Miami.
Apparently, from what Professor Jones says, my enthusiasm was baseless. He says, "If it [the house] is not sold the bank is often able to maintain the repossessed house on its books without showing a loss. The bank can list the value of its asset based on what it would be at ''maturity.'' The now-empty house may have been vandalized and have rotted drywall. But on paper the repossessed house is as valuable as it was before the bubble burst. The bank has no skin in the game."
Moreover, since so many of these homeowners at risk of foreclosure are underwater with their mortgages, without a considerable amount of debt forgiveness, homeowners who continue to pay their mortgages will continue to pay mortgages in which they will have no equity for a long, long time, unless the real estate market miraculously recovers soon.
Professor Jones tells us that the Federal government has started a Foreclosure Alternative Program, where they pay incentives to mortgage companies to allow homeowners to sell their homes through short sales or to allow homeowners to turn over their homes in lieu of foreclosures.
Apparently, Mediation is not the panacea that I thought. It looks that the Federal government will have to lend a hand to homeowners after all.
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We Floridians have been watching the foreclosure crash for a year now while our Federal government bailed out major banks across the country. While Main Street sat in ruins, Wall Street continued to reward their executives with millions of dollars in bonuses and pay back only a portion of the losses caused by the banking and insurance industries.
Almost all of us have heard of somebody who lost his house to foreclosure after losing his job. And although this presents excellent opportunities for those who have cash to buy foreclosures, remodel them, thereby adding value and then selling them at a profit, it must be a gut wrenching experience for those who put their hard earned money into their homes, only to lose them to foreclosure.
Good news in on the way for homeowners in Florida who are in jeopardy of losing their homes. The Supreme Court of Florida on Monday, according to the Miami Herald editorial on Saturday, "issued an administrative order requiring a statewide managed mediation program to handle all the foreclosures inundating state courts." The courts are forcing banks which are reluctant to offer homeowners alternative to foreclosure to sit down, talk, and "to negotiate rather than automatically foreclose."
I think this is welcome news for desperate homeowners, overworked courts, and the majority of us who think this will be a benefit to the middle class in Miami-Dade County by stabilizing neighborhoods and allowing otherwise responsible citizens some time to work out their financial problems without losing their largest asset.
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For every person who buys a property at foreclosure, there is a terrible story of someone who lost a valuable asset. It is the story of someone who saved and saved until he was able to provide a downpayment for a new house and then paid for that mortgage one year or 20 years. We don't know. What we do know is that the loss of the house was probably due to this horrible economic downturn which all of us in the construction business are suffering.
So what can be done now to turn this terrible crisis around? Well, I don't know if I can tell you what to do, but I can certainly tell you what not to do.
I read Jackie Bueno Sousa's column this yesterday in the Miami Herald, Disconnect in home values is killing deals. Apparently, the new property appraiser which we elected in 2008, Pedro J. Garcia, is not counting foreclosures in his appraisals.
But the appraiser's website states," ...I set out to establish the right values for all properties in the County. The assessments on the 2009 Notice of Proposed Property Taxes (TRIM Notice) mailed to you last month, reflected market value reductions of as much as 20% to 30% in some municipalities. I have met my promise to you, the property owners of Miami-Dade County and my Office has done its job." The question becomes, if he counted foreclosures, how much lower would these values be?
Sousa states in her column that a purchaser gave up on a deal when he found out that a house which sold for $600,000 a couple of years ago and was now on the market for $300,000 would still be taxed at the higher value. How can this be? Apparently, from what Sousa says, this is happening all over Miami-Dade County killing deals and preventing the economic recovery that could so help the county as a whole.
How is it possible that Mr. Garcia can just ignore foreclosures?
Here is what the Florida Statutes says on "factors to consider in deriving a just valuation":
- 1. The present cash value of the property, which is the amount a willing purchaser would pay a willing seller...
- 2. The highest and best use to which the property can be expected to be put in the immediate future and the present use of the property, taking into consideration the legally permissible use of the property...
- 3. The location of said property
- 4. The quantity or size of said property;
- 5. The cost of said property and the present replacement value of any improvements thereon;
- 6. The condition of said property;
- 7. The income from said property; and
- 8. The net proceeds of the sale of the property, as received by the seller, after deduction of all of the usual and reasonable fees and costs of the sale...
It seems to me that if the property appraiser follows the Florida Statutes above, particularly "1" and "2", he would be forced to consider whether the property in question actually went through a foreclosure, whether the property value of said property is being affected by a nearby foreclosed property, or whether the selling price is actually much lower than the last time it sold. Once the property sells it should be assessed at the lower value!
If we can get the construction industry moving again with the restoration of the real estate market and the reconstruction of many of these distressed properties, we can again move Miami into the economic engine it usually is, and get make more jobs available to those who have suffered so much in this environment.
Maybe it's time to get the legislature to put more teeth into the Florida Statutes and make sure the local property appraiser considers foreclosures in his valuations. Contact your representative and make sure he knows about your wishes on this issue.
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MLC@UnitedArchitectsInc.com