The U.S. Department of Housing and Urban Development (HUD) and the U.S. Consumer Product Safety Commission (CPSC) issued guidance on how to identify the presence of metal corrosion, as well as other indicators of problem drywall in homes. The guidance takes into account visual signs of metal corrosion, evidence of drywall installation in the relevant time period, and the identification of other corroborating evidence or characteristics.
HUD and CPSC’s two-step guidance requires a visual inspection that must show blackening of copper electrical wiring and/or air conditioning evaporator coils; and the installation of new drywall (for new construction or renovations) between 2001 and 2008.
Since metal corrosion can occur for other reasons, the guidance also describes corroborating evidence. For example, homes with new drywall installed between 2005 and 2008 must meet at least two additional criteria based on the chemical analysis of metal corrosion in the home; elemental markers in the drywall; markings on the drywall; or specific chemical emissions from the drywall. Homes with new drywall installed between 2001 and 2004 must meet at least four of those criteria. Collecting evidence of corroborating conditions may require professional assistance and analysis.
“Families have the right to know if their homes contain problem drywall so they can begin the process of doing needed repairs,” says Jon Gant, Director of HUD’s Office of Healthy Homes and Lead Hazard Control. “This guidance offers homeowners, contractors, and state and local authorities a course of action (so they know) if they’re dealing with problem drywall or not.”
The Federal Interagency Task Force on Problem Drywall developed the preliminary identification guidance. Additional analysis will continue to validate these methods and HUD says the identification guidance may be modified as necessary.
FHA-insured families experiencing problems associated with problem drywall may be eligible for assistance to help them rehabilitate their properties. HUD’s Community Development Block Grant (CDBG) Program may also be a resource to help local communities.
Homeowners who believe they may have problem drywall should report to CPSC by calling (800) 638-2772 (800) 638-2772 or logging on to www.cpsc.gov/cgibin/drywall.aspx. Hearing- or speech-challenged individuals may access the phone number through TTY by calling the toll-free Federal Relay Service at
(800) 877-8339.
© 2010 Florida Realtors®
Friday, January 29, 2010
State Farm won’t renew thousands of Fla. policies
Thousands of State Farm Florida property insurance customers will be seeing notices in their mailboxes next week saying their policies will not be renewed, a company spokesman said Thursday.
The first wave of notices will be mailed Monday to a selected number of the company’s policyholders who were set to renew Aug. 1, spokesman Chris Neal said.
It’s part of an agreement reached with the Office of Insurance Regulation in December. The company is cutting 125,000 policies in the next 18 months to reduce its liability in hurricane-prone Florida, where State Farm insures nearly 714,000 homeowners.
State Farm, which quit writing new homeowners policies in Florida two years ago, will send its final notices early next year for policies that would be otherwise renewed in the last week of July 2011. Most of the policies not being renewed are in high-risk coastal areas.
The Florida company is a subsidiary of the Bloomington, Ill.-based State Farm Insurance, one of the world’s best capitalized insurers.
Policyowners losing State Farm coverage may still retain their State Farm agent if they wish to have them service their replacement coverage. State Farm agents are independent contractors, Neal said.
As part of its deal with state regulators, State Farm dropped its plan to withdraw from the property insurance market in the state.
The deal, which permits State Farm to increase rates up to 14.8 percent on home and condominium owners, resolved a dispute over conditions Insurance Commissioner Kevin McCarty had placed on the company’s previously announced withdrawal plan.
The company said last January it would stop writing property insurance in Florida after Insurance Commissioner Kevin McCarty rejected a 47.1 percent rate increase. State Farm officials said they needed the big increase to remain financially viable.
Copyright © 2010 The Associated Press
The first wave of notices will be mailed Monday to a selected number of the company’s policyholders who were set to renew Aug. 1, spokesman Chris Neal said.
It’s part of an agreement reached with the Office of Insurance Regulation in December. The company is cutting 125,000 policies in the next 18 months to reduce its liability in hurricane-prone Florida, where State Farm insures nearly 714,000 homeowners.
State Farm, which quit writing new homeowners policies in Florida two years ago, will send its final notices early next year for policies that would be otherwise renewed in the last week of July 2011. Most of the policies not being renewed are in high-risk coastal areas.
The Florida company is a subsidiary of the Bloomington, Ill.-based State Farm Insurance, one of the world’s best capitalized insurers.
Policyowners losing State Farm coverage may still retain their State Farm agent if they wish to have them service their replacement coverage. State Farm agents are independent contractors, Neal said.
As part of its deal with state regulators, State Farm dropped its plan to withdraw from the property insurance market in the state.
The deal, which permits State Farm to increase rates up to 14.8 percent on home and condominium owners, resolved a dispute over conditions Insurance Commissioner Kevin McCarty had placed on the company’s previously announced withdrawal plan.
The company said last January it would stop writing property insurance in Florida after Insurance Commissioner Kevin McCarty rejected a 47.1 percent rate increase. State Farm officials said they needed the big increase to remain financially viable.
Copyright © 2010 The Associated Press
State Farm won’t renew thousands of Fla. policies
Thousands of State Farm Florida property insurance customers will be seeing notices in their mailboxes next week saying their policies will not be renewed, a company spokesman said Thursday.
The first wave of notices will be mailed Monday to a selected number of the company’s policyholders who were set to renew Aug. 1, spokesman Chris Neal said.
It’s part of an agreement reached with the Office of Insurance Regulation in December. The company is cutting 125,000 policies in the next 18 months to reduce its liability in hurricane-prone Florida, where State Farm insures nearly 714,000 homeowners.
State Farm, which quit writing new homeowners policies in Florida two years ago, will send its final notices early next year for policies that would be otherwise renewed in the last week of July 2011. Most of the policies not being renewed are in high-risk coastal areas.
The Florida company is a subsidiary of the Bloomington, Ill.-based State Farm Insurance, one of the world’s best capitalized insurers.
Policyowners losing State Farm coverage may still retain their State Farm agent if they wish to have them service their replacement coverage. State Farm agents are independent contractors, Neal said.
As part of its deal with state regulators, State Farm dropped its plan to withdraw from the property insurance market in the state.
The deal, which permits State Farm to increase rates up to 14.8 percent on home and condominium owners, resolved a dispute over conditions Insurance Commissioner Kevin McCarty had placed on the company’s previously announced withdrawal plan.
The company said last January it would stop writing property insurance in Florida after Insurance Commissioner Kevin McCarty rejected a 47.1 percent rate increase. State Farm officials said they needed the big increase to remain financially viable.
Copyright © 2010 The Associated Press
The first wave of notices will be mailed Monday to a selected number of the company’s policyholders who were set to renew Aug. 1, spokesman Chris Neal said.
It’s part of an agreement reached with the Office of Insurance Regulation in December. The company is cutting 125,000 policies in the next 18 months to reduce its liability in hurricane-prone Florida, where State Farm insures nearly 714,000 homeowners.
State Farm, which quit writing new homeowners policies in Florida two years ago, will send its final notices early next year for policies that would be otherwise renewed in the last week of July 2011. Most of the policies not being renewed are in high-risk coastal areas.
The Florida company is a subsidiary of the Bloomington, Ill.-based State Farm Insurance, one of the world’s best capitalized insurers.
Policyowners losing State Farm coverage may still retain their State Farm agent if they wish to have them service their replacement coverage. State Farm agents are independent contractors, Neal said.
As part of its deal with state regulators, State Farm dropped its plan to withdraw from the property insurance market in the state.
The deal, which permits State Farm to increase rates up to 14.8 percent on home and condominium owners, resolved a dispute over conditions Insurance Commissioner Kevin McCarty had placed on the company’s previously announced withdrawal plan.
The company said last January it would stop writing property insurance in Florida after Insurance Commissioner Kevin McCarty rejected a 47.1 percent rate increase. State Farm officials said they needed the big increase to remain financially viable.
Copyright © 2010 The Associated Press
Wednesday, January 27, 2010
Citizens adds employees as number of policies drops
Citizens Property Insurance Corp., the state-run insurer of last resort, has trimmed more than 26 percent of its customers since late 2007.
But the number of employees has grown by 17 percent.
“There isn’t a company in the state who could sustain those kind of cost increases at the same time as it’s losing [more than] 20 percent of its business,” said Sen. Mike Bennett, R-Bradenton. He’s so concerned, he said he plans to speed up legislation to put Citizens out of business if it doesn’t meet set financial goals.
A Sun Sentinel review of Citizens budgets, travel records and salaries found:
• Costs for salaries, benefits and payroll taxes rose 50 percent, from $57 million in 2007 to about $86 million last year, an estimate based on actual expenses through October. This year, the company plans to spend $95 million in compensation, according to the budget approved by its board last month.
• 49 Citizens employees were paid more than $100,000 before taxes in 2009, five more than the previous year. Citizens President Scott Wallace was paid $343,608 last year, about 5 percent more than the previous year.
• Citizens employees dined at some of South Florida’s finest restaurants while in town for customer forums in late 2008.
• Administrative expenses rose 24 percent over the two years to an estimated $122 million in 2009, up from $119 million and $98 million in the two previous years. This includes salaries, rent, maintenance and subscriptions. This year, the company plans to spend $148 million.
• Payroll grew to 1,169 employees in 2009 from 1,000 in 2007.
Meanwhile, the number of policies with Citizens fell from a peak of 1.4 million in October 2007 to just over 1 million now.
Citizens was formed in 2002 as a last resort for homeowners who couldn’t find coverage when insurers scaled back. After the busy 2004 and 2005 hurricane seasons, the insurer provided an alternative for policyholders whose private insurance premiums doubled or tripled, in some cases.
All Florida residents with insurance are affected by Citizens’ spending: Homeowners are paying an annual fee of 1.4 percent of premiums until 2017 to cover the company’s shortfalls after the 2005 hurricanes. If a hurricane strikes and causes major damage, all automobile and property insurance policyholders could pay fees to offset Citizens’ shortfalls.
Questions about the insurer are resurfacing as it starts boosting its premium prices by as much as 10 percent a year for the first time since 2007, when premiums were frozen by the legislature.
Christine Turner Ashburn, a spokeswoman for Citizens, said the company’s costs have grown because it must pay competitive wages, especially because it can’t attract employees with the bonuses and perks offered by private insurers.
The average salary for a full-year employee at Citizens was about $54,000 in 2009, less than the roughly $56,000 average nationwide for all occupations at insurance carriers – excluding those offering life, health and medical coverage – in 2008, according to the Bureau of Labor Statistics.
Citizens’ staff grew to cope with the more than 500,000 policies that came in between 2005 and 2007 as private insurers folded or reduced their numbers of policies in Florida, Turner Ashburn said. The company also improved its systems for managing policies and claims.
“Citizens grew very rapidly in terms of policy count, but it takes time to build up to the appropriate staff levels, so naturally employee count has continued to increase as the policy count has leveled off,” Turner Ashburn said. The number of employees has also started to level off.
More employees means the company will be able to provide better service now – and if a hurricane strikes – she said.
Brad Ashwell, a consumer advocate with the Florida Public Interest Research Group, called for more government oversight of Citizens.
“It’s hard to tell what’s going on from outside the organization,” he said. “With Citizens and all public-private partnerships, we need to be diligent in watching where the public dollars are going.”
Ashwell and other consumer advocates questioned Citizens’ staff members’ choice of restaurants during statewide public forums in the past two years.
The reimbursements to employees for meals during the trip fell under the $80-per-day rate allowed by state law for overnight out-of-town trips. But the list of restaurants raised some eyebrows.
The restaurants include Sushi Samba Dromo in Miami Beach, where 14 people spent $558; Blue Moon Fish Co. in Fort Lauderdale, where six people spent $249; and Trattoria Luna in Miami, where eight people had a dinner bill of $283.
“It’s one thing to go out to eat. It’s another thing to eat lavishly,” Ashwell said.
Citizens held three customer forums in South Florida in September 2008 as part of a statewide effort to talk with consumers. The company held one forum last year in Melbourne and will continue them in 2010, Turner Ashburn said.
Copyright © 2010, Julie Patel. Sun Sentinel, Fort Lauderdale, Fla
But the number of employees has grown by 17 percent.
“There isn’t a company in the state who could sustain those kind of cost increases at the same time as it’s losing [more than] 20 percent of its business,” said Sen. Mike Bennett, R-Bradenton. He’s so concerned, he said he plans to speed up legislation to put Citizens out of business if it doesn’t meet set financial goals.
A Sun Sentinel review of Citizens budgets, travel records and salaries found:
• Costs for salaries, benefits and payroll taxes rose 50 percent, from $57 million in 2007 to about $86 million last year, an estimate based on actual expenses through October. This year, the company plans to spend $95 million in compensation, according to the budget approved by its board last month.
• 49 Citizens employees were paid more than $100,000 before taxes in 2009, five more than the previous year. Citizens President Scott Wallace was paid $343,608 last year, about 5 percent more than the previous year.
• Citizens employees dined at some of South Florida’s finest restaurants while in town for customer forums in late 2008.
• Administrative expenses rose 24 percent over the two years to an estimated $122 million in 2009, up from $119 million and $98 million in the two previous years. This includes salaries, rent, maintenance and subscriptions. This year, the company plans to spend $148 million.
• Payroll grew to 1,169 employees in 2009 from 1,000 in 2007.
Meanwhile, the number of policies with Citizens fell from a peak of 1.4 million in October 2007 to just over 1 million now.
Citizens was formed in 2002 as a last resort for homeowners who couldn’t find coverage when insurers scaled back. After the busy 2004 and 2005 hurricane seasons, the insurer provided an alternative for policyholders whose private insurance premiums doubled or tripled, in some cases.
All Florida residents with insurance are affected by Citizens’ spending: Homeowners are paying an annual fee of 1.4 percent of premiums until 2017 to cover the company’s shortfalls after the 2005 hurricanes. If a hurricane strikes and causes major damage, all automobile and property insurance policyholders could pay fees to offset Citizens’ shortfalls.
Questions about the insurer are resurfacing as it starts boosting its premium prices by as much as 10 percent a year for the first time since 2007, when premiums were frozen by the legislature.
Christine Turner Ashburn, a spokeswoman for Citizens, said the company’s costs have grown because it must pay competitive wages, especially because it can’t attract employees with the bonuses and perks offered by private insurers.
The average salary for a full-year employee at Citizens was about $54,000 in 2009, less than the roughly $56,000 average nationwide for all occupations at insurance carriers – excluding those offering life, health and medical coverage – in 2008, according to the Bureau of Labor Statistics.
Citizens’ staff grew to cope with the more than 500,000 policies that came in between 2005 and 2007 as private insurers folded or reduced their numbers of policies in Florida, Turner Ashburn said. The company also improved its systems for managing policies and claims.
“Citizens grew very rapidly in terms of policy count, but it takes time to build up to the appropriate staff levels, so naturally employee count has continued to increase as the policy count has leveled off,” Turner Ashburn said. The number of employees has also started to level off.
More employees means the company will be able to provide better service now – and if a hurricane strikes – she said.
Brad Ashwell, a consumer advocate with the Florida Public Interest Research Group, called for more government oversight of Citizens.
“It’s hard to tell what’s going on from outside the organization,” he said. “With Citizens and all public-private partnerships, we need to be diligent in watching where the public dollars are going.”
Ashwell and other consumer advocates questioned Citizens’ staff members’ choice of restaurants during statewide public forums in the past two years.
The reimbursements to employees for meals during the trip fell under the $80-per-day rate allowed by state law for overnight out-of-town trips. But the list of restaurants raised some eyebrows.
The restaurants include Sushi Samba Dromo in Miami Beach, where 14 people spent $558; Blue Moon Fish Co. in Fort Lauderdale, where six people spent $249; and Trattoria Luna in Miami, where eight people had a dinner bill of $283.
“It’s one thing to go out to eat. It’s another thing to eat lavishly,” Ashwell said.
Citizens held three customer forums in South Florida in September 2008 as part of a statewide effort to talk with consumers. The company held one forum last year in Melbourne and will continue them in 2010, Turner Ashburn said.
Copyright © 2010, Julie Patel. Sun Sentinel, Fort Lauderdale, Fla
Monday, January 25, 2010
Florida’s existing home, condo sales up in December 2009
Florida’s existing home sales rose in December, marking 16 months that sales activity has increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors®.
Existing home sales rose 33 percent last month with a total of 14,630 homes sold statewide compared to 11,013 homes sold in December 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.3 percent over statewide sales activity in November.
Florida Realtors also reported a 91 percent increase in statewide sales of existing condos in December compared to the previous year’s sales figure; statewide existing condo sales last month rose 22 percent over the total units sold in November.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in December. A majority of the state’s MSAs have reported increased sales for 18 consecutive months.
Florida’s median sales price for existing homes last month was $140,400; a year ago, it was $155,300 for a 10 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in November 2009 was $171,900, down 4.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $304,520 in November; in Massachusetts, it was $285,000; in Maryland, it was $245,569; and in New York, it was $210,000.
According to NAR’s latest outlook, home sales are seeing a boost from the federal homebuyer tax credit. “There are many more potential buyers who can enter the market in the months ahead,” said NAR Chief Economist Lawrence Yun. “Activity should ramp up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires, and balance should be restored to the housing sector with inventories continuing to decline.”
In Florida’s year-to-year comparison for condos, 5,968 units sold statewide last month compared to 3,132 units in December 2008 for an increase of 91 percent. The statewide existing condo median sales price last month was $107,000; in December 2008 it was $130,300 for an 18 percent decrease. The national median existing condo price was $178,000 in November 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.93 percent last month, significantly lower than the average rate of 5.29 percent in December 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the West Palm Beach-Boca Raton MSA reported a total of 849 homes sold in December compared to 638 homes a year earlier for a 33 percent increase. The market’s existing home median sales price last month was $247,900; a year ago it was $246,000 for an increase of 1 percent. A total of 763 condos sold in the MSA in December, up 45 percent over the 527 units sold in December 2008. The existing condo median price last month was $111,400; a year earlier, it was $112,900 for a decrease of 1 percent.
Related: Dec. existing-home sales down, prices rise; 2009 sales up, says NAR
© 2010 Florida Realtors®
Existing home sales rose 33 percent last month with a total of 14,630 homes sold statewide compared to 11,013 homes sold in December 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.3 percent over statewide sales activity in November.
Florida Realtors also reported a 91 percent increase in statewide sales of existing condos in December compared to the previous year’s sales figure; statewide existing condo sales last month rose 22 percent over the total units sold in November.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales and higher condo sales in December. A majority of the state’s MSAs have reported increased sales for 18 consecutive months.
Florida’s median sales price for existing homes last month was $140,400; a year ago, it was $155,300 for a 10 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in November 2009 was $171,900, down 4.4 percent from a year earlier, according to NAR. In California, the statewide median resales price was $304,520 in November; in Massachusetts, it was $285,000; in Maryland, it was $245,569; and in New York, it was $210,000.
According to NAR’s latest outlook, home sales are seeing a boost from the federal homebuyer tax credit. “There are many more potential buyers who can enter the market in the months ahead,” said NAR Chief Economist Lawrence Yun. “Activity should ramp up for another surge in the spring when buyers take advantage of the expanded tax credit, which hopefully will take us into a self-sustaining market in the second half of 2010. In all, 4.4 million households are expected to claim the tax credit before it expires, and balance should be restored to the housing sector with inventories continuing to decline.”
In Florida’s year-to-year comparison for condos, 5,968 units sold statewide last month compared to 3,132 units in December 2008 for an increase of 91 percent. The statewide existing condo median sales price last month was $107,000; in December 2008 it was $130,300 for an 18 percent decrease. The national median existing condo price was $178,000 in November 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.93 percent last month, significantly lower than the average rate of 5.29 percent in December 2008, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s larger markets, the West Palm Beach-Boca Raton MSA reported a total of 849 homes sold in December compared to 638 homes a year earlier for a 33 percent increase. The market’s existing home median sales price last month was $247,900; a year ago it was $246,000 for an increase of 1 percent. A total of 763 condos sold in the MSA in December, up 45 percent over the 527 units sold in December 2008. The existing condo median price last month was $111,400; a year earlier, it was $112,900 for a decrease of 1 percent.
Related: Dec. existing-home sales down, prices rise; 2009 sales up, says NAR
© 2010 Florida Realtors®
Monday, January 18, 2010
Stuck with time shares
For Stacey Udell, a Craigslist ad enticing her to own a piece of property in the Bahamas for $3,000 was too good to pass up. The accountant from Cherry Hill, N.J., jumped on it, and became one of 6 million Americans who own a time share, shared vacation property that owners get to stay in for a week or so each year for life.
Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances. Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership.
Her bill for 2010 totals $1,650, up 20 percent from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”
Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.
Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.
Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.
“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”
There were 1,630 time-share resorts in the USA as of 2008, with 40 percent of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.
Sales drop, defaults rise
Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8 percent to $9.7 billion, according to ARDA. They plunged 40 percent more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.
Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9 percent of time-share mortgages went into default vs. 2.2 percent in 2008. About 8 percent of time-share mortgages were in default as of 2008.
Maintenance fees have grown an average of 12 percent a year since 2005. Large hospitality companies, already hurting from empty hotel rooms, are retreating. Wyndham Worldwide, the largest time-share operator in the USA, saw sales fall 51 percent in the first nine months of 2009 to $756 million. It has closed some sales offices and cut 4,000 jobs since late 2008. Marriott International’s time-share sales fell 38 percent in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.
Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif. Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale.
“Had I known what was coming in the future, I’d have held off,” she says. Lehenky asked Marriott to take the contract back last year. The company refused.
ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street. Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts.
The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.
Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12” properties that have already had groundbreaking, he says.
Remorseful buyers
The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50 percent of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10 percent to 15 percent, Waltrip says.
Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.
Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000.
“We were suckered in, and we fell in love with it,” she says. Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week because it fell in October when her kids are in school. Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.
“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”
Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run. The number of ads by owners looking to sell on Rogers’ website is 25 percent higher than a year ago.
“More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”
That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt.
“Going on a vacation like that would be living beyond our means,” she says.
‘Scams’ in resale market
Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000. Udell says she’s been bombarded by such solicitations.
“They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”
Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen. TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee.
“They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”
Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls. The lawsuit alleges that the defendants – including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk – collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.” The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.”
The defendants also “made blatant misrepresentations ... (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned. “The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.
Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market. She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Roger Yu.
Four years later, the thrill of ownership is gone. Her family has yet to use the one week at Atlantis Harborside Resort she bought, and the contract has become a nagging financial burden at a time when a lousy economy is squeezing her home finances. Udell is back on Craigslist, this time as a seller wanting to be free from the mandatory annual fees that sustain her ownership.
Her bill for 2010 totals $1,650, up 20 percent from last year plus a $250 charge to make up for “the deadbeats who have abandoned their time shares,” according to Udell. “I can’t deal with the hassle anymore.”
Udell is joining a rising chorus of time-share owners who are fed up with mortgages and burdensome payments that they think render little or no return. With ironclad contract terms, high annual fees and aggressive salespeople, time shares have always been controversial. But this economic downturn has been particularly nasty for the industry. It’s killed the easy credit that was the lifeblood of developers and forced would-be customers to think twice about signing a life-long financial commitment for something they’d use only a few days a year.
Sales are down. Resort development has come to a standstill. Mortgage defaults are rising. Thousands of salespeople and maintenance staffers have been laid off. Customers are flooding the resale market, where some are trying to unload contracts for as little as $1.
Meanwhile, scams that target desperate owners are skyrocketing, triggering enforcement actions from state attorneys general throughout the country. The number of consumer complaints about time shares received by the state of Florida, which is home to a quarter of the industry, doubled in 2009 to more than 2,500, according to the state’s Department of Agriculture and Consumer Services.
“We were always ‘the engine that could’ for the (tourism) industry, but now we’re the red-headed stepchild,” says Howard Nusbaum, CEO of American Resort Development Association, or ARDA, an industry trade group. “We’re going through a tough period.”
There were 1,630 time-share resorts in the USA as of 2008, with 40 percent of them concentrated in Florida, California and South Carolina, according to ARDA. About 7 million time-share contracts are currently held by owners in the USA. The average price in 2008 was $20,150.
Sales drop, defaults rise
Since they were created in the 1960s, time shares didn’t have a down year until 2008, when sales dipped 8 percent to $9.7 billion, according to ARDA. They plunged 40 percent more in 2009 to about $6 billion and will likely remain flat in 2010, Nusbaum estimates.
Time-share mortgage defaults rose each quarter in 2009 compared with 2008, ARDA says. In the third quarter of last year, 2.9 percent of time-share mortgages went into default vs. 2.2 percent in 2008. About 8 percent of time-share mortgages were in default as of 2008.
Maintenance fees have grown an average of 12 percent a year since 2005. Large hospitality companies, already hurting from empty hotel rooms, are retreating. Wyndham Worldwide, the largest time-share operator in the USA, saw sales fall 51 percent in the first nine months of 2009 to $756 million. It has closed some sales offices and cut 4,000 jobs since late 2008. Marriott International’s time-share sales fell 38 percent in the first nine months of 2009 to $445 million. It also wrote down $752 million of its time-share resorts’ value, and it said it would discontinue construction of new properties and would convert some to other types of properties.
Nancy Lehenky, a Marriott customer, wishes she could walk away from the $60,000 mortgage she took on last year for a two-week interval at a resort in Palm Desert, Calif. Lehenky and husband David, who run Flathead Distillers, a vodka distillery in Montana, pay $1,100 a month for the mortgage and $2,000 a year in taxes and fees. While they were able to afford the payment when they bought it, her husband has since been laid off and their decision to open the distillery has forced them to tighten spending. Lehenky particularly regrets having paid full retail price rather than shopping for a resale.
“Had I known what was coming in the future, I’d have held off,” she says. Lehenky asked Marriott to take the contract back last year. The company refused.
ARDA’s Nusbaum says industry woes can be traced largely to developers no longer being able to package mortgage debt as asset-backed securities sold to Wall Street. Developers have historically lent directly to customers. Cash back from investors on the sale of bundled mortgages was used to build more resorts.
The mortgage-backed security market all but vanished in the 2008 financial crisis, and the industry has had to halt most new construction and cut back on free cruises, air tickets and hotel rooms given as incentives for customers listening to a sales pitch.
Westgate Resorts, one of the largest operators in the industry, had a record year in 2009 with about 2,200 new rooms/suites, says Mark Waltrip, COO of Westgate. This year, it’ll open none. The company halted construction on “10 to 12” properties that have already had groundbreaking, he says.
Remorseful buyers
The industry contends that customer satisfaction remains high and that demand hasn’t waned. ARDA says 50 percent of buyers already own another time share. And the percentage of people who buy a unit after sitting through a sales pitch remains unchanged at about 10 percent to 15 percent, Waltrip says.
Unlike other hospitality or real estate industries, time-share operators dictate much of consumer demand by providing incentives for people to come directly to resorts or to sales-pitch sessions, ARDA’s Nusbaum says. “No one wakes up in the morning and says they’re going to buy a time share. They come in and get compelled by the product. It’s an emotional buy,” he says.
Summers Doonan, an American Airlines flight attendant in Orlando, knows all too well about the allure of a sales pitch conducted next to a resort pool glistening in the Florida sun. She and her former husband, Brian, were invited in 2007 to a free weekend at Ron Jon Cape Caribe Resort in Cape Canaveral and sat through a sales pitch. They walked out with a one-week contract that cost them $18,000.
“We were suckered in, and we fell in love with it,” she says. Having divorced last year and now on unpaid leave from her employer, Doonan wants to sell it. She never got to use her week because it fell in October when her kids are in school. Trying to exchange it for other weeks or for time at other resorts, which was her original intent, proved to be a lot more competitive, difficult and expensive than she was led to believe, she says. On top of $1,150 in taxes and fees every year, she pays $90 a year to belong to an exchange club and faces another $200 fee each time she wants to trade. She and her husband have agreed to split paying for the fees until it’s sold.
“Both of us are tight. I have three kids I’m trying to raise as a flight attendant,” she says. “It was a rash decision. You’re surrounded by beauty and the excitement of it all. (Salespeople) are definitely charismatic.”
Brian Rogers, who runs the Timeshare Users Group, or TUG, an online forum for owners, says the growing number of disgruntled, but more informed, customers combined with the financial crisis that has forced developers to cut spending will result in changes in how the industry is run. The number of ads by owners looking to sell on Rogers’ website is 25 percent higher than a year ago.
“More people are trying to get out. Some find it difficult even when listing their time share for a single dollar.”
That is not comforting news to Udell. She’s listed her week in the Bahamas for $4,300 on Craigslist, TUG and other sites, but hasn’t gotten any offers. Her husband, Craig, is changing his career to be a teacher and earns a fraction of what he made before, and her family can’t afford annual vacations without going further into debt.
“Going on a vacation like that would be living beyond our means,” she says.
‘Scams’ in resale market
Sensing desperation, fly-by-night hucksters are cold-calling and mailing owners with promises of a quick sale for an upfront fee as high as $5,000. Udell says she’s been bombarded by such solicitations.
“They make it very tempting,” she says. “One company guaranteed (it) can sell for $20,000. I hung up on him.”
Doonan, the flight attendant, paid $600 upfront with a reseller, which has listed her unit for $18,000 on its website and printed fliers that she’s never seen. TUG’s Rogers says he knows of no resale company that can guarantee an owner a sale. Customers, he says, should never pay resellers any upfront fee.
“They’re so masterful at their pitch,” he says of resellers. “It’s a scam on top of a scam on top of a scam.”
Florida is a hotbed of time-share scams. The state’s attorney general, Bill McCollum, sued two related companies in November that have allegedly collected more than $4 million monthly in fees from owners who were solicited via Internet advertising and telemarketing calls. The lawsuit alleges that the defendants – including Universal Marketing Solutions, Creative Vacation Solutions, owner Jennifer Kirk, and Kirk’s brother, Scott Kirk – collected “advertising and/or marketing fee(s) for time-share resale services via a series of false and fraudulent misrepresentations.” The defendants required “hundreds of consumers” to pay $1,500 each and said they “would market and/or advertise their time share in an attempt to resell it, when in actuality the time share was merely placed on a website, to which no Web traffic was directed.”
The defendants also “made blatant misrepresentations ... (that) they could definitely sell their time share within a certain time period.” Calls to the companies weren’t returned. “The secondary market doesn’t have the protections (that are in the primary market),” says Nusbaum of ARDA, which issued a statement applauding Florida’s lawsuit.
Despite their flaws, time shares still have legions of loyal fans. Linda Moore, a property manager in Thorofare, N.J., uses her weeks in Florida as her winter home. She bought her first week at Fort Lauderdale Beach Resort several years ago, and has steadily added to her portfolio by looking for deals in the resale market. She bought another week in early January for $575 and now owns more than 10 weeks there. “I had people come in and say, “This is a tremendous view,” and I’m saying, ‘Yeah, and it’s all mine.’ “
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Roger Yu.
Thursday, January 14, 2010
Deregulation pushed by insurance advocates
With the 2010 Florida legislative session looming, insurance industry advocates Wednesday stepped up their call for deregulating the residential property insurance market.
Instead of Citizens Insurance, the state-backed insurer of last resort, “becoming the preferred market” for many, the free market should be allowed to regulate rates and give consumers more choices, said Bill Gunter, former Florida insurance commissioner and chairman of the Florida Association of Insurance Agents.
Florida needs “a viable, competitive marketplace” for insurance, one that will encourage more private carriers to come back into the state, said Jeff Grady, president of the group, along with Walter Dartland, executive director of Consumer Federation of the Southeast.
There are only 73 private carriers in Florida making up about 98 percent of the residential property market, Grady said. Of those, 44 have underwriting losses and sharp declines in their surplus funds.
About a half-dozen small private insurers have either been taken over by regulators or failed in the past 12 months – an indication, Gunter said, that they were either undercapitalized or poorly managed.
“These are all disturbing developments in a four-year span when we’ve not experienced significant hurricanes,” he said. “We should be building reserves now.”
A bill that would take a big step toward deregulation – Senate Bill 876 sponsored by Sen. Mike Bennett, R-Bradenton, and the companion House Bill 447 by State Rep. Bill Proctor, R-St. Augustine – would eliminate the need for the state Office of Insurance Regulation to rule on rate requests by insurers. The office instead would be focused on whether the rates being charged allowed the private company to remain financially strong, Grady said.
The Office of Insurance Regulation (OIR) took issue with the claim that rate regulation is causing the problem. Instead, the office issued a statement saying the economy is the main culprit.
“Insurers’ recent financial performance is due to systemic problems and is not due to a suppression of rates,” the statement said. “Relative to other industries, and given Florida’s unique challenges, the Florida property insurance marketplace has been remarkably resilient.”
Grady and Gunter spoke favorably about the bill, but Grady bluntly noted, “We are for what is going to pass.” Gov. Charlie Crist vetoed a similar bill in the 2009 session, but Bennett thinks the expanded bill has a good chance of winning Crist’s approval this time around.
“The OIR gave him (Crist) some bad information last time on the number of companies coming to Florida and the amount of money. The secretary misled the governor,” said Bennett.
The bill also would require the special assessment Citizen policyholders receive to follow the person, even if the policyholder signs up with a new company.
Local insurance agency heads Andy Gregory and Bob Fowinkle agreed that deregulation is the best way to improve the insurance picture in the state.
“Deregulation is the only thing we can do to get competition back in,” said Gregory, president of Des Champs and Gregory. “Competition always wins – it always works that way, although we might not always like the impact at first.”
Critics have said a free marketplace will undoubtedly mean higher rates. But Fowinkle, president of Moore, Fowinkle & Shroer Agency, thinks it’s the best choice.
“If we keep on like we are going, we’re not going to have any insurance companies in town or in the state,” he said.
Copyright © 2010 The Bradenton Herald, Fla
Instead of Citizens Insurance, the state-backed insurer of last resort, “becoming the preferred market” for many, the free market should be allowed to regulate rates and give consumers more choices, said Bill Gunter, former Florida insurance commissioner and chairman of the Florida Association of Insurance Agents.
Florida needs “a viable, competitive marketplace” for insurance, one that will encourage more private carriers to come back into the state, said Jeff Grady, president of the group, along with Walter Dartland, executive director of Consumer Federation of the Southeast.
There are only 73 private carriers in Florida making up about 98 percent of the residential property market, Grady said. Of those, 44 have underwriting losses and sharp declines in their surplus funds.
About a half-dozen small private insurers have either been taken over by regulators or failed in the past 12 months – an indication, Gunter said, that they were either undercapitalized or poorly managed.
“These are all disturbing developments in a four-year span when we’ve not experienced significant hurricanes,” he said. “We should be building reserves now.”
A bill that would take a big step toward deregulation – Senate Bill 876 sponsored by Sen. Mike Bennett, R-Bradenton, and the companion House Bill 447 by State Rep. Bill Proctor, R-St. Augustine – would eliminate the need for the state Office of Insurance Regulation to rule on rate requests by insurers. The office instead would be focused on whether the rates being charged allowed the private company to remain financially strong, Grady said.
The Office of Insurance Regulation (OIR) took issue with the claim that rate regulation is causing the problem. Instead, the office issued a statement saying the economy is the main culprit.
“Insurers’ recent financial performance is due to systemic problems and is not due to a suppression of rates,” the statement said. “Relative to other industries, and given Florida’s unique challenges, the Florida property insurance marketplace has been remarkably resilient.”
Grady and Gunter spoke favorably about the bill, but Grady bluntly noted, “We are for what is going to pass.” Gov. Charlie Crist vetoed a similar bill in the 2009 session, but Bennett thinks the expanded bill has a good chance of winning Crist’s approval this time around.
“The OIR gave him (Crist) some bad information last time on the number of companies coming to Florida and the amount of money. The secretary misled the governor,” said Bennett.
The bill also would require the special assessment Citizen policyholders receive to follow the person, even if the policyholder signs up with a new company.
Local insurance agency heads Andy Gregory and Bob Fowinkle agreed that deregulation is the best way to improve the insurance picture in the state.
“Deregulation is the only thing we can do to get competition back in,” said Gregory, president of Des Champs and Gregory. “Competition always wins – it always works that way, although we might not always like the impact at first.”
Critics have said a free marketplace will undoubtedly mean higher rates. But Fowinkle, president of Moore, Fowinkle & Shroer Agency, thinks it’s the best choice.
“If we keep on like we are going, we’re not going to have any insurance companies in town or in the state,” he said.
Copyright © 2010 The Bradenton Herald, Fla
La. sues companies over tainted Chinese drywall
Louisiana’s attorney general on Wednesday sued building supply manufacturers and developers over imported Chinese drywall that homeowners claim has damaged their homes and made them sick.
Attorney General James D. “Buddy” Caldwell said he filed a lawsuit in state court on Wednesday to help state and local governments recoup the cost of dealing with contaminated drywall. The suit names a slew of companies – from Chinese drywall manufacturers to home developers – as defendants.
“The state attorney general’s office said enough is enough,” Caldwell said at a news conference on the steps of the Louisiana Supreme Court in the French Quarter. “We’ve had too many catastrophes down here.”
Caldwell said the state has lost tax revenues, suffered a decrease in property values and faces high disposal and medical costs because of the drywall.
Caldwell didn’t offer a tally of the losses or say how much he was seeking in damages.
He said 1.1 million sheets of Chinese drywall were brought into Louisiana after Katrina hit in 2005.
In a report issued in November, the Consumer Product Safety Commission said its studies found a “strong association” between the Chinese drywall and corrosion in homes. The agency also said it found a possible link between health problems and high levels of hydrogen sulfide gas emitted from the wallboard, coupled with formaldehyde, which is commonly found in new houses.
About 1,000 people have blamed the drywall for health problems in complaints to the Louisiana Department of Health and Hospitals, the suit said. Caldwell said he didn’t know how many homes contained the defective drywall.
He said the state was in settlement talks with Knauf Gips KG and Knauf International, German companies affiliated to Chinese drywall manufacturers. He said the majority of defective drywall in Louisiana was made by Knauf companies.
Kerry Miller, a lawyer for Knauf Plasterboard Tianjin Co., one of the main drywall manufacturers, said Caldwell’s suit disregarded “scientific evidence” that found “that KPT drywall has no harmful long-term health effects and is not toxic to humans or animals.”
Miller said KPT would work with Caldwell to “resolve the situation and allay homeowner concerns about property issues through the implementation of an appropriate remediation or repair strategy.”
Reports of tainted Chinese drywall began to surface last year in several states, and homeowners who bought houses with the imported materials have filed hundreds of lawsuits against builders, suppliers and manufacturers.
Copyright © 2010 The Associated Press
Attorney General James D. “Buddy” Caldwell said he filed a lawsuit in state court on Wednesday to help state and local governments recoup the cost of dealing with contaminated drywall. The suit names a slew of companies – from Chinese drywall manufacturers to home developers – as defendants.
“The state attorney general’s office said enough is enough,” Caldwell said at a news conference on the steps of the Louisiana Supreme Court in the French Quarter. “We’ve had too many catastrophes down here.”
Caldwell said the state has lost tax revenues, suffered a decrease in property values and faces high disposal and medical costs because of the drywall.
Caldwell didn’t offer a tally of the losses or say how much he was seeking in damages.
He said 1.1 million sheets of Chinese drywall were brought into Louisiana after Katrina hit in 2005.
In a report issued in November, the Consumer Product Safety Commission said its studies found a “strong association” between the Chinese drywall and corrosion in homes. The agency also said it found a possible link between health problems and high levels of hydrogen sulfide gas emitted from the wallboard, coupled with formaldehyde, which is commonly found in new houses.
About 1,000 people have blamed the drywall for health problems in complaints to the Louisiana Department of Health and Hospitals, the suit said. Caldwell said he didn’t know how many homes contained the defective drywall.
He said the state was in settlement talks with Knauf Gips KG and Knauf International, German companies affiliated to Chinese drywall manufacturers. He said the majority of defective drywall in Louisiana was made by Knauf companies.
Kerry Miller, a lawyer for Knauf Plasterboard Tianjin Co., one of the main drywall manufacturers, said Caldwell’s suit disregarded “scientific evidence” that found “that KPT drywall has no harmful long-term health effects and is not toxic to humans or animals.”
Miller said KPT would work with Caldwell to “resolve the situation and allay homeowner concerns about property issues through the implementation of an appropriate remediation or repair strategy.”
Reports of tainted Chinese drywall began to surface last year in several states, and homeowners who bought houses with the imported materials have filed hundreds of lawsuits against builders, suppliers and manufacturers.
Copyright © 2010 The Associated Press
Wednesday, January 13, 2010
Homeowners responsible for property damages if sinkholes occur
Residents with sinkholes on their property should be aware of several key factors as they seek to recoup their losses, state officials said.
Because of Florida’s geology, more sinkholes form here than in any other state, so a homeowner’s insurance policy covering sinkhole damage is recommended.
And if a sinkhole appears on private property – even if the formation was triggered by outside factors such as drought, new construction, heavy rain or heavy ground-water pumping – the property owner is responsible for the damages and repair, according to the Florida Department of Environmental Protection.
State law does not require insurance companies to include sinkhole coverage on new homeowners’ insurance policies, according to the state Department of Financial Services. Insurance companies are required to inform clients that sinkhole coverage is extra, at an additional premium.
Homeowners filing a claim should expect their insurance company to inspect the property to determine if a sinkhole is to blame for the damage, state financial services spokeswoman Nina Banister said.
Insurance companies will likely order a geological report. If tests confirm that a sinkhole caused the damage, insurance policies should pay for the testing and repairs.
If the insurance company denies a claim, the property owner can dispute it and request a neutral evaluation through the Department of Financial Services, Banister said. The insurance company is required to pay all costs associated with the neutral evaluation program, she said.
Officials give these additional tips and reminders:
• Hire a home inspector to find signs of potential sinkhole activity.
• Insurance companies vary on their individual requirements and homeowners should shop around for the best insurance policy. There is no ready reference on sinkhole prediction or risk assessment, which has hampered legislation, or an industry standard on this issue.
• If you’re buying a new home, remember that most real estate seller’s disclosure forms include a sinkhole disclosure statement. Sometimes it is overlooked. If it is in question, be sure to ask.
In theory, sinkholes can form anywhere in Florida. The bedrock underlying the state is honeycombed with cavities of varying size, most of which will not collapse in our lifetimes.
For information, call the Department of Financial Services consumer help line at 1-877-693-5236 or visit the Web site at www.myfloridacfo.com.
Copyright © 2010 Tampa Tribune, Fla.,
Because of Florida’s geology, more sinkholes form here than in any other state, so a homeowner’s insurance policy covering sinkhole damage is recommended.
And if a sinkhole appears on private property – even if the formation was triggered by outside factors such as drought, new construction, heavy rain or heavy ground-water pumping – the property owner is responsible for the damages and repair, according to the Florida Department of Environmental Protection.
State law does not require insurance companies to include sinkhole coverage on new homeowners’ insurance policies, according to the state Department of Financial Services. Insurance companies are required to inform clients that sinkhole coverage is extra, at an additional premium.
Homeowners filing a claim should expect their insurance company to inspect the property to determine if a sinkhole is to blame for the damage, state financial services spokeswoman Nina Banister said.
Insurance companies will likely order a geological report. If tests confirm that a sinkhole caused the damage, insurance policies should pay for the testing and repairs.
If the insurance company denies a claim, the property owner can dispute it and request a neutral evaluation through the Department of Financial Services, Banister said. The insurance company is required to pay all costs associated with the neutral evaluation program, she said.
Officials give these additional tips and reminders:
• Hire a home inspector to find signs of potential sinkhole activity.
• Insurance companies vary on their individual requirements and homeowners should shop around for the best insurance policy. There is no ready reference on sinkhole prediction or risk assessment, which has hampered legislation, or an industry standard on this issue.
• If you’re buying a new home, remember that most real estate seller’s disclosure forms include a sinkhole disclosure statement. Sometimes it is overlooked. If it is in question, be sure to ask.
In theory, sinkholes can form anywhere in Florida. The bedrock underlying the state is honeycombed with cavities of varying size, most of which will not collapse in our lifetimes.
For information, call the Department of Financial Services consumer help line at 1-877-693-5236 or visit the Web site at www.myfloridacfo.com.
Copyright © 2010 Tampa Tribune, Fla.,
County seeks emergency declaration over drywall
Broward County is seeking an emergency declaration from Gov. Charlie Crist for help with tainted Chinese drywall.
The county commission says too many insurers are denying homeowners’ claims.
The material, brought in to cover shortages at the height of the recent U.S. housing boom, emits a sickening rotten-egg smell that corrodes pipes and ruins copper wire.
The U.S. Consumer Products Safety Commission is conducting the largest investigation in its history after fielding thousands of homeowner complaints. Countless lawsuits have also been filed against developers, contractors and manufacturers.
Federal investigators have also found a possible link between health problems and gas emitted from the wallboard when coupled with formaldehyde, a substance common to new homes.
Copyright © 2010 The Associated Press
The county commission says too many insurers are denying homeowners’ claims.
The material, brought in to cover shortages at the height of the recent U.S. housing boom, emits a sickening rotten-egg smell that corrodes pipes and ruins copper wire.
The U.S. Consumer Products Safety Commission is conducting the largest investigation in its history after fielding thousands of homeowner complaints. Countless lawsuits have also been filed against developers, contractors and manufacturers.
Federal investigators have also found a possible link between health problems and gas emitted from the wallboard when coupled with formaldehyde, a substance common to new homes.
Copyright © 2010 The Associated Press
Tuesday, January 5, 2010
Homestead couple’s Chinese drywall case heads to court
After months of legal wrangling, it appears one of the first lawsuits filed over faulty Chinese drywall is headed to trial in federal court.
Melissa and Jason Harrell of Homestead filed a lawsuit against South Kendall Construction, Palm Holdings, Keys Gate Realty and Banner Supply in March.
The couple moved out of their home, built in 2006, after the entire family experienced breathing problems and headaches, and the coils of their air conditioner corroded and their home smelled of chemicals. They attributed all of the problems to the imported drywall used to build their house.
On Wednesday, the Third District Court of Appeal ruled that Banner Supply had ample opportunity to inspect the Harrells’ home and make an offer to repair it. Attorneys for the supply company did not return phone messages. Banner Supply had argued it had not been given enough time to make a repair offer and avoid litigation. “The courts are not going to be taken in with technical defenses that delay getting to the real heart of the matter,” said Stephen Rosenthal, one of the Harrells’ attorneys.
Earlier, a judge had ruled the Harrells could sue for damages beyond the cost of repairs – they could also sue for the loss of value to their home, the cost of alternate housing and more extensive remediation to their house, from new pipes to new appliances.
“For the Harrells pretty much right now, all the legal barriers have been cleared,” their attorney Alex Rundlet said.
The Harrells’ suit could pave the way for others in the same situation, including thousands of homeowners from around the country whose cases are being handled by a federal court in Louisiana.
Drywall victims learned of other victories this week, too. After merely encouraging lenders to give families with Chinese drywall a break on their mortgages in the past, the U.S. Department of Housing and Urban Development instructed FHA-approved lenders that they must do so this week.
“This is more than encouragement,” HUD spokesman Lemar Wooley said. “It notes instructions and specific guidance for FHA lenders.”
Some families juggling mortgage payments and rent or who are paying for expensive repairs have already slipped into foreclosure or are on the verge.
Federal Housing Administration lenders have been told they are to temporarily suspend mortgage payments for homeowners with the tainted wallboard. Or they should allow borrowers already behind to pay only their monthly mortgage bill for several months, without making back payments. And homeowners should not be charged late fees if they are given these accommodations.
In addition, the agency’s Community Development Block Grant program may offer homeowners money to pay for repair costs.
For most other CDBG programs, people who receive grants cannot earn more than 80 percent of an area’s median income. But a community could decide that doesn’t apply to this situation, said Gloria Shanahan, a spokeswoman for HUD in Miami.
Homeowners would need to contact their city and county governments to see if they have money from the program and if the local government will consider grants for drywall repairs.
For more information about the special mortgage terms for homeowners with Chinese drywall, call the HUD National Servicing Center, 888-297-8685.
Copyright © 2010 The Miami Herald,
Melissa and Jason Harrell of Homestead filed a lawsuit against South Kendall Construction, Palm Holdings, Keys Gate Realty and Banner Supply in March.
The couple moved out of their home, built in 2006, after the entire family experienced breathing problems and headaches, and the coils of their air conditioner corroded and their home smelled of chemicals. They attributed all of the problems to the imported drywall used to build their house.
On Wednesday, the Third District Court of Appeal ruled that Banner Supply had ample opportunity to inspect the Harrells’ home and make an offer to repair it. Attorneys for the supply company did not return phone messages. Banner Supply had argued it had not been given enough time to make a repair offer and avoid litigation. “The courts are not going to be taken in with technical defenses that delay getting to the real heart of the matter,” said Stephen Rosenthal, one of the Harrells’ attorneys.
Earlier, a judge had ruled the Harrells could sue for damages beyond the cost of repairs – they could also sue for the loss of value to their home, the cost of alternate housing and more extensive remediation to their house, from new pipes to new appliances.
“For the Harrells pretty much right now, all the legal barriers have been cleared,” their attorney Alex Rundlet said.
The Harrells’ suit could pave the way for others in the same situation, including thousands of homeowners from around the country whose cases are being handled by a federal court in Louisiana.
Drywall victims learned of other victories this week, too. After merely encouraging lenders to give families with Chinese drywall a break on their mortgages in the past, the U.S. Department of Housing and Urban Development instructed FHA-approved lenders that they must do so this week.
“This is more than encouragement,” HUD spokesman Lemar Wooley said. “It notes instructions and specific guidance for FHA lenders.”
Some families juggling mortgage payments and rent or who are paying for expensive repairs have already slipped into foreclosure or are on the verge.
Federal Housing Administration lenders have been told they are to temporarily suspend mortgage payments for homeowners with the tainted wallboard. Or they should allow borrowers already behind to pay only their monthly mortgage bill for several months, without making back payments. And homeowners should not be charged late fees if they are given these accommodations.
In addition, the agency’s Community Development Block Grant program may offer homeowners money to pay for repair costs.
For most other CDBG programs, people who receive grants cannot earn more than 80 percent of an area’s median income. But a community could decide that doesn’t apply to this situation, said Gloria Shanahan, a spokeswoman for HUD in Miami.
Homeowners would need to contact their city and county governments to see if they have money from the program and if the local government will consider grants for drywall repairs.
For more information about the special mortgage terms for homeowners with Chinese drywall, call the HUD National Servicing Center, 888-297-8685.
Copyright © 2010 The Miami Herald,
Monday, January 4, 2010
FHA borrowers get drywall help
The U.S. Department of Housing and Urban Development (HUD) announced over the holidays that FHA-insured families experiencing problems associated with toxic drywall might be eligible for assistance to help rehabilitate the properties. In addition, HUD’s Community Development Block Grant (CDBG) Program could help local communities combat the problem.
“We’re instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes,” says FHA Commissioner David Stevens. “We want to remove additional pressures for these families as they find solutions to allow them to return to a safe, decent and sanitary home.”
FHA Type 1 Special Forbearance (noted in Mortgagee Letter 2002-17) provides relief not typically available under an informal forbearance or repayment plan. This relief provided can include one or more of the following:
• suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of a default
• a period during which the borrower must make a regular monthly mortgage payment before repaying the arrearage
• a repayment period of at least six months
HUD has told lenders not to assess late fees while the borrower is making timely payments under the terms of the Special Forbearance plan. The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments. Lenders can review borrower applications and determine the most appropriate loss mitigation tool, including loan modification, partial claim or FHA HAMP.
Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at (888) 297-8685.
HUD’s CDBG Program is another resource to help states and local communities. Historically, CDBG has supported local efforts to rehabilitate homes through grants, loans, loan guarantees, and other means. In addition, CDBG may also support code enforcement, acquisition, clearance and remediation activities and relocation.
All CDBG-assisted activities must meet one of the program’s three national objectives: Provide benefit to low- and moderate-income persons; Eliminate slums or blighting conditions; or address an immediate threat to the health or welfare of the community.
The Consumer Product Safety Commission (CPSC) reports that more than 2,360 homeowners in 35 states and the District of Columbia (primarily in Florida, Louisiana and Virginia) have filed complaints of possible drywall-related problems, including damage to electrical wiring, plumbing, utilities and a variety of health concerns.
The drywall emits sulfur gases. One of these, hydrogen sulfide, which corrodes copper, was found at higher levels in homes with the drywall. Copper sulfide corrosion damage has been found on wiring, pipes and household appliances in homes with the drywall. In addition, the Centers for Disease Control and Prevention (CDC) is examining possible health consequences related to the drywall.
Related reports and findings are available online at the CSPC Drywall Information Center. (http://www.cpsc.gov/info/drywall/index.html).
© 2010 Florida Realtors®
“We’re instructing our FHA mortgage lenders nationwide to extend temporary relief to allow these families time to remove problem damaging drywall and repair their homes,” says FHA Commissioner David Stevens. “We want to remove additional pressures for these families as they find solutions to allow them to return to a safe, decent and sanitary home.”
FHA Type 1 Special Forbearance (noted in Mortgagee Letter 2002-17) provides relief not typically available under an informal forbearance or repayment plan. This relief provided can include one or more of the following:
• suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of a default
• a period during which the borrower must make a regular monthly mortgage payment before repaying the arrearage
• a repayment period of at least six months
HUD has told lenders not to assess late fees while the borrower is making timely payments under the terms of the Special Forbearance plan. The total arrearage for a Type 1 Special Forbearance cannot exceed 12 months of delinquent payments. Lenders can review borrower applications and determine the most appropriate loss mitigation tool, including loan modification, partial claim or FHA HAMP.
Any questions or clarification regarding the Type 1 Special Forbearance should be directed to the HUD National Servicing Center at (888) 297-8685.
HUD’s CDBG Program is another resource to help states and local communities. Historically, CDBG has supported local efforts to rehabilitate homes through grants, loans, loan guarantees, and other means. In addition, CDBG may also support code enforcement, acquisition, clearance and remediation activities and relocation.
All CDBG-assisted activities must meet one of the program’s three national objectives: Provide benefit to low- and moderate-income persons; Eliminate slums or blighting conditions; or address an immediate threat to the health or welfare of the community.
The Consumer Product Safety Commission (CPSC) reports that more than 2,360 homeowners in 35 states and the District of Columbia (primarily in Florida, Louisiana and Virginia) have filed complaints of possible drywall-related problems, including damage to electrical wiring, plumbing, utilities and a variety of health concerns.
The drywall emits sulfur gases. One of these, hydrogen sulfide, which corrodes copper, was found at higher levels in homes with the drywall. Copper sulfide corrosion damage has been found on wiring, pipes and household appliances in homes with the drywall. In addition, the Centers for Disease Control and Prevention (CDC) is examining possible health consequences related to the drywall.
Related reports and findings are available online at the CSPC Drywall Information Center. (http://www.cpsc.gov/info/drywall/index.html).
© 2010 Florida Realtors®
New rules to take effect on sinkholes, property taxes
The start of 2010 brings with it the enactment of new state rules and regulations relating to sinkhole insurance and property taxes.
Effective Friday:
• Sinkhole losses, Part 1 (SB 742 from state Sen. Mike Fasano, R-New Port Richey): Private insurers can “nonrenew” existing sinkhole coverage for properties in Pasco and Hernando counties, where sinkhole claims have mushroomed over the years.
Insurers that do this must notify the policyholders and offer alternative coverage that includes “catastrophic ground cover collapse,” excluding sinkholes. Catastrophic ground cover collapse refers to extreme damage in which a property is essentially destroyed and uninhabitable.
If they choose, those policyholders may buy back sinkhole coverage at additional cost. However, issuance of such coverage, in the form of a policy endorsement, may be subject to a property inspection. Those who choose to go without the extra coverage must receive a credit or discount. Bill sponsors said those discounts could halve some policyholders’ premiums, which have been increasing because of the rise in sinkhole claims.
• Sinkhole losses, Part 2 (SB 742 continued): The bill also requires the state to implement a grading system to determine how effective local sinkhole loss prevention ordinances are at preventing sinkholes and reducing the severity of damages. Each ordinance will be graded four years upon taking effect.
The state will mandate discounts on property insurance policies based on (1) a property’s compliance with such sinkhole ordinances and (2) the effectiveness of those ordinances.
• Beefing up TRIM notices (HB 701 from Rep. Matt Hudson, R-Naples): Existing law requires property appraisers to send taxpayers “Truth In Millage” notices, which indicate how the payer’s bill will be affected if the local taxing authority does or does not adopt a taxing proposal for the coming year.
The state has not mandated that actual millage rates appear on TRIM notices – until now. Starting next month, TRIM notices will also have to list the prior year’s millage rate, the proposed millage rate for the coming year if proposed budget changes are made, and the rate if the proposal is not adopted.
Copyright © 2009 Tampa Tribune, Fla.,
Effective Friday:
• Sinkhole losses, Part 1 (SB 742 from state Sen. Mike Fasano, R-New Port Richey): Private insurers can “nonrenew” existing sinkhole coverage for properties in Pasco and Hernando counties, where sinkhole claims have mushroomed over the years.
Insurers that do this must notify the policyholders and offer alternative coverage that includes “catastrophic ground cover collapse,” excluding sinkholes. Catastrophic ground cover collapse refers to extreme damage in which a property is essentially destroyed and uninhabitable.
If they choose, those policyholders may buy back sinkhole coverage at additional cost. However, issuance of such coverage, in the form of a policy endorsement, may be subject to a property inspection. Those who choose to go without the extra coverage must receive a credit or discount. Bill sponsors said those discounts could halve some policyholders’ premiums, which have been increasing because of the rise in sinkhole claims.
• Sinkhole losses, Part 2 (SB 742 continued): The bill also requires the state to implement a grading system to determine how effective local sinkhole loss prevention ordinances are at preventing sinkholes and reducing the severity of damages. Each ordinance will be graded four years upon taking effect.
The state will mandate discounts on property insurance policies based on (1) a property’s compliance with such sinkhole ordinances and (2) the effectiveness of those ordinances.
• Beefing up TRIM notices (HB 701 from Rep. Matt Hudson, R-Naples): Existing law requires property appraisers to send taxpayers “Truth In Millage” notices, which indicate how the payer’s bill will be affected if the local taxing authority does or does not adopt a taxing proposal for the coming year.
The state has not mandated that actual millage rates appear on TRIM notices – until now. Starting next month, TRIM notices will also have to list the prior year’s millage rate, the proposed millage rate for the coming year if proposed budget changes are made, and the rate if the proposal is not adopted.
Copyright © 2009 Tampa Tribune, Fla.,
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