When Jennifer and David Wakefield bought their home at the end of 2005, they believed its value would rise. After all, the couple they had bought it from made a $100,000 profit in just three years. But instead, the housing market foundered, and the house in Oviedo, Fla., that the Wakefields bought for about $230,000 is now worth just $115,000.
Jennifer Wakefield says she’s put off hopes of moving to a larger home. She once thought she could use a home-equity loan to help cover the $30,000 cost of adopting a child, but now there’s no equity to tap into.
“We’re in the middle of adopting our first child and would have loved to have used a home-equity loan to borrow from – if we had home equity,” says Wakefield, 32. “Now, we’re faced with coming up with $30,000.”
The Wakefields are among the owners of more than 11.3 million homes nationwide that are now worth less than the mortgages on them. The housing market collapse wiped out about $7 trillion in housing value from the third quarter of 2006 through the end of 2009, according to the Federal Reserve.
Gone are the days when households relied on their homes’ ever-rising values as family piggy banks that would pay for everything from new cars to college tuition. Legions of borrowers who once thought they could count on equity in their homes as a financial safety net are finding there’s nothing there. Instead, they’re discovering it may take years before their homes are worth as much as they owe on them.
A typical borrower who is “underwater” won’t see positive gains in equity until 2015 to 2020, depending on the market, according to a study of 10 major metro areas by First American CoreLogic for USA TODAY.
“It’s a rude awakening. There’s a total change in thinking going on,” says Amy Bohutinsky of Zillow.com, a real estate website. “People got caught up in the idea you could borrow against your homes, but they no longer think of them as savings accounts. We’re going through a big psychological shift. Will this recession change how we think about our homes? Are they an investment vehicle or a place to live?”
Vanished home equity is hurting young homeowners, who are finding they can’t relocate for jobs or promotions, and older borrowers, who are realizing they don’t have equity to tap for retirement.
‘What if I want to move?’
At 39, Tage Woehl already fears for his family’s financial future. Woehl, of Eastlake, Calif., is about $80,000 underwater on a home he and his wife, Imelda, bought for $430,000 in 2003. He’s locked into a 5.99 percent fixed-rate mortgage that no bank will refinance.
To hold down other expenses, the Woehls go without cable TV, and he’s holding onto his 1999 Dodge Intrepid, which has 188,000 miles on the odometer. The Woehls’ daughter, Nika, is only 4, but Woehl, an accountant, already is worrying about how he’ll afford college tuition in 13 years.
He says he feels like he’s lost his financial life jacket: “It’s not too comforting.”
Woehl says it sometimes feels unfair that other homeowners who don’t pay their mortgages on time get federal bailout assistance in the form of mortgage modifications and lower monthly payments. “I’m the one who’s paying every month, and when all is said and done, I’m scraping by,” he says. “We can’t refinance. We’re upside-down now. What if I want to move? I’d like to be closer to my job.”
But it’s also older borrowers without young children who are frustrated by their financial situation and feel stuck because they are underwater on their homes. Vicky Dicristo, 64, bought her home in Soquel, Calif., in 2006 for $535,000 with plans to fix it up, live in it awhile, then sell and buy a nice retirement home in Arizona, where she has family. She bought the home with a five-year, interest-only, adjustable-rate mortgage at a 5.9 percent interest rate.
Her home is now worth $350,000, according to the local assessor’s office. And Dicristo, who was laid off nearly two years ago from her job as a mortgage loan underwriter, has lost the $135,000 she put down on the house as well as the more than $15,000 she put into renovating the home with new floors.
“I lost $150,000,” Dicristo says. “I haven’t been able to make payments, either. I thought I was going to be able to sell it and move to a less expensive area. That had been my plan when I bought it, to move to someplace like Arizona and pay all cash. But that whole plan fell apart.”
Dicristo is in growing company. About 24 percent of all residential properties with mortgages had negative equity at the end of 2009, according to First American CoreLogic. That’s up from 10.7 million and 23 percent at the end of September.
Dicristo can’t sell her home and move, but she may be forced to leave. She no longer can afford the payments on her home and expects to be foreclosed upon. She’s living on Social Security and unemployment and drawing $800 a month from her $200,000 retirement account, but she says she has no choice but to walk away from her current home.
Her credit score had been close to a sterling 800, reflecting the type of borrower many banks would lend to at low interest rates. Because she’s been unable to make her mortgage payments, she believes her credit score has sunk to about 500, a score that would make it difficult for her to get a home loan.
Dicristo’s state, California, is among the top five states where negative equity is most concentrated. But it’s not in the lead. Nevada had the highest percentage of negative equity with 70 percent of its mortgaged properties underwater, followed by Arizona at 51 percent, Florida with 48 percent, Michigan with 39 percent. California came in at 35 percent, according to First American CoreLogic.
For Dicristo, losing equity in her home has meant losing the cash she sank into it and losing much of her retirement dream. “Emotionally, this has had a very big impact on me,” she says. “It’s changed how I view housing.”
When foreclosure looms
Losing equity has also cost Henry Oviedo, 75, an engineer, his retirement dream. He bought his home in 2005 in Owings, Md., for $642,000. It did not have a complete basement, so he spent nearly $100,000 to put in an office, a small theater, a bathroom, a fitness room and a big living room. He took out a five-year, adjustable-rate mortgage at 5.85 percent interest. When he went to refinance recently, his home was appraised at $590,000.
Oviedo says he has been unable to get his home refinanced because he is upside-down. Nor has he been able to get his mortgage modified. Oviedo is now paying $3,200 a month, but come November, he could face higher payments when the 5.85 percent rate on his mortgage will be adjusted. He must retire this year, and Oviedo says his Social Security check won’t be enough to pay his mortgage. His wife, Giselda, is unemployed.
“I am very worried,” he says. “I put $100,000 into the house. It’s very uncertain what is going to happen. I would have liked to have had this as my home in retirement, but I am going to have to go into foreclosure.”
The problem of negative equity is getting worse. The average equity amount that an underwater borrower was in the hole for in the fourth quarter of 2009 was $70,700, up from $69,700 the previous quarter. Without equity in their homes, many homeowners no longer have collateral for personal loans that financed new cars, vacations, home improvements and college educations before the housing bust.
Home-equity lending has plummeted. Lenders made $77 billion in home-equity loans or lines of credit in 2009, down from $430 billion during the housing boom in 2006, according to Inside Mortgage Finance. “That’s not likely to change any time soon until equity picks back up,” says Guy Cecala, CEO of Inside Mortgage Finance.
And as Americans wind up owing more on their homes than they’re worth, concerns are mounting that more may choose to simply walk away from their mortgages – a practice known as strategic default. When the value of the mortgage is more than the value of the home, homeowners begin to show a willingness to strategically default on their mortgages, especially when the value has fallen by 15 percent or more, according to a 2009 study by researchers at Northwestern University, European University Institute and the University of Chicago. That could lead to more foreclosures and further depress home prices.
The negative equity problem also is threatening future inheritances. Many homeowners who counted on their home equity as a substantial part of the estate they’d pass on to their heirs are now worrying about the welfare of their spouses and children after they die. Bob Riley had thought the equity in his home would provide for his wife, Dawn, and provide an inheritance for his three adult children. Now he fears it will just be a financial albatross for them. His home is one of the 2.2 million in Florida with negative equity. He and Dawn, of Tallahassee, spent $220,000 five years ago and took out a fixed mortgage on their four-bedroom, one-story home that backs up to a lake and includes a 1-acre yard for their two dachshunds. A nearly identical home across the street recently sold for about $180,000, and Bob guesses they’re at least $20,000 underwater on their house. He used to work as a concrete salesman but is currently out of work. Dawn sells insurance.
It’s frustrating, Bob says, because there’s a home they’d like to buy with more square footage that’s newer, but they’d have to write a check just to get out of their house. He says they’ve paid off all their bills and are now trying to decide whether to continue paying the mortgage.
“It’ll take years for the equity to get back,” he says. Four or five other homeowners in his neighborhood, he says, have simply walked away and left their properties to the bank.
And there are other hard realities to come to terms with. Bob, 60, says he’ll have no home value to pass on to Dawn or his three grown children. He had thought he could take out a reverse mortgage on the home. That’s when a homeowner who is older than 62 borrows money from his or her home. It isn’t paid back until the owner dies, sells the home, or permanently moves out.
“I can’t retire. I’m looking for work,” Bob says. “I thought whatever we’d have, I’d pass away and leave the house to her, and she’d have a reverse mortgage to live off of. Now we don’t know what we’re going to do.”
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour
Monday, March 29, 2010
Expanded mortgage aid program should cut foreclosures
The Obama administration’s revamped mortgage program may help more borrowers keep their homes, but economists say it could also delay foreclosures that can’t be prevented.
The program requires lenders to reduce mortgage payments for three to six months for unemployed homeowners. It also encourages mortgage servicers to consider reducing principal for borrowers who stay current on their loans.
In addition, some homeowners who owe more than their homes are worth may be able to refinance into loans backed by the Federal Housing Administration. The changes are designed to offer help to more borrowers than are getting aid under the existing program. But unemployed homeowners, for example, could still find themselves facing foreclosure if they remain unemployed when their forbearance period runs out.
“In six months, the lender will still have a non-performing loan and the borrower will still have a loan they can’t pay,” says Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, which does audits for lenders. “Foreclosures are still going to rise.”
About 2.8 million households received a foreclosure notice in 2009, and the number is projected to top 3 million this year, according to RealtyTrac. Close to 4.5 million first mortgage loans are in the foreclosure process or are at least 90 days delinquent.
But there is an upside. By spreading foreclosures over a longer period, home prices decline over a longer stretch, says Mark Zandi, at Moody’s Economy.com.
If a flood of foreclosures hit at once, prices would drop more drastically. Without changes to the government’s program, only an estimated 500,000 foreclosures would be avoided.
Zandi estimates that the changes could spare between 1 million and 1.5 million homeowners from foreclosure. Other economists agree that the Home Affordable Modification Program (HAMP) delays some foreclosures, but that’s not necessarily a bad policy.
“What policymakers are doing is telling lenders they have to look at every loan through the lens of HAMP, and all that does is buy us time,” say Ajay Rajadhyaksha, head of U.S. fixed income strategy at Barclays Capital. “It’s probably the right policy perspective ... the price drop is less.”
Copyright © 2010 USA TODAY, a division of Gannett Co. Inc.,
The program requires lenders to reduce mortgage payments for three to six months for unemployed homeowners. It also encourages mortgage servicers to consider reducing principal for borrowers who stay current on their loans.
In addition, some homeowners who owe more than their homes are worth may be able to refinance into loans backed by the Federal Housing Administration. The changes are designed to offer help to more borrowers than are getting aid under the existing program. But unemployed homeowners, for example, could still find themselves facing foreclosure if they remain unemployed when their forbearance period runs out.
“In six months, the lender will still have a non-performing loan and the borrower will still have a loan they can’t pay,” says Sylvia Alayon, vice president of operations for the Consumer Mortgage Audit Center, which does audits for lenders. “Foreclosures are still going to rise.”
About 2.8 million households received a foreclosure notice in 2009, and the number is projected to top 3 million this year, according to RealtyTrac. Close to 4.5 million first mortgage loans are in the foreclosure process or are at least 90 days delinquent.
But there is an upside. By spreading foreclosures over a longer period, home prices decline over a longer stretch, says Mark Zandi, at Moody’s Economy.com.
If a flood of foreclosures hit at once, prices would drop more drastically. Without changes to the government’s program, only an estimated 500,000 foreclosures would be avoided.
Zandi estimates that the changes could spare between 1 million and 1.5 million homeowners from foreclosure. Other economists agree that the Home Affordable Modification Program (HAMP) delays some foreclosures, but that’s not necessarily a bad policy.
“What policymakers are doing is telling lenders they have to look at every loan through the lens of HAMP, and all that does is buy us time,” say Ajay Rajadhyaksha, head of U.S. fixed income strategy at Barclays Capital. “It’s probably the right policy perspective ... the price drop is less.”
Copyright © 2010 USA TODAY, a division of Gannett Co. Inc.,
Friday, March 26, 2010
Broward seeks congressional hearings on FEMA response to Chinese drywall
Broward County commissioners are asking Congress to hold hearings to address why homeowners plagued with Chinese drywall are not receiving emergency assistance from FEMA.
Last week, the Federal Emergency Management Agency rejected the state’s request for help in assessing the damage caused by the corrosive, defective drywall from China. FEMA’s regional director said the request did not meet federal criteria for a disaster.
Commissioner Stacy Ritter, who represents the northwestern Broward area where the drywall has been a major problem, asked fellow commissioners to send the letter requesting congressional hearings.
“The people affected by this Chinese drywall are victims,” Ritter said in a statement. “The situation is no less an emergency than a natural disaster. People are being forced out of their homes. FEMA’s rules need to be changed to cover drastic events like this.”
Under a federal disaster program, affected homeowners could have applied for funds capped at $29,900 per family. Rough cost estimates have reached more than $100,000 per home.
Complaints about Chinese drywall began more than a year ago. The defective drywall generates a “rotten egg” smell and corrodes wiring, copper pipes, appliances and metals.
State officials have determined 530 homes in Florida, including 128 in Broward and Palm Beach counties, have had metal corrosion due to Chinese drywall. County property appraisers statewide have reduced property values of 2,505 homes, including 300 in Broward and Palm Beach counties.
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla.
Last week, the Federal Emergency Management Agency rejected the state’s request for help in assessing the damage caused by the corrosive, defective drywall from China. FEMA’s regional director said the request did not meet federal criteria for a disaster.
Commissioner Stacy Ritter, who represents the northwestern Broward area where the drywall has been a major problem, asked fellow commissioners to send the letter requesting congressional hearings.
“The people affected by this Chinese drywall are victims,” Ritter said in a statement. “The situation is no less an emergency than a natural disaster. People are being forced out of their homes. FEMA’s rules need to be changed to cover drastic events like this.”
Under a federal disaster program, affected homeowners could have applied for funds capped at $29,900 per family. Rough cost estimates have reached more than $100,000 per home.
Complaints about Chinese drywall began more than a year ago. The defective drywall generates a “rotten egg” smell and corrodes wiring, copper pipes, appliances and metals.
State officials have determined 530 homes in Florida, including 128 in Broward and Palm Beach counties, have had metal corrosion due to Chinese drywall. County property appraisers statewide have reduced property values of 2,505 homes, including 300 in Broward and Palm Beach counties.
Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla.
McCarty addresses insurer insolvency reports
All but a few Florida insurance companies have weathered a financially stormy year, the state’s insurance commissioner said Tuesday, responding to reports about insolvencies in the marketplace.
Insurance Commissioner Kevin McCarty told Gov. Charlie Crist and the Cabinet that only two companies have gone into receivership – though others are on the agency’s radar screen. Media stories have reported troubles in Florida’s domestic insurance market, and McCarty was asked to give the Cabinet a status update.
While some companies may be shielding profits by sending Florida premiums to their national firms or affiliated agents, insurers also have had bona fide events causing them to post a loss despite a year with few natural calamities and no hurricanes, according to McCarty.
“It is a reality in a capitalist system,” McCarty said. “There are some companies that are winners and some companies that are losers. Even when we have a strong economy, we have failures of insurance businesses.”
Of 206 companies reporting, 144 firms reported surplus gains, which are used to pay for future storms, for the year; 60 percent reported reduced surpluses. Despite the surpluses, 100 companies reported operating losses for the year compared to 81 companies that posted gains.
McCarty attributed the losses to a handful of factors including higher than expected mitigation reimbursements, recent replacement cost legislation and higher reinsurance costs.
Critics, including former state Rep. Don Brown, say such failures can be expected in a free market system but should not occur in a highly regulated industry like insurance. He disagreed with McCarty’s contention that no amount of regulation can keep all companies afloat.
“How in such a regulated market can we just assume some are going to fail?”
McCarty, however, said the agency has done a relatively good job spotting shaky companies before they go belly up and leave customers in the lurch. Two companies, American Keystone and Coral Insurance Co., failed last year and were ordered to liquidate. Others have been required to recapitalize and take other action under OIR oversight.
“Any known, troubled company without the financial wherewithal to deal with paying of claims will be required to re-capitalize, merge, be acquired or be liquidated,” McCarty said.
Going forward, OIR is backing a pair of insurance reform efforts now working their way through the Legislature that would rein in public adjusters, bolster financial requirements for new companies and allow insurers to hold back a portion of replacement costs until the work is completed.
McCarty said the agency supports legislation (SB 2044) by Sen. Garrett Richter, R-Naples, which bolsters financial requirements for new firms and allows companies to adjust rates for inflation without seeking approval from Florida’s Office of Insurance Regulation.
“The bill will go a long way to address the cost drivers that we’ve seen in the system,” McCarty said.
Another measure (SB 2264), by Sen. Mike Bennett, R-Bradenton, increases regulation of public adjusters and is also supported by OIR. The measure would reduce from five to three years the deadline for filing claims on a particular storm.
Source: News Service of Florida,
Insurance Commissioner Kevin McCarty told Gov. Charlie Crist and the Cabinet that only two companies have gone into receivership – though others are on the agency’s radar screen. Media stories have reported troubles in Florida’s domestic insurance market, and McCarty was asked to give the Cabinet a status update.
While some companies may be shielding profits by sending Florida premiums to their national firms or affiliated agents, insurers also have had bona fide events causing them to post a loss despite a year with few natural calamities and no hurricanes, according to McCarty.
“It is a reality in a capitalist system,” McCarty said. “There are some companies that are winners and some companies that are losers. Even when we have a strong economy, we have failures of insurance businesses.”
Of 206 companies reporting, 144 firms reported surplus gains, which are used to pay for future storms, for the year; 60 percent reported reduced surpluses. Despite the surpluses, 100 companies reported operating losses for the year compared to 81 companies that posted gains.
McCarty attributed the losses to a handful of factors including higher than expected mitigation reimbursements, recent replacement cost legislation and higher reinsurance costs.
Critics, including former state Rep. Don Brown, say such failures can be expected in a free market system but should not occur in a highly regulated industry like insurance. He disagreed with McCarty’s contention that no amount of regulation can keep all companies afloat.
“How in such a regulated market can we just assume some are going to fail?”
McCarty, however, said the agency has done a relatively good job spotting shaky companies before they go belly up and leave customers in the lurch. Two companies, American Keystone and Coral Insurance Co., failed last year and were ordered to liquidate. Others have been required to recapitalize and take other action under OIR oversight.
“Any known, troubled company without the financial wherewithal to deal with paying of claims will be required to re-capitalize, merge, be acquired or be liquidated,” McCarty said.
Going forward, OIR is backing a pair of insurance reform efforts now working their way through the Legislature that would rein in public adjusters, bolster financial requirements for new companies and allow insurers to hold back a portion of replacement costs until the work is completed.
McCarty said the agency supports legislation (SB 2044) by Sen. Garrett Richter, R-Naples, which bolsters financial requirements for new firms and allows companies to adjust rates for inflation without seeking approval from Florida’s Office of Insurance Regulation.
“The bill will go a long way to address the cost drivers that we’ve seen in the system,” McCarty said.
Another measure (SB 2264), by Sen. Mike Bennett, R-Bradenton, increases regulation of public adjusters and is also supported by OIR. The measure would reduce from five to three years the deadline for filing claims on a particular storm.
Source: News Service of Florida,
Monday, March 22, 2010
Financial help for homeowners with defective drywall remains elusive
The Federal Emergency Management Agency (FEMA) this week turned down a request from Gov. Charlie Crist to consider the outfall of defective drywall a disaster worthy of federal help.
The decision is the latest in a series of letdowns for homeowners with faulty wallboard, which emits sulfuric compounds that corrodes copper in appliances and wiring, blackens jewelry and other metals and is suspected as the cause of breathing problems and headaches.
Some homeowners, who number in the thousands nationwide but are concentrated in Florida and Louisiana, have been dropped by their home insurance companies when they tried to make damage claims. Others have moved out of their homes and are juggling mortgage and rent payments. No government agency has approved a method of rehabilitating affected homes.
Lawsuits seeking damages from drywall manufacturers, builders, suppliers and others are still inching their way through the courts.
In addition, requests that Crist declare the issue a disaster using an executive order have been ignored so far.
His office did not return phone calls Friday.
FEMA turned down Crist’s request because the issue “does not constitute an emergency or major disaster incident.”
“No one’s being held accountable but me,” said Boynton Beach homeowner Joe Grote, who moved into his home 2 1/2 years ago and continues to bear its smell. ‘‘I’m being held accountable to the bank.”
One tangible solution for some homeowners is money from their local government for repairs through the federal Community Development Block Program.
The city of Miramar said this week it they will make about $1.5 million from this program available to homeowners who need to repair their homes because of faulty drywall or other problems.
But the money is available for low-income households. Many of the homes affected by defective drywall are larger new homes built during the housing boom in gated communities.
Copyright © 2010 The Miami Herald, Nirvi Shah.
The decision is the latest in a series of letdowns for homeowners with faulty wallboard, which emits sulfuric compounds that corrodes copper in appliances and wiring, blackens jewelry and other metals and is suspected as the cause of breathing problems and headaches.
Some homeowners, who number in the thousands nationwide but are concentrated in Florida and Louisiana, have been dropped by their home insurance companies when they tried to make damage claims. Others have moved out of their homes and are juggling mortgage and rent payments. No government agency has approved a method of rehabilitating affected homes.
Lawsuits seeking damages from drywall manufacturers, builders, suppliers and others are still inching their way through the courts.
In addition, requests that Crist declare the issue a disaster using an executive order have been ignored so far.
His office did not return phone calls Friday.
FEMA turned down Crist’s request because the issue “does not constitute an emergency or major disaster incident.”
“No one’s being held accountable but me,” said Boynton Beach homeowner Joe Grote, who moved into his home 2 1/2 years ago and continues to bear its smell. ‘‘I’m being held accountable to the bank.”
One tangible solution for some homeowners is money from their local government for repairs through the federal Community Development Block Program.
The city of Miramar said this week it they will make about $1.5 million from this program available to homeowners who need to repair their homes because of faulty drywall or other problems.
But the money is available for low-income households. Many of the homes affected by defective drywall are larger new homes built during the housing boom in gated communities.
Copyright © 2010 The Miami Herald, Nirvi Shah.
Friday, March 19, 2010
Rate increase cap added to House insurance bill
Property insurers would be able to raise premiums without regulatory approval, but only by up to 15 percent a year, under a wide-ranging insurance bill approved in a House committee Wednesday.
The proposal (HB 447) was amended to add the 15 percent cap on unregulated premium increases, and to include other reforms requested by the property insurance industry, such as allowing companies to withhold most of an insurance claim for replacement until the work is completed.
Sponsored by Rep. William Proctor, R-St. Augustine, the original proposal allowed property insurers to raise premiums in excess of those approved by the Office of Insurance Regulation (OIR) without the agency’s approval. OIR would retain authority over other aspects of insurance regulation.
The amended version would ramp up the ability of companies to raise rates. An insurer could boost rates by 5 percent the first year, 10 percent the second year and 15 percent from there on without OIR approval. The House Insurance, Banking & Financial Affairs Policy Committee approved the measure on an 11-3 vote.
Backers say the increases are needed to shore up an industry ravaged by non-hurricane losses and rates that are not actuarially sound. Such rates have resulted in a market in which state-run Citizens Property Insurance Corp. is the largest property insurer in the state.
“I find it incredible that some people would think that the market we have now is working,” said Rep. Alan Hays, R-Umatilla. “That flies right in the face of the facts. The only reason why it’s working is that we haven’t had a 100-year storm.”
Critics, including state insurance regulators, say the bill provides too many concessions to the industry that will ultimately be paid by policyholders in the form of assessments. They also said the measure lacked provisions to prevent unapproved increases after rates become actuarially sound.
“There is a balancing act between consumer interests and market interests,” Sean Shaw, consumer advocate for the Office of Insurance Regulation. “This bill is askew in regard to that balance.”
Added to the bill were a number of provisions that had been part of separate legislation addressing a slate of recommendations insurers say they need to remain able to pay claims.
The measure now would allow companies to withhold 60 percent of payment for replacement until the repairs or purchases are made. Since 2006, Florida law has required insurers to pay the full replacement payment up front regardless of whether the repairs are made.
The measure also excludes medical malpractice policyholders from being assessed in the event of storm.
Insurers and business groups including the Florida Chamber of Commerce and Associated Industries of Florida backed the measure, saying it would re-invigorate a market that is now charging rates that are too low.
“Consumers need to know that the policy they pay for … is worth the paper it’s written on,” said David Daniel a lobbyist for the Florida Chamber of Commerce.
Source: News Service of Florida, Michael Peltier
The proposal (HB 447) was amended to add the 15 percent cap on unregulated premium increases, and to include other reforms requested by the property insurance industry, such as allowing companies to withhold most of an insurance claim for replacement until the work is completed.
Sponsored by Rep. William Proctor, R-St. Augustine, the original proposal allowed property insurers to raise premiums in excess of those approved by the Office of Insurance Regulation (OIR) without the agency’s approval. OIR would retain authority over other aspects of insurance regulation.
The amended version would ramp up the ability of companies to raise rates. An insurer could boost rates by 5 percent the first year, 10 percent the second year and 15 percent from there on without OIR approval. The House Insurance, Banking & Financial Affairs Policy Committee approved the measure on an 11-3 vote.
Backers say the increases are needed to shore up an industry ravaged by non-hurricane losses and rates that are not actuarially sound. Such rates have resulted in a market in which state-run Citizens Property Insurance Corp. is the largest property insurer in the state.
“I find it incredible that some people would think that the market we have now is working,” said Rep. Alan Hays, R-Umatilla. “That flies right in the face of the facts. The only reason why it’s working is that we haven’t had a 100-year storm.”
Critics, including state insurance regulators, say the bill provides too many concessions to the industry that will ultimately be paid by policyholders in the form of assessments. They also said the measure lacked provisions to prevent unapproved increases after rates become actuarially sound.
“There is a balancing act between consumer interests and market interests,” Sean Shaw, consumer advocate for the Office of Insurance Regulation. “This bill is askew in regard to that balance.”
Added to the bill were a number of provisions that had been part of separate legislation addressing a slate of recommendations insurers say they need to remain able to pay claims.
The measure now would allow companies to withhold 60 percent of payment for replacement until the repairs or purchases are made. Since 2006, Florida law has required insurers to pay the full replacement payment up front regardless of whether the repairs are made.
The measure also excludes medical malpractice policyholders from being assessed in the event of storm.
Insurers and business groups including the Florida Chamber of Commerce and Associated Industries of Florida backed the measure, saying it would re-invigorate a market that is now charging rates that are too low.
“Consumers need to know that the policy they pay for … is worth the paper it’s written on,” said David Daniel a lobbyist for the Florida Chamber of Commerce.
Source: News Service of Florida, Michael Peltier
Wednesday, March 17, 2010
Drywall aid not a FEMA matter
Just days after Florida asked the federal government for disaster relief for homeowners affected by tainted drywall, the state received an answer: No.
The drywall problem does not meet the federal criteria to be an emergency or major disaster, according to a letter received Tuesday from the Federal Emergency Management Agency (FEMA).
“Conditions experienced by individuals from a consumer product safety matter, such as the degradation of imported drywall, does not constitute an emergency or major disaster incident, as contemplated under the Stafford Act,” the letter said.
Late last week, David Halstead, interim director for the Florida Division of Emergency Management, asked FEMA to conduct a preliminary damage assessment and provide financial assistance to those with bad drywall. The letter, at the request of Gov. Charlie Crist, was a first step in seeking financial aid for homeowners.
“We have received the letter from FEMA and are presently reviewing it, and will continue to explore avenues for assistance,” said Lauren McKeague, a spokeswoman for the Division of Emergency Management.
FEMA also suggested that the state contact the U.S. Consumer Product Safety Commission, which already is looking into the problematic building material.
Homeowners contend the drywall emits sulfuric gases that cause a rotten-egg stench, possible health problems and corrosion of air-conditioner coils, appliances and electrical wiring. Most of the tainted drywall appears to be Chinese-made. However, some homeowners have recently complained of similar problems with domestic drywall.
Experts have said as many as 100,000 homes nationwide, built from 2004 to 2007, have the tainted drywall. Builders have estimated that replacing drywall and appliances can cost about $100,000 a home.
Some builders agreed to do the work for homeowners, and others have not, leaving many owners in a bind because homeowners’ insurance policies don’t cover the tainted drywall.
Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken.
The drywall problem does not meet the federal criteria to be an emergency or major disaster, according to a letter received Tuesday from the Federal Emergency Management Agency (FEMA).
“Conditions experienced by individuals from a consumer product safety matter, such as the degradation of imported drywall, does not constitute an emergency or major disaster incident, as contemplated under the Stafford Act,” the letter said.
Late last week, David Halstead, interim director for the Florida Division of Emergency Management, asked FEMA to conduct a preliminary damage assessment and provide financial assistance to those with bad drywall. The letter, at the request of Gov. Charlie Crist, was a first step in seeking financial aid for homeowners.
“We have received the letter from FEMA and are presently reviewing it, and will continue to explore avenues for assistance,” said Lauren McKeague, a spokeswoman for the Division of Emergency Management.
FEMA also suggested that the state contact the U.S. Consumer Product Safety Commission, which already is looking into the problematic building material.
Homeowners contend the drywall emits sulfuric gases that cause a rotten-egg stench, possible health problems and corrosion of air-conditioner coils, appliances and electrical wiring. Most of the tainted drywall appears to be Chinese-made. However, some homeowners have recently complained of similar problems with domestic drywall.
Experts have said as many as 100,000 homes nationwide, built from 2004 to 2007, have the tainted drywall. Builders have estimated that replacing drywall and appliances can cost about $100,000 a home.
Some builders agreed to do the work for homeowners, and others have not, leaving many owners in a bind because homeowners’ insurance policies don’t cover the tainted drywall.
Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken.
La. family: Drywall-tainted home needs overhaul
Plaintiffs in what could be a precedent-setting court battle over the damage done by Chinese drywall told a judge Monday that a Louisiana home tainted by the sulfur-emitting substance would need a complete overhaul.
However, the defendant, a Chinese wallboard company, said simply removing the drywall and making selective repairs would suffice. U.S. District Judge Eldon E. Fallon heard the arguments about the defective Chinese-made drywall, which was imported en masse during the housing boom and after devastating hurricanes in 2005.
The drywall has been linked to corrosion in homes and possibly health effects. About 3,000 homeowners, most of them in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall. The Consumer Product Safety Commission is conducting an in-depth probe into the contaminated material.
There is no jury in this case, which deals with the claims of the Hernandez family of Louisiana. But the outcome of this trial, and other bellwether trials Fallon is handling, could serve as guidance for about 2,100 similar claims.
Fallon is expected to rule on what action should be taken to make the Hernandez home livable and whether the family is entitled to new appliances, electronics and other items that may have been damaged by corrosion. Claims over health problems are not being heard at this trial.
In this case, drywall manufacturer Knauf Plasterboard Tianjin Co. is arguing that the Hernandez home can be restored for about $54,000. The plaintiffs argue that cost is closer to $211,000.
The difference lies in the extent of what the two sides believe needs to be removed.
Both sides agree the drywall needs to be taken out. Knauf also has agreed to remove granite countertops, some electrical and plumbing parts, insulation and molding.
The plaintiffs say the home’s wiring, appliances, and heating and air conditioning unit should be removed, too.
However, Knauf lawyer Don Hayden told Fallon the drywall had not ruined the home.
“This is not where we have to go in in big white space suits,” he said. “This is a typical construction job.”
The home could be fixed in three months, and there would be no lingering problems once the drywall was removed, Hayden said.
Dean Rutila, an engineer and remediation expert with Simpson Gumpertz & Heger, testified for the plaintiffs that corroded pipes, wiring and other materials could get worse over time if the house is not gutted. He said the materials and appliances should be replaced.
Tatum and Charlene Hernandez built their home in Mandeville in 2006. It was appraised shortly before the Chinese drywall was discovered at about $238,000, their lawyer said. The drywall has left the air conditioner and other appliances inoperable and caused Charlene Hernandez to have headaches, the family said.
The Hernandez case is not the first trial over Chinese drywall Fallon has heard. Last month, he heard a test case involving Virginia families. But in that trial the defendant, Taishan Gypsum Co. Ltd., failed to appear for the proceedings.
Because the Chinese company did not show up, Fallon’s findings in that case are not considered as crucial as those in the Hernandez case. So far, Knauf Plasterboard has been the only Chinese company that has responded to lawsuits.
Copyright © 2010 The Associated Press, Cain Burdeau
However, the defendant, a Chinese wallboard company, said simply removing the drywall and making selective repairs would suffice. U.S. District Judge Eldon E. Fallon heard the arguments about the defective Chinese-made drywall, which was imported en masse during the housing boom and after devastating hurricanes in 2005.
The drywall has been linked to corrosion in homes and possibly health effects. About 3,000 homeowners, most of them in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall. The Consumer Product Safety Commission is conducting an in-depth probe into the contaminated material.
There is no jury in this case, which deals with the claims of the Hernandez family of Louisiana. But the outcome of this trial, and other bellwether trials Fallon is handling, could serve as guidance for about 2,100 similar claims.
Fallon is expected to rule on what action should be taken to make the Hernandez home livable and whether the family is entitled to new appliances, electronics and other items that may have been damaged by corrosion. Claims over health problems are not being heard at this trial.
In this case, drywall manufacturer Knauf Plasterboard Tianjin Co. is arguing that the Hernandez home can be restored for about $54,000. The plaintiffs argue that cost is closer to $211,000.
The difference lies in the extent of what the two sides believe needs to be removed.
Both sides agree the drywall needs to be taken out. Knauf also has agreed to remove granite countertops, some electrical and plumbing parts, insulation and molding.
The plaintiffs say the home’s wiring, appliances, and heating and air conditioning unit should be removed, too.
However, Knauf lawyer Don Hayden told Fallon the drywall had not ruined the home.
“This is not where we have to go in in big white space suits,” he said. “This is a typical construction job.”
The home could be fixed in three months, and there would be no lingering problems once the drywall was removed, Hayden said.
Dean Rutila, an engineer and remediation expert with Simpson Gumpertz & Heger, testified for the plaintiffs that corroded pipes, wiring and other materials could get worse over time if the house is not gutted. He said the materials and appliances should be replaced.
Tatum and Charlene Hernandez built their home in Mandeville in 2006. It was appraised shortly before the Chinese drywall was discovered at about $238,000, their lawyer said. The drywall has left the air conditioner and other appliances inoperable and caused Charlene Hernandez to have headaches, the family said.
The Hernandez case is not the first trial over Chinese drywall Fallon has heard. Last month, he heard a test case involving Virginia families. But in that trial the defendant, Taishan Gypsum Co. Ltd., failed to appear for the proceedings.
Because the Chinese company did not show up, Fallon’s findings in that case are not considered as crucial as those in the Hernandez case. So far, Knauf Plasterboard has been the only Chinese company that has responded to lawsuits.
Copyright © 2010 The Associated Press, Cain Burdeau
Monday, March 15, 2010
Regulation rare for homeowners associations
A Gaelic good-luck charm draws a $2,250 fine.
Six yard decorations are deemed three too many. The penalty: more than $2,000 in fines.
Residents dispute the legality of monthly maintenance fees.
These are just a few examples stemming from unregulated homeowners associations in Manatee County.
There are an estimated 1,000 homeowners associations in Manatee and Sarasota counties – the exact number is unknown because they are not required to register with the state.
They operate virtually free of state oversight. The state only gets involved in homeowners association issues when they involve recall of officers or election of officers.
In 99 percent of cases in Manatee and Sarasota counties, homeowners associations go about their business of enforcing deed restrictions and taking care of common property in a quiet, smooth fashion, said Sarasota attorney Dan Lobeck. His firm, Lobeck and Hanson, represents roughly 500 associations in Manatee and Sarasota.
But then there’s that 1 percent of cases where an issue spins out of control within a homeowners association, causing a firestorm of controversy that tears neighborhoods apart, places the community under the unwanted glare of public scrutiny and usually casts the association as the heavy.
In many of these cases, strong personalities on both sides have poured gasoline on the fire, said Eileen Sugg, a board member at Tara. That neighborhood became a “1 percenter” last year when its homeowners association angered a group of residents who were against a renovation of the golf course and country club.
Those residents unsuccessfully tried to recall the board, including Sugg, and halt the renovation.
“It’s human nature,” Sugg replied when asked why a homeowners association sometimes explodes.
“Sometimes when people who are not used to exercising power and authority are given the opportunity, they become a little over-reaching,” Sugg said. “It is always best to settle these things in an amicable way instead of getting to the point where people are drawing lines in the sand.”
Such firestorms are exactly what’s happening in neighborhoods throughout Manatee County.
In Lakewood Ranch, Summerfield/Riverwalk not only has fined resident Joani Ellis more than $2,000 for having more than three decorative items in her neatly groomed Summerfield front yard – it has also, in the opinion of Lobeck, who is now her attorney, overstepped its bounds by preventing her from taking a seat on the board’s neighborhood committee, even though her neighbors voted her in.
Ellis, who got into trouble for having a handful of sea shells on a metal grid placed in a planter in her front lawn, plans on attending a March 25 Summerfield/Riverwalk board meeting where she will learn if her appeal to have her fines dismissed was approved.
If she doesn’t get satisfaction, Lobeck said his client will head to court and ask that her fine be dropped and her attorney fees be paid by the association.
Refusing to pay dues
Casa Loma, a community off State Road 70 west of Oneco, may soon be a “1 percenter.”
In that community, several residents charge that the board of directors is operating as a homeowners association when they are not.
David Montgomery, a Bradenton attorney representing resident James Peronti in a lawsuit, says Casa Loma has no deed restrictions in force because they expired in 1999.
He further contends that Casa Loma, whose board has been collecting fees from residents for years, is a successor to a developer and a corporation that owns a recreational facility, but not a homeowners association.
Janet Montague, a treasurer, indicated that the board holds regular meetings like a homeowners association. She described Casa Loma as a “corporation.”
Montgomery’s client and others in the community, including Donna and Ken Coill, have refused to pay their monthly maintenance fees, saying that the board is masquerading as a legal government body.
“If the board of directors at Casa Loma can convince the Florida Legislature that it is a homeowners association, then my client will feel good about being protected under the legal rights that come with being under a true association,” Montgomery said.
The Coills say they refused to make payments to protest having “no voice.” The Coills say meetings are not announced and that the board does what it likes.
Montague said the meetings are posted in the clubhouse for all to see.
Coill disagrees, saying, “That’s baloney.”
The Casa Loma Corporation has put a lien on his home for the back payments, which is roughly $1,300 plus late charges.
When Ken Coill and Montague pass each other walking in the community, they ignore each other, Coill said.
Why no regulation?
Condos are regulated closely by the state, so why not homeowners associations?
“There is state oversight in the matter of elections and recalls of directors and that is it,” Lobeck said. “It was a matter of compromise in the Florida Legislature when the Homeowners’ Association Act came to pass. Developers of homeowners associations did not want them regulated like condos because developers wanted greater flexibility and less control by the state. So, only the barest of regulations were created. Over the years, the homeowners association rules have come closer to condos with the control over elections being the most recent thing.”
“HOAs don’t even have to register with the state,” Lobeck added. “There is nothing moving anywhere that would create additional state regulations.”
But should there be?
State Rep. Ron Reagan, R-Bradenton, speaker pro tempore of the Florida House of Representatives, says “No.” Reagan feels that association problems are something that residents need to work out, and that the state should stay out of it.
Florida Attorney General Bill McCollum agrees.
Through his spokeswoman, Ryan Wiggins, McCollum told the Herald last week that he has received virtually no complaints from residents of homeowners associations in the state asking for help, and so he is planning no actions.
State Sen. Mike Fasano, who represents New Port Richey, is proposing a bill this legislative session preventing condo owners who don’t pay their association fees from using amenities at the condos, but he has nothing in the works for homeowners associations.
Fasano said there are just too many to try establishing oversight.
“There are few laws because there are so many of them,” Fasano said. “It would be difficult. Some are deed-restricted and some are not. I just don’t know if it’s a good idea to regulate. You are talking thousands and thousands of associations.”
An American tradition
Homeowners associations date back to the 1960s, when developers began building subdivisions and including deed restrictions. Homeowners associations started because residents were tired of having to sue each other if one neighbor was unhappy with what another was doing next door.
Homeowners associations usually have by-laws and covenants. They are the same as a contract, Lobeck said.
“It’s a contract and also a covenant that runs with the land,” Lobeck said. “In other words, when you buy you are under contract to follow the covenants and when you sell your land, future owners are bound as well.”
In the last 50 years, Lobeck said, homeowners association by-laws and covenants have woven themselves deeply into the fabric of American life, perhaps suggesting the unwillingness of politicians to mess with them.
Reagan recently got a letter from his homeowners association in Braden Woods, taking him to task for parking his motor home too long in his driveway.
In reality, the person who noted that Reagan’s motor home was in the driveway missed the fact that Reagan had it out of town for a week. The resident only saw the day Reagan was loading it and the day it returned and thought it had been in the driveway seven days, Reagan said.
But Reagan has not drawn a line in the sand over the incident.
“I didn’t have any bad feelings about getting the letter,” Reagan said. “I think when people sign documents to live in a deed-restricted community they have signed on to follow the rules. However, I do believe there should be an appeal process and there should be opportunity for change.”
In the 17 years he has lived in Braden Woods, Reagan remembers only one incident that could have exploded, but didn’t. A resident started to put stone on his house that was not approved by the architectural board. But the architect was notified and the situation was quickly corrected.
Knowingly breaking rules
But what about a resident who knows he or she has violated the covenants, but feels they are in the right and refuses to comply?
That’s what is happening in Lakewood Ranch right now.
In the latest incident to spark public attention, Malcolm and Karen Ronney, owners of MacAllister’s Restaurant on Main Street, paid a fine of $2,250 to the Greenbrook Village Homeowners Association because they had a sign reading “Albanach” mounted on their home for 47 days in 2006.
Albanach is Gaelic for Scotsman.
“It’s something you put on your house for good luck,” Karen Ronney said.
The Ronneys said they received 50 e-mail letters of support after word got out about their fine.
“I wanted to put the sign on the copier and put Albanach on all the homes in our neighborhood to see what would happen,” Ronney said.
The couple paid the fine because it had been turned over to a collection agency and it was not good for their business image.
“Bitter,” Karen Ronney said when asked how she feels about the incident.
“I think it’s ridiculous,” Malcolm Ronney said. “This would never have happened when Schroeder-Manatee Ranch was in control. I am really hoping the system can change.”
The Ronneys immediately knew in 2006 that the sign was not allowed, but chose to leave it up, logging a $50 per-day fine, said board member Steve Balazac.
“They were notified the sign wasn’t allowed based on the covenants of Greenbrook,” Balazac said. “The timeline was not heeded and the fine was in place. The folks were not present at the last meeting, which you would think they would try to be there to voice their opinion.”
Malcolm Ronney said he didn’t go to the Feb. 25 meeting because he was at work at his restaurant. Karen Ronney sent a letter in their behalf.
“We’re in the middle of season,” Karen Ronney said.
The Greenbrook board did trim the fine from $3,200, the Ronneys said.
Lining up defenses
It might be hard to top Albanach, but Ellis’ case seems to take the prize as the case that, at least on the surface, seems the most ado about virtually nothing.
In his 30 years of handling association cases, Lobeck said he has never seen a better set of defenses to a homeowners association enforcement action.
“I believe Mrs. Ellis has an open and shut case on four grounds,” Lobeck said. “The statute of limitations applies. Mrs. Ellis put in her yard in 1999 and this action should have occurred by 2004. Second, I have reviewed photographs of other lots, including that of the homeowners association president, another director and a compliance chairwoman and, if Mrs. Ellis is in violation, clearly they are too.
“There is also some ambiguity in the restriction,” he said. “It’s not clear if the three-item limit pertains to the whole front yard or each individual flower bed. And, finally, the restriction is unreasonable as applied. It is absurd to say her small shells and other items create any aesthetic offense whatsoever.”
When a homeowners association explodes, something has gone very wrong inside of it, Ellis said.
“Common sense has left,” Ellis said. “In my case, the Summerfield/Riverwalk board has the power and opportunity to turn this into a positive, win-win situation – or continue with their own agenda.”
Ellis hopes the board will make the decision to waive all her fines and invite her to apply for a modification, even though none exists right now for lawn decorations other than benches, birdbaths and fountains.
“That is what I am hoping for,” Ellis said.
Copyright © 2010 The Bradenton Herald, Fla., Richard Dymond
Six yard decorations are deemed three too many. The penalty: more than $2,000 in fines.
Residents dispute the legality of monthly maintenance fees.
These are just a few examples stemming from unregulated homeowners associations in Manatee County.
There are an estimated 1,000 homeowners associations in Manatee and Sarasota counties – the exact number is unknown because they are not required to register with the state.
They operate virtually free of state oversight. The state only gets involved in homeowners association issues when they involve recall of officers or election of officers.
In 99 percent of cases in Manatee and Sarasota counties, homeowners associations go about their business of enforcing deed restrictions and taking care of common property in a quiet, smooth fashion, said Sarasota attorney Dan Lobeck. His firm, Lobeck and Hanson, represents roughly 500 associations in Manatee and Sarasota.
But then there’s that 1 percent of cases where an issue spins out of control within a homeowners association, causing a firestorm of controversy that tears neighborhoods apart, places the community under the unwanted glare of public scrutiny and usually casts the association as the heavy.
In many of these cases, strong personalities on both sides have poured gasoline on the fire, said Eileen Sugg, a board member at Tara. That neighborhood became a “1 percenter” last year when its homeowners association angered a group of residents who were against a renovation of the golf course and country club.
Those residents unsuccessfully tried to recall the board, including Sugg, and halt the renovation.
“It’s human nature,” Sugg replied when asked why a homeowners association sometimes explodes.
“Sometimes when people who are not used to exercising power and authority are given the opportunity, they become a little over-reaching,” Sugg said. “It is always best to settle these things in an amicable way instead of getting to the point where people are drawing lines in the sand.”
Such firestorms are exactly what’s happening in neighborhoods throughout Manatee County.
In Lakewood Ranch, Summerfield/Riverwalk not only has fined resident Joani Ellis more than $2,000 for having more than three decorative items in her neatly groomed Summerfield front yard – it has also, in the opinion of Lobeck, who is now her attorney, overstepped its bounds by preventing her from taking a seat on the board’s neighborhood committee, even though her neighbors voted her in.
Ellis, who got into trouble for having a handful of sea shells on a metal grid placed in a planter in her front lawn, plans on attending a March 25 Summerfield/Riverwalk board meeting where she will learn if her appeal to have her fines dismissed was approved.
If she doesn’t get satisfaction, Lobeck said his client will head to court and ask that her fine be dropped and her attorney fees be paid by the association.
Refusing to pay dues
Casa Loma, a community off State Road 70 west of Oneco, may soon be a “1 percenter.”
In that community, several residents charge that the board of directors is operating as a homeowners association when they are not.
David Montgomery, a Bradenton attorney representing resident James Peronti in a lawsuit, says Casa Loma has no deed restrictions in force because they expired in 1999.
He further contends that Casa Loma, whose board has been collecting fees from residents for years, is a successor to a developer and a corporation that owns a recreational facility, but not a homeowners association.
Janet Montague, a treasurer, indicated that the board holds regular meetings like a homeowners association. She described Casa Loma as a “corporation.”
Montgomery’s client and others in the community, including Donna and Ken Coill, have refused to pay their monthly maintenance fees, saying that the board is masquerading as a legal government body.
“If the board of directors at Casa Loma can convince the Florida Legislature that it is a homeowners association, then my client will feel good about being protected under the legal rights that come with being under a true association,” Montgomery said.
The Coills say they refused to make payments to protest having “no voice.” The Coills say meetings are not announced and that the board does what it likes.
Montague said the meetings are posted in the clubhouse for all to see.
Coill disagrees, saying, “That’s baloney.”
The Casa Loma Corporation has put a lien on his home for the back payments, which is roughly $1,300 plus late charges.
When Ken Coill and Montague pass each other walking in the community, they ignore each other, Coill said.
Why no regulation?
Condos are regulated closely by the state, so why not homeowners associations?
“There is state oversight in the matter of elections and recalls of directors and that is it,” Lobeck said. “It was a matter of compromise in the Florida Legislature when the Homeowners’ Association Act came to pass. Developers of homeowners associations did not want them regulated like condos because developers wanted greater flexibility and less control by the state. So, only the barest of regulations were created. Over the years, the homeowners association rules have come closer to condos with the control over elections being the most recent thing.”
“HOAs don’t even have to register with the state,” Lobeck added. “There is nothing moving anywhere that would create additional state regulations.”
But should there be?
State Rep. Ron Reagan, R-Bradenton, speaker pro tempore of the Florida House of Representatives, says “No.” Reagan feels that association problems are something that residents need to work out, and that the state should stay out of it.
Florida Attorney General Bill McCollum agrees.
Through his spokeswoman, Ryan Wiggins, McCollum told the Herald last week that he has received virtually no complaints from residents of homeowners associations in the state asking for help, and so he is planning no actions.
State Sen. Mike Fasano, who represents New Port Richey, is proposing a bill this legislative session preventing condo owners who don’t pay their association fees from using amenities at the condos, but he has nothing in the works for homeowners associations.
Fasano said there are just too many to try establishing oversight.
“There are few laws because there are so many of them,” Fasano said. “It would be difficult. Some are deed-restricted and some are not. I just don’t know if it’s a good idea to regulate. You are talking thousands and thousands of associations.”
An American tradition
Homeowners associations date back to the 1960s, when developers began building subdivisions and including deed restrictions. Homeowners associations started because residents were tired of having to sue each other if one neighbor was unhappy with what another was doing next door.
Homeowners associations usually have by-laws and covenants. They are the same as a contract, Lobeck said.
“It’s a contract and also a covenant that runs with the land,” Lobeck said. “In other words, when you buy you are under contract to follow the covenants and when you sell your land, future owners are bound as well.”
In the last 50 years, Lobeck said, homeowners association by-laws and covenants have woven themselves deeply into the fabric of American life, perhaps suggesting the unwillingness of politicians to mess with them.
Reagan recently got a letter from his homeowners association in Braden Woods, taking him to task for parking his motor home too long in his driveway.
In reality, the person who noted that Reagan’s motor home was in the driveway missed the fact that Reagan had it out of town for a week. The resident only saw the day Reagan was loading it and the day it returned and thought it had been in the driveway seven days, Reagan said.
But Reagan has not drawn a line in the sand over the incident.
“I didn’t have any bad feelings about getting the letter,” Reagan said. “I think when people sign documents to live in a deed-restricted community they have signed on to follow the rules. However, I do believe there should be an appeal process and there should be opportunity for change.”
In the 17 years he has lived in Braden Woods, Reagan remembers only one incident that could have exploded, but didn’t. A resident started to put stone on his house that was not approved by the architectural board. But the architect was notified and the situation was quickly corrected.
Knowingly breaking rules
But what about a resident who knows he or she has violated the covenants, but feels they are in the right and refuses to comply?
That’s what is happening in Lakewood Ranch right now.
In the latest incident to spark public attention, Malcolm and Karen Ronney, owners of MacAllister’s Restaurant on Main Street, paid a fine of $2,250 to the Greenbrook Village Homeowners Association because they had a sign reading “Albanach” mounted on their home for 47 days in 2006.
Albanach is Gaelic for Scotsman.
“It’s something you put on your house for good luck,” Karen Ronney said.
The Ronneys said they received 50 e-mail letters of support after word got out about their fine.
“I wanted to put the sign on the copier and put Albanach on all the homes in our neighborhood to see what would happen,” Ronney said.
The couple paid the fine because it had been turned over to a collection agency and it was not good for their business image.
“Bitter,” Karen Ronney said when asked how she feels about the incident.
“I think it’s ridiculous,” Malcolm Ronney said. “This would never have happened when Schroeder-Manatee Ranch was in control. I am really hoping the system can change.”
The Ronneys immediately knew in 2006 that the sign was not allowed, but chose to leave it up, logging a $50 per-day fine, said board member Steve Balazac.
“They were notified the sign wasn’t allowed based on the covenants of Greenbrook,” Balazac said. “The timeline was not heeded and the fine was in place. The folks were not present at the last meeting, which you would think they would try to be there to voice their opinion.”
Malcolm Ronney said he didn’t go to the Feb. 25 meeting because he was at work at his restaurant. Karen Ronney sent a letter in their behalf.
“We’re in the middle of season,” Karen Ronney said.
The Greenbrook board did trim the fine from $3,200, the Ronneys said.
Lining up defenses
It might be hard to top Albanach, but Ellis’ case seems to take the prize as the case that, at least on the surface, seems the most ado about virtually nothing.
In his 30 years of handling association cases, Lobeck said he has never seen a better set of defenses to a homeowners association enforcement action.
“I believe Mrs. Ellis has an open and shut case on four grounds,” Lobeck said. “The statute of limitations applies. Mrs. Ellis put in her yard in 1999 and this action should have occurred by 2004. Second, I have reviewed photographs of other lots, including that of the homeowners association president, another director and a compliance chairwoman and, if Mrs. Ellis is in violation, clearly they are too.
“There is also some ambiguity in the restriction,” he said. “It’s not clear if the three-item limit pertains to the whole front yard or each individual flower bed. And, finally, the restriction is unreasonable as applied. It is absurd to say her small shells and other items create any aesthetic offense whatsoever.”
When a homeowners association explodes, something has gone very wrong inside of it, Ellis said.
“Common sense has left,” Ellis said. “In my case, the Summerfield/Riverwalk board has the power and opportunity to turn this into a positive, win-win situation – or continue with their own agenda.”
Ellis hopes the board will make the decision to waive all her fines and invite her to apply for a modification, even though none exists right now for lawn decorations other than benches, birdbaths and fountains.
“That is what I am hoping for,” Ellis said.
Copyright © 2010 The Bradenton Herald, Fla., Richard Dymond
Friday, March 12, 2010
New life in the big city as condos filling up
Out of the ashes of the downtown Miami condo collapse, a bright spot is emerging: a community of full-time residents slowly starting to turn the area into a 24/7 city.
A new study by the Miami Downtown Development Authority, in partnership with Goodkin Consulting/Focus Real Estate Advisors, has found that 74 percent of the 22,079 urban condominium units built since 2003 are occupied. They stretch from the Brickell district south of downtown Miami north to State Road 112.
This reflects a 20 percent increase over the 62 percent occupancy rate reported in a similar study completed in May 2009 and means the glut of new condos is being absorbed more quickly than expected. Sharp price cuts and a willingness to rent units, rather than sell them in a down market, have paved the way.
Before the real estate bust, young professionals such as Melinda Reilly wouldn’t have been able to afford a two-bedroom condo at Met 1 in downtown Miami with its wrap-around balcony and view of Biscayne Bay. But last July she sold her suburban Hollywood house and moved downtown where she is renting.
“It’s cheaper than the mortgage on my house and I get more for my money, plus somebody to take care of everything,” said Reilly, 31, a group sales manager at Doral Golf Resort & Spa. “It’s exciting downtown. It’s really social. Whether it’s a Tuesday or Saturday, you always find a lot of people out in all the restaurants.”
A wave of new urban residents began arriving last year as developers and lenders got more aggressive about cutting prices to move units. At the same time, individual owners, who bought condos for investments, realized renters could at least generate some revenue to cover hefty mortgages.
For downtown leaders who have been pushing for years to revitalize the area, the condo bust has worked to their advantage.
“In a weird sort of way, it has been good for revitalization,” said Neisen Kasdin, vice chairman of the Downtown Development Authority. “It accelerated the revitalization of downtown. Without the overbuilding and the great pool of rental units, downtown would not have been populated to the same extent.”
The DDA study found that 68 percent of the 22,079 new condos in the area have been sold, a 6 percent jump from the May 2009 survey. The average sale price downtown was $300,306, although prices were significantly lower than that in every area of the greater downtown area except Brickell Avenue.
“It’s all about affordability,” said Craig Werley, president and owner of Focus Real Estate Advisors.
“The availability of discounted pricing and good rental values is what’s creating this dynamic. It’s a dramatic improvement over what might have been and what a lot of folks expected.”
Now, downtown is no longer a ghost town after 5 p.m. or on weekends. It’s not uncommon to see people walking their dogs or jogging along Biscayne Boulevard, and young families with baby strollers on Brickell Avenue.
“It’s like a little mini-Manhattan,” said Andreas del Corral, 28, who closed on his unit in Met 1 in May 2008. “When I first moved in, you would only see a few people here and there. Now, the restaurants and bars are filling up. You see groups of five and 10 people walking up and down Brickell, going out for the night.”
The study shows there are still 7,010 unsold units in the new downtown area condominiums, compared with the 8,000 that existed seven months earlier. The biggest chunk of remaining units -- 51 percent -- are in the Brickell area, followed by 23 percent in the Central Business District.
If occupancy trends continue, the study predicts that downtown Miami’s existing condo inventory would effectively be eliminated over the next 25 months.
But Werley and partner Lew Goodkin also caution that this is by no means a sign that the condo real estate crisis is nearing an end.
“For the developers and lenders we’ve got years ahead of us before we create a real true equilibrium,” said Goodkin of Goodkin Consulting.
Renters account for about 52 percent of the occupied condo units downtown.
As far as Landy Labadie is concerned, renters are better for business at his downtown restaurant and nightclub. The director of operations for Mia at Biscayne has been “shocked” since opening in August with the amount of foot traffic. Mia’s business is running about 20 percent over projections.
“Renters are the ones that have the disposable income to go out,” Labadie said. “Owners are typically older and they’re worried about paying the mortgage, maintenance and insurance.”
As the condo buildings fill up with new residents, it’s having an increasingly positive effect on downtown Miami’s commercial base. Residents want places to eat, drink and shop.
The number of retail businesses in downtown Miami grew by 42 in 2009, according to the DDA. That marked the third straight year the district has seen 40 or more net new openings. Since 2005, 152 new retailers have opened downtown. And the growth have come amid an economic downturn that has seen retail contract across the country.
A recent Integra Realty Resources survey of the 50 largest markets in the U.S. found that downtown Miami’s retail vacancy rate of 5.06 percent is among the five lowest in the nation. That’s a big drop from mid-2008, when the vacancy rate climbed as high as 12.5 percent, according to CoStar Group.
“I think people are looking to downtown in terms of leading the way for economic recovery,” said Leo Zabezhinsky, manager of business development and real estate for the DDA.
One of the newest retail arrivals downtown is New York Bagel Deli, which opened about three weeks ago. Already owner Evan Steinman has had to add more employees for the busy lunch hour and extend his closing time to 6 p.m.
“Business is a lot better than we thought, without even advertising or telling people that we’re there,” Steinman said.
At Ecco Pizzateca + Lounge, weekend crowds have grown over the last year to about 100 each night with a steady crowd of regulars, owner Brian Basti said.
“People are getting more accustomed to their surroundings and venturing out of their condos,” he said.
“It’s still dead some nights, but right now it’s really on the verge of turning the corner.”
Even downtown veterans such as retailer La Epoca see the impact of the new residents. La Epoca’s sales are up more than 25 percent so far this year.
“I see new people coming in and introducing themselves every week,” owner Tony Alonso said. “It’s definitely moving in the right direction. I’m a merchant. . . . I want more.”
Copyright © 2010, The Miami Herald, Elaine Walker
A new study by the Miami Downtown Development Authority, in partnership with Goodkin Consulting/Focus Real Estate Advisors, has found that 74 percent of the 22,079 urban condominium units built since 2003 are occupied. They stretch from the Brickell district south of downtown Miami north to State Road 112.
This reflects a 20 percent increase over the 62 percent occupancy rate reported in a similar study completed in May 2009 and means the glut of new condos is being absorbed more quickly than expected. Sharp price cuts and a willingness to rent units, rather than sell them in a down market, have paved the way.
Before the real estate bust, young professionals such as Melinda Reilly wouldn’t have been able to afford a two-bedroom condo at Met 1 in downtown Miami with its wrap-around balcony and view of Biscayne Bay. But last July she sold her suburban Hollywood house and moved downtown where she is renting.
“It’s cheaper than the mortgage on my house and I get more for my money, plus somebody to take care of everything,” said Reilly, 31, a group sales manager at Doral Golf Resort & Spa. “It’s exciting downtown. It’s really social. Whether it’s a Tuesday or Saturday, you always find a lot of people out in all the restaurants.”
A wave of new urban residents began arriving last year as developers and lenders got more aggressive about cutting prices to move units. At the same time, individual owners, who bought condos for investments, realized renters could at least generate some revenue to cover hefty mortgages.
For downtown leaders who have been pushing for years to revitalize the area, the condo bust has worked to their advantage.
“In a weird sort of way, it has been good for revitalization,” said Neisen Kasdin, vice chairman of the Downtown Development Authority. “It accelerated the revitalization of downtown. Without the overbuilding and the great pool of rental units, downtown would not have been populated to the same extent.”
The DDA study found that 68 percent of the 22,079 new condos in the area have been sold, a 6 percent jump from the May 2009 survey. The average sale price downtown was $300,306, although prices were significantly lower than that in every area of the greater downtown area except Brickell Avenue.
“It’s all about affordability,” said Craig Werley, president and owner of Focus Real Estate Advisors.
“The availability of discounted pricing and good rental values is what’s creating this dynamic. It’s a dramatic improvement over what might have been and what a lot of folks expected.”
Now, downtown is no longer a ghost town after 5 p.m. or on weekends. It’s not uncommon to see people walking their dogs or jogging along Biscayne Boulevard, and young families with baby strollers on Brickell Avenue.
“It’s like a little mini-Manhattan,” said Andreas del Corral, 28, who closed on his unit in Met 1 in May 2008. “When I first moved in, you would only see a few people here and there. Now, the restaurants and bars are filling up. You see groups of five and 10 people walking up and down Brickell, going out for the night.”
The study shows there are still 7,010 unsold units in the new downtown area condominiums, compared with the 8,000 that existed seven months earlier. The biggest chunk of remaining units -- 51 percent -- are in the Brickell area, followed by 23 percent in the Central Business District.
If occupancy trends continue, the study predicts that downtown Miami’s existing condo inventory would effectively be eliminated over the next 25 months.
But Werley and partner Lew Goodkin also caution that this is by no means a sign that the condo real estate crisis is nearing an end.
“For the developers and lenders we’ve got years ahead of us before we create a real true equilibrium,” said Goodkin of Goodkin Consulting.
Renters account for about 52 percent of the occupied condo units downtown.
As far as Landy Labadie is concerned, renters are better for business at his downtown restaurant and nightclub. The director of operations for Mia at Biscayne has been “shocked” since opening in August with the amount of foot traffic. Mia’s business is running about 20 percent over projections.
“Renters are the ones that have the disposable income to go out,” Labadie said. “Owners are typically older and they’re worried about paying the mortgage, maintenance and insurance.”
As the condo buildings fill up with new residents, it’s having an increasingly positive effect on downtown Miami’s commercial base. Residents want places to eat, drink and shop.
The number of retail businesses in downtown Miami grew by 42 in 2009, according to the DDA. That marked the third straight year the district has seen 40 or more net new openings. Since 2005, 152 new retailers have opened downtown. And the growth have come amid an economic downturn that has seen retail contract across the country.
A recent Integra Realty Resources survey of the 50 largest markets in the U.S. found that downtown Miami’s retail vacancy rate of 5.06 percent is among the five lowest in the nation. That’s a big drop from mid-2008, when the vacancy rate climbed as high as 12.5 percent, according to CoStar Group.
“I think people are looking to downtown in terms of leading the way for economic recovery,” said Leo Zabezhinsky, manager of business development and real estate for the DDA.
One of the newest retail arrivals downtown is New York Bagel Deli, which opened about three weeks ago. Already owner Evan Steinman has had to add more employees for the busy lunch hour and extend his closing time to 6 p.m.
“Business is a lot better than we thought, without even advertising or telling people that we’re there,” Steinman said.
At Ecco Pizzateca + Lounge, weekend crowds have grown over the last year to about 100 each night with a steady crowd of regulars, owner Brian Basti said.
“People are getting more accustomed to their surroundings and venturing out of their condos,” he said.
“It’s still dead some nights, but right now it’s really on the verge of turning the corner.”
Even downtown veterans such as retailer La Epoca see the impact of the new residents. La Epoca’s sales are up more than 25 percent so far this year.
“I see new people coming in and introducing themselves every week,” owner Tony Alonso said. “It’s definitely moving in the right direction. I’m a merchant. . . . I want more.”
Copyright © 2010, The Miami Herald, Elaine Walker
Crist appeals to FEMA for drywall aid
Governor Charlie Crist directed Interim Emergency Management Director David Halstead to write a letter to Federal Emergency Management Agency (FEMA) Regional Administrator Phillip May regarding federal assistance for Floridians affected by defective drywall.
In the letter, the governor asks FEMA to “conduct a preliminary damage assessment related to the issue caused by the degradation of Chinese drywall used in homebuilding in Florida.” According to the Florida Office of Insurance Regulation, “Homeowners’ insurance does not cover the damages cause by the Chinese drywall.”
“While the health implications remain under investigation, it is undisputed the Chinese drywall corrodes copper and other metal surfaces, causing the degradation of non-performance of wiring, plumbing, appliances and smoke detectors,” the letter says.
While some cases have likely not been reported yet, the Florida Department of Health (FDOH), working with property appraisers in Florida’s 67 counties, compiled a list of the problems. According to FDOH, 530 Florida homes meet the “threshold for being impacted. Further, county property appraisers in Florida have identified 2505 homes that have had their value adjusted downward based on damage from the presence of toxic Chinese drywall. An additional 846 claims for adjustment due to the presence of Chinese drywall are pending.”
FDOH also compiled a list of the top 12 counties impacted by the presence of toxic drywall: Lee (86 cases), Broward (65), Palm Beach (63), Miami-Dade (57), Hillsborough (55), St. Lucie (50), Indian River (35), Sarasota (17), Collier (16), Manatee (13), Pasco (11) and Charlotte (10).
The complete letter is available online.
To read more about Florida actions concerning the Chinese drywall problem, visit the DOH website at: http://www.doh.state.fl.us/Environment/community/indoor-air/drywall.htmL.
© 2010 Florida Realtors®
In the letter, the governor asks FEMA to “conduct a preliminary damage assessment related to the issue caused by the degradation of Chinese drywall used in homebuilding in Florida.” According to the Florida Office of Insurance Regulation, “Homeowners’ insurance does not cover the damages cause by the Chinese drywall.”
“While the health implications remain under investigation, it is undisputed the Chinese drywall corrodes copper and other metal surfaces, causing the degradation of non-performance of wiring, plumbing, appliances and smoke detectors,” the letter says.
While some cases have likely not been reported yet, the Florida Department of Health (FDOH), working with property appraisers in Florida’s 67 counties, compiled a list of the problems. According to FDOH, 530 Florida homes meet the “threshold for being impacted. Further, county property appraisers in Florida have identified 2505 homes that have had their value adjusted downward based on damage from the presence of toxic Chinese drywall. An additional 846 claims for adjustment due to the presence of Chinese drywall are pending.”
FDOH also compiled a list of the top 12 counties impacted by the presence of toxic drywall: Lee (86 cases), Broward (65), Palm Beach (63), Miami-Dade (57), Hillsborough (55), St. Lucie (50), Indian River (35), Sarasota (17), Collier (16), Manatee (13), Pasco (11) and Charlotte (10).
The complete letter is available online.
To read more about Florida actions concerning the Chinese drywall problem, visit the DOH website at: http://www.doh.state.fl.us/Environment/community/indoor-air/drywall.htmL.
© 2010 Florida Realtors®
Monday, March 8, 2010
Associations fight for condo fees
In many condominium complexes, units sit empty and association fees go uncollected when homeowners abandon their property. In many cases, banks initiate foreclosure but postpone the final order, effectively putting the condo in limbo because the bank doesn’t want to become responsible for the unit’s obligations generally and homeowner association fees specifically.
But some condos are trying a backdoor way of getting the banks to pay. Called a “reverse foreclosure,” the associations foreclose on the unit first.
The problem starts with struggling homeowners who can no longer pay their mortgage and who, in many cases, owe more on the mortgage than the unit is currently worth. In most cases, a homeowner who stops paying his mortgage also stops paying his association fees.
After months of no payments, banks may start the foreclosure process. However, that can take a few months or a few years, depending on a number of factors, many of which the bank controls. The unit, in financial limbo and usually empty, is not yet a draw on the bank because it’s not on their books; but it’s also not a revenue generator for the condo association.
To speed the process, condo associations are foreclosing first, which they may legally do when maintenance fees remain unpaid for a period of time. Under this reverse foreclosure, the association takes title to the unit; but since the bank has a lien on the property, the association cannot legally sell it. The association can, however, renounce its claim on the unit in court, effectively giving ownership – and an obligation to pay maintenance fees – back to the bank.
A reverse foreclosure is considered a hardball tactic, but condo associations with a large number of foreclosures have little choice if they hope to maintain common elements and keep the property safe. Without the power to make banks pay, condo owners current on their mortgage and dues could be assessed large special assessments to cover the unused units. Special assessments could then cause even more owners to go into default, compounding the problem.
Even with a reverse foreclosure, a bank does not have to pay all past-due maintenance fees. Florida statutes limit the obligation to the past 12 months of association fees – six months for condos – or 1 percent of the mortgage, which is less.
The cap is, in fact, a big reason why the banks aren’t in hurry. “There is no incentive for banks to foreclose” in a timely fashion, says Ben Solomon, an attorney with Association Law Group.
The Keys Gate Community Association in Miami-Dade survived a court challenge when it used a reverse foreclosure to take a four-bedroom home. After the foreclosure, the association found itself holding a vacant home it didn’t want with $5,320 in unpaid fees it couldn’t collect. The home lender, HSBC Bank USA, had also filed a foreclosure notice, but it had not done so not until two months later, and it was in no hurry to take back the property.
A Miami-Dade circuit judge, Jerald Bagley, upheld the reverse foreclosure. On Jan. 12, he ruled that the bank owed association fees, legal fees, court costs and taxes. The bank still avoided $3,819 on the maintenance fees, however, thanks to the cap in Florida law.
The Keys Gate Community Association now has 13 more reverse foreclosures in the pipeline.
Source: 2010 Miami Herald Media Company, Rachel Lee Coleman
© 2010 Florida Realtors®
But some condos are trying a backdoor way of getting the banks to pay. Called a “reverse foreclosure,” the associations foreclose on the unit first.
The problem starts with struggling homeowners who can no longer pay their mortgage and who, in many cases, owe more on the mortgage than the unit is currently worth. In most cases, a homeowner who stops paying his mortgage also stops paying his association fees.
After months of no payments, banks may start the foreclosure process. However, that can take a few months or a few years, depending on a number of factors, many of which the bank controls. The unit, in financial limbo and usually empty, is not yet a draw on the bank because it’s not on their books; but it’s also not a revenue generator for the condo association.
To speed the process, condo associations are foreclosing first, which they may legally do when maintenance fees remain unpaid for a period of time. Under this reverse foreclosure, the association takes title to the unit; but since the bank has a lien on the property, the association cannot legally sell it. The association can, however, renounce its claim on the unit in court, effectively giving ownership – and an obligation to pay maintenance fees – back to the bank.
A reverse foreclosure is considered a hardball tactic, but condo associations with a large number of foreclosures have little choice if they hope to maintain common elements and keep the property safe. Without the power to make banks pay, condo owners current on their mortgage and dues could be assessed large special assessments to cover the unused units. Special assessments could then cause even more owners to go into default, compounding the problem.
Even with a reverse foreclosure, a bank does not have to pay all past-due maintenance fees. Florida statutes limit the obligation to the past 12 months of association fees – six months for condos – or 1 percent of the mortgage, which is less.
The cap is, in fact, a big reason why the banks aren’t in hurry. “There is no incentive for banks to foreclose” in a timely fashion, says Ben Solomon, an attorney with Association Law Group.
The Keys Gate Community Association in Miami-Dade survived a court challenge when it used a reverse foreclosure to take a four-bedroom home. After the foreclosure, the association found itself holding a vacant home it didn’t want with $5,320 in unpaid fees it couldn’t collect. The home lender, HSBC Bank USA, had also filed a foreclosure notice, but it had not done so not until two months later, and it was in no hurry to take back the property.
A Miami-Dade circuit judge, Jerald Bagley, upheld the reverse foreclosure. On Jan. 12, he ruled that the bank owed association fees, legal fees, court costs and taxes. The bank still avoided $3,819 on the maintenance fees, however, thanks to the cap in Florida law.
The Keys Gate Community Association now has 13 more reverse foreclosures in the pipeline.
Source: 2010 Miami Herald Media Company, Rachel Lee Coleman
© 2010 Florida Realtors®
Friday, March 5, 2010
La. senator: Are deaths linked to Chinese drywall?
U.S. Sen. David Vitter has called for federal officials to do a more thorough review of the deaths of several people who lived in homes that contained smelly, possibly toxic Chinese drywall.
Federal officials at the Consumer Product Safety Commission (CPSC) said they have investigated and found no link between the drywall and the deaths of eight people. They said one of the deaths did not even occur in a house with Chinese drywall.
Scott Wolfson, a spokesman for the safety commission, said the deaths were promptly investigated by staff toxicologists, epidemiologists and other experts by telephone, except for a case involving an asthmatic 9-year-old boy who died in Louisiana. Investigators went to his home and determined his death was not caused by the wallboard, Wolfson said.
“There is no evidence through investigations and follow-up of any correlation between Chinese drywall and the tragic fatalities reported to the CPSC,” Wolfson said.
Vitter asked the safety commission and the Centers for Disease Control and Prevention to do more, though he didn’t elaborate in his letter Wednesday to the agencies.
“A thorough review of all reported deaths would help instill confidence in your efforts and provide relief for many families,” the Louisiana Republican said.
CDC spokeswoman Bernadette Burden said the agency would review Vitter’s letter.
In November, the safety commission said it had found a possible link between respiratory irritation reported by homeowners and higher-than-normal levels of hydrogen sulfide gas emitted from the imported Chinese wallboard coupled with formaldehyde, which is commonly found in new houses.
The agency also said it was likely that wire and pipe corrosion in homes was caused by the imported wallboard.
About 3,000 homeowners, most of them in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall. The consumer commission has reviewed 800 homes, Wolfson said.
“This is the costliest investigation in our agency’s history and involves the most number of staff dedicated to one issue,” Wolfson said.
The vast majority of complaints involve Chinese-made gypsum board imported during the recent U.S. housing boom, when domestic building materials were in short supply, and after the catastrophic 2005 hurricane season.
Thousands of homeowners have been kept in limbo as hundreds of lawsuits against builders, contractors, suppliers and manufacturers are winding through the courts and the federal government develops aid plans.
Sen. Bill Nelson, a Florida Democrat, said affected homeowners deserve to know the extent of any health threat. “And what they can do to get the problem fixed so they can live in their own houses,” he said.
Dr. Patricia Williams, a toxicologist at the University of New Orleans hired by plaintiffs’ lawyers, said a more thorough probe was warranted.
“Each person needs to be looked at individually,” Williams said. She said her analyses of the Chinese drywall have found chemical compounds that can lead to death, particularly in people suffering from lung and heart disease.
Copyright © 2010 The Associated Press, Cain Burdeau, Associated Press writer.
Federal officials at the Consumer Product Safety Commission (CPSC) said they have investigated and found no link between the drywall and the deaths of eight people. They said one of the deaths did not even occur in a house with Chinese drywall.
Scott Wolfson, a spokesman for the safety commission, said the deaths were promptly investigated by staff toxicologists, epidemiologists and other experts by telephone, except for a case involving an asthmatic 9-year-old boy who died in Louisiana. Investigators went to his home and determined his death was not caused by the wallboard, Wolfson said.
“There is no evidence through investigations and follow-up of any correlation between Chinese drywall and the tragic fatalities reported to the CPSC,” Wolfson said.
Vitter asked the safety commission and the Centers for Disease Control and Prevention to do more, though he didn’t elaborate in his letter Wednesday to the agencies.
“A thorough review of all reported deaths would help instill confidence in your efforts and provide relief for many families,” the Louisiana Republican said.
CDC spokeswoman Bernadette Burden said the agency would review Vitter’s letter.
In November, the safety commission said it had found a possible link between respiratory irritation reported by homeowners and higher-than-normal levels of hydrogen sulfide gas emitted from the imported Chinese wallboard coupled with formaldehyde, which is commonly found in new houses.
The agency also said it was likely that wire and pipe corrosion in homes was caused by the imported wallboard.
About 3,000 homeowners, most of them in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall. The consumer commission has reviewed 800 homes, Wolfson said.
“This is the costliest investigation in our agency’s history and involves the most number of staff dedicated to one issue,” Wolfson said.
The vast majority of complaints involve Chinese-made gypsum board imported during the recent U.S. housing boom, when domestic building materials were in short supply, and after the catastrophic 2005 hurricane season.
Thousands of homeowners have been kept in limbo as hundreds of lawsuits against builders, contractors, suppliers and manufacturers are winding through the courts and the federal government develops aid plans.
Sen. Bill Nelson, a Florida Democrat, said affected homeowners deserve to know the extent of any health threat. “And what they can do to get the problem fixed so they can live in their own houses,” he said.
Dr. Patricia Williams, a toxicologist at the University of New Orleans hired by plaintiffs’ lawyers, said a more thorough probe was warranted.
“Each person needs to be looked at individually,” Williams said. She said her analyses of the Chinese drywall have found chemical compounds that can lead to death, particularly in people suffering from lung and heart disease.
Copyright © 2010 The Associated Press, Cain Burdeau, Associated Press writer.
National Flood Insurance Program extended one month
Late Tuesday, President Obama signed H.R. 4691 into law, extending the National Flood Insurance Program (NFIP) for one month – until March 28, 2010.
NFIP’s expiration date was Feb. 28. Without Congressional extension, the program officially lapsed for almost two days, impacting the issuance of new flood insurance policies until late in the day on March 2.
“Real estate closings can get delayed when mortgage holders require flood insurance, putting the financial security of millions of Americans at risk,” says Mike Becker, director of federal affairs for the National Association of Professional Insurance Agents. “This is only a short reprieve,” he adds.
The one-month extension gives Congress time to consider a broader initiative that would extend NFIP until the end of the year. In a Government Affairs Update, the National Association of Realtors® says it will continue to push for a longer extension to avoid compounding market uncertainty and give Congress sufficient time to enact meaningful long-term reform.
Most observers expect an NFIP extension to be in place by the March 28 deadline, but Matt Brady, a spokesman for the National Association of Mutual Insurance Companies, notes that this is the second time NFIP has been allowed to expire for reasons that have nothing to do with the program itself.
© 2010 Florida Realtors®
NFIP’s expiration date was Feb. 28. Without Congressional extension, the program officially lapsed for almost two days, impacting the issuance of new flood insurance policies until late in the day on March 2.
“Real estate closings can get delayed when mortgage holders require flood insurance, putting the financial security of millions of Americans at risk,” says Mike Becker, director of federal affairs for the National Association of Professional Insurance Agents. “This is only a short reprieve,” he adds.
The one-month extension gives Congress time to consider a broader initiative that would extend NFIP until the end of the year. In a Government Affairs Update, the National Association of Realtors® says it will continue to push for a longer extension to avoid compounding market uncertainty and give Congress sufficient time to enact meaningful long-term reform.
Most observers expect an NFIP extension to be in place by the March 28 deadline, but Matt Brady, a spokesman for the National Association of Mutual Insurance Companies, notes that this is the second time NFIP has been allowed to expire for reasons that have nothing to do with the program itself.
© 2010 Florida Realtors®
Wednesday, March 3, 2010
DBPR hunts for unlicensed activity this week
The Department of Business and Professional Regulation (DBPR) began a statewide enforcement operation this week to stop unlicensed activity. Sweep and sting operations will be held throughout Florida, with the department’s current emphasis on unlicensed community association managers and low voltage electrical contracting.
“Unlicensed activity harms consumers, our licensees and Florida’s economy,” says Interim Secretary Charlie Liem. “Statewide enforcement operations are a great way to remind consumers of the importance of hiring licensed professionals and let unlicensed individuals know that DBPR investigators are on the streets – and unlicensed activity will not be tolerated.”
DBPR will conduct sweeps and stings from its eight district offices around the state. A sweep involves checking licenses to ensure compliance with state laws; a sting involves undercover operations where known or suspected unlicensed individuals are targeted. This statewide operation will focus on unlicensed contractors and community association managers.
To check a license, call (850) 487-1395 or visit MyFloridaLicense.com. Report suspected unlicensed activity at MyFloridaLicense.com or toll-free at (866)532-1440.
© 2010 Florida Realtors®
“Unlicensed activity harms consumers, our licensees and Florida’s economy,” says Interim Secretary Charlie Liem. “Statewide enforcement operations are a great way to remind consumers of the importance of hiring licensed professionals and let unlicensed individuals know that DBPR investigators are on the streets – and unlicensed activity will not be tolerated.”
DBPR will conduct sweeps and stings from its eight district offices around the state. A sweep involves checking licenses to ensure compliance with state laws; a sting involves undercover operations where known or suspected unlicensed individuals are targeted. This statewide operation will focus on unlicensed contractors and community association managers.
To check a license, call (850) 487-1395 or visit MyFloridaLicense.com. Report suspected unlicensed activity at MyFloridaLicense.com or toll-free at (866)532-1440.
© 2010 Florida Realtors®
Citizens Property Insurance executive pay examined
Citizens Property Insurance Corp. Executive Director Scott Wallace was one of Florida’s top-paid government employees last year and 48 other Citizens employees earned more than $100,000, a Sun Sentinel analysis shows.
Federal labor statistics indicate Citizens’ executive wages are much lower than those of some national private insurers. And Citizens is a nonprofit, tax-exempt government entity – not a traditional state agency – so its employees don’t receive generous health and retirement benefits.
But the insurers’ finances have come under increasing scrutiny because almost all Florida homeowners pay to fund Citizens, which the state created as a last-resort property insurer.
Florida homeowners pay a 1.4 percent fee on private insurance premiums to cover the Citizens’ shortfalls after the 2005 hurricane season. If a hurricane strikes and causes major damage, all automobile and property insurance policyholders could also end up paying to keep the insurer afloat.
Concerned about growing claims costs for Citizens and other insurers, legislators have introduced bills aimed at reducing inflated or fraudulent claims. But the insurer’s overhead and payroll costs have also swelled in recent years even as it trimmed its policies from a peak of 1.4 million policies in October 2007 to just more than 1 million now.
Some Citizens policyholders have expressed concerns about the insurer’s spending in light of a law passed last year allowing premium increases of as much as 10 percent a year for the first time since 2007, when the Legislature froze Citizens’ rates.
Christine Turner Ashburn, a spokeswoman for Citizens, said the company must pay competitive wages in order to operate in the same way as a private insurer.
“We’re not a private insurance company, but we do have core functions where we have to operate as one” such as handling claims, issuing policies and tracking data, Turner Ashburn said.
A Sun Sentinel review of Citizens’ salary data found:
Wallace was paid a base wage of $343,608 in 2009. By comparison, the Department of Financial Services reports the top two highest paid employees of 34 state agencies earned salaries of $379,000 and $309,600 in 2009. But the department’s data don’t include state entities such as the State Board of Administration and universities. University athletic coaches can earn hundreds of thousands of dollars in performance bonuses alone.
Forty-nine employees earned more than $100,000 last year; six received moving expenses ranging from $1,241 to $52,414; and 657 received overtime ranging from 84 cents to $23,920.
About 107 Citizens executives and managers – including some first-line managers – earned $84,000 on average last year. On average, management officials nationwide at insurance companies earned $117,400, according to the Bureau of Labor Statistics’ data on the annual wages of employees of insurance carriers, not including life, health and medical companies.
Turner Ashburn said employees of the state-run insurer aren’t compensated in the same way as state employees who receive full health and retirement benefits packages. “It’s important to delineate that we’re not guaranteed benefits that state employees get,” she said.
She said the state agency that is most comparable to Citizens is the State Board of Administration, which manages the state’s pension fund and other state and local government funds, and pays its executive director $325,000 a year.
Turner Ashburn also said that the company can’t attract employees by offering many of the bonuses and perks private insurers provide. For instance, Wallace was hired in 2006 after working as executive vice president at a subsidiary of W. R. Berkley Corp., a major insurance holding company, where he earned a base salary of about $250,000 but also received additional bonuses and stock options, she said.
His Citizens wages are higher than the $188,310 average pay in 2008 for chief executives of insurance companies, not including life, health and medical companies, according to the labor bureau data.
But he earned much less than some of his counterparts at large national companies. Allstate Corp. Chairman Tom Wilson, for instance, earned a total compensation of $8.3 million in 2009, including a $1 million salary and much of the rest in future earnings. Ed Rust Jr., the chairman of State Farm, earned more than $9 million in 2009.
Copyright © 2010, Sun Sentinel, Fort Lauderdale, Fla.,
Federal labor statistics indicate Citizens’ executive wages are much lower than those of some national private insurers. And Citizens is a nonprofit, tax-exempt government entity – not a traditional state agency – so its employees don’t receive generous health and retirement benefits.
But the insurers’ finances have come under increasing scrutiny because almost all Florida homeowners pay to fund Citizens, which the state created as a last-resort property insurer.
Florida homeowners pay a 1.4 percent fee on private insurance premiums to cover the Citizens’ shortfalls after the 2005 hurricane season. If a hurricane strikes and causes major damage, all automobile and property insurance policyholders could also end up paying to keep the insurer afloat.
Concerned about growing claims costs for Citizens and other insurers, legislators have introduced bills aimed at reducing inflated or fraudulent claims. But the insurer’s overhead and payroll costs have also swelled in recent years even as it trimmed its policies from a peak of 1.4 million policies in October 2007 to just more than 1 million now.
Some Citizens policyholders have expressed concerns about the insurer’s spending in light of a law passed last year allowing premium increases of as much as 10 percent a year for the first time since 2007, when the Legislature froze Citizens’ rates.
Christine Turner Ashburn, a spokeswoman for Citizens, said the company must pay competitive wages in order to operate in the same way as a private insurer.
“We’re not a private insurance company, but we do have core functions where we have to operate as one” such as handling claims, issuing policies and tracking data, Turner Ashburn said.
A Sun Sentinel review of Citizens’ salary data found:
Wallace was paid a base wage of $343,608 in 2009. By comparison, the Department of Financial Services reports the top two highest paid employees of 34 state agencies earned salaries of $379,000 and $309,600 in 2009. But the department’s data don’t include state entities such as the State Board of Administration and universities. University athletic coaches can earn hundreds of thousands of dollars in performance bonuses alone.
Forty-nine employees earned more than $100,000 last year; six received moving expenses ranging from $1,241 to $52,414; and 657 received overtime ranging from 84 cents to $23,920.
About 107 Citizens executives and managers – including some first-line managers – earned $84,000 on average last year. On average, management officials nationwide at insurance companies earned $117,400, according to the Bureau of Labor Statistics’ data on the annual wages of employees of insurance carriers, not including life, health and medical companies.
Turner Ashburn said employees of the state-run insurer aren’t compensated in the same way as state employees who receive full health and retirement benefits packages. “It’s important to delineate that we’re not guaranteed benefits that state employees get,” she said.
She said the state agency that is most comparable to Citizens is the State Board of Administration, which manages the state’s pension fund and other state and local government funds, and pays its executive director $325,000 a year.
Turner Ashburn also said that the company can’t attract employees by offering many of the bonuses and perks private insurers provide. For instance, Wallace was hired in 2006 after working as executive vice president at a subsidiary of W. R. Berkley Corp., a major insurance holding company, where he earned a base salary of about $250,000 but also received additional bonuses and stock options, she said.
His Citizens wages are higher than the $188,310 average pay in 2008 for chief executives of insurance companies, not including life, health and medical companies, according to the labor bureau data.
But he earned much less than some of his counterparts at large national companies. Allstate Corp. Chairman Tom Wilson, for instance, earned a total compensation of $8.3 million in 2009, including a $1 million salary and much of the rest in future earnings. Ed Rust Jr., the chairman of State Farm, earned more than $9 million in 2009.
Copyright © 2010, Sun Sentinel, Fort Lauderdale, Fla.,
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