Citizens reopens more than a third of Hurricane Irma claims

TALLAHASSEE, Fla. – April 2, 2018 – More than a third of Hurricane Irma claims filed by customers of state-run Citizens Property Insurance Corp. have been reopened, the company said Wednesday.

More than 24,500 of 66,400 claims – about 37 percent – have been reopened at some point since the September hurricane for additional payments and to allow policyholders or their representatives to provide additional information related to their claims, Citizens said in a news release.

So far, Citizens has paid out $604 million to policyholders, and 54 percent of claims filed with Citizens have been closed with payments. These are among the claims that have been reopened, Citizens spokesman Michael Peltier said.

Claims that remain open are likely to have extensive damage, are the subject of disputes over repair costs, or are still awaiting a contractor’s repair estimates, the release said.

Across Florida, Hurricane Irma has so far generated 900,228 claims to all insurance carriers, according to the state Office of Insurance Regulation. Of those, 479,673 have been closed with payments and 293,229 were closed with no payment, primarily because the damage value did not exceed policyholders’ hurricane deductibles. About 14 percent of all claims remain open.

Total value of insured Irma losses is estimated at $7.9 billion.

“We want to reinforce to people that what we have provided them is an estimate, and that estimates may change as repairs begin,” said Jay Adams, Citizens’ chief of claims. “The initial estimate and payment does not necessarily mean your claim has been concluded.”

The company issued initial payments immediately after the storm to policyholders whose losses exceeded their hurricane deductibles, the release said, adding those initial payments were based on the actual cash value of damages caused by the storm. Additional payments to cover replacement costs are paid as repairs get underway, Citizens said.

Supplemental payments are available when additional Irma-related damage is discovered as repairs are made, or if the cost of labor or materials to make repairs has increased since the initial estimates.

“As repairs begin, policyholders should contact Citizens before beginning repairs for damages not included in our initial estimate, or if the contractor gives a higher figure for the repairs described in the initial estimate,” the release stated.

Citizens’ representatives can be reached to answer questions and address concerns by calling the Citizens Claims Resolution Unit at 866-411-2742, ext. 7794, or by emailing ResolutionUnit@citizensfla.com.

Copyright © 2018, The St. Augustine Record, Ron Hurtibise. All rights reserved.

Mortgage rates up for 8th week; 30yr now at 4.43%

March 2, 2018 – Long-term U.S. mortgage rates crept higher this week, marking the eighth straight week that it cost more to borrow to buy a home.

Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year fixed-rate mortgages rose to 4.43 percent this week from 4.40 percent last week. The new average for the benchmark rate is the highest since January 2014. The 30-year rate stood at 4.10 percent a year ago.

Mortgage rates have risen steadily in January and February, as interest rates generally have increased in response to higher levels of government debt and expectations of rising inflation. In addition to discouraging potential home buyers, rising rates also may prompt potential sellers to hold on to their homes, which are financed through lower interest rates.

Testimony to Congress on Tuesday by the new Federal Reserve chairman, Jerome Powell, conveyed optimism about the economy’s strength and held to the Fed’s projection of three hikes this year in its key policy rate. Many private economists say they now expect the central bank to boost rates four times this year rather than three.

Home affordability has become increasingly problematic for a growing number of would-be buyers. The recent jump in mortgage rates has increased their monthly costs, limiting how much they can pay for a house. Average home price increases are eclipsing wage growth. And the shrinking number of homes for sale is leaving more of these potential buyers dismayed at not being able to find a property that works for them.

The pace of Americans signing contracts to buy homes fell 4.7 percent in January to its lowest level in more than three years, due to a lack of homes for sale, higher prices and rising mortgage rates, the National Association of Realtors reported Wednesday.

The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. The fees on 30-year and 15-year fixed-rate loans were 0.5 percent, unchanged from last week. Fees for five-year adjustable mortgages also held steady, at 0.4 percent.

More states want to be exempted from drilling

WASHINGTON – Jan. 11, 2018 – Coastal states opposed to drilling off their shorelines clamored to be excluded from the Trump administration’s massive oil and gas expansion plan less than a day after Interior Secretary Ryan Zinke announced he would exempt Florida because of its “unique” status.

The “us, too” chorus included officials from California, Delaware, New York, Oregon, New Jersey, Virginia and Washington who are eager to make their case to Zinke like Florida GOP Gov. Rick Scott did in a face-to-face meeting Tuesday in Tallahassee.

“We’d like a word,” Democratic Gov.-elect Ralph Northam of Virginia tweeted.

“I’m going to request a meeting with SecretaryZinke to discuss the Trump Administration’s offshore drilling plan – and the risks that offshore drilling pose to #Delaware, the state’s natural resources, and our tourism economy,” John Carney, the Democratic governor of Delaware, chimed in on Twitter.

“New York doesn’t want drilling off our coast either,” Democratic Gov. Andrew Cuomo tweeted. “Where do we sign up for a waiver SecretaryZinke?”

Zinke announced last week that he proposed opening 90 percent of the Outer Continental Shelf off the U.S. coast – including Florida – to oil and gas exploration in the largest single expansion of offshore drilling activity.

The drilling plan, covering 2019 to 2024, includes 47 potential lease sales in 25 of the 26 areas identified as potential drilling regions: 19 sales off the coast of Alaska, seven in the Pacific region, 12 in the Gulf of Mexico, and nine in the Atlantic region.

Zinke called it a starting point and said the process to come up with a final list “will take months,” involving public hearings and meetings with stakeholders. The secretary said his agency would work with states and members of Congress who represent coastal communities to allay concerns.

He moved quickly on Florida after pushback from a number of state officials, including Scott, a Trump confidant and likely Senate candidate this year, who said he would oppose drilling off Florida’s coasts where tourism and coastal military installations are important to the state’s economy.

After flying to Tallahassee to see the governor whom he praised as “a straightforward leader that can be trusted,” Zinke announced he removed Florida from consideration because Scott convinced him “Florida is unique, and its coasts are heavily reliant on tourism as an economic driver.”

That spurred a pitch from Democratic Attorney General Xavier Becerra of California, who tweeted that his state also is “unique” and relies heavily on beach tourism.

Heather Swift, a spokeswoman for Zinke, said the secretary is willing to listen to other governors – and frequently does on a host of agency-related issues.

Copyright © 2018, USATODAY

NAR says Senate tax package ‘bad news for homeowners’

WASHINGTON – Dec. 4, 2017 – The U.S. Senate passed tax reform legislation over the weekend that the National Association of Realtors® (NAR) believes puts home values at risk and dramatically undercuts the incentive to own a home.

NAR President Elizabeth Mendenhall offered strong concerns over the bill and said Realtors will continue to work with members of the House and Senate as the process moves forward into a conference committee to reconcile differences between the two versions of the bills.

“The tax incentives to own a home are baked into the overall value of homes in every state and territory across the country,” says Mendenhall. “When those incentives are nullified in the way this bill provides, our estimates show that home values stand to fall by an average of more than 10 percent, and even greater in high-cost areas.”

Speaking for NAR, Mendenhall says that Realtors favor tax cuts done “in a fiscally responsible way,” and that current efforts in Congress produce some winners. But “millions of middle-class homeowners would see very limited benefits, and many will even see a tax increase. In exchange for that, they’ll also see much or all of their home equity evaporate as $1.5 trillion is added to the national debt and piled onto the backs of their children and grandchildren.

“That’s a poor foot to put forward, but this isn’t the end of the road,” she adds. “Realtors will continue to advocate for homeownership and hope members of the House and Senate will listen to the concerns of America’s 75 million homeowners as the tax reform discussion continues.”

© 2017 Florida Realtors

How FCC plan to end net neutrality is the wrong thing to do.

Nov. 22, 2017 – The Federal Communications Commission released a plan Tuesday to reverse net neutrality rules, a move that the National Association of Realtors® is concerned will make it harder for real estate companies, multiple listing services and property data aggregators to provide their services in a cost-effective way.

“We are looking carefully at the FCC’s plan to reverse net neutrality, which has been an effective and proven way to ensure a level playing field for businesses that depend on a neutral online playing field,” NAR President Elizabeth Mendenhall said in a statement. Small and large players in the real estate industry could be affected if internet service providers such as Comcast and Verizon create fast and slow lanes of web traffic based on financial arrangements they’ve made with content providers.

NAR is part of a coalition of business interests that support existing net neutrality rules as the most fair and competitive form of internet regulation. Current rules prohibit internet service providers from throttling or slowing web traffic to some sites while giving faster services to other sites that have entered into financial arrangements with them. The FCC is expected to vote on the plan – which was proposed by its chairman, Ajit Pai – in mid-December. Should the commission vote to reverse current rules, proponents of net neutrality are expected to sue.

NAR sent comments to the FCC in July urging it to maintain net neutrality.

“NAR supports open internet rules that protect American businesses and consumers by preventing Internet Service Providers (ISPs) not only from blocking, throttling, or discriminating against internet traffic and prohibit paid prioritization arrangements, but also interconnection issues and other anti-competitive practices,” NAR said in its comments.

Source: Robert Freedman, Realtor® Magazine

Fla. claims for Irma damage top $5 billion

TALLAHASSEE, Fla. – Oct. 24, 2017 – Six weeks after Hurricane Irma ripped through Florida, claims for damage have now topped $5 billion.

More than 23,160 property owners in Southwest Florida have filed claims for insured losses from Irma, according to an updated report Monday from the state Office of Insurance Regulation. That is 700 claims added since last week from Sarasota, Manatee and Charlotte counties.

The state agency said 772,934 owners of residential and commercial properties statewide had submitted claims to insurers as of the end of last week.

Total losses have now climbed to $5.31 billion, up by $740,000 from the previous week.

Homeowners account for 66 percent of the claims so far, the agency said. Another 11 percent come from other residential properties and 6 percent were filed by owners of manufactured homes.

Those claims do not include flood damage, which is not covered by homeowners’ insurance. Data analyzer CoreLogic has said flood losses in Florida and elsewhere could hit $38 billion, and up to 80 percent of the damaged homes might not have flood coverage.

The combined destruction of property from Irma and Hurricane Harvey, which struck Texas in late August, could range from $150 billion to $200 billion, according to a preliminary estimate from Moody’s Analytics. Moody’s said the U.S. could suffer an additional $20 billion to $30 billion in lost economic output from the two storms.

More than 40 percent of the damage claims from Southwest Florida have been closed, although nearly half of the closed claims were rejected for payment.

In Sarasota, 9,536 property owners had filed claims in the latest report. Some 1,929 have been paid and 2,061 were closed but not paid.

Manatee reported 7,302 claims, with 1,808 paid and 1,415 closed without payment.

A total of 6,323 claims came from Charlotte, with 1,297 paid and 1,162 closed without payment.

The three counties account for about 3 percent of the total Florida damage claims filed with insurers, the agency said.

Miami-Dade County reported the most claims, followed by Orange, Broward, Lee and Collier counties.

© 2017 Sarasota Herald-Tribune, Fla., John Hielscher. Distributed by Tribune Content Agency, LLC.

Harsh reality hitting Floridians without flood insurance.

FORT MYERS, Fla. – Sept. 25, 2017 – Anita Dennis talked on the phone with her homeowner’s insurance company, her furrowed brow expressing more than words could say. The 72-year-old widow carried flood insurance on her home years ago, then let it lapse after learning her neighborhood in The Villas in south Fort Myers was expected to flood only every 100 years.

The house, built in 1973, has flooded twice in the past month.

A rainmaker brought 4 inches of water into the 1,800-square-foot home a few weeks ago, then Hurricane Irma brought 7 inches of water inside.

Robert Hunter, director of insurance for the Consumer Federation of America, who ran the National Flood Insurance Program in the 1970s, expressed concern for financially strapped homeowners who live in more inland communities such as Lehigh Acres who did not carry flood insurance, many of whom just scrape by.

“Being poor, some people have high mortgages with little equity,” he said. “What happens next? It all depends on how damaged the house is, how much money the family has, how much equity in the home they have in terms of what they do.”

Hunter admonished the Federal Emergency Management Agency (FEMA) for doing a poor job of ensuring that homeowners mandated to carry flood insurance are doing so. “FEMA has done a terrible job of monitoring the banks to make sure they have flood insurance,” he said. “Something is really, really wrong.”

Property owners, he said, make two fundamental errors when it comes to flood insurance:

They have a false sense of immunity from catastrophe. “They assume it won’t happen to them because they haven’t seen water anywhere near where they live, and they’ve been there for 30 years.”
They expect a government bailout. If flooding happens, it’s going to be so bad the government is going to come in and dole out disaster relief. “It might be a small grant, but the bulk of disaster relief is a loan. Those two things together really impact people,” Hunter said.
Hurricane Irma resulted in 335,000 insurance claims representing $1.9 billion in property losses. Irma has exceeded the claims and losses from the two hurricanes (Matthew and Hermine) that hit Florida last year, the state Office of Insurance Regulation reported Monday.

That’s just for starters. Hunter said Irma may surpass Hurricane Andrew’s $26 billion damage cost, but “it’s going to be close.”

Despite back-to-back hurricanes hammering the USA, Hunter said the homeowner’s insurance industry should be fine.

“There’s some reports they could raise rates, but that’s crazy,” he said. “The models to set the rates already contain in them storms in the averages that are like Irma and Harvey. They shouldn’t have any impact on the pricing. There’s no reason for them to raise rates or cancel people’s insurance.”

An Associated Press analysis in early September – before Irma battered Florida – showed a steep drop in flood insurance policies across the state. In five years, the number of federal flood insurance policies in Florida has fallen by 15 percent, according to FEMA data. Property owners in Florida still buy far more federal flood insurance than any other state – 1.7 million policies, covering about $42 billion in assets – but most residents in hazard zones are badly exposed.

Florida has roughly 2.5 million homes in hazard zones, more than three times that of any other state, FEMA estimates. Yet, across Florida’s 38 coastal counties, 42 percent of these homes are covered. Florida’s overall flood insurance rate for hazard-zone homes is 41 percent. Fannie Mae ostensibly requires mortgage lenders to make sure property owners buy this insurance to qualify for federally backed loans, yet in 59 percent of the cases, that insurance isn’t being paid for.

About seven of 10 homeowners have federally backed mortgages, and if they live in a high-risk area, they still are required to have flood insurance. Many let their policies slip without the lender noticing; loans get sold and repackaged; paperwork gets lost; and new lenders don’t follow up.

Dennis, the south Fort Myers homeowner, doesn’t know how expensive it will be to repair her house. She was told that her windstorm policy will not cover most of the damage.

“I think it’s going to be a lot; that’s why I hope FEMA can help,” she said.

Copyright © 2017, USATODAY.com, USA TODAY, Casey Logan

RE investors should look for homes close to ALDI, Trader Joe’s or Whole Foods.

Aug. 2, 2017 – A new ATTOM Data analysis found that prospective homebuyers are better off buying near a Trader Joe’s than a Whole Foods or an ALDI.

Two things have changed, however. First, homes near Whole Foods have seen stronger home price appreciation recently – an increase closer to those seen with a nearby Trader Joe’s. ATTOM analysts think that might have something to do with Amazon’s acquisition of the high-end grocery chain.

Second, real estate investors who want to maximize their return via flipping or renting should target neighborhoods closer to ALDI, the discount German-owned grocer ALDI, according to the analysis.

Analysis details

Homeowners near a Trader Joe’s have an average 5-year home price appreciation of 67 percent, compared to 52 percent for homeowners near a Whole Foods and 51 percent near ALDI. Average appreciation for all zip codes with these three grocery stores nationwide is 54 percent.
Homeowners near a Trader Joe’s also have added equity, owning an average 36 percent equity in their homes ($232,439); homeowners near Whole Foods had an average 31 percent equity ($187,925) and homeowners near ALDI had an average 18 percent equity ($46,352). The average equity for all zip codes with these grocery stores nationwide is 24 percent.
Flip the tables and properties near an ALDI are an investor’s golden goose with an average gross flipping ROI (return on investment) of 69 percent, compared to properties near a Whole Foods which had an average gross flipping ROI of 41 percent and Trader Joe’s at 36 percent. The average gross flipping ROI for all zip codes with these grocery stores nationwide is 57 percent.
Properties near an ALDI had an average gross rental yield of 10 percent, compared to properties near a Whole Foods with an average gross rental yield of 6 percent and Trader Joe’s at 5 percent. The average flipping ROI for all zip codes with these grocery stores nationwide is 8 percent.
ATTOM created an infographic that shows the grocery store-home value relationship.

© 2017 Florida Realtors

The 28/36 Rule: How It Affects Your Mortgage Approval

Want to buy a home? If so, you should know the golden rule of mortgage lending. The 28/36 rule measures borrowers’ ability to afford their mortgages based on their households’ gross monthly income, monthly housing-related payments, and all other monthly debt payments.

The 28/36 rule states that a household should spend no more than 28% of its gross monthly income on total housing expenses, and no more than 36% on all debt, including housing-related expenses and other recurring debts.

The details of the 28% front-end ratio

Let’s start with the first half of the rule, which is that a household should spend no more than 28% of its gross monthly income on housing expenses. This is called the “front-end ratio.”

Housing expenses are generally summarized as PITI: monthly principal, interest, property taxes, and insurance payments. They also include any housing association or condo fees. The front-end ratio does not include other housing expenses like utility bills or cable TV services.

If a borrower expects to pay $1,100 in monthly principal and interest, plus $300 in property taxes and homeowners insurance payments, the PITI costs would be $1,400 per month. Thus, the household must have gross monthly income (pre-tax income) of at least $5,000 per month ($1,400 / $5,000 = 28%) to qualify on the front-end ratio.

The fine print on the 36% back-end ratio

The second half of the rule is the back-end ratio. This ratio is calculated by dividing all recurring monthly payments on the debt by a household’s gross monthly income. The back-end ratio includes all debt: PITI payments on your mortgage, any homeowners association dues or condo fees, and credit cards, car loans, student loans, and other personal loans. Where applicable, the back-end ratio also includes required monthly child support or alimony payments. A past divorce can come back to haunt a borrower when it comes time to apply for a mortgage.

There is an important detail you should know: Monthly payments are only included in the back-end ratio when they are expected to be paid for the next 10 months or more. For example, a car loan with 12 remaining monthly payments would be included, but a car loan with only nine payments remaining would not be. Paying down your other loans can be a really good way to qualify for a larger mortgage.

The borrower with $1,400 in PITI payments might also have a $200 monthly car payment and a $250 student loan payment; back-end monthly debt payments would tally to $1,850 per month. To qualify under the back-end ratio, this borrower would need to earn at least $5,139 ($1,850 / 0.36 = $5,138.88) in gross monthly income.

How to qualify for a larger mortgage

Conventional mortgage underwriting tends to have the most stringent requirements. Buying a home with an FHA (Federal Housing Administration) mortgage generally requires a household to qualify under a 31/43 rule, but this rule can be further relaxed in specific scenarios. Energy-efficient homes can qualify under an expanded 33/45 rule when financed through the FHA, which is much easier to meet than the standard 28/36 rule for conventional loans.

Although some lenders are willing to stretch on terms, these loans are riskier for the borrower and lender alike. Borrowers who can qualify under the 28/36 rule shouldn’t have much difficulty repaying their loans. Stretching too far may make it difficult for homeowners to pay their loans on time, or in full. Homeownership may be the American dream, but anyone who has lost a home to foreclosure will tell you it is an American nightmare.

There are three ways to safely increase the amount you can borrow:

Earn more: While earning more isn’t as easy as pressing a button, it will enable you to buy a more expensive home. A borrower who can reasonably expect to earn more in the near future (a nurse who will soon become a nurse practitioner, for example) might thus qualify for a larger mortgage thanks to a higher income.
Pay down debt: Paying down debt helps your back-end ratio by leaps and bounds. Debt with the highest monthly payments as a percentage of the principal balance (car loans and credit cards, for example) should be prioritized. Consider applying for a mortgage once you have fewer than 10 months of payments remaining on a car or student loan.
Make a larger down payment: How much you borrow has a greater impact on your front- and back-end ratios than how much the home costs. Waiting a year to save more will help you qualify for a larger mortgage.
Of these three methods, the best way to qualify for a mortgage on a more expensive home is to pay down your existing debt. Consider this: A borrower with a $300 monthly car payment would need to earn $833 more than a borrower who does not have a car payment in order to qualify for the exact same mortgage amount. It seems silly — $833 in pre-tax income easily covers a $300 car payment, and then some — but it’s an illustration of just how punishing the math of mortgage underwriting can be to indebted borrowers.

The bottom line: The best way to qualify for a mortgage is to follow the basics of good personal finance: Save more, spend less, and pay off your consumer debt before applying. People who do these three things should sail through the underwriting process and get a mortgage on affordable terms.

Single-family housing starts hit highest level in 10 years

WASHINGTON – March 16, 2017 – Nationwide housing starts rose 3 percent in February from an upwardly revised January reading, according to new data from the U.S. Department of Housing and Urban Development (HUD) and the Commerce Department.

Single-family production increased 6.5 percent to 872,000 units – its highest reading in nearly a decade. Meanwhile, the multifamily component fell 3.7 percent to 416,000 units.

“This month’s gain in single-family starts is consistent with rising builder confidence in the housing market,” says Granger MacDonald, chairman of the National Association of Home Builders (NAHB). “We should see single-family production continue to grow throughout the year, tempered somewhat by supply-side constraints such as access to lots and labor.”

“The growth in the single-family arena is very encouraging, but may be partly attributable to unusually warm weather conditions throughout most of the country,” said NAHB Chief Economist Robert Dietz. “The modest drop in multifamily starts is in line with our forecast, which calls for this sector to continue to stabilize in 2017.”

Regionally in February, combined single- and multifamily housing production rose 35.7 percent in the West. Starts fell by 3.8 percent in the South, 4.6 in the Midwest and 9.8 percent in the Northeast.

Future starts
A drop in multifamily permits pulled overall permit issuance down 6.2 percent in February. Multifamily permits fell 21.6 percent to 381,000 units – but single-family permits rose 3.1 percent to 832,000 units – its highest level since September 2007.

Regionally, overall permits rose 25.4 percent in the Midwest. Permits fell 10 percent in the West, 10.4 percent in the South and 22.3 percent in the Northeast.