Headlines – Week of December 4, 2011

December 19, 2011

Florida Leads U.S. in Mortgage Fraud Cases

According to industry publication Mortgage Daily, Florida retained its top ranking in the nation for mortgage fraud litigation through September as millions of dollars in bad boom-time loans continue to be discovered by law enforcement and lenders.

The report showed that Florida’s activity during the third quarter included more than $144 million in suspect loans that were questioned in court.

California ranked second on the activity index, but with more than $204 million in allegedly fraudulent loans, it came in first based on dollar amount.

Many investors continue to pressure banks to buy back mortgages that didn’t meet underwriting standards or were bogus for other reasons, such as falsification of the borrower’s income.

As an example, Bank of America bought back $2.87 billion in bad mortgages from federal mortgage backers Fannie Mae and Freddie Mac.

Nationwide, the mortgage fraud index climbed 16 percent in the third quarter, compared with the same time in 2010, with cases totaling more than $1.3 billion in questionable loans.

The five states with the worst index ranking were, in order: Florida, California, Minnesota, New York and Texas.

In Florida, the mortgage fraud index was up 45 percent compared with the previous quarter. It was 18 percent higher than in the third quarter of 2010.

A report issued by the federal Financial Crimes Enforcement Network in September that found Palm Beach County ranked sixth in the nation per capita for suspicious loan activity.

“There is a lot of fraud in South Florida, and we will see heavy enforcement in the future,” Thomas said “It’s taking a lot of time to catch up, but there are paper trails for all of this and they will eventually get to most of it.”

Investors Blamed for Bubble in Housing

According to a new federal report from Federal Reserve Bank of New York speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.

Researchers with the found that investors who used low-downpayment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.

More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.

Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide and more than a third in Arizona, California, Florida and Nevada from 2007 to 2009.

As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed. Residential construction also languished, putting hundreds of construction workers in the hardest-hit states out of work.

Full Report

Florida is Aging Much more Slowly

According to data released in a report by the U.S. Census Bureau, about 17.3 percent of the state’s population was 65 and older in 2010 down from 17.6 percent a decade earlier, according to a U.S. Census analysis released Wednesday. By comparison, 13 percent of the total U.S. population is now over 65, up from 12.4 percent in 2000.

As a result, some are saying it’s time for Florida to shed the “God’s waiting room” image and revive its slogan as the Fountain of Youth.

The country’s overall population has been skewing older the past 10 years in tandem with aging baby boomers. Florida can’t escape that trend, but it is aging much more slowly than practically anywhere else.

Only half-dozen states posted a drop in their percentage of older residents, with Florida showing the steepest drop.

Economists and demographers point to several reasons for the disconnect. The biggest reasons? Florida has been drawing younger workers over the past 20 years, particularly in fields like construction. Meanwhile, its inflow of retirees has slowed amid not just the housing bust but fierce competition from states like North Carolina and Georgia.

Nationally, the 65-and-up club grew by 15.1 percent between 2000 and 2010 while the total U.S. population grew 9.7 percent.

Florida still has the greatest share of population 65 and older among all states. But the gap is shrinking. No. 2 West Virginia (with 16 percent over 65) and No. 3 Maine (15.9 percent) both were among states that have been getting older the past 10 years, relatively speaking.

Numbers from the report:

17.3: Percent of Florida’s population 65 and older, the highest rate in the country.

19.8: Percentage of Clearwater residents who are 65 and older, the second-highest rate in the country among cities of 100,000 or more, trailing only Scottsdale, Ariz.

3.5: Percentage of Clearwater residents 85 and up, tied with urban Honolulu for highest in the country.

5: Number of Florida cities in the Top 10 list of those with the highest percentage of elderly residents.

1: Number of states that had fewer residents 65 and up in 2010 (Rhode Island).

Full Report

Posted by Scott R. Lodde

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