MIAMI – Oct. 27, 2011 – Despite renewed efforts to shore up the housing industry with mass refinances and federal aid, South Florida’s real estate market has a long road to recovery ahead of it, industry leaders said Wednesday during a conference hosted by the University of Miami Law School.
About 200 real estate professionals gathered at the Institute on Real Property Law, a forum to discuss the direction of a housing market bogged down by shadow inventory and a growing backlog of foreclosures.
Fort Lauderdale attorney Shari Olefson, who spoke at the event, talked extensively about the long list of government initiatives aimed at fixing the housing market, highlighting their strengths and weaknesses.
The Home Affordable Modification Program, for example, has had a limited impact in South Florida, with only about 33,000 permanent loan modifications for struggling homeowners. By comparison, there have been more than 200,000 foreclosure filings since 2007.
“Instead of getting a modification, what most people got under HAMP was a really bad experience with their banks,” said Olefson, author of Foreclosure Nation: Mortgaging the American Dream.
New initiatives, like the recently revamped Home Affordable Refinance Program, or HARP, aim to address some of the shortcomings of past efforts. The new HARP program, announced this week by President Obama, will open up the government’s refinancing initiative to people who owe significantly more on their mortgages than their properties are worth.
That could have a relatively large impact in South Florida, where about 45 percent of homeowners are underwater, and most of those are paying above-market interest rates, Olefson said.
Mortgage lenders are also changing gears. Some are offering “relocation assistance” of up to $20,000 for homeowners who opt to sell their homes at a discounted price instead of going through the lengthy foreclosure process. (See “Bank of America: $20,000 short sale incentive to struggling homeowners”)
But even with renewed efforts to prop up the real estate industry, a normalized housing market remains years away, said Bill Sklar, director of the Institute on Real Property Law at UM’s Law School.
Part of the reason is the region’s massive inventory of homes not yet on the market, due to delays in the foreclosure process. Investors are buying up many of the distressed properties, but it will take time for the “shadow inventory” to be fully absorbed, Sklar said.
“There’s some recovery because there’s capital investment – foreign investors are seeking to preserve their capital” with U.S. real estate, he said. “That will help fuel some recovery in certain sectors, but until we get past the current foreclosure crisis, we cannot get back to a healthy, thriving economy.”
Real estate lawyer Mike Chesser, who came from Destin to the conference, echoed that sentiment. His firm works with several condominium associations that are struggling financially due to the foreclosure crisis, and said relief has been scarce.
“More needs to be done to help the associations,” he said. “The associations are finding themselves in line behind the mortgage companies and the mortgage companies are slow to act. The associations are looking to do anything they can to shore up their finances.”
The conference continues Thursday and Friday at the Biltmore Hotel in Coral Gables, with sessions dedicated to issues facing condominium communities.