Scotsman Guide - July 2009 Residential Edition

JACKSONVILLE, FLA.

On the Web More Florida news and commentary: scotsmanguide.com/florida

Photo: Jon Worth

Jacksonville, Fla.’s, low barrier to homeownership seems poised to stay that way.

A foreclosure-rehabilitation effort funded by $26 million in federal Neighborhood Stabilization Program money could boost the city’s 72.1-percent homeownership rate, already the highest among Florida’s main population centers. The plan operates through a partnership between the city and private and nonprofit developers. It’s designed to motivate developers to spruce up almost 500 vacant, bank-owned properties in the next year-and-a-half.

In the past year, Jacksonville foreclosures have increased 240 percent.

What the Locals Say

“The Jacksonville metropolitan area is looking better than others within Florida. We’re still seeing a lot of foreclosures, but there is a significant market of people turning foreclosures into rentals. That’s probably a good sign because it reduces the number of homes on the market and also creates affordable rentals.”

— Lester Dominick, president and CEO, MortgageFlexSystems Inc.

“Not only is this a way to take these assets off of banks’ books, but it also will physically revitalize the community,” says Paul Tutwiler, executive director of the Northwest Jacksonville Community Development Corp., one of the participating nonprofit developers.

The effort may spark first-time-homebuyer interest in the city, where median home prices already have fallen to 2003 levels. Plans are for the houses to sell at affordable levels and in conjunction with city downpayment- and closing-cost-assistance programs, which allow some residents to buy for as little as $500 down.

Vitals Population: 805,605

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Population in 2000: 735,617

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Rank (U.S.): 12th-largest

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Metropolitan-area population: 1.3 million

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Metropolitan-area rank (U.S.): 40th-largest

Average commute: 23. 9 minutes

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Average commute in 2000: 25.2 minutes

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U.S: 25. 3 minutes

Median household income: $48,699

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Median household income in 2000: $40,316

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U.S.: $50,740

Median age: 35. 9 years

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Median age in 2000: 33. 8 years

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U.S.: 36. 7 years

Unemployment (March): 9. 5 percent

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Unemployment in March 2008: 4. 8 percent

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U.S. (March): 8. 5 percent

Inflation (Consumer Price Index, March): -1.4 percent

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Inflation in March 2008: 5. 5 percent

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U.S. (March): -0.4 percent

Market Median existing-home price (MSA, March): $146,400

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Median price in March 2008: $188,900

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U.S.: $217,300

Housing units: 366,205

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Housing units in 2000: 308,736

Total home sales*: 633

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Total home sales in April 2008: 631

Average days on market*: 103

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Average days on market in April 2008: 100

Median monthly housing costs: $1,335

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Median monthly housing costs in 2000: $902

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U.S.: $1,464

Foreclosure filings: 3,739

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Foreclosure filings in April 2008: 1,560

Foreclosure rate: 1 per 157 housing units

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Foreclosure rate in April 2008: 1 per 244 units

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State: 1 per 135 units

National city rate rank (out of largest 203): 21st

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Rate rank in April 2008: 48th

Single-family-residential building permits: 180

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Permits in April 2008: 457

Industry

Licensing: Brokers must apply for a two-year license through the state Office of Financial Regulation. New applicants must pay fees; complete 24 hours of prelicensure-education requirements; and pass an exam, fingerprint and background checks. License renewal requires 14 hours of accredited continuing education and a fee payment.

Number of brokers:

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Jacksonville: 4,165

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Florida: 114,916

State association: Florida Association of Mortgage Brokers, famb.org

Résumé

Demographics: 64 percent white, 31 percent black, 3 percent Asian, 2 percent other; 6 percent identify as Hispanic or Latino

Top area private employers: Blue Cross and Blue Shield of Florida, Publix Super Markets Inc., Winn-Dixie Stores Inc., Baptist Health of Northeast Florida, Citigroup

*Northeast Florida Area Association of Realtors

Darrick Meneken is an associate editor at Scotsman Guide. Reach him at (800) 297-6061 or darrick@scotsmanguide.com.

Q&A Patrick J. Lawler

By Ivanna C. Sukkar

CHIEF ECONOMIST Federal Housing Finance Agency

A year ago this month, the Federal Housing Finance Agency (FHFA) was born as regulator of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Since then, it has aimed to help stabilize the housing market, says its chief economist, Patrick J. Lawler. He tells us what brokers should know about the U.S. Treasury Department’s Making Home Affordable refinance and loan-modification programs for Fannie- and Freddie-owned loans, short sales, and more.

How is the Making Home Affordable program helping the housing market? The [refinance program] has been critical for people [with] Fannie Mae and Freddie Mac loans [whose] properties have declined in value, making it difficult in many cases to refinance Audio: FHFA their loans and thereby on the HVCC increasing the chances that

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Finance Agency’s general counsel, Alfred Pollard, has to say about the

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loan modifications, [the

FHFA has] been working with servicers so that they’ll be able to help borrowers who are not making their payments or who are in imminent danger of not making their payments so that they can keep their homes and so that a foreclosure won’t be necessary.

The FHFA’s February Foreclosure Prevention Report showed short sales increased from about 550 in February 2008 to more than 2,000 this past February. Why? Delinquency rates have skyrocketed; that’s the main factor. As lenders have sought to deal with the problem, they have recognized that foreclosure is extremely costly. And a short sale is much less damaging to the homeowner, to the lender and to the market as a whole than a foreclosure is.

How have loan-mod trends changed in the past year? The poor success of using simple repayment plans [as a foreclosure-prevention action] has encouraged lenders — and certainly, Fannie Mae and Freddie Mac — to be much more aggressive in the types of modifications that they’re making to ensure that the borrowers’ payments actually go down to a level that they can plausibly afford. The [Making Home Affordable] program has pushed the target payments down to 31 percent of gross income, something that borrowers are much more likely to be able to maintain.

With the [Making Home Affordable loan-modification] program, [lenders] will focus on reducing the interest rate of the borrower first and foremost and also on increasing the term of the mortgage, if necessary — and in some cases, reducing the principal amount. These [tactics] are much more helpful to borrowers and should have a much higher success rate.

What do you see happening in the economy through the second half of this year? We’re in a very difficult period, and it’s not going to ameliorate itself completely in a very short period of time. We know that. And that’s why we’re working so hard on programs that take a while and a lot of effort to implement. We think they’re going to be needed — not just this week and this month, but in coming months.