Governor bars criminals from mortgage business
Gov. Charlie Crist and his cabinet voted last month to prohibit anyone convicted of financial crimes from entering the mortgage business. The legislation came after it was revealed that the state’s lax licensing standards had allowed thousands of criminals to become mortgage brokers since 2000, some of which contributed to the at least $85 million in mortgage fraud committed in the state over that period.
The unanimous vote will impose a 15-year waiting period before anyone convicted of a violent crime, including murder, rape and armed robbery, can get into the mortgage business. People convicted of misdemeanors involving fraud, dishonest dealing or “moral turpitude” will have to wait five years from their conviction dates before they can get licensed.
Also in response to the mortgage licensing controversy, Don Saxon, chief of the state’s Office of Financial Regulation, announced that he will resign his post this month. He said he recognizes that closer oversight over the department, which handles licensing, is needed.
A lender to Las Olas Riverfront, a massive retail and entertainment complex in downtown Fort Lauderdale that entered into foreclosure earlier this year, has exercised its right to purchase the property. The company, an affiliate of New York-based hedge fund Cerberus Capital Management, purchased the mortgage from lender ACF Riverfront for $21.8 million. Cerberus has already been in talks with developers about future plans for the 260,000-square-foot property. Boca Developers purchased the site in 2005 for $31.9 million, with plans to demolish its existing buildings to make way for condos, offices, shops and entertainment attractions.
Foreign buyers, tourists boost Florida markets
Florida is the preferred U.S. location for international real estate investors, according to a report released by the National Association of Realtors. According to the report, nearly 26 percent of international buys in the country occur in the state, putting it at the top of the list. Canadian, Mexican, European and Latin American buyers all favored Florida as their top choice for U.S. purchases. The survey used data from May 2007 to May 2008, drawing on about 4,000 responses from registered brokers.
At the same time, foreign tourists have been propping up the South Florida hotel market, according to a report from the Greater Miami Convention & Visitors Bureau, which reported that the first half of 2008 showed the largest increase in foreign visitors in Miami-Dade in a decade. The metro area saw international visitors making overnight stays surge 8.2 percent over that period. This lifted the overall rate of hotel visitors by 3 percent, despite a 1.2 percent decline in domestic visitors.
Builder WCI Communities declares bankruptcy
Developer WCI Communities, builder of single-family homes throughout Florida and the owner of five multi-family properties in Miami-Dade, filed for Chapter 11 bankruptcy reorganization in early August. A U.S. Bankruptcy Court judge signed off on the relief plan, which stated that WCI can deliver clear title to homes and tower residences at closing and authorize title insurance issuance. The court ruled that deposits and other funds received by WCI and held in trust are not subject to the bankruptcy and are to be applied only according to the parties’ agreements and applicable law.
The relief package included an agreement with its senior lenders to immediately access approximately $50 million in cash. An examination of the builder’s path to bankruptcy shows that it could have avoided the Aug. 4 filing if it had taken a buyout offer from Carl Icahn, the company’s largest shareholder, according to GlobeSt. The June 2007 offer wasn’t as bad as the board thought at the time, and the company’s stock subsequently dropped to about 30 cents a share.
Insurance commissioner rejects hike
The head of the Florida Insurance Commission said the state will reject Florida Farm Bureau’s bid for a homeowner policy rate increase, which the insurer says is necessary in the case of severe hurricane damage. Insurance Commissioner Kevin McCarty said the proposed 28 percent average statewide property insurance increase was too sharp and wasn’t supported by the commission’s own numbers.
Some South Floridians faced increases of as much as 96 percent under Florida Farm’s proposal. Officials from Florida Farm, which has 100,500 homeowner policies statewide and 4,700 in South Florida, said the hike would provide backup storm coverage and allow claims to be paid in the wake of a damaging hurricane.
Gov. Crist said that he hopes McCarty also quashes an increase proposed by State Farm Florida executives that would push coverage on its customers’ homes up by an average of 47.1 percent, the Sun-Sentinel reported. South Florida residents, who live in the area most vulnerable to hurricanes, would bear the largest share of that increase.
Compiled by James Kelly