Archive for December, 2009

Airport Update

Saturday, December 19th, 2009

The new Northwest Florida Beaches International Airport is continuing to take shape. Construction crews are about eighty- percent complete.

But Friday, airport contractors asked for an extension to the extension. Crews need extra time to extend the main runway 1,600 feet.

Airport Authority Board members gave Phoenix construction an additional 46 days to finish the work. We’re told two of the eight extended lanes are already
down.

If the weather holds off, seven lanes should be finished by Christmas.

And the eighth by January 7th, just in time for the FAA test flight on January 18th.

Peoples First Fails

Saturday, December 19th, 2009

By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) — Seven U.S. banks were closed by regulators on Friday, bring the total this year to 140 as the effects of the credit crisis continued to be felt across the country.

What’s more, the Federal Deposit Insurance Corp. established temporary institutions to help close two of the failed banks.

Citi Blames Gov’t on Outcome of Equity OfferAs banks clear the TARP hurdle, Citi laments Treasury’s willingness to let Wells Fargo offering hit the market, Barrons.com’s Bob O’Brien reports.
Atlanta-based RockBridge Commercial Bank became the 25th Georgia-based bank to fail this year. The FDIC was unable to find another institution to take over the failed bank, and so will mail checks to retail depositors for insured funds.

RockBridge Commercial Bank had roughly $294 million in assets and $291.7 million in deposits as of Sept. 30. Its failure will cost the federal deposit-insurance fund $124.2 million, the regulator said.

Panama City, Fla.-based Peoples First Community Bank became the 14th to fail in that state in 2009. Peoples First Community Bank had $1.7 billion in deposits as of Sept. 30, and Gulfport, Miss.-based Hancock Bank has agreed to assume those deposits.

Peoples First Community Bank’s failure will cost the deposit-insurance fund $556.7 million, according to the FDIC.

New Baltimore, Mich.-based Citizens State Bank’s failure will cost the deposit-insurance fund $76.6 million, with the FDIC creating the Deposit Insurance National Bank of New Baltimore to protect depositors of Citizens State Bank.

The new bank will remain open for 45 days to allow depositors to access insured deposits and open an account elsewhere, the agency said. Columbus, Ohio-based Huntington National Bank will operate the DINB under contract with the FDIC.

An FDIC spokesman said the agency has created such bridge banks “several times this year and in previous years.”

Irondale, Ala.-based New South Federal Savings Bank also was closed by regulators Friday. The bank had $1.2 billion in deposits as of Sept. 30, which will be assumed by Plano, Texas-based Beal Bank, the FDIC added.

New South Federal Savings Bank’s failure will cost the deposit-insurance fund $212.3 million.

Springfield, Ill.-based Independent Bankers’ Bank was closed, with $511.5 million in deposits as of Sept. 30.

The FDIC said it created the Independent Bankers’ Bank Bridge Bank to allow client banks of Independent Bankers’ Bank “to maintain their correspondent banking relationship with the least amount of disruption.”

Independent Bankers’ Bank’s failure will cost the deposit-insurance fund $68.4 million.

Two Southern California banks were closed Friday, the 16th and 17th such failures in the Golden State as a whole.

First Federal Bank of California in Santa Monica was taken over by regulators. OneWest Bank of Pasadena will assume all of its deposits and take over First Federal’s 39 branches, the FDIC said.

OneWest Bank agreed to purchase all of the $6.1 billion in First Federal Bank assets and did not pay the FDIC a premium for the $4.5 billion in total deposits; the hit to the deposit-insurance fund will be $146 million.

Separately, La Jolla, Calif.-based Imperial Capital Bank was closed. It had $2.8 billion in deposits as of Sept. 30, the FDIC said, and its failure will cost the deposit-insurance fund $619.2 million. City National Bank of Los Angeles is assuming all of the deposits in the “least costly” resolution, according to the agency.

John Letzing is a MarketWatch reporter based in San Francisco

Program Falling Short

Friday, December 18th, 2009

WASHINGTON – Dec. 18, 2009 – A federal program that has cut mortgage payments for more than 500,000 homeowners since spring is falling well short of what’s needed to fix the nation’s foreclosure crisis, warns a congressional panel’s report out today.

“We’re concerned that not enough foreclosures will be prevented,” said Elizabeth Warren, who chairs the Congressional Oversight Panel for the $700 billion financial bailout program approved last year.

The panel’s report says the government’s mortgage modification program has three key problems:

*The kinds of mortgages that will make up growing numbers of foreclosures exceed the program’s eligibility requirements.

*With a goal of modifying only 25,000 to 30,000 loans a week, fewer than half of the predicted foreclosures would be avoided. One in eight homes are currently in foreclosure or default and 250,000 additional foreclosures are initiated monthly.

*Many modifications so far are still in a three-month trial period. As of Sept. 1, only 1,711 homeowners had received permanent modifications under the federal program. And after five years, many will see higher payments.

“The result for many homeowners could be that foreclosure is delayed, not avoided,” the report says.

Warren noted that the foreclosure problem has moved beyond subprime mortgages and that rising unemployment will cause more foreclosures.

The government’s program “appears to be targeted at the housing crisis as it existed six months ago rather than as it exists today,” she says.

Her panel’s cautionary report follows a more positive assessment Thursday by administration officials.

Under the federal program, the pace of trial modifications now exceeds the weekly pace of completed foreclosures, said Housing and Urban Development Secretary Shaun Donovan.

That means there are more families getting modifications through the federal program each month than families losing their homes to foreclosure, officials say.

“The fact we now have a pace of trial modifications that exceeds the pace of weekly foreclosures is a very important milestone,” Donovan said. “We believe we’ve reached an important turning point.”

Administration officials acknowledge that the start of a housing turnaround could still sour.

“We’re still living with the risk that housing is going to be a source of weakness in the economy,” says Treasury Secretary Timothy Geithner.

Copyright © 2009 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour and Paul Wiseman. All rights reserved.

Foreclosure Interest Wanes

Thursday, December 17th, 2009

CHICAGO – Dec. 17, 2009 – Consumers’ fascination with foreclosures may be flagging.

In May, 55 percent of adults said they were at least somewhat likely to consider buying a foreclosed home. When a similar online survey was conducted last month by Harris Interactive, only 43 percent of respondents said they’d consider such a purchase.

The survey, released Tuesday by real estate Web companies Trulia.com and RealtyTrac, could portend more difficult times for the housing market, particularly because most economists expect foreclosures to peak nationally next year.

A lack of interest in purchasing bank-owned properties not only would mean that foreclosed individual homes sit vacant longer but also would affect the broader housing market by bringing down median housing prices in neighborhoods beset with foreclosures.

Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure listings, said the decrease in buyer enthusiasm for foreclosures should be expected. “Some of the early enthusiasm of something new has waned,” he said, but added, “People that are interested are very serious about this.”

RealtyTrac predicts that by year’s end, 3.2 million households nationally will have received a foreclosure notice in 2009. Next year, the number of filings, which include notices of default, sheriff’s sale or bank repossession, could approach 4 million, Sharga said.

“Follow the unemployment numbers” to determine where foreclosures will rise next year, Sharga said. Last week, RealtyTrac said November foreclosure filings in the Chicago area rose 107 percent over a year ago. Illinois’ unemployment rate stands at 11 percent.

Moody’s Economy.com previously has predicted an additional 4.6 million foreclosures nationally in 2010.

“There are really two sides to this story, the positive and the bleak,” said Pete Flint, chief executive of Trulia.com. The positive side is that buyers have grown more realistic about their expectations of what a foreclosed property will cost to purchase and renovate, he said.

The Harris survey included 2,203 adults.

Copyright © 2009 Chicago Tribune. Distributed by McClatchy-Tribune News Service.

Southwest Announced Direct Flights

Wednesday, December 16th, 2009

PANAMA CITY BEACH — Southwest Airlines announced its four destination cities to and from the new airport this morning, along with special introductory fares.

The four cities are: Houston (Houston Hobby, or HOU); Nashville, Tenn. (BNA); Baltimore, Md. (Baltimore/Washington International, or BWI); and Orlando (MCO). Service will begin May 23.

Bob Montgomery, Southwest vice president of properties, made the official announcement during a press conference that began at 10:30 a.m. at the Breakers Restaurant in Panama City Beach. Montgomery said one-way flights will begin as low as $49.

“I think it is exciting news,” Airport Authority Chairman Joe Tannehill said Tuesday, before the announcement. “You are also going to get to hear about the low fares. I think everyone will be real excited.”

Officials have anxiously awaited the locations of the four “gateway” cities from which Southwest plans its eight daily non-stop flights to the new Northwest Florida Beaches International Airport. Bay County Tourist Development Council (TDC) officials said they want to jump-start a public relations campaign in the cities once they are announced, particularly using the new social media such as Twitter and Facebook.

The TDC has signed an agreement with Southwest, the nation’s largest domestic carrier, that requires the low-cost airline to begin service to the new $318 million airport with daily non-stop flights from four cities amounting to at least 525 inbound seats daily.

In exchange, the TDC will target the fifth cent of its 5-cent per dollar bed tax to help Southwest market Panama City Beach and put tourists into airplane seats, a deal worth millions that extends through Sept. 30, 2014. Walton County also is funneling bed tax dollars to aid Southwest marketing.

Rowe said the marketing and public relations efforts will take into account not only the cities slated for non-stop flights, but also their connecting cities.

Bay Defense Alliance president Tom Neubauer said he was looking forward to having the Baltimore-Washington route available, with those flights likely to be used extensively by defense contractors going to and from the nation’s capitol.

He also singled out the Orlando flights as a welcome addition for area residents.

“I think Orlando is great. I’m glad to have them back,” Neubauer said. Delta Connection used to fly from Panama City to Orlando.

Neubauer said he thought the new Southwest routes would force air fares down across the board.

Buyers Need Good Credit

Tuesday, December 15th, 2009

WASHINGTON – Dec. 15, 2009 – Five years ago, if your application for a mortgage included a 20 percent downpayment, your bank would have approved your loan by sundown and sponsored a parade in your honor.

But in this new era of tight credit, having a big downpayment no longer guarantees you’ll qualify for a mortgage. Starting this week, mortgage finance giant Fannie Mae will require borrowers with a 20 percent downpayment to have a credit score of at least 620. Previously, the cutoff was 580.

Fannie Mae buys loans, providing an important source of financing for lenders. For that reason, its guidelines are considered the gold standard for mortgage loans. Most banks are expected to adopt the new standards, if they haven’t already.

“Credit scores have never mattered quite as much as they do now,” says Bob Walters, chief economist for Quicken Loans.

In addition, Fannie Mae won’t approve loans for borrowers with a 20 percent downpayment if more than 45 percent of their gross monthly income goes toward debt. Fannie Mae didn’t disclose the previous debt limit, but it was higher than 45 percent, says Fannie Mae spokesman Brian Faith.

The higher standards could frustrate buyers hoping to take advantage of low interest rates, depressed home prices and generous tax breaks that were recently extended until next spring. Even buyers who qualify for a mortgage may find that they’re ineligible for the best rates because lenders have tightened their standards across the board, says Gerri Detweiler, credit adviser for Credit.com.

If you’ve already found a home you’d like to buy, there’s not much you can do to raise your score before you apply for a loan. But if you’re just starting to tour open houses, there are steps you can take to improve your credit profile, including:

• Review your credit reports for errors. Go to AnnualCreditReport.com and order your credit reports from the three main credit-reporting bureaus: Experian, TransUnion and Equifax. You’re entitled to a free credit report once a year from all three of the bureaus, but only if you go through this website.

Once you receive your credit reports, go through them and look for inaccurate information, such as accounts you never opened. All of the credit bureaus provide a process to dispute errors, says Craig Watts, spokesman for Fair Isaac, which created the widely used FICO score.

• Pay off credit cards and other debts. One of the factors used to calculate your credit score is your “credit utilization ratio,” which measures the amount of credit you have outstanding vs. your total available credit. This ratio accounts for 30 percent of your score. Paying off balances will increase the amount of unused credit you have available, which will help your score.

But even if you’ve decided never to use credit cards again, don’t close your accounts. Closing a credit card account won’t help your credit score and could hurt it, Watts says. When you close an account, you reduce the amount of your available credit, which could hurt your credit utilization ratio.

• Avoid opening any new accounts. “Every new account you open is likely to drop your credit score, at least a little,” Watts says.

Checking your score

When you order your free credit reports from AnnualCreditReport.com, your credit scores aren’t included; you’ll have to pay a fee to get them.

In recent months, though, several services, such as Quizzle, Credit Karma and Credit.com have launched programs that provide free credit profiles. These websites can provide a useful snapshot of your credit standing and provide tips on how to improve it, Detweiler says.

If you’re planning to buy a home a year from now, she adds, it doesn’t make sense to spend a lot of money to buy scores that could change by the time you apply for a loan.

But house hunters who plan to apply for a loan in the next few weeks should know their actual FICO scores, because that’s the score most potential lenders use, Detweiler says.

You can buy your FICO score and credit report from TransUnion and Equifax at www.myfico.com for $15.95 each.

Earlier this year, Experian stopped selling to consumers the FICO scores it provides lenders, Watts says. You can buy a credit score based on Experian’s own scoring model for $15 at www.experian.com. Experian’s website also promotes a “free credit report and score,” but to get this deal, you must enroll in a credit-monitoring service that costs $14.95 a month.

Copyright © 2009 USA TODAY

Supreme Court Hears Beach Case

Wednesday, December 2nd, 2009

text sizeAAADecember 2, 2009
The U.S. Supreme Court hears a major property rights case Wednesday, a case from Florida that pits the state’s need to prevent beach erosion against the rights of property owners to keep ownership of the land at the water’s edge.

At issue in the case is the demarcation of what is private and what is public land at the shoreline. And the facts in the dispute are almost as amorphous as the line of dry beach in the sway of the tides.

Florida has more than 2,000 miles of ocean shoreline, including some 820 miles of sandy beach — beach that has been consistently eroding. So much so that for the past four decades, the state and local governments have poured millions of dollars into beach restoration projects that pump sand into eroded areas to create a kind of sand buffer to protect the beach from storm damage and further erosion.

With hurricanes frequently bashing parts of the state, these restoration programs were not only uncontroversial, but popular with home and business owners, who literally saw the water lapping at their property. Michael Sole, secretary of the Florida Department of Environmental Protection, says about half the state’s beaches are in jeopardy.

“So the issue is actually conducting beach restoration,” said Sole, “to maintain not only the benefits of the beach” for recreation and tourism, but also for storm protection that benefits the private landowners.

Restoration Project Or ‘Land Grab’?

Until the last decade, the Florida Panhandle did not suffer the same kind of hurricane and storm damage that the southern part of the state did. But state and local officials saw that changing in recent years, and decided to spend a total of $15 million on a beach restoration project in Walton County — $4 million of it paid by the state, the rest paid for by the local community, including the town of Destin.

With that kind of money being spent to preserve the beach, the state set the property line for private beachfront property owners where it was when the project began — at the wet sandy beach. And if, because of the restoration, the dry beach extended farther out toward the water, that would be considered public property.

To some of the homeowners, like Slade Lindsey, the restoration project “was simply a land grab.” Or, as he puts it, local and state officials were putting sand in his backyard and “converting it to a public beach.”

Not so, counter the state and local governments, who say all they have done is make permanent the line of demarcation between private land and state land. Instead of the property owners’ land moving with the tides, it is set where the wet sandy beach was. And if the restoration project creates a narrow strip of new dry beach, where there once was water — that is public property, just as the land under the ocean was once public property.

The newly created strip of beach, whether or not it is covered with water, belongs to the public, says Deborah Flack, president of the Florida Shore and Beach Preservation Association, a league of coastal cities and towns.

“This new area of beach was in fact created by state-owned sand, and it’s being put on what was sovereign submerged state land, at a significant cost to the taxpayer,” said Flack. “So clearly, we’re talking about a recreational beach that should be open to the public.”

The access rights of the private property owners are still protected, says the state. State law bars anything obscuring a homeowner’s view; bars building any structure; and guarantees the same water access.

The public has always had some access to a private property owner’s beach. Florida state law has always allowed the public to traverse private beach property along the shoreline, and the local government in Destin provides paths to the sea alongside Lindsey’s property.

But Lindsey and five other homeowners are challenging the erosion restoration project as a taking of their land without just compensation. His property line, he concedes, is not much different than it ever was. On some days, the beach is bigger than it used to be, and on some days it is smaller. But he says he bought the house believing that he, in essence, had a private beach and could rent the house as having a private beach. Now, he fears that undesirable members of the public may put down their blankets, picnic or whatever on any newly created strip of public beach.

“If it’s state-owned land, we don’t have the right to tell them to go away,” Lindsey said.

Protecting Tourism

Sole says that most of the landowners have not objected to beach erosion control projects because they enhance the value of the property, protect roads and utilities around the property, and protect the state’s No. 1 industry: tourism.

Tropical Storm Ida this year proved the value of these projects, Sole said.

“Where we did beach restoration, we had hardly any damage. The beach actually served its purpose,” he said.

“Where we did not have beach restoration, we had significant damage. We had sea walls actually crumbling. So it’s clear that this beach, and these beaches, provide a significant value not only to the upland homeowners, but to the infrastructure that’s there along the coast as a whole.”

Lindsey and his lawyer, D. Kent Safriet, contend that the real reason the state and local governments are interested in beach restoration is to create more public beaches for tourism.

“What they needed in this case was to make a public beach open to the tourists for their economy,” Safriet said.

And if the state and local governments want to do that, he says, they have to pay for the land.

“No one is saying they can or can’t create the public beach,” Safriet said.

“They just gotta do it the right way, and pay for it.”

But the Florida Supreme Court said the state did do it the right way — and that landowners are asking for something they are not entitled to under state law.

An Unresolved Question

Now the case has been kicked up to the next level, the U.S. Supreme Court, where the question is, in part, whether a state court decision interpreting state law can amount to an unconstitutional taking of property.

It’s a question that has never been resolved by the U.S. Supreme Court. Yes, the court has said, a decision by the legislative or executive branch can amount to an unconstitutional taking. But whether a decision by the judicial branch can also amount to a taking is one of the great unanswered constitutional questions yet remaining in American law.

In its ruling, the Florida Supreme Court said the beach restoration program reflected “the state’s constitutional duty to protect Florida’s beaches in a way that reasonably balances public and private interests.”

The court said that when new beach is created with a restoration project, landowners still have the same right to access and view the water, but the court said Florida common law has never provided the landowner a right to own the emerging land as private property.

Now the U.S. Supreme Court — including at least one justice who owns a vacation house on the water — will tackle the question. The resulting decision could have implications for all other coastal regions in the country.

Curtesy NPR News

Flood Insurance In The Red

Tuesday, December 1st, 2009

Flood insurance program awash in red ink

WASHINGTON – Dec. 1, 2009 – Federal flood insurance has long been cheap in Florida, at least in comparison to private and state windstorm coverage. That may not last.

With the National Flood Insurance Program running some $17 billion in the red after Hurricane Katrina losses, federal budget watchers have expressed growing concerns about its financial stability and rate structure.

The stakes for Florida, with 2.2 million policies, are considerable.

“It’s called national flood insurance, but in reality if you take Florida and Texas, you’re talking about more than half of the program,” said Erwann Michel-Kerjan, a risk management expert at the Wharton School of Business at the University of Pennsylvania who authored a recent study on the flood rates in Florida.

A Government Accountability Office report in October 2008 singled out FEMA’s policy of grandfathering in older, more vulnerable properties at lower rates, calling it a subsidy that could force taxpayers to again bail out storm victims in another Katrina-like catastrophe. Florida has most of those properties.

FEMA spokesman Clark Stevens said paying down Katrina debts did not factor into a rate hike announced in October. He would not say if the agency was considering annual hikes, capped at 10 percent, or other overhauls.

But congressional panels are pondering options. Among them: Phasing out grandfathering, raising rates for high-risk properties, requiring multiyear policies. Michel-Kerjan said the government could also forgive the Katrina debt.

“It’s a touchy subject. At some point, we will have to make a political decision.”

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