South Florida Bankruptcies Up

South Florida Bankruptcies Up 

South Florida experienced a sharp increase in personal bankruptcies in October, a sign that banks are resuming efforts to foreclose on delinquent mortgages, local attorneys say. Filings jumped nearly 19% in a month in Broward, Palm Beach and Miami-Dade counties after they declined in September by 11.5%. There were more filings in October than even in August, when bankruptcies increased by 7%, according to records released Thursday by the US Bankruptcy Court in Miami. Overall, personal bankruptcy filings were down 6% in South Florida from a year ago -- which shows that the local economy continues to rebound from the worst economic times since the Great Depression. In the months ahead the improving economy may also further lower the number of bankruptcies -- even more than October's 6% drop from last year, suggested South Florida attorney Tim Kingcade. But the recovery hasn't been strong enough to save some strapped families. The struggling include contractors, doctors and o ther affluent South Floridians who never thought they would be unable to pay all their bills, said Plantation attorney Langley. "They've just been crushed by this economy," he said. Like other South Floridians many have been forced to take pay cuts and now can't afford their hefty mortgages and other bills, Langley said.

Service sector down

The Institute for Supply Management said its services index eased to 54.2 last month from 55.1 in September, shy of economists' forecasts for 54.5, according to a Reuters survey. A reading above 50 indicates expansion in the sector. The forward-looking new orders gauge fell to 54.8 from 57.7, but the measure of employment gained to 54.9 from 51.1. The vast services sector has fared better than its manufacturing counterpart, which contracted during the summer. Still, this was the first time since June that the rate of growth in services firms has cooled.

Housing crisis from Sandy

A housing crisis loomed in New York City as victims of superstorm Sandy struggled on Sunday without heat in near-freezing temperatures, and officials fretted displaced residents would not be able to vote in Tuesday's presidential election. Fuel shortages and power outages lingered nearly a week after one of the worst storms in US history flooded homes in coastal neighborhoods, leaving many without heat and in need of shelter in New York and New Jersey. Mayor Michael Bloomberg said 30,000 to 40,000 people in New York City alone would need housing, including around 20,000 from public housing. "We don't have a lot of empty housing in this city. It's a problem to find housing. We're not going to let anybody go sleeping in the street," Bloomberg said. "But it's a challenge and we're working on this as fast as we can." US Homeland Security Secretary Janet Napolitano said on Sunday federal agencies are looking for apartments and hotel rooms for people displaced by S andy. "Our goal is to try to get people out of the shelters," Napolitano said at a news conference in New Jersey with Governor Chris Christie. Overnight, at least two more bodies were found in New Jersey - one dead of hypothermia - as the overall North American death toll from Sandy climbed to at least 111. "People are in homes that are uninhabitable," New York Governor Andrew Cuomo said at a news conference.

US firms flock to 3rd world - Europe

US corporations have been flocking to Asia in search of lower wages for quite some time. The toll taken on middle-class Americans is not to be underestimated, as documented by GlobalPost's "America the Gutted" series. But Asia isn't the only locale with low-cost conditions — especially with aeuro zone debt crisis sweeping the continent. That's right folks. Widen that belt around the developing world, cuz its belly is getting bigger. Ireland and Poland are among the locales gaining popularity among potential outsourcers, notably legal outsourcers. White & Case, a major US law firm, recently announced that it would like to open a business and legal support center in either Belfast or Poland. "We have a support hub in Manila and now we're looking at building another one in Europe, which may provide legal services support as well as back office," White & Case chair man Hugh Verrier told legalweek.com. Two other law firms, Allen & Overy and Herbert Smith, have also recently set up shop in Northern Ireland. Also important to note is that at this stage in the outsourcing game, it's not just money that is calling the shots. Major US law firms have started outsourcing domestically, or "Amerisourcing," in lower cost US cities like Nashville and Wheeling, W. Va. No matter how much money can be saved in New Delhi, many firms find that they are simply more comfortable being able to keep a closer eye on what's going on. In Europe, especially in Eastern Europe and parts of the hard-hit euro zone, outsourcers find skilled workers and flexibility in addition to low labor costs and tax breaks. That's a pretty good deal. Ireland isn't new to outsourcing, either. Indeed, an influx of global companies helped earn the country its title "Celtic Tiger" during the 1990s, when Ireland's growth rate was between 8 and 9%.

Olick - what Friday's job report says about the housing market

Any jump in jobs is good for housing, and October's gain of 171,000 is no different. One of the biggest barriers to entry for potential home buyers, new and move-up, has been uncertainty in employment. So this positive report can only add to rising consumer confidence and wealth. When you dig down into the numbers, however, you can see where the numbers are not quite as rosy as some would hope for both home buyers and builders. While overall construction added 17,000 jobs in October, residential-building construction employment fell by 2,000. Residential specialty contractor jobs increased by 6,700, which speaks to the real root of today's housing recovery. All-cash investors are leading the gains; they buy distressed properties and then repair and remodel them to turn them into rentals. It's no wonder remodelers are seeing greater gains than the home builders. An industry index of remodeling finally climbed into the positive in October, making a significant jump to its highe st level since the end of 2005. Both current conditions and future expectations saw gains on the National Association of Home Builders' remodeling index (RMI). The builders claim it is not just investors, but a result of rising home equity. “The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize,” said NAHB Remodelers Chairman George Moore Jr., a remodeler from Elm Grove, La. “As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off.” While any construction is better than no construction, housing analysts focus more on home building than remodeling, as the nation's home builders contribute more to the overall economy, with more jobs and materials. Home builders have ramped up production dramatically, as they rise from the ashes of the housing bust . Housing starts and permits are up significantly from the bottom, and the public builders are all reporting at least double-digit gains in new orders. They still, however, need to see more demand from their historically strong cohort, the first-time home buyer. Those younger Americans are seeing employment gains, but are still proportionally harder-hit than the rest of the work force. "Among 25-34 year-olds, the prime age group for housing demand, 75.1% were employed in October, up from 74.9% in September and from 73.6% in October 2011,"" notes Jed Kolko of Trulia.com, a real estate sales and information website. "For this age group, the unemployment rate was 8.3% in October, down from 9.7% one year ago – an even bigger drop than for the economy overall. Labor force participation increased for this key group." The downside in October's jobs report, however is that job growth in what Kolko calls “clobbered metros” was just 0.5% (annualized rate) through Sep tember – behind the national average of 1.6% for the same period. (These figures are annualized 3-month growth rates to September, the latest data released for metros.) Kolko defines clobbered metros as the areas with the biggest price declines during the bust and the highest vacancy rates now: "Job growth there is especially important for housing demand," he notes.

FHA helps with faster loan qualifications

FHA helps with faster loan qualifications

Obama's "foreclosure mistake"

Yale University economist John Geanakoplos said Thursday the failure of President Barack Obama's administration to stem the foreclosure crisis has stymied efforts to restart the economy. "I think that's the biggest mistake of the Obama administration," Geanakoplos said, referring to the administration's failure to convince lenders to reduce the principal on underwater mortgages. "Writing-down interest, as the government did, just produced a bunch of people who re-defaulted anyway." Geanakoplos made his comments at a panel of economists at Yale Law School. He said reducing the principal on mortgages that exceed the value of homes would have made everyone better off by helping borrowers stay in their houses, helping lenders recoup as much money as possible, and helping housing prices recover. But instead, he said, the Federal Reserve has been stuck with the burden of reviving the housing market when it does not have the power to oversee debt in the economy. As a result, he said , the Fed's stimulus measures have been ineffective: "The rich are getting richer. The Fed wants them richer so that they’ll spend a little more money. That’s trickle-down economics." There have been roughly 8 million mortgage foreclosures since the housing crisis began, according to Geanakoplos.

Consumer confidence up

Consumer Confidence rose to 72.2 in October from 68.4 in September; the strongest level since February 2008. Looking beneath the headline, economists at RBS cited in a research note: "The results confirmed the improvement suggested by other October measures of consumer confidence. Though the fiscal cliff appears to be weighing on business sentiment, households have thus far been more resilient. The underlying details of the report were also generally favorable. On net, consumers' assessment of the current labor market ("jobs plentiful" less "jobs hard to get") improved by 3.5 points to -29.1, the best since November 2008. Their view of current business conditions ("good" less "bad") rose by 1.9 points to -16.5, the best since April 2008." Data from the retailers themselves confirms the improved sentiment. October is typically a breather month for spending, falling in between back-to-school and the holiday shopping seasons. Same-store sales, excluding Wal-Mart (WMT) rose 4.7% in October versus estimates of 4.3%, with luxury and discount stores posting stronger gains. Economist Chris Christopher of IHS Global Insight called the numbers a "positive signal for holiday sales." In a client note Christopher states: "The recent news on the consumer front has been favorable. The unemployment rate has fallen below 8.0%, personal income gains have been favorable, the housing marketing is looking brighter, pump prices started falling, and consumer mood is elevated. This is a good report. It serves as a positive signal that the holiday retail sales season is looking significantly brighter. We expect holiday retail sales to rise 4.5% above last year, not as strong as the past couple of years, but a solid showing."

FHA helps with faster loan qualifications

While mortgage giants Fannie Mae and Freddie Mac make people wait seven years after a foreclosure, the Federal Housing Authority (FHA) will approve loans after three years, providing the buyer has established good credit and the ability to pay the mortgage. "There's definitely a movement of folks who have had a foreclosure to re-emerge and re-engage in the market," said Dustin Hobbs of the California Mortgage Bankers Association. He said brokers have picked up on the trend. "It helps the housing market," said Guy Schwartz of CMG Financial, which handled the Davises' mortgage. The FHA, which is self-supporting, provides mortgage insurance for loans with low down payments and more flexible household income requirements. "An FHA loan is a good option for those who can qualify," said Paul Leonard, California director of the Center for Responsible Lending. And there couldn't be a better time to try, he said. "We are at near substantial price corrections," he noted. That and low in terest rates present "kind of a historic opportunity if people can qualify," he said. But it's not clear whether there's a flood or a trickle of new borrowers with foreclosures in their recent past. The FHA said it doesn't have data on how many of the loans it insures involve people who are buying homes after a foreclosure or short sale. Wells Fargo, the country's largest FHA loan originator and servicer, said it doesn't break out those loans. In the first six months of this year, Wells Fargo has made more than $73 billion in FHA-backed loans compared with $47 billion last year, spokesman Jim Hines said.

Unemployment up in final campaign week

The unemployment rate moved higher to 7.9%, setting the stage for a final push to the finish line in the heated presidential campaign. Economists had been expecting the report to show a net of 125,000 new jobs and a steadying of the unemployment rateat 7.8%. Nomura Securities predicted the rate would fall to 7.7%, but most expected no change. A broader measure of unemployment that includes discouraged workers and those employed part-time who would rather work full-time ticked lower to 14.6%. The labor force participation rate, a key metric that measures those working and looking for jobs, edged higher to 63.8% after wallowing around 31-year lows for the past several months. Unemployment for blacks showed the highest increase in the survey, surging to 14.3% from 13.4%. Also, the average duration of unemployment climbed to a 2012 high of 40.2 weeks. President Barack Obama has touted the more than 4 million jobs created since the 2009 economic nadir, while Repub lican challenger Mitt Romney has said pointed out that job creation has been slow and well behind the pace of previous recoveries. Friday's report comes a month after the Labor Department reported a drop in the unemployment rate below 8% that virtually no economists saw coming. There were 114,000 new jobs initially reported in September, but that number was revised up to 148,000 Friday. The September rate drop prompted criticism and charges that the government was manipulating the data to boost Obama's election fortunes.

Olick - homeowners to save on deductibles

"The fact that Hurricane Sandy was downgraded to a 'Post-Tropical Cyclone' before it made landfall on the East Coast will save homeowners potentially thousands of dollars in home insurance deductibles. New Jersey’s Department of Banking and Insurance Acting Commissioner Ken Kobylowski communicated that to the insurance industry Tuesday night and New York’s Governor Andrew Cuomo announced the same Thursday morning. 'Homeowners should not have to pay hurricane deductibles for damage caused by the storm and insurers should understand the Department of Financial Services will be monitoring how claims are handled,' Governor Cuomo said in a release. How is a hurricane deductible different from your basic homeowner policy deductible? It is based on a percentage of your property’s insured value, and it can be up to 5%. So let’s say your home is insured for $300,000. That’s a $15,000 deductible, which is likely far higher than your regula r deductible. The average homeowner deductible is between $500 and $1000. 'We have informed the insurance industry that hurricane deductibles are not triggered because Sandy did not have sustained hurricane-force winds when it made land in New York,' noted NY’s Superintendent of Financial Services Benjamin Lawsky in the release. 'We will be working with insurers to help them respond as quickly as possible to homeowners who need to file claims. And we will be sending our mobile command center to hard hit areas to help consumers with insurance questions and problems.' There is very specific language in homeowner insurance policies in terms of hurricane deductibles. Usually the storm has to reach specific wind speeds to trigger the deductible. A state governor couldn’t necessarily override that private contract. 'The way the insurers look at it is that this is a private contract between the insurer and the policy holder, and the policy as written is going to be enfo rced,' noted Michael Barry of the Insurance Information Institute. 'In this case Sandy does not appear to have reached the threshold to activate the hurricane deductible.' The insurance companies probably didn’t need Governor Cuomo’s directive as such, since they were already doing their own assessments immediately following the storm. 'We have done a review of the best available National Weather Service data and compared that to our language, and we have determined that the hurricane deductible will not apply in those states,' said State Farm spokesman Phil Supple. As for how much the difference in the deductibles will cost the nation’s insurance companies, that is impossible to calculate at this point, as the companies are still waiting to get in to the hardest hit areas and tally the damage. It is also, as Supple added, 'moot' to do any figuring, as they higher deductible clearly doesn’t apply.