A Simplistic Housing Crisis Remedy

Foreclosures weigh heavy on our lagging economy making real estate's immediate future unclear. Palm Beach and South Florida homes have been substantially affected by the amount of foreclosures on the market, prices have dropped and so has consumer confidence. With no clear future in sight what should those who can help do to ensure a better future for the real estate market?

Many plans have been considered with varying levels of commitment and complexity from Federal Government subsidies to the creation of a department that monitors credit lending. The method they are employing immediately is a simpler form than most but has proved effective nonetheless. The Federal Housing Association (FHA) is the government body poised on recovering the real estate market. FHA has formed FHASecure which allows borrowers the opportunity to refinance their loan into a more feasible payment plan.

There were many poor lending practices that led to the current foreclosure fiasco. The one type of loan in particular that stands out is subprime mortgage lending. Though this type of mortgage only makes up ten percent of mortgages in the U.S., it’s done enough damage to nearly bring real estate transactions to a halt. Rates have gone up after a sharp rise in defaults and foreclosures, causing serious disincentives for potential consumers in the housing market.

The FHASecure initiative that has been put forward by the federal government provides help for distressed homeowners by allowing them to refinance into payments that are more realistic. This will hopefully prevent foreclosures from driving down the price of homes across the nation. The FHA has already assisted 150,000 homeowners with this service and hopes to bring stability to the market by further assisting those that would otherwise default or foreclose on their property.

The FHA has been criticized for not having enough funds and resources to handle the expansive foreclosure problem in the real estate market. Their progress in the next couple months will either silence the critics or bring more attention to their criticisms.

Foreclosed Hearst Mansion Sells at Auction for $22 Million

One of the country’s most expensive residences, the Hearst mansion, sold at a foreclosure auction on Monday for a bid of $22 million from New Stream Capital. According to the attorney representing Veronica Hearst, the property will go back on the market so the creditor can recoup its investment.

The 20,000 square foot home was designed by Maurice Fatio and bought by Randolph Hearst in mid-2000 for $29.87 million, at that time the highest sale price on record in the state. Hearst passed away six months later, leaving his widow Veronica without the means to maintain the property.

Veronica Hearst borrowed millions against the home’s value to pay for property taxes and renovations. She sold 150 feet on the property’s south end for $6.2 million, explaining that potential buyers were uncomfortable with the considerable size of the home. She stated that, with an older property – the home was built in 1929 – you can either destroy it or refurbish it, and her decision as the owner was to refurbish it.

However, to some, any change to the historic home is unacceptable. According to one source, the daughter of the architect who designed the home says that any variation from the original design is wrong.

The home is located at 1100 S. Ocean Blvd. in Manalapan, which does not have a preservation board that may have been able to block Hearst’s decision to split the lot if it had been designated a landmark.