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Tuesday, September 16, 2008

DAILY BRIEFING Tuesday, September 16, 2008

BANKRUPTCY

The bankruptcy of mega-financial company Lehman Brothers will impact areas of Florida that relied on the company for funding of commercial projects. However, the move could lead to some condo deals as the courts liquidate Lehman Brothers assets.

AMENDMENT 5

Florida's Supreme Court justices, in a 15-page unanimous opinion, explained their decision to remove Amendment 5 from the November ballot. They said that voters would be misled by a claim that local school property taxes would be replaced with an "equivalent" amount of state funds when that guaranteed replacement is only good for the first year.

REAL ESTATE FRAUD

Florida, now saddled with the nation's highest level of mortgage fraud, once had a program to reimburse people scammed by rogue mortgage brokers. But the program ended a decade ago, making the state one of only three in the U.S. that doesn't help homeowners hurt by mortgage fraud.

COMMERCIAL

The capital markets crunch has hit Main Street, leaving many entrepreneurs in the lurch. It's tough finding a bank that will finance a project, and common to have approved loans cancelled before a scheduled closing.

FANNIE MAE AND FREDDIE MAC

The Federal Housing Finance Agency notified former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron that they would not be receiving up to $24 million in exit packages.

COLD HARD CASH

Florida real estate companies say they're seeing more buyers use cash to obtain a home, rather than rely on mortgages. For example, NRT says cash transactions have risen from 25 percent of home sales in August 2007 to nearly 40 percent last month; and Michael Saunders & Co. says cash transactions have risen from 38.5 percent between January and August 2007, to 54.5 percent during the same period this year. Mortgage bankers have tightened their lending standards during the credit crisis, making it more difficult for consumers to borrow money. "To get a loan these days you have to have really excellent credit, a minimum 700 FICO score; some even want 720 or 740," says Jack McCabe, a real estate analyst in Deerfield Beach, who adds that these players "are able to command the best prices. When you have a cash buyer sitting across from you saying you don't have to worry about anything, this deal will close right away."

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