Jason Donn

BANK OWNED 2 BEDROOMS 2 BATHS CONDO IN PINE ISLAND RIDGE. LARGE LIVING ROOM, TILE ALL THROUGH. COUNTRY CLUB MEMBERSHIP INCLUDED IN MONTHLY MAINTENANCE. GULF, TENNIS, 2 RESTAURANTS, & EXERCISE ROOM. CONVENIENT TO COLLEGES, MALL, HIGHWAYS, & AIRPORT.

By Siobhan Morrissey/Miami

CNNTime

If Gov. Charlie Crist has his way, Floridians in foreclosure will be in their homes for the holidays. Crist is readying a proposed moratorium on foreclosures through the holidays and into next year.

"His main purpose is to make sure Floridians can remain in their houses," the governor's spokesman, Sterling Ivey, told=2 0TIME. "He's talking about Floridians who are working and trying to make ends meet every day. Not those who bought five homes during the housing bubble." (Read Will E-Retailers Have a Letdown?.)

Details of the plan are sketchy, but Ivey says the Governor favors the approach taken by California Gov. Arnold Schwarzenegger - a proposed 90-day freeze that could conceivably give struggling homeowners the ability to renegotiate their loans to more favorable terms. However, the California plan, as envisioned by Schwarzenegger, would require banks to put in place a 90-day moratorium, while Crist is said to angling for voluntary participation by banks (California's legislature has yet to approve Governor Schwarzenegger's plan.) It remains unclear whether Crist will seek or even needs legislative approval for his plan, especially if the banks agree to the moratorium on their own. According to Ivey, Crist could make an announcement on his foreclosure plan as early as this week.

The help comes none too soon, as the Florida housing market, particularly in the tri-county area of Miami-Dade, Broward and Palm Beach counties, founders under the weight of tens of thousands of foreclosures. And the problem is only getting worse. (Read Exclusive Mutual Funds Reopen for Business.)

One indicator of the severity of the crisis is the number of homes ending up in the hands of banks, which really don't want to be in the real estate business. These properties are known as "real estate owned" or REOs, which is typically a house or condo that gets repossessed by the lender, usually after failing to sell at a foreclosure auction.

The number of REOs is skyrocketing. The first three quarters of 2008 show a spike of 190% in REOs in the South Florida tri-county area, according the real estate consultancy firm, Condo Vultures of Bal Harbour. The number of Miami-Dade properties turned over to lenders by the courts so far this year is 8,656. That's up 188% from last year's total of 3,009 during the first three quarters. Similar spikes occurred in Broward County, with a 215% hike, from 2,339 to 7,370. Palm Beach County saw an increase of 145%, jumping from 1,197 to 2,934.

Still, those numbers are just a portion of the overall foreclosures in South Florida. Peter Zalewski, founder of Condo Vultures, projects that nearly 75,000 properties in the tri-county area will slip into foreclosure this year, up from 33,154 last year.

"Foreclosures more than doubled in '08 compared to '07, year over year," Zalewski says. Creeping unemployment, tight credit and property devaluation, where the home is worth less than the amount owed on the mortgage, all tend to indicate the problem will only get worse. "Short of a government intervention, I would envision that we continue to grow higher and higher and higher," he predicts. "I wouldn't be surprised if we approached 100,000 [foreclosures"] in 2009, short of government intervention."

The governors are stepping up to ease the problem before it gets too far out of hand, Zalewski says. "That's why you're seeing the Charlie Crists of the world and the Arnold Schwarzeneggers of the world try to take steps to impose moratoriums on foreclosures, because the problem is so overwhelming," he says, adding that a 90-day moratorium should provide homeowners with the chance to refinance their loans and will dovetail with the incoming Obama administration, which holds out hope of providing financial relief to Main Street USA. (Read Four Steps to Ending the Foreclosure Crisis).

The moratorium ultimately may help the banks, particularly if it decreases the number of REOs they must contend with. By staving off foreclosures the banks also benefit when it comes to condos because in Florida the lender has to settle up condo fees for the past six months when they take a property into receivership.

The Schwarzenegger plan would give banks and mortgage servicing companies an out. If they don't want to wait the 90 days, they could agree to temporary interest-rate cuts to reduce the homeowner's monthly payments to an affordable amount. The idea is to make it possible for homeowners to pay their mortgages rather than writing off their debt as bad loans.

About the only bright spot with the current housing crisis is that the median cost for housing is dropping. The Greater Fort Lauderdale area shows a drop in its median condo prices, from $160,000 last year to $115,000 today, according to the Realtor Association of Greater Fort Lauderdale. That's good for those who have money in their pockets or access to credit. While homes in the area may be more affordable, some potential buyers are having trouble coming up with the money to purchase them. But for now, Florida's governor would be happy to help homeowners find a way to afford what they've already bought.

By Sule Aygoren Carranza

GlobeSt.com

FT. LAUDERDALE, FL-Like many firms these days, Adache Real Estate has decided to capitalize on the current downswing in the residential market, creating a bulk sales division to focus on opportunistic plays. The locally based sales and marketing firm's new division will help to identify opportunities and help investors seeking deeply discounted bulk purchases ranging of five to 500 units throughout the tri-county area--Broward, Miami Beach and Miami-Dade counties.

The venture was a response to market conditions and a natural progression of the firm's business, relates the company's president, Adam Adache. Over the past year, various buying groups have approached the company with interest in bulk sales, given its experience in the sector. "In the past, we've worked with a number of different developers in the South Florida area," says Adache. "Part of our company handled pre-construction sales, and when the market was hot, we had over 400 projects on our website. We were in close contact with many of the developers down here, and sold a lot of units for them. Now the market has changed significantly, and we still have 200 projects on our website. We know about all the projects, and we know everyone's in trouble. So with these groups asking about these kinds of deals, we kind of stumbled into it."

Because handling bulk sales is time-consuming and complicated, Adache decided to create a dedicated division as the firm's work in that arena grew. The buyers range from small groups of wealthy individuals looking for five to 10 units, to large players such as institutions seeking 30 to 100 units--as well as a number of foreign investors. "It's a vulture market, and now is a great opportunity for people with money," says Adache.

The buyers generally do all-cash transactions, or put a large chunk of equity into the deal. They appear to have three main strategies. Some players want to buy based on a cap rate; they want to buy a property at a decent enough price where they can actually profit as a rental operation. "For that to work, in most cases, you'd have to get a discount of over 60% on most of the properties here," explains Adache. "There are banks out there that are willing to play ball and consider any price at this time."

Other buyers want to flip the property when the market picks back up in three to five years. They'd accept a low cap rate, says the executive, as long as it still covers the carrying costs and expenses of the property. And other groups want to begin selling off the units immediately. To do that, they'd need to buy very low in order to reduce the unit prices to make them attractive to individual buyers.

Ultimately, though, the bank holding the lien on the property needs to get involved. "The bank has to discount its loan in order to sell the product cheaper, and if that happens, then the developer is no longer making money," explains Adache. "The developers are still in the game, for the most part, because they're trying to save face. They're doing whatever they can to work with the banks and sell the units so they don't go into default on their terms and, frankly, get sued by the banks. So even though we talk to a lot of developers, it's usually not just the developer that's involved, but the banks as well."

The banks' adjustments are necessary for most bulk sales to happen. Because the developers can only reduce their prices so much, the banks need to discount the loan, too, so the deal is attractive to buyers. "Even before a property is foreclosed upon, we are in many cases talking with both the developer and the bank to try to figure out if we can sell it at an attractive price prior to the bank going through all their processes," relates Adache. "In many cases, we're also dealing with banks that have already foreclosed on properties. Banks are increasingly foreclosing on properties; some of them are more aggressive than others right now."

When it's a developer that's selling off the units, they can usually be divided if buyers want smaller blocks. Banks, on the other hand, typically prefer to sell entire packages. "Some banks are more desperate than others--some may be in trouble because they got involved in a lot of condo deals," he says. But once the bank writes off these properties as bad debt, it's already taken its losses. So the sale may not be profitable, it's better than nothing because they've already taken the loss."

Adache relates that while the demand for bulk sales is growing, he hasn't seen too many firms focusing on brokering these deals yet, most likely because it is such a time-intensive and costly process. But it will take another couple of years for the market to turn around, he says, and there will be plenty opportunities to get into the business, in any fashion.

"This is definitely a market where one man's misfortune creates another man's fortune," says Adache. "We have a list of approximately 20 projects we're working with and 99% of them are really in trouble. And if they're not foreclosed upon now, they will be. The market is going to get worse in 2009, as the banks hold onto these properties longer, they'll starting considering giving bigger discounts. There are thousands of units just in the tri-county region alone. [The market] is cyclical and we're in a bad time, but there are definitely opportunities out there."

Even the developers that may not profit on the deals should take notice, he adds. They may be on the losing end, but it's worth their while to unload their units in order to move forward in their business. "I think it's going to get worse before it gets better, and a lot of developers, just like individuals, have wishful thinking these days--hoping that next month's going to be better," Adache says. "Sometimes you can bury yourself even more by doing that. The market is going to be bad for a while, and they--as well as banks--should seriously consider accepting some of the offers that they think may be too low, because they might be lower six months from now when all these units come to market."

Buying a South Florida home is in vogue again as prices continue to crater. So who's snagging all these bargains?

First-time buyers are stepping forward, overjoyed at the idea of finally being able to afford places of their own. Retirees paying all cash also are getting into the game, yanking their money out of the volatile stock market and putting it back into real estate.

Even investors are returning to the closing table. They're not flipping properties for quick profits anymore. Instead, they plan to live in the homes or rent them out, at least until the market recovers.

Joe Galinskie is due to close any day on a condo in Boca Raton Click here for restaurant inspection reports, but he's not stopping there. He wants to buy a dozen properties over the next year or so, with plans to rent them.

"This is the first time in [a while] that you can buy something and have it pay for itself," said Galinskie, 35, a stock trader who lives west of Boca Raton. "I'm looking towards the appreciation long-term."

A typical used home in Broward and Palm Beach counties now sells for less than $295,000, a price not seen here since spring 2004, according to the most recent data from the Florida Association of Realtors. Distressed properties fetch far less than that as desperate sellers and lenders slash prices to make quick sales.

Many existing condominium units, meanwhile, are going for under $140,000, nearly 40 percent less than two years ago. Age-restricted communities such as Kings Point and Century Village are seeing growing interest in one-bedroom condos selling for less than $50,000, real estate agents say.

It's no wonder that once-skittish buyers are jumping back into the housing market, creating a sales surge for the first time in four years.

"People are starting to say, 'Wow. How much lower can prices really go?'" said Brad Hunter, a housing analyst in West Palm Beach. "It's pretty clear right now that people have a buy-and-hold strategy."

In July, August and September, sales of existing homes rose each month by as much as 52 percent in Broward and 11 percent in Palm Beach County from a year ago, the Realtors group said. Condo sales also have been brisk over the same period.

Properties in the $100,000 to $250,000 range appear to be the most popular among buyers, agents say.

Despite the recent sales rise, South Florida's housing market is expected to remain soft into 2009 because of the slow economy and the large supply of homes for sale that will continue to drive down prices.

Analysts wonder whether the recent sales euphoria will continue much longer.

Credit started tightening during the summer of 2007, but lenders have become even more conservative after the financial implosion on Wall Street in September and October. Florida's rising unemployment also is a major concern for prospective home buyers.

On Monday, the state Realtors association will release October's existing home sales and prices, which reflect deals that were agreed to over the summer, before the financial meltdown.

Some agents are worried the November and December figures could plunge.

"Those could be really scary," said John Mike, past president of the Realtors Association of the Palm Beaches. "People are nervous to make a move because they're concerned that their job is not going to be there."

Rebecca DiLenge's only concern was in not buying.

She and two roommates were renting an apartment in Pembroke Pines for $1,700 a month. But with home prices falling, DiLenge figured she could buy a home for as much as she was paying in rent.

Like other young professionals looking to buy their first homes, DiLenge scoured the market for foreclosures. Most of the properties were in poor condition, but she was drawn to a two-bedroom condo in Weston listed for $165,000. She got it for $129,000.

By Paul Owers | South Florida Sun-Sentinel