The 2010 Florida Legislature adjourned in May, but not before taking action on a bevy of real-estate related issues supported by Florida’s Realtors. Most of the bills were approved by Gov. Christ:

• HB 109 — legislates a current Florida Department of Revenue practice of basing documentary stamp taxes on the sale price of a property and not on the amount of its outstanding mortgage balance. This issue was brought about by the wave of short sales that is currently pummeling Florida’s housing market. Approved.

• HB 303 — requires state oversight of the companies that administer networks of independent appraisers to fulfill appraisal assignments on behalf of lenders. The bill requires registration with the Department of Business and Professional Regulation and establishes application requirements, registration qualifications (including background checks) and disciplinary action standards. The bill also allows the Florida Real Estate Appraisal Board to adopt rules to institute requirements for the protection of appraisers’ signatures. Approved.

• HB 545 — repeals a disclosure requirement that, beginning in 2011, would have forced sellers of homes located in windborne debris regions to provide buyers with the building’s hurricane resistance rating and three improvement plan costs. Realtors believed the inspection process was rife with fraud and provided buyers with inaccurate information. Vetoed.

• SB 550 — requires the Department of Health to inspect of Florida’s 2.6 million septic tanks every five years, beginning in 2011. Property owners are responsible for the inspection fee, which cannot exceed $30, and for costs associated with having their tanks emptied prior to inspection. The legislation also creates a grant program for low-income homeowners whose septic tanks need repairs. Approved.

  
  

• HB 965 — requires property adjusters to adjust the assessed value of single-family residential properties affected by tainted drywall. Approved.

• SB 1196 — seeks to reduce the state’s inventory of condos by encouraging investors to purchase blocks of condo unit by: Lowering the cost of condo ownership by repealing the requirement that owners purchase individual unit owner insurance coverage; Removing the requirement for mandatory retrofits of sprinkler systems in condos more than 75-feet high; Requiring lenders to pay more in past-due assessments on foreclosed properties; Allowing associations to deny owners or occupants the use of common areas and recreational amenities when the owner is more than 90 days delinquent in paying financial obligations due to the association; and allowing associations to divert tenant rents to pay for delinquent assessments owed by unit owners. Approved.

• SB 2044 — raises the capital requirements for property insurance companies and reduces fraudulent claims by public adjusters. The bill also allows for rate increases due to inflation and reinsurance costs. Vetoed.
• HB 7179 — allows local governments to loan money to residential and commercial property owners for energy and storm-resistance improvements. The loans would be repaid via non-ad valorem assessments. To ensure buyers don’t pay twice for the improvements, through both higher sales prices and the assessments, sellers participating in the program will have to provide a disclosure at or before contract, informing buyers of the assessment. Approved.

The state budget addresses several issues of importance to real estate, including the allocation of $2 million to continue studying ways to reduce the amount of nitrogen released from conventional septic tank systems and $400,000 to combat and prosecute unlicensed real estate activity.

Historically, most of the successful commercial projects were the best planned. That trend isn't changing.

If you aren't aware of the Orange County Neighborhood Stabilization Program (NSP), now is the time to learn.

The NSP was created by the U.S. Department of Housing and Urban Development to respond to residential foreclosures, and it’s a new source of down-payment assistance. Program participants have a choice of purchasing either one of Orange County’s own rehabilitated homes (Option A) or a foreclosed home located within one of the program’s five targeted areas (Option B). Either way, homebuyers may receive up to $35,000 in assistance with additional funds for closing costs.

Buyers using the NSP can save $87 on their monthly payment. This comparison shows how:

FHA Loan $150,000 with a 3.5% down payment

Rate 5.5% / APR 6.316%

PITI $1,131.57

FHA Loan $130,000 with a Community Second NSP $20,000

Rate 5/5% / APR 6.39%

PITI $1,051.00

In this scenario, the buyer received $20,000 in assistance (another advantage is that the savings may also give the buyer access to homes in a wider price range).

Program participants may buy any NSP Option A home and apply for NSP assistance ($20,000, $30,000 or $35,000) as well as for additional funds to cover closing costs.

Eligibility Requirements

Buyers are not required to be first-time buyers. However, they must complete a homebuyers’ educational class. They also must be approved for a home loan and meet debt-to-income ratios and credit requirements to receive the assistance. The following requirements also apply:

• Home sale price may not exceed $219,000;
• Buyers must contribute 1.75 percent of the contract price;
• Buyers  may not currently own a home (no investors);
• Buyers must meet income requirements;
• Buyers must have a minimum credit score of 620 with satisfactory credit;
• Buyers must have two years of re-established credit after if they have had a bankruptcy, foreclosure and judgment; and
• Buyers must have a legal right to live in the United States permanently.
• Buyers may use conventional, VA and FHA loans.

NSP Option A

Under Option A, foreclosure homes have been purchased by Orange County at a discount, rehabilitated by private companies, inspected by county inspectors and offered for sale. The homes are listed in the local Multiple Listing Service, are on the county’s Web site and are marketed at community events. Buyers are required to have a Realtor to access the homes, negotiate contracts and coordinate inspections. It generally takes 30 to 60 days to complete a transaction on an NSP home.

These homes are hot commodities. They show like builder models, some with granite countertops and others with crown molding. There is also a one-year warranty on the rehabilitation work performed, and best of all, the seller (Orange County) responds promptly to phone calls.  As the program picks up speed and recognition, buyers may experience competition and multiple-offer situations. Buyers should work closely with lenders to provide proof of application, credit verification and debt-to-income ratios to help secure their contract offers for consideration. The program does not require this, but doing it may benefit the buyer if the home receives multiple purchase offers.

NSP Option B

Option B involves the purchase of a foreclosed home with buyers utilizing the NSP down-payment assistance funds. Buyers must meet the eligibility guidelines and buy a home located in one the five target areas (Pine Hills, Meadow Woods, Azalea Park, Holden Heights/Oak Ridge and Union Park).

Tip: Property eligibility can be verified on the Orange County Web site at www.ocfl.net.

A home inspection and termite/WDO (wood destroying organism) report is required, and the appraised value must be at least 1 percent higher than the contract. Homebuyers purchasing a bank-owned home that needs repair may use an FHA 203k home loan, but NSP funds, to address repairs.

Editor's note: Doreen Hargreaves, of Fidelity Mortgage Services, is an affiliate member of the Orlando Regional Realtor Association. This article was produced in partnership with the Orlando Regional Realtor Association.

Given the current economic climate, it’s increasingly difficult to ignore the situation of many investors, owners and financial institutions dealing with distressed or underperforming properties. And commercial real estate experts are quick to note that the climate isn’t expected to change overnight.

So, as an owner of a business, property or other asset, what options do you have for maintaining value and even avoiding foreclosure?

No Prize for Second Place

According to a fourth-quarter 2009 report by CoStar Group Inc., Florida has the second-largest number of distressed commercial properties in the nation. At the time of the report, Florida’s distressed properties included 3,469 office buildings, 3,576 industrial complexes and 715 shopping centers. If you’ve driven around Central Florida recently, you’ve probably noticed the vacancies.

Unfortunately, as more loan notes mature each month, it’s likely that bankruptcies and foreclosures will continue throughout 2010. At times, it may seem as though there isn’t much the average property owner can do. Yet, there is. By educating yourself about the available options, you can put your property in a better position to withstand current market conditions. Whether it is nonperforming (currently in foreclosure) or underperforming (headed toward foreclosure), or you’re lucky enough to have a performing asset, working with a receiver or property manager can greatly increase your chances for long-term success.

Benefits of Receivership

When a property is involved in a legal process, such as entering into bank-owned foreclosure, the court handling the matter often appoints a trustee/receiver. In some cases, the bank might recommend a specific company, instead of a lawyer, to manage the property. Commercial real estate management companies gain receivership to save properties – nonperforming and underperforming – from further distress.

A receiver is a neutral party whose first priority is to act as a financial manager. The receiver fills the critical role of protecting the property and the interests of the parties associated with it. In this role, the receiver collects rent, renews leases and provides monthly financial statements. The receiver’s key role is to secure the rental income and preserve the asset.

In addition to serving as financial manager, the receiver completes a full property assessment to determine whether money is being spent efficiently. When working with a property, one of the first things I do as a receiver is assess operating expenses, an area prone to overspending. Take landscaping, for example. Before the recession hit, many business owners got a quote from only one landscaper, and if it fit into their budget, they signed a contract. A better approach is to bid out all maintenance to a minimum of three companies, to find the most cost-effective resource. Under this scenario, one former client realized a $300,000 saving in annual operating expenses, just by conducting an energy audit.

Proactive Approach to Tenant Retention

Even if you own a performing property, the economy puts you at risk of losing tenants, who may leave for their own financial reasons, including moving to a different property because another landlord has lured them with lower lease rates or incentives. I work with my clients to develop a proactive strategy for successful tenant retention. Here are some of my recommendations:

• Don’t wait for leases to expire. Contact renters six months to one year before their lease ends and offer them a 10 percent discount if they sign a five-year contract. Don’t get stuck on pre-recession pricing levels. It’s smart to lock renters in now at a slightly discounted rate and avoid having to attract new tenants, at possibly a significantly lower price, in six months.

• Market aggressively. If you don’t negotiate lease rates and incentivize your renters, they’ll find someone who will. Make it known that you are offering discounts and added services to drive traffic to your property.

• Sign only approved tenants with a high potential for success. In a tough market, it’s tempting to compromise on tenant quality. However, it’s important to avoid payment issues by making sure all tenants are credit approved.
  

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Turn to the Pros

Without appropriate professional guidance from a commercial real estate expert, a nonperforming or underperforming asset is a liability to property owners, lenders and tenants. Contact a property management firm to develop a strategy for stabilizing your property’s capital and revenue. It’s a smart investment in your financial future.

Bob Owens, co-founder and president/CEO of O,R&L Corp. (www.or-l.com), has more than 22 years of experience in the real estate management and construction industries. Under his leadership, O,R&L Facility Services, with an office in Winter Park, has become an industry leader in facility management, property management and janitorial services for properties and companies.

The Federal Housing Administration mortgage insurance program has seen good days, but even amid some controversy, never better than in today’s market.

According to the 2009 Orlando Regional Realtor Association Profile of Homebuyer and Sellers, more than 50 percent of all buyers of homes in Orlando in 2009 did so with an FHA loan. In addition, 69 percent of first-time buyers used an FHA loan.

“FHA helps provide affordable mortgage financing to homeowners, particularly first-time homebuyers, who are so important in drawing down inventory to help stabilize the current housing market,” comments ORRA Chairman of the Board Kathleen Gallagher McIver of RE/MAX Town & Country Realty. “FHA is a critical part of the American housing fabric.”

At the same time, the FHA program is undergoing scrutiny to assess its fiscal soundness. Some people believe the program is on shaky ground. The nation’s Realtors aren’t among them. By contrast, they believe the program features responsible underwriting and perhaps needs enhancements but not radical reform. “Congress and the administration need to tread lightly before making changes to a program that has a profound impact on economic recovery and serves the nation’s families,” says McIver.

Vicki Cox Golder, of the National Association of Realtors, agrees. “With the collapse of the private mortgage market, the importance of the FHA mortgage insurance program has never been more apparent,” she says, noting that at one point in 2009 nearly 80 percent of all FHA-insured purchasers were first-time homebuyers. “And if you take a closer look at the numbers, you’ll see that program is doing exactly what it was designed to do — make more affordable mortgage financing available to homeowners.”

In 2009, almost 50 percent of nonwhite Hispanic borrowers used FHA insurance or the Department of Veterans Affairs’ loan guaranty for home-purchase loans, and 21 percent used the FHA or VA program to refinance a home loan. In 2008, more than 60 percent of home-purchase loans and about 45 percent of refinance loans to African-American homebuyers were insured or guaranteed by either the FHA or the VA.

The FHA’s decline in reserves is in part a reflection of a projected change in home price values and is not tied to excessive increases in defaults or unsound underwriting practices, NAR officials believe. In citing the recent FHA audit, Golder says: “If FHA makes no changes to the way it does business today, the reserves will actually exceed 2 percent in the next several years. FHA has sufficient reserves.”

FHA cash reserves and capital reserves give the agency combined assets of $30.4 billion, enough to pay all claims over a 30-year period. Most banks are required to hold reserves sufficient to pay only one year of claims.

“Realtors strongly believe that FHA is taking the necessary steps to assure its financial solvency,” says Golder, encouraging the FHA to take steps that will have the least impact on FHA borrowers, who are especially important to the housing and economic recovery.

Not coincidentally, the NAR strongly opposes HR 3706, the FHA Taxpayer Protection Act of 2009, which would increase FHA’s down-payment requirement. The bill would not add anything to FHA reserves, contends Golder, but would put homeownership out of reach for many creditworthy borrowers.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.

President Barack Obama has signed into law an extension and expansion of the $8,000 first-time homebuyer tax credit, but people thinking of buying a home can’t dawdle if they want to claim it. In order to qualify, a transaction must be completed by April 30 of this year.

Among other provisions, the extension adds money for certain move-up buyers; creates one deadline for signing a contract and a later deadline for closing; changes income requirements; and limits a qualifying home’s purchase price to $800,000.

“Extending the homebuyer tax credit and expanding it to reach more homebuyers is the right thing to do,” said 2009 Florida Realtors’ President Cynthia Shelton. “It is critical to maintaining the positive momentum we’ve been experiencing in the housing market and in the overall economy. Extending the homebuyer tax credit into 2010 will help Florida families realize their dream of homeownership, improve our communities and strengthen our economy.”

Studies from economists and housing industry analysts show that the homebuyer tax credit has been working, with home sales increasing and housing inventory declining in recent months, Shelton notes. According to research from the National Association of Realtors, the 2009 homebuyer tax credit has unleashed sales on the lower end of the market and brought into the market up to 400,000 first-time buyers who wouldn’t have bought otherwise. Similarly, in Orlando, sales of existing single-family homes for $250,000 or less accounted for roughly 80 percent of all sales through much of 2009. And sales of existing condos for $50,000 or less alone accounted for nearly half of all condo sales.

Since each home sale generates, on average, about $63,000 in additional economic activity, the 2009 tax credit has contributed approximately $22 billion to the national economy.

“Market activity has certainly picked up; [as of the end of September] we’ve experienced 13 months of increased home sales in Florida,” says John Sebree, vice president of public policy for Florida Realtors. “In addition to bringing new families into the housing market, [the tax credit] has helped stabilize property values. And current owners of Florida properties who will now be eligible for the $6,500 tax credit as [move-up buyers] will also see the added bonus of portability — the ability to take a portion of their Save Our Homes tax savings with them when they move. That is an incredible added incentive.”

While most details of the extension for first-time homebuyers mirror the rules currently in existence, the new law extends the $8,000 tax credit to homes under a sales contract by April 30, with the home purchase under contract completed by June 30. It has been expanded to include a new $6,500 credit for owners of existing homes buying a new principal residence (existing homeowners can claim the $6,500 tax credit if they lived in their principal residence for five consecutive years out of the last eight). And, effective Dec. 1, 2009, income eligibility limits to claim the full credit for both groups of homebuyers were raised to $125,000 for individuals and $225,000 for married couples.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.

Homebuyer Tax Credit At A Glance

* Extends through April 30, 2010, the tax credit for first-time homebuyers — up to $8,000 or up to 10 percent of the purchase price of the home.

* Provides a homebuyer tax credit of up to $6,500 to owners who have been in the same principal residence for five consecutive years during the previous eight years and are moving up to a higher-priced property.

* Increases the income eligibility limits to $125,000 for individuals and $225,000 for joint filers.

* Phases out the credit for individuals with incomes above $125,000 for individuals and joint filers above $225,000 at the same rate as current law (over the next $20,000).

* Limits the credit to purchases of principal residences valued at $800,000 or less.

Florida —Orlando, in particular — attracts international homebuyers that shore up the housing market.

Florida again leads the nation as international homebuyers’ location of choice, with 23 percent of all international buyers in the United States choosing to buy a home for investment or vacation purchases in the state. California follows, with 13 percent of buyers, along with Texas (10.7 percent) and Arizona (7.1 percent).

According to the 2009 NAR “Profile of International Home Buyers in Florida,” prepared for the Florida Association of Realtors, Orlando alone attracted 11 percent of all international buyers, a second-place tie with the Bradenton–Sarasota–Venice region. Miami–Fort Lauderdale–Miami Beach landed the greatest percentage of international buyers, 27 percent.

Western Europeans and, in particular, residents of the United Kingdom love Orlando, with 53 percent of all Western European buyers selecting a property in Orlando and 43 percent of all U.K. buyers doing so.

Study data shows that international customers represent an estimated 30 percent of Florida’s existing-home purchases. Applying that statewide percentage to Orlando’s 2009 year-to-date sales (14,496 as of Aug. 31) translates to 4,349 homes going to international buyers in that period.

“International buyers represent an important sector of the real estate market, as their presence expands the pool of buyers and in turn helps to stabilize pricing,” comments Orlando Regional Realtor Association President Les Simmonds of L.G. Simmonds Real Estate Corp. “In other words, the demand caused by international buyers helps protect Orlando’s real estate values from further decline. International activity has also helped absorb some of the excess inventory that has troubled Orlando in the past few years.”

International buyers’ interest in U.S. real estate overall has declined due to the worldwide recession and severe credit crunch, cites the National Association of Realtors, resulting in a sales decrease of about 9 percent. A significant number of foreign buyers (67 percent) paid cash for their Florida properties, in part because obtaining a mortgage was more difficult than in prior years. The total dollar volume was $38.7 billion.

Foreign buyers, however, recognize U.S. real estate as a desirable, profitable and secure investment, contends Zola Szerencses of RE/MAX 200 Realty and chair of the Orlando Regional International Council. Furthermore, the dollar’s weak position against foreign currencies has made U.S. real estate an even more attractive investment, she notes.

Recent improvements in the credit market will help reverse the slide in foreign buying, Szerencses adds: “Stock market gains and improving bank balance sheets will permit a greater amount of lending for second-home purchases. In addition, expanding foreign economies for international buyers and favorable exchange rates give them more purchasing power, particularly in a period of record-high affordability conditions in the United States. Property investment here generally builds wealth over the long term.”

U.S. laws do not restrict or scrutinize most property purchases by foreign nationals. There are few barriers to owning property here, unlike transactions in many other countries, although immigration laws prohibit foreigners from remaining in the United States continuously for more than six months without a special visa. Also, international investors are afforded the same property rights as those enjoyed by U.S. citizens.

In terms of style, slightly more than half of Florida’s foreign buyers (52 percent) bought a detached single-family home, compared to 78 percent among all buyers nationally. Approximately one-third (34 percent) of foreign buyers in Florida bought a condominium, 7 percent a town house or row house and the remaining 7 percent some other type of home.

Location choices of foreign homebuyers in Florida differ markedly from the patterns reported among all foreign homebuyers nationally. Nearly one-third (31 percent) bought a home in a suburban area, compared to 55 percent nationally. Nearly another third (32 percent) bought a property in a resort area, as compared with only 2 percent nationally. The significant share of resort buyers isn’t surprising, given the large share of vacation homes bought by foreign buyers. Almost three in 10 (28 percent) bought a home in a central city, and fewer than one in 10 bought a property in a small town or rural area.

With home prices down across the state, international buyers were able to buy discounted properties, with 14 percent buying homes for less than $100,000. One-quarter of homes bought by foreign buyers in a 12-month period sold for between $100,000 and $199,999, while a nearly equivalent share (22 percent) were bought for prices ranging from $200,000 to $299,999. One of 20 properties bought by foreign buyers sold for at least $1 million. The median purchase price for all reported home sales in this survey was $250,000.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.

Most Americans still consider accumulating enough money for down-payment and closing costs to be the biggest obstacles to buying a home. That’s according to the 2009 National Housing Pulse Survey, published annually by the National Association of Realtors.

The survey, which measures the way affordable-housing issues affect consumers, also found job security concerns to be the highest in seven years of sampling. Two-thirds of respondents think job layoffs and unemployment are big problems; eight in 10 cite these issues as barriers to homeownership.

“Homeownership is an investment in your future,” says Orlando Regional Realtor Association President Les Simmonds of LG. Simmonds Real Estate Corp. “However, saving for a down payment and closing costs is still too great of an obstacle for 82 percent of the nation’s house hunters looking to take advantage of the current market.”

In Florida, the state’s steps to monetize the $8,000 first-time homebuyer federal tax credit for down-payment or closing costs is an added incentive to spur home sales. And Orlando’s housing market is feeling the effect of those who believe now is a good time to buy: Home sales overall were up 45 percent in July, compared to July 2008. In addition, sales statistics from April 2009 show that Orlando Realtors sold nearly seven times more homes in the lower-price-range categories then in the upper categories, which Simmonds attributes in large part to first-time homebuyers taking advantage of the $8,000 federal tax credit.

Despite the challenges with the economy and housing market, according to the survey, 83 percent of Americans still believe buying a home is a good financial decision. Three-fourths of those surveyed also believe now is a good time to buy a home, a number that has increased steadily the past two years. In fact, one-third of renters are thinking more about buying a home than they were a year ago.

While Americans are seeing more stability in the real estate market, uncertainty persists. The number of those who feel buying and selling activity has stabilized or stayed nearly the same has increased significantly, from 18 percent last year to 26 percent this year. Yet, the majority (58 percent) report that activity in their market has slowed.

Regarding home sales, nearly eight in 10 respondents say it’s harder to sell a home in their area today than it was a year ago, though nearly three-fourths of them say home prices are lower. Large home inventories could be to blame; 44 percent cite concerns about the large number of homes and condos for sale in their area.

While nearly three-fourths of respondents in the study are concerned about the local drop in home values, they expect to see more stability in the near future. Nearly seven in 10 anticipate local home prices to remain about the same in the “next three months”; only 18 percent expect prices to further decrease. The drop in prices has improved affordability, and consequently, concerns about the lack of affordable housing are the lowest they’ve been in seven years of polling — 34 percent say it’s one of their biggest worries, down from 41 percent two years ago.

Foreclosures remain a real concern among survey respondents. Slightly more than half (51 percent) say the high number of foreclosures is a big to moderate problem in their area. However, the rate of foreclosures is generally seen as stabilizing; 41 percent say the rate of foreclosures in their area is about the same as last year.

Ninety-two percent of respondents said neither they nor members of their immediate family have experienced a foreclosure in the past year, although it is still a personal concern for many. One in five respondents said they are very or fairly worried that they will have difficulty making their mortgage payments over the next year. Thirty-two percent say it’s a big or moderate worry that they, or a member of their family, may have their home repossessed or foreclosed because of inability to make rising monthly mortgage payments.

In 2008, more than half of respondents (54 percent) were open to the federal government’s taking a more active role in overseeing mortgage and lending practices. The number dropped this year to 47 percent. This could be because 42 percent of Americans believe the country is back on the right track, more than double the number last year (16 percent).

Regarding financing, seven in 10 Americans cite a lack of confidence in their ability to be approved for a home loan as an obstacle to homeownership. The same number also say that banks are making it too difficult to qualify for a loan (71 percent) and that the reduction in mortgage options offered by banks has made it more difficult for them to buy a home (71 percent). The perception of qualifying for a loan as a huge obstacle is especially high among minorities.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.

Orlando’s current housing market is ripe with available affordable homes. The area’s affordability index has hovered near the 200 percent mark for months.

An affordability index of 99 means that buyers earning the state-reported median income are 1 percentage point short of earning the income necessary to buy a median-priced home. Conversely, an affordability index greater than 100 means that median-income earners make more than is necessary to buy a median-priced home. Buyers who earn the reported median income of $52,421 can qualify to buy one of 9,318 homes in Orange and Seminole counties currently listed in the local Multiple Listing Service for $238,757 or less.

As of June, first-time homebuyer affordability, while slightly lower than previously to accommodate lower median income levels, was nevertheless also at a record level (130.60 percent). At that time, first-time buyers who earned the reported median income of $35,646 could qualify to buy one of 5,462 homes in Orange and Seminole counties listed in the local MLS for $144,316 or less.

For first-time homebuyers, the Florida Homebuyer Opportunity Program can turn a tax rebate tomorrow into a down payment today.

Most first-time homebuyers qualify for the $8,000 first-time homebuyer tax credit, established through the American Recovery and Reinvestment Act of 2009 as an income tax rebate regardless of tax owed. To qualify, they must first buy a home, submit the information to the IRS through their tax return and wait for the $8,000 rebate.

Yet now, to help Florida’s first-time homebuyers secure money early enough in the home-purchase process to use it as a down payment, the state of Florida has created assistance: the Florida Homebuyer Opportunity Program.

The program provides state-funded bridge loans for first-time homebuyers to use for a down payment and then repay after the new homeowners receive their federal tax credit. 

“Homeownership is an investment in the future. However, saving for a down payment and closing costs is still too great of an obstacle for 82 percent of house hunters looking to take advantage of the current market,” says Orlando Regional Realtor Association President Les Simmonds, of L.G. Simmonds Real Estate Corp., referencing a recently released study by the National Association of Realtors.

“Monetizing the $8,000 first-time buyer tax credit for down payment or closing costs on the state level and on FHA-insured mortgages on the federal level are positive first steps.”

The Florida Legislature created FLHOP during the 2009 legislative session, and it is part of the 2010 budget.

Florida’s down payment loan program can work with Federal Housing Administration loans. Under a different federal program, the FHA has done something similar, yet with a significant difference: The federal program applies to FHA loans only, and buyers must still come up with a minimum down payment of 3.5 percent. The Florida Housing Finance Corp. — the state agency that funnels housing money to local housing agencies — has received confirmation from FHA that borrowers who access the $8,000 tax credit through a state or local government program may use it to make up the required 3.5 percent down payment, unlike the FHA down payment loan program through private lenders.

Florida’s local housing administrators oversee the down payment funds at the local level and should be prospective homebuyers’ first point of contact. For local housing authorities, the program is similar to the State Housing Initiatives Partnership program, with one major difference: income limits. Currently, SHIP uses area median income, which is typically lower and calculated differently than the federal tax credit limit of $75,000. The $75,000 for a single income tax filer ($150,000 for joint filers) will be used for FLHOP.

Local housing authorities have started taking applications, and local administrators have been trained on procedures for the FLHOP down payment program. In addition, local housing authorities have flexibility in administering the $8,000 loan, are able to include penalties and may create a structure dictating the way the new homebuyer will repay the money.

While the money is a bridge loan to buyers, once it’s repaid, local governments and housing authorities may keep the money and use it locally for affordable housing projects.

Editor’s note: This article was produced in partnership with the Orlando Regional Realtor Association.