Recent update to:
U.S. Senate flood insurance rate hikes, additional
news and information below.

Dear Richard,

I have another update on the progress of flood insurance legislation for you.

President Barack Obama signed into law a bipartisan bill that will delay flood insurance rate
hikes for property owners nationwide.

The Homeowner Flood Insurance Affordability Act repeals the Federal Emergency
Management Agency’s authority to increase premium rates when a property is sold. It also
refunds the excessive premium to those who bought a property before FEMA warned them of
the rate increase. The bill limits premium increases to 18 percent annually on newer
properties and 25 percent for some older ones. The senate approved the bill on March 13,
and the House of Representatives March 4.

“Today, many months of hard work, negotiation and bipartisan compromise have culminated
in a law that will end skyrocketing flood insurance costs for hundreds of thousands of home
owners,” says U.S. Rep. Maxine Waters, D-Calif. “Though the measure isn’t perfect, it
ensures there will be no more dramatic rate increases for families currently facing
unaffordable premiums.”

The rate hikes were part of the 2012 Biggert-Waters law, which had set out to
phase out flood insurance subsidies in an effort to shore up finances for the National Flood
Insurance Program, which stands about $24 billion in debt, mainly due to catastrophic storms
like Hurricane Katrina in 2005. As a result of the phase-out, some home owners who were not
required to pay the full actuarial cost of their insurance were being faced with tens of
thousands of dollars a year in flood insurance hikes.

“As the leading advocate for home and property owners, NAR applauds this bill for the relief
and protection it will bring to businesses and families nationwide, who are experiencing
financial hardship because of the extreme and sudden premium increases,” NAR President
Steve Brown had said after the Senate had approved the bill. “We believe this legislation will
bring relief to property owners by ensuring a slow and steady phase in of risk-based


David B. Bennett, CAE
President & CEO
Pinellas REALTOR® Organization
Richard (Dick) Clifford
(727) 735-2587
Licensed Broker Associate with Charles Rutenberg Realty, Inc
Charles Rutenberg Realty Clearwater Office
1545 Belcher Road
Clearwater, FL 33764
NAR: Feb. pending home sales continue slide

WASHINGTON – March 27, 2014 – Pending home sales in the U.S. declined for the eighth
straight month in February, according to the National Association of Realtors® (NAR).
Modest increases in the Midwest and West were offset by declines in the Northeast and
South; all regions are below a year ago.

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract
signings, dipped 0.8 percent to 93.9 from a downwardly revised 94.7 in January, and it’s
10.5 percent below February 2013 when it was 104.9. The February reading was the lowest
since October 2011, when it was 92.2.

“Contract signings for the past three months have been little changed, implying the market
appears to be stabilizing,” says Lawrence Yun, NAR chief economist. “Moreover, buyer
traffic information from our monthly Realtor survey shows a modest turnaround, and some
weather delayed transactions should close in the spring.”

The PHSI in the Northeast declined 2.4 percent to 77.1 in February, and it's 7.4 percent
below a year ago. In the Midwest, the index rose 2.8 percent to 95.3 in February, but it’s 8.5
percent lower than February 2013.

Pending home sales in the South fell 4.0 percent to an index of 106.3 in February – 9.3
percent below a year ago. The index in the West increased 2.3 percent in February to 86.1,
but it’s 16.5 percent below February 2013.

Total existing-home sales are forecast to hit 5.0 million this year, just below the nearly 5.1
million in 2013. Housing starts are projected to rise almost 19 percent and reach about 1.1
million, which is closer to the underlying demand of 1.5 million.

The gain in new home construction will reduce some of the pressure on home prices, with
the national median existing-home price expected to rise in the range of 5.5 to 6 percent this
year, compared with an 11.5 percent jump in 2013.

© 2014 Florida Realtors®
_________________________________________________________________________ Top 10 markets for first-time buyers

March 27, 2014 – today released its list of “Top 10 Markets for First-Time Home
Buyers” this spring and summer, and it includes three Florida cities.

Markets that made the 2014 list by rank include: Pittsburgh, Tampa-St. Petersburg-
Clearwater, Philadelphia, Fort Worth-Arlington, Orlando, Jacksonville, Dallas, Raleigh-
Durham-Chapel Hill and Phoenix-Mesa.

“As we head into homebuying season, these markets show favorable conditions for first-time
buyers, which is encouraging because these buyers are crucial to the housing market,” says
Steve Berkowitz, CEO of Move, Inc. operator of “First-time buyers have a
widespread impact on the local housing markets. In transitioning from renters to owners, new
buyers pay property taxes and other fees and taxes associated with homeownership that
benefits local schools and services.”

In the report, looked at five key factors – market popularity, prices, inventory,
time on market and employment – to determine which markets are currently the best for new
buyers. To determine ranking, it studied key housing indicators: search rank, median list
price, year-over-year change in inventory, median age of inventory and unemployment rates
against the needs and desires of the typical first-time homebuyer. Metrics were pulled from February 2014 data and the U.S. Bureau of Labor Statistics.

© 2014 Florida Realtors®
More Real Estate News below
Report: Pre-foreclosure inspections fraudulent?

WASHINGTON – March 27, 2014 – An investigation into the pre-foreclosure inspections
conducted by mortgage giants Fannie Mae and Freddie Mac revealed several errors –
including reports that possibly included fraudulent data – and raised “serious quality control
issues,” according to a new report from the Office of Inspector General for the Federal
Housing Finance Agency (FHFA).

The report alleges that Fannie Mae and Freddie Mac did “not have quality controls in place
to obtain reasonable assurance that pre-foreclosure property inspection information is
accurate, consistent and complete.”

The government-sponsored enterprises paid more than $91.2 million in pre-foreclosure
property inspections in 2011 and 2012.

The report alleges that the property inspection reports contained inaccurate information as
well as missing, manipulated and blurry photographs. The report also accuses servicers of
failing to have oversight procedures to evaluate vendors’ property inspection performance or
validate the accuracy of the inspection reports. The Office of Inspector General report also
says that the reports often did not even include the names or signatures of the people who
conducted the inspections.

The Office of Inspector General report provided examples of offenses, including an
allegation that one inspector’s report appeared to be just a copy of information from a
previous report.

“There has been little attention provided to pre-foreclosure property inspections by both
FHFA and [Fannie Mae and Freddie Mac],” according to the report. “Specifically, FHFA has
not issued guidance to [Fannie Mae and Freddie Mac] related to the quality of pre-
foreclosure property inspections, and the agency has not conducted any targeted
examinations of the [GSEs’] pre-foreclosure property inspection processes.”

OIG has advised the FHFA to direct Fannie and Freddie to assess the effectiveness of their
pre-foreclosure property inspection processes and called on the agencies to establish
uniform pre-foreclosure inspection quality standards and quality control processes for

Source: “Report: Fannie, Freddie Foreclosure Inspectors Did Terrible Job,” HousingWire
(March 25, 2014)

© Copyright 2014 INFORMATION, INC. Bethesda, MD (301) 215-4688
FEMA outlines next steps for flood insurance law

WASHINGTON – March 27, 2014 – In testimony before a U.S. House subcommittee, Federal
Emergency Management Administration (FEMA) Administrator Craig Fugate talked about the
timing of implementation. He suggested that homeowners and buyers be patient – it may take
awhile for the law’s mandates to filter down to insurance agents.

President Obama signed the flood insurance law on Friday, but FEMA has up to eight
months to develop guidance for insurance companies, according to Lisa Jones, a consultant
hired by the National Association of Realtors® (NAR) to navigate the complicated law. And
after FEMA solidifies the new rules, insurers have up to six months to retool their software.

Rep. Steven Palazzo, vice chairman of the House Subcommittee on Emergency
Preparedness, Response, and Communications, asked Fugate at a hearing yesterday if
there was a way to fast-track the process.

According to Fugate, the first step is to explain the grandfathering clause – where a
homebuyer pays the same rate as a home seller in areas where FEMA subsidizes some flood
insurance rates – to insurance agents in the field because “It’s going to take time to get that
out there to every agent and get that into the system.”

Fugate says buyers, at least in the short term, may have to work with both their insurance
agent and FEMA to get the correct flood insurance rate. FEMA “may need to handle some of
the immediate (flood insurance rate requests) – literally, hand-walk it through the process
until the system is fully up and running with the new changes,” he testified.

Fugate pointed to one part of the new law that would take time to calculate: A mandate that
no single premium exceed 18 percent, and “we’re looking at the timeframes you gave us to
do refunds” for homeowners who already paid a higher flood insurance premium.

Fugate said the new mandatory caps will also impact all calculations for rate increases, and it
will take FEMA time to do that, followed by software changes to programs that insurers use to
quote rates to homeowners.

Fugate's testimony is available by clicking on the arrow:

Higher deductibles:

In a flood insurance presentation earlier today, Jones told a group of Realtors that a little-
noted provision of the new law could help drive down flood insurance costs over the long
term: An option for homeowners to increase their deductible.

The new law allows deductibles as high as $10,000 for residential properties, which could
drive the down the overall cost of flood insurance. The law also waives the mandatory
purchase of flood insurance for detached structures.

Under the law, insurers must tell homeowners seeking or renewing flood insurance about the
higher deductibles, along with the consequences should they choose a higher option.
However, that change could also take time before it trickles down to homeowners and buyers.

© 2014 Florida Realtors®
BofA to spend $9.33 billion in FHFA settlement

WASHINGTON – March 27, 2014 – Bank of America will spend $9.33 billion to resolve a
dispute over mortgage securities with the Federal Housing Finance Agency (FHFA), the
regulator that oversees Fannie Mae and Freddie Mac.

The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to
Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind
the securities. These soured after the housing bubble burst and lost billions in value.

Bank of America said that it will make cash payments of roughly $6.3 billion and also
purchase securities from Fannie and Freddie worth more than $3 billion. It is one of several
banks to settle with the FHFA, which announced the agreement Wednesday.

Fannie and Freddie don’t directly make loans to borrowers. They buy mortgages from
lenders, package them as bonds, guarantee them against default and sell them to investors.
That helps make loans available and gives Fannie and Freddie a huge role in the housing
market. They own or guarantee about half of all U.S. mortgages.

The two were rescued in a taxpayer bailout in 2008 as they sank under the weight of
mortgage losses.

Separately, New York’s attorney general announced that Bank of America and its former
chief executive Kenneth Lewis reached a $25 million settlement to end an investigation into
their actions in the 2008 acquisition of Merrill Lynch & Co.

The civil fraud lawsuit accused them of failing to disclose Merrill losses and bonuses before
the deal closed. The settlement requires the bank to pay $15 million and continue certain
corporate governance reforms. Lewis, now 67, is prohibited for three years from serving as
an officer or director of a public company. He was ordered to pay $10 million.

The bank acknowledged the settlement in a statement Wednesday, noting the $15 million
reflects the attorney general’s cost of investigation and litigation. Last year, Bank of America
settled a related class-action shareholder lawsuit for $2.43 billion.

Attorney Bruce Yannett, representing Lewis, said his client relied on experienced legal
counsel about disclosures. Yannett said Lewis is proud of his role helping the banking
system survive a challenging period and he’s pleased to put the case behind him.

Shares of Bank of America Corp. fell 3 cents to close at $17.18 and rose 15 cents in after-
hours trading to reach $17.33.

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