By ALEXANDRA CLOUGH
Palm Beach Post Staff Writer
Thursday, June 21, 2007
BOCA RATON — In the clearest sign yet that the region's real estate boom has ended, Miami-based Ocean Bank confirmed Wednesday that it has filed a $50 million foreclosure action against the developers of a Boca Raton condo conversion.
The foreclosure may be the largest filed in Palm Beach County since the red-hot residential real estate market began cooling early last year. And analysts say it's a precursor of things to come as the lenders who fueled the frenzy with easy-to-get loans continue to tighten the purse strings.
"It's probably just the tip of the iceberg, the first of many more to come over the next couple of years," said Jack McCabe of McCabe Research and Consulting in Deerfield Beach.
Ocean Bank said NRW Development LLC, a South Florida real estate development firm, and six individuals owe $50 million on a condo conversion known as Villa Mare Beach & Yacht Club Residences, a 40-year-old apartment complex formerly known as Oceanview/Lakeview apartments.
In the lawsuit, filed June 1 in Palm Beach County Circuit Court, Ocean Bank seeks the property and personal guarantees from the six investors.
"We have filed a foreclosure action against NRW Development ... to protect the bank's interests in two Boca Raton properties," Terry J. Curry, chief credit officer of Ocean Bank, said in a statement. "Of the $60 million which Ocean Bank lent to NRW, $50 million remains outstanding. We anticipate resolving this matter."
The bank would not comment further.
Among those being sued: Hernan Gleizer, chief executive of Re/Max Bestseller Realty in Aventura, and Ricardo Djmal and Ricardo Weinstein, two investors in The Whitney condominium in West Palm Beach.
The Whitney's developer, Enrique Dillon, said the condo is not affiliated with Villa Mare.
None of the borrowers could be reached for comment Wednesday.
Ocean Bank is Florida's largest independent commercial bank with $5.9 billion in assets, and lent millions of dollars on condo projects in South Florida - which now has a glut of condo units hitting the market. Ocean Bank does not have Palm Beach County offices.
In March, the Federal Deposit Insurance Corp. issued a cease-and-desist order in which Ocean Bank agreed to reduce and monitor loans to condo conversions and land development. The bank also agreed to review the collateral backing commercial loans of more than $10 million, and to limit the level of credit to any borrower granted without bank board approval.
The enforcement action came too late for the NRW loan, however.
The Ocean Bank lawsuit says NRW and six other borrowers stopped paying on the loan in December, only seven months after NRW borrowed the $60 million to pay $57 million for the property.
NRW had planned to create Villa Mare out of the two aging 80-unit, five-story buildings, the last major rental complex on the Boca Raton waterfront. The apartments sit on a side street known as Sweetwater Lane that runs from the Intracoastal Waterway to the ocean, south of Spanish River Boulevard.
Units were to be priced between $311,000 and $1.2 million.
But even that sweet location wasn't enough to guarantee success, especially when NRW plunked down so much to buy the two-building complex.
It's tough to make the numbers work when you're paying $356,250 per unit, McCabe said.
Even when the sale took place last year, "we questioned that deal," he added. "The price may have been too high."
Now Ocean Bank has a giant hole in its $4.5 billion loan portfolio, bad news for a bank with past-due loans creeping past the $208 million mark.
Ken Thomas, a Miami banking analyst, called the bad NRW loan "a big issue" for Ocean Bank, especially given the rare enforcement action issued by the FDIC.
But Thomas said Ocean Bank can handle the hit. The bank posted a profit of $19.1 million for the quarter ended March 31.

6 MISTAKES THAT TIE YOU DOWN

from Florida Realtor Magazine, June 2007 by Bridget McCrea
6 Mistakes That Tie You Down
It pays to know how to run your business. Here are mistakes some sales associates make and tips for turning them into positives.We’ve all heard the saying “To err is human …” but in the real estate industry even the smallest mistakes can mean the difference between having a successful career and being stuck in a holding pattern.“The inherent nature of the business and how different it is from traditional careers makes it difficult for the average person to successfully make the transition into the real estate business,” says R. Eric Bramlett, a broker with One Source Realty in Austin, Texas, and the author of the article “Common Mistakes New Real Estate Agents Make.” “As a broker, I see many new [sales associates]. They bring a lot of great qualities to the table—lots of energy and ambition—but they also make a lot of common mistakes.”From failing to build a business plan to deciding that those important tech tools are just too expensive, sales associates can use these tips to build a thriving business.“There’s nothing fun about starting off your week with a [sales associate] whose hair is on fire because he or she [accidentally] goofed,” says Gwen Treston, broker/vice president at Watson Realty Corp. in Neptune Beach. “But as hard as we try, mistakes do happen.” We uncovered six mistakes that brokers see their sales associates making on a regular basis, along with some sage advice on how to avoid them. With freshly minted real estate licenses in hand, new sales associates flock to local brokerages ready to claim their piece of the real estate pie. Unfortunately, many of them just don’t take their new careers seriously. “Many of them are thinking, ‘Oh, I’m just going to sell real estate,’ and don’t treat it like a real business,” says Rebekah Rivers, CEO of The Rivers Team/Keller Williams Realty in Tallahassee. “I walk through the office sometimes and see agents in the recreation room chitchatting,” says Rivers. “I tell them, ‘This isn’t selling houses.’” Without a focus and plan, many of those sales associates wind up never taking the necessary steps to establish themselves as independent contractors. Some are unaccountable for their actions, while others hang around the office selling one or two homes a year until they eventually leave the business. “If you’ve ever opened the doors to any business, you know that one of the key ingredients is a business plan,” says Bramlett. “Your business plan helps you define where you’re going, how you’re getting there and what it’s going to take for you to make your real estate business a success.” Here are the essentials, according to Bramlett, of any good business plan:
Goals. What do you want? Make them clear, concise, measurable and achievable.
Services You Provide. “You don’t want to be the ‘Jack of all trades and master of none,” says Bramlett, “so choose residential or commercial, buyers, sellers or renters and in which [geographical] area you want to specialize.”
Market. To whom are you marketing yourself?
Budget. “Write down every expense—gas, groceries, cell phone and more. Then write down the new expenses you’re taking on—board dues, increased gas, increased cell usage, marketing, etc,” says Bramlett.
Funding. “How are you going to pay for your budget without any income? Plan for at least 60 days,” says Bramlett. “With the goals you’ve set for yourself, when will you break even?”
Marketing Plan. “How are you going to get the word out about your services? The most effective way to market yourself is to your own sphere of influence,” says Bramlett. “Make sure you do so effectively and systematically.” To help sales associates get a grip on reality, Rivers suggests you talk with them about the importance of creating and following a business plan, and developing marketing and advertising budgets. She has sales associates fill out goal sheets that include yearly goals and details on what it will take to reach those goals. To close two sales in a month, for example, a sales associate would set out to get three listings during that period. “I also tell them that the office is for training and client meetings,” Rivers adds, “but that they don’t make sales there.” No one really likes hitting the streets to find new clients and customers, but in today’s market, this age-old sales strategy has once again become a necessity for those who want to fill their pipelines. “Most of them just don’t like doing it,” says Gloria Frazier, broker/president at ERA American Realty of Northwest Florida Inc. in Fort Walton Beach. Frazier says overlooking this important marketing approach is a mistake. “Salespeople have more fun when they have a real buyer or seller in front of them,” she says. “Where the experienced [sales associates] have [licenced] assistants to do some of the screening and prospecting for them, those that haven’t quite ‘made it’ yet have a hard time setting aside enough time and energy to develop new business through prospecting.”For the latter, Frazier says, her brokerage offers a postcard program based on a specific geographic or demographic farm area. Sales associates can also get handouts (often a small gift tied in with a holiday theme) to use with past clients and customers. “Those gifts get the agent going to the front door to talk to past clients,” says Frazier, who impresses upon sales associates the much higher rate of return that comes from face-to-face contact with potential clients and customers. “Most new sales associates don’t realize that the hardest part of the business is finding the business,” says Bramlett. “They’ve just shelled out money for their license and board dues, so the last thing they want to do is to spend more money,” he says. “Any good businessperson will tell you that how much business you get is directly correlative to how much you spend on marketing. If you choose the right brokerage, then you’ll get some good inbound leads. However, don’t neglect a good personal marketing campaign from the beginning, to get your own name out.”“In addition, those who do spend money on personal marketing stop because they spend it in the wrong place,” says Bramlett. “The easiest place to spend your money is in conventional newspapers. This is the most visible place to see real estate advertising, it’s where large offices spend a good part of their money and so many new agents mistakenly spend their money here. This becomes very frustrating to new agents because of its low return. New sales associates should look to their own sphere of influence and referral marketing to see the most effective return on their investment,” he says. Also important is that customer pipelines have to be replenished through prospecting on a regular basis, not just when business is slow. “Every [sales associate] who gets busy in January and neglects to prospect regularly,” says Frazier, “winds up with no business in June.”Making assumptions about other people’s wants, needs and knowledge levels can be dangerous, according to Frazier. “The biggest mistake is thinking that the buyer or seller knows what’s going on, when they really don’t at all,” says Frazier, who sees too many sales associates neglecting to clearly explain to customers the steps involved with buying or selling a home. Skipped issues can range from seemingly small issues (like not telling the buyer to bring a cashier’s check to closing) to monumental problems. In the end, it’s the sales associate who winds up looking bad, and who can even be on the hook for future liabilities. At ERA American Realty, Frazier says, brokers use a combination of in-house training, case studies and role playing to ensure that sales associates are asking the right questions and covering the appropriate topics with their clients and customers. Five times a year Frazier holds a class based on real-life mistakes sales associates have made and complaints she’s heard. “Ninety-five percent of [the mistakes] are communication issues,” she says. “Most are based on disconnects that sales associates—had they recognized them at the time—could have dealt with quickly.”“Getting started is expensive,” says Bramlett. “However, you’ll run into even more expenses when you go to arm yourself with the necessary tools of the trade.” Of course, your first big expense should be your Realtor® Association membership. “Here’s what [else] I think is necessary,” he says.
Mobile phone with a beefy plan. “These days, everyone has a cell phone. But not everyone has a plan that will facilitate the level of use that real estate professionals need. Plan on getting at least 2,000 minutes per month,” says Bramlett.
Computer (preferably a laptop) with appropriate software. “There’s no way around it; you have to have a computer and be savvy enough to use e-mail,” says Bramlett. “You’d be wise to invest in some business management software, as well. If you’d like to save some money (and who wouldn’t?), then you can get the client and e-mail management software Thunderbird from www.mozilla.com. And, you can get a free office suite from www.openoffice.org,” he says. “The only downside to these programs is that they do not sync with your PDA or smartphone.”
Real estate–friendly car. “You don’t have to have an expensive luxury car, but your two-door coupe won’t do the trick. Make sure that you have a four-door car or van that’s comfortable and presentable,” he says. “Real estate professionals choose their broker for a variety of reasons—they have a good reputation, the office is close to their house and more,” says Bramlett. “While these aren’t bad reasons to choose a broker, they also aren’t going to help you in your success. The No. 1 reason to choose a broker, and the question to ask is, “What do you offer your agents?” “Ask the broker: Do they have incoming leads? What does their training program consist of? What’s their retention level? What’s their average sales price? Do they encourage their sales associates to promote themselves? A broker’s purpose is to help new sales associates start successful careers and to help established ones progress to the next level,” says Bramlett.Mistakes aren’t reserved for new sales associates by any means. Rivers, for example, sees way too many experienced professionals thinking that just because they’re hitting their sales numbers, they no longer need training, mentoring, education (above and beyond the required continuing education) or other tools that can give them an ongoing edge in the market. “They think that once they’re good, they’re good, and that they don’t need to be taught anymore,” says Rivers, who estimates that she herself has taken more training in the last 12 months (e.g., through her franchise’s Rising Star and Mastermind program) than she has in the preceding five to 10 years. “None of us are ever really that good,” says Rivers. “We can all use ongoing training and refresher courses to get even better.” To impress this on her sales associates, Rivers says, she offers mentoring, holds role-playing sessions and accountability classes, and talks one on one with them about their ongoing training goals. “I’m constantly reminding them that they need to go to class,” says Rivers. “Mostly, they want to do the fun stuff like schedule appointments and talk to people, but being a good real estate [professional] takes so much more.” Bridget McCrea is a Clearwater-based freelance writer.

FHA TRIES TO STAY RELEVANT TO BUYERS

FHA tries to stay relevant to buyers
MIAMI – June 22, 2007 –
Over the past eight years, the Federal Housing Authority (FHA) has become less and less important.Subprime lenders offering high-cost loans won away many of the moderate-income first-time homebuyers who used to count on an FHA guarantee to snare a mortgage.Home prices rose far above FHA lending limits, set by Congress and unchanged for years. And though the agency streamlined some of its procedures, it still takes far longer than 24 hours to approve an FHA loan, unlike the instant gratification that lures eager buyers to hard-marketing subprime lenders.The number of loans guaranteed by the FHA dropped two-thirds nationally from 1999 to 2006.Now, the FHA’s resurrection may be at hand.Legislation aimed at modernizing obsolete FHA loan standards is back in Congress, having died quietly last fall after passing the House.Then, nobody much cared. They do now, says Megan H. Booth, senior policy representative for the National Association of Realtors.“This is a critical window. There’s all this congressional concern about the subprime mess, with horror stories in every district. This is our time to get Congress to say: ‘If we can reform this program, we can give people a viable alternative that’s not risky like these crazy loans,’“ she says.“How many hearings has Congress had this spring on subprime? A gazillion. FHA reform can’t be a bailout to subprime problems, but it can be a solution.”Sweeping changes in the mortgage market this decade “shut them out. Now there’s an opening,” agrees Ann Grochala, director of lending and accounting policy for the Independent Community Bankers of America.If the Expanding American Homeownership Act of 2007 does pass, it would allow the FHA to consider what consumers have to pay for loan guarantees as determined by their credit histories; increase the amount it guarantees and thus come closer to the cost of houses in more expensive, usually urban, markets; and make it easier to purchase condominiums with FHA loan guarantees, lowering the first step into homeownership in pricey areas.The modernization bill would raise the limit to 100 percent of the loan limit allowed by mortgage purchasers Fannie Mae and Freddie Mac for high cost areas, and from 48 percent to 67 percent of the limit in lower-cost areas.“If it were increased, it would provide more options,” says Delbert F. Reynolds, Wisconsin field office director for the FHA. “Loan limits aren’t the only issue. One of the points of modernizing is to do some catch up with other tools, like not requiring a down payment.”That is one of the controversial provisions in the modernization proposal put forth by the Department of Housing and Urban Development, which includes the FHA: eliminating the requirement for a down payment of at least 3 percent. The new requirement would be some type of cash contribution by the buyer at some point in the purchase process.If the modernization legislation passes, it might bring the FHA into the 21st century, where it faces more competition than ever for historically overlooked moderate-income homebuyers.Suddenly sober subprime lenders have stiffened loan standards, to stanch losses and head off regulation, but they’re still making loans.Meanwhile, local non-profits and city and state government agencies have expanded their own homebuying assistance programs.Last fall, for instance, the Housing Authority of the City of Milwaukee quietly began selling rehabbed houses to buyers who qualified for housing subsidies but hadn’t been in those programs.Even if the proposed changes are adopted, the FHA will remain just one voice in a chorus clamoring for the attention of first-time buyers, says Geoff Smith, director of research with the Woodstock Institute, a research non-profit based in Chicago.“(The FHA) was designed to encourage banks to make loans to borrowers who couldn’t access them otherwise. Now there’s an abundance of access to credit, so the question is: Is the FHA still fulfilling a need?’“ he says.“There are other agencies that have loan programs, that offer loan down payments, and that are targeting the portion of the subprime market with prime or close to prime. As a person who follows housing policy and finance, I don’t think of the FHA hardly ever,” Smith says.There’s one market, at least, where the FHA’s appeal still shines.Homeowners with failing finances due to subprime loans are flocking to the FHA’s new Loss Mitigation Program.HUD reports that since last October, 36,500 families nationally have become new FHA borrowers as they escape the consequences of predatory loans.© 2007 Milwaukee Journal Sentinel, Joanne Cleaver. Distributed by McClatchy-Tribune News Service.