CONDO OWNERS IN WRONG PLACE AT WRONG TIME

It looks like my first blog is going to be concerning one of the more interesting quagmires of the recent real estate condition, and it is going to be about some folks very close to where I live. In fact, they live just down the street from me.

The Tampa Tribune published an article by Karen Branch-Brioso on Saturday 4/19/2008 about the Portofino Condos in New Tampa having recently been purchased, and the new owner planning on converting the development back to an apartment complex, which will make things as it was when it was originally built in 1998. Problem with that is, the current market values of the units are less than what they were when they were purchased during the past 18-24 months. So with the popularity of high LTV loans in recent years, it could mean that the mortgage owed on an owner’s unit is greater than the current market value of their property. That would mean that if the new owner pays close to current market value, the current owner may still be short of what they owe the lender on the property. Without much equity in their properties, these current owners will be facing the difficult challenge of having to make up a possibly significant difference between what they could expect to receive in fair market value for their home and what they owe on their current mortgage. Even if they are not “upside-down” on their mortgage, thanks to considerable equity already in the home, they could likely lose a good chunk of any equity as a result of the sale.

To me, this story is gut-wrenching because any financial misfortunes that manifest themselves with these homeowners as a result of these sales will not be because of their own financial mismanagement, rather, more directly from being in the wrong place at the wrong time.

It is my understanding that everything is not all said and done yet. Hopefully, there still exist some compromises and remedies that have yet to make their appearance.