Orlando Real Estate Update, September 17, 2009

Bernanke says recession ‘very likely over’ - Fed Chairman Ben Bernanke said on 09/15 that the worst recession since the 1930s is probably over, although he cautioned that pain – especially for the nearly 15 million unemployed Americans – will persist. He said the economy likely is growing now, but he warned that won’t be sufficient to prevent the unemployment rate, now at a 26 yr high of 9.7%, from rising to 10%. The recession, which started in Dec '07, has claimed a net total of 6.9 million jobs. Some economists say it will take at least 4 yrs for the jobless rate to drop down to a more normal range of 5%. Still, Bernanke’s declaration that the recession likely ended marked his most optimistic assessment yet of the economy. And his remarks came on the same day that the government reported that retail sales jumped 2.7% in August, the most in more than 3 yrs. All that helped to lift stocks on Wall Street. The Dow Jones industrial averaged gained nearly 57 pts to 9,683.41, its highest finish since Oct. 6. Meanwhile, Bernanke said he is optimistic that Congress will enact a revamp of the nation’s financial rule book to prevent a future crisis from happening.

Private capacity there to absorb most State Farm policies - Florida’s insurance commissioner said capacity exists within 210 other private property insurers still doing business in Florida to absorb many policyholders affected by State Farm’s decision to get out. Gov. Charlie Crist and others have said that recent Florida law changes reduce the risk for private insurers. About 30 established companies have approached the OIC & State Farm about taking clients. McCarty defended the agency’s rejection of State Farm’s 47% rate hike request earlier this year, but said the agency would be willing to approve higher rates if the company did a better job making its case. “Of course, we’d be better off if State Farm was here, even in a smaller presence”. Florida is not alone in facing property insurance challenges as many coastal states are also wrangling with how to insure residents as private insurers mull whether to pull up stakes. What we are seeing in Florida is endemic of what we’re seeing across the nation.”

Frank considers cramdown law - Influential congressman Barney Frank, D-Mass., said slow progress in assisting troubled homeowners could lead to a new push to change bankruptcy laws. He said Congress should revisit the issue of allowing bankruptcy judges to modify mortgages if the banking industry does not increase the pace of its help to homeowners. The federal Making Home Affordable program, relying on industry cooperation, has lowered pmts for 360,165 homeowners since March, with its goal was to help 500,000 homeowners by Nov. 1. An effort to provide bankruptcy judges with the power to modify home loans – a practice called “cramdown” – failed earlier this year, passing narrowly in the House, but failing in the U.S. Senate.

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