Banks in Florida
February 27, 2007 1:37 am
From: Seeking Alpha: Herb Greenberg (MarketWatch) submited a recent story about BankUnited Financial (BKUNA), best known for ARM loans in Florida, apparently has had it with critics.
Andrew’s Reply to the post: You have to know that something is going terribly wrong in Florida when we hear about crazy tax plans to eliminate the property Taxes in favor of increasing sales tax by 2.5%. This is just one more political game to create a stir and give some lesser know representative a bit of press. At least that is what it seems to be.
Forget the fact that tourism is such a huge part of the Florida economy and forget that this will be devastating to the Average Joe, the fact that they are even proposing this is a red flag that we may be approaching a real fall in the housing market in the sunshine state. Add to this the stupidity of the state by recently eliminating the Intangible Tax and one has to wonder where they think they are going to bring in sufficient revenue to pay for services and general costs of running the place!
Banks have long been quick to give out money without much due diligence as they have had the backup of the house as collateral. Once again, the short sight of the number crunchers did not take into consideration that there could be a reverse in housing prices. They also have been overly aggressive with creative loans to help provide money for overpriced housing.
Finally, why has no one ever looked at the maximum limit that any person can borrow to build? I though that over margin/leveraging was looked into back in the early part of the century when we saw that small market correction of the 30’s. Now we may possibly see a similar fate to those that have loaded up on mortgages only to find the properties sitting with no occupants.
Remember: Everything is cyclical. There is no new investment paradigm. Banks better wake up and smell the solid coffee or they are going to be looking forward to bailout applications.
Andrew Horowitz, CFP