Banks Lower Military Mortgages

A new government agreement with five of the nation’s largest banks is helping active-duty military service members save hundreds of dollars or more each year on their mortgages. Banks also pledged to make enrollment easier, notify service members who qualify for lower rates, and simplify the entire process to help more military families own homes without overwhelming debt. Research from the Government Accountability Office (GAO) found that many military service members fail to take advantage of the benefits available under the Service Members Civil Relief Act because they’re unaware of them or they don’t want to complete the paperwork.

Craig Barrett, co-founder of NBI Properties in Fort Walton Beach, said that under the previous law in 2003, active-duty service members could have mortgage rates and other debt fees capped at 6 percent.

“With so many military families residing here on the Emerald Coast, we learned that many were simply not taking advantage of benefits that could lower their mortgage payments,” he said. “In most cases, families were unaware they qualified for these benefits.”

Five of the country’s largest mortgage lenders – Wells Fargo, Bank of America, Ocwen Loan Servicing, CitiMortgage and Quicken Loans – all agreed to make the application process easier and take a more proactive approach to notifying those who are eligible. The lenders have pledged to make frequent checks of the Defense Department database to see if their customers qualify for any unclaimed benefits.

“This is great news for military families in this area,” stated Barrett. “Reducing mortgage interest rates can result in saving thousands of dollars.”


CRE CLOs Offer Investors More Options

Investors searching for higher yields have been flocking to CRE collateralized loan obligations (CLOs) for the past two years. Driven by target yields in the mid-teens for equity investors, real estate insiders say momentum continues to grow due to favorable stock market performances over the last several years.

“The market is on a roll, despite all kinds of predictions that the bull market will collapse any day now,” said Craig Barrett, co-owner of NBI Properties in Fort Walton Beach. “The investors we are working with are taking advantage of reduced borrowing rates and more loan options from lenders.”

Barrett added that commercial real estate CDOs were the financial vehicle of choice prior to the recession, but disappeared during the recovery. He said the new CLOs have an improved, simplified structure that is preferred because they are secured loan transactions.

Moody’s reported that 2013 closed with an estimated $2 billion in CRE CLOs issued, with an even bigger volume anticipated for 2014. However, CRE brokers say one of the biggest hindrances for the growing CLO market is the need to educate investors and discourage familiarity with CDOs, which are largely blamed for contributing to the 2008 financial crisis.

Barrett said there are there are important differences between the CDO structure and CLOs pertaining to commercial real estate.

“Before the recession, CDOs offered B-piece buyers a way to get leverage off of their double B and lower unrated portfolios,” he said. “People should know the new CLOs only include loans, and interim financing suitable for three, five and seven-year loans. What we’ve noticed is that
CLOs are not dominating commercial mortgage interim financing, but they still play an important role in the market.”

Recently issued CLOs have typically targeted loans on properties in transition. For instance, a typical loan could be structured for a class-C apartment building with an upfront reserve or future funding for renovation. The property would likely have a high occupancy level and be located in a tight market, but could possibly be in need of an upgrade in order to maintain and improve cash flow.

“Overall, CLOs are a good option for borrowers,” said Barrett. “We’re happy to help investors with the rules and regulations involved in order to take advantage of CLOs.”



Florida Property Owners Benefit from Credit Score Leniency

While many people are aware that lower credit scores make it difficult to qualify for loans, homeowners in most states are discovering that bad credit increases the cost of homeowners insurance. However, a recent study by CNBC revealed that Florida is one of only four states that do not penalize borrowers with low credit scores by raising property insurance rates.

According to the study’s findings, only Florida, Maryland, California and Massachusetts quote low credit score homeowners the same rates as those with high credit ratings. Nationally, homeowners who have poor credit pay an average of 91 percent more for homeowners insurance than those who have pristine credit reports, according to a new report by According to Craig Barrett, co-owner of NBI Properties, insurance rates are just another reason why more people are relocating to the Sunshine State and to the Emerald Coast.

“When we speak with prospective buyers, they will say it’s not their mortgage or their commercial lease that is killing them, but it’s the insurance,” said Barrett. “On top of that, so many people are dealing with less-than-perfect credit scores since the recession a few years ago, so paying 91 percent more for insurance doesn’t help these folks one bit. We love to be able to tell them that in 46 other states they would have to pay more based on their credit rating.”

The report also concluded that homeowners with credit scores in the fair or “median” range may pay 29 percent more for their insurance than someone with an unblemished credit record. Findings also revealed that how insurance companies weigh the significance of a person’s credit score can vary greatly from company to company and even state to state. Insurers started using credit-based insurance scoring in the early 1990s when FICO studies discovered a correlation between a person’s credit and his or her likelihood of filing a claim.

“There’s no denying that credit scores still have an enormous impact on an individual’s overall finances,” said Barrett. “Everyone knows that maintaining a good credit history is very important. But for those who are just starting out with no established credit or for those who went through some rough times and saw their scores drop, it’s good to know that Florida is one of the few states where they might be able to get a break.”



Florida Reels In A Cool BILLION in Settlement

Comedian Mike Myers and his goofy Doctor Evil character always liked to stress the importance of one BILLION dollars. But unlike the fictional comedy, nearly 17,000 Floridians will receive more than $1 billion in relief as part of a record-setting settlement with Bank of America. The Florida Attorney General’s Office recently made the announcement, calling it a “historic” resolution. Overall, the state is earmarked to receive about a seventh of the settlement’s $7 billion in aid to communities and homeowners hit hard by the housing market crash that led to the Great Recession.

Bank of America Corp. agreed to pay $16.65 billion to end federal, Florida and other state investigations into the sale of toxic mortgage securities during the subprime housing boom. Consumer relief will include principal reduction and forgiveness, loan modifications and new loans to credit-worthy borrowers struggling to obtain loans. Financing will also be available for affordable rental housing to help communities still recovering from the financial crisis that affected thousands of families statewide.

“We’ve learned that some of the details are still being finalized as far as who in Florida will be receiving aid,” said Craig Barrett with NBI Properties in Fort Walton Beach. “Programs are being organized and set up in order to help eligible borrowers.”

Many of the bad loans that backed the securities came from firms Bank of America acquired in 2008, including Countrywide Financial Corp. of Calabasas and Merrill Lynch & Co. Prior to the fallout, Bank of America had already incurred approximately $60 billion in losses and legal settlements from its purchase of Countrywide, which was one of the nation’s biggest subprime mortgage lenders during the housing boom of the mid 2000s.

Why Online Websites Won’t Replace Brokers

On the heels of recent news that Zillow, the most popular real estate listing website, has plans to acquire its biggest competitor Trulia for $3.5 billion, lots of questions are looming about the possible merger. Namely, people are wondering what this will mean for buyers and how if will affect real estate firms, agents, and brokers. Insiders say that once Seattle-based Zillow acquires Trulia, the companies will dominate the real estate listings market, accounting for 48 percent of web traffic for listings (not including local websites).

NBI Properties co-founder Craig Barrett said that online websites such as Zillow offer an alternative to the traditional MLS listings that agents and brokers have used for years. He said the online services offer a wealth of information for buyers, but have not disrupted the function of real estate brokerages.

“In my experience, websites like these are useful in the initial phases of research when buyers are browsing or shopping around to see what kind of properties they are interested in,” Barrett said. “It gives buyers a head start because they can meet with us at NBI and tell us specific types of properties they have checked out in the area. Based on what they have seen online, we can research the availability of their selections or recommend similar properties they may wish to see and compare with their findings.”

Once the Zillow and Trulia merger is finalized, Zillow stated that both brands will retain their own identities and continue to offer buyers, sellers, and renters access to information about properties at no charge. The company also said it will provide advertising and a software solution designed to help real estate professionals grow their business. By implementing these solutions, Zillow said the company will benefit consumers and the real estate industry, even though the service is bound to drive some traffic away from real estate brokerage websites.

“Overall, we look at this as innovation and not competition,” said Barrett. “Numerous studies prove that the majority of consumers and investors still prefer to buy real estate through an agent. Also, at NBI we use a lot more of the commercial real estate databases.”

Barrett also said consumers using online real estate databases should be aware that listings are not always up to date or accurate. He added that he had experienced several instances of buyers who called to inquire about a property they had seen online, only to be disappointed to learn it had been sold months earlier.

“The bottom line is the websites are good research tools, ” he said. “But overall, nothing can replace local realtors who have inside knowledge about the area and often know the history of a property and its condition. Buyers also rely heavily on realtors for price negotiations, guidance with the loan process, and contacts with inspectors, insurance underwriters, property appraisers and much more.”


Commercial Real Estate Rosy in Third Quarter

If the Real Estate Roundtable’s third quarter Sentiment Survey is any indication, commercial real estate markets in the States continue to enjoy a slow but steady recovery. Slight increases over the second quarter in two of the survey’s indices, “Overall” and “Current” quarter are in line with overall economic growth detailed in a recent positive report about higher-than-predicted gross domestic product (GDP) in April, May and June. Craig Barrett, co-owner of NBI Properties in Fort Walton Beach says the survey results are reflective of what his firm has been experiencing on the Emerald Coast.

“We’re busier than we were at this time last year,” noted Barrett. “We’re leasing properties to new businesses, franchises, and to professionals relocating to this area. Also, financing options have definitely improved since last year and investors are finding it easier to obtain sources of capital.”

Overall, the survey reported that commercial real estate is on the upswing, although some respondents voiced concern over policy matters on Capitol Hill that could affect the industry. Notably, some said they feared recovery is threatened by policy-related risks such as the scheduled expiration of the federal Terrorism Risk Insurance Act (TRIA) on Dec. 31 and the looming prospect of higher interest rates.

“We’re somewhat concerned about the TRIA expiring because it could cause a wave of economic setbacks and problems,” said Barrett. “I think we’d definitely see difficulties with banks and lenders again, which would mean that funding for new projects could come to a halt.”

The U.S. Senate voted resoundingly (93-4) for a seven-year reauthorization of the TRIA on July 17. House legislation countering with five-year extension program reforms cleared a key committee in June, but remains in limbo until Congress meets again in September.






CFPB Clarifies Rule for Inherited Homes

The Consumer Financial Protection Bureau (CFPB) recently clarified a rule that has been perplexing for heirs of mortgaged homes. A new interpretive rule stipulates that when a borrower dies, the name of the borrower’s heirs may be added to the mortgage without triggering the CFPB’s Ability-to-Repay rule. The new action is important because it allows heirs and surviving family members to acquire the title to a property, assume the mortgage, or apply for a loan workout.

The Ability-to-Repay rule, which was enacted in January, was intended to protect consumers from irresponsible mortgage lending by requiring lenders to verify that borrowers are financially able to repay their loans.

Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach, said the new rule is significant because it affords heirs the opportunity to work with a lender to pay off the mortgage.

“Specifically, surviving family members can work directly with lenders to pay off loans or seek loan modifications,” he said. “The rule can also apply to other family-related transfers such as those occurring due to living trusts or divorce.”

The CFPB requires mortgage servicers to have procedures in place to promptly identify and communicate with heirs and surviving family members.


CRE Investors Benefit from 1031 Exchange


At NBI Properties, we’re fielding lots of questions from investors interested in the IRS tax code 1031 exchange. This important tax code is attractive to investors because it permits the sale of one investment property to in order to purchase a higher-priced investment property — all without paying capital gains taxes and depreciation recapture taxes. The 1031 exchange is popular with investors because it can be used in multiple ways, according to Craig Barrett, co-founder of NBI Properties.

“By taking advantage of the 1031 exchange, investors can sell properties while taking part of the profits out,” he said. “However, when most of the profit is rolled over into a new property, investors may defer taxes on the amount that is rolled over.”

Since tax codes tend to be complicated and confusing, it’s important to retain a highly qualified real estate broker and tax expert. A few basic guidelines about the 1031 Exchange to consider include:

Properties qualifying for a 1031 exchange must be for business use or investment (“productive use” as descrIbed by the IRS).

Property must be of “like-kind” (also broadly interpreted by the IRS).

A qualified intermediary is required.

The investor cannot have constructive receipt of sale proceeds at any time.

The 45-day identification period and 180-day closing requirements must be met.

Price of the replacement property must be equal to or greater than the relinquished property.

The amount of mortgage on the replacement property must equal or exceed that on the relinquished property.

All of the funds from the sale must be reinvested in the replacement property.

In addition to these general guidelines, many investors consider the time restrictions the most difficult part of a 1031 exchange, and especially if transactions involve commercial real estate. As stipulated in the tax code, investors must identify a replacement property within 45 days of completing the sale of the property they are exchanging for a more expensive property.

The other major requirement is that a Qualified Intermediary must be used. This is a person holding a specific license allowing them to make the financial transactions on an investor’s behalf.

“The entire process sounds overwhelming, but it’s worth it because the tax savings for investors is huge,” explained Barrett.



Diversifying Investments With Real Estate

Many people accustomed to investing in the stock market are aware of the age-old advice that it’s wise to practice diversification. The idea is to minimize risk by not putting all of your eggs into one basket (or one particular stock) and to aim for a mix of different stocks, bonds and mutual funds. While all of these options will help diversify your portfolio, there are several reasons why adding real estate to your investment strategy is a good idea.
“Owning real estate is a tangible investment,” explained Jayme Nabors, co-owner of NBI Properties in Fort Walton Beach, Florida. “Instead of passively owning stocks and depending on a company’s performance to rack up gains, real estate offers investors more control over their profit margins.”
Real estate is typically a long term investment, although some investors prefer short term “flipping” transactions. Investors can purchase commercial or residential properties with a traditional mortgage, seller financing, or private loans. The silver lining is that tenants pay rent to cover the cost of repaying the loan and investors build up equity.
“The beauty of investing in real estate is that someone else pays for your property while you reap the benefits of ownership, including tax deductions and building equity,” said Nabors. “At NBI, we’ve found that once investors get involved in real estate, they are interested in adding more properties to their portfolios.”
Investors who own just a few properties may choose to manage tenants themselves while others opt for property managers to take care of all the details. Unless you have ample time to make improvements, collect rents, and take care of maintenance and repairs, it’s easier to hire a reputable property management firm to handle these important details.
“In our area, we currently manage more than 3000 properties,” said Nabors.”Many of the investors we work with live in other states and rely on us to handle the day-to-day business of keeping their properties we’ll maintained. For investors who own multiple properties, hiring a competent property manager is a necessity and eliminates a lot of headaches.”
For more information about real estate investment opportunities or property management, contact NBI Properties at 850-243-0007.

FEMA Allocates Disaster Assistance for Northwest Florida

Two months after a storm system brought massive flooding to Northwest Florida, $66.5 million in disaster assistance has been approved by the Federal Emergency Management Agency (FEMA) to help homeowners, renters and business owners recover. Residents with property affected by the storms and flooding from April 28 to May 6 in Escambia, Jackson, Okaloosa, Santa Rosa and Walton counties have until Monday, July 21, to register for disaster assistance with FEMA.”The deadline is fast approaching, so we are encouraging all of our clients, friends, and neighbors to register claims with FEMA as soon as possible,” said Jayme Nabors, co-founder of NBI Properties in Fort Walton Beach.

Those needing assistance can register online at or at on a smartphone. To apply by phone, call 800-621-3362 or TTY 800-462-7585.

To date, more than 14,200 people have been in touch with FEMA seeking help or information on disaster assistance following what local officials called the worst flood in Northwest Florida in decades.

Since the May 6 disaster declaration, more than $32.1 million in financial assistance has helped more than 6,600 homeowners and renters who were affected by the spring storms and flooding. This amount includes more than $26.6 million in rental expenses and essential home repairs and nearly $5.5 million to help cover other essential disaster-related needs, such as medical and dental expenses and lost personal possessions. In addition, the U.S. Small Business Administration has approved more than $34.4 million in low-interest disaster loans for qualified homeowners, renters, businesses of all sizes and private nonprofit organizations.

FEMA is continuing to work with state and local partners to connect people to recovery resources in their communities. Those who need extra help are encouraged to call Florida’s 2-1-1 information helpline or visit

Several voluntary agencies, local community- and faith-based organizations and other non-profit groups are also helping those affected by the flooding with long term needs. Among these voluntary agencies are the American Red Cross, United Way, Volunteer Florida, Operation Blessing, Florida Baptists and Samaritan’s Purse.

More than 3,300 local residents and business owners have met with FEMA mitigation specialists at disaster recovery centers and home improvement stores for advice and tips on how to rebuild safer and stronger. An additional 62 requests have been made for FEMA’s Public Assistance program by eligible state agencies, local governments and certain private non-profits. Requests for public assistance start the process of getting eligible costs reimbursed, which helps get communities back on track following a disaster. The nine counties designated for public assistance are Bay, Calhoun, Escambia, Holmes, Jackson, Okaloosa, Santa Rosa, Walton and Washington.
For more information on Florida disaster recovery, survivors can visit, the Florida Division of Emergency Management website at or the state’s Facebook page at