The Bravo Real Estate Blog

Foreclosures heading through the ROOF

2009-06-29T20:46:00.002-05:00

In case you missed it... last week was a great story in the USA Today / actually a cover story, and I say 'great' because it dealt honestly and openly with the current foreclosure crisis, the ineffectiveness of the much-touted housing rescue efforts put forth by the Obama administration, and the resulting - worsening - foreclosure crisis.

Please click here for a link to the story (PDF file).

The proof is in the pudding as they say. While a mere 190K loans were modified (and we know that 2/3 of those will default again within 9-12 months), almost 4 times as many homes were lost to foreclosure -- in the last three months since the administration announced its housing rescue plan.

Today, I believe the best solution for home owners in distress is to engineer a short sale to avoid losing their home to foreclosure. There are many advantages to short sales vs. foreclosure, and lenders prefer short sales generally as well since they will net more and have fewer expenses than they would under a foreclosure.

Sincerely,
Thomas Heimann, President & CEO
Bravo Real Estate / GSS Real Estate
"Your Guaranteed Short Sale Solution" (SM)

Can Obama keep up with falling home prices?

2009-06-28T15:07:00.002-05:00

The following is an article that was published today on CNN Money. I think it is worth reading as it provides a realistic and sobering assessment of just how well the current housing rescue efforts by the Obama administration are working - or not working.

The Administration is committing ever increasing funds in an attempt to get home owners to refinance the properties they cannot afford, while home prices continue to tumble and will most likely continue to tumble for some time to come.

Here is the article copied from CNN Money:

Good news or bad news? The National Association of Realtors reported Tuesday that 33% of May existing-home sales were distressed (read: foreclosures and short sales) and the median sales price is now $173,000.

If you’re employed by the glass-half-full NAR, you need to spin that as good news, and the eternal optimists did not disappoint. The trade association pointed out that the share of sales that were distressed has declined from the 45% rate in April.

But the half-empty view is hard to ignore. The current median sales price is still 25% below its May 2006 level and down 17% from the year-ago figure. The NAR may suggest that a decline in distressed sales to merely one-third of market volume is a green shoot, but that shoot is still about six feet under.

Plenty of homeowners seem to agree. The National Foundation for Credit Counseling released a survey last week indicating that nearly one-third of current homeowners doubt they will ever be able to buy another home. Forty-nine percent of respondents agreed with the statement, “Because of the current economic climate, the American dream of home ownership is no longer a realistic strategy for building wealth.”

“It appears that whether a person was directly affected or not,” says NFCC spokeswoman Gail Cunningham, “Americans’ attitudes toward homeownership have shifted.” Declines of more than 25% in value will do that to you. (The S&P/Case-Shiller home price index is down more than 30% from May 2006.)

Indeed, the American dream of flipping a house has given way to the nightmare of foreclosures. Refinancing is getting tougher. Mortgage rates are about 0.7 percentage points higher than in early April, and new rules are generating less-friendly appraisals that can thwart a refi.

And then there’s the humongous elephant still in the room: not enough equity to qualify for a refi. The Obama administration is reportedly reconsidering the maximum loan-to-value ratio allowed for refinancing under its Home Affordable program. Right now if you have a Fannie or Freddie mortgage and your LTV is as much as 105% — meaning you can be as much as 5% underwater — you may be eligible for the federally-backed refinance deal. But the director of the Federal Housing Finance Agency recently said talks are in progress that could boost the maximum LTV rate for Fannie and Freddie refis under Home Affordable to as much as 125%.
The implicit message: the market has gotten away from the Feds.

When Home Affordable was announced a few months ago the stated goal was to help 4 million to 5 million homeowners refinance over the next three years. But now it appears that housing prices have fallen so far that the Obama administration won’t get anywhere near that figure unless the government lowers the bar to allow mortgages with 25% negative equity to refi.

The Feds hinted as much in a mid-May Treasury release: “Fannie Mae has had over 233,000 eligible refinance applications through its refinancing program, with more than 51,000 of these having loan-to-value ratios between 80% and 105%.” And the other 182,000 applications? I’ll take the fact that the Feds are floating the notion of changing the program to throw lifesavers out to folks 25% underwater as a sign that the current cutoff of 5% underwater isn’t doing the trick.

But offering Home Affordable to keep someone 25% under water doesn’t compute for me. That homeowner still has little motivation to keep paying the mortgage if values slip even more from today’s level. I hope I’m wrong, but a year or two from now it it will be interesting to see the default rate on refis with such large negative equity. Perhaps it would be faster and less expensive to let the housing bubble naturally deflate, rather than try to keep propping it up.

For a link to the original story please click here.

Sincerely,

Thomas Heimann, President & CEO
Bravo Real Estate / GSS Real Estate

Get your $8,000 HUD tax credit now

2009-05-30T20:37:00.002-05:00

HUD tweaked stimulus tax incentive so first-time home buyers get instant assistance with down payment and closing costs.

The following article just appeared on CNN Money and I wanted top pass it along right away. This is GREAT news for anyone looking to buy a home who falls within the 'first time homebuyer' category.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate/Bravo Title
http://www.bravobrokers.com/

NEW YORK (CNNMoney.com) -- First-time homebuyers will now have access to quick cash to help them with their down payments.

On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.

"We believe this is a real win for everyone," said HUD secretary Shaun Donovan in a speech before the National Association of Homebuilders (NAHB). "Families will now be able to apply their anticipated tax credit toward their home purchase right away. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time -- when it's needed.

The delay created an obstacle to reigniting the housing market because most first-time buyers -- the ones who would buy much of the available inventory -- have only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.

The mechanics of the new program, according to NAHB economist Robert Dietz, allow lenders to purchase tax credits from the buyers and then collect the rebate from the IRS.

The initiative also authorized similar programs already offered in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee, Washington and other states. To quickly infuse cash into their housing markets, the housing finance authorities in these states created bridge loans to allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.

The first state to launch such a plan was Missouri, which rolled out its Missouri Housing Development Commission Tax Credit Advance Loan program on January 14 -- a month before Congress approved the stimulus package. Since then, Missouri has approved applications by more than 360 borrowers and closed on 166 of them.

Lamar Cherry and his wife, Chrishanna, used the program to augment their down payment when they bought their home in Kansas City.

The couple purchased a four-bedroom, three-bath split-level home for $150,000, putting about 6% down. Much of that $9,000 came from the loan program, which they tapped so they wouldn't have to drain their reserves.

"We had money saved up that we were going to use for the down payment," said Cherry. "Now we can use some of that to buy some things we need for the house."

At closing, the Cherrys, like all buyers in the program, signed for their first mortgage, plus a second mortgage issued by the state. The second note is good for 6% of the price of the home, up to $6,750; there is a $350 set-up fee, but no interest is charged if the debt is repaid by June 2010.

In Missouri, borrowers can only access $6,750 of the $8,000 credit for down payments. "We wanted them to have a cushion below that $8,000 in case other tax liabilities show up," said Greg Spurgeon, the single-family homeownership administrator for the Missouri Housing Development Commission.

If borrowers don't pay off the note, it becomes a 10-year fixed-rate mortgage with an interest rate one-half percentage point above that of their first mortgages. For example, borrowers paying 6% on their first mortgages would be charged 6.5% on the second.

So far, Spurgeon said, a significant proportion of participating homebuyers have repaid their loans. He expects most of the others to do the same before the deadline.

Cherry has claimed the federal tax credit on his 2008 taxes, but he hasn't gotten his refund yet. He definitely intends to repay the loan before the 2010 deadline because, he said, not doing so would add about $75 a month to his house payments.

### END ###

Tax Credit to directly assist with downpayment/closing costs

2009-05-29T17:18:00.002-05:00

Big news hit the mortgage industry today regarding the $8,000 tax credit available to first-time homebuyers. According to the Federal Housing Administration, first-time homebuyers can apply the new $8,000 tax credit toward the purchase costs of a FHA-insured home.

This is hot of the presses and more details will be released soon. I just received this information myself and will do a follow up post as soon as I have further information.

To Your Success!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.bravobrokers.com

Housing Rescue Plan to include Support for Short Sales!

2009-05-16T15:41:00.003-05:00

On Thursday the Obama Administration announced that it will include support for Short Sales in its housing rescue and foreclosure prevention efforts.

Foreclosures have been skyrocketing and it is expected that this year along between 4 and 6 million foreclosure notices will be filed. Foreclosures depress housing values and entire neighborhoods are being wrecked.

As part of this measure, not only do loan servicers receive $1,000 for each short sale they process, but the borrower also will receive $1,500 for going the short sale route rather than letting their home get repossessed by the lender.

While this measure may be unpopular with some, it does have the potential to address and possibly stem the flood of foreclosures. Most foreclosures can be averted by successfully completing a properly structured short sale, in which the lender agrees to release the lien on the property for less than it is owed.

Homeowners, however, do not understand the short sale process, and many times simply do not care anymore / resulting in their property being repossessed by the bank, and in turn the bank having to carry the property on its book as a "REO" property, and eventually selling it for less than it could have received in a short sale.

Here is a link to a story in the Wall Street Journal: Please click here.

If you or anyone you know is behind on mortgage payments, owe more on your property than it's worth and/or are facing foreclosure then please let us help you.

Please visit GSS - Guaranteed Short Sale Solutions at http://www.gss-processing.com to learn more the process, or email to: info@gss-processing.com.

At Your Service;

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.bravobrokers.com

Rocket Docket coming to Sarasota County

2009-05-14T06:11:00.003-05:00

Effective this Friday, Sarasota County will implement its own version of a "rocket docket" for handling foreclosure cases, processing up to 250 cases a day, giving Sarasota real estate owners who are facing foreclosures possibly only minutes for their case.

One key difference in Sarasota's rocket docket vs. other counties will be that only homeowners who are not defending themselves will be processed through this expedited system.

This stresses the importance for all home owners who have been served with foreclosure papers to file an answer - preferably through an attorney - within 20 days of being served.

In the past, homeowners could 'count' on a foreclosure case taking many months to drag its way through the system, under the new rules, cases in which no answer is filed could be resolved rapidly.

For a link to today's story in the Sarasota Herald Tribune please click here.

If you have been served with a foreclosure notice and need a referral to a real estate attorney, please contact me directly and I will be happy to assist. Also, if you are facing foreclosure, know that most foreclosures can be averted by doing a short sale of the property. Lenders generally do not want to take possession of a property.

The worst you can do if you are facing foreclosure is 'nothing'.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
theimann@bravobrokers.com
www.bravobrokers.com

More Foreclosure 'Pain' ahead for Florida...

2009-05-13T16:19:00.002-05:00

After a slow-down of foreclosure filings at the beginning of 2009 - mostly due to moratoriums agreed to by Fannie Mae and Freddy Mac, along with other major lenders - RealtyTrac today released April foreclosure filing numbers that far surpassed even the most pessimistic estimates.

Foreclosures rose 32% in April with at least 340,000 home owners receiving a foreclosure notice.

For a link to the complete story, please click here.

If you or someone you know is facing foreclosure then you should know that probably 90% of all foreclosures can be averted by completing a short sale of the property. Generally speaking lenders do not want to foreclose on a property and rather agree to a sale which will not be sufficient to pay off the loan balance, but nevertheless yield the lender/investor more than a foreclosure sale would.

For help with your Short Sale, please visit GSS Processing at www.gss-processing.com.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.bravobrokers.com

5 Tips On Buying A Foreclosure

2009-05-03T14:54:00.004-05:00

A foreclosed home is usually better for a buyer to purchase rather than a short sale simply because the bank owns the property. This makes the process much more efficient and less time-consuming. Below is an article that appeared in CNN Money that buyers may find helpful if they are considering purchasing a foreclosed property.

5 tips on buying a foreclosed home
Sure, there are great real estate deals to be had, if you know what you're doing.
By Amanda Gengler, Money magazine writer
May 1, 2009: 6:17 AM ET
(Money Magazine) --

1. Finding one has become easier
You don't need to show up at courthouse auctions or comb through legal filings. These days many banks sell foreclosed homes through real estate agents.
To find listings, look on sites that specialize in foreclosed properties, such as realtytrac.com and foreclosurepoint.com. The local multiple-listing service often has selections as well. (The fact that the home is in foreclosure is not always highlighted in the MLS, but it's often mentioned in the description.)
Finally, some agents specialize in foreclosures, so call your local realtor's office and ask for a referral.

2. It's best to buy from a bank
If you buy a foreclosed home at an auction before the bank repossesses it, you'll have to pay in cash, and you usually cannot inspect the property. You may also later discover that there are liens against it.
When a bank takes back a home, however, it will clear any outstanding liens. Plus, when you buy a bank-owned property, you can inspect it beforehand, and you can finance the purchase with a mortgage. Leave your suitcase full of cash at home.

3. Bring in a contractor before you buy
Many foreclosed homes have been abandoned, some even vandalized, and they often require major repairs. "One mistake a lot of people make is underestimating how much work it needs and the cost," says Rick Sharga of RealtyTrac.
To avoid getting stuck with a surprise bill, ask a contractor to give you an estimate of how much the restoration will cost and how long it will take. Many will do so for free in hopes of winning your business.

4. Bid low
Banks aren't necessarily selling foreclosures at fire-sale prices; some are listed at market value, says Gene Hacker, a broker in Orange County, Calif. So be prepared to haggle. The bigger the inventory of foreclosed homes the bank has and the longer the property has sat, the greater your chances of nabbing a great deal, says Chris Matty of ForeclosurePoint.com.
Set your initial offer about 20% below market price - or more if your area has a lot of foreclosures.

5. Be prepared to wait
While some lenders are getting back to bidders within 36 hours, others are dealing with an enormous backlog that can hold up their response for as long as three months. While you wait, someone can trump you with a higher offer.
To boost your chances at scoring a home you love, have multiple properties in mind, and get your financing pre-approved before you bid. Even if the lender says it has another offer, follow up every week - these deals can often fall through.

At Your Service!

Melissa Turrisi, Director of Marketing
Bravo Real Estate
www.BravoBrokers.com

A Short Sale Nightmare

2009-04-28T19:39:00.003-05:00

We have been warning our customers - especially buyers - of the dangers and pitfalls of short sales for some time now, to the detriment some might say of our core business given that a significant percentage of transactions today are short sales.

The sad truth is however that most short sales by far are managed by well meaning, yet incompetent (with respect to short sales) owners and/or real estate agents on the seller side, and when a buyer makes an offer on a short sale a stressful game of chance ensues that more often than not will leave the buyer frustrated, out of money, or worse.

It is for this reason that we implemented a new short sale policy for Bravo home buyers on April 1st, whereby we will not represent buyers on short sale transactions unless they and the seller agree to have a qualified third party short sale negotiation and processing company manage the process.

History simply shows that 80+ of short sales handled by the owner or well meaning real estate agent will simply fall apart; and should they close they usually close with many many heart aches and lingering problems.

Today I read a very interesting article / in essence a diary of a short sale / and prospective short sale buyers should take note: the issues highlighted in this article are the norm more often than not. Please click here for the article.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
http://www.bravobrokers.com/

BRAVO REAL ESTATE DISCONTINUES FREE MLS LISTINGS

2009-04-25T15:16:00.002-05:00

Bravo will no longer be offering its free MLS Listing Service.

Bravo Real Estate was the first company in the U.S. to introduce a Free MLS Listing Service in early 2007 as a way to offer the ‘do-it-yourself FSBO type home seller’ a way to list their home on the Multiple Listing Service and Realtor.com.
Bravo originally introduced the program as a marketing tool to create a greater market presence with the aim of ultimately upgrading some of the free listings to it’s Full Service for a Flat Fee marketing program. Unfortunately the free listing program never found the level of market acceptance Bravo was looking for to justify the effort.

Thomas Heimann, President & CEO of Bravo Real Estate states “The program was simply not effective, and we found that most sellers we talked to actually preferred our more traditional ‘hands-on’ full service marketing approach. Most importantly however, we really wanted to focus the core of our business on the buyer side of the transaction, where we pay home buyers a significant amount of money with our 75% Buyer Rebate Program.

Under Bravo’s exclusive 75% Buyer Rebate Program, Bravo pays their buyers up to 75% of Bravo’s buyer-side real estate commission at closing. The buyer side real estate commission is usually 3% of the purchase price, so 75% of that can translate into a large payment. On a $500,000 purchase, home buyers can expect to receive over $11,000 paid to them at closing.

This rebate can be used as a down payment or even towards the purchase price if the buyer chooses. Bravo has found that most buyers prefer to get the cash at closing.

The Bravo Team!

2009-04-17T10:24:00.003-05:00

I have, just a few months ago, celebrated my third year here at Bravo, and what an amazing three years it has been with the excitement of growing our clientele, expanding our unique business model into more cities in Florida and seeing delightful stories about us in the media! Sure, there have been times of difficulty as there are with any meaningful endeavor - the disappointment of making sacrifices you didn't bargain for at the interview table, the frustration of transactions being delayed or dying out due to forces neither the buyer nor the seller could have ever seen coming...

Well, what to do at times like these - times when nearly everything seems to be a challenge? Everything from getting the ol' printer to print correctly so we can get those precious brochures out to your clients eagerly awaiting, right on up to figuring out how we can overcome lender obstacles we've never encountered before on the day of a closing. Notably, it is rarely just one of us in the printer room fighting with the printer, or one of us at the closing table praying for the closing, it's often 2 or 3 or even 4 of us (Thomas right in the middle) trying to figure it out together.

The Bravo Team keeps moving forward, that's what we do. We can see the huge mountain top waiting for us and when we get there we will all yell at the top of our lungs that we finally made it! As Dr. Suess would say, "Oh, The Places You'll Go!"

Of course, the mountain top I am referring to is different for each individual team member; whether it be a performance-based bonus, a promotion, spearheading the start-up of a satellite office, national expansion, publicly traded shares, or all of those combined, the vision is the same. The culmination of all of our efforts as a team is growing a company that will some day be as highly recognized as Starbucks or Walmart. That is a truly awe inspiring thought. And, it is a thought that makes me just as excited about being here as I was the first day I started! There are about 10 of us right now and some folks find that hard to believe given all of the value they receive when they sell their listing, or the top notch customer service they experience when they buy or sell the Bravo way. Our CEO, Thomas Heimann, is greatly admired and deserves a lot of credit as he is the leader, the one who dreamt it all up and went out looking for us, to help run his ship, to help tell the world about this new way of doing real estate. He also gave us our Credo to live by and to grow by:

The Bravo Credo
Bravo Real Estate is a customer-centric company, committed to being the leader in quality, value and service within the real estate industry. Our values are Integrity, Quality, Service and Excellence in everything we do.

At Bravo, we are all about our customers, and once we enter into a client relationship, we are committed to anticipating and meeting each of our clients needs to the fullest. We set high expectations and then strive to exceed those expectations whenever possible.

The Bravo Team is the key ingredient to delivering outstanding value, quality and service to our clients. Our team consists of top notch professionals who are committed to a standard of excellence, and who are empowered to make decisions to meet our clients' needs. Each team member has a vested interest and shares in the success of the company.

All of us have memorized this credo and I, personally, am very proud to live by it during my daily activities at Bravo. Anytime we get frustrated because a closing was delayed, or snap at each other because it's been a crazy day, all we have to do is take a deep breath and remember our vision, our Credo, and keep on moving forward.

Dubai on the skids: a glimpse of Hell

2009-04-10T12:06:00.002-05:00

For the longest time Dubai has been held out as a real estate boom-town nirvana supposedley immune from the global real estate down turn, with scores of US and European investors pouring money into new construction opportunities. Well, quite obviously that is no longer the case.... What lessons can we learn from this in our own 'superlative-obsessed' society?

It's heart-breaking - An article worth reading!
Forwarded to me by a good friend.

The dark side of Dubai

Dubai was meant to be a Middle-Eastern Shangri-La, a glittering
monument to Arab enterprise and western capitalism. But as hard times
arrive in the city state that rose from the desert sands, an uglier
story is emerging. Johann Hari reports

Tuesday , 7 April 2009

The wide, smiling face of Sheikh Mohammed – the absolute ruler of
Dubai – beams down on his creation. His image is displayed on every
other building, sandwiched between the more familiar corporate
rictuses of Ronald McDonald and Colonel Sanders. This man has sold
Dubai to the world as the city of One Thousand and One Arabian
Lights, a Shangri-La in the Middle East insulated from the dust-
storms blasting across the region. He dominates the Manhattan-manqué
skyline, beaming out from row after row of glass pyramids and hotels
smelted into the shape of piles of golden coins. And there he stands
on the tallest building in the world – a skinny spike, jabbing
farther into the sky than any other human construction in history.

But something has flickered in Sheikh Mohammed's smile. The
ubiquitous cranes have paused on the skyline, as if stuck in time.
There are countless buildings half-finished, seemingly abandoned. In
the swankiest new constructions – like the vast Atlantis hotel, a
giant pink castle built in 1,000 days for $1.5bn on its own
artificial island – where rainwater is leaking from the ceilings and
the tiles are falling off the roof. This Neverland was built on the
Never-Never – and now the cracks are beginning to show. Suddenly it
looks less like Manhattan in the sun than Iceland in the desert.

Once the manic burst of building has stopped and the whirlwind has
slowed, the secrets of Dubai are slowly seeping out. This is a city
built from nothing in just a few wild decades on credit and ecocide,
suppression and slavery. Dubai is a living metal metaphor for the neo-
liberal globalised world that may be crashing – at last – into history.

I. An Adult Disneyland

Karen Andrews can't speak. Every time she starts to tell her story,
she puts her head down and crumples. She is slim and angular and has
the faded radiance of the once-rich, even though her clothes are as
creased as her forehead. I find her in the car park of one of Dubai's
finest international hotels, where she is living, in her Range Rover.
She has been sleeping here for months, thanks to the kindness of the
Bangladeshi car park attendants who don't have the heart to move her
on. This is not where she thought her Dubai dream would end.

Her story comes out in stutters, over four hours. At times, her old
voice – witty and warm – breaks through. Karen came here from Canada
when her husband was offered a job in the senior division of a famous
multinational. "When he said Dubai, I said – if you want me to wear
black and quit booze, baby, you've got the wrong girl. But he asked
me to give it a chance. And I loved him."

All her worries melted when she touched down in Dubai in 2005. "It
was an adult Disneyland, where Sheikh Mohammed is the mouse," she
says. "Life was fantastic. You had these amazing big apartments, you
had a whole army of your own staff, you pay no taxes at all. It
seemed like everyone was a CEO. We were partying the whole time."

Her husband, Daniel, bought two properties. "We were drunk on Dubai,"
she says. But for the first time in his life, he was beginning to
mismanage their finances. "We're not talking huge sums, but he was
getting confused. It was so unlike Daniel, I was surprised. We got
into a little bit of debt." After a year, she found out why: Daniel
was diagnosed with a brain tumour.

One doctor told him he had a year to live; another said it was benign
and he'd be okay. But the debts were growing. "Before I came here, I
didn't know anything about Dubai law. I assumed if all these big
companies come here, it must be pretty like Canada's or any other
liberal democracy's," she says. Nobody told her there is no concept
of bankruptcy. If you get into debt and you can't pay, you go to prison.

"When we realised that, I sat Daniel down and told him: listen, we
need to get out of here. He knew he was guaranteed a pay-off when he
resigned, so we said – right, let's take the pay-off, clear the debt,
and go." So Daniel resigned – but he was given a lower pay-off than
his contract suggested. The debt remained. As soon as you quit your
job in Dubai, your employer has to inform your bank. If you have any
outstanding debts that aren't covered by your savings, then all your
accounts are frozen, and you are forbidden to leave the country.

"Suddenly our cards stopped working. We had nothing. We were thrown
out of our apartment." Karen can't speak about what happened next for
a long time; she is shaking.

Daniel was arrested and taken away on the day of their eviction. It
was six days before she could talk to him. "He told me he was put in
a cell with another debtor, a Sri Lankan guy who was only 27, who
said he couldn't face the shame to his family. Daniel woke up and the
boy had swallowed razor-blades. He banged for help, but nobody came,
and the boy died in front of him."

Karen managed to beg from her friends for a few weeks, "but it was so
humiliating. I've never lived like this. I worked in the fashion
industry. I had my own shops. I've never..." She peters out.

Daniel was sentenced to six months' imprisonment at a trial he
couldn't understand. It was in Arabic, and there was no translation.
"Now I'm here illegally, too," Karen says I've got no money, nothing.
I have to last nine months until he's out, somehow." Looking away,
almost paralysed with embarrassment, she asks if I could buy her a meal.

She is not alone. All over the city, there are maxed-out expats
sleeping secretly in the sand-dunes or the airport or in their cars.

"The thing you have to understand about Dubai is – nothing is what it
seems," Karen says at last. "Nothing. This isn't a city, it's a con-
job. They lure you in telling you it's one thing – a modern kind of
place – but beneath the surface it's a medieval dictatorship."

II. Tumbleweed

Thirty years ago, almost all of contemporary Dubai was desert,
inhabited only by cactuses and tumbleweed and scorpions. But downtown
there are traces of the town that once was, buried amidst the metal
and glass. In the dusty fort of the Dubai Museum, a sanitised version
of this story is told.

In the mid-18th century, a small village was built here, in the lower
Persian Gulf, where people would dive for pearls off the coast. It
soon began to accumulate a cosmopolitan population washing up from
Persia, the Indian subcontinent, and other Arab countries, all hoping
to make their fortune. They named it after a local locust, the daba,
who consumed everything before it. The town was soon seized by the
gunships of the British Empire, who held it by the throat as late as
1971. As they scuttled away, Dubai decided to ally with the six
surrounding states and make up the United Arab Emirates (UAE).

The British quit, exhausted, just as oil was being discovered, and
the sheikhs who suddenly found themselves in charge faced a
remarkable dilemma. They were largely illiterate nomads who spent
their lives driving camels through the desert – yet now they had a
vast pot of gold. What should they do with it?

Dubai only had a dribble of oil compared to neighbouring Abu Dhabi –
so Sheikh Maktoum decided to use the revenues to build something that
would last. Israel used to boast it made the desert bloom; Sheikh
Maktoum resolved to make the desert boom. He would build a city to be
a centre of tourism and financial services, sucking up cash and
talent from across the globe. He invited the world to come tax-free –
and they came in their millions, swamping the local population, who
now make up just 5 per cent of Dubai. A city seemed to fall from the
sky in just three decades, whole and complete and swelling. They fast-
forwarded from the 18th century to the 21st in a single generation.

If you take the Big Bus Tour of Dubai – the passport to a pre-
processed experience of every major city on earth – you are fed the
propaganda-vision of how this happened. "Dubai's motto is 'Open
doors, open minds'," the tour guide tells you in clipped tones,
before depositing you at the souks to buy camel tea-cosies. "Here you
are free. To purchase fabrics," he adds. As you pass each new
monumental building, he tells you: "The World Trade Centre was built
by His Highness..."

But this is a lie. The sheikh did not build this city. It was built
by slaves. They are building it now.

III. Hidden in plain view

There are three different Dubais, all swirling around each other.
There are the expats, like Karen; there are the Emiratis, headed by
Sheikh Mohammed; and then there is the foreign underclass who built
the city, and are trapped here. They are hidden in plain view. You
see them everywhere, in dirt-caked blue uniforms, being shouted at by
their superiors, like a chain gang – but you are trained not to look.
It is like a mantra: the Sheikh built the city. The Sheikh built the
city. Workers? What workers?

Every evening, the hundreds of thousands of young men who build Dubai
are bussed from their sites to a vast concrete wasteland an hour out
of town, where they are quarantined away. Until a few years ago they
were shuttled back and forth on cattle trucks, but the expats
complained this was unsightly, so now they are shunted on small metal
buses that function like greenhouses in the desert heat. They sweat
like sponges being slowly wrung out.

Sonapur is a rubble-strewn patchwork of miles and miles of identical
concrete buildings. Some 300,000 men live piled up here, in a place
whose name in Hindi means "City of Gold". In the first camp I stop at
– riven with the smell of sewage and sweat – the men huddle around,
eager to tell someone, anyone, what is happening to them.

Sahinal Monir, a slim 24-year-old from the deltas of Bangladesh. "To
get you here, they tell you Dubai is heaven. Then you get here and
realise it is hell," he says. Four years ago, an employment agent
arrived in Sahinal's village in Southern Bangladesh. He told the men
of the village that there was a place where they could earn 40,000
takka a month (£400) just for working nine-to-five on construction
projects. It was a place where they would be given great
accommodation, great food, and treated well. All they had to do was
pay an up-front fee of 220,000 takka (£2,300) for the work visa – a
fee they'd pay off in the first six months, easy. So Sahinal sold his
family land, and took out a loan from the local lender, to head to
this paradise.

As soon as he arrived at Dubai airport, his passport was taken from
him by his construction company. He has not seen it since. He was
told brusquely that from now on he would be working 14-hour days in
the desert heat – where western tourists are advised not to stay
outside for even five minutes in summer, when it hits 55 degrees –
for 500 dirhams a month (£90), less than a quarter of the wage he was
promised. If you don't like it, the company told him, go home. "But
how can I go home? You have my passport, and I have no money for the
ticket," he said. "Well, then you'd better get to work," they replied.

Sahinal was in a panic. His family back home – his son, daughter,
wife and parents – were waiting for money, excited that their boy had
finally made it. But he was going to have to work for more than two
years just to pay for the cost of getting here – and all to earn less
than he did in Bangladesh.

He shows me his room. It is a tiny, poky, concrete cell with triple-
decker bunk-beds, where he lives with 11 other men. All his
belongings are piled onto his bunk: three shirts, a spare pair of
trousers, and a cellphone. The room stinks, because the lavatories in
the corner of the camp – holes in the ground – are backed up with
excrement and clouds of black flies. There is no air conditioning or
fans, so the heat is "unbearable. You cannot sleep. All you do is
sweat and scratch all night." At the height of summer, people sleep
on the floor, on the roof, anywhere where they can pray for a moment
of breeze.

The water delivered to the camp in huge white containers isn't
properly desalinated: it tastes of salt. "It makes us sick, but we
have nothing else to drink," he says.

The work is "the worst in the world," he says. "You have to carry
50kg bricks and blocks of cement in the worst heat imaginable ...
This heat – it is like nothing else. You sweat so much you can't pee,
not for days or weeks. It's like all the liquid comes out through
your skin and you stink. You become dizzy and sick but you aren't
allowed to stop, except for an hour in the afternoon. You know if you
drop anything or slip, you could die. If you take time off sick, your
wages are docked, and you are trapped here even longer."

He is currently working on the 67th floor of a shiny new tower, where
he builds upwards, into the sky, into the heat. He doesn't know its
name. In his four years here, he has never seen the Dubai of tourist-
fame, except as he constructs it floor-by-floor.

Is he angry? He is quiet for a long time. "Here, nobody shows their
anger. You can't. You get put in jail for a long time, then
deported." Last year, some workers went on strike after they were not
given their wages for four months. The Dubai police surrounded their
camps with razor-wire and water-cannons and blasted them out and back
to work.

The "ringleaders" were imprisoned. I try a different question: does
Sohinal regret coming? All the men look down, awkwardly. "How can we
think about that? We are trapped. If we start to think about
regrets..." He lets the sentence trail off. Eventually, another
worker breaks the silence by adding: "I miss my country, my family
and my land. We can grow food in Bangladesh. Here, nothing grows.
Just oil and buildings."

Since the recession hit, they say, the electricity has been cut off
in dozens of the camps, and the men have not been paid for months.
Their companies have disappeared with their passports and their pay.
"We have been robbed of everything. Even if somehow we get back to
Bangladesh, the loan sharks will demand we repay our loans
immediately, and when we can't, we'll be sent to prison."

This is all supposed to be illegal. Employers are meant to pay on
time, never take your passport, give you breaks in the heat – but I
met nobody who said it happens. Not one. These men are conned into
coming and trapped into staying, with the complicity of the Dubai
authorities.

Sahinal could well die out here. A British man who used to work on
construction projects told me: "There's a huge number of suicides in
the camps and on the construction sites, but they're not reported.
They're described as 'accidents'." Even then, their families aren't
free: they simply inherit the debts. A Human Rights Watch study found
there is a "cover-up of the true extent" of deaths from heat
exhaustion, overwork and suicide, but the Indian consulate registered
971 deaths of their nationals in 2005 alone. After this figure was
leaked, the consulates were told to stop counting.

At night, in the dusk, I sit in the camp with Sohinal and his friends
as they scrape together what they have left to buy a cheap bottle of
spirits. They down it in one ferocious gulp. "It helps you to feel
numb", Sohinal says through a stinging throat. In the distance, the
glistening Dubai skyline he built stands, oblivious.

IV. Mauled by the mall

I find myself stumbling in a daze from the camps into the sprawling
marble malls that seem to stand on every street in Dubai. It is so
hot there is no point building pavements; people gather in these
cathedrals of consumerism to bask in the air conditioning. So within
a ten minute taxi-ride, I have left Sohinal and I am standing in the
middle of Harvey Nichols, being shown a £20,000 taffeta dress by a
bored salesgirl. "As you can see, it is cut on the bias..." she says,
and I stop writing.

Time doesn't seem to pass in the malls. Days blur with the same
electric light, the same shined floors, the same brands I know from
home. Here, Dubai is reduced to its component sounds: do-buy. In the
most expensive malls I am almost alone, the shops empty and echoing.
On the record, everybody tells me business is going fine. Off the
record, they look panicky. There is a hat exhibition ahead of the
Dubai races, selling elaborate headgear for £1,000 a pop. "Last year,
we were packed. Now look," a hat designer tells me. She swoops her
arm over a vacant space.

I approach a blonde 17-year-old Dutch girl wandering around in
hotpants, oblivious to the swarms of men gaping at her. "I love it
here!" she says. "The heat, the malls, the beach!" Does it ever
bother you that it's a slave society? She puts her head down, just as
Sohinal did. "I try not to see," she says. Even at 17, she has
learned not to look, and not to ask; that, she senses, is a
transgression too far.

Between the malls, there is nothing but the connecting tissue of
asphalt. Every road has at least four lanes; Dubai feels like a
motorway punctuated by shopping centres. You only walk anywhere if
you are suicidal. The residents of Dubai flit from mall to mall by
car or taxis.

How does it feel if this is your country, filled with foreigners?
Unlike the expats and the slave class, I can't just approach the
native Emiratis to ask questions when I see them wandering around –
the men in cool white robes, the women in sweltering black. If you
try, the women blank you, and the men look affronted, and tell you
brusquely that Dubai is "fine". So I browse through the Emirati blog-
scene and found some typical-sounding young Emiratis. We meet – where
else? – in the mall.

Ahmed al-Atar is a handsome 23-year-old with a neat, trimmed beard,
tailored white robes, and rectangular wire-glasses. He speaks perfect
American-English, and quickly shows that he knows London, Los Angeles
and Paris better than most westerners. Sitting back in his chair in
an identikit Starbucks, he announces: "This is the best place in the
world to be young! The government pays for your education up to PhD
level. You get given a free house when you get married. You get free
healthcare, and if it's not good enough here, they pay for you to go
abroad. You don't even have to pay for your phone calls. Almost
everyone has a maid, a nanny, and a driver. And we never pay any
taxes. Don't you wish you were Emirati?"

I try to raise potential objections to this Panglossian summary, but
he leans forward and says: "Look – my grandfather woke up every day
and he would have to fight to get to the well first to get water.
When the wells ran dry, they had to have water delivered by camel.
They were always hungry and thirsty and desperate for jobs. He limped
all his life, because he there was no medical treatment available
when he broke his leg. Now look at us!"

For Emiratis, this is a Santa Claus state, handing out goodies while
it makes its money elsewhere: through renting out land to foreigners,
soft taxes on them like business and airport charges, and the
remaining dribble of oil. Most Emiratis, like Ahmed, work for the
government, so they're cushioned from the credit crunch. "I haven't
felt any effect at all, and nor have my friends," he says. "Your
employment is secure. You will only be fired if you do something
incredibly bad." The laws are currently being tightened, to make it
even more impossible to sack an Emirati.

Sure, the flooding-in of expats can sometimes be "an eyesore", Ahmed
says. "But we see the expats as the price we had to pay for this
development. How else could we do it? Nobody wants to go back to the
days of the desert, the days before everyone came. We went from being
like an African country to having an average income per head of
$120,000 a year. And we're supposed to complain?"

He says the lack of political freedom is fine by him. "You'll find it
very hard to find an Emirati who doesn't support Sheikh Mohammed."
Because they're scared? "No, because we really all support him. He's
a great leader. Just look!" He smiles and says: "I'm sure my life is
very much like yours. We hang out, have a coffee, go to the movies.
You'll be in a Pizza Hut or Nando's in London, and at the same time
I'll be in one in Dubai," he says, ordering another latte.

But do all young Emiratis see it this way? Can it really be so sunny
in the political sands? In the sleek Emirates Tower Hotel, I meet
Sultan al-Qassemi. He's a 31-year-old Emirati columnist for the Dubai
press and private art collector, with a reputation for being a
contrarian liberal, advocating gradual reform. He is wearing Western
clothes – blue jeans and a Ralph Lauren shirt – and speaks incredibly
fast, turning himself into a manic whirr of arguments.

"People here are turning into lazy, overweight babies!" he exclaims.
"The nanny state has gone too far. We don't do anything for
ourselves! Why don't any of us work for the private sector? Why can't
a mother and father look after their own child?" And yet, when I try
to bring up the system of slavery that built Dubai, he looks angry.
"People should give us credit," he insists. "We are the most tolerant
people in the world. Dubai is the only truly international city in
the world. Everyone who comes here is treated with respect."

I pause, and think of the vast camps in Sonapur, just a few miles
away. Does he even know they exist? He looks irritated. "You know, if
there are 30 or 40 cases [of worker abuse] a year, that sounds like a
lot but when you think about how many people are here..." Thirty or
40? This abuse is endemic to the system, I say. We're talking about
hundreds of thousands.

Sultan is furious. He splutters: "You don't think Mexicans are
treated badly in New York City? And how long did it take Britain to
treat people well? I could come to London and write about the
homeless people on Oxford Street and make your city sound like a
terrible place, too! The workers here can leave any time they want!
Any Indian can leave, any Asian can leave!"

But they can't, I point out. Their passports are taken away, and
their wages are withheld. "Well, I feel bad if that happens, and
anybody who does that should be punished. But their embassies should
help them." They try. But why do you forbid the workers – with force
– from going on strike against lousy employers? "Thank God we don't
allow that!" he exclaims. "Strikes are in-convenient! They go on the
street – we're not having that. We won't be like France. Imagine a
country where they the workers can just stop whenever they want!" So
what should the workers do when they are cheated and lied to? "Quit.
Leave the country."

I sigh. Sultan is seething now. "People in the West are always
complaining about us," he says. Suddenly, he adopts a mock-whiny
voice and says, in imitation of these disgusting critics: "Why don't
you treat animals better? Why don't you have better shampoo
advertising? Why don't you treat labourers better?" It's a revealing
order: animals, shampoo, then workers. He becomes more heated,
shifting in his seat, jabbing his finger at me. "I gave workers who
worked for me safety goggles and special boots, and they didn't want
to wear them! It slows them down!"

And then he smiles, coming up with what he sees as his killer
argument. "When I see Western journalists criticise us – don't you
realise you're shooting yourself in the foot? The Middle East will be
far more dangerous if Dubai fails. Our export isn't oil, it's hope.
Poor Egyptians or Libyans or Iranians grow up saying – I want to go
to Dubai. We're very important to the region. We are showing how to
be a modern Muslim country. We don't have any fundamentalists here.
Europeans shouldn't gloat at our demise. You should be very
worried.... Do you know what will happen if this model fails? Dubai
will go down the Iranian path, the Islamist path."

Sultan sits back. My arguments have clearly disturbed him; he says in
a softer, conciliatory tone, almost pleading: "Listen. My mother used
to go to the well and get a bucket of water every morning. On her
wedding day, she was given an orange as a gift because she had never
eaten one. Two of my brothers died when they were babies because the
healthcare system hadn't developed yet. Don't judge us." He says it
again, his eyes filled with intensity: "Don't judge us."

V. The Dunkin' Donuts Dissidents

But there is another face to the Emirati minority – a small huddle of
dissidents, trying to shake the Sheikhs out of abusive laws. Next to
a Virgin Megastore and a Dunkin' Donuts, with James Blunt's "You're
Beautiful" blaring behind me, I meet the Dubai dictatorship's Public
Enemy Number One. By way of introduction, Mohammed al-Mansoori says
from within his white robes and sinewy face: "Westerners come her and
see the malls and the tall buildings and they think that means we are
free. But these businesses, these buildings – who are they for? This
is a dictatorship. The royal family think they own the country, and
the people are their servants. There is no freedom here."

We snuffle out the only Arabic restaurant in this mall, and he says
everything you are banned – under threat of prison – from saying in
Dubai. Mohammed tells me he was born in Dubai to a fisherman father
who taught him one enduring lesson: Never follow the herd. Think for
yourself. In the sudden surge of development, Mohammed trained as a
lawyer. By the Noughties, he had climbed to the head of the Jurists'
Association, an organisation set up to press for Dubai's laws to be
consistent with international human rights legislation.

And then – suddenly – Mohammed thwacked into the limits of Sheikh
Mohammed's tolerance. Horrified by the "system of slavery" his
country was being built on, he spoke out to Human Rights Watch and
the BBC. "So I was hauled in by the secret police and told: shut up,
or you will lose you job, and your children will be unemployable," he
says. "But how could I be silent?"

He was stripped of his lawyer's licence and his passport – becoming
yet another person imprisoned in this country. "I have been
blacklisted and so have my children. The newspapers are not allowed
to write about me."

Why is the state so keen to defend this system of slavery? He offers
a prosaic explanation. "Most companies are owned by the government,
so they oppose human rights laws because it will reduce their profit
margins. It's in their interests that the workers are slaves."

Last time there was a depression, there was a starbust of democracy
in Dubai, seized by force from the sheikhs. In the 1930s, the city's
merchants banded together against Sheikh Said bin Maktum al-Maktum –
the absolute ruler of his day – and insisted they be given control
over the state finances. It lasted only a few years, before the
Sheikh – with the enthusiastic support of the British – snuffed them
out.

And today? Sheikh Mohammed turned Dubai into Creditopolis, a city
built entirely on debt. Dubai owes 107 percent of its entire GDP. It
would be bust already, if the neighbouring oil-soaked state of Abu
Dhabi hadn't pulled out its chequebook. Mohammed says this will
constrict freedom even further. "Now Abu Dhabi calls the tunes – and
they are much more conservative and restrictive than even Dubai.
Freedom here will diminish every day." Already, new media laws have
been drafted forbidding the press to report on anything that could
"damage" Dubai or "its economy". Is this why the newspapers are
giving away glossy supplements talking about "encouraging economic
indicators"?

Everybody here waves Islamism as the threat somewhere over the
horizon, sure to swell if their advice is not followed. Today, every
imam is appointed by the government, and every sermon is tightly
controlled to keep it moderate. But Mohammed says anxiously: "We
don't have Islamism here now, but I think that if you control people
and give them no way to express anger, it could rise. People who are
told to shut up all the time can just explode."

Later that day, against another identikit-corporate backdrop, I meet
another dissident – Abdulkhaleq Abdullah, Professor of Political
Science at Emirates University. His anger focuses not on political
reform, but the erosion of Emirati identity. He is famous among the
locals, a rare outspoken conductor for their anger. He says somberly:
"There has been a rupture here. This is a totally different city to
the one I was born in 50 years ago."

He looks around at the shiny floors and Western tourists and says:
"What we see now didn't occur in our wildest dreams. We never thought
we could be such a success, a trendsetter, a model for other Arab
countries. The people of Dubai are mighty proud of their city, and
rightly so. And yet..." He shakes his head. "In our hearts, we fear
we have built a modern city but we are losing it to all these expats."

Adbulkhaleq says every Emirati of his generation lives with a
"psychological trauma." Their hearts are divided – "between pride on
one side, and fear on the other." Just after he says this, a smiling
waitress approaches, and asks us what we would like to drink. He
orders a Coke.

VI. Dubai Pride

There is one group in Dubai for whom the rhetoric of sudden freedom
and liberation rings true – but it is the very group the government
wanted to liberate least: gays.

Beneath a famous international hotel, I clamber down into possibly
the only gay club on the Saudi Arabian peninsula. I find a United
Nations of tank-tops and bulging biceps, dancing to Kylie, dropping
ecstasy, and partying like it's Soho. "Dubai is the best place in the
Muslim world for gays!" a 25-year old Emirati with spiked hair says,
his arms wrapped around his 31-year old "husband". "We are alive. We
can meet. That is more than most Arab gays."

It is illegal to be gay in Dubai, and punishable by 10 years in
prison. But the locations of the latest unofficial gay clubs
circulate online, and men flock there, seemingly unafraid of the
police. "They might bust the club, but they will just disperse us,"
one of them says. "The police have other things to do."

In every large city, gay people find a way to find each other – but
Dubai has become the clearing-house for the region's homosexuals, a
place where they can live in relative safety. Saleh, a lean private
in the Saudi Arabian army, has come here for the Coldplay concert,
and tells me Dubai is "great" for gays: "In Saudi, it's hard to be
straight when you're young. The women are shut away so everyone has
gay sex. But they only want to have sex with boys – 15- to 21-year-
olds. I'm 27, so I'm too old now. I need to find real gays, so this
is the best place. All Arab gays want to live in Dubai."

With that, Saleh dances off across the dancefloor, towards a Dutch
guy with big biceps and a big smile.

VII. The Lifestyle

All the guidebooks call Dubai a "melting pot", but as I trawl across
the city, I find that every group here huddles together in its own
little ethnic enclave – and becomes a caricature of itself. One night
– in the heart of this homesick city, tired of the malls and the
camps – I go to Double Decker, a hang-out for British expats. At the
entrance there is a red telephone box, and London bus-stop signs. Its
wooden interior looks like a cross between a colonial clubhouse in
the Raj and an Eighties school disco, with blinking coloured lights
and cheese blaring out. As I enter, a girl in a short skirt collapses
out of the door onto her back. A guy wearing a pirate hat helps her
to her feet, dropping his beer bottle with a paralytic laugh.

I start to talk to two sun-dried women in their sixties who have been
getting gently sozzled since midday. "You stay here for The
Lifestyle," they say, telling me to take a seat and order some more
drinks. All the expats talk about The Lifestyle, but when you ask
what it is, they become vague. Ann Wark tries to summarise it: "Here,
you go out every night. You'd never do that back home. You see people
all the time. It's great. You have lots of free time. You have maids
and staff so you don't have to do all that stuff. You party!"

They have been in Dubai for 20 years, and they are happy to explain
how the city works. "You've got a hierarchy, haven't you?" Ann says.
"It's the Emiratis at the top, then I'd say the British and other
Westerners. Then I suppose it's the Filipinos, because they've got a
bit more brains than the Indians. Then at the bottom you've got the
Indians and all them lot."

They admit, however, they have "never" spoken to an Emirati. Never?
"No. They keep themselves to themselves." Yet Dubai has disappointed
them. Jules Taylor tells me: "If you have an accident here it's a
nightmare. There was a British woman we knew who ran over an Indian
guy, and she was locked up for four days! If you have a tiny bit of
alcohol on your breath they're all over you. These Indians throw
themselves in front of cars, because then their family has to be
given blood money – you know, compensation. But the police just blame
us. That poor woman."

A 24-year-old British woman called Hannah Gamble takes a break from
the dancefloor to talk to me. "I love the sun and the beach! It's
great out here!" she says. Is there anything bad? "Oh yes!" she says.
Ah: one of them has noticed, I think with relief. "The banks! When
you want to make a transfer you have to fax them. You can't do it
online." Anything else? She thinks hard. "The traffic's not very good."

When I ask the British expats how they feel to not be in a democracy,
their reaction is always the same. First, they look bemused. Then
they look affronted. "It's the Arab way!" an Essex boy shouts at me
in response, as he tries to put a pair of comedy antlers on his head
while pouring some beer into the mouth of his friend, who is lying on
his back on the floor, gurning.

Later, in a hotel bar, I start chatting to a dyspeptic expat American
who works in the cosmetics industry and is desperate to get away from
these people. She says: "All the people who couldn't succeed in their
own countries end up here, and suddenly they're rich and promoted way
above their abilities and bragging about how great they are. I've
never met so many incompetent people in such senior positions
anywhere in the world." She adds: "It's absolutely racist. I had
Filipino girls working for me doing the same job as a European girl,
and she's paid a quarter of the wages. The people who do the real
work are paid next to nothing, while these incompetent managers pay
themselves £40,000 a month."

With the exception of her, one theme unites every expat I speak to:
their joy at having staff to do the work that would clog their lives
up Back Home. Everyone, it seems, has a maid. The maids used to be
predominantly Filipino, but with the recession, Filipinos have been
judged to be too expensive, so a nice Ethiopian servant girl is the
latest fashionable accessory.

It is an open secret that once you hire a maid, you have absolute
power over her. You take her passport – everyone does; you decide
when to pay her, and when – if ever – she can take a break; and you
decide who she talks to. She speaks no Arabic. She cannot escape.

In a Burger King, a Filipino girl tells me it is "terrifying" for her
to wander the malls in Dubai because Filipino maids or nannies always
sneak away from the family they are with and beg her for help. "They
say – 'Please, I am being held prisoner, they don't let me call home,
they make me work every waking hour seven days a week.' At first I
would say – my God, I will tell the consulate, where are you staying?
But they never know their address, and the consulate isn't
interested. I avoid them now. I keep thinking about a woman who told
me she hadn't eaten any fruit in four years. They think I have power
because I can walk around on my own, but I'm powerless."

The only hostel for women in Dubai – a filthy private villa on the
brink of being repossessed – is filled with escaped maids. Mela
Matari, a 25-year-old Ethiopian woman with a drooping smile, tells me
what happened to her – and thousands like her. She was promised a
paradise in the sands by an agency, so she left her four year-old
daughter at home and headed here to earn money for a better future.
"But they paid me half what they promised. I was put with an
Australian family – four children – and Madam made me work from 6am
to 1am every day, with no day off. I was exhausted and pleaded for a
break, but they just shouted: 'You came here to work, not sleep!'
Then one day I just couldn't go on, and Madam beat me. She beat me
with her fists and kicked me. My ear still hurts. They wouldn't give
me my wages: they said they'd pay me at the end of the two years.
What could I do? I didn't know anybody here. I was terrified."

One day, after yet another beating, Mela ran out onto the streets,
and asked – in broken English – how to find the Ethiopian consulate.
After walking for two days, she found it, but they told her she had
to get her passport back from Madam. "Well, how could I?" she asks.
She has been in this hostel for six months. She has spoken to her
daughter twice. "I lost my country, I lost my daughter, I lost
everything," she says.

As she says this, I remember a stray sentence I heard back at Double
Decker. I asked a British woman called Hermione Frayling what the
best thing about Dubai was. "Oh, the servant class!" she trilled.
"You do nothing. They'll do anything!"

VIII. The End of The World

The World is empty. It has been abandoned, its continents unfinished.
Through binoculars, I think I can glimpse Britain; this sceptred isle
barren in the salt-breeze.

Here, off the coast of Dubai, developers have been rebuilding the
world. They have constructed artificial islands in the shape of all
planet Earth's land masses, and they plan to sell each continent off
to be built on. There were rumours that the Beckhams would bid for
Britain. But the people who work at the nearby coast say they haven't
seen anybody there for months now. "The World is over," a South
African suggests.

All over Dubai, crazy projects that were Under Construction are now
Under Collapse. They were building an air-conditioned beach here,
with cooling pipes running below the sand, so the super-rich didn't
singe their toes on their way from towel to sea.

The projects completed just before the global economy crashed look
empty and tattered. The Atlantis Hotel was launched last winter in a
$20m fin-de-siecle party attended by Robert De Niro, Lindsay Lohan
and Lily Allen. Sitting on its own fake island – shaped, of course,
like a palm tree – it looks like an immense upturned tooth in a
faintly decaying mouth. It is pink and turreted – the architecture of
the pharaohs, as reimagined by Zsa-Zsa Gabor. Its Grand Lobby is a
monumental dome covered in glitterballs, held up by eight monumental
concrete palm trees. Standing in the middle, there is a giant shining
glass structure that looks like the intestines of every guest who has
ever stayed at the Atlantis. It is unexpectedly raining; water is
leaking from the roof, and tiles are falling off.

A South African PR girl shows me around its most coveted rooms,
explaining that this is "the greatest luxury offered in the world".
We stroll past shops selling £24m diamond rings around a hotel themed
on the lost and sunken continent of, yes, Atlantis. There are huge
water tanks filled with sharks, which poke around mock-abandoned
castles and dumped submarines. There are more than 1,500 rooms here,
each with a sea view. The Neptune suite has three floors, and – I
gasp as I see it – it looks out directly on to the vast shark tank.
You lie on the bed, and the sharks stare in at you. In Dubai, you can
sleep with the fishes, and survive.

But even the luxury – reminiscent of a Bond villain's lair – is also
being abandoned. I check myself in for a few nights to the classiest
hotel in town, the Park Hyatt. It is the fashionistas' favourite
hotel, where Elle Macpherson and Tommy Hilfiger stay, a gorgeous,
understated palace. It feels empty. Whenever I eat, I am one of the
only people in the restaurant. A staff member tells me in a whisper:
"It used to be full here. Now there's hardly anyone." Rattling
around, I feel like Jack Nicholson in The Shining, the last man in an
abandoned, haunted home.

The most famous hotel in Dubai – the proud icon of the city – is the
Burj al Arab hotel, sitting on the shore, shaped like a giant glass
sailing boat. In the lobby, I start chatting to a couple from London
who work in the City. They have been coming to Dubai for 10 years
now, and they say they love it. "You never know what you'll find
here," he says. "On our last trip, at the beginning of the holiday,
our window looked out on the sea. By the end, they'd built an entire
island there."

My patience frayed by all this excess, I find myself snapping:
doesn't the omnipresent slave class bother you? I hope they
misunderstood me, because the woman replied: "That's what we come
for! It's great, you can't do anything for yourself!" Her husband
chimes in: "When you go to the toilet, they open the door, they turn
on the tap – the only thing they don't do is take it out for you when
you have a piss!" And they both fall about laughing.

IX. Taking on the Desert

Dubai is not just a city living beyond its financial means; it is
living beyond its ecological means. You stand on a manicured Dubai
lawn and watch the sprinklers spray water all around you. You see
tourists flocking to swim with dolphins. You wander into a mountain-
sized freezer where they have built a ski slope with real snow. And a
voice at the back of your head squeaks: this is the desert. This is
the most water-stressed place on the planet. How can this be
happening? How is it possible?

The very earth is trying to repel Dubai, to dry it up and blow it
away. The new Tiger Woods Gold Course needs four million gallons of
water to be pumped on to its grounds every day, or it would simply
shrivel and disappear on the winds. The city is regularly washed over
with dust-storms that fog up the skies and turn the skyline into a
blur. When the dust parts, heat burns through. It cooks anything that
is not kept constantly, artificially wet.

Dr Mohammed Raouf, the environmental director of the Gulf Research
Centre, sounds sombre as he sits in his Dubai office and warns: "This
is a desert area, and we are trying to defy its environment. It is
very unwise. If you take on the desert, you will lose."

Sheikh Maktoum built his showcase city in a place with no useable
water. None. There is no surface water, very little acquifer, and
among the lowest rainfall in the world. So Dubai drinks the sea. The
Emirates' water is stripped of salt in vast desalination plants
around the Gulf – making it the most expensive water on earth. It
costs more than petrol to produce, and belches vast amounts of carbon
dioxide into the atmosphere as it goes. It's the main reason why a
resident of Dubai has the biggest average carbon footprint of any
human being – more than double that of an American.

If a recession turns into depression, Dr Raouf believes Dubai could
run out of water. "At the moment, we have financial reserves that
cover bringing so much water to the middle of the desert. But if we
had lower revenues – if, say, the world shifts to a source of energy
other than oil..." he shakes his head. "We will have a very big
problem. Water is the main source of life. It would be a catastrophe.
Dubai only has enough water to last us a week. There's almost no
storage. We don't know what will happen if our supplies falter. It
would be hard to survive."

Global warming, he adds, makes the problem even worse. "We are
building all these artificial islands, but if the sea level rises,
they will be gone, and we will lose a lot. Developers keep saying
it's all fine, they've taken it into consideration, but I'm not so
sure."

Is the Dubai government concerned about any of this? "There isn't
much interest in these problems," he says sadly. But just to stand
still, the average resident of Dubai needs three times more water
than the average human. In the looming century of water stresses and
a transition away from fossil fuels, Dubai is uniquely vulnerable.

I wanted to understand how the government of Dubai will react, so I
decided to look at how it has dealt with an environmental problem
that already exists – the pollution of its beaches. One woman – an
American, working at one of the big hotels – had written in a lot of
online forums arguing that it was bad and getting worse, so I called
her to arrange a meeting. "I can't talk to you," she said sternly.
Not even if it's off the record? "I can't talk to you." But I don't
have to disclose your name... "You're not listening. This phone is
bugged. I can't talk to you," she snapped, and hung up.

The next day I turned up at her office. "If you reveal my identity,
I'll be sent on the first plane out of this city," she said, before
beginning to nervously pace the shore with me. "It started like this.
We began to get complaints from people using the beach. The water
looked and smelled odd, and they were starting to get sick after
going into it. So I wrote to the ministers of health and tourism and
expected to hear back immediately – but there was nothing. Silence. I
hand-delivered the letters. Still nothing."

The water quality got worse and worse. The guests started to spot raw
sewage, condoms, and used sanitary towels floating in the sea. So the
hotel ordered its own water analyses from a professional company.
"They told us it was full of fecal matter and bacteria 'too numerous
to count'. I had to start telling guests not to go in the water, and
since they'd come on a beach holiday, as you can imagine, they were
pretty pissed off." She began to make angry posts on the expat
discussion forums – and people began to figure out what was
happening. Dubai had expanded so fast its sewage treatment facilities
couldn't keep up. The sewage disposal trucks had to queue for three
or four days at the treatment plants – so instead, they were simply
drilling open the manholes and dumping the untreated sewage down
them, so it flowed straight to the sea.

Suddenly, it was an open secret – and the municipal authorities
finally acknowledged the problem. They said they would fine the
truckers. But the water quality didn't improve: it became black and
stank. "It's got chemicals in it. I don't know what they are. But
this stuff is toxic."

She continued to complain – and started to receive anonymous phone
calls. "Stop embarassing Dubai, or your visa will be cancelled and
you're out," they said. She says: "The expats are terrified to talk
about anything. One critical comment in the newspapers and they
deport you. So what am I supposed to do? Now the water is worse than
ever. People are getting really sick. Eye infections, ear infections,
stomach infections, rashes. Look at it!" There is faeces floating on
the beach, in the shadow of one of Dubai's most famous hotels.

"What I learnt about Dubai is that the authorities don't give a toss
about the environment," she says, standing in the stench. "They're
pumping toxins into the sea, their main tourist attraction, for God's
sake. If there are environmental problems in the future, I can tell
you now how they will deal with them – deny it's happening, cover it
up, and carry on until it's a total disaster." As she speaks, a dust-
storm blows around us, as the desert tries, slowly, insistently, to
take back its land.

X. Fake Plastic Trees

On my final night in the Dubai Disneyland, I stop off on my way to
the airport, at a Pizza Hut that sits at the side of one of the
city's endless, wide, gaping roads. It is identical to the one near
my apartment in London in every respect, even the vomit-coloured
decor. My mind is whirring and distracted. Perhaps Dubai disturbed me
so much, I am thinking, because here, the entire global supply chain
is condensed. Many of my goods are made by semi-enslaved populations
desperate for a chance 2,000 miles away; is the only difference that
here, they are merely two miles away, and you sometimes get to
glimpse their faces? Dubai is Market Fundamentalist Globalisation in
One City.

I ask the Filipino girl behind the counter if she likes it here.
"It's OK," she says cautiously. Really? I say. I can't stand it. She
sighs with relief and says: "This is the most terrible place! I hate
it! I was here for months before I realised – everything in Dubai is
fake. Everything you see. The trees are fake, the workers' contracts
are fake, the islands are fake, the smiles are fake – even the water
is fake!" But she is trapped, she says. She got into debt to come
here, and she is stuck for three years: an old story now. "I think
Dubai is like an oasis. It is an illusion, not real. You think you
have seen water in the distance, but you get close and you only get a
mouthful of sand."

As she says this, another customer enters. She forces her face into
the broad, empty Dubai smile and says: "And how may I help you
tonight, sir?"

Some names in this article have been changed.

SW Florida Real Estate Values Predicted to Decline Further

2009-04-01T06:05:00.002-05:00

Money Magazine just published its 2009 Real Estate List of the nation's top 100 metropolitan areas and projected declines over the next 12 months. In the past while not popular, this list - in part based on the S&P/Case Shiller Home Price Index - has been fairly accurate.

For the Sarasota market (#2 on the list after Miami), a further decline of 25.5% are projected for the coming year, for the Tampa market (#6 on the list) a 19.1% decline is projected.

You can access the list by clicking here.

News like this is bound to further frustrate home sellers who are already having a difficult time accepting the fact that their property is worth significantly less than what they had hoped to realize, and in many cases less than what they owe on the property.

To those looking to sell in this market the message is loud and clear: If you must sell, do whatever it takes and price your property to ensure it is the most affordable property amongst comparables. The value of your home will continue to erode by 2% a MONTH, meaning if your home is worth $250K today (actual value based on comparable sales, not wishful thinking based on other overpriced listings) then you can knock off $5K/month from that amount and expect your home to be worth $180K - 190K a year from now.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.BravoBrokers.com

Excellent WSJ Article on Homebuyer Credit - Even has Q&A

2009-03-20T18:37:00.002-05:00

Cracking a Valuable Homebuyer Credit
By TOM HERMAN

The recently enacted economic-stimulus law contains an unusually attractive new tax break for many homebuyers -- if they can only figure out how it works.

The new law sweetens a provision known as the "first-time homebuyer credit." In essence, if you meet certain qualifications, such as buying a home from Jan. 1 through Nov. 30 this year, you may be eligible for a tax credit of as much as $8,000. You also have a choice of claiming the credit on your federal income-tax return for 2008 or 2009. A credit is typically more valuable than a deduction, since it eliminates your taxes on a dollar-for-dollar basis -- and in this case, you may get it even if you don't owe any taxes.

But Congress made the homebuyer-credit fine print so devilishly tricky that many Americans are likely to have to pay an expert for help in deciphering it. "We've had numerous calls because people are confused," says Claudia Hill, owner of Tax Mam Inc., a Cupertino, Calif., tax-services firm. "The problem is when things are this complicated, many people don't get the benefits that Congress intended for them."

Internal Revenue Service officials recently issued a revised form and instructions. Even so, Nancy Hays of H&R Block Inc., the Kansas City, Mo.-based tax-preparation company, describes the credit as "crazy complex."

Here are answers from IRS officials and tax advisers to some questions about the credit.

Q: Who can claim the credit?
A: In general, the IRS says you may be eligible if you bought your main home, located in the U.S., after April 8, 2008, and before Dec. 1, 2009 -- and if you (and your spouse, if you're married) haven't owned any other main home during the three-year period ending on the date of purchase. That means you might be eligible even if you owned a home for many years before that period.
However, there are numerous other qualifications.

Q: How much is the credit?
A: That depends on when you bought the home and other factors, such as your income and the home's price.
If you bought during the 2008 period and qualify for the credit, the maximum credit is generally $7,500. But it's only half that amount if you're married and filing separately from your spouse. Even though it's called a credit, it's really an interest-free loan. You generally have to repay it over a 15-year period, without interest, in 15 equal installments, the IRS says. (There are several exceptions to this repayment rule. We warned you this was tricky.)

The rules are more generous if you buy a new home during the 2009 period and meet all the qualifications. In that case, the maximum amount generally is $8,000, or half that amount if you're married filing separately. More important, you don't have to repay the credit at all unless that home "ceases to be your main home within the 36-month period beginning on the purchase date," the IRS says.

Initially, there was some confusion about whether the $8,000 maximum credit would apply if someone bought a home in 2009 and chose to claim the credit on their return for 2008. It's now clear the $8,000 maximum limit does indeed apply, says Mark Luscombe, principal tax analyst at CCH, a Wolters Kluwer business. Naturally, though, "this doesn't help people who actually bought homes in the 2008 qualifying period, and who are limited to a $7,500 credit that must be repaid," he says.

Additionally, the credit generally is limited to the amounts mentioned above -- or 10% of the home's purchase price, whichever is less. For example, if you bought a new home this year for $70,000, the maximum amount of the credit would be limited to 10% of that amount, or $7,000.

Q: How do the income limits work?
A: You may be eligible for the full amount of the credit if your adjusted gross income, with certain modifications, is $75,000 or less -- or $150,000 or less if married and filing jointly. However, the credit begins to disappear, or "phase out," if your income exceeds those amounts. You can't claim the credit at all if your income is $95,000 or more, or $170,000 or more if married and filing jointly, the IRS says.

Q: What if I built a new home? How does that work?
A: You are considered having purchased it "on the date you first occupied it," the IRS says.

Q: I own more than one home. How do I figure out which is my "main" home? And does it have to be a house?
A: The IRS says your main home is "the one you live in most of the time." No, it doesn't have to be a house. It can be "a house, houseboat, house trailer, cooperative apartment, condominium, or other type of residence."

Q: Are there are other qualifications?
A: Yes. You can't claim it if your home is located outside the U.S. You also aren't eligible if you're a nonresident alien, if you inherited the home or got it as a gift, or if you acquired it from a "related person," such as your spouse, parents or grandparents.

Q: Will the credit help me if I don't owe any tax?
A: Yes. The credit "may give you a refund" even if you owe no tax, the IRS says.

Q: What form do I use?
A: Form 5405. The IRS recently revised it and posted it on its Web site (www.irs.gov), along with instructions. Dean Patterson, an IRS spokesman, says "programming is being done to electronically process Form 5405" to claim the $8,000 credit for homes bought in 2009. The IRS "will be able to process these returns electronically beginning March 30" this year, he says.

Q: Where do I put the credit on my Form 1040?
A: Line 69.

Q: I've already filed my return for 2008. Can I still claim it? If so, how?
A: Yes. File what's known as an "amended" return. Use Form 1040X, and attach Form 5405.

Q: If I buy this year, should I claim the new credit on my 2008 or 2009 tax return?
A: That can be tricky, and you may need to consult a tax pro. In general, most people who buy this year and qualify for the new credit probably will want to take it on their tax return for 2008, says Tax Mam's Claudia Hill. "They'll get their money more quickly," she says.
But some people might be better off claiming the credit on their 2009 returns. These would include eligible homebuyers who buy this year, whose financial circumstances changed during 2009 and who might qualify for a larger credit on their returns for 2009 than the prior year. An example would be someone whose income was too high to get any of the credit for 2008 but who recently lost his job and thus would be eligible for the full credit on his 2009 return, to be filed next year.

* * *

Mortgage Modifications not what they are held out to be

2009-03-14T08:27:00.002-05:00

On March 4, the Obama administration announced with much fanfare its long awaited "Homeowner Affordability and Stability Plan" now also dubbed the "Making the Home Affordable" plan.

Separately the U.S. Senate is currently debating cram down provisions of a new bill that would give bankruptcy judges - for the first time - the ability to adjust first mortgages on a consumer's primary residence as part of a consumer's bankruptcy petition. The thinking is that the loan modification plan announced is the 'carrot' and the cram down provision in the new bankruptcy bill the 'stick' that would force lenders and servicers into compliance.

Let's take a brief look at the loan modification plan and what it really means to homeowners. For starters, the loan modification plan does not provide for a reduction in principal or write-off. Rather, if a homeowner qualifies - and a number of criteria must be met - then the lender may reduce the principal for the purpose of payment calculation, while forbearing the balance of the principal, tacking it on to the tail of the loan, meaning it must be paid back. If the homeowner stays in the home for 5 or 10 years, and values go up again then the full loan amount does get repaid.

I think that this is a fair solution, after all the borrower did receive (and spend) the money, and the lender/investor did make the loan. The spirit of this plan is to ensure that homeowners can afford their housing payments, and to not lose their home to foreclosure if at all possible.

Unfortunately the plan has two major draw-backs: First of all it is entirely voluntary on part of the lender/loan servicer, meaning they do not have to work with homeowners - hence the plan to use the threat of a cram down under bankruptcy as a stick to encourage compliance. Secondly, it leaves a lot of property owners out. If you have two mortgages with different lenders you will in all likelihood not qualify. If your current income would push the to be adjusted loan amount to below what the lender may fetch for the property in a foreclosure then again you will not qualify, and if you are a landlord or investor with investment properties then you will also not qualify.

Furthermore, in order to be considered you not only have to demonstrate a hardship, but you also have to be able to document your income to ensure that you can afford to pay the new payment. If you have lost your job/are unemployed, or if your income has dropped significantly you again may not qualify.

I am copying below an excellent article that gives a primer on how the details of this modification program works.

If you are looking to get help in modifying your loan and you feel that you might qualify then the first step for you to take is to to contact your lender's Loss Mitigation Department to ask them if they are participating in the Obama loan modification plan. If your lender or servicer is refusing to communicate with you then you may want to consider third party help.

There is a tremendous amount of help available from non-profit organizations and you can contact HUD at www.HUD.gov for a number of resources. You may also want to hire an attorney or third party firm to assist in the modification. Note that as of October 2008 companies are not permitted in the State of Florida to collect advance fees for foreclosure prevention or modification services including loan modifications. Expect to pay $2,000 to $3,000 but stay away from un-reputable operators who charge up front and then fail to deliver. A reputable firm should only charge you if they succeed, in compliance with this new law.

Now of course there are always exceptions to such rules and one of those exceptions is - of course - that attorneys are allowed to charge up front. Be careful though, since attorneys also cannot and will not guarantee results in most cases, so you may just be out your money without getting any relief and unfortunately there are now a number of law firms popping up who target distressed home owners with a variety of expensive programs that can be considered questionable at best.

If you have any questions on loan modifications we have an affiliated processing company called GSS Processing in Tampa that does not charge any fees up front. You can contact them by emailing to info@gss-processing.com. If you are local to the Tampa Bay area and are looking for legal advise, and legal advise is CRITICAL if you have been served with a foreclosure suit, then Sarasota Attorney Anne Weintraub is an excellent choice; we also have worked out a flat fee pricing with a Tampa attorney for filing a Motion to produce the Original Note, at a $500 flat fee, which is a strategy that can delay the foreclosure proceedings significantly and give you time and leverage to negotiate a modification or short sale.

Finally, if you are going to lose your home, then there is no reason to just have the bank take back your property and completely destroy your credit. Two excellent alternatives are either a Deed in Lieu of Foreclosure, or a Short Sale, and since the lender really does not want to own your property, we find properly structured and executed short sales to be a very effective alternative. Please contact me for details if you are interested.

Below is the article I mentioned.

At Your Service,
Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.BravoBrokers.com

Rules are set for mortgage modifications
By HOLDEN LEWIS bankrate.com

People with unaffordable mortgages now have one set of rules, applicable nationwide, to determine whether they can get lower monthly payments. Folks who can afford their mortgages but need help to refinance to lower rates don't get a lot of help.

The Obama administration's housing plan encourages lenders to modify the mortgages of homeowners who can't afford their monthly house payments because of hardship. The definition of hardship is loose and includes: lost income, increased expenses, payment shock from an adjustable-rate mortgage, and "other indications of being at risk of default."

Qualified homeowners would keep their current loans, but the payments would be reduced to 31 percent of before-tax income. Most borrowers would see their payments rise after five years.
The aim of the Making Home Affordable program is to "prevent the destructive impact of foreclosures on families and communities," according to the Treasury Department.

Two weeks ago, the Obama administration announced the outlines of the foreclosure prevention program, which then was dubbed the Homeowner Affordability and Stability Plan. The guidelines for the mortgage modification plan explain who is eligible and how those monthly house payments are reduced to 31 percent of income.

Here are some qualifications to be eligible for a loan modification:

It has to be the homeowner's primary residence; it must be occupied and habitable.
The balance on the first-lien mortgage can't be more than $729,750 for a single-family home.
It's OK if foreclosure proceedings have begun or if the borrower is suing the lender.
If the borrower qualifies, then the mortgage servicer figures out what it will take to decrease the monthly house payments to 31 percent of income.

Here's how that shakes out:

Under this plan, the house payment includes principal, interest, taxes, homeowners insurance (including flood insurance), and homeowners association or condo fees. It excludes mortgage insurance premiums.

Past-due interest, taxes and insurance are added to the mortgage's balance. Late fees must be waived.

As a first step, the lender drops the interest rate as low as 2 percent. If that's sufficient to bring the payment down to 31 percent of income, then that's the rate. For example, if cutting the interest rate to 4 5/8 percent drops the payment to the 31 percent threshold, the rate doesn't go any lower.

If dropping the rate to 2 percent doesn't do the trick, the next step is to extend the term of the loan up to 40 years. It doesn't have to be 40 years; it's all good if a 2 percent rate over a 37-year term brings the monthly payments down to 31 percent of income.

If a 2 percent rate and a 40-year term don't get the payment down enough, the third step is to "forbear principal." This means that the borrower owes the same amount as before but pays interest on only part of the mortgage balance. For example, someone might owe $300,000 but pay 2 percent interest for 40 years on $250,000. All $300,000 must be paid back if the homeowner sells the home or refinances the mortgage later.

Those last three bullet points are somewhat misleading because the lowered interest rates don't last for the entire term of the loan. They last only five years. After that, the lender is allowed to raise the rate by 1 percentage point per year until the rate is close to the prevailing rate during the week that the modification was approved.

For example, if Freddie Mac's weekly mortgage rate survey says the average rate on a 30-year fixed in a given week is 5.3 percent then a modification that's approved on that date will have a rate that eventually rises to 5.3 percent. It might go from 2 percent to 3 percent in Year 6, then to 4 percent in Year 7, then 5 percent in Year 8 and finally 5.25 percent in Year 9.

For at least a year, the mortgage world has recognized the need for one national standard to decide who gets a mortgage modification and who doesn't. Academic studies have shown that different servicers apply wildly different rules governing modifications. Housing counselors say there's a lot of variation within mortgage servicers, too. These guidelines are designed to elicit more consistency.

"From where we sit, it's important that there's a recognized framework for modifications," says Douglas Robinson, spokesman for NeighborWorks, a government-sponsored nonprofit that trains and provides funding for housing counselors.

Short Sale may be best option for upside down home sellers

2009-02-22T13:08:00.003-05:00

A tragic reality amongst many home sellers - particularly those who either purchased or refinanced in 2005 or later - is that they simply owe more on their home or condo than it's worth, and no amount of wishful thinking will bring about a buyer who will appear as a "knight in shining armour" to bail out the seller and pay above market value.

Tampa, Bradenton and Sarasota home sellers are especially 'hard hit' due to the drastic declines in property values over the past 3 years, and this is a challenge that affects properties across all price ranges.

If you are a home seller, and if you MUST sell, and if you do owe more than your property is currently worth, then a "short sale" may well be your best option to actually get your property sold, and the mortgage off your back.

What is a Short Sale?

A short sale is a sale in which the lien holder (your lender/s) agree to a sale of the property, and to release their lien upon it, for an amount that is less than (or short of ) the amount you currently owe on your property.

In most instances the lender will 'forgive' and write off the unpaid balance. In some cases the lender will require the seller to sign a promissory note in the amount of the short fall. Such a request is rare and if done then such a note is generally unsecured, at 0% interest with repayment over 15-20 years.

When will a lender agree to a Short Sale?

Lenders are will generally be open to a short sale when

a) their only or most likely alternative is a Foreclosure, which is very expensive and time consuming for the lender and which will result in the property being auctioned or sold off for even less than they might be able to receive in a short sale, and

b) the lender is confident that you are not able to afford the property, and that you do not have sufficient income and/or assets to make the lender whole.

Generally speaking, lenders will not entertain the idea of a short sale until you are behind on your payments and the property is at risk of foreclosure. This means that if you have been current on your payments, unfortunately odds are currently slim to none that a lender will contemplate a short sale.

So prior to contemplating a Short Sale you should look at the alternatives to determine if selling your home is truly a MUST as set forth at the top of this post. If you do not have to move but you simply cannot afford your mortgage due to a recent rate adjustment for example, then looking at a loan modification may be a more sensible approach.

If on the other hand you have decided that you must get rid of the property, be it because it is an investment property that is putting you in the hole every month and that is underwater, or you simply do not see any option in making mortgage payments you cannot afford, and that are much higher than the cost of renting would be, on a property that is worth half of what you owe, then a Short Sale may be your best solution.

Some key pointers to consider:

Not only will you have to fall behind on your payments, but the short sale itself if approved will also hurt your credit rating - although not as much as a bankruptcy or foreclosure.
If the bank forgives you the loan short fall then - especially on investment properties - you may owe taxes on this amount, which is considered phantom income.
You must have BOTH an EXPERIENCED real estate agent to assist you in the marketing of your short sale property, AS WELL AS ensure that an EXPERIENCED person or firm will manage, process and negotiate your short sale. The vast majority of short sales that are not approved fail to get approved because a well meaning and well intentioned real estate agent (or the home owner him or herself) attempts to handle this critical aspect without having the experience to do so.
Failure to handle the short sale process properly - especially the negotiation part - may result in the property foreclosure being perfected, meaning you will lose your home to foreclosure, your credit will be completely ruined and the lender may likely come after you for a deficiency judgment to recover any losses on the property.
After you fail to make payments on your mortgage for 3-4 months your bank WILL file foreclosure proceedings. There are little known strategies (such as the request for original note strategy) that can allow you to drag out these proceedings for up to 18 months, which in turn will of course motivate the lender further to consider a short sale offer.

Your first step should always to contact the lender proactively to find out what their short sale requirements are and to request a short sale check list. Lender's may offer a loan modification and if that is a viable option to save your home and a sale is not a *must* then you will want to explore this route.

If you are currently looking to sell your home and you obviously are not able to sell your property for what you owe, and you do not have the resources to come with cash to closing, AND the sale of your property is an absolute MUST and not selling would mean you losing the property then we would love to be of service. Our companies have not only a fantastic, solid track record selling properties via a short sale, we have also all of the resources in house to process and negotiate your short sale successfully.

If you have any questions then I will be happy address them, either here on the blog, or you may email me directly at theimann@bravobrokers.com.

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
http://www.bravobrokers.com

First time home buyers to receive $8,000 tax credit

2009-02-16T20:46:00.003-05:00

Great news for first time home buyers:

If you purchase a home between January 1 and November 30, 2009 you will qualify for a refundable $8,000 tax credit that can be applied to either the 2008 or 2009 tax return. Because the credit is refundable you could receive up to the entire $8,000 tax credit paid out/refunded to you.

In order to qualify,...

Home buyers must qualify as first time home buyers, meaning that they cannot have owned a home for 3 years prior to the purchase
The home must be owned for 3 years or the tax credit may have to be repaid
Home buyer cannot earn more than $75,000 (single) or $150,000 (married couple)

To receive the tax credit, simply claim it on your tax return.

This could be a great incentive for home buyers to make a purchase prior to April 15, since the tax credit can still be claimed on the 2008 tax return, possibly resulting in a $8,000 tax refund.
Of course, when considering a home purchase do not forget Bravo's exclusive home buyer rebate program which will put significant additional money into your pocket.

At your Service!

Thomas Heimann, President & CEO
Bravo Real Estate / Bravo Title
www.BravoBrokers.com

Bravo's TV Commercials have been posted online

2009-02-12T22:42:00.002-05:00

We have posted copies of our exciting new TV commercials online on YouTube. The videos are also embedded / shown below.

The Buyer Commercial focusses on Bravo's exclusive full service offering combined with a huge cash rebate paid to buyers at closing. Bravo actually PAYS home buyers to buy their home with Bravo! Click here for the video or see below.

The Bravo Seller Commercial asks the question "why pay 6% when you can list your home for free with Bravo?". Fact is that the vast majority of listings taken today by 'traditional agents' - who are flat broke and cannot afford to invest a penny in advertising or marketing the listing - will only be placed in the MLS, usually with a few amateurish photos / less than 10% of listings have a virtual tour, and that's pretty much it. With Bravo you can get the same and more for FREE, or you can really be blown away with our Full Service at a flat fee marketing program that outperforms 99% fo all agents AND saves home sellers up to 90% on their commission!
Click here for the video or see below.

Both of these commercials began airing in the Sarasota, FL market on 2/12/2009 with a minimum of 250 each scheduled to be shown per month on the Comcast cable network.

Please let us know if you happen to see the commercials and what your thoughts are. Also, please help us spread the word so we can help as many home buyers and sellers as possible enjoy great service AND save a tremendous amount of money in the process :-)

At Your Service!

Thomas Heimann, President & CEO
Bravo Real Estate, Inc.
"Turning the World of Real Estate upside-down!"
http://www.bravobrokers.com

Bravo launches TV campaign and announces partnership with Roost.com

2009-02-11T17:19:00.002-05:00

Little over a month ago we announced our expansion into the Tampa market, and the opening of our new Tampa office on N. Himes Avenue. Since then we have started to sign up buyers in Tampa and are stepping up lead generation for buyers and sellers in this exciting market.

Last week we finalized a marketing partnership with Roost.com (www.roost.com) which is one of the most exciting, new real estate portals, and Bravo is at this time Roost.com's partner for the Tampa market, a move which we expect to drastically increase our visibility and lead traffic in the Tampa market.

In our primary market of Sarasota we are proud to announce that we have completed the production of our first set of TV commercials, and beginning tomorrow - 02/12/2009 - we will be airing a minimum of 250 30-second commercials targeted at buyers, plus 250 30-second commercials targeted at sellers - for a total minimum of 500 commercials per month.

This will be Bravo's first foray into TV advertising, and we are excited about getting the word out in the community about Bravo's fantastic service / savings offering, which we feel should be well received in this current economic climate.

We are going to post a link to a streaming video of the commercial on our blog at http://blog.bravobrokers.com, we well as on our website as soon as we have a copy available.

If the commercial turns out to be a success then we will be expanding the TV campaign into Tampa/St. Petersburg/Clearwater.

At your service!

Thomas Heimann, President & CEO
Bravo Real Estate, Inc.
"Turning the World of Real Estate Upside Down"
http://www.bravobrokers.com

Bravo's expansion to Tampa featured in Tribune article

2009-01-06T06:04:00.002-05:00

It's official!

Bravo Real Estate is moving forward with its expansion plans, and today the Sarasota Herald Tribune did a nice feature story on us and our growth plans.

We recently negotiated a fantastic deal on office space in Tampa - Bravo's Tampa Office will be located on Himes Ave, close to Westshore Blvd, Dale Mabry and I-275, plus we will have access to additional meeting space for our agents in Brandon and Temple Terrace.

The article also did a great job showcasing our current Preferred Stock Offering, as well as a number of other exciting opportunities before us right now.

This past year has been spectacular by all measures. We have doubled our number of transactions, our Buyer side business actually grew by over 140%, and given that we achieved these results in a market that saw a decline in transactions, spectacular is really the only way to describe our progress in 2008.

To access this exciting article please click here.

Tampa will be a very important market for Bravo and as we begin to make strides we will of course keep posting updates to our blog.

To Your Success!

Thomas Heimann, President & CEO
Bravo Real Estate, Inc./Bravo Title LLC

Bravo Real Estate and the Walmart Factor

2008-12-11T10:56:00.000-05:00

As the current economic slow-down is impacting virtually every aspect of our lives an apparent and drastic shift in consumer behavior is affecting industries across the board.

What I am referring to is the cutting of excesses and the unnecessary and the focus on budget and value. Even the ultra-high end market which at first seemed to be mostly immune to the slowdown has halted to a crawl as stock portfolios are shrinking and the ultra wealthy are no longer so wealthy.

Today the Wall Street Journal ran a cover story on how well to do households are letting go of nannies and household help, and taking on chores that in the past were outsourced to cheap labor.

The retail industry is in shambles and in November retail sales were down 5.5% - in spite of Black Friday.

Yet in the midst of the downturn and chaos there is one shining star: Walmart. Walmart's stock is the ONLY stock in the Down Jones Industrial Average Index that is UP for the past year, and while retailers across the board are posting huge losses Walmart is showing both revenue and earnings growth. Walmart the company that once was criticised for treating workers poorly or underpaying them... well, Walmart isn't laying people off, their workers have jobs while everyone else is slashing jobs.

When looking at the Real Estate Industry we at Bravo are experiencing a similar trend, and I am not just making the comparison because we have always referred to ourselves as the "Walmart of Real Estate".

While transactions are down drastically, we have doubled our number of transactions this year vs. last year, and our revenues have increased significantly. People are coming to us because they are seeking great service AND great value and the idea that "ten grand more or less to the real estate agent - buried in the sales price of the property - doesn't matter" is becoming absurd.

I think the writing is on the wall, clear and unmistakable:

Consumers are tightening their belts and as such are interested in value and savings now more than ever. Businesses who understand this and can adapt to this changing reality - and focus on meeting their client's needs while saving them money will without a doubt be on the winning side.

The story of Walmart is also the lesson of Walmart: Convenience, Service, Selection AND ABOVE ALL - SAVINGS - are what matters to the consumer. And the worse the economy gets, the better Walmart will do.

Likewise, the 'worse' the real estate industry is getting, likely the better Bravo Real Estate will do with its consumer centric business model that is focused on providing outstanding value.

To Your Success!

Thomas Heimann, President & CEO
Bravo Real Estate, Inc.
"Turning the World of Real Estate Upside Down!" (SM)

Seismic Shifts in Consumer Behavior

2008-11-15T15:16:00.000-05:00

The Wall Street Journal quoted the CEO of Best Buy in an article this Thursday, that "rapid, seismic shifts in consumer behavior"have created the most difficult climate he's ever seen.

As consumers are finding themselves in the midst of a deep recession with a climate of complete economic uncertainty, they are abandoning glitzy brands, unnecessary gadgets and are overall becoming extremely fiscally conservative.

For Bravo Real Estate this is translating into a steadily growing stream of consumers - both buyers and sellers of real estate - who are finally asking themselves "why should have I have to pay an additional thousands or even tens of thousands of dollars to a so-called 'traditional agent' when I do not receive any additional value in return"?

The old days of real estate agents getting paid 2.5-3% of the purchase price on each side of the transaction are slowly but surely coming to an end. Unless an agent or agency can justify their significant fees via a crystal clear value preposition, consumers will vote with their wallet and seek out alternatives.

So getting back to the Wall Street Journal quote, yes we are experiencing a sudden, seismic shift in consumer behavior, and if you are stuck in the old world of having to sell people things they do not need and cannot afford, enticed by a 'buy now, pay next year' financing scheme, this is a very painful time.

But, if you are in a business that is truly focused on the consumer and creating real value - meeting the consumer's needs at the best possible price - then this time right now could be the beginning of a real up-swing.

At Bravo this is what we are experiencing first hand.

Sincerely,

Thomas Heimann, President & CEO
Bravo Real Estate/Bravo Title
www.BravoBrokers.com

Sarasota Condo Values Drop 44% in one year!

2008-10-29T05:51:00.000-05:00

While price erosion has certainly been painful enough in the Single Family home market, the proverbial floor has dropped out from underneath condominium values in SW Florida.

In the Sarasota market - as reported by the Sarasota Herald Tribune - condo prices have dropped from an average of $280,400 in September 2007 down to $156,400 for September 2008. This represents a 44% price drop over the past year!

Likewise number of units sold have dropped from 217 units in Sept 2007 down to 119 units sold in Sept 2008.

For a chart showing the trend, please click here.

These are truly disturbing numbers, caused by the glut of condo conversion and new condo construction during the boom days, where the vast majority of units where purchased by 'wanna-be investors' who took out home equity lines of credit to finance the down payment and utilized liar loans and pay-option ARM mortgages with low teaser rates to finance in many cases multiple units.

People buying 4 or 5 condos were no rarity and today it is those 'investors' who could never afford to make the purchase who are letting their properties slip into foreclosure, which is contributing greatly to this price drop.

Of course this also means that there are great bargains to be had today for savvy investors with cash.

Sincerely,

Thomas Heimann, President & CEO
Bravo Real Estate, Inc.
http://www.bravobrokers.com/

Bravo is in the News again!

2008-10-25T15:42:00.000-05:00

Another great article appeared this Friday in the Gulf Coast Business Review, a business weekly distributed on the Florida Gulf Coast from Tampa Bay south to Naples.

The fact that Bravo has continued to post strong gains and growth in an industry and market that has declined severely is gaining more and more attention from local and regional media.

To view this fabulous article please click on the following link:

View "Bravo Articles"

To Your Success!

Thomas Heimann, President & CEO
BRAVO REAL ESTATE, INC

http://www.bravobrokers.com/

Mortgage rates spike - and may go higher yet

2008-10-16T10:46:00.000-05:00

If you are looking to purchase a home and have been waiting to see if housing values may decline yet a little bit more, you may be in for a costly surprise.

While there certainly can be arguments made about whether or not we have hit 'absolute bottom' with respect to home values, there is absolutely no question about the fact that home mortgage rates are increasing rapidly.

Freddie Mac reported Thursday that the average 30 year fixed mortgage has hit 6.46% - up from 5.94% the week earlier. This represented the largest weekly increase since 1987.

Bankrate.com has also charted the spike. They are reporting that the average rate on a 30 year fixed mortgage jumped to 6.74% on Wednesday from 6.2% the Wednesday before.

The bottom line is this: Mortgage rates have risen significantly and they will continue to rise. It is entirely possible that within the next 6 months we may see rates of 7.5% or more. To home buyers this means they will qualify for a much lower mortgage amount since the total debt service/mortgage payment drives their approval.

So if you are thinking about purchasing a home then NOW, Today, may be your time to make that move. Lock in your interest rate for 90 days and make an offer.

Even if home prices were to decline by another 10% over the next year, you are much better off buying today - especially if you are looking to stay at that home for 5 years - locking in today's still relatively low rates, than waiting for a 'bottom' and ending up paying significantly more on your mortgage.

What if you wait 1 year, and save 10% on your home but then end up paying 8 or 8 1/2 % on your mortgage? Unless you are a cash buyer you will have lost big-time. There is something to be said about being penny-wise vs. pound-foolish.

If you have not already done so, contact your lender and get today's low rates LOCKED IN.

Sincerely,

Thomas Heimann, President & CEO
Bravo Real Estate, Inc.
www.BravoBrokers.com