Dear Toby - September 2007

Your Comments and Questions - My Replies

I receive several comments and questions from website visitors. To many, I have responded individually. It occurred to me that some of these would be of interest to all of you. I’ll publish selected input and replies under the “Dear Toby” banner, with a new page each month to keep the pages short and readable. The most recent entry will be at the top of the page.

Feel free to use the “Contact Us” button to send in your comments or questions. Your name will not be disclosed. Due to volume, I may be unable to reply to everyone.

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Question:  I've heard that Bobby Ginn was forced out of Ginn Development Corp. Is this true?

Toby Says:  In July, the Ginn Company named  Robert Gidel as president. Bobby remains as Chairman and CEO. Many believe that Ginn's lenders forced this action. Typically, lenders funding agreements give lenders the option to take over some degree of control when the lending agreement is breached or if certain financial or performance metrics are unmet. When I spoke with Bobby Masters, Executive Vice President and Ginn spokesperson, Ryan Julison, they stated that the lenders had nothing to do with Gidel's appointment. They also said that a press release would be forthcoming. The fact that the company has since been silent on the matter, lends credence to the belief that the lenders have stepped in and taken over some control over Ginn's operation. GoToby.com was the only one to pick up on the story. Here is a link to my July news story - (New Ginn President)

Question:  I have a couple of quesitons and dont know if you can answer it or not but hope you can. I am a bit confused. When a short sale is accepted and the property is sold...being that the house was sold below the amount of the loan owed to the bank, I was told the difference amount would be given to the seller as a 1099. Meaning income to the seller. So with that said, can the 1099 be negotiated amount and or have it not issued in someway? Is there a way to be able to avoid a 1099 for full amount that was lost by bank or reduced?I hope you have an answer. Or advice.

Question two. Let's say the 1099 amount (what ever the amount is) can that be written off with property improvement and a loss on property investment?

Toby Says:  The difference between the net amount received by the lender at closing and the balance due on the mortgage (including late payments, penalties, etc.) would be treated by the IRS as a forgiven loan. The amount would be classified as current income and would be reported on a 1099. This is not negotiable. Your second question is a little more complex. The answer would depend on how the property is held (primary residence, investment, rental, etc.) and for how long. For instance, the extent to which long term capital losses can offset current income is limited. I am only a Realtor®, not an accountant. In other words, you should consult an accountant.

Question:  Who owns Grand Haven Golf Course, LandMar or Hampton Golf?

Toby Says:  Neither, the Grand Haven Golf Course is owned by Crescent Resources LLC, the parent of LandMar. Hampton Golf only manages the course. Hampton Golf also manages the three courses of The Grand Club which are owned by The Grand Club LLC. The Grand Club LLC has the same Jacksonville address as LandMar.

Question: What will it take to get a Costco in the area? It would seem that with the nearest Costco being an hour plus north (Jacksonvelle) or west (Altamonte Springs) that the Palm Coast/Daytona area would be a natural fit. Do you happen to know the demographics that Costco uses when deciding on a store? I think it would do very well in the area. What do you think?

Toby Says:  I'm a Costco member and feel your pain. Although rumors of Costco coming to Palm Coast have been around for at least a year, there is no hard evidence. A commercial Realtor with whom I spoke told me that he had talked to Costco within the past few months and that Costco's population threshold was 250,000 people. Not good news for Palm Coast, but maybe Ormond would fit.

Question:  Who was the winning bidder for the foreclosed Players Club?

Toby Says:  The Plaintiff (lender) was the only bidder. This is usually the case in foreclosure auctions since the lender needs to protect their investment. In the case of the Players Club, the original debt of $4 million had grown to $5 million as a result of accrued interest and late charges.

Question:  Did you hear anything about Publix building a store in Palm Coast Park (Rt. 1 by Matanzas Woods Parkway)?  I sure hope so.

Toby Says:  My same source for the SR100 Publix site selection also told me about the north store. That would be in the Palm Coast Park development near Matanzas Woods Parkway. However, because this is further in the future, my source felt a little less certain. From my veiwpoint, a Publix at that location  makes a lot of sense. Clearly Palm Coast Park will include a Publix.

Question:  Is the movie theater project at Town Center being moved back, yet again?

Toby Says:  I just heard that Epic Theaters has filed their final site plan submittal with the city's Development Review Board. It looks like this much anticipated project is back on track.
 

Question:  Do you have any information about the Professionals Park at Town Center? The plan calls for 6 small office buildings and will be located on Market Avenue behind Publix.
 

Toby Says:  This project has been submitted to the city for development review on two different occasions. The most recent submission was returned with comments by the development review board on June 12, 2006, over a year ago. There has been no activity since. 

Question:  I was wondering what the shopping center is behind Walmart on Cypress? I heard it was supposed to open several months ago, yet still under construction. What shops.stores will be in the shopping center?

Toby Says:  The shopping center behind Wal-Mart is Cobblestone Village. The two anchor stores are Lowe's and Belks. Lowe's plans an October 1st opening. Belks is slated to open on October 15th. Golden Corral has purchased an out-parcel north of Lowe's and plans to build a restaurant there. Talbotts was once rumored to be locating in Cobblestone Village but I understand that they have stepped away. There is no difinitive news on other stores locating there.

Question:  PMI is part of my monthly premium for my home in Palm Coast. Its my understanding  this insurance policy that I pay for protects the lender should I default.  How is it possible the lender can foreclose if they are being paid by the insurance company?  Yah, I know you are thinking this is a crazy question. Only the banks are not forthcoming when I have asked for exact details on how the the policy work.

Toby Says:  Private Mortgage Insurance, or PMI (also known as LMI or Lender's Mortgage Insurance), does not pay the mortgage premium. PMI is designed to protect the lender, not the borrower. It simply reimburses the lender for the loss incurred as a result of default. The lender must complete the default procedure before making a claim to the insurer. This means that they need to go through the foreclosure process, acquire the property, and then sell it. The insurance makes up for the difference between the net selling price of the property and the default amount. PMI is usually required by lenders when the Loan to Value Ratio (LTV) is greater than 80%.