Florida House approves timeshare bill.....

[rikkis_playpen]

The Florida House of Representatives today unanimously approved a bill to help the time-share industry by allowing developers to sell debt-cancellation policies and ensuring time-share exchanges aren’t subject to taxes.

The House voted 112-0 for the measure (HB 61), which has been lobbied for by the American Resort Development Association, Walt Disney World and a number of others.....

Now on the the Florida Senate...

Orlando Sentinel - House approves time-share legislation by Jason Garcia

[BocaBum99]

Wow. 112-0 is an impressive vote. If they held a vote to see who believed the world was round, it wouldn't come out 112-0.

What is a debt-cancellation policy? And how would a developer offer it?

It's an obvious attempt to help with the securitization of loans. My guess is it allows the resort developer to sell a debt cancellation policy to the buyer of the loan. For a premium of say $1000, the company purchasing the debt receives 90% of their principal balance back if the owner defaults on the loan.

What this will do is put a floor on the value of the loan since the balance would be covered by the developer. The developer cares, but can back the loan because it can reclaim the inventory and sell it again at full retail.

To make this work, the resort developer has to set up an insurance fund to which the premiums are held and from which defaulted loans are paid. It can make a guarantee to the insurance fund that it will buy back all inventory at 10% below developer cost to build. That reduces the risk for the insurance company.

The key variable is default rate on timeshare loans. Whatever that expected percentage is will determine the insurance premium.

Wait a minute. Isn't this what AIG did for the housing market for subprime loans?

[rikkis_playpen]

Originally Posted by BocaBum99

Wait a minute. Isn't this what AIG did for the housing market for subprime loans?

With Florida politicians and timeshare developers creating a program- I'd have little doubt the end result will be the same! Hopefully the spit and polish will hold out long enough for the industry to get a little boost.

[rikkis_playpen]

From the Associated Press:

The American Resort Development Association spent $270,000 in the first quarter to lobby the federal government, according to a recent disclosure form.

The association lobbied Congress on legislation intended to reform consumer mortgage practices and prevent anti-predatory lending, according to the report filed April 20 with the House clerk's office.

[SteveChapin]

Originally Posted by rikkis_playpen

From the Associated Press:
The association lobbied Congress on legislation intended to reform consumer mortgage practices and prevent anti-predatory lending, according to the report filed April 20 with the House clerk's office.

Prevent anti-predatory lending?

Ruh-roh!