Published on: May 17, 2016
If you derive all of your information about condominiums from press reports (or from association meetings at which dues increases are announced), you might assume that condominium owners hate everything about their communities – especially their neighbors, their managers and their governing boards. But annual surveys conducted by the Community Associations Institute (CAI) have consistently found that owners are highly satisfied with the condominium living generally and with their communities specifically. And this year’s survey, conducted in March by Zogby Analytics, continued that tradition.
Asked to rate their community association experience, 65 percent said they are “very” or “somewhat” satisfied and 22 percent said they were “neutral.” Only 13 percent responded negatively. The overwhelming majority also agreed that:
- Their association board members serve the best interests of their communities;
- Their community managers provide valuable support to residents and their associations;
- The assessments they pay are “about right; and
- They don’t want more government oversight of community associations and many would like less.
The results aren’t surprising, Thomas Skiba, CAI’s chief executive officer said. “We know that most community associations function very well, thanks to the skills and dedication of homeowner leaders, community managers and others who provide professional services to associations. We also know that all communities do not operate as well as they should,” he added, “and we’re never happy when we see a community in the news for the wrong reasons, but it’s reassuming to know we know struggling communities are the exception to the rule. “
The Consumer Financial Protection Bureau (CFPB) wants to prohibit financial services providers from including mandatory arbitration requirements in their consumer contracts. A proposed rule targets these ubiquitous clauses, which essentially preclude consumers from using class action suits to resolve conflicts. Companies could still require arbitration, but the arbitration language would have to state clearly that consumers retained their right to participate in class actions.
“Signing up for a credit card or opening a bank account can often mean signing away your right to take the company to court if things go wrong,” CFPB Director Richard Cordray said in a statement announcing the proposed regulation. Through the use of mandatory arbitration, he added, “many banks and financial companies avoid accountability.”
Business and financial industry trade groups, who have been expecting the proposal, objected strenuously to it, arguing that it flies in the face of Supreme Court decisions and public policy preferences that encourage arbitration over litigation. They also challenged CFPB assertions that arbitration judgments often favor businesses over consumers.
The primary beneficiaries of a mandatory arbitration ban will be plaintiffs’ attorneys, the U.S. Chamber of Commerce said in a press statement.
“In the 50 years since the advent of modern day class action lawsuits, plaintiffs’ lawyers have made millions of dollars in fees from these suits while consumers often receive little benefit,” the group asserted.
Analysts have used many adjectives to describe the labor market, but consistent isn’t one of them. Over the past year, the Department of Labor’s monthly employment report has surprised, disappointed, delighted, dismayed and in recent months, relieved, with a series of 200,000 plus monthly job gains.
April, on the other hand, proved disappointing as employers added only 160,000 workers to their payrolls, the smallest gain in the past seven months. Previously reported gains for February and March were adjusted downward by a combined total of 19,000. The unemployment rate remained unchanged at around 5 percent, but that was because workers dropped out of the market; the labor participation rate fell to 62.8 percent ─ the first decline in this indicator since last fall.
There was good news too: Average hourly wages, which have been stagnant for most of the recovery, increased to $25.33 – a tiny but still welcome 0.3 percent gain, pushing hourly pay up by 2.5 percent over the past 12 months.
Economists were divided on whether the below-par April report indicated underlying weakness in the economy – reflected in the anemic 0.3 percent first quarter growth rate – or was just a “blip” in an otherwise improving employment pattern.
How the Federal Reserve answers that question will determine whether its policy-making arm, the Federal Open Market Committee, increases interest rates in June, or decides again to delay that move, as it did in April. Most analysts are predicting another delay, assuming that the Fed will want to see less ambivalent signs that the economy is strong enough to absorb the increase.
Uncertainty – about the presidential election as well as the economic outlook — appears to be undermining consumer confidence. The University of Michigan’s preliminary confidence index fell to 89.7 in April from 91 in March – far short of the consensus forecast of 92 and the fourth consecutive monthly decline for this benchmark. More than 20 percent of respondents said they expect the election will have a negative impact on the economy.
Fannie Mae’s monthly survey found consumers equally unsettled. Respondents turned more negative about the economy as a whole, their economic prospects and the condition of the housing market, pushing the Home Purchase Sentiment Index down 2.5 points in March from the February reading.
“Growing pessimism over the last three months about the direction of the economy seems to be spilling over into home purchase sentiment,” Doug Duncan, senior vice president and chief economist at Fannie Mae, said in a press statement.
FLOOD INSURANCE REFORM
Members of Congress haven’t agreed on much in recent memory, but the House of Representatives voted unanimously to approve a legislative fix for the National Flood Insurance Program (NFIP). Designed to bring more private insurers into a market dominated by the federal government, the Flood Insurance Market Parity and Modernization Act would clarify that private insurance meets a secondary mortgage market requirement for continuous flood insurance on properties located in a designated flood hazard zone.
The legislation would allow homeowners insured by the NFIP who switch to a private insurer to switch back without triggering an increase in their previous NFIP rate. The risk that their NFIP rate might soar has prevented many homeowners from trying a private insurance alternative, supporters of the legislation argued. The measure clarifies that policies issued by private carriers that are “licensed, admitted, or otherwise approved” in the state in which the insured property is located, would meet the requirement for continuous flood insurance coverage.
“For many, the NFIP offers the only source of coverage that meets federally related mortgage requirements and protects properties in the 100 year floodplain,” Tom Salomon, president of the National Association of Realtors (NAR) said after the House vote. “This legislation will help foster a vibrant private flood insurance market while giving consumers the flexibility to return to the NFIP at a reasonable cost if they choose to,” he added. The NAR was one of several housing industry trade groups that supported the measure. A companion bill is awaiting a hearing in the Senate Banking Committee.
IN CASE YOU MISSED THIS
Home prices continued to rise in February, a positive indicator to analysts who see strong appreciation as a sign of health, but a serious negative to those who see housing affordability as an increasing concern.
While the existing home market seemed to regain its footing in March, new home sales declined for the third consecutive month.
Equifax is going to begin including HOA payments on consumer credit reports – the first of the three major credit reporting agencies to do so.
A majority of consumers spend more time shopping for cars and actions than they spend on comparing mortgage financing options.
The statistics say the economy is improving, and incomes are growing and consumers are feeling more confident, but a recent poll suggests otherwise: More than 60 percent of the respondents to a CreditCards.com poll said financial worries are keeping them up at night.
FALLING TREES AND DATA BREACHES
If a tree falls in the forest and no one hears, does it actually fall? A federal appeals court addressed a version of that ageless question in a case involving a data breach at a medical services company. The key question in Travelers v. Portal Healthcare Solutions, L.L.C., was what constitutes the “publication” of consumer information stolen in a data breach. The decision is relevant to community associations, because it doesn’t require much of a stretch to substitute ‘condo association’ for the medical company that was breached, and condo owners for the plaintiffs who sued as a result.
When Portal’s computers were hacked, plaintiffs filed a class action alleging that the company had failed to properly protect its medical records. Although the company’s commercial general liability policy covered claims resulting from the “publication” of consumer data or “unreasonable publicity” about an individual’s “personal life,” Travelers refused to defend the claim, arguing that simply posting information on the Internet, as the hackers had done, did not constitute the “publication” to which the policy applied.
Although the medical records were available on the Internet, Travelers contended, they had not been “published,” because there was no evidence that any third party had actually read them.
The District Court ruled otherwise. Relying on the dictionary definition of publish as “to place before the public (as through a mass medium),” the court concluded that publication occurs “when [personal] information is placed before the public, not when a member of the public reads the information placed before it.” The key question, the court said, “is not whether a third party accessed the information, because the definition of ‘publication’ does not hinge on third-party access.”
The court found a distinction between other cases in which the courts have ruled otherwise, such as a Connecticut cast in which a thief stole unencrypted computer tapes containing personal data that had fallen out of truck onto a highway. In this case, the court reasoned, the information had fallen into the hands not of a single thief but “to anyone with a computer and internet access,” which in the court’s view, constituted publication. Their personal information was “published,” the court said, “the moment they were posted publicly online, regardless of whether a third party viewed them.”
The Fourth Circuit didn’t publish a separate opinion, but simply commended the district court’s “sound legal analysis.”
The decision provides both a measure of comfort and a warning to condominium associations. The comfort: It is possible (though by no means certain) that other courts may find some coverage for data breach claims in commercial general liability policies. The warning: Other courts may also adopt the broad definition of ‘publication’ and the resulting potential for immense liability claims. The bottom line: Condo associations need both cyber-insurance coverage and stringent security measures to protect the personal information they collect.
“I don’t see a nationwide bubble in real estate right now at all.” ― Investor Warren Buffet, speaking at Berkshire-Hathaway’s annual meeting.