Published on: February 17, 2014
DATA DISASTER. The fallout from the gargantuan data breeches at Target and other retailers continues to spread. Banks estimate that the massive data breach at Target alone has cost them $172 million – so far. The costs for consumers will be both direct and indirect. Ken Harney points out in a recent column that fraudulent use of stolen credit card information could saddle innocent owners with charges they didn’t incur and credit accounts they didn’t open, depressing their credit scores and possibly derailing pending mortgage applications and home purchases. “The impact on credit scores, although short term, is devastating because they are current defaults and [trigger] a big hit to the score. With the sizes of the breaches, this could be painful for a long time,” Terry Clemens, executive director of the National Consumer Reporting Assn., told Harney.
TAXED RELIEF. Underwater homeowners who received mortgage modifications or sold their homes via short sales face huge tax bills because a law making forgiven mortgage debt tax exempt expired at the end of last year. And it’s not at all clear that Congress is going to re-instate it.
BETTER NEWS. The fourth quarter growth rate surprised on the up side with a 3.2 percent annual pace, propelled by the largest consumer spending gain in more than three years. The consumer price index also posted its largest increase (0.3 percent) in the past six months in December, driven by the cost of food, fuel and rental housing. Inflationary signs are not typically cause for celebration, but in this case, the CPI increase is easing growing concern about disinflation.
TOO MUCH AND TOO LITTLE. Consumers would benefit if bankers spent less on marketing to consumers and more on educating them, according to the Consumer Financial Protection Bureau. A CFPB study found that the industry spends approximately $17 billion annually on consumer marketing but only about $670 million on financial education.
DEBT LOAD. High unemployment and a mound of student debt are keeping young adults out of the housing market, taking a large bite out of the first-time buyer demand needed to fuel a sustained housing recovery.
WHAT RECOVERY? If you thought the housing recovery was on track, Fitch Ratings has some bad news for you. The company estimates that home values are currently overvalued by about 18 percent, inflated by “a unique set of market forces” (limited supply, investor activity and pent-up demand) that make the strong recovery rate we’ve been seeing “unsustainable,” in Fitch’s view. Other analysts share that concern. They cite a shrinking proportion of first-time buyers, increasing numbers of all-cash, investor purchases and still out-sized numbers of distressed sales as indicators that the “recovering” housing market may not really be recovering at all.
ENFORCEMENT PROBLEMS. “Because we say so,” doesn’t work all that well as a rule-enforcement strategy for parents with kids, and it doesn’t work well at all for condominium boards, as this recent court decision (Boyle v. Hernando Beach South Property Owners Association, Inc.) illustrates.
The board of this Florida association sued the owner (Boyle) for violating a covenant provision requiring owners to maintain their lots in a “neat, clean, and orderly condition.” A trial court granted summary judgment in favor of the association and issued an injunction requiring Boyle to comply with the board’s order to properly maintain his landscape and trim his trees, and with a separate order requiring him to mitigate the mold in his home.
Boyle appealed, arguing that the board had not specified exactly how his landscaping and tree maintenance violated the covenant and what exactly he was required to do about it. The Appeals Court agreed that those unanswered questions created “material issues of fact” that the lower court should have explored, making summary judgment inappropriate.
The mold issue, on the other hand, did not “suffer from the same infirmities,” the court said, because the evidence the board presented left “no room for speculation or conjecture.”
Improper grounds maintenance was also an issue, although not the only one, in Evans v. Davis, a battle that unfolded in Houston, Texas between the board and an owner in a community named (not entirely accurately, it would appear) “Happy Hide-A-Way.” The board cited Evans for improperly storing vehicles on his property and failing to maintain it in a “sanitary, healthful and attractive manner.” Evans and his wife moved a few months after getting that notice, claiming that they had cleaned the property before leaving and allowing someone else to occupy it.
The board said the property remained in violation and conditions worsened when the occupant began and then abandoned efforts to remodel the home, leaving the structure gutted – stripped of wiring and plumbing – and the lot covered with construction debris.
Evans claimed he first learned of the problem in May 2011, more than eight months after he had left, when he received a letter from the board informing him that the structures on the property would be demolished two months later. He said he immediately undertook efforts to clean the property. Disputing Evans’ contention that he had begun a clean-up and informed them of that fact, the board had the structure demolished, as threatened, in June.
Evans sued for damages –mainly, the cost of his demolished home. A trial court granted summary judgment for the association, rejecting Evans’ claim and awarding the association the damages it sought for the demolition and clean-up costs, plus more than $80,000 in accumulated fines at $200 for every day Evans was in violation.
The appeals court sided with Evans, however, finding that while the board had the authority to “regulate the use, maintenance, repair, replacement, modification and appearance of the subdivision,” it could not use any means it chose to do so. And the enforcement mechanisms available to the board, the court noted, did not include “self-help’ measures.”
The board cited a provision in the bylaws allowing it to “remove or cause to be removed such garbage, trash, rubbish and so on” at the owner’s expense and without incurring any liability to the owner. But the court said the association could escape liability for demolishing Evans’ home only if it could demonstrate that the structure was “garbage, trash or rubbish,” and the court noted, “the association failed to meet this burden.”
“The recovery in the labor market is far from complete,” – Janet Yellen, testifying before the House Financial Service Committee, in her first public statement since succeeding Ben Bernanke as chairman of the Federal Reserve Board.