Published on: January 5, 2016
HUD RULES TARGET TENANT HARASSMENT
The Department of Housing and Urban Development (HUD) has proposed regulations that would make it easier for victims of harassment to pursue claims under the Fair Housing Act (FHA) by creating uniform standards for evaluating those claims.
“A home should be a refuge where every woman and man deserves to live without the threat of violence or harassment,” HUD Secretary Julián Castro said in announcing the rules. “The rule HUD is proposing is designed to better protect victims of harassment by offering greater clarity for how to handle a claim against an abuser.”
HUD’s proposed rules define two types of harassment:
- Quid pro Quo – “subjecting a person to an unwelcome request or demand and making submission to the request or demand a condition related to the person’s housing”; and
- Hostile Environment — subjecting an individual to “unwelcome conduct that is sufficiently severe or pervasive such that it interferes with or deprives the person of the right to use and enjoy the housing.”
Although HUD officials report that most harassment complaints come from women, the regulations cover any class protected under the Fair Housing Act, barring discrimination based on gender, race, national origin, religion, family status or disability. They also apply to most forms of rental housing, not just to federally assisted properties, and they make it clear that property owners are “vicariously” responsible for the actions of their agents.
Because of the “heightened rights” that exist in a home and the importance of preserving its “sanctity,” the rules ease the standards for supporting a harassment claim, specifying that the heightened proof required for employment discrimination claims would not apply. Instead, tenants could rely on only a single incident and the analysis of the claim would have to consider the “totality of the circumstances,” including “the nature of the conduct, the context in which the conduct occurred, the severity, scope, frequency, duration and location of the incident(s), and the relationships of the persons involved.”
The public comment period on the rule ended in December; HUD is expected to issue final regulations later this year.
‘Tis still the season for economic forecasts, and most are calling for modest growth this year and next. Economists responding to a Philadelphia Federal Reserve survey expect GDP to average 2.4 percent for the next two years, possibly inching toward 3 percent in 2018. University of Michigan economists anticipate essentially the same growth rates, but put a more positive spin on their forecast, noting that growth rates that once would have been viewed as underwhelming will still represent the strongest pace in nearly a decade.
Although they aren’t expecting anything close to explosive economic growth, economists are confident about the employment outlook for this year. The University of Michigan group predicts the unemployment rate will fall below 5 percent next for the first time since 2005. The Philadelphia Fed group thinks the major problem will be a mismatch between the jobs available and the employees with the skills needed to fill them.
“The labor supply isn’t aligning with labor demand,” Mark Fleming, chief economist for First American Title Company, told DS News. The increase in available job openings “may be an indication of a tight labor market,” he said, “but not for the reasons we originally expected.”
HOME OWNERSHIP STABILIZING
Although the steady decline in ownership rates, a cause of concern for housing industry executives, may be ending as a stronger economy boosts home sales, economists warn that first- time buyers will continue to struggle under the weight of student debt loads, tight credit and rising interest rates.
Rising rents are creating another impediment, making it difficult for first-time buyers to amass the down payment they need. And there’s little relief in sight on that score, according to Zillow, which predicts that “next year will bring the least affordable median rents ever.” As a result, Zillow’s Gudell predicts that the median age of home buyers will continue to rise, reaching “new highs” next year, as millenials “put off homeownership and other major life decisions.”
MORE COLLATERAL DAMAGE
Last year’s winter from hell may be receding in memory, but the collateral damage it caused in New England continues to mount. Citing the need to recoup losses from outsized weather-related claims, some Massachusetts insurers are boosting premiums by an average of 9 percent – more than four times the average 2 percent increase reported last year. Mapfre, USA, which insures more than 200,000 homeowners in the Bay State, also wanted to add an ice-dam deductible, ranging from $1,000 to $10,000, for owners who filed multiple ice-dam claims. But the Massachusetts Insurance Division rejected that request, “because the criteria proposed to apply the deductible was not clear,” Chris Goetcheus, a spokesman for the division, said in a press statement. “Further, whether or not the deductible was applied and at what amount was at the company’s discretion, unlike windstorm or hurricane deductibles which are triggered by an independent third party’s measurement,” he added.
Consumers whose holiday gifts included a drone will have to register their new toy with the Federal Aviation Administration before launching it for the first time. New regulations unveiled a few weeks ago, require owners of small unmanned aircraft (UAS) weighing between .55 and 55 pounds, to register them through a new system the FAA has created for this purpose. The standard registration fee is $5, but the FAA is waiving it until Jan. 20 to encourage speedy compliance. Current drone owners, who purchased their equipment before December 21, will have until February 19 to register it. The registration requirement applies only to drones used for recreational purposes. The FAA is still developing regulations for commercial drones as concerns mount about the safety threats they pose. Close encounters with commercial aircraft are a particular concern, but critics also note the potential for damage to people or property and privacy concerns.
“Make no mistake: unmanned aircraft enthusiasts are aviators, and with that title comes a great deal of responsibility,” Transportation Secretary Anthony Foxx said in a press statement issued jointly with FAA Administrator Michael Huerta. “Registration gives us the opportunity to educate these new airspace users before they fly so they know the airspace rules and understand they are accountable to the public for flying responsibly,” Huerta added.
IN CASE YOU MISSED THIS
Young adults, who have delayed their departure from their parents’ nest, may finally be ready to establish households on their own, according to Fannie Mae, which detected “the first indication of stability in the number of young homeowners since the onset of the Great Recession.” But Goldman Sachs analysts offer a less upbeat assessment. While cyclical factors may have kept millennials at home for longer than usual, “cyclical upturns could turn into structural shifts if living with parents becomes more socially acceptable over time,” they warn.
It isn’t just the lack of finances that has been keeping first-time buyers out of the housing market; it’s their “cluelessness” about financing requirements, one recent survey suggest.
Existing home sales plummeted by more than 10 percent in November, leaving economists to debate whether to blame new regulations (delaying closings) or weakness in underlying demand.
Despite steady increases in home prices, more than 7.5 million homeowners are still struggling with negative equity.
The Supreme Court heard arguments recently in a case that asks whether plaintiffs must suffer actual harm in order to sue for statutory damages in federal court.
A DUTY TO INQUIRE
A recent decision by a Washington State appeals court provides an interesting side-note to the ongoing battle over the condominium priority lien. In this case (Linden Park Homeowners Association v. Mears), the association foreclosed on a delinquent owner, naming the mortgage holder (Bank of America) as a defendant in the suit. When the bank didn’t respond, the court entered a judgment against the bank and the owner, specifying that the bank’s interest would be “forever and fully extinguished” at the foreclosure sale. The day before the sale, the bank paid the super priority amount owed to the association ($1,800 of the total $11,000 lien) but filed no notice with the court and took no action to prevent the sale.
Ray Stevenson, a principal in Condo Group, LLC, which specializes in purchasing condo units foreclosed under a superlien, submitted the winning bid — $2,000. Although reportedly “shocked” that the opening bid ($1,000) was several thousand dollars below the outstanding lien, Stevenson did not ask for an explanation until after the sale. The sheriff’s office explained then that the bank had preserved its interest – a detail the office had not announced at the sale. When Condo Group asked a court to confirm that the bank’s interest had been extinguished, the bank objected, asking the court instead to vacate the default notice and judgment against it. The trial court agreed and Condo Group appealed. The key question on appeal: Whether Condo Group was a “bona fide purchaser” who had acquired the unit free of the bank’s interest.
Condo Group argued that its principal, Stevenson, had no way of knowing that the bank had paid off the lien, since that information wasn’t provided at the sale; the bank argued that as an experienced investor, Condo Group had reason to question the low bid and should have done more due diligence before buying. The Appeals Court agreed with the bank.
“While we do not condone Bank of America’s apparent negligence in protecting its rights,” the court said, “Condo Group’s argument fails because its presale diligence does not mean it can turn a blind eye to the circumstance that arose when the opening bid was called.” The duty of inquiry doesn’t require “actual knowledge” of a third party’s claim, the court said. It requires only (citing another case) “’information … which would excite apprehension in an ordinary mind and prompt a person of average prudence to make inquiry.” In this case, the court said, “the discrepancy between the opening bid and the judgment amount was information that would prompt a prudent investor to make inquiry.”
Condo Group had argued that because the opening bid was announced at the auction itself, there was no opportunity to inquire about the discrepancy. But the court noted that the company could simply have asked the deputy conducting the sale for an explanation. The sheriff’s office had information that the opening bid was low because the lender had paid the super priority lien,” the court noted. “Had Stevenson asked, there is no reason to believe that the deputy would have withheld that information.” A reasonable inquiry was possible, the court said, and it “would have revealed Bank of America’s interest.”
“Fannie and Freddie have their flaws, but that doesn’t mean the answer is to hand over their business to the banks…. Their role in the mortgage market is too important to put under the thumb of banks with a history of toxic mortgages, structured finance abuse and consumer maltreatment.” ─ Elise Bean, former chief counsel for the bipartisan Senate Permanent Subcommittee on Investigations, quoted in a New York Times article describing banking industry efforts to eliminate Fannie and Freddie.