Legal/Legislative Update – May 1, 2014

Published on: April 30, 2014

ALL CASH. Cash transactions made up more than 80 percent of condominium sales in Florida and Nevada in January ― the largest percentages among the 25 markets analyzed by CoreLogic. Massachusetts was at the bottom of the cash purchase list, at 36.7 percent, just above Virginia, at 32.4 percent. Restrictive lending requirements and other lingering effects of the downturn have “pushed condo cash shares much higher than pre-recession levels over the past five years and it doesn’t look like that is changing in the short term,” the CoreLogic report notes.

UPLIFTING. Rhode Island homeowners are seeking grants from FEMA to finance the elevation of homes at risk of flooding. They hope the reduced flooding risks will mitigate the other risk they face: Rising flood insurance premiums. Separately, a Deloitte report suggests that those rising FEMA premiums represent a significant market opportunity for private insurers.

NOT IMPROVING. Association Reserves estimates that 70 percent of common interest ownership associations have inadequate reserves – up from 60 percent deemed to be underfunded a decade ago.

BUMPER CROP. The Consumer Financial Protection Bureau is doing a booming business – in consumer complaints. The agency logged nearly 164,000 of them last year, nearly double the 90,000 processed the previous year. An analysis of that data reveals that the most vociferous mortgage-related complaints come from the wealthiest homebuyers.

THE REAL PROBLEM. With spring arriving finally, if belatedly, it’s getting harder to blame an icy winter for sluggish home sales. New York Times columnist Neil Irwin has another, more disturbing explanation — the difference between demand (what people want) and effective demand (what they can afford.) According to Irwin, many of the consumers who want to be homeowners can’t afford the cost, and so aren’t buying in large enough numbers to keep the housing market humming as an engine of the economic recovery.

DON’T ASK WON’T TELL. Consumers are more embarrassed about their credit card balance and more reluctant to reveal it than their age or their weight, a survey for the National Foundation for Credit Counseling found. “If you have a lot of debt, that sends a signal that you’re not successful or savvy with money,” Gail Cunningham, a spokesman for the NFCC told MainStreet. “Debt lets everyone else in on your secret that you’re living beyond your means.”

 

LEGAL BRIEFS

FLAWED NOTICE. In the real estate bust and its aftermath, mortgage lenders have often found themselves on the losing side when delinquent borrowers have challenged the foreclosure procedures used to claim their homes. But lenders wound up on top in a recent Massachusetts case decided by the Supreme Judicial Court (U.S. Bank, Nat. Assn. v. Schumacher). The question before the court: Does an error in the ‘right-to-cure’ notice provided before a foreclosure void the foreclosure sale? The borrower in this case argued that because the right-to-cure notice did not correctly define the mortgagee, the lender had not strictly complied with the foreclosure statute, which specifies that a foreclosed property cannot be sold unless the lender has complied with “the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale.” But the SJC ruled that the right-to-cure was not, strictly speaking, part of the foreclosure process, but rather a pre-foreclosure action, “designed to give a mortgagor a fair opportunity to cure a default before the debt is accelerated and before the foreclosure process is commenced.” So while the right-to-cure notice may have been flawed, the court said, the flaw was not fatal to the foreclosure sale.

 

WORTH QUOTING

“This is more than just NSA-style, this is more Gestapo-style collection of data on individual citizens who have no clue that this is happening.” ― Rep. Dan Webster (R-FL), decrying the joint CFPB-Federal Housing Finance Agency “National Mortgage Data Project,” which will collect what critics have described as “the largest amount of data the mortgage industry has ever seen.”