Published on: May 31, 2016


Existing home sales remained in positive territory in April, with a 1.7 percent increase following the 5.5 percent gain reported for March. Sales of condominiums and cooperatives, up 10.3 percent over the prior month, were almost entirely responsible for April’s positive numbers. Sales of detached, single-family homes increased by only 0.6 percent, according to the National Association of Realtors (NAR). Pending sales of existing homes, a marker for future sales, increased for the third consecutive month, pushing this NAR index to its highest reading in more than three years.

interest-rate-149879_1280Modest gains in the existing home market were overshadowed by a 16.6 percent year-over year increase in new home sales – the largest jump in 24 years. The annualized pace of 619,000 units reported by the Commerce Department blew well past a consensus forecast in the 525,000 range. Employment strength and wage increases, albeit modest ones, are boosting consumer confidence, encouraging them to “take the leap and buy the biggest of big ticket items of their lives,” Chris Rupkey, chief economist at New York-Based Union Bank, told Reuters. Other analysts cautioned that new home sales data are highly erratic and subject to often dramatic adjustments, up or down. Housing starts increased by 6.6 percent in April, rebounding from a disappointing March dip, and putting builders on a pace to create 1.16 million new homes this year.

Even with that improvement, builders are constructing “only about half as many homes as we should be in a normal market,” Zillow chief economist Svenja Gudell said in a press release. . “There still aren’t enough homes on the market to keep up with the high demand from every type of homebuyer,” she added.


janet_yellenFirst quarter economic growth wasn’t as bad as initially reported. This is hardly a rousing endorsement, however. GDP for the first three months of the year came in at an annualized rate of 0.8 percent ─ an improvement, but not much of one, over the first report’s 0.5 percent, and still a weak start for the year by any measure. There was some good news in the data, however: A $125.5 billion gain in wages and salaries, revised from the initial estimate of $81.7 billion. That larger than expected increase confirmed the general assessment that the labor market is improving and increased the odds that the Federal Reserve will boost interest rates again this year, possibly as soon as next month.

Federal Reserve Chairman Janet Yellen more than hinted at an imminent increase in d public discussion with Harvard economics professor Gregory Mankiw. Noting continuing employment gains and an encouraging increase in the labor force participation rate, Yellen said, “It is appropriate, as I’ve said in the past, for the Fed to gradually and cautiously increase our overnight interest rate over time. Probably in the coming months such a move would be appropriate,” she predicted.

Until recently, economists have been debating whether the Fed will act this year or next; now, the question seems to be whether an increase will come at the next meeting of the Federal Open Market Committee, in June, or the one after that, in July.


A new front has opened in the condo super lien war: The Federal Housing Administration (FHA) has proposed a new rule that would preserve the priority position of federally insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs). That provision is part of a broad package of reforms intended to strengthen the HECM program, the Department of Housing and Urban Development (HUD) explains in its Federal Register announcement of the proposal.

Although the proposed rule primarily targets long-standing consumer protection concerns about how reverse mortgages are marketed and structured, the super lien provision is attracting the interest of condominium industry leaders, who are battling banking industry efforts, spearheaded by the Federal Housing Finance Agency (FHFA), to weaken or eliminate the condominium super lien. (See related coverage of this issue here.) The FHFA has taken the position that because federal law (the Housing and Economic Recovery Act) prevents Fannie Mae and Freddie Mac from purchasing mortgages on which another entity might take a priority position, Fannie and Freddie will challenge any foreclosure initiated under a condominium association’s super lien authority.


In Massachusetts, a group of industry professionals, known as “the Massachusetts Five, has been working for months to win Congressional support for efforts to defend the super lien. (MEEB Partner Stephen Marcus is heading the group, which includes Wesley Blair, senior vice president of Brookline Bank and current president of CAI-New England; Laura Cardoos (Barkan Management), Scott Wolf (Greater Boston Properties, Inc.) and Ellen Shapiro (Goodman, Shapiro & Lombardi, LLC). Those efforts bore fruit recently, when the entire Massachusetts Congressional delegation signed a letter urging the FHFA to delay further actions based on its super lien policy until after holding a public hearing on it. Rejection of the condo super lien represents “a significant shift” in policy, the letter says, with implications “that could potentially affect millions of homeowners and thousands of loan servicers and community associations.”

While acknowledging that this represents “just the beginning” of a broad-based effort to “educate the FHA” about the Super Lien and its importance to condominium associations, Marcus said, “the significance of having the entire Massachusetts delegation [sign this letter] cannot be understated.” The hope, he said, is that this letter will spur industry executives in other super lien states to seek similar support from their Congressional representatives, increasing the pressure on the FHFA to reconsider its position.


Home builders have long argued that regulations of all kinds are driving up building costs and increasing the end price consumers must pay for the homes they buy. Those complaints aren’t new, but they have recently become louder and more insistent. The National Association of Home Builders (NAHB) recently published a new report estimating that the cost of complying with regulations has increased by almost 30 percent in the past five years. The study found that regulatory costs added about 24.3 percent ($84,671) to the average cost of a new home last year —down only slightly from 25 percent five years ago. Other studies have identified the same trend. For example, an analysis by Zelman & Associates reported recently in the Wall Street Journal estimates that the “impact fees” many local governments impose have increased by 45 percent since 2005 in some high-growth markets. “It really makes it hard to satisfy the lower end of the market, which is a lot of first-time buyers,” Paul Emrath, NAHB’s vice president for survey and housing policy research and the study’s author, told the Journal.


tax-957457_1280Federal lawmakers are going to consider a bi-partisan measure that would expand the Low Income Housing Tax Credit, to spur the development of affordable housing. Senators Orin Hatch (R-UT), chair of the Senate Finance Committee, and Maria Cantwell (D-WA), are co-sponsoring the measure, which would increase funding for the program by more than 50 percent. They estimate that the increase will help create or preserve 1.3 million homes over a 10-year period, compared with a maximum 400,000 units at current funding levels.

Among other changes, the measure would create an “income-averaging option” to preserve the affordability of units created by the program and establish a 4 percent credit rate floor for project acquisition or bond-financing costs. Those changes would make financing under the program more predictable and more flexible, the lawmakers said.

“Affordable housing is a crisis all across America,” Cantwell said in a press release announcing the program. “With skyrocketing rents and an increase in homelessness, more affordable housing units are a necessity, “she added.


Mortgages no longer top the complaint list at the Consumer Financial Protection Bureau. Debt collection and credit reporting claimed the top two positions in April, dropping mortgages to third place.

On a different list, Boston claimed the distinction of being the top city in which to launch a start-up venture, according to a ranking compiled by the U.S. Chamber of Commerce and Incubator 1776 – a Washington, D.C. start-up. Boston displaced San Francisco, which fell to second, in the April survey, followed by Denver in third place.

Half of all U.S. companies either purchased cyber insurance coverage for the first time or increased their existing coverage last year, according to a recent survey. But nearly one-third still have no cyber coverage at all.

Multiple studies have documented the increased costs and closing delays attributable to the new mortgage disclosure regulations (TRID). But a new study by the American Land Title Association has identified a definite plus: A 20 percent increase in the number of home buyers who actually review their closing documents before signing them.

The U.S. Supreme Court has declined two opportunities to review eminent domain decisions. One California Building Industry Association v. City of San Jose, required developers of housing projects with 20 units or more to offer at least 15 percent of them at prices affordable to low- and moderate-income buyers; the other (Beacon Resources Inc. v. W. Virginia DOT,) sought to challenge a West Virginia Supreme Court decision overturning a jury award in a dispute over whether an award for the condemnation of a coal mine should include lost profits on the coal. A jury said yes, the West Virginia court reversed the decision and the Supreme Court refused to hear the appeal.



Are condo association boards required to disclose the names and e-mail addresses of owners? The answer depends on which court you ask. A Kansas Appeals Court ruled recently that disclosure is required under that state’s condominium statute, while a Utah Appeals Court ruled that the Nonprofit Corporation Act in that state does not require disclosure.
In the Kansas case (Frobish v. Cedar Lakes Village Condominium), an owner (Frobish) sued the association after the board rejected multiple requests to disclose the names and addresses of delinquent owners. Frobish argued that disclosure was required under the Kansas Uniform Common Interest Owners Bill of Rights Act, which directs associations to maintain accounting records – including dues payment information — for five years and make those records public. The board argued that the law allows boards to withhold some records for privacy reasons, and that the names of delinquent owners qualified for that exemption. The court sided with Frobish, in favor of disclosure.

list-428312_1920In an unpublished decision, the court said that the law permitted the withholding of information that was already protected by association privacy rules in effect at the time of the request. Because there was no evidence the association had adopted privacy protections for delinquent owners, the court said, the privacy exemption did not apply.

Rejecting the association’s argument that owners had a reasonable expectation of privacy regarding their financial affairs, the court noted that their names would be disclosed in public documents related to a collection suit filed against them. Also arguing in favor of disclosure, the court said, was the importance of dues collection to the association’s operations. Identifying delinquent owners increases pressure on them to pay their dues and thus strengthens the collection effort, the court suggested.

The Utah Appeals Court had a different view of the disclosure requirement in that state. In Walker I Investments, LLC. V. Sunpeak Association, Inc., the plaintiff owner (Walker) sought contact information for owners, including their e-mail addresses and phone numbers, in order to “communicate efficiently and cost-effectively” with them about association operations.

The trial court ruled that owners’ names and mail addresses, which the association had provided, were sufficient to satisfy his request. Walker appealed, arguing that the state law required the association to provide access to any information an owner had an appropriate reason to inspect. The appeals court ruled that the disclosure requirement was not that broad.

The statute requires nonprofit corporations “to maintain a record of its members in a form that permits preparation of a list of the names and addresses of all members.” The statute further specifies that a corporation can comply with a request to inspect its membership records, by providing a list that includes their names and addresses. The association complied with that statutory disclosure requirement, according to the court, which concluded that the trial court had ruled properly that the statute did not require disclosure of owners’ e-mail addresses and phone numbers.


“It isn’t last call yet for this house party.” ― Wall Street Journal columnist Steven Russolillo, commenting on April’s existing home sales report.


Marcus Errico Emmer & Brooks specializes in condo law, representing clients in Massachusetts, Rhode Island and New Hampshire.