Legal/Legislative Update – November 20, 2013

Published on: November 20, 2013

NO FRACKING. Homeowners considering selling the mineral rights on their the damage caused by “fracking” (a technique for removing natural gas from underground rock) has led Fannie Mae and Freddie Mac to re-emphasize policies prohibiting mortgages on any property that contains hazardous materials – specifically including oil and gas. The GSEs also have the right to exercise the “due-on-sale” clause, requiring immediate payment of the outstanding mortgage balance, if they discover violations of this policy.

FRIENDS AND NEIGHBORS. Condominium boards called on to referee spats between owners might question these results, but a recent survey found that two-thirds of Americans like their neighbors, even though more than half (53 percent) don’t know their neighbors’ names. The survey, by Trulia, also found that homeowners are more likely than renters to know their neighbors (61 percent vs. 49 percent) and to like them (74 percent vs. 58 percent.

RESTART. The Federal Housing Administration is shortening the recovery time required before borrowers who have declared bankruptcy or gone through a foreclosure can qualify for an FHA-insured mortgage.

BOTH SIDES NOW. No wonder people are confused. Consider these two headlines, one posted above the other by Reuters: Reporting a Nielsen survey before the government shutdown: “U.S. consumer confidence at six-year high, Europeans also more upbeat.” From a Conference Board survey taken after the shutdown had ended: “U.S. consumer spending gauge rises, but confidence weakens.”

COOLING OFF. Although housing appreciation rates posted their largest year-over-year gain (12.8 percent) in August, the month-over-month increases have been moderating. And that’s good news, according to Zillow economists, who have been fretting about the prospects of another housing bubble in the making. Using different measures, or looking at the data differently, Lender Processing Services reports that home prices are close to their bubble peak. The company’s U.S. Home Price Index of national home prices hit $231,000 in August, just 14 percent the June 2006 peak of $270,000.

I DO’S ─ AND DON’TS. Rising home prices in many markets are spurring home purchases, home sales, remodeling activity ─ and prenuptial agreements.

 

LEGAL BRIEFS

FAIR HOUSING REMINDERS. Condominium attorneys advised their clients often and emphatically to be wary of Fair Housing land mines. “Just saying no,” is not their recommended response. But some association boards haven’t gotten that message. That information gap is proving costly for a Las Vegas homeowners association, which has agreed to pay $65,000 to resolve a complaint that the board improperly rejected an owners request to park an ambulance in the driveway needed to transport a disabled child to and from medical appointments. Although the family provided documentation from medical professionals affirming that the child had to travel in a prone position, the board refused to waive an association rule prohibiting owners from parking “commercial vehicles” on their property.

The Department of Housing and Urban Development (HUD) referred the complaint to the Justice Department for litigation. A conciliation agreement approved by a court requires the association and its management company to compensate the family (the $65,000 payment), establish a policy for handling future accommodation requests, and revise association rules “to better accommodate the needs of those with disabilities.”

A separate fair housing agreement announced about the same time requires the owner of a Reno, Nevada apartment building to pay more than $165,000 for discriminating against tenants using assistance animals. In this case, HUD found that the management company for the 900-unit building limited individuals with service animals to a particular section of the property, required them to pay special fees, required licensing or special certifications for their animals and barred both unlicensed service animals and comfort animals entirely – all violations of HUD’s fair housing rules.

“Assistance animals play a vital role in helping people with disabilities conduct everyday activities and fully enjoy their homes,” Bryan Greene, HUD’s Acting Assistant Secretary for Fair Housing and Equal Opportunity, said in a press statement. “HUD and DOJ will continue to enforce the Fair Housing Act’s protections and ensure that housing providers do not illegally limit assistance animals,” he added.

Although this complaint involved an apartment building, it should resonate equally with condominium boards—a point Greene underscored in a statement accompanying the announcement of the settlement with the Las Vegas association noted earlier. Homeowners associations, Greene noted, “have the same responsibility as [other] housing providers to follow fair housing laws.”

 

WORTH QUOTING:

“Taking a comprehensive look at the housing finance landscape leads one to the conclusion that many of the policies we are pursuing as a nation are having the unintended consequence of reducing the ranks of homeowners in the United States.” ─ Robert Couch, counsel at Bradley Arant Boult Cummings LLP and a member of the Bipartisan Policy Center’s Housing Commission, from an opinion piece in Forbes Magazine.