Legal/Legislative Updates

MILLENNIAL MINDSET Although most industry surveys continue to indicate that homeownership remains an important part of the American Dream, some analysts have detected what they think may be a sea change in the attitudes of millennials, who have not yet jumped on the housing ladder. Caren Maio, a millennial and a real estate professional, described that change in a recent blog: “In the span of a decade, the American Dream of homeownership has lost a [Read More...]

UNCERTAINTY AHEAD As Donald Trump settles into the Oval Office, the consensus economic forecast is “uncertainty” ─ uncertainty about the policies he will pursue, about the initiatives he will be able to implement, and about the impact they will have on the economy. Stocks and consumer confidence levels have both been riding a post-election bump upward for the past several weeks. Mortgage rates, which had begun to rise before the election, have continued to increase, [Read More...]

PREMATURE ELATION When Steve Mnuchin, President-elect Donald Trump’s nominee for Treasury Secretary, said “getting Fannie Mae and Freddie Mac out of government ownership” would be a top priority, industry executives, who have long-advocated privatization for the two companies, cheered, and the stock of the two GSEs soared. But that exuberance may be both premature and irrational. A recent report by Moody’s Investors Service concludes that the costs and complexity make privatizing Fannie and Freddie unlikely [Read More...]

UNEXPECTED SURGE Overcoming the headwinds created by rising interest rates, higher home prices, and anemic inventories, existing home sales surged unexpectedly in November. The third consecutive monthly increase pushed sales to an annual rate of 5.61 million units, their highest level in nearly 10 years, the National Association of Realtors (NAR) reported. Industry analysts speculated that higher interest rates, and the expectation that they will move higher in response to the Federal Reserve’s less accommodative [Read More...]

OVERTIME DELAYED Employers bracing for a sweeping and (for them) costly change in overtime laws have won a reprieve. A Federal District Court Judge in Texas approved a nationwide injunction sought by state governments and business groups opposing the change, preventing, at least for now, a redefinition that would have made approximately 4 million more workers eligible for overtime pay. President Barak Obama had championed the change in Department of Labor rules as a means [Read More...]

READY, SET….. The Federal Reserve is signaling that a December rate hike is almost certain. As widely expected, the Federal Open Market Committee left rates unchanged at its November meeting, reflecting somewhat more concern than the FBI about interfering in the impending election. But the committee’s post-meeting statement indicated that Fed officials see the moon, and sun, and stars aligning nicely to justify the long-awaited increase in the Fed’s benchmark rate, which has remained unchanged [Read More...]

NEW CONDO FINANCING RULES The Federal Housing Administration (FHA) has proposed new regulations easing some of the requirements condominium associations must meet to make units in the communities eligible for FHA-insured mortgages. Key changes would: Reinstate the “spot approval” process, under which the FHA will insure loans on individual units in associations that have not themselves been certified by the FHA; ease the recertification requirements for condos that have obtained initial certification; potentially reduce the [Read More...]

COOLING OFF The overheated rental market is beginning to cool off. The annual increase in apartment rents fell to 3.1 percent in July – the lowest level in two years, according to Axiometrics, which tracks rental trends. Rents actually gave ground in some of the hottest markets, the company found. “Lower rates of job growth and an abundance of new supply have been causing decreased apartment performance in [major] metros, Jay Denton, senior vice president [Read More...]

TEMPORARY EXTENSION The Federal Housing Administration has extended its temporary rules governing the certification of condominiums – a requirement to make buyers and owners eligible for FHA-insured mortgages. The extension – until August 31, 2017, will give agency officials time to incorporate changes mandated by Congress in the Housing Opportunity through Modernization Act, which was signed into law at the end of July. Among other changes, the law: Requires the FHA to streamline its recertification [Read More...]

STILL SAYING NO Resisting increasing public support to legalize the use of marijuana, the Federal Drug Administration (FDA) has rejected a recent request to rethink its classification as a highly addictive drug – on a par with heroin. Gina Raimondo and Jay Ins, Democratic governors of Rhode Island and Washington, respectively, had asked the FDA to reclassify the drug, noting the conflict between laws in 42 states permitting the medical use of marijuana, and federal [Read More...]

SUSPICIONS CONFIRMED Board members who suspect that at least some of the owners requesting “emotional support animals” don’t really qualify for them, will find confirmation in a recent New Yorker magazine article noting the ease with which pet owners can document their right to bring animals into residential and commercial properties where they aren’t otherwise allowed. “The Fair Housing Act says that you and your [support animal] can live in housing that prohibits pets,” the [Read More...]

REASSURING REBOUND After triggering a bad case of economic jitters in May, the employment report brought a measure of relief in June as employers added 287,000 workers to their payrolls. That stronger—than-expected performance, following a dismal increase of only 38,000 workers in May, tempered fears that the economy might be losing ground, but left uncertain the timing of the interest rate increase the Federal Reserve has been eyeing, but deferring, for most of this year. [Read More...]

CAI FORECAST The aging of buildings and their residents and the need for qualified managers are among the major challenges confronting the condominium industry, according to a series of white papers produced by the Community Associations Institute (CAI). Those conclusions came from CAI members and industry experts who met throughout last year to identify the major trends that will affect condominiums in the future. Four white papers, produced by four different panels, examine how communities [Read More...]

READY, SET, WAIT! Pity the poor Federal Reserve officials, fingers twitching over the interest rate trigger, forced once again to reassess whether the economic indicators are telling them it is still too soon to act. Just two weeks ago Fed Chairman Janet Yellen had hinted strongly that a rate hike was likely, when she told a Harvard audience, “It is appropriate, as I’ve said in the past, for the Fed to gradually and cautiously increase [Read More...]

A POSITIVE TURN 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 [Read More...]

GETTING SATISFACTION If you derive all of your information about condominiums from press reports (or from association meetings at which dues increases are announced), you might assume that condominium owners hate everything about their communities – especially their neighbors, their managers and their governing boards. But annual surveys conducted by the Community Associations Institute (CAI) have consistently found that owners are highly satisfied with the condominium living generally and with their communities specifically. And this [Read More...]

BACKGROUND CHECKS The Department of Housing and Urban Development has issued guidance for rental housing providers on the use of criminal background checks to vet prospective tenants. The guidance details a three-step analysis courts should use to determine if the screening violates Fair Housing laws: Does it have a “disparate” discriminatory impact on protected classes? If so, the guidance says — “The burden shifts to the housing provider to prove that the challenged policy is [Read More...]

STANDARDIZED FORMS Fannie Mae and Freddie Mac have developed standardized forms covering the condominium project information lenders are required to obtain for the condo loans they sell to the two secondary market giants. The agencies are responding to industry complaints about the amount of information association boards and managers are supposed to compile and the risks they incur by responding to many of the questions. Although CAI officials initially applauded the new forms, industry executives [Read More...]

HOUSING GRIDLOCK Rising home prices and shrinking inventory levels are creating “gridlock” in the housing market, crimping sales and threatening to create a vicious cycle that will perpetuate the problems. The problem begins at the low end of the market, where first-time buyers are having trouble finding available homes for sale at prices they can afford. Existing owners, unable to find buyers for their homes, are unable to trade up – hence the housing equivalent [Read More...]

RATE GUESSING If you’re tired of predicting who will win the presidential primaries – or who will say what about whom in that process ─ there’s another increasingly popular guessing game you might want to play instead: How many times will the Federal Reserve hike interest rates this year? Fed officials seemed to answer that question in December when they increased the Fed Funds rate for the first time since 2006, signaling at the time [Read More...]