Legal/Legislative Updates

DRONE CHALLENGE A consumer technology group is challenging the Federal Aviation Administration’s (FAA’s) rules requiring the registration of recreational drones. In a suit filed in the Court of Appeals for the District of Columbia, TechFreedom alleges that the FAA does not have the authority to regulate drones and if it does, the agency violated procedural requirements by failing to hold hearings and solicit public input before adopting the registration requirement. “Whether or not requiring drone [Read More...]

AMENDING FHA CONDO RULES The U.S. House of Representatives has approved legislation requiring the Federal Housing Administration (FHA) to revise several requirements for FHA-insured condominium loans. The changes, included in a broader housing measure (the Housing Opportunity Through Modernization Act), should make it easier for condo associations to obtain the FHA certification needed to make homes in the community eligible for FHA financing, said Dawn Bauman, senior vice president for Government and Public Affairs at [Read More...]

CYBER RISKS GROWING Cyber-attacks are getting more sophisticated, more dangerous and more expensive for businesses of all kinds. Nearly 70 percent of the corporate business risk managers responding to a recent survey said they had experienced at least one computer hacking incident last year and close to 20 percent said they had suffered more than 15 attacks. The most widely reported attacks have involved large entities – Target, several national banks and (recently) the Office [Read More...]

BRACED FOR A RATE HIKE Now that the Federal Reserve has made its long-delayed and much anticipated interest rate move, we can stop speculating about when it will occur and focus on the likely impact higher interest rates will have on the housing market. Analysts are, predictably, divided. Most agree that the small, .25 percent increase the Fed announced in December won’t be much of a factor. But the successive adjustments the Fed is contemplating [Read More...]

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 [Read More...]

HUD SMOKING BAN The Department of Housing and Urban Development is proposing rules that would ban smoking in all of the nation’s public housing developments. Approximately 228,000 public housing units are already covered by smoke-free policies that HUD has been encouraging housing agencies to adopt voluntarily since 2009. The proposed rules would make the remaining 940,000 units smoke-free. “We have a responsibility to protect public housing residents from the harmful effects of secondhand smoke, especially [Read More...]

A SURE BET….MAYBE A December rate hike is looking increasingly like a sure bet. But then, we’ve heard that assessment before, and more than once, only to see what had seemed a foregone conclusion that the Federal Reserve would act derailed. That’s what happened in October, when turbulence in the international financial markets and a surprisingly weak September employment report convinced the Fed policy makers that the economy wasn’t quite ready to absorb higher rates. [Read More...]

PUSHBACK ON FHA CONDO RULES Condo associations objected strenuously three years ago when the FHA tightened the requirements they had to meet to make units in their communities eligible for FHA financing. Now the National Association of Realtors and other housing trade groups are pushing back as well, arguing that the restrictions are making it more difficult for condo buyers to qualify for FHA loans. And they’re finding support in Congress, where more than 50 [Read More...]

NOW WHAT? September’s lackluster (to say the least) employment report may have put another crimp in the Federal Reserve’s plan to begin easing its tight grip on interest rates. After the Federal Open Market Committee (FOMC) decided to stand pat again in September, largely because of concerns about the international economic climate, Fed Chairwoman Janet Yellen said a move would likely come before the end of this year – possibly as soon as this month. [Read More...]

CFPB MORTGAGE RULES: THE DEBATE CONTINUES The statistics indicate that the Consumer Financial Protection Bureau’s (CFPB’s) new mortgage rules haven’t had the devastating impact that industry executives had predicted. But critics say the statistics don’t paint an entirely accurate or complete picture of what is happening in the market. And cynics point out that it is still too early to gauge the impact on residential real estate closings, which almost everyone agrees will take longer, [Read More...]

FIRST TIME BUYERS WAITING LONGER AND PAYING MORE First time homebuyers today are waiting longer before entering the market and devoting a larger chunk of their income to homeownership when they do. Median income for first-time buyers averages $54,340 today – about the same as in the 1970s, according to an analysis by Zillow economists. But today’s buyers are paying roughly 2.7 times their income for a median priced home that would have taken 1.7 [Read More...]

HUD TARGETING PRIORITY LIENS Condo industry executives concerned about the Federal Housing Finance Agency’s (FHFA’s) efforts to challenge the priority of the condominium superlien can’t be happy about the recent announcement that the Department of Housing and Urban Development (HUD) is requiring liens created by PACE (a popular energy retrofit financing program) to remain subordinate to FHA-insured loans. The HUD policy statement, issued in late August, doesn’t mention the condo superlien; it simply emphasizes HUD’s [Read More...]

EYES ON THE FED When will the Federal Reserve raise interest rates? Economists, business executives and consumers have been asking that question with increasing intensity for the past two years. The July employment report may have brought the Fed closer to answering it. Employers added 215,000 jobs for the month, a little short of the consensus forecast, but still above the 200,000-per-month level the market has averaged consistently this year. The unemployment rate remained at [Read More...]

TRID DELAYED The Consumer Financial Protection Bureau (CFPB) has delayed for two months the implementation date for the new consolidated Truth-in-Lending/RESPA disclosure rules. Mortgage lenders, settlement service providers and their vendors, who have been scrambling to prepare for the new requirements, will now have until October 3rd to make the adjustments in software, procedures and staffing they will need. Many industry executives had warned they would not be able to complete those preparations by August [Read More...]

FED POISED TO RAISE RATES – MAYBE The June economic reports brought a spate of mostly good news, peppered with continuing concerns about the employment outlook. Although employers added 223,000 jobs for the month wage gains remained anemic, leaving the timing of the Fed’s interest rate move still in doubt. On that point, Federal Reserve Chair Janet Yellen told a Congressional committee last week that the Fed plans to begin raising interest rates this year. [Read More...]

SUPER LIEN STRUGGLE CONTINUES The tug-of-war over the condominium superlien is becoming more intense and more complicated. In Nevada, the current center of the struggle, within the span of about two weeks: A federal district court ruled that an HOA’s suprelien could not extinguish the interests of a lender holding a first mortgage on the property; and The Nevada state Senate approved legislation retaining the super priority position of a condo lien, but establishing a [Read More...]

REG RELIEF FOR BANKS The Senate Banking Committee has approved a sweeping regulatory relief bill, exempting smaller banks from many of the Dodd-Frank supervisory requirements, establishing markers for the restructuring of Fannie Mae and Freddie Mac, and modifying the integrated mortgage disclosure rules (taking effect August 1) by waiving the three-day notice required for changes in loan terms if the only change is a reduction in the borrower’s loan rate. The proposed legislation would also [Read More...]

A CAPITAL ISSUE.   You know an industry issue should be written in capital letters when you start seeing ads promoting services to deal with it. So condo industry executive should note with some degree of concern recent reports that vendors have begun marketing HOA Super-Lien Services to manage the perceived risks the condominium superlien poses for lenders and investors. “There are super lien laws on the books in 21 states, plus Washington, D.C. Historically, [Read More...]

STILL GROWING.  The number of community associations, and the number of people living in them, continues to grow. The Community Associations Institute (CAI) tallied 333,600 common interest ownership associations in the U.S. at the end of last year (including homeowner associations, condos and cooperatives), and projects that another 8,000 to 10,000 communities will be added to the total by the end of this year. That’s up from 260,000 in 2004 and 10,000 in 1970, when [Read More...]

FHFA DOUBLES DOWN. The Federal Housing Finance Agency (FHFA) is doubling down on its position that loans backed by Fannie Mae and Freddie Mac are not subject to the “super lien” that gives condo associations priority status over a first mortgage in the collection of past due assessments owed by delinquent owners. Responding to a Nevada Supreme Court ruling upholding the right of HOAs to foreclose and extinguish a first mortgage loan in that process, [Read More...]

GETTING OFF THE POT ENFORCEMENT FENCE. As more states move to legalize marijuana or consider those measures, federal law enforcement officials are feeling increasing pressure to get off the fence they have been straddling and either enforce federal laws prohibiting marijuana use or make the live-and-let-live approach the Justice Department has been pursuing an official government policy. Another middle-of-the-road option: Have Congress enact legislation eliminating the federal proscription against marijuana in states that have legalized [Read More...]

CONDO REVIVAL.   Don’t get too excited yet – or too far ahead of the data – but some industry analysts are beginning to report evidence of a condominium revival. “While nobody’s ready to condo like it’s 2005, in markets across the country, for-sale multifamily has a new appeal,” a recent article in Multifamily Executive News), an industry trade publication, observed. The article includes Boston – along with Philadelphia, Washington, D.C., Atlanta and Chicago ―on [Read More...]

FED POLICY: “PATIENCE”.  An interest rate hike is on the Fed’s radar screen, but it is still a relatively small blip, visible, but not imminent. Fed Chairman Janet Yellen conveyed that message in recent testimony before the House Banking Committee, telling lawmakers that while recent economic reports are encouraging, the Fed is in no hurry to alter its current low-rate course. “There has been important progress,” she said. “However, despite this improvement, too many Americans [Read More...]

DRONES TAKING FLIGHT.    The Federal Aviation Administration (FAA) has issued proposed regulations governing drones, opening the door to some commercial uses (including those sought by real estate brokers) but leaving it closed, for now to the air-borne delivery services that Google, Amazon (and probably pizza franchises, as well) would like to launch. The proposed rules would not require drone operators to obtain pilots’ licenses, as some had feared, but would require them to pass [Read More...]

FORECLOSING TIMES. Foreclosure rates are declining nationally but foreclosure times aren’t, at least not much. It took an average of 604 days to process foreclosures in the fourth quarter, down only slightly from the record high of 615 days in the third quarter. Fourth quarter foreclosures were up 10 percent from the year-ago pace. That’s according to RealtyTrac’s Foreclosure Market Report, which found that lenders foreclosed on approximately 327,000 properties last year, nearly 30 percent [Read More...]

OFF TO A GOOD START.  The year began with a strong jolt of positive news: Employers added 252,000 jobs in December, beating estimates, and the unemployment rate declined to 5.6 percent, its lowest level since June, 2008. But wages declined for the first time in more than a year and the labor participation rate slumped, as well, casting a “yes-but” shadow over the otherwise encouraging report, and leading some analysts to predict that the Federal [Read More...]

SUPER BATTLE.  The condominium super lien appears to be under attack. First came the ‘Drummer Boy’ decision (Drummer Boy Homes Association, Inc. vs. Carolyn P. Britton et.al.), in which a Massachusetts appeals court ruled that associations can’t have multiple liens in place. Rejecting the successive rolling liens that associations have used traditionally to ensure the collection of unpaid common area assessments and attorneys’ fees when delinquencies span multiple six-month periods, the court ruled recently that [Read More...]

NEW ESCROW REQUIREMENT.  Federal bank regulators have proposed regulations that would require automatic escrowing of the premium payments on flood insurance policies. Federally regulated mortgage lenders are already required to make sure borrowers living in designated flood hazard areas purchase and maintain flood insurance. The new regulations would intensify efforts to ensure that borrowers don’t let their policies lapse. The Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Farm Credit [Read More...]

PULLING TEETH. What’s worse than a trip to the dentist? Spending time with a financial adviser, according to respondents to a recent survey, 17 percent of whom said that given the choice, they’d rather spend the time in a dentist’s chair. The poll results suggest that their finances need as much work, if not more, than their teeth. Nearly 60 percent of the respondents said they are barely making it from paycheck to pay check; [Read More...]

RETHINKING LOW DOWN PAYMENTS. Conventional wisdom holds that low-down payment mortgages approved for borrowers who really couldn’t afford home ownership costs, and who ultimately defaulted on their loans, contributed much to the implosion of the financial markets. But the Urban Institute compared default rates on loans with down payments of 3-5 percent and 5-10 percent, and found that there wasn’t much difference between them. Credit history is a far more accurate indicator of a borrower’s [Read More...]