Legal/Legislative Updates

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...]

FHA RISING. The Federal Housing Administration (FHA) has almost succeeded in rebuilding its insurance fund, which has been stuck for several years below its federally-mandated capital levels. A recent report by Moody’s analytics concludes that the fund will have “close to” the 2 percent reserve cushion it is required to maintain. Huge losses, attributable primarily to the FHA-insured reverse mortgage (HECM) program, forced the agency to accept federal funds last year (a $1.7 million infusion) [Read More...]

SECURITY LAPSES. It seems that the Consumer Financial Protection Bureau (CFPB), which enforces data security and consumer privacy requirements for financial institutions, has some lapses of its own in those areas. The Government Accounting Office (GAO) has identified 11 steps the CFPB should take to strengthen its privacy and data security practices and policies. Among other problems, a GAO audit found, the CFPB lacks “written procedures and comprehensive documentation” for several procedures, including those related [Read More...]

FEELING MUCH BETTER.   As the effects of the “Great Recession” recede, community association managers and board member are feeling a lot better about the communities they oversee. Almost 90 percent of the 1000 respondents to CAI’s annual “State of Associations” survey described the overall health of their associations as “excellent,” and more than half (55 percent) expect their associations to be in even better economic shape five years from now. VAPORIZING.  The companies selling [Read More...]

BETTER OR WORSE.  It’s either getting easier or more difficult to obtain a mortgage, depending on which of any number of competing studies you want to choose. The Federal Reserve’s most recent survey of senior loan officers found that nearly 24 percent of banks have eased their credit standards in the past three months – at least as they apply to borrowers “with solid credit and incomes,” according to the Wall Street Journal. But Ellie [Read More...]

PET FRIENDLY.   Renters are finding more pet-friendly apartments ― a good thing for them, since nearly half of all households own at least one dog or one cat. Nearly three-quarters (72 percent) of renters responding to a recent survey said they are pet owners. That’s down slightly from 75 percent in 2013, but still way ahead of the 43 percent responding positively in 2012. This doesn’t mean that pet restrictions have disappeared, however. Only [Read More...]

GUILTY OF MURDER.  The Dodd-Frank Financial Reform law killed the housing market! That is the less-than-subtle conclusion of an article written by two Bank of America Merrill Lynch analysts, who blame the myriad mortgage-related rules spawned by the legislation for the sluggish housing recovery. “We think persistently low mortgage application volumes and [the] extremely weak new home sales reports for May and June are natural outcomes of the legislation,” analysts Chris Flanagan and Adam Katz, [Read More...]

RETHINKING FHA CERTIFICATION.   Since the Federal Housing Administration (FHA) tightened the criteria condominium communities must meet to obtain FHA certification (a requirement for borrowers who want to use FHA financing to purchase condominium or refinance an existing mortgage) the number of condominiums seeking certification has slowed to a trickle. The Washington Post reported recently that only about 10,000 of an estimated 140,000 condominium developments nationally have obtained FHA certification. California Realtors have launched a campaign [Read More...]

NO IDLE THREAT.   Massachusetts Attorney General Martha Coakley, who had threatened to sue Fannie Mae and Freddie mac, has made good on that threat. She recently filed suit against the two GSEs and the Federal Housing Finance Agency, which oversees them, for violating a state law designed to help troubled borrowers remain in homes they are losing to foreclosure. The law prohibits provisions, which Fannie and Freddie include in foreclosure sales, barring purchasers of [Read More...]

FEELING DOWN.   Feeling more upbeat about the economic outlook? We’ll take care of that right now. The International Monetary Fund has slashed its growth forecast for this year from 2.8 percent to 2 percent, and is now predicting that the U.S. won’t see full employment again until sometime near the end of 2017. UNSETTLING OR OVERSTATED?   The severe economic restraints on young adults will create serious and long-term impediments to economic growth, Wall [Read More...]