real estate Archives - Page 31 of 101 - Real Estate News and Commentary

April 6, 2018November 23, 2021

Fair housing for all

Title VIII of the Civil Rights Act of 1968, better known as the Fair Housing Act turns 50 this year. Title VIII was the culmination of a number of laws that focused on personal rights. Personal property rights are protected in Fifth Amendment of the Constitution. The Civil Rights Act of 1866 was enacted to specify that all citizens, regardless of race or color, were equally protected under the law, which includes property rights. The Civil Rights Act of 1964 prohibited discrimination based on race, color, religion, sex or national origin. The Fair Housing Act expanded the protected classes by prohibiting discrimination in the sale, rental and financing of dwellings based on race, color, national origin, religion, sex, disability and familial status (the presence of children).

Some states and localities further expand the protected classes specified in the Fair Housing Act. For example, Maryland protects fair housing regardless of race, color, religion, sex, familial status, national origin, marital status, sexual orientation, gender identity, or disability. Montgomery County protects fair housing regardless of race, sex, marital status, physical or mental disability, color, religion, national origin, ancestry, presence of children, source of income, sexual orientation, age and family responsibilities.

Some say we have come a long way in protecting fair housing rights. But have we? Even though we have come a long way to protect the rights for a number of groups, some still find it acceptable to discriminate against those who are not listed as a protected class.

It was reported last week that a home seller in Sacramento CA put her home for sale with the caveat to not sell to a Donald Trump supporter. Some legal experts say the home seller may run into a legal challenge based on the First Amendment. There are only a few states that include political affiliation, activity, or opinion as a protected class against discrimination. California’s Bane Civil Rights Act includes political affiliation as a protected class against violence or the threat of violence.

Drew Bollea of CBS 13 of Sacramento (sacramento.cbslocal.com) reported that the home seller stated that she did not want to sell to a Trump supporter. And when it was pointed out that it could possibly narrow the buyer pool by 39 percent (39 percent of Sacramento voted for the President), she said that she did not care because her point was more important than money. She stated, “When you’re talking about principles, ethics and morals, it runs very, very deep.”

Principles, ethics and morals Indeed. Going back to the intentions of the Civil Rights Act of 1866, the spirit of the Fair Housing Act is inclusion. In today’s politically divisive atmosphere, there are many who would agree with the Sacramento home seller’s rationale of her discriminatory demand. However, her excuse proclaiming “principle, ethics and morality” harken back to the rationale of discriminatory practices of the past.

April is National Fair Housing Month. It’s ironic that while President Trump proclaimed this year’s Fair Housing Month recognizing the 50^th anniversary of the enactment of the Fair Housing Act, those who voted for him are singled out. It appears there is still much work ahead for fair housing advocates. In his proclamation, President Trump urged “all Americans to learn more about their rights and responsibilities under the Fair Housing Act and reaffirm their commitment to making homeownership within reach, no matter one’s background.”

By Dan Krell
Copyright © 2018

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

Protected by Copyscape Web Plagiarism Detector

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

March 29, 2018July 16, 2019

Interest rate increase – Don’t panic

Last week, the Federal Open Market Committee (FOMC) decided to raise the federal funds rate. The federal funds rate is the interest rate that is charged to banks for borrowing overnight funds to maintain the required target funds. Although the Fed interest rate increase means that a banks’ business is getting more expensive, it doesn’t necessarily mean that mortgage interest rates increase in kind.

If mortgage rates are not always affected by the Fed’s interest rate increase, then what is?

Katherine Reynolds Lewis pointed out that the FOMC’s interest rate hike indirectly influences jobs, wages, prices of the things we buy, and other items (7 ways the Fed’s decisions on interest rates affect you; bankrate.com; March 20, 2018). She states, “Sometimes mortgage rates go up when the Fed increases short-term rates, as the central bank’s action sets the tone for most other interest rates. But sometimes mortgage rates fall after the Fed raises the federal funds rate.” An example of this is the seventeen rate increases during 2004-2005 when mortgage interest rates initially dropped, then slightly increased a year later. And most recently, the three Fed rate increases during 2017 when mortgage interest rates remained stable.

The reason why a FOMC interest rate increase doesn’t always affect mortgage interest rates is because mortgage interest rates are tied to the bond market. The bond market is typically a bellwether of the economy. It is highly likely that the bond market baked in last week’s Fed’s rate increase prior to the FOMC announcement. Bond yields have already been increasing due to an improving economy, which pushed mortgage rates higher in recent weeks.

In fact, the Freddie Mac Press release the day after the Fed’s announcement indicated that mortgage rates increased one basis point (freddiemac.com; March 22, 2018):

“The Fed’s decision to raise interest rates by a quarter of a percentage point puts the federal funds rate at its highest level since 2008. The decision, while widely expected, sent the yield on the benchmark 10-year Treasury soaring. Following Treasurys (sic), mortgage rates shrugged off last week’s drop and continued their upward march. The U.S. weekly average 30-year fixed mortgage rate rose 1 basis point to 4.45 percent in this week’s survey.”

Immediately following the Fed’s interest rate increase, NAR’s chief economist, Lawrence Yun, stated “We are in the middle innings of monetary policy normalization (nar.realtor, March 21, 2018).” Yun believes that the labor market is pushing the Fed to act to stave off inflation. He stated that consumers should expect more rate increases throughout 2018. However, he believes that increased new construction can belay future Fed rate increases:

“Housing costs are also rising solidly and contributing to faster inflation. The one thing that could slow the pace of rate increases would be to tame housing costs through an increased supply of new homes. Not only will more home construction lead to a slower pace of rate hikes, it will also lead to faster economic growth. Let’s put greater focus on boosting home construction.”

Yun’s call to home builders to increase housing stock is preaching to the choir. The housing market’s tight sale inventory should already be spurring home builders to crank out new homes. But there are challenges. The latest new construction statistics released by the US Census (census.gov) indicated that building permits issued during February were 5.7 percent lower than January’s permits, but 6.5 percent higher than last February.

By Dan Krell
Copyright © 2018

Original published at https://dankrell.com/blog/2018/03/29/interest-rate-increase-dont-panic/

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

March 22, 2018November 23, 2021

Negative equity stats likely erroneous

Before the Great Recession, there was the foreclosure crisis of 2007. That was the year that the housing bubble popped and home negative equity soared. Many home owners negotiated with their lenders to keep their homes, while others lost their homes to foreclosure. The Mortgage Forgiveness Debt Relief Act of 2007 was one of the first measures to assist distressed homeowners during the financial crisis. The Act initially was to end in 2009 but has been extended annually. The Act was recently retroactively extended for 2017.

The purpose of the Act was to address tax liabilities that distressed homeowners faced when they tried to save their homes. Because debt forgiveness is typically considered taxable income, a mortgage balance reduction via mortgage modification or short sale would have resulted in a tax bill to a homeowner who was already experiencing a financial hardship.

Recent home equity gains in the housing market should help many home sellers who would have otherwise needed a short sale. Highlights from CoreLogic’s Q4 2017 Home Equity Report (corelogic.com) indicated that about 4.9 percent of mortgaged homes have negative equity (which is a huge improvement from the almost 31 percent reported in 2012 by Zillow’s Negative Equity Report). Additionally, CoreLogic reported that the national average of home equity gained by homeowners over the past year was in excess of $15,000. However, there is disparity in home equity growth by region.

Dr. Frank Nothaft, chief economist for CoreLogic stated:

“Home-price growth has been the primary driver of home-equity wealth creation. The CoreLogic Home Price Index grew 6.2 percent during 2017, the largest calendar-year increase since 2013. Likewise, the average growth in home equity was more than $15,000 during 2017, the most in four years. Because wealth gains spur additional consumer purchases, the rise in home-equity wealth during 2017 should add more than $50 billion to U.S. consumption spending over the next two to three years.”

The National Association of Realtors testified on March 14th to the U.S. House Ways and Means Subcommittee hearing on “Post Tax Reform Evaluation of Recently Expired Tax Provisions” to make the Mortgage Forgiveness Debt Relief Act permanent. In his testimony, Realtor Barry Grooms discussed the plight of many homeowners who are surprised to find that they are upside-down on their mortgage despite national home price gains.

Grooms made an argument why the Mortgage Forgiveness Debt Relief Act should be permanent. The Act has been retroactively extended each year in recent years leaving many short sellers “sweating it out” until the end of the year. Part of the decision-making process for a short sale is a potential tax liability. Many home sellers take the chance that the Act will be renewed retroactively. But others do not want to take the chance of incurring a large tax liability.

Negative equity statistics are likely to be erroneous. The number of homes with negative equity is probably under-represented due to deferred maintenance.

Yes, home prices have significantly increased, which has grown home equity. But the statistics for home equity assume that all homes are worth “retail value.” The retail value of a home is the full price a home can sell. In today’s market the home must be in better-than-average to excellent condition to sell for retail value. We don’t know the real value of any home until it’s sold.

In his testimony, Grooms touched upon a number of issues why homeowners are selling for less than they owe. However, not addressed by Groom is the number one reason why homeowners are under-water and why many home sellers need to sell via short sale. Property condition. The property condition crisis was highlighted in a February 2013 article by the Harvard Joint Center of Housing Studies entitled “The Return of Substandard Housing.” The lack of updates and/or deferred maintenance in a home can significantly decrease its value.

By Dan Krell
Copyright © 2018

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

March 17, 2018December 13, 2022

Home buyer savings account?

Maryland first-time home buyers may soon have another program to help them buy a home. Two related bills are making their way through the Maryland General Assembly to create a first-time home buyer savings account. If enacted, Maryland would join a handful of other states that have already enacted such programs to incentivize home buying.

The bills are an effort to address the lack of first-time home buyer participation in the housing market. The lack of first-time home buyer participation has received a lot of attention since the Great Recession. Not just because of the rising costs of buying a home, but also because of the lack of home buyer savings. The lack of down payment was identified by the National Association of Realtors as one of the issues barring first-time home buyers from entering the housing market. The October 18th 2016 NAR news release (Five Notable Nuggets from NAR’s Home Buyer and Sellers Survey’s 35-Year History; realtor.org) also cited underemployment, student debt, and delayed family formation.

The idea of a home buyer savings account is not new. It was first conceived by Montana in the 1990’s as an incentive for home buyers to save money for down payment and closing costs. Virginia was the second state to enact a similar program in 2014. Several other states have since enacted similar plans, while others (including Maryland) have proposed such plans in their respective state legislatures.

The increased attention to first-time home buyer savings account during 2017 has made it a hot topic. While states are looking to provide state tax breaks for first-time home buyers, Rep. Mike Coffman of Colorado wants to provide federal tax incentives to first-time home buyers for saving down payment and closing costs. H.R.2802 First-Time Homebuyer Savings Account Act of 2017 was introduced in Congress last June by Rep. Mike Coffman of Colorado, and co-sponsored by Rep. Sean Patrick Maloney and Rep. Barbara Comstock. The bill has yet to make it out of the House Ways and Means Committee.

Rep Coffman stated in a press release:

“The American dream of homeownership is getting harder and harder to attain for those starting out on their own these days, especially Millennials, because of the challenges involved in saving up for the down payment…The First-Time Homebuyer Savings Account Act is a straightforward and bipartisan solution to this problem. If we can help Millennials attain homeownership, this would not only be a wise financial move for them, but would have broader positive financial impact for our economy as a whole“

Maryland’s proposed first-time home buyer savings plan, introduced by HB0463 and SB0972, is currently being debated in the Maryland General Assembly. If enacted as introduced, the legislation would allow $50,000 to be deposited “state tax free” into an account for the purpose of buying a home in Maryland by a first-time home buyer. Any interest earned up to $150,000 would also be state tax free, as long as the interest is also used in said purchase. However, if the funds and interest are used for any other purpose, the holder of the account would be subject to state tax and penalties.

Would a first-time home buyer savings account stimulate interest in the housing market?

Lisa Prevost, writing for the New York Times, brought attention to Montana’s struggle to get first-time home buyers to participate in their savings plan (Tax Free Accounts for Homes: nytimes.com; August 8, 2013). At the time of Prevost’s article, the Montana Department of Revenue reported that “…no more than 225 people, and as few as 125, have participated annually since the program’s inception. Their annual deposits have averaged around $400,000.” Edmund Caplis, director of tax policy and research for Montana’s Department of Revenue, was quoted in the article as saying, “What you’ve got to understand is, this is people trying to get into their first home. For most working families, trying to pull together an extra buck is a stretch.”

By Dan Krell
Copyright © 2018

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.

March 9, 2018November 23, 2021

Insurance claim after storm

After enduring the recent twenty-four hours of near hurricane winds, many home owners are making repairs to their homes. Many are reporting storm damage claims to their insurance companies. Anyone who has made an insurance claim to repair their home knows that it can be ordeal. But you can make the process easier if you know what to do.

When making an insurance claim, the Maryland Insurance Administration recommends that you contact your insurance agent or company immediately to report damage. Prepare a detailed inventory of all damaged or destroyed property, to provide to the adjuster and for your records. It is recommended that you take pictures or video of the damage for documentation and to help the insurance company’s investigation. If emergency repairs are required, keep all receipts. It’s important to only make necessary repairs, and to contact your insurance company before making permanent repairs. You can view the Maryland Insurance Commissioner’s video on “Filing a Weather-Related Claim” for additional information and tips about your homeowners insurance (youtu.be/XywD4mdU1q8).

Before you make a claim, check with your insurance company about your deductible, policy coverage, and how they will pay-out the claim. If total cost of the repair is approximately, or slightly more than, your deductible, making a claim may not be worth the trouble. Your homeowners policy may also limit repairs to only the damaged areas, resulting in mismatched roof or siding. If your mortgage company has to endorse the insurance check, contact the mortgage company to engage the process and expect a delay in reimbursement or contractor payment.

Making an insurance claim may also have consequences on your insurance premiums and future applications. Much like credit reports that help creditors make decisions about extending credit, there are reports that provide the same to insurers. These reports help underwrite insurance policies. The “CLUE” report is a history of your insurance claims for the last seven years. A CLUE report can exist for you personally, as well as your home. Although the CLUE report has taken the public spotlight over the last decade, the A-PLUS property loss report is also popular with insurers.

Much like checking your credit report annually, the Maryland Insurance Administration recommends that you annually review your CLUE and A-PLUS reports. The reports contain a detailed history of insurance claims for you and your property, as well as details about damage to your home. Knowing what is contained in the reports may help you understand how an insurance company views your and your home’s insurance risk. This can affect your insurance policy acceptance, limitations, and/or premiums. And like credit reports, you can dispute any errors on the CLUE and A-PLUS reports. The MIA website offers a list of contacts to help you obtain these reports (insurance.maryland.gov/Consumer/Pages/CreditandPropertyLossHistoryReports.aspx).

It’s not uncommon to hear from contractors after the storm (verify contractor license).

The MIA issued a consumer advisory regarding what contractors can and cannot do:

What contractors can do:
-Prepare an estimate of the loss.
-Discuss the estimate with their customer.
-Answer questions the insurance company has about the estimates.

What contractors cannot do, unless they are licensed as a public adjuster by the Maryland Insurance Administration:
-Investigate, appraise, evaluate, give advice or assist their customer in adjusting a claim.
-Prepare the insurance claim for their customer.
-Negotiate the claim with the insurance company on their customer’s behalf.
-Advise their customer on the insurance policy’s coverage.
-Advertise or provide written materials that they can negotiate or investigate a claim on their customer’s behalf.

If the hassle of filing a claim is too much for you, you might consider hiring a Public Adjuster. The MIA describes the Public Adjuster as, “…an insurance claim adjuster who, for compensation, acts as an advocate for the policyholder in appraising and negotiating a first party property insurance claim under a property and casualty policy that insures the policyholder’s real or personal property…” The Public Adjuster must be licensed by the MIA and enter into a contract with the policy holder, as well as provide disclosures. Although a convenience, your insurance company is not obligated to accept the Public Adjuster’s claim.

The MIA states that a Public Adjuster must:

-be licensed by the Maryland Insurance Administration;
-prior to entering a contract with the policyholder, provide the policyholder with an explanation of the types of adjusters involved in the claims process and the insured’s rights to communicate directly with the insurer or its agents about settlement of the claims process and obtain the policyholder’s signature on the form;
-keep financial and business records and establish a separate escrow account for the policyholder’s proceeds.

-provide the policyholder with a written contract disclosing:

the terms of the contract;
the right to rescind or cancel the contract within 3 business days of signing;
that out-of-pocket expenses incurred by the Public Adjuster and approved by the insured will be reimbursed out of the insurance proceeds;
any compensation the Public Adjuster is to receive for services; and
the disclosure of any direct or indirect financial interest that the Public Adjuster or any immediate family member has with any other party who is involved in any aspect of the claim, including but not limited to the ownership of, or any compensation expected to be received from, any construction firm, salvage firm, building appraisal firm, motor vehicle repair shop, or any other firm that provides estimates for work or performs any work in conjunction with damages caused by the insured loss on which the public adjuster is engaged; and
the insured’s rights under the Maryland Consumer Protection Act.

By Dan Krell
Copyright © 2018

If you like this post, do not copy; instead please:
link to the article,
like it on facebook
or re-tweet.