The Federal Reserve Board on Tuesday alerted the public to instances of questionable solicitations directed at consumers. These solicitations promise consumers access to personal loans through a nonexistent Federal Reserve lending program.
Under this fraudulent scheme, targeted individuals are told that that they can work through a broker to access a Federal Reserve program that extends sizable secured loans to consumers. Consumers are encouraged to deposit large sums of money into a bank account, under the guise of a security deposit, in order to receive the purported loan.
The Federal Reserve is advising consumers that it has no involvement in these solicitations and does not directly sponsor consumer lending programs. The matter has been referred to the appropriate authorities for action.
Consumers are strongly urged to verify the legitimacy of potential service providers before entering into a business transaction. Individuals seeking personal finance options are encouraged to do business only with reputable lenders and to shop around for the most favorable loan terms.
Consumers with questions about solicitations that they suspect may be fraudulent are encouraged to contact the Federal Reserve Board Consumer Help Center at http://www.federalreserveconsumerhelp.gov or by calling 1-888-851-1920.
Barack Obama scored a barrier-shattering victory last night to become the first black president of the United States - capping a 22-month quest that tapped into a national hunger for "hope" and "change."
At age 47 and still serving his first Senate term, the Democrat cleared a historic hurdle that seemed insurmountable just a few years ago - and was bolstered by his party padding its majority in Congress.
He had 349 electoral votes to John McCain's 147, and was winning the popular vote by 52 to 47 percent. Obama was the first Democrat in decades to crack the 50 percent threshold.
The president-elect and his family took the stage at a massive rally of more than 125,000 people at Grant Park in Chicago.
"It's been a long time coming, but tonight, because of what we did on this day, in this election, at this defining moment, change has come to America," Obama told the throng, which included Oprah Winfrey, Brad Pitt and the Rev. Jesse Jackson, who in 1984 became the first black candidate to win a presidential primary.
"If there is anyone out there who doubts that America is a place where anything is possible, who still wonders if the dream of our founders is alive in our time, who still questions the power of our democracy, tonight is your answer," Obama said.
"I was never the likeliest candidate for this office," said Obama, who paid tribute to his grandmother, who died Monday.
In January, he will become the 44th president of a nation that has struggled to come to grips with its history of slavery and its bloody battles for civil rights that raged just a few decades ago.
"Even as we celebrate tonight, we know the challenges that tomorrow will bring are the greatest of our lifetime - two wars, a planet in peril, the worst financial crisis of a century," he said.
"The road ahead will be long. Our climb will be steep," he said. "We may not get there in one year or even one term, but . . . I promise you, we as a people will get there."
Daylight savings ends November 2nd and it's time again to move your clocks backward one hour. You've heard that every six months when you "fall backwards", it's a good time to change the batteries in your smoke or carbon monoxide detectors, flip your mattresses and replace screens with storms windows. But did you also know that computer experts recommend changing your passwords to critical computer and online areas twice a year as well?
Changing your passwords to log on to your computer or access critical stored information gets you in the habit of having a different one every so often. At the same time, it reduces the chance that someone else will be able to "break in" to your computer files or online information. Experts caution though that you shouldn't "sequence" your passwords to make them easier to remember. If someone gets hold of an old password of yours, "green03," and it doesn't work, it won't take long for your average computer hacker to guess the new password is "green04" or "green05."
It's a good idea to have different passwords for different things. This can be hard to do in practice because there are so many things needing passwords. Experts say having a couple different passwords can be helpful. Use one for less important things like your log on to the New York Times online or an Internet message board, and another, more complex one for more important things like your online banking or the place you store sensitive business documents on your hard drive.
Try to vary your passwords by using things that aren't easy to guess or find out, like your Social Security number, your birthday, or child's name. Another good idea, experts say, is including both letters and numerals in passwords. A good way to do this is to substitute numbers that look most like the vowels for a, e, i and o. "A" can be "4", "E" can be "3", "I" can be "1" and "O" can be "0". A password for an "agent" might be "4g3nt." These letter/number combinations are harder to guess but also, harder for a hacker to remember if they somehow are able to see them very briefly.
Whatever you do to make it easy for you to remember your passwords but hard for others to guess, consider changing your passwords when you turn off your outside water supply, change your clocks and detector batteries. You may be very glad you did!
And after the time change, please continue to think of us for all your Realtor® needs!
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Governor Arnold Schwarzenegger today reinforced his commitment to keeping California's roads safe by signing legislation that prohibits drivers from using text messaging devices while operating a motor vehicle."Building on legislation already helping save lives in California, I am happy to sign this bill because it further encourages safe and responsible driving," said Governor Schwarzenegger. "Banning electronic text messaging while driving will keep drivers' hands on the wheel and their eyes on the road, making our roadways a safer place for all Californians."SB 28 by Senator Joe Simitian (D-Palo Alto) specifically bans the use of an electronic wireless communications device to write, send, or read a text-based communication while driving a motor vehicle. The bill would impose a base fine of $20 for a first offense and $50 for each subsequent offense.This bill compliments an existing law which Gov. Schwarzenegger signed in 2006. SB 1613, also by Senator Simitian, requires motorists to use hands-free devices while talking on a mobile phone when driving a motor vehicle.
Give out your account information for transactions only if you are familiar with the company you are dealing with. And if you have not done business with a company before, give out account information only if you have initiated the transaction. Criminals may ask you for your bank account number and then withdraw money from your account by creating a demand draft (sometimes called a "remotely created check") or making an electronic transfer. They may also ask for your debit or credit card number and other personal information. Don’t fall for these scams and don’t let yourself be pressured into "free trial offers." To be removed from telemarketing lists, sign up for the National Do Not Call Registry online (https://www.donotcall.gov) or by calling, toll-free, 1-888-382-1222.
Make sure all the checks, debits, automatic payments, and other withdrawals are ones you authorized. If you see a transaction you did not authorize, notify your bank immediately. If your bank has online banking, you don’t have to wait until your bank statement comes--you can check your transactions at any time.
The sooner you alert your bank to a problem, the sooner they can get it resolved. In some cases, your bank may require you to notify them in writing. Keep copies of any documents you give the bank until the problem is resolved. If you think the problem is a result of fraud, you should also contact your state attorney general.
Checks are being processed more quickly these days, which means the money may be debited from your account sooner. Also, many stores and utility, insurance, and credit card companies will convert your check to an electronic payment, which also means the money will be debited from your account sooner. If you don’t have enough money in your account when you write a check or authorize a debit, you could find yourself paying a fee. For more information, see the Federal Reserve Board’s publications "What You Should Know about Your Checks" and "Protecting Yourself from Overdraft and Bounced-Check Fees."
If you have a problem with an electronic debit or electronic fund transfer, you have certain rights under the federal Electronic Fund Transfer Act (EFTA), as explained in the Board’s "Consumer Handbook to Credit Protection Laws." You also have rights under the EFTA if you have a problem with a check that has been converted, as described in the Board brochure "When Is Your Check Not a Check?" The Federal Trade Commission’s publication "Automatic Debit Scams (175 KB PDF)" explains your rights and what to do if you have a problem with a demand draft or remotely created check.
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HOUSING AND ECONOMIC RECOVERY ACT OF 2008
First
FEATURE
H.R. 3221
Housing and Economic Recovery Act of 2008
Amount of Credit
Ten percent of cost of home, not to exceed
$7500
Eligible Property
Any single
Refundable
Yes. Reduces income tax liability for the year of purchase. Claimed on tax return for that tax year.
Income Limit
Yes. Full amount of credit available for individuals with adjusted gross income of no more than $75,000 ($150,000 on a joint return). Phases out above those caps ($95,000 and $170,000, respectively).
Yes. Purchaser (and purchaser’s spouse) may not have owned a principal residence in 3 years previous to purchase.
Recapture
Yes. Portion (6.67 % of credit) to be repaid each year for 15 years. If home sold before 15 years, then remainder of credit recaptured on sale.
Impact on District of Columbia Homebuyer Credit
DC credit not available if purchaser uses this credit.
Effective Date
Purchases on or after April 9, 2008
Termination
July 1, 2009
Interaction with Alternative Minimum Tax
Can be used against AMT, so credit will not throw individual into AMT
The Federal Reserve Board on Monday approved a set of new rules, effective Oct. 1, 2009, pertaining to home mortgage loans aimed at better-protecting consumers and ensuring responsible lending practices. The new rules prohibit unfair, abusive, or deceptive home mortgage lending practices and restrict certain other mortgage practices.In addition, the rules establish a new set of advertising standards for the mortgage lending sector and require certain mortgage disclosures to be given to consumers earlier in the home-buying transaction."The proposed final rules are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership," said Federal Reserve Chairman Ben S. Bernanke.
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The Fed announced Sunday that the White House and Federal Reserve will loan Fannie Mae and Freddie Mac the capital they may need to ride out the nation's housing crisis, granting the Federal Reserve Bank of New York authority to lend money to the two mortgage giants, if necessary, both of which are suffering from losses tied to record numbers of home loan foreclosures."This authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets," the Fed said in a prepared statement.The announcement followed Treasury Secretary Henry Paulson's announcement of plans to obtain congressional approval to buy stock in Fannie and Freddie in exchange for a role as consultant over the two companies' financial practices. The request is now being considered by Congress as part of a sweeping housing package.
06/02/06
The phone rings, you pick it up, and the caller identifies himself as an officer of the court. He says you failed to report for jury duty and that a warrant is out for your arrest. You say you never received a notice. To clear it up, the caller says he'll need some information for "verification purposes"-your birth date, social security number, maybe even a credit card number.
This is when you should hang up the phone. It's a scam.
Jury scams have been around for years, but have seen a resurgence in recent months. Communities in more than a dozen states have issued public warnings about cold calls from people claiming to be court officials seeking personal information. As a rule, court officers never ask for confidential information over the phone; they generally correspond with prospective jurors via mail.
Want to learn more about new and common scams like this one? Then sign up for our e-mail alerts.
The scam's bold simplicity may be what makes it so effective. Facing the unexpected threat of arrest, victims are caught off guard and may be quick to part with some information to defuse the situation.
"They get you scared first," says a special agent in the Minneapolis field office who has heard the complaints. "They get people saying, 'Oh my gosh! I'm not a criminal. What's going on?'" That's when the scammer dangles a solution-a fine, payable by credit card, that will clear up the problem.
With enough information, scammers can assume your identity and empty your bank accounts.
"It seems like a very simple scam," the agent adds. The trick is putting people on the defensive, then reeling them back in with the promise of a clean slate. "It's kind of ingenious. It's social engineering."
In recent months, communities in Florida, New York, Minnesota, Illinois, Colorado, Oregon, California, Virginia, Oklahoma, Arizona, and New Hampshire reported scams or posted warnings or press releases on their local websites. In August, the federal court system issued a warning on the scam and urged people to call their local District Court office if they receive suspicious calls. In September, the FBI issued a press release about jury scams and suggested victims also contact their local FBI field office.
In March, USA.gov, the federal government’s information website, posted details about jury scams in their Frequently Asked Questions area. The site reported scores of queries on the subject from website visitors and callers seeking information.
The jury scam is a simple variation of the identity-theft ploys that have proliferated in recent years as personal information and good credit have become thieves' preferred prey, particularly on the Internet. Scammers might tap your information to make a purchase on your credit card, but could just as easily sell your information to the highest bidder on the Internet's black market.
Protecting yourself is the key: Never give out personal information when you receive an unsolicited phone call.
Resources: Common Fraud Schemes | Jury Fraud Press Release (09/28/05) | Executive’s Identity Theft Testimony
Refueling the Housing Bubble? By NAR Chief Economist Lawrence Yun
The Federal Reserve has been aggressively cutting rates recently and the question is being raised about parallels to the past. Back in 2001, in the aftermath of the internet stock bubble collapse and the September 11 terrorist attacks, Alan Greenspan — then the Fed chairman — made deep cuts in interest rates in order to stave off a possible economic recession. Many also blame Mr. Greenspan for having fueled the housing market bubble and subsequent collapse by keeping the rates too low for too long.
Now in early 2008, with the economy possibly heading into a recession — as evidenced by the GDP growth rate slowing from 4.1% in third quarter to 0.6% in the fourth quarter — the current Fed Chair, Ben Bernanke, has been following a very similar step of sharply cutting fed funds rates in order to revive economic growth — partly by making home buying financially enticing. Though there is never a direct correction between the Fed funds rate and mortgage rates, which are outside of the Fed's control and determined by the global bond market, the current 30-year mortgage rates have come down to essentially 45-year low levels. Aside from a few months in 2003, mortgage rates have never been this low since the early 1960s. A drop in the average mortgage rate from nearly 7% in mid-2005 to the current 5.7% would reduce monthly mortgage payments from $1330 to $1160 on a $200,000 mortgage. The average savings would be $340 per month or $4,000 per year on a $400,000 mortgage.
Therefore, could the Fed be simply refueling the bubble by dangling financial incentives to buy a home? Well, let's replay the key factors related to the recent bubble-collapse and see whether the same behavioral patterns will reemerge. Keep in mind that there are significant local market variations, but the markets that had the huge swings followed the below pattern:
Going back to our earlier question: is the current action by the Fed simply trying to replay the same volatile game? The answer is an unambiguous NO. The same game is played out because the global capital providers will not be taken for fools again. After being burned, German mutual funds or the Chinese government or the Florida's teacher pension fund will no longer buy toxic subprime loans. Without the loans, homebuyers simply cannot enter the marketplace independent of their desires. We are back to the careful underwriting standards of verifying people's income, requiring escrow accounts, and back to thoroughly checking borrower's ability to repay the loan.
However, the current low interest rate policies of the Fed are a big help to housing because low rates can begin to furnish genuine potential homebuyers with the financial capacity to think seriously about becoming a homeowner. Furthermore, the rate cut is lessening the degree of forthcoming ARM resets, thereby lessening the burden the current subprime loan borrower faces. So the current policy of Ben Bernanke will help stabilize the housing market.
The Federal Reserve, however, should be mindful to not lower the fed funds rate too greatly. Inflation is expected to head lower in 2008 but too much money can fuel inflationary pressures. If that happens, 30-year mortgage rates will RISE, and therefore, choke off any housing recovery. A careful balance must be taken regarding how low to bring down the fed funds rate.
Though some in the blogosphere have figured Alan Greenspan as one of the key persons to blame for the current housing mess, I do not blame Mr. Greenspan. I believe there is plenty of blame to go around due to other factors. Global capital providers misunderstood and were simply not careful about purchasing securities composed on little income documentation and of risky-borrowers. Mortgage originators just originated loans to anyone including to suspicious borrowers because they had no skin in the game (see the recent academic article on this topic by a group of professors from the University of Chicago). There were also many books about how to endlessly profit from real estate. Consumers — particularly the flippers/speculators — also need to bear some of the blame.
But the biggest blame in my view goes to Moody's and Standard & Poor's — the rating agencies. If they had properly assessed the risk as is their job, then global capital would have never reached subprime homebuyers and flippers. The housing boom would have stopped dead in its tracks. We do not yet know how much of the ratings firms' assessment were clouded by their financial interest in giving out easy Triple-A grades. Many workers at Moody's and Standard & Poor's took home hefty bonus checks when revenue skyrocketed from providing high ratings.
It is also fine for people to point the finger at me. In a fast changing market conditions, I too have been off on my forecast. I knew that the boom was clearly unsustainable and I made the forecast in early 2007 that home prices were likely to experience a price decline on a national level for the first time since the Great Depression. The national median home price indeed fell by 1.4%. I believe I downgraded my forecast for ten or so straight months in 2007 as it was strongly pointed out to me. At the same time, the Blue Chip consensus forecast, comprised of about top 50 private forecasters, including forecasts by Merrill Lynch, Goldman Sachs, UCLA, and the like — had also downgraded the housing forecast by more than 20 straight months. Forecasting is never perfect. Forecasts are bound to be off but the forecaster's job is to make the best prognosis given the available information at the time. The readers should always view any forecast with caveat emptor.
But back to the original question: Will we experience a re-emergence of a housing boom from the current easy money policy by the Fed? The answer is no because as Abraham Lincoln said — fool me once, shame on you. Fool me twice, shame on me. It will be impossible to part global capital providers' money with another foolish investment.
Six of the big mortgage companies involved the Hope NOW Alliance announced that the Alliance is expanding its efforts to help homeowners facing foreclosure.
The rate freeze program announced by President Bush in December applied only to borrowers who were facing resets on subprime adjustable rate mortgages but who were current, in fact had never been delinquent, on their mortgage payments.
The new program dubbed Project Lifeline extends earlier Hope NOW efforts to include those who are seriously delinquent whether their problems are with subprime, Alt A or prime loans and will even assist those in foreclosure with second mortgages or home equity lines.
Lifeline will be, at least at first, a joint effort by six of the largest mortgage servicers in the country; Bank of America, Wells Fargo, Citigroup, Washington Mutual, J.P. Morgan Chase, and Countrywide Mortgage. These six represent 50 percent of the U.S. mortgage market. There are another 19 services that are members of Hope NOW and Secretary Paulson expressed a strong desire to have them sign on to the new program.
Borrowers who appear to qualify for help will receive letters from their mortgage servicers notifying them of the program and their possible eligibility. These borrowers, who will be at least 90 days behind in payments, must contact the servicer within 10 days of receiving the letter and inform the servicers that they are interested in the program, that they are willing to participate in counseling if required, and they must provide financial information to the servicer. If the loan appears salvageable, the homeowner will be granted a 30 day "pause" in the foreclosure process to allow time for a loan modification or other resolution.
Bank of America's Robinson said that the evaluation of a borrower's situation will address the entire picture including credit card and other debt and will be transparent so the borrower knows exactly what is happening with the foreclosure and his loan.
Robinson and Schwartz recapped some of the activities of Hope NOW since it was set up to facilitate contact between troubled homeowners and those who might help them.
The hotline is now handling over 4,000 calls a day, up from 625 at its start, and there are 400 housing counselors working for Hope NOW. The organization has sent out 775,000 letters to borrowers in the last three months and has a 16 percent contact rate but hopes that this will improve as the program receives more publicity. An additional 200,000 letters are going out each month. 870,000 borrowers have been helped with their foreclosure situation and over one-half million of these have been subprime borrowers. Loan modifications doubled in the fourth quarter of 2007 over the third quarter.
One reporter asked how borrowers who are "upside down" in their loans would be treated. Would Bank of America for example, be open to writing down a loan to reflect the current market value of the home, thus forgiving that amount of debt? Robinson said he could not speak for the other servicers but that Bank of America would look at this kind of solution on a borrower-by-borrower basis.
Another reporter asked how many borrowers Project Lifeline was expected to help but Secretary Paulson refused to speculate saying that it would be up to the individual servicers to determine that number but that there would soon be a reporting system in place so that these kinds of questions can be answered.
Paulson stressed that not all borrowers can be helped by Project Lifeline or any other program. There will be some who simply refuse to make contact or who walk away from their homes and those whose financial situation makes it impossible to keep their homes "and we cannot help those who refuse to honor their obligations. But Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes."
Increasing conforming loan limits part of stimulus package
The U.S. House of Representatives unanimously approved a measure Tuesday that includes an increase in the conforming loan limits as part of a larger economic stimulus package. The measure would allow the Federal Housing Administration and Fannie Mae and Freddie Mac to issue mortgages above the current $417,000 level. Raising the conforming loan limits to more accurately reflect the cost of housing in California and other high-costs areas of the nation has long been an objective of C.A.R.
“While this measure is expected to face an uphill battle in the Senate, Tuesday’s action by the House represents a huge win for Californians and for C.A.R., which has fought aggressively for the increases for several years,” said C.A.R. President William E. Brown.
“For years, Chairman Barney Frank and I have worked to create affordable housing opportunities for families across the country by increasing the FHA and GSE conforming loan limits,” said Congressman Gary G. Miller, who has worked closely with C.A.R. to push for the reforms. “With the average home price in high-cost areas like California exceeding the current loan limit, homeowners and homebuyers in these areas have been unable to utilize these important federal housing programs. The loan limit increases included in the economic stimulus package will make safe, conforming mortgage loans available for homebuyers in all areas of the country.”
Currently, Californians are forced into more expensive non-conforming jumbo loans, decreasing homeownership opportunities for many and forcing others into more costly – and often riskier – loan products. Under terms of the proposed stimulus package, the conforming loan limit will be raised from $417,000 to as high as $729,750 in high-cost areas. The increases would only be valid through the end of the year.
While the House is hoping to send the measure to President Bush for signature by Feb. 15, the Senate is reported to be crafting a stimulus package of its own, including add-ons, which may result in delays. In addition, the Office of Federal Housing Enterprise Oversight (OFHEO) continues to oppose conforming loan limits reforms.
The House’s economic stimulus package also includes $500 million to support foreclosure mitigation counseling agencies across the country, many of which are currently short-staffed and overwhelmed by the rise in defaults.
Release Date: January 30, 2008
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.
Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.
Yesterday, the US House of Representatives overwhelmingly passed HR 5140 – an economic stimulus package that includes a temporary increase in the conforming loan limit and the upper threshold for FHA loan programs to as much as $729,750 in high-cost areas. The temporary increase would last only until the end of 2008. The bill would also restrict Fannie Mae, Freddie Mac and the Federal Housing Administration from guaranteeing or purchasing loans above 125 percent of the median home price for a given area. That means that the existing $417,000 conforming loan limit for mortgages eligible for purchase by Fannie and Freddie would not increase in areas where the median home price is $333,600 or less. The problem of course, is that as of right now, no one knows what the median home price is in different markets because this data has never been published by HUD!
Therefore, it would be up to the Secretary of Housing and Urban Development to determine the median home price for different housing markets "as soon as practicable," but no later than 30 days after passage of the bill, relying on existing commercial data where needed. In other words, if median home prices in your marketplace are $336,000 or less, this bill won't really affect you; and there's no way to tell if median home prices in your area are higher than $336,000 until HUD publishes this data. Nevertheless, jumbo relief is certainly on the way for places like California where median home prices are certain to be above $336,000.
Currently, the loan limit for FHA loan programs is between $200,160 and $362,790, depending on the county where the property is located. The proposed higher limits for FHA loan guarantees are also set to expire at the end of this year, unless Congress passes other legislation intended to modernize FHA programs by introducing risk-based pricing and lowering down-payment requirements.
While House leaders thought they had reached an agreement with the Bush administration to include FHA modernization as part of the stimulus package, they agreed to continue working on that issue separately at the administration's request, the Associated Press reported.
In order to make higher limits a reality, the next step is for the Senate to pass the bill and for the President to sign it into law. The target date for final passage set by the White House and Congressional leaders is February 15, so let’s hope for the best and we’ll be sure to keep you posted as we have more information.
Sources and helpful links:
· Inman News
· HR 5140
· FHA Loan Limit Search – (Current Limits)
SENATE PASSES FHA MODERNIZATION BILL
In a significant victory for REALTORS® and homeowners across the country, the U.S. Senate on Dec. 14 approved legislation designed to modernize the Federal Housing Administration’s (FHA) mortgage insurance program by increasing loan limits and helping troubled borrowers with subprime loans refinance into federally insured mortgages. The Senate’s approval followed an aggressive call to action by C.A.R. urging REALTORS® to contact Sen. Barbara Boxer seeking her support in passage of the bill.
The FHA Modernization Act, approved in a 93-1 vote, would increase loan limits for FHA-insured loans from $362,790 to $417,000, to mirror current conforming loan limits Fannie Mae and Freddie Mac may purchase. In addition, the Senate bill would allow the FHA to insure refinanced loans for borrowers who are delinquent on their mortgages due to ballooning payments on subprime loans.
“This is a tremendous victory for REALTORS® and C.A.R., and I want to thank REALTORS® who responded to our ‘Calls to Action’ and urged their elected officials to pass this bill,” said C.A.R. President William E. Brown. “The Senate’s action is a milestone in our efforts to provide safe alternatives for financing a home mortgage, not only for those borrowers who are facing foreclosure today, but for future homeowners as well.”
The bill, which has the support of the Bush administration, also would reduce the required minimum down payment for an FHA-insured loan from 3 percent to a flat 1.5 percent of the appraised value of a home.
The House passed a separate FHA overhaul measure in September, but there are several differences between it and the one passed by the Senate. The House bill, for example, would increase the FHA loan limit to $729,750, or 175 percent of the Conforming Loan Limit. The House bill also is pushing for a 0 percent minimum down payment, compared with the Senate’s 1.5 percent. The house bill would allow risk-based pricing for FHA mortgage insurance premiums, while the Senate version opposes it. Both bills would categorize all condo units as single-family units.
Both the House and Senate measures will now be carefully scrutinized by a conference committee for comparisons and reconciliation of their differences. Once a final bill can be crafted, it will be sent to the President for signature.
Meanwhile, C.A.R. will continue its efforts to work with California’s congressional delegation to ensure the final version of FHA reform passed out of conference committee has as high of a loan limit as possible.
To amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.
The following is Project Vote Smart's highlights for this bill, graciously made available by PVS:
The following summary is provided by the Congressional Research Service, which is a nonpartisan government entity that serves Congress and is run by the Library of Congress. The summary is taken from the official website THOMAS.
Release Date: January 22, 2008
The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.
The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.
Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Eric S. Rosengren; and Kevin M. Warsh. Voting against was William Poole, who did not believe that current conditions justified policy action before the regularly scheduled meeting next week. Absent and not voting was Frederic S. Mishkin.
In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.
Commentary: Anticipation builds for next week's labor report Friday, October 26, 2007 By Lou BarnesInman News Mortgage rates are stuck just above 6 percent, but the key indicator of anxiety, the 10-year T-note, fell into the 4.30s. The drop was brisk following news of deepening weakness in housing and credit. Stocks are holding a key level, in Dow terms, 13,500. That market recovered once this week on the rumor that things were so bad that the Fed would cut its rate before its Halloween meeting. A Fed panic would be good news? The resilience in stocks worldwide, and energy ($92 oil is the same constant-dollar price that killed us in 1980), and the euro (at $1.44 apiece a collector's item, and making it rather difficult to make a pfennig selling Euro exports) has two sources: great faith that the U.S. economy is no longer necessary to the world, and an ocean of Asian-exporter and petro cash still looking for investments. That ocean is still rising, the supply of valid investments shrinking by the hour. One of the world's leading investments 2000-2007, eagerly pursued by that ocean: the now-infamous CDO, or collateralized debt obligation, at least $1.2 trillion manufactured and sold. Of course, that was the aggregate purchase price; they are worth somewhat less today. How much less may be inferred from the dismal results at Merrill Lynch: a $9 billion quarterly loss (estimated three weeks ago at half that), more coming. Merrill was the last big manufacturer of CDOs, shoveling them out clear into July, and got caught with work in process: in-house CDO inventory was $32 billion 90 days ago, now $15 billion; mortgage-related securities down from $41 billion to $21 billion. How much was sold, how much written-down or reclassified (heh-heh), Merrill won't say. Why Merrill's CEO and board have not removed themselves ... oh, you know, stock market people. Ultimate CDO losses will be rather larger than thought. Half? The Treasury-assisted costume to cover $400 billion in SIVs (structured investment vehicles) is Freddie Krueger dressed up as a nice-looking kid. If these things liquidate, half at least are dead-loss, and would begin a cascade to liquidate similar assets. The failed dress-up is now an embarrassment to Treasury Secretary Henry Paulson. He was leader of Goldman Sachs, like his predecessor Robert Rubin, and should have all the information and skills to handle this credit meltdown. However, Rubin, the best since Hamilton, was a financial brain surgeon; Paulson seems a determined pounder, thus far unencumbered by insight. Paulson is also trapped inside the Bush administration, which is certain that markets are the solution to all economic crises; is opposed to financial bailout in any form; is unaware that national power flows from economic strength, not military; and is preoccupied by trying to bail itself out of Iraq while trying to pick a fight with Iran. As for housing, September sales of existing homes fell by double the forecast, which anybody at street level could have told you. These sales are measured by closings of contracts written in the months before, and the mortgage crunch did not bite until mid-August. You should assume that October will underperform its forecast, also; September was the worst contract-writing month since that one in 2001. However, perverse good news: At street level it is clear that psychological damage is worse than actual loan-denial. In our local market, that shock began to wear off last week. I wouldn't be surprised to see a false-bottom in November or December sales, a shock-rebound, and then a resumption of the grinding decline. Everyone should ignore the reports of new-home sales: they are based on contracts-written, not closed, and the cancellation rate is running 30-50 percent. Builders are not "clearing inventory"; they are still building it and then dumping it at market-wrecking discounts -- more than 10 percent of the gross revenue for some. Nothing would help housing more than the failure/merger/mothball of as many national builders as possible. Bigger than the Fed on Wednesday (even a half-point surprise): October payroll news next Friday. Employment gains are the only thing holding mortgages above 6 percent. Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com. ***
Friday, October 26, 2007
By Lou BarnesInman News
Mortgage rates are stuck just above 6 percent, but the key indicator of anxiety, the 10-year T-note, fell into the 4.30s. The drop was brisk following news of deepening weakness in housing and credit. Stocks are holding a key level, in Dow terms, 13,500. That market recovered once this week on the rumor that things were so bad that the Fed would cut its rate before its Halloween meeting. A Fed panic would be good news? The resilience in stocks worldwide, and energy ($92 oil is the same constant-dollar price that killed us in 1980), and the euro (at $1.44 apiece a collector's item, and making it rather difficult to make a pfennig selling Euro exports) has two sources: great faith that the U.S. economy is no longer necessary to the world, and an ocean of Asian-exporter and petro cash still looking for investments. That ocean is still rising, the supply of valid investments shrinking by the hour. One of the world's leading investments 2000-2007, eagerly pursued by that ocean: the now-infamous CDO, or collateralized debt obligation, at least $1.2 trillion manufactured and sold. Of course, that was the aggregate purchase price; they are worth somewhat less today. How much less may be inferred from the dismal results at Merrill Lynch: a $9 billion quarterly loss (estimated three weeks ago at half that), more coming. Merrill was the last big manufacturer of CDOs, shoveling them out clear into July, and got caught with work in process: in-house CDO inventory was $32 billion 90 days ago, now $15 billion; mortgage-related securities down from $41 billion to $21 billion. How much was sold, how much written-down or reclassified (heh-heh), Merrill won't say. Why Merrill's CEO and board have not removed themselves ... oh, you know, stock market people. Ultimate CDO losses will be rather larger than thought. Half? The Treasury-assisted costume to cover $400 billion in SIVs (structured investment vehicles) is Freddie Krueger dressed up as a nice-looking kid. If these things liquidate, half at least are dead-loss, and would begin a cascade to liquidate similar assets. The failed dress-up is now an embarrassment to Treasury Secretary Henry Paulson. He was leader of Goldman Sachs, like his predecessor Robert Rubin, and should have all the information and skills to handle this credit meltdown. However, Rubin, the best since Hamilton, was a financial brain surgeon; Paulson seems a determined pounder, thus far unencumbered by insight. Paulson is also trapped inside the Bush administration, which is certain that markets are the solution to all economic crises; is opposed to financial bailout in any form; is unaware that national power flows from economic strength, not military; and is preoccupied by trying to bail itself out of Iraq while trying to pick a fight with Iran. As for housing, September sales of existing homes fell by double the forecast, which anybody at street level could have told you. These sales are measured by closings of contracts written in the months before, and the mortgage crunch did not bite until mid-August. You should assume that October will underperform its forecast, also; September was the worst contract-writing month since that one in 2001. However, perverse good news: At street level it is clear that psychological damage is worse than actual loan-denial. In our local market, that shock began to wear off last week. I wouldn't be surprised to see a false-bottom in November or December sales, a shock-rebound, and then a resumption of the grinding decline. Everyone should ignore the reports of new-home sales: they are based on contracts-written, not closed, and the cancellation rate is running 30-50 percent. Builders are not "clearing inventory"; they are still building it and then dumping it at market-wrecking discounts -- more than 10 percent of the gross revenue for some. Nothing would help housing more than the failure/merger/mothball of as many national builders as possible. Bigger than the Fed on Wednesday (even a half-point surprise): October payroll news next Friday. Employment gains are the only thing holding mortgages above 6 percent. Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com. ***
Mortgage rates are stuck just above 6 percent, but the key indicator of anxiety, the 10-year T-note, fell into the 4.30s. The drop was brisk following news of deepening weakness in housing and credit.
Stocks are holding a key level, in Dow terms, 13,500. That market recovered once this week on the rumor that things were so bad that the Fed would cut its rate before its Halloween meeting. A Fed panic would be good news?
The resilience in stocks worldwide, and energy ($92 oil is the same constant-dollar price that killed us in 1980), and the euro (at $1.44 apiece a collector's item, and making it rather difficult to make a pfennig selling Euro exports) has two sources: great faith that the U.S. economy is no longer necessary to the world, and an ocean of Asian-exporter and petro cash still looking for investments. That ocean is still rising, the supply of valid investments shrinking by the hour.
One of the world's leading investments 2000-2007, eagerly pursued by that ocean: the now-infamous CDO, or collateralized debt obligation, at least $1.2 trillion manufactured and sold. Of course, that was the aggregate purchase price; they are worth somewhat less today.
How much less may be inferred from the dismal results at Merrill Lynch: a $9 billion quarterly loss (estimated three weeks ago at half that), more coming. Merrill was the last big manufacturer of CDOs, shoveling them out clear into July, and got caught with work in process: in-house CDO inventory was $32 billion 90 days ago, now $15 billion; mortgage-related securities down from $41 billion to $21 billion. How much was sold, how much written-down or reclassified (heh-heh), Merrill won't say. Why Merrill's CEO and board have not removed themselves ... oh, you know, stock market people.
Ultimate CDO losses will be rather larger than thought. Half?
The Treasury-assisted costume to cover $400 billion in SIVs (structured investment vehicles) is Freddie Krueger dressed up as a nice-looking kid. If these things liquidate, half at least are dead-loss, and would begin a cascade to liquidate similar assets. The failed dress-up is now an embarrassment to Treasury Secretary Henry Paulson. He was leader of Goldman Sachs, like his predecessor Robert Rubin, and should have all the information and skills to handle this credit meltdown. However, Rubin, the best since Hamilton, was a financial brain surgeon; Paulson seems a determined pounder, thus far unencumbered by insight.
Paulson is also trapped inside the Bush administration, which is certain that markets are the solution to all economic crises; is opposed to financial bailout in any form; is unaware that national power flows from economic strength, not military; and is preoccupied by trying to bail itself out of Iraq while trying to pick a fight with Iran.
As for housing, September sales of existing homes fell by double the forecast, which anybody at street level could have told you. These sales are measured by closings of contracts written in the months before, and the mortgage crunch did not bite until mid-August. You should assume that October will underperform its forecast, also; September was the worst contract-writing month since that one in 2001.
However, perverse good news: At street level it is clear that psychological damage is worse than actual loan-denial. In our local market, that shock began to wear off last week. I wouldn't be surprised to see a false-bottom in November or December sales, a shock-rebound, and then a resumption of the grinding decline.
Everyone should ignore the reports of new-home sales: they are based on contracts-written, not closed, and the cancellation rate is running 30-50 percent. Builders are not "clearing inventory"; they are still building it and then dumping it at market-wrecking discounts -- more than 10 percent of the gross revenue for some. Nothing would help housing more than the failure/merger/mothball of as many national builders as possible.
Bigger than the Fed on Wednesday (even a half-point surprise): October payroll news next Friday. Employment gains are the only thing holding mortgages above 6 percent.
Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.
***
Rent it Right Thursday, November 01, 2007 By Janet PortmanInman News Q: We rent a single-family house and have a two-year lease. A month into the lease, the owners told us they'll be selling the property, and sure enough, we've had droves of real estate agents and potential buyers traipsing through our home. My wife has a serious medical condition (she's in a wheelchair and uses a ventilator) and needs peace and quiet so she can rest, but with this commotion it's impossible. The landlord refuses to be reasonable. We want to leave, but do we have grounds to break our lease? --Steve F. A: Most states have laws governing when, for what reason, and with how much notice a landlord may enter a tenant's home. Entry to show the property to prospective buyers is always on the list of permitted reasons. As disruptive as it is, if your landlord is following your state's access rules, there's not much you can do on that front. But if your landlord is violating state law -- by not giving adequate notice or insisting on inappropriate showing times -- you may have some recourse. Practically speaking, however, unless the landlord's violations are extreme and repeated, you won't be justified in breaking your lease (you'll have to sue in small claims court for invasion of privacy and ask for money damages). But don't give up just yet. First, consider whether your wife's condition qualifies her as a disabled person under the Fair Housing Amendments Act. Does she have a physical or mental condition that substantially limits one or more major life activities? If so, the owners are legally bound to adjust their business practices so that she can live safely and comfortably in her rented home. This accommodation should mean at the minimum a willingness to work with you to minimize the disruptions caused by showing the property. If the owners still won't budge, suppose you break your lease and move. The owners will probably retain your security deposit to cover unpaid future rent -- and may sue you for the rest of the rent, too. In your defense (and request for the return of your deposit), could you prove to a judge that the owners knew they'd be placing the property on the market when you all signed the lease? If so, and if you can also provide credible evidence that the owners knew of your need for peace and quiet, you may be able to convince a judge that the owners should have disclosed their plans, and this failure justifies your breaking the lease. You'll be relying on a garden-variety legal principle that when one side to a deal has information that it knows is critical to the other side's decision but fails to disclose it, the contract can be voided. Q: The quiet street where our rental property is located is about to be widened, to make way for a four-lane roadway. This will take away the front yard and expose the residents to considerable traffic noise and pollution. We're upset, as are the neighbors. We all suspect that the large shopping center nearby is the driving force behind this project. Can we stop it?--Barry and Katie S. A: It sounds like your city is about to exercise its power of "eminent domain." This power traditionally gave government the ability to seize private property (and pay for it) in order to build roads, hospitals, schools and other structures that benefited the public in general. But what about taking private land to benefit private interests? The United States Supreme Court addressed this question in the Kelo case (Kelo v. City of New London, 545 U.S. 469 (2005)), where it allowed New London to seize property that would be used by a private developer. The public, however, was not happy with the Kelo decision. In the 2006 midterm elections, citizens in 12 states placed initiatives that would rein in eminent domain use. Many states now prohibit outright the use of eminent domain for economic development, and others permit it only to eliminate slums and blight. If your state has trimmed the permissible use of eminent domain, you and your neighbors may have an argument that the city is using it improperly. You'll want to know who will benefit from that wide new road other than the shopping center owners. Are other developers circling, ready to begin commercial or residential building once access is improved? For more information on the states' reactions to Kelo, and suggestions on how to protest an eminent domain taking for private development, check out castlecoalition.org. Q:We rent a home in a neighborhood that has a homeowners association. We have a problem with our next-door neighbors -- they don't like the fence our landlord put up, and have taken to dumping trash and yard cuttings on our side. Worse, they yell racial epithets at us. We've secured a restraining order, but it doesn't help. Our landlord has gotten nowhere with the homeowners association, which says it's a private dispute. The landlord is willing to let us out of our lease, but we don't want to move. Any suggestions on what we can do to stop this harassment?--Tim and Diana F. A: It's time to talk again to that homeowners association. Traditionally, these associations left neighbor-to-neighbor disputes alone, figuring that if the dispute didn't involve common areas or external appearances, it was a matter for the neighbors to work out or refer to the police. But now, they ignore disputes like yours at their peril. That's because courts are increasingly recognizing that condominium and even homeowners associations are subject to the Fair Housing Act (the federal law that prohibits discrimination in housing sales or rentals). This means that they need to take steps to stop the kind of situation you describe (lawyers would call it a hostile housing environment based on race.) Your association needs to take action to stop this obnoxious behavior in its midst. The association surely has a rule against illegal activity among its members, with consequences for its violation, including fines or suspension of privileges. Failure to address this situation will set the association up for a fair-housing lawsuit brought by you, which can be extremely expensive -- especially if the association's insurance policy does not cover such claims. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.
Thursday, November 01, 2007
By Janet PortmanInman News
Q: We rent a single-family house and have a two-year lease. A month into the lease, the owners told us they'll be selling the property, and sure enough, we've had droves of real estate agents and potential buyers traipsing through our home. My wife has a serious medical condition (she's in a wheelchair and uses a ventilator) and needs peace and quiet so she can rest, but with this commotion it's impossible. The landlord refuses to be reasonable. We want to leave, but do we have grounds to break our lease? --Steve F. A: Most states have laws governing when, for what reason, and with how much notice a landlord may enter a tenant's home. Entry to show the property to prospective buyers is always on the list of permitted reasons. As disruptive as it is, if your landlord is following your state's access rules, there's not much you can do on that front. But if your landlord is violating state law -- by not giving adequate notice or insisting on inappropriate showing times -- you may have some recourse. Practically speaking, however, unless the landlord's violations are extreme and repeated, you won't be justified in breaking your lease (you'll have to sue in small claims court for invasion of privacy and ask for money damages). But don't give up just yet. First, consider whether your wife's condition qualifies her as a disabled person under the Fair Housing Amendments Act. Does she have a physical or mental condition that substantially limits one or more major life activities? If so, the owners are legally bound to adjust their business practices so that she can live safely and comfortably in her rented home. This accommodation should mean at the minimum a willingness to work with you to minimize the disruptions caused by showing the property. If the owners still won't budge, suppose you break your lease and move. The owners will probably retain your security deposit to cover unpaid future rent -- and may sue you for the rest of the rent, too. In your defense (and request for the return of your deposit), could you prove to a judge that the owners knew they'd be placing the property on the market when you all signed the lease? If so, and if you can also provide credible evidence that the owners knew of your need for peace and quiet, you may be able to convince a judge that the owners should have disclosed their plans, and this failure justifies your breaking the lease. You'll be relying on a garden-variety legal principle that when one side to a deal has information that it knows is critical to the other side's decision but fails to disclose it, the contract can be voided. Q: The quiet street where our rental property is located is about to be widened, to make way for a four-lane roadway. This will take away the front yard and expose the residents to considerable traffic noise and pollution. We're upset, as are the neighbors. We all suspect that the large shopping center nearby is the driving force behind this project. Can we stop it?--Barry and Katie S. A: It sounds like your city is about to exercise its power of "eminent domain." This power traditionally gave government the ability to seize private property (and pay for it) in order to build roads, hospitals, schools and other structures that benefited the public in general. But what about taking private land to benefit private interests? The United States Supreme Court addressed this question in the Kelo case (Kelo v. City of New London, 545 U.S. 469 (2005)), where it allowed New London to seize property that would be used by a private developer. The public, however, was not happy with the Kelo decision. In the 2006 midterm elections, citizens in 12 states placed initiatives that would rein in eminent domain use. Many states now prohibit outright the use of eminent domain for economic development, and others permit it only to eliminate slums and blight. If your state has trimmed the permissible use of eminent domain, you and your neighbors may have an argument that the city is using it improperly. You'll want to know who will benefit from that wide new road other than the shopping center owners. Are other developers circling, ready to begin commercial or residential building once access is improved? For more information on the states' reactions to Kelo, and suggestions on how to protest an eminent domain taking for private development, check out castlecoalition.org. Q:We rent a home in a neighborhood that has a homeowners association. We have a problem with our next-door neighbors -- they don't like the fence our landlord put up, and have taken to dumping trash and yard cuttings on our side. Worse, they yell racial epithets at us. We've secured a restraining order, but it doesn't help. Our landlord has gotten nowhere with the homeowners association, which says it's a private dispute. The landlord is willing to let us out of our lease, but we don't want to move. Any suggestions on what we can do to stop this harassment?--Tim and Diana F. A: It's time to talk again to that homeowners association. Traditionally, these associations left neighbor-to-neighbor disputes alone, figuring that if the dispute didn't involve common areas or external appearances, it was a matter for the neighbors to work out or refer to the police. But now, they ignore disputes like yours at their peril. That's because courts are increasingly recognizing that condominium and even homeowners associations are subject to the Fair Housing Act (the federal law that prohibits discrimination in housing sales or rentals). This means that they need to take steps to stop the kind of situation you describe (lawyers would call it a hostile housing environment based on race.) Your association needs to take action to stop this obnoxious behavior in its midst. The association surely has a rule against illegal activity among its members, with consequences for its violation, including fines or suspension of privileges. Failure to address this situation will set the association up for a fair-housing lawsuit brought by you, which can be extremely expensive -- especially if the association's insurance policy does not cover such claims. Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.
Q: We rent a single-family house and have a two-year lease. A month into the lease, the owners told us they'll be selling the property, and sure enough, we've had droves of real estate agents and potential buyers traipsing through our home. My wife has a serious medical condition (she's in a wheelchair and uses a ventilator) and needs peace and quiet so she can rest, but with this commotion it's impossible. The landlord refuses to be reasonable. We want to leave, but do we have grounds to break our lease? --Steve F.
A: Most states have laws governing when, for what reason, and with how much notice a landlord may enter a tenant's home. Entry to show the property to prospective buyers is always on the list of permitted reasons. As disruptive as it is, if your landlord is following your state's access rules, there's not much you can do on that front. But if your landlord is violating state law -- by not giving adequate notice or insisting on inappropriate showing times -- you may have some recourse. Practically speaking, however, unless the landlord's violations are extreme and repeated, you won't be justified in breaking your lease (you'll have to sue in small claims court for invasion of privacy and ask for money damages).
But don't give up just yet. First, consider whether your wife's condition qualifies her as a disabled person under the Fair Housing Amendments Act. Does she have a physical or mental condition that substantially limits one or more major life activities? If so, the owners are legally bound to adjust their business practices so that she can live safely and comfortably in her rented home. This accommodation should mean at the minimum a willingness to work with you to minimize the disruptions caused by showing the property.
If the owners still won't budge, suppose you break your lease and move. The owners will probably retain your security deposit to cover unpaid future rent -- and may sue you for the rest of the rent, too. In your defense (and request for the return of your deposit), could you prove to a judge that the owners knew they'd be placing the property on the market when you all signed the lease? If so, and if you can also provide credible evidence that the owners knew of your need for peace and quiet, you may be able to convince a judge that the owners should have disclosed their plans, and this failure justifies your breaking the lease. You'll be relying on a garden-variety legal principle that when one side to a deal has information that it knows is critical to the other side's decision but fails to disclose it, the contract can be voided.
Q: The quiet street where our rental property is located is about to be widened, to make way for a four-lane roadway. This will take away the front yard and expose the residents to considerable traffic noise and pollution. We're upset, as are the neighbors. We all suspect that the large shopping center nearby is the driving force behind this project. Can we stop it?--Barry and Katie S.
A: It sounds like your city is about to exercise its power of "eminent domain." This power traditionally gave government the ability to seize private property (and pay for it) in order to build roads, hospitals, schools and other structures that benefited the public in general. But what about taking private land to benefit private interests? The United States Supreme Court addressed this question in the Kelo case (Kelo v. City of New London, 545 U.S. 469 (2005)), where it allowed New London to seize property that would be used by a private developer.
The public, however, was not happy with the Kelo decision. In the 2006 midterm elections, citizens in 12 states placed initiatives that would rein in eminent domain use. Many states now prohibit outright the use of eminent domain for economic development, and others permit it only to eliminate slums and blight.
If your state has trimmed the permissible use of eminent domain, you and your neighbors may have an argument that the city is using it improperly. You'll want to know who will benefit from that wide new road other than the shopping center owners. Are other developers circling, ready to begin commercial or residential building once access is improved? For more information on the states' reactions to Kelo, and suggestions on how to protest an eminent domain taking for private development, check out castlecoalition.org.
Q:We rent a home in a neighborhood that has a homeowners association. We have a problem with our next-door neighbors -- they don't like the fence our landlord put up, and have taken to dumping trash and yard cuttings on our side. Worse, they yell racial epithets at us. We've secured a restraining order, but it doesn't help. Our landlord has gotten nowhere with the homeowners association, which says it's a private dispute. The landlord is willing to let us out of our lease, but we don't want to move. Any suggestions on what we can do to stop this harassment?--Tim and Diana F.
A: It's time to talk again to that homeowners association. Traditionally, these associations left neighbor-to-neighbor disputes alone, figuring that if the dispute didn't involve common areas or external appearances, it was a matter for the neighbors to work out or refer to the police. But now, they ignore disputes like yours at their peril. That's because courts are increasingly recognizing that condominium and even homeowners associations are subject to the Fair Housing Act (the federal law that prohibits discrimination in housing sales or rentals). This means that they need to take steps to stop the kind of situation you describe (lawyers would call it a hostile housing environment based on race.)
Your association needs to take action to stop this obnoxious behavior in its midst. The association surely has a rule against illegal activity among its members, with consequences for its violation, including fines or suspension of privileges. Failure to address this situation will set the association up for a fair-housing lawsuit brought by you, which can be extremely expensive -- especially if the association's insurance policy does not cover such claims.
Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord's Legal Guide" and "Every Tenant's Legal Guide." She can be reached at janet@inman.com.
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