Some abuse victims caught in nuisance law trap

He put his hands on her throat, and squeezed until she couldn’t breathe. He had a gun, and a history of domestic violence against her.

All this is in the crime report.

But the gun that police found on Javonnta Simmons’ boyfriend that February day — he allegedly intended to pistol whip her — led the city of Rochester to assess nuisance points against the Genesee Street apartment building where she lived. And that, Simmons alleges in a lawsuit, forced her to move. Read more

Arkansas Lt. Gov. in foreclosure dispute with bank

Proving that politicians aren’t immune to the foreclosure crisis, Arkansas’ lieutenant governor Mark Darr is facing a lawsuit filed by a bank alleging he is late on his payments, Jonesboro, Ark.

Darr claims he is not late on his payments although the lawsuit alleges he missed four consecutive payments in a row from Signature Bank of Arkansas.

The bank has filed a lawsuit in Benton County to foreclose on the Springdale home of Lt. Gov. Mark Darr, but the northwest Arkansas Republican disputes that he is in arrears.

Darr told the Arkansas Democrat-Gazette Friday he hadn’t missed payments on either of two loans on the $275,800 home. The house is in a part of Springdale that extends into Benton County.
The lawsuit says Darr has missed payments for four consecutive months on two loans from Signature Bank of Arkansas. The suit claims Darr owes $256,074 on one loan and $29,771 on the other.
Darr told the newspaper he wasn’t aware of the lawsuit and that’s it’s inaccurate to claim he missed the four loan payments. Darr told the paper he’d give the bank a call.

CFPB, HUD face disparate impact mortgage lending dilemma

Lenders wanting to know the exact definition of discriminatory lending will have to wait until the Consumer Financial Protection Bureau releases its final ability-to-repay rule under the Dodd-Frank Act next January.

While the ability-to-repay rule doesn’t address discriminatory lending the way the U.S. Department of Housing and Urban Development does, the rule could have a disparate impact on groups that do not meet the ability-to-repay standards. And the question then becomes will those groups effected by not obtaining mortgages try to file lending discrimination claims under the Fair Housing Act? This is a concern for lawyers like Richard Andreano, a partner at Ballard Spahr, who follows mortgage regulations.

“The ability-to-pay rule says be very conservative (in lending to individuals),” Andreano said. “But disparate impact is telling me to make as many loans as possible.”

To avoid ambiguity and unnecessary litigation, he hopes the agencies will coordinate their rules.

As it stands now, the ability-to-pay rule drafted by CFPB is somewhat conflicting when its put side-by-side with HUD’s version of discriminatory lending, Andreano suggests.

In late 2011, HUD proposed a final Fair Housing rule that would essentially allow discriminatory lending cases if borrowers could show a “discriminatory effect” or that one group was disparately impacted by lending practices. In other words, no actual intent to discriminate is needed as long as the disparate impact of the lending can be shown by a group, according to documents filed in the Federal Register. The recording in the Federal Register says HUD proposed the final draft of the rule “to establish uniform standards for determining when a housing practice with a discriminatory effect violates the Fair Housing Act.”

At the same time, the CFPB is working on a rule that could hit lenders hard if they issue a loan and it’s later found the borrower did not have the ability to repay. The confusion comes in when trying to decipher how a lender determines ability to pay. And if a group disparately impacted by not meeting “ability-to-repay” standards is upset, can they then sue for discrimination under HUD’s proposed rule or will the two agencies create a safe harbor protection and coordinate the two laws?

“You have here two rules, and the underlying intent is consumer protection,” Mortgage Bankers Association CEO David Stevens said at a conference in Dallas last week. “But by not coordinating the rules you can actually harm consumers by creating constraints in lending that could become a concern.”

A court case that was expected to define the scope of discriminatory lending fell through at the Supreme Court last year, and HUD is waiting to see if a similar case will be heard by the Supreme Court this year.

Will it be a lender’s “discriminatory intent” that determines a case or will it be the “discriminatory effect or outcome” of how loans are issued that constitute discrimination? The latter would lead conservative lenders trying to follow CFPB guidelines into a tight spot if the rules are not coordinated, Andreano suggests.

He says HUD has seemingly slowed down its push to define the rule as it waits to see if the Supreme Court will define it for them. But the real question is whether the “ability-to-repay” rule from the CFPB will protect lenders from what could be perceived as disparate impact on certain groups of borrowers by stipulating in its rule that loan decisions are safe from discrimination allegations as long as they are based on ability-to-repay guidelines.

Andreano says if the rules are not coordinated, the ambiguity between discriminatory lending laws and ability-to-repay provisions will encourage overly cautious lending.

“These rules will determine whether people own or rent the home they live in,” Andreano said. “Since housing is such a key part of the economy, these rules are going to determine in a large part whether homeownership is obtainable for Americans or not.”

kpanchuk@housingwire.com

 

Economist: First-time homebuyer pipeline in growth mode

The August jobs report showed a definite lull in the American economy, but recent home price and sales improvements are setting the stage for an even stronger housing market in 2013, according to Mike Fratantoni, vice president of research for the Mortgage Bankers Association.

Fratantoni told HousingWire the slow economic recovery may create a pipeline of first-time homebuyers. With rates and prices low, those buyers may be willing to jump into the market in the coming months, he suggested.

Fratantoni said recent data shows the U.S. economy hitting a “soft patch.”  Yet, home prices are looking up in many markets after years of steep price declines, creating the momentum for additional home listings and purchases in 2013, Fratantoni told HousingWire while attending the MBA’s Risk Management and Quality Assurance Forum in Dallas.

The MBA economist noted first-time homebuyers vacated the market after taking advantage of homebuyer tax credits offered back in 2009 and 2010.  Those tax credits moved first-time homebuyer sales ahead a few years, reducing overall demand as housing prices plunged to their natural bottom.

kpanchuk@housingwire.com

Four Regional Banks Discuss Settlement Over Foreclosures

By Carter Dougherty and Cheyenne Hopkins on September 07, 2012

U.S. state attorneys general are pressing four banks to accept a legal settlement over botched foreclosures similar to a deal reached with larger competitors this year, according to three people briefed on the matter.

U.S. Bancorp (SFBC), PNC Financial Services Group (PNC) Inc., SunTrust Banks Inc. (STI) and HSBC Holdings Plc (HSBA) have held talks with state and federal officials who investigated claims that loan servicers mishandled foreclosure documents, according to the people, who spoke on condition of anonymity because the talks are private.

Neil Brazil, a spokesman for HSBC’s North America unit, said in an e-mail that the London-based lender has conducted “preliminary discussions with its bank regulators and other governmental agencies” and that “the timing of any settlement is not presently known.”

State attorneys general led by Tom Miller, a Democrat from Iowa, began an investigation of mortgage servicers in October 2010 after reports that practices including “robo-signing” had led to improper foreclosures. The probe led to a settlement in February among the five biggest servicers — JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Ally Financial Inc. — and 49 states and the federal government.

Michael McCoy, a spokesman for Atlanta-based SunTrust, declined to comment, as did Frederick Solomon, a spokesman for Pittsburgh-based PNC and Tom Joyce, a spokesman for Minneapolis- based U.S. Bancorp.

Repurchase Reserves

The effects of the housing market collapse continue to be felt by these and other banks, not only on mortgage servicing. SunTrust said today it would set aside $375 million to repurchase faulty loans it may have originated, following PNC, which set aside $350 million in June.

The deal with the five largest mortgage servicers is valued at $25 billion, including $5 billion in payments to states and $20 billion that banks will use to compensate borrowers who lost their homes to foreclosures, forgive debt, give payment forbearances, arrange short sales and refinance mortgages at lower rates. It also specified new standards for fair servicing of mortgages. In return, the banks received limited protection from state litigation.

“The jury is still out on whether this gets fixed or whether the attorneys general will have to go after them,” Ira Rheingold, executive director of the National Association of Consumer Advocates, said in an interview.

Settlement Resisted

The attorneys general made efforts to get the four smaller banks to join the February agreement — with proportionally smaller payments — before striking the deal with only the big five, one of the people briefed on the talks said.

In the last few months, the AGs have resumed the pressure on the smaller banks. In early August, they met in Washington with federal officials from the Department of Justice and the Department of Housing and Urban Development, and 12 state attorneys general including Miller.

Mortgage servicers typically handle billing and collections, as well as foreclosures when borrowers fail to pay. The four regional banks, whose mortgage portfolios are far smaller than those of the five larger banks, say the states have yet to demonstrate that a settlement would be more beneficial than letting banks handle customers’ problems individually, according to the people briefed on the talks.

Market Share

Of the four banks, U.S. Bancorp has the largest share of the mortgage servicing market, with 2.5 percent in the second quarter of 2012, according to data from Inside Mortgage Finance, a trade publication. SunTrust had 1.5 percent, while PNC had 1.3 percent and HSBC 0.9 percent.

By contrast, Wells Fargo had 18.5 percent in the second quarter of the year, while Bank of America had 15.8 percent.

Miller spokesman Geoff Greenwood declined to comment, as did HUD’s Brian Sullivan and Adora Andy at the Department of Justice.

While the banks are resisting joining a deal, some have set aside funds for a possible settlement. Minneapolis-based U.S. Bancorp said in a filing for the quarter ended June 30 that it had accrued $130 million in reserves for any deal.

“If a settlement were reached it would likely include an agreement to comply with specified servicing standards, and settlement payments to governmental authorities as well as a monetary commitment that could be satisfied under various loan modification programs,” according to the filing.

Last year, HSBC — which has U.S. branches in states including Florida and New Jersey — set aside $257 million as its “estimated liability” in any settlement. PNC in January set aside $240 million for costs tied to residential mortgage foreclosures as a result of “ongoing governmental matters,” the company said in January.

Also in January, SunTrust said it couldn’t estimate the cost of any potential settlement with state attorneys general.

ESL Federal Credit Union Supports Housing Council

ESL Federal Credit Union, the regions largest credit union, recently donated $5,000.00 in support of The Housing Council’s ongoing programs. Karen Leonardi, Board President of the Council, center, in the above picture, receives the donation from ESL Senior Vice President of Human Resources and Community Relations, Maureen Wolfe, left and Dave Fiedler, ESL Chief Executive Officer, right.

Leonardi, in accepting the donation, acknowledged the “ongoing history of ESL in their support of critical housing programs such as those that the Council manages, including foreclosure prevention, first time home buyer support, and landlord/tenant education.

 

Demand for apartments drives commercial real estate performance

A slowdown in job creation and ongoing tight loan availability has tempered growth in some of the major commercial real estate sectors, according to the National Association of Realtors quarterly commercial real estate forecast.

Although still positive, dampened demand is slightly moderating rent growth with the exception of the multifamily market.  “Sharply higher demand for apartments is causing rents to rise at faster rates,” NAR Chief Economist Lawrence Yun says.

NAR expects vacancy rates in the apartment rental market to drop from 4.3% in the third quarter to 4.2% in the third quarter of 2013. Vacancy rates below 5% are considered a landlord’s market with demand justifying higher rents. Average apartment rent is likely to increase 4.1% in 2012 and another 4.4% next year, NAR says.

With the exception of multifamily, vacancy rates remain above historic averages. Since 1999, the typical vacancy rate sat at 14.4% for the office market, 10.1% in industrial, 8.1% for retail and 5.8% in multifamily.

The current commercial real estate cycle has been driven by shifts in demand without an oversupply of new construction.  “The difficulty small businesses have in getting commercial real estate loans for leasing or purchase is keeping a lid on demand,” Yun explaind.  “Multifamily is the only commercial sector with a notable growth in new space, with some lending provided through government loans.”

Areas with the lowest multifamily vacancy rates  are Portland, Ore., at 2%; New York City and Minneapolis, both at 2.2%; and New Haven, Conn., and San Jose, Calif., both at 2.4%.

US apartment rents rise at highest rate since ’07

(Reuters) – Renting an apartment in the U.S. became even more expensive during the second quarter, as vacancies set a new 10-year low and rents rose at a pace not seen since before the financial crisis, according to real estate research firm Reis Inc.

The average U.S. vacancy rate of 4.7 percent was the lowest since the fourth quarter of 2001, down 0.2 percentage points from the prior quarter, according to preliminary data Reis released on Thursday.

Asking rents jumped to $1,091 per month, 1 percent higher than the first quarter and the biggest increase since the third quarter of 2007. Excluding special perks designed to lure tenants, like months of free rent, the average effective rent rose 1.3 percent to $1,041.

“The improvement in rents is pretty pervasive,” said Ryan Severino, Senior Economist at Reis. “Even in places like Providence and Knoxville, which you don’t think of as hotbeds for apartment activity, landlords felt the market was strong enough to raise rents on their tenants.”

Those two cities, in Rhode Island and Tennessee, respectively, posted quarterly effective rent increases of 0.7 percent, the smallest quarterly rise of the 82 areas tracked by Reis. No area posted a decline. On an annual basis, effective rents rose by at least 2.2 percent nationwide.

Severino characterized the broad increase in rental prices last quarter as “pretty amazing.”

Apartment dwellers have been facing higher rents since late 2009 but the pace of increase has been picking up steam over the past three quarters.

The surge in rental prices stems from a growing number of people who are looking for places to live, but are not willing or able to buy a home because of the ongoing slump in the housing market and tight lending conditions.

A dearth of new construction has also led more and more people to squeeze into tight urban areas at higher prices.

Generation Y has also been a driving force for higher rental prices in urban areas, particularly in cities like New York and San Francisco, where job markets are relatively strong. Even though home ownership costs less than renting, young professionals prefer to rent apartments in tightly packed cities than move out to the spacious suburbs, Severino said.

“This generation doesn’t hold home ownership on a pedestal the way prior generations did,” he said.

These dynamics have made the U.S. apartment market the best performing sector of commercial real estate since early 2011. That has helped landlords such as Equity Residential, Post Properties Inc, UDR Inc and AvalonBay Communities Inc, which have large concentrations of high-end apartment buildings in urban areas.

The particularly dense and expensive rental market of New York City loosened up slightly in the second quarter, with vacancies inching up 0.2 percentage points. Yet with a vacancy rate of 2.2 percent, New York remains the tightest market in the country and is by far the most expensive.

New York’s effective rents rose at a rapid 1.7 percent clip from the previous quarter and 3.9 percent from a year earlier. The average renter’s effective monthly tab of $2,935 beats the second-most expensive city, San Francisco, by over $1,000.

That California innovation hub and other technology-oriented markets like Seattle, Boston and Denver also posted sizeable gains in effective rents on both a quarterly and annual basis.

Memphis, Tennessee, had the lowest vacancy rate at 9.2 percent. The cheapest city to live in of the 82 urban areas that Reis tracks was Wichita, Kansas, whose monthly rent of $510 was less than half the U.S. average.