Homeownership may be for the few, not the many

Yale economist Robert Shiller, whose book "Irrational Exuberance" accurately predicted the stock market collapse in 2000, notes that U.S. housing prices posted roughly a zero percent gain between 1890 and 1990, after adjusting for inflation.
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You mean shoehorning yourself into a $350,000 condo isn't a wise investment? Heresy.

Fuzzy Privatization Math from New Jersey Privatization Task Force

Fuzzy Privatization Math: "On page 14 the report says it did no analysis “due not only to the fact that the actual cost of a privatized alternative will often not be known until the end of a full fledged competitive bidding process, but also because New Jersey state government agencies have difficulty calculating with precision the full cost of functions currently performed at the state level.” So, the sunny claims of big savings for the people of New Jersey are a guestimate, at best. and “To Be Decided” is the most accurate statement in the report."
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Governor Christie's privatization task force made a highly-publicized claim that privatization will save $210 million for the state of New Jersey. But it turns out that they did no real number-crunching to come up with that figure. Here is what they say (at p. 14.):

The necessarily short time the Task Force has had to complete its work has not always permitted the exhaustive vetting and cost‐benefit analysis that it recommends in this Report for all privatization initiatives.
Nor has the Task Force been able to calculate precise savings for the proposals that follow. This is due not only to the fact that the actual cost of a privatized alternative will often not be known until the end of a full‐fledged competitive bidding process, but also because New Jersey state government agencies have difficulty calculating with precision the full cost of functions currently performed at the state level.
The Task Force, given these constraints, has done its best to estimate the monetary savings, if any, of each of the privatization opportunities identified.

This is typical of privatization advocates. They are ideologically motivated (government bad, corporations good) and/or driven by the profit motive. The Chamber of Commerce seems to have been one of the driving forces behind the report. Some things can be done quite well by private contractors, but there are so many examples of failed privatization efforts, some at enormous public cost, that these sweeping claims have to be treated with great caution, because they are basically vaporware.

Countryway residents stage a coup after brouhaha over money, management

What started out as one home­owner's concern over spending and a 51 percent dues increase led to accusations of mismanagement, an appeal to the state, legal fees and the exit of four members on Countryway's master board.
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HOA Wars, Episode Fifty Thousand.

Nearly 20% of Florida homes are vacant

You mean grotesque overbuilding of overpriced condominium complexes on mosquito-infested swamp land hasn't worked as a long-term land use strategy? I'm shocked.

A real Toy Story! The house that childhood dreams (or nightmares) are made of | Mail Online

A real Toy Story! The house that childhood dreams (or nightmares) are made of | Mail Online:

A unique concept in lawn decoration...

Man sets townhome on fire trying to oust squirrels

Hughes said he previously had contacted the townhome management company, Royster Property Management, about the squirrels and the hole in his home but he was told he had to have the squirrels removed before it could repair the hole. Royster Property Management president Benita Royster confirmed that Hughes called March 4 and said he was referred to a local animal trapper because company policy makes homeowners responsible for having wildlife removed. It would cost $175 for the trapper to come out plus $75 for each squirrel ensnared, she said.
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So he put a smoke bomb in the gutter and set the place on fire. Sure, he's probably living in a motel now, but hey--I'll bet he scared the daylights out of those squirrels.

California's Inland Empire wants to attract employers

Chino Mayor Dennis Yates said the Inland Empire needs to find a way to entice businesses to the area. One way to do so, he says, is to create upscale neighborhoods.

"The objective for cities in areas like the Inland Empire is to somehow entice these high-tech folks to move to the Inland Empire. We would have to create some type of Brentwood or Coto de Caza atmosphere to get them to move here," Yates said.

"And trust me, they will relocate their business. The Inland Empire is a beautiful place to live - Suburbia USA - but we have very few places like a Coto de Caza or Brentwood. ... So I think that is the problem."

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But, Mr. Mayor, can you or will you work to create these places with public funding and governance without privatizing them via mandatory membership homeowner associations? We'll take your answer in the comments section of this post.

Industry attorney: Public policy on local govenment privatization contradictory

Given the list of benefits homeowners associations provide to local governments, it is easy to question why government is so rarely a friend to homeowners associations. Healthy homeowners associations feed tax coffers and ease budget strain for cities and counties, yet cities (and especially the state) often act as though they believe homeowners associations are an untoward restriction on individual freedom. The inherent contradiction in the local governments’ requirement that homeowners associations exist versus the state’s increasingly strict regulation of homeowners associations is the source of many difficulties the industry faces. Realizing this contradiction exists and informing our legislators of the contradiction are two important steps towards eliminating it.

If the government wants homeowners associations, it should allow them to function pursuant to their CC&Rs with minimal governmental intervention. If the government believes homeowners associations threaten individual liberty, it should not require their existence and let the market dictate their fate.

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So asserts Mark Holmgren of the law firm of Carpenter Hazelwood in a post this week on the firm's blog. Holmgren's commentary is notable in that it shows at least some degree of acceptance within community association industry circles that privatization of local government is public policy and not simply a market-driven "lifestyle" or "housing" choice.

About a decade and a half ago, an Arizona industry spokeswoman with an outfit that goes by the acronym CAI castigated the owner of this blog as a "tabloid journalist "for suggesting as much in his 1994 book Privatopia: Homeowner Associations and the Rise of Residential Private Government.

Barney Frank wants the big banks we bailed out to pay for mortgage assistance programs

House Financial Services Committee Ranking Member Barney Frank (D-Mass.) said Friday that he would reintroduce legislative language next week that would require large financial institutions to pay for federal mortgage assistance programs.
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Good for him. These are some of the institutions that wrecked the economy by abusing the government-sponsored mortgage securitization process. Then we, the taxpayers, bailed out the financial industry. Then the banks we bailed out put the money in their pockets and have consistently refused to lend and get the economy going. So, how about at least paying for the mortgage relief programs?

Property tax revenues finally begin to decilne

National property tax revenues rose through Q3 2010, according to the Rockefeller Institute. Nevada, epicenter for housing's boom and bust, enjoyed higher property tax revenues well into last year, according to the Fed study.

But property tax receipts have begun to roll over and will likely keep falling until well after real estate prices recover, which may still be a ways off.
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Most properties haven't been reassessed yet at their dramatically lower values. Now that is beginning to happen. See the quote from my colleague Mike Pagano--it will hit harder in 2 or 3 years, at which time cities and counties will have to make some hard choices about what to pay for and "who subsidizes whom."

"Save My Mortgage Interest Deduction"

Just received this from Ruth Potter, with whom I am not acquainted, who asked me to post it. Ms. Potter doesn't say so in her email, but from what I can see at the linked sites, this initiative emanates from the National Association of Home Builders. So--here it is:
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Hello

Congress and the Administration are looking into scaling back or eliminating the Mortgage Interest Deduction. The consequences would be devastating to the recovering housing market and the tens of millions of home owners who benefit from the deduction.

The House recently introduced a resolution to retain the mortgage interest deduction and I hope that you'll help spread awareness about it on The Privatopia Papers. We created http://SaveMyMID.org to support this initiative and I've also created a useful site for bloggers and journalists to borrow resources from:

http://savemymid.info

Please let me know if you have any questions or need more information. If you are able to post about this, I'd love to get the link and share it with my team.

Thank you,

Ruth

--
Ruth Potter
Ruth@SaveMyMID.info
www.SaveMyMID.info

Is the Florida Foreclosure King Abdicating? David J. Stern Will Close His Law Firm « Above the Law: A Legal Tabloid - News, Gossip, and Colorful Commentary on Law Firms and the Legal Profession

Is the Florida Foreclosure King Abdicating? David J. Stern Will Close His Law Firm « Above the Law:
The article says that there has been an investigation concerning the possibility of some falsified paperwork.

Nevada Lawmakers Discuss Homeowners Assoc. Bills

A commission on common interest communities had set caps on those fees, but Copening said Governor Brian Sandoval lifted those caps when he took office. "The governor put a cap on all regulations, so it never went into effect."

Copening is not alone in her effort. Republican Assemblyman John Hambrick.

"We have all heard of horror stories of huge fees," said Hambrick. "A $20 late bill, turning into a $5,600 penalty and all that money goes to the collective agencies. Those stories need to stop."

Copening wants a $1,950 cap on homeowners association fees. However, Hambrick said he isn't prepared to put a number on it. "I would like to see a cap, but I don't want to put a specific dollar amount on it yet."

From Fred Fischer: Nevadans share horror stories of HOAs.

Nevadans Share Horror Stories of HOAs

When HOAs are created to satiate government bureaucrats, rather than homeowners, it shouldn't be surprising that many HOA communities are neither well-crafted nor homeowner-friendly. But, the solution to the HOA problem is not more government intervention. It is less. The first step is for government to stop mandating and subsidizing the creation of HOAs. Nick Dranias, Goldwater Institute

State legislators for many years have been getting an earful from property owners over housing association contract governance yet they fail to understand the root causes of the conflicts and act accordingly. It’s the same issues that faced early colonial America until they finally acted and abandoned charter Board governance in favor of something better where “we the people” have a place and vote at the creation table and legislators should do the same.

Privatizing services is one thing but privatizing housing is a whole other animal and without a doubt most likely unconstitutional. Because it first represents the delegation of inalieable rights to others which clearly violates constitutional law. Second it gives the developer and industry member professionals who sit at the contract creation table the right to dictate what they want the behavioral and social standards of the eventual owners to be. Even though they themselves most often do not, will not or ever live in the housing association that they create with voting standards so high that it assures that changes by eventual owners will not likely occur !!!

Mr. Drains is correct that the substantial reforms needed concerning these contractually-created associations probably won’t come from State legislation for two primary reasons. 1) The housing association trade group lobby, which is fully funded by the housing association members has the most access and greatest economic influence upon State legislators. The initial CID legislation of forty years ago that includes a large number of today’s accompanying housing association legislation was authored by the housing association trade members and supported by municipalities. Consequently neither party has an economic or social incentive to either abandon or move away from what they have exclusively created and control for their own benefit. In fact the more conflicts and problems that occur with their created “corporate product” the more the industry prospers economically and politically. 2) The very foundation of the CID housing model is its governance which is based on private contracts. Except are housing associations valid contracts when mandated and created by others as compared to if owners voluntarily create them after development build out ? When did “a meeting of the minds” between the developer and the buyers occur to create the contract? Why are the contracts (declarations) devoid of important disclosures of information that potential buyers into these nonprofit corporations are in titled to know ? When potential buyers consider signing a housing sales contract, is the attached HOA contract genuinely voluntary since refusal to accept its provisions and authority leaves the buyer with only one choice, to walk away? How can this be a “voluntary act” when neither the association nor the homeowners had actual notice or meaningful reflection to accept or reject such a contract given the fact that it was drafted by the developer as required by municipal mandate and then imposed upon the association before the homeowners existed or took control of the Board ?

The endless and “fundamentally unworkable” issues that surround privatized housing when under the authority of private contract governance created by others will continue. Until the property owners have a place, voice and vote at the governance creation table and their constitutional property and other rights returned. Because when housing is privatized, owners are reduced to being renters and only owners in name and this needs to change since contract governance is not the only or best way to govern CID housing !!

Thanks, Fred Fischer

BBC News - South Africa: Toxic water 'threatens Johannesburg'

BBC News - South Africa: Toxic water 'threatens Johannesburg': "Rapidly rising acidic water in the abandoned gold mines under Johannesburg in South Africa could leak out early next year, the water ministry warns."
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Thanks to David McKenzie for the link. Water pollution and water scarcity will be enormous problems in many places in the years to come. Phoenix and Las Vegas, for examples...

FT.com / FT Magazine - Aerotropolis

FT.com / FT Magazine - Aerotropolis: "“[The Koreans] tracked us down, wanted us to build a city in the ocean, and no one else was interested. What was going on here?” Gale said. “Their vision scared everyone else away. It wasn’t until I saw the airport that I understood where they wanted to go with this.” The answer: to China. The sales pitch to prospective tenants is simple: move here and you’re only a two-hour flight away from Shanghai or Beijing. You’re four hours away at most from cities you’ve never heard of, such as Changsha, which happens to be larger than Atlanta or Singapore. Nearly one billion people are a day trip away.

“China alone needs 500 cities the size of New Songdo,” Gale told me, and he hopes to break ground on the next one in Chongqing sometime this year. How many will be umbilically connected to the nearest airport? “All of them.” "
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Thanks to David McKenzie for this link.

Investors snap up cheap homes, new buyers miss out - Yahoo! News

Investors snap up cheap homes, new buyers miss out - Yahoo! News: "WASHINGTON – Home sales are starting to tick up after the worst year in more than a decade. But the momentum is coming from cash-rich investors who are scooping up foreclosed properties at bargain prices, not first-time home-buyers who are critical for a housing recovery.

The number of first-time buyers fell last month to the lowest percentage in nearly two years, while all-cash deals have doubled and now account for one-third of sales."
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And I hear that condo units are popular with this type of buyer. They form a syndicate and buy up many units in the same building so they can control the association and do whatever they want with the property.

When Will the Housing Recession End? A Graphical Illustration Why the Downturn Will Persist Through 2013

This is an interesting web site that offers a pointed opinion on the causes of the current "affordable mortgage depression," as the author calls it.

Condo deals die in shadows of financially distressed buildings

It's not just the borrower who has to be up to snuff, it's the building, too, and in the Chicago area there are plenty of buildings that lenders won't touch.

Among the deal killers: too many renters in a building, pending litigation, inadequate association reserves and delinquent assessments. Those are some of the criteria lenders must look at in order to sell the loan to Fannie Mae or Freddie Mac, the troubled, government-sponsored entities, and the Federal Housing Administration, the first choice for many first-time homebuyers. Combined, the three agencies account for about 90 percent of the secondary loan market.
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But the problem is not that the GSE's won't buy or insure the loan. The problem is that developments like this are in trouble, and the lenders know it, and the buyers should have sense enough to realize that, but they want to buy anyway. Who in his or her right mind would buy a condo unit in a building that has no reserves?

California Proposed legislation

This just in from Marjorie Murray:

SB561/Corbett Targets Illegal Debt Collector Contracts

California Senate Majority Leader Ellen Corbett has introduced SB 561, a bill designed to
protect both homeowners and association boards during the assessment collection process.

HOA debt collectors routinely strike contracts with associations – or their agents -- that void the
board’s assessment collection DUTIES under EXISTING law. The debt collector then coerces the homeowner into signing a payment plan that voids his RIGHTS under EXISTING law.

SB561 targets both practices. Voiding either board duties or homeowner rights via these
contracts puts the association at legal risk.

How do these debt collection contracts work?

The debt collector coerces the homeowner into “agreeing” that, when s/he makes a payment,
the debt collector can pay himself instead of paying down the assessments owed, as required
by EXISTING law (Civil Code 1367(a). Because the debt collector is paying himself first, the
association typically gets paid last. This is irrational, given that the purpose of hiring the debt
collector in the first place is to recover assessments and give them to the HOA.

Not applying the homeowner payment to the assessment debt --obviously -- puts the owner at
risk of foreclosure.

CCHAL has documented numerous cases in which the homeowner was forced into a
payment plan, because homeowner “consent” is a condition of getting one. SB 561 clarifies
that these practices are prohibited by EXISTING law.

SB561 further specifies that the association cannot foreclose if the foreclosure is based on such
contracts. The bill says: “A waiver by an owner of his or her rights or a waiver by an association
of the association’s responsibilities under the act is void as contrary to public policy, and would
prohibit a foreclosure proceeding from being initiated or proceeding if it is based on an
agreement that is void.”

SB 561 applies to “Any debt collector, agent, or third party acting to collect payments or
assessments on behalf of an association.” This element of the bill is crucial, since debt
collectors often subcontract with other vendors during the collection process; the bill clarifies
that these parties too are bound by California’s assessment collection laws.

CCHAL urges all homeowners, board directors, and advocates to carefully read Senator
Corbett’s legislation at http://leginfo.ca.gov/pub/11-12/bill/sen/sb_0551-
0600/sb_561_bill_20110217_introduced.pdf

Reading and understanding the bill will enable homeowners and board directors in California’s
49,000 associations to counter any campaigns mounted by opponents of SB561 that distort
either its language or intent.

In 2010, the Community Associations Institute (CAI) built its statewide opposition campaign
against the Brownley bill (AB2502) around the fraudulent statement that the bill REQUIRED
homeowners wanting to negotiate a payment plan with the board to meet with the board in an
open meeting to discuss – or dispute – their debt. (AB2502 also dealt with the business
practices of association debt collectors.)

The bill said no such thing.

What AB2502 said was “IF REQUESTED BY THE HOMEOWNER, (this bill would)
require a meeting to discuss a payment plan to be held in an open session.” In other words, if
the homeowner wanted SUNSHINE shed on the negotiations, then s/he could request an open
session; if not, then the homeowner could meet privately with the board in executive session.

It was the HOMEOWNER who made the decision, but CAI claimed AB2502 forced the
negotiations out in the open.

Not true.

A Fact Sheet on SB561 -- prepared by Senator Corbett’s office -- is posted on the CCHAL
website: http://www.calhomelaw.org/doc.asp?id=1312. Use this as a guide to the bill, especially
if you are a board director, so you know what the bill says – and does.

But again, there is no substitute for reading the legislation itself. You can study it at
http://leginfo.ca.gov/pub/11-12/bill/sen/sb_0551-0600/sb_561_bill_20110217_introduced.pdf

Letters of support for the bill can be faxed to Senate Majority Leader Ellen Corbett, fax
916.327.2433. Please also thank Senator Corbett for carrying SB561 because it protects both
homeowners and associations.

Do fax (510.272.9830) a copy of your letter to CCHAL or email a pdf of it to
info@calhomelaw.org

SB561 is co-sponsored by the Center for California Homeowner Association Law (CCHAL) and
the California Alliance for Retired Americans (CARA).

SB561 specifically calls out the devastating effects of the debt collector’s predatory practices on
seniors. These cases have been documented in many NewsBriefs on the CCHAL website, e.g.
Curry v Association Lien Services; Fuller v Association Lien Services; Dacumos v Sunrise
Assessment; Santaella v Angius & Terry, etc.

A contract that one homeowner was forced into signing is on the CCHAL website:
http://www.calhomelaw.org/doc.asp?id=1156. Actually, the debt collector didn’t even demand
that the homeowner sign it: the plan says that just mailing a payment meant the homeowners
was ”consenting” to the debt collector’s plan to collect his profits first before paying down the
assessments.

A downloadable flyer of homeowner rights under EXISTING Californbia law during assessment
collection is on the website at http://www.calhomelaw.org/doc.asp?id=1315. It also lists legal
resources for homeowners.

We will keep CCHAL members posted on SB561 as it goes through the policy committees in
Sacramento.

CCHAL NewsBrief
February 27, 2011
© 2011