Saturday, December 10, 2011

Condo Owners Miffed By Removal Of Virgin Mary Statue

Papers from the homeowners association indicate the Vaskos were fined for every month they violated policy by having the statue outside illegally. That fine is now more than $4,000.

There’s more. Because they haven’t paid the fine, the homeowners association is holding the statue and has just taken away the couple’s rights for them to park on the property.

“This is religious persecution. This is discrimination. Is it a losing battle to hold your ground? No.

“If you are, then we might as well all quit as Americans and say, ‘Have a nice day, bye.’”

Glendale bans fake grass

Glendale bans fake grass
The Los Angeles suburb claims it adopted the ban because of dangers posed by chemicals, toxins and plastics present in artificial turf. Might there perhaps be an alternative motive, that of policing residents’ aesthetic taste in landscaping? Well, the ban applies only to front yards: “When asked why the fake grass would continue to be allowed in backyards, officials had no answer.”
Thanks to Mystery Reader for this story about Glendale turning itself into an HOA.

Mortgage Foreclosure project: National Law Commissioners

Mortgage Foreclosure
Take a look at this--if you follow the link to the first document they have listed you see some of the things they will be doing. The entire question of judicial vs nonjudicial is central. That's why even though this is about mortgage foreclosure it could have spillover effects for condo/hoa foreclosure.

• Who can commence foreclosure?
• What evidentiary proof is required to commence a foreclosure?
• What pre-foreclosure notices must the mortgagee provide?
• What is the appropriate time and place in the foreclosure process for alternative
dispute resolution?
• To what extent are statutory redemption periods warranted?
• To what extent do current foreclosure processes impose unwarranted costs that
inhibit a borrower’s potential ability to redeem?
• To what extent may private actors fulfill the role of government officials in the
foreclosure process?
• What post-sale court process, if any, is required to confirm the sale, and for what
• To what extent is the purchaser at a nonjudicial sale entitled to a presumption of the sale’s validity
based on the trustee’s representations of compliance with the state’s nonjudicial foreclosure

Laboratories of Democracy and the Commissioners of Uniformity - Credit Slips

Laboratories of Democracy and the Commissioners of Uniformity - Credit Slips
The Uniform Law Commission, who bring you the Uniform Commercial Code and other model state laws, is launching a project to consider drafting a uniform foreclosure law for the 50 states. The study group consists of professors, judges, and lawyers, but notably absent is any member who could be regarded as a consumer or homeowner advocate or even sympathizer. Interested parties may request to participate as observers, and I am told that observers have had some influence on these uniform law projects in the past. Of course, whatever the ULC drafts does not become law until a state legislature chooses to adopt it.
This is something to keep track of, I would say.

Friday, December 09, 2011

MF Global and the great Wall St re-hypothecation scandal

MF Global and the great Wall St re-hypothecation scandal
A legal loophole in international brokerage regulations means that few, if any, clients of MF Global are likely to get their money back. Although details of the drama are still unfolding, it appears that MF Global and some of its Wall Street counterparts have been actively and aggressively circumventing U.S. securities rules at the expense (quite literally) of their clients.

MF Global's bankruptcy revelations concerning missing client money suggest that funds were not inadvertently misplaced or gobbled up in MF’s dying hours, but were instead appropriated as part of a mass Wall St manipulation of brokerage rules that allowed for the wholesale acquisition and sale of client funds through re-hypothecation. A loophole appears to have allowed MF Global, and many others, to use its own clients’ funds to finance an enormous $6.2 billion Eurozone repo bet.

If it becomes widely known that money put in banks and brokerage houses is being "rehypothecated" and maybe lost forever, what happens to the banking system? I call that a systemic risk. We will be taking our money out and hiding it under the mattress.

Class action alleges B of A scam

Courthouse News Service
SAN DIEGO (CN) - Bank of America found a new way to illegally extract money from customers, according to a federal class action: deduct taxes and insurance from mortgage payments, even though the homebuyers make those payments themselves, then call the mortgage in default for the unauthorized deductions, and charge late fees and penalties.


This explains why Ben Bernanke's denials of the Bloomberg story about the size of the bailout are basically nonsense.

Thursday, December 08, 2011

CAI Survey: HOAs Still Reeling from Economic Slump

CAI Survey: HOAs Still Reeling from Economic Slump
This is a CAI press release on the results of a survey they did. Among other findings, "Forty-six percent of community managers say their client associations face “serious” problems as a result of the housing and economic downturn, while 10 percent describe the impact as severe...About a quarter of community managers say more than 5 percent of their units are vacant. This is largely due to foreclosures, the inability of nonresident owners to sell or rent their properties or owners simply walking away from their mortgages—and homes. Another 30 percent of managers report vacancy rates of 3 to 5 percent."

I just gave a couple of presentations to Chicago-area attorneys on this general subject, before seeing these results, and I was (as usual) pessimistic about the financial situation condo and HOA projects are in.

Thanks to Shu for flagging this.

Austin uses new financial technique to spur private development

Austin uses new financial technique to spur private development
For five years, developers and city officials have wrestled with how the city could control development along Texas 130 without having to dedicate scarce tax dollars to provide municipal services through full annexation.

The City of Austin last month sold about $40 million in bonds to finance initial construction of new roads, parks, and water and wastewater facilities upfront. The bonds are secured by the value of the raw land — not by the city — and are to be repaid with assessments on property owners in those developments, which carry a special designation: public improvement district, or PID.

Austin, which created the district, regulates development through a limited-purpose annexation.

Developers and city officials hailed the arrangement as a first in Texas, one that could be a blueprint for financially spurring future developments in a lending environment that can be hostile to large projects.

Bill Davis sent this along. Here we have yet another municipal shortcut to get around what was once considered the normal process of development: annexation and construction of public infrastructure in exchange for the right to collect property taxes from the new city residents. Instead we have this quasi-annexation that leaves the new owners shoveling tax dollars to the city without really being annexed into the city. And Bill points out that there will end up being HOA government to take another cut.

USA Police caught testing new City Spy Drones - Rapid Denial and Washover - YouTube

USA Police caught testing new City Spy Drones - Rapid Denial and Washover - YouTube
This link goes to a YouTube video of a Houston area local news story about a new HPD project: unmanned spy drones. Add this to the unrestricted powers of your HOA.

Dispute over child's playhouse becomes an international story | Fayette County |

Dispute over child's playhouse becomes an international story | Fayette County |
But the story of 3-year-old Cooper Veloudis' playhouse has created a buzz from coast to coast and has even made it overseas. Links to stories and blog posts about the playhouse — which Cooper's family says is instrumental in his physical therapy for cerebral palsy — have fueled online debates that have evolved into phone calls and letters that vilify the Andover Forest Homeowners Association, the organization that ordered the Veloudis family to remove the playhouse because it violates deed restrictions.

Read more:

Thanks to Shu for this follow up story.

Wednesday, December 07, 2011

Construction defects law under the microscope - Wednesday, Dec. 7, 2011 | 2 a.m. - Las Vegas Sun

Construction defects law under the microscope - Wednesday, Dec. 7, 2011 | 2 a.m. - Las Vegas Sun
The Nevada construction industry is using the horrible corruption scandal in Vegas HOAs as a lever to pressure the legislature for "reforms" that would restrict construction defect litigation. This was bound to happen. It would be unfortunate if people lost their ability to sue when they get stuck with defective original construction. There are many examples of legitimate litigation (by way of disclosure, I did construction defect litigation back in the 1990s) along with some frivolous or just ill-considered suits.
Thanks to Fred Pilot for the link.

Municipal Finance in the Face of Falling Property Values :: Thomas J. Fitzpatrick IV and Mary Zenker :: Economic Commentary :: 12.06.11 :: Federal Reserve Bank of Cleveland

Municipal Finance in the Face of Falling Property Values :: Thomas J. Fitzpatrick IV and Mary Zenker :: Economic Commentary :: 12.06.11 :: Federal Reserve Bank of Cleveland
The fall in property values associated with the recent recession has caused a decline in property taxes which may be amplifying local government budget crises across the country. Cuyahoga County is set to reappraise property values in 2012, and when it does it may only then absorb the full force of the housing market losses caused by the recession. We estimate the potential losses in property values and the county’s tax base and find that the impact could be significant.
Using data from the Cleveland area the authors predict: "If creative ways to make up for this lack of revenue are not found, local governments may face the undesirable choice of either raising property taxes or reducing funding for essential services. Both actions may make the municipality a less desirable place for new home owners to locate. Weakening housing demand may lead to further declines in property values. In any case, it appears that the dramatic fall in property values across the country will accelerate the financial distress of municipalities in the wake of the Great Recession."

My research shows that fiscal distress leads local governments to encourage or mandate CIDs in new housing, because it allows them the "double taxation" windfall. So, when housing construction kicks up again, it will be overwhelmingly in CIDs.

Tennessee family home burns while firefighters watch | The Sideshow - Yahoo! News

Tennessee family home burns while firefighters watch | The Sideshow - Yahoo! News
A Tennessee couple helplessly watched their home burn to the ground, along with all of their possessions, because they did not pay a $75 annual fee to the local fire department.
Another example of public governments behaving like private corporations. Might as well go back to the 19th century, when there were private fire departments that would let your house burn if you didn't pay.

Monday, December 05, 2011

HOA suing family for forgetting $120 fee

BOCA RATON, FL (WFLX) It may not sound like a lot of money, but an unpaid $120 bill could force a Boca Raton family out of their home.

Asher Essebag has lived in a Boca Del Mar home for 12 years with his family, but by next month they could be forced out. He's up to date on his mortgage, but Essebag and his family are haunted by a Homeowners' Association fee he forgot to pay earlier this year.

"Next thing I know, I have a police officer at my door serving me with a summons," said Essebag.

The summons read that if the fee isn't paid to the Boca Del Mar Improvement Association, he'll be foreclosed on. Essebag didn't think that would be a problem, since the fee was just $120. But it grew over time to twenty times more. Now that the Association is suing to collect the bill, it skyrocketed to $2400 to include legal fees.
Welcome to Privatopia...where the legal fees come first.

Ex-Countrywide Exec Blows The Lid Off The Systemic Fraud At The Company

Ex-Countrywide Exec Blows The Lid Off The Systemic Fraud At The Company
This is not news, of course. You can read about it any of six or seven books, such as Matt Taibbi's Griftopia and Michael Lewis' The Big Short. But I guess for people who just watch TV it is news. The big question is why hundreds of these crooks aren't doing time in a federal prison. Until that happens nothing will change.

Video-Banks In Cahoots With Payday Loan Businesses | PaydayLoanIndustryBlog

Video-Banks In Cahoots With Payday Loan Businesses | PaydayLoanIndustryBlog
If you have two minutes to spare, watch this cartoon.

Sunday, December 04, 2011

#OccupyYourHomes: Homeowners Facing Foreclosure Speak Out | Occupy America

#OccupyYourHomes: Homeowners Facing Foreclosure Speak Out | Occupy America
Two homeowners, Jean Cassine of Queens Village and Mimi Pierre Johnson of Elmont, describe how the foreclosure crisis has caused angst and frustation for themselves, as well as their communities. They have been fighting for years to keep their homes and see the Occupy movement as an opportunity for others to do the same.

Homeowners who are struggling to modify their mortgages, interest rates, etc and the bank is threatening to evict, do not leave your homes!

“On December 6, the Occupy Wall Street movement will join the national fight against foreclosure with a big day of action.”


Thanks to Mystery Reader for this link--are we about to see a new chapter in the story of the "Occupy" movement? I think this beats sleeping in the park during the winter.

Florida high court to decide whether developers are liable for defective HOA common areas, roads

The Florida Home Builders Association is concerned that, if the Supreme Court upholds the appellate-level decision, builders could be forced to fix a subdivision's problematic streets and common areas even though engineering firms and other contractors designed, constructed and inspected them.

"In the home, if something breaks, the builder has to fix it," said David Carter, president of the builders' trade group, which has filed briefs in the case. "But now, with all the entities that are involved, there's an effort to push the blame and responsibility to the builder/developer [for things outside the house] when there are other professionals who have responsibility for what they designed, inspected and certified."
Local governments been privatizing public infrastructure for decades by requiring residential projects be under the jurisdiction of a mandatory membership homeowners association. Now Florida's top court will decide whether developers who build that infrastructure are responsible when it turns out to be defective.

This case has wide implications and as the story indicates could require developers to spend more on infrastructure. Frequently when there are problems with roads and storm water systems, property owners turn to local governments to take them over or impose property tax assessments to pay for maintenance and repairs, so they also have an interest in the outcome.

How unemployment is tearing America apart

Having such a large army of semi-permanent unemployed workers will leave Americans poorer for years to come. “It not only affects your social fabric and creates social tensions, but it also has a fundamental impact on the long-term potential economic growth of the country,” he says. “What that means over time is a lower standard of living for everybody.” The downgrade in living standards is already underway in some unlikely places: America’s decaying suburbs. For decades the ’burbs represented the American dream for the middle class—white picket fences, two cars in the garage and a quiet cul-de-sac for the kids to play in. Yet today poverty in the suburbs is growing twice as fast as in cities, according to a recent analysis by the Brookings Institution.
As go the burbs, so goes Privatopia. Having only been around in significant numbers since the 1970s, HOAs have never had to weather a long economic storm. As the good perfessor recently noted, consequently they aren't prepared to cope with such adversity. Foreclosure and job loss strangle the lifeblood of assessment revenue. Adding to the pain is HOAs have far fewer households to pick up the slack like larger municipalities and counties.

This article points out the speculation and leverage led downturn that began in 2008 that shaved eight percent off the U.S. economy cannot be directly compared to the Great Depression of the 1930s, in which the economy contracted by nearly one third and far in excess of the 10 percent drop in GDP that defines a depression. But anemic recovery since 2009 has been so weak for so long that it is transfiguring the economy because so many have been out of work for six months or longer.

Postal cuts to slow delivery of first-class mail - Yahoo! News

Postal cuts to slow delivery of first-class mail - Yahoo! News
WASHINGTON (AP) — Facing bankruptcy, the U.S. Postal Service is pushing ahead with unprecedented cuts to first-class mail next spring that will slow delivery and, for the first time in 40 years, eliminate the chance for stamped letters to arrive the next day.

The estimated $3 billion in reductions, to be announced in broader detail on Monday, are part of a wide-ranging effort by the cash-strapped Postal Service to quickly trim costs, seeing no immediate help from Congress.

The changes would provide short-term relief, but ultimately could prove counterproductive, pushing more of America's business onto the Internet. They could slow everything from check payments to Netflix's DVDs-by-mail, add costs to mail-order prescription drugs, and threaten the existence of newspapers and time-sensitive magazines delivered by postal carrier to far-flung suburban and rural communities.

Congress caused this by ordaining in 2006 that the Postal Service had to prepay 50 years of its future pension obligations. Obviously the internet cut into postal revenues as well, but this present crisis was induced in order to justify privatizing the postal service entirely. A large segment of the American public is so ignorant, and determined to stay that way, that this strategy may work. Thanks to Fred Pilot for the link.