Comment on Getting the Most out of Your E&O Insurance Protection by Jeff Belrose

So, What if there is an actual loss. You did not cover that aspect and how it truly affects inspectors and their ability to insure. Please add this to your information.

Source: Working RE Magazine

Pennsylvania sues rent-to-own operator Vision Property Management for preying on low-income renters

Vision Property Management has already run into trouble in Wisconsin and New York, with each state claiming that the company’s rent-to-own business model is actually a scam designed to prey on low-income individuals who want to buy a home.

And now, the company has another state to deal with:

Pennsylvania Attorney General Josh Shapiro announced this
week that his office is suing Vision Property Management for allegedly using
misleading ads and dangling the promise of homeownership in order to trick
hundreds of people into signing rent-to-own contracts with the company.

“The suit alleges that Vision utilizes misleading sales
tactics to lure consumers into entering ‘rent to own’ agreements on foreclosed
houses that are in serious disrepair,” Shapiro’s office said in a statement. “Unbeknownst
to the consumers, the agreements provide no ownership rights, consumers face
immediate ejection if they fall behind on payments, and the agreements
unlawfully attempt to make the consumers responsible for expensive repairs
required to make the houses habitable.”

According to Shapiro’s office, Vision owns thousands of
foreclosed homes across the country, including more than 600 in Pennsylvania.

The state’s lawsuit claims that Vision targets low-income
residents who want to own a home but cannot obtain a conventional mortgage and
entices them with a “rent-to-own” program where the renter will have the
opportunity to rent a home and eventually buy it when they are ready.

But, as with Wisconsin and New York previously, Pennsylvania
claims that the properties are in poor condition and Vision’s agreements
stipulate that the renter must pay for those repairs themselves.

“The homes are in disrepair, often with missing pipes and
appliances, leaking and damaged roofs, mold, insect infestations, and
malfunctioning plumbing, among other problems. Vision does not disclose any
defects to consumers prior to entering the agreement,” Shapiro’s office stated.

“As a result of Vision’s misleading sales tactics, consumers often do not understand that the paperwork Vision requires them to sign places all of the burdens of homeownership on them, despite the existence of a landlord who owns the property,” Shapiro’s office continued. “Consumers endure great expense and inconvenience to repair the homes, but they have no ownership interests.”

According to Shapiro’s office, even if the renter pays their
rent consistently, they still only receive an “option” to buy the house at the
end of their lease term, typically above market price.

Beyond that, if the renter falls behind on their payments,
Vision allegedly evicts them from the house, then turns around and enters into
another “rent to own” agreement with another family, “thus continuing an
expensive and harmful cycle.”

According to Shapiro’s office, Pennsylvania residents “typically
spend less than two years in the ‘rent to own’ Vision homes that they thought
they had purchased, spending large amounts of time and money fixing up the home
that they cannot recover because they have no equity rights.”

Shapiro also sued Vision’s CEO and owner, Alex Szkaradek; chairman and owner, Antoni Szkaradek; and dozens of affiliated companies allegedly used by the Szkaradeks to acquire foreclosed homes and enter into the “rent to own” contracts with Pennsylvania residents.

“Vision Properties and its owners and affiliates take
advantage of lower-income Pennsylvanians who face barriers to owning a home,” Shapiro
said in a statement. “The company uses misleading sales tactics to lure
consumers into ‘rent to own’ agreements through which they incur significant,
unexpected costs and often never end up owning their homes. Our Bureau of
Consumer Protection is filing suit today to put an end to these predatory
tactics and deliver results to the hundreds of Pennsylvanians who Vision
Properties harmed.

The lawsuit alleges violations of the Consumer Protection Law, the Pennsylvania landlord-tenant law, the Loan Interest and Protection Law, and several other statutes, seeks to prevent Vision from engaging in these alleged practices, and aims to require Vision pay restitution, civil penalties and costs.

“When consumers face discrimination in seeking to buy a home
or apply for a mortgage because of their race, ethnicity, or other factors,
they are sometimes forced to seek out alternative methods such as ‘rent to own’
or ‘for sale by owner’ agreements,” Shapiro said. “Unfortunately, many of these
agreements are actually scams, like the ones organized by Vision Properties. We
will continue to stand up for the civil rights of all Pennsylvanians and work
to put an end to institutional racism in housing practices.”

Source: HousingWire Magazine

Citibank fined $30 million for holding onto foreclosures for too long

Citibank was
fined $30 million by federal banking regulators after an investigation found
that the bank was not selling foreclosed homes back into the market fast

The Office of the
Comptroller of the Currency
announced Friday that it fined Citibank $30
million for “violations related to the holding period of other real estate

Under federal banking regulations, there is a two-year limit
on banks maintaining possession of a foreclosed property. The rules stipulate
that banks can apply for an annual exemption that can push their ownership of a
property to as much as five years.

But after that, the bank is supposed to sell the property
back into the market to prevent available housing inventory from being kept away
from would-be homebuyers.

And according to the OCC, Citibank violated that rule by
holding onto hundreds of foreclosures for longer than the five-year limit.

“The OCC found the bank engaged in repeated violations of
the statutory holding period for OREO,” the OCC said in a statement. “These
violations resulted from the bank’s deficient processes and controls in the
identification and monitoring of the OREO holding period. In assessing this
civil money penalty, the OCC found the bank failed to meet its commitment to
implement corrective actions, resulting in additional violations.”

A quick note of explanation on the use of the term “OREO” by
the OCC: Most in the housing industry refer to foreclosures as REOs, for
real-estate owned, but federal regulators like the OCC and the Federal Reserve refer to them as OREO,
for other real estate owned.

According to the OCC order, an investigation found more than
200 violations of the foreclosure sale time limit rule between April 4, 2017
and Aug. 14, 2019.

But, Citibank states that the problem was limited to those
200 properties.

“The maximum holding period for foreclosed properties by a
national bank may not exceed five years. In some instances, we did not
meet the requirement,” the bank said in a statement.

The issue, involving approximately 200 properties,
was identified in 2015 and there was no impact on our customers,” the bank

“Since identifying the issue, we have strengthened
controls, processes and procedures to ensure the timely disposition of these
assets,” the bank added. “Most importantly, we consistently worked to ensure
the responsible disposition of the properties to avoid negatively affecting the
real estate market in those communities.”

As Citibank noted, the problem began in 2015. According to
the OCC, in 2015, the bank found its own processes to be “deficient.” More
specifically, the bank “lacked adequate policies, procedures, and processes to
effectively identify and monitor the holding period for OREO assets,” the OCC

The OCC stated that at that time, Citibank “committed to
developing and implementing corrective actions to address these deficiencies.”

But, the bank later submitted multiple requests to extend
the holding period for REO properties that were “not made timely and resulted
in numerous additional violations,” the OCC said.

Then, in April 2017, the OCC told Citibank that its internal
controls on REOs remained “decentralized, ineffective, and inadequate.” After
that, Citibank continued to submit “untimely requests” to extend the REO
holding period, the OCC said.

And things didn’t get much better from there.

“Following additional efforts to correct the root cause of the continued OREO holding period violations, the Bank recommitted to implementing corrective actions by August 31, 2018,” the OCC said. “The Bank failed to meet its commitment, resulting in additional violations.”

According to the OCC, the bank has made progress in dealing the REOs in question. In fact, the regulator states that Citibank has “significantly reduced” its REO holdings in the last year.

“The OCC continues to monitor the Bank’s progress to
implement the required corrective actions to attain effective policies,
procedures, and processes to identify and monitor the holding period for OREO
assets in compliance with the law and regulation,” the OCC stated. “As part of
these efforts the Bank has, over the last twelve months, significantly reduced
its inventory of OREO assets.”

According to the OCC, Citibank has already paid the penalty
to the Department of the Treasury.

Source: HousingWire Magazine

Housing market flashing recession signal

The housing market is signaling there will be an economic recession by the 2020 election, according to Benn Steil, director of international economics at the Council on Foreign Relations.

“Looking back at the years preceding the 2008 financial crisis, a critical warning sign was the surging gap between the growth in home prices and household income,” Steil wrote in a blog post with former CFR analyst Benjamin Della Rocca on the think tank’s website. “Today, a parallel dynamic is playing out.”

In 2018, as in 2005, housing-price growth began slowing, with significant price drops occurring in several major markets, the post said, linking to a story on New York home prices in “near free-fall” from earlier this month.

Household income has been growing, but it hasn’t come close to keeping up with the increase in home prices. For example, the median annual household income in August rose 1.3% from a year earlier, Sentier Research said earlier this month. That compares with the 4.7% gain in the U.S. median home price in August from a year earlier, using data from the National Association of Realtors.

“The trend-line in existing-home sales growth has also been down since 2015, tipping into negative territory at the start of last year,” the post said. “Similar drops have preceded nearly every recession since 1970,” it said.

“When income fails to keep pace with home prices, the latter must fall back,” the post said. “Falling home prices, in turn, drive down household spending by way of the so-called wealth effect – that is, consumers cut spending when their assets fall in value.”

A slowdown in consumer spending, which accounts for about 70% of GDP, points to an economic contraction. Economists define a recession as two subsequent quarters of negative GDP.

“If these trends continue, we should expect broad falls in home prices beginning by mid-2020, which will, in turn, drag down household spending against a darkening economic backdrop,” the post said. “Growth has been slowing, with Trump’s tariff war hitting exports. Manufacturing is contracting. Retail sales, excluding autos, have stalled. Consumer confidence is falling.”

The Federal Reserve probably doesn’t have enough power to stop a recession, the authors said. When the economy slows, the Fed cuts its benchmark rate to make it cheaper to borrow and encourage economic growth. But, the rate already is so low it probably won’t be enough to help, the blog post said.

“If we are really on the cusp of a recession it will likely take more than 175 basis points of easing to prevent it – and that is all the central bank has to play with before we’re back to the zero lower bound,” they wrote. “At that point, applying monetary stimulus becomes considerably more challenging.”

Source: HousingWire Magazine

Mortgage industry veteran Brian Fluhr to lead Veros marketing

Veros Real Estate Solutions, a developer and distributor of innovative mortgage technology and HW Tech100 winner, is bringing on industry veteran Brian Fluhr as vice president of marketing. 

The company announced the hire this week, stating that Fluhr will oversee branding, demand generation, and product marketing for all Veros products.

“Throughout his career, Brian has accelerated growth strategies by helping the mortgage and real estate markets understand how data and information can empower their business,” said Veros President and CEO Darius Bozorgi. “Brian’s background makes him a natural fit for Veros given his broad experience building award-winning marketing programs. He is a great addition to our team.” 

As vice president of marketing, Fluhr will be working with products such as Veros’ valuation and risk management technology solutions, including VeroSELECT, VeroVALUE and VeroPRECISION. According to the company, he will also be tasked with the promotion of VeroFORECAST, a tool that provides quarterly projections of property value trends up to two years into the future. 

“I am thrilled to join the amazing team at Veros,” Fluhr said. “I live and breathe connecting with audiences by providing data insight through data-driven marketing. This position enables me to do both, with the added benefit of working with so many industry standouts at Veros.” 

Fluhr previously served as vice president of marketing for DataTree by First American Financial for more than five years. Prior to that, he served in the same role for DataTrace. Fluhr additionally served as product marketing director at CoreLogic for three years. 

Source: HousingWire Magazine

Comment on OREP/WRE Bifurcated Appraisal Survey 2019 by Rob Review

I am a review appraiser for the largest lender in the US. I have reviewed a number of bifurcated reports and most of the time I recommend a product upgrade due to poorly selected comps or poorly collected data – think partly below grade being included in GLA. Most Realtors are not versed in FNMA lending guidelines as they relate to appraisal. I’m not sure if appraiser’s are being conservative in fear of liability. More often then not, the values are low and the borrower suffers. If me and most of fellow reviewers are recommending product upgrades, where’s the time saving? They are actually taking more time with an additional cost. Why isn’t anyone talking to the end users?

Source: Working RE Magazine

Visa, Mastercard, Stripe and eBay bail on Facebook's Libra ahead of key meeting

As regulatory pushback against Facebook’s Libra cryptocurrency has accelerated, keeping the project together has become a major challenge, with Visa, Mastercard, Visa, eBay and Stripe joining PayPal in leaving the project.
Source: American Banker

Comment on OREP/WRE Bifurcated Appraisal Survey 2019 by Scot Berke

Great article, bravo. I will go into a different business rather than do bifurcated work!

Source: Working RE Magazine

BofA's 'productive paranoia,' GSEs' next moves, debt collecters' letdown: Top stories of the week

BofA’s do-no-harm approach to AI; looking at what comes next for Fannie and Freddie now that they get to keep their earnings; ruling cuts short debt collectors’ victory lap over CFPB proposal; and more from this week’s most-read stories.
Source: American Banker

NAR: Nantucket and Martha’s Vineyard have largest share of vacation properties

Prices for vacation homes are rising faster than the rest of the market, the National Association of Realtors said in a report on Thursday.

The median sales price in vacation home counties rose 36% from 2013 to 2018 compared to 31% for all existing and new homes sold during the same period.

The report also listed the top 26 vacation home areas, measured as the U.S. counties with the largest percentage of seasonal or recreational homes. Massachusetts snagged the top two spots: Nantucket and Martha’s Vineyard, where 56% of homes were used as vacation housing.

Two areas were tied for No. 3, with 51% of the housing stock used for vacations: New Jersey’s Cape May and a collection of Colorado counties in the Rocky Mountains west of Denver: Grand, Summit Eagle, Jackson and Pitkin.

The north woods of Wisconsin was No. 5. In the area between Lake Superior and Lake Michigan – the combined counties of Vilas, Lincoln, Langlade, Forest and Oneida – 43% of housing was for vacation use, the NAR report said. The Michigan area between Lake Michigan and Lake Huron was No. 6, with 42% of its housing stock used for vacation homes.

For No. 7, it was back to Massachusetts. In Barnstable County, which means the collection of towns on Cape Cod, 41% of the housing stock is vacation homes.

No. 8 was in Missouri: the combined counties of Camden, Miller, Pulaski, and Morgan had a 40% vacation-home share.

When people think of buying or renting a vacation home, those aren’t the areas of the nation most people think about, said NAR Chief Economist Lawrence Yun.

“Some people may visualize the common popular vacation destinations in the U.S. when considering a vacation home, such as counties in Florida or California,” said Yun. “Although those locations have their share of vacation properties, we see that some homeowners prefer some of the other counties, including those in Massachusetts and New Jersey. These areas are often known for harsh weather conditions, but are popular nonetheless.”

Source: HousingWire Magazine