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Yes! $20000 in credit-card debt paid off in 33 months

Tanya LaPrad’s story of dealing with about $20,000 in credit-card debt has all the makings of a
CNBC show like
Till Debt Do Us Part or a Suze Orman segment of “Can I Afford It?” where the answer most
definitely is “Denied!”

But LaPrad, 43, is willing to share bits and pieces of her drama because the Detroit-area mom
eventually did find a way out.

She’s proud that she has learned to stop saying, “Oh well, I’ll just charge it” when it comes to
buying clothes for her two children.

After working with a debt counselor, LaPrad paid off the Discover card, the J.C. Penney card and
the rest of her credit-card debt and now carries about $800 in debt on one credit card.

“She took charge of it. She was really committed to paying this debt down,” said Bettina
Bartolo, a financial counselor for GreenPath Debt Solutions.

LaPrad was named the 2014 GreenPath Client of the Year after completing her debt-management
plan. Her story is worth hearing, even if it only motivates some consumers to stop and reconsider
how they’re using credit cards. It’s far easier to get into trouble charging groceries and clothes
than many want to admit.

When LaPrad started working with GreenPath four years ago, she faced interest charges of $358 a
month. She went through a divorce and was making about $30,000 a year as a cardiovascular
technician, plus working part time as a yoga and fitness instructor.

On her Discover card, LaPrad owed about $11,900 — just $100 or so short of maxing out on a card
with a $12,000 line of credit. The annual rate was 19.9 percent. It would have taken her 53 years
to pay off just that one card by making only the minimum payment of $235 a month.

As part of the debt-management plan, GreenPath negotiated the rate on the Discover card down to
6.9 percent, but the minimum payment was not reduced.

Bartolo said each creditor has different policies for concessions. Some creditors might agree to
reduce the minimum payment along with interest rates; others do not.

Under LaPrad’s plan, her total interest charges on the $20,000 in debt dropped to $108 a month
from $358 a month after concessions. That freed up $250 to go toward principal and other bills each
month.

LaPrad said it wasn’t easy making her payments each month. She paid $50 a month to GreenPath for
the program. But she said the fee was worthwhile because she paid substantially lower interest.

“I knew how much would be coming out each month, which helped with my budget.”

LaPrad also has faced a troubled mortgage, and her monthly expenses exceeded her income by about
$400. Fortunately, she worked to negotiate a modification for her mortgage and received help
through a community-action agency that offers foreclosure-prevention counseling.

Before her divorce, she put $10,000 of her husband’s debt on a newly opened zero-percent credit
card in her name.

“He started charging groceries and more, and things got out of control,” she said. “It was a
struggle. It was a control thing.”

During the marriage, she fell into a trap of trying to fix credit-card problems by closing one
account and opening another at ultra-low interest rates for a set time. But the charging continued,
rates went higher, the money troubles got worse and her marriage problems grew.

In 2012, she might have given up on the debt plan when she was diagnosed with breast cancer.

She had lost time at work. But she felt she was so close to paying off those bills that she
decided to keep going and never missed a debt-management payment.

“It would have been so easy to say, ‘I’m done,’  ” she said.

Yet family and friends helped out with a fundraiser when she got sick; she got help with some
bills; friends made dinners, which helped her tremendously.

“She was going to do it, no matter what,” Bartolo said.

During her debt-management program, LaPrad sent in extra money whenever possible. She was able
to pay off her debt in 33 months — more than two years earlier than originally expected.

“You have to budget everything,” LaPrad said. “I don’t spend extra on those extra things like I
used to. I love to shop — and who doesn’t?”

Now, she doesn’t buy shoes for herself as a pick-me-up.

Instead, now that she’s healthy, she tries to pick up extra jobs to fill her time and add extra
money to her wallet.

“It’s not a good feeling to be under that much debt,” she said.

Article source: http://www.dispatch.com/content/stories/business/2014/12/21/yes-20000-in-credit-card-debt-paid-off-in-33-months.html

Lessons from the housing crisis

The nightmare is ending, but the dream continues.

Despite the foreclosure crisis, the public still has “strong support for the association between owning a home and accumulating wealth,” according to one of the housing experts contributing to “Homeownership Built To Last,” a recently published book from the Joint Center for Housing Studies at Harvard University and Brookings Institution Press.

Indeed, new, stricter mortgage rules enacted in the aftermath of the crisis should help ensure today’s borrowers will find owning affordable, stress several contributors.

But they also warn that the rules are works in progress, and homebuying still is not a foolproof financial decision.

Here, some lessons that we should learn from the crisis:

Don’t Expect a Quick Profit

In the housing boom early last decade, many thought home prices would always rise and that a home could be easily sold at a price to pay off the mortgage, no matter how big it was.

Based on government data from 1975 to 2012, home prices tend to track annual inflation rates sometimes, with 1 or 2 percent tacked on.

Still, equity – the value of the home minus the total mortgage amount – represents the biggest source of wealth for most Americans. Equity is built by slowing paying down mortgage principal each month.

Know What’s

Really Affordable

Homebuyers tend to fixate on the monthly mortgage payment, and if they’re approved to borrow a certain amount, they consider that their limit. But it’s better to look at a big picture, like how much maintenance and utility costs will be for a particular home.

Look for Impartial Advice

Buyers look to real estate agents and lenders for advice, but they should balance that information with guidance from impartial sources. The Harvard/Brookings book advises that some of the best advice come from government-sponsored housing counseling agencies, like those listed on hud.gov.

Article source: http://www.nwitimes.com/lifestyles/home-and-garden/lessons-from-the-housing-crisis/article_b88666e8-6b6b-5518-a27b-d082dcd5f30d.html

It isn’t just the big boys subjected to regulations

Governments are two-handed creations. The more they’re involved in anything, the more they give with one hand, and take away with the other.

So it is with residential mortgage lending.

Fannie Mae and Freddie Mac, of which the American people are now the proud owners, are going to great lengths, we’re told, to make mortgage money more accessible for first-time home buyers. At the same time, the Consumer Financial Protection Bureau is writing consumer protection regs at a rate that would draw admiration from a counterfeiter running off Franklins.

The result, arguably, is that Americans have less access to mortgage money at any time since 1945.

Some cases in point are three foundation stones of mortgage finance that have very suddenly disappeared, or are on the way out: Seller financing, private lending and small community banks.

Now these don’t comprise the keystone that holds up the entire edifice, but they traditionally have provided viable options for U.S. homeowners.

Seller financing heretofore has been a solution for owners of unusual properties, or buyers with a nonconforming financial or credit profile, to craft a deal. Now, nobody has said that a seller can’t carry back a mortgage when selling a home to someone for use as a primary residence. But now that seller is treated very much like Bank of America. If the loan isn’t done right, in conformance with certain consumer protection laws and regulatorily mandated underwriting guidelines, the penalties can be very unpleasant and costly.

First, the seller has to make disclosures under the Truth in Lending Law, as well as inform the borrower of certain costs in relation to the loan, within three days of the buyer making an application to the seller. Mess up in disclosing, and the buyer has the right for significant reimbursement.

But wait, there’s more: After disclosing, the seller must underwrite the loan, just as a bank would, and make certain that the borrower is qualified for the loan and can handle the debt service. If the borrower defaults, and the loan goes into foreclosure, then the borrower can allege that the lender (seller) failed to properly determine that borrower’s ability to repay the loan. If successful, the borrower can get a whopping settlement from the seller, which can include the down payment, interest paid to date, and attorney fees and other costs.

Any seller is advised to seek counsel from an attorney before taking back a loan. I’m not privy to the workings of a lawyer’s mind (stop snickering out there — this is serious stuff) but the likely advice would be: Don’t.

The CFPB says that private lenders must conform to all of the consumer laws and regs, including underwriting guidelines, and new, and very complex, criteria for servicing their funded loans to primary homeowners. The upshot is that these capital sources, once a fallback resource for homebuyers and homeowners, simply aren’t making mortgages if the collateral is used as a primary home.

And then, there are the hometown banks.

I’ve spent a lot of time working for small banks in the Roaring Fork Valley. Occasionally, someone will express appreciation for a home loan made 20 or 30 years ago. I bask in their gratitude, but I really shouldn’t. As Hyman Roth said in Godfather II, “It’s nothing personal, just business.” And it was good business. The local bank has a unique knowledge of a potential loan that can’t be matched by a lender at some money center institution or mortgage conduit, just as the battalion commander on the ground knows a military situation better than the brass in the pentagon.

But now, little banks, being naturally nervous after having survived the Great Meltdown, are spooked by the downside of erring somewhere along the way in processing and funding a primary home loan. This angst prevails even if they’re selling the loan on the secondary market, because they learned, the hard way, that sewage runs downhill when something goes wrong.

I had an attorney partner once who cautioned: “In a business dispute, be very cautious before you call in the law.” In other words, try to work it out before yelling for official assistance.

After the Meltdown, we all screamed for the government to bail us out.

Be careful what you ask for.

Pat Dalrymple is a western Colorado native and has spent almost 50 years in mortgage lending and banking in the Roaring Fork Valley. He’ll be happy to answer your questions or hear your comments. His e-mail is dalrymple@sopris.net.

Owners using seller financing are now treated very much like Bank of America. If the loan isn’t done right, in conformance with certain consumer protection laws and regulatorily mandated underwriting guidelines, the penalties can be very unpleasant and costly.


Article source: http://www.postindependent.com/news/14204879-113/loan-seller-mortgage-borrower

$638000 in unreported fees




Steven Schlesinger



Credit: Joseph D. Sullivan

When the Nassau County Democratic Party has to name judicial candidates, attorney Steven Schlesinger has been among the select group of party members making the picks.

And when Nassau judges have to make lucrative court appointments, they have repeatedly turned to Schlesinger, awarding at least $638,000 in payouts to him and others in his firm since 2010, a Newsday review of court records has found. None of those fee awards was publicly reported as required until Newsday began its review in August.

‘The Insiders’ seriesThe InsidersInsiders pocket $350GWhere the money went$638G in unreported fees

State court rules established in 2002 prohibit party leaders from receiving court appointments, which are typically made to private attorneys who perform various duties for the court. Party leaders were barred to limit judges from doling out appointments in return for political support. But the rules don’t stop influential party members like Schlesinger from getting the appointments, leaving the system open to the kind of abuses that the rules were designed to stop.

Bennett Gershman, a Pace Law School professor and former prosecutor who investigated judges, said that when judges tap Schlesinger, they violate the spirit of the state rules and undermine public confidence in the courts.

“He should not be getting appointments,” Gershman said. “The situation is so rife with the potential for corruption.”

Nassau Democratic leader Jay Jacobs said Newsday’s findings concerned him and that he planned to review Schlesinger’s position as his party’s legal counsel.

“I would be very upset over anything that looked like self-dealing or taking advantage of one’s party position to benefit themselves or others financially,” Jacobs said.

A complete picture of Nassau court appointments and fee awards to Schlesinger — or any other appointee — is not yet possible to provide. Newsday’s review of 150 Nassau court appointments since 2008 found that key records had not been properly filed and made public, as required.

However, the review shows that at least 11 Nassau judges violated court rules by not publicly reporting awards to more than a dozen appointees, including Schlesinger and others with political ties.

Newsday reported in October that Schlesinger, Oheka Castle owner Gary Melius and other well-connected individuals were part of a network that benefited from court appointments and awards from Suffolk County Supreme Court justices Thomas Whelan and Emily Pines. The judges named Schlesinger, Melius and the other members of the group to be property managers or receivers — in effect temporary landlords — at four office parks in foreclosure and awarded them more than $762,000 in fees that came from rental income.

As in Nassau, many of the Suffolk appointments and awards were not reported, shielding the group’s activity from public scrutiny. Newsday has found that Nassau and Suffolk judges have awarded Schlesinger and his firm at least $828,000 in unreported fees since 2010.

The state court system’s Office of the Managing Inspector General for Fiduciary Appointments and the State Commission on Judicial Conduct, which investigates complaints against judges and disciplines them, opened investigations after Newsday’s stories on Suffolk’s court system. Those inquiries are ongoing.

In addition, Suffolk District Administrative Justice C. Randall Hinrichs pledged to fix the problems and assigned clerks to dig through files to identify appointments and awards that had not been disclosed.

Nassau Administrative Justice Thomas A. Adams declined to be interviewed and referred questions to state courts spokesman David Bookstaver. Adams is “following almost the same processes that the Suffolk County courts followed to put a laser focus on the rules and any deficiencies in compliance,” Bookstaver said.

Schlesinger declined to comment and directed questions to CommCore Consulting Group, a Washington, D.C.-based public relations company representing his law firm, Jaspan Schlesinger.

CommCore senior vice president Nick Peters, whose company specializes in crisis management, declined to answer questions about Schlesinger’s appointments or to provide the fee awards that are supposed to be public. Peters attributed his reluctance to a possible federal investigation, previously reported in Newsday, into how local state court judges get on the ballot.

“Our client does not believe that it makes sense to provide additional information at this time,” Peters wrote in an email.

Influential lawyer

Schlesinger wields considerable clout in Nassau politics and in the county’s legal community, and not just because of his role on the Nassau Democratic Party’s judicial screening committee.




Steven Schlesinger



Credit: Dick Yarwood

He is a managing partner in his Garden City law firm and works for Shelter Rock Strategies, a lobbying firm that represents clients locally, in Albany and in Washington, D.C. Schlesinger has done free legal work in election-law cases for numerous candidates, he sits on a state Character and Fitness Committee, which vets individuals joining the state bar, and has chaired the Professional Ethics Committee of the Nassau Bar Association.

Although Democratic Party leader Jacobs ultimately decides which judicial candidates will have the party’s backing, Newsday spoke with five court or party officials who said Schlesinger’s opinion carries significant weight on a screening committee that includes top Nassau Democrats, several of whom have held public jobs or elected office.

According to three people who have attended the screenings, Schlesinger typically champions a handful of contenders. This year, he lobbied to have his wife, Caryn Fink, an attorney whom he married at Oheka Castle in Huntington, nominated to run for a County Court judgeship. She lost the election.

The state court system maintains a list of more than 500 individuals in Nassau County it has approved to handle receiverships, although many of them have gone years without receiving one assignment.

That has not been a problem for Schlesinger.

There are a variety of appointment types, including receivers who oversee distressed businesses and properties, referees who preside at foreclosure auctions, and administrators who manage the estates of those who have died with no executor. Schlesinger has held them all.

In the past six years, court records show Nassau judges have named Schlesinger a court appointee at least five times. Because Nassau judges have not properly logged appointments and fee awards, it’s unclear whether the five represent all of Schlesinger’s cases.

The five cases include two in which there is no record of a fee award, meaning Schlesinger’s award was not documented or the case involved no payment. In a third case, Schlesinger was appointed by a Nassau judge and collected $18,000 from a Queens judge after the case was moved.

In another case, a Surrogate’s Court judge named Schlesinger the administrator of an estate worth $10 million. Schlesinger has earned at least $131,323 in fees from the case. Fees awarded to estate administrators are not subject to reporting requirements.

In the fifth case, Judge F. Dana Winslow awarded Schlesinger $52,325 in fees in 2010 after appointing him the previous year to be a receiver at a foreclosed Hempstead office building.

Winslow, who was re-elected in 2010 with the backing of the Democratic Party, awarded Schlesinger an additional $65,047 in 2011 and another $62,680 when the case ended in 2012.

None of the $180,052 in total fees Winslow awarded Schlesinger was reported to court administrators.

Winslow responded to questions with an email that said he’d not been given the form used to report fee awards that a clerk typically relays to parties involved in a case. He thanked a reporter for bringing the matter to his attention.

On the form Winslow referred to, judges must identify the appointee getting money and the amount awarded. A clerk then sends the form to state court administrators, and the information is made available on a dedicated public website.

Procedure skirted

That process has not been followed in Nassau.

Newsday’s review found that in most of the 150 receivership cases identified in Nassau since 2008, the appointments had been reported. However, payments to receivers were reported in only 41 of the cases.




Timothy Driscoll



Credit: Patrick McCarthy

Records show that those who received court awards that were not reported include:

– Harold Damm, the law partner of former Nassau County Legis. John Ciotti, has gotten two receiverships since 2010. In 2012 Justice Arthur Diamond approved a final payment to Damm in a case where fees totaled $56,350. Damm did not return calls for comment.

– Jerome Murphy, son-in-law to former Sen. Alfonse D’Amato, got the final portion of a $43,252 fee award in December 2011. Murphy had been elected a judge in Nassau the month before getting the award from Justice Timothy S. Driscoll but had not yet taken the bench. Murphy did not return a call for comment.

– William Garry, a Uniondale lawyer whose family has long-standing ties to the Democratic Party, has received at least four court appointments from Driscoll since 2010. A fee award of $3,250 was reported to the state in only one of the cases. Garry said he had not yet been paid in one case, and that in the other two he’d sent the required paperwork to the Nassau clerk who is supposed to coordinate reporting.
Garry said he did not know why his awards, which he disclosed to a Newsday reporter, do not appear on the public website.

Gershman, the Pace Law School professor, said that the failure of judges to make public their awards to fiduciary appointees puts the integrity of the court system at risk, especially when it comes to courtroom regulars like Schlesinger.

“This is not accidental,” Gershman said. “That’s not what’s going on here. What’s going on here is this particular person is getting special treatment because of who he is and what he has done for the judges and what he will do in the future.”

Related stories:


See where the money went


Key players


Oheka Castle shooting

Article source: http://data.newsday.com/projects/long-island/638000-unreported-fees/

Coming in 2015: A gas price increase that consumers may or may not notice

Local News

Toys for Tots gives Fresno kids an early Christmas (video)

Article source: http://www.fresnobee.com/2014/12/20/4296341/coming-in-2015-a-gas-price-increase.html

Jay County record

SUITS FILED

Circuit Court

Donna S. Stephens vs. Link A. Stephens, dissolution of marriage.

Wells Fargo Bank vs. Richard L. and Sylvia L. Witt, 140 Arlington Ave., Dunkirk, foreclosure.

Superior Court

State vs. Travis R. Miller, 19, 255 E. High St., Redkey, possession of paraphernalia, possession of marijuana, driving while intoxicated, driving while suspended.

State vs. Dustin M. Cline, 24, 5413 E. Jay County Road 200-S, Portland, possession of a controlled substance, possession of marijuana, driving while intoxicated.

State vs. Stephen Anthony Johnson Jr., 40, 1810 E. Hines, Muncie, driving while suspended, possession of paraphernalia.

State vs. Ariel Louise Gallo, 23, 1120 S. Shank St., Portland, theft, unlawful possession of a legend drug.

State vs. Susan L. Earls, 45, 320 N. Main St., Dunkirk, battery resulting in bodily injury, criminal trespass.

State vs. Michael D. King, 47, 412 N. Plum, Union City, possession of marijuana, possession of paraphernalia.

State vs. Brandon James Norris, 41, 1159 E. Case Blvd., Albany, driving while intoxicated, driving while suspended.

State vs. Karen J. Bartlett, 54, 690 W. Union St., Pennville, driving while intoxicated.

State vs. Nathan L. Scott, 26, 929 W. Water St., Portland, driving while intoxicated, failure to stop after accident.

State vs. Russell A. Haffner, 52, 310 S. Elder St., Portland, driving while suspended.

State vs. Scott A. Krieg, 45, 4298 S. Ind. 1, Redkey, possession of marijuana, driving while intoxicate, driving while suspended.

State vs. James P. Miller, 43, Uniopolis, Ohio, unlawful possession of a legend drug, driving while intoxicated, possession of marijuana.

State vs. Benjamin W. Morris, 25, Elkhart, possession of marijuana.

State vs. Stanley L. Smith, 61, 6124 S. Jay County Road 250-W, Portland, driving while intoxicated.

State vs. Tommy R. Hodge Jr., 45, 10544 W. Jay County Road 800-S, Redkey, battery resulting in bodily injury.

State vs. Heather A. Lennartz, 41, 715 S. Shank St., Portland, driving while intoxicated.

State vs. Linda Marie Rabinek, 26, 5739 E. Jay County Road 400-S, Salamonia, driving while suspended, possession of paraphernalia.

Nationstar Mortgage vs. Melissa Hamilton and occupants, 4880 S. Arlington Ave., Dunkirk, foreclosure.

Article source: http://www.thestarpress.com/story/news/local/2014/12/20/jay-county-record/20694169/

Investors from China add Colonial Charters to Myrtle Beach area golf course …

Local News

Men spend afternoons chatting and people watching at Myrtle Beach Wal-Mart

Article source: http://www.myrtlebeachonline.com/2014/12/19/4680182/investors-from-china-add-colonial.html

A Changing Mission: Who belongs in SF’s oldest neighborhood?

The run-down Edwardian on Folsom Street had hosted countless family affairs, milestones of love, laughter and loss.

Article source: http://www.sfchronicle.com/bayarea/article/A-Changing-Mission-Who-belongs-in-S-F-s-5970263.php

AG warns banks on mortgage marketing

New Mexico has begun warning financial institutions to stop marketing deeds of trust as mortgages because the two are separate legal instruments with significantly different potential consequences for borrowers.

The Attorney General’s Consumer Protection Division last week notified 11 lenders — including some of the nation’s largest banks — that the practice may violate the state’s Unfair Practices Act and the Home Loan Protection Act.

The violations would affect most harshly those borrowers who default on their home loans but could also significantly impact people transferring home loans in divorce proceedings, following deaths, or in quit-claiming residences.

A mortgage lien, the traditional instrument used in most home purchases in New Mexico in the past, gives a lender the legal protection to foreclose on a loan in the event a borrower should default, said Assistant Attorney General Karen Meyers. But the law also provides due process for the borrower, requiring judicial approval of all foreclosure sales.

Additionally, although most homeowners need mortgages to buy a home and pay off their loans, usually over 15 or 30 years, a mortgage allows the borrower to assume title to a property. A deed of trust may not.

In 2006, lenders convinced the Legislature to include mortgages in the Deed of Trust Act — which is ambiguous on whether judicial approval is required for a foreclosure sale — a mandate that is written into the Home Loan Protection Act.

With the change, instead of a traditional mortgage foreclosure sale overseen by a judge, the revised law authorizes a trustee sale for loans secured under a deed of trust. The law isn’t clear on whether  a judge’s involvement is required. The change provided lenders with much more discretion and borrowers with far less due process, Meyers said.

In 2009, advocates for homeowners convinced state lawmakers to strengthen the Home Loan Protection Act to assure judicial involvement in all  mortgage foreclosures. Prior to that, only high cost loans were included.

The 11 lenders notified by the AG’s Office have continued to market products as mortgages even when, in fact, they have been issuing deeds of trust, according to Meyers and fellow Assistant Attorney General David Kramer.

“It is apparent … that the wholesale use of deeds of trusts in lieu of mortgage instruments to secure home loans is intended to modify and abrogate the protections afforded a homeowner by the judicial foreclosure process and the Home Loan Protection Act,” the letter to the 11 lenders states.

The lenders under investigation are the First Mortgage Co., New Mexico Bank and Trust, Sandia Laboratory Federal Credit Union, New Mexico Educators Federal Credit Union, Peoples Bank, JP Morgan Chase Bank, Wells Fargo, Quicken Loans, BOKF Bank of Albuquerque, Bank of America and USAA Federal Savings Bank.

They were advised that the Attorney General’s Office “intends to continue its investigation and seek all appropriate remedies.” However, the letter to the lenders also expressed a willingness to “discuss a pre-litigation agreement to achieve appropriate remedial steps, a comprehensive change of practice and policy, and other appropriate relief.”

The letter offers to meet with the lenders, separately, during the first two weeks of January. So far, Bank of America, Wells Fargo and JP Morgan Chase have expressed a willingness to sit down with the state’s attorneys, Kramer said.

Article source: http://www.abqjournal.com/515041/biz/biz-most-recent/ag-warns-banks-on-mortgage-marketing.html

5 Ways America’s Newest Landlords Can Win the Public’s Trust

rental home

SOURCE: iStock

Single-family rental companies need to build trust within communities.

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Over the past three years, large investors have bought more than 380,000 homes that became available due to the foreclosure crisis. These investors now face a new challenge: building trust with the public.

Analysts and community groups have viewed the emergence of single-family rental companies as presenting both opportunities and risks. With a shortage of quality rental housing stock, particularly affordable rental units, the country needs the rental housing these companies can help bring online. At the same time, however, these firms have also encountered suspicion and distrust. News stories about high eviction rates and substandard property conditions abound, and several high-profile lawsuits have been filed against prominent, single-family rental companies. The resulting damage to a company’s reputation or brand could make it harder for firms within this industry to attract investors and to expand into new communities in the future.

One concern often raised by analysts, advocates, and local officials is whether these purchases are a short-term trade—meaning that companies are buying houses at low prices and planning to sell as soon as housing prices rise further—or whether companies are in the rental business for the long haul. Another concern is whether the firms will prove to be good neighbors: Are they pushing up rents and siphoning wealth from communities, or are they helping provide quality housing at reasonable rents and investing in the neighborhood?

These concerns exist at a time when distrust of Wall Street’s involvement in housing is already widespread. Before and during the foreclosure crisis, the public watched companies take steps to maximize their own profits apparently without regard for the social and economic costs of their practices. After the housing market crashed, many companies, including some financed by Wall Street investors, bought homes at historically low prices—sometimes, directly from taxpayer-funded federal or state agencies. Going forward, in order to build trust with the public, this new industry must demonstrate emphatically that professional, single-family rental firms are good allies to renters and communities alike and not in business simply to maximize short-term profits without regard for longer-term prospects or social and economic costs.

In a sign that the industry recognizes the importance of its collective reputation, a number of the largest single-family rental firms have joined together to form a trade group called the National Rental Home Council. This group recently published a set of management standards designed to support its claim that it can offer better tenant experiences than traditional landlords, such as mom-and-pop owners who manage a handful of properties. The standards, which members of the trade group have committed to following, address issues such as home rehabilitation, property management, and resident relations.

While these guidelines are an important step, they largely advise firms to comply with existing law. Yet acting lawfully is not enough: Many states offer few legal protections for renters, and it is worth remembering that much of the predatory lending during the mortgage boom was technically legal. When laws governing certain business practices are lax or nonexistent, companies must set standards beyond the legal minimum to act responsibly. Acting responsibly is even more important for the single-family rental industry if these companies hope to demonstrate that they are, as industry leaders say, a major part of the nation’s solution to the foreclosure and rental affordability crisis, rather than a source of additional strain on communities.

Thus, in addition to adhering to the law and to the new trade group guidelines, the Center for American Progress recommends that companies in the emerging, investor-owned, single-family rental industry go the extra mile to demonstrate that they are committed to managing homes responsibly, treating tenants well, and contributing to the economic and social well-being of the neighborhoods where they own homes.

Companies should adopt the following five recommendations to enhance their reputations and support the neighborhoods where they operate. Most of these standards are good practices that all landlords—large and small, single and multifamily—should follow, while a few are targeted specifically toward landlords who own large portfolios. There may be a financial cost associated with some of these recommendations, but we believe that companies can still be profitable while committing to good practices and affordability. Following these recommendations will help ensure this industry’s long-term viability.

Commit to core tenant protections

Certain basic protections can help renters feel stable and secure in their homes. These protections will become even more important as our nation’s renting population grows and more families do not have access to the protections associated with owning their own home. The United States gained about 4.7 million renters between 2008 and 2013, and experts estimate that at least another 4 million households will begin renting over the next decade.

Some jurisdictions, particularly those in the Northeast and in parts of California, have core tenant rights on the books that protect renters from certain abuses, including unjust eviction or sharp rent increases. Some jurisdictions also give renters a reasonable buffer between a missed payment and an eviction. Many states, however—including states where the number of renters living in single-family homes has grown significantly over the past few years—do not provide renters with adequate protections. This leaves them vulnerable to abusive landlord conduct, including having their rent raised significantly and with little notice or being subject to eviction if the rent check is just a few days late. Some of the largest single-family rental companies own high concentrations of homes in Georgia, Arizona, Florida, and Texas—all states that do not provide renters with these basic protections.

Emerging single-family rental companies should signal their commitment to renters by offering leases with strong tenant-protection provisions, whether or not state law guarantees those protections. We suggest the following standards.

Companies should not terminate leases without good cause and should offer longer-term options

Single-family rental companies should allow tenants to stay in their home as long as they pay their rent and follow the rules of their rental agreement. While renting families generally have “good cause” eviction protection in some  Northeast states as well as in parts of California—which allows them to stay in their rental home as long as they are following the rules of their rental agreement—this protection is less common in many of the jurisdictions where single-family rental companies have purchased the largest number of properties. In Georgia, for instance, leases that allow a landlord to terminate the lease at any time and for any reason with 60 days’ notice are both common and legal, and these lease terms and have been used by at least one large single-family rental firm. These types of provisions cause great uncertainty for renting households and are disfavored in jurisdictions with strong tenant protections.

Single-family rental companies should also offer tenants longer-term leases as long as they comply with the rules of their rental agreement. Currently, leasing periods and renewal practices vary by company. At least one large firm offers tenants a two-year lease with the opportunity to renew. On the other hand, some companies want to maintain the flexibility to either rent to a new tenant or sell the property at the end of one year.

Yet families seeking out single-family rental homes often want to stay for multiple years in order to put down roots in a neighborhood and perhaps to send their children to a particular school, according to analysts at the investment research and ratings firm Morningstar. Renters who live in places with good-cause eviction protection are, with a few exceptions, guaranteed a lease renewal if they are in compliance with the rules of their lease; in jurisdictions without these protections, a landlord is no under no obligation to renew a lease after the initial term is complete.

Guaranteeing tenants a longer tenure helps them plan better for the future and avoid costly moving fees. This practice is also consistent with the business goal of single-family rental companies to keep a property occupied by a responsible, rent-paying tenant. Formalizing the practice of either offering longer-term leases or guaranteeing lease renewal at least once after the initial one-year lease period will provide renting households with a greater degree of tenure security.

Companies should provide tenants a reasonable buffer between a missed payment and an eviction

Single-family rental firms should put procedures in place to protect tenants from mistaken or preventable eviction. The protections provided to renters if they miss a payment vary widely depending on the landlord and the jurisdiction. Some companies allow a one-week grace period after a missed payment before taking steps to evict, while others offer only three days. For example, renters living in Washington, D.C.; Vermont; Wisconsin; Rhode Island; New York; or Pennsylvania have at least three weeks to pay their rent in order to halt an eviction, while renters living in many parts of California, Florida, and 15 other states have fewer than five days to stop an eviction by paying rent.

Yet eviction carries serious upfront and longer-term costs for both renters and landlords. In the short term, an eviction can cause serious financial stress for renters, as they may lose their possessions during the eviction or have to pay higher rates for temporary shelter. For renters, as a recent MacArthur Foundation study notes, “eviction can be the equivalent of a prison record.” Like a criminal record, a prior eviction can prevent a prospective landlord from considering a renter’s application or make it harder for a renter to be hired by a prospective employer once the eviction is reflected on the renter’s consumer report. Since a renter is already more likely to be lower income and to have less wealth than a homeowner, the costs of eviction can set a person back for years.

For landlords, an eviction may lead to a period of vacancy during which the property is returning no value to the investor and is more vulnerable to damage by natural causes or vandalism. It also requires the landlord to incur the costs of advertising the property and screening a new tenant.

The best approach is for landlords to give renters a reasonable buffer between a missed rental payment and an eviction. A one-week grace period for missed payments can ensure a payment was not missed simply due to a technical glitch. If a tenant is experiencing a temporary financial hardship, the rental company could also first offer the renter a short-term payment arrangement before pursuing eviction. If a company subsequently decides to move forward with an eviction, it should give renters at least two weeks to halt the eviction process by paying what they owe. Twelve states already require all landlords to provide this opportunity, and the federal government requires it for public housing landlords.

Companies should minimize rent increases and give tenants advanced notification of rent increases

Instead of basing rent increases on real cost increases, some companies will push rents as high as the market will bear in order to produce greater returns and to attract investors. Sharp rent increases can put renting households in a difficult position: If renters cannot afford the rent increase, they must either cut back on other household needs or pay to move, which can be costly. Companies should give renters the assurance that they will not sharply raise their rent.

Additionally, a company should also help the renter prepare for any increase by providing 60 to 90 days’ advance notice of rent increases, as well as a written copy of any policies the company follows when calculating rent increases. This notice will make it easier for households to plan their finances and prepare to pay the increased rent, which is good for both renters and landlords. The recent guidelines issued by the National Rental Home Council acknowledge the importance of advance notice and encourage single-family rental operators to let renters know about upcoming rent increases.

Treat all renters fairly and provide greater opportunity by accepting rental vouchers

As single-family rental companies scale up to serve more tenants, they will need to ensure that their employees serve all families and communities equally. Larger companies recognize the importance of preventing discrimination and in their guidelines call for companies to take steps to comply with all fair-housing rules. Companies should make sure that qualified fair-housing personnel train their employees and contractors to prevent discrimination. Companies should also regularly review marketing efforts, tenant selection, housing rehabilitation standards, and maintenance response times in order to ensure that they are treating families and communities equally.

Companies can help with efforts to reduce concentrated poverty by accepting rental vouchers

Single-family rental companies can also contribute to a community’s strategy to address concentrated poverty and segregation. Communities will be required by the Department of Housing and Urban Development’s, or HUD’s, proposed Affirmatively Furthering Fair Housing rule to have more in-depth plans for reducing concentrated poverty and racial segregation, and single-family rental housing companies could be allies in these efforts, building a positive relationship with local governments and HUD in the process.

One specific way that single-family rental companies can help reduce concentrated poverty is to welcome families receiving housing subsidies. New research from Arizona State University finds that many foreclosed properties converted into investor-owned rentals have provided an opportunity for low-income voucher holders—who are disproportionately African American and Latino—to move to a higher-opportunity neighborhood. While some of the nation’s largest single-family rental companies allow tenants who receive subsidies to rent their homes, others do not. The firms that are accepting vouchers may not be doing so all that often. Last year, less than 1 percent of tenants renting from the largest single-family rental provider held Section 8 vouchers, according to Bloomberg.

While working collaboratively with local governments, renting to voucher holders may also help companies stay in compliance with the Fair Housing Act and avoid costly lawsuits. While the Fair Housing Act does not explicitly prevent companies from refusing to serve subsidy holders, 12 states and the District of Columbia have passed laws to prohibit discrimination based on source of income. Nationwide, nearly half of all tenant-based voucher holders are African Americans; in some popular jurisdictions for single-family rental—such as Atlanta, Georgia—the percentage is much higher. Blanket prohibitions on voucher holders may disproportionally affect African American renters and expose rental companies to challenges.

Preserve affordability

Single-family rental opportunities, which are often located in neighborhoods with strong schools and local amenities, should be available to families earning at or below the median income level and those recovering from the housing crisis. At least in some instances, however, overly restrictive tenant screening or high rents and fees put these rental homes out of reach for these families.

Companies should not turn down an applicant based on one metric

When companies evaluate prospective tenants, they should broadly evaluate an applicant’s ability to pay rent using a variety of sources and a full credit history, rather than declining an application solely based on a poor credit score or a bankruptcy.Households recovering from a foreclosure or a job loss during the economic downturn may still have damaged credit, especially since many credit scoring models do not take into account on-time rent and utility payments that could show a household is getting its finances back on track. Narrowing the pool of applicants prematurely will make it harder for single-family rental companies to fill their homes with rent-paying households. If households can demonstrate a history of on-time rental payments and sufficient income to support monthly rental payments, their full applications should be considered even if they have a low credit score.

Companies should commit to maintaining affordable rents

Single-family rental housing, if priced appropriately, can help ameliorate the rental housing crisis by increasing the pool of affordable rental options. The most commonly used definition of rental affordability is that the rent is no more than 30 percent of a renter’s gross income. While many single-family rental companies price at or close to the average rent for their area, often, average rents are not necessarily affordable rents.

We recommend that single-family rental companies compare their rents with area median incomes to be sure that some portions of their units are affordable to those earning at or below the median income level. Many multifamily developers are already required to set aside affordable units as a condition of the Low-Income Housing Tax Credit or through inclusionary zoning rules.

Firms can also build stronger relationships with community stakeholders and policymakers by demonstrating sensitivity to the economic challenges families are facing in the recovering communities where they are buying homes. Maintaining affordable options may also help single-family rental companies better reach the lower-wealth segments of the U.S. population that may have a hard time buying a home, saving the firms money on turnover since these families are likely to rent for longer periods of time.

Firms can preserve affordability in a number of ways. They can limit rent increases, accept renters who will use rental subsidies to help pay their rent, offer lower rents on properties they have purchased from the state or federal government at significant discounts, and offer rental units in neighborhoods with less-expensive housing stock. By committing to maintaining a level of affordability, single-family rental firms can also play a more meaningful role in a neighborhood’s recovery, helping support home prices over time.

Fees should be transparent, fair, and not overly burdensome

Companies should let renters know upfront what types of fees they will be charged in the case of a late payment or a maintenance request; they should also make sure the fees they charge are reasonable. The amount tenants are charged when they are late on their payment varies significantly. A report earlier this year published by housing advocates highlighted a single-family rental lease in Georgia with late fees in excess of 10 percent of the monthly rent charged to the tenant after the rent was five days past due, which is an onerous amount for typical families. In contrast, the residential lease templates available through the Florida and Texas Bar Associations—forms landlords may consult when writing residential leases—set late fees at 4 percent and 5 percent of a tenant’s monthly rent, respectively. We recommend firms limit their late fees to a size that will encourage on-time payments and perhaps compensate for any costs the company incurs as a result of late rent, rather than make them so high that they are punitive and potentially prevent the family from getting back on track with payments.

Moreover, landlords should not include provisions in rental leases that require a renter to pay for attorney’s fees the landlord incurs during an eviction proceeding. These fees can grow quickly and make it difficult for a household to keep up with rent obligations—or, in the case of a successful eviction, make it harder for the family to recover financially from the eviction. Voluntarily disclosing late-payment and maintenance fees and being careful to avoid burdening renters with excessive fees could also help companies steer clear of federal enforcement actions.

Ensure the community knows who owns the home

As single-family rental firms seek to professionalize single-family rental management, they should follow the example of some multifamily firms and make their ownership of properties clear so that it is easy for local government and community stakeholders to contact them.

The first step is for single-family companies to register their properties according to local requirements. This advice seems simple, but companies do not always adhere to it. In New York City, for example, landlords are required to register their apartment buildings with the city government and to supply emergency contact information so the city can reach the landlord if there is a hazardous condition in the building, but less than one-quarter of New York City landlords register their properties as required.

It is also important to register under the parent company’s name rather than under the name of a subsidiary or separate legal entity. While a company may buy a property under a different name in order to avoid broadcasting its buying strategy to competitors, once it buys the home, a company should be transparent about its ownership.

Invest in the surrounding neighborhood, and when it’s time, leave responsibly

In some neighborhoods, single-family rental companies are the largest property owners, but they may be headquartered thousands of miles away. Companies will need to commit to bridging this gap by establishing relationships with local governments and stakeholders, investing in the communities where they own homes, and assuring these communities that they will proceed responsibly if they decide to sell the homes they have purchased.

Companies should build good relationships with community stakeholders

Opening lines of communication with local governments, homeowners associations, legal aid and tenant advocates, and community development organizations is good for communities and good for business. As described earlier, when community stakeholders are encouraged to reach out to a firm, it is more likely the firm will find out early when there is a problem with a home they own, before there is damage to either the home or their reputation. Additionally, the more trust a firm can build with the local community, the less community resistance it is likely to meet as it further expands its business.

Investments should address needs identified by the community

Investing in the communities where single-family rental firms own homes helps strengthen the neighborhoods surrounding their homes. When investing in local communities, companies should be sure to align community revitalization investments with the needs identified by local policymakers and well-established, community-based, affordable housing nonprofits. Firms could also give back in an important way by investing in affordable rental units and by providing housing counseling services.

Firms should have a responsible exit strategy

Firms should have a responsible plan that takes the surrounding neighborhood into consideration if they sell the properties they have purchased. Some investors plan to own their rental homes long term, while others may shift their capital to more attractive investments if the single-family rental returns are not as profitable as anticipated.

When a company decides to sell an individual property, it should have policies in place to make sure the transition is smooth for the tenant. First, the company should offer the tenant the option to buy the home. This right of first refusal gives tenants a chance to buy if they can afford to do so and may also make it easier on the surrounding neighborhood than multiple changes of ownership. Moreover, the possibility of buying the home when the investor sells may create another incentive for tenants to stay current on their rent to avoid damage on their credit report and to take good care of the home. If tenants are not interested or cannot afford the property, the company should consider allowing nonprofits and other prospective owner occupants the opportunity to buy before flipping the property to another investor. This type of policy could build support for single-family rental companies among local and federal governments and community stakeholders.

If a company is selling off a large portfolio of homes and therefore cannot provide a first opportunity to owner occupants and nonprofits, the company should still take steps to ensure that its disposition does not undermine local home values.

Conclusion

The spirit in which single-family rental companies operate their businesses will determine whether the public perceives them as allies helping provide decent and affordable housing options or whether communities approach them with skepticism and mistrust. In order to build strong national brands, single-family rental firms should provide renters a reasonable level of service and protection regardless of what state law demands and should aim to build trusting relationships with neighbors and local governments by investing in local communities.

Sarah Edelman is a Policy Analyst on the Housing Finance and Policy team at the Center for American Progress. Julia Gordon is the Director of Housing Finance and Policy at the Center.

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Article source: https://www.americanprogress.org/issues/housing/report/2014/12/18/103530/5-ways-americas-newest-landlords-can-win-the-publics-trust/