Ungated

Happy Thanksgiving

Tom Skiba — Wed, 25 Nov 2009 17:39:40 -0500

Just wanted to wish all of our members a Happy Thanksgiving. And a special thank you to all of our volunteers who make our chapters, education programs, committees, and events work and make CAI a true community.

FHA call provides some clarification on new guidelines

Tom Skiba — Fri, 20 Nov 2009 09:28:19 -0500

On Thursday, November 19, 2009, FHA hosted a conference call discussing the newly released condominium guidelines. The call was the first outreach by FHA to lenders and other interested parties to begin the process of clarifying detail and taking questions related to the impact of the new requirements. Two of the areas of concern for CAI did come up in the discussion.

First, FHA discussed how they view the implementation of the budget review process required by the guidelines. FHA noted that their primary concern is that lenders review the budget to ensure that the budget is adequate, that there are provisions for funds for the upkeep and maintenance of common elements and roughly 10 percent of the budget is dedicated to reserves. The discussion focused on the reasonableness of the budget examined and FHA indicated that lenders should look to such mitigating factors as recently replaced common elements of the property. If these criteria are not met, then the lender or FHA will request a reserve study undertaken within the preceding 12 months.

Next, FHA staff touched on the issue of dues delinquency. Under the guidelines, condominium association with more than 15% of units 30 days delinquent in assessments will not qualify for FHA approvals. On the call FHA staff noted that this is an area that requires further work. CAI has expressed its concern that the 30-day, 15% delinquency rate, calculated by units is not an accurate measurement of an associations financial health. Rather, CAI has suggested that the FHA should use a longer delinquency period of 90 days and to look at the association budget to see if it has a line item for bad debt. CAI will continue to engage them on this issue.

Also FHA acknowledged that collection of data on owner occupancy levels may prove to be problematic and indicated that based on feedback from the condominium industry (i.e.- CAI) they will have to continue to work through this issue.

While many questions remain and many concerns will need to be addressed, CAI’s message is being heard.

In the weeks to come FHA will be releasing additional information to answer questions posed by CAI and other organizations. CAI will continue to provide updates and to formulate tools to assist our members in understanding the approval process and how to position their association to meet the requirements. check the Legislative Heads Up page of our website for new information as it becomes available.

More On FHA Condo Lending Guidelines

Tom Skiba — Wed, 18 Nov 2009 16:09:09 -0500

Recently the Federal Housing Administration (FHA) issued two new guidance letters on proposed transitional and final criteria for FHA mortgage insurance on condo loans. You can see the guidance letters on the FHA website here and here. CAI has also prepared a summary of the most recent guidance and an FAQ for those who would rather not wade through all the regulatory language.

CAI continues to speak with FHA staff on a regular basis to attempt to address our members continuing issues with this program. As additional information becomes available we will post it on our legislative Heads Up page, so keep checking back for more updates.

Red Flag Rules - Breaking News

Tom Skiba — Wed, 04 Nov 2009 17:23:27 -0500

CAI has just learned that the FTC has announced a delay in implementing new regulations which would require organizations to implement so called “Red-Flag” rules. The new regulations will go into effect on June 1, 2010. CAI will continue to monitor and communicate our concerns to the FTC on this issue and update our members as necessary. Our Legislative "Heads Up" page will be updated with additional information as it becomes available.

Red Flags?

Tom Skiba — Tue, 03 Nov 2009 13:35:54 -0500

No, not the kind that NFL coaches throw when they think the refs have missed a call and want a video review, but the kind the Federal Trade Commission is talking about and writing regulations about.

CAI's Legislative Heads Up web page has more information, but in short, “Red Flag” rules require that certain entities that extend credit or payment plans to consumers adopt policies to flag consumer identity theft. The big question, of course, is do these rules apply to community associations? As is the case with most complex government regulatory schemes the answer is a clear and unequivocal "MAYBE".

Generally the attorneys we consulted believe that these rules probably don't apply to most community associations, but they were concerned that the broad nature of the regulatory language may mean that the regulations could apply under certain circumstances. Because each association is different, and their assessment policies, special assessments etc, may be handled differently, it is impossible for us to say one way or the other if the rule applies to any specific association or circumstance.

Which means each association needs to examine their policies and procedures regarding payments from owners in consultation with their association attorney. To help get that conversation started, we have put together a explanatory memo, with a sample policy, that is designed for an association to use in conjunction with advice from their attorney to understand the rule and make a final determination as to implementing a policy in their community.

FHA Again Delays Condo Mortgage Insurance Regs

Tom Skiba — Thu, 22 Oct 2009 10:24:21 -0400

CAI learned this morning that the FHA has announced that it will again delay the implementation of the new regulations governing condominium mortgage insurance until December 7^th, 2009. Previously scheduled to go into effect in October and then November, these new regulations were initially proposed in June of 2009 and would change the approval process and the criteria used to determine if a mortgage for a unit in a condominium association qualifies for FHA mortgage insurance.

The proposal would replace the current spot approval process with a new comprehensive approval process under which approvals would be good for two years. CAI has scheduled a meeting with FHA staff tomorrow (Friday October 23rd) to provide input from our members and better understand FHAs goals, objectives, and expectations for these new regulations.

Additional information will be posted to our Legislative Heads Up page as it becomes available.

SENATE INTRODUCES CLIMATE CHANGE LEGISLATION; HOUSE SOLAR MANDATE NOT INCLUDED

Tom Skiba — Wed, 07 Oct 2009 16:49:20 -0400

On September 30th, Senators Boxer and Kerry introduced SB 1733, the Clean Energy, Jobs, and American Power Act on September 30th. The Senate bill DID NOT include language from the previously approved House bill that would have overridden state law in 35 states, local regulations, and homeowner association rules related to solar power and replaced them all with a one-size-fits-all answer to solar solution crafted in Washington. Find out more on CAI's Legislative Heads Up page.

Law Seminar 2010 - Right Around the Corner

Tom Skiba — Wed, 07 Oct 2009 16:38:16 -0400

Click here for
the brochure.

Don't miss your chance to join the top experts in community association law this January in Tucson, Ariz. at CAI's 31st Annual Community Association Law Seminar.

Presented by CAI's College of Community Association Lawyers, the Law Seminar program will feature more than 25 sessions, including the Wayne Hyatt lecture keynote, Roger Cossack, former chief legal analyst at CNN and currently an ESPN legal correspondent and visiting professor at Pepperdine Law School. Here are just some of the issues to be addressed in the education sessions:

• Case law updates	• Assessment collections	• New Fannie Mae guidelines
• Preventing fraud	• Contested elections	• Expert witness testimony
• Rental rights	• Reserve studies	• Fair Debt Collection Practices Act
• Business judgment rule	• Legislative trends	• HOAs and the economic crisis

The Law Seminar brochure is on its way, detailing these sessions, our concurrent CIRMS (Community Insurance and Risk Management Specialist) Masters Program and more. If you haven't received your copy yet, check out our digital brochure right now.

Register Today!

CAI's 31st Annual Law Seminar
Westin La Paloma Resort and Spa
Tucson, Ariz.
January 21-23
See our schedule of activities for guests

Thank you to our sponsors:

Name Badge Sponsor:

Alliance Association Financial Services

Table Top Sponsors:

AssociationReady

Collectronics Technology Solutions

iColligo

Illinois Manager Licensing FAQ

Tom Skiba — Mon, 21 Sep 2009 13:35:14 -0400

As noted in an earlier post, Governor Pat Quinn signed a bill requiring the licensing of community association managers in Illinois. The bill goes into effect this coming January and we anticipate final regulations to be developed and released sometime in 2010. For more information, CAI has developed a set of frequently asked questions to help our members understand the new law and the anticipated timeline for implementation.

Manager Salary Survey In Process

Tom Skiba — Wed, 16 Sep 2009 15:50:21 -0400

There is still time to win an iPod by completing the salary survey.

The Foundation for Community Association Research is again producing its Manager Compensation and Benefits Survey. This report will be a valuable tool for benchmarking compensation and benefit levels in the community association industry.

The Compensation and Benefits Survey will include data on:

Annual wages paid to community managers, including large-scale, onsite, portfolio, CEOs, and others
Employee benefit information
Vacation and sick leave
Retirement and pension plan information

Both members and non-members can participate by clicking this link www.caifoundationsalarysurvey.com
The survey should take less than 10 minutes to complete. To enter the survey, create a unique account for with your e-mail and a password of your choosing. This will enable you to return to the survey later, if you need to, and to access online results.

Results of the survey will be available in printed and online reports. Participants will have access to a personalized, confidential online report comparing their compensation figures to those provided by other respondents, and will be entered into a drawing to win one of three iPod shuffles.

To compile the survey results, the Foundation has once again retained the services of Industry Insights, Inc. survey research firm. Strict confidentiality will be maintained at all times. Neither CAI nor the Foundation will see any individual responses or data.

Please complete the survey by September 25, 2009. If you have any questions, please do not hesitate to contact the Foundation for Community Association Research at foundation@caionline.org.

Manager Licensing in Illinois

Tom Skiba — Thu, 27 Aug 2009 15:00:53 -0400

Earlier this week, Governor Pat Quinn of Illinois signed the Community Association Manager Act which creates education and licensing requirements for community managers practicing in the state. CAI's Illinois Legislative Action Committee, along with the Illinois Chapter and its Managers Committee led a multi-year effort to move this bill through the legislature. The key goals of this new licensing structure are to create minimum qualifications to practice community management, impose a disciplinary structure for manager misconduct, require initial and continuing education to receive and renew a license, and provide expanded protections for consumers.

Thanks to all our volunteer members in Illinois who have been working on this proposal for several years and special kudos to LAC Chair Mark Pearlstein and Managers Committee Chair Bill DeMille for their leadership on this effort.

But the signing of the bill only begins the process. Regulations to implement it will still need to be developed, managers still need to be educated on the requirements, and associations will need to be informed as well, so the Chapter and LAC still have important work to do. But even the longest journey begins with a single step and this is a big and important on in Illinois.

More information is available on CAI's Legislative Heads Up and Manager Licensing pages.

One Last Reminder to Vote

Tom Skiba — Wed, 26 Aug 2009 08:00:00 -0400

Polls are open until Friday night for the ongoing MRG elections. Please take a few moments to consider the candidates and cast your vote.

Community Associations Down Under

Tom Skiba — Tue, 25 Aug 2009 10:02:23 -0400

Later this week CAI Board of Trustees President Ed Thomas and I will be departing for a community association conference in Australia as guests of their CAI-equivalent, the National Community Titles Institute. This biennial conference put on by Griffith University brings together industry leaders from across Australia and around the world to learn from one another, solve problems, and network. Photos and updates will be forthcoming on our return.

CAI Elections Are Open: Vote Now

Tom Skiba — Mon, 17 Aug 2009 12:13:28 -0400

The voting website for CAI’s Membership Representation Groups is now open! The MRG's represent CAI's three unique groups of members, association volunteers, managers, and business partners. Learn more about CAI's governance and then log-in to the election site and cast your vote.

The election site will be open until Friday, August 28 at 11:59 PM Pacific Time. Please do not wait until the last minute to cast your vote, since we want to be able to provide you with assistance if you have any questions.

Now is your opportunity to select the CAI leaders who will represent you. CAI is your organization and your vote counts!

A Memorial for Shifty

Tom Skiba — Fri, 17 Jul 2009 12:36:30 -0400

I hope everyone will excuse a post today that doesn't have anything to do with associations and our industry in any way. I received the following email yesterday and it struck such a chord with me that I wanted to share it with our members across the country.

Like many I was captivated by HBO's Band of Brothers miniseries. The juxtaposition of the actors portraying these brave men with the documentary footage of their personal recollections provided unique insights into these most uncommon acts of common men. Frankly I was so struck that I went out and read the original Stephen Ambrose book that was the basis for the series, along with about a dozen others on World War II.

The email below was written at the height of the Michael Jackson death/memorial service frenzy.

Tom

Subject: MEMORIAL SERVICE FOR "SHIFTY"

We're hearing a lot today about big splashy memorial services.

I want a nationwide memorial service for Darrell "Shifty" Powers.

Shifty volunteered for the airborne in WWII and served with Easy Company of the 506th Parachute Infantry Regiment, part of the 101st Airborne Infantry. If you've seen Band of Brothers on HBO or the History Channel, you know Shifty. His character appears in all 10 episodes, and Shifty himself is interviewed in several of them.

I met Shifty in the Philadelphia airport several years ago. I didn't know who he was at the time. I just saw an elderly gentleman having trouble reading his ticket. I offered to help, assured him that he was at the right gate, and noticed the "Screaming Eagle", the symbol of the 101st Airborne, on his hat.

Making conversation, I asked him if he'd been in the 101st Airborne or if his son was serving. He said quietly that he had been in the 101st. I thanked him for his service, then asked him when he served, and how many jumps he made.

Quietly and humbly, he said "Well, I guess I signed up in 1941 or so, and was in until sometime in 1945 . . . " at which point my heart skipped.

At that point, again, very humbly, he said "I made the 5 training jumps at Toccoa, and then jumped into Normandy . . . . do you know where Normandy is?" At this point my heart stopped.

I told him yes, I know exactly where Normandy was, and I know what D-Day was. At that point he said "I also made a second jump into Holland , into Arnhem ." I was standing with a genuine war hero . . . . and then I realized that it was June, just after the anniversary of D-Day.

I asked Shifty if he was on his way back from France , and he said "Yes. And it's real sad because these days so few of the guys are left, and those that are, lots of them can't make the trip." My heart was in my throat and I didn't know what to say.

I helped Shifty get onto the plane and then realized he was back in Coach, while I was in First Class. I sent the flight attendant back to get him and said that I wanted to switch seats. When Shifty came forward, I got up out of the seat and told him I wanted him to have it, that I'd take his in coach.

He said "No, son, you enjoy that seat. Just knowing that there are still some who remember what we did and still care is enough to make an old man very happy." His eyes were filling up as he said it. And mine are brimming up now as I write this.

Shifty died on June 17 after fighting cancer.

There was no parade.

No big event in Staples Center .

No wall to wall back to back 24x7 news coverage.

No weeping fans on television.

And that's not right.

Let's give Shifty his own Memorial Service, online, in our own quiet way. Please forward this email to everyone you know. Especially to the veterans.

Rest in peace, Shifty.

"A nation without heroes is nothing."Roberto Clemente

Tom here again. According the the Urban Legends website the email above is factual and has been confirmed by Shifty's family.

So on behalf of CAI and our members across the country, let this serve as our modest tribute and memorial to Shifty Powers and to all the men and women past, present, and future who leave the safety of their homes and put themselves in harm's way on our behalf. Please feel free to leave a comment below. RIP Shifty.

A Consumer-Oriented Guide to Associations

Tom Skiba — Thu, 16 Jul 2009 13:48:33 -0400

A quick look in any bookstore tells you that one version or another of “everything you need to know about condominiums and HOAs” is readily available to the interested consumer. I’ve yet to come across one that quite has it all. Or one that is unbiased, or professionally published.

Long time CAI member Gary Poliakoff and his son Ryan have come closer than anyone to getting it right. Dad’s decades of legal experience and son’s literary talents have combined nicely to produce the comprehensive and well written New Neighborhoods: The Consumer's Guide to Condominium, Co-op, and HOA Living. It’s debuting August 1^st in Borders, Amazon and Barnes & Noble. But, CAI has it in stock now, so you can look over the table of contents and order it for 40% off the regular non-member price in our bookstore today. And don't forget to check out all the other titles and merchandise in the CAI bookstore.

Virginia Manager Licensing Update

Tom Skiba — Wed, 08 Jul 2009 12:15:19 -0400

As many of our members already know, Virginia implemented a statutory based manager certification, management company licensing program in 2008. As part of that program, the Common Interest Community Board (CICB) was charged with drafting regulations to clarify and assist with implementation of the new law. On June 22, 2009 the CICB published draft regulations in the Virginia Register of Regulations, pages 3962 - 3972. These proposed regulations provide additional clarification to the licensure requirements, and will become part of the permanent regulatory requirements governing licensing, replacing the initial set of emergency regulations.

CAI, on behalf of its members, will submit comments on these regulations. Interested members are encouraged to review the proposed regulations and to submit any comments to CAI by Friday, August 7^th. Comments from CAI members may be sent to: Janice Walls, at jwalls@caionline.org. All submissions will receive an e-mail acknowledgment verifying receipt.

Submissions will be reviewed and compiled, and consensus language and suggestions will be incorporated into the final CAI document that will be filed in coordination with our Virginia Legislative Action Committee (VA-LAC).

To learn more about manager licensing in Virginia check out our legislative "Heads Up" page and our Community Association Manager Licensing page.

Back in Town

Tom Skiba — Tue, 30 Jun 2009 11:00:14 -0400

I have been away from the office for some time for chapter visits and our annual management company CEO retreat so haven't been posting here much. But I am back now and hope to have some interesting things for you to consider in the near future.

And thanks to the more than 190 management company CEO's and senior executives who attended last weeks retreat in San Diego. This was are best attended retreat ever!

Florida and California - Cause or Sympton

Tom Skiba — Wed, 03 Jun 2009 09:46:35 -0400

Interesting article on the Atlantic's web site today regarding the apparent correlation between foreclosure frequency and levels of credit card debt in Florida and California. Based on this Forbes article, 8 of the top 10 cities in terms of credit card debt are in Florida and California.

You might also want to look at this Wall Street Journal blog post which contains a chart of 2008 changes in GDP, employment, and home prices by state. Guess which states led the nation in home price declines? If you said CA and FL you would have gotten 2 of the top 3 (NV is the "winner" here). Interestingly, according to this data, reductions in GDP, employment, and home prices do not necesssarily correlate.

Conference Photos Online

Tom Skiba — Tue, 26 May 2009 12:47:25 -0400

Photos from the 2009 National Conference in New Orleans are available online. There are photos from each of the general sessions, from the Friday night awards ceremony, and from various receptions, education sessions, and other functions throughout the week.

Enjoy, Tom

What's Next: CEO-MC Retreat

Tom Skiba — Thu, 07 May 2009 22:30:49 -0400

The CEO-MC Retreat is a once a year, high-level event exclusively for community management company CEO's and their most senior staff. This year we are returning to sunny southern California and the Hilton at Torrey Pines for the event on June 25 through 27. Check out the CEO-MC Retreat page on the CAI website for more information on the agenda, speakers, and registration.

Cram-down Up-date

Tom Skiba — Sat, 02 May 2009 21:48:37 -0400

The US Senate brought the Mortgage Cram-Down legislation to the floor this past week where it failed 45 - 51. Democrats were unable to muster even a simple majority, much less the 60 votes required to avoid a filibuster. I expect that we will see this bill continue to work its way through the legislative process and appear for a vote again.

On a very positive note, the Senate has heard our members concerns regarding how the bill could negatively affect community associations. The Senate version of the bill, as amended by Senator Durbin, addressed a number of issues raised by CAI including clearly restricting judicial modification authority to mortgages and specifically excluding association liens and assessments from the modification process. These changes were the result of our members making their voices heard through letters and calls from across the country. See the most recent "Heads-Up" for more information. You can also review our letter to Senator Durbin outlining the concerns that he addressed in his amended bill.

NOLA Is Calling You

Tom Skiba — Fri, 03 Apr 2009 17:53:44 -0400

Maybe you're among the 540+ members who have already registered for CAI's National Conference and Exposition, April 22-25 in New Orleans. If so, we look forward to seeing you there. If not, perhaps a few misperceptions are getting in your way. Learn more in our virtual brochure

Myth vs. Reality

Myth: It's too late to register.

Reality: It's not nearly too late-and we'll still give you the early-bird discount. Okay, you're not exactly an early bird, but who needs to know? Register today, you early bird.

Myth: In this economy, the cost of attending the National Conference is prohibitive.

Reality: You can't afford not to stay current in your profession, learn from industry experts and network with hundreds of your peers from across the country. Check out the education schedule.

Myth: Flights are probably full and airfares are too high.

Reality: There are still plenty of seats available from your area, and airfares are much lower than you may think, thanks in large part to lower fuel costs. Get your airline tickets today.

Myth: New Orleans is still recovering from Hurricane Katrina.

Reality: Parts of the metropolitan area are still being rebuilt, but the French Quarter remains its old, thoroughly enjoyable self-and April 24-26 is the first weekend of the city's unrivaled Jazz and Heritage Festival (Jazz Fest). Order Jazz Fest tickets

Myth: I don't know many people who attend the National Conference.

Reality: Make your own reality! Get to know your industry peers, make professional contacts and perhaps make a few friends along the way. And you can always bring a friend or two. Either way, CAI members always make first-timers feel welcome. Check out who has already registered.

Okay, we've exposed the myths. Don't let this once-a-year opportunity pass you by!

A special thanks to all of our sponsors for making our annual national conference a success.

Platinum Partner

AXA Equitable

Gold Partner

Preferred Property Programs SmartStreet Yardi

Event Sponsors

PCAM Reception:
212 Software

Managers Reception:
Kevin Davis Insurance, Inc.

Managers Exchange:
Alliance Association Financial Services

Welcome Reception:
AssociationVoiceJenark U.S. Lawns

Chapter Executive Director Scholarship &
Chapter Leadership Training Breakfast:
Union Bank

Early Bird Deadline Extended

Tom Skiba — Wed, 25 Mar 2009 09:38:27 -0400

We have extended the Early Bird registration deadline for CAI's upcoming National Conference in New Orleans. Register by March 30 and receive $50 off! And don't forget, make sure you contact the Sheraton and book your room by the 30th as well.

See you all in the Big Easy!

National Conference in New Orleans - Don't Miss Out

Tom Skiba — Thu, 19 Mar 2009 09:13:00 -0400

CAI's 2009 National Conference is fast approaching. Scheduled for April 22 - 25 in New Orleans, LA, the conference promises to be a unique blend of outstanding education and networking, seasoned with that unique spice that is New Orleans.

This year we are continuing our efforts to reduce CAI's environmental impact through the use of a "virtual conference brochure". Rather than print and mail a large document that requires tons of paper, ink, and foreign oil to produce, we are making the same (and even more) information available electronically.

Please take a look and feel free to forward the link to all your friends in the industry.

And don't forget the Early Bird registration deadline is fast approaching. Send in your application by March 24th and save $50.

And Now Presenting Chairman Bernanke

Tom Skiba — Mon, 16 Mar 2009 09:07:50 -0400

In an extremely unprecedented move, Federal Reserve Chairman Ben Bernanke gave a prime time interview yesterday to 60 Minutes correspondent Steve Pelley. In the course of the interview he discussed the current recession, what went wrong with our financial system, and lessons to be learned from the Great Depression. This is the first time that a sitting Fed Chair has agreed to such a public discussion of the economy and monetary policy.

Definitely worth the time to see/read. Interestingly, he pretty clearly predicts that the recession will ease by the end of this year and the economy will return to modest growth in 2010. Good news if it proves true.

Mortgage Cram-Down Up-Date (H.R. 1106)

Tom Skiba — Thu, 12 Mar 2009 15:28:22 -0400

The debate on mortgage modification, aka “Cram Down” has now moved to the Senate where sponsors are lobbying for the 60 votes needed for passage. If passed the mortgage modification bill would create a process that would be an alternative to foreclosures and the current bankruptcy process. Considering the ongoing issues in the housing market, such a process may work to help stabilize housing prices and to keep more people in their homes which is certainly a laudable goal.

CAI’s ongoing concern, and one that we are watching very carefully, is that this new process does not have any of the protections for associations that exist, even in a limited way, under current foreclosure or bankruptcy laws and processes. We will continue to reach out to the Senate sponsors to gain support to amend the proposal to protect community associations ability to collect their assessments. While we all, understandably, want to strengthen the overall market, it would only exacerbate the housing crisis to have increased costs put onto responsible homeowners through higher assessments.

We will be sure to keep all of our members posted as this process moves forward.

Warren Speaks

Tom Skiba — Tue, 10 Mar 2009 10:24:30 -0400

As many of my friends know I have been an unabashed fan of Warren Buffett and his approach to business and investing since business school days. I consider Buffett's letters to shareholders of Berkshire Hathaway as required reading for anyone trying to understand our economy and the market.

Earlier this week, Buffett gave an extended interview to CNBC on the state of the economy, including taking a number of questions from viewers. The CNBC website has both a transcript and video clips (In 7 parts). A couple of the key quotes regarding the current banking crisis that leaped out to me included:

> "No depositor of an insured deposit has ever lost a penny since 1934....Thirty-six hundred times (since 1934) the FDIC has come in....It hasn't cost the taxpayer one dime, no depositor has lost one dime."

> "...we have a system in place that can take care of the banks, and most of the banks are in pretty good shape."

> "...the Fed of New York, for example, had 9 billion of deposits from banks throughout the country a year ago. Now they have 450 billion....That is a huge change in behavior by banks."

One final Buffet thought for today from a NYTimes OpEd last October:

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. Let me be clear on one point: I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month--or a year--from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over. -- Warren Buffett Op-Ed Oct. 17, 2008

New UVA Study On Foreclosures and Home Prices

Tom Skiba — Wed, 04 Mar 2009 12:00:00 -0500

"National housing price declines and foreclosures have not been as severe as some analyses have indicated, and they are not as important as financial manipulations in bringing on the global recession, according to a new analysis of foreclosures in 50 states, 35 metropolitan areas and 236 counties by University of Virginia professor William Lucy and graduate student Jeff Herlitz."

...they claim that "66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines."

Report

NYTimes Blog Commentary

We all know intuitively that there are dramatic local and regional differences in foreclosure rates and home price declines, but it is startling to see 4 states make up 87 percent of the problem. Perhaps more important though is the observation that there was no "reverse gear" to extract non-performing mortgages from packaged mortgage securities and fairly revalue the remainder. As a result, a (relatively) small excursion in home values and default rates has resulted in a tsunami through the financial markets.

Helping Homeowners, Hurting Associations?

Tom Skiba — Mon, 02 Mar 2009 15:41:28 -0500

After passage of the stimulus bill, Congress and the President have now turned their attention to addressing the ongoing housing crisis. In fact, shortly after he signed the $787 billion stimulus bill into law, the President announced his three-point plan to stabilize the housing market called the Homeowner Affordability & Stability Plan.

The plan as announced has three broad goals. First is to provide refinancing for homeowners who are current in their mortgages, but whose loan to home value ratio may preclude them from qualifying for refinancing. Second, and potentially more problematic, is the plan to address those homeowners who are upside-down in their mortgages. That is that they currently owe more than the market value of their home. And finally, efforts by the government to shore up Fannie Mae and Freddie Mac to help ensure lower mortgage rates.

While many parts of the proposed plan attempt to help the most and harm the least, one pending concept—judicial mortgage modification—holds the potential to drive up assessments and needlessly hurt responsible homeowners in community associations across the country. Under the proposal currently before the House of Representatives, a homeowner whose home value is less than their outstanding mortgage (so called ‘upside down’ mortgages), could petition a federal bankruptcy court to ‘modify’ their mortgage. The bankruptcy court could rewrite this person’s mortgage and lower their payments and even reduce the principle balance to more ‘affordable’ levels. In other words, the court could ‘cram down’ both the homeowner’s monthly paymentsand the overall principle balance on their mortgage. Proponents argue that this approach is the best way to address the unprecedented decline in housing prices and keep as many people in their homes as possible. Critics contend that allowing the courts to rewrite private contractual agreements will increase interest rates for all homeowners and reward irresponsible homebuyers who relied on exotic mortgages to gamble on rising housing prices.

For community associations there is an added element of urgency to this proposal. As written, the mortgage cram down legislation could allow the courts to bypass state laws related to assessment liens, priority liens or other tools associations use to collect past due assessments. Because bankruptcy law is a complex mix of federal and widely differing state statutes, the actual impact could vary from state to state, but generally there is a concern that as written, the Cram Down legislation could allow bankruptcy courts to discharge past due assessments regardless of any lien or priority lien levied by the association. This would result in irresponsible homeowners getting a free pass on their past due assessments, raising the burden for everyone else or resulting in cuts to community maintenance and reserves. In addition, the possibility exists that judges could arbitrarily lower future assessment payment obligations for such homeowners. As a result, CAI feels that this proposal will have the perverse impact of hurting home values in community associations by leaving gaping holes in associations’ budgets. Holes that will have to be filled by the the rest of the communities residents, putting further pressure on them and causing additional homeowners to fall behind on their mortgage, assessment, and other payments. Clearly an outcome that no one desires.

The current federal bankruptcy code under Chapter 11, section 523(a)(16) recognizes the unique nature of community associations and provides that a homeowners assessments to their community associations cannot be discharged in a chapter 11 bankruptcy proceeding. If Congress’s goal for the so-called “Cram Down” legislation is to reduce the mortgage payments on upside down mortgages to manageable levels, without harming responsible homeowners, then they must revisit the legislation and expressly limit the authority granted to bankruptcy courts solely to addressing the principle balance of the primary mortgage, while preserving the ability of associations to collect past due assessments on such property. Failure to do so could:

· Impact an association’s ability to recover delinquent homeowners’ assessments and potentially affect future assessment obligations to the community.

· Bypass state statutes that provide a priority lien or assessment lien for past due association assessments.

· Cause additional strain on the housing market by forcing non-foreclosed homeowners to pay higher fees to cover mandatory operating expenses, pushing more homeowners into financial distress.

· Cut funds available to maintain common areas of the community, resulting in a spiral of deteriorating infrastructure, lower property values and ultimately, higher financial burdens on state and local governments.

· Undermine, if not unravel, the benefits of common ownership communities by exempting some homeowners from the obligation to pay their fair share to support common elements of the community.

CAI has taken our concerns to the leaders of the House of Representatives, and we will soon be asking you to make your voice heard as this issue moves through the legislative process. Each year, community associations save taxpayers close to $80 billion, by assessing themselves for the provision of services and amenities in their communities. Any approach to helping distressed homeowners must take into consideration the impact to the 1 in 5 homeowners who live in community associations and assure that the limited means available to associations to collect past due assessments are not thrown aside to the detriment of the vast majority of responsible homeowners in associations across the country.