May 14, 2008
Study Looks at Foreclosures in Denver
A recent study “Understanding Mortgage Foreclosures in Denver”, conducted by the Office of Economic Development (OED) of the City and County of Denver, confirms what we have known for some time. The rate of houses in our communities going into foreclosure has skyrocketed. Between 2000 and 2006, the number of foreclosure filings in Denver alone increased more than four-fold, from 917 to 4,745.
The OED study provides a wealth of statistics and information. However, it falls short of proposing the definitive solution to the problem. As Americans we are indoctrinated with the assumption that purchasing a home is the safest investment one can make in one’s lifetime. Today that may not always be the case. What is the cause of the current foreclosure crisis in our communities? Is it the fault of predatory lenders? Are the uneducated and financially unaware buyers to blame? I submit that the solution can be found within.
Living within one’s means is an invaluable survival tool in the current economy. An anonymous quote found in the OED study sums up the way this tool is applied to the purchase and financing of real property: “Fall in love with the loan and not the property.” If you are looking to buy another home or investment property, do your homework. Ask questions if you do not understand the paperwork the lender has provided to you. Shop around for a better deal. No one has your best interest at heart more than you.
Posted By Eric R. McLennan In Community Associations Miscellaneous
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May 12, 2008
SB 1135 Signed Into Law
SB 1135, just signed into law by Governor Ritter has established a new requirement mandating that covenant violation hearings be adjudicated by an "impartial decision maker". This law modifies most association's covenant enforcement policies limiting who may participate in enforcement hearings. Existing Board members are not disqualified from being impartial decisions m akers so long as they do not have an interest in the outcome of the hearing. Disqualifying situations may include situations in which a board member is a neighbor, has a personal history with the person in subject to enforcement. Both positive and negative history would disqualify the Director.
To be an impartial decision maker, the board members should not have any interest, either personally or financially with the outcome of the violation hearing. Board members having the above conflicts should abstain from the proceedings. We can assist in making any modifications that may be required to bring a covenant enforcement policy into compliance with the new law.
Posted By David A. Firmin In Legislative Miscellaneous
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May 9, 2008
Manager Licensing Continues to be Trend
The nationwide trend of state legislators imposing some form of manager licensing is continuing with Virginia. A bill recently approved by the Virginia General Assembly will go into law on July 1, 2008, if signed by the governor. This bill allows managers to meet licensing standards by holding certification and designations awarded by CAI and NBC-CAM. The bill also creates an ombudsman system, similar to the Florida model, for handling homeowner complaints.
If this is the trend, then perhaps it is advisable for managers and management companies to push to quickly obtain PCAM, CMCA and AMS designations to be “ahead of the curve” if such legislation comes to Colorado?
Posted By Loura K. Sanchez In Community Associations Miscellaneous
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April 30, 2008
More Info on Energy Bill
The approval of HB 08-1270 has caused us all to be more aware of energy efficiency issues. Is your association doing what it can to reduce energy consumption? Did you know that associations may be available for tax credits of 30% for installing solar devices? The average time to recoup the cost of a solar system to heat your community pool maybe as little of 5 years and loans may be available to make such purchases through banks like Community Association Banc.
In addition, the Denver Water Board offers rebates for the installation of rain sensors or sub-meters and Excel Energy also has various energy efficiency programs with financial incentives available.
Posted By Loura K. Sanchez In Legislative Miscellaneous
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April 28, 2008
Fannie Mae Announcement 08-01 Results in New Underwriting Guidelines in Condominium Communities
Fannie Mae Announcement 08-01 became effective on March 1, 2008. The lengthy document provides among many things, that each time a loan is submitted to Fannie Mae by a Lender in a condominium community the lender must warrant that: 1) the project meets all of the applicable eligibility requirements including the new legal, budget and delinquent account requirements that were set forth in Announcement 07-18; and 2) the Lender isn't aware of any change in circumstances that would result in the project not satisfying Fannie Mae's eligibility criteria.
The project eligibility requirements set forth in Announcement 07-18, require that:
1) no more than 15% of the units may be more than one month delinquent;
2) the association budget must have funding for reserves equal to at least 10% of the budget and;
3) the association budget must provide adequate funding for insurance deductible amounts.
These requirements may be impossible for some associations to meet given today's economy and the ever increasing pressure to keep assessments low by not funding reserves. However, this may be much to do about nothing and we may not seen any actual impact on associations. Several years ago Fannie Mae issued an announcement that indicated they would not buy a loan if the association was involved in litigation. This type of broad limitation could have resulted in most loans getting denied just because the association had a pending collection case. However, Fannie Mae turned its head and said "that's not what we really meant."
One also has to wonder whether we will see modifications to Lender Questionnaires as they attempt to comply with this issue. I am not aware of any changes at this time, but with the current sub prime lending issues and lenders being under great scrutiny from the federal government and Wall Street, they may want to improve their image by tightening their processes and attempting to shift risks to others. If so, adding questions of the association addressing these issues will be likely. So be on the lookout for them.
As with many federal laws, you question whether their measurement tools are indicative of anything - including the financial viability of the association. If an association doesn't have monthly assessments but rather annual or quarterly, how do you answer whether more than 15% of the units are more than one month delinquent? If an association has a line item for reserve in the budget but never makes the contribution, how does that help the financial stability of the association? If the association has no capital improvement for which it is responsible are reserves of 10% still required? If an association can borrow to cover reserves expenses or insurance deductibles does that matter? If the payment of insurance deductibles has been allocated to owners, does the association still have to have money budgeting for these deductibles?
After reading this, you may think I have more questions than answers ... that is probably true. If you want to try and find the answers click here to view the recent announcement.
Posted By Loura K. Sanchez In Legislative Miscellaneous
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April 25, 2008
Governor Ritter Signs Energy Bill Into Law
Yesterday Governor Ritter signed HB 1270 into law. As you know, this new law governs the installation of renewable energy generation devices and energy efficiency measures in homeowners associations. The effective date of the new law is contingent upon when the Colorado General Assembly adjourns - but is expected for sometime in early August. We will inform you when the exact effective date is know. To learn more about steps associations should take to begin preparing to comply with the new law, we invite you to visit our homepage at www.hindmansanchez.com.
Posted By Molly Foley-Healy In Legislative Miscellaneous
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April 15, 2008
Energy Bill Going to Governor for Signature
Today the House concurred with Senate amendments to HB 1270 - the energy bill introduced by Representative Andy Kerr several months ago. The bill has undergone substantial changes since it was introduced giving homeowners associations much more flexibility in placing reasonable restrictions on the installation of Renewable Energy Generation Devices and Energy Efficiency Measures. The bill is being sent to the Governor where it is expected to be signed into law. The effective date of the new law will be sometime in early to mid August. We will provide you with an update when the effective date is known.
Posted By Molly Foley-Healy In Legislative Miscellaneous
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April 7, 2008
New Federal Law Requires Certain Entrapment Avoidance Devices On Pools
The Federal Virginia Graeme Baker Pool and Spa Safety Act was effective on December 20, 2007. The Act, which applies to all public pools and spas requires certain types of safety drain covers and suction entrapment prevention devices. The definition of public pool includes any pool open to the public, whether for a fee or not and pools in multiple family residential facilities. So, certainly, pools in townhome and condominium communities are clearly covered. Pools in single family communities may be exempt unless open to the public. All pools must be compliant by December 20, 2008 or they can't be open! For more information click here.
Posted By Loura K. Sanchez In Legislative Miscellaneous
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March 31, 2008
Colorado Senate Passes HB 1270
Today the Colorado Senate passed an amended version of HB 1270. Since the version of HB 1270 that passed in the Senate differs from the language approved in the House, the bill will either be sent back to the House for concurrence or will go to a conference committee to hammer out the differences between the two versions of the bill. It is currently expected that the bill will be sent to the House for concurrence and will ultimately be signed into law by Governor Ritter with an effective date slated for sometime in August.
HB 1270 requires homeowners associations to permit residents to install Renewable Energy Generation Devices and Energy Efficiency Measures on their own property. The bill also permits associations to institute reasonable restrictions on aesthetics and placement. Associations must be prepared to handle submissions by homeowners to install these items and to act consistently with the provisions of the new law when it goes into effect. As soon as HB 1270 is sent to the Governor to be signed into law, HindmanSanchez will be providing guidance to associations on how to comply with the new law.
For more information about energy savings devices and associations, check out CAI's (Community Associations Institute) segment on KMGH Channel 7 News on April 12th at 8:10 a.m. In addition, the CAI Spring Showcase, Saving Green by Going Green, will focus on ways associations can help protect the environment. Loura Sanchez, Managing Partner of HindmanSanchez, will moderate a panel during the opening session of the Spring Showcase which will discuss in part the implications of the new law.
Posted By Debra J. Oppenheimer In Legislative Miscellaneous
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March 17, 2008
Is Legislation on Rental Restrictions and Proxies Next?
As we know, legislation affecting associations here in Colorado generally comes about because of alleged abuses in the industry and vocal owners who feel their rights are being unjustly infringed. The attached story seems to have all the makings for potential legislation. When an owner didn't like the actions being taken by his community (short-term rental restrictions), he decided to fight back. He apparently obtained a significant number of proxies from other owners and used these proxies to remove the board who was making decisions he didn't like. The result is a questioning of proxies, the role of proxies in associations and just how much power boards and owners should have with respect to basic property rights.
Posted By Loura K. Sanchez In Community Associations Miscellaneous
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