Know the Law, Know the Law, Know the Law

by Robert L. Cain, Copyright 2007 Cain Publications, Inc.

One property manager I knew told the story about the time she was talking to a landlord about her rental property and said "the law says. . ."

The landlord replied aghast, "There are laws!!!?"

Yes, ma'am, there are laws. And in most states those laws were written to protect the "poor, abused, downtrodden" bad tenant. Also in most states there are too many judges who take it a step farther and interpret the laws and rule in ways that provide bad tenants even more rights to not pay the rent and trash property.

Shame on the legislatures and shame on the judges, but that is the situation we face when we own and manage rental property.

Rental property is one of the most regulated industries in the country. It is filled with traps, pitfalls and snares awaiting the unwary landlord. The rental property business is one of the easiest to get into, as well. All you have to do is buy house,tidy it up a little, find a tenant, and rent it out.

Then the fun begins for the bad tenant when the landlord he or she rents from is totally unaware of the landlord-tenant law of the state. Landlords enter without proper notice, harass tenants when the rent is late, apply the apartment complex's rules unfairly,select tenants in violation of the Fair Housing Act, and handle security deposits improperly.

Bad tenants often know the law. They know the law because they have had experience using it and have probably sued a landlord or two over the course of their bad-tenanthood pillaging and devastation. Again and again they catch landlords who are unaware that laws govern our business. They lurk behind moldy tall grass and under rocks waiting for their landlords to violate the law ever so slightly, and then they slither out to try to get a judge to let them live rent free for months and months.

The landlord-tenant laws of most states are easily obtain able either online from the Rental Property Reporter website, online from your state's secretary of state, or from your local apartment, landlord or rental owners association. Having them on your bookshelf is one thing, but actually taking the time to read them and understand them is another.

Whenever I travel to another state to speak, I always print out that state's landlord-tenant act and read it. The first thing I look at are notice requirements, that is, how much time a landlord has to give to terminate a tenancy, change the terms of the rental agreement, allow after the rent is due before filing an eviction, and before he or she can enter a tenant's home for inspection or repair.

Next I want to know the security deposit requirement. Is there a limit on how much a landlord can collect? Does the deposit have to be placed in a special bank account? What are the requirements for accounting for it when a tenant moves out?

In most states' landlord-tenant laws, you can expect to see similar rights and responsibilities for both landlords and tenants. The real differences lie in entrance, notification and security deposit requirements. Those are the ones that will get you in trouble if you violate them, and the ones that bad tenants can probably recite verbatim.

If you don't know the law, you leave yourself wide open for the scheming of bad tenants. These people will take your property,your money and your sanity. Know the law, know the law, know the law.

Robert Cain is a nationally-recognized speaker and writer on property management and real estate issues. For a free sample copy of the Rental Property Reporter or Northwest Landlord call800-654-5456 or visit the web site www.rentalprop.com

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and now ror a little bit of the unusual.....

Daily Real Estate News September 14, 2007
Auto-Size Elevators Bring Your Car Inside Your Home

A Singapore-based developer, Hayden Properties, is building a 30-story condominium with individual elevators for cars so owners don’t have to worry about their wheels getting dinged in the garage."It's not a gimmick. I love my cars and I'm worried they might get accidentally dented in a shared car park," says Ong Chih Ching, director of Hayden Properties, who owns two Porsches and an Aston Martin. "This solves that problem and lets you look at your car all the time."Similar buildings with individual high-rise garages are being built in the United States and Dubai, but Hayden's $663 million project would be the tallest, Ong says.

Source: Reuters News (09/14/07)

Defaults Leave Condo Associations in the Lurch

Daily Real Estate News September 13, 2007

Condo associations are feeling the pain of increased delinquencies and foreclosures, which leaves them with unpaid assessments, additional legal fees and other expenses.Establishing an aggressive collections policy is the first step toward mitigating the problem, says Jim Stoller, president of The Building Group management company in Chicago. He recommends turning over any account that is 60 days late to the association’s attorney.Prompt legal intervention also will permit the association to go to court for temporary possession of the unit. It can be rented out until the debt is paid. The process takes several months and possession ends when the foreclosure occurs.Another option is to wait until the foreclosure and hope there's enough equity after the lender gets paid first. But that's risky. "Today we rarely see any surplus," says attorney David Sugar of Arnstein & Lehr in Chicago.Under certain circumstances, an association can collect up to six months of unpaid assessments from the buyer when the unit is sold for foreclosure, but the law is a new one and the process is complicated, says Sugar.

Source: Chicago Tribune, Pamela Dittmer McKuen (9/13/2007)

Reliance on Credit Cards Reflects Subprime

Daily Real Estate News August 29, 2007

FalloutThe credit card business to date seems to have escaped the growing reach of the subprime meltdown, with card delinquencies remaining flat even as defaults have skyrocketed among homeowners, but analysts at Merrill Lynch say the sector's resistance to the turmoil be weakening. "The next shoe to drop from this subprime mortgage fiasco, which has already fed into the asset-backed market, is probably going to be the credit card business," according to Merrill Lynch economist David Rosenberg.

Credit card borrowing was up 11 percent in May and June, likely because homeowners are using plastic to pay for daily expenses to free up more cash to make their mortgage payments. Moreover, while borrowers previously have tapped into mortgage equity to produce the money needed to resolve credit-card and other debt, a Goldman Sachs report notes that "cash-outs" peaked during the fourth quarter of 2005.

Source: Investor's Business Daily, Reinhardt Krause (08/27/07)

Give your credit score a makeover

now that the kids are back in school and before holidy shopping starts; AND while its still a buyer's market - yes you need to be buying NOW not waiting for prices to go lower. Nohting happens until YOU and I put pen to paper; let's make sure those clredit reports are in order.

read below to get started:

Gerri Willis explains. By Gerri Willis, CNN March 21 2007: 1:53 PM EDT NEW YORK (CNNMoney.com) --

A few moves could improve your rating and even save you some cash.

Your credit score can be the difference between getting a good home loan and getting stuck with higher monthly payments. And with lenders tightening their standards, it's even more important that you improve your credit score as much as you can. We're going to tell you how.
Most mortgage lenders look at your FICO score. What exactly does this score take into account?
Your payment history, which makes up the biggest chunk of your score, looks at how often you pay your bills on time. The amount of debt you owe is considered equally important. The amount of time you've had your credit cards and how much new credit you apply for all play a role in determining your score.

1: Pay off your debt
You want to aim for a score in the 700s to get more favorable loan terms. The national average, according to Fair Isaac, is a FICO score of 723. And the best way to improve your credit score in the short term is to pay off the high balances on your credit card - that can raise your FICO score 60 to 70 points overnight, says Craig Watts of Fair Isaac.
Credit bureaus can predict how much of a credit risk you are by how you handle credit card debt more than any other kind of debt, like student loans. That's because with installment loans, like mortgage payments, there is a predetermined amount you pay each month. With credit cards, you're in control of what debts you have.

2: Minimize your balances
Even if you pay your bills off every month, the amount you paid will be listed on your credit report. And if you spend more than 50 percent of your credit limit, that's going to negatively impact your score. In fact, you could lower your score 60 or 70 points, says Watts.
And that could make the difference between getting a good mortgage rate and a bad one. If you're within three months from applying for credit, make sure you don't charge a lot on your cards, or split the purchases between a few cards, so you keep the balances down.

3: Hang onto older cards
As we mentioned, your FICO score looks at how long you've managed your credit. So the longer you've managed your credit wisely, the better your score. If, for example, you have a card that is at least 5 or 6 years old, it's not a good idea to close those accounts.
At the same time, opening any new lines of credit - whether it's a retail credit card or a new car loan - will almost certainly lower your score by a few points.

4: Don't sweat the little things
We've already told you what impacts your score. But here are some things that don't matter to your score at all. Your score won't be affected if you request your own credit record, or if you go for credit counseling.

It also won't impact your credit score if your employer or other lenders look at your credit score and try to solicit your business.

Current State of Mortgage Financing...What's Going On?

courtesy of: Ryan Hart Mortgage Broker

Veranda Financial Corporation 92 Argonaut Ste 215 Aliso Viejo, CA 92656 Ph) 949-716-4081 Fax) 949-313-0960 Ryan@VerandaFinancial.com

Anyone watching or reading the financial news over the last few weeks has seen a lot of angst and consternation over the state of the mortgage industry. In fact, one of the larger lenders in the US, American Home Mortgage, was forced to shut down operations recently. But why? What is happening, what does all this mean to you and most importantly... what should you be doing do right now to make sure you are protected?

Here's the scoop. Over the past several years, many loans were made to homeowners with somewhat non-traditional or "non-conforming" situations, be it a poor credit history, inability to document income, or any number of factors that do not fit within the traditional "box" for home loans. These loans are often called "Sub-Prime", or "Alt-A", meaning that they were somewhat riskier in nature than A credit, prime, or traditional loans. Another type of "non-conforming" home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). If the loan amount is higher, it can certainly be done - it's called a "jumbo loan" - but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie.

Most non-conforming loan product rates popped significantly higher recently. Here's what happened… The end investor for Subprime or Alt-A loans will charge a premium for taking on a pool of these loans, because they know that traditionally, they might have a higher rate of default and delinquent payments within that risky pool. But lately, default and foreclosure has been on the rise - partly due to the fact that with credit tightening and a soft real estate market, many troubled homeowners are unable to refinance or sell in order to get out of trouble. So now, these end institutions are demanding a much higher "risk premium" for taking on these pools of loans, as they see the rates of default are climbing higher. But since these institutions are purchasing these pools of loans sometimes months after the borrower has actually closed at a given rate, this increase to the risk premium means that instead of paying $101K for a $100K loan that will bear interest, they may only be willing to pay $95K for that $100K mortgage to account for the risk. Multiply that times thousands upon thousands of loans...and you have millions upon millions of dollars in loss for the company trying to sell the pool at a much lower price than they were expecting. This is called a "liquidity crisis", and is exactly what happened to American Home Mortgage - there was no mismanagement, but they simply got caught holding too many "hot potato" loans, forced to sell them at massive losses...and eventually they had to make the decision to close the doors and stop the bleeding.

In response to seeing this situation play out in the demise of American Home Mortgage, lenders of other non-conforming loan products increased their interest rates dramatically almost overnight to be better prepared - and likely over-prepared - for increased risk premiums down the road. Even though loans above $417K are not presently suffering from increased delinquencies like the Subprime and Alt-A loans are, these rates popped higher as well, because they are being purchased by smaller private entities that can't afford to take on any margin of risk.

What happens next? The major damage is probably already done, and the present situation will likely settle out over the coming year. Lenders will stop pulling products off the shelf, and the rates on products that have moved so significantly higher now should trend lower down the road as delinquency rates stabilize.

But here are a few important things YOU should do right now:

ONE: Even if you are not presently in the market for a home loan of any type, make sure that your credit standing is as solid as possible. Many people in the market for a home loan didn't expect they would have a need, and didn't plan in advance to ensure their credit would qualify them for the best possible financing. With no immediate need for a home loan, time is on your side... why don't we take a few minutes together and just make sure you are prepared, should a need arise down the road? Call or email me to discuss your options.
TWO: If you are in the market for a home loan, or know someone who is - understand that now is the time to be working with a real qualified professional who can keep you informed of changes in the market and get your loan funded quickly. Now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true.

Your home and your financing are just too important, and times have changed. I am here to help and advise during these volatile times - and would welcome calls from you, your friends, family, neighbors or coworkers.

Your satisfaction and referrals are the cornerstones of my business.
Ryan Hart
Mortgage Broker
Veranda Financial Corporation
92 Argonaut Ste 215
Aliso Viejo, CA 92656
Ph) 949-716-4081
Fax) 949-313-0960
Ryan@VerandaFinancial.com