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Book Excerpt: What not to say - Make Sure Your Ads Don’t Discriminate

This article was published on: 02/01/2008

Choose your words and images carefully so that you don’t inadvertently show bias against protected classes under the Fair Housing Act.

BY MARCIA L. RUSSELL, DREI

Today, most complaints involving fair housing advertising are based on blatant violations of the Fair Housing Act, such as ads seeking “no children” or “adults only.” However, with the increased scrutiny of real estate advertising by fair housing organizations, testers, and individual home seekers, many real estate practitioners are concerned about being charged with housing bias based on the wording in their advertisements.

Seemingly harmless words may trigger a complaint. The key to composing advertising that is in compliance with the Fair Housing Act is to describe the property, not the seller, landlord, neighbors, or “appropriate” buyers or renters.

Creating advertising that is sensitive to the protected classes under the Fair Housing Act is not as difficult as it may seem. Simply review the wording in the ad to see if anyone would feel excluded by what is being said. Keep in mind that if a person wouldn’t pick up the phone to respond to the ad because of the exclusionary wording, there could be a complaint.

For example, the term “Christian handyman” in an ad for rental housing violated Wisconsin law by expressing illegal preferences on the basis of both sex and religion.

HUD Advertising Guidelines

The U.S. Department of Housing and Urban Development’s Advertising Guidelines categorize discriminatory advertising into three groups:

1. Advertising that contains words, phrases, symbols, or visual aids that indicate a discriminatory preference or limitation.

2. Advertising that selectively uses media, human models, logos, and locations to indicate an illegal preference or limitation.

3. Various types of discriminatory advertising practices condemned by the Fair Housing Act.

Use of Words, Phrases, Symbols, and Visual Aids

The HUD regulations prohibit the use of catchwords, phrases, symbols, photographs, and illustrations that convey dwellings are available or not available to a particular group of persons because of race, color, religion, sex, handicap, familial status, or national origin.

The words, phrases, and symbols in the following list typify those most often used in residential real estate advertising to convey either overt or tacit discriminatory preferences or limitations:

Words descriptive of dwelling, landlord, and tenants, such as: white private home, colored home, Jewish home, Hispanic residence, adult building.

Words indicative of race, color, religion, sex, handicap, familial status, or national origin.

Selective Use of Advertising Media or Content

The second general category of unlawful advertising identified in the HUD regulations involves the selective use of content or media based on race or other prohibited basis. For example, the selective use of human models in advertisements may have a discriminatory impact.

Other examples of this type of discriminatory advertising include the following:

• Selective geographic advertisements. This may involve the strategic placement of billboards; brochure advertisements distributed within a limited geographic area by hand or in the mail; advertising in particular geographic coverage editions of major metropolitan newspapers or in newspapers of limited circulation that are mainly advertising vehicles for reaching a particular segment of the community; or displays or announcements available only in selected sales offices.

• Selective use of equal opportunity slogan or logo. This may involve placing the equal opportunity slogan or logo in advertising reaching some geographic areas but not others, or with respect to some properties but not others.

• Selective use of human models. This regulation covers selective advertising based not only on race but on all of the Fair Housing Act’s prohibited bases of discrimination, including sex, handicap, and familial status. The regulations require that when human models are used in display advertising, the models should be clearly definable as reasonably representing majority and minority groups, both sexes, and, when appropriate, families with children. In addition, models should portray persons in an equal social setting and indicate to the general public that the housing is open to all persons, without regard to race, color, religion, sex, handicap, familial status, or national origin.

Other Types of Discriminatory Advertising

The HUD regulations prohibit the practice of refusing to publish advertisements for the sale or rental of dwellings because of race or other prohibited bases. Such advertisements may not be subject to different charges or terms.

According to the HUD guidelines, all advertising of residential real estate for sale or rent should contain an equal housing opportunity logotype, statement, or slogan as a means of educating the home-seeking public that the property is available to all persons, regardless of race, color, religion, sex, handicap, familial status, or national origin. The choice of logotype, statement, or slogan will depend on the type of media used and, in space advertising, on the size of the advertisement.

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Note from the publisher: This textbook is currently used across the country in continuing education classes for real estate agents and mortgage bankers. Please note that this book can be purchased through RECampus for professional development purposes; however, it cannot be purchased through RECampus for continuing education credit.

States Clamp Down on Sharks; Legitimate Investors May Feel Sting

This article was published on: 01/01/2008
 
LAW: Foreclosures

BY GINO CISCHKE

As the number of foreclosure filings climbs, increasing by 99.5 percent between the third quarter of 2006 and that of 2007, so does the number of laws designed to protect consumers from scams that pretend to help troubled home owners refinance.

It’s not that protections aren’t needed. Yet, as states busily try to stamp out such foreclosure “rescue” schemes, they’re enacting laws that sometimes snare legitimate investors. So if you’re buying foreclosure properties, or working with an investor client who is, you’ll need to exercise a little caution or you may end up on the wrong side of the law.

What New Laws Say

Several states, including Illinois (SB 2349), Maryland (SB 761), Minnesota (325N), New York (SB 4744), and Rhode Island (H 7650), have been busy crafting laws to stifle foreclosure fraud. The District of Columbia, Massachusetts, and other legislatures are considering similar legislation.

Many of these statutes are based on the oldest state mortgage fraud law, California Civil Codes 2945 and 1695. Its principal aim is to give home owners the opportunity to cancel a sale that occurs during the foreclosure process. The California law, and most other state statutes that have followed it, requires that a sales contract include a “notice of cancellation,” which gives a seller a clear method for stopping the sale of a home within a certain time frame — typically five business days.

The newer laws also try to protect homeowners’ equity during foreclosure. They diverge from the California code, however, in their efforts to implement this goal. The California statute prohibits foreclosure purchases that take “unconscionable advantage” of the owner in foreclosure. Minnesota’s statute, enacted in 2004, broke new ground by stipulating that home owners who sell while in foreclosure must receive “consideration” that equals at least 82 percent of the home’s fair market value. New York’s Home Equity Theft Prevention Act followed suit in 2006.

The most restrictive of these new laws is Illinois’ Mortgage Rescue Fraud Prevention Act, which took effect Jan. 1, 2007. Illinois lawmakers upped the ante by inserting an additional requirement that limits to 125 percent of the total debt owed the amount a foreclosure purchaser can make when selling the property back to the original home owner. There’s no such limit if the home is sold to someone else. Most state laws apply when the documents initiating foreclosure, such as notice of default or notice of pending foreclosure, are issued. However, in Illinois, the law applies to any borrower 90 days delinquent on a mortgage.

These narrow restrictions will almost certainly make it more difficult for legitimate home buyers and investors to purchase foreclosures except through an auction process. If you or your investor clients have plans to purchase foreclosed property already owned by a bank or to buy preforeclosures, sometimes called short sales, exercise care.

Consult with a knowledgeable real estate attorney to determine exactly what rules your client must follow to purchase or sell such homes. In some cases, poorly worded laws may be punishing legitimate buyers in an effort to punish scammers. Don’t get caught on the wrong side of this equation.

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A Scam in Five Acts

1. Bill, who has owned his home for nine years, loses his job and faces foreclosure.

2. Unscrupulous XYZ Finance says it will pay off the mortgage, cover closing costs, and give Bill $20,000 in cash, in return for a quit-claim deed.

3. XYZ also will let Bill stay in the house, paying rent at twice his former mortgage payment, with the promise he can buy the home back later.

4. Bill bites, figuring he’ll use the $20,000 to cover his rent until he gets a job. He deeds over the house to XYZ for about half the home’s value of $400,000, giving up his equity.

5. In a few months, Bill can’t pay the new, higher rent, and XYZ evicts him.

Writer Gino Cischke is the senior vice president and legal counsel at RealtyTrac Inc. The Irvine, Calif., company provides listings of foreclosed properties for consumers and real estate practitioners on its Web site.

Free Report - 7 Reasons to Own Your Home

7 Reasons to Own Your Home

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.

 

Welcome! This Weblog is for Agents, Realtors, and Brokers, from a REI Point of view!

Welcome!  This Weblog is for Agents, Realtors, and Brokers, from a REI Point of view!