Federal Reserve Likely Increasing Interest Rates Again

By: KTVB Staff, with ktvb.com

Despite an uncertain market, experts agree there is some good news for homeowners.

"A lot of homebuyers that weren't able to get in the last couple of years because of how hot the market was. We're now seeing them be able to come in and negotiate and actually buy homes," said Jared Cook, a mortgage manager with Zions Bank. But interest rates -- and the cost of borrowing -- are back in the rise. Cook said there was bit of a slump, but rates increased again last month after a "hot inflation report."

We might see another interest rate hike later this month. During a Senate

Banking, Housing and Urban Affairs Committee meeting on Tuesday, Federal Reserve Chairman Jerome Powell said interest rates will likely increase again.

"Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go, and it's likely to be bumpy," Powell said.

Federal Reserve economic data shows the average 30-year fixed-rate mortgage is almost 6.7%, which is about 2.5% higher than a similar mortgage one year ago.

Cook said potential homebuyers should watch their debt.

"Make sure that you have very little debt," he said. "So you have as much as possible to use as much of your income toward the down payment so that you can qualify."

The median home sales price in Ada County is $465,000, according to Boise Regional Realtors data. While affordability is still an issue, long-time real estate agent Mike Brown said there's no better time to buy.

"That interest rate can be adjusted over the course of time," Brown said. "And in six months or a year when interest rates come down, you can adjust your interest rate down by doing a refinance. And when you've got the house of your dreams at the lowest price that you could."

Experts also agree shopping around for the right real estate agent and mortgage rates make a big difference.

"Not everyone has the same mortgages," Cook said. "Some people have different terms, especially when you compare between banks and mortgage companies. Just shop around to make sure you're getting the right product for you."

Brown predicts year-over-year inflation numbers will decrease in mid -May, which would likely lower interest rates as well.

10 Energy Saving Tips for Spring

By: Scott Minos, with energy.gov

March 20th, marks the spring equinox and the end of the coldest days of winter. With the start of a new season comes a fresh opportunity to find ways to save energy and money.

Here are just a few simple things you can do to improve the energy efficiency and comfort of your home as warmer temperatures arrive:

1. Service your air conditioner. Easy maintenance such as routinely replacing or cleaning air filters can lower your cooling system’s energy consumption by up to 15 percent. Also, the first day of spring could serve as a reminder to check your air conditioner’s evaporator coil, which should be cleaned annually to ensure the system is performing at optimal levels.

2. Open windows. Opening windows creates a cross-wise breeze, allowing you to naturally cool your home without switching on air conditioners. This is an ideal tactic in spring when temperatures are mild.

3. Use ceiling fans. Cooling your home with ceiling fans will allow you to raise your thermostat four degrees. This can help lower your electricity bills without sacrificing overall comfort.

4. Cook outside. On warmer spring days, keep the heat out of your home by using an outdoor grill instead of indoor ovens.

5. Install window treatments. Energy efficient window treatments or coverings such as blinds, shades and films can slash heat gain when temperatures rise. These devices not only improve the look of your home but also reduce energy costs.

6. Caulk air leaks. Using low-cost caulk to seal cracks and openings in your home keeps warm air out -- and cash in your wallet.

7. Bring in sunlight. During daylight hours, switch off artificial lights and use windows and skylights to brighten your home.

8. Set the thermostat. On warm days, setting a programmable thermostat to a higher setting when you are not at home can help reduce your energy costs by approximately 10 percent.

9. Seal ducts. Air loss through ducts can lead to high electricity costs, accounting for nearly 30 percent of a cooling system’s energy consumption.

Sealing and insulating ducts can go a long way toward lowering your electricity bills.

10. Switch on bathroom fans. Bathroom fans suck out heat and humidity from your home, improving comfort.

Check out our home cooling and landscaping infographic s for more ways to cut energy costs this spring.

And visit Energy Saver for additional tips on improving your home’s energy efficiency.

8 Important Legal Tips for Landlords and Property Owners

By: Liran Koren, with luxurypropertycare.com

Lawsuits are everywhere and they can happen to anyone including you.

Rental properties are a lucrative investment but they come with the risk of litigation. Aside from making sure that your property is “rent-ready”, you should also make sure that you’re prepared to defend yourself in case you’re facing legal action.

Below, let’s take a look at eight things you can do to prevent nasty lawsuits:

#1 Keep Records of Everything

And by everything, we mean everything As a property owner, you should keep records of rent receipts, work orders, eviction notices, and more. Proper documentation can protect you when you’re faced with legal issues. To avoid pointing fingers, you should hold on to pertinent documents that may be considered as evidence.

This includes all landlord-tenant communication including emails, text messages, call logs, and the like. Whenever you’re discussing important matters with your tenant (e.g. late rental payment fees, eviction, etc.), it’s best to stick to written modes of communication.

#2 Understand Data Privacy Laws

Although the US doesn’t have federal-level data privacy laws unlike the UK’s General Data Protection Regulation (GDPR), the US does have state-level statutes such as the Californian Consumer Privacy Act (CCPA) and the Hawaii Consumer Privacy Protection Act (SB 418). These laws provide consumers with greater control over their personal data, such as their names, addresses, phone numbers, and more.

The state of Florida does not yet have laws governing data privacy, but there have been talks about introducing a law that is similar to the CCPA.

Data privacy laws apply to all landlords and property managers that collect personal information from their tenants. This includes the information found in the rental application.

#3 Require Renters Insurance

A property owner’s typical landlord insurance won’t cover the costs of replacing the tenant’s belongings in the event that they get destroyed or stolen. It also won’t cover the tenant’s medical expenses should they get injured on the property.

To protect yourself from lawsuits, consider requiring your renters to obtain renters insurance. Not only does it protect your tenant’s personal property, but it also guards you in the event that your tenant decides to sue.

Keep in mind that including this clause in the rental agreement may be prohibited in certain states. Be sure to check with your property manager to ensure that your requirements are within the law.

#4 Don’t Enter the Unit Without Notice

You may own the rental property, but the moment that it is rented out, you lose the ability to walk inside the home whenever you want. Tenants have the right to utilize their rented space without the interference of their landlord. This is called the right to the “quiet enjoyment” of their home. As a general rule, you may enter the property only when the tenant has given you permission.

There are, however, exceptions to the rule. You may enter the rental unit without notifying your tenant when:

• There is an emergency (e.g. gas leak, fire, flood)

• The is reasonable cause to believe that the tenant has abandoned the property

• The tenant has been absent from the property for an “extended absence”

#5 Require a Security Deposit

A security deposit is a fee that a tenant has to pay on top of the first month’s rent. It is a refundable amount that the tenant can get back when they move out. Its purpose is to protect you, the landlord, in the event that the tenant damages the property or fails to satisfy their financial obligations (e.g. rent payments and utilities).

The law does not require landlords to collect a security deposit from their tenants, however, it would be in your best interest to do so. If you decide to require a security deposit, keep in mind that some states have set a cap on the maximum amount that you can collect.

#6 Keep Your Security Deposit in a Separate Account

Landlord-tenant laws vary by state when it comes to where the security deposit should be stored. Generally, you shouldn’t store your tenant’s security deposit in your personal bank account since it yields interest.

In Florida, you should keep your tenant’s security deposit as a surety bond, in a dedicated bank account, or a non-interest-yielding bank account. It’s worth mentioning that security deposits stored in an interest-yielding bank account must be returned to the tenant along with the accrued interest.

#7 Follow the Fair Housing Act

As a landlord, you should know the Fair Housing Act (FHA) by heart. The FHA protects “protected classes” by prohibiting discriminatory acts in housing, such as:

• Refusing to rent the property due to race, religion, national origin, etc.

• Having preferences regarding the type of tenant/ s (e.g. “whites only” and “families only”)

• Failing to provide the same services, amenities,

etc. to tenants of protected classes

If a prospective tenant sues you for discrimination and if the Department of Housing and Urban Development (HUD) investigates the claim, you may want to consult an attorney. The penalty for first-time offenders can be as high as $16,000 excluding attorney’s fees, damages, etc.

#8 File Your Taxes Accurately

Filing your taxes is a skill you need to master if you’re planning on becoming a landlord. If you intentionally submit a false report of your annual income or claim unfounded tax deductions, you may soon be getting a visit from the Internal Revenue Service (IRS).

However, if you made an innocent mistake, you should file an amended tax return as soon as possible. You shouldn’t let the period for filing lapse.

Remember, if you purposely attempted to evade your taxes, you may face a maximum fine of $100,000. It’s best to hire a property management company that has its own team of attorneys and accountants to ensure that you don’t violate the law.

About Me

With over 10 years of mortgage lending experience, Jesus is someone who takes pride in his work and is dedicated to providing guidance to those looking to purchase, refinance, or renovate their home. He has an in depth understanding of the mortgage process and will utilize that knowledge and expertise to obtain the best options for your financial needs.

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About First World Mortgage

In the unpredictable home lending market, we stand out as one of the most credible mortgage lenders in Connecticut, and we are now the #1 First Time Homebuyer CHFA Lender In Connecticut. We serve as your safeguard and offer you complete security, safety and peace of mind that only the highest-trained professionals will work with and for you.

You will be in the hands of one of the most experienced Connecticut mortgage lenders, helping make the home buying experience fun, easy, and stress-free! It’s no wonder why we are the preferred Connecticut mortgage lender of individual homeowners, real estate professionals, home builders and financial advisers.

Rental Application Fraud in the Digital Age

By: Paul Jenney, Compliance Officer with TenantTracks

The process to apply for a rental unit looks much different than in years past. Rather than meeting with a landlord in person, applicants can send an application online without ever meeting face-to-face.

Zoom calls are common, as are virtual showings.

Reducing fraud should be a top-tier concern as it becomes more and more commonplace. Every day we are hearing of more scams, from people queuing up people to be their ‘landlord’ for references, to sophisticated operations generating paystubs, and even tax returns.

The digital pool of applicants adds more people to the pile of applications we are getting for every unit, but quite frankly, many of them are looking for a ‘mark’ that they can get one over on via one trick or another. Small landlords are easier to deceive than major management companies due to the belief they have a less robust set of tools.

One of the leading credit bureaus Trans Union (which is TenantTracks’ primary vendor) conducted a study in 2020 about application fraud. They found in addition to the switch from in-person applications to digital applications, the COVID-19 pandemic was another contributing factor to the rise of fraud in the rental housing industry.

They found that:

41% of respondents discovered fraud after move-in

67% are concerned about the future of fraud growth

Over the course of the coronavirus pandemic, fraud has steadily increased, and 22% of applicants failed authentication or were identified as high risk. During the pandemic, fraud reached a high of 15% compared to 10.3% over the same period in 2019.

It’s important for landlords to understand the risk factors of fraud, as it can result in several negative consequences. Some lasting impacts of fraud, as identified by Forrester (who conducted Trans Union’s study), include:

Increased repetitional damage: 59%

Increased evictions: 51%

Internal time spent comparing applications to find discrepancies: 46%

Increased financial loss: 35%

Lighter vacancies: 32%

Increased bad debt: 22%

The best way to catch fraud is to have systems in place to prevent it. Through the process of identity verification, you can make sure that you are speaking to the person you believe that you are speaking to. Cross referencing the information you see can show you what lines match up and what doesn’t. Does their governmentissued ID match with their other records? That can include credit information, eviction history, criminal history, and employment records.

Start with a completed rental application. Everything should be filled out, and of course, a full release to conduct an extensive background check. If you are doing this online, have them upload a copy of their government issued ID for a first line defense. If the information on the ID and the application do not much, that should be your first red flag.

From there, you can verify everything your applicant provided, and whatever is required within your rental criteria (you do have a WRITTEN criteria checklist, right?), is accurate and meets with your expectations. That would include checking for omitted information, noticeable gaps in their rental or employment history (cue criminal records possibility here), or references that just don’t seem to be as accurate.

Types of Fraud

With increased digitization comes more types of fraud.

We have all heard of data breaches. Fairly every week we are being notified that our own data has been compromised and offer us credit monitoring free. You should take advantage of these offers. Forrester estimates that one recent breach alone caused an increase 5% to 10% in identity theft-related fraud in the U.S.

With fraudsters becoming smarter, companies are having difficulties staying ahead of their advanced tactics. Some types of fraud landlords should be aware of include:

• Rental application fraud: This the practice of lying on a rental application, whether it be providing false income or uploading an altered photo.

Synthetic fraud: This is one of the fastest-growing types of fraud. It’s where an applicant creates a fake identity using real and false information. For example, a fraudster may create a fake Social

• Security number and pair it with a real address to create a fake identity to gain access to a rental property.

• First-party fraud: This type of fraud is performed by the individual, which is typically the tenant, where they use fake or altered information, such as pay stubs and previous addresses, to qualify for a rental property.

• Third-party fraud: This is when an individual uses another person’s identity or information to qualify for a rental property, such as misrepresenting who they are with someone else’s Social Security number, name, and date of birth.

Much of this can be mitigated with adequate screening both on the duediligence phase of calling landlords and employers, verifying documentation, and during the tenant screening report.

You must learn how to QUALIFY the reference as a reliable historian (this skill is a must have) to weed out those feeding you false information. You also need to be able to identify if a government issued ID is falsified.

Bartenders been doing this for years, so it’s a skill that can be acquired.

Consumer reporting agencies are extremely good at returning complete and accurate information even when identities are manipulated. It’s central to their business and there are extraordinary business and regulatory pressures on them to do this well.

They must have sophisticated tools for finding addresses, social security number fraud, address matches and mismatches, soundex and nickname logic, and a host of other tools to correlate the data supplied vs the output data that paints a complete picture of the applicant and that it is actually the individual applying.

The more homework you do at the outset to prevent fraud, the better the outcome for your bottom line. Visit TenantTracks.com for more information and all your tenant screening needs!