New York

Government briefs

Justice Samuel Alito

Justice Samuel Alito

Justice Samuel Alito

Justice Samuel Alito

Fannie, Freddie face lawsuits over growing profits

Fannie Mae and Freddie Mac are tangled in legal battles with investors and nonprofit housing groups that want a share of their fat profits, the Wall Street Journal reported. The nonprofits are challenging a 2008 decision by the Federal Housing Finance Agency, which regulates Fannie and Freddie, to suspend payments to two affordable-housing trust funds. The investors are suing over changes that the Treasury Department made last year to the terms of its $188 billion bailout of the lenders during the financial crisis; until last summer, Fannie and Freddie had to pay a 10 percent dividend on their bailout funds, but now they must turn over all their payments to the Treasury. The lawsuits, according to the newspaper, show the increased scrutiny of the government’s takeover of Fannie and Freddie. Housing policy expert Julia Gordon, with a liberal think tank called Center for American Progress, predicted the number of court fights is “going to multiply until Congress reforms” the lenders.

High court strengthens hand of developers against government land-use policies

The U.S. Supreme Court handed down a decision at the end of its 2013 term that could have widespread ramifications for real estate developers challenging state and local land-use policies, Atlantic Cities reported. In a 5-4 vote, the justices expanded the definition of the so-called Takings Clause of the Fifth Amendment far beyond simply banning government entities from seizing private property without proper compensation. Now, even the rejection of a special permit might be considered unconstitutional. The ruling came in Koontz v. St. Johns River Water Management District, an 11-year-old lawsuit filed by Florida property owner Coy Koontz, who is now deceased. Koontz wanted to develop four of 15 acres of wetlands but was denied a special environmental permit from the district because he refused to scale down his project or pay for improvements to nearly public property. The district’s rejection, Koontz contended, violated the Constitution. A sharply divided court agreed. “It makes no difference that no property was actually taken,” Justice Samuel Alito wrote for the majority. “Extortionate demands for property … run afoul of the Takings Clause.”

Senate bill would make green housing more affordable to the middle class

A bipartisan Senate bill aims to make energy-efficient features in homes more affordable by allowing average-income buyers to qualify for larger loan amounts, the New York Times reported. The legislation, called the SAVE (Sensible Accounting to Value Energy) Act, has two key provisions. The first would require Fannie Mae, Freddie Mac and the Federal Housing Administration to include energy efficiency into their underwriting policies. The second would force lenders to factor in energy savings when calculating a borrower’s debt-to-income ratio and to add the value of projected energy savings to the home’s appraisal; a higher valuation could help the prospective buyer qualify for a larger loan. A study examining 71,000 home loans from 2002 to 2012 found that default risks are 32 percent lower on homes that meet the government’s “Energy Star” guidelines than on similar non–Energy Star homes. The measure has broad support from business, real estate, energy and environmental groups.

New York

Government briefs

Justice Samuel Alito

Justice Samuel Alito

Justice Samuel Alito

Justice Samuel Alito

Fannie, Freddie face lawsuits over growing profits

Fannie Mae and Freddie Mac are tangled in legal battles with investors and nonprofit housing groups that want a share of their fat profits, the Wall Street Journal reported. The nonprofits are challenging a 2008 decision by the Federal Housing Finance Agency, which regulates Fannie and Freddie, to suspend payments to two affordable-housing trust funds. The investors are suing over changes that the Treasury Department made last year to the terms of its $188 billion bailout of the lenders during the financial crisis; until last summer, Fannie and Freddie had to pay a 10 percent dividend on their bailout funds, but now they must turn over all their payments to the Treasury. The lawsuits, according to the newspaper, show the increased scrutiny of the government’s takeover of Fannie and Freddie. Housing policy expert Julia Gordon, with a liberal think tank called Center for American Progress, predicted the number of court fights is “going to multiply until Congress reforms” the lenders.

High court strengthens hand of developers against government land-use policies

The U.S. Supreme Court handed down a decision at the end of its 2013 term that could have widespread ramifications for real estate developers challenging state and local land-use policies, Atlantic Cities reported. In a 5-4 vote, the justices expanded the definition of the so-called Takings Clause of the Fifth Amendment far beyond simply banning government entities from seizing private property without proper compensation. Now, even the rejection of a special permit might be considered unconstitutional. The ruling came in Koontz v. St. Johns River Water Management District, an 11-year-old lawsuit filed by Florida property owner Coy Koontz, who is now deceased. Koontz wanted to develop four of 15 acres of wetlands but was denied a special environmental permit from the district because he refused to scale down his project or pay for improvements to nearly public property. The district’s rejection, Koontz contended, violated the Constitution. A sharply divided court agreed. “It makes no difference that no property was actually taken,” Justice Samuel Alito wrote for the majority. “Extortionate demands for property … run afoul of the Takings Clause.”

Senate bill would make green housing more affordable to the middle class

A bipartisan Senate bill aims to make energy-efficient features in homes more affordable by allowing average-income buyers to qualify for larger loan amounts, the New York Times reported. The legislation, called the SAVE (Sensible Accounting to Value Energy) Act, has two key provisions. The first would require Fannie Mae, Freddie Mac and the Federal Housing Administration to include energy efficiency into their underwriting policies. The second would force lenders to factor in energy savings when calculating a borrower’s debt-to-income ratio and to add the value of projected energy savings to the home’s appraisal; a higher valuation could help the prospective buyer qualify for a larger loan. A study examining 71,000 home loans from 2002 to 2012 found that default risks are 32 percent lower on homes that meet the government’s “Energy Star” guidelines than on similar non–Energy Star homes. The measure has broad support from business, real estate, energy and environmental groups.