Is It Discrimination?

[retmar]

As we are all aware, lenders may not discriminate against anyone as identified in the laws. But, I have a question for everyone regarding what happened to us with a prospective lender this past week. I can find no reference in the laws as to our situation. In fact, the Broker we are using was shocked to even hear them say this. He has been doing this for years and has never had this happen before.

There is a direct lender who has a policy to NEVER allow a homeowner who lives in a Senior Area that is governed by CC&R's to obtain a loan. Everyone I have asked this past week, and that includes Brokers, Lenders, Escrow, and any others I could contact, that they have never heard of this before. Mind you, my Youngest Daughter is in Escrow herself. In fact, her company is handling our refi. Each one clearly stated this is Discrimination in their eyes.

Therefore, my question is IF this can be considered discrimination.

Please do not hesitate to give your opinions or any reference you may be aware of. Any info will be greatly appreciated.

[amortgageman]

Retmar,

Can you please clarify what a CC&R is?

[DocDon]

Found this:

Covenants, conditions, and restrictions, or CC&R’s for short are limitations placed upon the use of land by its owner. They are usually included in the deed and specify what uses will be permitted or prohibited on the land.

Covenants are promises to do or not to do certain things. A promise not to raise chickens in your backyard or not to put up a clothesline are examples of convenants.

Conditions are qualifications in a deed which, if not complied with, may give the grantor or his heirs the right to demand the property back. This is otherwise known as a reversionary right. For example, a seller could specify that he will convey his property to a buyer on the condition that the buyer not sell intoxicating liquors on the property. If this condition is not complied with, the property may revert back to seller, his hers, or his successors.

Restrictions encompass a general classification for various types of limitations on the use of real property, and they fall into two categories: private restrictions and public restrictions.

Public restrictions are those imposed on a property by its owner to assure a degree of uniformity in the development of a neighborhood, such as limiting the use of a land to residential purposes only. Such restrictions may not, of course, be unlawful or contrary to public, nor may they be unreasonable.

Public restrictions are best exemplified by zoning ordinances, which are said to be designed to “promote public health, safety, comfort, convenience, and genera welfare” These ordinances place limitations on the use of land within certain areas in accordance with a general policy that has been adopted. You should be aware that zoning ordinances are a separate obligation from CC&R’s and that zoning ordinances may not necessarily conform with CC&’s.

[amortgageman]

Since the CC&R's are restrictive to the property classification, I would have to lean towards this being perfectly legal, and up to lender discretion as to whether or not they will lend in the community. However, if the only "out of nature" restriction is tied to retirees, and the remaining terms are "ordinary," then this would be discriminatory.

To give an example, there are lenders who will not lend in a condominium community until it is more than fifty percent complete, and the homeowners association is still controlled by the developer, and not yet released to the homeowners. These are commonly referred to as unwarrantable condomininums. There are also instances where a lender wil not lend if a condominum is greater than "x number" of stories.

Then again, you mention the term "Senior Area," and if this is just an isolated section within a larger development (same homeowner association), there could be some serious discriminatory violations here.

[retmar]

Thanks for explaining that, Doc. I have the whole thing in my files, but, your version was short and to the point.

Amortgageman, the tract we live in is for the 55+. There are 501 Single Family Homes with 6 Models. The smallest is around 1000 SF and the largest is around 1475 SF. Ours is the second largest at 1427 SF. They were built in 1964. In fact, the man who built them lives here near the Clubhouse. We do have a HOA with fees of $55.00 a month. Our Clubhouse has a large room with Stage, Kitchen, Sitting Room, etc. There is also a Weight Room, Hobby Room, Card Room, Pool Room, Library, Olympic Sized Pool and 20 person Spa, along with a very large Covered Patio with all of the tables, etc. We also have a 9 Hole Golf Course. There are other 20 person Spas spread around the area. Ours is 4 doors down and across. They are easily identified as they have 50 ft Palms at each entrance, which allows access from either street. If you didn't know this, you would think they are just another home with a different appearance. They offer trips to different places, such as Laughlin, Nevada. Everybody knows everybody as when you drive down the streets, everyone waves at you. They check on you and your home if you are away. It is very clean and quiet. Some of the residents are Snowbirds. On T-Day, we finally met our neighbor on one side as they just returned from their 8 months away.

As Doc pointed out, there are some limitations with CC&R's. One thing I will add in regards to animals is some will allow small farm animals while others are domestic only. The last area we lived in allowed Chickens and Rabbits, while this one is Domestic only. The main reason for CC&R's here is that this is a Senior Living Area. This basically means that at least one member of the household must be 55+, but, no children can live here permanently. They must maintain a definite percentage of seniors, I think it is around 90%, to continue to qualify for the status. Visiting is restricted to 30 days. If to be longer, you must notify the office. There are some who live here with their parents as they are a type of caregiver or are disabled themselves. As I mentioned, we have the whole law as it was given to us when we bought this home. I think it has about 30+ pages explaining everything. If you like, I will get the numbers for you so you can read them yourself.

In regards to the limitations of what we can do with the home and property, this is the best we have ever seen. I asked the President of the HOA about what is allowed as to remodel, paint, and the like. He said the home and property belong to us and we can do whatever we want except to please not paint the home with Polka Dots or bright ridiculous colors like Purple. Landscape as we want with no limitations. If we decide to add a room or enclose our Covered Patio, they ask that we submit a plan giving a fair picture of our intent. If we want to invade our block wall, we must ask our neighbor if it is OK as we share a common wall. No structures can rise above the block wall unless you have permission. This pertains mainly to Storage Sheds and the like. We don't need one as our Garage is an oversized Single Car. We have our Car, my tool chest, work bench, Washer, Dryer, Sink, Chest Freezer, plus one wall has floor to ceiling Cabinets that have 2 ft shelves. Our Heating System is in one corner and there is still plenty of room to move around or do what you will.

Where we live is considered the Inland Empire in Southern California. Palm Springs is 25 Miles North, as the crow flies, of us. As you are aware, the prices out here are holding fairly well. An example is the home 2 doors down from us was just listed for $184,900.00. It is the second smallest model. The man bought it just over 4 years ago for $58,000.00. The home between us was offered to us when we moved in for $145,000.00. We declined as we did not want to get involved with the Courts as the man had passed and his Wife was placed in a Home. It sold and the people repainted in and out, replaced the Carpeting throughout, and cleaned up the yards. It is listed at $205,000.00 and is the next model down from ours. We paid $165,000.00 in April of this year and the appraisal for our refi came in at $210,000.00. I expected only around $190,000.00 as we need to do Carpet, Kitchen, and both Baths. They are not bad, just old, tired, and outdated. We are going to do the whole outside, including new Landscaping. The previous owners had the home repainted in February, but, did not have it trimmed out. We will do this ourselves. A model like ours down the street just sold for $199,000.00. We were shocked as this one has little for a Backyard. Plus, it is very plain as it has colored rock for the yard and little color, such as flowers. Ours is 20 ft deep and 70 ft wide while theirs is maybe 8 ft deep and 70 ft wide. We love Roses so have planted several of different colors along with the other colors we have already planted. Two blocks over, another like ours sold last month for $220,000.00. It had the same size property, but, the Kitchen had just been completely redone and new Carpeting. We also have approximately 15 new tracts of homes being built within a 15 mile radious of us. They are starting in the mid 2's and up to the mid 4's with footage of 1800 to 4000, for example.

If you like, let me know and I will send you a PM as to exact location of where we live.

[itsgettingbetter]

I told my family about your post I don't know much about this area myself--but there is a lot of expertise in my family. (my father was a real estate broker for over 40 years --commercial real estate, and my mother was a contractor who built and sold homes, I have several attorneys in the family and one cousin who is a mortgage broker)

They agree that this sounds like DISCRIMINATION. Please consult with a lawyer about it. I am only sorry that none of my relatives who practices law lives near you--they would would love to help you with this.

[amortgageman]

I have looked through Fannie guidelines and the only reference I could find that would make the property ineligible would be if there is skilled nursing on staff. I am also thinking that this represents financing of the entire community, not just a single property within the community.

Does the lender loan for Planned Urban Developments (PUD's)? Did your broker obtain a denial on the loan for you? What were the specific reasons listed for the denial? (If a lender denies credit, they must inform the borrower of specific reasons why) You will need this to prove the discrimination. From your detailed description about the property and the CC&R's, I could see nothing that would hold back an approval based on those guidelines.

A lender must be authorized by Fannie Mae and go through a trial period before they can underwrite certain loans. For several years, Wells Fargo was the only lender permitted to underwrite Reverse Mortgages. Many others have since followed.

[retmar]

Just to let everyone know, the Broker, upon hearing of their denial, without hesitation, contacted another Lender who immediately accepted the offer. They also stated this is not right. We have signed the Docs and should be funded tomorrow as our Daughter took them home with her Saturday.

I just talked to the Broker about the Letter of Denial and he is going to get one for me. He couldn't remember whether they do or do not do PUD's.

As to the other question, we do not have a Skilled Nursing Staff in this tract. I am sure there are some who have one contracted to come in as needed. To give you an idea of some of our neighbors, the man across the street is 96 yrs old, plays Golf everyday, drives he and his Wife to wherever, and is Blind in one Eye.

I am going to pursue this as no one deserves to be treated like this. My Broker didn't say it, but, I am assuming they are scratching their name from the list. I don't care if we get a Dime as my whole concern is to assure they cannot do this to someone else. If they get fined or sanctioned, that's their problem.