Beware the Downside Risks of Tidying Up Your Finances in Preparation for Getting a Mortgage Loan

city illusIf you’re hoping to buy a home and finance it with a mortgage (as do 86% of homebuyers, according to the National Association of Realtors’ 2015 Profile of Buyers and Sellers), getting your finances in order is a good start. You’ll want to understand how much debt, income, and assets you really have, pay off minor debts at high interest that might be harming your ability to take on more credit, and be able to show that you’re a good risk for the hefty loan you’re about to apply for.

But don’t go too far! You can, according to mortgage banker Ken McCoy of Petaluma Home Loans, actually oversimplify your finances to the point that it hurts your credit rating and your ability to qualify for a mortgage at the lowest interest rate and on the most advantageous terms.

Let’s start with your job. If the pay isn’t great, you might be inclined to look for something better before buying a home. But, warns McCoy, “Changing your job can be a bad thing if it’s in a different line of work. The lender wants to see at least two years’ history in the same occupation, basically as a sign that you’re going to stay in that job for the long haul.”

Next, there’s the matter of your assets. Like many people, you may have a checking account at one bank, a savings account at another, and a CD somewhere else. Consolidation would certainly make it easier to know what you’ve got; but, says Ken, “You’ll be creating more, not less paperwork. Lenders want to be able to trace where all the money you’re using to buy a home came from, and you’ll end up having to supply statements from the accounts you closed, just to show the paper trail.”

Finally, there’s the all-important matter of your existing debt, including credit cards. McCoy says, “Prospective homebuyers tend to think about paying off their credit cards or getting rid of debt altogether. But realize that you may qualify for a mortgage with some existing debt; and if you pay it all off, you’ve just taken valuable money you needed for the home purchase transaction. What’s more, you can actually hurt your credit score by having no existing credit, or by closing credit cards you’ve had for years.”

Of course, nothing is cut and dried in this arena. There are certainly circumstances in which, for instance, taking a new job that pays much more would make sense. But how are you to know for sure? “Six months before you want to start looking for a home, sitting down with a mortgage professional would be smart,” says McCoy. And for more tips, check out the Affording a House section of Nolo’s website.

Federal Ruling Muddies the Law on Recording the Police

Police arrest iStock_000019659948XSmallConstitutional and criminal law are littered with nuances  and vagaries. But at least we’ve got a basic, First-Amendment rule on recording the police. To summarize:

Almost every court to consider the issue has determined that the First Amendment gives you the right to record (pictures, video, and audio) an officer in public while he is performing his duties. But that doesn’t mean you’re allowed to record if you’re doing so surreptitiously (secretly), interfering with the officer, or otherwise breaking the law. 

(Recording the Police: Legal?)

A recent federal-court decision, however, has gummed up the works. At least for the moment.

The case in question involves separate lawsuits by two citizens claiming Philadelphia police officers violated their rights. The first citizen, apparently interested merely in taking what he thought would be a good picture, photographed about 20 officers standing outside a home. The second citizen tried to videotape an arrest of a protestor at a rally. Each plaintiff has alleged subsequent mistreatment by the officers on hand. (See the opinion for more detail.)

The judge assigned to the case held last month that the First Amendment doesn’t give citizens the right to “photograph police absent any criticism or challenge to police conduct.” The judge essentially said that you can’t photo the police merely for the sake of photo’ing the police.

To observe that it’d be a big deal if this line of thinking were to catch on might be to understate. Think for a moment about some of the smartphone-documented police/citizen encounters in recent years.

The decision represents a significant break from the widely accepted rule noted above. But an appeal is apparently coming. And at least one expert expects the higher court—which is one step below the U.S. Supreme Court—to reverse the trial judge.

If it doesn’t, we’ll have much more to write about.

EEOC Files First Lawsuits for Sexual Orientation Discrimination Under Title VII

LGBT flag

Earlier this month, the Equal Employment Opportunity Commission (EEOC) filed its first two lawsuits against a Pennsylvania employer and a Maryland employer for sexual orientation discrimination. The EEOC’s actions are not too surprising, given its recent decision in July of 2015, in which it held that discrimination against employees based on sexual orientation was illegal sex discrimination under Title VII of the Civil Rights Act.

The EEOC’s decision is seen as controversial by some, as federal courts have historically found that sexual orientation is not a protected class under Title VII (unlike “sex” or gender, which is protected). However, over the years, some courts have offered limited protection to LGBT employees under Title VII—primarily by holding that it is illegal to discriminate against employees for not living up to gender stereotypes. For example, a federal circuit court held that a gay male employee who was harassed by coworkers for being too “effeminate” could proceed with a Title VII claim of sex discrimination. In light of these decisions, and the Supreme Court’s recent decision to legalize same-sex marriage, the EEOC might be hopeful that courts will similarly step in to protect LGBT employees from employment discrimination.

Federal courts are not bound by the EEOC’s interpretation of Title VII and will decide the issue independently. However, until the issue is decided by the courts, employers should be aware that the EEOC is processing charges of sexual orientation discrimination filed by employees (and in rare cases, filing suit against employers on behalf of employees).

About half of the states—including California, Illinois, and New York—already have laws that prohibit private employers from discriminating based on sexual orientation. However, a ruling that sexual orientation is a protected class under Title VII would mean that private employers in all states will be prohibited from discriminating against LGBT employees.

Widespread Outrage Over Suggestion That Children Represent Self in Immigration Court

bordermapCount me in as another voice within the chorus of shocked responses to senior immigration court judge Jack. H. Weil, who said during a deposition that three- and four-year olds can learn immigration law well enough to represent themselves in court.

This wasn’t just a casual comment; Judge Weil was addressing the issue of whether children facing deportation are entitled to attorneys at taxpayer expense. And let’s not forget that he trains other immigration judges nationwide, many of whom are hearing cases of immigrant children by the thousands.

Here are Weil’s words, as reported by the Washington Post: “I’ve taught immigration law literally to 3-year-olds and 4-year-olds . . . You can do a fair hearing. It’s going to take you a lot of time.”

Darn right it’s going to take a lot of time. More time than immigration judges have these days, from all I’ve heard about their backlogged and overcrowded court dockets. And that’s not all it’s going to take.

How does one even begin to explain the reasons? Plenty of people have expressed doubt over Weil’s assertions, from experts like Laurence Steinberg, psychology professor at Temple University, who told the Washington Post, “I nearly fell off my chair when I read that deposition” to Harry Shearer, as part of his political commentary on the March 6 version of “Le Show.” (Even my mother called me after reading the headlines!)

The first thing to bear in mind is that the United States has, under international and national law, an obligation to treat refugees differently (i.e. better) than other immigrants. And make no mistake, these children are mostly refugees, or people afraid to return to their home countries due to past persecution or the possibility of future persecution.

According to an American Immigration Council Report by Elizabeth Kennedy, NO CHILDHOOD HERE: Why central american children are fleeing their homes, non-economic factors such as organized crime, gang threats, and violence appear to be the strongest determinants for children’s decision to emigrate. Many try moving within their home countries first, and flee to the United States only as a last resort. They’re afraid.

video prepared for the Center for American Progress by Tom Jawetz, Philip E. WolginAndrew Satter, and Kulsum Ebrahim called “Why We Must Protect Central American Mothers and Children Fleeing Violence” points out that, as potential refugees, the Central American migrant children and families are legally entitled to due process. Yet they are receiving the very opposite: in many cases, a quick trip out the door.

The next key point is that asylum law is not only complicated, but fact-based and ever-evolving. I’ve represented many applicants in court whose cases seemed marginal at first.  It was only after spending hours (often over the course of many meetings) that I was able to understand the true basis of their fear of returning home and then analyze whether that fit into a ground for U.S. asylum.

Sometimes the answer was no. A child who, for example, is simply afraid of random street violence, is going to have trouble proving that he or she would be singled out for persecution. (See Asylum or Refugee Status: Who Is Eligible?)

But what if that child is a boy who is particularly effeminate, and who is commonly picked on by anti-gay gangs who are beyond the government’s control?  That could be a ground of asylum.  But do we really expect a small child to understand that distinction? Or to admit, in front of a judge and an attorney for the U.S. government, that people make fun of him for possibly being gay?

I doubt it. And that’s just one of many possible fact patterns. Every case is unique, just as every child is unique, and deserves to be heard individually rather than pushed through an overloaded system.

Buyer Desperation a Major Factor in Current Real Estate Market

buying-home-selling-your-houseI recently asked a Bay Area real estate agent about trends she’s observing in the current market. The first thing out of her mouth was the new need for her to understand buyer psychology as they learn the consequences of low housing inventory (fewer homes on the market than interested buyers).

No longer is it a simple matter of buyers figuring out how much money they have saved up and how much house they can thereby afford, doing a bit of shopping, and then closing on a home. Buyers must now often go through stages, an evolution driven by desperation as the weeks or months of shopping go on, and by experiencing flat-out “No” answers in response to their purchase offers.

The prospective homebuyer may start out telling the real estate agent, “I want a two-bedroom in this neighborhood and won’t pay a penny more than $X,” move on to saying, “Hmm, maybe we’d better bid higher given all the competition for this one-bedroom in a marginal neighborhood,” and end up at “Never mind the home inspection! Let’s double the asking price! We can’t wait any longer, we have to have that (tiny) house!”

This isn’t just a Bay Area phenomenon, either. The December projection from the National Association of Realtors says it all “Alas, Inventory Shortages Likely to Stay in 2016.” Relief isn’t reportedly in sight until the end of 2017, when Capital Economics researchers predict an inventory rise of around 50%.

According to economists at Zillow, this is even having an impact on the best time to sell a home. Zillow recently found that, nationally, homes that are put on the market in late spring (May 1 through May 15), sell around 18.5 days faster and for 1% more than the average listing. The explanation?

“The housing market today is heavily influenced by low inventory,” says Zillow chief economist Dr. Svenja Gudell. “Faced with increasingly competitive markets, many buyers are forced to consider several homes and make multiple offers, elongating the home shopping experience.”

That’s good news if you are a home seller just starting to think about putting your home on the market for this spring! Not only has time not yet run out, but you might be just in time to pick up on the desperate buyers who’ve been out there for weeks and who just want a home, at any price.