WWDTD

This post is titled What Would Donald Trump Do. As one of the biggest real estate moguls out there, surely The Donald is shaking in his boots right now right?

Wrong. According to Trump, "Somebody says 'how's the market?' I say not good except for Trump." It looks like he learned a big lesson back in the early '90s when he almost declared bankruptcy. Back then, he was personally responsible for paying back hundreds of millions of dollars in debt. Lucky for him, he was able to do some debt restructuring and save his behind (banks are suckers for his personal brand name; A similar thing happened when his casino company almost went bankrupt in 2004).

Now, he runs his real estate brand in a smarter way. Instead of putting his personal assets as collateral for his projects, Trump makes deals with developers around the world to allow them to use his name on their projects in exchange for brand licensing fees, a percentage of sales, and in some cases, he just throws in a small pot of money in exchange for a bit of equity. He has some good diversification in his current plays. He has 20 projects in the U.S. and half of that abroad. Through his dealmaking, he has plays in Dubai, Seoul, Tampa, Chicago, Toronto, Atlanta, etc.

Several of his projects have some challenges going on and a few have stopped construction. It doesn't matter much to Trump though since he's personally liable for very little. So for now, he will remain his cocky self. I'll close with Trump's statement "All of my stuff has been a great success...Nobody has even come close to the track record that I have."

The great write-down

So the big thing right now on the street is seeing who can write-down the most due to the whole sub-prime mortgage debacle. The media talks about write-downs like most people know what it actually means.

When you hear a bank announce a $1 billion write-down, it just means that they're adjusting their debt holdings. A bank holding on to $10 billion in debt and reporting a $1 billion write-down just means that they are now owed $9 billion. This is due to losing value in actual mortgages or in instruments like CDOs which have mortgage exposure.

Banks are always "estimating" these write-downs. They have to do this since they don't really know how much money they lost. According to accounting rules for these institutions, they have to price their mortgage holdings according to the market value. Right now though, there's no real market so banks just have to guess.

Neri Bukspan, chief accountant for Standard & Poor's credit market services, commented that it's like figuring out how much your house is worth when no one in your neighborhood can sell theirs.

So, here's the tally right now (estimated) for the big banks:
Barclay's- $2.7 billion
HSBC- $3.4 billion
Bear Stearns- $1.2 billion
Bank of America- $3.3 billion
Citigroup- $11 billion
Merrill Lynch- $6 billion

Lucky Goldman Sachs, Lehman Brothers, and Deutsche Bank seem to have escaped fairly unscathed.

Homeseekers’ Rights: Fair Housing Law and Housing Discrimination Rights

Have you ever felt discriminated against when searching for housing? Don’t worry, you’re not alone. While hundreds of thousands of people are discriminated against annually, only 9,254 housing discrimination complaints were filed according to a 2005 annual report sent to Congress.

On your side is the U.S Department of Housing and Urban Development (abbreviated to HUD). Your weapon is the Fair Housing Act (FHA), which was enacted by Congress back in 1968. In a nutshell, what this act does is prevent direct providers of housing (e.g landlords, real estate companies, banks, etc.) from discriminating due to race, religion, sex, origin, family status, or disability.

To clarify, race discrimination covers more than just your typical “Sorry, I don’t rent to black/yellow/white/red/green people” remarks. Many times, homeseekers don’t know that they’ve been discriminated against. This happens when housing providers hide their discrimination by giving fake information about availability of housing. The Department of Justice actually has a special program, the Fair Housing Testing Program, which goes to uncover this kind of hidden discrimination.

Besides the normal interpretation of religion-based discrimination, housing providers can not create zoning ordinances to limit usage of private homes as places of worship. Also, don’t get too hyped up if you think you have a case against the local catholics-only rental unit; religious organizations are allowed to reserve housing for people of the same religion.

The most popular filings to the HUD are related to disability discrimination. According to the FHA, “persons with a disability” refers to people with “a physical or mental impairment which substantially limits one or more of such person’s major life activities.” This means that homeowners are not allowed to discriminate based on afflictions such as HIV infection, mental retardation, alcoholism, and mobility impairment. The FHA also does not cover users of illegal controlled substances, sex offenders, and juvenile offenders.

These laws against discriminatory practices also carry over to mortgage loans and home improvement loans; in these cases, you are protected under both the FHA and the Equal Credit Opportunity Act.

So what happens when you experience this discrimination? The FHA has complete provisions for handling this type of event. If you have been a victim of an illegal housing practice, you are allowed to either file a complaint with the HUD or file a lawsuit with the federal or state court. When you file a complaint with the HUD, the Department of Justice will get involved and launch suits on behalf of those who filed complaints.

As an example, a young man named Michael Scialabba in Chicago was involved in an automobile accident which left him with a traumatic brain injury. The condominium association and his property manager were accused of not making any reasonable attempt to accommodate Michael’s injury. The result: Michael won a $160,000 settlement against the condominium association due to the federal Fair Housing Act.

It’s nice to know sometimes that you have a few government organizations watching out for your fair treatment. Another little known fact is that if a housing provider uses force or threatens to use force to deny you your fair housing rights, the Department of Justice can launch the granddaddy of all suits: criminal proceedings.

Hopefully now you have a better grasp of what the HUD and FHA can offer you in terms of homeseeker empowerment. Knowing your rights will give you the upper hand when you look for housing; don’t let the housing providers take advantage of you.

-J

Find Housing and Roommates