Washington Post real estate columnist Kenneth Harney dies at 75

Washington Post real estate columnist Kenneth Harney dies at 75 Bart Barnes, The Washington Post May 24, 2019

Kenneth R. Harney, the author for four decades of the syndicated real estate column “The Nation’s Housing,” which explored issues faced by homeowners and home buyers, died May 23 at his home in Chevy Chase, Md. He was 75. The cause was acute myeloid leukemia, said his wife, Andrea “Andy” Harney. Distributed weekly to 90 newspapers around the country by The Washington Post Writers Group, Harney’s column was focused on unglamorous but vital issues concerning the intricacies of buying and selling property. He wrote about such topics as whether do-it-yourself home improvements were likely to increase the market value of a house, plus the perils of such undertakings where, he warned, it was easy for something to go expensively wrong. One homeowner, Harney reported in January, “inadvertently connected the plumbing from a new bathroom to the home’s sump pump discharge in the basement,” causing raw sewage to flow into the yard. “The message here isn’t that you should avoid DIY,” Harney wrote. “Rather you should take a sober look in advance at how your own technical and physical skills match up with what you have in mind. When the match doesn’t look all that favorable, call in a pro.” He weighed such questions as the cost of energy-efficient “green” improvements to a home and how they might affect the selling price. In the burgeoning “gig” economy, in which many potential buyers earn substantial portions of their incomes from part-time work – driving for Uber or Lyft, for example – Harney examined how lending institutions evaluate their loan risks and qualifications. He noted that the mortgage financiers Freddie Mac and Fannie Mae, aware that gig workers might not ordinarily qualify for loans based on traditional requirements, were starting to research how to accommodate people who pursued unconventional career paths. Two of Harney’s columns examining inappropriate charges imposed by a lender at real estate settlements resulted in a refund of thousands of dollars to a home buyer, The Post Writers Group said. Another column led to an increase in credit ratings for borrowers who made prompt payments on student loans. Over the years, Harney’s topics ranged from vacation getaway real estate scams to online hackers seizing control of real estate listings. He explored the impact of social trends on the real estate market, such as how housing sales have been depressed by the tendency among millennials to marry and have children later in life than previous generations. In a December 2018 column, Harney cast a revisionist light on one of the oldest real estate shibboleths: the commonly quoted guideline that buyers can afford homes that cost twice their gross annual income. Not true, he opined, citing a study. “There is no magic price-to-income rule of thumb for gauging affordability that fits everywhere,” he wrote, “although the median ratio nationwide was 3.3. As with everything in real estate, location plays a crucial role; ratios . . . ranged from an affordably modest 2.3 to a hyper-expensive 5.0.” Kenneth Robert Harney was born in Jersey City on March 25, 1944. He graduated from Princeton University in 1966, then worked as a newspaper reporter in Camden, N.J., before serving for more than two years in the Peace Corps in India. He came to Washington in 1970 as a program analyst with the Office of Economic Opportunity, then spent several years as the founding editor of Housing and Development Reporter, a publication of the Bureau of National Affairs. Harney also owned and managed business, financial, educational and investment organizations and freelanced for The Post and Washington Star before he began writing his syndicated column in 1979. He won several awards from the National Association of Real Estate Editors and the Consumer Federation of America. From 1995 to 1998, he served on the Federal Reserve Board’s Community Advisory Council. He also was the host of “Real Estate Magazine,” a television show on FNN, a forerunner of CNBC, and the author of two books. Harney wrote his final column last week. In 1967, he married Andrea Leon. In addition to his wife, of Chevy Chase, survivors include four children, Alexandra Harney of Shanghai, Brendan Harney of San Francisco, Timothy Harney of Brooklyn and Phurbu McAlister of Silver Spring, Md.; two brothers; a sister; and five grandchildren.

Zillow faces legal action over its co-marketing program

Zillow faces legal action over its co-marketing program Kenneth R. Harney on May 10, 2019 WASHINGTON – Zillow is back in hot water- A class-action suit against the online realty giant is moving forward after insider whistleblowers alleged that the company designed its controversial “co-marketing” program to violate federal anti-kickback laws. Zillow termed the charges “without merit” and says it intends to “vigorously defend” itself. Best known to the general public for its Zestimates property-valuation feature, Zillow is a multibillion dollar, publicly traded behemoth whose principal revenues come from advertising placed by realty agents. So-called “premier” agents and brokers, who receive prominent placement on Zillow-listed home sites, pay hundreds or thousands of dollars a month in advertising fees to the company. Premier agents need not be the highest volume or most successful agents in their area; they simply need to pay for the label. According to the company’s latest SEC filing, it earned nearly $900 million – two-thirds of its corporate revenue – in fees from agents paying for ads last year. In 2013, Zillow rolled out a program whereby realty agents could have large portions of their advertising fees paid for by lenders who share advertising costs with them. Buyers interested in a particular property could then contact not only an agent but a lender to shepherd them through the financing process. The idea proved wildly popular among agents and lenders. For paying part of an agent’s Zillow advertising fees – initially up to a maximum of 90 percent, later revised to 50 percent – a lender could get hot leads directly to active buyers. For realty agents, the attraction was obvious. Hey, why not? Lenders will subsidize my costs. However, a federal law known as RESPA – the Real Estate Settlement Procedures Act – prohibits payment of fees for business referrals among realty, mortgage and title industry providers that are not for services actually rendered. In April 2017, the Consumer Financial Protection Bureau informed Zillow that it was investigating whether its co-marketing program violated the law’s prohibition against kickbacks. Zillow negotiated with the CFPB, but last year, after the Trump administration appointed a new CFPB director, the agency abruptly dropped the case. Meanwhile, investors who said they purchased Zillow stock at inflated prices relying on company executives’ statements that its co-marketing concept did not violate federal law filed a class-action suit alleging securities fraud. A district court judge later dismissed portions of the suit but allowed the plaintiffs to file an amended complaint if they presented conclusive evidence that the co-marketing scheme violated RESPA. They appear to have done so successfully – at least enough to convince a federal district court judge to put the case back on track. Last November, the plaintiffs filed their amended complaint, bolstered by testimony from two unnamed Zillow insiders. The first- a regional sales manager for the company who alleged that lenders participated in the program because they “expected real estate agents to refer business.” The second- a sales and operations trainer who alleged that “every agent and lender knew that the co-marketing program was for the lender to get leads and referrals. … It was understood that lenders were paying for referrals.” Whenever the second insider “spoke to Zillow about potential concerns with the co-marketing program,” she was told “not to ask questions,” according to the court. She also alleged that she knew of a lender who had been paying 100 percent of a realty agent’s fees for 2 ½ years. Both whistleblowers provided “consistent testimony regarding how agents and lenders used the [program] to provide mortgage referrals in exchange for advertising payments,” according to the court. In his decision, which was handed down April 19, Judge John C. Coughenour of the U.S. district court in Seattle said “the court can draw a reasonable inference that Zillow designed the co-marketing program to allow agents to provide referrals to lenders in violation of RESPA.” Asked for his take on the case, Marx Sterbcow, a nationally known RESPA lawyer based in New Orleans, told me “the court certainly seems to suggest there is a lot of smoke involving the legality of Zillow’s” program. If the whistleblowers’ allegations are correct, he said, “it could cause [mortgage companies] and banks to pull completely out” of the program, for fear of violating RESPA themselves, and being exposed to major legal jeopardy. The significance for buyers, sellers and owners? The case is still out on the alleged federal law violations, but now when you see “premier” agents linked up in marketing efforts with lenders, you have a better idea about what’s really going on.