Certain house markets still rising

Despite all the "doom and gloom" stories published by the nation's biggest media outlets, recent studies show that home prices in many areas are still rising fast.

Q. It seems like I haven't been able to pick up a newspaper or turn on the TV in the past few months without seeing a story about how lousy the real estate market is. Isn't there anyplace in the country where prices are going up instead of down?

A. Actually, recent studies suggest that prices in many U.S. communities -- perhaps more than 50 percent of them -- are stable or rising. But most of the nation's biggest newspapers and nationwide TV networks aren't reporting these stories, in part because the largest price gains are coming from small and midsize markets that the media behemoths often ignore.

Here's a great example: Home prices in beautiful Grand Junction, Colo. (population 50,000), are up 18.6 percent from a year ago, according to Internet home-valuation giant Zillow.com. But the area's huge gains have received little notice from the nation's biggest papers and TV networks, in part because they don't have any full-time reporters there.

The Zillow.com report also notes that prices are up a healthy 11 percent in Corvallis, Ore.; 9 percent in the Charlotte area of the Carolinas, and more than 6 percent in Spokane, Wash.

A separate study by the National Association of Realtors notes that prices in Salt Lake City have jumped a staggering 22 percent from a year ago. Values in Binghamton, N.Y., have increased almost 20 percent, and prices in the Salem, Ore., area have climbed nearly 17 percent.

Q. What does the term "collateral security" mean?

A. It usually refers to an additional asset that's pledged to secure a real estate loan.

Let's say that you wanted to purchase a second or vacation home with a 10 percent down payment, but the lender has an internal policy that generally requires at least 20 percent down. The bank might be willing to waive its policy and give you a mortgage if you agree to provide collateral security, such as your primary residence or other investments that you own.

If you agreed to offer the collateral security to get a mortgage for the second home but later defaulted, the lender could not only foreclose on the second home but would also have the right to force a sale of the collateral assets that you had pledged.

Q. The tenant who has occupied the small rental home that I own recently moved out, so I started taking applications for a new tenant. I chose the applicant with the best credit score and signed a lease with her last week, but now one of the applicants whom I rejected based on his lousy credit history is threatening to sue me for violating the federal Fair Housing Act. The rejected applicant claims that I wouldn't rent to him because he is Asian and I am white. What should I do now?

A. Your letter states that you chose your new tenant because she had "the best credit score" of all the applicants for your rental, so it's doubtful that the applicant who is threatening to sue you for allegedly violating federal fair-housing laws would win his case if he foolishly tries to take you to court.

The Fair Housing Act prohibits property owners from refusing to rent their property or sell their home to someone else based on race, color, religion, gender, disability, familial status or national origin. It also bans discrimination against prospects simply because they may receive welfare or other types of government aid.

You chose to sign a lease with the applicant who had the best credit score, so you did not violate fair-housing law.

Ridiculous as it may be, however, the fact that you wisely checked all of your applicants' credit scores has made you subject to the provisions of another federal law -- the Fair Credit Reporting Act.

The FCRA allows you to refuse to rent to people based on their poor credit rating. However, if you do, you must also inform them that their lousy credit report was the reason why their application was rejected.

You should simultaneously notify them that they have 60 days to obtain a copy of their report from the bureau that you used to check their credit, and provide them with the bureau's name, address and phone number.

Put all of this in writing and send it to them via certified mail so they can't later claim that they were never informed about their rights under the FCRA.

© 2007, Cowles Syndicate Inc.