Can My Mortgage Go to Pot?
My goodness it’s great to live in Colorado. More specifically in the territory of The City of Denver known as Park Hill. In a land of Blue States and Red States our neighborhood is generally speaking part of the blue pigment, which in this century has tinted an historically Red State, to Purple.
We not only help put the swing into our state when it comes to national politics, but we move with that pendulum on those broad and basic issues which have shifted so dramatically over the past half century.
Sixty years ago we were warned that “The times, they are a changin” … and boy, was that an understatement! One hundred years earlier, a Frenchman told us that, “Nothing is stronger than an idea whose time has come.” And the ideas just keep on coming, and apparently will not be denied.
Denver and Colorado are in the battleground for many of these issues, and true to their contrasting colors, are home to champions of forces on both sides. We have seen cigarette smoking restricted and banned in most public places, the definition of “personhood” contested, women’s rights and choices protected and challenged.
The right of our state and local governments to tax us has been limited, to frack or not to frack is deliberated. Gays and lesbians fight for their rights to legal marriage, and racial profiling and cultural stereotyping is condemned. This last election mandatory GMO labelling of food made its initial appearance, was rejected, and which almost certainly will be back.
Amid this constant swirl of “progress” or “decline” – depending on one’s viewpoint – one item caught my eye the other day that touched on my area of expertise. Pot legalization. A prime example of an idea that refused to be ignored, and wouldn’t go away.
I saw an article reminding us of the fact that federal law still trumps state law. Even though 23 states have now legalized medicinal pot use, and four states permit recreational use, it’s still illegal in Uncle Sam’s eyes. Especially vulnerable are properties built or operated with federal funds or insured by HUD potentially affecting the nearly 300 federally subsidized housing projects across the state. This isn’t new information, but it can affect many of us here in the neighborhood who have FHA loans or are renting out a property.
Local landlords and property managers may want to pay attention, if their tenants are smoking in their buildings. After all, federal law gives the government the right to seize finances and property that are connected with illegal actions – including drug use.
Strictly speaking, landlords who allow marijuana cultivation on their premises or allow the smoking of it on site for any purpose could face the scenario of having their property confiscated. This violation of federal law alone could be enough to keep marijuana use out of their properties, but also to consider are possible violations of illegal activity mortgage covenants and potential issues with insurance companies.
Would a homeowner have difficulty in collecting Insurance benefits if his property burnt to the ground and investigators uncovered evidence that recreational marijuana usage as a probable cause? Will Insurance companies require riders covering pot usage or refuse coverages in a manner similar to the way some company’s deny coverage if you own a dangerous breed of dog?
It is unclear how FHA would respond if it is brought to their attention that someone who has one of their insured loans is found to be violating federal law – even if their activities are specifically allowed in state law. However unlikely it seems that the feds would aggressively take action under the present administration, things could change. History tells us that they will.
Another issue involves the international community and its cooperative War on Drugs. Since 1961, the feds have classified cannabis as a “controlled substance.” The United States could feasibly experience pressure to prosecute violations internally with the same vigor that it expects other nations to apply to other controlled drugs on their soil.
All of this may prove so much dust in the wind if the present administrative course continues and full legalization of marijuana comes about. But administrations change, as do Supreme Courts. This case has yet to make it there.
And here in Colorado, there is currently a case before the state Supreme Court over whether companies can fire an employee for using marijuana. Stranger things have happened before than a ruling in favor of the company.
So before spinning or downloading (I’m not sure of the proper urban term is for playing electrical music) Rainy Day Woman and belting out the refrain so all can hear, remember that these times may be a changin’ again.
Neil Funsch has been a mortgage broker for 18 years, the last four in Park Hill. He can be reached at 303-229-2684 or neil.funsch@gmail.com.