Mortgage Debt Relief. Wassup?

Another question hanging about our heads this year-end involves extension of Mortgage Debt Forgiveness, that measure that allows lenders not to 1099 you for the mortgage debt relief sellers who have gone through a short sale or foreclosure receive.

At this point with all eyes focused on the fiscal cliff, it is unlikely anything specific to this measure will be passed this year. If there is a continuing resolution (kick the can down the road for 90 days and let the new Congress deal with it), debt forgiveness could/would likely be a part of that. Otherwise we just get to wait until after the first of the year. NAR is pushing very hard for this – it was the subject of a recent call to action for Realtors nationwide, and we are moderately optimistic it will be extended by the new congress but by no means assured. Join the club with all the other individuals, businesses, charities, military members and others awaiting their fate at the whim of the administration and the able hands of Congress.

I know this is very nerve wracking for people involved in short sales or foreclosures right now who don’t know if their phantom income (debt relief) will be taxed or not. Imagine shortselling your home at a loss of $100,000 to your lender. If you close prior to December 31st, you have no tax liability on that money. If you close after January 1, that $100,000 could be added to your regular income and taxed at your increased rate – a potential difference of $20,000+. And right now nobody knows what’s going to happen. Merry Christmas. I’ll provide any updates as they become available.

You can let Congress know how you feel about this by clicking here:

 Do No Harm To Housing

FHFA REO Bulk Sale Program – what you need to know.

In response to the ongoing depression in our country’s housing market, the federal government has proposed yet another one-size-fits-all band-aid solution to a highly localized problem. As with most of the knee-jerk proposals they have attempted during the past 4 years, this program will not resolve the underlying issue and, in some cases, will make it substantially worse. I’m talking about the Federal Housing Finance Agency’s (FHFA) ‘REO Initiative’ pilot program destined for implementation in Los Angeles and Riverside Counties.

What the program proposes to do is effect a ‘bulk sale’ of REO (bank-owned) properties in select areas in order to ‘remove this overburden of inventory’ from the housing market and convert it to rental units for 5 years. Currently designated in Riverside County – more than 2,500 REO units.

Here’s the problem with that. Contrary to what the government tells us we are experiencing, we actually have a significant shortage of housing units for sale to begin with. There are areas of the country where this program might be effective in accomplishing what the government claims to want to fix, but our area is not one of them. There are areas of the county with a 2 year inventory of homes for sale, prices are continuing their precipitous slide and consumes are not buying homes at any price. Our area is not one of those.

It’s been nearly four years since our market had an inventory in excess of 12 months. Following a record sales year in 2010 and continued strong demand in 2011 and so far in 2012, our inventory of homes for sale is less than four months. For much of that time it has actually been between 2 and 3 months and, as I have written before, if you back out the higher end homes (over $1,000,000) that are selling very slowly, our local inventory of salable homes in Murrieta and Temecula stands at just 1.7 months. A ‘healthy’ inventory is considered to be 6-7 months and we are waaaay under that. Taking a large chunk of properties off the market would only further reduce the opportunities for home buyers to find a home and may well result in further price erosion and market deterioration.

But how about the government’s second argument that we are suffering from a severe shortage of rental units and that by releasing these units to large investor groups we would replenish that stock? Again, not true. Nearly 60% of current single family purchases are by individuals or small local investors who are buying the properties to either A) fix up and re-sell to qualified buyers, or B) keep as rental units.

Local individuals and small investors would be eliminated from the equation as the government program would only sell large blocks of homes to institutional investors far removed from our community. In addition to eliminating opportunities for home buyers and investors, the program would also exclude local property managers, as the properties would be handled by new departments of these institutional giants, and it would remove local Realtors® from the equation either as selling or rental agents in the transaction.

And what is the logical consequence of some far removed institutional investor buying a group of 100 or 200 properties in Temecula? Well, they’d probably want to rent them out as quickly as possible so they would rent them out at the cheapest rate possible. After all, they’d be buying them for pennies on the dollar so any income stream is better than a continuing vacant property. While this may result in some short-term advantage for local renters, long-term it would result in another round of foreclosures as current owners who are barely covering their cost would no longer be able to do that and would lose those properties.

Finally, in what may be the crowning insult, the primary groups that would stand to benefit from these bulk sales are many of the self-same industrial investors whose bad practices enabled the housing implosion to begin with. So they would now be able to purchase the same properties they made bad loans on for a fraction of their original price and they’d be buying them with the bail-out money the government (read: you and me) gave them.

As I initially stated, there are areas of the country where removing properties from the market and converting them to rentals might be good policy. We don’t happen to live in an area that, by definition, would benefit and could see substantial harm to our fragile recovery. The National Association of Realtors® has submitted a letter signed by most of our local Congressional delegates to Edward Demarco, acting head of FHFA, along with a bevy of other federal functionaries requesting that this ‘solution’ be applied only to carefully targeted areas of the country and to cancel any proposed sales in Los Angeles and Riverside Counties, and indeed in the whole state. We don’t want it. We certainly don’t need it – but when has that ever stopped the federal government from giving it to us anyway? Remember Ronald Reagan’s 9 scariest words – ‘We’re from the government and we’re here to help’. He was undoubtedly thinking about a program exactly like this.

 

 

SRCAR Encourages your Support of AB 1098.

On Friday, August 30, the legislature passed AB 1098, a bill that would reinstate VLF funds to the four newest cities in California, including Menifee and Wildomar. We encourage you to download the attached letter of support and email it to the following people. The Governor could make a decision on this measure at any time so time is of the essence.

Thanks to Senators Anderson and Emmerson and to Assemblymen Jeffries and Nestande for their affirmative votes to move this bill forward. 

SUPPORT letter for AB 1098 

nancy.mcfadden@gov.ca.gov,

gareth.elliott@gov.ca.gov,

anna.pozdyn@gov.ca.gov ,

gavin.newsom@ltgov.ca.gov

http://gov.ca.gov/m_contact.php

Another Bogus Budget

KEVIN’S CORNER

It was another rough month for the families and taxpayers of California, as the legislature completed this year’s budget this week.  I don’t know if there is anyone who is actually happy about the budget, as even the majority party who crafted it in its entirety would certainly rather be growing rather than cutting and eliminating programs.  But there are bad ways to deal with a deficit of this size, and there are worse ways, and make no mistake about it-they have chosen some of the very worst ways to do it.

A few of the worst elements of this budget plan (in no particular order):

  • Once again, the process was done largely in secret behind closed doors.  Hearings were held only on the most general concepts (when they existed at all), and witnesses were unable to say how specific programs might be affected or how much would be spent or cut.  Groups who were affected by the cuts (like local governments) were not allowed to see the final language until it was too late to organize against it, and promises that had been made in negotiations before the budget were absent when the bills were passed on the floor.
  • The budget is based on the assumption that California’s voters will pass an $8 billion tax increase in November, despite the fact that voters have rejected the last 8 taxes to appear on state-wide ballots, including the tobacco tax that just failed in June.  If voters are unwilling to support a relatively small tax that doesn’t affect most of them to cure cancer, are they really likely to pass a massive tax increase that will affect everyone and be spent by our dysfunctional state government?
  • The relatively successful Healthy Families Program that covers medical and dental care for poor children was scrapped, putting them into the state’s Medi-Cal program instead.  Healthy Families is administered by a private group for $50 per client, Medi-Cal is run by state employees for $395 per client.
  • Roughly $16 million was budgeted for administration and collection of the problematic and likely illegal fire tax.  It is likely that no net revenues will ever be recovered from this tax before it is struck down, and we will pay $16 million  for nothing.
  • It is expected that next week the Legislature will approve the $2.7 billion in bond sales that the governor wants for initial construction of the High Speed Rail Program, which will cost the state general fund roughly $180 million annually for 30 years-enough to keep all the State Parks open, fully fund the UCR Medical School, and restore funding to the cities in Riverside County who were victimized in last year’s budget-and still leave tens of millions of dollars to restore other cuts in critical programs or schools.
  • The Governor has targeted massive and unnecessary cuts at education if his tax increase fails as expected  in November.  I supported a budget alternative that would have protected schools and higher education from budget cuts, but it never even received a hearing.  Holding a figurative gun to the head of schools to force voters to pass his tax increase is a cynical move that exposes his true priorities.
  • Pension reform has been cast aside again.  Rather than including the billions in potential savings from legitimate reform in the state budget, votes on the Governor’s plan (a good one, actually) have been rejected, and all discussion of reform has taken place in private.  Rumor has it there may be a vote on some sort of reform next week, but once again, nobody but the legislative leadership and the government union leaders who elected them know what will be in it.
  • Local governments were once again victimized in multiple ways that attack their authority, their flexibility, their budgets, and the safety of their residents.

I am asked regularly what can be done to fix the problems in Sacramento, and there are no easy answers.  With the passage of Proposition 25 two years ago, only a simple majority is required to pass a budget, so the party in charge in Sacramento has free reign and can now make decisions based on whatever priorities they want.  The only way to change what is happening in the Capitol is to change the folks who are running the State Capitol.

Another option is through the initiative system, which allows citizens to go around those who control state government.  There is an initiative which just qualified for the November ballot that does put some restraints on how your government operates, including a requirement that bills be in print and publicly available for 72 hours prior to a vote.  I haven’t had a chance to review all the reforms contained in this measure, and this should not be considered an endorsement of the “Government Performance and Accountability Act”, but it is increasingly clear that the legislature is not willing to reform itself, and change will likely have to be forced upon them.

Because I am leaving the Assembly at the end of the year, this was my last budget fight in Sacramento, and I can guarantee I will not miss it one bit!

Sincerely,

Kevin

DRE releases interpretation on appointment of office manager


Effective July 1, 2012, pursuant to Business and Professions Code (B&P) Section 10164, an employing real estate broker or corporate designated broker officer may (but is not required to) appoint a licensee as a manager of a branch office or division of the employing broker’s or employing corporate designated broker officer’s real estate business and delegate to that manager responsibility to oversee and supervise operations and licensed activities. The appointed manager will share with the employing broker or corporate designated broker officer the liability of potential license discipline should violations of the Real Estate Law occur at the branch or division location.

While the appointment of a branch or division manager is completely voluntary under B&P §10164, a broker or designated broker choosing to appoint a branch or division manager must follow the guidelines set forth by B&P §10164. A licensee cannot be appointed as a manager if the licensee holds a restricted license or has ever been subject to a bar order. If the branch or division manager is a salesperson, the salesperson must have at least two years of full-time real estate experience within five years preceding the appointment. Whenever an appointment of a branch or division manager is terminated or changed, brokers or corporate designated broker officers should immediately notify the DRE in writing.

DRE’s Licensing Unit has developed a new form titled, “Branch or Division Manager Appointment” (RE 242), which will be used by a broker or corporate designated broker officer to appoint or terminate branch or division managers. This new form will be available no later than July 1, 2012. Licensees wishing to add or cancel branch offices should continue to use the Branch Office Application (RE 203).

 

CAR OPPOSES AG’s Homeowner Bill of Rights.

California Homeowners Bill of Rights:

A Lesson in Political Expediency & Unintended Consequences.

California Attorney General Kamala Harris announced in a much heralded press release today that her ‘California Homeowners Bill of Rights’ has ‘taken a key step toward passage’. Here’s the key step – she bypassed every preliminary opportunity for the bill to be discussed, debated or voted on in either the Assembly or the Senate. What she did, or had her minions in the Legislature do for her, was have the bill introduced to a ‘two-house conference committee’ that voted this morning to pass the bill. That means tomorrow or, more probably Monday, the full Senate and Assembly will vote on the bills – SB 900 & AB 278 with no discussion.

You’ve heard me discuss the measures previously as the Nevada Suite of bills, so named for the deleterious results Nevada experienced after passing similar legislation last year. Did I mention the ‘special committee’ was made up of 4 Democrats and 2 Republicans? Now guess what the vote was? That’s called a ‘procedural matter’ in Sacramento. Roughly translated it means ‘bend over’.

Here’s C.A.R.’s take on the issue:

C.A.R. is OPPOSING conference report, AB 278, containing anti-foreclosure legislation sponsored by the state Attorney General. C.A.R. opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not, C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes this conference report because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, and making it difficult for even well qualified borrowers to obtain financing. Financing is already very difficult to get. This conference report will only make a difficult situation worse.

Initially the Attorney General had sponsored a package of bills; the so-called the “Homeowners Bill of Rights.” For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report and it must be passed by both Houses of the legislature. These votes may occur as early as Monday, July 2nd.

Background

The Attorney General has sponsored a package of bills to place into California law an expanded version of the national settlement between major banks and state attorneys general. The contents of some of these bills have been under consideration by a Conference Committee comprised of six members who have just approved a conference report on a party-line vote. Some provisions will have the unintended effect of drying up mortgage loans for anyone but the most well-qualified borrowers, and increasing the costs of all mortgages.

One provision allows any borrower, no matter what the circumstances, to file a lawsuit. This will encourage opportunistic lawyers to pursue frivolous lawsuits, bringing unnecessary and unjustifiable delays to an already difficult and time consuming process. The language is so vaguely written that the borrower doesn’t even have to show that they have been harmed to file suit and be awarded damages.

One-sided  attorneys fees may still be awarded only to plaintiffs based on the very broad definition of a “prevailing party” in the report. And, of course, if lenders don’t have the remedy of foreclosure to ensure they can recover their security in appropriate situations, they will be less likely to lend, credit will be less available and the housing market recovery will limp along even more slowly.

C.A.R. is OPPOSED to the conference report because:

 

  • The housing market recovery is still fragile. About half of all sales are of distressed properties. By restricting a lender’s ability to foreclose and exposing them to unnecessary liability, this report will dry up inventory, and it will further discourage lending other than to the most highly qualified borrowers. Additionally, these bills will artificially slow down the foreclosure process, keeping properties off the market that are legitimately in foreclosure. Finally, by removing the threat of foreclosure, the bill erodes the incentive for short sales as well.
  • The bill invites bad-faith defaults and lawsuits. By broadly defining under what circumstances a lawsuit can be filed, even those legitimately in foreclosure can “game” the system. Additionally, the bill creates an incentive for plaintiffs’ attorneys to file frivolous lawsuits even if no harm has been done to the borrower. The courts are already overwhelmed. This bill, by inviting frivolous lawsuits puts an additional strain on the already underfunded courts
  • Lending is already tight. Even the most well-qualified borrowers are finding it difficult to obtain financing. By stopping legitimate foreclosures, banks will be forced to further tighten lending standards at the expense of homebuyers.

 

We’re not intimating that everything contained in the bills is bad and we have been supportive of some of the issues. We also have a competing dual-tracking bill in play that we feel is more balanced and less vague. But this is a take-it-or-leave-it kind of bill – you have to eat the whole enchilada and there are no amendments allowed at this point. All the bad will be with us as law along with the few good things it might accomplish. Sound familiar?

This is also what is referred to as a ‘gut & amend’ bill. For 1 1/2 years some bills have been floating around the Legislature knowing full well they weren’t going anywhere. They were being held for just such a vehicle as this to rise from the ashes and require a last minute vote – often with only minutes of notice.

So this bill will pass UNLESS you can convince your Democratic Legislator to vote against it. Otherwise it’s a simple exercise in vote counting (53 – 27) to ascertain that our housing market will take another hit – a victim of increased frivolous lawsuits, further restrictions on foreclosures and tightened lending standards.

So now you know the proverbial ‘other side of the story’ and it’s not pretty. I encourage you to read the bill at  AB 278 and then read the AG’s release below. While the release summarizes a much glossed over purview of the bills, the devil is in the details. So go to work on your Democratic Legislators and let them know how Realtors® feel, and every homeowner and landlord who doesn’t feel like paying the price this bill will cost.

 

 

NEWS RELEASE

June 27, 2012

FOR IMMEDIATE RELEASE
(415) 703-5837

Social Networks

Print Version

California Homeowner Bill of Rights Takes Key Step to Passage

SACRAMENTO — Attorney General Kamala D. Harris today announced the passage of two central elements of the California Homeowner Bill of Rights through a special two-house conference committee. The 4 to 1 vote sends the bills to an expected vote next week in both the Assembly and Senate.

The two bills approved by the conference committee are the Foreclosure Reduction Act, which restricts the process of “dual-tracked” foreclosures and the Due Process Rights Act, which guarantees a reliable contact for struggling homeowners to discuss their loan with and which for the first time imposes civil penalties on the practice of fraudulently signing foreclosure documents without verifying their accuracy, a practice commonly known as “robo-signing.” The proposed legislation also includes meaningful enforcement for borrowers whose rights are violated.

The full Homeowner Bill of Rights includes additional provisions to reduce blight, ensure appropriate law enforcement response to mortgage fraud and crime, and protect tenants.  The bills containing these protections are also advancing through the Legislature.

“I am gratified by this vote, which represents one more step toward our goal of achieving a Homeowner Bill of Rights for California,” said Attorney General Harris. “The mortgage and foreclosure crisis in our state demands urgent efforts to help Californians keep their homes. The legislature will now have the opportunity to cast a vote on behalf of California’s struggling homeowners.”

The California Homeowner Bill of Rights was introduced February 29, 2012 at a press conference featuring Assembly Speaker John A. Perez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate. The goal of the Homeowner Bill of Rights is to take many of the mortgage reforms extracted from banks in a national mortgage settlement and write them into California law so they could apply to all mortgage-holders in the state.

“The mortgage and foreclosure abuse in California ends here,” said Noreen Evans (D-Santa Rosa), co-chair of the Joint Conference Committee. “This committee has passed historic legislation that codifies the
protections eligible homeowners deserve, while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery. The Legislature has studied, listened and engaged Californians and
industry to find a solution that is fair and effective to mitigate this crisis. I look forward to the full support of the Legislature and Governor in implementing this package.”

“This bill is the result of a long and difficult process in which we received input from all interested parties; including homeowners and the banks and found that foreclosures benefit no one,” said Assemblymember Mike Eng (D-Alhambra). “We ended such dubious practices as having a bank foreclose while a homeowner is in the process of modifying a loan and cut through confusion by making sure that there is a ‘single point of contact’ with mortgage servicers.  With half a million California homes at risk of foreclosure, this action was urgently needed.”

The California Homeowner Bill of Rights extends Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012 Attorney General Harris extracted a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers.

More details about the California Homeowner Bill of Rights are found on the attached fact sheet.  To learn more about how the bills impact California homeowners, review the slideshow at: www.oag.ca.gov.

# # #

You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://oag.ca.gov/news/press-releases/california-homeowner-bill-rights-takes-key-step-passage

 

Do you qualify for a refi?

The White House, Washington

Hello —

President Obama’s plan to give mortgage relief to responsible homeowners boils down to one important principle. He wants to simplify the refinancing process.

And the very first step is to let people know if they would benefit from the President’s proposal — so we’ve built a tool to help answer that question.

Just enter a few basic facts about your mortgage, and this tool will help you figure out if you currently qualify for easy, low-cost refinancing — or whether, like millions of families, you need Congress to act to help you lower your interest rate.

Get started now.  

As tens of thousands of people have spoken up and written in to the White House, we’ve heard one message loud and clear: The refinancing process is anything but easy to navigate.

Even homeowners who have done everything right and made all their payments on time are getting caught up in unnecessary red tape. Sitting down and reading through some of these stories is a powerful reminder of why it’s so important that we get this done right away.

One mom in Maryland, raising two teenage boys by herself, wrote in to say that she’s working 15 hour days to make her mortgage payments and keep current on her bills. Another family from Illinois is hoping to lower their mortgage payments so they can help pay for college for their kids. One woman in Arkansas called the President’s plan a “no brainer” and talked about how much good it would do for the broader economy.

So if you are like these people and think that both you and our economy could stand to benefit from the President’s refinancing plan, give the tool a try, then take a moment to share it with your friends:

http://www.whitehouse.gov/refi

Thanks,

Brian

Brian Deese
Deputy Director
National Economic Council

FHFA proposes to solidify PACE program rules

For Immediate Release Contact: Corinne Russell (202) 649-3032
June 15, 2012 Stefanie Johnson (202) 649-3030
FHFA Proposes Rule for PACE Programs

Washington, DC –As required by a preliminary injunction issued by the Northern District 
Court of California, the Federal Housing Finance Agency (FHFA) has sent to the Federal 
Register for publication and public comment a Notice of Proposed Rulemaking (NPR) 
concerning certain state and local energy retrofit financing arrangements also known as 
Property Assessed Clean Energy or PACE.  The U.S. Court of Appeals for the Ninth Circuit has 
stayed any obligation required by the preliminary injunction for FHFA to publish a final rule. 
FHFA, as conservator, has directed Fannie Mae and Freddie Mac not to purchase any mortgage 
where PACE financing with a priority lien was placed on the underlying property.  Such 
financing moves ahead of the pre-existing first mortgage in lien priority, and thereby 
subordinates Fannie Mae and Freddie Mac security interests in the property.  FHFA took this 
action based on its determination that PACE financing arrangements present a safety and 
soundness concern by transferring financial risks to the regulated entities and lacking in 
adequate consumer protections and standards for energy retrofitting.  

The NPR seeks comments on FHFA’s proposed rule as well as on potential alternatives.  The 
comment period is 45 days from the June 15, 2012 date of publication.  FHFA welcomes 
comments on all aspects of the NPR.
Link to Rule as Proposed in the Federal Register
###
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.  
These government-sponsored enterprises provide more than $5.7 trillion in funding for the U.S. mortgage markets 
and financial institutions.

Simpler mortgage rules on the horizon?

Consumer Financial Protection Bureau considers rules to simplify mortgage points and fees
By Ashley Gordon

Rules would bring greater transparency to the mortgage market

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) outlined rules it is considering that would simplify mortgage points and fees and bring greater transparency to the mortgage loan origination market. These rules, which the CFPB expects to propose this summer and finalize by January 2013, would make it easier for consumers to understand mortgage costs and compare loans so they can choose the best deal.

“Mortgages today often come with so many different types of fees and points that it can be hard to compare offers,” said CFPB Director Richard Cordray. “We want to bring greater transparency to the market so consumers can clearly see their options and choose the loan that is right for them.”

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) places certain restrictions on the points and fees offered with most mortgages. The CFPB is considering proposals that would:

  • Require an Interest-Rate Reduction When Consumers Elect to Pay Discount Points: Discount points are a fee, expressed as a percentage of the loan amount, to be paid by the consumer to the creditor at the time of loan origination in return for a lower interest rate. Discount points can benefit consumers by allowing them to reduce their monthly loan payments. The CFPB is considering proposals to require that any discount point must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point.
  • Require Lenders to Offer Consumers a No-Discount-Point Loan Option: It is often difficult for consumers to compare loan offers that have different combinations of points, fees, and interest rates. Under the proposal under consideration, consumers must also be offered a no-discount-point loan. This would enable the homebuyer to better compare competing offers from different lenders.
  • Ban Origination Charges that Vary with the Size of the Loan: Brokerage firms and creditors would no longer be allowed to charge origination fees that vary with the size of the loan. These “origination points” are easily confused with discount points. Instead, under the rules the CFPB is considering, brokerage firms and creditors would be allowed to charge only flat origination fees.

In addition to regulating origination points and fees, the proposals the CFPB is considering would also address mortgage loan originators’ qualifications and compensation. Mortgage loan originators, who take mortgage loan applications from consumers seeking to buy a home or refinance a mortgage, include mortgage brokers and loan officers. The rules the CFPB is considering would:

  • Set Qualification and Screening Standards: Under state law and the federal Secure and Fair Enforcement Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is considering rules to implement Dodd-Frank requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable:

-Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness,
and financial responsibility;
-Criminal Background Checks: Loan originationators would be screened for felony convictions; and
-Training Requirements: Loan originators would be required to undertake training to ensure they have the knowledge
necessary for the types of loans they originate.

  • Prohibit Paying Steering Incentives to Mortgage Loan Originators: In 2010, the Federal Reserve Board issued a rule that prohibits loan originators from directing consumers into higher priced loans because they could earn more money. The Dodd-Frank Act requires the CFPB to issue rules as well. The proposals the CFPB is considering would reaffirm the Board’s rule, which bans the practice of varying loan originator compensation based on interest rates or certain other loan terms. The CFPB’s proposal would also clarify certain issues in the existing rule that have created industry confusion.

The proposals that the CFPB is considering are designed to preserve consumers’ choices while increasing transparency. In developing a formal proposal, the CFPB plans to engage with consumers and industry, including a Small Business Review Panel that will meet with a group of representatives of the small financial services providers that would be directly affected by the proposals under consideration. The documents that the CFPB will be sharing with these small providers include an overview of the proposals under consideration and a list of questions for input. The small provider representatives will provide feedback to the panel on the proposals the CFPB is considering and suggest alternatives. The Panel will issue a report summarizing this feedback, which the CFPB will consider when formulating the proposed rules.

A “fact sheet” summarizing the Panel process can be found here: http://files.consumerfinance.gov/f/201205_CFPB_public_factsheet-small-business-review-panel-process.pdf

An overview of the rules under consideration can be found here: http://files.consumerfinance.gov/f/201205_cfpb_MLO_SBREFA_Outline_of_Proposals.pdf

A list of questions for the Panel’s input can be found here: http://files.consumerfinance.gov/f/201205_cfpb_MLO_SERs_Questions.pdf

The public can email the CFPB their comments and feedback atMortgageLoanOrigination@cfpb.gov.

The CFPB plans to publish a Notice of Proposed Rulemaking this summer, which will be followed by a formal public comment period. The rules will be finalized by January 21, 2013.

SRCAR Endorses Kevin Jeffries for Supervisor Seat.

Two Influential Realtor Associations Endorse Jeffries
First and Only Candidate Ever Endorsed by Both Local Associations


(Riverside, CA) – Kevin Jeffries announced today that his campaign for Riverside County Supervisor (1st District) has received a pair of important endorsements from both the Southwest Riverside County Association of REALTORS and the Inland Valleys Association of REALTORS.

Both Associations advance the American dream of home ownership for families while promoting and maintaining high standards of conduct for local real estate professionals.

“Kevin Jeffries has been an unwavering advocate of home ownership for Riverside County families. Kevin has worked at both the state and local level to help keep fees and taxes low for homeowners” said Joe McGowan, Chairman of the Southwest Riverside County Association of Realtors.

“Kevin has not only worked to help jump-start our distressed housing market by proposing tax breaks for first time homebuyers, he has also been an unwavering advocate for private property rights” said Steve Manos, President of the Inland Valleys Association of REALTORS located in Riverside.

“Like thousands of Riverside County families, Riverside County Realtors have been living with the meltdown of our economy and the housing market. They know I’m going to be fighting to turn our local economy around and that affordable housing is a key part of our future recovery,” said Jeffries.

As an advocate on behalf of Riverside County homeowners and families since his 1990 election to a local water district, Jeffries was often a leading voice to oppose water and sewer rate increases, as well as the placement of unfair water “standby” taxes on homeowner property tax bills. Jeffries also led efforts at the State Capitol to provide first time homebuyers with tax breaks. Today Jeffries is currently leading an effort to repeal a soon to be implemented $150 special state fire prevention tax on nearly 800,000 homeowners across the state and portions of Riverside County.

This announcement comes just weeks after the Riverside County Farm Bureau announced their endorsement of Jeffries for Supervisor, according to Stacy Nicola with the Jeffries campaign.

 

# # #

CAR Opposes SB 1220 Transfer Tax

C.A.R. Opposes Transfer Tax Legislation
C.A.R. is opposing SB 1220 (DeSaulnier), which imposes a transfer tax to generate funds for affordable housing. C.A.R. is opposing SB 1220 because it will add to the cost of buying a home at a time when the housing market is struggling to recover. C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing by making housing less affordable and to fund affordable housing at the expense of homebuyers.
Sen. DeSaulnier has introduced SB 1220 to permanently fund an affordable housing trust fund. Unfortunately, SB 1220 creates a real estate transfer tax of $75 per document to fund this program. In virtually all transactions, a minimum of three documents are recorded – the grant deed, the release and reconveyance, and a trust deed. SB 1220 will create a minimum $225 transfer tax, and the amount could be even higher, depending on the total number of documents recorded.
C.A.R. believes it is unfair and unwise to target one group (homebuyers) to pay for affordable housing, which is an issue of broad social concern. C.A.R. is also troubled that SB 1220 increases the already-substantial cost of buying a home.
While C.A.R. adamantly supports the creation of homeownership opportunities, SB 1220 is clearly not the way to achieve this goal.

SB 1220 is expected to have a hearing in the Senate in April.
For more information, see C.A.R.’s web site: http://www.car.org/governmentaffairs/getinvolved/sb1220opposetransfertax/

LAPD Warning Against Hiring Unmanned Aircraft Operators for Aerial Photos

Los Angeles authorities have asked C.A.R. to communicate this warning to REALTORS® who hire unmanned aircraft operators to take aerial photographs for marketing high-end properties. Using these devices (also known as drones) for flight in the air with no onboard pilot may violate, among other things, the Federal Aviation Administration’s (FAA) policy on unmanned aircrafts, and Los Angeles’s local ordinance requiring permits for filming commercial motion pictures and still photographs.
The Los Angeles Police Department’s (LAPD) investigation has apparently revealed that aerial photos where unmanned aircraft were observed have appeared on certain real estate sales websites. According to FilmL.A., the LAPD Air Division has issued this warning as it intends to prosecute violators in the near future. FilmL.A. is a public benefit company created by the City and County of Los Angeles to manage film permit activity and related issues.
Under the Federal Aviation Administration (FAA)’s current policy, no one can operate an unmanned aircraft in the National Airspace System without specific authority. Operators who wish to fly an unmanned aircraft for civil use must obtain an FAA experimental airworthiness certificate, which will not be issued to an unmanned aircraft used for compensation or hire. Although the FAA allows hobbyists to fly model airplanes for recreational purposes under specific guidelines, that authority does not extend to operators flying unmanned aircraft for business purposes. More information is available from the U.S. Department of Transportation’s Notice on Unmanned Aircraft Operations and the FAA’s policy.

NAR Survey – What are we wiling to give up?

Don’t know if you all got this yesterday from NAR 2012 President Moe Veissi. NAR is doing a survey and would like your opinion regarding our federal policy agenda for the 2012. The survey touches on numerous policy areas from housing to healthcare, GSE’s to foreclosures. If you haven’t received it yet, take a minute to follow this link and give your opinion. It takes less than 5 minutes and you will be some of the few (probably) who bother to respond and make your voice heard.

http://www.zoomerang.com/Survey/WEB22E47V5J5E6″

Here’s the final question. I’d be interested to hear what you all think about this. It goes back to the root issue we all face that is the stumbling block for many of our legislators – how do you feel about putting your own issues on the table? We’re quick to encourage cuts to other areas of ‘obvious waste’ – but what about those issues that are near and dear to us?

Which of these statements most closely reflects your opinion on NAR response?

* When it comes to changes in tax deductions, real estate tax preferences and federal spending, we must all share in the sacrifice to reduce our national debt (including reducing or eliminating some real estate related deductions) to assure the future health of our nation.

OR…

* Existing real estate related federal tax deductions and preferences, including mortgage interest deduction and the $250,000/$500,000 capital gains exclusion, should be preserved in their current form despite concerns about federal deficits and national debt.

We’re having some fun now, eh?

Temecula, Murrieta among nations safest cities again.

Finally there’s a national statistic that shows parts of California in a positive light – and two of my cities are at the top of the heap. Business Insider.com recently released their analysis of FBI statistics for 2010 showing the 13 safest cities in America along with the 25 most dangerous. California scored 6 out of the 13 safest and just 3 of the 25 most dangerous.

According to FBI stats, violent crime, including murder, forcible rape, robbery and aggravated assault, is down across the country by 5.5%. That’s pretty good considering the economic situation. You might imagine just the opposite would be happening but so far so good.

For at least the 2nd year in a row Irvine California ranks #1 in safety with almost 10 times less than the national average crime rate – just 55 crimes per 100,000 people with Zero murders and 30 robberies. Contrast this with the most dangerous city in the country, Flint MI, with 2,208 violent crimes per 100,000 including 49 murders and 84 forcible rapes.

Southwest County again scored well. For the past couple years Murrieta has ranked #2 behind Irvine, with Temecula coming in at 4 or 5. This year Temecula leapfrogged to #2 and Murrieta came in 4th. Temecula had just 72 violent crimes per 100,000 with 3 rapes while Murrieta had 95 violent crimes and 1 murder. Considering that each city has just over 100,000 population, that means there really were only 72 violent crimes in Temecula last year. Applying the same count for #2 Detroit with 1,887 violent crimes per 100,000 and a population of 800,000 gives you a crime spree of nearly 19,000 violent crimes and 340 murders last year. Yowza!

The 13 safest:
Irvine CA
Temecula CA
Cary NC
Murrieta CA
Gilbert AZ
Red Rock TX
Frisco TX
Simi Valley CA
Bellevue WA
Orange CA
Amherst Town NY
Thousand Oaks CA
Surprise AZ

The 25 most dangerous:

Flint MI
Detroit MI
St. Louis MO
New Haven CT
Memphis TN
Oakland CA
Little Rock AK
Baltimore MD
Rockfort IL
Stockton CA
Buffalo NY
Springfield MA
Cleveland OH
Hartford CN
Washington DC
Springfield IL
Philadelphia PA
Lowell MA
Richmond CA
Saint Petersburg FL
Nashville TN
Kansas City MO
Miami FL
Lansing MI
Elizabeth NJ

Governor Brown – VETO SB469

On Friday morning, September 30, 2011, several representatives from our community held a press conference asking Governor Jerry Brown to VETO SB 469 (Vargas). This bill is another in the long line of attacks by California on both businesses and municipalities in our state. It is just one example of why California finds itself 49th out of 50 states for having a business friendly environment. It’s why we’re losing 5.4 companies every week to places like Texas and Colorado and North Carolina and Nevada. It’s another example of that political-think that says Sacramento can make better decisions for our local cities than they can themselves – keeping in mind that Sacramento is deeply in debt, can’t pass a budget, is divisively gridlocked and stocked with career politicians who have never held a real job. Yet they feel perfectly content to try to dictate to the rest of us how we should comport ourselves.

This morning I joined the Mayor of Murrieta, Randon Lane, Wildomar Mayor Pro-Tem Ben Benoit, Menifee City Council member Darcy Kuenzi, Lake Elsinore Finance Director Allan Baldwin and League of Cities rep Dave Willmon in providing our statements to the assembled press. Here is my statement:

Good morning. My name is Gene Wunderlich and I’m Chair of the Southwest California Legislative Council, a coalition of businesses and Chambers representing more than 3,000 small, medium and large businesses in Southwest Riverside County.

Communities throughout our state are facing crisis. In Riverside County our unemployment rate is 14.7%, statewide it is 12.1%, and that’s only the people they count. Like many other cities and counties across California, we each face problems that are similar in nature, yet unique to each locality. We must be able to make decisions that are best for our communities, our families and our friends.

Our elected leaders in Sacramento don’t seem to know what’s going on in Temecula, or Wildomar, or Menifee or communities across Southwest Riverside County. SB469 is a perfect example of that with its bureaucratic roadblocks and overreaching state authority. It’s a one=size-fits-all bill and it will not help us create jobs in our community – although it may well keep several attorneys busy for years.

This bill takes away the power of a community to build and define itself and gives that power to the state, having local land use issues defined in Sacramento. The state SHOULD NOT be imposing more regulations on local governments right now. The state SHOULD NOT be telling us what kinds of businesses we can and cannot approve and the state SHOULD NOT be interfering in our ability to help reduce the high unemployment rate in our own community.

We are asking Governor Brown to help Southwest Riverside County and cities and counties across the state. Join us in helping create new jobs, not destroy more jobs.

VETO SB469.

This bill is also opposed by the California Association of Realtors® and dozens of other pro-jobs, pro-business & pro-local rights groups throughout the state.

CA Attorney General files suit in massive 17 state mortgage fraud scheme.

CA State Attorney General Kamala Harris sued Philip Kramer, the Law Offices of Kramer & Kaslow, two other law firms, three other lawyers, and 14 other defendants who are accused of working together to defraud homeowners across the country through the deceptive marketing of “mass joinder” lawsuits. Prominent foreclosure attorneys Phillip Kramer and Mitchell Stein and at least 17 others have been accused of luring desperate homeowners into the scheme using deceptive advertising and telemarketing schemes aimed at millions of people in California and 16 other states.

The scheme claimed that courts have found that most mortgage lenders engaged in predatory lending practices or approved inappropriate loans (well, that part is certainly true), and that the homeowners bank was one of the guilty. As alleged in the lawsuit, defendants preyed on desperate homeowners facing foreclosure by selling them participation as plaintiffs in mass joinder lawsuits against mortgage lenders. Defendants deceptively led homeowners to believe that by joining these lawsuits, they would stop pending foreclosures, reduce their loan balances or interest rates, obtain money damages, and even receive title to their homes free and clear of their existing mortgage. Defendants charged homeowners retainer fees of up to $10,000 to join as plaintiffs to a mass joinder lawsuit against their lender or loan servicer.

It probably comes as no surprise that theses same ‘prominent foreclosure attorneys’ had previously been ‘prominent loan modification specialists’ but it is alleged that Kramer sent an email to another fellow defendant last year stating “Only morons would prefer to ‘sell’ mods from this day forward”.
Homeowners who have paid to be added to one of the lawsuits should contact the State Bar if they feel they may be victims of this scam. They can also contact a HUD-certified housing counselor for general mortgage related assistance. If you have sent money to any of the following seized entities, you should contact the CA Attorney Generals Office at http://oag.ca.gov/.

The Department of Justice has seized the practices of the following non-attorney defendants: Attorneys Processing Center, LLC; Data Management, LLC; Gary DiGirolamo; Bill Stephenson; Mitigation Professionals, LLC; Glen Reneau; Pate Marier & Associates, Inc.; James Pate; Ryan Marier; Home Retention Division; Michael Tapia; Lewis Marketing Corp.; Clarence Butt; and Thomas Phanco as well as seizing the practices and accounts of attorney defendants:The Law Offices of Kramer & Kaslow; Philip Kramer, Esq; Mitchell J. Stein & Associates; Mitchell Stein, Esq.; Christopher Van Son, Esq.; Mesa Law Group Corp.; and Paul Petersen, Esq.

Attorney General Harris is challenging the defendants’ alleged misconduct in marketing their mass joinder lawsuits; her office takes no position as to the legal merits of any claims asserted in the mass joinder lawsuits filed by defendants.

Victims in the following states are known to have received these mailers, or signed on to join the case. This is a preliminary list that may be updated:

Alaska, Arizona, California, Colorado, Connecticut, Florida, Hawaii, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New York, Ohio, Texas, Washington.

For more information please go to: http://oag.ca.gov/news/press_release?id=2552

NAR: New FTC Rules May Impact Brokerages

New FTC Rule May Impact Brokerages

The Federal Trade Commission (“FTC”) has recently issued its Mortgage Acts and Practices – Advertising, or “MAP”, rule (“Rule”). The Rule imposes requirements on those that provide information about mortgage credit products to consumers by prohibiting misrepresentations during these communications and also imposing recordkeeping requirements. The Rule will impact real estate professionals that provide this information to consumers, such as giving a consumer a lender’s rate sheet. The Rule takes effect on August 19, 2011.

Click here to read the Rule’s text and accompanying commentary.

Background

The FTC published an Advance Notice of Proposed Rulemaking in 2009, and issued a proposed rule relating to unfair or deceptive acts and practices that may occur with regard to mortgage advertising in September 2010. NAR filed a comment letter seeking an exemption for real estate professionals from the Rule- click here to read NAR’s comment letter.

The Rule is intended to regulate unfair or deceptive practices in the advertising of mortgage products, and covers all entities involved in the process such as mortgage brokers, lenders, and home builders. The Rule will also cover real estate professionals when they are providing information about a mortgage credit product to a consumer, as outlined in this article.

Rulemaking authority for the Rule has now transferred to the Consumer Financial Protect Bureau (“CFPB”). Enforcement authority for the Rule rests with the CFPB, FTC, and state attorneys general.

Rule’s Requirements

The Rule prohibits misrepresentations in a commercial communication about any term of a mortgage credit product. A “commercial communication” is broadly defined within the Rule, covering both oral and written statements designed to “create an interest in purchasing goods or services”, which in this case would be a mortgage credit product. A “mortgage credit product” is “any form of credit” that is offered to a consumer and secured by the consumer’s dwelling. The Rule’s coverage will include information about all mortgage terms and the Rule contains an extensive list of possible mortgage terms, including interest rates, products sold in conjunction with a mortgage such as credit insurance, amount of taxes, variability of interest rates, and prepayment penalties.

Application of Rule to Real Estate Professionals

The Rule will apply when a real estate professional provides information about a specific mortgage product to a consumer. An example would be providing a consumer with rate sheets containing the current interest rate from a lender or providing a consumer with applications or other information for a specific mortgage product. All statements about the terms of a mortgage will be covered by the Rule, and will need to be retained for two years. In addition, the statements should have the disclaimer language discussed in this article in order to protect against later misrepresentation claims.

The FTC has stated in its comments that the Rule does not apply to purely informational communications not designed to cause the purchase of a good or service because these are not commercial communications. So, providing a consumer general information about market rates for different types of mortgages products will likely not be subject to the Rule because these are not related to a specific mortgage product. However, providing a consumer with the daily rates from a specific lender would trigger compliance with the rule. Similarly, going through the prequalification process with a consumer in order to determine the range of properties that a consumer may be eligible to purchase won’t require compliance with the Rule; however, providing a consumer with the documentation needed to apply for a preapproval from a lender for a mortgage loan will be covered by the Rule.

Disclaimer or Qualifying Statement

In the preamble to the final Rule, the FTC notes that a disclaimer provided with a covered statement “may correct a misleading impression, but only if it is sufficiently clear and prominent to convey the qualifying information effectively”. Therefore, real estate professionals should always include a disclaimer when providing information to consumers about the terms of a mortgage credit product, as a properly crafted disclaimer can protect against later misrepresentation claims.

The disclaimer will need to be prominent, as the FTC notes in its comments that disclaimers in small type placed at the bottom of a document will not protect against misrepresentation claims. The disclaimer text should be separated from the other text in the covered statement, as language buried within the text may not be effective to protect against misrepresentation claims. Click here for a model disclaimer.

Note that the disclaimer should be tailored to the type of information that you are providing to a client. If you are providing other services beyond transmitting basic mortgage information, you will need to tailor your disclaimer to cover those services.

Recordkeeping Requirements

If a real estate professional is subject to the Rule, the real estate professional is required to keep all covered commercial communications for 2 years from the date that the communication was made to the consumer. In order to comply with this section, the real estate professional should put all covered statements into writing and include the statements in each consumer’s file (paper or electronic) with the brokerage. This record retention system should become part of the brokerage’s overall record retention program.

Crow with West Nile Virus found in Wildomar

A crow with West Nile Virus was recently found in Wildomar. Crows cover a lot of ground during their day and may play host to lots of mosquitoes. Here’s the caution from the County on how to avoid situations where you may be exposed.

Pay no attention to that man behind the curtain.

The California Democratic Party is at it again – and they’re counting on you being too stupid to notice.

Dan Walters, Political Columnists for the Sacramento Bee, recently wrote about the slew of Democratic legislation aimed at eviscerating the initiative process in our state. You know, the initiative process – whereby ordinary citizens have the opportunity to get measures on the ballot that legislators don’t like? Yeah, that process. Democrats complain that ‘the initiative process is being abused’ and they want to protect us from ourselves.

Now granted there are too many initiatives on our ballot sometimes – there were 10 on last Novembers ballot alone, But in its 100 year history, the initiative, referendum and recall petition has produced many beneficial results in addition to a few clinkers. Prop. 13 comes to mind, and last years successful Prop 20, which removed the redistricting process from the hands of our legislators, and failed Props 19, to legalize marijuana and  23, which would have overthrown the onerous AB 32.

But the Democrats don’t like us to have that much say in our government – because they know what’s best for us and how best to spend our money without any pesky input from us. Heck, they already control our legislature, our governor, and every major elected office in the state – they just don’t want to contend with the actual voice of the people.  They’re also afraid of public backlash against their incompetence and malfeasance in office which is threatening to put bills on upcoming ballots mandating pension reform, restrictions on political fundraising by unions, education entitlement and reform and a host of other issues that citizens are pissed off about but that the legislature refuses to act on.

Now in an act of craven insincerity, they are backing radio ads aimed at inducing fear of signing initiative petitions. You may have heard them – a sweet female voice just signed a petition outside the local grocery store while the wise male voice tells her she probably just gave her signature to an identity thief, all her pertinent information will be shared on the global network of signature gatherers/identity thieves, and she should never do that again. Listen closely at the end, after the terrified woman promises never to do such a stupid thing again – listen to who is paying for the ad. It’s a  group called – Californians Against Identity Theft,  ALONG WITH backing by unidentified labor groups. The origins of the group are murky but the goal is not.  Identity theft is a major issue and cause for concern for everybody, I’ve written about it numerous times over the years, But the SOLE FOCUS of CAIT appears top be  signature gatherers and the initiative process. Sound like a well rounded group focused on the real issue – or some special interest? Yeah, that’s what I thought.

Maybe I’m just cynical but could the liberal labor movement and their Democratic lackeys in the legislature be in cahoots on this? Could they actually be waging a concerted campaign both in the legislature and on the airwaves to further their agenda of coercion and control? Naw, I’m probably just being paranoid. Of course just because you’re paranoid doesn’t mean they really aren’t  out to get you.

How much do like being manipulated? You must – you keep voting for these people.

Read more: http://www.fresnobee.com/2011/08/03/2487995/calif-democrats-attack-initiative.html#ixzz1UqBID2Lb

The opinions expressed in this blog are solely the purview of the author and in no way represent the views or policies of SRCAR, or any other reputable organization or asylum I am associated with.

Take Action Now!

This week Congress will be debating amendments that will dramatically impact our business here in California – either extending or expiring the current conforming loan limits. Current loan limits are $729,000 max for conforming, with our area being closer to $625,000. If these expire our next max would be back to $425,000. Now  $425,000 may sound like a  pretty fair loan limit. Folks across the mid-west could buy three median price homes for that amount. But that’s part of what got us into trouble out here to begin with – our median price in Southwest California, as well as much of the state, was well over $500,000 for several years. But if you wanted to buy a median price home, you were forced into a non-conforming or jumbo loan. FHA loans fell to less than 3% of the market in 2006. So people started looking for alternatives to traditional financing. 

Viola – sub-prime, Alt-A, exotics. 

You’ve probably already heard that B of A is already operating under the new/old loan limits assuming that Congress will let them expire. This means larger, more costly jumbos are back in place for many buyers. You think our move-up and upper end market is dead now? Just wait. 

So please take a moment to respond to this Call to Action. This week the Senate will be considering an amendment to the Military Construction Appropriations Bill (don’t ask), to maintain the current loan limits for another year. Both CAR and NAR support this effort. This Call to Action urges our Senators to work to maintain the current loan limits to help fan the flames of the recovery they so desperately need. 

Please help us ensure that your clients have access to affordable mortgages. 

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