New Home Assessment Data from Larry Ward

The word is out from our County Assessor, Clerk Recorder Larry Ward – another round of declines for property taxes in Riverside County. This makes three straight years of dropping assessments, a year longer than the last go-around in the 90’s.

But a couple of things have changed. This year many of the dropped assessments will go to commercial properties, which are continuing to lag residential properties. When I spoke with Larry earlier this year he was hopeful there would not be a need for further reductions this year after taking property values for the county back to roughly 2002 levels last year. Indeed as we have seen from my reports, residential values have remained virtually flatlined through the past 24 months after dropping over 50% in the previous 18 months. Assessed property values for the county for 2011 will be just over $200 billion, down over 16% from their peak of $243 billion in 2008.

This will be felt next year by the county as well as our cities, who are struggling to keep services afloat. Property taxes are the single largest source of operating funds for our cities and county and a substantial and real drop as we have experienced puts a real crimp in budgets, especially following the recent state decisions to further plunder city coffers of redevelopment funds, vehicle license fees and some of the basic operating funds cities have always counted on to get by. For the county it will mean a drop of nearly $5 million in property tax revenue from their earlier estimate of $266 million, a reduction of nearly 1% from their current budget of $582 million.

A second major change from Ward’s office is in the way the changes will be reported to property owners. Every year along about this time people got used to seeing a little postcard in their mailbox telling them what next years assessed value on their home would be. This year that’s not happening. In an effort to shave $200,000 from his budget, Ward will be posting the new assessments on-line on July 15. You can review your property tax assessment at www.riversideacr.com. If you don’t have internet access, well then you’re probably not reading this but in case you know somebody who may not browse, they can obtain a written assessment by calling 951-955-6200. They could also write to

Assessor, County Clerk, Recorder Larry Ward
P.O.B. 12004
Riverside CA  92502-2204

One final change tis year. If you think your assessed value should be higher or lower, it might cost you to find out. There has been debate among the County Supervisors to charge a fee to challenge your assessment. Should your challenge prevail and the property re-assessed, the fee would be refunded. But if the initial assessment stands then you will forfeit that fee. This has been proposed for two reasons – first as a cost measure to help defray some of the expense of researching individual properties after the process has already been done. Second, to minimize the rash of frivolous filings that occurs every year without foundation. Appears the only time people want their home to be worth less than it actually is is for tax purposes. And while this is understandable, your ‘gut feel’ of what your home is hopefully worth for tax purposes costs the county a lot of money to show you otherwise and that is being addressed by the new fee structure. If  you purchased your home after January 1, 1999, chances are Larry’s got you covered. He’s been one of the most aggressive and accurate Recorders in the state as far as making sure you aren’t over taxed.

 

What’s wrong with our Association?

Yesterday I stood in the back of the room during our Tuesday morning mls marketing meeting. As usual it was well attended and the highlight yesterday was the forum by candidates who are running for our board of directors. We are truly blessed to have an exemplary crop of folks who are willing to give of their time to help guide our association into the future. It wasn’t that many years ago we had one or two people, if we bullied them into running. Now we have a surfeit of well qualified people from members from our Young Professionals Network to people who have been in the industry for 30+ years.  We have three openings this year and 8 people interested in filling them. The future looks bright.

But a question was raised from an audience member during the Q & A referring to a ‘disconnect’ between the board and the members. Now keep in mind I sat on the board for 12 years, chaired it three times and have sat in the back of the room as an observer the past 2 years. Never have I seen a board more connected to the members. Everybody on our board is a practicing Realtor®. They come from big franchise offices and one man brokerages. There are salespersons and brokers. There are people that work hard to do 5 deals a year and others who do 80 or more. There are people with lending and appraisal experience, men and women, young and not-so-young – in short, a board that mirrors our membership pretty well.

This board is also very engaged. There have been times in the past where board members were just padding a resume but todays board members sit on a variety of committees, several are traveling directors to our state association, some travel to national association meetings, others are involved in our regional and state mls, some are members of our fraud task force and some have stepped in from our future leadership pool, the Young Professionals Network, to become leaders today.

How do you even intimate these people are ‘disconnected’ from our members? They represent the very best of our members. And the people running for the positions represent a continuation of that excellence – it is insulting to them and to the current board to say they’re disconnected.

But then I had to step back and consider the source. Not everyone out there is connected, that’s obvious. The person calling for more transparency in board meetings is obviously not aware that board meetings are open to everyone to attend and that minutes are subsequently posted to the association website. In spite of repeated efforts to inform them, they’re disconnected from the bigger picture.

Another member bemoaned the lack of ‘outreach’ to get members to attend the Tuesday morning marketing meetings. This has been an ongoing  issue over the years as people tend to come to the meetings when times are tough but don’t attend when times are good. But even during the best of times attendance seldom exceeds 1% or 2% of our members plus a healthy dose of affiliates. Again, some members are disconnected. They think the entire association revolves around these Tuesday morning meetings simply because that’s the one thing THEY attend. As one director pointed out, an email goes out every week reminding members of the meeting – they can either choose to attend or not. Apparently of our 3,500 members, about 3,440 regularly choose ‘not’. Yet amazingly enough many of those people are very successful without attending the meetings. Not a lack of outreach, simply a matter of choice and priority.

Some pointed to a lack of Broker involvement or commitment to force their agents to attend these meetings. We have a very robust Broker community that take a very active role in our association. We hold regular meetings with them to provide information and solicit their input and these meetings are very well attended. Right now we are involved in an ongoing efforts to get a majority of our Brokers signed onto the Broker Involvement Program through CAR & NAR. The BIP has been shown to increase the response rate for calls to action by anywhere from 2 – 3 times. That’s critical for our state and federal legislative programs – far more critical at this juncture than pressuring these Brokers to force their agents to attend a Tuesday morning  meeting. Not only that, most Brokers have their own weekly marketing meetings and if they’re going to have their agents kill a morning a week, they would just as soon it be at their own office meeting. Their choice, not the association’s position to badger them.

Unfortunately, as all people running for office, our candidates treated all these questions with a gravitas often undeserved. Sometimes the premise behind a question is invalid and it’s OK to point that out. And as much as we’ve been told over the years “there are no stupid questions”, we all know better, don’t we? In any group there’s bound to be at least one asking stupid questions repeatedly. Yet our candidates, to their credit, dealt with each question, often according it way more legitimacy than it deserved. A couple even twisted themselves into corners on what they would do if elected trying to address every realm of some obscure question. Welcome to the world of politics.

Ah well, bless the candidates for stepping up. Three of them will go on to represent our members very effectively and develop that special connection. The ones not elected will still continue to contribute as they have over the years which brought them to this position today. Yesterday they staked out their positions and answered questions for an hour – all for the benefit of 5, count ’em, 5, people who had not yet voted. They treated it like it really made a difference – because it does. If you don’t like it, get involved yourself. It’s easy. All you have to do is step out from the back of the room lobbing vollies and move to the front of the room fielding them.

Southwest California Realtor Report for April 2011

Here’s the monthly report for Temecula, Murrieta, Lake Elsinore, Wildomar, Menifee and Canyon Lake. The report contains information on Single Family unit sales and median price for the region as well as a recent article on legislative issues dealing with homeownership.

If you find the type is a bit small for your viewing pleasure, simply click on the title to go to a full size version on Slideshare.com.

 

The right of property is the guardian of every other right.

Briefing Report: The Value of Property Rights

“The Right of property is the guardian of every other Right, and to deprive the people of this, is to deprive them of their Liberty.” – Arthur Lee

The Bedrock of a Free & Prosperous Society

The institution of the right to private property is perhaps the single most important condition for a society in which freedom and prosperity is to flourish. This notion of private property can seem fairly straightforward, especially for people living in a free-market society such as the United States. As noted in the book Unleashing Capitalism:

One reason for its familiarity to us is that private property is a bedrock principle of market capitalism. Think of a growing economy as an award-winning Broadway show. Private property is like the stage crew, constantly working behind the scenes to make sure the show runs smoothly. Private property, while perhaps underappreciated, is vital to ensuring that the economy will grow and prosperity will rise over time.

Yet in our modern political age, the importance of private property rights has faded to the background and has at times been termed little more than a “philosophical exercise that has no practical implications.” Nothing could be further from the truth. Across the nation, and particularly in California, property rights are becoming ever more vulnerable to infringement by government control in several forms: excessive taxation, regulation, and the process of takings (i.e. eminent domain). This undermines property rights and thereby suffocates economic growth prolonging our economic woes.

The protection of private property is vital component necessary for the economic growth and prosperity that will play a key role in lifting California out of her perpetual economic malaise.

The Cornerstone of American Exceptionalism

“Property,” John Adams wrote, “is surely a right of mankind as real as liberty.”

America’s founding was shaped by the radical declaration that our right to private property was and is inherent and inalienable. This novel and revolutionary idea, embodied in our Founding documents, challenged the historical practice of man’s rights being determined, limited, and granted by the state. This reorientation of the grantor of rights – from our Creator rather than from those in authority – dramatically redefined who was sovereign while simultaneously placing chains on the powers of government. The state would now be the protector – rather than the arbiter – of man’s inherent and inalienable rights to life, liberty, and the fruits of his labors1.

The right to hold private property is a well-documented principle of the Founding Fathers. William Blackstone, whose Commentaries on the Laws of England shaped much of the Declaration of Independence and the Constitution, wrote that “the law of the land… postpone[s] even public necessity to the sacred and inviolable rights of private property.”

Thomas Jefferson stated: “all power is inherent in the people… they are entitled to freedom of person, freedom of religion, freedom of property, and freedom of press.” Thomas Paine, in Rights of Man, cites property, along with liberty, security, and resistance of oppression, as chief among inherent individual rights.

Such reasoning led to drafting the Fifth Amendment in the Bill of Rights, where it states, “No person shall be…deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” The need to protect private property rights, once so obvious to Jefferson and Adams, is now becoming lost in a tangle of intrusive government takings.

Governmental forces (excessive taxation, regulation, and strong eminent domain powers) make property rights less secure, increasing owner uncertainty. Greater uncertainty decreases the willingness to undertake capital investment and accumulation thereby reducing the productivity of labor and depressing wages. Greater uncertainty also curtails transactions transferring property to new owners who discover more valuable uses. Ultimately, economic growth stagnates. When government undermines private property rights, the economy suffers and this thwarts prosperity for the future2.

The Millstone of Eminent Domain

The clearest example of government infringement on private property rights is the use of eminent domain. Eminent domain is the power governments have to confiscate private property as long as it is for a legitimate “public use”. Whereas eminent domain was initially intended to ensure that public services (ie roads and highways) were available to the public, local and state governments often use eminent domain for any project that is considered economically beneficial. Public use, as a practical matter, has morphed into a more ambiguous “public benefit.”

The most jarring example of this morphed “public benefit” was the city of New London’s abuse of eminent domain and the Supreme Court’s ruling upholding the action in Kelo v. City of New London (2005). In Kelo, the Supreme Court held that held that the Constitution allows governments to seize private property and transfer it from one private land owner to another in the name of economic development. In other words, after the Kelo decision, governments can use their eminent domain power to take homes for potentially more profitable, higher-tax uses, powerful evidence, as Justice Clarence Thomas suggests, that something is seriously awry with the Supreme Court’s vision of the Constitution.

Justice Sandra Day O’Connor framed the problem very simply in her blistering dissenting opinion: “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public in the process.” This decision went well beyond what the founders intended when they wrote the just compensation for public use clause.

While some political observers note that the power of eminent domain is rarely used in the Golden State, the Institute for Justice – a leading legal advocate against eminent domain abuse – has documented nearly 200 projects across the state that have threatened or used eminent domain for private gain. Within each of those projects, dozens, hundreds, if not thousands of homes, businesses, churches and farms have been impacted.

National polling confirms that the public is overwhelmingly opposed to the use of eminent domain for economic redevelopment. Some 87 percent responded that government shouldn’t have such power. Some 88 percent responded that property rights are just as important as freedom of speech and religion.

Regulatory Takings

Today, government imposition of regulatory regimes that signifi­cantly diminish the value and enjoyment of private property may present an even more common threat than abuse of eminent domain. Property owners are increasingly subjected to regulatory “takings” – where the use of their land is drastically restricted and, consequently, the overall value of the land diminishes.

The problem begins, therefore, with the growth of government regulations at the federal, state, and local levels of governance that deny owners the legitimate use of their property. A prime example can be seen in the advancement of the environmentalist movement. Just as the inflation of the 1970s moved people into higher tax brackets, so the environmentalism of the 1990s has given government new rationales for controlling the use of property. While there is little doubt that cleaner air or less traffic congestion are a positive end goal, when they are accomplished through heavy handed regulations, we may be sure that our liberties are also being restricted. Production and prosperity also tend to decline, and in the case of those people who bought land anticipating that they would be able to develop it – but now find that they have paid a high price to keep it idle – there is also manifest injustice3.

Leonard Gilroy of the Reason Foundation describes the infringement of property rights through land use regulation as follows:

…contemporary land use regulation often uses public policy to mandate the private provision of amenities that benefit the community-at-large. As the regulatory scheme influencing local land use has grown more prescriptive and restrictive, there has been an increasing curtailment of private property rights. Landowners in many communities nationwide have been restricted in their ability to use their land in the ways that they had intended when they purchased their property, dramatically reducing their property’s value and imposing an economic hardship on them.

If investors don’t know what they own, or can’t be sure of defending their property rights, then they either won’t invest or alternatively they will demand higher rates of return when they do. This idea applies to both tangible and intellectual rights. The net impact tends to be dual — lower levels of investment and higher interest rates, neither of which is conducive to faster economic growth.

Stimulating the Economy

Well-defined and enforced private property rights are the cornerstone of a free-market economy. The positive economic effects of private property are widespread and well documented. Secure property rights promote specialization and exchange, provide incentives for conservation and preservation of resources, and promote technological innovation, entrepreneurship, capital accumulation, and investment. In essence, secure property rights underlie economic growth.

This relationship is confirmed in The Heritage Foundation’s Index of Economic Freedom. As demonstrated in the chart to the right, property rights and economic prosperity go hand in hand.

On average, GDP per capita is over 10 times higher in nations with the strongest property rights than in those with the weakest property rights.

One of the government’s primary roles is to ensure that people can own and make decisions regarding how they will use their property and ideas – which in turn spurs entrepreneurial growth. As such the same correlation between strong property rights and economic growth must pertain to state and local governments.

In a free market economy, one of the strongest incentives that drive entrepreneurs is the desire to please customers and thereby earn a profit. To flourish, entrepreneurs need an economic environment that encourages private property and free markets.

In a system where the government or some central planner owns the nation’s resources and decides how they are allocated, entrepreneurs do not profit from their successes; thus, there is a much smaller incentive for them to be creative. In a free market economy, entrepreneurs can use their property and ideas in ways they think are best, and they can benefit directly from their successes in the form of higher profits or salaries.

Simply put, private property is necessary for economic growth and prosperity.

Conclusion

Today Californians are besieged on all sides by government infringement on their right to own property and use it to its fullest extent. As government and bureaucracy continue to grow, federal state and local governments alike are wielding far-reaching environmentally based land use restrictions, “growth controls,” unreasonable zoning hurdles, facility permitting regimes, and, now, potentially, crippling carbon dioxide emission limits. Throw in the threat of eminent domain and tax policies which diminishe productivity and undermines the security of ownership, and it is easy to see why California’s economy continues to struggle.

One of the most important steps that lawmakers can take is to serve as strong advocates of property rights, and ensure that new laws do not further erode those rights.

By focusing on the importance of private property rights and providing greater protection of those rights, federal, state and municipal leaders will witness the economic growth they have long pursued through other means.

For more information on this report or other Local Government and Housing issues , contact Ryan Eisberg, Senate Republican Office of Policy at 916/651-1796.

$40 political survival proposal – updated.

Many of you have commented on my earlier blog regarding the proposed $40 dues increase to fund the Realtor Political Survival Campaign. As you recall, that will be voted on in May at our annual meeting in DC. Yesterday we had a 1 1/2 hour webinar with NAR leadership discussing why the additional funding was necessary. At that time the possibility of putting the Public Awareness campaign on haitus for a couple years and using those funds for political purposes was presented as a sort of plan B. According to NAR stats however, that public awareness campaign is a great success – although most of you would just as soon it went away.

Anyway, for those of you opposed to an additional $40 hit on your dues, it appears your voices have been heard, Now you just need to make sure your local association and your NAR Directors are aware of your feelings.

From NAR President Ron Phipps:

To:        Local Board and State Association Presidents

This letter constitutes the official notice required by Article II, Section 10 of the Bylaws of the NATIONAL ASSOCIATION OF REALTORS® of a proposal to eliminate a previously approved membership assessment.

In May of 2010 the NAR Board of Directors approved an assessment of $35 per member for 2011-2013 to be used to continue the Public Awareness Campaign during those years.  The Finance Committee has now offered two alternative proposals regarding funding for the REALTOR® Party Political Survival Initiative.  One proposal eliminates the Public Awareness Campaign $35 Assessment for 2012 and 2013.  That proposal also increases NAR dues by $35 per year to fund the REALTOR® Party Political Survival Initiative.

The other proposal offered by the Finance Committee is being recommended by the NAR Executive Committee.  That proposal would increase NAR Dues by $40 per year to fund the REALTOR® Party Political Survival Initiative.  The Public Awareness Campaign $35 Assessment would remain in effect during 2012 and 2013.

Dues, membership assessments and amendments to membership assessments for the National Association are adopted by the Board of Directors of the National Association.  These issues will be coming before the Board of Directors at its meeting on May 14, 2011.

Sincerely,

Ron Phipps
2011 NAR President

Fannie & Freddie incentives for buyers & agents.

Fannie Offers Incentives for HomePath Properties
On April 11, 2011, Fannie Mae announced new buyer and selling agent incentives in connection with the sale of Fannie Mae-owned properties (HomePath properties).
A buyer of a HomePath property to be used as the buyer’s primary residence can receive up to 3.5% of the final sales price to be used toward closing costs.
A selling agent bonus is available in four states—California, Washington, Arizona, and Texas. In these four states, a bonus is being offered to selling agents who represent a buyer who will use the property as a primary residence. For properties in California and Washington, the selling agent bonus is $1,000. For properties in Arizona and Texas, the bonus is $500.
To qualify for either incentive, the buyer and, for properties in one of the four states, the selling agent must meet certain requirements, including the following. The buyer and selling agent incentive must be requested at the initial offer submission. The initial offer must be submitted on or after April 11, 2011, and the property sale must close on or before June 30, 2011. The buyer must use the property as a primary residence (auction, pool and investor sales are excluded). Check the HomePath website for more details. If you have questions, please CONTACT Jeff Lischer at 202-383-1117 or jlischer@realtors.org with any questions.

What a Government Shutdown Means for REALTORS®

The current continuing resolution (CR) providing funding for government operations is set to expire on April 8, 2011. If legislation providing for funding is not signed into law to extend funding after April 8, the federal government could shut down. This means many, but not all, government programs, including some that impact federal housing and mortgage programs, could grind to a halt as early as April 9, 2011. While the true impact of a shutdown is unclear until it actually begins below is a synopsis of how federal housing programs will likely operate in the event of a shutdown. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place and reportedly has instructed agencies to not provide specific information on impacted operations.

Federal Housing Administration

FHA cannot offer endorsements for any new loans in the Single Family Program and cannot make commitments in the Multi-family Program in the event of a shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate.

VA Loan Guaranty Program

Lenders may continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown.

Internal Revenue Service (IRS)

Should the federal government shut down, the IRS cannot process federal income tax returns or issue refunds (but it can deposit tax payments). Consumers who were expecting to use their tax returns as part of the down payment for a home purchase will temporarily not have access to these refunds.

Flood Insurance

The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown.

Rural Housing Programs

For the US Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lender will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

Government Sponsored Enterprises

Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency.

Treasury

No official word as of yet, but the Making Home Affordable program, including HAMP and HAFA, may not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.

Background Information on Government Shutdown

HJ Res. 48 extends the Continuing Appropriations Act, 2011 (Public Law 112-6) to April 8, 2011. If another continuing resolution (CR) or budget is not signed into law, the federal government could shut down on April 9, 2011. This requires the furlough of non-emergency personnel and the curtailment of federal agency activities. Federal contractors cannot be paid. Programs funded by annual appropriations are directly impacted though programs funded by laws other than appropriations (such as Social Security) may also be impacted. The last government shutdown occurred during fiscal year (FY) 1996 and lasted 21 days, from December 16, 1995 through January 6, 1996.

The Anti-Deficiency Act is the primary law preventing government activity when no budget or CR is enacted. The act, found in 31 U.S.C., prohibits:

  • Making or authorizing an expenditure from, or creating or authorizing an obligation under, any appropriation or fund in excess of the amount available in the appropriation or fund unless authorized by law.
  • Involving the government in any obligation to pay money before funds have been appropriated, unless otherwise allowed by law.
  • Accepting voluntary services for the United States, or employing personal services not authorized by law, except in cases of emergency involving the safety of human life or the protection of property.
  • Making obligations or expenditures in excess of an apportionment or reapportionment, or in excess of the amount permitted by agency regulations

Basically, the government may not make payments or commitments unless there is enough money in the bank. According to the US Office of Personnel Management, an agency must shut down activities not excepted by the US Office of Management and Budget (OMB) when it no longer has the funds to operate. OPM recommends that agencies:

  1. communicate with employees and representatives about a potential shutdown;
  2. prepare draft furlough notices;
  3. determine which positions are excepted from the furlough according to OMB guidance.

Federal agencies have been required to complete contingency plans since 1980. OMB has three different bulletins that agencies may reference in the development of their shutdown plans. Plans must include, among other things, estimated time to complete a shutdown and the number of employees to be excepted. The President, Members of Congress, presidential appointees, certain legislative branch employees, and federal excepted employees are not subject to the furlough.

Sources

House Resolution 3082, “An Act making appropriations for military construction, the Department of Veterans Affairs, and related agencies for the fiscal year ending September 30, 2010, and for other purposes.”
http://www.gpo.gov/fdsys/pkg/BILLS-111hr3082eas2/pdf/BILLS-111hr3082eas2.pdf

Antideficiency Act Background. US Government Accountability Office.
http://gao.gov/ada/antideficiency.htm

Guidance and Information on Furloughs. US Office of Personnel Management.
http://www.opm.gov/furlough/furlough.asp

Realtors! Please answer your Call for Action.

Stay Active. Answer the CFA!, Posted by Vince

Posted: 30 Mar 2011 07:18 AM PDT

Doctors consistently tell us that we can keep ourselves healthy if we stay active. Without consistent exercise, our health deteriorates.

It’s the same in politics. If REALTORS® continue to stay active on Capitol Hill, we can help bring our industry back to health and maintain its health. If our participation slides, our businesses slide.

We sent out a Call for Action on Monday to all REALTORS® on the mortgage interest deduction. It tells Congress not to trim the MID one bit. It also asks members of the House of Representatives to back House Resolution 25 which supports the MID in its current form.

We’ve already seen a strong participation rate on this one. But when we say we need “everyone” on board answering the Call for Action, we mean it. This is a serious issue that will affect homeowners, consumers, and every single REALTOR® in America.

There’s no association for home owners out there. There’s only us. NAR represents the 75 million home owners.

So it’s crucial that REALTORS® remain active and answer the CFA today. Now is your moment to let your member of Congress know what’s important to you.

If you need more convincing, check out the letter-to-the-editor on the MID in the Chicago Tribune from NAR’s Chief Economist. Do you think it’s a good time to ask homeowners to cough up another $3,050? I don’t either.

Thank you for your participation! I promise you, it’s making a big difference. — Vince Malta, 2011 NAR Vice President and Liaison to Government Affairs

Realtors® Oppose High Down Payment Requirement for Qualified Residential Mortgage Exemption

Washington, March 29, 2011

High down payment requirements being proposed by federal regulatory agencies as part of the upcoming rulemaking under the Dodd-Frank Wall Street Reform and Consumer Protection Act will unnecessarily burden homebuyers and significantly impede the economic and housing recovery, according to the National Association of Realtors®.

Six agencies, including the Department of Housing and Urban Development, Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, and the U.S. Securities and Exchange Commission, are developing a proposed risk retention regulation under the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM); FHA and VA mortgages would also be exempted. The purpose is to create strong incentives for responsible lending and borrowing.

“As the leading advocate for home ownership NAR supports a reasonable and affordable cash investment requirement coupled with quality credit standards, strong documentation and sound underwriting,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “A narrow definition of QRM, with an unnecessarily high down payment requirement, will increase the cost and reduce the availability of mortgage credit, significantly delaying a housing recovery.”

NAR believes that Congress intended to create a broad QRM exemption from the 5 percent risk retention requirement to include a wide variety of traditionally safe, well-underwritten products. Congress chose not to include a high down payment among the criteria it specified in the Dodd-Frank Act to guide the regulators in defining a QRM. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.

“We need to strike a balance between reducing investor risk and providing affordable mortgage credit. Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home,” said Phipps.

The definition of QRM is important because it will determine the types of mortgages that will generally be available to borrowers in the future. Borrowers with less than 20 percent down could be forced to pay higher fees and interest rates, up to 3 percentage points more, for safe loans that otherwise do not meet too narrow QRM criteria.

NAR is concerned that a narrowly defined QRM will also require severe tightening of FHA eligibility requirements and higher FHA premiums to prevent huge increases in its already robust share of the market, adding additional roadblocks to sustainable home ownership.

“Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” said Phipps. “We strongly urge the regulators to consider the negative consequences of setting onerous limits on the availability of credit.”

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Liberty Quarry Final Environmental Impact Report is Released

The Riverside County Planning Department has released the Final Environmental Impact Report (FEIR) for Granite Construction’s proposed Liberty Quarry Project south of Temecula. At 8,500 pages, the document is easily half again as long as the draft EIR released last year. I haven’t slogged through the report yet but preliminary indication is that it backs up the draft EIR findings that Riverside County would benefit economically and environmentally from the proposed quarry location.

That will have no impact whatsoever on quarry opponents who argue that the blasting will disrupt the area, reduce property values, contribute to earthquakes, and produce clouds of deadly silica dust that will entomb our region. To say it’s been an impassioned argument over the past few years would be an understatement. Sadly, it has pitted neighbor against neighbor, city against county and logic against emotion more than once. The Letters to the Editor section of the local paper would dry up if not for the continual missives pro & con on this single subject.

I posted information on this two years ago after our Directors had visited another quarry site and the SDSU Preserve area adjacent to where the new quarry would be located. The Southwest Riverside County Association of Realtors® has not taken a position on the quarry project but has attempted to bring accurate information to our members so they have some background should they choose to make their own informed decision. You can get that background here:

Liberty Quarry & Private Property Rights

SDSU Showcases the Santa Margarita Watershed

Public hearings have been scheduled for the project on April 26 and May 3 at Rancho Community Church (31300 Rancho Community Way) in Temecula starting at 4 pm.

The report is available for your perusal at: Liberty Quarry Final EIR

Few will actually read it, everybody will be quoting the ‘facts’ as they interpret them. And no matter which side prevails in the County’s final decision, we may be assured this will tie up the courts for several more years. Some people have more solid granite between their ears than would be mined from the Liberty Quarry in the next 75 years.

Attack!

NAR Realtor Party Political Survival Initiative – A Penny for your Thoughts.

It’s entirely probable you’ve heard about the new NAR Realtor® Party Political Survival Initiative introduced at the AE Institute this past Sunday. While NAR has not made a broad announcement of the program yet, our AE’s are returning from their meetings this week with information on the initiative and word has been getting out from Inman, from the blogs, and of course on Realtor.org itself.

According to NAR, the initiative was launched partially in response to last years Supreme Court decision, the celebrated Citizens United Case. As forecast, that decision stands as a game changer in the lobbying world granting corporations the same rights as individuals to contribute to political campaigns. The price of doing business has just gone up and if you want to stay at the table with the serious players, you’d better step up your game.

That’s what NAR is proposing by instituting a mandatory $40 dues increase effective 2012. The issue will be voted on at NAR’s Mid-Year Legislative meetings in May.

The following is a post by NAR stating their reasons for launching the initiative. I would encourage you to read it. I have also included the slide show presented to our AE’s in Dallas this past Sunday. I have no doubt this will be hotly debated as we approach our May meetings and I encourage you to make you opinions knows to me, to your local associations as well as your state and NAR Directors. Make sure to note that 2/3 of the funds raised will be channeled back to your state and local associations for local purposes.


Why did NAR create the REALTOR® Party Political Survival Initiative?
•  In January of 2010, the Supreme Court ruled in the case of Citizens United vs. the Federal Election Commission.
•  The ruling states that corporate dollars—so-called soft dollars—can be used to fund independent expenditure campaigns.
•  This not only changes the way elections are financed at the national level, but it also overturns restrictions that allowed only hard dollars—those funds contributed for political purposes by individuals, rather than corporations—to be used in 23 states.
•  This means political fundraising as we have known it for the past 100 years just shifted dramatically.
•  Corporate funds/dues can now be used to shape opinions about candidates in ALL 50 states.
•  It is a game changer of gigantic proportions.
•  It is as if the goal posts on a 100 yard football field were expanded to now cover 140 yards.
•  In order for “The Voice for Real Estate” to have the impact it has had for the past 100 years in terms of political advocacy, the REALTOR® organization is stepping up its game.
•  No one has spoken with more power or as passionately about protecting private property rights and fighting for opening the door to the American Dream of Home Ownership than the REALTOR® Family.
•  To maintain and grow our political power in this new landscape, NAR launched the REALTOR® Party Political Survival Initiative.
•  The REALTOR® Party Political Survival Initiative did not just happen overnight.
•  It was the result of nearly a year of careful study and consideration.

What does the REALTOR® Party Political Survival Initiative mean for members?
•  The proposal is for a dedicated dues increase of $40.00.
•  The increase would take effect in the 2012 budget year.
•  Because it is “dedicated” to this initiative, it would be used exclusively to fund political advocacy efforts.
•  In the past, NAR has already contributed funds to this initiative out of its operating budget.
•  But to undertake the initiative at this level and give it a best chance for success, greater additional funding is needed.
•  The increased dollars will be dedicated solely to advocacy purposes as outlined by the Political Survival Initiative.
•  If this dues increase is approved, over 50% of NAR budget would be devoted to political advocacy, which consistently ranks among members as the #1 benefit they receive from NAR.

What are the benefits of the Political Survival Initiative?
•  The most powerful benefit is it will keep the REALTOR® organization as one of the most influential advocacy groups in America.
•  There are monumental issues coming down the pike that will affect members in their daily businesses, such as the future of mortgage finance and keeping housing affordable in America.
•  We must have the power to shape this pivotal moment for the American Dream of Home Ownership.
•  Most importantly, these dollars will be available to state associations and local boards.
•  2/3rds of the dollars raised will be returned back to states to be used in support of local candidates and issue campaigns, and for other political advocacy needs—to help shape the opinions of candidates on real estate-related issues as they work their way up as elected leaders.
•  It will combine NAR funds with state/local funds to increase our political power
•  It will create early relationships with state and local lawmakers/policymakers
•  It will shape the political make-up of state or local governing bodies.
•  NAR President Ron Phipps often comments that “now is our time.”
•  With this initiative, REALTORS® are seizing the moment for home ownership.
•  We are doing this NOT ONLY because of the Citizens United Supreme Court decision, but because our core competency is our grass roots advocacy; it’s where we need to be investing today so our future advocacy efforts will be successful tomorrow.
•  We need to be grooming our “REALTOR® Champions” at the state / local levels now, before some of them progress to become elected leaders at the federal level.
•  The political press in Washington has already noted the emerging clout of the REALTOR® Party.
•  A recent article in Politico said: “REALTORS®… are going to want to be politically effective, and a large measure of their influence is that they are present everywhere.”
•  Now is our time to seize the day.

Short Sale Webinar Presented by Bank of America

Join us on March 23 at 1 p.m. or March 24 at 10 a.m. for a free webinar on Bank of America’s Cooperative Short Sale Program.  Bank of America will be rolling out its new program for expediting short sales, as presented by B of A’s Consumer Credit Executive Kimberly Dawson.  Topics to be covered in this one-hour session include:
How cooperative short sales will expedite the short sale process;
What the agent’s role will be;
Whether B of A will pay relocation assistance; and
Who the agent can contact for assistance or to escalate the process.
Space to attend this webinar may run out very quickly, so register now at http://www.car.org/education/webinars/bofawebinars/.  Once you have registered, you should immediately receive a confirmation email, which you will need to join the webinar on March 23 or 24.  If you have any questions, please contact C.A.R.’s Special Projects Coordinator Lindsey Moss at (213) 739-8217 or email her at lindseym@car.org.

MID Under Attack Soon? Watch your email inbox.

The Mortgage Interest Deduction (MID) may be under attack again.  As the 112th Congress struggles to finalize a budget plan for this year, everything is back on the table.  House Speaker John Boehner (R-OH) recently stated that MID for second homes is becoming harder and harder to justify in these
difficult times.  So might be the MID for homes greater than $500,000.

Now is the time for REALTORS® to act!  On March 28, an all member Call for Action (CFA) will be launched.  This CFA will ask REALTORS® to contact their House Members to urge them not to touch the MID in any legislative or budget proposal.  It will also urge them to sign on to H.Res. 25 expressing
the sense of Congress that the current Federal income tax deduction on interest paid on debt secured by a first or second home should not be further restricted.

First, be on the lookout early next week for the CFA (either from your broker or from NAR).  Second, respond immediately to the CFA.  Third, spread the word and ask your colleagues to respond too.  Any House budget action will be quick.  MID is on the line.  Now is not the time to sit back and let
someone else make the decisions.

CAR asks legislature to let the citizens decide.

C.A.R. today sent a letter to Gov. Jerry Brown and members of the California Legislature asking them to place the Governor’s budget framework on the June ballot.  The Governor’s budget framework calls for a $26 billion solution – half in the form of budget cuts and half in the form of revenue from the extension of existing taxes.

C.A.R. has not taken a position in support of tax extensions, but is only in support of putting the tax extensions on the June ballot to let California voters decide.

For more information, contact Christopher Carlisle, C.A.R.’s legislative advocate at (916) 492-5200.

I don’t know if I agree with today’s move by CAR – but they didn’t ask me. However, it appears to be in line with recent polls showing the majority of Californians appear to prefer having a voice in this latest budget skirmish. 61% believe the issue of  Gov. Browns tax & cut budget should be decided by a vote of the people. Even 56% of Republicans believe this should be the case although 61% of Republicans also say they would vote
against the tax measure. A majority of voters also indicate they would not vote for any new or increased taxes – but the survey didn’t drill right down to whether the majority would vote to extend the currently increased taxes for another 5 years.

While I am not in favor of the tax increase that was foisted on us two years ago and is now scheduled to expire, if the few Republicans who have not backed themselves into a corner with the No New Tax pledge can negotiate some meaningful cuts – not just the lame-ass cuts proposed by the Governor, it’s worth bringing to a vote of the people. Without the current taxes being extended, there will be foul nastiness ahead for our state. The few real cuts that have been proposed as well as any future cuts, would be to programs that probably should not be cut. The retirement boondoggle, entitlements and growing employment at the state level will not be impacted. Education, police and parks will be.

Whats worse, if the current tax structure is not extended for another 5 years, in addition to the worthless and superficial cuts that may occur, we would likely face a slew of new taxes disguised as fees, levies and outright thievery from our cities and counties. Many of those taxes would also be aimed at independent contractors, small business owners and other housing related areas. I mean, face it folks, our state is broke and should be declared bankrupt if such a thing were allowed and if we had any politicians with enough balls to do it. Unfortunately it’s not and we don’t.

Further, if the tax extension is placed on a special ballot I believe it would pass. It would be supported by massive spending by the  public employee unions, teachers, nurses, etc, as well as the vast entitlement population who live on the public dole. California has reached a tipping point where we have more takers than  givers, people who rely on the system for their income whether it’s direct payroll, retirement or welfare. When that dynamic exists in a state without the political will to address it, the result will inevitably result in those voters making sure their nest continues to be lined as long as the rest of us can pay for it.

Of even greater concern, and something I believe is another inevitability, taxes will get placed on the ballot with the promise of real and substantial cuts to programs and entitlements. The taxes will get passed but the cuts will not occur. We already saw what happened a few years ago when Arnold worked up the machismo to try to tackle a few state employment issues. He was sued under the table  and no jobs were lost. Even the few cost reductions that might have been realized by the imposition of a few months of furlough days was largely negated by the lawsuits necessary to defend the governors right to impose them.

So we’ll get our existing higher taxes extended another five years, the $12 Billion in cuts will not materialize, there will be a call for more ‘fees’ on services and any other way to wring the last few bucks out of the business class and the paying populace and next year we’ll be right back here trying to figure out why we’re another $25 Billion in the crapper.

Ahhh California.

On the upside, it is almost 80 today and the sun is shining beautifully. Had a great lunch with my Congressional Rep on an outdoor patio and it’s almost time to pour a cold one. What? Me worry?

Your February Housing Report

Housing stats for Southwest California for January 2011. Sales volume, median price, foreclosures, trends & commentary.

News from FHA on flipping and condos

Good news if you have clients who are FHA borrowers.  The FHA has extended its temporary waiver of its “anti-flipping rule.”  The original waiver, which was passed as the direct result of C.A.R.’s leadership efforts, was set to expire at the end of last month, but now will be extended through the remainder of 2011.  The ruling allows investors who acquire foreclosed properties at below-market value to be exempted from waiting the customary 90 days before reselling them.  The 90-day waiting period originally was put in place to protect FHA borrowers against predatory practices of flipping where properties were quickly resold at inflated prices to unsuspecting borrowers.  First-time buyers have responded overwhelmingly to the opportunity to buy “move-in ready” renovated homes with low down payments, prompting the extension.

If you work with condominium buyers, you’ll want to know if the condominiums in your area are approved and eligible for an FHA loan.  C.A.R.’s subsidiary, REBS®, has introduced Clarus FHA Approval™ Eligibility Check, which offers a unique searchable database that will allow you to quickly determine FHA loan eligibility via a simple property address search.  Using this service, you and your FHA clients can avoid failed transactions and non-recoverable costs due to undetermined FHA loan eligibility status.  C.A.R. has negotiated special discounts for its members.

You’ll also want to let the condominium associations in your area know that HUD now requires that an entire condominium development be preapproved before an FHA loan may be granted.  FHA loans currently represent almost half of all new mortgages nationwide, and failure for a development to be preapproved to be eligible for FHA loans will almost certainly impact the marketability and value of the development.  Clarus FHA Approval™ also offers Approval Services to assist condominiums in seeking HUD approval.  Discounts are available to condominium associations referred by a C.A.R. member.  For more information about both Clarus FHA Approval™ services.

2010 Recap Realtor Report

If you click on that little red Realtor Report just above the chart, you’ll get to a slightly larger version of the report which will be easier for your old eyes to read. You’re welcome.

NAR Pres. Elect Moe Veissi Talks Turkey at CAR Mid-Winter

Take-aways from our recent California Association of Realtors Mid-winter meetings.

From NAR President-elect Moe Veissi –

Six of the past eight recessions have ended due to increasing strength in the housing market. The other two were due to wars. That seems like an easy choice. We need to get behind housing. This battle against housing is counterproductive and the attack on the mortgage interest deduction is an attack on one of the basic foundations of the American Dream.

Similarly we should seek to preserve the basics of the GSE’s.They can certainly be improved upon but their services are vital to home buyers. They provide a foundation and critical financial instruments that allow many people to buy homes that otherwise would not be able to. Keep in mind that during the height of the meltdown, Fannie and Freddie had take-back rates of about 3 1/2% while at the same time banks like B of A and Wells were taking back 15% to 18%.

You hear people today who don’t know the history, who don’t know any better – oh, Canada doesn’t have a 30 year fixed mortgage and their housing market is great. Oh, Europe doesn’t have a Fannie/Freddie and their market is great. The fact is, their markets don’t compare with ours. Never have. Nobody does it like us. These other countries are trying to figure out how to do it like we do and we’re trying to figure out how to kill our system and adopt the systems others are trying to get rid of. So why would we try to emulate markets with which we have nothing in common? Why would we destroy 100 years of success to become more like an inferior market? It just doesn’t make sense.

These are not short term problems we are dealing with and they will keep rearing their heads. We have saddled ourselves with tremendous debt so attacks on basic and short term sources of tax revenue will be ongoing. Don’t believe them when they tell you – oh, we aren’t going to take it all away. Just this little bit. Yeah, just that little bit this time. Then  a little more, then a little more, you know how that works.

Realtors just don’t realize the power we have in our communities and our country. But we’ve got to stand up and be counted if we want to be heard. We need to present Congress with 1/2 million Realtor calls on issues instead of 100,000. When we can consistently deliver 1/2 million member voices or more to our Congressional leaders, they will know we mean business.

Murrieta men agree to prison in fraud case

The headline was exciting yesterday when news of our long-time resident scam artists started to trickle out. The authors of a $142 million dollar ponzi scheme & investment fraud have been in jail awaiting this moment for the past 1 1/2 years and now start to look forward to doing the rest of their time.

Long-time readers will be familiar with the Stonewood case, wherein these perpetrators enticed hundreds of people to invest in real estate. But not just invest – they were talked into buying homes for $100,000 or more over asking price with that overage going to the third party – Stonewood. People who could barely qualify for a car loan were talked into buying multiple properties, most i the $500,000 and over range, with the promise that the deficit between rental payments and the mortgage payment would come out of an investment fund seeded by that ‘overage amount’.

In some cases deficit payments were made for a month or so but quickly vanished as the perpetrators lived large, driving fancy cars, boats and living in multi-million dollar homes themselves. Ultimately over 200 homes went onto foreclosure, many starting in 2006 – well before the foreclosure crisis started. This wave of dead lawns jump-started our local foreclosure fiasco as the 200 homes were dumped onto the market along with dozens more from people who had bought in neighborhoods where the fraudulent purchases has driven up the comps.

Our local real estate association started noticing these transactions in late 2004 and by mid-2005 had compiled an extensive dossier on the scheme. At that time it involved about 60 homes and maybe $30 – $40 million dollars. We tried in vain to get local law enforcement, our District Attorney, our Dept. of Real Estate, the FBI – ANYBODY – to take an interest. To no avail.

Finally in late 2007 the SEC got involved not from the real estate side but from the investment fraud angle. This prompted the DRE to yank the brokers license from the principles but by then the damage had largely been done. Finally in 2008, the Justice Department, FBI and our DA got involved and brought the scanm to a screeching halt. Of course by then it had ballooned from 60 homes and $30 million to over 200 homes and $140+ million. Our DA was all puffed up taking credit for this great bust when, for years we had not even been able to get a meeting with him to discuss it. He was the first incumbent DA in our county to be voted out of office in over a century when voters rejected him this past November.

Two local reporters, Leslie Berkman of the Press Enterprise, and Chris Bagley or the Californian, were instrumental in keeping this in the public eye. Dozens of the victims banded together in a class action lawsuit. That helped. Our own Real estate Fraud Task Force was born out of this scandal and remains active and vigilant to this day.

So while many of the victims say a 18 year prison sentence is not nearly long enough for the ringleader, it’s at least a start. No punishment can ever rebuild the damage done to our community and no jury award will ever compensate for the retirement savings lost and the lives ruined by these people.

Maybe the lesson to be learned is – if the deal sounds too good to be true…

Of course as we all know, there’s a sucker born every minute and two grifters to fleece him out of his cash.

For the full story, please click below:

Murrieta Men Agree to Prison Time
Victims of Duncan’s Scheme Speak Out

Realtors Efforts Could Be Next Wave in Fundraising

Great article in the Politico yesterday entitled Realtors’ effort could be next wave in fundraising’

A year ago this week, the Supreme Court freed corporate America to fully engage in campaigns, prompting dire predictions that Big Oil, Wal-Mart or even foreign firms would suddenly flood the political marketplace.

That didn’t happen. But at least one industry sector quietly and without controversy became a major player in the 2010 midterms – in a way that some campaign-finance experts believe could be the wave of the future for 2012 and beyond.

The model: the “Realtors’ Party,” the moniker the National Association of Realtors gave to its $6.5 million election effort, which backed a bipartisan slate of 103 pro-Realtor candidates and saw election of 66 of them.

“The business community is figuring out they need to be their own best advocate,” said Greg Casey, president of the Business Industry Political Action Committee, which helps companies set up voter registration and education programs aimed at their employees. “There is a lot going on. In some cases, the Realtors could be the model.”

Read more:

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