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. 

Posted: 30 Mar 2011 07:18 AM PDT

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.

Call Your State Senator Today

C.A.R. is sponsoring SB 1178 (Corbett) to extend anti-deficiency protection to homeowners who had refinanced from “purchase money” loans and are now facing foreclosure. C.A.R. is sponsoring SB 1178 because most homeowners don’t know that when they refinanced from their original loan they lost their legal protections and now may be personally liable for the difference between the value of the foreclosed property and the amount owed to the lender. SB 1178 will be voted on soon by the entire Senate.

California law has protected borrowers from so-called “deficiency” liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires that the statute be updated.

Current law says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property
itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers brought down by financial crisis to get back on their feet.

SB 1178 is consistent with the intent of the original law and simply updates it for modern times. Current law was intended to ensure that if someone lost their home to foreclosure, they wouldn’t be liable for additional payment. Since the law was passed over 70 years ago, homeowners refinancing from the original loan to lower their interest rate has become a commonplace. The 1930s legislature didn’t anticipate how mortgages would change over time.

As things stand today, lenders could pursue families to collect this “debt” years down the road. Lenders have up to ten years to collect on the additional debt after a judgment has been
entered on the foreclosure. Years after a family has lost their home, they could find themselves in even more financial trouble. Lenders could even sell these accounts to aggressive collection agencies or even bundle them into securities. The end result would be banks who didn’t lend responsibly in the first place coming after families for even more money that they don’t have.

C.A.R. is Sponsoring SB 1178 because:

·
SB 1178 is fair. Home buyers, and lenders, entered into the purchase with the idea that the mortgage would be non-recourse debt, and that the lender would look to the security (the house) itself to make good on the debt if the borrower cannot.  mIt meets the legitimate expectation of the borrowers, who have no idea that they are losing this protection by a refinance. Home owners didn’t know that their refinance exposed them to personal liability, and new tax liability, on the note. It would be unfair to allow a lender, or someone that has purchased a note from a lender, to pursue the borrower beyond the value of the agreed upon security.

·     SB 1178 is consistent with the intent of the original law and simply updates it for modern times. Current law was intended to ensure that if someone lost their home to foreclosure, they wouldn’t be liable for additional payment. Since the law was passed over 70 years ago, homeowners refinancing from the original loan to lower their interest rate has become a commonplace. The 1930s legislature didn’t anticipate how mortgages would change over time.

·     Lenders could pursue families to collect this “deficiency debt” years down the road. Under current law, lenders have up to ten years to collect on the additional debt after a judgment has been entered on the foreclosure. Years after a family has lost their home, they could find themselves in even more financial trouble. Lenders could even sell these accounts to aggressive collection agencies or even bundle them into securities. The end result would be banks who didn’t lend responsibly in the first place coming after families for even more money that they don’t have.

·     SB 1178 does NOT apply to “cash-out” refinances, unless the money was used to improve the home and it doesn’t apply to HELOCs.

Be part of C.A.R.’s Government Affairs Team and help pass SB 1178. Call your state Senator TODAY and urge him or her to vote “YES” on SB 1178.

Real world effects:

In 2006, Mary and her spouse have a nice median priced home and a $500,000 mortgage.  Because it is a “purchase money” mortgage, if she defaults or walks away from the house, the lender’s only option is to take the house by foreclosure.

In 2006, Mary decides to refinance the house because interest rates have become so much more attractive.  They refinance their original “purchase money” mortgage, and begin paying on their new $500,000 mortgage. Nothing fancy, no new debt, no cash out, no consumer spending built into the loan – just a lower interest rate. Unbeknownst to Mary, and with no notice from the lender, she has lost the anti-deficiency protection that applied to the original purchase money note. Now, if she loses her job and defaults on the loan, the lender can sue her personally and not only foreclose on the house, but also get a judgment against her for the difference.

In 2009, Mary’s house is “upside down” and only worth half of what it was in 2006 – so, she could lose her house, and still owe the lender more than her original equity. Even worse, the lender can hound her for that liability for the next 10 years whenever she gets a new job or acquires any additional asset. Call Senator Dennis Hollingsworth today at: 1-800-672-3135, pin # 196519886 and
urge him to vote yes on SB1178.

We are researching more on this outfit but here’s what the Better Business Bureau had to say:

At our Mid-Winter Board of Directors meeting this past Saturday, the California Association of Realtors® overwhelmingly voted on a motion out of the Political Affairs Committee to begin assessing every Realtor® the amount of $49 effective in 2011 for the purpose of funding our political activities.

At the urging of the Government Affairs Director sub-forum, CAR adopted the concept during our October meetings, directing legal staff to determine the most efficient way to implement the policy. The determination, published as an Issues Briefing Paper prior to Januarys meeting, recommended a ‘political assessment opt-over approach’, which was ultimately the direction voted on by the BOD. The opt-over provision allows the member to determine whether the investment amount shall be directed toward the Realtor® Action Fund or ‘opted-over’ to an alternative account.

A bit of history. Since 2000 the CAR political action committees (PAC’s) have grown and shrunk based on membership numbers and the real estate market. In the 2001-2002 election cycle, the PAC’s were funded by $3.8 million of voluntary political contributions. By 2006-2007, the PAC’s funding had increased to $10.1 million. In the past three years those receipts have fallen to just $2.5 million for 2009. As our organization faces increasing challenges at the local, state and federal level, that amount is simply not enough to keep us as a serious player in the political arena.

In addition to our ongoing local and state efforts, we are facing three additional challenges in the coming years that may require significant expenditures.

First there is a proposal on the June 2010 ballot to allow open primaries. If approved by voters this will dramatically increase competitiveness in at least 32 state legislative races. With more competition, the more costly each race becomes and the greater the demands [placed on our PAC’s.

Second, the 2012 re-districting will radically alter the political landscape for Senate and Assembly Districts. That may place additional demands on our PAC’s when combined with the potential for open primaries.

There will also be increased demand in both the 2012 (Gubernatorial) and 2014 (Presidential) election cycles.

With over $19 million spent during the past year, NAR ranks as one of the top ten lobbying organization in the country and the #1 grassroots trade association lobby in Washington. Having achieved so much on behalf of our members and for our customers private property rights, we cannot abandon that position now. We’ve invested too much time and money to make it happen, we can’tsimply walk away from the opportunity we’ve created for ourselves.

In 2009 voluntary contributions to our Realtor Action Fund fell to just 19% of members from a peak of 35% in 2004. That means 81% of our members were freeloading and letting a few of us carry the weight. That’s right. 81% of our members could not see their way clear to investing $49 in their own political survival. $4 a month was too great a burden. That’s less than a #3 special at In-N-Out, one latte, 2 lines in the classifieds.

The program has been vetted legally to assure it complies with California laws on campaign contributions and is consistent with other state and federal laws. No doubt the will be some legal challenges from people who would rather spend thousands on attorney fees than $49 for their own political survival – but CAR is confident it will prevail – especially since CAR is not the first or the only trade association to implement this structure. Dentists, teachers and others have long enjoyed a fund-raising advantage since all members invest in their PAC. And we won’t even talk about the unions or the recent decision by the Supreme  Court allowing corporations to fund candidates from their general fund.

For those members with a religious or cultural aversion to political advocacy, you can direct your investment into an issues oriented fund that will not be used to directly support candidates.

This is a terrific move for CAR and one that has long been advocated as a way to equitably share the cost of our successful advocacy program across the membership rather than just saddling a few of us with the burden. It also means I won’t be hitting you up for a contribution every time I see you. That in itself should be worth $49 bucks.

There will be more information available on the CAR website soon and I’ll make sure that is posted for your review.

Translation: BUILDING MORATORIUM.

I’m not sure if Hoagland actually believes the specious arguments he puts forward or if the whole scheme is his attempt to shock the community into a response. As he summarizes, “We need action from our development community to pressure the Legislature to resolve the state water issues.”

Perhaps he believes his plan to hold the community hostage is what it will take. Perhaps he hasn’t been aware of, or participated in, the numerous efforts by local businesses (including developers), municipalities and Rancho Water District customers to effect comprehensive change with the legislature through numerous letter writing campaigns and personal visits.

Or perhaps he truly is that out of touch with the community he purports to serve. The ‘if we don’t build it, they won’t come’ philosophy went out of favor during Jerry Brown’s last term.

What we do not need is an attempt by Rancho Water or any other group to stifle legitimate development in this economic climate. While Hoagland alludes to ‘vacant malls and commercial centers’ and the high residential foreclosure rate, he doesn’t seem to grasp that these have already had a severe dampening effect on development. Considering that demand for new resources is at a virtual standstill due to the housing and commercial meltdown, this call for a moratorium accomplishes no positive purpose. It’s only apparent purpose is to heap insult onto an already severely injured party – namely the citizens, businesses, municipalities and ratepayers of RCWD.

Yet with our residential housing market carrying an active inventory of just over 1 month, the need for additional housing stock will become apparent before long. Similarly with the lack of funding mechanisms currently available for commercial development, only well conceived and funded projects are going forward, the rest are waiting until the current glut of available space is reduced. At a time when everybody from our President to our Governor to our city leaders understand the need to create job opportunities to return our economy to a more robust footing, Rancho Water is proposing to literally turn off the spigot on the cities efforts to attract new jobs to our region.  This is counter-productive at best, idiotically negligent at worst.

We are joined in our efforts by the Cities of Temecula and Murrieta, by our County Supervisor, the Southwest California Legislative Council, The Murrieta Temecula Group, the Building Industry Association and other business and advocacy groups throughout Southwest California.

If you agree that the last slap our community needs right now is a building moratorium, please join me at a public hearing at 6 p.m. on November 9th at the Rancho Water District board room at 42135 Winchester Ave in Temecula (Winchester West of Diaz). Hoagland claims he would like to ‘hear our ideas and views’. Let’s make sure he does – politely and concise.

In addition to our SRCAR email campaign, our partners at the Southwest California Legislative Council have also instituted a letter writing campaign which you can participate in by clicking below.

It’s been seven months since Assemblymember Kevin Jeffries (R-Lake Elsinore) introduced ACA 8. This bill would prohibit the Legislature from voting on bills without giving the public 72 hour notice of the content and an opportunity to comment. The bill goes on to require that ALL bills be available in print for at least 24 hours prior to a Legislative vote. You can read the full bill here: ACA 8

But so far, ACA 8 has yet to receive its first hearing. “I find it ironic that a bill that would put an end to back room deals is being held hostage in a back room somewhere,” says Jeffries. “So much for open and transparent government.”

A 72 hour notice of an issue that comes before the Legislature seems only fair. Local Governments and municipalities must adhere to this requirement as established in the Brown Act. Is it not reasonable to expect at least the same high standards from our state leadership?  Yet as we witnessed during the recent budget debates, agendas are set in secret, deals are made by the Big 5 (also in secret), and entire tax & spend sections of the budget are literally laid on Legislators desks as they are being asked to vote on them.

Is it any wonder our state is on the state it’s in?

If the majority controlled Legislature truly desires transparency and accountability, they will pass this bill. Unfortunately 53rd District Assemblymember Ted Lieu, who Chairs the Assembly Rules Committee, has seen fit to stall this bill in his committee for months now. Having spoken with Lieu recently on some housing issues, I believe he is a man of honor and integrity who may just need a little reminder that this important bill is languishing in his committee.

Please add your voice of concern to the Chair and the members of the Rules Committee. One click sends an email to all the committee members adding your support to ACA 8. Thank you.

I Support ACA 8 (Jeffries)

By the way, when you have completed this you’ll get auto-responders from the Rules Committee Members attesting to how swamped they are and encouraging you to go directly to their website to send your email. Don’t be confused – they get ALL their Legislative emails but if you go to their website they’ll ask for your zip code and then tell you they don’t want to hear from you because you aren’t in their district. They’d really rather not hear from anybody but telling you that would be too blatant.

Massive change requires massive action. That’s why your food banks have come together in a collaborative effort to partner with every household in our community to respond to this emergency at hand.  The need hit crisis levels this time last year.  This year, the need has risen higher. You, your neighbors and co-workers will make a huge impact this week by participating in the Heaven on Earth Food Drive, Saturday, August 8th.
Can you imagine the impact of every household responding with just one box on Saturday?

The time is now to bring your influence, your impact, your choice for change, to your community.  This week, I’m personally asking you to focus with me on things that really matter, and embrace the vision of “each one, reach one!” Will you reach into your cupboards to impact your neighbors with just one box of food? Will you lead your co-workers and neighbors to join you?

Have you caught the vision? Vision + Action = Impact! The details are on the attached flyer (drop-off locations, list of food banks benefiting, items needed). Print the flyers and pass ‘em out to your neighbors, colleagues, clubs, youth groups, everyone.

And please…cast the vision wide by forwarding this important message on to everyone you know in this special community!  I’d love to hear from them.

Please view the attached Heaven on Earth Food Drive flyer for more details, drop-off locations and a list of most needed items.

Remember, our neighbors are hungry…

but together we will change that!

Thank you.

One final note – please don’t yell at your Title Rep. This is entirely not of their doing and they are as frustrated and hamstrung by this as we are.

Anyway, here’s a note from CAR . If you happen to know any of these Gentlemen personally, contact DeAnn or Stan at CAR about how you might help. I thought we told them no new taxes just a month ago. Oh well.

First of all, thank you to all of you who have responded so far to last week’s Red Alert on the 3% withholding proposal contained in the most recent version of the state budget. We understand this budget may have a vote tomorrow or Thursday. If it’s passed, we think the Governor may veto it, even though it looks like he’s comfortable with the withholding requirement. Our goal is to have it removed from subsequent versions of the budget.

FYI only. We have issued a targeted Red Alert to all REALTORS® residing in targeted Senate districts asking them to call their Senator using our toll-free line. The Senators targeted for this mobilization are: Calderon, Corbett, Florez, Negrete McLeod, Padilla, Price, Wright and Yee. In a few days our additional phone line will be up and we will target specific Assembly Members for the same message.

In the meantime, if you haven’t already done so, please talk to your assigned legislator(s) and get back to me with any intelligence. Some of the most useful information we have received are from Key Contacts who have spoken to their legislator or the chief of staff. Even if you don’t think you’ve got anything worth sharing, please email me so I know that you’ve responded.

On another note, a red alert was sent to some of our members from a company providing substitute disclosures asking that they contact legislators in SUPPORT of AB 957 – the Buyer’s Choice Act. Unfortunately, C.A.R. is now OPPOSED to the bill. I’m attaching the communication we sent to some members and to the local associations. If asked about it, please ask people not to respond to this alert from Property ID.

For more information, please contact DeAnn Kerr at deannk@car.org or Stan Wieg at stanw@car.org.

“Buyers’ Choice Act” Has Been Amended to

Increase Your Exposure to Lawsuits!

Please beware! Many REALTORS® have received a “Red Alert” type communication asking that they contact their legislators in support of AB 957, the “Buyers’ Choice Act.”

While C.A.R. had been supporting AB 957, the legislation was recently amended to reduce the liability protection that REALORS® have under existing law when an NHD or other substitute disclosure (pest control report; geology report) is provided in the transaction. Due to these amendments, C.A.R. has no other option but to change its position and OPPOSE AB 957.

C.A.R. does NOT have a Red Alert out on this bill. C.A.R. does NOT support this bill. C.A.R. OPPOSES this bill as amended and urges you NOT to respond to the non-C.A.R. Red Alert!!

For More Information

For more information, please contact DeAnn Kerr at deannk@car.org or Stan Wieg at stanw@car.org.

Thanks everyone!

So why the big increase this year? Two reasons – first, as discussed before, there is overwhelming drive for anything GREEN this year. The science behind, or the cost of the associated project is almost irrelevant in the crush to implement anything GREEN. This is the type of group-think mentality that pervades our government from the top down these days and will be responsible for significantly increasing the costs of all our goods and services until this greensanity is brought under control.

The second reason we’re seeing an influx of POS bills is that there is a perception among some of the lobbying groups that Realtors are suffering from diminished influence these days. With increased union/liberal/Democrat control of Sacramento, the lobby for reason, for fiscal responsibility and private property rights is fighting the battle against longer odds. Second, they feel that with our membership numbers in decline that we are less prepared both numerically and monetarily to wage our battles.

The vanguard bill will likely come out of an effort by the State Water Department to inflict a POS bill on homeowners. The verbiage is being finalized and they will start a series of statewide public hearings on the matter within 30 days. Based on the information they collect from the public, they intend to modify the State Water Code to require property owners to retrofit ‘existing outdated, high water use plumbing fixtures upon resale’ with ‘water conserving plumbing fixtures’ and mandates that the seller and/or agent disclose compliance.

Existing plumbing fixtures defined as the following:

• any toilet that uses more than 1.6 gallons per flush
• any urinal using more that 1 gallon per flush
• any showerhead with a flow capacity more than 2.5 gallons per minute
• any interior faucet that emits more than 2.2 gallons per minute

Water conserving plumbing fixtures are defined as ‘any fixture that uses less water than the existing fixture.

So what’s wrong with this POS POS bill? Where t start.

First of all, POS bills NEVER accomplish what the authors claim they will. In this case the water department is under pressure to comply with the recently adopted ACWA standard mandating a 20% reduction in water use by 2020. Let’s put aside the argument that there really is no water shortage in the state but simply a politically motivated transmission problem (Delta Smelt, peripheral canal, etc). So the goal is to conserve water – an admirable goal. Does this POS bill accomplish that?

Not even close. Even the water department will tell you that household domestic water usage only accounts for about 20% of gross water usage and only a small percentage of that is considered waste. That leaves 80% of our domestic water usage outside the home – watering our lawns, washing our cars, cleaning our driveways, etc. Not only is the majority of water used outside our homes but the percentage of wastewater generated is significant – over spray, run-off, etc. So this bill doesn’t even address the largest are of water waste in domestic consumption. It addresses a small percentage of a small percentage of our usage – hardly likely to produce the desired 20% cut in usage. And don’t even ask about non-domestic water consumption. But it is a great excuse to jack our water rates through the roof.

Further, POS is a notoriously ineffective way to accomplish even this limited goal. On average statewide between 2% and 3% of homes change hands every year. Given that degree of penetration, you do the math on how many years it will take to reach enough homes in the state to register any statistical impact.

So the water department is going after a small percentage of a small percentage of water users in the least effective way possible. Yet they might succeed because the stated purpose of the regulation is to ‘conserve water’ a very GREEN goal. In the meanwhile, it will increase the cost of buying or selling a home in the state by anywhere from a few hundred (just for the inspection) to a few thousand – depending on the age of the home and the number of fixtures that need to be replaced.

In typical fashion the deparment hasn’t addressed the issue of inspection – who will do it, what will they charge, and how pervasive will their powers be to enter and cite homeowners for other violation they may observe (electrical, structural or other plumbing issues not in compliance). Anytime you increase the cost of buying or selling a home, you decrease the affordability of that property and while that may not seem an issue at current pricing levels, the bottom line is that every $100 increase to the price of a home eliminates nearly 1,000 potential buyers for that home across all levels of home from first-timers right on up the ladder.

So we’re looking at a proposed bill that doesn’t address the biggest issue of water usage at the home, inflicts unknown costs on homeowners to meet these specious goals, and doesn’t even mandate a degree of compliance – just that the new fixtures use less water than the existing fixtures.

Of course if the water depsrtment is correct then most of you won’t even read about this. And if you do, you won’t do anything about it until the bill has passed and it’s too late to do anything but bitch about it. I’m hoping the water department is wrong on this because if they’re not, we’ll be seeing more and more incursions into our business by people that wouldn’t have dared take us on a year ago. And your business and your customers will be on the losing end.