California Homeowners Bill of Rights – New Law for 2013.

The new California Homeowner Bill of Rights becomes law today. If you’re not familiar with this measure, it was a bill carried on behalf of California Attorney General Kamala Harris last year that sought to codify some of the measures set forth in the national mortgage settlement deal struck in early 2012. 

Initially opposed by the California Association of Realtors as well as the California Bankers Association and the California Mortgage Bankers Association, the bill was pushed through the legislature by a closed joint committee  of both houses so when the bill eventually reached the floor, it was voted on immediately and passed to the Governor. Total time in committee, floor and signature was measured in hours rather than days, months or years, as is typical for most bills. 

Due to the secretive nature of the committee structure, there was little opportunity for interest groups to provide input and there was great concern that what emerged would be a very flawed effort reflecting an over reaction to purported lender wrongdoing. However, CAR did have an opportunity to work with the committee to effect some modifications to the final version that removed our opposition to the bill. CAR was not supportive of the bill in its final version but adopted a neutral position, although banking groups remained steadfast in their opposition due to to concerns about meritless litigation that the bill opens up for aggreaved homeowners. 

Here’s what the bill does:

  • Stops dual tracking. Once the process has started for either a loan modification or short sale by the lender, the foreclosure process must be stopped. This is in response to cases where the property proceeds along multiple courses at the same time only to have the foreclosure process conclude days ahead of a short sale approval by another arm of the bank. As pointed out, this frequently resulted in the bank taking the property back and ultimately receiving thousands less in the foreclosure sale than they would have in a short sale. Of course we know the banks are covered either way and really don’t care but ultimately this should result in more short sales and fewer foreclosures, which is better for the recovering market.
  • Under the dual tracking provisions, banks must give an applicant a response to their loan modification before they can start the foreclosure process. If a homeowner has not applied for a loan modification, the bank must inform them of their right to do so before starting the foreclosure process.
  • No more robo signing.
  • Banks must provide a single point of contact to borrowers trying for a loan modification or short sale. Homeowners and Realtors are often frustrated by multiple points of contact and the handoff fr5om one agent to  another within a bank frequently resulting in the loss of paperwork sending the process back to square one while the foreclosure process continues apace in another department.
  • Allows the borrower to sue loan servicers if the borrower thinks they have violated any foreclosure laws. This is one of the most worrisome components of the bill in that it may open the door to frivolous lawsuits resulting in increased costs and unnecessary delays in an already costly and time consuming process. 

With nearly 1 million foreclosures recorded in the state since 2007, California remains one of the hardest hit areas of the country. However, foreclosures are down in most areas by 30% or more in the past year and with prices starting to climb across the state, the hope is that fewer and fewer people will be pushed into foreclosure anyway. Some 30% of state homeowners remain underwater in their loans but the combination of improving employment statistics and home price increases has decreased that by more than 5% in the past year.

The Homeowners Bill of Rights may well provide some relief for harried homeowners and produce further delays to the process, but it will do little to change the underlying ability of a homeowner to ultimately afford their home and will, in most cases, only delay the inevitable. If Sacramento and DC don’t screw it up, an improving economy will do more to aid homeowners than the HBR will ever accomplish – and ultimately that’s the best news for everybody. 

…The Light at the End of a Very Long Tunnel

CoreLogic® has just published their most recent Home Price Index showing a 3.8% rise in home prices for July marking the 5th consecutive month of year-over-year increases. They are forecasting an increase of 4.6% in August and are now anticipating that we will see a gain for the full year.

In this month’s Realtor® Report, you’ll find that housing  activity in Southwest California is running slightly ahead of these national numbers with year-over-year increases of 6% in both July and August putting us ahead of 2011 median price by 5% year to date. Temecula posted its 6th consecutive monthly median over $300,000 and its highest month since April 2008  ($347,985).

Sales were down somewhat in August, at least in part due to our increasingly severe inventory shortage. Demand activity remains strong and if we had more homes to sell, they would be selling. Year-to-date sales are 9% ahead of 2011 (4,963/5,454) and still running 4% ahead of 2010 (5,228/5,454) keeping us on pace to set a new high water mark for the region, but our inventory is down 62% since January.

Back in June, I updated you on a bill H.R. 5823. Authored by California Congressman Gary Miller, the “Saving Taxpayers from Unnecessary GSE Bulk Sales Act of 2012” follows months of direct lobbying to the FHFA and others to carve California out of their proposed pilot program to remove hundreds of homes from our inventory and convert them to rentals for 5 years in an ‘effort to stabilize the market’.

The bill is still languishing in committee. Meanwhile the FHFA has announced its intention to proceed with the program and remove 500 for-sale homes in LA and Riverside County to fire-sale to an investor as rentals by year-end. Even if we knew how they were selecting these homes, where they were located and who they were going to sell them to, this would still be a bad program. The fact that we don’t know any of those things only makes it worse.

I would like to thank the Riverside County Board of Supervisors, the Southwest California Legislative Council and the Cities of Temecula and Murrieta (so far) for joining Realtors® in SUPPORTING H.R. 5823 and opposing this FHFA program. Simply stated, the goal of this program is to stabilize the market by removing  ‘excess inventory’. But our region has no excess inventory, there is strong demand for the properties we have and our prices have been stable for 3+ years and have recently started to appreciate. This program would make it even more difficult for qualified buyers to find a home in our communities while exposing our neighborhoods to numerous rentals owned by an absentee landlord (hedge fund) just waiting out their 5 years to dump them back onto the market.

To get all the numbers behind the local real estate market as well as more information on how you can join the coalition supporting HR 5823, visit: http://www.slideshare.net/genewunderlich/9-realtor-report

 

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

 

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.

Update on Keep Your Home California Program

Update on the ‘Keep Your Home California’ program.

This $2 Billion program, announced a few months ago to great fanfare but little result, has determined it’s time to expand the programs due to it’s thus far limited reach. The program is designed for low and moderate income borrowers who refinanced their home, took out a home equity line of credit (HELOC), or are underwater on their loans and now find themselves in trouble (duh). The program features four separate sections to help these borrowers including one to get caught up on their loan, another to reduce their principle, one to provide relocation and transition assistance and one to subsidize payments to unemployed homeowners.

Administered from a federal grant by the California Housing Finance Agency, the programs director says they started slow by design. Before jumping in with both feet they wanted to guage the response, see what kind of people were applying and why they were not qualifying. The director expects the program ultimately to help 100,000 Californians.

Of course as I noted in an earlier post when the program was announced, the program is voluntary for lenders. Yeah, you read that right. Lenders will voluntarily agree to accept partial back payments or reduced principle for borrowers who took cash out of their homes during the boom times. Low to moderate income buyers, who are in financial trouble. Yeah, the banks haven’t demonstrated much pro-activity in helping anybody at all, let alone low to moderate income folks. I’m sure this will all work out fine. Even the director admits that ‘only some lenders are participating’. Go figure.

Oh well, I guess if we can keep 100,000 low to moderate income people in their homes here while other demographic groups are ignored by HAMP and HAFA and other bail-outs, that’s a good thing, eh?

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.

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.

It’s the Spending, Stupid

By Jon Coupal

“Government is like a baby,” Ronald Reagan was fond of saying. “An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”  If the former California governor were observing Sacramento today, he would probably add that our state government functions more like “triplets,” and has been doing so for more than ten years.

Back at the beginning of the millennium, the California treasury was overflowing due to capital gains tax receipts from what has become known as the “dot.com bubble.”  Almost everyone in the state understood that these tax producing profits were the result of a short-term business cycle, and the excessive flow of tax revenue would not be a permanent condition.  Unfortunately, there were a small group of Californians who did not understand these basic economic principles, including the majority in the state Legislature and Governor Gray Davis.

These officials responded to the increased revenue by spending it all and committing Californians to pay for expensive long-term programs, like radically increased pensions for government workers, that now have state and local governments facing nearly a half-trillion dollars in unfunded liabilities.

This profligate approach to governing was a contributing factor to the successful recall of Davis.  However, governor Schwarzenegger, and the party-hearty lawmakers that continued to dominate the Legislature carried on like there was never a problem.  When the state came up short, they used accounting gimmicks that allowed them to carry on spending as if there were no tomorrow.

Between 2003 and 2007, spending increased by one-third.  Then the housing bubble burst, and these same suspects imposed the largest tax increase in the history of all 50 states.  They had learned their lesson, they said, and pledged to taxpayers they would use the two years of massively higher taxes to buy time to reorganize and reform their spending ways.  Two years later, and in spite of California families having paid about two-thousand dollars in extra taxes, the state is now facing a $26 billion shortfall.  The “spendaholics” have fallen off the wagon, again.

All of this could have been avoided if the malefactors, who clearly lack self-control, had been compelled to work under a hard spending cap.

Because the politicians that control the Legislature and our current governor – the Department of Finance shows that Governor Brown’s budget will grow 31% by 2015 – are still in a state of denial regarding spending, there is an urgent need to take measures to restore a strict spending limit on state government.

This is why Senator Tony Strickland has introduced Senate Constitutional Amendment No. 10, sponsored by the Howard Jarvis Taxpayers Association, that would impose a firm spending cap on lawmakers.  The expenditure limit includes General Fund and special funds, and contains no exemptions for education or local government funding.  It creates a reserve of up to 10% of spending; this reserve can only be tapped to backfill revenue shortfalls in the current budget year and to fund non-fiscally related emergencies.  Funds could only be used by a Declaration of the Governor and two-thirds vote of the Legislature.  Half of the excess revenues beyond the 10% cap would be used to pay off existing debt.

Back when Bill Clinton was running for president, a big sign that read, “It’s the economy, stupid” was placed on his campaign office wall.  In an ideal world every member of the Legislature would be required to post a sign on their office wall that said, “It’s the spending, stupid.”  Sen. Strickland’s SCA 10 is the taxpayers’ way of sending this message.

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?

Update: CA State Bar v. Michael T. Pines. SHARK ATTACK!

Last October I wrote about a local attorney by the name of Michael T. Pines who was making quite a name for himself in local real estate circles. (Another Real Estate Scam to beware of.) Counselor Pines was making the evening news by advising clients who had been foreclosed on and evicted to break back into their former homes under the theory that since the debt had been satisfied through foreclosure, they could now own their former home free and clear.

To say this hadn’t worked would be an understatement. Clients who actually followed his advice were summarily re-evicted if they were lucky and arrested if they were not. After all, the homes were now the property of the bank and in some cases had already been resold so charges of breaking and entering and other minor misdeeds were alleged.

Turns out Mr. Pines himself was in foreclosure on some homes he owned and lost his own law office building to foreclosure (he didn’t try to break into his own building). At that time a judge had also slapped him with a $16,000 fine for filing frivolous lawsuits and for wasting his time and not acting in the best interest of his clients.  He also had a couple restraining orders against him for civil harassment after a trial and had been cited for contempt at least once.

law

Today attorneys for the State Bar of California asked a judge to suspend the law license of Mr. Pines. According to the state bar, Pines behavior had become ‘so
egregious’ that it filed to have his license suspended on an interim basis while it seeks a permanent removal. Jeez, that’s like watching sharks attack another shark – gruesome yet exciting, and as rare in legal circles as it is in nature.

Chief Trial Counsel James Towery was quoted in a written statement as saying “To remove a lawyer from active practice before formal charges are filed is a drastic remedy. In this case, that remedy is justified by the established misconduct of Michael T. Pines, who has shown complete disrespect for the law, the courts and especially the best interest of his clients.” Duh.

Never to be outdone, Pines has filed his own lawsuit against the state bar. “I’m sure the charges are going to be thrown out,” says Pines. “They’re going to be really embarrassed when they find out the truth.”

Hmm, attorneys vs. attorney. I’m guessing the truth might be a rare commodity in this v enue. Of course that’s just my opinion, I could be wrong.

Meanwhile people who have already suffered through a legal foreclosure in Southern California will not have the opportunity to be further victimized by this predator – at least until he teaches the state bar a lesson and gets his dorsal fin back.

fin

gad blog ar eml fb swcahomes rltr
The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.

Redevelopment Agencies are wrong places to cut

I’ve been writing about this since Gov. Brown stated his intent to do away with local redevelopment agencies and distribute the money from local agencies to hi8s statewide projects. Sure there are some cities around the state that either aren’t using the funds or are misusing the funds but many are not and they have done a world of good. Look at downtown Temecula. Look at the Gaslamp in San Diego. Without redevelopment, the Gaslamp would still be the slum it was not that long ago.

An article appeared in today’s Californian that adds the housing element to the mix. Redevlopment has provided over 91,000 affordable housing units since 1995. For every 100 units created, 125 local jobs are created and 32 permanent jobs. Some in Sacramento just don’t get it – they are actively trying to kill what’s left of the housing industry not understanding that housing speeds an economic recovery, housing is a jobs engine which our state desperately needs.

Click here to view the forum post: Wrong places to cut.

Your February Housing Report

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

Don’t Kill California’s Recovery

Posted by Former California Congressman George Runner in the Fresno Bee. Why can’t people understand this most simple concept?

Don’t kill California’s recovery

Posted at 12:00 AM on Tuesday, Feb. 15, 2011

By George Runner
With jobless numbers still at record highs, it wouldn’t be right to declare California’s economic downturn over anytime soon. Even so, glimmers of hope are beginning to emerge that the Golden State is inching its way toward economic recovery.

Let’s hope the politicians don’t mess it up.

In his recent State of the State address, Gov. Jerry Brown said “we will not create the jobs we need unless we get our financial house in order.”

Unfortunately the governor’s proposals to put California’s financial house in order are starting to look more like a wrecking ball than a rescue plan.

His budget proposes billions of dollars in taxes on the private sector — the very folks he wants to create more jobs.

It may seem like a distant memory, but merely two years ago, a different governor and Legislature tried taxing their way out of a similar budget mess. Since then California has lost more than half a million jobs and our state’s unemployment rate has grown by 20%.

We clearly don’t need an empirical study to tell us that tax hikes don’t create jobs.

Even so, Gov. Brown is proposing to extend these very same tax increases for five more years. If approved, Californians will pay $45 billion more in income taxes, sales taxes, and vehicle taxes.

On top of this, the governor is proposing to eliminate a number of tax incentives that currently encourage businesses to create and retain jobs in our state.

Under his proposals, private sector employers, including many small businesses, would pay more than $2 billion in retroactive taxes this year and increased taxes for years to come.

The governor calls his budget solution a “balanced approach” since it includes both tax increases and cuts. But in reality, his approach is anything but balanced.

A balanced approach would recognize that the private sector has been devastated by the economic downturn-more so in California than other states. In the past three years, more than one million private sector workers have lost their jobs.

During that same time period, guess how much state employment shrunk?

It didn’t.

According to the latest Employment Development Department numbers, state employment actually grew by 1,200 jobs. We now have 489,000 state workers-nearly half a million-whose wages and benefits are paid by a private sector that is a million workers smaller.

And now the governor is asking the private sector to step up and pay even more to protect those state workers’ paychecks.

Does that seem balanced to you?

To be clear, I’m not saying I want state workers to lose their jobs. I wouldn’t wish that on anyone. My point is simply that private sector workers provide the tax dollars that allow state government to pay its bills, including the paychecks of state workers.

California currently has the second highest unemployment rate in the nation. Our elected leaders could have responded aggressively months-even years-ago to protect California jobs and improve our state’s dismal business climate, but they didn’t. It’s only fair that government shares the pain.

California’s real problem is jobs, not revenues. When jobs are plentiful, government always has plenty of revenues. When jobs are scarce, as they are now, government revenues dry up.

Solve the jobs problem, and you’ll solve California’s budget problem — not to mention a few other problems as well.

George Runner represents more than 9 million Californians on the state Board of Equalization. For more information, visit www.boe.ca.gov/Runner< h6

Read more: http://www.fresnobee.com/2011/02/14/2272658/george-runner-dont-kill-californias.html#ixzz1EG8IYuQP

Property re-evaluation time. Check here for Prop 8 info.

Riverside County Assessor/Clerk/Recorder Larry Ward has published information on Proposition 8. Unlike some counties, in Riverside Larry takes the initiative to automatically evaluate property values every year and has reduced values (and taxes) in each of the past 3 years. The office is in the midst of looking at the market again this year to see if a wholesale reassessment will again be utilized or if the demand might be met by simply allowing individual homeowners to file their own reassessment requests if they think their values have declined further during the past 12 months (for the most part, they have not). However, if you would like to find out more and get a copy of what you’ll need to file if you do, please visit Larry by clicking on his homepage.

Also note the prominent warning about the so-called ‘Riverside County Tax Authority’ mailer soliciting $167 to produce a copy of your grant deed. Larry will be happy to get you one for about $10 or $20 bucks. Don’t get conned. Check with the authority first.

larry ward

Keep Your Home California – Good News for some CA homeowners.

Keep Your Home California Program

The U.S. Treasury Department has approved CalHFA’s plan to use nearly $2 billion in federal funding to help California families struggling to pay their mortgages.

The Keep Your Home California programs are focused on assisting low and moderate income families stay in their homes, when possible, and leveraging additional contributions from mortgage servicers.

Primary objectives for the Keep Your Home California programs include:

  • Preserving homeownership for low and moderate income homeowners in California by reducing the number of delinquencies and preventing avoidable foreclosures
  • Assisting in the stabilization of California communities

Each of the Keep Your Home California programs is designed to address one or more aspects of the current housing crisis by doing the following:

  • Helping low and moderate income homeowners retain their homes if they either have suffered a financial hardship such as unemployment, have experienced a change in household circumstance such as death, illness or disability, or are subject to a recent or upcoming increase in their monthly mortgage payment and are at risk of default because of this economic hardship when coupled with a severe decline in their home’s value.
  • Creating a simple, effective way to get federal funds to assist low and moderate income homeowners who meet one or all of the objective criteria described above. Speed of delivery will be balanced with fulfillment of the specific program’s mission and purpose.
  • Creating programs that have an immediate, direct economic and social impact on low and moderate income homeowners and their neighborhoods.

Murrieta General Plan Draft Review Available

NOW AVAILABLE – PUBLIC REVIEW DRAFT GENERAL PLAN 2035 AND ENVIRONMENTAL IMPACT REPORT

The Public Review Draft General Plan 2035 and Environmental Impact Report, along with the Technical Appendices, are now available to download from the project website (www.murrietaplan.info), by following this link http://www.murrietaplan.info/documents.asp  or to pick up on CD at the City of Murrieta, Community Development Department.

Copies of the Public Review Draft General Plan 2035, Public Review Draft General Plan 2035 Environmental Impact Report, and Technical Appendices are available for review at:

City of Murrieta
Community Development Department
1 Town Square
Murrieta, California  92562

and

Murrieta Public Library
8 Town Square
Murrieta, California 92562

Public Review and Comment Period

The Public Review Draft General Plan 2035 and Public Review Draft General Plan 2035 Environmental Impact Report have a 45-day public comment period that begins on February 8, 2011 and ends on March 24, 2011.
Written comments on the Public Review Draft General Plan 2035 and/or Public Review Draft General Plan 2035 Environmental Impact Report must be submitted no later than 5:00 PM on March 24, 2011 to:

Mr. Greg Smith, Associate Planner
City of Murrieta
1 Town Square
24601 Jefferson Avenue
Murrieta, California  92562

UPCOMING HEARINGS ON THE PUBLIC REVIEW DRAFT GENERAL PLAN AND ENVIRONMENTAL IMPACT REPORT

Specific dates have not yet been determined; however, public hearings are anticipated to be scheduled over the next few months with both the Planning Commission and City Council.  Stay tuned for more information on the website (www.murrietaplan.info) about the hearings.

Planning Commission – Public hearings anticipated in March 2011
City Council – Public hearings anticipated in April 2011

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.