Once again our thanks go out to our Affiliate group for organizing what has become one of the Valleys most successful holiday food drives. Thanks also to our Realtors who participate, who volunteer to collect the donations and deliver it to needy centers.

Special thanks to the hundreds of students in Valley grade, middle & high schools for bringing in non-perishable donations of food, toys & clothing to help their more needy neighbors. The need has exploded this year while donations have dropped – but even with that SRCAR collected nearly 11,000 food items so far this year with more to come.

The real estate part of it consisted of representatives from Stonewood Financial buying homes at significant premiums over asking price. As this was at a time our housing market was appreciating 20% – 30% a year, the fact that someone would pay a 25% or 30% premium on a home purchase was not enough to warrant investigation by the authorities. Homes listed at $500,000 were routinely selling for $600,000 or more. Targeting specific neighborhoods, after the first two or three sales were obtained with fraudulent appraisals, it became a self-feeding scheme since subsequent appraisals were now based on actual sales, albeit fraudulent. Turns out many of the buyers were either made of straw, or people talked into buying multiple properties they couldn’t begin to afford. Naturally other buyers into those neighborhoods also became victims since selling prices became predicated on fraudulently inflated values. In addition to the 200+ documented cases, many more innocent victims lost their homes when prices tumbled by more than 2/3 in some cases.

How did they do it? Well, partially through affinity fraud – many of the buyers were either members of the same ethnicity as the perpetrators or were nurses at the same facility where one of the perpetrators worked. They were also promised that the properties could be rented, that any shortage between the rental income and the mortgage payment would be paid for them, and that the $100,000+ overage collected by Stonewood or a related entity, would be paid to an investment account with the promise of even greater dividends to come.

Naturally there was no investment account to produce income, after a month or two the promised rental offset payments dried up and houses started going into foreclosure by tens, then by hundreds. When we became aware that something smelled bad here, we documented about 60 homes and about $40 million dollars in potential scams. By the time authorities finally acted on it the result was over 200 homes with the perpetrators indicated for over $120 million dollars. Our local District Attorney did not see fit to take action until the SEC, FBI and US Attorneys Office had finally acted, then he stood up on the podium all puffed up taking the credit. I like to hope in some small way it was part of the reason he was soundly defeated in his recent re-election campaign by a relative unknown.

Anyway, in addition to our local real estate fraud task force, reporters Chris Bagley from the Californian and Leslie Berkman from the Press Enterprise payed significant roles in shining the spotlight on these nefarious activities and our own attorney John Giardinelli and an attorney for some of the plaintiffs Richard Ackerman were pivotal in keeping the focus on.

It took too damn long and cost too many people – not to mention the damage done to entire neighborhoods and our cities – but as they say – sometimes the wheels of justice grind slowly. Let’s hope in this case they also grind exceedingly fine.

You can read the whole story and related elements here.

Press Enterprise – Fraud Trail Begins

Big news to report from our board of directors’ meeting in Sacramento: On Saturday, June 12, the C.A.R. board of directors voted to approve a new structure for the statewide MLS that will merge the efforts of calREDD® with the Multi-Regional Multiple Listing Service Inc. (MRMLS).

This joint effort supports and is in line with the principles that have guided our efforts throughout the process of building a statewide MLS. The new structure will create one dynamic MLS provider serving more than 33,000 real estate professionals and 22 REALTOR® associations statewide.

It’s a huge stride forward for our members — combining our respective strengths and resources will significantly accelerate our shared vision and position the new entity to deliver even more expanded and efficient MLS services to you. You’ll have expanded access to MLS information, greater exposure for your listings, and eventually will be able to select either the calREDD® software system or the Tarasoft Matrix platform currently in use by MRMLS. You should expect to see even more choices and increased services over time.

Your Association will remain both a member and a fundamental part of the new entity, and will continue to have the right to approve actions such as merger, dissolution or sale of assets, changes in the purpose of the new entity, and changes in the board composition.

calREDD® and MRMLS will work closely during the transition to the new entity to ensure there are no disruptions in service, the needs of members continue to be met, and associations scheduled to join calREDD® are seamlessly added to the system. The Amador Association of REALTORS® is on schedule for a June 21 launch, followed by the Tehama Association of REALTORS® on June 28.

I’d like to thank our board, and the members of the calREDD® board of directors and its chairman, Mike Silvas, for their hard work and dedication to ensure that our members’ interests were front and center throughout the process. We’ll provide more information as our joint effort progresses.

Also at the Sacramento business meetings, your board of directors adopted a special purpose political assessment of $49 per member for 2011. This special assessment is for the California Real Estate Political Action Committee or, if the C.A.R. member chooses, to direct the funds to the C.A.R. general fund for non-candidate political purposes.

I can’t stress enough how valuable political involvement is. Whether it’s the legislature looking to tap REALTORS®, the transaction, or our industry for additional sources of funding, or placing restrictions on private property rights or on our right to conduct business, we must be continually vigilant in Sacramento to ensure that our interests are fairly represented. This is even truer in today’s fiscal environment, with politicians searching for every available means to cut the state’s ballooning deficits and produce a balanced budget.

Over the past few years, our coffers have dwindled, and while we still have a strong presence and a team of dedicated individuals working on our behalf at the capital, so has our influence. That’s why I contribute to C.A.R.’s political action funds, why I believe each member of the Association should support our efforts in this area, and why I wholeheartedly support your board of directors in their decision.

The special assessment takes effect for the 2011 dues bill cycle. Details on process and implementation now are being worked out; we’ll let you know additional information as it becomes available. I know I can count on you for your support.

Looking ahead, if you haven’t registered for CALIFORNIA REALTOR® EXPO 2010, taking place Oct. 5-7 at the Anaheim Convention Center, early-bird pricing has been extended through June 25, so take a few minutes to sign up today to take advantage of the savings. This year’s EXPO will feature exhibit booths, cutting-edge seminars, and other special events, while Tech Tuesday on Oct. 5 will offer a full day of technology training preceding CALIFORNIA REALTOR® EXPO. You can register online by visiting http://expo.car.org or calling toll-free (800) 242-2732.

C.A.R. also has negotiated a 25-percent discount off the registration fee for members to Inman Connect in San Francisco July 13-15; use promo code “CAR.” http://www.inman.com/conferences/real-estate-connect-san-francisco-2010/register. While you’re at Connect, don’t miss the Association’s four agent-focused sessions during Agent Reboot on July 12.  C.A.R.’s Agent Reboot sessions assist agents with “rebooting” their business and are scheduled from 1 p.m. to 5 p.m. For a full list of program sessions, please visit http://www.agentreboot.com/.

Sincerely,

Steve Goddard

2010 President

CALIFORNIA ASSOCIATION OF REALTORS®

Effective in 2011 the $49 basic cost of staying alive will now be shared by ALL Realtors in the state of California. If you are philosophically or religiously opposed to making political contributions, your investment will be channeled into a general CAR fund used for issues campaigns rather than direct candidate or party expenditures but if you’re a Realtor in California there’s no more free ride while others carry your political water. Welcome to the club!

The Southwest Riverside County Association of Realtors is pleased to announce that Senate Minority Leader Dennis Hollingsworth (R-Murrieta) will be our honored guest at a June 18th luncheon. Senator Hollingsworth has been a champion of legislation to benefit Southwest California during his tenure as as Assemblyman and more recently as Senator. Over the years he has also carried several bills on behalf of Realtors® and for property rights issues.

Senator Hollingsworth has been a staunch anti-tax crusader, a position that elevated him to his current role as Minority Leader when his predecessor got a little too chummy with the tax-and-spend majority in Sacramento. As presented in numerous posts to this site, Hollingsworth has continued to rail against tax increases and the spending abuses that plague our state. Hollingsworth has led the Republican Caucus in advocating reduced spending and smaller government at a time when state government has expanded at a prodigious rate.

On a personal note, I have also credited Hollingsworth with helping Gov. Arnold find his balls late last year at a time when all seemed lost. Hollingsworth, who shares an affinity for cowboy boots and stogies with the Gov., was often spotted with Arnie in the Governors ‘smoking tent’ on the back lawn of the Capitol. It was during this time that Arnold experienced a brief resurgence of the vigor and focus that gave so many hope when he first ascended to the office.

As a former President of the Riverside County Farm Bureau, Hollingsworth has brought a unique knowledge and perspective to his position. He understands the need for conservation and the preservation of property rights. But he also understands the need to balance those needs with infrastructure requirements and job creation. He has lobbied the federal government on the Endangered Species Act and specifically, de-listing the Delta Smelt – the wee beastie that has wrought havoc on our state water supply. He has also led several efforts on behalf of Southwest County as well as the entire state, for more local control of funds, projects and power.

Senator Hollingsworth has also just been confirmed as the Keynote address during CAR’s Legislative Day on June 9th. Delegates from SRCAR and other associations will be meeting privately with the Senator in the afternoon. Attendance at our June 18th event will be limited to those members of our Realtor Action Fund Champions who have invested the ‘True Cost of Doing Business’ prior to June 1, 2010. If you would like to find out more about this event and how to get your name on the guest list for this exclusive opportunity to chat with our Senate Minority Leader, please contact me at GAD@SRCAR.org.

Any questions about why Arnold listens when the CTA speaks? Any questions on why the state continues to hire people and dole out raises while Riverside County unemployment hits 15%?

You’re either at the table or …

Over $1 Billion Spent by 15 Special Interest Groups on Political Campaigns and Lobbying Efforts

Today the Fair Political Practices Commission (FPPC), the state’s political watchdog agency, released a new report detailing how 15 wealthy special interests spent more than $1 billion throughout the last ten years in an attempt to shape public policy by influencing California’s voters and public officials.

The report, “Big Money Talks,” details the staggering amounts of money these interest groups spent on candidates, ballot measures and lobbying efforts, since electronic filing went into effect in 2000.  Included in this list are six corporations, three Indian tribes, two labor unions and four business associations.

“This tsunami of special interest spending drowns out the voices of average voters, and intimidates political opponents and elected officials alike,” said FPPC Chairman Ross Johnson.

These five interests are responsible for over half of the $1 billion spent by the top 15:

• California Teachers Association—$211,849,298

• California State Council of Service Employees—$107,467,272
• Pharmaceutical Research and Manufacturers of America—$104,912,997
• Morongo Band of Mission Indians—$83,600,438
• Pechanga Band of Luiseño Indians—$69,298,909

“The message from special interests is unmistakable—that they’re willing to spend millions of dollars to protect their narrow interests,” Johnson continued.  “The spending also serves as a warning to officeholders:  ‘Don’t forget, we can use our money to help or hurt you.  Think about it.’”

The complete report is available on the Commission’s website and the list follows.

The Top 15 That Spent $1 Billion to Influence California Voters and Public Officials

1)    California Teachers Association                                                         $   211,849,298

2)    California State Council of Service Employees                                 $   107,467,272

3)    Pharmaceutical Research and Manufacturers of America              $   104,912,997

4)    Morongo Band of Mission Indians                                                      $     83,600,438

5)    Pechanga Band of Luiseño Indians                                                    $     69,298,909

6)    Pacific Gas & Electric Company                                                         $     69,240,759

7)    Chevron Corporation                                                                            $     66,257,132

8)    AT&T Inc.                                                                                               $     59,619,677

9)    Philip Morris USA Inc.                                                                          $     50,756,360

10)  Agua Caliente Band of Cahuilla Indians                                             $     49,078,448

11)  Southern California Edison                                                                 $     43,412,031

12)  California Hospital Association                                                           $     43,281,456

13)  California Chamber of Commerce                                                      $     39,065,861

14)  Western States Petroleum Association                                              $     35,214,325

15)  Aera Energy LLC                                                                                   $     34,671,163

Total of Top 15 $1,067,726,126

The Next Ten

16)  California Association of Realtors $     33,329,943

17)  California Correctional Peace Officers Association                         $     32,452,083

18)  California School Employees Association                                         $     31,861,749

19)  San Manuel Band of Mission Indians                                                 $     29,747,811

20)  Reynolds American Inc.                                                                       $     29,213,942

21)  Pala Band of Mission Indians                                                              $     24,021,356

22)  United Auburn Indian Community                                                      $     24,019,877

23)  California Medical Association                                                            $     23,064,218

24)  Anthem Blue Cross                                                                               $     21,993,466

25)  Consumer Attorneys of California                                                      $     21,294,921

Total of Next 10                                                                   $270,999,366

GRAND TOTAL OF ALL 25                                   $1,338,725,492

With the exception of Lennar Homes, I’m not aware of any other local applications of this type of tax – but as this recent update from NAR points out – it’s becoming more of an issue with local governments strapped for cash and profiteers looking to make an illicit buck of the unwary homeowner.

Want to build windmills to generate electrical power? CEQA compliance will add 6 years to the timetable. Want to put solar collectors out in the middle of the Mojave Desert? Sorry, CEQA says it might disrupt animal migration patterns. Want to add another lane to the I-215? Sorry, you need to re-do all the CEQA stuff you already complied with once even though nothing has changed. Want to build a hospital in Temecula? CEQA will keep you hopping from makework to paperwork in no time at all.

Finally some in our state capitol are growing cajones and saying ‘enough is enough’. We need infrastructure, we need dams and roads and disaster relief and we need JOBS. You’ll note with no great surprise that the Sierra Club bemoans this ‘attack on CEQA’ and ‘developers using the recession as an excuse for rollbacks.’ When the Sierra Club gets into the business of helping create jobs in the state, let me know and I’ll start caring about what they say.

SRCAR has sent a letter to Senator Dennis Hollingsworth in SUPPORT of his bill SB X8-56, outlined below.

State’s main environmental law targeted on broad front in Capitol

The Southwest California Legislative Council, with whom SRCAR is an advocacy partner, today adopted the following positions on current/pending legislation:

Support – ACA 30 (Jeffries) To abolish the office of Lieutenant Governor.
Self explanatory – this largely ceremonial position requires salary & staff expenses and the duties could be consolidated with the Secretary of State.

Support – AB 1671 (Jeffries) To prevent the Governor from appointing vacancies on the County Board of Supervisors.
A recent example in Riverside County left us without the ability to pass certain bills at the county level while Sacramento played politics with us. Our local positions should not be state appointed.

Support – AB 1672 (Jeffries) To make the California Air Resources Board an elected rather than appointed body.
The CARB is one of the most egregious examples of the lack of accountability on state boards & commissions with the Chair stating publicly that if she had to worry about being elected she would worry about all the jobs cost by their recommendation – but she’s not so she doesn’t.

Oppose – AB 1594 (Huber) To prohibit construction of the peripheral canal.
An attempt to circumvent the wording and intent of the state water coalition recommendation and the Nov, ballot initiative.

Oppose – AB 518 (Lowenthal) Provides incentives for cities and counties to reduce or eliminate free or subsidized parking.
Would prove particularly costly to outlying areas like Southwest County where 60% of our residents commute and are forced to park either at work or when they go shopping.  Unintended consequence is a reduction in people going to the malls reducing revenue to shopowners and downstream job market.

Oppose – SB 657 (Steinberg) Require retail sellers and manufacturers to implement policies to eradicate slavery and human trafficking from their supply chain.
Legislation already exists prohibiting slavery and human trafficking. To expect your local grocery store or hardware store to be able to track it’s products back to their origin and potentially take action against some foreign source is ludicrous. Besides, doesn’t Darrell Steinberg have anything better to worry about – like our state budget?

Oppose – SB 810 (Leno) Single payer health care system
We are in agreement that the state should be the appropriate body to determine this issue – rather than the federal government, but this bill is not the answer and would only increase the debt load of the state.

Founded in 2004, the Southwest California Legislative Council is a regional advocacy coalition of the Temecula Valley Chamber of Commerce, Murrieta Chamber of Commerce, Lake Elsinore Valley Chamber of Commerce and the Wildomar Chamber of Commerce. Its mission is to provide a basis for the four chambers of commerce to act on local, state and federal legislative issues to secure a favorable and profitable business climate for our region.

As a Realtor® you are part of one of the largest special interest groups in this country – the Realtor® Party, and you have a noble cause – preservation of the American Dream of home ownership. You may not like the idea of being a ‘special interest’ and you may disavow any inclination to participate in the political process that supports it, but that doesn’t change the facts.

Pericles summarized the concept in 500 BC when he said “Just because you don’t take an interest in politics doesn’t mean politics won’t take an interest in you.” I’ve updated that somewhat with the Wunderlich codicil “If you’re not at the table, you’ll probably be on the menu.”

If you think the business of real estate is just about buying and selling houses, you only know half the story. The National Association of Realtors® is the largest grassroots political action group in this country representing more than 1.1 million Realtors® in our nation’s Capitol. Last year we invested more money in candidate elections and special campaigns than almost any other group. That’s the other business of real estate – the part that allows you to stay in your business.

A few members have voiced concerns over the recent decision by the California Association of Realtors® to increase our dues by $49 to cover this vital piece of our business. But in reading through those comments (comment summary on $49 investment), I realized some of you are simply not aware of what these critical funds are used for and the direct benefit you derive. For less than the price of 1 latte a month, you are insuring your political survival and generating a real and measurable impact to your bottom line.

So let’s break down what YOU get for that $49 investment.

• Just last week we defeated a proposal from CA Senate President Darrell Steinberg that sought to impose a 3% accelerated withholding tax on independent  contractors – that’s you. If you sold a $100,000 condo, the withholding from your commission check would be $90. On a median price home in Temecula last year that would have taken an additional $260.89 out of your check – every check all year long. If it wasn’t for our successful lobbying efforts you’d be  paying that already because Darrell tried the same thing 3 times last year. Is that worth $49 to you?

• Have you sold a home to a first-time homebuyer in the past year? Over 1.2 million first-time prospects have become owners since the inception of the tax credit last year – 450,000 of those would not have jumped into the market without that incentive. Who do you think lobbied to get that measure passed last February and then worked extra hard to get it extended and expanded in November against long odds? Selling side commission on a median price home in Murrieta last year was about $8,133. Is that worth $49 to you?

• Last year Canyon Lake proposed an ordinance requiring every Realtor® to pay a $90 business license fee every year. If you worked in, advertised in, sold a home in, or even mentioned Canyon Lake in your website – you would get a bill for $90. We worked hard to modify that ordinance – not just for Canyon Lake but so that other Southwest California cities didn’t get the idea they could just reach into your pocket without a fight. Is that worth $49 to you?

• Last election cycle we supported candidates in 9 local city council races. 8 of our candidates won including 3 Realtors®. Do you think it might be helpful to have people serving on our local councils and water boards who understand property rights issues, eminent domain, sign ordinances, zoning and so forth? How about in Sacramento? Or Washington DC? If we had more legislators in place who understood real estate or banking or appraisal issues do you think we’d be having some of the problems we’re having today? Is that worth $49 to you?

• Would the loss of the mortgage interest tax deduction have any impact on home ownership? How about capital gains tax benefits for home owners? The  mortgage interest tax deduction and capital gains benefits are on the table every couple years in Washington DC as a source of potentially significant tax revenue. They will be again this year. Without your NAR lobby, these significant advantages to homeownership would have disappeared along with a chunk of your business during the past decade. It that worth $49 to you?

• Would your business be impacted if a buyer could walk into any bank and buy a home from the same salaried employee who gave them a loan? NAR fought an 8 year battle to eliminate a loophole banks were trying to exploit to do just that. We won that fight in 2009. Is that worth $49 to you?
  

Those are just a few of the things your $49 does. Here’s a few things it doesn’t do:

• Realtor Action Funds do not support a political party platform or agenda – they support the Realtor® Party. We support candidates who understand our issues at the local, state and national level regardless of party affiliation. Historically our expenditures are split almost down the middle at the federal level.

• Realtor Action Funds do not support issues or legislation that is not real estate related. At the state level our analysts comb through every one of the 3,300 bills submitted in an average session. About 1,500 of these may be flagged as having some potential impact on either Realtors® or property rights. Our state directors discuss each of those bills to determine whether the Association will support it, oppose it, maintain a neutral position or if it really isn’t real estate related at all. We also sponsor our own bills to address specific real estate issues of concern to our members. You can read about the eight bills CAR  authored for 2010 here.

• Realtor Action Funds do not support travel by Directors, they don’t pay for lobbyists salaries and they don’t pay for ‘pet projects’. If it doesn’t directly support a candidate or real estate related issue or campaign, it doesn’t come out of these funds. They are too precious to squander and the real need is growing exponentially.

I hope this gives you a better feel for why this latest move was made by our state association. It was not a capricious decision and was discussed in detail for more than a year. In order to continue to be effective at the level our members have come to demand, we
must have the support of all members. 10% or 20% can’t continue to pay for benefits demanded and enjoyed by 100% of the membership. That’s neither fair nor equitable.

We welcome your input and questions and I encourage you to visit http://gadblog.srcar.org/ to take part in the discussion.

Yesterday the Senate Budget Committee, in its wisdom, decided not to bring up independent contractor withholding for a vote at its meeting. For the time being, we’ve won, but Steinberg is expected to push it again later in the year as the budget fight heats up.

For those members concerned about their $49 investment in political survival, you might ask them if they would rather have paid the extra 3% ($90 out of pocket on a $3,000 commission). This is what the $49 does – not travel for Directors, not salaries for lobbyists and not to pay for Chief Economist Lawrence Yun.

If you would like to read my earlier post on the subject, click here: Political Survival Investment No Longer Voluntary

If you are interested in CAR’s 2010 legislative activities, click here: CAR Sponsors 8 bill in session

So here are a few of the comments we received along with my responses to them. I suspect those folks won’t read this since they obviously didn’t read my earlier post on the topic – but we keep trying.

MS – Good Move. It’s for a damn good cause. Thanks!!
Thank you.
CR – I think it is totally reasonable to require $49 a year to support our political agenda.
Thank you.
PM – I doubt you want to hear what I have to say to your strong arm tactics.
Yes we do.
AF – Why can’t some of our meeting/convention people stay home for a change.
Well, we could do that but it really doesn’t have anything to do with this topic. Political survival will be necessary regardless of who travels where and this money is not spent for that.
BK – I will never give a penny to support CAR’s political activities. In addition I will recommend all Realtors opt over to an alternative account.
That’s why we created it as an opt-over. You don’t have to support Realtor® political activities even though you benefit from them.
KJ – It’s good to see socialism alive and well. I will be looking for a law group to make money fighting you.
Well, CAR already has law groups who have made money advising us this is OK but we anticipate there will be members who would rather spend thousands fighting this than invest $49 on their political survival.
JF – Apparently once a lobbyist is hired they can’t be fired so tax people more to keep them employed.
Our lobbyists can be hired or fired, although fortunately for our members our senior lobbyists have been around for years and are very effective on our behalf. But again, this money doesn’t go to pay our lobbyists so they’ll keep working for you regardless. Oh, and it’s not a tax – it’s a dues increase pure and simple. It’s the cost of doing business being shared equally by all who benefit rather than a few of us paying for most of you.
DA – Believe the board is treading in uncharted waters here and putting a lot more at risk than their pet political projects.
Well, these waters are hardly uncharted – numerous groups have been here, done that – it’s just new for us. As for our ‘pet political projects’, those are called Realtors® and our clients. If you look at the legislation we sponsor and support from the local to the federal level, every single piece is either for the benefit of Realtors® or to protect the property rights of your clients.
LM – I resent it!!!!!!!!
Sorry!!!!!!!!
LC – This is completely out of line. You have stepped beyond your authority!!!!!!!!
It’s actually right in line with what needs to be accomplished for the Realtor® party and, no, it is within our authority!!!!!!!!
RD – Then you will not get the other $349 from me in 2011!
Then you will not be a Realtor® in California.
DD – Your lobbying at the beginning of the decade plus dictating to Lawrence Yun to disclose only optimistic news contributed strongly to what we are going through now.
Again, these funds have nothing to do with Lawrence Yun (NAR Chief Economist), who is widely regarded as one of the leading economists in the country, not just by NAR but by most economists and scholars. Not sure what lobbying we did that resulted in the sub-prime melt-down. Had our lobbying been more effective against the Barney Frank’s and Maxine Water’s of the world, GSE loan limits would have been raised 8 years ago and the whole sub-prime debacle could have been avoided. We also had nothing to do with Fed monetary policy or with the banks greed – but I’m certainly open to hearing where we went wrong.

Please feel free to chime in. We welcome your ideas and thoughts whether you agree with the decision or not. But keep a couple things in mind. Money raised for political action IS NOT SPENT for other purposes. It does not pay for salaries or travel or lobbyists. PAC funds are either spent on issues campaigns such as the extension of the 1st Time Homebuyer Tax Credit, or to defeat onerous legislation like last years ACWA sponsored home energy audit bill. PAC funds are also spent supporting local, state and federal candidates that have demonstrated an understanding of Realtor® issues and private property rights. In the 2008 election cycle that included supporting 9 local city council and/or water board candidates, 8 of whom were successful.

Pericles understood the concept in 500 BC when he said “Just because you don’t take an interest in politics doesn’t mean politics won’t take an interest in you.” Like it or not, as a Realtor® you are part of one of the largest special interest groups in the country, and one with a noble cause – preservation of the American Dream of homeownership. If you think the only business of real estate is buying and selling houses, you’re working with only half the picture.

The eight bills we’ll be sponsoring this year include:

SB206 (Dutton) – REO Homebuyer Tax Credit. As introduced, SB206 would have created a program similar to the federal first time homebuyer program providing a tax credit up to $8,000 for the purchase of a principle residence. Due to the state’s fiscal crisis it was later determined modofied to limit the tax credit to purchases of REO properties. At our recent BOD meeting, the language was further modified to include supporting a recent proposal by the Governor for the purchase of new or existing homes IF a reliable source of funding is found. This means if the Governor sponsors a bill to address substantially the same issue, we will abandon SB206 and sign on to support the Governor’s efforts assuming anybody can find money to fund such a program.

Local Property Maintenance Ordinance – (No author yet). This legislation will pre-empt over-reaching local vacant property ordinances that may adversely affect the market and unfairly expose Realtors® and homeowners to liability. While many cities, including those in Southwest County, have adopted workable ordinances to address abandoned property maintenance and blight issues, other cities have determined these ordinances are excellent sources of revenue for their cash-flow and have levied substantial fines. In some cases, the level of the fine is in excess of the value of the property. This bill would supersede local ordinances.

Anti Deficiency Protection (Corbett) – This bill would extend the existing borrower protections against personal liability for a purchase money loan to either refi the property or for improvements that increase the value of the property. Current policy states that any refinance, even with no cash out just to reduce interest rates, automatically shifts the loan from non-recourse to recourse. This bill addresses that.

CID Unit Owner Right To Rent – In 2008 we sponsored AB2259 (Mullin) which would have allowed current property owners within an HOA to continue to use their rental rights until such time as they sold the property even if the HOA decided to restrict rentals. Approved almost unanimously in both houses, it was vetoed by the Governor. This bill would require a 2/3 approval in a CID for any amendment that would prohibit owners from renting or leasing their units.

Portable Appraisals (Correia) – Current law permits, but does not require, lenders to utilize an appraisal ordered by a different lender. This bill states that if an appraisal is ordered and prepared by one lender, a second lender would be required to accept the appraisal to support the mortgage.

Appraisal Management Company (AMC) Regulatory Oversight (Hall) – Driven by the HVCC, Appraisal Management Companies have grown
enormously in both scope and power over the past two years. In 2009 CAR supported SB237 (Calderon) which subjects AMC’s to review by the Office of Real Estate Appraisers (OREA). This bill clarifies and expands OREA’s oversight of these behemoths. Since we can’t seem to stop HVCC at the federal level, we are trying to at least establish some control and oversight at the state level. By the way, HVCC technically sunsets this year but nobody is betting that the process or the AMC’s will simply pack it in and go home.

DRE ‘Poison Pill’ Reserve Protections – During the 1990′s the Governor and Legislature raided Department of Real Estate funds to help balance the budget. CAR sponsored legislation stating that if the funds were taken it would trigger a rollback of license fees to 1982 levels. The bill passed. Years later the state again  raided the DRE money but stated that it was borrowed by the general fund so the rollback was not triggered. We again addressed the matter legislatively and closed that avenue of pilferage. In 2009 DRE coffers were again raided in a manner than again did not trigger a rollback as the funds were not stolen, not borrowed, but loaned not to the general fund but directly to another department, the DOJ. Back to the drawing board yet again.

Advance Fee Definition Clarification (Hayashi) - Last year we supported SB 94 (Calderon) to prohibit ‘cash up front’ loan modification contracts. However, the language that emerged in the final bill requires some clarification of the definition of advance fees for services such that it cannot be construed to include a listing agreement – which is technically a fee agreement for future services to be rendered.

The legislative deadline for identifying authors and obtaining bill numbers is February 15 so we will keep you apprised of developments and successes in our 2010 advocacy efforts as they occur. Stay tuned for RED ALERTS as we elicit your support to persuade legislators of the importance of these measures.

There are also hundreds of ‘bills of interest’ in the process of being introduced by others. At future meetings CAR will evaluate those bills and members will be asked to take a position.

For a complete (as of January 2010) summary of both CAR sponsored bills as well as a list of these others bills of interest, please go to:
http://www.car.org/governmentaffairs/

Proposition 17 - Continuous Coverage Auto Insurance Discount Act: Not Real Estate Related

Safe, Clean and Reliable Drinking Water Supply Act of 2010 (Not yet numbered): Neutral

Proposition 13 – Property Tax: New Construction Exclusion: Seismic Retrofitting ; For

Proposition 15 – Political Reform Act of 1974: California Fair Elections Act of 2008: Not Real Estate Related

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.

Welcome to the Realtor Report for January 2010. The attached charts summarize Southwest California housing activity for the year just past and provide some perspective on where we’ve been and where we are today. It’s going to take somebody far sharper than me to figure out where we’re going.

The first chart is always interesting in that it gives us a six year window on the market. One of the first thing you’ll notice is that sales were off 2008 levels – about 20% in Temecula, Murrieta and Lake Elsinore, 40% in Wildomar and Menifee and just 7% in Canyon Lake. However, when you drop down to the Demand Chart you’ll note that we’re still selling 70% of the properties that come on the market and our inventory is still minimal.

What that suggests to me is that even though sales were off, it was primarily a factor of product availability, not a decline in demand. 2008 was a record sales year in most of our cities and that absorbed much of the available housing stock dropping inventory levels from 20-22 months in December 2007 to 2 months or less in December 2009.  A ‘healthy’ market inventory is considered to be 5 – 6 months.

After bottoming out in Oct-Nov 2007, sales have generally posted a gradual increase proscribing a shallow ‘smiley face’ trend line – again with sales volume only constrained by available product. (6 Year Sales Graph)

Another thing to note in our sales  - you’ve all heard recent reports trumpeting housing sales off by 40% or more nationwide in December, the biggest monthly drop since Lincoln was a lad. But not in Southwest County. Our unit sales were actually UP December over November by an average of 25%. 12% in Temecula, 17% in Murrieta, 36% to 40% in Wildomar, Lake Elsinore & Canyon Lake and 5% in Menifee. (24 Month Sales Graph)

The Median Price of homes in the region continued to decline year-over-year in 2009 – down 15%, on average, from 2008. That ranged from dips of 22% and 24% in Menifee and Wildomar, to 14% in Temecula, 11% in Murrieta and just 2% in Lake Elsinore. That brought our peak-to-trough median price down 66% in Lake Elsinore, 58% in Canyon Lake, 52% in Menifee & Wildomar, 49% in Murrieta and 45% in Temecula.  (24 Month Median Price Graph)

Ready for some good news? I mentioned peak-to-trough pricing in that previous paragraph because it appears – appears – that our prices may have bottomed out, or be very close to it. Looking at quarter-to-quarter run rates, we have showed 1st to 4th quarter declines every year since 2006. In 2009, 1st to 4th quarter showed nearly a 5% increase in Temecula, 4% in Murrieta, 24% in Canyon Lake and drops of just 1% in Lake Elsinore & Wildomar and 6% in Menifee for a region-wide median price increase of 4%. If we can just keep that up for the next 10 years we’ll be back to where we started.

The last maps show the current status of pre-foreclosure and bank-owned properties in the region. These numbers could change, perhaps dramatically, during the next 60 days. Banks typically hold off foreclosure activities during the holiday season plus some moratoria and loan-mod efforts are scheduled to expire in the first quarter, so the number of notices of default (pre-foreclosure) could increase significantly.

Similarly, there has been a lag between NOD’s filed and actual trustee sales to the banks. As banks get more aggressive about clearing their books of non-performing assets, we may see the banks taking more properties back followed by an increase in releases to the re-sale market – as has long been rumored. Given our current lack of inventory, the extension of the First Time Homebuyer credit, continuing strong demand and historically low interest rates, this could only be good news for our Valley. Of course that’s just my opinion – I could be wrong. (ForeclosureRadar Maps).