California Senate Leadership seeks to punish homeowners and REALTORS® for opposing $75 recording tax

LOS ANGELES (May 23) – This morning the Senate Appropriations Committee approved Senate Bill 30 (R. Calderon), which would extend existing provisions of state law protecting homeowners from having to pay income tax on a "short sale."  SB 30 is sponsored by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).
However, in a surprise amendment, SB 30 was linked by the committee to another bill that REALTORS®, as well the county recorders, assessors and title industry, oppose.  That measure, Senate Bill 391 (DeSaulnier), would establish a $75 per document recording tax to fund an affordable housing trust fund.  C.A.R. is opposing SB 391 because it unfairly adds to the cost of recording real estate documents.  The amendment holds SB 30 hostage to the passage of SB 391.
"Families that are forced to make the difficult decision to sell their home as a short sale are already in financial trouble.  And, that financial trouble may be due to a serious illness and/or loss of employment.  They simply can’t afford to pay an additional tax on money they’ve never actually received," stated C.A.R. President Don Faught.  "I'm outraged -- as should the voters of California -- that the Senate leadership would approve linking the fate of SB 30 to that of SB 391, effectively holding California property owners hostage."
Short sales have become an increasingly important alternative to foreclosure for homeowners "underwater" on their mortgage.  Without special protection, federal and state law would view the debt forgiven by a lender in a short sale as income and, as a result, that “income” would be taxed.  In recent years, state and federal law has been amended to keep this “phantom” income from being taxed, but California protections have not been extended.  Consequently, C.A.R. is sponsoring SB 30.
While SB 391 does not apply to sale transactions, the measure applies anytime a home/property owner records a document (e.g., refinancing, transferring into or out of a trust, liens, quit claim deeds, etc.).  C.A.R. is an aggressive advocate for affordable housing, but believes it is bad policy to fund affordable housing at the expense of home/property owners who need to record real estate documents.  The amendment to SB 30 attempts to extort support for the new tax on homeowners in SB 391.

California Homeowner Bill of Rights signed into law


California Governor Jerry Brown signed into law yesterday the Homeowner Bill of Rights to help struggling Californians keep their homes. This law aims to avoid foreclosure where possible to help stabilize California's housing market and prevent the other negative effects of foreclosures on families, communities, and the economy. The new law will generally prohibit lenders from engaging in dual tracking, require a single point of contact for borrowers seeking foreclosure prevention alternatives, provide borrowers with certain safeguards during the foreclosure process, and provide borrowers with the right to sue lenders for material violations of this law.

Making sense of the story

• The Bill of Rights prohibits “dual track” foreclosures that occur when a mortgage servicer continues foreclosure while also reviewing a homeowner’s application for a loan modification.

• Under the new law, homeowners must be provided with a single point of contact when negotiating a loan modification.

• It expands notice requirements that must be provided to a borrower before taking action on a loan modification application or pursuing foreclosure.

• Additionally, the bill allows injunctions against foreclosure until violations are corrected and permits civil penalties against servicers that file multiple, inaccurate mortgage documents or commit reckless or willful violations of law.

• These new laws make California the first state in the nation to take provisions in the National Mortgage Settlement, which covered the nation’s five largest mortgage loan servicers, and apply those rules to all mortgage servicers.

• The law will go into effect January 1, 2013.

"Brace yourself real estate prices are going back up! House prices, after falling for more than five years, are rising again. All the major sales-price indexes show that there have been modest national increases in recent months, even after adjusting for seasonal patterns. "
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California Law To Require Carbon Monoxide Detectors

On May 7, 2010, California Governor Arnold Schwarzenegger signed into law a bill that requires carbon monoxide detectors in all California dwellings. The bill requires that the presence or absence of these devices must be disclosed when residential real estate is transferred. For more information visit Realty Times.

The bill also creates disclosure requirements about carbon monoxide detectors. Sellers of residential properties in California must provide the buyer with a state-mandated form known as the Real Estate Transfer Disclosure Statement (TDS). The TDS requires the seller to answer Questions as to features of the property. The TDS has now been amended so that, effective January 1, 2011, the seller will have to say whether or not the property contains one or more carbon monoxide detectors. Even if the answer is "no", that will not invalidate the sale or transfer of the property. The question regarding carbon monoxide detectors is similar to a current question regarding automatic garage-door reversing devices. A footnote explains that the lack of such a device may fail to meet current safety standards. Nonetheless, a transfer of the property may still take place.

Home Prices In Los Angeles Expected To Rise

After two years of gains, home sales in California are expected to fall 10 percent this year but prices should continue to rise.

The California Association of Realtors expects 492,000 sales this year, compared with 564,500 in 2009. C.A.R. predicts that sales activity will rise next year to 502,000 as the recovery regains momentum.

Sales increased by 27 percent in 2008 and 24 percent in 2009 after two sharp years of declines as the real-estate market collapsed.

"We have had weaker economic activity in the second half of this year as we have weaned ourselves from the federal government stimulus programs," Robert Kleinhenz, the association's deputy chief economist, said during a conference call.

The Los Angeles-based trade group expects next year's median to grow a modest 2 percent to $312,000.

The increase follows price decline of 38 percent in 2008 and 21 percent in 2009. Los Angeles County market should closely track the state, Kleinhenz said.

There were 60,000 home sales in the county last year and they should fall 24 percent this year, due in large part to the end of the federal tax credits. Modest gains should return next year, Kleinhenz said. The median price is on track to increase 5 percent this year and make a similar gain next year, Kleinhenz said. There was also word on Monday that the nation's residential housing market remains under pressure. The National Association of Realtors said that its index of sales agreements for previously occupied homes rose 4.3 percent to a reading of 82.3 in August. That's still more than 20 percent below the pace in the same month a year ago. "With underlying economic conditions still so weak, a robust housing recovery remains highly unlikely," Paul Dales, U.S. economist at Capital Economics, told the Associated Press.

Historic Interest Rates!

The thirty-year fixed rate mortgage (FRM) averaged 4.375% today, with an APR of 4.559%, down from Friday’s average of 4.36%. This rate is much lower than last year around this time when the 30-year FRM was averaging well over five percent. Today’s rates are the lowest recorded since Freddie Mac began keeping track of this type of mortgage back in 1971.

Gov. Arnold Schwarzenegger Signs Bill!!!!!

Gov. Arnold Schwarzenegger on Thursday signed a bill aimed at selling California's vacant homes and encouraging new construction by extending a $10,000 state tax credit for first-time home-buyers.

The governor signed a bill the state Legislature passed on a bipartisan vote earlier this week. It provides a state tax credit to first-time home-buyers who buy new or existing homes from May 1 until the end of 2010.

Home-buyers can claim 5 percent of the purchase price against their California taxes, or up to $10,000.

Call me for more information.

Heather Farquhar 818-388-2743

Fast Facts From The California Association Of Realtors

California median home price - July 09: $285,480 (Source: California Association of Realtors.)
California highest median home price by California Association Of Realtors region July 09: Santa Barbara So. Coast $885,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region July 09: High Desert $110,650 (Source: C.A.R.)Calif. First-time Buyer Affordability Index - Second Quarter 2009: 67 percent (Source: C.A.R.)Mortgage rates - week ending 8/27/09 30-yr. fixed: 5.14% Fees/points: 0.7% 15-yr. fixed: 4.58% Fees/points: 0.7% 1-yr. adjustable: 4.69% Fees/points: 0.6% (Source: Freddie Mac)

First-Time Homebuyers Push Sales Up In Studio City and Sherman Oaks

Southland Regional Association of Realtors® reported that first-time buyers are taking advantage of favorable market conditions and are pushing home sales up in the San Fernando Valley with May being the eleventh straight month of sales gains.
Seven hundred and eight single-family homes sold during May, an increase of 5.8 percent over a year ago and 2.5 percent above figures.
Currently there is a 3.8-month supply of homes compared to the 8.5-month supply of May 2008 (a five- to six-month inventory indicates a balanced market.)
The median price of homes sold during May was $350,000, down 22.2 percent from a year ago. The condominium median price of $185,000 was off 38.1 percent from May 2008.

Good News For Buyers

Home prices throughout most of California will decline next year, while sales of existing homes will continue to rise in 2009 this from "C.A.R.'s 2009 California Housing Market Forecast," released today. ."The current uncertainty about the financial system and economy is likely to persist over the next several weeks, and could extend into next year," said C.A.R. President William E. Brown. "Our forecast assumes that the financial system will begin to show signs of stabilization late in 2008 and into early 2009."The median home price in California will decline 6 percent to $358,000 in 2009 compared with a projected median of $381,000 this year, according to the forecast. Sales for 2009 are projected to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008."Sales in 2008 will be ahead of last year by 12 percent, with a further increase of 12.5 percent expected in 2009," said C.A.R. Chief Economist Leslie Appleton-Young. "However, the next couple of quarters in late 2008 and early 2009 will be marked by seasonal decreases in activity, with a pickup expected by the second quarter of next year."