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New Laws on Degree Brokers, Vacant REOs, and Military Servicemembers
On August 27, Governor Brown signed three significant legislative bills into law that may be of interest to REALTORS®. The full text of each law is available at http://www2.realtoractioncenter.com/site/R?i=x03l6Vdgcu0wyoMbG6eCnQ.
  • Restricting New Degree Brokers: Under a C.A.R.-sponsored law that comes into effect on January 1, 2013, the education exemption to the experience requirement for applying for a new real estate broker’s license is more stringent. Under existing law, an applicant must, among other things, be actively engaged in the business of a real estate salesperson for at least two of the last five years. The applicant, however, may petition the DRE for an exemption from the experience requirement if he or she graduated from a four-year college or university with a specialization in real estate. Because “specialization in real estate” is broadly worded, the new law requires that, to satisfy this exemption from the experience requirement, a degree broker’s course of study must have included “a major or minor in real estate.” Both the existing and new law also allows an applicant to petition the DRE for another exemption from the experience requirement by demonstrating at least two years of general real estate experience. Source: AB 1718.
     
  • Maintaining Vacant REO Properties: An existing law requiring an owner of vacant residential property acquired through foreclosure to maintain the exterior of the property, was originally set to expire on January 1, 2013, but has now been extended indefinitely. To prevent blighted neighborhoods, this law allows a governmental entity to impose a fine up to $1,000 per day for any violation. Violations of this law include allowing excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to prevent mosquitoes from breeding in standing water, and other public nuisances. This new law, which is part of the California Homeowner Bill of Rights, also gives a buyer of residential property foreclosed after 2007 an opportunity to correct substandard conditions. Starting January 1, 2013, if that buyer has purchased and is in the process of diligently abating any building standard violations, an enforcement agency cannot commence any action or proceeding for nuisance abatement for at least 60 days after the buyer takes title to the property, unless a shorter period is deemed necessary to prevent an immediate threat to health and safety. Also commencing January 1, 2013, any mortgage lender who releases a lien from a property with a recorded notice of pendency of action must notify the enforcement agency that issued the order within 30 days of releasing the lien. Source: AB 2314.
     
  • Protecting Military Servicemembers From Foreclosure: Starting January 1, 2013, the existing California protection for a servicemember against foreclosure by a mortgage lender during the period of military service or within three months thereafter, has been extended to nine months thereafter. Exceptions apply to sales made by agreement or court order. This law applies to mortgage loans originated before a servicemember’s period of military service for which the servicemember is still obligated. The nine-month period mirrors the foreclosure protection under the federal Servicemembers Civil Relief Act. However, President Obama recently signed into law the federal Honoring America’s Veterans and Caring for Camp Lejeune Families Act which extends, from February 2, 2013 to December 31, 2014, the foreclosure protection to one year after the period of active duty. Source: AB 2475 and H.R. 1627.

Dear Ruthann,

I know you’ve heard from me a couple of times already this week, but there is a lot happening on the real estate front, and I want to make sure you’re updated on the matters that affect your business. I’ll recap the major items in case you missed them.

On Monday, I informed you that the Federal Housing Finance Administration (FHFA) was going ahead with its REO bulk sales plan to sell nearly 500 Fannie Mae-owned foreclosed homes in the Los Angeles and Inland Empire areas to yet undisclosed institutional investors. Not only is FHFA carrying out the plan, it is doing so in a secretive manner by not disclosing any details, such as property locations, final property count, sales price, or names of winning bidders. We have filed a request through the Freedom of Information Act to obtain specific details.

We are disappointed that FHFA and Fannie Mae fail to understand that this plan will negatively impact the state’s housing market and burden taxpayers with Fannie Mae’s loss. Furthermore, they are targeting markets that have seen sales and price stabilization over the last three years. These areas are now experiencing strong housing demand and extremely low inventory.

C.A.R. has expressed its vehement opposition to the bulk sales initiative on numerous occasions, advising the FHFA and Fannie Mae that investors don’t need government incentives to purchase properties by offering REOs at a discount price and that home prices will be further depressed in affected areas.

We will continue to work with California congressional leaders and fight this issue.

On Tuesday, I notified you that FHFA announced it will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale. C.A.R. has long advocated for a streamlined, standardized short sale process, and some of the changes below address many of our requests.

Here are some specific changes that will be effective Nov. 1, 2012:

  • Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).
  • Enables servicers to quickly and easily qualify certain borrowers for short sales who are current on their mortgages without waiting for an approval from Fannie Mae or Freddie Mac
  • Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.
  • Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
  • May pay borrowers up to $3,000 in relocation assistance.
  • Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.

FHFA also clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan.

These new guidelines will improve short sales eligibility for those troubled homeowners trying to avoid a foreclosure so they can move on with their lives.

See Fannie Mae’s new short sale guidelines.
See Freddie Mac’s new short sale guidelines
.

As I mentioned, C.A.R. has been working persistently to address your short sale concerns. One way to do so is by meeting with lenders to ensure they understand the issues you face. In fact, at CALIFORNIA REALTOR® EXPO 2012, C.A.R. CEO Joel Singer will moderate a panel of top executives from Bank of America, Chase, and Citibank to discuss how REALTORS® can effectively work distressed transactions, what new programs and services are being offered, and how REALTORS® can better serve their clients’ needs. The panel discussion will be held at the Anaheim Convention Center, Wed., Oct. 3, 10 a.m. to 11:30 a.m. While you’re there, check out the numerous sessions related to short sales or distressed properties, and more at CALIFORNIA REALTOR® EXPO 2012. (See further below.)

Earlier this month, the Senate Finance Committee crafted and sent to the full Senate a package that would extend the mortgage debt cancellation provision for an additional year, through Dec. 31, 2013. Mortgage debt cancellation provides relief to troubled borrowers when some portion of mortgage debt is forgiven.

The Senate was unable to act on the bill before adjourning for its August break and the party conventions. The Senate reconvenes Sept. 10. Chairman Baucus (D-MT) had hoped to finish this package before the election in order to provide certainty about the extension (or not) of more than 50 provisions. Nonetheless, it is not known if the package also would be considered in the House before the election.

In addition to the mortgage cancellation relief provision, the package also includes a relief provision to limit the impact of the Alternative Minimum Tax (AMT) in 2012 and 2013. The 15-year cost recovery for leasehold improvements is renewed (it had expired Dec. 31, 2011) and extended through Dec. 31, 2013. The provision that permits the costs associated with brownfields environmental cleanup was not included in this extender legislation.

In a little over a month, thousands of REALTORS® will convene in Anaheim for CALIFORNIA REALTOR® EXPO 2012, and I hope you plan to be one of them. You’ll get top-tier training, ideas, and inspiration to increase your bottom line from more than 60 sessions, most of which are free. You won’t want to miss an opportunity to hear from the industry leaders and motivational speakers who will lead the luncheons, either. At Tuesday’s PRE EXPO Luncheon, Brian Buffini will share insights and practical information from his brand new Peak Producers sales system. At Wednesday’s luncheon with C.A.R. Vice President and Chief Economist Leslie Appleton-Young, you’ll get the first glimpse into the 2013 housing market when she gives her Annual Housing Market Update. Thursday’s Closing Luncheon will inspire you when you hear Iraq War veteran and 2011’s Dancing with the Stars winner J.R. Martinez’s incredible tale of optimism, survival, and perseverance.

Visit here to register for any of CALIFORNIA REALTOR® EXPO 2012 events.

I look forward to seeing you there!

Sincerely,

LeFrancis Arnold
2012 President
CALIFORNIA ASSOCIATION OF REALTORS
New Anti-Deficiency Protection for Refinance Loans Made After January 1, 2013

Starting January 1, 2013, a new California law will protect homeowners who default on their refinance loans from personal liability for any deficiency following foreclosure. Existing anti-deficiency law protects a borrower from personal liability for the difference between the principal balance and what the lender receives at foreclosure if the loan is a purchase money loan secured by an owner-occupied property with one-to-four residential units. The new law, Senate Bill 1069, extends that anti-deficiency protection to include any loan used to refinance the purchase money loan, plus any loan fees, costs, and related expenses for the refinance. The anti-deficiency protection, however, does not extend to any "cash out" in a refinance, which is when the lender advances new principal not applied to any obligation owed under the purchase money loan. This new law does not affect the other anti-deficiency protections for non-judicial foreclosures (or trustee's sales) and seller financing.

This new law only applies to refinance loans or other credit transactions used to refinance a purchase money loan, or subsequent refinances of a purchase money loan, that are executed on or after January 1, 2013. For purposes of this law, any payment of principal shall be deemed to be applied first to the principal balance of the purchase money loan, and then to the principal balance of any new advance and interest payments shall be applied to any interest due and owing.

C.A.R. supported Senate Bill 1069 in the legislative process as many homeowners do not realize that, by refinancing, they lose their anti-deficiency protection for a purchase money loan. Senate Bill 1069 is similar to Senate Bill 1178 sponsored by C.A.R. in 2010, but vetoed by Governor Schwarzenegger. The full text of the law is available at www.leginfo.ca.gov.


Action Update: Last night the House passed the 5 year Flood Insurance extension bill (HR1309). On to Senate.

Fannie/Freddie Servicing Guidelines
(April 28) The Federal Housing Finance Agency (FHFA) announced it has directed Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs) to align their guidelines for the servicing of delinquent mortgages owned or guaranteed by the GSEs.

President's Podcast: Short Sales, Qualified Residential Mortgages, and Budget Battles
(April 19) NAR President Ron Phipps discusses new legislation in Congress aimed at putting a deadline on lenders responding to short sales.

NAR Comments on Credit Score Regulations
(April 14) NAR submitted comments to the Federal Trade Commission (FTC) and the Federal Reserve Board on proposals to amend their risk-based pricing rules.

45-day Short Sale Decision Legislation Introduced
(April 12) Representatives Tom Rooney (R-FL) and Robert Andrews (D-NJ) introduced H.R. 1498, the "Prompt Decision for Qualification of Short Sale Act of 2011"

 

Over the course of the past year and a half, C.A.R. has been working vigorously to address your concerns related to short sale transactions.  As a direct result of our efforts, we have made significant improvements through discussions with legislators, housing regulators, and lenders.

C.A.R. has long advocated for a streamlined, standardized short sale process, and I’m happy to inform you of changes announced today by the Federal Housing Finance Agency (FHFA) that will align guidelines for Fannie Mae and Freddie Mac short sales and allow lenders and servicers to quickly and more easily qualify borrowers for a short sale. 

Here are some specific changes that are effective Nov. 1, 2012:

  • Eliminates current Fannie Mae and Freddie Mac short sale programs and creates a single standard short sale process for both entities (Fannie and Freddie HAFA programs will expire at the end of the year).
  • Enables servicers to quickly and easily qualify certain borrowers who are current on their mortgages for short sales without waiting for an approval from Fannie Mae or Freddie Mac
  • Offers special treatment for military personnel with Permanent Change of Station (PCS) orders.
  • Standardizes and clarifies foreclosure suspensions on a property with an approved short sale.
  • May pay borrowers up to $3,000 in relocation assistance.
  • Fannie Mae and Freddie Mac will offer up to $6,000 to subordinate lien holders to expedite a short sale.

Additionally, FHFA clarified that a borrower experiencing a hardship must wait at least two years before becoming eligible for a Fannie Mae or Freddie Mac loan.

These changes follow FHFA’s announcement in June that established strict timelines for servicers to respond to short sales within 30 days of receipt of a short sale offer, provide weekly status updates to the borrower, and communicate a final decision to the borrower within 60 days of receipt of the offer.


Short Sale News & Updates in a Few

Clicks--C.A.R. has launched a new California short sales website, designed to offer members and consumers the most up-to-the-moment news, legislative information, legal tips, and lender criteria from the ever-changing short sale world. Short sale tips for REALTORS®, sellers, and buyers; a HAFA short sale fact sheet, a timeline for foreclosure proceedings, and advice on how to avoid foreclosure rescue scams are among the useful information that can be found on the new site. Site visitors also can find out about upcoming short sale webinar schedules, short sale publications, and the latest C.A.R. efforts to help members navigate this oft-confusing transaction. Log on to http://www2.realtoractioncenter.com/site/R?i=xR6pjnXlko8coSZcXaV7Fg.. to learn more.

  
Newsletter_MarketMatters_Computer.JPG  CNNMoney

Home prices signal recovery may be here
The S&P/Case-Shiller national home price index, which covers more than 80 percent of the housing market in the United States, climbed 6.9 percent in the three months ended June 30 compared to the first three months of 2012.

Making sense of the story

  • Two other key indexes covered in the S&P/Case-Shiller report also showed gains. The 20-city index was up 6 percent on the second quarter, and the 10-city index rose 5.8 percent.

     
  • National prices were up 1.2 percent compared with a year earlier, and the 20-city and 10-city indexes also gained year over year. It was the first time all three measures showed positive annual growth rates since the summer of 2010, when generous tax credits for home buyers were in place.

     
  • The steep increase in home prices "feels really good after six years of straight down," said Mark Zandi, chief economist of Moody's Analytics.

     
  • He cautioned that the results may overstate the case for the housing recovery a bit. The mix of homes being sold has changed lately, with fewer repossessed homes on the market. Those sell at big discounts to conventionally sold homes and had been propelling prices downward.

     
  • As home values increase, home equity rises, and fewer mortgage borrowers will be underwater, owing more than their homes are worth. That will give them an asset to tap should they run into a tight financial patch.

     
  • An improving housing market will also give homeowners more confidence in the investments they've made in their homes.

Read the full story

 
 
In other news ...


Newsletter_MarketMatters_newspaper.JPG  The Wall Street Journal

Pay cash or finance?
Imagine yourself a banker, the gatekeeper to a limited pile of money.  You’re sitting across the desk from you. Would you give yourself a loan?

Read the full story

 

Newsletter_MarketMatters_newspaper.JPG  The New York Times

Half of homeowners under 40 are still underwater
Younger borrowers are more likely to be affected by negative equity in part because they generally have been in their home for shorter periods of time and had less time to build equity before the housing debacle.

Read the full story

 

Newsletter_MarketMatters_Computer.JPG  CNNMoney

No-fee mortgage option is on the way
Lenders would have to offer potential home buyers an option to get mortgages with no fees, under a rule proposed by the Consumer Financial Protection Bureau.

Read the full story

 

Newsletter_MarketMatters_newspaper.JPGThe Wall Street Journal

Get a picture-perfect home sale
Listings of homes with photos taken by professionals have about 61 percent more views than listings without – and that’s across all price tiers, according to research from Redfin, a real-estate brokerage firm.

Read the full story

 

Newsletter_MarketMatters_newspaper.JPG  The Los Angeles Times

Consumer confidence drops in August, down to late 2011 level
The Conference Board’s consumer confidence index fell to 60.6 this month, from 65.4 in July, driven not by what people feel about the current situation but their concerns about where the economy is headed.

Read the full story


Newsletter_MarketMatters_newspaper.JPG  The Wall Street Journal

In mostly tepid housing recovery, “jumbo” home loans set hot pace
By most measures, the housing market’s recovery has been slow.  But private-market “jumbo” mortgages – larger, higher-cost home loans that aren’t guaranteed by the federal government – are making a much faster comeback.

Read the full story

 
 
Talking Points
  • There are several ways a new home-buyer can save money.  From major moves like refinancing a mortgage, to more humble acts like bundling Internet and cable with one company, the savings potential for new or prospective homeowners is big.
  • Borrowers who are still shopping for mortgage loans, or those considering refinancing, may want to look at a loan with a term of 15 years instead of 30 years.  Paying off the house in 15 years instead of 30 years has some advantages, as well as some challenges.
  • On the plus side, a 15-year loan typically means a lower interest rate.  Most lenders offer a rate that’s at least a half percent lower than the rate for a 30-year loan, which means borrowers can pay much less interest over the life of the loan.
  • As for the challenges, because the borrower is paying off the loan in half the time, the monthly payment will be higher.  It’s important the borrower is comfortable with the payment, and can afford it.

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I met Ruth a few years back when I was looking for someone to assist me in the re-financing of my house. I had spoken with several...
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Ruth Biafora Broker/Owner 818-601-5765
ruth_biafora2003@yahoo.com

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