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Homeowner Facts


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Feb
1

Law Makes it Easier to Get an FHA Loan for a Condominium

If you’re looking to own but don’t want a single family home, a new federal law could help you qualify for a loan to buy a condominium. REALTORS® across America have championed H.R. 3700, which was recently signed into law by President Obama. The bill eases federal regulations allowing buyers to qualify for Federal Housing Administration (FHA) financing.

H.R. 3700, the “Housing Opportunity Through Modernization Act,” will benefit first time home buyers and others who typically invest in smaller homes or condos as the most affordable option. FHA financing was previously limited to condominium homeowner associations where 50 percent of the units were owner-occupied. This disqualified many condos, and precluded buyers from accessing an FHA loan, which is typically one of the easiest loans to get. H.R. 3700 requires HUD and the FHA to review and ease this policy. HUD is in the process of finalizing their FHA condo rules.

California Association of REALTORS® and the National Association of REALTORS® were both active supporters of the bill. REALTORS® estimate that the bill will put thousands of affordable housing opportunities within reach to families looking to own.

Contact your REALTOR® for more information about H.R. 3700 and how it might help you access FHA financing for the condo of your dreams.
Jan
18

Loan Limit Increase Makes it Easier to Qualify for a Mortgage

It’s no secret that California housing prices are among the highest in the nation, but homebuyers are getting relief with the announcement that the Federal Housing Finance Agency will increase conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017. The limits will increase to $424,100 for single-unit properties and $636,150 in high-cost areas including California.

What does this mean if you’re looking to buy a home in the Golden State?

Quite simply, it means that despite high prices, homes will be more affordable. Mortgages within the conforming loan limits will typically have lower interest rates and easier qualification standards.

Buyers seeking to purchase a home with a mortgage that exceeds the conforming loan limits would have to get a “non-conforming” or a “jumbo loan.” These mortgages have higher interest rates and more strict qualification guidelines.

California’s median home price is $515,940 and all markets, with the exception of the San Francisco Bay Area, have median prices within the new loan limits.

The best way to know how these changes can help you is to consult with a local REALTOR®. REALTORS® make a point of staying current with all of the latest regulations and financing options so that you can find and finance the home of your dreams.
Jan
18

Fighting for California Homeownership

During this time of year, people are focused on politics and elections. But do you ever wonder about how our elected officials do as lawmakers? It’s important, because every year, thousands of bills are debated in Sacramento and Washington D.C. that impact your ability to buy or sell a home.

The good news is that your local REALTOR® is paying attention, fighting for homeownership. When REALTORS® fight, families win. Here are a few of the more notable successes during the 2016 legislative session.

Homeownership Bills Signed Into Law

• Expanding access to financing: HR 3700 – REALTORS® supported federal legislation which expands homeownership by making it easier to use FHA financing to purchase condominiums. This is great for first-time homebuyers because FHA credit standards are more favorable and require lower down payments. This makes it easier for people to get a mortgage, start building equity and take advantage of the ability to lower their tax bill by writing off mortgage interest.

• Property tax disclosures: AB 2476 – Another REALTOR® sponsored bill that ensures property owners, not living at that address, are still notified when government wants to increase parcel taxes.

• Property tax disclosures: AB 2476 – Another REALTOR® sponsored bill that ensures property owners, not living at that address, are still notified when government wants to increase parcel taxes.

Anti-Homeownership Bill that REALTORS® Defeated

• Stopped a new sales tax on services: SB 1445 – REALTORS® defeated this bill, which would have imposed a tax on real estate transaction services (i.e., escrow services, disclosure and inspection reports, loan origination) and made it harder for Californians to buy a home.

Your REALTOR® does much more than help make sure you can buy or sell a home. They meet with lawmakers and fight for your rights.
Sep
14

Register and Vote – Your Voice Matters to Homeownership

Election season is in full swing! With many hotly contested races across California and the national election, voting is more important than ever. Casting a ballot is your voice as an American and an important opportunity to have a say in issues that affect your community.

With more than 324 million people in the United States, you may think your vote doesn’t matter. Think again. Numerous elections in our history have been decided by a handful of votes. In 1994, Dianne Feinstein won a U.S. Senate seat, edging out Michael Huffington by less than two percent of the vote. A 2010 tax measure to fund schools in Lakeview, Ohio passed by just 2 votes. In 2012, Cecilia Tkaczyk beat George Amedore by 18 votes out of more than 126,000 ballots cast in the race for New York Senate.

The reality is that your vote matters more now than ever before, particularly when it comes to homeownership. Every year, thousands of bills and new regulations are introduced in Sacramento and Washington DC that impact your ability to buy or sell a home. REALTORS® are engaged in the legislative process to protect your property rights. They educate legislators and oppose harmful policies like costly point-of-sale mandates or transfer taxes. Your REALTOR® is also fighting to prevent efforts to eliminate the mortgage interest deduction or extend California’s sales tax to real estate transactions. Many of these proposals don’t grab headlines, but they could have a huge impact on your business.

Your vote is critical to ensuring elected officials are accountable. Election Day is November 8th, but you must be registered to vote by October 24th. If you’re not able to make it to the polls on November 8th, you can always vote by absentee ballot. Visit www.REALTORParty.car.org to register so you can cast a ballot.

Make your voice heard this election season and protect the American Dream of homeownership.
Sep
30

Congress Still May Tax Mortgages to Pay for Highways

Back in July the U.S. Senate passed a long-term Transportation funding bill that includes a tax on mortgages to pay for the construction of highways. To make it more palatable to Republican lawmakers, this tax has been disguised as a “fee.” This tax isn’t small potatoes either. On a median priced home in California, homeowners could pay over $8,000 for this tax.

While the Senate has passed its version of the long-term Transportation bill, the House has merely passed a short-term version to keep the federal Transportation Department open. The House plans to pass its own version sometime this fall, but there’s no guarantee that this new tax won’t be included in that version.

The California Association of REALTORS® is actively opposing this approach to paying for the highway bill and is encouraging the public to get involved. People are urged to visit www.nomortgagetax.org and go to the “Take Action” tab to send a personal message to Congress to oppose the tax. The public can also get updates on Facebook at www.facebook.com/no.mortgage.tax or follow the campaign on Twitter™ at @NoMortgTax.

Under current law, a portion of every conforming loan, (those backed by Fannie Mae and Freddie Mac) includes a fee used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called guarantee fees (or g-fees). In 2011 Congress added on an additional.1% increase on the interest rate of every Fannie and Freddie mortgage to fund a six month extension of unemployment benefits. That “add on” was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.

The U.S. Senate’s highway bill extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced home of $489,560 using a typical conforming loan with a 20% down payment will pay an additional $8,100. This figure is sure to rise with an increase in sales prices.
Sep
1

Congress Considers Homeowner Tax to Pay for Transportation

Do you ever wonder how Congress pays for the spending bills it enacts? In the case of the long-term Transportation bill that the Senate recently passed, a new tax on mortgages has been created and disguised as a “fee.”

Under current law, a portion of every conforming loan, (those backed by Fannie Mae and Freddie Mac) includes a fee used to offset losses from bad loans and to pay for the administrative costs of running these companies. These are called Guarantee Fees (or G-fees). In 2011 Congress added on an additional 10 Basis Points, equal to .1% of the value of the loan, to the guarantee fee of every new loan to fund a six month extension of unemployment benefits. That “add on” was due to expire in 2021 and loans originated after that date would not be subject to the additional fee.

Now the U.S. Senate just passed a long-term transportation funding bill that extends the “add-on” fee until 2025 for all new mortgages in order to pay for transportation infrastructure. As an example using real numbers, buyers purchasing a median priced home of $489,560 using a typical conforming loan with a 20% down payment will pay an additional $8,100. This figure is sure to rise with an increase in sales prices.

This “G-Fee” is actually a disguised tax on homebuyers. That “fee” has nothing to do with a mortgage and is therefore a tax. And while everyone would benefit from improved roads and highways, only those who originate a loan during that period will be paying for these benefits enjoyed by all.

While the Senate has passed its version of the Transportation bill, the House has merely passed a short-term version to keep the federal Transportation Department open. The House plans to pass its own version sometime this fall, but there’s no guarantee that this new tax won’t be included in that version. The California Association of REALTORS®, believing the guarantee fee should only be used for its intended purpose, steadfastly opposes this funding mechanism and its members will be meeting with their congressional representatives this month to explain why.
Aug
26

Bill Making Mortgages More Expensive Stalls in Assembly

Legislation currently pending in Sacramento may make it more expensive for you to get a mortgage on a new home or refinance the loan you currently have. Senate Bill 602 has the seemingly noble goal of encouraging homeowners to upgrade their properties for seismic safety. But, as they say, the devil is in the details.

Under existing law, local governments can authorize loan programs, often initially funded by local bonds, for homeowners to upgrade their homes for energy efficiency. The loans are collected in the property tax bill. This new bill allows the California Earthquake Authority to use a similar program statewide. These new “earthquake retrofit” loans have super priority over any other existing loan on the property, which means they must be paid off FIRST, before any other mortgage or obligation. In other words, a seller who still owes on that loan will be forced to pay it off before closing escrow on the sale of the home, even if it means writing a check for the balance. Or they can negotiate to pass along the obligation to the buyer. However, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has determined that any property with one of these super priority loans attached is not eligible to be financed, or refinanced, with a conforming loan. Conforming loans are the traditional, 30-year mortgage most used in home finance. Not being able to use a conforming loan will force borrowers to look to more expensive financing options.

Not only does this proposal jeopardize the availability of mortgages, but there is no guarantee that the improvements enhance the value or the property or save the owner any money. Unlike energy improvements, which might actually save the home owner money to be used to pay for the new debt, this proposal is for new debt for seismic strengthening of unknown value, and doesn’t save money for homeowners now.

The California Association of REALTORS® is opposing SB 602 unless it is amended so that these loans aren’t made “first priority” and to add consumer disclosures for added transparency. Due in large part to REALTOR® opposition, the bill has stalled for the year but may be reconsidered in early 2016.
Aug
6

PROPERTY TAX RELIEF F0R SENIORS

A bill making its way through the California Assembly would make it easier for people who are 55 or older to receive property tax relief. For many of our parents and grandparents, this can mean the difference between keeping or being forced to sell their home.

Here’s the issue. California law today allows seniors to transfer the base value of their property to a new residence as long as the new house was in the same county and cost less than the old residence’s sale price. The problem is that only one spouse or partner can claim the tax transfer. That effectively discriminates against the other partner, preventing them from the same tax relief should their circumstances change.

Assembly Bill (AB) 1378 by Assemblymember Chris Holden (D-Pasadena) fixes this problem by giving both spouses an opportunity to take advantage of tax relief. It helps seniors by removing what some have called a “marriage penalty” that costs seniors, many with fixed or limited income, thousands of dollars in annual property taxes.

California has a long history of providing tax relief to help seniors keep their homes. California Association of REALTORS® continues to support this important tradition and believes this should measure should be passed.
Jul
14

New Law Protects Homeowners from Fines During Drought

If you’re worried about being fined for letting your lawn go brown, help has arrived.

Given Governor Jerry Brown’s and the State Legislature’s focus on the serious drought now plaguing California, it comes as no surprise that the first bill to be introduced this year addresses the subject of dead lawns due to water conservation. Assembly Bill 1, authored, by Assembly Member Cheryl Brown (D-San Bernardino) would prevent homeowners from being fined by local governments for letting their lawns go brown in an effort to help the state achieve unprecedented water reduction goals.

The California Association of REALTORS® supports the bill, which encourages conservation by exempting homeowners from lawn maintenance ordinances that are on the books in many California cities. According to Assembly Member Brown, fines for violation of these local laws can range from $100 a week to a flat fee of $500.

Assembly Bill 1 is not open-ended, and specifies that the exemption would only be in effect during the time that a governor’s emergency drought proclamation is in effect. Governor Brown issued a drought proclamation in January 2014 and it remains active.

This water-saving legislation was signed so homeowners can protect California’s most precious natural resource.
May
20

SERVICE TAX

A California legislator is proposing that, for the first time in state history, people must pay sales tax for services. Senate Bill (SB) 8 by Senator Robert Hertzberg would extend the state sales tax of 7.5% (and possibly higher depending on where you live) to now include things like legal and accounting, hair salons and a variety of services related to home purchases. This new service tax would be in addition to other taxes residents already pay including federal and state income taxes and other existing fees.

California is already considered a “high-tax” state, and regrettably, the impact of a new sales tax on services would be significant to working families, housing affordability and California businesses.

The purchase of homes and other real estate transactions would be especially hard hit by this new tax, since at least ten different services are generally part of a typical home purchase. Typically these services make up about 13 percent of a home’s purchase price. This tax is also regressive, meaning that it could hurt lower and middle-class families more than others.

The California Association of REALTORS® opposes this new tax, because it would price more families out of the housing market.
May
20

THREE PERCENT TAX CAP ON FEES

A new effort is underway in Congress to amend current law, called the Truth in Lending Act, to broaden access to where people can obtain mortgage loans and other related services. A bill has been introduced, H.R. 685, called the Mortgage Choice Act of 2015, that would have all financing providers use the same rules to determine whether a loan meets the Consumer Financial Protection Bureau’s Qualified Mortgage test. Loans must meet these guidelines to be approved.

The current guidelines are inconsistent, creating different rules for mortgage bankers, mortgage brokers, and affiliate services compared to big retail lenders. This limits the ability of mortgage brokers and bankers to provide loans to low and moderate income consumers.

The California Association of REALTORS® is part of a broad coalition that supports the effort to create a level playing field through impartial and consistent rules for all lenders. The end result is a greater opportunity for consumers to obtain a loan at a fair price.
May
20

Bill Would Protect Homeowners from Fines During Drought

If you’re worried about being fined for letting your lawn go brown, help may be on the way.

Given Governor Jerry Brown’s and the State Legislature’s focus on the serious drought now plaguing California, it comes as no surprise that the first bill to be introduced this year addresses the subject of dead lawns due to water conservation. Assembly Bill 1, authored, by Assembly Member Cheryl Brown (D-San Bernardino) would prevent homeowners from being fined by local governments for letting their lawns go brown in an effort to help the state achieve unprecedented water reduction goals.

The California Association of REALTORS® supports the bill, which encourages conservation by exempting homeowners from lawn maintenance ordinances that are on the books in many California cities. According to Assembly Member Brown, fines for violation of these local laws can range from $100 a week to a flat fee of $500.

Assembly Bill 1 is not open-ended, and specifies that the exemption would only be in effect during the time that a governor’s emergency drought proclamation is in effect. Governor Brown issued a drought proclamation in January 2014 and it remains active.

This water-saving legislation passed unanimously in the Assembly is now under consideration in the Senate. Hopefully it will be signed so homeowners can protect California’s most precious natural resource.
Sep
18

Bill to Allow Unproven Wage Liens on Property Defeated

AB 2416, would have allowed employees with a wage dispute to place unsupported, pre-judgment liens against an employer's property, and other properties where they worked, failed passage in the state Senate. Property liens are claims, filed by a creditor and attached to a property's official title record. If a lien is placed on a property, the property can't be sold, or purchased, unless the lien is removed. Typically there has to be some official finding, like a judgment, that the creditor is entitled to be repaid before the lien can be attached.

In the case of AB 2416, employees would have had the ability to record a lien, without a judgment or official determination that the property owner actually owed the employee any money. Even worse, creditors or "representatives" of the claimant would be able to record these liens.

Those opposing AB 2416, including the CALIFORNIA ASSOCIATION OF REALTORS®, thousands of REALTORS® from across the state and other organizations, worked tirelessly to keep this dangerous bill from passing. The bill was ultimately defeated in the Senate in the last days of the legislative session.
Sep
18

Governor Signs Bill to Stop Tax on Loan Modifications

If the principal on your mortgage was reduced in a loan modification, a new law may lower your taxes.

Governor Jerry Brown recently signed AB 1393 (Perea), legislation that will prevent homeowners from being charged state income tax when they've had a mortgage loan modified to reduce the principal. Under current law, the forgiven debt created by a reduction in principal as a result of a loan modification isn't subject to federal income tax, but is currently taxable under state law. The law will become effective immediately and is retroactive to January 1, 2014. This is great news for homeowners. The CALIFORNIA ASSOCIATION OF REALTORS® supported this measure.
Sep
18

Governor Signs Bill to Prohibit Fines for "Under-watering"

New law prevents fines for under-watering in a drought.

Governor Jerry Brown recently signed legislation that will prevent Homeowner Associations (HOAs) from imposing fines for under-watering lawns and plants during a state-declared drought emergency. Many Homeowners Associations (HOAs) have rules and regulations dictating the responsibilities of separate interest owners to maintain their yards, and can impose fines if these rules are not followed. The new laws prohibits an HOA from imposing fines for under-watered lawns and plants during a period for which the Governor has declared a drought emergency. This measure, supported by the CALIFORNIA ASSOCIATION OF REALTORS®, ensures that residents in common interest developments are permitted to undertake landscape modifications that foster more efficient water usage without risking a monetary fine by their HOA.

Another bill, AB 1636 (Brown) that would have prevented local governments from imposing similar fines for under-watering has stalled in the Assembly.
Jul
17

Bill to Stop Tax on Loan Modifications Passes Legislature

If the principal on your mortgage was reduced with a loan modification new legislation may lower taxes. The Legislature has passed AB 1393 (Perea), a bill that will prevent homeowners from being charged state income tax when they've had a mortgage loan modified to reduce the principal. Under current law, the forgiven debt created by a reduction in principal as a result of a loan modification isn't subject to federal income tax, but is currently taxable under state law. The bill has been passed by the state Legislature and awaits the Governor's signature. If signed, it will become effective immediately and is retroactive to January 1, 2014. This is great news for homeowners. The CALIFORNIA ASSOCIATION OF REALTORS® supports this measure.
Jul
17

How Citigroup Settlement Affects Borrowers

Citigroup settlement to provide money for consumer relief.

Citigroup has recently reached a $7 billion settlement with the U.S. Department of Justice for its role in the mortgage market meltdown. Of that, over $2.5 billion is set aside nationwide for consumer relief. Here's some great information in the San Jose Mercury News about how the settlement affects California homeowners who had loans underwritten or serviced by Citi and what to do if you may be eligible to file a claim.
Jul
17

Coastal Commission Suit May Set Precedent Affecting Property Rights

Lawsuit affecting property rights to be considered by Court of Appeals.

A lawsuit involving the California Coastal Commission, which regulates property in the coastal zone, is scheduled to be heard soon by a San Diego Appeals court. Because the decision will be made by an Appeals court, it may eventually affect property owners up and down the coast. Two homeowners in Encinitas had applied to the Coastal Commission for a permit to rebuild a sea wall damaged in a storm. In order to receive the permit, the Coastal Commission required that the permit application be re-submitted in twenty years. If the permit was then rejected, the homeowners would have to then take down the sea wall. The property owners filed suit to nullify that requirement. A local judge deciding the initial case referred to the Coastal Commission's requirement as a "power grab." Learn more about the case in the Los Angeles Times.
Jun
20

Pro-Consumer, Anti-"Shill Bidding" Bill Considered in Senate

Real estate auction companies increasingly are being used to sell real estate. Some lenders require homeowners to agree to use an auction company to see if the property fetches a higher price at auction before a short sale offer will be accepted. One aspect of the auction that is not commonly known is that the auction company may place a bid on behalf of the seller – or a "shill" bid – to artificially drive residential and commercial property prices up.

The CALIFORNIA ASSOCIATION OF REALTORS® is sponsoring AB 2039 (Muratsuchi), which would prohibit "shill bids" and make clear that only legitimate bids may be placed on behalf of a seller; otherwise, the seller bid must be disclosed to the all bidders as a bid which cannot be accepted to complete the sale of the property. The measure has passed the Senate Judiciary Committee but faces stiff opposition from the auction companies.
Jun
20

Legislature Reviews Bill to Allow Seniors and Disabled to Postpone Property Tax

Until 2009, the Senior Citizens and Disabled Citizens Property Tax Postponement Law allowed the Controller to postpone payment of property taxes for those qualified property owners who applied for the program. AB 2231 has been introduced to re-establish the Senior Citizens and Disabled Citizens Property Tax Postponement Fund within the State Treasury. AB 2231 provides individuals who are on a fixed income, such as senior citizens or disabled individuals, a program to which they can turn for assistance with paying their property taxes, allowing them to stay in their homes. Beginning on July 1, 2015, qualified individuals with at least 40% equity in their home may file a claim with the Controller to postpone the payment of their property taxes. Applications will be accepted until January 1, 2016, and the postponed tax amount will be filed as a lien against the property. AB 2231, which is supported by the CALIFORNIA ASSOCIATION OF REALTORS® is being considered by the state Senate.
Jun
20

Bill Introduced to Prevent Homeowner Associations from Imposing Unnecessary Document Fees

Often, when purchasing a home in a common interest development (CID) like a condominium, the Home Owners Association, in an attempt to generate more revenue, will "bundle" unnecessary documents with those that are actually required and then charge excessive fees for the "bundle." AB 2430 (Maienschein) will provide more specific document delivery and disclosure standards and tighten the anti-bundling provisions in connection with condominium sales and HOA document delivery requirements so that those buying or selling homes in CIDs aren't charged for more documents than are required. This bill is sponsored by the CALIFORNIA ASSOCIATION OF REALTORS®.
Jun
20

Legislature Considers Bills to Prevent Fines for Underwatering Landscaping

Under current law Homeowners Associations (HOAs) can create rules and regulations dictating the responsibilities of separate interest owners to maintain their yards and can impose fines if these rules are not followed. Two bills currently being considered by the state legislature, AB 2100 and SB 992, would prohibit an HOA from imposing fines for under-watered lawns and plants during a period for which the Governor has declared a drought emergency. Proponents of the measures believe residents of HOAs in CIDs should be permitted to undertake landscape modifications that foster more efficient water usage without risking a monetary fine by the HOA. The CALIFORNIA ASSOCIATION OF REALTORS® supports these measures.
Jun
1

Homeowner Tax Proposal Abandoned

The proponents of a bill that would have imposed a new tax on homeowners has declared defeat and has abandoned the bill for the year, vowing to try again next year. The bill would have created a tax that would be imposed on homeowners who need to record certain documents with their counties This $75 per document tax would have been imposed on a variety of documents, which would include, for example, documents related to refinancing properties, taking properties in and out of trusts, making lot line adjustments, obtaining constructions loans and upon the death of a spouse. The tax also would have applied to foreclosures (the owner would be responsible, not the lender) and filing mechanics liens. For instance, it's not untypical in a refinance, for six documents to be subject to the new tax, resulting in a tax of $552, in addition to current recording fees. If a spouse dies, up to five documents need to be recorded, creating a tax of $440 on top of existing recording fees.

The CALIFORNIA ASSOCIATION OF REALTORS® is opposing this bill.
Jun
1

IRS Further Clarifies Stance on Forgiven Debt in a Short Sale

Last fall, the IRS and the state Franchise Tax Board issued letters stating that California families who have sold their home in a short sale are not subject to either state or federal income tax on the forgiven debt. Recently, the IRS, claiming that its original letter had been "too broad," issued another letter to clarify that under some circumstances (e.g., cash out equity lines) the debt forgiven in a short sale is still taxable. Homeowners who have sold their home in a short sale are strongly urged to consult with a tax professional to determine what, if any, tax they owe.

In a short sale, homeowners sell their homes for less than what is owed. If a lender agrees to the sale, the lender is forgiving a certain amount of the loan principal. Before these clarifications, requested by Senator Barbara Boxer and Board of Equalization Member George Runner on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, it was not entirely clear that homeowners wouldn't lose their homes and then be faced with a large tax bill as well. Homeowners with questions about taxes and short sales should contact their tax professionals.
Jun
1

Mortgages to Remain More Affordable

The Federal Housing Finance Agency (FHFA), the federal agency that sets the maximum mortgage loan limit for what are called "conforming" loans, typically the most common and often the most reasonably priced loans. "Conforming" loans are those loans that meet certain federal guidelines and therefore enjoy the benefit of lower interest rates. The vast majority of mortgage loans – over 64% of mortgage loans obtained nationally – are "conforming" loans.

Late last year, the previous Acting Director of FHFA had indicated that the agency would be substantially reducing the loan limits, forcing many home buyers to obtain loans with higher interest rates. The National Association of REALTORS® and the CALIFORNIA ASSOCIATION OF REALTORS® both aggressively fought the proposal.

In the last few weeks, Melvin Watts, the new Director of FHFA, has announced that the agency will not be reducing the loan limits, helping make homeownership accessible to more families.
Jun
1

Legislature Proposes Limits on Going out of Business

Existing law prevents local governments from forcing rental property owners to continue in the rental business. SB 1439, a bill proposed by Sen. Mark Leno of San Francisco, would require that a rental property owner have owned the property for five years before the property can be converted to another use. For instance, if a homeowner owned an apartment building and needed to move aging parents into a unit, they would be unable to do so unless they had owned the property for at least five years. SB 1439 does not take into account individual families' financial or personal circumstances. SB 1439 was recently passed by the state Senate and now will be considered by the Assembly. The CALIFORNIA ASSOCIATION OF REALTORS® is fighting this attack on private property rights.
Mar
25

Legislature Considers Tax on Homeowners

The state legislature has been considering a tax that would be imposed on homeowners who need to record certain documents with their counties This $75 per document tax will be imposed on a variety of documents, which will include, for example, documents related to refinancing properties, taking properties in and out of trusts, making lot line adjustments, obtaining constructions loans and upon the death of a spouse. The tax also applies to foreclosures (the owner would be responsible, not the lender) and filing mechanics liens. For instance, it's not untypical in a refinance, for six documents to be subject to the new tax, resulting in a tax total of $552. If a spouse dies, up to five documents need to be recorded, creating a total tax of $440 including existing recording fees.

SB 391 is in the Assembly Appropriations Committee. The CALIFORNIA ASSOCIATION OF REALTORS® is opposing this bill.
Mar
25

Draft Tax Plan Would Limit Homeowners Tax Deductions

Rep. Dave Camp, Chair of the House Ways and Means Committee of the U.S. House of Representatives, recently unveiled a large-scale plan to overhaul the federal tax code. Included in his draft proposal was a significant limit on the mortgage interest deduction. Over four years, the amount of mortgage principal on which interest is deductible would be reduced from the current $1,000,000 to $500,000. According to the National Association of REALTORS®, this would apply only to new loans. In many areas of California, homeowners who would have struggled to purchase even the median priced home would be unable to take the full deduction for their mortgage interest and therefore might be priced out of the market. The draft plan also calls for the elimination of the deduction for property taxes.

The plan is currently in draft form, meaning that no bill has yet been introduced in the House of Representatives.

For more information, see the opinion editorial published in the US News and World Report.
Mar
25

President Obama signs Flood Insurance Bill into law

On March 21, 2014, President Obama signed the "Homeowner Flood Insurance Affordability Act" into law. This law repeals FEMA's authority to increase premium rates at time of sale or new flood map, and refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. The bill limits premium increases to 18 percent annually on newer properties and 25 percent for some older ones. Additionally, the bill adds a small assessment on policies until everyone is paying full cost for flood insurance.

Homeowners with questions about flood insurance should contact their insurance agent.
Mar
25

Short Sellers Won't Be Taxed on Forgiven Debt

In a short sale, homeowners sell their homes for less than what is owed. If a lender agrees to the sale, the lender is forgiving a certain amount of the loan principle. The IRS and the state Franchise Tax Board have recently issued letters clarifying that California families who have lost their home in a short sale are not subject to either state or federal income tax on the forgiven debt. Before these clarifications, requested by Senator Barbara Boxer and Board of Equalization Member George Runner on behalf of the CALIFORNIA ASSOCIATION OF REALTORS®, it was not entirely clear that homeowners wouldn't lose their homes and then be faced with a large tax bill as well. Homeowners with questions about taxes and short sales should contact their tax professionals.
Mar
25

Law Requiring Water-Conserving Plumbing Fixtures Goes into Effect

A law calling for the replacement of older plumbing fixtures with water-conserving ones went into effect on this year. The law says that, as of January 1, 2014, when improving a property new water-conserving toilets, showerheads, faucets and urinals must be installed before the local building department will issue a certificate of final completion and occupancy. The plumbing fixtures that will need to be replaced are: any toilet manufactured to use more than 1.6 gallons per flush; any showerhead manufactured to have a flow capacity of more than 2.5 gallons of water per minute; any interior faucet that emits more than 2.2 gallons of water per minute and any urinal manufactured to use more than one gallon of water per flush. Homeowners with questions about their individual fixtures are urged to contact the manufacturers.
Mar
25

Register to Vote

Recently moved? Don't forget to re-register to vote. Those elected to federal, state and local office make decisions that affect you every day, from the taxes you pay to the quality of your schools. Many races are decided by just a handful of votes so it's essential that all those eligible to vote do so. California's primary election is June 3, 2014 and the deadline to register to vote is May 19. You can register to vote here: http://www.sos.ca.gov/elections/elections_vr.htm

 

 

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