Gov presented on numerous legal topics affecting agents in the field and briefed the membership on new laws impacting transactions, homeownership and general real estate practices. For those unable to attend, a video of the presentation is now available for viewing (approx 2hr). 

Gov Hutchinson is Assistant General Counsel and Staff Vice President of the CALIFORNIA ASSOCIATION OF REALTORS®. He has been with C.A.R. since 1985 and manages C.A.R.’s Member Legal Services Program in Los Angeles. Gov advises REALTORS® through the “Hotline” on all aspects of real estate law and trains and supervises other “Hotline” attorneys. Received his Bachelor’s degree in History from Princeton University and his Juris Doctorate from the University of Pennsylvania. Gov has written for CALIFORNIA REAL ESTATE magazine, co-authored C.A.R’s continuing education courses and is a master instructor for the Education Division of C.A.R. with certification from the Department of Real Estate. He also regularly speaks to Associations/Board of REALTORS®, affiliated trade associations, city and county bar associations and major real estate firms. He is also a member of the Real Property Law Sections of the American, California and Los Angeles County Bar Associations.

The plan has two primary goals:

1.To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today’s lower interest rates. Many of these homeowners are unable to refinance because of lost appreciation in their homes due to the continuing decline in home prices. These homeowners still have equity in their home, just not the necessary 20% to get a refinance. Under the Administration’s plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105 percent loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure. The Administration is offering loan servicers and investors government assistance to help offset the cost of modifying qualified homeowners into affordable mortgages that will allow them to keep their homes. This may be done by reducing the mortgage interest rate, extending the term of the loan, principal forbearance, and/or principal cramdown. This program is voluntary and the servicers must agree to contracts with the Treasury to participate.

The following links are a GREAT resource for those interested in finding out if they would qualify or benefit from either one of the above-mentioned programs.

Click HERE to find out if you qualify for the Making Home Affordable Refinance

Click HERE to find out if you qualify for the Home Affordable Modification

Starting September 8, 2008, California has a special foreclosure timeline for loans originated between 2003 and 2007, which are secured by owner-occupied residences.  Loans involved in short sales are likely to be owner-occupied loans from the years 2003 to 2007, which was the heyday for sub-prime lending.  The special foreclosure timeline does not apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations.  The special foreclosure timeline will remain in effect until January 1, 2013.

Day 1: Lender Contacts Borrower

For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure.  During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days.  The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.

Day 31: Filing of Notice of Default

For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure.  The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice.  The notice of default informs the borrower of the default.  It must also include the lender’s declaration that it has contacted the borrower to explore options for avoiding foreclosure, attempted to contact the borrower, or the borrower has surrendered the property.

Day 121: Filing of Notice of Trustee’s Sale

Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.

Day 145: Deadline to Cure Default

Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs.  After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.

Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens.  At the trustee’s sale, the property is sold through a public auction to the highest bidder.

Contact a qualified REALTOR® EARLY on in this process (ideally before missing a payment) to ensure all options for avoiding foreclosure are identified.

Kevin

In July the law became permanent, but the formula was changed. It became 115% of an area’s median home price with a floor set by the government and the ceiling equal to 150% of the floor. Last Friday, the Housing Finance Agency said the floor would remain $417 for 2009 which would then put the ceiling at $625,500.

The conforming limit for Monterey County has been set to $483,000 for 2009. In contrast, the Oakland / San Francisco Market have a limit of $625,500 as does Los Angeles, Santa Cruz and Watsonville. What will this do to the already struggling market in Monterey County? For those looking to take advantage of a traditional conforming loan, a down-payment of 35% on a $750,000 purchase would be needed, significantly impacting the pool of buyers positioned to purchase.

Part of the benefit of MCAR membership is the opportunity to take advantage of market professionals who truly understand the dynamics associated with their field of expertise. This week, I was fortunate enough to be able to discuss this issue in great depth with one of our members, Linda Guy. Given the constant fluctuation of the market throughout the country, it seemed to make sense to establish a national conforming limit, high enough to meet the needs of the higher priced communities and counties in the nation, while providing a more accurate model for monitoring success annually. This in turn would eliminate the need for limits established regionally or by area, a formula that is certainly prone to dysfunction as we’ve seen illustrated above.

Buyers would need to qualify under typical lending qualifications and property would appraise locally, establishing an accurate market value.

There are rumblings in Congress that an extension of the $729,750 conforming rate is being contemplated for 2009. Whether or not this comes to fruition by years end is anyone’s guess. A legislative adjustment that would establish a singular national conforming loan limit is needed.

Your input is desired and appreciated as we pursue a dialogue with those in Congress. Please let us know your thoughts by utilizing the MCAR Blog.

Kevin

I have been hearing more and more conversations lately of people struggling with a perception that finding and obtaining financing for real estate purchases is nearly impossible these days. Before giving up hope, I urge you to take the time to research the financing options available to you, despite what others may be saying on their lack of availability.

Financing is available for those who qualify. Qualifying may not be as hard as you have heard either. It is true that guidelines have reverted back to a more conservative level, however if your debt to income ratio fits, than there is plenty of money available to you.

As an example, we just had a successful closing for a bank owned property (REO) in Seaside. The bank arranged financing for this $360,000 purchase using an FHA loan with 3% down. The buyer received a rate of 6.5% and a credit of a half point towards closing costs. The seller also contributed $5000 to the buyer’s closing costs and the guidelines had no reserve requirement.

Presently, conforming and FHA loan limits allow for financing up to $729,750 on a single family residence purchase. Market changes are bringing us back to a place where houses are more affordable, and now is the time to look into your purchasing options.

Financing opportunities do exist and are available for those looking to purchase a home. Consult a REALTOR® today for information on the area you are interested in and to get a referral to a trusted lending source.

Joe Smith

Bratty and Bluhm Real Estate
574 Lighthouse Ave.
Pacific Grove, CA 93950
(831) 372-7700 PHN
(831) 375-7790 FAX

As Realtors, looking out for our Buyers’ and Sellers’ interests, I think we would do them a great service to immediately implement a procedure where all plans and permits are recorded through the title companies,   Just like CC&R’s, deed restrictions, easements, the plans and permits would be preserved, long after specific properties have changed hands once, twice or more times.

Too often, we run into issues where cities dig in their heels and state there was no permit for whatever.  An example, I sold one house in Monterey three times over the years.  The first two sales had City Inspection Reports and passed without an issue.  The third time, the City said there was a porch enclosure without permit.  The neighbor who lived next door for over 30 years stated the house had been the same during the entire time she lived there.  When I approached the City with the two prior City Reports and the neighbor’s written statement, their response was “we are not responsible for our errors”. (Only the governmental agencies can get away with a statement like this.)  The net result was that the Seller had to pay thousands of dollars to hire a structural engineer, architect, contractors and pay for a permit to bring the porch up to current code requirements.

Another example – the City Inspector said the second bath was without permits, it had to be taken out.  No one had the plans on the house that was over 50 years old (the City has no documentation and the owner/builder was deceased).  Luckily, the agent representing the Buyer had gone thru this before and was smart enough to check with the Assessor’s office.  As it turned, out the Assessor had been taxing the house with two baths.  Once we got the document from the Assessor, the City had to back off.  What astounds me is that cities can make a statement without documentation – they no longer had the building permit or plans yet, were able to state there is no record of a 2nd bath.

How many Sellers have been blackmailed into paying for something, at point of sale, that was legally permitted but no one had the old records?

Water Management was a major recent issue.  The home I sold was going to the third owner.  Water Management had come to the house at the time of sale from owner one to owner two.  At the time of the sale to my Buyer, Water Mgmt. declared that we had seven wash basins, their records only showed five.  The current owner stated that the house was exactly as the way it was when the purchased it (did not add two wash basins).  We had two sets of plans that showed seven wash basins.  Without the “permit stamp”, Water Mgmt. did not want to accept the plans as a “legal record”.  Phil Smith went to Water Mgmt. and Water Resources and bought permits for the two “additional sinks” in order to get the transaction closed.  Water Mgmt. also showed one showerhead in the Master bath – it had dual showerheads.  We got a letter from a contractor stating that the plumbing fixtures in the Master shower were discontinued in the 80’s.  That did not matter, Water Mgmt. took the position it was added and needed a permit.  Phil Smith went to Water Mgmt. and paid for the second showerhead, which resulted in a deed restriction. I went to the Mty County Building Dept. because the County Building Report showed that the plans had been microfilmed.  Unfortunately, the County got rid of the microfilm.  I went to the Assessor’s office, they only had the number of baths, no fixture count.

(Mty County Building said they will only keep the plans for about three months after the permit is finalled and will not microfilm.)

My Buyer and I requested a meeting with Water Mgmt.  We went in armed with the plans, the contractor’s letter and photos of all the baths.  Showed them the photos which helped our case that the prior inspector may have missed two sinks if they ran through quickly.  We were able to convince them that (a) it appeared that the sinks and showerhead were all original and (b) they made an error on their prior inspection.  The Seller did get some of his money back from the additional permit fees and we were able to get the deed restriction released.

I believe Water Mgmt. went on the basis of the original permit application which showed 5 sinks when, in fact, 7 sinks were built into the house.  Probably what happened, they used that for their basis and just kept going with the original application document, not paying attention to what was built.

Had we had recorded plans and permits, we could have saved many hours on everyone’s part, gas and unnecessary permit fees and a lot of aggravation.  It demonstrated to me how careless the government agencies are and Sellers are forced to pay for something that was already permitted.  The only way to avoid these issues is for owners to record their documents with the title companies so there is a permanent record.  It could all be so simple.

Sincerely,

Lore Lingner
Realtor, Previews Property Specialist
Coldwell Banker Del Monte Realty
www.LoreLingner.com
Lore@LoreLingner.com ]]> http://mcarforum.com/2008/09/recordswhat-records/feed/ 2