Monthly Archives: March 2008

Revised Legal Article from CAR

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Member Legal Services has published a revised legal article, Equity Sharing (March 11, 2008). It is available on Legal’s What’s New and the Legal Articles pages on C.A.R. Online.  This article explains the advantages and disadvantages of equity sharing and provides a summary of the major issues to be addressed in an equity sharing agreement.  Equity sharing is a form of ownership and investment that allows two or more parties to share an interest in real property.  It is frequently used in situations where, because of the high cost of housing, one party, the investor, puts down the bulk of the down payment, and the other, the owner-occupant puts down little or no down payment but agrees to pay a monthly amount consisting of rental payments, mortgage payments, taxes, and other specified charges, and lives in the property. 

Washington Weekly Update – NARFederal Tax Report

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Conventional Residential Lending Report

NAR Testifies: Permanently Increase the GSE Conforming Loan Limits
On March 6, 2008, Vince Malta, Chair, NAR Public Policy Coordinating Committee and 2006 President of the California Association of REALTORS testified before the Senate Banking Committee on legislative proposals to reform the regulation of Fannie Mae and Freddie Mac. In his opening remarks, Chairman Dodd (D-CT) reiterated his commitment to passing GSE reform legislation that establishes a strong, single regulator for Fannie Mae and Freddie Mac with authority over safety and soundness and mission and with the power to set capital commensurate with risk. Chairman Dodd also indicated that he believes legislation should include a strengthened commitment to housing affordability—for low-income families as well as middle-class families—by the GSEs.

NAR has long-supported GSE reform, and has led the support for increasing the conforming loan limits. In his testimony, Mr. Malta urged the Senate to increase the national conforming loan limit to no less than $625,500 and to make the conforming loan limit increase for high cost areas, as provided in the economic stimulus legislation, permanent.

Also testifying at the hearing were representatives from the Government Accountability Office, National Association of Home Builders, Mortgage Bankers Association, Low Income Investment Fund.

NAR Testimony >
Housing Issues Continue to Dominate Tax Agenda
Following enactment of the first round of economic stimulus legislation (the $600 rebate and 50% bonus depreciation package recently enacted), Senate Majority Leader Reid (D-NV) introduced a second stimulus package directed specifically toward housing issues. That package contains provisions that the Senate had approved earlier, but that were not included in the final stimulus package. One important tax provision is intended to help homeowners stay in their homes. It would allow state housing agencies to issue additional mortgage revenue bonds and to use the proceeds from those bonds to assist eligible homeowners refinance subprime mortgages. A second provision would allow some taxpayers with losses to use the net operating loss carryback benefits for 5 years rather than the two years of current law.

The legislation was called up for Senate debate on February 28. Efforts to begin debate failed, however, on a very close procedural vote. Significant controversy related to a non-tax bankruptcy provision in the package doomed the package. It is expected that the Senate Finance Committee will make an effort to craft yet another tax-based housing package.
The Senate Finance Committee held a hearing on real-estate related issues, also on February 28. The witnesses were economists and executives of large commercial real estate development companies. Much of the questioning of the witnesses revolved around a proposed tax credit for purchases of homes. Senate Johnny Isakson (R-GA) has offered a bill that would allow a $15,000 tax credit to be taken over 3 years ($5,000 a year) for the purchase of a distressed property or a newly-constructed unoccupied residence. The credit would be available for principals residences only.

It is not yet known if the Isakson tax credit will be embraced. While it does have one Democratic cosponsor, the credit has 22 Republican sponsors and is also the centerpiece of a large Republican proposal. The Senate Finance Committee generally operates on a bipartisan basis. Nonetheless, the idea of a credit is still under consideration, though such a credit may be structured differently from the Isakson bill. Senate timing, however, is uncertain.
Housing Report
Fannie Mae and Freddie Mac Reach Deal on Appraisals with NY Attorney General
On March 3, 2008, government sponsored enterprises (GSE), Fannie Mae and Freddie Mac, reached an agreement with New York State Attorney General Andrew M. Cuomo that will help eliminate conflicts of interest on mortgage appraisals. According to the agreement, the GSEs will no longer purchase mortgages from lenders that utilize internal appraisers. The Home Valuation Protection Code will be implemented establishing standards on compensation and appraiser independence. A clearinghouse of appraiser information called the Independent Valuation Protection Institute will be created, with a separate board of directors, to monitor complaints from appraisers and consumers. All lenders will be required to provide post-purchase copies of appraisal documents to the clearinghouse. The Office of Federal Housing Enterprise Oversight and the Office of the Comptroller of the Currency were involved in the negotiations.

NAR Cuomo-GSE Update and FAQ >
NYS Attorney General Press Release >
Freddie Mac Press Release >
Fannie Mae Press Release >
OFHEO Press Release >
Court Rules Against HUD on Seller-Funded Downpayment Assistance Programs
On February 29, 2008, a federal court in California ruled against the US Department of Housing and Urban Development (HUD) on seller funded downpayment assistance programs. The Nehemiah Corporation and AmericaDream, Inc. both filed suit against HUD challenging the merits of the rule and seeking an injunction blocking its implementation. The court concluded that HUD’s regulation is invalid and that HUD violated federal law by failing to explain why it reversed its favorable stance on downpayment assistance and by failing to consider reasonable alternatives to the regulation. A ruling from the US District Court for the District of Columbia is expected shortly.

In October 2007, HUD published a final rule on Standards for Mortgagor’s Investment in Mortgaged Property that establishes that a prohibited source of downpayment assistance is a payment that consists, in whole in or in part, of funds provided by the seller or any entity that financially benefits from the transaction. Certain non-profits have raised concern because they were taking contributions from property sellers, subtracting a fee, and then granting the remaining money to buyers of the same property. In essence these non-profits created a “seller-funded” downpayment program, which NAR believes can result in home price inflation and risks for increased delinquency and foreclosure. In an effort to preserve qualified downpayment programs, NAR strongly urged HUD to construe the limits on non-profit downpayment assistance as narrowly as possible.

NAR supports downpayment assistance programs to help borrowers purchase a home. Downpayment programs take many different forms. For example, NAR has been a strong supporter of the American Dream Downpayment Initiative (ADDI). Other forms of downpayment assistance permitted with this ruling include assistance from family members, the borrower’s employer, state or local governments, and charitable organizations that do not rely on a party with a financial interest in the transaction.

HUD Final Rule: Standards for Mortgagor’s Investment in Mortgaged Property >
NAR Comment Letter to HUD on Seller-Funded Downpayment Assistance >
Higher FHA and GSE Loan Limits Published
On March 6, 2008, HUD published the new loan limits for FHA and Fannie Mae/Freddie Mac (the government sponsored entities, or GSEs). These new limits were required by the Economic Stimulus Act, signed by President Bush on February 13, 2008.

The new loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median area prices, with a floor of $271,050 for FHA and a floor of $417,000 for the GSEs, not to exceed $729,750. The loan limits are effective through December 31, 2008.

NAR research has indicated that increasing the FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market. An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced, and home prices would be strengthened by two to three percent. To find out the FHA and GSE loan limits for your community and other information about these important increases, visit NAR’s website at www.realtor.org/fha.

NAR’s website on the new FHA and GSE loan limits, with links for looking up limits in your area >

Virtual Advocate – Legislative News

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GOVERNMNET ANNOUNCES CONFORMING LOAN LIMIT INCREASES
The Office of Federal Housing Enterprise Oversight (OFHEO) recently announced it has temporarily increased limits on jumbo loans offered by government-sponsored lenders Fannie Mae and Freddie Mac from $417,000 to as high as $729,750 in fourteen counties for loans originated between July 1, 2007 and Dec. 31, 2008. Fannie and Freddie are reported to be working out new underwriting standards and expect to begin offering the new loans soon.

Also, the government raised the conforming loan limit for mortgages guaranteed by the Federal Housing Administration, and has begun offering the maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008.

The Fed’s economic stimulus package approved earlier this year called for the temporary increases on conforming loans to allow troubled borrowers to refinance out of sub-prime loans, and make it easier for many new buyers to qualify for mortgages in high-cost areas, particularly in California where they remain among the highest in the nation.

To view a list of the new FHA Mortgage Limits by county, go to https://entp.hud.gov/idapp/html/hicost1.cfmFor a list of the proposed loan limit changes for Fannie Mae and Freddie Mac, go to http://www.ofheo.gov/media/hpi/AREA_LIST.pdf

REALTORS® DEFEAT POINT-OF-SALE STOVE RETROFIT IN SOUTH COAST AIR DISTRICT
Thanks to aggressive and persistent monitoring by the REALTORS® Committee on the Air Quality Management Plan, the Southern California Air Quality Management District (SCAQMD) has dropped a proposal to retrofit outdated wood-burning stoves and fireplaces at the point-of-sale. On Friday, March 7th, the SCAQMD adopted Rule 445 regulating wood-burning devices, such as fireplaces and wood stoves in homes throughout the South Coast Air Basin. Foremost among REALTOR® concerns, the final rule does not include any form of point of sale enforcement. Representatives of a number of environmental groups did call for existing homes to cease burning wood and to have their fireplaces retrofitted with gas or other low emission devices, but the Board did not entertain any related amendments to the final draft rule. District staff pointed to their $1.5 million gas log incentive program and public outreach campaign as ways to help individual basin residents install cleaner devices in their home voluntarily.

SOUTHERN CALIFORNIA ASSOCIATION OF GOVERNMENTS’ EIGHTH ANNUAL REGIONAL HOUSING SUMMIT
SCAG invites you to attend its Eighth Annual Regional Housing Summit on Wednesday, May 21st, at the Mission Inn in Riverside. This year’s Summit theme, The Reality of Housing Marketing Uncertainty: Navigating the Course, will discuss the coming update of local housing elements, the impact of the mortgage lending crisis on local government, and the efforts to navigate through this difficult housing market period. This year, keynote speakers are Lynn Jacobs, Director, State Department of Housing and Community Development, and Lawrence Parks, Senior Vice President, Federal Home Loan Bank of San Francisco.

The Summit will include the 2nd Annual Compass Blueprint Recognition Awards Luncheon. The Awards program will feature plans and projects that demonstrate excellence, innovation, and work towards improving the mobility, prosperity, livability, and sustainability of our region.

Seating at this event is very limited. To register or for more information, please visit the SCAG website.

Legal Updates Now Available Online

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Member Legal Services has added three new cases to the Real Estate Brokerage Cases of Interest page on C.A.R. Online, Michel v. Palos Verdes Network Group, Inc. (2007), Nguyen v. Tran (2007), and Horning v. Shilberg (2005).  Michel deals with the fiduciary duty of a buyer’s broker; Nguyen discusses the C.A.R. arbitration paragraph when a buyer’s broker wants to compel arbitration against a buyer and the listing brokers; and Horning addresses a claim for commission when a real estate broker represents himself as the buyer, among other issues.  There is a summary of each case as well as a link to the actual text of the case. To find the Real Estate Cases navigation tab, first go to Legal Section at http://legal.car.org and then go to the Real Estate Law navigation tab and follow the arrow to the right.  Please contact me if you have any questions or comments. 

Corona man suspected of raping, stabbing real estate agent

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Corona Police arrested a 33-year-old Corona man Friday night on suspicion of raping and stabbing a real estate agent.

Police said Shawn David Yates arranged a meeting with the agent acting like a prospective buyer. When the agent showed up to the home on Silvestre Court, Yates took the woman by knifepoint into the home, police said.

Yates raped the agent then began stabbing her with a knife, police said. The woman fought back and was able to get away and run to a neighboring home where police were called.

The woman was taken to a hospital with multiple stab wounds.

Yates was booked on suspicion of rape and attempted murder.

—Rocky Salmon
rsalmon@PE.com

Posted by PE.com at 11:40 AM, March 08

Special Report from NAR – HUD Releases New FHA, Conforming Loan Limits

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Special Report

HUD Releases New FHA, Conforming Loan Limits
The U.S. Department of Housing and Urban Development today published new FHA and conforming loan limits, based on median home prices as mandated by the Economic Stimulus Act signed by President Bush in February. New loan limits for FHA and Fannie Mae and Freddie Mac are now calculated at 125 percent of the HUD published median prices, with a floor of $271,050 and $417,000, respectively, not to exceed $729,750. NAR expects the impact on the housing market to be significant because of the infusion of capital into the mortgage market, which should result in lower interest rates across the board. In addition, there will be a direct impact on high-cost areas that previously required borrowers to take out costlier jumbo mortgages. The new FHA loan limits can be accessed online. To find the Fannie Mae and Freddie Mac conforming loan limits, on the HUD site choose “Fannie/Freddie” in the drop-down menu called “Limit Type.”"We believe the economic stimulus bill will quickly have an impact on families and the nation’s economy. The loan limits for both FHA and Fannie Mae and Freddie Mac have been increased and this will act as a major stimulus for the housing industry and for those people wishing to own a home,” says Richard Gaylord, NAR president.

What This Means for Housing, REALTORS®, and the Economy
NAR research points out that increasing FHA loan limits will help an additional 138,000 Americans achieve the dream of home ownership and will allow nearly 200,000 homeowners to refinance and potentially keep their home. In addition, NAR believes that increasing the loan limits for Fannie Mae and Freddie Mac will bolster the housing finance market, which continues to be severely stressed, by providing an immediate infusion of much needed liquidity to the nation’s mortgage market.

An economic impact study conducted by NAR in January 2008 estimated that increasing the GSEs’ conforming loan limits would result in as many as 500,000 refinanced loans and could help reduce foreclosures by as much as 210,000. In addition, over 300,000 additional home sales could be generated, housing inventory would be reduced and home prices would be strengthened by two to three percentage points.

Why HUD Took This Action
HUD was mandated in the Economic Stimulus Act to publish new loan limits within 30 days of the bill’s signing by President Bush on February 13.

How HUD Calculates Its Median Home Prices
HUD median home prices differ from those published by NAR. That is because HUD uses a variety of sources and different areas to calculate the median home price.

Who Will be Affected
Increased loan limits will have a wide impact. The added liquidity in the mortgage market will help to make mortgages more easily available. Receiving direct helped will be borrowers in high cost areas who previously had no recourse except high- cost jumbo loans, and those with high-cost loans who can refinance into lower interest rate loans.

Revised Legal Article from CAR

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Member Legal Services has published a revised legal article, REO Transactions (March 5, 2008). It is available on Legal’s What’s New and the Legal Articles pages on C.A.R. Online.  This article has been updated to clarify the ways of advertising cooperating agent commission on the MLS when offering less than a percentage of the gross sales price as commission.  In particular, Question 29 has been revised.

News from NAR as of March 5, 2008

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NAR NEWS

New Median Home Prices to be Released
In the first step toward implementing higher conforming and FHA loan limits included in the 2008 national economic stimulus package signed by President Bush last month, HUD is set to release its new median home prices. The stimulus package increases conforming and FHA loans to 125 percent of area median home prices. Once the new median prices are available, FHA and the two secondary mortgage market companies, Fannie Mae and Freddie Mac, can begin the process of setting their new loan limits. HUD could release its new median home prices as early as today. Once the new median home prices are released, we will alert you, large brokers, and others in a separate INS report.

Reuters Coverage Finds Silver Lining in Today’s Market
A Reuters piece widely distributed last week quotes Phoenix sales associate Russell Shaw and other practitioners on the merits of buying in today’s market and the prospects of improved sales this spring. “I think this is the best buyer’s market that has existed in a decade, maybe longer,” says Shaw, affiliated with John Hall & Associates Real Estate. “There are tons of inventory, great interest rates, and the prices are back in line to where houses are decently priced again.”
ISSUE UPDATES

Fannie, Freddie Regulator Wants Quick Loan Hike
In response to a letter from NAR President Richard Gaylord, the director of the Office of Federal Housing Enterprise Oversight says he’s working with Fannie Mae and Freddie Mac as they raise their conforming loan limits, as authorized in the national economic stimulus package passed in February. But the director, James Lockhart, says how quickly they move is up to them: Fannie and Freddie have their own internal product approval process to ensure adequate controls are in place to address risk. Looking ahead, Lockhart says Congress must pass reforms to the way the secondary mortgage market companies are regulated, and he thanked NAR for supporting the need for reform.

Higher VA Loan Limits Sought
Congress should increase VA home loan guarantee limits in high-cost areas to 150 percent of the conforming loan limits, NAR told lawmakers this week. Congress should also ease refinancing requirements, especially for veterans who’ve fallen victim to risky subprime loans, and offer permanent authorization for adjustable-rate and hybrid ARM loan guarantees. Tony Agurs, a member of the NAR Board of Directors and a practitioner from California, testified on NAR’s behalf.

Extension of Commercial Energy Tax Credit Advances
Last week the House extended through 2013 tax incentives for energy efficiency in commercial buildings. The bill, called the “Renewable Energy and Energy Conservation Tax Act of 2008,” also extends the credit for energy efficient retrofits to existing residential homes through 2014 and includes tax credits for the purchase of certain energy efficient household appliances.

LEGAL

Broker Not Liable for Listing of Altered Apartment
No negligent misrepresentation or fraud occurred in a transaction involving a condo unit that was approved for one bedroom but that had been remodeled to include three bedrooms, the Civil Court, City of New York, ruled, the buyers’ lawsuit. The purchasers had access to the same information about the legal number of bedrooms as the broker, so they didn’t rely in the brokers’ information, the court said.

Toolkit: Managing Listing Content
Learn how to secure and manage the contractual and intellectual property rights of listing content in a comprehensive toolkit developed by NAR.

Supra Maintenance Notification

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Dear SRCAR Members,

On Saturday, March 8th starting at 7:30pm PST through Saturday, March 8th at 10:30pm PST, Supra will be conducting routine maintenance at their data center. During this time SupraNET, AgentWebPay and IVR will not be available. Keyholders will be able to eSYNC, get voice updates and log into KimWeb during this time.

Thank you,

SRCAR