Original Post Date: April 29, 2012

By: June Fletcher

WASHINGTON — If you’re one of the estimated 11 million homeowners burdened with an underwater mortgage, a new federal policy change could be good news: Starting in June, when you want to do a short sale to shed your mortgage and avoid foreclosure, you may not have to wait for months to hear back from your bank when you submit an offer from a potential purchaser.

Instead, if your loan is owned or securitized by either of the dominant conventional mortgage market players — Fannie Mae or Freddie Mac — you can expect a response within 30 business days, with a final decision taking no more than 60 days. If you don’t hear back during the first 30 days, the bank will be required to send you weekly updates telling you precisely where the holdups are and when they are likely to be resolved. None of this is typical of short-sale procedures today. Banks and loan servicers that don’t comply will face monetary and other penalties.

The mandatory timelines, which real estate and mortgage industry experts say should help speed up what traditionally has been a glacial process, are being imposed by the Federal Housing Finance Agency, the regulatory overseer of Fannie and Freddie in conservatorship. Short sales, in which the lender or loan servicer agrees to accept less than the full amount owed by the borrower, represent an important alternative to foreclosure.

Although short sales can be complex and messy, and can take anywhere from several months to more than a year to complete, they are turning into a mainstay of the real estate market. According to a report from the foreclosure data firm RealtyTrac, short sales jumped 33% in January compared with the same month the year before. In 12 states — including California, Arizona, Colorado, Florida, New York and New Jersey — there were more short sales recorded during January than sales of foreclosed properties.

This trend is welcome, regulators say, but the time required to complete short sales is still far too long. The 30-day and 60-day mandates address just one of the key points of delay in the process, but regulators promise a series of additional steps during the coming months designed to speed transactions. They include clearer guidelines on borrower eligibility, property valuations, compensation for lenders holding second liens and mortgage insurance issues. All of these are points of friction that can delay short sales for weeks or months.

Realty agents who specialize in short sales say setting mandatory timelines is a step in the right direction but won’t solve all the problems. The new rules and promises of more “are great if they really happen,” said broker Erik Berry of Erik Berry & Associates in Sacramento. Short sales that his firm handles take an average of “about six months” from start to finish on Fannie-Freddie loans. But FHA transactions, which will not be affected by the new regulations, average much longer, and sometimes drag on for a year.

Berry also is skeptical that banks and servicers will be able to reform their staffing practices quickly enough to meet the compressed timelines — even if penalties are imposed. In some cases, he said, banks switch personnel and negotiators five or six times over the course of a short sale.

“You’re dealing with one person one day and they say, ‘Don’t worry, everything’s fine,’ then suddenly they’re gone and you never hear from them again,” Berry said, leaving the deal stalled for weeks.

Matt Battiata, whose Battiata Real Estate Group in Del Mar, Calif., handles hundreds of short sales a year, said a reliable, 60-day decision deadline for responses to offers will be helpful — 30 days better than the 90-day average he now sees from banks — but the whole process will still take longer than traditional sales. For clients seeking to do short sales today, Battiata estimates five to six months from offer to closing.

Some of the complications inherent in short sales are beyond the control of regulators or banks, he pointed out. For instance, buyers put in offers to purchase but then change their minds, forcing the sellers and brokers to come up with replacement offers and the bank to reset the clock to analyze the new package.

The take-away for potential short sellers: Be aware of the new moves afoot to streamline the process, but don’t expect miracles.

Senate Bill 1220, which imposed a transfer tax to generate funds for affordable housing has been amended.  SB 1220 would have created a real estate transfer tax of $75 per document to fund an affordable housing trust fund.  In virtually all transactions a minimum of three documents are recorded (the grant deed, the release and reconveyance and a trust deed).  SB 1220 would have created a minimum $225 transfer tax and the amount may go higher depending on the number of documents recorded.  C.A.R. reached an agreement with Senator DeSaulnier on its amendments removing C.A.R.’s opposition by making it clear that SB 1220 does not apply to transfer/sales of real property and will not impose a transfer tax in the form of a point of sale.

Mello-Roos refers to “Special” Tax Districts.  Senator Henry J. Mello and former Assemblyman Michael Roos won passage of Mello-Roos Community Facilities Act in 1982.  This legislation authorized Mello-Roos Community Facilities District as a way to assist cities, counties and school districts to provide new infrastructure and facilities after governmental funds were cut by the passage of Proposition 13 in 1978.

Before Proposition 13, State and local governments used income collected through property taxes to build new roads, schools and other necessary community facilities.  In order to continue building residential areas, these same governments were forced to require builders of new communities to pay for these public facilities.  Consequently, these funds were added to the cost of homes.

These price increases hurt new home buyers as fewer people were able to afford higher-priced homes.  Those who could had to wait for the public facilities to be built.

Under Mello-Roos Community Facilities Act, landowners put up their land as collateral so that public agencies, like a school district could raise money to pay for vital basic public facilities.  The public agency forms a Mello-Roos Community District that sells bonds to fund the construction of these new public facilities.  A bond allows for payment over a specific amount of time through special taxes levied on property owners in that particular district.  Mello-Roos taxes are collected by the County Tax Collector as part of the normal property tax system.

Not all new home communities are affected by Mello-Roos special taxes.  For example, sometimes a new neighborhood is built within existing communities.  Because public facilities are already in place, they are not subject to Mello-Roos Taxes.

This information courtesy of Rick Rummens, Chicago Title..thanks Rick!

The preceding summaries are provided for informational purposes only.   For a more comprehensive understanding of the legal/tax consequences of mello-Roos, appropriate consultation is recommended with an attorney and/or CPA for specific advice.

By: G. M. Filisko

Published: January 5, 2012

With springtime at our doorstep, take the time to polish your home to perfection.

1. Let the sun in. Make any room look brighter with clean blinds and windows. Mix a solution of one part white vinegar to eight parts water, plus a drop or two of liquid dishwashing liquid, for a green window cleaner. Spray on and wipe with newspaper to avoid streaks. (Washing on a cloudy day also reduces streaking.)

Bonus Tip: Replace heavy drapes with lightweight shears during warmer months to give a room a brighter, lighter feel.

2. Snuff out smells. Check the drip tray underneath your refrigerator and wash out any standing water from defrosting. Remove inside odors by washing the inside of the fridge with a baking soda and water solution. Boil lemon juice in your microwave and add it to your dishwasher to eliminate bad smells. Also, put the lemon rinds down the disposal. Add activated charcoal in the fridge to keep odors at bay.

Bonus Tip: Make the fridge smell fresh instantly with cotton balls soaked in vanilla extract or orange juice.

3. Give your bed a makeover. Vacuum mattresses and box springs, and then rotate and flip over. Do the same for removable furniture cushions. This is also a great time to wash or dry-clean the dust ruffle and mattress pad.

Bonus tip: Add new loft to a lumpy comforter by having two people vigorously shake the quilt up and down to redistribute stuffing.

4. Cool your coils. Improve energy efficiency by vacuuming grates, coils, and condensers in your furnace, stove, and refrigerator (either underneath or in back). If a vacuum won’t reach, try a rag tied to a yardstick.

Bonus tip: Shut some air conditioning vents on the first floor or basement so that more air will reach and cool the second floor. Reverse the process in winter for heat vents.

5. Don’t forget the walls. Grease, smoke, and dust can adhere to walls and make even the best decorating look dingy. Wash walls using a general-purpose cleaner with hot water. Start at the top of the wall to avoid drips and in a corner so that you wash one wall at a time. Rinse the mop head frequently in clean water. And don’t press too hard because flat latex paint won’t absorb too much water.

Bonus tip: Resist the temptation to spot-clean walls since it will make the rest of the wall look dingy.

Michael Sebastian Real Estate is the premier resource in Orange and Villa Park CA for homeowners seeking the finest in professional real estate services.  As a part of OC Signature Properties, Inc, our clients benefit from over 30 years of experience delivering solutions for every real estate need.

C.A.R.’s pending home sales index surveys more than 70 REALTOR® associations and multiple listing services, and uses 2008 sales levels as a benchmark. An index reading of 100 is equal to the average level of sales contract activity in 2008.
The index climbed to 93.6 in January, up from 82.4 in December, but down 2 percent from a year ago, CAR said, noting that pending sales typically rise after seasonal slowdowns in November and December.

“January’s pending sales should be reflected in higher existing sales activity in February and March and serve as a precursor to the spring home buying season,” C.A.R. President Beth L. Peerce said in a statement.

Distressed properties — short sales and bank-owned (REO) properties — accounted for 54 percent of pending sales statewide, up from 50 percent in December but down from 56 percent a year ago.

Distressed properties accounted for 70 percent or more of all sales in Kern, Sacramento, Riverside, San Bernardino and Solano counties.

REO properties accounted for 32 percent of pending sales, up from 30 percent in January but down from 37 percent a year ago, C.A.R. said.

Short sales, which accounted for 19 percent of pending sales in January 2010 and 20 percent of sales in December, represented 22 percent of last month’s pending sales.

Looking at all sales of single-family homes that closed escrow in January, the median price was $278,900 — down 8.6 percent from a revised $305,020 in December and down 2 percent from a year ago.

But at $265,500, the median price for short sales closing escrow in January was 28 percent less than the $367,150 median price for “conventional” properties. The median price for REO properties, at $198,000, was 46 percent less.

One of the most common questions asked by real estate buyers is how the title to their property should be held.  There are a number of different ways to hold property title-each with different legal consequences.  It’s advisable before closing to ask for legal financial or tax advice about which of the following methods of vesting title is the most suitable for your particular situation.

HOLDING TITLE: Sole ownership

Sole ownership, which reflects ownership by an individual or other entity capable of acquiring title, includes the following common examples:

• Single person: Someone who is not and has never been married.
• Unmarried person: A person who was married at one time, but is now legally divorced, or a person who was once in a registered domestic partnership that has been legally dissolved.
• Married person or domestic partner as his or her sole and separate property: A person who is married or who has a registered domestic partner, but who wishes to acquire property title in his or her name alone as that property’s sole and separate owner. The spouse or domestic partner of the person establishing title will need to sign a form – usually a Quit Claim deed – relinquishing his or her right, title and interest to the property.
• Legal entity: Title can be vested to a company, corporation, general partnership, limited partnership, limited liability company or other legal entity.

HOLDING TITLE: Co-ownership

Co-ownership in which property title is acquired and owned by two or more persons or entities, may be vested in the following ways:

• Community property: In California, community property is property purchased by a husband or wife (or registered domestic partners) either individually or separately. Real estate purchased by a married person is generally considered to be the community property of the husband and wife.
• Community property with Right of Survivorship: With this type of vesting, the survivor owns the property upon the death of the other owner without the need to go through probate, Holding title in this way may offer tax benefits.
• Joint Tenancy: Joint and equal interest in a property automatically conveyed upon the death of an owner to the surviving joint tenants without the need for probate.
• Tenancy in common: Property owned by any two or more individuals or entities with each tenant-in-common owning a different percentage of the real property.

There are additional ways to hold title, but these are a few examples for informational purposes only. To determine the best way to hold title to your California real estate, it’s important to consult your legal, financial or tax advisors to determine which method most benefits your situation.

Information courtesy of Brandon Bianchi, LPS Title and Settlement Services

The HAMP plan did not assist homeowners in the numbers that were envisioned.

HAMP lowers a homeowner’s monthly mortgage payment to 31 percent of their verified gross (pre-tax) income to make their payments more affordable.

To qualify for HAMP, you must:

• Own a one- to four-unit home that is your primary residence
• Have received your mortgage on or before January 1, 2009;
• Have a mortgage payment (including taxes, insurance, and homeowners association dues) that is more than 31 percent of your gross (pre-tax) monthly income; and
• Owe an amount that is less than or equal to $729,750 on your first mortgage for a one-unit property (there are higher limits for two- to four-unit properties).

Homeowners who qualify must complete a trial period of three or four months to demonstrate that they will be able to make their reduced payments on time before their mortgage will be permanently modified. To create an affordable payment, your mortgage servicer can lower your interest rate to as low as two percent, as well as extend your mortgage term up to 40 years, or forbear (defer) payments on your principal. A portion of the principal can also be forgiven, although that is optional on the part of the servicer.

On November 18, 1918, an armistice, or temporary cessation of hostilities, was declared between the Allied nations and Germany in the First World War, known than as “the Great War.”

Commemorated as Armistice Day starting the following year, November 11th became a legal federal holiday in the United States in 1938. In the aftermath of World War II and the Korean War, Armistice Day became Veterans Day, a holiday dedicated to American veterans of all wars.

While Memorial Day, which is held on the 4th Monday of May honors American servicemembers who died in service to their country or as a result of injuries incurred during battle, Veterans Day pays tribute to all American veterans–living or dead–but especially gives thanks to living veterans who served their country honorably during war or peacetime.

So, while we may disagree about political direction and which candidates get to represent us in the Government, it’s difficult to disagree that we live in liberty and freedom in this great nation, thanks in large part to a veteran.

The unselfish sacrifice of America’s soldiers, sailors, airmen and Marines will never be fully appreciated by the rest of us who go about our lives under the constant vigilance and protection of these young heroes.

On November 11, please take the time to thank a veteran for his or her service.