California Homeowners Bill of Rights – New Law for 2013.

The new California Homeowner Bill of Rights becomes law today. If you’re not familiar with this measure, it was a bill carried on behalf of California Attorney General Kamala Harris last year that sought to codify some of the measures set forth in the national mortgage settlement deal struck in early 2012. 

Initially opposed by the California Association of Realtors as well as the California Bankers Association and the California Mortgage Bankers Association, the bill was pushed through the legislature by a closed joint committee  of both houses so when the bill eventually reached the floor, it was voted on immediately and passed to the Governor. Total time in committee, floor and signature was measured in hours rather than days, months or years, as is typical for most bills. 

Due to the secretive nature of the committee structure, there was little opportunity for interest groups to provide input and there was great concern that what emerged would be a very flawed effort reflecting an over reaction to purported lender wrongdoing. However, CAR did have an opportunity to work with the committee to effect some modifications to the final version that removed our opposition to the bill. CAR was not supportive of the bill in its final version but adopted a neutral position, although banking groups remained steadfast in their opposition due to to concerns about meritless litigation that the bill opens up for aggreaved homeowners. 

Here’s what the bill does:

  • Stops dual tracking. Once the process has started for either a loan modification or short sale by the lender, the foreclosure process must be stopped. This is in response to cases where the property proceeds along multiple courses at the same time only to have the foreclosure process conclude days ahead of a short sale approval by another arm of the bank. As pointed out, this frequently resulted in the bank taking the property back and ultimately receiving thousands less in the foreclosure sale than they would have in a short sale. Of course we know the banks are covered either way and really don’t care but ultimately this should result in more short sales and fewer foreclosures, which is better for the recovering market.
  • Under the dual tracking provisions, banks must give an applicant a response to their loan modification before they can start the foreclosure process. If a homeowner has not applied for a loan modification, the bank must inform them of their right to do so before starting the foreclosure process.
  • No more robo signing.
  • Banks must provide a single point of contact to borrowers trying for a loan modification or short sale. Homeowners and Realtors are often frustrated by multiple points of contact and the handoff fr5om one agent to  another within a bank frequently resulting in the loss of paperwork sending the process back to square one while the foreclosure process continues apace in another department.
  • Allows the borrower to sue loan servicers if the borrower thinks they have violated any foreclosure laws. This is one of the most worrisome components of the bill in that it may open the door to frivolous lawsuits resulting in increased costs and unnecessary delays in an already costly and time consuming process. 

With nearly 1 million foreclosures recorded in the state since 2007, California remains one of the hardest hit areas of the country. However, foreclosures are down in most areas by 30% or more in the past year and with prices starting to climb across the state, the hope is that fewer and fewer people will be pushed into foreclosure anyway. Some 30% of state homeowners remain underwater in their loans but the combination of improving employment statistics and home price increases has decreased that by more than 5% in the past year.

The Homeowners Bill of Rights may well provide some relief for harried homeowners and produce further delays to the process, but it will do little to change the underlying ability of a homeowner to ultimately afford their home and will, in most cases, only delay the inevitable. If Sacramento and DC don’t screw it up, an improving economy will do more to aid homeowners than the HBR will ever accomplish – and ultimately that’s the best news for everybody. 


CAR OPPOSES AG's Homeowner Bill of Rights.

California Homeowners Bill of Rights:

A Lesson in Political Expediency & Unintended Consequences.

California Attorney General Kamala Harris announced in a much heralded press release today that her ‘California Homeowners Bill of Rights’ has ‘taken a key step toward passage’. Here’s the key step – she bypassed every preliminary opportunity for the bill to be discussed, debated or voted on in either the Assembly or the Senate. What she did, or had her minions in the Legislature do for her, was have the bill introduced to a ‘two-house conference committee’ that voted this morning to pass the bill. That means tomorrow or, more probably Monday, the full Senate and Assembly will vote on the bills – SB 900 & AB 278 with no discussion.

You’ve heard me discuss the measures previously as the Nevada Suite of bills, so named for the deleterious results Nevada experienced after passing similar legislation last year. Did I mention the ‘special committee’ was made up of 4 Democrats and 2 Republicans? Now guess what the vote was? That’s called a ‘procedural matter’ in Sacramento. Roughly translated it means ‘bend over’.

Here’s C.A.R.’s take on the issue:

C.A.R. is OPPOSING conference report, AB 278, containing anti-foreclosure legislation sponsored by the state Attorney General. C.A.R. opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not, C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes this conference report because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, and making it difficult for even well qualified borrowers to obtain financing. Financing is already very difficult to get. This conference report will only make a difficult situation worse.

Initially the Attorney General had sponsored a package of bills; the so-called the “Homeowners Bill of Rights.” For procedural reasons, the majority of these bills have been under consideration by a Conference Committee made up of six legislators. REALTORS® had the opportunity to educate these legislators about C.A.R.’s concerns as part of Legislative Day and since then C.A.R. lobbyists have been working directly with the conferees and legislative staff to make them aware of the unintended consequences of some of these proposals. The Conference Committee has now issued its final report and it must be passed by both Houses of the legislature. These votes may occur as early as Monday, July 2nd.

Background

The Attorney General has sponsored a package of bills to place into California law an expanded version of the national settlement between major banks and state attorneys general. The contents of some of these bills have been under consideration by a Conference Committee comprised of six members who have just approved a conference report on a party-line vote. Some provisions will have the unintended effect of drying up mortgage loans for anyone but the most well-qualified borrowers, and increasing the costs of all mortgages.

One provision allows any borrower, no matter what the circumstances, to file a lawsuit. This will encourage opportunistic lawyers to pursue frivolous lawsuits, bringing unnecessary and unjustifiable delays to an already difficult and time consuming process. The language is so vaguely written that the borrower doesn’t even have to show that they have been harmed to file suit and be awarded damages.

One-sided  attorneys fees may still be awarded only to plaintiffs based on the very broad definition of a “prevailing party” in the report. And, of course, if lenders don’t have the remedy of foreclosure to ensure they can recover their security in appropriate situations, they will be less likely to lend, credit will be less available and the housing market recovery will limp along even more slowly.

C.A.R. is OPPOSED to the conference report because:

 

  • The housing market recovery is still fragile. About half of all sales are of distressed properties. By restricting a lender’s ability to foreclose and exposing them to unnecessary liability, this report will dry up inventory, and it will further discourage lending other than to the most highly qualified borrowers. Additionally, these bills will artificially slow down the foreclosure process, keeping properties off the market that are legitimately in foreclosure. Finally, by removing the threat of foreclosure, the bill erodes the incentive for short sales as well.
  • The bill invites bad-faith defaults and lawsuits. By broadly defining under what circumstances a lawsuit can be filed, even those legitimately in foreclosure can “game” the system. Additionally, the bill creates an incentive for plaintiffs’ attorneys to file frivolous lawsuits even if no harm has been done to the borrower. The courts are already overwhelmed. This bill, by inviting frivolous lawsuits puts an additional strain on the already underfunded courts
  • Lending is already tight. Even the most well-qualified borrowers are finding it difficult to obtain financing. By stopping legitimate foreclosures, banks will be forced to further tighten lending standards at the expense of homebuyers.

 

We’re not intimating that everything contained in the bills is bad and we have been supportive of some of the issues. We also have a competing dual-tracking bill in play that we feel is more balanced and less vague. But this is a take-it-or-leave-it kind of bill – you have to eat the whole enchilada and there are no amendments allowed at this point. All the bad will be with us as law along with the few good things it might accomplish. Sound familiar?

This is also what is referred to as a ‘gut & amend’ bill. For 1 1/2 years some bills have been floating around the Legislature knowing full well they weren’t going anywhere. They were being held for just such a vehicle as this to rise from the ashes and require a last minute vote – often with only minutes of notice.

So this bill will pass UNLESS you can convince your Democratic Legislator to vote against it. Otherwise it’s a simple exercise in vote counting (53 – 27) to ascertain that our housing market will take another hit – a victim of increased frivolous lawsuits, further restrictions on foreclosures and tightened lending standards.

So now you know the proverbial ‘other side of the story’ and it’s not pretty. I encourage you to read the bill at  AB 278 and then read the AG’s release below. While the release summarizes a much glossed over purview of the bills, the devil is in the details. So go to work on your Democratic Legislators and let them know how Realtors® feel, and every homeowner and landlord who doesn’t feel like paying the price this bill will cost.

 

 

NEWS RELEASE

June 27, 2012

FOR IMMEDIATE RELEASE
(415) 703-5837

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California Homeowner Bill of Rights Takes Key Step to Passage

SACRAMENTO — Attorney General Kamala D. Harris today announced the passage of two central elements of the California Homeowner Bill of Rights through a special two-house conference committee. The 4 to 1 vote sends the bills to an expected vote next week in both the Assembly and Senate.

The two bills approved by the conference committee are the Foreclosure Reduction Act, which restricts the process of “dual-tracked” foreclosures and the Due Process Rights Act, which guarantees a reliable contact for struggling homeowners to discuss their loan with and which for the first time imposes civil penalties on the practice of fraudulently signing foreclosure documents without verifying their accuracy, a practice commonly known as “robo-signing.” The proposed legislation also includes meaningful enforcement for borrowers whose rights are violated.

The full Homeowner Bill of Rights includes additional provisions to reduce blight, ensure appropriate law enforcement response to mortgage fraud and crime, and protect tenants.  The bills containing these protections are also advancing through the Legislature.

“I am gratified by this vote, which represents one more step toward our goal of achieving a Homeowner Bill of Rights for California,” said Attorney General Harris. “The mortgage and foreclosure crisis in our state demands urgent efforts to help Californians keep their homes. The legislature will now have the opportunity to cast a vote on behalf of California’s struggling homeowners.”

The California Homeowner Bill of Rights was introduced February 29, 2012 at a press conference featuring Assembly Speaker John A. Perez and Senate President pro Tem Darrell Steinberg and bill authors from the Assembly and Senate. The goal of the Homeowner Bill of Rights is to take many of the mortgage reforms extracted from banks in a national mortgage settlement and write them into California law so they could apply to all mortgage-holders in the state.

“The mortgage and foreclosure abuse in California ends here,” said Noreen Evans (D-Santa Rosa), co-chair of the Joint Conference Committee. “This committee has passed historic legislation that codifies the
protections eligible homeowners deserve, while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery. The Legislature has studied, listened and engaged Californians and
industry to find a solution that is fair and effective to mitigate this crisis. I look forward to the full support of the Legislature and Governor in implementing this package.”

“This bill is the result of a long and difficult process in which we received input from all interested parties; including homeowners and the banks and found that foreclosures benefit no one,” said Assemblymember Mike Eng (D-Alhambra). “We ended such dubious practices as having a bank foreclose while a homeowner is in the process of modifying a loan and cut through confusion by making sure that there is a ‘single point of contact’ with mortgage servicers.  With half a million California homes at risk of foreclosure, this action was urgently needed.”

The California Homeowner Bill of Rights extends Attorney General Harris’ response to the state’s foreclosure and mortgage crisis. Attorney General Harris created a Mortgage Fraud Strike Force in March, 2011 to investigate and prosecute misconduct related to mortgages and foreclosures. In February 2012 Attorney General Harris extracted a commitment from the nation’s five largest banks of an estimated $18 billion for California borrowers.

More details about the California Homeowner Bill of Rights are found on the attached fact sheet.  To learn more about how the bills impact California homeowners, review the slideshow at: www.oag.ca.gov.

# # #

You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://oag.ca.gov/news/press-releases/california-homeowner-bill-rights-takes-key-step-passage

 


Gov. signs Realtor Bill for short sale relief.

New law gives added protection to short-sale hopefuls On Friday, Gov. Jerry Brown signed Senate Bill 458 (Corbett) into law.  The new law, which contained an urgency clause and became effective upon signing, protects homeowners pursuing short sales by barring first and secondary lien holders from going after sellers for money owed after the short sales close.

Making sense of the story

*     A short sale – a transaction in which the homeowner sells the property for less than is owed on the mortgage – must be approved by the lien holder or lien holders, if there is more than one.

*     Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short-sale payment as full payment for the outstanding balance of the loan, but the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

*     The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) sponsored the bill and urged lawmakers to pass this much-needed legislation.

*     “The signing of this bill is a victory for California homeowners who have been forced to short sell their home, only to find that the lender will pursue them after the short sale closes and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce.  “SB 458 brings closure and certainty to the short-sale process and ensures that once a lender has agreed to accept a short-sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full, and the homeowner will not be held responsible for any additional payments on the property.”

Read the full story <http://www2.realtoractioncenter.com/site/R?i=Y7pJy-rwyTJMoTmgvOXhDA..>


$40 political survival proposal – updated.

Many of you have commented on my earlier blog regarding the proposed $40 dues increase to fund the Realtor Political Survival Campaign. As you recall, that will be voted on in May at our annual meeting in DC. Yesterday we had a 1 1/2 hour webinar with NAR leadership discussing why the additional funding was necessary. At that time the possibility of putting the Public Awareness campaign on haitus for a couple years and using those funds for political purposes was presented as a sort of plan B. According to NAR stats however, that public awareness campaign is a great success – although most of you would just as soon it went away.

Anyway, for those of you opposed to an additional $40 hit on your dues, it appears your voices have been heard, Now you just need to make sure your local association and your NAR Directors are aware of your feelings.

From NAR President Ron Phipps:

To:        Local Board and State Association Presidents

This letter constitutes the official notice required by Article II, Section 10 of the Bylaws of the NATIONAL ASSOCIATION OF REALTORS® of a proposal to eliminate a previously approved membership assessment.

In May of 2010 the NAR Board of Directors approved an assessment of $35 per member for 2011-2013 to be used to continue the Public Awareness Campaign during those years.  The Finance Committee has now offered two alternative proposals regarding funding for the REALTOR® Party Political Survival Initiative.  One proposal eliminates the Public Awareness Campaign $35 Assessment for 2012 and 2013.  That proposal also increases NAR dues by $35 per year to fund the REALTOR® Party Political Survival Initiative.

The other proposal offered by the Finance Committee is being recommended by the NAR Executive Committee.  That proposal would increase NAR Dues by $40 per year to fund the REALTOR® Party Political Survival Initiative.  The Public Awareness Campaign $35 Assessment would remain in effect during 2012 and 2013.

Dues, membership assessments and amendments to membership assessments for the National Association are adopted by the Board of Directors of the National Association.  These issues will be coming before the Board of Directors at its meeting on May 14, 2011.

Sincerely,

Ron Phipps
2011 NAR President


CAR asks legislature to let the citizens decide.

C.A.R. today sent a letter to Gov. Jerry Brown and members of the California Legislature asking them to place the Governor’s budget framework on the June ballot.  The Governor’s budget framework calls for a $26 billion solution – half in the form of budget cuts and half in the form of revenue from the extension of existing taxes.

C.A.R. has not taken a position in support of tax extensions, but is only in support of putting the tax extensions on the June ballot to let California voters decide.

For more information, contact Christopher Carlisle, C.A.R.’s legislative advocate at (916) 492-5200.

I don’t know if I agree with today’s move by CAR – but they didn’t ask me. However, it appears to be in line with recent polls showing the majority of Californians appear to prefer having a voice in this latest budget skirmish. 61% believe the issue of  Gov. Browns tax & cut budget should be decided by a vote of the people. Even 56% of Republicans believe this should be the case although 61% of Republicans also say they would vote
against the tax measure. A majority of voters also indicate they would not vote for any new or increased taxes – but the survey didn’t drill right down to whether the majority would vote to extend the currently increased taxes for another 5 years.

While I am not in favor of the tax increase that was foisted on us two years ago and is now scheduled to expire, if the few Republicans who have not backed themselves into a corner with the No New Tax pledge can negotiate some meaningful cuts – not just the lame-ass cuts proposed by the Governor, it’s worth bringing to a vote of the people. Without the current taxes being extended, there will be foul nastiness ahead for our state. The few real cuts that have been proposed as well as any future cuts, would be to programs that probably should not be cut. The retirement boondoggle, entitlements and growing employment at the state level will not be impacted. Education, police and parks will be.

Whats worse, if the current tax structure is not extended for another 5 years, in addition to the worthless and superficial cuts that may occur, we would likely face a slew of new taxes disguised as fees, levies and outright thievery from our cities and counties. Many of those taxes would also be aimed at independent contractors, small business owners and other housing related areas. I mean, face it folks, our state is broke and should be declared bankrupt if such a thing were allowed and if we had any politicians with enough balls to do it. Unfortunately it’s not and we don’t.

Further, if the tax extension is placed on a special ballot I believe it would pass. It would be supported by massive spending by the  public employee unions, teachers, nurses, etc, as well as the vast entitlement population who live on the public dole. California has reached a tipping point where we have more takers than  givers, people who rely on the system for their income whether it’s direct payroll, retirement or welfare. When that dynamic exists in a state without the political will to address it, the result will inevitably result in those voters making sure their nest continues to be lined as long as the rest of us can pay for it.

Of even greater concern, and something I believe is another inevitability, taxes will get placed on the ballot with the promise of real and substantial cuts to programs and entitlements. The taxes will get passed but the cuts will not occur. We already saw what happened a few years ago when Arnold worked up the machismo to try to tackle a few state employment issues. He was sued under the table  and no jobs were lost. Even the few cost reductions that might have been realized by the imposition of a few months of furlough days was largely negated by the lawsuits necessary to defend the governors right to impose them.

So we’ll get our existing higher taxes extended another five years, the $12 Billion in cuts will not materialize, there will be a call for more ‘fees’ on services and any other way to wring the last few bucks out of the business class and the paying populace and next year we’ll be right back here trying to figure out why we’re another $25 Billion in the crapper.

Ahhh California.

On the upside, it is almost 80 today and the sun is shining beautifully. Had a great lunch with my Congressional Rep on an outdoor patio and it’s almost time to pour a cold one. What? Me worry?


Keep Your Home California – Good News for some CA homeowners.

Keep Your Home California Program

The U.S. Treasury Department has approved CalHFA’s plan to use nearly $2 billion in federal funding to help California families struggling to pay their mortgages.

The Keep Your Home California programs are focused on assisting low and moderate income families stay in their homes, when possible, and leveraging additional contributions from mortgage servicers.

Primary objectives for the Keep Your Home California programs include:

  • Preserving homeownership for low and moderate income homeowners in California by reducing the number of delinquencies and preventing avoidable foreclosures
  • Assisting in the stabilization of California communities

Each of the Keep Your Home California programs is designed to address one or more aspects of the current housing crisis by doing the following:

  • Helping low and moderate income homeowners retain their homes if they either have suffered a financial hardship such as unemployment, have experienced a change in household circumstance such as death, illness or disability, or are subject to a recent or upcoming increase in their monthly mortgage payment and are at risk of default because of this economic hardship when coupled with a severe decline in their home’s value.
  • Creating a simple, effective way to get federal funds to assist low and moderate income homeowners who meet one or all of the objective criteria described above. Speed of delivery will be balanced with fulfillment of the specific program’s mission and purpose.
  • Creating programs that have an immediate, direct economic and social impact on low and moderate income homeowners and their neighborhoods.

2010 Recap Realtor Report

If you click on that little red Realtor Report just above the chart, you’ll get to a slightly larger version of the report which will be easier for your old eyes to read. You’re welcome.


NAR Pres. Elect Moe Veissi Talks Turkey at CAR Mid-Winter

Take-aways from our recent California Association of Realtors Mid-winter meetings.

From NAR President-elect Moe Veissi –

Six of the past eight recessions have ended due to increasing strength in the housing market. The other two were due to wars. That seems like an easy choice. We need to get behind housing. This battle against housing is counterproductive and the attack on the mortgage interest deduction is an attack on one of the basic foundations of the American Dream.

Similarly we should seek to preserve the basics of the GSE’s.They can certainly be improved upon but their services are vital to home buyers. They provide a foundation and critical financial instruments that allow many people to buy homes that otherwise would not be able to. Keep in mind that during the height of the meltdown, Fannie and Freddie had take-back rates of about 3 1/2% while at the same time banks like B of A and Wells were taking back 15% to 18%.

You hear people today who don’t know the history, who don’t know any better – oh, Canada doesn’t have a 30 year fixed mortgage and their housing market is great. Oh, Europe doesn’t have a Fannie/Freddie and their market is great. The fact is, their markets don’t compare with ours. Never have. Nobody does it like us. These other countries are trying to figure out how to do it like we do and we’re trying to figure out how to kill our system and adopt the systems others are trying to get rid of. So why would we try to emulate markets with which we have nothing in common? Why would we destroy 100 years of success to become more like an inferior market? It just doesn’t make sense.

These are not short term problems we are dealing with and they will keep rearing their heads. We have saddled ourselves with tremendous debt so attacks on basic and short term sources of tax revenue will be ongoing. Don’t believe them when they tell you – oh, we aren’t going to take it all away. Just this little bit. Yeah, just that little bit this time. Then  a little more, then a little more, you know how that works.

Realtors just don’t realize the power we have in our communities and our country. But we’ve got to stand up and be counted if we want to be heard. We need to present Congress with 1/2 million Realtor calls on issues instead of 100,000. When we can consistently deliver 1/2 million member voices or more to our Congressional leaders, they will know we mean business.


New laws for 2011 affecting Realtors or your clients

From CAR Government Affairs

The recent end of the 2009-10 legislative session has brought the end of short sale deficiency judgments for first loans, and other new laws affecting REALTORS® and their clients.  To view the full text of the following bills, go to www.leginfo.ca.gov.

No Short Sale Deficiencies: Starting January 1, 2011, a seller’s first trust deed lender cannot obtain a deficiency judgment against the seller after a short sale.  Providing written consent to a short sale shall obligate the first trust deed lender to accept the sales proceeds as full payment and discharge of the remaining amount owed on the loan.  This law applies to first trust deeds secured by one-to-four residential units, but does not limit the lender from seeking damages for fraud or waste by the borrower.  Senate Bill 931.  Governor Schwarzenegger vetoed Senate Bill 1178, our sponsored bill, which would have extended California’s anti-deficiency protection to refinance loans.

Energy Audit in Home Inspection Report:
Beginning January 1, 2011, a home inspection and inspection report may, upon a client’s request, include an audit of the energy efficiency of a home, according to the standards of the Home Energy Rating Systems (HERS).  REALTORS® are also strongly encouraged to give the newly released HERS booklet to residential buyers, because doing so provides a valuable shield from liability.  Delivery of the booklet will be deemed to be adequate to inform the buyer about the statewide HERS program.  Assembly Bill 1809 and California Civil Code section 2079.10.

Restriction on Adverse Possession Claim: Effective January 1, 2011, a claim for adverse possession requires, among other things, certified records of the county tax collector showing that all state, county, or municipal taxes have been timely paid for the five-year period the property has been occupied and claimed.  Existing law merely requires proof that taxes have been paid for the five-year period, not certified proof of timely payments.  Assembly Bill 1684.

Enforcement of MLO Requirements: Effective January 1, 2011, anyone acting as a mortgage loan originator (MLO) without an MLO license endorsement will be guilty of a crime punishable by six months imprisonment, plus a $20,000 fine.  Furthermore, a broker cannot employ or compensate a real estate licensee for MLO activities unless that licensee has a license endorsement.  This law has also given the Department of Real Estate (DRE) the authority to deny or revoke a MLO license endorsement or take other action.  This law also amends the MLO requirements for finance lenders and residential mortgage lenders under the Department of Corporation.  Senate Bill 1137.

Post-Foreclosure Protection for Tenants: Commencing January 1, 2011, a notice to terminate a residential tenant who remains after a foreclosure sale must generally include a statutory notice of the tenant’s rights.  This requirement, which sunsets on January 1, 2013, applies to an immediate successor-in-interest for one year after a foreclosure sale.  The tenant’s rights must be on a separate cover sheet or, for a 90-day termination, incorporated into the notice to terminate.  Another provision of this bill protects a residential tenant’s credit by generally prohibiting the court clerk from revealing unlawful detainer court records unless the plaintiff prevails at trial.  Senate Bill 1149.

Tenant Protection for Domestic Violence Victims: Starting January 1, 2011, a residential landlord cannot terminate or fail to renew a tenancy based on domestic violence against the tenant or tenant’s household members as specified.  This law applies if the person restrained from contact with the tenant by court order or named in a police report is not also a tenant of the same dwelling unit.  If the protected tenant subsequently allows the person restrained to visit the property, or the landlord reasonably believes the person restrained poses a physical threat to others or to quiet possession by other tenants, the landlord may serve a three-day notice to correct or quit.  To further ensure safe housing for domestic violence victims, this law also requires that, for leases entered into after January 1, 2011, a landlord changes the exterior locks of a protected tenant’s dwelling unit within 24 hours after the tenant provides a written request and supporting court or police documentation as specified.  Senate Bill 782.

Protections Against Real Estate Fraud: Effective January 1, 2011, new laws protecting consumers from real estate fraud include, without limitation, the following: (1) Expanding the foreclosure consultant law to include someone who performs a forensic audit of a residential mortgage loan (Assembly Bill 2325); (2) Requiring any mailed solicitation that offers to provide a copy of an owner’s grant deed or other title records for a fee to include a prominent statutory disclosure that the copy service is not associated with any governmental agency and that the homeowner can obtain such records from the county recorder (Assembly Bill 1373); and (3) Increasing the criminal punishment for renting out a residential dwelling without the owner’s consent from six months imprisonment plus a $1,000 fine, to one year imprisonment, plus a $2,500 fine (Assembly Bill 1800).

Other Laws: Some of the other laws that may interest REALTORS® include, but are not limited to, revisions to the mechanics’ lien law (Senate Bill 189); clarification that the prohibition against discrimination of tenants based on source of income pertains to lawful and verifiable income (Senate Bill 1252); extension of the CalVet Home Loan program to include 2-to-4 residential units (Assembly Bill 2087); and lien enforcement by a municipal utility district for a tenant’s delinquent charges (Senate Bill 1035).


New anti-deficiency law for short sellers hits the state 1/1/11

A ray of good news for homeowners in California. Lame-Duck Arnie actually signed a bill that provides some relief for short-sellers.

Existing law prohibits a deficiency judgment by the holder of a first trust deed on a property that has sold through foreclosure. SB931 extends that protection to short-sellers of a property as well. If the holder of a first trust deed or mortgage gives written consent to a short sale, that lender is obligated to accept the sale proceeds and discharge the remaining amount owed (the deficiency). Prior to this law, lenders could pursue a homeowner even after approving a short sale for the balance of the deficiency. It still allows the holder to pursue the seller in the event they determine there was fraud or waste by the borrower and it does not apply to holders of second or subsequent notes.

The California Association of Realtors was optimistic that the Gov. would also sign our sponsored bill SB1178 that would have extended anti-deficiency protection to owners who had refi-ed their homes only to the extent that the subsequent loan was used to pay debt or costs incurred in the purchase of the home. In other words, if you refi-ed only to get a better interest rate but took no  money out, your original anti-deficiency protections would still accrue.

We all know that during the boom years, banks were quick to offer refi-s but slow to disclose that you were giving up a valuable protection by taking them up on the offer. You sacrificed your anti-deficiency protection when you refi-ed. Arnie sided with the banking lobby and declared that SB1178 would interfere with the contract between the bank and the borrower. No matter that there was no disclosure or explanation of the ramifications. CAR will be looking to again sponsor this bill in the upcoming legislative session in hopes that a new Governor will have a better grasp of the issues.

Governor Schwarzenegger holds the distinction of vetoing more real estate friendly and CA sponsored bills than any previous governor of our state. But he talked such a good line when he came to talk with us – we thought he really meant all his accolades about real estate making him the man he is today. Oh well, he turned out to be much less of a man than we all hoped. Some people light up a room when they enter, others when they leave. Don’t let the door hit ya in the bum on the way out.