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IMPORTANT THINGS YOU SHOULD KNOW!   (Updated: May 2009)

C.A.R. launches Mortgage Protection Program To help provide first-time home buyers with peace of mind when purchasing a home, the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) Housing Affordability Fund is offering a new mortgage protection program to first-time home buyers. Through the C.A.R. Housing Affordability Fund’s Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit. For the eligibility and further details: C.A.R. H.A.F. Mortgage Protection Program

Loan-Modification Guidelines Finally, a program that may effectively curb the growing foreclosure problem has come out. We have been advocating a measure to stem foreclosures by offering affordable re-financing to borrowers who have not defaulted but are struggling to make their mortgage payments. This Treasury plan is close to what we wanted, if not perfect. If the cause is a single occurrence, addressing the resulting problem can work. How-ever, this foreclosure problem (cause) is continuous and growing; pumping money into the financial market is only a temporary relief and the crisis keeps coming back. The major points of the new program are: Loans originated on or before Jan. 1, 2009. First-lien loans on owner-occupied properties with unpaid balance up to $729,750. Must fully document income with required proof and must sign affidavit of financial hardship. Owner-occupancy verified by credit report and others; no investor-owned, vacant or condemned properties. Incentives to lenders to modify at risk borrowers who have not yet missed payments. Modifications can start immediately until Dec. 31, 2012. Subject loans are those owned by Fannie Mae and Freddie Mac (ask your lender), and the goal is to keep the monthly payment to 31% of borrower's gross income. For full details: Loan Modification Guidelines

WAHT'S IN THE STIMULUS PACKAGE (February 2009): The stimulus package includes two important real estate related registrations. The increased conforming loan limit expired at the end of December and decreased to $625,000. Now, it is reset back to $729,750 through Dec. 31, 2009. The bill also increases the first-time home buyer credit from $7,500 to $8,000. The IRS announced that first-time homebuyers can claim the tax credit on their 2008 or 2009 returns. The credit amount is up to $8,000 for joint or $4,000 for single. Unlike last year's incentive, homeowners do not have to repay the credit if they live in the homes, which they purchase this year as their primary residence, for 36 months after the purchase date. The credit amount begins to phase out for taxpayers whose adjusted gross income is more than $150,000 for joint, or $75,000 for single. Homeowners who did not own any other main home during the last three years qualify as a first-time buyer.

SELLER NEED NOT REVEAL SSN TO BUYER UNDER FIRPTA: Effective immediately, sellers are no longer required to provide to their buyers the Seller's Affidavit of Nonforeign Status (C.A.R. Form AS), which includes the sellers' social security numbers, under the Foreign Investment in Real Property Tax Act (FIRPTA). Instead, as another option, no federal withholding is required if the seller furnishes the Seller's Affidavit with his or her social security number to escrow or other qualified substitute as defined, who in turn, furnishes a statement to the buyer stating, under penalty of perjury, that it has the Seller's Affidavit in its possession. A "qualified substitute" is a person responsible for closing the transaction, such as an escrow company, title company or the buyer's agent, but not the seller's agent. The federal withholding law is now similar to California's Franchise Tax Board (FTB) policy which allows the escrow officer to remove the seller's tax ID number from the buyer's copy of the California withholding tax statement, but not other copies.

FORECLOSURE RELIEF BILL BECOMES LAW: the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013. The full text of Senate Bill 1137 (Perata) is available at www.leginfo.ca.gov.

Disclosure for Private Transfer Fees: Effective January 1, 2008, a seller who must provide a Transfer Disclosure Statement must also provide, at the same time, a disclosure statement of private transfer fees if applicable. A transfer fee is defined as any fee that must be paid upon transfer of real property as imposed by deed, CC&Rs, or other documents, with certain exceptions (such as, but not limited to, transfer fees imposed by probate, trust, court order, or a governmental agency). The new disclosure statement must contain, among other things, a notice that payment is required, the amount of the fee, and the entity to which payment must be made.

Real Estate Appraisers: Starting October 5, 2007, a licensed appraiser's compensation cannot be dependent upon, or affected by, the value conclusion generated by an appraisal for a real property purchase, sale, transfer, financing, or development. Also starting October 5, 2007, anyone with an interest in a real estate transaction is prohibited from improperly influencing, or attempting to improperly influence, through coercion, extortion, or bribery, the appraisal process for a mortgage loan. An interested party may, however, ask the appraiser to do any of the following: - Consider additional, appropriate property information; - Provide substantiation or explanation for the appraiser's value conclusion; or - Correct errors in the appraisal report.

Escrow Cancellation and Postponement Fees: Beginning January 1, 2008, an escrow company licensed by the California Department of Corporations (DOC) may charge a fee for cancellation or postponement resulting from the acts or omissions of the parties to an escrow transaction. The fee must be in not less than 8-point bold type on the front page of the escrow instructions signed by the principals. A postponement fee can only be charged for a postponement of at least two months after the most recent closing date in the agreed-upon written instructions. This legislative bill also requires an escrow company licensed by the DOC, and any of its directors, stockholders, trustees, officers, agents, or employees, to comply with the federal Real Estate Settlement Procedures Act (RESPA).

Anti-Discrimination of Tenants' Immigration Status: Beginning January 1, 2008, a landlord or landlord's agent cannot inquire into the immigration or citizenship status of an existing or prospective tenant or occupant. A landlord may, however, request information or documentation necessary to determine or verify the financial qualifications of a prospective tenant, or to identify a prospective tenant or occupant. This law also prohibits any city or county from requiring a landlord or landlord's agent of residential rental property to inquire into, or take any action based upon, the immigration or citizenship status of an existing or prospective tenant or occupant.

Notice of Agenda for HOA Meeting: Under existing provisions of the Common Interest Development Open Meeting Act, a homeowner's association (HOA) must not only allow members to attend HOA meetings as specified, but also provide members with at least 4 days notice of the time and place of a meeting. Effective January 1, 2008, such notice must contain the agenda for the upcoming meeting. At the meeting, the board of directors cannot discuss or take action on any item not on the agenda. Exceptions apply as specified for brief statements, exigent circumstances, and continuances from last month's meeting. This law does not prohibit a resident, who is not a member of the board, from speaking at a meeting about issues not on the agenda.

Consumers can access free Credit Report: Beginning December 1, 2004, consumers in 13 Western states--including California--will be able to requests a free annual credit report by visiting www.annualcreditreport.com, calling 877.322.8228, or mailing a standardized form to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.) It is strongly recommended that consumers regularly check their credit standing.