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REALTORS® are concerned about the recent announcement by the U.S. Department of Housing and Urban Development (HUD) that the Federal Housing Administration (FHA) will begin insuring mortgages on certain properties with Property Assessed Clean Energy (PACE) loans. REALTOR® officials say there ought to be more disclosures regarding the risks associated with PACE loans.
A PACE loan allows a homeowner to borrow money to finance energy upgrades. The loan is repaid as a surcharge on the property tax. The PACE loan takes primary position to the mortgage. If the cost of repaying the PACE loan and any mortgages on the property exceeds the home’s purchase price, the seller will be forced to make up the difference.
California Association of REALTORS® President Pat “Ziggy” Zicarelli said in a statement, “Although C.A.R. supports voluntary consumer-friendly energy improvement programs for homeowners, C.A.R. believes that HUD was ill advised to approve placing PACE loans in a senior position to FHA first mortgages. Doing so places FHA homebuyers and taxpayers at risk and does homeowners a disservice by approving a loan product without consumer protections and which is aggressively sold to homeowners who rely on FHA financing for safe and affordable mortgages.”
REALTORS® say PACE loans are unfairly expensive and carry higher interest rates than the first mortgage or a home equity loan. “This loan product has no minimum disclosures, no underwriting of the borrower, no proof that the borrower has the ability to repay, no three-day right to rescind, no marketing limitations, no interest rate or fee caps, no kickback prohibitions; nothing,” added Zicarelli.
The Federal Housing Finance Agency (FHFA) and conservator of Fannie Mae and Freddie Mac prohibits PACE loans to be placed in a senior position to the mortgage. Both the FHA and Fannie Mae currently offer mortgage financing that allows borrowers to finance energy efficiency improvements at lower rates than PACE liens. HUD’s announcement, which is contrary to FHFA’s current policy will only confuse homeowners, homebuyers, REALTORS®, lenders, escrow, title and the housing market overall.
The National Association of REALTORS® also expressed its concern, especially with regard to delinquent foreclosed properties. “A foreclosed property with a PACE loan in the primary position will likely remain on the market longer than it should, further increasing uncertainty in mortgage markets and placing unnecessary pressure on homeowners,” NAR President Tom Salomone said in a statement.
Karen Trolan, president of the Silicon Valley Association of REALTORS®, said, “Now, more than ever, the California legislature must pass AB 2693 (Dababneh), a C.A.R.-sponsored bill that would ensure consumers are aware of the consequences of PACE loans and have the opportunity to rescind after a three-day cooling off period. Current disclosures given to home buyers do not explain the potential consequences of using PACE loans. AB 2693 will require Truth in Lending type disclosures to borrowers.”
After hearing from REALTORS® from around the country, including a significant percentage of the Silicon Valley Association of REALTORS® membership, the U.S. Senate passed H.R. 3700, the “Housing Opportunity Through Modernization Act of 2016.” This This legislation makes dramatic improvements to the Federal Housing Administration (FHA) rules around purchasing condominiums.
Changes include efforts to make FHA’s recertification process “substantially less burdensome” while lowering FHA’s current owner-occupancy requirement from 50 percent to 35 percent. The bill also requires FHA to replace existing policy on transfer fees with the less-restrictive model already in place at the Federal Housing Finance Agency.
Representatives from the National Association of REALTORS® (NAR) testified last year in support of the bill, which passed in the House of Representatives 427-0 in February. NAR initiated the Call for Action soon after and asked REALTORS® from across the country to contact their senators and urge them to pass the legislation.
Recent news reports about burglaries of vacant homes for sale in the Bay Area are troubling and a good reminder for REALTORS® and their clients to take precautions to prevent this crime from happening to them. Majority of recent burglaries have occurred in homes with “For Sale” signs in the front yard, or homes that are easily identifiable as being vacant. These burglars are taking large appliances, like refrigerators and stoves.
The Silicon Valley Association of REALTORS® shares the following safety tips with homeowners who plan to sell their home or leave their home vacant for an extended time:
- Make your home look occupied. Use automatic timers on lights, a TV and/or radio, and set them to go on and off at different times to make your house appear occupied.
- Install motion detectors on the exterior of your home and garage or shed.
- Keep curtains/blinds closed and lock all doors and windows. Use wooden stakes inside patio door/window frames to prevent them from being opened from the outside.
- Keep your property maintained, grass mowed, and leaves raked. Trim trees and bushes so they can’t conceal burglars.
- Inform the police and trusted neighbors that your house will be vacant for an extended time. Police may be able to patrol your neighborhood periodically and keep an eye on your property. Ask neighbors to keep an eye on the property and call 9-1-1 immediately if they see or hear any suspicious activity.
- Ask a trusted neighbor to pick up flyers or newspapers that may be left on the front porch or driveway. Consider having a neighbor park their vehicle in your driveway while you are gone.
- Install an alarm system and/or security cameras.
- Consider renting your home or hiring a house sitter so the house won’t be vacant.
- Know the risks of putting “For Rent” or “For Sale” signs in front of your property.
- Never leave a spare house key under doormats, flowerpots, or other hiding places.
- Don’t place posts on social media informing others that your house is for sale or that you will be away on vacation.
Some sectors of Silicon Valley may be prospering, but there is another side to the valley, that of individuals and families struggling to make ends meet. Their number is rising, according to non-profit agency officials, and striking is these days is more among the needy are younger clients, many of them students.
At last week’s Silicon Valley Association of REALTORS® (SILVAR) Cupertino/Sunnyvale District tour meeting, Marie Bernard, Sunnyvale Community Services (SCS) executive director, said in response to the rising need, SCS has deepened its programs and will be extending services to those in need in the Alviso area.
SCS helps over 7,000 residents in the Sunnyvale area with food, in-kind assistance and financial aid. Bernard said SCS is very focused on the young and seniors – 39 percent of SCS clients are under the age of 18 and 14 percent are seniors.
Every Monday, the agency distributes 30 to 40 pounds of free fresh produce to an estimated 900 families. Clients are able to pick up for additional bags of nutritious food to help stretch their budgets a little further. SCS also provides children school meals throughout the year, including the summer months. In addition to all these, the SCS has a food pantry program, where families can shop once a month for meats, dairy items, canned food, household supplies, paper products, and more.
The nonprofit provides emergency financial assistance to low-income Sunnyvale residents who have been hit with an unexpected expense, like a major car repair, medical bills and other emergencies that can throw them off their budget.
“We help those who are one bill away from being homeless,” said Bernard.
Bernard explained by the time residents come to the SCS for help, they are already strapped with loans. Many are victims of payday lenders who charge interest rates as high as 459 percent on an annual basis, and owe these lenders thousands of dollars.
Kohinoor Chakravarty, director of Development and Communications for West Valley Community Services (WVCS), painted the same sad picture of the plight of the needy when she presented an overview of the agency’s services at the SILVAR district REALTORS® tour meeting last May.
Like SCS, WVCS is a non-profit, community-based agency that provides direct assistance and referral services to needy individuals and families. Clients served by the agency reside in Cupertino, Los Gatos, Monte Sereno, Saratoga, West San Jose and the unincorporated mountain regions.
Chakravarty noted the agency is seeing many students who are homeless and hungry. There are 200 students from De Anza College who are homeless. Their families cannot afford the rising rents in the area and have moved away. The students have chosen to stay so they can finish their studies. Since they cannot afford to rent an apartment, some couch surf; others live in their cars.
“It’s a sad situation,” said Chakravarty. In response to the rising needs of homeless and hungry students, she announced WVCS will be establishing food pantries at the De Anza and West Valley community colleges.
Currently 1,614 individuals are served through the WVCS food pantry and 770,515 pounds of food are distributed to clients. There are 231 individuals enrolled in food stamps, free/reduced lunches and health insurance.
WVCS also provides $100,615 in emergency financial assistance to 69 households. Among the agency’s special programs are its holiday food baskets, which are distributed to 212 needy families; holiday shopping spree serving 593 families; and its Back-to-School event, which helps 120 children shop for clothes for school.
In addition to the opening of the food pantries at the community colleges, the WVCS executive director announced the agency will be starting a mobile care service. With a newly acquired vehicle, the agency will be dropping off basic food and health services to its beneficiaries, since many clients travel two hours to receive the services.
The Silicon Valley Association of REALTORS®’ (SILVAR) fifth Certified International Property Specialist (CIPS) Institute took place this week with 17 students registered. The students, many of whom are SILVAR members, hail from the San Francisco Bay Area. One traveled all the way from Canada. Many are well-traveled and come from different cultural backgrounds. All were eager to learn more about the international real estate market and how to grow their global business.
The courses were once again taught by 2012 and 2009 National Association of REALTORS® International Instructor of the Year David Wyant, assisted by his wife, Patsy. The Wyants travel around the country and the world teaching the CIPS courses. This is their fifth trip to Cupertino. Each time they come, they remark about Silicon Valley’s growth.
Wyant also noted, “Silicon Valley REALTORS® are among the most intelligent in the nation.”
The CIPS Institute provides training in international business issues, including currency conversion, cultural awareness, legal and tax requirements, ownership and transaction principles of international real estate, and specifics about the real estate markets in Europe, the Americas, and Asia. The week-long CIPS Institute includes two required core courses and three elective courses. Students must pass a multiple-choice exam at the end of each course.
Upon completing the required five courses and fulfilling other necessary requirements, graduates of this year’s CIPS Institute can receive their CIPS designation and have the opportunity to be recognized at the 2016 NAR REALTORS® Conference and Expo, which will be held in Orlando, Fl. on November 4-7.
Thank you to this year’s CIPS Sponsors of the Day, who provided breakfast and lunch each day. They are Amy Ku, VP Mortgage Sales Manager for Northern California with HSBC Bank; Janet Case, CEO of Proxio; Anita Rodal, international liaison with AFEX (Associated Foreign Exchange) and president of SBPI Services, Inc.; Darrell Monda, owner of TourFactory Bay Area; and Larry Tringali, owner of Property Inspection Service.
Silicon Valley Association of REALTORS® says ... 