You are currently browsing the category archive for the ‘Real Estate’ category.
The Federal Housing Administration (FHA) is raising its mortgage insurance premiums (MIP) and changing MIP cancellation policies. These changes may impact first-time home buyers, but they are needed to mitigate risk and strengthen the solvency of the mortgage insurance fund.
FHA faces financial problems stemming from losses on reverse mortgages and forward loans sustained during the housing crisis and low home values, causing a shortfall in its reserves. There is talk that FHA may need a government bailout of $943 million in tax payer funds.
Traditionally, FHA loans should make up between 10 and 15 percent of the market. In 2012, due to the economic downturn and absence of a robust private lending market, FHA insured over 25 percent of all homes purchased in that year. The National Association of REALTORS® (NAR) says had FHA not stepped in to fill the market void, many families would have been unable to purchase homes, housing values could have dropped an additional 25 percent, and the country would be much further from a recovery.
Facing multibillion dollar losses, FHA has taken a number of steps to shore up funds. Beginning April 1, 2013, FHA’s annual mortgage insurance premium for all new loans that are less than or equal to $625,500 and with a loan-to-value (LTV) ratio greater than 95 percent will be 1.35 percent of the loan amount. The loan to value ratio is calculated as the percentage of the value of the house that is paid for by the loan.
FHA will also require most borrowers to continue paying annual premiums for the life of their mortgage loan. Effective June 3, 2013 FHA will require borrowers who take out a new FHA loan with an LTV ratio of greater than 90 percent to pay the MIP until the end of the mortgage loan term or for the first 30 years, whichever comes first. With an LTV equal to or less than 90 percent, the MIP will be assessed until the end of the mortgage term, or for the first 11 years, whichever occurs first. Previously, once the loan was paid down to 78 percent of the original value of the house or after five years, whichever came later, the borrower would no longer be required to pay the MIP.
FHA insured loan limits are currently calculated at 125 percent of the local area median home price, up to a maximum of $729,750 in highest cost markets like Silicon Valley. The limits are temporary and set to expire at the end of 2013 to 115 percent of local area median home prices with a cap of $625,500. There are discussions in Washington of lowering this amount further, however nothing has been established yet.
In Silicon Valley, where home prices are some of the highest in the nation, many buyers are borrowing at the top of the FHA limits. The MIP can amount to hundreds of dollars each month, in addition to their regular mortgage payment. For instance, buyers with a $600,000 FHA-backed mortgage who put 8 percent down will pay at the 1.35 percent rate, which comes out to well over $600 per month in mortgage premiums. Whereas previously, this additional payment would have been eliminated once the LTV ratio hit 78 percent or five years, whichever was later, now this payment will be assessed for the life of the loan.
FHA also will require lenders to manually underwrite loans for which borrowers have a credit score below 620 and a total debt-to-income (DTI) ratio greater than 43 percent. Also announced, but not yet approved, is a proposal by FHA to increase the minimum down payment requirement for mortgages with original principal balances above $625,500 from 3.5 to 5 percent.
A higher down payment requirement could impact millions of first-time home buyers. Many first-time home buyers rely on FHA-insured loans because they can require a down payment as low as 3.5 percent. In 2012, more than four out of every 10 first-time buyers purchased their homes with an FHA-insured mortgage. It remains to be seen whether these numbers will go down with the new higher rates and requirement that mortgage insurance be paid for the life of the loan.
NAR supports legislation that strengthens FHA’s fiscal solvency and that balances the need to protect the fund from tax payer risk with the need to continue providing access to safe and affordable mortgage financing. While these changes may be necessary in the short-term to help stabilize the FHA fund, NAR’s position is that higher fees make it difficult for first-time buyers to purchase a home, as well as repeat buyers who are relocating from less expensive to higher cost areas. NAR has encouraged FHA to reconsider the need for these changes when the fund returns to full capitalization.
April 2013 marks the 45th anniversary of the 1968 landmark Fair Housing Act, which strives to to ensure equal housing opportunity for all. Each year REALTORS® join the U.S. Department of Housing and Urban Development (HUD), the California Department of Fair Employment and Housing, and rest of the nation in recognizing April as Fair Housing Month.
REALTORS® play a vital role in ensuring fair housing for all and strive to make homeownership accessible to everyone. The National Association of REALTORS® (NAR) works to help create an environment where everyone can choose where they want to live and not be discriminated against as they seek to achieve the American dream of homeownership.
Carolyn Miller, president of the Silicon Valley Association of REALTORS®, whose members are also members of NAR, says REALTORS® abide by a Code of Ethics that states REALTORS® shall not deny equal professional services and shall not be a party to any plan or agreement to discriminate against any person for reasons of race, color, religion, sex, handicap, familial status, national origin, or sexual orientation.
“REALTORS® want all buyers and sellers to enjoy the benefits of a housing market free from discrimination,” says Miller.
On April 26, SILVAR is promoting Fair Housing Month by offering At Home With Diversity®, a course that teaches REALTORS® and other business professionals how to work effectively within a multicultural market. The full-day course addresses topics like diversity, fair housing and business planning development. For more information about At Home With Diversity®, call SILVAR at (408) 200-0100.
“Knowing how to work effectively with diverse populations can help you build business success in today’s multicultural real estate market,” adds Miller.
Under the law, a home seller or landlord cannot discriminate in the sale, rental and financing of property on the basis of race, color, religion, sex, handicap, familial status, or national origin. They cannot instruct their real estate agent to convey any limitations in a sale or rental.
Buyers or renters have the right to expect housing will be available to them without discrimination, including:
• housing in their price range made available without discrimination.
• equal professional service.
• the opportunity to consider a broad range of housing choices.
• no discriminatory limitations on communities or locations of housing.
• no discrimination in the financing, appraising, or insuring of housing.
• reasonable accommodations in rules, practices and procedures for persons with disabilities.
• non-discriminatory terms and conditions for the sale, rental, financing, or insuring of a dwelling.
• freedom from harassment or intimidation for exercising their fair housing rights.
Buyers or renters who believe they have experienced discrimination may file a complaint with the California Department of Fair Employment and Housing within one year of the alleged discrimination.
HUD recently launched a new mobile application for iPhone and iPad that provides the public information about their housing rights and responsibilities. The app also provides information about the fair housing complaint process, and allows the public to access HUD’s toll-free discrimination hotline and link to HUD’s fair housing website: http://www.hud.gov/fairhousing
A Notice of Credit-Based Denial to Rent (RNDR) is a new form that has been added to the PRDS library and may be accessed online by SILVAR and SAMCAR (San Mateo County Association of REALTORS®) REALTOR® members at http://www.prdsforms.com. The RNDR is a form needed in the event a potential tenant is turned down due to an unfavorable credit rating.
In addition to Form RNDR 5-09 Notice of Credit-Based Denial to Rent, the revised PRDS Supplemental Seller’s Checklist (SSC) is now also available online for SILVAR and SAMCAR REALTOR® members.
PRDS Forms is an extensive line of paper and online forms for residential purchase and sales transactions. These forms are available online free of charge as a member benefit to all SILVAR and SAMCAR REALTOR® members. Created by REALTORS® for REALTORS®, these forms are highly acclaimed, and have been heavily used for over 25 years by listing agents from leading offices in Silicon Valley and the San Francisco Peninsula.
To access these and other PRDS forms, visit http://www.prdsforms.com.
California Governor Jerry Brown will speak to REALTORS® at the California Association of REALTORS® Morning Briefing on Legislative Day. SILVAR members are encouraged to participate in this important event, which will be held on Wednesday, May 1. The deadline to sign up is Monday, April 22.
Legislative Day is the day REALTORS® from all over California travel to Sacramento and meet with their elected officials to discuss critical legislation that can affect REALTORS®, homeowners and private property rights. REALTORS® make up the largest group that travel to the nation’s capital to speak with their legislators.
When members arrive in Sacramento, they will receive a special briefing at the Sacramento Convention Center from California Association of REALTORS® lobbyists, REALTOR® leadership, Governor Brown, and other special guests. A joint luncheon with members of SILVAR, the Santa Clara County Association of REALTORS® (SCCAOR) and San Mateo County Association of REALTORS® (SAMCAR) will follow the briefing.
After lunch, SILVAR REALTORS® will attend meetings with all of the legislators in Silicon Valley, including Senators Jim Beall and Jerry Hill, and Assembly Members Paul Fong and Rich Gordon. At these meetings, REALTORS® will have the opportunity to discuss important real estate issues, such as private property rights, legal reforms and housing opportunity policies.
Personally meeting our legislators and discussing real estate-related issues that may adversely affect our clients – buyers, sellers, homeowners and private property rights – makes a difference! For more information about Legislative Day, contact SILVAR Government Affairs Director Jessica Epstein at (408) 200-0100.
In an effort to provide California home buyers with up-to-date information about available home buyer assistance programs, the California Association of REALTORS® (C.A.R.) has launched California Mortgage Resource Directory (http://mortgage.car.org), an online search tool that identifies current mortgage programs in communities throughout the state.
“Millions of dollars go unused every year because home buyers are unaware of the various buyer assistance programs available to them,” said C.A.R. President Don Faught. “With California Mortgage Resource Directory, REALTORS® and buyers can quickly connect with any number of home buyer resources without having to search within each municipality individually.”
California Mortgage Resource Directory helps bridge the down payment gap for homebuyers and connects them with resources that they may not have otherwise known existed. Buyers can search by city or address for public- and private-funded assistance programs including FHA/VA, HUD, affordable fixed-rate mortgages, rehab loans, and more.
“The California Mortgage Resource Directory is a good resource if you are thinking of buying a home and are assessing your finances. Many buyers are unaware of down payment and other home buyer assistance programs that are out there. This would be a valuable tool for both REALTORS® and their clients,” said Carolyn Miller, president of the Silicon Valley Association of REALTORS®.
“Low mortgage interest rates help make homes affordable for buyers, but many can’t come up with the down payment needed to qualify for a loan. The more money a buyer can put on a down payment, the lower the amount of the loan, so the California Mortgage Resource Directory can prove valuable to home buyers looking for down payment assistance,” added Miller.
The new directory is powered by Down Payment Resource, the nation’s only web-based aggregator of home buyer programs. The tool was developed by Workforce Resource (www.workforce-resource.com) and is made available through Multiple Listing Services, REALTORS® associations, and nonprofits.
At its February 26 meeting, the San Mateo County Board of Supervisors voted to postpone a discussion on eliminating Propositions 90 and 110 in San Mateo County.
For over 20 years Propositions 90 and 110 have created a pathway for senior citizens (those over 55) and the disabled to move into San Mateo County. The current law states that a senior citizen or disabled individual can transfer their base tax rate from another county when they buy a home in San Mateo County, as long as the new home is of an equal or lesser value.
Without notice to SILVAR or neighboring San Mateo County Association of REALTORS® (SAMCAR), the San Mateo County Manager placed the proposal to eliminate propositions 90 and 110 on the supervisors’ agenda for the February 26 meeting. Though only made public on Thursday, February 21, SILVAR was able to mobilize REALTORS® to quickly respond by emailing the San Mateo County supervisors and letting them know their opposition to the proposal to repeal the propositions. SILVAR’s Government Affairs team also reached out to each member of the Board of Supervisors to express its concern.
SILVAR would like to thank all who responded to the Call for Action email. Over 70 REALTORS® who live in San Mateo County sent emails to the supervisors. Additionally, several REALTORS® from SILVAR and SAMCAR attended the Tuesday Board of Supervisors meeting.
Although the supervisors listened and took the item off the agenda at their Tuesday meeting, members need to remain vigilant because the issue has not gone away. It is highly likely that the item will be placed back on their agenda in the near future.
SILVAR is seeking individuals who can testify about the important role Propositions 90 or 110 played for a client in buying a home in San Mateo County. If you have a story, please contact SILVAR Government Affairs Director Jessica Epstein at (408) 200-0108 or email jepstein@silvar.org.
On Tuesday, the San Mateo County Board of Supervisors will consider eliminating Proposition 90, an important tool which for the past 20 years has made it possible for senior citizens (as defined as over age 55 in the law) and persons with disabilities to relocate and transfer their tax basis to San Mateo County, to move closer to families, jobs and vital services. Revoking Prop. 90 would negatively impact the ability of seniors and persons with disabilities to afford housing and move into the county.
Please join SILVAR, REALTORS® and homeowners in opposing this proposal by sending the message below to the Board of Supervisors before it meets on Tuesday, February 26.
The San Mateo County Board of Supervisors will consider repealing a property tax benefit for seniors and persons with disabilities wishing to relocate to San Mateo County at their upcoming meeting on Tuesday, February 26.
Proposition 90 provides anyone over the age of 55 with relief from Proposition 13 by allowing them to move from one county to another without undergoing a change in their basic property taxes. Proposition 90 stems from Propositions 60 and 110. Under these propositions, if a seller or spouse is over age 55 or if a seller of any age is disabled when their original residence is sold, the seller may transfer the base year value of their home to a replacement primary residence of equal or lesser value within the same county, provided certain conditions are fulfilled. Proposition 90 extended this benefit to seniors and the disabled who move to counties that adopted Proposition 90 rules.
Since Proposition 90 is a “local-option” law, each county has the option of participating. If a county has adopted a Proposition 90 ordinance, it accepts transfers of property tax base assessments from other California counties. If the county that the homeowner is moving from does not have a Proposition 90 ordinance, this does not affect the eligibility of the homeowner. At present, there are only eight counties that have adopted the Prop. 90 ordinance – Santa Clara, Alameda, El Dorado, Los Angeles, Orange, San Mateo, San Diego and Ventura.
In 2011, SILVAR REALTORS® successfully fought an attempt by Santa Clara County Assessor Larry Stone to eliminate the tax benefit for seniors and the disabled in Santa Clara County. Stone wanted the supervisors to eliminate Proposition 90 as a way to increase revenue, but SILVAR REALTORS® and senior residents objected to the proposal. More than 50 members from the SILVAR and the Santa Clara County Association of REALTORS® (SCCAOR) attended the county board of supervisors in June 2011 to oppose the elimination of Prop 90. Several recounted personal experiences with seniors and disabled clients who benefited from the measure, and who otherwise would not have been able to move to the county had the proposition not been in place.
In the end, the Santa Clara County supervisors listened and decided to continue to opt in on Proposition 90. “There is value to it at the personal level. We supported it then, we should support it now,” they said. The supervisors also noted, “It doesn’t feel right to take this away from the people who could use it. In the big picture, it just doesn’t feel right.”
San Mateo County’s seniors and disabled residents will be facing this dilemma when the ordinance is considered at the board of supervisors meeting next week. A majority vote by the supervisors is needed to repeal the proposition.
The Silicon Valley Association of REALTORS® (SILVAR) hailed a rebuttal by the California Association of REALTORS® (C.A.R.) to an opinion editorial piece advocating the elimination of the mortgage interest deduction (MID).
“We are happy that California Association of REALTORS® President Don Faught was able to put the facts out there about the importance of the mortgage interest deduction to all homeowners, especially low- and middle-class families,” said SILVAR President Carolyn Miller.
Doyle McManus, a columnist with the Los Angeles Times, recently wrote an opinion editorial advocating the elimination of the MID. C.A.R. President Don Faught submitted a letter to the editor refuting the op-ed piece, questioning supporting a tax measure that would put a burden on lower- and middle-class families that can least afford it.
In his letter, Faught explained if the MID is eliminated, it would cost the average California taxpayer $3,940 annually, a substantial amount for those who need it the most. In California, 59 percent of taxpayers who claimed this deduction in 2010 earned less than $100,000 a year. The amount is considered not high income in California because home prices are among the highest in the nation.
“Eliminating the deduction would mean fewer home sales, not to mention a drop in other purchases that typically accompany a home sale such as furniture and other retail purchases. Already struggling local governments would see tax revenues fall, and since housing is widely regarded as a key economic driver, our country could be driven back to recession,” wrote Faught.
The MID allows an individual to deduct mortgage interest paid on mortgage debt of up to $1 million. The ability to deduct the interest paid on a mortgage can translate into significant savings at tax time.
Faught referred to a recent C.A.R. survey that found nearly eight in 10 home buyers said the mortgage interest and property tax deductions were “extremely important” in their decision to purchase a home. A Pew Research Center study last year also found 80 percent of Americans believe buying a home is the best long-term investment they can make.
“After all, renting is not the American Dream; homeownership is. For many, the mortgage interest deduction can mean the difference between attaining that dream or not,” Faught’s letter concluded.
Miller said REALTORS® will continue to defend the MID. “The mortgage interest deduction is not a loophole. It is a fundamental building block of equity for homeowners. For aspiring homeowners who don’t have hundreds of thousands of dollars in savings to buy a home outright, tax benefits like the mortgage interest deduction help them begin building their future through homeownership,” said Miller.
Jessica Epstein
Epstein is a graduate of the University of San Francisco School of Law and Barnard College, Columbia University. She is a former associate at Siegel & Yee and recently worked for Ground Floor Public Affairs, where she was involved in various political projects for the Bay Area, including the development and implementation of fundraising campaigns, political outreach and real estate development. She worked on similar projects on the East Coast, as well.
“We are very excited to have Jessica on board at SILVAR. With her experience and skills, she will be a valuable advocate for homeownership, private property rights and fair public policy for our members and Silicon Valley homeowners,” said SILVAR Executive Officer Paul Cardus.
The Silicon Valley Association of REALTORS® is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term “REALTOR®” is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Silicon Valley Association of REALTORS® says ... 