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The National Association of REALTORS® and SILVAR applaud the Federal Housing Finance Agency’s (FHFA) final rule limiting Fannie Mae, Freddie Mac and the Federal Home Loan Banks from dealing with mortgages on properties encumbered by certain types of private transfer fee covenants and in certain related securities. Transfer fees are contractual arrangements where an owner pays a fixed amount or a percentage of the sales price when transferring the property.
NAR fully supports FHFA’s decision to ban private transfer fees, which it believes increase the cost of home ownership, provide no benefit to home buyers, and do little more than generate revenue for developers or investors. NAR has long been vocal in its opposition to private transfer fees. There is virtually no oversight on where or how the fee proceeds can be spent, on how long a private transfer fee may be imposed. It also often places an inappropriate delay on the transfer of property.
The final rule excludes private transfer fees paid to homeowner associations, condominiums, cooperatives, and certain tax-exempt organizations that use private transfer fee proceeds to benefit the property. Fees that do not directly benefit the property are subject to the rule, and would disqualify mortgages on the property from being sold to Fannie Mae or Freddie Mac, or used as collateral for Federal Home Loan Bank advances. With limited exceptions, the rule applies only prospectively to private transfer fee covenants created on or after the date of publication of the proposed rule on February 8, 2011. Covenants created before that date, as well as covenants created after that date pursuant to certain agreements entered into before that date, would be exempted from the rule.
Mark Burns and Minh Ngo, executive director of CEEF, show members the sign that can be placed on the yard of property they sell that shows they support the schools when they participate in the sign rider program.
The Cupertino Educational Endowment Foundation (CEEF) thanks SILVAR and members of the Cupertino/Sunnyvale District for their longtime support for the Cupertino Union School District (CUSD). CEEF supports public education for students by working in partnership with CUSD, parents, and the community to raise funds for educational programs beyond what is possible through federal and state funding.
At yesterday’s district tour meeting, CEEF executive director Minh Ngo thanked members for supporting “An Evening of Aloha,” a gala held recently to honor CUSD’s Teachers of the Year. The gala raised $75,000 for the schools. As a result of the community’s generosity, each of the district’s 25 school sites will be granted $3,000 for music, arts, and technology programs.
Due to cuts in state and federal funding, the past few years have been rough for the schools, said Ngo. Although a parcel tax passed last year, that money cannot fund badly needed building and ground improvements at the schools. Ngo said CEEF is working very closely with CUSD and gearing up for a bond measure campaign this summer. Details about the measure are still being finalized.
Ngo said even if CUSD is the second lowest funded school district in the state, the support around the schools is unique. “There is an entire culture of support around education,” said Ngo. “Almost every individual has high expectations and rallies around the students, which in turn makes them outperform because of the support they receive.”
REALTORS® support the schools by participating in the Cupertino/Sunnyvale District’s sign rider program. REALTORS® can donate $250 of their commission for every property they sell in the school district. Signs that say they support the schools are then placed on the yards of homes they sell. REALTORS® also support sign rider programs for the Sunnyvale and Santa Clara school districts.
Mark Burns said supporting the schools is a way to give back to the community, since the quality of the school district is important for REALTORS® selling property. “Helping the schools helps all of us,” said Burns.
Senator Debbie Stabenow (D-MI) has introduced S. 2144, a bill that would make the mortgage debt forgiveness rules permanent. The rules that currently provide relief for homeowners on short sales, foreclosures or loan modifications expire December 31, 2012. This relief is essential to affected homeowners so they will not have to pay tax on the forgiven debt.
A companion bill in the House will be introduced soon. See additional information here.
The California Association of REALTORS® is OPPOSING SB 1220 (DeSaulnier), which imposes a transfer tax to generate funds for affordable housing.
C.A.R. is opposing SB 1220 because it will add to the cost of buying a home at a time when the housing market is struggling to recover. While C.A.R. is an aggressive advocate for affordable housing, the association believes it sets bad precedent to fund affordable housing by making housing less affordable.
Stay tuned for more information and a potential Red Alert!
On Thursday, SILVAR President Suzanne Yost updated members of the Cupertino/Sunnyvale District on the state of the Association. Yost announced the Association is financially secure (SILVAR hasn’t raised dues since 2002) and stressed that SILVAR highly values its membership.
SILVAR offers many valuable member benefits, including PRDS Forms, a complete line of paper and online forms for residential purchase and sales transactions. PRDS Forms were developed specifically for Silicon Valley’s REALTORS® by Silicon Valley REALTORS® who saw the need. These forms are highly acclaimed and available online free of charge as a SILVAR member benefit.
Yost assured members their dues dollars are very well spent, especially on government affairs. She highly credited SILVAR Government Affairs Director Adam Montgomery for his work in successfully warding off many point of sale and transfer tax proposals that could have hurt homeowners had they passed. A recent example is proposed regulations that would have included sewer lateral inspection and compliance mandates at the transfer of property for homeowners in southern San Mateo County. She added since it is a large association with a strong government affairs staff and many accomplishments, “SILVAR has a footprint” at the local, state and national REALTOR® level.
Yost noted SILVAR’s District Council system is an especially good model that emerged upon the merger of the five boards in 1995. This model provides another level of opportunities for leadership. Having more people “with ears close to the ground” helps ensure that the Association meets the needs of agents working in all five districts.
Members are very lucky to be doing business in Silicon Valley, said Yost. Recent speaking engagements before the New York State Association of REALTORS® and the Michigan State Association of REALTORS® brought home this fact, she said. While REALTORS® everywhere have had to face tough markets during the past three years, Silicon Valley’s housing market is improving due to its location and strong tech and other innovative industries.
SILVAR’s president encourages members to take part in the Association. Join your District Council, get involved in activities at the District and Association level, volunteer for RSVP (REALTOR® Service Volunteer Program) and help others in your community, Yost urged.
“We always want to develop new leaders and give you the opportunity to become leaders,” she stressed.
Yost is excited about a couple of new Association components this year. There is SILVAR’s Young Professional Network (YPN), which welcomes all members – the young, as well as the seasoned professionals. SILVAR is also developing a Global Business Council, an initiative which will have a strong education component to help REALTORS® learn how to effectively work with international buyers. She added that SILVAR highly values its Affiliate members and a group is currently working on written policies and guidelines for Affiliates.
Last, but not least, Yost urged members to continue to stay positive. “The numbers are getting better,” said Yost. “2012 is the year we’ll come out of this. 2012 will be better.”
The Silicon Valley REALTORS® Charitable Foundation presented a $1,500 grant to the Edgewood Center for Children and Families at Monday’s Menlo Park/Atherton District meeting. John Tripp, 2012 president of the Charitable Foundation, presented the check to Jamilla McCallum, kinship program director of the San Carlos center.
Edgewood Center for Children and Families helps children and families take back their future by working with them to overcome severe challenges like abuse, neglect, mental illness and crisis. The center is the oldest children’s charity in the western U.S., and began as a refuge for Gold Rush orphans. Edgewood now serves more than 5,000 children and families in the Bay Area each year, offering a broad range of behavioral health, family support, and educational services.
McCallum explained the center’s kinship program helps relatives of those who need help, she explained. Family members often step up to fill the gap when a crisis situation takes parents from a child. These “kinship caregivers” often have special needs themselves, linked to age, poverty, poor health, social isolation, and inadequate access to information and services. The Edgewood Kinship Program addresses the unique needs of each caregiver and child by providing referrals to basic services and a break from daily stresses.
Tripp thanked SILVAR members for their support of the Charitable Foundation. He urged members to continue giving to the Foundation. The Charitable Foundation grants support three main causes: families, youth and housing. He noted these grants would not be possible without the help and support from SILVAR members.
Wednesday, May 2, is Legislative Day. This is the day REALTORS® from all over California will meet with their elected officials in Sacramento and discuss critical legislation that can affect REALTORS®, homeowners and private property rights. Members of the Silicon Valley Association of REALTORS® will be participating in this annual one-day event in Sacramento.
Once members arrive in Sacramento, they will receive a special briefing from California Association of REALTORS® lobbyists, REALTOR® leadership and honorable guests. A luncheon will follow the briefing. California Governor Jerry Brown has been invited to speak at the event.
After lunch, SILVAR members will have meetings with all of the legislators in Silicon Valley, including Senators Elaine Alquist, Sam Blakeslee and Joe Simitian, and Assembly members Jim Beall, Paul Fong, and Rich Gordon. At these meetings, our REALTORS® will have the opportunity to discuss important real estate issues, such as private property rights, legal reforms and housing opportunity policies.
SILVAR REALTORS® who plan to attend Legislative Day should register for the event by calling SILVAR at (408) 200-0100, or sign up online at ims.silvar.org no later than Monday, April 23. See flyer for cost and more details.
The proposed fiscal year 2013 budget for the U.S. Department of Housing and Urban Development (HUD) includes information on upcoming premium increases for the Federal Housing Administration (FHA). Due to a provision in the Temporary Payroll Tax bill from late last year, FHA is required to implement a 10 basis point increase to annual premiums for all new FHA loans. In addition, FHA intends to increase premiums on “jumbo” loans (those over $625,500) by 25 basis points (for a total of 35 basis points on those loans).
In order to protect the financial stability of the program, FHA also says it may implement additional premium increases. The budget likewise states that FHA is reducing permitted seller concessions from 6 percent to 3 percent or $6,000, whichever is higher. A proposed rule regarding this is expected later in the month.
The budget revealed that for FY2012 (the current budget year), FHA’s re-estimates of revenues showed that FHA would actually need (for the first time in its history) a subsidy from the federal government of $688 million. Although it now will not request that money because it received more than $1 billion from the settlement with the banks over robo-signing, there will be intense pressure from Congress to re-evaluate FHA and its fiscal position.
For the last several years, FHA has had sufficient reserves to cover claims and losses, but its excess reserves have fallen far below the mandated 2 percent level. It now appears that for the current year, FHA’s losses exceeded its profits, requiring this additional money. The good news is the budget request anticipates the FHA fund will return to full solvency and mandated reserve levels by 2015.
The budget also included premium increases for FHA multifamily loans (221 (d)(4)) by 20 basis points. This won’t apply to loans with Section 8, low-income housing tax credits, or risk-sharing.
Last, the budget cuts contract renewal funding for Section 8 project-based projects. As has been done in the past, FHA will only partially fund renewals of these contracts, and owners expect there to be significant delays in Housing Assistance Payments (HAPs). These funding cuts will need to be approved by Congress.
The fiscal 2013 budget proposal President Barack Obama released this week includes proposals to trim the mortgage interest deduction (MID) and other itemized deductions for wealthier households. As in the previous three years, the proposal is expected to attract little support in Congress.
The proposed budget would reduce the value of itemized deductions to 28 percent for married couples with incomes over $250,000 and individuals with income over $200,000. Currently, depending on the tax bracket these households are in, the value of their deductions could be as high as 33 or 35 percent.
The proposal has never attracted sufficient support from either party, and National Association of REALTORS® President Moe Veissi in a statement yesterday said NAR would strongly oppose this or any proposal that would limit MID and other itemized deductions.
“The mortgage interest deduction is vital to the stability of the American housing market and economy,” Veissi said. “We urge the president and Congress to do no harm” to today’s fragile economic recovery. “The nation’s homeowners already pay 80 to 90 percent of U.S. federal income taxes. Raising taxes on them, now or in the future, could critically erode home values at all price levels.”
The budget request also includes a previously rejected proposal to tax the carried interest of general partners in investment partnerships, including real estate partnerships, as ordinary income rather than as capital gains, which is taxed at 15 percent. If taxed as ordinary income, it could be taxed at a higher rate, depending on the taxpayer’s tax bracket.
Analysts have said that this provision is mainly aimed at general partners of hedge funds, but general partners in real estate partnerships could get caught in it unintentionally. NAR in the past has opposed the tax change.
Overall, the budget request, which is just the opening step in a long process in which Congress will develop a budget for passage, envisions fiscal year 2013 spending of about $3.8 trillion. Of that amount, several hundred billion would be new spending for infrastructure, research and development, and other priorities of the administration. The budget envisions cutting about half a trillion dollars from the defense budget, and another roughly half a trillion dollars through tax law changes, including the NAR-opposed curbs to the value of MID for upper-income households. More savings would come from allowing tax cuts enacted during President George W. Bush’s administration to expire for all households, except those earning less than $250,000.
In all, the administration is saying it would cut the deficit by about $3 trillion over 10 years, plus another trillion dollars from legislation Congress passed in August of last year as part of the budget deal to raise the debt ceiling cap.
SILVAR past president and PRDS President Mark Burns, Charitable Foundation trustee Carolyn Miller and WVCS executive director Naomi Nakano-Matsumoto display the big check $2,000 to West Valley Community Services (WVCS).
This week, the Silicon Valley REALTORS® Charitable Foundation presented $2,000 to West Valley Community Services, a private non-profit, community-based agency that provides direct assistance and referral services to over 6,000 individuals and families annually in the communities of Cupertino, Los Gatos, Monte Sereno, Saratoga, West San Jose and the unincorporated mountain regions.
Receiving the check from Charitable Foundation Trustee Carolyn Miller, Naiomi Nakano-Matsumoto, executive director of West Valley Community Services (WVCS), thanked SILVAR members. She said the 2011 Homeless Point in Time survey has indicated an estimated 7,042 individuals are experiencing homelessness in Santa Clara County each night. While there are some signs the economy is improving, it doesn’t appear that way for some individuals and families, according to Nakano-Matsumoto.
Nakano-Matsumoto said the Charitable Foundation grant will support the WVCS Comprehensive Emergency Assistance Program (CEAP), a program which provides one-time financial assistance to prevent homelessness, hunger and utility disconnection for individuals and families experiencing unexpected financial setbacks.
WVCS also has the Haven to Home program, which provides supportive services and stable housing to homeless individuals and families; 30 homeless persons have been moved to permanent housing. The WVCS Transitional Housing Program houses 12 homeless men and six single mothers with a child. The program provides them with skills so they can secure permanent housing, find and maintain employment, and enhance income opportunity. WVCS likewise owns and operates Vista Village Apartments Complex, a permanent housing for low-income households.
Nakano-Matsumoto said the agency is in great need of volunteers to pick up, carry, as well as distribute food to the homeless. She added that they are short on food items. She said Second Harvest Food Bank, one of the groups with whom WVCS partners, is low on food items, so the agency has had to seek other partnerships to support its food program.
“It is such a rewarding feeling for all of our District members to be able to share with others in and around our local community. Naomi always fills us in as to where the money will be going. . . .always to great causes. We are so happy we’re able to send consistent contributions to this worthy cause,” Miller, who also serves as SILVAR’s 2012 president-elect.
Silicon Valley Association of REALTORS® says ... 