LEAD RENOVATION RULE EFFECTIVE 4/22/10

Starting today, renovations that disturb lead-based paint in older residential dwellings and child-occupied facilities must generally comply with the Lead-Based Paint Renovation Rule of the Environmental Protection Agency (EPA). REALTORS® acting as listing agents or property managers who advise their clients to perform renovations, repairs, or painting projects for such properties may, as a matter of prudence, also want to inform them about these lead renovation requirements. One common example is when a listing agent recommends that a seller has a home painted to improve its marketability.

Under the newly implemented rule, renovators of target housing built before 1978 must now be trained and EPA-certified to perform safe work practices to prevent lead contamination. Additionally, renovators must deliver EPA's lead renovation pamphlet to an occupant within 60 days before a project begins (and, if mailed, at least seven days before a project begins). Renovators must also obtain the occupant's signed acknowledgment of receipt or substitute documentation as specified.

The EPA issued this rule in 2008, but delayed implementation until now. The rule generally applies to building contractors, handymen, residential landlords, property managers, and anyone else who is paid to perform renovations or to direct workers to perform renovations as specified. The lead renovation rule does not apply to homeowners renovating the homes they live in. However, sellers of target housing must, among other things, disclose to their buyers any known lead-based paint and lead-based paint hazards (C.A.R. Form FLD).

Renovation work covered by the lead renovation rule is defined as a modification of an existing structure that disturbs a painted surface, such as surface restoration or surface preparation activity. Excluded are minor repair and maintenance activities that disrupt up to 6 square feet of interior painted surface or 20 square feet of exterior painted surface. Demolitions and window replacements are not considered minor repairs.

For more information about the lead renovation rule, C.A.R. offers a legal article entitled Federal Lead-Based Paint Renovation Rule. See also EPA's Renovation, Repair and Painting webpage which includes the new requirements, pamphlets, and other resources. To locate an EPA-certified renovation firm, go to http://cfpub.epa.gov/flpp/searchrrp_firm.htm.

San Francisco Housing Market Tightens; Median Sale Prices Rise

Sales activity in San Francisco’s housing market rebounded during the second half of 2009 and into early 2010, resulting in a significantly tighter housing market from a year ago, according to the most recent Market Focus report released jointly by the Rosen Consulting Group and the San Francisco Association of REALTORS®. The report states that completed home sales in March 2010 increased 58 percent from the same month a year ago, absorbing much of the excess inventory in the market and intensifying competition among buyers for desirable properties.

John Lee, president of the San Francisco Association of REALTORS®, notes that the scarcity of housing units for sale has driven up the median sale price of single-family homes. “In March,” he notes, “the median single-family home sale price increased by 19.4 percent, compared to a year ago, to $791,000.”

In a welcomed development for a city known for the high value of its real estate, the report indicates that the sale of luxury property has gained traction in recent months. The Rosen Consulting Group attributes this development to sentiment among high-end buyers becoming more positive.

The condominium market also gained ground during March with the median sales price rising to $670,000, a 4.9 percent increase from the March 2009. Stimulated by the availability of FHA financing, tax-credits, and attractive pricing/concessions in comparison to recent periods, completed condominium sales reached 206 units in March, a 76 percent increase from the previous year.

The report sounds an optimistic note about housing sales activity in the near-term future by noting that the market’s return to supply and demand fundamentals as a result of a decline in the number of foreclosures is likely to drive home price appreciation. California’s $200 million home buying tax credit program should continue to incentivize home buying, supplanting the expiring federal tax credit. While mortgage rates are expected to increase in coming months, with the end of the Federal mortgage-backed security purchase program, rising interest rates from private investments should help offset the rise in mortgage rates.

Hints on today's market

Home buyers waiting for a mortgage loan to fund are advised to be conservative when it
comes to buying new furniture, appliances, or the like for the house they are purchasing. It has become standard practice for lenders to check borrowers’ credit scores in the weeks leading up to the closing, sometimes even the day prior to closing. Large purchases can use up a considerable proportion of a borrower’s total credit limit, which can lead to a drop in the borrower’s FICO score and possibly change the terms of the loan.

Many homes currently on the market are distressed properties – foreclosures and short sales—which increases the importance of home inspections. According to the America Society of Home Inspectors, the owners of distressed properties usually didn’t have the money to maintain their homes and often deferred property maintenance. A home inspection can find problems with the foundation, electrical, plumbing, roof, attic insuand heating and air conditioning. Although home inspections can be costly, in the long run, home buyers will be better situated when they know what, if anything, needs repairing on the home.

Median list price rises in March

The median list price of homes increased by 1.07 percent in March to $263,754, and the median price reduction declined 3.02 percent to $20,200, based on homes surveyed by ZipRealty for its monthly review of Multiple Listing Services in 26 major U.S. markets.

San Diego and San Francisco were among the housing markets with the lowest percentage of price-reduced MLS-listed homes. In total dollars, San Francisco, Orange County, San Diego, and Los Angeles were among the markets with the largest median price reduction.

California won’t tax forgiven mortgage debt

Governor Schwarzenegger on Monday signed SB 401 (Wolk) into law providing distressed homeowners with state tax exemption on debt forgiven in a short sale, foreclosure, or loan modification. Effective immediately, this bill generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a qualified principal residence, borrowers now will be exempt both from federal and state income tax consequences. The tax exemptions apply, with certain restrictions, to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

CALIFORNIA'S TAX CREDIT MONIES MAY GO FAST

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.

Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become availablee.

Only 13 days left for homebuyer tax credit!!!!

Only 14 days to get in to contract if you want to take advantage of the Federal Homebuyer Tax Credit ($8000 for first time buyers and $6500 for repeat buyers) . Reminder of the program limitations : $800,000 maximum purchase price, $125,000 individual income/$225,000 joint filers income , $8000 for first time buyers and $6500 for repeat buyers. The credit is fully refundable, meaning even if the taxpayers Federal Tax liability is not $8000/$6500 , they will receive credit for the full amount . The filing for the credit is made when the buyer files their Federal tax return. Buyers must be in contract by April 30 and closed by June 30.

The State of California tax credit will go in to effect May 1 and last through January 1, 2011 - OR - until the funds are exhausted. The buyer must be a first time buyer (can not have owned a primary residence in the past 3 years); the $10,000 will be credited toward State tax liability over a 3 year period - up to $3,333 each year for the next three years. If the buyers State Tax Liability is not $10,000 they will not receive the full credit. The buyer must submit a request to reserve or claim funds within 14 days of closing. The program has a new home and existing home budget.

A home buyer can not claim the credit if:
The taxpayer or the taxpayer’s spouse is related to the seller
The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase

HUD redefines “foreclosed” and “abandoned” properties

The U.S. Dept. of Housing and Urban Development (HUD) has expanded the Neighborhood Stabilization Program (NSP) by changing its definition of “foreclosed” and “abandoned” properties to include properties in mortgage default and uninhabitable homes with lingering code violations. These expanded definitions, effective immediately, will increase the reach of NSP by allowing more properties to qualify for NSP assistance, remove existing barriers caused by market conditions, and help state and local grantees to meet a Congressional requirement that they obligate all of their NSP1 funding by September of this year.

Properties now will be eligible for NSP assistance if any of the following conditions apply: The property is at least 60 days delinquent on its mortgage and the owner has been notified; or the property owner is 90 days or more delinquent on tax payments; or under state or local law, foreclosure proceedings have been initiated or completed; or foreclosure proceedings have been completed and title has been transferred to an intermediary aggregator or servicer that is not an NSP grantee, subrecipient, developer, or end user.

HUD also is expanding the definition of an abandoned property to include homes where no mortgage or tax payments have been made by the property owner for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies.

San Francisco Homeowners Have New Way to Pay for Going Green

San Francisco homeowners have a new way of paying for solar panels, energy-efficient appliances and low-flow toilets.

A new city-run program, GreenFinanceSF, will give San Franciscans the money to pay for such projects up front and let them pay it back through installments on their property tax bills. Berkeley pioneered the idea in 2007, and since then, hundreds of cities, counties and states have adopted their own versions.

For more details, visit https://greenfinancesf.org/systems/energy.

SB 1275, Home Owners Bill of Rights, Makes Its Way through Legislature

SB 1275, the Homeowner’s Bill of Rights, would require that homeowners receive notice of their rights regarding their mortgages prior to foreclosure, as well as the remedies available to them if they believe their rights under the law have been violated.

The bill also would require loan servicers to process any application for loan modification before starting the foreclosure process.

Millbrae Community Shred Event April 17, 2010

MILLBRAE, CA – Mills High School will hold a Community Shred Event on April 17, 2010. The event will be held at Mills High School, 400 Murchison Drive, Millbrae, CA 94030. The event will take place in the school parking lot at the front of the school on Murchison.

Community Shred: Consumer fraud and identity theft are becoming an epidemic in our communities. To raise awareness and to promote prevention, Shred-it organizes Community Shred events. These events give individuals the opportunity to have their confidential documents destroyed on site. Whether it is small business documents you no longer need or personal papers you want to safely dispose of, Shred-it’s trucks contain cutting-edge proprietary technology that can handle the job.

Fee: One standard size banker’s box $8.00 each; Three (3) standard size banker’s boxes total $20.00. Brown bag (standard grocery paper bag) $3.00 each. Note: All Proceeds will benefit Mills High School Senior Class of 2010.

About Mills High School: Mills High School is one of seven schools in the San Mateo Union High School District . Current enrollment in Grades 9-12 is approximately 1,547. This year, Mills received an Academic Performance Index (API) of 837. Mills is ranked number one out of eighteen comprehensive high schools in San Mateo County by the California Department of Education. In 2006, Mills High School was granted a six-year accreditation through the Western Association of Secondary Schools and Colleges organization. Enrollment in AP classes has grown over the past four years. Current enrollment in AP classes stands at 918. For more information:
http://www.millshigh.org/

For more information Contact: Cathy Hidalgo by email at millsgrad2010@gmail.com or call Shred It at 650-588-2227.
For further information on other recycling options, visit www.recycleworks.org or call 888-442-2666.

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment. Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.


Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.

Home Affordable Foreclosure Alternatives (HAFA)

What is HAFA?
HAFA is a government-subsidized Home Affordable Foreclosure Alternatives program for distressed homeowners to sell their homes to avoid foreclosure, even if the sales price is not enough to pay off their existing mortgage loans. Under HAFA, a participating lender will pre-approve the terms of a short sale and give the borrower at least 4 months to market and sell the property using a licensed real estate professional.


Eligibility
The eligibility requirements for a HAFA short sale include the following: • Property must be borrower’s principal residence; • Loan must be a first trust deed originated before 2009; • Loan must be delinquent or default must be reasonably foreseeable; • Current unpaid principal balance must be $729,750 or less for single-family home (or higher amounts for 2-to-4 units); and • Borrower must be eligible for, but unable to complete, a loan modification under the Home Affordable Modification Program (HAMP).

Financial Incentives
The government incentives under HAFA are as follows: • $1,500 to borrower for relocation expenses; • $1,000 to servicer for each successful short sale; and$1 to investor for every $2 paid to extinguish junior liens, up to $1,000 maximum.

Effective Dates
April 5, 2010 to Dec. 31, 2012.

HAFA Procedures
The general standardized procedures for HAFA short sales are as follows:Step 1: Lender evaluates borrower for a loan modification under HAMP. Step 2: Lender evaluates borrower unable to complete HAMP modification for short sale. Step 3: Lender issues Short Sale Agreement (HAFA SSA). Step 4: Borrower lists the property for sale using a licensed real estate agent. Step 5: Borrower and agent market and sell the property. Step 6: Borrower submits to lender a Request for Approval of Short Sale (RASS). Step 7: Lender approves RASS within 10 business days. Step 8: Sale closes escrow.

Lender's Evaluation
Each participating lender will have its own written policy for approving or rejecting a HAFA short sale, based on factors such as the severity of the loss, market conditions, the borrower’s motivation and cooperation, property valuation, and title review.

Short Sale Agreement (HAFA SSA)
The Short Sale Agreement (HAFA SSA) will include, among other things, the following: • Either a list price or net proceeds acceptable to the lender; • An agreement to fully release borrower from all liability for repayment of the loan; • An agreement not to complete a foreclosure sale if borrower complies with SSA; • Amount of acceptable closing costs and up to 6% real estate commission. • Notice that the sale must be an arm’s length transaction; and • Notice that the buyer must agree not to resell the property within 90 days of closing.

Tax, Credit, and Other Consequences
A HAFA short sale may have serious tax, credit, financial, legal, and other consequences. A homeowner is strongly encouraged to seek the advice of a qualified professional regarding these consequences.

Participating Lenders
A list of lenders participating in the HAMP program is available at http://makinghomeaffordable.gov/contact_servicer.html. Fannie Mae and Freddie Mac have their own HAFA guidelines for their loans.

More Information
Supplemental Directive 09-09 dated Nov. 30, 2009 available at https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf.

California gets into the First Time Buyer Tax Credit Act

The State of California tax credit will go in to effect May 1 and last through January 1, 2011 with new construction eligible for contracts written by Dec. 31, 2010 - OR - until the funds are exhausted.

The rules differ from the Federal Tax Credit in that the buyer must be a first time buyer (can not have owned a primary residence in the past 3 years) and the $10,000 will be credited toward State tax liability over a 3 year period - up to $3,333 each year for the next three years. If the buyers State Tax Liability is not $10,000 they will not receive the full credit.

The buyer must submit a request to reserve or claim funds within 14 days of closing. The program has a new home and existing home budget - once the funds are used, the program ends, even though the program dates are in effect on paper until January 1, 2011.

A home buyer can not claim the credit if:
The taxpayer or the taxpayer’s spouse is related to the seller
The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

Question - contact us! We work with some great lenders.