Tag Archives: state

Mortgage Reform, Refinance, Really?

My Thoughts on the Current Real Estate Market: Mortgage Reform, Refinance, Really?

With interest rates at the lowest rate in history, and foreclosures bursting through the ceiling still at this writing, I ask myself, why is this still happening?  How does the 1-in-4 upside-down homeowner out there, staring at their bank and scratching their head, get help to avoid walking away?

The empty promises, or the so-called “helping hand” being offered by the banks and the government, is still a joke to say the least. For the people who sold their home in recent years, they are in a position to buy or have already bought another home and recovered from that stress of “What do I do?” while taking advantage of the low interest rates and prices.

upside-downIt still is not too late to make that leap and start over–because the faster you do, the faster you will recover. Property values are not expected to go anywhere for at least two more years, and the laws for selling short sales that protect homeowners will expire at the end of this year. Laws allow a purchase after two years of selling a short sale. With a consultation with me and strategy, you could pay off most of your unsecured debt, while not paying your mortgage. This can only be done with someone who has had experience with this. I have done this with clients that have recouped while living in their home for over 3 years without paying a mortgage.

The latest reform laws are offering a glimmer of hope; however, when and how these guidelines are implemented by the banks and government is clear to not happen for awhile.  The state governments will have to also be on board. At this time, California is weighing the settlement being offered for unlawful foreclosure practices from five of the larger banks that have agreed to pay a settlement.

My opinion is that any settlement should accompany a mandate that the banks must reduce every upside-down property out there to fair market values, to allow the homeowner an opportunity to keep their home; granted that the home is not dilapidated to the point that the owner does not have the funds to repair the home or care for it after the refinance. This exclusion is warranted to the extent that a home that is in bad shape is only dropping or keeping the values low in the neighborhood and should be taken care of. In a perfect world, the banks would allow the homeowner funds after the refinance to repair the home–heck, let’s go for it all!

As always, my gratitude to you for reading my blog.  Please share your opinions or questions–I look forward to any questions I can answer or help I can give!

John A. Silva, Realtor

(619) 890-3648 | www.JohnASilva.com

California targets property-tax payers

Beginning with the 2012 tax bill (due in April 2013), the state Franchise Tax Board will require property owners to break down their property taxes into deductible and non-deductible portions.

As many as 5 million California property-tax payers who have been taking the entire amount they pay off their state income taxes could see a major cut in their deductions when they file next year.

Beginning with the 2012 tax bill (the one due in April 2013), the state Franchise Tax Board will require property owners to break down their property taxes into deductible and non-deductible portions.

That means property owners who have been deducting their Mello-Roos fees — often running into thousands of dollars — will no longer be able to deduct those or any other special assessments like vector control or mosquito abatement.

In Orange County, 181,550 of the county’s approximately 900,000 parcels were subject to Mello-Roos in the 2011-2012 tax year, according to the auditor-controller’s office.  They were billed a total of $207.8 million.

The difference between deductible and non-deductible property taxes is not a new rule. Mello-Roos fees, which pay for roads, schools, fire stations and other public facilities in new developments, have not been deductible from state income taxes since the legislature authorized the special assessments 30 years ago.

Many property owners, however, routinely deduct the entire amount of their property tax bill from their state income taxes instead of only the parts that legally are deductible. Others just use the amount on the Form 1098 that their mortgage holder paid to the county tax collector on their behalf.

Until now the Franchise Tax Board didn’t to go after them. A new computer system being installed this year, however, will allow the agency to distinguish the portions of property tax bills that are deductible and non-deductible, said Daniel Tahara, a FTB spokesman.

He said the new scrutiny of property taxes is not due to any political pressure to increase tax revenues to close the state’s gaping budget deficit.

“Every year we look at areas of non-compliance and this happened to be one that came up,” he said.

Tahara said the agency is announcing the new rules now so taxpayers can make any adjustments this year for their 2012 state tax filing next year.

He said the FTB had planned to impose the new rules on 2011 tax filings due this April, but held off after getting “negative feedback” from tax preparers and the public.

Pat Yeckel, president of Canyon Tax and Bookkeeping Service Inc. in Rancho Santa Margarita, said that she and other tax preparers have known Mello-Roos and other fees weren’t deductible, but that clients usually don’t have the breakdown of their property tax bill.

It will be a particularly big deal for property owners in South County and other new developments where many of the public amenities were paid through Mello-Roos districts.

“This is going to be a big pain,” Yeckel said, noting that just getting the property tax paperwork can be a hassle.

Taxpayers will need a copy of their tax bills whether or not they pay their own property taxes or have them paid through their mortgage payment because they will need their parcel number in addition to the deductible/non-deductible breakdown for their 2012 state income tax filing.

For a full explanation of how the new deductible rules will work, CLICK HERE.

This article and information is from the Orange County Register: “State targets property-tax payers.”

Short Sale Memoirs & New Laws

The newest law in California is SB 458.  This law states that borrowers or owners of residential unit dwellings or properties of one to four units, will not experience any deficiency after a short sale extending to a junior lien holder.

Too good to be true, you’re asking? I have long known that the banks do not care about laws and take many months to implement them, whether they be federal or state government laws. They will march at their own drum. That being said, the new law that is instituted by the State of California is a joke!

Even senior lien holders of properties where there is only one loan, are still asking for a seller contribution. The California Law SB 931, passed in January of this year, clearly states there will be no contribution or deficiency and this new law, SB 458, piggy-backs on the SB 931 law. However, junior liens are still requiring contributions.

So why is this not applying to the junior liens and the SB 458 being enforced? Answer is, the banks want to test the validity of the law, while circumventing any loopholes that are there. The most important part of the new bill: “The bill would prohibit the holder of a note from requiring the trustee, mortgagor, or maker of the note to pay any additional compensation, aside from the proceeds of the sale, in exchange for a written consent to the sale.” This states that they can require seller to pay proceeds of the sale, but I have been successful to date with no seller contributions.  The lenders will do whatever it takes to squeeze money out of a transaction, but my track record shows that I have protected 99% of all sellers from contributions. Having an agent or short sale negotiator is now becoming paramount. I tend to avoid recommending many short sale negotiators because they do not have the experience I have in my two decades of short sale negotiating, since a huge problem is often caused in transactions due to the lender being not willing to pay them.

All new laws in real estate that are to help ward off the mess the government technically started by not limiting loan policies a few years ago has made the environment more difficult protecting the American Dream and helping citizens very little who pay their hard-earned money for taxes.

Bottom line–sellers want, and must have, a skilled and experienced agent with a team (assistant, attorney, accountant, escrow and title people) of problem solvers, that can get sellers out of their liability problems including past-due Home Owner Association Fees (which are collectible after bankruptcy filing post-petition or foreclosure). A short sale, when handled by me, will get paid past-due HOA fees with zero contribution by seller 99% of the time, call me today for a consultation, don’t delay!