Renters get relief from foreclosure
Many of the households affected by the foreclosure crisis are actually renters, and a federal law is designed to keep them from being evicted with little or no notice.
By Marcie Geffner of Bankrate.com

A federal law enacted this year offers renters more protection from eviction if their landlord loses the property through foreclosure. The law has some fuzzy requirements, but should be a boon to renters who otherwise might have been evicted with little or no notice.

“The fundamental purpose of the Protecting Tenants at Foreclosure Act is to ensure that tenants facing eviction from a foreclosed property have adequate time to find alternative housing. To that end, the law establishes a minimum time period that the tenant can remain in a foreclosed property before eviction,” a Federal Reserve memorandum states.

The national foreclosure crisis has not been kind to renters, despite their seeming bystander status. Indeed, the National Low Income Housing Coalition (NLIHC) has estimated that some 40 percent of households that have lost their homes due to foreclosure have been renters.

The law should provide some relief from immediate evictions, according to NLIHC President Sheila Crowley. “This bill brings long overdue relief for the most blameless victims of the foreclosure crisis — the families who, after paying their rent each month, are suddenly told they must move out of the homes because their landlords have been foreclosed on,” Crowley said in a statement.

Renters will get 90 days’ notice
The new law allows tenants who have a lease to remain in their home until the end of the lease period unless a new owner purchases the home at a foreclosure sale and intends to occupy it as a personal residence. In that case, the renter can be evicted with 90 days notice even if a longer-term lease is in force.

A rare but potentially important exception occurs if the renter signed the lease before the owner obtained the foreclosed loan. In that case, the lease will still “survive” the foreclosure, according to Janet Portman, an attorney and author of “Every Tenant’s Legal Guide.”

Tenants who don’t have a lease also are entitled to 90 days notice prior to eviction under the new law.

Technically, the law applies to “any foreclosure on a federally related mortgage loan.” That requirement shouldn’t be a burden for tenants because, as Portman explains, the definition of “federally related” encompasses virtually all loans.

The law became effective May 20 and is scheduled to end Dec. 31, 2012.

Only ‘bona fide’ renters are protected
The law protects only a bona fide lease or tenancy, which is defined as a situation that meets three criteria:

The renter may not be the former owner of the home, or the former owner’s spouse, child or parent.
The terms of the rental must be at arm’s length between the landlord and renter.
The rent cannot be substantially less than the fair-market rent, unless the rent is subject to a government reduction or subsidy.

The arm’s-length and fair-market rent requirements “are designed to prevent a sweetheart deal” between a defaulting landlord-owner and a renter whom the landlord wanted to protect from eviction after the foreclosure, Portman says. For example, if a landlord and renter signed a two-year lease at a very favorable rent just prior to a foreclosure, that likely wouldn’t meet the bona fide requirement.

Broken lease can lead to lawsuit
Renters who have a lease and are evicted may be able to bring a breach-of-contract lawsuit against the former landlord to recoup the costs of their forced move, according to Portman.

“You go to court and say, ‘We had a deal, and he didn’t deliver,’ ” Portman says. “The guy may be long gone. But if you get a judgment, that’s good for many years, and you could probably eventually collect on it.”

New law doesn’t affect rents, deposits
The new law doesn’t pre-empt any state or local laws. Instead, it specifies that it won’t affect “the requirements … of any state or local law that provides longer time periods or other additional protections for tenants.”

State laws apply to most landlord-tenant issues that are beyond the scope of federal law. Examples include prepayment of a last month’s rent and reimbursement of a security deposit. Neither of those issues is mentioned in the new law.

“Many states, including California, protect the tenant at any cost. They say basically that it is up to the buyer and seller, or in this case, the bank and the (former) owner, to figure out how to (handle those sums),” Portman says.

The bottom line is that landlords and renters have new rights and responsibilities in foreclosure situations. While renters may face challenges in their attempts to exercise those rights, knowledge and action can prevail.

Mortgage delinquency rate rises to 9.64 percent
Source: C.A.R. Newsline

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding in the third quarter, up 40 basis points from the second quarter, and up 265 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate, which set a new record in the third quarter, includes loans that are at least one payment past due, but does not include loans that are in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago.

“Once again the states of Florida, California, Arizona, and Nevada have a disproportionate share of the mortgage problems,” said Jay Brinkmann, MBA’s chief economist. “They had 43 percent of all foreclosures started in the third quarter, down only slightly from 44 percent both last quarter and the third quarter last year. They had 37 percent of the nation’s prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM foreclosure starts.”

One new foreclosure avoidance option is Fannie Mae’s Deed-For-Lease program, announced November 5, 2009. Remember, this option is only available after a borrower has exhausted all other options including a short sale!

Fannie Mae Servicing Guide Announcement 09-33 introduced the Deed-for-Lease Program (D4L), allowing qualified borrowers (or tenants) with properties transferred through deed-in-lieu of foreclosure (DIL) to remain in their home by executing a lease in conjunction with a DIL.

Summary

* With the D4L program, servicers should follow their regular process – in accordance with Fannie Mae’s workout hierarchy – in considering a borrower for a DIL.

* If a borrower is eligible for a DIL (as determined by the servicer), the servicer should notify Fannie Mae if the borrower may also be eligible for the D4L program based on an initial screen of predetermined eligibility criteria.

* Fannie Mae, or its designee, will take the steps necessary to further verify the property and borrower eligibility, determine the rental rate, and, if appropriate, execute the lease agreement.

* To qualify for D4L, the occupant of the property must have the ability to pay market rent (not to exceed 31 percent of his or her monthly gross income).

* The D4L agreement will be contingent on successful completion of the DIL.

For official details please visit their site: https://www.efanniemae.com/sf/servicing/d4l/

President Obama today signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday.

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

NEARLY $3 MILLION SETTLEMENT FOR HOUSING DISCRIMINATION
The U.S. Department of Justice has obtained a record $2.725 million settlement against Los Angeles apartment owners for alleged rental discrimination. In a lawsuit brought in August 2006, the Justice Department claimed that Donald T. Sterling and others engaged in discriminatory practices, such as refusing to rent to African-Americans, Hispanics, and families with children, refusing to rent to non-Koreans in Koreatown buildings, misrepresenting the availability of rental units, and preparing internal reports of tenants’ racial profiles.

Under the name of Beverly Hills Properties, the defendants in this lawsuit own and manage about 119 apartment buildings containing over 5,000 apartment units in Los Angeles County. Their agreement to pay $2.725 million is the largest monetary settlement the Justice Department has ever obtained for rental housing discrimination. The bulk of the money will be placed in a fund to pay tenants harmed by the defendants’ discriminatory practices. The defendants must also take certain measures to ensure non-discriminatory practices, such as obtain fair housing training and monitor their employees’ compliance with fair housing laws over the next three years. For more information, the Justice Department’s press release is available at http://www.justice.gov/opa/pr/2009/November/09-crt-1187.html.

Call-for-Action on Homebuyer Tax Credit

We are calling all of Team NuVision members, clients, guests, and friends to support requesting extension of the First-time Homebuyer Tax Credit beyond its November 30th expiration date.

Call 1-800-961-3302 and, when prompted, enter “999999999″ for the PIN number and home zip code to be connected to your legislator’s office.

Let’s do it gang!

-Rudy L. Kusuma
Your REALTOR® Of Choice
www.RudyLK.com

California cracks down on mortgage fraud

SACRAMENTO

October 12, 2009 5:27am

• New laws supposed to protect homeowners

• ‘Helps crack down on abusive lending practices’

California now has new laws that are supposed to prevent homeowners and homebuyers from mortgage fraud.

Legislation to increase protections for consumers in the lending market and provide law enforcement with more tools to crack down on deceitful mortgage practices was signed into law Sunday by Gov. Arnold Schwarzenegger.

The bills are supposed to:

• Strengthen California’s reverse mortgage laws by providing senior homeowners with greater consumer protections when considering reverse mortgage agreements,

• Make it a felony to commit fraud in connection with a mortgage application. and

• Promote responsibility and accountability in the real estate market.

“Fraudulent mortgage practices have become more prevalent as a result of the national foreclosure crisis that negatively impacted California’s housing market and economy,” says Mr. Schwarzenegger. “This legislation helps crack down on abusive lending practices by giving law enforcement the tools to effectively investigate mortgage fraud crimes and provides Californians with greater consumer protections to promote homeownership in a safe and accountable environment.”

Specifically, the bills signed are:

• AB260 by Assemblyman Ted Lieu, D-Torrance will enact the Higher-Priced Mortgage Loan Law which would codify a fiduciary duty for mortgage brokers, authorize California’s mortgage regulators to apply specified federal mortgage lending laws and regulations to their licensees and cap prepayment penalties and yield spread premiums on higher-priced loans.

SB 36 by Sen. Ron Calderon, D-Montebello to establish standardized licensing requirements for all individual loan originators who offer or negotiate residential mortgages.

• SB 239 by Sen. Fran Pavley, D-Santa Monica to make it a felony to commit fraud in connection with a mortgage application. This bill makes individuals who engage in mortgage fraud guilty of a public offense punishable by imprisonment in the state prison or in a county jail up to one year. The bill also provides law enforcement with the necessary tools to make it easier to obtain a search warrant for real estate records and documents believed to contain evidence of mortgage fraud.

• AB 329 by Assemblyman Mike Feuer, D-Los Angeles to establish the Reverse Mortgage Elder Protection Act of 2009 to provide senior homeowners with greater consumer protections to ensure that they are fully informed about the consequences of entering into a reverse mortgage agreement. Specifically, the bill requires lenders to provide prospective borrowers with a clear and informative written disclosure statement and a written checklist pertaining to the risks and suitability of a reverse mortgage, prior to borrower attending loan counseling.

• SB 237 by Sen. Ron Calderon, D-Montebello to create a registration program for appraisal management companies (AMCs) and prohibits any person or entity from acting in the capacity of an AMC without first obtaining a certificate for registration from the Office of Real Estate Appraisers.

• AB 957 by Assemblywoman Cathleen Galgiani, D-Livingston to mandate that buyers of foreclosed homes would have the choice of using a local escrow office to handle the transaction. It also prohibits a seller of residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller and would also prohibit a seller of residential property from, without good cause, disapproving the use of a title or escrow company chosen by the buyer.

• AB 1160 by Assemblyman Paul Fong, D-Cupertino to require mortgage loan documents to be translated into the language the verbal negotiations were conducted. Mortgage documents would be translated into Spanish, Chinese, Tagalong, Korean and Vietnamese languages.

Source for this article: http://www.centralvalleybusinesstimes.com/stories/001/?ID=13305

C.A.R.’s 2010 Housing Market Forecast released

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to C.A.R.’s “2010 California Housing Market Forecast,” presented today at CALIFORNIA REALTOR® EXPO 2009 in San Jose. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak. “This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace.”

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

“With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season,” said C.A.R. and Vice President Leslie Appleton-Young. “We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer. For the year as a whole, home prices are forecast to reach $280,000. The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government.”

More info:
http://www.car.org/media/pdf/econpdf/10-07-09Forecastexpo-FINAL.pdf

LOAN MODIFICATION ATTORNEYS UNDER INVESTIGATION

The State Bar of California has recently launched numerous investigations against attorneys for misconduct related to loan modifications. In a rare move, the State Bar has released the names of 16 attorneys under investigation, by opting to waive investigation confidentiality in favor of public protection. These attorneys have allegedly taken fees for promised services, but failed to perform those services or even communicate with their clients who face the possible loss of their homes. Their non-attorney staff may also be under investigation for unlawfully practicing law.

Not all attorneys engaged in loan modifications are unscrupulous. However, this announcement from the State Bar serves as a good reminder for home owners to be careful when dealing with attorneys and others for loan modifications. Scam artists may intentionally associate or affiliate themselves with attorneys in an attempt to lend credence to their fraudulent schemes. The list of attorneys currently under investigation is available at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10144&n=96395.

How the DST Works?

The DST is a tax deferral tool. You transfer property ownership to a dedicated trust, administered by a third party trustee. The DST sells the property to the buyer. The funds of the sale are disbursed by a third party administrator in DST payments, per the terms of your customized DST agreement.

The DST is a contract between you and the dedicated third party trustee to disburse DST payments to yourself, your trust, or your beneficiaries.

You do NOT pay taxes until DST payments begin, and only on the portion that is disbursed. The money in the trust can be invested, providing you with an income stream. Reinvestment of proceeds within the DST trust can fluctuate with the market, depending on your investment choices.

•IRS compliant tool, supported by the Estate Planning Team
•Alternative to 1031 Exchange
•Defers 1245 Depreciation Recapture
•Private Letter Ruling (Tax Code: IRC 453)
•Like an interest free loan from the IRS

I am inviting you to NuVision Real Estate Network tonight
for a presentation on DST and opportunities to ask questions
and see how DST may benefit you.

NuVision Real Estate Club
Tuesday, September 8, 2009
7pm – 9pm
Location: COLDWELL BANKER New Century
960 E. Las Tunas Dr, San Gabriel, CA 91776
Website: http://www.rudylk.com/real-estate-investors.html

DST Benefits.
•Provides income stream – Flexible income payments through an installment method negotiated in a customized DST contract.

•Defers capital gains tax – Defers taxes until receipt of installment note payments.

•Asset diversification and growth – Proceeds from the sale of your asset can be diversified among investments with the potential for capital appreciation and dividends within the DST.

•Income Flexibility – Installment note payments are disbursed to you, your trust, or your beneficiaries. Payments are secured by the Trustee of the DST, directly against DST assets.

•Like an interest free loan from IRS – With an IRS tax deferral, you can invest the money you would have immediately paid in taxes through your DST lifetime.

I am inviting you to NuVision Real Estate Network tonight
for a presentation on DST and opportunities to ask questions
and see how DST may benefit you.

NuVision Real Estate Club
Tuesday, September 8, 2009
7pm – 9pm
Location: COLDWELL BANKER New Century
960 E. Las Tunas Dr, San Gabriel, CA 91776
Website: http://www.rudylk.com/real-estate-investors.html