The National Association of Home Builders (NAHB) and a coalition of housing industry groups recently announced plans to file a lawsuit against the federal Environmental Protection Agency (EPA) for removing the “opt-out” provision from its Lead: Renovation, Repair and Painting rule (LRRP).  The rule applies to homes constructed before 1978 when lead paint was banned. Its opt-out provision, which expired July 6, let consumers allow contractors to bypass extra preparation, clean-up, and recordkeeping requirements in homes where there were no children under age 6 or pregnant women, thus avoiding additional costs.

The group will challenge EPA’s action on the grounds that the agency substantially amended its LRRP regulation without any new scientific data and before the regulation was put into place April 22, 2010.
Remodelers’ and other contractors’ estimates of the additional costs associated with the lead-safe work practices average about $2,400, but vary according to the size and type of job.

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On April 5, Assemblywoman Julia Brownley changed an existing bill on summary judgments to one that restricts the collection of delinquent assessments. The modified bill raises the threshold for foreclosure from $1,800/12 months to $3,600/18 months.

Good Intentions. Ms. Brownley undoubtedly has good intentions–protecting financially stressed owners from foreclosure. Unfortunately, she is doing so at the expense of everyone else. If associations cannot collect delinquent assessments, their budgets will fall short. To compensate for the drop in revenues, boards have only two options, (i) delay much-needed repairs or (ii) raise dues to make up for lost revenue.

Law of Unintended Consequences. Boards already face threats of litigation from owners impacted by deferred maintenance. If they cut back on maintenance to avoid raising dues, damage from increased roof leaks and plumbing backups will result in expensive litigation and higher insurance premiums. If boards raise dues to pay for higher legal/insurance expenses or alternatively raise dues to avoid litigation, they risk pushing more owners into foreclosure/bankruptcy. Ms. Brownley’s good intentions will have the unintended consequence of actually increasing foreclosures.

Embarrassing Owners. Ms. Brownley did two more things I find troubling. She requires that payment plans for financially stressed owners be (i) negotiated with the entire board rather and (ii) approved in open session. Requiring a meeting with the full board instead of a representative will delay approval of plans since boards meet monthly and not everyone is always available. Moreover, the already embarrassed owner must explain to a panel of five or more neighbors (depending on the size of the board) why they cannot pay their bills. Finally, the payment plan must then be approved by the board in open session in front of even more neighbors. The embarrassment of the process may deter owners from seeking payment plans, thereby increasing foreclosures.

RECOMMENDATION. There are better ways to deal with this problem than pushing even more owners over a financial cliff and increasing the litigation risk to associations. I recommend contacting Assemblywoman Julia Brownley and politely asking her to withdraw AB 2502. In addition, use CLAC’s sample letter on your own letterhead and fax it to Assembly Housing Committee members, by close of business Tuesday (April 20) if you want to be listed as an opponent.

Sincerely yours,

Adrian Adams, Esq.
Adams Kessler PLC

We got an e-mail alert this morning about a new site that has gathered private information for individuals culled from various sources. Unfortunately, they have not asked permission to post our credit rating and personal information. The site is:

www.spokeo.com

Search on your name and drill down to your state, then your city. You will be amazed at the amount of personal information that has been gathered by this group. To remove yourself, do the following. Type your name in the search box and press SEARCH.

In the left pane choose the state, then the city, then the street, Once you locate your name copy the URL (http://www.spokeo.com/search?q=John%20Smith#CITY,STATE), click on Privacy at the bottom of the page. A new window will pop up that looks like this:

1) Paste the URL into the first field
2) Put in your e-mail and type the code. It will act as if it didn’t take the entry as the page will refresh.
3) Within a few minutes, an e-mail will arrive with another URL.
4) That URL must be copied into a NEW browser window which will remove your listing.

Regards,
Mick Orton
Marketing for Janis Stone & SFResidence.com

The San Francisco Board of Supervisors has passed and the mayor has signed into law legislation that prohibits owner move-in evictions during the school year where a child under the age of 18 resides in the unit with a tenant who has a custodial or family relationship with that child, and the tenant has resided in the unit for at least 12 months or more.

There are, however, exceptions. The law will not apply where there is only one rental unit owned by the landlord in the building, or where the owner who will move into the unit pursuant to Section 37.9(a)(8) eviction has a custodial or family relationship with a child under the age of 18 who will reside in the unit with the owner.

Supervisor Mar’s legislation was offered against a background of 75+ other amendments to the Rent Ordinance approved by the Board of Supervisors since the imposition of rent control in San Francisco in 1979. While a few of those amendments were aimed at curbing abusive practices on the part of both landlords and tenants, most were intended to expand the rights of tenants and give them additional legal grounds to sue landlords—thereby making the ownership of rental real property in San Francisco an ever more risky and expensive proposition.

In the estimation of the Association, Supervisor Mar’s legislation fell into the latter category which is why the Association opposed it.

The Mar ordinance becomes effective on March 14, 2010.

The California legislature on Monday passed AB 183, providing $200 million for home buyer tax credits. The Governor is expected to sign the bill into law this week. C.A.R. supported this important legislation since its inception.  Part of a package of four bills passed at the request of the Governor, AB 183 is designed to help stimulate the economy and create jobs.  It allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under AB 183 purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).

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The San Francisco Residential Rent Stabilization and Arbitration Board has announced that the annual allowable rent increase for the March 1, 2010 to February 28, 2011 period is .1 percent. The interest rate payable on tenant security deposits for the same period is .9 percent. For further information, visit the Rent Board’s web site at www.sfgov.org/site/rentboard_index.asp.

- SFAR

From the mid-1800s to the 1930s, PG&E operated “manufactured gas plants” in the Bay Area. The plants processed coal or oil to make a fuel similar to natural gas. Those using coal produced coal tar as a byproduct, which was sometimes sold and sometimes buried on-site. Similar plants were operated by other utility companies throughout the country. 

In recent years, PG&E has been checking the site of each former plant, looking for contaminated soil. In most cases, the process has involved nothing more than taking samples from the backyards of homes and apartment buildings. Now, however, PG&E wants to check the soil 10 feet down.

To facilitate these site checks, PG&E has been mailing a brochure to residents of parts of the Marina District and Fisherman’s Wharf, whose homes are adjacent to or directly over the site of a former gas plant. The brochure can be viewed by clicking on the link below.

The San Francisco testing program will be voluntary, with the utility company only checking a property after receiving the owner’s permission.

Although PG&E has said that it believes that there are no health risks associated with any of these sites, a 1992 report prepared for the U.S. Army Corps of Engineers based on four subsurface soil samples found “high concentrations” of gasoline, diesel fuel and oil 11 feet underground at one of the former gas plant sites. Groundwater in that sample also was contaminated.

The State’s Department of Toxic Substances Control, which monitors PG&E’s gas plant program, said it is not unusual for those contaminants to be left in place for years after they’re found because they don’t tend to migrate to the surface where they can come into contact with people.

Since the owners of homes adjacent to or directly over the site of a former gas plant have been advised by PG&E of the possible presence of contaminants on their properties, a possible disclosure issue is involved. For that reason, the Association has requested its outside general counsel, Alex Weyand, to investigate the issue and make appropriate recommendations to its REALTOR® members.

To view the brochure, click here.

- SFAR

Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws.  Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow.  Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014).  Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500).  Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

• Attorney General’s Office
  California Department of Justice
  800-952-5225 Phone
  http://ag.ca.gov/consumers/mailform.htm
• Department of Housing and Urban Development (HUD)
  HUD Office of Inspector General Hotline (GFI)
  800-347-3735 Phone
  http://www.hud.gov/offices/oig/hotline
• Federal Bureau of Investigation (FBI)
  202-324-3000 Phone
  https://tips.fbi.gov

California Association of Realtors

The U.S. Treasury has allocated nearly $700 million to CalHFA to help low-and moderate-income borrowers who have been impacted by unemployment and declining home values.  CalHFA now must submit a proposal by April 16 to the Treasury outlining innovative programs focused on foreclosure prevention and housing market stability.  The Treasury will review each proposal for compliance with program objectives and other requirements. The Treasury expects that CalHFA may begin drawing down funds within four to six weeks following submission of proposals, or mid-year.
 
More info

Homeowners wanting to pay off their mortgage earlier than planned can do so by making extra principal payments.  One extra full principal and interest payment a year will reduce a 30-year loan to about 17 years, and adding the following month’s principal payment to the current one will cut the loan almost in half.  It is important that borrowers tell their lender the extra money is to be credited to principal.  Homeowners should keep records of their payments and review it once a year to be certain the lender has followed directions.

Private mortgage insurance (PMI) generally is required for home buyers whose down payment is less than 20 percent.  PMI may be added to the mortgage payment each month to protect the lender should the borrower default.  By law, PMI generally must be canceled automatically when the loan balance reaches 78 percent of the home’s original value.  However, lenders also may agree to cancel this coverage upon a borrower’s request when the balance declines to 80 percent of the current value, if certain conditions are met. Borrowers who have made their payments on time each month for five years should contact their lender or loan servicer to obtain all the details on cancelling the coverage.

- Mick Orton