8:00 a.m. - 11:30 a.m. Thursday, January 27th, 2011 Manchester Grand Hyatt San Diego, CA
Mission Statement The Housing Committee is a Policy Committee. Its mission is to develop C.A.R.'s housing policy. It has original jurisdiction to evaluate housing legislation and regulation in the following issue areas: Common Interest Developments; Fair Housing/Equal Opportunity; Housing Policy; Manufactured Housing; Multifamily Housing; Property Management; and Real Estate Finance.
Presiding: Allen Okamoto, Chair Allen Chiang, Vice Chair
Issue Chairs (ICs): Jay Avirom, Property Management Larry Black, Multi-Family Housing Bruce Bourdon, Manufactured Housing Sandy Darling, Housing Policy; NAR Liaison (Equal Opportunity & Cultural Diversity) Janet Halliburton, Common Interest Development Lidia Yun, Fair Housing/ Equal Opportunity
Executive Committee Liaison: Mike Riley
NAR Liaison: Jim Hamilton (Housing Opportunity)
Staff Coordinator: Dave Milton
I. Welcome and Opening Remarks - Allen Okamoto, Chair
II. Action Items A. Sponsored Legislation CID- HOA Fees Imposed by Third Party Agents - Janet Halliburton, IC; Dave Milton, Legislative Advocate 1. Status of Bill Authorship 2. Summary of REALTOR® input on HOA Fees Issue*
B. State Legislation No bills of interest in the housing area yet introduced.
C. Questions or Motions from Committee Members Should C.A.R. again sponsor legislation protecting the "right-to-rent" in CIDs? (An affirmative response would trigger an Issues Briefing Paper for the May Housing Committee Meeting, leading to possible introduction of a bill in January of 2012.)
III. Reporting Items by Issues Chairs
A. CID - Janet Halliburton Common Interest Development issues include policy decisions regarding representation of buyers and sellers of separate interests in common interest developments (CIDs); managing the CIDs through home owner associations (HOAs); educating HOA boards of directors regarding fiscal solvency of HOAs; and appropriate levels of regulation for CIDs.
1. Delinquent HOA Assessments - The Condo Market is increasingly seeing foreclosures. A direct consequence is the delinquent payments of HOAs are rising significantly. The CID Committee first discussed this issue several years ago and it has been recommended by a Housing Committee Member that we should consider supporting a policy that forces the lenders to make the assessment payments on properties they have in their foreclosure cue. The HOA is not only impacted, but the new buyers coming into the building may not be able to purchase when the HOA appears in a weak position. 2. Federal Developments in Condo Financing - FHA recently announced an extension of condominium project approvals with an expiration date of December 7, 2010. All projects that received FHA approval prior to October 1, 2008, were initially required to obtain recertification by December 7, 2010. Below are the extension dates based on five-year cohorts with the exception of those condominium projects with original approval dates from 1972 -1980. Projects that received approval between October 1, 2008 and December 7, 2009, will follow the recertification requirements defined in the Project Approval Section, XIII of ML 2009-46B.
Initial Project Approval DatesNew Expiration Date 1972 – 1980 December 31, 2010 1981 – 1985 December 31, 2010 1986 – 1990 May 31, 2011 1991 – 1995 July 31, 2011 1996 – 2000 August 31, 2011 2001 – 2005 September 30, 2011 2006 – 2008 March 31, 2011
The extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions.
B. Fair Housing/Equal Opportunity - Lidia Yun Fair Housing/Equal Opportunity issues include policy decisions regarding discrimination in housing, equal access to affordable home ownership for all California citizens, creation of additional availability of housing that provides accommodations without arbitrary discrimination based upon race, color, religion, sex, sexual orientation, marital status, national origin, ancestry, source of income, familial status, age, or disability.
C. Housing Policy - Sandy Darling Housing Policy issues include policy decisions regarding affordable home ownership for the workers in California, including the progression from rental housing to ownership generated by new construction, rehabilitation, and redevelopment; avoidance of restrictive regulatory policies; and encouragement of affirmative actions such as flexible zoning, innovative local planning, cooperative public-private projects, density bonuses, mixed use developments, land trusts, down payment assistance programs and shared equity arrangements.
1. The "Good, the Bad, and the Ugly" about the HAFA Program - Sandy and Matt Roberts: In mid-December, the California Association of Realtors(R) (CAR) submitted a letter to the Treasury and other governmental agencies on behalf of its members, outlining specific problems with and suggested solutions for HAFA. The letter, which spanned four pages, outlined issues Realtors(R) were having with the program, including the failure of lenders to comply with HAFA timelines and general rules, and the lack of uniformity in guidelines for all HAFA programs. Additionally the letter suggested raising the monetary incentive for servicers, investors and subordinate lien holders, citing the low payout as a common reason that HAFA short sales are rejected. C.A.R. also recommended that HAFA short sales be the required short sale method for all servicers, in order to make all short sale processes equal and uniform.
Under the new guidelines, effective February 1, 2011, servicers are no longer limited by the 6 percent cap with respect to payments to the subordinate lien holders. Additionally, servicers are now required to complete and send to the borrower a Short Sale Agreement (SSA) no later than 30 calendar days from the date the borrower responds to the HAFA solicitation. If the borrower requests HAFA consideration, the servicer must respond within 30 days. In addition to these rules, servicers are no longer required to verify a borrower’s financial information to determine a borrower’s HAFA eligibility, nor is it necessary to determine if the borrower’s total monthly mortgage payment is more than 31 percent of his monthly gross income.
Sadly, and much to the dismay of many of our members, HAFA has not become the universally implemented standardized short sale process originally hoped for. While there are many proposed reasons as to why HAFA has not succeeded (approximately 700 total closed HAFA transactions by the end of 2010) the simple reality is that it isn’t working. C.A.R. has taken the position that the primary failure of HAFA is that it is voluntary, like the failed HOPE Now Alliance, HOPE-for-Homeowners, and HAMP programs that came before it.
While there are other shortcomings to the program, the reality is that lenders will continue to process distressed transactions in any manner they wish unless the government decides to take a hard line on the issue.
C.A.R.’s Transaction and Regulatory Committee will discuss the short sale and HAFA issue during these business meetings.
2. Other Issues?
D. Manufactured Housing - Bruce Bourdon Manufactured Housing issues include policy decisions regarding manufactured housing financing; representation of buyers and sellers of manufactured homes and owners of mobile home parks and manufactured housing communities; and regulation of mobile home parks and manufactured housing communities.
E. Multi-Family Housing - Larry Black Multifamily Housing issues include policy decisions regarding enhancing availability of multifamily housing for veterans; occupancy guidelines for multi-family properties; representation of buyers and sellers of multi-family properties; and increasing development opportunities for multi-family properties.
F. Property Management - Jay Avirom Property Management issues include policy decisions regarding protecting rights of rental property owners such as the right to exit the business as provided by the Ellis Act; opposing restrictions on returns of investment in rental property; increasing the availability of rental housing in housing-short areas of the State; and establishing an affordable housing environment that begins with rental housing and culminates with home ownership.
1. CO Detector Experiences of Housing Committee (HC) Members - There is a new California law dealing with the issue of carbon monoxide poisoning: The Carbon Monoxide Poisoning Prevention Act of 2010 (Cal. Health & Safety Code §§ 13260 et seq.) was signed into law in 2010, to be effective on July 1, 2011. It requires carbon monoxide detectors to be installed in every “dwelling unit intended for human occupancy.” The California legislature also modified both the TDS (for residential one-to-four unit real property) and MHTDS (for manufactured homes and mobile homes) to include a reference to carbon monoxide detector devices, which is a relatively inexpensive device similar to a smoke detector that signals detection of carbon monoxide in the air. Under the law, a carbon monoxide device is “designed to detect carbon monoxide and produce a distinct audible alarm.” It can be battery-powered, a plug-in device with battery backup, or a device installed as recommended by Standard 720 of the National Fire Protection Association that is either wired into the alternating current power line of the dwelling unit with a secondary battery backup or connected to a system via a panel. If the carbon monoxide device is combined with a smoke detector, it must emit an alarm or voice warning in a manner that clearly differentiates between a carbon monoxide alarm warning and a smoke detector warning. The carbon monoxide device must have been tested and certified pursuant to the requirements of the American National standards Institute (ANSI) and Underwriters Laboratories Inc. (UL) as set forth in either ANSI/UL 2034 or ANSI/UL 2075, or successor standards, by a nationally recognized testing laboratory listed in the directory of approved testing laboratories established by the Building Materials Listing Program of the Fire Engineering Division of the Office of the State Fire Marshal of the Department of Forestry and Fire Protection. See C.A.R.'s Legal Q & A for more information. (http://www.car.org/legal/disclosure-folder/carbon-monoxide-detectors/?view=Print&url=h).
2) Out-of-State Withholding Experience of HC Members - Beginning January 1, 2010, property managers were required to withhold 7% of all income, if that income exceeds $1500, on properties owned by a nonresident of California, unless the owner qualifies for a reduced or waived withholding. C.A.R.'s Legal Q & A (http://www.car.org/legal/tax-folder/nonresident-owner-withholding/?view=Print&url=http://), republished on 1/6/2011, addresses the most basic questions about this requirement. Also helpful is the Franchise Tax Board (FTB) Publication 1017.
3. 1099 Requirements for Property Managers- the latest? - Jay and Matt Roberts: The health care legislation enacted in 2010 included two controversial and burdensome new requirements. Starting in 2012, all businesses are required to provide IRS 1099 information returns to any vendor (and to the IRS) when the business makes payments of more than $600 to the vendor in any calendar year. This 1099 reporting provision came out of nowhere in the final days of the health care debate. While there is bi-partisan support for the elimination of this provision as it is currently written, the Senate was unable to come to an agreement on what should be done. Two amendments at the end of last year failed to gain the 60 votes necessary to be included in a Senate passed small business bill.
The IRS will be in charge of implementing and enforcing the new law and has stated concern for the avalanche of paperwork the law will create. They have stated they do not intend to require purchases made with credit and debit cards to be subject to the new law. They are also listening to the business community to see how else they may be able to ease the burden on small businesses.
Lastly, under current law, property managers are generally required to provide Form 1099 on many of the expenditures they incur as part of their management of rental property. The new law expands this rule so that ANY person who receives rental income (not just property managers) will be required to report all expenditures of more than $600 to anyone from whom they purchase services.
IV. Other Business
* See Attachment: "Examples from REALTORS ® of HOA Fees "Out of Control"