Thursday January 22, 2009
1:00 p.m. - 5:00 p.m.
Monterey, CA
Presiding:
Heath Hilgenberg, Chair
Liz Anderson Fitzgerald, Vice Chair
Pat "Ziggy" Zicarelli, Vice Chair
Bill Jansen, Executive Committee Liaison
Allen Chaing, NAR Liaison
Staff:
Alex Creel
Stan Wieg
I. Welcome and Opening Remarks - Heath Hilgenberg, Chair
II. Survey of the Legislative Climate
A. Member Mobilization report - DeAnn Kerr
B. Extraordinary legislative session - Oral report from staff.
C. Evaluating proposals for sponsored legislation* Please see included
Issues Briefing Paper for factors to consider in making a decision to
sponsor legislation.
III. Anniversary Inspections and Point of Sale*
Please see included Issues Briefing Paper. The proposal under
consideration is to sponsor legislation that will act as an alternative to
point of sale mandates in legislation of others. Briefly summarized, it
would set a statutory date on which all legislatively required property
improvements and inspections would have to be done. At each 5-year or
10-year anniversary of that date, any requirements for inspections or
mandated improvements/retrofits would have to be completed - independent of
whether the property had transferred. Action is optional.
IV. Pilot program to purge unconstitutional CC&Rs* - Please see
included Issues Briefing Paper. The central issue is whether
C.A.R. should sponsor legislation creating an alternative to legislation of
other that attempts to require the purging of invalid CC&Rs from
property records as part of the transfer process. The possible sponsored
legislation would create a pilot program to encourage a county recorder to
use experimental software to "scrub" old records and prevent the release of
illegal CC&Rs.
V. Reports of Committees and Task Forces
A. Common Interest Development - Mike Riley
B. Equal Opportunity and Cultural Diversity - Cathlyne Scharetg
C. Housing Opportunity - Steve White
D. Land Use and Environmental - Lisa Meutterties
E. Local Governmental Relations - Tim Brigham
F. Manufactured Housing - Carl San Miguel
G. Property Management - Don Readinger
H. Real Estate Finance - Skip Zeleny
I. Taxation - Cynthia Carley
J. Public Policy Reorganization Task Force - Annette Graw
VI. Ballot Propositions* [Note: 6 propositions have
qualified for the ballot of the next general election, which would normally
occur in 2010. However, budget negotiations may result in a special
election as early as March of 2009.]
VII. State Pre-emption of Foreclosure Property Maintenance* Please
see included Issues Briefing Paper. The proposal is to consider
sponsoring legislation that will pre-empt local rules that require
maintenance of foreclosed properties (REOs), and require that local rules
be no more stringent that the general parameters of the rule created by the
proposed legislation.
VIII. "Shortclosure" Proposed Legislation* The proposal is
to consider sponsoring legislation to create a hybrid between a short sale
and a deed in lieu of a foreclosure. This hybrid would allow a property
owner to require a lender to accept a proposed short sale within a minimum
period, or accept a deed in lieu of foreclosure. The procedure would create
an incentive for the lender by treating junior note holders as "sold out
juniors" as to the property, and thus make the deed in lieu more attractive
and keep the juniors from interfering with the short sale.
IX. Department of Real Estate
A. Financial status - Overview of the DRE financial status
B. Proposed license fee increase - Report on the proposed regulation
increasing license fees. Current fee for broker's license is $165 every
four years; statutory maximum is $300. Proposal is not in print as of
publication date; rumored to be moving fees to the maximum.
C. Proposed restriction on licensing of listed sex offenders - DRE is aware
of proposed legislation to ban Megan's List registered sex offenders from
obtaining or holding a real estate license.
D. DRE Task Force to review exam questions - Oral update from staff.
E. License number on first contact materials - New requirement has become
law and will take effect mid-year 2009.
X. Mortgage Broker Regulation
A. S.A.F.E. Act implementation; loan originator license* Please see Issues
Briefing Paper, September 2008. Federal mandate for state legislation
regulating mortgage loan originators requires California legislation in
2009. DRE, DOC and DFI are collaborating with the author. State agencies
have not yet settled on a proposal. Two main issues for C.A.R. are:
- Whether the new license should be part of the real estate license, or a
completely separate license which anyone (including DRE licensees) can
obtain; and
- Whether the new license should require a bond or a recovery fund as
evidence of financial responsibility.
B. AB 33 (Nava); Financial agencies consolidation plan - The legislation is
currently in "spot" or intent form, but when amended is intended to
consolidate regulation of financial services regulation in one agency or
under a single set of rules.
C. AB 34 (Nava); Mortgage loan originators licensing - The legislation is
currently in "spot" or intent form and is intended to serve as the vehicle
for implementation of S.A.F.E. Act requirements.
D. Governor's foreclosure restriction and loan workout proposal - The
Administration has proposed a requirement that mortgage lenders or loan
servicers institute a "robust" loan work-out program modeled after that of
the FDIC (Federal Deposit Insurance Corporation) or Bank of America. While
California cannot legally assert jurisdiction over federally regulated
lenders, it can change the rules for enforcing mortgages, and those rules
apply to all lenders whether they are state or federal entities. The
proposal is to require a lender to wait an additional three or more months
before a foreclosure sale unless the lender is exempted from the new rule
by demonstrating that has an approved default work-out program in place.
Legislation based upon the Governor's proposal was introduced, but
defeated, during the November 2008 special session.
XI. Legislation of Others - Report by staff will
supplement published materials, as most legislation introduced in 2009 will
not be introduced prior to publication date.
[Note: For a complete listing of pending legislation, please see the
Legislative Program Report, which is updated monthly and available through
CAR.org; under Governmental Affairs.]
XII. 1031 Exchange - Historical Note: This issue briefing
paper was originally considered at the October 2008 business meetings;
however, neither the Taxation Committee or Legislative Committee elected to
put forth a motion relating to this matter.
SB 1007 (Machado) will provide some protection for real estate investors given the requirement for a $1 million fidelity bond or $1 million in cash, securities or a letter of credit. However, given the tens of millions of dollars involved in the two notorious 1031 exchange accommodator cases that occurred in 2007, the adequacy of SB 1007’s financial responsibility requirement has rightly been called into question. It may be possible to provide greater regulation of 1031 exchange accommodators by bringing them under California’s Escrow Law. 1031 exchange accommodators appear to be very similar to escrow companies in that they hold funds for the purchase of a property. While the bond amounts that each escrow company must maintain under the state’s Escrow Law are significantly lower than that required of exchange accommodators by SB 1007, membership in the Escrow Agents’ Fidelity Corporation would provide significantly greater financial security for real estate investors.
XIII. Other
XIV. Adjournment
