New Real Estate Related Law SB 94

Governor Schwarzenegger recently signed several hundred bills into law, including many that will impact the real estate industry. SB 94 is an urgency measure that takes effect immediately.

SB 94 prohibits advance fees for loan modifications and clarifies the real estate broker exemption from the mortgage foreclosure consultant act. This new law, that expires January 1, 2013, prohibits any person, including licensed real estate brokers and attorneys who negotiate, attempt to negotiate, arrange, attempt to arrange, or otherwise offer to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower related to mortgages and deeds of trust secured by residential real property containing one to four dwelling units to do any of the following:

• Claim, demand, charge, collect, or receive any compensation until after the licensee has fully performed each and every service the licensee contracted to perform or represented that he/she/it would perform.
  
• Take any wage assignment, any lien of any type on real or personal property, or any other security to secure the payment of compensation.
  
• Take any power of attorney from the borrower for any purpose.

The new language in California Business & Professions Code Section 10026 that defines "Advance Fee" has been modified to clarify that services may not be divided into phases to avoid the new law: "Neither an advance fee nor the services to be performed shall be separated or divided into components for the purpose of avoiding the application of this section."

Loan modification agreements entered into and advance fees already collected on or before October 11, 2009 are not affected. Any advance fees collected after October 11, 2009 must be fully refunded to the clients. Even if the DRE issued a "no objection" letter, licensees may no longer collect advance fees despite an executed loan modification agreement.

C.A.R. Mortgage Protection Program

Here’s a program you may not have heard about, and honestly I hope that none of my clients will ever need to take advantage of it. Still, it can offer some peace of mind in today’s uncertain job market.

Through the California Association of Realtors® (C.A.R.) Housing Affordability Fund Mortgage Protection Program, first time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500/month, for up to six months, to help make their mortgage payments. Qualified co-buyers could also receive $750 monthly for up to six months. C.A.R.’s Housing Affordability Fund has dedicated $1,000,000 towards this Mortgage Protection Program and estimates that up to 3,000 families will benefit from the program this year.

To qualify for this Mortgage Protection Program, you must:

• Be a first time home buyer - someone who has not owned property in the last three years.

• Close escrow on or before December 31, 2009.

• Use a California Realtor® in the transaction.

• Purchase the property in California.

• Be a W-2 employee (not self employed.)

More information about this program can be found here:

http://www.car.org/aboutus/hafmainpage/carhafmortgageprotection

$8,000 Federal Tax Credit for First Time Home Buyers Ends Soon

If you’re a first time home buyer looking to benefit from Uncle Sam’s tax credit, time may be running out. More than 1.4 million buyers have already qualified for the credit, but there is less than 60 days left until the program is scheduled to expire.

The National Association of Realtors and others are pushing to get some sort of extension, but as of now the program is set to expire on November 30th. If you’re seriously considering purchasing a home in the near future you should keep this in mind. Qualified first time home buyers (those who haven’t owned a home in the past three years) are eligible for up to a $8,000 tax credit (10% of the purchase price up to $8,000) You must close on a home before November 30th, not just be in contract to purchase.

There’s still time to take advantage of this program, but you probably should be in contract within the next few weeks in order to be able to close escrow by November 30th.

Additional information about this program can be found at the IRS’s web site here:

http://www.irs.gov/newsroom/article/0,,id=204671,00.html