Housing Discrimination and Sex Offenders: A Conflict Remains Unsolved

In February of this year, California Assemblyman Greg Aghazarian (R) introduced a bill which addressed the conflict in the law as it relates to sex offenders and housing discrimination. AB 1197, as written, would recite the legislature's intent that the Unruh Act, and housing discrimination protection, would be reflective of the laws protecting children from sex offenders (such as Megan's Law).

The bill died in committee but I hope that Assemblyman Aghazarian brings it back again. If he does, the safety of our children dictates that his fellow legislators support the law.

The protection of children is most important. But the law as it stands puts landlords in a bind. If the Dept. of Justice (D.O.J.)identifies a sex offender, shouldn't a property owner be permitted to recognize this in deciding who rents his or her property and lives next to other tenants? The ACLU and some special interest groups have opposed this bill, of course. Even the disability advocates oppose the bill because some sex offenders are disabled. But where do the rights of property owners come in? And, where does the safety of California's children come in?

I'll keep you posted if I hear more. Until then, you can call Assemblyman Aghazarian or your legislator and get this issue resolved before the problem is magnified....

One Thing Doesn't Change: Construction Defect Lawsuits

Stop the presses! Buyers are suing homebuilders! The latest in a line of reasons why builders earn every dime they make is evident in an MSN article about disgruntled homebuyers.

The article makes it sound as if the rush to courtroomsm has something to do with the credit/mortgage crisis. It doesn't. Nothing has changed in one respect: unhappy homebuyers are still using the courts to get their builder to pay up. Sometimes the builder deserves this. Often, they don't, nor do the agents, title companies, and everyone else drawn into the mess. Nevertheless, there will always be lawsuits directed at construction defects, credit crisis or not.

Happy Thanksgiving!

Happy Thanksgiving to everyone. This is one of the few days of the year where you can sit back and reflect on the market and where it's going to go. Watch some football, eat some turkey and pumpkin pie, and let your thoughts clear up a little. There are some great transactions lying ahead; we need to make sure we can spot them clearly.

Home Equity Law to Watch Out For

Wrote about the Mortgage Foreclosure Consultants Act earlier. A similar law is also in effect in California which regulates the transfer of real estate by "equity purchasers". This is distinguished by law from loan transactions. Main issue is whether the seller was unfairly coerced into transferring his/her property to a lender. Key point is that a five-day cancellation period is in effect, and not much can happen during that period. There's also an attorneys fees provision if a suit is brought, as well as a provision for possible criminal penalties. Every person who helps distressed homeowners should know this act. It doesn't say you can't help someone out, or do it for a profit. You just have to do it in a manner which the law allows.

The Mortgage Foreclosure Consultants Act

I spoke at a real estate seminar yesterday. Intelligent group of people asked some great questions. Two of the main issues we discussed were short sales and foreclosures. Much of the discussion centered around two California acts which regulate the practice of assisting distressed owners. One of the acts is known as the Mortgage Foreclosure Consultants Act. I've linked to the language of that act for anyone who wants to read it. A couple of things of note: the act requires a three-day cancellation period; and the act restricts the lender's ability to take an "interest" in the title of the property. The act does have some teeth, meaning it has some penalty provisions for violating the act. See 2945.4 for a list of violations. It should be taken seriously by professionals who make a living helping homeowners.

Some Foreclosures Hit a Federal Snag

The N.Y.Times published this article about a federal court ruling which limits the ability of some "investors" to foreclose on properties. If a mortgage is in foreclosure, and that mortgage has been pooled with other mortgages and sold to a bank, the bank likely cannot prove ownership at the time of foreclosure, which is a requirement of enforcing a mortgage. Usually this is a non-issue to the homeowner since the homeowner doesn't have the resources to defend, and pick apart, the lender's case. But in Ohio, the court took a stand against this established practice, and from the comments I read in the article, was quite ticked at the arrogance of the banks.

You Can't "Short" the I.R.S.

A lender may have an incentive to approve a short-sale of unproductive (and expensive to maintain and sell) property, especially in today's market. Our good friend, the IRS, does not have such incentive. It's important that sellers of property take that into account when they decide to do a short sale. There are some huge benefits to the short sale, i.e. avoiding larger credit problems, but there is also the disadvantage of having to justify the numbers to the I.R.S. For the seller, find out if it is a recourse loan or a non-recourse loan. I.R.S. Publication 544 talks about the differences in potential gain where the loan is recourse. In that case, the fair market value of the property plays a significant role in determining gain, or loss.

The Missing Notary Stamp

I've seen many real estate fraud cases which include a notary who either was negligent or just plain fraudulent. This case in L.A. involving a short sale fraud is the first time I have heard of fraud committed by way of a stolen notary stamp. I agree with the agents who wrote this story, how in the world a scammer thinks he or she can make money by recording fraudulent deeds in a foreclosure context, is beyond me. The only way someone could steal a stamp, record a deed (or a deed of trust, depending on their motive) and make money off fully-leveraged property, would be to also scam the lenders who have valid deeds of trust. Nevertheless, I believe as long as the title company properly searches title records, as most do, there won't be much damage. The new buyer will need to go to a court to have the fake deed reversed.

Notices, Notices, Notices!

Notices are everywhere. I'm talking about Notices of Trustee Sale. Have you looked at your local paper's legals? Sometimes I wonder if there is enough ink to publish all of these trustee sale notices. It's true that more and more lenders have become resigned, or should I say, open, to the option of a short sale. My guess is that either there are more defaults than even I imagined before, or many of these homeowners are not being aggressive enough with their lender to workout a solution. This wiki that I've linked to above describes a style of approach that many homeowners should consider when faced with a tough payment situation.

Another Lender Writes This One Off

* Taking the art of blogging seriously, I attended a blog trade show this weekend in Las Vegas. Called Blogworld, this show had a few seminars and some interesting exhibitors. Look for a much-improved blogsite in the next couple of weeks!

* The news today was that Bank of America is taking a $3 billion hit on its books due to bad debt. They're doing what most lenders are doing, large or small. My thought is this needs to be done so that the books can get cleaned up. They are calling their losses "manageable". That simply means that this won't take them down. But we assumed that.

A Visit to the County Recorder's Office

I must admit I've made a few trips to the county Recorder's office where I was just lost trying to figure out how to research property information. Every single time, I asked for help, and every single time my questions were answered. Not only that, unless the staff is extremely busy, they will help you learn how to work the machines like a pro.

The Recorder's office is easy to use, and a quick way to get copies of certified deeds or other recorded information. Looking at getting preliminary information about some property you're interested in buying? Ten minutes in front of a computer, and you'll probably find out more than you want to know. (That can be a good thing!).

Many people end up signing up with these companies that offer to provide certified deeds for a big fee, when they really don't have to. I wouldn't call this a scam in the true sense of the word, but an unnecessary service that is thrown at consumers en masse, hoping that a few consumers will unnecessarily give in.

The Value of Your Home, in Perspective

I enjoy listening to a great radio show in the mornings on ESPN Radio. The host is Colin Cowherd (did I spell that right?). In addition to his great style of getting his point across, he also throws out a lot of great thoughts to ponder. Many have little to do with sports in fact.

Today, he mentioned a great quote: Buy for memories, lease for fun. He was talking about spending your disposable income. Better to spend it on something that you'll remember when you're 80, such as a trip to Tahoe (his example) than on a jet ski or some material possession. I fully agree with that premise. Maybe that's why I don't have that 22' boat I've been eyeing!

When it comes to real estate, there is some truth there, too. Find a home that you build great memories with, and put your disposable income in that direction. There's nothing wrong with filling the garage with a new Harley, which I'm sure is a great escape toy. But once you find a place you can enjoy coming home to or spending your free time on the weekends at, the fluctuating value of that property just doesn't matter too much.