Lots of good news today – we’ll start with some legislative news. As part of the ‘Fiscal Cliff Bill’ passed by Congress in January, there was a provision to ‘extend the exclusion of the discharge of qualified principal residence indebtedness to debt that is discharged’. In plain English, if you short sell your home you will not be taxed on that ‘forgiven debt’. California’s measure keeping us in compliance with the feds expired last year.
So since the first of the year California short-sellers have been in the position where they would be exempt from federal tax but liable in California. It’s been dicey advising clients on possible outcomes and has no doubt had some dampening effect on the number of short sales – which are way down. To address this, a bill sponsored by the California Association of Realtors®, SB 30, was introduced by Senator Ron Calderon (D-Whittier) with Senator Joel Anderson (R-Temecula) as Principle co-author. SB 30 recently passed its first committee hearing on a bi-partisan vote so we are moderately optimistic that the bill will advance as an urgency matter. That will provide some resolution and good news for thousands of home owners across the state.
A fee increase is good news? This month the document fee charged by the county to record grant deeds, home sales, etc, is increasing from $3.00/document to $10.00/document. The good news – at least for us – is that this money goes to our District Attorney, Paul Zellerbach and is earmarked for his Real Estate Prosecution Trust Fund. This will help expand the staff, add forensic auditors and open an office in Southwest County. DA Zellerbach has been a strong partner in fighting fraud in the industry and we were pleased to support him in this.
A dollar of the new fee goes to Assessor/Recorder Larry Ward for the ‘courtesy notice’ program initiated last year.
This program provides postcard notification to homeowners when a document is filed on their home. The goal is to prevent ‘house stealing’, identity theft and elder abuse. It has been quite successful and we are pleased they will be able to continue this service. I have reported frequently on the incidence of fraud in our market including the Stonewood Mortgage Ponzi Scheme, an incident which jump started our foreclosure market here in 2006 & 2007. The last two of the nine defendants, Hendrix Montecastro and his mother Helen Padrino, were found guilty by the DA’s office a couple weeks ago. $142 MILLION! 317 felony counts! Right in our backyard. Local Realtors® first called out the market anomaly in 2004 so this has been a 9 year effort for us, the media, law enforcement and the many victims.
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/