TRID NEW DISCLOSURE RULES FOR MORTGAGES - Effective October 3, 2015

New Disclosure Rules for Mortgages

SEPT. 25, 2015

CreditThe New York Times

Mortgages

By LISA PREVOST

Home loan offers should be easier to decipher come Oct. 3, when mortgage lenders must begin using new consumer disclosure forms that explicitly break down the costs and terms associated with a loan.

Instead of receiving four different disclosures in various formats, as currently required under the Truth in Lending and Real Estate Settlement Procedures Acts, borrowers will receive just two. Intended to make the loan process more transparent, the new forms, created by theConsumer Financial Protection Bureau, look similar and are much easier to understand.

They are just one aspect of regulatory changes dictating how the real estate and lending industries must handle disclosures. Lenders have been gearing up for the rule change for more than a year. For borrowers, the shift will be much simpler.

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According to the new rules, disclosures must be delivered on a timely schedule. The initial Loan Estimate must be provided to borrowers no later than the third business day after they submit a loan application.

Its first page shows the loan amount and interest rate, what the borrower’s monthly payment would be, estimated taxes and insurance, and how much cash is required to close.

The Closing Disclosure, outlining the final transaction, must be provided to borrowers at least three business days before the closing date. This is a major change, as borrowers typically don’t see the closing documents until they are ready to sign.

In remarks to the National Association of Realtors earlier this month, Richard Cordray, the director of the Consumer Financial Protection Bureau, said the three-day window was intended to give borrowers time to compare the Closing Disclosure with the Loan Estimate and ensure the terms are the same.

“Our form makes that comparison very obvious, which minimizes the potential for nasty surprises such as bait-and-switch increases in rates, fees or settlement costs,” Mr. Cordray said.

Borrowers should be aware that under the new rules, if they decide to change loan products at the last minute — for example, switch from a fixed to an adjustable-rate loan — the closing date must be extended by an additional three days to allow for review of a new Closing Disclosure. Borrowers may not waive that three-day window.

To avoid such a delay, borrowers should make an informed decision early on about which product is going to work best for them, said Diane Evans, the president of the American Land Title Association, which represents the title insurance industry.

Borrowers might also ask their real estate agents or lawyers for advice on which lenders are best equipped to handle the regulatory shift, said Tammy Felenstein, the executive director of sales for Halstead Property in Stamford, Conn. “There’s going to be a little bit of a learning curve in the beginning,” she said. “Go with a lending institution that has prepared for these changes and knows what they’re doing.”

Consumers should be prepared for longer closing times as the industry adjusts to the new process. Under the rules, lenders, title companies, real estate agents and insurance representatives will have to come together much sooner in the process to get disclosures out in time. This could lengthen closing times over the next few months as they all adapt, Ms. Evans said.

Borrowers can help things along by getting their documents in quickly and scheduling inspections early on.

Some real estate agents are planning to write contracts with 45-day closings, instead of 30, Ms. Evans said, adding, “if you’re prepared for a little more time and it takes less, everybody leaves a little happier.”

BUYING VS RENTING by Josh Garskof 9/9/2015

Robert A. Di Ieso, Jr.

Q: My wife and I are enjoying city life and the flexibility of being renters. But everyone says we’re crazy for not buying a home. Is renting really such a bad financial move?

A: You’re certainly not crazy for enjoying the food, culture, and lifestyle that come with living in a great American city. But your real question seems to be whether it’s better to buy a home — even a downtown condo or co-op apartment, rather than a single-family property — or keep renting.

By waiting, of course, you’re missing out on the mortgage tax deduction. Often called the last middle-class tax break, this allows homeowners to write off the mortgage interest they pay on their primary home. If you were to buy a home at the national median price (now about $229,000) with the standard 20% down payment and a 4% fixed mortgage rate, you could get a roughly $7,269 write-off in Year 1 — and end up paying $1,817 less that year in taxes, assuming a 25% effective tax rate. For the median price home in San Francisco — a whopping $1 million — your first-year savings could be more like $7,935, given the same set of assumptions.

So for the simplest comparison, you would subtract that tax savings from your annual mortgage payments and weigh that against the cost of your rental.

But there are other factors to consider. Home maintenance costs are one issue; they might move the needle closer to the rental side. Assuming that you do plan to buy eventually, however, a stronger argument to make a move now has to do with mortgage interest rates, which are near historic lows — just over 4% as of this writing — and home prices, which while up from the depths of the Great Recession, are expected to rise in the next few years.

Waiting just a year to buy would mean an estimated loss of $18,672 in missed monetary gain and other financial benefits, according to an analysis published in May by Realtor.com chief economist Jonathan Smoke. Waiting three years would cost $54,879, according to Smoke’s Opportunity Cost Report.

Now, it’s no surprise that an economist associated with the National Association of Realtors would suggest buying into the housing market, but a look at the math that went into his equation does make a strong case:

·         In 80% of counties, buying is simply cheaper than renting (based on a comparison of median rent vs. the typical monthly payment for a median price home, subtracting the mortgage interest deduction but adding 1% of the purchase price each year for repairs and maintenance), according to Smoke.

·         Notwithstanding the past decade’s crash, real estate values have historically appreciated at 1% above the inflation rate over the long term. That’s after accounting for closing costs, which Smoke pegs at 8%, including commissions and other costs.

·         Rental costs are expected to increase 1.9% in the next year and then 2.2% a year for the next decade, Smoke says, citing an analysis of Housing and Urban Development fair market rent statistics and historical trends.

·         Realtor.com predicts that housing prices will increase 5.4% this year, based on current supply and demand, and then an average of 3% moving forward, saying that housing historically increases one percentage point above the inflation rate (and assuming the Fed successfully targets 2% inflation).

·         Realtor.com also predicts that interest rates will climb from the current 4.05% to 4.4% in one year, and add another 1% each of the following two years.

Basic Homeowner Association Stuff

BASIC HOMEOWNER ASSOCIATION STUFF

Authored By

Judy Graff   SFV Broker Realtor

If you’ve reading this blog, you know that my husband and I are in escrow on a Studio City townhouse.  We finally got the home owners association documents and they contained a few surprises.

HOA documents are usually voluminous.  They contain the Articles of Incorporation and the CCRS (covenants, conditions and restrictions).  These documents have a lot of boring legalese about how the “corporation” is formed, who is a member (you), how and when the Board can assess a dues increase, etc., etc. All of this is recorded at the county and legally binds the unit owner. The documents should also contain the yearly HOA budget, and income statement, and the minutes for a year’s worth of HOA meetings. If you’re going through this process, you’ll be so over the paperwork by the time you get these that you’ll be tempted to just glance at them.  Don’t.  There are things there that you really need to know.

By the way, it’s also a good idea to speak with the HOA president.  They will be able to give you the back story on everything and even tell you where the bodies are buried.

Back to the documents.  First, yes, you can lightly review the Articles of Incorporation and the parts about who is a member and who can vote, etc.  However, when you get time or want to put yourself to sleep, please read every word.  But then, turn to the rules pages of the CCRs.  This will tell you how many pets you can have, storage rules, how many cars you can park, and if/under what circumstances you can make changes to the exterior of the unit, among other things.  You cannot disregard these, although you may ask the HOA president if specific rules (like pet rules*) are strictly enforced.

Next, please review the budget, income statements, and minutes.  This will tell you a lot about your new neighbors – do they spend money to keep the place up? How much? Do they spend money frivolously?  Are dues projected to go up? What repairs has the building needed and what is anticipated? Have they done any termite remediation?  Are there disagreements at the HOA meetings? If so, about what?  Remember, you and the other owners are all in this together. These HOA folks will be your neighbors (gasp!) and will have an impact on your life and home while you live in your condo/townhouse.  You’ll want to know as much as possible about them and how they view the HOA.

*Digression re pet rules: The vast majority of HOAs (but not all) allow domestic pets but may limit how many pets you can have.  And some HOAs have breed restrictions.

Okay, back to us.  Our new building does spend a lot on upkeep, and it shows.  The building has had a few special assessments for painting and termites.  And it seems as if the other owners are a convivial bunch.  At least we hope so.  All in all, we think we’re pretty lucky about our new place.

BASIC HOMEOWNER ASSOCIATION STUFF

Authored By

Judy Graff   SFV Broker Realtor

If you’ve reading this blog, you know that my husband and I are in escrow on a Studio City townhouse.  We finally got the home owners association documents and they contained a few surprises.

HOA documents are usually voluminous.  They contain the Articles of Incorporation and the CCRS (covenants, conditions and restrictions).  These documents have a lot of boring legalese about how the “corporation” is formed, who is a member (you), how and when the Board can assess a dues increase, etc., etc. All of this is recorded at the county and legally binds the unit owner. The documents should also contain the yearly HOA budget, and income statement, and the minutes for a year’s worth of HOA meetings. If you’re going through this process, you’ll be so over the paperwork by the time you get these that you’ll be tempted to just glance at them.  Don’t.  There are things there that you really need to know.

By the way, it’s also a good idea to speak with the HOA president.  They will be able to give you the back story on everything and even tell you where the bodies are buried.

Back to the documents.  First, yes, you can lightly review the Articles of Incorporation and the parts about who is a member and who can vote, etc.  However, when you get time or want to put yourself to sleep, please read every word.  But then, turn to the rules pages of the CCRs.  This will tell you how many pets you can have, storage rules, how many cars you can park, and if/under what circumstances you can make changes to the exterior of the unit, among other things.  You cannot disregard these, although you may ask the HOA president if specific rules (like pet rules*) are strictly enforced.

Next, please review the budget, income statements, and minutes.  This will tell you a lot about your new neighbors – do they spend money to keep the place up? How much? Do they spend money frivolously?  Are dues projected to go up? What repairs has the building needed and what is anticipated? Have they done any termite remediation?  Are there disagreements at the HOA meetings? If so, about what?  Remember, you and the other owners are all in this together. These HOA folks will be your neighbors (gasp!) and will have an impact on your life and home while you live in your condo/townhouse.  You’ll want to know as much as possible about them and how they view the HOA.

*Digression re pet rules: The vast majority of HOAs (but not all) allow domestic pets but may limit how many pets you can have.  And some HOAs have breed restrictions.

Okay, back to us.  Our new building does spend a lot on upkeep, and it shows.  The building has had a few special assessments for painting and termites.  And it seems as if the other owners are a convivial bunch.  At least we hope so.  All in all, we think we’re pretty lucky about our new place.

Arcadia - Building Tensions Big Homes Change

Arcadia City Council meetings have become very contentious and vitriolic with tensions over residential development continuing to rise past the boiling point.  A number of very vocal concerned citizens have attacked three council members over their votes on large home construction approvals (in compliance with existing ordinances and codes) and the suspension of a city wide zoning code update process. A California Environmental Quality Act lawsuit was filed by an activist group against the City regarding residential development. The “appropriateness” of this action has been seriously questioned. A recall  action against certain council members has been threatened and perhaps has been initiated.

These tensions are very much about large homes and community/neighborhood change.  It is natural for homeowners to want to preserve their neighborhoods as they are.  Home and neighborhood engender strong emotions.  Home is the setting of most family memories and the launching place for future dreams.  It represents safety, security and a foundation.  It is usually a family’s largest investment/asset. Changing home surroundings can result in anxiety and concerns.

The City’s approval of the 29 E. Orange Grove and 1600 Highland Oaks projects went through the City’s appeal process; the Planning Commission voted 5 – 0 and Council voted 4 – 1 and 3 – 2 for approval. Arcadia’s 91007 zip code was the first zip code within the five southern most CA counties in which the median sales price surpassed the pre-recession median sale price high point. It doesn’t appear large home construction has hurt property values in Arcadia.  Building codes and ordinances reflect very specific 1^st and 2^nd floor setback requirements in addition to structure height limitations. I know of no existing home which has experienced a decline in value due to the construction of an adjacent or nearby new large home.

At Council meetings one hears a lot of conflicting concerns. Multiple families are occupying these homes and creating heavy traffic and tax limited City resources. Nobody is living in these homes destroying our neighborhood and creating safety/security concerns. Construction is everywhere and clogs streets at the same time the concerned citizen suggested developers be required to put all of the street home utilities underground.

Where do one owner’s property rights end and his neighbor’s rights begin? Does a neighbor’s right to build a 2^nd story prevail to the detriment of his neighbor’s view? Are views sacrosanct? Are HOA pronouncements subordinate to City ordinances and codes? Does the HOA really speak for all of the residents within the HOA boundaries? Are those residents vehemently expressing themselves a very vocal minority or do they reflect  the majority of residents?  Do those advocating reducing the size of new homes understand that the reduction will result in lower tear-down property values thus reducing the financial legacy left to heirs, further limiting retirement options and health care alternatives?  Are some  expressing  their  distaste for the larger homes also expressing their anxiety resulting from Arcadia’s ethnic transition?

The residential development issue is very emotional and extremely complicated. We are fortunate to live in a very well run city. The City should go forward with the residential building code and ordinance review process. Issues should be thoroughly discussed, reviewed and analyzed. And then, the citizens of Arcadia should decide how we address the residential development issues through the election of our elected representatives or voter referendum.  We have to keep faith in the process and the intelligence and fairness of our residents.

 

Will Foreign/Mainland Chinese Homebuyer Demand Continue?

July 13, 2015

Strong Dollar Discourages Many Foreign Homebuyers in the US

Frank Nothaft    |    Housing Trends

Home sales in the U.S. during the first four months of 2015 have been the best in eight years. Relative to the same period one year ago, sales jumped 9 percent, helped by a drop in fixed mortgage rates of almost one-half a percentage point. However, one group of homebuyers has backed off over the past year: foreign buyers.

The National Association of Realtors reports that the number of U.S. homebuyers who identified as international dropped to 2.0 percent during the first four months of 2015 from 2.5 percent a year earlier, a 19 percent decline. About three-fourths of real estate agents who work with international clients report that changes in foreign exchange rates have a moderate to very significant effect on foreign buying.1

The U.S. dollar has strengthened against currencies used by many foreigners who buy homes in the U.S. Exhibit 1 shows that from the beginning of 2014 through April 2015, the U.S. dollar had appreciated 10 percent relative to the United Kingdom pound, 13 percent relative to the Canadian dollar and 26 percent relative to the euro. Notable exceptions to these large swings in foreign exchange values were the Chinese yuan and Hong Kong dollar, which have closely tracked the value of the U.S dollar.

A stronger U.S. dollar makes property more expensive for foreign buyers whose currencies have weakened. Consequently, purchases by foreign buyers have dropped, especially for those whose currency was most affected by the foreign exchange swing. Between the first four months of 2014 and the same four months of 2015, the number of homes sold to foreign buyers drastically declined. Exhibit 2 shows the change in currency relative to the U.S. dollar and the change in home purchases in the U.S. for foreign buyers in selected locations. Foreign purchases were down between one-quarter to one-third during this period for buyers whose currencies depreciated significantly relative to the U.S. dollar, even though domestic purchases rose.

In addition to the sticker shock caused by the stronger U.S. dollar, the markets where foreigners tend to buy have had strong home price appreciation in the last few years. For example, many Canadians, Europeans and South Americans prefer to buy along the Southeast coast of the U.S. for the beaches, cultural amenities, warm winter temperatures and accessibility. Canadians made roughly two-thirds of their U.S. home purchases during the first four months of both 2014 and 2015 in Florida. Of these purchases in 2015, nearly one-half were located in the Miami-Fort Lauderdale-Palm Beach area where home prices rose about 7 to 8 percent from April 2014 to April 2015. Couple that with the effect of a stronger U.S. currency, and the average Canadian considering a home purchase in south Florida saw a jump in purchase cost of 20 to 25 percent in the past year.

Foreign buying could continue to decline, level off or increase in 2016 depending on the value of the U.S. dollar relative to most foreign currencies, but the uncertainties surrounding how the Eurozone will resolve the debt crisis in Greece has made it more difficult to project foreign currency movements.

Note: Contributions to this blog were made by Andrew LePage.

Source: CoreLogic Home Price Index, Federal Reserve Board (exchange rates) and CoreLogic analysis of public records data. The public records do not record the nationality of the homebuyer; rather, it records the primary address of the owner if different from the property address. The analysis in this blog used these data as a proxy for the nationality of the purchaser. Some foreign buyers may provide a U.S. address of their local representative; CoreLogic is unable to identify these cases and could lead to an undercount of foreign buying activity.

[1] Realtors Confidence Index, National Association of Realtors, Report on the May 2015 Survey, p. 17, accessed at http://www.realtor.org/reports/realtors-confidence-index; and 2015 Profile of Home Buying Activity of International Clients, June 2015, p. 8, accessed at http://www.realtor.org/reports/profile-of-international-home-buying-activity

Arcadia High School Makes Newsweek's List of top 500 Schools - Ranks 193rd

by Rebecca Kimitch, The San Gabriel Valley Tribune
POSTED: 08/21/15, 11:45 AM PDT | UPDATED: 1 WEEK, 2 DAYS AGO
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Five San Gabriel Valley high schools made Newsweek magazine’s annual list of America’s Top 500 High Schools.

Diamond Bar High School topped the local schools on the list, ranking 77th.

The rankings are based on various metrics and criteria, including graduation rate, college enrollment rate, retention of students from 9th to 12th grades, scores on SAT, ACT, AP and IB exams, and counselor-to-student ratios.

Walnut High ranked 148th, Arcadia High was 193rd, Glendora High reached 313th and South Pasadena Senior High was 460th.

In addition, six other local schools made the magazine’s Beating the Odds list, which also factors in poverty rates. Those schools included San Gabriel High School, Mark Keppel High in Alhambra, West Covina High, Alhambra High, Temple City High and John A. Rowland High in Rowland Heights.