As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don’t have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate, or secondary, to the lien of the refinancing lender. For a sale, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS’s processing time for subordination or discharge requests has been about 30 days. The IRS currently is working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to IRS Publication 783 for discharges and Publication 784 for subordinations at www.irs.gov.

The Four Point Plan

The most recent economic stimulus bill, the Emergency Economic Stabilization Act, was a good first step towards stabilizing our nation’s economy. Unfortunately, a number of the Act’s provisions have not proven to be as useful at stabilizing the nation’s housing markets as was first thought.

Congress may consider a second economic stimulus bill this month. If they do, there are a number of changes that could help to provide more stability to the nation’s real estate markets which most agree is a necessary step towards recovery.

NAR has urged Congress to include the following provisions in any future legislation:

• Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.

• Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

• Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don’t just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

• Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

While you may be disappointed that your property has lost value in this declining market, you should be proactive and have your assessed value reviewed. The Assessor’s website says that they will be reviewing these sales themselves and notifying you of their findings, but you can apply on your own before that time. You’ll need to send in the application found on the website and sales comps from the neighborhood showing a decline in value since you purchased the home and as of the lien date of January 1, 2008. I can run these comps for you if you are in need of my services.

Properties will be compared to sales near the lien date of January 1st, 2008. “If the market value is less than the assessed value indicated on your 2007-08  tax bill, the assessed value will be reduced accordingly.” It is important to understand that this reduction may be temporary and should the market correct, you will be reassessed accordingly at that time. Be sure to review the information on the Los Angeles County Office of the Assessor website.

For new FHA loans, the following will apply. These loans may take the place of a conventional loan for those desiring a smaller down payment who don’t mind providing full documentation (ie. tax returns, pay stubs, bank statements, etc.)

6% to $362,000, 6.5% to $729,250, 30 Year Fixed, No PP

Minimum 3% down payment required for all property types

Co-Signers allowed

620 Minimum credit scores. Exceptions considered.

No “declining market” reductions

Owner-occupied properties only, however, will loan on multiple unit properties:

1 unit – $729,750  2 units- $934,200  3 units- $1,129,250  4 units- $1,403,400

No EZ Qual programs. Full-doc only.

Plan for 45 day escrow.

For more information, please contact me and I’ll put you in touch with a mortgage specialist who can answer all of your questions.

GDP grew at .6% ratein the 1st Quarter, higher than expected, and 2.5% for the past 12 months…slow growth, but no recession.

Economy lost 20,000 jobs in April, much less than the expected decline of 75,000. The unemployment rate remains at 5%.

The Federal Reserve cut interest rates by another .25%. Prime rate is now at 5%, down from 8.25% in September. Many experts now predict that the Fed will NOT change rates at the next meeting on June 25th.

For more mortgage information, please send your information to my contact page.

Manhattan Beach

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© Brinette Holdren – visit sellingbeachhomes for more great content.

Hermosa Beach

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© Brinette Holdren – visit sellingbeachhomes for more great content.

North Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

© Brinette Holdren – visit sellingbeachhomes for more great content.

South Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

© Brinette Holdren – visit sellingbeachhomes for more great content.

El Segundo

© Brinette Holdren – visit sellingbeachhomes for more great content.

© Brinette Holdren – visit sellingbeachhomes for more great content.

Summary:

Recent activity has grown a bit over the last couple of months. The key to remember is that if you’re in the market to buy, now is a great time to get a good deal. If you’re in the market to sell, be sure to market your property right and at the right price! For more information on my marketing programs, please email or call me directly.

Current Number of “Active” Properties on the Market:

Manhattan Beach: 187Hermosa Beach: 82North Redondo Beach:158South Redondo Beach:173El Segundo: 43

Manhattan Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

Hermosa Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

North Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

South Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

El Segundo

© Brinette Holdren – visit sellingbeachhomes for more great content.

Summary:

In years past, February has been an important month for real estate sales. It has always been a great time to get your home marketed and usually equates to quick sales. With this year’s market, we are seeing a slower turnaround in the homes that are for sale. For example, the number of homes that has sold in past February months has averaged much higher and the pricing much closer to the asking price. What I’m seeing as your professional in the streets is a return to conservative investing on the part of buyers. They are no longer rushing out to purchase a home for fear that someone else will buy it. This ultimately is a good thing for everyone. If buyers make really thoughtful choices about what they want and they are honest with themselves about their financial situation and they are looking to be in a home for 5+ years, then they are more likely to be happy in their decision and less likely to second guess their decision. Everything goes in cycles. Investment is a risk, but over time, real estate has proven to be the strongest of investments a person can make. Many times, real estate will average a higher return than other more volatile investments. This is a great time to make a deal and really enjoy looking for your new home.

Current Number of “Active” Properties on the Market:

Manhattan Beach: 172Hermosa Beach: 97North Redondo Beach:163South Redondo Beach:127El Segundo: 41

Scenario #1: Higher Purchase Price, Lower Interest Rate$1,000,000 Purchase (20% Down Payment)

1st TD $800,000@6.0% $4,797.96

Taxes $1,041.67

Total $5,839.63

After Tax $4,125.46 Assuming 33% tax bracket

Principal $9,575.52 1^st Year

Interest $48,000 1^st Year

Scenario #2: 10% Price Reduction, 1.5% hike in Interest Rate$900,000 Purchase (20% Down Payment)

1^st TD $720,000@7.5% $5,035.51

Taxes $937.50

Total $5,973.01

After Tax $4,124.26 Assuming 33% tax bracket

Principal $6,426.12 1^st Year Interest $54,000 1^st Year

As you can see from the above scenarios, the difference in monthly payment would only be $1.20 more per month (after tax). However, after the first year, you would have $3,150.00 more in equity if you bought today. As the years go on, the amount you pay towards your principal would increase, and the amount you pay towards interest would decrease, making it even more advantageous to buy in today’s market. Please give me a call if you would like further detail or a more specific scenario.

Manhattan Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

Hermosa Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

North Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

South Redondo Beach

© Brinette Holdren – visit sellingbeachhomes for more great content.

El Segundo

© Brinette Holdren – visit sellingbeachhomes for more great content.

Summary:

The significance of list price over sale price is that buyers were able to negotiate a lower sales price than the

sellers were asking for their properties. Also, this means that it is a buyer’s market and a great time

to make an investment in real estate.

Current Number of “Active” Properties on the Market:

Manhattan Beach: 157Hermosa Beach: 95North Redondo Beach: 154South Redondo Beach: 137El Segundo: 41

(a) A pro forma operating budget, which shall include all of the
following:
(1) The estimated revenue and expenses on an accrual basis.
(2) A summary of the association’s reserves based upon the most
recent review or study conducted pursuant to Section 1365.5, based
only on assets held in cash or cash equivalents, which shall be
printed in boldface type and include all of the following:
(A) The current estimated replacement cost, estimated remaining
life, and estimated useful life of each major component.
(B) As of the end of the fiscal year for which the study is
prepared:
(i) The current estimate of the amount of cash reserves necessary
to repair, replace, restore, or maintain the major components.
(ii) The current amount of accumulated cash reserves actually set
aside to repair, replace, restore, or maintain major components.
(iii) If applicable, the amount of funds received from either a
compensatory damage award or settlement to an association from any
person or entity for injuries to property, real or personal, arising
out of any construction or design defects, and the expenditure or
disposition of funds, including the amounts expended for the direct
and indirect costs of repair of construction or design defects. These
amounts shall be reported at the end of the fiscal year for which
the study is prepared as separate line items under cash reserves
pursuant to clause (ii). Instead of complying with the requirements
set forth in this clause, an association that is obligated to issue a
review of their financial statement pursuant to subdivision (b) may
include in the review a statement containing all of the information
required by this clause.
(C) The percentage that the amount determined for purposes of
clause (ii) of subparagraph (B) equals the amount determined for
purposes of clause (i) of subparagraph (B).
(D) The current deficiency in reserve funding expressed on a per
unit basis. The figure shall be calculated by subtracting the amount
determined for purposes of clause (ii) of subparagraph (B) from the
amount determined for purposes of clause (i) of subparagraph (B) and
then dividing the result by the number of separate interests within
the association, except that if assessments vary by the size or type
of ownership interest, then the association shall calculate the
current deficiency in a manner that reflects the variation.
(3) A statement as to all of the following:
(A) Whether the board of directors of the association has
determined to defer or not undertake repairs or replacement of any
major component with a remaining life of 30 years or less, including
a justification for the deferral or decision not to undertake the
repairs or replacement.
(B) Whether the board of directors of the association, consistent
with the reserve funding plan adopted pursuant to subdivision (e) of
Section 1365.5, has determined or anticipates that the levy of one or
more special assessments will be required to repair, replace, or
restore any major component or to provide adequate reserves therefor.
If so, the statement shall also set out the estimated amount,
commencement date, and duration of the assessment.
(C) The mechanism or mechanisms by which the board of directors
will fund reserves to repair or replace major components, including
assessments, borrowing, use of other assets, deferral of selected
replacements or repairs, or alternative mechanisms.
(D) Whether the association has any outstanding loans with an
original term of more than one year, including the payee, interest
rate, amount outstanding, annual payment, and when the loan is
scheduled to be retired.
(4) A general statement addressing the procedures used for the
calculation and establishment of those reserves to defray the future
repair, replacement, or additions to those major components that the
association is obligated to maintain. The report shall include, but
need not be limited to, reserve calculations made using the formula
described in paragraph (4) of subdivision (b) of Section 1365.2.5,
and may not assume a rate of return on cash reserves in excess of 2
percent above the discount rate published by the Federal Reserve Bank
of San Francisco at the time the calculation was made.
The summary of the association’s reserves disclosed pursuant to
paragraph (2) shall not be admissible in evidence to show improper
financial management of an association, provided that other relevant
and competent evidence of the financial condition of the association
is not made inadmissible by this provision.
Notwithstanding a contrary provision in the governing documents, a
copy of the operating budget shall be annually distributed not less
than 30 days nor more than 90 days prior to the beginning of the
association’s fiscal year.
(b) Commencing January 1, 2009, a summary of the reserve funding
plan adopted by the board of directors of the association, as
specified in paragraph (4) of subdivision (e) of Section 1365.5. The
summary shall include notice to members that the full reserve study
plan is available upon request, and the association shall provide the
full reserve plan to any member upon request.
(c) A review of the financial statement of the association shall
be prepared in accordance with generally accepted accounting
principles by a licensee of the California Board of Accountancy for
any fiscal year in which the gross income to the association exceeds
seventy-five thousand dollars ($75,000). A copy of the review of the
financial statement shall be distributed within 120 days after the
close of each fiscal year.
(d) Instead of the distribution of the pro forma operating budget
required by subdivision (a), the board of directors may elect to
distribute a summary of the pro forma operating budget to all of its
members with a written notice that the pro forma operating budget is
available at the business office of the association or at another
suitable location within the boundaries of the development, and that
copies will be provided upon request and at the expense of the
association. If any member requests that a copy of the pro forma
operating budget required by subdivision (a) be mailed to the member,
the association shall provide the copy to the member by first-class
United States mail at the expense of the association and delivered
within five days. The written notice that is distributed to each of
the association members shall be in at least 10-point boldface type
on the front page of the summary of the budget.
(e) A statement describing the association’s policies and
practices in enforcing lien rights or other legal remedies for
default in payment of its assessments against its members shall be
annually delivered to the members not less than 30 days nor more than
90 days immediately preceding the beginning of the association’s
fiscal year.
(f) (1) A summary of the association’s property, general
liability, earthquake, flood, and fidelity insurance policies, which
shall be distributed not less than 30 days nor more than 90 days
preceding the beginning of the association’s fiscal year, that
includes all of the following information about each policy:
(A) The name of the insurer.
(B) The type of insurance.
(C) The policy limits of the insurance.
(D) The amount of deductibles, if any.
(2) The association shall, as soon as reasonably practicable,
notify its members by first-class mail if any of the policies
described in paragraph (1) have lapsed, been canceled, and are not
immediately renewed, restored, or replaced, or if there is a
significant change, such as a reduction in coverage or limits or an
increase in the deductible, as to any of those policies. If the
association receives any notice of nonrenewal of a policy described
in paragraph (1), the association shall immediately notify its
members if replacement coverage will not be in effect by the date the
existing coverage will lapse.
(3) To the extent that any of the information required to be
disclosed pursuant to paragraph (1) is specified in the insurance
policy declaration page, the association may meet its obligation to
disclose that information by making copies of that page and
distributing it to all of its members.
(4) The summary distributed pursuant to paragraph (1) shall
contain, in at least 10-point boldface type, the following statement:
“This summary of the association’s policies of insurance provides
only certain information, as required by subdivision (f) of Section
1365 of the Civil Code, and should not be considered a substitute for
the complete policy terms and conditions contained in the actual
policies of insurance. Any association member may, upon request and
provision of reasonable notice, review the association’s insurance
policies and, upon request and payment of reasonable duplication
charges, obtain copies of those policies. Although the association
maintains the policies of insurance specified in this summary, the
association’s policies of insurance may not cover your property,
including personal property or, real property improvements to or
around your dwelling, or personal injuries or other losses that occur
within or around your dwelling. Even if a loss is covered, you may
nevertheless be responsible for paying all or a portion of any
deductible that applies. Association members should consult with
their individual insurance broker or agent for appropriate additional
coverage.”

1365.1.  (a) The association shall distribute the written notice
described in subdivision (b) to each member of the association during
the 60-day period immediately preceding the beginning of the
association’s fiscal year. The notice shall be printed in at least
12-point type. An association distributing the notice to an owner of
an interest that is described in Section 11212 of the Business and
Professions Code that is not otherwise exempt from this section
pursuant to subdivision (a) of Section 11211.7, may delete from the
notice described in subdivision (b) the portion regarding meetings
and payment plans.
(b) The notice required by this section shall read as follows:
“NOTICE ASSESSMENTS AND FORECLOSURE

This notice outlines some of the rights and responsibilities of
owners of property in common interest developments and the
associations that manage them. Please refer to the sections of the
Civil Code indicated for further information. A portion of the
information in this notice applies only to liens recorded on or after
January 1, 2003.  You may wish to consult a lawyer if you dispute an
assessment.