Let’s Assess the Assessments

Dorian Hargrove, April 25, 2012

Residential property owners throughout San Diego might be finding an additional charge on their annual property-tax bills if a local businessman gets his way. The extra assessment would pay for enhanced services such as trash and graffiti removal, sidewalk cleaning, and promotional events, provided in specific neighborhoods through community benefit districts.

Since 1978, when Prop 13 was passed, declining tax revenues have forced cities across the state to cut programs and scale back on services. The trend is evident in San Diego’s neighborhoods, where street trees go untrimmed and abandoned couches clutter alleyways for weeks on end.

In response, beginning in the 1990s, some residents and community leaders have taken matters into their own hands, searching for creative ways to fund local improvement projects and prevent blight.

One popular tool is a maintenance assessment district, an area where an annual tax is levied on each property to fund maintenance services such as landscaping. Currently, the city of San Diego has 55 maintenance assessment districts, with more neighborhoods such as Barrio Logan looking to join the list.

But assessment districts have come under fire in recent years. Reports of flawed assessment engineer’s reports and allegations that the districts were illegally formed and ill conceived have made some residents rethink the benefits that maintenance assessment districts offer. In February, a judge ordered the dissolution of the maintenance assessment district in Golden Hill and South Park. Last year, residential and commercial property owners in North Park defeated a proposal to create a second maintenance assessment district. And downtown, after three years of waiting, residents still have not been refunded hundreds of thousands of dollars they paid in miscalculated assessments.

Marco Li Mandri, whose for-profit company New City America has formed 61 districts across the country, hopes to change the local law that regulates assessment districts so as to make it easier to establish them in San Diego neighborhoods.

The current law requires that to initiate the process, a petition must be signed by property owners who will be paying more than 50 percent of the total assessment. And once established, the district must be renewed by a vote of the property owners after five years.

Li Mandri proposes to create a new type of assessment district, a “community benefit district,” whose life would be extended to 20 years. And instead of a petition signed by property owners who will be paying more than 50 percent of the total assessment, a community benefit district would require only 30 percent to start the process. Li Mandri’s proposal also broadens the services that can be offered to include such improvements as parking facilities and kiosks and such activities as promotion of community events and furnishing of music in public places.

On November 2, 2011, Li Mandri appeared before the city council’s Public Safety and Neighborhood Services Committee during public comment to pitch his new ordinance.

His proposal was met with a glowing reception from councilmembers. “Assessment districts of all shapes and colors have been transformational in my council district,” said Councilmember Todd Gloria, “and Mr. Li Mandri is nationally recognized for his work on this issue. If there are suggestions to make it better, then I am all ears.”

And as city councilmembers and other city officials looked over the proposal, the same proposal appeared in the state legislature as Senate Bill 949, introduced on January 4 by Senator Juan Vargas.

Vargas’s bill, however, was met with resistance from constituents and taxpayer groups. “As it stands, we are taking an ‘opposed until amended’ position,” David Wolfe, legislative director for the Howard Jarvis Taxpayers Association, said earlier this month. “We have concerns, mainly how the assessment is implemented.” In mid-April, Vargas pulled the bill from committee, and last week his spokesperson in Sacramento confirmed that the bill is dead.

The same month that Vargas introduced the bill in the state legislature, Li Mandri was busy studying state law and working on the local ordinance. At the end of January, he submitted an invoice for $10,000 to the Downtown San Diego Partnership, which administers the Downtown Property and Business Improvement District, where Li Mandri serves as a consultant. On the invoice, Li Mandri listed among his accomplished tasks “Work on Proposition 218, Section 36600, MAD [maintenance assessment district], CBD [community benefit district], Golden Hill packets.”

Li Mandri did not respond to a request for comment about his proposal.

Vladimir Kogan, PhD candidate at the University of California San Diego and an expert on assessment districts, has looked over Li Mandrel’s proposal.

“This is clearly a full-employment act for [Li Mandri], who would get a lot of new business as a consultant for forming [maintenance assessment districts],” wrote Kogan in an email.

“[Maintenance assessment districts] are terrible ways of financing local needs. It’s incumbent on those of us who don’t like [them] to identify an alternative funding source. Currently, there is none. The city can’t afford to do it and will not be able to afford to do it unless its revenue structure changes.”

Kogan prefers funding mechanisms “that allow all residents, rather than just property owners, to participate and don’t require expensive consultants like Li Mandri to take a substantial cut of the proceeds. They are really the people that benefit the most from the status quo.”

Short sales top REO at JPMorgan Chase

By Jon Prior

• April 23, 2012 • 10:45am

JPMorgan Chase ($43.18 0.33%) completed short sales on 61% of its delinquent mortgage liquidations in 2011, the most of any servicer, according to data compiled by the bank’s securities research group.

As the robo-signing freeze put a hold on the foreclosure process, the largest servicers turned to short sales over REO. By the end of last year, servicers were completing short sales on more than half of their inventory of home loans more than 60 days delinquent or in foreclosure, according to the report. In 2008, short sales took roughly 25% of all liquidations.

According to Chase analysts, short selling a property resulted in an average 56% loss on the loan, roughly 15% lower than an REO sale.

recent story in Bloomberg detailed how short sales peaked even as a percentage of overall home sales in January.

Analysts at Chase, using the same Lender Processing Services($25.01 -0.48%) data, broke down which servicers were doing the most.

Following Chase, Bank of America ($8.14 -0.045%) completed short sales on 52% of its liquidations. Ally Financial and Wells Fargo ($33.04 0.35%) both did short sales on more than 41% of their resolutions.

Even firms not involved in the robo-signing investigation from the attorneys general turned to short sales. While still under Goldman Sachs ($112.78 1.03%) ownership, 43% of Litton Loan Servicingliquidations were short sales, followed by 43% at IndyMac and 39% of American Home Mortgage Servicing, according to the report.

Ocwen Financial Services ($14.72 0.01%) used short sales the least, completing them on roughly 25% liquidations, because the company was geared more toward modificaitons and REO, according to the analysts.

Fannie Mae and Freddie Mac will hold servicers to stricter short sale timelines beginning in June. The AGs and federal prosecutorsinstalled similar short sale standards in the $25 billion foreclosure settlement as well. A recent report from RealtyTrac showed 2012 could lead to even more short sales.

Chase analysts project servicers will have to liquidate roughly 2 million loans either through short sale or REO every year for the foreseeable future.

“Given that liquidation is inevitable for so many borrowers, investors in distressed assets should look to servicers who are more aggressive about pursuing short sales, where severities are lower,” analysts said in the report. “In general, there has been a trend of increasing short sales, and the percentage of all liquidations that goes through short sales is over 45% now.”

California Home Prices Going Up, Inventory Down, C.A.R. Reports

BY: ESTHER CHO

 

After 16 months of year-over-year declines, median home prices in California posted a gain, according to the California Association of Realtors.).

The median price of a single-family home for March 2012 was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February’s median price of $266,660. The month-over-month increase was the largest since March 2004.

When breaking up prices by specific regions, the San Francisco Bay area was an exception, seeing a year-over-year decrease of 1.6 percent, but a 9.1 percent month-over-month increase.

“In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average,” said C.A.R.

VP and chief economist Leslie Appleton-Young. “These low inventory levels demonstrate that the pilot program is not necessary in California.”

The pilot program involves the sale of government-owned REOs in bulk to institutional investors who will convert them into rental properties. According to C.A.R., in California, the program would call for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties.

Recently, 19 California congressmen sent a letter to Edward DeMarco, acting director of FHFA, asking him to make California an exception to the program.

C.A.R. reported that California’s housing inventory declined, with the Unsold Inventory Index for existing, single-family homes down to 4.1 months in March, compared to a revised 5.4 months in February and a 5.4 month supply in March 2011.

Los Angeles county had a 4.3 month supply, and Riverside county had an even lower number, with 3.8 months of inventory.

San Mateo and Santa Clara counties had notably low inventories as well, at 2.4 and 2.5 months, respectively.

Not only is California’s housing inventory down, but according to C.A.R., it takes less days to sell a home there, with the time it took to sell a single-family home dropping to 53.1 days in March 2012, compared to 58.9 days in February and 57 days for March 2011.

Let’s see your pets for a chance to win!!

We want to see your pets for our next Client Challenge!!  Send us a picture of your pet and you will automatically be entered into the raffle.

April 2012 Client Challenge

 

BofA Makes Changes to Trim Short Sale Timeline

BY: CARRIE BAY

Bank of America is making changes to its short sale procedures and introducing an improved task flow within the short sale technology module from Equator, BofA’s short sale management platform of choice. The goal: to reduce the timeframe for a short sale decision to less than three weeks.

Starting Saturday, April 14, real estate professionals working with BofA will be required to submit five documents for short sales initiated with an offer:

The acknowledgement and disclosure form, short sale addendum, and the form for third-party authorization are available through the company’s online Agent Resource Center.

The third-party authorization form is a new standardized document developed specifically for BofA. Previously, the lender accepted third-party authorization forms in differing formats and from a variety of sources when transacting a short sale.

Bank of America says it recognized a need for greater compliance and consistency with this important document and has now created its own form to standardize the third-party authorization process. The two-page document

requires signed acknowledgments from all borrowers and designated representatives in a short sale. Beginning April 14, BofA will accept only the official Bank of America Third-Party Authorization Form for short sales.

The bank’s new short sale process will enable real estate agents, brokers, attorneys, and other short sale specialists involved in pre-foreclosure transactions to complete tasks such as document collection, valuations, and underwriting simultaneously.

With these steps running concurrently, the timeline from initiation to closing is reduced. In fact, Bank of America says it will now be able to provide a decision on a short sale offer in 20 days. Typically, BofA’s short sale process has taken anywhere from 45 days upwards.

In continuing to streamline the decision process, should the buyer walk away from the sale, Bank of America is giving agents five days to submit a backup offer. Previously, the backup offer window was 14 days. Interested buyers are limited to two counteroffers and will receive a response from the lender within three days.

BofA notes that all email messaging between designated selling agents and their Bank of America short sale specialist will continue to occur within the Equator system. Agents will receive a standard notice via email to log into the system and retrieve their messages.

In order to implement the myriad of changes, BofA’s Equator platform will be down for 10-12 hours the night of Friday, April 13 into the early morning of Saturday, April 14.

Real estate agents and other short sale professionals are invited to review a Bank of America webinar outlining the coming changes. BofA is also offering task-by-task training on the new Equator process via a webinar to be aired on Thursday, April 19 from 4-5 p.m. (EST). Additional information can be found through the company’s online Agent Resource Center.

Bank of America’s short sale and REO executive Bob Hora says the company expects short sales to continue to increase and is taking steps to ensure it is providing decisions quickly and real estate agents are alerted of status as soon as possible.

Downtown San Diego Quiet Zone Testing Scheduled for March 30 through April 1

 SAN DIEGO — On behalf of the Centre City Development Corporation (CCDC), West Coast General Corporation/Select Electric will be performing a major cut-over transition of old to new railroad signaling equipment starting on Friday night, March 30 at 11:00 p.m. until Sunday evening, April 1, for the Downtown San Diego Quiet Zone project. The cut-over will remove old equipment and put new equipment in service.

The work will affect the at-grade rail crossings from Sassafras Street to Ash Street. Amtrak and the Coaster trains will continue providing service following their normal schedules during this time period. Trolley service will continue during the entire operation with minor delays within the work area.

Once the initial installation is complete and preliminary testing is performed, a test train will be utilized beginning Sunday night at approximately midnight. The test train will run a minimum of 24 runs that should be complete by 8:00 a.m. Flaggers will be present at all of the affected crossings during the cut-over and testing period. The testing will be performed at night during the time period when the commuter trains (Amtrak and the Coaster) are not operating. The heavy rail (BNSF Railway) will be restricted from operating during the test period.

CCDC is moving forward with an application to the Federal Railroad Administration (FRA) to designate downtown a Quiet Zone at downtown San Diego’s 13 grade crossings (Park Boulevard to Laurel Street). In order to establish a Quiet Zone, the railroad crossings are improved with safety enhancements such as additional gates, medians, traffic signals and warning lights. The Park Boulevard improvements will be constructed as a separate project and will include similar safety enhancements to meet the Quiet Zone designation. Construction is anticipated to be completed in late May with a mid-June formal certification anticipated. These improvements reduce the requirement that train horns be sounded at railway crossings, absent emergency situations.

A simplified explanation of why the testing is necessary.

Tests of railroad signal and crossing systems are a FRA requirement. All railroad systems must undergo several levels of testing prior to systems being deemed safe for service. The minimum tests required for each system and subsystem are; pretesting of each component, system and subsystem, in-service testing of each system and subsystem, and commissioning tests performed under actual train traffic.

How many more tests are necessary between now and project completion?

Seven (7) phases of commissioning have been submitted by the contractor. After this cut-over is complete there will be two additional cut-overs to complete the Quiet Zone project. Each phase will require meeting all required FRA testing. Test trains will be used for commissioning the portion of the system being put into service. This will be the final testing utilizing a test train for commissioning the equipment

The Department of Transportation FRA Office of Safety sets the minimum requirements under Part 234 of the Rules and Regulations Governing Railroad Signal and Train Control Systems. North County Transit District requires two (2) warning times in each direction for each track, for every affected crossing system. This testing will be limited to the heavy rail side of the railroad corridor.

For more information about the Downtown San Diego Quiet Zone project visit www.ccdc.comand click on the Downtown Quiet Zone section of the website.

Investment and second home sales surge in 2011.

This comes as no surprise in the San Diego market place.  For the past several months cash sales have taken a 49% market share. Total surge in investor purchases in 2011 has reached 64.5%. With low inventory of traditional sales investors are seeing a golden opportunity in purchasing “Cash Only” properties and “Auctions Properties” , fixing them up and turning around selling for a profit.

Second home buyers are finding San Diego to be a “perfect” place to come visit and or retire.  In 2011 vacation home purchases took 11% of the market share.  42% paid cash for their vacation home.

With these trends it is hard to argue that San Diego has reached the bottom of the market and that recovery is on its way.

For more information click the link below:

http://rismedia.com/2012-03-29/nar-investment-and-vacation-home-sales-surge-in-2011/

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