Los Altos Real Estate Blog

There's a raging debate in Santa Clara County, currently led by the Assessor's Office, to repeal Proposition 90, which gives homeowners the right to transfer their tax base to and from Santa Clara County upon the sale of their home.  This law was put into affect in conjunction with Proposition 60 and Proposition 13 to ensure that seniors can maintain their low tax base when moving from one county to another county within California.  The County Assessor claims that Prop 90 needs to be repealed to bring in much needed tax revenue.  The reality is that is will only bring in about $100,000 which is nothing compared to the shortfall.  What it would do is create an undue hardship on the bandful of seniors who relocate into and out of Santa Clara County.

This whole debate is a monumental waste of time for the county and does not reflect well on Silicon Valley as a suitable spot for senior citizens.  Larry Stone is basically looking in every little nook and cranny to find every dime he can for the county, but in my opinion there are better places to look.  By trying to take this tax transfer advantage away from senior citizens, he's telling voters and seniors that their decision from long ago isn't important enough to warrant keeping it.  He's persisting with the push to have it repealed instead of making recommendations for other cuts that would actually save the money the county actually needs.  Santa Clara County needs millions, not a hundred thousand dollars or so.

What's interesting is that local REALTORS® are fighting hard for the rights of homeowners, just as they always do.  While I don't always agree with the position my trade organization takes on issues, this one is straightforward.  I am confident that this attempt to remove a key homeowner benefit from residents of Santa Clara County will be defeated.  When Larry Stone comes up for re-election, keep in mind this example of a lack of vision.  He is clearly not focused on the right thing and needs to rethink his strategy on finances for this county if he has any chance to staying in his job.

The residential real estate market has spent the last 4 years digging itself out of a meltdown that is unlikely to be completely sorted out for at least another 4 years as foreclosures and short sales which have consumed millions of people.  This was all caused by loose lending standards to unqualified buyers who bought properties as "investments" with little or no money down loans.  The parade of "liars loans" and others with 3-5% down made homeownership a joke and lined the pockets of mortgage brokers, builders, and agents from coast to coast.  The wave of greed resulted in a wake of destruction that send the world's largest economy into a tailspin.

Have we learned nothing?

Congress is working on legislation to define rules for a Qualified Residential Mortgage which includes provisions that would require 20% down payments on new loans, higher ratios for refinancing, consistent debt-to-income ratios, and a requirement to verify borrowers incomes.  The rules do not apply to Fannie and Freddie loans, which constitute 90% of the market but there's a belief that the QRM standards will have an impact of the overall quality of the loans.  The belief is that these rules will improve the quality of the loans made and thus result in fewer foreclosures down the road.

NAR is fighting this legislation.  Why?  Because of their ill-informed belief that requiring higher down payments will put mortgages and home ownership out of reach for the middle class.  This position is dangerous and puts NAR in a position of advocating homeownership at the expense of the greater good.  While it's fine that we encourage more homeownership, the truth is that having people who are clearly unqualfied to buy a home do so merely puts the economy in danger, just as we did 4 years ago.

The idea that we have some moral obligation to let someone buy a home with 3% down is reprehensible.  Regardless of who you are or what you do, nothing should enable a buyer to put less than 20% down on a house.  There's nothing in the constitution that says everyone needs to own a home.  My generation had to put 20% down and worked hard to do it.  The current generation seems to think otherwise.  If NAR is successful in blocking this legislation, all they'll be doing is setting us up for another market collapse somewhere down the line.

UPDATE:  As you'll read in the comments below, it's clear that many people advocate less than 20% down but with strict debt-to-income ratios (traditionally 28/33%).  I support those positions, within reason.  It's clear that the ability to pay is as important as down payment, of course.  It would be nice if NAR worked with Congress and the banks to advocate a balance that works for the diverse markets around the country instead of outright blocking the legislation.

VISIT THIS ARTICLE TO VOTE ON LOAN TERMS IN PLACE OF QRM!

Can you define a well qualified buyer for the QRM rule!

http://activerain.com/blogsview/2310454/can-you-define-a-well-qualified-buyer-for-the-qrm-rule-