Ken Calhoon goes to the Capitol
Once a year the leadership of the California Association of Realtors (CAR) descends on the capitol to meet with the state’s lawmakers. Last Thursday over 2,000 CAR members, representing 190,000 Realtors, arrived in Sacramento for our annual legislative day. It was a day when legislative leaders and Realtors discussed issues important to the real estate industry. It also provided individual face time at a few receptions to hand over political donations to like-minded legislators and scold the ones who misunderstood our issues. CAR has one of the largest political action committees (PAC) in the state and maintains several full time legislative liaisons (lobbyists).
Realtors have been instrumental in not only representing our own self-interest but the interest of all property owners. We have not been bashful about taking a stand promoting affordable housing, additional educational requirements for agents and protecting private property rights. When necessary, CAR rallies the troops against legislation that would increase property taxes or to prevent adoption of overly restrictive land use regulation. Property owners would be underrepresented politically if Realtors were not aligned for our mutual interests. At the capitol you must pay to play and Realtors pay millions to be heard on housing issues.
More important than passing new legislation is preventing poor laws from getting passed in the first place. The legislature is a political body and as such is prone to over-reacting to headlines du jour. The recent flak about subprime loans is an example.
A small minority of homeowners is currently being impacted by the downside of adjustable rate sub-prime loans. A few well-intended lawmakers believe subprime loans require more “oversight”, a political term for regulations. Too much well-intended oversight and many potential new homeowners will be locked out of the housing market. Subprime loans are not government insured loans. They are made from private sector funds and the private sector has already made adjustments to their underwriting standards. Hastily passed legislation to prohibit subprime lending will dry up the subprime well of mortgage money.
Rather than curtailing subprime loans, the legislature should adopt legislation that would require all mortgage loan originators to be licensed. Currently, large banks and mortgage lenders are exempt from scrutiny by the Department of Real Estate. Out of state Internet mortgage loan call centers are not subject to state licensing requirements. Licensed real estate brokers have a fiduciary obligation to their clients to act in their best interest but transaction based lenders have no such obligation. Most of the complaints surrounding under or non-disclosure of the full details of a mortgage loan have been directed at large lenders who employ non-licensed loan originators. The playing field should be equalized. The same state laws that apply to your neighborhood mortgage professional should apply to dotcommortgage based in New York.
Affordable housing is another issue that’s always up for discussions at theses meetings with lawmakers. It’s an issue politicians like to endorse. How could anyone not be supportive of affordable housing? It’s like supporting world peace. The problem is with its implementation. One of the reasons housing is exorbitantly expensive in California is our plethora of land use regulation. Our high developmental costs bringing a home to market is a major contributing factor to unaffordable housing. We are all supportive of consistent and fair building fees and land use regulations but when lawmakers increase the cost of building a home and at the same time advocated their commitment to affordable housing, aren’t they talking from both sides of their month?
Realtors and builders have been on the opposite side of the aisle this year regarding private transfer taxes. In order to settle protracted litigation with environmental groups regarding proposed developments, some builders have written into the CC&Rs of their development, a private property transfer fee. The fee is usually equal to one percent of the selling price of the home and made payable to some conservatory or environmental group. The fee is due on each and every subsequent sale of the home. Builders claim the fee is blackmail by the environmental litigants but necessary to settle the land use lawsuit and allow the development to move forward. Realtors claim the fee is a hidden tax with no limit on who can impose the tax or how many private transfers taxes can be added to a home. While the highest transfer tax is 1.75 percent of a home’s value, under existing law there is no upper limit. I suspect that a compromise between the builders the Realtors will be worked out. It’s just another cost of buying a home in California.
Realtors have been instrumental in not only representing our own self-interest but the interest of all property owners. We have not been bashful about taking a stand promoting affordable housing, additional educational requirements for agents and protecting private property rights. When necessary, CAR rallies the troops against legislation that would increase property taxes or to prevent adoption of overly restrictive land use regulation. Property owners would be underrepresented politically if Realtors were not aligned for our mutual interests. At the capitol you must pay to play and Realtors pay millions to be heard on housing issues.
More important than passing new legislation is preventing poor laws from getting passed in the first place. The legislature is a political body and as such is prone to over-reacting to headlines du jour. The recent flak about subprime loans is an example.
A small minority of homeowners is currently being impacted by the downside of adjustable rate sub-prime loans. A few well-intended lawmakers believe subprime loans require more “oversight”, a political term for regulations. Too much well-intended oversight and many potential new homeowners will be locked out of the housing market. Subprime loans are not government insured loans. They are made from private sector funds and the private sector has already made adjustments to their underwriting standards. Hastily passed legislation to prohibit subprime lending will dry up the subprime well of mortgage money.
Rather than curtailing subprime loans, the legislature should adopt legislation that would require all mortgage loan originators to be licensed. Currently, large banks and mortgage lenders are exempt from scrutiny by the Department of Real Estate. Out of state Internet mortgage loan call centers are not subject to state licensing requirements. Licensed real estate brokers have a fiduciary obligation to their clients to act in their best interest but transaction based lenders have no such obligation. Most of the complaints surrounding under or non-disclosure of the full details of a mortgage loan have been directed at large lenders who employ non-licensed loan originators. The playing field should be equalized. The same state laws that apply to your neighborhood mortgage professional should apply to dotcommortgage based in New York.
Affordable housing is another issue that’s always up for discussions at theses meetings with lawmakers. It’s an issue politicians like to endorse. How could anyone not be supportive of affordable housing? It’s like supporting world peace. The problem is with its implementation. One of the reasons housing is exorbitantly expensive in California is our plethora of land use regulation. Our high developmental costs bringing a home to market is a major contributing factor to unaffordable housing. We are all supportive of consistent and fair building fees and land use regulations but when lawmakers increase the cost of building a home and at the same time advocated their commitment to affordable housing, aren’t they talking from both sides of their month?
Realtors and builders have been on the opposite side of the aisle this year regarding private transfer taxes. In order to settle protracted litigation with environmental groups regarding proposed developments, some builders have written into the CC&Rs of their development, a private property transfer fee. The fee is usually equal to one percent of the selling price of the home and made payable to some conservatory or environmental group. The fee is due on each and every subsequent sale of the home. Builders claim the fee is blackmail by the environmental litigants but necessary to settle the land use lawsuit and allow the development to move forward. Realtors claim the fee is a hidden tax with no limit on who can impose the tax or how many private transfers taxes can be added to a home. While the highest transfer tax is 1.75 percent of a home’s value, under existing law there is no upper limit. I suspect that a compromise between the builders the Realtors will be worked out. It’s just another cost of buying a home in California.
posted by Ken Calhoon at 7:35 AM
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