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Hot Topics Tue 15 September 2009 16:04

Santa Clarita hopes to boost the local economy by implementing a new 21-point plan to allocate, generate and re-allocate funds to new projects.

In an effort to boost the local Santa Clarita economy, the Santa Clarita City Council has approved a 21-point plan aimed at improving the general economic outlook of the Santa Clarita area. Projects range from infrastructure improvement and encouraging the use of Enterprise Zone tax credits to the City giving itself (i.e. Bob Kellar) permission to get into the residential real estate business in the City’s name.

Seems some of these 21 items have definite merit, and others appear to have been added just to get to the magic number of 21. Highlights of the plan are defining the use of Federal funds for infrastructure and other upgrades, micro-loans for highly-qualified low-risk businesses, a new film incentive program, streamlining the development and permit processes, and programs to help homeowners improve their neighborhoods (the ongoing Extreme Neighborhood Makeover program). The scariest aspect of the plan is the authorization for the City to purchase homes (residential real estate) to either fix and flip or rent out (how do you spell conflict of interest?).

Here are the basics of the 21-point plan:

1. Enterprise Zones: $50k has been set aside to market the use of Enterprise Zones more effectively. Enterprise Zones allow businesses to claim tax credits for hiring and other activities, which makes it more attractive to do business within the City of Santa Clarita.
2. Recycling Market Development Zones (RMDZ): Designed to encourage the use of recycled materials in product manufacturing, RMDZ’s encourage reduction of waste from manufacturing. Qualifying businesses are eligible for low interest loans, financial assistance referrals, and waste exchange. City staffers will help design new marketing brochures for the RMDZ program, at no additional cost to the City.
3. Think Santa Clarita and Shop Local Programs: $250k has been set aside for marketing efforts within the Santa Clarita area and extending into the Los Angeles area, using direct mail, cable tv, bus benches and the like. Per the City’s propaganda: “The greater Los Angeles outreach will promote Santa Clarita as THE place to shop, locate a business and live as a way to import sales tax revenue, attract businesses that may not know of our low tax environment, and attract homebuyers with higher incomes who may not know of our excellent schools, parks, commuter services, quality of life, etc.”
4. Film Incentive Program: $200k has been set aside, including $50k in tax rebates for film-related hotel stays, to incentivize increased film production in the Santa Clarita area. Santa Clarita is within the “30 mile zone” for filming, and this incentive is an attempt to attract more feature filming to the area. There is already a lot of filming in the area, including Stevenson Ranch being used as “Weeds” on the popular tv show.
5. SBDC Program for Business: $100k has been set aside for micro-loans for businesses who do not qualify for regular SBA loans and are low-risk borrowers.
6. Westfield Partner Program: $100k has been set aside in the form of potential lost revenues to explore possible incentives for Westfield to expand and thus add more sales tax revenues to the area.  Incentives could be in the form of a rebate or future expansion permit subsidization.
7. Development Process: $500k has been set aside to help streamline the development process within the City of Santa Clarita. This plan includes implementing technology solutions to accept plans and permits electronically, streamlining permit processes, formalizing a free one-stop review for projects, and relocating related City permitting services to the first floor for of the City Hall building as “Development One Stop”.
8. Incentives for Business that Create Jobs: $50k has been set aside to subsidize permit fees for business that create “quality” jobs.
9. Event Sponsorship Program: Creates a multi-year program where businesses could support City events (i.e. Concerts in the Parks) and enjoy the marketing from these sponsorships for a longer term with deferred payments. Or, in other words, sign up for a 5-year contract and postpone all payments until Year 2. Financial impact is not projected for this item. [Deja vu from the Vital Express scandal with the Performing Arts Center... will companies take the Year 1 freebie and then walk away?]
10. Staff Re-Allocation: Move staff from other areas within the City to the Economic Development area to implement new and ongoing programs. This would shift $250k in costs to Economic Development.
11. WorkSource Center Restructuring: This program will be moved to the Economic Development Division, and will work to create alliances and seek funding for the WorkSource program.
12. Business District Improvements: $2 million has been set aside to improve signage and upgrade street medians in the City’s primary sales tax-generating areas, the Valencia Town Center Mall and the Valencia Auto Center. Other areas that may receive a portion of these funds are the Bouquet Canyon area from Soledad to Seco, Railroad Ave. from Via Princessa to Bouquet Junction, the corner of Newhall Ranch Rd. and Copperhill, the Centre Pointe area, and the intersection of Sierra Highway and Via Princessa.
13. Stimulus Dollars for Infrastructure Projects: Over $10.3 million in secured Federal funds has been put aside for City infrastructure projects, including bridge rehabilitation, traffic circulation and improvements, expansion of parking at the Newhall Metrolink station, and the McBean regional transit center Park and Ride.
14. Stimulus Dollars for Non-Infrastructure Projects: Over $3.2 million in secured Federal funds has been set aside fund projects that support businesses, including justice (COBRA), community development block grants (CDBG), energy efficiency and conservation, and neighborhood stabilization.
15. Economic Development Corporation: The City will explore the formation of an Economic Development Corporation, with costs to be determined. Per the City: “One function of EDC would be implementation of registry of all businesses to maximize business-to-business opportunities, to more accurately identify business industry clusters, and to identify potential attraction targets from vendor/supplier, customer chain.”
16. “Give Me 10″ Promotion: Increases the City’s incentives to buy local from 5% to 10%, and supplements the Shop Local program. Encourages other organizations to offer discount programs as well (COC, school districts, HMNMH, etc). [Not sure how different this is from the 25Score program?]
17. Hotel Business Improvement District (BID): $400k has been allocated to create a new Hotel Business Improvement District, to be funded from new revenues generated by an additional 2% hotel tax. Funds would be used to attract additional economic high impact events to the Santa Clarita, such as the current AMGEN Tour and others.
18. Old Town Newhall Facades: $150k has been allocated to create new facades in the Old Town Newhall area. [Don't get me started on this black hole... I still don't see why someone would go out of their way to travel to Newhall to shop when it is so far from the freeways, and the economic study to support this project was counting on over 50% of the projected revenues to be generated from people 30+ minutes away.]
19. Use Tax Incentive for Business Expansion: Sets up a program where businesses can offer a $20k one-time use tax payment to the City (which is like sales tax and is generally charged for items purchased without sales tax, typically from out of state), and get half of that allocated back to them as payment for permit fees or other rebates. [HUH? Not sure what the benefit is for this from the business owner's standpoint.] Cost for this program would be potential lost revenues.
20. Neighborhood Stabilization Program: Almost $1.2 million has been allocated, supposedly to help areas that have been hit hardest by foreclosures. According to the City, “Funds can be used to purchase and rehabilitate foreclosed homes to sell or rent to lower income buyers; demolish blighted structures; and assist in redevelopment efforts for both residential and commercial properties.” [Kudos to the programs to assist homeowners in improving their homes, but wondering what can be scarier than the City going into the residential real estate biz? Why not let investors and regular buyers buy and fix these homes instead?]
21. One Valley One Vision (OVOV) Economic Element: Creates a stand-alone element of the OVOV plan to adress economic concerns. There are no stated costs for this program.

New Federal plan hopes to encourage banks to modify second mortgages.

Many distressed homeowners are all too familiar with the difficulties involved in getting loan modifications for second mortgages, especially if these loans are HELOCs (home equity lines of credit). To ease this process a bit, the Feds have come up with new incentives for banks to adjust these second mortgages as well.

This new program states that the Feds will pay mortgage servicers $500 upfront and $250 a year for three years for successfully modifying a second mortgage, including HELOCs.

To receive their incentive payments, servicers must modify all second mortgages where the first mortgage has already been modified. The term of the second mortgage must be extended, and interest rate reduced to match the first mortgage. Then, the government will share the cost with the servicer of reducing the rate down to 1% for amortizing loans and 2% for interest-only loans.

Apparently Bank of America, Wells Fargo and Chase have already agreed to participate in this program, and others are expected to participate as well.

Only time will tell if this program actually helps homeowners to stay in their homes, or if it is just another program that has more hot air than substance. Most of the Federal programs introduced to date have excluded so many homeowners that they had little to no impact on keeping people in their homes.

About the author: Linda Slocum is a Santa Clarita Realtor, Certified Distressed Property Expert (CDPE), and the author of the Santa Clarita Real Estate Blog. She can be contacted via email, or call her at 661.670.0349.

Low enrollment at West Creek Elementary delays school opening for at least a year.

West Creek Elementary School, which is connected to Lennar’s West Creek and West Hills developments in Valencia, will not open this year as planned. The school is expected to open in 2010 instead.

Saugus Union School District officials have elected to delay the opening of the West Creek Elementary School due to low enrollment numbers, and will instead use the facility for meeting rooms and staff development until there is enough student population to justify opening the new school.

The district requires at least 300-400 enrolled students to open a new school, since each new school requires administrative staff as well as teaching staff. The current enrollment at West Creek Elementary is apparently only about 50 students. Enrollment is expected to remain low for West Creek Elementary until Lennar’s West Creek and West Hills developments sell more homes. The adjacent Tesoro del Valle development is served by the Tesoro del Valle Elementary School, so it’s likely that the current West Creek and West Hills students will attend this school as well until their school is built.

Lennar’s West Creek and West Hills developments have largely been put on hold until the real estate market starts to improve. Estimates are that they may start building some of their projects again within the next 1-3 years, with some homes likely delayed for 5 years or more.

Lennar recently stopped production of the Patina homes in West Creek Valencia, after selling off the few remaining homes at a discount. Local sales representatives state that it will be at least another year before the Patina homes begin construction again, and the next reincarnation of the Patina homes may not include the solar power and other energy efficient features that the current homeowners enjoy.

That leaves only the Castillo homes available for purchase in West Hills, as well as the few remaining Esperto condos and townhomes in West Creek. Other homes and townhomes were put on hold already, including the larger Mosaic homes (Mosaic and Patina floorplans were reincarnated as Brookville and Heirloom at RiverVillage near Saugus), the Toscana homes (only the models were ever built) and the Artisan, Artenati, and Claridad condos and townhomes. The larger Vintage and Classics homes in RiverVillage were also put on hold, with the models being sold off recently after only a few of these homes were built.

Foreclosure activity remains relatively low for the Santa Clarita Valley area.

Foreclosure auctions in Santa Clarita remain relatively low compared to much of the Los Angeles area for the first quarter of 2009. Canyon Country continues to have the most foreclosure activity, with 130 foreclosures in zip codes 91351 and 91387 combined.

Santa Clarita Foreclosure Map First Quarter 2009

Of the 265 zip codes within the Los Angeles area, Santa Clarita ranks as high as 34 and as low as 151 for total foreclosure activity within a single zip code, with Canyon Country’s zip 91351 being the highest and Stevenson Ranch and Westridge zip code 91381 being the lowest. 

With various incentives and moratoriums being issued at both the federal and state level, it is unclear whether this decline in forecosure activity will continue, or if we’ll see a surge in foreclosure activity now that the federal stimulus package is in place. It seems that banks are getting more proactive in granting loan modifications in recent months, so hopefully more homeowners will be staying in their homes than in prior months. Short sale activity also remains high, with homeowners choosing to sell prior to the foreclosure auction in order to have less of an impact on their credit.

Foreclosure data and map courtesy of PropertyShark. All data is deemed to be reliable, but is not guaranteed.

New foreclosure auctions continue to decline in the Los Angeles area.

New foreclosure auctions in the Los Angeles area declined by 18% during the first quarter of 2009 as compared to the fourth quarter of 2008, according to data provided by PropertyShark. This brings the current foreclosure activity close to the level that we saw during the first quarter of 2008.

The Palmdale Lancaster area still tops the charts as the zip codes with the highest amount of foreclosure activity within the Los Angeles area. The San Fernando Valley areas of Sylmar, Pacoima, Reseda and Panorama City continue to show relatively high amounts of foreclosure activity as well, but not nearly as high as the top zip codes in Palmdale (93550) and Lancaster (93535), which have a combined total of 586 new foreclosure for the first quarter of 2009. There were 2,403 total new foreclosures for the Top 15 zip codes for the first quarter of 2009, with zip codes 93550 and 93535 representing over 24% of that total.

Santa Clarita remains off the Top 15 zip codes for foreclosures once again, with zip code 91351 topping the Santa Clarita foreclosure list. Zip code 91351 is ranked at number 34 with 71 new foreclosures for the quarter. Santa Clarita’s zip code 91381, representing primarily Stevenson Ranch and Westridge, came in the lowest for the area this quarter with only 18 new foreclosures.

Do your homework before paying any advance fees for foreclosure prevention or loan modification services.

The California Department of Real Estate (DRE) has issued a consumer alert warning homowners about paying advance fees for foreclosure or loan modification consulting services. If you are behind in your mortgage payments, be sure to investigate before you sign any agreements or pay any up-front fees for foreclosure consulting services.

In general, once a Notice of Default (NOD) has been filed by your bank, DO NOT pay an advance fee to anyone but a lawyer. All other individuals and entities are prohibited from collecting advance fees once an NOD has been filed. Non-profit agencies have been set up to help homeowners in this situation, which you can find through the FHA or through the Hope Now program. Real estate licensees are also authorized to help you, but only if they collect their fees AFTER the work has been completed.

If you are seeking help with your loan modification BEFORE the NOD is filed, then a real estate licensee may help you in return for an advance fee for their services. HOWEVER, the licensee (realtor or broker) must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. In addition, the agreeement must have been submitted to the DRE and approved before the realtor or broker can charge you an advance fee for their services. To verify whether a real estate licensee has been approved to collect advance fees, click here for a list or call (916) 227-0770.

For individuals or companies offering foreclosure or loan modification services where payment is required AFTER the work is complete, no restrictions or qualifications are required.

Many of the foreclosure prevention or loan modification services offered to Santa Clarita homeowners are the pay-in-advance type, where you’ll be required to pay an up-front fee of $2,500 or more, which is usually non-refundable, before they’ll start working on your situation. Be cautious of these services, and when in doubt call the California Department of Real Estate for further information.

Read more about the various types of foreclosure rescue scams here.

California’s first time homebuyers to benefit from new insurance program to protect against foreclosure in the event of a job loss due to layoffs.

The California Association of REALTORS (CAR) has rolled out a new mortgage protection program for first time homebuyers, effective April 2, 2009. This program provides up to six months of mortgage protection, and is available to first-time homebuyers who lose their jobs due to layoffs, as long as they purchased their homes through a licensed California Realtor.

CAR’s Housing Affordability Fund (commonly called CARHAF) has allocated $1 million towards this Mortgage Protection Program, and estimates that up to 3,000 families will benefit from this program this year. The program provides up to $1,500 per month for 6 months to help pay the mortgage payment when there is a job loss due to a layoff. Co-borrowers are also eligible for the program, with benefits available up to $750 per month.

According to CAR President James Liptak, “The Mortgage Protection Program was developed to help ease the anxiety of consumers who are concerned about potential job loss and its impact on their ability to pay their mortgage should they purchase a home. It also provides peace of mind to those buyers who are actively searching for a home.”

Qualifications for this mortgage protection program are as follows:

• Be a first-time home buyer - someone who has not owned a home in the last three years.
• Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
• Use a California REALTOR® in the transaction
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed)  
• Apply for the program through their Realtor

This program allows first-time home buyers a level of protection and peace of mind that they may need in order to buy a home in a market where job stability may be a concern. Other incentives are available to first-time homebuyers this year as well, including the $8,000 federal tax credit and the $10,000 state tax credit for new-home buyers.

Feds get into the movie biz with feature ads warning about foreclosure rescue scams.

Click to watch the ad on wsj.com.

The Federal Reserve will soon begin showing feature ads at movie theaters warning of foreclosure rescue scams in order to increase public awareness of the various types of “Stop Foreclosure Now!” scams that homeowners in distress are constantly being bombarded with. These ads will be shown as part of the theater’s pre-feature entertainment, which combines attention-grabbing shorts from upcoming movies with various types of advertising.

Santa Clarita is not immune to these foreclosure rescue scams, with many companies offering to help negotiate a loan modification for you if you’ll pay them an up-front non-refundable fee of $2,500 or more for services that aren’t guaranteed. Sandra Braunstein, director of the Fed’s Division of Consumer and Community Affairs, says, “People who are facing foreclosure are stressed enough. The last thing you need to do in a situation like that is put out a couple thousand dollars. There are people out there who can help and do not charge.”

The Fed’s ads will run in movie theaters in Arizona, California, Georgia, Florida, Michigan, Nevada and Ohio beginning the week of April 9.

Feds warn against paying high fees for loan modification assistance.

The Federal Reserve is trying to educate consumers on the various types of foreclosure rescue scams so they won’t continue to get caught in the trap of these scam artists. Often these messages are delivered in the form of “hand written” letters to the homeowner and yellow “bandit” signs along the roadways that look “hand written” as well (hint: there are companies that specialize in mass-producing these signs!). Common wording on these foreclosure rescue scams include:

• “Stop Foreclosure Now!”
• “We guarantee to stop your foreclosure.”
• “Keep Your Home. We know your home is scheduled to be sold. No Problem!”
• “We have special relationships within many banks that can speed up case approvals.”
• “We Can Save Your Home. Guaranteed. Free Consultation”
• “We stop foreclosures everyday. Our team of professionals can stop yours this week!”

Tacky as these signs are, they can be effective. Most people don’t realize that they are mass-produced and assume that some local guy is really there to help, which of course is why they’re printed this way. Don’t believe me? Here are some quotes from a company that promotes the use of these so-called handwritten signs: “…you should use handwritten signs to communicate that you’re not a corporation (people like dealing with other people instead of faceless corporations).” “We have seen handwritten signs generate more than double the number of incoming calls compared to printed signs.” “…we are not advocating that you handwrite each and every sign. Instead, make one handwritten sign and then ask your printer to copy the sign. This allows you to have the benefit of a handwritten sign with the benefits of mass production.” 

California is jumping on the bandwagon as well to crack down on these foreclosure scams. “We have lawyers, we have investigators, and we will go after those who break the law by falsely representing what they can do,” says State Atty. Gen. Jerry Brown.

Where to get free foreclosure help from the government:

• Foreclosure Resource Centers: The Federal Reserve has set up regional centers to help consumers facing foreclosure. The Santa Clarita area is covered by the San Francisco regional center.
• Foreclosure Resources for Consumers: Links to a variety of resources for people who are having troubles making their mortgage payments.
• Putting Your Home on the Line is Risky Business: Advises against using home equity for extra cash, debt consolidation, home repairs and “too good to be true” refinances. Includes a list of questions you should answer before you tap into your home equity.
• 5 Tips for Avoiding Foreclosure Scams: Tips on avoiding scams and where to find HUD-sponsored no-cost counselling services.

The bottom line is that homeowners facing foreclosure have a variety of options, including loan modifications, short sales and deed in lieu of foreclosure, that can help them when they get behind on their mortgage payments. The only option that will allow homeowners to stay in their homes is a loan modification, but this option isn’t available to everyone. In order to qualify for a loan modification, you must be able to show that you can pay the modified loan payment and meet certain other requirements.  Typically a loan modificatoin will not be available for an owner of a home that is not their principal residence.

Beware of scams where someone says they will “buy” your home and then allow you to remain in it. This is fraud, and can result in jail time for you since this scam involves negotiating a short sale with your bank(s). There’s also a new MLM-like entity that is paying $2,500 finder’s fees and $100 referral fees to those who help them find distressed homeowners for them to target. Their representative, who is a member of the MLM program and may even be one of your co-workers, will approach a homeowner offering this company’s services as well as $100 if they get others to “join” their program. They will then charge the homeowner thousands of dollars for their “services”, which are available for free anyways by contacting a foreclosure resource center.

There’s been a lot of press lately regarding the new programs like Hope for Homeowners that claim to reduce a borrower’s mortgage balance to an amount below current market value, but the banks are not obligated to participate in these programs. If you find that your bank will not grant you a loan modification program that you can live with, then the next step would be a short sale. With a short sale, you’ll list your home for sale at or near the current market value, and then your Realtor will negotiate with the bank once an offer is received to get the bank to agree to accept less than the balance that is owed on your mortgage as a full payoff. Yes, this will affect your credit score, but the impact will not be nearly as bad as a foreclosure would. Those who are in the military or other occupations that require security clearances should avoid foreclosure, since it is said to be almost as bad as a felony when it comes to security clearance evaluations.

Santa Clarita Realtor Linda Slocum is a Certified Distressed Property Expert (CDPE) specializing in short sales and distressed properties in the Santa Clarita Valley. She can be reached at 661.670.0349 or by email at Linda@SantaClaritaRealEstateBlog.com.

Getting qualified for an FHA loan is just the first step to homeownership.

FHA loans can be a great resource for many prospective homeowners, with low down payment requirements and lower credit score requirements for borrowers with less-than-perfect credit. However, getting qualified for your FHA loan is only the first step, since the home you buy must be FHA-approved as well!

Many condos in the Santa Clarita area that are priced low enough to be perfect for first-time homebuyers are not FHA approved, and thus you cannot finance your purchase using an FHA loan there. 

Santa Clarita homes that are not FHA-approved include the following developments (not a complete list):

• Vista del Canon in Newhall (near Costco)
• Bouquet Village in Saugus (at Plum Canyon)
• American Beauty Village (at Soledad and Rainbow Glen)
• Canterbury Collection (in Tesoro del Valle)

Why are these developments not FHA-approved? It could be simply that an application was never filed, or it could be that the approval was revoked because the development no longer met the FHA standards. According to the FHA, here’s what they’re looking for in FHA-approved developments:

1. At least 51% of the total units in the project must be owner occupied.
2. At least 90% of the total units in the project have been sold.
3. No single entity owns more than 10% of the total units in the project.
4. The project, including common areas, is complete with no special assessments and no legal actions pending.
5. The owners association has a reserve plan and a reserve fund, separate from the operating account, that is adequate to prevent deferred maintenance

If you want to see if a development is FHA-approved, you can do a search on the FHA website. You’ll need to know the 5-digit tract number in order to perform this search.

Be aware that there are many developments in the Santa Clarita area that are classified as “detached condos”, so even though they look like a detached single family home, they are zoned as a condo and thus fall under the same FHA approval rules as an attached condo. An example of this would be the Canterbury Collection in Tesoro del Valle.

In addition, even though a development is approved, that doesn’t mean that you can get FHA financing on all homes within that development. If the home is in poor condition, there may be some hoops to jump through in order to obtain FHA financing. Also, if a home was purchased by an investor and is being “flipped’ without an adequate waiting period, it will not qualify for FHA financing.

Need help finding your new home? Contact Santa Clarita Realtor Linda Slocum at 661.670.0349 or email her at Linda@SantaClaritaRealEstateBlog.com.

Happy house hunting!