Living La Vida Local

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Lenders thus rely heavily on income tax returns for recent years, just as they do in qualifying the self-employed. They assume that any errors will be in the direction of understating rather than overstating income. To verify that you have given them your real returns, however, they require that you authorize them to obtain copies directly from the IRS. They may also ask for an update since the most recent tax return.
Ordinarily, the only investment income that is usable in qualifying for a mortgage is interest and dividends. Realized capital gains are viewed as too volatile to rely on. Funds obtained from liquidation of assets don’t count either because it is assumed they will run out.
In principle, lenders should accept investment income from any sources so long as the total is demonstrably stable. In practice, the loan officer or broker you deal with may not have the knowledge or the patience to handle complicated cases. Borrowers who are confident that they have more sustainable income than lenders will credit them for may take the path of least resistance, which is to qualify without full documentation.
If the borrower qualifies using "stated income," the lender will accept the income the borrower states. The price is usually about ¼ of a point-one-fourth of 1 percent of the loan amount. This is not much for avoiding what can be a hassle.

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Timed Lights Thwart Potential Burglars


Q: What extra security precautions should I take when I'm away?

A: Don't make your absence obvious. When you're not home, draw the blinds and drapes. Also, put a light, radio or television set on a timer when you're away or coming home late. Stop your newspaper and mail delivery during vacations or ask a neighbor to pick up your letters.

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CAN THE AMERICAN DREAM DOWNPAYMENT ACT HELP CALIFORNIA?

By Jodi Summers

In the middle of the 19th century there were as few as 700 people living in what was to become the state of California. In 2003, the U.S. Census Bureau declared that California is still the most populous state in the nation with 35.5 million people, an increase of over a half million people since 2002.

Our continued growth impacts our housing crisis. In 2004, our state’s median home price is expected to climb 13 percent to $414,000. What is a first time homebuyer to do?
"Some of the things the governor has signaled looking at was infill development and attached housing in order to all create an affordable product without being in conflict with environmental rules of preserving open space," predicted Jon Ross, legislative counsel for the California Mortgage Bankers Association.

And, in its own small way, the federal government is trying to help. On December 16, 2003, President George W. Bush signed the American Dream Downpayment Act, a new program that provides grants to help first time homebuyers with downpayment and closing costs. The proposal authorizes $200 million dollars for the program for fiscal year 2004. The rhetoric was strong:

"Today we are taking action to bring many thousands of Americans closer to the great goal of owning a home," said President Bush. "These funds will help American families achieve their goals, strengthen our communities, and our entire nation."

"This is a good day for thousands of families who have only dreamed about sharing in the American Dream of homeownership," said Housing and Urban Development Acting Secretary Alphonso Jackson. "Not only will this law allow thousands of hard-working Americans to unlock the door to homeownership, it will also help close the gap that separates minority households from the rest of the country when it comes to owning a home to call their own."
How can the American Dream Downpayment Act work for California? A recent California Association of Realtors study indicated that only 23 percent of California households were able to afford a median-priced home. FYI - the minimum income needed to buy that home is $93,490. Nationally, a minimum of $40,990 in annual income was needed to purchase a median-price home, which cost $177,500 in August 2003.

According to American Dream Downpayment Act, the maximum downpayment grant is $10,000 or six percent of the purchase price of the home. Know anyone whose got a home to sale for under $150k? It’s expected that the new legislation will provide an average of $7,500 in down payment and closing cost assistance to help first-time homebuyers with annual incomes that do not exceed 80 percent of the area median income. (Or anyone earning under $75k in CA.)

It’s a nice holiday gift, but should have marginal impact here in Santa Monica where the average cost of a single family home is in the neighborhood of 1.2 million dollars, and the average 20% down payment on such a property is nearly $250,000. Closing costs are around 3%.

The objective of the American Dream Downpayment Act is to lower closing costs by approximately $700 per loan in order to stimulate home ownership for all Americans. The government would like to increase the home ownership rate, especially among minority groups, who have lower rates of home ownership. Es verdad.

Grants will be made to state and local governments through HUD's HOME Investment Partnership program. Families interested in applying for grants should contact their state or local housing agency or check out www.hud.gov <http://www.hud.gov>.

The American Dream Downpayment Act includes two other important provisions. It will increase Federal Housing Administration loan limits for the construction of multifamily housing in high-cost areas. The aim is to increase private construction of affordable rental housing in major urban areas like Boston, New York, Los Angeles and San Francisco. The per-unit maximum loan limit would increase from $194,190 to $218,465, which means the per-unit loan limit for a typical two-bedroom apartment in a high-cost urban area would rise from $136,749 to $153,843. If we can keep litigation costs and local government construction fees to a minimum, maybe we can address the local housing crisis.

Second, the American Dream Downpayment Act provides a technical correction to the FHA's adjustable-rate mortgage program that aims to make the product more available to consumers.

The National Low Income Housing Coalition is concerned that the Administration’s emphasis on homeownership comes at the expense of a complete national housing policy. But rental rates aren’t an issue unless you own units. Apartment rents are falling nationwide, and the 9.9 percent national vacancy rate is the highest since records began in 1956. Cause and effect: the more families that buy homes -> the more rental properties on the market.

For your real estate needs, e-mail Jodi Summers at jodis@verizon.net,
or call 310-260-8269).

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RE: DEFENDING THE LANDLORD

Jodi,

I read your interview with Gordon Gitlen today in the Santa Monica Daily Press. I have one question, that is, are all landlords in Santa Monica covered by the rent control law? Your article seems to say that that is the case. I was told that since the building I am living in was built after the rent control law went into effect, that it is not covered. My landlord has raised the rent substantially over the dot com period, and is not lowering it to market value. I have no choice but to move. But if all landlords are limited by the laws that Gordon Gitlen talks about, I should be getting back a lot of money from my landlord.

Thank you
-Paul

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Hi Jodi: Great interview!!! New construction is generally exempt from Santa Monica Rent Control because there are other conditions that developers must comply with, i.e. low income housing or in lieu fees, etc. New construction is after April 10, 1979. There are other possible exemptions that an owner can apply for and receive, i.e. three units or less and owner occupied, etc.. Of course, my offer still stands to assist you in any way I can.

- Gordon Gitlen
Attorney at Law

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Ms. Summers,

I wanted to let you know that I have read two columns that you have done about landlord/tenant relationships in the SM Daily Press and find them well
written and informative. It is nice to see information from the landlord perspective in Santa Monica press.

I would also like to make a suggestion for a future column, the responsibilities and obligations that tenants have. (My best friend is a landlord in Santa Monica and one tenants demands never cease to amaze me. The tenant seems to feel that her only obligation is to pay the rent. Her current complaint is that she does not get hot water FAST ENOUGH from one of her bathroom sinks. She treats my friend as if she were a servant, not as if she is paying for the use of the property.) Rental agreements are legally binding contracts and the attitude of some renters (this woman as well) seems to be that they don't have to adhere to that contract if they don't like it or don't want to. If the landlord must adhere to the contract, the tenant should be expected to as well. Enough or my rant.

Again, just wanted to say good job.

Caroline Sisneros
Santa Monica

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p.s. This is not intended as a solicitation if your property is already listed with another agent.