18 b. in mortgage relief for state of California

California to Receive $18 Billion in Mortgage Settlement
On February 9, Attorney General Kamala D. Harris announced that California secured up to $18 billion for its distressed homeowners as part of a $25 billion national multistate settlement with the country's five largest loan servicers. More than $12 billion will be used to offer short sales or write down loans over the next three years for about 250,000 underwater homeowners in California, according to the attorney general. Relief will go to areas hardest hit by the foreclosure crisis within the first year of the settlement.
Although the actual settlement has not yet been released, the attorney general has stated that other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general's office for costs and fees. As part of a California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $800 million to the state.
The loans involved in this settlement are those owned or serviced by Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc. The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing and other foreclosure misconduct by the lenders. It does not affect any individual's rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac.
This mortgage settlement does not change any homeowner's existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.
Homeowners seeking relief under the settlement agreement should contact their loan servicer or a HUD-approved housing counselor. More information including detailed FAQs is also available from the California Attorney General's website, or visit the National Mortgage Settlement website.

Californian homeowner's have great tax help- $18,000 Reasons to Purchase a Home

Stimulus from Sacramento

This government-led, economic injection comes directly from the desk of our governor, targeting not only first-time homebuyers but also anyone who buys a newly built home in the state. This $200 million program provides a tax credit of up to $10,000, spread over three years, with the intention of sustaining the housing recovery, and providing a bridge over slowly improving conditions.

Buyers of existing homes must close escrow between May 1 and December 31. Buyers of new homes can reserve a credit by entering into an enforceable contract between May 1 and Dec. 31, filing the proper paperwork with the tax board, and then closing escrow by August 1, 2011. Either way, buyers must plan to live in the house for two years after closing. The provisions are here.

With rates still hovering around historic lows, and bargains abounding throughout California, the state’s offer of $10,000 should definitely give rise to a short-term run on contracts. But note that, unlike the Federal program, the California tax credit is a first-come, first-served stimulus package—so when the money runs out, the credits run out. And, once again, to take advantage of both the Federal and State tax credit, the savvy first-time buyer will have to act fast.

In the simplest terms:

• Federal – Contract by April 30 and close by June 30
• State – Close between May 1 and the end of the year
• Double Dip – Contract before April 30 and close before June 30

Low prices, great rates and the state income tax credit make now a great time to buy, even if you miss the short window to tap the Federal credit as well. Please give me a call today and let’s get you into a new home.


Sincerely,

Mark Cohen
President

310-777-5401
markcohen@cohenfinancialgroup.com

LA Housing Authority Fraud uncovered by Controller Gruel

Controller Greuel Releases Housing Authority Audit;
Councilmembers Zine, Cardenas Join Greuel in Calling for Swift Reforms



LOS ANGELES -- City Controller Wendy Greuel released the first phase of her investigation of the Housing Authority of the City of Los Angeles (HACLA) and declared that reckless spending and lax travel policies allowed for thousands of dollars to be wasted on lavish meals. Greuel also uncovered instances of double and triple dipping and inappropriate reimbursements and charges for hotel rooms that went unused.

“Los Angeles taxpayers are being duped by Housing Authority officials who claim to serve the poor but instead recklessly waste public money to support their lavish lifestyles,” said Greuel. “Angelenos deserve better. There must be zero tolerance for this type of out-of-control spending and fraudulent activity.”

The first phase of Greuel’s audit uncovered numerous unallowable expenses and excess costs. Examples of thousands of dollars of questionable or unsupported travel expenses include:



Public safety representative Scott Butler was approved to drive an agency vehicle to San Diego but instead paid airfare exceeding gas cost and left the conference early to take a flight to Chicago, unnecessarily charging a night in a hotel that was not used;
HACLA board member M. Del Angel paid costs for other travelers who were not HACLA staff and for whom executive approvals were not provided;
Planning representative John King had meals paid in excess of $1,000, which is above the allowed per diem. The charges did not identify the names of individuals served, what was consumed to rule out the purchase of alcohol, and the business transacted at the group meal;
Planning representative John King had excess meal costs for triple-dipping relative to meals for which subsistence was claimed while meals were also charged to HACLA’s P-card while meals were also provided at the conference. The audit also questioned a “no show” hotel charge in Chicago because King was in Philadelphia for another conference; and
HACLA board member B. Stotzer did not prepare appropriate forms and only provided minimal receipts for hotel and baggage fees. Stotzer seldom provided receipts and instead signed a certification stating expenses were for HACLA business.

Greuel had released preliminary audit findings a few weeks ago which revealed Agency officials spent $300,000 per year on travel in 2009 and 2010. At that time, Greuel highlighted irregular travel expenditures, including staff reimbursements for sight-seeing tours.

Greuel said whistle-blower complaints about questionable spending practices in other parts of HACLA make it clear that the Agency leadership created an environment for wasteful spending and fraudulent activity.

“These findings, combined with the golden parachute for the recently ousted Chief Executive Officer, demonstrate that taxpayer funds have been misappropriated and the Agency has been mismanaged,” said Greuel. “What’s more alarming is that these findings are just the tip of the iceberg.”

Since she initiated her audit last Spring, Greuel said Agency officials created numerous obstacles and a hostile audit environment.

“My concerns continued to grow as HACLA leadership kept delaying, making it extremely difficult for my auditors to obtain information needed for this audit. Many employees expressed fear to come forward with information, exemplifying the culture of the Agency. Employee intimidation tactics cannot and will not be tolerated,” added Greuel.

During the course of Greuel’s audit, many red flags were exposed not just regarding HACLA’s travel policies, but also regarding its P-Card program and its LOMOD program, HACLA’s non-profit corporation thatfunctions as a Contract Administrator for project-based Housing Assistance Payments contracts.

“It is unfathomable that an Agency dedicated to creating and maintaining affordable housing for the poorest families in Los Angeles spent taxpayer money so irresponsibly when funds are insufficient to provide desperately needed housing in the City of Los Angeles,” said Greuel. “I appreciate the City Council and Mayor for supporting my efforts for a comprehensive top-to-bottom financial review of the Agency, which includes both of these programs. Reforms are critically needed and the second phase of my investigation will serve as a roadmap for rehabilitating the beleaguered Agency.”

Greuel’s comments were made just prior to a City Council presentation in which she discussed the problems that have plagued the Agency including news that taxpayers footed a $1.2 million golden parachute to ousted Agency official Rudy Montiel.

“I appreciate Controller Greuel’s efforts to uncover wasteful spending issues at HACLA,” said Councilman Dennis P. Zine, Chair of the Audits & Governmental Efficiency Committee. “I am hopeful that we will get to the bottom of the unconscionable behavior exhibited by the HACLA employees, initiate top to bottom reform, redirect the funds for their rightful purpose, and that we can begin to restore the public’s trust in this Agency.”

“The Housing Authority of the City of Los Angeles is responsible for serving the needs of our most vulnerable residents – I don’t understand how these questionable expenses fall in line with the core responsibilities of this Agency. As an elected official and steward of the public’s money, I intend to ask the tough questions that will get us answers,” said Councilman Tony Cardenas, referring to the City Council presentation. “Once we’ve gotten our answers though, our work is not done. We also need to make sure that this doesn't happen again, in this Agency or any other, and we must push for serious consequences for everyone involved in wrong doing.”

Controller Greuel’s audit is attached. Controller Greuel has conducted more than 40 audits and uncovered nearly $100 million that the City has lost to waste, fraud, and abuse over the last two years.

New York Fed Sites Recession's Cause NYT

There’s been much debate over the root causes of the housing meltdown that catapulted the nation into the worst financial crisis in 80 years – from lax lending and subprime loans to over-leveraging in the secondary market.
A new report from researchers at the Federal Reserve Bank of New York focuses on the sharp run-up and subsequent collapse in housing prices during the 2000s.
It concludes that real estate investors who used mortgage credit to purchase multiple residential properties with the intent of flipping, or reselling them within a short period of time, played a larger role in fueling the housing bubble than previously recognized.
These investors, the Fed researchers say, helped push prices up during 2004-2006, but when prices began to head south, they defaulted in large numbers, which served to intensify the housing cycle’s downward leg.
Fed officials point out in their report that investors are more likely than owner-occupants to walk away from an underwater property. As such, lenders typically factor in that higher default risk by requiring larger down payments from buyers who acknowledge that they won’t be living in the house.
The expansion of the nonprime mortgage market during the 2000s, however, provided the perfect opportunity for optimistic investors to get low-down-payment credit, according to the report. “Buy-and-flip” investors, in particular, were able to make higher bids on houses, even if they had relatively little cash.
At the peak of the boom in 2006, the New York Fed’s researchers found that over a third of all U.S. home purchase lending was made to people who already owned at least one house.
In the four states with the most pronounced boom-and-bust cycles – Arizona, California, Florida, and Nevada – the investor share was as high as 45 percent.
Overall, the investor share of mortgage-financed home purchases roughly doubled between 2000 and 2006, with the largest increases seen among those owning three or more properties, according to Fed data.
In 2006, Arizona, California, Florida, and Nevada investors owning three or more properties were responsible for nearly 20 percent of originations, almost triple their share in 2000, Fed officials report.
“Longstanding tradition in the mortgage lending business and the predictions of economic models hold that investors will quickly default if prices begin a persistent fall. This is what happened starting in 2006,” according to the Fed researchers.
From 2007 to 2009, they found that investors were responsible for more than a quarter of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida, and Nevada.
“We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought,” the researchers wrote in a blog post explaining their findings.
They stress that the availability of low- and no-down-payment mortgages in the nonprime sector enabled investors to make highly leveraged bets on house prices, which likely allowed the bubble to inflate further and caused millions of owner-occupants to pay more for their homes.
“In the end, even the value of the 20 percent down-payments made by responsible, prime borrowers was wiped out — leaving the housing market, and the economy, in the vulnerable state we find them in today,” according to the researchers at the New York Federal Reserve.

Home Insurance new help to compare policies

Home-insurance policies are pretty much the same, and carriers compete on the basis of price and service—right?
Believe those two myths and you might wind up paying dearly.
Homeowner policies have important differences that can affect whether claims are paid, according to a study scheduled to be published early next year in the University of Chicago Law Review. The problem is that those differences are poorly understood.
Home insurers historically relied on standard policy forms drafted by the Insurance Services Office, an industry group. But Daniel Schwarcz, a University of Minnesota Law School associate professor and the study's author, says he found instances where policies now differ "radically with respect to numerous important coverage provisions."
While some of these differences might work to homeowners' advantage, a substantial majority could hurt them, he says. Some policies provide $1,000 per item damaged by a sudden electrical current, and others pay an aggregate of $1,000. Some include mold and lead coverage, while others don't.
Many of the variations involve broader contract language, and it's unclear how they will ultimately affect consumers. Some of the biggest insurers "employ policy language that is systematically less generous than that provided" in the standard ISO policy, Mr. Schwarcz writes.
For example, a standard ISO policy insures against "risk of direct physical loss to property," according to the professor. But some carriers insure against what they call "risk of accidental direct physical loss" instead, and others against "sudden and accidental direct physical loss."
Tips for Buyers
Use a reputable independent agent with access to a range of insurers and coverage options.
Ask about exclusions and wording differences across policies.
Ask about coverage for water damage from sewer or pipe problems, and whether damage to the foundation is covered, limited or excluded.
Ask which items will be paid at "replacement value" versus "actual cash value."
(Source: United Policyholders)
"You have a core provision of a policy and these really important adjectives being added," Mr. Schwarcz says, noting that they "could easily be used to justify expansive claims denials."
He also found policies that allow insurers not to cover loss "to the extent that the policyholder's negligence contributed to the loss."
That is an important provision, says Mr. Schwarcz, because many losses could be tied to alleged negligence. Say a homeowner is advised by a tree trimmer that a backyard tree is dying and needs to be chopped down. If it isn't cut down and eventually falls on the house, is the policyholder negligent?
Among changes that might work in consumers' favor are liability protection for certain claims and coverage for mold more generous than that of the typical ISO policy, says Mr. Schwarcz, who also serves as a consumer representative at the National Association of Insurance Commissioners, an organization of state regulators.
In an example of how such wording can hurt consumers, Mr. Schwarcz points to a 2007 ruling by a federal judge in Minneapolis in favor of a unit of Allstate. The insurer had denied a claim for water damage brought by a couple in Eden Prairie, Minn. They were selling their 15-year-old home and a presale inspection revealed moisture behind the home's stucco exterior.
Among other things, Allstate cited policy exclusions for wear and tear, and for losses arising from defective construction. The judge noted that the policy language specified coverage of "sudden and accidental direct physical loss," a phrase he said was "not ambiguous."
While the policyholders "considered their discovery of the water damage to be abrupt and unexpected, they have presented no evidence that the loss was sudden," the judge wrote. "Rather, all the evidence of record indicates that the water damage was caused by a variety of original construction defects present in the home since 1989."
Allstate spokeswoman Stephanie Sheppard says the company "agrees with the court's ruling that the language is clear." Speaking generally, she says the company's coverage is defined "to ensure we help keep costs down for all our customers by covering appropriate losses."
The insurer's contract language, she says, reflects that, "like most homeowner insurers, Allstate provides coverage against losses that occur only on a chance basis," or where the insured cannot control the loss.
Mr. Schwarcz is wrong to interpret such wording differences as efforts to reduce coverage, when some changes are efforts to clarify what the insurers have priced the policies to cover, says Alex Hageli, an official with the Property Casualty Insurers Association of America, a trade group with more than 1,000 member companies.
Mr. Hageli says the changes are often reactions by insurers to adverse judicial rulings, with insurers adjusting wording "to what they thought their contracts said before the judge ruled the way he did." He added that he doesn't "see the same kind of deliberate attempt to weaken consumer protection" that Mr. Schwarcz does.
For his study, Mr. Schwarcz collected policies from the top-10-selling insurance groups in six states: North Dakota, South Dakota, Pennsylvania, Illinois, California and Nevada. Insurers' forms can vary by state.
Mr. Schwarcz has been pushing state insurance departments to post policies online, so consumer groups and others comfortable with the dense language of contracts can work up comparisons to aid buyers.
At least one state recently took him up on the offer: Nevada, which began posting policy forms in October for its 10 largest home and auto insurers. Gennady Stolyarov, a Nevada insurance regulator, said in an email that officials "hope that this is just the beginning" of an effort to improve consumers' ability to comparison-shop for insurance.
For now, many consumers' best option is to seek out an experienced and reputable insurance agent to cut through all the confusing language, says Amy Bach, who runs United Policyholders, a consumer-advocacy group in San Francisco. The group has long sought to educate consumers on the importance of comparison-shopping "for quality, not just price."

Disressed Property Search the easy way

Fannie Mae offers new REO platform
Beginning Dec. 7, Fannie Mae will launch the HomePath Online Offers Program to collect offers and manage the offer-submission process on properties listed on HomePath.com. Agents and brokers representing buyers are now required to submit offers exclusively on HomePath.com. All properties listed in California and Florida are eligible on the designated launch date.
The HomePath Online Offers Program is designed to ease and create transparency during the offer submission process with the following features:
• An easy to use, self-service offer submission system that can be assessed through HomePath.com
• A transparent offer process that keeps Selling Agents informed of the status of their clients’ offers on HomePath properties listed on HomePath.com
• Improved communication between the Selling Agent and the Listing Agent regarding offers on HomePath properties listed on HomePath.com

Tax Deductions Expiring in December

Here are several tax credits and deductions set to expire at the end of the year, and given the federal deficit problem, there's a good chance they won't be extended. If you want to take advantage of them, you need to act before Jan.1, 2012.

1. Mortgage insurance premium deduction
If you itemize deductions, you may deduct the premiums you pay for mortgage insurance, just like you do mortgage interest. However, this deduction is phased out if your income exceeds certain levels. To qualify for the full deduction, a couple or a single taxpayer must have an adjusted gross income of $100,000 or less. The deduction is phased out completely if AGI exceeds $109,000.
This deduction, which was first enacted for 2007, is scheduled to expire at the end of 2011. Thus, your payments are deductible only if you pay them during 2011; a payment after 2011 is not deductible.

2. Education expenses deduction
A deduction of up to $4,000 for qualified education expenses is available for 2011. All or part of the amount you pay can be for classes beginning in 2012. But you must make your payments during 2011, because the deduction expires at the end of the year. This deduction is not available if your modified adjusted gross income is more than $80,000 ($160,000 if filing a joint return). Nor is it available if any of education tax credits are claimed.

3.Home energy credit
First, any homeowner may qualify for an energy credit of up to $500. You can qualify for the credit if you purchase during 2011 solar panels to generate electricity or for water heating, or install wind energy equipment, a geothermal heat pump, or certain types of fuel cells to generate electricity. The credit is up to 30 percent of the amount you spend, up to the $500 limit. This credit is not available for purchases in 2012.

4.Sales tax deduction
If you itemize, you can deduct either your state and local taxes or your sales taxes paid during the year. This deduction is a boon for people who live in states with no or low income taxes. However, the deduction for sales and use taxes instead of state income taxes is scheduled to expire at the end of 2011. To maximize this deduction, you should make any large purchases before the end of the year.
Adoption credit

5.A tax credit for adoption expenses (adoption fees, court costs, attorney fees, travel, etc.) has been available for many years. However, an enhanced adoption credit is available for adoptions finalized before 2012. The credit is up to $13,360 of adoption expenses. For 2011, this is a nonrefundable credit, meaning you qualify for it even if it exceeds the amount of your 2011 tax liability. This means that you could qualify for a tax refund even if you did not have federal income tax withheld.
Stephen Fishman is an attorney and author who has published 18 books, including "Working for Yourself: Law & Taxes for Contractors, Freelancers and Consultants," "Deduct It," "Working as an Independent Contractor," and "Working with Independent Contractors."