Prop H

Thanks to Chris Daly -- who in my opinion will be happy with nothing short of a turning San Francisco into a socialist community -- Prop H is now in effect.

All tenants are due $4500.00 in relocation fees for any OMI or just cause eviction. I've represented clients who were blown away they had to pay a tenant who has a month to month lease, 1 grand -- now it's 4500 to move in. Obviously we need laws to protect specific types of tenants -- the eldery / disabled and terminally ill -- but the 25 year old college roommates are now due a total of 9 large if someone wants to owner occupy their own building. That seems extreme to say the least.

Homeowners and investors alike should keep a close eye on Mr Daly -- he's behind the movement to stop condo conversions of any kind and if he had his way -- we'd all live in Golden Gate park in a tent community!

Protect the right of the property owner!

Second Mortgages

Most of you probably have Home Equity Lines of Credit as your 2nd mortgages, which may not be the best strategy given the inherent
risk with this type of loan. The HELOC, as it is called, increases in rate as Prime Rate rises, which has doubled over the last few years and may still rise further, depending on the economy. A few years ago, the HELOC was a smart option, but now the HELOC doesn't make sense for those of you purchasing a new home or those of you with high balances on your existing lines of credit.

The alternative to the HELOC is the Home Equity Loan or "HELOAN." The key difference is that the rate for these loans are fixed for a period of 15 years, when the loan is due, rather than adjusting at any time, as the HELOC does. You also draw out the whole amount rather than pay as your draw out the equity and make an interest and principal payment, as opposed to just an interest-only payment with the HELOC.

For those of you with HELOCS that are 'tapped out,' switching to a fixed loan may be a great option. Closing costs are usually next to nothing and most lenders require no asset or income paperwork.

Jason Russell, Broker
Rob Wolf and Associates
Residential & Commercial Financing
850 Montgomery Street, Suite 100
San Francisco, CA 94133
1-415-788-1334 - office
1-866-313-5709 - fax

TIC rules

This month I am addressing a recent change in a TIC rule.

The old TIC rule had previously made condo conversions more difficult for owners of 2-4 unit buildings in San Francisco, but that has changed. Part of the section below is paraphrased from Andy Serkin, a popular TIC lawyer in SF...

The San Francisco Department of Public Works has announced it no longer needs the OK of the existing mortgage lender to allow 2-4 unit properties to be converted into condominiums. Before this change, The City wouldn't record the "condo map" which marked the last step in the conversion process unless the lenders with mortgages on the property gave the OK for the conversion.

If a building applying for conversion could not get the lender to sign the map, a refinance with another lender was necessary, causing delay and imposing significant additional costs - appraisal fees, loan origination costs, and title and escrow expenses.

Although the new policy will allow some owners to complete their conversion, these owners will not be able to record their covenants, conditions and restrictions (“CC&Rs”) until they are ready to sell or refinance the condominiums. Lenders have to sign the “condominium plan” (an attachment to the CC&Rs which shows the spaces included within each condominium) as a condition of condominium formation.
This is a minor issue - as there is no reason to record the CC&Rs and condominium plan until you are ready to sell or refinance.
_____________________________
Jason Russell, Broker
Rob Wolf and Associates
Residential & Commercial Financing
850 Montgomery Street, Suite 100
San Francisco, CA 94133
1-415-788-1334 - office
1-866-313-5709 - fax