State Senate Holds Underwater Home Owners Hostgage

Remember the Committee for the Re-Election of the President (CRP, or for non-Nixonians, CREEP). It was a private non-governmental campaign entity that used funds from its coffers to pay for, and later cover up, "dirty tricks" performed against Richard Nixon’s enemies and opponents. Now when what my late father used to call a ‘fast one’ is pulled, it’s often a ‘dirty trick’ or a ‘cheap shot’ in more contemporary vernacular.  Say hello to the Senate Appropriations Committee.

In a surprise move this week, the Senate Appropriations Committee linked Senate Bill 30 (which provides tax relief for thousands of California home owners) to the passage of Senate Bill 391, (which creates a new statewide recording tax), using a shameful political maneuver to force support for the recording tax.  As now linked, SB 30 can only become law if SB 391 becomes law. Once SB 391 is defeated, the link in SB 30 can be removed.

Which, in and of itself, is kinda weird since our own Jerry Hill is a member of the committee and if anyone gets it; that homeownership matters… it’s Jerry Hill.) What the Senate Leadership has done is provide us (and by extension, you) with a Hobson’s Choice.

A “Hobson's Choice” is a supposed free choice in which only one option is offered. The phrase is said to originate with Thomas Hobson, a livery stable owner in the 1500’s in Cambridge, England. To rotate the use of his horses, he offered customers the choice of either taking the horse in the stall nearest the door or taking none at all. Hobson had an extensive stable of some 40 horses. This gave the appearance to his customers of having their choice of mounts when in fact there was only one: Hobson required his customers to choose the horse in the stall closest to the door.

The public should be OUTRAGED that distressed homeowners are being held hostage. Upon casual observation, it would seem the Senate Appropriations Committee is trying to punish the California Association of REALTORS® (C.A.R.) for opposing the new TAX on recordings by holding the tax relief bill hostage.

Exhibit A: In an effort to conform state law to a federal law passed at the end of last year, the California Association of REALTORS® (C.A.R.) is sponsoring Senate Bill 30, so that California homeowners on the brink of foreclosure can get much-needed debt relief. It addresses a short sale or loan modifications (including any principal reduction, which covers the matter of ‘phantom income;’ where you were forced to pay income tax on money you never saw; all the while suffering the ignominy of foreclosure.)

Exhibit B: Senate Bill 391 imposes a statewide recording TAX to generate funds for affordable housing programs. SB 391 creates a $75 per document recording TAX.  C.A.R. is opposed this measure. Fun Fact: Some affordable housing projects, given the myriad of down payment assistance options, first time home buyer opportunities, and state and federal housing programs can record as many as 25 separate documents for just one sale. That’s a tidy $1,875 added to the cost of that ‘affordable' home.

And here’s the even funner part: There is nothing in the bill that specifies how funds should be awarded and it provides little oversight as to the best uses of the funds. While it contains an audit requirement, that requirement doesn’t even kick in until the end of the program’s second year, when $1 billion could have already been distributed.  And, it’s “geographic” approach to distributing the funds doesn’t ensure the neediest Californians benefit from the program. O

Oh yeah, in the California legislature this is the last week for bills to either pass or fail in their House of Origin. With hundreds of bills to consider, it’s going to be chaos. In lay terms, the “House of Origin” deadline means bills need to pass out of the house where they were originally introduced, either the Assembly or the Senate, by this Friday.