The San Francisco Peninsula Real Estate Blog

Proving once again that the government isn’t in business to give things away for free, President Barack Obama’s proposed budget has its sights set on one of the most ferociously protected tax shelters to recoup funds:  The mortgage interest tax deduction.   His proposal is aimed at reducing this deduction for America’s wealthiest familes, and will surely face vigorous opposition from homeowners and the real estate industry.

Here’s an excellent article that summarizes what’s at stake:

Mortgage Interest Deduction on the Slicing Block

There’s a significant percentage of households on the Peninsula who will be impacted by this change.  It’s definitely a discussion you should be having with your CPA or tax attorney….

Need some ideas on remodeling?   How about some creative tips on redecorating your home?  Or, do you just need something to do outside before it starts raining again?    If you answered “yes” to any of these, then you may be interested in checking out the Peninsula Home and Garden Show, which is running this weekend only at the San Mateo Expo Center (aka San Mateo County Fairgrounds.)   For complete details, just click on the image above, and it will take you right to their website.

There was also a nice write-up in the San Mateo Daily Journal about this event.  It highlights how much of show’s focus will be how to do more with your home for less money — smart strategy in this economic environment.

If you go, have a great time!

There has been so much written and speculated about the Obama Administration’s Foreclosure Prevention Plan, that it’s hard to understand what it really means for homeowners.   This morning I found a really nice, concise summary in the lastest edition of Realtor Magazine which briefly touches on the key points.   This is such a good summary, that I have reproduced the article below in its entirety, or you can click the photo above for the online article:

What’s In the Foreclosure Prevention Plan

The Obama administration yesterday released its long-awaited plan to stem foreclosures. It’s organized into three categories:

1.) Help for home owners making their payments but at risk of default and foreclosure.

Home owners with a Fannie Mae or Freddie Mac loan would be eligible to refinance as long as their mortgage doesn’t exceed 105 percent of the home’s current market value. Currently owners need to have at least 20 percent equity. Potential impact: 4-5 million households.

2.) Help for home owners already in default and in need of loan modification.

For lenders that voluntarily agree to lower a borrower’s payment so that it makes up no more than 38 percent of the borrower’s income, the government would share the cost of lowering the mortgage burden to 31 percent of income. Incentives to lenders to participate include a $1,000 payment.

Borrowers can receive up to $1,000 as an incentive to stay current on their new mortgage. Still in the works is a proposed provision that would allow bankruptcy judges to require loan modification (known as a cramdown) as part of a household’s restructuring. That provision requires legislation by Congress. Estimated potential impact: 3-4 million households.

3.) Doubled resources to Fannie Mae and Freddie Mac.

To encourage investors to buy the secondary market companies’ mortgage-backed securities, the government explicitly backstops them to up to $400 billion, twice the current amount.

The plan does not provide help to investors or to home owners who are in trouble with a second home, nor does it apply to homeowners whose mortgage is part of a private-label mortgage security that is not backed by Fannie Mae or Freddie Mac.

“The administration’s proposed plan, combined with provisions like the $8,000 first-time home buyer tax credit in the just-enacted American Recovery and Reinvestment Act, will help minimize foreclosures, shrink housing inventory, stabilize home values, and move the country closer to an economic recovery,” says NAR President Charles McMillan.

Source: REALTOR® Magazine Online

The Message:

The message here is simple: Help is available to you in a variety of ways. If you’re a homeowner in one of the situations outlined  above, the worst thing you can do is to DO NOTHING.  The Administration is trying to keep as many people in their homes as possible, so take advantage of this and get the assistance you need.

There’s absolutely no doubt that the quality of the public school district is one of the top decision criteria for home buyers as they decide where they will ultimately live.  Parents want the best schools for their kids, and home-buyers want their investment to retain value.  Homes in the more desirable school districts fetch higher prices, almost as if they’re tracking the API scores of their respective schools — the higher the API scores, the higher the home prices.   The converse is true as well.

But should you buy a home solely on which school district it resides in?    As some Burlingame families found out this week, the answer is a resounding NO.   Just because you fall within the stated boundaries of a particular school, it does not mean you are guaranteed to get into that school.    Residents in certain San Carlos school boundaries found this out last year.   Clearly, in the case of Lincoln Elementary School, there were examples of inexplicable miscommunication on behalf the School District.  But at the end of the day, this is of no consolation to those parents who will have to enroll their children in other schools.

What can you do?

If you’re searching for a home, and the school district is of paramount concern to you, the best thing you can do is arm yourself with as much information as possible.   Here are three key things you can do to ensure you’re making the right decision:

1. Interview the School Principal.  Find out what the current enrollment is, and what the trends are (increasing or decreasing?)   What percentage of capacity is the school currently at?   When are they projected to be full?   What plans are there to increase capacity?   Meet with the Principal in person, if possible.
2. Understand the District’s policy on Impaction.   What happens when a school is impacted?   How does the District handle decisions on inter-district transfers?  Does having a sibling in the school give higher priority.   These decisions are almost always made at the District level, so get in touch with the respective district and understand their policy.   Call the superintendent if you need to.
3. How are the adjacent schools? It’s not uncommon on the  Peninsula to have a high-scoring school adjacent to under-achieving ones.   Check out the schools adjacent to the area you are searching in.   If you wouldn’t send your kids to any of those, then you’re taking a much bigger risk by buying into a single district.

The bottom line?  Do your homework.  Every school on the Peninsula has its own website, and every School District has one as well.   The contact information for the Superintendent, Principal, and School Board Members is readily accessible.     Be the one to initiate the contact, ask questions, and make yourself a pain-in-the-rear if need be.    Don’t put yourself in a situation where you will suddenly resent the biggest purchase that you’ll likely ever make.

There’s simply too much at stake….

“Don’t pay  for something that you can get for free…”

That’s essentially the message that’s conveyed in this press release from County Assessor Warren Slocum’s Office.  San Mateo County homeowners have been receiving official looking letters from private companies that are soliciting fees to file a Request for Property Tax Reduction on your behalf.    The details of the scam along with examples of the solicitation letters, are nicely outlined on the San Mateo County Assessor’s website.  I highly recommend that you take a minute to read this link.

No scam would be complete without an ominous “call to action,”  and this one has that as well in the form of an artificial deadline — you must act by a certain date or you will lose the opportunity…..  you get the idea.

The Truth

As I outlined in this blog post about applying for a property tax reduction, there are 3 truths to applying for a reduction in your property taxes.

1. It’s FREE.
2. You deal directly with the County Assessor’s office (no intermediary required.)
3. You can apply for the reduction online or via mail.   It’s really very easy.

Now, this doesn‘t mean that you’re automatically going to get a reduction in your property taxes.   What it does mean is that the process to apply for this reduction is free.

In other words, don’t pay someone to do something that you can yourself for free!