Announcements

Ohio Budget Proposals do not include taxing real estate services at this time

Contrary to what we originally believed, Governor Taft's budget and related tax reform proposals do not appear to include expansion of the sales tax to real estate services at this time. However, it does include:

• Increase in the real estate transfer fee _ up $1 for every $1,000 of taxable value
• Elimination of the 10 percent credit on commercial and industrial property taxes
• a new 0.26 percent tax on business activity (except banks) for all revenue above $1 million a year, phased in over five years.

On the positive side, the proposals

• reduce the income tax by 4.2 percent a year, totaling 21 percent by 2010. (Those earning less than $10,000 a year would immediately pay no tax.)
• cut the corporate franchise (except banks) rate by 20 percent a year until eliminated.
• Reduce the state sales tax from 6 percent to 5.5 percent on June 30.

REALTORS® from across the state will be discussing these proposals at length during the Ohio Association of REALTORS® Legislative Conference in early March. Watch your In Contract magazine for further details.

Free Credit Reports now available

On March 1, Ohio residents will have access to free credit reports as a result of the regulations released by the Federal Trade Commission last year in compliance with the Fair and Accurate Credit Transactions Act. Free access was phased in throughout the country with the Midwest states (including Ohio) gaining access on March 1, 2005.
Under the legislation, the three big bureaus ? Equifax, Experian and Trans Union ? will now be required to provide a free credit file to any consumer who requests one, but no more frequently than once every 12 months. The free reports can be accessed at www.AnnualCreditReport.com.

This free access should help consumers keep track of any inaccuracies or omissions in their credit files that could depress their credit scores and raise the cost of the mortgage money they need to purchase a home.

Rate change for OHFA First-Time Homebuyer Program

On January 25, 2005, the Ohio Housing Finance Agency (OHFA) announced that the First-Time Homebuyer Program mortgage rates have been changed to 5.10% unassisted and 5.50% assisted (downpayment assistance).

Thirty-year fixed FHA-VA-RECD loans are eligible - existing, spec or nearly complete properties only. 2-1 buy downs are permitted. Loans must be closed by July 15, 2005.

Loan cost include a 1% borrower origination fee collected at closing, $150 transfer fee to master servicer and a $20 review fee to OHFA. Recapture provisions apply to all program loans.

For more info, visit www.odod.state.oh.us/ohfa/

FHA Mortgage Limits Raised

The limit on Federal Housing Administration (FHA) insured mortgages in the Columbus area has been raised from $208,801 to $233,700 on single-family residences. This increase includes Franklin, Delaware, Fairfield, Licking, Madison, Pickaway and Union Counties. The new limits, effective January 1, 2005 are as follows:

• 1 unit $233,700
• 2 unit $263,220
• 3 unit $319,800
• 4 unit $369,000

HUD now requires disclosure of ALL sales concessions for FHA loans

FHA now requires mortgagees to provide appraisers with all financing data and sales concessions for properties to be security for an FHA-insured loan. And appraisers are required to identify and report sales concessions and properly address and/or adjust the comparable sale transactions to account for sales concessions in the appraisal of all properties to be security for an FHA-insured loan.

Sales concessions influence the price paid for real estate. Sales concessions may be in the form of loan discount points, loan origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance, monetary gifts or personal property given by the seller or any other party involved in the transaction.

Sales concession information must include gifts and/or down payment assistance, which may or may not be included in the contract of sale.

Contributions from sellers or other interested third parties to the transaction that exceed six (6) percent of the sales price or other financing concessions are to be treated as inducements to purchase, thereby reducing the amount of the mortgage. Each dollar exceeding the six percent limit must be subtracted from the property's sale price before applying the appropriate loan to value (LTV) ratio.

To eliminate delays in underwriting, REALTORS® should

• Mark "Yes" or "No" for Seller Concessions when closing out your listing
• return appraisers phone calls promptly with the needed information

Feds come down on Interest-Only Loans

The office of the Comptroller of the Currency (OCC) of the Treasury Department has come out with new regulations that threaten action against federally-chartered banks (and their operating subsidiaries) if special subsidized mortgages with "terms favorable to consumers" are somehow refinanced with "new loans that do not provide a tangible economic benefit" to borrowers.

Further, OCC says it will move against lenders who make "subprime mortgage loans that involve a payment schedule in which regular periodic payments do not cause the principal balance to decrease."

Pickerington New Construction Moratorium resolved

Pickerington City Council agreed to settle the lawsuit filed by the Building Industry Association (BIA) on February 15, 2005 by exempting some developments from density restrictions. In return, the Building Industry Association will drop the suit and agree to not bring back the claims against the city.

The suit stems from a 2002 ordinance, approved by the voters, which restricted housing to two units per acre and new construction to 100 homes for a 12-month period. This moratorium was an effort to slow the burgeoning student population overwhelming the Pickerington school system. However, the restriction on housing permits, which expired in August, had curtailed developers abilities to develop land where they had invested hundreds of thousands of dollars.

Builders who had contracts and permits in place in 2002 can now proceed with construction at previously approved densities until July 31, 2006.

The city has approved 1,502 lots for single-family housing and 453 lots for higher-density housing such as condominiums.

Class action reform to benefit builders

Legislation approved by the Senate that would help curb frivolous class action lawsuits that unnecessarily drive up the cost of housing received the strong backing of the nation's home builders. The House was expected to approve the tort reform measure in late February and send it to the President to sign into law.
The legislation would move into federal court class action lawsuits involving more than $5 million in damages and defendants or plaintiffs who live in multiple states.
The National Association of Home Builders believes these provisions will discourage forum shopping, an abusive practice where attorneys seek out certain state courts that have a history of biased judgments against defendants in class action suits. This has reached a point where defendants will settle cases, even those without merit, rather than risk trial in state court. This bill will protect defendants from undue pressure to settle and ensure protection for plaintiffs.

Operation Cookie Drop

The Columbus Bar Association and Girl Scout Troop #2426 have teamed up to deliver a little taste of home to our troops. You can purchase Girl Scout Cookies and bring them to the Columbus Bar Association, 175 South Third Street, Suite 1100, and they will be delivered to the 436^th Movement Control Battalion at Camp Arafjan in Kuwait.

Cookies orders can be placed through March 18 from the Girl Scout Troop of your choice or by calling Nannette Dean 614-464-2235 or Pam Maggied, co-leader of Troop #2426, 614-464-2236. Also, if it's more convenient, you may deliver your donated cookies to Nannatte and Pam at 50 West Broad Street.

Emergency Preparedness Guide

NAR has recently introduced the Emergency Preparedness Guide, developed by the Homeownership Alliance in partnership with the U.S. Department of Homeland Security.
The guide includes information for homeowners on:

• Collecting emergency supplies
• Making effective emergency plans for families
• Understanding the kinds of threats homeowners may face

It helps homeowners prepare themselves to react in any kind of emergency situation like floods, fires or terrorism. Members can download the free guide to copy and distribute to homeowners at www.realtor.org.