Republicans and "Moderate Democrats" join forces to raid citizens' home equity

August 27, 2005

By AHRC News Services
Copyright AHRC News Services

Recent polls show that the approval rating for legislators in California has sunk to an abysmal 27%. The governor's approval rating has dropped by 30 points in the last 8 months to 34%. If what is happening to homeowner association bill SB 137 is any indication, those polls may sink even further.

AHRC reported recently that a compromise had been reached on SB 137 between Senator Denise Ducheny , the author of the bill, and the governor's office. That compromise would have banned the use of non-judicial foreclosure for unpaid assessments less than $1,500. It would also have required that a home be sold for at least 65% of its appraised value.

The industry has been mounting a furious attack on this compromise. They want the 65% equity provision removed. If successful, they will be able to sell a home for as little as $1,500 - even if there are hundreds of thousands in homeowner equity.

Obviously, the foreclosure sharks are salivating at this prospect. The industry includes CAI lawyers (Community Associations Institute) , CACM (California Association of Community Managers) , ECHO (Executive Council of Homeowners) , ( CAR (California Association of Realtors) and some banks that make loans to homeowner associations . Many homes are bought in foreclosure by realtors, lawyers, and industry associates who also sit the boards of homeowner associations

The onslaught on homeowners is being orchestrated by Perry Communications, the lobbying firm that led the attack on a similar bill last year that culminated in the governor vetoing the bill.

Perry Communications organized a series of meetings on the bill, characterized by them as meetings of "stakeholders". Apparently, homeowners are not "stakeholders", as they were conspicous by their absence.

Besides the industry lobbyists, legislative aides such as Lisa Engel and Hugh Bauer from California Assembly Housing Committee,. Happy Chastan from the governor's office and Tom Poole from the Department of Real Estate , were present.

A former legislative aide, Chris Tapio, who now acts as a private consultant under the name, Legislative Strategies, to the "moderate" Democratic caucus, reportedly represents the 14 moderate democrats who want the 65% equity protection stripped from SB 137. (Tapio is a former State employee who worked for various lawmakers shepherding their bills. He coordinated the passage of AB 555 that required the licensing of managers in homeowner associations. Homeowners objected to the monopoly powers and immunities the bill gave the sponsors of the bill. A bogus letter writing campaign by alleged "homeowners" in favor of a bill was included with the bill at committee hearings. An analysis of the alleged "homeowners" showed that they all wrote the same canned letter, and that many of them were employees of Merit Property Management . Requests for an investigation were supressed.)

Some observers say that nothing has changed in Sacramento. It is the same old story - lobbyists with puppet politicians ond government consultants on tow run the show.

A reliable source on condition of anonymity has told AHRC that a coalition of Republicans and "moderate" Democrats has reneged on its promise to protect at least 65% of homeowner equity. They had previously voted overwhelmingly for SB 137, but now, under heavy lobbying by the industry, they have threatened to withdraw their support unless the 65% equity provision is dropped.

Last year, CAR promised to support the bill if Senator Ducheny dropped the equity protection to 65%. Now CAR wants to strip away all equity protection. The lobbyist for CAR is Ron Kingston.

The same source has told AHRC that Assemblyman Gene Mullin, chair of the Assembly Housing Committee, has told Senator Ducheny to delete the 65% equity provision from its bill, or her bill will be recalled to his committee - implying it will be killed for this legislative session.

With legislative elections scheduled for next year, many homeowners are vowing to join the swelling throng of voters who want to kick the politicians out. Many have expressed the feeling that they are like chickens being sliced and diced on the lobbyist's chopping block. Many think that it is time for a change.