Reference no: EM133176402
As of January 1, 2018, SB-2 Building Homes and Jobs Act went into effect, mandating a fee (i.e., tax) on mortgage refinances and other real estate transactions. In drafting the law, the California Senate's objective was to address the state's homelessness problem by generating additional revenue for the state. SB-2, also known as the Building Homes and Jobs Act, mandates a fee on mortgage refinances and other real estate transactions.The purpose of the funds generated is to help finance new and rehabilitated developments for low-income residents. At the time of its passage, SB-2 was projected to generate $250 million annually.
SB-2 reads as follows: The bill would impose a fee, except as provided, of $75 to be paid at the time of the recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, per each single transaction per single parcel of real property, not to exceed $225. More simply, a seller may have a few documents at closing that are affected by SB-2. The total amount of the fees is capped at $225. For example, if you have separate documents -one for substitution of trustee and another for reconveyance, then that constitutes two documents for an additional fee of $150.
Which transactions does SB-2 impact the most?
Refinances appear to be the main target of the law. With mortgage rates still at historic lows, current homeowners are actively refinancing. Many face expiration of their current low rates and want to lock-in a favorable mortgage before rates drift any higher. Lien releases, lot line adjustment filings, and death of a spouse recording are also subject to the fee. The fee does not apply to transfers (i.e., sale) of residential properties to owner-occupiers. The bill establishes a permanent and ongoing source of funding specifically for affordable housing developments.
Do you think this law is an appropriate means by which to address homelessness? We all know that homlessness is a chronic issue, but do you believe it appropriate to assess a tax on mortgage refinancing, death of spouse recordings as well as other related documents?