January 2016 Newsletter

Happy 2016!

Let me wish everyone who is reading this a happy, prosperous and healthy new year. This is the year of our national elections and we expect to see lots of excitement politically.

This is the year of the Olympics, so we also expect to see excitement in the global sports world.

Hopefully, these upcoming events will countermand any bad events that might be planned by terrorists, hackers and other groups of ill-repute.


Like always, we get very nervous when Congress and the government start tinkering and enacting new tax changes and we the taxpayer, consumer, or business entities get caught scrambling to adjust.

This is just so in the case of the legislation that changes the FIRPTA – Foreign Investment in Real Property Act. I

n December the 2015 Tax Act had an inclusion that changed the withholding requirements for foreigners who invest in the U.S. Effective February 17, 2016 the FIRPTA will have the following substantial changes:

  1. If you are a foreigner and the property that you sell is over $1,000,000, then your withholding amount will be 15% of the sales price.
  2. If you are a foreigner and the property that you sell is less than $1,000,000 AND the Buyer intends to use this as a residence for more than 50% of the time, then the withholding can be reduced to 10%.
  3. If you are a foreigner and the property you sell is $300,000 or less AND your Buyer intends to use this as a residence for more than 50% of the time, then the withholding can be fully exempt, as long as the Buyer signs the Buyer’s certification. This DID NOT change from the previous regulations.

There may be only two major changes, but these are HUGE changes for all escrow practitioners in certain areas of California where foreign investments tend to congregate.

Try explaining to the foreign investor selling a million dollar home that:

1. You need an IRS issued Federal Tax Identification Number when you sell.

2. Oh, by the way, we need to hold $150,000 from your proceeds. Oh man!


Unfortunately, I have this gut feeling that the major issue we will be facing is that of cyber security in all facets of our personal and public life.

There is no part of our lives that will not be touched, one way or another by this threat.

We have been leading to this as we become more and more dependent on technology, but now, it is a global issue because the threats and attacks come from outside our community and can be more disastrous and debilitating than a physical attack on our person.

For a visual of how pervasive these attacks are on corporate organizations, see this fascinating interactive link that shows known breaches till the end of 2015.

Have you been affected? Regretfully, it will only be a matter of time until you are.

This article from Data Breach informs us that a Russian cyber gang have taken over 4.5 billion pieces of personal information. Holy cow, and you just know that a large percentage of that information belong to us who live and shop in the U.S.

But saying that businesses big and small must have all available resources at their fingertips to prevent threats and attacks is simplifying the issue.

When a company gets hacked, it’s not just their IT security system that is on the line; we as individuals must also take control and be aware of everything that we can and must do to decrease our vulnerability.

I found a new buzz word in the IT Cyber Security world, it is the “CIA Triad” and it stands for Confidentiality, Integrity and Availability, the 3 things that should be guaranteed by any security system while withstanding outside forces working to squirm their way in.

Just yesterday I signed up with a lender to update my security access information.

Not only did it have 5 questions to which I had to provide an answer to, it also asked by to choose a picture that I could identify with.

Now, every time they send me a secure e-mail I access their site and put in my 8 digit password which has a combination of small and caps letters, numbers and symbols, and I have to identify that picture that I have chosen, before it will let me in to retrieve my secured e-mail, which may very well just say, “Thank you for your business.”, end of message.

The day will come very soon in which we will additionally need to add in fingerprint, voice and facial recognition to the rest. Mission Impossible any one?


In a separate but related vein, there will be a rise in Ransomware, an item which I first mentioned a year ago in my December 2014 newsletter.

The hackers infiltrate and literally hold your data hostage until you pay. Here is an article in ABA Journal about an attorney in Oklahoma who was hit by this.

Compared to Oklahoma, we must have hundreds of thousands more attorneys in California, there must be many who have encountered this, but it has not yet been widely publicized.

This is very, very disturbing to me, in the escrow industry. If someone infiltrated my database and locked me down, what would I pay to get control of my system back?


This is the time to look ahead to what is coming up and what we can project. The National Association of Realtors has been doing a series of demographic projections on Buyers and Sellers which I have used in my previous news blogs.

Here is another look at some of their profiling results. From what I see that passes through my desk, I can tell you that the NAR chief economist is right-on-the-money when it comes to why there are not enough first time home buyers – lack of downpayment, lack of affordable housing, difficulty in obtaining a loan.

First time homebuyers should also plan their homeownership goals waaaaay in advance.

There are lots of tips that can help. Sometimes it will take years, but with a little perseverance, they will achieve their goals.

Here are a few myths that should not constrain these Buyers, including the myth of having a big downpayment and a fixed rate loan.

If you are a real estate agent, it’s time to make that New Year’s resolution of tapping all those friends and families who have potential young (or old) people who have also made a resolution of buying a home!


The following 4 facts that we might not have known about our cell phones was given to me by a friend. I have not tried it out, but am passing it along. Count it as a public service message!

There are a few things that can be done in times of grave emergencies.   Your mobile phone can actually be a life saver or an emergency tool for survival.   Check out the things that you can do with it:

1. Emergency  – The Emergency Number worldwide for mobile phones is 112. If you find yourself out of the coverage area of your mobile network and there is an emergency, dial 112 and the mobile will search any existing network to establish the emergency number for you, and interestingly, this number 112 can be dialed even if the keypad is locked.

2. Hidden Battery Power – Imagine you let your cell battery run very low. To activate, press the keys *3370#. Your cell phone will restart with this reserve and it will show a 50% increase in battery. This reserve will get replenished when you re-charge your cell phone next time.

3. How to disable a Stolen mobile phone? – To check your Mobile phone’s serial number, key in the following Digits on your phone: *#06#. A 15-digit code will appear on the screen which is unique to your phone. Write it down and keep it somewhere safe.   If your phone is stolen, you can phone your service provider and give them this code. They will then be able to block your phone. Even if the thief changes the SIM card your phone will be totally useless. You probably won’t get your phone back, but at least you know that whoever stole it can’t use/sell it either. If everybody does this, there would be no point in people stealing mobile phones.

4. Free Directory Service for Cells – Cell phone companies are charging us $1.00 to $1.75 or more for 411 information calls when they don’t have to. Most of us do not carry a telephone directory in our vehicle, which makes this situation even more of a problem. When you need to use the 411 information option, simply dial:  (800) FREE411 or (800) 373-3411 without incurring any charge at all.  Program this into your cell phone now.

“The mediocre teacher tells.

The good teacher explains.

The superior teacher demonstrates.

The great teacher inspires.”

̴ William Arthur Ward  ̴