October 3, 2017
Tuesday’s Regulatory & Legislative Roundup
- Years after the nation’s last recession, lower socio-economic workers are now reaping the benefits of a stronger economy.Though this is great, wealthier Americans still are gaining the most benefits from an upward flowing economy. A study found in 2016, 38.6% of America’s total wealth was controlled by 1% of households. However, within three years, the net worth of the average American family increased 16% to, $97,300.
- The Consumer Financial Protection Bureau is under judicial scrutiny again. A number of financial groups came together to file a lawsuit against the agency’s arbitration rule. Groups supporting the lawsuit include the U.S. Chamber of Commerce, American Bankers Association, Texas Association of Business, and nine chambers of commerce in Texas. Further, the group asserts the rule is invalid for four varying reasons.
October 3, 2017 | Permalink | No Comments
October 2, 2017
Foreclosure Alternatives
Realtor.com quoted me in 3 Foreclosure Alternatives: What to Do Before Your Mortgage Goes Underwater. It opens,
Maybe you’ve missed a couple of monthly mortgage payments. Maybe a notice of default from your lender is looming right now. You understand the severity of the situation, but what most homeowners don’t know is that foreclosure is not the only option you have when you’re no longer able to afford your house.
The first step for anyone in risk of foreclosure is to get in contact with your lender. This shows that you are aware of the problem and committed to finding a solution—and trust us, that will go a long way. The earlier you reach out, the greater shot you have of amicably rectifying the problem.
After you speak with your lender, your lender will lay out your options, including the foreclosure alternatives that you might be able to take advantage of. Let’s take a closer look at some of the alternatives so you—and your credit history—don’t suffer the ultimate blow.
1. Standard sale or rental
If your home is currently valued at more than you owe and if you are up to date on your mortgage payments (but you anticipate that paying your mortgage could become a problem), you can hold out as long as possible for a buyer.
You can also try to rent out the home to cover the mortgage payments until the house sells, says Carolyn Rae Cole, a Realtor® with Nourmand & Associates. In the end, virtually all homes eventually sell—it’s just about pricing.
2. Short sale
When a home has fallen in value and is priced so low that there isn’t enough equity to cover the mortgage, you might have the option to conduct a short sale. It’s also known as going “underwater.” This means the lender agrees to accept less than the amount the borrower owes through a sale of the property to a third party.
A short sale works like this: A specialist brokers a deal with the mortgage lender to sell the home for whatever the market will bear. If the amount of the sale is for less than what’s owed on the mortgage, the lender gets the money from the sale and relinquishes the remaining debt. (This means you won’t owe anything else.) In a short sale, the lender usually pays for the seller’s closing costs. A traditional sale takes about 30 to 45 days to close after the offer is accepted, whereas a short sale can take 90 to 120 days, sometimes even longer.
Sellers will need to prove hardship—like a loss of primary income or death of a spouse—to their lender. In addition to explaining why they’re unable to make mortgage payments, sellers will have to provide supporting financial documents to the lender to consider for a short sale.
3. Deed in lieu of foreclosure agreement
A deed in lieu of foreclosure is a transaction between a lender and borrower that effectively ends a home loan. Essentially both parties agree to avoid a lengthy foreclosure proceeding by the borrower voluntarily turning over the home’s deed to a lender, says professor David Reiss of Brooklyn Law School . The lender then releases the borrower from any further liability relating to the mortgage. However, if the property is worth significantly less than the outstanding mortgage, the lender may require the borrower to pay a portion of the remaining loan balance.
You might be eligible for a deed in lieu if you’re experiencing financial hardship, can’t afford your current mortgage payment, and were unable to sell your property at fair market value for at least 90 days.
Bottom line: This agreement is a negotiated solution to a bad situation—borrowers who have fallen behind on their payments are going to lose their house and the lender is not getting paid back in full.
October 2, 2017 | Permalink | No Comments
Monday’s Adjudication Roundup
- Leonard Vincent Lombardo allegedly is not out of trouble with the U.S. Securities and Exchange Commission (SEC). Prior to the SEC’s most recent investigation, the SEC banned Lombardo from participating in the broker industry. Despite the SEC’s ban, Lombardo allegedly participated in a real estate scheme that costed investors roughly $6 million.
- A Missouri jury found Sho-Me Power Electric Cooperative liable for violating their electric easements with a class of Missouri landowners. The electric company violated the easements through their use of fiber optics. As a result, the jury awarded the landowners $130 million; however, a judge vacated the awards and ordered a new damages trial.
- The U.S. Court of Appeals, Second Circuit recently reversed the convictions of Dean and Adam Skelos. However, federal prosecutors are filing new charges against the duo due to their alleged bribing of state leaders in Albany for construction projects. Further, the federal prosecutors deem the reversal of the convictions irrelevant to the new trial.
October 2, 2017 | Permalink | No Comments
September 29, 2017
Selling Yourself When You Have A Broker
Realtor.com quoted me in Selling Your House Privately If You Have a Listing Agent: OK or a Big N-O? It opens,
So your home is for sale, and you’ve signed a contract with a real estate agent, but you were actually able to nab a buyer through your own efforts. Maybe it was through word of mouth or your aggressive push on Facebook (you should really apologize to your friends for posting so many pictures of your house!), but someone is writing you an offer and really wants to buy your house. Having found a buyer on your own, are you still legally obligated to pay real estate fees or commission? Here’s how to know if you’re on the hook.
Read your listing agreement
In most states, a seller and an agent draw up something called a listing agreement. The listing agreement details the rights and responsibilities of the seller and the broker, and usually outlines the circumstances when a broker is due a commission.
“If it is an open listing or an exclusive agency listing, the seller can sell the property and not have to pay the broker a commission,” says David Reiss, professor of law at Brooklyn Law School .
Things get tricky if the listing agreement confers an exclusive right to sell. This means the real estate agent has the sole right to sell the property. All offers must go through him or her, and for any sale, you’re obligated to pay the agent the commission spelled out in the contract, according to Marc D. Markel, a board-certified Texas attorney in residential and commercial real estate law. Agents rely on these exclusive listing agreements to avoid putting in what can be months of free work without seeing a payoff. For this reason, the agreement outlines the many ways an agent earns a commission, including what happens if the seller breaches the exclusive agreement.
The loopholes
If the sellers do find a buyer on their own, despite having a contract with an agent, they may be able to negotiate a reduced commission with the agent. But the sellers should be up-front about their potential to find their own buyer when drawing up the exclusive-right-to-sell listing agreement, says Markel. Maybe they know of a friend of a friend who is looking for a house, or they plan on marketing their home on social media.
If the sellers feel as if they are doing all the work, they might also be able to modify the existing agreement and add a termination if the broker doesn’t meet certain obligations, like selling the home within a certain time frame, says Sandy Straley, a real estate agent in Layton, UT. Other obligations for the listing could include organizing open houses, creating and distributing printed materials, and even the posting of videos shot by drones, says Markel.
September 29, 2017 | Permalink | No Comments
Friday’s Government Reports Roundup
- Based upon the 2007-2009 financial crisis and the Dodd-Frank Act, the U.S. Government Accountability Office studied the use of the financial industry’s use of swaps. Swaps occur through financial contracts (derivatives) where two parties trade payments rooted in an asset price or other value. The use of swaps is governed by Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Dodd-Frank Act allows individuals and institutions to register as swap dealers; however, each are required to abide by specific rules which determine their eligibility to receive federal financial assistance.
September 29, 2017 | Permalink | No Comments
September 28, 2017
Equifax and Your Mortgage
HouseLoan.com quoted me in How Will The Equifax Data Breach Affect Your Ability To Get A Mortgage? It opens,
Like throwing a stone into a pond, the Equifax data breach has long-lasting repercussions. Already, because of what’s being considered one of the largest data breaches in recent history, 143 million consumers may be affected. Data compromised in the breach has the potential to impact any form of credit taken out in the U.S. — including mortgages, credit cards, and car loans.
WHAT ARE THE CONSEQUENCES OF THE EQUIFAX DATA BREACH?
The credit-reporting agency Equifax recently revealed that a data breach lasting from mid-May through July 2017 gave hackers access to their consumers’ names, Social Security numbers, addresses, birth dates, and, for some, driver’s license numbers. The Federal Trade Commission confirms that credit card numbers were stolen from an estimated 209,000 people and documents with personally identifying information for roughly 182,000 others. Hackers also accessed personal data for customers in the UK and Canada. Equifax says their agency didn’t discover the breach until July 29, 2017, after most of the damage was done.
Anyone who may be affected by the breach is encouraged to act fast, Lisa Lindsay, executive director of the collaborative group Private Risk Management Association (PRMA), which aims to raise awareness and educate agents and brokers, says. “Consumers will need to evaluate what they want to do next with regards to protection and what risk management options they want to take. Such as purchasing cyber and fraud insurance. Those impacted by the breach could be at risk for additional attacks.”
HOW WILL THE DATA BREACH AFFECT GETTING A MORTGAGE?
Buying a house may be the biggest financial decision you make. The last thing that you need is a credit setback — or disaster. Megan Zavieh, a Georgia attorney-at-law, explains that the full ramifications of the data breach have yet to be known because we don’t know who accessed private data or what they may ultimately do with it. But, she says, it could impact homebuyers significantly.
“If someone uses personal data to open new credit lines or take other typical identity theft actions, homebuyers could be in for a terrible surprise when they complete their home loan applications. Often, credit report correction following identity theft is a long process. And it could well prevent loans from closing if borrowers had identities stolen after the Equifax breach,” Zavieh says.
ADDING TO THE POST-EQUIFAX FRENZY, MANY PEOPLE ARE SEEKING TO FREEZE THEIR CREDIT IN THE WAKE OF THE BREACH.
David Reiss, Professor of Law and Academic Program Director of CUBE, The Center for Urban Business Entrepreneurship at Brooklyn Law School, says, “Those who are looking to refinance their mortgage or purchase a new home should be aware of how a credit freeze affects them. When they are ready to take the plunge and apply, they will need to contact the credit rating agencies where they had placed a freeze and lift the freeze temporarily.” Just as importantly, Reiss reminds buyers to put the freeze back in place after completing the mortgage process.
During the time when you’re buying a home and the freeze is lifted, you can place a 90-day fraud alert on your credit. Reiss explains that this should limit lenders from granting credit under your name without first verifying that you are the one who applied for the loan.
September 28, 2017 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Roundup
- Equifax’s data breach woes are far from over. Massachusetts led the charge against the credit giant by filing a complaint against Equifax. The city of San Francisco has followed suit. While Massachusetts led the charge as a state, San Francisco is the first city to take action against the company. San Francisco marks the eighth group to take action against the company. Further Equifax’s internal controls are taking action as well, three of the company’s top executives were fired and the CEO suddenly retired.
- Similar to Equifax, Meridian Title Corp., has found themselves in trouble with the Consumer Financial Protection Bureau (CFPB). The CFPB fined the real estate settlement services provider $1.25 million for their violations of the Real Estate Settlement Procedures Act. Meridian failed to correctly disclose their relationship with Arsenal Insurance, a title insurance company party owned by Meridian’s own executives. By participating in such activity, the company illegally benefited from their relationship with the title insurance provider.
September 28, 2017 | Permalink | No Comments
