Sunday, September 19, 2010

Want to make money

For information on applying to become a Fannie Mae listing broker*, appraiser, repair contractor, eviction attorney, maintenance company, or closing agent/title company - click here.

Looking for a great deal

Freddie Mac's website that sells their inventory of foreclosed properties can be found by clicking here. Not to be outdone, Fannie Mae's website that sells their REOs can be found by clicking here. Happy hunting.

Sunday, September 12, 2010

Knowing what the servicers know - The Servicer Handbook

This is a link to the new handbook provided by the government for servicers to comply with the Home Affordability Modification Program.

Previously, I had directed students to Supplemental Directives, which detail requirements in each individual topic. This handbook should minimize the need to read Supplemental Directives because it reorganizes the topics coherently for functionality and practicality. As always, stay tuned to new versions, which will of course optimize this product.

FHA Loan Modifications now available for Non-FHA Loans

A brand new program by FHA, click here to learn more.

To learn about mortgagee (lender) guidelines, click here.

This new program expires 12/31/2012.

Here are the requirements for participation:

1. The homeowner must be in a negative equity position;


2. The homeowner must be current on the existing mortgage to be refinanced;

3. The homeowner must occupy the subject property (1-4 units) as their primary residence;

4. The homeowner must qualify for the new loan under standard FHA underwriting

requirements and possess a “FICO based” decision credit score greater than or equal to 500;

5. The existing loan to be refinanced must not be a FHA-insured loan;

6. The existing first lien holder must write off at least 10 percent of the unpaid principal balance;

7. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent;

8. Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have a combined loan-to-value ratio greater than 115 percent;

9. For loans that receive a “refer” risk classification from TOTAL Mortgage Scorecard (TOTAL) and/or are manually underwritten, the homeowner’s total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income;

10. FHA mortgagees are not permitted to use premium pricing to pay off existing debt obligations to qualify the borrower for the new loan;

11. FHA mortgagees are not permitted to make mortgage payments on behalf of the borrowers or otherwise bring the existing loan current to make it eligible for FHA insurance; and

12. The existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification as described below.

Who can be an agent for a mortgagor in negotiations with a lender?

My firm recently was confronted from a loan servicer (mortgagee and / or agent) that we needed our authorizations to have specific names of individuals rather than the firm's name as the authorized agent. This requirement conflicts with what I have been suggesting to students at my classes at both the Real Estate School and while teaching MCLEs for First American. I always advise using the firm's or business' name (broad authorization) so you can easily have coverage in negotiating with a servicer if you are unavailable personally, but a colleague is available.

I hate giving out bad advice, so I looked into it further and learned the applicable definitions under the Power of Attorney Laws. I know that an authorization is not necessarily a Power of Attorney and that a servicer can require what they want, but if they do not like your authorization, simply using a Power of Attorney would also do the trick and servicers cannot reject a properly executed Power of Attorney under law.

To find the applicable rule, look under Title 15 of Article 5 of the General Obligations Law, Section 5-1508(4). This section provides that "any person, other than an estate or trust, may act as an agent, co-agent or successor agent under a power of attorney". A "Person" is defined in Section 5-1501 as being "an individual, whether acting for himself or herself, or as a fiduciary or as an official of any legal, governmental or commercial entity (including, but not limited to, any such entity identified in this subdivision), corporation, business trust, estate, venture, government, governmental subdivision, government agency, government entity, government instrumentality, public corporation, or any other legal or commercial entity."

Therefore, an entity can be designated as an agent under the Power of Attorney Law and I stand by my recommendation to use your business entity if you are performing Foreclosure Defense, Short Sales or Modifications and need to negotiate with the servicer on your client's behalf.

Thursday, September 9, 2010

Riverhead stops using google earth to enforce zoning

To read an interesting article on the topic click here.

Here is some food for thought - What is the legality of these types of searches with respect to NY Criminal Procedure Law under the Aerial Surveillance Doctrine in the first place?

The general rule is that warrantless aerial surveillance of an open field does not violate the Fourth Amendment rights of the occupier of the land. So why are they changing their practice in Riverhead? Perhaps lobbying works.

Monday, September 6, 2010

Interesting foreclosure misnomer video

While some in the industry may find this video offensive as it offers a negative perspective of real estate agents, it was put on the Real Estate Section's listserve from the NY Bar Association to illustrate the misnomer that a modification application stops foreclosure. Simply put - It does NOT!!!

Homeowners must be made aware that the only thing that stops a foreclosure is a written modification agreement coupled with a discontinuance of the foreclosure action. Hopefully all industry players can come together to educate homeowners on this important fact.

To view the video, click here

Please provide your thoughts.

Sunday, September 5, 2010

Does NY need foreclosure ONLY courts?

If you have not read about Florida's Foreclosure ONLY Courts, which are run by Retired Judges, you can read all about it in a NY Times article by clicking here.

The article discusses many positives of the Florida Courts including the ambitious goal of reducing the foreclosure backlog by 62% within a year. Such a reduction is certainly something that we could use in the NY Court System, which is continuously being strained by the mortgage meltdown. Yet, the article also discusses a negative consequence that has emerged from using Retired Judges in specialized Courts. Defense attorneys are claiming that a presumption in favor of the banks is emerging where questionable claims with incorrect documentation are achieving auctions and evictions. I am not clear how these Courts cause such a presumption, but the claim is that a correlation has been noticed.

In contrast to Florida's system, NY, which has also tailored its Court System to the foreclosure crisis. NY has created a new judicial position, entitled Foreclosure Referee, to conduct Foreclosure Settlement Conferences. Such conferences are designed to modify mortgages and avoid adjudication. Unfortunately, many cases are not modified in these Foreclosure Settlement Conferences as many Bank Attorneys do not come to the conferences with any intention of making a deal without respect to the CPLR's requirement to negotiate in good faith. Therefore, NY cases are being sent back to the Supreme Court for adjudication. In this sense, NY has added a layer to our Court System while Florida has moved a large case load away from their cohort of Judges.

My feeling is that a combined approach would work best. Retaining the Foreclosure Settlement Conferences, but having Judges preside at the conferences and keep the case if adjudication proves necessary. In this sense, the Judge could form a prejudice against a party who did not comply with the CPLR by failing to make a good faith effort to settle.

To read CPLR 3408 and subsection (f)'s requirment of negotiating in good faith click here.

New agency disclosure laws start in 2011

On August 31, 2010, Governor David Paterson signed into law multiple amendments to the state's real estate agency disclosure law. The amendments will take effect January 1, 2011 and will affect both sales and rentals in the residential sector, inclusive of coops and condos.

The key effect of the law is the requirement of a written agency disclosure form as opposed to verbal consent from clients. Additionally, the law will streamline the Dual Agency situation, where the same brokerage office represents the buyer and seller in a transaction, by permitting an advanced general consent to Dual Agency as opposed to requiring consent at a specific showing. 

In reviewing the Bill's justification section it becomes clear that the purpose of this legislation is to protect consumers in a Dual Agency Relationship where the same brokerage office represents both the buyer and seller in the same transaction and to streamline the process.

The new law can be found by clicking here.

Stay tuned to this blog for more information about these amendments and sample forms as they become available.