Wednesday, March 30, 2011

CLE 3/30/2011 - Robo-Registrations

Andrew M. Lieb, Esq. will be providing a 2 hour CLE this evening sponsored by First American Title Insurance Company of New York at the Hyatt in Hauppauge, NY. The CLE will cover Robosigners & MERS in the Foreclosure Mess. The following links and citations will be utilized during the course for your future reference:

  1. Recording discharge of mortgage - Real Property Law Section 321

  2. Bankruptcy Court MERS decision - In re Ferrel L. Agard, 2011 WL 499959 (ED NY, 2011)

  3. Foreclosure Settlement Conferences: (1) Uniform Civil Rules of the Supreme Court & County Court Section 202.12-a; (2) CPLR Section 3408; (3) Indymac v. Yano-Horoski, 890 NYS 2d 313 (Sup Ct, Suf. Cty., 2009); & (4) Indymac v. Yano-Horoski, 912 NYS 2d 239 (2nd Dept, 2010).

  4. MERSCORP, INC. Rules of Membership - http://www.mersinc.org/files/filedownload.aspx?id=172&table=ProductFile

  5. First MERS Case - MERSCORP v. Romaine, 861 NE 2d 81 (2006).

  6. Ways Home - http://www.knowyouroptions.com

  7. The State of the Judiciary 2011 - www.courts.state.ny.us/ctapps/news/SOJ-2011.pdf

  8. Robosigning Admitted in Testimony - Indeymac v. Machado, Florida, Case No. 50 2008 CA 037322XXXX MB AW

  9. Justice Winslow's Congressional Testimony - http://www.propublica.org/documents/item/ny-state-supreme-court-justice-dana-winslows-testimony-on-foreclosure-probl

  10. Certificate of Conformity - CPLR Section 2309(c)

  11. Deceptive Practices Act - GBL Section 349

  12. National Association of Attorneys General - http://www.naag.org/joint-statement-of-the-mortgage-foreclosure-multistate-group.php

  13. Attorney Affirmation Requirement - Adiministrative Order 548, 2010

  14. Affirmation Template - http://www.courts.state.ny.us/attorneys/foreclosures/Affirmation-Foreclosure.pdf

  15. Qualified Written Requests (RESPA) - http://www.hud.gov/offices/hsg/ramh/res/reslettr.cfm

  16. Affirmation Requirement Precedent - Citibank v. Murillo, 2011 NY Slip Op 21004, (Sup Ct Kings Cty., 2011)

  17. Standing issues - Wells Fargo v. Mastropaolo, 837 NYS 2d 247, (2d Dept, 2007)

  18. MERS Authority: (1) LaSalle v. Lamy, 824 NYS 2d 769 (Sup Ct Suf Cty., 2006); (2) US Bank v. Flynn, 897 NYS 2d 855 (Sup Ct Suf Cty., 2010)

  19. Standing Explained - US Bank v. Collymore, 890 NYS 2d 578 (2d Dept, 2009).

  20. 2010 Report of the Chief Administrator of the Courts - www.courts.state.ny.us/publications/pdfs/foreclosurereportnov2010.pdf

Monday, March 28, 2011

Federal MARS Rule on Loan Modification and Short Sale Providers

The MARS Rule
This year, the FTC enacted a new rule called MARS (Mortgage Assistance Relief Services) that puts several obligations on anyone negotiating on behalf of a homeowner for a loan modification or short sale. Several disclosures are required about the services and fees.
MARS is defined as a “service, plan, or program offered or provided to the consumer in exchange for consideration, that provides services in relation to a consumer’s mortgage, including negotiating a possible loan modification.”
Most notably, the MARS rule will ban advance fees. Now, fees will be unavailable for MARS providers that negotiated a loan modification or short sale until the mortgage lender or servicers has provided written documentation describing the key changes to the mortgage, which the consumer accepts. The consumer also has the right to reject this offer without any charges, and must be reminded of this.
Loan modification companies or other MARS providers must make certain disclosures about the agreement between them and the homeowner, such as the fact that they can stop doing business at any time, that they can reject offers the lender or servicer makes, and that they need not pay a fee if they reject the offer. A fee is only payable once the homeowner accepts an offer they deem to be acceptable, and the fee amount must be disclosed from the beginning. MARS also bars these companies from encouraging or preventing homeowners from communicating with their lenders and/or servicers on their own. Providers often suggest to consumers that they should stop paying their mortgage. If they do so, they must also disclose that because of that, they could lose their home and damage their credit scores in the process. They also must disclose that lenders may not agree to modify the loans at all. The following should be provided as a memo to the homeowner, that is conspicuously a disclosure statement, with language similar to the following:
IMPORTANT NOTICE (in two point-type larger than the font size of the disclosure): You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer’. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert amount or method for calculating amount) for our services. (NAME OF COMPANY) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
Additionally, the rule requires certain disclosures from these providers, such as disclosures about their services in any communications to potential customers. For example, they must disclose that they are not in fact associated with the government. They must also disclose: the consumer’s payment and mortgage obligations; the company’s refund/cancellation policies’ whether the company has performed the services it promised; whether the company will provide legal representation; the availability or cost of any alternative to for-profit mortgage assistance relief services; the amount of money a consumer will save by using their services; or the cost of the services. If they are going to make claims regarding benefits, performance, or effectiveness of services, they must have reliable evidence to back up these claims.
The following is an example of the disclosure that must be made by the agent who promises to perform negotiation, counseling, or other services regarding Short Sales:
IMPORTANT NOTICE (in two point-type larger than the font size of the disclosure): (NAME OF COMPANY) is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
Who is subject to MARS Rules?
Most obvious is that loan modification companies are subject to MARS regulations. Along with that can be real estate brokers and professionals, and sometimes attorneys as well.
Attorneys are exempt from the MARS statute as long as they are engaged in the practice of law, are admitted in the state of the property; and they are complying with the state’s rules on attorney conduct and regulations. They must also place any collected fees in an IOLA account, and follow regulations related to such, if they are to collect a fee without the applicable fee ban. However, this does not apply to circumstances where fees are collected in connection with preparing or filing documents in bankruptcy, court, or administrative proceedings.
Real Estate Professional who represent buyers or sellers in Short Sales are also subject to the new rules. They made need to make certain disclosures up front, and their fees are affected as well. Once they become aware that the transaction may be a Short Sale, they must comply with the disclosure requirements.
When is a real estate professional subject to MARS?
There are several situations that real estate professionals may find themselves in which may lead to Short Sale Listings, and therefore fall under the purview of MARS as a provider.
First, and most obvious, is where the real estate professional negotiates a short sale with a lender on behalf of a homeowner client. Exact compliance with the statute depends on the broker’s business.
A disclosure is required when providing an offer for mortgage relief, at the time that the homeowner is presented with the lender’s short sale approval letter. This disclosure must be provided on a separate page as follows:
IMPORTANT NOTICE: Before buying this service, consider the following information (in two point-type larger than the fnot size of the disclosure): This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount as disclosed previously] for our services. If you stop paying your mortgage, you could lose your home and damage your credit rating.
Along with this must be a notice providing for the material differences between the seller’s current loan and the lender’s proposed modifications to the loan, if the short sale offer is accepted (which may lead to a deficiency against the seller). This information will likely be included in the lender’s short sale approval letter to the homeowner as well.
MARS in Adveritising
If a real estate professional advertises as a MARS provider, full compliance is necessary. If a particular entity specifically markets MARS services to homeowner, then they need to make full disclosure in any advertisements, which includes telephone solicitations.
In a situation where a broker only does limited transactions involving short sales, and it is not the primary purpose of their business, then the MARS rules must be complied with for these transactions, and the necessity for these disclosures occurs once the real estate professional realizes it may become a short sale transaction situation. If a real estate broker that does not exclusively do MARS transactions advertises for themselves and includes in this advertisement the ability to do MARS transactions, then the FTC reviews these advertisements on a case by case basis, taking into account whether the ad gives a certain impression to a “reasonable consumer”.
Buyer’s representatives also may become a MARS provider if they negotiate the terms of a short sale on behalf of the seller with the lender. They would then need to make disclosures to sellers where they negotiate short sales on behalf of the seller while trying to acquire a purchase for the client, the buyer. Where there is no specific arrangement with the Seller, the real estate professional may not charge a separate fee to the seller. If he does make such an arrangement, it must be done in compliance with MARS.
Referrals made to a MARS provider in exchange for a fee will be subject to MARS requirements if it could be viewed as “arranging mortgage relief services” so one must be careful in that situation. This is a factual determination made on a case by case basis. To avoid MARS regulation, it must be clear that the client is not required to use the MARS providers offered by the real estate professional. Fee arrangements must be disclosed upfront.
Things to keep in mind regarding fees
If a broker customarily takes fees upfront, then they need to be cognizant of potential short sale situations because they would be in violation if they took a fee upfront and it turned out to be a MARS transaction.

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As an aside, the FTC is placing a stay on enforcing the MARS rules against a licensed real estate agent who is working on a short sale. To read the FTC's press release, click here. Nonetheless, NY real estate agents should be mindful of the Real Property Laws Distressed Property Consultant provisions and the impact this plays on their direct negotiation of a debt with a lender and how this may also constitute the unauthorized practice of law. Its therefore recommended that real estate agents abstain from direct negotiations on a release of the deficiency judgment, the lien and the notice of pendency incident to a short sale transaction. 

Monday, March 21, 2011

Notes from meeting with Suffolk County Zoning Board Chairs

• Generalized community opposition should not be considered by the ZBA although it exists as a political reality


• Lawsuits in an Article 78 Proceeding should be brought with the ZBA Chairman being named as the defendant and they do not want to be publically overturned

• Attorney for applicant:

o Is expected to have made a personal inspection of the site at issue

o Should meet with civic associations to garner community perspective and amend plan to accommodate oppositions concerns

• In Huntington, a letter is utilized to start the process, not a building permit application

• Always bring a complete narrative articulating your position and submit to the ZBA as they may try to cut the applicant off

• Using social media is a new way to ascertain community sentiment for the project

• Do not friend a page on Facebook if you are not friends, as this is an ethical violation

• Application should distinguish the present application on why it will not create precedent by showing the unique factors at issue

• Planning Board will submit a memorandum to the ZBA and they can be questioned about this

• Experts are sometimes allowed to do a narrative, but in other Towns required to be questioned

• Huntington requires experts in all commercial case

• Before proceeding, FOIL request the tax lot on the area of the case; read through the cards and then pull previous similar decisions

• Be sure to touch on Town Law §267b every element

• For the financial component of a nonconforming use application, you will need an expert (accountant) detailing financials for each and every available use

• “Self-created hardship” used to be enough to defeat an application, but not any more

Each Town is very different & the applicant should attend hearings before pursuing theirs even if they have done this before!!!!

Suffolk County Permit Portal

Suffolk County recently unveiled a portal to streamline the building permit process for each of the 10 towns and 33 villages in Suffolk County. This is only Phase One of the portal & the prospects of this into the future are endless. A great move by the County and we should read this as Suffolk County's endorsement of future development for the County. To utilize the portal, click here.

Tuesday, March 15, 2011

Post by our friend, KAREN LAURENCE from BFCU

Things will be changing-the new high for the jumbo fixed product is going down to $625,500 from $729,750 by September if no government action is taken.


FHA loans are raising their charges for the third straight year in a row. And may raise the down-payment requirement up from 3.5%.

Fannie is requiring that all condominiums be inspected to check on the cash reserves held by the Board- and increasing that from 10-20%-that is why fewer are on the approved lending list.

It is getting harder to close loans due to title issues-Lenders from 20 years ago have not closed and given satisfactions of mortgages to their clients. Open mortgages are appearing on credit reports.

There is now a .25% add-on for a loan sold to Fannie Mae-no matter what your credit score is-if the down-payment is not 25% on a purchase.

First thing I do is check and fix the credit. Then put the loan in and get it approved through the Desk Top underwriter used by Fannie Mae. Then you still need experience and knowledge to get the loan through due to issues that crop up during the loan process. New rules and regulations are everywhere.

Make sure you use an experienced lender. I like having in -house processing so I can ask the underwriters questions as the loan progresses and so can overcome the problems to get the loan closed.

Monday, March 7, 2011

Full Class Tomorrow - Commercial Real Estate

Tomorrow's Commercial Real Estate Class at Briarcliffe College is at full capacity with a waiting list. We're looking forward to the course!

Wednesday, March 2, 2011

Tax Grievance Deadline in Nassau Extended

You now have until April 23, 2011, instead of until yesterday. To learn more, read the County Executives Press Release. To file a grievance, your first stop should be here or hire a professional. Good luck and go reduce your taxes.