Friday, January 31, 2014

Obama Backs and Encourages Mortgage Finance Reform in his State of the Union Speech

In his state of the union speech on January 28, 2014, Obama asked Congress to focus on mortgage finance reform in the upcoming year. He stated, “Since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again and keeps the dream of home ownership alive for future generations.”

There have been proposals in the Obama administration to overhaul Fannie Mae and Freddie Mac, the mortgage giants which own or guarantee about 60% of all mortgages in the United States. These government-sponsored enterprises (GSEs) have prospered for decades by buying and selling mortgages to provide capital to lenders and borrowers. However, when the housing bubble burst in 2008, the federal government took ownership of the mortgage giants, costing billions of dollars in taxpayer dollars to bail the companies out of financial ruin.  The housing market is now in recovery and Fannie Mae and Freddie Mac are profiting once again, but many government officials fear that another financial crisis is still possible. The goal is to take away Fannie Mae and Freddie Mac’s monopoly on the mortgage market, limit the federal government’s role and risk, and to focus on private lending instead. However, it will take years before the current system is completely overhauled and replaced with one dominated by private lenders.

It is imperative that brokers understand that the housing market is on its path to recovery, but may be facing drastic changes over the next two to five years. Middle class consumers may have difficulty obtaining a 30-year mortgage in a market that is run by private lenders unless the reforms allow for some substantial governmental intervention. We may only be in the early stages, but these proposals in Congress will lead to one of the biggest reforms this country has seen in the last decade.

Wednesday, January 22, 2014

Case Escalations: Power to the Homeowner

Have you applied for a loan modification and felt that your servicer did not properly review you for HAMP and other Making Home Affordable programs? Perhaps your servicer lost your documents or failed to provide you with the proper update on your file? Well, what are you waiting for? Escalate your case today and demand your servicer to be in accordance with the MHA guidelines!

Homeowners may contact the MHA Hotline at 888-995-HOPE to request assistance in the escalation of their cases. The MHA Support Center, acting as an intermediary between the homeowner and servicer, ensures that the servicer is complying with the MHA guidelines and is reviewing homeowners’ case escalations in a timely fashion. However, homeowners may also contact their servicers directly or authorize their attorneys to go through the HAMP Solution Center (HSC) to seek resolution. No matter what route is taken, it may take up to 30 or more days for an escalated case to be reviewed and resolved, so homeowners should act immediately if they believe to have been wrongly denied a MHA Program.

Case escalations give power to the homeowner and keep disorganized servicers in check. Please go here if you would like to know how to escalate your case today!

The Intersection of Pet Policies and Anti-Discrimination Laws in Real EstateBreach of Contract in Real Estate Cases

Monday, January 20, 2014

Free CE on 2/28 in NYC: Foreign Buyers (limited seating)!

Foreign Buyers

Instructor: Andrew Lieb, Esq., MPH

Credits: 3

Price: Free

February 28th, 2014: 11:00am to 2:45pm

Registration: Advanced Registration Required through 

International clients are all the rage … sometimes. Learn diverging perspectives on their ownership of US soil. Explore cultural sensitivity and anti-discrimination statutes while gaining an understanding of the real estate agents / educators need to familiarize foreigners with our local customs and laws. This course will split hairs between different levels of citizenship and the resulting rights and obligations afforded to purchasers. You will be familiarized with a multitude of reporting requirements and tax withholding statutes for purchasers, sellers and their property managers that can turn a foreign purchase into your worst nightmare, if ignored. After this course, the student will know what it takes to be a foreign buyer or the seller / property manager to such a buyer in New York.

Google and the Smart Home

Google is on its way to creating the “Smart Home,” revolutionizing the way we live in the home and bringing advanced technology to everyday appliances and devices. In the beginning of January, Google bought Nest Labs for 3.2 billion dollars. For those of you that do not know, Nest is the founder of the Learning Thermostat, which adapts to your daily routine, saves energy in the home, and can be controlled from your phone. Millions of Americans have outdated and complicated thermostats that are left at the same temperature all day, which, in turn, waste energy and increase heating bills. The Nest Learning Thermostat brings efficiency to home heating and is the hottest home appliance on the market. More and more homeowners are attracted to the idea that the home will now “adjust to us” and our schedules.

There are already talks of Google creating more tools and appliances that are connected to the internet. This “Internet of Things” began with the smartphone but is expanding to include vacuums, toasters, thermostats, refrigerators, smoke detectors, carbon monoxide detectors, and many other mundane but essential household items. Some are afraid that the Google-run Smart Home will invade homeowners’ privacy by gathering and analyzing their personal information in order to improve the Internet of Things and user-based advertisements. However, Tony Fadell, CEO of Nest, has recently announced that there will be no change in the current privacy policy for Nest. This technology should considered as something that is exciting and revolutionary and will only make our lives easier.

Tony Fadell  is also the co-creator of the iPod and iPhone. Instead of selling the company to Apple, he has decided that Google is the company that can best support Nest’s growth and development.  Google understands Nest and is eager to take people’s interests to a whole new level.

Sunday, January 12, 2014

School District Education

Many customers and clients ask their real estate agent about the local school district as part of their search for a new home. While this seems like an easy conversation for the real estate agent, its not. There are a lot of discriminatory undertones to this conversation and real estate agents need to self-protect while answering questions. Remember, the Fair Housing Act prohibits racial steering, among its aims to provide equal access to protected classes of purchasers / renters.

Still further, boundary lines are confusing and often may result in a trickier situation than is appreciated by both the buyer and their agent; particularly when the home for sale is not being sold by a family with school aged children who would know.

Regardless, the best real estate agents know to refer their customers and clients to third-party sources when things can get hairy and instead focus on the introduction of the parties and the negotiations. This is particularly true in the modern age of the internet where websites have far more data than a real estate agent could possibly remember. So, a great agent will just provide their customers / clients with the names of the websites.

Do you want to know where to send your customers and clients when they ask you about schools?

Sure you do; try these:

  1. National Center for Education Statistics: Federal entity that collects and analyzes data related to education. Use the NCES's School Search tool to learn about public schools, private schools, colleges and public libraries near any house anywhere in the US. Interestingly, this tool will provide your clients with the race / ethnicity of students without having to touch on this discriminatory topic. You will also learn such important information as total district students, total classroom teachers and student/teacher ratio.  
  2. Greatschools: Non-profit that supports families to champion their children's education. Use the Greatschool's Moving With Kids tool to learn the best children's books on moving, how to have a Plan B!, imagine your ideal school, consider your child's needs and to learn about traditional school alternatives. Also, and similar to NCES's School Search, Greatschools offers such a Find a School feature and it offers many of the same quantitative data as the NCES, but also gets qualitative with reviews by people in the community, which will really hit home to your customers and clients. 
  3. SchoolDigger: A project by Claarware LLC, a software development shop, which should be the go to place for district boundaries for schools as their maps just make it so easy. Once you find your area on their interactive map you can click on the school you believe to be applicable to a given area and check their boundaries to see what areas are included in the district. However, knowing the difficulties that boundary lines bring to any question, the site has an important disclaimer that "Not all boundaries are included". So, make sure to check the seller's tax bill to be sure what school district goes with the property. 
Now go sell a house to someone who is educated. 

Welcome Breslin to The Moriches

Breslin Realty, welcome to Center Moriches; we at Lieb School and Lieb at Law are glad to be your neighbor. On their website, Breslin offers its site plan to bring big box retail to the quaint Moriches community.

While many may dislike the thought of big box retail in such a historic community in their initial gut reaction, this project should be viewed positively as it offers life to a very dead downtown that should benefit from some out-of-town traffic and life. More so, Breslin knows the community's unique character and seems to be embracing our culture with their marketing efforts. Specifically, the site plan's comments read as follows:

"Being one of the Gateways to the famous Hamptons of Long Island, this site affords major big box retailers the unusual opportunity to capitalize on one of the most sought after markets on Long Island. The location enjoys a non-competitive advantage on the South Shore, due to lack of developable, zoned retail properties; and due to the access from Sunrise Highway and Montauk Highway, your customer can access the site within minutes of Southampton, as well as the Moriches and surrounding trade areas."

We guess the secret of Center Moriches' marvelous location, being situated as the Gateway to the Hamptons, is out and more and more people will want to share in our pristine waterfront properties and striking downtown charm.

Welcome Breslin!

Thursday, January 09, 2014

The Plight of the Broker

Many look with envy at the good fortune of the broker, who reaps a large pot from simply introducing the parties to the deal, but to those who do not live in his shoes, think this:

"[A] broker is never entitled to commissions for unsuccessful efforts.

The risk of failure is wholly his.

The reward comes only with his success.

That is the plain contract and contemplation of the parties.

The broker may devote his time and labor, and expend his money with ever so much of devotion to the interests of his employer, and yet if he fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions.

He loses the labor and effort which was staked upon success.

And in such event it matters not that after his failure, and the termination of his agency, what he has done proves of use and benefit to the principal.

In a multitude of cases that must necessarily result.

He may have introduced to each other parties who otherwise would have never met; he may have created impressions which, under later and more favorable circumstances, naturally lead to and materially assist in the consummation of a sale; he may have planted the very seeds from which others reap the harvest; but all that gives him no claim.

It was part of his risk that failing himself, not successful in fulfilling his obligation, others might be left to some extent to avail themselves of the fruit of his labors."

This is the life of a broker as articulated by NY's Highest Court in the case of Sibbald v. Bethlehem Iron Co. in 1881, which remains true to this day. A broker deserves everything he gets as he must live in an all or nothing world. Here is to the broker who makes the deals happen!

Wednesday, January 08, 2014

Supplemental Directive 13-09 to Take Effect in Two Days

The time has come! Supplemental Directive 13-09 to the Making Homes Affordable handbook will take effect in two days on January 10, 2014.

As discussed in a previous entry, this Supplemental Directive makes the loss mitigation process easier, clearer, and more efficient. It is an alignment with the final Consumer Finance Protection Bureau (CNPB) Mortgage Servicing Regulations, which prohibit high risk lending and will also take effect on January 10, 2014. 

Servicers must review documents and submit Incomplete Information Notices in tighter timeframes than ever before. This makes sense because most borrowers submit incomplete initial packets anyway and should be advised of missing documents immediately to move forward from the initial stage. By contacting the borrowers earlier and responding to them quicker, servicers are now able to maximize borrower protection in their review of loan modification applications.

The Department of the Treasury and the Department of Housing and Urban Development did not want to completely overhaul the Making Homes Affordable guidebook because they did not want to alter or destroy the integrity of the programs. All changes to the Making Homes Affordable handbook were kept to a minimum and in accordance with the final CFPB Mortgage Servicing Regulations. Remember, the CFPB regulations are the bare bones of requirements for servicers, so when servicers review borrowers for HAMP, they still must consider the Making Homes Affordable handbook and state laws as well.  

Also, HAMP still remains top priority even though CFPB regulations require borrowers to be considered for all loss mitigation options at the same time. If the servicer participates in the HAMP program and the borrower is eligible for HAMP, the borrower must be given HAMP over other in-house loan modifications. 

Tuesday, January 07, 2014

The Closing Disclosure Replaces the HUD-1 in Real Estate Transactions in 2015

According to the Consumer Financial Protection Bureau, the new form, "The Closing Disclosure form replaces the current form used to close a loan, the HUD-1, which was designed by HUD under RESPA. It also replaces the revised Truth in Lending disclosure designed by the Board under TILA."

Consumers must receive this form "at least three business days before the consumer closes on the loan." Strikingly, if many possible loan components are changed following the provision of The Closing Disclosure form, such as changing the product or adding a prepayment penalty, a "consumer must be provided a new form and an additional three-business-day waiting period after receipt".

Look forward to this final rule, which is effective on August 1, 2015.

Monday, January 06, 2014

Ringing in the New Year With Real Estate Brokerage Advertising Regulations

If you've been following our blog, you've known for months about the Real Estate Brokerage Advertising Regulations which became effective on January 2, 2014. Hopefully you have been preparing to ensure compliance, but if you haven't, here's one last reminder that you most likely need to overhaul the way you advertise.

The Department of State has overhauled the Advertising Regulations found in 22 NYCRR 175.25. If you've visited their page before, make sure you refresh your browser to see the updated January 2014 regulations. What used to be two paragraphs has exploded into twenty-eight paragraphs over two pages covering everything from for-sale signs to e-mail correspondences. Even the simplest things fall under the new regulations. For example, salespersons and brokers must display their full licensed names on their advertisements, no nicknames, and phone numbers must be clearly labeled based upon their type (cell, desk, home, etc). By defining advertising as "promotion and solicitation related to licensed real estate activity" the Department of State has thrown a broad net in order to capture as much activity as possible under the new regulations.

It is imperative that brokers become familiar with the new regulations so they understand what they need to change, and it is even more important that brokers conduct trainings with their agents who most likely are unknowingly violating the new regulations on a regular basis. Determining what information is required on each type of advertisement requires a careful reading of the regulations. Consult your trusted attorney for guidance so you can avoid potential penalties and continuing running your brokerage without a hiccup.