LIEB BLOG

Legal Analysts

Tuesday, May 31, 2016

New Making Home Affordable Handbook Released: Program to End in 2016

The U.S. Department of Treasury recently released Supplemental Directive 16-04 (Making Home Affordable Program – Handbook for Servicers Version 5.1).  This Supplemental Directive announces the release of Version 5.1 of the Making Home Affordable (“MHA”) Handbook (the “Handbook”).  This newest version of the Handbook consolidates the “sunset” provisions provided by the U.S. Department of Treasury in Supplemental Directive 16-02 (MHA Program Termination and Borrower Application Sunset) and Supplemental Directive 16-03 (MHA Program Termination and Borrower Application Sunset II) into one location for ease of reference.

Distressed homeowners who are facing foreclosure must submit their request for mortgage assistance under the MHA program by December 31, 2016.  After that date, lenders will no longer be required to comply with the MHA guidelines set forth in the Handbook.  This will leave many distressed homeowners with few remaining options and most will face the possibility of foreclosure.

The MHA program was announced in 2009, by the Obama Administration, as a relief to distressed homeowners.  The MHA program’s objective is to provide guidelines to lenders to modify the terms of eligible mortgages so that “at-risk” homeowners would be able to reduce their monthly mortgage payments and to avoid foreclosure.  According to the most recent MHA Program Performance Report, during the last 7 years, the MHA program has only helped 2.5 million of the 7 to 9 million homeowners that were identified as “at-risk” by the Obama Administration in 2009.  This means that the remaining 4.5 to 6.5 million “at-risk” homeowners who do not submit their request for borrower assistance by December 31, 2016, will be faced with foreclosure.

Congress’ decision to abandon the MHA program seems misguided because of the time and resources it has invested in the program.  Most importantly, the termination of the program on December 31, 2016, leaves up to 6.5 million “at-risk” homeowners scrambling to submit requests for assistance of face the possibility of foreclosure. 

Tuesday, May 24, 2016

Saving on Real Estate Brokerage Commission

You may think that you can save money in real estate by not using a Buyer’s Agent. On the contrary, it is often argued that there is no savings because the secondary benefits of using a Buyer’s Agent surpass any costs of such a Buyer’s Agent. Nonetheless, the only factor that can actually save you money in brokerage commission in a real estate transaction is if it’s a Direct Deal.

Read the full article by Andrew Lieb, Esq. here.

Monday, May 16, 2016

Agency Disclosure Simplified - A Must Read

Finally, an article that simplifies this extremely complicated agency disclosure topic.

Buyer’s Agent. Seller’s Agent. Direct Deal. The terms may sound familiar, but do you or your clients or customers really know what they mean? That knowledge is essential for all sides in real estate dealings, particularly in understanding commissions and not violating license laws.



Tuesday, May 10, 2016

Making Home Affordable Program to End in 2016

The U.S. Department of Treasury (Treasury) recently released Supplemental Directive (SD) 16-03 (MHA Program Termination and Borrower Application Sunset II) to the Making Home Affordable (MHA) handbook, containing “sunset” provisions for its MHA program. The release of this Supplemental Directive signals that there will be no further extensions of the program.

The Making Home Affordable program was announced in 2009, by the Obama Administration, as a relief to distressed homeowners. The MHA program’s objective is to provide guidelines to lenders to modify the terms of eligible mortgages so that “at-risk” homeowners would be able to reduce their monthly mortgage payments and to avoid foreclosure. According to the most recent MHA Program Performance Report, during the last 7 years, the MHA program has only helped 2.5 million of the 7 to 9 million homeowners that were identified as “at-risk” by the Obama Administration in 2009. This means that the remaining 4.5 to 6.5 million “at-risk” homeowners who do not submit their request for borrower assistance by December 31, 2016, will be faced with foreclosure.

SD 16-03 provides the following modifications to the MHA handbook for winding down the program:
  • All borrower requests for assistance under MHA must be submitted by December 31, 2016;
  • On December 1, 2017, MHA Help and the Home Affordable Modification Program (HAMP) Solution Center will no longer accept new cases, nor escalate cases to servicers;
  • All cases that have been escalated prior to December 1, 2017 must be resolved by May 1, 2018;
  • After December 30, 2016, servicers will no longer be required to assign relationship managers to borrowers;
  • Effective May 1, 2018, servicers will no longer be required to follow Section 3 of Chapter 1 of the MHA Handbook; however, the Treasury suggests that servicers continue to follow the best practices that have been established by MHA;
  • After September 1, 2016, servicers are no longer required to satisfy the Reasonable Effort standard set forth in Section 2.2.1 of Chapter II of the MHA handbook; and
  • Servicers will not be required to suspend a scheduled foreclosure sale if a borrower submits an Initial Package after December 30, 2016.
After continuously developing and expanding the MHA program over the last 7 years, it is surprising that Congress has refused to extend its life. Since 2009, the Treasury has issued 5 versions of its MHA handbook and has issued over 80 Supplemental Directives, including SD 16-03, refining the guidance it has provided to participating servicers. Congress’ decision to abandon the MHA program seems misguided because of the time and resources it has invested in the program. Most importantly, the termination of the program on December 31, 2016, leaves up to 6.5 million “at-risk” homeowners scrambling to submit requests for assistance or face the possibility of foreclosure.

Thursday, May 05, 2016

Real Estate Brokerage Regulatory Updates - 5/3/16 NYS Board of Real Estate meeting summary

On 5/3/16 the NYS Board of Real Estate continued its mission of optimizing the regulation of real estate brokers in our state by holding its meeting in NYC, Buffalo and Albany. To remind real estate brokers and salespersons, the public is welcome at these meetings where the public can bring comments from the floor. It's encouraged that Lieb School students attend these meetings to have your voices heard. 

"[T]he Board has general authority to promulgate rules and regulations affecting real estate brokers and salespersons in order to administer and effectuate the purposes of Article 12-A of the Real Property Law."

A complete video of the meeting is available on youtube.

In summary, the following was discussed:

  1. Enforcement activity report;
  2. Equalizing points for salespersons seeking a real estate broker's license for acting on the selling and listing sides of deals;
  3. Updates on the continuing education topics of agency and diversity;
  4. The new broker's curriculum; and
  5. Fair Housing regulations, which were passed.
Most interestingly, the enforcement report claimed that while 317 complaints were fielded by the Department of State from January through April of this year, only 2% were referred to the Administrative Department to pursue charges. Agents should translate that statistic as meaning that while a lot of complaints come into the Department of State, a lot of effort is exerted in weeding out the legitimate complaints from the lot. This is quite reassuring.