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.

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.

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.

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.

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.

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.

Effective September 1, 2010, title related services inclusive of all relevant searches, which are not used in the course of preparing a title insurance policy will be subject to New York State and Local Sales and Compensation Use taxes. Now it will be even more expensive to buy a house in New York State. Its important for agents and attorneys to understand this tax and carefully explain it to their clients. A great source for more information on the tax can be found by clicking here.

We have a cancelation in tomorrow's Discovering The Home Inspection Class in Center Moriches. If you would like to enroll, register at our website. 3 Continuing Education Credits.

http://www.liebatlaw.com/realestateschool/register/inspection

Last night we had a great class at Lieb Cellars in Mattituck on Commercial Real Estate. While discussing Land Use, the class began to ask questions about Nonconforming Use exemptions, which are frequent on the North Fork. To address these questions I explained that Land Use is regulated on the local level and that the class should see the Riverhead Town Code or the Southold Town Code to get their answers. You can locate the Codes by clicking here.

To illustrate some of the facts on Nonconforming Use, I will explain the topic with reference to the Riverhead Town Code.With respect to Riverhead, the Town Code defines Nonconforming Use as "Any building, structure or land lawfully occupied by a use that does not conform to the regulations of the use district in which it is situated." Remember, that a district designates an area of land where certain uses and structures are permitted. Therefore, a Nonconforming Use is a use that is not allowed within the district where the land is located. Additionally, in Riverhead, the Town Code states that "Any building, structure or use existing on the effective date of this chapter [6-29-1976], or any amendment thereto, may be continued on the same lot held in single and separate ownership, although such building, structure or use does not thereafter conform to the regulations of the district in which it is located". As a result, the Code permits uses to be grandfathered from a period before they became impermissible under the Code.

I believe that the confusion last night stemmed from our class misunderstanding the difference between obtaining a variance, which is a deviation from the Town Code through application and approval, and having a Nonconforming Use, which is a particularized exception from the Town Code. To be clear, a variance is available to any landowner, who wishes to apply for an exception to the strict confines of the Code, but such an application must be approved by the Zoning Board to be permissible. In contrast, a Nonconforming Use is an exception to the Town Code, which does not require an application to the Zoning Board because the elements required to be met to qualify for such a use are clearly identified within the Code.

Of additional note, a student in the class kept referencing to a 3 year period where a Nonconforming Use would be lost for non-use. This was incorrect with respect to the Town of Riverhead. Instead, the Code states "No nonconforming use may be reestablished where such nonconforming use has been discontinued for a period of one year". Therefore, the correct period is 1 year. Furthermore, I mentioned that a Nonconforming Use can be lost if the building is destroyed by fire. Again, this should be qualified because the Code states that "Nothing in this chapter shall prevent the complete restoration within one year of a building destroyed by accidental cause". Therefore, if the building is rebuilt within 1 year the Nonconforming Use remains.

I hope that the reader is now clear on the topic of Nonconforming Use and how it differs from a Variance.

We have a new opening for tonight's Commercial Real Estate Class at Lieb Family Cellars in Mattituck!

The event is scheduled to begin at 5:15pm, and we ask you to arrive 15 minutes early to sign in. At that time, Dinner will be available, thanks to Rolling in Dough Pizza of Greenport, and Lieb Cellars will be hosting a complimentary tasting.

Http://www.liebatlaw.com/realestateschool/register/commercial