In People ex rel Cuomo v. First American Corp, the Court of Appeals denies the argument that NY can't regulate appraisals and instead says, while ruling on alleged fraud and violation of real estate appraisal independence rules concerning the issuance of mortgages, that both Federal and State authorities may ensure that real estate appraisal reports comport with the Uniform Standards of Professional Appraisal Practice (USPAP).

The implication of this ruling is that appraisers should be mindful of increasing oversight by both Federal and State authorities. More so, Appraisers should be knowledgeable of the USPAP and continually review its interpretations and amendments. To review the USPAP, click here.

Just like they have been doing for at least a year in short sales, banks are now offering a portal for homeowners and/or their representatives to apply for a mortgage modification through an online, streamlined, organized and optimized application process. This should mark the beginning of the end of the fax shredder days of modifications where the lender says they never received anything and they blame the homeowner's neglect for the denial of a modification. While the short sale portal utilized is traditionally administered by a third party company, Equator, the modification portal appears to be administered in-house by way of the homeowner's existing online mortgage account, which should create more tailored offerings to the client's specific needs. We highly endorse this move by the banks and believe technology will eliminate much of the he said / she said about document transmission, which is the main crux behind most modification denials to date.

Settlement negotiations are in place with the nation’s five (5) largest mortgage servicers to compensate victims of Robosigners. These lenders include Ally Financial, Bank of America, Citigroup, JP Morgan Chase, and Wells Fargo.

Robosigners are lender representatives that signed several thousand documents without reading and reviewing them for accuracy, creating issues in foreclosure litigation as a result. This practice came to light as a result of the 2008 financial crisis because the number of foreclosures increased greatly as a result.

On the Upside: A portion of the estimated $25 billion settlement will be used to assist homeowners facing foreclosure in participating states. Compensation may also be available to homeowners that fell victim to Robosigning practices. The lenders would also be required to participate in an upgraded procedure for processing foreclosures in order to provide homeowners with greater protection.

On the Downside: After a final settlement, the participating lenders would be protected from future litigation by the participating states. This raises concern to several state Attorney Generals, such as in California and New York’s Eric Schneiderman.

Opponents to the agreement argue that although the number seems large, these lenders are “getting off too easy”.

This opposition is also fueled in part by the concern that there may be other, undiscovered predatory, deceptive, and/or illegal practices in place with these lenders that warrant further investigation and potentially prosecution. Since protection for the participating lenders is part of the package, this may prevent investigation, prosecution, and protection concerning such ongoing practices.

Likewise, President Obama announced that he anticipates creating a task force which will further investigate lenders’ wrongdoing. If such a task force is created prior to the execution of the settlement agreement, this could result in a failure of the settlement. The lenders are bargaining for protection from further litigation and may not be willing to pay such sums without that promise.

Further, compensation to the victims of foreclosure is limited to a small class of persons damaged within a restricted date range. Homeowners with Freddie Mac or Fannie Mae loans will be exempt.

To learn more about this potential agreement, CLICK HERE or CLICK HERE.

Following on the heals of the Silverberg decision by the Appellate Division, which basically denied lenders the standing to sue when MERS was utilized to record a mortgage, the NY AG has sued the banks for their use of MERS. If you remember Ed Romaines lawsuit with MERS, this has been a long time coming. The lawsuit alleges deceptive and fradulent practices on homeowners and the Courts as a result of MERS involvement in mortgages. Basically MERS involvement skews the ability of the Courts and Defendants in a foreclosure action to determine if the Plaintiff in the lawsuit actually has the right to sue. To learn more about the lawsuit, click here.

This week the administration announced that its program that provides the framework for mortgage services to provide modifications to distressed homeowners will be extended for an additional year and will now be available through December 31, 2013.

Additionally, the administration will modify the framework of the Making Home Affordable program to offer assistance to an increased target population of homeowners. To accomplish this goal, the Home Affordability Modification Program (HAMP) will shift its sole focus on front-end debt-to-income ratio, or the comparison of income to a homeowner's mortgages, taxes and insurance, to also evaluating back-end debt-to-income ratios, or the comparison of income to a homeowner's total debt, including non-real estate related debt. Its interesting that it took the administration so long to shift to this focus because back-end debt-to-income has traditionally been the primary focus of lenders when making a loan. Still further, the program will be extended to income-producing properties, with tenants, as well as vacant properties instead of being limited to owner occupied properties as it currently exists. Lastly, the administration has expanded its incentive offerings to services who offer principal reduction to underwater homeowners.

To read the administration's explanation of its new policies with respect to the Making Home Affordable Program, click here.

Hi all,

Issue: Did real estate agent act as a dual agent and consequently was she required to disclose her divided loyalties and obtain the sellers' consent thereto on an agency disclosure form?

I had a great time presenting our CLE Course: Property Wars last evening and wanted to thank all those who attended for being a great audience.

2 recent decisions speak to the duties Boards have in Cooperative apartments.

Fair Housing Act: Not only can a Cooperative violate the Fair Housing Act regardless of the Business Judgment Rule, but specifically you can't keep the single guys out so says the Federal District Court in Lax v. 29 Woodmere Blvd. Owners, Inc. While the Court did not yet decide for the Plaintiff, the Court did say that the allegations if proven can constitute a cause of action.

Now that 2012 is here it is important to be aware of changes in the law in order to properly represent our clients. This is not a list about the best events from 2011, but, instead, a list that highlights the new legal landscape that you face as real estate practitioners. Being familiar with these laws, regulations and opinions may help you to better address your clients’ matters, save your license and make you money.

Property Tax Caps
Local government is now prohibited from raising property tax levies by more than the lesser of 2% or the rate of inflation (excluding New York City). An exception to this cap occurs if local government enacts a law or resolution explicitly overriding the cap by a 2/3rds vote. Currently, New York property taxes are the 2nd highest in the country and are 96% higher than the national median.

Marriage Equality
Same-sex couples may now marry and as an incident thereto may now be deeded title as tenants by the entirety. Yet, while New York now provides same-sex couples with many new rights, the practitioner must be mindful that the Defense of Marriage Act prevents same-sex married couples from realizing the full extent of rights enjoyed by opposite-sex married couples because it prohibits the availability of federally recognized rights.

Mortgage Modifications
Mortgagees / servicers who participate in the federal Home Affordability Modification Program (HAMP) and accept a borrower’s application for a loan modification under that program must fully abide by the rules of the program in New York. Specifically, the Appellate Division held in Aames Funding Corp. v. Houston that a foreclosure sale would be stayed until the borrower was fully evaluated under the HAMP program. Practitioners should therefore familiarize themselves with all HAMP rules, which can be learned by accessing the Making Home Affordable Handbook.

Electronic Recording
Real estate recordings are going digital. County clerks will begin accepting documents in electronic format on September 22, 2012. Don’t fret; you can still bring the Clerk your paper versions if you please. Yet, the justification for the bill argues that “owners of real property, real estate professionals and local government taxpayers would benefit from the more accurate and efficient land records system that this bill would facilitate” so you should consider the upside of going digital.

MERS’ Foreclosure Obstacle
Where Mortgage Electronic Registration Systems, Inc. (MERS) is nominee and mortgagee for purposes of recording, it cannot assign the right to foreclose upon a mortgage to a plaintiff in a foreclosure action absent MERS's right to, or possession of, the actual underlying promissory note. So says the Appellate Division in Bank of New York v. Silverberg where a foreclosure was dismissed for lack of standing as a result of MERS’ involvement. The decision coupled with the introduction of governmental electronic recording seems to signal the end of mortgagees’ practice of outsourcing their recordings to MERS in New York.

Ethical Seller’s Concession Rules Reinforced
The New York State Bar Association is at it again by clarifying its Opinion #817 which addressed the duty to disclose in a transaction involving a Seller’s Concession and a corresponding Gross-Up. Opinion #822 states that “all transaction documents containing the grossed-up sales price must disclose that the sales price has been increased by a sum equal to the seller’s concession” in order for the practitioner to comply with Ethics Rule 8.4(c).

Expanded Hardship Criteria for Real Property Redemptions
The Suffolk County Code has been amended to expand the definition of “immediate family” to include grandchildren residing with the applicant where an applicant seeks to enlarge its time period to redeem its tax foreclosed property past 6 months based upon an illness to a member of its “immediate family”.

Elimination of Recommended Attorney Lists by Title Agencies
In analyzing Insurance Law §6409(d), the New York State Insurance Department opinioned that a residential real estate broker may not refer its clients to attorneys on an “approved” or “recommended” list if the attorneys, in turn, refer those clients to the broker’s affiliate title agent. Yet, the opinion clearly states that it is premised upon the assumption that “attorneys that do not make the referral quota are removed from the list”, so a list is likely permissible so long as membership within the list is objectively independent from referral. Nonetheless, affiliated real estate brokerage and title companies are now eliminating their use of these recommended attorney lists.

On-Bill Recovery Loan Program
As part of the Power NY Act of 2011 and beginning January 30, 2012 homeowners can take out low-interest loans from NYSERDA for energy efficiency measures, to be paid back on their utility bills. Moreover, the payments may be tax deductible and are transferable if the property is sold. A great aspect of this program is that homeowners can watch their savings offset the cost of their energy efficiency measures on the very same bill.

Home Improvement Contractors can’t act on Behalf of Mortgage Brokers
Unnecessary repairs are thwarted as home improvement contractors and their agents are prohibited from promoting or arranging for the services of a mortgage broker or its affiliate. Also, referral fees are strictly prohibited under this legislation as are contractors acting as co-signers or guarantors of a loan for home improvements.

Private Transfer Fees are Eliminated
In furthering the public policy of the marketability of real property, new legislation prohibits private transfer fee obligations from running with title to property or otherwise binding subsequent owners of property. Also, the legislation provides a procedure to remedy existing obligations. Private transfer fees have traditionally been utilized as a creative means for developers to realize an income stream long after the finalizing of their projects.

This list only provides a small blurb on each new law, regulation and opinion. There may be further discussion on these topics going forward as they get fleshed out in the Courts. So stay tuned.