Federally Declared Disasters - Supplemental Directive (Modifications)

On November 16, 2012, we blogged about the Making Home Affordable Program's forbearance program for victims of Hurricane Sandy.

Today, Treasury issued Supplemental Directive 12-08, which addresses Federally Declared Disasters, such as Hurricane Sandy, and specifically directs Non-GSEs (servicers) with respect to the following topics:

• Flexibility with Borrowers in Federal Emergency Management Agency (FEMA) Designated FDD Areas
• Forbearance Plans
• Borrowers in a Home Affordable Modification Program® (HAMP) or the Second Lien Modification ProgramSM (2MP) Trial Period Plan
• Borrowers in a HAMP or 2MP Permanent Modification
• Handbook Mapping

To read Supplemental Directive 12-08, click here.

Age Discrimination in Housing

At our recent continuing education course, The Fair Housing Act, a student challenged our slideshow, which showed the list of protected classes. Specifically, they adamantly argued for the inclusion of age as a protected class. As explained then and reiterated now, there are multiple fair housing and discrimination laws of which real estate agents must be mindful. The course taught was the federal law, which does not expressly protect age. Nonetheless, New York has a law called the Human Rights Law that makes it unlawful to discriminate on the basis of age, among many other classes. However, the law does not apply the class of age to those under the age of 18, instead the class of familial status applies in those situations. Additionally, the law doesn't apply to housing restricted to those 55 years of age or older. Moreover, publicly assisted housing for the elderly is also exempted.

The message for real estate agents out there is that they need to consider a multitude of laws from Federal to State to Local (County, City, Town or Village) prior to practicing in a particular area.

The FTC is Investigating Deceptive Ads in Real Estate Marketing

According to Ad Age, the leading publication in the advertising industry, the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) are jointly investigating deceptive ads concerning mortgage modifications, short sales and workouts.

To read the article, click here.

The article expressly states that real estate agents have received warning letters from the FTC. Of specific concern to the FTC & CFPB was the practice of utilizing images of President Barack Obama in ads promoting loan-modification services, which wrongfully communicate to consumers that certain services are affiliated with the government. If you use the President's image on your advertisements, take it down now! 

Real estate agents this is important. When you work in mortgage relief, you must be mindful of the Mortgage Assistance Relief Services (MARS) Rules from the FTC, a summary of which can be found by clicking here.  Also, in New York, Distressed Property Consultants must additionally comply with Real Property Law section 265-B, the text of which can be found by clicking here. 

During each of our continuing education courses to real estate agents on foreclosure, whether its Foreclosure and the Economy: the Short Sale Course; or Foreclosure Filibusters we always stress the importance of these laws and regulations. Unfortunately, we always also get responses from agents that we are being ridiculous. This is very serious and far from ridiculous.

Real estate agents should also be mindful that the FTC's watchful eye is not restricted to mortgage modifications. As stated in our course, To be Green or Not to be Green: That is the Question, the Green Guides are available by the FTC and demonstrate the need to be candid and avoid deception in advertising Green Housing & Buildings. To read the Green Guides, click here. 

As Lieb School always states: You are a real estate Professional; knowing these laws makes you a value-add to your clients and customers. Now go study. 

Landlord Tip - Safety Glass - Is your rental house safe pursuant to statute?

Pursuant to the General Business Law, residential buildings and other dwellings must use safety glass in sliding glass doors, storm doors, shower doors, bathtub enclosures and "fixed glazed panels immediately adjacent to entrance and exit doors which may be mistaken for doors". 

The purpose of this law is to minimize the likelihood of piercing and cutting injuries. 

Landlords, be sure to perform a compliance analysis of your unit before renting. Failure to be in compliance with Statutes and Codes will devastate you if someone is injured in your premises. 

NY Attorney General to Wells Fargo - Modify Mortgages Now

Today, NY's Attorney General, Eric T Schneiderman, warned Wells Fargo to immediately recommence reviewing mortgage relief applications after the servicer / lender suspended its review process until it receives instructions from FEMA. Unfortunately for Wells Fargo, it has a settlement with 49 State Attorney Generals, that its new policy is now likely breaching.

To read the AG's press release, inclusive of his letter to Wells, click here.

While its not clear that Wells Fargo's policy was intended to hurt homeowners seeking a mortgage modification and instead was a response to the storm, it is clear that NY's Attorney General is quite serious about protecting struggling homeowners in his State and helping them to stay in their homes.

This is a good sign for homeowners seeking a modification.

Hurricane Sandy Mortgage Forebearances

Last evening we instructed our continuing education course Foreclosure Filibusters at Newsday's Corporate Headquarters for approximately 100 real estate agents. It was so gratifying to instruct this particular group of professionals as they continuously focused our course on their expressed concern for those who were devastated by Hurricane Sandy. They expressed concern for those presently in foreclosure proceedings and for those who will now likely default on their mortgage. They cared about their community, their friends and relatives. They wanted to help.

We discussed the mortgage modification process under HAMP. We addressed proactive short sales under HAFA. Now, we provide guidance for borrowers who need assistance as a result of Hurricane Sandy, which was a Federally Declared Disaster (FDD) pursuant to the Making Home Affordable (MHA) program. 

Please know that pursuant to MHA - "Any FDD forbearance plan should not impact the status of a homeowner's permanent HAMP modification."

So, if you, your clients or your customers cannot make payments as a result of the Hurricane, contact your servicer / lender and request an FDD forbearance until you can get back to affording life. 

To learn more about Treasury's direction to servicers in how they should make offerings of help to borrowers as a result of Hurricane Sandy, click here. 

Open House = Open for Inspection by Municipal Building Inspectors

Last evening, I hosted our monthly meeting for the Real Property Committee of the Suffolk Bar Association where we discussed municipal zoning violations, among other topics. In our company were some Assistant Town Attorneys who clearly articulated that real estate agents should always be mindful, and advise their clients, that hosting an open house also invites law enforcement into the house for Code Inspection.

Therefore, if you are showing a property with illegal structures or occupants - DO NOT HAVE OPEN HOUSES!!!

VA Loans on Veterans Day

VA loans are available to veterans, active duty personnel, certain reservists and national guard members, surviving spouses of persons who died on active duty or died as a result of service-connected disabilities, and certain spouses of active duty personnel who are missing in action, captured in line of duty by a hostile force or forcibly detained by a foreign government or power.

While VA loans are available through private lenders, the VA guaranties loan payments and thereby provides an incentive to lenders to make loans. The key advantages to a VA loan are as follows:

You can buy a home without a down payment - as long as the sales price doesn’t exceed the appraised value. (Of course, you have to qualify in terms of income and credit.)

You won’t need to buy private mortgage insurance.

VA rules limit the amount you can be charged for closing costs.

Closing costs may be paid by the seller. (You should keep this in mind when negotiating the sales price.)

The lender can’t charge you a penalty fee if you pay the loan off early.

VA may be able to provide you some assistance if you run into difficulty making payments.

To learn about eligibility FAQs, click here.

Lets pay our respect to our veterans on this Veterans Day!!!

Airbnb is Brilliant - NYC Housing

What a brilliant company Airbnb is. A major barrier to their success are local laws that prohibit short term rentals in many municipalities across the Country. They want the biggest markets, like NYC, but NYC prohibits rentals for less than 30 consecutive days based upon the State's Multiple Dwelling Law at section 4.

What a brilliant company Airbnb is. They see NYC's plight in the face of the destruction from Hurricane Sandy and they pounce. Not in a bad way, but instead as a savior of sorts. Yesterday, Mayor Bloomberg announced a partnership with Airbnb to help victims of the hurricane get necessary housing. Click here to read the article. You see, when two (2) political issues are face-to-face at odds, the public will choose the lesser of the two (2) evils. On the one hand, short-term rental housing has been associated with damaging the neighborhood environment, impairing the physical characteristics of a neighborhood and most importantly, creating safety hazards through unregulated units with transient guests. On the other hand, we have people without power, in flooded apartments that need a warm place to stay with the electricity turned on (yes Revolution, the power should be turned on). You guessed it, heat and power wins.

Yes, the partnership is not a home run for Airbnb; they have not repealed the short term rental statute that stands as their barrier to domination. This statute makes their customers' rentals of weekend apartments often illegal. Instead, they have capitalized on an opportunity to gain good will and brand awareness in their continual cause to have the law repealed. Great job Airbnb, you are brilliant.

Loan Modifications & the Federal Housing Finance Authority

A very interesting article in Business Insider for all those who have Fannie and Freddie (GSE) underwater loans. While its true that the current head of the FHFA has blocked any attempts to have Fannie and Freddie write off losses of underwater loans, the article speculates that "He's going to lose his job in the next six weeks" and this will quickly change.

An interesting aside is how this will create huge tax liabilities for homeowners in cancellation of debt income for those who have their underwater loans wrote off because the Mortgage Debt Tax Relief Act of 2007 is set to expire at the end of the year.

Maybe, it would be wise to extend the Act prior to concerning ourselves with whether its prudent to write off underwater loans.