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Friday, January 11, 2013

Ability to Repay Factors & Regulation Z Amendment Text

Mortgage Industry ,
Ability to Repay Factors & Regulation Z Amendment Text
The Ability to Repay amendment will only become effective on January 10, 2014 so we have almost a year to prepare. Yet, its time to start studying as the entire mortgage industry has changed as a result of the Ability to Repay amendment to Regulation Z.

The Regulation's Text can be read by clicking here.

The Preamble's Text can be read by clicking here.

The regulation lays out 8 factors for a creditor to consider in making an Ability to Repay analysis, including:

  1. Current or reasonably expected income or assets; 
  2. Current employment status;
  3. The monthly payment on the covered transaction; 
  4. The monthly payment on any simultaneous loan; 
  5. The monthly payment for mortgage-related obligations; 
  6. Current debt obligations, alimony, and child support; 
  7. The monthly debt-to-income ratio or residual income; and 
  8. Credit history. 
Additionally, these factors must be verified by use of reasonably reliable third-party records. 

Further analysis of the Regulation will be available on this blog in the days and months to come.

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Thursday, January 10, 2013

Major changes in Mortgages just announced - Welcome Qualified Mortgages

Mortgage Industry ,
Major changes in Mortgages just announced - Welcome Qualified Mortgages
The Consumer Financial Protection Bureau (CFPB) just announced major changes in mortgage lending.

This is MAJOR, read carefully.

The main components of these rules are as follows:

  1. Ability to Repay of borrowers burden is placed on lenders who must verify financial information supplied by borrowers and can no longer offer teaser rates to qualify a borrower & charge more in time. This will likely be the end of "no doc" & "interest only" loans.
  2. Qualified Mortgages (QM) have been defined & are presumed to be in compliance. These QMs limit upfront points and fees used to compensate loan originators; cannot exceed 30 years; cannot be interest-only; cannot offer negative-amortization payments; and must have debt-to-income ratios <=43%.

The CFPB issued its rules pursuant to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

To read a fact sheet explaining the new rule, click here.
To read the last summary of the proposal while it remained a proposal, click here.

All real estate professions, such as agents; attorneys; architects; title, etc. should become familiar with these rules as they will impact the ability to borrower and therefore your industry.

Mortgage brokers and bankers, start studying.

At Lieb School, our take is that this is what the public wanted following the great recession. Many borrowers  have blamed their lender time and time again for making a loan that the lender new could not be repaid. These rules will greatly limit this problem in the future. However, its always said to be careful what you wish for. Now, you actually need to be able to afford a house you think you deserve.
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Wednesday, January 09, 2013

Top NY Real Estate Agent Cont. Ed Questions...Answers Revealed

DOS , License Renewal
Top NY Real Estate Agent Cont. Ed Questions...Answers Revealed
Continuing Education Questions and Answers for Licensed Brokers and Salespersons in New York. 

What are the Continuing Education requirements for real estate agents in NY? Every 2 years, licensed real estate brokers and salespersons in the State of New York are required to take 22.5 continuing education credits. The ONLY mandatory class requirement is at least 3 hours of instruction pertaining to fair housing and/or discrimination in the sale or rental of real property or an interest of real property, within the 2 - year period immediately preceding a renewal.

Are there any exemptions for Continuing Education requirements for real estate agents in New York? Licensed real estate brokers who are engaged full time in the real estate business and who have been licensed for at least 15 consecutive years immediately preceding license renewal. This exemption must have been met prior to July 1, 2008.  An attorney admitted to the New York State bar is also exempt from the Continuing Education Requirement.

Am I required to take a course in Fair Housing if my real estate license is grandfathered? A NYS real estate agent does not need to take a course in Fair Housing if they are generally exempt by way of the "grandfather" factor.  Please refer the agent to Real Property Law section 441(3)(a) where it expresses the requirement for real estate agents to take 3 hours in a fair housing and/or discrimination course within a license renewal cycle. The link for the license law where this is discussed is as follows: http://www.dos.ny.gov/licensing/lawbooks/RE-Law.pdf. 

While reviewing the license law, please refer your attention to the last sentence of this requirement wherein it states: "The provisions of this paragraph shall not apply to any licensed real estate broker who is engaged full time in the real estate business and who has been licensed under this article prior to July 1, 2008 for at least 15 consecutive years immediately proceeding such renewal". This is the "grandfather" factor. 

In general, the only exception to the "grandfather" factor exemption is for NAR's mandatory quadrennial ethics requirement for members of the National Association of REALTORS®. This has nothing to do with licensing or the Department of State, New York. 

If I already completed a continuing education class, can I take the same topic again for credit with a different school in NY within the same license renewal cycle? Real estate continuing education courses are assigned independent approval codes by the Bureau of Educational Standards, Department of State, State of New York.  Licensed real estate agents may take multiple courses in the same topic within each "two year cycle of renewal" as long as each course has an independent approval code. Approval codes are assigned for each approved course, not school and not course topic.  It is advised that you always check your records of previously completed approval codes prior to registration for new courses within your cycle of renewal.
  
If I already received credit for taking a continuing education course, can I get credit for taking the same exact course in a different license renewal cycle?  Yes. While New York State Real Estate License Law, 19 NYCRR 177.18(c), states: "No continuing education course will be considered for continuing education credit more than once within the two year cycle of renewal", there is no specific regulation precluding taking the same continuing education course anew in a subsequent and different license renewal cycle.

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Tuesday, January 08, 2013

Bank of America and Fannie Mae Settle

Mortgage Industry ,
Bank of America and Fannie Mae Settle

Bank of America has agreed to settle claims brought against it by the United States. The charges claimed against Bank of America include allegations that the corporation, and its subsidiary, Countrywide Financial Corp., improperly sold the government entity, Fannie Mae, mortgages which later became delinquent.
            
The issue began in 2008 before the financial crisis when Bank of America bought Countrywide, a lender known for granting precarious loans. Bank of America was first applauded for this as they were viewed as eliminating a negative actor from the mortgage market.  However, things went sour when Bank of America began selling off the risky defaulted loans it had acquired from Countrywide to Fannie Mae in order to make a profit. Loans which Fannie Mae says never should have been sold due to their risky and insecure nature. 

The settlement has Bank of America paying $3.6 billion to buy back $6.75 billion of loans which Countrywide sold to Fannie Mae from January of 2000 through December of 2008. 

To read the Press Release from Fannie Mae, click here. 

To read the settlement, click here.


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Friday, January 04, 2013

Free CE's in NYC Starting 1/18. First Class is The Fair Housing Act. Check out this video preview!

License Renewal , Lieb School
Free CE's in NYC Starting 1/18. First Class is The Fair Housing Act. Check out this video preview!
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Mortgage Forgiveness Debt Relief Act Extended to 1/1/14

Mortgage Industry ,
Mortgage Forgiveness Debt Relief Act Extended to 1/1/14

Great News!

Congress has extended The Mortgage Forgiveness Debt Relief Act of 2007 through January 1, 2014 by way of The American Taxpayer Relief Act of 2012 (more popularly known by the fear inducing name of The Fiscal Cliff Bill).

If you recall, The Mortgage Forgiveness Debt Relief Act made it so taxpayers did not have to report income gained from debt forgiveness on their principal residence should the debt be reduced by mortgage restructuring or in connection with a foreclosure.

The fate of the Act was in limbo for a while as it was set to expire on December 31, 2012 with no word as to if it would be renewed.

Here’s the provision from The American Taxpayer Relief Act of 2012 extending the Mortgage Forgiveness Debt Relief Act for another year:

“SEC. 202. EXTENSION OF EXCLUSION FROM GROSS INCOME OF DISCHARGE OF QUALIFIED PRINCIPAL RESIDENCE INDEBTEDNESS.
 (a) IN GENERAL.—Subparagraph (E) of section 108(a)(1) is amended by striking ‘‘January 1, 2013’’ and  inserting ‘‘January 1, 2014’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to indebtedness discharged after December 31, 2012. "

To review the full Bill, click here. 

To review the White House's Press Release announcing the signing of the Bill into law, click here. 
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Thursday, January 03, 2013

Helpful Hints on Home Affordable Unemployment Program

Helpful Hints on Home Affordable Unemployment Program

Today the Making Homes Affordable Program offered a training on the Home Affordable Unemployment Program. This program is meant to extend relief to people in default who are also without work.

Here are some bullet points to keep in mind about the program:

  • At least one person on the note (not the mortgage) must be unemployed to be eligible. 
  • If eligible, borrowers are entered into a forbearance period where they pay a determined percentage of the mortgage for a certain amount of months (typically in HAMP this is a 3 month period but under UP it's an extended period of time determined during the evaluation process).
  • This is a short term fix, not a long term alternative, after the forbearance period borrower is evaluated to determine if he/she is able to transition to HAMP or HAFA resolutions.
  • Borrower does not qualify if over 12 months delinquent on mortgage.
  • Clients who have previously been entered into a HAMP modification or trial period but defaulted are eligible.
Remember, if you are unemployed there is hope. Utilize the Unemployment Program while you try to find work. Good luck and happy 2013. 

This blog was written by our friend Laura Palermo who works in modifying mortgages at Lieb at Law, P.C.
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Sunday, December 23, 2012

Source of Income Discrimination in New York

Source of Income Discrimination in New York

Source of Income discrimination in housing means not offering rental housing equally to those who wish to pay their rent by way of housing choice vouchers, Social Security, unemployment insurance, veteran's benefits, or other governmental subsidy. 

While neither the Federal Fair Housing Act nor the New York Human Rights Law makes Source of Income a protected class, many municipal laws do. Additionally, S83-2011 proposes to add this protected class to the New York Human Rights Law. To read the bill, click here.

The bill's JUSTIFICATION states as follows:
"Currently, New York State law does not prevent landlords from discrimination based on a person's source of income. As a result, landlords often reject tenants with rental subsidies, such as Section 8 and subsidies tied to the Nursing Facility Transition and Diversion and Traumatic Brain Injury Medicaid Waivers. Many people with disabilities rely on those subsidies and other assistance programs to live independently in the community. This legislation would make discrimination by landlords based on a tenant's source of income illegal under New York State Human Rights Law. Similar laws have already been passed in New York City and Nassau.

This topic recently came to the forefront as New York City’s Human Rights Law does make source of income a protected class and an individual, Keith Short, who believed that he was discriminated against brought a claim thereunder. In pursuing his claim, Keith Short sued MANHATTAN APARTMENTS, INC., ABBA Realty Associates, Inc., Soni Realty LLC, Kimberly Place Realty Corp., and Askarinam Realty, Inc. Mr. Short claimed that the Defendants refused to rent to him because he had acquired immunodeficiency syndrome (AIDS) and received public housing subsidies. Mr. Short’s subsidy was from HIV/AIDS Services Administration (“HASA”). Mr. Short claimed that as a result of the discrimination he experienced several months of homelessness as wells as emotional distress. The Court awarded Mr. Short $20,000 as a result of the discrimination.

Now, we are often asked about discrimination and what is permitted and what isn’t. The rule is you can discriminate against anyone you want for any reason you want unless the discrimination falls into a protected class. Be mindful that while there is a Federal Law, the Fair Housing Act and a New York State Law, the Human Rights Law, both of which have their own set of protected classes, many municipalities such as New York City have far more expansive laws with a multitude of additional classes. It is the duty of a real estate agent to know the laws in the municipality where you work. Be careful not to discriminate. Also, pay attention to the bill to modify the State’s Human Rights Law because one day it is likely that source of income will be a protected class throughout the State as it becomes a more and more visible form of discrimination. 
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Wednesday, December 19, 2012

Mortgage Lender Complaints - The 5 Worst according to Business Insider

Mortgage Industry ,
Mortgage Lender Complaints - The 5 Worst according to Business Insider
Bank of America wins as the worst with 27% of all complaints directed at them. Next in line is Wells Fargo, followed by Chase, then Citi, and rounding out the top 5 is Ocwen.

To read a great article in Business Insider giving the specific statistics and some analysis, click here.

Business Insider based its information from data collected by the Consumer Financial Protection Bureau. To visit CFPB, click here.

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Proposed Advertising Regulations for Real Estate Licensees

Proposed Advertising Regulations for Real Estate Licensees
We continuously field questions about the rules for advertising in brokerage. Our consistent answer is that there is a current proposal that has not yet been adopted, but it can provide some insight on what may be. The proposal states as follows:


175.25 Advertising

(a) Definitions
1. “Advertising" and "advertisement" mean promotion and solicitation related to licensed real estate activity, including but not limited to, advertising via mail telephone, websites, e-mail, electronic bulletin boards, business cards, signs, billboards, and flyers. “Advertising” and “advertisement” shall not include commentary made by a duly licensed real estate salesperson, real estate associate broker or real estate broker that is not related to promoting licensed real estate activity.
2. “Team” means two or more persons, one of whom must be an associate real estate broker or real estate salesperson, associated with the same real estate brokerage who hold themselves out or operate as a team.
3. “Real estate brokerage” means a real estate company represented by a real estate broker.
4. “Logo” means a graphic mark used to identify a real estate broker, associate broker, salesperson or team, but not a photograph of a real estate broker, associate broker, salesperson or team contained in an advertisement.
5. “Property” means real property or shares of stock in a cooperative corporation.
(b) Placement of advertisements
1. Only a real estate broker is permitted to place or cause to be published advertisements related to the sale or lease of property. Advertisements placed or caused to be published by an associate real estate broker, a real estate salesperson or a team for the sale or lease of property listed with or represented by a real estate broker are not permitted except where the property is listed with or represented by the real estate broker with whom the associate real estate broker, real estate salesperson or team placing the ad is associated and said real estate broker approved placement of the advertisement.
2. Authorization
a. No property shall be advertised unless the real estate broker has obtained authorization for such advertisement from the owner of the property or as hereinafter provided.
b. Real estate brokers shall not advertise property that is subject to an exclusive listing held by another real estate broker without the written permission of the listing broker.
c. Proprietary information. Photographs of property that are posted on a real estate broker’s website shall not be used or reproduced without written permission from the copyright holder of such photographs. 
(c) Content of advertisements
1. Name of real estate broker. Advertisements shall indicate that the advertiser is a real estate broker and provide the name of the real estate broker or real estate brokerage and either: (i) the full address of the real estate broker or real estate brokerage or, (ii) the telephone number of the real estate broker or brokerage.
2. Name of associated licensees. The advertisement may include the names of one or more associate real estate brokers or real estate salespersons associated with the real estate broker or brokerage placing the advertisement. Where an advertisement includes the name of an associate broker, real estate salesperson or a team, the name of the real estate broker and/or real estate brokerage must also be printed in the advertisement.
3. Nicknames. Real estate brokers, associate real estate brokers, and real estate salespersons shall advertise using the name under which said real estate broker, associate real estate broker or real estate salesperson is licensed with the Department of State. A nickname may be used in an advertisement provided that the full-licensed name is listed clearly and conspicuously.
4. License type. Except as provided in subsection (d) of this section, advertisements shall correctly and accurately state the type of license held by the real estate broker, associate real estate broker or real estate salesperson named in the advertisement. Licensees may abbreviate the type of license held, provided that such abbreviation is not misleading. The use of the titles, “sales associate”, “licensed sales agent” or simply “broker” is prohibited. Real estate brokers, associate real estate brokers or real estate salespersons who have additional titles or designations are permitted to advertise such titles or designations.
5. Contact information. An associate real estate broker, real estate salesperson or team may provide additional contact information, such as a post office box, in an advertisement.
6. Home offices. A residence may be used as an office provided that it is properly licensed by the Department of State.
7. Telephone numbers. Notwithstanding subdivision (c)(1) of this section, a real estate broker, associate broker, real estate salesperson or team may provide telephone numbers other than that of the brokerage in an advertisement, provided that the advertisement clearly identifies the type of such other telephone number as desk, home, cell phone, or otherwise.
8. Logos. A real estate team, associate real estate broker or real estate salesperson may use a logo different from that of the real estate broker or real estate brokerage with whom they are associated, provided that the name or logo of the real estate broker or real estate brokerage is also printed in the advertisement.
9. Property description. Advertisements shall include an honest and accurate description of the property to be sold or leased. All advertisements that state that the advertised property is in the vicinity of a geographical area or territorial subdivision shall include as part of such advertisement the name of the geographical area or territorial subdivision in which such property is actually located. Use by real estate brokers, associate real estate brokers and real estate salespersons of a name to describe an area that would be misleading to the public is prohibited.
10. Guaranteed Profits. Advertisements shall not guarantee future profits from any real estate activity.

(d) Additional requirements and exceptions
1. Classified Advertisements. Classified and multi-property advertisements may omit the license type of any associate real estate broker or real estate salesperson named in the advertisement.
2. Business Cards. Notwithstanding subdivision (c) of this section, business cards must contain the business address of the licensee and the name of the real estate broker or real estate brokerage with whom the associate real estate broker or real estate salesperson is associated. All business cards must also contain the office telephone number for the associate real estate broker, real estate salesperson or team.
3. Web-based advertising
a. Websites created and maintained by associate real estate brokers, real estate salespersons and teams are permitted, provided that said associate real estate brokers, real estate salespersons and teams are duly authorized by their supervising real estate broker to create and maintain such websites and such websites remain subject to the supervision of the real estate broker with whom the licensees are associated while the website is live. Such websites shall be directly linked to the website of the broker with whom the licensees are associated unless the broker does not have a website.
b. Every page of such a website shall include the information required by these rules and regulations.
4. E-mail. An initial e-mail from a real estate broker, associate real estate broker,
real estate salesperson or team to a client or potential client shall provide the information required by these rules and regulations. Such information may be omitted from subsequent e-mail communications to the same recipient.
5. For-Sale Signs. Notwithstanding subdivision (c)(1) of this section, unless
otherwise prohibited by local law, any property listed through a real estate broker must be advertised as such, and any signage placed upon such property soliciting the sale or lease of the property must identify the representative broker or brokerage and include the office telephone number of the brokerage.
6. Advertisements referencing property not listed with broker. Any advertisement that references or includes information about a property that is not listed with the advertising broker or was not sold by the advertising broker shall prominently display the following disclaimer: “This advertisement does not suggest that the broker has a listing or has done a transaction in this property or properties.” Such advertisement: (i) shall not, absent consent provided pursuant to subdivision (b)(2)(b) of this section, suggest, directly or indirectly that the advertising broker was involved in the transaction and (ii) shall not refer to property currently listed with another broker. 
(e) Teams
1. Team name. Team names shall either: (i) include the full licensed name of the real estate brokers, associate brokers or real estate salespersons who are part of said team, or (ii) if the names are not included, the team name must be immediately followed by “at/of [full name of the broker/brokerage].” Team names may use the term “team.” The use of any other terms besides “team,” such as “associate,” “realty” or “group” is prohibited. The use of the name of a non-licensed individual in a team name is prohibited. For twelve months after the adoption of this regulation, teams that have changed their name to comply with this provision shall be entitled to state in advertisements under their new name that they were ‘formerly known as’ their prior team name.
2. Unlicensed team members. If any unlicensed individuals are named in advertising for a team, the advertisement must clearly and conspicuously state which individuals are real estate licensees and which ones are not. 


At Lieb School we emphasize that a proposal is not a rule and that the purpose of providing this proposal to our readers is so that you can have insight into the thinking of the Department of State. Also, we suggest that you let the Department of State know your thoughts on this proposal by contacting your local representatives as well as your local Boards of real estate.
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