Due to the housing bubble burst in 2008, the federal government took ownership of the mortgage giants, Fannie Mae and Freddie Mac, and bailed them out of financial ruin. Not only did this bailout cost $187.5 billion in taxpayer dollars, but it also took years for Fannie Mae and Freddie Mac to recover from their monumental losses and begin to profit again.

However, there is good news! Now that the mortgage giants are profitable again, they have more than repaid the government for their 2008 bailout by paying dividends to the U.S. Treasury of $192.5 billion. Fannie Mae alone broke records with its $84 billion profit in 2013, completely exceeding the government’s expectation of recovery.

Fannie Mae and Freddie Mac do not expect to make as huge a profit in 2014 as they did in 2013, but they are hopeful that they will remain profitable in the long run. The Obama Administration, however, still wants to overhaul the mortgage giants and take away their monopoly on the mortgage market. There is currently a bipartisan bill in the Senate called the Housing Finance Reform and Taxpayer Protection Act of 2013 that focuses on financial reform and will hopefully take center stage this year.

Brokers, keep in mind that the housing market may drastically change in the next 5 years as private lending replaces the government-sponsored enterprises. However, now that the mortgage giants are turning such huge profits, reform may experience some delays. It is difficult to enact reforms when times are good, even though another financial crisis always looms on the horizon. 

You just bought your dream summer home right after the completion of a subdivision of an old grand estate. You knocked down some walls to modernize the place, put in a hefty amount of trees and hedges for privacy, and even replaced the exterior wooden shingles. After leaving the city in rush hour and spending hours sitting in traffic, you drive up to your home to discover your driveway has been replaced with a vegetable garden enclosed by monuments. Your lawyer informs you that the survey of the property clearly shows that the driveway is outside of your boundary line and reminds you that you decided to cheap out on Title Insurance (no Fee or Owner’s policy). There is no way the insurance company would ever provide coverage.

Ultimately, you decide that your next course of action is to approach the neighbor who planted the vegetable garden with freshly baked cookies and pray on sympathy to access the street from your house. Remember, people are quite possessive of their property and don't like to share especially when they pay taxes on it, right? Guess what. The law offers you a solution for this problem called an Easement by Necessity. This legal right can free the landlocked property owner and give them the access that they desperately need to the street regardless of the neighbor's gleaming personality.  

So, regardless of your neighbor, you can still get from your car to your house. An Easement means a right to use someone else's land for a specific purpose and the word Necessity means that the right that you seek is indispensable. So, the legal solution says exactly what you, the homeowner needs; a right to cross over someone else's property because it’s an indispensable need to use one's own property. And it gets better. While an Easement is typically something bought and sold as it limits the property owner's right to their own property, an Easement by Necessity is granted by a Court in what is called a Declaratory Judgment Action, wherein the Court declares a right of a party. In New York, this action would be brought pursuant to a statute called the Real Property Actions and Proceedings Law at Article 15, which deals with claims to real property. Other States have similar laws on this topic, it is important to check your local State's laws and regulations with a qualified attorney before making any claims about any rights that you may have.

In New York, a claim similar to this one was just addressed by our Appellate Division, Second Department, in a case called Faviola, LLC v. Patel. Therein, the Appellate Court explained that a property owner who seeks an Easement by Necessity must establish the following to prove their case: "there was a unity and subsequent separation of title, and that at the time of severance, an easement over the servient estate was absolutely necessary to obtain access to the party's land". In English, this means your little property was once part of the property contained within the estate, but that when the properties were divided, the only way to get to your property was through the property that remained part of the mansion and was not subdivided away with yours. In Faviola, the Court made clear that you will only get this Easement by Necessity if the right-of-way was absolutely necessary and "not a mere convenience" to you. 

So, the law understands your plight and levels the playing field between you and your neighbor. 

Fire insurance policies were just addressed by NY’s highest Court. Real estate agents should get familiar with these policies because value-add agents are successful agents, particularly in the commercial setting where fires often spur relocations and the availability of multiple brokerage commissions.

In the case before the Court, the insurance company disclaimed coverage because its policy had a time limit for claims, but required that the cost of replacement be known in order to recover for a loss. However, the cost wasn't known until construction was complete, which didn't happen until after the time limit for the claim. Hence the predicament for the insured building owner.   

Specifically, in Executive Plaza LLC v. Peerless Insurance Company, it took the building owner over 3 years to renovate over one million dollars in damages to its property, but the policy only gave the owner 2 years to submit its loss.

Great news – the Court ruled that “such a contractual limitation period, applied to a case in which the property cannot reasonably be replaced in two years, is unreasonable and unenforceable.”

So, the policy’s purpose of insurance except where you need it was negated by the Court.

Now, you understand a predicament faced by your commercial building owners and you understand that in NY, insurance companies can no longer play the game of impossibility to avoid paying out a claim. So, go armed with knowledge when you help commercial tenants relocate after a fire and when you help a new building owner with their purchase and getting insurance.  

In his state of the union speech on January 28, 2014, Obama asked Congress to focus on mortgage finance reform in the upcoming year. He stated, “Since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again and keeps the dream of home ownership alive for future generations.”

There have been proposals in the Obama administration to overhaul Fannie Mae and Freddie Mac, the mortgage giants which own or guarantee about 60% of all mortgages in the United States. These government-sponsored enterprises (GSEs) have prospered for decades by buying and selling mortgages to provide capital to lenders and borrowers. However, when the housing bubble burst in 2008, the federal government took ownership of the mortgage giants, costing billions of dollars in taxpayer dollars to bail the companies out of financial ruin.  The housing market is now in recovery and Fannie Mae and Freddie Mac are profiting once again, but many government officials fear that another financial crisis is still possible. The goal is to take away Fannie Mae and Freddie Mac’s monopoly on the mortgage market, limit the federal government’s role and risk, and to focus on private lending instead. However, it will take years before the current system is completely overhauled and replaced with one dominated by private lenders.

It is imperative that brokers understand that the housing market is on its path to recovery, but may be facing drastic changes over the next two to five years. Middle class consumers may have difficulty obtaining a 30-year mortgage in a market that is run by private lenders unless the reforms allow for some substantial governmental intervention. We may only be in the early stages, but these proposals in Congress will lead to one of the biggest reforms this country has seen in the last decade.

Have you applied for a loan modification and felt that your servicer did not properly review you for HAMP and other Making Home Affordable programs? Perhaps your servicer lost your documents or failed to provide you with the proper update on your file? Well, what are you waiting for? Escalate your case today and demand your servicer to be in accordance with the MHA guidelines!

Homeowners may contact the MHA Hotline at 888-995-HOPE to request assistance in the escalation of their cases. The MHA Support Center, acting as an intermediary between the homeowner and servicer, ensures that the servicer is complying with the MHA guidelines and is reviewing homeowners’ case escalations in a timely fashion. However, homeowners may also contact their servicers directly or authorize their attorneys to go through the HAMP Solution Center (HSC) to seek resolution. No matter what route is taken, it may take up to 30 or more days for an escalated case to be reviewed and resolved, so homeowners should act immediately if they believe to have been wrongly denied a MHA Program.

Case escalations give power to the homeowner and keep disorganized servicers in check. Please go here if you would like to know how to escalate your case today!