I am often asked how someone can get into commercial real estate. My general response is that a first step is to read literature on financial statements so that you can understand the money driver behind the industry. I suggest watching talks from leading developers, which can be found at i Tunes U. Its also important to read a form lease and to look up all of the terms so that you can gain a basic understanding of the language of the industry. Yet, what can be done that takes less self-discipline to get someone motivated, kind of a jump start?

I suggest joining one of these five (5) regional organizations to meet, network and discuss your passions and you can see if commercial real estate is really right for you.

Website	Name	Topic
www.lireia.com	Long Island Real Estate Investment Association	Real estate investment club for brokers
www.lireg.org	Long Island Real Estate Group	Provides the real estate industry and allied trades a platform for real estate-related charitable giving and networking
www.licommercialnetwork.org	Long Island Commercial Network	Commercial Division of the Long Island Board of Realtors
www.cibs-li.org	Commercial Industrial Brokers Society of Long Island	Where Nassau and Suffolk commercial dealmakers meet and build relationships
www.bomali.org	Building Owners’ and Managers’ Association	The leading advocacy group for the commercial real estate industry

Go to the website, look up when a meeting is happening, drive to the meeting, introduce yourself around the room and you are half way there. You will gain mentors and friends that can help you along the way.

Also, keep your eyes open for this year's Long Island Commercial Real Estate Convention and come experience the leading service providers to the industry and take a seminar or two to sharpen your skills.

A few posts back we discussed the technique of government utilizing its Eminent Domain power to force mortgage restructuring by taking mortgages at their current fair market value (not face value) and thrn having investors push money into government in order to modify the terms of the borrower's payments.

Thereafter, the Real Property Committee to the Suffolk Bar Association discussed this topic at our monthly meeting and addressed the issue of if Eminent Domain could force the taking at the depressed value or if instead, the taking should be had at the pre-depressed value as Eminent Domain takings had occurred during the Great Depression - our most similar reference in case law. To be clear, there are Eminent Domain cases that dispute the value at which property should be taken during a depressed market and it is unclear if, in NY, Eminent Domain could even be utilized to take mortgages at their current market value instead of their pre-depressed value.

Well our Congress now has a bill, HR 5397, Defending American Taxpayers from Abusive Government Taking Act of 2012, which basically prohibits Federal Agencies from partaking in such restructuring through Eminent Domain. So even if local government did utilize Eminent Domain, if this bill passes, many many mortgages would be off limits.

Your author doubts the bill will pass because there has been so much push back on the use of Eminent Domain in the first place throughout our Country, the issue of valuation in the second place within NY and other States, and the history of not much really getting done in Congress these days.

Regardless, to view & track the bill, as it is intellectually interesting, click here.

Following up on previous blog posts about Regulation X & RESPA our latest chapter brings you a proposal by the CFPB to add new mortgage servicing rules. To be clear, servicing refers to the business of managing the billing, accounts & management of a note and mortgage.

Here are the proposed rules:

• Monthly mortgage statements
  Servicers would be required to provide clear billing statements including information on the loan, amount due, and application of past payments.
• Warnings before interest rate adjustments
  Servicers would be required to provide consumers with a new notice 6 to 7 months before the first rate adjustment, as well as earlier and improved notices before rate adjustments causing an increase in a consumer’s mortgage payments.
• Force-placed insurance
  Servicers can only charge borrowers for buying insurance on the property when they have a reasonable basis to believe that the borrowers have let their own insurance lapse and have given borrowers two notices estimating the cost of the “force-placed insurance.”
• Early outreach for delinquent borrowers
  Getting a delinquent borrower back on track requires early intervention and information about options available.
• Prompt crediting of payments
  Payments must be applied as of the day they are received, and the handling of partial payments is clarified.
• Accurate information management
  Servicers must have reasonable policies to ensure that when borrowers provide documents and information the servicers can find and use them.
• Error resolution and information requests
  Mistakes happen, but they need to get fixed. Servicers must address borrower concerns about possible errors within certain timeframes and provide the information they request.
• Direct and ongoing access to servicer personnel
  Delinquent borrowers will be able to contact the right people at their servicer to get information and take steps to avoid foreclosure.
• Evaluation for alternatives to foreclosure
  Servicers would be required to appropriately review borrower applications for loan modifications or other options to avoid foreclosure.

Make your voice heard - Comment by October 9:
For Regulation Z, click here
For Regulation X, click here

Yet, Real Estate Agents are Professionals, not business people. They are licensed by the Department of State and have certain ethical requirements to maintain their status as a professional. These professionals consist of Brokers and Salespersons. As a result, when these professionals aren't paid and they bring suit to collect their professional fees, they should not sue in the commercial division. 

Yesterday, we had a wonderful group of real estate agents attend our continuing education course, Foreclosure and the Economy.

During the class, we warned real estate agents not to negotiate with lenders directly unless they comply with the rules for Mortgage Assistance Relief Services and Distressed Property Consultant Contracts.

Here are some helpful links to comply:

Mortgage Assistance Relief Services: http://www.ftc.gov/os/fedreg/2010/december/R911003mars.pdf
Distressed Property Consultants:  http://codes.lp.findlaw.com/nycode/RPP/8/265-b

Over a year ago, on February 11, 2011 the Obama Administration first announced the winding down of Fannie Mae and Freddie Mac in its Housing Report. The Long Island Education Board's blog on the report can be found by clicking here.

Now, the process continues as Treasury just announced steps its undertaking to expedite the process by modifying its Preferred Stock Purchase Agreement with the Federal Housing Finance Agency, the conservator of Fannie and Freddie. To read Treasury's Press Report, click here.

According to Treasury, new steps are being implemented to prevent Fannie and Freddie from retaining a profit and reentering the market in their prior form.

The takeaway is that the decentralization of mortgages is no joke and is coming. Get ready.

Just this past week, Fannie Mae issued its Selling Guide with other updates. To see the guide, click here.

Two highlights from the Guide are as follows:

1. Maximum LTV for ARMS are reduced from 97% to 90% with Desktop Underwriting & from 95% to 90% for Manual Underwriting. 
2. Minimum credit score requirement is increased from 620 to 640 for manually written loans. 

Lieb at Law is Hiring! Excellent opportunity to learn the residential real estate practice first-hand while managing files under the guidance of experienced attorneys. 

Law student responsibilities include daily file updates to clients and real estate brokers in acting as the firms liaison from retention to attending closings. Issue spotting is a must. Be prepared to manage expectations and learn everything that can go wrong in a sale or purchase of residential real estate. To get this position, you must be ready to succeed, work in a team environment and process quickly. Must embrace education and technology. 

Those that succeed in this role will have the opportunity to advance. Can lead to Junior Associate Position. 

TO APPLY: Email Cover Letter and Resume to careers@liebatlaw.com 

*No Phone Calls or Faxes.
*Paid and Part Time (flexible to class schedule)
*Position is in Center Moriches Office

First, San Bernardino County, California, sought to seize upside-down mortgages and restructure them with more favorable terms to borrowers utilizing the government's compulsory sale powers by way of Eminent Domain.

Next, the idea was floated in Chicago.

Now, there is talk about its utilization in New York.

But, what are all of these politicians actually talking about?

As the advocates would put it, private investors will provide a municipality with the requisite funds to seize the underwater properties at market value, discounted from the loan amount as the properties are upside-down, and than purchase the restructured loans back from the government. Yet, there are many secondary effects as the introduction of this new approach to mortgage modifications adjusts the risks inherent in making loans and will likely change future loan terms for all.

Traditionally, Eminent Domain is utilized by municipalities for roads, schools and to facilitate up-zoning efforts in redeveloping districts. The concept being floated is to utilize Eminent Domain instead to force mortgagees to sell their notes and mortgages to the government for less than what is owed and to allow the government to flip the loan, at market value for the real estate, not based upon the agreed upon terms between mortgagor / mortgagee, to a new investor who will provide better terms to the borrower/mortgagor.

Can this be done in New York?

Looking at the applicable New York Statute, which is the Eminent Domain Procedure Law, Section 103 defines Real Property as follows: includes all land and improvements, lands under water, waterfront property, the water of any lake, pond or stream, all easements and hereditaments, corporeal or incorporeal, and every estate, interest and right, legal or equitable, in lands or water, and right, interest, privilege, easement and franchise relating to the same, including terms for years and liens by way of mortgage or otherwise.

As can be seen, a lien / mortgage is included. So, technically it appears on first glance that this is possible.

If it is, how much must the government pay for these underwater loans?
According to In re Public Park in City of New York, the Appellate Division held that the amount should be determined as follows:
If the portion of the land taken which is subject to the ... mortgage has a value in excess of the amount of the mortgage, then his interest is measured by the face of his mortgage and interest. If the value of the land is less than the face of the mortgage, then his interest is the value of the land, less, of course, a proper apportionment of taxes and assessments.

So there you have it, its the value of the land (at the time of the Eminent Domain) minus taxes and assessments.

Yet, interestingly, the statutory purpose for Eminent Domain in New York contains a wrinkle, which states, in pertinent part, as follows: to give due regard to the need to acquire property for public use as well as the legitimate interests of private property owners, local communities and the quality of the environment, and to that end to promote and facilitate recognition and careful consideration of those interests; 

So the question becomes, is this proposed utilization of Eminent Domain a "public use" at all or is it instead, a public purpose, which is not written as the statutory purpose for Eminent Domain?
You see the public isn't using the land at all. Instead, the public is trying to fulfill the purpose of helping homeowners in distress. Therefore, the utilization of Eminent Domain to rescue underwater homeowners in New York state appears questionable at best.

The Consumer Financial Protection Bureau is asking for your help in reviewing proposals at Regulation Room and reacting to them concerning regulating the mortgage industry. Click here to help make a difference in how mortgages are serviced into the future.

Regulation Room is a place where people talk to people talking to government. Each issue has its own summary for reading, discussing and commenting to the agencies that make the regulations.

Don't complain about the future of your industry, shape it.