If you are a struggling homeowner and have sought relief via a loan modification, there may be new pressure on lenders to negotiate a modification. Last week, New York’s Appellate Division, Second Department, ruled in US Bank N.A. v  Sarmiento that Wells Fargo, a well-known lender, could not collect interest or fees on a loan that had accrued while a borrower, Sarmiento, pursued a loan modification. Sarmiento attended 18 settlement conferences and remained persistent in obtaining a loan modification yet the decision indicates that Wells “delayed and prevented any possible resolution of the action.” Wells is cited for various delays and miscommunications which when considered wholly, led to the determination by the court that Wells failed to negotiate in good faith. This court decision yielded a long-awaited definition of “good faith” with regards to negotiations in foreclosure conferences.  The court concluded that Wells’ conduct indicates a “disregard for the settlement negotiation process” which increased the balance on Sarmiento’s loan.

This decision gives hope to borrowers frustrated with the often drawn-out process of obtaining a loan modification. If a lender loses documents, repeatedly requests the same information, fails to review the application in a timely manner, denies an application without adequate grounds or deliberately or recklessly delays the process in any way, a borrower now has the option to demonstrate the lender’s failure to negotiate in good faith. This could translate to thousands of dollars lost in interest and legal fees for lenders.

Hopefully, this will put pressure on lenders to remain timely and organized in their evaluation of a borrower’s loan modification application for if they don’t comply with good faith guidelines, they could be at risk to lose a great deal of money. But remember, “good faith” is a double edged sword, as borrowers must also negotiate in good faith by putting forth a purposeful and honest effort at a settlement conference to reach a resolution.

If you are a licensed real estate agent and have ever used or are still using air drones to take photographs of properties to improve your listings, stop now and do not do so again. The Department of Transportation’s Federal Aviation Administration has recently provided clarification on the FAA Modernization and Reform Act of 2012, prohibiting the commercial use of model aircraft.  

Under this Act, a model aircraft is defined as an unmanned aircraft that is flown recreationally within visual sight of the aircraft operator. There are numerous statutory requirements that aircraft operators must adhere to when flying model aircraft, such as the weight of the aircraft and where and when the aircraft can be flown. However, the most important statutory requirement for real estate agents is that the aircraft must be used only for recreational purposes.

Millions of Americans have joined aircraft clubs in order to build and fly model aircraft and have used model aircraft to take aerial photographs and video of their communities, gardens, and farms. This is allowed. If you are using a model aircraft to take photographs for pleasure and do not intend to use or sell the photographs for your business, then you do not violate any statutes. Real estate agents, however, use model aircraft for commercial purposes, violating the statutory requirement of recreational use. For example, many real estate agents use model aircraft to take aerial shots of properties for their listings, especially if the properties are large and have a high sales price. With high commissions at stake, real estate agents are willing to put forth the extra effort to take these aerial photographs and improve their listings to catch a worthy buyer’s eye. It is important to note that if a real estate agent is caught using model aircraft to take photographs of properties for listings, the Federal Aviation Administration, under this Act, may fine this real estate agent (or exact punishment in any other way it deems necessary) for the violation of this statutory requirement.

Since the Federal Aviation Administration has the power of enforcement, it is wise to avoid using model aircraft for commercial purposes at all costs.

Stay tuned for an update on what kind of fines the FAA can exact on violators.