Real Estate Hints and Help

January 19, 2009

No Equity, Scammers Go for the Debt Consolidation Fraud in New York.

When there’s distress, there’s fraud, scams and victims, especially in New York.

Distressed homeowners beware– no equity, no plan, no defense to scammers. The NYTimes reports about a new breed of scammer, one who takes your payments, fails to deal with the debt they promised to consolidate or “solve,” and stands idly by as the bank forecloses.

You see the commercial, hear the radio blasts– there are all sorts of companies out there touting themselves as “foreclosure rescue companies.” Typically, these companies charge an upfront fee to help you “modify loans,” but often do nothing to prevent foreclosure.

January 17, 2009

Don’t be Fooled by the Power of the Appraisal in New York

by Peter Klose

How was it that during the “heyday” of the credit spigot the “lender’s” appraisal for real property in New York always ended up at or close to the exorbitant purchase price and inflated mortgage sought by the purchaser. That is the question that New York’s Attorney General threatened to investigate, leading to immediate guidelines seeking to revamp how appraisers are getting paid by the lenders who hire them.

The problem– often the lender was charging borrowers $300 to $600 for an “appraisal,” but paying the appraiser only half of the fee, leading to inferior and suspect appraisal. Obviously, the most inexperienced an morally susceptible appraisers conducted millions of these “appraisals” during the height of the real estate market, “hitting the numbers” sought by the lenders.

Often the appraiser (who was not getting paid very much to work on the valuation) would be pushed to value the property quickly, even overnight. The low pay resulted in improper inspections and inaccurate evaluation of comparable properties, and missed comparisons to pending sales contracts and local market trends.

January 5, 2009

New York Attorney General Asks–Do You Know Your Home Improvement Contractor?

by Peter Klose

Your home is your sanctuary, your largest investment, and possibly your largest headache if you are not careful about who you hire. So, it pays to be careful when hiring home improvement contractors, whether for a small construction project or a huge renovation, you need to know that your contractor is reputable, reliable and not a cheat. Here are some helpful hints in selecting a home improvement contractor in New York.

According to a recent article in the Poughkeepsie Journal, the New York State Attorney General’s office has mediated more than 1,550 complaints against home improvement contractors since January 2007, and recovered more than $800,000 in restitution, settlements, or other discounts for consumers. So, how do you avoid becoming the next victim of home improvement contractor problems?

With the Internet, you have valuable resources at your fingertips allowing you to research your selection of a reputable contractor, with know your contractor links to NY state and local county agencies offering consumer assistance and information as to status of a contractor’s license (if required), and any complaints.

December 29, 2008

Refinancing — the Fed to the Rescue of New York Homeowners?

by Peter Klose

Is the price of re-financing worth the expense in New York? Well, as you can imagine, that depends.

As a recent NYTimes article points out, as the prices for mortgages drop, consumer interest perks up, and we all go around wondering whether it makes sense to re-finance again!!

Here’s the rub– typical real estate mortgages last for about five to seven years before the mortgagor (homeowner) sells or refinances, but lenders compensate for such fluctuation by collecting much of the mortgage interest up front. So, if you are in your home for the long term, and have paid off more than five to seven years worth of debt, you are watching your equity grow and the overall debt drop more quickly– a nice thought in today’s market. But, now the banks are offering very low interest rates (less than five percent in some cases). Now what?

December 17, 2008

IRS and New York State Tax Department Trying to Expedite Tax Lien Information and Closings.

by Peter Klose

How do you sell your distressed home or refinance your real estate if you have a federal or state tax lien?

Well, WSJournal.com reports that the IRS is trying to help themselves get paid for their tax liens more quickly, thereby speeding up relief to distressed homeowners trying to re-finance.

Under the new “expedited process,” the refinancing and sellers can find out more “quickly” how much they owe on a federal tax lien, so the lien does not delay or prohibit the transaction.

December 9, 2008

Second Home Taxes and Exclusions–Capital Gains Tax May Hurt in New York

by Peter Klose

It appears that the Federal Government is getting a little more needy, because it is now going to collect more capital gains taxes on the sales of residential real estate property in New York.

As discussed in other posts, under the “The Housing Assistance Tax Act of 2008,” homeowners no longer are simply allowed to exclude $250,000 of capital gains ($500K if filing jointly). Indeed, the calculation becomes more difficult because the gain will now be taxed on the percentage of time you used the home as your “primary residence.”

Yes, now for the “jargon.” Capital gains must now be divided between “qualifying” and “non-qualifying” uses, and potentially cutting the amount of capital gain which might previously have been “excluded” from your income tax.

December 2, 2008

Attorney Contingency Clauses in Upstate New York.

by Peter Klose

Beware of what you are signing in an upstate New York real estate transaction. The problems and perils of non-lawyers having contracts signed prior to attorney review.

New York State’s highest court, the Court of Appeals, recently considered a frightening set of facts and protected the attorney-client relationship. But, beware.

In this case, the defendants signed a real estate contract to purchase the home of plaintiffs. The contract contained a rider with an “attorney approval contingency” stating as follows:

December 1, 2008

What is a CEMA and How Does it Save Money in New York?

by Peter Klose

“CEMA” stands for Consolidation, Extension and Modification Agreement, and is used to save mortgage tax in certain situations.

Sellers sometimes use this process and procedure to refinance real estate located in New York State because, when recording a New York Consolidation, Extension and Modification Agreement, they pay only the mortgage tax on the difference of the new money and old. The idea behind a CEMA is to renew the terms of an existing mortgage by re-financing an existing note and mortgage. The CEMA is the actual legal document which combines into one set of rights and obligations all the promises and agreements stated in existing Notes and Mortgages secured by the property being re-financed.

If the new Consolidated Note and Mortgage includes additional monies (or funds), the Borrower pays only the Mortgage Tax on such “new funds.” In counties such as Dutchess, Rockland, Westchester, Ulster this process can save thousands of dollars because the mortgage tax is paid (over one percent) on the difference between the old money and the new funds.

November 24, 2008

What is an “Apostille” or “Authentication?”

by Peter Klose

You have relatives in Greece, but need them to sign a deed in a form recordable with the New York State courts. How, in today’s age, where people move, fly and otherwise re-locate, do we get them to sign a deed without coming back to Rockland County?

How do we prove that a document signed in Russia is authentic and should be given the full faith and credit of our local laws in Dutchess County? What if your wife died in England, but you need to sign a document for American Surrogate court. All of these questions are becoming increasingly common, and increasingly easy to solve.

In October 1981, the United States joined as a signatory to the 1961 Hague Convention. For most of us, that means that we can now follow the “simplified certification” process whereby public documents (including notarized deeds) will be universally admissible in America and abroad. For a list of signatories to the Convention go here.

November 17, 2008

New HUD Rules, Too Little, Too Late for “Uninformed” New York Borrowers?

by Peter Klose

If anyone has ever closed on a HUD inspired (guaranteed) loan, you know that there are millions of forms that are designed to provide notice of the borrowers’ rights and responsibilities. The prevailing view of policy makers was let the borrower beware, give them notice, and then let them make the mortgage– move the closing along.

The present housing crisis, however, has everyone re-thinking whether the borrowers are really getting well advised about the meaning of all these lending terms, prices, fees, etc. Hardly surprising given American’s thirst for debt and former “equity” in their homes.

The problem, however, should not be so prevalent in New York, where attorneys are still largely responsible for closing with clients and, presumably, advising them of the mortgage process.