New York Real Estate Lawyer Blog

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 31, 2008

Professional Telemarketers Make the Money, Not the Not For Profits– Give Directly

by Peter Klose

We all get them– telemarketers calling to solicit funds for the Police Benevolent Association, the PTA, or the American Heart Association. Did you know that a vast majority of the the professional telemarketers are the ones making the money, not the Non-Profit, and it’s totally legal.

When I first started practicing law (as a law student in Massachusetts) I worked for the Attorney General’s Office, Public Charities Division. At the time (long ago), they were investigating telemarketers for Police Benevolent Associations. Whether in New York or elsewhere, the telemarketer is making the money, not the Not For Profit.

In today’s day and age, where there are so many fine charitable organizations in desperate need of your hard earned dollars, why would you give through the telemarketer who often takes more than 65% of the money the raise? The internet, credit cards, and direct giving make charitable donations so much easier. Why give to the telemarketer?

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 24, 2008

Long Term Disability Claimant Wins Against Unum Provident.

by Peter Klose

What can you do if your disability insurer disclaims coverage for your long term disability claim?

Well, as one policy holder found, you can sue, and win. In this case, the insured sued because the infamous Unum Provident disclaimed coverage for his long term disability claim. Unfortunately for the insurance company, the claimant happened to have read his policy (he was an attorney), and took issue with their disclaimer all the way to the Second Circuit (federal appeals court).

In a scathing decision, the appeals court reversed the lower court and found that the administrator of the Plan (Unum) had a conflict of interest because it had both the discretionary authority to determine the validity of the disability claim, and paid the benefits under the policy; found that a reasonable person would conclude that the insurer’s denial of long-term disability was arbitrary and capricious; and granted benefits and interest running from September 18, 1995, the date on which defendant-insurer rejected plaintiff’s appeal.

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 5, 2008

Daily News- “Steals the Empire State Building”– New York City Fraud Investigation.

by Peter Klose

Mortgage Fraud, Deed Thefts and other nefarious acts by unscrupulous people in New York City lead the New York Daily News to investigate.

As part of the “investigation” they filed a bogus deed to the Empire State Building, exposing the massive loopholes in New York City’s recording of documents.

Here’s the Daily News Article.

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: