If you are a regular reader of my blog, you may recall an article I wrote last year ‘Beware of Short Sales without a Waiver of Deficiency’.  One of the major issues with deficiency judgments in many cases was that the banks had years to file for a deficiency judgment.  Waiting until the (former) homeowner recovers financially to sue for a deficiency judgment certainly raises the lenders’ chances of collecting on the deficiency, but it also creates a situation where many Americans can never quite recover financially from this crisis.

A recent House Resolution, called the Fairness in Foreclosures Act of 2011 or H.R. 3566, would put a one year limit on deficiency judgments, preventing the banks from going after homeowners years later and prolonging the damage.  This bill also provides protection for ‘low income’ households.

Rep. Ed Towns, D-N.Y. introduced the bill earlier this month.

“At a time when so many Americans are out of work due to the excesses of the financial industry, we must protect those who are unable to protect themselves.  I am fully committed to offering relief to struggling homeowners across the country,” Rep. Towns stated in a release.

“A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to homeowners after they have gone through the arduous foreclosure process,” “Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely.”

California and Nevada currently have laws in place protecting homeowners from deficiency judgments, but in some states banks have as long as 6 years to go after homeowners for a deficiency.

This Bill would be a great help to homeowners suffering in this tough economic climate.  Unfortunately, another concern is that the banks may issue a 1099 to homeowners for the deficiency, allowing the IRS to go after homeowners for the income taxes on the difference.  The IRS considers any forgiven deficiencies a gift from the bank and will charge former homeowners income taxes on the shortfall.

There is currently a Mortgage Forgiveness Debt Relief Act in place to help homeowners in this situation, but it is due to expire December 31^st, 2012.  Extending this act may be an important addition the Fairness in Foreclosures Act to truly help homeowners in need.

If you have any questions regarding a short sale, foreclosure or concerns about a deficiency judgment, please don’t hesitate to contact me for a consultation.

With home prices in decline over the past 4 years, and still falling in most markets, many people have fallen victim to foreclosure.  For some, the decision to let a home go to foreclosure can feel like a relief after a long struggle and failed negotiations with lenders.  Unfortunately, that sigh of relief may be a little too soon.

Most homes that are lost to foreclosure are underwater on their loans, meaning that the home value has dropped far below the existing mortgage loan amount.   When homes are sold in foreclosure, they often sell for substantially less than the loan, leaving the banks holding upwards of $100,000 on the loan.

More and more, banks are suing homeowners for the deficiency, or balance due on the loan after the foreclosure sale.

Rather than helping struggling homeowners with a fresh start, lenders are trying to squeeze even more money out of distressed borrowers.  These days, foreclosure may mean losing your home and still finding yourself burdened with a large debt, with interest building each month, and nothing to show for it.

A recent article in the Wall Street Journal highlights several homeowners in Florida who have found themselves in similar situations after losing their homes to foreclosure.

“Ray Falero, a truck driver whose Orlando home was foreclosed on and sold in August 2010, says he thought he was hallucinating when, months later, he opened the door and saw a sheriff’s deputy. The visitor handed him a notice saying he was being sued for $78,500 by the lender on the home purchase, EverBank Financial Corp., of Jacksonville, Fla.

“’I thought I was done with this whole mess,’ he says.”

This has also spurred increased business for debt collectors.  Increasingly, banks are selling debt to collection agencies, who then file suit against borrowers for the deficiency.  Lenders have up to 5 years to file for a deficiency judgment, leaving distressed former homeowners time to recover and therefore able to make payments.  In the meantime, debts grow at an average of 8% interest rate.

There are better options for homeowners out there facing the possibility of foreclosure.  One option may be to consider a “short sale” on your property.  An experienced attorney can help to navigate these troubled waters, and to protect you from unexpected lawsuits and deficiency judgments in the future.  I specialize in short sales, foreclosures and distressed real estate situations such as these.  Please, contact me before you lose your home, I am here to help.

Many homeowners in the US find themselves tied to properties with negative equity.  As a matter of fact, nearly 11 million properties, or 22.5% of homes in the US, are worth less than the underlying mortgages.

Further complicating problems is that many homeowners in this situation also find themselves paying above market interest rates on their homes.  As a matter of fact, 3 out of 4 homeowners with negative equity in their homes are paying well above current market interest rates, putting them in a very precarious financial situation.

Negative equity is preventing many homeowners from refinancing or selling their homes, leaving them strapped to a high interest mortgage and paying more each month than they should be, for a home that is no longer worth the remaining balance of the mortgage.

According to CoreLogic, nearly 28 million mortgages are at above market interest rates.  Unless the Obama administration relaxes or eliminates negative equity restrictions on Fanny Mae and Freddie Mac loans, homeowners with negative equity will continue to pay well above current interest rates.

Some analysts claim that the housing market is still falling, expecting prices to drop another 5% at the beginning of 2012.  This will further impact the number of homes with negative equity, pushing the number of homes with mortgages that are higher than the equity owned to above 15 million homes.

Economists consider high mortgage payments on homes that are “underwater,” or worth less than the debt owed on them, to be more likely to lead to foreclosure, according to an article in the Seattle Times.  These homeowners can end up feeling hopelessly trapped by the bad decisions made during the boom years.

There are, of course, better options to consider before allowing your home to go into foreclosure.  It’s always a good idea to consult an experienced real estate attorney for advice before making any decisions.

A short sale can be a good option for both borrowers and lenders, if transactions are handled properly; ultimately saving all involved the headaches and costs of foreclosure, and lessening the blow to your credit score as well.

Our office specializes in short sales, working with both buyers and sellers, to avoid the frustrations often encountered during the short sale process and provide positive results for all parties.

If you find yourself strapped to a high interest mortgage on a property with negative equity, or are considering a short sale for any reason, please give us a call.  We have the experience to answer any questions you might have.

There has been disagreement among those in the real estate business (and in the media) recently about whether short sales are a good thing or a bad thing. Anyone new to the process and looking for information can easily become confused by the conflicting reports available in the news and on the internet.  Even the opinions of real estate agents can vary drastically depending on what their past experiences may have been.

Those who feel that the short sale process is broken may have experienced unnecessary delays and frustrating miscommunications with lenders.  Many claim that “Instead of helping struggling homeowners who need to sell and willing homebuyers who want to buy, lenders have created manmade roadblocks that have caused real estate gridlock and hindered a desperately needed housing recovery.”

On the other side of the coin, however, you find many homeowners for whom the short sale option has been a godsend. This article from CBS News tells the story of Suzette Parris, a homeowner in New York who was saved from losing her home to foreclosure by getting her bank to agree to a short sale instead.

The truth is that banks generally prefer a short sale to a foreclosure as well. A recent article from NuWire Investor reveals that “While significant losses may be incurred in both foreclosure and short sale scenarios, the overall negative financial impact of short sales is typically less than that of foreclosure. In many cases short sales represent the best way for lenders to minimize their overall losses. In general, all parties fare better when a foreclosure is prevented.”

It seems that the best way to avoid a bad short sale episode is to enlist the help of an advisor with plenty of short sale experience under his belt. My own background with short sales has been that each individual sale will be different; and while some short sales are certainly easier than others, every short sale will pay off in the end if you just stick with it.

This is why I’ve set up my own practice to specialize in short sales. With my streamlined process I am able to easily and effectively work on multiple short sales at one time.  I work with real estate agents to ensure they get the full 6% commission they deserve and help buyers and sellers navigate the short sale process to avoid frustration and achieve the greatest benefit possible.

I know from experience that with patience and attention, short sales can provide positive results for all involved. Please contact my office if you are involved in a short sale, or if you have any questions about whether a short sale might benefit you.

With so many foreclosures happening around the country, homeowners aren’t the only ones affected—home renters find that they are being hit almost as hard when the properties they rent are foreclosed upon and bought up by new owners. The experience these tenants have during the foreclosure process varies, but all of them worry about the uncertainty of a new landlord, and wonder about their rights as tenants when the landlord they’ve known for months (or sometimes years) suddenly disappears.

The first thing renters need to know is that renters do have rights. This article on the Nolo website explains that the Protecting Tenants at Foreclosure Act of 2009 ensures that tenants of foreclosed properties are protected. “This legislation provided that leases would survive a foreclosure — meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days’ notice before having to move out (this notice period is longer than any state’s non-foreclosure notice period, a real boon to tenants).”

The 2009 law applies to ALL properties—apartments, condos, single family homes.  It even applies to tenants in rent controlled properties. “Tenants who live in cities with rent control “just cause” eviction protections are also protected from terminations at the hands of an acquiring bank or new owner. These tenants can rely on their ordinance’s list of allowable, or “just causes,” for termination.” This is an important point for many New York renters.

The only exception to this rule is if the new owner of the foreclosed property intends to live in the property.  Under these circumstances, the buyer may terminate the lease, but is required to give no less than 90 days notice to the existing tenant. This may still be disappointing to renters, but as the article points out, a 90 day notice period is “longer than any state’s non-foreclosure notice period,” and is “a real boon to tenants.”

Of course, these new protections don’t necessarily ensure that the foreclosure and transfer of ownership will be smooth sailing for tenants.  The most common complaint from renters is that once a property is in (or has gone through) foreclosure it becomes almost impossible to get a response to maintenance requests. “If the bank becomes the owner, it may pay a servicing company to handle the property. But don’t expect close attention — these companies are focused on financial matters, not mundane things like maintenance.”

In more severe cases, tenants won’t even be aware that the property is being foreclosed upon until after the fact—sometimes long after the fact.  It is not unusual to hear stories about tenants who, unaware that the property had changed hands, continue paying rent to the old owner for months before they are notified of the change of ownership.

But perhaps the most drastic stories are stories like that of Pamela Lewis in Jacksonville Florida; stories about foreclosed properties, or properties in-between owners, which are fraudulently rented out without the knowledge of the actual owner. This is an extremely unusual case, but with so many foreclosed properties being bought up by banks which simply don’t have the time or manpower to attend to each one, the idea of a fraudulent lease is not impossible to imagine.

All of this only goes to show that renters in today’s market need to be especially cognizant of their rights—and especially vigilant about the terms of their leases. If you are a renter don’t be afraid to ask for help in navigating these turbulent legal waters; the help of a professional in reading and understanding a lease can be immensely helpful, and when maintenance requests go ignored the attention of a knowledgeable attorney can sometimes get a response more quickly than repeated requests from a tenant.  But most importantly, if you feel you are being wrongly evicted, or worry that your new lease may be fraudulent, don’t hesitate to contact me immediately. Waiting only eats up valuable time, and makes it that much harder to ensure that your rights as a renter are protected.

As I was out and about the other day, looking at properties on the market, it suddenly occurred to me that many of the properties I was seeing could be purchased at prices I would have expected to see in the late 1990s. These “flashback deals” may not be prevalent everywhere, but a smart investor who knows what to look for can find rental properties that would have listed for $150k in 2006 for almost half that price today! I realized that in spite of the trepidation investors may be feeling because of the “burst of the housing bubble,” if you know what you’re doing, now is the perfect time to buy.

Any quick search of real estate news will tell you just how low housing prices are. This article in the New York Daily News states that “home values [in the New York metro area] fell 1.6% between January and March to $346,600, hitting their lowest level in more than seven years,” and that  “across the country, home values posted their biggest quarterly drop since 2008, falling 3% in the first three months of this year.” According to ABC News “Home value declines are currently equal to those we experienced during the darkest days of the housing recession.”

This is good news for investors, who may wait decades for a buyer’s market as steadfast as the one we’re currently experiencing; but further research reveals that investors looking to take advantage of the low property prices should be prepared to make it a long-term investment.  Although there are a few opportunities for house flipping for a quick profit, most experts agree that it may be a few years more until the housing market fully rebounds and home values see a consistent upward trend.

So when can investors expect to see home values increase?  Most sources say not until 2012 at the earliest.  According to CNBC “Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011.” The Wall Street Journal puts it another way, saying “if we consider that the housing bubble inflated from roughly 1999 to 2006, that made seven fat years. An ancient authority would suggest that seven lean years should follow. That would mean two more lean years to go.”

But when economists predict two more years of declining real estate prices, they don’t necessarily mean that prices will suddenly return to “normal” in one or two years, only that this is when we might expect a break in the downward momentum.  The Wall Street Journal explains it this way “As the debt hangover works its way through the system, the outlook is for housing to continue along an extended rocky and bumpy bottom, generally moving sideways in nominal terms. Since we will have an overall inflationary regime, real house prices will be falling. After working through the concluding lean years, housing prices can reasonably be expected to regain their long-term trend of increasing a little over 3% per year in nominal terms. . . This would take them back to their highs in 10 years or so.”

What this means for investors is that there may never be a better time to buy than right now… but only if you have the wherewithal to hold on to your investment as long as it takes to see the kind of return you hope for. If you have questions about the current real estate market, or whether now is the right time for YOU to buy, contact my office today.

While the current housing crisis has some homeowners and sellers worried that the sky is falling, savvy investors recognize that if you are in the market to purchase or resell a property there are some great opportunities out there.

Buying a home in foreclosure can often mean amazing deals, sometimes as much as 25% below market prices or more.  However, as a real estate investor myself, I know the ins and outs of dealing with foreclosure sales, and there are some pitfalls to watch out for.

Unlike a regular sale, where you are dealing with an individual homeowner, when buying a distressed property you may end up dealing with several different lenders and investors, each with their own agenda and procedures to follow.  This can often drag the process on for many months.  The bank that services the loan may not even own the loan, in which case they will need to confirm what investors who do own the loan are willing to accept.

A great example of an eventually successful but drawn out short-sale property in Long Island was described in a recent article in CNN Money.  Shopping for a new home on Long Island after the birth of their daughter, Chris and Diane Moore fell in love with a 1920s Mediterranean-style home with a storied history.  According to the article, the home was sold as a short sale, in which a lender must agree to accept less than what’s owed on a property.  And as often happens with such deals, the buying process soon turned into a horror show.  The property was one of a kind, and the couple eventually secured the property at a 26% discount, but it took 10 months of negotiating.

Some short sales may qualify for the Federal HAFA program (Home Affordable Foreclosure Alternatives); and if it is a bank approved short sale or HAFA qualified short sale, this can speed up the process considerably.

Investors may wonder if it is safe to purchase a foreclosed property.  With recent news of the ‘robo-signing’ scandal, many illegally or improperly filed foreclosures and properties being returned to the original home owners, I understand your concerns.   Rest assured, as long as the new lender and buyer have title insurance, the former owner cannot seize the property.  Lenders always require a lenders title policy.  Owner’s policies are optional, but highly recommended for foreclosure properties.

If you are in the market for a home, it is especially important in this volatile and sometimes confusing real estate market to work with a real estate team that you can trust.  As a real estate investor myself as well as a real estate attorney, I can help you navigate these troubled waters to secure the amazing properties you are looking for.  Please feel free to call me with any questions or concerns.

Conflicting reports in the media may have some homeowners at a loss as to what is really happening in these troubling financial times.  Reports of a steep decline in foreclosure filings had many hopeful that the housing crisis may be heading towards recovery, but experts warn that the underlying conditions in the housing market have not yet improved.

With a 15% decline in February for New York foreclosures, and 27% nationwide, the country experienced a 3-year low compared to 2010.  In February, default notices, auctions and seizures all fell, according to a report by RealtyTrac.

Some experts are attributing the decline in February to the backlog of filings due to the ‘robosigning’ controversy in the industry.  Investigations into the foreclosure process resulted in a big drop in activity as banks and servicers work through the mess they got themselves into due to poor procedures.  Lenders are now working to re-file paperwork that was initially improperly done.

Dr. Barbara van Kerkhove, Research and Policy Analyst at the Empire Justice Center recently published an exhaustive report on New York’s foreclosure crisis. The report indicates that the state is nowhere near the end of the foreclosure crisis, which now includes those homeowners with good credit and prime loans.

A recent article in The Daily Record quoted Van Kerkhove as saying the number of loans 90-plus days past due exceeds the number of pending foreclosures in every county of New York state, meaning a flood of new filings is forthcoming.

According to an article in the Business Review, Nearly 69,000 home loans in New York are at imminent risk of foreclosure, a situation that an advocacy group said today could lead to a “tsunami” of foreclosures over the next year or two.

Rueters recently reported on the decline as well, quoting Rick Sharga, senior vice president at RealtyTrac; “The drop-off was too severe to be organic.  There’s nothing in the underlying conditions that are causing foreclosures to suggest they should be going down yet.”

And so it seems we aren’t out of the woods just yet, despite the recent decline in filings.

I will continue to follow and report on the current housing crisis, foreclosure trends and legislation.  If you or somebody you know is at risk of foreclosure, I can help—please contact me.

Many seniors have considered a reverse mortgage to help support them in their golden years, but are not aware of the pitfalls associated with this type of loan.  You may even be surprised to learn that the rules have changed, leaving some elderly homeowners at risk of losing their homes.

Reverse mortgages are supposed to protect seniors from economic hardship, paying older homeowners a regular sum against their property’s equity.  Now, due to a 2008 rule change by the Department of Housing and Urban Development, surviving spouses can be excluded, leaving them at risk of being displaced due to foreclosure upon the death of their spouse.  AARP, the seniors’ organization, recently filed suit against HUD, asserting that recent policy changes are pushing older unsuspecting homeowners into foreclosure.

Reverse mortgages were intended to be non-recourse loans.  This means that the most a borrower can lose is the house itself, even if the value of the property goes down.   In this market, nearly 25% of all homes with mortgages are worth less than they owe, making them nearly impossible to sell.

Lenders sometimes encourage only the elder member of a couple to put his or her name on the mortgage because then the payout is greater.  What they fail to disclose to the couple is that when the older spouse passes, the loan becomes due and payable in full.

In one such case, reported in the New York Times, the Robert and Ophelia Bennett secured a reverse mortgage.  The new mortgage, intended to secure this couple’s future, instead helped destroy it.  They paid $20,000 in fees but received only $1,800 in cash.

Mr. Bennett said he did not realize that his new mortgage had taken his name off the title of the home, which the couple had owned together since 1981.

Mrs. Bennett, who was a decade senior to her husband, died shortly after the new mortgage went into effect. The payments immediately stopped and the mortgage became due and payable.

The lender began foreclosure proceedings and scheduled a sale of the property last month.

If HUD had not changed the rules, the suit says, Mr. Bennett would have been allowed to live in the house until his death.

I can’t stress enough how important it is to work with a team you can trust to avoid such tragedies to your family.   If you have ever considered a reverse mortgage or have questions about any real estate topics, please feel free to contact me.

Purchasing Real Estate is a major life event, right up there with marriage and career.  It is one of the most important investments you will make and can carry with it much excitement and anticipation—as well as significant stress.  I cannot express how important it is to make sure you have a real estate team that you can trust to make sure your investment is a sound one.

A recent lawsuit has many asking the question, how do you determine the square footage of a property?  Is it calculated by the livable area?  Does it include closets or even the insides of the walls?  Incredibly, in New York, where every inch of space is precious, there is no hard and fast rule; and lawyer Rishi Bhandari recently discovered that some developers and sellers will even ‘estimate’ square footage to their advantage, in some cases over stating the square footage by several hundred square feet.  Many buyers take the information that a developer or real estate broker advertises at face value.

The New York Times recently reported on an ongoing lawsuit over a Brooklyn condo, noting that the state attorney general’s office, which oversees the sale of new condominiums, does not tell developers how to tabulate space, but requires them to disclose to buyers how they do it and to abide by their stated guideline. (In co-op conversions, square footage is not required to be reported.)

Homebuyer Mr. Bhandari, said he was also pursuing a principle: if he walked away, developers would continue to sell properties with inflated floor plans.

The standard of measurement can get confusing for buyer: exactly how is square footage defined?  Is the square footage advertised based on gross square footage or net square footage?  Appraisers and architects generally measure from inside wall to inside wall including the closets.  Gross living area as defined by Fannie Mae and the Appraisal Institute’s Dictionary of Real Estate: “Gross Living Area (GLA) – The total area of finished, above-grade residential space excluding unheated areas such as porches and balconies; the standard measure for determining the amount of space in residential properties.” In a perfect world, this information would be accurately disclosed to potential buyers and overstating square footage would be an illegal practice; unfortunately, we do not live in a perfect world.

The good news is that this is just one of the many details that your real estate team can assist you with to make a well informed decision when purchasing real estate. You may want your real estate team to include: a real estate agent, title company, inspection team, insurance agent, and of course—a knowledgeable real estate attorney.

I know exactly how important it is to have a team you trust; not only because of my years of experience with real estate law, but also because of my own experience with buying and selling property as a real estate investor myself.  If you have any questions, or need help in putting together the best real estate team for your needs, do not hesitate to contact me.