All posts by Robert Bevans

Assessments Reassessed!!!

Earlier this month, I represented a Seller in a Boston condominium. Every transaction has its issues, and the issue in this matter was the fact that the Condominium, which had more than sixty (60) units, was undergoing renovation, and there were going to be Special Assessments to pay for same. The Seller and Buyer spent a substantial amount of time and effort trying to figure out an equitable way to split the responsibility for same. I normally take the position that if the subject of the Special Assessment is looking backward [repairing a rotted roof, foundation cracks or brick pointing], it is clearly the Seller’s responsibility. If the subject is a new feature for the Condominium [recreation room, pool] the Buyer should pay. There is never a clear path, but, generally, if both the Seller and Buyer are motivated, we can reach agreement.

Once I put this matter to bed, it occurred to me that Assessments, which are often viewed with horror by both Buyers and Sellers, are really a positive sign of good Condominium governance, and not something to avoid. As I started to think about Condominiums which I have owned, or assisted people in buying or selling, I realized that not having Assessments, and addressing either deferred maintenance or improving the Condominium complex, is, in fact, a negative factor, because when problems do arise, they are that much more significant since they have been ignored no long. For example, the Condominium where I live has not changed its monthly fee, or had a Special Assessment, for the more than the twelve (12) years I have lived there. I do not view this as a good thing: I view it as sloth and indolence on the part of the people who run the Condominium.

The bottom line is that there is a lot of deferred maintenance in all homes, but especially in Condominiums. If you live in a Condominium, where management is up-front and pro-active in keeping the systems and components in good shape, chances are that there will never be a major problem, because the smaller problems are being addressed on a continuing basis. I now also believe that “self-management” is really a code word for “cheap”, and that a self-managed condominium is not as valuable as one which has professional management and experienced operatives dealing with normal, and extraordinary, issues which arise. The more I see of self-management, the more I see megalomania. That results because like our political system, competent people are not willing to serve as Trustees and condominium officers, so people without experience or framework assume power, often leading to poor decisions and a Condominium with no prospects of having the value thereof increase. The only thing these individuals possess is plenty of spare time, and the old adage “if you want to get something done, ask a busy person” very often applies.

Short Sale Review Time Shortened by the FHFA

The time consuming process of selling and buying a home through a short sale may be getting much shorter in the near future. The Federal Housing Finance Agency (FHFA), the regulator and conservator of Fannie Mae, Freddie Mac, sent out a bulletin on April 17th. It announced the faster short sale review process and the increase in the communications sent to the short sale borrower. The new rules apply to short sale applications made on or after June 15, 2012. FHFA is also requesting that the mortgage servicers apply these new rules sooner if at all possible. What the FHFA did not do was change what the mortgage servicer must consider when it reviews the short sale application. The result of the short sale request may be the same as it would have been before, but it will be given faster. However, it does appear from tenor of the bulletin that the FHFA’s intent was to increase the number of short sale approvals as well as making the review timeline shorter.

A short sale is the sale of a home in which the debts owed on the house exceed the sale price of the home. The seller is upside-down or underwater in their home. It is estimated that 25% of all homes in the U.S. are underwater. As a result a large percentage of the homes currently for sale are short sales candidates. The general observation of short sales has been that they are anything but short. For whatever reason the review process has been lengthy and the paper work has been substantial. The FHFA wants to shorten the review period. It also intends on working on the other short sale issues in the near future.

The FHFA considers borrower communication and decision time lines as critical elements in the short sale process. Once the borrower files the complete application for a short sale review the mortgage servicer must provide a response within 30 calendar days from application. The servicer must notify the borrower if the application is missing information. If the application is still under review after thirty days then the servicer would have to provide the borrower with weekly updates until a final decision is made. A final decision would have to be provided within sixty calendar days from the date of the application. It is safe to assume from these changes that the FHFA was not satisfied with the current short sale application process especially as it has been applied to borrower communication and decision time lines. The FHFA changes have been universally praised as welcome revisions to the process. If the quicker responses are also combines with increased short sale approvals, the struggling housing market might get a huge shot in the arm.

This quicker short sale review process is just the beginning of the FHFA’s push to avoid foreclosures. It will be making additional announcements later this year addressing borrower eligibility and changes in the evaluation, documentation simplification, property valuation, fraud mitigation, payments to subordinate lien holders and mortgage insurance, all of which are intended to increase foreclosure avoidance. FHFA wants to explore other liquidation options such as short sales and deeds in lieu as additional tools to prevent foreclosure and to keep homes occupied and help maintain stable communities.

Any improvements made to the short sale process will be welcomed. The shorter review process will reduce the stress that both the seller and the buyer must endure. The additional status communications will provide information to the parties as they wait for the final approval so they are not waiting in the dark. The FHFA’ support of short sales could result in a significant increase in home sales with a positive impact on the economy in general. The short sale borrower will have to be prepared to submit their complete application from the beginning of the process to take advantage of the shorter review. An earlier negative response is still a negative response just received sooner. Competent counsel should be used as a partner in this process so that the borrower can take full advantage of this faster review process. The sale of the underwater home could be the fresh start that the borrower needs to move on with their lives. Contact Robert T. Bevans, Esq. at 781-890-6230 or at rbevans@topbev.com with your short sale questions or other real estate questions.

The Cash Buyer Needs an Attorney

The conventional process of buying a home is being avoided by many buyers. Recent reports indicate that one-third of all sales of homes are to cash buyers. One of the reasons for this is based in the lenders’ tight credit standards making the loan process even more complicated and time consuming than what it has been in the past. Because of this credit worthy buyers are opting to use their own funds to buy the properties as opposed to financing the transaction. The buyers are being buoyed by the fact that they are purchasing properties at bargain prices. Home prices nationally are down 33 % from the peak of the market.

It is more important in these cash transactions for the buyer to employ counsel to represent them. The buyer that finances the transaction often uses the lender as a safety net to protect them. They feel that their interest and the lender’s interest run parallel to one another and therefore they will be protected. Without this safety net the buyer has to rely on someone else. That has to be the competent real estate attorney. The attorney must be able to coordinate the entire deal for their buyer. It has to start at the offer stage and continue up to and after the closing.

There are events that occur in the process that must be completed by a date certain and if they are not met they may be waived and can significantly harm the buyer’s position in the transaction. The attorney will monitor these dates and make sure that they are dealt with properly. The attorney will have the title to the property examined so that it can be ensured that the property is conveyed properly and free of liens. Deeds must be reviewed so that the correct party is conveying the property and that they are executed properly. Adjustments must be made for numerous items, such as rents, taxes, utilities, heating oil, condominium fees and many others. If the property is an investment property the coordination of the security deposits is crucial. These are all done to protect the buyer and if not done properly the buyer’s great investment can turn sour in a hurry.

The real estate attorney you select as the buyer is crucial to the success of your transaction. The attorney cannot guarantee that the property will appreciate in value but he or she can make sure that your investment is not compromised by something that could have been avoided. The cash buyer walking the transaction tight-rope needs the safety net that the experienced real estate attorney provides.

Does the attorney doing your refinance impact the sale of your home?

You just finished your refinance. You could not be happier. You shortened you loan term and lowered your rate. What could be better? Little did you know that the closing you completed would prevent the timely sale of your home. If you had just chosen an attorney to do your refi that knew what he or she was doing. When you refinanced you were paying off your existing loan. The loan was held by Big Bank and serviced by Mega-Servicer. The attorney that closed the loan sent your payment to Mega-Servicer and received a discharge. The discharge was then recorded at the registry of deeds. This process is completed thousands of times every day, but there are hundreds of things that could go wrong. What happened in this case was the refi-attorney that received the discharge did not check it before sending it to be recorded. The discharge was executed by Mega-Servicer but your loan was held by Big Bank. The discharge that was recorded is ineffective and the mortgage that was paid-off at your refi is still outstanding of record. You are now selling your home. The closing attorney contacts you to let you know that your mortgage has been improperly discharged and a new discharge has to be obtained and recorded. The buyer is requiring that you convey good marketable title free from all liens; your paid-off mortgage is still a lien. What are you going to do? The terms of your purchase and sale agreement may allow you to continue the sale for 30 days but now you cannot buy your new house because you were relying on the money from the sale of your old home. You may not be able to resolve your title issue within thirty days; maybe your buyer will walk. Total panic sets in. You may be defaulted under the terms of the agreement to buy your new home. You could lose your deposit. The dominoes that were supposed to be falling in such an orderly fashion are now stuck behind your improperly discharged mortgage. What if Big Bank has been merged or has been taken over by the FDIC how will you get the discharge and how long will it take. This all could have been avoided if the closing attorney that did your refi knew what he was doing. So when you are meeting with your lender let them know that you want to select the attorney to close your loan, do not let them make that decision for you, tell them you want to use Topkins & Bevans. Our years of experience dealing with real estate transactions allow us to make sure that not only is your closing conducted professionally and without incident but we will also make sure that all matters are properly taken care of. The mortgage we payoff will be discharged and the record title will be cleared properly. So when you go to sell your home you may encounter other issues but you will not encounter the improperly discharged mortgage we paid off.

The New Massachusetts Homestead Law takes effect March 16, 2011.

The long awaited and much needed revision to the Massachusetts Homestead Law will be taking effect on March 16, 2011. It can be found at Massachusetts General Law Ch 188 §1-10. The Homestead Law has caused more debate among real estate practitioners than almost any other statute, confusion seemed to be the only consensus that was ever reached. Regarding the Old Homestead basic issues were debated such as was a mortgage a release of the homestead, did a spouse have to sign a deed even if they were a non-title holder, what effect did the filing of a subsequent homestead have on an existing homestead. The New Homestead Act was enacted to resolve all these and other issues inflatable toys.

There are now three types of Homesteads available. One is automatic and two must be created by the filing of a Homestead.

I “Automatic Homestead”

There is an automatic protection in the amount of $125,000.00 for an individual’s principal residence against subsequent attachment. The property must be occupied or intended to be occupied as a principal residence of the property’s owner. The protection is provided to the individual and the other family members of his or her family living at the property.

The two non-automatic Homesteads available are as follows:

II “Basic Homestead

The protection provided to those who file a Homestead. The amount of protection is equal to $500,000.00 if the property is occupied or intended to be occupied as their principal residence.

III “Elderly\Disabled Homestead

This protection is provided only to the person making the Elderly or Disabled filing. The protection provided is in the amount of $500,000.00. The filer must be either 62 or older or meet the definition of disabled that is included in the statute. The property must also be occupied or intended to be occupied as the filer’s principal residence.

How do you establish an Automatic Homestead?

As long as you meet the requirements nothing needs to be filed.

How do you establish a Basic Homestead?

In order to establish the Basic Homestead the requirements of Section 5 of the statute must be complied with. An outline of these requirements is as follows:

  1. The declaration of Homestead must be signed by each owner of the property.
  2. If there is a non-titled spouse they must be identified in the Declaration.
  3. The declaration shall state that the each person named in it occupies or intends to occupy the home as their principal residence.
  4. Trustees of property held in trust can now file a declaration of homestead on behalf of the beneficiaries of the trust who occupy the property as their principal residence.

The Homestead can no longer be created as part of a deed it must be a separate filing.

How do you establish an Elderly\Disabled Homestead?

  1. The same requirements for the Basic Homestead must be complied with and also:
  2. There must be a statement that the owner to be benefited is an elderly person or a disabled person and
  3. An original or certified copy of a disability award letter issued to the person by the United States Social Security Administration or a letter signed by a physician registered with the board of registration of medicine certifying that the person meets the disability requirements as set forth in the Act. The award letter or the physician’s letter shall be recorded with the declaration.

How can any Homestead be terminated?

  1. A deed signed by the owners or by the owner and the non-title holder spouse or former spouse who reside at the home as a principal residence
  2. If a Trustee established the Homestead then a deed signed by the trustee
  3. A release signed by any of the above
  4. A new Basic Homestead declaration being filed or
  5. An abandonment of the home as a principal residence

How can an Elderly\Disabled Homestead be terminated?

  1. Deed or release signed by the person who declared the Elderly\Disabled Homestead
  2. Acquisition of a new Homestead
  3. An abandonment of the home as a principal residence

Important Highlights:

Does the non-title spouse have to execute a mortgage?

No, only the title spouse needs to execute the mortgage and no additional language needs to be added to the mortgage for the Homestead to be subordinated to the mortgage. The requirement by the lender that the Homestead be released is now prohibited.

How do you handle a change in marital status when a document is executed?

The Act requires the identification of the non-title spouse as part of the declaration. The subsequent divorce, death or remarriage can alter the current information of those protected by the Homestead. The change in status can be resolved by including the current information in the deed, release or mortgage. The document containing the statement regarding the marital status of the grantor may be relied upon in good faith. An affidavit must be executed by the grantor, releaser or mortgagor under the penalties of perjury, stating that at the time the document was executed that the affiant had no spouse or partner entitled to claim the homestead. The affidavit may be recorded with the deed, release or mortgage containing the recital.

If the single owner marries do they need a new Homestead?

If property is purchased by a single person who later marries the new spouse is automatically protected by the declaration of homestead right. As a result of this every deed should include the marital status of the grantor and if married then the non-title spouse must also execute the deed.

What happens to existing Homesteads?

All existing homesteads in effect as of March 16, 2011, shall continue in full force and effect, and shall be governed by the New Act notwithstanding their failure to comply with the new execution requirements.

Special Note regarding closings:

The Closing attorney at each transaction must provide the mortgagor with a written notice that shall include a summary of the differences between the automatic homestead protection and those acquired by making a declaration.

This is not a complete evaluation of the new law but only a brief summary. A person that desires to create a Homestead should seek the assistance of a Massachusetts Attorney with an understanding of the New Homestead Act. We at Topkins & Bevans can provide this service to you. You can contact me at rbevans@topbev.com, my office number is 781-890-6230 ext. 241 and cell 781-858-6468.

NFLPA wins one in Court. Will it have any impact on the current negotiations?

Judge David S. Doty, ruled this week in favor of the NFLPA against the NFL. This ruling could have a significant impact on the current negotiations regarding a new Collective Bargaining Agreement (the “CBA”).

The Players had alleged that the Owners and the NFL had ignored their obligation to act in good faith and to use their best efforts to maximize the total revenues for both the NFL and the Players when they were renegotiating or negotiating the most recent broadcast contracts (“TV Deals”). These obligations were in place as part of the White Stipulation and Settlement Agreement (the “SSA”). The matter was heard in January by Stephen B. Burbank, the special master assigned to hear the action.

The SSA has been in place since 1993. It was part of a settlement in antitrust class action brought by Reggie White and other players. It is often referred to as the White Settlement or the SSA. The NFL and the NFLPA entered into a CBA at that time that mirrors the SSA. The CBA was amended and extended in 1996 and 1998 and then renegotiated in 2006 covering the period of 2006-2012. The NFL had the right in the CBA to opt out of the last two years of the CBA and on May 20, 2008, they took advantage of this provision and opted out. Based upon this opt-out the SSA and the CBA are set to expire on March 4, 2011. The NFLPA and the NFL have been negotiating in an attempt to reach an agreement for a new CBA. During these negotiations the Owners have recognized that a lockout was “Realistically possible in order to achieve a new agreement more favorable to their interests.” This perspective is crucial to embrace when reviewing Judge Doty’s decision. You must also remember that this is not a work stoppage on the part of the Players but a lockout by the Owners inflatable shade structures.

The TV Deals generate about one-half of the NFL’s total revenues. These revenues are shared by the Owners and the Players. The NFLPA does not negotiate the TV Deals the NFL does it alone. The existing TV Contracts did not require the Networks to pay the NFL if there was a lockout in 2011. The NFL was concerned about lost revenue and the possibility that certain of its loan obligations could be considered in default if the TV revenue was not being received as a result of the lockout. The NFL thought that all of these events would decrease their bargaining power with the Players.

The NFL shortly after opting out of the CBA began negotiations with the Television Networks that broadcast NFL games in the hope of modifying the existing TV Deals. It renegotiated the DirectTV deal so that the NFL was actually paid more in 2011 if they locked the Players out. DirectTv “would have considered paying more in 2009 and 2010 to have the [the work-stoppage provision] go away” but that was not part of the final agreement. The agreement was extended and the rights fees for 2009 and 2010 stayed the same. The TV Deals in place with CBS and Fox prior to the renegotiation required the NFL to pay the Networks refunds in 2011 if there was a lockout. The renegotiated deals again did not have increased fees for 2009, 2010 or 2011, but the lockout penalties were decreased. The deal with NBC also had the same work-stoppage penalty in it. Again the NFL did not seek increased rights fees for 2009, 2010 or 2011, but the new agreement had increased rights fees for 2012 and 2013. A common theme was developing the deals had been modified so that the lockout penalties were significantly diminished and later revenues increased, assumedly after the end of the lockout. ESPN had a contract in place that was to expire in 2013. The contract was not extended but “the work-stoppage provision was amended”. The new deal was directly linked to a work-stoppage. There were also the deals with Comcast and Verizon that were renegotiated. Judge Doty wrote “In total, the NFL negotiated access to over $4 Billion in rights fees in 2011 if it locks out the Players. Of that sum, it has no obligation to repay $421 million to the Broadcasters.”

The Players claimed that the owners had failed as required by the SSA to maximize total revenues for 2009 and 2010 which would benefit both the Players and the NFL. After a trial in January the special master ruled that the NFL had violated its obligations under the SSA in negotiating the TV Deals, but only partially. The special master granted the players $6.9 million in damages for the NBC contract. Judge Doty ruled that the reasoning applied by the special master was incorrect. When the NFL was negotiating these deals it could apply the principle of “Sound Business Judgment” but this does not allow the NFL to do this “at the expense of maximizing total revenues during the SSA.” The NFL had negotiated or renegotiated these TV deals “to benefit its exclusive interest at the expense of, and contrary to, the joint interests of the NFL and the Players.” In addition the NFL by failing to seek revenue modifications for 2009-2010 seasons when it modified practically every other term of the agreements did not make the required Best Efforts in these negotiations.

Judge Doty seemed to be particularly moved by the NFL’s vast market power which one television executive described as the ability to have the NFL Commissioner call you and state “we’re done, pay this or move on … [the NFL has] market power like no one else”. As a result of this market power the NFL could have gotten more revenues for the 2009 and 2010 seasons when it entered into these modified contracts, but chose to emphasis the best way to position the Owners if there was a lockout to the determent the Players. The NFL had told the networks during these negotiations that “opposition to lockout provisions to be a deal breaker and clearly a deal it would not consider.”

The Court’s has ordered a new hearing to be held to determine what relief it should grant the Players. The Court has indicated that both money damages and the possibility of injunctive relief would be considered.

The NFL has indicated that it was prepared for this ruling and that it does not effect its negotiating position. This may be the case, but it seems to fly in the face of logic. If the NFL negotiated these deals to position itself for a lockout and there is now the possibility that you may not have this revenue and if as the NFL believed the lockout could result in the default of some of its obligations there is a substantial price to pay as a result of the lockout that otherwise would not have to have been paid. We may know if this decision effected the NFL by the result of this week’s mediated negotiations. Hopefully, a fair agreement will be reached so the league can continue to function to the benefit of both the Owners and the Players and for all those people that rely on the NFL for their livelihoods.

Link to the decision http://images.nflplayers.com/mediaResources/files/Lockout%20Insurance%20Case%20Decision.pdf

Our On-Line Closing Program

More than an electronic document management system

SureClose allows all parties involved in a transaction 24/7 online access to the documents that pertain to them. Buyers, sellers, real estate professionals, escrow officers, title agents and lenders alike are able to view step-by-step transaction information from any Windows® based PC with Internet capability providing customers a new level of service and peace of mind. With SureClose, customers are able to review and approve documents before the closing date at a convenient time and place. Security features ensure that buyers and sellers see only the documents specific to them. SureClose operates via a password-protected Web site. And with around the-clock access, office hours and time zones are no longer factors for doing business. Customers even receive automatic notifications when critical documents post to their SureClose file, keeping customers abreast of the transaction’s progress at all times.

 

Move business online

• Monitor real-time progress of the transaction

• Manage, share documents

• Post and receive messages

• Receive automatic event notifications

• Order settlement services and exchange documents

 

Streamline the list-to-close process

• Integrate with key electronic touch points in the real estate process

• Eliminate time-consuming status tracking and missed phone calls

• Facilitate communication among all parties

• Diminish courier and overnight mail expenses

• Reduce hard copy paper clutter

 

Provide a new level of service

• Extend office beyond brick and mortar with mobile technologies

• Differentiate company from the competition with new online services

• Increase brand awareness

• Create a great customer experience

 

Key service highlights:

• Fully customized Web site, branded to your business

• Easy to implement
easy to upload documents via fax, e-mail or proprietary print driver

• Web-wide file access
24/7 from office, home or any location

• Deliver superior service with branded consumer Web site and closing CD

• Distribute documents, forms and messages by e-mail, fax or PCS phone.

• Manage workflow with task assignment and calendar views

• Auto alerts and notifications sent to e-mail, fax or PCS phone

• Real-time reports by users, branches or across enterprise

• Dissolve long-term storage costs with digital archiving

• Provide an audit trail of the transaction history

• Mission-critical security measures protect your data and clients

• Extensive online training and superior customer support

 

If you have any questions or would like a one-to-one presentation of our closing program please let me know. Office 781-890-6230 cell 781-858-6468 or rbevans@topbev.com.

Thank you

Bob Bevans

Do Lower Mortgage Defaults Signal a Recovery?

It was reported today by the Mortgage Bankers Association that fewer Americans are falling behind on their mortgage payments. This has nothing to do with the foreclosure “robo-signing” mess, because the number they were looking at was the first indication of a potential foreclosure, the number of borrowers that had a single payment past due. This means that less and less people are falling behind on their mortgage payments.

It was speculated that there are two reasons for this. Less people filing for unemployment, although that number did go up today; and improved underwriting of mortgages over the past few years. The improved under-writing was a direct result of a change in modus-operandi of the lenders following the mortgage melt-down.

Ok so let’s speculate and assume this is a signal of some part of a recovery. Many of the other pressures on the housing market remain with the largest being bank-owned property. The delay in foreclosures may have the biggest impact on the housing recovery. There is still a large amount of foreclosures that have to move through the system; in fact CNBC reported that the percent of loans in foreclosure is 4.63% tying the record high for that segment of the loan population. Most foreclosures once they are started continue until they are completed. The result will be more bank-owned inventory for sale to compete with. So in the short-term the pressures of the foreclosure inventory will most likely extend the current market conditions. However, with less mortgages going bad maybe that inventory will begin to diminish and we can all return to whatever normal has become. Let the Recovery begin.

The Senate approved a measure to extend the First Time Home Buyer Tax Credit

The Senate approved a measure to extend the First Time Home Buyer Tax Credit until September 30, 2010. The House had already passed this bill. This will allow the buyers who had qualified for the tax credit but were not able to close by June 30, 2010, to now close by September 30, 2010. The Bill still has to be signed by the President but that seems to be a done deal.