|T&B Trending January 2015 Vol 1-2015|
|Top StoryNovember 2014 Job Growth – 7th Best Month in 10 Years Source: Dr. Ted C. Jones
Job growth continues to accelerate into the fall and winter as November 2014 saw 321,000 net new jobs (preliminary) added on a seasonally-adjusted annualized rate. That was the seventh best month of job growth in the past 10-years. Read more >>
In The News
Forecast: Full Steam Ahead for Housing
The housing market will continue its gradual recovery and gain momentum in 2015 after a disappointing 2014.
Home Sales, Housing Starts Expected to See Significant Growth in 2015
Improvements in economic fundamentals, notably employment growth among millennials, will fuel significant increases in home sales and housing starts and a modest rise in home prices in 2015. Read more >>
In Our Neighborhood
First-time homebuyers given more options to buy a home by FannieMae and FreddieMac:
Source: Topkins & Bevans Blog
Earlier this week new lending guidelines for first-time homebuyers were released in a statement by the FHFA Director Melvin L. Watt . Watt wrote “The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down. Read more >>
Earlier this week new lending guidelines for first-time homebuyers were released in a statement by the FHFA Director Melvin L. Watt . Watt wrote “The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3 percent down.
The lower down-payment requirement will allow more first-time homebuyers the opportunity to buy a home. Often the greatest hurdle for the first-time homebuyer is saving enough for a down payment. Many first-timers would try to save 20% of the purchase price that many lenders required. It can take a significant period of time to save that large amount of a down-payment forcing first-timers to wait to buy a home. Right now with rates as low as they are it very well may be cheaper to buy than rent.
FannieMae in its statement regarding its My Community Mortgage® “announced an option for qualified first-time homebuyers that will allow for a down payment as low as three percent. …the 97 percent loan-to-value ratio (LTV) option will expand access to credit for qualified first-time homebuyers that may not have the resources for a larger down payment.” Other requirements will still have to be met by the first-timer. These include “the usual underwriting, income documentation and risk management standards. These loans will require private mortgage insurance or other risk sharing, as is required on purchase loans acquired by the company with greater than 80 percent LTV.”
FannieMae expressed its hope that “Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”
FannieMae will require for this program that at least one of the borrowers be a first-time homebuyer.
FreddieMac also provided its guidelines for the low down-payment program. The program is entitled “Home Possible Advantage”
FreddieMac also set forth its Key Facts:
- Home Possible Advantage offers qualified low- and moderate-income borrowers a conforming conventional mortgage with a maximum loan-to-value ratio of 97 percent.
- Home Possible Advantage mortgages can be used to buy a single unit property or for a “no cash out” refinance of an existing mortgage.
- First time homebuyers must participate in an acceptable borrower education program, like Freddie Mac’s CreditSmart®, to qualify for Home Possible Advantage.
- Home Possible Advantage mortgages are available as 15-, 20-, and 30-year fixed rate mortgages.
These programs are seeking to allow the first-time homebuyer the ability to buy a home with less of a down payment but also limit the risk that the loan will go bad or default. They are focusing on the borrowers’ credit worthiness as opposed to the size of their down-payment. There is always an element of risk with requiring a lower down-payment; the homeowner has less of their own money at risk. But when you balance this against the economic drag of so many potential buyers sitting on the sidelines the benefit of pulling pull them into the real estate market may outweigh that risk.
We offer reduced rates for first-time homebuyers. Contact if you are thinking about buying a home. We will provide you with over a century of experience in dealing with real estate.
The current pace of our lives makes finding time to develop an Estate Plan more and more difficult. Please find below some moves you can make which are not complicated, or expensive, but which can improve your position, and let you sleep at night.
Create or Update Your Will or Revocable Trust
These documents are the cornerstone of your Estate Plan. They insure that your assets will be distributed exactly as you would like. Failure to keep these documents current may result in disinheritance or financial hardship for loved ones who depend on you.
Review Beneficiary Designations. When you established life insurance or retirement plans, you were asked to name beneficiaries of these accounts who will receive the assets upon your death. It is important to review these designations regularly to ensure that your assets pass to the appropriate loved ones.
- Create or Update Your Health Care Proxy and Living Will You need a health care proxy to appoint your spouse, a trusted friend or family member to make medical decisions on your behalf in the event you are unable to make those decisions yourself. Your health care agent will work with your doctors and other health care providers to make sure you get the medical care which is best for you. A living will is a type of advance directive that gives you the opportunity to formalize your wishes as to prolonged health care in the event that your condition is terminal. NOTE: Living Wills give direction but are not legally binding
- Create a Durable Power of Attorney. Regardless of the size of your estate or your family circumstances, you should have a durable power of attorney. You may appoint your spouse, a trusted family member or friend to handle all of your financial affairs on your behalf in the event you are not able to do so, yourself.
- Establish Guardianships for Minor Children. Have you considered who would take care of your minor children in the event of the untimely passing of you and your spouse? If you do not finalize your wishes in your Will, a court will decide who will care for your children. Do not leave your children’s well-being in the hands of a court. Appoint a Guardian for you minor children in your Will.
- Encourage Your Adult Children to Create an Estate Plan. Whether your son or daughter is going off to college or beginning a career, encourage your child to set up an Estate Plan. If your adult child requires medical attention, you have no legal right to their medical records, nor can you participate in health care decision, without a duly executed health care proxy.
- Encourage Your Aging Parents to Create, or Update, Their Estate Plans. It becomes increasingly more difficult to discuss finances and health care decisions with your parents as they age. Encourage your parents to put an Estate Plans in place, or review their existing Estate Plans.
The Massachusetts Appeals Court in Allen V. Allen ruled that a deed signed by a grantor but not acknowledged by the grantor before a notary was not enforceable. This was family transaction involving the family home in Lexington. The matriarch of the family Ethel began the process of moving from her Lexington home to live with one of her daughters, Nancy in 2001. Ethel’s son Harold claims that a deed from Ethel executed on July 23, 2001, conveyed the house to him and Ethel as joint tenants. This deed is the subject of the litigation. An Attorney prepared the deed and notarized it. The acknowledgement (notary) was dated July 23, 2001, and it read: “Then personally appeared the above named Ethel M. Allen and acknowledged the foregoing instrument to be her free act and deed, before me”. The attorney then recorded the deed on August 10, 2001.
Later that year, on November 30, 2001, Ethel established the Allen Realty Trust and executed a deed conveying the Lexington property to herself and to her daughter Deborah as co-trustees of the Trust, reserving a life estate for herself. Ethel specified in the trust that the property would be sold upon her death and the proceeds divided among several of her descendants, including Deborah. This deed was recorded on February 8, 2002. Ethel died on December 20, 2009. It was at this time that Harold revealed the July 23, 2001, deed. Neither Deborah nor her sister Nancy nor the attorney who prepared the November deed had discovered Harold’s deed. When the second deed was recorded no title examination was done. Deborah commenced a litigation in January of 2010. Her suit disputed Harold’s claim to the property and sought to declare the deed to him was unenforceable.
The judge at the trial found that Ethel’s signature on the July deed was authentic. But he determined that Ethel never appeared before the attorney/notary to acknowledge the deed. The judge found that Ethel had signed the deed in front of Harold; he then brought it to attorney/notary for his signature, and then the attorney had notarized the deed without Ethel in his presence.
The Land Court ruled that the deed was unenforceable because it was improperly notarized. It was not sufficient that Ethel had signed the deed. She had not confirmed before the notary that the deed had been her free act and deed. The deed because of the invalid acknowledgement was not entitled to be recorded as the Registry of Deeds. The Court stated “We therefore conclude that the latent defect in the certificate of acknowledgment of the July deed prevented it from giving constructive notice to Deborah of the prior conveyance.” The Appeals Court affirmed the Land Court’s findings in its decision.
There were other arguments made by Harold which all also failed. Always remember that a document cannot be notarized unless you are in the presence of the notary when you execute it or when you acknowledge that your signature was your free act and deed. Also whenever you have a document conveying an interest in real estate recorded, have the title checked for any other matters first and then record your document.
We all know how many mortgages are currently “under water” By “under water”, I mean than once the property is sold and selling expenses and comissions paid, there is no money left over for a downpayment on the “next”home. The mortgage and property taxes are current; the property just has no equity.
Here is a solution I recently developed which worked out well for a client of mine. The client’s parents had excellent credit and had saved up some money. I caused them to purchase, in their names, the property which their daughter had identified as more suitable for her growing family. The daughter entered into a lease with her parents, with market rental rates. She has an option to buyer the bigger home from her parents at a formula price. There is a provision in the lease that every rental payment has a “rent-to-own” coefficient, so the daughter is building up equity in the home she now lives in every time she makes a monthly rental payment United States.
The “under water” residence is now being rented to third parties. Evenutally, when the real estate market comes back, the daughter can sell this home and come out whole. In the meantime, she is receiving income to defray her mortgage and tax expense, whicile she is paying Mom and Dad for the new, more spacious home.
Everybody wins as long as the numbers work out, which in this case, they do. I am not saying that this approach is the “be-all” or the “end-all”. It is, however, a creative solution which has given my clients’ parents a chance to help their daughter without a huge financial sacrifice. There are variations to this theme; perhaps, you can suggest some you have used.
We are not done with this “down” real estate market whatever some of you suggest. There are pockets of progress; there are pockets of stagnation. Creative thinking can many time save the day. We all need to practice it.
Our firm. Topkins & Bevans, does a significant number of REO representations in Massachusetts.
This is a fantastic “how-to” list and I am going toptu it up on my firm;s blog Topkins & Bevans Blog commercial jumping castles.
The feedback after last weeks Harris Real Estate University Superstar Interview has been amazing,……
We interviewed the President of Excellen, Cary Sternberg. Mr. Sternberg was very generous with not only his time but, his candor when answering the questions.
As you may know HREU has had a close working relationship with Titanium for years.
(Excellen is a division of Titanium Solutions Inc.)
If you missed the live interivew…no worries…here is the link for you to listen to the replay.
Agents, know this…its NOT too late for you to become a REO listing agent. Asset managers are looking for listing agents now. Learn how to become a REO listing agent now..watch the FREE Agent REO Secret video and download the FREE Agent REO Secrets book NOW!
Here are a few of the notes that Julie and I wrote down from this interview….
Top 17 Ways to Keep Your Asset Managers Happy!
1 Practice Excellent Communication: Call, email asset managers often. Be available during normal working hours. Market your homes using 1800HomeHotline.com
2 Have Timely Responses: Make it so the Asset Managers can easily reach you…not your voice mail…not your assistant..YOU!
3 Operate on both a personal and professional level: Cary made a great point….’Treat every asset as if it were your OWN home”.
4 Do not delegate your asset manager relationships to any staff members. Asset Managers are your best sellers (remember, they will often list 10-20…50 homes with you. Treat them like GOLD.
5 YOU..the listing agent must know the asset. You must know all of your listings cold…know their condition…market competition…know the market!
6 Practice MMFI for every asset manager. ‘MMFI’ Make Me Feel Important. Make them FEEL like they are your only client.
7 KNOW your inventory. Cary made it clear that you must know the market. Don’t list outside of your service area.
8 Its OK to bring in a team member to help partner with you….but, introduce this person to the Asset Manager…let them know that this team member is their personal asset manager contact.
9 Be a Problem Solver, not a Problem delegator. Don’t tell the Asset Managers about the problem….bring them the solution.
10 Be innovative. When doing an occupancy check..ask the neighbors…walk around the house. Actually…make an effort! 11 TAKE ACTION
Learn how to become a REO listing agent now..watch the FREE Agent REO Secret video and download the FREE Agent REO Secrets book NOW!
12 Treat it as if it’s YOUR HOUSE. Don’t wait to be told what to do. Again, treat every asset as if it were your own personal property.
13 Get occupancy checks back in HOURS, not in DAYS. They track this….you will earn more assets the faster you report back to the Asset Manager about occupancy.
14 Maintain low Days on the Market. They track your DOM….Warning: you will lose the asset if you don’t sell it in 90-120 days.
15 List to sell price ration. BPO vs. actual SALE PRICE should be a close ratio.
16 What works needs to be done? Get it into Lend-able condition ASAP.
17 Do your Cash for Keys correctly. Know the Tenant Protection Act.
We all marvel at the “deal-makers”, those people who we deal with, and envy, every day because their deals get done; their paydays really happen. After more than 41 years of practicing law in Massachusetts, I have learned the following things about closing deals, and I thought I would share them with you:
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1. Deal Makers Have a Healthy Sense of Paranoia. They can see problems before they surface. They have decision trees in their minds well before the decision needs to be made. They are pro-active because the have thought through the ocnsequences of the deal for each participant. How much dose the Seller need to sell? How would delay affect the chemistry of the deal? What things can the “deak maker” do in advanec which will combat aribitrary or selfish behavior on the part of someone else in the deal?
When I first started practicing law, it was accepted practice to bill matters by the hour. After all, the only thing I was selling was my time, and if I spent more time on a matter than I expected, why shouldn’t the client compensate me for that effort? While these axioms remain true, the marketplace has changed, and consumers are now aware that “shopping” for an attorney is no different than shopping for any other service or commodity. Because of these trends, and because I want everyone I represent to believe they have been well served and fairly charged for services, my firm now uses a “fixed fee” approach to almost all real estate transactions. My practice is to enter into an initial discussion with the client to determine the level of complexity of the transaction, and then to agree upon a fee, which will not change even if the transaction goes viral, and I spend more time on the matter than anticipated.
Accordingly, if you work with Topkins & Bevans for the purchase or sale of your home, you will know, up front, what the matter will cost you, and you can factor that expense into your budgeting process.
There are several inherent advantages to this approach:
- You and our firm establish a relationship of TRUST, our most important product.
If you believe that you are working with honorable professionals, you will feel comfortable telling your friends and family about us, and that helps Topkins & Bevans to expand our client base. You may also feel comfortable using our firm for other legal matters which may arise, including helping you develop an Estate Plan for your family.
- You are not hesitant to email or call when you have a question.
Many people worry about calling when the meter is “on”. They have concerns, but they do not want to expand the amount of their legal fee. Fixed fee billing eliminates that factor from the equation. When the pressure is off, people communicate better. On the other hand, the situations are few and far between where a client takes unfair advantage of the fixed fee approach.
- We get all the information from you that we need to give you appropriate representation.
Our firm has real estate experience at almost every level. We have completed condominium conversions. We have prepared subdivisions. We are familiar with current lending practices. None of this expertise will help you unless we know all the facts of your situation. When you are not worried about the added cost, you can open up and give us good information. That usually translates to our being able to give you effective representation.
If you are considering buying or selling a home, we would love to hear from you. We will work with you on a fixed fee basis and even defer payment of some, or all, of your fee until the closing. There is nothing better in our line of work than a satisfied client, and that is what we aim for, each and every time.
Like everyone else’s business, my business as a Massachusetts real estate lawyer runs in spurts. Lately, I have been involved in three situations concerning Easements. In one situation, a client of mine is buying a guest house while the Seller is retaining the major home. All the systems, however, run through the major home. To make things more complicated, some of the utility lines actually leave the street and pass over the land my client is purchasing. A reciprocal Easement is needed to protect both sides in terms of repair and access. With the assistance of an excellent surveyor, who drew up recordable plans which I can use, I should be able to articulate the rights of the parties in a manner that does not give rise to disputes somewhere down the road.
The other Easements were retained restrictions imposed a relatively long time ago by a land owner who wanted to protect the environment. Since these Easements were put in place, the Towns where the property is located have become much more vigilant in enforcing local and state conservation laws and codes. The people who put on the restrictions originally now are willing to remove some of the more onerous restrictions, since times have changed and there has been other development in the neighborhood. We are very close to reaching agreement, which enhance the value of both the retained and purchased land, and still provide requisite environment protections.
Because they represent encumbrances of the title, all Easements start with an accurate title report. Until we know who the current lien holders on the property are, we cannot complete the Easement work. In the case of the major home-guest house, the owner of the major home has a mortgage on his property. A Subordination of this mortgage to the Easement must be obtained before the Easement can be fully in effect. This takes some time, so we will hold back some funds from the Seller until the Seller delivers the Subordination. One never knows how long obtaining the Subordination will take. I am going to request that 1.5% of the purchase price be held back. That should “encourage” the Seller to act quickly.
In the restrictive Easements situations, my goal is to either eliminate, or weaken, the effect of the restrictions. That will take some negotiating and compromise, but restrictions like these, while laudable, can really make the value of property diminish.
The last issue is whether a full certified Plan is necessary for an Easement. I have prepared Easements where a sketch of the property lines and rights of way is adequate. Naturally, I would prefer a Plan prepared by a Surveyor, in recordable form. Most of these considerations are financial, but unless there is precision in Easement drafting, which includes accurate depiction of the property in question, the money saved in the present tense may be spent many times over in the future.
Home-ownership is often complicated, and never exactly what you expect. Nothing you have done previously in your life can prepare you totally for owning a home. Don’t get me wrong: there is not a greater believer in home ownership than I. All I am saying is that there are some definite steps you should be taking, and moves you should be making, and the sooner you get things organized properly, the easier you will find the home ownership experience. Here is my list of “do’s” and “don’ts”, in no particular order of importance:
- DO file for a Homestead. I do deal with Homesteads each and every day. There is no downside to recording the Homestead Declaration, unless you think a $100 dollar investment to protect $500,000 is not a good deal. How you will employ your Homestead when it is necessary is not something you can predict. Just understand that you only need to file a Homestead once, and it will endure through countless refinancing transactions. A Declaration of Homestead is truly “the gift that keeps on giving”.
- DON’T be a careless record keeper. The current tax laws are extremely favorable to middle-class America. If you have lived in your home for at least 2 of the last 5 years, you can sell your home and not pay any capital gains tax to a maximum exclusion of $250,000 for a single person and $500,000 for a married couple. Especially these days, that exclusion covers most of us, and we can make one, two or more transactions without any concern for paying the tax man. Well, there is no guarantee that our law makers will continue this tax benefit forever. What if fiscal needs require the termination of this program? Are you ready to recreate your tax basis in your home? Do you have records of improvements and additions which can be added to your tax basis? The time to determine whether you do is NOW, not when you are staring down the barrel of a tax audit.
- DO be a believer in preventive maintenance. Letting needed repairs slide is not a good idea, even in a recession. If your roof is not sound, or you need new windows, get the work done before greater woes befall you. You may find that the payback with new windows on energy costs justifies the expense. Ditto with needed insulation. Attend to these items as they are needed. You will receive the benefit.
- DON’T wait too long to consider Elder Care transactions with regarding your home. If you are fortunate, and have children you can trust, you may want to consider getting your home out of your name and into a Grantor Trust. These Trusts can be helpful later on, but there are waiting periods in place to prevent abuses and every time they change, they seem to get longer. Don’t let this go so that when you decide you want to make a move, you too close to need attendant care to insulate your assets. Again, each circumstance is different, but certainly 60 years of age is not too early to start planning.