UCC-1s and UCC-3s are subject to rejection if they are not completed in their entirety. Please double check all UCC forms prior to your closing date to ensure that all sections are complete and accurate including 'Record and Return,' and whether it is being submitted for initial filing, termination, amendment or continuation. It is also important to state whether it is being filed with the State or County.
Motivating Your Broker to Sell
In a buyer's market where there is an overabundance of homes on the market to choose from, it seems almost impossible to get your property shown, much less sold. But according to The Journal News, atypical broker incentives are becoming more popular, and may put your property in prime position for showing. Mentions of cash bonuses, gift cards, high-end luxury cars and such like are now being attached to some listings to motivate agents to get the job done. An incentive could be influential when there are two similar homes and one offers a little something extra; however, a motivated broker does not guarantee a sale because, at the end of the day, buyers will only buy what they like. Additionally, a savvy consumer, fully aware of properties on the market that fit her needs, may question your broker's motives for withholding information, and begin to avoid him. And, in a fiercely competitive market like this one, it is really worth the risk?
The U.S. real estate market ' reeking of stagnant housing sales and near and actual property foreclosures, a sign of creative sub prime lending strategies gone belly up from a previous year's abundant haul. It is nothing short of a disaster, and the aftermath has strapped beleaguered homeowners in a rollercoaster of emotions including anxiety, embarrassment, fear, desperation, depression. Yes, these are tough times, and tough times call for tough measures, one of which is getting familiar with the various agencies and options available to counter the emotional and financial impact associated with a potential or actual crisis sooner rather than later!
For a myriad of reasons, many homeowners in faulty loan situations will sit in denial and allow pride to make a bad situation worse. But, if they know they are in default, or even suspect that they will not be able to make a payment, the first thing they should do is to seek help. Veline Acquah, a counselor at Westchester Residential Opportunities' Mount Vernon Homeownership Center at the Armory says that timely intervention goes a long way in stopping foreclosures because once the ball gets rolling, it is more difficult to find solutions. Some state and federal government programs like SONYMA and FHASecure, for example, are available to homeowners who have adjustable rate mortgages, but they cannot be more than two months behind on their payments.
Many lenders have several options available depending on the homeowner's circumstance, credit score, ability to repay and whether default occurred because of short-term hardship like a job loss or medical expenses, or if the problem is permanent. Per the Federal Housing Administration, solutions to a temporary situation may include:
1) Reinstatement. Here the lender is willing to discuss accepting the total amount owed that is past due in a lump sum by a specific date. Typically, forbearance may accompany this option.
2) Forbearance. The lender allows for the reduction or suspension of payments for a short period of time and then agrees to another option to bring the loan current. A forbearance option is often combined with a reinstatement if the homeowner knows for certain that he/she will have enough money to bring the account current at a specific time. The money may come from a hiring bonus, investment, insurance settlement, or tax refund.
3) Repayment Plan. The homeowner gets an agreement to resume making regular monthly payments plus a portion of the past due payments each month until caught up.
If the situation appears to be long-term or will permanently affect the borrower's ability to bring his account up to date, he may want to contact the lender to discuss other methods including:
1) Mortgage Modification. If payments can be made on the loan, but there is insufficient funds to bring the account up to date, or if the current payment amount is too burdensome, the lender may be able to change the terms of the original loan to make the payments more affordable. The loan could also be changed in one or more of the following ways:
a. Adding the missed payments to the existing loan balance
b. Changing the interest rate, including making an adjustable rate into a fixed rate
c. Extending the number of years you have to repay (e.g. from 30 to 40 years)
2) Partial Claim. If the mortgage is insured, the lender may help the mortgagor get a one-time interest free loan from the mortgage guarantor to bring the account to current. In this case, the mortgagor may be allowed to wait several years before repaying the second loan, or it may be paid concurrently with the first. In order to qualify, the loan must be in delinquent status between four and 12 months, and the homeowner must be able to begin making full mortgage payments again.
If the homeowner can no longer afford the home, then getting rid of the property and paying the loan on sale may be the only option. In light of current market conditions, one may not be able to sell at market value so the more creative & effective the escape strategy, the better. In an Assumption, for example, a qualified buyer may be allowed to take over the mortgage even if the original loan documents state that it is non-assumable. In some cases, a disadvantaged homeowner may secure a deed-in-lieu-of foreclosure and 'give back' the property to the bank. Of course conditions apply, but once you qualify, you're on your way! Another exit strategy to consider in cases where the full market value cannot be obtained from a traditional sale, is a short sale. In this case, the lender accepts the net amount received from the sale after allowing for certain expenses, and forgives the remaining balance. In times past, the seller would have to pay income tax on the amount forgiven, but with the establishment of the Mortgage Forgiveness Debt Relief Act of 2007, this is no longer true.
The Mortgage Forgiveness Debt Relief Act of 2007
Beneficial, but from an entirely different perspective, the Mortgage Forgiveness Debt Relief Act is yet another route to alleviating the discomforts of those personally affected by current market conditions. It is a timely establishment, a silver lining in a grey cloud that allows the beleaguered homeowner to recoup some of his losses and benefit in some way despite the hand dealt. The nucleus of the Mortgage Forgiveness Debt Relief Act of 2007 is a three-year exclusion of mortgage debt forgiveness from a homeowner's income on qualified home loans, along with a handful of other real estate benefits. These include a significantly expanded time period for a surviving spouse to use the higher home sale exclusion, a three-year extension of the mortgage insurance premium deduction, the exclusion from income of certain state and local tax breaks given to firefighters and emergency medical technicians, clarification of student housing eligible for the low-income housing credit, and a more liberal qualification test for cooperative housing corporations.
Foreclosure Relief -- When a foreclosed property sells for less than market value and the remaining debt is discharged by the lender, the cancelled debt is no longer considered taxable income. Currently the new law excludes from taxation, discharges of up to $2 million of indebtedness that is secured by a principal residence, and is incurred in the acquisition, construction or substantial improvement of the principal residence. The relief is available for three years beginning January 1, 2007 and ending December 31, 2009.
Mortgage Workouts ' Mortgage renegotiations (terms changes/lower monthly payments, rate resets, etc.) are also covered in the law's new exception. The new law applies to qualified principal residence indebtedness which means acquisition indebtedness as defined above, as well as debt refinancing. It now covers $2 million in acquisition indebtedness but does not count home-equity debt not used for renovations. Note: Exclusion not applicable to loans discharged due to lender services, or to taxpayers in Chapter 11 bankruptcy.
Mortgage Insurance Deduction ' The new law temporarily extends the deduction for qualified mortgage insurance premiums for three years through December 31, 2010. Additionally, the new law extends mortgage insurance deduction to amounts paid or accrued after December 31, 2007, but only with respect to contracts entered into after December 31, 2006 or prior to January 1, 2011. Note: No deductions allowed for the unamortized balance of mortgage insurance premiums that have been capitalized if the mortgage debt is satisfied prior to the end of its term.
Survivor's Home Sale Exclusion ' Effective January 1, 2008, recently-widowed spouses can take advantage of the $500,000 home sale gain exclusion before being treated as a single individual entitled only to $250,000.00 exclusion, provided the sale occurs within a two year span of the death of the individual's spouse. Note: Same-sex couples married under state law cannot benefit from this provision.
Volunteer Emergency Responders ' Individuals who receive a qualified state and local tax benefit, any reduction or rebate of a tax and qualified payments of up to $360.00 each year for volunteer services, can exclude them from income. This benefit applies to tax years beginning after December 31, 2007.
In conclusion, homeownership has always been the cornerstone of the American dream despite the rising threat from current market conditions. To protect this lifelong tradition, homeowners must investigate and implement the myriad of programs and provisions that have been formulated to counter the potential repercussions of the time. In so doing, they may very well save themselves and their families from a terrifying nightmare.
The once stable market for retail 1031 exchanges has been upstaged by the nationwide credit crunch. Industry experts revealed that the latter part of 2007 and the early part of 2008 saw 1031 exchange volumes plummet some 40 percent for many 1031 specialists and sale facilitators. According to Real Capital Analytics, the credit squeeze sent the sales volume for major retail properties spiraling downward to the tune of 31 percent in fourth quarter last year. Large portfolio transactions were off even more in the final quarter with only $4.2 billion of closings logged, down from $32 billion of combined sales over the first three quarters.
Bernard Haddigan, Managing Director of Marcus & Millichap, says 1031 exchange activity is really only about half of what it was two years ago. Multifamily building owners in California (traditionally the most active 1031 traders) are now on the sidelines. Some investors may still elect to be part of the game, but they could actually lose if they cannot find financing for replacement properties, resulting in taxable profit from the sale. Additionally, the supply of 1031 exchange properties may decrease significantly as retail developers delay or pull back on expansion plans. Convinced that real estate values will decline even further, sellers are taking the 15 percent capital gains hit rather than finding replacement property. The strategy is to lose now, and win later when things begin to stabilize.