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Archive for September, 2010

Homeowners Assistance Program – Part V: The closing process

September 30, 2010 Leave a comment

Once a determination is made as to which benefits are most advantageous for the applicant, the closing process can finally begin.� There are several noteworthy items to keep in mind at this time:

1. Prior to closing, the applicant will need to ensure that their mortgage is paid current, including interest, late charges, fees and penalties.� In addition, any homeowner's association or condominium association dues will also have to be paid current.

2. If you are a PCS eligible applicant receiving Government Acquisition Benefits:

A. You will need to have certified funds sent to your Benefits Specialist to pay for interest due on your mortgage to the time of settlement, as well as for any property taxes that may be due.

B. If your buyer has requested a home warranty, your benefits will not cover the cost of a home warranty.� You will have to write a separate check to the home warranty company to cover the cost.

C. Any repairs that your buyer has requested be made to the property prior to closing will also not be covered as part of your benefits.� You will either have to provide a check to the Government at the time of closing, or you will have to ensure that the repairs are made prior to closing.

D. As part of the Government Acquisition Benefits, the applicant will “sell” their property to the Government, who will in turn, on the same day, “sell” the property to the willing buyer.� This results in two transactions, and if the applicant has a real estate agent, said agent's commission will be paid as part of the second transaction (from the Government to the new purchaser).

3. Pursuant to the Unemployment Compensation Extension Act of 2009, which was signed into law in November of 2009, benefit payments under the Expanded HAP program are exempt from Federal taxes.� However, there may be state tax implications, so applicants should seek financial and/or legal assistance. �

4. For any applicants who had Federal taxes withheld prior to the law change in November of 2009 should receive a W-2C (Corrected Wage and Tax Statement) from the IRS.

While the housing market remains stagnate in many areas across the country, the Department of Defense is doing everything it can to assist its military families and civilian employees escape some, if not all, of the financial loss associated with selling home. While the process can be trying at times, once the settlement documents are signed and the mortgage is paid off, you will realize it was all worth it.�

If you are thinking about applying, do not hesitate — now is the time to take advantage of this program before the appropriated funds run out. �

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DC Homestead Application changes … again!

September 30, 2010 Leave a comment

We recently blogged about the changes in the District of Columbia's Homestead Application process.��

In that post, we commented on how the Office of Tax and Revenue had suddenly changed the requirements for applying for the DC Homestead credit. A new Homestead Application form was to be used, and the form required supporting documentation to be included with the application, specifically:

��� �a copy of the purchaser's DC driver's license with the purchaser's new address
��� �a copy of the purchaser's DC voter registration card with the purchaser's new address,
��� �a copy of the purchaser's DC motor vehicle registration with the purchaser's new address,
��� �and copies of the purchaser's 2009 DC tax returns.��

Since it was impossible to obtain these items prior to closing, we were no longer able to file the DC Homestead Application on behalf of the borrower but instead just handed the application to the borrower to file later on.

Of course, a major concern for me as a settlement attorney was how many purchasers would actually file the application post-closing.��

As anybody who has purchased a home can attest, the home buying process can be overwhelming, especially for a first-time buyer. There was no doubt in my mind that many first-time buyers would forget to file the Homestead Application and lose out on a significant savings.

But then the entire process changed … again!� The DC Office of Tax and Revenue announced that the Homestead Application process will be simplified.�� A new, simpler application is being prepared and the supporting documentation will no longer be required.��

Most importantly, because the supporting documentation is no longer necessary, the Homestead Application can now once again be completed at closing and submitted as part of the recording process, giving homebuyers one less thing to worry about and allowing them to concentrate on enjoying their new home.

Now let's just hope that there will not be any more sudden changes…

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Homeowners Assistance Program – Part IV: What are the benefits?

September 27, 2010 Leave a comment

Once your application for Expanded HAP assistance is approved, a Benefits Specialist will be assigned to your file, and will immediately contact you to determine the appropriate benefits for your specific situation.

There are four types of benefits available under the Expanded HAP program. �

1.�� �Private Sale Benefits:� If you have already sold your property or you are able to pay any loss on the sale at the time of closing, private sale benefits are paid directly to you after the closing.� PCS and BRAC 2005 applicants would be reimbursed for 90% of the prior fair market value (defined as the price you paid for the property) of their home minus the sale price, plus allowable closing costs (such as realtor's commissions).� Traditional BRAC applicants, wounded warriors and surviving spouses are reimbursed for 95% of their prior fair market value.

2.�� �Short Sale Benefits:� Are calculated the same as Private Sale Benefits, unless the applicant is left with an outstanding obligation after the sale of the property.� If there is a substantial obligation remaining, benefits will be calculated as an amount not to exceed the difference between 95% of the prior fair market value and the total of the short sale, plus the amount of the forgiven obligation.� If there is no outstanding obligation, benefits would be calculated at 90% of the prior fair market value.� However, if the amount of the mortgage that is forgiven by the lender exceeds the Expanded HAP benefit, the applicant would only be entitled to closing costs.

3.�� �Private Sale Augmentation Benefits:� Calculated the same as Private Sale Benefits.� However, if you are unable to pay the loss on the sale of your property at the time of closing, these benefits would be paid at the time of closing to cover some or all of the funds needed to pay off the outstanding mortgage.� Any funds remaining after the sale is complete will be distributed to the applicant at settlement.

4.�� �Government Acquisition Benefits:� Are designed to assist applicants who are “upside-down” with their mortgages, and are available to PCS qualified applicants who are able to bring a willing and capable buyer to settlement.� The Government will pay the greater of 75% of the prior fair market value or will pay off the mortgage for PCS, Traditional and BRAC 2005 applicants.� For wounded warriors and surviving spouses, the Government will pay the greater of 90% of the prior fair market value or the mortgage balance.� In addition, allowable closing costs are also paid (including realtor's commissions).

A. Please note: wounded warriors, surviving spouses and Traditional BRAC applicants do not need to bring a willing buyer to settlement in order to qualify for this benefit.

B. It is also important for applicants seeking this benefit to ensure that they are current with their mortgage payments, and any fees associated with owning the home (i.e., HOA dues or condo fees).

It is possible to increase the amount of your prior market value, for purposes of calculating your benefits, if you made improvements to your property.� At the time of application, you will be asked if any improvements were made to the property, and if so, you are asked to submit copies of paid receipts.� However, items such as painting are considered home maintenance items, and will not be included.

Here is an example of how to calculate private sale benefits:

Your original purchase price was $200,000
You made $10,000 worth of improvements to the property.

��� $200,000�� �Purchase Price
+� $10,000�� �� Approved improvements
————————–

��� $210,000�� �”New” Prior Fair Market Value (PFMV)
x�������� 90%
————————–

��� $189,000�� �Starting valuation for benefits
-�� $150,000�� �Sales Price (within 10% of the current fair market value)
————————–

���� $� 39,000�� �Property benefit
+�� $� 15,000�� �Approved reimbursable closing costs
————————–

��� $� 54,000�� �Total benefit you would receive after closing

Once a determination is made as to the benefits the applicant will receive, an additional thirty (30) to sixty (60) days will be needed to proceed to closing, if you are receiving Private Sale Augmentation Benefits or Government Acquisition Benefits.

What does the closing process entail?� Stay tuned for Part V � Closing Process.

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Maryland's new power of attorney law

September 27, 2010 Leave a comment

By now, most of us in the business sphere of residential real estate have become comfortably numb to additional laws and regulations. Starting with last year's revisions to the Truth-in-Lending Act (TILA) to this year's Real Estate Settlement Procedures Act (RESPA) reforms, many of us, despite the impact on our business operations, have hardly noticed many of the new legal reforms imposed by state governments.�

The most recent reform impacting Maryland residential real estate transactions comes to us compliments of the Maryland General Assembly. �

Effective October 1, 2010, individuals utilizing a power of attorney (POA) in order to consummate a real estate transaction should use the new Maryland Statutory Form Limited Power of Attorney; or a form that “substantially” conforms to the statutory form. Prior to this new law, an individual could use any specific power of attorney form that was acceptable to a title insurance underwriter.

The new statutory form not only requires the principal (i.e., the person granting the authority) to acknowledge before a notary public but also for the form to be attested and signed by two or more adult witnesses in the presence of the principal and in the presence of each other (one of the witnesses may be the notary). In addition, the new law allows the agent (a.k.a., the Attorney-in-Fact) to execute a certification form to certify the validity of the power of attorney and agent's authority.�

A title company must record the executed and notarized certification along with the POA form.

Because of the many associated pitfalls, one should always try to avoid the use of a POA. In those cases when it's absolutely necessary for a buyer or seller of real estate to use a POA, be very attentive to the legal requirements so as to avoid a closing delay. Federal Title's website provides more detailed information and instructions for using POAs along with the specific forms required in DC, MD, and VA.

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6 real estate headlines: 9-22

September 22, 2010 Leave a comment

A daily dose of headlines for real estate agents, mortgage lenders and consumers.

Miami-Dade pending home sales jump 33%
Miami Herald:
Pending home sales were up 33.7 percent in Miami-Dade County in August compared to the same month last year, according to data released Thursday by Miami Realtors.
Obama: Housing market faces tough decisions
Wall Street Journal
: Top members of Obama's economic team could soon be leaving, and he signaled he will press hard to raise taxes on wealthy hedge-fund and private-equity managers.
Buyers with hypersensitivity should raise concerns early
Washington Post: For people who are seriously allergic or sensitive to common household chemicals, buying the right home is fraught with difficulty.
Is that what recovery feels like?
The New York Times: The ugly fact is that serious financial crises take a very long time to resolve and result in a permanent fall in the standard of living.
The housing recession isn't over
CNN Money: The past three months may have been decent, but the future looks less promising. For the housing market, at least, it doesn't look like the recession is over just yet.

Great recession really over?
New York Observer: For housing to turn a decisive corner, the inventory overhang has to dissipate. That may take one to three years, according to real estate experts.

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Pending home sales up in Maimi-Dade County

September 21, 2010 Leave a comment

Pending home sales were up 33.7 percent in Miami-Dade County in August compared to the same month last year, according to data released Thursday by Miami Realtors.

Pending sales — signed contracts that have not yet closed — were up to 10,119 last month, compared to 7,570 in August of last year in Miami-Dade County. Month-over-month, pending sales were up 0.6 percent.

Full story… http://twlv.net/hPVTSQ

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Miami public hearing to focus on mortgage fraud

September 21, 2010 Leave a comment

Tasked with getting to the bottom of the factors that led to the Great Recession, the Financial Crisis Inquiry Commission is hosting a hearing at Florida International University, focusing specifically on predatory lending and mortgage fraud. The hearing, open to the public, will feature experts in the field of predatory lending, victims of mortgage fraud and law enforcement officials involved in protecting consumers.

“This is the first [hearing] specifically for homeowners,'' said Graham, a member of the 10-person commission created last year. “I hope they will come away with a better understanding of the pitfalls a potential homeowner or a current homeowner needs to be on the lookout for.''

The commission consists of former politicians, lawyers, business executives, and academics. Created in 2009, the group is gathering information about the wide range of financial missteps that led to the recession, and must report its findings to the President and the public by Dec. 15.

Full story http://twlv.net/f73CMd

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