July 21, 2010
The Kirsh Law Firm, along with APGFCU and Millennium Brokers/Clark Turner, is hosting this month's Cecil County Board of Realtors Card Exchange on Wednesday, July 28 from 5-7PM at the Wellwood Restaurant in Charlestown, MD. Please join us for food, prizes and fun! Open to all CCBOR members and their guests.
July 8, 2010
ATTENTION DELAWARE REAL ESTATE AGENTS. Delaware Withholding Taxes are now a reality. HB 349 was signed into law with an effective date of January 1, 2011. If you have a seller who is not a Delaware resident, be prepared for the State to keep some of your client's sales proceeds. See our April 14 update (below) for more information.
July 7, 2010
SCAM ALERT. At least 2 Cecil County realtors were targeted for a scam in which an out-of-the-Country buyer (both times purportedly based in Canada) agrees to buy a property. The "client" sends a cashier's check for a large deposit. Then the client elects to terminate the contract and asks for the deposit to be wired back to him. The checks, which are drawn from legitimate banks in Canada and payable from legitimate companies (or law firms), are counterfiet. The scammer hopes the wire will be sent before the realtor's bank notifies them that the check is bad. Copies of the two checks are below. We identified the scams before the checks were deposited. BE CAREFUL OUT THERE. If it sounds too good to be true, it probably is.
June 14, 2010
ATTENTION MARYLAND REAL ESTATE AGENTS! Starting October 1, 2010, a contract for the sale of residential property (1 to 4 units) must include a notice that, if the property is sold between January 1 and June 30, the buyer has 60 days from the settlement date to appeal the property's assessed value or tax classification. See recently enacted House Bill 6 for more information. HB 6
June 14, 2010
If you are in the real estate business in New Castle County, then you probably know that the County's records on building permits for basements, decks, and other minor improvements constructed in years past are somewhat light. This can be a problem if you are selling a house with a finished basement, deck or other limited improvements. The County recently adopted an excellent policy concerning any improvements made prior to 2002. If the improvement were built before 2002 and do not pose a safety or health risk, the County may issue a Certificate of Awareness, which eliminates the need for a building permit! To see the full policy, click on the following link. Certificate of Awareness
April 14, 2010
Delaware Real Estate Withholding Taxes are one step closer to reality! Speaker of the House Bob Gilligan and President Pro Tempore of the Senate Anthony DeLuca introduced HB 349 which requires non-resident persons, corporations or pass-through entities that sell real estate owned in this State to declare and pay their estimate of the tax due on the gain recognized from the sale before the deed will be recorded. The bill has already been released from the House Revenue and Finance Committee. Clink on the following link to see the text of HB 349: HB 349
April 5, 2010
The Obama Administration’s guidelines on foreclosure alternatives go into effect today, April 5, 2010. The guidelines, known as the Home Affordable Foreclosure Alternatives (“HAFA”), have the goals of promoting short sales and deeds-in-lieu of foreclosure when mortgage modification is not appropriate. HAFA attempts to achieve its goals by standardizing and simplifying the short sale process and providing financial incentives for mortgage servicers and home owners to complete a short sale as opposed to a foreclosure.
HAFA requires loan servicers to adopt a written HAFA policy consistent with their investors’ guidelines. The policy will describe what the servicer will accept concerning short sales proceeds, acceptable closing costs and other financial matters. These terms are determined by the servicer, but once the policy is adopted by the servicer then the servicer must adhere to the policy consistently.
To be eligible for HAFA, a borrower must meet the basic criteria for the Home Affordable Modification Program (“HAMP”). The basic criteria are:
- The property must be the borrower’s primary residence,
- The monthly mortgage payment must be at least 31% of the borrower’s gross monthly income,
- The principal balance of the mortgage must be less than $729,000, and
- The mortgage must have originated prior to January 1, 2009.
HAFA also states that in order to participate in HAFA the homeowner must not qualify for a loan modification under HAMP, have failed to successfully complete a HAMP modification trial period, or be delinquent on a HAMP modification. However, it appears that a servicer has the ability to offer a short sale to a home owner who has not gone through the modification process if permitted by the servicer’s HAFA policy.
In order to begin the short sale process, the home owner must request a short sale. Once the home owner requests a short sale the servicer must consider the short sale within 30 days. As part of the servicer’s consideration of the short sale, the servicer must confirm the home owner’s HAFA eligibility, determine whether the loan meets the servicer’s short sale criteria under the servicer’s HAFA policy, and determine the minimum acceptable net proceeds. If the servicer concludes that a short sale is appropriate, the servicer must send a Short Sale Agreement (SSA) to the home owner. The SSA is a straight-forward standardized form that outlines the terms under which the lender will accept a short sale. A copy of the SSA form can be found at www.HMPadmin.com.
The home owner has 14 days to sign and return the SSA to the servicer, after which the home owner must list the property with a realtor. When a buyer is found, a contract is signed and a Request for Approval of Short Sale is sent to the servicer within three days. The servicer must then respond to the request within 10 days of receipt. Settlement can then occur.
Junior lien holders (second mortgages, etc.) still have to be dealt with. Under HAFA, junior lien holders will be paid 3% of their debt (up to $3,000 maximum for all junior lien holders.). Servicers may pay more than 3%, but will not receive reimbursement under HAFA. In order to receive the funds the junior lien holder must agree to release the home owner from all liability. Junior lien holders are not required to consent to a short sale.
Investors will receive $1,000 from HAFA, but must agree to release the home owner from all liability. Servicers will receive $1,000 under HAFA for administrative and processing costs. Home owners will receive $1,500 for relocation costs.
If the home owner is not eligible for a short sale under HAFA, the servicer can still agree to a short sale but the transaction will not be eligible for the HAFA financial incentives.
For more information go to www.HMPadmin.com.
March 16, 2010
**Real Estate Witholding Taxes Coming to Delaware?** Delaware officials have been circulating a proposed bill that would require non-residents to pay a witholding tax upon the sale of Delaware real property. This would affect the sale of vacation homes and investment properties by individuals and entities who are not Delaware residents. The current draft of the bill, which has not yet been introduced, would require the non-resident seller to calculate and pay taxes on anticipated gains. The current draft of the legilation would extend to members of pass-through entities (such as limited liaility companies and limited partnerships) who are not Delaware residents. In other words, if the seller is a Delaware limited liability company, but one of the members is not a Delaware resident, then that member would have to calculate and pay the tax. The tax would have to be paid before the deed is recorded.
This concept is not novel and, given today's economic climate, we certainly understand the State's desire to collect applicable income taxes from non-residents. Maryland already has a similar law and it works fairly well. However, the current draft of the proposed Delaware legislation is a bit more cumbersome in that it requires a seller to make tax calculations prior to the sale, which can present a challenge to a seller who does not have a tax advisor. Maryland's law, on the other hand, has a safe harbor of 7.5% (8.25% for entities) of the net sales price.
We will post updates when and if this legislation is introduced.
March 15, 2010
**USDA Loan Program** USDA recently announced that its popular loan program will likely run out of funds by April. Unlike in previous years, USDA will NOT issue conditional commitments because officials are not sure when they will receive additional funding. Some lenders are halting all new USDA loans as a result. If you are a buyer who is counting on a USDA loan, please check with your loan officer to see if your loan will be affected.
March 13, 2010
The Federal Tax Credit for Home Buyers Expires April 30! Just a reminder that buyers must sign a purchase contract by April 30 (and settle by June 30, 2010) in order to qualify for the federal tax credit. The credit is $6,500 for repeat buyers and $8,000 for first time home buyers. See www.federalhousingtaxcredit.com for more information and a terrific FAQ section. Don't leave this money on the table!
March 11, 2010
**SHORT SALE ALERT** New federal Home Affordable Foreclosure Alternatives ("HAFA") guidelines go into effect April 5. Although not perfect, these guidelines might help sellers obtain short sale approval from their lenders. One key is that the seller must apply for a loan modification under the Home Affordable Modific...ation Program first. If the seller does not qualify for a modification, or fails to complete a modification, then they may be eligible for a HAFA short sale. See the attached article for a brief description of the program.
HAFA short sale rules may help sellers |
