Do I need to Homestead my property?

CFPB

In a distressed housing market, it is natural for homeowners to question the security of their homeownership. Attached is an informative piece on how a homestead declaration operates in the state of California.It is important to remember that a homestead provision offers homeowners only limited protection from a forced sale to satisfy certain debts.  As always, we kindly recommended you direct all legal/debt questions to the proper professional.

What is a Legal Description?

A Legal Description (also known as Land Description) consists of the written words which delineate a specific piece of real property.  In the written transfer of real property, it is universally required that the instrument of conveyance (in California, a Grant Deed) include a written description of the property. Attached please find examples of how legal descriptions appear on title documents of record.

CFPB

IMPORTANT TITLE TIP:  As title insurers, it is the Legal Description and the corresponding Assessor’s Parcel Number (APN) that we insure to, NOT the property’s address.  The Post Master and Tax Assessor employ two different means of classifying property.

Click here for sample

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Understanding a Trustee’s Deed Upon Sale

Title industry figures reveal that over the last decade forgery losses tripled, accounting now for over 20% of the losses paid by title insurers.

A Trustee’s Deed Upon Sale, also known as a Trustee’s Deed Under Sale or a Trustee’s Deed is a deed of foreclosure.  This deed is prepared after a property’s foreclosure sale and recorded in the county were the property is located.  The Trustee’s Deed transfers the property to the buyer who purchased the foreclosed property at auction.

California foreclosure law states that on the day that has been established for the sale of the property, and only after all publication period requirements have been met (NOD & NOT time periods), the property is sold to the highest bidder for cash for the full amount of the debt plus foreclosure fees and expenses. If no one bids at the Trustee’s Sale, the property automatically reverts back to the beneficiary (the bank) for the debt.

Special Note: The successful bidder of a Trustee Sale receives a Trustee’s Deed Upon Sale, which conveys full ownership of the bundle of rights but comes with no guarantee’s that the title is clean.  The property may be in default on taxes, have mechanic’s liens and/or other encumbrances.  Trustee’s deeds come with many risks and title insurance cannot be purchased to cover them.

Staying on Top of Your Short Sale Transactions.

We’ve prepared this checklist to help you have a smooth closing of your transaction and avoid those last minute snags.

Is the approval letter current? 
The approval letter must be current.  The letter will state the date by which the transaction must close and/or the date the funds need to be received.  If these dates cannot be met an extension will be required.  This may be in the form of a new letter or an email.  Send all of them to us and we can close.

Does the information on the approval letter match the transaction?
The approval letter(s) will list the accepted sales price and the anticipated buyer.  Be sure the information is current. Title cannot close the transaction unless the information on the letter matches the specifics of the file.

Are there approval letters for each loan on the property?
Approval letters are required for each loan.  If both loans are with the same lender they may issue one letter covering both loans.

Does the lender require an estimated HUD1 prior to closing?
In ALL cases the lender will require an estimated HUD-1 for approval prior to closing.  A copy of the approved HUD-1 must be submitted to title for each loan prior to closing/recording.

Is the seller allowed to receive funds?  
99% of the time the seller cannot receive any proceeds from the sale.  Some lenders are allowing Seller’s some money but this is rare.  It must be stated in the approval letter.

Have all the lenders conditions been met?  
It is very important to review the approval letters carefully.  Some lenders will require notarized signatures of all parties in the transaction including the agents.  If all conditions are not met and fulfilled according to the approval letter, the lender may reject the payoff and continue with the foreclosure, even after the close of the escrow.

Mortgage cancellation relief for home owners has been extended!

As seen on Reatlor.org

On Jan. 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama.

Below are a summary of real estate related provisions in the bill:

Real Estate Tax Extenders

  • Mortgage Cancellation Relief is extended for one year to Jan. 1, 2014
  • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  • 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
  • The 10 percent tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Permanent Repeal of Pease Limitations for 99% of Taxpayers

Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers.  These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000.  These thresholds have been increased and are indexed for inflation and will rise over time.  Under the formula, the amount of adjusted gross income above the threshold is multiplied by three percent.  That amount is then used to reduce the total value of the filer’s itemized deductions.  The total amount of reduction cannot exceed 80 percent of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years.  They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012.  Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15 percent for those the top rate of $400,000 individual and $450,000 joint return.  After that, any gains above those amounts will be taxed at 20 percent.  The 250/500k exclusion for sale of principle residence remains in place.

Estate Tax

The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax.  After that the rate will be 40 percent, up from 35 percent.  The exemption amounts are indexed for inflation.

Blog post by: Realtor.org

Summary of the National Mortgage Settlement Act

In February 2012, the United States Department of Justice announced a settlement with five major banks accused of robo-signing and other fraudulent foreclosure practices. Here are the major details of the settlement:
What’s the Settlement Worth?:
Roughly $25 billion dollars (with additional $4 billion pending the sign-on of 9 small banks).
Participating Banks:
Ally/GMAC – Bank of America – Citi – JPMorgan Chase – Wells Fargo
Where the Money Goes:

  • $5 billion consisting of $2000 payments to borrowers who were foreclosed on between Jan. 1, 2008 and Dec. 31, 2011 and who were subjected to the fraudulent practices.

$20 billion will be used towards foreclosure alternatives:

  • $10 billion will go to borrowers who are delinquent on their mortgage.
  • $7 billion towards assisting homeowners through short sales, forebearance, relocation assistance, or other alternatives.
  • $3 billion will be spent helping borrowers who owe more than the value of their home to refinance.

Deadlines (From March 2012):
30 – 60 Days: Negotiators will select an administrator to handle logistics of the settlement and monitor compliance.
6 – 9 Months: The settlement administrator and attorneys general will identify homeowners eligible for immediate cash payments and notify them by mail.
3 Years: The settlement should be completed by the banks.
Additional Notes:
Robo-signing practices are forbidden.
Dual-track Foreclosures (working with the homeowner on modification of the loan while simultaneously pursuing foreclosure) is forbidden.
Fannie Mae and Freddie Mac insured loans are not impacted by this settlement.
Special recourse is in place for Servicemembers who were charged over 6% interest rates after a valid request to lower their rates under the Servicemembers Civil Relief Act (SRCA) or who were wrongly foreclosed on.  Any compensation by the banks to Servicemembers will be in addition to the core $25 billion settlement amount.
Money will be distributed differently for different states.
• California will receive the most of any state: $12 billion
• Oklahoma was not a party to this settlement, creating their own agreement worth $18.6 billion.
What does this mean for you the agent?
Banks will be open to exploring more options
Banks are incentivized to push completed paperwork through.
Phone numbers to help you research:
• Ally/GMAC: 800.766.4622
• Bank of America: 877.488.7814 (Available M-F 7am-9pm CT & Saturdays 8am-5pm CT)
• Citibank: 866.272.4749
• JP Morgan Chase: 866.372.6901
• Wells Fargo: 800.288.3212 (Available M-F 7am-7pm CT)
Websites that can help you do your research:
• Official Site for the Settlement: http://www.nationalmortgagesettlement.com
• To locate Attorney General in your state: http://www.NAAG.org
• To determine if a loan is ineligible due to insurance by Freddie or Fannie:
http://www.fanniemae.com/loanlookup
http://www.freddiemac.com/mymortgage

Information source is www.nationalmortgagesettlement.com.

Click here for the fact sheet.

Expiring Mortgage Debt Relief Act Fuels Strategic Default: Survey

As seen in DSNEWS.com

A foreclosure prevention agency found that the pending expiration of the Mortgage Debt Relief Act of 2007 is prompting struggling homeowners to strategically default on their loan.

YouWalkAway.com conducted a national survey and found 34 percent of respondents indicated that the act, which is set to expire December 31, 2012, contributed to their decision to walk away sooner rather than later from their property. Those surveyed were YouWalkAway.com clients who were actively considering or navigating through the foreclosure process.

The Mortgage Debt Relief Act releases homeowners from the obligation of paying taxes on mortgage debt forgiven from a short sale, foreclosure, or modification. Taxpayers are eligible if the property is the primary residence.

For entire article click here

Bank of America offers relo assistance to short-sellers

As seen in Inman.com

Bank of America says it will provide up to $30,000 in relocation assistance to delinquent borrowers who work with the bank to obtain a preapproved short-sale price before submitting purchase offers.

Short sales must be initiated by the end of this year and close by Sept. 26, 2013, to be eligible for the payments, which will range from $2,500 to $30,000 at the completion of a qualifying short sale. Payments will be determined on a case-by-case basis using a calculation that includes the value of the home, amount owed and other considerations, Bank of America said in announcing the program.

Click here for full article.

BofA to Offer Principal Reductions of More than $100K

As seen in DSNEWS.COM

Some Bank of America borrowers may be in for principal reductions in amounts exceeding $100,000, according to the latest developments in the settlement the bank and four other large servicers made with state and federal regulators.

Of the five servicers participating in the settlement, BofA is set to pay the largest portion of the total $25 billion settlement. The bank will pay $3.24 billion to the government and $8.58 billion to borrowers.

Of BofA’s total, $1 billion is part of a separate settlement regarding loan origination issues for Countrywide, which BofA acquired in 2008.

While the other four servicers in the national settlement are being required to diminish principal so underwater borrowers have loan-to-value ratios of 120 percent or less, BofA will be reducing principal for about 200,000 homeowners to fall in line with current market values.

For some deeply underwater borrowers, this may result in reductions of more than $100,000.

The expanded principal reductions may prevent BofA from paying $850 million in penalties, according to the Wall Street Journal.

Fitch Ratings responded to the news stating that the 200,000 principal reductions will be “neutral to negative for some RMBS bondholders and potentially beneficial for the bank.”

Fitch suggests the loans most likely to qualify for the extended principal reductions will be those originated between 2005 and 2007.

“Because the bank has already reserved for penalties, any reversals could help BAC’s income going forward,” Fitch stated. “While the agreement will help the bank reduce the amount of penalties it owes over time, the aggregate best case benefit is moderate from a financial perspective.”

Click here for entire article