10 Years Ago Today - Sound Familiar?  "Incomes Flat but Americans Still Buying"

  • By David Soble
  • 14 Jun, 2017

I actually cut out and saved this article from the August 27, 2004 USA Today because at the time, this tag line struck me funny.

It  foreshadowed the things to come....

Americans hang on to bigger, better lifestyles

Incomes Flat, but people still buying homes, cars

By Haya El Nasser and Paul Overberg, USA TODAY
Americans' passion for living large is growing, even if their incomes aren't, a Census survey released Thursday indicates.

Since the beginning of the decade, their homes have gotten substantially bigger and more expensive. Almost half of all homes, about 46%, have six or more rooms. More than 15% have eight rooms or more.

Almost one in five families have three or more cars. And more workers are opting out of carpools and mass transit to drive to work alone.

But this lifestyle comes at a cost when incomes are stagnating and housing prices are soaring.

In a separate report on poverty and income, the Census Bureau reported that median household income, when adjusted for inflation, remained flat last year. ( Related story: Poverty rises in USA )

But the survey of how Americans live finds that more than 22% of homeowners spent at least 35% of their income on housing in 2003, up from 19% in 2000. And 38% of renters spent as much, up from 33% in 2000.

"Our wages stopped growing, but our wants kept going," says Robert Lang, a demographer who heads the Metropolitan Institute at Virginia Tech.

"People will just suffer a little and pay a bigger mortgage to hold on to their dreams," he says.

The latest snapshot of American life comes from the Census Bureau's American Community Survey. The annual survey of 800,000 households asks the same questions as the Census that is taken every 10 years. The 2003 numbers offer a look at how the nation has changed in the wake of recession and terrorist attacks, and they hint at social trends shaping the decade.

"Even though the economy took a dive, the initial shock of 9/11 has worn off," says William Frey, a demographer at the Brookings Institution in Washington. "People are buying bigger homes, more cars."

Riding record-low interest rates, housing prices have skyrocketed. The percentage of homeowners who live in houses valued at more than $500,000 doubled since 2000, to more than 6%.

And one in eight homeowners live in homes valued at $300,000 to $499,999.

About half still live in homes that cost less than $150,000, the typical price range for working-class families and young couples buying their first homes. But that number has dropped sharply from almost 64% in 2000.

Even in North Dakota, which has the lowest housing value in the nation, prices rose. The median value of a house there went up 10% to $81,796 since 2000. Nationally, the median value rose 22% to $147,275.

The survey reflects other changes:

• The percentage of homes without telephone service rose to 3.8%, from 3% in 2000, which reflects the increased dependence on cellular phones.

"A lot of dorms have no phone service now," Lang says. "Kids go to college, and not one of them has a real phone. They're all cells."

• The educational level is on the rise. More than a quarter of the population has a bachelor's degree or higher. And the percentage of high school graduates continues to climb, up 2 percentage points to 83.6%.

The ratio of college grads to high school dropouts has increased. There are 1.62 college grads for every dropout, up from 1.35 in 2000.

This "brains-to-brawn" ratio reflects the shift from a blue-collar to a knowledge economy, Frey says.

• Americans are spending about the same 24 minutes commuting to work, but almost 78% are driving alone, up from 76.3% in 2000. The exception is so-called "exurban" counties across the USA, such as Pasco County, north of Tampa, and McHenry and Kane counties outside Chicago. They experienced significant increases in commuting times.

Use of other forms of transportation, from walking to riding a bus, dropped. But the percentage of people working from home increased slightly.

• All racial groups are growing, except for whites who are not Hispanic. Whites make up 76.1% of the population, down from 77.3% in 2000. They're expected to make up half of the population within 50 years.

• The foreign-born population continues to grow but so does the share of immigrants becoming citizens: 41.4%, up almost 1 percentage point since 2000.

Because naturalized citizens can vote, there has been a push to encourage naturalization before the upcoming presidential election.

• Veterans, who have taken center stage in the race for the White House, make up a relatively large share of several battleground states such as Maine, New Mexico, Florida, Nevada and Arizona.

• Although still in the minority at 48.9%, men make up a growing share of the population. Frey attributes the change to male-dominated immigration flows from Latin America.

By David Soble 05 Nov, 2017

I recently had a client who came to me complaining about an investment home that their 74 year old father had owned. He had sold the property to a real estate agent’s son for substantially below market value. Considering the neighborhood, the overall condition of the home and the current and active market conditions, the low sales price was concerning. When I called the agent to inquire further, she said that they had negotiated a fair price and that my client’s father “knew what he was doing.”

Upon further investigation, I learned that my client’s dad had a serious back injury just months before the transaction closed and was pretty much ‘homebound,” recuperating. He did not have a care giver and had no family members living nearby. He also relied on the monthly rental income of the home in question. Finally, I learned that the buyer, besides being the real estate agent’s son, was a landscape contractor for the rental property. Soon after the dad’s surgery, the buyer had become a frequent visitor to the father’s residence.  Because of the circumstances surrounding the real estate transaction, I began to suspect that my client’s father was a victim of undue influence or financial fraud.

 According to a recent survey conducted by the American Banker’s Association Foundation, Americans over the age of 50 account for 70 percent of all bank deposits, and 20% are estimated to be targeted by financial fraudsters. (ABA Banking Journal, November 1, 2017). Both the AARP and the Better Business Bureau say that seniors are more vulnerable to financial scams because of their physical frailty, isolation, or poor mental recall. In incidents where real estate is involved (often the most valuable asset that seniors own) the results are most costly and disastrous.

Here are 5 things that seniors and their family can do to protect their real estate and property interests from financial fraudsters:

 1. Tax Statements and other bills. Regularly review all of your real estate tax statements and other documents. While a tax statement does not definitively document property ownership, it will usually name the "owner? of record. So twice a year, when the tax statements issue, verify the name of who is listed as owner. Other items to monitor in the mail: bank statements, unpaid bills, utility shut off notices or worse, eviction notices.

2. Create a trust. Put the real estate in a trust on a senior’s behalf. Unscrupulous. high pressure real estate sales agents or investors often try to weasel a power of attorney, will, other legal document from unsuspecting seniors. These documents give them access to a senior's property. They get seniors to sign these documents through deception, and intimidation. But when a property is placed in a trust on behalf of a senior, it is the trustee who must endorse the sales or other legal documents for a real estate transaction to be legally binding. This arrangement would have served my client’s father well had he had a trust and at the very least, slowed down the transaction.

 3. Open and review the mail. Fraudsters can tap into equity lines long thought to be dormant by a senior home owner. Caregivers or family members should monitor checking accounts and be alert to large deposits and withdrawals in a senior’s bank account. Always encourage the use of checks or credit cards instead of cash. This leaves a paper trail. Most importantly, verify signatures on checks or other documents and report any unauthorized or suspicious signatures.

 4. Use monitoring services. Consider using real estate monitoring and credit monitoring services. There are services that monitor property transfers and track unauthorized liens in the county public records. Credit monitoring services, such a Lifelock, are also effective to protect against credit card forgeries or other accounts opened fraudulently. With the recent Equifax hacking, it is a good time to pull your senior's credit report to ensure they are not victims of identity fraud.  

 5. Strength in numbers. Collaborate with a senior's caregiver, family members and financial and legal advisors.  Fraudsters take advantage of isolated seniors who may not have a caregiver or family member living nearby. Encouraging good communication amongst a senior’s family members and / or advisors fosters a layer of protection against fraudsters. The more professionals who work on behalf of a senior, the better.

For more information on this topic, see the Better Business Bureau, or the Federal Bureau of Investigation: See Elder Financial Fraud

 About David Soble:  Since 1990, David Soble   has represented lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career. He has over 27 years of real estate and loan law experience to support his good-tempered cynicism.


By David Soble 29 Oct, 2017

 September 29, 2017  

CLEVELAND, Ohio -- In the week since Equifax disclosed its horrific data breach, much has been written about what to do. Now, it's time to talk a bit about what NOT to do:

Don't think that because you've never heard of Equifax before, or never agreed to give them your information, that Equifax doesn't have it. They don't need your permission to compile your information. Banks and other creditors furnish all of your info to the credit bureaus. What the banks don't have is obtained by the bureaus from court records and other public records.

Don't click on links you get by email or from your friends that say it's a link to help you figure out whether your SSN was compromised. There are links being circulated by data theft rings or by people who just want to cause mischief. Don't click on links from sources you don't trust. The official link being provided by Equifax is www.equifaxsecurity2017.com  Your best bet: Type this address in your browser yourself, rather than clicking on any link, including mine.

Don't feel safe if Equifax says your personal data wasn't compromised. Some people type their information into Equifax's online tool and are told their information wasn't stolen. Then they try again the next day and are told their information was indeed stolen. Just assume your information has been compromised and take steps to protect yourself.

Don't believe that a credit freeze, credit monitoring and a fraud alert all accomplish the same thing:

  • A credit freeze locks your credit file to creditors and should keep bad guys from taking out new loans or opening credit cards or buying cellphones in your name.
  • Credit monitoring doesn't keep thieves from using your stolen information; it simply notifies you after  something bad has happened.
  • A fraud alert placed on a credit file cautions creditors that the person's information may have been stolen. But many creditors don't even check this; they're not required to. It's like pretty please.
Don't provide your credit card number to Equifax in connection with any of its services. The credit freezes are free through Equifax through Nov. 21. Its other protection services are free for a year. For now, you'll have to pay $5 in Ohio to freeze your credit files through TransUnion and Experian. The lesser-known fourth bureau, Innovis, doesn't charge a fee. There's regulatory pressure on Equifax to cover everything or reimburse people.


Don't think if you freeze your credit file that it also covers your spouse or kids. Couples have different Social Security numbers, so do each of the kids in a family. A freeze affects only one SSN, not an entire household.

Don't click on ads you see online or links you see in news stories or anything like this, not even my links! Re-type the addresses in your browser. Only click on links when going directly to sites like Equifax, TransUnion, Experian or Innovis.


Don't provide information to entities that send you emails or text messages or letters, or call you on the phone. They're most likely imposters. Fraudsters connected with this breach may try to lull you in because they'll already know your SSN, your date of birth, your home address and a whole bunch more. Reputable companies don't contact you out of sky blue and ask for personal information. Call companies using on a number your find independently (back of credit or debit card, bank statement, company website, etc.)

Don't worry about changing the numbers on your deposit accounts, like checking and savings. These numbers are not in your credit files. But you still need to monitor deposit and investment accounts more closely in case thieves use your stolen information to impersonate you and steal your money.


Don't be scared into not  freezing your credit. For example, TransUnion is working hard to discourage credit freezes. If you contact them online or by phone, TransUnion will try to convince you to "lock" your credit instead of freezing it. They gush that it's free and easy, while cautioning that freezes can be a hassle and cost money.
I think all of the bureaus may start pushing some kind of "lock" instead of a freeze because freezes are regulated by law, locks aren't. Plus, if you're file is frozen, the bureaus may not be able to sell your information to creditors and other companies for those pre-screened credit offers and other marketing purposes.
If you want to freeze your credit, then do it. Don't be talked out it by a pushy credit bureau.

Don't believe that if you freeze your credit that you can just kick back and relax. About 88 percent of fraud involves existing accounts, not new ones. You still need to regularly monitor your credit card, debit card and bank accounts in case someone has your stolen information to gain access. Sign up through your bank and credit cards for email or text alerts so you're notified about activity. Also, monitor your accounts at least once a week online.


Don't use data that was in your credit files as part of any online user name or password, for your email, financial accounts, Facebook, etc. Not your date of birth, not a past phone number or street address, nothing.

Don't think that if you froze your credit files years ago that you're safe from this breach. The theft involved Equifax's internal files, not just the ones available to creditors. The information stolen could be used in all sorts of nefarious ways, including to answer security questions for bank, credit, insurance and investment accounts.

Don't give up. If you've tried to freeze your credit files and haven't been able to get through, wait a week or so. The bureaus have been inundated with volumes that their websites and customer service call centers were never designed to handle. Go on to other protection tactics like signing up for alerts through your bank and credit card, making sure your online passwords are secure, etc.

Don't go to any other source for a free copy of your credit report except www.annualcreditreport.com  or by calling 1-877-322-8228. You will NOT be asked for a credit card or debit card number. Or you can fill out a paper request and mail it certified to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, Georgia 30348-5281. Other web sites may say they're free, but there most likely is a free trial period before you have to pay for credit monitoring, or the site may just be a total scam.

Don't freeze only your Equifax credit file. Even though Equifax is the one that suffered the breach, the information stolen from Equifax could be used to open accounts with companies that only check your files through TransUnion or Experian. Truthfully, most creditors don't check all three of your files, unless you're getting a mortgage, because most of your information is the same on all of them.

FREEZING YOUR CREDIT FILES

Equifax by mail:
Write a short note that you're requesting a free credit freeze and include your name, address, Social Security number and date of birth. Mail your request through certified mail to Equifax Security Freeze, PO 105788, Atlanta, GA 30348.

Here are the phone numbers to call
Equifax 800-685-1111
TransUnion 888-909-8872
Experian 888-397-3742.
Innovis: 1-800-540-2505 (a lesser known bureau, used more for business accounts)

Or you can go online:
https://freeze.transunion.com/sf/securityFreeze/landingPage.jsp
https://www.experian.com/freeze/center.html

By David Soble 15 Aug, 2017

The “ Great Recession ” in 2008 has had a lingering effect on how banks lend money to small business owners  and entrepreneurs.  Gone are the days when small businesses have  fast access to bank credit at competitive interest rates. Instead, alternative non-bank lenders, led by companies such as On Deck, Yellowstone, and Cash King, are filling the lending void, growing rapidly on the backs of unwary small business owners.

Here are 5 things small business owners should consider before taking out an “alternative” business loan:


1. Rates That Make Former Sub-Prime Mortgage  Lenders Blush.  High rate loans are the rule rather than the exception for alternative lending sources.  These lenders are not banks and therefore are not federally regulated, unlike companies that provide loans to consumers.   Instead these loans are often  funded by private investors selling credit at effective annual rates that commonly exceed 30%.

2.  Non -cancellable Daily ACH’s.  Since alternative business lenders don’t look at individual or business credit ratings, their risk of not getting paid back is high. They rely on a business’s cash flow only and expect to be paid daily rather than monthly, by using a non-cancellable automatic payment deduction (“ACH”) out of the borrower’s account. The lender can immediately call a loan in default should a business owner fail to replenish their designated account. This exposes the borrower to litigation and further expenses.  Borrowers should be confident that they can meet their daily, rather than monthly, obligations.

3. Arbitration.  Alternative loan contracts generally have expensive arbitration clauses where the debtor agrees to forgo the traditional legal process for a binding decision from designated arbitrators. Arbitration clauses are not favorable to borrowers. They often dictate where a legal case can be heard, usually in a creditor friendly state far removed from the borrower. This creates added expenses to a case even before it’s heard on the merits.   Arbitration decisions usually cannot be appealed (“ binding arbitration ”).  Finally, professional arbitrators have been criticized for having biases in favor of lenders since successful arbitrators make their living from work referred to them by the lending industry.

4. Consent Judgments.Many lenders have business borrowers essentially endorse a “consent judgment” before the the ink is even dry on the original lending agreement.  In a consent judgment, the borrower admits to a default and to the terms of a judgment against them, waiving any legal protections that they might otherwise have.    Lender’s will say that this instrument is harmless and only used in the event of an actual default.  It’s a disturbing trend because it sets the borrower up for failure and legally neutralizes them. (Imagine a hospital locating a corn beef stand next to the cardiac care unit or meeting a bank’s REO bank officer right after you close on the purchase of your home.)

5.  Personal Guarantees.While the business loan is given to the business in name, the small business owner often personally guarantees the payments in the event that their business fails. Personal  loan guarantees are an integral part of the lending agreement, so borrowers should think carefully before signing. Lenders will look to the former business owner to make payments long after a business closes it doors.

Alternative business loans appeal to business owners because the loan process is much  faster than traditional lending sources (some lenders say a loan approval can be given in less than 48 hours) and there are no personal credit requirements.  If you don’t need the money  “yesterday” (these type of lenders anticipate that you do) then one should seek assistance through a non-profit dedicated to helping business owners in all areas of business and finance, a SBA lender ( Small Business Administration ), or the assistance of a knowledgeable business attorney who can help you negotiate a far better loan agreement.

About the Author:  

 Since 1990, David Soble  has represented lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and contract issues. He has been involved in thousands of real estate transactions and has been responsible for billions in real estate loan portfolios throughout his career. 

By David Soble 15 Aug, 2017

According to business periodicals such as  Entrepreneur Magazine , Inc. and  Forbes , with the beginning of each year comes an increase in new business start-ups.  Perhaps this is because people are seeking an increase or alternative means of income,  job independence, or a more rewarding career. Whatever the reason, since the  Great Recession  of 2008, new business filings trend upwards this time each year.  

Regardless of the time of year,  new business owners tend to overlook 3 important considerations that expose them to financial risk and legal liability.  They are:   

1. Meet  Filing  Requirements.  Corporate filing and licensing is a mundane but necessary task.  Without proper paperwork, a business may not have “standing” to bring a suit in court because they are not recognized as a legal entity authorized to perform business.  Seeking to collect past monies owed or to enforce a contract?  “ Lack of standing ” is a valid defense to a lawsuit  On another note,  if you intend to conduct business in another state, you must also meet that state’s corporate filing requirements as well.

2.Create A Meaningful Operating Agreement.   Creating a business entity without an operating agreement falls short of good business planning. Failing to detail your own operating agreement generally means that in the event of a dispute or corporate governance problem,  less favorable ‘boiler -plate” language from a legal form “factory” or state statutory language could be substituted and control how your business relationships operate -contrary to your initial intent. This is especially true where multiple owners are involved as disputes will  invariably arise.  

If a business relationship falls apart (The  Small Business Administration  statistics state that one-third (⅓) of all new businesses close in the first 5 years) it’s best that business owners have predetermined  termination terms in their operating agreement, as opposed to having terms imposed upon them by statute or third parties such as an arbitrator.

3. Read and Understand  Contract  Terms .  Conducting business on a handshake, however sincere, is a thing of the past and impractical in today’s fast -paced global economy.  Business owners encounter contracts in all forms: service agreements, leases, loan agreements, guarantys,  joint ventures, co-marketing, purchase agreements and client agreements are to name but a few. Reading through just one of these documents can be daunting and time consuming.  Most “boiler -plate” contracts are drafted by attorneys and have extensive and onerous “default” provisions.  Don’t “ sign on the bottom line” until you have read your contract for meaning.  If you don’t understand how a contract provision affects you and your legal rights, then by all means consult with your own attorney–not a real estate or leasing agent,  not your cousin in law school, and certainly not ‘their’ attorney.  Consult with your  O-W-N  attorney.  And do it before, not after, you sign a legally binding document.

Never is the old adage, “an ounce of prevention is worth a pound of cure” more appropriate than in today’s business climate.  Experienced business and real estate attorneys regularly address countless variables experienced by businesses just like yours.  Many attorneys will provide new entrepreneurs with a free initial consultation and it’s a solid business decision to take such a meeting.

About the Author:  Since 1990, attorney David Soble has been responsible for billion of dollars in real estate and finance matters representing the interests and legal needs of both small business owners and consumers alike. David can be reached at 888-789-1715.

Disclaimer: You should not rely or act upon the contents of this article without seeking independent legal advice from a qualified attorney.

By David Soble 01 Aug, 2017


I just read about a tragic and avoidable event that happened last week. According to The Washington Post, a Manhattan couple jumped to their deaths from the ledge of their 9th floor apartment. The couple, a chiropractor and his wife, reportedly left a suicide note citing their ever increasing debts as the reason for their despair.  Apparently, they were good people; They were well liked by their friends and patients. They are survived by their two children. ( See The Washington Post, July 29, 2017 .) 

After reading this article, I was immediately taken back to the events of 2008 and the devastating financial wake of the Great Recession. Many businesses and lives were ruined - all because of debt.  I know. As the chief enforcer / attorney for several national lending institutions, I was in the thick of it.  I was responsible for the collection of billions in defaulted loans and my job was to vigorously pursue delinquent debtors and ‘cure’ non-performing loans.

Even in today’s economy there are still people who struggle financially for a number of reasons that include, but are not limited to, underemployment and stagnant wages.  Here are 5 things I wish to impart to those who are burdened with mounting debt and the ever-advancing debt collectors:  


1. Communicate. While it may not feel good,  keeping the lines of communication between creditor and debtor benefits both parties.  Believe it or not, banks and creditors want to work out payment arrangements as opposed to litigation.   Ignoring and avoiding creditors gives a creditor no alternative but to escalate a collection action. This increases debtor anxiety and reduces opportunities for a reasonable settlement.

2. Contact a professional early in the process.

For those who are uncomfortable with negotiations or confrontation,  contacting a professional about a debt issue may be the answer.  For small loan balances, reach out to a non-profit credit or debt counselor early in the process. Larger note obligations or guarantees require the attention of a seasoned professional.

I am frequently retained by clients only after they have already been “steam rolled” by their creditor. These clients thought they could “go it alone.”  I can tell you that cleaning up a legal and financial mess after the fact is far more challenging and expensive than when someone comes for legal advice at the onset of their problem.  (See my article, “Just What Is The Law of Holes?” at  http://bit.ly/prholes ).  Dealing directly with a creditor without proper representation is not the best approach and most often costs a debtor more money in the long term.

3. Don’t bring a knife to a gunfight.

The American Bar Association lists over 75 practice areas of law. Not all attorneys specialize in debt or loan law.  Speaking with the appropriate attorney can prevent costly mistakes. While at the banks,  there were many occasions  that I had the pleasure of sitting across the table from a debtor’s divorce attorney or personal injury attorney. It made my job easy and I welcomed them.  The old adage,   “don’t bring a knife to a gunfight” is never more true than in lending and finance law where debt agreements are usually complex and highly regulated.

4. Beware of  scam artists - they’re everywhere .

Avoid individuals and companies that aren't properly credentialed and that have not been rated by their industry peers.  In fact,  when it comes to consumer issues, almost all professionals working with the public require a state or federal license. Verifying an adviser’s competence and reputation should be a debtor’s top priority.  Today as  I sit to write this article,  The Washington Post features an article about how a California modification scam recently swindled thousands of homeowners out of their home equity, and many lost their homes because of it. Remember:  “Trust but verify.”

5. It really will be okay.   Sure it sounds simplistic and trite, but with the right professional guidance and some patience,  the sting of debt issues subsides over time. There are many ways to successfully approach serious debt issues without filing bankruptcy, such as seeking a court ordered installment payment plan, graduated settlement options, structured debt forgiveness,  and being declared ‘uncollectable.”   To learn more about these and other options one has to actively seek help. (According to a CreditCards.com poll, 85 percent of respondents said they were unlikely or somewhat unlikely to talk with a stranger about credit card debt -- a subject that is more taboo than religion, politics, salary and love life details.)  

Conclusion. Nothing is more professionally and personally gratifying than helping a business owner or individual through the darkness that is mounting installment or revolving debt. I have ushered thousands of people through their debt issues, without bankruptcy, and after they successfully enter into a negotiated settlement, the difference in their demeanor is truly night and day. Once debt problems are resolved, it is as if you can see the heavy financial burden lift off a client’s shoulders. I only wish the poor couple from Manhattan could have known this relief as well. R.I.P.

About the Author: Since 1990, Michigan attorney David Soble has represented lenders, loan servicers, consumers and business owners with legal matters related to finance and real estate.  He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his clients.

Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.

 


By David Soble 30 Jun, 2017


 This week, the FBI and local law enforcement officials raided the business offices of realtor Ralph Roberts .  Roberts is the subject of an ongoing criminal investigation and several news probes.  In controversy is his alleged ‘misuse’ of the Michigan public administrator system. It’s supposed that Roberts finds properties of deceased homeowners, uses a public administrator to open an estate in probate court,  and then bills the estate for his sales commissions and other “services.”

 At first blush, I find Robert’s alleged sales practices ignoble, to say the least.   But until the authorities release more of their findings, I am not convinced that this contentious salesman has done anything illegal.  What this investigation does confirm however,  is that in the business of real estate, people are always looking for another ‘angle’ to make ‘big’ money, and every so often, they will knowingly cross the line to the detriment of unwitting homeowners.  

 Here 7  things you can do to protect your real estate from “charlatans’ and (frankly) from yourself: 

      1.    Say no to blank documents.  Never sign any blank documents. If you are unsure, make a large “X”on the blank page, and then sign beneath it.  Similarly always retain a copy of your signed contracts.

      2.   Know before you sign. In the real estate business, written contracts define relationships, obligations and one’s legal rights.   If you read a contract and don’t understand it, don’t sign it. Also, never rely on an explanation of “how things work” from the party who stands to benefit from your lack of knowledge.

     3.     “Fake” attorneys . Similar to the preceding paragraph, don’t accept legal advice from someone who is not a licensed attorney.  Accountants, doctors, real estate agents, mortgage brokers, or the county clerk are not attorneys and cannot dispense legal advice or draft legal documents.  In other words, ignore the outside chatter of your “mother’s friend’s sister’s son.” Odds are (1)  they aren’t an attorney, (2) their situation has a different set of facts and is not completely on point, and (3) they won't be there for you when @#$%@# hits the fan. 

     4.     Record your property interest. Always record your property deed with the county in which your property sits. Holding onto an unrecorded deed does little good to notify the world that you have ownership in a particular piece of real estate.  If you ‘snooze’ and don’t record your property interest, you can ‘lose’ your property rights. 

     5.     Save the D.I.Y. for Home Depot.  Drafting your own deeds or other legal documents without the proper language and legal guidance is a recipe for disaster.  Unwinding a real estate transaction (or any contract for that matter)  involving a person(s) that you have grown to hate, can be very expensive and emotionally draining. It only becomes worse when you find out that your D.I.Y. contract inadvertently gave another party more legal rights and protections than you gave yourself.    

     6.     Open your mail, @#$% - it.  Unless you’re a clairvoyant, open your mail.  Important legal notices that affect legal rights come in the mail. They aren’t often texted.  Legal processes have sensitive timelines.  Miss a legal deadline and it becomes almost impossible and very expensive to reinstate your rights.   People pay more attention to what they’re going to “binge watch” on Netflix than they do to their legal rights. Give your legal issue the proper attention it deserves so that later on you don’t have to devote all of your time, energy and money to cleaning up a legal mess.  

      7.  Consult with an attorney before “Google.” Our property laws are deeply rooted in centuries of legal history and case law. Lawyers devote years of their lives to their legal education and to their practice to perfect their craft.  One or two Google search results cannot adequately address a legal problem.  Consult with an attorney who specializes in your area of concern.

      Bonus Item.   In the real estate business, nothing of value is free. There is tremendous value in seeking “preventative” legal advice, but beyond that and above all else, when it comes to all of those “great” real estate deals that your friend or family member has turned you on to...remember this one axiom, ”nothing of value is free..”..repeat….”nothing of value is free”  ..”.nothing of value is free....”

 

       About the Author:   Since 1990, Michigan real estate and finance attorney David Soble has represented lenders, business owners and individuals in real estate, loan, and contract matters.  He has structured countless real estate transactions worth millions,  and has successfully saved millions of dollars for his business and consumer clients.

       Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.

 


By David Soble 14 Jun, 2017

HOW TO LOSE $1,729,631

Over the last two months, several clients  ( prior to hiring me)  lost a combined total of  $1,729,631 because  (for whatever their reason), they failed to file  their real estate documents publicly with the county recorder.  Their  property rights  as evidenced by various deeds, trusts, assignments, land contracts, mortgages, and liens,  simply went unnoticed.  Most of the properties were lost to the taxing authorities or through foreclosure, because the clients were never notified of a property auction.   Other properties were sold or mortgaged to third parties who had no idea that my clients also had prior property claims.  Whatever the cause,  $1.7 million is an alarming figure when the solution against such loss is so easy.

MULTIPLE TRANSFERS

Nationwide, state property laws encourage, but do not require, anyone with property interests to record them in their county recording office.   Recording  real estate transfer documents protect against situations where the same property interest is transferred multiple times, (ie. seller grants a mortgage for the same property to two different lenders).  State laws all but determine which party’s interest prevails based upon when a deed, a mortgage or other documented interest is filed with the recording office.  The laws predominantly favor those who properly record their property interests over those who don’t.  

NOTICE TO THE WORLD

Recording real estate documents into a property’s ‘ chain of title ’  provides “notice to the world” (known as “constructive notice”) of one’s property interest.  By not appearing in the title chain,  interested parties will not receive legal notices concerning the property, such as tax notices or lien filings.  More importantly, in almost all instances, good faith purchasers, lenders and other lien holders who are unaware of prior outstanding, but unrecorded property interests, have superior claims when challenged by property owners who failed to record their property interest.  

WHO AND WHAT SHOULD BE  FILED

The list is not exhaustive, but generally all real estate deeds need to be filed. Where land contracts are concerned, it is important that the buyer have a Memorandum of  Land Contract  recorded.  Too often is the case where a seller has sold a property out from underneath a land contract buyer, all because no evidence of the sale was ever recorded with the county.  Most title or closing agents will file real estate transfer documents as part of their business for a small fee.   Lastly, mechanic liens, judgment liens or claim of liens against a property need to be recorded in a timely manner to be effective.  If you are unsure about filing requirements, contact a real estate attorney.  

CONCLUSION: SHOW UP!

Remember, in order to protect your property interests against title claims or loss, it’s important that your real estate documents show up  in the public  records 100% of the time.

About the Author:  Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and compliance matters. For over 25 years, he has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients.

Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.

By David Soble 14 Jun, 2017

With the steady influx of property investors seeking to stake their claim in the phoenix that is Detroit, comes various investment property management challenges.   Listed here are 5 common problems that new real estate entrepreneurs face when moving to sever the  property rights  of a delinquent property owner or tenant:  

1. The Tenant / Occupant Won’t Leave.  Avoid ‘self- help.’   Landlord  ‘self-help’ for locking out an occupant is, with rare exception, illegal and has serious financial and legal consequences. The same is true for investors who seek to extinguish a mortgage or  land contract .  An eviction action is required when the former homeowner or perhaps event their tenant, remains in the property after the foreclosure redemption expires. The mere fact that the redemption period has expired does NOT give the lender rights to enter the property.  Shutting off utilities or changing door locks is considered ‘self help” and can expose an investor to liability in actions of trespass, property damage, and even emotional distress.    

Solution:  Legally sever the possessory interest  by filing an action for eviction and secure a judgement and writ for eviction. I know of  several cases where an investor is ready to close on the sale of their property, only to be sued by a former owner or tenant whose legal interest in the property had not been properly extinguished.

2.The Former  Property Owner  or Occupant Files  Bankruptcy .   Equally as serious as landlord ‘self help’ is when a creditor violates an automatic stay after the tenant or homeowner files bankruptcy.   An automatic stay halts all collection activities and this includes eviction and foreclosure actions.  The ‘stay’ has to be lifted by a federal court order. Creditors, such as landlords and mortgagees, who knowingly violate a bankruptcy stay face severe fines, sanctions, and attorney fees. They may even have to pay damages.  

 Solution:  Once notified of an occupant’s bankruptcy, stop any and all collection efforts until you have a signed order “lifting the stay”. When in doubt, consult with legal counsel.

3. Failing to Understand Choices of Rights and  Remedies.   Investors, particularly those who purchase out of state properties,  should know what type of property interest they hold and the legal rights that the interest affords.  In Michigan,  mortgage holders do not have a fee simple interest in a property, only a lien interest. So when a former property owner abandons the collateral, an investor cannot legally sell the home until they foreclose out the homeowner’s interest or unless they obtain a Deed in Lieu of foreclosure.

More importantly, investors need to know which legal process to use in order to accomplish a specific goal.  For instance, in a land contract matter, a judicial sale can be used to preserve a deficiency for a vendee’s default, whereas a land contract forfeiture gives the land contract vendor possession only.

Solution:  Investors should consult with a real estate attorney licensed in the  state where they plan to invest and clarify their legal rights before they engage in purchasing investment properties or pursuing legal action.    

4. Property Tax   Foreclosure .   It is not uncommon for investors to run up against property tax foreclosure deadlines as delinquent taxes are an inherent part of purchasing distressed properties.  Until proper due diligence is performed, it makes little economic sense to initiate any  legal actions  for foreclosure, eviction or forfeiture, if the property would only be lost to tax sale before an investor’s legal action is completed.  

 Solution: Perform a title search and make arrangements to pay the taxes before initiating legal action.

 5. Deeds in Lieu of Foreclosure .   A Deed in Lieu of Foreclosure (“DIL”) is a deed executed by the homeowner that satisfies a loan in default in exchange for the mortgage holder to forgo the foreclosure process.   However, taking a DIL without performing a title search or without drafting the proper supporting documents is rife with problems.

First, a DIL is similar to quitclaim deed in that the mortgagee takes title to the property with all liens, encumbrances and assessments that the former property owner  incurred on the property.  Sometimes the amount of liens are so excessive that it makes more sense for the investor to foreclose on the property and pursue a deficiency action against the former property owner.  

Second,, specific legal provisions are required in the DIL documents, without which,  an investor can experience difficulties foreclosing out subordinate lien interests or in obtaining title insurance for a later sale of the property.  

Solution: Perform a title search and if you plan to take a DIL, don’t do so without having a qualified attorney first prepare DIL documents.

6. Boilerplate or Self -Generated Documents.    There is an old adage that ‘ a contract is valid until someone legally challenges it.’  Property investors are often surprised to learn that their self- prepared documents may actually violate federal or state laws. Unfortunately they only discover this at court placing their own legal interests  in jeopardy. Indiscriminately using online or “boilerplate” forms to  prepare a land contract, private mortgage, or lease back can be legally hazardous.   For instance, selling back a property to a former homeowner raises federal compliance issues under RESPA (Real Estate Settlement Procedures Act) and leasing back a property to a former homeowner creates a landlord / tenant relationship that ironically requires the investor to obtain a certificate of occupancy and make city required repairs on the former homeowner’s home.

Solution: Rely on an experienced real estate lawyer to review and draft the state- specific contracts that will be used in property transactions.  It will reduce future legal headaches, losses, and uncertainties.    

Conclusion:  Don’t be the ‘Test Case.”  When in doubt of how to legally proceed with severing a former property owner’s rights, it is best for the new real estate investor to seek out an experienced real estate lawyer.  

 

About the Author: Since 1990, attorney David Soble has represented lenders, loan servicers, consumers and business owners in real estate, finance and business matters. He has been involved in thousands of real estate transactions and has successfully negotiated and saved millions for his business and consumer clients alike.

Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own, qualified attorney.

By David Soble 14 Jun, 2017

When clients are confronted with a complex legal problem that has a lot of moving parts, it can be difficult for them to  ‘see the forest through the trees’.  I offer clients overwhelmed by a complicated real estate or finance problem, the following 5 items to consider so they can effectively tackle their source of stress.

1.           Get organized. Staring at a pile of miscellaneous documents can weigh on one’ moral and motivation.   Take the time to sort important paperwork in manilla folders. For example organize papers by a vendor, an antagonist,  chronologically, by subject or concern, by contract, loan(s) or lease(s).  You’ll feel better once you’re organized and you’ll help your advisors address the problem more quickly.

2.          Define the “what” “when” and “how”.  Complex matters often have a series of tangled and interrelated problems.  Write down all the problems that present themselves in a particular situation. Then define how you intend to solve each problem. There may be several ways to approach each problem. List them.  Ask yourself, “what  can I do to create any movement that will make me happy with my progress?”  Now realistically define the time frame that you expect to address and be done with the problem.

3.         Prioritize.   Resolving complex problems requires one to prioritize each step or action  necessary for a resolution. Prioritize and strategize what has to occur first before you can move ahead to the next task.

4.         Don’t make quick decisions. Never let anyone, particularly the antagonist in your situation,  push you into making a decision.  Consider the “24 Hour Rule”.  Take 24 hours to weigh the pros and cons of a decision.  Remember, complex problems took time to create. Take time to think about the consequences of a decision.

5         Give yourself a break.    Ruminating about a problem 24/7 does not solve the problem. In fact it can stress your physical and mental health.  Think about all of the good decisions that you have made in the past under stress.  Eat well, rest and exercise for a clear head.

A mentor once told me that successful problem solving is like eating a whale –you have to eat it one bite at a time. Envision setting a table to feast on your problem — calmly organize your documents, define the problem(s), and prioritize your proposed solutions using realistic time frames that will make you happy with your progress.

By David Soble 14 Jun, 2017

Keeping Control of Aging Parent’s Property

Greater longevity for Americans has expanded the population aged 75 and over.  The  U.S. Census Bureau  states that the number of people reaching their 80s and beyond will sharply increase in the ensuing decades and as elderly parents age, more financial responsibilities are placed upon the shoulders of their adult children.  Senior housing issues are a genuine concern for adult children who want to ensure that their elderly parents can maintain personal dignity, safety and a sense of control while still living in their home.  Homes too,  are filled with much sentimental values and memories and these must be respected.

Here are several financial and housing considerations adult children should explore so that their parents can remain in their home:

 

Reverse Mortgage

A reverse mortgage is a residential loan specifically designed for seniors.  A reverse mortgage allows the homeowner to convert a portion of the home’s equity into cash, while eliminating the possibility of having to sell the home.   Aside from the fact that a reverse mortgage will deplete assets left to potential heirs, they must be paid off in the event the owner leaves the home for a year or more.  So in the event that an elderly parent will have to move to a different housing environment because of illness, the entire loan balance becomes due if the parent fails to return to their primary residence within one year.

Reverse mortgages generally require that the homeowner pay annual property taxes and in my experience this is a source of many senior homeowner defaults.  So before obtaining a Reverse Mortgage, one should consult with a real estate or elder care law attorney.


Conversion to  Rental Property

One option that is often overlooked by adult children is leasing the home to family members.  This provides some security that the home will be well maintained and cared for by a relative or close friend while one’s parent still remains in the home.   As with any business transaction proper due diligence should be taken with regards to drafting a lease agreement. Consult with an attorney for a thorough agreement.

Professional  Home Maintenance

Hiring a professional property maintenance company is one way to make sure that the home is maintained both mechanically and visually, reducing the physical demands of upkeep on one’s parent.   Having maintenance services will also free up the  time and energy needed to attend to a parent’s physical care.  Another consideration is that a well -maintained home is much easier to sell at a later date when necessary.

Make sure that the  property management  company is licensed and bonded.  In many states a real estate agent can provide property management services without holding any additional licensing.  But property management is a profession unto itself.  It’s best to confirm that an agent devotes a large majority of their business to home preservation and even better to hire a property management company that is referred by a trusted source.

Professional Personal Assistance

Most seniors want to live as independently in their homes for as long as possible.  There are options that exist to make this as convenient and dignified for senior homeowners.  Housekeepers can do the heavy cleaning, a visiting nurse can do home check ups and attend to other medical issues.  Seniors can even receive meals delivered daily.  Unskilled  Home Care  Services are increasingly popular these days, but adult children should perform  a thorough background check on such services.  See below.

  Protect Seniors From Scams Targeted at  Homeowners

The  U.S. Federal Trade Commission  (“FTC) regularly reports scams that are focused on senior citizens. Senior homeowners are easily targeted because they are often isolated from their neighbors and become easy ‘prey.”   Advise family members to never give out any sort of information over the phone or to respond to door to door solicitations.  Assist them with checking their bank records and credit reports often and to offer immediate assistance if their are any warning signs of abuse or fraud.

 

David Soble  is the principal of  Soble PLC and founder of Proven Resource LLC.  He has been a real estate and finance attorney for over 25 years and as a member of the National Care Planning Council (NCPC) he  focuses on senior issues as they relate to real estate and finance.

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