Bankers Smell Equity: Are Reinvigorated By Recent Increase In Property Values

  • By David Soble
  • 14 Jun, 2017

Since the Great Recession of 2008, consumers and business owners have found their credit lines all but frozen or even closed by their banks. But recently there are signs that the credit pendulum is swinging back now that real estate values are starting to increase in many areas of the country. The Wall Street Journal  reported the noticeable increase in equity loans in their May 2014 article, "Borrowers Tap Their Homes at a Hot Clip". Lenders are creeping back –looking to tap into newly revealed real estate equity. Consumers and business owners are looking for ways to consolidate debt with an equity line of credit (“ELOC”) What a perfect opportunity...or is it? Here are 4 things to consider before taking an ELOC from reinvigorated banks:

1. New Exposure. Proponents of consolidating credit card debt and other personal loans with an ELOC like to state that consolidation improves one's credit score because it provides regular fixed monthly installment payments while reducing monthly outlay. True, installment loans and ELOCs are treated more favorably by credit bureaus, but an ELOC is secured by the equity of collateral such as a car, business assets, or most importantly, real estate. Credit cards and personal loans do not secure collateral and therefore, in the event of a default, significant assets such as real estate or a car are not at risk. Borrowers increase the exposure of their assets to collection by using an ELOC.

2. New Tripwires. Banks and lenders experienced huge losses with ELOCs in the recent past and have “tightened -up” their lending agreements since 2008. The newer line of credit agreements contain more restrictive default provisions. For instance, a bank can freeze a credit line or call your obligation due in the event of a “global default”. This means that even though one is current on payments with their line of credit, a default on any other credit cards or obligations can trigger a "default tripwire'. For those borrowers who say that would never happen to them, consider the past 6 years.

3. More Restrictions. ELOCs contain balloons. This means that while monthly payments on an ELOC can be spread out over 240 months (20 years) or 360 months (30 years), the loan balance is due in 60 months or five years. Proponents of ELOCs state that by consolidating loans with a ELOC, debtors can pay off their loans faster by having a fixed payment over a fixed time period. But balloon payments prevent the loan from fully amortizing and, as explained earlier, banks can call these loans due even earlier, creating more financial difficulty for the borrower. If the main purpose of taking out an ELOC is to consolidate credit card debt, consider other options for paying down credit card balances.

4 . Federal Student Loans. When consolidating federal student loans into an ELOC, or for that matter into a private student loan, debtors will lose certain protections such as a graduated loan repayment, forbearance, or deferment. However, federal student loans are not discharge-able in a bankruptcy, where as consolidation loans, (secured or unsecured) can be discharged. Take note that in the event of a default,  no matter how the loan is categorized (secured or unsecured, federal or private) most good lenders are motivated to collect repayment, and so provided that a debtor has a temporary hardship, they should consider payment arrangements or a forbearance agreement.

As with all bank loans, terms and provisions that control the lending relationship are recited in a loan agreement. Before signing, read and understand the agreement. Loan agreements by their very nature are long and the terminology is foreign to most borrowers. Get an explanation about your obligation from an objective third party – namely an attorney experienced in lending law. There is an adage, “if you think hiring a professional is expensive, wait until you hire an amateur”. If the consolidation effort ever goes bad, be assured that the debtor will be called upon to pay.

About the Author: 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 24 years of real estate and lending law experience to support his tempered cynicism.

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

Anecdotes

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.

By David Soble 14 Jun, 2017

Assisting loved ones who begin to lose their ability to think clearly and make rational decisions is not easy.  It’s not uncommon for some elderly to become unable to make sound decisions about a variety of issues including finances , health care and managing themselves at home.  Below are a few legal options for children of aging parents to consider when assisting a loved one.

Power of Attorney

A Power of Attorney grants   legal authority   to an individual to make decisions on behalf of another. Laws for creating a Power of Attorney vary from state to state. They can be limited to specific issuesor broadened to handle many issues such as personal and financial matters, including   real estate . In   Michigan , a Power of Attorney addressing the sale or refinance of real estate must be filed in the county records where the property is located.

Advanced Directive

A person can use an advance directive to make provisions for health care decisions in case that person becomes unable to make such decisions. There are two main types of advance   directives : a Living Will and   Durable Power of Attorney for Health Care . In some cases, a hybrid of these two directives can be established.

Living Will

This is a signed, witnessed document called a declaration or directive which instruct an   attending physician   to withhold or withdraw medical intervention from its signer if the signer’s condition is terminal and is unable to make decisions about medical treatment.
Durable Power of Attorney for Health Care

This is a signed, witnessed document in which the signer designates an agent to make health care decisions on behalf of the signer if the signer is temporarily or permanently unable to make such decisions.  The agent in this case will have the authority to decide if health care will be provided, withheld or withdrawn from the signer.

Only a Power of Attorney that specifically addresses real estate will give the agent of the signor, usually an adult child, the authority to deal with a mortgage, loan or disposition of real estate while the signor is living.   The other ‘directives’ concern health care and related health issues. All three are significant to good asset planning and protection.

Consider speaking with a qualified attorney to learn more.

By David Soble 14 Jun, 2017

MarketWatch

March 17, 2015

By: Bill Bischoff


Chances are you’ve spent plenty of your free time thinking about the money you’ll have available at retirement. But what have you done to plan out your estate? The sad truth is that most of us — some 70% of adult   Americans   — have neglected to   write   a will. Some think their assets are just too puny to worry about, others worry that the costs of writing a “last will and testament” are too high. But   wills   aren’t just vehicles for the wealthy or the morbid. If you’ve got a family and a home — not to mention a   savings account   — you should definitely have one. Cost is no excuse. While the average will drawn up by a lawyer typically runs from $500 to $1,000, you can get a simple will at a legal clinic for as little as $75 or create your own with an online vendor for even less. For most people, the first time in your life that a will becomes imperative is when you have children. Forget about your assets for a minute. In the terrible event that you and your spouse die at the same time without a will, it falls to a   probate court   judge to name a guardian for your minor children — not a pleasant prospect. That is why it is a crucial first step to name a guardian for your minor kids. Our experts recommend naming an alternate guardian in the document, as well, in case something happens to your first choice.

Writing a will, of course, is also your chance to clarify who gets what in your estate. Before you can do that, however, you have to tally up your assets. That includes your house, your investment portfolio, the value of your retirement plan account(s), and the payout(s) from any   life insurance coverage . After adding these things up, most folks discover that they are worth more than they initially suspected. Find your new home now ... Address, City, Zip Price Advertisement Once you’ve got your assets listed, you can decide what you want to leave to whom and who will be executor of your estate. One important caveat: Make sure that the beneficiaries listed in your will match the beneficiaries you name for your insurance policy and for your 401(k) and any other retirement accounts. If not, the beneficiaries named in these other documents will be the ones who actually get the money. Now, if you want to do any more complex estate planning, chances are you’ll have to set up a trust, which isn’t cheap.

They cost as much as $2,000 to $3,000 or more. The primary reason people go to this kind of trouble is to protect their heirs from having to pay hefty estate taxes that can turn their carefully built nest egg into chicken feed. Or to protect their heirs from themselves if they are — to put it kindly — not very financially astute. Remember: for every dollar you leave behind over the unified federal gift and estate tax exemption amount ($5.43 million for 2014), the   IRS   will take 40 cents for the federal estate tax. Once you have a will in place, don’t forget to update it regularly. You’ll need to amend it whenever there is a big change in your family’s circumstances — a birth, a death or marriage, or even if you move out of state. A will might seem like a hassle, but that is nothing compared with the hassles your heirs will experience if you die without one.

By David Soble 14 Jun, 2017

Detroit, Michigan,  January 30, 2015

According to numerous “real estate investing” or “note buying” websites (A Google search of real estate “note buying” prompted over 19 million results), real estate investing is “fun” and “easy," which it can be, but not without “work.” Proven Resource managing attorney reviews important steps investors can take to protect their investments.

After a 4 year court battle to obtain title to a foreclosed Florida condo, a   Florida State Appellate Court for the Fourth District   ruled that Bank of America must restart the entire foreclosure process from the beginning because of a clerical error, namely an incorrect property legal description. (Case No. 4D13-4066) On the same date,   Florida's Daily Review   quoted one bank attorney involved in a similar case as saying, “It was a case that should have never happened.” Famous last words.

Investing in real estate mortgage notes and flipping properties can be financially rewarding. According to numerous “real estate investing” or “note buying” websites (A Google search of real estate “note buying” prompted over 19 million results), it’s even “fun” and “easy.” Perhaps it can be, but not without “work.” As seasoned real estate and note investors know, buying real estate notes and distressed property can be a great source of income, but as in the Bank of America matter above, it can also a be source of problems.

Here are 5 things real estate and note investors can do in order reduce headaches before rushing in to acquire income producing commercial or residential properties:

1. Audit the loan file. It's good business to have an attorney or compliance professional review loan documents before purchasing a note. Any legal defenses that a borrower has against a lender, they can have against the loan assignee or note buyer. Have a professional review loan documents such as federal loan disclosures, deeds, legal descriptions, issue an opinion on potential title defects and verify back property taxes and IRS liens. Note buyers want to buy a note, not a lawsuit.

2. Understand the implications of invoking certain loan provisions. For instance, in commercial loans, it's common to have provisions for an Assignment of Rents. This means that the note holder can require tenants currently at a property to make payments directly to the investor in the event of a landlord - borrower’s default. This sounds straightforward until one considers that in most jurisdictions, note holders who exercise the right to collect rents become responsible for property repairs even when the investor does not yet own the property. Tenants could withhold rent from the investor until prior neglected repairs, such as a roof repair, are addressed. It can be quite costly especially when tenants in distressed properties often request rent abatement.

3.     Don’t ignore title insurance. Note buyers usually have three options to make their investment profitable. If they can’t modify an existing note, taking a deed in lieu from a property owner, or initiating a foreclosure action are they only ways to take legal title to sell a property. In both instances, having title insurance is very important. Taking a deed in lieu from a borrower without having title insurance can be folly since any and all liens on the property will be transferred to the grantee. Starting a foreclosure action without knowing what’s on title could expose the property to IRS liens that affect the investor’s clear title. At the very least, perform a title search.

4. Make sure the entity acquiring a note or property is in compliance with state and federal law before taking any action against a tenant or borrower. For instance, evicting a tenant without a recorded title interest can be legally challenged. It’s the same for investors who issue notices of loan default. Recording one’s legal interest in a property is paramount. It’s also important that incorporated investors register their business with the state in which their investment property sits, otherwise their authority to enforce provisions concerning their own investment can be challenged. Finally, make sure all collection and default notices comply with federal and state laws.

5. Expect ‘push back’ and time delays. Making properties profitable or collecting timely payments does not happen right away. True, there are times when a borrower agrees to a loan modification, brings themselves current or even refinances off the note, but these instances are uncommon. Instead, anticipate little, if any, tenant or borrower response to correspondence and prepare for eviction, foreclosure or even bankruptcy actions.

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 24 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

Detroit, Michigan   (PRWEB) November 28, 2014

On November 24, 2014,   the FBI Detroit Field Office  issued an official press release that it had arrested 16 people in a telemarketing and   real estate   ponzi scheme netting the offenders over $20 million from 290 victims nationwide, who thought they were investing in bank owned homes. According to the authorities, telemarketers lied about the values of the homes, telling investors that they were purchasing homes worth many times more than the current sales prices.

It seems that every year law enforcement exposes an unscrupulous real estate or mortgage scam, but what is even more incredulous is that there are people willing to purchase real estate over the telephone. The old adage is true: “A fool and his money are soon parted.”

Here are 5 things to seriously examine before purchasing investment property:

1. Visually inspect the subject property. In real estate, variables such as property location and structural integrity, affect value. A physical inspection of the property is imperative. If it’s too inconvenient to personally visit an asset, hire an independent, licensed professional appraiser to assign a   property value .

2. Order a   property title   search. Every property comes with its own unique title history. Mortgages, delinquent taxes, assessments, and judgments are but a few types of liens that will directly impact a purchaser’s ownership rights. Order a title search from a reputable   title company   or get a ‘ title opinion ” from a real estate attorney.

3. Investigate participants. State and federal law require licensing for most real estate services and activities that involve real estate investments, sales, or loans. When in doubt, contact state licensing authorities to see if an activity is regulated or contact a real estate attorney for an opinion.

4. Funding. When purchasing property, use a title or escrow company to disburse purchase funds to a seller, even in a cash transaction. Title companies will also provide title insurance to verify property ownership, address property liens, confirm   property taxes   and itemize money disbursements in a transaction.

5. Documentation. Real estate transactions involve many documents that include, but are not limited to sales agreements, deeds, mortgages, discharges, liens, settlement statements, authorizations and resolutions. Review these documents with a   real estate agent , or a real estate attorney. Most importantly, never endorse any documents that are blank or contain incomplete or blank fields. Never relinquish original documents without retaining copies.

Successful real estate investing requires patience and reliable information. Rushing into a transaction without thoroughly performing one’s own due diligence or hiring experienced professionals to do the same is an open invitation to deep financial disappointment.

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 24 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

Earlier this month, CNBC news reported that nationally,   consumers   and   business owners   are at greater risk of losing their assets as the number of foreclosures and repossessions have spiked. The need for payment modifications and more flexible loan guidelines persists. Here are 5 tips debtors should review when contemplating a consumer or business loan modification:

1.   Bankers   today. In banking today, bankers at the retail level have very limited authority to make significant   financial   decisions without first obtaining approval from an underwriting committee or from a higher bank authority. Don’t don’t rely or act on any bank communication that is not on paper containing a signature. Important decisions do not come quickly so be patient.

2. Disclose. If you are seeking a reduction in a monthly payment obligation, be prepared to disclose all personal financial information. No competent lender will provide relief based upon verbal statements of financial hardship alone. Provide thorough documentation supporting the reason for the hardship request and be prepared to answer further questions concerning the same.

3. Creativity is not valued here. Use the documents that the bank provides to complete any request. Supplying information on one’s own format just delays the process. Creditors have numerous requests for payment adjustments or debt forgiveness so don’t expect the lender to take time to decipher your “customized” presentation. Standardization is key to efficiency and a lender’s timely response.

4. Be consistent. Nothing generates more questions than when financial information provided to a   creditor   fails to match up with earlier submissions of one’s financial representations. Red flags will go up when, for instance, a large account balance listed on a   loan application   is not reported on a later statement for financial hardship.

5. Don’t piecemeal documentation. Its common for lenders to request a list of documents needed to process a hardship request. These documents are valid for a certain time after submission. For example,   bank statements   are valid for 30 days while other. financial papers may be valid for or 90 days. It’s best to submit all requested documents at the same time to avoid a document ‘leap frog’ effect--where the lender is ready to make a decision but can’t because some documents have expired while others are newly submitted.

Failure to address the above listed items will certainly delay, if not kill one’s opportunity to modify a loan agreement. Proceed cautiously, thoroughly, and maintain reasonable expectations.

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 24 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

Earlier this month,   CNBC   news reported that nationally,   consumers   and business owners are at greater risk of losing their assets as the number of   foreclosures   and repossessions have spiked. The need for payment modifications and more flexible loan guidelines persists. Here are 5 tips debtors should review when contemplating a consumer or business   loan modification :

1.   Bankers   today. In banking today, bankers at the retail level have very limited authority to make significant   financial   decisions without first obtaining approval from an underwriting committee or from a higher bank authority. Don’t don’t rely or act on any bank communication that is not on paper containing a signature. Important decisions do not come quickly so be patient.

2. Disclose. If you are seeking a reduction in a monthly payment obligation, be prepared to disclose all personal financial information. No competent lender will provide relief based upon verbal statements of financial hardship alone. Provide thorough documentation supporting the reason for the hardship request and be prepared to answer further questions concerning the same.

3. Creativity is not valued here. Use the documents that the bank provides to complete any request. Supplying information on one’s own format just delays the process. Creditors have numerous requests for payment adjustments or debt forgiveness so don’t expect the lender to take time to decipher your “customized” presentation. Standardization is key to efficiency and a lender’s timely response.

4. Be consistent. Nothing generates more questions than when financial information provided to a   creditor   fails to match up with earlier submissions of one’s financial representations. Red flags will go up when, for instance, a large account balance listed on a   loan application   is not reported on a later statement for financial hardship.

5. Don’t piecemeal documentation. Its common for lenders to request a list of documents needed to process a hardship request. These documents are valid for a certain time after submission. For example, bank statements are valid for 30 days while other. financial papers may be valid for or 90 days. It’s best to submit all requested documents at the same time to avoid a document ‘leap frog’ effect--where the lender is ready to make a decision but can’t because some documents have expired while others are newly submitted.

Failure to address the above listed items will certainly delay, if not kill one’s opportunity to modify a loan agreement. Proceed cautiously, thoroughly, and maintain reasonable expectations.

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 24 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.

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