THE ECONOMY: Obama's housing scorecard

NEW YORK (CNNMoney) -- The housing market is gaining strength thanks in part to government programs aimed at helping struggling homeowners, the latest Obama Administration Housing Scorecard released Thursday found.

"The Obama Administration's efforts to speed housing recovery are showing clear signs of traction," said Erika Poethig, Acting Assistant Secretary for the Department of Housing and Urban Development (HUD) which releases the report in conjunction with the Department of the Treasury.

Home values are back to levels not seen since the beginning of the Obama administration and the number of homeowners who are underwater on their mortgage is down 11% since last year, the report said. In addition, more than half a million borrowers have had their loans refinanced through government efforts like the Home Affordable Refinance Program this year.

"It is clear that we're making progress. But with so many households still struggling to make ends meet, we have important work ahead," Poethig said.

Another boost to the housing market came last April, when the attorneys general of 49 states and the District of Columbia inked a $25 billion settlement deal with the nation's five largest banks over so-called robo-signing foreclosure abuses. That deal is expected to help another couple of million borrowers reduce their mortgage payments.

Since the administration started rolling out its programs in April 2009, more than 5.4 million borrowers have received aid, the Department of Housing and Urban Development (HUD) said.

Here's a rundown of the government's mortgage relief efforts and how they've fared:

Home Affordable Modification Program (HAMP)

Launch: March 2009

Borrowers affected: As of July 2012, there have been 1.9 million trial modifications started. More than 1 million have made the transition into permanent modifications. Some 235,000 of those have been canceled due to re-defaults or because borrowers sold their homes.

This program enables eligible borrowers to lower their first mortgage payments to more affordable and sustainable levels. Lenders receive incentives to reduce mortgage payments for at-risk borrowers; the target is 31% of income.

HAMP originally fell well short of estimates that it would lower mortgage payments for 3 to 4 million borrowers. And, many early workouts failed as borrowers soon re-defaulted on their loans.

Track record: HAMP's record has improved and re-default rates have declined, but they're still troubling. As of July, nearly 19% of all borrowers with HAMP modifications are at least two payments behind 12 months after their loans were modified.

HAMP modifications have slowed to a crawl lately, with just 17,000 permanent modifications started in July.

The modifications have led to a total of more than $14.4 billion in lowered borrowers' payments, according to the Treasury Department.

Home Affordable Refinance Program

Launch: March 2009

Participants: 1.5 million

This program helps borrowers who are current on their mortgage payments but are having a hard time refinancing their mortgage because they are underwater or owe more on their home than it is worth. The home must be underwater due to falling home prices and the mortgage must be backed by Fannie Mae or Freddie Mac.

Originally, HARP allowed homeowners to refinance if their loan balances were between 80% and 105% of the market value of their home. But after disappointing initial results, the rule was changed to include borrowers with loan-to-value ratios of up to 125%. Later, they removed that cap altogether.

Track record: The changes have helped make HARP one of the more successful government programs. The number of HARP refinancings has accelerated with more issued during the first seven months of the year than in all of 2011.

More than half the loans refinanced in June and July went to homeowners with loan-to-value ratios above 105%.

Second Lien Modification Program (2MP)

Launch: April 2009

Participation: 90,000 borrowers

The Second Lien Modification Program (or 2MP) provides assistance to homeowners who have second mortgages or home equity lines of credit in addition to their primary mortgages.

Many potential mortgage modifications have hit roadblocks because lenders of home equity loans and lines of credit refuse to cooperate. After all, the first mortgage holder typically gets paid first when an underwater mortgage gets modified and there's often nothing left for the

REMODELING: Working with subcontractors also about relationships

Given the depressed state of residential building and remodeling, is it reasonable to assume contractors would respond to opportunities for work like locusts to a green pasture?


I certainly did this past summer, before contacting 150 subcontractors in eight trades for two remodeling projects.

As a small businessman, I was excited to offer work to people who need it. I had recently “unretired’’ and resumed my business of doing consulting work about home building and remodeling and set out to find contractors for my new clients’ house.


Suzette and David Standring planned a new family room, storage area, and half-bathroom in the basement of their brick Colonial in Milton. Their daughter and her family, including two young girls, might soon move in, and the new space would provide privacy.


The centerpiece would be custom wainscoting and an entertainment center with roll-outs for toys, additional storage, and shelving for a wide-screen television, books, and pictures.


The Standrings also wanted to address a lingering problem.


“There is a very old, almost unusable bathroom near the room,’’ Standring said. “We wanted to take out the existing shower, move the toilet location, install new fixtures, and redo the walls, window, and floor.’’

I beat the bushes for carpenters, electricians, plumbers, tile and hardwood installers, plasterers, painters, and insulators, then developed a database to track them, called relentlessly, and awaited the invasion.


Rather than a swarm, I heard a buzz.


“Where did you get my name?’’ some challenged, as though I had hacked the computer of their secret society. When I told them the phone book they said, “Oh.’’


Several demanded to know my occupation, which was probably a test, and pressed for more.


“Are you a general contractor?’’ No.


“Are you a lead-generator service?’’ No.


“Do I owe you anything?’’ No.


“Who pays you?’’ The homeowner.


“How many bids are you after?’’ Three.


“When can I see the jobs?’’ Whenever.


Eight visited, but only two bid.


“There are a lot of hacks out there, and pricing is insane,’’ a contractor volunteered.


Most told me to check references, but one electrician actually asked for my references. So I e-mailed my bio and heard nothing.


To avoid lengthy explanations, I e-mailed the subcontractors links to pictures of the project,

BUYING A HOME: 7 Questions Homebuyers Need to Answer

I find more and more that buyers are calling the listing agent of a property and expecting them to have their best interest in mind. The listing agent represents the seller in a transaction, and always has the sellers’ best interest in mind. Anything you say to the listing agent can and will most likely be used against you in a negotiation. A Buyer’s Agent will know what to tell the sellers side without weakening your negotiating position. Here are some questions you should consider the next time you are on the fence about whether to use a Buyer’s Agent…


1) Do you know how to comprehend all of the local market data to best understand what is a good value, current trends and absorption rates?


2) Are you familiar with a common residential real estate contract and how to interpret various clauses to protect yourself from making common buyer mistakes?


3) Do you know what not to say to the seller to hurt your negotiating position?


4) Do you know the zoning regulations, building codes, and any other laws pertaining to real estate in the area you desire?


5) Are you familiar with the various loan types and special programs that you may qualify for?


6) Do you have the expertise to negotiate on your own behalf, especially if the seller has an

MORTGAGE & FINANCE: Coakley steps up probe into foreclosure fraud

Massachusetts Attorney General Martha Coakley is beefing up her investigation into foreclosure fraud, targeting a powerful lender-created company in Virginia that claims to be the official owner of tens of millions of mortgages nationwide.


Yesterday, Coakley said she will ask county registers to provide information to see if Mortgage Electronic Registration Systems Inc., known as MERS, is violating Massachusetts laws related to property seizures. She is concerned that MERS failed to pay government fees as well as “impaired the integrity’’ of the state recording system by failing to document loan transfers.


Coakley also said she would not agree to releasing MERS from any liability in talks between government regulators and large banks to settle allegations of sloppy and fraudulent mortgage-related practices. State and federal regulators launched the probe last year after some bank representatives, now known as “robosigners,’’ admitted to signing thousands of mortgage-related legal documents without accurately reviewing them.


“We want to be clear we are not prepared to give a release of liability on any broad scope of MERS issues,’’ she said. “We intend to complete the investigation.’’


Coakley joins a growing number of real estate attorneys, judges, and consumer advocates voicing concerns about MERS, a company created in the 1990s by major US lenders to reduce paperwork and save money.

MORTGAGE & FINANCE: Long-promised loan aid for jobless is launched

A federal program that will provide interest-free loans to unemployed homeowners so they can make mortgage payments was launched yesterday after months of delays, with $61 million earmarked for Massachusetts.


The Department of Housing and Urban Development and NeighborWorks America, a Washington, D.C., nonprofit that is helping to administer the $1 billion program, said it will benefit about 30,000 homeowners nationwide — including more than 1,000 in Massachusetts. Applications are due by July 22, and officials are anticipating needing a lottery to determine who receives money. Those who meet eligibility requirements will be able to borrow up to $50,000 over a two-year period. Under some circumstances, the money will not have to be paid back.


The program, approved by Congress last summer, was supposed to be up and running by the end of 2010, but various complications slowed its start date.


Lewis Finfer, executive director of Massachusetts Communities Action Network, a Boston nonprofit, said about 1,260 Massachusetts homeowners are expected to qualify for the funds, which must be allocated by the end of September.


“We know there are so many people in need,’’ said Finfer, who has been pushing for help for unemployed homeowners for several years. “This will make the difference between people saving their homes and losing their homes.’’


To qualify, homeowners must be able to prove they have had a drop in income of at least 15 percent due to job loss, wage cuts, or a health emergency, and be at least three months behind on their mortgage payments. Borrowers also must meet certain income requirements, which differ by region. In the Boston area, a family of four’s income could not have exceeded more than $110,150 before the drop in salary, according to federal documents.


In some cases, the federal loans will turn into gifts. Borrowers who remain in their homes and stay current on mortgage payments for five years — after they stop receiving the federal help — will have their debt balance reduced by 20 percent annually until it is eliminated.


The program, which targets residents in 27 states and Puerto Rico, is meant to complement a similar effort managed by the Treasury Department for states that were “hardest hit’’ by the US financial crisis, according to federal officials. Massachusetts was not part of that program.


Local agencies, including Urban Edge Housing Corp. and Nuestra Comunidad Development Corp. in Roxbury, will be working with homeowners to help them through the new program’s application process.


The federal assistance comes as the number of foreclosures mounts in Massachusetts and around the country, even though the rate of increase has slowed. Locally, as many as 56,000 homeowners were at least 90 days late on their mortgage, but not yet in the foreclosure process, according to a recent study by the nonprofit Massachusetts Housing Partnership.


In Worcester, Mayor Joseph C. O’Brien held a press conference yesterday to highlight the new program. The central Massachusetts city has been severely affected by the foreclosure crisis. “These funds will help hard-working families stay in their homes and help stabilize neighborhoods,’’ O’Brien said.


To receive a loan application or get more information, call 855-346-3345 or visit www.FindEHLP.org.


Jenifer B. McKim Boston Globe June 21, 2011

TAXES: Homeownership and Taxes

Homeownership comes with a wonderful host of benefits. But did you know that it can also save you money on your taxes?

According to the National Association of Realtors, numerous deductions and credits are available for homeowners. These include capital gains and mortgage interest deductions, as well as credits for energy-efficienct upgrades.

To get the latest information on energy credits for this year's tax return, visit EnergyStar.gov. You may be able to deduct portions of improvements on everything from windows and doors to water heaters.

Why do homeowners get such special treatment? For starters, the NAR reports that "home owners pay 80-90 percent of all U.S. federal income taxes."

And the credits and deductions don't just benefit wealthy homeowners.

Before taking on a reverse mortgage, it’s important to know options, costs

More and more seniors are turning to reverse mortgages to supplement their retirement income. If you are considering making this move, you need to understand some of the options and the initial and recurring costs associated with them.


Most reverse mortgages are offered through the Federal Housing Administration’s Home Equity Conversion Mortgage program, and I would urge you to consider a reverse mortgage only if it is under this program’s auspices.


Aside from interest, there are three basic costs associated with a reverse mortgage: an origination fee, mortgage insurance costs, and closing costs. The entire amount of these fees may be financed as part of the mortgage. The origination fee is 2 percent of the loan amount up to $200,000, plus 1 percent of the loan amount above that level. The fee cannot be less than $2,500 or more than $6,000.


HUD guidelines require that all HECM mortgages be insured. For a standard HECM mortgage, the initial mortgage insurance premium cost is 2 percent of the appraised home value plus an annual premium of 1.25 percent of the loan balance. This requirement penalizes mortgage holders who take out a loan much lower than the home value. For an HECM Saver mortgage, the insurance cost is only 0.01 percent of the appraised home value or of the principal lending limit, whichever is less.

MORTGAGE DEBT RELIEF: For many homeowners, false hope

Firms offer mortgage relief, then fail to deliver, state says

Marlon Hernandez was sick with worry that he would lose his Malden home to foreclosure two years ago. Then the Salvadoran immigrant heard a Spanish-language radio advertisement that sounded like the answer to his problems.


In the ad, Revere lawyer David Zak said he helped troubled homeowners negotiate with banks. Hernandez paid Zak $5,600 to help lower his unmanageable monthly mortgage payment. But Hernandez said he never got the promised services.


“I am just waiting for my house to be in foreclosure,’’ he said. “I’m waiting for them to kick me out.’’


Attorney General Martha Coakley filed a lawsuit earlier this year against Zak, claiming he targets troubled Latino homeowners like Hernandez by making false promises and unlawfully charging upfront fees to provide help that he fails to deliver. Zak contests the charges, calling it a “smear campaign,’’ arguing that he is doing nothing unlawful and has helped hundreds of troubled homeowners avoid foreclosure.


The legal dispute highlights a growing concern in Massachusetts and across the United States about lawyers and business people taking advantage of troubled homeowners through foreclosure rescue scams. Loan-modification schemes have been one of the top five consumer issues in Massachusetts over the past two years, state regulators say.

LEGAL NEWS: Lawyers’ role in closings affirmed

SJC backs Mass. real estate bar in dispute with firm.

The Massachusetts Supreme Judicial Court released a ruling yesterday that requires real estate lawyers to play a key role in residential home closings — a long-awaited decision that could mean stronger legal oversight for home buyers and more business for local lawyers.

The ruling by the state’s top court addresses a legal dispute in what has become a high-stakes turf battle between local real estate lawyers and a Pittsburgh company that provides services to mortgage lenders nationwide, including examining titles, disbursing settlement funds, and arranging for local lawyers to attend closings on the lenders’ behalf. At issue is what constitutes the practice of law in residential home closings.


Supporters of the ruling, which include local legal groups, say it is good for lawyers and for homeowners, who often are making one of the most important financial decisions of their lives. They say local real estate lawyers provide better oversight than those hired by a third party who show up just for real estate closings.

LENDING NEWS: Government Orders 17 Lenders and Servicers to Reimburse Home Owners

WASHINGTON —The federal government on Wednesday ordered 17 of the nation’s largest mortgage lenders and servicers to reimburse home owners who were improperly foreclosed upon.


Government regulators also directed the financial firms to hire auditors to determine how many home owners could have avoided foreclosure in 2009 and 2010.


Citibank, Bank of America, JPMorgan Chase, and Wells Fargo, the nation’s four largest banks, were among the financial firms cited in the joint report by the Federal Reserve, Office of Thrift Supervision, and Office of the Comptroller of the Currency.


The Fed said it believed financial penalties were “appropriate” and that it planned to levy fines in the future. All three regulators said they would review the foreclosure audits. Under the agreements reached, the lenders and servicers have 45 days to hire an auditor and will “remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies.” There is no minimum or maximum dollar amount identified.


In the four years since the housing bust, about 5 million homes have been foreclosed upon. About 2.4 million primary mortgages were in foreclosure at the end of last year. Another 2 million were 90 days or more past due, putting them at serious risk of foreclosure.


Critics, including Democratic lawmakers in Congress, say the order is too lenient on the lenders. House Democrats introduced legislation Wednesday that would require lenders to perform a series of steps, including an appeals process, before starting foreclosures.

REVERSE MORTGAGE: National Council on Aging Offers Free Reverse Mortgage Counseling

As older adults continue to face financial challenges in the sluggish economy, the National Council on Aging will offer free counseling for seniors through its Reverse Mortgage Counseling Services Network.


RMCS counselors are waiving the usual $125 counseling fee in order to help more home owners understand how reverse mortgage loans, along with community programs and other options, could help them remain in their homes. Consumers age 62+ can schedule a free reverse mortgage counseling session by calling 1-800-510-0301.


“Many home owners are struggling in this economy, and with the looming budget cuts in senior services on Capitol Hill, it may make things more difficult for those in need,” said Barbara R. Stucki, Ph.D., vice president of Home Equity Initiatives for NCOA. “With this in mind, we are happy to offer free counseling so that older adults can learn how to make smart decisions about using their home equity at a time when other resources may be decreasing.”


Generally, RMCS counselors do not charge a fee for counseling upfront, only at the time of closing, if the client decides to take out a reverse mortgage. RMCS counseling is always free for clients with annual incomes of less than $20,000 for individuals or $30,000 for couples.


NCOA also offers a consumer booklet on reverse mortgages, Use Your Home to Stay at Home.


HouseLogic.com March 29, 2011 Source: National Council on Aging
Read more: http://www.houselogic.com/news/articles/national-council-aging-offers-free-reverse-mortgage-counseling/#ixzz1IBQWWITG

ENVIRONMENT: Tax benefits may spur more to protect land

Susan Peterson and John Teal gave up the development rights to more than 100 acres in Rochester for the peace of mind of knowing the land will be preserved as open space in perpetuity.


“We’re very conservation-minded people, and we wanted to do the right thing,’’ Peterson said.


Through a legal arrangement known as a conservation restriction, the couple can continue living on Teal Farm and pass their property on to their heirs, secure in the knowledge that the land will remain if not a pure wilderness, then the “working landscape’’ it has been for hundreds of years, Peterson said.


Land conservation groups such as the Duxbury-based Wildlands Trust believe that an expanded federal tax incentive program will encourage others to do what Peterson and Teal did, providing a financial reward for an act that benefits their community by preserving open space.


When landowners donate a conservation restriction, or easement, on their land, they give up development rights while maintaining ownership and the right to sell or pass the land on to their heirs. Congress recently renewed a tax incentive that allows property owners who place a conservation restriction on their undeveloped land to deduct 50 percent of their income, and extends the deduction to 16 years up to the full value of their gift.


So a landowner with an annual income of $50,000 a year would be able to deduct $25,000 for the year of the donation and then for 15 more years, for a total of $400,000 in deductions. Farmers and ranchers are allowed to deduct 100 percent of their income.


While Congress put this into effect for this year only, the Land Trust Alliance, a national lobbying organization, is trying to make it a permanent part of the federal tax code.


As opposed to giving up property by selling or donating it, a conservation restriction is a legal encumbrance on land held by another entity that bans the construction of housing projects or other kinds of commercial development. The holder of the restriction manages the property to assure it will remain open, green conservation space.


“Our whole community benefits when landowners have a financial incentive to conserve their land,’’ said Karen Grey, executive director of the Wildlands Trust.


Along with other members of the national Land Trust Alliance, the Wildlands Trust believes the generous tax deductions should be made permanent so property owners can plan ahead.


Grey said the program approved for this year also existed from 2006 through 2009. When it lapsed last year, the deduction dropped to 30 percent and could only be used over six years.


During the four years when the higher deduction was in effect, 11 private landowners made conservation restriction agreements with the Wildlands Trust. Last year, none did.


The trend was mirrored statewide. The Nature Conservancy, a major land trust organization in southeastern Massachusetts, said the number of restrictions peaked in 2008, with more than 10,000 acres protected statewide. After the federal tax credit ended, land restrictions declined to around 4,000 acres a year. Congress did allow the higher credit to lapse in 2009, but voted to restore it retroactively at the end of that year.

NEWS: Bank returns seized homes to military families

WASHINGTON — JPMorgan Chase & Co. has returned 10 homes to military families whose properties were seized when they should have been protected a by law designed to shield service members from financial stress, a bank executive said.


The properties were among 18 found to have been improperly taken by New York-based JPMorgan, said Stephanie Mudick, the bank’s head of consumer practices. Two other homeowners got unspecified settlements, and six cases remain unsettled.


“We will attempt to make the remaining borrowers whole as quickly as possible,’’ said Mudick, who added that the bank is continuing its review.


JPMorgan, the nation’s second-biggest bank by assets, said last month it would return money to families who were overcharged on mortgages or lost their homes after the company was accused of violating the Servicemembers Civil Relief Act. The bank has begun paying back $2.4 million to about 4,500 service members, Mudick said. The median payment is $70 plus interest.


The law restricts the ability of lenders to foreclose on homes owned by military service members who are on active duty or recently returned. It also caps mortgage interest rates at 6 percent during active duty and for 12 months afterward.


Bloomberg News February 10, 2011

TAXES: 10 Common Errors Home Owners Make When Filing Taxes By: G. M. Filisko Read more: http://www.houselogic.com/articles/10-common-errors-home-owners-make-when-filing-taxes

As you calculate your tax returns, consider each home tax deduction and credit you are—and are not—entitled to. Running afoul of any of these 10 home-related tax mistakes—which tax pros say are especially common—can cost you money or draw the IRS to your doorstep.


Sin #1: Deducting the wrong year for property taxes
You take a tax deduction for property taxes in the year you (or the holder of your escrow account) actually paid them. Some taxing authorities work a year behind—that is, you’re not billed for 2010 property taxes until 2011. But that’s irrelevant to the feds.


Enter on your federal forms whatever amount you actually paid in 2010, no matter what the date is on your tax bill. Dave Hampton, CPA, tax manager at the Cincinnati accounting firm of Burke & Schindler, has seen home owners confuse payments for different years and claim the incorrect amount.


Sin #2: Confusing escrow amount for actual taxes paid
If your lender escrows funds to pay your property taxes, don’t just deduct the amount escrowed, says Bob Meighan, CPA and vice president at TurboTax in San Diego. The regular amount you pay into your escrow account each month to cover property taxes is probably a little more or a little less than your property tax bill. Your lender will adjust the amount every year or so to realign the two.


For example, your tax bill might be $1,200, but your lender may have collected $1,100 or $1,300 in escrow over the year. Deduct only $1,200. Your lender will send you an official statement listing the actual taxes paid. Use that. Don’t just add up 12 months of escrow property tax payments.


Sin #3: Deducting points paid to refinance
Deduct points you paid your lender to secure your mortgage in full for the year you bought your home. However, when you refinance, says Meighan, you must deduct points over the life of your new loan. If you paid $2,000 in points to refinance into a 15-year mortgage, your tax deduction is $133 per year.


Sin #4: Failing to deduct private mortgage insurance
Lenders require home buyers with a downpayment of less than 20% to purchase private mortgage insurance (PMI). Avoid the common mistake of forgetting to deduct your PMI payments. However, note the deduction begins to phase out once your adjusted gross income reaches $100,000 and disappears entirely when your AGI surpasses $109,000.


Sin #5: Misjudging the home office tax deduction
This deduction may not be as good as it seems. It often doesn’t amount to much of a deduction, has to be recaptured if you turn a profit when you sell your home, and can pique the IRS’s interest in your return. Hampton’s advice: Claim it only if it’s worth those drawbacks.


Sin #6: Missing the first-time home buyer tax credit
If you met the midyear 2010 deadlines, don’t forget to take this tax credit into account when filing.


Even if you missed the 2010 deadlines, you still might be in luck: Congress extended the first-time home buyer credit for military families and other government workers on assignment outside the United States. If you meet the criteria, you have until June 30, 2011, to close on your first home and qualify for the tax credit of up to $8,000.


Sin #7: Failing to track home-related expenses
If the IRS comes a-knockin’, don’t be scrambling to compile your records. Many people forget to track home office and home maintenance and repair expenses, says Meighan. File away documents as you go. For example, save each manufacturer’s certification statement for energy tax credits, insurance company statements for PMI, and lender or government statements to confirm property taxes paid.


Sin #8: Forgetting to keep track of capital gains
If you sold your main home last year, don’t forget to pay capital gains taxes on any profit. However, you can exclude $250,000 (or $500,000 if you’re a married couple) of any profits from taxes. So if you bought a home for $100,000 and sold it for $400,000, your capital gains are $300,000. If you’re single, you owe taxes on $50,000 of gains. However, there are minimum time limits for holding property to take advantage of the exclusions, and other details. Consult IRS Publication 523.


Sin #9: Filing incorrectly for energy tax credits
If you made any eligible improvement, fill out Form 5695. Part I, which covers the 30%/$1,500 credit for such items as insulation and windows, is fairly straightforward. But Part II, which covers the 30%/no-limit items such as geothermal heat pumps, can be incredibly complex and involves crosschecking with half a dozen other IRS forms. Read the instructions carefully.


Sin #10: Claiming too much for the mortgage interest tax deduction
You can deduct mortgage interest only up to $1 million of mortgage debt, says Meighan. If you have $1.2 million in mortgage debt, for example, deduct only the mortgage interest attributable to the first $1 million.


This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.


G.M. Filisko
Read more: http://www.houselogic.com/articles/10-common-errors-home-owners-make-when-filing-taxes/#ixzz1DZFIwQ7r

SAFE HOMES: Congress Moves to Reduce Lead in Drinking Water

WASHINGTON—Congress on Friday sent President Barack Obama a bill that would significantly reduce exposures to lead in drinking water.


Lead contamination can pose serious health risks, particularly to pregnant women and children. It has been linked to health problems such as kidney disease, hypertension, reduced IQs in children, and brain damage.


The House approved the bill on a 226-109 vote. The Senate approved it earlier on a voice vote.


The bill would set federal standards for levels of permissible lead in plumbing fixtures that carry drinking water, with allowable lead content going from the current federal level of as much as 8 percent to 0.25 percent. It limits the amount of lead that can leach from plumbing into drinking water.


Rep. Mike Doyle, D-Pa., said the new standards would nearly eradicate lead in faucets and fixtures. He cited Environmental Protection Agency estimates that lead from these sources contribute to up to 20 percent of human exposure.


The bill becomes effective 36 months after it is signed into law. It would then prohibit manufacturers and importers from selling plumbing fixtures that don’t meet the new standards.


“In 21st century America, we have a responsibility to do more to protect our children and families against lead exposure acquired through plumbing systems,” said Rep. Anna Eshoo, D-Calif., who authored the bill in the House. “Lead-free plumbing is an existing alternative, it’s affordable and it’s time we adopt it across the nation.” Health studies, she said, have estimated that lead exposure costs the nation $43 billion in lost time and health costs.


“Lead, a toxic heavy metal, does not belong in our drinking water,” Senate sponsor Sen. Barbara Boxer, D-Calif., said Thursday night after the Senate passed the bill on a voice vote. “This is a major step forward in the effort to eliminate lead in our drinking water.”


Almost all the opposition came from Republicans. Rep. Cliff Stearns, R-Fla., questioned the necessity of passing a federal law when major producers of faucets are already making safer equipment and some states are imposing their own tough standards.


He added that “people should not mistake this bill as a panacea when studies have shown that lead service lines are the biggest culprits of leaked lead.”


An Associated Press investigation last year found that contaminants have surfaced at public and private schools in all 50 states, with lead among the most frequent causes of unsafe water.


Last month residents in New York City were told to run their taps for 30 seconds before drinking water after tests showed elevated lead levels in some older buildings.


“Lead in drinking water poses a dangerous health risk, particularly to pregnant women, infants, and children, and it is refreshing to see that members of both parties in the Senate and House can agree on making the water we drink every day safer,” said Mae Wu, an attorney at the Natural Resources Defense Council.


Jill Abrams House Logic.com December 20,2010


Read more: http://www.houselogic.com/news/articles/congress-moves-reduce-lead-drinking-water/#ixzz18x4VXQ5c

LEGAL NEWS: New law clarifies Mass. homestead protections

Protecting your home against creditors will be easier now that Governor Deval Patrick signed into law a bill that automatically provides Massachusetts homeowners with a $125,000 cushion against debt collectors, if they hold that much equity in their properties.


The legislation, signed Thursday, clarifies ambiguities in a law first enacted in 1851. The statute, amended a number of times in ensuing years, provided $500,000 in protection from creditors — but only for homeowners who file a so-called homestead declaration with a county registry of deeds, a process that can cost between $35 and $100. Under the new law, homeowners do not have to make such a filing unless they hold more than $125,000 in equity in their homes. They can still get $500,000 in protection if they file a homestead declaration.


“It is an important piece of consumer protection,’’ said Michael Goldberg, cochairman of the legislation committee for the Real Estate Bar Association for Massachusetts. “It ensures that homeowners in the Commonwealth have the protection of a modernized, understandable homestead law.’’


The legislation culminates a years-long effort by attorney groups to improve the antiquated homestead law, enacted when women could not own property. It also addresses complaints that the law was unfair to homeowners who didn’t have the training or legal counsel to help with the declaration filing process.

REAL ESTATE LAW: 'As is' clause clears seller of fraud

Judith Johnston owned a home in Mobile County, Ala., In 2001, the county placed drainage culverts on her property to drain runoff into a creek behind Johnston's property. Johnston complained to the county that the drainage system was flooding her lot, although it did not flood her actual home. The county claimed it could not do anything about the flooding, and Johnston decided to sell the property, according to court records.


Wylene and Ross Teer offered to buy it, and Johnston provided them with a disclosure statement that expressly represented "that there were no 'flooding, drainage or grading problems' with the property and that the property had never flooded," after which the Teers and Johnston signed a purchase agreement for the home.


The purchase agreement stated that the sale was an "as-is" transaction with the exception of a warranty Johnston would provide on the appliances, and also provided that the "contract constitutes the sole agreement between the parties and any modification hereto and any modifications of this contract shall be signed by all parties to this agreement. No representation, promise, or inducement not included in this contract shall be binding upon any party hereto."


While the Teers claimed that they were induced to sign the purchase agreement by the disclosure statement, both the Teers and Johnston acknowledged that the disclosure statement was not formally incorporated into the purchase agreement.


The Teers purchased the property in 2005 and moved in, after which the property flooded several times. The Teers filed suit against Johnston in 2007, seeking to rescind the purchase agreement, reverse the sale and recoup damages they incurred in buying and moving into the home.


Their primary claim was that Johnston intentionally and fraudulently induced them into buying the property by representing that it had no flooding issues, when she knew that it did.


The trial court granted summary judgment in favor of Johnston, citing Alabama's rule of caveat emptor in the "as is" purchase of real estate, and dismissed the Teers' case.


The Teers appealed to the Alabama Supreme Court, which affirmed the trial court's ruling. The high court of the state rejected the Teers' invocation of the rule that when a seller knows or should know of a material defect in the property that affects health or safety, both the seller and the listing agent are required to disclose the defect to the buyers.


The court agreed with the trial court that the Teers had not shown that the flooding on the rear of the property's lot was, in fact a material defect that affected health or safety.


Further, the court explained, in an as-is real property sale contract in Alabama, a fraudulent misrepresentation in pre-contract disclosures does not survive the execution of the purchase contract, unless that contract incorporates the pre-contract disclosures, which the Teers' contract did not.


The state's Supreme Court reiterated that in Alabama, on the resale of residential property, the caveat emptor rule applies, and sellers have no duty to disclose any property defects to buyers, unlike in many other states -- even in cases of seller fraud; the court went on to expressly reject the Teers' plea to reverse this "clear and consistent" line of cases upholding this rule.


The court concluded: "Because the 'as is' clause in the purchase agreement negated any reliance the Teers may have had on previous representations made by Johnston in the disclosure statement concerning the property in question, the Teers cannot establish their fraud claim against Johnston." Accordingly, the trial court's ruling was affirmed and the Teers' case was dismissed.


Tara-Nicholle Nelson Inman News December 1, 2010

FINANCE & FORCLOSURE: Bill calls for court OK to foreclose

Galvin says reviews would clarify titles, protect homeowners

“You aren’t going to straighten out the economy of the state until this housing thing gets figured out.” — William F. Galvin, Secretary of state


Secretary of State William F. Galvin plans to submit a bill next month that would force Massachusetts mortgage lenders to get court approval before seizing homes, in an effort to protect homeowners and address concerns about how foreclosures are conducted.


Galvin said he will revive a proposal that state lawmakers rejected two years ago because of new questions about the validity of titles for foreclosed properties — an issue housing specialists say is hampering the state’s real estate market.


“Unless we do something to clean up the titles in these properties we are going to have a big continued problem,’’ Galvin said. “You aren’t going to straighten out the economy of the state until this housing thing gets figured out.’’


Massachusetts is one of 27 states that do not require foreclosures to be reviewed by a judge.


Lenders and some real estate lawyers say mandating judicial approvals would create another level of bureaucracy that would delay the foreclosures and, in turn, slow the housing market’s recovery.


Indeed, foreclosures often take more time in states that require courts to sign off on them. The mortgage giant Fannie Mae, for example, estimates that it can take more than 180 days to complete a foreclosure in states with judicial oversight of foreclosures, compared with 90 days in Massachusetts.


Galvin, however, said that court oversight would help resolve the uncertainties about titles that have put the future of many properties in limbo. “You can create a very fast process and provide some finality,’’ he said.


Geoff Walsh, a staff attorney with the nonprofit National Consumer Law Center, based in Boston, said a longer timetable for foreclosures would give owners and lenders an opportunity to find other solutions.


“Allowing that time for the homeowner and the lender to communicate, particularly when there is some judicial supervision, is much more beneficial,’’ Walsh said. “The lenders lose a tremendous amount of money in completing a foreclosure.’’


Currently, lenders in Massachusetts must go through a series of steps before taking a home, including — in many cases — allowing for a 150-day waiting period before seeking foreclosure.


They must also publish a notice in a newspaper, submit a petition to the state Land Court, and warn an owner 14 days prior to auctioning a property.


Kathleen C. Engel, a Suffolk University Law School professor who specializes in mortgage law, said recent evidence of widespread problems with foreclosure procedures shows the need to have courts determine whether a lender has the legal right to seize a home.


“It looks like there are hundreds, potentially thousands, of situations where the lenders didn’t have standing to bring foreclosure claims,’’ she said.


The proposed legislation comes as concerns about foreclosure practices escalate nationwide.

LEGAL NEWS: Real estate attorney faces malpractice suit

Gertrude Banks, who lived in Washington, D.C., desired to take a loan out on a property she owned in New Jersey. She agreed in writing that she owed and would pay five relatives of her deceased husband $30,000 each out of the loan proceeds, according to court documents. None of the relatives lived in New Jersey.


New York attorney Jordan Kapchan handled the closing of the loan transaction, and also secured title insurance for the transaction from a New Jersey insurer.


Originally, Kapchan followed instructions to disburse $30,000 each to the five relatives, and cut checks to them, which were returned to him. With the returned checks, Kapchan received a letter from a woman named Vivian Prince, who claimed to be working on Banks' behalf, instructing him to cut a single check for $150,000 to Banks, which Kapchan did. Banks cashed that check, court documents state.


After closing, Banks defaulted on the loan and the lender commenced foreclosure proceedings. Her husband's relatives intervened in the foreclosure proceedings, claiming that Banks had defrauded them out of their interest in the property and not paid them their due. When the title insurer verified that the relatives had not been paid, the insurer paid each of the five relatives $30,000.


The title insurer, First American, then sued Kapchan in a New Jersey Superior Court for legal malpractice in not closing the transaction to professional standards and failing to disburse the funds in accordance with the HUD-1 settlement statement he prepared, which showed the $30,000 payments to each of the five relatives. Kapchan moved for the case to be dismissed, on grounds that the New Jersey court had no jurisdiction over him.


The trial court agreed with Kapchan and dismissed the case, finding that because Kapchan was a New York attorney and all the parties and funds involved were from states other than New Jersey, First American had not proven that Kapchan had sufficient contacts with the state of New Jersey for the New Jersey courts to gain jurisdiction.


First American appealed to the Appellate Division of the New Jersey Superior Court, which overturned the lower court's ruling. The Appellate Division clarified that First American was not claiming that Kapchan had sufficient contacts with New Jersey for the state to have general jurisdiction over him; rather, the title insurer argued that the specific loan transaction on a New Jersey property from which the matter arose endowed the New Jersey court with specific jurisdiction over Kapchan in connection with this transaction.


The court agreed with First American's rationale, holding that "the real estate itself provides a very tangible and central nexus between Kapchan, who prepared all or most of the transactional documents, including the HUD-1, and the State of New Jersey."


Additionally, Kapchan, by his own admission, acted as the closing agent for a New Jersey-based title company. As a result, it would not offend "traditional notions of fair play and substantial justice" for New Jersey courts to exercise jurisdiction over Kapchan in this specific situation. The trial court's ruling was reversed and the case sent back for further proceedings.


Tara-Nicholle Nelson Inman News November 10, 2010

LANDLORD INFORMATION: 5 need-to-knows for novice landlords; A guide to navigating tax breaks, maintenance, improvements.

It's an occasionally awkward fact of life in this American economy: Scores of people who never have been landlords suddenly find themselves in the position of collecting rent checks every month because they can't sell their homes and are installing tenants instead.


Then there are the owners of vacation properties who have turned their getaways into sources of income by renting them out.


The situation is sometimes awkward when both of the above categories of property owners find themselves running a business and struggling with the bookkeeping skills and the knowledge of tax-law basics the Internal Revenue Service expects, according to an expert on small-business tax considerations.


"Many novices fail to realize that when you put a place up for rent, you're in a business," according to Abe Schneier, senior manager in taxation with the American Institute of Certified Public Accountants in Washington, D.C. "You have to have a set of books and records that properly reflect your income and your expenses."


Five things for novice landlords to know about keeping their books in a way that will satisfy the IRS:


1. You really do have to keep books, period.


"You can't keep it on a scribble sheet," Schneier said. "When the IRS agent walks through the door, he's going to throw that back at you. It's not his job to do your bookkeeping."


But it doesn't have to be complicated, he said. "It can be as simple as using (an online spreadsheet system) or knowing how to keep a ledger sheet."


Whatever the system, it needs to be exactly that -- a system -- that readily separates income and expenses and clearly identifies and details entries in both categories. Plus, landlords have to retain and organize their receipts.


2. Deductibility can be a nifty thing -- maintenance, repairs and improvements that wouldn't be of any benefit (at least immediately) to the average homeowner can be write-offs for landlords, he said.


Examples of expenses incurred on properties that landlords can deduct from their income include: advertising, cleaning and maintenance, mortgage interest, insurance premiums, legal fees, utilities, property taxes and other costs.


The IRS also allows landlords to claim depreciation on their properties -- that is, that they "wear out" over the years, just as a manufacturer's equipment becomes used or is made obsolete over time. This can be a valuable deduction, but rules are complex. The government explains them at IRS.gov and in Publication 946, "How to Depreciate Property."


3. Landlords also can deduct the costs of traveling to their properties to collect rent or to perform work on them -- but only to a point, Schneier said.