Real Estate News and Commentary

May 11, 2010October 5, 2019

Foreclosure mediation

The 2010 regular session of the Maryland Legislature passed measures to assist and clarify issues regarding foreclosure. In addition to legislation that adds procedures to protect renters who live in homes in foreclosure, and clarifying that an individual must exercise the “power of sale” stated in a deed of trust – the requirement to provide a home owner the opportunity for mediation prior to a foreclosure sale will take effect July 1st, 2010.

Maryland H.B. 472: “Residential Property Foreclosure Procedures – Foreclosure Mediation” was the outcome of Governor O’Malley’s workgroup to explore the option of implementing a foreclosure mediation program to assist home owners stay in their homes while attempting to reduce the number of Maryland foreclosures. The bill was passed and recently signed into law.

The new law establishes additional rules for foreclosure filings as well as requirements to exhaust efforts assisting the home owner to retain their home, including mediation. As of July 1st, the new law requires any lender filing a notice of intent to foreclose (NOI), to provide the home owner an opportunity for loss mitigation (including mediation), as well as including additional foreclosure information.

To comply with the law, the NOI must either be accompanied by a preliminary or final affidavit for loss mitigation. The lender’s NOI will now include a statement recommending housing counseling; information on governmental foreclosure assistance; and an explanation of the Maryland foreclosure process (including time lines). Additionally, the NOI will be accompanied by a loss mitigation application; instructions for completing the loss mitigation application; a telephone number to call to confirm receipt of the application; a description of the eligibility requirements for the lender’s loss mitigation programs that may be applicable; and a preprinted envelope indicating the address of the person responsible for conducting loss mitigation on the lender’s behalf. Fees that are collected for the NOI will assist in funding mediation, housing counseling, and other foreclosure resources.

If the home in foreclosure is owner occupied, then the home owner can file a petition for mediation before the foreclosure sale date is scheduled. The request for mediation must be made within fifteen days of service or mailing of the final loss mitigation affidavit. The mediation will be conducted by the Office of Administrative Hearings (OAH), which has sixty days to schedule the mediation; the OAH has authority to extend mediation by no more than thirty days if needed. The OAH must report the outcome of the mediation either when the sixty days expires or after the expiration of any extension period that is granted. If no agreement is reached during mediation, the lender may schedule a sale date (which can be as early as fifteen days after the mediation hearing).

If mediation is requested by the home owner, the lender must be engaged in the process. The lender’s representatives who are present in mediation must have the authority to settle the matter or be able to readily contact someone who can. The home owner, when entering into mediation, may be accompanied by a housing counselor and/or an attorney.

Information regarding the new Maryland foreclosure mediation law will be available to home owners through approved housing counselors as well as the MDHope Hotline (1-877-462-7555). Additional assistance and additional foreclosure resources are available from the Maryland Office of the Commissioner of Financial Regulation (www.dllr.state.md.us/finance/consumers/mortforeinfo.shtml).

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 10, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

May 7, 2010October 5, 2019

With all due respect, Mr. Trump…

Dear Mr. Trump,

I enjoy watching your interviews and often listen intently to what you have to say. And although, you’ll have to forgive me because I do not follow your hit TV show, “The Apprentice,” I always find your appearances entertaining and sometimes educational. I even caught your recent interview by Joan Rivers (on her TV Land show, “How’d You Get So Rich?”); I’m always intrigued about real estate.

Of course, I can appreciate the point you made during the interview (which is the point you have been making for some time now) – it is a great time to buy real estate.

Mr. Trump, you do have a magic touch, there’s no doubt. So, naturally you caught my attention when you disclosed on national TV that your company purchased land along the Potomac River (mentioning a golf course). So of course, I wondered if the project was in MD, DC, or VA.

Lo and behold- I found that the public records indeed indicated that there was a purchase by your company. What a beautiful piece of land. There is a golf club, of course, and it is right on the on the Potomac River… in Sterling, VA!?

…Really?

With all due respect, Mr. Trump, if you want the opportunity to buy some great real estate and make some deals- why not here in Maryland? After all, there are plenty of deals and development opportunities– some even along the Potomac River, just minutes from DC!

So, Mr. Trump…I’m waiting for your call to see if we can do business (my contact information is on my website: www.dankrell.com). However, if it turns out we can’t- it’s all good! I’ll just catch your next interview.

All the best…

May 4, 2010October 5, 2019

Ethics, Wall Street, and Real Estate

Watching the recent Congressional hearings on the financial crisis makes you wonder about ethical leadership in Corporate America. The hearings can be characterized by Senator Carl Levin (D- MI) trying to explain to a seemingly confounded Goldman Sachs CEO Lloyd Blankfein about an alleged conflict of interest. Senator Levin made a salient point when he said, “…you want people to trust you…I wouldn’t trust you…”

My purpose is not to pass judgment on anyone; however, I feel there is a parallel to real estate practice. These hearings remind me why the National Association of Realtors has maintained a code of ethics since 1913 (Realtor.org). Much like security traders who take their code of ethics seriously, as well as Goldman employees (yes, Goldman posts their code of ethics that on their website under corporate governance); Realtors comply with the NAR code of ethics communicates to ensure there is integrity in all dealings.

Unfortunately, having a code of ethics does not guarantee that all members adhere to it; adherence is up to individuals and enforcement is based on the general milieu. Fortunately, in some states such as Maryland, aspects of the NAR code of ethics are incorporated into the real estate licensing law protecting consumers from rogue agents.

The preamble to the NAR code of ethics states, “In recognition and appreciation of their obligations to clients, customers, the public, and each other…” So, if you’re involved in a transaction with a Realtor, you can expect ethical conduct that includes (but not limited to) honesty, disclosure, commitment, and truthful communication.

Article 1 of the NAR code of ethics states that even though a Realtor’s “primary interest is to promote and protect the interests of their client”, they are obligated to treat all parties in the transaction honestly. An example that is given by the NAR is to present a client’s ability to purchase honestly even when they have issues that may interfere with a home purchase (such as credit issues). Another example is that a seller should not be mislead in an attempt to obtain a listing (standard of practice 1-3).

Article 2 indicates that Realtors are obligated to disclose any material facts they know of without exaggeration or misrepresentation. For example, a Realtor must disclose all property condition facts they are aware of, as well as a true picture of the nature of the problems if known.

Article 11 states that Realtors are committed to provide professional services for which they are trained and to ask assistance in situations where they lack training, while disclosing that fact. If the transaction exceeds a Realtor’s competence, the agent must seek competent assistance and disclose that fact to their client.

And finally, article 12 states that Realtors are required to be truthful in all communications including advertising. Besides identifying themselves as real estate professionals, Realtors are obligated to accurately depict all information communicated to the public. A contemporary example is the use of photo editing software- room photos should not be distorted such that rooms appear larger.

The point that is brought home is that ethics and business (including real estate) are not diametrically opposed, but rather coincide with each other. Ethics is not only good business, but as Senator Levin pointed out, it’s ultimately a matter of trust.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 3, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

May 2, 2010July 18, 2019

The Real Estate Pulse

Making news the week ending May 1st, 2010:

24 Rooms in an efficiency? Check out how to get the most of space:
A video from “World’s Greenest Homes” highlights a Hong Kong architect who transformed his efficiency into a 24 room living experience.

MarketWatch answers some important questions about credit reports:
How long does derogatory information remain on your credit report? This Q and A from MarketWatch has some explanation.

Homebuyer tax credits are over, now what?
The home buyer tax credit has officially expired. Some are upset, others are happy. The REOInsider has insight how this will impact the real estate market.

More mixed foreclosure data…
Although a recent report by Lender Processing Services (LPS) indicates about 7.39 million non-current and REO loans darken the Real Estate landscape, there is a recent reduction in delinquencies. Although the March foreclosure numbers improved from February there was an increase in loans moving from seriously delinquent to foreclosure. The Real Estate Economy Watch analyzes the newest data.

There’s no surprise in who’s backing residential mortgages:
The Wall Street Journal explains who is providing home loans; you might be surprised to know that a report from Mortgage Finance indicated that 96.5% of all home mortgages in the first quarter of 2010 were backed by Government entities. Government entities only backed 90% of all residential mortgages in the fourth quarter of 2009.

And Finally this week…
The Wall Street Journal reported that Karl Rove’s Washington, DC home is under contract.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

April 30, 2010November 23, 2021

The “right to rent”; an old idea is given new life

H.R. 5028 also known as the Right to Rent Act of 2010 was introduced April 15th by Representatives Raul Grijalva (D – AZ) and Marcy Kaptur (D – OH) as a means “To allow homeowners of moderate-value homes who are subject to mortgage foreclosure proceedings to remain in their homes as renters.”

According to Representative Grijalva’s press releases ([http://grijalva.house.gov/index.cfm?sectionid=13&parentid=5&sectiontree=5,13&itemid=582] and [http://grijalva.house.gov/uploads/R2R_2010.pdf]) , the bill is designed to allow homeowners facing foreclosure to rent the home back from the lender rather than being evicted while the bank is foreclosing. “The bill aims to give relief to middle-income homeowners, not speculators or people living in unaffordable mansions.” To qualify, the home must be the family’s primary residence for at least two years, the home must be equal to or below the median home price for the metropolitan area, and the mortgage must have been originated before July 1, 2007. Upon receiving a notice of foreclosure, the homeowner, may elect to rent for a term of up to five years at a rent determined by an appraiser.

The credit for the idea of “right to rent” along with the rules that seem eerily similar to those set forth by H.R. 5028 actually belongs to Dean Baker, the co-director of the Center for Economic and Policy Research. Mr. Baker’s idea of “right to rent” was introduced in 2007, when the idea was actually better suited to be implemented in helping distressed homeowners as well as reducing the impact of home value deterioration (http://www.guardian.co.uk/commentisfree/2007/oct/23/therightbailout).

The original article discussed the merits of keeping families in a home, maintaining the integrity of the neighborhood, all the while not requiring a government bailout:

“It is possible to help these families without any big bailouts or new bureaucracies…so that homeowners facing foreclosure will have the option to rent their home indefinitely at the fair market rent…The appraiser would determine the fair market rent…”

“This measure would ensure that current homeowners could at least keep a roof over their head…”

“This own to rent provision can be limited by both the date of issuance of the mortgage, and the value of the home…the own to rent option can be restricted to mortgages issued before July 1 2007…”

“To ensure that only less affluent homebuyers benefit, it can be restricted to homes that sold for less than the median price in an area…”

A variation of the “right to rent” was implemented by Fannie Mae in November 2009 and subsequently by Freddie Mac. Fannie Mae’s “Deed for Lease” program allows the homeowner to lease the home back from the lender for a twelve month period (the lease may be extended beyond the initial twelve months on a month to month basis) after giving the home back to the lender by completing a deed in lieu of foreclosure and meeting other criteria.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

by Dan Krell