FOR HOMEOWNERS WITH FEDERALLY BACKED MORTGAGES

The CARES Act puts in place two protections for homeowners with federally backed mortgages:

• First, your lender or loan servicer may not foreclose on you for 60 days after March 18, 2020. Specifically, the CARES Act prohibits lenders and servicers from beginning a judicial or non-judicial foreclosure against you, or from finalizing a foreclosure judgment or sale, during this period of time.
• Second, if you experience financial hardship due to the coronavirus pandemic, you have a right to request a forbearance for up to 180 days. You also have the right to request an extension for up to another 180 days. You must contact your loan servicer to request this forbearance. There will be no additional fees, penalties or additional interest (beyond scheduled amounts) added to your account. You do not need to submit additional documentation to qualify other than your claim to have a pandemic-related financial hardship.

Contact a HUD counselor to discuss these options.

The method of repayment varies depending on your loan and the options offered. Not all borrowers will be eligible for all options. You should take steps to be aware of how these programs work and what you can expect in terms of repaying these amounts.

Generally, repayment of forbearance occurs by the amount being repaid:

• in one lump sum at the end of the forbearance period
• added onto your existing monthly payments over a set number of months
• added to the end of your loan as additional payments or as a lump sum

Just as forbearance may differ between the federally backed agencies or entities, so does the repayment of the forbearances.

Please check back for updated information as well as check with your loan servicer and the website of the agency or entity that owns or guarantees your loan. The following information provides some of the options to repay your forbearance.

• Fannie Mae & Freddie Mac loans:
  • Borrowers allowed to repay past due amount within 12 months after forbearance ends;
  • Extend the term of the mortgage by the exact number of months in forbearance;
  • Add past due amounts into loan balance and extend the term of the loan by the number of months necessary to make the monthly payment the same as the previous payment;
  • Add past due amounts into loan balance and extend term of loan for 40 years (480 months).
• FHA loans:
  • Borrowers may enter into a repayment plan to repay past due amounts within 6 months after forbearance ends;
  • Extend term of mortgage to 30 years (360 months) by adding the past due amounts into the previous monthly payment;
  • Past due amounts paid off at the end of the loan in a lump sum.
• VA loans:
  • Borrowers may enter into a repayment plan to repay past due amount within 6 months after forbearance ends;
  • Add past due amount into loan balance and extend term to 30 years (360 months);
  • Targets lower payment of 31% of borrower’s gross income by extending loan term to 30 years (360 months) with option to forbear principal.
• USDA loans:
  • Borrowers may enter into a repayment plan to repay past due amounts within 6 months;
  • Add past due amount into loan balance and extend term to 30 years (360 months) as long as payment less than or equal to payment prior to forbearance;
  • Lump sum repayment at loan payoff.

A SALE OF HOME GOES BAD - DELAY IN RETURN OF DOWN PAYMENT

When a contract of sale is contingent on a mortgage commitment, the buyer should document its attempt at getting the loan. Otherwise, the issue of returning the down payment may be litigated.

Doony, Inc. v Palmiotto, 2019 NY Slip Op 02065, Decided on March 20, 2019, Appellate Division, Second Department:

"On June 23, 2017, the plaintiff entered into a contract to purchase real property from the defendant Mark Palmiotto (hereinafter the seller) for $435,000 and, upon execution of the contract, it tendered a down payment of $43,500. Pursuant to the contract, the plaintiff was required to promptly apply to one or more institutional lenders for a mortgage loan in the amount of $391,500. The plaintiff's obligations to complete the sale were contingent upon the issuance of a commitment from an institutional lender on or before 30 days from receipt by its attorney of a fully executed contract (hereinafter the commitment date). The contract of sale expressly provided that "a commitment conditioned on the Institutional Lender's approval of an appraisal shall not be deemed a Commitment' hereunder until an appraisal is approved."

On August 7, 2017, the plaintiff obtained a commitment from a lender conditioned upon an appraisal showing an "as is" fair market value of the property of not less than $435,000. The appraisal, which was performed on August 18, 2017, and issued on August 31, 2017, valued the premises at $395,000. As a result, the plaintiff asserted that no commitment as defined by the contract had been issued, and demanded the return of its down payment, but the defendants refused to return the funds. In January 2018, the plaintiff commenced this action to recover its down payment, and after joinder of issue but prior to discovery, moved, inter alia, for summary judgment on the complaint. As relevant here, the Supreme Court denied that branch of the plaintiff's motion which was for summary judgment on the complaint.

The plaintiff failed to establish its prima facie entitlement to judgment as a matter of law (see Alvarez v Prospect Hosp., 68 NY2d 320; Samson v Sapphire Capital, Inc., 74 AD3d 1172). In her supporting affidavit, the plaintiff's principal conceded that the plaintiff delayed in filing an [*2]application for a mortgage loan, and she failed to state when the plaintiff applied and the number of institutional lenders to which application was made. Moreover, the plaintiff failed to set forth the date on which its attorney received the fully executed contract, thereby rendering it impossible to ascertain if the lender's denial was timely, so as to trigger the plaintiff's right to cancel. Under such circumstances, the plaintiff failed to eliminate all triable issues of fact as to whether, inter alia, it made a prompt application for a mortgage loan and whether it properly cancelled the contract (see Dazzo v Kilcullen, 127 AD3d 1126, 1128; Hsieh v Pravder, 106 AD3d 694, 695; Samson v Sapphire Capital, Inc., 74 AD3d at 1173). Since the plaintiff failed to meet its prima facie burden, we need not consider the sufficiency of the opposition papers (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Miloslavskaya v Gokhberg, 126 AD3d 678, 679).

Accordingly, we agree with the Supreme Court's determination denying that branch of the plaintiff's motion which was for summary judgment on the complaint."

ADVANCE FEES FOR LOAN MODIFICATION SERVICES

"Enacted in 2008, the Foreclosure Prevention and Responsible Lending Act is a comprehensive law that addresses various issues relating to the foreclosure crisis, including predatory subprime lending, the foreclosure process, foreclosure prevention, mortgage fraud, and loan modification scams.  The law prohibits the upfront payment of fees by consumers to distressed property consultants.  In December 2009, parts of the law were amended to limit exemptions from the scope of the law.  Licensed attorneys who provide distressed property consulting services in the course of their legal practice are still exempt, but licensed attorneys who provide those services outside of their legal practice are not." 

See http://www.preventloanscams.org/states/new-york/new-york-law-prohibits-advance-fees-for-loan-modification-services

MORTGAGE BROKER GROUPS AND TRID

It would appear there is an attempt is being made by mortgage broker groups to delay the penalty period for TRID non-compliance:

http://campaign.r20.constantcontact.com/render?ca=a66799fa-d4f0-4585-a48a-8f731ffedc38&c=8db0f940-35c2-11e3-b42a-d4ae52a45a09&ch=8ea89fb0-35c2-11e3-b525-d4ae52a45a09

I attended a TRID training seminar recently and the consensus is that because residential sales must be handled differently, some of the past practices will no longer apply. Buyers, and Sellers, should now be made aware that this cannot be an accelerated process and attorneys should advise Sellers and Buyers of the effect of the TRID rules.

FROM THE CFPB RE: MORTGAGE APPLICATIONS

 "Good afternoon,

Consumers applying for most mortgages now face less stress when shopping for their loan since our new rule and forms took effect on October 3. We made these changes to ease the process of taking out a mortgage, help you save money, and ensure you Know Before You Owe.

Learn more about Know Before You Owe: consumerfinance.gov/know-before-you-owe

In addition to making it easier to understand these forms, the Know Before You Owe mortgage disclosure rule:

• Combines four overlapping disclosure forms into two forms, the Loan Estimate and the Closing Disclosure.
• Allows you time to review your Closing Disclosure to ensure you fully understand terms and obligations.

Check out how these new Know Before You Owe measures will better serve consumers and lenders today: consumerfinance.gov/know-before-you-owe

Thank you,

Consumer Financial Protection Bureau"

TRID STARTS TOMORROW

October 3 is the start date for the new Loan Estimate and Closing Disclosure requirements a/k/a the “Truth-in-Lending RESPA Integrated Disclosure” Rule a/k/a TRID that will combine two existing disclosure regimes under TILA and RESPA and make mortgage disclosure easier for consumers to understand and use.

According to the Consumer Financial Protection Bureau: http://www.consumerfinance.gov/blog/know-before-you-owe-making-the-mortgage-process-easier-for-you/

For some other views on this see:

http://www.wsj.com/articles/new-mortgage-rules-may-spark-delays-frustration-1443519000

https://www.parjustlisted.com/top-ten-things-realtors-need-to-know-about-respa/

MORTGAGE LOAN APPLICATIONS AND MISREPRESENTATIONS

According to ABA Journal for September 2015, the most common misrepresentations on a mortgage loan application, from 2013 through 2015, were:

1. 62% - the amount of liabilities.

2. 18% - intent to occupy as primary residence.

3. 9% - material facts about property or comparable sales.

According to The Washington Post:

"What happens to borrowers who lie about property use and subsequently are found out? Usually it’s not pretty. Lenders can call the loan — demanding immediate, full payment of the outstanding mortgage balance. If the borrowers can’t afford to or refuse to pay, the lender typically moves to foreclose — wrecking whatever plans of long-term investment or vacation-rental-home ownership the borrowers might have had. In cases involving multiple misrepresentations, lenders can also refer the case to the FBI: Lies on mortgage applications are bank fraud and can trigger severe financial penalties, prosecution and prison time if convicted."

See http://www.washingtonpost.com/realestate/a-little-lie-on-mortgage-application-can-cost-you-big/2015/06/30/2e2dcff0-1e6b-11e5-aeb9-a411a84c9d55_story.html

COMMUNITY FORUM ON MORTGAGE LENDING

From the Empire Justice Center:

Join the Empire Justice Center for a Community Forum on Mortgage Lending on Long Island

What: Release and community briefing on Empire Justice Center’s most recent report.

Who: Ruhi Maker and Barbara Van Kerkhove of Empire Justice Center

Date: Friday, September 18, 2015

Time: 10:00 am – 1:00 pm

Where: Touro Law Center, Faculty Conference Room
              225 Eastview Drive
              Central Islip NY 11722

Why: Learn about results and recommendations from Empire Justice Center’s most recent analysis of mortgage lending in Nassau and Suffolk Counties. Share your ideas to improve access to credit in our community.

RSVP by September 11, 2016!

Questions?  Contact Maria DeGennaro at (631)650-2319 or Ruhi Maker at (585)295-58

NEW RULES ON MORTGAGE EFFECTIVE OCTOBER 3

The Consumer Financial Protection Bureau (CFPB) issued a final rule moving the effective date of the Know Before You Owe mortgage disclosure rule, also called the TILA-RESPA Integrated Disclosures rule, to October 3, 2015. The rule requires easier-to-use mortgage disclosure forms that clearly lay out the terms of a mortgage for a homebuyer.

A copy of the final rule is available here:

http://files.consumerfinance.gov/f/201507_cfpb_2013-integrated-mortgage-disclosures-rule-under-the-real-estate-settlement-procedures-act-regulation-x-and-the-truth-in-lending-act-regulation-z-and-amendments-delay-of-effective-date.pdf

NEW RULES FOR HOME BUYERS?

As reported:

"Fannie Mae (FNMA) and Freddie Mac have set terms for letting borrowers put down as little as 3 percent of a home’s cost to get mortgages, a step criticized by Republican lawmakers as a return to risky lending.

Starting on Dec. 13, Fannie Mae will allow the lower down payments for first-time homebuyers and permit refinancing borrowers to reduce equity to 3 percent to cover closing costs, the company said today in a statement. Freddie Mac will begin a program in March giving breaks to lower-income buyers and first-time borrowers who get housing counseling."

NEW MORTGAGE RULES EFFECTIVE JANUARY 10, 2014

High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z) and Homeownership Counseling Amendments to the Real Estate Settlement Procedures Act (Regulation X):

http://www.consumerfinance.gov/regulations/high-cost-mortgage-and-homeownership-counseling-amendments-to-regulation-z-and-homeownership-counseling-amendments-to-regulation-x/#consumers

ON MORTGAGE RESCUE SCHEMES

Newsday reports today about a further development with one of the parties involved in the Empire Property Solutions matter.

Here is a link to a January 2012 decision in Nassau Supreme in an action by the NYS Attorney General against various parties involved which also describes some aspects of the scheme:

http://statecasefiles.justia.com/documents/new-york/other-courts/2012-ny-slip-op-30346-u.pdf?ts=1329488079

LATEST NUMBERS ON HOMES IN DANGER OF FORECLOSURE

The numbers with respect to homes valued less than the debt are staggering - nationwide 37% are "effectively" underwater with New York at 29.9%:

http://zillow.mediaroom.com/index.php?s=159&item=437

HMDA

"
Each year thousands of banks and other financial institutions report data about mortgages to the public, thanks to the Home Mortgage Disclosure Act, or “HMDA” for short. These public data are important because:

• Help show whether lenders are serving the housing needs of their communities;
• Give public officials information that helps them make decisions and policies; and
• Shed light on lending patterns that could be discriminatory"

See their site:

http://www.consumerfinance.gov/hmda/explore

MORE NEW ISSUES IN FORECLOSURE

There are many stories on this:

Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say

This action is pending in US District Court Massachusetts but the plaintiffs are seeking class certification and New York is one of the states that would be covered in the proposed class.

Here is a link to Plaintiff's memorandum of law for class certification which describes in more detail the nature of the action:

IN RE BANK OF AMERICA HOME AFFORDABLE MODIFICATION PROGRAM (HAMP) CONTRACT LITIGATION CLASS CERTIFICATION MEMORANDUM OF LAW

REVERSE MORTGAGES

Yesterday I attended a CLE on reverse mortgages sponsored by Tradition Title Agency.

A reverse mortgage is actually called a Home Equity Conversion Mortgage (HECM). It is a FHA program and, in my opinion, may not be completely explained in the commercials I see on television. Some basic information about them, the costs, eligibility, etc. can be found at these links which I found to be helpful:

HUD - Frequently Asked Questions about HUD's Reverse Mortgages

WIKI - Reverse mortgages in the United States

Another interesting fact I learned is that not all banks are offering reverse mortgages.

WHAT IS AFFORDABLE HOUSING

From the HUD website:

"The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care. An estimated 12 million renter and homeowner households now pay more then 50 percent of their annual incomes for housing, and a family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States. The lack of affordable housing is a significant hardship for low-income households preventing them from meeting their other basic needs, such as nutrition and healthcare, or saving for their future and that of their families."

I bring this up due to my work yesterday as a volunteer lawyer for the Nassau County Bar Association Mortgage Foreclosure Clinic.

MORTGAGE FORECLOSURE CLINIC TODAY MAY 6 AT NCBA

I will be a volunteer lawyer today:

"Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County.

Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation. The attorneys will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.

In addition to meeting one-on-one with a volunteer attorney, housing counselors, bankruptcy attorneys and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- are on hand to provide assistance.

→ Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents. Attorneys fluent in other languages are available upon request when reserving.

All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola."

MORTGAGE FORECLOSURE CLINIC AT NCBA

I will be a volunteer lawyer today:

"Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County.

Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation. The attorneys will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.

In addition to meeting one-on-one with a volunteer attorney, housing counselors, bankruptcy attorneys and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- are on hand to provide assistance.

→ Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents. Attorneys fluent in other languages are available upon request when reserving.

All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola."

MORTGAGE FORECLOSURE CLINIC AT NCBA

I will be a volunteer lawyer today:

"Nassau residents caught in the growing mortgage foreclosure crisis can have their questions answered by attorneys at a free clinic sponsored by the Nassau County Bar Association at the NCBA headquarters, 15th and West Streets, Mineola, NY. Attorneys have volunteered to provide one-on-one guidance, advice and direction to any Nassau County homeowner who is concerned about foreclosure matters or is already in the foreclosure process involving property in Nassau County.

Attorneys have volunteered to review individual foreclosure issues with Nassau homeowners, help them sort things out, and give advice or refer them to agencies and programs, right in the same room, that may be able to help. This is not legal representation. The attorneys will help the homeowner find out if indeed, they need a credit counselor or a lawyer, and get them in touch with available resources.

In addition to meeting one-on-one with a volunteer attorney, housing counselors, bankruptcy attorneys and representatives from Nassau/Suffolk Law Services -- which provides free legal services for those who meet certain income guidelines -- are on hand to provide assistance.

→ Reservations are required by calling the Bar Association at 516-747-4070. Please bring your mortgage documents. Attorneys fluent in other languages are available upon request when reserving.

All clinics are 3-6 p.m. and are held at the Nassau County Bar Association in Mineola."