Black and Buono Blog

Up! Again! It is refreshing to see home sales on the rise, consistently. Massachusetts single-family home sales were up in September for the third straight month when compared to the year-ago month.

Single-family home sales  jumped nearly 10% last month when compared to September 2010.

But on a month-to-month basis, sales dropped nearly 18% compared to home sales in August. Massachusetts Association of Realtors reported that it is typical to see a drop-off between August and September sales figures.

The Boston-based Warren Group, which tracks the state's real estate market, reported a 7% increase.

The boost was credited to historically low interest rates.

There was nearly a 2% increase in the median sales price to almost $295,000. Condominium prices were also up.

If this news give you the confidence and motivation to buy a new home or to sell your existing home, you need a real estate attorney to look out for your interests. Contact Black and Buono.

There is quite a renter’s market out there, both nationally and in Massachusetts. Rental occupancy is in the high nineties, and rent revenues are at an all time high.

...by Anthony Buono

As we head toward another recession, (many homeowners in Massachusetts will say we never left the last one), there are some disturbing credit facts out there I’d like to bring to your attention:

• According to Equifax, nearly 15 million new credit cards were issued in the first five months of 2011, a three-year high.
• Banks gave 4.4 million cards to consumers with poor credit histories, a 65% increase during that same time period last year.

...by Kiley Black

When buying or selling property, it is important to have the expertise of a real estate attorney to help you through any obstacles that may come up along the way. The risk of not hiring a Real Estate Attorney can cost a buyer/seller thousands if not tens of thousands of dollars. Since the purchase or sale of your home may well be your most significant financial transaction, you want to take care when entering into a real estate transaction.

Most people don’t realize how complicated buying and selling a house can be. The procedure requires reading and drafting complicated legal documents and familiarity with real estate transactions. If you have bought or sold a home, or know anyone who has, than you understand that the amount of paperwork involved is legendary. Each step from negotiating terms to drafting and closing entails a significant amount of paperwork.

Most people buy or sell a home once or twice in their life. Real Estate Lawyers handle this transaction every day. And each transaction is different, with different obstacles and situations.

The process of buying or selling a home includes the following:

1. Negotiating the terms of the Sales Contract. Everyone wants the best deal and a lawyer can help you protect your interests.
2. Strict legal deadlines: Many transactions fall through because deadlines are not met.
3. You need financing: At closing the purchaser signs hundreds of loan papers that an attorney can best explain.
4. Home inspections: A real estate lawyer will conduct a title search to assure the seller is the owner of the property, has paid all the taxes, and there are no judgments existing against the property.
5. Property and mortgage insurance: Mortgage lenders require that the home is insured

...by Kiley Black

A Deed in lieu of foreclosure is becoming an increasingly popular alternative to foreclosure.  A “deed in lieu” means the homeowner transfers all their interest in the property to the lender in order to avoid a foreclosure. The main difference: the transfer is voluntarily made. However, there are some limitations and restrictions you must be aware of if you are contemplating a deed in lieu of foreclosure.

Creditors Claims - Preferences: There is the possibility that other creditors of the Mortgagor may attempt to void the conveyance as a fraudulent transfer or a preference under bankruptcy law.  In order to prevent such a re-characterization, you have to demonstrate that the value of the property is less than the amount of outstanding debt.  You can do this by obtaining an appraisal, which needs to show the current value of the property is now less than the amount of outstanding debt owed under the note and mortgage at the time of the deed in lieu.  Massachusetts has adopted the Uniform Fraudulent Transfer Act and, in doing so, has created a four year period for avoidance of fraudulent conveyances.
 
An Absolute Conveyance -Freely Made: The deed in lieu should indicate that it is an absolute conveyance and that there are no other agreements between the parties with respect to the property.  As a practical matter, this means there cannot be agreements between the parties that would allow the Mortgagor to make a claim in the future, that despite the recording of the deed, the actual intent was to allow for redemption and reacquisition of the property by the Mortgagor if future payments were to be made.  Also, to avoid any suggestion of duress, undue influence and coercion, the deed should also recite that it is freely and fairly made.
 
Affidavit from the Mortgagor: The intent of the Mortgagor should be confirmed by a satisfactory Affidavit, which states that the conveyance is an absolute conveyance, freely and voluntarily made, not given as a preference against other creditors of the Mortgagor, and that the consideration for the deed includes the cancellation of all debts and charges secured by the mortgage (describing the mortgage and the recording information) and the release of the mortgage.  
 
Payoff All Outstanding Mortgages and Liens: Unlike a foreclosure, a deed in lieu is a voluntary conveyance and, therefore, subject to all junior mortgages and liens that would normally be extinguished by a proper foreclosure.    Hence, you will need to obtain and record the necessary releases of all other mortgages and liens on the property or our title insurance policy would need to take an exception for the same.

...By Anthony Buono

Bankruptcy filings by individuals are off sharply this year compared to 2010, reflecting a modest improvement in household finances in Massachusetts.

During the first six months of 2011, Chapter 7 bankruptcy filings dropped to 7,733 filings, down about 20 percent from 9,411 filings during the first six months of 2010.

Business bankruptcies, however, are on pace with 2010 numbers. During the first six months of this year there were 111 Chapter 11 filings, compared to 105 filings during the first six months of last year.

Chapter 7 filings usually involve liquidation and are used by individuals or families and, sometimes, companies that fail to right their courses through Chapter 11 proceedings.

Nationally, the number of personal bankruptcy filings dropped 6 percent during the first quarter of 2011.
While unemployment is still high, creditor pressure has eased to some degree as foreclosures have dropped in recent months.

The declining number of personal bankruptcies may also simply be because during the worst of the recession, many people filed and the people left are more stable financially — or they’re just trying to hold on as the economy gradually improves.

Original article in Boston Business Journal

...by Anthony Buono

Addressing a group of 200 real estate agents, mortgage brokers, attorneys, home inspectors, and property managers today, Attorney General Martha Coakley highlighted her proposed legislation to address the ongoing mortgage foreclosure crisis that has gripped Massachusetts.

An Act to Prevent Unnecessary and Unreasonable Foreclosures, which is sponsored by Senator Spilka and Representative Walsh, requires that creditors take reasonable steps to avoid foreclosure and prohibits foreclosures without appropriate documentation.  The legislation will also prevent additional foreclosures by mandating loan modifications in certain circumstances.  AG Coakley discussed the legislation during her keynote address at the North Shore Association of Realtors’ Annual Membership Meeting and Business Expo in Peabody.

“Our communities have been devastated by the housing crisis,” said Coakley.  “The proposed legislation will help rebuild our communities by promoting a process in which creditors and borrowers work together.  Requiring creditors to take reasonable efforts to avoid unnecessary foreclosure is in everyone’s best interest.”

The legislation targets loans generally considered to have a higher risk of default, such as interest-only loans, adjustable rate mortgages, and loans with short-term introductory interest rates.  Under the bill, creditors are required to have appropriate documentation that supports their right to foreclose prior to beginning foreclosure proceedings and are prohibited from passing on certain fees and costs associated with foreclosure to homeowners. 
The legislation makes the failure to comply with the law a violation of the Massachusetts Consumer Protection Act.

During this economic crisis, Coakley’s office has brought predatory lending cases against two major subprime lenders, Fremont Investment & Loan/Fremont General and H&R Block/Option One Mortgage Corporation.  The Attorney General’s Office has also reached settlements with investment giants Goldman Sachs and Morgan Stanley for their role in securitizing subprime loans. 

Original article by Moe Bedard  

...by Anthony Buono

A strategic default in terms of home ownership is the decision by a homeowner to stop making mortgage payments (to default) on their debt despite having the financial ability to make the payments.

This is particularly associated with residential mortgages.  It usually occurs after a substantial drop in the house's price when the debt owed is much greater than the value of the property, meaning negative equity or underwater, and is expected to remain so for the foreseeable future.

Homeowners who walk away in strategic defaults are not necessarily the ones most 'underwater.'

Credit scores are designed to predict the risk of default. But when it comes to strategic default -- which is when people who can afford to pay their mortgages don't, usually because their homes are worth less than their loans -- analysts have noticed a reverse phenomenon: Good credit scores can indicate a higher likelihood that a homeowner will voluntarily bail on a home loan.

Today, somewhere around one in three mortgage defaults is strategic.

"People who make the decision to strategically default tend to be more savvy," said Andrew Jennings, the chief analytics officer for Fair Isaac, the company that created the leading FICO credit score. "Most of the people who walk away from a mortgage are saying, 'This is not a contract that makes sense anymore.'"

FICO analysts looked at a population of borrowers who started out current on all their bills but wound up 90 days or more behind on their mortgages.

The people who stayed current on their other bills but stopped paying their mortgages had better initial credit scores and lower credit balances, and were less likely to have gone over their limits -- all signs of responsible money management.

Intriguingly, one factor that wasn't a strong predictor of strategic default was how far "underwater" these homeowners were. What mattered far more was the future trajectory of home prices.

Another point: research indicated that 40% of strategic defaulters lived in "recourse" states, where they could face lawsuits over debts that remained after foreclosure. It's not clear whether defaulters didn't understand the risks or whether they had bet that their lenders wouldn't come after them.

“We feel that people take this action without fully understanding the consequences," Jennings said. The message coming from them is that if enough people take this action, there is no way the banks are going to come after us, and even if they do, we can declare bankruptcy."

Strategic default dumps the traditional "payment hierarchy" on its head. In the past, lenders could count on people skipping other payments first before they reneged on their mortgages. And, the trend seems to be growing. A study at the University of Chicago found that 35% of mortgage defaults in the U.S. were strategic in September 2010, compared with 26% in March 2009.

If you're thinking about skipping out on your mortgage, here's what you need to keep in mind:

• The foreclosure process varies by state and by lender. Don't count on other people's experiences to predict your own.
• Your risk varies. Some states prohibit lenders from suing you for mortgage balances you owe on a primary residence. Massachusetts is NOT one of those states.  Massachusetts allows the lawsuits. Before you stop paying, talk to a bankruptcy attorney who is familiar with the credit and real-estate laws in your state as well as industry practices.
• Understand what a foreclosure does to your credit. The higher your credit scores, the longer they will take to heal.

By Anthony Buono

If you are in a position where you are underwater on your home, you are not alone in Massachusetts. Unfortunately, 17% of homeowners are underwater in Massachusetts. If you think you need to sell your home, and you believe you will have to sell at a loss, it is important to solicit the help of a real estate attorney. There may be ways to keep you in your home. But, if you think you are in financial trouble, the time to act is now.

Losses Rise as the Boston Housing Market Tumbles

Greater Boston’s housing market has tumbled back to 2002’s pricing levels, and one out of every three homes being sold is resulting in a loss.

The price declines have left approximately 17 percent of the Massachusetts homeowners underwater, that is, holding a mortgage balance that exceeds a home’s value. Greater Boston’s “underwater” rate — essentially one in six homeowners — is up from the 14 percent of Massachusetts homeowners who were underwater at the end of 2010 and is far ahead of the 11.7 percent mark set a year earlier. The national negative-equity rate is 28.4 percent.

The local housing data was included in a national report published Monday by Zillow.com.

According to the Zillow analysis, Boston-area home values were down 5.3 percent on a year-over-year basis as of March 31 and had tumbled 2.6 percent from the end of 2010. The region’s average single-family home value was $305,800 at the end of the quarter, versus the national average of $169,600. Pricing averages are derived from Zillow’s Home Value Index and include all homes, and “not just those that sold in a particular period.”

Boston-area prices have slipped 23.2 percent since their peak in July 2005 and are back to where they were nearly a decade ago in June 2002.

The trends appear to be forcing more homeowners to sell at a loss. According to Zillow, 33.9 percent of all first-quarter sales went for less than their prior purchase prices. That was up roughly 3 percent on both a year-over-year basis as well as a quarter-to-quarter basis. Nationally, 37.7 percent of all home sales were at a loss in the first quarter — a new record.

Original article-Boston Business Journal by Craig M. Douglas

Attorney Anthony Buono explains what his law firm brings to the table that other real estate law firms in Massachusetts do not bring. He speaks about experience and commitment. With over 30 years of experience in Real Estate and Bankruptcy Law in Massachusetts, the Law Office of Black and Buono has broad based knowledge of the real estate market and processes in the Framingham area and throughout all of Massachusetts.



For more information on why you should have your own real estate attorney, on purchasing a FSBO properties or short sale homes, or information on the bankruptcy process, visit the Black and Buono You Tube channel, or contact us.