Black and Buono Blog

"Can I afford this mortgage?" is a question that only you can answer.  But I think it's probably worth outlining the questions you should ask yourself before you decide to default on your mortgage:

1.  Have I made a good faith effort to cut my expenses?  Have I cut out cable, sold vehicles or boats, cut down on bills, stopped unnecessary expenses or cut down on vacations?

2.  Have I made a good faith effort to ramp up my income?  Have I looked for freelance work, part time jobs?  Have I considered a roommate if that works in my situation?

3.  Is the mortgage cutting into necessary savings?  After I have worked on the income and expense side, can I pay the mortgage while still saving:

• 15% of my income for retirement
• An adequate sum for college if I have kids
• An emergency fund of at least 6 months worth of expenses
• Any savings for special needs or upcoming medical expenses

4.  Would keeping the house endanger my family's health or education?  If your two-story house is too far underwater to sell, you don't have spare cash to put toward the mortgage while you rent it out, and a loved one is in the hospital; default on the house if you don't have enough savings to make up the equity shortfall.  
 
5.  How likely is this circumstance to change?  If you just lost your job which was necessary to pay the mortgage, immediate strategic default should be held off.  But if it's been nine months and the mortgage is eating up your savings, it's time.  If your income situation is likely to be long term then there's no sense putting off the inevitable.  Stop paying your mortgage and start talking about a short sale, start talking to a personal bankruptcy lawyer, and get credit counseling.

If you think you'll make more money later, what is right and what is sensible is to take an extra job for a while to cover the mortgage.

6.  Is the bank going to come after me for the deficit?  If the deficit is smaller than your emergency fund, consider using the emergency fund to sell the house and make up the deficit. You will be better off saving the emergency fund again than you will be destroying your credit.

If the deficit greatly exceeds your assets (other than retirement which creditors can't touch), then do a short sale, a deed-in-lieu, or go through a forecloser. If the lender won't negotiate down to something you can pay, talk to a bankruptcy attorney.

Contact Black and Buono, real estate lawyers who can assist you in your short sale transaction and bankruptcy lawyers who can help you with a personal bankruptcy filing or credit counseling.

Excerpts – The Atlantic

...by Kiley Black

A short sale is when the lender agrees to accept less than they are owed for an outstanding mortgage loan. A bank would much rather agree to a Short Sale than foreclose on a home. Homeowners that are in jeopardy of foreclosure may attempt to negotiate a short sale in order to preserve their credit and limit their future financial responsibilities. If you are a buyer, and you have time and patience, buying a short sale home can be a bargain of sorts.

Massachusetts short sales are not your typical transaction and you need patience, understanding of the process, and you need to consult with qualified professionals. There are additional legal and tax issues that apply to a short sale which can change the timeline for the negotiations and closing date.

The Massachusetts foreclosure process can take over 90 days and is an expensive legal process. The bankruptcy court allows sales to be overturned if the amount of the sale was less than the market value of the property. So lenders in Massachusetts go out of their way to notify prospective buyers and real estate agents of an upcoming sale.

Negotiating a successful transaction requires an accepted contract with the Seller subject to lender approval. To prevent foreclosure, the Seller must have an offer that meets lender guidelines for approval, but there is no guarantee of lender approval. Follow these guidelines to improve your chances of a buying and closing on a short sale listing:

You must be a Qualified Buyer
You must show that you qualify to purchase the property. The lender will not approve a short sale with a home buyer unless they have reasonable assurances that you have funding. Obtain credit approval or, if you are a cash buyer, provide proof of funds through bank statements or letters of credit. The pre-approval must not contain restrictive conditions such as subject to the sale of an existing property.

The Listing
Sellers selling short usually have a limited amount of time to obtain a qualified buyer in order to avoid foreclosure. If they have not started the process with their lender and provided the necessary paperwork, there may not be enough time to affect a sale.

Do not pursue a property that is not short sale ready as you may be locked in for a long time and may not be able to buy other properties that come on the market.

Negotiating the Offer
The first step is to have the Seller accept your offer and in most cases you will be competing with multiple buyers.  Buyer qualifications, selling price and terms will be the deciding factors for seller acceptance. Offers with fewer contingencies are usually preferred by sellers and lenders.

Home Inspection – be prepared to invest the time and money in the home inspection prior to lender approval. A seller risks losing the buyer on the inspection issues and will not have time to sell the property to another buyer so they can’t wait for lender approval.

Closing Date Flexibility - lenders often require a quick closing once they approve the short sale. To take advantage of your contract you may be required to meet the lenders conditions. Also, be prepared to lock your interest rate thru closing so that your mortgage commitment will be valid.

Subsequent offers in Massachusetts, real estate law requires that all offers be submitted to the Seller. A contract with a higher sales price may have a better chance at being approved by the lender and may be a financial advantage to the Seller. The lender will give the Seller direction as to submitting additional offers.

Lenders have large inventories of distressed property so you must have realistic expectations of the time-frame for approval. It may take as long as 180 days and during this timeframe, property values can change.

...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

In March 2009, the Obama administration launched the Home Affordable Modification Program (HAMP) which promised to keep 3-4 million struggling families in their home.  To date, the HAMP program actually helped about half a million.  Treasury Secretary Timothy Geithner has acquiesced the program will not meet the numbers promised.

On March 16, 2011, the Congressional Oversight Panel (COP) released its final report.

Within the report released December 14, 2010, the COP reported, “In April 2010, in its most recent report on Treasury’s foreclosure prevention programs, the Panel raised serious concerns about the timeliness, accountability, and sustainability of Treasury’s efforts. The Panel also noted “It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble…. Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated.”

The report’s conclusion of the success of the HAMP was brutal yet honest.  “The Panel now estimates that HAMP will prevent only 700,000 to 800,000 foreclosures – far fewer than the 3 to 4 million foreclosures initially promised, and vastly fewer than the 8 to 13 million foreclosures expected by 2012.”

 “In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer’s interests may at times sharply conflict with those of lenders and borrowers.”

“For example, although lenders suffer significant losses in foreclosures, the loaning institution can turn a substantial profit from foreclosure-related fees. As such, it may be in the bank’s interest to move a delinquent loan to foreclosure as soon as possible.”

“Another major obstacle is that many borrowers have second mortgages from lenders who could profit by blocking the modification of a first mortgage. Therefore, HAMP’s straightforward plan to encourage modifications has proven ineffective in practice.”

The report provides an answer to why most HAMP applicants have had the same paperwork requested several times by the same lender during their loan modification approval process without reasonable explanation.

The COP report concludes that the real problem with the HAMP approval process may have been that “Treasury has also failed to hold lending banks accountable when they have repeatedly lost borrower paperwork or when they have refused to perform loan modifications.”

The Panel communicated had several more concerns and made suggestions to the Treasury for improvements.  This feedback was ignored.  COP concluded, “many billions of dollars set aside for foreclosure mitigation may be left unused. As a result, an untold number of borrowers may go without help – all because Treasury failed to acknowledge HAMP’s shortcomings in time.”

The COP offers now that at least there should be learning from mistakes in developing any further programs.  “Future policymakers should be mindful that the incentives of mortgage lenders are different from those of the government, and design any foreclosure mitigation program with that reality in mind.”

Truer words could not have been spoken by the COP.  Those that work in housing related industries do understand the problem from the perspective of real world everyday business workings unlike those who are making policy in Washington D.C.

The fact is that the federal government penalizes anylender that actually agrees to reduce a borrower’s principal amount or even lower their interest rate. In the past, when a financial institution purchased a mortgage on the secondary market and modified the loan, the homeowner was taxed on the debt that was forgiven, and the financial institution was taxed on the difference between the purchase price of the loan and the new modified face amount.  Because of this, mortgages were rarely, if ever, modified.

Because of the housing crisis, the tax on homeowners was eliminated, but the tax on the lender was left untouched.  This has become a very real deterrent to modification, and almost half of all mortgages modified since 2005 have re-defaulted within a year of modification.

It only stands to reason that if this tax is eliminated, the number of modifications will increase, and the number of foreclosures will decrease.
 
In reality, those institutions providing loans really don’t want to take over the titles homes.  They would much prefer to figure out a way to keep people in their homes and get the loan performing again.  This takes a lot of time and personal attention however, which larger loan institutions simply cannot handle.  Large banks and lenders do not have the resources to meet with each homeowner and evaluate their ability to pay.  People in trouble need to work with individuals who specialize in this process. There is a difference  between homeowners that can actually afford to stay in their homes and those that cannot.
 
Original article written By Brenda Krueger Huffman-and can be read at AXcess News

Have you weathered the Great Recession fairly well?  Has your income and credit rating remained untouched?  Are you still paying your mortgage on time just fine?

Has the high rate of business failures or record job losses not affected your household directly?  Has the record number of foreclosures not affected your family directly?        

If you answered “yes” to these questions, you are fortunate in America today.   You may feel you have been smarter than those in trouble or lived within your means unlike them.  This may be true.

You may have little if any compassion for those in foreclosure.  Yet, as the ramifications of a prolonged recession and real estate market meltdown continue, it may also be true that for the grace of God go you.

As we all know, the housing market came crashing down around America in 2008.  It’s still in a smoldering heap of trouble in reality no matter the political spin.  The result is deep pain that will leave lasting scars mainly on the non-political and non-connected class of Americans.  

There is plenty of blame to go around – Congress, Wall Street, banks, mortgage lenders, and even some home buyers.   The sub-prime loans caused the first collapse along with the sub-prime adjustable rate mortgages (ARM).  With 80% of Option ARM, including interest only, loans allowing for homes to be  negatively amortized, top-tier borrowers can also end up in real trouble when the loan resets.

As more ARM loans reset, many homeowners will see their house payments double and even triple.  Add in the continued high unemployment going into 2011, and things could get a whole lot worse again before it gets better with the already record foreclosure reality of 2008-2010

The first cause of record foreclosures may very well be written off with little collective sympathy by many as a result of “those who lived above their means and should never have gotten the mortgages they did.”

The recession is moving into its third year, and the recovery has been the worst since the Great Depression.  The official unemployment rate has remained at or above 9% for a record setting 21 months.  The official rate only counts those that are collecting unemployment benefits.

On December 8, 2010, the Labor Department released its 2009 work report.  In 2009, there was an increase of 2.7M long-term unemployed Americans looking for jobs in 2009 over the 2008 total. There were 5.8M job seeking Americans that had no work at all in 2009.

In 2008 and 2009, there was a net loss of approximately 8 million jobs.  In 2010, it was first estimated 1.1 million jobs were created.  The Labor Department’s January 2011 report revised this figure down to report 950,000 jobs were actually created in 2010.  So far in 2011, the monthly net job growth has not kept up with population growth.

On March 4, 2011, the Labor Department reported the unemployment rate dropped to 8.9% in February 2011.  They reported a loss of 36,000 jobs in February.  Was this lower job creation number really due to “snow storms” as presented by the White House – no.  Is this .01% unemployment rate decrease great news as spun politically – not really.

Did you know the Labor Department’s February payroll employment figures counts people as employed if they receive only one hour of pay for the period?  Do you consider yourself employed if you worked one hour in February?  Can you make your mortgage payment on one hour of pay for the month?  

Most experts agree the estimated reality unemployment rate, which takes into account those that want jobs that do not qualify for unemployment benefits or have exhausted the 2 years of benefit eligibility, is between 15-20%.

The second cause of record foreclosures is a result of prolonged unemployment that has exhausted the assets, savings, and even retirement accounts of many trying to hold on to their home.  Some have just walked away and maybe some who have not should.  Others have become squatters in their homes waiting for the final foreclosure eviction notice.  Some are so cash strapped they simply can’t afford to move.

There is a lot of prolonged pain in America in 2011.  Digging out of the foreclosure mess may take 2-5 more years, but it must be done.  It must be well thought out and socially conscience while maintaining fairness and reality.  It can be done, and it must be done.

Bryan sums up the seriousness of the situation. “The statistics surrounding this crisis are staggering. Since 2007, over 3.2 million Americans have lost their homes to foreclosure, causing housing prices to fall 27%. However, this is just the tip of the iceberg. An additional 2.2 million homeowners are currently in foreclosure.”

He continues, “A further 4.7 million borrowers are at least 90 days delinquent on their mortgage, and it is only a matter of time before foreclosure proceedings are initiated against these homeowners. This means that we are potentially not even one-third of the way through the foreclosure process.”

He concludes, “Moreover, if housing prices stagnate or fall further, we could see many more defaults as more than one-quarter of all homeowners in America, about 15.7 million people, have no equity in their homes. As a result, if we do nothing, as many as 12.5 million more homes could potentially be lost to foreclosure. It is impossible to overestimate the impact this would have on the economy as a whole.”

Bryan and his wife Susan Ganz felt a personal calling to act for their community. "Scudder Bay was formed by me and Susan in late 2009 to help resolve the mortgage crisis in New England in a socially responsible manner.  Scudder Bay purchases nonperforming loans in New England from banks and other financial institutions and works with deserving and cooperative homeowners to make the best out of a bad situation.”

Bryan works with a philosophy to decrease the pain.  “At Scudder Bay we believe working with homeowners in a socially responsible manner, rather than in an adversarial manner, we can reach the best solution for both the homeowner and our investors.  We can shorten the time it takes to come to a resolution and avoid unnecessary legal fees.”

“In addition, by working constructively with the homeowner, in those cases where we have to take title to the home, it is generally in much better condition than it would be if we had to foreclose and evict the homeowner.”

Elliott has seen a divide in attitude toward helping homeowners facing the pain of foreclosure, even within the professional real estate community.  “I was shocked at the split on Active Rain.  Many people were sympathetic, and some were downright angry when I wrote about my failure in being able to assist borrowers in trouble who wanted to climb back on the bus and start paying.”

He explains, “About 75% shared their own stories with me, and they were touching. The other 25% were rude and unfeeling.  They responded I didn’t understand the workings of capitalism.  Some noted I was naïve in understanding the restrictive terms the banks are operating under.”

Elliott also notes, “Some asked why I was defending people who signed a contract and now want to get out of it. These were the timbre of their responses. I admit it was scary for me to hear so much anger.”

Bryan details opinions are mixed in his talking with friends and acquaintances on the subject too.  “Some people believe a contract is a contract and that those in foreclosure should be forcibly removed from their homes as quickly as possible”.

He notes, “Others believe that the lending institutions are to blame, and they should be forced to modify loans to keep homeowners in their homes.  As with most issues, the majority of people seem to be on the extreme ends of the spectrum with few people occupying the middle.”

Bryan concludes, “If our work at Scudder Bay has shown us anything, it is there is plenty of blame to go around.  There are bad actors on both sides of the issue, from shady lending institutions that made outrageous loans with no consideration for the borrower’s ability to pay to unscrupulous borrowers who refinanced their homes and then never made a single payment.”

One thing is for sure.  Not effectively addressing America’s foreclosure mess will only prolong the pain for everyone – people, business, and government.  A recovery plan must be realistic.  It must not create a whole new set of problems to deal with in digging out of the original mess.

Real solutions must also reflect the problem involves real homes, real people, real lives, and real pain.  As a part of the working solution, “shared sacrifice” will have to include true compassion in understanding the tragedy – even if you were spared directly.

Capitalism is not evil.  Not all profit is evil.  Not all politicians understand or care about the benefits only capitalism can bring to a situation.  This situation does call on capitalists to be leaders in creating lasting resolution.

We will explore these truths further in the coming articles in the series with the working insights of experts Elliott Topkins and Bryan Ganz.  Our 5-part series on the “Digging out of America’s Foreclosure Mess” will include:

Part 1 - Prolonged Pain
Part 2 - Failed Government Intervention
Part 3 - New Government Programs
Part 4 – Socially Conscious Private Investment
Part 5 – Working Investor Solution

By Brenda Krueger Huffman-AXcess News

By Kiley Black

There are many value added services which a real estate law firm can provide to realtors. However, it is not just monetary services you should provide to your clients, the whole customer service package enhances your value and keeps repeat business and referrals coming back to you. When home buyers and sellers see that you have their interests in mind, and that you surround yourself with others throughout the process that have their interests in mind, they remember you when they or someone they know has a real estate transaction. It is important in this age of technology, information, and the tightening dollar to show value for your services.

Providing a real estate attorney that does E-recording and declarations of homestead can figure into your value proposition. E-recordings allow the transfer of the deeds and paperwork to be done while the closing is still taking place.

This in turn, gets the funds transferred faster, the recording of documents is accelerated, and it eliminates a big headache for the realtor. As the real estate market heats up, in addition to the fact that traditionally spring brings with it an increase in home sales, realtors will benefit from no longer having to go to the Registry for closings. This is very beneficial when you have back to back closings. There are very few law offices in Massachusetts which are able to do e-recordings and Black and Buono is one of them. Additionally, the costly overhead of traditional submission and recordation methods is reduced with e-recordings, therefore providing superior service to your clients, while saving them money and time.

We will also provide to your clients Declarations of Homestead for no additional fee. The Declaration of Homestead allows your clients to protect their property up to five hundred thousand dollars of the value per residence, per family. This service is also provided by Black and Buono at no extra fee. If you are a realtor looking to expand your service level to your clients, contact Black and Buono in Framingham.

... by Kiley Black

The Massachusetts high court ruled on Friday that two foreclosures are invalid because the banks could not prove they had the proper paperwork to foreclose.

The banks "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure," Justice Ralph Gants wrote for the Massachusetts Supreme Court.

This could be a harbinger of things to come because it is the first ruling by a state high court on the issue of whether banks can foreclose on homeowners if can't prove they hold the mortgages.

Numerous instances of this emerged last fall, as evidence appeared that banks were robo-signing foreclosure documents without actually reading them. As a result, there are dozens of similar cases in lower courts across the country, all waiting for the Massachusetts Supreme Court ruling.

"It's about the most extensive beat-down the banks have received over their shoddy practices," said Christopher Peterson, a real estate law professor at the University of Utah. "It could be a wake-up call for rubber stamping judges that they need to more carefully examine practices."
Confessions of a robo-signer

What's the issue? Mortgage loans are like real property and can only be transferred by physically signing over the paperwork -- like someone endorsing a check or the title to a car -- and delivering it to the next holder. Without that, the holder of record doesn't change.

Under mortgage securitization, loans get transferred many times after origination before landing in pools of mortgages that are sold to investors. But often times, the banks simply didn't endorse the paperwork between steps.

Massachusetts law on how to legally transfer mortgages goes back more than 200 years and is very clear, according to Paul Collier, the attorney who represented homeowner Antonio Ibanez in the case. "You've never been able to assign in blank in Massachusetts," he said.

The high court agreed with that assessment, but also clarified that when banks transfer mortgages into a pool they can establish ownership through proper recording or through a document that states all of the mortgages held in the pool, with addresses and owner names. Although, Justice Grants said, "recording is likely the better practice."

"The key in either case is that the foreclosing entity must hold the mortgage at the time of the notice and sale in order accurately to identify itself as the present holder in the notice and in order to have the authority to foreclose under the power of sale," he added.

What happened? Regardless of recording issues, there is little dispute that Antonio Ibanez, a special education teacher in Springfield, Mass., defaulted on his loan for $103,500. He did not even fight the foreclosure when it came in 2007.

The case only went to trial because the bank needed to establish clear title to the property after foreclosure so it could resell the house. The insurance companies would not issue title insurance on the home without a court ruling.

The case went before state Land Court Judge Keith Long, who found no evidence that the plaintiffs were the actual mortgage holders and asked them to prove it.

According to court papers, Ibanez's loan went through five different owners before winding up in a pool of mortgages that U.S. Bank was the trustee for. During that trip down the chain, the parties failed to legally assign the mortgage.

The bank produced documents that showed that the loan was one of the mortgages put into a pool, but that failed to satisfy the court, which cited "the utter carelessness with which the plaintiff banks documented the titles to their assets."

In the case of Mark and Tammy LaRaces, Wells Fargo, provided evidence that the loan had been assigned to a pool. The evidence, however, was merely a copy of the pooling and servicing agreement that had been downloaded from the SEC website and was unsigned.

The state's high court ruled that, in both the Ibanez and the LaRace cases, no valid assignments were made after the lender assigned it to the record holder, Option One Mortgage Corp. in both cases. Option One, therefore, was the mortgage holder at the time of the foreclosures and no one else had the right to foreclose.

The future: Bruce Allensworth, an attorney for the banks, said they have the records to prove ownership in both cases, but since they were not introduced in Land Court hearing, rules of evidence prevented them from being introduced into the appeal.

"I'm thinking if there's a way of going back and reintroducing these documents to the Land Court," he said.

So where does that leave Ibanez and the LaRaces?

According to Collier, his clients may now own the home free and clear. "I don't see how [the banks] can win if they challenge the decision," he said, "but maybe they'll take a shot."

Orignal Article article by By Les Christie, CNNMoney.com - Click Here

...By Anthony Buono

The large majority of bankruptcy filings from senior citizens stem from credit card debt.

Only 7 percent of all bankruptcy cases filed in the U.S. between 1991 and 2007 were entered by people aged 65 and older, however, the demographic was the fastest-growing age group observed in a new study from the University of Michigan Law School. About two-thirds of these elderly consumers were forced to file for protection because their credit card debt was unmanageable; their debt was roughly 50 percent higher than it was for bankrupted consumers in other age groups.

There were a number of causes for these filings, the most common being senior citizens' reliance on credit cards to pay for medical expenses as their incomes decreased and became fixed, the report said. In addition, others had to deal with the death of a spouse who provided a secondary income.

In recent months, fewer Americans filed for bankruptcy as a result of insurmountable credit card debt. Fewer filings may signal improvement in the economy and rising consumer confidence.

...By Kiley Black

Negative equity is the term that describes the situation of having a home that is worth less than your mortgage. In layman terms, you are upside down on your home. Negative Equity is the result of the boom and bust cycle of the housing market. If you find yourself in this situation, you have a few options which consist of a short sale, foreclosure, loan modification or a deed in lieu of foreclosure. If you do not have the resources to sell your property, meaning you do not have enough money in the bank to make up the difference between what is owed and what you can sell the home for, your options are more limited. However, if you have the resources, if you have money in the bank, you can go the closing as a seller with money. In this way your credit can remain unaffected.

A loan modification is when, as the homeowner, you find yourself unable to make your monthly loan payment. You can work with your lender to get the loan modified, or lessened. This does affect your credit rating. Loan modifications show up as late payments, but you will be able to stay in your home.

A short sale is when your lender agrees to accept less than they are owed for an outstanding mortgage loan. A bank would much rather agree to a Short Sale than foreclose on a home.
No matter your situation when you have an upside down mortgage, you need a real estate attorney who is well versed in these procedures. Contact Black and Buono today.

...By Kiley Black

There are some basic questions which we get asked every day about the Homestead Act. There is quite a bit of confusion out there regarding Homesteading and if you should or should not pursue a MA declaration of homestead.

An Estate of Homestead is a type of protection for your residence. The document is called a “Declaration of Estate of Homestead”. It allows homeowners in Massachusetts to protect their property up to five hundred thousand dollars of the value of the residence, per family. At Black and Buono, we will provide you a Declarations of Homestead for no additional fee.

Many ask how exactly this protects them. When you file a declaration of Homestead, your home which should be your principal residence, is protected against an attachment or levy. Therefore, you would not have to sell your home to satisfy debts to the extent of five hundred thousand dollars per residence, per family. The term “Family” in this law constitutes either parents or children, or if you own your home alone, a single owner of the home. In simple terms, if you get sued as a homeowner, you home is protected up to $500,000.

There are, however, certain situations even Homesteading cannot protect you from. These include Federal, state and local taxes, assessments, claims, and liens; mortgages used to purchase the residence; an execution issued from the Probate Court to enforce a spouse to pay for the support of a spouse or children; buildings on land not owned by the owner of a Homestead estate which have attachments or a levy, or are sold; upon an execution issued from a court based upon fraud, mistake, duress, undue influence or lack of capacity; debts contracted prior to the acquisition of the homestead.

At Black and Buono we understand that the Homestead Act is confusing and we offer counsel in regards to homesteading and if it is right for you. You should never make a financial decision if you are confused or unsure. Always consult with a real estate attorney if you have any questions. We are here to help, contact us today.