The laws that govern Indiana foreclosures are found in Article 29, Chapter 7 of the Indiana Code
Indiana is a lien theory state. This means the property acts as security for the underlying loan. The mortgage is the document that places the lien on the property. It is filed to evidence the underlying loan and the specific terms of repayment which are set forth in the promissory note. There is no power of sale mortgage provision recognized in the Indiana Code. In order to foreclose on a mortgage, the lender must go to court in what is known as a judicial foreclosure proceeding. During this proceeding, the court will issue a final judgment of foreclosure. The property would then be sold as part of a publicly noticed sale.
Before the property is sold at foreclosure sale, the sheriff must advertise the sale by publication once per week for three (3) consecutive weeks in a newspaper of general circulation. The initial publication must be made thirty (30) days before the date of sale. The borrower/homeowner must be served notice in accordance with the Indiana Rules of Trial Procedure governing personal service.
Indiana doesn't have a post sale statutory right of redemption, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. However, there is a pre-sale right to redemption after the issuance of the judgment.
A deficiency judgment can be obtained when a foreclosed property is sold at a public sale for less than the loan amount that the underlying mortgage secures. In this case, the borrower still owes the lender for the difference between what the property sold for at the foreclosure sale and the amount of the original loan.
Tuesday, February 21, 2012
Monday, January 30, 2012
FTC Will Not Enforce Provisions of MARS Rule Against Real Estate Professionals Helping Consumers Obtain Short Sales
The Federal Trade Commission will forbear from enforcing most provisions of its Mortgage Assistance Relief Services (MARS) Rule against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers.
As a result of the stay on enforcement, real estate professionals will not have to make several disclosures required by the Rule that, in the context of assisting with short sales, could be misleading or confuse consumers. As more and more American homeowners seek short sales, it is especially important that the Rule not inadvertently discourage real estate professionals from helping consumers with these types of transactions.
The MARS Rule was issued pursuant to authority granted by Congress in 2009. The issuance of the Rule followed numerous FTC and state enforcement actions against companies that claimed to be able to obtain from consumers’ mortgage lenders or servicers a loan modification or other relief to avoid foreclosure. The Rule covers companies or individuals, among others, who assist consumers in obtaining approval of a short sale from their lender or servicer.
A short sale occurs when a home is sold for an amount less than the balance owed on the mortgage loan, and the lender or servicer agrees to accept the proceeds of the sale instead of pursuing foreclosure. Short sales can benefit consumers by allowing them to escape from a mortgage that they cannot afford, while avoiding foreclosure. Many real estate professionals assist distressed homeowners by providing both traditional services associated with selling their homes (e.g., listing the property) and working to seek lender or servicer approval of a short sale.
The MARS Rule requires companies offering mortgage assistance relief services to disclose certain information to consumers about the services they provide, bans collection of advance fees, and prohibits false or misleading claims. After the Rule went into effect, a number of real estate professionals who help consumers with short sales raised concerns about complying with the Rule. These professionals pointed out that some of the required disclosures could confuse consumers or could be inaccurate in this context.
At this time, the Commission has announced that it will not enforce most of the provisions of the MARS Rule against real estate professionals who are engaged in obtaining short sales for consumers. The stay applies only to real estate professionals who: 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing the practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule’s ban on misrepresentations.
The Commission stated that the stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications. In addition, the FTC will continue to enforce the Rule and Section 5 of the FTC Act, which prohibits unfair and deceptive practices, against all other providers of mortgage assistance relief services.
FTC
Changes in HAMP - Home Affordable Modification Program
Recently, new changes have been enacted regarding the HAMP program. HAMP was originally designed to help borrowers with a higher debt load by offering incentives to banks to reduce the principal on mortgage loans. HAMP was supposed to help 4 million mortgage borrowers when it was introduced in February of 2009, but it has helped fewer than 1 million homeowners.
Here are a few of the changes:
1. HAMP was extended until December of 2013 - it was originally set to expire at the end of this year.
2. Eligibility has been expanded - originally, there was a floor for the borrower's debt ratios set at 31% of the borrower's income. This is no longer the case. The new guidelines allow for a more flexible approach without the hard floor.
3. Eligibility has been extended to owner's of rental property - HAMP originally applied solely to owner occupied property; this is no longer the case.
4. The balance reductions incentives to lenders have been tripled - New HAMP guidelines will pay lenders between 18 and 63 cents for every dollar of reduction of the mortgage principal balance, up from 6 and 21 cents.
5. Fannie Mae and Freddie Mac loans are now included - Fannie and Freddie loans had not been included in the principal reduction plans, previously.
The changes in HAMP do not take effect until April.
CNN-Money
Here are a few of the changes:
1. HAMP was extended until December of 2013 - it was originally set to expire at the end of this year.
2. Eligibility has been expanded - originally, there was a floor for the borrower's debt ratios set at 31% of the borrower's income. This is no longer the case. The new guidelines allow for a more flexible approach without the hard floor.
3. Eligibility has been extended to owner's of rental property - HAMP originally applied solely to owner occupied property; this is no longer the case.
4. The balance reductions incentives to lenders have been tripled - New HAMP guidelines will pay lenders between 18 and 63 cents for every dollar of reduction of the mortgage principal balance, up from 6 and 21 cents.
5. Fannie Mae and Freddie Mac loans are now included - Fannie and Freddie loans had not been included in the principal reduction plans, previously.
The changes in HAMP do not take effect until April.
CNN-Money
The Home Affordable Refinance Program (HARP)
In 2009, the Home Affordable Refinance Program was established for Fannie Mae and Freddie Mac loans. It allows home owners to refinance their homes, even if the value of the home has decreased. Homeowners with a loan owned by Freddie Mac or Fannie Mae have the opportunity to refinance with any participating lender. The Home Affordable Refinance Program (HARP) has been extended until December 31, 2013.
The following criteria must be met to qualify for the Home Affordable Refinance Program:
1. HARP refinances apply only to Fannie Mae or Freddie Mac mortgages.
2. The homeowner must be able to afford the new lower payment.
3. The current mortgage must be current with no late payments in the past twelve (12) months.
4. Payments on the new loan must be more stable than on the existing loan.
5. The maximum loan to value (LTV) cap has been removed on home owners looking to refinance in to a fixed rate mortgage. It was originally set at 125%.
6. Homeowners can refinance with an adjustable rate mortgage (ARM), so long as the maximum LTV does not exceed 105%.
A participating HARP lender can determine if a loan is owned by Fannie Mae or Freddie Mac and can further evaluate eligibility.
Friday, August 26, 2011
Pitt attends National Symposium in Chicago
Michael Pitt recently returned from the 3 day, 2011 Planning for the Generations Symposium in Chicago, where more than 400 estate planning attorneys from around the country gathered to advance their knowledge and discuss new strategies. Mike noted in particular that the knowledge he gained in how to incorporate advance asset protection strategies into estate plans will enable him to assist his clients to better protect the assets they have accumulated and give his clients greater peace of mind that those assets will be there always for their needs and the needs of their families.
“Estate planning today is a thoughtful, ongoing process … no longer merely a document created in a single legal transaction,” said Pitt. “Our goal at Pitt & Frank is to provide a high level of asset protection for out clients, so they can sleep better at night, not having to worry about preservation of their assets.”
Michael Pitt and Christine Emison of Pitt & Frank are members of WealthCounsel, a national, collaborative organization of estate planning attorneys dedicated to providing a comprehensive, client-centered approach to estate planning.
“Estate planning today is a thoughtful, ongoing process … no longer merely a document created in a single legal transaction,” said Pitt. “Our goal at Pitt & Frank is to provide a high level of asset protection for out clients, so they can sleep better at night, not having to worry about preservation of their assets.”
Michael Pitt and Christine Emison of Pitt & Frank are members of WealthCounsel, a national, collaborative organization of estate planning attorneys dedicated to providing a comprehensive, client-centered approach to estate planning.
Monday, August 15, 2011
You Got the Tax Credit When You Purchased in 2009/2010 - What Happens When You Sell?
Repaying the Credit
Q. When must I pay back the credit for the home I purchased in 2009?
A. Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009 or early 2010. The obligation to repay the credit arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
Q. If I claim the first-time homebuyer credit for a purchase in 2009 or early 2010 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.
Q. When does my home stop being my main home?
A. Here are examples of when your home stops being your main home:
1. You sell the home.
2. You transfer the home to a spouse or former spouse in a divorce settlement.
3. You convert the entire home to a rental or business property.
4. You converted the home to a vacation or second home.
5. You no longer live in the home for the greater number of nights in a year.
6. Your home is destroyed or condemned.
7. You lose your home in foreclosure.
8. You die.
Q. When do I have to repay the credit?
A. You repay the full or part of the credit as an additional tax on your tax return when the home stops being your main home during the 36-month period following the date you purchased your home.
You must repay the full credit when:
1. You sold your main home to a related person or entity
2. Your home is destroyed, condemned or disposed of under threat of condemnation and you do not purchase or rebuild a replacement home within two years.
3. You converted the entire home to a rental or business property.
4. You converted the home to a vacation or second home.
5. You no longer live in the home for the greater number of nights in a year.
You may have to repay the full or a part of the credit when:
1. You sold your main home to a non-related person or entity.
2. You repay the amount of the credit up to the amount of your capital gain. Note: when calculating gain or loss on your main home if you received the first-time homebuyer credit, you reduce your basis by the amount of the credit. See Publication 551, Basis of Assets, for more information.
3. You lost your home in a foreclosure.You must repay the credit only up to the amount of gain.
Divorced Persons
If you (transferor spouse) transfer your main home to a spouse or former spouse (transferee spouse) under a divorce decree, the transferee spouse who keeps the home is responsible for repayment of the entire credit if, during the 36-month period after the purchase of the home, the home ceases to be his or her main home. You (transferor spouse) are not responsible for any repayment of the credit.
Source: http://www.irs.gov/
Q. When must I pay back the credit for the home I purchased in 2009?
A. Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009 or early 2010. The obligation to repay the credit arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence.
Q. If I claim the first-time homebuyer credit for a purchase in 2009 or early 2010 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it?
A. If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit.
Q. When does my home stop being my main home?
A. Here are examples of when your home stops being your main home:
1. You sell the home.
2. You transfer the home to a spouse or former spouse in a divorce settlement.
3. You convert the entire home to a rental or business property.
4. You converted the home to a vacation or second home.
5. You no longer live in the home for the greater number of nights in a year.
6. Your home is destroyed or condemned.
7. You lose your home in foreclosure.
8. You die.
Q. When do I have to repay the credit?
A. You repay the full or part of the credit as an additional tax on your tax return when the home stops being your main home during the 36-month period following the date you purchased your home.
You must repay the full credit when:
1. You sold your main home to a related person or entity
2. Your home is destroyed, condemned or disposed of under threat of condemnation and you do not purchase or rebuild a replacement home within two years.
3. You converted the entire home to a rental or business property.
4. You converted the home to a vacation or second home.
5. You no longer live in the home for the greater number of nights in a year.
You may have to repay the full or a part of the credit when:
1. You sold your main home to a non-related person or entity.
2. You repay the amount of the credit up to the amount of your capital gain. Note: when calculating gain or loss on your main home if you received the first-time homebuyer credit, you reduce your basis by the amount of the credit. See Publication 551, Basis of Assets, for more information.
3. You lost your home in a foreclosure.You must repay the credit only up to the amount of gain.
Divorced Persons
If you (transferor spouse) transfer your main home to a spouse or former spouse (transferee spouse) under a divorce decree, the transferee spouse who keeps the home is responsible for repayment of the entire credit if, during the 36-month period after the purchase of the home, the home ceases to be his or her main home. You (transferor spouse) are not responsible for any repayment of the credit.
Source: http://www.irs.gov/
Monday, July 11, 2011
Short Sale Basics
1. What is a "Short Sale?"
A "short sale" typically occurs when an owner has no equity in the property under any reasonable measurement of value. Secured creditors are asked to voluntarily accept "short" payoffs in full satisfaction of their liens in order to facilitate a sale of the property at a price insufficient to pay all liens in full. Unlike a foreclosure, there is no legal leverage requiring secured creditors to release their liens upon the sale regardless of the amount of recovery for their liens, so cooperation and consent of all secured creditors is necessary.
2. Advantages of a "Short Sale"
In theory, unlike a foreclosure property, the property is marketed privately at its best potential value in the marketplace. Also, while a typical short sale may take longer than a conventional third party sale to accomplish, the timeline is usually much shorter than current foreclosure actions are taking.
3. Title Company Procedure is the Key to a Successful "Short Sale"
Prior to closing, the title company works with the secured creditors, both mortgage holders and lien holders, to insure that all items will be released from the property upon completion of the short sale closing. This function typically requires much more scrutiny by the title company. What may normally be an administrative function in obtaining a full payoff figure from a lender graduates to a more legally and conditional contractual agreement by the lender to even consent to a compromised payment. Involuntary lien holders (judgments, mechanics', tax liens, etc.), who are never pre-disposed to be cooperative in obtaining full payoffs and releases anyway, may be even more recalcitrant in their cooperation with a short sale. The title company must exercise extreme diligence in obtaining unambiguous and clear releases of liens prior to closing because in most cases little to no consideration is being received in exchange for such releases. Upon the agreement of all secured creditors in writing to the title company, the closing can take place.
A "short sale" typically occurs when an owner has no equity in the property under any reasonable measurement of value. Secured creditors are asked to voluntarily accept "short" payoffs in full satisfaction of their liens in order to facilitate a sale of the property at a price insufficient to pay all liens in full. Unlike a foreclosure, there is no legal leverage requiring secured creditors to release their liens upon the sale regardless of the amount of recovery for their liens, so cooperation and consent of all secured creditors is necessary.
2. Advantages of a "Short Sale"
In theory, unlike a foreclosure property, the property is marketed privately at its best potential value in the marketplace. Also, while a typical short sale may take longer than a conventional third party sale to accomplish, the timeline is usually much shorter than current foreclosure actions are taking.
3. Title Company Procedure is the Key to a Successful "Short Sale"
Prior to closing, the title company works with the secured creditors, both mortgage holders and lien holders, to insure that all items will be released from the property upon completion of the short sale closing. This function typically requires much more scrutiny by the title company. What may normally be an administrative function in obtaining a full payoff figure from a lender graduates to a more legally and conditional contractual agreement by the lender to even consent to a compromised payment. Involuntary lien holders (judgments, mechanics', tax liens, etc.), who are never pre-disposed to be cooperative in obtaining full payoffs and releases anyway, may be even more recalcitrant in their cooperation with a short sale. The title company must exercise extreme diligence in obtaining unambiguous and clear releases of liens prior to closing because in most cases little to no consideration is being received in exchange for such releases. Upon the agreement of all secured creditors in writing to the title company, the closing can take place.
Subscribe to:
Posts (Atom)