Thompson v Chase Update

 

There is a case that came down that is relevant to the process of conducting a foreclosure. Thompson v. JPMorgan Chase Bank, N.A., No. 18-1559, 2019 WL 493164 (1st Cir. Feb. 8, 2019). In short, lenders and servicers were not using the precise language of the default provision in the mortgage when notifying borrowers of their impending foreclosure. The United States First Circuit Court of Appeals ruled that Massachusetts law required “strict compliance” when a lender exercises its right to foreclose. Id. citing Pinti v. Emigrant Mortg. Co., 472 Mass. 226 (2015). So what does that mean for the buyer or subsequent owner of a foreclosed property?

If you are buying a bank-owned property, before spending any money, confirm with the bank if they are compliant with Thompson v. JP Morgan Chase. Your attorney and title insurance underwriter will review the notices that were sent against the default provision contained in the mortgage. If the notice is not identical, the foreclosure may be deemed invalid. If the lender has complied with the requirements of Thompson, then the transaction will proceed as an ordinary bank-owned purchase.

Overall, It is clear that Thompson is a case where if you are looking to buy a bank-owned property it slows the process down quite a bit. With that, it halted a lot of purchases. If a closing was derailed because of Thompson, we can help you. Call us at Stiles.

\If you have any questions about buying a bank-owned property, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

 

 

The Gift of Equity

 

We recently received a question from a client: “Can we gift equity in our home to our child/children?” The short answer is that it depends. Typically, you can gift equity in a home that you own when you sell that home to your child. This is called a “gift of equity.” Most lenders will allow a gift of equity as long as the gift is documented correctly, which means that it must be based on an accurate appraisal and clearly stated in the purchase and sale agreement.

What if you are buying a home that is not owned by a family member and your family wants to give you money to assist in purchasing the home? This is referred to as a “gift of funds.” It is easy to confuse a gift of equity with a gift of funds. It is important for the home buyer to talk to their lender and those that are giving that gift should speak with their CPA to make sure they are not unintentionally making a tax or estate planning mistake. A gift is not a loan. A gift is irrevocable. Once delivered and accepted, the person making the gift has no right to ask that the funds be repaid. This will be certified to the lender that the lender will not seek repayment.

If you have any questions about equity, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

Why is My Payoff So High?

 

We received another question from a viewer this week: “Why is my payoff so high?” When selling a home, the seller’s mortgage payoff may seem higher than expected. Sellers are often surprised because they are expecting a figure close to their most recent principal balance.

When notified of an upcoming sale, the mortgage lender will provide a written payoff. The payoff will identify the exact amount that is owed to pay the loan in full. The lender will calculate all outstanding principal, accrued interest, in addition to all other fees and costs due.

Sellers may be familiar with the principal balance shown online or in their last mortgage statement which is only a portion of what is due. For example, the mortgage payment due on November 1 includes the principal and accrued interest in October. The payment includes the interest from October 1 through October 31. If the closing is on November 15 and the payment that was due on November 1 was not paid, the total payoff will be the interest from October 1 through November 15 plus all outstanding principal. If the November 1 payment was made, the payoff will include the principal balance with interest from November 1 through November 15.

Typically, a small cushion is added to the payoff to account for possible delays in processing payment.  For example, if the closing occurs on November 15, interest may be collected through November 18. The lender will reimburse the borrower for any overpayment. The payoff usually does not account for funds held in the borrower’s escrow account. In most cases, funds held in escrow for insurance and taxes will be disbursed to the seller within thirty days after the mortgage is paid off.

If you have any questions about selling your home and or your payoff, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

What Happens if I Get Cold Feet when Buying a Home?

 

Another question came in from one of our viewers this week “What happens if I’m under contract to purchase a home and I simply get cold feet?”

In short: it depends. The answer is determined by Massachusetts law. Hopefully you are not relying on your lender’s attorney who reviewed you purchase and sale agreement as a convenience. You will need your own attorney who can guide and counsel you through this process. You are now potentially in litigation and could forfeit your entire deposit.

Taking a step back, it is important that we recognize how you may have gotten to the point of “cold feet.” Buying a house is a major investment. The market is volatile and with its highs and lows is exciting. Although exciting, it is important that you do not become intoxicated by the whirlwind of buying a house.

Be certain when purchasing a home. Educate yourself as a buyer before beginning such a serious process. Find an attorney that will represent your best interest and not just the bank’s. It will be their goal to lead you to a successful conclusion.

From the seller’s perspective, it is not a good idea to be testing the market without an actual intention to sell. With the market being so active at times, you may think to yourself that you could potentially get a lot for your house. When you are not sure you are ready to move, but put your house on the market anyway, you are wasting everyone’s time, including your real estate professional’s. Ultimately this could lead to being sued by the buyer.

If you have any questions about selling your home, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

What is the MLC?

 

We received another question from a viewer this week asking, “What is the MLC?” MLC is an acronym that is used frequently in real estate law for Municipal Lien Certificate.

While performing due diligence before purchasing a home, buyers should verify that real estate taxes are paid. The MLC is delivered by the city or town and is their way of certifying to the buyer that real estate taxes and other municipal charges against the property are paid.

The MLC will include the location and the current owner, the due date of the tax payments, the annual amount of real estate taxes and other municipal charges, and whether taxes are due quarterly or semi-annually. Most importantly, the MLC will state how much is due to pay all outstanding taxes and charges.

Usually, the closing attorney will order this MLC. The city or town charges a small fee before issuing the certificate. The closing attorney will have the MLC recorded with the registry of deeds. Recording the MLC should prevent a city or town from claiming any taxes not disclosed on the MLC are due against the property.

If you have any questions about selling your home, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.

Do You Need a Mortgage Contingency?

 

We received another question from a viewer: “What is the difference between a mortgage contingency and a mortgage commitment?”

A mortgage commitment is a written promise to lend a borrower money once certain conditions are satisfied.

A mortgage contingency is a provision in an offer and purchase and sale agreement which allows a buyer to terminate the contract, with the return of buyer’s deposit, if the buyer is unable to secure a mortgage commitment on or before a certain date. This term is included with the offer and is an important term of the contract.

A lender will ask any borrower for many important documents. It is critical for a borrower to deliver those documents as quickly as possible. By responding quickly, the borrower has increased the chances of an early mortgage commitment or understanding what additional information or documents may be necessary. Many lenders will check a borrower’s creditworthiness early in the process; however, before issuing a commitment to lend, the lender will underwrite the loan to verify many aspects of the borrower’s qualifications including the borrower’s income, debt obligations, employment history, credit score, and much more. A borrower should never lie to their loan officer. In most cases, the loan officer will already know the truth.

A successful borrower will provide their lender all of the requested documents as quickly as possible to receive a mortgage commitment before the mortgage contingency date and to avoid unnecessary delays. When a commitment has not issued before the mortgage contingency date, the buyer’s attorney usually must ask for an extension on the mortgage contingency date. This can cause all parties involved to become anxious. The seller may begin to think that this transaction will not occur and may consider looking for a new buyer.

Try your best to get everything to the lender as quickly as possible. Your loan can then be approved in expedited manner which helps to keep the transaction stress free.

If you have any questions about mortgage contingencies, contact Stiles Law by calling (781) 319-1900.

Copyright © 2019 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts.