Beware Fraudulent Liens on Foreclosed Properties!

As you probably know, an empty home can be a target for all sorts of crime.  Every once in a while you might read a news story about an empty home that was broken into, damaged, or used by a gang for criminal activity.  However, empty homes are targets for less violent forms of crime also.  Specifically, it is easy to commit fraud when no one is checking up.

Foreclosed homes, in particular, are a target.  No one is looking out for them.  The banks are too far away and much too busy to know what is going on with each of their properties.  As a result, some individuals and/or companies have developed a new scam -- they will claim that they have completed repairs on a property and file a mechanic's lien, even if they have not actually done any work at all.  When the property is ready to close, the bank will be forced to pay the lien if they do not want to delay the closing or risk losing the buyer.

Recently, after allowing a transaction to close when a lien popped up at the last minute, the Federal National Mortgage Association (FNMA) found such a scam.  Upon investigation, it was determined that the lien was fraudulent; moreover, the same person had filed a similar lien on a number of other FNMA properties. 

Moral of the story -- If a mechanic's lien appears on the title report of a foreclosed property, make sure you investigate to see if the work was actually performed before paying it!

Second Lien Modification Program -- Get Your Home Equity Line Modified

Many homeowners are in a situation where they have two mortgages on their primary residence -- a first mortgage and a home equity line (or another type of second mortgage).  In these tough times it can be hard to make either or both payments.  There are many federal programs in place to assist with your first loan, such as HAMP, HAFA, or HARP. 

The good news is, there is also a program to assist with your home equity line or second mortgage.  This is called the Second Lien Modification Program (2MP).  If, and only if, your first loan is modified under HAMP, you may qualify for a home equity modification under 2MP.

What are the criteria for determining whether or not you are eligible for a 2MP modification?  First and foremost, you must be eligible under HAMP, and your loan must have been modified under HAMP.  Additionally, you must meet the following requirements:

1.   You must have a balance of $5,000 or more on your second mortgage.
2.   Your monthly second mortgage payment must be at least $100.
3.   You cannot have missed three consecutive payments on the loan you modified under HAMP, after the modification.
4.   In the last ten years, you have not been convicted of a crime such as fraud, forgery, felony larceny, theft, tax evasion or money laundering with respect to any mortgage or real estate transaction. 

Not all banks are participating in 2MP, but if your bank is participating, you should check to see if you qualify.  If you do qualify, your secondary lender will be offered incentives to reduce your obligation under the second mortgage.

Congress Repeals Reporting Requirement for Small Landlords

Last year, Congress buried a small provision in two lenghty pieces of legislation (the Patient Protection and Affordable Care Act of 2010 and the Small Business Jobs Act) that suddenly imposed "business-like" restrictions on people who were renting out so much as one small condominium.  Owners of such property were suddenly required to track all work done on their property that cost more than $600.  Moreover, owners then had to obtain particulars from the contractors who had performed such work, prepare 1099 forms for them, and then distribute the 1099 forms.

Given that many landlords simply own one unit or rent out their own residences, second homes, or homes they've inherited, the requirement to prepare and distribute 1099 forms seemed particularly onerous.  Most likely, many landlords would not even know about the new requirement and could later face penalties as a result.   

Apparently, Congress now realizes this.  Last month Congress passed legislation to repeal the provisions requiring landlords to prepare and distribute 1099 forms.  While this is a victory for the many small landlords out there, most of them do not even know about it!

Americans with Disabilities Act Will Now Apply to Timeshares and Hotel Condominiums

Effective December 2011, the Americans with Disabilities Act (the ADA) will apply to new or renovated timeshares and hotel condominium units (i.e. hotel condominiums that are rented out like typical hotel units)units).  The ADA previously did not cover these types of properties. 

Any remodeling completed to these properties after December 2011 will have to take into account ADA standards, such as wheelchair accessibility through doors and corridors, grab bars in bathrooms, carpeting that is not too plush (i.e. a wheelchair or motorized device should be able to traverse the floor comfortably), accessibility to towel racks and paper towels in bathrooms, etc.