Cash-strapped homeowners who are forced to sell their homes would gain some relief under a bill approved Monday by the state Senate.
Homeowners who are losing their homes to foreclosure will no longer be forced to pay the municipal portion of the conveyance tax. Currently, the municipal portion amounts to $420 on a $300,000 home.
The exemption was sought by the state's Realtors in a radio commercial that played in recent days and asked listeners to call their legislators in order to pass the exemption.
The foreclosure provision was part of a larger bill that extended the municipal portion of the state's tax on real estate transfers for one year.
Without the extension, the portion of the tax that is directed to cities and towns would expire as of July 1. The issue had prompted a battle over the past seven years between real estate agents and the Connecticut Conference of Municipalities, which represents most cities and towns. CCM strongly favors the tax because it generates about $25 million annually for cities and towns.
The Senate voted, 32 to 4, before 3 p.m. for the one-year extension. Four Republicans - Senators Dan Debicella of Shelton, L. Scott Frantz of Greenwich, Toni Boucher of Wilton, and Anthony Guglielmo of Stafford Springs - voted against the measure.
"People have seen the prices of their homes drop 10, 20, 30 percent since they purchased them, and now we're going to be hitting them with an additional tax,'' said Debicella, who is running for Congress in the Fourth Congressional District against Democratic incumbent Jim Himes. "I cannot do this to the homeowners of Connecticut.''
Guglielmo said the leaders of the 13 towns that he represents have worked hard to control spending.
"I think it's a very unfair tax - the conveyance tax,'' Guglielmo said on the Senate floor. "Most people don't expect it when they go to a closing. ... Then we whack them with a pretty heavy burden.''
From a report emailed to me over the weekend:
At the core of the foreclosure-prevention strategy is ignoring delinquencies. The percentage of older delinquent loans not yet in foreclosure is startling: 60% have at least 12 missed payments, and 35% have at least 18 missed payments. Add to this that three-fourths of delinquent loans are not in foreclosure, and we see that hidden losses well exceed those in the open.
Uh, they're not being "ignored" - this is systemic and intentional fraud.
Remember, these loans are either being held by someone or securitized into some sort of package. When you have a loan that has no chance of "curing" (to cure a loan with 12 missed payments the borrower would have to come up with the 12 payments to bring it current!) that loan should be carried at its recovery value - that is, the value of the collateral that can be seized and sold, LESS the cost of eviction, remediation and resale.
Does anyone recall all the entries I've written about getting competent legal and accounting (tax) advice before proceeding with any sort of action regarding walking away, short sales or foreclosure? This same report says:
Many homeowners would be better off going into foreclosure, than doing a short sale. Short sales are fraught with potential legal, credit, and complicated tax issues. For example, someone who refinanced could owe capital gains taxes, which are not forgiven under federal and California temporary debt relief acts. In the foreclosure route, borrowers can live in their house mortgage-free for at least one year, maybe two years. Both short sales and foreclosures are reported as “account not paid in full”, and are equally damaging to a credit score. An exception exists if short sellers can negotiate better terms with their lender on recourse liens. The other possible advantage to a short sale is the ability to get a mortgage again in 2 years (Fannie, Freddie), rather than having to wait 3-5 years after a foreclosure.
Homeowners pursue short sales, unaware of the problems they are creating for themselves. Their agents never warned them of deficiencies, ruined credit, taxes due on forgiven debt, or legal consequences. Agents made flowery promises to get listings, and now the lawsuits are starting.
No, really? You mean that people in the real estate business are less than truthful with their clients? That would never, ever happen with licensed professionals, right?
Then there's this, which I also have written about:
Another gray area is junior lien holders asking buyers for additional payments. As the market improved, juniors were no longer content with $3k thrown to them from the senior. They now want 10% of the junior note. They argue the additional payment is legal practice because the payment is made to escrow and appears on the HUD-1. However, they are actually hoping the senior lien holder does not read the HUD-1. The California Association of REALTORS® position is that all payments made by the buyer or agent in the purchase of a short sale must be part of the written short sale agreement signed by the senior lien holder. Concealing payments from seniors is loan fraud, and omitting these payments from the HUD-1 closing statement may violate RESPA. Some seniors reinstate their security interests because of the fraud. It’s surprising that the biggest banks are responding, when pressed on the fraud of their request, “just do it if you want the deal done”.
Right. Big banks saying "just do it"? Why would they do that? Is it so they can re-instate their security interests? No, nobody would ever do anything that hoses the consumer, would they? Naw.....
Few people understand that the bank that gave them their mortgage turned around and sold it into a mortgage bond, and the “bank” on their mortgage statement is actually a servicer.
Actually, it's a bit more complicated than that.
As I've been working on (and writing on) for a long time, and as a few attorneys are now starting to understand, the entirety of this process was corrupted and is rife with outright fraud from top to bottom.
Let's go through a (partial) list of the problems:
No comments:
Post a Comment