WORD: Involuntary Lien

The WORD for Today is:

Involuntary Lien—any lien, such as a tax lien, judgment lien, etc which attaches to property without the consent of the owner. Such a lien is unlike a mortgage lien, which a borrower voluntarily agrees to have placed against a property.

A legal claim against property that must be satisfied when the property is sold. A judgment affecting all the property an owner has or acquires during the legal life of the lien. Statutory and involuntary liens fall into four categories:

1. Property tax liens—These are placed against a property when the property taxes are not paid on time; they are given precedence over all other claims; if they continue to be delinquent for five years, the property will be sold off to pay the taxes; whenever a property is foreclosed upon, taxes are always the first debts paid.
2. Judgment liens—These are general liens resulting when a person suing another person wins a judgment from a court for the sums owing and records an abstract of that judgment
3. Mechanics liens—These are recorded with the county by contractors, subcontractors, materials suppliers, or workers who wish to be paid for their delinquent bills covering labor or materials on new construction, land improvements, or remodeling projects
4. Federal or State liens—These result from unpaid federal or state taxes, personal and inheritance taxes being the most common.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Losing Home to Tax Sale

Q. I am behind on my property taxes and wonder can someone just pay my taxes and take my house? Surely that is not possible, but a friend has warned me that it is something I should be worried about.

A. The short answer is YES, you can lose your home because you did not pay the property taxes. However, it is not something which could happen without you receiving notice and having ample time to resolve the problem. Let me explain.

While it is true that a person can lose their home because they failed to pay the property taxes, that usually will not become an issue unless you are at least 2 or more years past due with the taxes. Property taxes are mandated under state or local municipal law and are collected by an office which has the authority to do so. The name of the office may be tax assessor or tax collector or similar. In addition to collecting taxes when due, this same office has the authority to:

1. Place a lien against any property owner who has not paid the appropriate taxes for an extended period of time (and the amount of time will vary from municipality to municipality, set by local law)
2. Notify the owner that the property will be made available for sale due to unpaid taxes, if the problem is not corrected within a specified period of time
3. Proceed to offer the property for sale at an auction specifically for the purpose of collecting unpaid taxes
4. Advertise the availability of the property for past due taxes and complete the sale at the designated time

*Some folks have gotten wealthy by acquiring property in this manner because the prior owner was not aware of their redemption rights.

Many states have a redemption period during which you can reclaim your property by re-paying the amount of the tax bill, court costs and any other applicable costs. This redemption period may be as short as 6 months or as long as 2 years. You will need to check the statutes in your city/state. It is important that you keep abreast of your tax situation, even if you are not able to make the regular mortgage payment.

My experience has taught me that the individual most likely to be unaware that their taxes have not been paid is someone who had a mortgage with taxes included as an escrow item and then refinanced.

When they processed the refinancing, no escrow account was set up for the payment of the taxes so the individual who has not been in the habit of paying taxes simply ignores the tax BILLS they have been receiving believing that they are the tax NOTICES/RECEIPTS which they are accustomed to getting. Their taxes fall further and further behind until the appropriate authority utilizes the process outlined above to collect the taxes.

Please take the time immediately to verify your actual tax situation; you may even be able to make partial payments to the taxing authority to avoid losing your home in this manner. Yes, you may have the right to get it back, but better to keep it in the first place.

Good luck!

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Short Sale Fast Facts for Consumers

Short Sale Fast FACTS for Consumers

1. Short Sale could be your solution—but it has some pitfalls

Get informed and Get started

2. Short Sale is an Option Not a RIGHT

You will need to “qualify” for the option to dispose of the house by using a short sale.

Most lenders use the same basic criteria—what I call the “Universal Hardship Test”

• Was the default ‘trigger’ something beyond your control
• Did the trigger lead to an increase in expenses or a decrease in income?
• Are you still an occupant in the home secured by the loan?
• Have you depleted all of your assets available to make mortgage payments?
• Are you willing to pull together the documents required by the lender/guarantor to determine if they believe you qualify for a workout?
• If there is a co-borrower, are both parties committed to this workout attempt?

3. Finding a competent REALTOR could be difficult

A short sale is a Speciality transaction. You need to find a

REALTOR who:

• Works full-time—yes, even in today’s climate
• Is experienced in short sales (means they closed)
• Is familiar with your area and price point
• Whom you feel comfortable with
• Who is able to demonstrate to you what the value of your home is compared to similar homes in the neighborhood
• Has the ability to effectively market your home
• Is pleased to share with you that they have had specialized training in Short Sales (I mentioned this last, because if they haven’t mentioned by now, it is because they don’t have any—Not a good sign)

4. You can list the home for short sale—BEFORE the lender approves the

short sale—

**As long as you indicate that “all offers are subject to lender approval” This should be included on your listing contract, on the seller disclosure form and within the comments on the MLS sheet

**You can’t ACCEPT and CLOSE without the lender’s approval but you don’t have to wait to get started. Why not start today? Is your house ready? Do you have the documents needed for the hardship package?

5. Might leave you with a deficiency—which could be used to get a judgment against you

Negotiate to get the lender to agree to “waive their right to a deficiency judgment” as part of the short sale approval letter.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right to pursue you for the shortage.

If it’s not in writing—signed by an authority—you should expect them to pursue you for the shortage.

6. Foreclosure process—will most likely continue, even while you have the house on the market for sale

FHA loans which are subject to HUD regulations—require that the foreclosure process STOP while the home is marketed for short sale

Foreclosure action continues on ALL other loan types

7. Listing Termination—can be mandated by your lender when you are in default

The Lender is not a party to the listing contract and you might logically assume that therefore they had no say so about what does or does not happen with the attempt to sell your home.

Unfortunately, you would be mistaken.

Government guarantors, HUD, VA, USDA, Fannie Mae, Freddie Mac, and Rural Development have the right under Federal regulations to compel you to withdraw the listing IF:

You are cooperating with showing the property as a show of ‘good faith’

Title issues are uncovered which would prevent the transfer to a new buyer

The condition of the property is such that a sale is unlikely

You have failed to comply with request for information to determine your eligibility for a workout. Remember: This is an Option, not a RIGHT.

8. Second Liens can present a challenge—also known as a ‘stumbling block’

Second lien holders seldom initiate foreclosure; they block short sales all the time with their obstinacy. You cannot transfer real estate to a new buyer when there is a second lien holder without their cooperation.

They must either:

a. Release the lien

b. ‘Lift’ the lien and permit the closing

Usually they can be enticed to do one of these things, preferably the first. Many will accept a token payment as a settlement for the obligation if foreclosure is imminent and they stand to get nothing after the lien is wiped out. Other they may agree to an unsecured loan in exchange for

their cooperation.

Your lender may make a contribution toward getting this second released, especially if you have a government backed loan. Their regulations have a stipulated amount set aside for this purpose. Get your facts and get going.

9. Tax Implications—Didn’t Your REALTOR mention that?

When there is a deficiency (difference between what you owe on the house and what the new buyer is willing to pay for it) you are taxed on that amount as though you received it as a gift.

IRS rules require that the lender provide this information directly to IRS for tax purposes.

You should NEVER assume that because the lender agreed to the short sale that they have waived their right

10. Now about signing those papers…….WAIT

I believe strongly that the seller of a property which is upside down would do well to pretend their fingers are broken once they have signed the listing contract and seller disclosure form until Mr. Smitherman, the supervisor at the bank, has:

a. Approved their short sale, with all continguences

b. Given them permission in writing to sign something

As a trainer, I take the position that ‘lender approval’ means getting the lender’s approval before you agree to anything with a potential buyer.

That means do not sign a purchase agreement, no matter what contingency clauses have been included by a so-called sharp REALTOR. Do not sign a counter offer. I said, ‘pretend your fingers are broken until the supervisor at the bank tells you to sign something.

If you sign BEFORE he tells you to, you are agreeing to terms which he has not yet agreed to. You cannot perform (or deliver the deed to the house) without his agreement. He may:

a. Select a difference ‘potential purchaser’

b. Counter and ask for a lot more money

c. Go ahead and foreclose, then you have nothing to sell.

Don’t get ahead of the bank. “Lender approval required” means the bank gets to decide everything: to whom we will sell, and for what amount, on what terms. Don’t allow yourself to be lulled into thinking it’s okay to make an agreement and then get his approval. That is risky business. Remember, your fingers are broken.

Please share today’s blog with someone you know who is struggling and not sure what steps to take next.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Did You Know? Your Most Prized Possession

FYI: Your most prized possession is not your house, your stocks and bonds, your vintage car, your bank account. You, in fact, own just as much as the folks you feel have it all together and are financially secure.

Unfortunately, what most folks do not realize is that the most valuable possession any of us have, (which ALL of us have) is, in fact, our SIGNATURE.

Your SIGNATURE.

If you were asked to name the most valuable possession you have, almost none of you would have thought to say your signature. Most of us fail to realize the significance of our signature and how we alter our lives when we sign documents, totally changing the course which our lives will follow.

Consider: Your signature is required to validate:

• A marriage license
• A divorce decree
• Accepting a mortgage
• Agreement to build a house
• The co-signing of a loan
• A surgical procedure
• An abortion authorization
• A birth certificate
• The authenticity of your will
• The beneficiary on your life insurance policy
• Acceptance of a lien against your home when you refinance/take out an equity line
• Your acknowledgment of baptism
• Accepting a plea agreement
• The truthfulness of your tax returns
• The responsibility for a minor’s actions
• Your willingness to grant an adoption
• Your granting the power of attorney for another to act on your behalf
• Signing documents to authorize Madoff to invest your money
  

I could go on and on but I am sure that you would agree that your signature on any of the above mentioned documents all signify agreement with a life changing activity. It is simply a short step in thought process to see that if you withheld your signature, then the pendulum would have swung in a different direction. Consequently, your power to change the outcome hinges on whether or not you allowed the activity or prevented it: and that power is as simple as whether or not you signed the necessary documents.

How Should This Impact Your Behavior?

First, it should shake you up pretty seriously. Really. Think about how casually most of us sign things without thinking about the long terms implications. My personal commitment, since I realized this several years ago, is that I will NEVER sign important papers which require a signature to be valid the first time I see them. The ONLY reasonable exception in my opinion is in order to get medical attention, in an emergency. Since I have high blood pressure as well as a possibly fatal allergic reaction to bee stings, I would sign papers without even reading them for treatment of either one of those conditions.

For any other situation, I need to see the papers a day or two in advance so I have a chance to read over them. Then I can ask questions, do some research if I feel I need to, seek out the counsel of someone I trust and make an unrushed, educated decision about whether or not this is something I clearly want to do.

This is turning out to be a very long blog but I need to share this.

DON’T DO IT. Several years ago, just out of the blue, I started coughing up blood while on a vacation with my children. They were terrified and I was pretty scared myself. I had not even been sick. I spent a week in isolation in an out-of-state hospital while they checked for everything, including TB.

Since these little coughing spells occurred several times during that week, the consensus of the specialists there was that it was best to remove a lung in order to avoid a possible lung embolism and the likelihood of death. I REFUSED to sign and agree to the surgery because they could not tell me how the blood got into the lung in the first place and it appeared they wanted to remove a LUNG as a precautionary measure. That’s pretty serious, based on a hunch. I steadfastly refused, against their continued pressure to sign and agree to the surgery.

Five months later, two more little blood coughing spells, two exploratory surgeries and lots of tests and X-rays they finally did a thyroid scan. I had previously had thyroid surgery but who would have thought the stupid thing would regenerate and cause havoc again? We didn’t, but it had. Turns out my thyroid was totally out of control and causing bleeding, which pooled in my lung, leading to the coughing fits. Now we had an explanation which made sense.

I quickly granted permission for a second thyroid surgery (this time TOTAL removal of the pesky little gland). My family had not understood my refusal to have the lung surgery, but I will forever be grateful that I made a decision based on my strong conviction that I need to UNDERSTAND why I am doing something before I do it and that it cannot happen until I have signed papers granting permission.

My refusal to agree to the wrong surgery saved my LUNG.

Never forget: your most prized possession is in fact your scraggly signature. If it is significant enough to require a signature then it is significant enough to take some time to consider.

Check out the post for tomorrow to get the "definition" of Signature.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)