Keller Williams Realty Atlanta – Peachtree Road

Real Estate Legal Tip

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Legal Tip:  More About Property Taxes

New this week:  Fulton County and City of Atlanta tax bills are out.
 
Due Dates:   Atlanta:  October 15, 2010     Fulton:  October 31,  2010
 
Tips for contracts and closings:
 
1.     Write in a Special Stipulation that the Seller’s contribution to closing costs can also include TAX PRORATIONS,
 
The standard GAR contract language includes “lender escrows” in the Seller contributions but not prorations.  Once the tax bills are out, the tax escrows are lower, but the prorations are much higher,  especially in late summer (as much as one-third of the annual bill).
 
2.     Make sure that the current year’s property tax bills are being paid at closing on the HUD-1 or are being escrowed to be paid later this year (not next year).
 
Because some of the metro Atlanta counties change their tax due dates every year (especially Fulton), the lenders may be using a timetable to calculate escrows that does not show the accurate due dates for the current year. 
 
Traditionally, Atlanta taxes were due by August 15th and Fulton taxes were due by October 15th.
 
Last year, the Atlanta/Fulton bills did not come out until Octber 15th and were due in December.
 
This year is different again.
 
Protect your buyer and seller by confirming how this year’s tax bill is being handled.  Never assume that it is being taken care of.
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA  30324
lenox@neelandrobinson.com  404-705-3690   fax  404-705-3697

More Legal Tips From Neel & Robinson:

 Special Stipulations for Residential Leases

Make Sure You Know Who Owns The Property!

Quit Claim Deeds & Owner Title Insurance 

Choosing A Settlement Agent When Buying A Fannie Mae Property

KW Atlanta Legal Tip: Georgia 2010 Filing Deadlines Coming Soon!

Due Diligence When Buying a Condo, Townhome or In a Planned Community

 Try To Avoid Credits & Allowances!

Special Issues with Buying/Selling Condominiums

 First-Time Home Buyer’s Tax Credit – Don’t Wait Till The Last Minute!

 Buying Property From The Bank: Tips For Buyers

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Keller Williams Realty Atlanta – Peachtree Road

Current Mortgage Programs To Assist Home Buyers

There are many loan programs and acronyms floating around out there so here is a quick summary of the main programs you may be hearing about.

Home Affordable Mortgage Programs

 HARP:  Home Affordable Refinance Program:

The purpose is to refinance homes that have lost value.  These are loans that are currently held by FNMA and FHLMC with current loan-to-values up to 125%

·        Must be primary residence

·        1-4 Units

·        Must be currently held by FNMA/FHLMC

·        LTV must be equal to or less than 125%

HAMP:  Home Affordable Modification Program:

The purpose is to modify the existing mortgage to a level that is affordable now and sustainable long-term

·        Must currently be delinquent

·        Must be primary residence

·        Mortgage must have been originated prior to 1/1/09

Steps that may be taken under HAMP

·        Immediate reduction of rate to as low as 2%

·        Possibly extend loan to 40 years

·        Possibly forbear a portion of principal until loan is paid off and waive interest on deferred amount.

HAFA:  Home Affordable Foreclosure Alternative:

The purpose is to provide an alternative for those homebuyers not helped by the HAMP program and to gracefully exit the home.

·        Must prove financial hardship

·        Will receive pre-approved short sale terms

·        Will receive full release from future liabilities

·        Must be primary residence

·        Will receive $1500 in relocation assistance

·        Will have 120 days to find buyer and complete short sale

·        Existing payment reduced to 31% of income during marketing

·        Program scheduled to end 12/31/12

HA2MP:  Home Affordable 2nd Lien Modification Program:

Same as the HAMP but for 2nd liens.

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Keller Williams Realty Atlanta – Peachtree Road

Real Estate Legal Tip

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Real Estate Legal Tip:  Special Stipulations for Residential Leases

Many agents are now involved in writing residential leases, in addition to the traditional Purchase and Sale contracts. 
 
Some of these leases will be in conjunction with a “Lease-Purchase” and some will not.  Either way, the lease contract should be complete and correct in order to be enforceable.
 
Here are some issues that should be considered and possibly included in the Special Stipulations:
 
1.     HOA or condo dues (if mandatory):  specify whether the landlord or tenant pays these;  (if tenant, factor this into rent).
2.     Hazard insurance for contents:  specify whether tenant is required to have and pay for.
3.     Pets:  always be very specific on types of pets allowed (even size) and include additional deposits for pet damage.
4.     Legal description:  needs to be as complete as possible.
5.     Rent payments and late charges:  be very specific about due dates (postmark or receipt).
6.     Security deposits:  specify whether these funds can be applied to unpaid rent during the lease, at the end of the lease, or never.
7.     Commission:  best to collect from the tenant, not the landlord, as a deduction from the first rent payment.  Also specify the commission due upon an eventual closing between the same parties.
8.     If the lease is tied to a purchase (hopefully), specify if any of the rent will be credited as nonrefundable option money towards the purchase price.  This is not earnest money, because it is not refundable. 
 
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA 30324
lenox@neelandrobinson.com
404-705-3690       fax  404-705-3697

More Legal Tips From Neel & Robinson:

How To Protect Your Cash Home Buyers

New Georgia Law Changes Property Tax Assessment Procedure

 The Buyer Should Do Repairs Whenever Possible, Not The Seller

 Watch Language in Short Sale Letters

Flood Insurance Is Not Always Available

Make Sure You Know Who Owns The Property!

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Keller Williams Realty Atlanta – Peachtree Road

JUST LISTED: Virginia Highland Tudor Home For Sale

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Keller Williams Realty Atlanta – Peachtree Road

What Is Changing in the FHA World?
 
Effective October 4, 2010, FHA will be making changes to their Mortgage Insurance Premiums.  As you know, borrowers currently pay 1.75% of their loan amount upfront which is called Upfront MIP.  Additionally they pay .50% to .55% of their loan amount annually (actually paid in 12 installments with their monthly payment).
 
The new MIP structure will require an Upfront MIP of only 1% of their loan amount.  The downside is that their annual MIP will increase to .50% to .90% paid on a monthly basis.
 
Give Me An Example of How This Impacts The Wallet
 
Here is an example of how the changes will impact FHA borrowers:
 
Loan Amount:  $250,000
 
Upfront MIP:   Currently                     $4,375
                        As of October 9, 2010 $2,500
                        Upfront cost is $1875 less BUT when the homebuyer sells or pays off the loan, part of this cost is refundable to the borrower
 
Monthly MIP:  Currently                     $115 per month
                        As of October 9, 2010 $188 per month
                        Cost is $876 more per year
                        No portion of this monthly MIP is refundable to the borrower
 
What Is The Real Impact?
 
When an FHA homeowner sells their home, they are entitled to a refund of the unused portion of their Upfront MIP.  The borrower is not entitled to any refund from the Monthly MIP they pay to FHA each month.  So shifting the revenue stream paid to FHA from the Upfront MIP to the Monthly MIP is actually a win for FHA as less of the MIP paid by the borrower will be entitled to a refund.
 
The IRS allows homeowners to write-off the cost of mortgage insurance as long as their income is less than $110,000 per year.  Shifting some of the MIP from Upfront to Monthly will actually give the homeowner a greater write-off on their tax return.
 
Higher monthly MIP will increase the borrower’s Debt-To-Income ratio and, in theory, make it slightly more difficult to qualify for the loan.
 
Net Effect:  I believe the net effect to the borrower is negligible.  Basically, these changes shift revenue within the government.  FHA will enjoy higher revenues to offset their tremendous losses while the IRS will decrease their revenues as homeowners have greater mortgage insurance write-offs.

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Keller Williams Realty Atlanta – Peachtree Road

Real Estate Legal Tip

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How To Protect Your Cash Home Buyers

There are special considerations and issues for a cash buyer:
 
1.     Proof of funds – do not provide confidential bank statements or brokerage account statements;  instead have the buyer’s personal banker or financial adviser write a letter to confirm the buyer’s ability to pay for the property.
2.     Title insurance – always recommended for a cash buyer, but remember that there will not be a simultaneous issue discount, because there is no loan or loan policy.  The premium will be about $3.60-$4.00 per thousand of the sales price.
3.     Hazard insurance – make sure that the coverage begins the day of closing.  If the property is vacant or will have a tenant, the buyer should disclose this to the insurance agent to make sure that the proper coverage is provided.
4.     Flood insurance – since there is no lender to order a flood certification, the buyer should inquire and investigate whether flood insurance is required.  A new survey is a good idea.
5.     Inspections – the buyer’s home inspector is especially important, because there is no lender’s appraisal or inspector to provide a second opinion on quality, condition, or value.
6.     How to take title – sometimes a buyer has credit issues or income tax liens, making it difficult for the buyer to get a mortgage.  Make sure the buyer knows that if title goes into his/her individual name, any existing liens or judgments will attach to the new property; the buyer may want to set up a trust or LLC.
7.     Estimating closing costs – since there are no lender fees, make sure that the seller’s allowance for closing costs is completely used or otherwise credited back to the buyer.  Repair credits, unused closing cost credits, and rebates are acceptable on a cash purchase, plus the allowance can be used for a survey, home warranty, HOA dues, condo dues, even tax prorations, as long as this is spelled out in the Special Stipulations.
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA 30324
lenox@neelandrobinson.com  404-705-3690  fax 404-705-3697

More Atlanta Real Estate Legal Tips:

New Georgia Law Changes Property Tax Assessment Procedure

 The Buyer Should Do Repairs Whenever Possible, Not The Seller

 Watch Language in Short Sale Letters

Flood Insurance Is Not Always Available

Make Sure You Know Who Owns The Property!

Quit Claim Deeds & Owner Title Insurance 

Choosing A Settlement Agent When Buying A Fannie Mae Property

KW Atlanta Legal Tip: Georgia 2010 Filing Deadlines Coming Soon!

Due Diligence When Buying a Condo, Townhome or In a Planned Community

 Try To Avoid Credits & Allowances!

Special Issues with Buying/Selling Condominiums

 First-Time Home Buyer’s Tax Credit – Don’t Wait Till The Last Minute!

 Buying Property From The Bank: Tips For Buyers

Waiting Periods Required Under New Truth in Lending Law

  Termite Letters – Still a Good Idea

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Keller Williams Realty Atlanta – Peachtree Road

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Keller Williams Realty Atlanta – Peachtree Road

Real Estate Legal Tip

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 New Georgia Law changes Property Tax Assessment Procedure

 
 
Georgia recently passed “The Property Tax Assessment and Appeals Reform Bill” (Senate Bill 346) on June 7, 2010.
 
Highlights include:
1.     Every property owner will receive an Annual Notice of Assessment and the right to appeal;
2.     Every Notice of Assessment must contain the estimated property tax (in dollars);
3.     Appeal period has been extended to 45 days;
4.     Alternative streamlined appeal option for properties valued over $1,000,000;
5.     Automatic taxpayer victory on appeals when government fails to respond within 45 days;
6.     Requirement that all relevant sales, including distress sales, be included when determining Fair Market Value (FMV);
7.     Requirement that only “current use of property” be used in determining FMV;
8.     Taxpayer must be given access to all data used in determining FMV;
9.     Sales price establishes FMV for next tax year.
 
Remember that a reduction in the assessment does not always reduce the actual bill.  Other factors such as the millage rate, homestead exemption, and other exemptions will also affect the final tax bill amount.
 
Presented by Leigh Clack, Attorney
Neel & Robinson Attorneys at Law, LLC
22 Lenox Pointe, Atlanta, GA 30324
lenox@neelandrobinson.com  404-705-3690  fax 404-705-3697  

**SEARCH FOR ATLANTA HOMES NOW**

Keller Williams Realty Atlanta – Peachtree Road

**SEARCH FOR ATLANTA HOMES NOW**

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