Miami Lawyer Blog

Short Sales Boost 1st-Quarter Foreclosure Activity

by The Associated Press

Bank-owned homes and those in some stage of the foreclosure process saw their share of overall U.S. home sales grow to 26 percent in the first quarter.

The increase was driven by a spike in short sales, or homes that sell for less than what the owner owed on their mortgage, foreclosure listing firm RealtyTrac Inc. said Thursday.

Short sales make up the vast majority of homes sold while still in the foreclosure process. Those that aren't sold or auctioned off typically end up being repossessed by banks, what most people commonly think of as foreclosures.

In the first quarter, short sales grew 25 percent from a year earlier, hitting a three-year high. In contrast, bank-owned properties declined 15 percent versus the first three months of last year, the firm said.

The trend indicates a greater likelihood that home prices will continue to soften, as foreclosures and short sales typically sell at sharp discounts to other homes.

It also suggests a shift in the way lenders handle mortgages that have gone unpaid.

Lenders may be favoring short sales versus waiting for troubled loans to go through the foreclosure process to take back the homes securing the loan, said Daren Blomquist, a vice president at RealtyTrac.

"A short sale is a safer alternative to avoid any potential problems that they face because of the way they're processing foreclosures," Blomquist said.

Last year, mortgage lenders grappled with allegations that they had been processing foreclosures without verifying documents. The pace of foreclosures slowed sharply as the nation's biggest mortgage lenders worked to hammer out a settlement with state and federal officials.

They reached a $25 billion settlement in February, clearing the way for banks to take action on unpaid mortgages.

All told, 233,299 bank-owned homes or those in some stage of foreclosure sold in the first quarter, making up 26 percent of all U.S. home sales in the same period, the firm said.

That's the highest percentage of overall sales since hitting 28 percent in the third quarter of 2010, before the foreclosure abuse claims against mortgage lenders surfaced.

Foreclosure sales made up 22 percent of all sales in the last three months of 2011 and a quarter in the first quarter a year ago.

As of end of April, there were 637,668 bank-owned homes yet to be sold, representing a 17-month supply, Blomquist said. Another 722,467 were in some stage of the foreclosure process.

Sales of all previously occupied homes jumped in January to the highest pace in nearly two years, but declined slightly the next two months. Sales rose 3.4 percent in April from March to a seasonally adjusted annual rate of 4.62 million, according to the National Association of Realtors. That nearly matched January's pace of 4.63 million, but was below the nearly 6 million that most economists equate with healthy markets.

While rising, the share of foreclosure sales remains well below its first-quarter 2009 peak of 45 percent of all sales. They comprised less than 1 percent of all sales in 2005, at the height of the housing boom.

More foreclosure sales also means potentially more pain for homeowners, who could see the value of their homes erode further as neighboring foreclosures sell.

Combined, bank-owned homes and those still in the foreclosure process sold for an average of $161,214 in the first quarter. That's down 1 percent from the fourth quarter of last year and down 2 percent from the first quarter of 2011.

Compared to non-foreclosure homes, the average price of a foreclosure sale was 27 percent below the average sales price of homes not in foreclosure or bank-owned during the quarter. That discount is unchanged from the fourth quarter last year, but is down from a discount of 29 percent in the first quarter of 2011.

3 new programs aimed at improving the housing market

Foreclosed homes continue to plague communities, the housing market and the economy. Banks completed 3.2 million foreclosures between 2008 and 2011, and half again as many lurk in a "shadow inventory" that includes homes with seriously delinquent mortgages, those that are in the foreclosure process and those that have been taken over by banks but not yet listed for sale, according to CoreLogic, a mortgage data firm. Many of those homes are vacant, and they sell for about one-third less than other properties, on average.

Foreclosures have been a drag on the market for years, and relief can't come soon enough. But the latest proposed fixes won't get rolling before year-end.

The Home Affordable Modification Program (HAMP) helps troubled borrowers by reducing their monthly mortgage payment to 31% of their gross monthly income, usually by reducing their interest rate, extending the loan term, deferring repayment of principal or forgiving some of it. The Treasury has extended the program through the end of 2013, tripling the incentives for lenders that choose to reduce loan principal. Borrowers will begin qualifying under the expanded criteria by this summer. Bank analysts estimate that the beefed-up program will help an additional half-million homeowners. For more, visit www.makinghomeaffordable.gov.

A mass-refinancing plan would allow borrowers who owe more than their house is worth but who are current on their loan payments to refinance at today's low interest rates. The plan would save such borrowers an average of $3,000 annually. The catch: Congressional approval of a fee paid by the largest lenders to fund the program is unlikely.

A pilot buy-to-rent program launching this year in hard-hit markets will let investors buy foreclosures from Fannie Mae, then rent them out. Look for the program in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida. Investors must qualify to participate (for information, go to www.fhfa.gov). The aim is to make a quick dent in the supply of foreclosures for sale. Success depends on whether bargain-hungry investors pay the prices Fannie expects for its properties.

None of the programs is a quick fix. In fact, the pace of foreclosures will continue to pick up in the wake of a $25 billion settlement reached in February among the federal government, attorneys general in 49 states and the nation's largest mortgage servicers. Although much of that money is slated for principal reductions, refinancing and other consumer assistance, banks are now free to step up foreclosures that were delayed pending the settlement.

Foreclosure fixes will become moot as the economy gains traction and housing demand picks up, says economist Celia Chen at Moody's Economy.com. By 2013, the number of distressed sales will still be high, but their share of total home sales will decline, allowing home prices to rise. The speed of recovery depends on how big a market share distressed properties represent.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

Bank of America has expanded a Florida pilot program to the rest of the nation, offering 'relocation incentives' to underwater homeowners to leave the property.

Bank of America is offering homeowners up to $30,000 to sell their homes in a short sale.

The nationwide program, announced this week, is the expansion of a pilot program that started in Florida last year. That program offered homeowners $5,000 to $20,000, with the average payout being $12,000.

The new program offers homeowners $2,500 to $30,000 in "relocation assistance."
To be eligible for the new program, homeowners must owe more than their property is worth -- the reason they would do a short sale as opposed to a regular sale -- plus their loan must be owned and serviced by Bank of America.

New rules may speed short sales

The amount of the payment is at the discretion of the bank. A Bank of America news release says it will be "determined on a case-by-case basis using a calculation that includes the value of the home, amount owed and other considerations."

New short-sale rules may help sellers

To get the payments, homeowners must initiate the sale by the end of 2012 and close by Sept. 26, 2013. In addition, the homeowner is required to work with the bank to set a preapproved sale price before the home is listed for sale. However, homeowners currently in the short-sale process may be eligible for the payments. Information for homeowners is here.

Other lenders also have offered homeowners financial incentives to complete short sales, which they find cheaper and easier to manage than foreclosures. Plus, the home is usually left in better shape and the process is more orderly. But the incentive payments have not been common up to now.

New short-sale rules may help sellers

As the number of short sales grows, such payments may become more common.

The federal Home Affordable Foreclosure Alternatives program offers homeowners $3,000 in relocation incentives to do a short sale.

FTC: Skechers Deceived Consumers With Shoe Ads"

"Skechers USA Inc. will pay $40 million to settle charges by the Federal Trade Commission that the footwear company made unfounded claims that its Shape-ups shoes would help people lose weight and strengthen their butt, leg and stomach muscles. Kardashian, Burke and other celebrities endorsed the shoes in Skechers ads.

Wednesday's settlement also involves the company's Resistance Runner, Toners, and Tone-ups shoes and claims of deceptive advertising for those shoes as well. Consumers who bought the shoes would be eligible for refunds, though it's not clear how much money they'll get...."

http://www.usnews.com/news/us/articles/2012/05/16/feds-skechers-deceived-consumers-with-shoe-ads?goback=.gde_4029717_member_116102061

WASHINGTON (AP) -- The government wants you to know that simply sporting a pair of Skechers' fitness shoes is not going to get you Kim Kardashian's curves or Brooke Burke's toned tush.

Skechers USA Inc. will pay $40 million to settle charges by the Federal Trade Commission that the footwear company made unfounded claims that its Shape-ups shoes would help people lose weight and strengthen their butt, leg and stomach muscles. Kardashian, Burke and other celebrities endorsed the shoes in Skechers ads.

Wednesday's settlement also involves the company's Resistance Runner, Toners, and Tone-ups shoes and claims of deceptive advertising for those shoes as well.

Consumers who bought the shoes would be eligible for refunds, though it's not clear how much money they'll get. The FTC says that will depend on how many claims are received in the eight-month filing period. Buyers can go to the FTC website to file a claim.

Most of the $40 million federal settlement would be returned to consumers, but a small amount of the settlement would be used to administer the payouts.

The settlement is related to a broader agreement also announced Wednesday that resolves a multi-state investigation led by the attorneys general from Tennessee and Ohio and involving more than 40 states. The company will provide an additional $5 million to the states, and pay $5 million in class-action attorney fees.

"The FTC's message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims," said David Vladeck, director of the agency's consumer protection bureau. For millions of consumers, he said, "the only thing that got a workout was their wallet."

The commission settled similar charges with Reebok last year over its EasyTone walking shoes and RunTone running shoes. That $25 million agreement also provided customer refunds.

Skechers denied the allegations but said it settled to avoid long litigation.

"Skechers could not ignore the exorbitant cost and endless distraction of several years spent defending multiple lawsuits in multiple courts across the country," said David Weinberg, the company's chief financial officer. "While we believe we could have prevailed in each of these cases, to do so would have imposed an unreasonable burden on the company."

The company, based in Manhattan Beach, Calif., said it has received overwhelmingly enthusiastic feedback about the shoes from thousands of customers.

Skechers billed its Shape-ups as a fitness tool designed to promote weight loss and tone muscles with the shoe's curved "rocker" or rolling bottom -- saying it provides natural instability and causes the consumer to "use more energy with every step." Shape-ups cost about $100 and are sold at retailers nationwide.

Ads for the Resistance Runner shoes claimed people who wear them could increase "muscle activation" by up to 85 percent for posture-related muscles and 71 percent for one of the muscles in the buttocks, said the FTC.

The commission says Skechers falsely represented that clinical studies backed up the company's claims about its toning shoes. The FTC's Vladeck said the studies had defects, such as one that said people lost weight wearing the toning shoes, when in fact they gained weight.

The settlement bars Skechers from misrepresenting any tests, studies or research on its shoes in the future.

___

On May 2, 2012, Charles Schwab & Co. announced an initiative to make its website more accessible for all customers, particularly those who are blind or have sight disabilities. This high-profile development was part of the settlement of a claim by Kit Lau, a Charles Schwab customer for more than 25 years.

While many have focused on the Americans with Disabilities Act's (ADA's) ever-changing pool lift requirements, we continue to see the DOJ and private advocacy groups driving to enforce the original regulations promulgated 20 years ago under the ADA. As of December 31, 2011, more than 13,130 lawsuits had been filed under the ADA, and the trend continues to grow.

Charles Schwab settlement is one of 15 prominent web site settlements

Charles Schwab, one of the nation's leading securities broker-dealers, and a disability rights advocacy attorney, announced last week that they settled a year-long claim by a blind customer that its website was inaccessible to blind, low vision and cognitively challenged customers. The structured negotiations concluded this dispute short of trial.

With this settlement, Charles Schwab joins a list of 15 prominent companies which have settled website accessibility complaints. Charles Schwab agreed that it will make its website more accessible and inclusive for all customers, and agreed to implement the Web Content Accessibility Guidelines (WCAG) Version 2.0 Level AA which will make its website navigable by disabled customers.

An informal complaint backed by the threat of litigation and administrative investigations was lodged with Charles Schwab by the lawyer for a blind day trader. The claimant was a long-time Schwab customer and herself a computer programmer. One morning, she found that she could no longer navigate the Schwab website using JAWS software and was prevented from making trades on-line. The JAWs software reads aloud the text of the page so blind and low vision customers can access the website.

No DOJ-approved standard for websites

The Department of Justice (DOJ) has not approved and adopted any formal standards for website accessibility and recently withdrew its Notice of Proposed Rule Making for web access standards. The Web Accessibility Initiative (WAI) has been working for years and has promulgated the WCAG which is widely recognized as the "gold standard" for web access. However, given the almost daily changes in technology and the complexities of cyberspace, there are no official website standards.

Most recent DOJ investigations and settlements have focused on website accessibility. Target Corp. recently paid over $6 million to settle a website ADA class action.

What does this settlement mean to you?

If you have not examined your website for ADA compliance, now is the time to do it. Not only does your website need to comply with the substantive requirements for accessible features, for example, but the website itself needs to be accessible to disabled customers. You need to ask yourself some questions. For example:

What standards of accessibility is your website hosting?
How do you measure website compliance?
How often do you audit your website for ADA compliance?

We see the Charles Schwab settlement as reinforcing the importance of ADA compliance for website accessibility as dramatically emphasized in the Hilton ADA settlement with the DOJ. In that recent landmark settlement, Hilton agreed to implement changes to its websites to make them accessible to all customers.

Wakeup call for compliance

Now is the time to audit your website and implement changes to make them accessible, if you have not taken action to make them accessible to disabled customers. Website accessibility audits are far more technical than an ADA Compliance Audit for a hotel and requires highly specialized expertise. The Law Offices of Aaron Resnick, P.A. works with experienced website compliance auditors. Since your secrets are only protected with your lawyer, you should consult with an experienced ADA attorney to help evaluate your company's website.

Charles Schwab is implementing enhanced website accessibility features based on a time table set by a settlement agreement. If you are proactive, you can set your own time table, control the content of your website, and control your own destiny.

Attorney Aaron Resnick is on the Host Committee for "One Miami, United," Overtown Music Project's 2nd Annual Gospel Brunch on Saturday, May 19th from 11:15 a.m. to 1:30 p.m.

There will be a non-denominational community service with soul-stirring music and some serious soul food (i.e. Miss Vivian's homemade sweet potato pie and Yardbird's Mama's Chicken Biscuits).

Miami's civic and community heroes will come together to commemorate one of Miami's oldest communities. The event takes place at the historic Bethel A.M.E. Church in Overtown and welcomes the community from within and outside of Overtown.

Mr. Resnick is a huge supporter of the cultural arts in Miami and is a leader in helping preserve Miami's historical communities.

Tickets are $25 and you can purchase them here: http://www.eventbrite.com/event/2275602388

Hermès Wins $100 Million Judgment in Counterfeit Case; 34 Knock Off Websites Are Forced To Shutter

Ever notice those janky looking ads for websites promising you Birkins at bargain prices and wonder how they can legally exist? Well they can't. And 34 of them-including HermesBagsOutlet.org, HermesBirkin-Bags.org and HermesOutletStore.com-were just shut down following a ruling handed down in Manhattan's federal court.

According to the New York Post, Judge Denise Cote awarded Hermès a $100 million judgment against these knockoff sites saying they were "liable for trademark infringement and counterfeiting." Shockingly, not one of the defendants showed in court.

The sites hawked fake Birkins and Kelly bags as well as accessories. The Post is reporting that payments already made in the web sites' PayPal accounts will go towards paying the $100 million awards. Sucks for those folks hoping to snag a fake Birkin on HermesBagsOutlet.org. Though we're sure, as evidenced by the screen cap (above, left) that these sites will keep cropping up.

Still, it's a big victory for Hermès. And to make sure that the shuttered sites stay shuttered, the settlement also stipulates that "Google, Bing and Yahoo stop providing links to the Web sites" and that "Facebook and Twitter 'de-index' and remove from any search results the offending sites."

http://www.nypost.com/p/news/national/hermesfakers_lapped_hNEk7dELnSOzQvRvtBv0RJ

Former NFL players William Joseph, Michael Bennett and Louis Gachelin have been arrested by the FBI and are charged with an identity theft and tax fraud scheme.

The Miami Herald reports that the three are among a group of several people charged with filing false tax returns in other people's names and then stealing their refunds. More details of the scheme are expected to be revealed today, when the defendants are scheduled to appear in a federal court in Miami.

According to the Herald, lax IRS oversight makes it easy to fraudulently receive tax refunds: The IRS often disperses refund money before actually checking to see that the taxes a filer claims to have paid match what the filer's employer withheld. The process the IRS uses eventually catches people who misrepresent their own taxes, but a criminal who steals someone else's identity can receive a refund in that person's name without the victim of the identity theft ever realizing it. By the time the IRS and the identity theft victim discover the erroneous refund, the money has already been taken by the identity thief -- and the IRS allows those identity thieves to have the refunds deposited onto prepaid debit cards, which are difficult to track.

Joseph was a 2003 first-round draft pick of the Giants and Bennett was a 2001 first-round draft pick of the Vikings, and the two were teammates in the final season of both of their carers with the 2010 Raiders. Gachelin was a 2004 draft pick of the Patriots who was briefly on their roster but never made it into a regular-season game.

Attorney Aaron Resnick will be attending the 2012 AAHOA Annual Convention & Trade Show this May 2-5, 2012, at the Omni Hotel and the Georgia World Congress Center.

With nearly 11,000 members owning more than 20,000 hotels that total $128 billion in property value, AAHOA is one of the fastest-growing organizations in the hospitality industry.

Mr. Resnick sits on the banking committee for AAHOA.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

According to attorney Aaron Resnick, the foreclosure wave has not diminished in Miami-Dade County, Florida. Of the 50 largest metro areas, Riverside-San Bernardino posted the highest foreclosure rate, with one in every 62 housing units with a foreclosure filing during the quarter. In Miami, one in every 95 housing units had a foreclosure filing this past quarter.

Other metros with foreclosure rates that were more than twice the national average included Sacramento (one in 77 housing units), Las Vegas (one in 82 housing units), Phoenix (one in 87 housing units), Atlanta (one in 90 housing units), Miami (one in 95 housing units), Orlando (one in 101 housing units), and Chicago (one in 107 housing units).

RealtyTrac is an online marketplace of foreclosure properties, with more than 2 million default, auction, and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data.

The metro areas that saw the largest increases in foreclosure activity among the 50 were Orlando (+52 percent); Indianapolis (+41 percent); Hartford, Connecticut (+38 percent); Miami (+37 percent); and Philadelphia (+33 percent).

Metro areas with foreclosure rates in the top 20 category included Atlanta (No. 11); Miami (No. 13); Orlando (No. 15); Rockford, Illinois (No. 16); Chicago (No. 17); and Prescott, Arizona (No. 19).

The Law Offices of Aaron Resnick, P.A. is positioned to help homeowners with short sales, loan modifications and foreclosure defense throughout the State of Florida.

According to attorney Aaron Resnick, based upon a preliminary report released by LPS, 2,060,000 properties are in foreclosure inventory. As of the end of the 2011 fourth quarter, 11.1 million borrowers were reported to be underwater, according to CoreLogic.

That's a lot of potential debt to be forgiven, and through the Mortgage Debt Relief Act of 2007, homeowners get a break from paying taxes on their forgiven debt - whether it was forgiven through a short sale, foreclosure, or a modification. The act though, is set to expire at the end of this year.

If extended, this could lead to thousands in savings for the individual borrower. For example, depending on one's tax bracket, every $10,000 in forgiven debt could incur as much as $1,500 to $3,500 in federal taxes. Thus, if $100,000 in mortgage debt is forgiven after a foreclosure, this could mean $15,000 to $35,000 in taxes owed for the borrower.

Rushing to hand over a deed before the December 31 expiration date could become a mistake though if Congress ends up extending the debt relief act, which it may.

"Obama did include it in his budget, to extend it to 2014," said Mark Luscombe, a principal analyst for tax research firm CCH, in a statement. "Congress..... might decide it's not as crucial as extending the tax breaks that already expired at the end of last year."

That doesn't mean Congress won't eventually act to extend the relief, Luscombe said.

"Usually the only fight about these things is finding a way to pay for it," he said.

The administration is proposing to extend the act until January 1, 2015.

The criteria to have forgiven debt excluded as taxable income is the debt must be from a primary residence, and the debt must be used to buy, build or substantially improve a primary residence.

Also, the exclusion applies only to acquisition debt up to $2 million, or $1 million for married taxpayers filing separately.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

According to attorney Aaron Resnick, short sales are rising sharply, offering many struggling homeowners a better alternative to foreclosure in many of the nation's hardest hit states. A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.

A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower. While credit is also typically damaged much less than from a foreclosure, both often result in a negative credit report against the property owner. Most creditors require the borrower to prove they have an economic or financial hardship preventing them from being able to pay the deficiency.

Creditors holding liens against real estate can include primary mortgages, junior lien holders--such as second mortgages, home equity lines of credit (HELOC) lenders, home owners association HOA (special assessment liens)--all of whom will need to approve individual applications for a short sale, should they be asked to take less than what is owed.

Most large creditors have special loss mitigation departments that evaluate borrowers' applications for short sale approval. Often creditors use pre-determined criteria for approving the borrowers and the terms of the sale of the properties. Part of this process typically includes the creditor(s) determining the current market value of the real estate by obtaining an independent evaluation of the property with an appraisal, a Broker's Price Opinion, or a broker opinion of value (BOV). One of the most important aspects for the borrower in this process is putting together a proper real estate short sale package including hardship letter explaining why a short sale is needed.

Depending on each creditor's policy and the type of loan, creditors may accept applications from borrowers even if the borrower is not in default with their payments. Due to the overwhelming number of defaulting borrowers due to mortgage failures and other causes as part of the 2008-2012 global financial crisis, many creditors have become adept at processing such short sales applications; however, it can still take several months for the process from start to finish, often requiring multiple levels of approval.

In January, short sales rose 33% compared with 12 months earlier, the company reported. During the month, 32 states saw year-over-year percentage increases in short sales. Even more encouraging, short sale deals outnumbered foreclosures in 12 states, including some of the hardest hit like California, Arizona and Florida.

January's numbers look to be just the beginning. "[W]e believe 2012 could be a record year for short sales," said Daren Blomquist, vice president at RealtyTrac.

Banks are showing signs of being more open and willing to approve the deals -- even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
The rich walk away: Million-dollar foreclosures

Typically, banks get about 20% less for a foreclosed home. Foreclosure can also take years to unload, during which expenses, like property taxes, insurance and other expenses, mount up.

One of the biggest roadblocks for short sales has been the time it takes to get deals approved. That time shrunk slightly during the first quarter -- to 306 days from 308 days the previous quarter -- but many deals still fall through because the buyer eventually walks away.

However, that could all change come June 1 when a set of new rules are put in place that will require lenders to make a decision about short sale requests within 60 days.

The Law Offices of Aaron Resnick, P.A. has helped hundreds of clients with short sales.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

The Law Offices of Aaron Resnick, P.A. joins the Columbian American Chamber of Commerce. Attorney Aaron Resnick states that many of the firm's clients are Columbian nationals and he looks forward to helping further cement the firm's position as a go to shop for all legal needs for Columbians seeking to do business in South Florida.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

The Law Offices of Aaron Resnick, P.A. joins the Panamanian American Chamber of Commerce. The chamber promotes and fosters bi-lateral trade between Panama and the United States. The firm, which already represents and number of Panamanian companies and individuals looks to continue to grow its practice providing services to Panamanians looking to and doing business in South Florida.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.

AARON RESNICK'S TOP TEN THINGS TO KNOW WHEN BUYING A CONDOMINIUM

Condo financing can be challenging these days. Before selecting your new home, save yourself some time and frustration by checking with the HOA against this list of criteria to make sure the loan you want is available:
1. Is the condo complex FHA approved? This means the project is listed on the FHA approved list and has recently been recertified to meet current FHA guidelines. The project still needs to meet items 2 - 10 on this list in order to qualify for FHA.
2. What is the owner occupancy ratio in the project? This is determined by finding out how many total units there are, how many are owner occupied, and how many are rented. FHA requires 50% owner occupancy. Fannie Mae and Freddie Mac require 51%. Some conventional financing allows for owner occupied buyers only with at least 10% down when these ratios cannot be met.
3. How many owners are more than 30 days late on HOA dues? FHA and conventional financing requires no more than 15% of the owners be late or the project is considered non warrantable.
4. Does any one person or entity own more than 10% of the project? This can be an issue in small complexes when someone owns more than one unit or has combined two units into one.
5. How much of the building is mixed use? Many newer projects in Boulder and metro Denver have a mixed‐use component. While it's great for urban planning, it can be challenging for financing. If more than 25% of the total square footage is used for commercial or business, the project is ineligible for conventional or FHA financing. Some smart developers have phased their projects in such a way that they avoid this issue so always be sure to check.
6. Is the HOA in a lawsuit? While this isn't a prevalent problem, it does come up. If the HOA is in any kind of lawsuit with owners or contractors or anyone else, FHA and conventional financing will not be available until the lawsuit is settled.
7. Does the HOA annual budget include 10% in reserves? Most well‐run HOAs have a reserve built into their annual operating budget but it is important to make sure.
8. Does the HOA have $1 million liability coverage? This is a minimum industry standard.
9. If the project is over 20 units, does it have fidelity bond coverage? Another new industry standard for larger complexes to protect against mismanagement of HOA funds.
10. If the project is FHA approved, have they allocated funds for FHA re‐approval every 2 years? FHA now requires every project be recertified every 2 years. It's a good idea to make sure the HOA has the resources allocated in the budget for this new additional cost. Especially if the condo price point is in lower end of the spectrum, you
will be better prepared for resale by making sure the condo you buy will be easy to finance for a new buyer when you're ready to sell and move up.

About the Law Offices of Aaron Resnick, P.A.

The Law Offices of Aaron Resnick, P.A. is a full service boutique law firm with offices in Miami, Boca Raton, Gainesville/Ocala, Jacksonville and New York City. For additional information, please go to www.thefirmmiami.com, or call 305.672.7495.