short sale attorney danbury brookfield naugatuck waterbury

Short Sale Impact On Homeowners Credit Score

The Impact of Short Sale on the Credit Score of the Homeowner

What is the impact of short sale on the credit score of the homeowner?

When a homeowner cannot make their mortgage payments, for whatever their personal reason is, and they have no equity in the property they have two options: foreclosure, short sale, or bankruptcy. While losing your home may be stressful, most clients are more worried about the future: when will they be able to buy a home again?

Sadly, all three of the above options will have a negative impact on the homeowner’s credit score. Let’s take a look at the options:

  1. Foreclosure – By the time the lender files for foreclosure, you have missed two, four, six, maybe more payments. The foreclosure process can last a year or more, by which time you have missed 12 or more additional payments. When the judgment of foreclosure is entered, you may be responsible for additional costs, or in extreme cases the difference between the foreclosure sale price of the property and the amount of the mortgage. Then a foreclosure is added to your credit report and your credit score drops further.
  2. Bankruptcy – May allow you to keep some of your property, maybe even your home if you have enough other assets, but it will essentially strip you of everything you are worth to pay off your creditors. A bankruptcy is also one of the most devastating negative marks you can get on your credit report.
  3. Short Sale – By entering into a short sale agreement, you can stop the negative impact of missed payments as soon as you know a problem exists. You can even file for short sale without missing any payments – something most lenders won’t tell you! While some lenders may report short sales to credit bureaus, the credit score impact of a short sale is for less than that of a foreclosure or bankruptcy.

Since Short Sale has a smaller impact on your credit score, and can save the additional missed payments that come with foreclosure or bankruptcy, the overall impact on credit is much lower. Therefore, credit scores will recover much faster after a short sale. Short Sale is not always the better choice, but all things being equal, it is almost always the lesser of three evils.

The option of short sale is available to homeowners at almost any time! If you owe more than your house is worth, it may be the right option for you.

power of attorney in purchase or sale of real estate

Power of Attorney for Real Estate Transactions

Power of Attorney When Buying or Selling Real Estate

Authorizing Somebody Else to Act on Your Behalf

A power of attorney is the term used for an express authorization allowing somebody else to act on your behalf for a specific purpose. A power of attorney can be as general or as specific as the person creating the authorization wants and can allow somebody to make healthcare, financial, and other decisions on their behalf.

One common use for a power of attorney is in the context of a real estate transaction. The main use for a real estate power of attorney is to allow somebody else to execute, or sign, documents on behalf of a buyer or seller who is not present at the time of conveyance (or transfer) of the real estate property.

For example, if a Seller has moved to another state but is selling property in Connecticut, they may want to authorize a family member or their attorney to sign the deed transferring title on their behalf. A Buyer who is not present for a closing, for example if they are on active duty, can authorize a family member or their attorney to sign the mortgage and other loan documents on their behalf. Even entities such as corporations or LLC’s can authorize an individual to act on their behalf for the purpose of executing closing documents.

Whenever the use of a power of attorney is being considered, an experienced real estate attorney should be involved. The power of attorney must contain certain terms and be drafted properly, and then needs to be executed in a certain manner, to be compliant with Connecticut General Statute subsection 47-5. The deed will also need to be recorded on the land records in proper order, or the documents executed under that power of attorney will not be enforceable. Finally, an authorized individual under a power of attorney signing documents on behalf of the buyer or seller must sign in a specific way. An experienced Connecticut real estate attorney can make sure a power of attorney is drafted, signed and recorded properly and direct the authorized agent on how they must sign documents.

At G&G Law, LLC we draft Connecticut compliant power of attorney authorizations for our real estate clients, and will even act as power of attorney, at no extra cost if they are hiring us as closing agents to buy or sell property. We can also draft power of attorney authorizations for all other clients for a fee. If you need our assistance please call us at 203-906-9622.

ct real estate title law

Title Search and Title Insurance When Purchasing or Refinancing Residential Real Estate

Title Search and Title Insurance in a Purchase or Refinance of Residential Real Estate

Lender Requirements and Buyer Protections

When you are buying residential real estate, you are paying money in exchange for title to the property. It is in the interests of the buyer, and the lending institution giving the buyer a mortgage, to make sure that title is clear and “marketable”. The buyer wants to make sure they are actually being buying the property rights as promised by the seller. The lender wants to make sure that the collateral on the mortgage is as promised; the property has marketable title and is clear of other encumbrances, such as mortgages or liens. So, how do the buyer and lender make sure that title is clear and marketable?

Title Search

The buyer will need to hire a real estate attorney to perform and/or review a title search. A title search reviews the history of the property by looking at the land records. The title search will provide the legal description of the property, showing exactly what the buyer is buying.

For purchases, all conveyances, mortgages, liens and releases are reviewed going back 40 years (called the “chain of title”). By reviewing the title search, the real estate attorney for the buyer will be able to tell if the seller owns the property, how the seller or sellers hold title, do they have the right to sell it, are there any liens or mortgages on the property that must be paid off to make title marketable, and if there are any relevant powers of attorney relating to the property.

The Buyer may also choose to do a municipal search, which reviews all zoning and building permit for compliance with local laws.

For a refinance, only a current owner search is necessary. Through a current owner title search, the real estate attorney performing the refinance closing will be able to see if the borrower is truly the owner, and what mortgages and liens must be paid off to give the new lender first priority.

Title Insurance

Lenders are not willing to rely on title searches and attorney opinion when it comes to making sure they have actual collateral when making mortgage loans. Therefore, Title Insurance was invented to cover losses in the case that a title defect is discovered after the closing on the property. Title insurance is available to protect both the Lender and the Buyer from title defects that could result in loss of property value, or even loss of ownership of the property. In Connecticut, real estate attorneys act as title insurance agents and will prepare and secure the policy on the Buyer’s behalf.

For a purchase, the Lender will demand that the Buyer purchase title insurance to cover the Lender. The Buyer will also have the option to purchase additional coverage that will protect their interest in the property.

For a refinance, the Lender will similarly demand title insurance to cover their interest, but no Buyer policy is necessary. The homeowner will still be covered by the title insurance from their purchase. It should be noted that even if the refinance mortgage lender is the same as the purchase mortgage lender, a new title insurance policy will need to be purchased.

What does title insurance cover?

  1. Insures against anyone else making a claim that he or she is the owner of all or part of the property;
  2. Insures against liens or other encumbrances that were missed by the title search or misindexed by the town clerk;
  3. Can offer protection of ownership even where defects in title marketability exist (such as old unreleased mortgages);
  4. Insures a legal right of access (though this may be just by foot);
  5. Insures against violations of government regulations, but only those violations listed on the land records;
  6. Insures against the exercise of eminent domain in certain situations;
  7. Insures against fraudulent conveyances in the chain of title;
  8. Any defect in title that arises from the date of the policy (the closing date) and the date the deed and mortgage are recorded;
  9. For the Lender, it insures the enforceability of their lien created upon the title of the property by the mortgage;
  10. For the Lender, it insures the priority of their insured mortgage lien against other liens or encumbrances;
  11. For the Lender, it insures the priority of their mortgage lien against liens for services, labor or materials for work done on the property (in conjunction with an Owners Affidavit signed by the Seller);
  12. For the Lender, it insures the assignment and assignability of any mortgages that are assigned to and assumed by the Buyer;
  13. Pays attorneys fees and costs of defending title and the insured mortgages.

There is also available an expanded title insurance policy; which is a good idea for Buyers and may be necessary for the Lender in certain situations. In addition to the protections of a standard title insurance policy, the expanded title insurance policy also covers:

  1. Correcting or removing existing violations of restrictive covenants;
  2. The inability to obtain building permits due to existing violation of subdivision regulations;
  3. Removal of existing structures that were built without proper building permits;
  4. Removal of existing structures due to non-compliance with zoning laws;
  5. If the property cannot be used as a single family home due to zoning regulations;
  6. Removal of an existing structure that is then found to encroach upon the land of a neighbor;
  7. If a neighbor builds a structure that encroaches upon the property of the insured;
  8. For one to four family homes that have a valid certificate of occupancy and no recent boundary line changes, offers survey coverage even without a survey.

What does title search not cover?

  1. Government regulations for which a violation was not recorded on the land records;
  2. Rights of eminent domain where a notice of exercise was not recorded on the land records;
  3. Defects, liens or encumbrances that:
    1. were created or agreed to by the insured;
    2. known by the insured but not disclosed to the title insurance company;
    3. that do not result in any loss to the insured;
    4. were created or attached after the date of the policy;
    5. resulting from the Buyer’s lack of “bona fide purchaser” status.
  4. For the Lender, enforceability issues created by the Lender’s inability to meet Connecticut business practices requirements;
  5. For the Lender, enforceability issues created by the Lender’s lack of compliance with consumer protection or truth in lending laws;
  6. Any liens for services, labor or materials for work performed after the date of policy and not paid for by mortgage proceeds;
  7. Any claim arising from bankruptcy or other creditors’ rights laws.

How much does title insurance cost?

The cost of title insurance is set by statute and controlled by the legislature. With that said, title insurance premium are set increase beginning January 1, 2016 for the first time in decades.

With that said, we will look at the pricing structure at the time of the writing  of this article, even though we are only weeks away from the increase.

Let’s use the example of a house that will cost $200,000 (the amount of Owner coverage) and where the mortgage will be for $170,000 (the amount of Lender coverage). A standard lender title insurance policy will cost $607.00. If the Buyer decides to purchase a standard owner policy in addition to the standard lender policy, the total for both is $750.00. Expanded coverage for both Buyer and Lender would cost $825.00 for both policies. This is money well spent for the Buyer, as the title policy remains in effect until the property is sold.

In a refinance, there is no need for an owner policy as the owner is not conveying the property and will be covered by the title insurance policy from their purchase. The Lender policy will need to be purchased to cover the new mortgage, even if the refinance lender is the same as the purchase lender. The good news is that policy is discounted so that a $170,000 lender policy for a refinance would only cost $400.00.

At any time you can get a title insurance quote from the Connecticut Attorneys Title Insurance Company on CATICulator.com.

The Bottom Line on Title Insurance

The title search and title insurance are sometimes unanticipated and unwelcome expenses when the Buyer is presented with their closing costs. However, the Lender policies are required by the mortgage companies and banks, and the Owner policy is a relatively cheap addition that provides a lot of protection. Expanded policies offer buyers the peace of mind that they will not have to incur costs of compliance with violations that were not discovered before the purchase, and even some issues that arise after the purchase. If the Lender MANDATES title insurance to cover its investment, shouldn’t the Buyer similarly protect themselves?

 

attorneys for young professionals

Attorneys for Young Professionals

Attorneys for Young Professionals

Let us be your lawyers for life!

At G&G Law, LLC, we are a firm comprised of three attorneys in their thirties. As young professionals ourselves, we are able to cater to other young professionals such as doctors, nurses, financial advisers, accountants, insurance agents, real estate agents, teachers and professors, life and success coaches, etc. Our young professional clients appreciate our ability to communicate on their level, use technology to improve the flow of information and their overall attorney experience, and in general understand the hardships and demands of the modern landscape for young professionals.

Below are some of the practice areas we serve and some examples of how we help our young professional clients meet their needs within those areas of law.

Business Formation, Planning & Licensing

Whether you just graduated school or have been working for somebody else gaining experience, you may be looking to open your own business or practice. One of the things they don’t teach you in grad school, and that your previous employers are not likely to share with you, is how to start, plan and run a business. Many of our first encounters with our young professional clients are when they are trying to go out on their own but don’t know how to handle much of the business paperwork that was previous done on their behalf. Should they form a partnership, an LLC or a corporation? How should they handle partners or investors? Are they allowed to have partners or investors under State laws? What licensing will they need? What types of insurance will they need? What contracts do they need to sign with their clients and customers? How about a business plan to seek funding? Should they be charging sales tax?

We can assist our clients by identifying all of the needs of their business, the barriers it will have to get over, and how we will attack those barriers. We have the knowledge, experience and software to meet all the business law needs of our young professional clients.

Real Estate – Purchases, Sales & Refinance

Many young professionals are beginning to reap the fruits of their labor; they are finally starting to make decent money after years of education and training. One of the first things many think about, and perhaps the most important purchase of their life, is buying a home. Whether buying a condominium or a house, there are many specific considerations that go into the legal process of buying a home. As first time homeowners, young professionals need a little extra help when buying their first home. Our real estate attorneys are ready to guide our clients from contract signing to closing.

Perhaps the young professional bought a home before they were making good money, and now their income and credit score have improved. It might be a good idea to consider a refinance, lowering your interest rate and perhaps the length of the mortgage, saving you lots of money over the life of the loan. Or maybe they want to sell their condo and buy a house – we can manage a sale and purchase for the same day!

Wills, Estate Planning and Probate

Until they begin working in their profession and building up wealth, many young professionals do not feel like they own anything worth putting into a will, so many do not consider an estate plan. First, you should always have an estate plan, even if that plan is to not draft documents and allow the laws of intestacy (dying without a will) control the distribution of your assets. Second, once the money starts rolling in and the young professional owns a car, has a home, marries and has kids, the issue of what will happen to their money and will it provide for those they care about becomes very important. Young professionals also need special considerations in the modern age: child protection plans, social media property distribution, and an increased need for privacy are just some of those considerations.

As we age so do our loved ones, such as our parents and grandparents. Issues such as the need for special needs trusts or probate estate administration after the death of a loved one begin to arise. Our firm can handle the estate planning and administration needs of multiple generations; and we hope to serve the next generation too (the children of our current young professional clients).

Tax Planning & Resolution

With increasing wealth come higher taxes. The more you make the more you pay; unless you can spend it properly by investing in the future of your business. Our tax attorney can review your industry, financial situation, assets and liabilities and advise you of the most tax-advantaged ways to put your money to use.

Some young professionals have also already dug a hole for themselves with the IRS or State. Perhaps you had a job as a waiter, and now you have unpaid or unclaimed income tax debts due to the IRS. Maybe you improperly set up your service business, did not charge sales tax on the services you provided, and now the CT DRS is coming after you for uncollected or unremitted Sales & Use Tax debts. Our tax resolution attorneys can help you appeal government determinations, comply with audits, and resolve your tax debts using an array of methods available to those who know and understand tax law and procedures.

Family Law – Divorce & Child Custody

Sometimes we make decisions when we are younger that we spend our entire lives dealing with. An error only becomes a mistake if you do nothing to fix it. The impact of such decisions can be minimized. Whether you are in an early marriage that has become unhappy or abusive or you are seeking child custody or a modification of the custody agreement due to a change in circumstances, our family law attorney is ready to assist with your family matters in a way that has the least negative impact on the family relationship.

Young Professionals Need Proper Representation

At G&G Law, LLC, we know the modern landscape and how treacherous it can seem. Young professionals are the future of the the middle class and upper middle class, and will be the backbone of the United States in the decades to come. Without proper planning and guidance, the years of education, training and labor in your industry could be jeopardized.

As a young professional, you need to protect your property, your money, and your family; but most importantly yourself. As attorneys for young professionals, we help our clients review their life situation, not just their one individual need at that moment. We want to help you make the right legal decisions, place the right planning into action before it is too late, and get out of hot water if the need arises.

No matter what your needs as a young professional are, we are here to help; even if it does not fall into our area of expertise, we will help find you the right attorney to handle your needs. If you need our help, contact us today by calling 203-740-1400.

Connecticut Attorney Title Insurance Company Raises Cost of Title Insurance for the First Time Since 1992

6% Increase In Title Insurance Premiums from CATIC

First Title Insurance Premium Increase in 23 Years

When you are buying a home or refinancing, you are required by the lender to purchase title search so that the ownership of the property, the collateral, is insured against loss due to title issues that may pop up after the sale. Since the additional cost of also insuring the homeowners themselves is relatively low, an owners title policy is also usually purchased. Title insurance is a one time fee policy that remains in effect until the property is conveyed again. The cost of title insurance is set by statute and regulated by the Connecticut General Assembly. At Glouzgal Ramos Groth, we write policies for Connecticut Attorneys Title Insurance Company, or CATIC, due to the ease of dealing with a company dedicated to our State.

With increasing regulations in modern times, and especially with the additional regulations imposed by the new TILA RESPA Integrated Disclosures (“TRID”), the cost of compliance for attorneys and title insurance companies has increased. CATIC has therefore lobbied and received approval for an increases of title insurance premium for the first time since 1992. The increased cost of title insurance will be 25 cents per thousand dollars of insurance ($25.oo per $100,000.00 of property value). This amounts to just a 6% increase in rates. The increase in cost of title insurance takes effect January 1, 2016.

Below is a chart supplied by CATIC to show the increased cost of insurance based on home value:

CT Title Insurance Rates - CATIC

Please note that Expanded Protection Policies, which offer a few additional protections, such as future fraud, are offered at a 10% policy increase.