Mar 082017
 

The following article is reprinted with permission from “State News Updates” — an e-newsletter from Representative Paul Stearns, District 119.

Foreclosure Diversion Program

The Foreclosure Diversion Program (FDP) in the Maine courts gives lenders and homeowners in foreclosure a chance to explore other options and work out their differences.  In mediation, both parties, with the help of a neutral mediator, talk about whether it is possible to avoid a foreclosure on the property.  Some other options include a loan modification or short sale.

To participate in mediation, a homeowner must live in the home, and the property must have no more than four (4) units.  When a qualified homeowner in foreclosure requests mediation, the case enters the FDP.  Homeowners attend an informational session, where a judge explains the court process and a housing counselor or legal services attorney explains more about working with lenders to modify loans.  The homeowner attends the first mediation session on the same day.

At mediation, the homeowner(s) and their attorney(s), if they are represented, meet with the lender and the lender’s attorney.  A mediator is present to help the parties to make sure that everyone is heard and that important issues are discussed.  The mediator submits a report about the mediation to the court.  Sometimes parties return at a later date for another mediation session.

How Do I ask for mediation?

All requests for mediation must be in writing and given or sent to the court clerk.  A copy of the request must also be given or sent to the attorney for the lender.  Homeowners can request mediation by using the one-page Answer form attached to the foreclosure complaint, by filing an Answer without the form, or by writing a letter to the court to ask for mediation.

How Do I prepare for mediation?

Homeowners can call the Bureau of Consumer Credit Protection’s foreclosure hotline:  1-888-664-2569 to discuss the situation, to find a housing counselor, or to be directed to legal assistance.  In addition, the best preparation is to decide on your goals.  Do you want to stay in the house?  Do you have money to pay for it?  Lenders can best prepare for mediation by knowing the status of the loan, having all documentation of the loan in order, and by bringing any forms required for review of the loan to mediation, even if the forms were previously provided with the complaint.  Lenders should know what options for loan modification apply in each situation and should have obtained a reasonable fair market value of the property.

What is the benefit of mediation?

Parties have a chance to talk with each other in an informal setting.  The mediator is impartial and is trained to help parties discuss issues and explore options.  New ideas for settlement may come up at mediation that neither party knew were possible before meeting.  Parties make the decisions.  The mediator does not decide your case.  Because of the communication established in mediation, many foreclosure cases are dismissed.  More than half of the foreclosure cases mediated in the FDP from 2010 through 2015 were dismissed.

How Do I contact the Foreclosure Diversion Program staff?

If you have questions or suggestions about the Foreclosure Diversion Program, please contact:  Laura Pearlman, the Foreclosure Diversion Program Manager at (207) 822-0706 or by email, FDMP@courts.maine.gov.

How Do I contact a Foreclosure Mediator?

All Foreclosure Diversion Program mediators are independent contractors to the Judicial Branch.  Their names appear here by consent.


Operation of the Foreclosure Diversion Program is governed by: 14 M.R.S. §6321-A and Maine Rule of Civil Procedure 93.

For more information, click here.

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Feb 282017
 

Dagnabbit! I can’t make things work!

Imagine your buyer client calling you in panic or frustration because the lights in their new home keep going on and off… the garage door is opening by itself… and the thermostat refuses to affect the temperature of the house. Would your first instinct be to suspect the house is haunted? (Bonus point available–that’s called a stigmatized property. Is that a required disclosure in Maine?)

Well, there might just be another explanation and an item for you to add to your closing checklist. (You do have one, right?)  Here’s a link to a recent article in USA Today reporting how “As the Internet of Things finds itself into houses via connected devices, more and more homes contain hot new tech gadgets that can all too easily become unlocked digital backdoors.”

In non-technical language, if the seller forgets to reprogram his smartphone, he could end up opening the garage door of the home he sold.

Speaking of closing checklists,  the article includes a link to a one-page “smarthome checklist” created by the Online Trust Alliance. It’s not exactly free of technical terms but is definitely worth a look. Sorry if it makes your head hurt! Those with kids have access to technical support with this language and these devices.

Seriously, there are some potential issues here to think about–including what electronics “go with the house” and what programming changes need to happen when a property changes hands.

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Feb 242017
 

One of the challenges we face in real estate courses is making certain our content is current. Come to think of it, that’s a challenge for real estate licensees as well!

There’s an old story claiming that someone once asked Albert Einstein for his phone number and he had to look it up. He supposedly remarked that “an intelligent person doesn’t store information, he knows where to find it.” That makes some sense and carries with it the importance of knowing what we don’t know so we do not give out false information. Einstein had the confidence required to admit he didn’t know the answer to what many would consider a fairly simple question.

So if I asked some number of licensees (particularly those who recently completed the sales agent or associate broker course about the Maine Nonresident Withholding Tax on real estate sales, I suspect many would give an incorrect answer because some rates changed for 2017. When Ben Franklin opined that “In this world, nothing can be said to be certain, except death and taxes,” he didn’t mean the amount would be certain–just the existence.

You’d be correct (well, nearly) if you cited the default calculation as 2.5% of the purchase price. “Nearly” is added because the withholding only applies if the sales price is $50,000 or more.

You might also remember there are some alternative calculations and that each requires a waiver from the Maine Department of Revenue. One of those calculations is based on a “small profit.” Those are the rates that have changed for 2017. With a waiver, the seller may be allowed to have the smaller of the two amounts (2.5% of the purchase price, 10.15% of the profit for residential) withheld.

If you think this is starting to get complicated, you get a sticker. Like Einstein, you may be concluding the best answer to the question “How much is the Maine Nonresident Withholding?” is “We’d better look it up.” Actually, an even better answer is “We’d better consult a tax specialist.” (If your client doesn’t have an accountant or tax advisor, like Einstein this might involve a phone book or its Internet equivalent.)

From an estimating point of view, the safe calculation is the default calculation of 2.5% of the sales price. After all, that is the most the seller will have withheld. If your client is a “do-it-yourself” type you can offer him or her the link to the Maine Revenue Services Website. It’s a very user-friendly place with lots of information and all the forms one may need. (Forms and information use the abbreviation REW-Real Estate Withholding.) Note that any request for a reduction in withholding must be made at least five days before closing.

While there’s no minimum on how helpful we should be with our clients, there may be some limitations when it comes to the amount of knowledge we have–particularly in areas such as taxes that extend beyond our area of expertise. Personally, I think a client who is a nonresident of Maine needs to know he or she may be facing at 2.5% withholding from proceeds at closing. We can and should also explain that there are alternative calculations, waivers, and exemptions and these should be discussed with a tax professional well before closing. In the interest of accuracy, perhaps “the less said, the better.”

Another option might be to provide all nonresident sellers with the Notification to Sellers of Withholding Requirement–it could become part of your listing packet and be included on your listing checklist.

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Feb 112017
 

Knox-Lincoln Soil & Water Conservation District is sponsoring Maine Forest Service District Forester Morten Moesswilde for a free evening talk, “Stumped About Tree Growth? Understanding Maine’s Tree Growth Tax Law,” at Rockland City Hall on Thursday, Feb 16 from 6:30 to 8:30 pm. This program is free and open to the public. No pre-registration is required – just show up!

Moesswilde will provide details about the why’s and how’s of Maine’s Tree Growth Property Tax program, which provides eligible woodland owners with reduced property tax valuations if they commit to managing the land long-term for forest products.

The Tree Growth program has broad participation from small to medium-sized woodland owners across midcoast Maine and beyond, yet sometimes generates misconceptions and misinformation about what it actually involves. With an annual deadline of April 1 for new enrollees and some re-certifying parcels, landowners who are considering enrolling, or who are already enrolled and need to find out more, should find this program helpful in understanding their options and responsibilities under Tree Growth.

Moesswilde will present the basic provisions and requirements of Tree Growth, and allow time for questions and discussion of specific situations. In addition, he will discuss further resources available for landowners including free “walk and talks” on their land with a Maine Forest Service (MFS) District Forester; assistance with woodland planning; and publications on a variety of topics – as well as additional upcoming workshops. The Maine Forest Service is part of the maine Department of Agriculture, Conservation & Forestry, and provides numerous resources, assistance, and presentations about trees and forests in Maine, including owning, enjoying, planning for, and, where desired, harvesting forest products on woodlands.

For more information, contact Knox-Lincoln SWCD at 596-2040, hildy@knox-lincoln.org or MFS District Forester Morten Moesswilde at 441-2895, morten.moesswilde@maine.gov

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Jan 172017
 

A question we often hear from potential sellers is whether or not they should renovate or otherwise improve the property before selling. While there’s no one correct answer (except “it depends”), most licensees will recommend some degree of “freshening” — cosmetic improvements that might fall under the headings of staging or curb appeal.

But what about the “bigger” stuff? Should we remodel the bathroom?

Every year Remodeling Magazine reports the results of research designed to determine which projects have the greatest dollar return. The results of the most recent survey are reported on REALTOR.COM and might surprise you. While sexy renovations may help with the sale, it doesn’t necessarily mean a great increase in value. The top return was attic insulation–statistically it returns more than the cost.

We ought to bear in mind (and explain to prospective sellers) that the value of the improvement shouldn’t simply be measured in dollars, but having some data beats pulling our opinions out of the air. If you look at the chart, note also there are regional differences. Also, pay attention to what people are saying. I know when I talk with folks who are buying and selling two things that come up consistently are “energy efficiency” and “aging friendly.” It shouldn’t be a surprise to hear that in Maine where we have an aging population and some mighty cold weather.

One of the funnier questions I had a few years ago came from a young couple who wondered, “Should we remodel and add a bedroom if we’re planning to sell in ten years–will we get back the money we spend?” That’s some strategic thinking! In this case, they ultimately decided ten years living in a home with the additional bedroom would be worth spending the money–even if the long-term payback wasn’t guaranteed. There are too many “it depends” to answer the dollar question with any degree of certainty.

Seth Godin recently wrote a piece (Economics Is Messy) about the difference between value and profit. When considering the “Should I renovate…?” question, it’s an important distinction. The average dollar “return” on improvements is about 64%, making most improvements a loss if we only measure in dollars. When we look at the value we include factors like how much more salable the property becomes and how much pleasure the current owner will reap from the improvement. Those factors add value and may well offset the lack of dollar profit.

 

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Dec 292016
 

It’s that time of year when cars occasionally need help getting started in the form of a jump or boost that puts more power into the process. If you’ve been “thinking” about a career in real estate, now is a good time to put some power to your thoughts and dreams by taking the Sales Agent Course starting on January 25, 2017 at the Ramada Inn in Bangor Maine. *

This is a live (and lively!) course… admittedly intense and demanding–most students concede they didn’t realize how much there is to learn. But our material and teaching methods have a proven track record. Alumni Renee Jarvis says, “I enjoyed the way Walter taught the subject matter so it would be understood and not just memorized.  I truly love Walter’s teaching style…”

For additional information, course dates, and to register online, visit the Arthur Gary School of Real Estate Website or call the school at 207 856-1712. If you have questions about course content or a career in real estate let me know–I’ll be happy to help!


* The state of Maine requires that a person pass the 55 hour Sales Agent course and a state exam, both with a 75% or better, in order to qualify for a Sales Agent license. Our 55 hour Sales Agent course covers all of the material required by Maine License Law and Rules to qualify for a Sales Agent license.

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Oct 252016
 

tax-1351881_1280Licensees may not be tax accountants or qualified to provide tax advice, but that doesn’t mean we can’t share resources with our clients. The United States Department of Agriculture recently released Tax Tips for Forest Landowners for the 2016 Tax Year. I’ll confess that reading it (it’s only two pages) made my eyes glaze over, but if the only thing it accomplishes is sending your client to a tax advisor, that’s probably a good thing!

A few years ago I had my small woodlot cut and would have reported the income as “ordinary income” if I hadn’t used a tax advisor. The tax savings was significant. It’s important to “know what you don’t know.”

Licensees could post this link on their website or Facebook Page or send it directly to those on your mailing list who own forest land. Obviously, you won’t be able to answer questions, but folks may appreciate the information you can provide!

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Sep 092016
 
Seagulls or birds? An argument worth having?

Seagulls or birds? An argument worth having?

When my oldest daughter was a toddler we were at the beach. In a parental desire to show her things and develop her understanding and vocabulary, I pointed out sea gulls. (She liked animals and birds–still does.) In short order, she began pointing and saying, “Daddy! Birds!” Somewhat absent-mindedly I would reply, “Those are seagulls, Bethanie.”

After several of those exchanges, she said pointedly, “Daddy, you can call them seagulls. I’m going to call them birds.” I have always admired her independence. On this occasion, I opted to accept her refusal to adopt my vocabulary.

But names can be important. So after announcing that “new core courses” are being released, we will not be referring to them as “new” and “old.” We need some fairly precise language here, so I will refer to them by their proper names. Effective October 1, 2016, there be a Core Course for Designated Brokers 2 and a Core Course for Brokers and Associate Brokers 2. These courses effectively replace the Core Course for Designated Brokers 1 and the Core Course for Brokers and Associate Brokers 1. When I say “replace,” understand that the courses numbered 2 are different than the courses numbered 1–both in content and application.

So what should you take (or have taken) before you renew your license?

What hasn’t changed:

Designated Brokers must take the “Core Course for Designated Brokers.” Brokers and Associate Brokers must take the Core Course for Brokers and Associate Brokers. That’s actually pretty straight-forward.

Where it potentially gets confusing:

Whenever there’s a change in core courses, the question always raised is “which core course do I need to have completed when I renew my license?” The answer is, “It depends!” While figuring out the answer initially sounds a bit daunting, this too is fairly straight forward for most licensees. It depends on the expiration of the license you are renewing. It might help if you have that information before reading further.

Brokers and Associate Brokers with a license expiration date prior to April 1, 2017 may fulfill the core course requirement with either the Core Course for Brokers and Associate Brokers 1 OR the Core Course for Brokers and Associate Brokers 2.

Designated Brokers with a license expiration date prior to April 1, 2017 may fulfill the core course requirement with either the Core Course for Designated Brokers 1 OR the Core Course for Designated Brokers 2.

Brokers and Associate Brokers with a license expiration date on or after April 1, 2017  must fulfill the core course requirement with the Core Course for Brokers and Associate Brokers 2.

Designated Brokers with a license expiration date on or after April 1, 2017 must fulfill the core course requirement with  the Core Course for Designated Brokers 2.

The same explanation would apply to activating a currently inactive license. If you activate before April 1, 2017, either course is acceptable. On or after April 1, 2017, you must have the appropriate Course 2.

For most, the expiration date will determine which course is required. However, if your license expired prior to April 1, 2017, but you do not renew it until after April 1, 2017, you would need Core Course 2.

If you are at all confused, don’t guess! You can, of course, also ask your DB or call the Maine Real Estate Commission if you need some help determining the answer.

As a reminder, continuing education is only required to renew a license. Sales Agents, for example, are not required to have continuing education hours–a Sales Agent License is not renewable. A Sales Agent’s “continuing education” is the Associate Broker Course. Associate Brokers who plan to take the required course and apply for a Broker License would also not need “continuing education.” Personally, I still think continuing education is a great idea in both of those scenarios even though it’s not required. I remember one sales agent who came to the Associate Broker Course with a lot of “under contracts” during a very depressed market. His classmates were in awe and wonder. He explained, “I’ve taken over 40 hours of continuing education. There might be a correlation!”

I will be teaching both the Core Course for Brokers and Associate Brokers 2 and the Core Course for Designated Brokers 2 on Friday, October 7, 2016 at the Ramada Inn in Bangor. For more information and to register, you can call the Arthur Gary School of Real Estate at 856-1712 or visit the Arthur Gary School of Real Estate Website.

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Aug 052016
 
Let's think about this.

Let’s think about this.

Since I’m not actively engaged in brokerage on a daily basis, I take some extra steps to make certain I’m keeping current with “what’s going on in the business.” I know all too well the hazards created when class content and delivery aren’t in tune with the current environment.

One of those steps is to scan the media regularly and consistently. Recently there have been some headlines regarding action taken by the CFPB (Consumer Financial Protection Bureau) that are at best misleading. One I saw this morning claimed “CFPB makes clear lenders’ ability to share closing disclosure.” Actually, the CFPB has proposed some changes to TRID (TILA-RESPA Integrated Disclosure Rule). Until those changes are adopted, nothing has changed. The original rules remain in place.

In layman’s terms, the current rules adopted last fall created a reluctance on the part of lenders to share Closing Disclosures (a detailed statement of the buyer/borrower’s costs) with third parties–including real estate licensees. I suspect this stemmed in part from a desire to protect borrowers’ privacy. That would seem to be noble goal. But it was a change that did not sit well with some licensees who had become accustomed to the lender sending the previous disclosure (called ” the HUD”) to the licensees involved in the transaction.

Under the new rule, lenders were given strong confidentiality guidelines that actually go far beyond the issue of who gets the closing disclosure. Those guidelines increased the borrowers’ confidence that information about them and their transaction would remain confidential. Nothing, however, took away the borrower’s right to share that information with others.

Personally, I never understood why this created a problem for licensees. Under the new rule, the lender would send the closing disclosure to the borrower. The borrower would, if he or she wished, contact his real estate licensee and provide a copy for review and discussion. I informally polled some of my students and, while many admitted it felt like an extra step, no one reported a serious problem with the process. In exchange for what might be seen as an extra step, the buyer/borrower received additional protections and maintained responsibility for the the process. So the campaign to change this rule feels a bit like a solution in search of a problem.

Perhaps someone can help me understand why this change is necessary. The lines of communication between a real estate licensee and his or her client should be open and frequent. We say it often, “The agent (licensee) advises, the client decides.” Why would that not apply here? The information contained in a closing disclosure belongs to the client, not the licensee. This change might actually be seen as a power grab, taking away a borrower’s right.

We sometimes hear licensees “complain” that buyers and sellers do not accept enough responsibility for what happens in a transaction and are quick to blame the licensee when things go wrong. If that’s true, does it really make sense to take this step?

I haven’t looked at the specific language of the proposed rule changes, but a summary indicates the change will include (among other things) “guidance on sharing the disclosures with various parties involved in the mortgage origination process.” It seems to me that we already have that and we might think about what we’re doing and saying if we change that guidance.

 

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