Stephen's Title News: V.A.

Monday, March 14, 2011

Is it becoming harder to get a mortgage? Looks as though it is.

Marc Santora of The New York Times writes about “New Worries for Buyers Seeking Mortgages.”

Frankly, there are horror stories out there about getting mortgages.

For one prospective apartment buyer,

“the moment she stepped into the two-bedroom apartment at 59th Street and First Avenue, with its oversized windows and sweeping views of the Queensboro Bridge, she just knew.”

And her offer was accepted.

“That was in August. But it was only in February, nearly six months later, that she finally closed on the $1.15 million apartment.

“In the intervening months, as she battled through a computer glitch and reams of documentation, Ms. Herman underwent a crash course in the complexities of navigating the mortgage market — which itself continues to undergo profound change.”

“The dread of not finding a lender after the market collapsed in 2009 has been replaced by uncertainty, confusion and frustration. According to brokers and lenders, the list of demands that stand between finding a place to buy and signing on the dotted line simply never stops morphing.“

And it looks as though more change are coming to the mortgage market as the Obama administration plans to reduce the role of the federal government in the mortgage market by, for instance, lowering the limit on loan amounts for loans to be bought by Fannie Mae and Freddie Mac as well as reducing loan amounts for FHA and VA loans.

“And let’s not forget the federal government’s proposal to eliminate the mortgage interest tax deduction for high-income earners; the changes in the way brokers will be compensated because of new regulations; and the fact that banks — despite recent profits — are still leery of lending. Taken together, all these elements create a situation that can paralyze potential buyers. “

The result of all this is that “confusion and uncertainty can have the same impact as fear, unfortunately,” said David S. Marinoff, a mortgage broker and managing director of the Guard Hill Financial Corporation."

Summing up the problems facing the market is this from Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst for Prudential Douglas Elliman,

“housing does not truly recover until lending does. It is currently dysfunctional.”

Once again the crystal ball goes dim.

Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Tuesday, October 12, 2010

Saving mom's home

Bankrate.com’s Steve McLinden fields questions about real estate. Here’s a column with a question that will resonate with more folks as time goes by.

Dear Real Estate Adviser,

My elderly mother needs assisted living. She owns a home in which she has lived for 50 years. If she sells the home, valued at about $150,000, she wouldn't be eligible for Veterans Affairs benefits for assisted living.

Is there any way she might be able to place the home in some kind of trust and not realize any monetary benefit from the sale? -- Steve F.

Dear Steve,

Yes. A family trust might be the solution to the asset-retention challenge your mother -- and ultimately the rest of the family -- will face.

Also known as a living trust or revocable living trust, this type of trust protects a home and other assets such as stock from remaining on the books as part of her net worth. In addition, it covers how those individual assets will be handled prior to and after your mother's passing.

The trust would also leave control of the home in the hands of your mother while she is alive, provided she remains mentally competent.

Once your mother -- who is considered the grantor in this case -- passes away, the appointed family trustee would take over and be required by law to distribute the property precisely as the grantor desired.

In the case of a house, the children typically would receive equal shares after the parent's passing. At that point, the house could be sold, or one or more of the heirs could elect to buy the others out and take ownership. There may be some overhead to maintaining a trust, by the way.

Gifting the house outright to the children, who could then sell it, is another option, particularly if you need to raise money soon for your mother's assisted-living expenses.

The negatives to this are the tax consequences, since federal law only permits an annual exclusion of up to $13,000 per family member without payment of federal gift tax. It would be prudent to have the home appraised by a professional appraiser before doing this to avoid any questions of value by the Internal Revenue Service.

As your family plans out a strategy, take into consideration any Medicaid benefit planning in addition to the VA assisted-living planning as part of a comprehensive long-term elder-planning approach. Realize the gift of a house can result in a period of ineligibility for Medicaid benefits.

For these and many other reasons, you should first consult with an estate-planning attorney or other asset-protection professional who is steeped in knowledge of VA pensions and assisted-living benefits.

You also might take another look at the U.S. Department of Veterans Affairs "Survivors and Dependents Benefits -- Death After Active Service" section. The VA's toll-free line for income verification and means-testing questions is (800)929-8387.

Good luck in sorting this out and best wishes to your mother, whose needs should remain paramount to others in this matter.

Note- Always seek competent legal advice on issues such as estate planning. Your local bar association is a good source to locate specialists in the field of estate planning. This column should not be construed as legal advice!

See the column on line - Family trust could save mom's benefits