Need to co-sign a loan? Be careful

Realty Times’s Bob Hunt writes “Guarantors of Another's Debt Need to be Very Careful.” Loan guarantees are likely to be sought in an economy like this one.

“In this kind of environment it is not unusual that a creditor may want some third party to guarantee the debt of a borrower. Parents may be asked to guarantee a lease for one or more of their offspring. (And which would you prefer: that you guarantee their lease, or that they move back in?) In-laws may be asked to guaranty some debt taken on by newly-weds; and a person venturing into a new business may need to turn to friends and/or family to guarantee a loan for start-up costs.”

While guaranteeing a family member’s loan is a traditional way to help someone get started in life or business, it should not be taken lightly. “Loan guarantors need to fully understand the terms of their guarantee.”

A California case points out the pitfalls of co-signing or guaranteeing another’s obligation. In this case, the bank went after the guarantors while it did not pursue the borrowers.

The guarantors didn't think it was right or fair that they should be pursued while the original borrower and one of the guarantors stood by. However, the trial court ruled against them; and the appellate court sustained the trial court's decision.

“There are two issues here that other, perhaps more pedestrian, potential guarantors want to keep in mind. More accurately, there is one main issue, and two examples of it. The main issue is simply this: IF YOU ARE GOING TO GUARANTEE A LOAN, BE SURE YOU READ THE DETAILS OF THE GUARANTEE CAREFULLY.”

“The point is simple. If you are going to guarantee a loan – which may be a terrific thing to do for someone – be sure you read the terms of the agreement carefully. Have a trusted attorney review it. You could be glad you did.”

Read the full article from Realty Times.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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FDIC closes three banks – total to date is 146

Reuters reports that FDIC regulators closed three banks in the United States on Friday, November 12, 2010. This brings the number of closures in 2010 to 146.

“The Federal Deposit Insurance Corp has said it expects bank closures to peak this year after 140 closures in 2009. The bulk of this year's closures have been smaller institutions, each with less than a billion dollars in assets.”

“FDIC Chairman Sheila Bair said recently that while the number of failures will exceed last year's tally, the total assets of this year's failures will likely be lower.”

The weak link in the American banking world appears to be community banks as “their recovery has lagged behind that of larger institutions and the broader economy.” These banks are susceptible to the problems in the commercial real estate market because they have “higher concentrations” in these loans than bigger banks.

Read the full Reuters report.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Tip for home sellers - don't let your emotions get in the way

Carla Hill, writing in Realty Times advises Sellers: Don't Let Emotions Rule

It can be easy for the selling experience to become clouded by emotion. A homeowner may have years of memories stored within the walls of a home. They look at a room, and instead of resale potential, they see a baby's first steps and early Christmas mornings. When the time comes to sell, however, the time has also come to sever emotional ties with a house.

Emotions can cloud your reasoning. And they can misguide you during a very expensive and important business transaction. Sellers sometimes overvalue their homes, adding in sentimental value on top of property value. They refuse offers that, while reasonable, don't add up to the value of their memories. Or they turn down a potential buyer, because they don't garden and won't "leave the rose bushes," or aren't the "type" of person they'd like living in their home.

For a smooth transition, hire an experienced real estate agent. Once you've turned yourself over to their guidance, you can then turn your focus onto the new phase of your life. And agent can help you establish a fair, and unbiased, asking price. They find the sellers. They show the house. And they help you sign on the dotted line. The middle man is extremely beneficial in separating from your emotions.

Your emotions may surface as soon as you list the house for sale, since many agents will suggest you remove many of your personal items from the house for staging. This is neither a personal attack on your decorating nor your memories. Staging is a wonderful way for homeowners to see the house as their future home, instead of seeing your house and your home.

Don't fret over lost memories; take pictures of your home and make a scrapbook. Channel your emotions into the joy of moving. And have fun imagining the new memories you'll make in your new place. This is not a time for mourning, instead it's a time for celebrating!

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Misunderstandings in foreclosure and bankruptcy- how to protect your home

Bankrate.com has an excellent article on keeping your home in the pending face of a foreclosure. It asked its expert Justin Harelik to address this question:

“I'm filing bankruptcy. I am behind on my mortgage payments but not in foreclosure. I plan on reaffirming the loan but can they still choose to foreclose instead of reaffirming with me? If that happens, I was also going to hire a foreclosure defense attorney to challenge their ownership of the note, but don't know if I can do this through the bankruptcy process or wait until I reaffirm the loan?”

The expert’s answer-

"Unfortunately, I don't think you are getting correct information. You are discussing one thing that is not an option and another that is highly speculative."

To get a handle on what’s wrong with these two approaches and a suggested approach to the writer’s problem read the full article “Preforeclosure options to keep a home.”

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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Refinance costs - how often can they be deducted?

Here's an interesting question from a Kiplinger's reader:

Although I refinanced my mortgage less than two years ago, interest rates are so low that I plan to refinance again. What costs can I deduct when I refinance for a second time?

Folks who refinance and refinance, again, are called serial refinancers. We saw the phenomenon grow during the days of sub-prime lending. But with interest rates now so low, it may make sense to refinance sooner rather than later.

To answer the question,

Serial refinancers get an additional tax break on top of the usual mortgage-interest and property-tax deduction. You can deduct the points you pay to get a mortgage in the year you buy a home -- even if the seller paid the points for you (a point is equal to 1% of the loan). You can also deduct points paid to refinance a mortgage, but normally that deduction must be spread out over the life of the loan. So if you paid two points ($5,000 in this example) on a $250,000, 30-year mortgage, you can deduct just $166.67 per year for 30 years.

The income tax consequences for making a mistake are not light. So caution is in order.

Read the full article, Get a Tax Break for Refinancing Again

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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