April 16th, 2014
The number of VA-guaranteed loans reached a record high in the year 2013, with no signs of slowing down. The steady increase represents an upward trajectory since the collapse of the housing market. The Department of Veterans Affairs guaranteed approximately 630,000 mortgage loans in fiscal year 2013, about half of which were borrowed with the purpose of refinancing.
Reasons for the increase include not only historically low interest rates on the loans, but also the fact that service members view the loans as the most viable option compared to other alternatives in the tough lending climate of the last six years. Another big incentive for first-time homeowners is that the VA loans do not require a down payment. They also save buyers money by not requiring private mortgage insurance, which would otherwise add to monthly payments and thus, increase the cost to the borrower over the life of the loan.
To qualify, the loan must be for a primary residence, and the borrower must show enough monthly income after personal debts and housing costs to meet “residual income” levels, which are determined by the department. However, this prudence pays off; according to the Mortgage Bankers Association, VA loans have yielded the lowest foreclosure rate for the last five years.
If you are a service member interested in becoming a homeowner, please feel free to contact the Real Estate Department of HoganWillig at (716) 636-7600.
January 10th, 2014
Homeowners should be aware of the important regulations regarding flood insurance. Any loan that is federally guaranteed for a residential property located within a Special Flood Hazard Area (SFHA) must have flood insurance coverage. For homes located within these high-risk areas, there is a 1 in 4 chance of flooding over the duration of a 30-year mortgage. It is important to be aware of this, as standard homeowners’ insurance policies do not cover losses due to flooding. If you are unsure as to whether your home is located within a Special Flood Hazard Area, you can take a look at the maps on file with your local town building department. For a general estimate, you can complete the “One Step Flood Risk Profile” here: http://www.floodsmart.gov/floodsmart/.
Although flood insurance is required for these high-risk areas, statistically about 20% of flood-related claims come from moderate to low-risk areas. For this reason, you may wish to secure coverage anyway, especially since it is not included in the regular homeowner’s policy. Also, certain lenders may necessitate flood insurance, even if it is not federally required. If you would like further guidance on this matter, contact one of our real estate attorneys at (716) 636-7600.
November 29th, 2013
For the past two years, the number one post closing issue relating to home sales has been septic system failures. Many septic systems in Western New York seem to have reached the age of around 50 years, which seems also to be about the end of life for many of its parts – tank, leach field, filters. If you have a septic system you should have it pumped out every two to three years. If you are thinking of buying a home with a septic system you should check with the County Health Department and the Town Building Department to see what records they may have regarding the age and capability of the system. Often the Health and Building Departments have no records. This is not does not in itself create a problem, but you will want to know, whether you are the seller or the buyer, that the capacity of the system is sufficient to service the home. This is traditionally calculated based on the number of bedrooms. Because of the increase in failures, we are now suggesting to all our buyers that they have the septic system professionally inspected, along with the house.
November 15th, 2013
In order to continue to receive a Basic STAR Exception, homeowners in New York State must register with the NYS Department of Taxation and Finance by the end of this year. Senior Citizens receiving the Enhanced STAR Exemption are not affected by this new requirement to register.
The two types of STAR Exemptions are:
- Exempts the first $30,000 of the full value of a home from school taxes.
- Is available for owner-occupied, primary residences where the resident owner and their spouse’s income is less than $500,000.
- Exempts the first $64,200 of the full value of a home from school taxes as of 2014-15 (an increase from $63,300 in 2013-14).
- Provides an increased benefit for the primary residences of senior citizens (age 65 and older) with qualifying incomes.
To register, visit www.tax.ny.gov or call (518) 457-2036.
If you have any questions about the STAR Exemption or any other real estate issues, please feel free to contact our Real Estate Center at (716) 636-7600.
June 18th, 2013
Clients should beware of a recent scam in which companies are recommending that all homeowners obtain a copy of their current Grant Deed. Contrary to this advice, securing a copy of the deed is not necessary once the original has been recorded (having a copy of the deed is not necessary to prove ownership as long as the deed is recorded in the county clerk’s office). The companies involved in this scam have been contacting property owners via letters and emails, offering to provide a copy of the deed for a fee that ranges anywhere from $50 to $80. Though not required, if a homeowner does wish to obtain a certified copy of the deed, this can be done through the county clerk’s office for a smaller fee, usually between $4 and $10 depending on the length of the original document.
February 25th, 2013
In these winter months of sledding, snowmobiling and frolicking in the snow, you might wonder if you could be held liable if someone is hurt while having some fun on your property. New York has a law for that! Section 9-103 of our state’s General Obligations Law, commonly known as the recreational use statute, recognizes the value and importance to New Yorkers of pursuing recreational activities, and encourages landowners to open their land for recreational use without fear of liability in most circumstances.
So if you open your property for certain outdoor activities throughout the year, whether or not your land is posted, you are immune from the usual duty to keep your property safe and may well be protected from liability. Protected recreational uses include hunting, fishing, canoeing, boating, trapping, hiking, cross-country skiing, tobogganing, sledding, spelunking, horseback riding, bicycle riding, hand gliding, dog training, motorized vehicle operation for recreational purposes, snowmobiling, cutting or gathering of wood for non-commercial purposes and even organized gleaning. If a person is engaged in one of those activities on land which is physically suitable for that purpose, you have no duty to keep the premises safe or to warn of hazardous conditions or activities, as long as you don’t willfully or maliciously fail to guard or warn against a dangerous condition on the property and you haven’t charged a fee for the privilege of coming on your property to engage in that activity.
What does this mean to you? If you allow the neighborhood kids to sled down your open hill and one is hit in the eye by a sharp stick in the snow, or allow snowmobilers to cross your property and one is hurt when he drives into a gate near the trail, you very likely cannot be held liable. So let those recreational “wonderers and wanderers,” spelunkers and gleaners go ahead and have some fun – you’re protected!
December 17th, 2012
With the New Year on its way, and in addition to the “fiscal cliff” issues, there are a few changes that will or may arise from the Legislature that affect individual homeowners and potential buyers of real estate, and the real estate market as a whole.
The first such change will be the possible elimination of real estate related income tax deductions. If such a bill passes, the individual tax payer would no longer be able to benefit from taking deductions for the mortgage interest they pay throughout the year on their mortgages and real estate taxes that are paid on such real estate, or such deductions would be limited or modified in some way. Experts are debating as to whether or not this elimination would cause potential homeowners to decide against owning and continue renting for their housing needs.
Another change that may be on the horizon is the possible failure of Congress to extend the Debt Relief Act which will expire on December 31, 2012 if not renewed. The Act temporarily amended the tax code to allow mortgage debt that is cancelled through a loan modification, foreclosure sale or short sale to escape tax as ordinary income. Depending on the amount of mortgage debt forgiven, a homeowner could be subject to substantial tax if that amount is considered ordinary income by the IRS.
On a better note, the Federal Housing Administration (FHA) has already eased its standards in certifying condominiums and their homeowner’s associations in order to allow more access to FHA mortgages. The FHA, before certifying a condominium, looks at the viability of the association, which usually includes a review of the association’s budget, reserves, assessment default rates and ratio of owner-occupied units to leased units. The FHA has significantly lowered the factors they require for certification. Whether this will significantly increase the numbers of buyers for said condominiums (traditionally purchased by first time home buyers who are in need of FHA’s assistance in the loan market) or not is the question.
Given the above, it seems like there will most likely be some changes in the coming year that will affect the real estate market. The extent of said changes is still up in the air.