4sale by divorce february 2017

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A B R , A S P , C D PE , C R S

4Sale by Divorce February 2017 Issue

D ID YO U KNOW??

TILA-RESPA A new rule by the CFPB went into effect, August 1, 2015, designed to provide more clarity to consumers purchasing or refinancing real estate.

The Good Faith Estimate (GFE) and the initial Truthin-Lending Disclosure (TIL) have been combined into a new form, the Loan Estimate. The new Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying. The Loan Estimate must be delivered within 3 days of making application.

The HUD-1 and final Truthin-Lending have been combined into another new form, the Closing Disclosure, designed to provide clarification for all of the costs of the transaction.

The Closing Disclosure must be provided at least 3 business days prior to closing of the loan. Continued on page 3.

Phillip H. Lande RE/MAX Legends Group/ Atlas Group Direct: 317.863.2356 plande@atlasrealty.com www.remax-atlasgroup.com

What Makes a Divorce Appraisal Different?

Let’s face it, going through a divorce is an emotionally challenging time for everyone taking part. It involves many difficult decisions about the kids, investments and marital assets, including who gets the house. When it comes to the house and other real estate, the two most common choices are selling and dividing the proceeds, or one party can “buy out” the other. In either case, one or both parties will order an appraisal of the residence and other real estate holdings.

A divorce appraisal is not the same as your typical appraisal used for lending purposes. Some of the differences are: 

The divorce appraisal is likely to have a retrospective date of value, meaning the value of the property will be based upon a date in the past (perhaps the filing date, the date of marriage, the date of separation or the date of purchase) rather than the current date.

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In some cases the appraisal will provide both a retrospective value as well as a current value.

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Occasionally, in a divorce situation, the appraiser may be called upon to testify is count as an expert witness. As a witness, the appraiser may not be an advocate for either side of the proceedings, regardless of who may have hired him. The appraiser may only testify about the appraisal and the data/analysis contained therein.

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What Makes a Divorce Appraisal Different? Continued 

Since a divorce appraisal is not related to financing or lending, it does not have to comply with Fannie Mae guidelines (or UAD Guidelines).

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Typically, a divorce appraisal is completed on non-Fannie Mae forms such as the GPAR forms or it is written in a narrative format.

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In completing a divorce appraisal, the appraiser is bound the same confidentiality and USPAP requirements that he would be in completing a lending appraisal. That means that the appraiser cannot share information about the appraisal with any party other than his client and/or his client’s attorney, unless legally required to do so.

Most attorneys’ primary concern when they order an appraisal is the final value and how it will affect their case. They are usually not too worried with how the report is presented, so long as it is defensible. Many attorneys are used to receiving residential appraisals on the URAR 1004 Form which is the most commonly used Form for residential appraisals.

Why give it a second thought, right? Wrong. This could prove to be a huge mistake.

FACT: The common URAR 1004 Form is not intended to be used for valuation matters other than mortgage finance. (It even says so right in the report.)

Yet, all too often, this is the “go to” Form for appraisers who may not be experienced performing appraisal for legal purposes. Their mistake could cost you your case.

Imagine being in court for a hearing and presenting your appraisal prepared on the URAR 1004. While the court may not know the nuances of the Intended Use of a URAR 1004, a savvy opposing counsel, township solicitor or expert appraisal witness could very easily point this out. Technically, the report is invalid as a result of the Form’s Intended Use being violated by the appraiser. The court could deem the report inadmissible and jeopardize your client’s case.

There is a simple solution. There are a number of general purpose appraisal forms available to residential real estate appraisers that are also in compliance with USPAP*. They are typically called GPAR Forms (General Purpose Appraisal Report) and they address most residential usages (single family, multi-family and condo.) The Appraisal Institute has even developed its own USPAP compliant GP Forms as have most appraisal software providers.

So, next time when ordering an appraisal; be sure to specifically ask your appraiser which Form they intend use. If they say the URAR 1004, you need to insist that they use a GPAR Form or you run the risk of presenting an invalid appraisal.

www.remax-atlasgroup.com

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New Disclosure Requirements Continued The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time.

The final rule applies to most closed-end consumer mortgages. It does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land). The final rule also does not apply to loans made by persons who are not considered “creditors,� because they make five or fewer mortgages in a year. The TILA-RESPA rule went into effect August 1, 2015.

A little Divorce Humor

Squeeze on Renters The visualization below shows the percentage of change in rental costs over the past five years in the (top 20 metro areas with higher % of change listed) across the U.S. The gap between rental costs and household income in many metro areas is widening to unsustainable levels in many parts of the country.

(National Association of Realtors)

With so many questions and variables with divorcing clients deciding to rent or purchase another homes once the divorce is final, working with a qualified divorce real estate professional is always an advantage for divorcing clients.

Please don’t hesitate to contact me if I can provide clarification and assistance to you and your divorcing clients.

www.remax-atlasgroup.com

Phillip H. Lande ABR, ASP, CDPE, CRS RE/MAX Legends Group/ Atlas Group 5645 Castle Creek Pkwy N Indianapolis, IN 46250 www.remax-atlasgroup.com plande@atlasrealty.com Direct: 317.863.2356

As professional real estate agents specializing in helping divorcing couples, we are here to help both parties involved through a smooth yet emotionally difficult process when they need to sell the marital home and purchase new homes moving forward.

As a member of your professional divorce team, our goal is to: 1. Help clients understand the legal and tax aspects of divorce in regards to the sale of the marital home and other real estate.

2. Offer alternatives to the usual mistrust and the emotional responses as a result of dividing real estate assets.

3. Work with both parties together to help them save and make money now and down the road with regards to real estate.

4. Work with both parties, not just one, in selling the marital home for the best price.

Please don’t hesitate to call us if we can be of service to you and your divorcing clients!

R E A L E S TAT E

S T R AT E G I E S FOR DIVORCING COUPLES

With the divorce rate stable at fifty percent and home ownership at sixty-two percent, there are a lot of families who need professional guidance as they navigate what to do with their home. For most people their home is the largest asset they own, so the decision must be carefully thought out and analyzed. Now more than ever a full time local Realtor must provide professional guidance. This is not the time to take the real estate advice of family, friends or other professionals. While your legal adviser or family member who lives in another state means well, real estate still remains local, particularly with our mercurial national market.

The sale of the marital home is not an isolated decision. There are short and long term financial, emotional and tax consequences. A Realtor, preferably one who specializes in divorce, can offer the best guidance regarding the marital home. They must understand that they will work in tandem with other professionals for the best customized outcome.

The goal should be a client that has their individual needs met and is making informed decisions from a knowledgeable place.

This is for informational purposes only and not for the purpose of providing legal or tax advice. You should contact an attorney or tax professional to obtain legal and tax advice. Not a commitment to lend.

Copyright 2017 All Rights Divorce Lending Association, LLC The information contained in this newsletter has been prepared by, or purchased from, an independent third party and is distributed for consumer education purposes.