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Questions & Answers

Can I use my unemployment income when applying for a home loan?

posted Mar 26, 2014, 2:43 PM by Massey Kouhssari

Yes.... but unemployment income only counts for a "special" income category which requires a minimum of 3 years continuance. This also applies to SSI, Alimony, sublease income, lottery winnings & any other income you can imagine.Unemployment is usually only good for 6 mo to 1 year with no guarantee to continue beyond that. We do however have some non conforming programs that you can qualify for using your unemployment income if you meet all the other loan guidelines. So the answer is YES you can use unemployment income but we have to run the whole scenario to see if the loan program can benefit your financial situation.

Joint Tenants versus Community Property

posted Aug 15, 2012, 11:04 AM by Massey Kouhssari   [ updated Aug 15, 2012, 11:39 AM ]

Holding title as joint tenants or as community property involves a multitude of issues to be dealt with. Given that, let me narrow the issues to those two distinguishing features between taking title as joint tenants or community property (i.e., death and tax benefits) that most people are concerned with.

When title is taken as joint tenants and one spouse dies, the surviving spouse automatically receives the property. This is called a right of survivorship. (Although the property does not go through any probate proceeding, the surviving spouse must still file an affidavit of death of joint tenant to remove the deceased's name from the deed.)

When title is taken as community property, however, and one spouse dies, there is no right of survivorship and the surviving spouse does not automatically receive title to the property. If the deceased spouse died  without a will, the deceased spouse's interest in the community property would go to the surviving spouse. If there was a will, the deceased spouse's interest would be handled as outlined in the will. In other words, each spouse has ownership of their half of the community property and can leave it by will to their surviving spouse or any other third party.

One way of looking at the death scenario is that joint tenancy has more certainty and community property has more flexibility.

The tax consequences have been a little more blurred as of latte but basically the issue is as follows:

If property is held as joint tenants, the tax basis of the deceased spouse's 1/2 interest would be "stepped-up" to the fair market value at the date of his/her death. The tax basis of the surviving spouse's 1/2 interest would remain at its original basis.

For example: Husband and Wife purchased their house for $100,000 with each spouse's tax basis at $50,000. At the date of Husband's death the property's fair market value was $200,000. Since they held the property in joint  tenancy, Wife automatically received Husband's 1/2 interest upon his death.

Husband's 1/2 interest tax basis (originally $50,000) is "stepped up" to the fair market value at his death (i.e.,$100,000). Wife then has property worth $200,000 with a tax basis of $150,000 (her original $50,000 basis plus her deceased husband's stepped up basis of $100,000). If the property were sold for $200,000, there would be $50,000 of taxable gain.

If title is taken as community property, however, the entire property receives a "stepped-up" basis to the fair market value at the date of one spouse's death.

For example: Assume the same $100,000 purchase and $200,000 value at date of death and further assume Husband willed his interest to Wife. Wife's original $50,000 basis gets stepped-up along with Husband's original $50,000 basis to the current $200,000 fair market value. Wife then has property worth $200,000 with a basis of $200,000. If the property were sold for $200,000, there would be no taxable gain.

The information contained in this website may or may not reflect the most current legal developments; accordingly, information on this website is not promised or guaranteed to be correct or complete, and should not be considered an indication of future results or none should be considered as legal or tax advice. BankerBroker.com & its affiliates expressly disclaim all liability in respect to actions taken or not taken based on any or all the contents of this website. All information on this website is for informational basis only. Please consult your accountant and/or Lawyer for professional advice.

Dry Funding State vs Wet Funding State

posted Mar 22, 2012, 11:08 AM by Massey Kouhssari

Both wet and dry funding pertains to the variable periods as soon as the mortgage is considered closed when a new buyer can take ownership of the property.

"Wet payment laws" demand that lending banks pay out funds during a particular period of time as soon as the closing date of the loan, which may vary according to the specific state where the mortgage was taken out. Disbursement times may differ depending on the state where the mortgage took place and can range from the date of closing to within two days afterwards. Intentionally made-up to shield the consumer versus bank fraud, these laws prevent lending banks to postpone funds dispersal as soon as the required papers have been signed.

The terms "dry funding" and "wet funding" are slang and refer to the state where the funding was started. "Dry" states refer to those states where the paperwork required to officially close a loan does not need to be concluded on the day of closing. All the necessary documents required to close the loan should be ready and approved at the time of closure when dealing with wet funding regulations.

Alaska, Arizona, California, Hawaii, Idaho, Nevada, New Mexico, Oregon and Washington are regarded as dry funding states and all the others are as wet as they come. A dry closing happens for the benefit and convenience of both the buyer and the seller and is actually not a closing at all. No money is distributed and the parties convene only to sign documents.

The legitimacy of the sale is assured with dry funding and no fake activity can happen. With a wet loan, there is more risk, the transaction moves a lot faster and the property seller gets money either right away or very soon after the sale. With the sale occurring before the paperwork is completed the convenience and speed must be thought of against the clear probability of real estate fraud. The documentation up for evaluation in the case of a wet loan is received as soon as the funds have been disbursed, kind of like that old saying about putting the cart before the horse.

You can understand the difference between wet and dry funding by doing research on these matters. Approaching house loans with caution is always the best protection from bank fraud. 

Can I have the seller pay my closing costs?

posted Mar 21, 2012, 6:45 PM by Massey Kouhssari

VA & FHA Closing Costs and Allowable Seller Paid

FHA closing costs are a significant reason for choosing an FHA home loan. Most traditional mortgages allow only a maximum of 3% seller contribution towards closings costs. With an FHA mortgage, the rules are that the seller is allowed to pay up to 6% of the sales price towards the buyer’s closings costs. This is usually more than enough to cover all of your FHA closing costs and even include discount points if you wish to buy down your mortgage interest rate. This, of course, means that you will have more money remaining after the close on your new home.

On VA home loans you have the ability of getting 4% seller concession & having the seller pay all the rest of your closing costs.

Having the seller pay for some or all of your FHA or VA closing costs can be a part of your negotiation when buying a home. Make sure to bring this up with your real estate agent and attorney at the very beginning of the home buying process. Your BankerBroker could come up with a tactic to save you thousands on your closing costs.

Click Apply Now to discuss options with your Loan Officer!

Can a married couple have one person as a power of attorney or do we need 2 separate people?

posted Mar 14, 2012, 3:24 PM by Massey Kouhssari

Hello- that is ok- as far as the POA is concern –– it’s ok for the POA to represent both borrowers- since both borrowers will not be present. We don’t have specific overlays on that.

What is the difference between a CLTA & a ALTA title policy?

posted Feb 21, 2012, 7:04 PM by Massey Kouhssari


Posted on 03. Mar, 2011 by Massey Kouhssari

Title insurance protects against losses due to defects in title. Before issuing a title insurance policy, title companies search and examine public records and, in certain circumstances, survey the property to identify liens, claims or encumbrances on the property, and alert you to possible title defects. The premium cost is a one-time fee payable at the time of escrow closing.

When talking about title insurance policies for commercial real estate transactions, there are basically two types of title insurance, there is the California Land Title Association “Standard Coverage” (CLTA), also referred to as the CLTA Owner’s Policy and there is the American Land Title Association “Extended Coverage” (ALTA), also referred to as the Lender’s Policy. The CLTA coverage is the least protective with the ALTA being more encompassing. As a general rule the seller of commercial real property purchases the CLTA Standard Owner’s Coverage policy with the buyer paying the difference between the CLTA and the ALTA Extended Coverage Policy.
 
What is the difference, aside from the price – quite a bit. The CLTA policy covers matters affecting title, that occurred in the past and that are not specifically excluded from the policy terms. CLTA policies are obtained by Buyers to insure their interest in the title to the property conveyed to them by the Sellers.
 
The matters generally covered by a CLTA policy are:  
  • Ownership of the property: This assures the Buyer that the selling entity owns and can convey clear title to the Buyer. It is particularly important to verify that the name in the purchase agreement mirrors the name that is found on the Preliminary Title Report.
  • Access to the property: This protects the Buyer from purchasing property that may be landlocked; it guarantees that there is access to an open, dedicated public street.
  • Marketability: This guarantees that the insured has a marketable interest in the real property.
  • Liens or Encumbrances: Usually shown as an exclusion from coverage, this protects the Buyer in the event that the insurer has not identified all matters of record, such as an easement, lease, option, or deed of trust.
  • Various title defects, such as forged documents, fraudulent transfers, or transfers by bankrupt or incapacitated persons.
The CLTA policy may also be ordered by lenders, normally on second deeds of trust by individuals and non-banking or savings and loan lenders.
An ALTA Policy covers what the CLTA Policy covers plus it covers matters that are not “of record”, as well as matters that are not shown on an ALTA Survey, such items could include following:
  • Unrecorded liens, encumbrances, taxes and assessments.
  • Encroachments.
  • Unrecorded easements.
  • Items disclosed by a survey.

An ALTA policy usually requires a physical inspection of the property. An owner may order an ALTA policy, which is the broadest form of insurance.

Under both the CLTA and the ALTA policy certain matters are typically excluded. Those exclusions are typically:
  • Laws, ordinances, regulations, and policy powers.
  • Rights of eminent domain.
  • Matters controlled by the seller/insured.
  • Creditor’s rights claims.
All title companies offer endorsements to correct or modify the exclusions of a title policy or add additional coverage. If your preliminary title policy contains exclusions that you are not comfortable with or do not understand, feel free to talk to your title officer as many title companies offer different types of endorsements.

Can a lien be recorded on a property in trust?

posted Feb 21, 2012, 7:01 PM by Massey Kouhssari

If the lien is being recorded against the Trust: YES but not if it is against the owner prior to trust or any one in the trust. A trust is a third party. After yo place a property in a trust it is really no longer yours so no one can place a lien on the property against you.

Short Sale vs. Foreclosure??

posted Jul 2, 2011, 9:43 PM by Massey Kouhssari   [ updated Jul 2, 2011, 9:44 PM ]

On January 1, 2011, California Senate Bill SB931 went into effect and stops deficiency judgments on short sales and foreclosures in California on all first mortgages. This means a lender cannot pursue a deficiency judgment whether the loan was purchase money or a refinance.

California Senate Bill SB931 added Section 580e to the California Code of Civil Procedure. The first part of the bill is similar to Code of Civil Procedure Section 580d, which says:“No judgment shall be rendered for any deficiency upon a note secured by a deed of trust or mortgage upon real property or estate for years therein” when the mortgagee or trustee sells the property with the "power of sale" verbiage in the mortgage or deed of trust.

The Legislation applies to any note secured by a first deed of trust or first mortgage for a dwelling of not more than four units. It protects Homeowners as well as Investors, as it is not limited to consumer transactions, nor limited to homeowner occupied dwellings.

Are you a current homeowner facing a Short Sale or Foreclosure?
You need to educate yourself on the option of a Short Sale vs. Foreclosure.

Foreclosure
Short Sale

Resident owner not eligible for a FNMA backed for 5 years.

Eligible in 2 years.

Investor owner not eligible for a FNMA backed loan for up to 7 years.

Eligible in 2 years.

On future credit applications one will have to answer YES to the question that asks. “Have you had a property foreclosed upon, or relinquished a “Deed in Lieu.”

There are no such questions regarding relinquishment of a property by short sale.

A homeowner’s FICO Score may be lowered anywhere from 250 to 300 points or more.  One’s credit score will generally be adversely affected for up to 5 years.

Only late payments on mortgages will appear.  After the sale the debt is reported as “paid as agreed”, “paid as negotiated”, or “settled by compromise”, only lowering the score by 50 points or so.

A foreclosure can remain in one’s credit history records for up to 10 years.

A short sale is not reported in one’s credit history.  It’s shown as a charge-off and its effect might last only 12 to 18 months.

Other than a serious misdemeanor or felony conviction, a foreclosure is a primary issue to obtaining (or keeping) a Security Clearance.  If one is a police officer, in the military, in the CIA, FBI or in any position requiring clearance, clearance is revoked and the position may be terminated.

A short sale does not challenge most security clearances in that there has been a bona fide offer and compromise regarding indebtedness. In other words, the loan was paid as agreed.

Employers are actively checking credit on employees in sensitive positions.  In many cases, a foreclosure can be a reason for immediate termination.

A short sale is not reported as a foreclosure on a credit report and is therefore not a challenge to employment.

Many employers are requiring credit check on all new employees and a foreclosure is one of the most detrimental entries one can have.

A short sale is not reported on a credit report and is therefore not a challenge to future employment.

Are You a Credit Score Wannabe?

posted Jun 19, 2011, 8:59 AM by Massey Kouhssari

These days, it´s not about who has the flashier designer clothes or the faster car - it´s about who has the higher credit score! That´s because the better your score, the better position you´re in to manage your financial future.

Why? Believe it or not, having a strong credit score is one of best ways to save money, says financial lifestyle expert Denise Winston, founder of Money Start Here, which produces financial seminars and DVDs. "Your credit score can determine if you get your dream job, your auto insurance rates, the cost of future loans, if a landlord will rent you an apartment, and much more," she says.

In order to become a "first class" credit user, start by adopting the strategies of these top-tier score holders.

Credit is No Laughing Matter: Jim Dailakis

Credit Score: 760

New York City-based actor/comedian Jim Dailakis may be a clown on stage, but when it comes to his financial status, he's straight as an arrow. The Australian-born performer owns two homes and pays his bills on time without fail.

His strategy: "I see when the due date is and then put it on my electronic calendar on my computer," Dailakis explains. Then, he says, he makes sure he has enough to pay the total amount, to the penny, every time.

Why you should try it: "It's very liberating not to feel the ‘wolf´ pounding at my door," says Dailakis. "I´ve definitely acquired financial discipline."

Lesson learned: Keeping up with your credit can be a challenge, says credit consultant Wayne Sanford of YourCreditSpecialist.com. He suggests setting up an online auto-pay. "This way, you can have the amount you need transfer directly to your creditor and not pay any extra fees."

Extra Credit: Anna del C. Dye 

Credit Score: 804

Anna del C. Dye, a new-fantasy author from Salt Lake City, UT, is proud of her long-lasting marriage as well as her financial acumen over the years.

Her strategy: "When my husband got a raise 10 years ago, we opted to add it to the principal in our mortgage rather than our monthly expenses," says Dye. "We lived on the same income as before and paid our house faster."

Why you should try it: "Our house is ours and so is everything in it," says Dye. "Now we can eat out more often, help others, go to the movies more often, and travel around the world. We get to play and have fun when we are still young."

Lesson learned: "Our culture´s lenient attitude toward debt is harmful," says Peter Dunn, personal finance expert and author of 60 Days to Change. "If you want great credit, you must develop an urgency to become debt-free."

Divorced from Bad Credit: Tammie Aaron-Barrada 

Credit Score: 789

Tammie Aaron-Barrada´s first husband essentially ruined her credit just by having his name on her cards, and running her into debt. After they broke it off, she was left to claim bankruptcy. The entrepreneur and inventor from Ruffs Dale, PA, has since made rebuilding her credit top priority.

Her strategy: Aaron-Barrada had to make wise decisions to reestablish her credit standing. She took out 90-day same-as-credit accounts to buy new furniture that she could afford, as well as made sure she put utilities in her name and paid those bills on time.

Why you should try it: Aaron-Barrada says having great credit gives her peace of mind, should an emergency ever arise. Building back up to a high credit limit means she won´t be left high and dry ever again, and has a better credit score to show for it.

Lesson learned: "When you make someone a joint-account holder or you co-sign a loan, you become fully responsible," warns Denise Winston. She recommends checking your potential spouse´s credit report and finding out if he or she owes back taxes.

"Your credit score has the potential to determine the quality of your life," says Winston. "It can potentially cost you thousands, if not hundreds of thousands, of dollars over your lifetime."

Your Credit Score is calculated using the same kind of information creditors, landlords and employers use when considering their relationship with you, particularly if they want to have one. This can affect the terms or rates you are able to receive. To make sure your Credit Score is all it can be, check and maintain your credit report regularly. Even if it´s just to take advantage of the tools and resources available to help you better understand your credit.

5 Smart Ways to Invest Your Tax Refund

posted Jun 19, 2011, 8:58 AM by Massey Kouhssari

Now is a good time to start thinking about your income taxes. After all, April 15th will be here sooner than you think. If you are expecting a tax refund this year, why not invest the money wisely? Here are five ways to spend your refund on something that will help you get a jump on your 2011 financial goals.

Pay Down Credit Card Debt

If you are like many Americans, reducing credit card debt is a top priority this year. Given that many banks and financial institutions still charge upwards of 14% on their credit cards and less than one percent on a regular savings account, it doesn't take a business school graduate to know that paying down the card debt is a better financial move. What's more, retailers have known for years that Americans are vulnerable to spending their tax refund without much thought or discipline. "Many consumers look forward to tax season, when they know that the government will be padding their pockets with a little extra cash," NRF President and CEO Tracy Mullin said in a statement. "Retailers begin to offer special sales and promotions in early April in anticipation of consumers hitting the stores with extra money in their wallets." Don't cave in. If you haven´t experienced it yet, the exhilaration of eliminating credit card debt is a wonderful thing.

Buy A New Car

If your current vehicle is more than seven years old, has lots of miles on it, or is costing you too much in repairs, now is a great time to buy a new car. You could use your tax refund as a down payment and keep your savings account intact. Despite some recent good news from Detroit, automobile manufacturers are still struggling in today's economy. Price discounts, rebates, low financing deals and a wide selection of vehicles are still the order of the day. Plus, auto loan interest rates are still under 6%, which is still low. Plus, there are lots of good deals on new 2010 vehicles. Dealers are trying to sell their remaining fleet from year-end. You can get a good price and a good loan rate on a brand new 2010 vehicle.

Start a College Fund

Even though the cost of college keeps rising each year, it's still one of the best long-term investments you'll ever find. Why not take your tax refund and get a jump on college expenses for your kids? Many financial professionals suggest a College 529 Savings Account for your child. "A 529 Plan is a vehicle that allows you to save for your child's future education costs," says Natasha Verbsky, a financial advisor with AXA Advisors, based in Dallas, Texas. "It can be used for tuition, room and board, required books and fees associated with undergraduate school, graduate school and technical training." One of the biggest benefits of a 529 plan is that the funds will grow tax-deferred. All withdrawals used for qualified education expenses will be distributed tax-free. Now that's smart investing.

Pay Your Property Taxes

For many homeowners, just keeping up with the monthly mortgage payments can be difficult in these tough economic times, let alone coughing up thousands more for property taxes. But if you use your tax refund to pay your property taxes, the financial hit to your pocketbook is minimal. That is, you probably won't have to take money out of your checking or savings account to pay your taxes. In fact, you might even have some extra money left over to reward yourself. Granted, it's not the most exciting thing you can do with the money, but consider that you'll have to pay your property taxes either way. By handing over your tax refund to your tax assessor, you won't have to hassle with paying your property taxes until next time.

Establish An Emergency Fund

Even though it is hard to resist the temptation of spending "free money" from the IRS, having a "rainy day" cash fund on hand to meet emergencies is a good idea. "The average person that gets a refund, thinks 'oh good,' but doesn't think a whole lot about it," Theodore Sadar, a certified financial planner, said. But while spending those dollars on a lavish vacation or a new TV can be very satisfying, Sadar suggests leaving it in the bank instead.

If you decide to heed our advice with your tax refund, checking your 2011 credit is a smart idea. For example, if you pay down your credit card debt, check your credit report to make sure the payments were applied to your outstanding card balance. Or if you're shopping for a new car, knowing your credit score before you take a test drive is a wise thing to do, since higher credit scores usually mean lower interest rates and more favorable terms on a new loan, which could save you a bundle of money.

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