SunTrust Settles U.S. Mortgage Claims

SunTrust Banks Inc. is paying more than $1 billion to settle federal allegations of mortgage violations, in the latest move by a bank to put behind it costly legal issues stemming from the financial crisis. A portion of the money - $160 million - will be paid to resolve claims that SunTrust mishandled borrowers' loans. SunTrust is the first bank to join the national mortgage settlement since the deal was announced in February 2012 with Bank of AmericaCorp., Citigroup Inc., J.P. Morgan Chase & Co. and Ally Financial Inc. The settlement introduced more than 300 new servicing standards that required the banks to improve their communication with borrowers who are seeking loan modifications.

 

For more information please visit our website at www.carthewlaw.com or call one of our Attorneys at 248-656-6800.

New Property Transfer Law Effective December 31, 2013

When there is a "transfer of ownership" to a new owner (including a family member), the taxable value of the property generally is "uncapped" to the state equalized value, which is supposed to represent 50 percent of the property's current fair market value.  Uncapping the taxable value after a sale or transfer can result in the new owners paying significantly more in property taxes than longtime previous owners of the same property.

A new law now extends tax protection to transfers between close relatives. Under Public Act 497 of 2012, signed into law in December 2012 but made effective December 31, 2013, a tax exemption will apply to a transfer of real property to a person related by blood or affinity to the first degree.  This includes a person's parents and children (including legally adopted children). Persons related to the first degree by affinity also include a person's spouse, mother-in-law, father-in-law, son-in-law, daughter-in-law, stepson, stepdaughter, stepmother or stepfather. The exemption applies only to property that is classified as residential real property, and only as long as the use of the property does not change following the transfer. MCL 211.27a(7)(s).

The new law is not limited to primary homesteads. Therefore, it allows a tax exemption on secondary residences such as second homes, cottages and vacation homes.  In essence, the new law will allow parents to transfer long time cottages and vacation homes to close relatives without an increase in tax.

For more information please visit our website at www.carthewlaw.com or call one of our Attorneys at 248-656-6800.

New Errors in Foreclosure Relief Further Exasperates Frustrated Borrowers

To add insult to injury, nearly 100,000 home loan borrowers received incorrect foreclosure error checks.  These borrowers were being compensated for potential foreclosure errors arising out of their home loan foreclosure and for which  payment was being made out of a settlement that required banks to send 3.6 billion back to borrowers.  The Federal Reserve said the checks were for less that the payment amount scheduled and was the second error made in the settlement compensation plan so far.  Earlier last month, some borrowers were unable to cash the checks after the payment firm who processed the checks was unable to verify that the funds necessary to cover the checks was available.

For more information please see our website at www.carthewlaw.com or call one of our Attorneys at 248-656-6800.

Flawed Review of Foreclosure Documents

Flawed review of Foreclosure Documents

The Government Accountability Office criticized the Office of the Comptroller for not requiring banks to use consistent methods for foreclosure error review.  Regulators ordered an independent review of foreclosure files in April 2011.  Much has been in the news of late regarding the enormous costs of hiring consultants to conduct the reviews as well as the inconsistent results achieved. The independent review was called off when the costs of the reviews skyrocketed and 13 major banks entered into a 9.3 Billion settlement. The Wall Street Journal recently published a finding that the average homeowner who suffered errors during their foreclosure would receive $1,000 or less  of the 9.3 Billion settlement with banks.

If you believe you are being improperly foreclosed upon, please call one of Carthew Law Firm, PC attorneys 248-656-6800 or visit us online at www.carthewlaw.com

Michigan Court of Appeals rules that rental property owners are not protected by home owner insurance policies and must obtain “rental dwelling policies”.

In the recent Michigan Court of Appeals (Unpublished) Case Washington v. Allstate Prop. & Cas. Ins. Co. the court of appeal ruled that a property owner acting as a landlord must obtain a rental dwelling policy and is not covered under a homeowner policy.

The case arose from an insurance policy Allstate issued to Washington in 12/08. He testified that in 4/08 he purchased a residence intending to operate it as a rental property. After finishing the necessary repairs, he contacted Allstate to obtain insurance for the property. He called Allstate's "800" number and spoke with an Allstate employee about an insurance policy. He claimed, and Allstate conceded for the purpose of its summary disposition motion, that Washington requested a landlord, or "rental dwelling," insurance policy. After completing the application process and receiving a quote over the phone, Washington purchased the insurance policy. Allstate mailed Washington a copy of his insurance policy. He claimed he read "the important stuff" in the policy, but did not read the entire policy. His policy was a "homeowners policy." In 1/09, he obtained a tenant, who occupied the residence until the property suffered damage due to an arson fire in 4/9. During its investigation of Washington's property loss claims, Allstate learned for the first time that he was not residing at the insured premises, but rather, was operating it as a rental property. Allstate refused to pay Washington's claims under the policy, which required him to reside at the insured property. The court of appeals upheld the denial of insurance coverage as the policy defined "dwelling" as "the single family building structure identified as the insured property on the Policy Declarations, where you reside and which is principally used as a private residence." This definition stated that the "dwelling" is the "insured property" where the insured resides. Also, the policy defined "insured premises" as "the residence premises[,]" and that term was defined as "the dwelling, other structures and land located at the address stated on the Policy Declarations."

                The lesson learned is that if you are a property owner you must obtain a rental dwelling policy and a simple homeowner policy will not provide coverage.

House Search Warrant Powers Clarified by U.S. Supreme Court

A warrant allowing police to search a house does not give them the authority to detain someone who is away from home at the time the search is being conducted, the U.S Supreme Court ruled.

Police investigating a drug case got a search warrant for an apartment on Long Island, New York, in 2005, after an informant claimed to have seen guns when he went there to buy drugs from a man known as "Polo."  While detectives watched the apartment, waiting for the time of the search, they saw a man matching Polo's description drive away.

They followed the car for almost a mile, then pulled it over. In the man's pocket, they found a set of keys.  They drove him back to the apartment, where officers found a gun and drugs in plain view.  It was later discovered that one of the keys opened the door of the apartment.

In a 6-3 ruling, the U.S Supreme Court said that the general power police have to detain someone at home during a search doesn't apply beyond the immediate area.  Police can, the court has ruled, detain someone at the place being searched for the sake of officer safety and to prevent a person from interfering with the effectiveness of the search.

But, said Justice Anthony Kennedy for the court, "Once an occupant is beyond the immediate vicinity of the premises to be searched, the search-related law enforcement interests are diminished."

Mortgage Pact Relief: $19 Billion

Five of the largest U.S. banks have provided $19 billion in mortgage debt write-downs to some 240,000 borrowers under the terms of a federal and state settlement of foreclosure-processing violations reached one year ago. The banks included Bank of America, Ally, Citigroup, Inc. JP Morgan Chase & Co and Wells Fargo Co.  Bank of America Corp., which was required to provide the majority of relief under the foreclosure pact, with about $13.5 billion in homeowner debts written off. Another $2.2 billion in loan forgiveness modifications were in a trial stage as of December 31^st.  For more information please see our website at www.carthewlaw.com or call one of our Attorneys at 248-656-6800.