Richard Vetstein

Richard Vetstein Quoted In Banker & Tradesman About New Fannie Mae Credit Report Rules

admin — Sun, 06 Jun 2010 13:39:00 +0000

Local Agents Raise Questions Over New Fannie Rules

‘Loan Quality Initiative’ May Prove Burdensome, Not Bountiful

By Colleen M. Sullivan

Banker & Tradesman Staff Writer

06/07/10

Local brokers and bankers have some unanswered questions about new Fannie Mae rules for auditing loans, and the lack of clarity could create havoc for borrowers at the closing table.

The rules, part of an ongoing so-called “Loan Quality Initiative” on behalf of the government lending agency, are intended to filter out poorly-underwritten loans before they reach Fannie’s books. A big sticking point is a new regulation requiring a second credit check within days of a planned closing. If a borrower’s debt-to-income ratio has worsened during that time, Fannie could refuse to accept the loan.

The requirement would help catch fraudsters trying to take out more than one mortgage without informing a lender, or reckless borrowers who’ve made other large purchases at the same time that they’re trying to purchase a home.

But having to re-check credit for borrowers who’ve already been qualified could disrupt the chain of contracts and commitments that occur before a closing, which incur obligations on all parties to the transaction.

“You’re moving the point of conception to after the birth,” said Brian Koss, managing partner of The Mortgage Network, an independent mortgage company based in Danvers.

While lenders have always had certain checks in place to verify the quality of a loan before it’s made, “The difference now with this new piece that really throws off [the closing process] is that they want to make sure there’s no changes to the credit profile prior to closing,” said Koss.

Crossing The Threshold

Exactly what the thresholds are at which Fannie will refuse a loan are unclear, and even minor possible alterations to an individual’s credit report–like a new credit card offer–would have to be investigated.

“Between commitment and closing, the average person has three inquiries that would have to be addressed,” said Koss.

But it’s not merely borrowers making big purchases who might have reason to be concerned. Smaller changes in credit status might mean that a borrower no longer meets the criteria for a previously quoted mortgage rate.

“If there’s even a minor fluctuation in the credit score – one point – that can impact the pricing on a loan,” said Amy Tierce, president of Needham’s Fairway Independent Mortgage.

If a borrower’s score drops, “Are we going to raise the rates? Those are still questions that are out there,” said Geof McLaughlin of Mortgage Master in Walpole. “I haven’t gotten guidance from the lenders.”

No More Outs

Also unclear is what will happen to borrowers’ deposits if they are unable to close because of the second credit check.

“In lots of other parts of the country, people buy real estate with nothing more than $1,000 to $5,000 at risk. Often, you put $1,000 down, and that is all the money that you’re going to lose if you end up not being able to close the transaction,” said Tierce. “But in our state with the [purchase and sale piece], you could have 10 percent, you could have $50,000 on the table. So I think some of the legalities around this could be very complicated.”

Under standard purchase and sale agreements, if financing falls through because of a fault on the buyer’s part, the seller can keep the deposit.

“Once you’re past the loan commitment deadline, you don’t really have any more outs, as a buyer – if your loan gets pulled, you’re up a creek without a paddle,” said Richard Vetstein, founding partner of Framingham’s Vetstein Law Group, which specializes in real estate law.

An alert attorney can draft a modified agreement that gives a buyer a little more leeway, but Vetstein said he worries that that many in the industry aren’t cognizant of the possible effect of the law.

“It’s amazing how many loan officers I’ve talked to who aren’t aware this is on the horizon,” he said.

Richard Vetstein Featured in Banker/Tradesman Article On Ibanez Foreclosure Mess

admin — Mon, 19 Apr 2010 17:22:39 +0000

Reporter Steven Altieri of the real estate trade journal Banker & Tradesman recently published an article on the Ibanez foreclosure case, I mpending SJC Ibanez, Tit le Ruling May Invalidate Thousands Of Foreclosures, Why Real Estate Attorneys Expect The Worst, And What It Means To The Industry.

Since we’ve written about the case extensively here, Steve asked for my views about the impact of the case and recent matters I’ve handled with Ibanez title defects:

Framingham real estate attorney Richard Vetstein recently represented a family who had bought a house out of foreclosure about a year ago, then invested in excess of $100,000 in improvements to the property with the intention of selling it to their daughter. But before they could complete the sale, a title issue came up and put the transaction on hold.

In Vetstein’s client’s case, when the original owner was foreclosed upon, the mortgage company did not have a properly recorded assignment. To clear the title, Vetstein had to track down the original owner in Alabama, and persuade him to sign over the deed to the property.

“They can close now that the title issue is solved, but in a lot of cases that [is] not going to be able to be solved,” said Vetstein. “We were lucky, that’s what it came down to.”

Steve asked me how I would handicap the appeal of the case:

Vetstein, who has blogged on the Ibanez case at length, thinks the court might uphold the Ibanez decision.

“Given the current constitution of the court and their tendencies of recent years to be kind of moving towards some pro-consumer decisions, I wouldn’t be surprised if they upheld the land court probably by a slim margin,” Vetstein said. “And so for people who are stuck with an Ibanez issue, that is in essence the worst-case scenario.”

Indeed, it’s unlikely that a “pro-consumer” verdict upholding the Ibanez decision would actually help consumers on the whole. Home buyers or investors who thought they had gotten a good deal and a clean title on a foreclosed property will instead be saddled with hefty legal bills and an inability to sell their property.

Lastly, Steve asked if the Ibanez ruling has created an business development opportunties for real estate attorneys:

“I don’t know of any real estate attorney using Ibanez as a business development opportunity, mainly because solving these title defects, if at all, is incredibly difficult and in some cases impossible,” Vetstein said. “It’s a ‘lose-lose’ in many situations.”

One aspect of the case could potentially provide plenty of work for attorneys. Should the SJC uphold the Ibanez decision, Vetstein reasons that there will be many claims against the foreclosing lenders and the foreclosure attorney, for failing to convey good title.

“There will also be claims for rescission of these transactions,” he added. “There is a class action against lenders and foreclosing attorneys which could encompass many millions in potential damages.”

Banker & Tradesman is a great publication. If you don’t want a paid subscription, you can follow them on Twitter and Facebook.

Richard Vetstein Quoted In Boston Globe Article About Recent Developers’ Rights Case

admin — Wed, 24 Mar 2010 13:16:49 +0000

Boston Globe reporter Jenifer McKim read my blog post, Four Toed Salamanders And SLAPP Suits, and decided that it would be a great topic to write about. Her superb article, How A Salamander Raised A Rights Issue, was published today, and I was fortunate enough to be quoted:

Richard Vetstein, a Framingham real estate lawyer, said the decision was a victory for developers in a state that has an especially tough permitting process.

“Whether it is zoning, whether it is wetlands, you name it, vernal pools, you can invoke some pretty serious regulation and have a property get bogged down pretty quickly,’’ said Vetstein, who wrote about the salamander case on his Massachusetts Real Estate Law blog.

The case is very interesting, pitting free speech rights against developers’ rights to build.

Richard Vetstein Quoted In Wall Street Journal Online/Smart Money On Expiring $8,000 Home Buyer Tax Credit

admin — Mon, 22 Mar 2010 13:05:08 +0000

House Call: To Buy or Not to Buy

There are fewer than 40 days remaining until the federal home buyer tax credit expires. And home builders and realtors aren’t letting consumers forget it.

Home builder Lennar (LEN: 16.11, -0.43, -2.59%) is touting its move-in ready homes in South Florida. Beazer Homes’ (BZH: 4.67, -0.28, -5.65%) web site encourages house hunters to “cash in on the tax credit,” while KB Home’s (KBH: 17.33, -0.31, -1.75%) site declares “Time is running out,” along with countdown — to the second — until the credit expires.

Time is, indeed, running out: Buyers must have a binding contract on a house in place by April 30, and the sale must close by June 30. But should you heed the call?

It is true that the tax credits, combined with low mortgage rates and overall affordability make buying a house tempting today. But there are other considerations that should factor into your decision.

Here are a few reasons why taking advantage of the credit may not be a savvy move:

1. Say there was no credit

Taxes are important, but they shouldn’t drive the decision-making process. “If absent the tax credit, you wouldn’t make that purchase, don’t do it just to save a few thousand dollars,” says John Scherer, a certified financial planner and president of Trinity Financial Planning in Middleton, Wis.

The bottom line is, if you’re in a position where it makes sense to buy a house, and you’ve found a house you really want at the right price, then you should pursue the credit, he says. But don’t settle for a house you may not be happy with just to get the money – you might regret it.

For existing homeowners after the $6,500 credit, think about what’s involved in selling your current house. Buyers are still bidding low and homes continue to come on the market, says Neil Sullivan, president of Westfield Mortgage in Westfield, N.J., who adds that many homes that didn’t sell last year were taken off the market.

2. The bigger picture

From a psychological perspective, $8,000 is a lot of money to many people. But as a percentage of the purchase price for, say, a $200,000 home, it represents just 4%.

“How many of us would rush off to a car dealer who was offering a 4% discount off the car price?” says John Vogel, a professor of real estate at the Tuck School of Business at Dartmouth. And buying a home is more complicated and involves more time and effort than buying a new car.

Also, if you’re in a rush to land the credit, a seller might more inclined to use that as leverage and be less willing to negotiate on price, says Erin Baehr, a certified financial planner and owner of Baehr Family Financial in Shawnee-on-Delaware, Pa.

3. Last-minute snags

The deadline to be in contract is April 30 and June 30 to close on the house. For buyers who haven’t started doing research and seeing houses, it’s cutting it close. Even if you’re preapproved for a mortgage, things might still hold up the transaction that could mean missing the deadline.

For one, the appraisal process can be a wild card in many transactions, says Sullivan. For deals with little margin for error, an appraisal below the agreed sales price can make the deal hard to complete.

“Deals have been canceled because of low appraisals – it has to match up with the purchase price,” says Richard Vetstein, a real estate attorney in Framingham, Mass.

One way around this is making sure you include a provision (called a mortgage contingency clause) in the purchase contract to protect the buyer. So if the appraisal comes in less than anticipated or if there’s a title issue that pushes the closing date back, the buyer can terminate the deal, says Vetstein.

4. How long do you plan on staying in the home?

If you don’t plan to live in the new house for at least three years — and preferably five years — the brokerage and other transaction costs are likely to swallow up all the profit, including the $8,000 or $6,500 tax credit, says Vogel.

What’s more, if the home ceases to be your primary residence after less than three years after purchase, the IRS will ask you to pay back the $8,000 tax credit. If you’re self-employed and you know where you’ll be living five years from now, buying a house isn’t that big of a risk, says Jake Engle, CFP and founder of Wealth Planning & Management in Portland, Ore. Get transferred to another region for work and you may be forced to sell into a bad market – and you “could get a bill from the government for the credit you just took,” says Engle.

5. Prices might still be declining

All the variables that a housing rebound depends on makes it difficult to forecast where home values will be in a few months, let alone a few years from now.

The credit, which was has been around for about a year (and was extended and expanded last fall), to a large extent artificially stabilized home prices. That also means there’s a lot of uncertainty about what will happen once the credit expires and all the demand still trickling into the market will have evaporated, says Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal firm in New York.

Without another extension – which most in the industry don’t expect – you may see weaker prices in the second half of 2010. (Moody’s Economy.com predicts house prices to fall 2% this year.) And if you buy into a slumping market, that tax credit may not be as compelling as you thought.

Cracking The Top 100: Richard Vetstein and the Massachusetts Real Estate Law Blog

admin — Fri, 12 Mar 2010 14:43:51 +0000

As reported through PR NewsWire, the Massachusetts Real Estate Law Blog is now ranked #95 of all legal blogs according to Avvo.com and Alexa rankings! As far as I can tell, this puts us Numero Uno in Massachusetts for all substantive legal blogs focusing on Mass. law.

Much thanks to all of you — our readers — who have made this blog so much more than I could have ever imagined. In the next few months, this blog will see more contributors, more guest bloggers, and will even get a bit of a design face-lift. So stay tuned…

Attorney Richard D. Vetstein’s The Massachusetts Real Estate Law Blog Cracks Top 100 List

admin — Tue, 09 Mar 2010 22:23:25 +0000

FRAMINGHAM, MA, March 9, 2009/PR Newswire/– The nationally acclaimed the Massachusetts Real Estate Law Blog created by real estate attorney Richard D. Vetstein was recently ranked #97 in a ranking of all North American law blogs by Avvo.com. The Massachusetts Real Estate Law Blog, averaging 15,000 monthly page views, has proven very popular to home buyers, sellers, consumers, realtors and lenders due to its easy to read articles on timely topics affecting Massachusetts and national real estate law.

Attorney Richard D. Vetstein, Founding Partner of the Vetstein Law Group, P.C, set out to launch the first ever legal blog dedicated solely to Massachusetts real estate law. Through the blog, Attorney Vetstein offers timely legal commentary, updates and checklists to help consumers, realtors and lenders navigate the intricacies of Massachusetts real estate law. Recent popular posts include:

Attorney Richard Vetstein’s blogging follows a greater trend of attorneys using blogs as a key component to their business development and marketing efforts. “I truly enjoy blogging. It helps me become a thought leader and expert on the latest trends in real estate law. Plus, as the founder partner of a small law firm, blogging is an incredibly cost-efficient tool for business development and marketing,” said Vetstein. “In the legal services industry, blogging is a win-win for the attorney and the consumer. People get access to basic legal information without charge, and good lawyers further enhance their reputations and hone their writing and analytical skills,” Vetstein adds.

About Richard D. Vetstein and the Vetstein Law Group, P.C.

The Vetstein Law Group, P.C. is a law firm based in Framingham, MA, servicing clients in real estate, real estate and business litigation, construction, condominium, and zoning law. Richard D. Vetstein, Esq., the Firm’s Founding Partner, is an avid blogger and proponent of Web 2.0 technology for business development and marketing. Richard Vetstein is also a contributing blogger on the Real Estate Now Blog of Boston.com. Mr. Vetstein can be followed on Twitter and Facebook.

Richard Vetstein Quoted In SmarterMoney.com on New 2010 RESPA Closing Cost Rules

admin — Mon, 11 Jan 2010 12:58:20 +0000

Real Estate by Lisa Scherzer (Author Archive)

New Rules Help Borrowers at Closing

Plenty of home buyers have found themselves at the closing table, ready to sign the myriad documents that will officially make them new homeowners–only to get nasty sticker shock. What was originally supposed to cost them, say, $2,500 in closing costs, has turned into $3,000.

The Good Faith Estimate (GFE), a tally of the fees associated with a mortgage loan due at closing, is exactly that – an estimate. Often these costs, which are provided by mortgage brokers and lenders to borrowers within three days of getting a loan application, escalate by closing time.

But on Jan. 1, new federal rules adopted by the Department of Housing and Urban Development took effect, mandating the use of a redesigned, simplified Good Faith Estimate form. The idea behind the revision: to avoid those closing-table surprises.

The main change is how lenders communicate fee information to borrowers. Under the old system, there was no standardized format. “Fees were communicated in multiple ways, which adds to the confusion when comparing costs,” says Keith Gumbinger, a vice president at HSH Associates, which tracks the mortgage market. Under the new rules, lenders will all be required to use the same form for their Good Faith Estimates – a three-page document issued by HUD.

There are also new rules capping increases in costs that are disclosed on the Good Faith Estimate and guidelines so that fees listed on the initial GFE reflect the actual cost at settlement. “Those fees on the GFE at the beginning of the process will be the same on HUD-1 form [final settlement statement] at the end of the process,” says Gumbinger.

The new GFE guidelines are certainly better than the old ones and will reduce closing costs modestly – but there are still some kinks in the process, namely opportunistic pricing, says Jack Guttentag, professor of finance emeritus at the Wharton School who also operates a web site that offers free mortgage information.

That means that two different borrowers can go to the same lender but get two different estimates. The lender can size up the first one as a sophisticate, the other as a dupe, and charge the latter more than the former – just because he thinks he can get away with it. “There’s no ready way a disclosure statement can prevent that,” Guttentag says.

Prospective buyers should also be aware that while overall costs associated with closing on a home may come down as a result of the new GFE, they might have to pay up down the line in other ways. It will cost lenders to comply with the new regulations: they have to buy new software, print new documents, train loan originators to fill out the new forms properly. “They will be built into fees, so eventually consumers will pay” for these overhead costs, says Gumbinger.

So will the new good faith estimate make borrowers savvier about shopping around for a loan? Some are doubtful. “The forms are still pretty complicated,” says Richard Vetstein, a real estate attorney with Vetstein Law Group in Framingham, Mass. “Even for me – a real estate attorney – it took several hours to go through the forms and all the changes, and figure out what’s going on.”

Here, a summary of the types of charges you can expect to see on your Good Faith Estimate.

1. Fees that cannot change from the original GFE to final settlement. These include the lender’s origination and underwriting charges, and the credit or “points” based on the specific interest rate chosen.

2. Fees that can increase up to 10% at settlement. These include services required and recommended by the lender. If the borrower selects a third-party provider (for title services, title insurance and recording charges) from the lender’s approved list, the fees cannot increase by more than 10% from the upfront estimate to the final.

3. Fees that can change without limit. These include charges from service providers (for title insurance) chosen by the borrower, but not recommended by the lender. This category also includes things like daily interest charges, homeowner’s insurance, as well as flood and pest insurance, if necessary. It encourages borrowers to do their own shopping. “It prevents the worst abuses of price escalation on third-party charges for service providers selected by the lender,” says Guttentag.

Richard D. Vetstein Quoted In Lawyers Weekly USA About Friending Clients On Facebook

rvetstein — Wed, 23 Dec 2009 13:57:03 +0000

Client, Facebook friend – or both?
by Sylvia Hsieh
Dolan Media Newswires

BOSTON, MA — As more lawyers create personal Facebook pages, the decision about whether to include clients as “friends” is just a click away.

Many younger, social media-loving lawyers advocate friending as many people as possible to grow your online presence. They see nothing wrong with including clients on a personal Facebook page.

Richard Vetstein, a real estate lawyer in Framingham, Mass., counts up to 30 of his clients as Facebook friends.

“Most of my clients I consider my friends. I don’t see a big issue with it,” said Vetstein.

But pre-GenX attorneys, some of whom may still be wondering when “friend” became a verb, are more cautious about mixing their professional and personal lives.

Traci Capistrant, a family law attorney at Capistrant & Wong in Minneapolis, Minn., declines friend requests from clients on her personal page.

“The reality is I don’t necessarily want them to see all my personal information, nor do I want to see theirs,” she said.

For lawyers like Capistrant, the networking benefits are outweighed by various ethical issues, including security and overly-personal interaction with others, such as opposing counsel.

A Florida ethics opinion recently advised judges to “de-friend” attorneys who appeared before them because it gave the appearance of bias.

Getting friendly…

Showing clients a glimpse of your personal life can make them more comfortable with you and expand your network to draw in potential new clients.

David Barrett, a practicing litigator in Boston who also coaches lawyers on using social media, encourages lawyers to use Facebook strictly as a networking tool.

Solos and small firms with few marketing dollars have used Facebook to level the playing field against larger competitors.

Vetstein, for example, has generated business from Facebook “friends”: one whose sister had a dispute over a purchase and sale agreement and another who became a client after striking up a conversation about the Boston Celtics.

However, just as you may cement your rapport with clients on Facebook by finding common interests, you may just as easily turn them off.

“On Facebook you are more likely to reveal your personal ideologies because of information-sharing, discussions or joining certain groups. It can ruffle a client’s feathers,” said Barrett.

Even if your clients overlook your political associations, they are less likely to forgive fraternizing with opposing counsel if they can see that you are “friends” with the other side’s attorney.

“If my client can see that I’m chummy with the other side, he or she may think, ‘Can you really be tough when you’re clearly buddies with the other attorney?’” said Capistrant.

One option is to categorize friends into those who can see your personal information and those who can’t.

Capistrant chose to use another method. She built a page for her firm in addition to her personal Facebook page so that she could keep clients separate from her family and friends.

“When a client tries to friend me on my personal page, I decline and then invite them to my firm page,” she said.

However, there are some downsides to creating a Facebook page for your firm.

Because Facebook prohibits duplicate pages for the same person, a lawyer who wants to have a business presence must create a separate entity page, which arguably defeats the purpose of showing your personal side.

You are also not able to connect with new people whom you do not already know, because you cannot invite friends to visit your business page through the Facebook platform; instead you must send an e-mail to invite someone to become a “fan.”

An advantage to having clients as Facebook friends is monitoring how they are using the site.

Barrett once noticed on Facebook that a client he was representing in a custody case was a member of a Bob Marley fan club that had a marijuana leaf as its logo.

“I’m like, ‘You [have to] take those off your Facebook page.’ It could have been used as evidence at least by giving the appearance of drug use. So clients can benefit [from friending their lawyers,] too,” said Barrett.

…But not too friendly

Even Facebook enthusiasts who friend their clients say they would never, ever communicate with clients through Facebook.

When Vetstein gets a message on Facebook from a client, he tells him or her to contact him through e-mail or by phone.

“I just don’t trust the security,” said Vetstein.

Weak security is just one risk. In addition, Facebook communications are not your property and arguably no longer privileged.

“You don’t own the platform. Facebook owns the content that’s on there. Do you want Facebook to own your attorney-client communications?” asked Gina Rubel, a former trial attorney and owner of Furia Rubel Communications, which advises lawyers on public relations.

Lawyers should also be careful about the content they post to their Facebook page.

For example, publishing a big win in a case violates some state ethics rules, because clients who see the posting can be misled into thinking that a win implies future performance, Rubel noted.

Another thing that could mislead a client straight to the ethics board is if he sees his lawyer spending more time on Facebook than on his case.

“You can see when other friends are on Facebook, so if you have clients who feel you’re not attending to their matters quickly enough … it would hurt your argument that you don’t have time for their legal case,” said Barrett.

Although there is an option to appear “offline,” many lawyers are not paying attention to their settings, said Barrett, who should know, as his 3,500 Facebook friends include about 3,200 lawyers.

Lawyers may also not be aware that certain games on Facebook, like the popular Mafia Wars and Farmville, make automatic postings on your wall and in your news feed.

For a lawyer trying to maintain a professional image, it can look ridiculous to ask friends to join your Mafia group or to announce that you’ve completed some advanced level on Farmville, said Barrett.

Powersiteblog.com Features Richard Vetstein and the Massachusetts Real Estate Law Blog

admin — Mon, 30 Nov 2009 15:36:28 +0000

From Powersiteblog.com:

FRAMINGHAM, Mass., Nov. 27 (PRNewswire) — Only four months old, the Massachusetts Real Estate Law Blog created by Metrowest Massachusetts real estate attorney Richard D. Vetstein has quickly become the highest ranking legal blog in Massachusetts according to Avvo.com and Alexa.com rankings. The blog has proven very popular to home buyers, sellers, consumers, realtors and lenders due to its easy to read articles on timely topics affecting Massachusetts and national real estate law.

Attorney Richard D. Vetstein, a Framingham, Massachusetts based real estate lawyer and founder of the Vetstein Law Group, P.C., set out to launch the first ever legal blog dedicated solely to Massachusetts real estate law. Through the blog, Attorney Vetstein offers timely legal commentary, updates and checklists to help consumers navigate the intricacies of Massachusetts real estate law. Recent popular posts include:

The Catch-22 Impact Of New Fannie Mae Condominium Lending Regulations

There’s Nothing “Standard” About The Massachusetts Standard Purchase And Sales Agreement

New Stricter FHA Condominium Lending Regulations and Guidelines Sure To Slow Financing And Chill Sales

Massachusetts Land Court’s Ibanez Decision Invalidates Thousands Of Foreclosures

Richard D. Vetstein

Richard Vetstein’s the Massachusetts Real Estate Law Blog Top of the Class

admin — Sat, 28 Nov 2009 00:39:18 +0000

The Massachusetts Real Estate Law Blog has quickly become the highest ranking legal blog focused solely on Massachusetts substantive law according to Avvo.com and Alexa.com rankings. As reported in BizJournals, the blog has proven very popular to home buyers, sellers, consumers, realtors and lenders due to its easy to read articles on timely topics affecting Massachusetts and national real estate law.

Much thanks to all of our readers!

Richard D. Vetstein