What Every Homeowner Should Know About Mortgage Fraud And Identity Theft

Identity theft professionals are becoming greedier and more proficient at their “game.” Identity theft is no longer limited to unpaid credit cards, small credit loans, but with the booming real estate market there is fast cash there for the conniving individual to make.

Mortgage fraud through identity theft is the second most common mortgage fraud scheme. The FTC reported in 2004 that $429 million dollars in damages for home mortgage fraud hoaxed and approximately $1.1 million dollars lost on commercial loans.

Mortgage fraud through identity theft occurs in several different ways. First a person may apply for a loan for a new home or for a home equity loan using your personal and financial information. The home equity loan is most often on the house that you are residing in, thus making this the easiest hoax to commit. Knowledge of an individual’s date of birth, social security number, as well as address makes it easy for victimization to occur.

Secondly, mortgage fraud may occur in a fake sale of your home. One thief will assume your identity and “sell” the property to another thief. With mortgage loan money in hand, both thieves get away and no real sale occurs. However, there have been instances where the homeowner’s identity was stolen and the home was sold to a legitimate buyer and the thief gets away with the money, the buyers have no new home and the original homeowner is left with the messy business of re-establishing his identity and his credit.

In most cases, the banks are the ones most damaged by these types of schemes. A legitimate homeowner did not take out the loan, so may not be held liable, but they don’t get off with out any damage at all. Many hours and much money may be required to correct the credit problems that are a result of identity theft, particularly when the theft results in large sums of money being stolen. Then there is the additional effort to protect their future credit and personal information.

Those most likely to be victims of mortgage fraud are the elderly, established homeowners, and those who have a great deal of equity in their homes. Equity information is readily available through an online title search and the use of tracking property values in the area.

Homeowners need to do the following to protect their homes and their credit.

- Monitor your credit report, receive regular updates, and stay informed;

- Immediately contact any lenders that provide information on your credit report when you discover pieces of information that are mistakes of fact or that you don’t know or recognize;

- Read your social security benefits statement when it comes in the mail to determine if anyone has already claimed your benefits.

- Be wary of communications regarding your home, real estate, personal or mortgage information including special “offers” to help you with your mortgage or interest rate.

- You may need to educate your parents or other elderly individuals with their credit protection plans.

- Install an anti virus and spyware software system on your computer to protect your personal and financial information.

Early detection and reporting of mortgage fraud schemes is important. With mortgage fraud, consumers may lose their property, their savings, and their credit rating. Secondly, lenders are affected by the loss of money, security, and assets in their company, not to mention the lack of trust resulting from these types of rackets.

If a victim of this type of crime, it should be reported to The Federal Bureau of Investigation (FBI) http://www.fbi.gov/ (202) 324-3000 – National FBI Financial Institution Fraud Unit. However, there are a possible 18 other government agencies, banking, consumer, and fraud reporting agencies as well as other consumer resources available to consumers depending on the type and method of mortgage fraud that occurred. For a complete list of resources, visit Mortgage News Daily http://www.mortgagenewsdaily.com/Mortgage_Fraud/National_Resources.asp

Consumers can try to stop identity theft before it happens by being forewarned and vigilant. If you are a victim of identity theft, in particular mortgage fraud you will have the information you need to correctly and quickly report the theft and take the steps necessary to begin to repair your credit.

Lisa Carey is a contributing author for Identity Theft Secrets: prevention and protection. You can get tips on Identity theft protection, software, and monitoring your credit as well as learn more about the secrets used by identity thieves at the Identity Theft Secrets blog

Building And Town Planning Permits

LAC Lawyers Pty Ltd is engaged in a substantial domestic building dispute in the Victorian Civil and Administrative Tribunal (“VCAT”) in Melbourne which involves a claim in excess of $1,800,000.00. Essentially, the case raises the inter-relationship between the issue of a building permit and the antecedent issue of a town planning permit in respect of Section 24 of the Building Act 1993 (Vic.).

That Section requires that a building surveyor must not issue a building permit unless a planning permit has been obtained and the building permit will be consistent with that planning permit.

Since the introduction of the Building Act 1993 (Vic.), the Victorian Building Commission has issued Ministerial Guidelines on behalf of the Minister for Planning.

In November 2000, the Building Commission issued a Minister’s Guideline numbered 00/001 entitled “Building Permit and Planning Permit Consistency”. Those guidelines required the building surveyor, in determining whether the building permit would be consistent with the planning permit, to take the following steps:

- Compare the plans lodged with the application for the building permit with those plans endorsed by the responsible authority as part of the planning permit and any documents referred to in the planning permit that have a direct bearing on the proposed building permit to ensure that they are consistent; and

- Confirm that all planning permit conditions relevant to the building permit that are required to be completed prior to commencement of the development, have been complied with.

The November 2000 Minister’s Guideline provided that the surveyor’s assessment of consistency between the building permit and the relevant planning permit should include (but not be limited to) consideration of:

- The height, area, form and configuration of the proposed building work or any part of the building work;

- The location of the proposed building on the land, including setbacks from boundaries;

- The location of windows, doors and privacy screens; and

- Any conditions of the planning permit that have specific construction requirements or that require specification construction details.

In October 2005, the Building Commission issued a further Minister’s Guideline entitled “Professional Standards – Building Surveyors” which stated that building surveyors performing their functions had to do so in a competent manner and to a professional standard.

This legislation and guidelines places a building surveyor under an obligation to identify discrepancies between the architectural drawings and town planning drawings on the one hand and working drawings and building contract on the other hand. Any such discrepancies should be referred back to the client/builder with a request that an explanation be provided. A building surveyor should not attempt to reconcile or resolve the discrepancies on his or her own.

Likewise, a builder has independent obligations to check documents approved as part of a building permit for any discrepancies before setting out building works and commencing construction.

Section 16 (1) of the Building Act 1993 (Vic.) requires that a person must not carry out building work unless a building permit in respect of the work has been issued and is in force and the work is carried out in accordance with the legislation and the building permit.

Accordingly, builders who do not identify discrepancies between architectural and town planning drawings on the one hand and working drawings and the building contract on the other hand before proceeding to excavate footings, poor slabs and erect frames may well be responsible for considerable damages for re-building, delay and consequential economic loss to developers if such matters as setbacks have been incorrectly calculated even where the setbacks are in accordance with the working drawings incorporated into the building permit but are contrary to the town planning permit conditions or endorsed town planning drawings.

Both building surveyors and registered builders have important responsibilities to ensure that commercial and domestic buildings are constructed in compliance with Victorian legislation and Victorian planning and building permits.

Of course, the fact that discrepancies exist between the endorsed town planning drawings and the building permit working drawings may also give rise to liabilities on the part of the building designers/architects responsible for either. If the town planning drawings drafter knows that a developer/builder has appointed someone else to complete working drawings, the town planning drafter may be under a duty of care to warn the developer/builder to ensure that the working drawings are consistent with the town planning permit conditions and the endorsed town planning plans. Likewise, where the working drawings drafter is aware that the developer/builder has appointed someone else to complete town planning drawings, the working drawings drafter may be under a duty of care to warn the developer/builder to check the working drawings when the town planning permit is issued to ensure that the working drawings are consistent with the later endorsed town planning drawings.

Modern building practice is for developers to shop around to obtain the most competitive price for town planning and drafting services. This sometimes leads to different design professionals being appointed for each function. Where this is so, the drafters have an obligation to ensure that plans continue to be checked even if this work is to be performed by another. Likewise, a developer may find that he or she is regarded by the courts as accepting a de facto duty to work as a project manager and ensure liaison between the town planning drafter and the working drawing drafter where these functions are split on the grounds of cost efficiency. This duty may be imposed even when the developer is not a professional builder or investor.

Michael Pickering is a solicitor employed at LAC Property Lawyers Melbourne. He has nearly 20 years experience as a lawyer.

Airspace Over Your Property – How Much Of It Do You Own?

CYA Disclaimer: The following is intended for reference purposes only and not as legal advice. The short answer is, “as much of it as you can use”. No, you cannot float a “No Trespassing” blimp and shoot down passing airliners for trespassing. But believe it or not, you can build a tall building on your property and the airlines can’t make you take it down even if it interferes with air traffic – unless you can find a law (such as building codes) that expressly prohibits you from doing so. By federal law, upper airspace is considered “navigable”, meaning the public has the right to use it. But what exactly is “upper airspace”? In the foregoing example, if you built a tall building on your land and the airline were overflying your property at altitudes lower than the height of your building (and in the same vicinity), it would be possible for you to sue them for trespassing.

It would also be possible for you to sue for nuisance even if the planes didn’t even overfly your airspace, if the planes were making enough noise to interfere with your “quiet enjoyment” of your property. Keep in mind, though, that if you live near an airport, the airport has probably already purchased the right to make as much noise as they want. If you don’t know about any such purchase, it’s probably because these rights were purchased from a previous owner of your property.

I’ve got some good news, though, if a new airport is being built near property you own – you might be able to make them pay for the right to pollute your airspace with noise, regardless of whether their planes will be overflying your property or not. If the airport is government-owned, you could claim that the noise constituted a “taking” of your property and although you couldn’t stop them from doing it, you could demand “just compensation” (note that the legalese is in quotation marks). If the airport is privately owned, you could file a claim under nuisance law and force them to choose between either continuous liability under nuisance law or settling with you in lump sum for the reduction in the value of your property.

Real Estate Law in Plain English explains real estate law without the legalese.

Community Property Law

Community property law is normally applicable only to two people who are legally married, although it is sometimes applied to couples who have lived together for a long time. Some states have not yet enacted community property laws, and the law varies considerably among the states that have enacted them. Nevertheless, the community property laws of various states share certain features in common.

Contrary to popular opinion, you can’t marry a millionaire in a Las Vegas Chapel ‘o Love drive-thru window, pull around and get a drive-thru divorce, and pull out of the parking lot a millionaire yourself. Community property applies to all the property gained during the marriage – so the longer the marriage lasts, the better chance the richer spouse has of getting fleeced. For most couples, wages and salaries are the biggest component of community property. Pensions are also included, as are assets (such as houses and cars) bought with these funds. So if one spouse is worth ten million and the other is worth fifty cents before walking into the church for the wedding, their respective wealth is probably going to be about the same when they walk out a few hours later.

In addition to “community property”, each spouse will normally have some “separate property”. Separate property includes each spouse’s property obtained before the marriage, along with income derived from this property, even if the income is earned after the marriage (in most cases). Gifts received by one spouse only are also considered separate property. In a few states, though, family residences are considered community property even if it was a gift to one spouse and the title is in that spouse’s name only. In addition, separate property can be converted into community property by having one spouse donate his or her separate property to the couple’s community property..

The foregoing is a very simplified explanation of community property law. Keep in mind that significant differences exist among states, and that there are a lot of rules involved. This article was written to give you a rough idea of what does and does not belong to you.

DISCLAIMER: The following in intended for reference only and not as legal advice.
Real Estate Law in Plain English explains real estate law without the legalese.

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Real Estate Options to Purchase

What is an Option? “An option is a contract by which the owner of property invests another with the exclusive right to purchase said property at a stipulated sum within a limited or reasonable time in the future.” Nattress & Associates v. Cidco (1986) 184 Cal.App.3d 55, 66. Donald Trump used an option to purchase the Hotel Commodore at Grand Central Terminal, his ground breaking first deal at 27 years old. More commonly, options are used in leases in which the landlord gives the tenant an option to buy the property. For example, the AIR Option to Purchase form provides that the lessee must provide written notice within a certain time period (i.e., April 1, 2004 to April 30, 2006), with the option expiring at the end of the option period. The form also sets forth the price, the escrow agent, a time period in which to close the sale and other instructions. After exercising an option, the parties should then enter into a Purchase & Sale Agreement, which addresses in more detail all of the minutiae of the sale transaction.

An Option is Irrevocable. An option supported by consideration (even $1) is an irrevocable offer, open for a prescribed period. The acceptance must be in accordance with the terms of the option agreement and must be free of conditions which the optionor is not bound to perform. Riverside Fence Co. v. Novak (1969) 273 Cal.App.2d 656, 660. The exercise of an option is merely the communicated election of the optionee to accept the option. Id. at 661. It is important to recognize that, in terms of the formation of a contract, an option is a contract. Therefore, the “offer” (option) is truly irrevocable and merely awaits acceptance.

A Qualified or Conditional Acceptance. What is the effect of an acceptance which adds additional terms or is made conditional? “Any tender of performance is ineffective if it imposes conditions upon its acceptance which the offeror is not entitled to demand.” Riverside Fence Co., supra., at 662. However, the fact that a purported acceptance adds a qualification to the agreed-upon option does not in and of itself terminate the option. As long as the option period has not yet expired, a party may still exercise the option without qualification or condition (even though a prior [ineffective] acceptance may have added such qualifications). Again, the option is truly irrevocable.

The courts have explained that “if the person offering to perform is acting in good faith, and makes the mistake of demanding something to which he is not entitled, he ought to be given the same opportunity to recede from such demand that he is allowed for tendering the correct amount where he has tendered too little, or the right thing where he has tendered the wrong thing…” Nattress & Associates, supra., at 67.

Waiver of Conditions. In the event that a party imposes additional conditions on the exercise of an option, the offeree must specifically point out the alleged defects in the tender or he waives the right to object to the conditions. Civil Code §1501; Code Civ. Proc. §2076. The rationale of this requirement is that the offeror should be allowed to remedy any defects in his tender. Therefore, the offeree should not be allowed to remain quiet at the time of the tender and later surprise the offeror with hidden objections. Riverside Fence Co., supra., at 662.

In addition, an optionor may not do any act or omit to perform any duty calculated to cause the optionee to delay exercising the option within the specified period. A court will look at the good faith of the optionor. If he attempts to prevent the exercise of the option, his behavior may excuse a failure to perform and other conditions precedent to acceptance by the optionee. For example, in the Riverside Fence case, the optionor failed to sign the escrow instructions but would not explain why. The optionee offered to make corrections but the optionor refused to identify any defects in the exercise of the option. The court found that, although plaintiff had not performed, she had attempted in good faith to tender performance and that defendant’s evasive conduct was calculated to prevent timely performance. The court therefore precluded the optionor from asserting that there had not been a timely or proper exercise of the option.

Laine T. Wagenseller is the founder of Wagenseller Law Firm, a full service real estate litigation firm in downtown Los Angeles. The firm represents real estate developers, owners, and investors. For more information visit http://www.wagensellerlaw.com or contact Mr. Wagenseller at (213) 996-8338.

Basic Foreclosure Process/Timing in Indiana

Need a handle on how long it will take to liquidate your borrower’s collateral in Indiana? Since the foreclosure process officially starts with the filing of a complaint, my timelines start there. A complaint cannot be filed until there has been a default under the terms of the real estate mortgage or personal property security agreement. Needless to say, many weeks if not months might pass between the initial loan default and the decision to file suit. The timing of the foreclosure process largely depends upon whether and to what extent the borrower contests the proceeding:

Uncontested Foreclosure: 4½ – 6 months minimum. If a business debtor does not contest foreclosure (but will not agree to a deed in lieu), the process can move relatively quickly. Here are the major steps and applicable ranges of time:

1. Filing of the Complaint

2. Service of process on the debtor: occurs in 5-10 days unless service by publication

3. Application for default judgment: can be sought 21-24 days after service of process

4. Entry of default judgment and decree of foreclosure: should occur within approximately 30 days after the Application is filed

5. Praecipe for Sheriff’s sale, including notice of same: by statute, cannot be filed until 3 months after the Complaint

6. Sheriff’s sale: happens about 45-90 days from Praecipe, depending on the county

Contested Foreclosure: 6-9 months minimum. Given the vagaries of litigation, it’s virtually impossible to conclusively estimate how long a contested foreclosure case may last. Much depends upon how clear the default and the damages are. Perhaps the most significant factor relates to the time associated with workout negotiations. In that regard, each case is different. Here are the main steps of a fairly quick contested foreclosure:

1. Filing of the Complaint

2. Service of process on the debtor: occurs in 5-10 days unless service by publication

3. Appearance of debtor’s attorney and motion for one or more 30-day extensions of time to respond to the Complaint: filed 20-23 days after service of process

4. Answer to Complaint: filed 30 days after filing of Appearance and expiration of last motion for extension

5. Motion for summary judgment: can be filed immediately after the filing of the Answer 6. Objection to motion for summary judgment: due 30 days after the filing of the motion for summary judgment

7. Summary judgment hearing: usually held 75-120 days after the motion is filed

8. Entry of judgment and decree of foreclosure: occurs on day of hearing, or soon thereafter, unless the motion is vigorously contested with viable defenses

9. Praecipe for Sheriff’s sale: can be submitted immediately after the entry of judgment assuming more than 3 months have passed since the complaint was filed

10. Sheriff’s sale: takes place 45-90 days from Praecipe, depending on the county

Judicial sales. Indiana law requires a judicial sale in order to foreclose a mortgage. I.C. 32-29-7-4 (http://www.ai.org/legislative/ic/code/title32/ar29/ch7.html#IC32-29-7-4) is a nice option for creditors looking to expedite a sale. The statute permits, under certain limited circumstances, the sheriff’s sale to be conducted by a private auctioneer on the civil sheriff’s behalf. This may be advisable in counties without regularly-scheduled sheriff’s sales. (I should note that, as to personal property security interests, UCC/Article 9.1 and/or the terms of a security agreement may allow the creditor to repossess the collateral without a sheriff’s sale.)

Be prepared for delays. Although the basic procedure is the same throughout Indiana, the timing can be impacted dramatically by the dockets of the individual courts and/or the schedules of the individual civil Sheriffs’ offices. The periods described are the minimum time periods. The actual time usually is longer. This is especially true if there are multiple creditors named in the lawsuit. Further, in contested cases involving debtors represented by counsel, opposing attorneys can prolong the process in a variety of ways, including multiple motions for extensions of time, requests for discovery and vigorous challenges to a motion for summary judgment. In the event a trial must occur, a resolution of the case can be delayed several months if not years. In addition, a bankruptcy can be filed up until the time when the Sheriff’s sale begins, and that can delay the foreclosure process indefinitely.

Depending on the goals of the lender, the lawyer representing the lender can push the case aggressively toward a sale. Or, counsel can be more passive to give the parties time to assess whether a refinancing arrangement may be warranted. The parties can settle, or the debtor can redeem – real estate / I.C. § 2-29-7-7 (http://www.ai.org/legislative/ic/code/title32/ar29/ch7.html#IC32-29-7-7); personal property / I.C. § 26-1-9.1-623 (http://www.ai.org/legislative/ic/code/title26/ar1/ch9.1.html#IC26-1-9.1-623) – right up to the sale or disposition of the collateral. Debtors’ attorneys know this, so don’t be surprised if a borrower waits until the eve of sale either to file for bankruptcy protection, redeem or yield to the lender’s loan modification terms.

John D. Waller is a partner at the Indianapolis law firm of Wooden & McLaughlin LLP (www.woodmclaw.com). He publishes the blog Indiana Commercial Foreclosure Law at http://commercialforeclosureblog.typepad.com. John’s phone number is 317-639-6151, and his e-mail address is jwaller@woodmclaw.com.

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Filing Date is What Matters When Determining Parties to Name in Mortgage Foreclosure

When a lender makes the decision to foreclose on its borrower’s real estate collateral in Indiana, the lender must determine who, besides the borrower, claims an interest in the property. That’s why a title policy (foreclosure) commitment is ordered before the filing of the case. Clear title cannot be obtained upon a sheriff’s sale unless all lien holders are named as defendants in the suit (so that their interests can be foreclosed). Recently, the Indiana Court of Appeals reminded us of why and when pre-suit title work must be updated. The rule. In the December 8, 2006 opinion House v. First American Title Company, 2006 Ind. App. LEXIS 2472, the Court of Appeals addressed a dispute between the purchaser of residential real estate (after a sheriff’s sale) and his title insurance company. Although the issues in the opinion have no real bearing on commercial foreclosure law, a rule cited by the Court in its decision does: a foreclosure action’s filing date is the “only relevant date used to determine the proper parties to a mortgage foreclosure.” Third-parties who secure an interest in the mortgaged property after the filing of the foreclosure complaint need not be named in the suit. Note these comments from House:

Because the judgment of the Dearborn County Health Department did not attach until after the foreclosure action was commenced by the Bank of New York, any lien which arose as a result of the default judgment obtained by the health department was foreclosed by the foreclosure sale and therefore does not affect fee simple title to the real estate.

So, lenders need not continuously search title during the course of litigation and worry about adding new parties to their foreclosure complaint. “The only relevant date” is the foreclosure action’s commencement date – the day the lender filed the complaint.

Date down. Invariably, there will be a gap between the completion of the preliminary title search and the initiation of the suit. Conceivably, liens, etc. could arise during that time. To cover the gap, lenders must “date down” (update) their title policy commitment to the day of the filing of the complaint. House confirms that this is the only title update required, and I recommend that it be done shortly after the filing of the complaint. If any interests arise during that period, the new lienholders must be added to the case. Should the updated commitment uncover no new interests, the lender can be comfortable proceeding with the original cast of characters.

John D. Waller is a partner at the Indianapolis law firm of Wooden & McLaughlin LLP. He publishes the blog Indiana Commercial Foreclosure Law at http://commercialforeclosureblog.typepad.com. John’s phone number is 317-639-6151, and his e-mail address is jwaller@woodmclaw.com.

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