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January 21, 2011

Ruling by Mass. SJC May Alter Ownership of Foreclosed Homes

The ownership of hundreds, if not thousands, of foreclosed properties in Massachusetts are likely to come into dispute following the Massachusetts Supreme Judicial Court’s (SJC) decision to uphold a 2009 state Land Court ruling which invalidated the actions of Wells Fargo and US Bancorp to foreclose on two Springfield homes because it was determined the lenders did not hold clear titles to the properties.   The unanimous decision by the SJC could also alter the manner in which foreclosure sales are conducted going forward since the Court found that it is illegal to take ownership of a home without all the necessary documentation in place at the time a property is seized.

The SJC ruling could provide a boost to efforts by Massachusetts Secretary of State William Galvin to get legislation passed that would mandate judicial approval of foreclosures in the Commonwealth.  The Bay State is one of 27 states in the U.S. that does not require a judge to review and sign off on a foreclosure before a bank can take back ownership of a property.  Galvin, who serves as head of the state Registry of Deeds, says he is also working to make sure homeowners are able to easily access records to see who owns the mortgage on their house.

According to the SJC, its decision applies to all foreclosures in Massachusetts regardless of when they occurred, since the laws governing proper foreclosure procedures have remained constant over time.  As a result, this ruling offers homeowners seeking to fight foreclosures additional reason to pursue legal action, and could further stall foreclosures in others states where similar litigation is pending.  See the Legal Corner column in this issue of On the Home Front for more on this important Court decision.

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Revisions to Homestead Act Provide Automatic Protection of Equity in Primary Residences

Under recently approved legislation signed by Governor Patrick, homeowners in Massachusetts will soon find it easier to protect the equity in their home against certain creditors.  Specifically, in March 2011 when new revisions to the state’s Homestead Act (G.L. c. 188) take effect, Bay State homeowners will automatically receive Declaration of Homestead coverage protecting their primary residence against subsequent attachment, suit or bankruptcy of up to $125,000 of equity in the home. 

Additionally, as of this March, the Act will permit homeowners to sell their primary residence, but still maintain the same Homestead protection coverage on the proceeds of the sale for up to one year from the time of sale or until a new primary residence is purchased, whichever is sooner.  Finally, new provisions have been made to the Act allowing Homestead protection coverage for homes held by a trust and for residential properties as large as four-family homes.

Currently, under existing law, homeowners are required to file a “Declaration of Estate of Homestead” at the registry of deeds to assert their rights to protect their home’s equity from creditors.  Upon such filing, a person’s primary residence is protected against “subsequent attachment, suit or bankruptcy to the extent of $500,000 of equity per residence, per family.”  As of March 2011, homeowners who wish to obtain the maximum coverage of $500,000 will still be required to file the “Declaration of Estate of Homestead” document at the local county registry.  Notably, debts relating to the purchase of the home (money mortgages), tax obligations, and child/spousal support, are not covered under the Act.  For more information, see the FAQ available from the Massachusetts Registry of Deeds.

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New law addresses storage of tenant’s belongings during eviction

Landlords and residential property managers should benefit from the passage of legislation (SB1791) introduced at the request of the Greater Boston Real Estate Board (GBREB) which clarifies the handling of tenants’ belongings during the eviction process.  Under the new law (Ch. 393 of the Acts of 2010), a tenant’s possessions must be re-located to a public warehouse, licensed and bonded pursuant to current state statute.   Furthermore, the storage facility must be located within a 20-mile radius from where the building where the personal property was removed.  According to GBREB Government Affairs Director Patricia Baumer, this measure will close a loophole that has been exploited by some tenants who have taken advantage of the ambiguity in state law to have their property moved to their new apartment at the landlord’s expense.  An explanation of the rationale behind the new law was provided in an article published in the 2006 Fourth Quarter issue of Bay State Apartment Owner magazine.  For a comprehensive summary of real estate industry-related measures passed on Beacon Hill during the past Legislative session, check out the online version of the 2010 GBREB Legislative Report.

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The Value of Curb Appeal

The 2010-11 Cost vs. Value Report published by Remodeling Magazine found that nine of the top 10 most cost-effective home improvement projects based on value recouped are exterior renovations, an indication that curb appeal remains one of the most important factors for property owners to address at the time of sale.   In all, the report examines 35 interior and exterior remodeling projects, including room renovations, additions, and replacement projects, and analyzes construction costs and resale values to determine which home improvements provide the best return on investment for homeowners.  A steel door entry replacement and garage door replacement ranked as the top two overall projects for returning the most money, while the addition of an attic bedroom and remodeling of a basement returned the most money among interior home improvement projects.  A summary of project descriptions as well as national and regional data for 80 U.S. housing markets is available online.  In addition, a webinar with analysis of the home improvement trends detailed in the 2010-11 Cost vs. Value Report will be hosted by REALTOR® Magazine on January 27 at 3 p.m. EST.  To register, click here.

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Federal Commission Recommends Changes to Mortgage Interest Deduction

A commission appointed by President Obama to identify and propose spending cuts and tax changes to trim the federal deficit over the next decade has recommended significant changes to the current mortgage interest deduction (MID) as part of its final report issued on December 1.   Specifically, the National Commission on Fiscal Responsibility and Reform has recommended converting the mortgage interest deduction into a tax credit, capping eligible mortgages at $500,000, and eliminating the MID for second homes and home equity loans. 

The National Association of REALTORS® is firmly opposed to any modifications to the mortgage interest deduction, arguing that the MID is vital to the stability of the U.S. housing market and economy.  A change to the mortgage interest deduction could bring down home prices at a time when the market is beginning to show signs of stability.  According to NAR, home values could erode as much as 15 percent if the proposed changes to the MID outlined by the Commission are enacted into law. 

For access to all of NAR’s statistical data on the mortgage interest deduction and the free MID Calculator app (available from the iTunes store) to estimate the tax savings value of the MID to clients or customers visit the HomeOwnership Matters page on realtor.org.

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Tax Relief Act Extends Benefits for Homeowners

Homeowners are among those who will benefit most from the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010,” which was signed by President Obama in mid-December.  Most media reports focused on provisions of the legislation that temporarily extend the Bush-era tax rates for two years (through 2012) and reduce the employee withholding portion of the Social Security payroll tax by 2 percent for 2011, but the bill contained key provisions affecting real estate as well.  Most notably, the Act extends through 2011 a provision allowing homeowners to deduct mortgage insurance premiums, retains the capital gains tax rate of 15 percent for assets sold or disposed of during 2011 and 2012, and includes extensions for numerous energy efficiency credits until the end of this year.

To qualify for the full PMI deduction, homeowners must have an adjusted gross income of $100,000 or less, while taxpayers with an adjusted gross income of $100,000 - $109,000 can claim a partial deduction.  However, borrowers can’t deduct mortgage premiums on home loans closed prior to 2007.  As for tax credits for energy-efficient home improvements, homeowners who installed insulation, new windows or other similar energy-saving improvements this past year are eligible for a credit worth 30 percent of the cost up to a lifetime maximum of $1,500.  Those who don’t complete improvements until 2011 are still able to apply for a tax credit, albeit a more modest one, which is capped at $500.  For more information, see the detailed summary of the Act and its provisions prepared by NAR staff, and read NAR Chief Economist Lawrence Yun’s analysis on whether the Tax Relief Act will provide a boost to the economy and job market in this economic forecast.

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Boston Area Sees Modest Home Sales Gains in November

Sales of detached single-family homes and condominiums in metropolitan Boston rose unexpectedly in November from one month earlier, though sales fell for a fifth consecutive month on an annual basis in November.  The modest increase in November sales volume over October reflects a small rebound in buyer demand after Labor Day and follows a steady decline in sales activity that occurred this summer after the federal home buyer tax credit expired.  Sales of detached single-family homes rose 9.2 percent in November from the previous month, and condominium sales improved 4 percent from October’s level.

The month-to-month sales gains offer a stark contrast to the sharp year-to-year sales declines in detached single-family homes (-29.2%) and condos (-38%) that occurred in November and are magnified due to the surge in closings that took place in November 2009 as consumers raced to take advantage of the initial first-time home buyer tax credit.  Despite the drop in sales volume from last November, median selling prices for single-family homes and condos continued to rebound over the past 12 months.  The median selling price for detached single-family homes climbed for a ninth consecutive month on an annual basis, increasing nearly 10 percent to $445,000, while the median selling price for condominiums sold in November rose 20 percent to $378,200 to set a new all-time monthly high (eclipsing the previous record high median price of $372,000 which occurred in both July 2007 and again in July 2010).

To view all November data and to get a more detailed analysis on the housing market in greater Boston, visit the Monthly Housing Reports page on gbar.org. 

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GBAR to Award Grants to Local Housing-Related Charities

The Greater Boston Association of REALTORS® (GBAR) is currently accepting applications from members and others who wish to nominate a local housing-related non-profit organization for a monetary grant.  Grants are restricted to 501 (c)(3) organizations which provide shelter, food and clothing, mortgage and/or rental assistance, home buyer counseling or other similar support to individual and households.  In addition, the organizations nominated or applying for a grant must be located in or operate within the GBAR jurisdiction or an adjacent community in which a GBAR member firm is located.  Grants of up to $2,500 will be awarded through the GBREB Foundation this summer.  The deadline to apply is March 15, 2011.  For more information or to obtain an application, visit gbar.org or contact Kate Reynolds at 617-399-7840 or kreynolds@gbreb.com.

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GBAR to Debut New Webinar Series, Offer Expanded Options to Earn CE Credits

This month the Greater Boston Association of REALTORS® will debut a new bi-weekly professional development series for agents looking to enhance their knowledge and understanding of industry disciplines and real estate fundamentals.  Entitled Manageable Mondays, all courses will be presented online in a live webinar format which will allow for direct interaction with the course instructor, and each webinar course will provide two continuing education credits for those who meet the required attendance time.  For those who wish to avoid the additional time, cost and travel headaches incurred as a result of driving to a live classroom course, the Manageable Mondays webinar series is a low-cost, convenient alternative to learning.  Each webinar is just $15 for GBAR members to enroll and participate.

The first live webinar will take place on January 24, from 9:00 – 11:00 a.m., and will address Condominiums, Cooperatives and Timeshares (RE12R07).  February webinars will delve into Brokerage Relationships (RE57R07) and the Residential Mortgage Loan Market and Credit Today (RE47R05).  All webinars are accessible from both PC and Mac computers.  To learn about the Manageable Mondays course series, system requirements, or to register, visit our webinar information page at gbar.org.

Notably, GBAR will continue to present continuing education courses in the more traditional classroom setting in 2011 as well, with classes being presented each month at the GBAR/GBREB offices in downtown Boston as well as at suburban locations within the GBAR/GBREB jurisdiction.  For upcoming classes, visit our online education calendar.

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2011 GBAR Officers & Directors Installed, MAR and NAR Directors Announced

A new slate of officers and directors for the Greater Boston Association of REALTORS® was installed last month during ceremonies held on December 13 in downtown Boston.  Over 100 GBAR members and guests attended the GBAR Installation and Holiday Reception where Deborah Heffernan, broker-owner of Avenue 3 Real Estate in Cambridge, was sworn in as president for 2011.  Heffernan will be joined on the GBAR Leadership Team by President-elect William Dermody, sales manager of Coldwell Banker Residential Brokerage in Needham; Vice President Carolyn Chodat, broker-owner of Classic Properties in Medway; Treasurer Daphna Fields, sales manager of Coldwell Banker Residential Brokerage in Jamaica Plain; and Immediate Past President Amleto “Mel” Martocchia, of Martocchia & Co., Inc. in Waltham. 

Martocchia also will serve on the Executive Committee of the Massachusetts Association of REALTORS® (MAR) this year as he has been appointed to serve as 2011 MAR Vice President of Government Affairs by MAR President (and former two-term GBAR president) Laurie Cadigan, broker-owner of Barrett & Co. in Concord.  John Ranco, the 2009 GBAR president, will be a member of the MAR Executive Committee this year as well, having been elected as 2011 Greater Boston Region Vice President to MAR.  Meanwhile, both 2011 President Deborah Heffernan and Immediate Past President Mel Martocchia also will serve as GBAR representatives on the National Association of REALTORS® Board of Directors in 2011.

For a list of names and contact information for all 2011 GBAR Officers and Directors you may access the Board of Directors roster posted on gbar.org.  Also available online is a listing of individuals who will represent GBAR as directors to the Greater Boston Real Estate Board, and a roster of GBAR members who have been elected to the MAR Board of Directors for 2011.

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