Following recent discussions in Washington D.C. with U.S. Treasury Officials, the Ministry of Finance announces the formation of a new task force to evaluate the suitability of a government-to-government reporting arrangement for the implementation of the U.S. Foreign Account Tax Compliance Act (FATCA) in the Cayman Islands. Click here to read the full article.
One of the most recent efforts to bring the big banks to task over their role in the nation’s real estate crisis is a New York lawsuit, Abel v. BAC Home Loans Servicing LP et al, alleging international money laundering by Bank of America as well as other major federally chartered banks. The lawsuit alleges that Bank of America, JP Morgan Chase, Citibank, Citigroup, 1 West and Wells Fargo have been moving trillions of dollars into offshore accounts without properly disclosing those transactions on their balance sheets.
When a property forecloses and sells in a Trustee sale, the servicer of the loan takes its fees for servicing the foreclosure as well as other fees. The remaining funds from the sale are supposed to go to the new owner of the loan. Finally, the old debt is supposed to be discharged. However, the big banks are being accused of diverting that remaining money into off-shore accounts which earn interest. Meanwhile, they are NOT crediting the previous loan and discharging the debt.
In their defense, the banks claim that since they don’t know who the new investors are, they can’t pay them the money while conveniently earning interest off those investments. Ironically, that same argument has been used by struggling homeowners who want to mediate their loans to avoid foreclosure. In typical fashion, where the homeowner suffers, the banks profit.
Transferring money to offshore accounts is not illegal if done correctly. However, by not fully disclosing the transfers and failing to discharge the old debts, the banks may be in violation of money laundering statutes and the Patriot Act.
This case brings to the forefront yet another aspect of how sloppy paperwork and accounting has been a standard business practice of the big banks.
On May 3, 2012,
in Asset Protection, Estate Planning, Foreclosure, Legislation, Real Estate,
by blacklobellolaw
Click here to listen to the Legal Hour on KDWN AM720 from May 2nd, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Jeffrey Morse, Esq., Special Counsel to Withers Worldwide. Ms. Black Chernine and Mr. Morse discuss Abel v. BAC Home Loans Servicing LP et al, a current case in New York alleging that banks are laundering money overseas (2:15), problems with the stress tests for the major banks (12:40), tips for investment including real estate and offshore accounts (16:40), how to check house foreclosures (21:27), real estate agent unfair practices (25:30), problems getting a loan modifications (29:30) and tips for successful asset protection (34:40).
Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
Click here to learn about the $25 billion Multi-State Settlement between the Attorneys General and the five major banks.
Click here to listen to the Legal Hour on KDWN AM720 from April 25th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Bubba Grimsley, Esq., an attorney based in Alabama. Ms. Black Chernine and Mr. Grimsley discuss how a bankruptcy case in Louisiana shows how mortgage servicers take advantage of homeowners (2:00)(20:00)(30:15), bank fees charged during a default (12:15), chapter 7 vs. chapter 13 (14:00) and how divorce affects bankruptcy(17:40).
Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
Prior to March 8, 2012, an exemption to the State Business License was provided to certain types of home-based businesses. As such, those businesses that were “home-based” and earned less than a certain amount of yearly income did not have to file for the state business license or pay the annual fee of $200.
However, effective March 8, 2012, the Legislative Subcommittee to Review Regulations approved the measure that Secretary of State Ross Miller said was necessary after the Secretary of State took over collecting the $200 state business fee in 2009 from the Department of Taxation.
Mr. Miller estimated 60,000 entities claim to be home-based businesses and that the state is losing about $10 million annually.
Now, all entities formed in Nevada must pay the $200 annual fee for the state business license despite the fact that their company may have been formed not to operate a business but, for example, as a holding company or to own a rental property.
The regulation limits the home-based business exemption to “natural persons” who sign a statement that they earn less than the threshold income, i.e. sole proprietorships or general partnerships who meet the exemption requirements and other entities which do not afford asset protection to the owner.
Entities claiming a home-based business exemption on their annual list filing after March 8, 2012 will be returned to the customer for correction and to apply for the state business license.
A copy of the approved regulation can be found under the “Announcements” section of the Secretary of State’s website.
On April 25, 2012,
in Asset Protection, Estate Planning,
by blacklobellolaw
SB 405 went into effect on October 1, 2011. It strengthens the asset protections available to Nevada-based entities. The updated charging order language affects Nevada Limited Liability Companies (LLCs), Corporations and Limited Partnerships (LPs). The law changed as follows: the new language in the statute makes the charging order the exclusive remedy of a judgment creditor- including single member LLC’s and single shareholder corporations. A charging order is a remedy issued by the court giving the creditor a lien over the debtor’s interest in the entity. As such, this new language solves the problem brought forth in case law (specifically single-member LLC cases). Using the generous provisions provided by Nevada statute, many opportunities for asset protection and estate planning can be designed to maximize protection and take advantage of the charging order as the exclusive remedy, discouraging litigation and encouraging settlement.
Main Advantages of Forming Entities Post SB 405: No Equitable Remedies Allowed
Most significantly, SB 405 adds key language to the entity statues specifically stating that no other remedies may be applied. Equitable remedies have served to allow a court to evade the “charging order as the exclusive remedy” language in the past. Equitable remedies are court-granted remedies that require a party to act or refrain from performing a particular act. Under the doctrine of limited liability, a corporate entity is liable for the acts of a separate, related entity (or individual) only under extraordinary circumstances, commonly referred to as piercing the corporate veil. Federal common law typically involves a two pronged test for piercing the corporate veil: the party sought to be charged must have used its alter ego to perpetrate a fraud or have so dominated and disregarded its alter ego’s corporate form that the alter ego was actually carrying on the controlling party’s business instead of its own. In the Ninth Circuit, cases suggest (at least in California cases), that fraudulent intent in incorporation need not be shown to pierce the veil, as long as it can be shown that the separate identity of the corporation has not been respected and that respecting the corporate form would work an injustice on the litigants. The test for alter ego liability is almost identical to the veil-piercing test. Alter ego has been defined as a lack of attention to corporate formalities, commingling of assets and intertwining of operations. Alter ego requires demonstrating that the two corporations (or individual and corporation/company) functioned as a single entity. Applying this notion, the court could set aside the protection afforded by the corporation or company by ordering that the company or corporation is the owner’s “alter ego” then piercing the corporate veil by stating that the company and the individual are one in the same (and going after the other’s assets in satisfaction of the judgment). Of course, veil piercing and alter ego concepts are separate and distinct. Piercing the corporate veil allows the court to find A vicariously liable for B’s debts. By contrast, a contention that A is B’s alter ego asserts that A and B are the same entity. Liability then is not vicarious but direct. Most other forums do not specifically disallow the court from applying equitable remedies and, as such, the court would have discretion to seek piercing the corporate veil under theories such as reverse veil piercing, alter ego, constructive trust and the like. Of note is that one exception to SB 405 was made. Courts are allowed to apply the “alter ego” theory as the only equitable remedy as to corporations (not limited partnerships or LLCs). As such, Nevada LLCs and LPs continue to be a favored structure for ease of management and asset protection.
Available Opportunities for Planning
SB 405 creates numerous planning opportunities for current business owners and those looking to create entities. Citing the precedent reached in Albright, A-Z Electronics, Modanlo and Olmstead among others, many estate and business planners in the past have been hesitant to utilize single member LLCs because a Court may state that a single member LLC doesn’t enjoy the charging order as an exclusive remedy. Per SB 405, this loophole is now specifically closed by statute. Additionally, out-of-state entities may enjoy protection as well. To bolster the protection provided by a foreign entity, there are many options available:
Start Over In Nevada
A client may choose to “start from scratch”, so to speak, and re-form the company here in Nevada, dissolving the foreign entity. This may be a good choice if the assets themselves are easily transferable.
Domesticate the Foreign Entity in Nevada
If the assets are hard to transfer (or if the entity owns many types of assets), it may be easier to domesticate the entity in Nevada, taking advantage of our favorable laws. In that instance, the individual assets would not need to be transferred, making it simple to effectuate.
Form a Nevada Holding Company
This type of “hybrid” option involves forming a Nevada entity, such as an LLC, and transferring ownership of the foreign entity to the Nevada entity. As such, no individual assets would need to be moved and the companies would enjoy Nevada-based protection. This is a great choice for clients who have a number of foreign entities or existing Nevada corporations.
What do I do if I have a corporation?
LLCs and LPs have been favored over corporations by many planners because of greater creditor protection. The alter-ego theory cannot be applied against LLCs or LPs, but can be applied against a corporation. Clients who have foreign and Nevada corporations would still like to make use of the protections now available under SB 405 to increase their creditor protection. The options above can still be used, relatively easily and with minimal expense. To conclude, Nevada’s passing of SB 405 greatly enhances its creditor protection laws for Nevada LLCs, LPs and corporations by excluding all potential equitable remedies (with the exception of the alter ego remedy for corporations). It goes even further by stating that single member or single shareholder companies enjoy the limits of a charging order remedy, therefore setting our laws above and beyond the laws of the rest of the country.
Click here to listen to the Legal Hour on KDWN AM720 from April 18th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses the options Nevada should consider for the money received from the $90 million Multi-State Settlement (1:30)(22:50), the effects of the Las Vegas renters’ market (10:15), tips for prospective renters (12:00), renewing the tax law that allows forgiveness of debt (17:00), when debt forgiveness applies (19:30), refinancing options for rental properties (23:40) and Homestead Act scams (30:00) actions to take against your lender according to the Truth and Lending Act (37:05).
Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
Black & LoBello will be hosting a seminar about FATCA regulations Friday, May 4th at 2:00 PM. FATCA regulations primarily deal with “foreign financial institutions” (FFI) and what they must do to be IRS compliant. However, the proposed regulations impact US advisors and intermediaries in many ways. The proposed regulations mandate a 30% withholding from any US source payment made to a non-compliant FFI (and many other types of entities). Any time a US payor or trustee makes a payment to a non-US beneficiary or non-US entity, compliance with the FATCA rules should be considered.
In many cases, US trusts with foreign beneficiaries or with foreign grantors, and trust companies, will be treated as FFIs. One can anticipate that advisors will be shocked in the first quarter of 2013 when the compliance rules are scheduled to take effect and when a trust, trust company or beneficiary receives a payment from a US source investment that was subjected to 30% withholding because the trust or trust company was considered an FFI even though it may have been domiciled in the US. In some cases, there is no ability of an FFI to seek a refund for the withholding.
Aaron Schumacher and Jeffery Morse will be leading this seminar. Mr. Schumacher has headed up the FATCA group at Withers Worldwide for some time and is quite knowledgeable on the subject. Please RSVP at http://www.blacklobellolaw.com/contact/ and be sure to include “FATCA Seminar” as your Area of Legal Interest.
While President Obama has proposed the Financial Crisis Responsibility Fee, it has not yet been taken up by lawmakers on Capitol Hill. The President has tried to push this same big-bank-tax through the channels twice before, in early 2011 and early 2010, but was unsuccessful.
The idea met with strong opposition from lawmakers and industry trade groups who threatened to take legal action had the Financial Crisis Responsibility Fee passed.
Under the President’s proposal, any borrower with a mortgage that is not currently guaranteed by Fannie Mae or Freddie Mac can qualify for refinancing through FHA if they:
- Have been current on their payments for the past six months and have not missed more than one payment in the six months prior;
- Have a FICO score of at least 580;
- Have a loan that meets FHA conforming loan limits for their area; or
- Are refinancing the mortgage on their principal residence.
Borrowers will apply through a streamlined process which the President says is designed to make it simpler and less expensive for both borrowers and lenders to refinance.
Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed.
Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, lenders will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.
President Obama outlined additional steps to reduce program costs, including establishing loan-to-value (LTV) limits for qualifying loans. He says his administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify.
President Obama also proposed creating a separate FHA insurance fund designated for the new streamlined refinancing program. He says this will help FHA better track and manage the risk involved and ensure the program has no effect on the agency’s Mutual Mortgage Insurance (MMI) fund – the principal insurance account that covers default claims on all single-family and reverse mortgages.
In addition, the President Obama says his administration has worked with the Federal Housing Finance Agency (FHFA) to streamline Fannie and Freddie’s refinancing program for non-delinquent borrowers. With the latest expansion of the Home Affordable Refinance Program (HARP), the GSEs have eliminated LTV restrictions, lowered their refinancing fees, and reduced borrowers’ closing costs.
The President is now calling on Congress to enact additional changes that he says will save taxpayers money by reducing the number of defaults on GSE loans.
“We believe these steps are within the existing authority of the FHFA. However, to date, the GSEs have not acted, so the administration is calling on Congress to do what is in the taxpayer’s interest,” according to a statement issued by the White House.
President Obama wants Congress to eliminate appraisal costs for all borrowers participating in HARP by directing the GSE’s to use mark-to-market accounting or another alternative to manual appraisals on loans for which the LTV cannot be determined with the GSE’s automated valuation model (AVM).
The President’s legislative plan would also require the GSEs to implement the same streamlined underwriting for new servicers as they do for current servicers under HARP, in hopes of increasing competition between banks for borrowers’ business.
A key component of the President’s refinance plan centers on giving borrowers the opportunity to rebuild equity in their homes. All underwater homeowners who decide to participate in either HARP or the FHA refinancing program will have a choice. They can take the benefit of the reduced interest rate in the form of lower monthly payments or apply that savings to rebuilding equity in their homes by opting for a shorter loan term.
To encourage borrowers to go the rebuilding equity route, President Obama is proposing the legislation provide for the GSEs and FHA to cover closing costs when the borrower agrees to refinance into a loan with a term of 20 years or less, with monthly payments roughly equal to what they’ve been paying.
President Obama says this option would shave an average of $3,000 off each homeowner’s refinancing costs and would give the majority of underwater borrowers the chance to get back above water within five years or less.
The Agriculture Department, which supports mortgage financing for rural families through the USDA program, is also streamlining its process for refinancing to align with the plan outlined by the President.
FHA is making similar changes to its existing refinance program available to borrowers whose original loan is FHA-insured. To alleviate lenders’ concerns about refinancing without a full underwrite of the new loan, FHA will not include these loans in its assessments of lender performance.
President Obama admitted that the administration’s past efforts to counter the effects of the housing crisis haven’t produced the results that were initially promised.
“I’ll be honest, the programs we’ve put forward didn’t work at the scale we’d hoped,” President Obama told the crowd in Virginia. “Not as many people have taken advantage of it as we wanted.
“[N]o program or policy will solve all the problems in a multi-trillion-dollar housing market,” President Obama continued. “What this plan will do is help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or wrapped up in red tape.”
President Obama closed with an appeal to Congress to act, to pass his plan, to help more families keep their homes.
Click here to listen to the Legal Hour on KDWN AM720 from March 28th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses why Federal programs fail to help the real estate market (3:00), how private lenders can guard against title fraud (5:40), how to dissolve ownership of a property (11:00), short sales vs. principal reductions (17:17), options for elderly homeowners in an underwater property (21:05), problems with WRAP mortgages (26:43), whether a beneficiary on a deed of trust can collect on a default from a renter (31:33) and the Channel 8 “Desert Underwater” series winning a Peabody Award (35:30).
Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
Click here to listen to the Legal Hour on KDWN AM720 from April 4th, 2012. Christopher Phillips, Esq., who practices Probate, hosts with guest lawyer Andras Babero, Esq., who practices in Commercial Litigation and Real Estate Law from the law firm Black & LoBello in Las Vegas, Nevada. Mr. Babero and Mr. Phillips discuss AB 284 and how lenders could avoid its requirements (1:20), how robo-signing affects foreclosure (10:40), how irrevocable trusts can be amended (13:35), how to remove a trustee (18:30), contesting rights to assets (20:55), liability on mortgage fraud (25:40) and assets exempt from collections (33:40).
Please tune in to AM720 KDWN’s “Legal Hour,” Wednesdays, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
On April 12, 2012,
in Community Event,
by blacklobellolaw
On Wednesday, April 11th, Andras F. Babero, Esq., from Black & LoBello spoke to students at Hyde Park Middle School in Las Vegas, NV. Mr. Babero served as the official judge throughout the day for debates the students held discussing the topic, “Who should get Israel/ Palestine…the Jews or Arabs?”
Pictured below is Mr. Babero judging the debate and giving feedback to students about their techniques, strategy and how debate is used in the legal field.
The Channel 8 I-Team’s “Desert Underwater” series which chronicled the housing crisis in Southern Nevada received a Peabody Award on Wednesday. The “Desert Underwater” series featured Black & LoBello managing partner attorney, Tisha Black Chernine. The series was acclaimed for the Channel 8 I-Team’s use of website content to assist Valley residents and statistic seekers. The Channel 8 I Team included with other esteemed recipients including PBS’ American Experience and HBO’s Game of Thrones.
The Home Affordable Refinance Program (“HARP”) is a federal program supported by the Obama administration which can help homeowners refinance their underwater properties. However, there are a couple major hurdles that homeowners must pass before being considered for the program. First, the homeowner’s loan must be with Fannie Mae or Freddie Mac. To determine this, simply go to either Fannie or Freddie’s websites or go to Nevadaharp.com for easy links to both. Second, the loan must have been acquired by either Fannie Mae or Freddie Mac before June of 2009 which a major sticking point for many homeowners. This may not be as big a problem since most homeowners were not able to qualify for a loan until after that time.
Essentially, HARP refinances a homeowner’s existing loan using interest rates to match current market values. While there is no principal reduction option, the remaining balance of the loan becomes incorporated into the new loan at the lower interest rate. A term of 30 years at a fixed rate would achieve the lowest monthly payment possible but 20 and 15 year terms are available as well.
Therefore, homeowners who are underwater that want to say in their homes should consider the HARP program as a way to start their loans over “from scratch.”
Click here to listen to the Legal Hour on KDWN AM720 from March 21st, 2012 in which Managing Partner, Tisha Black Chernine, Esq., hosts special guest, Mark Baker from Sierra Pacific Mortgage. Ms. Black Chernine and Mr. Baker discuss what the HARP program does and how it can help people (1:50), the limits to the HARP (12:45), the pros and cons of strategic default vs. short sale (16:45), financing reverse-mortgages (29:50), why Bank of America no longer works with Fannie Mae (31:50) and the Shared Appreciation Modification Program (34:40).
Please tune in to AM720 KDWN’s “Legal Hour,” Wednesdays, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
Freddie Mac CEO Charles “Ed” Haldeman gave a strong signal Friday that new incentives from the Treasury Department may be enough to start principal reduction on mortgages backed by the government-sponsored enterprises.
To read the full article, click here.
One of the main dysfunctions that led to Nevada’s real estate crisis lies in how the paperwork was handled when transferring ownership of a property from one person to another. During the housing bubble, paperwork was pushed through so fast that critical errors occurred that could affect the marketability or ownership of many properties. During good times, nobody complained because housing values were rising steadily and people could make money easily by selling or “flipping” properties quickly. However, now that the bubble has burst leaving people stuck in underwater homes, unable to make payments, and with foreclosure looming; the process of transferring ownership or “chain of title” has come under scrutiny. Nevada’s new legislation, specifically AB 284, forces foreclosing lenders to provide some additional documentation to proceed with more diligence. Homeowners should do their best to become aware of and comfortable with the property records recorded against their property, especially in default. This information is important to ensure that defaulting homeowners are dealing with the proper parties and apprised of any discrepancies that may be useful through the short sale, loan modification, or foreclosure process. Fortunately for the homeowner, this information is readily available, as follows.
Simple instructions to view your property records or “chain of title.”
(1) Obtain Assessor’s Parcel Number (APN) from the Clark County Assessor’s website.
- Click “Property Records” on the left-hand side.
- Click “Owner Name” in the middle of the page.
- Enter the homeowner’s proper first and last name as they would appear on the deed. Click “Search.”
- From the property records provided, find the homeowner’s name and click on the Parcel Number.
- This will give you the Real Property Parcel Record. Make sure the property address is correct and copy down the Parcel Number.
(2) Now that you have your APN, you can obtain your chain of title by visiting the Clark County Recorder’s website.
- Click “Search Records” on the left-hand side.
- Click “Parcel #.”
- Enter your APN in the “Parcel #” field at the top and click “Search.”
The resulting page should include a list of documents recorded against the property including deeds, homesteads, deeds of trust (Nevada’s typical type of “mortgage”), liens, and foreclosure notices (Notices of Default/Notices of Sale, etc.).* A sample Clark County Recorder’s Page is pictured below.
*While this is a good place to look for discrepancies, this information may not always be up-to-date or even accurate. It is possible that the County Recorder’s webpage does not reflect all or even the latest developments in a particular property’s ownership. Other difficulties may arise if documents were not recorded, or the property was substituted or reconveyed to/from Mortgage Electronic Registration System Inc. (MERS), the third-party deed recording company formed by Fannie Mae and Freddie Mac. Its records are not open to the public and may not be visible on the County Recorder’s webpage. Many other circumstances exist in which the steps above may not provide an accurate account of all recordings on a particular property and, as stated in the Notice below, the information found herein or on the websites referenced above should not be relied upon without separate and appropriate advise of counsel. Nevertheless, the process described above is a good start and can help homeowners stay informed as to the overall status of their property.
The Nevada Journal interviewed Tisha Black about the detailed settlement documents that the Obama administration and 49 state attorneys general filed with the U.S. District Court in Washington, D.C., last week.
To read the full article, click here.
On March 16, 2012,
in Military, Real Estate,
by blacklobellolaw
Click here to listen to the Legal Hour on KDWN AM720 from March 14th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses medical liens on real estate (2:30), a class action suit affecting military servicemembers suffering from foreclosure (6:45)(19:10), how to check the status of a mortgage (10:00), when banks make different insurance requirements (13:35), refinancing through HARP (21:50)(38:10) and recourse for failed loan modification attempts (31:50).
Please tune in to AM720 KDWN’s “Legal Hour,” every Wednesday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
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