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Thursday, December 20, 2012

Today’s Lawyers and Law Students - More Women, Minorities

Today’s Lawyers and Law Students: More Women, Minorities


While it is clear that some racial and gender boundaries and issues remain in the United States of America, those issues and boundaries seem to be reduced, and the issues are shifting.  This is easily observable in our country in general, as well as in the legal field.  Law firms are increasingly made up of women and minorities, although white males remain the most populous group.


 According to statistics published recently by the American Bar Association, women made up approximately 39% of law firm associates in 1993, but make up over 43% today. This is an increase of approximately 11%. Women, however, are still making their way to the ranks of partners. In 2011, approximately 19.5% of law firm partners were women, compared to approximately 12.25% in 1993. The female partnership numbers are both encouraging and discouraging; the growth since 1993 is an improvement of almost 60%, but obviously the pure math shows that there should be many more female partners. Interestingly, 46.7% of law school students are female at this time.


 Minorities made up approximately 8.36% of law firm associates in 1993, but make up over 19.9% today.  This is an increase of approximately 138%. Minorities, however, are still making their way to the ranks of partners. In 2011, approximately 6.56% of law firm partners were minorities, compared to approximately 2.55% in 1993. The minority partnership numbers are both encouraging and discouraging; the growth since 1993 is an improvement of almost 157%, but obviously the math dictates there should be a larger percentage of minority partners. Notably, 24.5% of law school students are minority at this time.


 Obviously, given the trends shown above, the ratio of white male attorneys within law firms has been reduced over time.  White males made up approximately 52.65% of law firm associates in 1993, but make up 36.75% today. This is a reduction of approximately 33%. In 2011, approximately 73.9% of law firm partners were white males, compared to approximately 85.18% in 1993. The reduction since 1993 is almost 13.25%.  53.3% of today’s law school students are males.  


 Of course, the demographics above must be considered in the context of the overall makeup of our country. The population of the United States, as estimated by the US Census Bureau in 2011, is approximately 312,000,000 people.  Women represent approximately 50.8% of the United States population; in other words, in 2011, there were approximately 5,000,000 more women than men in America. In 2011, minorities made up approximately 36.6% of the population of the United States.


 It’s pretty clear that the makeup of law firms will continue to approach the same ratio of demographics of our country overall.  Of course, that progress is not linear and exact timelines are not predictable. The only thing we know for certain is that law firms now do not look the same as they did in 1993 and certainly won’t look the same in another 20 years.


Tuesday, December 18, 2012

North Carolina Mortgage Loan Distress – Foreclosures Up 38%

North Carolina Mortgage Loan Distress – Foreclosures Up 38%


As an attorney who represents borrowers in mortgage loan disputes, mortgage relief matters, foreclosures cases, and other similar matters, I obviously pay great attention to the trends in foreclosures. Unfortunately, mortgage loan distress for North Carolina homeowners continues to increase, with the amount of foreclosure cases initiated in 2012 up 38% as compared to 2011.  This, according to October US Foreclosure Market Report published by RealtyTrac. Unfortunately, the foreclosure initiations in North Carolina in October, 2012 were up almost 26% as compared to just one month earlier in September, 2012.


While it is difficult to accurately measure the number of foreclosures completed within a certain time frame, we do have approximate data as to changes in the amount of bank owned properties in North Carolina. These properties are often referred to as “REO” properties, which stand for “Real Estate Owned”. Again, according to RealtyTrac, the amount of bank owned properties increased by almost 29% compared to October 2012. When comparing October, 2012 and September, 2012 figures, we see that there was a 16% increase in REO properties in October as compared to September


Maps from RealtyTrac showing hotspots of foreclosure in North Carolina and in Mecklenburg County, NC are  contained below; click to enlarge the map.


[caption id="attachment_6660" align="alignnone" width="276"]NC Foreclosures (Oct. 2012) NC Foreclosures (Oct. 2012)[/caption]

 


[caption id="attachment_6662" align="alignnone" width="460"]Mecklenburg Cty. Foreclosures Oct.2012 Mecklenburg Cty. Foreclosures Oct.2012[/caption]

McGrath & Spielberger, PLLC provides assistance to those involved in mortgage disputes, including borrowers in need of mortgage relief services such as mortgage loan modification, foreclosure negotiation, and deed-in-lieu or other negotiated settlement resolutions.


 


Sunday, December 16, 2012

National Mortgage Database from the CFPB & FHFA – About Time!

National Mortgage Database from the CFPB & FHFA – About Time!


As an attorney who represents borrowers in mortgage loan disputes, mortgage relief matters, foreclosures cases, and other similar matters, I often experience great difficulties in attempting to navigate the maze that confronts almost anyone attempting to gain clear and true information regarding the ownership and holding of a mortgage loan note.  Mortgage loan servicers and noteholders, as well as their attorneys, routinely ignore requests to provide clear information as to the ownership of mortgage loans.  It is my hope that the intended National Mortgage Database, discussed below, will help to even the playing field and prevent mortgage loan servicers and lenders from hiding information from homeowners.


 The Consumer Finance Protection Bureau (“CFPB”) a fairly new Federal agency which got off to a slow start, but it now continues to move aggressively in its efforts to protect consumers.  The CFPB and the Federal Housing Finance Agency (“FHFA”) are going to join together to create a truly comprehensive National Mortgage Database.  The details are still being developed, but the database will supposedly include in information such as:



  1. The borrower’s financial and credit profile;

  2. The mortgage product (loan) and its terms;

  3. The property at issue; and

  4. The ongoing payment history on the loan.


The intention, apparently, is to include as much data as possible all the way back to 1998.  The National Mortgage Database will be updated every month. The stated reasons for the creation of the database are as follows:



  • to monitor the health of mortgage markets and consumers;

  • to provide insight into consumer decision making:

  • to monitor new and emerging mortgage products;

  • to consolidate data on first and second lien mortgages for a given borrower; and

  • to help policymakers understand consumer debt burden.


The National Mortgage Database is expected to make its debut in 2013. It is unclear, at this time, when the public will have access to the information – but the public IS supposed to have access.



Friday, December 7, 2012

Mortgage Loan Forgiveness & Taxes – IRS Insolvency Exclusion

Mortgage Loan Forgiveness & Taxes – IRS Insolvency Exclusion


As an attorney who represents borrowers and homeowners in mortgage disputes, mortgage relief matters, and foreclosure cases  in multiple states, I am frequently asked about possible tax consequences if a borrower does not have to pay the entire loan back. This can occur is various scenarios; some of the more common ones involve partial forgiveness of a mortgage loan as part of a modification, forgiveness of the outstanding balance as a result of a deed in lieu or negotiated satisfaction of a mortgage loan, or even in instances in which a foreclosure occurs and the foreclosure sale does not bring enough proceeds to cover the entire outstanding loan balance.

I am not a tax attorney, and I am not a CPA, and I always tell my clients who are faced with this issue to seek advice from one or both of those types of professionals (such as our Angel Oliver or Kelly Brown).  However, I can provide information regarding the “insolvency exclusion” as outlined by the IRS. This exclusion will help most individuals reduce or completely eliminate any federal tax liability in relation to a canceled debt.

Let’s take a scenario in which John Doe’s assets (the value of everything John owns) total $100,000 while John Doe’s liabilities (all of his qualifying debts – including the entire amount of the debt at issue) - total $200,000.[1]  This means that John Doe is insolvent by $100,000.

Let’s say that John’s mortgage loan lender is prepared to forgive $75,000 of mortgage loan debt.  Because John is more than $75,000 insolvent, he is probably able to exclude the entire $75,000 of debt forgiveness, and generally would not be required to pay federal taxes on it under this exclusion. However, if the amount of debt to be forgiven was $125,000, then this exclusion, if it applied would only allow him to exclude $100,000 of the $125,000. Of course, the outstanding $25,000 which is not excluded may be impacted by other sections of the tax code, which is only one reason that it would be wise of John to seek consultation with a tax attorney or, more likely, a qualified CPA.

I want to emphasize two important points.  Number one, this exclusion applies to mortgage loan debt and other types of debt.  Number two, the exclusion should be calculated by using the assets versus liabilities immediately before the debt cancellation.

Of course, as referenced above, there are other laws and parts of the tax code which can have relevance to mortgage loan debt and related tax matters, such as the Mortgage Forgiveness Debt Relief Act of 2007 , which is discussed by this author -  IRS, Taxes – Mortgage Forgiveness Debt Relief Act expiring! Key Facts 1 – 5 and IRS, Taxes – Mortgage Forgiveness Debt Relief Act Expiring! Key Facts 6 – 10.




[1] Please see IRS Publication 4681, in order to review a more full explanation of what liabilities are counted. Also see that publication for specific examples, additional details, and how the relevant tax forms should be completed.

McGrath & Spielberger, PLLC provides assistance to those involved in mortgage disputes, including borrowers in need of mortgage relief services such as mortgage loan modification, foreclosure negotiation,  and deed-in-lieu or other negotiated settlement resolutions.

Wednesday, December 5, 2012

UPDATE: Mortgage Forgiveness Debt Relief Act Expiring! Key Facts 6 – 10.

2014 UPDATE: Status of the Mortgage Forgiveness Debt Relief Act


As attorneys who represent homeowners and borrowers in mortgage and foreclosure matters, we have been concerned about the status of the Mortgage Forgiveness Debt Relief Act. Unlike last year - when the Act was renewed a few days into January (2013) for the year 2013, our legislature has not yet renewed/extended the Act, which expired at the end of 2013. Senate Majority Leader Harry Reid (D-Nevada) has sponsored an extension. The bill is considered alive, but not doing well. The result of this bill will have a major impact on hundreds of thousands of borrowers who are in need of a mortgage loan modification, deed-in-lieu of foreclosure, short sale, discounted settlement of mortgage loan, or similar relief.


Below, we enclose a real-time update on the bill as provided by the U.S. Government. Please read further down to understand that, even if the MFDRA isn't renewed, there are other ways in which a borrower who is being forgiven loan debt may avoid tax liability.




 

IRS, Taxes – Mortgage Forgiveness Debt Relief Act Expiring! Key Facts 6 – 10 (original post in December, 2012).


As an attorney who represents homeowners and borrowers in mortgage and foreclosure matters, I am frequently asked about the tax implications which may come into play when some or all of a mortgage loan is forgiven or cancelled.  While I always recommend that clients in such situations seek advice from a tax attorney (such as our Angel Oliver or Kelly Brown) or a qualified CPA, I can share the following key points, with this information based on publications by the IRS itself.  Please note that I am only addressing federal tax matters here, not any state tax matters.

This specifically addresses issues related to the Mortgage Forgiveness Debt Relief Act of 2007.  Another blog post coming soon will address the “insolvency exclusion”, which may also reduce or eliminate the need for a borrower to pay taxes on forgiven mortgage debt.  Please keep in mind, that as of today’s date – December 6, 2012 – the Mortgage Forgiveness Debt Relief Act of 2007 is set to expire at the end of 2012.   For the Mortgage Forgiveness Debt Relief Act first five key points click this link.  Here are five additional key pieces of information to know about the Mortgage Forgiveness Debt Relief Act.

6. With regard to refinanced mortgage debt, if some of the funds obtained by the refinancing are used for other purposes, such as paying off credit card or other debt, forgiveness of that part of the debt would not qualify for the Mortgage Forgiveness Debt Relief exclusion.

7. Per IRS instructions, if you have debt which may qualify for exclusion under the Mortgage Forgiveness Debt Relief Act, you will need to fill out form 982 and attach it to your Federal Income Tax return for the tax year in which the qualified mortgage debt was forgiven.  Form 982 is called Reduction of Tax Attributes Due to Discharge of Indebtedness.

8. Mortgage debt forgiven on second homes, rental properties, and business properties do not qualify. Please keep in mind, however, that other tax relief provisions could apply to these kinds of debts in certain circumstances.  You may want to refer to IRS for 982 for more details about such provisions. You may download IRS form 982 by clicking here.

9. If your debt is reduced or eliminated you should usually receive a year end statement, form 1099-C from your lender.  This form is called “Cancellation of Debt” and, by law, must show the amount of debt forgiven and the fair market value of any foreclosed property. You may download IRS form 1099-C here.

10. You will need to examine 1099-C carefully, and notify the issuing lender immediately if any of the information is incorrect.  Box 2 should show the amount of debt forgiven and Box 7 should show the value listed for the property at issue.

Right now, the clock is ticking as borrowers hope to gain forgiveness of mortgage loan debt before the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of 2012.

McGrath & Spielberger, PLLC provides assistance to those involved in mortgage disputes, including borrowers in need of mortgage relief services such as mortgage loan modification, foreclosure negotiation,  and deed-in-lieu  or other negotiated settlement resolutions.