Many people feel overwhelmed by the C-Corp, thinking that a corporation must be more tedious to maintain than an LLC.  In the end a C Corporation will outlast the LLC.  Some business owners don’t want to file a “resolution” for the corporation, to say nothing of the minutes of meetings.

 

The truth is, even if you have an LLC you should be doing this.  A copy of the Resolution you can use for your business with is available at www.xxx.com.

 

I have found a program called www.managemyminutes.com, which is really easy and allows you to fill in information required for documentation.  It even has prompts, and walks you through the process so you can keep your records.  Then as soon as you enter the required information it can print out minutes and resolutions.  You print them and add them to your corporate file, and you’re done.

 

For a mere $199.00, having this company do it for you is a no brainer. People who do this through an attorney usually pay them from $500 to $3,000 dollars.  It even provides standard contract templates that you can use. And you can set it up so it emails you reminders – at the end of the year, for example, saying you need to do your statement.  It will notify you when it is due.

 

It seems that many people are also afraid of C-corps because they think they need to be a big company to call their business a corporation.  In reality, in most states you only need one person to have a C-corporation; while some others do require at least two.

 

The other benefit to an Entrepreneur is how it enhances your benefits.  A C-corporation can cover up to 100% of certain expenses, and give you a tax write off.

 

For example, God forbid, if you get cancer; because your business is set up as an LLC, you are going to be responsible for 20% of the bill.

 

There are a number of things that the C Corporation can do that the LLC cannot.

 

 

 

 

 

 

 

 

 

 

Dustin Mathews- best-selling author of How to Get Rich Working For FREE, and co-author of Secrets of The Real Estate Millionaires, is the nations most celebrated small business and entrepreneurial financing expert.  Claim your very own copy of the video e-Course, “How to Get The Money You Need to Launch or Expand Your Business without Going to The Bank!” at http://www.BusinessCreditVideos.com

Let’s say that you’re looking for a landlord lawyer—someone to represent you, give you advice, review forms, or any number of things you might need help with as a landlord.  How will you know what to ask in order to make sure you find the right one?

 

I promise you they will all seem confident and fully qualified.  But how well do they really understand real estate investors and your needs as a landlord?  To answer this, I’m listing 5 questions to be sure to ask whenever you’re interviewing a potential landlord lawyer.

 

Question #1:  How much of your practice is devoted to real estate law?

 

This will tell you how much they actually know about real estate law.  Note: Paying an attorney to spend time learning the law is not very fun!

 

Question #2: How many of your clients are landlords or investors?

 

The wants and needs of investors are very different than those of regular homebuyers and sellers.  They will need to be well-versed on landlord-tenant law in your state.

 

Question #3: Are you familiar with creative real estate strategies?

 

By this, I mean techniques like assigning contracts, buying subject-to, and lease/optioning properties.  If you don’t recognize these terms, I would earn them right away as they are all no-money-down strategies that really work.

 

Question #4: Do you personally own investment properties?

 

This isn’t essential, but it will mean they know what it’s like to be in your shoes and will probably have the solutions to common landlord challenges already figured out.

 

Question #5: How available are you for contact?

 

Nothing is worse than needing an important answer and not being able to get a hold of your attorney.  Make sure they can get back to you by phone or email in a day or so.

 

They don’t have to answer all of these with flying colors.  But ask them all anyway.  Maybe call three to five landlord lawyers and ask each of them the same questions, then compare results.  They have helped me build the right dream team and I hope they do the same for you.  Happy investing!

 

Click Here: http://stinkymarketreport.net — to receive a free copy of my interview with a $100,000,000 investor on making money in a slow real estate market — Dramatically increase your real estate investing profits by learning how market cycles REALLY work.  Or, for info on Alan Brymer, go to www.AlanBrymer.com

Common Investor Legal Mistakes
by Attorney William Bronchick

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You can’t expect to reduce your risk of getting sued to zero, but you can take steps to reduce your risk as much as possible. In any situation where your money is at risk, ask yourself, “Is there a better way?” Know the legal and financial risks of the situations in which you place yourself, your business, your family, and your assets.

Without covering every issue involved, here are a few common mistakes that investors make, novice and experienced alike.

Poor legal forms—It’s amazing how short-sighted novice investors can be when it comes to shelling out money for good legal contracts. They often buy contracts at discount office supply stores, from Internet Web sites, or borrow them from friends. However, a real estate deal is only worth the paper it’s written on. Like the old expression, “every tax strategy works until you get audited,” it can be said that “every contract works until you have a dispute.” So invest in a good set of legal forms that apply to your practice and ask a local real estate attorney to review them. Also, make certain you fill in the forms correctly—a good real estate attorney will review contracts for just a few hundred dollars.

Too many people rely on real estate brokers to fill out contracts, which is fine for a “standard” deal. However, most brokers aren’t trained in legal matters and often create long contract addendums that are insufficient to protect your interests.

Illegal discrimination—The Fair Housing Act of 1968, as amended, prohibits discrimination on the basis of race, color, religion, nationality, familial status, age, and gender. Many state and local laws also forbid discrimination on the basis of sexuality or source of income and the Americans with Disabilities Act makes it illegal to discriminate against disabled people. If you harbor any such prejudices and would allow them to come into play when renting a housing unit, then you’re probably not cut out to be a landlord. However, many sincere real estate investors make honest mistakes that result in discrimination lawsuits. The best way to avoid these lawsuits is to be informed.

The Fair Housing Act may appear to be common sense and most people would never think of discriminating against people of different races or religions or on the basis of gender. However, it’s important to note that the Act extends beyond the screening process and into advertising as well, so watch the wording on your ads. This is where many landlords and property managers make critical mistakes. Some people scour the classifieds looking for inappropriately worded ads so they can pounce on them and threaten a lawsuit. While someone must have standing to bring suit, these scoundrels often work in coalitions to ensure that all of their bases are covered.

For example, if you own a rental property in a predominantly Jewish community, its proximity to the local synagogue could be a major feature. But if your ad says “within walking distance of the synagogue,” you could be sending the message “gentiles need not apply”—even though this wasn’t your intent. And keep in mind that you may not discriminate on the basis of whether a couple is married and whether children are to live in the unit. You may also not discriminate on the basis of age. Often, novice landlords aren’t aware of these areas of concern. And while it’s good that citizens are more aware of their rights today, it can create a bad situation for well-meaning landlords who are out of step with the law.

Be aware of your local laws and use good business sense. State law and local ordinances can extend similar protections granted under the Fair Housing Act to other groups. For example, California, Minnesota, and North Dakota prohibit discrimination based on source of income. In other words, landlords can’t discriminate against would-be tenants who rely on public assistance. Putting the political perspective of the landlord aside, such discrimination makes little business sense because people on welfare or social security are virtually assured of a fixed income.

The Americans with Disabilities Act (ADA) prohibits discrimination against the disabled and also requires landlords to make “reasonable accommodations” to disabled tenants. Who decides what’s reasonable? Typically, judges, if it comes to that. But while most landlords are aware of the ADA and would never stoop to discriminate against a person in a wheelchair, many are unaware that the ADA also protects mentally disabled tenants. A mental disability could also include recovering alcoholics and drug addicts. On the downside, these people can relapse; if they do, this can cause serious problems for you and other tenants. Everyone deserves a second chance and many recovering addicts become productive members of society. Those unable to recover typically have other problems and, thus, if you decide to reject their rental applications, it’s vitally important that you document additional reasons for rejecting their applications.

Improper disclosures—Improper disclosures are a common mistake for investors. It’s critical to be aware of the federal and state requirements for disclosures. For example, federal law requires a lead-based paint disclosure on the sale or rental of properties that were built before 1978. State laws may have additional regulations.

It’s become common practice for real estate brokers to use a property disclosure form as a general-purpose sell disclosure for all aspects of the house. Even if you’re selling your house on your own, be sure to use one of these forms (refer to the sample in Appendix 6). Whenever in doubt, disclose what you know, especially something the buyer or tenant may not know about, such as dangerous conditions, water damage, electrical issues, or plumbing problems.

Illegal solicitation of money—Many novice investors try to solicit money for investing via public advertising or mailings. This is commonly referred to as syndication. You may inadvertently cross over a variety of federal and state securities regulations when trying to raise capital. Chatting with friends over the dinner table about a real estate deal is one thing, but advertising to the public in mass may be considered a public offering. Before soliciting money from strangers, review your marketing, paperwork, and solicitation strategies with a local attorney well versed in this area of law. You may be able to get away with a good set of written disclosures if you solicit money on a limited basis, but it’s better to be safe than sorry.

Independent contractor liability—The IRS and your state department of labor are on the lookout for employers who don’t collect and pay withholding taxes, unemployment, and workers’ compensation insurance. If you have employees that are “off the books,” you’re looking for trouble. If you get caught, you’ll have to pay withholding taxes and as much as a 25 percent penalty. Intentionally failing to file W-2 forms will subject you to a $100 fine per form. The fine for failing to complete the Immigration and Naturalization Service (INS) Form I-9 varies from $100 to $1,000 per form. Your corporation or LLC won’t shield you from liability in these cases, either. All officers, directors, and responsible parties are personally liable for the taxes.

If you hire people to do contract work for you on a per-diem basis, they may be considered employees by the IRS. If any workers fail to pay their estimated taxes, you may still be liable for withholding. If these workers are under your control and supervision and work only for you, the IRS may consider them employees, even if you don’t. If this happens, you may be liable for back taxes and penalties.

To protect yourself, you should:

•  Hire only contract workers who own their own corporation or get the business card and letterhead of any unincorporated contractors you may use so you can prove these workers aren’t your employees.

•  Require proof of insurance (liability, unemployment, and workers’ compensation) in writing.

•  Get written contracts or estimates on workers’ letterhead that states they’ll work their own hours and you don’t have direct supervision over the details of the work. (Refer to the sample independent contractor agreement in Appendix 7.)

•  Have letters of reference from other people for whom the contractors worked to show that the contractors didn’t work solely for you. Keep these in your files.

File IRS Form 1099 for every worker to whom you pay more than $600 per year.

In addition to possible tax implications, an independent contractor can create liability for you if a court determines the contractor is your employee. For example, if your independent contractor is negligent and injures another person, the injured party can sue you directly. If facts show that you exercised enough control over your contractor, a court may rule that this contractor is your employee for liability purposes. As you may know, an employer is “vicariously liable” for the acts of his or her employees—the employer is liable as a matter of law without proof of fault on the part of the employer. Make certain you follow these guidelines when hiring contractors and pay particular attention to the issue of control.

Finally, under your state’s law be aware which duties are considered inherently dangerous, such as providing adequate security for tenants in a multiunit building. These duties can’t be delegated to an independent contractor without liability on your part, regardless of whether the person you hire is considered an independent contractor or an employee.

http://www.legalwiz.com

The foreclosure crisis is affecting homeowners from all walks of life. A recent newspaper article revealed that Atlanta experienced the highest number of foreclosures in its history last month with 6873 advertised houses scheduled for auction. I personally am overwhelmed by the number of property owners that are seeking some kind of solution and there aren’t enough investors out there to handle the amount of properties in default.

 

The problem is so close to home that even our neighbors, friends, and co-workers are affected by the crises. They don’t teach a class in high school, grade school, or college called “what to do if your house is in foreclosure” so here are some guidelines if you or anyone you know is already or about to go into default.

 

The lenders do not want to foreclose on anybody, the first thing a property owner should do is contact their lender and tell them about their situation. The lender will look at the financial situation and is willing to try to come up with a workout plan. They may be able to modify the loan to help an owner get back on track. The owner must be able to convince a lender that they can afford to keep the house. Most owners are several months behind and can’t come up with the back payments but may be able to make next months payment but they can’t come up with all the past due payments at once. Therefore the lender may be able to spread the arrearages over the life of the loan. A lender can’t help if the owner is not willing to discuss the matter.

 

A second option is to contact the government about a special low interest refinance loan for homeowners affected by foreclosure. Ask your lender, a credit counseling agency, or go to the website, www.hud.gov to inquire about the program. I understand there are qualifications that must be met and there are only so many of these loans available, but an owner should inquire to see if they qualify…

 

The third option for defaulting owners is to contact a credit counseling agency. There are many available to discuss the owner’s circumstances and negotiate for you. Most are non profit organizations and it may be worthwhile. I do believe it will affect a credit rating and they may not be able to help everybody but it is an option to be aware of. There was a phone number in a newspaper article for people affected by the crises and the number is 1-888 995-HOPE. If they are unable to work out a solution they might advise the owner to try selling the property, or they may offer a certificate to consult with an attorney about bankruptcy protection.

 

It may be in the owner’s best interest to sell their property and find something that’s more affordable. Though it’s true we are in a slow market and there are multiple houses for sale, there are investors that can buy the property and can close quickly. Property owners get plenty of mail from companies that buy houses fast so an owner can contact a few of them and see what they have to offer. Put a “for sale” sign in the yard because a property in foreclosure gets plenty of free advertising.

 

There is no justifiable reason to let a house go all the way to auction with so many options available. I am surprised at the amount of properties that get cried out on the courthouse steps each and every month. There are many gurus telling investors to buy from the lenders. But let’s not forget about the homeowners. Investors can make a difference.

 

If you are an investor seeking to buy a property from someone in foreclosure, here are some guidelines that I recommend.

 

DON”T,  It is not a good idea to buy a property in foreclosure and lease it back to the owner on a lease option. (my opinion)

 

DON’T,  Never let an owner sign a power of Attorney

 

DON’T, Hold an owner to a contract, if they are not happy with the deal, let them back out. (re-negotiate)

 

 

 

Tony Youngs can be contacted through our Coaching Club website at www.TheCoachingClub.com  and is always willing to answer questions about real estate investing in up or down markets.

He has a twenty years experience and a wealth of knowledge to share.

 

File Amended Returns

For Hidden Savings!

_______________________

Albert Aiello, CPA, MS Taxation

 

In my former days of being in tax practice I literarily did hundreds of amended returns for refunds of past paid taxes because of missed deductions or strategies. Here were the results:

 

• Ø First off, NOT one got audited (they usually don’t).

 

• Ø Most of the taxpayers were real estate investors because real estate is where most of the tax savings are. Most real estate investors have the potential for cash refunds.

 

• Ø You can amend, not just for one year, but for three years so it could be three years worth of refunds (plus some interest).

 

• Ø For missed depreciation there is no statutory limit as to the years you can go back, so it could be many years worth of refunds,

 

• Ø Refunds are often large, sometimes astronomical (as high as $50,000 or even more) – like “found money” that you can reinvest for more income.

 

Some items for which you can file amendments for:

 

_Depreciation on rental properties

 

_Other missed deductions such as tuitions for real estate courses, conferences and boot camps  

 

_Depreciation on business equipment or automobile

_Other missed business expenses such as auto, leasing, travel, marketing, etc.

 

_Any other deductions or business expenses for which you have back-up proof

 

_Tax overpayments, such as social security taxes that should not have been paid on passive income.

 

For amending returns individuals generally file IRS Form 1040X.   Go for that found money!

 

For more from Albert Aiello, click here.

By: Laine Wagenseller

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 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 of Civ. Proc. §2076. The rationale of this requirement is that the offeror should 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.

Quality real estate investors understand the need for better legislation

 

Real estate agents are complaining that some homes marketed as short-sale properties are not actually short sales and they affect both the market and buyers’ expectations in them which is helping to create a muddied picture when it comes to real estate investment.

 

As a real estate investor who has been involved in almost every aspect of the market I understand the picture a little better. Let’s examine some of the facts here: In a short sale, the lender signs off on a real estate transaction in which the sale proceeds fall short of what the owner owes for the mortgage.

 

A decline in the home’s value since the date of purchase, or a seller falling behind on mortgage payments do not automatically qualify a home as a short sale. Nor can there be a short sale without the lender’s approval, as the lender must consider whether it is worthwhile to accept less than the full loan amount in order to avoid a foreclosure and save their home and credit history.

 

So why would a property be marketed as a short sale when it clearly isn’t a short sale? Well, serious buyers are a rare breed in some market areas these days, and many of them are looking for bargains. Short sales can in some cases sell for a lower amount than comparable properties that are not similarly distressed, as there is urgency by sellers to get out from under the properties and by lenders that wish to avoid costs associated with foreclosure.

 

In all these cases a foreclosure would actually produce a better lasting value and release a property back into the market which would have an above average chance of actually not coming back in as another foreclosure statistic just a few months down the line.

 

This is exactly why foreclosures are a such a powerful vehicle for real estate investors and why they make sense in the financial model we implement in our real estate economy. They are designed to generate a value-laden solution that revitalizes a stagnant property and allows it to work in the microcosm surrounding it adding value to both the economy and it immediate community.

 

Fake short sales achieve none of this. They are used to merely attract buyer attention and move properties off Real Estate agents’ property stock in the full knowledge that as financing deals fail later on that property will, in most likelihoods, come back to be either sold as a fake short again or, this time actually go to foreclosure.

 

In the past decade the real estate industry has suffered from predatory lending practices which have done little to enhance our economy and have deprived many people from attaining the great American Dream.

 

The time has come to set the record straight and look to our lawmakers for some legislation which will stop predatory lending and selling practices in real estate. 

 

 

 

David Lindahl, also known as the “Apartment King” has been successfully investing in single-family homes and apartments for the last eight years. He is the author of four popular, money making home study courses “Apartment House Riches”, “How To Estimate And Renovate House For Huge Profits” “Managing For Maximum Profits” and “The Real Estate Investors Marketing Tool Kit”. He can be reached at dave@real-estate-fortune.com and www.rementor.com.

Due Diligence

By Patrick O’Connor

Due diligence is an essential step in real estate investment. After selecting the property type and geographic location, the investor needs to ascertain he has accurate information regarding the physical asset, financial performance, tenant base and future prospects for the subject property. Due diligence helps the investor accomplish those tasks. Due diligence can provide in-depth data and insights for these areas and mitigate the risk of a real estate investment. The costs associated with due diligence are minimal compared to the costs of making an imprudent investment decision.

In addition to investors avoiding unfavorable investments, due diligence can:

Enable investors to quickly pass on potential investments which do not merit a complete analysis;

Save money and reduce the time an investor spends evaluating a possible investment by more quickly declining an investment which does not fit the investor’s criteria or that is not consistent with what was presented; and

Provide the investor with a better understanding of the benefits, costs, risks and opportunities related to an investment.

The financial costs and time expended by the investor and the opportunity cost (of not pursuing other more attractive investments) related to fully analyzing a real estate investment are substantial. Due diligence helps to reduce these costs. In most due diligence cases, the business person leading the investment effort has developed an “investment hypothesis”. Potential “investment hypotheses” include the following:

This property will generate a 7% unleveraged yield without any upgrading.

This property is 30% occupied due to poor management. By focusing on leasing, the purchaser can achieve stabilized occupancy of 90% within 12 months while leasing at $18 per square foot.

The subject class A apartment complex was built 15 years ago when the level of finish was at a lower level. The subject property currently has both a good resident profile and is in good physical condition. By spending $8,000 per unit to upgrade the level of finish with items such as granite countertops, better appliances, upgraded cabinets, the rental rates can be increased from $.90 per square foot per month to $1.05 per square foot per month.

Investors cannot save both time and money by performing an initial review of the investment hypothesis. In many cases, the investor has too many other time consuming commitments and responsibilities to personally perform an in-depth analysis or to visit the property to confirm the investment hypothesis before proceeding with an acquisition. If it is possible to eliminate investments which do not meet the investor’s criteria before negotiating the contract to purchase the property, the investor can save legal fees related to the contract, time involved in negotiating the contract, time working with the lender, the cost of third-party lender – related records and any additional due diligence the investor would perform.

Depending on the investment hypothesis, the investor’s familiarity with the submarket where the property is located and the subject property itself, the following due diligence tasks merit consideration:

Market rent analysis;
Market analysis (occupancy, absorption, construction and rental rate trends);
Financial analysis/financial modeling;
Construction cost analysis (upgrading and curing deferred maintenance);
Code compliance;
Organize procurement of third-party reports;
Evaluate options regarding the level of renovation or upgrading;
Highest and best use analysis;
Market study;
Feasibility study;
Lease audit;
Lease abstraction;
Detailed examination of the seller’s financial statements;
Comparison of seller’s financial statements with bank statements;
Obtain survey;
Interview management companies;
Interview leasing companies;
Property tax analysis and forecast.

The list of due diligence tasks which should at least be considered is daunting. However, the time and cost related to properly performing due diligence is insignificant compared to the time and cost to remedy a poor investment.

To obtain more information on O’Connor & Associates due diligence services, call us at 713-686-9955

The appraisal division of O’Connor & Associates is a national provider of commercial real estate appraisal services including feasibility studies, cost segregation, due diligence, insurance valuations, financial modeling, gift tax valuations, highest and best use analyses, casualty loss valuations and HUD map market studies.

http://www.protest-harris-county-appraisal-district-taxes.com/Articles/feasibility_study.cfm

http://www.poconnor.com/cost_segregation.asp

About The AuthorPatrick C. O’Connor has been president of O’Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes. He continues to set the standard in direction and quality of our appraisal products, adding services ranging from business valuations and business appraisals to cost segregation analysis for income tax reduction.

How a Piece of Paper – Or the Absence Thereof – Can Protect You From Foreclosure

Imagine if you will, walking in to your local Honda dealer and purchasing a car.  The following month, you make a late payment, and half a dozen Honda dealers threaten to repossess your vehicle even though only one dealership holds the actual loan paperwork for your car.  For up to half of Americans facing foreclosure, a similar crime is taking place – a crime referred to as real estate theft.

Produce the Note:  Requesting a copy of your original mortgage note can stall foreclosure action in up to 40% of all cases, according to a University of Iowa study.  “Produce the note”, has become the battle cry of millions of homeowners in danger of losing their home, their greatest investment, and their greatest source of security.

A copy of your original mortgage paperwork can be the final thread that protects you from foreclosure or at least a step in the process that keeps you and your family in your home when you have reached the end of your rope and tied a knot to hang on.

With more and more lenders moving to put homeowners out on the street, judges nationwide are holding lawyers seeking litigation against delinquent homeowners to much higher standards regarding the laws governing such litigation.   In a landscape where foreclosed homes are destroying the fabric of America, where unfair and predatory lending practices have driven home values to an all-time low, and where the government is too busy bailing out banks to take care of its citizens; the “produce the note” strategy is a huge step in the process of protecting homeowners.

When foreclosure notice is received, requesting the original mortgage paperwork – the actual promissory note which serves as the official legal record of the loan WITH the homeowner’s signature on it, can stall, or even stop the foreclosure process.  Over the last decade in the midst of a real estate feeding frenzy mortgages were flipped and sold and packaged up to investors on Wall Street.  While lenders rushed to unload the mortgages they made to homeowners, little details like paperwork fell through the cracks.  Often times the original note has been destroyed, shipped off to a warehouse, errantly filed, or misplaced entirely.  Carelessness on the part of lenders in their rush to profit from mortgage writing may actually protect the very borrowers they seek to profit from.

This oversight on the part of investors can be timely protection for homeowners.

Cases are setting judicial precedent all over the country as judges slow, halt, or throw out entirely foreclosure actions against homeowners where the mortgage holder cannot prove their right to sue for foreclosure in light of the absence of the original promissory note.  Once the lender is stalled in court from moving to foreclose they become much more willing to renegotiate the mortgage to assist the homeowner in staying in their home.  When the “produce the note” cry is issued, the battle lines are drawn and the gauntlet is thrown down on the mortgage holder.

Another reason that it is important to demand that your mortgage holder “produce the note” is that in some instances, once a lender has foreclosed and put the homeowner out, other lenders who have held the note on the home can also take collections action against the homeowner on the home they no longer live in.  If a lender who doesn’t hold the note takes action, then another lender out there somewhere can still take action against you.  Again, insisting that they “produce the note” protects you from being charged twice for the home you no longer even own!

According to Mitch Stacy of the Associated Press, “More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes.”  The Center for Responsible Lending projects nearly 2.5 million homes will move into foreclosure in 2009.

While “produce the note” is not a guarantee in and of itself to protect you from foreclosure, it can be a step in the process to keep you in your home long enough to find employment, to obtain assistance from President Obama’s new stimulus aid package, or to negotiate a mortgage package that is fair and reasonable with your lender.

For free documents to file your produce the note request with your mortgage holder, refer to Chris Hoyer’s Consumer Warning Network website – http://www.consumerwarningnetwork.com.

The stimulus aid available from the government is only available to people who are still in their homes, so the inability of your lender to “produce the note” may very well enable you to stay in your home long enough for relief to come.

Eliminate IRS Fear By Knowing Your Rights And “Hidden” IRS Weaknesses!

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Albert Aiello, CPA, MS Taxation

FEAR-OF-THE-IRS is one of the big reasons why entrepreneurs unnecessarily fork out way too much in taxes. Well, eradicate the fear because you have rights against the IRS.  IRS employees can lose their jobs because of ten possible offenses, including a violation of constitutional or civil rights of taxpayers. You can sue the IRS for up to $100,000 of damages caused by an IRS employee who negligently disregards the tax law and up to a $1,000,000 if an IRS employee willfully violates the tax law.

Also, IRS “hidden weaknesses” can help you. For example, in an audit, you have a much better chance on winning by going to appeals.  Statistics show that the average results on appeal are a 40% reduction in taxes. But only one out of 16 audited taxpayers goes to Appeals. (This is because taxpayers or their tax preparers are afraid to do so, or many tax preparers do not know how to do the Appeals process. ) The Appeals (or “Appellate”) level of the IRS is not a court, but an informal hearing with an “Appeals Officer”, who has a different job than auditors at the examination level.  Their job is to settle cases and avoid the “hazards of litigation”, such as the cost of going to court and the IRS losing. (You do not need an attorney to represent you before Appeals, although you should use a competent tax specialist who could be a CPA or a tax attorney.)

Knowing your appeals rights from the outset of an audit can give you more confidence and strengthen your position throughout the audit. IRS auditors are evaluated by how many cases they close. They therefore do not want your case  to go to Appeals. Just, by saying. “OK if you’re going to play hardball, I got hard bats. I don’t even want to waste my time to talk to your manager. Stop now as I will settle this in Appeals.” This will have a real impact on the auditor. They would realize that you know the rules, you are not playing games and are not easily intimidated.

Even better, knowing your rights from the outset and knowing how the system works, can have an impact on your taxes before you are ever audited (if you are ever audited). For instance, if you discreetly take aggressive positions on gray* areas, you know that you have a good chance of winning by going to Appeals, or by stating that you will go to Appeals, with the good possibility that the IRS auditor will back off, as per the above.

Plus, even better, there are audit-proofing techniques (discussed in other articles) that you can employ so you do not get audited in the first place.  But if you are audited, you have an ace in the hole – Appeals.