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Tax Liens and Mortgage Lenders

  In Colorado, liens for unpaid real property taxes have priority over all other liens, including deeds of trust. Many of our clients know this and maintain tax escrows on loans they hold which are secured by real estate. Yet not all loans require tax escrows. Lenders with second deeds of trust rarely maintain tax … Continue Reading

How to Commit Loan Fraud

This article educates readers about how to avoid inadvertently committing loan fraud. Another article on our website, “How to Commit More Loan Fraud,” intends to further help real estate professionals and sellers from inadvertently becoming caught up in such a scheme. Question: I have brokered a transaction in which the seller is willing to give … Continue Reading

Clearing Erroneous Credit Report

  Do you have customers who, but for a mistaken entry on their credit report, would otherwise qualify for a mortgage? Recognizing the importance of the credit reporting system, and its potential for error, Congress, in 1970, enacted the Fair Credit Reporting Act (Title 15, United States Code, Section 1681 et seq). Among its purposes … Continue Reading

Deferred Like-Kind Exchanges of Real Property

Like-Kind Exchanges of Real Estate Like-kind exchanges under Internal Revenue Code Section 1031 are a popular method used by real estate investors for disposing of one property and acquiring another without recognition of taxable gain. When taxable gain is not recognized in a transaction, income taxes are not required to be paid as a result … Continue Reading

The Hidden Dragon of Imputed Depreciation

  I bought a house in July 1988 for $137,500 and rented it out for ten years. I took deductions for depreciation in tax years 1988 through 1995, but I forgot to take depreciation deductions in 1996 through 1998. My total depreciation deductions for years 1988 through 1995, as reported on my tax returns, were … Continue Reading

Who Can Lien On Whom?

  A construction lender lends funds to an owner. The owner acts as its own general contractor and hires subcontractors to build a building on the owner’s property. For whatever reason (e.g. mismanagement, embezzlement, bad luck), the owner does not pay the subs. The subs stop work and file mechanic’s liens. Neither the lender nor … Continue Reading

Benefits of Seller Carry Financing

Co-Author:  Oliver E. Frascona, Esq. When selling real estate, an owner may realize its equity by receiving cash or by “carrying” a note. Because mortgage interest rates exceed interest rates banks pay on deposits, there can be a significant financial advantage of carrying one’s equity, rather than taking it in cash at closing upon the … Continue Reading

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