Buying and Selling a Home: Federal Laws

If the proposed seller either files for bankruptcy or is named in a petition for involuntary bankruptcy, control of the title to his real estate passes to the Bankruptcy Court and is subject to its disposition. Any foreclosures are automatically stayed until the trustee in bankruptcy decides whether to sell the property himself or allow the foreclosure to proceed.

If a purchaser acquires property from a seller who shortly thereafter goes bankrupt, the trustee may have the deal set aside the transaction was in payment of a disproportionate part of a debt owed to the buyer,

If a purchaser acquires property from a seller who shortly thereafter goes bankrupt, the bankruptcy trustee may have the deal set aside if inadequate consideration makes it a fraudulent conveyance

No state may prohibit a lender from employing or enforcing a due-on-sale clause.

A lender may not exercise its option pursuant to a due-on-sale clause upon 1) a transfer where the spouse or children of the borrower become an owner of the property, 2) to an inter vivos trust in which the borrower is and remains a beneficiary, and which does not relate to a transfer of rights of occupancy in the property, 3) a transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property.

REAL ESTATE SETTLEMENT PROCEDURES

Servicing disclosure form

Adjustable rate mortgage caps as determined by the Federal Reserve

Penalties for violating RESPA

A creditor may not extend credit in the form of a higher-risk mortgage to any consumer without first obtaining a written appraisal of the property to be mortgaged prepared in accordance with the requirements of this section.

Withholding of tax on dispositions of United States real property interests by foreigners

The “closing agent” is responsible for reporting the transaction to the Internal Revenue Service

Federal tax liens are filed in the county recorder’s office.

Fair Housing Act

Disclosure of information concerning lead upon transfer of residential property

Truth in Lending (Regulation Z) deals with the disclosure of information regarding the credit transaction. It requires anyone who regularly extends credit to consumers for personal, family, or household purposes to make certain disclosures regarding those credit terms. The disclosures include such things as the monthly finance charge, the annual percentage rate, when payments are due, when late charges are due, and the total finance charges.

Regulation B requires creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection with a loan application and requires creditors to notify applicants in writing that copies of appraisals will be provided to them upon earlier completion and at least three business days before closing

REAL ESTATE SETTLEMENT PROCEDURES ACT (REGULATION X)

Contents of closing disclosure form

Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards Upon Sale or Lease of Residential Property

Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards Upon Sale or Lease of Residential Property

Federal Finance Housing Agency The recently approved title acceptance pilot will waive the requirement for lender’s title insurance or a legal opinion on certain low-risk refinance transactions where there is confidence that the property is free and clear of any prior lien or encumbrance.