A few months ago, we began to sit down and figure out what the direction of the Firm would be, moving forward, as we’ve grown since 2010.  And we began to realize a few things:

1. The area of Bankruptcy law is getting more crowded in New York City as more and more attorneys are coming into the practice and each website slowly begins to look almost identical to one another.

2. Many people were (are) coming to us and complaining about problems with receiving a loan modification even when their lender told them to stop making payments (thus ruining their credit). Now these same people face foreclosure in New York.

3. We like doing work for the most underprivileged in our New York City area but realized we could do more.

4. I like donating money to charity.

So, over the next year, here’s our plan:

While I’ve no doubt that you like reading the blog (except the emails I receive that say  ”I don’t like reading your blog.”) I overwhelmingly hear about how much you prefer our videos. So, we’re going to give you more of that.  In early 2012, we’ll roll out a video page that, I think, is unlike anything you’ve seen before on a law firm’s website.  As always, we’ll ensure that the videos are clear and understandable.  But we also realize there is not a “one size fits all” approach to either Bankruptcy or Real Estate, and so our videos will be more tailored to you.  Personalized.  They’ll answer questions directly.  Why?  Because there is so much out there on the internet, and the last thing you want is to research for hours and fail to find anything that address your particular situation.  In other words, I think we can do it in a different way that will be more easier, more direct, and more appealing for you.

Another issue we’ve identified is how many people across New York City have been victimized by their own lenders when it comes to loan modifications. I say victimized sincerely.  Client after client complains about listening to their own lenders advice on not making future payments, to their detriment.  We hope to change that.  In 2012, we’re going to substantially expand our presence in Foreclosure Defense in New York City.  It’s one thing if “Loan Mod USA “(fictional name) tricks someone into believing they can reduce their principal and payments.  It becomes quite another when the very bank that financed your home is telling you to take steps that hurt your credit score, and then foreclose on that home.  We hope to change that, and we believe we will. Look for a Gershburg Foreclosure Defense site in January 2012.

I’m perhaps most excited to address #3 and #4 above.  Ever since I established this practice five years ago, I believed it was imperative that I give back to the community in the form of Pro Bono work.  The reason?  I basically learned the practice of Bankruptcy through doing volunteer work at the Brooklyn Bar Association.  Each time I did a pro bono case I felt as if I was doing something good for the Brooklyn community.  Is it cliche and cheesy?  Maybe, but it was and continues to be, quite important for me.  Having said that, at the time of this blog, the Brooklyn Bar Association has 30 open Pro Bono Bankruptcy cases waiting to be filed.  I’ve called them and said that my firm would personally take on each one of them in 2012.  We hope to bring the open case load down to 0 by December of 2012.  Why?  Because it’s important for us and it’s the right thing to do.

This year, we’ve been able to donate money to the Wounded Warrior Project, an amazing organization that helps develop programs for  severely wounded  Vets come back home.  Also, in conjunction with the Street Academy for Financial Literacy and an absolutely amazing organization, Pencil.org, we’ve been able to bring Financial Literacy programs to a middle school in Brooklyn, and we are eager to expand this, with Pencil’s help, to several schools across Brooklyn in the coming year.  We’re teaching kids the value of a dollar and how to save it.  We’re teaching them about credit and debt and the relationship they have.  And we’re teaching kids good money habits that can transform their lives as they grow older.

In addition, the communities where our offices are located (one in TriBeCa and one in Sheepshead Bay) are incredibly important to me.  I’ve lived and worked in both areas and they are close to my heart.   In 2012, we ‘ve pledge to donate up to 10% of the profits of Daniel Gershburg, Esq., P.C. to various charities working in both areas (email us if you know of worthwhile charities in either community). Beyond that, we’re putting even more of an emphasis on doing volunteer work .  In fact, starting in 2012, our staff they will receive paid days off for doing volunteer work at the charity of their choice.

So, why am I telling you all of this?  First, because I think it’s time we did this.  I’m incredibly happy with our website, but it’s time we do something different…again.  I think that law firms and social media and tech are a great combination. In fact they’re so great that everyone is doing it. In fact so many people are doing it that you can’t tell the difference anymore.  Everyone is on Facebook and Twitter and LinkedIN and that’s fine. But this blog has never been here to scream “Look at us, we’re great!”; That’s unethical.  This blog and site were designed to serve a purpose, which was to make finding the information you need easier for you while you search at work.  We hope to do that with our new video page.  We hope to do that with our new Foreclosure Defense Page.  And, most importantly, we hope to do that by doing things you can’t possibly do online.  We hope to do our part in changing our communities.

I wish you the very best in this holiday season and the New Year.

-Daniel

The first and most important step in stopping foreclosures across the Country is to deal with unemployment crisis.  Nothing else matters unless this changes (or Oprah says “You get a house for free and YOU get a house for free, and YOU…).  This sounds pretty simple, but for some reason, we can’t seem to grasp it.  My clients want to pay for their stuff.  They never come to me to file because they don’t want to pay for their stuff or they want to take advantage of the system.  To the contrary, they’ve likely paid idiotic debt collectors for years (at exorbitant interest rates) because they feel they have a responsibility to try and pay their debts.  The problem isn’t that their mortgage interest rate is too high.  That’s just absurd.  The problem is that many of them are now unemployed or underemployed.  We’re not at 9.1% in this Country.  Thats a mytth.  When you count the number of unemployed and “underemployed people” I would guess we’re likely closer to 17-20%.  You don’t fix housing until you fix that.  You can’t bring the interest rate of a mortgage down by 1% and expect it to change anything at all.  These people need decent paying jobs.  They need money.  Not disposable cash.  But a consistent paycheck, so that they can pay their mortgages.  If you ask someone if they want to pay $2400 for their home or $2516, they’ll obviously pick the former.  But if you ask them if they want to pay $2516 but also have a job that pays them, I’m pretty sure they could care less about the $100 difference.  You cannot put bandaids on someone’s arm when they’re internally bleeding.  You’re wasting time (and band-aids).

To effectively deal with the Housing Crisis, we also have to take definitive steps at addressing our emotions and move forward.  What we’re doing now is a little Waltz.  Dancing around the issue.  Sprinkle some mortgage relief here, maybe some there, and that’s it.  And everything still stays the same.  As I mentioned, we have two camps; they have to make peace or learn to move on.  Unless the guys in the room who think that the people who paid for homes they couldn’t afford deserve relief, we’ll get nowhere.  I understand the mentality.  I get it.  I think it’s much more complicated, but I get it.  But we need someone to reach across and say “Yes, a lot of people messed up and got caught up in the craze, but we need to move beyond this, otherwise nothing gets better.”  Half the Country bought into the notion that Real Estate prices will always go up.  But this Housing crisis has played a tremendous role in the surge of Bankruptcies, and the inability of a family to right their lives.  If you’re stuck paying for a home you can’t afford, you have two choices.  You keep paying and hope you’ll find more money (horrible idea) or you walk away and threaten the property values of your neighbors (horrible idea).  We just have to say “bad idea” and move on and forgive a ton of mortgage principle and fix this thing.  Otherwise we’re going to be pointing fingers at each other while we watch property values continue to drop or stay stagnant.

Unless this Administration, or Congress, or even the private sector, figures out a way to refinance these homes and reduce the principal owed on them, nothing changes.  These interest rate reductions will help close to no one.  It’s a joke.  If we want to effectively deal with the problem, then let’s deal with it.  But if you’re going to tell me that reducing already historically low interest rates for people who barely make enough to keep the lights on, will do anything long term, then I have something to sell you.

Let me just say that many times co-op boards are wonderful and have great people on them who are more than willing to take a fair look at your application and give you a quick decision and turnaround time to close.  Im not referring to these people.  All 3 of them in New York.  Rather, I’m referring to my last few closings where we have represented an eager purchaser who wanted to purchase a co-op in New York City.

Ill give you some context first, in terms of what happens when you purchase a co-op.  The abridged version:  Sellers send Contract to Purchasers.  Purchasers review, make changes, send back to Sellers.  Sellers shrug and agree to changes and sign (or don’t and then the attorneys go “cmon” for a while until everyone agrees).  We’re in Contract.  Mazel Tov.  Next up is ordering the Lien Search for the Purchasers attorney.  I can explain that to you, but you’d likely pass out on your keyboard and your boss would find you asleep.  And then you would hate me.  Heres the really important part though.  A purchaser applies for a mortgage gets something called a mortgage commitment.  That in essence means that unless you lose your job, or go to Vegas and gamble your savings away, chances are your bank is going to give you a mortgage in the amount you applied for.

Now that you have your mortgage commitment, you put together (and sometimes this happens prior) a Board Application package for the Co-Op Board.  This package can contain references, employment history, bank statements, credit reports.  Basically anything and everything as each co-op requires something different.

Now heres the kicker.  Here’s why I’m not a huge fan of many Co-Ops.  YOU WAIT.  You have to wait until the Board decides to meet to interview you.  How long does that take?  Dont know.  Literally.  No idea.  Could be 2 weeks, could be 2 months, could be 3.  Seller wants to move out?  Makes no difference.  Your bank is calling you to let you know the interest rate you locked in when you applied for your mortgage is about to expire?  Makes no difference.  The date listed in the Contract to close is coming up?  Who carrresssss.  There is literally almost nothing you can do push the Board to meet.  Why?  Because the Co-Op is a corporation.  Which means, in legal terms, that judges will almost never interfere in their decisions (its called the Business Judgment Rule).  And that means that the attorneys hands are, for all intents and purposes, tied.  As marvelous as some people think their attorneys are, there is really very little we can do.  Because if we push the Board too hard, there is always a chance they may simply deny the application.  It’s like a big Tree House club.  Literally.  Don’t mess with the Tree House rules or else you wont get into the Tree House.  Yes, I just said that.

In any case, the whole point is that your fate is decided by people who will meet whenever they see fit, behind closed doors, and will let you know their decision whenever they see fit.  I get the fact that co-ops cost less than condos or homes, for the most part, but the process is still entirely too difficult.  It is VITAL that your Real Estate broker keeps in constant and cordial contact with the management company for the co-op board.  It’s also vital that the Purchasers attorney speaks with your bank regularly to let them know if there are any updates.  You should be doing this also.  It’s a headache, but it can proactively deal with many things that can go wrong in a closing.

My general advice is that you expect to wait when you buy a co-op.  In other words, it doesn’t matter if that Contract you signed says you’ll close  by May 25th.  If the Board hasnt met yet, you’re not closing.  End of story.  And again, this isnt to say that all co-ops are bad.  Some are great and have some great people that love their building and they are super quick to decide if you’re going to be a new member of the Tree House.  But then there are the others….

So my GENERAL advice to you is to make sure you find out all the available information on a co-op before you decide to purchase there.  How?  Sites like www.streeteasy.com, www.trulia.com, or www.brownstoner.com may have some insights for you.  In addition, make sure you plan ahead, based on your date of closing. Work with your bank so they know that you may need extensions on rate locks, etc.   In other words…be ready to wait.

We had one closing where we needed to close way before our mortgage expired. There were just some pretty serious circumstances surrounding the purchasers personal lives, and they needed to get in there. Initially, I just didn’t think it would happen. Contract stated that there was plenty of time to close. But, to the credit of my clients, they didn’t give up and they kept pushing and pushing and pushing. Sellers initially said “No”, but they finally got into the unit in the time period they needed. Squeaky wheel. Sponsors and sellers dont want to deal with that. Most of the time, if you complain loud enough and long enough, the sellers will in fact give in, or at least meet you half way.

Same thing happened on a similar deal last week for a new construction in Williamsburg. Sellers didn’t want to throw in the paying of transfer taxes (literally tens of thousands of dollars). The Purchasers basically threatened to walk. They meant it. This wasn’t so much of an emotional deal for them as it was a financial one. Purchasers complained and said everyone in the neighborhood had the sponsors pay transfer taxes. You know what? They got it. Sponsors ended up paying.

So the lesson here is (and it was also a lesson for me): Don’t stop being aggressive just because you think the seller is in a position of power, because typically they are not. Sellers still need to move units. They still need cash. The market is still WAYYY in the favor of the purchaser. Be aggressive. Have your lawyer be aggressive. It helps if your lawyer also wears pocketsquares, because that screams “aggressiveness” (even silk ones). The things you think you have no shot of getting are those very same things the seller will likely throw in if you make enough of a fuss.

Springtime is coming. People will start buying real estate in New York again. Make sure you get what you need from the purchase.

One of the most important aspects of the offering plan is that it lists what you, the Purchaser in New York, is responsible for paying for at the closing. Typically, in most real estate purchases in New York, the Purchasers pays their own attorneys, mortgages taxes, and a few other fees. Not so with new construction. Here, you might have to pick up the tab for the Sellers (Sponsors) transfer taxes to New York City and New York State. You might have to chip in to pay THEIR attorney…as well as yours. Lovely. You may also have to pay for tax abatement fees, offering plan fees, fees of fees fees. Im serious. There is a ton in there. It literally can cost tens of thousands of dollars if you go into this blind. Soooo…what do you do? Clearly, you read the book on your own in addition to your trust New York City Real Estate Attorney reading it. You need to come in armed with questions. You need to ask your attorney to explain each fee, etc. You’re buying something that you’re going to live in for years, so you want to know exactly whats going on.

Which brings me to my next point. If you see that the attorney that your Real Estate broker may have recommended isn’t giving you the time of day on the phone. This may be an indicator as to how much time the attorney will devote to your questions. It may not be though. The attorney might be great. My point is you have to be 100% comfortable with who you choose. This isn’t a pitch in any way, but I can tell you that we go through each offering plan because I’ve seen, firsthand, what happens at a closing when someone…shall we say “goofs”. Its not pretty. And no client needs to ever be in that position. So make sure you ABSOLUTELY read the Offering Plan on your own, and hire a real estate attorney in New York City you feel confident will do the same.

Good luck!

I can tell you that many of my real estate clients are first time home/apt/condo buyers.  They have tons of questions, and thats normal.  I can also tell you that many of these clients are not aware of just how much closing costs can run on an average purchase.  Say, for example, you, like tons of of people out there, have just had an offer accepted on a new construction condominium in Greenpoint, Brooklyn.  You’re purchasing for $500,000.  The closing costs can literally add anywhere from 3-6% on top of that price.  But heres the thing.  MANY of these costs are completely negotiable.  In a new construction, typically the developer will try and make you, the purchaser, pay the New York City and New York State transfer taxes, which could be thousands of dollars.  You can negotiate that.  The Seller can have you try and pay THEIR own attorneys fees.  You can negotiate that out.  The Seller can try and have you pay for a re-imbursement fee for filing the Offering Plan (a document thats required to be filed with the New York State Attorney General when building new construction).  You can negotiate that out.  You can literally cut your closing costs by 50% if we just take charge and attempt to get many of these fees reduced.

Furthermore your lender charges all types of fees (many of which seem to be redundant, and many of which they cant even explain).  Some of my best clients have been able to call their lenders and negotiate these fees down, or even eliminate them altogether.

Sometimes, attorneys will say that they like clients who just “sign” and purchase, without the hassles of discussing every single fee.  I completely disagree.  I love clients who want every fee explained.  That sounds somewhat crazy, but it means the client is an informed consumer.  That actually makes it easier for us, because we know that were on the same page.  Our whole mantra is “No Surprises”.  The last thing we ever want is to come to the closing table and have our clients say “What in the world is this fee???”  With some negotiating skills and tactics, you can make sure that doesnt happen.

Any questions, as always, feel free to call.

Many of my clients who filed for Bankruptcy purchased more house than they could afford on the belief, which most of us, me included, had that housing was never going to drop the way it did.  Well…it did.  We now have a situation where people are being subsidized into taking on more debt, more house, etc., by offering incentives to purchase.  And while, yes, I can understand that something had to be done to stabilize the market, I nevertheless believe that providing First Time homeowners with cash to be things which cost hundreds of thousands of dollars, irrespective of whether they can afford it, does nothing to get us out of this hole.

Again, Im not an economist (I would work less hours), nor am I a TV talking head (I would spray tan…more), but I can tell you that I meet countless clients on a weekly basis for both Bankruptcy and for Real Estate in New York City.  The common denominator for the Chapter 7 bankruptcy clients in New York City is that they bought and they couldn’t afford it.  They did it because the market gave them the means to do so (through sub prime loans, no money down purchases etc.)  What we are seeing now almost mimics this.  Tax credits which are basically a band-aid, mixed with low mortgages rates, and FHA loans (which, some, including me, have serious reservations about) have the potential to now bring forth another perfect storm onto the market.

My two cents (adjusted for inflation).

1.  Many people realistically don’t  know if they qualify for the credit:  Many of my clients, but not all, make a nice amount of income and therefore, based on the income limits set forth by the IRS, may not even qualify for this credit to begin with.  However the majority of first time purchasers I have spoken to (and not just my clients) have had absolutely no contact with his/her accountant before proceeding with the purchase to make sure there are no caveats involved in qualifying for this credit.  They just are hoping they qualify.  Nice.

2. An $8000 credit on a $600,000.00 residence is like me enticing you to buy a Mercedes by offering you a free snickers bar and one shoe.  Lets face it, $8000 is $8000 and were in a recession.  But I would base my decision on whether or not to buy now on factors such as the neighborhood, the price of the place, the interest rate you’re receiving, whether or not you see yourself living there for more than 7 years, and/or whether or not the floors are caving in.  Over the life of a loan for a property worth $600,000.00 or even less, $8000 would mean absolutely nothing at all.  Doesn’t matter, people are still offering their first borns for this credit.

3. If you are purchasing a new construction condominium and you haven’t had the place inspected AND you’re rushing forward because you wanted to fit into this 8k credit, then you’re signing a letter absolving me of any responsibility as your attorney.  Look, I’m not a real estate broker, you can go to Trulia.com for that, but lets face it, there are serious legal consequences involved in buying a home, especially if its a new construction.  Half of Park Slope is suing their developers because their windows are falling off.  Williamsburg looks like California after the Gold Rush left town.  The most important thing I tell clients these days is to get their place inspected and to make sure to list the things that need repaired inside the actual contract itself.  If you’re foregoing this crucially important step which can ultimately cost you tens of thousands of dollars down the line because of an 8k credit, then we you have some ‘splainin to do.

At the end of the day what I see, and what I completely empathize with, is that people are very emotional about the places they want to live and purchase.  The ones that are completely unemotional (Ive found something cheap in a decent neighborhood with a low interest rate, low common charges, good condition, and I get this 8k credit) are the ones that may very well come out ahead.

Ive spoken to several New York City Real Estate attorneys last week, who, like me, were burning the midnight oil attempting to get deals done in time for the deadline.  And they all say the same thing:  We’re happy this is finally over.

Think Im crazy?  I am.  But ask any people you know who purchased a condo/co-op or a home in New York City in the past year what the process was like.  They will tell you it was pure unadulterated hell.  Banks have no clue what they’re doing anymore.  Absolutely none.  And because of that, what you thought would be a smooth loan process has turned into a loan nightmare.  Therefore, here are some friendly tips from your Manhattan Real Estate Attorney:

1.  Everything on time, all the time, with confirmations of receipt.  If youre dealing directly with a bank, you may be speaking to Jim in Omaha on Monday, and Tyle in Akron on Tuesday.  You want to get a point person whenever possible, because you can verify all the documents the bank asked to be sent, were in fact sent in received.  Absent that, I would ask to always deal with supervisors, as they seem more helpful on most occassions.

2.  Do not believe anything they tell you.  Im serious.  The loan process is fairly simple, but they keep saying nonsense that confuses both client and attorney.  They’ll say “We need your lawyer to close by March 9th” but they wont assign a bank attorney who is required to be present at the closing and to actually clear the file to close.  Once you get any response from them, call your lawyer and tell he/she what the bank said.  I don’t care if they get annoyed, they shouldn’t.  It can delay your closing and your rate can expire.  If your lawyer has to call (we do it all the time), so be it.  Its a crazy market out there and you need someone who knows that and doesnt care.

3.  Bankrate.com .  I dont care if your neighbor told you their mortgage broker got them a free house.  Before you do anything, go to that site.  Completely unbiased and independent and offers you a comparison of tons of banks, their rates, closing costs, and even contact information, plus informative articles.

4.  Aspirin.  Take it a lot during the process because you’ll need it.  I know I’m making this sound so dreary but the reality is that the process has become quite painstaking and can take some time and patience to navigate.  Have a good attorney by your side, always always always follow up with the bank (also have a back up bank in case the first isnt moving quick enough) and youll be fine at the end of the day.

Case in point.  My client is selling a co-op apartment in  Brooklyn.  Again, she is SELLING the apartment in Brooklyn, not buying it.  Weve found purchasers who are paying cash.  We have a closing date.  But we cannot close because the bank is unable to send us the stock and lease (analogous in some respects to a deed for a home).  Weve called in approximately 10 times (not a typo) and have been on hold each time for approximately 30 minutes.  Th bank cannot tell us why they cant send us the stock and lease and state that someone will get back to us within 24 hours or 2 weeks.  Can you imagine if you called a friend and they said they would either get back to you later today, or Mid February.  Unless this was your mother in law where youd be happy to wait the 2 weeks, you would not be pleased.  We were not pleased.  Also the bank cant communicate with the proper department because that department doesnt have phones.  The dept has live people, and computers, but no phones.  Again Id like to emphasize all we are currently looking to do is pay the bank lots of money but the bank is saying “We know, and wed love to take the money, but we cant take the money, we dont know why we cant take it, and we dont know when we could tell you why we cant take it, but someone may or may not be able to tell you why we cant take it within 2 weeks.”

On another closing, the bank appraised a home for a certain sum and said “Youre ok to close.”  They then came back the following week and re-apraised the house for $50,000 less.  Lets again use a real life example.  I come to you and tell you Id like to buy your Mercedes, and that Id be willing to pay you $20,000 for the car and tell you I’d like to meet you the following week to pay you.  You agree.  The following week I show up announced and say “Let me look at the car again” and after looking at the identical car I tell you I will pay you $14.32 right now on the spot.  Absurd no?  Well folks welcome to 2010, the year when the recovery will hit.

In business, companies are always obsessed with bottom lines, and thats normal.  However, when you’re looking to buy a home in New York City and the lender is telling you that they’re telling you that they dont have phones, there is something wrong.  No business can recover financially if they are acting completely irrationally.  You may be reading this and thinking that there is something more to the story.  Something is missing because it doesnt make sense.  I wish there was.  Our firms Manhattan Real Estate practice has shifted in that we now do so much more on a daily basis for our clients than we ever have just to get them into the homes they wanted.  There really should be no discussion of a bottoming of the market in New York City without discussing why we’re stuck here now in the first place.