Beware: Corporate Periodic Reporting Scam

There is a new scam circulating via fax and email transmission which states that corporate shareholders and directors will face personal liability if a periodic report is not filed with the Colorado Secretary of State's office on or before April 15, 2011.  The company claims that for $225.00 it will assist your company in filing the documents.  What it does not tell you is that the filing fee is only $10.00 in most cases and that you can file it yourself on the Colorado Secretary of State's website.

Filing an annual report is only part of what every Colorado corporation or limited liability company should be doing to preserve the benefits of the business entity.  At Toussaint, Nemer & Coaty, P.C., we keep you in compliance with all required filings, keep your corporate book up to date with minutes and stock/membership transaction records, and provide an annual letter summarizing new laws and cases that may affect the way you do business.  It's all part of our corporate compliance program.  If you've delayed in reporting in the past and need to get back into good standing, we can help you with that too.  Please call our office for more information about our corporate compliance program or any other legal issue.


Reverse Mortages: Now there are two varieties

Reverse Mortgages have become popular with people who want to cash out some of their equity for living expenses, medical expenses, or other long term expenses.  Owners over the age of 62 with sufficient home equity may qualify for a reverse mortgage.  The advantage for many is that monthly loan payments are not required.  Instead the principal and interest come due when the residence is sold or when the borrower moves or dies.  In the meantime, the owner has had the use of the property's equity in funds taken in monthly payments, a lump sum, or a line of credit.

There are now two types of Reverse Mortgages: the Standard and the Saver.  The Standard has been around for some years while the Saver was introduced in 2010.  Both have upsides and both have drawbacks.

The Standard Reverse Mortgage allows you to borrow more of your equity than a Saver Reverse Mortgage but it comes with a price, namely a Federal Housing Administration premium of up to 2% of the value of the residence charged to protect against losses on these loans, along with other upfront fees due at closing.  All together, these fees can add up to 4%-5% of the value of your home, which means these loans are generally only appropriate for borrowers who believe they will be able to stay in their homes for a considerable period of time.

The FHA has cut the insurance premium to .01% for Saver Reverse Mortgages, and some lenders are promoting Saver Reverse Mortgages by reducing other upfront fees.  However, these up-front savings come with costs over the life of the loans.  First the interest rate may be slightly higher for a Saver.  Also the amount that can be borrowed is 10% to 20% less than what a person can borrow through a Standard Reverse Mortgage.  Some lenders also limit the ways the equity can be paid under a Saver to the lump sum distribution only.

These mortgage products are quite sophisticated.  You should research them carefully prior to committing and obtain professional advice to answer any questions you may have.  If you are interested in a Reverse Mortgage the professionals at Toussaint, Nemer and Coaty can assist you in your research.  In addition, you should contact a reverse-mortgage counselor who is approved by the federal government.  Go to www.hud.gov or let our office assist with finding such a counselor.  We can also recommend lenders with expertise in this field.


Mortgage Difficulties

Mortgages are in the news constantly and with good reason.  Many families need some sort of relief from time to time.  If you are having difficulty with your current mortgage or HELOC, we suggest you take steps to work out any problems as soon as they appear.  Besides calling one of the experienced lawyers at TNC, there are many other resources available. 

The best place to start is an officer at the lending institution that holds the mortgage.  Holders of mortgages in Colorado are required to have loss mitigation personnel.  You can also call the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673).

New mortgages and "Re-Fi's" can raise many legal and financial issues.  Again, the professionals at TNC can advise you about Promissory Notes, Deeds of Trust, land use, zoning, water and mineral rights, title disputes and easements, to name just a few of the issues that can arise.  The term of the loan, the "closing costs", the APR, the security being encumbered, are all subjects a borrower needs to understand when creating a mortgage.

Reverse Mortgages are becoming much more popular.  Watch for our next blog about the two types of Reverse Mortgages.


Home Owners Association 2011 New Requirements

A new Colorado law, House Bill 10-1278, created the HOA Information and Resource Center within the Colorado Division of Real Estate as a resource for consumers and HOAs to understand basic rights and duties under the Colorado Common Interest Ownership Act.  The new law, effective January 01, 2011, also imposes registration requirements on owners associations and provides that HOAs that fail to register will lose certain rights they otherwise have under the Colorado Common Interest Ownership act, specifically the rights to impose assessment liens, to enforce liens, and to collect enforcement costs and expenses.

At present, it appears that the Colorado Division of Real Estate is not prepared to implement the registration process; however, the Division is in the process of updating its system to provide for online registration of HOAs.  When its system is ready, we expect HOAs will be given a grace period to register before any action to revoke their rights is taken.


Tax exempt status changes

As we approach the end of 2010 and the end of the ‘Bush Tax Cuts’ there are many tax uncertainties facing individuals and businesses alike.  Hopefully Congress and the President can complete a tax package sooner than later.

            There is, however, a deadline that is definitely sooner than later.  All small tax-exempt organizations that have not properly filed tax forms in 2007, 2008, and 2009 are at  risk of losing their tax exempt status unless they file by October 15, 2010.  There are hundreds of thousands of these organizations throughout the country, and hundreds in Colorado.  There is a list of the organizations on the IRS home page at www.irs.gov .  

            The IRS has tried to get the word out on this issue.  The Service has an informative article on its web page and it has released a YouTube video.  IRS Commissioner Doug Shuman stated, “We are doing everything we can to help organizations comply with the law and keep their valuable tax exemptions.”  The smallest charities only need to file a 990-N online.  Larger charities need more extensive filings. The forms are on the IRS web page.  Failure to file will result in the tax exempt status being lost. A list of organizations that lose their exemptions will be posted by the IRS.