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Rust Consulting: tax return docs sent to people who never got paid

(Housing News) Many homeowners are receiving 1099-MISC tax forms stating that they got a check from Rust Consulting for being wrongfully foreclosed upon, yet never received their check. What’s going on?

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Did You Receive Your Payment from Rust Consulting?

Imagine this… You receive an envelope in your mailbox in which you have been sent a 2013 1099-MISC from Rust Consulting. In the return address window are the words “Independent Foreclosure Review,” and Box 3 has the amount of $1000. Only one thing wrong here… you never received any payment from Rust Consulting.

According to Daniel Smith, Vice President of Hill+Knowles (a company that assists Rust Consulting), as of February 4, 2014, the  number of uncashed checks at somewhere is 500,000 (that’s checks, not dollars). This was due, in part, to checks lost in the mail and also to the number of people that have moved or relocated during the mortgage meltdown.

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What Is Independent Foreclosure Review?

As you may recall, the Independent Foreclosure Review is part of the settlement associated with the robo-signing debacle of 2010. As part of this review, thirteen mortgage servicers and their affiliates identified customers who were part of a foreclosure action on their primary residence during the period of January 1, 2009 to December 31, 2010.

These 13 mortgage servicers sent solicitation letters to 4.2 million potential victims of robo-signing and other foreclosure-related (and potentially fraudulent) matters. These letters provided homeowners the opportunity to request an independent review of their foreclosure process (Independent Foreclosure Review). If the review found that financial injury occurred as a result of errors, misrepresentations, or other deficiencies in the servicer’s foreclosure process, the customer could receive compensation or another remedy.

The deadline to request the independent review was December 31, 2012. However, those who did not respond to the solicitation letters but who were felt to be victims were also included in the settlement.

How Were Disbursements Determined?

Settlement disbursements by the paying agent, Rust Consulting, began in April of 2013 and continue to this day. Borrower remuneration varies from $300 all the way up to $125,000 depending upon their perceived financial harm by the events surrounding their foreclosure activity. The Independent Foreclosure Review Disbursement Breakdown shows that 2.4 million borrowers will receive $300 and approximately 1300 borrowers will receive $125,000—the bulk of borrowers will receive $500 to $600 dollars.

The Independent Foreclosure Review Disbursement Breakdown also contains lists of categories used to determine the disbursements. The categories vary greatly and include wrongdoing to service members, wrongful foreclosures on borrowers not even in default, foreclosures during a forbearance period, and even successful completion of a loan modifications. The categories are broken down into types of servicer error and some servicer errors are more grievous than others. Many individuals have pointed out that borrowers may fall into multiple categories, yet no additional information has been provided as to the disbursement decision-making process.

So, What’s With the 1099-MISC?

As you may already know, a 1099-MISC is issued when a company pays $600 or more to an independent individual or Limited Liability Company. In this case, Rust Consulting sent a 1099-MISC to any individuals for whom payment was made (or checks were cut in 2013 and undelivered) for over $600.

According to data points from Rust Consulting, “Based on guidance from tax counsel, federal regulators directed Rust Consulting to send Form 1099s to borrowers who received payments as part of the IFR. The company encourages borrowers to seek the advice of qualified tax professionals regarding IFR payments. The forms were mailed whether the associated check was cashed or not. This is in alignment with IRS reporting guidelines, which say that tax obligations – if any – do not require that a recipient has actually cashed a check.”

I contacted Rust Consulting just last week to get a little bit more information. And, when I spoke with an employee, I was told that several hundred thousand wronged borrowers may have a pleasant surprise waiting for them in their mailbox—as many checks issued in 2013 have been reissued the first week in February.

Individuals who received a 1099-MISC and did not receive a disbursement check or individuals who never received their check but received a postcard from Independent Foreclosure Review last March can contact Rust Consulting at 1-888-952-9105 for more information.

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

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1 Comment

1 Comment

  1. ss

    February 13, 2014 at 7:29 pm

    The envelope from Rust Consulting looks like junk mail. It could easily be thrown away by mistake.

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Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

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Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

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Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

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aging housing inventory

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

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Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

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Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.

2. Two major media brands emerge

Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.

…Click here to continue reading this story…

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