If you own residential rental property in Arizona, you should be aware of A.R.S. § 33-1902:

http://www.azleg.gov/FormatDocument.asp?inDoc=/ars/33/01902.htm&Title=33&DocType=ARS

This law requires all owners of residential rental property to keep certain current information on file with the County Assessor, including the property owner’s name, address, and telephone number.  If you live outside of Arizona, the law requires you to designate and record with the assessor a statutory agent who lives in Arizona.  What happens if you don’t comply with this law?  A few things could happen—(1) Your tenant may terminate the lease agreement if you fail to comply with this law within 10 days after the tenant sends you a notice to comply; (2) the city or town may impose a civil penalties on you; and (3) the city, town, county, or the state may inspect the property and charge you for the costs of the inspection. 

In Yavapai County, the form you would file with the County Assessor is called the “Notification of Residential Rental Property,” and you can find the form here:  

http://www.co.yavapai.az.us/DLForm.aspx?mk=FormCategories&mv=+Miscellaneous+Assessor+Forms&id=19600

HARP sounded good, but it was unavailable to many homeowners in Arizona, largely because refinancing was only available to borrowers who owed up to 125% of the value of their homes.  In the hardest hit states such as Arizona, where home values dropped by 50% or more, many homeowners were so far underwater that they were not even close to the 125% loan to value ratio.  Thus, the program was unavailable for the people that needed it the most.

However, things are about to change.  A few months ago, President Obama announced an overhaul to the HARP program in an effort to help more upside down borrowers.  Under this new version of HARP (sometimes called “HARP 2.0”), the biggest roadblock—the 125% LTV cap—has been removed for fixed rate refinances.  That means that borrowers will now be able to refinance no matter how far their homes have fallen in value. 

Under HARP 2.0, Arizona homeowners may be eligible if they meet the following criteria:

1.         The loan must be owned or guaranteed by Fannie Mae or Freddie Mac. 

Many people automatically think that their loan does not qualify because they are making payments to a bank such as Wells Fargo, Chase, or Bank of America.  DO NOT ASSUME YOUR LOAN DOES NOT MEET THIS CRITERIA!  What is more likely is that the bank is just the mortgage servicer—the bank that collects the payments.  Most loans that have payments sent to one of these banks are actually backed by Freddie Mac or Fannie Mae. 

To find out if Fannie Mae owns or guarantees your loan, you may call 1-800-7FANNIE or look it up at http://www.fanniemae.com/loanlookup. 

To find out if Freddie Mac owns or guarantees your loan, you may call 1-800-FREDDIE or look it up at http://www.freddiemac.com/mymortgage.

2.         The loan was sold to Fannie or Freddie on or before May 31, 2009.

3.         The loan has not already been refinanced under HARP (unless it was a Fannie Mae loan refinanced under HARP between March and May of 2009).

4.         The loan to value ratio is above 80%. 

This is the minimum, not the maximum.  Again, there is no cap on the maximum LTV under the expanded HARP 2.0 program!

5.     All payments must be paid current for the past six months and no more than one late payment in the past year.

If you meet these criteria, you may be able to refinance under HARP 2.0.  If you have already determined you may be eligible, the next step is to shop around for the best interest rates.  You do not have to stick with your current mortgage servicer.  Borrowers can refinance with any lender that is participating in HARP 2.0, and each lender sets its own interest rates and closing costs and has its own guidelines.  Some of the big banks (who are able to manually underwrite loans) have already started taking applications, and many smaller banks, credit unions, and other mortgage lenders will be joining in the competition when the updated automated underwriting system goes into effect in mid-March. 

For more information on HARP 2.0 and other programs available under Making Home Affordable, you can visit http://www.makinghomeaffordable.gov/Pages/default.aspx or call 888-995-HOPE to speak with a HUD-approved housing counselor who can help you (for free) in understanding your options, preparing applications, and working with your mortgage company.

Recently, as part of a larger “Fresh Start” initiative, the IRS launched a new program which may provide some relief to certain employers looking to resolve past worker classification issues.  That program—the Voluntary Classification Settlement Program (“VCSP”)—allows eligible employers to reclassify the workers as employees and only pay an amount of approximately 1% of the wages paid to the reclassified workers for the past year, with no other interest or penalties.  For further details, including eligibility requirements, please visit the IRS website:  http://www.irs.gov/newsroom/article/0,,id=246203,00.html

If you are concerned that your independent contractors may be misclassified, and are worried about the potential consequences for you in the event of an audit, we highly recommend consulting a knowledgeable attorney or tax professional to see if the VCSP may be a solution.

     Under federal law, each of the three major credit reporting agencies (Equifax, Experian, and TransUnion) are required to provide you with one free copy of your credit report every 12 months. You can easily order your credit reports from these agencies through annualcreditreport.com (online, by phone, or through the mail). BEWARE—there are many imposter websites out there. Annualcreditreport.com is the official site created by the three major credit reporting agencies.

     When you order your report(s), you have the option to order one, two, or all three of the available credit reports. While each report may contain different information, each report will generally give you a “snapshot” of your credit at that point in time. Rather than requesting all three at the same time, it may be advisable to stagger your requests throughout the year, requesting a credit report from each of the three agencies at different times. That way, you will be able to see your credit snapshot several times throughout the year, rather than just once, so you can discover potential issues with your credit earlier.

     For more information about obtaining your free credit reports, see:

https://www.annualcreditreport.com/cra/index.jsp

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre34.shtm

Big Banks Loosen Lending Standards

http://online.wsj.com/article/SB10001424052748704868604575433441447633952.html

The Article reports that while banks may be easing lending standards and terms, the demand for loans among consumers and businesses remains low.  Along with current low interest rates, this recent change in lending standards and higher competition among banks for business, may make it worth your while to take a second look at applying for a loan for your business.

http://money.cnn.com/2010/03/29/pf/taxes/employee_audit_crackdown.smb/index.htm

Many business owners mistakenly believe that they are protected by simply signing a contract with the worker stating that the worker is an independent contractor. However, the mere existence of an independent contractor’s agreement—no matter how well drafted—does not mean that the worker is not an employee in the eyes of the IRS. The contract is only one of the factors the IRS will look at in order to determine if the worker is an employee or independent contractor. The IRS considers the entire relationship and looks at three broad categories of factors including behavioral control, financial control, and the type of relationship of the parties. For more information on these factors, please see the IRS website:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

Understanding these factors can help a business owner in considering whether to hire an employee or an independent contractor. Also, companies with existing independent contractors should consider an internal assessment of their current independent contractors to ensure that those relationships are correctly classified.

The distinction between employees and independent contractors is important. If there is any doubt in applying the IRS factors to a particular situation, a business owner should consult a knowledgeable attorney or tax professional.

http://www.theatlantic.com/magazine/archive/2010/09/the-great-stock-myth/8178

Loss Assessment Insurance

Important legal development that may affect your business

Noteworthy news affecting the business climate in central and norther Arizona

Links to articles from various periodical providing insight and analysis regarding important national and international economic developments and events that affect us all

On the lighter side, we will from time to time share experiences and information on outdoor activities that we find noteworthy.