Law Offices of Richard M. Lovelace, Jr., P.A.

Law Offices of Richard M. Lovelace, Jr., P.A. The firm enjoys a peer rating of AV as determined by the Martindale Hubbell Legal Directory and is listed in the "Bar Register of Preeminent Lawyers"

The Law Offices of Richard M. Lovelace, Jr., PA is a transacationally centered practice serving clients not only in Conway and western Horry County, but also the greater Grand Strand to include Georgetown, Statewide, Regionally, and Internationally for clients interested in off-shore banking, off-shore trusts, and off-shore limited liability companies. The firm has established practice concentrati

ons in the purchase, sale, development and financing of residential and commercial real estate; the formation of and rendering advice to business entities; estate planning, probate administration, and asset protection.

08/27/2023

Don't mind me, just doing all of the work... 😂😂😂

09/28/2016

A REIT is a legal structure that owns, or finances, property that generates income. It pays no taxes itself but has to distribute over 90% of earnings to shareholders. Crippled by the financial crisis in 2008, they have since grown fast. This year their market capitalization passed $1 trillion, or 4% of the American total, close to the size of the utilities sector. They have been performing well, beating the market in 2014, 2015 and so far this year, when they have generated a return of 18.1%, and are trading at an average multiple of 23 times earnings, compared with 17 times for the S&P 500 index as a whole. In a mark of their new prominence, this month S&P and MSCI, another index provider, classified real estate as a distinct sector. The early REITS of the 1960s were seen as dull, niche investment vehicles designed to collect a steady stream of rental income. But what used to make them boring – that they resemble fixed-income bonds- is positively exciting in today’s low-interest rate world. REITS churn out stable and predictable cash flows from five to ten-year long property leases. Their current yield is 3.6% higher than the 1.7% yield offered by a ten-year Treasury bond. Moreover, the growth of REITS has coincided with a soaring rental market after America’s housing crisis in 2008. As more people have opted to rent than own, rents have surged by as much as 3-6% a year in cities such as New York and San Francisco. Even in the suburbs, national REIT operators have emerged, buying and leasing batches of single-family homes with garden. As a group, three of these have made a return of 33% this year. A third reason for the current craze for REITS if that, since the crisis, they have become more diverse. Businesses not traditionally seen as part of the property sector, such as telecom towers, data centres and forestry concessions, have labelled themselves as REITS to avoid corporate tax and achieve higher marker valuations. They now make up one-sixth of REITS’ total market capitalization. Between 2013 and 2015 a wave of casinos and hotels spun off their properties, listed the assets separately as REITS, and leased them back to the operating business. Big firms such as Macy’s and McDonalds’ have faced pressure from activist investors to do something similar. The REIT-creation frenzy, however, may already have passed its zenith. In June, the Internal Revenue Service, America’s tax bureau, issued regulations banning companies outside the property industry from abusing the tax-free REIT structure. So far this year only one REIT has listed its shares, compared with seven last year and 19 in 2013. Another looming risk is an interest rate rise. When the Federal Reserve hinted as tighter monetary policy in 2013, REITS prices dropped by 13.5% in five weeks, and the rental market is coming to a peak as supply picks up and demand weakens. “The days of 6% rent growth in lots of markets are probably over,” says Mike Kirby, the chairman and co-founder of Green Street Advisors, a property-advisory firm. But REITS also look more resilient than they were in 2008. They have reduced their debt-to-asset ratio from about 70% then to 31% today. E-commerce may threaten some shopping malls, but also boosts demand for facilities such as warehouses and data centres. Last year four out of the seven top-performing REITs were data centres. The industry today bundles a range of different businesses whose only similarity is checking the same tax-free box.

08/03/2016

Estate Tax Warning

The U.S. government on Tuesday proposed making it harder for wealthy business owners to transfer assets to heirs without paying estate and gift taxes. The plan from the Treasury Department and Internal Revenue Service would place new limits on a common technique used to transfer interests in family businesses. The regulations address the practice of discounting the value of ownership stakes in closely held businesses or land. The discounts are permitted because some stakes are worth less since they are harder to sell or represent a minority interest. The reduced values allow wealthy families to pack assets inside the $10.9 million lifetime exclusion from estate and gift taxes for married couples. A typical strategy would place, say $14 million worth of assets – stock, a business, real estate or even cash – into a company with restrictions on some of the owners’ ability to sell their pieces, said David Scott Sloan, a partner at Holland & Knight LLP in Boston who advises high-net-worth families. Those restrictions could allow the owners to get an appraisal saying that the actual value of those assets was about $10 million. “By taking advantage of these tactics, certain taxpayers or their estates owning closely held businesses or other entities can end up paying less than they should in estate or gift taxes,” Mark Mazur, the assistant secretary for tax policy, said in a statement. “Treasury’s action will significantly reduce the ability of these taxpayers and their estates to use such techniques.”

The government’s proposal would make it harder for tax payers to claim valuation discounts that taxpayers typically have used to reflect the diminished value of minority interests, said Richard Dees, a partner at McDermott Will and Emery in Chicago. “This is going to be a major problem for all family-owned businesses,” Mr. Deeds said “This all boils down to the question of whether a family business should be valued as if it’s owned by one person.” The government has signaled for months that the regulations were imminent. Estate planners have urged clients to complete transfers before the government acted. Such efforts may accelerate, because of the regulations must first go through a 90-day, public-comment period and parts of the regulations won’t take effect until 30 days after the government issues a final version. Estate and gift taxes apply at a top rate of 40% above the $5.45 million per-person exclusion, which means the estate tax affects about 0.2% of those who die each year. In 2014, about 5,200 estates filed taxable returns, according to IRS data. Republican presidential candidate Donald Trump wants to eliminate the estate tax. Democratic presidential candidate Hillary Clinton says she would make the estate tax apply to about twice as many people. She proposes returning to the law in effect in 2009, when there was an estate-tax exclusion of $3.5 million per person, a $1 million per-person gift-tax exemption and a 45% tax rate. In fiscal 2016, the U.S. is projected to collect $20 billion in estate and gift taxes, less than 1% of federal revenue, according to the Congressional Budget Office.

07/21/2016

Housing Starts Signal Firming Demand

Home building in the U.S. rebounded in June, a sign demand for housing continues to firm heading into the second half of the year. Housing starts rose 4.8% from a month earlier to a seasonally adjusted annual rate of 1.189 million in June, the Commerce Department said on Tuesday. “Homebuilding continues to gradually recover from the housing bust that accompanied the great recession,” said PNC chief economist Stuart Hoffman. “Demand for new single-family homes is slowly but steadily improving.” That rising demand has led to concerns about the low inventory of new and existing homes on the market, which is pushing up prices and could weigh on further expansion. But Tuesday’s report showed an estimated 1.015 million homes under construction in June, the highest level since February 2008. June’s uptick was driven by a jump in starts in the West and Northeast, two of the pricier regions in the country. The conditions underpinning demand are still in place, namely historically low interest rates and steady- if slowly moderating – job creation.
Starts on single-family homes, which account for roughly two-thirds of new construction, rose 4.4% in June from May, to 778,000. May single-family starts were revised down. Starts on multifamily buildings with five or more units, which include apartments and condominiums, rose 1.6& to a rate of 392,000 in June from the prior month, the market has swung to the single-family segment over the first half of the year, with those starts up 13.2% in the first six months of 2016, compared with a year ago. Housing starts in structures with five or more apartments fell by 3.9% in the year-to-dated from the same period in 2015. Still, the pace of apartment units already under construction in June 573,000, the highest since 1974, new applications for building permits, a bellwether for forthcoming construction, rose 1.5% to 1.153 million, from a downwardly revised May figure.
Permits have lagged behind housing starts for much of this year, and are down for the first half of the year from the same period in 2015, which some economists say signals slowing momentum in the housing market. “Favorable weather conditions might help explain the overshoot in starts compared to April and May permits; either way, they’ll need to correct over the next few months,” said Ian Shepherd son, chief economist at Pantheon Macroeconomics. The 4.8% rise handily beat the 0.9% increase forecast from economists surveyed by The Wall Street Journal but home-starts figures are volatile and often revised. June’s figure came with a margin of error of plus or minus 13.5 percentage points, and May’s starts figure was revised down to 1.135 million from an initial estimate of 1.164 million.
Builders have been struggling to keep pace with demand, with many reporting shortages of skilled construction labor and affordable lots on which to build. Although the market got off to a slow start to the year, housing was a bright spot in the U.S. economy in 2015, contributing more than a quarter of a percentage point to gross domestic product growth over the year. In the first quarter of 2016, residential investment contributed over half a percentage point to the quarter’s meager 1.1% growth rate. Still, construction levels for new homes remain historically low relative to the levels in the 1990s and 2000s, before the last decade’s housing bubble.

02/22/2016

Back during the financial crisis there were many complaints that banks were holding off on writing down bad loans to create a phony picture of their financial health. Bank executives denied doing any such thing, of course. But a new study has found evidence banks were understating loan-loss provisions even after the financial crisis. This creates a double-edged danger for investors. If banks understate loan-loss provisions to boost earnings, it creates the risk of bigger write-downs in the future. And if markets don’t trust banks to properly report their loan quality, valuations will suffer. That could explain some of the steep discounts to book values in the share prices of many of the biggest banks. J.P. Morgan Chase’s shares trade at 96% of book, Goldman Sachs Group is at 82%, Morgan Stanley at 69%, Bank of America 54% and Citigroup around 55%.
The accounting standards that govern loan losses require banks to record an expense for an estimated loss if it is probable that a loan is impaired and the amount of the impairment can reasonably be estimated. These loan-loss provisions are non-cash expenses that can have significant downward effects on a bank’s profits. As a practical matter, there is a lot of subjective judgement and flexibility involved in loan-loss provisioning. And it has long been suspected that banks use this discretion to “smooth” earnings, overstating losses in good times and understating them in bad times.
Those rules may be changing. The Financial Accounting Standards Board has proposed rules that would require banks to record loan losses far more quickly than they do now. But these face stiff opposition from banks, which argue that it would crimp lending and be ruinous to community banks. This isn’t just a matter of historical interest. Bank earnings are pressured by a flattening yield curve and low capital-markets revenue. That creates an incentive for banks to understate losses that might arise from distress in the energy sectors and loans in emerging markets.
Investors may find themselves once again wondering if banks are giving in to the temptation to burnish earnings by putting off provisioning for loan losses. That could put even more pressure on valuations and share prices.

06/30/2015

The housing recovery is on sound footing. Sales of existing homes in May were up 9.2% from a year earlier, according to the National Association of Realtors. Meanwhile, new-home sales were up 20% from a year ago, hitting their highest level in seven years. Increased activity also is helping prices. The latest reading of the S&P/Case-Shiller's Composite 20- City index to rise 5.4% from a year ago; the index will reflect a three-month average of prices in February, March and April. This would mark a slight acceleration from the March report, which showed a year-over-year gain of 5%. Importantly, there is no sign of overheating. In 2013 and early 2014, national home prices rose at double-digit percentage rates. That pace was unsustainable, particularly given meager wage growth and subdued inflation since the end of the recession. Fortunately, home-price appreciation slowed before prices got ahead of themselves. Meanwhile, Americans' spending power has been growing. Wage growth in recent months has picked up a bit, while lower energy prices have allowed for increased savings. Those savings provide the dry powder for sustained demand for homes. And they are consistent with a rational attitude to housing: Would-be buyers can save a down payment rather than feel desperate to buy now on the assumption prices will rise rapidly in the future. Another sign of strength: First-time home buyers made up 32% of all sales in May, compared with just 27% last year. First-time home buyers are important because they create the foundational demand that allows current homeowners to "trade up." Even higher mortgage rates in May didn't slow momentum. The NAR's release Monday of its pending-home-sales index, which measures signed contracts to buy a home, showed sales rose 0.9% from April to May. The index is at its highest since April 2006. That indicates demand for homes may stay strong even as the Federal Reserve begins raising rates later this year. And since the Fed is likely to proceed cautiously, there is less danger of a big jump in mortgage rates that could discourage buyers. For housing, a measured pace is better than a quick sprint. -The Wall Street Journal

06/15/2015

Want a House? Good Luck with the Down Payment. Lenders have eased standards but buyers still need a bundle for a mortgage

Saving for a down payment has long been a big challenge for anyone who wants to buy a home. And it got harder after the financial crisis, as lenders insisted on down payments of 20 percent or more for conventional mortgages, which make up the bulk of the market.
That seems to be changing a bit – perhaps because so many consumers have paid down other debt and have raised their credit scores. Since 2010, the average down payment has declined to 18.4 percent from 21.4 percent, according to date from Realtytrac. (Just by way of comparison, it was about 2 percent at the peak of the housing bubble.)
For a lender, there are certain drawbacks to loans with less than 20 percent down. For one, the loans sometime don’t qualify for a government guarantee or insurance. There also is a practical reason for the 20 percent standard: Historically, when a property went into default, banks could foreclose and then sell quickly at say a 20 percent discount, and still recoup their investment. Banks also see bigger down payments as a way to ensure that borrowers have more at stake, tamping down the speculation that contributed to the housing bubble.
For many buyers, however, the down payment hurdle remains a source of frustration, making it hard for many people to benefit from mortgage rates that have been at or near record low for several years.
Does the decline in down payments signify an easing of mortgage lending standards? If it does, its only marginal and more likely signals that banks are just a bit more willing to lend to customers they consider lower overall risks, regardless of the down payment size.
Maybe when interest rates began to rise, and lenders see the potential to earn wider spreads, we will see mortgage-lending standards ease a bit. Until then, buyers need to keep saving their pennies.

04/06/2015

Continued stock-market gains and low interest rates drove sales of vacation homes to the highest level on record last year, putting this segment of the housing market above its prerecession peak. Vacation home sales amounted to 1.13 million properties in 2014, up 57.4% from 2013, topping the high from 2006 to become the biggest year for vacation-home sales volume. Vacation homes accounted for 21% of all sales last year perhaps because buyers last had median household income of 94,380, up from 85,600 in 2013. The number of buyers is likely to grow in the years ahead as 76 million-plus baby boomers advance in age and buy vacation homes that eventually will become retirement homes. Meanwhile, the prospect of rising prices has spurred buyers to act sooner than later. Rates on 30-year, fixed-rate mortgages, which have hovered below 4% since November, are poised to rise later this year as the Federal Reserve increases short-term rates.
At least part of last year’s gain in vacation-home sales can be traced to more purchases of condominiums and town homes as vacation properties. The market for condominiums was up 27% and town homes 18% higher than in previous years. A trend toward purchases of such smaller vacation homes likely contributed to an 11.1% decline in the median price of vacation homes sold last year to $150,000 and a decline of 200 square feet in their median size to 1,500 square feet.

03/25/2015

A pick up in consumer prices and higher demand for homes point to a firming in the economy, The consumer-price index – covering everything from Americans rent to the cost of their dental care- rose in February for the first time in four months. This move suggests that inflation pressures are slowly building back up, and real estate investment represents the best hedge against inflation. Sales of newly built homes surged nearly 8 percent in February to an annual rate of 500,039, the highest level since early 2008 according to the Commerce Department, but new homes are only about a tenth but all home purchases, with mortgage rates holding at historical lows. The rate at which the Federal Reserve is lending money to member banks is currently zero and even if it increases and that increase does proportionally effects long term mortgage rates, the projected increase by the Fed should not result in a long term mortgage rate which chills the buying public’s elevated interest in real estate.

03/16/2015

Do Deposits Threaten the Banking System- Why trust the bank with your deposits if it won’t trust you to repay a loan.
Funds on deposit at your local bank which pay interest are treated on the banks books as a liability, but when banks are making a spread between what they pay you for your funds and their yield on the loan of your deposits, the liability aspect is minimized. The paradox in the current economy is that many local banks, still bruised form the great recession, are foregoing the income these loans would produce by refusing to lend money even to the most credit worthy customers, making their deposit base a drag on the banks performance, and promoting regulatory scrutiny. The net result is that community banks are only making loans to customers who don’t need the money and are ignoring customers who do, even though the interest rate charged on a loan is calculated to offset any bank risk. A corollary oddity is that you earn next to nothing on your bank account but get more than 1% cash-back on every dollar you spend using a rewards card.
If consumer banking is strange these days, the institutional banking business is even more bizarre. Banks are now charging their big customers to keep money on deposit- and their so-called negative interest rates are forcing liquidity out of the banking system. The irony is that this is the result of post crisis financial regulations that are supposed to ensure that banks remain liquid. J.P Morgan recently announced it may charge institutional clients as much as 5.5% on certain deposits, in an effort to push as much as $100 billion of these deposits out the door. What accounts for this strange behavior? Once a U.S bank accepts a deposit, it must pay insurance premiums to the Federal Deposit Insurance Corp. Federal Legislation changed the way the premiums are calculated, and the upshot is that insurance costs rise on nearly every new dollar deposited. Insurance premiums on average are about 20 basis points on each dollar deposit, although they can be as high as 45 basis points for a large bank. Deposits have to earn enough to cover deposits insurance and other bank operating costs. Deposits will earn only 25 basis points on deposits with Federal Reserve banks- not enough to offset insurance and other operating costs.

03/09/2015

The three biggest companies that collect and disseminate credit information on more than 200 million Americans will change the way they handle errors and list unpaid medical bills as part the broadest industry overhaul in more than a decade. Equifax Information Services LLC, Experian Information Solutions Inc. and Trans-Union LLC will be more proactive in resolving disputes over information contained in credit reports- a process federal watch dogs and consumer advocates have long decried as being stacked against individuals.
The credit-reporting firms will be required to use trained employees to review the documentation consumers submit when they believe there is an error in their files. If a creditor says its information is correct, an employee at the credit-reporting firm must still look into it and resolve the dispute. Lenders, credit-card issuers and collection agencies report consumers’ debts, balances, late payments and other credit-related information, such as bankruptcies and foreclosures, to the three companies. The data are added to consumers’ reports and are used to calculate their credit scores. These scores help lenders determine whether to approve applicants for loans and at what interest rates.
Credit reports can also have far-reaching effects in other aspects of consumers’ lives, including whether they can rent an apartment, get home or car insurance, or even find a job. The credit-reporting firms for years mostly functioned as a powerful middleman between consumers and lenders or other companies that report credit information. When consumers file a dispute, the credit-reporting firms often convert it into a three-digit that they send to the lender. If the lender tells the credit-reporting firm that they information on the credit report is accurate the firm typically doesn’t change it.
Credit experts say the settlement marks the biggest reform for the credit-reporting industry since 2003, when a federal law addressed how credit-reporting firms would treat disputes and required giving consumers access to their three credit reports for free once every 12 months. The law, the Fair and Accurate Credit Transactions Act, accelerated the dispute process for the consumer when an error was related to fraud or identity theft. The new policy several efforts to make consumers more creditworthy. Last August, Fair Isaac Corp., the firm that created the so-called FICO credit score, announced it would stop including in its newest credit-score version any record of paid or settled bills with collection agencies and would give less weight to unpaid medical bills that are with collection agencies is the move also underscores the growing pressure on credit-reporting firms over the past couple of years to provide more consumer protections and better manage the accuracy of credit reports. The Consumer Financial Protection Bureau began overseeing the credit-reporting industry in 2012 and has been focusing on accuracy issues- including complaints by consumers who say it is difficult to get the errors on the credit reports corrected.

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