Title & Escrow

HUD Comment Period: “Required Use” Affiliated Business Arrangements

<<< Call To Action >>>

Please take some time to comment to HUD during the comment period on “Required Use”.  I would also recommend reading this extremely informative blog from Bob Willett of Sacramento, CA: http://sacrelender.com/?cat=41

From National Association of Independent Housing Professionals (NAIHP):

Affiliated Business Arrangements:

“As many of you know, RESPA Reform originally contained a provision prohibiting the “required use” of specific settlement service providers, where discounts and/or incentives were offered. HUD was forced to withdraw that provision last year, after the National Association of Home Builders filed suit in objection.

HUD is again exploring language to clarify “required use” and is asking for your comments.

To be perfectly clear, NAIHP is NOT opposed to Affiliated Business Arrangements. Our concerns pertain to consumers forced to use certain settlement service providers, as a condition of receiving discounts and/or incentives. Research has shown these discounts and incentives are frequently made up elsewhere in the transaction, often by higher interest rates and closing costs.

Please click on the link below and give HUD your comments. If you have personally witnessed harm to consumers, please give them this information. You can upload supporting document attachments.

We support consumer incentives and discounts, PROVIDED consumers are NOT required to use specific mortgage companies, title companies, or any other settlement service providers to obtain them. One stop shops often eliminate competition and provide no benefit to consumers.”

You can comment by clicking here to comment:  CLICK HERE

Here is what I wrote to HUD if you are looking for talking points:

“Required Use” Clarification -

My concerns pertain to consumers forced to use certain settlement service providers, as a condition of receiving discounts and/or incentives. Research has shown these discounts and incentives are frequently made up elsewhere in the transaction, often by higher interest rates and closing costs.  Furthermore, this hinders competition which, in turn, leads to a reduction in consumer choice which ultimately leads to increased costs for the consumer.  One only needs to see the increased costs of appraisals due to the implementation of the Home Valuation Code of Conduct (HVCC) to see how lack of consumer choice increases costs and provides no benefit to the consumer.

In addition, if a home builder has “required use” for a lender that is a bank (IE: Wells Fargo, BofA, etc) then they are under even less scrutiny to provide transparency because the lending institution is not required to disclose the service release premium (SRP) to the consumer.  SRP is exactly the same thing as yield spread premium (YSP) which is credited to the consumer on broker transactions.  This is even more detrimental in providing accurate information and choices to the consumer.

Basically, if “Joe Schmo” seller trying to sell his home in the resale market cannot do it, why should a builder, bank (REO homes) or any other seller be allowed to dictate through “required use” incentives where any buyer receives their services?

This leveling of the playing field needs to happen on the services and lending side in order for consumers to get a truly fair deal from lenders and other service providers.  Providing consumer choice is the only way to truly protect the consumer.

Short Sale My Home

Short Sales Simplified for Home Owners.This web based information gathering system will assist a home owner in the proper documentation and information necessary to achieve a successful short sale transaction.

• Complete at your own pace in the privacy of your own home.
• Save all the documents for quick review or changes.
• Keep organized for when unexpected questions and calls come from the bank.
• Be sure that the Agent has everything they need from you to facilitate the possible Short Sale
• Takes 30 minutes to complete your package.
• Provides a complete end-to-end document management system.

To gain access to the system at NO CHARGE contact Lisa Capes at Chicago Title Insurance by e-mail  at capesl@ctt.com or by phone at 480.695.3136.

Home Owners Associations

Homeowner’s Associations are a huge issue with short sales and REO properties. Many times escrow is presented with a contract, negotiations are complete on the short sale or the REO, escrow proceeds and closes – a few weeks/months later escrow is contacted by the new owner who has received a bill for delinquent dues and transfer fees. Owner wants to know who will pay. Sellers in both types of transactions have no money with which to pay these ‘after the fact’ bills. Short Sale sellers know if there is an HOA, so they need to be questioned about this subject. REO sellers, however, may or may not know if there is an association, so this is where the Realtor’s experience comes in. You may know the neighborhood, so, please, if you do know there is an HOA, mention it to escrow so the information can be followed up on.

Need Your Home Staged??

Luxury Home Staging has redefined the standards in the world of home staging by offering the most extensive and exceptional staging services available in the market today. We specialize in staging vacant luxury homes with our readily available, custom selected, high-end inventory. Our professional design team is ready for your complete or partial staging package, no matter the size or price of your home.  http://primeimagemedia.com/lhs/index.html

Canadian Citizens

Canadian citizens document signings:  To sign in the United States, they will need a passport AND a visa as identification.  Should the party wish to sign in Canada, they have two choices:  They can go to the U.S. Consulate OR be signed by an attorney.  The signed documents must be accompanied by a Canadian Certification of Notary.  Sellers will also need to complete the FIRPTA (Foreign Investment Real Property Tax Act) forms.  Depending on the use of the property, there may be a charge at close of escrow of 10% of the sales price which is remitted to IRS per the FIRPTA laws.

The transfer of funds from a Canadian Bank must be in US Dollars and there may be charges for that conversion of funds from Canadian to US dollars.

Lisa Capes

Chicago Title Insurance

capesl@ctt.com

www.chicagotitlearizona.com/capes

What Makes a Home “Perfect” for a 203k Loan?

Do you 203k?  What the heck is that? 

Many people in the lending and real estate industry have learned about the “new school” 203k renovation loan.  What some people might remember, is the “old school” version of the 203k loan which was used widely in the 80’s and before.

Simply put, the “new school” version of the 203k loan which was brought back into widespread use by Congress passing The Housing and Economic Recovery Act of 2008 is much simpler to use than the older version - less paperwork, less red-tape, faster approval times.  At the current time, most lenders can approve FHA 203k Renovation Loans in approximately the same amount of time that they take to approve most standard FHA loans once the “new finishes” are determined by the homeowner.

While the initial thrust and what most people think of using 203k loans for  seems to be for fixing up existing bank-owned homes ”that were trashed”, the loan in effect not only applies for completely trashed houses, but also for some that just might need some new carpet and paint  - Basically, any home being purchased  (under the FHA maximum amount) would qualify as long as the the property updates “make sense”.

Which brings us to the second point.  What the heck happened to people having “second mortgages” on their homes?  This one we pretty much all know the answer to - they are simply gone for the most part.  Lenders in particular really, really do not like being in second position when there are widespread foreclosures going on as is currently happening.

Simply put, “second’s” have largely been replaced by “203k’s” because there is only 1 loan on the property and the renovation funds are actually used for renovations which are adding value to the home.   Congress simply got tired of people taking out a second on their home to buy a motorcycle, go to Europe, pay down some credit card debt, and not using the money to actually improve the value of the property (that was the original intent of a second, right?  to borrow money against the house to actually improve the property…? ). 

Our great grandparents knew that the “whole system” which we had created by robbing Peter to pay Paul with our “equity” in our homes was a dead end street in addition to lenders up until the past few years being told by Congress that is was OK to loan up 125% of the value of homes in general.

Apparently, the ghost of FDR came to our members of Congress in 2008 and at least partially set them straight on what “renovation funds” should actually be used for.  If FDR were alive today, no doubt he would make sure that the 203k loan would also be promoted as a way to get people back to work as well as bringing civic pride back into both the appearances of our neighborhoods and also self-respect for those who now have viable employment.

The great thing about 203k loans is that the lender will loan on the “projected” value of the house once the renovations are completed (i.e., if updating that old kitchen might add some value to the house, your lender would want to talk to you about that so your “equity needed” would not necessarily be the same as if you were approaching these renovations as in the old fashion of “getting a second” which we all know to a large extent have dissapeared anyways).

So in effect, any home which could use a little updating, or just a little TLC in general and falls under the local FHA Maximum Amount is perfect for a 203k loan.

Is the 203k the REAL NEW DEAL?  It just might be.

Please visit www.TheAnswer.info for more details.

The “Secrets” of Buying a Home Using a 203k Renovation Loan

As someone looking to purchase a home or as a realtor looking to help your client find a home, it is no small secret that the first question is:  How much do you qualify for or how much do you want to spend?

More often than not, people have a number in their mind, say $150,000 for our example.  So again more often than not, people in this case would  go looking at every house listed around $149,000, right?

So then what people find is say 50 houses ”in their price range” and they go and look at 2/3rd’s of them and none seem to fit what they are really looking for.  The realtor gets tired of driving the buyers around and the buyer starts getting more and more frustrated as the search seems to go on and on….

Ok, so here is the secret:

Look at houses $10, $20, $30, $40, and $50,000+ LESS than you are qualified for, but in the neighborhoods you want, with more square footage, number of bedrooms, and on a larger lot than you thought you would ever dream of owning.

The deals are out there right now, no question about that, but the “problem” has been that these houses you might be looking at “need too much work” - i.e., the kitchen is from 1978, the green shag carpet has holes in it, the A/C units were stolen, or maybe you just don’t like the pink tile in the master bathroom.

The “secret” of the 203k renovation loan is that it allows you to KEEP YOUR MONEY IN YOUR POCKET and roll a majority of those COSMETIC and other items that need to be repaired to get the property up to FHA minimum standards (health and safety issues) into the loan.  With only 3 1/2% down (which really is actually taken care of in many cases for you by Uncle Sam because of the $8,000 first time home buyer tax credit now being allowed to be applied directly towards the down payment), buyers are now also simultaneously improving the value of the property by bringing it’s finishes “into our decade”.

So again, what is the real secret?

Pick your new carpet.  Pick your new kitchen.  Pick your new paint colors.  Then go find the house.  Imagine the possibilities…….

It may seem kind of strange to bring up a quote from Gandi in an article about 203k renovation loans, but he said “Be the change in the world you wish to see.”

The 203k renovation loan was brought back to help restore pride in our local communities and eliminate the catch-22 of buying a home and then not having the cash to “customize” the property the way someone would want it (within reason and comparable to the neighborhood).   The 203k is the means by which the FHA is allowing each of us to contribute to the “change in the world (each of us would) wish to see” in our own homes and communities as well.

Please visit www.HowToFixTheEconomy.info for more details.

Washington Report: Appraisal System

I’ve warned of this before and so it begins…Higher appraisal costs are already here.  Be sure to explain to your buyers that this increased cost and the required up front payment for services not yet rendered will probably be required on most all of your purchases.  And this is NOT an added cost that lenders are just arbitrarily adding to their GFEs.  Our elected officials have found yet another way to increase the cost of doing business while simultaneously reducing the level of customer service to our clients across the nation.

How long will it be before our government tells us where we can get title services or credit reporting?  Then we can all look forward to paying 5 or even 10 percent in closing costs one day.  Hooray for us…NOT!

Washington Report: Appraisal System
Last week saw the official kickoff of Fannie Mae’s and Freddie Mac’s mandatory new system of appraisals nationwide, and some mortgage and appraisal groups are up in arms over sharply higher costs for consumers.

Roy de Loach, CEO of the brokers group, cited one member’s experience — where total appraisal fees for a routine FHA cash-out refi ballooned to $1,068 to the consumer.

Home buyers and realty professionals need to be aware of these sharply escalating fees — and their controversial use on FHA loans that are supposed to be exempt from the Fannie-Freddie code.   (Watch out for these guys! – Spencer)

Full Story: http://realtytimes.com/rtpages/20090511_washingtonreport.htm

Spencer Anglin
Velocity Financial, LLC
Sr. Mortgage Planner
480.287.5719  Direct
602.705.6293  Cell
866.589.5742  eFax
Email: spencer@velocityfinancial.com
Website: www.spenceranglin.com

Are you waiting for the news that the Phoenix Real Estate market has hit bottom?

If you are waiting for the news media to tell you that the phoenix real estate market has hit bottom so that you can purchase a home, then you will be to late. My favorite line that summarizes this is

“I would rather be 15 minutes early than 5 minutes late.”

Real estate prices are low and interest rates are at lows we may never see again. Some numbers for thought that are for all of Maricopa County, We are down to approximately 33,000 listings. we have almost 15,000 homes under contract and we closed almost 7,500 homes in April 2009.  Those numbers are huge! The news media will not report on these numbers because all they look at are closings. You can expect them to report on the large number of closings we had maybe in the next few weeks or maybe next month. The number of pendings tell us that the buyers are in the market and putting homes under contract. Banks are receiving multiple offers on their listings. We are down to less than 2 months of inventory for bank owned homes. We currently have 5,798 bank owned homes on the market and in April 4,856 bank owned homes closed. The bad news is that of the 7,460 homes that closed in April only 629 of them were priced above $350,000. The middle and high end market still continues to move at a snails pace.

The martket is hot right now for homes priced below $350,000. The buyers that are purchasing these homes and getting an FHA loan are also postioning themselves with a tremendous exit strategy for when they go to sell their home. FHA loans are assumable if the buyer qualifies. What that means is if you buy a home and have a loan at 4.5% then no matter what the interes rate is 5 years from know you will be better postioned to sell your home because the buyer can assume your loan and have a great rate even if the market 5 years from now has interest rates at 8%.

 

The only dark clouds we have on the horizon are job growth and how many more people are going to be foreclosed on by the banks.

As far as job growth goes I think here in the valley of the sun we are postioned better than most places in the country. California is taxing their business owners at higher and higher rates and we are starting to see business owners pick up from california and head to arizona where txation is much lower.

People will continue to move to the Phoenix area because of our weather, because of the many amenities that we offer and because its a great place to live. Dont forget all of the baby boomers that will be looking for a warm place to retire and play golf and swim and relax. They are coming soon!

How many more foreclosures? That is the big question. It will take time to see how many people will be helped by the Homeowner Affordability Plan and Stimulous Plan. I will let you know as the numbers come in.

I have been in the Title Insurancve business for over 23 years and have worked in the Scottsdale/Phoenix market for 9 years.

Thanks for reading my post and let me know if you have any questions.

Rob Clang - Security Title

Rob.Clang@Securitytitle.com

In Order to Give Good Funds We Have to Receive Good Funds

When purchasing a home there are two checks written during the process.  First, a check written for Earnest Money. Earnest Money is given as a promise to the seller that the buyer is serious about purchasing thier home.  Earnest Money is usually given in the form of personal check made payable to the title company closing the escrow.  The second check is given at the signing table during the close of escrow.  

The Earnest Money check paid by personal check to the Title Company is usually an adequate form of payment due to the fact once escrow is opened there is time for the check to clear prior to the close of escrow.  However, the check given for final closing cost at the close of escrow MUST be in the form of a Certified Check.  You must request this type of check from the teller at the bank.  If the teller hands you a check with “Official Bank Check” written at the top, this is not the same as a Certified Check and could be denied at the signing table.  This would result in a potential delay of the closing of the transaction. 

Other forms of “Good Funds” accepted by Chicago Title Insurance are monies that are wired from bank to bank.  Those funds are good immeadeatly.

For more information please contact

Lisa Capes, Sales Representative

Chicago Title Insurance (Arizona)

capesl@ctt.com