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Archive for the ‘title insurance’ Category

Short Sale Escalation With Social Media

Challenges arise in almost every short sale. Frustrated and running out of options, Realtor Nicole Charles of Keller Williams in Madison, Wisconsin, turned to twitter:

@Ask_WellsFargo Can anyone please help me with a short sale issue? Getting the run around an am about to lose the Buyer due to delays. HELP

Wells Fargo responded! First, in tweets, they asked for more information and direct contact. After a few more tweets and correspondence, a representative promised to escalate the matter and have answers that day. She had revived a dying sale through social media!

Escalation

Creative and persistent agents understand the importance of escalation in short sale negotiations. This can be as simple as contacting a manager or supervisor. It can also include contacting the investor or mortgage insurance company directly. The goal of escalation is to reach an individual with more authority and the ability to move the transaction towards closing. Often, the biggest challenge is simply finding contact information for that escalated individual. Some agents call Fannie Mae or Freddie Mac directly, when they know they are the investor. Others manage to glean investor contact information from hints or clues in correspondence. And this creative agent discovered the newest way to get things done – social media and twitter!

Thank you Nicole Charles for this fantastic tip!

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A new settlement among big banks may provide relief to many struggling home owners.  Nearly 20% of all home mortgages are underwater – the home is worth less than the amount owed to the bank. This has been the major cause of the foreclosure crisis nationally and a problem many have sought to remedy. A new settlement with big banks raises hope for many underwater home owners that they may be able to reduce their loan or refinance with better terms.

New Federal Settlement

Ordinarily, a bank will not lend to a homeowner if the home is worth less than the current mortgage because it requires the homeowner to borrow more money than the home is worth. Under the new settlement, tens of billions of dollars will be earmarked for homeowner relief. It is unclear how this money will be dolled out, but it is presumed that it will include:

  • Reducing the principle balance owed on a loan
  • Refinancing to a lower rate
  • Providing incentives to lenders to approve refinances, modifications, or short sales
  • Providing cash settlements to some homeowners who have already lost their home to foreclosure

As with previous federal programs (HAFA and HAMP), this program is not expected to provide broad reaching relief. It will only apply to about 10% of underwater homeowners. Nevertheless, this might be enough to stabilize the housing market and provide a much needed boost to the hardest hit segment of the market.

For a detailed summary of the settlement, see the New York Times Article.

Madison Realtors, lenders, and attorneys are invited to our seminar on Short Sales & Foreclosures:

Short Sale Seminar

February 23, 2012: 1pm – 4pm

City Center West
525 Junction Rd.
Madison, WI 53717-2152

REGISTER HERE

Licensed REALTORS, Attorneys and lenders are invited to attend this powerful seminar on short sales, foreclosures, and navigating distressed properties. This seminar has previously been approved for 3 Hours of Continuing Legal Education credits in Wisconsin.

Attorney Peter Zarov will be breaking down the foreclosure time line, the short sale process, and REALTOR’s risks and responsibilities. This class will cover:

  • Short sale time line
  • Foreclosure process and understanding timing and leverage.
  • How to avoid liability during a short sale (Your referral team, common scams, etc.)
  • The short sale packet and best practices to submit
  • The HAFA Short Sale Program and other new incentives
  • Transactional pitfalls and how to avoid them
  • Bankruptcy and how it affects sales

Agents will a acquire critical knowledge of the foreclosure process in Wisconsin, short sale procedures, and important trends in distressed property transactions.  Surviving and thriving in this market requires a familiarity and understanding of these topics. 

The Event is $15 and includes a 65 page packet of outlines, materials, and forms.  

 
 


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2011 December Home Sales Report – Wisconsin REALTORS® Association.

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Many people have media-fatigue when it comes to interest rates. It seems like 10 straight years of constant chatter that “interest rates are near historic lows.” Once again, the news, radio ads, and constant phone calls are imploring people to refinance because “rates are at or near historic lows.” Many people shrug this off and ignore it, happy with their already “historically low” interest rate. This can be a mistake. The reality is that, with a dragging economy, mortgage rates have once again dropped.

Rates ARE at Historic Lows!

Interest rates are indeed at historic lows and, for most people, it makes economic sense to refinance. At this time last year, consumers heard the same drumbeat about low rates. And the news was all true – rates were at historic lows, with 30 year rates at about 4.5%. Today, many banks are offering rates of 3.85% on a 30 Year mortgage. Once again, rates have hit record lows. But many home owners just don’t believe the hype.

Lender and Realtors will tell you that there is no better time to borrow or buy. From the standpoint of interest rates, this certainly appears accurate. Indeed, even if a homeowner purchased or refinanced this summer, it can still make perfect financial sense to refinance again. With interest rates almost a full point (ten basis points in lending terms) lower than early summer, a homeowner with a $225,000 mortgage can save over $130 per month. And, a first time homebuyer has incredible purchase power, with the combination of lower home values and incredibly low interest rates.

Is an ARM an Option?

It is hard to believe that mortgage rates could go any lower. Of course, we’ve all been saying this for 10 years. Still, most people would say it is crazy to pass on locking in on a 30 year mortgage at rates in the 3’s. Then again, how many people own the same house for more than 30 years? Most people move before the end of 10 years. Indeed, it is very common to move every 5-7 years. If you know that you will not be in the same house 4 or 5 years from now (your kids will be in college, your family will outgrow the house, your already thinking of a move), then an adjustable rate loan (an ARM) could be an incredible cost savings. Some banks are offering 5-Year Adjustable Rate Loans at 3.2% or lower. Using the same example above, a homeowner with a 5% interest rate might save $235 per month for the next 3-5 years.

The Challenges of Refinancing

There are challenges to refinancing. Of course, there is the paperwork and time. And there is also the increased standards and scrutiny. Gone are the days when a poor credit score could be overlooked. And gone are the days of easy appraisals. With housing values near or below levels seen 8-10 years ago, many homes simply don’t appraise for enough to support a new loan. For homeowners with decent credit and a lot of equity in their homes, these are not insurmountable hurdles. And, any homeowner thinking of refinancing should work with their lender and never assume they simply won’t qualify.

All of this is to say, believe the hype. Interest rates ARE at historic lows and it IS a great time to buy or refinance. Don’t pass up an incredible opportunity to save money or buy the home of your dreams.

Homestead Title is not a lender and does not provide any loan products. We do provide incredible service and great rates for Wisconsin buyers, sellers, and home owners wishing to refinance their loans.

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Sometimes the best way to avoid a closing nightmare is to simply choose the right title company. We recently met with one of our vendors to discuss how they could help our business and the salesperson shared a story about her closing at one of our competitors.

Just Sign HERE!

Joan and her husband (not their real names) had signed an offer to purchase and arrived at the title company with a mixture of excitement and nerves. Soon the emotions turned entirely to stress and nerves. The closing officer simply asked Joan to “sign and date here… sign and date here” without any explanation for each document. Joan became increasingly uncomfortable, feeling like she was signing her life away on documents she did not fully understand. She asked to call her attorney and the closing officer became huffy and irritated. Joan began to cry. This is when the unbelievable happened – the closing officer slammed the documents on the table, barked at Joan “fine, call your attorney!” and stormed out of the room.

Empathy, Insight, and Care

Providing incredible service as a title company means so much more than simply not making mistakes, quickly finishing a closing, or handling a large volume of transactions. Those are minimum standards. Great service requires that everyone involved understand the anxiety, high stress, and emotions of buyers and sellers. Attention to detail, accuracy, and efficiency are core competencies of a good title company. But empathy, compassion, and understanding of buyers, sellers, and the professionals they work with are what set Homestead Title apart. We don’t deal in “transactions.” Rather we help guide buyers and sellers through some of the most stressful moments of their lives by offering guidance, understanding, and a hands-on touch.

I’ll Never Buy a House Again!

The last thing Joan said to us after conveying this nightmare story really struck a chord – “I told my husband ‘I’ll never buy a house again!'” Her experience at the closing didn’t turn her off to that title company. She felt as if the whole process was distasteful and to be avoided. This should not come as a surprise. The closing is the last thing to happen and leaves lasting memories. Be sure to choose wisely when ordering title insurance. As a lender, attorney or Realtor, your choice of title companies reflects upon you. For hands-on, empathetic, caring service, choose Homestead Title. We will reflect well upon you.

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At least three major lenders have suspended foreclosures in nearly two dozen states, including Wisconsin. Allegations of misconduct and flawed practices in foreclosure lawsuits prompted GMAC, Bank of America, and JPMorgan Chase to put the brakes on foreclosures and halt post-foreclosure REO sales of properties in at least 23 states. Indeed, many title insurers have also suspended issuing title insurance policies for REO sales from these companies. Now, according to the New York Times, lawmakers in Washington and many states are calling for a freeze on all foreclosures. Foreclosure Furor Rises; Many Call for a Freeze, Oct 5, 2010.

At issue are flawed or false affidavits – sworn statements by the lenders’ employees who were to have reviewed the files for accuracy and correct documentation. Rather than actually review the files, these companies allegedly used “robo-signers” — employees who signed thousands of affidavits per month with no knowledge of the content and, in many cases, without even bothering to read the Affidavits.

Some Affidavits dealt with lost or missing assignment of mortgages. The bank that made the original loan often assigned or sold their loan to another bank. That bank, the new owner of the mortgage, must prove to the court that they have standing to file the foreclosure action; in other words, they are the proper party with an appropriate interest to foreclose.  They need to produce the original Assignment of Mortgage document as proof. During the hay-day of loose lending practices, many banks lost or even never had the original Assignment of Mortgage documents.

The solution: sign an affidavit that swears that the bank keeps original documents like this and the signer can’t find the original after a thorough search and investigation for the lost affidavit.

The problem: the person signing that affidavit allegedly never made a thorough investigation and has no knowledge of the file. How could he when he signed thousands every month.

In most foreclosures, the home owner never contests the foreclosure action because the homeowner had stopped paying many months earlier. These flawed affidavits usually present only procedural flaws, not real defenses on the merits. Thus, they likely only serve to slow the process and delay the inevitable.  In some cases, however, the injustice may rise beyond a lack of due process. 

No one knows the affect that this temporary moratorium will have on the real estate market or the foreclosure crisis. Yet, it certainly has created more risk and costs for lenders during the foreclosure process.  One affect may be to encourage lenders to seek foreclosure alternatives, such as short sales and deeds in lieu of foreclosure. Only time will tell.

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A deed is the legal document that transfers ownership rights (called “Title”) from one owner to the next. There are many different kinds of deeds in Wisconsin, and the type of deed used has important legal ramifications. A clear understanding of the different kinds of deeds also illuminates why title insurance is so critical.

What Deeds Do

A deed transfers an interest in property from one party to another. In addition, a deed may contain other important language that can affect the new owner, including among others, warranties and reservation of rights.

Warranties

A deed may contain certain warranties or promises. Warranties are the Seller’s promise to the Buyer regarding the title interest that the buyer will receive. The standard Warranty Deed contains the following warranty:

Grantor warrants that the title to the Property is good, indefeasible in fee simple and free and clear of encumbrances…

Thus, a Warranty Deed offers a legal promise that the buyer will receive good title. By contrast, a Quit Claim Deed contains no warranties at all. Other deeds may have limited warranties.

Reservation of Rights

Deeds may also contain reservations of rights. For instance, a deed may reserve interest or rights in the seller or grantor, such as a life estate. A deed might also contain provisions for easements or other restrictions. In other words, deeds may contain limitations on the rights the new owner will receive.

Various Types of Deeds

There are many different types of deeds, including Warranty Deeds, Quit Claim Deeds, Trustees Deeds, Sheriff’s Deeds, and Personal Representative Deeds. The major difference between each kind of deed is the level of warranties provided.

Type of Deed

When Used

Warranties

Warranty Deed In most standard sales. Warrants good, indefeasible title in fees simple, free and clear of encumbrances. This is the strongest warranty and generally gives the new owner the right to seek redress or damages from the seller in the event of most title problems.
Quit Claim Deed Many inter-family transaction, between neighbors, divorce Contains no warranties at all. A seller conveys, and the buyer receives, whatever interest the seller has in the property, even if that interest is nothing at all.
Sheriff’s Deed Sale at the end of Foreclosure Like a Quit Claim deed, there are no warranties. The Buyer gets whatever interest the sheriff was able to convey (which could be nothing at all).
Personal Representative’s Deed Used to transfer property rights from a deceased person’s estate. Involves Probate Court. Like a Quit Claim deed, there are no warranties. Generally, the Personal Representative is unwilling to warrant or promise anything relating to property that he/she has never personally owned.
Special Warranty Deed REO (Bank Owned) Sale Provides very limited warranties. Generally only warrants that the Bank had title sufficient to sell the property.

 

Title Insurance and Deeds

A title insurance policy insures that the new owner will receive good, indefeasible title, free and clear of encumbrances other than exceptions noted in the policy. You may notice that this is almost exactly what a seller Warrants in a warranty deed. Title insurance can be viewed as an insurance policy in the event that a seller breaches a warranty and is unable to pay. And, after all, how many sellers could come up with the kind of money needed to pay for a breach of a warranty?

But what if the seller gave no warranties at all? What if the deed is a Quit Claim Deed, a Sheriff’s Deed, or a Personal Representative’s deed. Then title insurance becomes even more critical. The Title policy would be the buyer’s only recourse in the event of a title defect.

Title Insurance policies always protect buyers against certain unforeseen title problems. This is often added protection above and beyond the buyer’s right to seek redress from the seller. Whenever the buyer has no right to seek redress from the seller – when there are no warranties – it becomes imperative that the buyer receive a title insurance policy.

Giving Legal Advice

This information is intended to serve as a warning to Realtors and other non-attorneys to steer clear of giving legal advice. It is important to understand the characteristics and limitations of each kind of deed. It is even more important to leave the legal advice to attorneys. If a question or issue arises involving which type of deed is appropriate, always consult an attorney.

This information was provided by Attorney Peter Zarov. The information provided is not to be construed or used as legal advice and may not be accurate outside of Wisconsin.

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Shelley K. Reynolds has joined the Homestead team as Director of Marketing & Client Relations. Shelley has more than 12 years of real estate and title insurance experience. Prior to joining Homestead Title, Shelley worked for Attorneys’ Title Guarantee, traveling in Illinois & Wisconsin as the state’s Business Development Manager for over nine years.

Shelley has extensive experience in the title insurance industry, including land searching, title examination, and real estate closings. In addition, she has valuable experience in business development and staff training, helping clients improve and grow their businesses. Her focus will be ensuring that our customers and clients receive the highest level of customer service. Shelley will assist Realtors, lenders, and attorneys with title and closing questions, rate quotes, mailing lists, and generally improving their business. She will also be introducing some new and innovative educational tools for our customers and clients over the coming months.

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Changes to Recording Fees & Social Security Protection

Effective June 25, 2010 the cost to record a real estate document in the County Register of Deeds office will be $30 regardless of the number of pages.

Formerly, the fee was based on the number of pages in a document: $11 for the first page and $2 for each additional page. This old fee structure made it difficult to give exact quotes prior to closing. The new fee will, on average, not add much in total fees and will add certainty to transactions. Lenders and Realtors will be able to give exact quotes for recording fees.

Five dollars of the new fee is designated for the removal of social security numbers from all public documents. The recording fee will revert to $25 upon the earliest of the following 1) the Register of Deeds has successfully redacted all social security numbers from electronic format; 2) January 1, 2012, unless an extension of time is granted by DOA; or 3) January 1, 2015.

New Rules for Correcting Errors in Recorded Documents

Errors in recorded documents are common and unavoidable. Everyone makes mistakes from time to time. It is how we correct those mistakes that separates us.

For over a decade, the tool for correcting a mistake was an “Affidavit of Correction.” If a deed or a mortgage contained an error, the title company or an attorney would record an Affidavit that described the error and showed how it was to be corrected. For instance, if a deed omitted a Buyer’s middle initial, the title company would file an affidavit of correction that stated: “The Deed recorded on May 24th omitted John D. Smith’s middle initial. The Buyer’s correct name is John D. Smith.”

In 2007, the Wisconsin Court of Appeals ruled in Smiljanic v. Niedermeyer, 2007 WI App 182, 737 N.W.2d 436, that using Affidavits of Correction to correct errors is not proper because there is no Statute in Wisconsin that authorizes the use of this tool. This new ruling not only made it much more difficult to correct errors, it called into question all of the past Affidavits that had been filed.

A new law now authorizes the use of Affidavits of Correction in certain circumstances and describes who must sign the document.

What May Be Corrected? A corrective instrument may be used to correct a legal description (such as a distance; unit, or building number; subdivision or condominium name, etc.), a party’s name or marital status, homestead information, dates, notary information, and a number of other issues.

Who May Sign? The new law provides that the person who may sign is a “…person having personal knowledge of the circumstances of the conveyance and of the facts recited in the correction instrument, including the grantor, the grantee, the person who drafted the conveyance that is the subject of the correction instrument, or the person who acted as the settlement agent in the transaction…” In other words, the title company, any party, or an attorney involved in the transaction can all sign.

In certain circumstances, however, only a party can sign. For instance, if a buyer is to be removed from title, THAT buyer must sign. If a parcel is corrected to add land, the Sellers must sign. 

What About Old Affidavits of Correction? The new law “grandfathers” in old Affidavits of Correction if they would be valid under the new law.

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Foreclosures continue to rise in 2010, and with them, we continue to see more REO and Sheriff’s Sales. A sheriff’s sale is the judicial auction at the end of the foreclosure process. If there are no bidders, the bank retakes the property and sells it from its “Real Estate Owned” Department, or REO for short.

Both of these sales occur after a foreclosure, a judicial proceeding designed to end all ownership rights in former owners. This raises the question:

Do buyers of these properties really need title insurance?

The Answer is a resounding YES!

A Sheriff’s sale is designed to “strip” all interests and liens from the property and sell it free and clear to a new buyer. But, that does not always happen. Lien holders, like mortgages and judgments, that are not properly named or served in the foreclosure proceedings may retain an interest in the property. Taxes likely will remain due against the property. And, certain federal liens can be enforced months after the sale.

The Sheriff’s deed provides no warranties. This means that any title problems are solely the buyer’s responsibility. While title insurance will not entirely take the place of a warranty, it provides a level of protection and insurance in the event of a title claim.

Similarly, a Bank generally will transfer the property by “Special Warranty Deed” or “Quit Claim Deed.” These deeds also lack the full warranties of an ordinary deed. The warranty is the seller’s promise of good title.  Without a full warrenty, buyers will not be able to go after the seller for most title problems.

Thus, the need for title insurance.  A title insurance policy can protect buyers from liens such as past mortgages, judgments, taxes, or construction liens that might attach to the property.

Buying a property out of foreclosure without title insurance – whether at Sheriff’s sale or through REO – is a risky proposition. The cost of an owner’s policy of title insurance is a small price to pay to substantially minimize the risk.

Title insurance, however, is not the perfect solution.  It won’t eliminate all risks.  Title policies usually include certain “exceptions” or “exclusions” from coverage. The policy may not cover for some title risks such as adverse possession, boundary line disputes, construction liens, or matters not shown in the public record (among others). A full warranty deed would be the only protection from all title claims. But, Banks and Sheriff Sales don’t generally offer full, warranty deeds.

The trade-off when buying an REO or Sheriff’s sale is a great price in exchange for a little risk… unless you don’t bother with title insurance, in which case you’ll get a great price with a whole lot of risk.

This discussion is not intended as legal advice and should not be used outside of Wisconsin.  Buyers of REO or Sheriff sale properties are urged to seek the advice of a qualified attorney.

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