Feeds:
Posts
Comments

Posts Tagged ‘madison’

Closing Cost Credits – Buyer Beware!

A simple contract term can cause so much confusion:

“Seller shall provide buyer with a closing cost credit of $3,000 at closing.”

Closing cost credits are often used to help buyers cover their costs or to address contract issues prior to closing. When Buyer’s and Sellers agree on this credit, everyone should be happy. Unfortunately, it is not that simple.

The buyer’s lender must approve all closing credits and they must appear on the HUD-1 Settlement Statement. Problems arise when lenders reject these credits.

Contract Language and Communication

Realtors must draft good contract language and communicate with their Buyers. First, Realtors may provide for a “closing cost and prepaid” credit. Lenders will only allow credits up to the amount of the Buyer’s actual closing costs. Including “prepaids” allows many lenders to increase the allowable credits to include prepaid mortgage interest and tax escrows. Realtors should also avoid excessively large closing cost credits. In Dane County, for instance, it is unusual for closing costs to exceed $3,500. A closing cost credit of $8,000 is virtually certain to be denied. It is also important to communicate with your Buyers and warn them that the closing cost credit requires lender approval. Prepare them for the possibility that the credit may be limited or even rejected.

Avoiding Lender Rejection of Credits

Many Realtors or attorneys include provisions that reduce the purchase price by the amount of any rejected credits. Beware: this can cause delays and the need to re-underwrite a loan. The seller may also credit “prepaid” items to increase the allowable credits. Check with the lender prior to drafting the “closing cost and prepaid credit” provision to make sure it is acceptable. The best practice is to avoid closing cost credits that exceed actual closing costs.

Most importantly, if a lender rejects a credit, there are certain things that are not acceptable:

  • Do NOT have the Seller write a personal check to the Buyer at closing
  • Do NOT ask the title company to write a check to the buyer, and reduce the seller’s proceeds by that amount.
  • Do NOT have the Realtors write a check to the Buyers.

Each of these “solutions” may constitute loan fraud. It is never worth risking a Realtor’s license or an attorney’s practice to assist or instruct their clients in the commission of loan fraud (no matter how unlikely it may seem that there would be any real consequences).

This information is provided by attorney Pete Zarov. This is not intended to constitute legal advice and should not be relied upon in place of individualized legal advice. For more real estate tips, check out Homestead Title’s blog.

Read Full Post »

State of Wisconsin Accidentally Releases Social Security Numbers

Many Wisconsin residents who sold their homes last year are receiving ominous looking letters from the Wisconsin Department of Revenue (DOR). The letters warn that the DOR is “taking precautions to protect confidential information pertaining to your 2011 real estate sale.” Specifically, the state inadvertently included social security numbers in sales data that is routinely posted on their website. This data is intended for use by appraisers and Realtors to track property sales and values. The information remained on the site from April 5 through July 23, 2012 and only related to 2011 real estate sales.

The data was included in an embedded file (it was not readily apparent or readable) and was only downloaded 138 times. The State insists that there is no sign that criminals accessed the information. “We have a responsibility to protect the sellers who had their personal information included in the report, and we have reached out to the real estate and appraiser organizations to contact their members to destroy the file. We know the individuals who downloaded this file are using it for their own business purposes and have no malicious intent, yet we will be offering free credit monitoring for a year for the individuals who may have been impacted by this situation,” said Secretary Richard G. Chandler.

The DOR has been mailing letters to sellers that may have been impacted and offering them one year of free credit monitoring. Sellers can also contact the DOR directly at 888-947-3452 or realestate@wisconsin.gov.

For more information, see:

http://www.revenue.wi.gov/news/20120724_01.pdf

Read Full Post »

February might have been a great month! The National Association of Realtors will release its existing-home sales data tomorrow and many analysts are already predicting strong numbers. Bloomberg reports that home purchases climbed in February to the highest level in almost two years. New construction, on the other hand, shows a more mixed message. Today, the Commerce Department reported that housing starts fell in February but permits for future construction jumped to their highest level in over 3 years.

Unsold Inventory, Low Prices and The Drag on the Economy

Unsold inventory and lost equity continue to be a drag on our economic recovery. Despite steady improvement in both new construction and existing homes, an oversupply of unsold homes continues to keep prices down and slow the recovery. (U.S. Housing Report Shows Uneven Growth, N.Y. Times, March 20, 2012). This oversupply also includes the vast “Ghost Inventory” of distressed properties, such as short sales, foreclosures, and REOs.

These depressed prices and the loss of homeowner’s equity both caused the economic crisis and is slowing the recovery. The decline in home values (prices) has restricted borrowing power, further slowing the recovery. Indeed, many people are unable to tap the value of their home by refinancing or selling. As an unexpected consequence, our economic recovery has been strongest in areas that did not have severe price drops, reports Amir Sufi, professor of finance at the University of Chicago. (Measuring Housing’s Drag on the Economy, New York Times, February 24, 2012). Likewise, the recovery has been weak in states like Arizona, California, Florida, and Nevada – states hit with the larges housing price declines.

Thus, the improvement in home sales is the first piece of good news. A full economic recovery, however, may require more than strong numbers in new and existing home sales. It will likely require more robust recovery in home prices.

Read Full Post »

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!

Read Full Post »

Free Legal Help for Homeowners Facing Foreclosure in Dane County

Dane County Foreclosure Prevention Taskforce
http://www.daneforeclosurehelp.org
For more information contact:
Dan O’Callaghan (608) 283-0117or Ellen Bernards (608) 576-8658

  

What:            FREE LEGAL HELP!  For homeowners facing foreclosure. Help available in English and in Spanish Ayuda disponible en español también.

Who:              For homeowners who have received a Foreclosure Summons and Complaint

When:           11:00 am – 1:00 pm, Thursday, March 1, 2012 & Every 1st and 3rd Thursday of the month.

Where:          City-County Building, 3rd floor, 210 Martin Luther King Jr. Blvd.

THIS IS A RECURRING EVENT, 1ST AND 3RD THURSDAY OF EACH MONTH.

FREE LEGAL HELP is available for Dane County homeowners in foreclosure.  Homeowners can receive basic legal information and free assistance in writing an Answer to the lawsuit at the Foreclosure Answer Clinic.  The Clinic has assisted almost 200 homeowners to understand the legal process of foreclosure and to respond their lawsuit. Homeowners who respond in writing to the lawsuit have more control over the process and a better chance for a favorable outcome.   

Homeowners have ONE CHANCE to file an Answer to their lawsuit. Filing an Answer is one of the critical things a homeowner MUST do even if the homeowner is in communication with the lender and working on options such as a loan modification or short sale.

Time is of the essence because homeowners generally have only 20 calendar days from the date they receive the initial lawsuit papers to file a formal response called an Answer.  Failing to file an Answer to the lawsuit on time significantly reduces homeowners’ control over the process and their ability to share their story with the judge. In addition, they may not be notified of important steps in the court process of foreclosure.

The Clinic is open the 1st and 3rd Thursdays of each month from 11:00 a.m. to 1:00 p.m. on the 3rd floor of the City-County Building, 210 Martin Luther King Jr. Blvd, Madison.  No appointments are necessary.  Homeowners should bring their Summons and Complaint as well as any other relevant papers about the foreclosure.  

The Foreclosure Answer Clinic is a collaborative effort of the Dane County Foreclosure Prevention Taskforce, the Dane County Bar Association and the UW Law School, with grant funding provided by the State Bar of Wisconsin and other support provided by Dane County.

Who We Are.  The Dane County Foreclosure Prevention Taskforce is a coalition of public agencies, non-profit service providers and other community partners working together to develop sustainable alternatives to foreclosure in Dane County. For more information, please visit daneforeclosurehelp.org.

Our Mission.  To develop and implement a coordinated response to the current foreclosure problem in Dane County. 

Read Full Post »

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.  

 
 


Read Full Post »

2011 December Home Sales Report – Wisconsin REALTORS® Association.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

The Banks’ Dilemma:

To Foreclose or Accept a Short Sale?

Over the past 4 years, short sales – house sales in which the bank holding a mortgage agrees to accept less than the full amount due – have proliferated. Short sale experts have worked hard to dispel the myth that banks never negotiate and never accept less. But now, a recent New York Times article suggests that there may be some truth to that myth.

In a recent article, the Times reported that banks are resisting short sales and putting more focus on foreclosures. In fact, there are some incentives for banks to foreclose, even when a short sale will reduce risk and financial losses. New accounting rules allow banks to delay the “write down” of their loss until the house later sells. In a short sale, by contrast, the bank must take the loss immediately. In addition, the bank with which realtors and home owners negotiate are only one interested party; they are the servicer. Short sales usually also need to have the approval of investors, underwriters, and/or private mortgage insurance companies. And, while the recent foreclosure freeze highlighted the risks associated with foreclosure, banks face many risks in short sales, including fraud. A bank’s decision to agree to a short sale may involve far more than a simple cost-benefit analysis assumed by Realtors, attorneys, and distressed homeowners.

The Times article states that banks are “historically reluctant to do short sales” and suggests that they may be more likely to foreclose, even in the face of a good offer. This has not been our experience, based on anecdotal evidence. Rather, most banks appear very open to negotiating short sales, especially when there is a bona fide buyer in the wings. A large number of short sales are closing. Homestead Title is analyzing data over the past 3 years to determine the percentage of sheriff’s sales in Dane County in relation to the percentage of foreclosure filings.

Homestead Title offers expertise and guidance throughout the short sale process. Owner and attorney Peter Zarov often teaches seminars on foreclosures, short sales, and distressed properties. We will continue to provide updates, information and resources on these topics.

Read Full Post »

« Newer Posts - Older Posts »