Combining the RESPA based Good Faith Estimate with the TILA disclosure required by the Truth In Lending Act into one easy to understand form is one of the many mandates given the recently created federal Consumer Finance Protection Bureau. I wrote last week in my February Mortgage Market Share commentary about an American Land Title Association suggested version of such a combined form. (click archives button on right sidebar)?
Others are also noticing that the current form of GFE falls short in providing consumers with all the information that they require to make intelligent decisions. Today?s New York Times contains an article about other problems with the form. It?s a good read and here?s the link.
What?s your favorite indicator of where the market it going? Each month I publish a variety of Monroe County statistics hoping to lend perspective to our local real estate and mortgage finance markets. Mortgage and deed recordings, transfers, foreclosures started and finished just to name a few. I slice them, dice them and try to put them in meaningful relationships with a cool graph or two.
The Monthly Mortgage Market Share report reflects my unfulfilled desire to find the holy grail of market indicators. The one stat that above all others would tell me when the market would turn, how vigorous it would be and when it would end. Were I able to find such a metric, I?d be forever free from the anxiety of living or dying with daily order counts?a curse I?ve endured for over thirty years.
My job would be easy. My confidence would soar. I?d know exactly what decisions to make and I?d always be right. Staffing, capital expenditures, expansion would all be easy considerations. Alas, my search continues. I do know if asked that ?Well, we?re busy in the summer, and slow in the winter.? But that?s about it. Anything else I can add is history; what happened last month, quarter or year.
So I still form my opinions about the future from anecdotal evidence that over the years I?ve learned to trust. For example, I mentally track the number of new for-sale signs between home and the office every week. Before email and Adobe? attachments became common place, I could tell how things were going by how much fax paper we used every day. More than a ream and I knew that?we?d be rocking soon.
One of my favorite?market predictors is the weekend parking lot indicator. It?s quite simple. On any Saturday or Sunday, I just look out my office window and across the street to Re/Max Professionals? parking lot. When it?s empty, I know that none of my friends are schlepping buyers around looking for dream houses. When it?s full though, especially with cars I don?t recognize, get ready. The market will be turning soon. Make sure there?s paper in the fax. Right now this indicator is pretty darn bullish.
What?s your favorite market indicator?? Leave a comment and let the world know.
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Recently a closing was delayed, let me share this scenario offered up by one of our Closing Specialists, Stephanie Monzo…
You have a client purchasing a property and plans to bring? $10,000.00 as a down payment for the purchase.? You have prepared your client to wire the funds to the Title Company and explained the GF Law.? However, due to a few delays in the process figures do not arrive to the Title Company until late the day before closing.? Your client makes a trip to the Bank and estimates they need to bring $10,600.00 based on figures from the GFE.? The bottom line on the HUD ends up being $10,750.00.? The buyer shows up with $150.00 in a cashiers check.? DUE to the Good Funds Law a Title Company cannot accept the cashiers check.? Any funds $10,000.00 and over must be in the form of wire funds.? A cashiers check?or?personal check? will not be acceptable.
The point to this scenario is to always over estimate what your client should wire to the Title Company whenever you’re working with tight deadlines.? The Title Comapny can always refund the overage.
Mortgage foreclosures are once again making headlines. This time it?s about revelations that documents used by the lenders to prove to the court that the foreclosure is warranted may be faulty.
Here is a link to a great New York Times article about how this all came to light.
Courts require evidence in order to prove that a borrower is in default under their loan.?Often this evidence is provided in the form of a sworn affidavit made by an employee of the lender. The affidavit states?how much is owed and other pertinent facts necessary to establish that a foreclosure and resultant eviction is warranted.
The affidavit will state that the employee making it has personal knowledge of the facts. Apparently in many instances this may not be true. Lenders?are accused of?hiring employees?just to sign?hundreds of these affidavits every day without much understanding of what the affidavits meant, let alone whether the facts were true.
And if the evidence used to support the judgment of foreclosure is faulty, maybe the foreclosure itself is faulty? That?s what borrower?s attorneys will be arguing anyway.
Investors and homeowners that have recently purchased property that came through foreclosure are concerned. If the validity of the foreclosure is challenged because of a faulty affidavit or other reason, where does that leave them??Hopefully?the?new owners purchased or received an owner?s title insurance policy when they acquired the property.?If the foreclosure is later challenged, in most instances the title insurance company will be obligated to defend the new owners in court.
In the unlikely (in my opinion) event the foreclosure is overturned, the title insurance company would either make a payment to secure the new owner?s title or pay the new owner the value of the loss up to the policy amount.
As far as new or pending foreclosures, the major national title insurers are considering requiring that?the lenders agree to protect the title insurer from claims that the?court?proceedings are faulty. Otherwise the title insurers?may not insure new purchasers against a challenged foreclosure.
The largest national lenders have postponed their foreclosure activities in the twenty three states where a court must approve a foreclosure. (Indiana is one of them.) Once they review their processes, they may resume the foreclosures or re-file the affidavits. On properties they now own where the foreclosure has been completed it will be interesting to see if they go back and re-open the foreclosure.
Lenders must also deal?with the political fallout of fifty state attorney generals running for office while investigating their foreclosure practices.?Class actions lawsuits are sure to follow.
This story is strangely fascinating. It?s like watching an avalanche or earthquake in slow motion ?not knowing what will be damaged or destroyed next, but being certain that something will.