July 27, 2015
We interrupt our regularly scheduled programing of compliance induced folderol for this important?message: People are actually buying and selling homes! In fact, they are buying and selling homes in?Monroe County at the fastest rate in seven years; a rate that is almost twenty percent better than the?second quarter of last year.
The chart on page 13 shows Monroe County sale transactions by quarter for the last eleven years. This?past quarter is the highest quarter since the third quarter of 2007. That?s thirty-one quarters!
What was going on in 2007? Well, the first iPhone was released; Bob Barker still hosted ?The Price Is?Right?; Miley Cyrus was better known as Hanna Montana; and we were debating the long term merits of?HD DVDs or Blu-Rays! We were also still underwriting mortgages using a mirror and the fog test; and?verifying incomes with ream sequences.
Also interesting to me are the charts on pages 14 and 15. Second quarter sales of properties not?intended to be the buyer?s primary residence (i.e. investment, commercial, vacant) peaked two years?ago in 2013. However they are still up almost 24% from quarter two of last year. Almost all of the?increase seems to be in the $200,000 and up range.
Sales of properties intended to be the buyer?s primary residence are up 17% from the same quarter last?year. These sales are at the highest level since the sales disclosure data became publicly available. The?increase is over a broader section of the pricing market than non-primary sales.
Total mortgage lending (chart page 7) while not near the refinancing induced peaks of 2009, 2012 and?2013, is still quite strong. And it?s up about 33% from quarter two of last year.
Finally, it looks like the level of foreclosures is stable. See the trend line on page 16. This is the lowest?level of new foreclosures since I began tracking them ten years ago.
We now return to our regularly scheduled program: TRID Compliance Truth or Consequences. Watch for?the October 3rd inaugural season premier!
June 22, 2015
Over the last few weeks I?ve talked with lenders about the August (Now! Woo Hoo!) October 1st Truth-in-Lending/RESPA disclosure changes. I?m happy that there seems to be a consistency in the conclusions?that are being made about the best way to comply with the new rules.
Every lender that I?ve talked with has decided that they will be the one delivering the Closing Disclosure?(CD) to the consumer. And all of them anticipate doing that with a confirmed receipt by the consumer as?opposed to mailing the disclosure seven days ahead of consummation (forever after herein referred to?as closing).
Lenders anticipate that the settlement agent will complete their portion of the CD and return to the?lender, so that it can be sent to the consumer. They also anticipate that any necessary amendments or?changes to the CD that happen in the disclosure period will be made by the settlement agent with the?Lender?s approval.
Many lenders are waiting for their software upgrade to be completed, tested and evaluated before?finalizing their process. Most anticipate this happening by the end of June.
Lenders will continue working from the purchase agreement closing date, but anticipate needing more?lead time to confirm a closing date. Seven to ten days is the time most often mentioned. And no lender?wants to issue a CD until the loan is clear to close.
No one has a good idea yet about how buyer mail-outs are going to work. An unanswered question is?whether the closing documents can be received prior to the end of the three day waiting period.
And finally everyone agrees that the required title insurance disclosure in the Loan Estimate is?confusing, convoluted and useless. Oh well. Maybe this can get straightened out in the extra sixty days?the CFPB gifted us.
Let me know if you?d like to talk about your specific situation.
May 15, 2015
The HUD-1 settlement statement serves two important purposes. One purpose is disclosing the actual?settlement costs to the buyer and seller. The other is functioning as a disbursement record for the?settlement agent. The disbursements on the HUD-1 must balance to the disbursements from the?settlements agent?s trust account. One of the less obvious differences between the HUD-1 and the new?Closing Disclosure (CD) we?ll all be using after August 1, 2015 is that the CD is not suitable for use as a?disbursement record.
The pre-closing CD will contain the final numbers for loan and some closing costs, essentially the same?fees now disclosed on the final TIL. But, the CD may also contain estimates for other non-loan related?charges ? tax pro-rations, association dues to name a couple. And it will not reflect last minute buyer?and seller credits for inspections, repairs or possession. Those items will be finalized in the three day?waiting period and changes do not require a new disclosure period.
The CD also includes a convoluted calculation of the buyer?s title insurance costs. In our market the?amount disclosed for title insurance will significantly overstate the actual cost to the buyer in almost?every purchase transaction. As a result settlement agents will also be preparing a disbursement?statement for the parties to sign which will indicate all of the credits and charges required ? the same?information contained in a HUD-1 today. The settlement agent?s form will balance to the disbursements?made from the trust account.
The American Land Title Association has created a model settlement statement which most of its?members will use to record and balance disbursements. I?ve include a copy of the form with this?month?s report. I find it ironic that this disbursement statement is remarkably similar to the one I used?early in my career before the enactment of RESPA in 1976. Try not to laugh.
All of this serves to remind us that the new rules are designed to strengthen the consumer?s position?with regard to the lender?s disclosure of loan terms, fees and closing costs, not necessarily in regards to?the other parts of the transaction outside of the lender?s control.
Complying with the new CFPB disclosure rules taking effect later this year will require that lenders and settlement service providers work more closely than ever before. In order to accurately meet the disclosure time lines we will each be entering our information into each other?s forms. It makes sense to do as much as this as possible through exchanging the information in an electronic format that is integrated with our respective production software.
Black Knight Financial Services through its RealEC unit is providing an exchange platform that will integrate leading loan origination and closing production software systems. The platform is called Closing Insight?. Several national lenders have selected Closing Insight? as the way that they will exchange settlement information with title companies doing their closings.
Softpro, the closing production system that John Bethell Title uses is integrated with Closing Insight?. Thus, allowing us and participating lenders to cede data directly into each other?s systems. Closing Insight? also includes other features to enhance scheduling and management of closings and disclosures.?Softpro is building integrations with our leading loan origination systems as well.
As your decision making evolves, we are available to consult with you about the best way to integrate our respective responsibilities in the most cost effective and compliant manner. Don?t hesitate to let us know how we can help.
As many of the quarterly charts show, business is up considerably over last year?especially in the $200,000 to $500,000 range. By most measures we experienced the best first quarter purchase market in seven years. Refinancing also increased on a year over year basis but is still well below the recent boom years of 2009, 2012 and 2013. Our own pipeline of open orders indicates that the second quarter will also represent a big year over year improvement.
Have a prosperous and profitable spring!