I received the following info from a realtor friend's email newsletter; thought I'd share... Happy 2014! Bo
Mortgage Changes to Know in 2014
The New Year is almost here, and with it comes a bevy of legal and regulatory changes, especially for the mortgage industry. To help potential homebuyers understand how the changes will affect their mortgage processes, Don Frommeyer, CRMS, President of NAMB (The Association of Mortgage Professionals), outlines some of the regulations set to start in January 2014.
“Since 2009, the housing market has been working to create standards and regulations that minimize the risk of another mortgage industry fiasco,” says Frommeyer. “The ability-to-repay mandate is a perfect example of this and it exemplifies how mortgage professionals are taking extra caution with every customer.”
Upcoming mortgage industry changes include:
- Ability-to-Repay Mandate: The CFPB designed this regulation to set a gold-standard for lending to ensure each and every borrower is a qualified borrower. Lenders will follow a set of guidelines to establish a consumer’s income, assets and obligations before deeming them eligible. The CFPB rules establish a standard for what the government considers a “qualified mortgage.”
- Decrease in FHA Loan Limit: The Federal Housing Administration (FHA) announced that beginning January 1, 2014, mortgages will be limited to $625,000, down from $729,750. Homebuyers looking to obtain a larger loan will have to apply for a jumbo loan, which will most likely come with a higher down payment. “For many areas of the country this change won’t be a huge issue as average home prices fall below the established limit. However, borrowers in metropolitan areas with higher average housing prices may face challenges when applying for mortgages as the 20 percent down payment associated with jumbo loans will be an enormous increase from a traditional loan’s 3.5 percent down payment,” notes Frommeyer.
- Caps on Loan Origination Fees: January 10, 2014 brings a rule for the Qualified Mortgage that points and fees on mortgages cannot exceed 3%.
- Tighter Regulations for Self-Employed: As the rules to create a QM (qualified-mortgage) take effect, people without a W-2 will face difficulty when they apply for loans. It’s more of a task for individuals to prove their debt-to-income ratio without the proper documentation, even if they have a high net-worth and perfect credit. The income is calculated bringing into play the customer write offs to reduce taxable income.
For more information, visit www.namb.org
Friday, January 10, 2014
Monday, September 23, 2013
Deed is DONE!
The last time I wrote about deeds I discussed the different forms of deeds, such as Quit-Claim Deeds, Security Deeds and Warranty Deeds. To read “Doing the Deed” click HERE. This time I’m going to discuss several issues relating to deeds.
If you own a property by yourself, it’s solely in your name. That’s a simple concept; not much to understand about that. If you own a piece of property with someone else, the specific language in that deed is very important. Let’s say a property was conveyed to Sonny and Cher (note to anyone under 40: Google them). Yep, no question about it--Sonny and Cher own their property; that’s simple enough. BUT, like all my political rants about unintended consequences, if it’s just spelled out that Sonny and Cher are the owners (with no other special language) there could be issues lurking down the road. If you’re curious, that type of deed would be called “Tenants in Common”. Put that thought on hold and let’s try another scenario.
I won’t bore you with statutes and history but years ago the Georgia legislature created another deed concept called “Joint Tenants with Right of Survivorship”. That meant that if Sonny and Cher took title as Joint Tenants, they more or less owned the entire property together—however, if either one of them passed away, the title to the entire tract would pass to the other immediately as an operation of law.
The distinction for these two deed formats is specific to the language. As noted, the Joint Tenants deed passes title immediately upon the death of one of the Joint Tenants. Contrast that with Tenants in Common—picture a big line drawn through the property. With Tenants in Common each “Tenant” owns their “half”. So if Sonny died, Cher still owns her half but now Sonny’s estate owns the other half. This may or may not be a big deal—if Sonny has a will giving everything to Cher, then she gets the entire property just like the Joint Tenants deed. The difference? With the Joint Tenants deed, Cher would have received the property ‘automatically’ upon Sonny’s death. With the Tenants in Common, Cher has to Probate the Will through the Court system or Administer the estate if there was no will. Either process involving the court will cost money and time—something that Cher may not have depending on her situation. If she received the property through the Joint Tenancy deed, she can do what she needs immediately, no waiting!
Take a look at the deed to your own house. TYPICALLY attorneys will default to creating a Joint Tenants With Rights of Survivorship for closing OR they will give you the option. If that’s your intent, great, the JTWROS deed is a useful tool. Take a look at your parents’ deed—was it an older deed that just has both of their names (Tenants in Common) OR was it just in ONE of their names? Again, through the court system, a surviving spouse will ‘eventually’ be able to receive the property BUT why put up barriers that involve time and expense?
What if you own a vacation house with another family? If by mistake the lawyers used a JTWROS deed, then if Family Dad 1 dies then Family Dad 2 would own the complete property. Most likely that won’t be an issue (e.g. will Family Dad 2 effectively kick out the heirs of Family Dad 1? He could!) but we attorneys hear all sorts of horror stories (and even within families—it’s weird how money can induce craziness into families).
What about a ‘blended’ family? Take the Brady Bunch. If Mr. Brady wanted only HIS sons to receive his interest in his property, then Tenants in Common may be the way to go for him. That way Mrs. Brady would get her share and the sons would get theirs. However, there could be a LOT of issues that could come up so you really need to think things through and PLAN with both the deed and a well-crafted Will.
One final issue to discuss is Divorce. So Sonny and Cher hit a rough patch and decide to go their own way. In the divorce decree (the ‘road map’ to the divorce, more or less a contract telling what must happen) it says Sonny will deed the house to Cher, so he does. Now Cher owns the house, right? Here’s the classic “What if” situation—what if Sonny and Cher had a loan? Well, Cher may own the house, but BOTH Sonny and Cher are tied together through the loan. Actually, look at it this way—Sonny and Cher’s CREDIT is tied together through the loan. If Sonny wants to buy his own place, he may not be able to do so until Cher pays off that loan or refinances that loan ‘solo’ (e.g. Sonny is no longer on a loan tied to the old house). Again, a simple concept, but I get calls or emails all the time relating to this. More “what if’s” for you—now let’s say Cher stops paying the mortgage; obviously her credit is trashed and she may lose the house. BUT guess whose credit is also trashed? Sonny’s, because he is still on the loan! He may never know this until he is turned down for a Home Depot credit card or something much more important like his own loan or even a job!
On a similar note, what if Cher got the house and the divorce decree actually states clearly that Cher must refinance or sell the house to get Sonny’s interest released? That is a great idea and ANY divorce attorney should make sure that is in the decree (with time limits!). BUT (there’s always a but, right??)—what if the house is ‘upside down’ and cannot be sold or refinanced? These are serious concerns with no easy answer. I just want to point out some of these issues so that you can properly plan for the future should this event happen to you.
The moral of the story? You should get thee to the file cabinet, safety deposit box or simply contact your closing attorney and find out how you hold title to your property (and again, ask your parents, grandparents or kids, etc.). At a minimum it’s best to have both spouses on title and ‘in general’ it’s best to have a Joint Tenant With Rights of Survivorship Deed. As noted, everyone’s situation is different (I didn’t even touch on tax liabilities, which I’m not really qualified to do!) so start by looking at your deed and then consult your estate planning attorney, CPA and real estate attorney to do what’s right for you!
As always, if you find some generic deed online, you’ll probably get what you pay for (meanwhile, your home is merely your most important asset but what’s $50, eh?). Likewise, I saw a will creator program at my local warehouse club for $45. All I can say is this—you may be dead, but do you want to burden your family with a ‘what if’ that comes to life due to some wacky software glitch? Let me know how I can help, either a quick review of your deed and/or revision as well as helping to craft a simple will for you that’s in line with your current situation. I’d love to help serve you! Thanks as always for reading, take care! Bo
If you own a property by yourself, it’s solely in your name. That’s a simple concept; not much to understand about that. If you own a piece of property with someone else, the specific language in that deed is very important. Let’s say a property was conveyed to Sonny and Cher (note to anyone under 40: Google them). Yep, no question about it--Sonny and Cher own their property; that’s simple enough. BUT, like all my political rants about unintended consequences, if it’s just spelled out that Sonny and Cher are the owners (with no other special language) there could be issues lurking down the road. If you’re curious, that type of deed would be called “Tenants in Common”. Put that thought on hold and let’s try another scenario.
I won’t bore you with statutes and history but years ago the Georgia legislature created another deed concept called “Joint Tenants with Right of Survivorship”. That meant that if Sonny and Cher took title as Joint Tenants, they more or less owned the entire property together—however, if either one of them passed away, the title to the entire tract would pass to the other immediately as an operation of law.
The distinction for these two deed formats is specific to the language. As noted, the Joint Tenants deed passes title immediately upon the death of one of the Joint Tenants. Contrast that with Tenants in Common—picture a big line drawn through the property. With Tenants in Common each “Tenant” owns their “half”. So if Sonny died, Cher still owns her half but now Sonny’s estate owns the other half. This may or may not be a big deal—if Sonny has a will giving everything to Cher, then she gets the entire property just like the Joint Tenants deed. The difference? With the Joint Tenants deed, Cher would have received the property ‘automatically’ upon Sonny’s death. With the Tenants in Common, Cher has to Probate the Will through the Court system or Administer the estate if there was no will. Either process involving the court will cost money and time—something that Cher may not have depending on her situation. If she received the property through the Joint Tenancy deed, she can do what she needs immediately, no waiting!
Take a look at the deed to your own house. TYPICALLY attorneys will default to creating a Joint Tenants With Rights of Survivorship for closing OR they will give you the option. If that’s your intent, great, the JTWROS deed is a useful tool. Take a look at your parents’ deed—was it an older deed that just has both of their names (Tenants in Common) OR was it just in ONE of their names? Again, through the court system, a surviving spouse will ‘eventually’ be able to receive the property BUT why put up barriers that involve time and expense?
What if you own a vacation house with another family? If by mistake the lawyers used a JTWROS deed, then if Family Dad 1 dies then Family Dad 2 would own the complete property. Most likely that won’t be an issue (e.g. will Family Dad 2 effectively kick out the heirs of Family Dad 1? He could!) but we attorneys hear all sorts of horror stories (and even within families—it’s weird how money can induce craziness into families).
What about a ‘blended’ family? Take the Brady Bunch. If Mr. Brady wanted only HIS sons to receive his interest in his property, then Tenants in Common may be the way to go for him. That way Mrs. Brady would get her share and the sons would get theirs. However, there could be a LOT of issues that could come up so you really need to think things through and PLAN with both the deed and a well-crafted Will.
One final issue to discuss is Divorce. So Sonny and Cher hit a rough patch and decide to go their own way. In the divorce decree (the ‘road map’ to the divorce, more or less a contract telling what must happen) it says Sonny will deed the house to Cher, so he does. Now Cher owns the house, right? Here’s the classic “What if” situation—what if Sonny and Cher had a loan? Well, Cher may own the house, but BOTH Sonny and Cher are tied together through the loan. Actually, look at it this way—Sonny and Cher’s CREDIT is tied together through the loan. If Sonny wants to buy his own place, he may not be able to do so until Cher pays off that loan or refinances that loan ‘solo’ (e.g. Sonny is no longer on a loan tied to the old house). Again, a simple concept, but I get calls or emails all the time relating to this. More “what if’s” for you—now let’s say Cher stops paying the mortgage; obviously her credit is trashed and she may lose the house. BUT guess whose credit is also trashed? Sonny’s, because he is still on the loan! He may never know this until he is turned down for a Home Depot credit card or something much more important like his own loan or even a job!
On a similar note, what if Cher got the house and the divorce decree actually states clearly that Cher must refinance or sell the house to get Sonny’s interest released? That is a great idea and ANY divorce attorney should make sure that is in the decree (with time limits!). BUT (there’s always a but, right??)—what if the house is ‘upside down’ and cannot be sold or refinanced? These are serious concerns with no easy answer. I just want to point out some of these issues so that you can properly plan for the future should this event happen to you.
The moral of the story? You should get thee to the file cabinet, safety deposit box or simply contact your closing attorney and find out how you hold title to your property (and again, ask your parents, grandparents or kids, etc.). At a minimum it’s best to have both spouses on title and ‘in general’ it’s best to have a Joint Tenant With Rights of Survivorship Deed. As noted, everyone’s situation is different (I didn’t even touch on tax liabilities, which I’m not really qualified to do!) so start by looking at your deed and then consult your estate planning attorney, CPA and real estate attorney to do what’s right for you!
As always, if you find some generic deed online, you’ll probably get what you pay for (meanwhile, your home is merely your most important asset but what’s $50, eh?). Likewise, I saw a will creator program at my local warehouse club for $45. All I can say is this—you may be dead, but do you want to burden your family with a ‘what if’ that comes to life due to some wacky software glitch? Let me know how I can help, either a quick review of your deed and/or revision as well as helping to craft a simple will for you that’s in line with your current situation. I’d love to help serve you! Thanks as always for reading, take care! Bo
Thursday, May 23, 2013
Owner's Title insurance; why or why not?
I'm always surprised when someone chooses to waive their optional owner's title. This typically happens with a buyer from out of state (who is not well-versed in title issues found in Georgia) or with someone who thinks that they are covered by the Lender's title policy. I guess the easiest way to ponder that is to look at the name... "Lender's" versus "Owner's". Who is actually protected???
So the recent cash buyer 'saved' around $900 on their new purchase but what if someone makes a claim against the $240,000 equity in their new home? Considering the price differential, I'd say the choice is clear!
Still not convinced? Check out these links for some light reading! Be safe out there!
PROTECT YOUR INVESTMENT
WHY OWNERS TITLE
So the recent cash buyer 'saved' around $900 on their new purchase but what if someone makes a claim against the $240,000 equity in their new home? Considering the price differential, I'd say the choice is clear!
Still not convinced? Check out these links for some light reading! Be safe out there!
PROTECT YOUR INVESTMENT
WHY OWNERS TITLE
Friday, February 15, 2013
A quick refresher on how to title your property
This LINK should take you to a question asked online. It was answered by another real estate attorney and I added my thoughts as well. Between the two, this should give you some points to ponder re: how to title your home.
Have a great weekend! Bo
Have a great weekend! Bo
Monday, September 17, 2012
Enough of this running S&%#!
(One of my favorite comments from Sean Connery, in the movie Untouchables)
So I had to drop off a vehicle for service last Saturday; Susie was running errands so I figured I would just run home (i figured it was 'a few' miles away; it was 2.6; no problem). I also had to run into a store (on the way). Again, no problem.
Reality check: at 46 and I haven't RUN in oh... over a year +? this was an 'interesting' idea.
So the store was .4 miles from service place (thank GOODNESS as I was already hurting!). Asked the Q I needed to ask, left and started the run again. The quick 'rest stop' helped. Ran a mile; hit 'a wall' and that was the end of it (it was, however a sub-9 minute mile ; ) Ran about a half mile more along the way (uphill, mind you) but sad to say, I only ran the one mile, complete.
Sunday/today; my thighs are killing me and I am definitely feeling my age :) (We still did our 5 mile walk with the dogs yesterday)
SO if any of you other 'old farts' decide to get uppity like me, think twice :)
So I had to drop off a vehicle for service last Saturday; Susie was running errands so I figured I would just run home (i figured it was 'a few' miles away; it was 2.6; no problem). I also had to run into a store (on the way). Again, no problem.
Reality check: at 46 and I haven't RUN in oh... over a year +? this was an 'interesting' idea.
So the store was .4 miles from service place (thank GOODNESS as I was already hurting!). Asked the Q I needed to ask, left and started the run again. The quick 'rest stop' helped. Ran a mile; hit 'a wall' and that was the end of it (it was, however a sub-9 minute mile ; ) Ran about a half mile more along the way (uphill, mind you) but sad to say, I only ran the one mile, complete.
Sunday/today; my thighs are killing me and I am definitely feeling my age :) (We still did our 5 mile walk with the dogs yesterday)
SO if any of you other 'old farts' decide to get uppity like me, think twice :)
Friday, September 7, 2012
"Doing the deed"
In real estate, you hear the word ‘deed’ a lot but sometimes it’s not clear what is being referenced. A deed conveys or transfers property from one to another, be it an entity or an individual—that is consistent for all deeds. The key is what this deed actually SAYS. Sometimes the title of the deed is clear (like “Warranty Deed” at the top of the instrument), but that could be meaningless if the internal wording is incorrect or less than an absolute warranty of title. Let’s explain…
The ‘best’ deed is a Warranty Deed. If I transfer a property to you with that, I am warranting that I own it and can freely transfer it to you. I also give you a ‘warranty’ that I will help defend that clear title (thank goodness for Owner’s Title policies!). The ‘worst’ deed is a “Quit-Claim” deed (no it is NOT a quick-claim or quick deed!). The Quitclaim deed transfers ‘whatever I own’ to you. If I am the full owner of the property, great! That means you own whatever I ‘gave’ you. What if I don’t own it? Well, if I EVER take ownership of that property down the road, then that deed more or less finally kicks in (as an example, I can deed you the Golden Gate Bridge, but you didn’t get anything because I don’t currently own that beautiful piece of living history. BUT if I ever do (somehow) own it, guess what? At that point it’s yours!)
Interested in buying a foreclosed property? A Bank takes title to the property through a “Deed Under Power”, meaning they used their power of sale embedded in the Security Deed to ‘take back’ the property when the owner defaults. (A Security Deed transfers an ownership interest to the Bank in order to Secure their interest in the property—an analogy is a car title where you and the Bank own the secured item together). Now that the Bank owns the property, they will sell it to you using a “Limited Warranty Deed” (sometimes called a “Special Warranty Deed”). There is specific language in that deed noting that they warrant and guaranty the title to the property ONLY through their time of ownership ‘forward’ in time (in other words, “we only promise to defend any claims that showed up AFTER we obtained this property).
Next time I will talk about “issues” with deeds. When I am cleaning up titles, I find a lot of unintended consequences (incorrect names, incorrect descriptions, incorrect format, etc.). One thing I will say is that you are risking a lot when you use a deed you found on the internet or some cheap office-supply form. Isn’t the ownership of your home worth the $50-150 an attorney would charge to prepare that instrument? You will hopefully decide YES once you see the next newsletter…!
As a side note, I have received various “official” notices in the mail with a very strong call to action. This call to action virtually screams that I MUST contact them and get a copy of my property deed TODAY (oh, and send them $55-85 for this important service). Here’s the deal—if you have signed any deed of conveyance, the attorney who handled this should have mailed you the original. Can’t find it? No problem! Go to your county Clerk of Superior Court (property records division) and get a copy… for FIFTY CENTS. Yep, those ‘official’ notices are a scam—legal, but still an absolute scam. Be safe out there!
The ‘best’ deed is a Warranty Deed. If I transfer a property to you with that, I am warranting that I own it and can freely transfer it to you. I also give you a ‘warranty’ that I will help defend that clear title (thank goodness for Owner’s Title policies!). The ‘worst’ deed is a “Quit-Claim” deed (no it is NOT a quick-claim or quick deed!). The Quitclaim deed transfers ‘whatever I own’ to you. If I am the full owner of the property, great! That means you own whatever I ‘gave’ you. What if I don’t own it? Well, if I EVER take ownership of that property down the road, then that deed more or less finally kicks in (as an example, I can deed you the Golden Gate Bridge, but you didn’t get anything because I don’t currently own that beautiful piece of living history. BUT if I ever do (somehow) own it, guess what? At that point it’s yours!)
Interested in buying a foreclosed property? A Bank takes title to the property through a “Deed Under Power”, meaning they used their power of sale embedded in the Security Deed to ‘take back’ the property when the owner defaults. (A Security Deed transfers an ownership interest to the Bank in order to Secure their interest in the property—an analogy is a car title where you and the Bank own the secured item together). Now that the Bank owns the property, they will sell it to you using a “Limited Warranty Deed” (sometimes called a “Special Warranty Deed”). There is specific language in that deed noting that they warrant and guaranty the title to the property ONLY through their time of ownership ‘forward’ in time (in other words, “we only promise to defend any claims that showed up AFTER we obtained this property).
Next time I will talk about “issues” with deeds. When I am cleaning up titles, I find a lot of unintended consequences (incorrect names, incorrect descriptions, incorrect format, etc.). One thing I will say is that you are risking a lot when you use a deed you found on the internet or some cheap office-supply form. Isn’t the ownership of your home worth the $50-150 an attorney would charge to prepare that instrument? You will hopefully decide YES once you see the next newsletter…!
As a side note, I have received various “official” notices in the mail with a very strong call to action. This call to action virtually screams that I MUST contact them and get a copy of my property deed TODAY (oh, and send them $55-85 for this important service). Here’s the deal—if you have signed any deed of conveyance, the attorney who handled this should have mailed you the original. Can’t find it? No problem! Go to your county Clerk of Superior Court (property records division) and get a copy… for FIFTY CENTS. Yep, those ‘official’ notices are a scam—legal, but still an absolute scam. Be safe out there!
Friday, July 13, 2012
What does "Preferred" mean to you?
I remember a brief conversation I had with a realtor recently... I asked who she typically closes with; she noted she closes with her 'preferred' attorney (e.g. the law firm that is 'partnered' with her real estate brokerage). I knew the firm and tossed out the location of an office; she said, "oh no, I don't like that office, I don't use them."
She had also asked a real estate favor (that took me all of 5 minutes to sort out/answer with some quick research) and asked why her 'preferred' attorneys didn't help her; she noted with a smirk "Yeah, if I can get them on the phone." My thought is this--WHY DO YOU REWARD THEM WITH YOUR BUSINESS?
Here's a question for you--if you are working with a law firm (or Realtor, Loan Officer, etc.), try calling them. Did you get them? How long did it take for you to get a response? If you're not satisfied, MAKE A CHANGE!
Hope you all have a great weekend! Bo
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