Wednesday, January 28, 2009
Time and Place
Date: Thursday, January 29, 2009
Time: 10:00am - 1:00pm
Location: CBRB Alexandria
Street: 310 King Street
City/Town: Alexandria, VA
Please contact Harry Yazbek if you can make it!
Saturday, January 24, 2009
It is called an "Obtain Payoff and Secure Release Fee," and for this we charge $155.00 to the seller for -- as the name suggests -- obtaining a payoff and getting a release signed and recorded.
First, some history:
Sellers used to have a mortgage with a local bank. Not a mortgage company or national lender with offices in every major city and a processing department in Florida. No, they banked with and borrowed from a local bank. The seller could physically walk in, ask for a payoff statement, and walk out with one. Shortly after closing, the payoff check could be hand-delivered or mailed to said local bank, and the release would be prepared within 24 hours. Once signed and recorded, the mortgage or deed of trust is released, and we likely never deal with that instrument again.
Times have changed. For this formerly simple process, here is what we do today for the $155.00:
- Solicit payoff information from seller. This can of course take several attempts, along with some "encouragement" from helpful listing agents.
- Obtain written authorization from seller so lender can release payoff information.
- Order the payoff from lender via phone call or fax (depending on lender's requirement). This often times takes several attempts.
- Prepare a payoff letter and a "Certificate of Satisfaction" which is a document the lender signs releasing the mortgage or deed of trust. They either sign this one or prepare one themselves.
- Cut payoff check.
- After the settlement, send the payoff check, payoff letter, and Certificate of Satisfaction to the lender.
- Monitor and confirm receipt of the "payoff package" by the lender.
- Receive the Release or Certificate of Satisfaction from the lender, and forward it to the courthouse along with $30 recording fee.
- Sixty (60) days after the settlement, check our own tracking system as well as the Maryland Land Records to see if the release has indeed been recorded.
- If it has not (and many times it has not), we call the lender to follow up.
- Continue steps 9 and 10 until the release is recorded, in many cases escalating the matter to a specialist dealing with recordings and releases.
This is not a plea for sympathy, this is our job. However, as the job has become progressively more complex since the proliferation of the secondary market and national servicers, hard costs and labor time need to be recouped.
I hope this explanation is helpful. If you are an agent reviewing a HUD with your seller, and see this fee or some variation of it, perhaps this will help you explain the charge. In the meantime, if you have any questions feel free to comment below, email me at Derek[dot]Massey[at]MASettlement[dot]com, or find me on Twitter.
NOTE: Although we perform closings in virtually all Maryland counties, Northern Virginia and DC, for ease of explanation I specifically addressed settlements conducted in the Greater Baltimore region of Maryland. Some fees and procedures may be different in areas like Maryland's Eastern Shore or Northern Virginia.
Friday, January 23, 2009
Thursday, January 29th
What? Short Sales
What time? 10:00AM
Where? Coldwell Banker Residential Brokerage office in Alexandria, VA
What's the address? 310 King Street
Friday, January 30th
What? Short Sales and REOs
What time? 11:00 AM
Where? Coldwell Banker Residential Brokerage office in Manassas, VA
What's the address? 7696 Streamwalk Lane
Please contact Harry Yazbek via phone (703-946-4470), email or on Twitter if you'd like to join us!
Wednesday, January 21, 2009
Tuesday, January 20, 2009
This year, I think we get a second chance for our New Year's Resolutions.
Unless you live under a rock (and that rock doesn't have cable or wifi) you know that Barack Obama becomes our 44th President today. Put politics aside. Some folks were fine with the status quo. Many folks were not. Many folks thought John McCain would better lead our country. Many more did not. But all folks can agree on one thing: As of today we have a new President and a new Administration, and the torch is being passed in pretty dramatic fashion.
I view today as a new beginning. Not a better or worse one, as only time will tell. But a new one, and with that comes the opportunity to be better. A better person, company, and industry. If New Year's came and went and you missed the chance to put a plan together to start fresh, why not do it today?
Tuesday, January 13, 2009
Thank you Devin Holland (our Salisbury and Ocean City, MD Title Service Rep) for spearheading this little project.
Monday, January 12, 2009
Harry Yazbek will be teaching an informational (non-credit) class at the Fairfax Coldwell Banker Residential Brokerage office this Thursday, January 15th at 10:00 AM. More specifically, the class will aim to educate agents on the REO and short sale markets, and tips on entering them.
Please email Harry at Harry[dot]Yazbek[at]MASettlement[dot]com if you are interested, or feel free to leave a comment below telling us you are coming.
Friday, January 9, 2009
Well, I will leave the first question to the seasoned real estate professionals and Realtors to answer but with respect to the second question, is the process easier or harder depends upon many variables. One thing for sure, as a buyer, brush up on your coping skills!! Here are some points to ponder:
1. Does the buyer know that REO lenders can take a while in coming back with an answer to the offer? This will likely mean that if the buyer needs to close and move into a house in 3 weeks, REO is probably not the answer. Often times the REO lender is so busy and acceptance or a counter to the offer requires additional investor approval, which could take anywhere from several days to several weeks.
2. Does the buyer know they are buying the property “as-is” in most cases? This means that if the property is in need of basic repairs just to make it habitable and the buyer does not have money for those repairs and REO lender is not willing to repair nor credit for repairs, once again REO may not be the answer.
3. Does the buyer know that they may experience delays in the closing that may not be their fault? After the lender accepts the offer (contract ratified), things can come up prior to closing that may delay the settlement by days and sometimes weeks, will talk more about that in a minute.
4. Does the Listing Agent have a good relationship with the REO lender? Specifically, the Asset Manager, so when issues arise throughout the transaction they are resolved promptly. This is always a plus but sometimes the best relationship out there may not be enough to make the process move any faster, so just be prepared.
5. Does the buyer understand that closing usually comes down to the wire and may or may not happen as expected? Don’t load up that moving truck yet!! This is when an REO transaction can get really complicated and if you are not using a competent and seasoned settlement agent who truly understands REO processing, you are asking for trouble.
These are just some examples of what we have seen frustrate some buyers, but let’s talk about some potential “deal-breakers,” meaning issues that are very difficult to address in a short amount of time. Those are the ones that must be resolved prior to settlement and if not, you have no deal. So here are a few:
1. Was the foreclosure done correctly or is it defective? You wouldn’t think this would be a big issue but from what we’re seeing lately, it can be. It is not uncommon to examine the foreclosure documents and realize that the lender only foreclosed on the husband but not the wife. The lender foreclosed on the wrong property because the legal description on the deed of trust was wrong. The lender forgot to send out the required notices to one of the junior lien holders to notify them that a foreclosure was taking place. Once again, this is where an experienced settlement agent can catch these problems early on in the process and fix them as quickly as possible.
2. Do we have a deed signed by the seller, and I mean the real seller? Wow…how simple it sounds now that I am typing this! Often times the REAL seller is an entity far removed from the servicing company with whom we have been dealing. This is when we look at who signed the deed to the buyers and determine if they had proper legal authority along with proper documentation to sign on the real seller’s behalf. This often comes down to the last minute and if not handled correctly, the buyer may end up buying a property and acquiring title by virtue of a defective deed.
3. Is the HUD1 approved and signed by seller? Once again it sounds basic but this can also cause issues and is often a last-minute situation. REO lender (seller) usually requires 24-48 hours to review and approve the HUD1 settlement statement (balance sheet to the transaction). Once again, it is not uncommon to find ourselves in a situation where everybody is ready to close but we do not have a final HUD1 approval from the REO lender. This is when the good relationship with the asset managers I talked about earlier comes in handy.
4. Are we there yet? Getting a “clear to close” status from title legal review can make or break a deal. Title review will look for things other than just defective foreclosures. Often times there are unreleased liens of record that need addressing prior to closing. This is where some companies will offer the buyer “insurable title” rather than “marketable title”. I will address that in detail in another post, but in short, when a buyer gets “insurable title” to the property, they are getting a property with unresolved issues, what I call baggage on title but a title insurance company agreed to insure the transaction anyway. Don’t panic, buyer is still insured and owns the house but there is a technical difference here.
So what’s the bottom line on all this? I am of the opinion that buyers need to be prepared and expectations need to be set early on in the process by the buyer’s REALTOR so they know what they are in for. Additionally, it is imperative that you hire a competent settlement agent who processes and closes REO transactions, lots of them, on a regular basis. This will help cut down on the frustration and increase the chances of closing on time. Happy REO hunting.
You or your client just locked in a killer rate on a refinance. Set to close in 30 days. You have a mortgage, the one you plan to pay off. You also have a home equity loan or line of credit. Maybe you haven't tapped into it yet, maybe you have. It's for a college tuition payment, new swimming pool, or just a "break-glass-in-case-of-emergency" option for the unexpected. Whatever the reason, you want to keep that line open.
Here's the problem: That loan or line of credit is likely encumbering your property, and if you want to keep it open, you will need the lender to "subordinate" the mortgage or deed of trust.
Here's the bigger problem: Due to current volumes and demands on the loan industry, getting that subordination agreement can take time and money.
At least one major lender has told us that a normal request for a subordination agreement takes 10 business days and will cost $125.00. Need it quicker to get it in time for settlement? A "rush" request (5 day turnaround time) can cost $200.00.
What can you do about it? As a loan officer or a real estate professional advising the borrower, ask the following questions at time of loan application:
- Do you have any home equity loans or lines of credit? Probe a little. They may not think the loan is tied to their property, but if it's truly a "home equity" it likely is.
- Do you want to keep it open after the refinance settles?
- Can you gather the contact information for this loan quickly so we can see what this particular lender's policy is on subordinations?
The sooner this information gets into the hands of the title company, the better the chances that this issue will not delay the closing, and will likely cost the borrower less in the process.
* Just kidding, please keep reading. Also don't forget to subscribe to this blog. We love subscribers!
NOTE: Topic inspiration came from a post on Fred Glick's blog called Top 10 things you may not know about refinancing. Further research was done by always helpful Lauren Dersnah.
Thursday, January 8, 2009
- Seller's Social Security Number (SSN) or Employer Identification Number (EIN): We need this to complete various closing documents, and also to order the payoff statement for any outstanding mortgages or deeds of trust.
- Any and all open mortgages / deeds of trusts / lines of credit with a signed authorization to release information: Yes, the title search will bring up what's of record, but wouldn't you rather us order the payoffs in advance? Also, many lenders will not give us a payoff with a signed authorization.
- Whether the property is subject to any lease or ground rent, and if so the name and phone number of the fee holder.
- Name and contact information for any HOAs, condo associations, or front foot utilities which collect a fee for servicing the property. Depending on the jurisdiction, these entities may not have published contact information.
- Whether the seller is a foreign person, or a non-resident of the state where the property sits, as this may trigger a federal or state tax withholding.
- Whether the property is held by a trust, corporation, LLC, or other entity, and who, precisely, the trustees or principles are. This is required so proper authorization documents and signature blocks can be prepared. If the property is held in a trust, we will most likely need to see the trust documents!
- Whether the property was part of a recent separation or divorce. Most divorce stipulations or separation agreements dispose of the real estate held by the husband and wife, and a sale can trigger payouts from one party to the other.
- Whether the seller is involved in a bankruptcy. Very important, as the seller's right to convey property can be greatly impacted by a bankruptcy court.
- Whether the property is part of a 1031 Exchange. Our closing documents and settlement statement change when a qualified intermediary is involved.
- A copy of the seller's owner's title insurance policy from when they purchased the property. This helps on a number of fronts: (1) if there is a title problem that predates the seller's taking title, the policy may prevent a delay in the sale ; (2) we may be able to use the policy as a "starter" to perform the title search quicker and with less expense, and (3) the buyer may qualify for a reissue rate, or a reduced rate on title insurance.
Wednesday, January 7, 2009
But what about the email inbox?
Several years ago, I was given Gina Trapani's Lifehacker book by my father. Within those pages I found the system I still use today, The Trusted Trio. Click the link for the full blog article.
I've added some modifications:
- I replaced "Follow Up" with "Action" mostly because it appears alphabetically at the top of my Outlook list. Also, because it sounds better to Act then to Follow Up.
- I allow for 2 transitory/temporary folders. When I was transitioning from NH to MD, I started keeping a emails in a separate Mid-Atlantic folder so as to not confuse the 2 companies.
- I have a folder called "My Team" with subfolders for each Leader. This is handy during Guided Coaching sessions to monitor progress on certain strategies and gameplans.
Monday, January 5, 2009
With that, here is some great feedback I received last night from a happy broker. Dan Coleman (@DanielColeman on Twitter) is our Regional Vice President, a die-hard Baltimore Ravens fan, and a mediocre fantasy football enthusiast:
Dan Coleman handled a major problem for us between 4:00 p.m. yesterday and about 3:00 p.m. today! This was a major problem. He was patient, professional at all times, his eye on the target, which was to provide the buyer with outstanding service. As a result of his expertise our buyer/client will have a Happy New Year now. Our agent provided Dan the information he needed in order to resolve problem. Guess you can say this was an example of “team work” working!
This stuff happens every day. Contracts don't just happen, loans don't just get made, and settlements don't just occur on their own. And even when every party is doing their best, issues can arise. How we respond to the issue is what defines us and our industry.
If I've learned one thing since dipping my toe into the blogoshere, it is that good bloggers make it look effortless. I wouldn't know it was difficult by merely reading the content -- that's the point. If the reader has to work too hard, the writer hasn't done his job correctly. I know it is hard because I read the Twitter updates that were posted at 4:00 AM vetting out the topic, I see the many comments and the thoughtful responses, and - most importantly - I have foolishly convinced myself I could "pound out" a post in an hour in between meetings, only to settle on an update on the light rail.
I've also learned a lesson that is much more valuable: There are hundreds of real estate agents and loan officers out there who are extremely passionate about what they do for the purpose of helping buyers and sellers. If there is a new movement afoot to bring "customer-centricity" to this industry, I want to be part of it. Good things happen out there every day, but like the news it gets relegated to the back page.
With these two revelations, I made a commitment to (1) make this blog my voice, and not just the voice of a corporate logo (2) post frequently, and (3) provide content that gives agents, loan officers and (in a shot of ambition) buyers insight into what we do and how it can help them and their clients. Call it MASettlement.blogspot 2.0!
Upcoming topic at some point this week: Why REO closings can take so long to settle.