Sunday, March 29, 2009
Disclaimer: This video post deals exclusively with specific POAs for the purpose of transferring an interest in real estate. We could not fully cover all Power of Attorney matters in a 6-minute presentation. Furthermore, we are not providing legal advice or counsel. We always suggest you seek the advice of your own attorney when dealing with legal matters.
Friday, March 27, 2009
Paying off a seller’s existing mortgage (or deed of trust, depending where you are) is of course a very important part of what a title company does during the closing process. This is because it is extremely important to not only extinguish the indebtedness between the seller and lender, but even more importantly to release the property from the lien placed upon it.
So what’s the big deal? All we’re looking for is a piece of paper saying the note is paid or will be paid upon the receipt of X dollars, right?
If only it were that easy.
Only a payoff from an institutional lender involving a current (non-delinquent) loan can be labeled “vanilla” these days, and even those can cause problems. Here is a list of potential payoff issues:
- Private Lender: If the mortgage is to Mom, Dad, or Uncle Jake, we are going to insist upon having the original release in our hands the day of settlement. Otherwise, we run the risk of never getting it.
- Deed of Trust Released Between Transactions: Most of the time, a first mortgage is paid off at time the property is sold or refinanced. You’ll see on a title search the release following shortly after the deed or new deed of trust (even within 6 months would be considered “shortly after”). But what if the seller bought the home in June of 2008 with mortgage money, and then there was a release of that same mortgage in November 2008 without a evidence of a refinance around that date? It is possible that they found the money to pay it off, but is it likely? We would take extra precautions to ensure the release was not a forgery.
- Institutional Loan, but
- Payoff is marked “In Foreclosure,” “In Default” or something along those lines;
- There are several months of unpaid interest on the payoff statement;
- There are attorney’s fees or a retainer on the payoff statement; and/or
- It’s a short sale.
The reason we are challenged by any of the circumstances in section 3 above may or may not be obvious. In short, we are concerned that even if we abide by the terms of the payoff statement we have, the lender will not provide a release upon payment citing an insufficient payoff check. In many circumstances we have found the situation to “change” between the time the original payoff was issued, and the closing. More interest accrues (which we typically account for anyway), more attorneys' fees are added, or (gasp) the property is foreclosed upon! What we need to do to ensure insurability is call to verify the terms of the payoff statement verbally, or order a new, updated one.
As always, please feel free to call me or any of our attorneys, TSRs or leaders should a closing of yours involve a "payoff problem."
Monday, March 23, 2009
Disclaimer: Not all ground rent cases are created equal, and we could not possibly provide a comprehensive discussion in just 5 minutes. If we went longer, you'd never come to our blog again. Should you have additional questions about ground rent in general, or a particular case, please do not hesitate to call any of our attorneys, or contact your own attorney.
Saturday, March 21, 2009
The Godfather is on AMC... I own the DVD collection, why must I watch this whenever this is on? As soon as I'm out, they pull me back in!
Great question. We've all been there. I can name a dozen films that fit into this category, including Dodgeball, Wedding Crashers, or any Godfather or Rocky movie. I have them all on DVD, but I too will get sucked into the TV broadcast.
But why? Clearly it's not a better viewing experience. There are commercials. The good scenes and bad language are edited out. The sound and audio quality are much less than on DVD.
I guess one explanation is laziness. We don't want to get up and put the DVD in the player when it's on TV. But I truly believe there is a much better explanation, and it's about connection.
When we come across "The Godfather" on TV, we want to tell our friends, like Marc did. We know there could be thousands or maybe millions of other people watching. Maybe someone will mention it the next day at work? There is some possible connection being made that doesn't exist when we're experiencing an event in a vacuum. It's the same with a song on the radio. It's why Blip.fm is becoming so popular, despite the fact that it can be pretty tedious to find a song. People want to connect, interact and share experiences.
This is why social media is such an important part of our business today. Consumers want this connection, and it's not just personal anymore. Real estate agents, are you on Facebook? Are you interacting, and not just listing? Loan officers, are you on Twitter? Are you quoting rates so your legions of followers know - at any given point in the day - what your current rates are? If you're not, you should know that your competitors are.
Your marketing needs to be the TV show that everyone's watching, not the DVD.
Friday, March 20, 2009
Want to know when and where they are?
It's easy, go to our Facebook Fan page, and become a fan. It's real easy. There are pictures. There will be videos (coming soon). What more could you want?
For those cut and paste types, here is the link: http://www.facebook.com/pages/Hunt-Valley-MD/Mid-Atlantic-Settlement-Services/54250543277
Also feel free to call or tweet @DanielColeman (410-382-7491) or @HarryYazbek (703-946-4470).
Thursday, March 19, 2009
“If the property was acquired by any means of fraud, [lender’s name] reserves the right to pursue any and all actions available to it to pursue any and all actions available to it to offset its losses. If it is determined that Sellers and/or Buyers participated in any way to the fraud, this short sale will be void, and the Note and Security Instrument will remain in full force and effect.”Should we receive a letter with such a provision, we are not authorized by our underwriters to close the transaction unless the letter is amended in writing to remove the offending provision.
This post was updated to answer additional questions from several agents.
What does this mean for you, the agent?
Unfortunately, we will not know if a short sale transaction will be impacted by such a restriction until we get the short sale approval letter from the lender. Nor have the lenders made it entirely clear what type of fraud they are talking about. What this update means for agents is that we will be reviewing short sale approval letters more closely, and if the letter contains restricting language like this, we will ask the lender to remove the language. If they refuse, we cannot close the transaction and issue title insurance.
Please do not hestitate to contact us with any additional questions or concerns.
Friday, March 6, 2009
SB 86 - Title Insurance Producers - Regulation and Requirements. Specifies that only a licensed title insurance producer may have control over or custody of money in escrow or in trust; increases the amount of the fidelity bond and the surety bond or letter of credit for a title insurance producer's license to $250,000.
SB 109 - Real Property - Residential Leases - Required Mold Assessment and Remediation. Requiring a landlord, at the request of a tenant, to perform a mold assessment of the tenant's dwelling unit; requiring a landlord to carry out mold remediation measures; and authorizing a tenant to deposit rent in an escrow account with a court.
SB 150 - Maryland Uniform Power of Attorney Act - Loretta's Law. Establishes the Maryland Uniform Power of Attorney Act; providing that a power of attorney created under the Act is durable unless the power of attorney contains a specified provision to the contrary; and requires a power of attorney to be signed by the principal or a specified other individual.
SB 203 - Residential Property - Foreclosure - Notice to Occupants. Requiring a secured party to send a written notice of intent to foreclose on residential property to the occupant of the property at least 45 days before filing a foreclosure action; requiring the notice to contain specified information; requiring the occupant to be served in a specified manner with a copy of an order to docket or complaint to foreclose on residential property and specified other papers; and authorizing service to be effected on an occupant in an alternative manner under specified circumstances.
SB 364 - Real Property - Mechanic's Lien - Certified Interior Design Services - Establishing that work done for or about a building, for purposes of establishing a mechanic's lien, includes specified interior design services provided by a certified interior designer.
SB 395 - Task Force to Review Property Tax Assessment Procedure and the Assessment Appeals Process - Establishing a Task Force to Review Property Tax Assessment Procedure and the Assessment Appeals Process; requiring that the Task Force issue a report by January 1, 2010.
SB 453 - Income Tax - Payments - Sale of Real Property by Nonresidents - Setting the rate of tax that must be paid to the clerk of the circuit court for a county or to the Department of Assessments and Taxation before the recording of specified deeds for the sale of property to be 7.5% of the total payment to a nonresident or 8.25% of the total payment to a nonresident entity.
SB 541 - Common Ownership Communities - Fidelity Insurance - Requiring governing bodies of a cooperative housing corporation, a condominium, or a homeowners association to purchase fidelity insurance not later than the time of the first conveyance of a unit to a person other than the developer and to keep the insurance in place each year thereafter; requiring the fidelity insurance to provide for the indemnification of the common ownership community against loss resulting from specified acts or omissions of specified persons.
SB 559 - Real Property - Restrictions - Clotheslines or Other Laundry Drying Devices – See HB 443 prior post.
SB 727/HB 983 - Recordation and Transfer Tax - Controlling Interest Transfers - Altering the definition of real property entity under the controlling interest transfer tax to remove a requirement that the entity own real property of at least $1,000,000 value; requiring the articles of organization of a limited liability company to include the name and address of specified organizers, members, managers, and authorized persons.
For details on each, please visit the Maryland General Assembly website.
Thursday, March 5, 2009
HB 79 - Real Property - Mortgage Fraud - Creation of Fraudulent Documents. Expands the scope of the Maryland Mortgage Fraud Protection Act to prohibit the creation or production of a document that contains a deliberate misstatement, misrepresentation, or omission with the intent that the document be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process.
HB 143 - Baltimore City - Newly Constructed Dwelling Property Tax Credit - Modification and Reauthorization - Authorizing the Mayor and City Council of Baltimore City to establish maximum limits for a Newly constructed dwelling property tax credit; authorizing the Mayor and City Council of Baltimore City to establish a one-time application amnesty period subject to specified restrictions.
HB 186 - Real Property - Condemnation Proceedings - Valuation of Property - Establishing that damages awarded for the taking of property used for a business may include specified damages for the loss of goodwill; including in the calculation of damages any diminution in value occurring after the first official governmental announcement of a public project; and including specified costs in calculating diminution in value for specified property.
HB 194 - Land Use - Development Rights and Responsibilities Agreements - Increasing from 5 to 10 years the time period after which a specified development rights and responsibilities agreement will be void under specified circumstances; and providing that a local jurisdiction may not enforce specified laws, rules, regulations, or policies governing the use, density, or intensity of specified real property that is subject to development rights and responsibilities agreements unless specified circumstances exist.
HB 197 - Real Property - Installation and Use of Clotheslines on Residential Property - Prohibiting a local legislative body from prohibiting the installation or use of clotheslines on residential property; providing that a contract, deed, rule, bylaw, lease agreement, or other document may not prohibit a homeowner or tenant from installing or using clotheslines on specified residential property; providing that the Act does not prohibit reasonable restrictions, for specified purposes, on the dimensions, placement, or appearance of clotheslines.
HB 263- Real Property - Common Ownership Community Ombudsman - Establishing the office of Common Ownership Community Ombudsman in the Department of Labor, Licensing, and Regulation; providing for the appointment, service, qualifications, and salary of the Ombudsman; requiring a common ownership community to register with the Ombudsman; requiring the Ombudsman to charge a fee for registration; establishing a Common Ownership Community Ombudsman Fund; providing that the Fund is a special, nonlapsing fund; exempting a homeowners association from the Act under specified circumstances.
HB 287 - Real Property - Condominiums - Repair or Replacement of Unit by Council of Unit Owners - Clarifying that the council of unit owners of a condominium is responsible for the repair or replacement of condominium units, exclusive of improvements and betterments installed in units by unit owners other than the developer, in the event of damage or destruction of the condominium; providing that the owner of the unit where damage originated is responsible for the council of unit owners' property insurance deductible up to $10,000.
HB 428 - Property Tax - Semiannual Payment Schedule - Small Business Property - Requiring the governing body of a county or of a municipal corporation to provide a semiannual payment schedule for State, county, municipal corporation, and special taxing district property taxes on small business property with a property tax bill of $50,000 or less; applying the Act to taxable years beginning after June 30, 2010.
HB 443 - Real Property - Restrictions - Clotheslines or Other Laundry Drying Devices –Authorizing a homeowner or tenant to use a clothesline or other laundry drying device on specified property notwithstanding the terms of any contract or other document concerning use of clotheslines; authorizing the governing body of a condominium, homeowners association, or housing cooperative or a landlord to restrict use of clotheslines and other laundry drying devices following an open meeting of affected homeowners or tenants of which advance notice must be provided.
HB 465 - Income Tax - Payments - Sale of Real Property by Nonresidents - Setting the rate of tax that must be paid to the clerk of the circuit court for a county or to the Department of Assessments and Taxation before the recording of specified deeds for the sale of property to be 7.5% of the total payment to a nonresident or 8.25% of the total payment to a nonresident entity.
HB 497 - Maryland Power of Attorney Form and Oversight Act - Establishing the Maryland Power of Attorney Form and Oversight Act; amending the law concerning specified witnesses, certification, and recordation of a power of attorney; providing for judicial proceedings concerning a power of attorney; requiring a person to accept a power of attorney under specified circumstances; establishing a statutory form for creation of a power of attorney.
HB 544 – Real Property - Mechanic's Lien - Certified Interior Design Services - Establishing that work done for or about a building, for purposes of establishing a mechanic's lien, includes specified interior design services provided by a certified interior designer.
HB 852 - Maryland Uniform Power of Attorney Act - Loretta's Law - Repealing provisions of law relating to durable powers of attorney; establishing the Maryland Uniform Power of Attorney Act; establishing exceptions to the application of the Act; establishing that a power of attorney created under the Act is durable unless the power of attorney contains a specified provision; requiring a power of attorney to be signed by the principal or a specified other individual.
HB 1006 - Real Property - Community Land Trusts - Exempting a LEASE OF RESIDENTIAL PROPERTY THE LESSOR OF WHICH IS A COMMUNITY LAND TRUST , from the statutory right to redeem a lease, including a ground lease, or the statutory right to convert an irredeemable ground rent, by a tenant if a community land trust is the lessor and the lease grants the lessor specified preemptive rights to purchase the lessee's interest, or if the lease contains specified restrictions on the transfer of the property.
For details on each, please visit the Maryland General Assembly website. Tomorrow will feature bills currently introduced to the Maryland State Senate.
Sunday, March 1, 2009
I have written several blogs about short sales, the last of which was specifically geared towards buyers, this blog will be addressing sellers.
So you have to sell your home for one reason or another but you owe more on it than it is actually worth. You have heard from friends and the “internet” that you can do a short sale and once it’s over, life is good!!
Well that could be true depending on many variables. Getting a short sale transaction approved and closed is a very complicated matter and in most cases will require the assistance of a few professionals.
First of all, let’s define a short sale: It is a transaction where a buyer purchases a property from a seller and gets “clear” title to the property. The buyer is always encouraged to buy title insurance. Not much is really different for a buyer other than some potential delays and frustration, more on that in future articles.
Things are a little different for the seller, since you can’t sell the property for enough money to pay off your loan(s). You appeal to your lender(s) to accept less money than what they are owed, and if they agree and a sale takes place, that transaction is called a short sale. The word “short” in short sale references the “short pay-off” you will be making to your lender.
How you make your appeal to your lender for accepting less money will vary from lender to lender but I will go over some basic rules. But first things first, let’s talk about those professional services I referenced. You will need a competent Realtor, period!! Trying to do this on your own is very frustrating, painful and in most cases a waste of time and energy on your part. It’s hard enough to sell a property on your own in a good market, trying to sell a property in challenging times, negotiate with the bank, and getting to closing on time is just almost impossible and in my view, unwise.
So a Realtor will be your best friend for a while. Next, you will need to consult with an attorney. Depending on where you live and other variables, there is a possibility your lender can sue you for a “deficiency judgment”, the difference between the short pay-off and the amount you actually owe the lender. For example, if you end up selling your house for $200,000 and make a short pay-off to your lender of $190,000 but you actually owe the lender $250,000, the lender may have the option to sue you for the $60,000. So talk to an attorney!
The lender may decide not to sue you, so they decide to “forgive your debt”. The word forgive is actually deceiving, your lender may decide to forgive that $60,000 deficiency we discussed, but the IRS will not hear of it. You may be getting a 1099-C from your lender, a copy of which goes to the IRS. This $60,000 may now become taxable, depending on your circumstances. The forgiven debt is actually called “cancelled debt” by the IRS and becomes “phantom income”, on which you may have to pay “phantom taxes”. And NO, if you owe taxes, you may not pay your taxes with a “phantom check”!! This brings me to the final professional, a competent accountant, who will quickly become your best friend.
Here are some suggested steps to get this process started:
1. List the property with a Realtor.
2. Start assembling financial information such as W2’s, pay stubs, bank statements, a list of assets and liabilities, and a list of monthly debts. The more you can provide the bank, the better chance you have of getting your file looked at in a reasonable amount of time. The number one cause for delay in a short sale transaction is lenders not having enough information or incomplete packages submitted by sellers.
3. A hardship letter telling the bank the reason why they should accept less money than what they’re owed. It is suggested that you keep this letter brief, factual and as precise as possible. I recommend you break the letter in three categories:
a. Tell the lender the nature of the hardship (job loss, death in family, illness, divorce, acts of nature, job transfer, etc...).
b. Explain to the lender why a short sale is beneficial in this case.
c. Explain your circumstances if a short sale is not approved (foreclosure, bankruptcy, etc...).
Once you have an offer (ratified contract), assemble the entire package and send it to the lender for processing. Check with your bank to see what department to send it to but typically it will go to the Loss Mitigation department.
If you have more than one loan, send a complete package to each lender who is being asked to accept less money than is actually owed.
The lender will typically come back with an answer of Yes, No or Maybe:
“Yes” means they have accepted the offer. An approval letter is generally sent to you outlining the terms and conditions of the approval. Typical approval letters state the minimum pay-off they are willing to accept, the sales price, the amount of closing cost credits to the buyer, if any, the total commission to the Realtor and in some cases the letter will disclose what the lender intends to do with the deficiency amount.
Some lenders will actually commit to forgiving the debt and issuing a 1099-C on the approval letter, others will state they reserve the right to collect the debt while others will not say anything at all regarding deficiency, in which case you should know the lender is reserving the right to collect at a future date.
“No” generally means no deal but sometimes it means they want more money.
“Maybe” is where it gets interesting, the lender may want you to sign an unsecured note for part or all of the deficiency. The lender may want you to bring some cash to the table in lieu of paying the note in full. The lender may not ask for anything but after closing takes place they may send the account to collections for the deficiency. There are many ways this can go down so please make sure you have competent professionals helping you throughout this process.
Remember, when dealing with any Loss Mitigation department, their number one priority is to minimize the lender’s losses, not yours, hence the name “Loss Mitigation”. They are required to do what’s in the best interest of the lender not the homeowner. If the lender’s best interest happens to be also in your best interest, then it’s a win-win situation.