Wanted: A Maryland Sales Manager!

Is one of your New Year's resolutions to embark on a new career?

If you have title, mortgage, or real estate brokerage sales experience, we may have a great opportunity for you to lead the most gifted team of settlement officers and attorneys in the region. Becoming the Maryland Sales Manager gives you the following:

* The chance to lead this exceptional team of closers!

* A seat on this fantastic leadership team.

* The good fortune of working with me every day. :)

* The ability to meet and network with some of the very best real estate professionals in Maryland, including brokerage leadership, high-producing real estate agents, and seasoned loan officers.

* The security and strength of being part of something bigger, yet with local autonomy and leadership.

Sound good? Click here to apply or email recruiting[at]TRGC[dot]com. You can also reach out to me directly at Derek[dot]Massey[at]MASettlement[dot]com.

Happy New Year!

Get educated in 2011!

We are currently scheduling classes for 2011!

We offer a great mix of credit and non-credit classes for real estate agents and loan officers. Here are some of the classes we currently offer:

1031 Exchange: The various aspects of a 1031 exchange transaction, timelines, accommodator role, benefits and overall transactional structure.

Contracts: Contracts on a macro level and the Regional Sales Contract and common addendums.

Ethics: illegal flipping, predatory lending, the history of the code, articles commonly violated, recent decisions and case studies.

From Contract to Closing: After an offer is accepted, we discuss how to keep a contract current, removing contingencies, working with lender and title company and overall how to keep a transaction together until closing.

Negotiating Closing: the anatomy of an offer, understanding offers from buyer's and seller's position, evaluate the merits of an offer, how to support an offer.

Real Estate Agency: the history of agency, fiduciary relationship, terminology, review Virginia/Maryland agency law and required disclosures.

Real Property Rights / Public Records: the various land records web sites available to the public and other services.

REO Representation: the default cycle, REO tasks associated with a transaction, listing servicing, pre-foreclosure involvement and overall REO client expectations.

Safety in Real Estate: how to stay safe in the real estate business, how to practice "safe showings".

The Settlement Process: all the various stages of a settlement from contract ratification to post-closing.

Short Sale Strategies: the "default cycle" from origination to REO, deficiency disposition, phantom tax, listing, packaging, negotiation and case studies.

Title Insurance: the history of Title Insurance and its evolution, various title insurance policies and compare coverage, title insurance claims and prevention.

Transaction Red Flags: the various obstacles to anticipate and various issues that can delay or "blow-up" a transaction and how to address them.

Want to schedule a class? Reach out to your Title Service Rep or call/email us at (800) 530-9372 | info[at]MASettlement[dot]com today!

Tech Tip: Get your email when you want it!

We've all been there.

An email arrives in your bloated inbox that you know you will have to address, but not until next week.

Or, you've just sent an email out to someone who should respond to you in one week. You want to make sure you're reminded to follow up in case they don't.

Your options have historically been to:

- Keep it in your inbox in the hopes of reviewing it next week.
- Add it as an item in your calendar.
- Add it as a "to-do" item in a tasking program.
- Set up a separate "hold" or "follow-up" mailbox to review later.
- Tie a string around your finger.
- Forget about it.

Until now.

With Laytr and NudgeMail, you can simply forward any email to a date in the future and you'll get it at that time. It's simple, easy, and a great way to keep your inbox at zero by putting in front of you only what you need to handle today.

Try it now! If you're getting this post via email, forward it to Dec.21@laytr.com or Dec.21@nudgemail.com, and put off reading it for a week. Don't worry, I'll never know. :)

What are "good funds?"

Think of an escrow account as a water tower, except with money. Money goes in, money goes out. For each particular real estate transaction, the amount of money coming in must match what's going out - to the penny.

Typical incoming funds:

- Loan funds
- Buyer's personal funds

Typical outgoing funds:

- Seller's loan payoff
- Broker's commission
- Tax payments
- HOA payments
- Title and lender closing costs
- Seller's proceeds

Another key requirement of real estate escrow is that the incoming funds must be irrevocably in the title company's account before it can disburse against them. In other words, they must be in the water tower such that no one can get them out. There are typically only two ways to accomplish that upon receipt:

1. Wires
2. Certified or cashiers checks

Wires are self-explanatory: A wire is a direct deposit of water into the tower.

What makes certified / cashiers checks superior to personal checks?

When a certified check is prepared, the money is pulled out of the account right then and there. Unlike a personal check - which can bounce due to the asynchronous nature of check writing and depositing - a certified check is not merely a promise to deposit water if there is enough water in the account, but it actually has the water attached to it.

I'm an agent or loan officer. What do I do with this information?

Remind your buyers that good funds are needed for settlements, particularly in table-funded states like Maryland. Instruments like personal checks, ACH orders and retirement account checks are NOT good funds, and cannot be disbursed against until they irrevocably clear in the title company's escrow account. Knowing and communicating this well in advance of closing will allow the parties to find the best solution for ensuring a timely settlement!

Flickr photo by doug_wertman

Why do we close at the end of the month?

I'm not breaking any ground by stating that more real estate settlements happen at the end of the month (defined as the last day or two) than any other time of the month. We're all well-versed in the stories and issues that come with end-of-month closings: courthouse recording offices backed up, lender packages not arriving in a timely fashion, settlement attorneys frantically scheduling and rescheduling to make the closing happen.

There are 20 days in a typical business month. If closings were evenly distributed throughout the month, 5% of the total would close on any given day, including - of course - the last day of the month.

In fact, 17%* of all settlements occur on the last DAY of the month!

That's a drastic increase in volume that puts on a strain lenders, title companies, recorders, couriers, brokers, and - ultimately - buyers and sellers.

In many industries, this kind of "cyclical strain" cannot be avoided. Christmas happens on December 25th, so rather than straight-lining their sales, retailers have to accept a crunch in November and December. Ocean City hotels can't count on robust sales in December and January, for obvious reasons. Even in real estate, we understand sales are better in the warmer months when homes look nicer and taking a ride to house-hunt doesn't require snow tires.

But why the monthly cycle in real estate?

I came up with a few:

• A renter who closes mid-month will be paying rent and a mortgage for the remainder of that month.
• A buyer's mortgage interest doesn't kick in until the beginning of the next month. (Except a borrower typically pays interest in advance at settlement for the days between settlement and the first mortgage payment).
• A seller has already paid their mortgage for the month, and wants to "get what they paid for." (Except that a non-FHA payoff statement is good through a particular date, and the seller doesn't really pay any more than what's owed as of the "good-through" date of that statement).

So, unless we have a renter-buyer and/or a seller with an FHA mortgage, are there other reasons for closing at the end of the month? If not, why do we schedule them at the end of the month?


* According to our settlement schedule for Jan - Nov. 2010. Also, I cheated for August, and included the last 2 days of the month, as the 30th and 31st fell on a Monday and Tuesday respectively.

Flickr photo by Aarongeller

Zillow.com Launches Real Estate Agent "Ratings and Reviews"

Zillow.com, home of the Zestimate, Zillow Mortgage Marketplace, and many other online real estate resources, yesterday launched a "Ratings and Reviews" system for real estate professionals.

This new tool will allow consumers to review and rate real estate agents with whom they've previously worked. Zillow believes this will help potential buyers and sellers in selecting an agent that fits their individual needs, AND will help great real estate agents. Details on the program (with a TON of commentary) can be found here.

What do you think? Is this good for the industry? Good for consumers? For agents?

What should you ask your title company?

Congratulations! You have a ratified contract. Your buyers have signed on the line which is dotted. Your job is done, right?

Wrong.

Not true in any market, much less this one. Now comes the fun part - navigating from contract signing to settlement. An integral part of this process is selecting the title company.

So, how do you pick a title company? Likely you know someone and/or have worked with someone in the past. You have a relationship with them. And like all business, relationships are what drive this business. But let's say you are testing a new company out or want to dig a little deeper to see what is behind that friendly, helpful closing attorney?

Here are some great questions to ask which should help frame your decision:

1. What are your fees? All of them. No one likes hidden fees that do not pop up until the final HUD-1 is presented at the table. Ask your title rep for a fee schedule, or better yet, get the fees for your particular transaction. This can be done manually or via a web-based application, like ours.

2. When do you order the title search? This is the question which prompted this post. Some title companies wait until they hear the appraisal is back before ordering title. Why? It costs money to order title. See here what goes into a title search. However, I would insist that your title company order the search the day you hand over the contract. It's too important to wait. Otherwise, last minute title issues could arise that could have been addressed earlier.

3. How often is your escrow or trust account reconciled? Escrow/trust accounts should be reconciled monthly, no exceptions. If not, a shortage could exist which could come back and haunt your buyer should the title company find itself insolvent.

4. How many title insurance companies do you write for? This is a particularly interesting question today, and here's why it is important: title underwriters, like loan underwriters, are made up of people. People judge things differently. On a number of occasions, Title Insurance Company X will insure something that Title Insurance Company Y will not. It's the nature of the beast. I love my affiliated title insurance company, but I also want to know that I have others to call should I need to get a deal to closing. Is your title company bound by the underwriting staff of just one underwriter?

5. Where will the settlement take place? It all depends on your comfort level and convenience. Do they have a local office? Will they come to you? To the lender? To the buyer's home? Ask in advance, so you know what you're dealing with.

6. Do you have attorneys on staff? Titles can be confusing, and may require someone with a legal background to fully parse through recorded documents, legal proceedings and contract clauses to determine what needs to happen before or at closing. The title company attorney should never purport to fully represent your buyer, but they can provide guidance as to how to get the deal to settlement.

7. How many short sales and REO transactions have you handled this year? Short sales are REOs are different animals, and require much more work than refinance or straight seller-to-buyer deals. Is your title company well-versed in these nuances? How experienced are they?

We hope you find this helpful. As always, please email us at info[at]MASettlement[dot]com if we can ever be of assistance to your or your buyers!

BREAKING NEWS: DC passes "Saving D.C. Homes from Foreclosure Emergency Act of 2010"

On Wednesday, the District of Columbia enacted the "Saving D.C. Homes from Foreclosure Emergency Act of 2010." The key provision of which all of us dealing with DC real estate purchases must be aware is that for all foreclosure sales occurring November 17th or after, a "Mediation Certificate" must be recoded among the DC Land Records PRIOR TO the issuance and recordation of the Notice of Foreclosure.

Foreclosure attorneys, title agents and title insurance companies are all working diligently to see exactly what this means for DC foreclosures, but as this "Mediation Certificate" has yet to be created (to our knowledge), there seems to be a gap between what the law requires and what can practically be done to effectively foreclose on a DC property.

Again, as with any of these DC Foreclosure developments, the situation is very dynamic and fluid. As we receive more clarification and direction, we will pass that information along. To see all of our updates on Foreclosures, click here.

DC Foreclosures Just Got a Little Tougher

On October 27th, District of Colombia Attorney General Peter Nickels issued this Statement of Enforcement Intent Regarding Deceptive Foreclosure Sale Notices. The Washington Post reported on this development here. In this statement, the Attorney General now requires:

Prior to initiating a foreclosure involving a District of Columbia homeowner, a trustee or noteholder is obligated to confirm that the District’s land records demonstrate that the noteholder has the security interest that will be listed in the foreclosure sale notice. Each assignment of interest (or other document) by which the security interest was transferred to the noteholder, or to one of the noteholder’s predecessors in the chain of conveyances from the maker of the note, must be recorded with the Recorder of Deeds.

This means that before a foreclosure sale can occur, there must be a clear chain of ownership of the indebtedness such that the public records match the name of the entity who is doing the foreclosing. Because of MERS and the securitization of loans today, this clear chain doesn't always exist.

How does this affect how we issue title insurance in DC?

We have received two underwriter bulletins on this subject. In the first, we are asked to comply with the statement and ensure there are "recorded assignments of the Deed of Trust each time the owner of the note sells the indebtedness so that a clear chain of ownership of the indebtedness leads to the lender who is directing the trustee to initiate the foreclosure action."

In the other bulletin (from another underwriter), we are asked for the following for DC sales transactions:

Proof that the foreclosed Deed of Trust was not secured by owner-occupied residential property at the date of initiation of foreclosure proceedings, in the form of an affidavit from the foreclosing lender or its agent stating that the defaulting borrower(s) did not occupy the property as his/her/their personal residence at the date foreclosure proceedings were commenced.

This obviously adds some some additional complexity to our title reviewing process, and may in some cases render a title uninsurable. Many speculate there may be some emergency legislative or judicial action to more clearly reconcile this opinion and that of MERS with respect to the latter's ability to foreclose on properties.

Stay tuned as more develops...

"A peculiar thing about this document..."

"It was never notarized!"

What Lucy and Charlie Brown can teach us about the proper execution of documents. :)

It's the Great Pumpkin Charlie Brown - Football - Click here for more free videos

Happy Halloween from your friends at Mid-Atlantic Settlement Services!

Foreclosure Update for MD, VA and DC

As we discussed in this post, the "Robo-signing" foreclosure issue is a very dynamic and fluid one. There is new information by the hour. Here are some updates to that original post:

Maryland and "Corrective Affidavits"

The Baltimore Sun reported here that several Maryland foreclosure attorneys had others sign their names on court documents rather than sign them personally. In an attempt to correct this, the attorneys filed "Corrective Affidavits" later. From a title insurance perspective, this adds another layer of review for us. Should we find such a document in a foreclosure file, our underwriter needs to review the entire file before allowing us to insure. Fortunately, this can often be done in a matter of hours.

Bank of America re-opening the REO pipeline

Bank of America has partially unfrozen its foreclosure halt by allowing foreclosures to resume in 23 states after having reviewed their processes and finding no errors. Foreclosures should resume by October 25th.

Use of a "Lender Indemnity"

The Fidelity National Financial (FNF) family of title insurance companies is requiring the use of an indemnity signed by the lender/servicer for each transaction settling November 1st or later. Such an indemnity is not required, however, for deals involving Bank of America REO property as a master indemnity agreement has been signed between the two entities.

Stay tuned, as more news is sure to follow!

How is the "Robo-Signer" Issue Affecting Title Insurance in MD, DC and VA?

Even those not in real estate are now familiar with the term "Robo-Signer" - a term describing a mortgage company employee who allegedly signed thousands of documents authorizing foreclosures across the country, without actually having personally reviewed the loan documents. If you're not familiar with the story, this is one of the earlier pieces which brought the matter to light.

What impact has this had on the market nationally?

The investigation has caused lenders such as JP Morgan Chase, Bank of America and GMAC to cease their foreclosure practices in a number of jurisdictions while these entities take inventory and review procedures relating to the processing of these types of transactions. In addition, Bank of America announced today that it is halting foreclosures in all 50 states due to concerns that this practice affects all foreclosures, not just judicial ones.

What is the status in MD, VA, and the District of Columbia?

As of the writing of this post, only Bank of America has an outright freeze on foreclosures in MD, VA and DC. These jurisdictions are not considered pure "judicial foreclosure" states, and therefore are not included in the list of 23 states that Ally/GMAC (among others) is halting foreclosures in.

How does this affect how we evidence or insure title?

At this time, whenever there is a foreclosure in the chain of title or we are passing title from a lender to a new buyer as a result of foreclosure, we carefully examine the title and if we see irregularities we consult with our underwriter before insuring. At least one of our underwriters has instructed us to consult with them before insuring a foreclosure from Ally/GMAC.

Please be advised that this is a very fluid and dynamic situation. As we receive more updates from either lenders/servicers, or our underwriters, we will keep you updated.

Any questions? Please call your Title Service Representative or email us at info[at]MASettlement[dot]com today!

New Maryland Power of Attorney Changes Effective October 1st, 2010

On May 20, 2010, Governor O’Malley signed into law Chapter 689, HB 659 which repeals Estates and Trusts Sections 13–601 through 13–603 (Powers of Attorney) and adds Estates and Trusts Sections 17–101 through 17–204 under the new title “Maryland General and Limited Power of Attorney Act.” The Act takes effect on October 1, 2010.

Among the many changes are two distinct provisions which Maryland real estate practitioners should be aware of: (1) New execution requirements and (2) new statutory forms.

New Execution Requirements

In addition to the pre-existing requirements for properly executing a power of attorney (POA), a POA executed after September 30th must be attested and signed by two or more adult witnesses who sign in the presence of the principal and in the presence of each other (one of the witnesses can be the notary). Signature blocks for these new requirements are a part of the new statutory form.

New Statutory Forms

The Act creates, among others, two forms which real estate professionals should be aware of. The first is the Maryland Statutory Form Limited Power of Attorney. While the statutory doesn't have to be used, if it is it cannot be refused on the basis of the content of the form alone.

A Maryland real estate professional will also see a Certification as to the Validity of Power of Attorney and Agent’s Authority used in conjunction with a POA. This form must be executed before a notary and recorded along with the POA in every transaction. In the absence of fraud, such certification is “conclusive proof of the nonrevocation . . . of the power at that time.”

As a reminder, a POA should only be used when principal(s) absolutely cannot sign or be present at a closing. They have been tools for fraud and real estate related scams. As a title company, we will always inquire as to why one is being used, so if your buyer or seller is using one, please be prepared for questions!

Maryland Ground Rents After September 30th

On May 8, 2007, Governor O’Malley signed House Bill 580 - “Ground Rents – Registry of Properties Subject to Ground Leases” - which became Chapter 290 of the Laws of 2007. The law provided for the creation of an on-line registry of properties that are subject to ground rents and required that all ground rent owners must register every ground rent owned by the owner with the State Department of Assessments and Taxation (SDAT) and pay a fee by September 30, 2010 or else risk having said ground rent interest extinguished.

Now that September 30th is fast approaching, what's going to change?

According to at least one of our underwriters, Fidelity National Title Group, absolutely nothing. This is because there is a pending lawsuit [Charles Muskin vs. State Department of Assessments and Taxation (Case Number 24C10004437)] which if successful will deem the ground rent legislation as unconstitutional and will bar its enforcement. So long as this case is active, Fidelity tells us, we are to treat ground rents as we always have and will not render a ground rent as extinguished just because it fails to appear in the registry.

Note that this just one underwriter's position, but we fully expect the other major title insurance companies to follow suit in the coming days. We will continue to update you on what other title insurance companies are doing as well as the status of the case and how it affects this legislation. Stay tuned!

UPDATE: On September 24th, another one of our underwriters, First American, sent us a memo with substantially the same information as the earlier Fidelity notice. This is now the second underwriter who has told us "business as usual" with respect to ground rents.

Fraud Alert: Canadian Checks

It was reported as early as June of this year that some real estate agents were being approached by clients via email (and in many cases through Trulia) to facilitate the purchase of a home. The fact pattern went something like this:

"Buyer" contacts agent through Trulia's "Voices" channel, offering to purchase a certain house for $XXX,XXX.00. The individual is very clear about (1) being foreign (often he is an Asian individual living in Canada); and (2) having cash to purchase the property. He is particular about using Docusign, and once agreement is signed sends the checks (often written from a Canadian bank) for EMD + additional deposits to either brokerage or title company. The problem is that the checks they provide for closing funds are counterfeit. Shortly after the checks are received, the "buyer" cancels contract and demands the funds be wired back to them. If the scam is successful, the funds are wired back before it is determined the checks are counterfeit.

Some online examples of this fraud can be found here, here and here.

Note that a Maryland agent has been approached with a similar offer as recently as today. Should you be approached by someone with a similar fact pattern, tread lightly. Feel free to contact us, and we'll go through the specifics with our underwriting counsel. Under no circumstances should you wire funds out of any accounts until you are 100% sure they are in your account and under your control.

Maryland's Tax Withholding Requirements

As you probably know, the state of Maryland imposes upon a nonresident seller a 7.5% income tax withholding at the time of settlement. This 7.5% is applied to:

the total sales price paid to the transferor less: (1) debts of the transferor secured by a mortgage or other lien on the property being transferred that are being paid upon the sale or exchange of the property; and (2) other expenses of the transferor arising out of the sale or exchange of the property and disclosed on a settlement statement prepared in connection with the sale or exchange.

In order for a seller to claim exemption from Maryland withholding, the seller must either be a resident of Maryland or the property sold must be the “principal residence” of the seller. For a property to qualify as the seller’s principal residence, it must meet both the IRS definition (IRC 121) and it must be indicated on the SDAT records as being the assessed owner’s “principal residence.” Sellers have typically signed a "Certificate of Exemption" which accompanied the deed to be recorded at the County, or language was built into the deed containing this certifying language.

I know all of this information. So what has changed?

An earlier version of the “Certificate of Exemption” form did not include the requirement that the property be indicated as the principal residence on SDAT records. The Assistant Attorney General for the Courts and Judicial Affairs Unit, Stuart Cordish, has requested title insurance companies and agents make sure we use the correct “Certificate of Exemption from Withholding” form at closings. Because they are seeing a greater number of sales by nonresident sellers involving properties that are claimed as principal residences but are not listed as owner-occupied by SDAT, they are also considering asking the Clerks to reject deeds whose affidavits do not contain the current language.

Each title company must make sure the correct form is filed (see here, page 28), and that they have checked to ensure the property is owner-occupied on SDAT to ensure the recordings are not rejected.

A Day at the Beach

Unfortunately, summer is coming to end here in the Mid-Atlantic region. Every year many of us like to spend a little time away from the the hustle and bustle of our towns and cities to enjoy some cool ocean breezes at the beach. Unfortunately, the beach is not necessarily the best place to clear the the respective minds of title people. To the contrary, we are reminded that waterfront properties have special title issues, some of which are discussed below.

Oceans

Picture yourself hauling your ice chest and beach chair as you walk from your car toward the ocean. You are on what is known as the “upland”. Depending upon how far away you had to park, at some point you will arrive at a point at which there is no more grass, shrubbery or major improvements. All that is between you and the water is sand. You have just passed what is known as the “vegetation line.” As you continue toward the water, the dry, hot sand becomes wet. You have just passed the “mean high tide line”. Your next imaginary line is the “mean low tide line”. It will probably be under water, unless you are there right at low tide. Beyond this line is the ocean itself.

The casual visitor to the beach may assume that everything seaward of the vegetation line is public property, entitled to be used by all. However, the trained title professional knows that this is not necessarily the case. Different states have different laws regarding the rights of private oceanfront property owners (“littoral” owners) verses the rights of the public to use the beach.

In most states boarding the Atlantic Ocean, the Pacific Ocean or the Gulf of Mexico, any lands that are “washed by the tide” are owned by the state. It is the mean high tide line, not the vegetation line, which forms the seaward boundary of oceanfront property. Ownership of the upland includes the dry sand, but not the wet sand, seaward of the vegetation line.

In Maine, New Hampshire and Massachusetts, however, because of a 17th Century law still recognized today, the littoral owner will be able to claim fee title all the way down to the mean low tide line, or 100 rods (1650 feet) from the mean high tide line, whichever is shorter.

All of that said, there have been lawsuits brought against private property owners in several states (including Florida and New Jersey), seeking to establish a public right to use the dry sand area for recreation area and for access to the water. Various theories, such as claims of prescriptive easements and the doctrine of customary usage, have been used to allow public use of portions of beachfront property. Whenever insuring title to beachfront property, consult with your underwriting counsel regarding the need for an exception for any rights of the public to use the property.

Texas law provides for an easement in favor of the public from the vegetation line seaward to the mean low tide line. This easement is created by statute, not by a written document. So, while the owners of a Texas beachfront home may have fee title to the dry sand, they do not have the exclusive right to use it. Moreover, the vegetation line along the Gulf Coast is greatly influenced by hurricanes. In 1983 and again in 2008, Galveston Island and nearby areas were hit by major hurricanes. One of the effects of the hurricanes was to move the vegetation line further west. Ground that was once part of the upland is now subject to the public’s easement to use the beach. Property owners are typically not permitted to build or maintain structures located seaward of the new vegetation line.

Tidal Rivers and Bays

If you enjoy sailing or crabbing, you are probably familiar with tidal rivers and bays. They are waterways located in coastal areas that are affected by the ebb and flow of the tide. Although less noticeable than those of the ocean, these waterways also have mean high and low tide lines. As with oceanfront property, the boundary of property that boarders a tidal river or bay extends to the mean high tide mark, in most states. However, in some states, the littoral owner has fee title to the low water mark of the tidal waterway. The state will hold title to the submerged land, for the benefit of the public.

In New Jersey, the general rule is that the state holds title to all lands now or formerly flowed by tidewater. This doctrine has led to an elaborate mapping system, which identifies dry land that was formerly affected by the tides. In many cases, a developer of property on or near the water will have obtained a “Tidelands Grant” from the State, in which the State (at a price, of course) relinquishes its interest to land formerly affected by the tides. This doctrine affects property along much of the Hudson and Delaware Rivers and their tributaries, as well as property near the Atlantic Ocean and near the numerous rivers and bays along the Jersey Shore.

Other states, such as Florida and Maryland, also have specific laws affecting title to tidal property. Again, consult with your underwriting counsel regarding the need for a specific exception applicable to tidal property in your state.

Regardless of the fee ownership, all property covered by navigable water is subject to the rights of the United States and the public to use the water for transportation and commerce. A body of water is generally considered “navigable” if it can be used in its ordinary condition for commerce or transportation. An exception for this “navigable servitude” of the United States should be included in all policies insuring land located on any navigable waterway.

Sometimes, there is a bulkhead between the land and the waterway. In such cases, the policy should include an exception to the effect that title to property beyond the bulkhead is not insured under the policy. When dealing with riverfront property, also be aware that the owners of land upstream and downstream have certain rights known as “riparian rights”. These include rights to take and use the waters. An exception for riparian rights should be included on all policies insuring riverfront property.

If a portion of a body of water has been artificially filled in, additional issues arise. If the water was navigable, a permit would have had to have been obtained from the United States and/or the applicable state. Title to the filled in land would be subject to the terms of such permit, and an exception to such terms should be taken on all policies. Many cities contain property built on landfill. If you visit Boston’s Back Bay, Battery Park City in New York, or the San Francisco Embarcadero, ask your tour guide what exceptions were included in the title policies covering these properties by reason of their being built on landfill. Let me know what type of reaction you get.

Conclusion

The foregoing is meant to briefly point out some of the special issues relating to coastal property. There are many others as well. As always, you are encouraged to contact your underwriting attorney for assistance when handling transactions involving waterfront property. And, of course, enjoy your vacation!

The original article was written by Wade Thunhorst from Title Resources Guaranty Company, our affiliated title underwriter headquartered in Dallas, TX.

Ocean Flickr photo by ahisgett and bay photo by photofarmer

Why we support Real Estate BarCamps

On September 12th from 12PM to 5PM, the Hilton Suites Ocean City Oceanfront will be host to the second Real Estate BarCamp, Ocean City Maryland. And Mid-Atlantic Settlement Services will be participating by sponsoring and attending. This will be the 9th RE BarCamp we sponsor.

So why do we do it?

• The attendees are as passionate about brokerage and agency as we are about title. It's a perfect match.
• We believe that technology can make the entire real estate process more seamless, less clumsy, and more user-friendly. The focus is always on the buyer and seller.
• RE BarCamp fosters discussion, and discussion fosters relationships. Very few venues in the real estate space offer this type of interaction.
• Many of the techniques and strategies utilized by agents and brokers can be applied directly to our business.
• We get to meet agents face-to-face that we only previously knew online.
• It's more than just a little fun!

Have you thought about attending one, but didn't want to commit an entire workday? Are you attending the MAR Annual Conference and Tradeshow in September? Have you ever wanted to visit Ocean City, MD in September, perhaps the best time of year to be there?

If you answered yes to any of these questions, click here to get on this list. We'll see you on September 12th!

Home-Resale Fees Under Attack

As reported in today's Wall Street Journal, home-resale fees (also known as "reconveyance fees" or "private transfer fee covenants") are under attack by a group led by the National Association of REALTORs® and the American Land Title Association. Home-Resale Fees are set by a developer to trigger when any subsequent homeowner sells the property, with the typical 1% of the sales price going to the developer. 12 states, including Maryland, have outlawed this type of transaction fee, but if this group is successful there will be a federal ban on such a practice.

Modifications to the Homestead Deduction Application Process in DC

Thank you to our DC and Montgomery County, MD partner Paragon Title for this information:

The District of Columbia Office of Tax and Revenue has changed the procedure for filing Homestead Deduction Applications. The Homestead Deduction results in a $67,500 decrease in the taxable assessment and places a 10% cap on the annual amount that a tax assessment can increase for qualified owner occupied properties in the District of Columbia. As a result of this change, homeowners will be responsible for filing the application themselves and your title company or title attorney will no longer be able to file it for them a part of the closing. The procedure for filing the Application is not difficult, but the requirements must be met in order for a homeowner to receive the benefit of the Deduction.

In an effort to ensure that anyone who receives the Homestead Deduction actually qualifies, DC has mandated that the Applicant satisfy the following specific requirements:

1. The Applicant must have actually moved into the property.
2. A completed Application must be submitted with the required indicia of domicile: (a) DC Driver’s License with the subject property address on it. (b) DC Car Registration with the subject property address on it. (c) DC Voter Registration. (d) Proof of Paying Income Taxes in DC. i. Current Residents - DC Tax Return ii. New Residents - Pay Stub showing DC taxes withheld.

To ensure that the Application will not be rejected, the Applicant should make every effort to include all of the above indicia that apply. DC has suggested that if the Applicant does not attach a DC Driver’s License or a Car Registration because they do not own a car and/or drive, they should state “I do not drive” and/or “I do not own a car.”

If a DC Voter Registration is not attached and the Applicant is not registered to vote in another state, the application should specify “I do not vote.” The Applicant cannot have a voter registration in any other jurisdiction.

The Homestead Department prefers that the Application and supporting documentation be emailed to Homestead@dc.gov. Applicants cannot take a Homestead Deduction on more than one property. Purchasers who are currently receiving the Homestead Deduction on another DC property must include a “Cancellation of Homestead Deduction” form in that same email. A link to this form can be found on the left side of this Bulletin. Once the application has been submitted, the Homestead Department will acknowledge receipt by email.

Here are some helpful links for DC residents:

ONLINE CHANGE OF ADDRESS: This site allows users to update their address for both their Driver’s License and Car Registration. http://dmv.dc.gov/serv/dlicense/ChangeofAddress.shtm

ONLINE CHANGE OF VOTER REGISTRATION: This site is the DC Board of Elections & Ethics where homeowners can register to vote in the District. https://www.dcboee.org/voter_info/register_to_vote/ovr_step1.asp

HOMESTEAD APPLICATION AND CANCELLATION DOCUMENTS: This link directs you to the Real Property Forms page on the DC Office of Tax and Revenue’s site. Under the heading “Tax Relief” you will find all of the relevant Homestead Documents. http://otr.cfo.dc.gov/otr/cwp/view,a,1330,Q,593974.asp

Flickr photo by alykat

Owner's Title Insurance: Why Your Buyer Needs It

Real estate agents are often asked "Do I need an owner's title insurance policy?" by their buyers. With all of the costs associated with purchasing a home, an agent may be tempted to either answer "No" or even more innocently not have a clear answer as to why title insurance is needed. Title companies and underwriters have material (disclosure: TRGC is an affiliated title insurance company) to help with this - and you should always ask - but here is a story I recently heard which should be enough to convey the importance of owner's title insurance to your buyer. This took place in a different region, and the names are hypothetical, but the story is real.

Tiger Title Company settles a purchase from Sam Seller to Bob Buyer earlier this year. As part of the transaction, Tiger Title endeavors to pay off the loan that Sam Seller had with Lion Lender. Except, they didn't. Tiger Title was owed money from other lenders on other transactions, and did not have enough in the account to cover the payoff amount.

Scared yet?

Lion Lender never got their money. They are now looking to Sam Seller to pay off the loan. Bob Buyer (who now technically owns a property with 2 mortgages on it) is going to be asked to move out. Bob's lender, who thought they were in first position, is now in second.

What's title insurance got to do with it?

It seems clear here that Tiger Title is at fault. They had a duty to pay off the mortgage, and they didn't. They're likely a small shop, don't reconcile their escrow account monthly, and just don't have the money to pay off the mortgage. Bob and Sam could sue them, and maybe they are covered by a surety bond, but that requires lawyering up and waiting months or years before things are settled.

Fortunately, Bob Buyer purchased an owner's title insurance policy. With a phone call, Bob can file a claim and the title insurance company will step into his shoes. In all likelihood, the title insurance company will pay off the mortgage. After all, Bob has a policy for clear title that doesn't take exception to the mortgage. The title insurance company will likely be visiting Tiger Title's home office in short order, but that's their business. Paying off the mortgage immediately means that (A) Bob Buyer stays in his home with only one lien on the property and (B) Sam Seller owes nothing.

Most title companies do not operate like Tiger Title. Most reconcile their file accounts to the penny and reconcile master escrow accounts monthly. Most would step up if there was a shortage and pay it from operating funds.

But do you want to be the agent who either advises against an owner's policy or is unable to explain the importance?

Flickr photo by borman818

MLTA President to Discuss Title Insurance this Sunday on WBAL AM1090

Like many industries, title insurance has come under some scrutiny lately in the media. What goes into a title insurance policy? What does it cost? Is that cost justified?

This Sunday (7/18) at 12:30 PM, Maryland Land Title Association President Nathan Finkelstein, Esq. will speak and discuss the settlement process. He will explain that title insurance producers are in the Real Estate Settlement profession, and will detail the process. He shows title insurance as one component of that process.

For any real estate professionals interested in settlement and title, here is a good opportunity to hear directly from a title industry leader as he answers some pointed questions. Tune into 1090AM at 12:00PM for a general discussion on the topic - Attorney Finkelstein's segment will start at 12:30.

We're Building a Northern Virginia Title Team

Positions are now open for a new Northern Virginia title team we're creating!

We are looking for settlement coordinators (processors), settlement officers and real estate attorneys to work out of our Tysons Corner office.

Interested or know someone who is? Shoot us an email at careers[at]MASettlement[dot]com.

Tax Credit Closing Extension Passes Senate

Congress acted at the 11th hour today by signing and sending to the President a bill which would extend the closing deadline for the First Time Home Buyer Tax Credit from 6/30/10 to 9/30/10. It is expected that President Barack Obama will sign the bill, thus giving an estimated 180,000 home buyers the benefit of the credit they otherwise would not have have received due to delays in settlement.

See full story here.

June 30, 2010 Homebuyer Tax Credit Closing Deadline has NOT yet been extended

It appears that there is much confusion in our industry and in the media regarding the homebuyer tax credit deadline.

As of today, the June 30, 2010 closing deadline for purchase contracts entered into on or before April 30, 2010 has not been extended.

On June 16, 2010, the Senate passed bill H.R. 4213 (American Jobs and Closing Tax Loopholes Act of 2010) which included a House Amendment to extend the June 30, 2010 closing deadline to September 30, 2010 (see this post). H.R. 4213, however, contains many provisions unrelated to the tax credit deadline and the bill that passed the House is different than the bill that passed the Senate. Thus, Senate and House members are in committee to work through their different versions of this bill. Once a version is agreed upon, the final bill will be presented to President Obama for signing. Only then will we know whether the closing deadline is extended.

We will continue to keep everyone posted on any developments

ALERT: Home-Buyer Tax Credit Extension Passed in Senate

The Senate voted 60-37 today to extend the closing deadline of the home-buyer tax credit from June 30th to September 30th. The bill still needs passage by both chambers of Congress, but if successful will allow home buyers who signed a contract by April 30th to still get the full benefits of the home-buyer tax credit provided they settle by September 30th, 2010. This will be particularly helpful for those buyers who entered into short sale or REO (foreclosed) properties in the waning days of the 4/30 signing deadline, as many of those transactions will not be ready to settle by the end of this month.

The full MarketWatch article can be read here.

UPDATE: This is not effective law, as it has neither passed the House nor been signed by the President. See here for most current status.

Listing Agents: 2 Steps to Avoid Surprises

I recently heard a story of an agent who lost a short sale listing to foreclosure of a lien. He knew it was a short sale, but didn't realize there was another lien which was eventually foreclosed upon. While you can't *make* the seller tell you everything, there are a couple of steps you can take which could prevent surprises - and loss of a listing - before settlement:

1. A net sheet
2. A title search

Net Sheet

Before taking a listing, I would do a “net sheet” for the seller. The simple formula is this:

Approximate sales prices - (commission) - (mortgage payoff) - (other lien payoffs) - (back taxes) - (seller settlement costs) = seller net proceeds.


Obviously you are relying on good faith, cooperation and estimates, but in many cases you can get a sense before you take the listing as to what a sale will net (if anything) and if your "foreclosure radar" needs to be up.


Title Search

Let’s say that you are in a short sale situation – or anywhere close to it (remember, the seller may not realize they are upside down), I would order a title search from your friendly neighborhood title guy.

Why?

While it is the buyer’s job to evidence title (at least in buyer-controlled markets like ours), as listing agent you don’t want to put work into marketing a property the seller will lose rights to own/sell. A title search may cost you/the seller something ($150 maybe?), although it is possible that the buyer will select that title company or buy the search in which case it would cost you nothing.

In the case I heard about, a Home Owner Association (HOA) lien was foreclosed upon, thereby wiping out the mortgage. Had a title search been done in advance, it may have revealed the existence of the lien. If you were aware of it, you could have done some legwork on your own to determine that the HOA was about to foreclose on their interests. You or the seller could have asked them to hold off until settlement, at which case they'd get paid.

Again, these are not fail-proof methods to avoid all pitfalls that come with listing in this environment, but they just could save yours.

We are Hiring!

We are looking to add a highly-motivated and experienced settlement agent / closer to the MASettlement team! The successful candidate will cover Northern Anne Arundel County, specifically focusing on the area from Severna Park north to Glen Burnie. If you or someone you know is interested, please click here to apply.

Truly Remarkable People for Truly Remarkable Settlements!

Northern Virginia Alert: Fairfax County Courthouse to close at 1:00 PM Tomorrow (3/26)

The Fairfax County (VA) Courthouse is closing at 1:00pm tomorrow (March 26th) to update their computer systems. Recorders are likely going to get in line at the courthouse around 10:30 or 11:00AM, so make sure you or your title company gets documents to them as early as possible today or tomorrow if you want them recorded tomorrow.

Q&A: CRESPA and a Virginia Buyer's Right to Select Settlement Agent

Q: Can a buyer in Virginia choose a settlement agent after they have already signed a contract listing another settlement agent?

A: Yes. Virginia’s Consumer Real Estate Settlement Procedures Act (CRESPA), in § 6.1-2.22 (Disclosure) states that "the purchaser or borrower has the right to select the settlement agent to handle the closing of this transaction." Furthermore, this right may not be waived by agreement, meaning that even if the contract provides for a particular title company, the buyer may later select the title company of his choice.

Source here.

The New RESPA Rules: 4 Common Issues

Before the new RESPA rules became effective, we wrote a 12-part series on them. As helpful as that may have been, we are now close to 3 months into actually closing transactions under these new rules. I have been keeping notes on the issues we've been seeing with the intentions of writing a post when I saw a tweet that asked that question. So, here we go...

Q: What kind of issues have you seen with the new HUD lately, if any? I'd love to know, thanks!

A: This is still very much a transition period for all of us. Although the new changes went into effect January 1st, some of the new rules are subject to interpretation or leave the lender some different options for handling a particular matter. Here is a quick list of issues we are currently working through. So what can an agent do? The biggest thing an agent can do to make this process go as smooth as possible is to strongly encourage that their title agents over-communicate with lenders. Understanding the lenders and talking through the disclosure issues will help mitigate any potential delays at closing. So, on to the specific issues...

Itemization of the 800 and 1100 series charges: Historically the HUD-1 Settlement Statement had an itemized breakdown of the various fees charged by lenders (in the 800 section) and title companies (in the 1100’s). A primary change of the new rule is to abandon this itemization in favor of “bundled” costs so that borrowers can compare whole apples to whole apples. Lenders, however, still want to see that breakdown. In some cases they need the breakdown to calculate APR or to show a state regulator or investor that may require itemization. As such, many title companies have been asked to either (A) itemize the fees to the left of the buyers’ column and “roll up” to line 1101, or (B) provide a separate addendum which breaks them out. Since the rule specifically forbids itemization on the HUD-1 (pages 45 and 47 on the New RESPA Rule FAQs), many title companies are creating a separate addendum to accompany the HUD-1 that gets sent to the lender for approval.

Confusion regarding the “Settlement Provider List” and the placement of fees on Page 3: When a loan officer permits a borrower to shop for third-party settlement services (such as a title company), the LO must provide the borrower with a written list of settlement services provider (s) on a separate sheet of paper. Whether the title company is on that list dictates where the title costs go on Page 3 of the HUD-1: In the “Charges That in Total Cannot Increase More Than 10%” box or in the “Charges That Can Change” box. So what’s the problem? As a title company, we don’t always know if we’re on the written list – the lender needs to tell us (another example of the importance of over-communication as noted above). The GFE does not tell us. As such, it is common for us to send a HUD for approval, and then be told we have our fees in the wrong box. This does not cause any major issues, but can add a little time to the approval process.

The “new look” of the HUD: Agents are used to the old HUD-1, plain and simple. In time, this HUD-1 will cease to be called the “New” HUD-1, but in the meantime there is a learning curve. The best thing an agent can do is to request a preliminary HUD as soon as possible in the process to understand where everything is and what it looks like!

When does a lender cure a tolerance violation? The lender has two options for curing a tolerance violation: Either at closing (via a HUD-1 credit) or within 30 days after settlement. Naturally, lenders are not all consistently doing the same thing. Some cure via credit at closing, some cure within 30 days via check. For an agent, it’s important to know that the lender can choose either option, and that we may not know which option they select until the day of closing when the tolerance violation is discovered.

Like any change in procedure, there has been an adjustment period for all of us involved in the real estate transaction. The adjustment period will likely continue for a bit. At some point, as mentioned above, the “new” GFE and HUD-1 will lose the “new” status and just be the GFE and HUD-1. Until then, we just handle each transaction individually, follow the new rules, and seek guidance from HUD where the rules are not perfectly clear (they have been extremely responsive to questions). For anyone interested in reading up more on these topics, the New RESPA Rule FAQs document (link here) is a great resource. Use Adobe’s “search” function to search keywords to get answers to your questions. You can also email me at Derek[dot]Massey[at]MASettlement[dot]com.

Realogy's Richard Smith on CNBC's Squawk Box

The video below featuring Realogy president and CEO Richard A. Smith originally aired March 16th on CNBC's "Squawk Box." Mr. Smith discusses the state of housing market and what we might see in 2010.



Mid-Atlantic Settlement Services is a wholly-owned subsidiary of Title Resource Group, which is in turn a subsidiary of Realogy.

Devin Holland and Monica McNamara discuss the new HUD

Coldwell Banker Residential Brokerage's Monica McNamara and our own Devin Holland discuss the new changes to the HUD-1 statement, and how this can impact second homes.

WANTED: A Numbers Guy or Gal for our Leadership Team

We are excited to announce that we are once again hiring! Mid-Atlantic Settlement Services is looking for a senior-level accounting person to become our "Accounting and Post-Closing Manager." This is a manager-level position that includes a seat on our 6-person Leadership Team, and the successful candidate reports into me. We offer a competitive compensation plan and benefits, and because we are part of the TRG/Realogy family of companies, there is plenty of opportunity for growth.

Interested and want to know more? Click here for the job posting, and follow the instructions for applying. Still want more information? Feel free to email me at Derek[dot]Massey[at]MASettlement[dot]com.

Flickr photo by Jorge Franganillo

Mid-Atlantic's Lee Snyder Featured in Baltimore Sun's Real Estate Blog

Ever wonder if a series of emails can constitute a real estate contract? Each case is specific, and this is by no means legal advice, but Mid-Atlantic's own Lee Snyder helped the Baltimore Sun's Jamie Smith Hopkins answer her mailbag regarding this question.

To read the full article, click here.

Weather Update: Delayed Opening for Thursday, February 11th

Due to the anticipated road conditions Thursday morning, our Hunt Valley office is planning a delayed opening at 12:00 PM. We will monitor traffic conditions in the morning, and will update accordingly if anything changes.

Should you need any assistance while the office is closed, please call your Title Service Rep (TSR) on his or her cell phone, Dan Coleman at 410-382-7491 or Derek Massey at 443-541-1199.

Weather Update: Wednesday, February 10th

Due to the already challenging road conditions coupled with the high probably of more snow and blizzard conditions today, the Mid-Atlantic Settlement Services offices will be closed today, Wednesday, February 10th. We will reopen at 8:30AM tomorrow morning.

We apologize for any inconvenience caused. Should you need any assistance throughout the day, please call your Title Service Rep (TSR) on his or her cell phone, Dan Coleman at 410-382-7491 or Derek Massey at 443-541-1199.

Thank you, and please be safe!

Early Closure Due to Snowstorm

Due to today's impending snow storm, we will be closing at 12:30. We hope all of our customers have a safe and fun Super Bowl® weekend!


Flickr photo by distar97