Continued Education Schedule Updated

We currently have 9 classes scheduled (most for credit) which are open to real estate agents. Topics include Short Sale Strategies, Title Insurance, and Ethics (MD and VA).

What's the catch?

You need to go to our Facebook Fan page on the events tab to see them! While you're there, why wouldn't you become a fan?

Link --> http://www.facebook.com/pages/Mid-Atlantic-Settlement-Services/54250543277

We are still scheduling, so please do not hesitate to ask! Reach out to your TSR, Dan Coleman (Daniel[dot]Coleman[at]MASettlement[dot]com) or Harry Yazbek (Harry[dot]Yazbek[at]MASettlement[dot]com) today to set up a class either in your office or a nearby location.

Why Should a Title Company be on Twitter?

I admit, I started tweeting because it was novel, fun and the real estate industry was embracing it in spades. Then, almost mid-tweet, it occurred to me that this thing called Twitter may have some legs, and more importantly some utility to a title company. Keeping in mind that as an industry we are part (mostly, really) business-to-business and part business-to-consumer, I thought I'd break down exactly how a title company can benefit from actively using Twitter:

Subject Matter Knowledge: In short, getting into the heads of real estate agents! What are the concerns that many share in the industry? What kind of technology are folks turning to? What blogs are agents creating, reading and commenting on? Sure, real estate is local and provincial, but the biggest challenges and solutions are universal. Twitter allows me to listen in on a conversation between real estate agents and walk away with a much better understanding of their challenges. How can that not make me a better title guy?

Virtual Handshake: I find myself getting to know individual real estate agents on a level I wouldn't otherwise. Through Twitter, I learned of Real Estate Bar Camp Virginia 2009 (REBCVA) taking place in Fredericksburg, VA next week. Forget the fact that without Twitter I wouldn't have learned of the event, I will walk into the Monday evening Happy Hour knowing that Heather Elias REALLY likes coffee, Rob Hahn is a Jets fan, and Matt Wilkins prefers The Simpsons to The Family guy. While I wholeheartedly agree with Heather yet take issue with Rob and Matt, it's nice walking into a setting with some common ground. I already know something about these folks, and am genuinely excited to meet them!

Cross-Platform Marketing: This is the obvious one, but worth mentioning. As a title company, do you have a website? A blog? A Facebook page? Do you want more people going to those sites? With enough real Twitter followers, you can drive traffic to your other content. Obviously this comes at a price...the more you are pushing your product or service, the less people will be interested in you.

Lead Generation: I am not talking about leads for a title transaction (yet). Instead, I am talking about someone looking for a mortgage or a real estate agent, and being able to refer that lead to those loan officers and real estate agents in my network. Where I am a resource or a referral source for my clients, I am of value. Twitter enables that platform.

Chatting with Other Title Guys: Am I the only one seeing an increase in refinance orders? Are these funding delays by Lender X specific to my region, or is everyone experiencing them? How are others handling it? Through Twitter, I learn (almost in real time) what others in the industry are experiencing.

Keeping in Touch With the Team: There are about 5-6 of us who utilize Twitter regularly. I've found it a great way to know who is where, and what they have going on. I was once in a client's parking lot, ready to leave when I got a tweet from a TSR telling me she was still in the office. Since I do not want to miss an opportunity to meet with members of my sales team face to face, I was able to catch up. Without Twitter, I wouldn't have known she was still there.

Bonus (The Open House): So let's say I'm a conveyancing attorney in Massachusetts (technically, I am...just not a practicing one) and I am, as always, looking to get a leg up on my competition. As I am driving to the grocery store to run some errands, I get this tweet on my cell phone.

Whether Ms. Buckley is an existing client or one I have been trying to get business from, could I make an impression by stopping in with a (RESPA compliant) snack tray and some drinks? Offer to help? Let some of my friends know about the open house? This tool allows me to jump at an opportunity I may not otherwise know about.

I have not even mentioned utilizing Twitter as a Customer Service Channel in the same vein as Frank Eliason from Comcast, as I am not sure there are enough of our customers on Twitter (yet!), but I fully expect that to change in coming months.

Like anything, Twitter is but a tool; one tool of many in the marketing toolbox. Without the right sales approach and fundamental operational excellence, Twitter will do nothing to make us a better title company. But assuming we are otherwise running well and efficiently, Twitter helps open a door into our operation and likewise open doors into our clients' needs and wants.

Follow the company and team on Twitter: @MASettlement, @DerekMassey, @DanielColeman, @HarryYazbek, @LynnHenley, @DBHolland and @SusanLloydOC

Tax Deductions for Homeowners

I was inspired to write this blog because one of my Realtor clients (thank you Sunita) asked me to draft a letter that she can forward to all the clients she helped buy property last year. This letter will outline possible tax deductions and be accompanied by a copy of their HUD1 settlement statement. I am posting a copy of this letter here for informational purposes only, we all know how complicated the tax code can be so this is just my understanding of how this works.

Dear ____________:

Once again, congratulation on the purchase of your new home last year and as tax season is fast approaching, I am including a copy of the HUD1 settlement statement, the “debits and credits” to the transaction so you can take advantage of some deductions available to homeowners. I have referenced the possible deductions with the line item on the settlement statement where appropriate.

I encourage you to discuss these items with your accountant but here’s a synopsis of a few pages of Publication 530 by The Internal Revenue Service entitled “Tax Information for Homeowners”.

Real Estate Taxes:

You may be able to deduct any amount paid as taxes to your state and local government, including amounts paid on your settlement statement. You may start deducting taxes from the day of settlement and forward, even if the seller paid them on your behalf.

If your taxes and insurance are escrowed with your lender (included in your monthly payment), you may only deduct what is being paid for taxes and not the hazard insurance.

Items you may not be able to deduct on your taxes include money collected by local or state government for water, trash collection, fees for single service such as lawn or pool maintenance.

Some special assessments are deductible provided they were paid for the benefit of marinating infrastructure that tends to increase your property value. Talk to your account.

You may not deduct homeowner association fees or transfer taxes (stamps).

Home Mortgage Interest:

You may be able to deduct interest on your home provided it is your main home (primary residence) for up to $1,000,000 or $500,000 if filing separately. Special limitations apply if you refinanced your loan.

Pre-paid interest on your settlement statement may be deductible.

Late payments and pre-payment penalties may be deductible.

Points:

You may be able to deduct the entire amount you paid as points provided the home you bought or built is your main home (primary residence), and points were not charged in lieu of other charges such as appraisal fee, inspection fee, title fee or closing fees. Points must be clearly shown your settlement statement

The points had to have been computed as a percentage of the loan amount and must be clearly itemized on the settlement statement.

You may be able to deduct points even if the seller paid for them on your behalf, provided you meet other qualification.

Basis:

Some fees on the settlement statement are not deductible but you can add them to your “basis”. This is the amount your accountant will use in the future to figure out how much profit you made from the sale of your property. The higher the basis, the less taxes you pay. These items include abstract fees, legal fees, recording fees, surveys, transfer taxes, owners title insurance. Additionally, some costs you paid on behalf of the seller can also add to your basis.

The above is not intended to be tax advise but rather a quick glance at some of allowable deductions. You are encouraged to consult your accountant for further clarification.

I encourage you to contact the IRS at 800-829-3676 or www.irs.gov/formspubs.com and request copies of Publication 936 “Home Mortgage Interest Deduction”, Publication 530 “Tax Information for Homeowners”. You can also write to the IRS at:

Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington , IL 61705-6613

Generation G

Author and Speaker extraordinaire Jeffrey Gitomer says that "everything being equal people want to do business with their friends and everything being unequal people still want to do business with their friends." Jeffrey is telling us that if you want to make more money you should make more friends. So the question becomes “how do you make more friends?” The most overlooked rules in life are "play nice" and "share". Playing nicely with others and sharing can be a challenge not only for children, but for adults as well. Play nice and share because you value their friendship not because you want something from them.

Where are your friends playing these days? The internet! To be more exact, they are playing on the new and improved Web 2.0 version. Remember when you had an Atari and everyone else had the Nintendo? Well it is time for you to once again put down your joystick and pick up the control pad. Get on Facebook, LinkedIn, Twitter, read a blog, post a comment, or write a blog. Now is the time because Web 2.0 is still new to a lot of people.

I recently came across two related articles about what is known as Generation “G”. You have heard about the Baby Boomers and Generation "X". Let me introduce you to the generation that is not defined by the year in which they were born. This new generation is a mix of all generations known as Generation "G". What is Generation "G" and how do you market to them?

According to TrendWatching.com, Generation G:

Captures the growing importance of 'generosity' as a leading societal and business mindset. As consumers are disgusted with greed and its current dire consequences for the economy—and while that same upheaval has them longing more than ever for institutions that care—the need for more generosity beautifully coincides with the ongoing (and pre-recession) emergence of an online-fueled culture of individuals who share, give, engage, create and collaborate in large numbers.

Copyblogger’s Brian Clark takes the concept a step further and discusses how to market to this generation. While he is speaking mainly to online marketers, this still applies for this in the real estate space:

But here’s the win-win-win-win that results when you give away valuable content in a smart way. Not only do you get attention, and not only are you viewed as generous, you’re viewed as a subject matter expert who demonstrates expertise instead of simply claiming it. You’re building authority with prospects while kicking in the reciprocity effect, so they in turn amplify your authority by talking about you to others. The same process will result in the 4th “win” - Google viewing you as an authority and ranking you high in the search results (more on this in the near future). If you’ve managed to attract attention from prospective customers or clients who view you as a generous expert, AND you’ve got great search results, you’re way ahead of the vast majority of your competition. And yet, you can take it even further thanks to social networking.

How do we apply this to real estate or the title industry?

• Create content that consumers and real estate professionals can call upon 24/7 to help them with whatever issue they have.
• Ensure “Salespeople” are resources, equipped with the knowledge and willingness to help on transactions they are not going to profit on.
• Create hotlines and helpdesk email platforms (manned by real people) to take in questions and answer them timely.
• Be where the people are, namely Facebook and Twitter.
• Where proper and legal, bring service failure resolution out into the open so people can see how it happened, and what you did to fix it.
  

Running a business with transparency, honesty and integrity is not a novel concept. The novelty resides in the fact that these current times demand it, and the current technology not only allows for it, but supports and encourages it!

This Week in Training

We have one scheduled agent CE class this week.

What: Short Sale Strategies (3 credit hours)
When: Wednesday, February 18, 2009 from 10:30 AM to 1:30 PM
Where: Coldwell Banker Residential Brokerage located at 6225 Brandon Avenue, Springfield, VA

Interested? Please contact Harry Yazbek via email, phone (703-946-4470) or Twitter.

Have a great week!

Short Sale anyone?

So you are in the market for a house and you’re thinking of buying “short sale” but heard horror stories from your friends or your brother-in-law who took a real estate course three years ago and knows it all. But what do you really know about short sales and how it affects you as a buyer?

The reality is if you go in knowing what to expect and armed with a competent Realtor who understands short sales, you will be fine. If not, expect frustrations and if the deal does eventually close, you will feel like you earned a medal of valor at the end of the settlement process!

Let’s start by defining the term “Short Sale”. It is a sale of a property where seller owes the lender(s) more money than what it’s worth, and lender agrees to accept less money than what they are owed (short pay-off). Anytime a sale takes place under those conditions, it is considered a “Short Sale” transaction. As you may have guessed, the term “short’ in short sale comes from the seller’s pay-off to their lender being short on money.

So why would a lender ever accept less money than what they’re owed? Well it all comes down to the “bottom line”; if the lender thinks they can lose less money by foreclosing on a property and selling it at an auction, that’s what they will do. But if they think they will lose less money by granting a short sale, they will go that route. It all comes down to what’s in the lender’s best interest. Often times what’s in the lender’s best interest happens to be in the best interest of the seller, that’s when you as a buyer can make this process worthwhile for you.

So how does this work? First you find a property you’re interested in with your Realtor and then you make an offer, also known as “writing a contract”. If seller accepts your offer or counter-offer, the contract is then known to be “ratified”. The seller will have to accept your offer but make this acceptance “subject to third-party/lender approval”, meaning the lender to whom seller owes money has to now agree to the terms of the contract ratified by you and the seller.

By this time, the Realtor representing the seller should have assisted the seller in submitting an application for a short sale approval to the lender, known as a “package”. I will address the package in a future article but in short, this package is going to include all of the seller’s financial information, a letter explaining why a short sale is necessary, known as a “hardship letter”, and of course a copy of the ratified contract, as well as other documents justifying the seller’s request.

If the seller has more than one loan on the property, a package has to go to each lender for consideration. This is where you have to be patient because the lender has a lot of homework to do here. Remember, the seller is asking the lender to accept less money than what they are owed, in some cases it is a substantial amount of money. If that was your money, wouldn’t you want to take your time and give this careful consideration? This process can take anywhere from 3 to 10 weeks, often times longer. But eventually, the lender will come back with an answer: 1. Yes, 2. No, or 3. We want more money.

Whatever the lender’s answer is, as a buyer you are affected by it. If the answer is yes, then you go to settlement and all is well (of course that’s relative!). If the answer is No, you have no deal and you need to start all over again with another property. If the answer is lender wants more money, this is where it gets a little interesting. At this point, your experienced Realtor will really shine. Perhaps you can offer a little more money for the property, provided of course you were getting a good deal from the start. Or instead of offering more money you offer to make a lump-sum payment directly to the lender on behalf of the seller. There are many ways to get around the “we want more money” answer and again, your Realtor can assist here.

So is all this really worth it? It can be with the right property and the right seller and the right lender. Often times the lender may agree to accept an amount below the appraised value if the seller is willing to pay back some of the money he owes outside of your transaction (personal unsecured note).

Don’t forget that you as a buyer will get “clean” title to the property and of course don’t even think about buying a short sale without a title insurance owner’s policy. In fact, don’t think about ever buying any property without a title insurance owner’s policy but that’s a future article.

So what’s the bottom line on all this? Short Sales can be frustrating if you are not educated or if you don’t have a Realtor who can help you. But with the right information and representation, a short sale transaction can be very rewarding on many levels to all parties involved.

REO - Marketable or Insurable Title

So you want to buy a bank-owned (REO) property? Well they can be a great deal for buyers and the buying experience does not have to be comparable to getting dental work done without Novocain.

You put in an offer on an REO property and eventually the lender comes back with an addendum that includes the “requirement” that the buyer must use their own title company. Many agents at this point do not challenge that “requirement” for fear that the lender will simply not ratify the contract. A legitimate concern of course but here are a few things to keep in mind.

Is your buyer getting “Insurable Title or “marketable Title” to the property? Is there really a difference and if so why should we care? Let’s start by defining those terms:

Insurable Title – Title to the property may have issues such as unreleased liens, this can include deeds of trust and other money related matters. Even if those liens have been paid off, the public records may not reflect that since a Certificate of Satisfaction or a Release has never been recorded. Other matters may encumber title as well, and those are what I call “Title Baggage”. The lender will find a Title Insurance company at that point who is willing to assume the risk and insure the transaction without cleaning up the baggage. Buyer is then acquiring “Insurable Title”.

Marketable Title – Title to the property may have baggage but the settlement agent handling the transaction insists on clearing up those messes. For example, we may track down a prior lender on a loan that has been paid off but no one bothered to record the release in public records, we will obtain that release and record it. Of course there are times when tracking down a lender is not possible. For example, a loan made by a private individual who has since “disappeared”, retired on an island somewhere and cannot be found or has long departed our planet.

So why should a buyer care? Why should a Realtor care? Let’s start with the buyer. Once the buyer acquires “Insurable Title” and say he wants to refinance a year or two later, guess what is still on title? You got it, the “baggage” we talked about earlier. This can cause delays and in some cases we’ve had clients’ interest rate lock expire since cleaning up the mess, known as “Title Curative Action” can take a while. Of course the borrower can always go back to the same company that insured it to begin with but that can also be challenging on many different levels.

Or worse, we’ve had situations where the buyer goes to sell at some point in the future only to find out that the “baggage” is still there, delayed settlements can be frustrating and in some cases costly.

So should a Realtor care? Well now that we know what we know about the difference between “Marketable” and “Insurable”, who wants their name associated with a transaction where the client may have issues down the line, not good for referrals. Perhaps a previous buyer now comes back to you as a seller only to discover the baggage, once again it can be costly.
In short, if and when possible, it is usually a good idea to have your own settlement agent review the title, address curative matters, and settle the transaction. So what about the “free” owner’s policy the REO lender entices the buyer with? Experience has shown us that in a lot of cases when you compare a preliminary HUD1 from the REO lender’s preferred settlement company vs. a settlement company that’s going to make every attempt to clean-up the “baggage”, the cost is nearly the same and not to mention that the buyer will acquire “Marketable Title” to the property. Happy closing!!

Maryland Ethics Class Tomorrow (2/5) in Pasadena, MD

We will be presenting a Maryland REALTOR Ethics class tomorrow, February 5th at 10:00 AM at Century 21 The Real Estate Centre's Pasadena, MD office located at 8230 Ritchie Highway in Pasadena. Maryland agents can earn three (3) credit hours.

If you are intereted, please contact Harry Yazbek at:

Phone: 703-946-4470
Email: Harry[dot]Yazbek[at]MASettlement[dot]com
Twitter: @HarryYazbek

What the HELOC?

Our primary underwriter, Title Resources Guaranty Company, sends out a quarterly newsletter which features a great article called "Stump the Underwriter." In it underwriting attorney Paul McNutt poses scenarios - very real ones - which can affect title if not properly disposed of. I will periodically use this space to present a scenario, then discuss the solution.

Situation: Seller has - in addition to a first mortgage - a Home Equity Line of Credit (HELOC), which the title company pays off at closing. Title company never gets a release. Can this lead to a title issue? Can the borrower make another draw after the sale?




[intentionally blank thinking space]





Answer: Yes and Yes! Payment of HELOC loans without also obtaining an agreement by the lender to cancel the line-of-credit as signed by the borrower on the lender's (or title company's) form can certainly present future problems. Paying off the current balance is not enough...there must be sufficient written evidence that the line is closed and no future checks or debit withdrawals can be made against the account. Distinguish from a term mortgage or deed of trust where there are no draws against the balance - once paid off the lender is obligated to discharge the debt.

We Just Got a Little Bigger

As many of you know, Mid-Atlantic Settlement Services is one of many companies owned by Title Resource Group (TRG). This relationship gives us the advantage of being able to help local agents with referrals to out-of-state title companies, or to facilitate multi-state transactions. To that end, we are pleased to republish the following press release announcing that TRG has expanded into Louisiana. As a reminder, should you have a title need in ANY state, county or jurisdiction, please ask!

TITLE RESOURCE GROUP ANNOUNCES ACQUISITION OF EQUITY CLOSING SERVICES GROUP IN LOUISIANA

MT. LAUREL, N.J. and METAIRIE, La., (Feb. 2, 2009) – Title Resource Group (TRG), a full-service title, settlement and vendor management services company headquartered in New Jersey, today announced the acquisition of the assets of Equity Closing Services Group, LLC in Metairie, La., just outside of New Orleans. The firm, which was founded in 2003, will continue to operate under the Equity Closing name. The current leadership team of Paul Unkauf and Ray Benitez, the company’s former co-owners, will remain in place. The terms of the transaction were not disclosed.

Equity Closing Services Group, a title insurance agent and escrow company, will become TRG’s Louisiana platform for its Real Estate Owned (REO) property channel and its lender-driven title and escrow business.

“This acquisition will strengthen TRG’s presence in Louisiana and in the Southeast region, and does so with a local leadership team that has guided the company through the most difficult operating conditions following Hurricane Katrina in 2005,” said Don Casey, president and CEO of TRG. “Equity Closing Services Group also clearly shares our vision of innovation through technology, which we believe is paramount in operating a world-class title and escrow operation.”

“Our company’s success during the past five years has earned us this opportunity to become part of TRG, one of the nation’s leading settlement services companies,” said Unkauf. Benitez added, “We have been greatly impressed by the strategic vision of TRG’s business leaders, and we believe this change will ultimately prove to be a winning combination for us all.”

About Title Resource Group
Title Resource Group (TRG), a subsidiary of Realogy Corporation, is a full-service title, settlement and vendor management services company serving real estate companies, corporations and financial institutions in support of residential and commercial real estate transactions. Headquartered in Mount Laurel, N.J., TRG has approximately 2000 employees and 400 offices and is licensed in 43 states and the District of Columbia.

Media Contact:

Kathy Borruso
On behalf of Title Resource Group
Kathy.borruso@realogy.com
(973) 407-5041