The Importance of Title Insurance

The task of buying a home is no small one and the job is not really over with just getting your mortgage finalized. When you buy your home, the first thing you have to be sure of is that there are no issues with the title of the home and that the seller is actually the owner of the property. If there are issues that crop up with title insurance, then you will not be able to enjoy your home completely and it will definitely affect the resale value of your home. So how do you go about a title search?

Once your sales contract has come through, approach a title professional who will scan through public records and find any issues that may be related to your home. What this search will generally entail is a review of all land records for the property that go back to as many years as available. This search will bring out details such as a previous owner defaulting on the payment related to the construction of a part of the house or an extension to it. If there have been an issue of property taxes or any other governmental taxes not being paid, then that will come up at this point. The title professional you hire will work towards solving all these problems before you actually settle on the house. Such investigation is actually important if you are looking at refinancing your home.

There are times when minor issues with the owner's title policy are not matters of public record and can come up some other way. In such cases, you can give yourself a bit of immunity by getting the Owner's policy of title Insurance to protect you for any such trouble that can come up. Some of the problems that could come up can be related to any mistakes that may be there in the deeds themselves, any issues that have arisen from mistakes in examining of records, forgery or any sorts and the sudden appearance of undisclosed heirs.

House Bill 87/SB 152

Since 1913 the Maryland Tax code has allowed and protected mortgage interest deduction. Governor Martin O'Malley has proposed a budget that will reduce the amount of mortgage interest deduction (House bill 87/SB 152) that some Marylander's can receive.

Maryland would be the first state to reduce the mortgage interest deduction. This bill may further delay the real estate recovery for Maryland and create less incentive for home ownership, which is something that Maryland can not afford to let happen.

In my opinion this bill will cause more damage to the state economy than any good from the revenue it will generate.

Time to Buy Property is Now

Mortgage rates have fallen below five percent again, to the mid four range. That means now is a great time to seek financing for the purchase of real property. According to the National Association of Realtors, new contracts to purchase existing homes dropped 11 percent in April, which is typically the start of the busy season for real estate transactions; and sales are off by 26 percent from this time last year. The drop in existing home sales contracts will likely keep prices moderated or even depressed in certain parts of Maryland. This, combined with the low interest rates on mortagages, creates an excellent buying opportunity. Anyone even considering purchasing a home in the next year might want to consider accelerating their plans and purchasing now to take advantage of the current opportunities.

Mortgage Giants Align Guidelines

the Federal Housing Finance Agency has now forced Fannie and Freddie to align their guidelines on dealing with delinquent mortgages and there customers.

Fannie Mae and Freddie Mac had two separate protocols with dealing with the delinquent mortgages after a push from the FHFA, the mortgage giants must now abide by the same process. They must engage with the borrower as soon as the customer becomes delinquent on their loans.

The mortgage servicers must work with the borrower(s) on coming up with alternatives to foreclosure until the 120th day of delinquency. The servicers will perform a formal review of the case to ensure the borrower knows of any alternatives before foreclosure is filed.

The FHFA stated the new process with force the mortgage servicers to contact the troubled borrowers sooner, and help develop a modification agreement quicker.

Fannie Mae CEO Michael Williams:

This initiative will direct servicers to reach families earlier, communicate more frequently and clearly, and provide relief, Fannie Mae fully supports this Initiative, and we remain committed to stabilizing communities and building a stronger foundation for housing."

Record-keeping

The question is often asked: "How long should I keep copies of my financial records?" The answer is different depending upon who you are asking, and what type of records you are referring to.
When you are talking about records from the settlement of the purchase of real property in Maryland, the answer is usually going to be "indefinitely."
There are some very good reasons for keeping your records indefinitely.
First, you should keep copies of all of your closing documents at least until you sell the property, at a minimum. Your accountant will thank you and commend you. One cannot accurately calculate basis, gain or loss on the acquisition and sale of real estate unless the purchase records are available. This is similar to the need to maintain records from the purchase of equity securities, bonds and other financial instruments so that you may determine basis and gain/loss.
Secondly, you need to keep your Maryland title insurance policy for as long as you own the property. You will need to be able to locate it in the event that you need to file a claim, just as you would need to locate any other insurance policy in the event of a loss. Furthermore, if you have your closing documents and you refinance your loan, you will be able to get a lower rate on the new lender's policy, known as a "re-issue rate." Your original Maryland title insurance policy is required to get the lower rate on the next transaction.
So, make copies, and buy a filing cabinet!

Getting A FHA Loan Anytime Soon?

Yup they did it again. The Federal Housing Administration raised there FHA Mortgage Insurance Premium for there annual rate by 25 basis points. If you already have an FHA loan and do not plan on refinancing then this will have no effect on you. But if you are looking at buying or refinancing with FHA you will fall under the new insurance rates unless you had your FHA Case Number issued before April 18th.

Here is the example of the increase will effect you:

Based on 30 yr. Term - Greater than 95% or great LTV:

	Oct-10	Apr-11
Annual MIP %	90 bps	115 bps
Sales Price	$163,000	$163,000
Min Down Payment	$5,705.00	$5,705.00
Mortgage with Out UFMIP	$157,295	$157,295
FHA Monthly MIP	$118.00	$151.00
Change in Monthly Payment		$33.00
Yearly change		$396.00
After 5 Yrs.		$1,980.00

Fall the Link to the Mortgagee Letter from FHA. Click Here!

The Inside Scoop

Did you know that in most closings for home purchases in Maryland, the settlement agent will caluculate the pro-rated balances of certain bills related to the property such as property taxes and utilities? The purpose of calculating a proration is so that the seller pays just their portion of the bill up to the date of settlement, and the buyer only has to pay from the date of settlement forward. Buyers should always contact utility companies directly however, to ensure that the account is transferred into your name. The settlement company cannot do this for you. Did you know that first-time Maryland homebuyers do not have to pay transfer tax? You may still qualify even if you have purchased a home before, as long as enough time has passed. Be sure to ask your realtor or settlement agent about the credit and to see if you qualify.

Baltimore Co. Title Company Owner Pleads Guilty to Wire Fraud.

The owner of a Baltimore County Maryland title company pleaded guilty Friday to wire fraud.  The charges were tied to a scheme to defraud homeowners, lenders and a title insurance company of more than $2 million.


A federal grand jury charged Daniel E. Fink Jr. of Baltimore, owner of Homemaxx Title & Escrow LLC, in March 2009 with wire fraud and money laundering. bases on the plea agreement, Fink arranged for his company to do title work for residential closings and refinancings, then concealed crucial facts about title insurance issued to home buyers or borrowers who refinanced. The fraud occurred between February 2003 and July 2004, the plea agreement said.

Its important to know your title company and who you are doing business with.... Ask the hard questions before your next settlement.  Are you bonded?  Are you audited?  Can you demonstrate timely recordings etc.  Maryland is a great state to own property and live but not all title companies in any state are created equal so get to know your title provider before your next settlement.

Know Why You're Buying

If you are thinking of buying a home, be sure that you know what your goals are. If you are expecting property values to grow over the next ten years the way that they have in the past ten years and you are looking for a big payday when you sell, you may want to reconsider. When considering the purchase of real estate in today's economy, consider the average return on investment of real estate over time compared with other investment vehicles. If your goal is only to realize a huge gain on future appreciated value, and you don't intend to live in the property long-term or rent it, you might be better off putting your money into the equity markets where gains have outstripped real estate consistently over time. But, if you are looking to move in and live in the home that you purchase, or if you want to rent a property, your goals are different, and you would do well to look to buy now. Interest rates are low, and although they are not at an all-time low, they remain very good and will likely not decrease for a long time. The Fed is rumored to be considering a rate-hike and mortgage rates are going to be going up as well. Home prices are at record lows and inventory remains high with many short-sales and foreclosures holding prices down. Long-term home-ownership has many benefits that make it worthwhile, even if the long-term gain on the investment may be lower than other investment options. And if you are seeking to establish long-term rental investments, and you are saavy in your selection of properties and what you pay for them, you are certainly in the right market to be buying properties to hold and lease.

Short Sale & Bankruptcy

If you are seeking approval from your lender for the sale of your property for less than you owe on the loan (short sale), and also considering bankruptcy, be sure to consider all of the permutations before you file anything. It is highly recommended that you seek the advice of bankruptcy counsel AND your lender and realtor. The filing of a bankruptcy petition prior to the closing of a short sale may have unintended and adverse consequences for your short sale approval. Many bankruptcy attorneys will give you good advice that might not take into consideration your pending short sale unless you have informed them of it. Furthermore, if your realtor and lender are unaware that you are considering bankruptcy, they may make recommendations that would be different if they knew you were filing for bankruptcy. The filing of a bankruptcy and short selling a property are interrelated and if not properly planned can cause difficulty in achieving either objective. So, consult your attorney, your realtor and your lender before doing anything.

Maryland loan officers get ready! New compensation rules take effect

Mortgage brokers -- who work independently from banks, brokering loans through multiple lenders -- maintain that the rules favor loan officers employed by banks, and will drive many of them out of business.


Only time will tell for sure what the effect of the new compensation rules will be but one thing is for sure this ruling for the rules to take effect April, 6th was a suprise to many.  Lenders are now scrambling to meet the requirements and many Maryland lenders/banks have suspended taking new loan applications until they get organized for compliance with the new rules.

Maryland Title Co. license revoked by state regulators!

Maryland State Insurance regulators revoked the license of a Baltimore title company for allegedly misappropriating nearly $700,000 in checks from another firm it shared an office with, according to the Maryland Insurance Administration. 
Maryland Title Company, Principal George Sybert Sr., who is also facing a civil lawsuit in Baltimore City court, claimed responsibility for forging the checks during an agency hearing Feb. 5, according to insurance administration documents.


Read more: Maryland Title Co. license revoked by state regulators
Baltimore Business Journal

LO Comp Rule Delayed

March 31st at the end of business the U.S. Court of Appeals granted a stay on the Federal Governments Loan Officer Compensation Rule, the rule will be put off until the 5th of April until a another hearing could be conducted.

So, After months of and many lawsuits against the Fed, the NAMB was able to delay the implementation of the LO Comp Rule at least for now.

Some Lending Institutions have already implemented the compensation changes, but many more were hoping the the rule of the LO Comp would be delayed. Many different lending institutions have very different interpretations of the Fed LO comp rule, and that those varying interpretations was the reason the NAMB was asking for the delay.

With so many different ideas of how to implement the rule and not having a clear cut format or guidelines , has left many lending institutions scratching there heads. But at least for now they have a slight reprieve from the new Loan Officer Compensation Rule.

FDIC Releases New Mortgage Rules

Today the FDIC released and voted on proposed risk retention rules for certain types of mortgages. Under Title IX of the Dodd Frank Act, mortage loan originators will be required to retain more risk rather than passing on all of the risk by distributing the loans to securitizers. Qualified Residential Mortgages are exempt from risk retention, and will be subject to much higher than normal standards for borrower qualification such as a lower DTI, higher minimum down payment, and higher maximum LTV ratio. But, according to the FDIC, such loans will account for only a small percentage of all loans and therefore should not impair the access of low to middle income borrowers to mortgage credit. The bigger news today is that the Dodd-Frank Act will require issuers of securitized loans to hold five percent of the risk. How this requirement will affect the overall availability of credit and by extension the still-recovering residential purchase market remains to be seen. Stay tuned.

Oh What is An Apprasier to Do?

Well Four States (Illinois, Maryland, Missouri and Nevada) are trying to have legislation passed that would force Appraisers from using Distressed Home Sales. So NO foreclosures or short sales will be used as a comparable, that would bring home values down. Sounds Good for the Maryland Real Estate Values. But....

The Problem is that the Law contradicts the federal law which states they must obey the Uniform Standards of Professional Appraisal Practices. That law/code requires that Appraisers must use foreclosures and short sales values to come to an apprised value for Maryland real estate. If the appraiser does not follow the law/code of the uniform standards of professional appraisal practices, they can loose there licenses.

This could also create a problem with obtaining a loan because the banks will not see an appraisal done in any of these states as accurate data because it is appraised on a different playing ground then other states and they could avoid buying or offering these loans to consumers.