Monthly Archives: October 2015

First TRID-based loans underway

tridnewsheader

First TRID-based loans underway

Industry more than two weeks into new lending environment

A little more than two weeks in, and the first handful of loans in the Consumer Financial Proection Bureau’s new world of the Truth In Lending/Real Estate Settlement Protection Act Integrated Disclosures rule are underway.

The lead up to the new TRID rule consumed the industry as it anxiously waited for Oct. 3.

While there still a lot of talk about the minute details of TRID, the industry must move forward.

However, there is a TRID implementation grace period, which more government regulators and entities are jumping onboard with.

As the industry continues to adjust to the new rule, several lenders have already successfully closed their first loans using the new TRID rule, according to a press release from Docutech.

One of the first companies is Charlotte-based Movement Mortgage, which successfully closed its first post-TRID loan with no interruptions in mid-October.

“We are confident that these new regulations will only encourage others in the industry to do what we at Movement Mortgage have always advised our borrowers to do – Know before you owe by having a loan fully underwritten up front before the consumer begins shopping for a home,” said Casey Crawford, CEO of Movement Mortgage.

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RED FLAG WEATHER AND FIRE PREPAREDNESS

fireprep

The term “Red Flag” refers to certain weather conditions that lead to a greater possibility for a brushfire that starts to spread rapidly. These conditions generally exist when the winds exceed 25 mph and the relative humidity is below 15%. Southern California averages 15 Red Flag days every year.

During weather conditions such as these, listen to news reports on the radio or TV to see if a Red Flag Warning or Alert has been issued. Here are some checklists to help you prepare for any possible evacuation.

Protective Measures
□ Park your car heading out (windows closed) and keep your car keys handy
□ Disconnect automatic garage door openers and use the manual function in case of power failure before you are able to exit
□ Place your box of important documents, photos and keepsakes inside your car
□ Keep pet carriers readily accessible
□ Using a digital camera and the free Home Inventory Guide from the California Department of Insurance
(available at http://www.insurance.ca.gov), catalogue your possessions and document their values.
· Label Photographs with information about each item.
· If a video recorder is used, commentary about each item should be included.
· A copy of the inventory and supporting documentation, such as receipts and model numbers, should be stored in a safe place such as a safe-deposit box, work office, or a relative’s house.
· These records should also include financial documents such as insurance policies and mortgage information.

When You Leave Your Home
□ Keep drapes or other combustible window coverings OPEN or remove them completely
□ Close all interior doors of the house (this slows the spread of the fire)
□ Close all windows
□ Keep interior lights ON. (As long as power remains, your home will be more visible to firefighters through the smoke or darkness)
□ Move combustible furniture (sofas, beds, etc.) away from windows and towards the center of the room

If you need to talk to someone about evacuations, shelters, road closures and other disaster-related services, call 211.

www.caltitle.com | The information contained herein is deemed to be reliable, but it is not guaranteed. California Title Company assumes no responsibility for errors or omissions. Images may be subject to copyright. ©2015 California Title Company

“Green financing has hobbled home sales in California”

Green financing has hobbled home sales in California

SolarPanelsAn innovative, government-sponsored program aimed at funding energy-saving home improvements has drawn praise from powerful supporters, including President Obama. But complaints from a growing number of homeowners, lenders and realtors in California suggest the financing is making homes more difficult to sell and disrupting the mortgage market.

More than 50,000 California households have signed up for Property Assessed Clean Energy (PACE) financing since state legislators passed a law in 2008 allowing residents to borrow money for such things as solar panels and energy-efficient windows. The financing method, authorized by cities and counties, and funded  by venture capital-backed startups like Renovate America Inc, Renew Financial LLC and Ygrene Energy Fund Inc, is then paid off through special assessments on property tax bills.

Because the improvements stay with the home, and subsequent owners will reap the benefits of them, the assessments are intended to remain with the property in the event of a sale.

But some homeowners trying to sell their houses have found potential buyers scared off by the higher tax assessments. And now realtors in the state are organizing against PACE, saying it makes getting new mortgages much tougher and can leave sellers stuck in their homes.

In Riverside County, an inland part of Southern California where PACE has been particularly popular, Paul Herrera, government affairs director for two realtor groups, said he gets daily phone calls from agents reporting difficulties selling homes with PACE assessments.

Sancho Lopez, a Riverside police officer and homeowner in an adjacent county, experienced the problem first-hand. He and his wife financed the $40,000 cost of 21 dual-pane, energy efficient windows and two sliding doors with a PACE loan. When they decided to sell their house, their realtor warned them it wouldn’t be easy.

The house sat on the market for 10 months, and it is in escrow now, Lopez said, only because he has agreed to pay off the loan balance – now $46,000 because of interest and fees.

“I wouldn’t ever do it again,” Lopez said of the PACE program he used to pay for the windows.

MORTGAGE HIERARCHY

Banks dislike PACE loans because they take precedent over mortgage debt in the event of a default, upending a basic tenet of the market.

“There is a general principle in mortgage banking: first in time, first in line,” said Pete Mills, senior vice president with the Washington-based Mortgage Bankers Association. “Taxing authorities are always a risk of jumping ahead, but that’s a far different matter than a private company selling energy improvements being able to jump ahead.”

Both the Federal Housing Administration and the Federal Housing Finance Agency, while saying they support energy efficiency, have not supported  the program up to now because the first lien position of mortgages is not assured.  In 2010, the Federal Housing Finance Agency directed mortgage finance giants Fannie Mae and Freddie Mac not to buy mortgages on properties with PACE liens.

That has exacerbated the problems in Riverside County, Herrera said, where most mortgages are backed by Fannie or Freddie or insured by the FHA.

The federal housing regulators’ reluctance has caught the attention of President Obama, who has said he wants the program to succeed and grow because it helps citizens participate in reducing energy consumption and greenhouse gas emissions.

In August, the White House said it will work with the Federal Housing Administration to boost adoption of PACE financing nationwide. Nearly 30 states have passed laws to enable residential PACE, but states other than California have sat on the sidelines pending a resolution to the controversy.

JOLT FOR GREEN ECONOMY

The PACE program was created at a time when California’s construction sector had been hit hard by the housing crisis. A new funding source for green home improvements was seen as a way of both putting contractors back to work and helping meet climate goals.

Seven years on, supporters say the program is working. Renovate America, which has financed 90 percent of the residential PACE deals in California through its HERO program, said its 47,000 projects have created more than 8,000 jobs and reduced carbon dioxide emissions by an amount equal to taking 330,000 sport utility vehicles off the road for a year.

Wall Street also likes it. Investors have snapped up hundreds of millions of dollars of bonds backed by PACE projects, which are regarded as low risk because they enjoy priority over a mortgage.

Renovate America has raised more than $600 million through bond sales over the last two years.

“PACE is the only financing that allows the seller to transfer the remaining debt to a new buyer,” Renovate America spokeswoman Ellen Qualls points out, noting that even under current federal policy, about 45% of home sellers with PACE financing from her company have been able to pass the assessments on to new buyers.

It’s difficult to quantify how many homeowners have had difficulty selling their homes since real estate agents don’t keep data on deals that don’t happen, Herrera said.

Rich Simonin, owner of Westcoe Realtors, a Riverside County real estate company that sells about 700 homes a year, said PACE assessments pose challenges in about 5 to 10 percent of his deals.

Renovate America has responded to criticism from realtors and others by improving disclosures in its contracts and creating a division focused on resolving issues with home sales.

“I’m not a realtor. I’m a software guy,” McNeill said. “When you create something you tend to not know 100 percent about where you are going to go until you get feedback.”

Renovate has also started allowing homeowners who ask – generally when trying to refinance or sell – to subordinate their assessments through a separate contract. But if subordinating PACE liens becomes the industry norm, providers argue that could hurt the credit quality of their securities and raise borrowing costs when they issue bonds.

In the meantime, people continue to be caught in the middle.

Steve Lista used Riverside County’s PACE program to pay for a nearly $27,000 prepaid lease of solar panels for his Eastvale home. The account manager for an automobile auction company put his 5-bedroom house on the market in June, but despite receiving at least six offers couldn’t find a buyer willing to take on the $3,000-a-year assessment.

“No one was comfortable taking over the terms,” he said.

Lista, who had hoped to sell his home to pay off some debt, took his house off the market last week.

(Reporting by Nichola Groom; Additional reporting by Will Caiger-Smith; Editing by Terry Wade and Sue Horton)

Closing Time: 6 Steps Every Homebuyer Should Expect

Closing Time: 6 Steps Every Homebuyer Should Expect

Get owner’s title insurance and buy your home with confidence

Your long home-buying journey is almost over. You found the home you love, the seller agreed to your offer and now it’s time for closing. Of course, there’s a lot to think about right now, and the last thing you want is something­ to go wrong. So make sure you work with an experienced closing agent to help ensure the details come together and everything runs smoothly.

As soon as the seller accepts your offer, the behind-the-scenes work begins. You can expect closing to happen within 30 to 90 days.

 

1.   Select a Closing Agent

If you are working with a real estate agent, with your permission, he or she may place an order with a closing agent as soon as your sales contract is accepted. The closing agent can be a title company, an escrow company or a settlement company.

Most homebuyers rely on their real estate agent to select a closing agent—someone they work with regularly and know to be professional, reliable and efficient. However, you can choose your own closing agent if you wish. The closing agent will oversee the closing process and make sure everything happens in the right order and on time, without unnecessary delays or glitches.

2.   Draw up an Escrow Agreement

First, a contract or escrow agreement is drafted, which the closing agent reviews for completeness and accuracy. The agent will also put your deposit into an escrow account, where the funds will remain until closing.

3.   Title Search is Conducted

Once the title order is placed, the title company conducts a search of the public records. This should identify any issues with the title such as liens against the property, utility easements, and so on. If a problem is discovered, most often the title professional will take care of it without you even knowing about it. After the title search is complete, the title company can provide a title insurance policy.

4.   Shop for Title Insurance

There are two kinds of title insurance coverage: a Lender’s policy, which covers the lender for the amount of the mortgage loan; and an Owner’s policy, which covers the homebuyer for the amount of the purchase price. If you are obtaining a loan, the bank or lender will typically require that you purchase a Lender’s policy. However, it only protects the lender.

It is always recommended that you obtain an Owner’s policy to protect your investment. The party that pays for the Owner’s policy varies from state to state, so ask your settlement agent for guidance before closing.

5.   Obtain a Closing Disclosure

Your lender must provide a Closing Disclosure to you at least three days prior to closing. Your lender may also have a closing agent provide the Closing Disclosure to you three days before you close your transaction.

If you or your lender makes certain significant changes between the time the Closing Disclosure form is given to you and the closing, you must be provided a new form and an additional three-business-day waiting period after receipt of the new form. This applies if the creditor:

  • Makes changes to the APR above ⅛ of a percent for most loans (and ¼ of a percent for loans with irregular payments or periods)
  • Changes the loan product
  • Adds a prepayment penalty to the loan

If the changes are less significant, they can be disclosed on a revised Closing Disclosure form provided to you at or before closing, without delaying the closing.

6.   The Finish Line: Prepare for Closing

As closing day approaches, the closing agent orders any updated information that may be required. Once the closing agent confirms with the lender and the seller, he or she will set a final date, time and location of the closing.

On closing day, all of the behind-the-scenes work is complete. While you’ve been busy packing, ordering utilities and coordinating the movers, your closing agent has been managing the closing process so that you can rest assured, knowing all the paperwork is in order.

More Homebuyer Tips & Information

The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process.

This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.

Do you safely, securely send emails with the new TRID rule?

Do you safely, securely send emails with the new TRID rule?

The correct way to email in lending, real estate

Link to riginal article | Written by Bud Walden

About two years ago, the American Land Title Association (ALTA) published a set of best practices for real estate transaction professionals which included a heavy focus on data and information security.

With the new TILA-RESPA requirements increasing time pressures on the exchange of settlement documents now in force, it’s a good time – maybe high time – all real estate professionals assess how they exchange documents with lenders, agents and borrowers. Leveraging the time and cost efficiency, as well as the ubiquity, of email services makes sense – but only if it can be done securely.

Why? Government regulation and compliance laws related to the handling of personally identifiable information that can be used to perpetrate identity theft and wire fraud are ever expanding – and rightly so.

Identity theft and massive data breaches are an increasing problem as we all conduct more of our personal and professional business on-line. Any professional or professional service organization handling personal identity and financial information needs to stay in compliance with regulations to protect themselves, their customers and business partners from data theft and compliance fines.

And be warned – unencrypted email is not secure – the content and attachments are electronically visible and discoverable. In most cases, once you hit send, your email with attachments leaves your email service, traveling through many public server-to-server Internet hops on its way to the recipient.

This is where the security issue is. At any one of these server hops, the content you sent is electronically viewable and available for misuse without your knowledge.

Consider this analogy for unencrypted email; it’s like sending private information on the back of a postcard through the postal service. Anyone along the delivery path could intercept and read the content – it’s not hidden.

But with email it’s worse and easier to see because a hacker can tap into a public server anywhere along the email delivery route, and from anywhere, and steal non-public personal information (NPPI) or other sensitive financial data.

ALTA specifies the use of secure delivery methods when transmitting NPPI – names, addresses, driver’s license numbers, SSNs, account numbers, credit info, etc. ALTA’s decision to make data security a foremost pillar in its published Best Practices guideline is a direct result of the Consumer Finance Protection Bureau’s increasing concern for the consumer during the real estate settlement process. It recognizes most email users don’t realize the risks of sending NPPI in email bodies and attachments.

In fact, ALTA’s Best Practices Pillar #3 recommends organizations with a hand in transferring a land title to adopt and maintain, in writing, a privacy and information security program to protect NPPI.

Pillar #3 requires everything from a disaster response plan to established training and documentation of the steps taken to protect NPPI – and this includes the proper protocol for transmission of secured information.

Fortunately, it is fairly easy to secure email and attachments by using encrypted email and file transfer solutions. These solutions work with existing email addresses and require little or no “IT guy” involvement to setup.

Typically the user selects when they want to send an encrypted message right from their email client, and the recipient can easily retrieve the encrypted message and attachments with very little complexity, even from Apple and Android mobile devices. A quality solution will work with virtually any email client or service, including Office 365, Gmail, Thunderbird and others

Budget-wise, there are a number of ways to cost-effectively get started. For small to mid-sized offices, cloud-based encryption services are generally offered as inexpensive subscriptions on a per user basis – a simple credit card transaction and you’re good to go. No software license fees, hardware or installation is required.

There are also automatic email encryption solutions – a pre-set filter that scans all email and attachments for NPPI and encrypts discovered messages automatically. This may take more time and experience to setup, and therefore cost more to implement, but once in place, the automated encryption policy can take some human error out of the equation, eliminating the “oops – I forgot to encrypt that email!”

Either way – an encrypted email service is the best protection against data breaches and fraud when sending sensitive documents and messages via email. Also known as secure mail – it is a valuable service for real estate professionals to use – and another measure that elevates a professional organization’s status as a trusted business partner and advisor in the transaction process.