The New Year is here, you are ready to purchase a new home, what’s new?? The biggest and most significant industry change in years, maybe even decades, has come from the US Department of Housing and Urban Development (HUD). HUD has revised the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement to try and make it simpler and easier for the consumer to make responsible and informed decisions before purchasing a home.

As a consumer, most of the changes and revised forms have been made with your best interests in mind. HUD has tried to prepare a simpler more direct way to help you understand your options and fees up front so that you have as much information as early as possible to be able to make the best decision for you and your family. The new rules and forms have been put in place to help provide a loan shopping tool that accurately discloses terms and fees, and prevents last minute changes to either at closing.

In anticipation of the new rules, HUD has released a publication to help guide you, the consumer, through the loan decision process: Shopping For Your Home Loan: HUD’s Settlement Cost Booklet. Real Estate Settlement Procedures Act (RESPA) requires that loan originators provide consumers with the booklet within three days of a loan application. This booklet, albeit lengthy, provides a basic overview of the home buying and mortgage lending process. It also explains in detail each part of the new GFE and the new HUD-1 Settlement Statement.

The intention of the new GFE is to encourage consumers to shop and compare fees from various lenders before choosing a mortgage. It shows what services are lender chosen (and thus cannot change), and also what services the consumer can go out and shop for. It clearly states important dates, loan terms, and settlement charges should you decide to move forward with the loan.

The new HUD-1 Settlement Statement then allows borrowers to easily compare those quoted fees to their final costs before closing on a loan. A new page has also been added to the HUD-1 Settlement Statement that contains a chart which shows the actual fees charged compared to those fees that were listed on the GFE. The chart identifies charges that should not have increased at all compared to the GFE, those that should not have increased by more than 10% compared to the GFE, and those that can fluctuate.

• Origination charge: cannot increase.
• Transfer taxes: cannot increase.
• Appraisal fees: can only increase up to 10%.
• Government recording fees: can only increase up to 10%.
• Title insurance: can only increase up to 10% if borrower uses the title insurer selected by the lender

It also shows whether the consumer’s monthly payment will increase and, if so, when. This gives the borrower a very clear picture of what the closing expenses will be compared to what was shown on the GFE, so he or she can note any discrepancies and ask about them up front and prior to closing –preventing surprise fees and delays at the time of signing.

With these new tools now available and with a clearer disclosure of fees and terms, hopefully consumers will be able to make informed and responsible decisions that will help them and their families achieve financial success and home ownership.

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What is the Statement of Information?

Upon the opening of escrow, Buyers and Sellers receive their initial escrow package – the Statement of Information (also known as the Statement of Identity) is included in this package for completion and return to the escrow holder.

The statement of information is a one page document which requests the party’s name, date of birth, social security number, current and previous addresses etc.

Who requires the Statement of Information?

The Title Company of record requires this completed form to ensure successful and expedient transfer of title. This document assists in eliminating untimely delays in closing of real estate transactions.

How does the Statement of Information work?

The Statement of Identity establishes and confirms identity. Confirming identity will assist the Title Company to eliminate/resolve matters that affect real property such as child support liens, judgments, bankruptcies etc., filed against persons who have the same or similar names.

This is important as such liens and judgments are recorded against real property and against individuals on a daily basis.

Why Should Buyers/Sellers Complete the Statement of Information?

Consider these scenarios:

Scenario #1: Seller is Robert Smith. The title company runs a name check on Robert Smith. Title company finds recorded liens and judgments filed against a Robert Smith that must be paid.

How will title eliminate our Seller, Robert Smith against these potential liens? Title will compare social security numbers, previous address, etc. (as per Statement of Identity) to determine which Robert Smith is liable for payment of said liens/judgments.

As result, our Seller Robert Smith has been eliminated as the potential party owing thousands of dollars due to liens.

Scenario #2: Buyer/Borrower is John Williams. Once again, title runs a name check and discovers that a John Williams has defaulted on his child support payments. Upon further investigation it has been determined that YES this is our Buyer/Borrower. Now escrow has the heads up to advise their Buyer/Borrower to bring his account current and also escrow can then secure an updated statement that will be sufficient for title transfer.

In conclusion:

The title company requires that buyers/borrowers and sellers fill out the Statement of Information to be able to complete their fiduciary duty to return clear title for the real estate transaction. The documents the title company requires comes from the escrow company after it has been completed by the Buyer or Seller, so your Escrow Officer can discuss the Statement of Information with you. Each transaction is case specific. Your Escrow Officer can clarify the points that are needed to finalize the transaction.

If the Statement of Information requirements give you cause for discomfort, talk to your Escrow Officer about the specific needs of your escrow. Your Escrow Officer will be able to explain the Privacy Act Notice with which CV Escrow is in compliance.

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Tuesdays, here at the CV Escrow website, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of real estate.

Google is used by millions of people every day to search for everything, including real estate. The buzz at the recent Inman Connect Conference in New York City, was the importance of search and being found on Google by your potential customers. To help Realtor’s do that, Google has created “Google for Real Estate Professionals”, a special section just for agents looking for the tools and tips to harness real estate search capabilities.  Go to Google.com/realestatetools and there you will find Google’s suggestions for utilizing Google Maps, AdWords and YouTube to connect to your potential customers.

As Google states on the site:

“The majority of home buyers use the Internet to research properties. Google makes it easier for real estate professionals to connect with home buyers and renters at every stage – while they’re looking for properties, checking out locations and selecting their agent. It’s how you reach more sellers, attract more buyers and sell more homes.”

Here is a summary of the real estate lead generation options Google highlights:

• Google Maps puts all parts of the property picture together. It’s a free service and one that makes your listings easier for home buyers to find. Are you uploading your listings to Google? Get more information on how to best do this at Google’s FAQ for Real Estate Agents and Brokers. Also, agents should not overlook services like Real Estate Shows where as part of your membership, you can create a property flyer via a simple, templated process, and have that flyer syndicated not only to Google, but also Trulia, Zillow, and other top listing sites.
• AdWords (Google’s paid search results program, also know as pay per click advertising) provides effective and efficient lead generation for real estate professionals. Set whatever budget you are comfortable with, target your ads by demographics and geography, and reach potential buyers and sellers at the precise moment they are looking for properties or agents.
• YouTube: Are you showcasing your listings in video, on your own branded YouTube channel? YouTube isn’t another TV screen, but a window into your business through which viewers can learn about your properties, your people and your ideas. For real estate professionals, it means your listings can sell themselves and home buyers can do a virtual walk-through of potential homes before they contact you.

The site also provides excellent information about using Google Analytics and Insights for Search. The tutorials are well written and easy to understand.

Learning how to best position yourself and your real estate business on Google is fast becoming the critical business skill of the modern Realtor. Google has just made understanding it all a bit easier for the industry with this portal. It’s worth a look.

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The escrow process can be a complicated and often technical necessity of buying and selling real estate.  The escrow company and its officer have many duties to juggle on behalf of the Realtor, Seller, and Buyer during the real estate transaction.  Understanding the various duties and functions of the escrow can assist all parties in ensuring a successful and timely transaction, as everyone involved has a part to play.

The escrow officer’s main duty is to remain as a neutral third party between buyer and seller in a real estate purchase transaction at all times.  The escrow officer is not to be involved in negotiations between buyer, seller and/or lender.

Additional escrow officer duties and responsibilities are as follows:

1.   Receive and hold buyer’s funds in a non interest paying trust account during escrow

2.   Read and comply with all agreements as detailed in the Purchase Contract and Joint Escrow Instructions as it pertains to the escrow process

3.   Follow mutually signed, written instructions agreed upon by buyer and seller during escrow

4.   Prepare Escrow Instructions/General Provisions, Amendments, Grant Deed (for seller’s signature), Estimated Closing Statement and any additional documents required to clear title or as required by the new lender

5.  Although in many cases reports are ordered by the buyer, seller or agents outside of escrow in some cases the escrow officer will obtain reports as required by the purchase contract and provide same to the buyer during escrow for their review

6.   Make sure escrow is in receipt of buyer and seller signatures on Purchase Agreement and Joint Escrow Instructions, Escrow Instructions/General Provisions, Grant Deed, any Amendments, Estimated Closing Statements and any other documents required during escrow

7.  Receive loan documents from the buyer’s new lender (IF APPLICABLE) and prepare amendments and estimated closing statements as required by the lender on their lender’s instructions

8.  Order the evidence of insurance from the buyer insurance agent as per the requirement of the new lender

9.  Send the signed loan documents and all lender required items to the new lender for funding

10.  Send original recordable documents along with any releases required to clear title to the title company for recording at the close of escrow

11.  Make sure that escrow is in receipt of all funds necessary to pay the seller their proceeds as well as all invoices agreed upon by buyer and seller during escrow

12.  Make sure the seller has sufficient equity in the property to cover all costs, payoff of liens and any invoices agreed upon by buyer and seller during the escrow

13.  Make sure that all the proper paperwork is in escrow to provide the buyer with clear title to the property

14.  Make sure that all the conditions agreed upon by the buyer and seller on the purchase agreement and in writing through escrow have been satisfied prior to closing the escrow and transferring the property into the buyer’s name

The Buyer and Seller should also be aware that they will be receiving many additional items that may require their signatures from their agents and lenders directly.

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Wishing you seasons’ greetings and good wishes.  Thank you for your continued readership of our blog.

May your holidays and new year be filled with Hope, Joy, and Peace.

Every Tuesday, here at the CV Escrow website, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of real estate.

If one of your New Year’s resolutions is to jump on an opportunity to learn more about how social media can grow your business in 2010, then save the date for January 4th to get started on your goal.  Virtual Real Estate Barcamp is back and all you need to attend is a computer and an internet connection.  This webinar is free for you to participate in and is pulling some of the best national trainers on the real estate social media scene:

Brad Andersohn, Active Rain,  “Blogging for Beginners”

Jay Thompson, aka Pheonix Real Estate Guy, “Write Right, Right Now: Get Your Blog On”

Reggie and Nicole Nicolay, My Tech Opinion,  “Twitter Essentials for 2010″

Pango Group, the parent brand of Coachella Valley Escrow, is a sponsor of Virtual REBarCamp and I have been invited to present during the webinar.  I’ll be available after my webinar session entitled, “Facebook Tools and Tricks:  Separating Personal from Professional”, to field questions in the live chat room.  Hope to “see” you there!

Event Details are as follows:

• When:  Monday, January 4th, 2010, 9:00 am – 4:00 pm PST
• Where:  Online Webinar
• How to Attend:  Information Here
• Cost:  Free
• Registration: Participate by registering here
• Schedule:  Calendar of Sessions
• Presenter Bios

Interested in what you are reading? To automatically receive these Tuesday Technology Tips in your email box, subscribe to these articles at the top right corner of this site (www.CoachellaValleyEscrow.com) in the box titled “Subscribe via Email”.

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Do you have a foreign investor or buyer looking to purchase a home in California? Our experience has been that if the client writes a personal check drawn on a foreign bank, it may take several weeks to be able to verify that the check has actually cleared. On the other hand, deposit checks we take from a customer drawn on a U.S. bank typically clear within 3-4 days.

Wire Transfers Expedite Process
There are steps you can take to ensure the escrow closes on time by working with your buyer to understand the need for a wire transfer to expedite the closing process. When you write an offer and are presented with a check drawn on a foreign bank, write on the first page of the purchase agreement that the buyer will arrange to wire transfer the deposit to the escrow company upon acceptance of the offer.  Sometimes Realtors will go so far as to actually take the check to present with the offer, but state that the check will be replaced with a wire transfer upon acceptance.  Either way works.  Please keep in mind, that some escrow companies may require a wire from a foreign buyer (and not accept a check at all) due to the possibilities of delay. Contact the escrow company directly to inquire what the required procedures are.

There are problems that could arise if a check drawn on a foreign bank IS deposited into escrow:

1. Buyer could call his bank to put a stop-payment order on the check and escrow may not even be notified of this for 6 to 8 weeks.  Our escrow officers have experienced buyers who decided against the purchase of the property and placed a stop payment on the check and then were unaware the stop-payment had been done.
2. Costs are being incurred on the strength of the buyers’ earnest money deposit.  If the Sellers are holding their property off the market, they deserve to be assured that the buyer has “good funds” in escrow to back up the offer they have made to purchase
3. If the escrow is scheduled to close rather quickly, for example 14 days, and the initial deposit check drawn on a foreign bank is deposited into escrow, the escrow company may not be able to verify clearance of the check as a way of guaranteeing that there are “good funds” in the escrow and allowing the escrow to close.

Our experience has been that there has been little resistance from the buyer to following these suggestions. We have seen that if a buyer is told up-front by the Realtor that any funds coming into escrow must be made by wire transfer, it conveys to the client that we are all on the same page and have the same goal: closing the escrow successfully.

Here is an example of a wire transfer request

Interested in what you are reading? To automatically receive these Escrow Tips in your email box, subscribe to these articles at the top right corner of this site (www.CoachellaValleyEscrow.com) in the box titled “Subscribe via Email”.

Every Tuesday, here at the CV Escrow website, we post Technology Tips designed to help you, the Realtor, grow your business, keep up to date on the latest technologies, and move you forward into the new era of Real Estate.

Which image is more interesting?

The image on the left is reflective of the default look for a Twitter profile.  It’s not unattractive, but it is also overused, and not customized to the personality or brand of the twitter user.  The image on the right is the exact same Twitter profile – the only difference is that it has a custom background applied to it.  This is a very simple, and free process that any Twitter user can do.

When you are utilizing Twitter for your business, you want to make sure that you project a persona reflective of who you are.  And, when using social media for real estate business purposes, your presence in social communities should reinforce your status as a trusted advisor.  How your Twitter profile looks is an element in that.

I’m going to assume that if you are utilizing Twitter, you have already made sure that your profile is filled out and includes you location, links to a business URL, and you have a bio that mentions your profession and gives some personality insight as to who you are.  Realtor Elaine Hanson (@ElaineHanson on Twitter) provides a great example of this:

With these details in place, the next step is to make sure that your background is also reflective of your professionalism and personality.  There are several great resources out there designed to do just that.  Here are two of my favorite:

1. Twitrounds:  This site offers hundreds of free, beautiful and creative Twitter backgrounds and has a 1 click, automated process for installing your selected background on your twitter profile.  It doesn’t get easier than that!

1. TwitterImage:  Fantastic photographic images as well as creative professional backgrounds can be found here (also for free).  This site does not have an automated installation script like Twitrounds does, so you have to go through the manual process of uplaoding the Twitter background to your profile.  This is a fairly easy process and the site offers a 4 minute video and step by step directions on how to do this here.

In addition to the free Twitter backgrounds that these sites offer, they also both have the option to pay for a customized Twitter background (between $79-$99 per background).  If you want to have a background that is unique to you, this is a very affordable option and a great marketing investment for the Realtor interested in representing their brand on Twitter.

If you install a custom background on your Twitter profile tell us about it by putting a link to your profile in the comments!

If you are unfamiliar with why you might want to use Twitter for real estate, these earlier posts will help to introduce you to Twitter for Realtors:

• What is this Twitter Thang Everyone Is Talking About?
• Why Twitter and 10 Ways a Realtor Can Use It
• Mobile Twitter Tools for Realtors

Interested in what you are reading? To automatically receive these Tuesday Technology Tips in your email box, subscribe to these articles at the top right corner of this site (www.CoachellaValleyEscrow.com) in the box titled “Subscribe via Email”.

A special greeting at this Thanksgiving from CV Escrow to express our sincere gratitude for reading our blog and the feedback you provide.   We are thankful and would like to extend our best wishes from our family to yours.  Happy Thanksgiving!

To help consumers more easily understand settlement costs and prevent big price discrepancies between the preliminary Good Faith Estimate and the HUD-1 settlement statement, the U.S. Department of Housing and Urban Development (HUD) has created stricter Real Estate Settlement Procedures Act (RESPA) regulations are scheduled to take effect by April, 2010. (The regulations originally were to take full effect on January 1, but HUD provided a four month respite for compliance to the industry.)

For a review of what RESPA is, see our prior blog post.

New RESPA Rules

The upcoming Real Estate Settlement Procedures Act (RESPA) Reform requirements aim to provide customers with the essential information and adequate time to understand their home purchase and refinance options.  HUD is requiring that loan originators provide borrowers with a standardized Good Faith Estimate (GFE) which clearly discloses key loan terms and closing costs.

The loan industry, in an effort to dissuade consumers from shopping for a loan, created separate Good Faith Estimates for each company, so that consumers could not equally compare costs. With the new standardized GFE, consumers now will have a chance to compare “apples to apples” when looking at competitive loan products.

In a busy year of reforming the mortgage industry, there are new federal governmental regulations called the Mortgage Disclosure Improvement Act (MDIA) (see below) which went into effect in July of this year. To clarify why RESPA and MDIA are related, if a lender is out of compliance with the MDIA, they are subject to a RESPA violation. The new standardized GFE, the MDIA, and stricter RESPA laws will all assist consumers in understanding the complexities of the mortgage process.

While HUD requires the RESPA Reform regulations to take effect in 2010, many lenders have begun implementing the required changes early. We, at CV Escrow, have experienced that interpretations of the RESPA Reform requirements vary from lender to lender and as a result have caused delays in closing. Below is information about the MDIA from an attorney that specializes in RESPA law to help clarify the new requirements which will assist in closing transactions on time.

Compliance with Mortgage Disclosure Improvement Act/RESPA Requirements:

1.The 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan (business days are everyday except Sundays and Holidays). This means that before a borrower can close on a transaction the borrower must receive the initial Good Faith Estimate (GFE) and initial Truth in Lending (TIL) statement disclosing the final Annual Percentage Rate (APR) seven days prior to closing.

2. If the final annual percentage rate is off by more than .125%  for a fixed rate loan or .25% for an ARM loan, from the initial GFE disclosure, then the lender must re-disclose and wait yet another three business days before closing on the transaction. Note: If the rate fluctuates EITHER WAY, up or down, more than .125% on a fixed or .25% on an ARM, the re-disclosure takes effect.

3. Lenders are forbidden from collecting money for appraisals, loan applications, etc. prior to the delivery of the truth in lending statement. Lenders can only collect the credit report fees from the borrower at the time of prior delivery of the final TIL. No other fees are permitted to be collected at the time of the application. If the TIL is sent by mail, additional charges can occur after the 3rd business day after the borrower receives the TIL in the mail.

4. The following language must be clearly written on the initial and final TIL: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”

5. Any Lender or Settlement Service Provider found in violation of the new RESPA regulations will have 30 days after the close of escrow to correct any errors and compensate the consumer for any overage.

What do these new MDIA/RESPA regulations mean to a Realtor?

Plenty. These rules help the buyer make sure that their lender does not say one thing and then do another. Here is how Realtors can help their clients:

* Make sure to check the initial Good Faith Estimate and Truth In Lending form for a buyer and look for discrepancies in charges. The new rules were put in place to protect consumers from being low balled one figure by a loan officer only to find out at the closing table that the fees charged were much higher. The new MDIA rules will absolutely delay closings if these steps are not followed carefully.

* Buyers, sellers, and real estate professionals should not schedule a closing until the borrower has completed the seven day waiting period as required in the initial Truth In Lending statement.

* Contact your Escrow Officer for an Estimated Settlement Statement as soon as the Good Faith Estimate is available.  Many lenders do not contact escrow for fees and/or recurring closing costs.

To learn more, go here for the new RESPA rule FAQ’s and here for the RESPA final rule.

Go here to learn more about the 120-day delay in the RESPA regulation enactment.

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