Ohio Abolishes Use of Transfer on Death Deed

Effective January 2, 2010, a new bill known as S.B. 124 became law in Ohio which effectively abolishes the use of transfer upon death deeds in Ohio and replaces them with transfer upon death affidavits. The new affidavit requires a description of the property, the specific interest to be transferred if it is to be less than the entire interest, a statement by the individual executing the affidavit that he is the record owner of the property, and if the owner is married the affidavit must include a statement by the owner's spouse subordinating the spouse's dower interest. The bill also allows a person to designate less than his/her entire interest as transferable on death. 

The IndyMac slap in our face

You won't believe the sweetheart deal that the Indymac boys were given by the FDIC.  Check it out at http://www.thinkbigworksmall.com/mypage/player/tbws/23088/1556674

Columbus!!! - Best Places To Get Ahead 2010

What is Registered Land?

I'm asked this question several times a year so here is a clip from the Hamiliton County Recorder website:

The concept of Registered Land was conceived in the 19th century with the establishment of private title insurance companies. These companies guaranteed a clear title to prospective buyers of real estate. This guarantee, of course, protected lending institutions and their investors as well.

This concept evolved into law with the Torrens Act in 1913 that was adopted by the State of Ohio. Under this Act, any property owner can voluntarily petition to have his land "registered".

Registered Land is surveyed, and the boundaries are guaranteed correct by the state. It is also subject to specific codes set by law. The title is guaranteed by a state insurance fund against loss to the property owner from land examiner and/or Recorder errors. Adverse possession cannot be claimed against Registered Land, and property owners must be notified of any involuntary liens within a specified time. All parcels that have been registered under the provisions of this law have a document known as a Certificate of Title that shows ownership. A Registered Land Examiner approved by the court must handle most of the paper work involved with a Certificate of Title. Changes to Registered Land must be approved by the Court.

There is presently more Registered Land in Hamilton County than any other county in the State of Ohio.

New HUD-1 / GFE

In case you haven't seen the new HUD-1/GFE:
Example - New HUD 1

Example - New GFE

Are the "Junk" fees really going to go?

You know how I feel about "junk" fees and frivolous charges appearing at the last moment on a settlement statement.

An excellent article from Ken Harney at the Daily Herald regarding the new HUD 1/GFE scheduled for January 1, 2010.

Click here for the article

Take the OAITA online survey!

If you are a homeowner and/or borrower and recently closed a real estate purchase or refinance transaction in the last year, please complete the online survey put together by the Ohio Association of Independent Title Agents (OAITA).

Click Here to take survey

RESPA reform receives mixed reviews

The Real Estate Settlement Procedures Act (RESPA) underwent a facelift one year ago, with changes expected to take effect on January 1, 2010. The Department of Housing and Urban Development’s (HUD) regulation, designed to control costs and prevent deception in home closing procedures, will now go one step further in protecting consumer rights. It will require a three-page Good Faith Estimate (GFE) form presented to buyers up front, disclosing key loan terms and estimated closing costs.

The GFE format will be easy to read and compare with the HUD-1 Settlement Statement, where actual costs are outlined. Corresponding lines on the GFE and HUD-1 will be labeled for comparison purposes. This ease of use is one of the major differences between the new GFE and old GFE form. Additionally, the form is now standardized, fees are grouped together, and there are fewer leniencies for variations in the numbers presented on the GFE at the beginning of the process and the HUD-1 at the end.

This marks the first major change to home closing policies and procedures in nearly 17 years. Government officials say such changes were necessary due to the recent mortgage crisis, which many link to complicated terminology and financial surprises that befuddle would-be homeowners.

“The whole idea of RESPA reform, expressed by then-President Bush and the principals at HUD who were there at the time, was a desire to get consumers a more transparent, clearer and more accurate settlement transaction,” said Phil Schulman, D.C.-based K&L Gates firm partner, in the May edition of RESPA News Monthly.

“The whole idea was to try to create a system that would simplify the process, provide greater transparency and most important, try to get the consumer more accurate figures about what this transaction was going to cost them three days into the process, rather than at the closing table.”

Schulman added, however, that the costs of training staff to follow the new regulations and how to fill out the new GFE form could strain mortgage lenders who are already strapped for cash. President Barack Obama has decided to keep the RESPA reforms in place, with the exception of one provision. He overturned the “required use” clause, which forbade home builders from offering buyers incentives in exchange for the use of certain partnering mortgage and title companies.

The new changes, effective January 1, are widely considered very positive for consumers, with upfront language on details that have previously stumped home buyers. It clearly presents any “gotcha” terms and conditions previously buried in the fine print or vaguely stated with confusing industry lingo. The following are some of the key changes expected to benefit home buyers:

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  Home buyers will now know up front the term, type and interest rate of their loan, whether the rate is adjustable or fixed, whether there is a prepayment penalty, and exactly how much money is required for closing costs.
  
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  The GFE must be presented to home buyers within three days after receipt of all necessary, relevant information.
  
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  The new GFE form is more concise, only three pages with one additional page of instructions on how to read and understand the form.
  
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  Because fees are grouped into clear categories, “junk fees” will be harder to sneak in. Total estimated closing costs will appear clearly on the front page, for easier comparison of various loan offers.
  
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  At closing, HUD will very closely control which fees can or cannot vary from the amount presented on the GFE in the beginning of the process. If allowing a fee to change, HUD will control how much the fee can change.
  
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  Overall, total closing costs are expected to drop by nearly $700 on average per transaction.
  

At this time, the rule contains many requirements and limitations pertaining to it. For example, the loan originator must provide a GFE within three business days of the borrower's application and cannnot charge more for the GFE than the cost of the credit report. Generally, a revised GFE cannot be issued unless there are "changed circumstances". Change circumstances include the acts of God, war, disaster, other emergencies and situations where information particular to the borrower or the transaction either changes or is later found to be different from what was known at the time the GFE was provided.

Of particular interest, the GFE sets forth three categories of settlement charges and states what changes will be tolerated on the HUD-1.

• Cannot Increase (Zero Tolerance).  The following cannot increase at settlement:
• Loan origination charge or adjusted origination charges (after the interest rate is locked)
• Borrower's credit or charge (points) for the interest rate chosen (after the interest rate locked)
• Transfer taxes
• Can Increase up to 10% at Settlement.  The aggregate total of the following charges can increase up to 10% at settlement:
• Required services that the lender selects
• Title services and lender's title insurance (if the lender selects them or the borrower uses companies that the lender identifies)
• Owner's title insurance and required services that the borrower can shop for (if the borrower uses companies which the lender identifies)
• Government recording fees
• Can Change.  The following can change at settlement:
• Required services that the borrower can shop for, title services and title insurance (if the borrower does not use companies that the lender identifies)
• Initial deposit for escrow account
• Daily interest charges
• Homeowner's insurance

HUD has also determined that a loan originator may cure a violation of the tolerances simply by reimbursing the borrower the amount by which the tolerances were exceeded. :)

Mortgage broker vs. bank

Shopping for a home loan? You’ll have a different experience depending on where you go – a bank or a mortgage broker. Is either one better than the other? Not necessarily, but there are pros and cons to each and it’s important for consumers to understand the differences before proceeding.

Banks
Loan officers at a bank or credit union can offer access to a wide variety of loans, all originating from the same financial institution. Working with local banks can mean faster loan processing because there are fewer questions about the specifics of local property, the local real estate market, and local standard operating procedures.

Mortgage broker
A mortgage broker scouts out the best deals for clients, whether local or long-distance. They work on a fee per transaction and may be able to offer more options. Because they act as the liaison between the home buyer and the lender, mortgage brokers may be able to secure better loan terms or interest rates. They may also be able to help those purchasing unique or commercial property, or those with poor credit whose loans may not have been approved by other lenders. Mortgage brokers may be able to provide a more specialized loan that best suits your need.

Always choose the mortgage loan that offers the best interest rate, terms and conditions. Although they are working for an additional upfront fee that you must pay, brokers can prove well worthwhile in the long run for the money they might save you in lower interest fees.

Pros and cons of reverse mortgages

Reverse mortgages are receiving a lot of attention lately. Not only are they seeing increased popularity among cash-strapped elderly homeowners, but they are currently undergoing congressional scrutiny for their feasibility, practicality and, in some cases, their legitimacy. Reverse mortgages are, by and large, legitimate deals although there are some concerns about their possible use as a tool to prey on the elderly poor who have much-needed money tied up in home equity. While Congress sorts out the matter and identifies any necessary regulatory tweaking, consumers are left to fend for themselves. So before jumping on the reverse mortgage bandwagon, it’s important to know the pros and cons.

Pros
Reverse mortgages offer flexible payout options, including lump sum, equity line or monthly payments. A person can choose the best option to fit their financial picture, or a mixed combination of the three options.
Anyone at least 62 years of age may be approved for a reverse mortgage, dependent upon factors like the applicant’s age, current interest rates, and the amount of home equity. Access to home equity can supplement social security income or help pay for costly medical expenses.

Cons
Fees, interest rates and closing costs are often higher with reverse mortgage loans. Many people view their estate as their legend, a parting gift they can leave for loved ones, so borrowing against their home has emotional repercussions as well. Furthermore, assuming the debt is not paid off before the homeowner’s death, surviving family members will have a more complicated time settling the estate. If the home stalls on the real estate market or is “underwater,” meaning more is owed on the home than it is worth, surviving family members may choose to let it go into foreclosure.

Options
Senior citizens may consider a simple refinance of all or a portion of their home. This allows access to cash with lower upfront fees, but does require mortgage repayment with interest, taxes and insurance. Seniors may prefer to avoid the burden of a monthly payment, even if it will be relatively low. Either way, professional consultation from an independent financial advisor should be sought first before making a decision.