PAVINICH JOINS PENNSYLVANIA FIRST SETTLEMENT SERVICES II, L.P.

Milford – PA1st is pleased to announce that Joan Pavinich, owner of Accord Abstract in Milford has joined Pennsylvania First Settlement Services as an Account Manager and Settlement Agent.

Said Craig Roberts Pres. of Pennsylvania First Settlement Services, “We are extremely excited about having Joan as a part of our sales team.  She knows the Milford business community quite well and it is an area that (as a company) we are very much looking forward to service the areas title and settlement needs.

Prior to joining PA1st, Pavinich owned and operated Accord Abstract for the past 6 years.  Pavinich has been in the title industry for the past 20 years.

Pavinich, in her new position will cultivate business in the Milford, Pike County and Lake Wallenpaupack areas.

Lorie Lehman who also is in the position of Account Manager and Settlement Agent recruited Pavinich.  Said Lehman, “Joan and I are good friends and when I heard she was looking for a company to associate with, I never even hesitated about suggesting to Pennsylvania First that we strike a deal with her.  That was on a Monday and we hired Joan that Wednesday.”

Said Pavinich, “To be associated with a company where their logo is “Where service comes first” is where I want to most be.  In today’s economic times, combining offices was the right thing to do.  I am truly excited to be a part of this great team”.

Pennsylvania First Settlement Services has been in business serving the real estate industry for the past 8 years.  Craig Roberts, President and the former owner of Fidelity Home Abstract, one of the most successful title companies in the Pocono Mts., joined the firm in the position of President one and a half years ago.  Since that time, Roberts increased the number of closings that the company handles and broadened the market area that they service as well as increased the customer base by over 50%.  Said Roberts, “With service professionals like Lorie and Joan, Pennsylvania First Settlement Services is in full swing.  We have the support staff and expertise to handle a large volume of business while not losing what has made us who we are and that’s our level of customer satisfaction.”

Pennsylvania First Settlement Services is located at 304 Park Avenue in Stroudsburg.  PA1st is on the internet at www.pafirstsettlement.com

Bank of America Halts Foreclosure Sales in 50 States

WASHINGTON (AP) — Bank of America Corp., the nation’s largest bank, said Friday it would stop sales of foreclosed homes in all 50 states as it reviews potential flaws in foreclosure documents.

A week earlier, the company had said it would only stop such sales in the 23 states where foreclosures must be approved by a judge.

The move comes amid evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them.

“We will stop foreclosure sales until our assessment has been satisfactorily completed,” company spokesman Dan Frahm said in a statement. “Our ongoing assessment shows the basis for our past foreclosure decisions is accurate.”

Concern is growing that mortgage lenders have been evicting homeowners using flawed court papers. State and federal officials have been ramping up pressure on the mortgage industry over worries about potential legal violations.

On Thursday, Senate Majority Leader Harry Reid, D-Nev., urged five large mortgage lenders to suspend foreclosures in Nevada until they have set up systems to make sure homeowners aren’t “improperly directed into foreclosure proceedings.” Nevada is not among the states where banks had suspended foreclosures.

Also Friday, PNC Financial Services Group Inc. said it is halting most foreclosures and evictions in 23 states for a month so it can review whether documents it submitted to courts complied with state laws. An official at the Pittsburgh-based bank confirmed the decision on Friday, which was reported earlier by the New York Times. The official requested anonymity because the decision hasn’t been publicly announced.

PNC becomes the fourth major U.S. lender to halt some foreclosures amid evidence that mortgage company employees or their lawyers signed documents in foreclosure cases without verifying the information in them.

In addition to PNC and Bank of America, Ally Financial’s GMAC Mortgage unit and JPMorgan Chase & Co. have announced similar moves in the past two weeks.

In some states, lenders can foreclose quickly on delinquent mortgage borrowers. By contrast, the 23 states use a lengthy court process. They require documents to verify information on the mortgage, including who owns it.

Mortgage Rates Hit 40 Year Low

Mortgage rates just hit a 40-year low, and that may be music to the ears of both homeowners and the local housing market.

Even if you just refinanced, rates on 30-year and 15-year mortgages fell to their lowest points in decades.

The average rate on 15-year fixed loans fell to 3.72 percent from 3.75 percent. That was lowest on record dating back to 1991.

“That means for those looking to purchase or to construct a new home, mortgage money just became even more affordable,” said Bob Howes, senior vice president of lending services for ESSA Bank and Trust.

Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans dropped to 4.27 percent, the lowest on record dating back to 1971. That’s down from 4.32 percent the previous week.

The rates provide opportunities even for those who recently refinanced.

“If someone has already (refinanced) a year or two ago with a rate in the 6’s, it’s still time to look at it again,” said Teresa Anthony Yocum, business development and commercial loan officer with Community Bank & Trust. “It’s a great time to buy. It’s definitely a buyer’s market.”

Low-cost money, along with a decline in home values from its peak in 2007, means there’s tremendous opportunity, according to Howes. Those with loans can refinance to lower their monthly payments or shorten the length of their loans.

“Where they are really going to get ahead is if they could cut the term,” Yocum said. “Their payment might be the same as what they are paying now, but they can cut 10 years off the payment of their loan, saving tens of thousands of dollars of interest.”

Vickie Brockelman, owner of Commonwealth Real Estate Your Way, said the rates have to affect the local housing market positively.

“For the first-time home buyer, with the interest rates the way they are, I can’t imagine they can’t help but get into the market at rates lower than they can rent,” Brockelman said.

It’s also an opportunity for someone who bought during the housing bubble of high home prices to catch up. She advises they set their selling price lower and let the current market work for them. “You’ll be buying in today’s market and at today’s interest rates,” she said.

The low rates can even help distressed borrowers.

“It’s an opportunity for sellers under water to get their houses out there competitively and avoid foreclosure,” Brockelman said.

Refinancing usually involves bank fees and title insurance, which make the refinance decision more complicated. Howes said ESSA may waive the title insurance for borrowers choosing a 20-year term or less, and a loan amount of $200,000 or less.

When is it time to refinance? There are on-line calculators like the one on ESSA’s website. Yokum advises borrowers to call their local bank and talk to a loan officer, who can help determine whether it’s worth refinancing.

But wait for lower rates at your own peril.

“Nobody knows where the bottom is,” Howes said. “This may be the bottom. If you delay, you might miss enjoying the lower payment now, in the hope that rates might go lower.”

Help for Housing Market Proposed- Monroe County Judge Seeks Mortgage Mediator

Creation of a Monroe County mortgage mediation board could help more people avoid home foreclosures while alleviating a case backlog in the county Sheriff’s Office, Monroe County President Judge Ronald Vican said Wednesday.

“I thought, in terms of trying to help out the community, it might help,” Vican told the Monroe County commissioners during a hearing on the 2011 courts budget. “If we could affect just 10 percent of the foreclosures, that would be a significant number.”

There were 1,908 foreclosure filings last year with the Monroe County Prothonotary’s Office, setting a new record for the third year in a row.

Vican approached commissioners a year ago about possibly setting up a mediation board similar to that in Philadelphia. The board might be comprised of lawyers with real estate experience who could work with lenders and borrowers to renegotiate terms so that families could stay in their homes.

“It could help the banks,” Vican said. “They would get something back besides the foreclosed property.”

Pennsylvania Supreme Court Justice Ronald Castille has expressed interest in forming a mortgage mediation process at the state level, Vican said.

Two other Monroe County judges, Margherita Worthington and Art Zulick, are among those invited to a state forum next month on the subject.

Monroe County Commissioner Janet Weidensaul said the idea is worth exploring.

“When homes are being foreclosed, taxes aren’t being paid,” Weidensaul said.

First Time Home Buyers Stoke Demand for Smaller, Less Expensive Homes

RISMEDIA, September 28, 2010—A growing segment of the housing market—first-time home buyers—are contributing to an increase in demand for smaller and less expensive new homes, according to research from economists at the National Association of Home Builders (NAHB).

Delving into data from the most recent biennial American Housing Survey, which was conducted by the Department of Housing and Urban Development and the Census Bureau in 2009, the study, “Characteristics of New and First-Time Home Buyers,” finds that 41% of the 8.4 million households who bought a home between 2007 and 2009 were first-time buyers.

“Builders are increasingly gearing their homes to the needs of first-time buyers, and we expect the trend to continue in the period ahead as the economy begins generating more jobs and more people in their 20s form households,” said Bob Jones, chairman of NAHB and a home builder from Bloomfield Hills, Mich.

“New homes are a better match for the needs of the population in general,” Jones said. “Compared to what is typically available in the existing housing stock, they are more energy-efficient, easier to maintain and have designs better suited to today’s lifestyles.”

The market share of first-timers was up from 35% in both 2005 and 2007. Although some of the demand was fueled by the initial version of the home buyer tax credit in mid-2008, which was specifically targeted to those buying a home for the first time, the upward trend is expected to continue as children of baby boomers—members of a generation that is larger than their parents’—move into their household formation years in the period ahead.

Although new housing is significantly more expensive than the existing housing stock, 13% of first-time buyers between 2007 and 2009 purchased new homes. By comparison, 17% of all the homes sold during that period were new.

Competing with foreclosures and large house price declines in the existing home market, new homes lost ground disproportionately during the housing downturn, falling from a 21% share of the homes sold in both 2005 and 2007.

The average market value of a new home purchased was more than $315,000, compared to more than $238,000 for existing homes.

First-time buyers for the two years of the study had an average age of 34, compared to 46 for those trading up.

The average income of first-timers was over $67,000, about 30% below the average household income of trade-up buyers of $97,000. About half of the first-time buyers earned less than $60,000.

The household size of both first-time and trade-up buyers has been declining, while single-person households have been on the rise.

First-timers bought homes with an average market value of about $184,000, compared to more than $297,000 for trade-up buyers.

First-time buyers bought homes averaging 1,874 square feet, significantly below the 2,549-square-foot home purchased on average by those trading up. Forty-six percent of first-timers bought homes smaller than 1,500 square feet.

The large majority of first-time buyers—82%—purchased single-family detached homes.

Looking at survey findings on the reasons that buyers chose a particular home, the NAHB study notes that price was the top consideration for 38% of the first-time buyers, followed by the design and layout of the home, at 36%.

On average, first-time home buyers looked at 15 homes before making their purchase; 63% used their savings as the source of the downpayment; and 22% of them had no downpayment. That was down from a peak of 25% in 2007, reflecting a tightening of credit standards in the mortgage market.

For more information, visit www.nahb.org.

4 Reasons Why Buying A Home Now Is Taking Advantage Of An Opportunity Of A Lifetime

RISMEDIA, September 17, 2010—(MCT)—As the economy continues to suffer and home prices continue to fall, numerous Americans across the country are staying away from the real estate market. But, if you are looking to take advantage of the opportunity of a lifetime, now is the perfect time to get off the sidelines. Playing by your own terms may be the name of the game today. Ask for price reductions, improvements, closing costs—whatever—and sellers, who are desperately trying to get a contract, are very likely to work with you, said Jay Papasan, one of the authors of the book Your First Home.
If all the pieces are in place—you’re qualified to buy a home, the purchase makes sense for your situation and you’re prepared to live in the home for at least five years—according to Papasan and the experts at ForSaleByOwner.com, the following reasons should be motivation enough to get you back in the market.
1. You have a large inventory to choose from
In many places it is taking months to sell a home, which is creating a lot of inventory for those looking to buy. A large selection of homes on the market gives buyers more choices and drives down prices as well. And home sellers have gotten the picture—it’s fair to say that home sellers have become “increasingly desperate,” Papasan said. “People who have had for sale signs in the yard for six months are starting to become in tune with the reality of the situation,” he said.
2. Builders are offering big discounts
Homebuilders are getting even more aggressive with their pricing today. In fact, Eddi Fadel, author of Don’t Rent, Buy! recommends looking at completed new homes first because builders are offering such steep discounts. Plus, you’d have a warranty not only on the home itself, but also on the home’s appliances, he said. “Builders want to save their credit, save their brand, save their reputation and clear out inventory,” he said. “They can go buy cheap land today with that cash.” His advice: Walk in with a preapproval for a mortgage, make an offer, then walk away without making a deal if you have to. Chances are, a builder will call back and reconsider that offer rather than let a potential buyer get away.
3. Mortgage rates are historically low
It’s not just the price of the home that will affect affordability; mortgage terms will also affect your monthly payments. In fact, according to Bankrate.com’s weekly national survey, mortgage rates moved lower this week, with the average conforming 30-year fixed mortgage rate retreating to 4.54%. Rates on the popular 30-year fixed-rate mortgage came in at 4.54%; 15-year fixed-rate mortgages were down to 4.00% and 5/1 ARM mortgages were as low as 3.78%. But low rates don’t mean lenders are handing out mortgages easily. You’ll still need good credit, a substantial down payment and a willingness to document your income in order to qualify for these great rates—if you can qualify at all. In addition, low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. This allows new homeowners to have a little give to absorb any ups and downs as housing market continues to gain traction.
4. Houses are in move-in condition
Many homeowners have decided to wait out to the market and instead stay in their current home and take care of home improvement projects to make the home feel like new again. Because of this, many homes coming onto the market today are in good condition and ready for buyers to move in.
2009, MarketWatch.com Inc.
Distributed by McClatchy-Tribune Information Services.

Lowe’s, REbuildUSA Launch Program to Support FHA Streamlined 203(k) Loan

RISMEDIA, September 15, 2010—In today’s housing market, many homes for sale are in need of repairs and renovations. The FHA Streamlined 203(k) program helps add money into a mortgage for repairs and renovations. Lowe’s and REbuildUSA are partnering to bring a national in-store program offering customers a one-stop destination for all of their repairs, renovation products and services needs.
“Homes needing renovation are typically the very best buys available; however, most prospective buyers have no idea how to finance both the purchase of the home and the renovation work required,” says Dennis Walsh, CEO of REbuildUSA. “The FHA Streamlined 203(k) offers a competitive solution. At the same time, millions of current homeowners could also benefit from this program that offers excellent rates and the ability to make improvements to their homes. We’re excited to partner with Lowe’s to make use of the Streamlined 203(k) much easier than ever before.”
The FHA Streamlined 203(k) renovation loan program provides funds for both the purchase and renovation of eligible homes packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors. There were approximately 21,000 FHA 203(k) loans in 2009, including Streamlines.
To that end, most recently, Lowe’s added preferred lending partner Bank of America, which will help coordinate financing options for both renovations and home purchase with renovations through the Streamlined 203(k) loan, increasing the Lowe’s stores footprint with Bank of America’s locations.
“Lowe’s is working with REbuildUSA to be the home improvement solution for products and services required by a Streamlined 203(k) loan,” says Mark Malone, vice president of consumer marketing for Lowe’s. “We can help facilitate the needs of home buyers acquiring distressed properties and facilitate the process of getting their projects done.”
And for the industry’s top leaders, they believe this announcement is coming at just the right time.
“Every real estate professional needs to know about this great opportunity in today’s market,” says Dave Liniger, chairman and co-founder of RE/MAX LLC. In fact, Liniger recently presented the REbuildUSA program to RE/MAX agents during a live broadcast via RE/MAX University.
“[This program] is nothing less than the future of real estate,” explains Ed Krafchow, president and CEO, Prudential CA/NV Realty. “If you’re serious about success in this business, you’ve got to get involved in this ground-breaking program.”
Specially trained Lowe’s associates in stores across the country, except in Texas, can help the customer plan the project and select products and Lowe’s independent subcontracted installers can handle the installation. The program allows Streamlined 203(k)-qualified customers to have a huge selection of products and services under one roof, and it gives customers the ability to immediately improve their homes by adding equity with the repairs and renovations.
Concludes Alex Perriello, president and CEO of Realogy Franchise Corp.: “REbuildUSA is a concept whose time has come and will have a positive impact on the real estate industry and homeownership in America.”
ABOUT LOWE’S
With fiscal year 2009 sales of $47.2 billion, Lowe’s Companies, Inc. is a FORTUNE® 50 company that serves approximately 15 million customers a week at more than 1,700 home improvement stores in the United States, Canada and Mexico. Founded in 1946 and based in Mooresville, N.C., Lowe’s is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.
ABOUT REbuildUSA
REbuildUSA™ is dedicated to “rebuilding America one dream at a time.” Its industry leading 203(k) Specialist designation training, membership support, lead generation, marketing solutions and exclusive online Project Portal™ fulfillment platform help consumers, lenders and real estate professionals leverage the power of the U.S. Government FHA 203(k) Home Purchase and Renovation Loan program. The parent company, Dennis Walsh & Associates, Inc., has delivered cutting-edge education and sales and marketing solutions to more than 80,000 associates of the world’s leading real estate organizations since 1988. REbuildUSA™ is proud to work with Lowe’s as its home improvement partner, Pillar To Post as its home inspection partner and a who’s who of the nation’s most successful real estate organizations and leading mortgage lenders. As members of REbuildUSA™, these industry leaders are able to more effectively open up many more home ownership opportunities and stimulate the economy while improving homes and communities across America.
For more information, http://www.REbuildUSA.com.

Survey Says.. Homebuyers Are Ready To Move From The Sidelines

RISMEDIA, August 30, 2010—Are more Americans positioning themselves for home purchase? Although May’s data showed that home sales were down 26.8% as the home buyer tax credit concluded, a new survey conducted by Relocation.com suggests some families are opting for renting while they research—cash in hand—for deals on a new, more desirable home in their area.
Among the key findings of the survey: Of the 60% of individuals moving into rentals, 24% were previous homeowners who are renting temporarily while they look for a new home to purchase. Underscoring this finding is the fact that for many of these families, foreclosure was not the reason for moving—in fact, the number of consumers who moved due to foreclosure dropped by 70%.
Furthermore, many of these families stayed in the area (one in three made a short distance move of 100 miles or less), opting to remain in a location where they already know their schools, shopping districts and prime neighborhoods.
“While the housing market continues to flux from month to month, we’re seeing strong, continued interest as consumers looking to move start their research with us,” said Relocation.com Chairman and Founder Sharon Asher. “These findings suggest that more Americans may be poised to re-enter the housing market this year.”
The Relocation.com survey was conducted in early June 2010 and is a continuation of consumer surveys conducted since March 2009 to gauge moving and relocation attitudes and behaviors.
For more information, visit www.relocation.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

Is Title Insurance Boring??

Stroudsburg--When we first talked about this blog, I was warned by Lorie Lehman who is an Account Manager at Pennsylvania First Settlement Services located here in the Pocono Mts that it would be very hard to write a blog about title insurance because… there’s just not a lot to say!  I thought about that long and hard and you know what, maybe she has a good point, but since title insurance is required on every real estate transaction, it’s got to be something that’s worthwhile talking about.  So, I’m giving it a try.

I elected to talk about title insurance from three viewpoints; (1) the buyer; (2) the Realtors–primary contact of a transaction and (3) an owners of the title company.  Each of these people make up a title insurance transaction and each of them are important in the actual transaction itself.

The Buyer’s Role

The buyer is actually the purchaser of the title insurance policy.  All transactions (that are mortgaged) require that the property be insured at minimum in the amount that it is mortgaged.  In my professional opinion, title insurance should be in the amount of the value of the property as opposed to the value of the mortgage, but 9 times out of 10, it’s for the mortgage amount.

What is title insurance?…”Title” is the foundation of ownership of a property.  Title to a property collectively makes up the terms that are your legal rights to own, possess, use, control and dispose of property.  Title insurance is an insurance policy that protects against future loss should a title condition be any different than when the policy was written.

A title deficiency is something that’s missing from the title; for example, an undisclosed error from a previous owner who could make a claim on the property.  It includes anything that could happen with the entire ownership of the piece of real estate that may encumber or jeopardize the owner’s rights to a “peaceful enjoyment” of the property or cause the owner to lose any portion of the parcel.

An encumbrance is a claim made upon the land.  For instance, your local power company may have an easement for a power line that will serve your home.  If you are borrowing money to purchase land, your lender will require your title to be cleared of any outstanding deficiencies or encumbrances before the land transferred or, at minimum, clearly identified.

The biggest question is…why do I need title insurance?  You as the land owner are protected against any title loss.  Title insurance insures the value of the property.  Having clear title is something that will be required when you go to sell the property, because the buyer is going to want title insurance and if you don’t have it, you have risk in reselling of your investment.

Title insurance comes after a title search.  A title search is a detailed examination of the historic and public records concerning the property.  Those records, including the deeds, court records, property name and indexes and many other public documents are reviewed by the Title Searcher.  The purpose of the search is to verify the seller’s right to the transfer of ownership and to discover any deficiencies or encumbrances on the title that have not been disclosed to you the buyer.

You may ask, is title insurance as important as other types of insurances such as fire, and homeowners?  The answer to that is, yes.  Because your losses without title insurance can even be greater than that of a fire or homeowner loss, title insurance is just as important, if not more important than those other types of insurances.  For example, imagine if a house burns down, the land is still there on which to rebuild, but if there are title problems, then not even the land has a value.

Last but not least, does title insurance protect both me and my heirs?  Yes, the title insurance policy covers from the time of its effective date back to the origin of title.  If the property passes to your heirs or devisees the title insurance policy would defend the title for your heirs and devisees just as if it were for you when you were alive.

Title insurance is ordered after the Agreement of Sale is executed by all parties.  It is typically handled by the Realtor who suggests the title company and forwards a copy of the Agreement of Sale including the terms and conditions thereof to the title company.  The title company then represents the buyer in the transaction and provides for title insurance and settlement services to transfer the property from the seller to the buyer.  It’s called a closing.

The Realtor’s Role

The Realtor’s role in a property transaction is that of a conduit to get the fully executed Agreement of Sale to the title company.  The Realtor also will help the title insurance company get to know who the buyer is, all their contact information, provide the Agreement of Sale (and any contingencies thereof) and give the title company the proposed settlement date.

Realtors look for customer services such as timeliness, accuracy, courtesies and doing all that above being done with a smile!

Until the time the property deed is searched, the Realtor doesn’t have a lot to do with the transaction.  The Realtor is typically involved in the property inspections, mortgage contingencies and other contingencies that may be required for the sale.

After all of the inspections are done, then the Realtor becomes involved in the title insurance part because the transaction is now getting ready to close.  The Realtor will find out on behalf of the buyer, whether the title search has been done–we talked about a title searcher earlier.  Everyone begins to zero in on the date and time that the settlement will occur.

A few days before closing, a draft HUD is forwarded between the seller’s Realtor, the buyer’s Realtor and the buyers themselves.  Each party will review the HUD to ensure that the correct pro-rates are taken care of and displayed properly on the HUD.  Usually that takes a few times going back and forth to make sure all the numbers are properly recorded in the right places.  After that, a final HUD is issued and the buyer’s told exactly how much money they need to bring to closing.

At settlement, it’s usually a pretty good time!  The buyer is excited to buy and the seller is excited to sell.  The Realtors are…excited to get paid their commissions for a successful transaction.

The settlement process will usually take about 45 minutes to 1 hour maximum.  It’s the time where the keys are exchanged, the mortgage documents are reviewed by either the mortgage broker or the settlement officer and checks are traded between all of the parties.  At that point, the buyer owns a new home and gets the keys to the property.

Title Company Owners’ Role

A person or persons own(s) a title company because the premium that is charged on the title policy is split between the owner and the insuring agent.  It’s primarily a commission based business.  The owners become an agent for a specific title insurance company.  As an agent for that company, they share in the profits of what the title insurance sells for.

Title insurance is regulated by the Commonwealth of Pennsylvania, so therefore, regardless of what title insurance company you work with, the price of the policy remains the same.  There are what’s called a basic policy and an enhanced policy.  At Pennsylvania First Settlement Services we sell on enhanced policy.

It’s our opinion that an enhanced policy is much better than a basic policy and covers more as well as taking into account property appreciation, market value and the increased value the property has year to year.

The title company finds Realtors that want to work with them primarily because of their customer service.  Customer service is something a Realtor looks for.  A title company that provides good customer service to all of the people in the transaction typically is used more and more; thus more profits.  It’s called the book of business and you want your book of business to expand to as many Realtors as you can handle.

The title company owner employs an Escrow Officer(s), maybe a secretary or Receptionist that receives and opens the order and then they have a settlement agent or closer.  Together, those people work as a team to move the transaction from opening to closing at the settlement table.  Typically, Title Searchers are third party vendors and not employees of the title company.  At least that’s true in today’s title company model.

Your Title Agent or Escrow Officer is the point of contact for all the parties in the transaction.  The Title Agent or Escrow Officer is responsible for filing documents, verifying the legal description, collecting and disbursing all funds through the Settlement Agent, clearing all outstanding debts against the property and verifying all the pro-rates on the HUD.  The Escrow Officer, at least at PA1st, will also coordinate property owners’ insurance for the buyer.

Sometimes Realtors have an ownership interest in the title company and that’s called an afBa.  They own shares or membership interests in the title company.  While that used to be a popular Pocono commodity in the past, it’s not used that much in today’s business.  The Realtors simply want to be recognized for their loyalty through recognition at a party or things such as this.  Realtors are not paid on a referral basis for each transaction that they bring to the title company.  That is a violation of HUD.

Refinancing, or “Customer for Life” as they are called at Pennsylvania First Settlement Services are those customers that have closed their property with Pennsylvania First Settlement Services sometime in the past and now for some reason need additional title insurance because something has changed, either they have refinanced the property or they are making some small change in ownership which requires a re-issue rate.  A re-issue rate is typically an insurance rate that’s less than the sale price of an insurance policy because the work has primarily already been done.

Well, that’s a little something about the title insurance business from all three angles.  In the end, I think it’s very exciting and hopefully you thought the same as well!

Thomas R. Wilkins is General Partner in Pennsylvania First Settlement Services.  He is the founder of Pennsylvania First Settlement Services which was formed in 2007.  Their corporate offices are located at 304 Park Avenue, 2^nd Floor, Suite 2, Stroudsburg.  In addition to Pennsylvania First Settlement Services, Wilkins is CEO of NEPA Management Associates, Inc. and Broker of Record for Better Homes and Gardens Real Estate Wilkins & Associates, one of the largest real estate companies in the Poconos.

Selling Underwater- HAFA Nuts & Bolts

In a previous article I talked about the introduction of the new Home Affordable Foreclosure Alternatives (HAFA) program (see Selling Underwater – Short Sales under HAFA ).  In this article I want to cover HAFA from the process perspective – how it really works.

The core principal of HAFA is standardization.  Previously when confronted with a sales price the homeowners and the agents had to contend with the mortgage servicer on a case-by-case basis under that servicer’s own terms and requirements.  Under HAFA the entire process is streamlined with a framework of standardized qualifications, documents, approval criteria and processing time frames.  HAFA lays out a step-by-step process for all the players to follow.

HAFA recognizes two short sale transactional scenarios:

1. A home that is under agreement of sale with a buyer in place (Contract);
2. A home being offered for sale (Listing).

The process for the two scenarios is different.  HAFA’s principal focus is on up-front approval in which a homeowner is approved for short sale and enters into a Short Sale Agreement with the servicer.  I will cover those particulars in detail in my next article.  This article covers the Contract short sale process, where a short sale property is under contract with a buyer in place.  Under HAFA this scenario is referred to as an Alternative Request for Approval of Short Sale (Alternative RASS).

First, here is a summary of the mechanics of the Alternate RASS process broken into two primary steps:

Step One – Eligibility Requirements. Does this situation qualify for HAFA?

• The borrower has qualified under the Home Affordable Modification Program (HAMP).
• The property is the borrower’s principal residence.
• The property is not vacant or condemned.  Exception: a borrower to be eligible for HAFA if the borrower provides evidence that he or she was required to relocate at least 100 miles from the mortgaged property to accept new employment or was transferred by an existing employer and has not purchased another home.
• The mortgage loan is a first lien mortgage originated on or before January 1, 2009.
• The mortgage is delinquent or default is reasonably foreseeable.
• The current unpaid principal balance is equal to or less than $729,750.
• The borrower’s total monthly mortgage payment exceeds 31 percent of the borrower’s gross income.
• The borrower documents a financial hardship¹ and completes HAMP Hardship Affidavit and provides required documentation.

Tip: Under HAFA borrower’s total monthly mortgage payment is defined as: monthly mortgage principal and interest, RE taxes, homeowner’s insurance, flood insurance and homeowner’s association fees.

Step Two – Submit an Alternative Request for Short Sale Approval (Alternative RASS) to the servicer.  The Alternative RASS is a specific package of forms and documentation.

The Alternative RASS requires the following documents:

• Alternative RASS (Program Terms and Conditions – Terms of Sale) to be completed and signed by Borrower (Seller)
• Copy of a signed listing agreement with a real estate broker (if applicable)
• Executed copy of the sales contract and all addenda
• Buyer’s documentation of funds or Buyer’s pre‐approval or commitment letter on letterhead from a lender
• Information about other liens secured by your home such as home‐equity loans
  • Completed and signed Hardship Affidavit form (if applicable)

It is important to recognize significance of the first item under Step One: “The Borrower has qualified under HAMP.”  Six simple words – but behind them lies a potential mire of complexity.

To qualify for HAMP means that a borrower has been approved for mortgage modification under the Home Affordable Modification Program.   Many stories have circulated and I’m sure you’ve heard some of them: distressed borrower hung up in limbo for months waiting for their servicer to deliver on mortgage modification promises made under HAMP.  The stories are often emotional as homeowners struggle with bills piling up and mortgage default looming. In fairness, the nation’s mortgage servicers have been deluged with workout requests. As of April 2010, according to a US Treasury/HUD Report, servicers have made 1.4 million modification offers, behind 4.2 million borrower solicitations.  That’s a lot of processing.

Here’s the key – homeowners in distress need to begin the process with their servicer in advance of their short sale, the earlier the better. HAFA (short sale) may well be the needed solution, but the true first step is HAMP (mortgage modification) approval.  A homeowner is not required to accept the HAMP modification offer if one is made, but they do need to get HAMP qualified to take make use of the streamlining provisions under HAFA.

Look for the next article in this series covering the Listing short sale approval process… coming soon.

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¹ HAMP hardship conditions (one or more of the following required):

• Reduction in or loss of income that was supporting the mortgage;
• Change in household financial circumstances;
• Recent or upcoming increase in the monthly mortgage payment.
• Increase in other expenses.
• Lack of sufficient cash reserves to maintain payment on the mortgage and cover basic living expenses at the same time. Cash reserves include assets such as cash, savings, money market funds, marketable stocks or bonds (excluding retirement and emergency accounts – generally equal to three times the borrower’s monthly debt payments).
• Excessive monthly debt payments and overextension with creditors, e.g., the borrower was required to use credit cards, a home equity loan, or other credit to make the mortgage payment.
• Other reasons for hardship detailed by the borrower.

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