HARP REDUX?

By Daniel E. Cullick, CEO at Global American Title Agency, Inc

President Obama recently presented a proposal to revise the Home Affordable Refinance Program (HARP) … again.  This would be the third version of HARP and it is being proposed to help even more homeowners who have not been able to refinance because of the sharp drop in property values over the past several years.  While many borrowers have been able to take advantage of the previous versions, it has not been nearly as many as had been hoped.  The new version would have all the advantages of the previous versions, but would also:

            -   Eliminate the need for the borrower to have a Fannie Mae or Freddie Mac backed mortgage.  Under the new version, loans owned by banks and also loans with private investors would also be included.  (The program for these loans would be operated through FHA)

-  Make a credit score above 580 the qualifying mark.  About nine out of ten

borrowers would have the ability to meet this criteria.

            -  Set the maximum loan amounts at conforming FHA limits.  Depending on the area, FHA limits range from $271,050 to $729,750.

            -  Ensure the loan is for a single family owner-occupied principal residence.  The program is designed to help families stay in their homes.

            The proposal also includes caveats for eliminating the appraisal cost, streamlining the refinance process and increasing competition among lenders to insure the borrower is getting the best deal possible.

            A decision should be made in the near future.  Hopefully this will enable even more homeowners to take advantage of the record low interest rates.

DOES TODI HAVE WARTS?

By Daniel E. Cullick, CEO at Global American Title Agency, Inc.

A new estate-planning tool became effective in Illinois on January 1, 2012 and it is known simply as the Transfer on Death Instrument (TODI).  Some are viewing it as similar to a will that doesn’t require prove-up and does not have to go through probate proceedings.  It should be noted that a TODI is NOT a deed!

The TODI transfers title to residential real estate only and do not take effect until the death of the owner who executed the TODI.  The TODI must contain the essential elements and formalities of a recordable deed; be executed, witnessed and acknowledged; state the transfer is to occur at the owner’s death and be recorded before the owner’s death in the office of the Recorder of Deeds in which the property is located.  The Act also states the TODI shall be prepared only by a licensed Illinois attorney.

The TODI does not affect the right of the owner to convey or mortgage the property during his lifetime.  If the subject property were mortgaged after the TODI is executed, the beneficiary would take the property subject to the mortgage. If the owner transfers the property to a third party after the execution of the TODI, the beneficiary will have no right to the property.  The beneficiary has no interest in the property during the life of the owner.

In order to make a TODI effective, the beneficiary must record a Notice of Death Affidavit and Acceptance in the office of the Recorder of Deeds in the county in which the property is located.  If the Notice is not recorded within 30 days after the death of the owner, the personal representative of the owner’s estate may take possession of the property.  If the Notice is not filed within 2 years of the owner’s death, the TODI is void.

The TODI presents a great many potential problems and pitfalls for title insurers.  What does the title company do if the owner has been dead for a year and the Notice of Acceptance has not been recorded?  What if only one party executed the TODI when title is held as joint tenants or tenants by the entirety?  What if the owner transfers title to a living trust after a TODI is executed?  What if the TODI transfers title to someone who is a minor at the time of the owner’s death?  Does a parking unit in a condominium development that has its own PIN count as residential real estate?  Is a municipality required to attach an exempt stamp to a TODI even though it is not a deed?  Many more issues were raised at a recent seminar presented by Illinois Land Title Association.

Because this is a brand new instrument and untested in the court system, title insurers will undoubtedly be very conservative in underwriting properties that involve a TODI.  There will undoubtedly be many requests for probate proceedings, suits to quiet title and deeds from heirs and legatees.

The new instrument leaves many questions unanswered at this time.  As is always recommended, please contact a qualified attorney to determine which estate-planning course of action best suits your needs.

'TIS THE SEASON TO BE SELLING

By Daniel E. Cullick, CEO at Global American Title Agency, Inc.
           

‘Tis The Season To Be Selling?

Many homeowners are hesitant to list their homes for sale during the always-hectic holiday season, but in many instances it is a necessity.  The reasons may be tax related, work relocation related, or sadly, in the current economy, an attempt to avoid foreclosure.  Whatever the reason may be, the decision to sell now may be a profitable one.

1. Most homeowners who plan to sell their homes want to wait until after the holidays.  By listing you home now, you avoid that competition and could be one of the few in your neighborhood to be listed (at least recently).
2. You can present your home with all its holiday finery and show potential buyers what a fantastic place it would be to make their own memories.
3. Many potential buyers have days off from work they are trying to use up by the end of the year and since there is only so much shopping anyone can do, they may notice your home while out driving around looking at the light displays.
4. If you are lucky enough to find a buyer right away, you could possibly have the kids in a new school by the start of the second semester.  It is always easier for new students to blend in when other students are also in a mode of change with new schedules.

Whatever your motive for selling may be, it could be right for you to pull the trigger now and put a few extra dollars in your pocket for those bills that will be looming after the first of the year.  Please accept our wishes for a happy and healthy holiday and a prosperous new year!

Can the HARP make music for you?

By Daniel E. Cullick, CEO at Global American Title Agency, Inc.

Can the HARP make music for you?

 Lately it seems all the financial pundits are talking about HARP.  No, it is not the instrument played by angelic beings, but rather, a federal program to assist homeowners who have not been able to take advantage of historic low interest rates.  HARP is an acronym for Home Affordable Refinance Program and it was enacted to aid homeowners who could not refinance because their property is worth less than what they owe.  The program has been around for a little while and new changes were just made which are due to become effective in November, which will make the program accessible to even more homeowners.

What are the new rules?

 Under the old program, a borrower could not qualify if he owed more than 125% of the home’s current value.  This cap has been eliminated under the new rules.  The deadline for a HARP refinance has been extended to December 31, 2013 and many costs have been lowered or eliminated, including the need for a new appraisal in many instances.

Is it right for me?

There are a few qualifications a borrower must meet before starting the application process:

1. The mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac.
2. The mortgage must have been sold to one of the agencies on or before May 31, 2009.
3. The loan to value ratio must be higher than 80% (if it is under 80%, a traditional refinance should be available).
4. The borrower cannot have missed a mortgage payment in the past six months and not more than one mortgage payment in the past twelve months.
5. It is a one time only program, at least for now.  If a borrower took advantage of it once, he cannot refinance under it again.

Where do I begin?

If the above criteria have been met, the borrower would want to find out if the loan is with Freddie Mac or Fannie Mae.  This can be done by going to the website for the companies (http://www.freddiemac.com/ or http://www.fanniemae.com/) or calling the current loan provider.  A call to a reputable loan officer or financial adviser would also speed the process along.  A loan under this program can take a little while longer to go through the application process, but the savings in the end should make it more than worth the effort.

Have more questions? Contact Global American Title Agency, Inc. at info@globaltitle.com.

Understanding the HUD-1 Statement

By Stephanie Lococo, Title Closer at Global American Title Agency, Inc.


Understanding the HUD-1 Statement

There are many steps and details involved when purchasing or selling a home. For first time buyers and seller you may feel excited, happy, but also a little overwhelmed. When it comes time for settlement all those steps and details are recorded so that all parties can see what transactions have taken place, monies owed to and from each party, and the agreements made by the lender, buyer, and seller. The HUD-1 Statement is used during the real estate transaction to itemize all these charges and give each party a complete list of their incoming and outgoing funds.

This standard real estate settlement form is used in all transactions within the United States that involve mortgage loans. Although the HUD-1 Statement is not required for cash transaction it’s commonly used for all transactions as standard practice.

Who prepares the HUD-1 Statement?

The HUD-1 Statement can be prepared by the title company closing the transaction or in attorney states by the attorney closing the transaction. It is prepared by obtaining fees from the lender, title company, and seller’s or buyer’s attorneys office. Any other fee’s received at closing can be added at that time. The parties involved will receive a copy at closing.

What if my information is incorrect on the HUD-1?

Changes to a HUD-1 can be made within 30 days of settlement.

How to read a HUD-1?

The HUD-1 Statement can be a bit overwhelming, so be sure to ask questions so that you understand all the details. The form is broken down into sections and numbered within each section. Start by looking at the top of page 2 and work your way down section by section. This way you will see how the fees are totaled on the bottom and then that number is then shown again on the top of page 1.

The top section of page 2 includes lender charges, the middle title charges, and the bottom section details recording and additional charges.  Page 1 then breaks down into two sections, credits and debits, which are subtracted to give you the bottom line. The top section includes credits to the seller (which can include anything from pd upfront by seller to assessments usually) and the total from page 2. The bottom section includes credits to the buyer (which includes the loan amount from the lender, earnest money deposit and tax prorations).

Have more questions? Contact Global American Title Agency, Inc. at info@globaltitle.com.

Building Your Home Selling Team

Selling your home can involve many different real estate professionals. It’s their job to get you through the selling process smoothly. Building a team of professionals can help you understand what condition your home is in, its market value, and what your selling options are.  So where do you begin?

You may choose not to use all the service providers listed below, but the important thing to remember is to choose a real estate professional who has your best interests in mind.

• Real Estate Agent
• Title Insurance Company
• Real Estate Lawyer

Your Real Estate Agent, will act as an intermediary between you and the buyer. They will assist you in marketing your home to attract interested buyers.

The Title Insurance Company transfers the ownership of your home to the new buyer. It is the choice of the consumer to choose the title company they wish to work with.

Hiring a Real Estate Lawyer helps you focus on prospective buyers while they focus on the details of the sale. Your real estate attorney can handle the paperwork throughout the process such as receiving an offer, assisting with contracts, and attending the closing.

For more information on finding real estate professionals in the Chicagoland area, contact us at info@globaltitle.com or call us 630-469-2725.

What is the Illinois Anti-Predatory Lending Database Program?

By Linda Bonk, Real Estate Closer at Global American Title Agency, Inc.

Predatory lending affects not only the homeowner, but also the entire community. Home values decrease as properties are abandoned and neighborhoods are destroyed. To reduce predatory lending practices in Illinois, the Anti-Predatory Lending Database Program was developed.

The program is designed to assist borrowers in understanding the terms and conditions of the loan that they are applying for. This protects the borrower and helps to reduce the number of foreclosures in Illinois.

Where in Illinois does this apply?

The Anti-Predatory Lending Database Program went into effect on July 1, 2008 in Cook County and July 1, 2010 for Kane, Peoria, and Will County.

How does the program work?

If you are purchasing a property in Cook, Kane, Peoria or Will County, a certificate must be generated from this database and recorded with your mortgage at the recorders office. There are additional costs to the borrower to generate and record this certificate.

At the time of your closing the title company’s escrow officer must enter the loan information and attach certain documents such as, the Settlement Statement, Truth and Lending Disclosure, and the Good Faith Estimate into this database. The database will then determine if counseling is necessary for the borrower.

When counseling is required a HUD certified counselor reviews the terms of the mortgage with the borrower and it is then the decision of the borrower to decide if he or she wishes to proceed.

If the information entered by the mortgage and title company matches, no counseling is required and a certificate of compliance is generated to record along with the mortgage.

For more information regarding the Illinois Anti-Predatory Lending Database Program visit http://www.ilapld.com/ or contact info@globaltitle.com