09.01.07
Is That Email for Real?
This is the best site I have ever seen to help detect what we all wonder about … is that email I just got from my bank, credit card co.,… etc. for real. Check it out at Phishing
08.14.07
Cost of Foreclosures
A good article in American Chronicle reminded me of the closings that changed over from MIP to Piggy-back loans, where a first and second mortgage kept the borrower from having to pay the traditional Mtg. Ins. premium.
The article said “Most loans with higher than 80% loan to value ratios when they were originated had to have mortgage insurance on them if they were bought by institutional federally chartered savings and loans or FDIC insured banks.”
It seemed like a good idea from the borrowers perspective - save a few bucks. But from the Lender’s perspective, they lost their default insurance and will pay a corresponding price in this foreclosure market.
The article also pointed out “For every million dollars in loans being serviced on defaulted loans, many banks are losing about $10,000 a month plus the loss of value as the property market spirals inward on its dwindling integrity and corrupt viruses which have infected the entire industry. That is a serious implosion.”
Another perspective on what the lending industry has done to itself.
Check the Gap or Pay the Consequences
Catching up on email today, I saw another fine example of fraud. This one I have seen many times, but it keeps rearing its ugly head. An average couple taking out a home-equity line of credit… er, that would be five home-equity lines of credit, all in the same day, sinking five different lenders into the mucky-mud of bad loans never being repaid because of a home with negative equity. More fodder for my classes.
How incrediby important is each person in the chain - The Closer in rushing the documents to the County Recorder - the Recorder in getting the documents of record, the Abstractor in checking the public record to new recordings.
As an educator for County Recorders, Abstractors, Closers and Title Personnel, I am always harping on how important it is to record in a timely manner. After all laws in most states explain that the first person to get to their document recorded at the Courthouse has legal rights over others. I stress with Recorders how important it is to be timely in recording. I stress with Closers in those states that do not close in escrow how important it is to record ASAP. And I stress with Abstractors how important it is to be thorough in checking the record.
I was recently told by a customer that their policy was NOT to bother to re-check the record if the existing work was 3 mos old or less. Alot can happen in 3 mos. Alot can happen in three hours - as the article exemplifies. I am saddened by those who do not think it necessary to re-check the public records at the time of closing to see if anything has been filed in the interim that would afftect title. In my opinion, they are being negligently irresponsible. In my opinion, check the Gap, or Pay the Consequences.
But, in a case like this one, even the most prudent Abstractors, Recorders and Closers would likely not help the loss.
Taking 5 loans in one day is a classic example of the danger in table-funding closings. In “table-funding,” the closer disburses funds immediately upon signing documents, and the danger of interim recordings, known as “the gap period,” is assumed. Under this scenario, the title insurer or closer is at tremendous risk. Will Underwriters in table-fund states re-think the way of doing business by requiring a closing in escrow or perhaps pushing e-recording – or will the traditional marketplace way of doing business continue to dictate…. time will tell.
06.27.07
Might You Divulge Personal Information Under Duress?
The phone rings. As you hear the caller, a feeling of dread grows in the pit of your stomach. A young “representative” says he needs to speak with you about your child. The adrenalin builds.
The voice says your family member has been seriously injured and brought to the hospital. In order to begin treatment, paperwork needs to be completed immediately, and personal information like social security numbers and date of birth need to be verified. Money and/or insurance information also needs to be obtained so that they can proceed quickly.
Wait a second! What’s wrong with this picture? First of all, WHO are you talking to? What information are they asking for? This kind of scam is a form of phishing. The thief makes up a story to scare you into giving up one of your most valuable assets - your personal information. Think first. Hang up if anyone on the phone starts asking for that information. He or she is a criminal trying to steal your identity.
The bottom line is that lwe all need to learn NOT to give out any personal information over the phone when contacted by unknown and unverified individuals. Be alert, be aware and be safe.
06.15.07
Deed in Lieu is a Bigger Problem than Foreclosure
Did you know that deeding your property back to the Lender instead of allowing foreclosure can cost you! Under Federal Law, Lenders who accept less than the full remaining balance on the loan (including late fees, interest and other chargable items) must file a 1099-C (as opposed to the 1099-S.) The 1099-C shows any concessions made by the Lender, and tells the IRS the concessions are TAXABLE INCOME.
For example, say your Mother took out an exotic loan to help pay medical bills and refinance the house. The loan is an adjustable rate for $312.250. -(125% of the then current value of $250.000.) The loan was at 5% interest two years ago and is now at 9%. She was assured that housing markets would continue to rise.
Now she finds herself unable to make the payments, and the current house value is estimated at $242,000. If the Lender is willing to accept $242,000. for a deed in lieu of foreclosure, knowing that is the best they can do, it must file a 1099-C with the IRS. The IRS will then show that Mother has received TAXABLE INCOME in the amount of $70,250. OUCH! As unfair as it seems, she now has another problem, one bigger than just losing her home.
05.21.07
Mortgage Closers, are you explaining those terms?
I know it’s not a sexy topic, mortgages. But everyday, I see mortgages with almost impossible terms. Fifty years -?, “bad credit okay,” “adjustable rate, “negative am,” “low initial rate,” and WE all know what that means… But do the borrowers on these sub-prime mortgages, aka loser loans, (and I mean loser in more ways than one) know what they are getting into? I believe Closers have responsibility to cover the mortgage note and mortgage deed or deed of trust in detail so that the borrower will get the picture.
I once closed a first mortgage loan at 23%. Yes, 23%. In the early eighties, a gentleman needed to refinance a land contract, or lose his house. With bad credit, he went to the local “Credit and Thrift Company.”
He had no choice, and I had no choice but to explain the terms to him, as a good closer does. It was a terrible closing. He even pulled my phone off the desk and threw it at me. He wanted to kill the messenger. I did what was required and explained it all in a professional manner, but I sure felt sorry for him. He was doomed to lose that house.
That was an isolated insident for me, Thank heaven! But now, I am not so sure it doesn’t happen to you all every day. The news is bad. But I hope you have the integrity to completetly and professionally explain to the consumer What they are signing.