Hurricane Sandy makes you think about waterfront living

Two stories in the 11/4/12 edition of the New York Times talk about the weather and its impact on living on the water.

My opinion boils down to this – build on the waterfront, be it ocean, lake, bay, lagoon or river, the Federal and state governments no longer step in to help you rebuild.

IF tropical storm Irene last year was an eye-opener, was a reality check. Waterfront property in the New York area is some of the most coveted in the nation, but after back-to-back years of supposedly once-in-a-generation storms, public officials, developers, brokers and homeowners are being forced to re-evaluate.

Read the full story.

Real Luxury: A Way Out The damage caused by Hurricane Sandy speaks to something so obvious it is often overlooked: New York City shores are not fit for living.

Read the full story here. 

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Closing fees high, don't blame the title agent

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Closing fees are a component of the home purchase or refinance.  This article from the New York Times is a tad misleading about these costs and where the blame, if that's the right word, lies.

 FOR some people, a major hurdle to homeownership is the closing costs that come on top of the required down payment. There are fees for everything from title searches to deed recordings, and if you happen to be buying in New York or New Jersey, you’ll find some of the highest costs in the country.

But these fees have been easing, according to a report released last week by Bankrate.com, which found that average closing costs, including mortgage origination fees, fell 7 percent nationwide from 2011 to 2012. In New York they fell 12 percent.

OK, so where do these high fees come from?  Not from third party suppliers such as title agencies, but from lenders and government officials.

Yet, the article continues,

Title insurance is the biggest cost, averaging around 1 percent of the loan balance. Mr. McBride suggested that borrowers shop around, eliciting good-faith estimates from a number of lenders.

Poppycock.  Rates in New Jersey are regulated as they are in New York and costs will be identical from title agent to title agent.  Companies such as ours survive based on the level of service we provide our clients to get buyers and borrowers to the closing table as safely and expeditiously as possible.  (Unless your title agent is owned by a bank or controlled by a real estate agency whose goal is to get you to the table no matter what.)

But the buyer/borrower cannot escape government charges.  The county recording fee for an average mortgage in New Jersey is $240!  And, in New York, you must add government mortgage taxes that add thousands to the cost of a home or mortgage.

The only place where the buyer/borrower can maneuver is with the lender.  There are three words to remember when applying for a loan, shop, shop and shop for the mortgage and if the loan officer cannot explain something to your satisfaction, run for the hills.

Read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Time to tap your home’s equity? Banks are making it easier.

The New York Times’ Vickie Elmer writes about good news for potential home equity borrowers.
mortgage refinance title insurance closing heloc
Seems that the Office of the Comptroller of the Currency “noted that one in five lenders nationwide loosened up underwriting standards on home equity loans, while another 68 percent kept them unchanged from a year ago.” That’s a big improvement over 2009.

“Lenders also have been lowering the credit scores and equity levels needed to qualify, industry experts say. “You may not need to have as much equity as lenders may have demanded two years ago, when housing prices were going to fall,” said Keith Leggett, a senior economist at the American Bankers Association. This is especially true, he said, in areas where home prices are appreciating.”

Advice for tapping your home’s equity-

“Borrowers must decide whether they want a traditional home equity loan, sometimes called a second mortgage, which has a fixed interest rate and fixed payments, or a home equity line of credit, known by its acronym, Heloc. A line of credit usually has a variable rate and can be drawn down incrementally. The variable-rate Heloc is one and a half percentage points lower than the fixed-rate home equity loan, which in turn is around three percentage points above the average 30-year fixed-rate conventional mortgage.”

Once you are approved for a home equity loan, you will have to select a title agency to close your loan. For my two cents, avoid the one recommended by the lender because experience shows that borrower’s need the personal touch when it comes to closing the loan, not some production line outfit. Personal service, that’s something we’re proud to be able to provide.

Read the full article here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Good news from Supreme Court for NYC renters - rent control stays in place

A lawsuit filed by property owner in New York City went against them at the US Supreme Court. The issue, whether NYC's rent stabilization law requiring landlords to accept rents that are below market value is an unconstitutional taking of property prohibited by the 5th Amendment to the Constitution. The court said it was not. As reported by the New York Times,

Tenants in nearly a million apartments subject to New York City’s rent regulations could breathe a sigh of relief on Monday. The United States Supreme Court, after indicating it might be interested in hearing a challenge to the regulations, decided to let them stand. As is customary when the court declines to hear a case, the justices gave no reasons. There were no published dissents. Perhaps one in a hundred petitions seeking review by the court is granted, meaning that the decision not to hear the case sent no larger message.

The suit did not directly challenge the rent control law, an older system that applies to far fewer tenants. The Harmons said that requiring them to accept below-market rents amounted to an unconstitutional taking of their property.

“We still believe that the Constitution does not allow the government to force us to take strangers into our home at our expense for life,” Mr. Harmon said in a statement issued after the court turned down the case on Monday. “Even our grandchildren have been barred from living with us. That is not our America.”

Obviously, New York City and State officials were delighted with the outcome. Renters vote, too, you know.

Read the full article here.

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if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

F.H.A. may need a bailout

According to a story in the New York Times, the F.H.A., the backbone of the Federal government's housing program is running low on cash.

Chances are nearly 50 percent that the Federal Housing Administration will need a bailout next year if the housing market deteriorates further, the agency’s independent auditor said in a report released Tuesday.

With the amount of cash on hand about 50% less than last year, the F.H.A. may have to call on the central government to replenish its accounts. All due, of course, to the housing crisis and the number of defaults in F.H.A. related mortgages. Stay tuned.

Read the full story here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Denied a mortgage? Maybe here’s why

The New York Times’ Vickie Elmer addresses reasons for mortgage loan application rejection.

“WE regret to inform you...” Nobody applying for a new mortgage or a refinancing wants to see or hear these words. But last year more than two million people were turned down for home loans, according to federal data, often because they didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. Lenders’ underwriting criteria have become more rigorous in recent years; some banks have tightened up beyond federal requirements.

Here are the six biggest triggers for rejection, according to industry experts.

• INSUFFICIENT INCOME Lenders want to make sure you can afford to make the mortgage payments. Someone who earns, say, $40,000 a year need not bid on a $750,000 apartment, unless there’s a trust fund with quarterly payouts or other money available. Also, lenders typically look for at least a two-year track record of income, which could hurt those who may have switched jobs recently.
• CLOUDY FINANCIAL PICTURE. Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of your adjusted gross monthly income. Borrowers may be surprised at what counts and what doesn’t.
• BAD CREDIT Lenders typically reject applicants with a FICO score below 620. Failing to pay your mortgage on time affects your score.
• LOW APPRAISAL. This is the predominant reason people are denied home loans today, according to industry experts.
• PROPERTY PROBLEMS. Issues within an apartment unit or a house such as major repairs have to be addressed. In our area of NJ, there are several condominiums with lawsuits pending against them that have turned into deal killers.
• INFORMATION MIX-UPS. About 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

Read the full article.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Who’s giving you the best mortgage deal?

The New York Times suggests vetting the lender when you buy a home.

“BEFORE buying a house, borrowers will undoubtedly do a thorough check of the property, examining its structural soundness and the surrounding neighborhood, among other things; they will research the best type of loan, comparing interest rates, terms and fees. But not all borrowers do due diligence on their lenders.”

“Ferreting out good information is not that easy. For one thing, different kinds of lenders are held to different rules, licenses and disclosure requirements. Some states, like New York and New Jersey, require mortgage brokers to complete criminal background checks through the state police.”

So what to do?  According to industry experts they  

“suggest that borrowers focus more on the individual who would be their mortgage broker, loan officer or loan originator. Among the questions borrowers should be asking them: How long have they been in the field? How well or promptly do they answer questions? Do they want to know the borrower’s financial goals? A look at their work experience and background on their LinkedIn profile may also be helpful.”

What should you look for?

• are good listeners, and helpful with personal-finance questions.
• size might be one factor.
• whether a blemish on a firm’s record, say a large number of foreclosures or a class-action lawsuit settled three years ago, will dissuade you from cultivating a helpful relationship.
• governmental and quasi-governmental sites may be helpful.

A minefield? Maybe.  Read the full article to learn more.



For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

New York mortgage tax - how can it be reduced

A client posed a question yesterday-

"I have a borrower who is trying to save money on a refinance in Manhattan, any ideas?"

"Sure," I said, "use a CEMA."

CEMA is shorthand for Consolidation, Extension and Modification Agreement. It helps to save mortgage tax because the original mortgage being paid-off is assigned to the new lender instead of being satisfied. The mortgage tax is paid only on the amount of the loan being given by the new lender. The two mortgages are "consolidated" into one by the CEMA.

The New York Times has an interesting article on the money saving aspects of a CEMA transaction. Read it here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Helping underwater homeowners? Not flood, mortgages.

The New York Times editorial pages takes on the cause of underwater homeowners, folks whose property is worth less than the mortgage or mortgages on it. Principal relief? Who's going to judge who's entitled to it?

Neither Congress, nor federal regulators, nor state or federal prosecutors have yet to conduct a thorough investigation into the mortgage bubble and financial bust. We welcomed the news that the Justice Department is investigating allegations that Standard & Poor’s purposely overrated toxic mortgage securities in the years before the bust. We hope the investigative circle will widen.

Tens of millions of Americans are being crushed by the overhang of mortgage debt. And Congress and the White House have yet to figure out that the economy will not recover until housing recovers — and that won’t happen without a robust effort to curb foreclosures by modifying troubled mortgage loans.

Read the complete editorial.

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Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

stephen flatow stephen's title agency mortgages underwater

Not what it seems -you do need title insurance

The New York Times’ Mary Ann Haggerty writing writes “Paying for Title Insurance” in the Sunday real estate section.

She begins,

“THERE’S not much you can do about title insurance.”

“If you take out a mortgage to buy a home, you have to buy this specialized form of insurance. If you refinance a mortgage, you have to rebuy it. And comparison shopping may not save you much money, as premium rates throughout the New York area are regulated.”

And that’s true. What you are doing when you select a title agent is one thing, seeking the best service.

What is service? In our book, service is thoroughness in the examination of title, communication with the client, professionalism in the resolution of title issues (and they do exist,) and promptness in getting you to the closing table.

We look forward to serving you in the future.

Read the full article.

For your next title order
or if you have questions about what you see here, contact
Stephen M. Flatow, Esq.
Stephen's Title Agency, LLC
165 Passaic Avenue, Suite 101
Fairfield, NJ 07004
Tel 973-227-4724 - Fax 973-556-1628
E-mail Stephenstitle AT comcast.net - http://www.stephenstitle.com/

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Adjustable rate mortgages do have advantages

 

The New York Times’ Maryann Haggerty writes about The Appeal of Adjustable Rates

 “THE 30-year fixed-rate loan has earned its reputation as the sensible, conservative move in the aftermath of the financial crisis, especially with near-low interest rates. But despite risks, some borrowers still are getting or keeping adjustable-rate loans, which have even lower rates.”

“Adjustable rate mortgages generally attract borrowers when rates are high. The rate is set for a specific time — generally one, five or seven years — and then it adjusts to prevailing rates within boundaries. That means payments can go up. Payment shock has caused plenty of problems over the years. [From the Ed – shows us the cases.] Rates can also go down, as borrowers who took out ARMs five to seven years ago are finding now. But it’s tough to imagine how rates could get much lower than now, short of Japan-style negative rates.”

According to Sari Rosenberg of Manhattan Mortgage Company whom we’ve worked with, “If a person is debt-averse and has a history of paying off his or her mortgage within 5 to 10 years, then he or she would definitely consider an ARM.”

Who else would benefit?  According to Ms. Rosenberg, “I have another client who knows he is selling his home within the next few years and even with the closing costs he will be saving money,” so he took out a three-year ARM.

“Keith Gumbinger, a vice president of HSH Associates, a financial publisher in Pompton Plains, N.J., said, “ARMs are good for borrowers with short-term time frames, usually seven years or less.”

“Conversely, ARMs aren’t wise for borrowers who plan to stay put, Mr. Gumbinger said, or those who would have trouble managing rising payments. That includes people who expect cash-flow strains, such as those starting a family.”

Is an ARM right for you?  A savvy mortgage counselor can help.  Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Short-Sale Nightmare

Readers of this blog know about the pitfalls and benefits of short sales where a home is sold for less than the amount of its mortgage.

Since a short sale cannot occur without the consent of the lender, sellers are completely subject to the lender’s whims and ineptness.

The New York Times reports on one New Jersey homeowner who lived the short sale nightmare in “A 30-Month Short-Sale Saga” by Antoinette Martin.

“MELANIE BROWN sits at the breakfast bar of the Teaneck house she will soon surrender to new owners and says the pain of that is piercing, but at least the “mental torture” at the hands of bankers and their computerized bureaucracy is finally done, after two and a half years.

“They would demand information, and then delay any response, demand and delay, over and over,” said Ms. Brown, 42, a school administrator, about her lender, Bank of America, and its Equator software system. “I got to feel like a mouse that a cat just kept smacking around.”

“This was a short sale. It took 30 months. And it might not have happened at all — despite Ms. Brown’s sustained effort to meet every shifting deadline for documents, and her real estate agent’s campaign to get help — except that the agent finally contacted an aide to a congressman, who contacted an aide to the president of Bank of America.”

What was it like dealing with Bank of America? Ms. Brown says,

“No one ever actually talks to you,” “they just send threatening e-mails, saying things like: ‘If you don’t refile those documents for the third time giving the entire history of your life by the end of the business day, then this process is terminated. You will have to start over at the beginning.’ ”

“Ms. Brown’s original loan was from Countrywide Savings Bank, acquired by Bank of America in 2008. When she began asking Bank of America about loan modification, she said, she was told it was impossible, because she was current with her payments.

“They told me I had to stop paying for three months before they could even consider helping me,” she said. “I was shocked. I thought that was drastic, but they said it was the only way.”

Sounds drastic, but a common step.

Do you have a short sale nightmare to share? We’d love to hear from you.

Read the full story here.

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if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Problems With New Good Faith Estimate Forms. Ya think!

The New York Times reports on “Problems With New Good Faith Estimate Forms.”

“THE revamped Good Faith Estimate form, which arrived just over a year ago, has helped give home buyers and homeowners looking to refinance their mortgages a better understanding of their borrowing costs

“But industry experts say the three-page, line-by-line disclosure — which lenders must provide within three days of receiving a loan application — still falls short of telling borrowers exactly what they will be paying. Some in the mortgage industry complain that it can even distort or obscure the true cost.”

We have had difficulties with lenders and their preparation of the Good Faith Estimate (GFE.) That which was intended to be a simplified method of explaining loan costs is anything but that. And, lenders do not uniformly provide us, as settlement agents, with information that needs to be reported. In other words, even lenders are confused about what information goes on which line.

Read the full article by Lynnley Browing.

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Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

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Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Adjustable Rate Mortgages back in vogue?

The New York Times Lynnley Browning reports on the move back to the once despised adjustable rate mortgage.

“IN the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try.”

However, the mortgage seems to have learned one lesson of the mortgage melt down.

“This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road.”

“Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide.”

Lenders ranging from Equity Now in New York to Bank of America are increasing the number of ARM transactions.

“Mortgage brokers and lenders say the loans most in demand are the “5/1” and “7/1,” in which the initial interest rate is fixed for the first five or seven years — after which many homeowners typically think about selling or refinancing anyway — then adjusted annually at a capped rate toward a maximum level.”

While many have railed against the risk inherent in changes of interest rates over time, I believe history reveals that ARMs were safe due to caps on increase amounts at each step and over the lifetime of the loan. For a homeowner who plans on selling within a few years, the ARM may give her a nice discount in rate.

Starting rates are usually one to one and a half percentage points below those of 30-year fixed-rate loans.

“But one catch is that getting an ARM may now be harder.

“Last summer Fannie Mae, the government buyer of home loans, said lenders must qualify borrowers on either the initial rate plus two percentage points, or on the full index rate to which the initial rate is tied, whichever is greater.”

While ARMs may be attractive to some, it’s doubtful that the number of ARM transactions will approach the 1994 high of about 70 percent of all home purchases.

Read the full report More Borrowers Are Opting for Adjustable-Rate Mortgages

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if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

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Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Is it becoming harder to get a mortgage? Looks as though it is.

Marc Santora of The New York Times writes about “New Worries for Buyers Seeking Mortgages.”


Frankly, there are horror stories out there about getting mortgages.

For one prospective apartment buyer,

“the moment she stepped into the two-bedroom apartment at 59th Street and First Avenue, with its oversized windows and sweeping views of the Queensboro Bridge, she just knew.”

And her offer was accepted.

“That was in August. But it was only in February, nearly six months later, that she finally closed on the $1.15 million apartment.

“In the intervening months, as she battled through a computer glitch and reams of documentation, Ms. Herman underwent a crash course in the complexities of navigating the mortgage market — which itself continues to undergo profound change.”

 “The dread of not finding a lender after the market collapsed in 2009 has been replaced by uncertainty, confusion and frustration. According to brokers and lenders, the list of demands that stand between finding a place to buy and signing on the dotted line simply never stops morphing.“

And it looks as though more change are coming to the mortgage market as the Obama administration plans to reduce the role of the federal government in the mortgage market by, for instance, lowering the limit on loan amounts for loans to be bought by Fannie Mae and Freddie Mac as well as reducing loan amounts for FHA and VA loans.

“And let’s not forget the federal government’s proposal to eliminate the mortgage interest tax deduction for high-income earners; the changes in the way brokers will be compensated because of new regulations; and the fact that banks — despite recent profits — are still leery of lending. Taken together, all these elements create a situation that can paralyze potential buyers. “

The result of all this is that “confusion and uncertainty can have the same impact as fear, unfortunately,” said David S. Marinoff, a mortgage broker and managing director of the Guard Hill Financial Corporation."

Summing up the problems facing the market is this from Jonathan J. Miller, the president of the appraisal firm Miller Samuel and a market analyst for Prudential Douglas Elliman,

“housing does not truly recover until lending does. It is currently dysfunctional.”

Once again the crystal ball goes dim.

Read the full story.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

MERS – The big bad wolf?

The New York Times lays part of the blame for the mortgage collapse at the feed of the Mortgage Electronic Registration System, Inc., we all know as MERS. In a report headlined “MERS? It May Have Swallowed Your Loan” By Michael Powell and Gretchen Morgenson MERS is taken to task.

“Never heard of MERS? That’s fine with the mortgage banking industry—as MERS is starting to overheat and sputter. If its many detractors are correct, this private corporation, with a full-time staff of fewer than 50 employees, could turn out to be a very public problem for the mortgage industry.”

“Judges, lawmakers, lawyers and housing experts are raising piercing questions about MERS, which stands for Mortgage Electronic Registration Systems, whose private mortgage registry has all but replaced the nation’s public land ownership records. Most questions boil down to this:

“How can MERS claim title to those mortgages, and foreclose on homeowners, when it has not invested a dollar in a single loan?

“And, more fundamentally: Given the evidence that many banks have cut corners and made colossal foreclosure mistakes, does anyone know who owns what or owes what to whom anymore?”

As courts have stepped in to protect defaulting homeowners from the specter of foreclosure, every angle to stick it to the banking industry (and thereby the rest of the consuming public.)

We in the title industry were introduced to MERS as a convenient way to insert a nominee in the chain of title to a mortgage. Gone would be the days of lost assignments of mortgage and deeds of trust—something that gave us many a nightmare.

Instead, this admitted convenience to lenders and the real estate industry, and to paraphrase Forrest Gump, has now jumped up and bit the banking industry in the butt.

Examples:

“The Arkansas Supreme Court ruled last year that MERS could no longer file foreclosure proceedings there, because it does not actually make or service any loans. Last month in Utah, a local judge made the no-less-striking decision to let a homeowner rip up his mortgage and walk away debt-free. MERS had claimed ownership of the mortgage, but the judge did not recognize its legal standing.”

“And, on Long Island, a federal bankruptcy judge ruled in February that MERS could no longer act as an “agent” for the owners of mortgage notes. He acknowledged that his decision could erode the foundation of the mortgage business.”

MERS was designed to streamline the ownership system in the days of mortgage securitization “but critics say the MERS system made it far more difficult for homeowners to contest foreclosures, as ownership was harder to ascertain.”

Challenges to MERS were raised by county clerks around the country. After all, they would be cut out of a lucrative source of income raised from recording assignments of mortgage, but they lost in light of the nation’s desire to speed up the mortgage process.

“We lost our revenue stream, and Americans lost the ability to immediately know who owned a piece of property,” said Mark Monacelli, the St. Louis County recorder in Duluth, Minn.” (Oh please.)

“Some experts in corporate governance say the legal furor over MERS is overstated. Others describe it as a useful corporation nearly drowning in a flood tide of mortgage foreclosures. But not even the mortgage giant Fannie Mae, an investor in MERS, depends on it these days.”

In any event, MERS is being made the whipping post for a larger problem—greed of lenders and borrowers.

Read the full article at MERS? It May Have Swallowed Your Loan

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

F.H.A. Loans to cost more

From the New York Times, Lynnley Browning writes about the increase in F.H.A. insurance premiums scheduled to take effect for loans taken out on or after April 18, 2011.

“FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

“The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.”

While the F.H.A. is calling the rise a “marginal increase,” “industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.”

This is the second change in premium rates in the past 12 months, having last gone up in November 2010.

“The increase does not apply to F.H.A. loans already in place, or to F.H.A. reverse mortgages or home-equity conversion (HECM) loans.”

The raise is necessary because F.H.A. reserves have fallen below required levels.

Read more, F.H.A. to Raise Insurance Premiums.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Mortgage brokers getting new rules to play by

The New York Times Lynnley Browning writes about new compensation rules from The Federal Reserve that will affect compensation of mortgages. According to the new rules, borrowers who use brokers “will most likely pay less for their services” and “be offered the lowest possible interest rate and fees for which they qualify.”

Small banks and credit unions which do not fund loans from their resources will also be covered by the rule change.

“But most banks and other direct lenders, including the few mortgage companies that function like banks, are exempt.

“The new rule is known as the Loan Originator Compensation amendment to Regulation Z, part of a strengthened Truth in Lending Act passed by Congress in 2008. Designed to prevent consumers from being steered into high-cost, risky loans, it covers how a loan originator — or any person or company that arranges, obtains and/or negotiates a mortgage for a client — is paid.

“Under the new rule, a lender can no longer pay a loan originator a lucrative rebate known as a yield-spread premium, which is tied to the rate or terms of the mortgage. Banks and other lenders can continue to pay commissions to brokers, but these payments must now be based solely on the loan amount.

“In the past, the higher the interest rate and points, the more money a broker stood to “earn.'"

How does this work?

“Brokerage firms typically earn a yield-spread premium of 1.5 to 2.5 percent of the loan amount, with higher-rate loans paying closer to 2.5 percent. The brokerage and its broker, or loan officer, typically split the rebate. On a $400,000 loan at 5.25 percent, that might total $8,000, based on two points paid, with a point being 1 percent of the loan amount.

“In the new system, the brokerage can earn a fixed commission from the lender, but the amount is not tied to the loan terms. Also, the brokerage cannot pass on a part of the commission to the broker, who must now be paid an hourly wage or salary. The exception is for loans where the lender pays the borrower’s points to the brokerage, typically for higher-rate loans. (The commission range is expected to be 1.5 to 2.5 points.) “

A new day for consumers may be dawning, but you still have to keep a wary eye open for charges, hidden and disclosed, when applying for that mortgage.

Read the full report.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

Calculating the Annual Percentage Rate

The New York Times’ Lynnley Browning is a little off his fine writing in this article dealing with the annual percentage rate calculations required by lenders.

THE lending industry has tried to make it easier for borrowers to understand thetrue cost of a mortgage by disclosing both its interest rate and its annual percentage rate, or A.P.R. But consumers may often wonder which figure they should focus on when buying or refinancing a property.

This is the first mistake in Browning’s report. It was not the lending industry that focused on making a loan’s true cost understandable, it was the folks in Washington, D.C. who promulgated the Truth-in-Lending Act.

The answer, many mortgage experts say, may seem counterintuitive: while the A.P.R. is popularly seen as providing a more complete picture of what you are actually paying each month, it often omits some costs.

Yes, that’s true, but what is overlooked is the underlying premise of the APR—that all lenders will have to calculate the APR the same way. There never was a promise that consumers would have to do some homework in figuring out which loan was best for them.

“When someone calls for a quote, we always give the interest rate, not the A.P.R.,” said Melissa Cohn, the president of the Manhattan Mortgage Company, a brokerage firm. “The A.P.R. is not all-inclusive.”

Whoa, if they did that in print, it would be a violation of Federal law.

When you read the full report you will see that the argument is being made for the further dumbing down of the loan process by including ALL costs in the APR calculation. In reality that sounds like a plan that would work, but by lumping in costs that are fixed in the marketplace, such as, mortgage tax in NY, and those that vary by company, for example, credit checks, you create a scene that is ripe for errors.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com

The curse of water damage - Battling Mold Infestations

This article by Jonathan Vatner in the New York Times is worth reproducing in full. Here it is:

TOXIC mold continues to be a problem in New York City. Last year the Department of Housing Preservation and Development issued 14,290 violations for mold in residential buildings.

It’s not just older buildings that can be infested with the greenish-black mold called Stachybotrys chartarum, which, along with other molds, is linked with illness of the respiratory tract; some think it causes immunological and neurological problems, too. Of the roughly 500 mold cases in the city investigated each year by Microecologies, a company that identifies and seeks to resolve indoor environmental problems, one-fourth are in buildings less than five years old, where incorrectly installed plumbing or insulation has caused water damage.

“We’re talking about multimillion-dollar condos,” said Bill Sothern, a certified industrial hygienist at Microecologies. “Brand-new!”

One defense against infestations is mold-resistant drywall, usually installed in places prone to water damage or leaks, like bathrooms and kitchens, or near heating and air-conditioning units. These products — trade names include DensArmor Plus from Georgia-Pacific, Gold Bond XP from National Gypsum and Fiberock from USG — typically include specially formulated paper or fiberglass coatings. They are not much more expensive than traditional drywall, which is paper-faced gypsum board. But using them during construction can save millions in remediation down the line.

To be on the safe side, the developers of one new building, the Laureate, a 76-unit condominium at West 76th Street and Broadway, decided to use mold-resistant drywall even in areas not prone to water damage. The brand they chose was Mold Defense by Lafarge.

“It’s a culmination of industry practice over the last seven or eight years,” said James Davidson, a principal in SLCE Architects, which designed the Laureate, “using mold-resistant Sheetrock not only in the wet areas where you’d expect moisture but also in standard partitions where you don’t expect moisture to be present.”

Though mold-resistant drywall isn’t especially expensive, installing it everywhere in the building added up: The Laureate’s developer, the Stahl Organization, paid a total of more than $150,000 extra.

The building industry may soon adopt mold-resistant drywall as a standard. Last year the Green Codes Task Force, an assemblage of architects, developers and other building experts, released a set of 111 guidelines for making New York’s building codes more environmentally sound, one of which is a proposal to require mold-resistant gypsum board and cement board — even more unfriendly to mold — in areas prone to wetness. Thirteen of those guidelines have been enacted by the City Council; the mold proposal, also known as HT 7, is under consideration.

“This is a very low-cost proposal with substantial health benefits,” said Russell Unger, the executive director of the Urban Green Council and the chairman of the steering committee for the Green Codes Task Force. “Mold is not just unsightly; it can be a serious health hazard.”

The use of mold-resistant drywall alone is not enough to ensure that a home will be mold-free. The exterior needs to be impermeable; all the building materials need to remain dry during the construction process; and condensation should not form inside the walls.

Before closing on any apartment, whether a resale or new construction, potential buyers should ask questions about mold, Mr. Sothern said.

In addition to ascertaining the kind of drywall, buyers should ask what the heating and air-conditioning equipment is insulated with — especially when the building isn’t brand-new. “Fiberglass often gets extraordinarily moldy after about 10 years,” Mr. Sothern said.

He also recommended examining the perimeter of the apartment for wetness. If condensation is forming inside the windows, or if moisture is getting in around windows and doors, that should be a red flag. Also check for warping on the floor at the edges of the unit, and any musty smells.

Another option to consider is paying for a home inspection. Microecologies charges $475 and up for an inspection, including a written report.

“So many mold problems are hidden from plain view,” Mr. Sothern said.

Read the article on-line.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Stephen's Title Agency, LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-227-4724 - Fax 973-556-1628

E-mail Stephenstitle AT comcast.net - www.stephenstitle.com