National Association of Realtors Government Affairs is interviewed by Realtor Magazine about the New GFE. The video is titled Making Sense of the the New GFE and HUD1. There may be confusion about the new form but NAR provides resources at www.REALTOR.org/government_affairs/respa. If REALTORS have questions, they can email respa@realtor.org.
The good faith estimate was designed to disclose all costs and simplify the process and help consumers shop for charges. This is an attempt to more easily track changes from the GFE from the lender to the HUD-1at the time of closing. Good communication is encouraged between the closing agent, REALTOR, and lender. Watch the GOOD FAITH ESTIMATE/HUD1 VIDEO.
Like any government form, you may need a class to fill out this counter intuitive paperwork. Note he talks about the buckets and tolerances A. Zero Tolerance B. 10% Tolerance C. No Tolerance.
Bottom line, if lenders’ costs are above tolerances, there is a 30 day cure law. Lender issues check back to borrower. My question, can lender walk from deal with no penalty and leave the borrower at the closing table with NO money? This question was emailed. Stay tuned for response.
The Colbert Report has a video that provides some sarcastic humor on the financial tsunami. Basically if you promise to pay your mortgage, you give your word. To honor your word, do what it takes to pay the banks, including selling body parts. Sometime you just need to take a break from the madness, watch the video, and let me know what you think?
Tom Richardson, general counsel, of Liberty Title capsulated the points and process for the government mandated madness at the Ann Arbor City Club. I swear regulators don’t talk to the grunts that do the jobs. Whatever happened to leadership by walking around?
Anyway there are some intricacies and maybe contract language changes that need to be in effect for the sales agreement with regard to closing costs credit.
Courtesy of Andy Chapelle of Crains: The big news: Liberty Title has developed a new online tool to help mortgage lenders make the accurate fee disclosures mandated by new federal regulations requiring good faith estimates of closing costs on real estate transactions.
Tom Richardson, general counsel and CEO at Liberty Title, says his company’s software is the first of its kind in Michigan.
Richardson said the new HUD rules and mandate for good faith estimates are a major revision to the federal Real Estate Settlement Procedures Act originally passed by Congress in 1974.
The act was created to prevent companies involved in buying and selling of real estate — lenders, realtors, construction companies and title insurance companies — from providing undisclosed kickbacks to each other.
Changes in the law will have a huge impact on the residential real estate market, Richardson said.
“They will definitely change how clients interact with their lenders and how the whole closing process is organized. We are pretty proud of our new application and are going to do presentations in Florida later this week and Atlanta later this month to try and sell it around the country,” he added.
“We have gotten rave reviews from our lender clients and already have 47 lenders signed up on our second day of our release,” he said.
“I will be showing the app to the Title Executives Council in Atlanta at the end of the month. This is a subgroup of our national trade group comprised of the top 55 of the title agents by revenue in the country. We think we can customize the software for other users for $3,000 to $5,000, now that we have created the basic architecture,” Richardson said.
“GFE QuickQuote will give lender’s the accurate information they need to quote title and closing charges, transfer taxes and recording fees to prospective borrowers,” said Michele Richardson, president of Liberty Title.
“Our guaranteed quotes, available in seconds, will give lenders the ability to quickly complete good faith estimates,” she said in a press release.
According to the press release, the new online system can be accessed by lenders through the company’s Web site at www.Libertytitle.com.
The software provides quotes of the lender’s title services, the owner’s title premiums, transfer taxes and recording charges on all types of residential mortgage transactions.
The system also gives lenders tax information for calculating escrow deposits required by the new regulations and assurances that they are making the compliance efforts required by the new federal regulations.
“The system will help them avoid costly refunds arising from inaccurate disclosures on good faith estimates,” Tom Richardson wrote.
And the custom software for the new system was developed locally by Ann Arbor-based Medhub Inc.
“GFE QuickQuote is the type of unique business software that is our specialty” said Peter Orr, CEO of Medhub. “We see great potential for licensing this software in other states.”
“MedHub did a great job of getting the coding done on a rush basis over the Christmas holiday when it became apparent that HUD would stick with its Jan. 1 implementation date even though the industry still had a million questions,” Tom Richardson said.
“We worked on this project for about five months after HUD released their first set of FAQ’s to the public on the new regulations. The idea to create the app came as I was chatting with some lender clients who expressed a great deal of concern about their need to quickly get this information in a guaranteed format, 24/7,” he said.
He said Liberty Title has always been a market leader in Ann Arbor in adopting new technology to the closing process and coming up with the application was a natural.
Founded in 1974, Liberty Title is one of the largest independent title agencies in Michigan. The company has offices in Brighton, Canton, Chelsea, Farmington Hills, Jackson and Rochester Hills.
Andy Chapelle shared the above: share your Ann Arbor area business news tips by e-mailing them to him at achapelle@crain.com
12 Extra Costs to be Aware of Before Buying an Ann Arbor Area Home
“The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home,” Diane Ratkovich, BUYER REPRESENTATIVE.
Whether you’re looking to buy your first home, or trading up to a larger one, there are many costs – on top of the purchase price – that you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an unwanted financial nightmare on closing day if you’re not informed and prepared.
Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every case, however it’s better to know about them ahead of time so you can budget properly.
Remember, buying a home is a major milestone. Whether it’s your first, second or tenth home, there are many important details to address, during the process. The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home.
Read through the following checklist to make sure you’re budgeting properly for your next move. I have an Ann Arbor Home Buyer ebook available here. Reminder to come to our next monthly Ann Arbor Home Buyer Roundtable – Jan 13th 2010 5:30 pm 355 S Zeeb Rd Ann Arbor, MI 48103. MUST confirm with Diane 734-845-6542
1. Appraisal Fee
Your lending institution may request an appraisal of the property for which would be your responsibility. Appraisals can vary in price from approximately $175 -$ 325. 2. Property Taxes
Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that taxes were paid. 3. Survey Fee
When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property or mortgage survey. The cost for this survey can vary between $100- $2,000. 4. Property Insurance
Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan. Talk to our friend Cindy Strang at State Farm. 5. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee. 6. Legal Fees
Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer. 7. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment. 8. Mortgage Brokers Fee
A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost. Ask for a good faith estimate, now required by lenders within 3 days of application. I suggest a GFE on the phone consultation before meeting any lender. 9. Moving Costs
The cost for a professional mover can cost you in the range of:
• $50-$100/hour for a van and 3 movers, and
• 10-20% higher during peak demand seasons. 10. Maintenance Fees
Condos charge monthly fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. Costs will vary depending on the building. Ask for the budget, reserve amounts, and minutes. 11. Water Quality and Septic Certification
If the home you purchased is serviced by a well or septic, you must comply with Health Department regulations and here you need to have your water and septic checked by APPROVED local Ann Arbor experts. Depending upon where you live, determines whether or not a fee is charged, to certify the quantity and quality of the water. In Washtenaw County it runs about $400. You can enter the property address to collect Ann Arbor Real Estate: Washtenaw County Health Dept. info on line. 12. Local Improvements
If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars. Check to see if future assessments are on the horizon, within your township.
If you have uncovered or know about any other hidden gems let us know. We can update the list.
“The real estate industry has seen tremendous change and evolution over the past decade,” said NAR President Vicki Cox Golder. “As the first, best source for real estate information, Realtors® have not only anticipated and adapted to the evolving needs of their clients and customers, but also have influenced industry trends and innovations that will carry us into the future.”
Do you know where buyers come from? Look at the National Associationa of REALTORS® data which corelates to our local Ann Arbor Real Estate market practice. Over 50 percent of our closed Ann Arbor Real Estate buyer sales came as a result of buyers using eht web in 2009.
1999: 37% of buyers searched for a home online. 2009: 90% of buyers searched for a home online.
1999: median home value is $137,600. 2009: median home value is $172,600 (but not that some reports reflect that when accounting for inflation, the value hasn’t changed at all this decade).
1999: 82% of buyers purchased detached, single family homes. 2009: 78% of buyers purchased detached, single family homes.
1999: 46% of buyers choose suburban neighborhoods. 2009: 54% of buyers choose suburban neighborhoods.
1999: 68% of buyers were married couples. 2009: 60% of buyers are married couples.
1999 and 2009: the median age for buyers was 39.
1999 and 2009: “neighborhood quality, affordability, and convenience to work and school have consistently been top priorities.”
I trust you and your family had a fantastic Christmas and are looking forward to a bright and exciting new year. Our family had a great Christmas and I think we’ve eaten enough cookies, chocolate, pecan pie, eggnog, and anything else brought to us to keep us hyped up for at least the first Quarter of 2010! Thank you to the many of you who shared goodies with our office. The sweets were well loved by EVERYONE and has already brought about the quiet mumbling of New Year resolution diets. It’s always funny how those work together so well!
I’m sure you’ve read the many national reports lately regarding our improving real estate market. I have had several wonderful opportunities to come share the ann arbor real estate market news with local groups. I plan to continue to do so into the New Year. We will post the Ann Arbor Area real estate market stats from our MLS system and the reporters buzz on those stats.
I’m here at the office this morning with many of our team members who are busy showing property and also working with sellers to get their homes on the market. With the expiration of the home buyer tax credits coming up in April, we are working very hard to find more homes for buyers to choose from. There are still great Ann Arbor foreclosures. It’s going to be extremely busy in February, March, & April.
Here’s to wishing you a very happy, safe, and prosperous 2010 in our Ann Arbor Area!
Ann Arbor First Time Home Buyers can now receive the Keller Williams easy to understand Ebook that explains how to get the tax credit. If there is any further question about this, you can contact the Ann arbor Real Estate Experts or attend the Ann Arbor Area Home Buyer Roundtable January 13th at 5:30 pm at 355 S. Zeeb at United Bank and Trust. You need to confirm attendance – banks have security issues after hours so be sure to call Diane 734-845-6542 so we know you are coming. There will be an accountant, Julie Lepper, on hand to answer any questions. We have posted an Washtenaw Home Buyer Tax Credit Table and Video for explanations.
Earlier this year, KW Research conducted a study of first time-buyers and here’s a few of the findings:
1. The median age was 28, significantly down from where it was four years ago at 32.
2. Location or Neighborhood was the No. 1 “must-have” for 36% of buyers.
3. 25% saw 5 or less homes before writing an offer, the average buyer saw 10 homes.
4. 2 out of 5 first-time buyers purchased a distressed property.
5. 2 out of 3 sellers paid at least part of the buyer’s closing costs.
6. 1 in 4 had help from their family for the down payment.
If you’re interested in learning more about the new tax credit or about homes in your area, speak with our team soon and feel free to come to our Home Buyer Roundtable Jan 13th with EA tax accountant on hand 734-845-6542.
For highlighted information on the tax credit; talk to us or watch the home buyer credit video below.
The $6,500 home buyer tax credit applies only to people who have previously owned AND LIVED in their homes for at least 5 consecutive years out of 8 and are planning to purchase a new home by or before April 30, 2010. For those who previously owned a home and purchased another one this year, the tax credit will not apply. It starts when the bill is signed, and it is not retroactive. The important thing is that your contract must be signed by April 30, 2010; you need to close on the transaction by June 30, 2010.So if you closed on a home prior to Nov 6th, sorry, you’re not getting anything from the government except the standard IRS refund based on your mortgage payments and property taxes.
Most people are likely to claim the $8,000 or $6,500 dollar tax credit in their 2009 tax returns. But, an immediate refund is available to those who amend their 2008 tax returns. This time around, in order to avoid fraudulent refunds, the IRS will require those claiming the tax credit to attach proof of their new home purchase. Also, all purchasers must prove that they are over 18 years of age. This is great news for our Ann Arbor Real Estate.
The new homebuyers tax credit also expands the income limits for buyers. The adjusted gross income limit for single taxpayers to receive full benefits has risen to $125,000 and to $225,000 for joint income tax payers.
The estimated cost of the extended tax credit bill is likely to be around $11 billion. However, according to the National Association of Realtors (see PDF comparison table), the tax credit has already added more than $22 billion to the nation’s economy and will result in more than 2 million home sales.
The tax credit applies to residences priced up $800,000. The majority of homes sold during the initial tax credit program were priced at under $300,000. Only 20% were priced between $300,000 and $400,000. See home buyer tax credit video.
Since its inception in 2008, about 1.4 million people have filed for the home buyer tax credit. However, despite whatever economic stimulation may have resulted, legislators have indicated that this is likely to be the last time the tax credit will be extended.
There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
· The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence – you could live in one unit and rent out the others
· If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)
· The credit applies even if you have co-signers on your mortgage loan
Here are some frequently asked questions on the changes to the Homebuyer Tax Credit
Question: Existing homeowner credit: Must the new house cost more than the old house?
Answer: No. Thus, for example, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.
Question: I am an existing homeowner. On October 25, 2009, I signed a contract to purchase a new home. I have lived in my current home for more than 5 consecutive years and am within the new income limits. I will go to settlement on November 20. If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?
Answer: Yes. The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed). There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.
Question: I am a first time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009. I will be covered, however, by the new income limits. If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?
Answer: Yes. The new income limitations go into effect as soon as the President has signed the bill. The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date. So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you’re within the phase-out range).
Question: I am an eligible existing homeowner. I have a fair amount of equity in my home. I
have found a home with a nonnegotiable
price of $825,000. Will I be able to use any
of the $6500 tax credit?
Answer: No. The $800,000 cap on the cost of the purchased home is firm at $800,000. Any amount
above $800,000 makes the home ineligible for any portion of the credit. The $800,000 is an
absolute ceiling.
Question: I owned my home for 10 years, but sold it two years ago year and have been renting
since. If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the
other eligibility tests?
Answer: Yes. Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit. For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and
occupied it as his principal residence for 5 consecutive years out of the last 8 years. The
keyword here is “consecutive.” As long as he lived in that house for 5 years straight what he
did since 3 years doesn’t impact eligibility.
Question: I am an eligible first time
homebuyer. I entered into a contract to purchase on November 1, 2009. Do I have to go to closing before December 1? How does the extension date affect me?
Answer: You do not have to close before December 1. Now it is as if the Nov 30 date had never existed. Therefore, so long as the contract settles on or before June 30, 2010, the purchaser will be eligible for the credit.
Home Buyer Tax Credit Extended and Expanded
Current
New
Effective Date
·January 1, 2009
·December 1, 2009
Deadline
·Close on or before
November 30, 2009
·Contract signed before May 1, 2010, must close before July 1, 2010
·Members of the uniformed services, foreign services, and intelligence employees who served an extended service of 90 days will have until April 30, 2011 and June 30, 2011.
Amount
·First-Timers: maximum of $8,000 or 10% of sales price
·Prior Owners: $0
·First-Timers: Unchanged
·Prior Owners: $6,500 if lived in prior home for at least 5 years of past 8 years
Income Limit
·Individual: $75,000
·Couple: $150,000
·Individual: $125,000
·Couple: $225,000
Other Restrictions
·Home must be primary residence for at least 3 years. If home is sold or buyer moves before 3 years, must re-pay full amount of credit.
·Buyer must be at least 18 years old and not classified as a dependent for tax purposes
·Home must cost less than $800,000
·New Home must be primary residence for at least 3 years following purchase. If home is sold or buyer moves, before 3 years, must re-pay full amount of credit. Exception for military, foreign services, or intelligence with extended 90 days service overseas.
How to claim
·If purchased in 2009, by amending 2009 tax return or claiming on 2010 tax return
·If purchased in 2010, by amending 2010 tax return or claiming on 2011 tax return
Listen to this post 
promise to pay your 
mandated madness at the 
NAR President Vicki Cox Golder. “As the first, best source for real estate information, Realtors® have not only anticipated and adapted to the evolving needs of their clients and customers, but also have influenced industry trends and innovations that will carry us into the future.”
