~Why do success and punctuality go together?

Why do success and punctuality go together?

As a young ambitious TV producer, I once sat on the advisory board of an international television festival. Arriving late for a meeting one evening, the colleague I sat next to commented, "Yes you must be very busy." I was producing a massive internationally co-produced series. But he ran a national network. His comment was a subtle but unmistakable put-down I've never forgotten.

High-achievers are punctual.

Are they so successful because they are also so punctilious -- or does being so make what makes them achieve so much? I don't know but I can't help but be struck by the fact that the most successful people I know share the following habits:

They turn up on times
They reply to emails swiftly
They remember peoples' names, no matter what their status
They are reliable
We tend to think of leadership and excellence as residing in standout qualities: Mathematical genius, aesthetic dazzle. But these smaller traits contain profound messages. At the least, they signal self-discipline and good organization. More deeply, they imply a concern or at least respect for other people. Being punctual means you don't waste other peoples' time -- or think it is more important than your own. Replying swiftly allows others to get on with their work; you aren't their roadblock. Remembering names requires effort and that they do so implies they believe you matter. Being reliable frees their peers and colleagues from worrying about whether they'll deliver on promises.

All of these habits build trust -- and trust hugely reduces the friction and costs of doing business. So these habits are profoundly efficient for both the long and the short term.

Consider the opposite behaviors. Being late, ignoring or delaying emails, forgetting other people and being capricious in honoring promises sends a loud message: I matter more than anyone else. To get away with this attitude requires power -- so the caprice is also a demonstration of status. It also leaves other people feeling or being helpless. No reply to an email means other people can't progress with their work. If you aren't reliable, it means nobody can be quite sure of what is happening around them. You render others powerless while exhibiting your own status. Such wayward behavior in small things can look powerful while being insidiously costly and destructive.

This all seems so self-evident. And yet over the last few months, I've found myself repeatedly in meetings where key people are late, or working with colleagues who are unreliable. They're all senior, successful people and they get away with it. But I wonder if they fully understand or control the very clear messages that they send. I also can't help but wonder just how much further they'll get. 
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By Margaret Heffernan Money Watch January 27, 2014, 11: 27 AM
www.cbsnews.com/news/why-do-success-and-punctuality-go-together/

What You Can Do to Improve Your Credit

Credit scores, along with your overall income and debt, are big factors in determining whether you’ll qualify for a loan and what your loan terms will be. So, keep your credit score high by doing the following:

1. Check for and correct any errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.
2. Pay down credit card bills. If possible, pay off the entire balance every month. Transferring credit card debt from one card to another could lower your score.
3. Don’t charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
5. Don’t order items for your new home on credit — such as appliances and furniture — until after the loan is approved. The amounts will add to your debt.
6. Don’t open new credit card accounts before applying for a mortgage. Too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation.

Falling Foreclosures Pushing Up Home Prices

Daily Real Estate News | Thursday, October 18, 2012

  

As foreclosure backlogs have decreased, so have many of the big discounts on home prices. The slowdown in foreclosures is partially behind the recent rise in home prices, some economists say.
“Deeply discounted existing homes have been subject to strong demand from cash buyers and investors looking to lock into housing’s attractive income returns,” says Paul Diggle, a housing economist at Capital Economics. “The supply of such homes, meanwhile, has been dwindling. That has bid up existing house prices, particularly at the lower end of the price spectrum."
The median price of existing homes nationwide was 9.5 higher in August compared to a year ago, and new home prices were up 17 percent in that same time period.
Distressed properties typically sell for big discounts. For example, in 2007 during a nationwide foreclosure surge, foreclosures tended to sell for about a third of the median price of the home. The housing markets with some of the largest price falls tended to have the highest number of distressed home sales.
Lately, foreclosures have been posting big drops. Last month, new foreclosure filings reached a five-year low, according to RealtyTrac, a real estate research firm that tracks foreclosure housing data.
“There is a shortage of inventory — as crazy as it sounds to say that,” says Daren Blomquist, a RealtyTrac spokesman. “In a lot of market there's less inventory of foreclosed properties than there is demand. You’re hearing about multiple bids for these properties.”

Understanding Foreclosures

 

It is an unfortunate commentary, but when economic activity declines and housing activity decreases, more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.

When prices are rapidly accelerating during a real estate “bonanza”, many people go to any lengths available to get into the market through investments in vacation homes, rental housing and trading up to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. It is possible that neither will occur and borrowers may be faced with large balloon payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.

In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner’s financial situation improves.

Let’s say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the county recorder’s office. A copy of the notice is mailed to the property owner.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before.

After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes on the block. At the sale, buyers must pay the amount of their bid in cash, cashier’s check or other instrument acceptable to the trustee. A lender may “credit bid” up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.

Your local title company will be happy to provide additional information.

 Choices…they define us or they destroy us.

• Give or take
• Love or hate
• Church or watching the NFL
• Soda or Water
• Exercise or snooze bar
• Investing or buying that 60” plasma
• Smile or frown
• Going for a walk or sitting on the couch
• Operating from a schedule or just winging it
• Clean my office and be organized or leave it messy and be unorganized.
• Return all of my calls and emails or blow them off and kid myself I will do it tomorrow
• Going above and beyond or just doing the minimum
• Do a business plan and set goals or hope and wish for success
• Working hard or doing the bare minimum
• Energy giver or energy sucker
• Embrace accountability or run from it.
• Burger or salad
• Embrace change or resist it
• Positive & optimistic attitude or a negative & pessimistic attitude
• Forgive or be mad and hold a grudge
• Dress professionally or dress like a slob
• Do my homework or don’t do my homework
• Practice or don’t practice
• Shoulders back or shoulders slumped
• Laugh or yell
• Hug or fight

The most common difference between those who have an AWESOME life and those who don’t are simply the choices they make every day. It’s usually not their circumstances, the way they were raised, or their education. Most people who are not accomplishing their dreams in life are those that have chosen not to. These people just aren’t willing to do what is necessary to have a life that good.

Think about your life for a moment, what do you want and what does it take to get it? So, why haven’t you been doing what it takes to get it?

Before you start with all of the excuses, ask yourself - if you really had to do it, could you? Let me make it clear how this is a choice - I don’t even like to think these thoughts, but it will help you understand that you can do it, if you want it bad enough. If the person or people you care about the most lives depended upon it (life or death), could you do it? We both know the answer. Of course you could and would. Life is a series of choices - I call them the Y’s in the road. In most cases if you take the easy path - the one most people take - you will experience short term gain and long term pain. On the other hand if you have the courage to take the other path - the one most will not take - you will have some short-term pain, but long-term gain. So, make the right choice and have a life of pure magic!

Start by making the choice every day to FEEL GOOD. Because when you FEEL GOOD you are ATTRACTIVE. When you are ATTRACTIVE, you have AMAZING PRODUCTIVITY. When you have AMAZING PRODUCTIVITY, you have EXTRAORDINARY RESULTS. And when you have EXTRAORDINARY RESULT, you feel even better! It is the circle of success.

By Tom Tognoli
COO, Founder
Intero Real Estate Services

Getting your Deam Home!

In 1750, Samuel Johnson wrote that “to be happy at home is the ultimate result of all ambition.” And there’s truth to this; for most Americans, our homes are our launch pads for being and doing our best in the world, and the places where we live out our most precious, private moments. So, if you follow our most important dreams to their logical conclusions, they almost all boil down to having a happy home, where we and our families can thrive and enjoy happy, secure lives.

Fortunately, dreams do come true - and dream homes can become reality. Here is a short list of musts for developing the vision, strategy, commitment and effort it will take to make your dream home your actual home.

1. Know what a dream home is - and is not. Like anything else in life, you can’t realize your dream home if you don’t know what it is - and isn’t, definitionally. For purposes of this conversation, our definition of a dream home is closely related to our aspirations and our visions in a couple of key ways. Aspirationally, dream homes take some work and effort to achieve - they aren’t usually handed to us on a silver platter.

And our dream homes are related to our holistic visions for our lives, as well. By that I just mean that our dreams of home are less about owning a particular building, and more about creating a vision for our whole life as it will be impacted by our choice of home. We want a home that will allow our children to flourish, that is safely located, that allows us to personalize it and either does or doesn’t require much work, depending on our personal preferences. By the same token, our dream home is also one that doesn’t create problems for our lives or prevent us from doing the things we want and need to do.

If a given home is beautiful, but owning it requires us to work overtime at a job we hate, causes relationship problems, or simply requires too much repair or work for the time and resources we have, then that home is - by definition - not our dream home.

Here are some other concepts of home that are often confused for dream homes, but don’ fit the bill. Your dream home should not be defined by:

• the over-the-top fantasy mansion you saw on TV (if it’s bizarrely unattainable, in other words, it’s a fantasy home - not a dream home)
• some antiquated notion of the biggest, flashiest home with the most amenities
• the most expensive home you can afford
• your mother’s, sister’s or best friend’s dream home.

Understanding what makes for a dream home - and what doesn’t - can help you avoid the common pitfalls of being upset when your dollar doesn’t stretch to get you a home like the one you saw on Million Dollar Listing, overextending yourself, or assuming that the types of homes your friends and relatives think are ideal for you are the same as your dream home. While they might overlap, they don’t always - and trying to fulfill someone else’s idea of what your dream home should be is the fastest way to create a nightmare home buying experience.

2. Get and stay clear on your personal vision. There are various tools you can use to create a clear vision of your dream home, to avoid the above pitfalls. The most important of these is to sit in a still and quiet place and literally start writing down what you want your life to look like after you’re in the home of your dreams.

Don’t start with the technical characteristics of the building: you’ll get there soon enough, and the reality is that your co-buyer’s wants and needs, your budgetary limitations and the inventory available on your local market at the time will all impact the granular details of the property you end up with.

Instead, start with big picture life objectives, like who lives with you; what activities everyone does in the home that may require dedicated nooks, crannies, whole rooms or outbuildings; where and how much you work (at home? 3 towns away? around the clock?); how you get there and home every day; and what you do in your down time - be it hiking, home fixing, entertaining or strolling to the corner cafe.

3. “Be stubborn on the vision and flexible on the details.” Amazon founder Jeff Bezos delivered this one-liner in explaining his philosophy of creative problem-solving. And it applies just as powerfully to the creativity that is essential when hunting for your dream home. Compromise is unavoidable. Whether you’re spending $25,000 or $2.5 million on your next home, you will be required to compromise in order to reconcile your dream with your financials, the dreams of any co-buyers you have and realities of the real estate market, the inventory of available homes and geographic and other realities.

You may want a water view, but your wife wants to walk to the shops - and no home exists with both of those things. Or maybe you want to keep your payment below $2,500 per month, but you also want to buy a move-in ready home in The Best School District Ever. And all of those things are simply not possible with the down payment money you have in hand.

Bottom line: you’ll need to be somewhat flexible on the precise specs of the home you end up in as your ‘dream’ home - and the only way to do this is to ensure that you know what your whole-life vision is. Once you have your vision of life/home document ready,
then you can get granular about the number of bedrooms, bathrooms and square feet you need, as well as location specifics, brushing your absolute must-haves and absolute deal-breakers in the most minimalistic of strokes.

Adopting this Amazon-style ‘flexibility on the details’ empowers your experienced local agent/partner to suggest creative solutions for homes that will allow you to create the happy home life you’re trying to achieve, despite the circumstantial limitations.

In any event, hold onto your vision of life vis-a-vis your home journaling document for later. If you end up in contract on a home and have second thoughts, it’s a powerful document to revisit before you finalize the deal, to make sure the inevitable compromises haven’t completely wiped out all traces of the life you hoped to create in this dream home.

4. Communicate your dream vividly to those who need to know. A frequently expressed dilemma of wanna-be dream home buyers is that their agent is not showing them homes that fit the bill. In my experience, this issue often arises when buyers’ champagne tastes and beer budgets don’t align, and their agent is trying hard to show them the best they can afford, but it still disappoints.

To make sure that you are communicating your vision and dream to your agent with crystal clarity, consider doing some or all of the following:

• Send your agent the Trulia listings for homes that reflect features of your dream home - or the whole enchilada, if you can find it.
• Attend Open Houses and save flyers of homes months, even years, before you start house hunting in earnest, to share what you loved about them with your agent when the time is right.
• Ask your agent to show you at least one home that reflects what they *think* you want in your dream home - regardless of price. You might be stunned and astonished at what your dream home really costs, but the experience can help you manage your own mindset, and expectations, back into the realm of reality.

5. Mind your business. Dreams may seem fluffy and soft, but the dream of a home is one which requires you to click into hard-core numbers mode in order to make things happen. Don’t fall into the trap of fixating on images of wainscoting and tree-lined streets until your money matters have been fully handled. I’m often surprised at how many buyers believe their dream home is just out of their financial reach, but have so much fat that can still be cut from their monthly budgets: money they spend on things they would say are much lower than their home on their priority list.

Sit down and comb through your existing spending patterns with a fine-tooth comb and ask yourself whether your fantasy football habit is truly more or less important than getting closer to affording the home of your dreams. Talk with a financial planner and your mortgage broker about putting an action plan in place to eliminate bills that are impacting your ability to afford and/or qualify for your target type of home. Get clear, in your own household and spending plan, on what you can truly afford to spend on housing every month, versus looking to your mortgage broker to tell you what you can afford.

Making your dream home come true involves some heavy duty bookkeeping and an intense commitment to managing your finances in a way that lines up with your values.

6. Get uncomfortable. Being a grown-up is full of paradoxes, isn’t it? A few of my faves:

• Living an easy life takes a lot of hard work.
• With fashion and food, often less really is more.
• I get younger and younger with every day that passes. (Humor me, please.)

Here’s one more to keep in mind as you pursue your dream home: creating a comfortable home might require you to do some uncomfortable things. Writing - and sticking to - a spending plan, is one. Reading eye-glazing contracts and hundreds of pages of uber-boring HOA disclosures is another. Having frank conversations with your partner, negotiating, managing your emotions around affordability and the like - there are loads of uncomfortable moments that take place in and around the process of buying your home.

These discomforts are temporary. But avoiding these uncomfortable moments can get you into some long-term un-dreamy drama: surprise HOA special assessments, a decade of living in a home you (or your partner) truly despises and years of living paycheck-to-paycheck from having overextended yourself are a few that come to mind.

So, dive on into being uncomfortable for this short period of time, with the knowledge that doing so will set you up for long-term success in your dream home.

7. Know the difference between your vision for “this” dream home, and your long-term vision. The home you buy now might not be your forever home. It’s essential that you feel comfortable with the prospect of staying put for at least 5-7 years before you buy, in most areas. But don’t feel like this home must have every feature you’ll ever want to have in a home. Especially if you’re buying your first home, the reality is that you’ll likely move up several times in your future, as your career, earnings and savings grow over time.

Also, if your ‘dream’ home features list is particularly aggressive and/or your budget is particularly tight for your area, you might have to exercise serious visionary powers to visualize how you can develop the home you can currently afford into your dream home over time. Focus on location, expandability, and these other characteristics of a hidden gem of a home, and find someplace that is livable right now, but has the potential, with your hard work, to become the home of your dreams down the road.

So tell us, have you scored your dream home? If you're still on the hunt, what's on your short list of features that makes a home your family's ideal?
From Turlia

Escrow Functions

The Functions of an Escrow

Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is imperative that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed.

As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. The technical definition of an escrow is a transaction where one party engaged in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. This third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.

Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow.

The escrow must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds.

If the transaction is dependent on arranging new financing, it is the buyer’s or the buyer’s agent’s responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. A real estate agent can help identify appropriate lending institutions.

When all the instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees- such as title insurance premiums, real estate commissions, termite inspection charges- are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.

Payment of funds at the close of escrow should be in the form acceptable to the escrow, since out-of-town and personal checks can cause days of delay in processing the transaction.

The following items represent a typical list of what an escrow holder does and does not do:

THE ESCROW HOLDER:

• serves as the neutral “stakeholder” and the communications link to all parties in the transaction;
• prepares escrow instructions;
• requests a preliminary title search to determine the present condition of title to the property;
• requests a beneficiary’s statement if debt or obligation is to be taken over by the buyer;
• complies with lender’s requirements, specified in the escrow agreement;
• receives purchase funds from the buyer;
• prepares or secures the deed or other documents related to escrow;
• prorates taxes, interest, insurance and rents according to instructions;
• secures releases of all contingencies or other conditions as imposed on any particular escrow;
• records deeds and any other documents as instructed;
• requests issuance of the title insurance policy;
• closes escrow when all the instructions of buyer and seller have been carried out;
• disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;
• prepares final statements for the parties accounting for the disposition of all funds deposited in escrow (these are useful in the preparation of tax returns).

THE ESCROW HOLDER DOES NOT:

• offer legal advice;
• negotiate the transaction;
• offer investment advice.

Your local title company should be happy to provide additional information.

Items You need....

Items You Need When Applying For a Loan

Have These Items Ready When You Apply For a Loan

It used to be that lenders mailed out verifications to employers, banks, mortgage companies, and so on, in order to verify the data supplied by borrowers. Nowadays, the interest is often in speed and getting answers quickly so alternate documentation has become more widely used. Alternate documentation means that underwriting answers can be obtained with information supplied directly from the borrower instead of waiting around for verifications to come back in the mail.

The following is required for most standardized loans as part of alternate documentation processing. Items may differ according to whether your loan is a conforming (Fannie Mae or Freddie Mac), non-conforming (jumbo) loan, government loan, or a portfolio loan.

Verifications are still mailed out, but usually as part of quality control procedures.

These are the things you need to supply to your lender to get a quick approval using alternate documentation

Income Items

• W2 forms for the last two years
• Pay stubs covering a 30 day period
• Federal tax returns (1040s) for the last two years, if:
  • you are self-employed
  • earn more than 25% of your income from commissions or bonuses
  • own rental property
  • or are in a career where you are likely to take non-reimbursed business expenses
• Year-to-Date Profit and Loss Statement (for self employed)
• Corporate or partnership tax returns (if applicable)
• Pension Award letter (for retired individuals)
• Social Security Award letters (for those on Social Security)

Asset Items

• Bank statements for previous two months (sometimes three) on all accounts. All pages.
• Statements for two months on all stocks, mutual funds, bonds, etc.
• Copy of most recent 401K statement (or other retirement assets)
• Explanations for any large deposits and source of those funds
• Copy of HUD1 Settlement Statement on recent sales of homes
• Copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed
• Gift letter (if some of the funds come as a gift from a family member)
• Gifts can also require:
  • Verification of donor’s ability to make the gift (bank statement)
  • Copy of the check used to make the gift
  • Copy of the deposit receipt showing the funds deposited into bank account or escrow

Credit Items

• Landlord’s name, address, and phone number (for verification of rental)
• Explanations for any of the following items that may appear on your credit report:
  • Late payments
  • Credit inquiries in the last 90 days
  • Charge-offs
  • Collections
  • Judgments
  • Liens
• Copy of bankruptcy papers if you have filed bankruptcy within the last seven years

Other

• Copy of purchase agreement (if you have already made an offer)
• To document receipt of child support (if you desire to show it as income)
  • Copy of Divorce Settlement (to show the amount)
  • Copies of twelve months canceled checks to document actual receipt of fund

FHA Loans

• Copy of Social Security Card (or other documentation of social security number)
• Copy of Driver’s license

VA Loans

• Copy of DD214

Refinances

• Copy of Note on existing loan
• Copy of HUD1 Settlement Statement on existing loan
• Name, address, phone number, loan number of existing loan/lender

The Functions of an Escrow

 

Buying or selling a home (or other piece of real property) usually involves the transfer of large sums of money. It is imperative that the transfer of these funds and related documents from one party to another be handled in a neutral, secure and knowledgeable manner. For the protection of buyer, seller and lender, the escrow process was developed.

As a buyer or seller, you want to be certain all conditions of sale have been met before property and money change hands. The technical definition of an escrow is a transaction where one party engaged in the sale, transfer or lease of real or personal property with another person delivers a written instrument, money or other items of value to a neutral third person, called an escrow agent or escrow holder. This third person holds the money or items for disbursement upon the happening of a specified event or the performance of a specified condition.

Simply stated, the escrow holder impartially carries out the written instructions given by the principals. This includes receiving funds and documents necessary to comply with those instructions, completing or obtaining required forms and handling final delivery of all items to the proper parties upon the successful completion of the escrow.

The escrow must be provided with the necessary information to close the transaction. This may include loan documents, tax statements, fire and other insurance policies, title insurance policies, terms of sale and any seller-assisted financing, and requests for payment for various services to be paid out of escrow funds.

If the transaction is dependent on arranging new financing, it is the buyer’s or the buyer’s agent’s responsibility to make the necessary arrangements. Documentation of the new loan agreement must be in the hands of the escrow holder before the transfer of property can take place. A real estate agent can help identify appropriate lending institutions.

When all the instructions in the escrow have been carried out, the closing can take place. At this time, all outstanding funds are collected and fees- such as title insurance premiums, real estate commissions, termite inspection charges- are paid. Title to the property is then transferred under the terms of the escrow instructions and appropriate title insurance is issued.

Payment of funds at the close of escrow should be in the form acceptable to the escrow, since out-of-town and personal checks can cause days of delay in processing the transaction.

The following items represent a typical list of what an escrow holder does and does not do:

THE ESCROW HOLDER:

• serves as the neutral “stakeholder” and the communications link to all parties in the transaction;
• prepares escrow instructions;
• requests a preliminary title search to determine the present condition of title to the property;
• requests a beneficiary’s statement if debt or obligation is to be taken over by the buyer;
• complies with lender’s requirements, specified in the escrow agreement;
• receives purchase funds from the buyer;
• prepares or secures the deed or other documents related to escrow;
• prorates taxes, interest, insurance and rents according to instructions;
• secures releases of all contingencies or other conditions as imposed on any particular escrow;
• records deeds and any other documents as instructed;
• requests issuance of the title insurance policy;
• closes escrow when all the instructions of buyer and seller have been carried out;
• disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;
• prepares final statements for the parties accounting for the disposition of all funds deposited in escrow (these are useful in the preparation of tax returns).

THE ESCROW HOLDER DOES NOT:

• offer legal advice;
• negotiate the transaction;
• offer investment advice.

Your local title company should be happy to provide additional information.

Article by CLTA

Different Markets

Hot, Normal, and Cold Markets

Hot Market

This is an extremely competitive market and is advantageous to the seller. Sometimes, homes will sell as soon as they are listed or even before homes are listed. Typically, during a hot market, multiple offers will be made on each home and more often than not, homes will sell for more than the asking price. It is even more crucial to be prepared and to be ready as a buyer when the market is hot. It can be easy to get caught up in the bid for a home, but if you are prepared (pre-approved, solid in price range, realistic about your needs), it is easier to remain focused on your housing needs and price range.

Normal Market

In a normal market, there is a fairly large number of homes available and an average number of buyers. This market does not necessarily favor the buyer or the seller. A seller may not have as many offers on their home, but he or she may not be desperate to sell either. Again, it is the buyer’s responsibility to be prepared. During a normal market, the chances to negotiate are higher than in a hot market. As a buyer, you can expect to make offers at lower than the asking price and negotiate a price at least somewhat less than what the sellers are asking.

Cold Market

In a cold market, houses may be listed for more than a year and the prices of houses listed may drop considerably. This market is advantageous to the buyer. As a buyer, you have the time to make an offer that works to your best interest. It is not uncommon to low-ball and to find that sellers are accommodating to meet your needs. Keep in mind that even though this market is a great time for buyers, you do not want to lose your dream home by being unrealistic. Your goal is to get your dream home at the best possible price.

WHAT’S A FICO®?

What is a FICO® Score?

FICO® stands for Fair Isaac & Company and is the name for the most well known credit scoring system, used by Experian. The credit bureau’s computer evaluates a complete credit profile and assigns a score, which is used to estimate credit worthiness. Each of the three bureaus (Experian, Trans Union, Equifax) employs its own scoring system, so a given person will usually have 3 separate scores. Someone with a higher score will be viewed as a better risk than someone with a lower score. Typically, scores will range from about 600 to 700 or above, although some cases will be outside this range.

What Kind of Score Do I Need for a Home Loan?

There are as many answers to this question as there are loan programs available. Most lenders will take the average of all 3 scores to evaluate an application. Niche loans, such as Easy Qualifier and low down payment loans will have higher FICO® requirements.

How is My Score Determined?

The FICO® model has 5 main elements:

1. Past payment history (about 35% of score) The fewer the late payments the better. Recent late payments will have a much greater impact than a very old Bankruptcy with perfect credit since.
   Myth - paying off cards with recent late payments will fix things. Payoffs do not affect payment history.
2. Credit use (about 30% of score) Low balances across several cards is better than the same balance concentrated on a few cards used closer to maximums. Too many cards can bring down the score, but closing accounts can often do more harm than good if the entire profile is not considered. BE CAREFUL WHEN CLOSING ACCOUNTS!
3. Length of credit history (15% of score) The longer accounts have been open the better for the score. Opening new accounts and closing seasoned accounts can bring down a score a great deal.
4. Types of credit used (10% of score) Finance company accounts score lower than bank or department store accounts.
5. Inquiries (10% of score) Multiple inquiries can be a risk if several cards are applied for or other accounts are close to maxed out. Multiple mortgage or car inquiries within a 14 day period are counted as one inquiry.

How Can I Raise My Score

Your score can only be changed by the way that item is reported directly to the credit bureaus (Experian, TU, Equifax). Written confirmation from the creditor is required. It is best to make these corrections before you try to purchase a home, because you can never be sure the exact impact a change will have on your score.

What Does This Mean to Me?

You should have your credit reviewed BEFORE you look for a home, and work with a PROFESSIONAL loan officer to make sure your loan is based on the most accurate information.

California foreclosure overhaul signed into law

By Alejandro Lazo

July 11, 2012, 11:08 a.m.

A major overhaul of foreclosure laws in the Golden State has been signed into law by Gov. Jerry Brown.
Last week, California lawmakers passed the legislation that would provide homeowners with some of the nation's strongest protections from foreclosure and aggressive bank practices. For instance, seizing a home while the owner is negotiating to lower mortgage payments will be restricted.
At a boisterous signing ceremony in downtown Los Angeles, Brown said that the measures were an important step for an economy still suffering the fallout of the subprime mortgage crisis and housing bust.
"This is a very important day, to sign a very important bill, to clean up at least part of the mess that has been created by all sorts of people in the mortgage, the banking and servicing business that caused untold suffering to millions of people," Brown said. "People have lost their homes, they have lost their jobs. Families have broken down because of the insensitivity, the greed and the blindness of very powerful people who made millions of dollars personally, and billions of dollars for their respective entities."
The legislation was backed by Atty. Gen. Kamala D. Harris, who earlier this year helped negotiate a national mortgage settlement with the nation’s largest banks. Many of the reforms that were part of that settlement were incorporated into California law with the bill signed into law Wednesday morning.
"California homeowners will take back a system in a way that gives them due process, gives them transparency, gives them dignity through a fair process," Harris said. "This is about saying that we have had a series of unnecessary foreclosures in a state full of responsible homeowners."
When the measures go into effect next year, California will be the first state to prohibit lenders from "dual tracking," the practice of negotiating with clients to modify a mortgage so that payments become more affordable while simultaneously pursuing foreclosure. In such cases, homeowners can wind up being evicted even though they had been working with the bank to modify their loans.
The new laws also ban so-called robo-signing — the improper or faulty processing of foreclosure documents — and would allow state agencies and private citizens to sue financial institutions, under limited conditions, for economic compensation and for additional civil damages of up to $50,000 if lenders willfully, intentionally or recklessly violate the law. No lawsuit could go forward if the bank or servicer first fixes the problem with documentation or procedures, according to the bills.

A good first impression

Making a Good First Impression

If you want buyers to be interested in your home, you need to show it in its best light. A good first impression can influence a buyer both emotionally and visually, thus prompting them to make an offer. In addition, what the buyer first sees is what they think of when they consider the asking price.

A bad first impression can dissuade a potential buyer. Don’t show your property until it’s all fixed up. You do not want to give buyers the chance to use the negative first impression they have as means of negotiation.

Ask around for the opinions others have of your home. Real estate agents who see houses everyday can give solid advice on what needs to be done. Consider what architects or landscape designers have to say. What you need are objective opinions, and it’s sometimes hard to separate the personal and emotional ties you have for the home from the property itself.

Typically, there are some general fix ups that need to be done both outside and on the inside. As a seller, you should consider the following:

• Landscaping - Has the front yard been maintained? Are areas of the house visible to the street in good condition?
• Cleaning or Redoing the driveway - Is your driveway cluttered with toys, tools, trash etc.?
• Painting - Does both the exterior and the interior look like they have been well taken care of?
• Carpeting - Does the carpet have stains? Or does the carpet look old and dirty?

Whre does money come from...

Where Does the Money Come From for Mortgage Loans?

In the olden days, when someone wanted a home loan they walked downtown to the neighborhood bank or savings & loan. If the bank had extra funds lying around and considered you a good credit risk, they would lend you the money from their own funds.

It doesn’t generally work like that anymore. Most of the money for home loans comes from three major institutions:

• Fannie Mae (FNMA - Federal National Mortgage Association)
• Freddie Mac (FHLMC - Federal Home Loan Mortgage Corporation)
• Ginnie Mae (GNMA - Government National Mortgage Association)

This is how it works:

You talk to practically any lender and apply for a loan. They do all the processing and verifications and finally, you own the house with a home loan and regular mortgage payments. You might be making payments to the company who originated your loan, or your loan might have been transferred to another institution. The institution where you mail your payments is called the servicer, but most likely they do not own your loan. They are simply servicing your loan for the institution that does own it.

What happens behind the scenes is that your loan got packaged into a pool with a lot of other loans and sold off to one of the three institutions listed above. The servicer of your loan gets a monthly fee from the investor for servicing your loan. This fee is usually only 3/8ths of a percent or so, but the amount adds up. There are companies that service over a billion dollars of home loans and it is a tidy income.

At the same time, whichever institution packaged your loan into the pool for Fannie Mae, Freddie Mac, or Ginnie Mae, has received additional funds with which to make more loans to other borrowers. This is the cycle that allows institutions to lend you money.

What Freddie Mac, Ginnie Mae, and Fannie Mae may do after they purchase the pools is break them down into smaller increments of $1,000 or so, called mortgage-backed securities. They sell these mortgage-backed securities to individuals or institutions on Wall Street. If you have a 401K or mutual fund, you may even own some. Perhaps you have heard of Ginnie Mae bonds? Those are securities backed by the mortgages on FHA and VA loans.

These bonds are not ownership in your loan specifically, but a piece of ownership in the entire pool of loans, of which your loan is only one among many. By selling the bonds, Ginnie Mae, Freddie Mac, and Fannie Mae obtain new funds to buy new pools so lenders can get more money to lend to new borrowers.

And that is how the cycle works.

So when you make your payment, the servicer gets to keep their tiny part and the majority is passed on to the investor. Then the investor passes on the majority of it to the individual or institutional investor in the mortgage backed securities.

From time to time your loan may be transferred from the company where you have been making your payment to another company. They aren’t selling your loan again, just the right to service your loan.

There are exceptions.

Loans above $333,700 do not conform to Fannie Mae and Freddie Mac guidelines, which is why they are called non-conforming loans, or “jumbo” loans. These loans are packaged into different pools and sold to different investors, not Freddie Mac or Fannie Mae. Then they are securitized and for the most part, sold as mortgage backed securities as well.

This buying and selling of mortgages and mortgage-backed securities is called mortgage banking, and it is the backbone of the mortgage business.

Saving and Down Payments

Your Savings and Down Payment

Your First Step Toward Buying a Home

When preparing to buy a home, the first thing many homebuyers do is look at the real estate ads in newspapers, magazines and listings on the Internet. Some potential buyers read how-to articles like this one. The next thing you should do - before you call on an ad, before you talk to a Realtor, before you shop for interest rates - is look at your savings.

Why?

Because determining how much money you have available for down payment and closing costs affects almost every aspect of buying a home - including how you write your purchase offer, the loan programs you qualify for, and shopping for interest rates.

Mortgage Programs

If you only have enough available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If someone is giving you a gift for all or part of the down payment, your options are also limited. If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify.

Of course, if you have enough for a large down payment, then you have lots of choices.

Your loan choices include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Shopping for Rates

A very important reason you need to have at least some idea of your down payment is for shopping for interest rates. Some loan programs charge a slightly higher interest rate for minimal down payments. Plus, the interest rates for different loan programs are not the same. For example, conventional, VA, and FHA all offer fixed rate loans. However, the rates vary from one program to another.

If you shop lenders by phone, the loan officer will be able to tell you which programs fit and quote your rates accordingly. However, if you are shopping on the Internet, you have to develop some idea of your loan program on your own.

Writing Your Offer

Another reason you need to have a clue about your down payment is because it affects how you write your offer to purchase a home. Not only are you required to put your down payment information in the offer, but also different loan programs have different rules that also affect how you write your offer. This is especially important when dealing with FHA and VA loans.

If you are asking the seller to pay all or part of your closing costs, you have to be certain your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. Some loan programs will allow a seller to pay certain types of costs, but not others.

Finally, your down payment also affects your ability to qualify for a loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. For larger down payments, they will tend to make allowances or exceptions to the rules.

Conclusion

As you can see, the down payment affects every choice you make when you buy a home. Although you should look at ads, familiarize yourself with neighborhoods, learn about prices, and read as much as you can - when you get ready to take action - the first thing you should do is figure out how much money you have available for the purchase.

Sales Price

Setting the Price

The price is the first thing buyers notice about your property. If you set your price too high, then the chance of alienating buyers is higher. You want your house to be taken seriously, and the asking price reflects how serious you are about selling your home.

Several factors will contribute to your final decision. First, you should compare your house to others that are in the market. If you use an agent, he/she will provide you with a CMA (Comparative Market Analysis). The CMA will reflect the following:

• houses in your price range and area that were sold within the last half-year
• asking and selling prices of houses
• current inventory of houses on the market
• features of each house on the market

From the CMA, you will learn the difference between the asking price and selling price for all homes sold, the condition of the market, and other houses comparable to yours.

Also, try to find out what types of houses are selling and see if it applies to your area. Buyers follow trends, and these trends can help you set your price.

Always be realistic. Understand and set your price to reflect the current market situation.

Thinking About Buying a Foreclosure?

With the housing bubble burst and the subprime mortgage crisis, millions of homeowners found themselves unable to make their mortgage payments. Many found themselves owing more on the house than the home was worth. Many just walked away from their homes. As a result of these complicated issues, millions of homes were foreclosed.

While this isn’t the only reason for which homes are foreclosed, it has been a widespread one. With all the foreclosed properties, there has also been extensive interest in buying these properties at a bargain price.

It is true that foreclosed properties can be priced at a significant discount, but they are also a much riskier investment. Before making an offer on a foreclosed property, do your due diligence.

Things you must do before buying a foreclosure:

• Do a title search - make sure that when you purchase a foreclosure that you are the only person who has any ownership claim
• Check for liens - find out if there are any liens against the property because you will be responsible for paying them
• Check for a second mortgage - you don’t want to be surprised by an extra mortgage that you will need to pay
• Know how good of a “bargain” you’re getting - foreclosures are sold “as is” and in many cases you will not be able to do a proper inspection. You may end up paying thousands of dollars repairing the property before it is fit to be lived in.

It is also important to consider that there are different types of foreclosure properties and each type comes with its own advantages and disadvantages. The different types of foreclosure purchases are:

1. Pre-foreclosure
2. Auction
3. Real Estate Owned (REO), also called “bank owned”

Pre-Foreclosure

A pre-foreclosure is when you buy the home directly from the homeowner, before the bank officially forecloses. This type of purchase does not require as much capital as other foreclosures. Also, since you are purchasing straight from the homeowner, you will be able to gather all of the necessary information, such as inspection reports, title information, etc. that may not be available with other foreclosure properties. Once you take over the mortgage, you will be responsible for all future payments as well as any overdue back payments.

Auction

A foreclosure property will usually end up at an auction. Real estate auction practices vary by state but common practice is for the auction to be held on courthouse steps, in front of the foreclosed home, or at the county clerk’s office.

Real estate auctions offer the best chance for a great deal but also hold the greatest risk. Auction properties are sold as is, with no opportunity for potential buyers to perform inspections. When buying a home at auction, the buyer must pay cash, usually a cahiers’ check. It is also possible that there may still be tenants living in the home. In such a case, you would be responsible for the often costly eviction process.

REO

Once a foreclosure has gone to auction and failed to sell, it becomes a Real Estate Owned, or bank owned, property. Most homes do not sell at auction, most fail to even get any bids.

An REO property is the least likely of the foreclosure properties to represent a bargain, but it is also the least risky. The property can be fully inspected, any title issues can be found and dealt with, and the sale can be subject to a mortgage. REO properties also tend to be in better condition than other foreclosure properties.

Another thing to keep in mind when purchasing a foreclosure is that some states have a redemption period that allows the original owner to buy back the property by paying the remaining balance owed. You may be able to have this redemption period waived, so check the state laws on this topic before purchasing.

Still interested in buying a foreclosure property? If so, always do your research before purchasing!

Home Inspection is a GOOD thing!

Insist on a Home Inspection

A professional home inspection protects both you and the buyer. It allows both you and the buyer the opportunity to learn about the property’s defects.

A home inspection usually covers the following:

• Plumbing conditions - if there is leakage or clogging
• Roofing conditions - the extent of deterioration, if there is leakage
• Electrical conditions - if there are inadequate circuits or potential fire hazards
• Structural problems - if there are problems with the underlying foundation of your home

As a seller, the home inspection reports protect you because it establishes the actual condition of the property at the time of sale.

Required Reporting to the I.R.S.

Sellers of real property will have certain information regarding the sale reported to the Internal Revenue Service.

This required reporting is a consequence of the Tax Reform Act of 1986; it is intended to encourage taxpayer compliance and aid in audit and enforcement efforts by the I.R.S.

To help you better understand this subject, the Land Title Association has answered some of the questions most commonly asked about Required Reporting to the I.R.S.

Who is required to report to the I.R.S.?

Sellers of real property, under guidelines established by the I.R.S., are required to have their gross proceeds from the sale reported on a Form 1099S. When a settlement agent is used, the I.R.S. makes this agent responsible for the delivery of the information on the Form 1099S.

The settlement agent generally will be the escrow agent or title company; however, it may be an attorney, real estate broker or other person providing settlement services.

What is an I.R.S. Form 1099S, and what will be reported?

The Form 1099S is the reporting form adopted by the I.R.S. for submitting the information required by law.

The information will be transferred onto magnetic media by the settlement agent who will store the information and make the required report to the I.R.S. The settlement agent is also responsible for keeping a master copy of all transactions reported.

In general, information required by the I.R.S. falls into the following categories:

1. The name, address and taxpayer ID number (social security or tax identification number) of the seller(s)
2. A general description of the property (in most cases an address)
3. The closing date of the transaction
4. The gross proceeds of the transaction (even though gross proceeds do not correspond to taxable income)
5. Any property involved as part of the transaction other than cash or cash equivalent
6. The name, address and taxpayer identification number of the settlement agent.
7. Real estate tax paid in advance that is allocable to the buyer.

On what type of transactions is a Form 1099S required?

Currently, typical homeowner transactions covered include sales and exchanges of 1-4 family residential properties such as houses, townhouses, and condominiums. Also reportable are sales or exchanges of improved or unimproved land, commercial or industrial buildings, condominiums, stock in a cooperative housing corporation and mobile homes (manufactured homes) affixed to real property.

Specifically excluded from reporting are foreclosures and abandonment of real property and financing or refinancing of properties.

What happens if the seller(s) refuses to provide the taxpayer identification number for the Form 1099S?

The settlement agent is required to request the transferor’s taxpayer identification number(s) (TIN(s)) before the time of closing. You may request a TIN on Form W-9 or use an alternative written request. The IRS has included sample wording of an alternative written request in the instructions for preparation of Form 1099S.

Should the seller fail to provide the identification number and certify its correctness, the settlement agent may choose to:

1. Delay the closing of the transactions until the information is furnished, or
2. Complete the transaction and report to the I.R.S. that an attempt was made to obtain the information from the seller.

How is the sale reported when there is more than one seller involved or when multiple sellers do not own equal interests in the property?

Multiple sellers may allocate the gross proceeds among themselves for purposes of reporting. If there is no allocation, an incomplete allocation or conflicting allocations, then the entire gross proceeds will be reported for each seller.

Where can I go for further information on taxation of real property?

The I.R.S. provides free publications that explain the tax aspects of real estate transactions. You may wish to order:

• Publication #523 “Tax Information on Selling Your Home”
• Publication #530 “Tax Information for Home Owners”
• Publication #544 “Sales and Other Dispositions of Assets”
• Publication #551 “Basis of Assets”
  

To place your order, phone toll-free (800) 829-3676.

Mechanic's Lien info

Mechanic’s Liens

The Mechanics’ Lien law provides special protection to contractors, subcontractors, laborers and suppliers who furnish labor or materials to repair, remodel or build your home.

If any of these people are not paid for the services or materials they have provided, your home may be subject to a mechanics’ lien and eventual sale in a legal proceeding to enforce the lien. This result can occur even when the homeowner has made full payment for the work of improvement.

The mechanics’ lien is a right that a state gives to workers and suppliers to record a lien and ensure payment. This lien may be recorded where the property owner has paid the contractor in full and the contractor then fails to pay the subcontractors, suppliers, or laborers. Thus, in the worst case, a homeowner may actually end up paying twice for the same work.

The theory is that the value of the property upon which the labor or materials have been bestowed has been increased by virtue of these efforts and the homeowner who has reaped this benefit is required in return to act as the ultimate guarantor of full payment to the persons responsible for this increase in value. In practice, a homeowner faced with a valid mechanics’ lien may be compelled to pay the lien claimant and then pursue conventional legal remedies against the contractor or subcontractor who initially failed to pay the lien claimant but who himself was paid by the homeowner. Another justification for this result relates to the relative financial strengths of the parties to a work of improvement. The law views the property owner as being in a better situation to absorb the financial setback occasioned by having to pay the amount of a valid mechanics’ lien, as opposed to a laborer or material man who is viewed as being less able to absorb the financial burdens occasioned by not being paid for services or materials provided in connection with a work of improvement.

The best protection against these claims is for the homeowner to employ reputable firms with sufficient experience and capital and/or require completion and payment bonding of the construction work. The issuance of checks payable jointly to the contractor, material men and suppliers is another protective measure, as is the careful disbursement of funds in phases based upon the percentage of completion of the project at a given point in the construction process. The protection offered by mechanics’ lien releases can also be helpful.

Even if a mechanics’ lien is recorded against your property you may be able to resolve the problem without further payment to the lien claimant. This possibility exists where the proper procedure for establishing the lien was not followed. While it is true that persons who have provided labor, services, or materials to a job site may record mechanics’ liens, each is required to strictly adhere to a well-established procedure in order to create a valid mechanics’ lien.

Needless to say, this is one area of the law that is very complex, thus it may be worthwhile to consult an attorney if you become aware that a mechanics’ lien has been recorded against your property. In the event you discover that a lien has been recorded but no effort has been made to enforce the lien, a title company may decide to ignore the lien. However, be prepared to be presented with a positive plan to eliminate the title problems created by this type of lien. This may be accomplished by means of a recorded mechanics’ lien release from the person who created the lien, or other measures acceptable to the title company.

As in all areas of the real estate field, the best advice is to investigate the quality, integrity, and business reputation of the firm with whom you are dealing. Once you are satisfied you are dealing with a reputable company and before you begin your construction project, discuss your concerns about possible mechanics’ lien problems and work out, in advance, a method of ensuring that they will not occur.