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Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel each Friday.

Ask a Real Estate Pro: Mortgage changes to slow home closings

Ask a Real Estate Pro: Mortgage changes to slow home closings
By Gary Singer  Sun Sentinel correspondent

New mortgage disclosure forms will change the way homes are bought and sold
30-day home closings could take 60 days as real estate industry adapts to new rules

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/business/realestate each Friday. To ask him a question, go to SunSentinel.com/askpro

Big changes are planned for how homebuyers finance their mortgages, and that almost certainly means that closings will take longer. In some cases, closings that now speed through in 30 days probably will require at least 60 days.

The changes had been expected to begin in August, but the effective date was pushed back to Oct. 3.

After the housing crash, Congress felt that we needed a better system of mortgage disclosures and procedures so that Americans can better protect themselves and make the best choices when getting home loans.

The Consumer Financial Protection Bureau was created and charged with accomplishing this. The bureau decided that the four existing disclosure forms required under federal law would be changed into two new, more comprehensive documents - a Loan Estimate and a Closing Disclosure. These forms are known as the "TILA RESPA Integrated Disclosure," or more commonly, TRID. In addition, the closing process was unified so that all 50 states use the same forms and procedures.

Who do these new rules apply to?

They apply to residential properties that include a mortgage as part of the transaction - both sales and refinancings. The rules are designed to protect the buyer/borrower, but they will affect all parties to the transaction.

Lenders are bearing the brunt of ensuring compliance with the new rules, making the lender responsible for getting all of the other parties on board. The rules do not apply to commercial transactions or all-cash deals.

What is changing?

Buyers applying for loans will get a Loan Estimate (instead of the current Good Faith Estimate) within three days of applying for the loans.

The new form is designed to highlight key terms to enable borrowers to shop around for the best deals. It's supposed to be user-friendly and almost certainly will be, considering how confusing the current form is.

The Closing Disclosure must be received by the borrower three business days before the closing. If the form is mailed, couriered or emailed, the lender must allow an extra three business days on top of that. This means that the closing can't occur for at least six business days after the lender sends out the completed Closing Disclosure. This is a massive change from the way it is now, when some of the information is still being filled in on the closing day, sometimes even while the parties are sitting at the closing table.

The biggest issue I have with these new forms is that they significantly downplay the importance of getting owner's title insurance policies, which is money well spent. I can't think of any situation in which not getting this very important coverage would be a good idea. And I've seen many instances in which not having title insurance costs a buyer the home.

What do buyers and sellers need to do?

Closing agents - used to finalizing the process at the last minute to accomplish everyone's rush to close - now will need to get the final closing information to the mortgage lender at least 10 days before the closing date so that the lender can complete the Closing Disclosure in time to get it out six days before the scheduled closing. Realistically, to accomplish this, buyers and sellers will need to add three to four weeks to their closing timelines.

To make matters even more confusing, all of the standard purchase contract forms have been recently changed to address the new rules. That's causing real estate professionals to learn the new forms. Be sure your real estate agents and others on your team are aware of the new information and have been trained on how to deal with it. Fortunately, the industry seems ready for this change, and there is plenty of training available for those in the business.
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Real estate Q&A: Is landlord responsible for storm shutters?

Real estate Q&A: Is landlord responsible for storm shutters?

September 3, 2015 12:16pm

 

Aug. 28-- Q: We rent a house, and our landlord told us to put up the shutters in case a hurricane hits. The lease doesn't address this issue, but isn't the landlord responsible? After all, he owns the house.

-Anonymous

A: Unless the matter is agreed to in the lease, neither the landlord nor the tenant is obligated to put up hurricane shutters. But I think it's a good idea for the landlord to do it.

The landlord should be concerned about protecting his investment. It makes no sense to have a tenant who is unfamiliar with the house put up shutters. If the landlord is receiving an insurance discount, and the property is damaged because the shutters were not properly in place, the insurance may not pay out the claim.

Paying a professional installer to put up shutters is one of the costs of being a landlord and should be considered when determining the amount of rent to charge.

With a storm is approaching, the landlord and tenant should work together to ensure everyone gets through the storm safely.

But if your landlord refuses to install shutters, you should consider doing it to protect your own safety-or leave the home during the storm if you have another place to stay. By the way, this is a good reminder to make sure you have adequate renter's insurance.

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Ask a Real Estate Pro: Buying after a short sale? The wait just got longer

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/business/realestate each Friday. To ask him a question, visit SunSentinel.com/askpro

Q: We completed a short sale about two years ago. We have been renting and saving our money to buy a new home after the two-year waiting period imposed by Fannie Mae. When we applied for our new loan, we were told that now we have to wait another two years. We are very upset and feel we were lied to during the short sale. What gives? — Al

 

A: The large majority of lenders follow Fannie Mae guidelines when qualifying potential borrowers for new loans. When you closed on your short sale, you were given valid information that under the right conditions you could get a new loan two years after completing the deal.

Unfortunately, a couple of months ago Fannie Mae changed its guidelines so that there now is a four-year exclusion period before a buyer can qualify for a loan after a short sale. The guidelines do provide for a two-year period under extenuating circumstances, which are a sudden, drastic and prolonged drop in income that left the borrower with no other reasonable option but to default on the mortgage. In reality, it is extremely difficult to get this exception.

The good news is, not all lenders follow the Fannie Mae guidelines. Credit unions and community banks often will look past your credit score and other arbitrary criteria and evaluate your overall situation. They'll take into account factors such as income, savings, job history and whether the short sale was an isolated event or caused by circumstances outside of your control. In all likelihood, you will need to apply at multiple lenders and jump through hoops, but I have seen many borrowers get mortgages this way.

 

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Ask a Real Estate Pro: Landlord shouldn't try to be friends with tenant

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/business/realestate each Friday. To ask him a question, visit SunSentinel.com/askpro

Q: We recently bought a new home and will rent out our existing property. Can you please give some advice to a new landlord? – Julio

 

A: Renting property can be a rewarding business — if you approach it correctly.

When selecting your tenants, be very picky. Do credit and background checks and make sure their employment and financial pictures are stable. It's better to take longer to find a good tenant than to have to evict a lousy one.

Once you have a tenant, don't try to be friends with him or her. This a business relationship. If you go golfing with your tenant every Saturday, how will you feel if the rent payment is past due and you have to post a warning notice on the door? If the payment is late, you must take immediate action. Don't get in the habit of accepting excuses.

A good landlord immediately responds to the tenant's request for repairs and maintenance. Also, save all of your receipts. These expenses can help offset the rent you receive on your taxes.

The landlord-tenant statute is not hard to understand. Familiarize yourself with it. The procedures for enforcing the lease are set forth step by step in the statute. Make sure to have a good lease form that is current and state specific. Entering and exiting leases can be intimidating for beginners, so don't be afraid to seek help from a qualified real estate professional.

The information and materials presented here are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing here is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

 

 

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Ask a real estate pro: So you want to be an investor?

Boaard-certified real estate lawyer Gary M. Singer writes about the housing market at our real estate page each Friday. To ask him a question, click here. 

Q: I just attended a three-day real estate investor training course. There was an offer to attend a mentor training program that included an impressive software package. Is there a way to get the same type of software package without spending a lot of money? – Robert

 

A: Probably not, though this still can be the beginning of a lucrative new career. But remember: There is no shortcut to becoming a successful investor, and a computer program can’t replace the process. As my old mentor always said, “You can’t rush seasoning.”

I work with many investors in my law practice, and the most successful rely on personal skills and market knowledge. You need to properly value properties and the cost of repairs and have the people skills to deal with buyers, sellers, real estate agents, other investors, appraisers, attorneys and lenders.

New investors should get licensed as real estate agents and join the local Realtor board because it opens up great resources.

I am not criticizing the software or the training. You should read every book you can and attend every seminar. But there is no particular training or software I have seen that works nearly as well as study, hard work and experience gained over time. In my opinion, nothing is more important for investors than driving through neighborhoods looking for deals and talking to people.

The information and materials presented here are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing here is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

 

To follow Gary Singer on Twitter, click here.

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Ask a real estate pro: Tenant breaks lease

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: I recently found a tenant for my apartment through a real estate agent. A week after the tenant moved in, he decided against staying and wanted to break the lease. The lease calls for a
...

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: I recently found a tenant for my apartment through a real estate agent. A week after the tenant moved in, he decided against staying and wanted to break the lease. The lease calls for a one-month penalty at termination. When he started the lease, he gave first and last month rent and a security deposit. I had to pay a month’s worth of rent to the real estate agent. Please clarify what money I am entitled to keep. – Martha

 

A: The first thing to do is to check the lease. In most cases, rent is paid in advance, so you should be able to keep the entire first month's rent, even if he lived there only one day.

 

The lease dictates a one-month penalty for early termination, so the tenant forfeits the last month's rent as well. In your next lease, I would increase the penalty to two months of rent  because one is not enough, in my opinion. Most leases allow landlords to accept the termination fee or to seek actual damages in court. Before deciding to go to court, you should carefully consider whether this option is worth the trouble.

 

As for the security deposit, it can't be used as rent. It must be used to cover only damage to the property (unless the tenant and landord agree otherwise). If there is damage, you can deduct that from the security deposit, but you are obligated to give him back the remaining deposit. I doubt you will be able to get the real estate agent to return the commission. But speak to him or her and see if you can get a break when you list the unit again. The agent should be willing to at least do that.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

To follow Gary Singer on Twitter, click here.

 

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Housing market: Broward prices rise

Sun Sentinel 8:07 a.m. EDT, September 22, 2014

Broward County home prices rose in August while sales dropped, but the mixed results aren't cause for concern, real estate agents say.

The countywide median price for existing single-family homes last month was $290,000, up 7 percent from a year earlier, the Greater Fort Lauderdale Realtors

...
Sun Sentinel 8:07 a.m. EDT, September 22, 2014

Broward County home prices rose in August while sales dropped, but the mixed results aren't cause for concern, real estate agents say.

The countywide median price for existing single-family homes last month was $290,000, up 7 percent from a year earlier, the Greater Fort Lauderdale Realtors said Monday. Sales fell 7 percent, to 1,295 from 1,389 in August 2013.

Meanwhile, the median price for existing condos rose 2 percent to $120,000, but sales were down 9 percent.

The housing market has cooled in recent months as investors pull back on purchases and more sellers list their homes.

"You're supposed to have minor ups and downs," said Stephen B. McWilliam, president of Florida State Realty Group in Fort Lauderdale. "This is what a normal market looks like."

 

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Ask a real estate pro" Lightning strikes house

Sentinel Correspondent12:00 a.m. EDT, September 19, 2014

 Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: I am under contract to buy a new home, and the closing is several weeks away. During some nasty weather, the house

...
Sentinel Correspondent12:00 a.m. EDT, September 19, 2014

 Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: I am under contract to buy a new home, and the closing is several weeks away. During some nasty weather, the house was struck by lightning. I am concerned about what this has done to the house. What should I do? — Stu

A: The first step is to consult your contract, looking at the part titled “Risk of Loss” to see what your rights are.

The typical contract will contain a clause that says if the cost of repair is minor, such as less than 1.5 percent of the purchase price, the seller is obligated to fix it, and the closing should take place as scheduled.

If the cost of restoration is more than the 1.5 percent, the buyer can either choose to take the property as-is — along with a credit for the 1.5 percent — or cancel the contract and get the deposit money back.

In your situation, you will want to look at the damage to see if it is more than the small amount allowed in the contract.

If there’s major damage — a hole in the roof or a bedroom burned out — see if the seller will agree to the cancellation without the trouble of getting a repair quote. If the damage seems minor, you still should hire a home inspector and an electrician to make sure there are no hidden issues.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

To follow Gary Singer on Twitter, click here.

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Ask a real estate pro: As-is contract problems

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: We have equity in our home and agreed to sell it using an “as-is” contract. It allows the buyer 15 days to get an inspection and cancel if they're not satisfied with the condition of the pr

...

Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.

Q: We have equity in our home and agreed to sell it using an “as-is” contract. It allows the buyer 15 days to get an inspection and cancel if they're not satisfied with the condition of the property. The inspection found about $3,000 worth of normal wear and tear, but now the buyer is threatening to cancel if we don’t lower the price. What should we do? – Sonia

A: This kind of thing is happening more often now that prices are rising and distressed sales are less common. We're starting to get back to a more traditional housing market, but many sellers are still using as-is contracts that are more appropriate for short sales and bank-owned homes.

In an as-is contract, the buyer is allowed several weeks to inspect a property and cancel the deal if there are problems. Instead, some buyers are demanding a credit for normal wear and tear and are backing out of the sale if they don't get it.

This is an issue for sellers who have set their bottom-line price based on the as-is contract. Unless you are selling a distressed property, I recommend using a contract that allows for a small repair credit and setting your sales price a bit higher to account for this.

This is better than the surprise and frustration of having to choose between lowering your rock-bottom price or having to find a new buyer. In your case, you need to decide if, and how much, you are willing to lower your price to save the deal. And if you can’t come to an agreement and the sale falls apart, make sure to reset your asking price to account for the likelihood that your next buyer will want a repair credit, no matter what contract you use.

The information and materials on this blog are provided for general informational purposes only and are not intended to be legal advice. No attorney-client relationship is formed, nor should any such relationship be implied. Nothing on this blog is intended to substitute for the advice of an attorney, especially an attorney licensed in your jurisdiction.

To follow Gary Singer on Twitter, click here.

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Housing market: Asking prices up

Sun Sentinel3:16 p.m. EDT, September 8, 2014

Asking prices for homes in Palm Beach County rose 14.5 percent during August compared with a year ago – the fourth biggest jump in the nation, according to a new report.

Miami-Dade County and the Birmingham, Ala., metro area tied for the largest increase at 15.6 percent, real estate website

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Sun Sentinel3:16 p.m. EDT, September 8, 2014

Asking prices for homes in Palm Beach County rose 14.5 percent during August compared with a year ago – the fourth biggest jump in the nation, according to a new report.

Miami-Dade County and the Birmingham, Ala., metro area tied for the largest increase at 15.6 percent, real estate website Trulia.com said. Lakeland was third (14.8 percent), while Broward County ranked 24th with a 10.4 percent increase.

“This reflects where sellers and their agents are setting prices,” said Jed Kolko, chief economist for Trulia. “It’s a good leading indicator of sales prices two months later.”

South Florida sale prices have been leveling off in recent months, but the Trulia data suggest that South Florida may see slightly larger price increases in the months ahead, Kolko said.    


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