Foreclosure & the Economy: The Short Sale Class
9/13/11
Sunday, September 18, 2011
Friday, September 16, 2011
While at BB Kings this week I got into a heated discussion about the largest title companies & it got me thinking is bigger always better?
Before we get to that thought, a great resource to learn about title companies & their respective market shares is the American Land Title Association's website - http://www.alta.org/industry/financial.cfm. There you will learn that many of the title companies are just subsidiaries of larger parent companies. For example, during my conversation someone argued that Chicago Title is the largest and therefore the best. Well it turns out that Chicago is only the largest when its included with Fidelity, Commonwealth and Alamo within the Fidelity Family of Companies. Nonetheless, First American Title Insurance Company has 24.6% market share standing alone while Chicago only has 16.9%. This renders First Am the largest. So, the numbers can be skewed to your liking.
Yet, is bigger better? In a way it is. You see in title companies, which are insurance companies size does matter. Except we are not concerned with market share, but instead assets. The reason is the company with the largest assets has the greatest ability to meet its insured's needs. Although this may also be skewed to your liking because assets may be compromised by risk. Therefore, one should really look at a company's Best's Capital Adequacy Ratio (BCAR), which evaluates and qualifies the adequacy of a company's risk-adjusted capital position. To learn more about rating title insurance companies see information about Best's Rating Methodology by clicking here.
Monday, September 12, 2011
While reading a study out of the University of Chicago entitled "Payday Lenders: Heroes or Villains?", I was struck by the following statistical fact - foreclosures rise in communities faced by a natural disaster by 4.5 per 1,000 homes. Now this is obviously a bad thing, people getting foreclosed upon, but its also a fantastic opportunity for real estate investors. If you recall the TV pictures of the ski towns in Vermont and upstate New York following Hurricane Irene, its clear a natural disaster struck these areas very hard.
Now, I wonder would if this statistic for foreclosures after a natural disaster would be even higher if the community affected relied upon seasonal rental income to sustain. Meaning, in a ski town without a ski lodge wouldn't less people rent a ski house, causing even more foreclosures or distressed homeowners than the 4.5 per 1,000.
Regardless, the team at Lieb at Law always lives by the motto "don't dwell on the past but enhance the future". So, speaking of enhancing, all of you real estate investors out there should be focusing on seizing the opportunity of the Hurricane Irene natural disaster. Yes, no one wants a storm, a fire or a flood, but we cannot control these occurrences. Yet, we can control how we respond. I suggest responding with investment in the hardest hit towns. Seize the opportunity. Now go make a fortune.
Tuesday, August 30, 2011
Whenever a Seller does not have a copy of a survey, the Buyer runs into the situation of having to order a new survey. Surveys are costly and sometimes time consuming, especially during certain times of the year. If the premises is located in the Town of Brookhaven an owner of real property or a purchaser in contract to buy real property, may obtain a copy of a survey from the Town of Brookhaven Assessor's Office at no cost. While there is no guarantee that they will have a survey on file, nor that the survey will be guaranteed to a Title Company (required to insure the boundary lines of the premises), nonetheless it is well worth the attempt. A third party can also request a copy of a survey for a fee. The catch is that the fee is paid upfront and not returned should they not have a survey on file. Either way if a survey is on file it will cost the Buyer much less than ordering a new one.
Effective, October 1, 2011, HUD has issued new requirements for borrowers to successfully complete a trial payment plan prior to being approved for a loan modification. To read the requirements embodied in Mortgagee Letter 2011-28, click on the attached link.
Interestingly, the letter indicates an incentive fee for lenders who give the modification after a successful trial plan pursuant to the Letter's rules. Its important for borrowers to understand the requirements put on lenders in order to get those incentives because lenders are going to want the money and therefore mandate compliance with the trial plan rules.
Sunday, August 28, 2011
To Start:
Take a look at your insurance policy before you do anything about your claims. Read the policy, review your deductibles, determine the procedure, but act quickly so that the insurance company can't disclaim coverage for untimely notice. Yet, read your policy and learn your rights. Remember, insurance companies are not excited to pay claims and you need to be a great advocate for your own rights, you may even want to hire a lawyer if you get into a dispute with your insurance company about coverage. If you believe that they should pay based upon what your policy says, don't just take their denial as being correct, fight it. Be clear, each policy is different, so you have to read your policy before you act.
Something Interesting:
It's likely you have a Hurricane Deductible in your policy. New York is one of many States that have Hurricane Deductibles in homeowners' policies. These deductibles are a charge of a percentage of the claim, instead of a flat fee, prior to the policy paying. Some are in the neighborhood of 4% of a claim. So, it can get quite pricey. The States (territories) that have these deductibles are Washington DC, Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Rhode Island, South Carolina, Texas, and Virginia.
The reason it's a good idea to look at your policy is that this deductible may not be triggered by a tropical storm. Each policy is different, but the downgrade in the storm may have saved you thousands of dollars in your deductible. Good luck.
Friday, August 26, 2011
Residential Lead-Based Paint Hazard Reduction Act
In a landlord-friendly decision, the Appellate Division, Second Department (with jurisdiction over Long Island, among other places) just ruled that minor children of tenants cannot sue landlords for injuries resulting from exposure to lead paint under this Act even if they take possession with the tenant at the beginning of the tenancy.
To be clear, we are talking about the law that requires disclosure of known information on lead-based paint and lead-based paint hazards to a purchaser or lessee. A law that real estate agents should be very familiar with.
The Court held that the purpose of the act was to establish disclosure obligations triggered upon the lease or sale of property. The case is Brown v. Maple3, LLC and can be found by clicking here and the applicable law, RLPHRA, is 42 USC 4851. The clear rule is that infants residing with lessors are not within the zone of interest protected by the statute. The statute is about disclosure, not about strict liability for injuries.
Nonetheless, the Court did note that the door is not closed on the minor children and suggested that they instead pursue a claim under common law negligence. This means if you are injured in a residence as a result of lead exposure, your rights may be limited, but that you still do have rights and you should pursue them.
Thursday, August 25, 2011
Buyers: The general rule is that if you have not taken possession or closed the deal, you can cancel the contract because of a mutual impossibility of performance. Nonetheless, you are in a great position because you may also demand performance with a price reduction. The price reduction would be the fair market value of what was lost in the storm as determined by an appraisal (this would likely be litigated as I'm sure the seller's appraisal would differ with yours). Yet, should you wish to cancel the contract, you can get your deposit back and that is the direction you will likely go. Anyway, lets hope the storm changes course and you can close on a fabulous property that's now in contract.
Sellers: You may have to take a price reduction as stated above, but hopefully your homeowners policy covers your loss. Nonetheless, its likely the deal will just be cancelled and you will have to rebuild.
Disclaimer: This advice assumes material damage to the premises and is based upon NY General Obligations Law 5-1311(1)(a)
Monday, August 22, 2011
Recently, there have been developments in technology, notably, smart phone applications which allow persons who bank at large franchises to take snapshots of the front and back of a check in order to immediately send it for deposit. This can be useful-or detrimental-when it is done by a Seller at a real estate closing.
Cell phone applications now make available the option of taking a photograph of the front and back of check for immediate deposit.
Beware of this as the Buyer because Sellers should not be depositing checks without Buyer's awareness or consent, or until such time has passed that it is acceptable to do so.
This can be an extremely efficient way to deposit funds and move forward in a deal in the best case scenario-when everything goes smoothly. In fact, this can help where Seller is going to turn around and purchase a house after selling their former residence.
However, it does not always work out where that is appropriate. Checks should be monitored because there may be situations where they are initially presented (and deposited unbeknownst to the Buyer). If Seller immediately deposits, then the deal goes bad by bickering, which we all know is possible, by the end of the closing Seller now has money they are not entitled to.
Wednesday, August 17, 2011
Just a matter of anecdotal evidence, for whatever that is worth - this firm has seen a drastic rise in the amount of modifications & short sales approved this month.
This confirms our thoughts that workouts come in waves & to keep reapplying even after a denial, until you get closer to what you want.
