Friday, April 29, 2011

6 real estate headlines: 29-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

A new template for smart growth
Washington Post
: Shifting demographics, along with increasing consumer interest in a more-urban existence, are redefining the real estate market.
Projects shelved spring back to life
The New York Times
: Factors contributing to the building trend include higher rents, aging office stock and a possible decline in labor costs.
Weighing whether to buy a vacation home
Wall Street Journal
: With an increasing range of options�from managed resorts in the Maldives to a self-owned bungalow in Bali�deciding what type of vacation home to own, and what investment risks to take, is becoming a more complicated process.
Homeownership drops
Housing Wire
: While the homeownership rate across the country continues downward after the housing crash, a recent survey from Pew Research showed 81% of adults still believe buying a home is the best long-term investment a person can make.
How history killed the suburb
The Atlantic: Projected growth in housing demand is going to come largely from young people who are much more comfortable with urban lifestyles and from retiring baby boomers who no longer need large amounts of house and yard space.
6 tips to help you avoid real estate law suits
Inman News
: Even if you have adequate errors and omissions insurance coverage, being a defendant in a lawsuit can have a huge negative impact on both you and your business.

Thursday, April 28, 2011

Transfer taxes, real property taxes... Explained

"In this world nothing can be said to be certain, except death and taxes," Ben Franklin once famously said. Yet when it comes to taxes on real property � especially for first-time homebuyers � we find much uncertainty and confusion exists.

Homebuyers should expect to pay two main types of taxes on their homes, 1) transfer taxes are non-recurring and paid once at settlement and 2) real property taxes are recurring and paid semi-annually (when you pay depends on where you live).

Transfer Taxes

Aside from the down payment, transfer taxes are often the single largest expense a homebuyer will pay at settlement. Transfer taxes are also known as recordation taxes, stamp taxes or grantee taxes but are all lumped together on the HUD-1 settlement statement and identified, collectively, as "Transfer Tax."

For example in Montgomery County, Maryland, a homebuyer will customarily pay one-half of the total county transfer tax, state transfer tax and recordation tax. The total of these three taxes will be collected as a single line item on the HUD-1 and called "Transfer Tax."

Even more confusing in the District of Columbia and Virginia, the law requires homebuyers to pay the "Recordation Tax," yet federal regulation requires those recordation taxes to be lumped together and identified on the HUD-1 as "Transfer Tax."

For the purpose of this discussion, the term "Transfer Tax" will include any and all one-time, non-recurring, taxes customarily paid by the homebuyer at the time of closing.

Transfer taxes vary depending on where the property is located, which may lead some homebuyers to think they are being penalized if purchasing a home in a city or county with a higher transfer tax rate, such as the District of Columbia.

While it's true that transfer taxes for DC properties are significantly higher than in Maryland or Virginia, the overall amount a homeowner will pay in taxes evens out over time thanks to property tax rates.

Property Taxes

Homeowners are typically expected to pay their property tax bill in two installments spread over the year. (For a summary of real estate tax rates by jurisdiction, including when property tax payments are due, see the homebuyer tax section of our website.)

As mentioned above, the District of Columbia may have one of the region's highest transfer tax rates, but it also boasts the region's lowest property tax rate at just $0.85 per $100 of assessed value. In Bethesda, Maryland the property tax rate is $1.027 per $100 of assessed value, while homeowners in Arlington County, VA pay $0.958 per $100 of assessed value.

Tax Comparison

Let's see how the taxes shake out for a homeowner in Washington, DC versus Bethesda, MD versus Arlington, VA over the course of 10 years, assuming tax rates remain unchanged. Remember: "Transfer Taxes" include ALL state recordation taxes and state/county transfer taxes as customarily apportioned, by jurisdiction, between the homebuyer and seller.

This figure also assumes that the purchase 1) is an owner-occupied residential purchase and, 2) that the homebuyer is a first-time homebuyer. Let's use $500,000 as our purchase price with 20 percent down:

Total taxes paid (estimate)
$500,000 purchase price

JurisdictionTransfer taxesProperty taxes
District of

As you can see, the total amount of transfer tax plus property taxes paid over 10 years is far less in the District of Columbia compared to Maryland and Virginia.

This is partly because of the lower annual tax rate of just $0.85 per $100 of assessed value, and largely due to the Homestead Deduction, which homeowners qualify for so long as the property is their principal residence. Individuals who own multi-unit dwellings with five or less units also qualify for the deduction so long as they occupy one of the units.

Now, let's try the same thing, only this time we'll use $300,000 and $700,000 price points:

Total taxes paid (estimate)
$300,000 purchase price

Transfer taxes
Property taxesTotal
District of

Total taxes paid (estimate)
$700,000 purchase price

Transfer taxes
Property taxes
District of
$4,999.58 $67,060.00$72,059.58

First-time Homebuyers

Homebuyers who have not owned property in Maryland and the District of Columbia may be exempt from paying their portion of transfer and recordation taxes. Unfortunately for Virginia homebuyers, no tax incentive exists.

To qualify for the transfer tax exemption in Maryland, all buyers must be first-time homebuyers. So, for example, if a wife owned a condo prior to marriage and now wants to purchase a house with her husband who is a first-time homebuyer, the exemption would not apply.

Furthermore, if you are purchasing as a "first-time homebuyer," and you intend to take title in the name of your revocable trust, or another type of entity, you will not qualify for the tax exemption in Maryland.

In the District of Columbia, the program is known as DC Tax Abatement, and, for a purchase price of $332,000 or less, it provides an exemption from the DC 1.1% Recordation Tax and an allowable credit from your seller(s) of 1.1% equal to the DC Transfer Tax. This is a 2.2% swing in favor of the homebuyer!

Additionally, the DC Tax Abatement program excuses first-time homebuyers from having to pay real property tax on their property for five years beginning October 1 following the date of closing. To qualify,� first-time homebuyers must 1) prove they live in DC, 2) must not have owned a property in the District for one year prior to the closing date, 3) meet the income requirement and 4) meet the purchase price requirement.

In sum, homebuyers can expect to pay two kinds of taxes on their property: transfer taxes and property taxes. Even though transfer taxes may be higher from one jurisdiction to the next, it doesn't necessarily mean a homebuyer is guaranteed to pay more taxes over the course of his/her ownership. First-time homebuyers may be eligible for tax exemptions.

For more information on taxes paid at settlement or during the course of homeownership, please contact the team at Federal Title.

6 real estate headlines: 28-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

The Donald's real estate record
Wall Street Journal
: Though he's flirting with a presidential run, Donald Trump is a developer first. (As well a reality-show star, author, New York icon and hairstyle inspiration to millions.)
Prince William and Kate's starter home valued at over $76 million
Curbed DC
: Clarence House, where Middleton and Prince William will live once married, is valued at more than $76.68M and worth 343 times the average newlywed starter home ($223,282) in England.
Region's home price recovery tops U.S. in February
Washington Examiner
: Northern Virginia and the District are leading the rise in prices locally while the Maryland suburbs lag.
Home prices drop in 19 U.S. cities
Washington Post
: But economists and real estate agents are noticing what they call a key first step for any housing recovery: a drop in the glut of homes for sale in markets hit hardest by foreclosures.
Search to Web to save on title insurance The one-time cost is usually paid at closing. Most buyers use the insurer their lender or lawyer recommends, though a 1974 federal law gives purchasers the right to choose.
Affordable rental housing scarce
Washington Post
: Analysts say they expect rents to keep climbing as developers try to ramp up new projects and catch up with demand.

Wednesday, April 27, 2011

House tries to speed up short sales

Short Sales. These two words strike fear in buyers, agents and title companies. Whenever we receive a contract for a short sale, there is an immediate push to get out the seller HUD-1 to the short sale lender, ASAP!

We get calls from everybody involved to drop everything and get that short sale HUD-1 out for review immediately. We're told that any delay by us will delay the settlement.

The reality is that after we send out the short sale HUD-1, the short sale lender doesn't even bother to review it and approve it for months. I've had plenty of frantic calls from listing agents insisting that the short sale HUD-1 needs to be sent out by the end of the day, only to not get an approval (and thus a closing) for six months. In some cases, the response has taken even longer.

Apparently Reps. Tom Rooney (R-Fla.) and Robert Andrews (D-NJ) have heard about these issues as well. They recently introduced a bill in the House of Representatives that would require mortgage servicers to respond within 45 days of receiving a short sale request.

As might be expected, the National Association of Realtors immediately backed the bill. The hope is that the bill will assist homeowners who are unable to avoid foreclosure, since the lengthy delays often correspond with the seller's inability to make timely monthly payments.

Even if the bill is passed, it remains to be seen if it is practical. Often approvals are needed from multiple entities, and obtaining approvals from all the parties in 45 days may be difficult. Also, the bill requires that the servicer must send notification to the borrower within the deadline whether or not the request is approved, changed or if additional information is needed.

So this does leave a servicer the opportunity to ask for additional information, thereby extending the deadline.

Despite this, passage of the bill could be a significant step in improving the short sale process, and saving all of us in the real estate industry some stress when it comes to a short sale closing.

6 real estate headlines: 27-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Residential development heats up as demand swells
Washington Examiner
: Condominium sales increased by 44 percent last year in the District, compared with a 14 percent increase regionally.
Lenders, appraisers catching up with green homes
: Many who improve their homes with energy-efficient products do so with high hopes of return, only to find that their appraisals are disappointingly low. The reason is inadequate appraiser training.
Buyer's market? Stressed sellers say not so fast
Wall Street Journal
: A nearly five-year slide of home prices has left many sellers unable or unwilling to lower their prices.
Mortgage denied: Sometimes for no good reason
CNN Money
: Getting a mortgage just keeps getting tougher, and many homebuyers are getting rejected for loans they could easily afford. rolls out iPad app
Inman News
: Agents need to make sure the information they're putting into their multiple listing service is as accurate, up-to-date, and detailed as possible,
Home loan applications rise
: The index that measures home purchasing activity was up 10 percent to the highest level in more than four months. That jump was driven largely by a 17.6 percent increase in applications for so-called government loans.

Tuesday, April 26, 2011

Pending settlement reached in JPMorgan Chase class-action military mortgage lawsuit

Earlier this year, JPMorgan Chase admitted to improperly overcharging thousands of military service members on their mortgages and foreclosing on their homes. As the result of a class-action lawsuit filed in a federal court in Beaufort, South Carolina, JPMorgan has agreed to pay $56 million to settle those claims.

The pending settlement includes the following terms:
  • A total of $27 million will be paid to approximately 6,000 active-duty service members who were overcharged on their mortgages, and will also be used to lower interest rates on their mortgages and to return homes that were improperly foreclosed on.
  • Approximately $6 million in payments have already been made to service members who were overcharged on their mortgages.
  • Approximately $6.4 million will be paid to service members who may have undergone 'wrongful foreclosure practices.'
  • Another $8 million will be paid in legal fees to the service members' attorneys
  • JPMorgan will be required to reduce interest rates on all deployed service members' mortgages for one year to 4%
  • All houses that were improperly foreclosed upon, but remain unsold, are to be returned. �
  • For those houses already sold, JPMorgan will pay the service members the fair market value of the property.
  • JPMorgan will forgive any outstanding mortgage balances for those service members who were improperly foreclosed upon.
  • Any remaining unused funds will be donated to the charity of choice selected by the U.S. military.
The above-referenced terms have been agreed to by all the parties involved, however the final approval of the settlement has yet to be issued by U.S. District Judge Margaret B. Seymour.

Monday, April 25, 2011

6 real estate headlines: 25-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

7 basic facts about home insurance
: Whether you're a first-time homebuyer or a veteran homeowner, understanding home insurance is critical for protecting your investment.
4 costly homebuying contract errors
: When buying a home, mean what you say and say what you mean when filling out the contract.
How solar panels affect home value
DC Urban Turf
: The value of adding solar panels to your home is two-fold: yearly savings on your utility bills and the value the panels add to the home if you plan on selling it.
Senate report lays bare mortgage mess
Wall Street Journal
: The report shows Wall Street in gritty, day-to-day detail, angling to profit from a booming mortgage market, and then scrambling to cope with its collapse.
New apps help homebuyers
Market Watch
: Instead of jotting down notes on paper while walking through an open house, buyers are bringing up listings on their iPads and sending e-mails to their agents.
FHA vs. private loan insurers
Washington Post
: It's true that the FHA has just gotten a little more expensive, but it may still have the total package you need to do the deal.

Friday, April 22, 2011

6 real estate headlines: 22-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

DC's oldest house?
: The District's oldest house wasn't actually built in DC, but was moved here in six separate railroad cars from Danvers, Massachusetts.
Obama: Housing probably biggest drain on economy
Wall Street Journal
: Underwater borrowers aren't spending much because they've lost wealth and job mobility is hindered because people can't easily sell their homes and move, he said.
Impact of first-time homebuyer tax credit still felt
: The Treasury Department is now estimating that improper deductions worth more than $500 million have been taken under the government's tax credit program for first-time homebuyers.
Does private mortgage insurance have a place in the new mortgage order?
: It's no surprise that the private mortgage insurance industry is fighting hard against proposed new risk retention rules for the mortgage industry.
New commonsense mortgage rule
: It was the lack of basic, commonsense rules that allowed lenders to give out mortgages to people who clearly couldn't afford them during the housing bubble.
DC's Top 10 green neighborhoods
DC Urban Turf
: Earth Day is today, so in honor of this annual day of environment awareness, MRIS has compiled a list of the DC area's top ten green neighborhoods.

Thursday, April 21, 2011

6 real estate headlines: 21-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

First-quarter foreclosures fall; March numbers raise concerns
Washington Examiner
: Many experts had predicted that states would see an increase in filings during the first half of 2011 as the national investigation into the foreclosure process wound down.
5 rookie homebuyer mistakes
: If you're a mortgage newbie, don't get caught making an error that could cost you big money. Here are five home financing mistakes that rookie homebuyers make, along with tips on how to avoid them.
Will tenant purchases continue?
Washington City Paper
: Why is leaving the Trust Fund mostly empty a problem? Part of the reason: Timing is important. There's only so much affordable housing in the city.
'Uneven' housing recovery continues
CNN Money
: First-time buyers purchased 33% of homes in March, down from 44% in March 2010. Investors accounted for 22% of sales, up from 19% a year ago. All-cash sales were at a record high in March, accounting for 35% of existing home sales.
Fed offers up two options for protecting lenders
Washington Post
: Many within the industry said the legal protections offered under option one would work best for consumers as well as lenders. Without such protections, consumers will end up paying more for the mortgages they want, they said.
The uncertain future of TOPA
DC Urban Turf
: The sluggish real estate market of the past few years has resulted in the fund losing money since it gets money primarily from deed transfer taxes.

Wednesday, April 20, 2011

Short sale headaches

It's bad enough that a short sale can take six months to close.� It's even worse when the short sale payoff lender decides at the last minute to change the terms of its agreement. �

Can they do this?� In short, yes.

After all, they are the ones who are agreeing to take less than what is owed in order to complete the transaction � they are under no legal obligation to agree to do this. �

Here are some recent short sale nightmares that I have seen:

Despite the HUD-1 having been first provided to the two short sale payoff lenders in November, a final approval was not obtained until April.� The problem that arose was that one of the short sale lenders would only approve a commission of 3% in the transaction, since they determined that the listing agent and the buyer's agent both worked at the same brokerage, and the short sale lender would not allow more than 3% commission to one broker.� The broker agreed to lower the commission from 5% to 4%, but the short sale lender would not allow this to net out of their funds, consequently meaning that the seller had to come out of pocket for the additional 1% (roughly $14,000).� This was not a problem for the seller, but the short sale lender determined that if the seller could come up with an additional $14,000 to pay the broker, then the seller could pay that $14,000 over to the short sale lender.� Thus the short sale lender increased their required payoff by an additional $14,000.� Since now the seller had to come up with an additional $28,000, he was no longer able to complete the deal.� The broker relented and had to agree to lower the commission on the HUD-1 to 3%, at which point the short sale lender also agreed to lower their payoff by $14,000, but only if the commission remained at 3%.

Often commissions are whittled down by the short sale lenders, and often at the last moment.� The most common scenario involves the short sale lender requiring that the seller come up with a specific amount of funds to close, say $5,000, but the seller not having this money.� The only way to close is for the agents to lower their commission so that the closing can take place.

Another nightmare situation involves seller closing cost credits to the purchaser.� Often the short sale lender will either not allow the credit at all or limit the amount of the credit.� Purchasers and agents should be careful when negotiating a short sale contract that the agreed upon seller closing cost credit may not survive the short sale approval process.

6 real estate headlines: 20-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

New prototype for mortgage forms coming in May
Wall Street Journal
: The planned revamp of the forms borrowers receive when taking out a home loan is a key priority of the new Consumer Financial Protection Bureau, which was created as part of the Dodd-Frank financial overhaul law.
City development oversight board in the works
Washington Examiner
: The transition report released by Mayor Vincent Gray's administration earlier this year called for a quasi-governmental entity that would oversee all major city projects.
Why it's good to be apprised of where appraisal fees go
Washington Post
: When you pay $450 to $550 at settlement for an appraisal on a home purchase or refinancing, do you assume that all or most of the money is going to the appraiser who performs the valuation?
Former church to become condos
DC Mud
: Scheduled to break ground the first quarter of 2012, the plan is for a six-story, 37 unit condo building at 2105 and 2107 10th Street.

How to buy at real estate auction
Baltimore Sun
: So you've seen an advertised auction property and you'd like to take a closer look? Here are some best practices for pursuing real estate at auction.

New home construction hits 6-month high
Richmond Times Dispatch
: New homes can spur job growth. Each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders

Tuesday, April 19, 2011

Homeowners Assistance Program cutoff date changed

In 2009, Congress passed the Expanded Homeowners' Assistance Program ("HAP") to assist military members suffering as a result of the housing bust across the country. As part of that bill, assistance was to be given to members of the military receiving PCS orders through September 30, 2012.

However, as the Army Corps of Engineers has recently reported, of the $855 million designated for the program, approximately $763.8 million has already been used on behalf of 5,093 homeowners. There are another approximately 4,500 military members who have been deemed eligible to receive benefits, and the funding is dwindling rapidly. Additionally, new applications are still being submitted for consideration at approximately 300 per month. As a result of the funding issue, the cutoff date for those receiving PCS orders has been moved up by 2 years to September 30, 2010.

Military members who otherwise may have been eligible for benefits under HAP may no longer be able to receive benefits because they were in the middle of a deployment and therefore unable to receive their permanent PCS orders while deployed. In a recent article in the Army Times, Karen Jowers stated that the Army has proposed a policy change which would allow deployed personnel to still be considered eligible for benefits if: (1) they were forward deployed from March 1, 2010 through August 31, 2010, (2) received PCS orders within 45 days of their return from deployment and (3) met all the other eligibility requirements for expanded HAP assistance. It is expected that a decision on this policy change will occur in the next week or two.

Even if the proposed policy change is adopted, it is unclear whether or not additional funding will be allotted to the expanded HAP program. While government purchased HAP homes are being sold, with the proceeds being added back into the funding pool, it is possible that there are still not enough funds available to cover the losses military members face on the sale of their properties.


6 real estate headlines: 19-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Geometric precision awaits Arlington's Lee Heights
: Angles abound for this 4 bed/4 bath home without a single square room in sight. Looks like the architect got a little carried away with their protractor and ruler, but they made good use of the lot that has only .26 acres.
For region's town centers, identity is key
Washington Examiner
: As planners contemplate hacking Tysons' massive blocks into smaller, more pedestrian-friendly ones with Metro building three stations in the area, experts note creating a sense of place doesn't have to be a massive undertaking.
Arlington real estate tax unchanged for FY 2012
Arlington Real Estate News
: The proposed FY 2012 Arlington County budget has no increase for the property tax rate for the county. The current tax rate: 95.8 cents per $100 assessed value will remain the same for 2011.
New broker compensation rules may not solve woes
Washington Post
: Readers may be incredulous to learn that until April 1, it was legal for a mortgage broker to steer a borrower to a loan that benefited the mortgage broker to the detriment of the borrower.

Foreclosed? The tax man may want� a piece
CNN Money
: In general, if you lose your home to foreclosure or short sale, where you sell your home for less than you owe, the IRS won't add insult to injury by counting the difference as income, at least until 2012, when the act expires.

A green roof 3 years later
The Hill is Home
: A green roof system is green both because it's planted with all sorts of vegetation and because it harbors many environmental benefits.�

Monday, April 18, 2011

Maryland first-time homebuyer state transfer tax exemption: Denied!

If you are purchasing a home in Maryland as a "first-time homebuyer," and you intend to take title in the name of your revocable trust, or another type of entity, you can forget about realizing the benefit of the Maryland First-Time Homebuyer State Transfer Tax Exemption.�

That's because the Maryland State Transfer Office will only honor the exemption to individuals; specifically, all individuals taking title to the property must be "First-Time Homebuyers" in Maryland in order to qualify for the exemption.

Now the truth is that most mortgage lenders discourage homebuyers from taking title in the name of a trust or other legal entity with the purchase of a residential, owner-occupied, property.�

However, in some cases, a homebuyer may be counseled by their attorney to seek an exception from the mortgage lender and to vest title in the name of a revocable trust � a common estate planning vehicle.

In Maryland, for first-time homebuyers, this advice will cost the homebuyer the benefit of the state transfer tax exemption; an amount equal to 0.025% of the purchase price.

60 Minutes: Who really owns your mortgage?

Do you know who really owns your mortgage? As Scott Pelley reports on "60 Minutes" this week, that question has become a nightmare for many homeowners since the invention of mortgage-backed securities.

6 real estate headlines: 18-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Why mortgage puts homebuyer at disadvantage
Market Watch
: For home buyers who need to finance their purchase using a mortgage, a cash buyer can be their worst enemy. That's because when a buyer makes a cash offer, the seller knows it's a solid deal � and that financing hiccups won't delay a closing.
Unexpected uptick encourages home sellers
: Home sales are picking up this year, say Maryland real estate agents, but they remain cautious about calling the trend a turning point in a market that's generally been moribund since before the Great Recession.
Mortgage mess: Who really owns your mortgage?
CBS News
: As Scott Pelley reports on "60 Minutes" this week, that question has become a nightmare for many homeowners since the invention of mortgage-backed securities. And there still causing problems.
Public acceptance developers' biggest challenge
Washington Examiner
: Local opposition to new suburban development is practically a given in most developers' minds, particularly when it involves large-scale projects.

New bill for short sales
: If passed into law, the Prompt Decision for Qualification of Short Sale Act of 2011, would "require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale."

MD gets $40M in foreclosure aid for unemployed
Baltimore Sun
: Borrowers could receive as much as $50,000 in interest-free loans to pay off past-due amounts and to make up to two years of payments.

Friday, April 15, 2011

6 real estate headlines: 15-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

New rules for first-time homebuyers
Smart Money
: The new fees and higher barriers to entry are all a response to the sweeping mortgage losses of the last several years.To cover those losses, banks and the agencies are raising fees on new mortgages
Are you disciplined enough for an ARM?
: borrowers looking to land an even lower mortgage rates are considering adjustable rate mortgages (ARMs). Would you be better off with an ARM, even though current fixed-rate loans are not far from their rock-bottom lows?
Fannie offers closing help
: Fannie Mae is reviving incentives to lure buyers as it tries to unload its thousands of foreclosed homes by offering to give buyers up to 3.5 percent of the selling price to be used toward closing costs..
Big banks get foreclosure orders
Wall Street Journal
: The bank regulators' action is part of an ongoing effort to reach a broader deal over alleged mortgage-servicing abuses

Sharp drop in DC foreclosures
DC Urban Turf
: In the DC area, there were 6,619 properties with foreclosure filings in the first quarter of 2011, down just over 50 percent from the first quarter of 2010.

A family compound on Massachusetts Avenue
: Anyone wanting to be closer to the political action should check out this little number next to the Vice President's residence on Observatory Circle for $6.995M.

Thursday, April 14, 2011

6 real estate headlines: 14-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

The White House is for sale!
Washington Post
: There is a full-scale, lived-in replica of the White House in McLean.And the owner, who hired a historical architect to help design and build it, is unloading it for the low low price of $4,650,000.
More urban housing at center of region's development future
Washington Examiner
: Much of the Washington area's future development will center on accommodating the growing demand from young professionals and families for urban living.
Budget deal holds pain for housing
Wall Street Journal
: The HOME Investment Partnerships Program, the largest federal block grant designed exclusively to create affordable housing for low-income households, is receiving a $215 million cut.
6 common mistakes home sellers make
: If you're planning on putting your home on the market, it's crucial to understand the time-honored mistakes sellers make, and how to avoid them.

Design house offers dramatic spaces
Washington Times
: Established by the principals of DC Living Real Estate, the design house has raised more than $400,000 for the Childrens National Medical Center in the past three years.

Chantilly mansion for Notre Dame fans only
: Everyone needs to be inspired while they workout, so why not decorate your home gym with the logo of your favorite alma mater?

Wednesday, April 13, 2011

DC and VA reissue rates automatically apply

Here's some good news we'd like to pass along to you and your clients regarding refinance costs for properties in the District of Columbia and Virginia: Reissue Rates Automatically Apply.

What does this mean for your borrower?

  • It means the borrower is no longer required to provide a copy of an existing owner's title insurance policy to obtain the full reissue rate.

  • It means that a 40% discount is automatically applied against the lender's title insurance premium.

  • It means that, previously, without an existing owner's title insurance policy, a DC refinance for $500,000 would have cost $2,100 for the lender's title insurance premium. As of April 1, 2011, the same transaction will cost only $1,260 in premium� � a savings of $840!

All online quotes from Federal Title now reflect these new changes so please feel free to share the news with your colleagues. �

In the meantime, if you have any questions about the new reissue rate policy, please feel free to contact the team at Federal Title.

Shop to save on title services

Homebuyers who close with Federal Title are often surprised to learn how much money they've saved on their closing costs. This is because we offer every homebuyer (and refinancing homeowner) an instant rebate known as a REAL Credit™.

So why don't all title companies offer a similar savings?

As our fearless leader Todd Ewing likes to say, long ago Federal Title kicked the "affiliated business arrangement" habit. Some title companies out there are affiliated with real estate firms, mortgage companies � and sometimes both. When they send their clients to the title company for settlement, the title company pays those guys a referral fee, an expense that's often passed on to the homebuyer.

This is why we tell every homebuyer to shop for title services, just as Todd told Michele Lerner of the Washington Times in the recent article "Shop to save on title services," which ran last Friday on the cover of the Homes Section.

Our REAL Credit™ represents what a title company would typically pay to the referral source and ranges anywhere from $100 to $1,100 depending on the purchase price.

Proponents of these so-called ABAs like to say it's actually beneficial for consumers, a sort of "one-stop shop" system that's more convenient. They don't like to talk about how the cost for said convenience often comes at an increased price.

I don't know about you, but I find saving money to be pretty convenient, and if it's a question of saving as much as $1,100 or more, you can bet I'm going to do some research. It is so easy to shop for title services. The Internet is a magical invention that pulls information � such as closing fees and title insurance rates � at the click of a button.

We've even gone a step further and done the homework for you. Check out the DC Metro Closing Cost Report to review closing fees from title companies who've published their rates online.

6 real estate headlines: 13-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

A Bethesda house that could be a Tetris game
: If you are allergic to curves this is the house for you.The glass walls that surround the courtyard let light in at all sorts of crazy angles, which the architect previously described as "living in a kaleidoscope."
Real estate bust hasn't dimmed Americans faith in real estate
Wall Street Journal
: According to the results of a telephone survey conducted in March, Pew Research Center found eight-in-ten adults believed a home was the best long-term investment a person could make.
Down payment requirement angers senators
Washington Post
: Under the plan, banks would have to retain a stake in loans with smaller down payments, a costly requirement that the industry said it would pass on to borrowers in the form of higher interest rates and fees.
Watch for rising mortgage costs
: Under the law, loans that do not meet the stricter standards will be pushed into a less-favored, higher-cost category.

March housing activity highest since 2006
Washington Examiner
: The region's housing market this spring is positioned to have an even stronger performance than last year -- and that's without the help of a federal tax credit to drive up sales.

Shop to save on title services
Washington Times
: Savvy homebuyers shop carefully for the right real estate agent and a trustworthy lender, but many then think the only shopping left to do is for the home itself.

Tuesday, April 12, 2011

6 real estate headlines: 12-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

How many buyers qualify for new 'safe' mortgage rules?
Wall Street Journal
: About one in five mortgages purchased by Fannie Mae or Freddie Mac over the 1997-2009 period would meet the proposed standard of "safe" mortgages that would be exempted from costly new lending rules.
DC's March home sales represent return to 'normalcy'
DC Urban Turf
: While the increased sales activity is positive news for the region, RBI analyst Jonathan Miller sees the sales surge as a return to the seasonality of the market, not a second coming of the housing boom.
Some neighborhoods shine, although Washington condo market continues to struggle
Washington Post
: Trendy neighborhoods in the District and close-in suburbs may be blossoming, but much of the Washington area may find it to be another chilly spring.
Proposed federal rules would drive many out of the market for home loans
Washington Post
: Under the law, loans that do not meet the stricter standards will be pushed into a less-favored, higher-cost category.

Donohoe's trifecta in Woodmont Triangle
DC Mud
: Montgomery County Planning Board will likely approve a multi-phased, mixed use project that will redefine the urban landscape of the underutilized Woodmont Triangle area in Bethesda.

Avoiding refinancing costs after a divorce
The New York Times
: There is another, little-known option that can avoid refinancing and its costs, which generally run 3 to 6 percent of the outstanding loan principal.

Monday, April 11, 2011

6 real estate headlines: 11-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

What new homebuyers need to know
: First-time home buying is well documented as an arduous process, and much of that can be attributed to the sheer number of new and unexpected issues.
Mortgage troubles? Try a house billboard
Wall Street Journal
: Adzookie, a startup based in Anaheim, Calif., will paint its ads on at least 100 homes, keeping them in place for between three months to a year, after which the home will go back to a color of the owner's choice.
What to expect from a home inspection
Arlington Real Estate News
: Things to expect from your inspector: this is a VISUAL inspection � they're not going to cut behind walls, move appliances, or turn on the house near the house to see if it'll flood.
Even short-term FHA shut down will hit housing
: FHA will maintain the ability for lenders to secure case numbers and underwriting will not be impacted either. However, lenders will be challenged to close these loans during a government shutdown as they will not be able to secure mortgage insurance.
What will banks do if FHA is closed?
Wall Street Journal
: If the government shuts down, the Federal Housing Administration will stop accepting new loans.
Great Neighborhoods: McLean Gardens
Washington Examiner
: Built in the 1940s by the federal government to house World War II defense workers, McLean Gardens might be Washington's most unique address.

Friday, April 8, 2011

6 real estate headlines: 08-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

5 things to know about buying a vacation home
CNN Money
: Home prices continue to fall and there are some great deals for buyers looking for a vacation home. Here are five things to know before taking the leap.
It pays to own a multi-family home
Market Watch
: House prices are still tanking in many parts of the country, mortgage rates are inching up, and job growth is subpar. So what are some homebuyers doing? They're buying even more home.
Original first-time homebuyer tax credit now headache for IRS
Washington Post
: If you took advantage of the $7,500 first-time home-buyer credit two years ago, you had better remember to include your first repayment of that loan on your 2010 tax return, which is due April 18.
Are home price declines easing?
Wall Street Journal
: If price declines are moderating, it's likely because the share of distressed sales is falling and not because of a firming up of demand (mortgage applications remain mired at weak levels).
'Fantastic' mortgage rates expected through spring
: If you can qualify for mortgage financing, mortgage rates are expected to remain "fantastic" through the spring. The "bad" news: They're not expected to remain at unprecedented levels.
Where your living room can be the 19th hole
: A list of golfer's dream homes, (some for sale), across the country where the owners are a few feet from the fairway and a golf membership is a standard home amenity.

Thursday, April 7, 2011

6 real estate headlines: 07-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Could a government shutdown hit housing?
Wall Street Journal
: But if the federal government shuts down, the FHA won't be insuring any new loans. Banks will still be able to make FHA loans, but they'll have to fund and hold onto those loans until the government re-opens for business.
Should money buy you height
Washington City Paper
: Should DC allow for more capacity in areas where there's demand for it, by imposing a one-time "floor tax" on all stories that a developer would like to build over the existing height limit?
FHA mortgage program makes homebuyers pay after mortgage is paid off
Washington Post
: Could the federal government's booming FHA mortgage program be forcing homeowners to pay tens of millions of dollars of extra interest charges when they sell their houses or refinance loans?
Public hearings scheduled for DC ward redistricting
: At-Large Councilmember and Subcommittee on Redistricting co-chair Michael A. Brown will solicit input from the public during a pair of meetings about the District's decennial border redrawing.
Freddie Mac warns lenders on interest
Washington Examiner
: McLean-based Freddie Mac and Fannie Mae of Washington, which own or guarantee more than half of all U.S. home loans, require lenders to buy insurance on mortgages that have small down payments.
Old Town Alexandria's answer to food trucks
DC Urban Turf
: Starting this month, up to eight city-approved food carts hosted by local restaurants will operate daily at Market Square on King Street.

Wednesday, April 6, 2011

Closing 101: What homebuyers should know about home closing costs

Closing costs will inevitably take a large bite out of your wallet at the settlement table � anywhere from a few to several thousand dollars.

Here are 10 things to know about your closings costs, information that will help you better understand closing costs and teach you the right questions to ask your title or real estate agent.

1. Homebuyers who shop title service providers save big. A recent study commissioned by Federal Title & Escrow Company based in Friendship Heights found that District of Columbia homebuyers who shop title service providers save as much as $1,180 at closing, while Maryland and Virginia homebuyers save upward of $900. Needless to say, not every title agent was thrilled by the results of the apples-to-apples comparison.

2. Some closing costs are tax-deductible. The big one to keep in mind here is any money you paid in points at closing to "buy down" the interest rate of your loan. You may also deduct pre-paid mortgage interest and property taxes paid at settlement. It's important to note, however, that to claim these deductions you must itemize your return and forego the standard deduction. For homeowners interested in what they can and cannot deduct post-closing, see the IRS's very thorough article on homeownership costs that are tax-deductible.

3. You must account for closing costs along with your down payment. In today's real estate market, don't count on a loan to help cover your closing costs. Lenders want to see that the homebuyer has enough cash on hand to meet these expenses and still have approximately six months of reserves left over once dust from the transaction settles.

4. Closing costs run roughly 3% to 6% of the purchase price. How much you pay in closing costs depends largely on where the property is located. For example, District homebuyers will pay higher closing costs than their Maryland or Virginia counterparts for a property with the same purchase price because title insurance policy premiums are higher in DC. In the last couple years, it's become increasingly common for the home seller to pay at least a portion of the homebuyer's closing costs. To lower your closing costs, consider asking the seller for settlement help in your sales contract.

5. Ask about "standard" title insurance versus "enhanced" title insurance. The type of title insurance policy you purchase will also affect closing costs. Some title companies push enhanced title insurance without providing the consumer with a proper disclosure that a less expensive standard policy is available. For many homebuyers, a standard policy will suffice. It's a good idea to compare standard vs. enhanced title insurance, and make sure to ask your title company what types of insurance products they offer. Talk with your lender and settlement attorney to determine what policy is appropriate for your home investment.

6. Closing cost discounts do exist. A handful of independently-owned title companies in Washington, DC offer homebuyers an instant rebate on their closing costs. Federal Title pioneered this practice in the DC area by introducing its REAL Credit™ program over a decade ago. Even if your chosen title company can't offer you an instant rebate, it's fair to note that any title company may be able to provide you a full reissue rate discount if your property is located in DC or Maryland. Typically, in order to qualify: 1) the seller must provide a copy of his or her owner's title insurance policy; 2) that policy must be less than 10 years old; and 3) the coverage amount must equal or exceed the new purchase price.

7. Some closing costs are fixed while others are variable. The cost of your title insurance policy and government recordation fees are dependent on the purchase price of your home, and the bulk of settlement costs are typically paid by the homebuyer. However, the seller doesn't get off scot-free. Seller fees include a fee for mortgage release procurement and deed preparations. The settlement fee is often split between buyer and seller. Homebuyer fees include a title examination/abstractor fee, location survey fee and a fee to process paperwork. A title company may charge additional fees unique to each transaction, but the extent of the fees should be disclosed up front.

8. Closing costs should not change (much). Your lender's Good Faith Estimate will give you a good idea of your settlement charges long before you receive a list of actual costs on your HUD-1 Settlement Statement at closing. For the most part, you shouldn't see much discrepancy between the two forms, as your lender is legally obligated to stay within what's known as "tolerance limitations" when it comes to most settlement charges.

To know which closing costs could change, think of settlement charges as "3 Buckets." The first bucket includes your lender's origination charges, points you paid to "buy down" your interest rate and transfer taxes. Charges in the first bucket cannot increase. Charges in the second bucket may increase up to 10 percent and include title services and a lenders title insurance policy (lumped together on line 1101 of your HUD-1), owner's title insurance policy and government recording charges. Bucket three includes charges that can change at settlement, including daily interest charges and homeowner's insurance, amounts that depend on your closing date.

9. Roughly 70 percent of closing costs that are variable are title-related. That's a pretty large number to leave to chance. It may not be a bad idea to get a closing cost quote on your own from a couple title service providers just to make sure you're getting the best deal possible. Several local companies offer free closing cost calculators to help you shop and compare rates.

10. Referral fees increase closing costs. Did you know just 5 percent of title insurance premiums go toward insurance claims, according to the Government Accountability Office? A far greater percentage (some reports claim 50 percent or more), went to real estate agents and mortgage lenders for referral fees. This practice, a product of the affiliated business arrangement, is legal but anti-consumer. Homebuyers' best protection against high closing costs is education � simply knowing they have the right to choose their title company, asking about discounts and learning about what options are available.

Local headlines and real estate agents are saying the same thing: The DC real estate market is back! Scoff if you like, but the numbers don't lie. A steal of a deal in the DC real estate market is increasingly rare, but by understanding your closing costs, you can make sure you're not overpaying on the back end of your real estate transaction.

6 real estate headlines: 06-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

What makes DC the hottest real estate market?
Washington Examiner
: A confluence of factors, including low interest rates, steady job growth and low unemployment -- thanks in part to military and the federal jobs -- have put a fire under local home sales.
Housing bubble continues to haunt the Fed
Wall Street Journal
: Americans' love affair with housing is over. But, ironically, deflation of the bubble risks fueling consumer-price inflation.
Problems with new Good Faith Estimates
The New York Times
: Amid the uncertainty, a growing number of lenders have been furnishing consumers with their own custom "work sheets" as a supplement to � or in a few cases, in lieu of � the required disclosures.
Former real-estate developer thinks VA farm is fertile ground for business
Washington Post
: The scope and the design will likely not change very much, as the concept already has Board of Zoning Adjustment and Historic Preservation Review Board approvals.?
Shadow inventory shrinks, remains high
Market Watch
: The inventory of distressed homes lingering in the shadows of the U.S. real-estate market shrank slightly in January, but these properties will remain a major drag on the housing market.
10 things you should know about closing costs
DC Urban Turf
: The information in this article from Federal Title will help you better understand closing costs and teach you the right questions to ask your title or real estate agent.

Tuesday, April 5, 2011

10 things you should know about closing costs

Closing costs will inevitably take a large bite out of your wallet at the settlement table � anywhere from a few to several thousand dollars. But why pay more than you have to?

With a solid understanding of title insurance & closing costs, you will know the right questions to ask your real estate agent or title agent here at Federal Title.

A steal of a deal in the DC real estate market is increasingly rare, but by understanding your closing costs, you can make sure you're not overpaying on the back end of your real estate transaction.

Check out our article, which appeared today on DC Urban Turf: 10 things you should know about closing costs.� Give it a read and feel free to leave your comment below.

10 things you should know about closing costs

6 real estate headlines: 05-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Washington suburbs recovering slower than city
Washington Examiner
: While the unemployment rate in urban areas remains higher on average, the damage in the suburbs has narrowed the gap, largely because of the professions hit by this recession.
Rowhouse Rehab: Fencing in the contractor
Wall Street Journal
: Unfortunately, saving the old is more labor intensive and often more expensive. But don't let contractors fool you into thinking it's impossible.
An ecological calculator for homebuying decisions
Washington Post
: Home purchases tend to be very emotional transactions, but when you assume a mind-set of dispassionate, rational self-interest, it's a win-win for yourself and the environment,
What 14th Street's new condos will look like
DC Urban Turf
: The scope and the design will likely not change very much, as the concept already has Board of Zoning Adjustment and Historic Preservation Review Board approvals.?
Stumpf: How to fix the mortgage mess
CNN Money
: We have to solve the Fannie Mae and Freddie Mac problem and eventually figure out the proper role of the federal government in supporting a secondary market for home mortgages.
Hard to sell basement units? Don't build them
Washington City Paper
: The Redstone is built with a bike room and storage on the first floor, and three floors above it with an overhang that makes the whole building look levitated off the ground.

Monday, April 4, 2011

6 real estate headlines: 04-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

DC's most diverse neighborhood: Columbia Heights
DC Urban Turf
: Columbia Heights is still in transition, and at this point, it's not clear whether the community's best characteristic � its dynamic mix of people � will remain a permanent feature.
Sell home. Donate to Japan. Get tax break
Washington Post
: Retired architect and actor Stephen Meadows, 60, wants to sell his $2.5 million Venice Beach home, which he bought from Eric Clapton in 2003 for around $1.4 million.
Real estate market finds new normal
Washington Examiner
: The Washington area market is settling into a new normal, with indicators such as the absorption rate and inventory-to-sale ratios showing movement toward more stable inventory levels.
Mortgage rates steady; do consumers even care?
: With the mortgage market stuck in a swirl, credit conditions as strict as they are, and economic recovery being as unstable as it is, do consumers even care all that much about current mortgage rates?
Troubling dip or double dip?
: Apparently the administration is leaning toward double dip despite its reporting that foreclosure activity and mortgage delinquencies are falling.
Your tax questions answered: Home
CNN Money
: From the more than 1,000 questions you submitted, we picked the investing, filing, retirement, home, and small-business topics most likely to lead you off course.

Friday, April 1, 2011

6 real estate headlines: 01-April

A daily dose of headlines for real estate agents, mortgage lenders, homebuyers and home sellers.

Region's home prices bucking nation's double dip
Washington Examiner
: Washington has posted monthly price increases in eight of the past 10 months, according to Case-Shiller.
Getting in on the ground floor in Southwest
DC Urban Turf
: In a city where real estate watchers are always speculating about the next hot neighborhood, it is curious that DC's Southwest quadrant gets so little attention.
Want a vacation home? Prices are falling
CNN Money
: The median price of a vacation home was $150,000 in 2010, down 11.2% from a year earlier, the National Association of Realtors reports.
Foreclosure aid fell short and is fading
The New York Times
: Saying it is a waste of money, the Republican-controlled House voted on Tuesday night to kill the foreclosure relief program.
Why is it so hard to get approved for HARP refinance?
: Decoded, this means that HARP refinance applications with LTVs exceeding 105 percent are treated differently by the software and are less likely to be approved.
CityCenter DC site under construction
DC Mud
: The project's plan for nearly 700 units of housing, 185,000 s.f. of retail, 520,000 s.f. of office space has developers holding firm for nearly a year that this spring will mark the project's birth.