Closing Costs Explained Visually 'Good Introduction' to Settlement Process

If you're shopping for a home and haven't had a chance to watch this quick introduction to title insurance, you may want to check it out. While "Closing Costs Explained Visually" is targeted toward consumers, real estate experts are also finding it useful.

"Rather than a detailed step-by-step dissertation on title and escrow -- which many consumers really need before the home buying begins -- the two-minute Federal Title & Escrow Co. video is useful as a primer to get you into the basics of the process," writes Broderick Perkins, editor of Deadline News and the Real Estate News Examiner blog.

After a proper intro to the settlement process from Federal Title, home shoppers may then want to read Perkins' thorough three-part title insurance series for a better understanding of today's title insurance industry.

My favorite installment: Part 3 - Shop Around for Title, Escrow Services.

Title insurance companies sometimes get a bad rep, but we're not all bad. Some companies are committed to giving their customers the lowest rate possible on insurance premiums. Federal Title for one is saving home buyers as much as $2,000 through our REAL Credit Program.

As a home buyer, the more you know about the settlement process, the more you'll be able to save on closing costs.

MD 1st Time Homebuyers: True/False

STATEMENT: As long as you have not owned a principal residence in Maryland in three years, you qualify as a Maryland First Time Homebuyer.
FALSE: The code does not provide a reset clause – if you have ever previously owned a principal residence in Maryland, no matter when, you are not eligible for the exemption.

STATEMENT: If you have previously owned a property in Maryland, but have never lived in that property, you qualify for the exemption.
TRUE: The requirement is that you must not have previously owned a principal residence in Maryland. Previously owning a non-principal residence does not disqualify you, as long as the property that you are purchasing will be your principal residence.

STATEMENT: It does not matter how you title the property, you will receive the exemption as long as you are a Maryland First Time Homebuyer.
FALSE: If the purchaser is a Trust, a Partnership, an LLC, or a Corporation, it can not qualify as a Maryland First Time Homebuyer.

STATEMENT: If two people are buying a principal residence, as long as one of the buyers has never previously owned a principal residence in Maryland, they can receive the exemption.
FALSE: Every purchaser who intends to live at the property as a principal residence must have never previously owned a principal residence in Maryland.

STATEMENT: While I qualify for the exemption, my parents who will be on title only to help me get the loan disqualify me since they already own a principal residence in Maryland.
FALSE: The Maryland Code will still allow the exemption as long as the parents sign an affidavit stating that they are a co-maker or guarantor of a purchase money deed of trust and that they will not occupy the residence as their principal residence.

Power of Attorney Pitfalls

In my 18 years as a settlement attorney, I can point to an improper Power of Attorney (“POA”) form as one of the most common causes of a delayed closing. You have no doubt encountered clients who are too busy or physically unable to make it to closing. You’ve heard “My mom gave me Power of Attorney,” “I gave my husband Power of Attorney,” “Grandma is in the nursing home – I have Power of Attorney.” Simple enough – right? Wrong.

So often, clients find POA documents online or stationary stores. We are frequently presented with general “checklist” POA forms and clients are dismayed to learn that we cannot accept them for the purpose of insuring title. When it comes to conveying or encumbering real property by Power of Attorney, make sure your client has the proper legal authority well before the closing date.

Many states specifically address, by statute, the use of Power of Attorney and impose very specific requirements. Title insurance underwriters go beyond the state’s statutory requirements with even stricter guidelines for Power of Attorney usage. I think it’s helpful to first understand the definition of an “attorney.”

ATTORNEY: A person legally appointed by another to act as his or her agent in the transaction. . . . www.dictionary.com.

It’s also important to understand the two specific parties in the Power of Attorney. The PRINCIPAL is the person granting another the power to act in their stead; the one who signs the POA document. The ATTORNEY-IN-FACT is the receiver of the power from the Principal.

In order to satisfy most title insurers, a POA form to be used for the purpose of conveying or encumbering real property must meet the following requirements:

RECENT: The document needs to have been executed by the Principal within a year of the transaction at which it is being used. While exceptions are made on a case-by-case basis, it is rare that a title insurance underwriter will accept an aging POA because of risk of fraud or marketability issues.

SPECIFIC: The document must grant the Attorney-in-Fact the powers required to effect the transaction and should recite the specifics of that transaction (i.e., property address, convey or encumber). A document giving the Attorney-in-Fact the ability to “handle real estate transactions” is too vague and too general.

DURABLE: The document must state that the Power of Attorney will not terminate upon the disability of the Principal. It is not acceptable for the document to be entitled “Durable Power of Attorney” and not recite the above durability language specifically with the text.

ORIGINAL: The document must be an original. A copy of the POA is not acceptable. The POA must be recorded with the clerk’s office and the clerk requires original documents to be recorded.

To be absolutely certain that your client’s Power of Attorney is acceptable, please forward to our office for review prior to closing. If you would like to have sample POA forms recommended by our office, please feel free to contact us and we will gladly provide those forms.

Going Green - Federal Title ditches paper copies for USB Flash Drive

Federal Title Goes Green
The average closing takes approximately 200 sheets of paper. There are loan documents, closing documents, title and deed documents, letters to buyers, letters to sellers, letters to lenders etc. By using a USB Flash Drive to store your (borrower's) documents, we can reduce this number by an average of 32%. Let's do a quick translation of what you are saving*:

• One tree provides 17 reams of paper (approximately)


• In an average month at Federal Title, we can save 15 reams of paper by using a USB Flash Drive


• In an average month at Federal Title, we can save almost THREE tons of water by using a USB Flash Drive


• The average cost of a wasted page is $0.06

So by using Federal Title & Escrow Company, you are helping the environment by saving trees, water and energy. We will provide a complimentary flash drive or can load the documents on a flash drive you provide. Rather have it on email? We offer that option as well.

What is a flash drive and who can use it?
It is a small memory stick that is placed in your computer's USB port, from there you open it and can see all of your closing documents. We convert your package to Adobe PDF for simple browsing. With this easy paper reducing process, you simply print out the papers you need and browse the others.

What are the advantages of having your closing documents on a USB Flash Drive?
You can easily:

• Email any of the documents as needed


• Print any of the documents as needed


• Browse your settlement documents


• Store 50-75 sheets of paper in an area the size of your thumb


• Add any other real estate documents to the Flash Drive so you have everything together

Federal Title clients already have an advantage of being tech savvy, you have ordered online, received an email copy of your closing costs and eliminated sending faxes back and forth. Take that savviness one step further by putting all of your closing documents on a USB Flash Drive - walk out of closing knowing you have saved trees, water, energy but most importantly, time.

*Information was calculated by referencing http://www.printgreener.com.

Transparent Title Companies - Where are they?

By Ann Herdon Eskew

WHAT IF YOUR PREFERRED TITLE COMPANY:

* Delivered an instant, online, guaranteed closing cost quote to you and your clients - specific to the transaction;
* Was independent and gave back part of its revenue to your home buyer; instead of giving money back to your broker through an Affiliated Business Arrangment;
* Allowed you to submit the transaction order entirely online.

Very few title companies offer a Web 2.0 experience when it comes to delivering service. In fact, most still cling to fax machines and land lines -- taking orders over the phone, quoting fees/costs over the phone. Further, many title companies have no room to significantly lower their fees to your client because they are kicking back 30% to 50% of the transaction revenue to a broker by way of an Affiliated Business Arrangment.

I am proud to say that my company, Federal Title, has remained independent for the last 13 years. We have grown to be the largest independent title company in the Washington, DC metro area. Our growth is directly attributed to our ability to deliver instant, online, and guaranteed closing cost quotes to agents, home buyers, and mortgage lenders. It is also attributed to our REAL Credit Program in which we give back part of our revenue to the home buyer rather than a referral source. The consumer loves transparency and savings and we deliver.

Federal Title enters Miami-Dade market

Federal Title & Escrow Company Enters Miami-Dade Market with Its "Guaranteed Closing Costs" and "Anti-Kickback" Business Model

Coral Gables, Fla., February 5, 2009 - Seeking to assure a more transparent settlement transaction that delivers a guaranteed quote for closing costs and directs a financial benefit to the home buyer instead of the referral source, Federal Title & Escrow Company introduces to the Miami-Dade market an unprecedented model that empowers the consumer. While many title companies share their revenue with real estate brokerages as a reward for the referral, Federal Title instead gives part of its revenue back to the consumer. The announcement comes on the heels and in the spirit of the U.S. Department of Housing and Urban Development's proposed rule to reform the Real Estate Settlement Procedures Act ("RESPA").

Federal Title's Market Entry

Federal Title & Escrow Company, an independent provider of real estate settlement services based in Washington, DC, proudly announces its expansion into the Miami-Dade market with the opening of its newest office in Coral Gables, FL.

The new Coral Gables office is part of the company's expansion plans to introduce its "guaranteed closing costs" and "anti-kickback" model in other markets. The model is supported by the company's proprietary online technology that delivers instant online closing costs specific to the consumer's transaction. The office will be managed by the law firm of Bales & Bales, P.A., a Coral Gables-based law practice.

Consumer-Friendly Business Model

In the majority of today's real estate transactions, real estate brokerages profit from title insurance premiums charged to home buyers or sellers by participating in joint ventures with title companies (also known as "Affiliated Business Arrangements"). Such arrangements require the participating title company to share its revenue with the real estate brokerage. Individual real estate agents are urged by their companies to refer home buyers and sellers to the joint venture title company in order that the brokerage may profit from the referral.

"For too long, at the expense of the consumer, title companies have been beholden to the financial interests of their referral sources. Legal and illegal kickbacks in the real estate transaction have fostered distrust with consumers and posed ethical dilemmas for real estate agents," said company president, Todd Ewing, adding that Federal Title does not share its revenues with referral sources. Instead, the company gives back part of its revenue to the home buyer through its innovative REAL Credit ProgramTM.

Attorney Amy Bales, manager of the Coral Gables office, added: "Our ability to deliver an instant, online, and guaranteed quote for closing costs along with substantial savings to the home buyer through our REAL Credit Program will give our agent and mortgage lender referral sources a distinct advantage over others. The Miami-Dade area real estate market is in dire need of a face-lift. Our real estate community needs to deliver more transparency to the consumer and raise the bar of ethics," said Bales.

About Federal Title & Escrow Company

Federal Title & Escrow Company (miami.federaltitle.com) (www.federaltitle.com) provides real estate settlement services for residential and commercial real estate transactions in Florida, Washington, DC, Maryland, and Virginia. Federal Title is committed to establishing long-term relationships with real estate agents and mortgage lenders who embrace transparency and high ethics.

Headquartered in Washington, DC, Federal Title is the largest independent title company in the Washington DC metro area. Through its proprietary and innovative AQGTM technology, Federal Title delivers online guaranteed closing cost quotes for the benefit of home buyers and referral sources. Through its REAL Credit ProgramTM, Federal Title gives back part of its revenue to the home buyer instead of referral sources.

# # #