Forgery is the crime of falsely and fraudulently making or altering a legal document. It is a felony punishable by imprisonment in a state prison. It is also an act which may cloud title to property and may result in protracted legal proceedings.
The incidence of forgery is escalating, and the victims are innocent property owners. Title industry figures reveal that over the last decade forgery losses tripled, accounting now for over 20% of all losses paid by title insurers. These statistics indicate that the consumer's chances of becoming a forgery victim are the greatest ever. Forgeries affecting real property are created in a number of ways.
A deed may be forged by someone, often a family member or associate, in an attempt to transfer legal ownership of the property without the knowledge of the true owner. A lender's recorded security agreement for a loan may be eliminated by a forged instrument falsely indicating payment of the secured debt, thereby allowing another loan to be fraudulently obtained. A note and deed of trust may be forged by a person who then sells the note secured by the deed of trust and disappears, leaving an unsuspecting homeowner to discover the cloud on title when the purchaser of the note commences foreclosure proceedings for the nonpayment of the debt. A fraudulent document may be notarized by either a person impersonating a notary or a legitimate notary who fails to ascertain that the person signing the document is not the person whose name appears on the document.
The mounting trend in forgery has received serious attention. No longer may title companies concentrate only on removing risks arising from inadvertences or errors in recordings; instead, we now have the additional responsibility of contending with criminal acts. The title industry is reevaluating its title and escrow practices and strengthening notarization processes, closing loopholes which forgers might other-wise exploit.
But, what can you as a property owner do about forgery? While you may not be able to prevent a forgery, you can be protected. Title insurance provides protection against forgeries in your title which may have occurred prior to the issuance of your title insurance policy. Without this protection, you would single-handedly face the uncertainty and expense of resolving legal issues.
It is an unfortunate commentary, but when economic activity declines and housing activity decreases more real property enters the foreclosure process. High interest rates and creative financing arrangements are also contributing factors.
When prices are rapidly accelerating during a real estate "bonanza," many people go to any length available to get into the market through investments in vacation homes, rental housing, and "trading up" to more expensive properties. In some cases, this results in the taking on of high interest rate payments and second, third, and even fourth deeds of trust. Many buyers anticipate that interest rates will drop and home prices will continue to escalate. Neither may occur, and borrowers may be faced with large "balloon" payments becoming due. When payments cannot be met, the foreclosure process looms on the horizon.
In the foreclosure process, one thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner's financial situation improves.
Let's say, however, that a property owner has missed payments and has not made any alternate arrangements with the lender. In this case, the lender may decide to begin the foreclosure process. Under such circumstances, the lender, whether a bank, savings and loan or private party, will request that the trustee, often a title company, file a notice of default with the County Recorder's Office. A copy of the notice is mailed to the property owner.
If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may direct the trustee to sell the property at a public sale.
In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. Once the notice of sale has been recorded, the property owner has until 5 days prior to the published sale date to bring the loan current. If the owner cures the default by making up the payments, the deed of trust will be reinstated and regular monthly payments will continue as before. After this time, it may still be possible for the property owner to work out a postponement on the sale with the lender. However, if no postponement is reached, the property goes "on the block." At the sale, buyers must pay the amount of their bid in cash, cashier's check or other instrument acceptable to the trustee. A lender may "credit bid" up to the amount of the obligation being foreclosed upon.
With the recent attention given to foreclosure, there has also been corresponding interest in buying foreclosed properties. However, caveat emptor: buyer beware. Foreclosed properties are very likely to be burdened with overdue taxes, liens and clouded titles. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale and various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.
The Letter of Authorization is required by the lenders to confirm that they are authorized by all borrowers to release information to the negotiating party. Please contact your escrow officer for a copy of our LOA form, or visit us online at www.nat.com and search under "Services - Realtor®."
2. Hardship Letter
The Hardship Letter is the Homeowners' opportunity to state why they need relief from their mortgage. It is important that the letter is legible and preferably typed.
3. Financial Statement
The lender wants to review the borrowers‘ monthly income and expenses to determine the significance of the financial hardship. The information that should be provided is:
I. Borrower(s) who are on the loan only
II. Reasonable - if amounts allocated for groceries or entertainment seem out of line, the Lender might question that item and other parts of the file. Review the borrowers' financial statement before submitting it. Most lenders accept the Freddie Mac Financial Statement but there are exceptions. If you have more than one lender who will be discounting their loan, you may need to have your seller complete more than one Financial Statement. (To find out which form to use and to get a copy, go to www.nat.com and click on "shortsales.")
4. Bank Statements
The lender will want to see two months of banking activity for all borrowers on the loan. Ask the seller to provide two months of statements for all non-retirement accounts, including bank accounts, brokerage and mutual funds.
The statements must be:
I. As current as possible
II. Covering consecutive months
Note: Bank statements frequently need to be updated if the short sale process goes over 90 days.
5. Pay Stubs
The lender will require at least one month of pay stubs for each borrower on the loan. If a borrower has more than one job, pay stubs for all jobs should be included. North American Title requests that you provide two months of pay stubs from each borrower. This helps the lender get a complete view of the homeowners' financial situation. If the pay stubs are disability checks, these checks usually have no withholding - gross pay equals net pay. The lender will want a copy of the disability "awards letter" which outlines the terms of the disability income.
6. Tax Returns
The lender will want to see two years of tax returns for each borrower on the loan. Please have your client provide Federal Returns only, for the two most recent years. If we are beyond April 15th, and the borrower has not yet filed for the last full year, include the taxpayers' signed and completed extension form. Always include all pages and applicable schedules for each tax return.
7. Purchase Contract
Please provide a "clean", fully executed copy of the purchase agreement which has been accepted by the homeowner. Include all counter offers and addendums.
8. Estimated HUD - Settlement Statement
The lender will work from the estimated HUD we provide, so review it carefully before including it in this package. Do not rely on your escrow officer to properly interpret your contract. If the estimated HUD is to include estimates for delinquent property taxes, repairs, expenses, and fees on a senior lien, allow some room in your estimate in case costs come in higher or it takes longer to close escrow.
9. Listing Agreement
A lender will want to see a fully executed copy of your listing agreement. Make sure the commission section has been completed. Regarding commission, keep in mind that the lender may want to negotiate.
10. Price History
The lender will want to know that every reasonable effort was made to maximize their recovery of capital. In many cases that means graphically demonstrating to the lender that the property was offered for sale at a price, or at prices, above the list price at the time an offer was received and accepted.
The price history chart should include:
I. List date and dates prices were changed
II. Number of days at each price
III. Each price at which the property was offered
IV. The number of showings at each price
V. The number of offers received at each price
VI. The amount offered in each offer
11. Broker Price Option - BPO
The lender will want you to provide a simple and accurate BPO which states your estimate of the value for the property. If possible, use comps within ¼ mile radius and attach copies of MLS printouts.
WORDS matter. Wars have started over them. Civilizations have collapsed because of them. And it would appear that the speed with which a house sells might be determined by them.
As listings grow old on the vine in this flush-with-inventory market and frustrated sellers grapple for the slightest edge, the findings of several academics might offer some guidance.
For example, a Canadian professor, as part of a broader study on real estate sales patterns, found that sales in which the seller was "motivated" actually took 15 percent longer to sell, while houses listed as "handyman specials" flew off the market in half the average time.
"It surprised even me," said researcher Paul Anglin, who teaches real estate and housing trends at the University of Guelph in Ontario, Canada. The study dissected the wording of more than 20,000 Canadian home listings from 1997 to 2000.
What surprised him most was how the buying public put style over substance. Words that denoted "curb appeal" or general attractiveness helped a property sell faster than those that spoke of "value" and "price." Homes described as "beautiful" moved 15 percent faster and for 5 percent more in price than the benchmark. "Good-value" homes sold for 5 percent less than average.
Another finding in Anglin's study was that the plea of "must see!" was received about as enthusiastically as a dinner-time telemarketing call. Homes with listings using the words "must see" had a statistically insignificant impact on the number of days they took to sell.
Listings where the word "landscaping" was heralded sold 20 percent faster, and homes in "move-in condition" took 12 percent less time to sell than the benchmark, although the study showed "move-in condition" had an insignificant impact on the sales price.
Owners use listing language to convey how serious they are about selling. Some words work better than others, Anglin's study found. Listings in which the seller said he or she was "moving" sold for 1 percent less in price compared to 8 percent less when the seller was "motivated."
Real estate listings, not unlike personal ads, are crafted to minimize blemishes and maximize perceived selling points. So if "enjoys moonlight walks on the beach and cooking together" means "I'm unemployed and am looking for someone who won't always expect to eat out," then "needs TLC" might mean "this house will have you on a first-name basis with the clerks at the local hardware store."
Anglin's study isn't alone in efforts to determine what language moves the market.
Last year, the impact of listing language was covered in a National Bureau of Economic Research study that looked at whether real estate agents selling their own homes hold out for a higher price. (They do; the study found they take longer to sell but fetch a higher price.
'As is' lowers price
Descriptions of houses that indicated an obvious problem -- such as "foreclosure," "as is" and "handyman special" -- drew substantially lower sales prices.
Words that suggested desirable attributes -- "granite," "maple," "gourmet" -- translated into a higher sale price, the study found.
One problem discovered was that "superficially positive" words that, in effect, damn with faint praise -- such as "clean" or "quiet" -- had zero or even a negative correlation with prices.
Those findings echo those made in a 2000 paper called "Real Estate Agent Remarks: Help or Hype?" researched by University of Texas finance and real estate professor Ronald C. Rutherford.
Rutherford found, among other things, that buyers read between the lines. If you can't find anything better to say than "new paint," perhaps it's best to say nothing at all.
Positive and factually verifiable comments such as "golf" or "lake" drew increased sales prices; other presumably positive comments regarding new paint or new carpet brought lower ones.
"What you say needs to be extravagant," Rutherford said, "or the signal that is received by buyers is that it's not worth talking about."
Uh-oh: 'New paint'
But what do sellers know? "New paint" appeared on 15 percent of the listings and was the most commonly listed comment.
Rutherford said sellers would be best served by a listing with "just the facts, ma'am."
"In today's market," he said, "if it's a good deal, you need to convey it with factually verifiable language."
An example: "Needs repairs," he said.
Of the information from his study, conducted between 1994 and 1997 of almost 60,000 closed residential transactions in Tarrant County, Texas, what surprised him most?
That homes with "motivated" sellers stayed on the market 15 percent longer than average and sold for 4 percent less.
His theory: "They overpriced the house to start with and eventually had to lower it. That explains the length of time on the market and the lower sales price."
Your primary goal within the first few months of your real estate career is to build awareness of your services in your target market. The most effective way to do this is on a limited budget (with between $2,000 and $5,000 to spend on marketing), according to industry experts, is to conduct repeated mailings of a single, strong marketing brochure to your target market.
Once you've developed a Personal Marketing Plan and a budget, here are tips on how to execute your plan:
• Decide how large your target market is. You need to know how many marketing pieces you will need over the next few months. Remember, when it comes to printing, it's much cheaper to order one very large quantity as opposed to making ten orders of smaller amounts.
• If you've decided to work with a designer and copywriter to help you develop your brochure, ask for estimates in advance. And review them carefully to see what they include. Ask how many drafts they'll allow under the original charge. Is photography needed and is it included in the cost? Is the estimate made on a set number of hours or on the project? Allow at least two weeks for copy and two weeks for design. When everything is done to your satisfaction, sign off on the final copy.
• Develop mailing lists for your brochure. North American Title Company can help you with labels for your newly selected target market, but you will need to order envelopes and stationary if you need them for your mailing.
• Mail your brochure to your mailing list, which should include your family and friends, also called your Sphere of Influence. Then mail 10 brochures per day into your farm area. If you don't have a farm, send your brochure to 10 names from the reverse directory (a directory that if you have a street address give you the name of the person who live there). Also, hand out 10 brochures per day to people you meet. Always have your brochures and business cards ready to give out. If you eat out, put your tip on top of your brochure when you leave.
• Evaluate the results of your mailing. How many responses did you get? What groups responded most favorably? Keeping track of the responses helps you to determine where you should be spending your marketing dollars and efforts for the best return.
This is simply a history of the ownership of a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records-usually a County Clerk's or Recorder's Office-or obtained from title plants privately owned and maintained by title companies.
Tax Search
This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due. A due and unpaid tax or special assessment is a prior lien or claim on the property above all others. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.
Report on Possession
The purpose of this is to supplement the information learned from the title search. In the eyes of the law, any buyer of real estate is assumed to have notice of all matters properly shown in the public records as to that real estate as well as any information that an actual inspection may reveal.
Judgment and Name Search
One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. A judgment is a general lien against the debtor's real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.
It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person named Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So all possible variations of the name must be examined. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.
Commitment
When these searches have been completed, North American Title issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the search and examination.
A short sale is the sale of a property, with the authorization of the creditors, for less than what is owed on it. Whether it is the forgiveness of debt owed by a nation or an individual, it simply means that someone is willing to settle for less than what they originally anticipated. It's part of business. All lenders know that they will not win all the time. Risk and loss of capital is an anticipated cost in the lending industry.
What are the leading causes of short sales?
Changing economic conditions (like what Northern California is experiencing currently), conflicts (such as the ones seen in the eighties in Eastern Europe), and Mother Nature (post Hurricane Katrina) are among some of the many causes of unforeseen situations that turn good lending contracts into bad.
When do short sales occur?
In the context of foreclosure on secured assets, a short sale occurs when debtors agree to settle their liens for a known amount of money as opposed to taking a chance at auction. Auction prices are often unpredictable and usually greatly discounted. Many lenders are willing to mitigate further risk of loss by making deals before auction. Bad debt is sold by lenders all the time. For instance, there is a huge market for unsecured credit card debt that is sold for pennies on the dollar to collection agencies. That's self-effectuated short sales. Lenders are more than happy to discuss resolution of aged debt. Their business is to lend capital, not dispose of foreclosed assets.
What are the potential ramifications of a short sale?
The transaction can be completed at no cost to the homeowner - commissions, title and escrow fees and most repair costs are all paid by the lender - there can be negative financial consequences on the seller. Most often, both federal and state governments view a short sale as debt relief (and let's face it, it is a relief) and the difference between what was settled and what your loan was can become taxable. Always check with a professional tax consultant before making any permanent decisions.
The Mello-Roos Community Facilities Act of 1982 was passed by the California Legislature to address local government efforts to fund the cost of facilities in communities through the establishment of special assessments in specified geographic districts.
Mello-Roos districts are often encountered in new developments when the developer seeks creation of an assessment district to finance new public services facilities to meet increased demands on local agencies as a result of the new development. San Francisco County has Mello-Roos taxes within its borders.
The Act, which has been amended several times since its inception in 1982, is contained in section 53313,et seq.,of the Government Code. The act provides for the financing of various types of services within the specified area, including jails, juvenile halls, fire protection, ambulance and paramedic facilities, recreational programs, operation and maintenance of parks and parkways and open space, storm drainage systems, museums and other cultural facilities, and removal or other remedial action for clean-up of any hazardous substance affecting the environment.
The establishment of a Mello-Roos District requires that notice be given to the affected homeowners with the opportunity for them to voice their opinions regarding the formation of the district. The city or county must then adopt a resolution of formation which establishes the district. An election is then held in which at least two thirds of the votes cast in the election are in favor of levying the special tax. After approval, a notice of special tax lien is recorded in the office of the county in which any portion of the district is located.
After establishment of a Mello-Roos district, a special tax sufficient to pay for the stated facilities is imposed and secured by recording a continuing lien against all nonexempt real property within the specified geographic area. The resolution establishing the tax specifies the rate, method of apportionment, and manner of collection of the special tax. This tax, levied annually, remains in effect until the special tax obligation is permanently satisfied and the lien canceled.
Mello-Roos Assessments are usually collected with the secured property tax roll until the assessment has been satisfied. Upon satisfaction of the assessment under the district, a Notice of Cessation of Special Tax is recorded which states that the obligation to pay the special tax has ceased and the lien imposed by the Notice of Special Tax Lien is extinguished.
Prepayment of the assessment may be allowed and a Notice of Cancellation of Special Tax Lien may be issued and recorded in the county recorder's records upon payment of the special tax applicable to a particular parcel of land. In the event of non-payment of Mello-Roos assessment liens, special rules provide for foreclosure to satisfy payment of the lien amount.
One of the most common areas of concern in the insurance of title to residential property is that of the vesting of title, as it is affected by the marital status of the owners or prospective buyers. Although on its face, the issue would seem simple, the human condition seems to work to make it more complex all the time.
Consider the concept that a person is either married or not.Well, what about "separated?" tells a title insurer that the person is married and that there is some sort of problem between the person and his or her erstwhile spouse. Or consider the age old question of whether a person is single , unmarried ,divorced, or widowed. One of the recurring issues with which the title insurer is faced is whether the nature of the description makes a difference (it doesn't), or whether it is the number of persons on title which counts (it does).
The vesting of title , for "natural persons," may be as sole and separate property, as community property to exist, there must be a valid subsisting marriage between the parties to the purported community interest. Parties who have acquired title as community property when no valid marriage exists between them would be deemed to hold as tenants in common.
Married persons acquiring property during the marriage are presumed to have acquired as community property unless the documentation provides otherwise. If the property is to be held as separate property, the acquiescence of the spouse is generally needed, most usually in the form of a quit claim deed. The exception to this would be acquisition by gift or inheritance, which is generally accepted as being separate property unless the gift or bequest indicates otherwise. Where the spouses intend is generally accomplished by a quit claim deed from the spouse disclaiming the interest.
If you have questions or problems in this area, a discussion with your North American Title Company title officer will give you the basic information you will need for an efficient conference with your lawyer. Always consult your lawyer when dealing with matters as important as the vesting of title to your real estate.
Written by H.Collyer Church,Vice President
Underwriting Counsel, North American Title Company
Home sellers are very concerned when their home has been on the market for some time. The offers presented, if any, have been too low to even consider. The home hasn't sold. Quite naturally they want to know what's wrong.
That's a fair question. The newspapers say the home market is active again; some homes in the area have sold. Now sellers are asking questions like, "Interest rates are down, aren't they?", "Why haven't I had a serious offer?", "Should I take my house off the market?", "Should I change Realtors?"
FIRST of all, slow down. Don't panic. Take a rational look at the market and make the most of it. Smart home sellers are moving their home right now, today. They recognize the market today is different from last year. Pricing a home correctly initially is vital. Pricing too high and then dropping the price later can cast an unfavorable feeling over the property.
SECOND, the smart home seller comes to the obvious conclusion that with cautious buyers looking at more homes you have to be competitive, flexible, aggressive, and do a better job of marketing to generate offers. Your home can sell, and quickly. Staging a home is just one great way to bring out the full value potential of a home.
THIRD, sit down with your real estate professional and rethink your marketing plan. There are a number of actions to consider to beat out your competition. The correct set of actions will generate the sale.
Be patient. Today's buyers are tough but every market offers opportunities. Seek your real estate professional's advice. Put together an aggressive program and then act on it. Properly priced, packaged, and presented homes are selling. Yours will too!
PRICE. Reviewing your asking price is the most difficult, painful and personal part of answering the question, "Why aren't we getting any action?" This is typically the single most critical element in your new marketing plan. Get fresh comparable sales in your area. Forget the asking prices of homes that aren't selling. Check out the homes that are selling. Your home must be priced to meet today's market or all the other elements of your new plan won't make much difference.
There is a selling price for every property. If the market is showing little interest in your property, the price is probably too high for this market.
TERMS. How flexible are you really prepared to be? How big a second can you take on? Can you offer a fast escrow?
APPEARANCE. Remember the old advertising slogan, "Even your best friends won't tell you!"? Well, a good agent will level with you. Have your real estate professional give you a set of ideas on how to spiff up your house. Put aside what you think is "nice" or "adequate." Listen to your professional advisor. Paint, clip, cut, clean, deodorize, send to storage, toss out, caulk, mow, paper, cement, repair, add, scoop, weed, tear down, and scrub. Little things do count. A relatively small amount of time, effort and money spent now can bring back large rewards.
ATMOSPHERE. There are also some "do's and don'ts" which can be helpful in creating a selling atmosphere. Leave the house when it's being shown and take the dog and children with you. If you must be home don't chat with buyers, just disappear. Tune the FM radio to quiet, soothing music. Be careful of cooking odors. Turn on all the lights. Fresh flowers are always a plus. Keep the temperature at a comfortable level, and open the windows and doors if weather and security permit. Pick up kids' toys. Help your real estate professional by creating a warm, pleasant, private sales environment.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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