The TRID has been postponed, not just once, but twice!
New proposed effective date is October 3, 2015.
Oh boy, I go on vacation for 2 weeks and boom! Things started happening fast and furious.
There was no June newsletter from me, but I have extra stories in this July monthly letter as so many “fun” things deserve special mention.
THE IRS HACK: UNINTENDED CONSEQUENCES
While traveling in Helsinki (Finland) my eyebrows shot up when this big headline proclaimed that the United States I.R.S got hacked! And by Chinese hackers, no less.
Uh, oh. I turn around sheepishly wondering if anyone is looking askance at me, this Chinese tourist, casually reading the news headline.
Four million federal government employees are not happy and who can blame them. The IRS is supposed to be sacrosanct. But of course, if they can do funny things to the Federal Reserve, why not the IRS?
It’s a bigger challenge for hackers, you get bigger bragging rights.
Perhaps those who are in the lending industry or consumers who are looking to obtain a loan may not be happy either.
In March of this year another story broke about stealing data from the IRS using the “Get Transcript” feature, thereby defrauding the government of millions of dollars in refunds that should have gone to actual taxpayors.
Here are two articles to follow up on this secondary news item: first and second.
An unintended consequence of this breach of security is that it has become more difficult and time consuming for Lenders to get a copy of the taxpayors’ income tax transcripts, an underwriting requirement that has been in place for years and years.
Lenders need proof that the income tax returns submitted are true and correct and they use the Borrower signed 4506T form to request that the IRS provide a copy of the tax returns in their files.
Now, with the breach, IRS is taking up to 10 days to accept or reject a request for tax transcripts, and if they accept the request, another 5-10 days to issue it.
If the Lender’s request is rejected then the customer will have to request it themselves.
If you are requesting it in person, you probably will need to take a copy of your most recent 2 years of tax returns to show proof to the IRS that you are who you are.
Yes, the IRS has been hacked, they have been scammed, and they are very nervous of providing any information to an unrelated third party, particularly of taxpayors who they feel are in a strong position to be defrauded by unscrupulous people.
Life is full of unintended consequences.
FORECLOSURE ISSUES FROM HELL:
I call this a human interest story. It’s human, and it’s interesting, so there.
Big kudos to a Texan attorney who was able to help a widow stop the foreclosure on her house.
Why is this so unusual that I would bother to put in on my newsletter?
In a case named Barzelis vs Flagstar Bank (No. 14-10782, United States Court of Appeals, Fifth Circuit) at this link, Mrs. Barzelis lost her husband and then had to file bankruptcy.
Despite such personal losses she did not give up on her mortgage obligations and continued to pay the mortgage on the home that she lived in.
The lender, Flagstar Bank, refused to accept the payments because the loan was taken out by the husband only and the Lender said they could only accept payments directly from him.
Well, he died, didn’t he?
No matter, foreclosure proceedings were started by the Lender and to counter, Mrs. Barzelis started her own lawsuit of wrongful foreclosure against Flagstar.
Of course, the case is much more complicated than what I have stated here, but the long and short of it was that the property and debt had to be considered part of community estate so that the debt could pass on to the wife and she could pay on it.
On the surface this is a perfect example of a Big Lender riding roughshod over the consumer. Where is the sympathy and empathy they should have shown?
On the other hand, it is interesting how state laws and federal laws come into play.
There is no doubt that it took an attorney with both backgrounds to help Mrs. Barzelis win her case.
Now she is legally responsible for the debt.
Which makes you wonder, doesn’t it? Did she win?
HOW DO TAX LIENS PRIORITIES WORK?
We all have a fear of the IRS. Human nature being what it is, we will do just about anything not to have the IRS banging on your door.
However, there are times when it can’t be helped, particularly when income taxes are not paid.
The IRS sort of frowns on that and they have been known to put a lien against a person if he doesn’t pay those nasty little amounts within 10 days after notification is given.
As it is filed against the social security number, this is a blanket lien which will attach to everything the person owns and it will pop up in the most inopportune moments, like whenever the person sells or buys property or a business.
This is one of the reasons why we ask our Buyer and Seller to complete a Statement of Information.
The question follows then: what priority position do these IRS and State tax liens have when there already are mortgages on the property?
If the mortgages were recorded BEFORE the tax liens got recorded, then the IRS and State tax liens take a backseat position to the mortgages.
This does not mean that the liens don’t have to be paid off; it just means that the federal and state agencies cannot repossess the property unless they are willing to deal with (aka “pay”) the mortgages that were filed before them.
It also does not mean that if the lenders of these mortgages foreclose on the property the IRS or State tax liens are wiped out.
Much like a nasty virus, until they are paid in full and a Release obtained, these liens will follow a person wherever he goes, whatever he owns and whatever he buys in the future.
However, when it comes to property tax liens it becomes a different story.
Property tax liens are specific to a certain property and have immediate priority over mortgage or other tax liens.
If left unpaid, the property is put into default status and conceivably, after 5 years and proper notification to any and all parties with any interest in the property, the County will have the right to “repossess” the property and put it up for tax sale, at which time those existing mortgages and aforementioned tax liens would then be wiped out.
But Tax Sales are a whole different ball game and lots of fodder for future topics.
So, that’s the scoop on taxes!
PREPPING OUR COMPUTERS FOR THE TRID
Unfortunately, the TRID may be postponed, but it is not gone. Sooner or later (now it is “later”) that particular bomb that was lobbed further down the road will blow up.
While waiting for the bomb we continue absorbing webinars and seminars hoping that by the time October 3rd comes around we will be in a position to dodge the bomb, unscramble the Lender requests, decipher what they really want and regurgitate the forms the way they need it, in the format that is required.
We aren’t sitting around twiddling our thumbs; we are using this added time to make sure that we have all the necessary new hardware, software and tie-ins to the platforms that will be necessary come October 3rd.
While listening and viewing a recent webinar on the new software, I realized that like an Excel sheet in which you have added double the number of columns because we need to work with two simultaneous but different software, the expanded screen view will barely fit on my 22” screen.
So I thought I would go online and see whether I can find a bigger monitor that will save me from rolling my mouse back and forth and squint at the screen. And I found it. Yessiree.
How about a Samsung 96.1”x 42.5” x 11.5” screen (without stand).
Take a look at that! Awesomeness!
Upon viewing this my husband said that I might just have to take down a wall and probably remove my desk totally, but hey, I will be able to see all the columns on one screen! I have to wait until makes it available, though. Rats!
SAMSUNG IS MY FRIEND
Oh, yes, today Samsung is my friend. A few days ago, while I was driving on the 605 freeway during early morning rush traffic, I found myself following an 18 wheeler for a few miles while waiting for my exit to show up.
Okay, I drive a standard sedan, not an SUV, and imagine my consternation when I almost totally missed my exit because I could not see the highway exit sign! Don’t tell me that hasn’t happened to you, and doesn’t it annoy the heck out of you?
So here’s a very innovative idea from Samsung that will save the world. Okay, maybe not the world, but at least me and all those drivers on the 605 fighting for space with the 18 wheelers: A screen on the back of that truck that would show the car behind what the truck driver is looking at in front of him!
We could now actually see if it was just one slow moving car holding up traffic in that lane or is it really bumper to bumper? And we won’t have to follow a hundred feet away from that darned truck in order to see the exit sign, right?
FOR FOODIES IN JAPAN
Things that are hard to come by will cost more; we know that, it’s the age old supply and demand syndrome.
We also know that different countries, different cultures, have different views of things that we may take very much for granted. For instance, we know that certain things can cost quite a bit in Japan and what they consider a luxury item may not quite jive with what we feel.
Here is a story about the auction of premium melons for a hefty $12,400 (sounds even worse in Japanese yen – 1.5 million yen!!!) , which as the article says, can be equal to the purchase of a new car. Guys, I won’t even pay that amount for a piece of jewelry, much less something that will go in one way and come out the other!
What if it looks great, and that’s why you would bid on it, and then it turns out to be a…. melon? (Ha, ha! Laughing out loud very hard at my own joke.)
EMOJIS. AND HOW ARE YOURS?
Here is my funny for this edition. I am not an emoji person. The only ones I know are J and L. Anything further than that and you just lost me.
Are you an emoji person? This article will surely be worth a “let’s-scratch-our-heads-and-maybe-ask-our-kids” read for you. Did you pass that?
The graduate to this. Once you have deciphered this new hieroglyphics, how about sharing it with the rest of us?
KEEPING ESCROW TRANSACTIONS MOBILE
You have heard of mobile notaries, right? These are notaries who will travel to a customer to obtain signatures so that their documents can be signed in the comfort of their own home, in their pjs, with no makeup on, and without hassles.
Now there is a Title Company in Detroit who is going one step beyond in customer service.
I am not sure how this works and whether it is feasible or not, especially in California, but they are offering an office on wheels equipped with all the necessary IT gadgets to get the escrow closing work done.
So this Closing Agent (that’s what they are called in the East Coast) will just drive over to where the clients are to perform a “round table closing” (another East Coast invention) where the Buyers and Sellers gathered around the kitchen table instead of the business office’s conference table.
The Closing Agent will then get all the escrow and loan documents signed and notarized, deposit the final funds, balance the funds and cuts the net proceeds check to the Seller, all right then and there. Really?
If the State Regulator (and I am not sure that Michigan has a State Regulator who oversees Closing Agents like we do here in California) asks for a physical address, it would be, “Well, right now we are at the corner of Happy and Sunshine”?
No, Viva Escrow is not going to do that anytime soon. Sorry.
Oh, The Hazards of the Escrow Desk!
This one has to be called “The joys of being caught between a rock and a hard place”
It is Thursday and notification was given to us that the transaction must close on Friday.
The long weekend is coming up, the lock is expiring and most important, the date and time for the movers have been set.
In order to close the transaction we escrow officers need to order the funding of the new loan one day beforehand, before the funding cutoff time hits.
In this case the East Coast Lender tells us that it will be 11:00 a.m. Once that loan funds, we have to close escrow and record the documents the next day.
The Lender wants to be sure his loan is secured on the property right away.
All’s well and preparations are made until we get a frantic call (and why are they always frantic, I don’t know) that the Buyer cannot make the walk through until 11:30 that morning.
The Buyer insists that he must give the final okay before he will allow the loan to fund. After all, once the loan funds, he starts paying interest, so okay, we understand his need for control.
Did I mention that two days ago we were inundated with heavy rain after almost 6 months of hot, dry weather?
Here is what ran through our minds.
What if, after the long dry spell, the rain caused the all sorts of leaks to pop up as roofs cracked?
What if the walk through is a disaster?
Do we take the initiative and ask for funding first before the walk through is completed and keep our fingers crossed?
Do we follow the Buyer’s instructions and wait, which will cause us to miss the funding deadline thereby ensuring that there won’t be a closing at all on Friday?
What do we do? What do we do?
We did what we could only do: we called the Seller’s real estate agent. What is the condition of the house? Will it pass muster? Yes? Fund the loan and keep our fingers crossed!!!
Some days I hate this business…..
My new brochure on the FIRPTA and the California Withholding is out! If you would like a copy, drop me an e-mail!
Direct Tel # (626) 744-1684
E-Mail – JulianaT@vivaescrow.com
“Whether you think you can, or you think you can’t – you are right”
̴ Henry Ford ̴
