It’s always nice to start out the monthly newsblog with some good news. No, we are still struggling with the real estate drama of no supply and over demand. What has happened is that in the mortgage refinance market, the Federal Housing Finance Agency (FHFA) is eliminating the “Adverse Market Fee”. I talked about the charge of this extra fee of .50% on refinance loan amounts over $125,000 in my newsblog of September 2020. Come August this fee will no longer be charged. Will that mean lesser origination fees for customers? Or will lenders continue to include the higher point fee and pocket the difference? Don’t cry for FHFA however, according to this article Fannie made $5 billion and Freddie made $2.8 billion on this fee just during the 1st quarter of 2021.
What do we have for our Q &A session for this month?
YOU HAVE QUESTIONS, WE HAVE ANSWERS!
VIVA ESCROW Q & A SEGMENT
(Real questions emailed/called in to us)
Question: I have a transaction that is closing soon, but the Lender insists that we have to re-do the purchase contract because my sister-in-law, who is co-signing for me, was not mentioned in the contract or the escrow. Do we have to re-do the contract?
Answer: You will definitely have to add her to the escrow transaction. Usually, escrow would do an amendment that adds her name and states that her signature on the amendment will signify her acceptance and approval of all documents that were issued before.
However, some lender programs may find this insufficient for their underwriting purposes. They may want the person’s name to be on all the documents from the beginning, including the purchase contract. This means that your real estate agent will have to re-do the contract with her name added on, hopefully with the same dates as before. On the other hand they can try to get around this by doing simply doing an Addendum and having your sister- in-law sign on all pages of the old contract to signify consent.
To answer your question in a nutshell, whatever it takes to get your loan finalized, do it right away! Minimize delays.
Educational Moment: If you did not know you needed another person to qualify for the loan until halfway through the transaction, that is another story, but if you know, going into a purchase, that you are going to need that person’s help, please ask your loan agent if you should bring that person in right at the beginning so that paperwork will be correct from day one. A little foresight will save everyone a lot of headaches later on.
Let me share a case we had recently: 2 weeks into a 30 day transaction a 3rd person’s name popped up on some of the initial loan disclosures we received. Surprise! Who is this “Jane” person and why is her name on the loan disclosures? According to the Buyers, they and the lender knew all along that Jane would be needed in the transaction to help qualify the loan. However, no one bothered to mention this important fact to escrow and now we and the real estate agent had to re-do paperwork to add her name on. If the Buyers had advised their real estate agent at the start the offer could have been written correctly with all 3 person’s names, saving the mad scramble halfway through. If we had found out further into the transaction, the resulting delay would have required an escrow extension. Fortunately, the correction was caught early enough and even better, we did not have to explain to the Seller why he had to re-sign and re-notarize the Deed at additional cost. Remember to communicate with your Escrow Officer!
Question: In a Revocable Living Trust, the Trustor listed the names of all her 7 living children, as well as stating that the remainder of the trust estate shall be distributed in equal percentage to those 7 children. Upon the Trustor’s death, can 6 of those children refuse receipt of the trust estate (a single family house), leaving 100 pct of the trust estate (the house) to one sibling?
Answer: The answer is “yes”, but my recommendation is as follows:
If 6 of the siblings decide that the single family home shall go to one of the Beneficiaries, the Trustee of the Trust can grant the property to that 7th sibling. However, I recommend, with an eye to future issues and family dynamics, that the siblings sign an agreement (and have it notarized if possible) that they give up their claim to that house to the 7th sibling. Should this 7th sibling sell the house in the future and the escrow or title company question the transfer of ownership deed, this sibling has proof that all beneficiaries in the Trust agreed. The drawing of this agreement is something that you might want to have an attorney draw up, just to make sure everyone is protected.
Educational Moment: When it comes to family matters, particularly when it involves money, always discuss it with the family members involved and draw up an agreement that everyone will agree to and sign.
Do you have other questions I can answer for you? Please feel free to email me at info @ vivaescrow.com
~ Funny of the month~
Dean Martin and a Brain Surgeon meet up at a bar….it doesn’t take much of a brain to figure out the skit would be pretty comedic!
~ Quote of the month ~
“Maybe it’s true that life begins at fifty, but everything else starts to wear out, fall out, or spread out.”
– Phyllis Diller –
Escrow Tip #9:
Payoff information – The Importance of being “Right”!
You Have Questions? We Have Answers!
Juliana Tu, CSEO, CEO, CBSS, CEI, SASIP
“Escrow is my FOREMOST language!”
The opinions expressed in this blog are solely the author’s.
Your comments and viewpoints are always welcome.
Info @ VivaEscrow.com