September 2017 Newsblog

BUSY! BUSY!!!
HOT OFF THE PRESS AND RIGHT ON TIME – FINCEN GTO CHANGES AND WE NEED TO WATCH OUT

For the last year we have kept a very wary eye out for transactions that match the requirements for a “Covered Transaction” under FinCEN’s Geographical Targeting Order (GTO).

They have been renewing it every 6 months, but with their successes in lassoing in illegal money laundering, they have (or course) extended it again, but with some important changes.

So for those real estate agents who work high end deals, do I have a “deal” to sell you.

Effective September 22 and through to March 20, 2018, the original qualifications still apply with the exception that funds that are wired to us are no longer a part of the exemption. So let’s run this through one more time as a refresher:

If you have a residential 1-4 unit transaction OVER $2,000,000 that is being purchased by a Legal Entity Buyer (LLC, Corporation, etc) and the transaction is in the following counties – L.A., San Diego, San Francisco, San Mateo and Santa Clara, then you should watch out because.

If this Legal Entity Buyer is buying ALL CASH and not getting an institutional loan then you have a “COVERED TRANSACTION”.

And you don’t want a transaction that is a “Covered Transaction”. Under a “Covered Transaction” we will need to ask all members and representatives of the Legal Entity who own 25% or more of the interest in the entity to supply their personal information, passport, driver’s license, etc. and this gets submitted to FinCEN.

The new GTO order includes additions of other U.S. locations (including Honolulu, Hawaii) and to obtain further information, please contact us, your Escrow Officer or FinCEN directly at #(800) 767-2825. Here is their news release.

If you want a copy of our newest GTO flowchart, please e-mail us at info@vivaescrow.com.

APPRAISAL FREE MORTGAGES

I love that four letter word – FREE! But mortgages not requiring appraisals is the elimination of one of the cornerstones of lending. This is not some odd weird Lender program out in the boondocks.

This is Freddy Mac and Fannie Mae backed loans on certain purchase mortgages. There is always a catch to “free” and we shouldn’t subscribe to that “anything free is good” concept.

Do you see shades of the economic meltdown looming?

We can’t have possibly forgotten all those overvalued appraisals for higher loan amounts that led to the mortgage meltdown?

The thinking behind this is that it saves the Borrower about $500 and maybe 10 days in their loan approval process. Really?

Is this sufficient reason to eliminate this very important lending consideration? Read about this turn of events here.

What do the appraisers say? Obviously, they are a little nervous.

We are talking their livelihood and although I am sure they understand that times are changing, is it really worth the while to save the bucks and the few days?

I understand that there is already a tremendous shortage of qualified appraisers due to licensing requirements; will this further discourage new entrants into the field? It will be a viciously constricting cycle.

Here are comments from the appraisers side. If you have more than a few minutes, here is a dissertation (yes, it is pretty long whiny article) on the woes of the appraisal market.

A NEW CONCEPT – MORTGAGE LINKED CREDIT CARD  

I did say at the beginning that this is a busy month(s). Here is a new concept in the mortgage industry. Get a mortgage which has a credit card tied to it.

Earn points for using the card which goes to pay down your principal (instead of free airline flights or whatever).

Yes, indeed, this is the new name in the game, in more ways than one. Remember Nationstar Mortgage who changed the name to Mr. Cooper last month?

Well, this is the surprisingly bright idea from some (Millennial?) on their marketing team.

Use their card and you can earn cash back that can apply to their mortgage! 2 birds and one big stone. You get their mortgage and get their credit card. Use one and benefit the other.

Win-Win!

Interested?

The article is here (see, I am not making these things up) and I am sure you can Google Mr. Cooper to get more details.

One financial industry commentator said that Nationstar should have re-named/re-branded the name as “MRS. Cooper” as everyone knows who actually wears the pants and makes those financial decisions at home. LOL.

E-CLOSINGS

We knew that it was going to come down sooner or later, and I guess the time is now.

United Wholesale Mortgage, a lending institution which the escrow industry is familiar with, has closed their very first E-Closing refinance transaction.

This is a full virtual closing, with the Borrower submitting and signing everything electronically, including, in particular, the notarization of the security documents via video cam with the notary, which has always been a sticking point.

Don’t everyone rush to their favorite mortgage broker and demand to sign their loan docs dressed in their pj and in the comfort of their own home/computer.

There are a number of delicate considerations and the biggest is that not all states allow e-notarizations.

Without virtual signing notarization laws that allow notarization to be done without the client appearing before the notary, the “e-closings” can only be considered a “hybrid closing” which are a combination of electronic signing and then wet signing those documents that needs to be notarized and recorded.

The future is NOW. And we escrow people are looking at this with some trepidation.

That’s because FRAUD is a bad 5-letter word. For those of you interested in this next step of human evolution here is an article which gives you a crash course on “the next best thing”.

 A STORY OF … UNPAID TAXES

I was thinking of a suitable title for this paragraph and I couldn’t figure out what to name it. A Story about…. “what happens when you don’t pay taxes”? “what happens when you don’t check your mail”? “what happened to love thy neighbor?”

It’s a simple story, really. A real estate developer bid and won at a tax sale auction conducted by the County Tax Collector a piece of property in a very prestigious San Francisco neighborhood.

Have you heard of this one?

The property was a common area street that was owned by the homeowners association that did not pay taxes for many years because the Tax Collector did not have a good last known address for the tax bills.

Normally, before a tax sale auction happens, the Tax Collectors office is supposed to notify owners of all surrounding properties but either they didn’t do so or they did and no one took notice.

A developer sees the possibilities and steps up to win the bid.

Now that he owns the street he is thinking his options: How about “charge the residents to park on their street and rent out the 120 parking spaces that line the grand circular road”.

Now all those millionaires on that grand circular road got that memo and sat up and took notice.

As the article says, first thing after the shock wore off is “see you in court”.

You have to admit to a certain wide-eyed envy. Sure, the developer may be in for an expensive fight, but then, he bought it fair and square through his own entrepreneurial efforts and don’t we all wish we had that kind of luck!

Apparently, no one else on that street thinks this way. What a story!

YOUR WELLS FARGO FIX FOR THE MONTH

I am sure you are a little tired of all the bad (and stupid) things that Wells Fargo has been doing these last few years and are all coming into the light all at once.

I won’t belabor the issues that have befallen them but I need to point out two more problems:

• Instead of opening fake accounts they have frozen or closed customer’s bank accounts unexpectedly, bringing financial hardship to the account holders, and
• Wells Fargo has settled a lawsuit that claimed the bank (and other banks) charged veterans hidden fees when they refinanced. Wells Fargo will pay the government $108 million.
• They uncovered up to 1.4 million more fake accounts making the total about 3.5 million potentially fake bank and credit card accounts. Wells will pay a total of $6.1 million in refunds to customers, up from $3.3 million and has settled on a $142 million class action suit on this fake account scandal.

So, does anybody own Wells Fargo stock? Besides Warren Buffet, of course, who can probably use the loss on his income tax return.

What a mess.

CALIFORNIA HOUSING AFFORDABILITY

One final piece of news and I will hang it up for the month. I hate to end it with not-so-good news but the California Association of Realtors findings says that only 29% of California households can buy the $553,260 median priced home.

That’s because in order to qualify for this median priced home, we need to make $110,890 in annual income.

Take a look at that CAR chart in the article.

The Golden State is not so golden for many and it should be renamed. Given that it is over 100  ̊ here as I am typing, all the rain is in Texas and Louisiana, and we are bone dry, I vote “The Parched State”.

****************************************

I don’t take credit for this, but oh boy, does it resonate!

If my body was a car, I would be trading it in for a newer model.

I’ve got bumps, dents, scratches & my headlights are out of focus.

My gearbox is seizing up & it takes me hours to reach maximum speed.

I overheat for no reason and every time I sneeze, cough or laugh either my radiator leaks or my exhaust backfires!