So what is wrong with this practice and what could be the ramifications for the Agent, Officer and Client? Who would be liable for any errors or omissions made by the chosen company- the Agent or the Escrow Officer?

California Financial Codes 17403.2 and 17403.3 states that “No one shall solicit or accept an escrow instruction containing any blank to be filled in after that signing.” These laws were codified to prevent altered written instructions from being erroneously accepted by escrow, thus ensuring that the parties’ instructions are followed completely.

By leaving blanks, has the Agent skirted their obligation? By filling in the blanks, has the Escrow officer helped the Agent or have they altered the escrow instructions without approval from the parties? If an Agent leaves a blank and an Escrow Agent fills it in with a company who makes a mistake – who is liable to the Client? The Agent who has a fiduciary duty to use due diligence in selecting the best companies for their Client or the Escrow Officer who is forbidden by law from changing escrow instructions?

Send us your thoughts.

1) Fewer options, high prices and bidding wars

Demand from homebuyers is growing faster than the supply of homes for sale. “It’s creating a little bit of a shortage and a mismatch between supply and demand,” says Jed Smith, managing director of quantitative research for the National Association of realtors. Buyers are facing bidding wars in many parts of the country, and competing offers present a challenge for first-time homebuyers.

2) Loan Modifications made easier

Homeowners who are behind on their mortgages may get a hassle-free opportunity to reduce their monthly payments. The federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting in July. The offers will be sent to homeowners who are at least 90 days behind on their loans but no more than two years. Borrowers won’t be required to submit any financial documentation to the lender to get approval.

3) FHA loans lose appeal again

Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don’t get their Federal Housing Administration mortgages by June 2. Once the change goes into effect, all new FHA loans with less than a 10 percent down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10 percent down payment or greater will have to pay for mortgage insurance for at least 11 years.

4) Equity loans and cash-out refis are back – sort of

According to a recent study by CoreLogic, about 1.7 million homeowners regained equity in their homes last year, and an additional 1.8 million are close to it. All they need is home values to go up by another 5 percent, says CoreLogic. As home prices rise, millions of homeowners might consider turning to their homes as a potential source for a loan. Cash-out refinances and home equity loans are slowly returning, along with the temptation to tap into equity.

5) Mortgage rates rise at a snail’s pace

Mortgage rates are expected to creep up this spring but should remain low. The Mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9 percent by the end of the first quarter this year. That’s not as good as the super low rates that borrowers saw in December 2012, but it’s still a good deal for most buyers and refinancers, housing experts say. “Rates are climbing slowly, but even by the end of year, they are not going to be astronomical,” says Smith. “They are still a bargain.”

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Approximately 96,000 troubled borrowers were shortchanged on compensation from the most recent foreclosure settlement reached between the Federal Reserve and Goldman Sachs Group and Morgan Stanley & Co.

The company hired to distribute the money, Rust Consulting, sent checks to about 96,000 borrowers on May 3 that “were smaller than the amounts that the Federal Reserve had specifically instructed Rust to send,” the central bank said Wednesday.

Rust Consulting diffused the blame, attributing the mistake to a clerical error, saying in a statement that the remainder of the 217,000 checks sent May 3 on behalf of Morgan Stanley and Goldman Sachs were for the correct amount.

Rust Consulting and The Federal Reserve did not provide details on the amount missing or how the error occurred. Rust stated it was sending supplemental checks to shortchanged borrowers to make up the difference. Coming under further scrutiny is the Independent Foreclosure Review program. The troubled program was officiated by the Federal Reserve and the Office of the Controller of Currency, who regulates national banks.

Initially, the government entities planned to require banks to hire consultants to review all foreclosure documents and abuses such as “robo-signing” which occurred in 2009 & 2010. The review proved too costly and time-consuming, and was discarded for a $3.6 billion relief fund for all borrowers affected. Amounts varied depending on likelihood of damages caused by improperly handled foreclosures.

The program launched last month and borrowers were left high and dry, unable to cash checks, because Rust Consulting had not insured they would clear. The NSF checks were distributed to borrowers of former Goldman Sachs subsidiary, Litton Loan Servicing, and former Morgan Stanley subsidiary, Saxon Mortgage Services. Both have been sold and now are owned by specialty loan servicer, Ocwen Financial Corp.

The 13 large mortgage servicers covered by the agreement include the giant banks Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp. and Citibank Inc.

More information is available at the Independent Foreclosure Review website. Borrowers may also call Rust Consulting at (888) 952-9105.

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Did you know that Fidelity National Financial, Inc. “Fidelity” owns 100% of at least one California real estate brokerage company?

We just learned that J. Rockcliff, Inc. is a Fidelity-owned company. According to their own website, they are one of the fastest growing real estate companies in California with offices in eight (8) cities and they have hundreds of agents.

Interestingly, the J. Rockcliff website does not appear to disclose the Fidelity ownership. We learned of this ownership through an “Affiliated Business Arrangement Disclosure Statement.” In the document, Fidelity discloses that it owns 100% of the real estate brokerage firm, thus competing directly with brokers and agents in the residential market. The Disclosure Statement further reveals that their affiliated settlement service providers are also owned by Fidelity.

What could be a ground breaking first in the real estate industry, is that Fidelity, by way of its ownership in a brokerage firm is now doing business in every facet of the real estate industry. This includes escrow, title, NHD, home warranty and now home sales! So every dollar you spend on Fidelity products and services, may be funding their expansion into your business.

By the way, Fidelity also discloses in the same document that Fidelity subsidiaries own 100% of Disclosure Source NHD, Chicago Title, Ticor Title, and many Fidelity-branded settlement services. They also own 40% of Pacific Coast Title Company. Click here to view the Affiliated Business Arrangement Disclosure Statement. This is a real client document so the names were removed to protect their privacy. Also, at the top of J. Rockcliff’s website, the Fidelity-owned broker discloses that they use Transaction Point, which was previously owned or affiliated with Fidelity and which was the subject of a multi-million dollar settlement with HUD based on alleged RESPA violations.

Would you send your settlement services business to a competing brokerage?

Are you as surprised as we are to learn about this business relationship? Will this change the way you do business with Fidelity? We want to know!

Regulators and private lawyers have discovered kickbacks and sham agreements that inflated fees paid by customers, and discouraged free competition. Many of these shady dealings occurred during the real estate boom before the 2008 financial crisis. Today, it is important that consumers be aware of the dangers when purchasing a home.

Recently, a Maryland civil case claimed that a Howard County real estate agent, Creig Northrop, took in hundreds of thousands of dollars he received through unlawful payments over a period of 13 years, to send settlement business to a local title firm. The suit alleges that the kickbacks violated a federal law designed to protect home buyers against these malpractices. Three thousand customers were harmed throughout the 13 years, and are now asking for $11.2 million in damages.

According to court papers, Northrop received $6,000 to $12,000 a month from Lakeview Title under a 2008 marketing agreement between the two parties, which outlined that Northrop would “designate Lakeview as its exclusive preferred settlement and title company,” and would not “designate or endorse any entity” other than Lakeview for such business. Northrop denies the charges and is fighting the complaint, alleging that all payments were for permissible services and not for referrals.

Northtrop’s case is just one of many to have been uncovered. On April 4, the U.S. Consumer Financial Protection Bureau announced that four major national mortgage insurers agreed to pay $15.4 million in penalties to settle a complaint that they had made improper payments to mortgage lenders in exchange for business.

On a general scale, lack of disclosure is a definitely problem. Seeking independent advice from people who have no financial stake in the transaction is advised. Are you surprised by these lawsuits? Share your thoughts with us.

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The servicers, who include Wells Fargo and JP Morgan Chase, agreed to pay $3.6 billion to more than 4.2 million borrowers in a settlement reached in January. All other servicers began making payments on April 12, leaving Goldman Sachs and Morgan Stanley trailing behind in the process.

If recent history is any guide, checks will range from $300 to more than $125,000 and will be made by mid-July. Borrowers who were eligible for payments have already received notification postcards from Rust Consulting Inc., the company in charge of handling the payments.

As of Friday, around 1.2 million checks with a combined value of about $1.2 billion had been cashed or deposited in homeowners’ accounts.

Do you feel justice has been served? Does a check for $300 make up for a foreclosure? Does this sound like justice or the cost of doing business to you?

For more on this story, click here.

The standard 30-year mortgage rate dropped this week to an average of 3.35%, its lowest rate in four months and within a whisper of its record low of 3.31% in fall, Freddie Mac said Thursday.

The 15-year fixed mortgage, popular with homeowners refinancing loans, set a record low for the second straight week, falling from 2.61% to 2.56%, Freddie said in its weekly tally of what lenders are offering to solid borrowers.

The long-running survey recorded an all-time record low of 3.31% for the 30-year fixed loan on Nov. 21, which rose to 3.63% on March 14, and has since tailed off amid a weak economic recovery and little sign that inflation is a concern. It was at an even 3.4% last week.

Freddie Mac asks lenders each Monday through Wednesday about the terms they are offering to borrowers with down payments of 20% or more, solid credit scores and the capacity to repay their debts.

The borrowers in the latest survey would have paid an average of 0.7% of the loan amount in fees and points to the lender.
Have we reached the bottom of rates for a while? How will these new rates affect your business?

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The annual rate of new home sales jumped 1.5% in March to 417,000—the second highest monthly sales pace in three years. Year-over-year sales in March were up 18.5% according to data released Tuesday by the Commerce Department.

On Monday, the National Association of Realtors reported that only 1.93 million existing homes were for sale last month, the lowest home-count in March since 2000.

Builders are putting an increasing number of new homes into the market. Commerce Department data from Tuesday shows 153,000 newly built homes for sale.

Builders have taken advantage of heightened demand to raise prices. The median price of a new home in March was $247,000, up three percent from a year ago.

However, builders aren’t completely out of the woods. The National Association of Home Builders reported earlier this month that builder confidence fell for a third straight month, citing the increasing cost of land, labor, and construction materials.
The good news for builders is the plummeting inventory of existing homes on the market. According to Realtor.com, nine of the ten largest annual declines in existing home inventory as of March occurred in California markets, including Stockton, Sacramento, and Orange County.

Are builders cutting you out of a sales commission? Are your buyers asking to see new homes because of low inventory? What’s happening to you and in your market?

Are any of you old enough to remember land fever? Most housing bubbles in our recent history were relatively local in nature and they were caused by the promotion of supposedly valuable lots of land.

Land fevers occurred in Florida in the 1920s where shady operators sold “swamp land” as an investment. Earlier land booms included New York State in the 1790s, Kansas in the 1850s, and California during the gold rush. In these situations investor induced speculation is generally blamed for the real estate bubbles.

The housing bubble in which we are currently recovering was much more widespread in nature due to financial promotions including sub-prime mortgages, no-down payment mortgages, and securitized mortgages.

It was also fueled by the belief that because land is finite, all home prices must rise. However, a study conducted by Morris Davis of the University of Wisconsin and Jonathan Heathcote of the Federal Reserve Bank of Minneapolis indicated that the share of nonfarm home value accounted for by land declined from a high of 36.4 percent in 2000 to 23.7 percent in 2012. Overall this is a relatively small increase from 15.3 percent in 1930.

Which begs the question: Are your clients buying property because of the perceived value of the land or the house? We’d like to hear from you.

“This is interesting. I wonder how this will compare to last year’s statistics for the summer months in 2013. The percentage drop is much more significant than I would have expected!” from Genevieve.

Genevieve thank you for your comment! Statistics are only a prediction when they are done ahead of time.

“I think the real problem is lack of inventory of previously owned homes.” Mary

Mary thanks for your comment! We agree that the problem is a lack of inventory. Tell me what you think of the inventory in your area.

The full Story:
Why have sales of previously owned home sales dropped with inventory at record lows? Is the housing rebound over? An unexpected drop in the market occurred between March and February, when sales of previously owned homes fell 0.6%.

The National Association of Realtors’ reported several reasons behind the shift. The first being a lack of supply in the housing market, not a lack of demand. Only 30,000 net new units hit the housing market in March, this number is down a whopping 16.8% from the previous year, and is the lowest inventory level for the month of March in 13 years.

The National Association of Realtors asserts that rising demand and falling supply continue to push prices higher. The median home price in March is up 11.8% from last year. In the Western market, particularly, median prices rose 26.1% from last year, a true signifier of inflated price points.

Additionally, buyers are becoming increasingly frustrated and some sellers are getting greedy. Due to low inventory, many sellers aren’t willing or able to sell homes at prices down from seven years ago. Sellers aren’t confident they can find another home to move into, so they are less likely to list their homes.

The current market isn’t fun for real-estate agents, but it is good for home builders. If would-be buyers are motivated to buy now to take advantage of low prices and low mortgage rates but can’t find a home on the resale market, they’re likely to turn to the new-home market. New homes have made a comeback from the depressed levels of a year ago, and builders are regaining market share.

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