Life On The Other Side

IMG_6124Being an allied professional in the real estate industry means spending your days guiding clients through the pitfalls and travails of the process with an observer’s cool detachment and level head, all in the name of helping them realize their goals and achieve their dreams.

Always Be Closing.

Then comes the day you find yourself on the other side of the table.  You become the consumer of someone else’s professional services.   Short of a sugar-laced, mid-afternoon double espresso, what better jolt to the system than being on the receiving end of lackluster service?

“Good morning Mr. Luzier, this is your wake-up call.”

For me it started innocently enough.  A quick email to a previously-utilized mortgage resource led to a phone application and a rapid approval for a refinance at a favorable rate.  Then, the real work began – providing account statements, insurance information, expense verification, tax returns, blood type – and so on and so forth.  Over, and over, and OVER again.

For One Hundred and Sixty. Nine. Days.

Yes, you read that correctly: 169 days.  My own refinance was taking so long that my office colleagues kept track by counting down for everyone to see – along the lines of the way the world waited with unfailing anticipation during the Iranian hostage crisis – i.e. “Day 145 – need updated bank statements AGAIN.”  Meanwhile, I convinced myself the repeated delays, unanswered questions, and glacial pace were no different than the treatment I often see my own clients endure at the hands of their mortgage lenders.

“This is the nature of the beast.”  “It doesn’t matter who you are or what you have – everyone gets treated the same way.” “Getting a mortgage these days is a marathon, not a sprint.”

These are all words I’ve said to others (in earnest) to assuage their feelings of having been chewed up and spit out by the mortgage process.  They are the same words I told myself to divert my attention from the cycle of disinterest demonstrated by those who had agreed to help me achieve my goal of completing a garden-variety refinance.

Thankfully, somewhere around Day 155 I had a moment of clarity, and on a hunch picked up the phone to reach out to a mortgage originator many of my clients hold in unusually high esteem – someone whose low-key demeanor and ability to answer people’s concerns in a methodical and intelligent way made me hope that perhaps even my simple project could one day reach its intended conclusion.

The difference was like night and day.

The approach from the new lender was simple and logical.  They took a quick look at my credit history in the context of the requested loan, then drilled down to assimilate the information necessary to provide their underwriter with a fully-defensible application package.  Since all was in order when application was made, the approval occurred promptly, and the list of pre-closing conditions to satisfy was reasonably short.

Barely 30 days will have elapsed from the first contact with the originator to the closing of the new loan.  Granted, all of the information requested of me was close at hand thanks to my prior experience, so I was able to short-circuit much of the document assemblage challenges that hog-tie so many in their effort to move their mortgage request from application to closing.

Meanwhile, I’ve received regular status updates throughout, enjoyed prompt responses to my inquiries, and was repeatedly impressed with the interactive nature of the conversation with my lender who expressed genuine concern about me, my financial goals, and what would work best for me and my family with this particular transaction.

Out of the morass came the simple affirmation that just because many have a dismal experience in a particular business sector, doesn’t mean this is the new normal.

As with most things, the right people on the job can make all the difference – because they are veterans who know the ropes and stay on top of the process –  because they want to do a good job for you and earn your repeat business –  because they care.

Life is all about choices, and the moral of this story is to choose wisely when it comes time to suggest to whom your clients should turn to satisfy their mortgage lending needs.

Realtors and novices alike know the mortgage approval process is not what it used to be thanks to drastic changes in regulatory oversight in the wake of the Great Recession.  So why waste your time with those who are not totally invested in or easily capable of delivering a 5-star experience under the new rules and regulations, when there are professionals out there who understand the challenges, and know how to negotiate the process so you come out the other end happy and satisfied?

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This information in this site is not intended to establish an attorney-client relationship, and if anything herein could be construed as legal guidance or advice, I strongly encourage you to consult with your own attorney before relying upon any such information.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

dunlapmoran.com

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Debunking Old Myths, Installment 1: Yes, You Need A Survey With A Cash Closing

Somewhere along the line it entered the Realtor lexicon the phrase “you’re paying cash, you don’t need a survey.”

It is as if the method of payment for the property magically changes the fact that…for example…a six-foot corner of the living room encroaches into the platted side yard setback…

It is common knowledge that mortgage lenders require a survey in connection with their loan.  However, there are those Realtors and buyers who believe that on this particular subject the inverse is true when it comes to paying all cash, and the survey requirement is merely the contrivance of mortgage lenders to make buyers’ lives more difficult and expensive.

So just what exactly is a survey, and why do you need one?

The survey is “the process by which corners, boundaries, divisions, and other attributes of land are ascertained and measured.”  A surveyor is the expert who renders his or her opinion as to the location of “property and its improvements and appurtenances.”  The physical rendering of the surveyor’s work is the map of survey.

The map shows a buyer precisely what they’re purchasing in terms of the boundaries of the land, the location of improvements on and about the land, and the rights of others (if any) to use portions of the land.  How one finances the purchase of a property has no impact on the physical reality of the property, its boundaries, improvements, and any third party rights relating thereto.   

Put another way, to decline to obtain a survey is to forgo an understanding about the location of a property’s boundaries and improvements, the nature and extent of any third party rights and uses, and whether there are any collateral issues regarding these or any other matters that would impact the ownership and enjoyment of the property.

It is also important to note that unless the closing/title agent is provided with an accurate survey in advance of closing, the buyer’s title insurance policy will contain an exception to coverage for “[a]ny encroachment, encumbrance, violation, variation, or adverse circumstance affecting the [t]itle that would be disclosed by an accurate and complete land survey.“  Provision of the survey allows the title agent to insure the buyer’s property free and clear of such matters (except any adverse matters indicated on the survey map).

Practically speaking, the most typical survey-related concerns involve easements and encroachments.   

An easement “is a right given to another person or entity to use [a person’s] property.”  For instance, most modern subdivision lots have easements around the perimeter of each lot that allow utility providers access for placement and maintenance of lines and conduits, or allowing the homeowners association or others access to and from the property for maintenance and other matters.  In other cases an easement may exist to provide access to a land-locked parcel by granting ingress and egress over the subject property.

Regardless of the nature of the easement (whether specific or general), it can limit one’s ability to do what they please with their property, so it is important to know where the easement(s) is/are located, and the nature/extent of the easement(s) prior to taking title to the property.

An encroachment occurs when physical improvements (i.e., the home, patio, garage, fence, etc.) are built beyond setback or easement lines within the property, or beyond the boundary line of the property (or likewise when an adjoining property’s improvements are built into the subject property’s boundary).

Some encroachments can be resolved prior to the time of closing, i.e., through physical removal, or through the negotiation of the appropriate agreement, etc.  In some specific cases an endorsement can be added to the final title insurance policy to provide the buyer with protection in the event of a later challenge to an encroachment that is not (or cannot be) removed prior to closing.  Some encroachments are of enough concern that the client may not end up purchasing the property at all.

Of course, the buyer would never have any of these options if a survey revealing the issue was not procured in the first place.

From the selling agent’s perspective, keep in mind that the FAR-BAR contracts specify the time period for acquisition of the survey (Section 9d), and the mechanism for identifying issues of concern and extending the closing date as necessary based on the survey results (Section 18B).  As with the rest of the contract form, it is important to be familiar with these provisions so you are not caught unaware when a survey-related issue comes to light.

From the listing agent’s perspective, always make it a point to ask sellers for a copy of the latest and most accurate survey of the property that they have available, and share this early on with the selling agent, or even attach to the MLS file so the information is readily available to potential buyers and their closing agent.  Also be prepared to discuss and have your sellers disclose any known survey-related issues so they can be addressed as soon as possible and hopefully not delay or hinder the closing.

As always, I encourage you to seek the advice and guidance of an experienced real estate attorney when it comes to understanding and interpreting surveys and their contents, and when having to protect clients’ rights in the event of survey-related issues or concerns.  It goes without saying that we would be delighted to provide such assistance when the time comes.

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This information in this site is not intended to establish an attorney-client relationship, and if anything herein could be construed as legal guidance or advice, I strongly encourage you to consult with your own attorney before relying upon any such information.

 All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

dunlapmoran.com

Beware of Mortgage Lenders Demanding Contract Changes

We all have our stories from the trenches of new and unusual requirements by mortgage lenders and how they impact the successful conclusion of an otherwise pleasant closing.  An alarming trend we have experienced involves mortgage lenders dictating contract addenda.  I use the word “alarming” on purpose, since what might appear to be a reasonable request might have significant, unintended consequences.  At the very least, it can prove to be inconvenient and inappropriate.

Cases in point:

1)  Two weeks before closing a diligent buyer liquidated a six-figure amount from his stock account in anticipation of the cash he would need to close.  The buyer alerted the mortgage lender that he was sending the funds direct to the closing agent, rather than having to deposit them into his own account, then turn around and wire out prior to the closing.  Two days before the the scheduled closing, as the buyer was struggling to get the lender to give its coveted “clear to close” signal, the underwriter said “please forward a contract addendum showing the $***,000 in escrow as additional earnest money deposit.”

As a savvy Realtor, you know what this means legally – suddenly the cash to close would be subject to claim in the event there was a failure to perform under the contract.  Not to say that the transaction had been contentious, but there were some notable hiccups here and there, and most importantly, there was no reason at all for the buyer’s substantial equity contribution to be at risk.  When pushed, the lender capitulated and waived the requirement.

2) A the result of some minor walk-through issues the morning of closing, a Realtor agreed to a small (<$500) credit to her client, to be paid from her commission.  She called and had her broker quickly provide us with authorization for the adjustment, and as the parties sat at the table the revised HUD was sent out for re-approval.  The lender’s response was”we need a contract addendum to document the credit.”  While the parties were all accommodating, it was uncomfortable for the Realtor and her clients, who were first-time home buyers, and who had specifically instructed her not to say anything to the seller.

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Since there is no way to prevent a mortgage lender’s request for a contract addendum, the best approach is to remain vigilant about the substance of the request, and if it involves anything at all unusual or off the beaten path, do not hesitate to ask the closing agent or the buyer to seek clarification or push back as needed.  Oftentimes the underwriter making the call has no clear understanding of the practical impact of the addendum they’re demanding, and is just trying to check a box as to a perceived issue and move the file off their desk.  As a shrewd professional, you understand the potential pitfalls, and can help work through the problem the underwriter’s demand creates by getting to the heart of what is driving their request, and re-framing the conversation.

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This information in this site is not intended to establish an attorney-client relationship, and if anything herein could be construed as legal guidance or advice, I strongly encourage you to consult with your own attorney before relying upon any such information.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

dunlapmoran.com