Questions that Need Answers

What is a HUD-I Settlement Statement?

The HUD-I Settlement Statement is the document prepared by the title company at closing which shows where all of the money in the transaction is coming from and going to. It gives a 'financial picture' of the closing transaction. At closing, the title company is responsible for preparing the HUD-I Settlement Statement in accordance with the contract, lender's instructions, market practice and state and federal laws. Every closing should have a HUD-1.

What should I know about title insurance?

Most home sellers and buyers have been informed that obtaining title insurance will provide them necessary protection over possible title defects, but many remain uncertain why this is so. You buy car insurance to protect yourself, not because you think you are going to be in an accident. Title insurance is there to protect your most important investment.

What is owner's title insurance?

Owner's title insurance provides you with protection against the loss of your home caused by someone in the future finding a problem with the title.

Why does the buyer need title insurance?

Even the best title search, performed by the most experienced and capable experts, cannot ensure that no title hazards exist. Some problems just aren't revealed in public records. Years ago, there may have been an honest mistake in determining the status of title. Or today, a previously unknown heir may come forward to claim ownership or a deceased relative's property. To help protect you in these events, First Tipton Title can issue you an owner's title policy. This will insure you against most of these unforeseen problems. We not only help to remove the flaws that show, we also insure against those that may not show.

What if I don't have owner's title insurance?

If a problem with your title occurs and you don't have owner's title insurance, you could lose everything you've invested in your home or face expensive legal costs. No one wants someone else living in their home after they have paid the mortgage.

What risks call for title insurance protection?

Real estate has such great value and is so basic a form of wealth that many special laws have been enacted for its protection. As a result, the owner of land has exceedingly strong rights and so do the family and heirs of the owner.

However, others may have "rights" in the property as well. There are mortgage and leaseholder rights; liens due to unpaid taxes; lien claims to those whom the owner owes money; mining, oil or air rights, and many others. Anyone who has such a claim is, in a limited way, a part owner. He or she cannot ordinarily be deprived of their interest except by having the claim settled or released. As a new owner, you may know nothing about these risks, but you are still vulnerable to such claims on your property.

My lender has a mortgage title insurance policy on my property. Isn't that enough?

No, it is not enough. If there is a complete failure of title, you have no protection and could lose both your property and equity in the property.

A mortgage title insurance policy protects only the lender's interest in the property, not the current owner's. First Tipton Title provides owners' title insurance policies; to protect the owner's interest in a piece of property should a claim arise. Purchasing an owner's title insurance policy at the same time that the lender orders the mortgage title insurance policy can result in a huge savings.

Is title insurance expensive?

The cost of title insurance on any piece of property is very small when compared with the benefit and security it gives. And, there are no annual payments to keep the policy in force. The original premium is your only cost as long as you or your heirs own the property.

How can there be a title defect if the title has been searched and a loan policy issued?

Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

Doesn't the seller's deed take care of giving me clear title?

No! Not at all. A "deed" is merely an instrument whereby a seller transfers his or her right of ownership, whatever it may be, to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine for certain what rights, liens or claims may be outstanding against your title.

What is Predatory Lending, and how can I protect myself from loan fraud?

According to HUD, people across America lose their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:

Sell properties for much more than they are worth using false appraisals.

Encourage borrowers to lie about their income, expenses, or cash available for down payments in order to get a loan.

Knowingly lend more money than a borrower can afford to repay.
Charge high interest rates to borrowers based on their race or national origin and not on their credit history.

Charge fees for unnecessary or nonexistent products and services.

Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.

Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.

"Strip" a homeowner's equity from by convincing them to refinance again and again when there is no benefit to the borrower.

Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

Be Smart: ACH Credit Transfers

There is a type of electronic check or transfer of funds that is called an ACH credit transfer. It can be used to fund real estate transactions. The Tennessee “Good Funds” statute at TCA 47-32-102(2) authorizes the use of Federal funds wire transfer including electronic payment as defined in 12 CFR Section 229.2(p). You guessed it, 12 CFR Section 229.2 defines electronic payment as a wire transfer or ACH credit transfer. We have learned that title agents in Texas and Louisiana have closed and disbursed on funds received as an ACH credit transfer only to have those funds withdrawn from their escrow account several days after closing.

ACH electronic transfers to a title agent’s escrow account are similar to the use of a person’s own credit card or debit card to make a payment or purchase. In other words, an ACH transfer is an electronic check rather than a paper check. And, although, ACH transfers are electronic, they are NOT “wire” transfers. Some lenders are funding real estate transactions by the use of an ACH transfer which costs them mere pennies to do, as opposed to a wire transfer that can cost an average of $10 to $20 per wire.

One of the dangers of an ACH transfer is that it can be recalled or reversed, even after it reaches the title agent’s escrow account. A wire transfer once credited to an agent’s account cannot be reversed or recalled. An ACH transfer may be recalled for up to 5 days after the settlement date, or as much as 90 days after the settlement date for certain limited reasons such as an unauthorized transaction.

We suggest that you exercise caution in funding upon an ACH transfer. You should contact the bank in which you maintain your escrow account to see if your bank can “block” the recall or reversal of an ACH transfer. The “block” would not stop the ACH transfer from entering the escrow account; it would stop the recall or reversal of the ACH transfer.

Memphians prefer Labradors

From The Memphis Business Journal

Labrador Retriever is Memphis' favorite canine, according to the American Kennel Club.
No. 2 on the list of top 10 most popular AKC-registered dogs in Memphis for 2006 is the German Shepherd, followed by Boxer and Rottweiler. Beagle, at No. 5, tied with Golden Retriever, at No. 6. Poodle, Yorkshire Terrier, Shih Tzu and Miniature Schnauzer rounded out the list.

While Labrador Retriever also tops the national list, small breeds are becoming more popular everywhere except in Memphis. Big dogs reign supreme in Memphis, with five out of the six top slots occupied by large breeds.
"Although a national trend is moving toward a preference for smaller breeds, Memphis has shown a loyalty to its large breed favorites," said AKC spokesperson Lisa Peterson in a release. "Even the popular Yorkie, which hit No. 2 nationally in 2006, only made it to No. 8 on the local list."
In general, Memphians stick to the dogs they've always loved:
> Memphis' top three breeds from 2005, Labrador Retrievers, German Shepherd Dogs and Boxers, hold steady for 2006.
> Local top 10 for 2005 all retain top 10 rankings for 2006, despite a shuffling in actual breed rankings.
And while Memphis' preferences are in line with the rest of the nation -- nine of the top 10 local choices appear on the national top 10 -- Rottweilers gain in local popularity, rising to the No. 4 spot, despite failing to make the top 10 nationally.

The American Kennel Club is a non-profit organization that oversees the sport of purebred dogs in the U.S.

N.Y. firm invests in airport center industrial site

From The Commercial Appeal

Falcon pays $37.1 million to expand holdings beyond big-market office properties

Falcon Real Estate Investment Co. LP, a New York-based real estate investment and advisory company, has entered the Memphis market with the purchase of the Memphis International Airport Center portfolio for $37.1 million.

The 68-acre industrial park, located at Winchester and Prescott, includes nine warehouses totaling 1.1 million square feet.
Falcon, known for investing in office properties in top-tier markets such as Chicago, Washington and Los Angeles, was attracted to the park because of its proximity to Memphis International Airport, the world's busiest cargo airport.

Read the entire story HERE.

Home sales down in Memphis area

From The Memphis Business Journal:


November home sales down

The Memphis Area Association of Realtors said Friday that 1,369 homes were sold during November, down from 1,427 in November 2005.

"Despite the sales decrease in November, year-to-date home sales of 18,343 and sales volume of $3.17 billion keep 2006 on track to exceed 2005's record-breaking totals," MAAR said in a statement.

The average home price was $170,000 in November, a decline of 2 percent from November 2005.
"For those who might be unsure of current economic conditions, there couldn't be a better time than now to buy a home in the Memphis area," said MAAR President William Mitchell in a statement. "With our market's long track record of steady and measured increases in property values, the historically low mortgage rates, and the good supply of homes available, buyers have a unique opportunity now invest in their future."

The Memphis Area Association of Realtors is Tennessee's largest real estate trade association with 5,000 members in Shelby, Fayette, Tipton, Hardeman, Hardin and McNairy counties. The data were collected from Shelby, Fayette, Tipton, Hardeman, Hardin, McNairy and DeSoto counties.

Happy New Year!

HAPPY NEW YEAR

from First Tipton Title Co.

New Home Sales Rise in November

From Forbes.com

By Martin Crutsinger 12.27.06

Sales of new homes rose in November while the backlog of unsold homes fell for a fourth straight month, providing hope that the serious slump in housing could be ending.
Sales of new single-family homes rose by 3.4 percent last month to a seasonally adjusted annual rate of 1.047 million units, reflecting solid sales increases in every region of the country except the South.
The increase was better than had been expected and offered hope that the steep slide in housing may be starting to bottom out as builders, using a wide array of incentives, begin to make a dent in the record level of unsold homes.

The 3.4 percent rebound in sales last month was the third increase in the past four months. It helped to lift the median price for a new home to $251,700, an increase of 3.2 percent from a year ago. The median price is the point where half the homes sold for more and half for less.

The housing industry has undergone a severe slowdown this year following a prolonged boom that had been fueled by the lowest mortgage rates in more than four decades.

This year's slump followed five years in which sales of both new and existing homes had set records.
What some are calling a recession in housing has been a big factor in the economy's overall slowdown, cutting 1.2 percentage points from growth in the July-September quarter, a period when the economy expanded at a lackluster pace of just 2 percent.

Many analysts believe housing is continuing to act as a drag on growth in the current quarter and will continue to depress activity through the early part of 2007.

New TN Law Involving Septic Systems

Dear Real Estate Professional:

Septic systems are rarely the choice for polite conversation. However, there is new legislation in Tennessee that deals with an old and often repeated problem: more bedrooms than the property’s septic system will allow. Currently my law firm is involved in litigation against two builders/sellers for this exact problem. One of my clients was actually told to “Just sue your realtor, they have money,” instead of suing the culpable party. Any real estate professional must take all reasonable steps to protect themselves against risks, the new law could add new liability to a realtor or broker.

Below is an amendment to the Consumer Protection Act that became effective on July 1, 2006.

SECTION 1. Tennessee Code Annotated, Section 47-18-104(b), is amended by adding the following language as a new, appropriately designated subdivision:

(A) Knowingly advertising or marketing for sale a residence as having more bedrooms than are permitted by the residence's subsurface sewage disposal system permit, as defined in Section 68-221-402, unless prior to the execution of any sales agreement the permitted number of bedrooms is disclosed in writing to the buyer.

(B) If a residence is marketed for sale as having more bedrooms than are permitted by the subsurface sewage disposal system permit and no disclosure of the actual number of bedrooms permitted occurs prior to the execution of a sales agreement, then the buyer shall have the right to rescind the sales agreement and may recover treble damages as provided in Section 47-18-109.

(C) A subsurface sewage disposal system permit issued in the name of the owner of the residence shall serve as constructive notice to that owner of the residence and that owner's real estate agent for the purpose of establishing knowledge as to the number of bedrooms of the residence for the purpose of finding a violation of this subdivision.

SECTION 2. This act shall take effect July 1, 2006, the public welfare requiring it.

Please feel free to contact me if you have any questions and, of course, Happy Halloween!

Sincerely,

Jeff Ward

October 31st will be here soon!

DID YOU KNOW? # 2

DID YOU KNOW?

Subject: Matricula Consular Cards

Most states in the U.S. require federal or state issued identification for notary purposes as long as it was issued within the last five years and contains a photograph, signature, physical description of the bearer and identifying number. Examples include a driver's license, ID card issued by the Department of Motor Vehicles or a foreign passport stamped by U.S. Immigration and Naturalization.

In the past two years, use of Mexican Matrícula Consular ID cards has increased tremendously and they are now being presented to notaries across the nation. Matrícula Consular is an identification card issued by the government of Mexico through its consulate offices. The card certifies the holder is a Mexican national living outside of Mexico, and states his or her birthplace and U.S. address. The card costs about $29 and is valid for five years.

The U.S. government has decided that, at this time, these cards are not a reliable form of identification due to the inability to verify the true identity of the card holder. Here are the primary concerns:

· The government of Mexico does not have a centralized database to coordinate the issuance of the Matrícula Consular ID cards. This results in multiple cards being issued with the same information.

· The government of Mexico issues the card to anyone who can produce a Mexican birth certificate and one other form of identity, including documents of very low reliability. There is a huge business involving forged Mexican birth certificates believed to be fueled by the demand for Matrícula Consular cards.

DID YOU KNOW? #1

DID YOU KNOW?

Subject: Transfer Fee Rights

We have probably all heard that a title is composed of a bundle of rights. We are familiar with the fee simple title to real estate, and we understand that the title could be subject to easements, mortgages, restrictions, leases, mining rights and numerous other rights and interests. But, have you heard of a Transfer Fee Right?

We wanted to alert you to a scheme currently in operation in Texas by Freehold Development, Inc. to market “Transfer Fee Rights”. Marketing materials describe the “Transfer Fee Right” as an owner’s right to recapture the future value of the improvements made to his/her property. According to Freehold Development, Inc., “there is the present value and the future income value of your improvements and under the current outdated system, you are not being compensated for this future value when you sell.”

How does it work? By the use of a recorded Declaration of Covenants, Conditions and Restrictions, property owners are being encouraged to encumber their property with a covenant that will require payment to the owner of a sum equal to one percent (1%) of the gross sales price of the property with each non-exempt transfer of all or part of the property. With this use of the covenant, every time the property is sold, the closing agent will have the responsibility to collect the transfer fee and remit the fee directly to the property owner. The marketing scheme also allows realtors’ commissions.

For more information, a website is available at www.FreeholdDevelopment.net.



First Tipton Title Company, LLC is a registered agent of Fidelity National Title Insurance Company and will publish the “DID YOU KNOW” mailings on a semi-regular basis.

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