Tag Archives: Laws and regulations

Town Hall Meeting on Flood Recovery 9/13/2016

Town Hall Meeting on Flood Recovery 9/13/2016

Notes and comments on the meeting

I attended this meeting last night, which was held at our beautiful Live Oak United Methodist Church. Those present included State Representative Valarie Hodges, Livingston Parish President Layton Ricks, Livingston Flood Administrator Chuck Vincent, several representatives of FEMA, SBA, the governor’s office, GOHSEP, and others.

Below is a summary of the notes I took during the meeting, along with my comments in italics.

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What Your Agent Doesn’t Know Can Cost You Now and Beyond the Sale

What Your Agent Doesn’t Know Can Cost You Now and Beyond the Sale

Getting the right agent is crucial when putting your home on the market.

When you hire an agent to sell your home, you spend quite a bit of money at closing, but what are you actually paying for? It really depends on who you hire and how they perform their duties. Unfortunately, many sellers end up hiring what we refer to as “real estate secretaries” – someone who enters the listing into the MLS, puts up their sign, (maybe) answers calls, fills out a contract, and shows up at closing to get their check. When sellers see bare-minimum service like this, they ask “Why am I paying them thousands of dollars to do so little?” and they are right to question this.

Being well represented as a seller goes beyond not just getting your value out of your listing commission in the form of great marketing, communication, and follow-up. The process of selling a property involves multiple parties, legally binding contracts, and many complex steps before closing, so it must be executed diligently, to avoid the risk of large expenses and even lawsuits. It is your agent’s knowledge, advice, guidance, and experience (or lack thereof) which will make the difference here. This is where the value is found in information that you can’t just get from Google and wing it. A seasoned, thorough, detail-oriented agent will have those skills, which prove to be priceless in many situations.

While these concepts all sound good, let’s look at a real life example which came up very recently. The seller of a property had some previous title work done with a title company and was under the impression that if the buyer used their title company, then the seller would save significant closing fees. So, the seller told the listing agent to mandate that the buyer must close with their title company. First of all, the seller was mistaken about the closing costs, since most closing costs are the buyer’s responsibility and a seller’s fees typically only run $250-$500 at closing, and often less. Far more important however was the fact that by mandating the closing company, the seller (and agent) were actually violating the Real Estate Settlement and Procedures Act (RESPA), a federal law that governs the sale and purchase of residential property. This law “prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale.” (Reference: HUD RESPA Section 9) Violating this section of RESPA allows a buyer to sue the seller for up to 3 times the amount of the title insurance, so with a typical title insurance cost of $800-$1200, the liability to the seller is $2400-$3600 (probably in addition to attorney fees etc), all to try to save at most $500.

Not only was I concerned about putting everyone in the transaction in a position to be sued if something were to go wrong with the title, but I also wanted to have a different set of eyes on the title work to be sure that it all gets processed correctly. I emailed my concerns to the listing agent, citing the federal law and the liability vs. potential benefit for the sellers, and the sellers decided that it, indeed, was in their best interest to not push this issue with my buyer. All of this happened in the background without upsetting my buyer and causing them unnecessary stress.

“Real estate secretaries” will not anticipate issues such as this one, and often lead the seller into dangerous territory, where expensive litigation or other financial losses could result. So, when you interview and choose a listing agent, keep in mind that the discount commission charged by an inexperienced agent or one who rushes through everything very superficially can ultimately cost you far more than an agent who has the experience, knowledge, and skills to keep you out of trouble and to maximize your profits at closing.

A win for homeowners!

The new 2015 transportation bill does NOT take money from those who pay mortgages.

After a huge outcry from realtors and many others, the proposal to appropriate steal part of the guarantee fees (mortgage insurance premiums) from homeowners who pay them was dropped from the transportation bill. The bill was then passed and signed into law. In our recent article, we detailed this proposal, and how damaging it would be to almost everyone who pays a mortgage. The idea was  strongly opposed across the board. Only some Washington DC politicians supported it, seeing it as yet another way to get hardworking homeowners to shoulder the financial burden of yet another government project they can’t afford.

To our pleasant surprise, common sense prevailed. We want to express our sincere thanks to all who contacted their representatives in Congress and opposed this ridiculous proposal. Great job!

ALERT: CONTACT CONGRESS ASAP TO STOP THEM FROM HARMING HOMEOWNERS!

ALERT: CONTACT CONGRESS ASAP TO STOP THEM FROM HARMING HOMEOWNERS!

Once again, the idiots in Washington, DC are trying to find a way to make it harder and more expensive to purchase a home.

Background: Every type of loan has some sort of mortgage insurance which the buyer is required to pay. It is called PMI (Private Mortgage Insurance), or MIP (Mortgage Insurance Premium), or a Guarantee Fee. This insurance can be an up-front lump sum payment, a monthly premium added onto your note, or a combination of both. Even conventional loans with a 20% down payment, which don’t charge any monthly PMI, compensate for that by having a higher interest rate! So, while some forms of PMI are more apparent than others, the American homeowner always ends up paying to cover the lender’s risk of loans going bad.

Behind every lender is some entity which is ultimately responsible for the loan. VA loans are backed by the Veterans Administration; Rural Development loans are backed by the US Department of Agriculture; and FHA loans are backed by the Department of Housing and Urban Development (HUD). Note that these are all government agencies…

Conventional loans are backed by FNMA (Federal National Mortgage Association, commonly called “Fannie Mae”) and FHLMC (Federal Home Loan Mortgage Corporation, known as “Freddie Mac”). These are public government-sponsored enterprises (GSEs), created decades ago to provide a “private” secondary market for mortgages. In simple terms, they purchase conventional mortgages from the lenders. In our opinion, since the government has pretty much taken over Fannie and Freddie along with every other form of home lending, the GSEs are now just another department of the government.

Unfortunately, if you want to finance the purchase of a house, you WILL end up paying some form of mortgage insurance. It is a necessary evil, and there is no way around it. With so many mortgages going bad in past years, lenders are more reluctant than ever to write loans, and mortgage insurance helps reduce their risk. Without it, financing a house would be even harder, so there is a benefit to homebuyers.

The problem: RIGHT NOW, a new transportation (highway) funding bill is being debated in Congress which would steal part of those premiums away from the GSEs and use it for roads! The federal government cannot resist ANY opportunity to take money from taxpayers whenever they see it, and this is just the latest attempt by them to do so. It turns out that they raised guarantee fee rates for the GSEs back in 2011 to “offset” a measly 2-month payroll tax cut. This rate increase was for 10 YEARS! In other words, the millions of hardworking Americans who financed or will finance a home with a conventional loan between 2011 and 2021 will be paying for that “tax cut” over the entire life of their mortgages!

The highway funding bill currently in Congress seeks to extend that rate increase another 4 years. And, there’s no telling if they’ll try to raise the rates even more! Either way would keep the financial burden squarely on the shoulders of homeowners. This will prolong the harm being done to everyone trying to purchase a home, and possibly make it worse, all the way through the year 2025!

We urge you to contact your Senators and Representatives and ask them to oppose any use of guarantee fees (“G-fees”) in this highway bill. Homebuyers should NOT have a special “tax” placed on them alone to fund public projects which have nothing at all to do with housing.

You can get contact info for your Senators and Representatives at this website simply by entering your zip code.

Please act NOW, as this bill could be voted on at any time! They are pressing hard to get it pushed through.