1. Title Underwriters Are Going to Go Bankrupt
For as long as any of us can remember, we paid little attention to the title underwriter that was issuing title insurance right? Well those days are long gone. All of the title underwriters are under extreme financial pressures caused by decline in new premiums and claims on old policies. The vast majority of new policies being written are being written over foreclosure properties, REO’s and other properties that have a much greater risk of hidden problems and title claims. Because of this we can expect extreme pressure on these companies and some just will not make it in the long run. To protect your client, you need to take an active role in considering who will close your deals and you should go the extra step to confirm the title work with your agent.
2. You Must Take A Much More Active Role In Your Closing
The days of turning your contract over to the title company then waiting for your closing date are long over. You need to be very proactive with your title agent, making sure that all bases are being covered and that all conditions and problems are being actively resolved from the moment the contract is signed. The days where your involvement in closing was limited to reviewing the HUD when you arrived at the closing are long gone. Develop a strong working relationship with your title agent and be actively involved in every step of the process.
3. Make Sure Your Listing Agreement and Sales Contracts Reflect The New Closing Realities
In previous postings, I have described where the FAR/BAR Short Sale Addendum is deficient, does not adequately protect sellers and may lead to complaints and litigation against realtors. The reality is that every contract, from the listing agreement to the sales contract should be modified to reflect the inevitable delays, miscommunications and problems that are now a part of every closing. If you do not, you can expect complaints and problems at some point in time.
4. Know Your Clients and Their Situation
Every listing agreement should contain explicit instructions that your client must notify you in writing if they are served with a foreclsoure lawsuit. If they are served with a foreclosure suit, they must retain a local attorney who can properly defend the foreclosure. Defending the foreclosure creates the space you and your clients need to help effectively negotiate a sale. If your client fails to respond and a default is entered against them, you lose important negotiating power against the lenders.
5. Know All Parties That Are Involved in Your Closing
Clients these days are approached by all sorts of individuals and businesses who are offering to help them and in some cases take advantage of their situation. Florida recently passed one of the toughest consumer protection statutes that makes most of these activities illegal and which subjects all parties involved in such transactions subject to penalties and fines. You may be surprised at all the activities and made illegal, but as the professional involved in the transaction, you are responsible to know these details and take steps to protect your clients! The text of the statute can be viewed here keep in mind that the language is drafted so broadly that many activities that were once permissible are now illegal.
These are challenging times in the industry and you need to work harder than ever to protect your clients and yourself. Make sure you’re working with an attorney who knows this market and who can properly advise you.
Don’t you think that Fidelity National Title Insurance and its related companies are just too big to fail and that the government will bail them out just like AIG?
I’ve been a Florida licensed Broker and Realtor over 15 years. Last year almost all my clients were selling or purchasing short sales. Due to almost complete and total refusal by Lenders to participate and respond, I made hardly any income at all. Last Summer, I began applying for a loan modification on my home. I have $375,000 invested since 2005 in the home and it’s current appraisal price is $180,000. I never had any cooperation or response to my loss mitigation applications and was served a Lis Pendens this Christmas. I have 2 small children living in my home as well. When the Lis Pendens was filed, my excellent credit was ruined and my creditors cut my limits down on every account to the balance owed. I have had to rely on all my cash income for basic needs. I have also maintained my own Property Taxes and insurance throughout this process.
During voluntary mediation, I agreed to list the home for appraised price of $180,000 and have been responding in circuit court to all communications and actions from Plaintiff’s attorney. After 3 months with no offers coming and my real estate income starting to increase steadily, I put my boyfriend’s income and information together with mine and again asked to be considered for a reasonable modification to the mortgage so we can afford to stay here. I’ve had no response.
Last night, I finally got an offer to purchase as a short-sale for the $180,000 price. I owe $255,000. Is there some language that I could include in an addendum to be signed by me & Buyer before I submit this to the Lender? Obviously, I would prefer that WE get the house we have put so much work & money into for 5 years. If it will be sold to strangers for $180,000, I’d like the Lender to consider modifying my loan to $180,000. If they don’t modify and we are forced to sell, we will have no money for rental deposits, moving expenses, insurance, etc. It will make our current hardship insurmountable. Obviously, since the Lis Pendens, I am not going to qualify to purchase even if I had a down-payment. I need to be able to fight to keep from being pursued for the short fall also. Anything you can tell me that might help me negotiate through this would be most appreciated. We are desperate. My next hearing with the Circuit Court Judge is in July. Thanks so much for all your help.
Kristen Jaquish, Broker-Associate
ERA Legacy Realty
Pensacola, Florida
http://www.KJbeachsales.com