The myClosingSPACE.com Blog Has Moved

Hooray!!! We have successfully moved our blog to our own server. We appreciate all of our visitors and hope that with the move we can make the myClosingSPACE blog even better. Be on the look out for our new Ask the Title Expert and Closing Process features that will be coming soon and if you have any questions you would like us to explore please let me know.

We are also asking for some help from you. If you have links pointing to the blog we would be very appreciative if you could change the URL you are pointing to. Our new URL is blog.myclosingspace.com. The links to our old blogspot URL have been 301 redirected to they will still work but as we move forward we would love it if those links were changed to go to the new address.

Thanks for all of your readership and support and we will continue to move forward better than ever.

Coming Soon to the myClosingSPACE Blog

Return visitors may have noticed that there have been a few changes to the myClosingSPACE.com. Besides some slight changes to the look and feel we are also in the process of moving the blog to our own server. I hope to have this move completed in the next day or two. I will make an announcement when that happens.

When the change takes place we are going to start a couple of special features that should help consumers understand more about the closing and title process. One series will explain a bit more about what goes on behind the scenes at a title company to get everything in order and make the closing process that consumers see run smoothly. Another series, Ask The Title Expert, will be an ongoing effort by myClosingSPACE to answer specific questions from consumers (and professionals if you want to join in). This series will rely on feedback from the community so if you have any questions please email me at mpilatowski@myclosingspace.com or simply post it in the comment section here. I look forward to reading and answering your questions.

Our goal is to help consumers understand the title and closing process so they can make educated decisions when it comes to choosing a title company. It is our sincere hope that these two new features will help us do that.

Home Prices Going DOWN, Down, down....

According to a recent CNN article home prices across the country continue to fall. No matter if you believe NAR or other sources the fact is that prices are still falling. Their is a difference of opinion as to how much and why the prices are falling but everyone seems to agree that prices are still trending downward.

According to NAR prices have fallen to their lowest level in 5 years while the Case-Shiller index of 20 cities is showing prices are at their lowest in 16 years. Both studies have their flaws but the Case-Schiller study has less bias simply because NAR has an obvious motivation to put a positive spin on the market. IMO the prices, especially in markets where prices rose dramatically a few years ago, will continue to fall until they reach more reasonable levels. You know, prices that most consumers well over the median income for that area can actually afford.

The reasons given for the drop seem to vary as well. While NAR blames the recent credit crunch other organizations are blaming unnatural price increases coupled with sellers who still won't accept that their homes are not worth as much as they believe them to be. I believe that all of these factors are contributing to the situation we have now. Prices rose dramatically based on loose lending standards and speculators bought properties believing the market would continue to rise. Now those lending standards are much tighter leading to less qualified buyers as well as fewer buyers willing to spend 3/4 of their income on a mortgage. All of these factors are bringing prices down to be more in line with what they should be.

I believe this price drop will continue until prices reach the point where they should be based on a natural cycle. Once that happens we will see more qualified buyers who are able to afford homes without breaking their budget. Obviously the sooner this happens the better it will be for everyone but it won't happen until everyone gets on board with reality.

Video: Steve Poizner Addressing CLTA

Pretty long video of California Insurance commissioner Steve Poizner speaking to the California Land Title Association about potential caps on title insurance rates and consumer focused initiatives. Some of his discussion focuses on new technology and how utilizing this technology can help title companies reach consumers and help them learn about and shop for title insurance. It is around 9:00 minutes long so make sure you have time before sitting down to watch it.

FHA to Implement New Refinancing Product

The latest news on the mortgage meltdown front comes from the federal government and the FHA. As many people know the FHA was established to assist first time and lower to middle income consumers in buying a home. The FHA has announced a new product called FHASecure, which is designed to help overburdened ARM borrowers with an opportunity to refinance and potentially avoid foreclosure. This news should help the improve the mortgage market as it will allow many homeowners refinance their current ARM loans to avoid default and foreclosure when they are unable to pay when their teaser rates expire. I will withhold judgment on this until I see how it is applied and whether homeowners are able to get out of trouble. This will not help everyone but if applied correctly it should help a considerable number of people.

Here are some of the highlights.

• Lower Down Payments. Authorizes zero and lower down payment loans for borrowers that can afford mortgage payments, but lack the cash for a required down payment.
  
• Housing Counseling. Authorizes more than double the current funding level for housing counseling, to help subprime homebuyers and borrowers late on mortgage loan payments.
  
• Subprime borrowers. Directs FHA to provide mortgage loans to higher risk (but qualified) borrowers, without authorizing unnecessary fee hikes on such borrowers.
  
• Reverse Mortgages. Enhances the FHA reverse mortgage loan program to help seniors pay for health and other expenses, by removing the loan cap to avoid program shutdowns, raising loan limits, and by reducing the maximum fee lenders can charge for these loans.
  
• Multifamily Loans. Raises FHA multifamily loan limits, so these loans can fully fund construction costs in high cost areas, and enhances sale of foreclosed FHA rental housing loans to localities, so that affordable housing can be maintained in local communities.
  
• Affordable Housing Fund. Authorizes up to $300 million a year from the bill’s excess profits for affordable housing, instead of returning such funds to the General Treasury.
• Higher Loan Limits. Adopts the Frank/Miller/Cardoza amendment that would raise FHA single family loan limits, which now bar loans above 95% of the median home price in each local area and shut FHA out of higher cost home markets. The amendment raises the FHA loan limit in each area to the lower of (a) 125% of the local area median home price or (b) 175% of the national GSE conforming loan limit. The amendment also retains the bill’s provision for a nationwide FHA loan floor of 65% of the GSE conforming loan limit, and gives HUD authority to raise these loan limit amounts by up to $100,000 “if market conditions warrant.”
  

One of the biggest changes is that the limit for FHA loans has been raised from $417,000 to over $600,000. IMO this is a good idea. While $400,000 in many areas of the country is a huge amount of money to those living in areas with high housing costs it is a welcomed change. In many parts of the country the average home is over $400,000 and because the FHA capped their limits in that range many first time and middle income homeowners were unable to get FHA loans. These people were either unable to buy their own homes or they had to get into risky financing situations to achieve the American Dream. With this increase many more middle income citizens will be able to buy a home through FHA and avoid more risky finance models. It will also help those who may have been unable to refinance with regular lenders and move into more consumer friendly FHA loans.

Again I will withhold judgment until I see some results but IMO this is a good thing and could help give the real estate and mortgage market a bit of a push in the other direction. And remember even if you are refinancing you are still required to get title insurance so make sure you shop around and find the best title company in terms of price and service.

Washington Post Title Insurance Article

The Washington Post had a pretty good article about title insurance and why home buyers should choose to buy an owner's policy along with the required lender's insurance. Many home buyers believe they are covered by the lender's policy they purchased when closing but the fact is it only covers the lender's money in the property. As you pay on your mortgage the amount covered is lowered. On top of that if your house appreciates the added value is no longer covered. With an owner's policy you are covered for the value of the home.

I also like that the article implies that consumers should shop around for title insurance. They don't explicitly state that you should shop for title insurance but they imply it when they mention asking your title company whether their quote includes both policies. It is important to shop around for title insurance and while doing so it is important to understand exactly what you are getting. To compare prices you need to make sure that each company is providing a quote for the same service and coverage. Make sure you ask if their quote includes an owner's and lender's policy and what additional charges will be included. Make sure you are getting the same full quote from all of the companies you interview.

All in all I think the Washington Post article is a good article about the importance of getting owner's title insurance and also a good reinforcement on the importance of shopping around for title insurance.

ALTA Announces New Consumer Initiative

When I opened my email this morning I was pleasantly surprised by my ALTA newsletter. The first article was an announcement that ALTA is launching a new Title Insurance Consumer Initiative. The idea is to provide more information about title insurance to consumers. As is stated in the story the impetus behind this initiative is the recent GAO Report on Title Insurance, which found that consumers were being ignored and fleeced when it came to title insurance. I am happy to see ALTA making an effort to increase consumer knowledge and power in the title insurance marketplace.

As part of the the consumer initiative they are launching a new consumer facing website, http://www.homeclosing101.org. This site is dedicated to providing detailed information to consumers on all aspects of the title insurance and closing process. myClosingSPACE.com has been attempting to bring this information to consumers since their inception and we are happy to see ALTA jump on board. Hopefully we can work together to educate consumers and get them to take the time to shop for their title company when they are in the market.

I am glad to see ALTA make a stand for consumers and hopefully this will go a long way in changing the market by making it more consumer focused and friendly. The new site offers some good information and hopefully consumers will be able to find it and take control of the closing process. If ALTA is successful in bringing more information and assistance to consumers we may be able to change the title industry for the benefit of consumers and consumer friendly title companies.

Housing Widgets

I was recently made aware of a great new site called Housing Widgets. It is dedicated to real estate related widgets and tools. There is a great collection of tools available for real estate blogs and sites. The site also allows anyone to add a widget for free. If you are looking for new tools to add to your site or if you have an interesting tool you may want to visit the site. It is fairly new so I expect the number of tools available to increase so I will continue to check back often.

Title Insurance Deregulation? Sounds Good to me.

So, I have spent some time at Forbes.com today (as you may be able to tell by these last two posts) and found some interesting articles. One recent story that caught my eye discusses the possibility that New Mexico may deregulate title insurance. There are many things I agree with in the article and a something that I tend to disagree with. If you have spent some time at this blog you will see that I am an advocate for making title insurance more friendly to consumers and IMO deregulation would be a step in the right direction.

Some may say that deregulation would hurt consumers but in the case of title insurance it would actually benefit them. Here is why. Currently many states, including New Mexico, have regulations on how much title insurance should cost. This seems like a great idea until you realize that it also means that title companies are not allowed to charge LESS than the state regulated charges. So if a title company has the ability to charge less than other companies they are not allowed to do it. They must charge the mandated rate. This is not good for consumers but it is good for title companies who helped make the law. It decreases competition and creates and oligopoly where a few title insurers control the market.

According to the Forbes article a group called Think New Mexico wants to change that deregulating the industry. That would mean a title company could charge whatever they feel is necessary and let the market decide. IMO this would benefit consumers greatly by allowing them to actually have a choice in who they use for title insurance. It would actually create real competition in the title industry.

One issue I have with the article is that they recommend having lenders purchase title insurance and while on paper it sounds good I think there are potential pitfalls to this. On one hand lenders are more familiar with the process and they have the buying power to negotiate lower prices. On the other hand there is a distinct possibility that they would simply tack on extra charges that are passes on to their customers. This would create a whole new problem that still results in the consumer paying too much. Instead, consumers should be allowed to decide who they buy title insurance from. Open the market up to consumers and they will choose the best title company for them, they would know exactly what the title insurance costs, and would avoid additional charges. It would require title companies to actually be more open and work with consumers. It has worked in the mortgage industry and many other industries. With the Internet the information is available and if the industry were opened up the most consumer friendly title insurance providers would take the lead.

I will be keeping an eye on the situation in New Mexico and hope that they do move forward with deregulation. By creating transparency and competition in the title industry New Mexico could force the title industry to work for the consumer and if successful could force other states to revisit their regulations on title insurance.

Forbes Lists the Riskiest Real Estate Markets

Forbes.com recent article discussing the riskiest real estate markets. The4 riskiest markets are in California and Florida, states that have been hit hard by the recent real estate downturn. When the market was at it's height Florida and California home prices were going through the roof and mortgage lending practices were very lax. After all the prices were still rising so if you could not afford to pay that ARM when it adjusted you could surely sell your house. Of course, markets work in cycles and eventually those rising prices would stabilize and in this case actually started to drop. Now these homeowners are stuck with mortgages that they can't afford. On top of that the median home prices are starting to go down so now they are stuck with mortgages that are higher than what their home is worth so they can't sell without taking a loss and refinancing is usually not available. This means that in many of the cities that saw the biggest rise in home prices are now facing huge problems with the current downturn.

According to Forbes the riskiest markets are Miami, Orlando, Sacramento, and San Francisco. There are still opportunities for investors to make money in these areas but there is also great potential to lose big. The Forbes article discusses more cities with risky markets and the reasons why they are having problems. Forbes also offers a video discussion of these risky markets.