Tip 42-2009: REO Closings Delays with HUD Approval

As the REO Banks own more foreclosure properties, there will eventually be more delays with their out sales. One recent delay was due to the requirement that the REO Bank needs to approve the final HUD (which review usually requires 48-72 hours). Because the REO insists on both sides of the HUD being completed, this means that the final HUD can not be submitted to the REO until the Purchaser’s lender has approve the HUD (usually this does not occur until the day before closing). As a result, although the loan is approved and funded, the recording of the deed and delivery of the keys to the Buyer may be delayed several days until REO HUD approval. Please warn the Buyer that these delays may occur!!

PS—One strategy we have used is asking for the lender’s package as early as possible and pushing the REO representative for a quick HUD approval.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 41-2009: REO and "Free" Title Insurance

“If it sounds too good to be true it probably is”. “You get what you pay for”. Two sayings to keep in mind when buying property from an REO Seller that offers in the contract to provide “for free” the owner’s title insurance binder for the purchaser. We have discovered that closings are delayed due to the fact that the Seller’s title company does not produce the title binder in time, sometimes not providing the binder until the day of closing. Also the REO provided policies are short form title insurance binders which do not list the exceptions such as easements, restrictions, etc on the property. Sometimes, the REO policy is just wrong (unpaid real estate taxes). Finally, the buyer may not actually save money as he is still responsible for payment of the search fee and lender’s policy. These payments to the REO title company sometimes exceed the cost of obtaining title insurance from the local title companies.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 40-2009: Short Sales (Order Title Early)

A previous Tucker Tip (#18) mentioned that the Seller and/or the Listing Agent may want to consider a title rundown to verify what issues and liens the Seller has (2nd Deeds of Trust, Home Equity Loan, Judgments, etc). If the Seller has not had a recent title search performed, then I definitely recommend that the Purchaser have their own title search completed as soon as possible. If there are title issues, then this allows the Seller time to resolve these problems while the Short Sale Lender takes its time approving the short sale. This is especially true if the title search shows for example a Home Equity Loan which the Seller “forgot about” or “didn't’ think an equity loan was a mortgage”. In all of these cases, with subordinate Deeds of Trust or other surprise judgments, with enough time there is a good chance of resolving these issues before the short sale approval.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 39-2009: Columbus Day

All of the Clerk’s Offices, Courts and some Banks will be closed Monday, October 12, 2009 for Columbus Day (National Holiday). As I understand it, many of the law offices, real estate companies and mortgage companies may be open.

Accordingly, if you have a closing on Friday, October 9 which needs to be recorded you may want to schedule your closing early on Friday. Otherwise, if the deed can not be recorded on Friday, the recording will need to wait until Tuesday, October 13.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 38-2009: Short Sale (Inspection & Financing Contingency)

If you represent a buyer of a short sale property, I recommend that you do not delay the buyer’s inspection and loan application until after short sale approval. Short Sale lenders want to know if they approve the short sale, that there will not be any other delays or issues with the closing. They usually want to be certain that the buyer has their loan commitment and the buyer has accepted the property “as is”. All the Short Sale lender cares about is how soon the closing can occur and how much money they will receive. They do not want any surprises like the buyer’s loan has not been approved or certain repairs will need to be made before closing. The Short Sale lender definitely does not want any additional deductions from the HUD they had previously approved.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 37-2009: Loss of a Friend

I lost a good friend and business associate this week. His family lost a loving husband, father and grandfather. The Charlottesville legal real estate community lost one of its most valued members. Ernie Flynn, a Naval Academy graduate, Commander in the Navy, UVA Law School graduate, and CEO of Republic Title Services died at home on September 21, 2009. Ernie was a lawyer, but even more important an expert in the title insurance field. Personally, Ernie was a mentor and someone who always had a suggestion and willingness to try to find a solution to the many title insurance problems we encounter every day. His brilliant mind, vast knowledge and expertise will be greatly missed. If there is a point to this Tip besides saying good bye to Ernie, it is to enjoy and celebrate your friends and loved ones each day.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 36-2009: Short Sales and the First Time Buyer's Deadline

I am suggesting that everyone representing a First Time Homebuyer be cautious of the November 30 deadline, especially if the property selected requires short sale approval. If the first time buyer wants to be sure they can close by November 30, 2009, I would caution choosing a property which requires short sale approval due to the uncertainty of how long it takes for short sales to be approved by the lender. There is just no way to guarantee the short sale approval will happen in time. Accordingly, I would suggest that first time buyers not enter into a new contract to buy a short sale property if they want to be certain of closing by the November 30 deadline and receiving the $8000 credit. There probably are exceptions but just be careful. Also, as short sales are usually great values, even if the closing does not occur by the deadline, the short sale may still be a great buy without the $8000 credit. Finally we can always hope Obama sees the light and extends the First Time Homebuyer Credit program.

PS—Some lenders are saying any contract submitted after October 15 may have problems if you are trying to close by the November 30 deadline.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 35-209: Keys

Besides “How much money do I need to bring to closing?”, the most asked question by the Buyer is “When do I get my keys?”. Although there is no single rule, the majority practice for new construction appears to be “when the deed and check have been exchanged or when the deed has been recorded”. For existing houses, there is no general rule. The keys may be already given at the final walk through, may be handed to the Buyer at the settlement table, or may be delayed until after recording (i.e. REO Sellers). No matter when the keys are to be delivered, make sure that the Buyer knows when and how to get the keys.

PS—I personally prefer that the keys be given to the Buyer at the settlement table, after the Buyer has signed all their loan docs and delivered their closing check. The only thing left for the Buyers is to move in! This is a great opportunity for the realtor, if he or she is present at the closing, to be the hero by handing over the keys.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 34-2009: Stupid Short Sale Story

To show how ridiculous short sale lenders can be, read the follow example:

After weeks of negotiations, a short sale lender rejected the short sale unless the lender could net an additional $4,000. The Buyer, Seller and realtor all conceded some money, so a new contract was signed between the same parties for the short sale lender to receive the additional money. (The lender would not accept a simple price amendment). However, rather than accept the new contract which gave the lender everything they previously demanded, the short sale lender said the new contract will have to start over for short sale approval (another 30-45 days). It’s the same buyer, seller and property, and it’s the price they said they would accept!! To add to the stupidity, the contract has to go to another short sale negotiator. We’re still waiting!!

PS—This is another good example of “There are No Rules” for short sales.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 33-2009: Short Sale - Authorization To Lender

The short sale lender, as part of the short sale application, requires an Authorization from the Seller to release information and discuss the short sale application with third parties. I recommend that this Authorization not only list the realtors but also name the attorney and paralegal representing the Seller as approved third parties. Also scan the Authorization and save it to your PC, as it will eventually need to be sent to the short sale lender more than once. (It’s amazing how often they lose or never can find the initial Authorization.)


Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 32-2009: Labor Day

Fortunately, Labor day (September 7) does not fall on the last weekend of the month of August. Labor Day will not effect the closings and recordings for both Friday, August 28 and Monday, August 31. All the local Courts and Clerks Offices will be closed on Monday, September 7. Accordingly this year avoid late closings on Friday, September 4. Have a Happy Labor Day!

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 31-2009: Local Lenders

As we encounter more and more last minute problems with lenders and underwriters, it is important to use local lenders. A local lender means there is someone to meet with and discuss these last minute issues, instead of an “800” number or email to who knows where. We are extremely fortunate in our area to have many excellent local lenders still providing various loan products and opportunities. I can not overemphasize the number of times these local lenders have saved a closing. Please try to encourage your client to use a local lender.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 30-2009: Contracts and Addendums

It is important that the settlement attorney receive a copy of the signed contract along with all addendums. If the copies are not legible due to faxing and/or multiply copying, please also send an unsigned readable copy as long as it has all the changes. Make sure that both settlement attorneys have all signed Addendums. Finally, be sure that a commission statement has also been sent and received by the settlement attorney. These steps will help for a smoother closing.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 29-2009: Short Sales - New CAAR Rules

The new CAAR requirement to disclose the “distressed short sale” is a step in the right direction. This disclosure allows everyone involved in the transaction to be aware in advance of the potential short sale issues. Most of the short sale sellers I have talked to have not objected to such a disclosure. Allowing everyone in advance to understand this is a short sale can save time and potentially many problems. Great first step CAAR!

PS—A future step for CAAR might include providing some uniform Short Sale Addendums and Information Forms.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 28-2009: Settlement Dates and Month End

The last day of the month seems to be the most popular day for closings, and unfortunately the most crowded. If possible, please try to avoid scheduling a closing for the end of a month (30th or 31st), especially if the end of the month falls on a Friday. When this occurs (like this month, Friday, July 31) there is a possibility that the closing may not be completed by the end of the day. The loan package and final lender review could be delayed. The actual settlement may also get backed up with any last minute closing problems (these seem to happen more often now). Finally, if the Seller has an FHA loan to pay off, any delay in the closing may result in the loan payoff increasing by an additional month of interest.

PS—A second date to try to avoid is on the 15th of the month (as that date seems to be the next most popular date for closings).

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 27-2009: Contracts and Correct Addresses

Lenders and their underwriters are getting extremely careful in the review of everything. Recently we have experienced problems with the address in the contract not being correct. In one case, the lender recalled the loan proceeds check after all the papers had been signed by the borrower and the deed and check had been exchanged. Fortunately, the deed was not recorded so the funds were able to be returned to the lender. (Several days later the closing was redone after a contract amendment was executed with the correct address). Accordingly, everyone in the signing process (the realtor, lender and settlement attorney) should verify that the correct address is on all documents.

PS: The same review as to the parties correct names should be performed so that all documents have the same name including first and middle initials, Jr., III, etc.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 26-2009: Short Sales - Recent Observations

Short sale lenders are becoming more responsive to reviewing short sale contracts. In fact, we have even been successful recently in getting a response to a contract with a two week deadline for approval. Also, once a short sale contract with a proposed HUD is sent to the short sale lender, the scheduled foreclosure will usually be postponed. However, the seller is still not normally being released from the potential deficiency from the short sale.

PS: Please remember these are just my general observations and there are “No Rules” with short sales.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 25-2009: Surveys & Plats

Surveys & Plats:

We have recently experienced an epidemic of problems with physical surveys (especially in the City of Charlottesville). For example, a garage that actually encroaches on the adjacent property or a fence on the City right of way. Please try to provide the settlement attorney with a copy of any existing physical survey. Sometimes, even a plat of the boundary lines can be helpful. If no physical survey exists for the property, please explain to your client that it is extremely important to know where the house and all improvements are located on the property and if there are any encroachments or set back violations. Therefore, ordering a new physical survey may be necessary. Otherwise, the Purchaser is buying the Seller’s problem!!

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 24-2009: Safety Tips

Instead of a real estate tip, I thought it would be nice to use this week’s email to wish everyone a Happy 4th of July, and provide a few safety tips about fireworks:

· Light them at arm's length using a suitable taper
· Never go back to a lit firework
· Never put fireworks in your pocket
· Never throw fireworks

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 23-2009: July 4th Holiday

July 4 Holiday:

With another National Holiday approaching, please be aware that all local Clerk’s Offices will be closing on Friday, July 3, 2009. Therefore any closings which need to occur next week should occur on Wednesday (July 1) which would allow Thursday to complete any recordings in the Clerk’s Office. If you have to close on Thursday, (July 2) please arrange the closing to start early in the morning, otherwise the recordings could get delayed until Monday, July 6. Have a Happy & Safe Holiday!!

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 22-2009: Short Sale (Proposed HUD)

Short Sale (Proposed HUD):

The short sale lender requires a preliminary HUD to review as soon as there is a potential contract. It is important to provide whoever is preparing the HUD with as much correct information as possible. Some important matters not to forget are: HOA dues (especially if they are delinquent); well, septic and termite (who is supposed to pay); real estate commission (always start with a full commission); number of loans currently outstanding; and, whether real estate taxes are current or delinquent. Finally, sometimes a one owner title search may be helpful to determine if there are any other outstanding judgments or liens.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 21-2009: Propane Gas Proration

Propane Gas Proration:

The standard residential contract provides in Paragraph Nine that the propane gas will be paid by the Buyer at closing to the Seller. Normally, the Seller or their Realtor calls the propane company to assist in calculating the amount of gas in the tank and the current market price. AmeriGas has recently changed their procedure which could mess up the contract practice. If AmeriGas is aware of a pending sale, they sometimes will put a lock on the actual propane tank and will pay the Seller directly for the propane prior to closing. (AmeriGas claims they only "lock the tank" when asked to do so.) AmeriGas then expects to be paid by the Buyers for the gas before they will remove the lock. Accordingly, if your closing has an AmeriGas propane tank someone needs to verify prior to closing as to who actually owns the propane (the Seller or AmeriGas).

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com

Tip 20-2009: Recording Costs

Recording Costs:

In a prior tip (8-2009) I mentioned the problem of recording costs being charged on the higher of purchase price or the localities real estate tax assessment. In some cases, with the purchase price being considerably lower than the tax assessment, the recording cost paid could be hundreds of dollars more than estimated. My law firm has been successful lately in most of the local clerk's offices in basing the recording cost on a current private appraisal (usually obtained from the new buyer's lender). We have a form which we take to the Clerk's Office along with the current appraisal, which allows the Clerk to base the recording cost on the appraisal (thereby saving money for the buyer).

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 19-2009: Short Sale (General Observations)

Short Sale (General Observations):

My new rule regarding short sales is that "There are no rules". Each short sale approval is different. In fact the approval process can change daily with the same lender. The only good news is that the short sale lenders seem to be more receptive to reviewing and usually approving the short sale contract within a shorter period of time. (Thirty to sixty days seems most like the norm, but remember there are no rules).

I still believe that every short sale that is approved within the Central Virginia marketplace is important and necessary. Each successful short sale means one less foreclosure (one less empty house) to have a negative impact on real estate values.

Please contact me if you have any questions.

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
http://www.tgblaw.com/
http://www.tgblaw.blogspot.com/

Tip 18-2009: Short Sale (Title Search for Seller)

Short Sale (Title Search for Seller):

Recently I have been required by the short sale negotiator to provide a title rundown to determine what other liens (inferior Deeds of Trust and Judgements) may be on the property. Sometimes in negotiating the short sale approval you can wait for the contract purchasers to complete their title search. It may be a better strategy to obtain a title rundown (current owner search) early in the short sale process. This will enable the Seller to know exactly what other liens have to be dealt with as part of the short sale approval. (An additional advantage is it will allow the Seller or their attorney to begin obtaining releases of any Deed of Trust and/or Judgements which have been paid off but not released of record.) Please contact me if you have any questions.


William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBlaw.com
www.TGBlaw.com
www.TGBlaw.blogspot.com