Tuesday, January 13, 2015

Title Topics: What's a Tax Sale?

Property taxes, or real estate taxes, help pay for services that we deem important as a society, like public schools, but it only works if everyone pays their fair share. So what happens to a property owner who does not pay their property or real estate taxes? Quite frankly, the consequences are big. Once property taxes come due and are not paid, the governing municipality will begin to charge interest on the delinquent payment, and the balance owed will begin to rise. After a state law specified amount of time, it could be a few months to a few years, the property may go up for auction. The winning bidder, after paying the delinquent taxes, may receive a lien against that property in the form of a tax sale certificate, or in some jurisdictions, may receive free and clear title to the property. In some states there is no auction; the taxing authority will take ownership of the property

If the consumer has given a mortgage on the property, and the real estate taxes are escrowed, the taxes should be paid out of the consumer's mortgage payment. As long as the consumer makes their mortgage payments, the taxes should not go delinquent. If the consumer defaults and no longer makes their regularly scheduled payments, the lender or holder of the mortgage generally ensures the real estate taxes are paid to protect their interest.

If you ever find yourself with delinquent property taxes, you should pay them if you can, or contact the taxing authority for clarity regarding what other options you may have.

Any questions or comments? Please let us know!

Friday, January 9, 2015

Title Source in the Community 2014 Recap

Though we may have said goodbye to 2014, the exciting efforts our team members contributed to within our communities last year are far from over (and they say all good things come to an end, psh)! In 2014, team members set the bar high with a goal to complete 12,000 volunteer hours. Not only did we reach our goal, we crushed it by almost 52 percent! Let’s look back at some of the remarkable ways Title Source team members have made a difference in the communities across the nation throughout 2014.

In the beginning of June, 70 team members, family and friends participated in the Susan G. Komen Race for the Cure in Detroit. Our very own Title Source team was presented the “Rookie of the Year” award. This award is presented by the Detroit Tigers Wives Association, and is given to the largest new team to register for the event. To read a full recap of the event, click here.

On June 14th, over 50 team members in Pennsylvania joined the two-mile-long Walk Now for Autism Speaks event that started and finished at Heinz Field in Pittsburgh. Not only did they raise an amazing $4,000, but they also helped spread awareness about this increasingly common disorder.

At the end of September, 34 team members in Texas volunteered at the Serve Denton Charity Golf Classic. This event raises money for numerous nonprofits in the Denton community to provide food, clothing, shelter and medical care to those who are in desperate need.

In California, 10 team members joined 16,600 other participants in the Children’s Hospital of Orange County Walk in the Park on October 12th. This three-mile walk, which takes place throughout the Disneyland Resort, raises funds for a variety of patient and family programs at the Children’s Hospital of Orange County. Together our Title Source team members raised over $1,000!

During the holiday giving season team members from all offices and remote locations rallied together to support a variety of charity drives. Their generosity resulted in an amazing show of compassion and support for charitable organizations in need. Altogether, Title Source donated over 1,300 toys to Toys for Tots; 1,500 pieces of clothing to Coalition of Temporary Shelter (COTS), Salvation Army and St. Vincent de Paul; and a whopping $14,000 to the American Red Cross.

To finish up the year, our very own CEO Jeff Eisenshtadt dressed up as the friendly snowman Olaf from the Disney animated film “Frozen” to support the Salvation Army’s Metal in the Kettle Campaign. Braving the cold and windy weather on a mid-December afternoon, Title Source and Quicken Loans leaders donned costumes and stood next to their red kettles while ringing bells to collect donations. Altogether, over $75,000 was raised to help those in need in the surrounding community.

We could not be any more ecstatic about all of time, dedication, contributions and smiles that our team members have brought to their communities in 2014. The fun’s not over though! Our new goal for 2015 is to reach 18,000 community involvement hours.

We can’t wait to see all the great ways our team members are donating their time and supporting the communities where we work, live, and play in 2015!

For more information about the charities that Title Source supported in 2014, click the links below:

Click here to find details about the 2015 Susan G. Komen Race for the Cure in Detroit.
To find a walk near you, go to the Walk Now for Autism Speaks website.
Want to learn more about Serve Denton? Click here for more information.
To read about the CHOC Walk in the Park, click here.
Click here to learn about Toys for Tots.

To find more details about COTS, click here.

To see how the American Red Cross serves in your community, click here.


Tuesday, December 30, 2014

Mortgage Market Forecast for 2015

Since the housing market bust of 2007-2009, the recovery for the mortgage market has been slow. Even with record low mortgage rates and low housing prices, home purchases haven’t returned to their pre-2007 level. Recently, an economic letter from the Federal Reserve Bank of San Francisco noted that “The housing sector has been one of the weakest links in the economic recovery, and the latest data trends continue to show only modest improvement.”
“Personally, I’m bullish on the mortgage market for next year,” says Whitney Fite, the Managing Director of Angel Oak Home Loans. While he acknowledges that there are still challenges to be overcome, Fite is nonetheless optimistic that the housing market’s recovery should pick up some steam next year.

Economic recovery to drive home purchases
“If you look at recent employment reports, there are strong indicators that the economy is continuing to rebound,” says Fite. “Looking at the consistency of job creation month over month, and the fact that we are coming out of the most consecutive months of growth since the late 1990s, are indications that job growth seems to be fairly sustainable.”

The unemployment rate has been consistently falling over the last year, which Fite expects to continue. The Federal Reserve feels that the economy is so sufficiently stable that it ended its asset purchase buying program. This leads to expectations that the Fed Funds Rate will be hiked by the middle of 2015. While policymakers speak words of caution and patience, they too seem relatively optimistic about the sustainability of the economic recovery.

Consumers who feel confident about the economy and their own finances might be inclined to commit to a home purchase. “First-time homebuyers are at a historic low right now, accounting for 28 percent of buyers, versus 40 percent before the crisis,” Fite says. “When you think about recovery and improvement, you should expect the first-time buyer to come back in a robust way.”

Fite also points out that it’s not just first-time homebuyers that might feel more confident about buying as the economy improves. “A great motivator in the market for the next year will be move-up buyers looking to buy bigger, more expensive homes,” he says.

Will millennials be ready to take the plunge?
So far, millennials have been reluctant to purchase homes. He recognizes that many millennials, saddled with student loan debt and stuck in an uncertain job market, have put off homeownership, deciding to rent instead of purchase. Even those who can afford to make home purchases have become reluctant. “They’ve been scared due to the recent carnage in the marketplace,” Fite explains.

However, in spite of recent fears, Fite thinks that many millennials, especially those who graduated college in the last five to seven years, might be ready to take the plunge. Many millennials are older now, and starting families. They might also be looking around, realizing that home prices are still very reasonable, and that mortgage rates are near historic lows. Next year offers them a big opportunity to get in the market while it’s very affordable, Fite said. “If this age group becomes more comfortable, we could see a decent surge,” he says. “Student loan debt might be a deterrent, but there is still plenty of potential.”
Easier credit terms should provide some support
Part of the problem with the sluggish mortgage market recovery has been tighter lending standards. “The pendulum swung heavily to one side after the financial crisis,” Fite says. “Now it’s starting to swing back to the other, and there are more opportunities.”

Fannie Mae and Freddie Mac, two companies that provide financing for a large number of mortgages originated in the United States, recently announced that they are easing lending guidelines. Looser guidelines mean that more people can qualify for mortgages, and that should help the market. “The credit box is opening up more,” says Fite. “There are potential buyers who couldn’t qualify for mortgages last year, or the year before, but will be able to qualify in 2015.”

Fite thinks that raising rates would change things. “If and when rates start going up, it could create urgency in consumers,” he points out. “Consumers will look at affordability and see that rates are rising, and may want to hurry to get a mortgage before rates go too much higher.”

He also points to programs that allow homebuyers to put down less than 20 percent for a down payment, and other measures that are designed to help buyers understand that mortgages are possible for them. With all of these factors, Fite expects to see some positive growth in 2015. He thinks that the growth in the mortgage market will remain relatively modest, but he sees the potential for a return to an interest in home buying.

Monday, December 8, 2014

What you should know about being a landlord

Rental real estate ownership is considered one of the best ways to cultivate passive income. If you can get together the capital needed to purchase a property, and then rent out, you have the potential to make a significant amount of money passively. On top of that, there is the chance that real estate appreciation will lead to the ability to sell the property later at an increase, further improving your return on investment.

Being a landlord isn't for everyone, though. Larry Ludwig owns a hosting business, runs the site InvestorJunkie, and has owned rental property for several years. While he, in general, has been satisfied with his experience, he also acknowledges that it can be a lot of work, expense, and inconvenience, depending on your situation.

Before you decide to take the plunge, here are a few things you should know about being a landlord:

It’s essential to screen your potential tenants

“The key to a good experience is a good tenant,” says Ludwig. “The key to getting a good tenant is the screening process.”

This is especially important if you are renting out a single property. It’s true that there are real estate moguls and development companies that own large, multi-family buildings, and that don’t worry too much about screening. However, if you only have one or two properties, it’s especially important to screen tenants so that you reduce the chances for difficulties in terms of payment, as well as how the property is cared for.

“Don’t rent to the first person that comes to your door,” says Ludwig. He suggests that you set up systems for credit checks and background checks. If you are interested in tenants you don’t have to worry about, those with good credit, and who have good references, are more likely to fit your needs. A good tenant, with whom you can build a good landlord-tenant relationship, can provide you with years of passive income.

Keep your property maintained

One of the best things you can do is keep your property maintained. If you maintain your property, you can reduce the chance for large repairs down the road. When issues do come up, have them repaired in a timely manner. Keeping your property maintained can help ensure that your repair retains its value (or appreciates over time), and it is much easier to spread maintenance and repair costs out over the years, rather than to try and take care of it when it becomes absolutely necessary.

Plus, keeping your property maintained will also help you increase the chances that you can keep your property rented out. High quality tenants (who are likely to pass rigorous screening) want high quality rentals. If you maintain your property, you will be able to command top rates from reliable tenants.

A landlord also has to be responsive to requests from tenants. If a tenant is locked out, or there is a leak under the sink, it’s up to you to take care of it. Unless you hire a property manager to handle these items, you need to be prepared to be on call, even when you are on vacation or in the middle of the night.

Be ready for disaster

Ludwig’s rental property was located in an area devastated by Hurricane Sandy in 2012. While Ludwig had insurance for his property, he didn't have flood insurance, so a large portion of the damage to the property didn't qualify for coverage. “I don’t want to experience that again,” he says. “I’m getting flood insurance now, even though that was a 100-year storm.”

He also points out that rental property owners might not qualify for FEMA assistance, since it’s an investment property. While Ludwig’s displaced tenant qualified for assistance, he, as a business owner, did not. He was directed to the Small Business Administration, which provided him with access to a short-term loan with a below-market interest rate. However, the loan was for less than $10,000, and the total work he needed to fix up his rental amounted to about $25,000. In the end, he spent close to $40,000 to upgrade the rental, since he had to redo everything anyway.

If Ludwig had flood insurance, he would have received greater assistance in paying to remodel the rental. Other types of insurance should be considered as well. As a landlord, it makes sense to be ready for a disaster, whether it’s in the form of a destructive tenant, or whether Mother Nature goes to work.

Make sure you have the liability and property insurance coverages you need to ensure that your assets are protected in the event of a disaster. Losing your rental can be a big blow to your finances.

Know the restrictions on your rental

Finally, understand what’s allowed in your area. You might not be able to rent a home to more than one family if your city doesn't zone for multi-family residences. Another consideration is what’s available if you have a condo, like Ludwig has.

“With a condo, you have by-laws,” he says. “Sometimes, depending on the building and the rules, you have to get approval to get a tenant, and the condo board might need to approve the tenant.”

Understanding the restrictions on rentals ahead of time is vital so you don’t run into penalties and other difficulties later.

As long as you are prepared to be a landlord, and acknowledge some of the work involved, it’s possible to make a good income from a rental property. Just be careful about how you go about it, and make it a point to understand the drawbacks before you commit your capital.

Friday, November 21, 2014

Title Source Team Members in our Pennsylvania Community

Title Source is proud to partner with Moon Parks & Recreation Department in Pennsylvania, whose mission is to advance the quality of life for their residents. This is done through the advancement of parks, recreation and environmental conservation efforts in Moon Township. Title Source team members volunteered time with Moon Parks at Robin Hill Park on October 24, 2014, which was the first of many opportunities. We hope to sustain a monthly volunteering commitment with the Department, and volunteer additional time on an as-needed basis.

Thanks to Moon Parks & Recreation Department, we can leave the communities around us a little safer and cleaner for area residents.
For more information about Moon Parks & Recreation, Click Here.

Tuesday, November 11, 2014

Why Aren't Millennials Buying Homes?

Homeownership is often considered a major financial milestone. Owning a home is considered a part of the “American Dream,” and it’s something that many have aspired to for decades. All that might be changing with millennials, however.

Last year, a report from the New York Federal Reserve indicated that homeownership had fallen across the board for younger people. Many in the housing industry wring their hands at the data, and wonder what can be done to improve millennial interest in homeownership.

The problem, though, may not be that millennials are giving up on the “American Dream.” Many of them acknowledge that homeownership is still a goal. So, if homeownership is a goal for millennials, what’s holding them back?

Changing family structures

A recent survey conducted by Zillow indicates that one of the main reasons for declining homeownership among millennials is a change in family structures.

Daren Blomquist, the Vice President at RealtyTrac, agrees that, to some degree, changing family structures probably impact millennial desire to buy a home. “Culturally, millennials tend to be making milestone decisions later in life,” he points out. “Marriage and having kids are coming later in life to millennials, and those are decisions that often lead to homeownership.”

The Zillow data indicates that, among married couples with two incomes, homeownership remains above historic levels, but the question of when those marriages take place is at issue. “With these types of life decisions being pushed to later, it only makes sense that homeownership would be pushed to later as well,” says Blomquist.

Worries about home ownership as an investment

Blomquist also thinks that many millennials are concerned about the investment potential of homeownership. “During millennials’ formative years, we say the first real decrease in home prices in several generations,” he points out. “They’ve watched as parents and other relatives see declines in value, and maybe even foreclosure. The mantra that home value will always rise has been debunked.”

While many millennials see homeownership as an essential part of life in the future, they are also wary of committing to buying before they are settled. “Homeownership can be beneficial if you stay in one place for a long time,” Blomquist says. “But for many millennials, who are still figuring out where they will land for the long term, it may not make sense because they could have to sell at a loss if home prices drop in five or six years, right when they might have to move for a new job.”

Blomquist says that there has been a paradigm shift in millennials, and now they are looking at homeownership differently, and considering what might happen if buying a home didn’t turn out to be a good investment decision. “For some millennials, it can work out if they have a Plan B to rent out the property if they have to move. Even so, millennials don’t view homeownership as a no-brainer like many in the generations before saw it when they came of age to buy.”
Student loan debt and homeownership

Another reason that millennials might be delaying homeownership has to do with the growing amount of student debt that they have. The New York Fed report indicates that homeownership among those aged 30 with student loan debt has been declining.

“That student debt is a weight, at least psychologically, for many millennials,” says Blomquist. “Before taking on additional debt, many want to clear out, or at least take a big bite out of, that student loan debt they have.”

RealtyTrac has its own data about how student loans impact the ability to buy a home. A recent analysis indicates that, in most places, homeownership is still a possibility, even with student loans. Blomquist says that millennials might have the perception that student loans are holding them back, but, at this point, the reality is that student debt doesn’t have to preclude homeownership.

Even so, Blomquist concedes that student loan debt does impact how much home a typical millennial buyer can afford. “Even though the data shows that affordability isn’t truly an issue for college grads, student loans can affect buying power,” he says.

According to Blomquist, a college grad with student loan debt would have to make adjustments amounting to 34 percent of the home’s purchase price. “Either the grad with student loans would need to earn 34 percent more to buy the same amount of house as someone without student debt, or he or she would have to buy a home that is 34 percent less expensive.”

Bottom line

Much has changed in the years since the Great Recession. Millennials are approaching the age that generations before have traditionally bought homes, but aren’t quite ready to take the plunge. That doesn’t mean that they won’t eventually become homeowners, though. As soon as millennials feel comfortable with their lives and their finances, they are likely to start house hunting.


Wednesday, October 29, 2014

Title Topics: Who are Fannie and Freddie?

Who are these well-known names and why are they important? Fannie and Freddie have a huge role in the mortgage industry, so, let’s meet them!

Fannie Mae
The Federal National Mortgage Association is officially known as Fannie Mae and is a United States Government-sponsored corporation insured by the Federal Housing Administration (FHA). Fannie Mae was created prior to Freddie Mac and is a competitor to the similar corporation. Fannie Mae’s role in the mortgage lending process is to buy mortgages from lenders and sell them to investors on the open market. This process is essential in replenishing the supply of lend-able money available for new home purchases.
Freddie Mac
The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, is a government sponsored enterprise of the United States federal government. Freddie Mac was created in 1970 to expand the secondary market for mortgages in the US. Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.

Now that you are introduced …
Now that you know more about these corporations, you understand that Fannie and Freddie do not issue mortgages but buy them from banks. Then, they guarantee the securities and bundle them for resale on the secondary mortgage market. 

Any Questions or Comments?  Let us know!