Monthly Archives: December 2012

2013’s Top 10 Healthiest Housing Markets….

Along with our take on what’s in and what’s out for housing in 2013, I’ve got my eye on 10 “healthy” housing markets with solid fundamentals. The healthy markets that made the list have strong job growth (Bureau of Labor Statistics), which bodes well for housing demand; low vacancy rates (U.S. Postal Service)–low enough to encourage new construction, but not so low that inventory and sales are restrained; and low foreclosure inventory (RealtyTrac), since foreclosures tend to hold back recovery.

But why, you might ask, aren’t rising prices included as part of our definition of healthy local housing markets? Because many of the markets with the largest price gains in 2012 were rebounding from huge price declines during the bust, but they still have weak fundamentals, such as high vacancy rates, large foreclosure inventories, or slow job growth. For instance, Las Vegas and Phoenix both have high vacancy rates and large foreclosure inventories going into 2013, despite having year-over-year asking-price increases of 14% and 27%, respectively, according to the November Trulia Price Monitor. And Detroit has a sky-high vacancy rate and is suffering job losses, even though asking prices in Detroit rose 10% year-over-year. Just as losing lots of weight might be part of an unhealthy cycle of yo-yo dieting, big price gains aren’t necessarily a sign of a healthy housing market if they’re being driven by a post-crash rebound, rather than solid fundamentals. That’s why Las Vegas, Phoenix, and Detroit aren’t on the healthiest-markets list for 2013.
The envelope, please:
The 10 Healthiest Metros for Housing in 2013 
Houston, TX
San Francisco, CA
BethesdaRockvilleFrederick, MD
San Antonio, TX
Austin, TX
Seattle, WA
Omaha, NE-IA
Peabody, MA ***
Fort Worth, TX
Louisville, KY-IN
Among the 100 largest metros.
***Note that Peabody MA refers to the Essex County metropolitan division, which includes the suburbs north of Boston, with a population of 740,000.
Map of Trulia's Top 10 Healthiest Housing Markets for 2013
Of these 10, four are in Texas (Houston, San Antonio, Austin, and Fort Worth); two are on the West Coast (San Francisco and Seattle); two are northeastern suburban metros (Bethesda, next toWashington DC; and Peabody MA, north of Boston); and Omaha and Louisville round out the list. These aren’t necessarily the markets with huge price gains going into 2013, but they have strong fundamentals. For instance:

These 10 markets should set the pace as the national housing market continues to return to health next year. Here’s to a healthy 2013!
Carolyn Ingebritson

Jed Kolko, Chief EconomistJed leads Trulia’s housing research and provides insight on market trends and public policy to major media outlets including TIME magazine, CNN, and numerous others.

Reverse Mortgages have been considered….

Reverse mortgages have long been considered one of the most expensive ways to extract cash from your house. But that is changing as some of the country’s biggest reverse-mortgage lenders are slicing closing costs—helping even some affluent homeowners who want to generate additional income.
Reverse mortgages allow people who are 62 years old and older to convert their home equity into cash. Instead of the homeowner writing a check to the bank each month, the bank pays the homeowner, who can elect to receive a lump sum, a line of credit or monthly payments. The loan is due, with interest, when the borrower dies, moves, sells the house, or fails to pay property taxes or homeowner’s insurance. Heirs typically sell the house, pay the balance and keep whatever is left.
One of the biggest criticisms of reverse mortgages has been the fees, which can total 5% of a home’s value. But the new cuts in fees mean that some homeowners can save $10,000 or more on the closing costs.
Genworth Financial Inc., Bank of AmericaCorp., BAC -1.14%Wells FargoWFC -0.80% & Co., OneWest Bank’s Financial Freedom unit and other lenders also have dropped or reduced their origination or servicing fees, or both.
Why are lenders cutting costs now? To drum up business. From Oct. 1, 2009, to March 31, 2010, home-equity-conversion mortgage volume fell 22% from the same period a year earlier. One reason: In response to falling home values, the Department of Housing and Urban Development cut the amount of equity that reverse-mortgage borrowers could extract by 10% last October.
That meant some homeowners no longer qualified for a large-enough reverse mortgage to pay off their regular mortgage—a basic requirement for getting such a loan approved. And some consumers have been dismayed by falling home values and postponed taking action.
Another factor: In the past two years, lenders have started securitizing reverse-mortgage loans by converting them into Ginnie Mae-backed bonds. Popular with investors because of their government guarantees and high yields compared with Treasurys, these bonds also have been more profitable for issuers than selling them to Fannie Mae, the main alternative, says Peter Bell, president of the National Reverse Mortgage Lenders Association in Washington.
Mary Hobbs, 69, is closing on a reverse mortgage with Security One Lending of San Diego for her three-bedroom home in a retirement community in Lincoln, Calif. Her goal: to pay down her mortgage and replace some of the income she lost when a real-estate loan she had made on another property recently went bad. Because of cuts in closing costs, Ms. Hobbs will now be able to borrow an extra $10,400, bringing her loan total to almost $368,000.
MetLife Inc. MET +0.36% dropped its reverse-mortgage origination fee and monthly servicing charges in March. One of the firm’s consultants, Sandra Clements, says she is hearing from better-off older homeowners who would like to tap their home equity to help fund their retirements, but who previously were put off by steep closing costs.
Origination fees are allowed to run as high as $6,000, by federal law, while the monthly servicing fee is typically charged up front as the “present value” of those costs for a number of years set by the lender. One big expense for homeowners remains: mortgage insurance, which HUD requires for most products.
So far, the cuts in fees apply mainly to one type of reverse mortgage: the plain-vanilla fixed-rate “home-equity conversion mortgage,” which is backed by the Federal Housing Administration and is paid out to the borrower as a lump sum. That product accounts for about 60% of reverse mortgages, Mr. Bell says.
At least one lender, Wells Fargo, is giving borrowers a break on origination and monthly servicing fees for adjustable-rate reverse mortgages, which allow homeowners to tap their home equity as they need it. Other lenders are cutting interest rates on such loans.
For example, Financial Freedom has lowered its rate by 0.75 percentage point, to just over 2%. The fee cuts could continue. Bank of America, for example, is studying “options to address some of the other costs associated with the loans,” says Steve Boland, the bank’s reverse-mortgage executive.
Consumers should consider more than closing costs in deciding whether a reverse mortgage works for them, and if so, which type. One drawback of a fixed-rate reverse mortgage is that you have to draw down the entire loan amount up front and pay interest on the entire amount across the life of the loan.
“It used to be that all of the costs were up front, and you could see them. Now, more of the costs are being included in the interest rate, more like a conventional mortgage,” says Barbara Stucki, the National Council on Aging’s vice president for home-equity initiatives. If you don’t need a large amount up front, you may be better off with an adjustable-rate loan. (Rates on fixed-rate loans are generally more than 5%; variable rates are hovering just above 2%.)
Before you start talking to lenders, consider consulting a HUD-certified reverse-mortgage counselor to learn more about the options and mechanics. Until the end of April, the National Council on Aging and other nonprofit groups are offering free counseling to homeowners regardless of their income.
You can find a directory of reverse-mortgage counselors at Click on “Talk to a Housing Counselor,” and then “Search online for a housing counseling agency near you.”

How 2012 Property Taxe saffect your 2013 Closing 

Two options for paying property taxes
There are two options available for paying real estate taxes in Colorado.
The first option is to pay the entire amount of the prior year’s taxes in full on or before April 30.
It is also possible to pay the real estate taxes in two installments—the first installment on or before February 28 and the second installment on or before June 15.

Property taxes and your closing
Depending on the time of year that a property closes and which method the lender uses to pay property taxes, Land  Title will follow one of several procedures for collecting taxes at closing.
If you’re closing early in the year…For closings that take place during the first couple of weeks of each year, before the counties have certified new mill levies, Land Title will normally escrow from the seller 120% of the previous year’s property tax amount (or use the most recent assessed value, if higher). These are short-term escrows, and no escrow fee is charged. Land Title can provide you with the complete escrow instructions and W-9 forms that are needed.
Once the mill levies are certified and the actual tax amount is available, the prior year’s (2012) taxes will be paid from the escrow, and the difference will be refunded to the seller.
The lender’s procedure for handling property taxes Lenders also play a role in how the title insurance company determines what real estate taxes to collect at closing.

At this time of year, lenders typically request that we handle the payment of the prior year’s (2012) real estate taxes in one of two ways.
The first option is to collect from the seller (by means of a debit entry on their Settlement Statement/HUD-1) the entire amount of taxes due and remit that amount to the appropriate county treasurer prior to April 30. The second option is for Land Title to pay only the first half of the prior year’s (2012) taxes.

When paying only the first half of the prior year’s taxes…
In the event that the new lender requests that Land Title pay only the first half of last year’s property taxes to the county, Land Title typically follows this procedure:
1. The seller will be debited and the buyer credited for the entire amount of 2012 taxes.
2. The buyer will be debited for the first half of the 2012 tax amount and Land Title will pay this amount to the county. The lender will collect a tax escrow and will pay the second installment when it comes due.
3. The buyer and seller will both execute a Memorandum of Understanding Regarding Payment of 2012 Real Property Taxes. This document explains to the buyer and seller that Land Title has paid the first half of the taxes in Te c h   B u l l e t i n  | D E C   2 0 1 2
accordance with the instructions from the buyer’s lender and that the lender will be remitting the second half of the taxes on or before June 15. Taxes disbursed but not received by the treasurer

By the first part of February, parties to a real estate transaction often encounter the problem of what to do when the payoff statement indicates the prior year’s (2012) taxes (either all or half) have been disbursed from the escrow account by the existing lender but have not yet been received by the treasurer. When this is the case, these options are available:
1. Land Title will accept an escrow of 110% or more, depending on the county, of the prior year’s (2012) real estate taxes from the seller/owner until such time as payment of the taxes can be confirmed with the county treasurer. These are short-term escrows, and no escrow fee is charged. Keep in mind that by the time payments can be confirmed, taxes may be past due.
2. On streamline refinances where escrows are being transferred to the new loan to pay for 2012 taxes, an indemnity letter is required from the lender stating that the lender will be responsible for the payment of said taxes.
3. Land Title will accept an indemnity from the lender (who paid the taxes) stating that the taxes have been paid in full (or that the appropriate half has been paid). In this case Land Title will close without collecting a duplicate payment from the sellers.
4. The last option is for Land Title not to pay the taxes and have this shown as an exception on Schedule B-2 of the title commitment and Schedule B-II of the policy. The title policy would be issued insuring only the previous year’s (2011) taxes as being paid. New lenders requesting a mortgagee’s policy will not, in most cases, accept this option.

If you have any questions regarding these procedures, please contact your Land Title Sales Representative or Closing Manager.

Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged
in rendering legal, accounting, or other professional service. If legal or accounting advice or  other expert assistance is required, the services of a competent professional should be sought.

© Copyright, 2012, by Land Title Guarantee Company