What's New:

We at CSS wish all of you very Happy Holidays and a safe and Happy New Year! We truly appreciate your business and look forward to continuing to exceed your expectations in 2019!

Cyber-crime is everywhere these days and can have devastating consequences if successful.
At CSS, we will continue to update and educate you and your customers to reduce the risk of such affecting your transactions. Below is an example of the latest scam in the Cyber-crime battle.

Market News:

How Criminals Can Spoof Your Phone

"Ever heard of SpoofCard? It’s a scammer’s dream and a nightmare for title and settlement agents. The application offers the ability to change what someone sees on his or her caller ID display when he or she receives a phone call. To spoof a call, a criminal will dial one of SpoofCard's access numbers and enter the destination number followed by the phone number to appear on caller ID. The recipient of the call will think it is coming from one person when it is actually coming from someone else. It makes it easier for a hacker to spoof a title company and call the buyer when it is time to wire funds for closing or to impersonate a seller and call the title company, giving it fraudulent wiring instructions to which to transfer the proceeds from closing. The Federal Trade Commission reported that impostors made more than 250,000 spoofed phone calls in 2017. One preventative measure is to ensure that early in the transaction, all parties to that transaction are clear on how wiring information will be exchanged during the process so that they can attempt to identify a fraudster before it is too late. Unfortunately, the fraudsters are always looking for new ways to pierce our security measures, so continuing diligence and education is key." - American Land and Title Association

Source: ALTA Blog

2019 Housing Predictions

It’s that time again when everyone tries to predict what the housing and mortgage markets will look like in the following year. Here are some predictions for our markets in the coming year:

1. Forbes’ Forecast:

According to Forbes, the market suggests more rate increases. Currently, the most likely option seems to be a single hike in 2019. However, up to three increases are possible in the market's view. The Feds will be looking at the following in determining when, how many and how much of an increase should be made to rates:

China, Housing, Energy and Agriculture

• Chinese economy. China is a significant source of global growth, it's both a large global economy and seeing among the fastest growth anywhere. Any material slowdown in the Chinese economy could downgrade global growth prospects.
• S. housing. Home buyers are deterred by rising mortgage rates on recent data. Activity in the energy sector will be closely watched.
• Increasing energy investment to grow U.S. oil output was a theme in much of 2018. Yet, November's extremely sharp fall in the crude oil price may change that and have other knock-on impacts for the broader economy, that could be more positive.
• This sector is a potential source of risk, as various products are hit by tariffs hurting profits.

Change To Rotating Seats May Make Consensus Harder

In January 2019 the heads of the Reserve Banks of Richmond, Atlanta, San Francisco, and Cleveland will rotate off the decision-making committee and the heads of Chicago, Boston, St Louis, and Kansas City will rotate on, as is standard. This should not have a major effect.

A Flattening Yield Curve?

The other thing to keep a close eye on, though not directly controlled by the Fed, will be the slope of the U.S. yield curve. Currently, that difference is extremely small relative to history. Yet the yield curve hasn't inverted, which is where short-term rates are above longer-term rates. When that happens, it can be a negative sign and it does not take much of a move in the yield curve to get us there. The implication is that the tightening cycle has ended, but in a bad way, because a recession could be on the horizon.

2. Zillow’s Predictions:

Zillow has also made some predictions for this coming year:

• Below average mortgage rates will begin to change as the 30-year fixed rate mortgage reaches 5.8%. Affordability will take a hit, making home ownership difficult for many. Homeowners will stay put as they hold on to low mortgage rates and the rates may discourage first-time home buyers.
• Aspiring homeowners will continue renting, as a result of which the slight drops in rent we have seen, will reverse and turn positive again.
• A Zillow survey of housing experts and economists anticipates a 3.79% increase in home values for 2019. Both forecasts indicate cooling from rapid growth of 8% in March of 2019.
• Home values will increase 6.4% from October 2018 to October 2019.

3. National Association of Realtors (NAR)’s Real Estate Trends:

• Marriage not needed (i.e “You don’t need a ring”): 

The share of married couple buyers hit the lowest point since 2010 at 63%. Single females made up the second-largest buyer group at 18%, followed by single males at 9% and unmarried couples at 8%.

• Tough for first-timers (i.e. “Rent or live with mom and dad”):

Low inventory for entry-level homes and rapid price increases continue. In 2018, the share of first-time buyers fell to 33%, down slightly from 34% in 2017 and below the historical norm of 40%.

• Older repeat buyers (“Everyone can live with mom and dad”:

Repeat buyers are getting older. The median age was 55 years, up from 54 last year and an all-time high for the survey. Many are purchasing multi-generational homes and taking care of parents, and/or their children are moving back home.

• Student loan debt (“see above”):

College debt remains a significant challenge for potential home buyers. Almost a quarter of all buyers reported having a median of $28,000 in student loan debt, while two in five first-time buyers said they had a median of $30,000 in education debt, making it difficult for a down payment.

• Fewer children (“me, myself and…my pet”)

Home buyers with children under 18 reached 34%, which is the lowest in the past 37+ years. Some buyers may be willing to move to up-and-coming neighborhoods more than before and may be looking for townhouses or condominiums, houses with less than three bedrooms, and a pet-friendly environment. 15% of buyers in 2018 said it was important that their home is close to green spaces or a veterinarian for their pets.

Legal News and Case Law:

The broker gets commission without a written agreement. To be enforceable in Michigan, a contract or agreement relative to the sale of real property must be in writing. This is pursuant to the Statute of Frauds. This generally means certain oral contracts will not be enforced. However, the Michigan Supreme Court recently confirmed that under certain circumstances, the Statute of Frauds does not bar a real estate broker’s commission claim, based upon equitable doctrines such as promissory estoppel.

Promissory estoppel is a judicially created, equitable exception to the legislative statute of frauds. The elements of this are: (1) a promise; (2) the party making the promise should have expected the promise to cause the party relying on the promise, to act in a definite and substantial manner; (3) that person did, in fact, rely on the promise by acting in accordance with its terms; (4) the promise must be enforced to avoid injustice. In other words, even though a contract for payment of a commission is not in a signed writing, it would be inequitable and unfair not to enforce the promise if it induced conduct by the broker who relied upon the promise.

In a recent case, North American Brokers, LLC and Mark Ratliff (“Brokers”) worked with St. John Providence to develop a concept that required a particular type of property. The Brokers believed that the Latson School property, being sold by Howell Public Schools, suited their concept. The property had a for-sale sign that indicated it was “broker protected.” The Brokers approached St. John Providence about the property. Howell Public Schools and St. John Providence subsequently reached a purchase agreement through another real estate agency and the Brokers received no commission. The Brokers sued Howell Public Schools and St. John Providence, alleging a variety of claims, including a count of promissory estoppel.

The Michigan Supreme Court decided that the for-sale sign on the Latson property was not a signed writing for the purposes of the Statute of Frauds. However, the Brokers alleged that the “broker protected” sign was a promise that induced them to cultivate St. John Providence as a buyer of the property and, based upon the doctrine of promissory estoppel, Brokers should be entitled to a commission.

Although this was a favorable outcome for the Brokers, best practice and law still require all real estate commission agreements to be in a signed writing. Expecting that an oral promise to pay a real estate commission will be upheld by a court, is risky.

Maura A. Snabes, Esq., CES®, NPT, CLTP – Sr. Underwriting & Compliance Counsel Phone: (231) 547-5220×102 802 Bridge St., Charlevoix, MI 49720 e-mail: msnabes@visitcss..com.

Corporate Settlement Solutions has many Michigan branch offices to serve you—Traverse City, Suttons Bay, Elk Rapids, Charlevoix, Bellaire, Mt. Pleasant, and Big Rapids in addition to providing services throughout the eastern United States.

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