2018 Summer Newsletter

What's New!

We are in the middle of the “dog days” of summer, which is our busiest time in Northern Michigan. Real estate is moving, and that is good news for all of us! The legislature has been moving, also, passing several Bills that affect real estate transactions. While I sent these out via e-blast, I am providing the information again in the event it was missed. Enjoy the warm weather while it lasts!

Market News:

Federal Taxes and Homebuying

In the past, it was a requirement that homebuyers pay off any delinquent federal taxes to obtain financing. However, this is no longer a mandate for loans that are being purchased by Fannie Mae (and perhaps others). Under new rules from the government-sponsored company, as long as you have an approved payment plan with the IRS, you can qualify for a home loan. However, since monthly payments under any payment plan will be counted as debt when calculating the debt-to-income ratio, one may want to try to negotiate to have smaller payments and a longer payoff period. Of course, paying off the debt in full is the best solution, if it is feasible for a potential homebuyer to do.

There are some conditions that come with Fannie Mae’s new guidelines: First, a Notice of Federal Tax Lien cannot have been filed against the borrower in the county in which the property is located. Second, at least one payment under the IRS agreement must have been made before closing. Also, the lender must obtain extra documentation, including:

-- An approved IRS installment agreement with the terms of repayment, including the monthly payment and total amount due.

-- Proof the borrower is current on that contract. Acceptable evidence includes the most recent payment reminder from the IRS, reflecting the last payment amount and date received, and the next payment amount and due date.

Top Servicing Challenges Facing Lenders in 2018

According to the MBA, with originations expected to fall by the end of 2018, lenders are looking for new ways to solve servicing challenges to reduce costs and improve profits. Among their largest concerns:

Cost Reduction Challenges

The cost to originate a mortgage loan is nearing the $8,500 mark, but servicers are also subject to increasing costs. At a roundtable hosted by Fitch Ratings, servicers pointed to four primary reasons for their rising costs: (1) compliance expenditures impacting performance; (2) compliance costs; (3) more state servicer reviews; and (4) trouble transitioning out of HAMP to other modification strategies. Today, servicers are looking for ways to cut their operating costs without impacting their performance. Some are reaching out to third-party partners, but even that is a challenge.

Finding the Right Partners

Servicers have expressed difficulty in finding the right third-party outsourcing partners that understand the technology and process. There are very few that follow both. Due diligence is critical in today’s lending world, and servicing is too complicated to work with vendors that do not have the experience and knowledge required. Finding the right partners will involve extensive due diligence, adequate risk mitigation, and achieving high efficiency. Getting the right partners makes every interaction between the servicer and the third-party partner more efficient, lowering costs and improving the servicer’s bottom line.

Accessing the Best Technology

Servicers and lenders cannot take technology out of their process, and it can be difficult and expensive to keep up with the latest technology. However, failure to do so can quickly put the servicer at a competitive disadvantage. Having high-tech software is a critical tool for driving the advanced mortgage servicing machine. It is mandatory, not optional to be successful. The key is to find the right tools while balancing capital and operational expenditures with a satisfactory return on investment.

Servicing Success in 2018

As we all know, challenging times are also times for new opportunity. Servicers are looking forward to having the breathing room to do the work of transforming their businesses, whether they are pursuing operational efficiency or zero full tolerance compliance. Servicers should continue to focus on what drives value in our industry: compliance, quality, and customer service. And, it is a great time to find expert partners to help share that load.

Legal News and Case Law:

The Michigan legislature has been very busy, enacting 3 bills which will affect the manner in which we are currently handling our real estate transactions:

  • Remote Online Notarization (RON) - PA 330 of 2018. We are one step closer to providing full electronic closings in Michigan! To date, a person had to be in the literal physical presence of a notary in order to meet the requirements of the notary statute and acknowledge a person’s signature. However, with the passage of House Bill 5811, the term “presence” now includes verification through a remote electronic platform approved by the Secretary of State. The law takes effect 90 days after the Governor signed it. However, we will not see much happening until next year. This law provides that beginning March 30, 2019, the Secretary of State will begin reviewing the RON platform(s) and may approve any or all of them. After that, a notary may acknowledge a person’s signature using the approved platform(s).
  • Recording of Trust documents and Death Certificates. Senate Bills 731 through 740, comprising a package of bills intended to modernize language and remove obsolete sections of statutes regarding register of deeds offices in Michigan. The most relevant to us are Senate Bills 734 and 735.
  • Senate Bill 734 amends Public Act 133 of 1991 (MCL 565.434) to require that a trust agreement or certificate of trust existence and authority that accompanies an instrument that affects an interest in real property be recorded as a separate document.
  • Senate Bill 735 amends chapter 65 of the Revised Statutes of 1846 (MCL 565.48), which governs the conveyance of real property by a surviving joint tenant or tenant by the entirety, to require a death certificate to be recorded as a separate document when it is being filed concurrently with the deed or other instruments that purported to convey an interest in land by the survivor or survivors. These Bills are effective on September 17, 2018, which is 90 days after they were signed into law. They are known as Public Act (PA) 194 and 195 of 2018.

 

Maura

Maura A. Snabes, Esq., CES®, CLTP

Sr. Underwriting & Compliance Counsel

Phone: (231) 547-5220x102

802 Bridge St., Charlevoix, MI 49720

Email: msnabes@visitcss.com.

 

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

This Newsletter may be construed as an advertisement as defined in Public Law 108-187. A recipient of this Newsletter may decline to receive future messages by making such a request to the above-e-mailed address.

Topics: Senate Bill 735, Senate Bill 734, Senate Bill 731, Senate Bill 732, Senate Bill 737, Senate Bill 738, Senate Bill 739, Senate Bill 740, House Bill 5811, Senate Bill 733, Federal Taxes, Homebuying, Remote Online Notarization, Senate Bill 736, Public Act, Corporate Settlement Solutions has

RECENT NEWS & INSIGHTS

Title & Closing For Regional Lenders: Time for a New Centralized Model!
Sep 16, 2019 by Jerome Jelinek - CEO
While regional lenders have historically narrowed working relationships to a few AMCs and home equity title, valuation & flood vendors, the...
Continue Reading
Opportunity Zones vs. 1031 Exchanges—Can They Co-exist?
Aug 13, 2019 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
Many real estate investors are familiar with the parameters and tax advantages of a Section 1031 tax-deferred exchange to defer the payment of...
Continue Reading
Cannabis Real Estate Transactions: Weeding Out The Confusion
Jul 10, 2019 by Beccy Clennan - Manager of Commercial Title & Escrow
Has the passage of recent Marijuana laws made the real estate industry in Michigan more confusing? Closing a cannabis transaction could be easier...
Continue Reading
2019 Summer Newsletter
Jul 8, 2019 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
What's New: Summer is FINALLY here, the temperatures are increasing, and so is real estate activity! A strong job market and low mortgage rates...
Continue Reading
How to Cater to the Millennial Homebuyer
May 28, 2019 by Debbie Bartlett - Executive Vice President, Title & Closing Operations
The Millennial Homebuyer is projected to dominate the housing market in the not too distant future. Sharing audience traits and characteristics with...
Continue Reading
The Top 6 Commercial Loan Policy Endorsements to Protect a Lender
May 22, 2019 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
Want the Commercial Loan Policy Endorsements that provide the maximum protection? The ALTA 2006 Loan Policy provides many protections for a lender...
Continue Reading
Advantage AVM Cascade: Get Better Results and Lower Costs
Apr 22, 2019 by Kevin Ingles - Vice President Customer Development
An AVM Cascade could help your bottom line in a multitude of ways. Are you interested in reducing origination turn-times with limited additional risk...
Continue Reading
2019 Spring Newsletter
Mar 28, 2019 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
What's New: Happy Spring! It was a long, cold, snowy winter, but the snow is finally melting, the temperature is rising and we are looking forward to...
Continue Reading
Electronic Remote Online Notary (RON) in Michigan
Mar 20, 2019 by Debbie Bartlett - Executive Vice President, Title & Closing Operations
Electronic remote online notary (RON) closings are soon to become the new normal in Michigan. As a Realtor, if you haven’t been experimenting with...
Continue Reading
Use of Electronic Signatures & Remote Online Notarization
Mar 19, 2019 by Jerome Jelinek - CEO
Many in the lending community still harbor reservations over the use of electronic signatures and remote online notarizations. This article is...
Continue Reading
Cyber-security Protection Checklist
Feb 13, 2019 by Eric Henke
A cyber-security breach could lead to serious financial and reputational damage for your customer. Please help ensure that your customers are...
Continue Reading
Hybrid Appraisals: A Viable Alternative to Traditional Appraisals?
Feb 13, 2019 by William Janke
Hybrid appraisals have become more prevalent and accepted by the lending industry as an alternative to traditional appraisals. Benefits to lenders...
Continue Reading
2018 Winter Newsletter
Dec 5, 2018 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
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...
Continue Reading
Oct 1, 2018 by admin
What’s New: I have just returned from my annual Federation of Exchange Accommodators 1031 conference. The conference had a lot of daily transactional...
Continue Reading
Jul 23, 2018 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
What's New! We are in the middle of the “dog days” of summer, which is our busiest time in Northern Michigan. Real estate is moving, and that is good...
Continue Reading
Mar 28, 2018 by Maura A. Snabes, Esq., CES®, CLTP - Sr. Underwriting & Compliance Counsel
What's New! CSS was recently awarded its 4th consecutive Circle of Excellence Award from Fidelity National Title Group, one of the agency’s...
Continue Reading