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What exactly does it mean to you when your mortgage has been “sold?”

 

The sale of mortgage “paper” and/or servicing is common practice.

 

Federal law requires that the outgoing mortgage holder must send you in writing, notification of the sale and provide you with the new company’s contact information. The new company must also send you in writing their “welcome” letter and provide you with clear instructions on how and where to pay your mortgage. To learn more, visit http://www.consumerfinance.gov/askcfpb/215/what-happens-if-my-mortgage-servicer-changes-what-do-i-do.html

 

So what could possibly go wrong? Realize that many of the servicing agents are not located in the United States; data from the loan package is often manually entered into a new database; and escrow accounts can slip into an abyss. Because you, the mortgagor, are ultimately responsible for your mortgage, taxes, and insurance; you must be vigilant.

 

The subject of escrows held by a lender (or lender’s servicing company) has been tested in court and it has been determined that “when the lender holds escrow funds for property tax payments, a fiduciary duty exists.” This is a very important decision inasmuch as the lender has the obligation to you to pay all taxes and insurance (should they be collecting for that as well) in a timely manner.

 

A client recently contacted us for help sorting out the sale of their mortgage and getting their taxes paid on time. After two months of phone calls, and several emails, their property taxes were finally paid. However, the County and Town tax records now show  that late payment interest and penalty fees had been levied and received. This indication is not on the servicer’s record, it is on the homeowner’s record.

 

What’s a homeowner to do?”

 

  1. Open all lender correspondence promptly.
  2. Act on the correspondence immediately.
  3. Do not be put off by promises or delays.
  4. Keep copious notes of names, times, dates, and agreements. Record the conversations, if possible (they record theirs)
  5. Follow up, follow up, follow up.
  6. Get everything in writing.
  7. Keep all contact numbers handy.
  8. Do not hesitate to contact the investor of your loan to let them know of your problems inasmuch as the investor usually contracts the servicers.

 

If you have any questions, you can always contact us.

If you look hard enough, you can find almost anything on the internet. When it comes to buying, selling, or renting, there are plenty of websites where you can connect directly with buyers, tenants, landlords, and homes for sale.

Why should you bother finding a real estate agent when you have Google?

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Trust

Real estate scams are a thing, particularly for rentals. The FTC provides information on their site for how to recognize a scam, and one way you can spare yourself the trouble is to find an agent you trust who will sift through the market for you. That agent will be sifting through properties listed with agents.

Properties listed with an agent, both to buy or rent, will have a number of things going for them. First, it is in the best interest of the listing agent to make sure that the landlord actually owns the property he or she is listing. Second, the listing agent also wants to get the property rented or sold, so they will do their best to make the property attractive, accessible, and well priced. Third, they will make sure the money and paperwork goes to the right people in a timely fashion.

For sellers and landlords, working with a realtor also provides the safety and comfort that someone prescreened the folk who will be trooping through your home. Your realtor will know which realtors have shown your house, and will have talked personally to any buyers or tenants without agents who want to see the place.

Besides the practical reasons to do good work, realtors have a fiduciary duty to look after the interests of their clients. accountant-accounting-adviser-advisor-159804.jpeg

Wisdom

The internet provides knowledge and very general information. But how do you apply the information, or even determine if it is reliable?

According to Zillow, “Nationwide, Zestimates are currently within 5% of the final sale price 52.9% of the time,” and “Nationally, Zestimates are currently within 20% of the final sale price 85.8% of the time.”

These percentages turn into pretty significant numbers when you’re dealing with houses. It’s easy to set a price too high, or too low, and lose a great deal of money. You could even lose the sale entirely because the price is far higher than the actual appraisal by the lender.

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Why does Zestimate have such a huge margin of error?

Zillow can’t walk into a house and get the feel for it’s actual condition and layout. What about how the light moves through the house? Or, how the light moves through the other houses in the neighborhood, or the other houses in the region that have the particular features this particular buyer is looking for?

A good realtor can help you take into account the unquantifiable factors of a home.

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Connections

Price is only one part of buying or selling a house.  Home inspectors, contractors, title companies and the like, all provide services essential to a transaction. Services that absolutely must be done well because they have far reaching ramifications. A good realtor will have good people to recommend to you.

When working with a realtor to sell a house, you’re not just relying on their knowledge to set the price and make the best repairs, you’re tapping into their network of human beings who might want to buy or know someone who might want to buy your property. And nobody networks like a realtor.

When working with a realtor to buy a house, you’re tapping into their resources and knowledge of the area, the market, and the professionals. They also have direct access to the most up to date information about the market, and are happy to spend time tracking down the best options for you. You should still do your homework on schools and crime rates, because a realtor can’t make those choices for you–but a good realtor is absolutely invaluable.

At Properties on the Potomac, we pride ourselves in our commitment to our clients. We share our knowledge and our connections with our clients. If you are thinking of buying or selling and want to find out more about how we can help you, contact us here.

 

On December 22, 2017, the President signed the Tax Cuts and jobs Act. This new law has specific impact on real estate. It impacts that which you already have and any future real estate you will acquire.

 

Below is a table summarizing the changes:

 

Tax Item Deduction New Law Prior Law
Maximum Loan Interest $750,000 (For purchases after 12/14/17 $1,000,000
Equity lines of credit  None Up to $100,000
State and Local Taxes total $10,000 No maximum
Capital Gains Exclusion No change Must be owned 2 of last 5 years
Like Kind Exchanges (1031) Unchanged for real estate only  
Real Property Depreciation Unchanged  
Capital Gains Tax Rates Unchanged  

 

Much has been broadcast about the benefit of homeownership in relation to the new law. At Properties on the Potomac, Inc. we view homeownership as a form of supreme independence and wealth building for the following reasons:

 

  • Real Estate builds your wealth through

o   Appreciation of a large asset and the use of OPM (other people’s money)

o   Your mortgage payments pay down your principal, thus building your equity

  • Owning your own home gives you control over your living situation.
  • Tax savings remain a significant benefit of ownership.
  • Owning a home is a financially sound decision.
  • You can keep, rent out, sell, or will your real estate as you determine is best for you.

To read the entire Bill click here.