Using Power of Attorney? Think again

Fannie Mae recently issued new restrictions on the use of power of attorney (see bulletin details). As a result, these new restrictions will apply to virtually every real estate transaction. 

One important restriction is that if you are doing a cash-out refinance, you cannot use a power of attorney. There are no exceptions to this rule.

If you are doing a non-cash-out refinance or a purchase, you will need to satisfy these key requirements in order to use a power of attorney:

1. Prior to closing, the Principal (the person not attending the closing and appointing the Attorney-in-Fact) must provide the title company and lender with a written statement detailing the reasons he or she cannot attend the closing.

2. If no borrowers will be present at closing, the Attorney-in-Fact (the person signing on behalf of the Principal) must be the Principal's relative or Attorney-at-Law. A "relative" is defined to include a fiancé, fiancée or domestic partner of the Principal.

3. If at least one borrower will be present at closing, the Attorney-in-Fact signing for the absent borrower(s) does not need to be the Principal’s relative or Attorney-at Law.  So, for example, if an unmarried couple is buying a house together, and only one of them can be present at the closing, it would be permissible for that person to be designated as the Attorney-in-Fact for the absent Principal,

4. The Attorney-in-Fact cannot be:

  • a real estate agent with a financial interest in the transaction or any person affiliated with such real estate agent;
  • a title company providing the title insurance policy or any affiliate of such title insurance company, or any employee of either such title insurance company or any such affiliate;
  • the lender to the transaction, any affiliate of the lender, any employee of the lender, the loan originator, the employer of the loan originator, or any employee of the employer of the loan originator

An exception to the above restrictions is if the real estate agent, title company employee, or lender is a relative of the borrower. (This applies in cases where use of POA is allowed, so not in the case of a cash-out refinance.)

Close It! nominated for Tabby Award

We've got exciting news to share! Our iOS app is one of three finalists for a Tabby Award in the Business Products and Services category.

Launched in May of this year, Close It! has already received more than 5,000 downloads. The app is available for iPad and iPhone (the former is the version that's in the running for this particular award).

Close It! is like Turbo Tax for real estate transactions. If you've downloaded the iOS app, you know already know how easy it is to accurately calculate your buyer's total cash to close or your seller's total cash in pocket.

If you haven't downloaded Close It! yet, what are you waiting for?! Download Close It! >>>

For those who have never heard of the Tabby Awards, it's a worldwide competition for the best iPad, Android and Windows 8 tablet apps.

At least a dozen countries are represented this year. More than 40 apps, including Close It! were selected as finalists in 18 categories.

An international panel of judges will choose the winners on November 13 in New York City.

How to choose a really good real estate agent

The idea of buying a home is simultaneously enchanting and daunting. For instance, it's fun to daydream about color palettes and kitchen / bathroom renovations and coming home to your very own Home Sweet Home. It's less fun to think about what the transition from daydreaming and dream home entails.

A really good real estate agent can walk you through the steps of homebuying and even help you negotiate an offer that might lower your upfront and ongoing costs of home ownership.

Really good real estate agents are familiar with the neighborhoods where you'd like to live. They know how long houses have sat on the market and can tell you the difference between listing prices and recent purchase prices.

The question is how do you find a really good real estate agent?

Talk to friends & relatives

Whether through Facebook or other social media platforms or (gasp!) face-to-face, ask your friends and relatives who've had recent homebuying experiences what real estate agents they recommend. And find out why.

Was their agent especially skilled at contract negotiation? Did he or she have encyclopedic knowledge about the local market? What about their communication skills? Did their agent return phone calls and emails in a timely manner?

These kind of details will help to paint a colorful picture of what it's like to work with a real estate agent. And presumably, if it's coming from your friends and relatives, it's coming from a source you know well and one you can trust.

Read online reviews

If you don't have friends or relatives with recent homebuying experiences in your area, the Internet may be the next best thing. Sites like Angie's List (paid subscription required) and Yelp (no subscription necessary, but be sure to check the "filtered reviews) have tons of reviews about local real estate professionals.

Real estate sites like Redfin, Zillow and Trulia post agent reviews as well. The downside of online reviews is you most likely don't know who the source is. More than likely the review is bias, but reading multiple reviews should allow you to get a fairly balanced picture.

Contact top prospects, interview them

Once you've made a short list of prospects, call them and ask more questions. For added peace of mind, find out if your prospective agents have additional references.

Pick their brains about the neighborhoods where you'd like to live. Find out, on average, what percent of the listing price do their clients typically pay. Obviously a real estate agent who negotiates deals for less than the asking price is someone you want negotiating your home purchase.

The more research you do at the beginning of the agent selection process, the better your chances of finding a really good real estate agent and having a pleasant homebuying experience.

Once you've made it through the all the steps, consider posting your own agent review to give future homebuyers an idea of what it was like to work with your agent selection.

And if these tips don't help to ease your mind about how to select a real estate agent, feel free to reach out to our office and ask for even more agent recommendations. We closed roughly 1,500 deals last year, so we know a lot of real estate agents (mortgage lenders, too).

Lenders, be careful when calculating income for D.C. Tax Abatement

The D.C. Tax Abatement Program is a great program for those homebuyers who qualify. Qualifying homebuyers are exempt from paying transfer and recordation taxes at closing and will also be exempt from paying real property taxes for 5 years beginning the next full tax year after filing. It is understandable that lenders want their clients to qualify for the program wherever possible.

One of the key qualifications is income. The household must have an income under a certain limit.

Often, lenders will use the income they have calculated for their client for underwriting purposes as a basis for determining whether their client will qualify for the Tax Abatement Program. Lenders will usually take a conservative approach when calculating income for underwriting purposes, because this approach reduces their risk.

Lenders need to be aware that the D.C. government will do its own, independent calculation of income (looking at tax returns and W-2’s for the past two years as well as the applicant’s last two pay stubs) when determining an applicant’s qualification for the Tax Abatement Program. D.C.’s approach may not be as conservative as the lender’s.

We have seen some cases recently where the lender’s determination of income for underwriting purposes was low enough for a homebuyer to qualify for the Tax Abatement Program, but when the D.C. government did its own calculation, the homebuyer did not qualify.

If lenders have any questions about Tax Abatement income qualifications, they should ask the title company.

DC wants to 'Open Doors' to potential home owners

A new program from the DC Housing Finance Agency (DCHFA) called ‘DC Open Doors’ seeks to make homeownership in the District even more affordable. This new program offers qualified homebuyers a variety of mortgage loans, including FHA and Fannie Mae conventional mortgages, as well as down payment assistance.

In order to qualify for the new program, the following conditions must be met:
  1. There is a borrower income limit of $123,395. Please note, this is not a household limit, so if two people live together and have a combined income of over $123,395, one member can still apply for the loan as long as his/her income is less than the limit.

  2. The borrower has a minimum credit score of 640.

  3. While borrowers are not prohibited from purchasing a higher priced home, there is a $417,000 loan limit.

  4. Once a borrower has applied, he/she is then required to take 8 hours of homebuyer education classes in person or online, and

  5. The program is not just available to first-time homebuyers.

The benefit of the down payment assistance program is that it is a 0%, non-amortizing, subordinate loan that has a 5-year term. The loan is only repayable if the borrower sells the property, refinances or converts it to a rental property within the first 5 years of owning the property.

The program provides for a 20% annual forgiveness for each year the property remains the borrower’s principal residence, therefore at the end of 5 years, the loan will be 100% forgiven.

The DCHFA website provides a list of participating lenders for any potential homebuyer who may have questions or be interested in the program and who meets the above-referenced criteria.

  • Ways to save at closing

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  • What are closing costs?

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  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

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