Scheduling a settlement date is a contractual obligation for homebuyers

An often overlooked provision in paragraph #6 of the GCAAR Regional Sales Contract provides that the "Purchaser agrees to contact the Settlement Agent within 10 Days after the Date of Ratification to schedule Settlement and to arrange for ordering the title exam and, if required, a survey."

Homebuyers and their agents should pay particular attention to this requirement.

Recently our office was notified that a seller had declared the purchaser in breach of contract due to purchaser's failure to schedule settlement within 10 days from the date of ratification.

While the purchaser had ordered a title exam with our office, neither he nor his agent had scheduled the settlement date.

Through email notification, Federal Title reminds homebuyers and their agents to schedule the closing with our office within this time period. Unfortunately, in this particular instance, our notifications were ignored.

What's up in real estate?

Housing outlook 2014: 10 predictions from the experts

In 2013 the housing recovery was a welcome bright spot for the economy: prices were shooting up, fewer homeowners were underwater, and builder confidence was finally on the upswing. It's looking like 2014 should be another good year for housing – mostly.

What are your gripes about closings?
Realtor Magazine

The Consumer Financial Protection Bureau (CFPB) is asking for feedback on the most stressful, confusing, and problematic areas for consumers when it comes to the closing process in a home purchase.

This guy spent the last month dressing up like local realtors and pasting himself over their bench ads

For the last month Phil Jones has been recreating the ads from local realtors and then taping over them with his own version. He called it The Faces Of Real Estate.

Local news

Photos: Metro shows off railcar of the future

Metro today gave the media a look at its new 7000 series railcar, which was greeted at the Greenbelt station by Mayor Vince Gray, Del. Eleanor Holmes Norton, Maryland Gov. Martin O'Malley and other politicians.

New condo supply on the rise
DC Urban Turf

The number of unsold condo units in new projects or those under construction (and not yet marketing) rose to 3,308 in the DC area by the end of 2013, an increase of 1,000 units from the third quarter when the new condo supply hit its lowest level in a decade.

Report: DC-area condo prices to keep rising for the next three years
Washington Business Journal

In its quarterly snapshot of the Washington condo market, Delta notes the year-over-year change in condo prices in the third quarter was positive for the sixth consecutive quarter, even as sales volume fell to the lowest level since the final quarter of 2011.


4 methods for your mobile house hunt madness
Trulia Blog

You’ll want to make sure you find the best solution (home), with the most efficiency (time, money, etc.) and strategic smarts (not driving yourself wild with anxiety or overwhelm). What you need is a little method to avoid the madness that mobile house hunting can bring.

5 DC startups positioned for major growth in 2014
Huffington Post

HomeSnap makes hunting for real estate a breeze. The algorithm uses a combination of big data and iPhone features (accelerometer, gyroscope, location services) to determine where you are and then present a home's details.

Home Improvement

7 storage solutions you didn't know you had
House Logic

Every square foot of your home is valuable. These storage solutions take advantage of underused nooks and crannies. And just for fun, we did some back-of-the-napkin calculations based on the average price per square foot of a U.S. home ($81) to attach a theoretical value to the bonus space.

Low-cost cabinet makeovers
Better Homes & Gardens

Save thousands of dollars by using paint and new hardware to update your existing kitchen cabinets instead of buying new ones. These colorful, budget-friendly examples will help you get started.

Supplemental tax bill catches some Maryland homebuyers off guard

When people purchase a home, especially for the first time, many practice their due diligence and find out the amount of the present tax bill and proposed insurance in order to calculate their closing costs and future expenses in addition to their proposed mortgage payment.

This is not as easy when purchasing a newly renovated or built home. Yes, you can estimate taxes based on the purchase price of the property, but people are often blindsided by a supplemental tax bill. Not all jurisdictions have supplemental tax bills, so it is wise to check the jurisdiction in which you are buying to be certain.

What is a supplemental tax bill?

A supplemental tax bill is a bill that is issued when a property is reassessed during the current tax year. Often the supplemental bill will be for a specific period, i.e., a quarter, half or three-quarter tax period. This bill is an additional bill that is sent directly to the home owner and is paid directly by the owner.

Tax escrows that are collected by the mortgage companies as part of the servicing of a loan do not contemplate supplemental tax bills. In fact, most mortgage companies will have you sign a document at closing stating the borrower/home owner will be responsible for paying any supplemental tax bill directly.

What "triggers" a reassessment of a property?

Typically, major renovations or improvements added to a property will trigger a reassessment at time of completion.

What constitutes completion?

Usually, completion is when all permits are closed, certificate of occupancy is issued, and/or the property is sold as an improved lot.

Why would this affect a new home buyer?

At time of purchase of a new home, the real property taxes are often based only on the assessed value of the lot. The sale itself triggers a reassessment. Although this can be contemplated for purposes of an escrow account by estimating the taxes based on the purchase price, there is no way to know what the new actual assessment will be and when it will be actually done.

It is prudent for a new home buyer to put money aside based on the timing of closing and the estimated amount of taxes based on the purchase price. In Maryland, the fiscal year runs from July 1 through June 30 of the following year. So for example, if you purchase in September you should expect to get at least a three-quarter supplemental bill.

Whether you are a first-time homebuyer, first-time new homebuyer or just someone who likes to do the homework – remember to consider supplemental tax bills when looking at not only the closing costs but future carrying expenses for your new home.

For further information, feel free to contact Catherine Schmitt at Federal Title & Escrow Company.

Maximum VA loan county limits for 2014 released

The Department of Veterans Affairs Loan Guaranty Program recently published county "limits" to be used for VA Loans effective January 1, 2014.

Please note, these limits do not reflect a maximum amount that an eligible veteran is permitted to borrow, but rather, reflects the VA’s maximum guaranty amount for a particular county.

The maximum VA guaranty amount for loans over $144,000 is twenty-five (25%) percent of the 2014 VA limit. For example, an eligible veteran may borrow up to $692,500 to purchase a property in Washington, DC (2014 VA limit), with the VA guaranteeing twenty-five percent (25%) of the loan amount, or approximately $173,125.00. These amounts have decreased dramatically in most area of the DC Metro Area compared to the 2013 VA limits.

The limits listed below are for some counties in Maryland and Virginia, as well as for the District of Columbia. To get a complete list of the county limits for 2014, please click here. [Please note, if your county is not listed on the county limits chart on the VA website, the 2014 limit is $417,000.]

State County 2014 VA Limit
DC District of Columbia $692,500
MD Anne Arundel $500,000
MD Frederick $692,500
MD Howard $500,000
MD Montgomery $692,500
MD Prince George's $692,500
VA Alexandria $692,500
VA Arlington $692,500
VA Fairfax $692,500
VA Falls Church $692,500
VA Fauquier $692,500
VA Loudoun $692,500
VA Manassas $692,500
VA Prince William $692,500

Real estate predictions for 2014

Demand will remain high and the cost of homebuying will increase for homebuyers in the Washington, DC metro area.

LIMITED HOUSING INVENTORY is the biggest driver of the DC region's housing market, says Federal Title & Escrow Company's founder, and as long as supply is limited the market in 2014 will look a lot like last year.

Houses with multiple offers selling for tens of thousands dollars above asking price in some cases – it happened frequently enough in 2013 that the editors at Urban Turf created a new column called Above Asking.

"You've got a migration of folks from all over the country trying to crack the DC [housing] market," said Todd Ewing, whose company handled more than 1,400 purchase closings in 2013. "That trend will continue."

Higher interest rates should not affect the region

Some real estate experts are predicting mortgage rates in 2014 will rise above 5% for the first time since 2010, but the increase is not expected to greatly impact the DC region's housing market.

Homeowners who were planning to refinance have already done so by now, Ewing said, and the federal government continues to attract new people to the region who are in need of housing, driving demand.

"There are still homebuyers out there looking, most two-income households," said Ewing, who's been handling real estate settlements and observing market cycles since the mid-90s. "I don't see a rising interest rate having much of an impact on whether a homebuyer moves forward."

Increased oversight from CFBP will increase closing costs

Expect the Consumer Financial Protection Bureau (created through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010) to crack down on enforcement of the Real Estate Settlement Procedure Act, a piece of legislation from the 1970s meant to protect consumers from unethical business practices, including excessive fees.

"If the CFPB does what its charter sets forth, such as the enforcement of anti-kickback laws, and remains vigilant of those in the industry who engage in such practices at the expense of the consumer, then this crack down could ultimately be beneficial to the consumer," Ewing said.

But any benefit to the consumer will come at a price that will most likely get passed along to the consumer, as additional training, staffing and implementation new technology will add to the cost conducting a real estate closing.

Phasing out the HUD-1 Settlement Statement

The HUD-1 Settlement Statement will become extinct in August 2015, and the Closing Disclosure will take its place, according to a ruling of the CFPB last November. The new document is five pages and will essentially combine the Truth in Lending Disclosure with the HUD-1.

This year title companies will be looking to completely overhaul their software systems in preparation of change, which may lead to added costs for the consumer.

Federal Title anticipated the CFPB's ruling on the Closing Disclosure and incorporated it into Close It!, an iOS and Web app that accurately determines how much cash will cross the closing table during any given real estate settlement.

Tech developments from Federal Title

Speaking of technological developments at Federal Title, Ewing who has been pleased with the initial performance of the iOS app said he plans to announce the release of a new product later this year. Since launching in May 2013, Close It! has garnered nearly 10,000 downloads and the tablet version was nominated for a Tabby Award last fall, Ewing said.

"It's a popular tool with agents and lenders, and it's way ahead of its time in that it produces a Closing Disclosure," Ewing said. "Going forward we intend to keep on innovating, and we're excited to roll out something new for real estate professionals [later this year]."

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