What is two-factor authentication, and why is it important for your real estate business?

We’ve noticed an uptick in agent email addresses that have been compromised by cyber criminals with the intent of defrauding home buyers, sellers and title companies – and most agents are totally unaware when we tell them.

The emails we’ve received of late are generally inquiries about wire transfers of seller proceeds. The sender is hoping the recipient (in this particular scam, title companies) will fall for a request to wire funds to their “client’s” account. If the victim is duped and sends funds, the fraudsters will quickly clear the account making it virtually impossible to recover the funds.

Reports of wire fraud scams have come in from all over the country and have cost the industry millions, if not billions, of dollars over the past several years.

These emails inquiring about wire transfers don’t come from the agent’s legitimate email account either, which is why the agent is often unaware any cyber hacking has occurred. Instead, the emails come from phony email accounts that look almost identical to the agent’s legit email account that was hacked – perhaps an extra letter, hyphen or dash is the only difference.

By the time the title company receives one of these phony email inquiries, the real estate agent’s legitimate email account has already been compromised along with all the contents of the inbox. Information pertaining to upcoming closings, specific property addresses, names and email addresses of other parties in the transaction are all used to bait the wire-fraud trap.

Needless to say real estate professionals must do all they can to protect their inboxes and the interests of their buyers and sellers, and email accounts have proved a particularly vulnerable area for attack. That’s where 2-factor authentication comes in handy.

What is two-factor authentication?

Pretty much like it sounds, two-factor authentication creates a second layer of security that a user must clear to gain access to the account. A classic example is the ATM card. To take money out, the individual must know their pin code (password) AND be in possession of the bank card that’s linked with the account that matches their pin. Having one or the other is not enough.

Two-factor authentication works very similarly with email, and many major email providers such as Gmail and Yahoo! Mail offer the option. To configure, a user goes to account settings, ticks the box to enable two-factor authentication and enters her mobile phone number. There’s an option to receive a verification code by phone or text. Enter the verification code to configure two-factor authentication with that mobile device.

From then on, any time the user logs into her account she must also enter a unique code to gain entry. It might seem like a hassle, but it increases email security significantly.

Even if an individual’s username and password are compromised – maybe they accidentally downloaded malware from a spam email or used public, unsecured WiFi to access their email – the criminals cannot gain access unless they also possess the specific mobile device that was configured with the email account.

The two most common two-factor authentication methods rely on text messages and/or mobile applications to produce the code.

With text message, a user logs into her email account with username and password and then receives a text message on her phone that contains the unique six-digit code. Once she successfully enters the code at the email login, she unlocks the second layer of security and gains access to her account.

A second method is similar to the SMS approach but instead relies on a free smart phone app, such as Authenticator by Google, which produces a new six-digit code every 30 seconds. A user logs into her email account with username and password and then opens the app to obtain the unique six-digit that unlocks the account.

With both methods, the user must have knowledge of their username / password AND possess a specific device that’s configured with the email account. Knowledge of the username / password makes one factor, and possession of a specific device makes two factors.

Catching up with the First-time Homebuyer Tax Benefit Amendment Act of 2015

Catching up with the First-time Homebuyer Tax Benefit Amendment Act of 2015

First-time buyers and real estate pros in the District of Columbia awaiting word on the status of the First-time Homebuyer Tax Benefit Amendment Act of 2015 can expect to hear a response from the office of Mayor Muriel Bowser this week.

A final version of the bill that would amend the District of Columbia Deed Recordation Tax Act was transmitted to the Mayor’s office Feb. 2, and a response is due by Feb. 16.

The revised transfer tax rule would retroactively go into effect Oct. 1, 2016, according to the final bill, provided the measure is approved by the Mayor and passes the 30-day congressional review period.

As we previously reported, the bill will create a new transfer tax rate of 0.725% for homebuyers who have never purchased a house, condo or share in a cooperative unit in the District of Columbia. The current transfer tax rate for D.C. homebuyers is 1.1 percent on purchases of $399,999 or less and 1.45 percent on purchases of $400,000 or more.

The median home price in the region soared to a record high of $446,000 last summer, the Washington Post reported.

When we checked in last April with the bill known as B21-0417, or the First-time Homebuyer Tax Benefit Act of 2015, it was under committee review and awaiting scheduling for a mark-up. That happened last November.

After a first reading of the of the bill was delivered Dec. 3, 2016, Councilwoman Elissa Silverman (D-At Large) was the only one to vote against the measure, later telling Washington City Paper that because the bill did not specify income limits, the tax break would benefit a homebuyer in Ward 3 five times more than a homebuyer in Ward 8, rendering the benefit "regressive."

Councilwoman Silverman was not the only individual to express this sentiment. The lack of an income restriction has been a concern of the bill’s critics all along.

During testimonies that took place about a year ago, a representative from the D.C. Fiscal Policy Institute said the city would negatively impact its Housing Production Trust Fund, which has produced or preserved more than 8,000 affordable homes since its inception in 2002.

“Rather than provide a new tax benefit for all first-time homebuyers, DCFPI recommends that policymakers review the city’s current deed tax assistance to low- and moderate-income homebuyers and make adjustments if they appear warranted,” said DCFPI Housing Policy Associate Claire Zippel in her testimony last February.

The city regularly alters the income and purchase price restrictions on its popular D.C. Tax Abatement program, and the D.C. Office of Tax and Revenue most recently increased the income and purchase price limitations at the end of last year.

However, the income-restriction concern in regards to B21-0417 was addressed Dec. 13, 2016 when Councilwoman Anita Bonds (D-At Large) introduced an amendment that added two eligibility requirements, an income limit of 180 percent of the area median income as well as proof of District residency.

The median income in D.C. in 2015 was $109,200 annually, so buyers earning up to $196,564 could potentially qualify for transfer tax relief.

The amendment also created a lifespan of four years after the program’s implementation date, at which point the Mayor must submit a report to City Council that reviews the benefits or impact of the tax relief program on homeownership rates.

With the Bonds amendment in place, Council voted unanimously in favor of the First-time Homebuyer Tax Benefit Amendment Act of 2015 on Dec. 20, 2016.

DC Tax Abatement income, purchase price limits increase

DC Tax Abatement income, purchase price limits increase

Purchase price and income thresholds to qualify for the popular DC Tax Abatement Program have increased, hopefully making it easier for more homebuyers to become homeowners.

The District of Columbia Office of Tax and Revenue upped the purchase price threshold to $439,160 from $408,000.

At the same time, the income threshold for a single buyer increased to $58,980 from $57,540 while the income threshold for a two-person household increased to $67,380 from $65,760.

In "Economic Development Zones," the income limits are higher. For a single buyer, it's $67,265 and for a couple it's $76,890.

For more on income limitations and the DC Tax Abatement Program, please visit our page on the DC Tax Abatement Program.

Real estate website Trulia reports the median sales price for homes in DC was $539,000 over the past three months, an increase of 5 percent over the previous year.

The DC Tax Abatement Program provides an exemption from the DC 1.1% Recordation Tax and an allowable credit from your seller(s) of 1.1% equal to the DC Transfer Tax. Additionally, the program provides a five-year real estate tax abatement that begins October 1 following your date of closing.

The numbers in this article may be out of date. Visit our guide how to qualify for DC Tax Abatement for the most current information.

How to change your chosen title company after you have a ratified sales contract

Most homebuyers know by now that it’s their legal right to choose their own title company and that shopping for title services is one of the most effective ways to reduce costs at the closing table.

(For those who haven’t heard this, read our content on Marketing Service Agreements and Affiliated Business Arrangements and see for yourself how these common deals jack up closing costs for consumers.)

But what happens if a homebuyer doesn’t learn about this important right until after her sales contract has been drafted, accepted and signed by all parties? And is it possible to change title companies once a title company has been designated in the contract and an earnest money deposit has been delivered to that designated title company?

The short answer is you can change your mind with the consent of the seller, through a simple addendum to the sales contract. View our a settlement agent-change sample addendum.

Once the addendum is completed and signed by all parties, the homebuyer can then use the new title company listed on the addendum.

Even if the earnest money deposit was already delivered, with the addendum in place, the new title company would simply reach out to the old title company holding the funds and arrange for a wire transfer. That’s it!

How might a homebuyer find herself in a situation where she wishes to change her company after all parties have signed a sales contract with a designated and undesired title company?

First and foremost, we encourage every homebuyer to get closing cost quotes from several local title companies and compare costs and online reputations to avoid this situation. We also remind homebuyers that title companies don’t necessarily include all the same services in their settlement fee. Sometimes additional services, i.e., document fees, processing fees, amount to hidden costs, so it’s important to ask what services are included and what extra costs may be charged.

And while it’s technically illegal for real estate agents to fill in the name of a preferred title company if their brokerage has a professional affiliation with that title company, the practice persists. In these cases, homebuyers may not realize until after they have a ratified sales contract that they could have chosen their own title company.

It’s important to ask your agent if his company has a professional affiliation with the title company he’s listed in your sales contract and what benefits or incentives the real estate agent or brokerage may be receiving by recommending that title company. Sometimes the answer is there is no affiliation; the agent is familiar with a certain company and recommends that company from the perspective of good service and pricing.

There’s nothing inherently wrong with an agent directing their client to use their favorite title company, except that it may lead a homebuyer to falsely believe she does not have a choice, or once a title company’s name is written into the contract and that contract is ratified, the decision is set in stone and the title company can’t be changed.

A homebuyer maintains a right to choose her own title company and also has the right to change her mind and choose a different title company.

This isn’t an invitation to change title companies several times prior to closing or to change for no good reason. Keep in mind any addendum to a ratified sales contract must be signed by all parties, including the sellers. You may risk delaying closing, annoying your sellers or even causing your deal to fall through by abusing your right to change title companies after you have a ratified sales contract.

We put this post together specifically to help those who learned after the fact they could have chosen their own title company and would like to exercise that right. Two primary reasons a homebuyer may choose to change title companies might be she’s found a title company that charges lower prices and/or provides better customer service than the company initially listed on the sales contract.

A better way to deliver EMDs

Delivery of earnest money deposit checks is about to become incredibly easy and more secure than ever.

We are excited to share with you the benefits of our new partnership with ZOCCAM, a revolutionary service that lets real estate agents and homebuyers send their EMDs directly to Federal Title's escrow account – with just a few taps on their smart phone.

Simply take a picture of the front and back of your EMD check, select Federal Title's escrow account, confirm the information on your check and hit send.

You and the homebuyer will immediately receive email notification that the EMD was received, plus you’ll have saved yourselves the time and hassle of driving a check across town.

ZOCCAM doesn’t contain or hold any financial account information, and all content is encrypted and sent using state-of-the-art security techniques that ensure every client’s non-public personal information is protected.

We're in the final stages of building our partnership with ZOCCAM and believe it’s only a matter of time before this superior method of delivering EMDs becomes standard practice in our business.

We look forward to providing this great benefit to all real estate agents and homebuyers very soon and will keep everyone posted when the service goes live.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.