Just a note to owners of multiple dwellings (that is 3 or more apartments). My firm now handles the conversion of existing buildings into condominium ownership. We have succesfully converted numerous buildings, both new construction and renovated buildings to condominium ownership.
Conversion to condominium ownership would allow you, the owner, to sell off individual apartments in the building you own. Just a caveat, once the conversion takes place and is effective, you no longer own the building but only the apartments in the building. The process is complicated, takes time and involves the owner hiring not just a lawyer, but an architect, engineer and a few other professionals but can be very rewarding and profitable.
You do not have to be a developer to sell condominiums and there are various benefits to this undertaking. For example, an owner of a four family building can convert the building to a condominium and sell 3 units. With the proceeds of the sale, any existing mortgage on the property will be paid and the owner can keep the 4th apartment for him/herself with no debt (and maybe/hopefully a profit).
Feel free to call or email with any questions regarding this process.
November 11, 2009
October 5, 2009
HSBC and CEMA
It has once again been a while since I have been able to post. It's been pretty busy the last few months as homeowners continue to refinance and finally buyers are starting to pull the trigger on new purchases. Prices are down but appear to be somewhat stabilizing. The more desirable properties are selling while the less desirable ones are either seeing more price reductions or languishing on the market.
Interest rates are still low so anyone with an interest rate above 6% should contact a mortgage lender and inquire about a refinance and do not forget to make sure that you do a CEMA to save on the mortgage recording tax.
Speaking of CEMA, it has recently come to my attention that HSBC will not cooperate with a CEMA request made by one of their borrowers when the borrower is refinancing with another bank. If you are planning on refinancing out of an HSBC loan, you should know that unless you refinance with HSBC, you will not be able to do the CEMA and therefor, you will have to pay the full mortgage recording tax. I hope that HSBC changes this policy soon. If this is not true, please send me an email so I can update this post.
Interest rates are still low so anyone with an interest rate above 6% should contact a mortgage lender and inquire about a refinance and do not forget to make sure that you do a CEMA to save on the mortgage recording tax.
Speaking of CEMA, it has recently come to my attention that HSBC will not cooperate with a CEMA request made by one of their borrowers when the borrower is refinancing with another bank. If you are planning on refinancing out of an HSBC loan, you should know that unless you refinance with HSBC, you will not be able to do the CEMA and therefor, you will have to pay the full mortgage recording tax. I hope that HSBC changes this policy soon. If this is not true, please send me an email so I can update this post.
July 23, 2009
Things appear to be improving
It has been quite a while since my last post. Although I would like to post more, I am happy to say that I have been busy. It looks like things are starting to pick up. Refinances have been going strong and I am seeing more and more contracts for condos, houses and commercial properties. Hopefully, purchasers will be able to secure financing. Looks like I will have some time next week to submit a new blog of some substance.
May 19, 2009
Countrywide CEMA process update
Its been a little busy lately which is a good thing. Representing lenders is keeping me pretty busy and mostly with refi's although I have noticed a small increase in purchase activity lately as prices continue to drop.
I just wanted to get back into the swing of things by giving some info on Countrywide's CEMA process. Countrywide, through a company called Recon Trust (which I assume is an affiliate of Countrywide) asks that you provide them with a non-refundable certified check of $695.00 to start the process. They will then assign an attorney to handle the rest. The attorney will let you (or your attorney or your lender or the new bank attorney) when the documents are ready and at closing, there is an additional fee of $425.00 to the attorney.
So Countrywide makes it pretty expensive to do the CEMA and so it would only make sense for a fairly large loan. Don't forget that there are other costs associated with the CEMA such as recording fees which could easily be another $400-$500 as well as additional bank attorney fees and possibly other bank fees depending on the new lender's procedure.
Find out all the costs before you start the process because you could end up actually losing money.
I just wanted to get back into the swing of things by giving some info on Countrywide's CEMA process. Countrywide, through a company called Recon Trust (which I assume is an affiliate of Countrywide) asks that you provide them with a non-refundable certified check of $695.00 to start the process. They will then assign an attorney to handle the rest. The attorney will let you (or your attorney or your lender or the new bank attorney) when the documents are ready and at closing, there is an additional fee of $425.00 to the attorney.
So Countrywide makes it pretty expensive to do the CEMA and so it would only make sense for a fairly large loan. Don't forget that there are other costs associated with the CEMA such as recording fees which could easily be another $400-$500 as well as additional bank attorney fees and possibly other bank fees depending on the new lender's procedure.
Find out all the costs before you start the process because you could end up actually losing money.
March 5, 2009
Saving on Title Company Charges
Aside from title insurance premiums and mortgage recording taxes, title/abstract companies charge various fees related to their services. The fees are broken down into 2 categories: production fees and recording fees. Today, I will discuss the production fees.
As an aside, "title companies" are direct insurers such as First American or Old Republic. "abstract companies" are agents of the insurers. Because the premiums are regulated, you are paying the same rates regardless of who you use and so I will refer to them both as title companies. Also, for purposes of this discussion, I will assume that the borrower does not have a lawyer. I always recommend a lawyer as most of the issues to be discussed should be dealt with by your lawyer but I understand that lawyers cost money and many people do not want to spend the money on a refinance. When buying a home, you should definitely have a lawyer.
Production fees are costs associated with the underwriting process of the insurance policy. This includes researching the property and its history with the County Clerk and other agencies and which is presented to you in the form of a title report (legally known as a title commitment). The fees for a title report are not regulated and every title company charges slightly different fees. My rule of thumb is that unless there are extenuating circumstances (such as multiple owners or unusual searches requested), the title report should not cost more than $350.00-$400.00 all in. Some companies charge outrageous fees for production and mark up the fees for bankruptcy searches and patriot searches and other junk fees on top of the fee for the title report which will substantially increase the cost of the title report. This is a tell tale sign that you are probably paying too much. If you are paying more than $400.00 for the title report, ask the title company to cut the cost.
Hint 1: If you see a fee for overnight delivery or Fedex or courier, demand to know what was sent, where and how. Some companies have a standard fee for this on their invoice even if they do not send anything by courier.
When you are at a closing and you go over the title company invoice, if you think it is too high you must say something. At the very least get an explanation of each and every fee. When refinancing, most people do not use a lawyer. This is an instance where a lawyer would come in handy as he would be able to review the bill and make sure you are not being overcharged (of course, the lawyer would have to get paid for this).
During the past few years, prior to the real estate implosion, new abstract companies sprouted up every day and many are now out of business, especially the less reputable companies. I have seen many of these companies come and go and have been shocked at the prices I have seen them charge their customers for production fees. Many of these companies are still out there so be careful.
Hint 2: Ask to see the title company invoice prior to closing so that you are not caught off guard at closing. This way you can discuss the fees with the title company without the added stress of being at a closing table.
As an aside, "title companies" are direct insurers such as First American or Old Republic. "abstract companies" are agents of the insurers. Because the premiums are regulated, you are paying the same rates regardless of who you use and so I will refer to them both as title companies. Also, for purposes of this discussion, I will assume that the borrower does not have a lawyer. I always recommend a lawyer as most of the issues to be discussed should be dealt with by your lawyer but I understand that lawyers cost money and many people do not want to spend the money on a refinance. When buying a home, you should definitely have a lawyer.
Production fees are costs associated with the underwriting process of the insurance policy. This includes researching the property and its history with the County Clerk and other agencies and which is presented to you in the form of a title report (legally known as a title commitment). The fees for a title report are not regulated and every title company charges slightly different fees. My rule of thumb is that unless there are extenuating circumstances (such as multiple owners or unusual searches requested), the title report should not cost more than $350.00-$400.00 all in. Some companies charge outrageous fees for production and mark up the fees for bankruptcy searches and patriot searches and other junk fees on top of the fee for the title report which will substantially increase the cost of the title report. This is a tell tale sign that you are probably paying too much. If you are paying more than $400.00 for the title report, ask the title company to cut the cost.
Hint 1: If you see a fee for overnight delivery or Fedex or courier, demand to know what was sent, where and how. Some companies have a standard fee for this on their invoice even if they do not send anything by courier.
When you are at a closing and you go over the title company invoice, if you think it is too high you must say something. At the very least get an explanation of each and every fee. When refinancing, most people do not use a lawyer. This is an instance where a lawyer would come in handy as he would be able to review the bill and make sure you are not being overcharged (of course, the lawyer would have to get paid for this).
During the past few years, prior to the real estate implosion, new abstract companies sprouted up every day and many are now out of business, especially the less reputable companies. I have seen many of these companies come and go and have been shocked at the prices I have seen them charge their customers for production fees. Many of these companies are still out there so be careful.
Hint 2: Ask to see the title company invoice prior to closing so that you are not caught off guard at closing. This way you can discuss the fees with the title company without the added stress of being at a closing table.
March 4, 2009
Citibank CEMA
In response to a prior comment, Citibank's fax number to order a New York CEMA is currently 866-620-7227. They require the new bank's name and address as well as a contact person (usually borrower's attorney or new lender's attorney) in order to process the request.
January 29, 2009
We Can Help
Our firm is now offering low fees to our clients who are refinancing. We charge a flat fee for our services which include processing the CEMA request. Our services start when you obtain your mortgage commitment and we will work with you until closing to make sure you do not pay anything more that you have to (for taxes, title charges or otherwise). Remember, not all banks will make the CEMA option available so we cannot guarantee that we will be able to close with a CEMA. However, in most cases we can find out in the beginning of the process and we will set our fee accordingly. Please note that no attorney client relationship will be created until a retainer agreement is entered into.
Never retain anyone who charges you a percentage of your savings.
Never retain anyone who charges you a percentage of your savings.
Citibank CEMA Fee Update
I recently found out that Citibank no longer charges $650.00 upfront to process a CEMA request. It is collected upon payoff. In order to process the CEMA, they have a fax number to which you can fax a request and they will get back to you in a few days to let you know who their attorney will be. Several days after, the attorney should contact you to let you know the status of the documents. Citi's turnaround time is pretty good as the last 2 requests I made were ready to close within 2 weeks. I guess they really want their money back.
As a point of reference, Countrywide CEMA requests take up to 6 weeks and they still require over $800.00 upfront in certified funds.
As a point of reference, Countrywide CEMA requests take up to 6 weeks and they still require over $800.00 upfront in certified funds.
January 16, 2009
Title Insurance When Refinancing
In response to a comment to a prior post, when refinancing, the new lender, even if it is the same bank currently holding your mortgage, will require a new title insurance policy to protect its interest in the property. This is because the bank will want to insure itself over any items that may have appeared since the old mortgage such as a judgment against the homeowner or a mechanic's lien, for example.
The cost of this policy is usually paid for by the homeowner. For HELOCs, some banks do not require title insurance and others will pay for it (provided you do not pay off the loan for a certain amount of time).
The good news is that title insurance rates for refinances are dramatically lower than for a purchase. This is especially true if you are refinancing within 10 years of the original mortgage in which case you are entitled to a "reissue rate" which is 50% of the regular refinance rate up to a loan amount of $475,000.00 and 70% of the regular refinance rate above a loan amount of $475,000.00. For example, the regular refinance rate is $1,746 for a loan amount of $400,000.00 so it will be $873.00 if you already had a mortgage on the property.
Make sure that your title company is charging the reissue rate on refinances. Many companies were not doing so and it was resolved in the Court system. They have to give you the lower rate.
Again, the costs discussed herein only include the premium and do not include the cost of recording, the title search and other fees charged by the title company.
The cost of this policy is usually paid for by the homeowner. For HELOCs, some banks do not require title insurance and others will pay for it (provided you do not pay off the loan for a certain amount of time).
The good news is that title insurance rates for refinances are dramatically lower than for a purchase. This is especially true if you are refinancing within 10 years of the original mortgage in which case you are entitled to a "reissue rate" which is 50% of the regular refinance rate up to a loan amount of $475,000.00 and 70% of the regular refinance rate above a loan amount of $475,000.00. For example, the regular refinance rate is $1,746 for a loan amount of $400,000.00 so it will be $873.00 if you already had a mortgage on the property.
Make sure that your title company is charging the reissue rate on refinances. Many companies were not doing so and it was resolved in the Court system. They have to give you the lower rate.
Again, the costs discussed herein only include the premium and do not include the cost of recording, the title search and other fees charged by the title company.
Title Insurance Costs in New York
My prior post described in a nutshell the role of title insurance. But how much does title insurance cost? New York State is divided into 2 zones. I practice in the New York City Area which is considered Zone 2 and includes most of downstate New York and so I will only discuss this zone. Also, please note that in this post I am only discussing the cost of the insurance premium and not of any other cost associated with buying title insurance (such as the cost of the title search and recording fees which I will discuss in later posts).
Title insurance rates are set by the title insurance companies and are published with the NYS Insurance Department. Although the rates are not "regulated" by any governmental agency, title companies cannot deviate from their published rates. Several years ago, most underwriters reduced their rates by 15% after a lawsuit initiated by the NYS Attorney General at the time. I believe that Old Republic did not sign on to this reduction and are still charging the higher rates. If I am incorrect, please let me know so that I can change this post. Regardless, make sure that the company insuring your title signed on to this reduction and if not, switch companies to save the 15%.
As for the rates, they are based on the amount of insurance which is based on the cost of the property or the amount of the loan. The formula if difficult to explain but for illustrative purposes:
a. title insurance for a $200,000.00 house purchase with a mortgage of $160,000.00 will be $1,291.00
b. title insurance for a $500,000.00 with a mortgage of $420,000.00 will be $2,688.00.
c. title insurance for a $1,000,000.00 with a mortgage of $800,000.00 will be $5,439.00
So you see the range of the cost to you depends on the price.
When purchasing a property, the title insurance premium is divided into 2 parts which I combined in the examples above. One part is the title insurance you buy to insure you, the homeowner and the other part, which is considerably cheaper is the lender's title insurance which will be discussed in the next post.
Title insurance rates are set by the title insurance companies and are published with the NYS Insurance Department. Although the rates are not "regulated" by any governmental agency, title companies cannot deviate from their published rates. Several years ago, most underwriters reduced their rates by 15% after a lawsuit initiated by the NYS Attorney General at the time. I believe that Old Republic did not sign on to this reduction and are still charging the higher rates. If I am incorrect, please let me know so that I can change this post. Regardless, make sure that the company insuring your title signed on to this reduction and if not, switch companies to save the 15%.
As for the rates, they are based on the amount of insurance which is based on the cost of the property or the amount of the loan. The formula if difficult to explain but for illustrative purposes:
a. title insurance for a $200,000.00 house purchase with a mortgage of $160,000.00 will be $1,291.00
b. title insurance for a $500,000.00 with a mortgage of $420,000.00 will be $2,688.00.
c. title insurance for a $1,000,000.00 with a mortgage of $800,000.00 will be $5,439.00
So you see the range of the cost to you depends on the price.
When purchasing a property, the title insurance premium is divided into 2 parts which I combined in the examples above. One part is the title insurance you buy to insure you, the homeowner and the other part, which is considerably cheaper is the lender's title insurance which will be discussed in the next post.
January 8, 2009
Title Insurance
Title insurance is a type of insurance that a purchaser of a property (other than a coop which will be discussed later) should buy at the closing of title. This insurance will insure the purchaser's ownership of the property free of any liens, claims or encumbrances. Most people just think it is a fee that has to be paid at closing and is of no significance. In reality, however, it is no different than any other type of insurance in that you buy it and you hope you never have to use it. But if you do have to resort to filing a claim with the insurance company, you will be very thankful that you purchased the insurance (even if at the time you were annoyed to spend the money).
A dramatic example of how title insurance protects a homeowner is as follows. You bought a house from John Doe. As it turns out, John Doe died three years prior to the closing. At the closing, a person with Jon Doe's ID signed the deed and took off with your money. After the closing, the real John Doe's daughter comes to the house and is shocked to see that you moved in to her deceased father's house. If you bought title insurance, and assuming this very simple fact pattern, the title company would be on the hook for making you whole as far as returning to you the money spent to purchase the house. As an aside, you will not be covered for closing costs.
This is a very simple explanation of title insurance and there are many other facets as well as different options of coverage available so if you have any questions, please comment (or email) and I will do my best to reply.
A dramatic example of how title insurance protects a homeowner is as follows. You bought a house from John Doe. As it turns out, John Doe died three years prior to the closing. At the closing, a person with Jon Doe's ID signed the deed and took off with your money. After the closing, the real John Doe's daughter comes to the house and is shocked to see that you moved in to her deceased father's house. If you bought title insurance, and assuming this very simple fact pattern, the title company would be on the hook for making you whole as far as returning to you the money spent to purchase the house. As an aside, you will not be covered for closing costs.
This is a very simple explanation of title insurance and there are many other facets as well as different options of coverage available so if you have any questions, please comment (or email) and I will do my best to reply.
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