Nearly half of all mortgage defaults from the housing bust might have been prevented by forthcoming consumer-protection regulations, but another 25% of loans that didn't default might not have been made, according to an analysis by economists at Goldman Sachs.

The Goldman analysis tries to quantify the impact of the forthcoming "qualified mortgage" regulations, which were part of the 2010 Dodd-Frank financial-regulatory overhaul. The law changed lending rules so that mortgage lenders are legally responsible for ensuring a borrower can repay a loan. The Consumer Financial Protection Bureau was tasked with writing rules for a "qualified mortgage" that lenders could make that would automatically satisfy the new ability-to-repay mandate.

The "QM" rules don't take effect until next month. Lenders aren't barred from making loans that fall outside of the QM rules, though they could face greater legal liability on those loans. Tuesday's WSJ looked at how some banks have decided that they will offer some "non-QM" loans once the rules take effect next year, primarily by making loans to affluent customers (or potential customers) that will stay on banks' balance sheets.

The Goldman study assumes that any loan that wasn't a QM wouldn't have been made. Nontraditional loan products are excluded from the QM definition, meaning loans with interest-only terms, for example, which don't require immediate principal payments, wouldn't qualify.

For loans originated between 2005 and 2008, nearly 47% of loans that defaulted had at least one product feature that isn't allowed under the QM rule; around 59% of loans made in 2007 that ultimately defaulted had at least one nontraditional product feature that doesn't meet the QM standard.

Read more.  

Financial Moves You Should Make by New Year's

IRA Distributions, 401(k) Contributions and Other Critical Decisions

 

by Lindsay Gellman, Reporter, The Wall Street Journal, November 30, 2013 

Sure, there are halls to be decked, gifts to be wrapped and feasts to be prepared. But now is also the time to make sure you meet important year-end financial deadlines.

Here are some items to cross off your to-do list before the ball drops this New Year's Eve:

1. Boost your 401(k) contribution.

Now is your chance to temporarily increase your 401(k) contribution-a particularly smart move if you're expecting a bonus of some kind, says Greg McBride, senior financial analyst at Bankrate.com. "You want to stuff as much money as you can into your 401(k) by Dec. 31," Mr. McBride says. "You can never go back and make additional contributions for this year...even if you hit the lottery the first week of January."

Once you've increased your end-of-year contribution, you can always reduce it after the new year, he says.

People who are under 50 years old as of Dec. 31 can contribute up to $17,500 of their own money this year (not counting employer matches, that is), while those who are 50 or older by that date may contribute up to $23,000. Note: You don't have to wait until you're 50 to make the contribution.

Since you can make contributions only from your paycheck, make sure to leave enough time for your adjustments to kick in before the end of the year, Mr. McBride says. For example, if you're paid the first and third weeks of the month, don't wait until the last week of December to update your contribution preferences. It's a good idea to verify with your employer that a change you make now would take effect soon enough to count for 2013, he adds.

2. Fund 529 accounts.

The door closes Dec. 31 on 2013 contributions to 529 college-savings accounts, so it's a good idea to get the ball rolling now on any end-of-year money transfers you plan to make, Mr. McBride says. The accounts allow post-tax funds to grow tax-free as long as they are used for qualified education expenses. Contributions are limited to "the amount necessary to provide for the qualified education expenses of the beneficiary," according to the Internal Revenue Service, and Federal gift taxes may apply if your contributions exceed the annual exclusion ($14,000 for 2013). (See irs.gov for more information.)

You'll want to pay particular attention to your fund contributions if you live in a state, such as New York or North Carolina, that offers a state-tax deduction for contributions to the in-state plan up to a certain limit. Making such contributions in the next month could mean you get some of your state-tax money back for 2013, Mr. McBride says.

Electronic document recording, a/k/a "e-recording," is the process of transmitting real property documents to the county or local government for recording via the Internet. While the process of e-recording is not a new one, the concept has been around since the mid-'90s, it has only recently become widely implemented across the U.S. and is now available in over 1300 counties in nearly all 50 states.

In contrast to traditional recording methods where real property documents are usually overnighted or physically delivered to the land record's office for recording, the original documents never actually leave your possession during the e-recording process and are submitted to the recorder's office within minutes. Also, the documents are returned in an electronic format with the recorder's digital stamp immediately after recording. In most cases,

the whole recording process from start to finish occurs in just a few minutes instead of days or weeks. Some of the main benefits to e-Recording include the following:

1. Increased efficiency.
2. Recording process is streamlined and simplified.
3. Shortened cycle time for document recording and final policy production.
4. Reduced recording time on property covering land in multiple counties. The document can be recorded in a matter of minutes in all counties.
5. Same day notification and processing of rejected recordings.
6. Cost savings.
7. Savings in postage for rejections, overnights, and prepaid postage for returned documents.
8. Possible savings on recording shortages. Most systems automatically calculate recording fees which can allow additional fees to be recouped, if necessary.
9. Savings in the cost of check stock since fees are submitted electronically.
10. Reduced risk.
11. Shortened recording time and reduced "gap" period.
12. Original unrecorded documents are never lost in the mail.

While the benefits of e-recording can be great, it's not necessarily for everyone. In many cases, e-recording works best if you record a lot of documents outside of your home county. If you're headed to the land records office daily, it may be easier to just drop off your documents for recording. The significant cost savings only applies if the agent is sending several overnight

packages to the land record offices as most e-recording software providers charge a per document submission fee of $4 to $5. Although this fee can be passed along to the consumer, it may not be worthwhile to e-record if you're going to the land records offices on a regular basis for other reasons.

Technology is also a consideration. If your scanner is inadequate or your internet connection is slow, it can be quite time consuming to e-record. Also, many counties will not accept conveyance instruments and other document types electronically; therefore, you have to remember which documents can be e-recorded in that county. Lastly, don't forget about the accounting side. You will need to set up a separate ACH account to pay the county for recording fees. You never want to give access to your main escrow account, and you'll need to reconcile your ACH e-recording account regularly.

There are many service providers in the market today who facilitate e-recording with recorder's offices throughout the U.S. One of the most well-known providers is Simplifile. Simplifile is a vender with SoftPro's 360 services which provides integration with an existing ProForm order. This integration is very helpful and reduces the user's time spent keying in critical information for e-recording.

Again, e-recording can have significant benefits as long as you determine that the benefits outweigh the administration of managing the e-recording process and account. If you're considering e-recording, determine whether or not the counties you record in the most have been set up for e-recording. If so, contact an e-recording service provider to help you determine if the process best suits your overall recording needs.

There are four key elements that need to be addressed:

1. People. Today's workplace is ever-evolving, becoming more diverse, and covering more generations than ever before.  It has to accommodate all types of people and work styles - it's a balancing act to support diverging needs.

Beyond just the demographics and differing work styles of employees, there's the larger component of technology and the role it plays in the office environment today and in the future.  Predictions are that fewer workers will be needed in the future, due to technology, and office spaces will start to shrink with its implementation. Telecommuting and shared office space environments are becoming more commonplace and the U.S. will see fewer commuters as the current generation starts to retire.

One thing is for certain:  Whatever the future holds, your people are always the foundation of your organization.  Having a unified work group with a shared vision and direction in a supportive work environment is critical to an organization's success.

2. Technology. Do you remember when you started your career and what type of technology was used in your office?  Depending upon your age, there may or may not have been computers.  And, some of you may have still been using typewriters.

It's hard to imagine a workplace today without computers or being connected to the Internet.  But, there was a time not that long ago when fax machines and copiers were the most technologically advanced piece of equipment in an office.

So, what does that mean for the future?  According to an article entitled, "The Workplace of the Future" by Michelle Bowles, "Ten years from now, modern devices will give way to more advanced technologies such as multilingual and sensory- recognition software that allows work to be conducted more efficiently - potentially meaning less people required to do a job."

3.  Space. The trend in recent years in workplace design has been focused on the idea of collaborative spaces.  What's interesting is that in the Gensler 2013 report "Workplace Performance Index" which surveys 2035 office workers in the US, they discovered that workers are actually spending more time on focused, individual tasks then they were five years ago.

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What strategic plans has your organization put in place for 2014 that will create a more effective workplace?  Let us know. 

In a major reversal for government efforts to regulate business ventures among real estate brokerage, title insurance and mortgage companies, a federal appellate court has thrown out HUD's long-standing 10-point test that defines key standards for affiliates under the Real Estate Settlement Procedures Act (RESPA).

The U.S. Appeals Court for the Sixth Circuit handed down its potentially far-reaching decision in Carter v. Welles-Bowen Realty Inc. the day before Thanksgiving. The ruling is certain to grab the attention of real estate industry executives nationwide, especially given the aggressive approach on affiliated businesses adopted by the Consumer Financial Protection Bureau, which inherited RESPA enforcement authority from HUD.

First enacted in 1974, RESPA bans kickbacks in exchange for referrals of business among settlement service providers in residential mortgage transactions. A 1983 amendment to the law created a safe harbor for affiliated businesses that disclose their arrangements to clients, allow consumers free choice to reject using an affiliate, and who receive compensation from the venture only in proportion to their ownership interests.

In 1996, HUD added a 10-point set of criteria to help determine which affiliates are "bona fide" under RESPA, rather than shams or shells intended to disguise referral kickbacks.

That policy statement has shaped the structures of thousands of affiliated businesses since its publication. It says that in determining whether an affiliated business is actually a "sham," regulators will consider factors including whether the new entity has its own offices and employees,  competes in the marketplace for business, and whether it sends business exclusively to one of the settlement service providers that created it.

Though HUD never formally issued the policy statement as binding regulations, real estate and mortgage industry participants have widely interpreted them as crucial guidelines to avoid legal attacks by the federal government.

en·croach·ment: enˈkrōCHmənt/ (noun)
A situation in real estate where a property owner violates the property rights of his neighbor by building something on the neighbor's land or by allowing something to hang over onto the neighbor's property. Encroachment can be a problem along property lines when a property owner is not aware of his property boundaries or intentionally chooses to violate his neighbor's boundaries. This is also known as structural encroachment.

1. The degree of encroachment;
2. How long the encroachment has existed;
3. the nature of encroachment; and
4. Whether the encroachment completely or partially prevents concurrent use.

If, based on the above criteria, the title company is unwilling to provide affirmative coverage, a description on the deed of trust can be drafted so that the legal area of the encroachment is not included, and therefore not encumbered by the deed of trust. Then, the lender's policy can be issued without exception to the encroachment.

Other methods available to address and "cure" encroachments:

1. A boundary line agreement to re-establish the boundary lines.
2. an easement for encroachment to "cure" the encroachment.
3. An indemnity agreement from the insured owner to provide lender's coverage.
4. The neighbor's written waiver acknowledging that the use is permissive. Such waiver must be recordable and must run to his "heirs and assigns."

Where the title company feels comfortable giving affirmative coverage, the following language is acceptable:

This policy insures against loss or damage which the Insured may sustain due

to the enforced removal of said encroachment. 

VTC TEAMMATE FEATURE

Susan Miller, Settlement Processor

You can say hello to Susan by e-mail or call her at 800.468.5811.

Click here to view information about other members of the VTC team.