Weekend Wanderings in Tucson…

November 20th, 2015

bicycle-20clip-20art-1197114401399640364Steren_bike_rider.svg.med7 am Saturday morning the shotgun start of El Tour de Tucson starts the beginning of the 104 mile race. The sun will be climbing over the Rincon Mountains to the east and those fit souls, having had nourishment to get them off to a good start, will be pedaling the first stretch of the annual bicycling race.
The temps will be in the high 40’s, low 50’s during the first start of the morning. Those athletes crouched on their bikes in a position, trying to avoid drag force, otherwise known as wind resistance, should not be riding into wind bursts. In other years, competitors have faced rain, snow, and both cold and hot temperatures but the weatherman promises the Saturday ride should be pleasant.
Always the Saturday before Thanksgiving, the Greater Arizona Biking Association brings together more than 9,000 contestant for various rides around Tucson. The longest race, 104 miles skirts the city and wends its way along winding and rolling hills. There is also a 75 mile race, a 55 mile race and a 40 mile race for those less robust, but wanting to participate. Fun rides for families and children of 11 miles and 5 miles are available.
The day culminates in El Tour Fiesta, an event downtown at the finish line, where awards will be presented with music, food, and the excitement of the race finish.
If shopping for arts and crafts is more your vein, then visit the Tucson Museum of Art annual art and craft show. This juried show on the grounds of the Museum, brings together more than 100 artisans and is a perfect time for gift shopping. The beauty of the hand crafted items is astonishing. Find unique pottery, interesting jewelry sure to draw comments, different crafts worthy of positive comment, and of course paintings.
It also marks the opening of El Nacimiento, the intricate hand made representation of the nativity scene, a true work of both love and art. It is housed at La Casa Cordova in the Historic Block, a home believed to date back to pre-Gadsden purchase. It is on display from November to March. Stop in at Café A La C’art for a bite to eat or purchase from vendors at the artisan fair.
It’s perfect weather for a hike in one of the trails in our mountain ranges, or just a meandering walk downtown to see what’s new. If you’re tired, take the trolley. And of course at night, the music scene comes alive. Sunday at 4 the Sunday Jazz Jam, open to the public and free, is in full swing at Lowe’s Ventana Canyon sponsored by the Tucson Jazz Society.
Always something to do in Tucson, just open your eyes and see!

The New Closing Document?

November 19th, 2015

signing_document_4Before October 3, pre Consumer Financial Protection Bureau (CFPB) regulations, the title company drew up the closing disclosure statement which used to be known as the HUD-1. With the implementation of CFPB, in Arizona, it is now the responsibility of the lender to draw up the closing disclosure and get it to the escrow officer with whom the buyer and seller will “close escrow”. The real estate agent should also be present and explained the closing statement to the clients prior to close of escrow.
Lenders, under CFPB, are now required to get the closing disclosure to the parties three business days prior to the scheduled closing. It is a simpler form that the HUD-1 and spells out the loan amount, the interest rate, the monthly principal and interest and any prepayment penalty .
The projected payments show how the payment is calculated with principal, interest, mortgage insurance and estimated escrow which includes taxes and insurance. Projections are for Years 1-7 when Mortgage interest is required and then from years 8-30 or the life of the loan when mortgage insurance is no longer required. Estimated taxes and insurance are spelled out in a separate box. These are not static costs, they can rise yearly as taxes increased as well as insurance.
Closing costs are estimated and the cash to close is spelled out. The second page is a breakdown of the closing costs detailing all loan costs; loan origination fee, services the borrower did not shop for; and services the borrower shopped for.
Taxes and government fees which include recording fees are spelled out as well as all pre paids which include hazard insurance premium, mortgage insurance, prepaid interest, and tax escrow accounts on a monthly basis. The initial escrow payment at closing will include insurance, mortgage insurance if applicable, and taxes and these are computed in the closing costs needed by the borrower to close escrow. Other fees will include Homeowner’s Association fees, Real Estate commissions with the amount and to whom it is paid, and owner’s title insurance.
The third page includes a calculation of “cash to close” which includes total closing costs, anything paid out of escrow such as an appraisal, any closing costs which are financed, and the down payment, any deposit, the funds for the borrower from the loan, any seller credits or other adjustments, and then the cash to close figure is derived.
The remainder of page three is a summary of all the transactions from the previous pages, and shows the borrower’s transaction as well as the seller’s transaction so the net due seller is calculated. Any deposits, amount of the loan, and seller credits are displayed; adjustments such as taxes or HOA fees, showing as a debit or a credit for the buyer and the seller. Any mortgage payoff is shown on the seller’s side.
Page four are loan disclosures about features of the loan, whether there is a demand feature, if the loan can be assumed, what happens with a late payment, if there is negative amortization, and will the lender accept a partial payment. The escrow or impounds will be spelled out, and the estimated property taxes if the buyer declines an escrow account will be shown.
The last page shows the total amount which will be paid if the buyer holds the property for the length of the loan and makes payments as scheduled. The amount of interest paid during the life of the loan is shown as well as the amount financed. The higher the loan interest rate, the greater the amount of interest paid. The annual percentage rate is shown and is different than the interest rate for the loan. The APR includes all the funds necessary to close escrow. And then the box which will show the total interest rate percentage over the life of the loan will knock your socks off! It is the total amount of interest paid over the loan term as a percentage of the loan amount.
Contact information for the lender, the mortgage broker, the real estate broker for the buyers and seller and the settlement agent are listed with name, address, identification number, state license number, contact person and the contact identification and state license number, e mail address and phone number.
To view this form: http://files.consumerfinance.gov/f/201311_cfpb_kbyo_closing-disclosure.pdf


Taking Title in Arizona…

November 17th, 2015

2926345The manner in which a buyer takes title to a property in Arizona has legal and tax consequences.
Arizona is a community property state.  Neither the real estate agent nor the escrow officer can give legal advice on how to take title. However general guidelines have been published and are reproduced here.  These are definitions provided by Fidelity National Title Agency, Inc.  Thank you.


COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP:  Community property with right of suvivorship is a method of ownership by husband and wife that vests title in the surviving spouse upon the death of one of the spouses.

COMMUNITY PROPERTY: Arizona is a community property state.  There is a statuary presumption that all property acquired by husband and wife is community property.  Community property is a method of co-ownership for married persons only.  Upon death of one of the spouses, the deceased spouse’s interest will pass by either a will or interstate succession.

SOLE AND SEPARATE:  Real Property owned by a spouse before marriage or any acquired after marriage by gift, devise, descent, or specific intent.  If a married person acquires title as sole and separate property, the spouse must execute either a disclaimer deed or quit claim deed.

JOINT TENANCY WITH RIGHT OF SURVIVORSHIP:  An undivided interest in property taken by two or more joint tenants.  The interest must be equal; occurring under the same conveyance, and beginning at the same time.  Upon death of a joint tenant, the interest passes to the surviving joint tenant or tenants, rather than to the heirs of the deceased.  If a married couple acquires title as joint tenants with right of suvivorship, they must specifically accept the joint tenancy to avoid the presumption of community property.

TENANCY IN COMMON: A method of co-ownership where parties do not have survivorship rights and each owns a specific undivided interest in the entire title.

CORPORATION: Any group of people “incorporating” by following certain statutory procedures many take title to real property in the name of the corporation.

GENERAL PARTNERSHIP: Title may be taken in the name of a general partnership duly formed under the laws of the state of the formation of the partnership.  A partnership is defined as a voluntary association of two or more persons as co-owners in a business for profit.

LIMITED PARTNERSHIP:  A partnership formed by two or more persons under the laws of Arizona or another state and having one or more general partners and one or more limited partners.  A certificate of limited partnership must be filed in the Office of the Secretary of State, a certified copy of which must be recorded.





Title? Escrow? What’s the Purpose?

November 16th, 2015

title-deed-paper-document-rolled-isolated-white-background-41043141Arizona is a title company state. The escrow company- escrow officer- closes escrow, not an attorney. In attorney states, close of escrow takes place with the attorney for the buyer and seller.  The attorney is responsible for clearing the “chain of title”. In title company states, it is the title company which insures the chain of title.
The escrow company and title company are often used interchangeably, but they are different. The escrow company is responsible for preparing all documents and ordering the title report from the Title Company. The escrow company holds the money and disburses it according to instructions from the lender, reviews the files to make sure all the conditions of the contract have been met and makes sure all contingencies have been fulfilled.
Some of the larger Brokerages have relationships with title companies; on the purchase contract, the Title Company and the Escrow Company are different.   Often the prices for title and escrow are higher than if the same company performed both functions. It is the buyer’s choice to choose the title and escrow company.
In Tucson, we are seeing real estate agents “recommend” in the MLS listing, that a specific title company or escrow officer be used.   The buyer and buyer’s agent can choose any company and does not have to abide by this “recommendation”. The purpose is to generate more business for that company (owned by the brokerage) which generates more money for the brokerage, which is allegedly used for additional marketing.   (These relationships also exist  for the lender and the home warranty company.) The Consumer Financial Protection Bureau, is investigating whether this is a violation of RESPA rules –The Real Estate Settlement and Procedures Act since consumers allegedly pay more.
Most big brokerages have disclosures in the myriad of paperwork which clients are asked to sign. Whether those disclosures are explained to the client depends upon the agent;some agents can’t explain the documents to be signed.
Once the contract has been signed, the agent “opens escrow”. The earnest money check and the purchase contract are given to the escrow officer. The escrow agent orders the title search.  The preliminary title report is issued and it is important for the agent to read the “prelim” in case there are red flags.

Often a person with a common name will be flagged for back child support, or a lien on the property. These must be cleared prior to transferring title. If the buyer/seller is not this person, he/she will have to sign a “not one in the same” document and provide proof he/she is not that person.
Other onerous title issues may occur. If there has been a death of one of the owners and the estate has not been probated, often heirs must be located and/or the estate probated prior to the surviving spouse transferring title.
On occasion, I have had to refer these title issues to a real estate/estate lawyer. However, it is far better to insure the title is clear prior to listing the property so that any transaction can flow smoothly. Waiting until escrow has been opened and title problems solved may put the kibosh on the transaction.
When dealing with sellers where one party may be incapacitated, it is important to get a durable power of attorney. Sometimes this takes a while; agents are often eager to get property on the market. Being knowledgeable about title issues prior to putting a property on the market is essential for a smooth transaction.

Weekend Wanderings…

November 13th, 2015
Digital StillCamera

Digital StillCamera

Tucson, home to Davis Monthan Air Force Base, continues to recognize Veterans Saturday with the “Hats Off to Heroes” festivities. Starting at 11 am and continuing throughout the day, culminating in the Tucson Pops Orchestra’s tribute at the bandshell with special guests The American Bombshells from 5 to 7:30 pm, the day will be packed with activities.
The 5K Fun Run begins at 10 am at the Northwest corner of Reid Park, and the Veterans Resource Fair runs from 10 am to 3 pm at the Bandshell. Throughout the day there will be military displays in various locations in the park, and the food court opens at 11 am offering those yummy diet busting fair foods which we all love! Strains of music will reverberate throughout the day with live music playing at the bandshell from 11 am.
Folks can wander downtown to the Second Saturday for more music and entertainment at various venues. Check http://www.2ndsaturdaysdowntown.com/schedule for the schedule. Take an evening ride on the streetcar or stop in one of the myriad of restaurants for a snack or dinner. Take your jacket or sweater since temps will be dipping during the evening to the 50’s. It’s fun to wander downtown during the evening, seemingly a different landscape than the hustle and bustle of business people scurrying to and fro during the day.
Need a new bike in preparation for El Tour de Tucson? Plenty of cycles from which to choose will be for sale at the Fall Bike Swap Sunday sponsored by the Greater Arizona Biking Association. (GABA).   http://www.bikegaba.org At the corner of 6th Avenue and 7th Street downtown, both individuals and bike shops will sell bikes, from the most elementary to the fanciest of gear.
More than 4800 dogs will strut their stuff at the AKC Coyote Classic Dog Show from 8 am to 4 pm every day this weekend beginning today at the Pima County Fairgrounds on Houghton.
The University of Arizona basketball plays Pacific tonight at McHale with tip off at 7:30. Saturday at 8 pm U of A football meets Utah at the Arizona Stadium, but wear blue because Utah is wearing red.
There is always something to do in Tucson; if you need more ideas, check this website:   http://tucsonhappenings.com/



November 12th, 2015

PreviewThe purpose of an appraisal is to protect the investment of the lender’s investors. Actually the lender bundles the loans and sells them on the secondary money market and often they are resold which is why the buyer must purchase an Alta Lender’s policy which assures that the lender is always in first lien holder position. This is why you may purchase a property and the check for the loan is made out to xyz company; eight years later, you receive notice it is to be made out to 123 company and then even later, you write your check to abc company. The mortgage notes have been sold. But I digress.
If you have a loan on the property, usually you must have an appraisal. The appraisal is nothing more than an opinion of value. Hopefully that is what your Realtor® has provided you; an opinion of value substantiated by homes of similar age, quality, size and amenities within a reasonable range. The Realtor® is very aware of the fact the property has to appraise. It does no one any good to put a high price on a property, receive a contract for that high price, and then have the property not appraise.
So what happens then? One of three things. Let’s say the property is priced at $275,000. The appraisal comes in at $260,000. The buyer is putting 10% down or $27,500 and carrying a loan for $247,500. Scenario One: The buyer can come in with the additional $15,000, the difference between the $275,000 and the $260,000 and put $42,500 down. But why would a buyer pay $15,000 more for a property than it is worth?
Scenario Two: The seller can lower the price to $260,000 on the basis that the property, according to the appraiser, is not worth $275,000.
Or Scenario Three: The seller and the buyer can meet someplace in the middle and each give up something, the seller can come down $7500 and the buyer can put down an additional $7500. It’s a re negotiation.
Or the seller’s agent can “fight the appraisal” but will generally loose, especially if it is a VA appraisal.
I had a property which sold immediately for $162,000 with a VA loan. The appraisal came in at $156,000. The seller went down $2,000, the buyer came up $2,000 but there was no meeting of the minds. We cancelled the contract, and put the property back on the market but indicated we would not accept VA financing. The VA appraisal stays with the property for six months and I did not want to constrain my seller to the $156,000 appraisal.
Within 48 hour, I had another contract, also for $162,000 but with a conventional loan. The appraisal was done within a week and a half of the first appraisal, and came in at, you guessed it, $162,000. And ironically, that same first buyer came back with another back up offer but of course the second buyer closed on the property within three weeks.
The lesson to buyers is simple. If you have a property you want, be prepared if the appraisal comes in low. Your agent should give you comps to support the price you are offering. Your agent may also know how other agents price: some price high, some price on target, and some give you about 3% to negotiate – often to account for the 3% concessions buyers often request.
The lesson to sellers is equally as simple. Your agent should price the property with supporting comps in a realistic range based on properties in the neighborhood of like kind which have sold. These are the same comps the appraiser will be using. Don’t fall for the old argument, price high, you can always come down. Generally that is a recipe for not selling your home, or a series of price reductions which will net you less than the price your agent originally suggested. Remember, the property has to appraise!

What is the Loan Status Update? LSU?

November 11th, 2015

stock-photo-young-couple-meeting-financial-advisor-for-investment-254297140The Lender must issue Loan Status Updates, otherwise known as LSUs, when requested by either the seller’s agent or the buyer’s agent. The first page of the LSU is similar to the Pre-Qualification form but is issued after mutual acceptance of the contract.
The close of escrow date is specified, the name of the buyer, the name of the seller and property address as well as Assessor’s number, and the city.
It is page two however, which tracks the progress of the loan from the reception of the contract and all addenda from the buyer’s agent. Understanding these items which the lender must fill out with the date completed and his/her initials, marking each box a yes or a no, is a journey through the loan process.
Once again, the lender must assure that he/she has the buyer’s name, income, social security number and the address of the property, as well as the estimate of value of the property and the amount of loan requested. The lender verifies that the loan estimate has been sent and the buyer indicates his/her intent to proceed with the loan.
The lender receives a signed Form 1003 (http://www.mortgagesanalyzed.com/gyan/docs/fnma-form-1003/fnma-form-1003.php) which is the loan application form as well as all of the lender disclosures.
CFPB regulations now have the appraisal being ordered almost immediately and usually prior to the home inspection. In the “olden days”, pre CFPB, the home inspection was done first and then the go ahead given to the lender to order the appraisal. Buyer’s agents should now order the home inspection upon mutual acceptance of the contract as soon as possible.
Down payment sources are identified and the lender must review the Title Commitment to make sure there is no clouded title on the property, then the lender can lock the loan program, interest rates, points, and specify when the lock expires. Once the lock expires, that interest rate is no longer guaranteed and the buyer may have to pay a higher rate which potentially could prohibit him/her from purchasing the property since the total loan amount would exceed the amount of pre-qualification.
The appraisal is received and the property must appraise for the loan amount requested. We will talk about low appraisals in another blog tomorrow. If the appraiser has requested any repairs, the list must be provided to the buyer and the buyer and buyer’s agent must acknowledge receipt. These repairs must be completed and the appraiser must go out again and ascertain that the repairs have been done as a condition before the lender can issue documents for signing. The second trip is an additional expense to the buyer. These repairs are called PTD, prior to documents conditions.

The lender package goes to the Underwriter, the silent but powerful person in the back office. It is the underwriter who makes sure the conditions of the loan have been met and issues the final decree that the buyer has loan approval without PTD conditions.
The lender now orders closing documents and completes the closing statement, formerly a task done by the closing agent. This was called the HUD-1 and is now called the Closing Disclosure Statement. The lender reviews all, making sure all prior to funding conditions have been met and then orders funds to be sent to the escrow company. The buyer and seller sign the loan documents and another property has transferred ownership.

To see the new documents, check this website:



What does the Lender need?

November 10th, 2015

loanapprovalWith the October 3 implementation of the Consumer Financial Protection Bureau’s regulations governing mortgages and lending, additional requirements fall upon the lender. Serious buyer generally are pre-approved before they look at property. Most professional agents will insure their buyer has met with a lender so the buyer will not be disappointed down the line if he/she cannot qualify for the house wanted.
The Arizona Association of Realtors® Pre-Qualification Form has basic information required by the lender. This includes whether the buyer has consulted with a lender and if not, the buyer must declare  he has not consulted with a lender yet by checking the appropriate box.   If this is the case, chances are the seller will not take any offer submitted by the buyer very seriously, or will require that the buyer talk with a lender before considering the offer.
The lender declares his company,his/her name plus the Arizona License and NMLS number,along with the address, e mail, phone and fax numbers, signature and  date. The buyer must also sign and date the Pre-Qualification form and the buyer’s  legal name must appear in the first lines of the Pre-Qual form.
The lender must indicate the buyer marital position; married, unmarried, or legally separated and note whether the buyer is relying upon the sale or lease of a property in order to qualify for the loan,  and/or  whether the buyer is relying upon seller concessions to close the loan.
The type of loan and whether it is a loan a primary or secondary residence, or a non-owner occupied residence such as a rental is necessary plus the type of property; Single Family Residence, Condo, Townhome, Manufactured Home, or Mobile Home.
The lender must provide any FHA loan buyer with the pamphlet, “For Your Protection: Get a Home Inspection” as well as discussing assets, liabilities, and income, then obtaine a Tri-Merged Residential Credit Report.
After these discussions, the lender will calculate how much loan the buyer can pre-qualify, and make an assumption of the monthly principal and interest plus mortgage insurance, property taxes, insurance, HOA due, and flood insurance.  The lender will stipulate that the monthly loan amount not exceed x dollars with an interest rate not to exceed a specified percentage and must indicate whethert the interest rate is fixed, adjustable, and if there is a pre-payment penalty.
The buyer will have to provide specific documentation and the lender will check off if this documentation has been received. Buyers should bring to the lender, the last two paystubs, W-2 forms, tax returns for the past two years, corporate tax returns if applicable, documentation of the down payment and any reserves required, documentation for all sources of gift funds, documentation of credit and liability, and any other paperwork the lender may require.
Once this is done, the lender will provide a loan status update to the Seller and the brokers within ten days of mutual acceptance of the contract.

Act Now to Buy Before 2016!

November 9th, 2015

Fotosearch_k5087602Time keeps on slipping into the future…and it’s hard to believe there are less than eight weeks left until we greet 2016 and say goodbye to 2015!
Anyone wishing to purchase a home with a loan during 2016 had better get on the stick and make an offer this week. With the requirements set forth by the Consumer Finance Protection Bureau, many lenders are requesting 45 days from start to finish for a loan. FHA and VA loans will definitely take that amount of time and 45 days takes us to December 24 if that offer and loan is applied for today. And then we run into the Christmas and New Year’s Holidays.
Buyers and sellers need to think about time frames. 45 days takes us into a month and a half. Some lenders can still do a loan in 30 days but the buyer needs to have his ducks in order and should obtain a list of everything the lender needs and get those documents to the lender as soon as possible. Ask your agent if he/she has a lender who can process and fund the loan in 30 days, some can, my lender can, but they require cooperation from the buyer.
We are on the Fed merry go round again, will they or won’t they raise rates? Fed action has an impact on home sales. With the increase in jobs reported last week, a lot of money in the know is betting the Fed will raise rates. Janet Yellen has hinted as much. For every percentage increase in interest, the buyer can purchase less house because more money is going to interest.
This does not just impact the buyers. Sellers too are affected. If a buyer has to pay more in interest, that leaves less money to pay for the house-i.e. net to seller. If you are thinking about buying or selling a home, this may well be the time to act. Time keeps on slipping into the future…

Weekend Wanderings… All Souls Procession…

November 6th, 2015

asp-2014-03All Souls Procession, totally unique to Tucson, will bring celebrants from all over remembering their loved ones in art, music, food, and a procession. Emanating from El Dia de los Muertos, the Day of the Dead, a day of to commemorate those in our lives who have died, the All Souls Procession has grown to a full weekend event which ends with the burning of the urn filled with thoughts and messages to those who are departed.
Participants dress or wear clothing reminding them of the departed, either human or animal, and many carry photographs. The art work which people construct is amazing, with huge paper mache heads or intricate clothing. Workshops to create these masterpieces are held throughout the year.
Skull heads are artfully painted on the faces of participants and skilled stilt walkers proceed in the procession along the city streets as skeletons.
The air is electric with anticipation by observers, many of whom are also dressed commemorating the deceased, craning their necks to see the beginning of the procession. The drum beats echo through the dark night downtown area heralding the beginning of the procession. It is both exciting and solemn, and everyone carries his own personal meaning of this night remembering both good and bad of those who have died.
The weekend culminates in the Procession. Participants should arrive at 4 for the 6:30 start time for the procession. It will end at Mercado San Augustin just west of I-10 and Congress where the urn will be burned and Flam Chen will perform.
As the procession passes, observers can join the procession walking to the finale. This is a photographer’s paradise with varied emotions, colors, expressions. The link below gives detailed information as well as a video and photographs of this expressly unique Tucson event.