The 10 year
treasury closed at 1.72%, which, except for last Friday’s 1.69, is the lowest
of the year.
The Dow closed
at 14,865, which is the highest it has been since…….
The dollar
closed at $1.299/Euro, a 6 week low against the Euro.
Mortgage backed
securities are the best they’ve been since mid January.
Taxes
Do you have
someone in contract? Haven’t filed taxes yet?
If they are
closing after April 15 the lender will want their 2012 1040s (federal tax
return).
No problem.
They will also
want the 4506T for those returns.
That could be a
problem. It could take some time for the 4506T to come back and
up to 6 weeks for it to come back with results.
Some lenders
will run the 4506T and go with the “no result,” like Princeton. Some won’t.
Unless the
person is self employed, or has other income that the lender gets off the
taxes, like rental income. Then we need the 4506T back.
Or, they can
get a tax extension and provide the extension instead of the taxes. Problem
solved.
And then file
the taxes. (I’m not a tax advisor so consult a tax advisor, blah, blah)
What if they
filed two weeks ago? That extension is really handy…
Insurance
I’ve talked
about this before.
Insurance is
one of the more common causes of delays at close, probably second most common.
We request
Evidence of Insurance (EOI) from the borrowers hazard insurance company.
This often
doesn’t go well.
Sometimes we
contact them and they don’t respond, because they have only given a quote and
the borrower has not told them to issue the policy. Since the agent hasn’t been
chosen they ignore our request, completely.
Delay.
Shockingly,
many agents don’t know what coverage is required.
I always tell
my clients, but the insurance agents often don’t seem to understand the simple
instructions.
They don’t know
the difference between face value of a policy and the replacement value.
This can cause
the borrower to pay for more insurance than they need.
We also get
policies with the correct amount of coverage, just not on the right thing. They
cover personal property, or liability, or anything other than what we want
(dwelling).
And then there
are the typos. When we request one typo fixed, they introduce another one. Or
they change the effective date to the wrong one. And when we request that be
fixed, they mess up something else. The wife called so the wife is on the
policy, but where is the husband?
I had one
recently where the agent, after we requested a series of corrections, issued
insurance on the buyer’s current property, not the subject property.
And on it goes.
Happens on way
too many loans.
The moral is
twofold:
1. Push your buyers to line up insurance immediately. If
they find a better deal later they can change, after close. But choose an agent
and pass the contact info on to us. And make sure the insurance agent has been
told to “issue the policy.”
2. Choose a good insurance agent. The difference between a
good one and a bad one is day and night.
Another example
is I periodically have a property in a flood zone, or get a call from one of
you who is in a flood zone, and the insurance agent asks for an elevation
survey (send a surveyor out the property). What they really want is an
elevation certificate from the city, but they don’t know this. And getting said
document is NOT a lot of fun. A competent insurance agent will know how to get
it without asking the buyer to provide it. If anyone ever asks you to get them
an elevation survey, or the elevation cert, consider changing agents.
Or if you ask
for an HO-3 or HO-6 policy and they don’t know what that is, you are probably
going to have a bad experience.
This still
happens, believe it or not.
I have had many
HO-3 policies come in based on the appraised value instead of the replacement
cost of the improvements.
The lender is
fine with it and will let it pass with the extra insurance without saying a
word, but when you have a $2M property with a little fixer upper/tear down,
that difference translates to a lot of wasted premium.
I have attached
vcards for two insurance agents that have a good track record with funding
departments we work with.
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