One expert says fear of a recession could lead to one.
Increasing anxieties
over a recession could be the cause of the next recession, according to Analyticom President
Dan Geller, developer of the theory of money anxiety.
Geller’s theory
explains that an increase in money anxiety can lower consumer confidence and
cause a recession by reducing consumer consumption by just 5%. Since consumer
consumption makes up about 70% of gross domestic product, a 5% reduction in
spending equals 3.5% of GDP, which is greater than the projected GDP for 2019.
In July 2019, the Money
Anxiety Index was flat at 44, the same as June, but slightly higher than May’s
42.7 points. While these figures are relatively low and don’t point to an
immediate recession, Geller explained that the constant hype about a recession
could increase the level of money anxiety.
“An example of how
recession hype can increase peoples’ perceived anxiety and reduce their
confidence in the economy can be seen in the preliminary August figures of the
Michigan Survey of Consumer Sentiment,” Geller explained. “The August index
decreased 6.4% from the previous month indicating that the level of consumer
confidence in the economy dropped in the first couple weeks of August.”
“Since the Michigan
index is based on what people think about the economy, in the form of a
questionnaire, it is highly likely that the recent recession hype influenced
the respondents’ confidence about the economy,” he explained.
Nearly half of experts
surveyed by Zillow back
in 2018 said they expect the next recession to begin sometime in 2020, according to the company’s Home Price Expectations
Survey, a quarterly survey of more than 100 real estate experts and economists.
Since then, the talk
surrounding recession has only increased as more and more experts begin to
predict a recession by late 2019 or early 2020.
There were several dire
warnings this week about the economic dangers posed by President Donald Trump’s
ramped-up trade war with China.
“On a scale of 1-10,
it’s an 11,” Cowen Managing
Director Chris Krueger said in a note to investors, describing the economic ramifications of the trade war.
In July, Zillow’s
panel of more than 100 housing experts and economists said the next
recession is expected to hit in 2020. A few even said it may begin later in 2019,
while another substantial portion predict that a recession will occur in 2021.
But unlike last time, the housing market won’t be the cause.
Showcase your firm’s strengths at the closing table.
Many title agents spend
money and time on marketing and sales efforts to increase directable business.
While most campaigns are effective, and certainly essential, one of the best
opportunities to showcase your firm’s strengths is at the closing table.
A well thought-out and
unique closing table strategy will result in increased referral business, and
will cost half of traditional marketing plans. A well thought-out closing table
strategy looks like this:
Target
referral sources who attend closings at your office.
Showcase your
firm’s customer service and competency.
Follow up with
collateral materials and a call to action.
As real estate
professionals, we value a well-planned and executed marketing campaign,
directed at realtors, loan officers and future clients. Typically, this includes direct mail,
targeted email, web presence, social media and office visits.
All of these methods have
varying degrees of cost, both in dollars and time. Everyone would agree that
they are essential to building and maintaining a business.
The closing table, however,
is a hotbed of opportunity that is, unfortunately, often ignored. A number of
factors that make this situation unique include:
All parties
can be scheduled and will attend;
Traditional
referral sources are there;
As a closing
agent, you control the pace, flow, and agenda of the time you spend together.
As the closing approaches,
since your office will schedule, you will be aware of who will be attending. With
that information, you can tailor your approach to fit the needs of each. Your
approach should be a systematic and repeatable part of your processes.
The buyer’s agent is most likely your referral source. You
should acknowledge their competence and professionalism, in the presence of
their clients, the buyers, and be sure to thank them with a small, parting
gift, in full view of the seller’s agent.
The seller’s agent is your primary target. An informational
packet should be prepared with contact information, pricing and an order form. Also,
testimonials are always helpful if they can be obtained. It can be useful to
acknowledge them in the presence of the parties, and thank them for their help
in facilitating the closing. Be sure to obtain a business card and information
on their office which could be helpful in future marketing opportunities.
Finally, it is always appropriate to ask for their future business in person.
The mortgage broker, if present, and not familiar to you, should
have their own take-away packet, containing similar information to the seller’s
agent, as well as a document outlining their firm’s experience in handling
various types of loans other than residential. An acknowledgement of their
professionalism and assistance in putting together the transaction is essential.
Sellers should be given a branded packet with all their documents, containing
all you contact information and some swag such as pens, highlighters or pads. Do
not overlook this important contact. They are a potential future client. At
some point later in the year, they will be looking for copies of various documents
which they have lost. Their ability to contact you and obtain these documents
will cement your relationship, and make it more likely they will call on you
for their real estate needs in the future.
Finally, remember that
you, as the closing agent, are on stage. Whatever you project at this closing,
will make or break your ability to obtain future business from the parties. You
should be affable, available, and project quiet confidence. This is important
at what can be the most stressful experience in a consumer’s lifetime.
At the closing table, by
targeting referral sources, showcasing your abilities, and having collateral
materials prepared ahead of time, you will be able to take advantage of a
unique and valuable marketing opportunity.
Sure you know the ins and outs of title insurance, but it is likely buyers and sellers have limited knowledge of what title insurance covers and why they need it. You need to be able to respond to questions that will be asked, or have answers to some that should be asked, to be able to best serve your customers. Learn more about title insurance regulations, and other key points to explain to customers why the policy you provide is to protect their interests.
It may seem like “Title Insurance 101” – but small mistakes can be signs of fraud or misuse of funds or outright intentional undoing of a clear road to closing on a real estate deal.
It may seem like
“Title Insurance 101” – but small mistakes can be signs of fraud or
misuse of funds or outright intentional undoing of a clear road to closing on a
real estate deal.
Not everyone knows everything
all of the time; a thousand items have to fall into place and “add
up” in order to make the process smooth and completely unencumbered.
A power of attorney
showing up in the middle of a transaction (or at the end) should be
scrutinized. So should cashier’s checks drawn from geographical areas that
don’t coincide with the seller’s, buyer’s or property’s locale.
Take a look at the
potential red flags below; being aware is half the battle.
Preliminary Title
Report/Title Search
Red flags” involving the preliminary title report and title search may include:
Ordered
by, prepared for, or mailed to a party other than the lender.
Property
seller is not in title (possible purchase disguised as a refinance or improper
property flip).
Seller
owned property for a short time with a cash-out on the sale.
Notice
of default is recorded (possible cash-out purchase with a straw buyer or
foreclosure rescue).
Report
indicates delinquent property taxes.
Report
indicates modification agreement on existing loan(s).
Title
documents show the borrower or Seller on a purchase is not the owner of record.
For a purchase transaction, the seller
should be the owner of record.
For a refinance transaction, the
borrower on the loan application should match the owner of record on the title
documents.
Escrow/Closing
Instructions
“Red flags” involving escrow
and closing instructions may include:
“Fill
in the blank” or generic escrow instructions.
Change
of sales prices to “fit” the appraisal.
Odd
amounts paid as a deposit/down payment.
Significant
or unusual buyer credits or fees.
Unusual
amendments to the original transaction.
Seller
on Closing Disclosure different than seller on preliminary title report.
Evidence
of “white-outs” or alterations without initials.
Payoffs
to third parties whose lien was not listed on the preliminary title report.
Reference
to another escrow.
Down
payment is paid into escrow upon opening.
Cash
is paid outside of escrow to property seller.
Sale
is “subject to” property seller acquiring title.
Entity
acting as the property seller is controlled by, affiliated with, or related to
the applicant or another party to the transaction.
Buyer
is required to use a specific broker/lender.
Sale
of subject property is not subject to inspection.
Power
of attorney used with no explanation.
Power
of attorney is not properly documented/recorded.
No
one wants to learn that fraud or misuse of funds or fraudulent transfers
happened once a closing is complete, yet those events can be part of real
estate closing worlds.
Appraisals
can also prove to be undependable, as parties involved can have
less-than-legitimate agendas.
After the Exchange of Funds (regardless of the dollar amount of the loss)
Contact your
bank.
Speak with someone who has authority to
reverse or “recall” the wire. This contact may be in your bank’s fraud
department. Note: A best practice is
to identify this contact and establish a relationship with him or her before a
wire fraud incident occurs.
Make sure the bank understands you have been
the victim of a Business Email Compromise (BEC) scheme.
Request a Wire Recall or SWIFT Recall
Message.
Ask your bank to fully cooperate with law
enforcement.
Contact your
local FBI office (https://www.fbi.gov/contact-us/field-offices). The FBI has a number of protocols aimed at
freezing and retrieving funds. They will activate appropriate protocols based
upon the circumstances of the loss. The American Land Title Association has more information on the FBI’s protocol for reversing
fraudulent international wires.
Complete and
submit a Complaint Referral Form to the FBI’s Internet Crime Complaint Center (IC3). Be prepared to
provide all details related to the transaction including date, amount, the name
of your bank and the beneficiary bank, account numbers, contact information,
etc.
Contact the fraud
department at the beneficiary bank to notify them about the wire-recall request
due to the fraud. Provide details and request that the account be frozen.
Contact the
Alliant National Claims Department by first calling the Claims Manager at (303)
682-9800, ext. 425, and then follow up by emailing applicable information to Claims@alliantnational.com.
When the Money Goes Out, Minutes Count
The 48-hour period following a fraudulent
wire transfer is critical; immediately contacting your bank, the local FBI
office and submitting a complaint to IC3 as described above will increase your
chances of recovering the funds.
Since international wire
fraud has a very low chance of recovery or reversal of the wire, special
precautions are advisable, such as requiring “in-person authorization” from
only those authorized signers on an out-going international wire, and having
such precautionary requirements agreed upon with your bank.
Appraisals and appraisal reports may contain “red flags” indicating
potential fraud. “Red flags” may include, but are not limited to:
Owner of
record listed is inconsistent with other information disclosed in the loan
file.
Occupant is
identified as a tenant on an owner-occupied refinance application.
Owner-occupied
refinance transaction, but the property is vacant.
Occupant of
subject property is listed as “unknown.”
Appraiser uses
public record, exterior inspections, or property seller/builder as sole data
sources.
Illegal zoning
is checked on first page of the appraisal.
“Physical
deficiencies or adverse conditions that affect the livability, soundness, or
structural integrity box” is checked “Yes” on the first page of the appraisal.
Subject
property has increased in value in a stable or declining market.
Land value is
atypically high for the area.
Excessive
adjustments in urban or suburban area where marketing time is under six months.
Timeframe between
sales does not allow enough time for reported renovations made to property.
Loan file
contains a note with a predetermined value.
Ineligible
Condition (C5, C6) or Quality (Q6) ratings.
Blank spaces
on the form (borrower, client, occupant, etc.).
Missing photos
or maps.
Photos do not
match description of property.
House number
in photo does not match property address.
Photos do not
match the floor plan sketch (i.e. location of garage, fireplace, etc.).
Photos of
subject property taken from odd angles or with no depth of field, or have been
cropped or otherwise altered.
Photos reveal
items not disclosed in appraisal (e.g., commercial property next door, railroad
tracks, another structure on premises, etc.).
Weather
conditions in photo of property are not appropriate for the date of the
appraisal (i.e., July photo shows snow on the ground for a property in
Illinois).
“For rent” or
“for sale” sign in photo of subject property on owner-occupant refinance application.
Most recent
sale(s) and/or listing information on subject property and/or comparable
properties are missing.
Use of
unverified comparable sales (i.e., not verified through traditional data
sources such as MLS, sales office, Closing Disclosure, real estate agent,
etc.).
Use of
inappropriate comparable properties (e.g., that are not similar to the subject
property when comparable properties are present).
Excessive
distance between comparable properties and subject property.
All comparable
properties are from different town(s) than the subject property.
Lack of
bracketing with comparable sales used (e.g., all sales are significantly larger
in living area than the subject).
Appraisal is
ordered and/or prepared prior to date of sales contract or loan application.
Appraiser is located
outside of the county in which the property is located.
Sales contract “Red flags” indicating potential fraud may include, but
are not limited to:
Multiple sales
contracts exist.
Sales contract
is dated after the appraisal date.
Sales contract
is subject to an existing lease on an owner-occupied transaction.
Sales contract
includes personal property or prohibited sales concessions.
Sales price is
significantly above or below market value.
Purchase
contract addenda adjusts the sales price.
Applicant is
not shown as purchaser.
No real estate
professional involved.
Real estate
agent(s) used, but not paid a fee; or no real estate agent(s) involved at all.
Seller is a
corporation or LLC and the subject property is not new construction.
Seller is an
affiliated real estate agent, trust, relative or employer.
The parties to
the transaction are related by family or commercial enterprise.
The contract
is not dated.
Names are
deleted from or added to the purchase contract.
The contract
is an “option contract.”
The contract
was assigned or is assignable.
Earnest-money
deposit is an unusually high amount, consists of the entire down payment, or is
an odd amount.
Contract has a
very short inspection period and upon satisfactory inspection, the buyer is to
notify the settlement agent who is then supposed to transfer a large portion or
all of the deposit to the seller (scam is that 10 business days later, it is discovered
that the cashiers’ check is counterfeit after the money has been sent, and the
escrow account suffers a shortage).
Recommendation is to contact the bank or
entity issuing the cashier’s check to confirm that the cashier’s check number
and amount is valid prior to depositing the item in the account. Most banks
will confirm this by telephone. Due to the increasing occurrences of
counterfeit cashier’s checks, most banks have instituted mandatory holds on
cashier’s checks. It is not uncommon for a hold to last up to 10 days (check
with your bank to confirm their policy).
Name and
address on earnest-money deposit check is different from that of the buyer.
Earnest-money
deposit checks have inconsistent dates, for example:
Check #111 dated November 1
Check #113 dated September 1
Check #114 dated October 1
Earnest-money
check is not cashed or is not reflected on the Closing Disclosure.
