State of the Texas Title Industry 2022

Let’s start by pointing out that the real estate market is like the weather. It is very localized. It changes like the seasons. And it can often be unpredictable. Stormy skies today may be sunny tomorrow. And just because it is raining in Houston doesn’t mean it is the same in Austin.

The year 2021 was an unexpectedly good one for the title industry. Historically low interest rates, a strong housing market and hearty refinance numbers made for a positive year.

Higher prices, Fewer Transactions

We’ve started 2022 with a record low inventory of homes for sale across North Texas. Consequently, we’re expecting fewer sales in 2022. Fewer real estate sales means less business for the title industry.  

With the rise in both home prices and interest rates, housing affordability is expected to worsen. As long as demand exceeds supply, 2022 will challenge potential home buyers. That makes this housing market very different than some of the booming seller’s markets we’ve seen in the past 20 years.

This year of high prices is not the real estate bubble the country experienced prior to the great recession of 2007-2009. There have not been a lot of subprime and risky mortgages issued in recent years. This market is a different situation because it is driven by supply and demand. Most homeowners currently have positive equity in their properties.

As mortgage rates rise, the refinance volume is expected to dip and provide less title insurance business in that sector as well. Refinance transactions typically account for at least 20 percent of annual title insurance volume.  Industry experts from The Title Report indicate that refinance transactions could drop by 40 percent. That will depend on interest rates which are expected to slowly rise to about 3.6 percent on average by the end of the year.

Changes in the Title Industry

The title business has had to adapt to a lot of change - like most businesses in the last two years. The pandemic brought about a boom in remote signings and curbside closings. Record setting volumes have combined have created their own challenges in this business that is highly regulated by the state.

This past year also saw a rise in financial scammers and security breaches. Additional security and advanced technology in the title world are expected to continue developing rapidly throughout 2022. Title companies will be expected to adapt quickly to the changing technology and additional requirements to challenge their expertise.

The consensus among industry experts is that while 2022 may not be as robust as the previous year, it should still be another good year for title volume. Confidence remains strong as we see what direction 2022 takes us. 

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Texas 2021 Real Estate Legislative Update 2.0

A little property tax relief is coming for some Texas homeowners. Two minor property tax bills were approved at the Texas Legislature’s August 2021 Special Session. With some of the highest property tax rates in the country, most homeowners welcome any law that provides Texans a tax break.

New Homeowner Homestead Exemption

Under current law, when someone purchases a home, they must wait until January 1 of the following year to receive the benefit of a homestead exemption. This new law allows a homebuyer to receive their homestead exemption in the year that they acquire the property, rather than having to wait for January 1 of the following year.

Starting in January 2022, new Texas homeowners who qualify for a homestead exemption will become immediately eligible to receive a property tax reduction when they purchase their property. Those buyers will receive the exemption allocated proportionally from the time they purchase the property. For example, if the buyer purchases the property in February, they will receive the homestead exemption on that year’s tax bill for February through the end of the year.

Texas homestead exemptions from counties, schools, cities, and special districts reduce the property taxes for the homeowner. The amounts vary from county to county. All Texas homesteads receive a $25,000 exemption on their home’s value from school property taxes. Other local entities, like cities and counties, offer a separate residence homestead exemption. A homestead exemption can typically save a homeowner 10%-20% on their property taxes.

Senior and Disabled Exemptions

The Texas Legislature passed “an Act relating to the reduction of the amount of a limitation on the total amount of ad valorem taxes that may be imposed by a school district on the residence homestead of an individual who is elderly or disabled to reflect any reduction from the preceding tax year in the district’s maximum compressed rate and to the protection of school districts against the resulting loss in local revenue.”

That’s a mouthful of legal jargon. Essentially, this legislation proposes a reduction in school taxes for seniors and disabled Texans. It would extend the school property tax rate cuts approved by the Texas Legislature in 2005, 2007, and 2019.

School property taxes for homeowners who are at 65-plus years old or who are disabled are frozen at the amount owed in the year they qualify. However, when some school districts reduced their tax rates, those homeowners did not see a reduction in their tax bills due to this frozen value. The new law would reduce the frozen value by the same percentage as the reduction in a school district’s tax rate, starting in the 2023 tax year.

Because there are different property tax laws for Texas elderly and disabled property owners, reforms to their tax rates must be made by constitutional amendment. Texas voters will need to approve this on local election ballots in 2022. If approved, the amendment to authorize this tax cut would take effect in January 2023.

Texas Property Taxes

No one likes to pay taxes and Texans don’t like hearing that our property taxes are higher than most other states. However, we do not have state income taxes like many other states. Texas counties set their own property tax rates, and they vary across the state. Counties with smaller populations tend to have lower property taxes. The average property tax rate in Texas is 1.8 percent of the property’s appraised value.

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2021 Real Estate Scams & Fraud

Scams, fraud, breaches, and phishing are everyday concerns for today’s title companies. Financial and privacy threats continue to evolve in 2021 and increased with the pandemic. Not only do these cost the title company time and money, but they also create additional hurdles for buyers, sellers, brokers, agents, and lenders.

Texas and California lead the country in monetary losses reported to the FBI due to scams. Let’s take a look at some of the biggest threats we’re seeing right now and what you can do to protect yourself and your clients.

Data And Information Breach

A data breach can be where so many problems begin. This is when your private information is stolen. Make no mistake- this is a sophisticated multi-billion-dollar business run by smart professionals who are very good at what they do.

The criminals are not usually stealing this information from the title company. They’re getting it from individuals like you. This is typically a clever manipulation of the natural human tendency to trust. Once the criminal has your private information, they may hack into or monitor your computer to get your login and/or passwords to accounts. They may intercept emails and download viruses or ransomware.

Your phone and computer are the biggest risks for a breach. Do you have sensitive or irreplaceable information on your computer or phone? Most people do. Do you back them up regularly? Most people don’t. Most computer users do not have even basic cybersecurity. Scammers know this. You might as well be falling for the Prince of Nigeria scam.

A scammer can use your information to impersonate or manipulate you or your accounts. Their next step is to gain access to your information and/or computer, monitor your activity, and ultimately steal money. In a real estate transaction, they can attempt to divert buyer down payments, earnest money, mortgage payoffs, seller proceeds, etc.

Almost 97% of breaches start with emails. The most powerful way to avoid this is to be wary of every email you receive. Establish strong passwords and change them every three months. It doesn’t matter if you rotate using names of state capitals, vegetables, car models, months, … Just get a system of changing them that works for you. Only use secure Wi-Fi connections and avoid all free Wi-Fi connections in public locations for both your computer and your phone.

Wire Fraud

A 2021 survey by the American Land Title Association reports that one-third of all title company transactions have experienced a wire fraud attempt. Wire fraud is carried out by criminals who impersonate escrow officers, real estate agents, or lenders. They persuade home buyers to wire funds into their accounts during the closing process. These scams are very clever and are often carried out by criminal organizations with untraceable offshore accounts. The FBI estimates that only 12-15% of wire fraud is reported.

Wire transfer crooks hack legitimate emails or send buyer emails posing as someone involved in the transaction. They monitor a pending sale, and when the closing date nears, they send the buyer instructions to wire the closing funds to their fraudulent account. This scam is so lucrative that the fraudsters even set up fake websites that look similar to the title company or lender you’re working with, making them seem legitimate. They may create an email address that appear familiar, but one number or letter is off. It’s easy to miss the small inaccuracy or misspelling.

Always be suspicious of any email or text requesting a change to wiring instructions. Before sending money, go back to the original documents you received from your title company and call the phone number listed there to verify the wiring instructions.  Never click on links or send money without verifying wire instructions with a live person. Pick up the phone and only call the number that you first received from that contact (not the latest email).

Check Fraud

The frequency of fraudulent and counterfeit cashier’s checks is rising. A fake cashier’s check may clear immediately when first deposited. However, when the bank determines that the check is fraudulent, they take the money back.  This can happen days or weeks after the deposit.

Many title companies now treat a cashier’s check similarly to a personal check and require buyers to wire money to them if the amount is substantial.

… And More

There are a lot of real estate scams that we only hear about in title company offices. Rip-offs like roofer scams, fake rental house cons, moving company swindlers, etc. happen every day. The pandemic has led to a rise in cons like foreclosure relief scams that claim they can help homeowners save their homes and reduce their mortgage payments for an upfront fee. They sometimes claim to be affiliated with a government agency or housing assistance program. Remember, these guys are pros at ripping people off, and their methods keep getting more creative.

Unfortunately, buyers and sellers are the targets of scammers, and the losses they suffer keep mounting. In the end, only you can protect yourself.

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Are Cash Buyers Better? 4 tips to decide

Why would a home seller prefer a cash buyer? After all, the seller gets their funds from the title company the same way regardless of how the buyer pays.

Sellers often do not care where the purchase money is coming from, as long as the buyer can get their loan approved in a reasonable amount of time – and the seller gets their money. However, the mortgage loan process can be time-consuming and comes with no guarantees.

Let’s look at four reasons why a cash homebuyer may be more appealing than a buyer getting financing:

1. Skip the appraisal.

Mortgage lenders require an appraisal of the property to determine if they will lend funds for the purchase of the property. Let’s face it. Home appraisals are unpredictable. In our changing market of rising prices, the uncertainty of an appraisal adds risk. There is less chance of the deal falling through if a home sale does not require an appraisal.

2. Disregard buyer loan approval.

When a homebuyer is financing a purchase, the sale is typically contingent on the buyer obtaining loan approval within a specified amount of time. If the buyer can’t get their financing, they can’t buy the property. They may get out of the contract (within a specified time) if there is a financing contingency. Despite promises and pre-approval letters, a seller cannot be certain that a buyer will qualify for their loan.

3. No property loan approval.

In addition to a buyer qualifying for their loan, the property must also meet lender’s requirements for the loan. Those requirements involve the appraisal, insurability of the property and any lender-required repairs. Depending on the terms of the contract, the buyer may be able to get out of the contract if the property does not meet the lender’s terms for their loan.

4. Quicker closing. 

The loan approval process often takes weeks. Cash sales can take just a few days to close. The vetting of both the buyer and the property condition is effectively skipped when no lender is involved. However, just how quickly a sale can close also depends on how ‘clean’ the title may be. The same title search is conducted on both cash and financed transactions to uncover all liens and encumbrances on a property.

Money is Money

A cash buyer will not actually be paying in actual cold, hard cash. In Texas, real estate must be purchased with “good funds” such as a wire transfer or cashier’s check. The title company has the discretion to determine which good funds it will accept.

All title companies are legally required to report any cash or personal checks used to close a transaction that total more than $10,000 to the IRS. This is designed to discourage money-laundering, tax evasion, drug trafficking, and other illegal activities.

Regardless of the source of the funds, the money passes hands through the title company.

Historically, most cash buyers are investors, second homebuyers, or older buyers who are using the proceeds from the sale of another property. Traditionally, the percentage of cash homebuyers in the U.S. hovers just above 20 percent.

For many sellers, a cash offer does not overly impress. Just because a buyer is paying cash does automatically earn them the right to bargain or jump to the head of the buyer line in this hot market. While there are advantages to picking a cash offer, most sellers will agree to an offer with terms that suit them best.

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New Real Estate Survey measurement rules

Not all surveyors have two right feet. But some do.

For more than 100 years, there have been two different survey definitions of the 12-inch measurement known as a foot. But change has been afoot for some time for the official measurements used by U.S. surveyors.

Many land surveyors use the widely accepted International Foot for measurements. However, the “U.S. Survey” foot is still used by some land surveyors in 40 U.S. states and territories. Texas is one of them.

Soon the International Foot will be mandated for use throughout the U.S. The National Institute of Standards and Technology states that the International Foot will become officially used by all surveyors by 2022. That means the Texas system of using the U.S. Survey Foot will need to get the boot. The Texas Legislature designates the state standard for survey measuring applications in the Texas Natural Resources Code, Subtitle B, Chapter 21.

The difference between these measurements is miniscule. When measuring a mile, the International Foot is about an eighth of an inch smaller. So it’s not going to make a difference in your average residential survey. But it can make a difference when measuring large distances. In a measurement of 1 million feet, the difference is 2 feet.

The problem started almost 90 years ago. In 1893, the U.S. government definition of a foot was 1,200 meters divided by 3,937. That makes a foot equal 0.3048006+ meters. In 1933, the International Foot was created. It was defined as 0.3048 meters, exactly. The last digits were eliminated. By 1959, the U.S. government switched to the International Foot and mandated its use – except for surveying and mapping applications.

The minor difference may seem insignificant, but it has caused problems for surveyors, engineers, and planning officials for high-speed rail and bridges in some states. It seems prudent to use the same measuring stick like the rest of the world to avoid errors, confusion, and additional costs. Discontinuing the use of the U.S. Survey Foot is expected to bring uniformity and accuracy for professionals in the surveying, mapping, and engineering businesses.

Industry icon Barry Rhodes with Burns Surveying has worked in the surveying business for more than 50 years and is responsible for more than 120,000 surveys in North Texas.

“The difference in measurements are so minute for local surveyors,” says Rhodes. “The difference isn’t usually a big deal unless you’re dealing with long pipelines or something similar. When you go really long distances, you have the curvature of the earth to deal with.”

Rhodes doesn’t expect the change to create problems for Texas surveyors. “I always use the U.S. Foot. But if the state says to make the change, we’ll do it,” Rhodes said. “Our software probably has the option to convert.”

The next time someone tells you that a foot is 12 inches, you might want to add that the official definition of a foot is actually 0.3048 meters. Even in Texas.

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When is Refinancing Worth It?

The refinance market is booming with homeowners taking advantage of record low interest rates. However, millions of homeowners are passing on the opportunity to save money by refinancing their current home mortgage. Many of those mortgage holders are just not sure if refinancing is worth it.

The Pros And Cons

Refinancing is replacing a current mortgage with a new one. The new mortgage loan pays off the old one, and the homeowner is then responsible for paying the new mortgage. There are significant time and costs associated with refinancing. It can save a homeowner money or cost money.

“Any determination of whether a borrower should refinance is dependent on whether or not the transaction creates a tangible benefit,” says loan officer Alison Hannah, Vice President of IberiaBank.

Do The Math – Consider The Fees

Closing costs are an important factor in deciding whether to refinance. Like an original mortgage, refinancing requires a title search, credit report, appraisal, application fees, recording fees, tax certificate, and title insurance. Costs can also include an origination fee, processing fees, and more. Refinance fees and closing costs can add up depending on the loan amount, discount points you may buy, and what the lender charges.

Total closing costs typically amount to 2 to 6% of the new loan amount. According to Freddie Mac, the average closing costs on a mortgage refinance are $5,000.

In December 2020, the Federal Housing Finance Agency plans to add in a refinance fee of 0.5 percent of the loan amount to all refinance loans sold to the government-supported entities Fannie Mae or Freddie Mac. That accounts for about 70% of all U.S. mortgage loans.

A lower interest rate might not be worth it if your savings are consumed by fees and closing costs.

How much should mortgage rates fall before you think of refinancing?

Many experts recommend refinancing when it would reduce an owner’s interest rate by 1 percent or more. Every refinance has a break-even point. That is a point in time where your refinance pays for itself.

“The cost to refinance must be recovered via the reduced payment in a short enough period of time so as to make sense with respect to the borrower’s holding period,” advises Hannah.

To determine this, divide your mortgage closing costs by the monthly savings of your new mortgage. If you are paying $5,000 in closing costs and will save $200 per month because of refinancing, it will take 25 months to break even.

Break-Even Period on a 30-Year Mortgage

Use a mortgage refinance calculator to enter your current interest rate, monthly payment, and your new loan terms and calculate how the two mortgages would compare. If you do not plan to keep your home past the break-even point, it does not make sense to refinance.

Every homeowner’s financial needs and goals are different. A 1 percent interest rate decrease may offer significant savings on a $1 million mortgage but not make financial sense for a $100,000 mortgage.

Getting a Mortgage Can be Complicated

The refinance activity this fall has been a rollercoaster pattern of increased refinance application volume followed by a dip in requests. Forbes Advisor published a survey in October 2020 stating that about 32.4 million homeowners have a home loan with a 0.75 percent higher rate than today’s average mortgage rate. That represents about three out of every four mortgage holders with a 30-year mortgage.

Not all of those homeowners are eligible to refinance due to their income, employment, credit scores or home value. However, there are millions of qualified homeowners who could save hundreds of dollars a month on their house payments. So why isn’t everyone doing it?

Many homeowners do not want to go through the hassle and the paperwork that refinancing requires. The process can be daunting and not everyone is prepared or willing to jump through the hoops. They forget that the lender is handing over a big sum of money and even the most loyal clients carry a risk for repayment. Be prepared for the significant time and effort involved in refinancing.

Do Your Homework

When it comes to interest rates and closing costs, mortgage lenders take into account credit score, income, assets, loan amount, and property value.

Know your credit scores since they affect your interest rate. The higher your credit score, the lower the interest rate. Many lenders recommend a credit score of at least 720 to qualify for the most competitive rates. Consider taking steps to improve your scores before refinancing.

If you are unsure about refinancing, choose a knowledgeable mortgage lender who can help you decide. Know what costs to expect and whether it makes financial sense for your situation.  [where: 75230]

Closing Costs in Texas - A Comparison

Recently released national closing cost data showed that in 2019 average closing costs remained flat despite an increase in home prices. The average closing costs in Texas was $3,744 with an average sales price of $274,163.

The average closing costs in Texas was 1.75 percent of the sales price. That put Texas ranked 28^th in the country for closing costs based on percentage of sales price.

The closing cost data, announced by ClosingCorp, calculated the cost of title insurance, appraisals, settlement fees, recording fees, surveys and transfer taxes. We don’t have transfer taxes in Texas. If we exclude those transfer taxes, Texas still ranks 28^th in the country.

The states with the highest average closing costs, excluding taxes, were Washington DC, New York, Hawaii, and California. That is a reflection of both closing costs and average sales prices being high. If you look at the highest closing by state based solely on percentage of sales price, the highest states were Pennsylvania, Delaware, Washington DC, and Maryland. Their percentage averaged more than double the closing costs in Texas.

In most states, consumers can shop around and compare closing costs like they would a mortgage loan or homeowner insurance. Title insurance rates often vary based on several factors such as the purchaser’s credit scores or amount of their down payment. The escrow, legal, and closing fees can even vary from county to county within a state.

In Texas, the cost of title insurance is set and regulated by the state. All Texas title companies are required to charge the same for a title policy. The debate comes up every few years that Texas title insurance should be unregulated. The argument is usually that the free market and more competition would help reduce the cost to the consumer. The Texas Department of Insurance actually lowered title insurance rates in September 2019. For now, the system seems to be working well for our state. 

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Top 5 Scams aimed at Realtors

Buyers and sellers aren’t the only victims of real estate scams and crimes. Realtors are also a favorite target of crooks, criminals, and other shady types. 

Due to the nature of the real estate business, agents naturally come in contact and work with strangers on a regular basis. Most real estate deals involve big ticket transactions and that adds to the risk of dealing with unfamiliar people.

In the last couple of weeks, I’ve highlights a few scams aimed at buyers and sellers. Realtors often get caught in the web of these deceptions as well. They just add to crimes that focus on these professionals.

After quizzing a few Realtors, here are just some of the scams going around lately:

1. Email hijacking and cyberfraud. Like everyone else with an email address, Realtors get phishing emails, fraudulent notices, and hacking attacks. But these are laced with real estate references and are designed to get data for identity theft or for financial information. They contribute to the cost of Errors & Omissions insurance premiums for agents. Often the scams appear to come from a mortgage company, title company, professional organization, etc.
2. Fake buyers. These devious phonies pretend to be in the market for a luxury home. They enjoy the charade of being fussed over and catered to. Dressing the part and asking detailed questions about the property, their deception can be quite believable – for a while. Fortunately, all they will likely rob you of is time – and maybe a couple of meals.
3. Open house thieves. These criminals target home sellers and Realtors. They pose as prospective buyers and may operate alone or in pairs. While they can be nicely dressed and well spoken. Plenty of agents have been robbed of money, jewelry, etc. while holding an open house.
4. The Friday night date. Another unrepresented ‘buyer’ works this con. He schedules an appointment during the week to see an expensive house and loves it. Now he wants to come back on Friday or Saturday in the early evening and bring his girlfriend or boyfriend. He confides that he could be the one and he wants his/her opinion on the house. He and his companion are warmly greeted by the agent, who shows them around. The ruse is simply to feed his ego, impress his date, and help him get laid.
5. Theft of furnishings and décor. Agents sometimes assist with selling a home by having it staged with model furniture and accessories. The crook views the home and manages to leave a door or window unlocked. The house is later cleaned out either by the crook or the person who bought the furnishings, not knowing they were duped as well.

Of course, the worst crimes aimed at Realtors have involved violence. Plenty of agents fear for their safety. Sadly, they may have good reason. Agents have been robbed, raped, and murdered all over the country. The National Association of Realtors 2018 Member Safety Report stated that 33% of Realtors said that in the previous year they had experienced a situation that made them fear for their personal safety or safety of their personal information. 

Knowledge is power and Realtor associations across North Texas hold regular classes on Realtor safety and fighting cybercrime. If you’re an agent, take a class or a refresher to remain vigilant.

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Voice of the Title Agent Survey

The “2019 Voice of the Title Agent” is hot off the presses from The Title Report. This annual survey gives an idea of how folks in the title business are doing and their outlook for the coming year. The study covers a variety of topics related to the state of the title industry.

When questioned about business in the coming year, most title agents surveyed were optimistic about the future. More than 56 percent are anticipating some level of growth in 2019. However, they aren’t as expectant as they’ve been over the past few years. Last year, more than 66 percent of title agents anticipated growth. While the majority of agents are expecting growth, the number who feel their business will drop or remain flat continues to increase.

The low unemployment rate and healthy economic conditions were felt to benefit the title industry and title agents. The economy also topped the list of concerns for title agents. Cyber threats and increased operating costs were chief concerns as well. These were the top three worries in the 2018 survey, too.

The hardest job in the title business is thought to be the residential loan closer, called an Escrow Officer in Texas. I’ve always thought it was the sales side of the business that is the hardest. However, some respondents felt that one of the reasons the closer’s job is most difficult is because they deal directly with the public and those who don’t understand the title industry. On that, I would agree.

The report exposed the concerns many title agents have about the aging of this industry. The title business is growing old in many ways. Of the title agents surveyed, 55 percent work for companies that have been in the business for more than 20 years. Most of them are independent, with fewer than five offices.

Title company ownership across the country is dominated by people approaching or past retirement age. Agents are uneasy about the exit strategies for these leaders and where the next generation of title agents and owners will emerge. For the most part, cybercriminals, fraud, and security combine to be the greatest concerns for title agents. Keeping their information and customers safe is their focus for 2019. [where: 75230]

The Pain of Unpaid Property Taxes

Property taxes are the talk of the town right now. Municipalities all over the Metroplex are proposing tax rate increases on top of the frequent increase in property values. This year’s tax bill may be a double whammy for our already steep homeowner taxes. If you’re thinking of avoiding those taxes, here is your warning. 

“Texas is pretty efficient with collections or foreclosing because our property taxes are high,” says Mary Doggett, VP of National Investors Title Insurance.

Despite our strong homestead rights in Texas, you can lose your home if you don’t pay your property taxes. Rest assured that the taxing authorities will collect their money one way or another. There is no escaping it.

“This a topic we face often in the title industry,” says Doggett. “Property taxes are the No. 1 cause of losses for the title business in Texas.”
That’s why title companies diligently research property tax records and potential tax liens on every sale. Unpaid property taxes collect penalties and fees quickly. And we want to ensure they are paid when the property transfers ownership.

“A property tax lien is a Special Priority Lien. They take priority over almost all other liens,” says Doggett. Whoever owns the property on January 1st of that year, is liable for the taxes for that year.

From a taxing authority prospective, a new owner isn’t responsible for previous years taxes. However, a tax lien runs with the land. That means the tax lien attaches to a property and stays with it – regardless of ownership – until the taxes are paid.

A tax lien can remain on the property even if the ownership changes. That shouldn’t happen if you use a title company to handle the transaction.

If you’re over 65, you may be eligible to defer your property taxes on your homestead. The taxes will show as unpaid and a tax lien will attach to the property. Interest will accrue on the unpaid taxes. Of course, the taxes will have to be paid either when you sell your home, or you die.

It might be painful, but paying your property taxes on time is easier than facing the taxman later.

Take a glance at Doggett’s chart showing the Pain of Unpaid Property Taxes. You can see that a $10,000 property tax bill left unpaid for 1 year increases to $15,000 with penalties and interest. Ouch! 

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal or tax advice. Contact an attorney or accountant to obtain advice for any issue or problem.

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Annual Report on DFW Title Companies

Texas Department of Insurance (TDI) recently released the 2016 Title Agent Statistical Report. Yes, this is now the summer of 2018, so those stats are a bit dated. What can I say? It’s a government agency.

TDI licenses and oversees all title agents in Texas. Our state’s title insurance business is highly regulated and title companies are audited at least every 2 years. Every agency must account for every dime they take in and every dollar they spend.

Take a glance at this 326-page report and you can see why it could take months to compile this information. The report covers every title agency’s income, expenses, and losses. The majority of title companies on the list are Independent Agents. The others are either Affiliated Agents or Direct Operations.

For each agency, they disclose their income, which consists mostly of the amounts they collected in title premiums. In the expense column, you can see how much in total salary they paid their employees and how much the owner/partners were paid. Other details of expenses like rent, utilities, postage, telephone, courier fees, and office supplies are included.

The expense I find most interesting is item No. 54 on each expense list: Fines or penalties. Yes, indeed. You can see who has been good and who has been bad. I’m relieved to see my own company has a big zero in that category. Keep in mind that some of these agencies are small ‘mom and pop’ operations while others are large, multi-branch companies. I totaled just over 100 D-FW agencies with no fines or penalties and 11 with some amount of fine or penalty.

Congratulations to these D-FW area companies without any fines or penalties in 2016:

Independent Agencies: Advantage Title, Affinity Title, Alamo Title, Allstar Title, Allegiance Title, Alliance Title Group, American Title Assurance of Texas, AW Title of Texas, BCHH Title of Texas, Benchmark Title, BNT of Texas, Brahama Title & Escrow, Capital Title of Texas, Carlisle Title, Carrington Title Services, Chapin Title, Chronos Title Solutions, Community National Title, Consolidated Lender’s Resources, Contemporary Solutions-USA, CSP Texas Joint Venture, Decatur Title Company, Designated Title.

Ellis County Abstract and Title, Empire Title Company, Equity National Title & Closing Services, Excel Title Group, Fair Land Title Company, Fair Texas Title, Federal Title, First Rockwall Co, First Title & Escrow, First Western Title Acquisition, FNC Title Services, Freedom Title, Gainesville Title Company, Global American Title Agency, Grand Title Company, Grayson County Title Company, Green Brick Title, GRS Title Services, Inspire Closing Services of Texas, Kane Title, Kensington Vanguard National Land Services of Tx, Lakewood Title, Legacy Pioneer Title, Legacy Texas Title, Lenderlive Title Agency, Lenders Title Solutions, Linear Title & Settlement Services, Luna Buyer.

Madison Title Agency, Maverick Title of Texas, MCS Long Star Solutions, Members Title, Meridian Title, Milestone Title Agency, Miller Title, Mortgage Connect of Texas, National Assurance Title, Navy Federal Title Services, Nexbank Title, North Texas Title of Hunt, Paradise Settlement Services, Prima Title, Providence Title, PTS-Texas Title, Ranger Title, Rattikin Title Company, Reltco, Secured Title of Texas, Sentinel Title Company, Sewell Title, Signature Pioneer Title, Silver Star Title, Superior Abstract and Title, Texas Capital Title, Texas Premier Settlement Services, Texas Secure Title Company, Thomas Title & Escrow Tx, Tiago Title, Timios, Title Source, Title365 Company, Transtar National, True Concept Title, Unisource Information Services of Texas, United Lender Services of Texas, Vantage Point Title, Westminster Abstract Company, Worth National Title Agency and Xome Settlement Services.

Affiliated Agents & Direct Operations: Chicago Title Insurance Company, Commonwealth Title of Dallas, Dominion Title of Dallas, HMH Title Company, Landon Title Company, Millennium title Company of North Texas, NETC Title Company, North American Title Company, Novare National Settlement Service, PGP Title, S&S Title Company, Strategic Title Company, Title Clearing & Escrow, Titlevest Agency of Texas, Titlevision Texas, and WFG Lender Services.

After the scandal at Millennium Title, it’s surprising to see them on the nice list instead of the naughty list. We’ll need to check the next year’s report for that.

Don’t see your favorite company on the good list? That’s because there were a few rule breakers disclosed amongst our D-FW area companies. Their 2016 fines range from $33 to $3,825.

If you’ve got a desire to see your favorite title company’s financial statement, here is the report 

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Title Insurance vs. Other Kinds of Insurance

There are lots of kinds of insurance. There’s homeowner insurance, auto insurance, health insurance, life insurance, liability insurance, … You can insurance just about anything of value. “We focus mostly on property and casualty insurance,” says insurance agent Amanda Campbell of Smith Allen Insurance. But she and other insurance companies offer all kinds of insurance. “You can insurance your pet for loss, accidents, medical bills and more.”

“You can also get wedding insurance,” she adds. “It covers loss of deposits or money lost on wedding expenses if you have to move your date due to weather or the venue ends up flooding or something. It can even cover if you serve alcohol and someone leaves and has an accident.” 

And speaking of alcohol - “You could insure your really nice wine collection if all the bottles were to break or were ruined.” She says. “You can even insure body parts. That’s more for famous people.” Apparently, J Lo has her butt insured to protect her ‘assets’.

Regardless of what you want to insure or protect, almost all insurance is purchased annually. You typically pay for it annually or monthly and you must continue to pay the premiums in order to continue to receive coverage. 

That’s where title insurance and other types of insurance differ dramatically. When you purchase a property and get title insurance, you pay the premium up front at closing and it stays in effect for as long as you own your home.

Lots of new homeowners get confused between their title insurance, homeowner’s insurance and home warranty. Homeowners insurance protects against loss or damage to your home and contents. It covers things like fire, flood, theft. A home warranty is a service contract that covers repair of most major home appliances and systems. They typically cover items like air conditioning, water heaters, and plumbing.

Title insurance protects your ownership in your property. It insurances the owner against someone else trying to lay claim to it.

Most insurance protects against what could happen in the future. Title insurance protects against what could have happened in the past. Homeowners – and their mortgage companies – want to be covered against losses from ownership issues that existed before they bought the property. No one wants a previously an unknown heir, ex-spouse, lien-holder, … showing up to claim ownership. 

Before a title company issues title insurance, they conduct research for outstanding liens, encumbrances or other title defects. But there could always be unknown factors. Like other types of insurance, title insurance gives the owner protection against what could be catastrophic loss. Because, life can be like a box of chocolates. You never know what surprises it might hold. 

The opinions expressed are of the individual author for informational purposes only and not for the purpose of providing legal advice. Contact an attorney to obtain advice for any particular issue or problem.

Dallas Real Estate Update July 2016

Anybody with knowledge of real estate in this town knows that the Dallas market is hot!

Here are a few updates and predictions that Steve Brown (real estate editor at the Dallas Morning News) shared with me this morning.
In a nutshell -

• More than 350 people a day are moving to the DFW area. That continues to drive the demand for housing. As long as job growth continues, our population growth will continue and demand for homes will continue. 
• Demand for residential real estate remains strong with very few properties available under $300k. 
• We currently have about 50,000 apartments under construction with the average rent on a NEW apartment at $1,500 a month. Vacancy rates are less than 5%. 
• Very few condos are being built right now due to the competition for land. 
• Home prices are rising much, much faster than wage increases. This will make homeownership less attainable for many people in the future. Fortunately mortgage rates are still low. 

Looking ahead, I agree with Steve on several items:

• The home market will remain strong for now. 
• We'll see a seasonal slow down soon due to the election. Folks don't like to make major purchases right before the presidential election. Regardless of who wins, sales will pick back up after Christmas.
• The rate of growth in prices will slow down especially at the high price points. That's a slow down and level off - not a drop. 
• A rise in interest rates could also slow our lightening fast market to a more normal pace. 

Remember - 350 PEOPLE A DAY. 

All those folks have to live somewhere. 

[where: 75230]

Dallas is 2nd hottest real estate market in the US

Dallas is currently the second hottest market in the country. Mostly California cities dominate the Realtor.com list of top-performing housing markets in terms of housing supply and demand. But thanks to the influx of folks relocating to Texas, we're #2!

The top 10 housing marketing according to the National Association of Realtor's site, Realtor.com are:

1. San Francisco, Calif.
2. Dallas, Texas
3. Denver, Colo.
4. Vallejo, Calif.
5. San Jose, Calif.
6. San Diego, Calif.
7. Santa Rosa, Calif.
8. Sacramento, Calif.
9. Santa Cruz, Calif.
10. Yuba City, Calif.

The available inventory of homes for sale rose last month and homes will now take a little longer to sell as the days become shorter. The rise in prices should level off for the next few months as this typical trend continues.

Even though these are hot cities for real estate, autumn and winter should see the buyer's frenzy cool with the weather - making it a little easier for eager buyers to find the property they're seeking.

If you’re looking to buy a home, now is the time to make your move.

Dallas Homes selling fast and high in 2015

Dallas homes are selling faster and the sales prices are ending up either close to or more than the asking price right now.

So far this year, the average home has sold for 99.6% of its original asking price. That's taking into account that many are selling for over the asking price.

The average time it took for those properties to sell after they hit the market was 61 days.

These statistics are for all residential properties sold through the MLS in Dallas county.

Expect the Average Days on Market numbers to increase this fall when the new federal lending requirements go into effect and will cause home loans to take longer to process. Combined with the typical slower autumn market, it should increase the amount of time about a month or so.
[where: 75230]

Blue Moon mortgage rates?

The 2015 mortgage rates to buy a Dallas home are still so low, I have to wonder how often we get to see great deals on home financing.

Less often than a blue moon.

While current rates are still well below the past 40 year averages, they are expected to increase a full percentage point in the next 6-9 months. Why do we care so much about a single percentage or less? Because it makes a huge difference in your monthly payments and in what you can ultimately afford to buy. When I bought my first home in the 80s, the average mortgage rate was 12.7% and I paid more than that. Ugh.

A $200,000 house payment ( on a 30 year note) costs you:

• $877 a month if you got the low 3.31% rate in 2012. 
• $3,177 a month if you paid the high 18.63% rate back in 1981. 

That's for the exact same house!

By the way, tonight is a Blue Moon so I couldn't resist making the reference. The definition of a Blue Moon is a full moon that occurs twice in one month. Take advantage of today's low rates to make your home purchase more affordable.
[where: 75230]

Dallas Real Estate Update - July 2015

No summer vacation for active Realtors this year. Because the Dallas housing market doesn't show signs of slowing like it usually does this time.

Demand is up. Prices are up. There aren't enough available homes to purchase and that isn't changing any time soon.
Why you ask?

The incredibly robust north Texas economy is bringing more than 120,000 jobs a year to our area. Meanwhile, we're building about 25,000 new homes and about 30-35,000 new apartments a year. Right now there are 14 new high rise apartments being built in Dallas. Home builders haven't come back strong enough since the recession because the of lending requirements amongst other things. So our housing shortage may be very long term.

Dallas leads the country in home price increases this year. We expect to see that eventually slow as interest rates increase and because incomes simply aren't increasing that fast.

While soaring prices are not a sustainable pattern, experts don't expect another bubble/burst scenario. Homebuyers are not over-extended like they were 10 years ago and there is no excess of available housing in Dallas.
[where: 75230]