Happy National Dessert Day! While today may be rainy and cloudy, it’s always a great day for dessert. I think I’ll make another dark-matter-heavy batch of banana pudding today, and eat a huge bowl of it for dinner.

It’s like BASE jumping. You hope the parachute works.

Fannie Mae and Freddie Mac, the two government-sponsored entities that buy and hold most conventional mortgages in the U.S., will accept attorneys’ title opinions in lieu of a lender’s title insurance policy in certain cases.

Why it matters: This can save borrowers an average of $1,100.00 in closing costs when refinancing a home loan.

Attorney title opinion letters (ATOL’s) must meet FNMA’s and Freddie’s guidelines and limitations.

  • They cannot be used for condominiums or co-ops.
  • The property cannot be subject to any restrictive covenants, so homes in most subdivisions aren’t eligible. But homes in planned unit developments that have such restrictive covenants are eligible.
  • ATOL’s only dispense with lender title policies in refinances.

Some pros of ATOL’s in refinance transactions:

  • The borrower saves money on closing costs.
  • The closing could occur faster if the lender can obtain title evidence electronically and have it reviewed by an attorney who then generates the opinion based on that information.

Some cons of ATOL’s in refinance transactions:

  • Attorneys assume that all signatures in the chain of title are genuine, so the opinion doesn’t cover fraudulent or forged signatures in the prior chain of title. If that has occurred and later comes to light, the lender has no coverage for that.
  • If the attorney dies or retires, then the malpractice insurance will generally expire, leaving the lender with nothing to cover them if the ATOL is later discovered to have errors or omissions.
  • Licensed title agents who are not also attorneys will be prohibited from handling refinance transactions where no title insurance is being issued for the lender.

Our thought bubble: Slippery slopes. Being an attorney and a licensed title agent, I recommend lenders obtain a lender’s title policy, even in a simple refinance, to ensure their mortgage will be marketable on the secondary market.

In 1938, unemployment insurance was born.

Inflation rose another 0.4% in September, up 8.2% from a year ago. The yearly gain for core inflation was the highest since August, 1982. To cure this “price instability” that exists, the unemployment rate will have to climb.

Why it matters: How steep, fast, and high the unemployment rate will climb is the subject of a lot of speculation.

And the Fed, so far, appears to be OK with that.

In the past, when unemployment has risen

  • Home prices dropped.
  • Rents flattened.
  • Office and industrial vacancies increased, lowering those values too.
  • Bankruptcies and foreclosures increased as well.

Despite the doom and gloom surrounding the forthcoming unemployment numbers, most economists are hopeful for a “soft landing” recession that will be shallow and short-lived, and nothing like the 2008 Great Recession or the 2020 Pandemic Collapse.

Situation Awareness: We’re hearing many of our clients planning to go on buying sprees over the next year to snatch up properties of all types at better prices. Even with higher interest rates, if the price is right, the property will cash flow. Others are brushing up on foreclosures, subject-to transactions, bankruptcies, and short sales so they’re prepared to handle those situations efficiently.

The bottom line: While a recession with a soft or hard landing is unpleasant, it can be profitable for those who prepare.

  1. Commercial and multi-family lending is expected to be 14% less this year than it was last year according to the Mortgage Bankers Association. The drop is attributed to higher interest and capitalization rates, and valuation uncertainty. Dodd Frank Update
  2. United Wholesale Mortgage has unveiled a new program that allows mortgage brokers to do closings without title agencies issuing a lender’s title insurance policy. They rely on attorney title opinion letters only. United Wholesale Mortgage PR
  3. Florida has the highest insurance premiums in the country. Florida accounts for 97% of all insurance litigation in the country. After Ian, Florida’s insurers won’t be profitable without another 30% to 50% rate hike on properties that can get insurance at all. Another problem: mortgage servicers don’t want to deal with the hassle of Florida properties’ insurance claims. Will mortgage lenders have trouble finding servicers for Florida mortgage loans? HousingWire Podcast
  4. Here are the 10 cities with the largest home price drops since June. Spoiler alert: Palm Bay is #3 on the list. The Hill
  5. Experienced home flippers are pulling back while rookies continue to rush in. Shades of 2007? Fortune (Subscription)
One of the office pets, Edward, played with his football so hard that he just had to take a nap. Yes, this is his goofy nap position.
In case you have too much dessert today and need to work it off instead of taking a nap like Edward, the Fitness Marshall will get you pumped.
We hope you found this helpful — any feedback is appreciated.

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PCS Posts is a blog from PCS Title President, Joe Seagle. Each edition, Joe presents details from the top of the news feed that affect our industry. This info ranges from real estate closing form changes to updated laws to trending topics. Joe breaks each idea down into manageable pieces and highlights the facts you won’t want to miss. Please subscribe to our email list for the latest blog.

Thank you for choosing PCS Title, the cornerstone of real estate closing services since 2004, as your premium title professionals when it comes to your next Florida real estate transaction.

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