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					Representing First-
Time Home Buyers
Through TLP
                          The Law Project
                          March 16, 2011
        Justin Winerman and Tom Kennedy
Initial Matters
   When you first receive the case file...
     Introduce  yourself to the client and discuss your role
     Identify the relevant parties, introduce yourself, and
      get contact info:
          Seller
          Seller’s attorney
          Brokers
          Buyer’s primary lender
          Buyer’s secondary lenders (e.g., funding agencies)
          Buyer’s counselor
     Draft initial correspondence with seller’s attorney
     Ensure that you have a legible copy of the contract
     Verify names – spelling, full legal names – and marital
      status of client
     Check for time-sensitive deadlines
Relevant Parties
                                   Lender
                                               Seller’s
                        Closer
                                               Broker


                                                           Seller’s
           Seller                                          Attorney


                                  BUYER
                                                          Government
        Title Company                                      Agencies
                                                          (e.g., IHDA)


                                               Buyer’s
                        CHA
                                               Broker
                                  Counselor
                                 (e.g., NHS)



   Start a contact list early to keep everyone up-to-date and to
 determine who you can approach with questions at each agency
The Engagement Letter
   Sets out firm policy   “As described to us, the
   Sets scope of the        Engagement involves
    engagement and its       solely reviewing the
    termination point        contract for the
       Limited scope        purchase of the
                             property and assisting
                             with the closing of the
                             transaction.”
Attorney Review Period Extension
   You may receive the case near the end of the period specified in the
    contract for attorney review
   Choose a period long enough that you will have time to review and discuss
    the relevant provisions with the Seller’s counsel
        Budget time for communication delays
   Further extensions are common
   If inspection is complete, roll in requests for repairs
   Ensure that language is used to avoid “counteroffer” problems; i.e.,
    “alteration”
   Example language from opening letter:
Reviewing the Contract
   Make sure the contract is complete and
    readable
       Usually fully-negotiated, but not always
   Ensure that the CHA Rider is attached
       Must be signed by both parties
   Look for attached disclosures and warranties
       Real Property Disclosure
       Lead Paint Disclosure
   Review all sides, all attachments
   Ensure earnest money has been deposited with
    escrowee
   Buyer must take possession at closing
Other Documents to Review With
Contract
   Condos
       Condo declaration/bylaws
           Review with client, who as first-time homebuyers
            may not be familiar with these types of documents
       Homeowner association
   New Constructions
Often-Negotiated Terms:
   Negotiate for:                        Delete:
       Better tax proration – at             Provisions that allow Seller
        least 110% for Cook                    to obtain mortgage for
        County
                                               Buyer
       Lower maximum rate on
        mortgage (so buyer can get            Any provisions
        out of deal if they can only           contemplating buyer’s non-
        get a high rate)                       possession at closing
       Lower down payment in                  (post-closing rent, escrow,
        mortgage contingency                   etc.)
       Location of closing – in the
        Loop
       Title agency – pricing
Setting a Timeline
   Pull the relevant dates from the contract
       Acceptance date of contract
           Critical
           Date Seller accepts offer from Buyer
           Other deadlines measured from this point
       Financing/mortgage contingency date
       Expiration of attorney review period
       Expiration of inspection period
       Closing date
           Be prepared to extend
           Tentative until ALL parties give go-ahead
Inspections
   Two inspections
       CHA
           Repairs MUST be made

       Independent
         Facilitated through Buyer’s broker or counselor
         Buyer can negotiate additional repairs, but cannot
          spend more than $1,500 to repair before closing
         Safety concerns must be addressed
Sample Inspections – CHA
Sample Inspections – Independent
Appraisal
   Required in the
    CHA rider
   May result in
    modification of
    purchase price if
    appraisal is too
    low
Financing
   Buyer will have at least two sources of financing:
     Primary Lender
        Marquette

        Harris

        PNC Mortgage

     Secondary Lender(s)
        IHDA (grant administered through LUCHA or Spanish
         Coalition of Housing)
        ADDI (grant administered through City of Chicago Dept. of
         Housing)
     1%  or 3% of the purchase price must come from
      client’s personal funds
          Lenders are generally aware of this
     Coordination     with all parties is important
Title Commitment
   Gives history of property
     Legal title holder
     Any mortgages, liens, easements, encumbrances,
      etc.
     Status of taxes
   Obtain as soon as possible
   Make sure it’s signed
   Verify insured amounts match loan amounts
    from agencies
     Important:  failure to have correct amounts can result
      in delay of closing
   If they don’t, you usually can call title co. directly
    to have changed
Affidavit of Title
Deed
   Review prior to closing
   Things to note:
     General      accuracy (names, property, tenancy etc.)
          Make sure person selling property (i.e., the “Grantor”) on
           deed is same person on title commitment
                Can only convey what you own
          Tenancies
                Joint Tenancy
                Tenancy in Common
                Tenancy by the Entirety
Survey
   Try to obtain a copy before closing
     Ifyou don’t, not a problem; review for general
      accuracy on closing date
   Review legal description of property make sure it
    matches that in the title commitment
   Review for any encroachments, building line
    violations
    No survey for condos
     If   Condo get declaration and bylaws
Bill of Sale (for personal property, if any)
Loan Documents
   Review documents
     Mortgage – security agreement
     Promissory Note – loan
     Recapture Agreement
   Verify Terms
     Interest
             rate
     Amount of mortgage
     Review recapture provisions in all documents
Transfer Declarations
   Mostly Seller’s obligation – review for
    general accuracy at closing
     State of Illinois
     Cook County
     City of Chicago
Before Closing
   Coordinate with all agencies
        Paperwork needed – get checklists early
             E.g., ADDI needs title commitment, wiring instructions, closing request form
        Wiring instructions for the title company
        Prepare list of contact information for each agency at the beginning
        Confirm that all grants are funded and will be there at time of closing
        If possible, confirm with all agencies a week before closing
   Final Walk-through
      During day
      Check that all repairs have been made
      Broom-clean condition
      No need to attend – Buyer can go with broker
      Buyer should inform you ASAP of any problems
   Give notice to client’s current landlord and agree on times for
    showing in writing
Before Closing
   Inform your client what documents/items he or she will need to
    bring:
        Certified Check
             Make it payable to them
        Picture ID
             Issued by Gov’t agency
             E.g., passport, driver’s license
      Checkbook
      Original Insurance Policy
      Voided Check
             To set up electronic debit payments
        Proof that Buyer has $1,000 in separate savings account
             For future home repairs, if needed
   Remind client of time and place of closing
   Explain general idea of what documents will be involved – granting
    documents, loan documents, tax documents – so clients are not
    surprised when they see the stack at the closing
At Closing
   Explain charges on Loan Settlement Statement and RESPA
      Settlement Charges
      Title Company fee
      Junk fees – e.g., Yield Spread Premium
      Cash From Borrower – the “bottom line”
   Explain forms – mortgage, grants, deed, escrow account for taxes,
    etc.
        Residency requirements/recapture provisions
   Explain real estate taxes
        Twice a year, in arrears
   Bring your cell phone and contact list
   Make sure TLP gets fee!
        Currently $250
   No money can go back to client if overage – call counselor or CHA
    for tips
        Flood insurance, TLP fee, purchase home warranty
After Closing
   For client’s records:
     Forward title insurance policy
     Forward recorded documents
     Forward RESPA

 Refer clients with maintenance or other
  ownership issues back to counselors
 Termination letter
Questions or Comments

				
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