With all the recent changes and upcoming changes in the real estate lending world it is hard to keep track. An oft overlooked party in the real estate closing process is the title company. If you are buying or refinancing your property in Missouri you as a buyer have a choice in which title company to choose. To simply rely on the lender or your real estate agent to select the title company could cost you money. While it maybe convenient for them you may pay a higher price and beware, all title companies are not the same.

When you purchase a home you expect clear title to the property. A title company will search public records to determine if there are any matters that could adversely affect your interest in the property. This search, unlike other forms of insurance, hopes to eliminate any problems before they become an issue. If say for instance a long lost relative lays claim to a piece of property which you own and you have title insurance you will b eprotected.

While researching title companies, make sure they are independent of any lender or real estate company and ask if they have an affilated business arrangement of any kind. If the answer is yes, due your due diligence and shop around. It could save you a considerable amount of money.

Franklin County Title Company in Union, Missouri is an independent title company that has been is business for over four decades and is an independent, non-affilated title company doing things the right way. Give them a call and check out their pricing versus other title companies in Missouri.

Kudos to Franklin County Title Company located in Union, Missouri on their 40th anniversary. Four decades in business is a great achievement and a result of their experience, expertise and work ethic. If you are purchasing a home in Saint Louis, Franklin, Jefferson or Gasconade county we recommend Franklin County Title Company.

Banks still reluctant to lend

Fewer banks tightened lending standards in the past three months, but loans are still tough to come by. Banks said this won’t change until next year at the earliest.

NEW YORK (CNNMoney.com) — Loans for consumers and businesses remained tough to come by over the past three months, according to a report published Monday by the Federal Reserve.

In the central bank’s latest survey of senior loan officers, banks said they lent less from May through July, as demand for loans dwindled further and the creditworthiness of potential loan recipients worsened.

The only category of loans where banks reported greater demand was prime residential mortgages, home loans to borrowers with the highest credit quality. Mortgage rates fell during the May through July period, sparking a wave of applications for refinancing.

Still, nearly 90% of respondents reported that lending standards were currently tighter than average for both subprime and prime home loans.

Half of the banks surveyed said they lowered credit limits, and 35% reported tightening standards for credit card applicants. None said they loosened standards or raised limits for existing customers. About 20% of banks reported weaker demand for all types of consumer loans.

Though a smaller percentage of banks said they were tightening their standards when compared to earlier this year, bankers were still pessimistic about the future.

Most banks said they expected their lending standards would be tighter than average until at least the second half of next year. For subprime companies and consumers, the majority of lenders said those standards will be stricter than normal for the foreseeable future.

Banks’ willingness to lend money has become a focal point during the recession as the U.S. government has provided a massive amount of aid to financial firms in an effort to get credit flowing again.

Despite criticism from both lawmakers and taxpayers, industry executives maintain they are still making new loans and extending existing credit lines to both consumers and businesses.

In a separate survey released Monday, the Treasury Department said that the 22 largest recipients of government aid reported a 13% increase in loan originations in June from May.

The Treasury added that much of the increase was due to higher demand for mortgages as a result of new home purchases. Business lending continued to slump however. Banks surveyed by the Treasury indicated that demand for commercial and industrial loans as well as commercial real estate loans were “well below normal levels.”

Have we hit rock bottom? I don’t think so and either does Brett Arends.

Home Prices: There’s No Quick Recovery Ahead

By BRETT ARENDS

So, is our long national nightmare over? Has the housing market finally hit bottom?

There has been some muted — albeit exhausted — cheering from homeowners in recent weeks. But before we break out the champagne, look out for further potential problems just down the road.

The good news? According to the closely watched Case-Shiller Home Price Index, which tracks home prices across 20 major cities nationwide, the three-year housing slump slowed sharply in April and May.

May’s decline was just 0.2%, the slowest in two years. And several cities actually saw prices rise — among them Denver, Washington, D.C., Chicago, Boston, Cleveland and Dallas.

Even Miami only fell about 1% in May. That’s a great month down there. Previously, prices had been falling 3% a month.

We’ll get an even better picture of the situation when the Case-Shiller figures for June are released on Aug. 25.

But these data aren’t the only hopeful signs.

Inventories of unsold homes have come down. According to the National Association of Realtors, there were about 3.8 million unsold homes on the market at the end of June. That’s down a long way from 4.5 million a year ago.

And yes, housing affordability is dramatically better. People, obviously, need to live somewhere. At some point, housing gets cheap enough that the fundamentals start to look good.

The average home is about a third cheaper than it was at the peak three years ago, a plunge unprecedented since the Great Depression. In the hardest-hit places, such as Phoenix, Las Vegas and Miami, average prices have been halved or better from their bubble peaks.

Cheap Mortgages, Too

Factor in falling mortgage rates as well, and housing starts to look cheap by many measures. Thirty-year mortgage rates, at around 5.5%, are still low by historic standards. A few months ago, when they fell below 5%, they were very cheap.

Scott Pollack

There’s some other good news for homeowners from the rest of the economy. July’s job losses were better than feared: The unemployment rate, which was heading vertical a few months ago, eased to 9.4% last month from 9.5%.

Some are saying the worst is behind us, for the economy and the housing market. No wonder the iShares Dow Jones U.S. Home Construction exchange-traded fund (ITB), which tracks shares of home-building stocks, has bounced sharply since early July.

So, is that it?

Not so fast.

Prices may — may — be nearing the bottom in many markets. But beyond the headlines, there are plenty of reasons to stay cautious. There may even be fresh dangers just ahead.

And even if prices have stopped falling, it may be years before they start rising sharply again.

First, late spring is traditionally the strongest season in the real-estate market.

And it’s hardly a surprise the market saw some green shoots this time around. It’s enjoying not one, but two, gigantic taxpayer subsidies — an $8,000 refundable tax credit, or gift, for first-time buyers, as well as those cheap mortgage rates. The Federal Reserve has been spending billions of dollars to keep interest rates down.

Both are only short-term fixes. Any sustained economic upturn would be expected to send long-term mortgage rates rising again, dousing the real-estate market with fresh cold water.

Glut of Empty Houses

The picture on inventories isn’t as good as it sounds, either. A lot of unsold homes have simply been put up for rent instead, especially in the most difficult markets like Miami. The result? A glut of empty rentals as well.

New waves of foreclosures and distressed sales may be coming, too. In states such as California, it can take many months for delinquencies to turn to foreclosures, which means last winter’s bad news may still be coming down the pike. Meanwhile, vast tranches of teaser-rate mortgages are due to reset later this year and in 2010.

As for the economy: Both unemployment and household debt levels remain at extremely high levels by the standards of postwar history. Either is bad news for housing. The combination is very bad.

Dean Baker, co-director of the Center for Economic and Policy Research, argued in a recent paper that the fundamentals still aren’t great. It still remains cheaper to rent than to own in many markets, he says.

The biggest bubbles usually produce the deepest busts. And the 2002-2006 bubble was a doozy. The bad news may have ended after three terrible years, but maybe not. Japanese housing prices still haven’t recovered from the late 1980s bubble. Western U.S. markets took six or seven years to recover after the last big bubble burst there in the early 1990s.

Yes, there are some hopeful signs, but don’t let them fool you into thinking it’s all clear. It might not be. As ever, anyone making a major financial decision needs to think more about his or her own situation than what “the market” is doing. A real-estate purchase needs to make sense on its own terms. And measure it on cash flow today, not the hope for capital gains tomorrow. When you factor in all the costs, is the purchase cheaper than renting?

If you get a cheap mortgage and you are aggressive on price, you may get a bargain. That’s especially true if the owner has to sell. Foreclosures and other distressed sales are selling for about 20% below the rest of the market. There are opportunities out there. But you can afford to take your time to shop around.

President shifts focus to renting, not owning

Using $4.25b to build affordable housing

By Joseph Williams, Globe Staff  |  August 16, 2009

WASHINGTON - The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities.

The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.

Analysts say the approach takes a wrecking ball to Bush’s heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan’s recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home.

In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis.

“I’ve always said the American dream should be a home - not homeownership,’’ said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration’s push to put mortgages in the hands of low- and moderate-income people.

Conservatives, however, believe that President Obama and HUD shouldn’t head too far in the other direction; in some cases, rent can be more expensive than a mortgage payment.

Done properly, they say, homeownership can bolster the tax base and bring stability to neighborhoods and families, reducing crime and helping people achieve financial independence.

The $4.25 billion set aside for the creation of rental housing will come from $14 billion that HUD has received from the federal economic stimulus package. Another $4 billion of the money will be used to fix up the nation’s existing public housing stock of 1.2 million units.

The funds for new units will be available under competitive grants, and officials in Massachusetts said they will be among the states aggressively competing for the money.

In Boston, more than 20,000 households are on a waiting list for affordable rental housing, said Lydia Agro, a spokeswoman for the Boston Housing Authority. “There’s definitely a need out there,’’ she said.

City, state, and federal officials said they could not yet estimate how many new rental units will be created with stimulus money, but HUD said the “tens of thousands’’ of apartments and town houses it will produce nationwide will ease an increase in homelessness that has resulted from the foreclosure crisis.

Carol Galante, HUD’s assistant secretary for multifamily housing, said HUD will still be in the business of helping people buy homes using existing lending subsidies.

The difference from the Bush administration, she said, is “we’re trying to have a balanced policy. We’re not trying to say homeownership isn’t important, because it is. But we have to be sure we’re helping people get into homes that are sustainable for them.’’

RealtyTrac, a private company that follows homeownership trends, reported Thursday that the number of foreclosure notices issued to homeowners nationwide increased 9 percent during the first half of 2009. At the same time, the US Census Bureau reported that the vacancy rates for homeowner housing nationwide crept up for the second consecutive quarter, further signs of the ongoing mortgage crisis. The foreclosures are displacing large numbers of families, who will need new housing.

“People who were owners are going to be renting for a while,’’ said Margery Turner, vice president for research for The Urban Institute, a Washington think tank that studies social and economic policy.

“There is a housing stock that is sitting vacant. There is a real opportunity here’’ to use those homes as rental property and solve both problems, she said.

In addition to the stimulus money, Obama’s budget also seeks $1.8 billion for the construction of rental housing, the same amount that Congress approved in the last year.

David John, a senior analyst at The Heritage Foundation, a conservative policy center, said it remains to be seen whether the Obama administration’s decision to step away from the Republican administration’s “ownership society’’ will have a positive effect on minorities and the working class.

John said the benefits of homeownership are greater than just building equity in a house.

For example, he said, children of parents who own homes do better in school.

“There’s more stability in the family and overall an improvement in society,’’ he said.

“Usually, homeownership brings with it a sense of building towards the future, rather than living day to day.’’

Still, he said, renting is better than putting a family in a house that it cannot afford. “It’s a mixed bag,’’ he said.

In the past few weeks, Donovan, the former housing commissioner in New York City, has embarked on a series of cross-country trips to cities like Seattle and Anchorage to highlight the federal stimulus money being used to build low- and moderate-income rental housing units. Donovan was unavailable for an interview.

Bush made homeownership a signature issue of his tenure.

In remarks before a panel discussion on promoting minority homeownership in 2002, Bush said America is “a nation of owners. Owning something is freedom, as far as I’m concerned.’’

But that vision disappeared over the last two years as the housing market plunged, leaving homeowners struggling under mortgages they could no longer afford for a home that was no longer worth what they paid.

As mortgage defaults piled up, banks that made the risky loans imploded, helping trigger the global financial crisis.

“This notion that a home was your source of wealth was a recent one,’’ Frank said. “People thought that prices would go up, and up, and up, and up.’’

Frank said he never bought the idea that Americans could keep borrowing to support higher and higher home prices.

“My answer was, I wish I could eat more and not gain weight,’’ he said.

As homeowners head ‘underwater,’ another housing crisis looms

Almost half of homeowners with a mortgage could be underwater by 2011, says Deutsche Bank. We asked how that will play out.

NEW YORK (Fortune) — Karen Weaver, global head of Deutsche Bank’s securitization research division — responsible for analyzing credit default swaps, collateralized mortgage obligations, and other exotic Wall Street products — said last week that 48% of U.S. mortgage owners will end up owing more than their home is worth by 2011.

The figure may have left many Americans wondering how this could be possible. But consider that 27% of U.S. homeowners with a mortgage are already “underwater.” And according to Deutsche Bank, home prices may fall another 14% before hitting a bottom.

Fortune spoke with Weaver to understand the implications of her recent forecast, why it will affect regions that missed the housing boom, and why still-falling home prices are hurting even the best borrowers.

How many Americans are underwater?

Currently we estimate that 14 million homeowners have negative equity. However, based on our home price forecast, as prices continue to fall we think that number could reach 25 million, or 48% of all mortgagors.

Where does this leave us?

The obvious takeaway of falling home prices and being underwater is what it does for defaults. But there’s a bigger implication, which is that when we look at the economy over the past decade or two, it’s been very much a consumer economy.

What has been driving the consumer hasn’t been gains in incomes. What has been driving them is easy credit and rising home values. And the fact that their home price was rising and they could borrow against that through home equity lines or loans or refinancing, it augurs for a very different economy going forward if people don’t have that option.

What mortgages are most responsible for this problem?

The subprime loan borrower is more likely to use a second mortgage when purchasing a home, so they’ll put down very little equity when they’ve purchased. So the same decline in price is going to leave them in a worse negative equity position than someone who put down 20%.

On option ARMs (adjustable rate mortgages), the way those loans work is that the payments are very small. And the difference between a normal payment that would cover someone’s full interest and principal, and these lower teaser payments, is added to the balance. So even if prices did nothing, an option ARM could end up with negative equity.

Isn’t it the case that many of those were issued at the peak?

Exactly. These products — option ARMs, subprime, etc. — were regarded in the industry as “affordability products.” What they were designed to do is to provide options to customers in areas where home prices were unaffordable. In other words, given an individual’s income, it was prohibitively expensive to purchase the average home.

So by creating products that lowered the payment, or lowered the amount of down-payment, it enabled more people to buy a home. It also perpetuated the bubble.

To give an example, if you look at Los Angeles: At the peak of home prices in LA, only about 9% of people living in Los Angeles made sufficient income to purchase the average house. Now, a number of those people had purchased their homes beforehand, so it was moot to them. But for a first-time home buyer, it meant that it was highly unlikely that you were able to purchase a home unless you used one of these very aggressive products that stretched your [income].

This is occurring in states where speculation was rampant — for example, Florida, California, and Nevada — but where else?

People are surprised at the extent to which subprime mortgages were used in the Midwest. In a lot of cases the Midwest has had a manufacturing recession for a while now. It’s going through a paradigm shift. So in the industrial Midwest, subprime lending was more popular than some people might think.

I think the surprise is prime quality mortgages. That’s where the biggest deterioration could take place in the next leg. Right now about 16% of those borrowers are underwater. If our home price forecast is correct, down another 14%, we could have 41% of borrowers underwater in the prime mortgage space. That’s what happens when another 14% decline occurs.

Does this lead to a new wave of foreclosures?

Well, we don’t think that the wave has stopped in any sense. But the wave is clearly building. That is evident by looking at serious delinquencies. If you look at a chart of how many borrowers have missed more than two payments, a large portion of those people are going to end up being foreclosures.

Well, that rate of serious delinquency has been rising rapidly and continues to rise, pretty much in tandem with unemployment. As long as you have serious delinquencies going up, you know for the next year and a half, a large portion of those are going to turn into foreclosures.

Of subprime and Alt-A (Alternative A-paper) borrowers, about 33% of those borrowers are seriously delinquent. If you look at prime jumbo, the highest quality mortgages, 6.2% are seriously delinquent. That sounds like a low number. But two years ago that number was 1%. It’s a very straight trajectory from September 2007, pretty closely mimicking unemployment.

At what point of being underwater do homeowners start falling into foreclosure rapidly?

Once you get to the point where negative equity is significant — for example, 25% or more — there have been studies that suggest you get more strategic defaults.

People say, “I bought my house for $500,000, it’s worth $250,000, there are 10 available for sale in my neighborhood. It makes no economic sense to spend the rest of my life trying to pay off a $500,000 debt when there’s no reasonable likelihood to expect this house to go back up to $500,000.”

This might sound extreme, but we have borrowers who bought a $500,000 home in California at the peak of the market on $50,000 of income. So for them to devote their gross income for the next 10 years solely to paying off [their] mortgage doesn’t make any sense.

The Federal Reserve of Boston recently studied a similar housing crash in Massachusetts during the 1980s. What did they find?

In Massachusetts, there was a downturn in their housing market in the late ’80s. The Federal Reserve [Bank] of Boston put out a report last year, and in their report they looked at how many people defaulted once they had negative equity. If a borrower has equity, and they can’t maintain their home, that borrower is going to sell rather than default. So the question is, once someone does have negative equity, what’s the propensity to default?

In Massachusetts, less than 7% of borrowers who had negative equity defaulted. This speaks to the inherent credit worthiness of mortgages — why they’re always considered to be a low-risk investment.

Is it fair to say that that will play out the same now?

Now, for example, if we believe the Deutsche Bank forecast and 25 million borrowers fall underwater, unfortunately we think 7% will be too low. The reason is when you look at Massachusetts in the late ’80s, you had much better quality borrowers. In addition to that, unemployment in Massachusetts peaked at 9.1%. We’re already at 9.5% [nationally]. In California, unemployment is at 11.5%. We do know that most people try to maintain their home. They try to keep their mortgage current. But to expect it to be as low as 7% is very wishful thinking.

Colonial’s failure could make mortgages more scarce

Colonial BancGroup controls 25% of all warehouse-lending funds. If that money disappears, mortgage loans will be even harder to get.

NEW YORK (CNNMoney.com) — The collapse of Colonial BancGroup poses another hazard to the still-shaky housing market: Mortgages could become even harder to get.

The Southern regional bank, based in Montgomery, Ala., was the largest remaining player in warehouse lending, which provides short-term financing to independent mortgage bankers. At one time, these mortgage bankers originated half of all U.S. home loans using these funds.

Today, the warehouse lending market is decimated. In 2007 it was worth an estimated $200 billion; now there is just $25 billion available — 25% of which belongs to Colonial. With Colonial’s failure, those funds could become even more scarce.

“It’s like if they shut down half the concession stands at the baseball game,” said Scott Stern, CEO of the Lenders One mortgage bankers group in St. Louis. “It means the guy who’s last in line is going to have to wait a lot longer to get a hot dog, and in this market who knows what the price is going to be when he gets there?”

The money began drying up when investors started shunning mortgages not guaranteed by government-backed agencies such as Fannie Mae. These loans, made by the independent mortgage bankers, had become closely associated with the worst excesses of the housing bubble.

Among the biggest players in the market were Countrywide, rescued last year by Bank of America (BAC, Fortune 500), and Washington Mutual, which collapsed last September. This year, two other prominent lenders had to unwind their warehouse business: National City, the troubled Cleveland bank acquired last fall by PNC (PNC, Fortune 500); and Guaranty Bank, the Texas thrift that warned last month that it expects to be taken over by regulators.

To be sure, everyone isn’t fleeing the market. ResCap, a troubled home lender owned by the government-supported GMAC finance company, said earlier this year that it would expand its warehouse lending business. Citi said this month it expects to put $2 billion into warehouse lines this year.

But with small banks failing and pulling back and many larger players, such as JPMorgan Chase and Wells Fargo, not aggressively pursuing new business, few expect the new entries to reopen the market.

Thus the industry is lobbying Washington to give government-backed Fannie Mae, Freddie Mac and Ginnie Mae a bigger role in warehouse lending.

But with those entities already backing some 90% of current U.S. mortgage originations — and taxpayers on the hook for potentially hundreds of billions of dollars of losses at Fannie and Freddie — that idea is proving a hard sell.

Still, mortgage bankers are hoping the latest tremors in the banking industry will make Washington more receptive.

“We’re trying to show people how important this is, but I’m not sure the urgency is there,” said Glen Corso, a longtime mortgage industry executive who now heads the Warehouse Lending Project that’s advocating an expanded federal role. “We’d like to see a private solution, obviously, but failing that we need to get something in place to keep financing flowing.”

I know this is completely off the normal subject but this was an interesting article. If we run out of sugar there will be some major problems. Read article here.

Choosing the right title company to handle your sale or refinance can mean the difference between a smooth and rapid closing or a complicated, delayed closing, fraught with anguish. Most often the buyer will choose the closing agent in Missouri but whoever it is, there are several important criteria which should be considered.

This choice will be one of the most important steps in the closing process. The title company will monitor conditions of your instructions, and they will keep your funds safely deposited in an escrow account. They will strive to be as confidential as possible, answer your questions, and clear up any title problems which may arise.

The first criteria is the reputation of the company in the community. There are good title companies and then there are great title companies. Ask friends, neighbors. colleagues who they have worked with. Check with the Better Business Bureau.

The second criteria to look at the experience of the title company you are choosing. Find one that has been in business for over ten years. Anything short of ten years throws up a red flag.

The next criteria is location. While this criteria is important it is not the end all be all. Some title companies will come to you or the agents office if you let them know ahead of time. In the internet age, look for a title company that has a web presence. Some title companies have websites developed where you can track the order of your title work and view closing documents ahead of time in the comfort of your home.

The final criteria is to consider is the fee. In Missouri, rates are filed with the state but there are cost involved with closing loans. Some title companies quote low rates but add lots of junk fees. If you don’t know which questions to ask you might get burned.

With that being said, I have found that Franklin County Title Company, located in Union, Missouri to be the best title company located near St. Louis. Check out their site here.