Trust This. Higher Fees Coming to Cash-Uut Refi’s

👋 Happy first Friday of 2023 🥳 ! As foreshadowed last week, this year brings a new name and look for this newsletter. The name comes from our business focus: trusts — land trusts in particular. But, the topics will remain the same, focusing on real estate and business issues of the week, things we’re seeing cross our desks and monitors, and songs that I can’t stop humming. Plus, we’ll be sure that dogs and flowers are prominent subjects of our featured pictures of the day.

Situation Awareness: This week was the first time in 100 years that no Congress existed in the U.S. for an extended period. Until a new Speaker of the House is chosen, no other members of Congress may be sworn in. NPR explains what happened back then and how it eventually ended.

1 big thing: Cash-out refi’s getting tougher

The Federal Housing Finance Agency will start charging higher upfront fees for most cash-out refinance loans on February 1.

Higher fees, coupled with higher interest rates, and tougher underwriting standards will make it tougher for homeowners to tap into the average $92,000.00 in equity they have in their homes, according to a report from HousingWire.

By the numbers:

According to the latest report from Redfin, homes that are selling are being sold at about the same price as the prior year, with nationwide prices up just half a percent to $350,000.00, year over year. No inflation here anymore.

Pending home sales dropped 32% to the lowest level since 2015. The biggest drops were in pandemic boomtowns, but none in Florida.

While purchase mortgage applications are down by 12%, probably because of all the December storms and holidays, first-time homebuyers searching for new homes are up about eight percent coming into the new year.

The bottom line: The housing and mortgage markets will remain flat this year.

Go deeper: Redfin

2. Sales and refinancing pitfalls

We learned today that a land trust beneficiary had sold four properties we held in trust.

Why it matters: The title company he used for the closings never contacted us at all to have us sign the deeds or other closing documents. The insured buyers all will have claims under the warranties of title against the beneficiary now.

What we're seeing: We’re also hearing a lot of questions about how to refinance properties held in land trusts and limited liability companies.

One way to get a lower rate, conventional mortgage for an investment property is to convey the property out of trust or the LLC to a human owner to be the borrower.

Yes, but: Before moving a property out of any entity into a human being, tax advisers and attorneys should be consulted, and a competent closing agent should be engaged. Such a simple act may cost more in tax liabilities and legal liabilities than it is worth in mortgage interest savings.

3. What passed by

4. Pic of the day

The number one resolution is to lose weight.

While I’m not focused on losing weight, I am focusing on living better and longer. I’ve subscribed to an app that will continuously track my glucose levels for the next three months while my Apple Watch and iPhone track almost everything related to my health state.

Here’s to a healthy 2023. If you need the motivation to use that treadmill as more than a glorified clothes hanger, here’s Olivia Newton-John to help you Get Physical.

We hope you found this helpful — any feedback is appreciated and can be shared by hitting reply or using the feedback feature below.

Be on the lookout for our next issue! 👋