Keep an Eye on Your Pipes

by Dan Krell
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Whether you own an old home or a new home, maintenance is the key to keep your home in top condition. Obviously older homes require a different level of maintenance compared to a new home. However, no matter how old your home may be, you want to keep an eye on your pipes.

If your home was built in the early part of last century, your pipes could be lead or galvanized steel. Lead pipes have the tendency to leach lead in your drinking water. Since lead has been identified as a hazardous material, it is not an ideal for indoor water delivery. Because of the inherent dangers, most lead pipes have already been replaced; however if you still have lead pipes in your home, you should consider having the pipes replaced. You can access a wealth of information about lead at the EPA website: www.EPA.gov/lead.

Another type of pipe used in older homes is galvanized steel pipes. Steel pipes that were used at the time had a tendency to rust, so the thought was that by galvanizing the steel pipes rust on the outside of the pipes would be inhibited. The problem that developed was that galvanized steel pipes rust from the inside out. The rust builds up on the inside and consequently reduces water pressure. Additionally, these pipes have had a history of leaking and bursting. As a result, some insurance companies will not underwrite a home with galvanized plumbing.

Many homes built in the 1980’s and early 1990’s had plumbing with polybutylene pipes. Polybutylene was supposed to be the pipe of the future, as it was inexpensive and easy to install. Polybutylene pipes have had a checkered past as they have a history of leaking and bursting. The problem stemmed a class action suite against Shell, the manufacturer of the polybutylene resin used in these pipes. Although polybutylene pipes are no longer being installed, many homes continue to use these pipes as the internal water delivery system. If you have polybutylene pipes, you can get more information about the class action suite, replacing the pipes and other information at www.pbpipe.com.

Presently, the most common source of water delivery in the home is through copper and PVC pipes. Although considered reliable and safe, copper and PVC pipes have had their problems as well. Copper pipes can develop pinhole leaks; locally, WSSC has been researching this problem for a solution (www.wssc.dst.md.us/copperpipe/pinholescroll.cfm). Additionally, lead solder used to connect the pipes can leach lead into the water; new lead free solder is now being used to eliminate this problem. Alternatively, PVC pipe is cheap, easy to install, and durable; however, there is some controversy that surrounds PVC as it is associated with a carcinogen, dioxin, which is released when PVC is produced and if it is incinerated.

No matter what type of pipe is in your home, general maintenance can minimize potential problems. You should know the location of the main water shut-off valves; periodically inspect pipes for leakage; make sure all plumbing fixtures are firmly secured; outdoor faucets should be shut off from the interior and drained; and be sure pipes in areas such as crawl spaces are protected from freezing. For more specific safety and maintenance information regarding your pipes, you can contact the Plumbing-Heating-Cooling Contractors Association (www.phccweb.org).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally pubished in the Montgomery County Sentinel the week of 1/8/2007. Copyright © 2007 Dan Krell.

Know Thy Lender

by Dan Krell

To protect the public interest, most professionals involved in real estate transactions in the state of Maryland are licensed. Realtors, title attorneys, real estate appraisers, and insurance agents are all regulated by the State. As of January first loan officers working for mortgage brokers, or as they are now titled mortgage loan originators, are now regulated as well. Loan officers working for federally chartered banks are exempt. The law is the fruition of efforts to help curb the fraud, predatory lending, and other problems that exist in the industry.

Make no mistake, the mortgage industry is already heavily regulated by the Federal Government as well as the State. Mortgage loans that are originated are required to comply with federal regulations such as the Truth in Lending act, regulation Z, the Fair Credit Reporting Act, and the Real Estate Settlement Procedures Act. The state of Maryland has additional requirements that need to be met as well.

By licensing mortgage loan originators, the state of Maryland has placed accountability directly on the loan officer. Many are hoping that the new licensing laws will force loan officers to do their due diligence and act responsibly such as when issuing approval letters, loan commitments, or rate locks. Additionally, the new regulations will help curb predatory lending and hopefully reduce settlement table surprises.

Before January first, consumers’ source of recourse was to make complaints against the mortgage company to the Maryland office of Financial Regulation and/or the Maryland Attorney General’s office. Now, an offending loan officer will be held accountable for his/her actions and misdeeds and may face penalties for violations.

Another positive aspect of the new regulations is the limiting of opportunists that come and go when the market is favorable and hopefully weed out those with bad intentions. In addition to a criminal background check and finger printing, requirements for licensure include either three years of experience in the lending industry or the completion of a forty hour “pre-licensing” class.

Although the law went into effect on January 1, 2007, a recent Baltimore Sun article (Md. Warns Loan Officers: Get License, 12/22/2006) stated that many loan originators had not filed for their license and boasted about their intentions of not filing. Maryland regulators are taking this seriously as they are planning to “round up” those violators. The bottom line is, as stated in the article by the deputy commissioner of financial regulation, if someone is talking to the public they need to be licensed.

As a precaution, the Maryland Association of Mortgage Brokers offers these suggestions to consumers: never sign a blank document; read all documents carefully and ask questions and don’t be hurried into signing anything you do not clearly understand; stop the entire transaction if you feel you are not getting clear answers; be wary of telephone or mail solicitations, especially if the promises seem “too good to be true”; do not be pressured into applying for more money than you need; even a small increase in the total loan can result in big interest payments over time; get copies of all loan documents, especially anything you have signed.

If you are unsure of your loan officer’s license status you can check with the Department of Labor, Licensing, and Regulation (www.dllr.state.md.us).

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally pubished in the Montgomery County Sentinel the week of 1/2/2007. Copyright © 2007 Dan Krell .

Corporate Relocation Made Easy

by Dan Krell
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One of the top reasons for people to move to a new city is because of job relocation. Moving is not always easy, but relocating your entire family to a new city is especially a huge endeavor that requires lots of planning and assistance.

Whether you decide to relocate thirty miles away or 2,000 miles away, it is always overwhelming. One of the first things you may want to do is find out about the town you plan to live. There are many relocation resources online that can help with your planning. Websites such as Relocation Essentials (relocationessentials.com), or Home Fair (homefair.com) offer community information, school information, planners, demographic statistics, and city virtual tours.

Additionally, you may want to talk to a local Realtor in the new town , as well as friends, family, and even your Professional association to learn about the town from first hand experience. Networking can help with assisting with family needs that are not offered in your relocation package.

Another item you should be familiar with is your corporate relocation benefits. Although many companies offer a relocation package, benefits vary from one company to another. Most companies contract with a relocation company to handle relocation requests. The terms of your relocation package may vary depending on the level and tenure of your employment as well as the distance of your relocation.

Although, most relocation companies allow you to choose the real estate professionals you want to work with including Realtors, some do not. So, before you sign the listing agreement with your favorite Realtor, ask the relocation company if there are any restrictions.

Common elements of a typical relocation package include a moving allowance, closing cost help, and a buyout. Whether you are moving across the country or across town, it is not cheap and depending on the terms of your package, a moving allowance can pay for the entire cost or just provide you with a stipend. Additionally, you may be required to use a specific moving company. If not, compare reputable moving companies to see which one will be best for you.

Another common element of a relocation package is closing cost assistance. Corporate America knows that relocation is not cheap and one of the large expenses is purchasing a new home. To lure top prospects, some relocation packages offer special financing including paying all closing costs. Most relocation packages offer a stipend that may cover most of the closing costs. As lender requirements vary, make sure your lender will allow any relocation stipend.

Many companies offer a corporate buyout as an additional benefit to your relocation package. The buyout is actually performed by the relocation company that your company contracts with, and is a guaranteed sale at price that is determined by the relocation company. Depending on the terms of your relocation package, you are usually allowed to attempt to sell your home before it is bought by the relocation company.

If you are relocating for a new position within your company, you are restricted to the terms of your current relocation benefits package. However, if you are relocating because of a position with a new company, you can attempt to negotiate a custom relocation package that will offer the services and financial assistance necessary to make the move easier.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally pubished in the Montgomery County Sentinel 12/26/2006. Copyright © 2006 Dan Krell .

Why Title Insurance is Important

by Dan Krell
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Title insurance should not be an enigmatic item listed on the settlement sheet, and there should be no question as to its validity. Here is a very basic attempt at demystifying title insurance and why it is important.

Title insurance, like other forms of insurance, is governed by the Maryland Insurance Administration (MIA). Title companies and title attorneys are licensed by the State to sell title insurance.

Title insurance is an assurance that the home buyer receives a clean title from the home seller. Clearing a title of all liens and mortgages is not always an easy task. The first step is for the title attorney to order a title abstract.

A title abstract is simply a synopsis of the chain of title, or a history of ownership, that has been recorded in the office of land records in the county court house. The title abstract indicates all owners, mortgages, liens, encumbrances, and easements attached to the property. The title abstract also indicates previous sales and mortgage and lien satisfactions.

Because all the information in the title abstract is obtained from recorded information, it is inevitable that mistakes occur. For example, it is common for mortgage release letters to be lost, misfiled, or never filed at all. Sometimes there are years of information that is lost or destroyed resulting in a break in the chain of title.

Once received, the title attorney will review the abstract and look for any blemishes including unreleased mortgages or liens and breaks in the chain of title. If there are any blemishes found, they need to be cured before issuing a clean title. The home seller can remedy most blemishes by supplying all required documents or paying to release attached liens and mortgages. Sometimes it may be necessary for the home seller to show their title insurance policy so as to indicate they were given a clean title.

Sometimes there are items not filed in the office of land records that may affect the ownership of your home. Some of these items may be heirs of previous owners or undocumented lien holders who may make claim to your home. Title insurance can protect you from these claims. It is rare, but making a claim with the title insurance company can resolve these issues.

If you are obtaining a mortgage to purchase the home, your lender will require “lender’s coverage” title insurance. The lender’s coverage protects the lender in case there are any unrecorded liens, easements, or other unrecorded defects.

Just as in other insurance policies there are different levels of coverage of title insurance. A basic owner’s title insurance policy typically assures clear title to the property and covers against incorrect signatures, on documents, forgery, fraud, and defective recordation of covenants, encumbrances or judgments.

Extended coverage may include coverage for building permit violations from previous owners, covenant violations from previous owners, living trusts, and a variety of encroachments and forgeries. Title insurance does not cover against liens placed after the effective date of the policy.

Some policies cost more than others because of the difference in title insurance companies and levels of coverage. When comparing title companies, you should also ask about title insurance coverage and rates. You can access more information about title insurance at the MIA website, www.mdinsurance.state.md.us.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This column was origiinally published 12/18/2006 in the Montgomery County Sentinel. Copyright © 2006 Dan Krell.

High Expectations for the 2007 Market

By Dan Krell
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The past year’s real estate market was not what people expected. With much speculation and pessimistic media reports many expected the worst. The worst never happened and the numbers for 2006 were respectable, as home sales go.

It was interesting to see the inventory grow as the number of active listings increased through the year. In fact, 2006 has had the most active listings at one time since before 1999! Many home sellers were taken aback by the amount of competition they faced for potential home buyers; while at the same time home buyers were overwhelmed with the amount of choice.

Now that we are heading towards the end of the year, many home sellers are taking their homes of the market after a disappointing fall and many days on the market. These home sellers are anticipating re-listing their homes in the spring. In fact the number of active single family homes listed in Montgomery County has hovered around the 4000 unit mark since June, however recently dropped to about 3000 units in November (which is still more than last year at the same time) (GCAAR.com). While some of those homes did sell, most did not.

Although the average home price has steadily increased in the county, many neighborhoods are seeing depreciation in the form of lowered sales prices. The home price average in Montgomery County is more likely skewed due to the increase of home sales in the million dollar or more range. November showed a decrease in sales in all price ranges except $1.5M or higher. There was an increase of almost twelve percent in sales in November as compared to the same time last year for this price range; there were 296 sales of homes priced $1.5M and higher in November 2006 in Montgomery County.

Many are anticipating a brisker market this upcoming spring. Many forecasters are predicting a nationwide recovery in the real estate market place. While perusing the optimistic reports about the 2007 real estate market don’t expect a huge appreciation in home values. Many forecasters predict a balanced market across the nation. Economists for the National Association of Realtors predict that the number of existing home sales will maintain at the roughly the same level as 2006, however new home sales will continue to slide into 2007 (Realtor.org).

Locally, the outlook is also positive due to a strong economy, relatively low unemployment, and relatively low interest rates. Another positive sign for the market in 2007 is the foreclosure rate. A recent article in the Baltimore Examiner (examiner.com) reported about a 12% drop in Maryland foreclosures from 2005, while the rest of the country realized a 27% increase during the same time!

As the spring market arrives, we will see many homes returning to market along with new listings of existing homes. Adding to the many options available will be the high builder inventory, which has been accumulating through the fall.

Spring will also bring many home buyers to explore the market as well. However, with many choices to consider, the average days on market for listed homes will remain high. Let’s face the truth that the market has slowed; however, the good news is that we are not heading into oblivion.

This column is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel 12/13/2006. Copyright © 2006 Dan Krell.