How a Land Survey Protects Home Buyers

Purchasing a home involves a lot of different processes all taking place during the same time frame. Once a contract is executed, it puts in motion several actions that must be completed prior to the closing. All of these things take time and require professionals who are knowledgeable and experienced in their particular field. The typical home buyer is a novice to all of this. That is why they need expert counsel by a caring REALTOR who will guide them through the process and explain the importance of things like title insurance and land surveys. Without understanding the purpose of having these things, many home buyers will feel overwhelmed and opt to skip some items to save a little money upfront. Here are a few basics about land surveys and how having one done will help prevent future costs and headaches for home buyers.

What is a survey?

A survey is the official and documented opinion of a certified surveyor on the location of a property's boundaries, buildings, structures, easements, right of way and encroachments. It records projections, variations, easements, boundary lines and is a legal representation of what the home buyer is actually purchasing. A survey is crucial when purchasing title insurance to protect the home buyer.

Why do home buyers need a survey?

The housing market collapse resulted in banks, lending companies, and property management companies receiving a huge volume of properties that they never intended to own and were not prepared to handle. Attorneys and courts were overwhelmed by the number of foreclosures they had to process. For paralegals and and other people in the process, it created mountains of paperwork and massive tangles of red tape (both digital and hard copy) that they had to work through quickly and under ongoing stress. To reduce costs, many essential aspects of proper land transfer were eliminated. These led to many properties being put back on the market with encroachments and other discrepancies in the legal description. Some properties that fell into foreclosure were situated on parcels that were part of large family-owned properties. Banks that made loans to construct homes on these parcels did not always make sure there was proper legal access in place. As a result, the people who purchased the homes from the bank had a costly and tiresome legal process to set things right and have legal access.
Differences between tax maps and survey lines is also a possibility. The property taxes a home owner pays are based on the the size of the property and what is included within the property boundaries. Too often, home buyers pull up tax maps or, even worse, some other online aerial view of property to determine property lines based on fences, trees, the amount of lawn mowed, or driveway locations. This method and taking the word of home sellers, agents, or neighbors is unreliable and will almost certainly lead to confusion and disputes at some time in the future. The only way for a home buyer to know what they are really buying and to protect their purchase is to have a survey done by a certified surveyor and have their own title insurance policy that is in addition to the policy required by lenders.

The cost of a survey

Surveyors typically charge based on how much time it takes to do the survey. Factors like terrain of the property, access to records and size of the parcel all influence the cost. Some surveys do not need a printed map of the property. It reduces costs if all the buyer needs is flags and corner markers. If the buyer uses the same surveyor who did the previous survey, it is typically less costly than hiring someone unfamiliar with the property. Buyers can also reduce the amount of time a surveyor will spend doing their field work by making sure property lines are clear. Much like title insurance, the initial cost is minimal compared to the value of the protection and peace of mind a survey provides.

The CFPB Continues Striving For Transparency in Mortgage Market Practices

The Consumer Financial Protection Bureau (CFPB) strives to empower consumers by providing them with the information they need to make prudent decisions about their finances. Part of that mission involves simplifying the industry jargon and legalese associated with contracts and most financial documents. Their primary purpose is to educate consumers about abusive practices. They also

actively supervise the conduct of lending institutions and other financial service companies. The CFPB analyzes market information and consumer data to determine the best policies for protecting consumers. The CFPB has just updated rules for loan disclosure and mortgage market practices.

The Integrated Disclosure Rule Rollout

There were vocal critics of the Integrated Disclosure Rule when details were first released in 2013. Combining the Truth in Lending Act (TILA) with the Real Estate Settlement Practices Act (RESPA), it became known as Integrated Disclosure, or TRID. Despite approximately two years to prepare for the implementation, the rollout was not as smooth as the CFPB had hoped. The rule was delayed by two months because the CFPB felt the lending industry needed more time to prepare. There remains some uncertainty of how to best lock interest rates for borrowers on closings that may be delayed to comply with the integrated disclosure rule. Historically, most rate locks were for 30 days and at not cost to the borrower. To meet with the "Know Before You Owe" requirements, some closings are delayed and require rate locks of 45 and 60 days. For a borrower to lock an interest rate for that term, they may incur hundreds or thousands of dollars in additional fees.

Prior to the integrated disclosures rule, many lenders were accused of bumping up interest rates on home loans just prior to closing and tacking on additional fees like prepayment penalties. TRID prevents any last-minute changes by giving borrowers three days to review all loan documents prior to signing. Consumers can also walk away from transactions without penalty, under some circumstances.

The CFPB has just updated rules about lending practices and understands that TRID is the biggest change the mortgage industry has had in the past 40 years. Full implementation requires updates to existing software and changes in how vendors supply market data interest rate information to banks and other lending institutions. The CFPB is expected to re-evaluate implementation and report on progress of adapting the TRID rule later in 2016.

Updates to the Home Mortgage Disclosure Act

The CFPB has just updated rules regarding the Home Mortgage Disclosure Act (HMDA). The rule was enacted over 40 years ago by Congress in response to the allegation that banks were not properly servicing some communities. The HMDA addresses this concern in three ways:

It shows whether or not lenders are properly serving the housing needs of their community.

Provides information to public officials so they can make informed decisions on policies for the local area.

Reveals any lending patterns that may be considered discriminatory.
The CFPB has just updated rules to the HMDA that should improve lending data for local, regional and national housing markets. Lenders will be required to report property value, loan terms, an prepayment penalties, and the specifics of any introductory interest rates or teasers. Additionally, lenders mus provide more information than they did previously on underwriting policies. The new data requirements will be effective on January 1, 2018. The compiled data, edited to maintain privacy of applicants and borrowers, will be available to the public in 2019.

When individuals apply for a loan, they will be asked to provide their race, ethnicity, sex, and income. This information is used by consumer groups, researchers, and regulators to ensure all people are receiving fair treatment and an equal opportunity to realize the American dream of home ownership.