Author Archives: Hallmark Abstract Service

Hallmark Abstract Service

About Hallmark Abstract Service

Hallmark Abstract Service provides title insurance for residential and commercial real estate transactions in New York State and nationwide, underwriting through Chicago Title. HAS opened its doors in 2008 with two primary goals in mind! Number one was to create a title insurance company that would provide our clients with a superior finished product while affording them a seamless and stress-free process. Number two was to make the experience of working with Hallmark Abstract Service as easy and as pleasurable as obtaining title insurance for a real estate transaction could possibly be! From the sheer number of satisfied clients who keep coming back to Hallmark Abstract Service for their title insurance needs, I believe that we have accomplished our goals in the past, and we will continue striving to improve on them in the future! My Background In 1980 I earned an undergraduate degree in economics followed in 1984 by an MBA in finance with a concentration in the tax-exempt market. With this focus on the municipal market I became a municipal bond analyst at Shearson/Lehman Brothers tasked with following both general obligation issuers on the city and state level as well as housing bonds secured by mortgage pools. This experience at Shearson/Lehman Brothers followed by stints at PaineWebber and Citigroup provided a broad framework of understanding concerning the mechanics of mortgage debt in terms of prepayment experience, mortgage quality and the expected duration of a portfolio. Leaving Wall Street I started Exeter Commercial which funded commercial mortgage loans. Title insurance was a critical part of the underwriting and closing process. At the peak of the financial crisis, I recognized both an opportunity and need as many title firms, for a variety of reasons, closed their doors. Out of this, Hallmark Abstract Service was born.

NYC Apartments: Criminal Background Checks Yes Or No? (Poll)

You Are Currently Renting An Apartment in a New York City Building…

The question is whether building management and others in the building have the right to be aware if another apartment in the building is going to be rented to someone with a criminal record?

The NYC ‘Fair Chance for Housing Act’ will be debated on December 8th before the City Council’s Committee on Civil Rights…

It appears to have the votes for passage, and would prevent New York City landlords from doing criminal background checks on prospective apartment renters.

But should landlords have the option to run these checks if they choose?

Bottom Line

Is outlawing criminal background checks a good and fair idea as a potential renter has the right to privacy (and a second chance if they served their time for a crime), or do other tenants in a building have the right to know if a convicted felon will be living next door?

Have an opinion? Leave it in the comments below…

Some previous comments…

  1. Let’s have The Fortune Society and its members weigh in here.

    I’m going out on a limb by saying some things that will not sit well with many. Throwing the book at people has never solved problems. Let’s consider an operation from a space of empathy.

    Years ago, I saw the play The Castle. The story of Casimiro “Cas” Torres was particularly heartwrenching. If you haven’t seen the play, check it out.

    Until we deal with the issues that feed problems of this kind, the legislature will be forced to decide on the more significant issue at any given time. They want lobbying money or quick results to make them look good for the next election. The affordable housing issue has become so larger that lawmakers are forced to act fast.

    Who will be responsible for housing all the people that have become victims of the prison industrial complex? How will we discern between the individual who took a plea at age 18 because proving their innocence would have kept them in jail for decades?

    What about the nurse who killed her abusive husband in self-defense? Today, DA Alvin Bragg is seeking a dismissal. What about the Central Park Five?

    Can we trust landlords to make these distinctions?
  2. I honestly don’t think they should outlaw them, however I’m not sure if it actually matters. I worked in property management for 5 years and have run countless background checks and in NYC you see all kinds of things. Usually the property manager would step in to discuss with your leasing manager and possibly request more clarity on the matter from the prospective tenant if it raises red flags. But I have never seen anyone denied because of it alone, usually felons have a hard time finding high enough paying jobs so they are not necessarily moving into Soho, Williamsburg or any other well to do neighborhood. I have heard of more denials for tenant landlord court or for having a program voucher (not section 8) which is what they really need to look at. Also how can current tenants know their neighbors business? It’s not broadcasted on WHO did what.
  3. Most landlords do not run criminal background checks. However, I do not think they should be prevented. Under the Fair Housing Act a landlord must consider a applicant with a criminal history on a case by case basis taking into consideration a number of factors. I believe if weighed fairly this is appropriate. I don’t believe that tenants have a right to know all their neighbors business.

How much does title insurance cost in New York City?

Article in Brick Underground

Hallmark Abstract Service CFO Linda Haltman spoke with Brick Underground Founder and CEO Teri Karush Rogers about the title insurance for a New York City real estate property purchase, and things that buyers should consider when selecting the title insurance company to work with.

While the property buyers real estate attorney will recommend a title company, it is the right of the purchaser, if they choose, to pick the one that they would like to use. And while many consider title insurance to be of the same quality regardless of who is used, the fact of the matter is that significant differences, including cost, can exist (Are New York Title Insurance Providers All The Same?).

The article also includes the input of Schwartz Sladkus Reich Greenberg Atlas Partner Jeffrey Reich.

‘How much does title insurance cost in New York City?’ by Teri Karush Rogers

  • On a $1 million property with a mortgage, you can expect to pay 6 percent
  • You can save as much as $1,000 to $2,000 by negotiating extra charges

Question: How much does title insurance cost in NYC? And do I really need it?

The Answer: On a $1 million New York property with a mortgage, expect title insurance that protects you and your lender to cost around 6 percent, or about $6,000, our experts say. If you’re paying all cash, title insurance will be around 4 percent of the purchase price—and if you’re buying a co-op (versus a condo or house), you don’t need any at all.

When and why you need title insurance in New York

Title insurance protects you (and your lender, if you have a mortgage) against future third-party claims against the title to your property. These are claims against the legal ownership of your home that were missed during the initial title search when you bought your place. They might include tax liens or liens by contractors for unpaid or disputed debts. Or there could be a loan against the property of which you’re unaware.

“For example, if the county clerk recorded a mortgage under the wrong block and lot, it wouldn’t be discovered during the title search,” says Linda Haltman, co-founder of Hallmark Abstract Service, a title insurance agent in NYC and Long Island. 

In other cases, the seller doesn’t have the right to sell the property. That could be due to outright title fraud, an overlooked heir, or some combination of the two.

“For example, a parent dies and leaves the house to their four children, but three decide to sell and run away with the money. The fourth child has a claim for a quarter of what the house is worth at the time the claim is made,” Haltman says. 

Buying a co-op? You can skip title insurance altogether.

“Title insurance only covers real property, and a co-op is not real property—when you buy a co-op, you’re buying shares in a corporation,” Haltman says. Instead, “we do a co-op lien search which searches for all the liens against the co-op corporation and the original apartment,” at a cost of around $350.

Do you need title insurance if you’re paying cash?

You don’t have to buy title insurance if you’re paying cash, but most people do.

“It’s very rare that people don’t,” says Jeffrey Reich, a real estate attorney at Schwartz Sladkus Reich Greenberg Atlas. While “the incidences of loss such policies protect against are exceedingly rare,” you may want it if you refinance later or sell.

“Having a title report and policy at the time of purchase will remove some of the unknown or potential issues that can derail a future sale closing,” Reich says. “Title defects will be brought to light, dealt with and insured. Thereafter, if the title defect is raised by a future purchaser, the owner/seller can raise the issue with their title insurer and the title insurer will likely issue a coverage letter, which would resolve the issue and allow the closing to move forward.”

Additionally, you may decide to unlock some equity in your home one day and take out a mortgage. 

“The lender will require you to get title insurance and give you a reduced rate if you’ve had title in the past,” Reich says. 

How to save money on title insurance: Negotiate ‘junk’ fees

In New York State, title insurance rates must be approved by the Title Insurance Rate Service Association (TIRSA), which is licensed by the state’s Department of Financial Services

These rates don’t vary that much, but title companies that perform the title searches and do other work on behalf of the insurer may tack on a number of extra charges that can add up to as much as $1,000 to $2,000.

Haltman calls these “junk fees.” They may show up on a title company’s bill—usually presented at the closing table, when there’s little time to review or question them—as “made up charges like ‘search fee,’ ‘administrative fee,’ or FedEx.”

Then there’s outright padding.

“Let’s say it costs $895 to record a deed,” Haltman says. “I would put $895 on my bill, whereas another might say $1,200.”

She recommends that buyers ask their attorney to send a copy of the title bill before closing day, and compare it to one or two quotes from other title insurance companies, which can be easily obtained with a phone call or online. 

“If there are excess fees on there, ask your lawyer to negotiate them out,” Haltman says. 

Most title companies will agree rather than risk losing the deal, she says. That’s because “title companies keep about 80 to 85 percent of the premium. The other 20 percent is remitted to the insurance company,” Haltman says.

Do real estate attorneys get paid by title companies?

Real estate attorneys typically work with two or three title companies that they trust to get the job done smoothly, and they’ll recommend that buyers use one of them. Sometimes, real estate attorneys also pocket a big chunk of your title fees. 

“In NYC, a lot of attorneys have ‘affiliated relationships’ with title companies,” Haltman says. The attorney does “none of the title work, but the title companies will open separate companies for each attorney and give them a large split of their fee. It could be 50/50.” 

Some real estate lawyers actually own the title company they recommend to clients. 

“If yours does, he’s making $4,800 on title insurance on top of a $2,500 transaction fee” on your $1 million purchase, Haltman says. 

In either scenario, “The attorney is legally supposed to disclose [their relationship to the title company] to the buyer—but it’s typically done in a form that’s presented at the closing table,” Haltman says, so ask up front if your attorney has any financial ties with the title company. 

Election Day, November 8, 2022! What’s Your Plan?

Election Day November 8, 2022…A Hallmark Abstract Service Poll

The question asked is whether you plan on casting your vote in the midterm elections on or before November 8th?

Voting is considered a right and responsibility, as it provides the opportunity to vote for leaders who we feel will best represent our ideas and interests.

Yet in the 2018 midterms less than 50% of eligible voters cast a vote, and in 2014 only 36%.

What will the percentage be this time?

Judging by members of LinkedIn who cast their vote, turnout in 2022 could be quite large!

Do you plan on voting? Yes or No let us know your reasoning in the comments section below.

How Is Inflation Impacting Your Life?

Are Rising Prices Forcing Tough Decisions?

You don’t need this email to tell you that rising prices in all aspects of the economy creates great difficulties for many consumers!

We hear horror stories all of the time about decisions needing to be made about what to buy and what can be done without.

At the same time there are people who may not like the higher prices, but who have the ability to pay them.

Hallmark Abstract Service asked the question…How, if at all, has inflation impacted your life?

The results speak for themselves, with nearly 85% of respondents indicating that it has indeed had an impact on their lives.

What do you think?

Leave your comments below.

Higher Commercial Mortgage Rates + Higher Cap Rates + Lower Building Valuations = Refinancing Problems And Finally, Distressed Commercial Properties!

Distressed Commercial Real Estate

With interest rates spiking, cap rates moving higher and building valuations therefore trending lower, commercial building owners may be facing some significant headwinds when the time comes to refinance the mortgage on their building.

In business, finance and the economy the John Templeton phrase ‘this time it’s different’, is typically invoked to justify situations that may not in fact be sustainable. For instance the wildly narrow spread between junk bonds and treasury yields that had existed in a 0% interest rate environment, needed in some way to be justified. Insert ‘this time it’s different’. So too did real estate prices that in some cases doubled or more due to the demand created by Covid. Insert ‘this time it’s different. You get the idea.

Well because what goes up must come down, or rather interest rates artificially held down must at some point move back up, borrowers who entered into loans at lower rates will now be facing higher rates and higher cap rates leading to lower building valuations, all when it comes time to refinance.

The result will not be pretty for many, as banks may only offer them a loan amount (based on LTV and other factors) that’s less than what they owe, requiring owners to come-up with the difference to make the lender whole.

This leads us to the article below written by Bruce Stachenfeld, Chairman of the firm Duval & Stachenfeld. It describes what had been the case in some past market ‘crises’, and then what will likely be the case in the near future when borrowers face reality with their lender, in this case called ‘Fulcrum Capital’.

It is definitely worth the read!

Distressed Real Estate and Fulcrum Capital

Let me get right to it.  There is going to be distressed real estate – I mean it is already here.   Here is the background and some thoughts about what to do:

First – some history – during the Global Financial Crisis, many thought there would be tons of real estate distress.  I recall meetings and seminars planning for an enormous wave of distressed real estate.  However, the Fed and other governments printed a lot more money, which lowered interest rates.  This permitted most of the cans to be kicked down the road.  There was some distress for sure, but not nearly the expected level.

Second – came COVID – and there was again a major expectation of distressed real estate.  However – other than retail, hotels, and a few other places – the crash and distress were a flash that lasted a little over 60 days, and the dip quickly disappeared to be replaced by a boom.  This was again due to interest rates continuing to fall – plus the government continuing to print dramatically more money. 

However, this time it is quite different. 

Let me start with a ridiculously simple hypothetical, and I do apologize for insulting everyone’s intelligence that this hypothetical is too simplistic.  I want to set the table here, and I promise more intellect later in this article:

The borrower owns a building – e.g., multifamily – worth $100M as of the end of last year – with that valuation being based on trading at a 3-cap, which was pricing at the time.  It had a nice safe 70% LTV mortgage on it for $70M. 

However, now due to interest rates rising, the 3-cap is now a 4-cap or even a 5-cap, so the valuation is no longer $100M.  Maybe it is worth $80M, and now the mortgage comes due. 

The lender can hardly extend (whether or not it pretends) because it would now be $70M out of $80M, which is an 87.5% loan to value.

To stay at 70% loan to value (i.e., 70% of $80M), there needs to be a pay-down to $56M to get to a 70% loan to value, which requires a $14M payment to the lender.  I am going to call this “ Fulcrum Capital.”

There are solutions, of course that could avoid the need for Fulcrum Capital, but they may not be easily palatable.  Obviously, the borrower could just reach into its pocket and make the payment; however, the borrower might not have the dollars and/or might not want to make the payment.  Equally obviously, the lender could foreclose, but the lender might not want the property, or the borrower might not want to give it up so easily.  Or maybe the borrower could just walk away and give the keys to the lender despite the lender not wanting it. 

This is a classic distressed real estate situation.  It is the simplest one I could devise, and of course, there are super-complicated situations where there are multiple tranches of debt, preferred equity, different investors, and other stressors on the system.  Sometimes it is a true Gordian Knot to figure it all out.   

However, one way or another, there is often going to be a need for Fulcrum Capital, based, quite simply, on the property valuation adjustment, which makes a previously healthy property become overleveraged. 

Notably, some irony here struck me that the erstwhile safest assets are the ones most likely to be in this situation.  This is because super-safe assets – e.g., multifamily, industrial, SFHR – were trading almost like bonds on a cap rate basis.  Yet those are the ones where the valuation hit is most obvious because – just like a bond – when the interest rate goes up, the valuation goes down. I may be missing something, but the safest funds – i.e., core funds – may take some of the biggest hits here.

Having said that, of course, rents can potentially rise faster than inflation, so to some extent, this result may not be as bad as it seems.  My crystal ball has a cloud for this specific question. 

So I have set the table – now what happens?

First – non-bank lenders will eagerly step into this kind of situation.  It is essentially their raison d’etre, to provide – expensive – Fulcrum Capital in these situations.  From their perspective, if they provide the missing $14M, they will be paid extremely well for these dollars.  I won’t specify a number, but it is a heads-they-win-tails-they-win investment as it is largely equity returns with a solid equity cushion.  Indeed, depending on the level of distress, sometimes the Fulcrum Capital primes part of the first lien debt at heady interest rates.

Second – making it even more interesting, is that the parties providing this capital will only partially be non-bank lenders.  This is because many non-bank lenders that provide high-yield debt don’t want to go up to 87.5% in the capital stack as it is too risky for them. 

However, since the returns for this Fulcrum Capital are equity-like, the many private equity funds in the business will be putting in the dollars instead of the non-bank lenders.  From the point of view of private equity funds, Fulcrum Capital is not a (bad) over-leveraged loan but a (good) equity deal with a nice equity cushion that they typically don’t get. 

Notably, many non-bank lenders are also private equity providers, so it just may be one pocket of funding versus another.  Either way, you will see real estate private equity funds providing this Fulcrum Capital through their debt funds, equity funds, or both. 

As an aside, Fulcrum Capital will have various guises, including:

  • A new mezzanine loan
  • New preferred equity
  • Splitting up the debt into an A and a B piece
  • New common equity
  • Foreclosure and a new loan
  • A recapitalization
  • A deed-in-lieu with a new loan and the lender potentially converting a portion to equity
  • More bespoke structures

I sense that a large amount of money is available to provide Fulcrum Capital, which will keep a (moderate) lid on the pricing of this Fulcrum Capital.  I predict that initially, the pricing of this capital will be very high; however, over time as Fulcrum Capital becomes more de-rigueur and the markets stabilize, pricing will settle into a place where it is high but not crazy high. 

Now I am trying to simplify things in this article; however, these deals are rarely simple.  There are many concerns since the parties have so much at stake. 

The borrower might lose its property which could be a calamity

The lender – if a regulated bank – may find itself in a desperate situation with its regulators depending on how it handles the workout.   

There are potential litigation risks if any of the parties become hostile – as opposed to analytical – and distressed situations sometimes bring out the worst sides of parties. 

And, let’s not forget the tax implications of a foreclosure or workout or bad outcome.

To conclude, I urge the following:

Dispassionate and unemotional analysis of how market conditions brought the asset in question to the situation it is in;

Assessment of whether the troubled situation is due to just a change in market sentiment with interest rates rising or whether the owner’s lack of competence caused the trouble;

Assuming the counterparties are competent, they should start out by trying to work together – borrower and lender and Fulcrum Capital provider — to achieve a win/win/win result, utilizing the different guises of Fulcrum Capital to mutual advantage;

Be creative.  This is a time when brainpower and creativity can make a major difference. Fortunes can be won – as well as lost – in turbulent times; and

And no matter what, don’t blow your reputation up.  I guess a little chest-beating and brinkmanship is okay, but that old saying about a lifetime to achieve a reputation and fifteen minutes to lose it is apropos.  Further to that point, during good markets, new partners or investors typically do their due diligence for your track record in the last downturn.  Your future self will thank you if you always act with honor and integrity.

I wish everyone the best possible outcomes as the markets have changed. 

Recession Yes, No or Maybe? Survey Says…

The people have spoken In A Hallmark Abstract Service Economic Poll That Asked…

Are we in recession, heading towards recession or will avoid recession?

President Biden said: There is the potential for a slight recession, but he doesn’t think there will be one.

And, remember this old saying?

Recession: When your neighbor loses their job!
Depression: When you lose your job!

The majority of those who responded feel we are in recession now!

So are we in recession, heading towards recession or will avoid recession?

Leave your opinion in the comments section below.

Suffolk County, NY Victim of a Cybersecurity Shut Down!

Suffolk County Is Down!

12 days! Computer access at Suffolk County, New York has been down for 12 days.

But is Suffolk County merely the tip of the cyber intrusion iceberg?

This may come as a surprise to some, but for those living or with an interest in Suffolk County, and who are in urgent need to source documents or information for a variety of issues including real estate transactions, it’s a big deal!

That said Suffolk County real estate closings, under the correct conditions, are still taking place at Hallmark Abstract Service!

But if Suffolk County has become the target of a cyberattack, the question is how many municipalities and other government entities on the local, state, and federal levels are vulnerable to something similar occurring? One can only imagine the potential ramifications!

Perhaps we won’t know until we know, but for political leaders, money needs to be spent proactively on cybersecurity, rather than the more typical reactive position after the damage has already been done!

In other words, decision making by commission rather than by omission.
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Hallmark Abstract Service LLC…You Buy, We Protect!

Voted Best Title Company in the Long Island Business News Reader Rankings!

Read more about differences between title companies in the article ‘Are New York Title Insurance Providers All The Same?’ at the Hallmark Abstract Service website here, https://www.hallmarkabstractllc.com/?p=10321.

Have questions? Reach out to us at (646) 741-6101 or send us an email at info@hallmarkabstractllc.com.

Whip Inflation Now!

The Heroes To Heroes Foundation Groceries, Gas & Gratitude Sweepstakes! 

Inflation got you down? Here’s a Win-Win-Win proposition…

Lucky winners will receive $2,500 of groceries or $2,500 of gas and, they will pick the veteran of their choice to win the exact same prize!

10 entries are only $25, and the drawing will be held on Veterans Day, November 11th.

Enter here: https://go.rallyup.com/heroestoheroes/m/michaelhaltman/Member/Details

If you have any questions please let us know (info@hallmarkabstractllc.com), and if you know of anyone who you think might be interested in the sweepstakes and the HTH mission, please pass this link along.

Whip Inflation Now!

(Note: Hallmark Abstract Service CEO Michael Haltman as Board Chair of this combat veteran charity that successfully saves vets who return home suffering moral injury and live at serious risk for death by suicide)

Press Release: Hallmark Abstract Service Ranked #1 In 2022 Best Title Company Category By Long Island Business News Readers

The firm has over a decade’s worth of experience providing title insurance for commercial and residential real estate purchases, as well as mortgage refinances, in New York State

August 22nd, 2022: Hallmark Abstract Service has been ranked #1 in the 2022 Best Title Company category by Long Island Business News readers. The prestigious award relies on the recommendation of readers who vote for top-performing companies in the Long Island market, based on their own experiences using their services.

In a statement released by the firm today, the company’s CEO, Michael Haltman, thanked all the readers who participated by casting their votes and also promised to continue upholding the excellent standards of service that have brought them to this honor.

“We are delighted to be the recipient of this year’s Long Island Business News award for Best Title Company. Hallmark Abstract Service offers our deepest gratitude to everyone who voted for us. And for those who have never worked with us, we would love to speak with you, describe the way we do business, and hopefully work to win your vote in 2023.” – Michael Haltman, CEO, Hallmark Abstract Service.

Established in 2008, Hallmark Abstract Service possesses over a decade’s worth of experience in providing title insurance for commercial and residential real estate purchases, as well as mortgage refinances, in New York State. Underwriting through the Fidelity Family of title insurance companies and AmTrust National Title Insurance, the firm also provides a mobile application that allows users to create a title insurance bill for any purchase price and mortgage amount in any town or city across the state.

Driven to continually uphold the best standards of service in the sector, Hallmark Abstract Service maintains a laser focus on protecting New York State commercial and residential real property buyers in what could potentially be the largest financial commitment of their lives! To learn more about the company, please visit its website, or reach out to Hallmark Abstract Service via the contact info below.

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Media Contact:

Hallmark Abstract Service 

Michael Haltman/mhaltman@hallmarkabstractllc.com/https://www.hallmarkabstractllc.com

commercial real estate photo