Today’s First-Time Buyers Are Realistic

February 23, 2013 by

Today’s First-Time Buyers Are Realistic, Planners

First-time home buyers have long been an important part of the housing market. And that hasn’t changed today. According to the 2012 Profile of Home Buyers and Sellers from the National Association of REALTORS®, first-time buyers accounted for 39 percent of all housing sales from July 2011 through June 2012.

But what do these first-time buyers want? In Chicago and its suburbs, first-time buyers are looking for homes that are located near public transportation and are large enough for them to grow into as they expand their families. For other first-time buyers, affordability is a key issue. These buyers are looking to work with sellers who are willing to pay for at least part of the closing costs of their mortgage loans.

These are the observations of agents in the RE/MAX Northern Illinois real estate network who are helping first-time buyers negotiate today’s housing market.

And these agents agree that first-time buyers are an important, and active, part of the Chicago-area housing scene.

“First-time buyers are my primary market at this time,” says Laurie Christofano, with RE/MAX in the Village, Realtors®, in Oak Park, Ill. “There has been a new excitement among first-time buyers during the last year. They see that we are at the bottom as far as housing prices go. They understand just how low interest rates are. And they have gotten the message that homeownership in the long-term is a really good thing as far as being able to provide stability for their families, build up equity and fashion a long-term plan for their lives.”

Room to grow

Jeff Donnellan, with RE/MAX Vision 212 in Chicago, says that he advises first-time buyers to skip the starter-home mentality and instead purchase a larger home within their budget that they can grow into as their needs change.

For instance, instead of buying a two-bedroom condo, first-time buyers might instead choose a single-family home or condo that boasts three bedrooms and two bathrooms. That way, if the buyers should have a baby, they’ll have enough room. They won’t have to immediately move again.

“I recommend that my first-time buyers find a home that will suit them for a good five years,” Donnellan says. “If their lives change, a versatile home is a stable part of their lives instead of a burden. And it usually takes five to seven years for most owners to pay down their mortgage enough, while their home appreciates enough, to be able to sell and make a profit. They won’t have to bring money to the closing.”

Many first-time buyers are following this advice, Donnellan reports. And Christofano agrees.

Christofano says that today’s home buyers, thanks to the myriad real estate stories populating the Internet, are a savvy bunch. They know how important it is to buy a home that they can settle into for five years or more.

And with housing prices still at affordable levels across Chicago and its suburbs, it’s easier for first-time buyers to get into those homes that are a bit larger.

“I’m seeing first-time buyers who are planning for the long term,” Christofano adds. “Many of them are bypassing the condo stage completely. In previous years, that would have been their first stepping stone of homeownership. Instead, they are choosing single-family homes with at least three bedrooms. Some are choosing homes with four or five bedrooms so that they can grow into them. They don’t want to be forced to move out too soon.”

James Ludes, an agent with RE/MAX Top Properties in Morris, Ill., says that today’s first-time buyers are more realistic than they were in the past. Ludes has worked in residential real estate for 10 years, so he witnessed the housing boom of the early to mid-2000s.

Back then, first-time buyers frequently stretched their budgets to get into the largest homes possible. Today, though, first-timers are more budget-conscious, looking for homes that will suit their needs and allow for growth but not put them in financial peril.

“At the peak of the market, your first-time buyers were going for the gusto,” states Ludes. “They were looking for everything they could get in a house. If they were pre-approved for a mortgage loan of $240,000, they’d want to see everything up to $250,000. If they could get 3,000 square feet and it was just two people, why not? Today, first-time buyers are being more realistic. They are looking for homes that will serve their needs for the amount of time they plan on staying there.”

Location

As with all buyers, first-time buyers are interested in location. But RE/MAX agents say that today’s first-time buyers are frequently looking for homes located within walking distance of public transportation, restaurants and shops.

And if buyers can find a home that allows them to ditch their cars? That’s even better, adds Donnellan.

“Public transportation is a big key for a home’s value. If someone can live close to public transportation and if that person doesn’t need a car, that buyer can afford a lot more home. If you don’t have to worry about car payments, paying for gas, insurance and all the other costs associated with owning a car, you’ll have more money to get the right home.”

Christofano says that many of her first-time buyers might not want to live in Chicago, but do want to feel connected to the city. They can do this by living near public transportation.

And if they can buy outside of the city itself, these first-time buyers can afford more home.

Other first-time buyers are looking to work with sellers who are willing to pay for part or all of their closing costs. Again, this helps buyers who’ve never owned a home get into a potentially larger residence that will allow them space to grow their families, Christofano adds.

“Finding sellers who are willing to contribute to closing costs is one of the top things that are attractive to my first-time buyers today,” says Christofano.

A top market for first-timers

No matter what features first-time buyers are looking for today, this remains a strong market for them.

Housing prices in the Northern Illinois region are at affordable levels. Interest rates are at historic lows.

At the same time, rents continue to rise. This makes owning a home sometimes more affordable than renting an apartment.

Ludes says that he’s surprised there aren’t even more first-time buyers in the Chicago area.

“If you can buy a house now, why wouldn’t you?” Ludes asks. “Anyone who can get a mortgage loan today with an interest rate in the threes? Why wouldn’t that person want to buy a home? It always surprises me when people continue paying rent when they don’t have to. This is a great market if you’re looking for your first home. If you’re going to live in this region and work in this region, I really think you should buy a home today.”

For more information, visit www.illinoisproperty.com , www.remax.com or blog.illinoisproperty.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Real Estate Topics

Erie Area Information

February 22, 2013 by

Erie Area Information

Don’t let the “town” in Erie’s title fool you. This is a full service community that by the end of the summer of 2012 will have its own state of the art Olympic cycling training facility.

Located just west of Interstate of 25 in southern Weld County, Erie is eagerly anticipating the Boulder Valley velodrome. The facility is expected to attract athletics of all levels, and will easily accommodate Olympic level cyclists – no small feat for a town the size of Erie.

Erie, which likes to cultivate its community centric, small town feel, also boasts an award winning community center, 20,000 square foot library, new schools and scenic trails.

According to the town, Erie is also committed to sustainability. Eco-friendly civic development and environmentally “green” practices includes a town wide interconnecting trail system, a water saving irrigation system in its public parks and a thermal solar system installation at the Erie Community Center. Erie Community park, a 41 acre “green” area, was opened in 2010

This environmentally friendly spirit has caused some turmoil in recent months with another one of Erie’s booming but controversial oil and gas development. Encana Oil and Gas, an energy producer with natural gas wells in Erie, has received a lot of push back from Erie residents over drilling in the area, most notably a site called Canyon Creek between two elementary schools.

Transportation options include the Erie Municipal Airport, owned and operated by the town of Erie. The general aviation facility is located three miles south of the central business district.

 

Erie Profile:

Square miles: Planning square miles – 48, Incorporated square miles – 18

Population: 20,000

Labor force: 8,723 (2010 Census)

Employment: 8,444 (2010 Census)

Per capita income: $38,688 (2010 Census)

Median household income: (100,288 (2010 census)

Households: 6,797, with additional 4,105 units approved

Online Resources

Erie Chamber of Commerce: www.eriechamber.org

Town of Erie: www.ci.erie.co.us

Upstate Economic Development: www.upstatecolorado.org

Presented by Boulder Area Realtor Association

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Area recreation, Real Estate Topics, Things to Do Tagged With: , ,

Is a Handwritten Will Legally Valid?

February 21, 2013 by

Is a Handwritten Will Legally Valid?

will_and_testament Are handwritten wills, also known as holographic wills, legally valid?

Usually, when people think about creating a will or a trust, they envision a formal event involving witnesses, a lawyer, and maybe a notary. A handwritten will seems almost too easy. What’s to stop someone from creating a fake will and signing your name?

Actually, the idea is that because the will is in the will maker’s own handwriting, it is inherently more trustworthy in some ways. So, how is a holographic or handwritten will different from a typed-out will? Is writing a will by hand easier than having a lawyer draft one for you?

General Requirements for Handwritten Wills

In general, a typed-out will usually requires the signature of two witnesses to make it a legally valid document. By comparison, in some states, handwritten wills require no witnesses for the will to be valid.

Of course, laws vary from state to state, so looking up your state’s statutes on wills is essential to ensure that your will is valid.

For example, in some states, a holographic will must be entirely in the will maker’s own handwriting for it to be valid, and must include certain things like a dated signature; a printed form with blanks that you fill in may not automatically be valid unless there are witnesses, like with a regular will. However, other states will allow a partially handwritten will to be valid without witnesses, under certain conditions.

Potential Complications

Creating a completely handwritten will can also add some complications into the mix. Some probate judges may be hesitant to recognize handwritten wills because they are difficult to verify, as they do not have any witnesses who can attest to the will.

And while creating a handwritten will may seem to simplify the process, it can actually make things more difficult when you are dealing with a large number of assets. Trying to make changes to a handwritten will by crossing things out, for example, can also create confusion and lead to drawn-out court battles, long after the will maker has passed.

How to Avoid Problems with a Handwritten Will

When putting together a will on your own, handwritten or not, there are some ways to make sure it will hold up in court. It’s often wise to consult an experienced wills lawyer who can look it over, but many are uncomfortable with just reviewing and “signing off” on wills that they didn’t personally draft. And if you need to make changes, or have more questions later on, you’ll be paying for those additional services.

Another option is to sign up for a personal legal plan, some of which offer basic will-drafting and reviewing services. These plans can be affordable too: LegalStreet, for example, works out to just $12.50 a month and includes an annual will review and updates, along with unlimited access to on-call local attorneys who can help with many other legal issues.

Bottom line: A handwritten will can raise many legal questions, but they can be valid, depending on the circumstances. To learn more about wills, check out FindLaw’s free Guide to Writing a Will .

For more information, visit www.findlaw.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Local news Tagged With: , ,

Mortgage Rates Mostly Flat

February 20, 2013 by

Mortgage Rates Mostly Flat

mortgage_rate_scale Freddie Mac recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates largely unchanged from the previous week helping to keep homebuyer affordability high, refinancing strong and should continue to aid the ongoing housing recovery.

Results showed that the 30-year fixed-rate mortgage (FRM) averaged 3.38 percent with an average 0.7 point for the week ending January 17, 2013, down from last week when it averaged 3.40 percent. Last year at this time, the 30-year FRM averaged 3.88 percent.

Additionally, the 15-year FRM this week averaged 2.66 percent with an average 0.7 point, the same as last week. A year ago at this time, the 15-year FRM averaged 3.17 percent.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.67 percent this week with an average 0.6 point, the same as last week. A year ago, the 5-year ARM averaged 2.82 percent.

The 1-year Treasury-indexed ARM averaged 2.57 percent this week with an average 0.4 point, down from last week when it averaged 2.60. At this time last year, the 1-year ARM averaged 2.74 percent.

Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following links for Regional and National Mortgage Rate Details and Definitions. Borrowers may still pay closing costs which are not included in the survey.

“Mortgage rates were flat to down a little this week amid reports that inflation remains contained,” says Frank Nothaft, vice president and chief economist, Freddie Mac. “The overall producer price index rose 0.1 percent between November and December, below the market consensus forecast, and the consumer price index was unchanged. For the year as a whole, consumer prices rose just 1.7 percent in 2012, almost half that of 2011′s increase of 3.0 percent.”

For more information, visit www.FreddieMac.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Real Estate Topics Tagged With: , , ,

The Good and the Bad of the Latest Existing Home Sales Numbers

February 19, 2013 by

The Good and the Bad of the Latest Existing Home Sales Numbers

The National Association of REALTORS® (NAR) released their latest statistics for existing home sales last week, and the numbers show both some positives and negatives regarding America’s housing industry. Home sales are up and so are selling prices, but foreclosures and short sales still make up a large portion of the sales numbers.

So, what’s the good news? Even with the highly-populated Mid-Atlantic and Upper East Coast regions still being affected by Hurricane Sandy, national sales numbers were up in October. The report from NAR shows a 10.9 percent increase in existing home sales when comparing numbers from October 2012 to the same month in 2011. The national median existing-home price (S178,600, to be exact) is also up 11 percent when compared to the same month last year. That’s the eighth consecutive monthly year-to-year increase. We hadn’t seen an increase for so many months in a row since the period from October 2005 to May 2006.

NAR’s Chief Economist, Lawrence Yun, says rising home prices have already resulted in $760 billion worth of growth in home equity during the past year. He estimates that could increase to close to a $1 trillion gain in 2013. Total housing inventory — meaning the number of homes currently available on the market — dropped to 2.14 million across the country. At the current sales rate, that’s a 5.4-month supply. That’s also down from October 2011, when there was a 7.6-month supply of inventory. The median time a home was on the market before selling was 71 days in October, down from 96 days during the same month last year. And finally, according to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.38 percent in October. Compare that to October 2011, when the rate was 4.07 percent.

So, what’s the bad news? Distressed homes still accounted for a large chunk of all home sales in October. In fact, 24 percent of all of the homes sold in October were either foreclosures or short sales. That’s a decrease from the same month last year (when foreclosures and short sales made up 28 percent of the homes sold around the country), but economists at NAR say all of those distressed properties are bringing down the national median sales price — and that’s not good. According to NAR, foreclosures sold for an average discount of 20 percent below market value of the homes, while short sales were discounted 14 percent. While interest rates continue to hover near all-time record lows, they are expected to rise in the months to come. That’s due to the looming “fiscal cliff”, increased retail sales during the holidays, and higher-than-expected numbers of new-home construction across the country. More homes being built creates jobs, and whenever Wall Street sees an increase in jobs, they quickly up the bidding on stocks and sell off bonds. When that happens, mortgage rates elevate quickly.

While Hurricane Sandy didn’t affect October numbers too much, Yun expects the storm to have an impact on sales in the future. Most October transactions were complete before the storm hit, so it’s too soon to determine how much the storm will effect home sales in the Northeast. Yun says the pause and delays in the storm-impacted regions will certainly hurt sales numbers in that area of the country, but it could also affect national sales figures as well.

SOURCE: RealtyPin.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Real Estate Topics Tagged With: , , ,

More Americans Believe Economy Headed in Right Direction

February 19, 2013 by

More Americans Believe Economy Headed in Right Direction

Despite continued uncertainty surrounding the fiscal cliff, Americans are showing increased confidence in the housing market and the direction of the economy. According to results from Fannie Mae’s November 2012 National Housing Survey, such improvement bodes especially well for continued strengthening in the housing sector, which in turn is likely to support overall economic growth.

“Consumer attitudes toward both the economy and the housing market continue to gather momentum, with many of our 11 key National Housing Survey indicators at or near their two-and-a-half-year highs,” says Doug Duncan, senior vice president and chief economist of Fannie Mae. “On the housing front, attitudes about the current selling environment continue to improve, with a significant increase in those saying it would be a good time to sell. This growing confidence in a housing recovery, in addition to other factors, may reinforce growing consumer optimism regarding the improving direction of the general economy. Those indicating that the economy is on the right track has risen to 44 percent while those saying it’s on the wrong track has fallen to 50 percent, the smallest gap since the survey’s inception.”

The November survey results show significant movement across many of the indicators. The share of respondents who say now is a good time to sell a home jumped 5 percentage points in November to 23 percent – the highest level since the survey began in June 2010 – narrowing the gap with those who say it is a good time to buy. The percentage of respondents who expect mortgage rates to go up increased by 4 percentage points to 41 percent. Those expecting home prices to go down within the next year also rose by 4 percentage points to 14 percent over last month, a rebound from the survey’s record low in the prior month, while the share who believe home prices will go up in the next 12 months edged up to 37 percent, tying the survey high. Of note, 51 percent of respondents now say it would be easy to get a mortgage, marking the highest rate since the survey’s inception (this survey finding is in addition to the 11 National Housing Survey indictors).

When asked about the economy, those who say it is on the wrong track dipped 6 percentage points since October and a total of 25 percentage points in the past year. Respondents expressed some improvement in the status of their current finances; however, due potentially to the looming fiscal cliff, the share who expect their personal financial situation to get worse over the next 12 months rose 5 percentage points to 18 percent – the highest level since December 2011.

Survey Highlights

Homeownership and Renting

• Average home price change expectation held steady at 1.7 percent.
• Fourteen percent of those surveyed say that home prices will go down in the next 12 months, a 4 percentage point increase over last month.
• The percentage who think mortgage rates will go up continued to rise, increasing 4 percentage points in November to 41 percent.
• Twenty-three percent of respondents say it is a good time to sell, a 5 percentage point increase over last month, and the highest level since the survey’s inception.
• The average rental price expectation hit 4 percent in November, a 0.9 percent rise over the past two months.
• Forty-eight percent of those surveyed say home rental prices will go up in the next 12 months, a slight decrease from last month.
• The share of respondents who said they would buy if they were going to move held relatively steady at 67 percent.
• Fifty-one percent of respondents now say it would be easy to get a mortgage, marking the highest rate since the survey’s inception.

The Economy and Household Finances

• Hitting 50 percent for the first time since the survey’s inception, the percentage who think the economy is on the wrong track has declined by 25 percentage points over the past year, and by 6 percentage points from last month.
• The percentage who expect their personal financial situation to get worse over the next 12 months rose 5 percentage points to 18 percent, the highest level since December 2011.
• Meanwhile, 21 percent of respondents say their household income is significantly higher than it was 12 months ago.
• Household expenses remained stable over the past month, with 56 percent responding that their household expenses stayed the same compared to 12 months ago.

For more information, visit www.fanniemae.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Local news, Mortgage, Real Estate Topics Tagged With: , , , ,

Treasury to Announce Big Changes to HAFA Program

February 18, 2013 by

Treasury to Announce Big Changes to HAFA Program

Teasury_Bldg_on_currency The U.S. Treasury Department will be making some changes to the HAFA Program in 2013, and as a real estate professional, these changes will affect short sales in your local market.

To prepare yourself for the upcoming changes, you can view this live webinar that will take place on December 17th at 4 p.m. ET with Laurie Maggiano, the Treasury’s Director of Public Policy and Alex Charfen, CEO and author of the Certified Distressed Property Designation.

During this live streaming broadcast, Maggiano and Charfen will discuss how these changes will impact the speed and success of your short sales and the foreclosure inventory that reaches our markets.

From the webinar, you will gain insight on the following topics:

• How to speed up your deals and streamline your short sale package for faster approval using the new “pre- determined” hardship categories
• Which current HAFA documents are no longer mandatory and how this will affect your current deals
• What new anti-fraud affidavit you must provide both the buyer and seller to verify the HUD1 Statement is at arm’s length
• The condensed approval timeline servicers, which are now required to use, and how this change benefits your business
• How your ability to negotiate will change with the new increase in available incentives for subordinate lien holders
• Why you might experience a surge in investor business when the “prohibition against resale” is reduced from 90 to 30 days.

To view this webinar, live Monday December 17th at 4 pm ET, register at no cost here .

For more information, visit www.cdpe.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

 

Filed Under: Real Estate Topics Tagged With: , , ,

First-Time Homebuyers Face Stiff Competition from Investors

February 17, 2013 by

First-Time Homebuyers Face Stiff Competition from Investors

first-time_homebuyers_family In this hot market the homes moving fastest have two types of increasingly web savvy buyers: First time homebuyers who take advantage of FHA financing and absentee buyers looking for investments.

“All-cash purchases and absentee buyers are at nearly twice their historic 12-year averages,” says Chris Pollinger, senior vice president of Sales for First Team Real Estate. “At the same time, FHA loans have dropped for another month even though they are still high, which shows that these two different groups are increasingly competing for single family homes in the price range of $225,000 to $400,000.”

According to figures released by DataQuick, nearly 1 of every 3 property purchases were to investors, many who paid all cash for houses with a median price of $245,000. At the same time, first-time homebuyers made up 25.5 percent of mortgage originations with FHA backed loans, down for the second time in as many months.

As these two groups compete for the mid-range of properties, they are increasingly using the web to find the properties that suit them best.

Analysis of thousands of home listings and hundreds of other criteria yielded three key reasons why first-time homebuyers and investors are using the web to get a leg up in the battle for homes:

• Local brokerage sites display 100 percent of the agent-listed homes for sale compared to about 80 percent for the national portal sites.
• Local brokerage sites show newly listed homes for sale 7 to 9 days earlier than national portals. FirstTeam.com is updated four times daily.
• Local brokerage sites almost never show a home listing as active that has already sold; about 36 percent of listings that appear as active on national portals are no longer for sale.

For more information, visit www.FirstTeam.com

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Real Estate Topics Tagged With: , , ,

Freddie Mac Economist Sees New Households Outpacing Apartment Boom

February 16, 2013 by

Freddie Mac Economist Sees New Households Outpacing Apartment Boom

In his 2013 forecast, Freddie Mac’s chief economist, Frank Nothaft, sees more than a million new households bolstering housing starts, driving apartment vacancy rates down to ten year lows and outpacing the boom in new apartment construction.

“The last few months have brought a spate of favorable news on the U.S. housing market with construction up, more home sales, and home-value growth turning positive. This has been a big change from a year ago, when some analysts worried that the looming ’shadow inventory’ would keep the housing sector mired in an economic depression. Instead, the housing market is healing, is contributing positively to GDP and is returning to its traditional role of supporting the economic recovery,” Nothaft says.

Here’s how Nothaft sees the coming year:

• Next year some regions will post faster house price gains, while some will be stagnant or see value loss fof the year, but overall, the housing recovery continue to strengthen property values and most U.S. house price indexes will likely rise by 2 to 3 percent, according to 2012 forecast from Freddie Mac’s chief economist,

• Look for fixed-rate mortgage rates to remain near their 65-year record lows for the first half of 2013 then begin rising a bit in the tail end of next year, but staying below 4 percent. In the single-family market, this means homebuyer affordability should remain very high in 2013 for those with good credit history, stable income, and sufficient savings.

• Household formation will be up. Unemployment, while still high, will likely drift down toward 7.5 percent; the resulting job and income gains will facilitate household formations – meaning that more members of the boomerang generation who have been living in their parents’ basements should start to move out. Look for net growth of 1.20 to 1.25 million households in 2013. These gains will help drive more housing construction and reduce vacancy rates further. Housing starts should be up around the 1.0 million pace (seasonally adjusted annual rate) by the fourth quarter of 2013.

• Vacancy rates have been trending lower for much of the past three years because household formations have outpaced new construction. To illustrate, in 2012, net household formations through the third quarter totaled 1.15 million but completions of newly built homes (both rental and for sale) were just under 700,000; the difference is made up by a reduction in vacancies. This trend will continue in 2013 and could bring total vacancy rates down to levels last seen a decade ago. While this is good news for property owners, tenants will likely see rents rise a bit faster than prices on all other goods.

• Refinance activity accounted for the bulk of residential lending in 2012 and will account for the bulk of it in 2013, too. But, simply put, we’ve seen the peak in refinancing. Homeowners who obtained a loan with a low mortgage rate in 2012 or refinanced through the Home Affordable Refinance Program are unlikely to refinance in 2013. Next year’s likely pickup in home sales won’t be enough to offset the coming drop in refinance activity. Consequently, total single-family originations will probably drop by about 15 percent in 2013. On the other hand, permanent financing on newly built apartment buildings, a pickup in property transactions, and refinancing of loans exiting “yield maintenance” terms are expected to increase multifamily lending by about 5 percent.

For more information, visit www.realestateeconomywatch.com

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

Filed Under: Real Estate Topics Tagged With: , , ,

10 Fraud Blind Spots to Watch Out for in 2013

February 15, 2013 by

10 Fraud Blind Spots to Watch Out for in 2013

fraud_magnifying_class When you’re driving, you want to be sure you’re covering all your blind spots in order to stay safe on the road. Well the same goes for fraud.

“Just like legitimate businesses, fraudsters are planning ahead for 2013,” says James Gifas, head of RBS Citizens Treasury Solutions.

“During and just after the holidays is when many fraud schemes pick up, as more people feel stretched with greater year-end expenses,” he says. “And as we look ahead into 2013, companies may have blind spots they may not be considering when trying to protect themselves, particularly when it comes to employee fraud.”

RBS Citizens Treasury Solutions experts are currently conducting a fraud education campaign for commercial customers to make sure clients are aware of the areas of vulnerability at their firms, including new online threats that will pose the greatest risk in 2013.

Gifas and his team have identified ten common security gaps that companies need to address to protect themselves when planning for 2013:

10 Fraud Blind Spots

1. Are you using weak passwords? “Hackers have more processing power to crack passwords than ever before, and can relatively quickly test all words in the dictionary to see if the right one comes up. Use instead a more complicated combination of letters, numbers, and symbols that aren’t easily searchable.”

2. Do employees keep passwords “hidden” in their top desk drawer? “The strongest password in the world won’t protect your account if a perpetrator can read it from a slip of paper in your office. Keep passwords behind lock and key, just as you would cash.”

3. Are you training your employees against social engineering? “Many fraudsters find it easier to trick a person into revealing account credentials than to hack into a computer. Training your employees to not provide any user name or password information over the phone or email – even if the source seems legitimate and unless and until the source is independently verified – is a vital measure of protection.

4. Do you lock your computer when you step away from your desk? “As we all know, a minute away from our desk can sometimes turn into much longer, as meetings pop up and we get stuck taking care of a crisis. Again, just as you wouldn’t leave cash lying around on your desk, always lock your computer as well. Also, software such as Trusteer Rapport provides additional high-tech protection against infiltrators who try to break into your computer electronically.”

5. How well do you know your vendors and business partners? “While you may somewhat confidently share wire instructions with long-time vendors or business partners, it is wise to conduct some due diligence around new vendors or other payees. Using the Positive Pay services for checks and ACH and Payee Positive Pay for check disbursement accounts adds in an extra layer of protection.”

6. Do you conduct surprise audits? “The American Bankers Association reports that 60 percent of all fraud incidents within a business involve employees. Surprise audits are a good way to detect and deter occupational fraud schemes so that funds can’t be manipulated ahead of the audit.”

7. Does your company enforce vacation policies? “Similarly, making sure that there are periods of time in which employees are away from their desks and have their records available for oversight has been supported by financial regulators like the SEC for years, but all companies can benefit from this policy. A one- or two-week window can provide the additional transparency needed to expose internal fraud.”

8. Are dual approvals required for your payments? “Implementing banking processes that require dual approvals for activities such as payments and wire transfers is an easy way to minimize certain fraud risks. Companies can also require additional approvals before a new vendor is added to a payment system, as well as use debit blocks and alerts to reduce the risk of unauthorized payments.”

9. Is there open access to company checkbooks? “In 2012, 85 percent of organizations experienced actual or attempted check fraud, according to the Association for Financial Professionals’ latest fraud survey. Having company checkbooks out in the open leaves your bank account information visible and increases the risk of check theft. Always lock up any checkbooks.”

10. Does your company have on-site collections? “Outsourcing collections mitigates the risks that emerge when receivables checks are lying around the office.”

“Whether it’s our personal banking information or the company accounts we are responsible for, the most basic advice we can give is to use common sense – and make sure your employees do, too,” says Gifas. “Walking employees through scenarios and conducting training around fraud threats can help to minimize the headaches and real financial losses that happen when fraud occurs.”

Source: RBS Citizens Financial Group, Inc.

 

John Marcotte

www.boulderhomes4u.com

720-771-9401

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