Thursday, August 30, 2007
Just got a call from a very nice lady who works for an attorney who is insuring title for a property WE insured last year.
Their title search revealed an unsatisfied mortgage from 1935.
Well, I said I'd have passed on a mortgage that old and she put me on hold.......
Nah, her boss thinks he'll have trouble getting title insurance with that unsatisfied mortgage.
So, instead of arguing that IT WAS 72 YEARS AGO and full searches in these parts only go back 60 years, I decided to be grateful that he had done a full search and was taking the title seriously.
I offered to process an indemnification letter for them and they were happy, so I am enjoying my coffee and pondering a new found appreciation for the attorneys who are learning to be title agents and are at least taking the high road. ;)
We've got our own little title plant. We've got the files for every transaction we've insured back to 1991. Most of them are scanned and accessible on our network while processing a new title order. So, if we find the property in our title plant, we ask our human abstractor aka title searcher to search back to the date of our last title policy. If we have no prior file, we order a full search.
Some title companies have changed their title plants to include data gleaned from courthouse indices and other internet accessible real property related sites. I call these title plants garbage.
Why do I call them garbage? Well, there are no qualified human eyes reviewing the data before it's considered usable. I would not want to rely on a title search using this type of title plant. I take the ownership of real estate too seriously. I want a professional title search because we talking about the roof over a person's head and we're talking about the largest investment in the lives of most families.
Wednesday, August 29, 2007
Tuesday, August 28, 2007
The joint venture [aka affiliated company aka ABA aka CBA aka AfBA] must be a real company. Most are not.
Consider your fiduciary duty to your customers and keep that in mind while making referrals.
If you refer a customer to your affiliated company provide the correct RESPA disclosure before you make the referral.
query: if you have title insurance on your land house debt free do you need additional title insurance
Problems, if found, will be offered up for solution. If you are getting a mortgage to buy the property, problems must be corrected. If you are buying cash, you will decide if you want to take title with problems in place.
Normally the mortgage lender selling the foreclosed property is willing to fix the problems.
It's definitely a buyer beware situation so be sure you have a true professional vetting title for you.
Saturday, August 25, 2007
We consider IRS liens as valid for 10 years and 30 days. IRS liens penetrate tenancy by the entireties and they attach to after acquired property.
You may want to contact lenders who are willing to take second position. Tell them about the IRS lien up front to no one wastes their time.
If your husband is alive, he can sign a deed conveying his interest to you alone. You'll still need the services of an attorney who will prepare the deed and review other concerns with you.
I would want to check whether you have an outstanding mortgage. The terms of most mortgages contain a "due on sale" clause. This language prohibits transferring an ownership interest without the permission of the mortgage lender.
I would also suggest discussing marital rights with your attorney. In Pennsylvania, spouses can make claims in divorce even if they are not vested on the deed. Your attorney may want to add language to the deed which eliminates the right moving forward. As an example, "John Smith now and forever releases any marital rights he may have in the herein described premises. "
Hire an experienced real estate attorney and let them take care of it for you. Don't forget to shop around just a little so you know the going rate for deed prep in your area. For instance, in our area, deed preparation over $150 would be considered excessive unless the circumstances involved lots of extra work.
Geez. How childish and unhelpful can you get? Most agents want to move the deal along and will cooperate with all parties as long as the actions are ethical and legal, BUT, they can choose not to, soooooooo...........then I have to ask why the listing agent needs to deal with your loan officer at all?
You are dealing with your loan officer. Your agent, the selling agent would be the person to deal with the listing agent, not the loan officer.
The agents have an obligation to take your offer to the seller. If the seller accepts an offer with a mortgage contingency, the seller has an obligation to allow an appraiser onto the premises. If the seller accepts an offer with contingencies for inspections, the seller has an obligation to allow inspectors onto the premises.
Frankly, I see no obligation for the seller or their listing agent to deal with your loan officer.
Who knows. Maybe the listing agent has personal reasons for not helping but I think you can move the transaction along with the help of your selling agent alone.
Thursday, August 23, 2007
Mortgage lenders have quality control programs that perform routine audits. If your file is selected for an audit they will submit the 4506.
Audit selection may be random or not. If a mortgage lender suspects fraud they may tag your file for an audit. Random auditing is typically 10% of all closed files.
Really good quality control programs randomly select not only 10% of all production but they make certain they are checking 10% of each originator's production, 10% of each appraiser's work, etc.
A really good quality control program will catch crooks. They are easy to spot if you are really looking for them.
Wednesday, August 22, 2007
The fraud play in the subprime mortgage lending origination departments - retail and wholesale - was that from the top to the bottom, the players paid no heed to the underwriting rules.
My perspective as a title agent is from the bottom. I'm the last person in the chain. Title agents and attorneys witness the interplay between the loan originator and the borrowers. We also see the final lending underwriting conditions. Those title agents and attorneys who refused to fudge facts and tried to report bad acting to a higher level found in most cases, loan processors, underwriters and management saying "just do it". I believe this is really why the subprime lenders prefer notary signing agents. The signing agents are more likely to be ignorant and less likely to really understand what's going down at the table.
I know that due diligence suffered in subprime, but what really galls me and what I see as such a rude affair is the total disregard for the minimal standards lenders agreed to when they sold the paper.
You have mortgage lenders selling high risk paper and telling analysts that it at least meets such and such minimal guidelines then the lender's origination network takes those guidelines and throws them out the window by faking the numbers and engaging in team spirit fraud.
That's systemic fraud - whole subprime departments from top to bottom supporting each other's bad behavior in the name of volume, coaching the willing borrowers and just fudging the data of the unwilling borrowers.
These folks regularly and systematically defrauded their employers. The employers made reps and warranties to the secondary market and the rest is history. It might have been easier to stand on the corner and throw money away.
Can we avoid this moving forward? Yes, reinstate qualified human "in house" quality control with real teeth. Good quality control with regular audit selections would have caught the crap early. We know how to do due diligence, we just have to decide that it's important.
Sunday, August 19, 2007
Actions by the employee outside of their job function is another matter entirely.
If there clearly is a mistake, ask for a general endorsement correcting the description but don't stop there. Make sure all documents such as your deed and mortgage are correct.
It is entirely possible that the title insurer searched the wrong property and that's a problem. To protect your interests I always recommend that you review the title commitment PRIOR to closing. We like to give our customers copies of any maps or surveys found on record so they can look at the parcel and visually confirm we have searched the correct property.
Since we started sending the maps along with the title commitment prior to closing, we have eliminated doing at least two or three corrective deeds each year.
You might ask, well, how do these mistakes happen? Well, sometimes the sales agreement does not clearly identify the parcels being sold. This is especially an issue when the seller owns more than one parcel.
BTW- The danger of selecting the wrong property or creating a description error increases significantly if the title examiner has little or no experience. The risk of error goes through the roof when the lender or title agent relies on an automated search. Be picky and select a title company with expertise and one that assures you they are doing a FULL search performed by a human being and not a computer.
Saturday, August 18, 2007
Those that expanded and built their business plans on serving subprime lenders and adopted the relaxed crappy standards the subprime culture created may find it hard to survive the collapse.
Forensic quality control reviews shouldn't find it too hard to connect vendor management style processing with inadequate due diligence.
WAZZUP, PEOPLE? Don't you know that there is a major correction taking place and even very experienced title people are losing their companies or jobs?
Just thought I'd ask.
Anyway, IMHO - I really dislike that phrase but it fits here - if you have to ask that question, you aren't qualified to do the work.
Most mortgages have payments due on the first day of the month with a 15 day grace period. That means as long as they receive your payment by the fifteenth, it's considered on-time. Any payment received by the lender after the end of the grace period is late and will affect your credit record.
If you are not sure about the due date and grace period for your mortgage, you can find the terms in the NOTE signed at closing.
Friday, August 17, 2007
OK, well, I don't think it really matters what state the property is in, the issue is more a collateral issue. Any mortgage lender is going to want to protect the security for their loan. That means that if you have a tool shed that is really terrific - so terrific that its loss would impact the value of the collateral, well then I wouldn't blame the lender for requiring the insurance.
Grant you, it's a rarity, but that must be some tool shed.
Strangely, we have an example in play, right now, today. We're standing our ground against two Realtors and one mortgage lender employee who don't understand that they are trying to defraud the mortgage lender.
Soooooo, I'll be back.
Thursday, August 16, 2007
If you can afford to wait it out, there's lots of money to be made. Remember, money doesn't disappear. It just changes hands. ;)
Hey, it might be a good time to buy some Countrywide stock. Who knows?
Wednesday, August 15, 2007
I'm seeing red flags, are you?
I do hope that you purchased a policy prior to the start of construction. Most construction lenders require that the borrower put the insurance in place at closing.
I am very sorry for your loss. We often have to explain to our construction customers who complain about having to purchase the insurance before the house is completed that the materials on the site and the partially completed house may still be lost in a fire.
Monday, August 13, 2007
What if there is a restriction against parking RVs in the driveway and you have a big beautiful RV? Buying real estate is like marriage. Once you say "I do.", you did.
The rise of sub-prime lending created a lending environment in which some unscrupulous mortgage lenders could make more money by taking homebuyers through sub-prime rather than prime programs. These creeps used and abused borrowers and basically made them think they weren't eligible for prime lending.
Don't get me wrong. There ARE folks who have really poor credit and have too much debt. Those folks just shouldn't be buying real estate. But if YOU have your financial house in reasonable order you should be able to find a mortgage lender.
So, don't panic. Regular conventional lending requires 5% down plus closing costs. The seller can pay some towards those costs to help you. If you don't have that much available, consider going FHA. Both the FHA and VA programs are still considered prime lending and with these programs the credit review is slightly more lenient and the cash requirements are lower.
Before sub-prime reared it's ugly head, I put many many families into homes using these tried and true programs.
In my experience the average family can afford to buy the average house using these programs as long as interest rates are 10% or less.
This assumes that you have had a reasonable credit history - not perfect, but reasonable. It also assumes that you are not underwater with debt.
If you can't make timely payments on your current debt, you shouldn't be buying real estate. Take time to get your financial house in order.
Here's a conservative formula to use. Take 28% of your GROSS monthly income. That's your maximum mortgage payment including taxes and insurance. If you stay in that ballpark, you won't be house poor and you'll likely not face foreclosure.
For instance, if there is an unsatisfied mortgage on record that everyone believes has been paid in full, the receipt by your title company of an indemnification letter from the prior title company - under an owner policy - allows you to move forward and close. It doesn't satisfy or clear the title cloud. The prior title company still must makes efforts to satisfy the mortgage. They are expected to contact the lender and work to get the satisfaction recorded so the cloud is eventually removed.
The easiest way to understand it is to think of homeowners insurance companies. You have insurance underwriters like Allstate, State Farm, and Nationwide. You have agencies owned by local business people that sell the insurance.
In title insurance, the big underwriters are First American, LandAmerica, Fidelity, Chicago, Old Republic, etc. The consumer can buy directly from the underwriter, but most often buys through an agent.
In Pennsylvania where we have regulated rates, the premium paid by the consumer is the same no matter where they buy it. The variations are in service and optional fees. There is also a difference in expertise and sadly in the willingness to give regulated discounts.
Check out our title premium calculator and you'll see some of the available discounts in PA.
Friday, August 10, 2007
Just look at these fees I saw posted on the Notary Rotary:
1117. Notary Service/Signing Fee $700.00 to XX Title
1120. Edoc/Email fee $200.00 to XX Title
1121. Post closing review fee $250.00 to XX Title
It's obvious from the post that the notary who is actually performing the service isn't earning anything near these fees. This unfortunate Wyoming consumer has been ripped off by their title company.
BTW - Even when a lender waives escrow, they still have an interest in the payment of insurance and taxes. If they find out you aren't paying either, you may be in default, so be careful.
Thursday, August 09, 2007
I'm talking about the beautiful worker bees in prime mortgage lending offices.
These folks aren't the predators you've read about.
These are the folks who work hard maintaining quality standards and helping consumers buy homes that they can afford.
What's the problem?
Well some folks have them all mixed up with the bad killer bees. You see, they look so much alike.
The killer bees - the folks who deserve to go out of business cause they've caused so much harm are the predators and the subprime and frankly the Alt-A pushers.
Our worker bees - the sweet honey makers - are being exterminated by folks who can't tell the difference.
PLEASE, if you are in a position of to help prime mortgage paper producers, the quality mortgage lenders, continue operation, please help.
Consumers may not understand that their ability to buy, sell or refinance real property is dependent on money flowing through to our good quality mortgage companies.
This is no longer a "subprime" issue, it's a money flow issue.
The following is abstracted from a
"A home warranty is a settlement service covered by RESPA (24 CFR § 3500.2 definitions). The RESPA regulations do not prohibit a person from receiving more than one fee in the transaction. However, where a person is receiving an additional fee and is in a position to refer settlement service business (as a real estate agent is), the payment must be for services that are actual, necessary and distinct from the primary services provided by such person (24 CFR § 3550.14(f)(3)).
"Additionally, the fee itself must be reasonably related to services actually performed. So long as the tests cited are met, and you appear to represent that they are, there is no objection to the payment of a fee to the agent for services performed. If, on the other hand, the transaction only consists of referring the home warranty business and no actual services are provided, this would be a violation of Section 8(a) of RESPA. We have made no independent evaluation of the value of the warranty services you describe."
Wednesday, August 08, 2007
In normal circumstances, there is a point in the foreclosure process where you reach an all or nothing point. This is your "Last Chance Texaco" moment called reinstatement.
Read your mortgage document and look for that word - reinstatement. The FNMA 3039 PA Mortgage 1/01 contains this language in Section 19. It reads:
"Borrower's Right to Reinstate After Acceleration. If Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earliest of: (a) five days before sale of the Property pursuant to any power of sale contained in this Security Instrument; (b) such other period as Applicable Law might specify for the termination of Borrower's right to reinstate; or (c) entry of a judgment enforcing this Security Instrument. Those conditions are that Borrower: (a) pays Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cures any default of any other covenants or agreements; (c) pays all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorney's fees, property inspection and valuation fees, and other fees incurred for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument; and (d) takes such action as Lender may reasonable require to assure that Lender's interest in the Property and rights under this Security Instrument, and Borrower's obligation to pay sums secured by this Security Instrument, shall continue unchanged. Lender may require that Borrower pay such reinstatement sums and expenses in one or more of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality or entity; or (d) Electronic Funds Transfer. Upon reinstatement by Borrower, this Security Instrument and obligations secured hereby shall remain fully effective as if no acceleration had occurred. However, this right to reinstate shall not apply in the case of acceleration under Section 18."
[Section 18, BTW, is the "due on sale clause", which a lot of people ignore for some reason. I never understood why.]
Sooooooo, call your lender and ask if it's too late to start making payments again. These are not the usual circumstances and so there may be lenders, who hoping to avoid foreclosure, will modify your terms and extend the maturity date. Then again, they may not. But what have you got to lose by calling?
Tuesday, August 07, 2007
If the answer to that question is yes, then you must reconsider. Anybody with a pulse on the current climate has discontinued taking risks.
A title agent who takes a check from another company does so with no guarantee that the money is truly available.
I can think of no other time in my career when absolute adherence to good funds policies is necessary. Wiggle room left the building last week.
Ask - Do you triple reconcile your escrow accounts every month?
Ask - Do you disburse on transactions before verifying receipt of good funds from all parties?
Ask - Can the seller get a cashiers check or wire for proceeds without a fight?
Correct answers would be yes - no - yes. If you get any hesitancy from the title agent you may wish to move on to someone who has better control over their accounts. Be safe. Be well.
Monday, August 06, 2007
Sunday, August 05, 2007
Either way, start by contacting the company who performed your closing and issued the title insurance. If you are lucky they will still be in business and have an easily accessible data base. If you contacted my office, I could e-mail you a pdf of your entire file while we were chatting on the phone. Most companies aren't that accessible though, so let's assume you aren't having any luck there.
If you have a copy of the HUD-1 Settlement Statement, look at the 1100 section and see if you paid for title insurance. A premium paid on a HUD-1 is evidence of title insurance. The HUD-1 may even have the name of the actual title insurance company. Google them or contact your state insurance department for assistance. Contact the company and ask for a copy of your policy. It may take time but they should be able to track it down. By time, I mean it could take months, because title companies don't always have a good way of tracking title policies.
If you can't find the HUD-1, your mortgage lender, Realtor or even the seller may have a copy that they will share with you. Good luck and let this be a reminder to all to keep those documents in a safe place. ;)
Pure mortgage banking as traditionally done with warehouse lines alone may be a thing of the past. Mortgage bankers who are not owned by a bank or thrift or some other large funding source may go the way of dinosaurs.
That said there is still a possible life for mortgage brokerage if brokers contain themselves and act responsibly. I am presuming that the market correction will rid us of the fraudsters, inexperienced, predators, etc. and that what we will have left is a population of largely professional mortgage brokers who can and will originate prime paper, okay?
So, that said, I am talking to you, the professional mortgage broker, the prime player who understands that there are larger duties in performance than just self gratification.
First, let's talk about the risk to mortgage brokerage. In a liquidity crunch, we have less money. [I know you know that but I am explaining it for those reading this who may not.] When we have less money, mortgage lenders may be strongly motivated to funnel that money into retail operations rather than wholesale. If we lose wholesale, we lose mortgage brokerage.
This isn't a real horrible problem for consumers because they can easily get their mortgages directly from lenders through retail operations, so consumers won't be too concerned.
From a mortgage brokerage point of view, though, you can help your mortgage lenders by moving into pure prime product sooner rather than later AND you can avoid any consideration of double locking or dual submissions. Yes, I know you think you are protecting yourself and your consumer, but think of the greater whole.
Secondary market managers are going to be traveling through rocky waters and they have to depend on the pipeline data to produce stability. If anyone gets the idea that mortgage brokers en masse are feeding fake locks into the system, mortgage brokers will be cut off. Secondary market managers know that their retail originators cannot double lock and so if the pipeline is purely retail, it is more stable. Remember that.
So, act responsibly. In the grander scheme of mortgage banking, good wholesale relationships provide the volume needed to create a lucrative operation. If the players aspire to good old fashioned standards, agency prime lending, and act responsibly, the professional mortgage brokers will find solid ground in a shorter recovery.
Saturday, August 04, 2007
Basing reserves on current market conditions ignores looming defalcations.
When asking about escalating claims due to underwriting, the risk isn't off shore versus on. The question posed should be human versus non.
"Unlocking the hidden value" in various enterprises all related to data mining is like looking for the key to Pandora's box, at least from the perspective of those who cherish privacy.
I review title reports all the time that have issues reported in the abstract that do not impact the title. I like to make a note on the abstract so an auditor knows I saw the issue and why I passed. This note is not required but it's useful if there are questions later on.
If you are a seller and the buyer's title agent is giving you grief over an expired judgment I suggest you tell the buyer to find another title company. You can't be expected to resolve title issues that are not real.
On the other hand if you have a judgment that IS impacting title and you can't find the party to whom payment is owed, you might offer to place funds in escrow with the title company so you can close and work on a resolution over time. If the issue isn't resolved, the title company can eventually escheat the money to the Commonwealth of PA showing the judgment holder as the owner of the funds. This is one way to create an official audit trail of attempts to resolve a problem should it ever rear its ugly head.
Friday, August 03, 2007
Read that here.
Responsible lending makes a comeback. Thank heavens.
Some day folks will look back at the underwriting standards of the last decade and wonder how this foolishness ever got started. I for one am happy sanity is back in style.
Current regulations only require that the borrower receive a good faith estimate within 3 days of mortgage application. Frankly, I just don't know how a borrower can shop for a lender without having good faith estimates in hand.
This is the first and only article I have read that correctly outlines the role of a notary signing agent who is not otherwise licensed to perform other roles in a transaction.
Thursday, August 02, 2007
Wednesday, August 01, 2007
I love that line. Got it on a blog from down under.
In this crazy real estate market, buyers with cash or access to good credit are poised to build wealth.
We're poised to help. People have asked if our Choose & Save Program is really a good deal.
Heck, what are you nuts?
It's a fantastic deal.
We provide copies of the commitment to both the lender and the consumer as soon as it's issued. There are some circumstances in which the consumer has scheduled the closing before the final search results are in. In those cases we may be issuing the title commitment on the day of closing and the consumer is taking their first peek at the exclusions at the closing table. I'd rather they wait and take time to understand the transaction but it's their choice and we aims to please.
Here's a good post by Jeanne Johnson on her Landrecs.com blog.
That doesn't mean that coverage does not exist, it's just my opinion. If you are faced with a real life situation involving a hidden oil tank and you have an owner policy, just contact the title insurer and make a claim.
If any readers have experience with hidden tanks and title claims, I'd be happy to receive your comments.
A homeowner buying real estate with a mortgage or cash has just as much risk. You either buy title insurance coverage or you don't.
Remember, in a mortgage transaction the lender is only requiring that you purchase a loan policy. You can waive owner coverage if you choose.
Why under any circumstances you would allow an asset of that size to be uninsured is beyond me but it's your choice. Make it a good one! Be safe. Be happy.