final RESPA rule out in two weeks?

WASHINGTON (10/24/08)—Changes to the Real Estate Settlement Practices Act, known as RESPA, will be out within the next two weeks, according to Federal Housing Administration (FHA) Commissioner Brian Montgomery. Read more.....

just filed a title claim for a customer

There was a typographical error in a deed filed in 1946 which changed the lot number.  All of the deeds filed since then for this lot carried forward the mistake.

A full search in our area is 60 years.  This transaction was processed in 2005 and we ordered a full search from First Am.  They apparently only did a 59 year search.  Had they gone back for a full search, they would have pulled the prior deed in the chain, dated 1937, and discovered the error.

They will fix the problem for our customer.  They have assigned an attorney and they did so promptly when notified.  I appreciate that.

This case proves two points.  First, there is a reason why we do full searches.  We are looking fo mistakes with the job of fixing them.  Secondly, even when a search does not discover an item that is covered under title insurance, the policy will still protect you.

what does a possible takeover in title insurance mean for our future?

If a giant lender decides to buy a giant title insurer, then we are facing a giant bundling concept.

No doubt models are changing, they have to. Fidelity - with Cyberhomes - has decided to change the point of sale by capturing the consumer before the real estate agent has a chance to.

Looks like we might have a giant lender deciding to offer consumers one stop pricing - all services included without affiliation, but with full ownership. Does that fly in insurance circles? Probably.

My plan is still the same. I'm planning to offer boutique title services at a local level with the emphasis on quality and traditional services.

We'll see where all of this leads. Should be interesting.

FHA Wiki - This is a great idea.

Consumers, lenders, title agents, and real estate agents are always looking for a reliable source for FHA program info.  The FHA on-line resources have really come into their own.  Take a look at this Wikipedia run by FHA.gov.

CLICK HERE.

Here's a good one:  How do I determine when the annual MIP will be cancelled?

For loans closed on or after January 1, 2001, FHA's annual MIP will be automatically terminated under the following conditions: 1. For mortgages with terms more than 15 years, the MIP will be terminated when the Loan to Value (LTV) ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the LTV reaches 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. 2. For mortgages with terms 15 years and less and with LTV ratios of 90% and greater, the MIP will be terminated when the LTV ratio reaches 78%, irrespective of the length of time the borrower has paid the MIP. 3. Mortgages with terms 15 years and less and with LTV ratios of 89.99% and less will not be charged MIP. Read more....

being prepared for closing

Take a moment to check your identification documents.

You'll need a CURRENT photo ID that has been issued by the state or federal government.

I have also noticed that lenders are asking for copies of social security cards.

So, take both to closing.

Am I interpreting the tea leaves correctly?

Has First American been taken over by a large financial institution? Speak! Speak!

query: in PA what are the procedures for signing over a house that was inherited.

Seek legal advice from a competent estate attorney.  You must make certain that matters concerning the estate are properly resolved including the filing of an inheritance tax return.

query: what happens if you get caught with occupancy fraud

Getting caught in mortgage fraud of any kind is serious.  

Let's talk about occupancy and why mortgage lenders care about it.  It's all about basic human needs and survival.  When the chips are down and times get tough, you still need a roof over your head.  People tend to protect that roof and let other investments go south.

Mortgage lenders and their underwriters rate risk.  They know from experience that second homes and investment properties go into foreclosure more easily than primary residences.  To offset that extra risk, the mortgage lender will normally require a higher down payment and/or a higher interest rate.  

If you have lied to a mortgage lender and borrowed money for a second home or investment property but signed legal documents indicating that the property would be your primary residence and you get caught, you may face criminal prosecution and incarceration.  If you're lucky, the mortgage lender will simply raise your interest rate and demand that you come up with the higher down payment.

What if you intended to live in the property but circumstances beyond your control forced you to move somewhere else?  You should contact your lender and explain the circumstances and let them decide if they will allow you to retain the same structured terms.

Lenders are very good at catching occupancy fraud.  Never let a real estate agent or a mortgage loan officer give you a wink and a nod indicating that it's no big deal.  Mortgage fraud is always a big deal.

query: what happens if mortgage is not subordinated

Let's talk about mortgage lien priority. Mortgages tend to fall into two categories - primary and subordinate. The most common form of subordinate mortgage is the home equity loan. Most consumers have the home equity loan or HELOC as a second mortgage recorded after their main mortgage. The main mortgage is in first position. First position gives the main mortgage lender lien priority in the event of a foreclosure. First position gets paid first.

So, let's say you have two mortgages, your main mortgage and a HELOC. You decide to refinance your main mortgage but you like your HELOC and don't want to pay it off and satisfy it. The problem is that your HELOC will move up to first position when you payoff your main mortgage and that would put your NEW main mortgage in second position. THAT won't make your main mortgage lender very happy at all, so they will require that your HELOC lender agree to subordinate their position, allowing your new main mortgage lender to basically skip in front of them in line.

This subordination is done with a legal document signed by the HELOC lender. The subordination document is usually recorded when you record the new main - first - mortgage.

As a consumer, you sort of have to keep an eye on the refinance process if you intend to leave a HELOC or any subordinate mortgage in place. It might take time to get the subordination approved and so you should contact your HELOC lender and get the process started. Don't rely on the title agent to do this because they might not know you intend to keep the loan until late in the transaction. That's the other thing - make sure YOU tell the title agent that you intend to have a subordination and also make sure you have told your new main mortgage lender.

What happens if the transaction closes and no one did a subordination? The title agent - who likely insured first position for your new main lender - will have to fix it. They'll have to go to the other lender and ask for the subordination. This can still be done post closing but it's risky because the lender might not agree. If the lender doesn't agree, then the new main lender who wants first position may have a claim against the loan title insurance policy.

Claims are based on losses but the lack of lien priority may impact the saleability of the mortgage paper and though the lender hasn't suffered a loss in a foreclosure, you still have the question of whether or not the title agent followed the lender's written instructions. The title insurer will work all of this out with the mortgage lender.

As the consumer, your obligation is to cooperate, as needed, to assist in the resolution of getting the subordination. Why? Well, your new main mortgage was likely subject to the subordination and you have to satisfy that condition even if it is post closing.

received this nice e-mail this morning....nice way to start the day ;)

Thank you for your and your teams’ excellent work regarding my home purchase. I have completed your survey and you should be receiving it in the mail soon.

Also, I really appreciate the guidance, counseling, and service provided regarding the sewer easement survey situation. I come from a military background and currently serve and attention to detail as we say, wins wars. I know this is only a home purchase but that is what professionals are all about!!

nice try, CentRealTech

EL DORADO HILLS, CA, October 08, 2008 /24-7PressRelease/ -- CentRealTech Inc. announced today that they have released an Industry White Paper which presents a compelling case for the implementation of a Web based, automation solution for the labor intensive Title Production Process used by most title companies today. The title industry is going through one of the toughest times in its history with the direct impact of the housing slump, the subprime mortgage collapse and the regulatory/consumer group pressures to reduce premiums. Read more...

What a bunch of hooey. Real people buying real property want a real title examination behind their title insurance. That's what real people think they are buying when they pay for title work in a real estate closing.

Automation is crappy product with no thought and just because you can do it cheaply is not a good reason to do it at all.

The best thing the title underwriters can do - hopefully having learned from all of the claims they are processing right now - is to restore traditional human title examination and start educating the troops.

The Pittsburgh Post Gazette has it totally wrong on this one.

Here's the headline:

Home buyers can now purchase title insurance directly

Here's a link to the article.

First of all, any regular reader of Title Insurance Talk knows that consumers have ALWAYS been able to buy their title insurance directly.

I am a pro-consumer title insurance advocate and so when I heard of the ENTITLE marketing plan, I was interested. I have been encouraging my fellow title professionals to market directly to the consumer for years.

When I looked at the details of the ENTITLE offer, I found that they have a set of flat fees which consumers must pay in additional to the title insurance premium. Unless the consumer is involved in a high priced transaction, say, over $200,000, they pay MORE in flat fees than the so called 35% savings implied in the advertising.

In PA - most transactions are under $200,000 and so consumers who fall for the 35% savings ploy are being ripped off.

I have contacted both the Dept. of HUD and also the PA Dept. of Insurance and complained that ENTITLE is misleading consumers.

The best tactic for any consumer is to shop around and get your quotes in writing. Compare the entire transaction - title premium and flat fees.

Our Choose and Save program is the least expensive way to buy title insurance and settlement services in the Commonwealth of PA.

The folks at ENTITLE must be laughing all the way to the bank - at the expense of our citizenry and that MAKES ME REALLY MAD.

INDEPENDENT TITLE AGENTS FILE LAWSUIT AGAINST OHIO DEPARTMENT

Contact person: Robert B. Holman, Esq.
OAITA
(440) 232-9911

SUBJECT: INDEPENDENT TITLE AGENTS FILE LAWSUIT AGAINST OHIO DEPARTMENT
OF INSURANCE DIRECTOR ALLEGING FAILURE TO ADEQUATELY PROTECT OHIO
HOMEOWNERS

FOR IMMEDIATE RELEASE

The Ohio Association of Independent Title Agents (OAITA) (www.oaita.org) has filed a lawsuit
with the Ohio Supreme Court against Mary Jo Hudson, Director of the Ohio Department of
Insurance. OAITA, an association of independent title insurance agents in Ohio, seeks to prevent
the spread of kickbacks and referral schemes in the real estate industry by asking the Ohio
Supreme Court to compel the Director of the Ohio Department of Insurance to enforce currently
existing rules prohibiting banks, realtors and mortgage brokers and their subsidiaries from
engaging in the business of title insurance.

OAITA is represented in the newly-filed lawsuit by Columbus attorney E. Bruce Hadden, Medina attorney Gregory W. Happ and Oakwood Village attorney Robert B. Holman. The lawsuit alleges that Director Hudson failed to enforce current administrative rules based on long-standing Ohio statutes that prohibit banks, realtors or mortgage brokers, or any of their subsidiaries, from unlawfully steering Ohio homeowners and their real estate transactions to title insurance agencies owned all or in part by those same banks, realtors or mortgage brokers. The suit alleges that ownership of title insurance agencies by banks, realtors or mortgage brokers, known as controlled business arrangements, creates dangerous conflicts of interest by allowing those banks, realtors and mortgage brokers to obtain kickbacks and referral fees for steering Ohio homeowners to their own controlled title agencies. The lawsuit alleges that such conflicts of
interest violate Ohio statutes and that Director Hudson has failed to construe newly enacted rules in accordance with the long-standing law. The suit is the first of its kind in the United States and is an important step towards reducing the overreaching power and influence a bank, realtor and mortgage broker has over a homeowner’s real estate transaction and, in particular, a
homeowner’s statutorily protected choice of title insurance provider. The lawsuit is important
since many homeowners do not even realize such a choice exists. By permitting banks,
mortgage brokers and realtors to move into the title insurance business, the lawsuit alleges that
the ODI’s inaction has helped to feed the pervasive greed that has overwhelmed the real estate
industry in recent years. Considering the well-known impacts of the mortgage industry meltdown and the rise in foreclosures across the country, homeowners across Ohio are well-served by the OAITA’s action.

Independent title insurance agents serve as important checks and balances on the power of
banks, realtors and mortgage brokers to unlawfully steer homeowners’ real estate transactions to controlled entities. Members of OAITA are independent title insurance agents who refuse to give kickbacks or referral fees to banks, realtors and mortgage brokers for the real estate transactions they close. Instead, independent title agents: (1) help to reduce the cost of title insurance by not engaging in elaborate schemes to reward referral parties at the homeowners’ expense; (2) help to lessen the likelihood of real estate related litigation involving homeowners by not allowing referral party pressure to dictate closing requirements; and, (3) help restore trust and integrity in the fiduciary relationship that exists between homeowners and their settlement providers by insuring that only disinterested title agents provide title insurance services, not their referral parties.
-END

interesting reading on Housing Wire ..the inside view

“If the federal government wants to get into the asset management business, we all may as well write the check for taxpayer losses right now,” said another managing director at a distressed-loan purchasing specialist. “This business is much harder than it looks, and the issue isn’t as simple as holding to maturity or a desire to be aggressive on loan modification.”

Some sources, as a result, expected that the Treasury proposal could end up being a boon for distressed mortgages. “They’ll find out they need to churn and burn whatever they buy,” one source suggested. “That could mean the market for whole loans will really start moving, with the pricing hurdles removed.”

read more...