Friday, September 25, 2009

real estate agent covers seller's bum

A vigilant real estate agent in New York state has concluded what seemed like a never ending quest to make certain her seller could not be accused of colluding to defraud a lender in a FHA mortgage transaction. Facts...the seller assist in the contract exceeded FHA guidelines. This was not noticed until underwriting and the parties were never notified except via the closing instructions which arrived - as usual - at the last moment prior to closing.

The lender CAPPED the seller assist.

When this happens a GOOD title agent will contact all parties and explain prior to closing. This gives parties a chance to decide if they want to close or postpone and renegotiate the contract.

In this case the parties were not working with a GOOD title agent. They were working with a BAD title agent who chose instead to make the HUD-1 meet the lender and FHA instructions but to adjust the actual checks to reflect the terms of the sales contract.


The seller had not attended closing and neither had the real estate agent. The seller was represented by an attorney who saw no problem with this arrangement. Once the real estate agent realized what had happened, she recognized the fraud and the potential for criminal penalties and called everyone including the attorney, lender and title agent and everyone thought she was a nut. So, she called me.

It took her some doing but she has fully documented her efforts to rectify the transaction and it was the mortgage lender who - though they will not acknowledge the wrong doing of anybody - decided to send the seller the balance of proceeds so that the seller has in hand the full amounts reflected on the HUD. So, she covered her client and she is stopping there.

What bugs me about this case is that none of the professionals except this vigilant agent can see the fraud. Geez, how can they be so out to lunch?

A forensic audit of this file would have held all parties accountable for the fraud. I commend this agent. She was spot on with her assessment of the wrong doing and as for the other so-called professionals in the transaction, the seller's attorney, the title agent, the mortgage broker, the mortgage lender AND the layman, the buyer - all of whom should be capable of reading the HUD-1 Addendum..........brainless or willful frauds all.

So many interesting cases

...have crossed my desk lately that I should be blogging about but the good news is that we've been really busy and each time I think I should stop and post, I think about that next consumer waiting for their title work. So with that in mind I'm going to toss up these few notes without expanding into a larger post. Forgive me. ;)

  • When building a new house or addition to an existing dwelling, hire a surveyor to come out, locate and mark the placement of the foundation BEFORE the builder breaks ground. One of our recent insured consumers had her property surveyed prior to the start of construction on a major addition. She failed to have the surveyor mark a location for the foundation. She allowed the builder to mark off and measure. Result? The addition is two inches over the lot line and the neighbor - who warned her she was close or over the line when he saw the construction - will not give an easement for less than a few thousand dollars.

Monday, September 14, 2009

Friday, September 11, 2009

protecting privacy

I thought we had this problem licked but just today we noticed a mortgage with a social security number on the first page. This is a government program and now we are wondering if this is a new development or just the first time it popped out to our eyes.

Why in heavens name would a mortgage lender or a government agency put a person's social security number on a document intended for public recording?

We have a call in to the lender to find out if we can remove the number prior to recordation.


Wednesday, September 09, 2009

ALTA licensing fee

If you write title insurance using an ALTA form, heads up. ALTA has decided to claim ownership of the forms and charge a licensing fee.

WASHINGTON--(Business Wire)--
In a move aimed at strengthening the land title industry by protecting the
association`s top industry product, the American Land Title Association has
launched an initiative to license the use of its uniform title insurance policy

"ALTA`s uniform policy forms have become the `gold standard` throughout the
lending and legal communities. Because land title insurance coverage is
standardized, the secondary market readily accepts mortgages that carry title
insurance. This has greatly contributed to the growth of demand for title
insurance across the country," said Mike Pryor, president of ALTA.

Read more here on Reuters.

Wednesday, September 02, 2009

file this under WOW

Media reports and court records reveal that on August 24, 2009 a complaint was filed in the US District Court in Orlando by the Secret Service which alleges that Victor Cedeno had stolen over $1.5 million dollars from the proceeds of short sales he managed on behalf of his former employer Taylor, Bean and Whitaker (TBW). Read more on the Mortgage and Real Estate Fraud blog.