Friday, December 31, 2010

Internet Archive Wayback Machine.....cool!

Wayback when I killed my old Radical Title Talk blog.  I did not keep a copy.  Every once in while I did wish that I could take a peek.  I stumbled across this Wayback site and here for your enjoyment are some good ole Radical posts.  LOL


Enter the Radical era of days gone by.

Thursday, December 30, 2010

let me put it this way.........as a tiny mustard seed of a title agent who looked up into the guts of Full Spectrum from below, I'd say this suit sheds light on truth......

Allstate said that starting in 2003, Countrywide quietly decided to boost market share and ignore its own underwriting standards by approving any mortgage product that a competitor was willing to offer, in a "proverbial race to the bottom."

Countrywide then passed on the added risks to investors who bought debt backed by the mortgages, Allstate said.

Read more in Reuters.

Wednesday, December 22, 2010

humans prevail over automatons...thanks, we win one ;)

New rules from the five federal bank regulatory agencies no longer accept technological tools like automated valuation models alone as a substitute for an appraisal, forcing vendors to upgrade these products with the required on-the-ground inspection and other data.

Automated valuation models provide property values using mathematical modeling and a database of comparable properties. The Financial Institutions Examination Council, which is made up of the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corp., the National Credit Union Administration and the Office of Thrift Supervision, released new guidelines on Dec. 2 that are impacting lenders that rely on AVMs.

Read more on Housing Wire.

Thursday, December 16, 2010

bait and switch? query via email from K

I have an unusual situation regarding a recent refinancing on my home that I would appreciate your advice on.
 
I refinanced to a lower interest rate.  This was a no-cost refinancing and there was no dispersion of cash to me.
 
I closed on November 20th.  I signed the appropriate paperwork and HUD statements electronically with a notary present.  As part of the final transaction I wired $400 to the title/escrow company (line 303 on HUD statement).
 
The HUD that I signed had a broker credit for NRCCs (non-reoccuring closing costs) of $6000 (lines 204 to 206).  My closing costs/settlement charges (line 103) were $8000.  The breakdown of the settlement charges included $4200 for an initial escrow account deposit, $1000 in daily interest charges, $800 origination fees, $1100 for title and title insurance, and $900 in misc charges (appraisal, recording fees, ...etc).
 
Here's where it gets weird.  Today I was contacted by my title company and my mortgage broker that the NRCCs credit that they placed on my HUD was incorrect and the actual amount should have only been $2800 -- enough to cover closing costs not including my initial escrow deposit and daily interest charges.  They sent me a "revised" HUD that basically had two changes, the new NRCCs credit and a new balance (line 303) on HUD that shows I now owe them an additional $3000.  This is all now happening approximately 1 month after I closed.
 
My questions are
1) Does this sound suspect to you? And what are the legal ramifications for me refusing to pay the additional $3000?
2) Does this give me right to void my contract and go back to my old mortgage? (Im weary of dealing with this title company and my mortgage broker anymore)
3) Can I apply the old NRCCs broker credits to my initial escrow deposit? or ask for the old NRCC broker credits in cash?
Thank you in advance for your responses.  
 
K
 
Two things come to mind when I read this.
  1. What did the Good Faith Estimate say? 
  2. Is the lender giving you another right to cancel period?
Considering both of those questions should help you decide which of the two HUDs most closely resembles the transaction you bargained for.  If based upon your review you think the lender is engaging in bait and switch, then contact HUD and report them.  You can also report them to state authorities.  Your rights under the cancellation rules would terminate the refinance and return your money to you.  If the lender gives you any grief about that, again seek assistance from HUD or state regulators or hire an attorney.

If after consideration you determine that the corrected HUD is essentially the deal you originally bargained for and not a bait and switch, then this is really a matter of human error.  You should still be entitled to your right to cancel, so either way, if you don't like the deal, in my opinion as a non-attorney title agent blogger you can get out of it.  [Seek the advice of a competent attorney.]

I hope this helps and thank for reading!

Diane

Thursday, December 09, 2010

Americans marked off property, courts recognized that property, and the people got deeds that meant everyone knew their property was theirs. They could then buy and sell and borrow against it as they saw fit.

This idea of a deed protecting property seems simple, but it's powerful. Commerce between total strangers wouldn't happen otherwise. It applies to more than just skyscrapers and factories. It applies to stock markets, which only work because of deed-like paperwork that we trust because we have the rule of law.

Read more on Reason.

Wednesday, December 08, 2010

An attorney involved in several local mortgage fraud cases, including some involving Beechview developer Bernardo Katz, was sentenced in federal court today to 57 months in prison.

John Chaffo Jr. of Murrysville was the lawyer involved in 57 fraudulent property sale closings from 2000 through 2007, Assistant U.S. Attorney Brendan Conway told Senior U.S. District Judge Donetta W. Ambrose, who oversaw the July trial at which he was found guilty of 11 of 13 counts. "He obviously committed this massive mortgage fraud and he violated his fiduciary obligations to the bank," Mr. Conway said. "He violated every ethics rule in the book."


Read more: http://www.post-gazette.com/pg/10341/1108953-100.stm#ixzz17YlLzxTS

Why would an underwriter have strict credit standards for agents?

I thank reader, David, for his inquiry today concerning becoming a title agent and having some trouble because his credit history is not good.

I suggested that he consider a different profession.

Title insurance agents have access to and control loads of cash.  What is the primary attribute you as a consumer wish to see in a person who manages money?  How about trustworthiness?

What is a credit history but a report card on the trustworthiness of an individual?

Yes, we understand that people make mistakes and get into trouble and then later recover. The point I am driving at is that the standard for being the person who holds in their hands lots of money on behalf of others is and should be a higher standard than standards for other types of work.

Title underwriters and consumers should expect and demand excellent money management skills in their title insurance agents.

Tuesday, December 07, 2010

here's a few hmmms.... for ya ;)

hmmmm........ A lender requires a private road maintenance agreement.  Instead of hiring a competent attorney to draft a document, the buyer drafts his own and in the process creates a separate individual document for each person on the street to sign.  The whole project ended up costing close to $350 in recording fees when an attorney would likely have charged $150 for creating a document that might have costs $55 to record.  So, he paid WAY too much money and has a crappy, probably unusable agreement on record which will likely get lost in an indexing black hole.



hmmmmm......At two recent title insurance CE classes at least one attorney instructor recommended to attendees that they overlook the regulation in TIRBOP which compels a title insurer to accept as evidence an unsatisfied mortgage to establish a basis for discounted premiums.  What is it that these two attorneys do not understand about the word SHALL and do they really want to play footsie with class action suits and our new governor who has all eyes on title insurance?  I for one follow the rules and give the discounts.  When in doubt err on the side of the consumer.



hmmmmm.......Stand your ground sellers - most of the attorneys in the CE class yesterday said they pass on to sellers any cost which cannot be charged to the buyer.  Who compels a seller to pay the buyer's attorney anything?  No one.

Tuesday, November 30, 2010

Fannie Mae will no longer accept back a mortgage that was repurchased by a secondary market investor, government-sponsored enterprise or private institutional investor — even if the lender cured the defect in the loan.

Read more on Housing Wire.

query: what kind of experience leads to a job in mortgage underwriting

In my opinion, a good underwriter can be taught the mortgage rules IF they have the basic smarts and analytical talents.  It's not an entry level position and most often underwriters move up out of mortgage processing.  I have to say, however, that most of the underwriters I hired and trained when I was in mortgage banking did not.  Most were simply excellent performers in a related department.

I look for and test for the same qualities in my title insurance agency staff now.  I want a person who can read and comprehend instructions and guidelines, analyze and resolve problems, maintain quality of product and service, work efficiently and has a good attitude.

Any position in the mortgage or title insurance business requires long training at the side of an expert.  So my advice is to find a good underwriter under which to learn your craft and then demonstrate your abilities by doing an excellent job.  You will be noticed.  Once you have achieved credibility with management based upon your quality of work, let them know you'd like to move into underwriting.

In the meantime, read and study all available resources - there are lots of good web sites - to learn MORE than you are taught in your office.   You will be noticed.  ;)

Friday, November 19, 2010

A 'barn-find' Bugatti amounting to little more than a loose collection of bits has sold at auction for more than seven times its estimate.
Completely dismantled, incomplete and lacking its engine and body, the 1926 Bugatti Type 38 was expected to fetch only around £9,000 when it went under the hammer at a Bonhams sale in Australia.

Read more in the Daily Telegraph.
The firing prompted Mike Huckabee and Sarah Palin, among others, to call for NPR to be stripped of federal funding.

Ailes later semi-apologized for his comment in a letter to the Anti Defamation League.
"I was of course ad-libbing and should not have chosen that word, but I was angry at the time because of NPR's willingness to censor Juan Williams for not being liberal enough," he wrote, as TV Newser reports.

"I'm writing this just to let you know some background but also to apologize for using 'Nazi' when in my now considered opinion, 'nasty, inflexible bigot' would have worked better," he added.

Read more on CBSnews.

query: what if property taxes change after closing, does that impact prorations?

Hi Diane,

I didn't see on your blog where I could post my question, so hope you don't mind me writing to you.

I'm about to close (Nov 30) on a home for the first time, so I've been studying everything I can to try to be prepared at closing, and avoid any surprises, especially financial ones.  I'm wondering about the settlement of pre-payed property taxes.  The seller bought at the height of the market, so the current taxes are probably close to what they will be for me based on the recorded sale price.  If I have to reimburse the seller for three months of prop taxes at $700/month, but my property tax bill is only going to be $350/month for those same three months, does this get adjusted in the HUD-1?  Or do I lose out and should be thankful that my property taxes will be lower than the seller's were?

Thanks,

Dan


Hi, Dan:

Thanks for sending me the email and I'll post your question so it will be there to help others.


If what we are talking about is pre-paid taxes, meaning the taxes that the seller has already paid, then we're really just reimbursing the seller dollar for dollar for a lienable item that they paid beyond the date of their ownership of the real estate.  We call this proration and it will be listed on the first page of your HUD-1 settlement statement near the beginning, just after the sales price.


Most title agents will include in the papers you sign at closing, some sort of agreement that prorations will be based upon the best available figures at closing, meaning the current bills.  There may even be an exception in your title insurance commitment that refers to bills currently due and payable.  This is to avoid controversy in the event the tax assessment is altered after closing that creates an increase or decrease in the tax bills which is retroactive.


You should plan to reimburse the seller based upon the bills as they exist now unless you and the seller negotiate otherwise.


Does this help?  If I have misunderstood the question, just post a response on the blog or shoot me another email. Take care and may I applaud your careful research as a savvy buyer.  We need more consumers like you!   ;)


Diane

Tuesday, November 16, 2010

Thanks to new federal rules covering closing costs on mortgages, home buyers are experiencing a new type of surprise at closing.

Instead of being faced with higher-than-expected costs -- as homebuyers often were shocked to find prior to this year -- the amount needed to close on a mortgage loan is generally the same or lower than the original estimate, experts say.

That's because lenders and brokers, faced for the first time with new penalties if they lowball estimates of upfront mortgage costs, are giving borrowers more realistic cost estimates.

Read more in the Tribune Review.

Thursday, November 11, 2010

the day title insurance and Marilyn Monroe met in a Google Alert

"suggests that she not only cooked, but cooked confidently and with flair": Scrawled on stationery with a letterhead from a title insurance company, ...



Read all about it in the NYT.

Saturday, November 06, 2010

haven't had a taste of mortgage fraud for awhile.....

So, the exercise of yesterday afternoon was like time travel back to the days of sub-prime.


We received a frantic call from a listing real estate broker concerned that the HUD-1 did not accurately reflect the movement of the money.  Huh?

Turns out that after our closer left the table, the seller had confronted her and demanded that she pay him $800 to cover his loss.  He had been forced to pay $800 because the closing was delayed.  This real estate broker could not figure out what he was talking about and since he was too angry to be coherent, she left leaving hanging in the air his threat to complain to the real estate commission.

She had no idea what $800 fee he was referring to and pondered the HUD-1 for two days before calling the buyer's loan officer to see if he knew anything about it.  He did.  He gave her the complete story which I later heard from the buyer and seller when I called them yesterday.

There was a well issue which delayed the closing just enough to push it into the next month.  A buyer who had been planning on less than $100 to close now needed $800 because of interim interest.  Mind you, this was one of those cliff hanger HUD-1s.  Instructions and HUD approval all came the day of closing.  Here's what happened based on what I was able to piece together yesterday.

The buyer called the seller on his cell phone.  The seller, who was on his way to closing - it was a two hour drive - was faced with a threat from the buyer that the seller had caused the problem and he better pay up or the buyer was walking away from the deal.  The seller felt penned in and furious.  He could not reach the listing agent on the phone and so conferred with the selling agent and mortgage broker who both agreed that he should get a cashiers check payable to my office and give it to the buyer before closing.  The seller agreed to do this so he could move forward with his closing and expected to extract the money from his listing agent.

Now, let's pause for a moment in this story to discuss what honest real estate agents and mortgage brokers should do in this kind of a situation.  Professionals are trained.  Real estate agents, mortgage loan officers and brokers along with title insurance agents are trained to recognize and guard against illegal acts.  WHAT DOES A TRAINED PROFESSIONAL SAY
WHEN A CONSUMER - A LAYMAN WHO MAY NOT KNOW BETTER - SUGGESTS AN ILLEGAL ACT?   Let's all say it together........

NO.

Well, in this case, these two professionals, now known as scofflaws, said great idea and colluded to defraud the mortgage lender.  They knew better than to tell my office, so they hid the act.  When asked for funds at closing, the buyer pulled a cashiers check from his pocket.   The closer reviewed it, found nothing out of order.  Though the check did not show a remitter - not all do - the buyer's name was printed on the check by the bank in the memo line.  The seller had taken the extra step to make it look good.

Once the full set of facts were known to us, you can imagine how disappointed we were.  It's hard to find out that people with whom you have had a working relationship are liars.  As the listing real estate agent explained yesterday when she called our office, the only people at the closing table who did not know what was going on were our closer and her. 

We wrote a letter to the mortgage lender which was delivered by fax along with a copy of the check and HUD.  Original sent to the address on the HUD.  All parties in the transaction were copied including our title underwriter.

JC had chatted with the selling agent and mortgage broker before I spoke with the buyer and seller.  They both insisted that knew nothing about it.  I spoke with the seller and buyer and explained that what happened was mortgage fraud and illegal.  The buyer insisted it was his idea and that he had not discussed it with anyone.  The seller inferred that he had discussed it with either the selling agent or the mortgage broker, he couldn't remember.  These conversations took place before the listing agent filled in the blanks and we knew that both the selling agent and mortgage broker were involved.

The letter prompted a call from the lender who asked plainly why folks didn't just do a work out and revise the HUD?  That's exactly what the listing agent had asked.  If the buyer didn't have or didn't want to pay the money, she would have liked the opportunity to consider a reduction in the commission.  In this case, the mortgage broker made thousands of dollars.  He could have knocked down his fee a bit.  The seller had a two hour drive.  We could have worked all this out with the lender and got an approved HUD without skipping a beat.  But no, they had to go under the table and take the illegal route -pulling their consumers in with them.

The lender pulled the loan from their pipeline - it hadn't been pooled yet - and will get back to us on Monday with a suggested fix.  They said they will contact the mortgage broker.  It will likely be a modified HUD - showing basically the fix that SHOULD have taken place on the day of closing.  I don't know that anything else will happen.  We're waiting to see.

This is a good example of what was so common during the sub-prime fiasco.  I am truly surprised that there are still players in the business acting out retro-mortgage foolishness.

Friday, October 29, 2010

this still blows my mind....ROBO-GFEs...don't they get it yet?

"Several important new features in ClosingCorp’s SmartGFE service just went live in order to improve the GFE data process — including an automatic notification of changed circumstances"  source


ClosingCorp's SmartGFE is nothing more than a ROBO-GFE in my mind.  It's only a matter of time before the lack of human decision making is exposed yet again as a bad idea.  Culture of brainlessness..."we" can't seem to value human beings.

Well, that's an angle I hadn't consider. Hmmm.

"We are not an equity owner in any law firm," he said.

Read the article in Housing Wire.

"standing in the wind" and "the wall is red"

I've probably talked about these two techniques before but just in case, let me explain.

What we call "standing in the wind" is the purposeful listening  to another person venting while remaining calm.  Our natural instinct is to get riled and defensive. It's not that the wind is bad.  The wind is.

Real estate is a large transaction that touches some of the most important moments of life and humans express frustration, rage, fear, sadness and joy in different ways.  Sometimes something completely unexpected will cause a person to need to vent.  These moments are normal.

As noted at the top of Title Insurance Talk, we think of our office as an emergency room of life and that means our staff must be trained in bedside manner.  Remain calm and help.

The second technique, "the wall is red", is the ability of staying on target with an important point, quietly standing your ground, and saying the same thing over and over until the other party understands whatever it is that you need to communicate but they are having a hard time grasping.  The point is to not go off on tangents and to not get riled or frustrated.  We are humans with all the frailties we share, but we are the professional in the transaction and we need to keep our focus on the task and help others to move forward to a successful closing.

Mind you, we are not always successful because we, like you, are not perfect.  We use these techniques to remember to stay calm and move forward to accomplish our shared task.

Here's an example:

Insuring title for property owned by an out of state LLC, not registered as a foreign LLC in PA.  There is a mortgage with a local bank.  The seller was represented by an attorney.

We requested:
  1. the operating agreement for the LLC along with any amendments
  2. a statement of the nature of the business being conducted in PA so we could determine whether or not there was a corporate tax lien risk
  3. authorization to obtain a payoff letter from the bank
We received a letter from the attorney stating that they had no operating agreement, since they were registered in another state, there was no corporate tax risk in PA, instructions to give him the proceeds check payable to the bank and he would secure a release.

We responded asking that he clarify who he was representing in the transaction - the LLC, the bank, or both.  We had reason to believe the LLC did have an operating agreement and would he confirm that with his client.  We respectfully disagreed with his position on PA corporate tax and asked that he provide a statement concerning the nature of the business being conducted in PA.   We also let him know that we needed to communicate directly with the bank and if the bank wanted us to give the attorney the proceeds check, they would need to give us those instructions in writing.

The response included an operating agreement with amendments, a statement that the LLC conducted no business in PA beyond the ownership of real estate and a signed release.

We had independently contacted the bank and received a letter signed by a VP stating that they wanted us to send the proceeds check directly to their office.

Fine, now we could move forward.  No, the attorney still wanted the check directed to him and produced a letter from the bank which instructed us to give the check to the attorney.  This new letter was signed for the VP by his secretary.  We said we would be happy to change the instructions but that the letter had to come from the VP, not by his secretary.  That new letter came a couple of days later, we validated it by calling the bank, and the transaction closed.

I thought the entire exchange was a bit odd.  My staff had remained calm and simply continued to reply and request what we needed over roughly a month.  We had dealt with this attorney in the past and not remembered such an unusual exchange.  Yesterday, the truth of the underlying tension was disclosed.  The attorney, who needed to vent sadness, shared with my staff that the previous manager of the LLC had recently killed himself and his wife in a murder/suicide.

We never know what might be causing another person in our transaction to be less than focused. I am proud of the folks in my office who gently worked their way to closing without getting riled.  They calmly repeated "the wall is red" until it was heard and understood and continued "standing in the wind" until the door to closing opened.

Wednesday, October 27, 2010

My heavens to Murgatroyd, we're busy.

Me thinks consumers have finally discovered that interest rates are LOW LOW LOW and those that aren't buying are refinancing. 

Oh, and BTW - lenders are lending!  ;)

Monday, October 18, 2010

I really do not understand this need to make transactions brainless. Do you?

The robo-signers that have blown a hole into the foreclosure process are evidence of this never ending quest for the holy grail of brainlessness.  WHY  WHY  WHY WHY is the mortgage and title insurance business so darned interested in getting rid of competent human beings?

I just got a call from a nice lady at Closing.com.  They call every so often to ask if my fees are accurate and I always say that our listing directs people to our web site and to call us to get an accurate quote.

This time she was insistent that they need accurate fees because lenders will use their automated system to populate GFE fields and that they need to guarantee the accuracy of the data.

WHAT?  WHY?

Why is it so bloody hard for a lender to have trained human beings who know how to complete a loan disclosure?

Why are title insurers who participate in this program ignoring the unique nature of real estate transactions and the definitions of title services.  Is everybody just overcharging consumers to cover all possible transaction fees or are they misleading consumers then giving them a gotcha in the end?

Consumers actually take their transactions seriously and expect to deal with humans who have trained brains in gear.

WHAT THE HELL IS WRONG WITH THIS INDUSTRY?

WHY DON'T YOU WANT TO PRACTICE A PROFESSION THAT REQUIRES THOUGHT?



My brain wants to burst when I have a conversation like that.  I just don't get it.

Thursday, October 07, 2010

mortgage broker advertises interest rates tied to affiliated title insurance

A friend showed me the mortgage rate section of the Tribune Review last weekend and pointed to a mortgage company listing that had asterisks next to a few interest rates.  These asterisks pointed to a note that the rates were only available if the transaction was a purchase and the borrower used a particular title provider.

Clearly the mortgage broker sought to avoid Pennsylvania's discounted refinance title premiums as part of this package deal.  Only purchases transactions are eligible so there's enough cash in the pot to subsidize the rates.  The consumer appears to be getting a deal with the package.

What do you think about this offer?  Is it a problem under RESPA or PA lending or insurance law?

I've pondered on it and I'm really not sure.  It's very much like the deals offered to buyers in construction transactions.  You get the good price if you use the affiliate.  If you don't use the affiliate, you pay higher than market.  As far as I could tell these interest rates weren't especially low.

What's also interesting is that I did some checking around and found that the mortgage broker is an attorney who is operating the title services business through the law firm and not as a title agent.  He's working under the approved attorney program.  That means that TIRBOP rates do not apply.  So what's the deal with purchase versus refinance?  This fellow can charge whatever he wants when he wants to. 

Anyway, in the days of a more compliant and aware marketplace, this was oddly red flaggie.  ;)

Wednesday, October 06, 2010

Hey, readers. Hello!

Hope you like the new look of Title Insurance Talk.  This is the first visual overhaul since 2006.  I've been wanting to update the picture for some time but the right shot just hadn't surfaced, then my friend Marianne sent my this photo of us playing at the local farmer's market.  I LOVE that she caught my TCS minicooper in the shot, SOOOOO, here we are.  ;)

Marianne McAuliffe plays Native American flutes and we love making music together.  She picked up those fun peace glasses at the beach and I love them!

BTW  - Here's the new addition to the TCS fleet.  We retired one of the minicoopers and bought a KIA Soul.  I think the logo looks really nice against the red, don't you?  The Soul is a nice happy looking car and that's what we want.

PS  Here's Marianne's CD.Desert Spirit

Fidelity scales up outsourcing to India

CHENNAI: Spotting an opportunity to cut its costs by around 30 per cent with increased productivity, US-based insurer Fidelity National Title Group Inc has decided to scale up its business process outsourcing (BPO) and software development activities in India.

The company had set up its captive BPO company Fidelity National Financial India in Bangalore three years back.

The $4.6 million revenue Fidelity National Financial India has around 800 employees searching and confirming property titles in the US for its insurance parent. 



Read more in Economic Times.

Monday, October 04, 2010

if you bought a foreclosed home and are concerned about recent news

“If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge,” said Kurt Pfotenhauer, chief executive officer of ALTA. “However, it is unlikely that a court will take property from an innocent current homeowner and return it to a previous homeowner who failed to make payments on the loan subject to the foreclosure.”
Though laws may vary on a state by state basis, in general, the buyer of a property that has been through foreclosure has numerous defenses available to assure their continued ownership.
  • The alleged deficiency in the foreclosure process may not be accurate.
  • The alleged deficiency in the foreclosure process may not have harmed the previous owner.
  • The foreclosure judgment is a final court order. It is likely too late for a technical objection to the foreclosure process to be raised by the previous owner.
  • Because the new owner purchased in good faith, they may be protected under the law. 

Read more from ALTA here.

Tuesday, September 28, 2010

the junk junkies just never learn, do they?

I've been slowly watching the return of articles pushing automation in mortgage underwriting and mused that it wasn't taking very long for people to forget that the loss of competent human credit analysts is what started this whole mess.

This morning, this article popped up on Inman and I am simply amazed but I guess shouldn't be surprised that folks just don't get what credit underwriting is all about.

With so many people now saddled with poor credit, reestablishing "nonprime" lending is increasingly important to the future of homeownership, researchers at Harvard University's Joint Center for Housing Studies argue in a new report.

The hardest lesson I learned as a young underwriter is that some people are not willing or able to repay and that placing them in a house, even when the lender isn't a predator and the consumer fully understands the disclosures, is NOT helping them.   It only leads them to foreclosure.

Trust me.  Don't walk down this road again.

Wednesday, September 22, 2010

the dangerous dangling lot

You might not think of an extra lot as being dangerous but from a title insurance perspective, the extra lot causes all sorts of misunderstandings and potential for loss, especially when the lot is forgotten or not considered.

A recurring problem surfaces in foreclosure.  If a title agent only places a mortgage upon the lot on which the house sits but doesn't consider discussing the adjacent vacant lot with the mortgage lender, you have potential marketing issue if the lender forecloses.  Many of these adjacent vacant lots only have value as a yard extension for the house and often aren't good building lots.  So, when the REO department of the lender goes to sell the house and doesn't have title to the adjacent lot, how does that impact marketability?

We've run into this a few times and often the extra lot isn't discovered until we do our title work.  The new buyers then have to decide if they want to track down the vested owners, the folks who lost their house,  wait for the lot to go up for tax sale as it often does, or cancel the contract.

We have a new order in which the sister of a foreclosed upon borrower is buying the house and the adjacent lot.  She's buying one from the REO lender and the other from her sister.  Interestingly, the house with the lot is going for a really low price because the lender discovered that most of the house sits on the adjacent lot still owned by the sister and not the one on which the mortgage was placed.

Thursday, September 16, 2010

question to settlement agents

Are you seeing a drop off in the number of transactions with home warranties being sold as part of a purchase transaction?  I am.

Interesting, huh? 

Tuesday, September 14, 2010

interesting observation on RESPA 2010

How the industry is faring with new RESPA forms After eight months of using the new Good Faith Estimate and HUD-1 Settlement Statement forms, mortgage lenders, closers and the legal community are at a calmer place with implementation than they were on Jan. 1. But is it a perfect system yet? Two attorneys say no, with one saying that his firm is performing half of the closings per month than his company conducted before the forms were implemented.

You need to subscribe to RESPAnews.com to read the article.  But from this blurb we see feedback from an attorney who says his firm has lost business since the RESPA implementation.

Well, I'm from the flip side of that comment.  Our office has seen an increase in business from various sources since RESPA 2010 was launched.  Why do I think that happened?  Well, we embraced the concept early.  Our staff was fully trained and prepared so that when lenders weren't sure, we were able to assist them.  We see RESPA 2010 as a positive step forward and that attitude makes all the difference.

We hear from our lender friends that some title agencies and attorneys do nothing but grumble and make their already stressful jobs harder.  So, cheer up my fellow title agents and attorneys.  A smile and a kind "we're in this together and we'll make it work" attitude is a good marketing strategy. ;)

Monday, September 13, 2010

query via email: Is it legal to have a simultaneous closing?

Hi Diane,

My question concerns methods of closing. Is it legal to have a simultaneous closing?

In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.

At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?

I hear some Title companies will and many will not. I would like to know the legalities on the issue.

Thank you, R

Hi, R:

I am not an attorney and am unable to answer your question about legalities.  As a title insurance agent, I can help you understand why I may or may not handle a transaction like this.

I insure title in PA and so there may be issues in FL of which I am unaware.  In PA the Dept of Revenue considers, as do I, that these are clearly two transfers.  Even if there are not two deeds in PA, both transfers are subject to transfer taxes.

When a transaction like this is presented, a title agent will consider whether or not there is a potential for fraud.  We insure against fraud and we also do not want to collude to defraud another party.  A test, then, is whether all parties - A, B and C - are aware of the simultaneous close.

This is the case in relocation transactions. In those cases a relocation company has advanced funds to a homeowner and holds a signed deed in hand pending the sale of the property to a buyer.  The buyer deals with the relocation company but at closing there may be two deeds - one from the owner to relo, then another from relo to the buyer - or there may be just one deed from the owner to the buyer.  In both cases transfer taxes are paid twice.  Everyone is aware of the nature of the transaction.  There is no fraud and there is no harm.

As to the specific transaction you mention:
"In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.

At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?"

A title insurance agent is in the business of insuring title.  If the closing vests title in B, then B is the consumer and the one being insured.  The fact that C gave B the money, has nothing to do with the title agent.  If you then expect the title agent to convey from B to C, that's a second transaction and though it may happen at the same table, it is really happening after the first closing.

Since this type of closing has so often been used as a vehicle for fraud, honest title agents are hyper-sensitive and for that reason would be likely to pass on taking the business unless they are absolutely comfortable that everything is above board and there are no shortcuts.

I hope that explanation helps and thanks for reading!  ;)

Diane


speaking of escrows

What do you think?  If an agent is no longer representing a particular underwriter, doesn't it make sense that the underwriter should take the escrows related to their policies?

I was thinking about that lately and it makes sense to me. 

abandoned escrows

It still blows my mind how many abandoned inheritance tax escrows we have every year.  I've got thousands of dollars sitting in escrow that I need to get over to the Department of Revenue.  They in turn will send us a release for our insured property and we can then file it at with the Register of Wills.

Each year I work with a different person at the Department. Most are just happy to get the money and send releases quickly.  Last year, the person charged with dealing with our escrows was a tiny bit perturbed and the entire process was more time consuming than it needed to be.

As soon as I have a bit more free time I'll process this year's batch.  Hopefully it won't turn into a make work project.

Saturday, September 04, 2010

Hello to fast reader in the Netherlands. :) May I help you find something in particular?

This is the little blog that could. ;) Title Insurance Talk sits out here in the web ether answering usually 100 to 200 questions at day.  Most hits are specific queries - questions to search engines.  I always hope YOU, the reader will find what you are looking for.  If not, if it's a relevant question we haven't covered before, I'll do a post.  Some hits are regular readers and I love seeing your visits because it feels like a little title community.

Today, I was really surprised to see close to 500 hits and the day isn't over.  I wondered if I had said something that caused a stir.  Unusual hit volume on this blog usually means a viral topic like the old notary signing agent discussion.

Today, I see the increase in hits is coming from one source in the Netherlands.  So, just wanted to say hello and thank you for reading.  ;)

Wednesday, September 01, 2010

Monday, August 23, 2010

query: should buyer get title insurance on land cash deal

Unless you want to put the cash at risk, YES, buy an owner title insurance policy.

query: when does being threatened with adverse possession end

I do hope you confer with a good real estate attorney.  In PA, you can evidence that you granted permission for the use, even if temporary permission and that should defeat an adverse possession claim.  A good real estate attorney can advise you.

I bought a property a few years back and the survey revealed that a neighbor was using my land for parking and generally as a side yard.  The land was on the other side of a creek and if I had not had a survey done, I might never have know it WAS my land.  Interesting, eh?  Anyway, I visited the folks and offered to sell them the land for a small amount plus the cost of doing a subdivision.  They said no, so - to protect myself from an adverse possession claim - I sent them a letter giving them temporary permission to use that portion of my land.  That was all I needed to do to defeat a potential adverse possession claim. 

Some readers might say what's the big deal?  Well, if I am paying taxes on the lot, I want to maintain control.  The neighbors wanted use but were unwilling to pay, so that's life.

Adverse possession is a real threat to property owners and you should take the simple precautions available to you in the law.  Ignoring the use of your property by another is not an option unless you don't care about the loss.

questions on a public forum

Purchased a house about 5 months ago in PA. I have talked to the guy 8 or 10 times now and he has made many excuses and promises.. and yet, I never received the original title back, or the owner's title insurance policy I paid for. I checked with the county, and the purchase has been recorded with them.

So, obviously I will try to press on him by filing BBB complaint, etc, but my concerns are:

1) Is a certified copy of the title just as good as the original?
2) Can I go to a 3rd party to obtain title insurance at this point? Is there some time limit in which it must be purchased?
3) If he didn't issue the lender's title policy (a much bigger expense than the owners), is that going to negatively affect me in some way?
4) Is there anything else I am supposed to get that I didn't?

my answers:
1)  In a real estate transaction, it is not important to have an original deed so long as that deed has been recorded in the county courthouse.
2)  If you already paid for title insurance, you are entitled to receive a policy.  Contact the PA Dept. of Insurance for assistance.  The investigative department will be very interested in this title insurance agency.  Failure to respond to a consumer or to deliver a policy within a reasonable timeframe is a RED FLAG that there are likely other, perhaps more serious, deficiencies in the way this title agency is managed.
3)  Don't worry about the loan policy.  That is between the lender and the title insurance agent.
4)  You'd be better served to file a complaint with the Attorney General rather than the BBB.  The AG has teeth. BBB does not.

Saturday, August 21, 2010

question from Bob

A Lender’s Policy was issued by a Title Company for private financing in the amount of the loan on a single family home with a LTV of 50% or less.  A good portion of the loan proceeds were used to cure delinquent taxes and acquire an adjacent property.

Borrower signed as a Personal Representative of an Estate with minors.  Title Company failed to discover borrower’s PR status had expired.  This error was discovered when borrower petitioned the Estate, represented by the Public Fiduciary, to pay delinquent loan payments and back taxes as Lender had commenced a Trustee’s Sale.

The Public Fiduciary sued Lender in Superior Court asking for a Declaratory Judgment that the Note and Deed of Trust be judged invalid and unenforceable.  Lender filed a claim against Title Company who hired an attorney to represent Lender but, it was discovered, only for the amount of the Policy plus costs.  The Title Company informed Borrower that Borrower must sue Title Company Escrow separately on Title Company’s E&O, a separate agency, to hopes of recovering accrued interest and penalties which are now substantial because of time elapsed.

In the parallel world of home insurance where there has been a total or substantial loss, the insured frequently hires a Public Adjustor to negotiate a settlement taking a percentage of new money when the settlement offered is not satisfactory.

Are there Public Adjustors who specialize in Lender’s Policy issues?

Hi, Bob, and thank you for your question.  I have never heard of Public Adjustors in title insurance.

Loan policies insure the validity of a lien and in this case it seems that the loan policy performed.

I do not understand why the borrower would seek to hold the title agent liable for the borrower's failure to perform as a fiduciary for an estate.  You might argue that the title agent could have noticed and raised the issue but the title agent was charged with issuing a loan policy as a representative of the title insurance company and in that capacity should not also be acting as an attorney for the borrower.

In fact, the question you pose does not mention that the title agent was an attorney and so in any case would not be expected to give advice to the borrower.  The title agent may have presumed that the borrower had knowledge of the responsibility of the fiduciary and was able to execute the loan documents.  That was an error in judgment for which the title insurance company paid a claim.

In my opinion, the borrower would not have standing to go after a title agent for an error created by the borrower's own negligence.

So, that's my non-attorney title agent two cents.

I'm not certain if this response is helpful, but I hope it is. If there are readers out there with another take on this issue, please chime in with a comment.  

Thanks for raising the issue, Bob, and thanks for reading. 

Thursday, August 12, 2010

2008 taxes used for 2010 closing?

Diane: After we closed on our property we discovered the title company had made an error when they did the title search regarding the taxes. They said they based them on the 2008 taxes because the 2009 tax bills were not out yet, we closed Feb. 22, 2010. They said their title search found the 2008 taxes were $1130 when in fact the 2008 taxes were $2950. The amounts that were allowed for taxes during closing was short by over $1,800. We purchased title insurance with the understanding that this would cover us in the event of an error such as this. Who should be responsible for the under payment for the taxes? We went to the title company first, they jerked us around for several weeks before they finally submitted the claim to the title insurance company, now I think we are being given the run around by the insurance company. We just need to  know who should be responsible for compensating us for the $1,800 owed for 2009 taxes.The title company who made the error, the title insurance company or the bank that we purchased the property from? Does the title insurance company represent us if we need to recover the tax money from the bank? No one seems to be giving us any answers. Thank you for any information you  can give us regarding this error. Kris

Hi, Kris:  Here are some general comments that might be helpful.  Find out when the 2009 taxes were due at discount.  That date is crucial.  If the taxes were due at discount before the date of the issuance of your title insurance policy, then you've got the basis for a claim against the title insurance company.  Most title policies contain an exception for taxes that are not yet due and payable, so if the bills came out after your policy was issued, then this typical exception would negate a claim.

If the issue is that the taxes were underestimated when setting up a lender escrow account or perhaps underestimated in the tax proration calculations between you and the seller, that's really a harder case for assessing blame.  Presumably the real estate agent or the seller would have provided tax figures when you viewed the property.  Any reasonable person looking to purchase property would consider the cost of taxes when negotiating price. 

The title agent has no personal knowledge of the property and so if there is an error that could or should be recognized by the parties at a closing, the parties - seller or buyer or real estate agent - have an obligation to point out the error.

Taxes do change from year to year and title agents rely upon the best information available which is usually a tax certification from the tax authority.  You might ask for a copy of that certification so you can better understand what happened.  Sometimes the tax collector quotes incorrect information.  Sometimes the title agent hasn't done a good job of getting up to date info.

I hope this helps.  Good luck with it and thanks for reading. ;)

Diane

Monday, August 09, 2010

happy insured

Hi Diane,  thought I would follow up to share the outcome of this title insurance claim for the costly non-permitted construction on our house...

Even though our legal matter with the sellers was far down the road (and stalled) and only then had we decided to file the claim, First American agreed to pay the full amount of the policy cap of 25K for such claims (hey, it's something!).   So in this case, we're very lucky we decided to pay for the enhanced policy way back when we bought the home.  I also think our intense record keeping on the matter provided the title company with the information they needed to evaluate the claim without any prolonged investigation or agony on anyone's part.

While we would have rather avoided this whole mess, at least we have found this bright spot in what we once, as first time home buyers, thought was just an obligatory part of the closing process.  It was a nice feeling to realize that a signing a couple of pages and a small check resulted in this little policy that has been quietly protecting our interest all these years.

Very happy to hear that.  Thanks for reporting back.  ;)

Thursday, August 05, 2010

just curious

How many states or underwriters require a written quality control plan for title agencies?  I just had an inquiry from a reader in Kentucky who is looking for a plan.

JC's response to the last post.

JC says, if anything, what he hears most often now from borrowers is, "Is that all?", and I think that's just darn exciting.  RESPA 2010 has turned the world of the Good Faith Estimate on its head.

Tuesday, August 03, 2010

the great silence.....can you hear it?

I cannot remember the last time a consumer called or cried about their amount of cash required for closing.

How amazing is that?  It's wonderful.  It is life changing.

HUD, thank you.

Your plan worked.  The new GFE and HUD-1 2010 RESPA standards have accomplished what years of training couldn't - accountability in disclosure.

Put the fear of real penalties in the hearts of loan officers and eliminate bait and switch or just plan sloppy work.  You did it.  You stood up to the lending and title insurance establishment and did something REAL, something that actually helped.


APPLAUSE  APPLAUSE  APPLAUSE

BRAVO HUD. 

Wednesday, July 28, 2010

The seller did his own title search and.....

he says someone at the courthouse did his deed for him.  Hmmmm....

Well, the prior vested owner was a man, we'll call John Smith.  Our seller's deed was from a woman who says she was Mrs. John Smith.  The deed says John Smith is dead and that Mrs. Smith owns the property by operation of law as having been his wife.

Well, that's wrong.  She wasn't in title so does our seller actually own the property?

We asked the seller to produce an original death certificate.  The plan is to verify that Mrs. Smith was married to John Smith at the time of his death and try to figure out where an estate might have been raised, if any, etc.

Our seller cannot seem to get a death certificate so we say John Smith is not dead and therefore our seller does not own the property.  How about them apples?

Will be interesting to see how this plays out.

Tuesday, July 27, 2010

just a note to say hello

Our two most interesting cases pending now are one involving a Power of Attorney for a buyer and another in which the neighbor stepped forward on the eve of closing to say the driveway is on his property.

Both are cases of info coming in really late in a transaction and so both are delayed while we work out solutions.


In the case of the Power of Attorney, the buyers told the loan officer that they intended to use a POA because the husband is employed by the military and working in a war zone.  He comes home once a month and was sitting right in front of the loan officer while they had this conversation.  Did she think to call us or her manager?  No.  She told them it shouldn't be a problem and asked that they send a copy of the POA to her.  Well, when we finally heard about it and had a copy in our hands, we noted that it was a general POA rather than a specific POA which is preferred when used by a borrower in a mortgage transaction.

As the title agent, the risk to an insurer when using a general POA for a mortgage is that the principal may challenge the validity of the mortgage on the grounds that they did not intend that the agent mortgage the real property.  It's a stretch but it's a risk.  I figured I'd reduce that risk by asking the mortgage lender to approve the general POA in writing after I had notified them in writing that it was a general POA and not the usual specific.  If they said okay, then I had a paper trail for the title insurer to fight off a claim on that issue.  The notice to the lender in writing - via email - fulfilled my fiduciary duty by raising the general versus specific issue to be sure the lender was making an informed decision.

The underwriting guidelines for the mortgage program absolutely require a specific POA, no wiggle room.  So we did a fast prep of a specific POA including a military style notary acknowledgment and emailed it to the buyer.  He, of course, if now back in the war zone and transporting this document back to us is likely to take 14 days.  Their contract was for a July 31st closing so they are looking for an extension.

In the case of the driveway, folks were supposed to go out and take a look see last night.  I am waiting for a call.  As always, we have so far recommended to the buyer THREE times in writing that she get a survey.  She has signed our survey hold harmless.  Our position as title insurer is that we don't care about the driveway because she has total frontage on a public road and therefore our insurance of access is covered.  As the fiduciary for the lender, however, we want to know just how much of the driveway is on the neighbor's property.  If access to the driveway is totally blocked, then the lender's collateral may be diminished and they'll likely want a right of way.  The lender is part of the email conversation on this pending issue so they have been fully informed.

We did find on record a survey done a few years ago which shows the house but not the driveway.  We can see that the surveyor located or set three pins on the front lot line.  I suggested that they take a metal detector out there last night and see if they can find the pins.  The neighbor may be entirely wrong about the location of the lot line and the driveway.

If we are talking major blockage and the lender or buyer want it resolved, we will require a survey along with a right of way.  If its just a tip of the driveway, we'll settle that with signed disclosure and written acceptance by both lender and buyer.

That's it for now.  Back to work!  ;)

Tuesday, July 13, 2010

you probably know by now how I feel about FICO scoring...

I'm not a fan.

I think FICO got us into this credit mess by creating and supporting the false belief that automated underwriting could replace expert human analysis and judgment.  Though developed as a tool, it replaced humanity in the lending process.  NOW, it's time to let go.

We don't have subprime lending.  It's basically gone.  Hard money lenders are few and difficult for consumers to reach if at all.  That means many families and individuals will voluntarily or with little other choice, start to live within their means and pay cash.

Heavens!  What shall we do?  Isn't this a good thing?  Consumers learning to manage their money?  Yes.  I say it is, but it won't be a good thing if these consumers need or desire credit ever again.

Once a person recovers from bad money management and proves an ability and willingness to repay obligations, oughtn't creditors take a chance and lend?  I say yes, however, I suspect lenders who rely upon FICO scoring will say no.  Living without credit does not a high FICO score make.

If FICO won't change the calculations and  reward conservative cash based living and lenders are married to using FICO, then how does a deserving potential reformed or new borrower find a lender?

helping a consumer deal with reality

Back in April we received a title insurance order for a vacant lot on which the buyer planned to build a new home.  It's a cash deal and it still has not closed.  Why?  Well, the seller didn't realize that he had a mortgage on this lot and now we are working through a long process of obtaining a release.

Why didn't the seller know about the mortgage?  Well, the purchase of the adjacent lot was made after he purchased the main property, the lot with his house.  He had purchased the adjacent vacant lot with cash.  What he didn't realize is that when he later refinanced, the mortgage lender - Countrywide - took both parcels as collateral.  We don't know if that was intended or simply an accident, however, it does point out how careful a property owner should be when offering collateral for a mortgage.  Don't assume you and the lender are on the same page.  ;)

Anyway, our transaction is further complicated because the seller hasn't been making mortgage payments.  We're dealing with Bank of America - the new servicer of the old Countrywide mortgage - and they in turn must deal with Fannie Mae to get approval for the release.  It's a time consuming process requiring at least one appraisal but it IS slowly moving forward.

So, yesterday I received a call from the real estate broker.  She had me on speaker phone with two agents in the conversation - all talking over each other.  The broker called me to say they love our company, have never had a problem, but she cannot understand why we haven't closed this cash deal - it's been over two months, etc. etc.

I pulled the file, reviewed the copious notes by DH and proceeded to explain the reality, basically as I have done here for you.

Yes, I understand that this is not what the buyer expected and that they had hoped to get construction started before school starts.  No, I do not know how long Fannie Mae will take to approve the release.  Can she call Fannie Mae?  Sure.  Do I know who to talk to?  No.  Will I call? No.  The release was sent to Fannie Mae by Bank of America on June 29th.  I think we are still in a reasonable processing time.  How much longer will it take?  I don't know.  Two weeks?  Perhaps.  Six months?  I doubt it.

While we were having this conversation one of the agents in the room had Fannie Mae on the phone.

[pregnant pause for effect]

I suggested to the real estate broker that the best service she could do for her buyer is to help them understand that they have a seller that simply did not know about the need for a release.  Releases take time and they need to be patient.  The mortgage lender and Fannie Mae are motivated to get money and as long as the money being offered for the release is reasonably matched to the value of the vacant lot, I see no reason why we won't come to a successful conclusion.

She did not find my advice helpful and basically wanted to push me into doing a brow beating upon Fannie Mae in her stead.  I refused and said I would certainly make a call if I thought it would help, however, in my professional opinion the best course at this point is to be patient and wait.

When I have a conversation like that with a real estate broker I realize I may be doing so at the peril of not doing business with them again.  I have found, however, that being kind and using the tough love of the truth is better in the long run.  Many will see that and appreciate it and those are the real estate agents I like to work with.  If I spend my time doing the bidding of a person who is not grounded in reality, the consumers I am assisting will not be well served and I will be miserable in my daily tasks.  I'd rather be happy.  ;)

I get a kick out of seeing Title Insurance Talk translated into a foreign language.

Last year I noticed a post had been translated into Vietnamese.  Last week I saw one translated into Spanish for a Chilean reader and then this morning I noticed another translated into Dutch for a Belgian reader.  Cool. ;)

Thursday, July 08, 2010

LOL....I'm sorry but this makes me laugh.

The vagueness of the individual factors is compounded by the subjective balancing process inherent in the test. HUD explains that the ten factors “will be considered together in determining whether the entity is a bona fide settlement service provider.” But HUD gives no indication how many factors might be determinative, or which factors might weigh more heavily in the analysis. Any entity wishing to operate as an ABA (an arrangement RESPA specifically condones, with certain limitations) is thus confronted with a massive gray area. At some point within that gray area, both civil and criminal liability might attach. But the test gives no indication of where that point might be. Thus, the regulation does not contain “sufficient exactness to prevent arbitrary enforcement and give notice of what an individual must do to comply with the enactment.”Belle Maer, 170 F.3d at 559.

source document 

DUH!  It's gray and vague because that is what the industry establishment wanted!  They specialize in lobbying for vague rules so they can make a mint teaching everybody how to interpret and beat the rules.  They LOVE living in the gray because the line moves with the political environment. This is hilarious.   This is fascinating and in the interest of preventing a sham explosion of any kind, I do hope HUD and state insurance regulators will take note and provide clear guidance.  Need help?  I'm sure there are lots of us with good ideas. ;)



sham test unconstitutional?

The U.S. District Court, Northern District of Ohio, Western Division in Toledo, Ohio has issued a Memorandum and Opinion Order decided by Judge Jack Zouhary which holds that HUD's 10-Part Test to determine whether a controlled business arrangement is a sham entity or not is unconstitutional. The case is styled Erick Carter, et al. v. Welles-Bowen Realty, Inc., et al. and involves two controlled business arrangements operating in Toledo, Ohio which are co-owned by two of the largest real estate firms in the area and Chicago Title.

Read more on the OAITA blog.
WILLIAMSPORT — A State College businessman who admitted embezzling $1.6 million while serving as an agent for Ticor Title Insurance Co., based in Philadelphia, has lost his bid to be given a sentence lighter than called for by sentencing guidelines.
In an opinion issued Friday, U.S. Middle District Senior Judge Malcolm Muir said while Ellery A. Crissman’s community activity may justify a sentence at the bottom end of the guideline’s range of 51 to 71 months, they are not so extraordinary to merit a departure from that guideline.
Crissman, who lives in Lock Haven, pleaded guilty in September, and is scheduled to be sentenced in August. The guideline range calculated in a presentence report includes enhancements for the amount of financial loss, number of victims (more than 50) and abusing a position of trust.

on support of TARP

Against lots of vocal opposition, I supported TARPThis is why.  The assistance was necessary to stop a spiraling dynamic and prevent a banking disaster.  It was a carefully thought out plan with a way to recover funds when the danger was clear.

The unfortunate unintended consequence was that politicians across the nation saw it as a GO signal to borrow in previously unthinkable levels against the future wealth of the nation under the guise of protecting the NOW without any real understanding of what they were doing to the FUTURE.

For at least a year prior to TARP I had been watching the big three - Bair, Bernanke & Paulson - react and carefully work as a team to navigate the financial markets through what was certainly the most rocky and scary happening since the Great Depression.  I know they approached the extremes of the TARP plan with fear and reluctance.  Who would have guessed, certainly not me, that it would trigger a demonstration of full blown economic idiocy by our politicians. 

If they HAD been able to see the unintended consequences, do you think they would have proposed the TARP plan?  It's a hard call, but I'd have to say NO.  I think they'd have more carefully disguised the anticipated cost and perhaps approached the fix incrementally rather than lay out a gameplan for approval of BILLIONS in one vote.  They inadvertently gave the spending addicts in power a "how to" lesson in tapping into the nation's wealth.  Like stupified lottery winners politicians have gorged on the thrill of spending and we still don't really know how that story ends but I have to say TARP started it and WOW, what a hard lesson.  I just had no idea how really ignorant most politicians are.  I always kinda thought it was a disagreement of principles but now I think it's just plain ignorance.

Wednesday, July 07, 2010

just got freaked out by a tax collector

If you live in a metro area or some other place of the country with professional tax collection, you just probably cannot believe how we collect property taxes in most of Pennsylvania.  Each municipality has an elected official in charge of the tax collection.  Many are part-time and work out of their homes.

I just got off the phone with a new tax collector who called because she could not match up the amount of our check with the taxes owing.  We sent in tax at penalty having just missed the face due date of 6/30.  The face amount is $86.61 which makes the tax at penalty $95.27.

This young lady doesn't understand how to calculate percentages, doesn't know what a penalty is and is sort of out to lunch on the collecting property tax business.  Apparently her mother used to be the collector and now she has the job.  Wow.

I cannot blame this young lady.  She seems nice enough and you don't know what you don't know until you know it, eh?  I've got to say the system ought to have a better selection process or perhaps her mother should have taken the training to a level of adequacy.

On another tax collector freak out note, I am taking a tax collector to the district justice because he collected the same tax twice and refuses to release the funds.  He also refused to claim the certified letter we sent.  We'll be sending the constable for him soon.

Tuesday, July 06, 2010

short sale lender wants buyer docs? why?

This is a first.  We just got a post closing request from a real estate broker for "a copy of the Note, Homeowners Insurance Dec Page and paid receipt, Approval letter from lender or and Amended approval Letter."

Say what?  Why?  What business are these personal buyer documents to the seller's mortgage lender?

Here's my response:

"To guard privacy, we release documents when requested by the principal.  As the documents you are requesting are buyer documents, I need a written request from the buyer directing that we release them to you.  They can fax it to me [724-238-7830] or send me an e-mail."

If the buyer wants to share, I don't care but I do wonder what this is all about.  We read the terms of the short sale prior to close and there is nothing in there which indicates that this documentation is part of the deal.

Sunday, July 04, 2010

query: title company will stop pay on refund check unless new HUD is signed

Interesting topic.  If you check the documents signed at closing you should find one or more in which you, the borrower in a mortgage transaction, agreed to cooperate and sign corrective documents as necessary.

If the title company has been charged by the mortgage lender or some other party to have a corrective HUD-1 signed and you are not cooperating, they may choose to use whatever means they have at their disposal to get your cooperation.

Stopping payment on a check is one way to get your attention, eh?

Monday, June 28, 2010

Thursday, June 24, 2010

gee, Charles, you didn't look very hard...we've been out here talking with consumers for YEARS

"We decided that the only fair option is to let the consumer select a title company they can trust, rather than leave that decision to the financial institution" says Charles Marino, CEO of Pennsylvania Title Company. "We don't know of any other title companies who are reaching out to the end user like this, and we feel it will be a positive direction in which to take our company" says Marino.

Read more on Newswire.


I'm always happy to see a title insurer reaching out to consumers.  Shopping?  Check out their web site, then check out ours.  We have the Choose and Save Program which is the most affordable way to get title insurance and settlement services in PA, at least as far as I can find.  We close 8 to 8 Monday thru Friday and 10 to 5 on Saturday - no charge for after hours closings, just to make it convenient for YOU, the consumer.  If you opt into Choose and Save, we come to YOU for free.

Chicago Title held liable for fraud by employees

Fidelity National Financial Inc.’s Chicago Title Corp. and Chicago Title Insurance must pay $5.7 million in punitive damages for the role some employees played in a $30 million real estate scam, a San Diego jury said today.

The companies also were told to pay a share of $1.11 million in compensatory damages the California state court jury awarded to three investors who sued.

Read more on Bloomberg.

Tuesday, June 22, 2010

error in proration or lender escrow?

Diane,
I did not see a link to allow a new post on your Title Insurance Blog, so I wanted to email you.  I read many of the posts and several came close to my question, but as always a little different.

We recently purchased and closed on a condo.  Afterwards (about 10 days) my closing attorney contacted me about an error found by the seller on the HUD-1.  It was missing prorated insurance on line 409, which was blank on the executed HUD.  They are asking for another $1,300 to cover 10 months of the pre-paid insurance.  I did pay a similar amount into an insurance escrow.  I would expect that the escrow or the new HUD is incorrect and that I would be paying the amount twice.  I would also think that once the closing is completed and signed, my responsibility has been met. 

Any insight would be appreciated.
Thanks,
Don

Hi, Don:  The proration and lender escrow sections of the HUD-1 are separate and distinct. 

The mortgage lender sets up an escrow to pay the insurance bill the NEXT time it is due.  What you want to do is find out when the next invoice will come out for insurance.  Count the number of mortgage payments you will make between closing and the due date.  That's how many months the lender should collect.  They are permitted to escrow a cushion of up to 2 additional months.

If the seller prepaid insurance beyond the date of closing AND your sales contract included agreement to prorate insurance, then you do owe the seller for insurance paid beyond the date of closing.  Errors like this do happen sometimes and if the title insurance agent was forced to take you into court, they would likely win because - if the contract called for it - you made the agreement.


I would check to make sure the mortgage lender was given the correct date for the next insurance bill.  If the seller paid it so far in advance, it's likely that the lender would not have to escrow so much for that item.


Thanks for reading and I plan to post this later today because it will help folks in a similar situation.  ;)


Diane

Monday, June 21, 2010

read this article in the Baltimore Sun, please

Government knows it has a problem.

In a recently concluded report, the Commission to Study Title Insurance in Maryland, appointed by the legislature two years ago, wants the insurance commissioner to study setting up a guaranty fund to pay back future victims. It also suggests making title-insurance underwriters more responsible for the behavior of agents such as Sybert who represent them at the closing table.

Those are decent ideas. But the report lacks a sense of urgency and outrage over the mounting rip-offs. It seems far too easy to obtain a title-insurance agent's license in Maryland; there are more than 400 agencies. Why Sybert was allowed to stay in business with his blemished record is a mystery.  Here's the whole article.


As an honest hard working title insurance agent, like all honest hard working title insurance agents, it galls me to no end that underwriters and regulators don't take our role as the guardians of the gates of fidelity more seriously.  Title insurance agents more than any other party in a real estate transaction have the ability to detect and stop fraud.  We also have our hands on millions of dollars and no one seems to understand how critical the role of title insurance agents can be in maintaining a secure and stable real estate market.  We can't control natural market swings but we can, if we aren't working under conflicts of interest and have been vetted for security and competency, do much to eliminate fraud theft and abuse.

We have to work everyday in an industry filled with crooks and that puts our livelihood at risk because people can't tell the difference between players.  They trust that a license to operate means something.  

Even in PA where we have a good investigative insurance department staff, the oversight of escrow account practices seems to lay in a black hole between the Department of Insurance and the Department of Banking  Lots of crooks in all states have been caught and taken out of the business in these last couple of years or so, but we still don't have good vetting in place to create licensure that means something.  I know regulators and underwriters are working on it.  It's hard because there is a political dynamic underlying the entire process.  Isn't that surprising...ha-hah.  When so much money is in play, there is always a force working to protect referral structures.  If you are a consumer, please be careful and make certain YOU select your title insurance agent by shopping for price and quality of procedure.  Talk with people and see if you think they actually "know" their product.  You need title insurance.  The protection of the product is real, but you do need to be careful that you aren't being steered or lured into a bad situation.

Good luck to best wishes to all those doing it the honest way.  There are more of us than the bad guys, so hang in there and keep on keeping on...we'll fix this. ;)

Friday, June 18, 2010

Just because the grantor is FANNIE MAE you ought not to overlook review of the deed and power of attorney.

It's frustrating.  FANNIE MAE does not release the deed for review prior to closing.  We have to wait for a courier delivery of the original which arrives on the day of closing.  That means we have no opportunity to find problems before the last minute and usually everything is okay but not always.

This morning JC reviewed a FANNIE MAE deed for a closing in Somerset County.  The deed referenced a power of attorney which had been previously recorded.  Following procedure, JC pulled a copy of the POA off the Recorder of Deeds web site and found that it had expired in January of 2009.  Yes, that's right -EXPIRED JANUARY 2009!

I wonder how many FANNIE MAE transactions closed in Somerset since January 2009.  It's not a high volume county, so probably not many but it does make you wonder, eh?

Anyway, this is the second expired POA JC has found in recent months.  Is anyone else looking at them before they close?

It's an easy fix.  The attorney for FANNIE MAE just gets a new original to us by courier and we record it with the deed.  The sellers are never happy because we have to do a dry closing but that's better than creating a cloud on title and it's out job to protect our insured buyer and lender.

Wednesday, June 16, 2010

WASHINGTON — The Federal Housing Finance Agency has ordered Fannie Mae and Freddie Mac to delist from the New York Stock Exchange and any other national securities exchange.

For more information, visit washingtonpost.com:
http://link.email.washingtonpost.com/r/U38ITL/O9UFJ/HSF107/H1TXYW/B985Y/JY/t

Monday, June 14, 2010

query: what does owners extended coverage per rate filing mean for closings

hmmmm.....

I'm guessing the buyer bought extended owner title insurance rather than the regular owner title insurance which is less expensive.  The "per rate filing" just indicates that the charge for extended coverage is determined by a filed rate, likely with the state insurance department.

I'll further guess that the buyer didn't get a moment in which to choose whether or not to purchase the extended coverage.  The "per rate filing" lingo makes me think the party who added it might want to make it all look official so the consumer doesn't ask questions.  That could just be cynicism on my part, though, because it really kills me how many title insurance agents place consumers in higher priced coverage without asking, "Mother, may I?"

Conversely, we have the entire other school of thought in which a title insurance agent never offers owner coverage and just slips a little waiver under the consumer's pen at closing.  All this under the guise of making their pricing look more competitive so they get more referrals from lenders and real estate agents - ignoring the big but......  BUT -  the consumer doesn't know THEY HAVE ABSOLUTELY NO COVERAGE HAVING ONLY PAID FOR A LOAN POLICY. 

So, over pay or under pay, I don't care as long as the consumer gets to make an informed decision.


Let the consumer, the one whose money is in play make the decision, eh?
But, he warned that restricting yield spread premiums (YSPs) and limiting how much a loan officer can make would impact lenders' ability to attract and retain qualified loan officers on their staffs.

Found this sentence is this article and it kinda makes me nauseated.  You see, I think reducing the amount earned by loan officers per mortgage transaction will reduce the origination capacity down to a level that more accurately reflects the true nature of the job and might even burst the compensation balloon that maintains upward pressure on appraisal numbers.

In my humble - perhaps vintage mortgage lady - opinion, the cost to the consumer of mortgage origination could be reduced if we returned to a system of a commissioned loan officer supported by a salaried processor.  Even with software support, the task of mortgage processing placed back into the hands of efficient clerical support frees up the time of a loan officer to handle more volume.  A loan officer whose time and effort have been freed to handle a larger number of transactions does not have to desperately grasp so much income from one transaction.

I see it as a win-win-win.  The consumer gets a better price, the loan officer gets the peace of mind to concentrate on origination instead of the extreme multi-tasking of also being a processor, and the mortgage lender gets a better mortgage application package because it's been processed by a person with the right set of skills to do the job.

I see no reason why a loan officer whose time has been freed to handle more volume can't make a nice living making 40 to 100 basis points per transaction.  Do you?

Sunday, June 13, 2010

oops...missed two items in foreclosure.....

Usually the foreclosing mortgage lender buys the property at sheriff sale.  Sometimes a third party decides to outbid the lender and that's what happened on the case sitting in our office.  Not only did a third party decide to outbid the lender but they immediately listed the property for sale and it went under contract BEFORE the sheriff's deed was recorded.  So that's a pretty good indication that the property is worth more than the amount needed to make the mortgage lender happy.  The third party stands to make a fast buck on the transfer, right?  Well, maybe yes and maybe no because the property came through foreclosure with TWO title clouds.

The buyer hired our office to handle the conveyance and issue title insurance.  We found an unsatisfied mortgage for a prior owner and we also found an installment land contract without resolution.  The contract was signed by the folks who lost the home in foreclosure and it was recorded after their mortgage.  We found no release or notice given to the buyer in the land contract.

We raised the two issues - unsatisfied mortgage and lack of notice on the land contract.

Turns out the unsatisfied mortgage had been missed by the foreclosing attorney's abstractor AND the third party's abstractor.  That's odd but they did some research and apparently found the original satisfaction was sitting in a title agency file and are in the process of having it recorded.  Okay, that's one problem fixed.

The lack of notice on the installment land contract is a bit of a sticker problem.  You see, there is a letter in the sheriff's file showing that someone, perhaps the sheriff, raised the lack of notice issue with the foreclosing attorney.  The letter is from the foreclosing attorney who agrees that they failed to notify this person, however, since the property was posted and they did send a generic "tenant/occupant" notice to the premises it was likely that this party had been notified as there was a good chance he was living there.  Besides, the letter went on, any third party purchaser at the sheriff sale would be taking the property subject to installment land contract interest anyway.

Well, the third party who now is selling the house reads that letter as a green light.  I read that letter as a cloud on title and am not willing to insure over the interest of the person holding an equitable interest under the land contract.  The contract itself shows that he paid a substantial deposit so without specific notice, I think it's a claim waiting to happen.

Since our buyer is a cash buyer, the decision is theirs whether or not to close.  I can close by putting an exception in their title policy for the installment land contract.  If I were the buyer, I'd not do it, and I doubt that they will.

This third party - now seller - in my opinion will have to fix the notice issue or hope for a less than fully informed purchaser.

query: do mortgage underwriters contact the IRS

At closing, most mortgage lenders require that the borrowers sign an IRS form 4506 which gives them the right to obtain a copy of the borrower's income tax form.  Mortgage lenders DO contact the IRS routinely as part of a good quality control program.  It's a fraud prevention tool and they DO catch fraudsters using this method.

I strongly advise against falsifying tax forms used in a mortgage application.  Though it is rare for the mortgage underwriter to contact the IRS prior to loan approval, they may flag a questionable file for quality control review immediately after closing.  Either way, if you lie, you'll be caught.  If they check prior to closing, you'll simply be denied.  If they check AFTER closing, you may be prosecuted.

hmmm...a word about a potential title insurance claim

In 2006 we insured a transaction for property which sat in two different municipalities.  The house and most of the land was in one and the back 50 feet of land was in another.

I received a letter last week from the grandfather of the insured stating that we had failed to clear title on the 50 feet and that we had better pay roughly $700 to resolve the matter and that his granddaughter ought not to have to wait for the title company.

Anytime a potential claim is raised I always contact the parties immediately and review the file.  I called the gentleman who wrote the letter and left a message then I immediately drafted a letter to our insured with a copy to her grandfather including a copy of her owner policy, instructions for filing a claim and asked that she contact me with some clarification of what they meant by failed to clear title.  I had reviewed the file and there wasn't anything that stuck out as a problem but I did notice that the abstract had been performed by the underwriter.

Well, the grandfather called me a day or two later and said that prior to sending me the letter he had filed a claim on behalf of his granddaughter and that he had paid the roughly $700 to the county to buy back the 50 feet in the rear of the insured parcel.  He said we had failed to clear taxes on that parcel and that the county had taken it in a tax sale. 

Huh?  Well, that raised three issues in my mind.

First, there wasn't anything pressing for me to do because he had already paid the county and filed a claim so the matter was in the hands of the title company attorneys.  The next step will be a request from the title company for our file information so they can process the claim.  I expect I'll receive that soon.

Second, in my fast review of the file I only saw one tax number on the cover sheet.  We have a system in place to quadruple check tax numbers and so if a file moves through that system with an undiscovered tax parcel, it's because someone was asleep at the wheel.  That someone could be the seller or a real estate agent or the abstractor or someone in my office, maybe even me.  It would take more thorough review of the file to determine what may have happened and I know that review will take place as the claim is being processed.

Third,  if taxes aren't being paid on a parcel the tax collector and the tax claim bureau send out notices.  Prior to a tax sale taking place, the property is posted and advertised and the vested owner is notified by certified mail.  Our insured, the granddaughter, had to have ignored all of these notices.  We insured a conveyance in 2006.  This is a claim in 2010.  I wonder what tax years were delinquent and the basis of the tax sale?

It will be interesting to see how this works out in the end.  I'll share the findings when available.