query: is the title company the agent of the lender

Good question.  If by title company you mean a title agency, the title agency is the agent for the title company/underwriter.

Title insurance companies/underwriters and their title agents have a fiduciary duty to the mortgage lender and so they do or should be keeping their eyes open for fraud and error.  If the mortgage lender has requested coverage under a closing services/protection letter then the title company/underwriter and title agents have an obligation to follow the lender's written closing instructions.

phew, I am trying to calm down.....

I haven't been this angry while writing a blog post for a long, long time.  Just goes to show how much wonderful progress we have made.  It's rare to run into incompetence and ignorance in the business and that's a good thing.  So, let me end my blog day on the happy note.  I want to express gratitude to the thousands of folks who have embraced good practices and work with their thinking caps engaged.  ;)

See ya.

Sorry, there's no better way to say this, Saxon Mortgage is an IDIOCRACY.

I have never - NEVER - NEVER - in my entire 35 year career faced an absolutely hideous mortgage servicer.

Saxon uses teams of customer service people who seem to exchange roles in and out of the payoff department - each time you call you wait forever and any prior conversation is completely erased from the company memory.  Letters sent go into a black hole.  Money goes into a black hole and sits there for months before any human can decide how to handle it.  On the surface, the company looks like they know what they are doing.  They even threaten to send money back if a payoff is inadequate but do they?  Do they contact a remitter if there is a problem with a payoff -NO.


Back in November 2009 we remitted funds via wire to payoff two mortgages.  One account is still in La La Land.  Hideous, just hideous.  Never faced anything like it.  I feel sorry for consumers.  Saxon is a brickwall of smiling know nothings.

Okay, so this afternoon I get a new payoff letter to see if I can figure out what is going on.  We remitted via wire $18335.76 back in November and they couldn't figure out what to do with it though it was sent with the borrower name and property address and our return wire data.  The account number had a typo in it.  So rather than figure out which mortgage to pay off or simply return the wire to us, they sat on the money until late February when they contacted the borrower.  Now, in the meantime he had not been making any payments on this account and had received NO statements or late notices -NOTHING that would indicate that there was anything wrong. 


In early March the borrower contacted me and I provided evidence of the wire, we figured out what had happened with the typo and started trying to figure out how to move this account forward.  A gazzillion phones calls and one certified letter to Robert Meachum, EVP at Saxon and produced NOTHING.


So, I call again today and AGAIN, after previously talking to fifteen thousand people in their customer service department we have to start over.  This time, in frustration I just said send me a payoff letter.


I get the letter and see that the money they have had since November STILL hasn't been credited to this account.  They just continued to accrue interest as if the money didn't exist.  WHAT JERKS.


I sent in $788 in the form of a cashiers check via FEDEX out of our own pocket just to get this stupid issue resolved.  Who wants to place a bet that it's not over, eh?

RESPA Referral Fee Matrix

Check this out.  You have to be kidding me.  Is there seriously anyone out there still playing the referral fee game and thinking that regulators will give them a pass?

I found that little jewel in under this blog post:

LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee.  Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com



My advice?   Forget it, LO folks.  Make your money the honest way.  Just do your job well.  Real competition and effective marketing will create winners and losers.  Consumers do not need to support a referral fee network.   Nobody wants to pay a higher fee for a crappy LO who can't get business any other way.  Don't embarrass yourself by sinking back into corruption.  You are better than that, okay?

query: how do I complete the GFE for 1st and 2nd mortgages

HUD wants you to do a separate GFE for each mortgage.  Check the RESPA FAQs.  There's lots of good info available in there.

query: what do you mean mortgage post closing

The word "post" means after.  So any reference to post closing means after closing.

We have a post closing department which handles all of the details and work that takes place AFTER the closing.  For a title insurance agent, that means recording documents, issuing policies, delivery of documents, filing, scanning, escrows and sending out checks, etc.

Mortgage lenders also have post closing departments which process the mortgages for sale in the secondary market and/or for loan servicing.

If you are a consumer and someone asks you to do something, perhaps send a document and they say, "You can send it post closing."  they just mean it's okay to send it to them later, after closing.

enjoy a title insurance blog - what? are you crazy? ;)

Diane,

This might strike you as a bit strange, but I enjoyed visiting your blog.

Who would have thought I would visit a blog about title insurance?

I stumbled on your blog when I was researching the term "successors and assigns". I was interested in the term because I was sort of skimming through the United States Code. Right from the get go, the USC defines terms, one of which is "company". This makes a lot of sense to me as a lot of arguments have to do with definitions. Here is the page where I ran across the term "successors and assigns": http://www.law.cornell.edu/uscode/html/uscode01/usc_sec_01_00000005----000-.html

When I read that, I thought, what does that mean? I googled the term and found your very clear discussion of the term.

While I was at it, I read some of your observations about how big banks are in trouble with their bad loans, which in turn appears to be based on taking some shortcuts in making loans. You seem to cite the failure to do simple lien searches as contributing to the overall problem.

Of course, the financial crisis was caused by lots of specific actions, but all have one thing in common: greed blinding everyone to the risk. The perfect loan would have no risk. Sad to say, life is all about risks. So when the bankers and others in financing came up with things like credit default swaps and collaterallized debt obligations, they were just fooling themselves. A piece of paper protecting you from something bad happening is only as good as the person or company backing it. There is always a counterparty to every financial derivative. If the counterparty is corrupt or broke, so is your financial derivative.

Anyway, I enjoy your very informal and chatty way of expressing yourself.

Regards,

Jack 

Hi, Jack and thanks for reading and taking the time to comment.  You are correct that life is all about risks.  When the traunching of mortgage backed securities was developed, we had in place good systems of checks and balances in risk analysis and due diligence.  The representations and warranties on which the system was built should have worked.  It's a bit like construction.  The engineering can be right but if the contractor doesn't follow the plan, cutting corners and using less than adequate materials, well then you have a disaster in the making.  Good quality control programs would have stopped it all early on.  Such programs were developed and mandated by FNMA, FHLMC, FHA & VA but the implementation was flawed and that was the ultimate weak link. 

The industry is recovering and rediscovering good practices. It's an honorable field again.  ;)

Diane

First American responds to suit....

The lawsuit pits the nation’s No. 1 mortgage lender against the nation’s No. 2 title insurance company. Officials for Bank of America declined to comment on the case.
A spokeswoman for First American issued a statement expressing regret over the lawsuit, adding that the practices of an intermediary likely will be “scrutinized” as a result of the case:

“United General Title Insurance Company and First American Title Insurance Company regret that their valuable customer, Bank of America, has chosen to file a legal action against the companies. However, we are hopeful that we will be able to resolve this matter outside of court with continued discussions.”

The title policies were issued under the QuickClose LPI Program administered by Fiserve Solutions Inc.
First American spokeswoman Carrie Gaska said that her company expects that Fiserve’s “practices will be scrutinized in this process.”
A Fiserve spokesperson couldn’t be reached for comment.

Read more in the Orange County Register.

well, well, well......crappy title underwriting comes home to roost

Now Bank of America Corp., the nation's biggest mortgage lender, is saying the nation's second-largest title insurer did much the same thing and should be on the hook for more than $500 million in losses.

In a lawsuit filed earlier this month, BofA alleged that First American Corp. in Santa Ana relied on home buyers to tell them about liens on their properties and other matters, rather than conducting traditional title searches.

The shortcut was part of a program called QuickClose that BofA said in its suit did not require "title searches in connection with loans processed under the program."

Read more in the LA Times.

This is fascinating...I'm sure there's more to this story.

Bank of America, one of America's largest mortgage lenders and the recipient of more than $45 billion in TARP funds from the federal government, claims that United General Title Insurance and First American Title Insurance, now corporate affiliates, insured mortgages for title defects, undisclosed intervening liens and other problems, and to cover equity loans and lines of credit up to $500,000.
     Now the insurers are balking at paying the claims, blaming Bank of America and the firms it acquired prior to the global economic crisis for creating their own problems, BofA says in Mecklenburg County Court.
     As of February the two insurers have denied at least 2,200 of Bank of America's claims, representing more than $235 million in losses, and failed to respond to another 2,300 claims, representing more than $300 million in losses, BofA says.
     All of the claims arise from a home equity loan or line of credit that is in default, the bank says.

Read more in Courthouse News.

HELOC/open end payoff, satisfaction, reconveyance.....

When you find an "open end" or line of credit/HELOC mortgage on record in a title search, you really need proceed carefully.  Most important is to freeze the account when you get your payoff letter.  You need to stop the moving money target.  There are some lenders who refuse to put a freeze on these accounts so your post closing payoff procedure can include a few extra steps to eliminate risk.  Here are some tips:

1. Add language to the mortgage payoff clause in Schedule B1.  This is what we use:  NOTE:  This is an open line of credit.  The account holder must contact this mortgage lender and request that they freeze the credit line in anticipation of payoff, closure, and satisfaction.
2. Have the mortgagor sign a statement requesting that the account be closed and satisfied.  If the lender does not include this type of statement in the payoff letter, create one yourself.  It is okay to keep it simple and I believe it is best to write it on the payoff letter.  We just legibly handwrite "Please close and satisfy."  We have the mortgagor sign this which does two things for us.  It give us an acknowledgment that the mortgagor is aware of the payoff and has agreed that the account should be closed and satisfied.  This eliminates any confusion over whether they can still use the account after closing and before the payoff is posted.  It also gives them a chance to tell you if they have drawn additional funds after the payoff letter was issued.
3. Send the payoff letter and funds to the lender rather than processing the payoff by wire.  We sometimes have trouble in our office remembering this step.  We are so used to doing payoffs by wire that sometimes an open end account slips through.  If you wire, the lender won't get that "Please close and satisfy." statement which I believe is most effective when received by the lender with the funds.

If after you have paid off the mortgage you have trouble getting the lender to satisfy it of record, don't give up.  We find letters are most effective rather than the phone.  If your first letter doesn't get a response, then send a second via certified mail.  Certified mail is the most effective tool we have to elicit a response from most anyone.  It's the first step in creating a case and it is a recognizable step. ;)

call is over.....

I thought it was very helpful.  The answer to my question is that I can opt to use Table B which I will do.

BTW - That "mouthy broad" was NOT me.  LOL


Favorite comment - "I agree with the dog."  ;)

PA Data Call conference call this morning.......

My question:

Please comment on the section concerning the various discounted rates.  I do not understand the limited categories of BASIC and REISSUE for short form policies.

It seems to me that the question of whether a long or short form was used is not related to the rate charged to the consumer.  For instance, in PA the most popular Community Reinvestment Act program is a Pennsylvania Housing Finance Agency mortgage.  ALL PHFA transactions are eligible for the Community Reinvestment Act rate which is 75% of basic, a deeper discount than reissue which is 90% of basic.  PHFA requires that we use the ALTA short form, therefore all PHFA policies would not be included in the study data as having been properly discounted for the consumer.  Does this make sense?

[FYI The extra charge of $100 for a short form is offset by the inclusion of the 100 & 300 endorsement coverage which runs $100 extra when using a long form.]

RESPA 2010 - just where do you put the NOTARY or SIGNING SERVICE on the new GFE?

Simple......... in title services.

RESPA 2010 - purchase with a 1st and 2nd mortgage

We are getting ready to close our first simultaneous 1st and 2nd under the new rules.  Our buyer is getting a line of credit 2nd mortgage and as far as I know, drawing the whole line now for closing.

When we got the title order, we checked the RESPA FAQ and saw on page seven that there should be TWO GFEs and TWO HUD-1 forms.  We asked the lender for both GFEs and held back delivery of the title commitment because we couldn't get a GFE on the second.

I did some more research and found that the RESPA final rule does have an exception for a line of credit.  The lender can opt to not do a GFE and instead provide the consumer with the appropriate disclosures under Reg Z.  I then asked for the Reg Z disclosure.

After a series of requests including chatting with a supervisor in the home equity department, I was given what they said was the full disclosure pack that had been given to the consumer.  I looked at every page and couldn't find anything resembling the Reg Z disclosure.

I decided to move the transaction forward by releasing the title commitment and producing both prelim HUDs.  Note that I could not input any GFE data for the 2nd - the line of credit, so I wasn't able to do any test comparison.

I then sent an e-mail inquiry to HUD and got a prompt response that the issue had been covered in the FAQ and we needed TWO GFEs and TWO HUDs.  I replied that I seem to be having a problem because the lender isn't doing a GFE because the mortgage is a line of credit and that the final rule appears to allow that opting out.  How, I asked does the settlement agent complete a HUD-1A and do a GFE comparison without having a GFE?  I am awaiting a response on that question and will post back here when received either directly or through updated FAQs.

After submitting the prelim HUD-1A to the home equity department I received a response saying they didn't want title insurance on the 2nd and they wanted me to remove the title services charge.  I replied that I didn't charge for title insurance on the second but our other related fees are in that figure.

This morning I received another reply asking then if I intended that figure to be a settlement fee and I responded that under RESPA 2010 rules I had to lump all my charges into that one figure and I gave her the breakdown which had been provided with the prelim.

Here's the reason for my post.  How is it that this subject hasn't come up before?  This is March!  

PS - Some may wonder why we are charging anything to close the 2nd.  Our decision to charge or not is based upon the amount of extra work.

We have two local banks for whom we close line of credit seconds for no extra charge because there is little paperwork, no draw/disbursements, and all we have to do is have a couple of extra docs signed and record the second.  Docs are provided by the banks and they are delivered back with the 1st package to the same department.  We'll see if this changes under the new rules.

When we have a 2nd closing with a large doc pack, separate set of instructions, working with a draw/disbursement - delivering and dealing with a different lender or a different department, we charge for those extra services because we are doing double the work - so two incoming wire fees, two couriers, two edoc printing and two settlement fees.

pre-qualification versus pre-approval

The new mortgage disclosure rule is upending the first step in the process of lending to homebuyers.
Before shopping for a property, a prospective buyer typically gets a preapproval letter from a lender indicating how big a loan the person qualifies for. Real estate agents often ask for these letters so they can make sure the customer can afford the property before showing it.  Read more here. 




LOL  Sometimes I feel ancient.  I guess that's what happens when you've been in business longer than most of the other people in it.  Real estate agents used to be able to do simple pre-qualification formulas.  Loan originators helped.  No one expected a pre-approval letter.  As long as a real estate agent takes the time to ask the right questions, then they won't be wasting their time showing property to unqualified buyers.

Frankly, I have always viewed the "pre-approval" letters as a marketing tool.  If the borrower gets one from a lender, they are most likely to go back to that lender for the loan.  Pre-approval letters are the first step of the steering process.  It's a pretty solid way to eliminate competition.

I think HUD is correct in their course of relieving borrowers of heavy pre-application document tasks.  If you make each conversation with a lender too burdensome, then borrowers won't shop around.

The whole POINT of this new RESPA rule is to ENCOURAGE shopping.

So far, I think things are moving forward rather smoothly under the new rules.  I do hope HUD stays the course.  Good job, HUD.