Friday, April 30, 2010

the new Colorado law

Will we finally see a move by title insurers in Colorado to finally charge for title insurance commitments issued for transactions that do not close?  The only reason title companies do not charge for these services, even when the charge would be leveled against a consumer, is fear of retribution by referral sources such as realtors and lenders.

We have this problem in PA.  We've got the law and it is not enforced.  In fact, very few even seem to know it exists and so all are afraid to charge for services rendered.

I have asked ALTA and our state association PLTA to lead the way by but so far, no dice.

Thursday, April 29, 2010

So, I guess this means the new First American Title iphone app

which provides free data to realtors is illegal in both Pennsylvania and Colorado?  Can't give free property reports in either state.  Anyone else have details on other state laws?

Colorado....YOU ROCK!! Well done. ;)

April 28, 2010                                                    For Immediate Release  

Contact:  Cameron Lewis, Colorado Division of Insurance, 303.894.2261
               Chris Lines, DORA Public Information Officer, 303.894.7873


Although many homebuyers are not educated in the intricacies of title insurance, the Colorado Division of Insurance is working to update title rules and regulations to ensure consumer interests are protected in real estate transactions.

Effective May 1, 2010, there’s a newly adopted version of Division of Insurance Regulation 3-5-1, which governs the title insurance industry in Colorado.

“When purchasing a home, having title insurance in good order helps buyers be sure that there are no problems with the home's title and that the seller really owns the property,” said Colorado Insurance Commissioner Marcy Morrison. “The recent update to our regulation recognizes the inherent value in services provided by title insurance companies and agencies, and moves to ensure these entities are compensated for valuable services, rather than passing hidden costs back to consumers in the form of higher premiums and closing fees.”

While much of the regulation has remained the same as past versions, there are a number of important changes in the way title insurance entities must now conduct business:

  • Free property reports – title insurance companies and agencies are no longer permitted to issue property reports (known as ownership and encumbrance reports, or O&Es) without charge.  Also included in this prohibition is the issuance of preliminary title commitments (known as TBD commitments) without charge.  These products represent a considerable expense for the title industry, expenses that are passed back to consumers in the form of higher premiums and closing fees.

  • Free classes for real estate agents – while title entities may still teach classes relating to title insurance without charge to the attendees, any costs associated for classes not primarily related to the business of title insurance must be passed back to the attendees.  Classes such as internet marketing for real estate brokers, or how to prepare a real estate contract, may not be provided without charge.

  • Title commitments and disclosures – a number of updates affect the internal operation of title entities, including clarifications on what is considered a reasonable search and exam, disclosure requirements on the title commitments regarding true ownership of properties, and prohibitions against overly broad coverage exceptions.

  • Consumer funds – title entities are no longer permitted to invest the funds they hold for other parties without first receiving written approval from necessary parties. Additionally, a title entity that earns interest on fiduciary funds must now give disclosure that interest is or was earned, and give consumers the opportunity to receive payment for any interest over certain administrative fees.

The updated regulation can be viewed at:

Wednesday, April 28, 2010

sign contract by 4/30.....close by 6/30

We are in the midst of a panic as homebuyers are trying to close on April 30 mistakenly believing that the 30th is the last day to close.

Please read this article.

Eligible borrowers must sign contracts by April 30 and close on their loans by June 30 to qualify for the tax credits, which include $8,000 for first-time buyers and $6,500 for home owners buying a new residence.

cool....hello Vietnam! Just noticed a reader translated this post. ;)

Post-đóng có nghĩa là sau khi đóng. It's a catch all phrase for jobs or tasks that take place AFTER the actual closing. Đó là một nhận tất cả cụm từ cho công việc hoặc nhiệm vụ đó diễn ra sau khi kết thúc thực sự. Post-closing includes the final takedown/bringdown of title and recordation of documents, the issuance of title policies, disbursement of funds not disbursed at the closing table, stuff like that. Post-đóng bao gồm gỡ bỏ cuối cùng / bringdown của Tiêu đề và recordation các văn bản, phát hành các chính sách tiêu đề, giải ngân nguồn vốn không giải ngân tại bàn đóng cửa, các công cụ như thế.

Sometimes lenders and title agents use it in their day to day lingo like "Oh, we'll take care of that post-closing." Đôi khi người cho vay và các đại lý tiêu đề sử dụng nó trong ngày của họ để lingo ngày như "Ồ, chúng tôi sẽ chăm sóc cho rằng đóng cửa hậu." That just means they'll do it later and won't postpone the closing for the sake of whatever it is they need to do. Điều đó chỉ có nghĩa là họ sẽ làm điều đó sau này và sẽ không hoãn đóng cửa vì lợi ích của nó là bất cứ điều gì họ cần làm.

is this FREE app a thing of value under RESPA?

The AgentFirst app is currently available at no charge from the App Store at For more information, or to establish an AgentFirst account,real estate professionals may contact their local First American Title sales representative.

Read more here.

Sunday, April 25, 2010

query: how much are tax service fees that FHA won't pay

Tax service fees are a one time charge collected at closing by a mortgage lender.  What a tax service does is a bit iffy to me.  I always thought that once a mortgage loan was set up in servicing that the tax service would monitor and oversee the tax payments for that property.

That appears to be partially true in some cases, because we do see instructions for the future billings going to tax services for some lenders.  However, in most cases the lenders are issuing instructions that the tax bills go to their servicing department.  In either case, if the tax bill isn't routed to the correct address, the tax doesn't get paid and so that makes me wonder what consumers are really paying for when they pay these fees.

Most tax service fees range between $70 and $150.  Many are companies owned in whole or part by the mortgage lender.  When a mortgage lender has an ownership interest in a company like this they are not permitted to require use.  That means a consumer could insist that they be able to shop for tax service.  I have never seen a consumer do this, but under our regulatory structure it is an option.

Under current FHA and VA rules, the buyer is not permitted to pay a tax service fee presumably because the FHA and VA believe this is a cost that lenders should provide without charging a separate fee to borrowers.  A few lenders will waive the fee upon request but most will insist that the seller pay it.

If you are a seller and your contract did not include a seller assist, meaning you did not agree to pay for any of the buyer's closing costs, you can refuse to pay for the tax service fee.  That  might result in a classic game of chicken.  Nobody wants to lose the transaction over such a small fee.  If the lender won't budge, who will?  Sometimes the real estate agent pays for it in cases where it is clear that they should have known this was an issue when they drafted a contract including a FHA or VA mortgage contingency clause.  Savvy real estate agents will be sure to include a minimum seller assist in any FHA or VA transaction to cover miscellaneous charges that might be prohibited on the buyer side.

Saturday, April 24, 2010

good advice...

Technically, a full mark up might not be completed until AFTER a closing, depending on the type of closing. The mark up takes place prior to the issuance of the policy and after all conditions noted in Schedule B1 are resolved. We routinely send copies of the title insurance commitment to consumers PRIOR to closing so they know we have agreed to insure and they have the opportunity to review exceptions to coverage.

Mortgage lenders receive a marked up commitment with their closing documents. In fact, most receive their loan policy in short form at that time.

I would be very happy to provide a marked up commitment to a consumer and would be thrilled that they were so tuned in to risk. Good job putting this out there on YOUTUBE> ;)

at street level everyone knew what was going on....

There's plenty more of the same in the complaint by MGIC charging that Countrywide agents were complicit in various and sundry deceptions. Frankly, we found it all something of a hoot, though it's not hard to see why MGIC isn't laughing.  Read more on Barron's.

The MGIC issue with Countrywide like the First American Title issue with Countrywide loans now being held by Bank of America is a real hindsight wanna change reality play.

During this entire mortgage fraud rampage we continually had to stand our ground to prevent fraud or at the very least to turn away business by refusing to participate.  Nobody wanted to hear about it, period.  Whistleblowers were ignored and quality control results were ignored or the programs made incapable of doing the job they were intended to do.

Remember, Fannie Mae, Freddie Mac, and the FHA and VA all required diligent quality control programs that were supposed to audit ten percent of the pipeline.  I have been involved in the these programs and when run correctly they find systemic and isolated fraud very effectively.

What happened is that the industry decided to party down and not care about the consequences.  I have no doubt  - NO doubt - that Countrywide and the insurers crying foul had plenty of employees at street level and in management who knew what was going on and either actively participated or simply chose to ignore it.

Sure.  Bet you can pull a box of files from that time and find some kind of fraud in just about every box.  It was a culture of lies.  It was very hard for the good guys to make a living staying clean but we did.  Standing against reverse peer pressure may have been what these insurance companies wish they HAD done.

So, perhaps arbitrators or judges will decide which of the active or passive participants in fraud was the worst and punish one or the other.  I will find the results interesting and either way, not disturbing.  Afterall, lots and lots of good guys lost everything in and after the bubble because of the lying bastards of fraud.  Doesn't bother me a bit that some bad guys have a bad day or two or three.

Friday, April 23, 2010

We just closed a most interesting $1200 transaction.


A month or so ago I received a call from a nice lady who wanted to buy a vacant lot which was being marketed by a bank after foreclosure.  Her intentions were to build on that lot.

The price was low because the property is in a distressed part of town but that's okay we are seeing lots of renewal in our metro areas where potential homebuyers are finding bargains.

What bothered her was that the real estate agent was encouraging her to NOT buy title insurance since she was paying cash for the lot.  In fact, she had already given the real estate broker the entire purchase price as hand money.  The real estate agent insisted that the foreclosure had cleaned the title and that there were no liens.

She wanted to be sure so she found our web site and gave me a call.

I explained that buying title insurance is a good idea no matter what kind of property you are buying and further said that our examination would check to make certain the foreclosure was done properly and we'd report any liens that had survived the process.

She then told me that the city had demolished the house that sat on the lot and she heard through the grapevine that the cost for demolition was owing.  The real estate agent and the seller's attorney denied that this was the case.

I made explicit notes for my staff to watch closely and NAIL the demolition issue prior to closing.  I wanted an affirmation by the city that there was or was not a pending lien for demolition.

We completed our title examination, having uncovered current property taxes owing and a $1023 municipal lien outstanding for sewer service.  Otherwise the city reported no other pending items.  JC called the city and asked the treasurer's office about a lien for demolition.  He was told no other monies were owing.  He moved forward with the HUD and worked on closing.  We do lots of doublechecks when we are working with distressed properties, so he called again and asked again.  This time he spoke with different person who transferred him to another department and THERE he found that there was a pending lien of $6000.

He notified all parties that we were holding the documents and funds in escrow while we worked this out.  The seller's attorney and the real estate agent all called foul and wanted us to file and disburse.  We said no.

We spoke with the city solicitor who apologized profusely saying that they had never considered reporting demolition liens to the treasurer's office so that they could be reported on municipal lien letters.  YOI.  DOUBLE YOI!

Anyway, they fixed that pronto and since the seller's attorney was all up in arms, I asked why this wasn't handled as part of the sheriff's sale.  He said the demolition took place after the sale.  I asked if the seller [the bank] had received notice and he said YES.  There was a public hearing and that the bank had received a letter by certified mail and the property had been posted.  He agreed to send me this evidence.

In the meantime, the attorney for the seller argued that since the lien had not been filed in the courthouse, it wasn't valid.  I said that they have three years in which to file and YES, it is a valid lien.

Once the attorney had the evidence of notice in hand, he agreed that the seller would pay the lien.  Yesterday we verified that the city had received the funds and we closed.

How about that?  Thank heavens this homebuyer was savvy enough to NOT believe everybody and to think for herself and buy title insurance.  Also, thank heavens she was savvy enough to give me a heads up on the demolition lien because we might not have found it and that might have lead to a title insurance claim.

In this case, her title insurance policy would only be for $1200 - the purchase price - so it wouldn't have covered the full amount of the lien and there would also have been the question of her having been told about it prior to purchase which might have ended in a claim denial.

The good news is that it all worked out and the city is EXTREMELY happy to have a new home going up in that neighborhood and we are happy to have a happy customer.

query: what does POC stand for on a HUD-1 form

POC means PAID OUTSIDE OF CLOSING.  In other words, money paid prior to closing or in some odds cases, after closing.  This is money being reported on the HUD-1 form because it is related to the transaction but the figures are not included in the column calculations.

query: will a mortgage underwriter overlook my little lie

What?  Why are you lying to your lender?

If your mortgage underwriter is smart, the underwriter will verify everything and not take your word for anything.  That's how mortgage underwriting SHOULD be done anyway.

Most people tend to estimate their income a bit high and their liabilities a bit low.  That's not unusual, but if you are flat out falsifying data, then I would hope the underwriter rejects the application.

The lending and borrowing of money is built upon trust.   The ability to borrow is a privilege not an entitlement.  You need to rethink your priorities and work on the meaning of the word HONOR.

Thursday, April 22, 2010

seller questions HUD-1 after closing

Hi, I came across your web site after doing a few google searches on the topic of HUD-1 errors.  We closed this past Friday on selling our house, and received the HUD-1 form today, Wednesday.  We looked over it, and saw that the attorney (this is in NY) for the buyer (who prepared the HUD-1) did not put the buyers earnest money in line 501, and did not include our $300 credit to the buyers for small repairs anywhere I can find it on any page.  So that is $1300 extra that we are listed as getting.  Additionally, the closing costs are about $700 less than was estimated by our attorney, but there are several charges listed on the estimate our lawyer made up for us that do not show on the HUD-1, inc. money transfer fee, overnight doc fee, water escrow (? we had it transferred day of closing), "abstract" of $285, and "disbursements" of $65.  These errors happened I think in part because we have already left the state, so we have not seen this (although our lawyer did, and signed off on it) until post-closing.

My question is

a) we are closing on the purchase of a house in <1 week, and need the HUD form for the new loan.  I am concerned that any errors that I have uncovered will delay our purchase of this house.  What are the requirements for new loans if the HUD-1 incorrectly gives us slightly more than we were expecting?

b) errors on the HUD-1 form will come back to haunt us when we apply for the 2nd time homebuyers tax credit- would errors cause red flags on the tax form, or cause the IRS to say the form is invalid?

I don't want free money- I don't care if they make an error and need some of that final check back to them (since we were planning on the amount in the pre-estimate which should be correct).  I just don't want it to hurt the closing of my house in <1 week.

Concerned in MD

Hi, Concerned:  

Even when having an attorney or agent represent you at closing you should always insist upon reviewing the HUD-1 yourself prior to closing - just in case.

First, if you have a fully signed/executed HUD-1 in hand, you can use it as evidence that you sold your house, because you DID sell your house. 

Let me take some of these issues individually.

EARNEST MONEY:  Did they give the buyer credit for a deposit?  If so, it doesn't have to show on your side on page one.  It may be deducted from our proceeds somewhere else on the HUD-1.  ASK.  If not and you DID receive money from the buyer up front and someone failed to return that deposit to the buyer, that is an ERROR and you should ask that they work out a correction.

REPAIR CREDIT:  If your buyer was getting a mortgage, their lender likely would not allow a credit for repair.  This is something that should have been discussed with both parties prior to closing, however, if the lender doesn't permit something, then it can't be done.  The buyers simply lose the money.  You cannot give it to them even after closing as that would be mortgage fraud.

COSTS:  It's okay if your attorney overestimated your costs and the actual costs were lower.  That just means the attorney was conservative and wanted to prepare you for a higher number.

I can't tell from your e-mail if you have already received your proceeds.  If for ANY reason the amount you actually received is different than the amount shown on the HUD-1, that is a RED FLAG of mortgage fraud.  For instance, if they did not show the earnest money or repair credit on the HUD-1 but actually deducted it from your proceeds, then they are colluding to defraud the mortgage lender.  In that event, I would correspond with all parties with a letter via certified mail insisting that they either send you the money or amend the HUD-1 to show the real flow of money.  Make sure you include the mortgage lender in the loop.  If you do not get satisfaction, send the evidence to the FBI.

It is this seemingly innocent type of mortgage fraud that was the underpinning of the credit crisis we are recovering from.

In either case, I do not see a problem moving forward using this HUD-1 for evidence of sale. 

Hope that helps and thanks for reading!


Tuesday, April 20, 2010

ALTA on RESPA 2010

RESPA is getting some attention in the mainstream media, and I wanted to be sure you saw this New York Times article about problems created by the new regulation. ALTA's RESPA Implementation Task Force continues to meet regularly and recently summed up its most pressing concerns in this April 13 letter to HUD.

Monday, April 19, 2010

Friday, April 16, 2010

nice to be busy.......we are slammed!


Tuesday, April 13, 2010

here's another oldie but goodie....buyer beware when hiring a notary public

Be explicit. Are you buying notarial services OR are you buying "signing agent" services?

You see, things are very confused in the notary business these days. Let me take a moment to explain.

Each state has its own set of laws concerning the closing of a real property transaction - purchase or refinance.

In all states, attorneys may perform the transaction.
In many states, attorneys ONLY may perform the transaction.

Many states license title insurance agents and/or producers. In those states these licensed title professionals may perform all or part of the transaction.

Here's where it gets confused. A few documents in a real property transaction require the seal of a notary public, therefore most attorneys and title professionals must by necessity also be notaries. Got that?

Enter the National Notary Association [NNA] and other notary groups who got the idea somewhere - probably from a big subprime lender - that notaries could perform real property transactions. They decided to "pretend" that the closing wasn't a closing at all so they could "pretend" that they weren't breaking any laws. They decided to call these notaries "signing agents" and started recruiting and offering advertising and marketing plans and "certification" courses - none of which had any basis in law or licensure.

This mass marketing and recruitment of notaries started about 15 years ago and has mushroomed to the point where it's not about teaching existing notaries, they actually recruit people to BECOME notaries just because they think there is big money in the real estate business.

So, if you need a notary seal on a few documents, you must be VERY careful that the notary you hire is only charging you to seal the documents and isn't adding "signing agent" fees because many don't know the difference.

Here's an example I found on the notary forum, Notary Rotary:

"What would you charge for signing a set of 1st docs on an out of state land purchase? The signing will be here and the client has all the docs. Travel would only be about a mile."

Now, I'm going to guess that the "client has the docs" means that the homebuyer is already working with an attorney or title professional in the state where they are purchasing the real estate. They are already paying the attorney or title professional to perform the real property transaction.

The homebuyer is simply involved in a remote closing, which means that they are signing documents and returning them to their attorney or title professional to complete the transaction. There are a few documents in the package that require a notary seal. This means that those few documents must be signed before a notary - just those few documents.

States regulate the fees a notary may charge per seal. The fee is usually $2 or $5. So, let's say this homebuyer has 5 documents that require notarization. If the homebuyer drives to the notary's office, the total cost for notarization will likely be $25.

Want to bet this notary will attempt to charge more, and for what?

As I post this item, there are two responses on Notary Rotary. The first implies the notary should charge, the "basement" rate -whatever the means. The second response seems to indicate that the notary should charge for time while the homebuyer reads the documents.

Homebuyer - if you are already paying an attorney or title professional to perform your transaction, review your documents and have them answer your questions before you go to the notary public. Take ONLY the documents that need notary seals to the notary's office. Do not give them any excuse for thinking they are providing "signing agent" services. Really - the situation with notaries is out of control. I know it sounds ridiculous, but it's true.

Be very careful when hiring notaries in a real property transaction. Be specific about services and get a written quote before you hire.

Bank of America v. First American


Guess a judge will have to decide who was the greater fool.  It's like a team of engineers who design and build a bridge using substandard materials which they buy from a dealer who knows his materials are crap but is willing to guarantee replacement of parts and apparently neither the dealer or the engineers considered that the bridge might collapse.

Sunday, April 11, 2010

Just for kicks, here's a rerun....query: future of title insurance?

Boy, you and me both, we could sure use a crystal ball now couldn't we?

We "traditional" title examiners and agents are operating in a strange industry quagmire in which our supposed leaders and purveyors of what we have to sell - the big title insurance companies - seem to be hell bent on destroying our product - title insurance.

This product which found its roots in the hands of carefully trained attorneys and conveyancers and examiners who had a love for the land and a respect for the quality and integrity of the conveyance process may not survive.

Title insurance has been bastardized by the so-called leaders of our industry and has been reduced to a vehicle for the payment and collection of referral cashola and laid out as the base for the creation of gold plated data silos.

Now, instead of spending energy and creative thought on the education and ethical conduct of title professionals, these "leaders", who are scofflaws themselves, expend all effort in the creation of more referral affiliations and teach how to skirt laws in the quest for cash and data for the silos.

It's a crime against the industry, it's a crime against consumers who deserve and need a quality product provided by ethical, well trained professionals, and it's a crime against those of us who chose what was once an honorable profession. We who made careers, loving and learning the laws governing real estate, have been sacrificed upon the rock of prostituted standards which sits in the church of greed.

I have hope that the future of title insurance will be saved by state and federal regulators who have the ability and motive to rein in the outlaws of title. We're not too far gone to restore a quality product of use to the consumer and we haven't yet lost the professionals who can train and mentor those who come behind us.

Saturday, April 10, 2010

query: what does it mean if we paid for title insurance

I am presuming you are faced with a potential loss or title issue to resolve and someone has asked if you paid for title insurance?  If you did pay for title insurance, it would be noted on the HUD-1 Settlement Statement in the 1100 section.  The form will indicate whether you paid for lender coverage or owner coverage or both.  Check the papers you received at closing.

Even if you borrowed your closing costs or the seller paid them for you, this form is still evidence that a premium was paid.

Hope that helps.

Oops, almost forget to tell you...

that I received copy of a letter sent by the PA Department of Banking to a VP at Saxon Mortgage Services, Inc.  Did I mention that my last document pack and letter was copied to the Department and also the Tom Corbett, PA Attorney General?

I'm a fairly persistent and persuasive professional problem solver and if I couldn't penetrate the mortgage servicing brick wall at Saxon, just imagine how hard it would be for a consumer.  With that thought in mind I copied Saxon's regulatory overseer and our consumer guardian, the AG.  It was my hope that one or the other or perhaps both would intervene to right a wrong.

The PA Department of Banking has requested a response from Saxon by May 8th.  I'll let you know how it goes.  ;)

Friday, April 09, 2010

maintaining privacy

We title agents are charged with guarding other peoples money and other peoples information.  On the information side, we have privacy rules.  One of these rules is that we do NOT release documents from our closed files to anyone other than a principal to a transaction who would have a legitimate need for a document.  That principal must request the document in writing so we have a reasonable chance to verify that they are who they say they are.

I am suspicious of companies like the one who identifies itself only as INVESTOR PROCUREMENTS.  Who the heck are they?  I can't find them on the internet.  I sure haven't done a closing for them.  They just call and call and ask for documents.  We call them back and you can never speak with the person who called and so there is this continual request and denial cycle.  I just called the game - faxed them a nice note with our document request procedure and said that we will ignore future phone requests.

Pennsylvania Treasury escheat deadline is looming......

Title agents must file a report even if they have no money to escheat!

Q:  Are holders required to file a “negative report”?
A:  Yes, all holders that have no property to report, must file a none report each year by April 15th.

Read more FAQs on the Treasury web site.

Wednesday, April 07, 2010

what about these title agents who fail to issue policies, eh?

Hi Diane,
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.


Hi, Frank:  A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list.  I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results.  It's a moving forward plan but it will be effective.

On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing.  Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates.  We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package.  It is possible that this might be a small part of the problem and a decision to
require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.

If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse.  If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.

Good luck and let me know how it works out, okay?


Tuesday, April 06, 2010

query: I have been pre-approved and have received a Good Faith Estimate, does that mean I am approved?

No.  Receipt of the Good Faith Estimate is the first step in selecting a lender.  The question on the table right now is - are YOU satisfied with the terms offered by the mortgage lender?

Your job right now is to speak with a few lenders and compare Good Faith Estimates. Lenders cannot charge you for that pre-approval or Good Faith Estimate so move fast, make your decision -  choose a lender.

Whichever lender you select will take you through a verification and approval process normally lasting 4 weeks.  They must obtain an appraisal, verify your credit, assets and income and then submit your file to a mortgage underwriter for formal approval.  You will know you are approved when you received a document called a COMMITMENT LETTER.  Read it carefully because there may be conditions.  YOU are responsible for meeting any conditions.  Work closely with your loan officer and respond to any request to make sure your transaction moves forward.

Saturday, April 03, 2010

on the PA Data Call

It just hit me.  The reason PLTA and members are outraged over the PA Data Call is that they don't keep good records.  DUH!  That means they don't keep track of cancelled transactions and that HAS to be why they aren't outraged about the loss of thousands and thousands of dollars.

HEY TITLE AGENTS!!! Start a spreadsheet for dead deals.  Live and learn, baby.  Start counting the thousands -THOUSANDS -  of dollars you lose every year because our industry is too frightened to collect cancellation fees.

Yoi.  Double yoi.  ;)

wasted money and manhours

If PLTA and the various commenting members would get as outraged over wasted money and manhours spent processing cancelled title transactions as they got over the PA Data Call, we'd make some headway.

I'll likely go to my grave still wondering why our industry places little or no value on its prime work product.  I am proud of our work.  It has value.  I kills me to be forced to give it away in fear.  Yesterday I fielded a call from a consumer who casually cancelled a transaction because the property has termites.  We paid roughly $300 out of pocket plus significant manhours including clerical and expert services.  We examined title, resolved problems, prepped documents and were ready to close.

Outsiders just don't understand how often this happens.  People think we work on a commission.  If the deal doesn't close, we shouldn't get paid.  This is not a commission business.  We are paid for service rendered and to cover risk.  If a transaction doesn't close, well then the services we render are fewer and we haven't taken on insurance risk, so we shouldn't receive our entire compensation.  We have, however performed numerous pre-closing services for which we justly ought to be paid.  The most outrageous cancellations are the ones in which we identify a title problem which cannot be resolved.  We have done our job and protected the lender and the prospective buyer and if the deal falls thru we don't get paid.  Doesn't anyone see the conflict that creates for title agents? 

Trust me.  Any long time reader of this blog knows I have run the gauntlet of charging fees and taking people to court, etc. etc. etc. until I finally realized I was committing agency suicide.  Since our trade associations aren't out there leading us on the right path, I walked that walk alone and we suffered for it.

We have to support the industry together.  We need leaders who understand.  We need leaders who are not afraid.

The law is on our side.  All we have to do is step up to the plate.

Friday, April 02, 2010

Well, I am impressed.

Anne Anastasi did call back after receiving my message concerning cancellation fees.  She noted that we do have a specific statute in Pennsylvania and wondered how we could address this nationally.  Here's our PA rule:

§ 125.2. Charges required for title reports and others.

If we were to charge the rate for a minimum title insurance policy, that would be $420 which, in my view reflects the value of our pre-closing work product in most cases.

We also have TIRBOP rules stating that we SHALL charge a cancellation fee AND the PAR sales agreement includes language stating that the buyer agrees to pay a cancellation fee in TWO places in the sales contract.

With all that muscle, you'd think we could accomplish something, right?  Well, it takes leadership.  Our trade associations, both PLTA and ALTA need to step up to the plate and lead the way.

After recently receiving short shrift from ALTA's Mike Pryor at a PLTI RESPA seminar and several years ago when I submitted an article to ALTA on the subject, I would be pleasantly surprised if ALTA stepped into a leadership role and recognized the work product of its membership as having value and not being afraid of retribution from lenders and Realtors.

We'll see.  Change is the norm and sometimes things change in the right direction.  ;)

Thursday, April 01, 2010

ALTA asking for membership

As part of what I guess is a routine membership drive, I received a voice mail from the soon-to-be president of ALTA noting that I had previously been a member and would I consider rejoining?

Yes, I used to pay over $2000 per year for the privilege of ALTA membership.  I stopped paying $2000+ per year when I suddenly realized that ALTA was advocating against my interests and not for them.  DUH!

ALTA has in recent years been a strong advocate for closely held affiliated or joint venture relationships.  ALTA has also been an advocate for automated title search and examination, even though testimony at the state and federal level would have you think otherwise.

I have to give ALTA some credit for rethinking the role of expert human examination and perhaps they have backed off the joint venture bandwagon.  That's not enough for me.

I lose thousands of dollars every year paying for abstracts and lien letters on cancelled transactions.  In an average year make that around TEN thousands.  In a boom year, make it around TWENTY-FIVE thousands, so when I have repeatedly asked ALTA to advocate on behalf of the interests of title insurance agents like me and convince the real estate and lending community that our pre-closing work product has value and ALTA says NO, well, I don't see my $2000+ membership dues going into their pocket anytime soon.  Do you?

PLTA responds to the PA Department of Insurance on the data call


Interestingly, we have paid for voluntary annual CPA audits and maintained spreadsheets for issued policies and cancelled transactions so we're able to give reasonably accurate data for everything accept the geographic breakdown.  For that, we are randomly reviewing scanned files for these years, as many as we can and will do a guesstimate based upon an extrapolation of the sampling. We're giving three man hours to this task each day.  I think that is reasonable.

Maybe it's because my staff and I mostly used to be lenders and bankers that we have fairly well organized systems of storage and access to data.  We've been through audits for the entirety of our careers, usually with little or no notice.  Funny, it never occurred to us NOT to keep track of most of what we do.

to be or not to be "on the list" --------- RESPA 2010

We do lots of closings for lots of different lenders.  Sometimes we are "on the list" and sometimes we're not.  By "on the list" I am referring to the Provider List given to a borrower with the new GFE.  When a lender gives a borrower the name of a title service provider, they have to put the provider on the list.  This is a referral and when the lender gives a name to a borrower and also gives the borrower a GFE, the lender should be familiar with the fees charged by that provider, and so the rule requires that the figures on the GFE must be subject to the 10% tolerance test.  Now, if the borrower goes out and selects a title service provider who was not mentioned by the lender and is not on the list, the lender can't be expected to give any guarantee of pricing.

When we prep the HUD-1, our software prompts us to indicate whether or not we are on the list.  If we ARE, then our title services fees are a part of the 10% tolerance calculation.  If we are NOT, then our fees are not part of the tolerance.

For the most part, everyone has been on the same page and in the few instances where we have found an intolerance, the lender has done an immediate cure.

Yesterday we had an interesting FIRST.  We alerted the lender to an intolerance.  The lender's response was that it wasn't a problem because they had over quoted title services and that covered the difference.

The lender did not have our company on the list.  Our fees were significantly lower than those quoted on the GFE, however since we were not "on the list" our fees could not be used to offset an under quote of another fee.

We had a bit of a back and forth and asked the lender to take a close look at the RESPA FAQs pages 12-14, with a special emphasis on page 14.

Turns out their compliance team had given them incorrect direction.  The supervisor cured the intolerance, thanked us for the help and said they would escalate this up the chain so company policy could be corrected.

If you are in a position prepping HUD-1 forms, please make sure you have read the RESPA FAQs and don't be shy about sharing information with your lender.  We always do this in a way that demonstrates we are all on a learning curve.  By having discussions about compliance, using the FAQs as a guide, we have often been able to think through scenarios and work out situations together as they are discovered.  We are learning from lenders and visa versa.  The point is that we should be able to understand clearly what we, lenders and title insurers, are doing and why rather than just taking direction mindlessly.