Sunday, July 31, 2011

state slow to respond

When a private investigator finally tracked down the owner of Choice Title of South Florida in the fall of 2009, the contents of her office were in a pile on her living-room floor and homeowner complaints were mounting in Tallahassee.
Milissa Hernandez's company was facing fraud, conspiracy and breach of contract lawsuits. Its underwriter, the respected Old Republic National Title Insurance Co., had terminated its contract, and a wronged Broward County homeowner was about to receive a $217,873 judgment against it.

Saturday, July 30, 2011

local condominium units posted for sheriff sale...for a day

These are tough times.  There are a few unsold units left in the development.  The developer failed to pay property taxes and the sheriff came and posted signs on ALL units.  The signs stayed up for a day, then presumably the taxes were paid and the signs came down.

This story was told to me last night by a unit owner who seemed slightly perplexed.  All I can say is that there are really nice things about the common ownership of condominiums but it comes with risk.  It's a team, not an individual form of ownership and there is always hope that all  the members of the team will perform well.  ;)

Thursday, July 28, 2011

nasty allegations against Tanya Blackwell, PA attorney

Ally Financial (GJM: 23.23 -0.13%) said it discovered a foreclosure defense attorney was working for its mortgage unit and pilfering confidential information on the company's foreclosure operations.

That's according to a lawsuit filed against the terminated employee, Tanya L. Blackwell, an attorney actively licensed to practice in Pennsylvania, according to the Pennsylvania State Bar Association, which did not list any disciplinary actions against her.

Read more on HW.

Wednesday, July 27, 2011

Office of Thrift Supervision closes as functions shift

The Office of Thrift Supervision’s functions, including the regulation of federal savings associations, have moved to theOffice of the Comptroller of the Currency, the OCC announced Wednesday.
Section 312 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 mandated the OCC take over the functions of the OTS. The OTS will cease to exist on Oct. 19. OTS employees packed  up and moved to the OCC office over the July 15 weekend.

Tuesday, July 26, 2011

Bethany McLean of Slate's right on

I believe that government regulations like those that the controversial new Consumer Financial Protection Bureau may hand down are a poor substitute for bankers choosing on their own to behave ethically and responsibly, and for consumers digging into the details on products that sound too good to be true. But let's get serious. Bankers aren't going to change their behavior, and consumers aren't all of a sudden going to become educated and savvy. (Especially in the face of a deluge of advertising, like that we saw at the height of the mortgage boom, which urged consumers to cash out the equity in their homes.) Unfortunately, regulation is the only tool left.

Read more on Slate.

required use and affiliated title agencies

There is a title insurance agency in Pennsylvania called Bankers Settlement.  It's owned by several community banks.  We do closings and title insurance on occasion for some of these community banks. Though they may not send us direct referrals, if a consumer wants to use The Closing Specialists, that's always been okay. Since our advertising is consumer focused and we have a terrific deal in our Choose and Save Program, consumers often call us directly to shop for services.

One of the affiliated banks, S & T Bank, is now refusing to give consumers the option to use any other title insurance agency.  This was confirmed yesterday when a consumer who wanted to use Choose and Save called his loan officer and was told they don't do business with The Closing Specialists.  I called the mortgage department and queried the reasoning and was told flat out that they require all borrowers to use Bankers Settlement.  I said to the fellow that they can't require use of an affiliate.  He said their attorney looked into it and disagrees with me.
Hmmmm.....I have a call into the manager at Bankers Settlement.  I have no beef with them but I am hopeful that he can resolve this crazy situation.  Will report back.  ;)

It's fascinating to me that ALTA is now lobbying for title insurance as an inclusion

in the final definition of Qualified Mortgage as juxtaposed with their successful lobby against inclusion of insurance as a regulated business under Dodd Frank.


Anyway, here's a blurb from HW.

"Prudent underwriting of a borrower’s ability to repay would require that a creditor evaluate the title to the collateral to determine what outstanding debts will need to be satisfied before the creditor can obtain the first lien mortgage," said Anne Anastasi, president of ALTA.
"A title search and examination backed by a title insurance policy is a crucial underwriting feature that ensures that the borrower will have the ability to repay the mortgage by verifying their ownership of collateral and identifying any liens superior to the creditor’s mortgage," Anastasi said.

Friday, July 22, 2011

CFPB issues interim rule

Today, the CFPB is issuing an interim rule effective immediately to fill a regulatory gap.
Some lenders are chartered or licensed by states, while others operate under federal charters. For years, state lenders have been able to rely on a federal law called the Alternative Mortgage Transaction Parity Act (or AMTPA, for short) to make variable rate loans and other “alternative” mortgages, regardless of state law restrictions. Congress passed AMTPA to allow state lenders to make alternative mortgages on the same footing as their federally chartered competitors. Last year, the Dodd-Frank Act amended AMTPA to update it and to provide states more room to regulate certain fixed-rate loans and certain features of adjustable rate mortgages.

title/settlement agents and the RESPA GFE provider list

We have a major national lender generating GFEs [Good Faith Estimate] on a computer model which creates a provider list containing ONLY their affiliated companies.  There is no option for a loan officer to ADD referrals to non-affiliated providers.  This wouldn't be an issue except that loan officers employed by this lender are making referrals to other providers and have no way to create a compliant GFE provider list.

Why would a consumer care?  Well, if a lender gives a consumer a referral to a provider and the consumer chooses to use the referred company, then the lender has an obligation to have given the consumer correct quotation of fees on the GFE.  RESPA rules further require the lender to back up that quotation with a 10% tolerance test and payment of a cure if they give a less than adequate quote to the consumer.

It's important to the consumer to have a record of the referral and the official record is the provider list which is part of the GFE.  If a loan officer gives a verbal referral and makes an error in the quotation on the GFE causing the consumer to pay more than they anticipated, the consumer may have trouble getting a RESPA cure if the lender has no evidence that the loan officer made the referral, right?

So, what do YOU do as a title/settlement agent when you prep a HUD and you know the loan officer referred the consumer to your office BUT you do not appear on the GFE provider list?

We take the position that if we are not on the list, we were not referred.  If the lender insists that we place the fees in the referred section of the HUD, we will comply since the act is in favor of the consumer.  We want them to put their instructions in writing and we will make notes regarding the provider list in our file in case of an audit.  Bottom line, the mortgage lender is responsible for compliance with RESPA.

My advice to consumers is to pay careful attention to the GFE provider list and if your loan officer is sending you to a company whose name is NOT on the GFE provider list, insist that the company be added to the list. This is your only evidence of the referral and will serve to help you if there is a misquote of services and you hope to hold your mortgage lender responsible.

Many lenders do not make referrals and leave the shopping of services entirely up to you.  That's OKAY - in fact that can be good for consumers because it makes you engage in the selection process and may help you understand the services your are purchasing.  In cases where the mortgage lender does not make any referrals, there will not be a provider list attached to your GFE.

Tuesday, July 19, 2011

on PA closing costs

Diane Cipa, general manager for The Closing Specialist in Ligonier, said that if Bankrate used good faith estimates to compile their data, the numbers could be inflated because the good faith quote is usually higher than the actual costs at closing.

"The current form for good faith estimates encourages lenders to quote high numbers for closing costs," Ms. Cipa said. "If they give a quote that is too low, the lender could be responsible for making up the difference."

Monday, July 18, 2011

query: earnest money need to show on the HUD-1

Yes, earnest money aka hand money should be shown on the HUD-1.  The exception is a case in which the funds haven't transferred or a mortgage lender has not been able to verify that the funds have transferred.  In these cases, the deposit is not credited on the HUD-1 because we do not want to imply that there was a deposit if in fact, one did not exist.

Sellers and agents should always deposit an earnest money check and let it clear before the time of closing.  The buyer may need a copy of their cancelled check as proof for their mortgage lender.

query: whose liability would it be if the title insurance company issued a final policy on a construction loan and the house never got built

I don't see the issuance of a title policy as having anything to do with the construction of the house.  Title insurance does not insure construction.  For the mortgage lender, it insures the validity of their lien.  For the owner, it insures the ownership of the land.

Any property owner or mortgage lender involved in a construction transaction must keep their own eyes on the construction and ought not to confuse title insurance and having anything to do with it.

Sunday, July 17, 2011

ALTA's Anne Anastasi Testifies Before the Financial Services Subcommittee

1. If ALTA believes what Ms. Anastasi says about the important function of a title insurance agent at the closing table, why does ALTA take no stand against the use of notary signing agents who are not employees, likely not licensed and even more likely not well trained, if at all?

2. Owner title insurance is a product that protects the buyer and is rightly, in my view, a product purchased on behalf of the buyer, just like the home warranty. It makes perfect sense to place this cost on the buyer side of the Settlement Statement and simply have the seller credit funds to cover the costs if that is the custom or how the contract was negotiated. The inability of the industry to adjust to a different form of disclosure says more about the industry than the document.

3. Federal regulations such as those promulgated under RESPA for the Good Faith Estimate are specifically targeting specific types of transactions and meant to disclose to consumers those costs which lenders impose so that consumers can make good decisions about which lender and which loan program they select. This document is not meant to be a tool for the selling of owner title insurance. The phrase "not required" contains two simple, easy to understand words. I think consumers get it.

former Ohio Attorney General Richard Cordray slated for CFPB director nomination

On Sunday the White House announced that the president would nominate the agency's current head of enforcement, former Ohio Attorney General Richard Cordray to lead the bureau. Cordray's selection will be announced at a White House event on Monday.

Read more on The Hill.

Thursday, July 14, 2011

1500 pending RESPA violations cases moving to CFPB

In November 2008, HUD issued new RESPA regulation, establishing a standard Good Faith Estimate form and process and an expanded HUD-1 Settlement Statement. To be in compliance with RESPA, and help assure fair prices for consumers, actual costs at closing must fall within established tolerance ranges. These new disclosures were implemented in January 2010.

Since then, HUD opened more than 1,500 cases against mortgage companies suspected of violating RESPA, said Teresa Payne, the associate deputy assistant secretary for regulatory affairs at HUD.

Read more on HW.

query: getting a replacement copy of title insurance policy

This one's easy.  If your original policy is lost and you do not just want a photocopy of the policy and need an original, just go to your title insurance agent and request a DUPLICATE copy of your policy.  The agent may not know that they CAN issue a duplicate but if they contact their underwriter for instructions they can do it.

The typical procedure is for the agent to reprint the policy and type DUPLICATE ORIGINAL on the jacket.

This is normally not a request from a consumer with an owner policy.  Photocopies of an owner policy are usually all a consumer would need. Lenders, however, may need an original policy in hand to meet secondary market standards for documentation.

In either case, it can be done.  If for some reason the title agent is no longer in business or refuses to cooperate, then contact the title insurance underwriter directly.  That would be the title company whose name is hopefully on the HUD-1 Settlement Statement, page 2, near the premium.

Wednesday, July 13, 2011

I don't know. This phrase is just so bizarre, I can't think of anything to say. ;)

"prejudicing consumers against considering these services by using loaded terms like ‘not required,’"

Read more on Business Wire.

coupla chuckles

CHUKLE #1  "Brown said the treatment of home warranties under the Real Estate Settlement Procedures Act, which prevents kickbacks for referrals among settlement service providers, is one of the issues facing real estate firms, home warranty companies and consumers. Since home warranties are not a requirement for a mortgage origination or home sale, NAR believes that including the optional insurance product as a settlement service stretches the meaning of RESPA. Brown urged the subcommittee to pass H.R. 2446, the RESPA Home Warranty Clarification Act of 2011 introduced by Reps. Judy Biggert (R-Ill.) and Lacy Clay (D-Mo.), that would clarify that home warranties are not subject to RESPA and would provide for appropriate consumer disclosure."

CHUCKLE #2 "Another area of concern to the industry is the definition of points and fees in the Qualified Mortgage provision of the Dodd-Frank Act, which limits the total points and fees collected by lenders and their affiliates -- such as title companies -- to 3 percent of the loan amount. This limits many affiliated companies from offering full services to their clients to avoid violating the cap. NAR recommends that Congress restore an exemption for affiliates duly constituted under RESPA, so that consumers can fully benefit from greater competition between affiliated and unaffiliated mortgage lenders."

Read  more on MarketWire.

HUD continues to clean house on RESPA violation cases

WASHINGTON, DC - July 13, 2011 - (RealEstateRama) — The U.S. Department of Housing and Urban Development (HUD) today announced an agreement with Prospect Mortgage, LLC (Prospect) to settle allegations the California-based mortgage lender created sham affiliated business arrangements for the purpose of paying improper kickbacks or referral fees in violation of Federal Housing Administration (FHA) guidelines and the Real Estate Settlement Procedures Act (RESPA).  Prospect agreed to dissolve these sham joint ventures and pay $3.1 million to resolve the complaint.

Read more on CaliforniaRealEstateRama.

query: how does an insurer cancel title insurance far as I know, once issued, the title insurance policy cannot be cancelled.  Now, if you are talking a title insurance commitment, that's different.  An insurer can refuse to insure, even if a commitment has been issued.

Monday, July 11, 2011

FNF agreed to cease the practice of paying real estate brokers.....THANK YOU HUD.

FNF agreed to cease the practice of paying real estate brokers that place orders via the software platform for title insurance and other services.

"RESPA is very clear that paying fees or providing anything of value for the simple act of referring business is a violation of law," said Acting FHA Commissioner Bob Ryan. "This agreement should be a signal to others that these business practices won’t be tolerated."

Read more on HW.

Sunday, July 10, 2011

free CE credits and other stuff

being nostalgic today about Radical Title Talk

Radical Title Talk was born in anger. Every post was passionate and most people reading and commenting did so with passion. That takes a tremendous amount of energy. I am not a personal who walks in anger. I get angry, I deal with the issue and be done with it. I love to laugh and be a goof and have fun. Once Radical found its voice and its mission, I had to commit and follow it through which meant writing every day in a voice defining the argument against corruption. You have to understand that Radical was never meant to be a sales generating blog. It was a declaration of independence and the beginning of a war that only title insurance people can really understand. I carried the mantle until I felt that I had said everything that could possibly be said on all the various subjects. The stats showed me the readership and I knew Radical had been a bully pulpit the likes of which I had never envisioned. Once I felt the entire of what needed saying was said, I figured I could leave it up there for folks to use. They could continue to comment if they wanted but I felt that I need to walk away. So I said thank you, posted Desiderata and let it go.
I think that was in May of 2007. In July I started to notice odd transformation in what was then the subprime crisis. It seemed to me that it was leaking into prime lending and I just couldn’t trust that the “powers that be” would recognize that. I know that might sound egotistical but I never assume that people will see something. If my warning is redundant that’s okay but at least I did my part.
I knew there might still be some readership out there with feeds who would pick up posts so I shared my concerns. The Coalition Petition [a third and temporary blog] was followed by some federal folks because the petition had been directed to those offices. I started with a post or two on Coalition but decided almost immediately to start posting on Radical just to make certain someone who could help might see the message. The mortgage credit crisis then became the second life cycle for Radical. It regained its readership two-fold and then got caught in a sort of negative energy and I decided I really just need to get out so I deleted the entire blog, completely with no back up. [You can still find old Radical posts in search engines if you look for cached posts.]
I talked about it on Lenderama [blew my blog brains out] and the feedback I got was a great help. I kept Radical dead for a week then decided to put in into a virtual beauty sleep mode. Radical woke up as a sort of personal business space for me. I can still talk about hard issues but I don’t feel compelled to be at war. I am purposefully keeping it casual. I like it. I’ve lost some readership but that’s A-OK with me. In the meantime the readership of Title Insurance Talk has grown and I’ve been able to focus on the day to day business of selling title insurance.

Read more on Lucid Ninja.

query: what is a marked up title commitment and how soon should I get one before closing

Great question.  ;)

A title commitment is marked up by the title agent when they have completed the transaction and are prepping the file notes for the issuance of the title policy.

The mark up takes place during the closing process and is therefore not available prior to closing.

If you are given a marked up title commitment prior to closing it isn't a genuine mark up.

Consumers and lenders should always review their title commitment prior to closing. The availability of the title commitment is tied to how quickly folks want to close after the commitment is produced.  Make sure your title agent knows that you expect to review the title commitment prior to the closing and let them know you want that copy as soon as the commitment is issued.

The marking of the title commitment is a review of the commitment to make sure all conditions listed on Schedule B1 are cleared.  It is also a final check of endorsements to be issued as requested by the lender and all other policy terms will be checked.

You can ask for a copy of the marked up title commitment AFTER closing or AT closing.  That's an unusual request so let the title agent know you want it.  I think it's overkill unless your review of the title commitment noted a matter that you wanted changed. In that case, getting a copy of the marked up commitment would confirm for you that the title agent made the requested change and if you are being such a diligent consumer, I say HOORAY!  ;)

Wednesday, July 06, 2011

CFPB Forum has been launched by Jonathan Foxx

The CFPB Forum has been launched by Jonathan Foxx, president of Lenders Compliance Group, as a "discussion forum" for news and views regarding the new Consumer Financial Protection Bureau (CFPB), an independent bureau within the Federal Reserve System
created by the Dodd-Frank Act. The CFPB Forum is not associated or affiliated with the Consumer Financial Protection Bureau.

Read more here.

commenting to CFPB concerning defining larger participants

There was a technical issue on which has now been resolved.  If you tried to post a comment and had a problem, give it a go now.  I just did and it worked!  Cool site. ;)

Tuesday, July 05, 2011

comment to CFPB

I am a title insurance agent. I operate what might be considered a small regional agency. I have had roughly $22,000,000.00 move through my escrow account YTD. The procedures I have in place to account for and safely guard these funds were developed with little or no oversight. These funds include down payments collected from home buyers, proceeds of home sellers, mortgage payoffs and incoming mortgage funds to be disbursed as part of federally related mortgage transactions. I also receive with each mortgage transaction a full mortgage application accompanied by other sensitive consumer data such as tax returns, paystubs or bank statements. I retain copies of these documents in paper and electronic form. I believe consumers have a false sense that the funds and information we collect are safe because we are seen as an extension of the mortgage transaction and also because I think there is a presumption that our business must be subjected to some form of regulation. Beyond state licensure and some oversight by underwriters, we are on our own. I am honest and careful. I have a background in banking where I learned how to manage money and data. Many in my business have no such background and no guidelines to follow. My authority to provide such consumer financial products and services comes from my position as an agent of a title insurance company. Though the business of insurance is not covered by CFPB, settlement service providers are and I mean by these comments to direct attention to the large volumes of money and data moving on  and off shore through these companies and their agents. How do you define a large participant in this business? I would tend to say any agent or sub-agent or a title insurance company who conducts more than twenty transactions per month – or 240 per year – could be considered a large participant. This is arbitrary, of course, but it would at least capture oversight of those likely to do the most damage. Diane Cipa,

Sunday, July 03, 2011

Ms. Shelp is suing her title insurance company.

When Theresa Shelp bought 544 Eynon St. in Scranton two years ago, she said she thought she was living a dream.

But Ms. Shelp, 43, now says she is stressed over the house, which continues to have problems such as mold. The property also is at the center of a lawsuit Ms. Shelp has filed against the city and three companies. She claims in the lawsuit that she suffered financial distress and emotional pain after buying the house, which was condemned at the time. The city eventually evicted her, but she later was allowed to return after the city lifted the condemnation.

Please read the article and comment.  I wonder if Ms. Shelp filed a title insurance claim before deciding to sue.  There is no mention of that in the article.  I also wonder is the title insurance agent ordered and received a municipal lien letter.  If they did, the letter ought to have uncovered the municipal condemnation.

We have had two situations in which municipal lien letters were received by our office showing NO outstanding municipal issues only to find PRIOR to closing that there were serious unresolved matters.  In these two cases, buyers uncovered the problems while talking with local folks.  In both cases we had lengthy chats with the municipal officers about the procedures for issuance of municipal lien letters and the discovery process.  You can't just issue lien letters without having a system in place which gives accurate information concerning property in that jurisdiction.

Real world advice.  To those who examine title and issue title insurance, make certain you carefully check the local municipal records.  To those who issue municipal lien letters or are charged with enforcement of zoning matters, make certain your procedures include disclosure of outstanding matters when queried.  Title agents discover municipal problems by requesting letters from municipal offices.  Make certain you know who is issuing these letters and that they have a system for giving accurate reports.  To everybody, keep your eyes and ears open and never assume that people have good and complete information.  If you hear something that is of concern, raise it with all parties to make certain everyone is on the same page.  It's always better to find problems early and avoid claims and law suits later, eh?