Thursday, October 31, 2013

flood insurance sticker shock

Perhaps you've already heard that FEMA has new rules for flood insurance.  We are getting reports that a new elevation certificate is required and these certificates are pricey.  Once the new quote comes in, it's higher than expected.  For instance one family selling their home told a buyer they were paying $400 per year for flood insurance.  Under the new system their buyer will have to pay $2300.

We are also hearing that there may be legislation moving to delay or change this new FEMA rule.  What have you heard?

glory hallelujah....notary signing agents will have standards!!

During the MBA Annual, a special committee of major lenders and title companies known as the Signing Professionals Workgroup announced the creation of best practice standards for notaries handling loan signings. These recommendations were the result of a year-long investigation and discussion for new notary standards within the mortgage process.
“After the Consumer Financial Protection Bureau issued the ‘Service Providers Bulletin in April 2012, financial institutions have been held accountable for verifying the credentials of their third-party service providers,” said Thomas Heymann, president and chief executive officer of the National Notary Association. “Until now, there were no consistent or broadly acceptable standards for the notaries who represent lenders at the signing table.”
In said CFPB Bulletin, lenders were told to verify that their service providers complied with federal law and maintained “appropriate training and oversight of employees or agents.” In addition, lenders are expected to establish ongoing monitoring programs, and put in place enforceable consequences for providers who fell short and failed to quickly address their shortcomings. For these reasons, the NNA and the members of the SPW committee felt compelled to act and shore up this end of the process.

Saturday, October 26, 2013

Nine title companies run by one employee in one office?

A Kentucky law firm is in the crosshairs of the Consumer Financial Protection Bureau for its operation of nine title insurance companies.
The bureau sued the six-lawyer Louisville firm, Borders & Borders, on Thursday, claiming the title companies were used to pay kickbacks for work referrals, report the Wall Street Journal Developments Blog, the Louisville Courier-Journal, and the National Law Journal.
The suit (PDF) alleges the law firm paid for referrals by operating nine joint-venture title insurance companies with local real-estate agents and mortgage brokers. The nine companies didn’t have separate office space and were operated by one law firm worker, the suit says. The CFPB claims the split profits for title work were illegal kickbacks that violated the Real Estate Settlement Procedures Act.

But principals at the firm publicly disagreed with the CFPB's findings.
"This case concerns a number of title agencies that were affiliated with our firm several years ago," Borders & Borders said in a statement. The firm calls the title agencies 'affiliated business arrangements,' and says they are "expressly allowed by RESPA."
"There were disclosures to every consumer, as required by the statute, and in every instance in which title insurance was issued through the agencies, the consumer approved," the law firm said. "We note that the CFPB does not allege that there was any consumer harm, or that any consumer paid a penny more for title insurance issued through the agencies in question. Instead, the CFPB is trying to enforce its own version of rules that are not only not in the statute but which have been declared unconstitutional by a United States District Court. We are very disappointed by the CFPB’s conduct, and we will certainly defend the case vigorously."
The Department of Housing and Urban Development kicked off the initial investigation, prompting Borders to shut down its joint ventures. The case was then moved to the CFPB in July 2011 when the bureau obtained RESPA enforcement authority.

Tuesday, October 08, 2013

title company wants to change borrower net proceeds after the rescission period has expired

  I just refinanced my house, We signed all the FINAL HUD FORMS! The title co sent us a check for the amount that we are getting from the lender, This was the final hud settlement forms . Now the title co wants me to hold the check and says they will stop payment on it if we deposit it. Everything was notorized and witnessed. After waiting the required 3 day resition period everybody was funded. Now he says I have to wait! Is this legal after closing and can he change the amount of our proceeds? Something seems to be fraudulent!

If the figures are being changed, you should be eligible for another 3 day rescission period.  Contact your lender immediately and tell them what is going on.  Tell them you insist that they inform the title company that it is too late or that they redo the closing statement and give you another 3 day right to cancel. Tell them you will contact the Consumer Finance Protection Bureau and the state banking department if they refuse to grant another right to cancel period. If you still don't get help, in addition to contacting these agencies you might want to talk with an attorney about sending in the cancellation form and rescinding the transaction anyway.

The entire purpose of the federal right to rescind on a refinance of a primary residence is to give the consumer a period of time to review the terms and the dollars involved in the refinance.  You have to have REAL figures to consider before you waive your right to cancel.  If these figures were wrong - and they might be legitimately in error - then you need to have good figures back in front of you with the right to cancel.

If the reality is that you would have cancelled if you had correct figures, then I believe you still have that right.  If the reality is that you would not have cancelled if you had the correct figures, then you might want to just go along with the correction.  There is a difference between a legitimate error and a bait and switch situation.

Hope this information is helpful.