That video is interesting but I'm not sure I buy that

the Community Reinvestment Act is the culprit. Most of the paper written - bought and sold - in sub-prime and Alt-A was NOT originated under a CRA program.

I don't claim to be a brainiac, rocket scientist or economist. I'm a street level, street trained mortgage lender and title agent. I lived through what happened at street level and had sufficient exposure to the inner workings of wholesale lending and secondary market operations to get a feel for how it should work and where it went wrong.

I just don't buy into blaming one political party over another because each administration we lived through added their own twang to the song and frankly any sanity in the mortgage industry or securities industry could have ignored politics and held firm to quality in due diligence. That's the job of underwriters and management, not politicians.

As for the Paulson Plan, I can only say this. How we got here isn't as important to me as not dying while we fight out who to blame and stupid politics. We can worry about that stuff once our damaged ship at sea in a hurricane makes land. For now, I'm listening to three people - Paulson, Bernanke and Bair. Why? Because over the last year I have watched them and they have not disappointed me with their critical decision making as they have attempted to bring us home and out of harms way.

I trust that they know the monetary system and have a gut instinct for how all this is moving without perhaps being able to verbalize it. I trust that their intuition senses danger and that they have a very hard time dealing with politicians who don't understand and have to act like they do.

This is not a time for pure democracy. This is not a time for populist decision making. This is a time for leadership and hard resolve and fast action to save our economy from severe damage.

I trust the warnings. I'm willing to trust the plan. Call me an idiot if you want to, that's okay but my guts are talking and I do like to listen to those guts even if I can't articulate their message in any way you can understand.

this is interesting

I'm going, are you?

“The National Compliance Summit promises to deliver useful legal knowledge applicable to title companies’ business immediately,” said Syndie Eardly, editorial director at October Research Corporation. “This two-day seminar will provide attendees with the latest legal and regulatory information, including RESPA reform, closing scripts and required use, new enforcement and regulations, litigation updates and fiduciary duty, duty to non-insured and fraud.”

The 2009 National Compliance Summit for Title Companies will be held inside the modern Westin Casuarina Las Vegas Hotel, Casino & Spa. An advance registration discount is being offered to all October Research customers until midnight, EST, December 31, 2008. For more information, call toll free 877.662.8623, ext. 6104, or to register, visit www.octoberseminars.com/ncs09

Senator McCain...

step up to the plate and support the plan.


Sarah would.

excellent

______________________________

____
NEWS ALERT
from The Wall Street Journal

Sept. 25, 2008

Congress reached an agreement in principle on a $700 billion package to bail out the financial industry, leaders from both parties said Thursday. They plan to present the deal to the White House later Thursday, hoping for a vote within days. Lawmakers said there were few hurdles remaining. "There really isn't much of a deadlock to break," said Democratic Rep. Barney Frank, chairman of the House Financial Services Committee. Republican Sen. Bob Bennett said the plan is one that can "pass the House, pass the Senate (and) be signed by the president."

one of those days when I regret ever having done business with First American

I have a transaction we closed and insured through First American using their "Fast Web" title abstract program. This was before I realized what a piece of crap search product it was. This transaction closed in 2005. I had bought into the idea that FATIC would back the abstract and relieve me of the abstract liability. Gee what a deal.

I am now advised that the lot number in my deed and the prior deed is purportedly incorrect. FATIC only provides a current deed with the search and so I called their Quakertown office to get the chain data and perhaps copies of prior documents. They were kind enough to take the call right away and were able to look at the archive immediately. That was impressive, BUT their file as a naked as my file is. They have no chain back beyond the last deed.

UNFREAKINGBELIEVABLE.

They charged me $135 for a full search and they did a stupid-ass current owner which probably cost them $10.

So, I have two choices. I can pass off my customer to FATIC's claim office and say FATIC - YOU figure it out; OR

I can pay an abstractor to research the title -at my own expense - and try to figure out what reality is and how to fix it.

You know me by now. What do YOU think I'm gonna do?

That's right. I'm gonna pay - out of my pocket - to have the title searched back to find the problem and fix it IF it is a reasonably easy fix. If it's a fix that involves a quiet title action, I'll pass it on to FATIC to pay that bill and handle it. I'm hoping - for the sake of my customer - that it's something I can work out.

NOW HEAR THIS ALL YOU FOLKS WHO SAY TITLE INSURANCE ISN'T WORTH IT. Any fix that I do myself is done because the consumer bought owner coverage. If I fix this without turning it into FATIC it will NEVER show up as a claim. GOT THAT?

The work done by traditional title insurance agents in claim avoidance is what you pay for when you buy title insurance.

I'd like to know who did the underwriter audits.

In the following press release Acting United States Attorney Terrence Berg announced that a 45 year-old Macomb man who embezzled over $2.2 million while working as a bookkeeper for a now-defunct Michigan title company was sentenced to 37 months in federal prison on 9/18/2008. Joined in the announcement was FBI Special Agent in Charge Andrew G. Arena.

Eric McAlpine was an independent contractor performing bookkeeping functions for American Title Works, a title agency with offices in Clinton Township, Livonia and Southfield. Over the course of five years, McAlpine stole checks totaling over $800,000 that were made payable to American Title Works and funded by buyers and sellers of real estate, and/or from lending institutions that granted loans to buyers. McAlpine also stole checks totaling almost $1.5 million that were drafted from American Title Works escrow accounts. As a result of McAlpine’s embezzlement from its escrow accounts, American Title Works went out of business resulting in the loss of employment for its almost 30 employees.

Read more.....

thank you

NEWS ALERT
from The Wall Street Journal

Sept. 24, 2008

Republican presidential candidate John McCain said he will "suspend" his campaign on Thursday, and asked to delay Friday night's debate against Democratic candidate Barack Obama, so he can return to Washington to deal with the financial crisis. Congress is currently considering a $700 billion bailout plan that is drawing increased scrutiny from lawmakers.

white papers and electronic signings

Funny you should mention this, October Research.

Why have lenders been slow to adopt this technology when so many consumers use online banking and more will in the future? According to a whitepaper by First American Equity Loan Services, many lenders have said there are a number of issues that are preventing them from utilizing electronic signing of mortgage documents.

I was just thinking about it over lunch. All those gazillion white papers Fannie and Freddie and everyone else did on the paperless mortgage transaction...are they all for naught? I doubt that anyone really cares right now. Who survives and how they do business will take place in a clean slate environment.

Guess we'll find out then, whenever then is.

news heard on the street.....

Fidelity has announced a 10% pay cut for all its employees, across all
brands (Fidelity, Chicago, Ticor..) for 6 months.

Why I love reading the Wine Dog...

I care about this big bail out. It’s a socialist solution to a capitalist problem. It won’t work. The solution is simple. Banks will figure it out. Re-write the loans or go under. It’s simple shit. We don’t need to be bailing out these guys and their bad decisions. We’re not bailing out the individuals who made bad decisions. Why are we bailing out businessmen who made bad decisions? Screw them. No golden parachutes, you’re an asshole, you made bad decisions have fun living on $1800 a month.

Read more...

query: I cannot find my title insurance policy.

Unfortunately, that may be a problem.  Hopefully, you have your HUD-1 Settlement Statement.  The HUD-1 will identify the settlement agent/title agent on the first page in the top section.  Start by contacting the title agent.  They are the ones who issue the policy in most instances.

If the title agency is no longer in business or not helpful, look on page two of the HUD-1 in the 1100 section.  You should see the name of a title insurance company near the title insurance premium.  If the HUD-1 was prepared properly, that is the title underwriter.  The title underwriter is a huge company and they will have an almost impossible time finding your policy BUT having a HUD-1 in hand showing that you paid a premium for a policy is evidence of insurance.

If the title agent is out of business, there's a good chance they never sent a title policy to you anyway, so having the HUD-1 as proof of payment is important.  If you also have a copy of your title insurance commitment, you've got an open and shut case and the title underwriter can't ignore you.

Consumers, are you seeing the picture, here?  YOU, unfortunately, must be a careful shopper for title insurance services.  I know, that stinks, but it is reality.  I run a great title insurance agency in a business full of shoddy characters.  It didn't used to be that way but title insurance failed at the same time the mortgage business failed.  They allowed thieves and creeps and ignorant slobs into our business with very little oversight.  The system is still flushing out the bad so be careful.

Always get your title insurance commitment BEFORE you close and review it carefully.  Make sure you understand what is and what is not covered.  Put it in a safe place.

Always get your HUD-1 - fully signed by everyone - at closing.  Put it in a safe place.

Always follow-up after closing - give it 60 days or so - to make certain you get your owner policy.  Check to make certain the exceptions are the same as those in the commitment - nothing added that was not expected.  Put it in a safe place.

Got it?

Is it true?

I find it absolutely reprehensible that neither Senators McCain or Obama have plans to return to Washington to vote on the Paulson Plan.

I find it easy to ignore establishment bravado

trashing the federal bailout of credit markets and RESPA reform.

You kids trashed the house. The party is over and Mommy and Daddy have to clean up your mess. If you don't like it, lump it.

query: what happens once a loan goes through the underwriters

Loan application files that have moved through the underwriting department come out with status marked, denied, approved with conditions, or suspended.

If your loan application has been denied, the lender must send you a notice called an ADVERSE ACTION.  You can appeal the decision by providing evidence that disputes the basis of the denial.  You won't get a chance to talk with the underwriter so if you are making an appeal, you must write clearly and concisely in a way that makes your case for approval logically and with reason.  Emotional appeals will not work.  The underwriter is interested in your ABILITY to repay, your WILLINGNESS to repay, and numerous other items such as the acceptability of the COLLATERAL, the house and land, and EQUITY AND RESERVES - are you investing savings in the transaction and do you have money to fall back on in hard times.

If your loan application is approved - it will always have conditions.  They may be simple conditions like getting a hazard insurance policy or there may be a long list of conditions that seem onerous.  There can be 20 items listed that you must provide prior to closing in order to meet current underwriting rules.  Don't panic and don't get mad.  Just deal with the reality that lenders are being very careful in this lending environment.  It's not about you.  It's about learning a new, more conservative way to lend.

If your loan application is suspended, that's not bad news.  It means they'd like to approve it but they don't have enough information.  Cooperate, stay calm, and give them as much as they ask for and more.  Help them approve your application.

Remember, the lending staff really wants to make the loan but they are under strict guidelines and can't bend, so stay calm and work together as a team.

Finally, no one, NO ONE, should assume they will be approved or that they will be approved within a controlled timeframe.  That means that YOU must remain flexible with moving plans.  In fact, until all of the ducks are in a row, all conditions cleared, I wouldn't make definite plans.  Stay flexible.

I spoke the other day with a woman whose job depended on her having access to highspeed internet service.  She had set up cancellation on the service to her home and also set up new service installation at the new house BEFORE final approval.  She was very angry that the date she had in mind wasn't likely to happen and she wanted everyone to change reality so that it would.  I calmly explained that we had her title file ready and as soon as the lender was ready, we would close.  She had applied for a state bond program and the lender has no control over the timely response of the state underwriters.  I suggested that she undo the cancellation of the internet service to her present home so that she would have a fall back position since it was unlikely that the deadline would be met.  She refused.  That's her decision, however, an adult must learn to go with the flow and not stand and stomp their feet and say they are unhappy.  For heavens sake, if my job depended on internet availability, I'd leave all options open, wouldn't you?

query: my name is not on house title, what happens if my husband dies

For a concern as serious as this, I suggest you consult an attorney.  First, an attorney will understand the laws of your state, and secondly, everyone should have a WILL, preferably prepared by a competent estate attorney.  Your concerns for all assets and children, if you have them, can be taken care of with a WILL.

So, with that in mind, in PA, if your name is not on the house title and your husband dies, the house along with his other assets go into his estate.  If he has a WILL, the terms of the WILL guide the distribution of assets.  If he dies without a WILL, as his spouse, it is likely that you would inherit his property but there could be complications, particularly if there are family disputes.  The best advice is to handle your estate planning and concerns with a competent estate attorney.

they don't own the land.....didn't buy title insurance...tsk tsk tsk

How do you know your home and the land it sits on belongs to you? One Oklahoma couple was shocked when they tried to sell their home and found they didn't own the land it's built on.

Dennis and Teresa Fine raised three children in their home near Peggs. After 27 years, when they tried to sell their one and only home, they found out the land it's on belongs to the state.

"It was definitely a shock," Dennis says. "We've lived here for nearly 27 years and bought it from the U.S. government. So, I didn't think there would be a problem with the title."

Their modest home has three bedrooms and two baths and sits on just over an acre of land. They have re-financed the home several times and are the third family to own it. They can't understand how the land ownership problem wasn't discovered before.

"Not until this time, not until we tried to sell it."

Read more...

query: door to nowhere fha deck

LOL...it took me a minute to get this query. ;)

Both the FHA and VA have trouble with the "door to nowhere" situation. You know what I mean. You planned to put up a deck but never did or maybe you HAD a deck, took it down and never replaced it. Basically, you have a door in a wall and nothing on the other side.

Prior to closing, you'll need to fix it. Some will tell you that you've got to put that deck up. Well, not necessarily. If you'd prefer a cheaper option, ask if your can install a bar across the door, or perhaps one of those fake balconies on the outside - a railing close to the house. In the old days we were allowed to nail or bolt the door shut but I don't know if that would fly anymore.

Anyway, that's the deal. Hope it helps.

it's about freakin time!

WSJ reports:

The Dow Jones Industrial Average soared 400 points amid reports that regulators are considering a Resolution Trust-like mechanism to help banks unwind soured credit holdings and stepping up action against short sellers. New York Attorney General Andrew Cuomo said that he has starting a "wide-ranging investigation" into short selling and British regulators barred short sales of financial stocks. Calpers and other large holders said they are no longer lending out shares of Morgan Stanley and Goldman Sachs.

ah - what a breath of fresh air.......

Finally, let me make one more comment about the path forward before I take questions. Yesterday there was a hearing on the Hill where we heard numerous legislators assail proposed reforms to the Real Estate Settlement Procedures Act (RESPA). The unnecessary complexity of mortgages has significantly contributed to our housing crisis. We must do something to make mortgages more understandable and the process more transparent. That's why we have been seeking new regulations to require all mortgage lenders and brokers to clearly display an estimate of all settlement services, fees, and charges. They must not be hidden in the fine print. Borrowers would know their closing costs, interest rate and monthly payment amount. They would know whether or not the rate or principle balance would increase over time. They would know if there are prepayment penalties or any balloon payments. The rule would require a clear statement that would itemize closing costs and lock in certain charges at settlement. This would offer greater transparency and certainty, allowing Americans to shop and compare.

We have gone through a lengthy public comment period. We are committed to striking a balance between the needs of consumers and those in business of homeownership. But, I believe it is absolutely reprehensible that so many people in Congress today are fighting to stall progress, especially when they know so many families are in trouble because they didn't understand the terms of their mortgage. Our goal is to get RESPA completed by the end of this year and then provide the industry with a full year to implement that the rule. I firmly believe this will be a big step forward for restoring trust and transparency between the industry and the homeowner.

Read the whole speech...

HUD - no show....or maybe brave when it comes to bullies

I love that our system of government ismade of checks and balances.  It's such a great protection against bullies.

HUD is trying very hard to pass rules which protect the consumer in a real estate transaction.  They are pushing against the machine, the real estate and mortgage and title insurance establishments.  The political pressure is tough because these guys give lots and lots of money to politicians.

Politicians don't know much about this business.  They listen to their contributors and champion their causes.

Who speaks for the consumer here?  Well, HUD is being brave.  They are standing up and fighting and I applaud their valiant effort.

Radical RIP

Gone, gone, gone, but not forgotten.  Radical Title Talk was a labor of love and it served my venting needs well.  Time to move on.  I know, I know, you've heard that before - at least twice.  I'm not leaving.  I'm just taking one blog off my plate.

What happens if a title company fails?

That's a really big question and it has two completely different sets of answers. Why? Well, the words title company are used interchangeably to describe two very different kinds of title companies. So, for you to fully understand the answers, you first need to understand the difference between a title agency and a title underwriter [the real title company].

Title insurance is written through AGENCY or DIRECT operations. When you focus on those two words, I think you can start to see the difference. DIRECT means you are dealing with an EMPLOYEE of the title underwriter/company. AGENCY means you are dealing with a person or entity who is an independent company - meaning NOT the real title company - who has been authorized to write title insurance on behalf of the title underwriter/company. Get it?

If you are in the mortgage business, this may seem like a model that matches the mortgage broker/mortgage lender model. If you look at it in that light, it's similar but you'd have to add delegated underwriting and then it's more in the ballpark.

The failure of the Mercury Companies "empire" - their nationwide structure of multiple and huge title agencies - which most people thought of as title companies - has people scratching their heads and thinking through the ramifications of failure. I'll talk about some of the issues. It's a much bigger subject than a single post could cover and frankly, I'm not an expert in failure - LOL - but I've witnessed it from afar and with interest.

The failure of a TITLE AGENT is almost always due to mismanagement of the books - either by theft or absolute negligence. In most states, the only one really watching the operations of a title agent is the title underwriter. This is one area that I think could be improved. I would prefer that states set an audit requirement as part of licensing so that we have a more secure and regular method of checking the operations of a title agent but that's a different topic. In the meantime, if the title underwriter hasn't noticed bad management by an agent, a failure can happen without any notice. A consumer or mortgage lender caught up in this kind of failure is apt to suffer inconvenience in most cases and in some, real financial loss. When a title agency fails, the real title company - the title underwriter - comes in and takes over. Their employees will sort things out - often with the state regulators keeping an eye on things.

All title insurance policies that have been written by the failed agent are honored because the agent had the authority to bind the title underwriter/company. Where it gets sticky is that agents who are doing a bad job with the money are usually doing a bad job with the policies, too. That means that they might have closed your transaction and failed to create a policy or pay the real title company. How do you protect yourself as a consumer? ALWAYS get a copy of the title insurance commitment PRIOR to closing and ALWAYS get and retain a fully signed copy of the HUD-1 Settlement Statement. The commitment is binding and identifies the real title company. That's important if the title agent wrote for more than one company. The HUD-1 is your evidence that you paid for the insurance. Even if the title agent failed to remit that premium to the title underwriter/company, your payment will be honored. Remember that you should receive your actual title insurance policy - reasonably - within 90 days after your closing. Keep track and if you don't get it - follow up. If the title agent is not cooperating, contact the real title company directly.

While I believe every consumer should shop for a title agent and make the selection based upon strength and expertise - it's sometimes hard to figure out which company is run by a negligent or crooked manager. I've posted tips for shopping but you should also rely on your guts and then take heart that there is a different, much stronger and more heavily regulated title underwriter/company sitting behind every title agent and that is the strength of the system.

The big question I have been asked is what happens if a title underwriter - the real title company fails. First, you need to know that underwriters as insurance companies, are strictly regulated and monitored. They must maintain reserves and those reserve requirements adjust as the risk of claims adjust. All of this activity is monitored by states and private rating companies. Fitch is a good source if you are interested. Finally, most states have some sort of arrangement for overseeing the dissolution of failed insurers. So, I'm not worried about the failure of the real title companies. There are lots of eyes watching their every move and authorities will step in to protect the system and the consumer if a company goes out of control but the likelihood is pretty slim.

Hope that helps and if there is anyone out there who would like to add to the discussion, please do.

query via e-mail - Would the "marked up" policy have been as good as a policy without the exceptions?

Hi Diane!

I found your blog in a search for title insurance info.  It was much more interesting and informative than anything else that I found.  I have a question that I hope you can help me with.  It's actually more of a situation.  We were in the process of purchasing a feed mill.  We had the winning bid at an auction. Yeah!  There was a commitment for title insurance before the sale and the buy sell that we signed stated that the seller had until Aug 23, 2008 to provide title insurance but they were given an extra 30 days if there were issues that could be cleared up in that time.  The title had never been looked at before, that we are aware of, and there were exceptions dating in the late 1800's.  They told us that anything older than 40 years could be written off but the other exceptions may need a "quiet title."  They said that this would take 2-3 months to clear up.  Then they said they found everything that they needed....and then they didn't...you get my point.  I'm sorry that this is going on, and on, and on.  We were scheduled to close on 3 different occasions but then the title insurance would not be ready. On the last scheduled day for our closing the title office emailed a copy of the title insurance to me.   The "title lady" had assured me that it was finally clean (she assured me at least 4 times).  Two of the exceptions that she told me were gone were still there!  Argh!!!  When I called her she said that they would be cleared up when the seller brought in some paperwork.  Well, not exactly.  It would be cleared up when the two documents were recorded but they could give us a "marked up" policy and that would give us coverage for those two exceptions when they were recorded which would take possibly 1 week but more likely 2 weeks.  The two weeks would put us at the end of their 30 days.  We opted not to go through with the purchase and lost our down payment.  The "title office lady" said that the "marked up" policy was binding and "as good as" a policy without the exceptions.  All that to ask you....Would the "marked up" policy have been as good as a policy without the exceptions? 

Thanks for your time and any help that you can give me.

Cheryl

PS We will not be going to any auctions anytime soon.

Cheryl:  Thank you for your kind words and thanks for reading.  This is a great query because there's good advice for consumers and title insurance agents.

First, let's chat a moment about exceptions.  They said there were exceptions going back to the 1800s and that those older than 40 years could be written off.  Exceptions listed in a title insurance commitment are items that your title insurance will not cover.  These are often rights that have been previously granted to another party - for instance a right of way.  The fact that an exception is older than 40 years does not make it passable.  A right of way established in the 1800s is still a right of way. I just wanted to make that clear before saying that the folks who were handling your file could have communicated more clearly, but perhaps they did not understand or weren't sure.

How does a consumer stay in control of communication when applying for title insurance?  You do it with the title insurance commitment.  It should take no more than 2 weeks to produce a title insurance commitment.  The consumer should get a copy and read it as soon as it is available.  You are looking for three things.

First, make sure that the property identified is the one you are planning to purchase.  Mistakes happen and this is your chance to fix it before it is too late.

Next, look at Schedule B I.  This is where the title agent will identify problems found in title that they intend to resolve prior to the issuance of the policy.

Schedule B II list items that will most often survive and be REAL exceptions in your final title policy.

Before we get to the essence of your query, I would like to suggest to title agents that they make certain that the consumer gets the title insurance commitment AND that if there are unusual or complicated circumstances that you correspond with the parties in WRITING.  E-mail is so very easy and it's such a great tool for keeping everyone on the same page.  If the consumer is having a hard time understanding your concerns or suggested solutions, putting your thoughts on paper will often clear the air.

Now, finally, to your real question, Cheryl.  The title agent is correct.  A marked-up title insurance commitment is binding.  Evidence of payment of a premium [your HUD-1] combined with a copy of a marked-up title insurance commitment gives you standing with the title company.  That said, it sounds like the title issues in your planned purchase were complex and given the inconsistent communication and the lack of clarity, I'd have wanted your attorney to review the entire situation before closing.  You still might want to have an attorney review what transpired.  Perhaps there is a basis for getting back your downpayment.  It sounds like the seller will have an easier time of it since you really laid the groundwork for the fix.  Good luck and don't forget to ask for the title commitment and don't let them give you any crap!  ;)

PS  Fonts are wacked out tonight.  Yoi.