Saturday, October 29, 2011

query - does title insurer have a duty to audit agents and report fraud

Would I be too unkind to say that any title insurer who does not audit its agents is a fool?  There may not be a legal requirement to report fraud but I would certainly hope that the title insurer severs its contract with a fraudulent agent.  I think the title insurer would be doing a service to the industry to report the fraud and have the fraudster taken out of the position of trust they enjoy.

What do you think?

Wednesday, October 26, 2011

query: title underwriter cannot find policy

Interesting.  Hard to say whether the underwriter had a failure of good document protection or the agent failed to remit.

Might seem strange but this isn't that unusual of a happenstance.  You see, unless the title insurance agent SENDS a copy of the policy to the underwriter, they don't have a copy.  Title insurance agents create policies after the closing.  They then send the premium along with a copy of the policy to the underwriter.  Agents are supposed to do this pronto but some don't.  Some title agents do bad things like use the premium money for operating expenses and then go out of business before ever sending your policy to the underwriter.

What can YOU do as a consumer to solve this problem?  You can present a copy of your title insurance commitment and HUD-1 form.  The underwriter will look to see their name on both and then - even if the commitment isn't "marked-up" - should accept both documents as evidence of insurance.

If you didn't get a copy of your title insurance commitment prior to closing, your mortgage lender may have a copy.  If you paid cash, you'll have to try to make your case with just the HUD-1 form.  If the HUD-1 doesn't list the underwriter, you may not be able to make the case that you are insured through this company because the agent may have represented more than one underwriter.  In that case, seek help from an attorney, the state insurance regulator, or state attorney general.

The query raises the big issue of selection of settlement service providers - title insurance agents - and being a smart consumer.  Please shop for your provider and ask questions up front.  Look for professional demeanor and ask about getting a copy of the title insurance commitment prior to closing.  If you have any reluctance in the response, move on to another provider.  Make sure you review your commitment prior to closing, then when you review your HUD-1 form make certain the name of the underwriting company in the 1100 section of the form MATCHES the company on your commitment.

Good luck!

Tuesday, October 25, 2011

First American fined in CO

The market conduct examination found 20 separate violations, including: failure to require agents to keep adequate documentation and records in title underwriting files, failure to require agents to remit title premiums within the required contractual period, and failure to provide evidence of written instructions from all necessary parties when First American's agent or direct operation provided closing and settlement services; failure to ensure agents were duly licensed prior to transacting business; failure to provide anti-fraud statements and failure to charge rates in accordance with the rates on file with the Division of Insurance.

Read more in the Denver Post.

Monday, October 24, 2011

query: how do I get a copy of my HUD appraisal

A consumer may get a copy of the appraisal used for their mortgage application by making the request in writing and sending it to their mortgage lender.  If you do not get cooperation from the mortgage lender you can request help from the Consumer Finance Protection Bureau or the state mortgage licensing agency.  In Pennsylvania that would be the PA Department of Banking.

Sunday, October 23, 2011

query: difference between a title commitment and title policy

A title commitment is like a mortgage commitment letter.  It's an approval to insure where the mortgage commitment letter is an approval to lend.  Both commitments set out terms and conditions.

A title commitment is typically in a standard format created by ALTA - American Land Title Association.  There is a jacket which gives definitions and other important information.  Schedule A sets out the proposed insurance coverages and reports who currently owns the land being insured.  Schedule B 1 sets out conditions which must be cleared prior to the closing or issuance of the insurance.  Schedule B 2 identifies potential exceptions to coverage.  Somewhere on Schedule A or in a Schedule C you will see a legal description.

It is really important that the consumer and the mortgage lender receive and review the title commitment as soon as possible and PRIOR to closing.

After closing, the title policy will be issued, often after the recorded documents have been returned from the courthouse.  Consumers and lenders should expect to receive the title policy within 60 days after closing.

Saturday, October 22, 2011

comments went into spam can

Oops.  Sorry to commentators whose comments went into my spam can!  It's fixed and those awaiting moderation have been posted.  ;)

Friday, October 21, 2011

read your mortgage document before you sign that oil and gas lease

Did you know that your mortgage contains promises made by you to protect the collateral and NOT to store hazardous waste on the property?  If you sign an oil and gas lease without the approval of your mortgage lender you may be in default and subject to foreclosure - even if you are making your mortgage payments on time.

Thursday, October 20, 2011

mobile home titles

If you are the owner of a mobile or manufactured home, please take the time to verify the status of the vehicle title.  Get evidence in hand showing that you either have the vehicle title or certificate of origin or evidence of surrender.  Having no hard evidence in place may impact your ability to refinance or sell your property.

Every year we work on transactions which are delayed while the vehicle title evidence is processed.  In Pennsylvania the system is cumbersome.  If you have time, and do not have the original title or evidence of surrender in hand, work on doing that now, before you have a deadline with a refinance or sale transaction. ;)

Saturday, October 08, 2011

ah...the semicolon

Here's a blurb concerning a judicial interpretation of the Dodd Frank Act based upon the use of a semicolon:

Judge Altonaga ruled that the plain language of Section 1400(c), in particular, the semicolon in the title, indicates that “Effective Date” is not used as a subcategory of “Regulations.” Rather, the semicolon “suspends the thought regarding regulations and begins a new thought involving effective dates.” As such, section 1400(c) addresses both the regulations that are required to be implemented as well as the effective dates for all sections—not only the effective dates of those sections that call for regulations. Based on this interpretation, Judge Altonaga dismissed the Plaintiffs’ RESPA claims because the amendments were not in effect prior to Wells Fargo’s issuance of the force-placed insurance policies. Read more on cfsbulletin.

I love it.  Presumably lawmakers carefully chose the way in which the language of the law was crafted.  If so, the careful interpretation by the court enforces the intention of the law.  If not, then shame on the sloppy lawmakers for not using the language properly.  WORDS HAVE MEANING as does the punctuation which creates the structure by which we capture the nuanced intention of the author.  Like vitamins and exercise which keep our bodies fit, using the language carefully keeps our brains fit and in this case, protects the pocketbook.  ;)

Friday, October 07, 2011

Jan is curious.

I know someone that recently borrowed against a home his mother owns and has title to.  The father is deceased.
The son has been living in the home for many years.  Even while the father was still alive.  Now they have found it necessary to
borrow against the home’s equity, I’m sure that’s due to the mother’s old age illnesses and the son’s inability to work.   They
borrowed over $86,000.00.  In reading the mortgage note, the SON signed as a“non vested spouse”.  How can this be if he is the son? 
Is that legal?  I also noticed that the note was notarized by a long time friend of the family and the witnesses are neighbors.  The lender
is from out of state.  The notary knows for a fact that this man is this woman’s SON and not her spouse.  What do you think is going on????



Hi, Jan:  It's hard to say whether there was an intention to defraud the lender.  Often people don't read documents.  Even if the lender knew the correct circumstances, they may have made an error in the preparation of the final Note.  If the title agent or notary isn't doing a good job of checking documents they may not notice it.  Since the son isn't working, I doubt that the lender used his financial strength to approve the loan.  He isn't vested in title and so his permission isn't needed to create a lien.  His position - in my opinion as a non-attorney blogging title insurance agent - by being on the paperwork is more of a personal guarantor.   Why the lender added him I don't know but they may have had a reason that is not discoverable by public record.