Monday, February 27, 2012

This is a fascinating behind the scenes story of a quality control manager forced into being a whistleblower.

Hunt wasn’t alone in her worries. According to the government’s suit, Michael Watts, the director of quality control, complained repeatedly to company officials charged with controlling risk. He warned that employees had “marching orders” to fight quality control decisions.
At one large staff meeting, managers praised loan processors for “beating back” the quality control team and getting them to withdraw complaints, she said. The quality control team was standing there listening. “Someone was allowing them to bully us,” Hunt said.

Read more:

Saturday, February 25, 2012

Is it unethical to collect premiums and not issue the insurance?


Saw your blog online, as I was searching for information.

What happens if the closing attorney, who is also a title agent, never files the title insurance policy with the title company, and therefore never pays the title company for the policy that a client has purchased? Is it unethical to do this, and is there an amount of time that the attorney has to file? I'm referring to cases in which the attorney has many, many, many unfiled policies. Does that mean the property isn't protected, and/or that the insurance hasn't been purchased?

Thank you,

Hi, Anon:  It is illegal for a title agent to collect money from a consumer and fail to issue the policy.  Title companies expect policies to be issued and premiums remitted within a reasonable period of time.  Anything over 90 days would be considered too long.

Consumers are at risk and likely not covered, though there are some cases in which title companies will extend coverage with the right evidence - title commitment and a HUD-1 that identifies the title company and the purchase of coverage.

If you have evidence and can identify the title underwriter, I'd contact their office and let them know what's going on.  You can also notify the state insurance department.

Bad actors like this need to be stopped.  Good luck.


Friday, February 24, 2012

BOA moving on from FNMA

At the heart of the decision is recent changes in mortgage insurance policies. The filing notes Fannie Mae policy where MI rescission must be resolved in a timely fashion. As of Dec. 31, 2011, 74% of the MI rescission notices received had not been resolved, and Fannie began exercising repurchases with Bank of America.

Read more in HW.

Monday, February 20, 2012

The folks at CAARE would like you to sign their petition concerning RESPA statute of limitations.

The Real Estate Settlement and Procedures Act (RESPA) is the enforcement tool of the new Consumer Finance and Protection Bureau (CFPB).   RESPA is a consumer disclosure and anti-kickback law.  However, with a one year statute of limitations, the prospect for meaningful enforcement or fines to act as a deterrent is non-existent.  

For a business intent on paying illegal kickbacks it is only a matter of performing a cost benefit analysis to determine that it is a profitable proposition to violate the law.  The cost of a potential enforcement action is far outweighed by the financial benefits of violating it.  For example, in 2007 First American Title Insurance Company was fined $500,000 in Minnesota for operating what the Minnesota Department of Commerce said were “sham title agencies that provided illegal referral kickbacks to local real estate agents, mortgage brokers, developers and other industry players"  (click here for the Star Tribune article) 

Joe sold too much land by accident.

Title ins. co. or bank put wrong survey on the deed   The new owners refuse to sign corrected deed The title co. is going to have me sign a affidavit saying my intention was to sell 3 acres not 11 that was mistakenly noted on deed What will this do for me? They are going to register this along with the deed. Is there anything else i can do to get back my 8 acres? Thank you for your time  Joe

Hi, Joe:  I strongly recommend having an attorney assist you.  It sounds like you sold the whole parcel - though in error.  The new owners will have to cooperate in signing that extra land back to you.  If not, you'll likely need the action of the court to help you recover it.


Saturday, February 18, 2012

She shredded the files.

I've been trying to write a post about a title agent who sold her agency to an attorney.  She used to run a few affiliated agencies out of one office - one was owned by a large regional real estate broker.  I wasn't really paying any attention to this matter, infact, I had no idea that the agencies had closed or the lead agency sold.  I just happened to have an unsatisfied mortgage related to a transaction closed by her company.

I called for assistance, but the files are gone.

She shredded the files.

She shredded the files.

I can't think of anything else to say because it's just astounding to me.

She shredded the files.

Thursday, February 16, 2012

title company wants to pay Realtors commissions for business

I am a Realtor and I have a minority ownership in a title company. The title company wants to formalize a plan to pay me a 'commission' on any deals that I send to them. I would disclose to my clients that I am a part owner of the title company. Is this legal or is this a RESPA violation? The title company is planning to go to dozens of Realtors and offer them a partial ownership deal whereby they claim they can legally pay commissions to referring Realtors since the Realtors would also be owners of the title company. It sounds logical but not sure if legally legit.

Read more on agentsonline forum.

It might sound logical but it's not allowable under RESPA rules.  In addition to RESPA, I suggest checking your state rules. Most states also have prohibitions against referral fees.

Friday, February 10, 2012

Should the seller pay for revised tax prorations based on a new assessment after closing?

Hi Diane,
we sold our home on July 28th, 2011, and i just recieved a letter (Feb 7, 2012) from the buyers of our home that i owe them a check for 231.00 for the price difference in the amount that thier property taxes have now gone up due to the home has gone up in assesed/appraised value. At closing, we paid for property taxes from 1/1/2011-7/28/2011 per the HUD based on the previous years taxes (which was 3,800). when they got their tax bill in November it was for 4,031) so they say i should owe them the difference. My question is, why should i have to pay them the difference if taxes went up or the home assessed/appraised for more? They had an appraisal done before they ever closed on the home so they new it was going to be worth more? Can they really ask me for that price difference, and do i have to cut them a check? 


Hi, Anon:  This is a good topic.  Thanks!

I would ask the buyers to provide a copy of a document in which you agreed to pay for a retroactive tax proration based on a new assessment.  If there isn't a document supporting such an agreement, in my non-attorney blogging title agent opinion I see no basis for you having to cover it.

Take a look at this language and see if it wouldn't have been useful in your situation.

"Buyer(s) understands that the calculations used for proration and lender escrow, if applicable, of taxes not yet due and payable are based upon the best information available.  The actual tax when due may be different due to reassessment or changes in millages.  Buyer(s) agrees to accept the tax proration figures as shown on the HUD-1 Settlement Statement without further claim to the seller(s).  Buyer(s) further understands that the lender escrow, if applicable, would change if actual tax figures are different than the estimated figures used to establish the escrow account."

We use this language in our Sales Agreement Satisfaction form.  It's not required but we find it helpful.

Good luck and let me know if anything interesting happens. ;)


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Wednesday, February 08, 2012

Pennsylvania Treasury holding FREE escheat webinar.

The Pennsylvania Treasury is holding a free unclaimed property webinar on 
Thursday, February 23, 2012, from 2:00 p.m.  -  3:00 p.m. Register Now

All companies and organizations doing business in Pennsylvania are subject to the Unclaimed Property Law, and April 15th is the deadline to file an annual report with Treasury. This webinar will focus on the reporting process, and discuss how to:
  • Identify unclaimed property.
  • Determine when an account becomes dormant.
  • Come into compliance.
  • Prepare an unclaimed property report.
PLUS: A live question and answer session with Treasury's Unclaimed Property Compliance Team.