Hi, I came across your web site after doing a few google searches on the topic of HUD-1 errors. We closed this past Friday on selling our house, and received the HUD-1 form today, Wednesday. We looked over it, and saw that the attorney (this is in NY) for the buyer (who prepared the HUD-1) did not put the buyers earnest money in line 501, and did not include our $300 credit to the buyers for small repairs anywhere I can find it on any page. So that is $1300 extra that we are listed as getting. Additionally, the closing costs are about $700 less than was estimated by our attorney, but there are several charges listed on the estimate our lawyer made up for us that do not show on the HUD-1, inc. money transfer fee, overnight doc fee, water escrow (? we had it transferred day of closing), "abstract" of $285, and "disbursements" of $65. These errors happened I think in part because we have already left the state, so we have not seen this (although our lawyer did, and signed off on it) until post-closing.
My question is
a) we are closing on the purchase of a house in <1 week, and need the HUD form for the new loan. I am concerned that any errors that I have uncovered will delay our purchase of this house. What are the requirements for new loans if the HUD-1 incorrectly gives us slightly more than we were expecting?
b) errors on the HUD-1 form will come back to haunt us when we apply for the 2nd time homebuyers tax credit- would errors cause red flags on the tax form, or cause the IRS to say the form is invalid?
I don't want free money- I don't care if they make an error and need some of that final check back to them (since we were planning on the amount in the pre-estimate which should be correct). I just don't want it to hurt the closing of my house in <1 week.
Concerned in MD
Hi, Concerned:
Even when having an attorney or agent represent you at closing you should always insist upon reviewing the HUD-1 yourself prior to closing - just in case.
First, if you have a fully signed/executed HUD-1 in hand, you can use it as evidence that you sold your house, because you DID sell your house.
Let me take some of these issues individually.
EARNEST MONEY: Did they give the buyer credit for a deposit? If so, it doesn't have to show on your side on page one. It may be deducted from our proceeds somewhere else on the HUD-1. ASK. If not and you DID receive money from the buyer up front and someone failed to return that deposit to the buyer, that is an ERROR and you should ask that they work out a correction.
REPAIR CREDIT: If your buyer was getting a mortgage, their lender likely would not allow a credit for repair. This is something that should have been discussed with both parties prior to closing, however, if the lender doesn't permit something, then it can't be done. The buyers simply lose the money. You cannot give it to them even after closing as that would be mortgage fraud.
COSTS: It's okay if your attorney overestimated your costs and the actual costs were lower. That just means the attorney was conservative and wanted to prepare you for a higher number.
I can't tell from your e-mail if you have already received your proceeds. If for ANY reason the amount you actually received is different than the amount shown on the HUD-1, that is a RED FLAG of mortgage fraud. For instance, if they did not show the earnest money or repair credit on the HUD-1 but actually deducted it from your proceeds, then they are colluding to defraud the mortgage lender. In that event, I would correspond with all parties with a letter via certified mail insisting that they either send you the money or amend the HUD-1 to show the real flow of money. Make sure you include the mortgage lender in the loop. If you do not get satisfaction, send the evidence to the FBI.
It is this seemingly innocent type of mortgage fraud that was the underpinning of the credit crisis we are recovering from.
In either case, I do not see a problem moving forward using this HUD-1 for evidence of sale.
Hope that helps and thanks for reading!
Diane
Thursday, April 22, 2010
Tuesday, April 20, 2010
ALTA on RESPA 2010
RESPA is getting some attention in the mainstream media, and I wanted to be sure you saw this New York Times article about problems created by the new regulation. ALTA's RESPA Implementation Task Force continues to meet regularly and recently summed up its most pressing concerns in this April 13 letter to HUD.
Monday, April 19, 2010
Friday, April 16, 2010
nice to be busy.......we are slammed!
LENDERS ARE LENDING AND IT'S A GREAT TIME TO BUY OR REFINANCE.
Tuesday, April 13, 2010
here's another oldie but goodie....buyer beware when hiring a notary public
Be explicit. Are you buying notarial services OR are you buying "signing agent" services?
You see, things are very confused in the notary business these days. Let me take a moment to explain.
Each state has its own set of laws concerning the closing of a real property transaction - purchase or refinance.
In all states, attorneys may perform the transaction.
In many states, attorneys ONLY may perform the transaction.
Many states license title insurance agents and/or producers. In those states these licensed title professionals may perform all or part of the transaction.
Here's where it gets confused. A few documents in a real property transaction require the seal of a notary public, therefore most attorneys and title professionals must by necessity also be notaries. Got that?
Enter the National Notary Association [NNA] and other notary groups who got the idea somewhere - probably from a big subprime lender - that notaries could perform real property transactions. They decided to "pretend" that the closing wasn't a closing at all so they could "pretend" that they weren't breaking any laws. They decided to call these notaries "signing agents" and started recruiting and offering advertising and marketing plans and "certification" courses - none of which had any basis in law or licensure.
This mass marketing and recruitment of notaries started about 15 years ago and has mushroomed to the point where it's not about teaching existing notaries, they actually recruit people to BECOME notaries just because they think there is big money in the real estate business.
So, if you need a notary seal on a few documents, you must be VERY careful that the notary you hire is only charging you to seal the documents and isn't adding "signing agent" fees because many don't know the difference.
Here's an example I found on the notary forum, Notary Rotary:
"What would you charge for signing a set of 1st docs on an out of state land purchase? The signing will be here and the client has all the docs. Travel would only be about a mile."
Now, I'm going to guess that the "client has the docs" means that the homebuyer is already working with an attorney or title professional in the state where they are purchasing the real estate. They are already paying the attorney or title professional to perform the real property transaction.
The homebuyer is simply involved in a remote closing, which means that they are signing documents and returning them to their attorney or title professional to complete the transaction. There are a few documents in the package that require a notary seal. This means that those few documents must be signed before a notary - just those few documents.
States regulate the fees a notary may charge per seal. The fee is usually $2 or $5. So, let's say this homebuyer has 5 documents that require notarization. If the homebuyer drives to the notary's office, the total cost for notarization will likely be $25.
Want to bet this notary will attempt to charge more, and for what?
As I post this item, there are two responses on Notary Rotary. The first implies the notary should charge, the "basement" rate -whatever the means. The second response seems to indicate that the notary should charge for time while the homebuyer reads the documents.
Homebuyer - if you are already paying an attorney or title professional to perform your transaction, review your documents and have them answer your questions before you go to the notary public. Take ONLY the documents that need notary seals to the notary's office. Do not give them any excuse for thinking they are providing "signing agent" services. Really - the situation with notaries is out of control. I know it sounds ridiculous, but it's true.
Be very careful when hiring notaries in a real property transaction. Be specific about services and get a written quote before you hire.
You see, things are very confused in the notary business these days. Let me take a moment to explain.
Each state has its own set of laws concerning the closing of a real property transaction - purchase or refinance.
In all states, attorneys may perform the transaction.
In many states, attorneys ONLY may perform the transaction.
Many states license title insurance agents and/or producers. In those states these licensed title professionals may perform all or part of the transaction.
Here's where it gets confused. A few documents in a real property transaction require the seal of a notary public, therefore most attorneys and title professionals must by necessity also be notaries. Got that?
Enter the National Notary Association [NNA] and other notary groups who got the idea somewhere - probably from a big subprime lender - that notaries could perform real property transactions. They decided to "pretend" that the closing wasn't a closing at all so they could "pretend" that they weren't breaking any laws. They decided to call these notaries "signing agents" and started recruiting and offering advertising and marketing plans and "certification" courses - none of which had any basis in law or licensure.
This mass marketing and recruitment of notaries started about 15 years ago and has mushroomed to the point where it's not about teaching existing notaries, they actually recruit people to BECOME notaries just because they think there is big money in the real estate business.
So, if you need a notary seal on a few documents, you must be VERY careful that the notary you hire is only charging you to seal the documents and isn't adding "signing agent" fees because many don't know the difference.
Here's an example I found on the notary forum, Notary Rotary:
"What would you charge for signing a set of 1st docs on an out of state land purchase? The signing will be here and the client has all the docs. Travel would only be about a mile."
Now, I'm going to guess that the "client has the docs" means that the homebuyer is already working with an attorney or title professional in the state where they are purchasing the real estate. They are already paying the attorney or title professional to perform the real property transaction.
The homebuyer is simply involved in a remote closing, which means that they are signing documents and returning them to their attorney or title professional to complete the transaction. There are a few documents in the package that require a notary seal. This means that those few documents must be signed before a notary - just those few documents.
States regulate the fees a notary may charge per seal. The fee is usually $2 or $5. So, let's say this homebuyer has 5 documents that require notarization. If the homebuyer drives to the notary's office, the total cost for notarization will likely be $25.
Want to bet this notary will attempt to charge more, and for what?
As I post this item, there are two responses on Notary Rotary. The first implies the notary should charge, the "basement" rate -whatever the means. The second response seems to indicate that the notary should charge for time while the homebuyer reads the documents.
Homebuyer - if you are already paying an attorney or title professional to perform your transaction, review your documents and have them answer your questions before you go to the notary public. Take ONLY the documents that need notary seals to the notary's office. Do not give them any excuse for thinking they are providing "signing agent" services. Really - the situation with notaries is out of control. I know it sounds ridiculous, but it's true.
Be very careful when hiring notaries in a real property transaction. Be specific about services and get a written quote before you hire.
Bank of America v. First American
CLICK HERE
Guess a judge will have to decide who was the greater fool. It's like a team of engineers who design and build a bridge using substandard materials which they buy from a dealer who knows his materials are crap but is willing to guarantee replacement of parts and apparently neither the dealer or the engineers considered that the bridge might collapse.
Guess a judge will have to decide who was the greater fool. It's like a team of engineers who design and build a bridge using substandard materials which they buy from a dealer who knows his materials are crap but is willing to guarantee replacement of parts and apparently neither the dealer or the engineers considered that the bridge might collapse.
Sunday, April 11, 2010
Just for kicks, here's a rerun....query: future of title insurance?
Boy, you and me both, we could sure use a crystal ball now couldn't we?
We "traditional" title examiners and agents are operating in a strange industry quagmire in which our supposed leaders and purveyors of what we have to sell - the big title insurance companies - seem to be hell bent on destroying our product - title insurance.
This product which found its roots in the hands of carefully trained attorneys and conveyancers and examiners who had a love for the land and a respect for the quality and integrity of the conveyance process may not survive.
Title insurance has been bastardized by the so-called leaders of our industry and has been reduced to a vehicle for the payment and collection of referral cashola and laid out as the base for the creation of gold plated data silos.
Now, instead of spending energy and creative thought on the education and ethical conduct of title professionals, these "leaders", who are scofflaws themselves, expend all effort in the creation of more referral affiliations and teach how to skirt laws in the quest for cash and data for the silos.
It's a crime against the industry, it's a crime against consumers who deserve and need a quality product provided by ethical, well trained professionals, and it's a crime against those of us who chose what was once an honorable profession. We who made careers, loving and learning the laws governing real estate, have been sacrificed upon the rock of prostituted standards which sits in the church of greed.
I have hope that the future of title insurance will be saved by state and federal regulators who have the ability and motive to rein in the outlaws of title. We're not too far gone to restore a quality product of use to the consumer and we haven't yet lost the professionals who can train and mentor those who come behind us.
We "traditional" title examiners and agents are operating in a strange industry quagmire in which our supposed leaders and purveyors of what we have to sell - the big title insurance companies - seem to be hell bent on destroying our product - title insurance.
This product which found its roots in the hands of carefully trained attorneys and conveyancers and examiners who had a love for the land and a respect for the quality and integrity of the conveyance process may not survive.
Title insurance has been bastardized by the so-called leaders of our industry and has been reduced to a vehicle for the payment and collection of referral cashola and laid out as the base for the creation of gold plated data silos.
Now, instead of spending energy and creative thought on the education and ethical conduct of title professionals, these "leaders", who are scofflaws themselves, expend all effort in the creation of more referral affiliations and teach how to skirt laws in the quest for cash and data for the silos.
It's a crime against the industry, it's a crime against consumers who deserve and need a quality product provided by ethical, well trained professionals, and it's a crime against those of us who chose what was once an honorable profession. We who made careers, loving and learning the laws governing real estate, have been sacrificed upon the rock of prostituted standards which sits in the church of greed.
I have hope that the future of title insurance will be saved by state and federal regulators who have the ability and motive to rein in the outlaws of title. We're not too far gone to restore a quality product of use to the consumer and we haven't yet lost the professionals who can train and mentor those who come behind us.
Saturday, April 10, 2010
query: what does it mean if we paid for title insurance
I am presuming you are faced with a potential loss or title issue to resolve and someone has asked if you paid for title insurance? If you did pay for title insurance, it would be noted on the HUD-1 Settlement Statement in the 1100 section. The form will indicate whether you paid for lender coverage or owner coverage or both. Check the papers you received at closing.
Even if you borrowed your closing costs or the seller paid them for you, this form is still evidence that a premium was paid.
Hope that helps.
Even if you borrowed your closing costs or the seller paid them for you, this form is still evidence that a premium was paid.
Hope that helps.
Oops, almost forget to tell you...
that I received copy of a letter sent by the PA Department of Banking to a VP at Saxon Mortgage Services, Inc. Did I mention that my last document pack and letter was copied to the Department and also the Tom Corbett, PA Attorney General?
I'm a fairly persistent and persuasive professional problem solver and if I couldn't penetrate the mortgage servicing brick wall at Saxon, just imagine how hard it would be for a consumer. With that thought in mind I copied Saxon's regulatory overseer and our consumer guardian, the AG. It was my hope that one or the other or perhaps both would intervene to right a wrong.
The PA Department of Banking has requested a response from Saxon by May 8th. I'll let you know how it goes. ;)
I'm a fairly persistent and persuasive professional problem solver and if I couldn't penetrate the mortgage servicing brick wall at Saxon, just imagine how hard it would be for a consumer. With that thought in mind I copied Saxon's regulatory overseer and our consumer guardian, the AG. It was my hope that one or the other or perhaps both would intervene to right a wrong.
The PA Department of Banking has requested a response from Saxon by May 8th. I'll let you know how it goes. ;)
Friday, April 09, 2010
maintaining privacy
We title agents are charged with guarding other peoples money and other peoples information. On the information side, we have privacy rules. One of these rules is that we do NOT release documents from our closed files to anyone other than a principal to a transaction who would have a legitimate need for a document. That principal must request the document in writing so we have a reasonable chance to verify that they are who they say they are.
I am suspicious of companies like the one who identifies itself only as INVESTOR PROCUREMENTS. Who the heck are they? I can't find them on the internet. I sure haven't done a closing for them. They just call and call and ask for documents. We call them back and you can never speak with the person who called and so there is this continual request and denial cycle. I just called the game - faxed them a nice note with our document request procedure and said that we will ignore future phone requests.
I am suspicious of companies like the one who identifies itself only as INVESTOR PROCUREMENTS. Who the heck are they? I can't find them on the internet. I sure haven't done a closing for them. They just call and call and ask for documents. We call them back and you can never speak with the person who called and so there is this continual request and denial cycle. I just called the game - faxed them a nice note with our document request procedure and said that we will ignore future phone requests.
Pennsylvania Treasury escheat deadline is looming......
Title agents must file a report even if they have no money to escheat!
Q: Are holders required to file a “negative report”?
A: Yes, all holders that have no property to report, must file a none report each year by April 15th.
Read more FAQs on the Treasury web site.
Q: Are holders required to file a “negative report”?
A: Yes, all holders that have no property to report, must file a none report each year by April 15th.
Read more FAQs on the Treasury web site.
Wednesday, April 07, 2010
what about these title agents who fail to issue policies, eh?
Hi Diane,
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.
-Frank
Hi, Frank: A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list. I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results. It's a moving forward plan but it will be effective.
On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing. Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates. We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package. It is possible that this might be a small part of the problem and a decision to require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.
If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse. If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.
Good luck and let me know how it works out, okay?
Diane
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.
-Frank
Hi, Frank: A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list. I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results. It's a moving forward plan but it will be effective.
On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing. Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates. We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package. It is possible that this might be a small part of the problem and a decision to require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.
If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse. If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.
Good luck and let me know how it works out, okay?
Diane
Tuesday, April 06, 2010
query: I have been pre-approved and have received a Good Faith Estimate, does that mean I am approved?
No. Receipt of the Good Faith Estimate is the first step in selecting a lender. The question on the table right now is - are YOU satisfied with the terms offered by the mortgage lender?
Your job right now is to speak with a few lenders and compare Good Faith Estimates. Lenders cannot charge you for that pre-approval or Good Faith Estimate so move fast, make your decision - choose a lender.
Whichever lender you select will take you through a verification and approval process normally lasting 4 weeks. They must obtain an appraisal, verify your credit, assets and income and then submit your file to a mortgage underwriter for formal approval. You will know you are approved when you received a document called a COMMITMENT LETTER. Read it carefully because there may be conditions. YOU are responsible for meeting any conditions. Work closely with your loan officer and respond to any request to make sure your transaction moves forward.
Your job right now is to speak with a few lenders and compare Good Faith Estimates. Lenders cannot charge you for that pre-approval or Good Faith Estimate so move fast, make your decision - choose a lender.
Whichever lender you select will take you through a verification and approval process normally lasting 4 weeks. They must obtain an appraisal, verify your credit, assets and income and then submit your file to a mortgage underwriter for formal approval. You will know you are approved when you received a document called a COMMITMENT LETTER. Read it carefully because there may be conditions. YOU are responsible for meeting any conditions. Work closely with your loan officer and respond to any request to make sure your transaction moves forward.
Saturday, April 03, 2010
on the PA Data Call
It just hit me. The reason PLTA and members are outraged over the PA Data Call is that they don't keep good records. DUH! That means they don't keep track of cancelled transactions and that HAS to be why they aren't outraged about the loss of thousands and thousands of dollars.
HEY TITLE AGENTS!!! Start a spreadsheet for dead deals. Live and learn, baby. Start counting the thousands -THOUSANDS - of dollars you lose every year because our industry is too frightened to collect cancellation fees.
Yoi. Double yoi. ;)
HEY TITLE AGENTS!!! Start a spreadsheet for dead deals. Live and learn, baby. Start counting the thousands -THOUSANDS - of dollars you lose every year because our industry is too frightened to collect cancellation fees.
Yoi. Double yoi. ;)
wasted money and manhours
If PLTA and the various commenting members would get as outraged over wasted money and manhours spent processing cancelled title transactions as they got over the PA Data Call, we'd make some headway.
I'll likely go to my grave still wondering why our industry places little or no value on its prime work product. I am proud of our work. It has value. I kills me to be forced to give it away in fear. Yesterday I fielded a call from a consumer who casually cancelled a transaction because the property has termites. We paid roughly $300 out of pocket plus significant manhours including clerical and expert services. We examined title, resolved problems, prepped documents and were ready to close.
Outsiders just don't understand how often this happens. People think we work on a commission. If the deal doesn't close, we shouldn't get paid. This is not a commission business. We are paid for service rendered and to cover risk. If a transaction doesn't close, well then the services we render are fewer and we haven't taken on insurance risk, so we shouldn't receive our entire compensation. We have, however performed numerous pre-closing services for which we justly ought to be paid. The most outrageous cancellations are the ones in which we identify a title problem which cannot be resolved. We have done our job and protected the lender and the prospective buyer and if the deal falls thru we don't get paid. Doesn't anyone see the conflict that creates for title agents?
Trust me. Any long time reader of this blog knows I have run the gauntlet of charging fees and taking people to court, etc. etc. etc. until I finally realized I was committing agency suicide. Since our trade associations aren't out there leading us on the right path, I walked that walk alone and we suffered for it.
We have to support the industry together. We need leaders who understand. We need leaders who are not afraid.
The law is on our side. All we have to do is step up to the plate.
I'll likely go to my grave still wondering why our industry places little or no value on its prime work product. I am proud of our work. It has value. I kills me to be forced to give it away in fear. Yesterday I fielded a call from a consumer who casually cancelled a transaction because the property has termites. We paid roughly $300 out of pocket plus significant manhours including clerical and expert services. We examined title, resolved problems, prepped documents and were ready to close.
Outsiders just don't understand how often this happens. People think we work on a commission. If the deal doesn't close, we shouldn't get paid. This is not a commission business. We are paid for service rendered and to cover risk. If a transaction doesn't close, well then the services we render are fewer and we haven't taken on insurance risk, so we shouldn't receive our entire compensation. We have, however performed numerous pre-closing services for which we justly ought to be paid. The most outrageous cancellations are the ones in which we identify a title problem which cannot be resolved. We have done our job and protected the lender and the prospective buyer and if the deal falls thru we don't get paid. Doesn't anyone see the conflict that creates for title agents?
Trust me. Any long time reader of this blog knows I have run the gauntlet of charging fees and taking people to court, etc. etc. etc. until I finally realized I was committing agency suicide. Since our trade associations aren't out there leading us on the right path, I walked that walk alone and we suffered for it.
We have to support the industry together. We need leaders who understand. We need leaders who are not afraid.
The law is on our side. All we have to do is step up to the plate.
Friday, April 02, 2010
Well, I am impressed.
Anne Anastasi did call back after receiving my message concerning cancellation fees. She noted that we do have a specific statute in Pennsylvania and wondered how we could address this nationally. Here's our PA rule:
§ 125.2. Charges required for title reports and others.
If we were to charge the rate for a minimum title insurance policy, that would be $420 which, in my view reflects the value of our pre-closing work product in most cases.
We also have TIRBOP rules stating that we SHALL charge a cancellation fee AND the PAR sales agreement includes language stating that the buyer agrees to pay a cancellation fee in TWO places in the sales contract.
With all that muscle, you'd think we could accomplish something, right? Well, it takes leadership. Our trade associations, both PLTA and ALTA need to step up to the plate and lead the way.
We also have TIRBOP rules stating that we SHALL charge a cancellation fee AND the PAR sales agreement includes language stating that the buyer agrees to pay a cancellation fee in TWO places in the sales contract.
With all that muscle, you'd think we could accomplish something, right? Well, it takes leadership. Our trade associations, both PLTA and ALTA need to step up to the plate and lead the way.
After recently receiving short shrift from ALTA's Mike Pryor at a PLTI RESPA seminar and several years ago when I submitted an article to ALTA on the subject, I would be pleasantly surprised if ALTA stepped into a leadership role and recognized the work product of its membership as having value and not being afraid of retribution from lenders and Realtors.
We'll see. Change is the norm and sometimes things change in the right direction. ;)
Thursday, April 01, 2010
ALTA asking for membership
As part of what I guess is a routine membership drive, I received a voice mail from the soon-to-be president of ALTA noting that I had previously been a member and would I consider rejoining?
Yes, I used to pay over $2000 per year for the privilege of ALTA membership. I stopped paying $2000+ per year when I suddenly realized that ALTA was advocating against my interests and not for them. DUH!
ALTA has in recent years been a strong advocate for closely held affiliated or joint venture relationships. ALTA has also been an advocate for automated title search and examination, even though testimony at the state and federal level would have you think otherwise.
I have to give ALTA some credit for rethinking the role of expert human examination and perhaps they have backed off the joint venture bandwagon. That's not enough for me.
I lose thousands of dollars every year paying for abstracts and lien letters on cancelled transactions. In an average year make that around TEN thousands. In a boom year, make it around TWENTY-FIVE thousands, so when I have repeatedly asked ALTA to advocate on behalf of the interests of title insurance agents like me and convince the real estate and lending community that our pre-closing work product has value and ALTA says NO, well, I don't see my $2000+ membership dues going into their pocket anytime soon. Do you?
Yes, I used to pay over $2000 per year for the privilege of ALTA membership. I stopped paying $2000+ per year when I suddenly realized that ALTA was advocating against my interests and not for them. DUH!
ALTA has in recent years been a strong advocate for closely held affiliated or joint venture relationships. ALTA has also been an advocate for automated title search and examination, even though testimony at the state and federal level would have you think otherwise.
I have to give ALTA some credit for rethinking the role of expert human examination and perhaps they have backed off the joint venture bandwagon. That's not enough for me.
I lose thousands of dollars every year paying for abstracts and lien letters on cancelled transactions. In an average year make that around TEN thousands. In a boom year, make it around TWENTY-FIVE thousands, so when I have repeatedly asked ALTA to advocate on behalf of the interests of title insurance agents like me and convince the real estate and lending community that our pre-closing work product has value and ALTA says NO, well, I don't see my $2000+ membership dues going into their pocket anytime soon. Do you?
PLTA responds to the PA Department of Insurance on the data call
LETTER
Interestingly, we have paid for voluntary annual CPA audits and maintained spreadsheets for issued policies and cancelled transactions so we're able to give reasonably accurate data for everything accept the geographic breakdown. For that, we are randomly reviewing scanned files for these years, as many as we can and will do a guesstimate based upon an extrapolation of the sampling. We're giving three man hours to this task each day. I think that is reasonable.
Maybe it's because my staff and I mostly used to be lenders and bankers that we have fairly well organized systems of storage and access to data. We've been through audits for the entirety of our careers, usually with little or no notice. Funny, it never occurred to us NOT to keep track of most of what we do.
Interestingly, we have paid for voluntary annual CPA audits and maintained spreadsheets for issued policies and cancelled transactions so we're able to give reasonably accurate data for everything accept the geographic breakdown. For that, we are randomly reviewing scanned files for these years, as many as we can and will do a guesstimate based upon an extrapolation of the sampling. We're giving three man hours to this task each day. I think that is reasonable.
Maybe it's because my staff and I mostly used to be lenders and bankers that we have fairly well organized systems of storage and access to data. We've been through audits for the entirety of our careers, usually with little or no notice. Funny, it never occurred to us NOT to keep track of most of what we do.
to be or not to be "on the list" --------- RESPA 2010
We do lots of closings for lots of different lenders. Sometimes we are "on the list" and sometimes we're not. By "on the list" I am referring to the Provider List given to a borrower with the new GFE. When a lender gives a borrower the name of a title service provider, they have to put the provider on the list. This is a referral and when the lender gives a name to a borrower and also gives the borrower a GFE, the lender should be familiar with the fees charged by that provider, and so the rule requires that the figures on the GFE must be subject to the 10% tolerance test. Now, if the borrower goes out and selects a title service provider who was not mentioned by the lender and is not on the list, the lender can't be expected to give any guarantee of pricing.
When we prep the HUD-1, our software prompts us to indicate whether or not we are on the list. If we ARE, then our title services fees are a part of the 10% tolerance calculation. If we are NOT, then our fees are not part of the tolerance.
For the most part, everyone has been on the same page and in the few instances where we have found an intolerance, the lender has done an immediate cure.
Yesterday we had an interesting FIRST. We alerted the lender to an intolerance. The lender's response was that it wasn't a problem because they had over quoted title services and that covered the difference.
The lender did not have our company on the list. Our fees were significantly lower than those quoted on the GFE, however since we were not "on the list" our fees could not be used to offset an under quote of another fee.
We had a bit of a back and forth and asked the lender to take a close look at the RESPA FAQs pages 12-14, with a special emphasis on page 14.
Turns out their compliance team had given them incorrect direction. The supervisor cured the intolerance, thanked us for the help and said they would escalate this up the chain so company policy could be corrected.
If you are in a position prepping HUD-1 forms, please make sure you have read the RESPA FAQs and don't be shy about sharing information with your lender. We always do this in a way that demonstrates we are all on a learning curve. By having discussions about compliance, using the FAQs as a guide, we have often been able to think through scenarios and work out situations together as they are discovered. We are learning from lenders and visa versa. The point is that we should be able to understand clearly what we, lenders and title insurers, are doing and why rather than just taking direction mindlessly.
When we prep the HUD-1, our software prompts us to indicate whether or not we are on the list. If we ARE, then our title services fees are a part of the 10% tolerance calculation. If we are NOT, then our fees are not part of the tolerance.
For the most part, everyone has been on the same page and in the few instances where we have found an intolerance, the lender has done an immediate cure.
Yesterday we had an interesting FIRST. We alerted the lender to an intolerance. The lender's response was that it wasn't a problem because they had over quoted title services and that covered the difference.
The lender did not have our company on the list. Our fees were significantly lower than those quoted on the GFE, however since we were not "on the list" our fees could not be used to offset an under quote of another fee.
We had a bit of a back and forth and asked the lender to take a close look at the RESPA FAQs pages 12-14, with a special emphasis on page 14.
Turns out their compliance team had given them incorrect direction. The supervisor cured the intolerance, thanked us for the help and said they would escalate this up the chain so company policy could be corrected.
If you are in a position prepping HUD-1 forms, please make sure you have read the RESPA FAQs and don't be shy about sharing information with your lender. We always do this in a way that demonstrates we are all on a learning curve. By having discussions about compliance, using the FAQs as a guide, we have often been able to think through scenarios and work out situations together as they are discovered. We are learning from lenders and visa versa. The point is that we should be able to understand clearly what we, lenders and title insurers, are doing and why rather than just taking direction mindlessly.
Wednesday, March 31, 2010
query: is the title company the agent of the lender
Good question. If by title company you mean a title agency, the title agency is the agent for the title company/underwriter.
Title insurance companies/underwriters and their title agents have a fiduciary duty to the mortgage lender and so they do or should be keeping their eyes open for fraud and error. If the mortgage lender has requested coverage under a closing services/protection letter then the title company/underwriter and title agents have an obligation to follow the lender's written closing instructions.
Title insurance companies/underwriters and their title agents have a fiduciary duty to the mortgage lender and so they do or should be keeping their eyes open for fraud and error. If the mortgage lender has requested coverage under a closing services/protection letter then the title company/underwriter and title agents have an obligation to follow the lender's written closing instructions.
Friday, March 26, 2010
phew, I am trying to calm down.....
I haven't been this angry while writing a blog post for a long, long time. Just goes to show how much wonderful progress we have made. It's rare to run into incompetence and ignorance in the business and that's a good thing. So, let me end my blog day on the happy note. I want to express gratitude to the thousands of folks who have embraced good practices and work with their thinking caps engaged. ;)
See ya.
See ya.
Sorry, there's no better way to say this, Saxon Mortgage is an IDIOCRACY.
I have never - NEVER - NEVER - in my entire 35 year career faced an absolutely hideous mortgage servicer.
Saxon uses teams of customer service people who seem to exchange roles in and out of the payoff department - each time you call you wait forever and any prior conversation is completely erased from the company memory. Letters sent go into a black hole. Money goes into a black hole and sits there for months before any human can decide how to handle it. On the surface, the company looks like they know what they are doing. They even threaten to send money back if a payoff is inadequate but do they? Do they contact a remitter if there is a problem with a payoff -NO.
Back in November 2009 we remitted funds via wire to payoff two mortgages. One account is still in La La Land. Hideous, just hideous. Never faced anything like it. I feel sorry for consumers. Saxon is a brickwall of smiling know nothings.
Okay, so this afternoon I get a new payoff letter to see if I can figure out what is going on. We remitted via wire $18335.76 back in November and they couldn't figure out what to do with it though it was sent with the borrower name and property address and our return wire data. The account number had a typo in it. So rather than figure out which mortgage to pay off or simply return the wire to us, they sat on the money until late February when they contacted the borrower. Now, in the meantime he had not been making any payments on this account and had received NO statements or late notices -NOTHING that would indicate that there was anything wrong.
In early March the borrower contacted me and I provided evidence of the wire, we figured out what had happened with the typo and started trying to figure out how to move this account forward. A gazzillion phones calls and one certified letter to Robert Meachum, EVP at Saxon and produced NOTHING.
So, I call again today and AGAIN, after previously talking to fifteen thousand people in their customer service department we have to start over. This time, in frustration I just said send me a payoff letter.
I get the letter and see that the money they have had since November STILL hasn't been credited to this account. They just continued to accrue interest as if the money didn't exist. WHAT JERKS.
I sent in $788 in the form of a cashiers check via FEDEX out of our own pocket just to get this stupid issue resolved. Who wants to place a bet that it's not over, eh?
Saxon uses teams of customer service people who seem to exchange roles in and out of the payoff department - each time you call you wait forever and any prior conversation is completely erased from the company memory. Letters sent go into a black hole. Money goes into a black hole and sits there for months before any human can decide how to handle it. On the surface, the company looks like they know what they are doing. They even threaten to send money back if a payoff is inadequate but do they? Do they contact a remitter if there is a problem with a payoff -NO.
Back in November 2009 we remitted funds via wire to payoff two mortgages. One account is still in La La Land. Hideous, just hideous. Never faced anything like it. I feel sorry for consumers. Saxon is a brickwall of smiling know nothings.
Okay, so this afternoon I get a new payoff letter to see if I can figure out what is going on. We remitted via wire $18335.76 back in November and they couldn't figure out what to do with it though it was sent with the borrower name and property address and our return wire data. The account number had a typo in it. So rather than figure out which mortgage to pay off or simply return the wire to us, they sat on the money until late February when they contacted the borrower. Now, in the meantime he had not been making any payments on this account and had received NO statements or late notices -NOTHING that would indicate that there was anything wrong.
In early March the borrower contacted me and I provided evidence of the wire, we figured out what had happened with the typo and started trying to figure out how to move this account forward. A gazzillion phones calls and one certified letter to Robert Meachum, EVP at Saxon and produced NOTHING.
So, I call again today and AGAIN, after previously talking to fifteen thousand people in their customer service department we have to start over. This time, in frustration I just said send me a payoff letter.
I get the letter and see that the money they have had since November STILL hasn't been credited to this account. They just continued to accrue interest as if the money didn't exist. WHAT JERKS.
I sent in $788 in the form of a cashiers check via FEDEX out of our own pocket just to get this stupid issue resolved. Who wants to place a bet that it's not over, eh?
Thursday, March 25, 2010
RESPA Referral Fee Matrix
Check this out. You have to be kidding me. Is there seriously anyone out there still playing the referral fee game and thinking that regulators will give them a pass?
I found that little jewel in under this blog post:
LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee. Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com
My advice? Forget it, LO folks. Make your money the honest way. Just do your job well. Real competition and effective marketing will create winners and losers. Consumers do not need to support a referral fee network. Nobody wants to pay a higher fee for a crappy LO who can't get business any other way. Don't embarrass yourself by sinking back into corruption. You are better than that, okay?
I found that little jewel in under this blog post:
LO’s are again asking about the RESPA rules — about when you can legally pay an affiliated party a referral fee. Dr. Gary Lacefield, RESPA Expert, has provided a RESPA REFERRAL FEE MATRIX and you can find it in the Charts & Checklist section of www.MortgageCurrentcy.com
My advice? Forget it, LO folks. Make your money the honest way. Just do your job well. Real competition and effective marketing will create winners and losers. Consumers do not need to support a referral fee network. Nobody wants to pay a higher fee for a crappy LO who can't get business any other way. Don't embarrass yourself by sinking back into corruption. You are better than that, okay?
Saturday, March 20, 2010
query: how do I complete the GFE for 1st and 2nd mortgages
HUD wants you to do a separate GFE for each mortgage. Check the RESPA FAQs. There's lots of good info available in there.
query: what do you mean mortgage post closing
The word "post" means after. So any reference to post closing means after closing.
We have a post closing department which handles all of the details and work that takes place AFTER the closing. For a title insurance agent, that means recording documents, issuing policies, delivery of documents, filing, scanning, escrows and sending out checks, etc.
Mortgage lenders also have post closing departments which process the mortgages for sale in the secondary market and/or for loan servicing.
If you are a consumer and someone asks you to do something, perhaps send a document and they say, "You can send it post closing." they just mean it's okay to send it to them later, after closing.
We have a post closing department which handles all of the details and work that takes place AFTER the closing. For a title insurance agent, that means recording documents, issuing policies, delivery of documents, filing, scanning, escrows and sending out checks, etc.
Mortgage lenders also have post closing departments which process the mortgages for sale in the secondary market and/or for loan servicing.
If you are a consumer and someone asks you to do something, perhaps send a document and they say, "You can send it post closing." they just mean it's okay to send it to them later, after closing.
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