news alert on LandAm

On Monday, November 24, 2008, the Nebraska Department of Insurance filed petitions for rehabilitation for Commonwealth and Lawyers Title under the Nebraska Insurance Code. Hearings on the petitions are set for later today.

The Company expects that rehabilitation orders will be entered quickly and that the rehabilitations will function as a temporary administrative step to assist the transition of Lawyers Title's and Commonwealth's businesses to the family of companies owned by Fidelity National Financial, Inc. ("FNF"). Lawyers Title and Commonwealth will continue to operate and serve customers during the completion of the sale. Both underwriters are entirely solvent.

Under the Stock Purchase Agreement, Fidelity and Chicago Title will pay the Company $298 million in total for Commonwealth, Lawyers Title and United. The closing of the transactions under the Stock Purchase Agreement are subject to approvals by the Bankruptcy Court, the Nebraska Department of Insurance, and other state and federal regulatory agencies. The Company intends to work with FNF toward a closing as early as late December 2008 and will request expedited approval from the Bankruptcy Court.

Read more....

good general query via e-mail

Hi,

I read your blog about title insurance. It is very helpful.

I have 2 questions to ask:

1. I did not buy title insurance at the purchase. can I buy it now (later)?

2. My friend bought a house, and after closing he was noticed there was an unsettled mortgage made by previous owner against the house. The title company's search did not find and report the said mortgage. If my friend did have the title insurance, will the title company be held for the liabitiy?

Thank you in advance. Looking forward to your reply.

John

Both are great questions, John.

Yes, you can buy owner title insurance later if you did not buy it when you made the purchase. The title agent will need to re-examine title and then the premium should be based upon market value of the property. In PA, if you don't have a current appraisal, we would work out a market value using the tax assessment. Also, in PA our title rates are regulated. They may not be in your state, so be sure to shop around and get quotes in writing.

Unsettled or unsatisfied mortgages are one of the most common post-closing issues title insurance companies deal with. Your friend should call their title agent and also file a formal claim directly with the title underwriting company. That's the company whose name and logo are on the policy jacket.

executive management memorandum to agents on the LandAmerica status...

To our Agent Partners:

Many of our customers, particularly our customers involved in commercial transactions, have been contacting us with questions about the financial strength of LandAmerica's two major title insurance companies, Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation.

It is important to remember that while an affiliate of these underwriters, LandAmerica 1031 Exchange Services Company, Inc. ("LES"), had problems liquidating guaranteed securities, our title insurance companies continue to do business and have adequate surplus and reserves to meet our customers' needs.

These problems do not affect our title insurance companies, as LandAmerica underwriters, Lawyers Title and Commonwealth, have over $300 million in combined statutory surplus. We have put together the attached spreadsheet, which was taken from publicly filed documents, to allow you to see for yourselves that the underwriters remain competitive with other major U. S. title companies.

We hope you will continue to place your title, closing and escrow orders with LandAmerica.

Our talented employees remain available to assist you and service your accounts. And our underwriters have the financial strength to back those orders. Plus, if we are liable for a claim, we can pay it. We have some of the industry's most stringent requirements for reserves in place to protect our policyholders. The LandAmerica underwriters' claims reserves are back by over $1.1 billion in cash and investments.

We appreciate your business, and we are working hard to earn your continued trust. Please call and we'll be happy to answer any questions you may have.

I am very happy to hear this.

The situation does not affect LandAmerica's title insurance subsidiaries, the company said. The assets of those "highly regulated companies" are "completely separate" from the 1031 exchange company, and are "more than sufficient" to meet obligations to policyholder and escrow customers.

Read more....

There is an eerie silence today, isn't there?

Is there hope? I have hope.

Here's what I think. I think the folks at the top of Fidelity, First Am, Old Rep, and Stewart ought to consider what the failure of a major underwriter means to THEM and then do something to stop it.

Insurance is all about trust and stability. If an industry shows vulnerability beyond the capabilities of the public's ability to comprehend, the industry is doomed.

Doomed.

Do we want more doom?

Doom da doom doom doom doom.


I don't but I can't do a darn thing about it.



I have hope that decision-makers at the highest levels in the big title insurance firms are thinking big picture and not just selfish survival.

Here's a good article on the LandAmerica situation.

READ IT HERE.

plans off

Fidelity National Financial Inc. has called off its plan to acquire troubled rival LandAmerica Financial Group Inc., the companies said Friday, a development that casts doubt on LandAmerica's long-term prospects.

Fidelity and LandAmerica both issued terse statements at 8 p.m. Eastern Time Friday saying Fidelity had exercised its right to back out of the deal during a due diligence period.

Read more...

NAMB ------- GET OVER IT

The National Association of Mortgage Brokers (NAMB) is up in arms over the recently updated Real Estate Settlement and Procedures Act (RESPA). The U.S. Department of Housing and Urban Development’s (HUD) revision to the Good Faith Estimate (GFE), a simplified three-paged document designed to help borrowers better understand the terms and conditions of their home loan, has the NAMB President Marc Savitt promising, “We are not going to stand for this,” wrote National Mortgage News.

When NAMB came into the mortgage wholesale seen, as I remember, they walked, talked and acted like hard money lenders. NAMB put their hard money arms out and while trying to go their membership, swallowed up the business of wholesale origination and took the framework of traditional and reputable mortgage brokers with them.

NAMB whether you encouraged bad practices or simply did nothing to stop them, I don't give a darn. All I can say is that you marched the business of mortgage brokerage to a cliff and played the horns till everyone fell off.

You are not needed here anymore. Go away. Mortgage lenders can try to re-build wholesale mortgage lending without anymore of your bright ideas. Consumers were not well served by your counsel or your membership. I hope you have no political pull with the new administration. I hope the Obama administration puts the interests of consumers first and your greedy needs last.

foreclosure rescue - PLEASE resist the temptation to pay for this kind of help.

Here's a blurb from The Daily Mortgage Fraud News:

In the following press release Illinois Attorney General Lisa Madigan today (11/18/200) announced that she has filed seven new lawsuits against so-called mortgage “rescue” companies and warned consumers about an alarming rise in these scams that prey on vulnerable homeowners on the verge of foreclosure. Madigan urged consumers to use caution when seeking help if they are at risk of losing their homes and to seek reputable sources for assistance.

“Consumers need to resist offers of a ‘rescue,’” Madigan said. “These scam artists prey on desperate homeowners who are struggling to save their homes. I urge consumers to avoid ‘rescue’ offers and, instead, reach out to trusted sources for help. My office assists homeowners attempting to avoid foreclosure. Anyone looking for help should call us immediately.”

I just came in contact with one of these scams this week. A reader of this blog contacted me to ask about an offer a "rescue" company had made to some people in foreclosure. These folks were being asked for $2000 up front, non-refundable, all for this company to try to save them but with no promises.

Wisely, our fellow reader recognized the signs of a scam and assisted these folks by encouraging them to call their lender directly. Guess what? They got a mortgage loan modification AND they didn't pay their desperately needed $2000 for the privilege.

GREAT JOB YOU ANGEL!!! I am so proud of you.

Here it is.

WASHINGTON - For the first time in more than 30 years, the U.S. Department of Housing and Urban Development today issued long-anticipated mortgage reforms that will help consumers to shop for the lowest cost mortgage and avoid costly and potentially harmful loan offers. HUD will require, for the first time ever, that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. HUD estimates its new regulation will save consumers nearly $700 at the closing table. Read more....

interesting, eh?

The Obama administration is likely to try to go well beyond the new Respa rules and look more comprehensively at disclosures lenders are required to make to borrowers, said Howard Glaser, a mortgage industry consultant who served as a senior HUD official in the Clinton administration. "This won't be viewed as sufficient to restore borrower confidence in the mortgage process," Mr. Glaser said. Read more...

On the FNF/LandAm merger...

FNF - of all the major title companies I have been watching - has done the best job of navigating rough financial seas and reorienting itself to a new way of doing business.  I have continued to be impressed with CyberHomes.

It's no secret that I don't like automated title examination and outsourcing but I am enough of a realist to know that much of the consuming marketplace wants these kinds of services, even if they don't understand them.

The folks I have worked at LandAm are title experts and hard working producers.  If they find a place in the new FNF structure, I'll be very happy for them, but sometimes being forced to find a new path can be a good thing, even if it's scary in the short run.  No matter what, I know these good people will land on their feet.

I'm also very happy that consumers insured through LandAm are safe and that management chose the right course by seeking a merger rather then crash land.

The Closing Specialists is an agent for both LandAm and Old Republic.  We're continuing to deliver policies to LandAm but are directing new commitments into Old Republic until we get clear notice on how the merger will impact our operations.

If anyone gets useful information, please share it with an e-mail or comment.  ;)

FNF buys LANDAM...thanks, Tim for heads up

Fidelity National Financial, Inc. and LandAmerica Financial Group, Inc. Announce the Signing of a Definitive Merger Agreement

Jacksonville, Fla. and Richmond, VA -- (November 7, 2008) -- Fidelity National Financial, Inc. (NYSE:FNF) and LandAmerica Financial Group, Inc. (NYSE:LFG) today announced the signing of a definitive merger agreement under which FNF will acquire LFG. Under the terms of the merger agreement, LFG shareholders will receive 0.993 shares of FNF common stock for each share of LFG common stock.

Thanks, Alicia.

She sent us this really nice note:

"It was the easiest part of the entire process. Everything was handled very efficiently & professionally. Big thanks & great job to both Michelle and John."

the case of the revised subdivision

This isn't a matter which has been resolved but I thought I'd mention it as an example of how things can get royally confused in a real estate title.  ;)

In early 1979 a developer got formal planning authority approval for and recorded a subdivision.  Later that year, the developer revised the subdivision.  I can't tell why.  I can't tell whether the developer submitted the revision for formal planning authority approval and was rejected.  All I can tell you is that the revised subdivision was not recorded.  

So, for reasons which remain clouded, the developer seems to have deeded some lots based upon the original recorded plan and at least one lot, if not more, based upon the unrecorded revised plan.

What makes this case especially irksome is that many - if not most - of the recorded documents in the two chains I reviewed reference the recorded plan, but also use the word revised.  I think it's just all screwed up.

Now my insured buyer has a neighbor who recognizes the lot lines described in the original approved plan.  My insured buyer wants to use the lot lines as revised.

It's a classic boundary line dispute and I post it just to show how a sloppy developer is causing grief even close to 20 years later.

Our insured buyer will find no relief in title insurance for this dispute.  In PA there is no boundary line dispute coverage in an owner policy.  We did recommend that he get a survey and he chose not to.  A survey may have raised the issue.  I have reason to believe that the neighbor did approach the buyer and raised the issue prior to closing so I do not think he went into the transaction without a heads up.  Also, the owner policy does not insure subdivision approval.

If the dispute ever goes to court, it will be interesting to see if the unrecorded revised plan has standing.

your choice as a consumer

If you decide to buy title insurance, and I strongly recommend that you do, select the provider carefully.

First, make certain that the title insurer is actully performing the title examination themselves and not farming it out to a computer or a vendor clerk will likely do a cursory review or no review.

It is important to realize that most of the premium you pay for title insurance is for the pre-insurance examination of title, the purpose of which is to find and eliminate reasonable risk of claims.

Why care about the risk of claim, if you are insured?  Well, the process of making a claim isn't pleasant and in the end you might end up with some money and not the home that you love.

Second, carefully review the work product of the title insurer before you close.  That means get the title commitment and read it.  Look carefully at the exceptions to coverage and understand what you are buying before you close.

If you are dealing with an expert title insurer, you'll get clear information.  If you are dealing with someone who got into the business cause they thought it was a gold mine and not a profession, you'll get wishy washy answers.  Use your intuition and select your provider very carefully.  The gold miners will skip all the work steps and issue an empty title policy void of examination and full of widely generalized exceptions that boot out most, if not all claims.

Be a careful shopper.

final RESPA rule out in two weeks?

WASHINGTON (10/24/08)—Changes to the Real Estate Settlement Practices Act, known as RESPA, will be out within the next two weeks, according to Federal Housing Administration (FHA) Commissioner Brian Montgomery. Read more.....

just filed a title claim for a customer

There was a typographical error in a deed filed in 1946 which changed the lot number.  All of the deeds filed since then for this lot carried forward the mistake.

A full search in our area is 60 years.  This transaction was processed in 2005 and we ordered a full search from First Am.  They apparently only did a 59 year search.  Had they gone back for a full search, they would have pulled the prior deed in the chain, dated 1937, and discovered the error.

They will fix the problem for our customer.  They have assigned an attorney and they did so promptly when notified.  I appreciate that.

This case proves two points.  First, there is a reason why we do full searches.  We are looking fo mistakes with the job of fixing them.  Secondly, even when a search does not discover an item that is covered under title insurance, the policy will still protect you.

what does a possible takeover in title insurance mean for our future?

If a giant lender decides to buy a giant title insurer, then we are facing a giant bundling concept.

No doubt models are changing, they have to. Fidelity - with Cyberhomes - has decided to change the point of sale by capturing the consumer before the real estate agent has a chance to.

Looks like we might have a giant lender deciding to offer consumers one stop pricing - all services included without affiliation, but with full ownership. Does that fly in insurance circles? Probably.

My plan is still the same. I'm planning to offer boutique title services at a local level with the emphasis on quality and traditional services.

We'll see where all of this leads. Should be interesting.

FHA Wiki - This is a great idea.

Consumers, lenders, title agents, and real estate agents are always looking for a reliable source for FHA program info.  The FHA on-line resources have really come into their own.  Take a look at this Wikipedia run by FHA.gov.

CLICK HERE.

Here's a good one:  How do I determine when the annual MIP will be cancelled?

For loans closed on or after January 1, 2001, FHA's annual MIP will be automatically terminated under the following conditions: 1. For mortgages with terms more than 15 years, the MIP will be terminated when the Loan to Value (LTV) ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the LTV reaches 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. 2. For mortgages with terms 15 years and less and with LTV ratios of 90% and greater, the MIP will be terminated when the LTV ratio reaches 78%, irrespective of the length of time the borrower has paid the MIP. 3. Mortgages with terms 15 years and less and with LTV ratios of 89.99% and less will not be charged MIP. Read more....

being prepared for closing

Take a moment to check your identification documents.

You'll need a CURRENT photo ID that has been issued by the state or federal government.

I have also noticed that lenders are asking for copies of social security cards.

So, take both to closing.

Am I interpreting the tea leaves correctly?

Has First American been taken over by a large financial institution? Speak! Speak!

query: in PA what are the procedures for signing over a house that was inherited.

Seek legal advice from a competent estate attorney.  You must make certain that matters concerning the estate are properly resolved including the filing of an inheritance tax return.

query: what happens if you get caught with occupancy fraud

Getting caught in mortgage fraud of any kind is serious.  

Let's talk about occupancy and why mortgage lenders care about it.  It's all about basic human needs and survival.  When the chips are down and times get tough, you still need a roof over your head.  People tend to protect that roof and let other investments go south.

Mortgage lenders and their underwriters rate risk.  They know from experience that second homes and investment properties go into foreclosure more easily than primary residences.  To offset that extra risk, the mortgage lender will normally require a higher down payment and/or a higher interest rate.  

If you have lied to a mortgage lender and borrowed money for a second home or investment property but signed legal documents indicating that the property would be your primary residence and you get caught, you may face criminal prosecution and incarceration.  If you're lucky, the mortgage lender will simply raise your interest rate and demand that you come up with the higher down payment.

What if you intended to live in the property but circumstances beyond your control forced you to move somewhere else?  You should contact your lender and explain the circumstances and let them decide if they will allow you to retain the same structured terms.

Lenders are very good at catching occupancy fraud.  Never let a real estate agent or a mortgage loan officer give you a wink and a nod indicating that it's no big deal.  Mortgage fraud is always a big deal.

query: what happens if mortgage is not subordinated

Let's talk about mortgage lien priority. Mortgages tend to fall into two categories - primary and subordinate. The most common form of subordinate mortgage is the home equity loan. Most consumers have the home equity loan or HELOC as a second mortgage recorded after their main mortgage. The main mortgage is in first position. First position gives the main mortgage lender lien priority in the event of a foreclosure. First position gets paid first.

So, let's say you have two mortgages, your main mortgage and a HELOC. You decide to refinance your main mortgage but you like your HELOC and don't want to pay it off and satisfy it. The problem is that your HELOC will move up to first position when you payoff your main mortgage and that would put your NEW main mortgage in second position. THAT won't make your main mortgage lender very happy at all, so they will require that your HELOC lender agree to subordinate their position, allowing your new main mortgage lender to basically skip in front of them in line.

This subordination is done with a legal document signed by the HELOC lender. The subordination document is usually recorded when you record the new main - first - mortgage.

As a consumer, you sort of have to keep an eye on the refinance process if you intend to leave a HELOC or any subordinate mortgage in place. It might take time to get the subordination approved and so you should contact your HELOC lender and get the process started. Don't rely on the title agent to do this because they might not know you intend to keep the loan until late in the transaction. That's the other thing - make sure YOU tell the title agent that you intend to have a subordination and also make sure you have told your new main mortgage lender.

What happens if the transaction closes and no one did a subordination? The title agent - who likely insured first position for your new main lender - will have to fix it. They'll have to go to the other lender and ask for the subordination. This can still be done post closing but it's risky because the lender might not agree. If the lender doesn't agree, then the new main lender who wants first position may have a claim against the loan title insurance policy.

Claims are based on losses but the lack of lien priority may impact the saleability of the mortgage paper and though the lender hasn't suffered a loss in a foreclosure, you still have the question of whether or not the title agent followed the lender's written instructions. The title insurer will work all of this out with the mortgage lender.

As the consumer, your obligation is to cooperate, as needed, to assist in the resolution of getting the subordination. Why? Well, your new main mortgage was likely subject to the subordination and you have to satisfy that condition even if it is post closing.