liens survive forclosure

Working on a file, a purchase transaction, with property that passed through foreclosure before my seller acquired it. Four liens survived the foreclosure and though, in this case, I'm fairly certain they can be resolved, the resolution may take time.

I noted that a local attorney handled the conveyance. I'm pretty certain he is not a title agent but he is the solicitor for the municipality and that helps because two of the liens are municipal liens. I called the municipality and they will satisfy the liens for us.

Municipal liens are not divested by foreclosure. Keep that in mind. If the attorney had known that he would have insisted that the REO lender pay the liens when they sold the property. They weren't huge liens, but the municipality might have been happy to receive about $2,000.

The other two surviving liens are federal tax liens and they survive because the USA was not named as a defendant in the foreclosure action. That's the proper way to give notice to the USA.

So, I am hoping this won't take too long to resolve. I'm fairly certain we'll have an argument from the attorney who handled the last transaction but if he issued title insurance to our seller, the underwriter will assist.

Consumers should remember that attorneys and non-attorney title agents make mistakes. They are human and that is why you must always purchase an owner policy from a reputable and solvent title company. Title insurance is your safety net.

Well, I am totally beat.

Long day at the public hearing which, BTW was a richly rewarding experience. Will be back with more. It was really nice to see everyone who was there.

Here's a big hello to

everyone doing their research for the public hearing in Harrisburg next week. See you there. ;)

new federal entity being born? will it cover insurance?

The discussions are in flux but at an advanced stage. It is unclear if the administration will propose creating a new federal agency or place new powers within an existing agency. The scope of the new powers also isn't settled, including whether they would cover insurance, which isn't currently regulated at the federal level. Read more...

Wow, this was a surprise. Jim Maher died.

James Robert Maher, 59, a retired executive with the American Land Title Association, died May 5 of kidney cancer at his home in McLean.

Mr. Maher joined the American Land Title Association, the trade association for the abstract and title insurance industry, as general counsel in 1984 and was promoted to executive vice president four years later. He was responsible for managing the association's legislative, legal and research activities, as well as its education and public relations work. He retired from ALTA in 2007 but continued working as secretary and counsel of the Title Industry Assurance Company and the Title Reinsurance Company. He also was a board member of Mortgage Electronics Registration Systems.

Read more....

Good job to our reader and good job to his title company!

Hello Ms. Cipa,

I replied a few weeks ago to your "how_to_file_claim" post on your Title Insurance Talk blog. You replied and recommended writing a certified letter. I did and it seemed to have worked, as I finally received a response:

I received the following letter from my title company yesterday regarding my claim:

XYZ Title Company has finished our review of the aforesaid claim. As you know, you submitted a claim after receiving your 2008 tax bill and noticing you were billed for both an HOA and a CID assessment. While the HOA assessment was disclosed to you prior to your closing, you maintain you were not aware of the CID and the document creating the CID. It is noted the contract you signed for this transaction points out the “BUYERS acknowledges that the Property may be subject to recorded declarations, maintenance or other documents that place certain restrictions on building materials and uses of the Property, require maintenance of the area and assess homes association dues. BUYERS are responsible for obtaining a copy of any such recorded declarations and other documents and for reading and understanding them prior to closing. Buyers agree to abide by all of the provisions of such recorded declarations and documents. At closing, Buyers shall directly pay or reimburse Builder for any homes association dues paid or payable for the period after closing. BUYERS recognize that homes association dues are approximately $360.00 per year.” While you acknowledge the yearly homeowner’s association dues which you acknowledge in the contract could only have been assessed pursuant to a recorded instrument, you are now claiming you have no knowledge of such instrument and have submitted a claim for reimbursement of the CID assessment of $505.00 for this tax bill as well as future years.

XYZ Title Company has investigated the matter and determined that the CID document was not listed on your commitment and policy and should have been. However, you were aware that such a document had to exist. Furthermore, in reviewing other purchases of other homes affected by a similar restriction, we can not find any transaction in which the proper disclosure by the title company resulted in any change in the purchase price. The buyers proceeded to purchase these other properties without decreasing the amount they were willing to pay. Furthermore, in reviewing the contract we find that you would have been obligated to close and purchase subject land whether or not the CID was disclosed to you. That being the case, there is no loss that is covered by your title insurance policy since such loss is limited to the “difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy” (See policy Conditions and Stipulations 7 (a) (ii). However, we also recognize the unfair surprise this assessment has caused you if you were not aware of the existence of this resolution, and we are therefore, willing to pay this year’s installment.

Therefore, enclosed please find our check for $505.00 for payment of said CID and complete settlement of this claim. Future payments of said CID will be your responsibility as previously discussed under the terms of your policy.

In your opinion, does the title company have its butt covered, or is their letter full of fluff and attempting to avoid paying the $505 for the next 16 years? They DID admit failing to list the CID document on our policy. If we truly had no claim, why would they pay us the $505 check?

Or do we have a better case against our builder (or their law firm that drew up the CID documents), for disguising the CID as an HOA and never stating the words "community improvement district" in the contract, or its potential assessment amount?

During our research late last year, we received word from the law firm that drew up the CID documents that the recorded document "specifies the formation of the CID and that it will act as an HOA and assess the property within its boundaries...." We also learned from the Missouri Department of Economic Development that an HOA and a CID are different legal entities. It appears that the builder was trying to hide the CID, portraying as an HOA. The contract only mentions an HOA with dues of $360; why would we reasonably expect to also be part of a CID with additional assessments on top of this?

Thanks again; I really appreciate your time!

The title company was generous. I'd cash that check and be grateful.

Whether you have recourse with others, well, I think you need to pose that question to an attorney.

Glad you were able to find some relief and clarity on the issue. Thank you for the follow up. I will post this as it will be helpful for others. Take care!

Diane

Angelo Mozilo to face fraud charges.

Staff at the SEC have decided to recommend filing civil fraud charges against Angelo Mozilo, the co-founder of Countrywide Financial, according to people familiar with the investigation. The potential charges include alleged violations of insider-trading laws as well as failing to disclose material information to shareholders, according to one person familiar with the matter.

Read more...

Did you happen to catch the story of the family who built their dream home on the wrong lot?

And now you know why you should have a survey performed before you build your dream home. The surveyor should mark out the location of the foundation so you avoid easements and setback lines and, most important of all, get the house on the right lot!

Pennsylvania Insurance Department to Hold May 28 Public Hearing on Title Insurance

HARRISBURG, Pa., May 7 /PRNewswire-USNewswire/ -- Insurance Commissioner Joel Ario today announced that the Insurance Department will hold a public informational hearing on title insurance at 10 a.m. on Thursday, May 28, in Hearing Room 4 of the Keystone Building, 400 North Street, in Harrisburg.

Topics discussed at the hearing will range from the basic structure of the product, the pricing of the product and the relationships between the title insurance companies and those who sell the product. Consumers and those from the title industry who are interested in testifying are encouraged to attend.

The department is charged with overseeing the title insurance business in Pennsylvania, including rates and policy forms, licensing of companies and title agents and market practices relating to title coverage. At the present time, an overall rate level increase of 4.1 percent is pending on behalf of the Title Insurance Rating Bureau of Pennsylvania.

Information about the upcoming hearing and related materials are available for review on the department's Web site. Interested parties should visit www.insurance.state.pa.us, go to "Topical Information" on the right side of the site and click on "Title Insurance Hearing."

query: what does instructions are at title mean

I think it means that the mortgage lender has delivered their formal closing instructions to the title agent/company and that parties are awaiting a HUD-1 and closing.

That's reading a bit into your query but in my title world, that's the meaning of those words. ;)

tax claim bureau certificate was wrong

We recently had a title insurance claim, now resolved, over delinquent property taxes. Our insured owner had received notice of delinquent property taxes and contacted our office for help. I checked the file and found that we had a clear tax claim bureau certificate.

I immediately did three things. I sent letters to the seller and the tax claim bureau, then opened a claim with the title underwriter.

Response from tax claim - not sure what happened but taxes are owing, pay up!

Response from seller - knew the taxes were owing and mistakenly thought they had been paid during closing. Doesn't have the money anymore but will try to send some in a few months.

Response from title underwriter - contacted the director of the tax claim bureau and successfully made the case that the tax claim bureau system must be reliable. Tax claim researched the matter and found that it had been a software malfunction. The director of tax claim got the software company to pay the tax.

YEAH! Good job, title underwriter [Old Republic] and director Samuel Runco of Cambria County. Nicely done.

query: can I sue the title company for using the wrong lot number

Well, I guess you can sue anybody for any reason if you so desire. Will you win? That's another matter. Have your attorney carefully review your owner policy. If you have suffered a loss due to the error, you may have a basis for a title insurance claim.

When a typographical error is discovered, such as an incorrect lot number, the title agent or title company would normally prepare and file corrective instruments at no charge to you.

If you are getting the run around from a title insurance provider, go up the chain. Use certified mail and send a letter to the title company you see named on the title policy jacket. If an address is provided, use that address. Copy your state insurance regulator.

Demotech releases report

The collapse of the financial markets compounded these losses in operations and consequently led to a decrease in Net Investments of 28 percent for all companies from the previous year. These results contributed to a Net Loss of nearly $400 million for the industry. While all of the NAIC Title underwriter groups reported a Net Loss, the unaffiliated Title underwriters combined for a Net Gain. Read more...

here's a RESPA question for you

NAMB announces:

On Tuesday, April 28, 2009, the House Financial Services Committee voted in favor of attaching an amendment to H.R. 1728, "The Mortgage Reform and Anti-Predatory Lending Act of 2009" that would withdraw the Final RESPA Rule. The amendment, offered by Representative Judy Biggert (R-IL), stated that the Department of Housing and Urban Development (HUD) should work in conjunction with the Federal Reserve Board (Board) to develop and issue a new rule to address simplifying the mortgage process within six months of the passage of H.R. 1728.

This is a victory for NAMB as we have requested that HUD withdraw the RESPA Rule and work together with the Board to simplify the mortgage process in our comment letters, calls to action, and communications to Congress. H.R. 1728 is tentatively scheduled to be voted upon by the full House of Representatives on May 7, 2009.

My question is this. Does the legislative branch have the authority to direct HUD to withdraw its final rule? I don't think so. They can certainly apply pressure but unless they are re-writing RESPA itself, the rulemaking is the prerogative of the regulator isn't it?

LinkedIn

In an earlier post I mentioned that I couldn't find a real live human being to assist in researching a potential fraudulent transaction involving PNC. For the heck of it, I did a search on LinkedIn for PNC and mortgages. I found an officer in the mortgage arena who was connected to one of my colleagues and through him I contacted her. It worked! She responded and within a few days, the PNC angle was resolved and their mortgage assignment was confirmed. Cool - like LinkedIn. ;)

NAILTA news

Can you believe it has been six months since our meeting in Pittsburgh!
Well, a lot has been happening at NAILTA headquarters. If you have not had
a chance, please check-out our new and improved website www.nailta.org.



As with any new start-up, the process of forming NAILTA has taken longer
than some might have wanted or expected but you can be assured that your
President, Board of Directors, and Committee Members have been working
diligently to bring to you an organization that is on the path to being a
voice and a forum for the independent title insurance agent and a resource
for the consumer and public officials. But we are not done, there is much
more to be accomplished and we need your support, your expertise, and your
insight.



Please consider joining NAILTA today - it is as easy as 1-2-3. Go to
www.nailta.org and pay by check or credit card - it is that simple and while
you are there, register for the NAILTA Spring 2009 Conference in Atlantic
City, New Jersey. You can register at the website or simply print the
attached flyer - all the information you need is contained in the
attachment.



Finally, I ask you to please pass this information on to your colleagues,
industry partners, and vendors. Ask for their support, it is not hard to
do, I am doing it right now!



Best Regards,



Francine D'Elia Wirsching

Secretary

National Association of Independent Land Title Agents

francine@naland.com

610-834-6080

610-834-7372-fax

I'm not a subscriber but here's an interesting headline in RESPAnews.com

BREAKING NEWS: Federal judge determines real estate firm liable in unearned fee class action

Wednesday, April 22, 2009

In an opinion issued Monday in a RESPA class action lawsuit, a federal judge determined that a real estate firm was liable for charging illegal fees to more than 30,000 customers in violation of RESPA.

bitch bitch bitch bitch bitch

You think there's a problem in the title insurance marketplace here in PA? Well, you've got a chance to express your opinion directly to the horse's mouth, the PA Dept. of Insurance is asking for input.

See the prior post.

If you are an abstractor, notary signing agent, title agent or consumer of title services, NOW is your time to try to make a difference. It's all gonna be on the table, I guarantee it.

So, if new rules are promulgated that you don't like and you didn't take the time to voice your opinion in any kind of helpful way, well, don't say I didn't give you a good heads up.

Okay?

Geez it's hard to find a human being when trying to contact a big company.

I just can't get a person who can help me research a potential fraud against PNC Bank. Whether through the web or phone system, the wall between outside and inside communications is just too thick. Oh, yes, I can reach a human but not one who can direct me to the right spot or when they think they do I go into yet another phone maze with no way out.

Trying to help you, PNC. Call me.

public hearing on title insurance in PA...May 28th

Public Hearing on Title Insurance Rates and Practices

The Pennsylvania Insurance Department (“Department”) will hold a public informational
hearing on title insurance issues on Thursday, May 28, 2009 at 10 a.m. in Hearing Room 4 at the Commonwealth Keystone Building, 400 North Street, Harrisburg, PA 17120. The hearing will
consider the full scope of issues currently under consideration within the Department, including
the public policy issues raised by the current rating system and market practices such as how
rates are implemented by companies and agents, compensation to title agents, the use of
affiliated business arrangements, and the payment of compensation or profit-sharing based on the referral of business. Additional focus will be given to recent comments by the Pennsylvania
Office of Attorney General and broader reform proposals suggesting that economic trends,
changes in the financial services industry, and technological changes create opportunities for
new efficiencies in the title business. The Department requests information and testimony on the
following topics (this list is not exclusive):

o The premiums charged by title insurance companies, the commissions or fees paid to or
charged by title agents and approved attorneys and the effect such premiums,
commissions and fees have on the overall cost to consumers;

o The cost to title insurance companies to insure against defects in title and the cost to title
insurers or agents to perform the necessary title searches, to prepare a title abstract, to
clear defects in title and to perform a real estate closing;

o The current availability and viability of computerized title records searches and any
current or projected impact electronic searches may have on the cost of performing title
searches;

o The current compensation structure to title agents, including the use of affiliated business
arrangements, the payment of compensation or profit-sharing based on the referral of
business, and the effect these practices have on consumers and on competition in the
marketplace;

o The differences between a policy issued upon the sale of a home versus the refinancing of
a home loan and how this should be reflected in the rating structure;

o The appropriateness of charges for services ancillary to a real estate closing;

o What is a reasonable rate of return for title insurance companies under current economic
conditions;

o The impact of the current real estate market on the solvency of title insurance companies
and the possible impact on consumers given the absence of guarantee fund coverage; and

o Whether current economic trends and changes in the financial services market create
opportunities for new efficiencies.

Individuals wishing to testify about these or any other topics may contact the
Department’s Office of Insurance Consumer Liaison and Market Analysis at the following
address and telephone number to schedule to testify at this hearing. Individuals may also appear
at the hearing without advance notice and will be afforded the opportunity to testify after all
individuals scheduled in advance have testified. Testimony will be limited to a 10-minute
presentation. The Insurance Department requests that individuals provide a written copy of their testimony the day of the hearing, with no limit on the length of written submissions.

Interested parties are also invited to submit written comments, information or suggestions
about these or any other topics to Title Insurance Hearing, Insurance Department, Office of
Insurance Consumer Liaison and Market Analysis, 1326 Strawberry Square, Harrisburg, PA
17120, (717) 525-5884, ra-in-consumerliaison@state.pa.us. The deadline for written comments
will be June 4, 2009.

PA title agents, even if you have no funds to escheat,

you need to file a negative holdings report. It's easy. You can do it on-line and it takes less than five minutes. Follow this link. Once you register, you'll need to give them your asset size, annual sales and number of employees, then click submit and you're done.

Since the state has taken the time to send a reminder, I take that as a signal of increased audits this year. That's what happened with the user tax.

Mortgage fraud always surprises me....

and you'd think by now title agents would STOP enabling or colluding to defraud lenders.

You know, younger, inexperienced, or stupid title agents might make the argument that they didn't understand that having two settlement statements was mortgage fraud. Though they'd still be held accountable by authorities, someone might have believed them a year or two ago.

Now, anyone in this business who doesn't know that sending a lender a HUD-1 that does not match up with disbursements is mortgage fraud is an absolute criminal or ignoramus and deserves to at least lose their license.

I had an interesting chat with a real estate agent in New York yesterday. Seems she represented a seller in a transaction which included a seller assist. All went well until the closing. The seller did not attend. The real estate agent also did not attend because the seller was represented by an attorney who said he would attend. Turns out he did not. For some reason no one on the seller side reviewed or approved the HUD-1 prior to closing.

Who signed the HUD-1 for the seller? Get this. The title agent signed for the seller and did so without authority.

The real problem is that the mortgage lender capped the seller assist and rather than contacting all parties to renegotiate the contract, this title agent created and signed a HUD-1 matching the mortgage lender instructions, THEN disbursed funds based on the contract.

WHAT? Yes, the HUD-1 was a total fabrication meant to satisfy the mortgage lender.

THAT, FOLKS IS MORTGAGE FRAUD.

The real estate agent, once she discovered what had happened has been demanding that the title agent either undo the transaction or remit the balance owed to the seller so that funds do match up with the HUD-1.

I suggested that she report the facts to the Attorney General, the FBI, the state insurance department, the mortgage lender and the title underwriting company, oh, and also the Dept. of HUD.

We need to clean our business of title agents who are unable or unwilling to walk the straight and narrow line of fidelity. We need to have ZERO tolerance for bad guys or we won't get this situation in the mortgage market under control.

MORAL OF THE STORY FOR CONSUMERS: Control your transaction. Review the HUD-1 before you close and make certain that the movement of money is correctly shown. There is no such thing as "off HUD" disbursements. Anything paid outside of closing must be disclosed on the HUD-1 as POC so that there is a money trail. Do NOT allow a professional in the transaction to convince you otherwise. To do so is to collude to defraud a mortgage lender. I have no idea if the buyer in this transaction or their real estate agent knew what happened, but even if they did not, they can be held accountable for mortgage fraud.

Pennsylvania outlaws stated income mortgage loans

"Stated income loans present opportunities for abuse on both sides of the transaction," Kaplan said. "The new documentation requirements will go a long way in reducing the potential for fraud and dishonesty."

The new regulation also requires lenders and brokers licensed by the department to use a new, simplified, one-page disclosure form that calls attention to loan features, such as a variable interest rate or prepayment penalty, which can cause loan payments to increase or make it difficult to refinance. Read more......

NAILTA.ORG Spring Conference

You can now register for the conference at http://www.eventbrite.com/event/320490596.

unrecorded spousal waiver

There's just no wiggle room to use unrecorded spousal waivers. We have to either have the spouse sign the mortgage to validate the lien or attach a recorded spousal interest subordination to the instrument. The only alternative is to use an unrecorded spousal waiver with an exception in the loan policy for the spousal interest and I just can't think of a lender that wants an exception for spousal interest, can you?

Underwriters are just paying too many claims on these cases that go to foreclosure. The unrecorded documents are too easily lost when lenders go out of business or do a poor job of maintaining their files. That along with title agents going out of business so nobody has a record that the spouse waived their marital rights.

The spouse may conveniently forget signing the waiver and there goes the validity of the mortgage lien. Poof!