this still blows my mind....ROBO-GFEs...don't they get it yet?

"Several important new features in ClosingCorp’s SmartGFE service just went live in order to improve the GFE data process — including an automatic notification of changed circumstances"  source


ClosingCorp's SmartGFE is nothing more than a ROBO-GFE in my mind.  It's only a matter of time before the lack of human decision making is exposed yet again as a bad idea.  Culture of brainlessness..."we" can't seem to value human beings.

Well, that's an angle I hadn't consider. Hmmm.

"We are not an equity owner in any law firm," he said.

Read the article in Housing Wire.

"standing in the wind" and "the wall is red"

I've probably talked about these two techniques before but just in case, let me explain.

What we call "standing in the wind" is the purposeful listening  to another person venting while remaining calm.  Our natural instinct is to get riled and defensive. It's not that the wind is bad.  The wind is.

Real estate is a large transaction that touches some of the most important moments of life and humans express frustration, rage, fear, sadness and joy in different ways.  Sometimes something completely unexpected will cause a person to need to vent.  These moments are normal.

As noted at the top of Title Insurance Talk, we think of our office as an emergency room of life and that means our staff must be trained in bedside manner.  Remain calm and help.

The second technique, "the wall is red", is the ability of staying on target with an important point, quietly standing your ground, and saying the same thing over and over until the other party understands whatever it is that you need to communicate but they are having a hard time grasping.  The point is to not go off on tangents and to not get riled or frustrated.  We are humans with all the frailties we share, but we are the professional in the transaction and we need to keep our focus on the task and help others to move forward to a successful closing.

Mind you, we are not always successful because we, like you, are not perfect.  We use these techniques to remember to stay calm and move forward to accomplish our shared task.

Here's an example:

Insuring title for property owned by an out of state LLC, not registered as a foreign LLC in PA.  There is a mortgage with a local bank.  The seller was represented by an attorney.

We requested:

1. the operating agreement for the LLC along with any amendments
2. a statement of the nature of the business being conducted in PA so we could determine whether or not there was a corporate tax lien risk
3. authorization to obtain a payoff letter from the bank

We received a letter from the attorney stating that they had no operating agreement, since they were registered in another state, there was no corporate tax risk in PA, instructions to give him the proceeds check payable to the bank and he would secure a release.

We responded asking that he clarify who he was representing in the transaction - the LLC, the bank, or both.  We had reason to believe the LLC did have an operating agreement and would he confirm that with his client.  We respectfully disagreed with his position on PA corporate tax and asked that he provide a statement concerning the nature of the business being conducted in PA.   We also let him know that we needed to communicate directly with the bank and if the bank wanted us to give the attorney the proceeds check, they would need to give us those instructions in writing.

The response included an operating agreement with amendments, a statement that the LLC conducted no business in PA beyond the ownership of real estate and a signed release.

We had independently contacted the bank and received a letter signed by a VP stating that they wanted us to send the proceeds check directly to their office.

Fine, now we could move forward.  No, the attorney still wanted the check directed to him and produced a letter from the bank which instructed us to give the check to the attorney.  This new letter was signed for the VP by his secretary.  We said we would be happy to change the instructions but that the letter had to come from the VP, not by his secretary.  That new letter came a couple of days later, we validated it by calling the bank, and the transaction closed.

I thought the entire exchange was a bit odd.  My staff had remained calm and simply continued to reply and request what we needed over roughly a month.  We had dealt with this attorney in the past and not remembered such an unusual exchange.  Yesterday, the truth of the underlying tension was disclosed.  The attorney, who needed to vent sadness, shared with my staff that the previous manager of the LLC had recently killed himself and his wife in a murder/suicide.

We never know what might be causing another person in our transaction to be less than focused. I am proud of the folks in my office who gently worked their way to closing without getting riled.  They calmly repeated "the wall is red" until it was heard and understood and continued "standing in the wind" until the door to closing opened.

My heavens to Murgatroyd, we're busy.

Me thinks consumers have finally discovered that interest rates are LOW LOW LOW and those that aren't buying are refinancing. 

Oh, and BTW - lenders are lending!  ;)

I really do not understand this need to make transactions brainless. Do you?

The robo-signers that have blown a hole into the foreclosure process are evidence of this never ending quest for the holy grail of brainlessness.  WHY  WHY  WHY WHY is the mortgage and title insurance business so darned interested in getting rid of competent human beings?

I just got a call from a nice lady at Closing.com.  They call every so often to ask if my fees are accurate and I always say that our listing directs people to our web site and to call us to get an accurate quote.

This time she was insistent that they need accurate fees because lenders will use their automated system to populate GFE fields and that they need to guarantee the accuracy of the data.

WHAT?  WHY?

Why is it so bloody hard for a lender to have trained human beings who know how to complete a loan disclosure?

Why are title insurers who participate in this program ignoring the unique nature of real estate transactions and the definitions of title services.  Is everybody just overcharging consumers to cover all possible transaction fees or are they misleading consumers then giving them a gotcha in the end?

Consumers actually take their transactions seriously and expect to deal with humans who have trained brains in gear.

WHAT THE HELL IS WRONG WITH THIS INDUSTRY?

WHY DON'T YOU WANT TO PRACTICE A PROFESSION THAT REQUIRES THOUGHT?



My brain wants to burst when I have a conversation like that.  I just don't get it.

mortgage broker advertises interest rates tied to affiliated title insurance

A friend showed me the mortgage rate section of the Tribune Review last weekend and pointed to a mortgage company listing that had asterisks next to a few interest rates.  These asterisks pointed to a note that the rates were only available if the transaction was a purchase and the borrower used a particular title provider.

Clearly the mortgage broker sought to avoid Pennsylvania's discounted refinance title premiums as part of this package deal.  Only purchases transactions are eligible so there's enough cash in the pot to subsidize the rates.  The consumer appears to be getting a deal with the package.

What do you think about this offer?  Is it a problem under RESPA or PA lending or insurance law?

I've pondered on it and I'm really not sure.  It's very much like the deals offered to buyers in construction transactions.  You get the good price if you use the affiliate.  If you don't use the affiliate, you pay higher than market.  As far as I could tell these interest rates weren't especially low.

What's also interesting is that I did some checking around and found that the mortgage broker is an attorney who is operating the title services business through the law firm and not as a title agent.  He's working under the approved attorney program.  That means that TIRBOP rates do not apply.  So what's the deal with purchase versus refinance?  This fellow can charge whatever he wants when he wants to. 

Anyway, in the days of a more compliant and aware marketplace, this was oddly red flaggie.  ;)

Hey, readers. Hello!

Hope you like the new look of Title Insurance Talk.  This is the first visual overhaul since 2006.  I've been wanting to update the picture for some time but the right shot just hadn't surfaced, then my friend Marianne sent my this photo of us playing at the local farmer's market.  I LOVE that she caught my TCS minicooper in the shot, SOOOOO, here we are.  ;)

Marianne McAuliffe plays Native American flutes and we love making music together.  She picked up those fun peace glasses at the beach and I love them!

BTW  - Here's the new addition to the TCS fleet.  We retired one of the minicoopers and bought a KIA Soul.  I think the logo looks really nice against the red, don't you?  The Soul is a nice happy looking car and that's what we want.

PS  Here's Marianne's CD.

Fidelity scales up outsourcing to India

CHENNAI: Spotting an opportunity to cut its costs by around 30 per cent with increased productivity, US-based insurer Fidelity National Title Group Inc has decided to scale up its business process outsourcing (BPO) and software development activities in India.

The company had set up its captive BPO company Fidelity National Financial India in Bangalore three years back.

The $4.6 million revenue Fidelity National Financial India has around 800 employees searching and confirming property titles in the US for its insurance parent. 


Read more in Economic Times.

if you bought a foreclosed home and are concerned about recent news

“If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge,” said Kurt Pfotenhauer, chief executive officer of ALTA. “However, it is unlikely that a court will take property from an innocent current homeowner and return it to a previous homeowner who failed to make payments on the loan subject to the foreclosure.”
Though laws may vary on a state by state basis, in general, the buyer of a property that has been through foreclosure has numerous defenses available to assure their continued ownership.

• The alleged deficiency in the foreclosure process may not be accurate.
• The alleged deficiency in the foreclosure process may not have harmed the previous owner.
• The foreclosure judgment is a final court order. It is likely too late for a technical objection to the foreclosure process to be raised by the previous owner.
• Because the new owner purchased in good faith, they may be protected under the law. 

Read more from ALTA here.

the junk junkies just never learn, do they?

I've been slowly watching the return of articles pushing automation in mortgage underwriting and mused that it wasn't taking very long for people to forget that the loss of competent human credit analysts is what started this whole mess.

This morning, this article popped up on Inman and I am simply amazed but I guess shouldn't be surprised that folks just don't get what credit underwriting is all about.

With so many people now saddled with poor credit, reestablishing "nonprime" lending is increasingly important to the future of homeownership, researchers at Harvard University's Joint Center for Housing Studies argue in a new report.

The hardest lesson I learned as a young underwriter is that some people are not willing or able to repay and that placing them in a house, even when the lender isn't a predator and the consumer fully understands the disclosures, is NOT helping them.   It only leads them to foreclosure.

Trust me.  Don't walk down this road again.

the dangerous dangling lot

You might not think of an extra lot as being dangerous but from a title insurance perspective, the extra lot causes all sorts of misunderstandings and potential for loss, especially when the lot is forgotten or not considered.

A recurring problem surfaces in foreclosure.  If a title agent only places a mortgage upon the lot on which the house sits but doesn't consider discussing the adjacent vacant lot with the mortgage lender, you have potential marketing issue if the lender forecloses.  Many of these adjacent vacant lots only have value as a yard extension for the house and often aren't good building lots.  So, when the REO department of the lender goes to sell the house and doesn't have title to the adjacent lot, how does that impact marketability?

We've run into this a few times and often the extra lot isn't discovered until we do our title work.  The new buyers then have to decide if they want to track down the vested owners, the folks who lost their house,  wait for the lot to go up for tax sale as it often does, or cancel the contract.

We have a new order in which the sister of a foreclosed upon borrower is buying the house and the adjacent lot.  She's buying one from the REO lender and the other from her sister.  Interestingly, the house with the lot is going for a really low price because the lender discovered that most of the house sits on the adjacent lot still owned by the sister and not the one on which the mortgage was placed.

question to settlement agents

Are you seeing a drop off in the number of transactions with home warranties being sold as part of a purchase transaction?  I am.

Interesting, huh? 

interesting observation on RESPA 2010

How the industry is faring with new RESPA forms After eight months of using the new Good Faith Estimate and HUD-1 Settlement Statement forms, mortgage lenders, closers and the legal community are at a calmer place with implementation than they were on Jan. 1. But is it a perfect system yet? Two attorneys say no, with one saying that his firm is performing half of the closings per month than his company conducted before the forms were implemented.

You need to subscribe to RESPAnews.com to read the article.  But from this blurb we see feedback from an attorney who says his firm has lost business since the RESPA implementation.

Well, I'm from the flip side of that comment.  Our office has seen an increase in business from various sources since RESPA 2010 was launched.  Why do I think that happened?  Well, we embraced the concept early.  Our staff was fully trained and prepared so that when lenders weren't sure, we were able to assist them.  We see RESPA 2010 as a positive step forward and that attitude makes all the difference.

We hear from our lender friends that some title agencies and attorneys do nothing but grumble and make their already stressful jobs harder.  So, cheer up my fellow title agents and attorneys.  A smile and a kind "we're in this together and we'll make it work" attitude is a good marketing strategy. ;)

query via email: Is it legal to have a simultaneous closing?

Hi Diane,

My question concerns methods of closing. Is it legal to have a simultaneous closing?

In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.

At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?

I hear some Title companies will and many will not. I would like to know the legalities on the issue.

Thank you, R

Hi, R:

I am not an attorney and am unable to answer your question about legalities.  As a title insurance agent, I can help you understand why I may or may not handle a transaction like this.

I insure title in PA and so there may be issues in FL of which I am unaware.  In PA the Dept of Revenue considers, as do I, that these are clearly two transfers.  Even if there are not two deeds in PA, both transfers are subject to transfer taxes.

When a transaction like this is presented, a title agent will consider whether or not there is a potential for fraud.  We insure against fraud and we also do not want to collude to defraud another party.  A test, then, is whether all parties - A, B and C - are aware of the simultaneous close.

This is the case in relocation transactions. In those cases a relocation company has advanced funds to a homeowner and holds a signed deed in hand pending the sale of the property to a buyer.  The buyer deals with the relocation company but at closing there may be two deeds - one from the owner to relo, then another from relo to the buyer - or there may be just one deed from the owner to the buyer.  In both cases transfer taxes are paid twice.  Everyone is aware of the nature of the transaction.  There is no fraud and there is no harm.

As to the specific transaction you mention:

"In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.

At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?"

A title insurance agent is in the business of insuring title.  If the closing vests title in B, then B is the consumer and the one being insured.  The fact that C gave B the money, has nothing to do with the title agent.  If you then expect the title agent to convey from B to C, that's a second transaction and though it may happen at the same table, it is really happening after the first closing.

Since this type of closing has so often been used as a vehicle for fraud, honest title agents are hyper-sensitive and for that reason would be likely to pass on taking the business unless they are absolutely comfortable that everything is above board and there are no shortcuts.

I hope that explanation helps and thanks for reading!  ;)

Diane

speaking of escrows

What do you think?  If an agent is no longer representing a particular underwriter, doesn't it make sense that the underwriter should take the escrows related to their policies?

I was thinking about that lately and it makes sense to me. 

abandoned escrows

It still blows my mind how many abandoned inheritance tax escrows we have every year.  I've got thousands of dollars sitting in escrow that I need to get over to the Department of Revenue.  They in turn will send us a release for our insured property and we can then file it at with the Register of Wills.

Each year I work with a different person at the Department. Most are just happy to get the money and send releases quickly.  Last year, the person charged with dealing with our escrows was a tiny bit perturbed and the entire process was more time consuming than it needed to be.

As soon as I have a bit more free time I'll process this year's batch.  Hopefully it won't turn into a make work project.

Hello to fast reader in the Netherlands. :) May I help you find something in particular?

This is the little blog that could. ;) Title Insurance Talk sits out here in the web ether answering usually 100 to 200 questions at day.  Most hits are specific queries - questions to search engines.  I always hope YOU, the reader will find what you are looking for.  If not, if it's a relevant question we haven't covered before, I'll do a post.  Some hits are regular readers and I love seeing your visits because it feels like a little title community.

Today, I was really surprised to see close to 500 hits and the day isn't over.  I wondered if I had said something that caused a stir.  Unusual hit volume on this blog usually means a viral topic like the old notary signing agent discussion.

Today, I see the increase in hits is coming from one source in the Netherlands.  So, just wanted to say hello and thank you for reading.  ;)

note to testy comment person

Roger, wilco and out.  ;)

query: should buyer get title insurance on land cash deal

Unless you want to put the cash at risk, YES, buy an owner title insurance policy.

query: when does being threatened with adverse possession end

I do hope you confer with a good real estate attorney.  In PA, you can evidence that you granted permission for the use, even if temporary permission and that should defeat an adverse possession claim.  A good real estate attorney can advise you.

I bought a property a few years back and the survey revealed that a neighbor was using my land for parking and generally as a side yard.  The land was on the other side of a creek and if I had not had a survey done, I might never have know it WAS my land.  Interesting, eh?  Anyway, I visited the folks and offered to sell them the land for a small amount plus the cost of doing a subdivision.  They said no, so - to protect myself from an adverse possession claim - I sent them a letter giving them temporary permission to use that portion of my land.  That was all I needed to do to defeat a potential adverse possession claim. 

Some readers might say what's the big deal?  Well, if I am paying taxes on the lot, I want to maintain control.  The neighbors wanted use but were unwilling to pay, so that's life.

Adverse possession is a real threat to property owners and you should take the simple precautions available to you in the law.  Ignoring the use of your property by another is not an option unless you don't care about the loss.

questions on a public forum

Purchased a house about 5 months ago in PA. I have talked to the guy 8 or 10 times now and he has made many excuses and promises.. and yet, I never received the original title back, or the owner's title insurance policy I paid for. I checked with the county, and the purchase has been recorded with them.

So, obviously I will try to press on him by filing BBB complaint, etc, but my concerns are:

1) Is a certified copy of the title just as good as the original?
2) Can I go to a 3rd party to obtain title insurance at this point? Is there some time limit in which it must be purchased?
3) If he didn't issue the lender's title policy (a much bigger expense than the owners), is that going to negatively affect me in some way?
4) Is there anything else I am supposed to get that I didn't?

Read more: http://www.city-data.com/forum/real-estate/1062334-never-received-title-title-insurance-policy.html#ixzz0xR6HTg7m

my answers:

1)  In a real estate transaction, it is not important to have an original deed so long as that deed has been recorded in the county courthouse.

2)  If you already paid for title insurance, you are entitled to receive a policy.  Contact the PA Dept. of Insurance for assistance.  The investigative department will be very interested in this title insurance agency.  Failure to respond to a consumer or to deliver a policy within a reasonable timeframe is a RED FLAG that there are likely other, perhaps more serious, deficiencies in the way this title agency is managed.

3)  Don't worry about the loan policy.  That is between the lender and the title insurance agent.

4)  You'd be better served to file a complaint with the Attorney General rather than the BBB.  The AG has teeth. BBB does not.

question from Bob

A Lender’s Policy was issued by a Title Company for private financing in the amount of the loan on a single family home with a LTV of 50% or less.  A good portion of the loan proceeds were used to cure delinquent taxes and acquire an adjacent property.

Borrower signed as a Personal Representative of an Estate with minors.  Title Company failed to discover borrower’s PR status had expired.  This error was discovered when borrower petitioned the Estate, represented by the Public Fiduciary, to pay delinquent loan payments and back taxes as Lender had commenced a Trustee’s Sale.

The Public Fiduciary sued Lender in Superior Court asking for a Declaratory Judgment that the Note and Deed of Trust be judged invalid and unenforceable.  Lender filed a claim against Title Company who hired an attorney to represent Lender but, it was discovered, only for the amount of the Policy plus costs.  The Title Company informed Borrower that Borrower must sue Title Company Escrow separately on Title Company’s E&O, a separate agency, to hopes of recovering accrued interest and penalties which are now substantial because of time elapsed.

In the parallel world of home insurance where there has been a total or substantial loss, the insured frequently hires a Public Adjustor to negotiate a settlement taking a percentage of new money when the settlement offered is not satisfactory.

Are there Public Adjustors who specialize in Lender’s Policy issues?

Hi, Bob, and thank you for your question.  I have never heard of Public Adjustors in title insurance.

Loan policies insure the validity of a lien and in this case it seems that the loan policy performed.

I do not understand why the borrower would seek to hold the title agent liable for the borrower's failure to perform as a fiduciary for an estate.  You might argue that the title agent could have noticed and raised the issue but the title agent was charged with issuing a loan policy as a representative of the title insurance company and in that capacity should not also be acting as an attorney for the borrower.

In fact, the question you pose does not mention that the title agent was an attorney and so in any case would not be expected to give advice to the borrower.  The title agent may have presumed that the borrower had knowledge of the responsibility of the fiduciary and was able to execute the loan documents.  That was an error in judgment for which the title insurance company paid a claim.

In my opinion, the borrower would not have standing to go after a title agent for an error created by the borrower's own negligence.

So, that's my non-attorney title agent two cents.

I'm not certain if this response is helpful, but I hope it is. If there are readers out there with another take on this issue, please chime in with a comment.  

Thanks for raising the issue, Bob, and thanks for reading. 

2008 taxes used for 2010 closing?

Diane: After we closed on our property we discovered the title company had made an error when they did the title search regarding the taxes. They said they based them on the 2008 taxes because the 2009 tax bills were not out yet, we closed Feb. 22, 2010. They said their title search found the 2008 taxes were $1130 when in fact the 2008 taxes were $2950. The amounts that were allowed for taxes during closing was short by over $1,800. We purchased title insurance with the understanding that this would cover us in the event of an error such as this. Who should be responsible for the under payment for the taxes? We went to the title company first, they jerked us around for several weeks before they finally submitted the claim to the title insurance company, now I think we are being given the run around by the insurance company. We just need to  know who should be responsible for compensating us for the $1,800 owed for 2009 taxes.The title company who made the error, the title insurance company or the bank that we purchased the property from? Does the title insurance company represent us if we need to recover the tax money from the bank? No one seems to be giving us any answers. Thank you for any information you  can give us regarding this error. Kris

Hi, Kris:  Here are some general comments that might be helpful.  Find out when the 2009 taxes were due at discount.  That date is crucial.  If the taxes were due at discount before the date of the issuance of your title insurance policy, then you've got the basis for a claim against the title insurance company.  Most title policies contain an exception for taxes that are not yet due and payable, so if the bills came out after your policy was issued, then this typical exception would negate a claim.

If the issue is that the taxes were underestimated when setting up a lender escrow account or perhaps underestimated in the tax proration calculations between you and the seller, that's really a harder case for assessing blame.  Presumably the real estate agent or the seller would have provided tax figures when you viewed the property.  Any reasonable person looking to purchase property would consider the cost of taxes when negotiating price. 

The title agent has no personal knowledge of the property and so if there is an error that could or should be recognized by the parties at a closing, the parties - seller or buyer or real estate agent - have an obligation to point out the error.

Taxes do change from year to year and title agents rely upon the best information available which is usually a tax certification from the tax authority.  You might ask for a copy of that certification so you can better understand what happened.  Sometimes the tax collector quotes incorrect information.  Sometimes the title agent hasn't done a good job of getting up to date info.

I hope this helps.  Good luck with it and thanks for reading. ;)

Diane

happy insured

Hi Diane,  thought I would follow up to share the outcome of this title insurance claim for the costly non-permitted construction on our house...

Even though our legal matter with the sellers was far down the road (and stalled) and only then had we decided to file the claim, First American agreed to pay the full amount of the policy cap of 25K for such claims (hey, it's something!).   So in this case, we're very lucky we decided to pay for the enhanced policy way back when we bought the home.  I also think our intense record keeping on the matter provided the title company with the information they needed to evaluate the claim without any prolonged investigation or agony on anyone's part.

While we would have rather avoided this whole mess, at least we have found this bright spot in what we once, as first time home buyers, thought was just an obligatory part of the closing process.  It was a nice feeling to realize that a signing a couple of pages and a small check resulted in this little policy that has been quietly protecting our interest all these years.

Very happy to hear that.  Thanks for reporting back.  ;)

just curious

How many states or underwriters require a written quality control plan for title agencies?  I just had an inquiry from a reader in Kentucky who is looking for a plan.