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CFPB Continues to Evaluate TRID

The Consumer Financial Protection Bureau (CFPB) has issued a letter to the public in response to feedback from the ortgage Banker Association.  They continue to work on the Truth in Lending RESPA Integrated Disclosure forms and are paying heed to comments from consumers and from those of us who follow and implement the TRID forms.  The complete CFPB letter can be found here.

LLTA Proposes Uniform Filing Fees

The Louisiana Land Title Association (LLTA) has proposed a bill modifying existing laws to provide for uniform and simplified filing/recording fees across the State.  The  purpose of the legislation is to make the quoting of filing/recording fees more accurate in order to facilitate compliance with the Federal “Know Before You Owe”/TRID Rule.  Along with the LLTA, the legislation is supported by the Clerks of Court Association, the Louisiana Bankers Association, Louisiana Notary Association, Louisiana Realtors Association and the Credit Union Association.

Go LLTA!  I great idea that will help everyone.

Closing Agents Not Solely Liable for TRID Errors

Clarifying comments from Richard Cordray of the CFPB on Closing Liability where Closing Agents have agreed to share in responsibility for TRID.

RESPA NEWS:

“The Know Before You Owe mortgage disclosure rule (TRID) places responsibility for the accuracy and delivery of the integrated disclosures on the creditor,” Cordray wrote. “But, as discussed in the preamble … creditors and settlement agents are free, as they have always been, to decide how to divide responsibility and risk most efficiently and to implement those mutual decisions via contract.

“While creditors may enter into indemnification agreements and other risk-sharing arrangements with third parties, creditors cannot unilaterally shift their liability to third parties and, under the Truth in Lending Act, alone remain liable for errors on the Know Before You Owe mortgage disclosures,” Cordray continued.

See the entire article

 

FEMA Flood Maps Can be Appealed to Lower Flood Insurance Costs

Harrisburg, PA – Insurance Commissioner Teresa Miller today issued a consumer alert telling homeowners about a process by which they can appeal their property’s placement in a flood zone by the federal government, which in many cases requires them to purchase flood insurance.

“The Federal Emergency Management Agency (FEMA) recently re-mapped most of the country using 100-year flood projections, resulting in many homes being designated in flood zones which were never there before, despite many of these homes never or rarely having experienced flooding,” Commissioner Miller said. “If the mortgage on a home is backed by the federal government, which many are, then the homeowner must buy flood insurance.”

To appeal a home’s placement in what is officially called a Special Flood Hazard Area, the homeowner must show the lowest adjacent grade, or the lowest ground touching the structure, is at or above what is called the Base Flood Elevation. The Base Flood Elevation is the computed elevation to which flood water is anticipated to rise during the base flood used in determining the land is in a Special Flood Hazard Area.

Commissioner Miller noted that it is the homeowner’s responsibility to provide this information in a letter to FEMA. For this type of appeal, called a Letter of Map Amendment, there is no charge to the consumer.

Homeowners can get more information on how to appeal a flood zone designation, get a flood map, and find answers to other questions, by going to https://www.fema.gov/information-homeowners. Homeowners can also call 1-877-FEMA-MAP (1-877-336-2627) to get information on appealing a flood zone designation.

As NFIP premiums have risen and more homes have been re-mapped into flood zones, more private insurers have started entering the flood insurance market. However, private companies may not cover higher risk properties, leaving the NFIP as the only option for some homeowners.  Homeowners who now have NFIP insurance with a subsidy, and switch to a private policy, will likely not be eligible for any subsidy if they later go back to the NFIP. Currently, only those homes insured through the NFIP are eligible for federal grants to help cover the cost of flood mitigation work, such as raising a home to lessen the chances of flooding in the future.

“In many cases, we have found comparable private flood coverage is much less expensive than the NFIP product,” said Commissioner Miller. “I encourage consumers who need or want flood insurance to shop and find the best coverage for them at the best price.”

Title Agent Could Spend Fifteen Years in Prison

Another sad tale for the title industry. A Jacksonville FL title agent has been charged with defrauding clients of nearly $400,000 while operating an unlicensed title agency.

The Florida Department of Financial Services Division of Insurance Fraud arrested 41-year-old Kristine Ann Spahr, who is accused of illegally defrauding clients of nearly $400,000; illegally operating  Signature Title and Trust LLC;  and profiting from escrow monies belonging clients.

The investigation started in January, when the Florida Division of Insurance Fraud got a complaint about Spahr’s operations.  Investigators soon learned Spahr had forfeited her title agency to work for another title company, Grace Title, but she was allegedly still operating Signature Title without a license.

Spahr is accused of defrauding clients on at least seven separate occasions by keeping their real estate escrow funds and not giving clients the title insurance they paid for. Those funds exceed $391,000, according to investigators.  Spahr was booked in to the Nassau County Jail for a felony count of organized schemes to defraud and could face up to 15 years in prison if convicted.

Foreign Investment in Real Property Tax Law affects Closing Agents

Beginning February 17, 2016, the Foreign Investment in Real Property Tax Act (AKA FIRPTA) withholding has increased to 15% of the total sales price, up from the previous 10% and a new reduced withholding category pertaining to certain real estate sales has been created.

As before, the buyer still has the duty to deduct and withhold a portion of the sale price and report the sale to the IRS. In most cases, the settlement agent is the party that actually remits the funds to the IRS, but the buyer is legally responsible. A buyer that fails to comply with FIRPTA could be liable for withholding tax, plus penalties and interest.  All parties should consult their attorney or tax advisor for advice.

The Following Outlines Changes to FIRPTA Effective February 17, 2016:

1.       Withholding increases from 10% to 15%.
2.       There is a  “new” reduced withholding of 10% for buyers’ qualified purchase of residence of more than $300,000 and no more than $1 million (no changes for qualified purchase of residence of no more than $300,000).

Purchase of Residence: A U.S. real property interest is acquired for use as a residence if the buyer or a member of the buyer’s family has definite plans to reside in the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. Do not take into account the number of days the property will be vacant in making this determination.  If the buyer or the buyer’s family does not in fact use the property as a residence, the withholding tax plus penalties and interest may be collected from the buyer.

  • Settlement agents should consider providing a buyer’s disclosure regarding legal and tax risk for failing to meet the IRS sale price or residency requirements, and recommending that buyers seek legal and/or tax advice from a qualified professional.

3.       The PATH Act made a number of changes that impact real estate investment trusts (or REITS). The new REIT provisions have varying effective dates.

Additional information regarding FIRPTA and changes to FIRPTA in the PATH Act can be obtained at:

  • IRS tax forms and publications are available through the IRS website, WWW.IRS.GOV.
  • Taxpayers may contact the IRS for tax help at its website or by telephone at 800.829.1040 or 800.829.4477.
  • For further information, refer to IRS Publication 515, Withholding of Tax on Nonresident Aliens and IRS Publication 519, U.S. Tax Guide for Aliens.

Information here is intended for educational purposes only and does not constitute legal or tax advice.

It has been a long time since I have seen information from Commerce on the Licensing requirements for Abstracters, and I was pleased to see their latest bulletin.  While I know there is no education requirement, the content is significant and requires a good working knowledge of the trade. For those who need assistance with the legalese in title searching the online Principles of Abstracting course can help.  In any case, here is the outline from the PSI bulletin.

ABSTRACTER EXAMINATION CANDIDATE INFORMATION BULLETIN

Legal description and elements of real property (10 items)

  1. Definitions and components of real property
  2. Methods of legal description
  3. Estates in real property
  4. Forms of ownership
  5. Transfer / alienation of real property
  6. Deeds
  7. Types
  8. Characteristics / elements

iii. Warranties

  1. Land use controls
  2. Public
  3. Private/Covenants, conditions, and restrictions (CC&Rs)
  1. Condominium Law

Documents (15 items)

  1. Conveyance
  2. Recording
  3. Torrens
  4. Encumbrances
  5. Types and priorities of liens
  6. Easements
  7. Encroachments

Research and Compilation of Abstract (20 items)

  1. Indexes
  2. Search requirements and techniques
  3. Documents and Entries
  4. Legal description in abstract
  5. Searches (including judgments in favor of the U.S.)
  6. Certification

Licensing and Professional Conduct (5 items)

  1. Licensing requirements
  2. Prohibited conduct

 

TILA/RESPA Course for Closing Agents

After Studying and working on a draft of a class for  the TRID changes, I took the CEShop course  and found it an excellent resource for closing agents. The online class covers the time-frames, the history, the responsibilities and what to look out for.  I highly recommend it and it is being published as a service to consumers for the amazing price of $5.oo

Try it – you’ll like it.

CFPB Chimes in on RESPA

The Ninth Circuit Court- Edwards v. The First American Corp., August 24, 2015,

The case questioned whether an ownership interest in a title agency could be categorized as “a good, facility, or service,” making such payments legitimate under the RESPA anti-kickback rule that allows compensation if a payment is “for goods or facilities actually furnished, or for services actually performed.”

The RESPA regulator (the CFPB) contended that payment to a Title Agent is not payment for “goods, facilities, or services” and urged the Court to defer to the CFPB, as regulator. The Court concluded that the agency’s interpretation of the RESPA statute has not been publicly available as a rule, and so the CFPB did not have authority over the case.  However, the Court did agree with the CFPB’s interpretation, finding that meanings of the words “goods, facilities, and services” are plain, and that ownership interests purchased by First American are “equity shares,” not goods, services, or facilities. The Court concluded that the court erred in determining that the case did not qualify for a class action suit. The case has been returned to the court for reconsideration.

MN Secretary of State Adds Closing Agent to its Notary Site

The Secretary of State’s office has added information to its Notary Public Website at https://notary.sos.state.mn.us/ regarding closing agents.

Under the Public Links, click on the “Duties of a Notary” and “Frequent Questions” (information is at the end of that list). The information was approved and provided by the Department of Commerce for the website.

 

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association