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UCC Search Releases $1.5 B Loan in Error

A, perhaps overly conscientious, paralegal pulled three UCC searches when asked to locate a Financing Statement that General Motors had given to secure money from J P Morgan.  There were apparently two UCC’s with a balance of $300 million to be paid off, but the paralegal located three UCC’s, and in the course of events, papers were drawn up by the law firm to release all three, including a $1.5 Billion security instrument.

Although the paperwork was checked by JP Morgan, General Motors, and the law firm, the releases were created, signed and filed.  Ouch.  See more in the abajournal

Moral of the story: as I always say in checking deeds,  mortgages and security documents, assume there are always MISTAKES, and your job is to find and correct the error/s. Check, check and double-check.

Genuine Title Scam Busted by CFPB

The internet is buzzing with the latest CFPB settlement. Reuters, Pioneer Press, ABC News, CBS and many others. Here is a link to the St Paul Pioneer Press article.


The CFPB and Maryland Attorney General have settled cases against Wells Fargo and Chase for RESPA violations, where more than 100 Wells Fargo loan officers in at least 18 branches, mainly in Maryland and Virginia, participated in the scheme, steering thousands of loans to the now defunct Genuine Title (note the irony of the name) in exchange for cash and marketing services. The penalties were in excess of $35.7 Million.  RESPA specifically prohibits kickbacks in the mortgage process.


“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.


No mention was made of what will happen to owners of Genuine Title.


CFPB Director Discusses New Tools

Below are recaps with hyperlinks to three Tools that CFPB Director Corday discussed at a recent speech at the Brookings Institution in Washington, DC.  I think all are of particular interest to the Title and Lending Businesses, as well as consumers.

  • Consumer Complaint Database  Director Cordray acknowledged the criticism of the Bureau’s consumer complaint tool, in particular its public posting of consumer complaints and anecdotes. He noted that the consumer complaint function was mandated by Congress through the Dodd-Frank Act, and is becoming an increasingly important source of information for the Bureau, companies, and consumers. In particular, he stated that the CFPB looks to consumer complaints to guide and focus its enforcement efforts.
  • Owning a Home Initiative  The CFPB is starting an initiative this summer “Owning a Home” in conjunction with the Know What You Owe program .  Director Richard Cordray says that the it will be introducing a new mortgage application booklet and  will include a tool that will allow consumers to determine likely interest rates offered in their geographic area that are tied to their specific credit score.
  • Mortgage Servicing  Cordray highlighted the Bureau’s continued focus on mortgage servicing, noting that the CFPB has set out uniform rules and will continue its supervisory and enforcement efforts in this area, as well.


Woman Appears in Court Stealing Attorney’s Credentials

I have mentioned recently how easy and rampant identity theft is.   It is simple to obtain false identification, and virtually perfect ID’s are available from China on the internet. But here we have a woman in Utah who  set up a bogus law firm, using the identity of a real lawyer, using the Bar Association number of real lawyers and appearing in Court to represent unwitting clients This Deseret Newspaper article from Salt Lake City, Utah explains how even  the Courts have be fooled by fake attorneys.

“Attorneys in Utah have to give their name and bar number when they appear in court, but are not required to show a photo identification. There have been problems in the past with people falsely representing themselves as being a licensed attorney in Utah and taking people’s money, Stirling said. But she said the Utah State Bar had not heard of a case of someone actually going into a courtroom impersonating a real attorney and handling real court cases.”

Can you imagine being convicted of a crime, after being represented by a bogus attorney? The clients she represented were  without proper representation, and will have to be re-opened and re-tried.

Notaries Beware: Courts Authorize Serious Jail Time for Notaries

Two seemingly unrelated articles caught my eye today that relate to our everyday title and closing business.   First, a CBS Investigative report shows China Flooding the US with Fraudulent Driver Licenses   that truly are authentic.


Meanwhile, an article in Law360 tells us that the 9th Circ. OKs Longer Sentences For Notary Seal Forgers 

The use of forged notary seals in wire fraud schemes can warrant longer prison sentences, the Ninth Circuit ruled Thursday, upholding a California man’s 10-year jail term over a $5.4 million scam. A three-judge panel found that notary seals can qualify as “authentication features” under a federal law that bars the use of fraudulent identification documents. Judges are allowed to increase the sentences of defendants whose crimes involve authentication features.

The appeals court panel upheld the 10-year sentence of Henrik Sardariani, a Glendale man who pled guilty to wire fraud conspiracy and other criminal charges. Prosecutors say he obtained $5.4 million in loans by pledging properties he didn’t own as collateral.

“In calculating the advisory guidelines range in this case, the district court correctly applied an enhancement for use of an authentication feature under [the] sentencing guidelines,” Ninth Circuit Judge Richard Clifton wrote for the unanimous panel on Thursday.

Moral of the Story:  Take a good look at those ID’s when using your Notary Seal.  It’s serious business.

More Law Firm Affiliated Title Companies Charged with Foreclosure Fraud

On December 22nd, two more title companies, affiliated with law firms, have been charged with over-inflating fees in foreclosure cases in Colorado. National Title and City Park Title are being targeted along with their related Robert J. Hopp & Assoc. and the Vaden Law Firms. The suits continue in Colorado’s investigation into what became a distinct industry after the 2008 mortgage debacle – the foreclosure mills, under a state program called   See the press release here.

These Title Companies continue to be part of the ongoing investigations. In July, the Colorado AG sued RE Records Research and Colorado American Title, in conjunction with their related  foreclosure Law firms, Castle Law Group and Aronowitz & Mechlenberg., settling at least one case for $10 million. It was claimed that the foreclosures handled by these firms could have collected in excess of $97 million in illegal  profits.  See  the JD Journal Article here.


Beware of Document Prep, Imperfect Mortgage May Grant a Homebuyer a Free Home

A great article “Mortgage Recording Requirements: Tiny Technical Defect Strikes Again” in Lexology this week by Vicki Harding of Pepper Hamilton LLP, reminds us how dangerous it is for a lender or settlement to make a mistake on a Mortgage Document.   While the situation of an errant mortgage is settled in some states (such as Minnesota) where a law or title standard dismisses a recording problem, in other states, a mortgage can give a consumer a “free home” by testing the technical waters in court. Think of the potential costs to those of us that prepare mortgages every day with a careless error. Think again when preparing and reviewing those common documents.

A good quote reads:

There are a surprisingly large number of cases that avoid mortgages based on technical defects.  As illustrated by this case, two points to remember:  (1) on the one hand, just because a document was recorded does not mean that it was properly recorded so that it provides constructive notice, and (2) on the other hand, there may be remedial provisions that lead to the result that once a document is recorded specified defects are no longer relevant.

Read Article Here

Just Asking About an Insurance Claim Can Make Your Rate Go Up

Washington Post (12/15/14) Marte, Jonnelle


The Comprehensive Loss Underwriting Exchange (CLUE) report tracks claims and inquiries about claims for car and home insurance policies, but many consumers are unaware of the database. A recent InsuranceQuotes survey reveals only 1 percent of consumers are very familiar with CLUE reports, 7 percent said they were somewhat familiar with the reports. Claims are stored for seven years in CLUE reports, which insurers review to learn more about the property and the policyholders they are covering. The reports include a person’s name, birth date, the type of loss, the amount paid by the company, and the description of the car or house. Insurance companies then add information to the file when they pay out money, deny a claim, and set up a file for a possible claim. According to the survey, only 17 percent were aware that insurance claims filed by previous homeowners could affect current insurance premiums. Consumers can request one CLUE report on their property per year.

Free Speech Case Decided in CIC’s

An excellent opinion out of Lexology cites a New Jersey Supreme Court case that delivered its third opinion in the past few years about free speech rights of residents in common interest communities.    The Court ruled that a resident (a regular critic of the board of directors) had the right to distribute leaflets under CIC doors throughout the building. The Court held that the “House Rule” banning all soliciting and distributing of written materials, including resident leaflets, was an unconstitutional limit to free speech rights and it went on to describe the kind of restrictions that could be adopted without infringing on the free speech rights.


Read the full article Free Speech in Condos and Coops  here.

Minnesota Online Closer License Course is Here

(Read this entire paragraph!)  The required eight hour Minnesota Closer Licensing course has been in the works for some time, and is now here.   As an introductory offer and a Thanksgiving gift, I am offering a coupon, good through the end of December for $50 off the course.  Just enter Gift50 and you will immediately receive the discount.  Thank you all for staying with me through this process.  Regards,  Jeanne

Info On Home Closing

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