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Do We Recognize Those Daily Unfair Deceptive Practices

We see them so often, I think we have started to simply overlook those daily Unfair and Deceptive Practices. You  simply can’t go anywhere without someone trying to push a new credit card (when you complain they tell you,  “sorry, my company requires that we ask all customers to open one of OUR credit cards.”) It’s all very annoying.

But worse, my young nephew, a college student, working part time at Walmart, went into a we’ll-go-far bank to cash his hard earned money.  He is attacked by the well-trained teller, who advises him he really should have some help with his finances now that he is a man, earning his own money and the bank can help. “Well, of course, he says proudly, who should I talk to?”  The next thing we know, he comes home with no cash, a new checking account, a new savings account, and a credit card in his proud name with $35 late fees and a 29% interest rate!  He’s no dummy, but we all know students who got suckered by predatory banks into a bad credit card. The CFPB takes that VERY seriously.

So I really appreciate the CFPB and many of the finance challenges they are tackling.  Some of the Unfair practices include

  • Add-On” products, such as enrolling customers for “free” (for one month with a monthly billing after that for Identity Theft Protection, debt protection or credit score services. Often through a third party vendor.
  • Mortgage Servicing
    • where lenders do not honor loan modifications after a servicing transfer,
    • requiring borrowers to “waive all existing claims” in order to qualify for a loan modification
    • failing to properly apply mortgage payments and hosts of others
  • Student loans and Credit Cards, knowing that many students were vulnerable in need for money and unable to understand the consequences of late payment and compound interest. Yes, I agree. We need to teach students more about financing!

An outstanding set of articles by Morrison Foerster gives a much deeper look into UDAAP and the CFPB.  They describe items of interest that annoy many of us (at least this author) by constantly trying to sell us items that are semi-related to what we are in the process of doing.  Their second article is even more detailed.         Both are very interesting – as a consumer, an educator for the mortgage and title industries, and an advocate for fair pratices.



What Will the New Federal NARAB Mean to the Title Insurance Industry

On Jan. 12, President Obama signed legislation establishing the National Association of Registered Agents and Brokers (NARAB), where any licensed insurance producer meeting requirements can belong.  Starting in 2017, any NARAB member licensed in its home state will be able to obtain a non-resident insurance producer license in any other state.

This is a huge change for all insurers – Property and Casualty, Life, Health, Agricultural, Car Insurers and Title Insurers.  In the past title insurers were required to be licensed in each and every state in which they do business.  Insurance has always fallen under state control. Will this simply be another layer of over-site at the Federal Level?

  • Will it be easier for Large Banks to get into the National Title Insurance Business? (meaning more competition with the same number of transactions)
  • Will it be easier for Large Real Estate Agencies to get into the National Title Insurance Business? (meaning more competition with the same number of transactions)
  • Will it be easier for Title Insurance Underwriters to open operations in nearby states (allowing small regional underwriters to become larger)
  • Will it be easier for Title Insurance Agents to open in nearby states (possibly increasing their book of business)
  • Will it be easier for Affiliated Businesses to extend their reach by opening title insurance operations in multiple states?

I can’t even guess if this will be a good thing or a bad thing for the industry or consumer.  But, nothing stays the same forever. So, be prepared for more and more government involvement in insurance, it will be an interesting (and I am sure bumpy) ride.

For more detail on NARAB, see the Holland and Knight article in Lexology

CFPB Finalizes TIL-RESPA Changes

Good Blog article by Buckley Sandler LLP that briefly outlines TIL-RESPA Changes

On January 20, 2015, the CFPB finalized amendments to the TILA-RESPA Integrated Disclosure (“TRID”) rule that make a number of amendments, clarifications, and corrections, including:

  • Relaxing the redisclosure requirements after a rate lock.  The final rule permits creditors to provide a revised Loan Estimate within three business days after an interest rate is locked, instead of the current requirement to provide the revised Loan Estimate on the date the rate is locked (and instead of the proposed rule that would have allowed only one business day)
  • Creating room on the Loan Estimate for the disclosure that must be provided on the initial Loan Estimate as a condition of issuing a revised estimate for construction loans where the creditor reasonably expects settlement to occur more than 60 days after the initial estimate is provided
  • Adding the Loan Estimate and Closing Disclosure to the list of loan documents that must disclose the name and NMLSR ID number of the loan originator organization and individual loan originator under 12 C.F.R. § 1026.36(g)
  • Providing additional guidance related to the disclosure of escrow accounts, such as when an escrow account is established but escrow payments are not required with a particular periodic payment or range of payments
  • Clarifying that, consistent with the requirement for the Loan Estimate, the addresses for all properties securing the loan must be provided on the Closing Disclosure, although an addendum may be used for this purpose


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

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