These classes are all available at Classes.Landrecs.com.
For information on new classes contact me.
I have commented in the past on how not handling title claims in a timely manner can cause damages, and I use real examples to stress the point. Well, comes another heavy duty example. The Superior Court of Pennsylvania has upheld $1,572,909.24 in punitive damages in Davis V. Fidelity National Title Insurance Company for what could have/should have been a fairly minor claim.
Here is a quote from the court document:
Initially, we note the trial court awarded Davis $393,227.31 in compensatory damages and $1,572,909.24 in punitive damages. This represents a 4:1 ratio of punitive to compensatory damages. The United States Supreme Court stated: We decline again to impose a bright-line ratio which a punitive damages award cannot exceed. Our jurisprudence and the principles it has now established demonstrate, however, that, in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process. In [Pacific Mut. Life Ins. Co. v.] Haslip, [499 U.S. 1, 111 S.Ct. 1032, 113 L.Ed.2d 1 (1991)] in upholding a punitive damages award, we concluded that an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety. 499 U.S., at 23- 24. 111 S.Ct. 1032. We cited that 4–to–1 ratio again in Gore, 517 U.S., at 581, 116 S.Ct. 1589. The Court further referenced a long legislative history, dating back over 700 years and going forward to today, providing for sanctions of double, treble, or quadruple damages to deter and punish. Id., at 581, and n. 33, 116 S.Ct. 1589. While these ratios are not binding, they are instructive. They demonstrate what should be obvious: Singledigit multipliers are more likely to comport with due process, while still achieving the State’s goals of deterrence and retribution, than awards with ratios in range of 500 to 1, id., at 582, 116 S.Ct. 1589, or, in this case, of 145 to 1.
Remember, Title Agents, Title Insurers, the face amount of the Title Policy is NOT the ceiling on your title claims.
Reasonable comments made in Lexology about the CFPB publishing consumer complaints for the whole world to see. I mean really – is that fair? After all, who wants their name besmirched by a cranky customer. This makes the lender, title company, real estate company, etc. look guilty with no chance of rebuttal.
by Sirote & Permutt PC
The Consumer Financial Protection Bureau announced with some fanfare two weeks ago that it is going to publish consumer complaints on its website. So, let’s see…
A disgruntled consumer, who decides to get back at his lender, files an unverified, unsubstantiated and unproven complaint. The CFPB, without verification, substantiation or proof, then posts the complaint on its website – first stripping away information identifying the consumer, but not the lender. What can be wrong with that?
Well, for starters, if the lender is a bank then disparaging the same may be a crime under state law and federal law – or at least it used to be. Even if it is not illegal (i.e., disparagement as a crime) it is hardly fair to the lender not to be given an opportunity to investigate and if appropriate, protest the nature of the complaint, before the same is made public.
But say consumer advocates, surely disgruntled consumers would not file a frivolous or irrelevant complaint. Hmmm. Has anyone out there experienced an increase in the volume of frivolous and irrelevant letters alleging account errors?
As we said in a recent post, the CFPB seems to shoot first and ask questions later.
So, the CFPB promotes the situation where the lender’s reputation is damaged with no safeguards or method to appropriately respond.
A post from Thomas Pryde’s Blog, re-printed with his permission.
The prevailing view among some industry leaders seems to be that the independent abstractor is a dying breed, the last vestige of an ancient way of doing business. This is attributed to the rapidly expanding digitization of title documents and new technology solutions that are being designed to quickly and efficiently obtain and deliver those documents to their clients. This is one example where technology has made promises well beyond what it can actually provide.
While it is true that the need for independent title abstractors might actually be eliminated if the idealized descriptions of a technology provider’s capabilities proved realistic, proclamations of the imminent demise of their business may be premature. In fact, the independent abstractor has a real opportunity that seems to have been largely overlooked, but in order to understand and take advantage of this opportunity, we have to first examine the promised market of full digitization and automation.
In this oft-prophesied and idealized market, all archived public documents will be available both remotely and digitally, and the client who needs these documents would be able to simply and efficiently obtain them, removing the need for someone to go to the courthouse, manually obtain documents, scan them, and then deliver them back to the client.
All search-related activities could be performed remotely, and there would be no need for any local expertise. This is the essence of what is promised on the back of technology.
However, if digital availability was ubiquitous, if the digitized documents were perfect, and if all the related data was flawless, such technology might indeed eliminate the need for a skilled abstractor. However, achieving such perfection in the document chain would also virtually eliminate the need for the title insurance industry as a whole.
Of course, the reality is (and will continue to be) far from this ideal, and title insurance companies will continue to thrive on the potential existence of problems that might be found in any given document chain. As long as this is true, local expertise and timely results can work together to offer a value proposition that will ultimately trump a mindless search service offered at rock bottom prices.
This is a commentary by Thomas Pryde in his Blog, reprinted with his permission.
If independent abstractors are going to take the necessary steps to be seen as valued specialists, as opposed to mindless searchers, it isn’t enough to rail against the over-inflated promises of technology. There needs to be a clear understanding of what technology can do. Perfection in the document chain is not a promise that technology will soon deliver, but there are some direct advantages that technology can provide.
Like it or not, the industry is increasingly being driven by technological forces. This happens because our clients understandably want to pay less, get results faster, and ensure greater accuracy. Technology can improve results in all three of these areas, but over-prioritizing the first two values can (and frequently does) undermine the last.
For example, it used to be enough to offer unparalleled accuracy, but speed and price have become paramount to many of our clients. As long as they don’t have to sacrifice too much in quality, faster and cheaper will win the day. For clients who value price and speed above quality, off-shore operations can offer labor rates that will undercut any US based search operations.
Technology has facilitated this possibility, but offshore operations pose a significant risk: quality inevitably suffers when there is a lack of sufficient local knowledge. To further complicate the matter, doing business with US based companies does not eliminate this risk. “US based” operations can employ an offshore search team.
It is important to point out that the technology that makes cheaper and faster possible cannot actually improve the reliability of the person performing the search, and in the end, search quality is heavily dependent on the skill of the abstractor. With that said, there are some direct advantages to be gained by using technology to automate or facilitate three main processes:
Theoretically a full implementation of these technologies could leave the customer and the abstractor doing business with one another directly. Ideally it would, but the reality remains that in between the origination of the order and the person actually doing the search there are a variety of businesses, processes, and other factors that all add cost and time to the order. Used effectively, technology can at least minimize the impact of these factors.
By understanding the forces of technology that are changing our marketplace and taking advantage of the available technology, independent abstractors can compete in this increasingly technological world. That is why the company I lead exists, but ultimately technology can only be part of the solution. The market needs to see that errors resulting from inexperienced searchers, either in the US or offshore, ultimately hurt the customer (and the consumer in the end).
Independent abstract specialists can and must make the case that their local expertise provides a significantly more reliable result. That is the difference between being an abstract specialist or a mindless searcher. Technology can help you be more efficient, it can help you be faster, and it can even help eliminate some kinds of errors, but only a pair of well trained eyes can provide consistently reliable results.
Good Title Article in Lexology about new construction projects, claims, title policies and defenses.
On March 12, 2015, the United States Court of Appeals for the Seventh Circuit entered an opinion interpreting “the most litigated provision in the standard-form title-insurance policy purchased by real-estate lenders to protect their security interests in ongoing construction projects.”1 Exclusion 3(a) in the standard-form construction lender’s title policy provides that liens that are “created, suffered, assumed or agreed to” by the insured lender will not be covered under the title policy. In BB Syndication Services, Inc. v. First American Title Insurance Company, the Seventh Circuit held, in the context of a failed construction project, that this exclusion applies to mechanics’ liens arising as a result of a construction lender’s decision to declare a default and stop funding additional loans.2
The Seventh Circuit’s interpretation of Exclusion 3(a) in the standard-form construction lender’s title policy places the risk of loss associated with unpaid subcontractors arising from a lender’s decision to stop funding squarely on the construction lender, not the title insurer. There are, however, steps that a construction lender can take to mitigate this risk of loss.
Read the entire article HERE
I understand why Minnesota licenses its closers. It is a big responsibility to handle the hundreds of thousands of dollars each month that go a closer’s hands. It seems prudent to run those background checks, identify those trust accounts, etc. to secure the rights of the public and be able to follow those funds.
After all, it is a big temptation when times get tough. I know people, “good people,” who have “borrowed” funds (illegally.) I truly believe they thought they would just need a little help for a short time, to cover the rent or make payroll, until things got better and then they would reimburse the account. It’s a sad story and a dangerous tale. But we all know the title business is a very seasonal business and it seems it is always feast or famine. We are always looking to hire, or lay off.
On the other hand there are those who knowingly steal and think they can get away with it.
A title agent in Estero, FL is a recent example. Here is an account from Insurance News
March 14–A former title insurance agent in Estero accused of siphoning more than $705,000 from her clients in 2010 faces theft and fraud charges.
Lana Kaye Dargai, of the 22000 block of Forest View Drive, was arrested March 7, accused of stealing escrow funds put aside for the purchase and sale of real estate in Estero and Bonita Springs in June and July of 2010, according to theFlorida Department of Financial Services.
The department’s Division of Agent and Agency Services and Division of Insurance Fraud investigated the case. Dargai was doing business under the name Global Title Co., which she owned.
The investigation also found:
–Global Title used escrow money to purchase cashier’s checks to pay its own monthly rent and its own property taxes.
–In one instance, $9,000 in escrow money was moved into a bank account for Dargai’s father.
–At least eight times, from August 2009 through June 2010, funds from the company’s escrow account held with Bank of Florida were transferred into Global Title’s operating account, held with the same bank.
Dargai faces up to 15 years in prison for first degree grand theft and fraud charges, and her title agent license has been revoked. Dargai’s case will be prosecuted by the State Attorney’s Office in Fort Myers.
“These cases are thoroughly investigated, which takes time. Also, the State Attorney’s Office had a forensic accountant going over all the facts and figures,” said Ashley Carr, a spokeswoman for the Department of Financial Services.
Dargai, she said, turned in her Global Title agency license in 2011. She made off with money from at least five clients.
Stewart Title Guaranty, the underwriter for the money, reported the fraud to the state. “The clients weren’t even aware of any issues as Stewart Title covered the losses,” Carr said. “The clients are not out any money. The victim is Stewart Title.” Florida Community Bank was among the claimants that Stewart paid.
All Insurance companies are concerned with data privacy and security, especially title insurers and closers who deal with Privacy Laws and the Gramm Leach Bliley Act. There should therefore be particular interest in the second annual Global Insurance Symposium, May 26-28 in Des Moines, will include sessions on cyber security, big data and innovation.
Speakers include Thomas Sullivan, associate director of the Federal Reserve board of governors; Daud Vicary Abdullah, president and CEO of the Global University of Islamic Finance; and insurance commissioners Ken Kobylowski of New Jersey, John Huff of Missouri, Ted Nickel of Wisconsin and Kevin McCarty of Florida.
Sponsors include the Iowa Insurance Institute, the Federation of Iowa Insurers, the Iowa Economic Development Authority, the Greater Des Moines Partnership and the Iowa Insurance Division.
This online course will show you how to read and draw legal descriptions. Even the “geographically impaired” will learn how to identify the correct parcel on a map, and draw out descriptions to look for possible gaps and overlaps.
An easy and fun course that simplifies and explicates descriptions.
Spring Promotion, Type: MetesandBounds into the Coupon code before March 31st for a $50 savings.
The American Land Title Association (ALTA), the national trade association of the land title insurance industry, released the following statement in response to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray’s testimony before the House of Representatives Financial Services Committee:
“In 150 days, new disclosure forms for real estate transactions will completely change the homebuying process as it’s known today,” said Michelle Korsmo, ALTA’s chief executive officer. “As our member companies work to implement these new forms on Aug. 1, we strongly urge Director Cordray to announce a five-month restrained enforcement period so that new business processes can be adjusted to comply with these regulations. As with previous regulatory reform, only when the new forms are in practice will many issues and defects be discovered. A restrained enforcement period helps our members, and the broader real estate industry, make the changes needed to their business processes and collaborate with industry and regulators to ensure the consumer has a positive experience at the closing table.”
“Unfortunately, we’re already aware of one major problem with the new CFPB forms,” Korsmo stated. “The Bureau’s Closing Disclosure, which replaces the current HUD-1 Settlement Statement, inaccurately discloses the fees associated with title insurance premiums for consumers. State law and regulation in half of the United States dictates that consumers must pay title insurance rates that are different than how the CFPB requires industry to inaccurately disclose these fees to the consumer.”
“Every homebuyer should be well-informed about the accurate costs of homeownership—including what they pay for each service during the real estate closing process. For many consumers, buying a home is the single largest investment they will make in their lifetime. It’s critical that Director Cordray and the CFPB staff adjust the disclosure forms prior to Aug. 1 to ensure consumers receive accurate information about their mortgage costs. ALTA and our member companies stand ready to help the Bureau ensure consumers are neither confused nor misled at the closing table.”
The American Land Title Association, founded in 1907, is the national trade association representing more than 5,400 title insurance companies, title and settlement agents, independent abstracters, title searchers and real estate attorneys. With offices throughout the United States, ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.
I have to pass on this news to you, as you are a HUGE part of my success.
I found out last week that I passed my exam and am Licensed in SD now!!!
I raved of your courses to the Board of Abstracters. I know I wouldn’t have been successful in this quest so quickly without your help!
(even scored 100% in one of the 5 sections!!)
Thank you! Thank you!!
For whatever reason this industry is difficult to find training on. I wish it were required to have the standard of training you provide for all individuals to be licensed in any state!
Office Manager/Closing Agent
Brookings County Title Company
422 4th Street
Brookings, SD 57006