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Online Classes

Principles of Closing

Principles of Abstracting (National Edition)

Principles of Abstracting (Minnesota Edition)

Title Exam for Title Insurers (Midwest Edition)

Reading and Drawing Legal Descriptions

These classes are all available at Classes.Landrecs.com.

For information on new classes contact me.


Thoughts on TRID

The “TRID Rule” is short for the TILA-RESPA Integrated Disclosure where the Consumer Financial Protection Bureau (CFPB) consolidated the number of required disclosure forms from four to two. Under the original Truth in Lending Act (TIL) and Real Estate Procedure Act (RESPA), consumers received four different disclosure forms that were federally required and had overlapping information. The multiple forms led to more confusion for consumers and missed the mark of making the information more understandable. These two new mandatory disclosure forms – the Loan Estimate and Closing Disclosure – are required on most residential mortgages. Their goal is to reduce paperwork and eliminate confusion for the consumer

The LE The Loan Estimate form replaces the Good Faith Estimate and initial Truth-in Lending form and is intended to guide consumers by highlighting important information. The first page of the form shows the interest rate, monthly payment, and total closing costs, allowing for an easy comparison of mortgage loans, so consumers can select the best loan for their situation.

The CD The Closing Disclosure form replaces the HUD 1 Settlement Statement and the final Truth-in Lending form on many loans. It does not apply to loans such as HELOCS or CASH sales. The CD outlines the costs of taxes and insurance, information about changes that can occur to the interest rate and payments, and includes warnings to consumers about prepayment penalties and other important items. This information can effectively be used to assist potential home buyers in deciding how much they can afford to spend on a new home and what loan fits them best.

Thoughts – What do you think, are your customers saying they have used it successfully, or are they still relying on “professionals” to help them get the right loan? Certainly, the intent is good, but until we can get the hundred plus pages of loan documentation to a manageable level, I’m not convinced that it will be used by most borrowers. The typical loan process is still too complicated for the typical consumer to wrap their heads around.

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.

 

MN Closer Licensing Course

I’ve had many questions on the MN Closer Pre-License Course, so here are some pointers:

Pointers

Pointers

  • the 8 hour class is available online 24/7 and you have 90 days to complete it.
  • You do not need to take all 8 hours in one sitting!  Just bookmark your place and return to it later.
  • there is a minimum amount of time that must be spent on each of the 12 sections, but there is no maximum time, so spend as long as you’d like to be sure you understand the material
  • if you don’t complete a section before the minimum required time and you log out , you will have to repeat that section
  • Each section has a quiz at the end. You must pass the quiz to move on
  • the final examination requires a proctor form (someone who says they saw you take the exam without assistance of any kind.)  The proctor cannot be a spouse, relative or boss.  A neighbor, friend or public librarian (there is no charge) works fine
  • the final exam is 90 questions and you need 75% to pass.  You may spend as long as you like on the exam (but you cannot leave your desk during the exam, so the proctor knows you have not used outside materials for any answers.)
  • If you fail the exam, not to worry. You can review the material (if you wish) but must retake the quizzes to retake the exam (no extra charge.)

Info On Home Closing

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