These classes are all available at Classes.Landrecs.com.
For information on new classes contact me.
Interesting case out of Alabama. See more detail.
Her mortgage had been foreclosed, but the mortgagor challenged the foreclosure by appeal, saying the lender who foreclosed had no legal interest because the note was not properly assigned. The appeal court agreed and the foreclosure sale has been reversed and remanded to the trial court.
Moral of the story: Dot your I’s and cross your T’s when it comes to assignment of mortgage notes.
THE ABSTRACTER LICENSE RENEWAL PROCESS HAS CHANGED
For corporate licenses, a renewal ID is no longer needed; instead, you will need a user name and password. Detailed instructions for creating a user name and password are found on the second page of your printed license. To print your license or get renewal information, go to Pulse Portal.
INDIVIDUAL ABSTRACTER LICENSES Just a reminder that the State of Minnesota had many changes to Abstracting laws and rules this year. Individual abstracter licenses cannot be renewed until any associated company license has been renewed. Individual licenses will lapse unless the company license and insurance documentation are received before 4:30 PM Central time on June 30. It is highly recommended that you complete your renewal by June 15th.
Excellent article for title companies, and especially smaller title agencies by Aaron Prenger of Spencer, Fane, Britt and Browne, called” Snail Mail: a Whale of a fail…” pointing out the importance of title copanies and lenders proving the dates documents were sent out and received.
” With the upcoming regulatory changes going into effect on August 1st, it is more important than ever for mortgage lenders and title companies to have an electronic disclosure system…”
” Practically speaking, this means lenders and title companies that do not use electronic disclosures will not be able to begin collecting required documentation until four days after taking an application by phone or online. Likewise, such lenders will need to have their closing packages prepared at least seven days prior to closing.
Read the whole article here: “Snail mail: a whale of a fail that will make your borrowers bail, your lenders flail, and leave you on the rail”
Interesting case regarding new construction law. Although out of a Missouri Court, the takeaway still applies. When obtaining a Sworn Statement from a Builder stating that all subcontractors have been paid, do you also obtain a personal indemnity? Do you know the financial condition of your builder?
In this case, Frank Miceli lied to Commonwealth Land Title when he signed sworn statements at closing that all contractors, subs and materialmen were paid on three homes. There were no assets in Miceli Homes, the name the homes were built under. The court initially found that consent judgments barred particular claims against defendant Miceli Homes.
After much ado, the courts were convinced that it not bar claims against defendant Frank Miceli, individually, who held assets in his individual capacity; trustee of the Frank Miceli Revocable Trust; Miceli Homes, Inc; Miceli Development Company; Miceli Holding Company; Masterwork Homes, Inc.; and Miceli Masterwork Homes, Inc., D/B/A Miceli Custom Homes.
With much effort, and several appeals, Commonwealth was able to convince the court to pierce corporate veils to look at recouping the $1.5 million dollar losses paid in mechanic’s lien claims. A good case for all title people to understand.
After all, we all know builders who go out of business one day, only to start up the next under a similar name. Names DO matter. And signatures on indemnities matter. Is the signature that of an officer of the Building Corporation, or is their also a personal indemnity to back it up. In the Miceli case, the personal responsibility made all the difference, because none of the assets were in the name of Miceli Homes.
Read the whole Commonwealth Land Title Vs. Frank Miceli et al here
PACE (Property Assessed Clean Energy) is a new way to finance energy efficiency and water conservation upgrades to buildings. PACE pays for new heating and cooling systems, lighting improvements, solar panels, water pumps, insulation, and more for almost any property – homes, commercial, industrial, non-profit, and agricultural. The idea is great – who doesn’t want more energy efficiency? Lower Energy Bills? Better Environmental Health?
But real estate agents, closers, abstractors and title companies, BEWARE. We may have a problem.
The PACE advertisement reads:
“Property owners across the US are using PACE because it saves them money and makes their buildings more valuable. PACE pays for 100% of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing stays with the building upon sale…”
While that is a true statement, PACE financing does stay with the building upon sale, it’s not quite that simple. Once PACE is added as an assessment, it becomes part of the real estate taxes. And, as we all know, real estate TAXES are a FIRST LIEN.
So, let’s say Home Owner Holly uses PACE to install $30,000 worth of PACE-energy efficient fixtures (with a 5% interest rate on the 20 year PACE Assessment) and enjoys low energy bills. Two years later, Holly is offered a new job out of town. She lists the home with Realtor Rick. Rick is excited because he is an energy efficiency advocate and lists all of the energy upgrades for this fine home, selling for only $249,900. Bobby Buyer comes along and makes an offer of $240,000. Holly agrees. She is thinking the buyer will just take over the house and taxes.
Bobby Buyer applies for a loan of $192,00. They order title work. The title company and abstractor know that the $28,000 is a first lien along with the taxes. Holly has not thought to use any of the money saved from her lower electric bills to pay the PACE lien. She thought PACE told her the PACE financing would “stay with the building.” She never thought she might have to cough up the money at closing. . Bobby’s lender does not want to be in Second position behind a $28,000 PACE lien, so now the conundrum. Where does that extra $28,000 in PACE money come from at closing?
I’m not saying PACE’s a bad idea, I love energy efficiency! But let’s make sure everyone understands PACE and how it works.
Here are some excerpts from Thomas Pryde’s new Blog pertaining to abstractors. To read the entire article click: Thomas Pryde Blog
I couldn’t agree more.
There are certainly opportunities to succeed in this market. If independent service providers are going to take advantage of them, they must differentiate themselves from the rest of the market, and nothing sets the independent apart from the crowd better than the fact that they know abstracting, in the context of their local areas, better than anyone.
However, while this is a distinct advantage, there are two critical obstacles to getting that message out to clients and convincing them to use your services. Once the obstacles are understood, the opportunities and challenges become clearer.
This is really the point of this article. The message that local expertise results in superior results is not making it to the clients. This may be partially due to a lack of marketing and communication from the independent providers, and/or it may be partially due to the fact that the ultimate clients (consumers and lenders) are frequently insulated from the independent provider that is performing the search.
Even where this is understood there is no way to verify or validate genuine expertise, and therein can be found the biggest challenge. Until there is a broadly accepted education and certification process, there is not likely to be any significant traction gained in regards to the one market value that independent providers can best deliver.
Gains can be made in the other two values, and that will be important. However, very few things would positively impact the market for independent providers better than a robust certification program. Such a program would be good for the market as a whole; it would especially benefit consumers, and independent service providers would have the means to communicate the difference between a discount provider and one with genuine local expertise.
What can be done?
- Recognize that you are part of a large group of providers that can significantly impact the market, if there is unity.
- Participate in SOT and other social media venues (Linkdin has several communities as well)
- Contribute to best practices discussions, in particular, and strive to educate your clients as to why commodity searches are inferior.
- Join NALTEA or other professional organizations that can provide the structure for increased cooperation and unity.
- Speak up on behalf of better education practices for training abstractors, and join efforts to codify that effort in a certification process.
There is much work to be done, but without a unified commitment to these things, the opportunities will be eaten away slowly, until the idea of independent search services is a thing of the past.
My husband and I recently had a fire at our home with a terrible loss. For many years I have paid what I considered a very hefty premium because my insurance agency said it was what I needed, and I trust them. They know the business, they had our home valued for replacement value, so we paid the premiums, never believing we would use it. It was just the right thing to do. Now, thank heaven, we know why we paid those hefty premiums. Insurance company to the rescue – but it has been and will continue to be a process to rebuild our lives. We rely on those who”know their stuff” to help us with complicated purchases, like insurance. I am thankful to my agent and my insurer.
Similarly, as I have said for a long time – “Title Insurance is like fire insurance – You hope you’ll never need it, but if you do, it’s worth it’s weight in gold!” The difference with hazard insurance is that you pay it over and over again, each month, or each quarter or each year. With title insurance you pay once and it’s done. I sold a LOT of owner’s policies, and while only a few “paid off,” those who needed them, really needed them and were thankful.
Along that vein comes a good article in the Washington Post:
Insurance is one of those necessary evils in life. You purchase a policy and hope you never have to file a claim. And in the meantime, you send a regular payment to your insurance company “just in case.”
That’s true of all but one type of insurance. Unlike other policies, title insurance is a one-time fee paid at closing. It protects your financial stake in the property you’re buying should an unforeseeable claim arise in the future. A claim could stem from anything from fraud or identity theft to encroachment or mortgage liens.
Without an owner’s title insurance policy, the legal costs to hash out a title claim would be in the tens of thousands of dollars paid directly out of your pocket. Not to mention you could lose the money you’ve invested in your property such as your down payment and any improvements you’ve made. A frequent refrain we hear from our clients is “Why do I need title insurance when you have already done a title search?” Not only does title insurance cover mistakes made during a title search, it also covers a gamut of issues that even the best title search cannot reveal. Read the entire article here
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.