08.24.07
Posted in Education at 5:08 pm by Jeanne
Once again, Minnesota, Land of the Nice, has proved to be Land of the Suckered. Two news articles Pioneer Press and the Star Tribune point out how easily it is for a Title Agency to go into business, handle Millions of Dollars, Dup Banks and the Public, and abscond with funds.
Are Title Underwriters not getting it? NOT EVERYONE BELONGS IN THE TITLE INDUSTRY! Just because someone purports to bring in a bit of business, doesn’t mean they are the right people for the job. Why do we have hundreds of title agents in an area as small as the Twin Cities? Is it because Title Underwriters have been so greedy for business with affiliateded companies, or not, that they will hire anyone who appears on there doorstep with a “sign me up” flag? Is it because Underwriters have been far too lax to check out their Agents before they are signed - to know who they are dealing with? Is it because there is no one overseeing these Agents either from the Underwriters or the Government? Is it because Government oversight is streeeeched far too thin to do any kind of meaningful review? Is it because there are way too many government Agencies that oversee the industry, and no one knows WHO is responsible for the oversight?
What kind of WAKE UP CALL will it take for us to clean up our industry? Will Title Underwriters have to get bailed out -like Banks who made bad loans? I am tired of these sad stories.
I should think the Pioneer Press, the Star Tribune and the hundreds of other newspapers that pick up these daily stories about our industry would make the Lenders, the County Recorders, the Builders, the Public Crazy, but it seems like the trend to sign up just about anybody is just never-ending…
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08.16.07
Posted in Education at 1:14 pm by Jeanne
Lynn Hammett and I have been discussing taking a two day Abstractor seminar “on-the-road” in NC, SC and possibly PA. The Seminars would be designed around national abstracting principles, and would be excellent for those planning to get the Naltea Certified Abstractor (NCA) Designation for those of you wishing to demonstrate to clients that you are a professional, skilled Abstractor, who that takes pride in your profession.
The study manual to focus on key national aspects of land title searching and abstracting and core “need to know” title searching concepts. Refresh your skills, and learn to compare and contrast the variations of national themes such as Deed of Trust vs. Mortgage, Joint Tenancy vs. Tenancy by the Entireties, etc. The book is a must for you when dealing with clients in multiple states to understand what your customer really wants.
Special Features:
Key learning objectives are clearly defined for each chapter
Hands on examples with copies of documents, appear in the book
Tests appear after each unit to assess your knowledge of the material
Answers are given to verify your comprehension
Glossary of Terms helps you identify key concepts, and explains the variations of terms used in different locales.
NALTEA Board has placed “Principles of Abstracting, Searching and Land Records Management” (National Edition) on its approved reading list as a study guide for the NCA designation.
If you have an interest, please let us know!
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08.14.07
Posted in Money and Finance, Mortgage Problems at 9:52 pm by Jeanne
A good article in American Chronicle reminded me of the closings that changed over from MIP to Piggy-back loans, where a first and second mortgage kept the borrower from having to pay the traditional Mtg. Ins. premium.
The article said “Most loans with higher than 80% loan to value ratios when they were originated had to have mortgage insurance on them if they were bought by institutional federally chartered savings and loans or FDIC insured banks.”
It seemed like a good idea from the borrowers perspective - save a few bucks. But from the Lender’s perspective, they lost their default insurance and will pay a corresponding price in this foreclosure market.
The article also pointed out “For every million dollars in loans being serviced on defaulted loans, many banks are losing about $10,000 a month plus the loss of value as the property market spirals inward on its dwindling integrity and corrupt viruses which have infected the entire industry. That is a serious implosion.”
Another perspective on what the lending industry has done to itself.
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Posted in E-recording, Education, Money and Finance at 9:16 pm by Jeanne
Catching up on email today, I saw another fine example of fraud. This one I have seen many times, but it keeps rearing its ugly head. An average couple taking out a home-equity line of credit… er, that would be five home-equity lines of credit, all in the same day, sinking five different lenders into the mucky-mud of bad loans never being repaid because of a home with negative equity. More fodder for my classes.
How incrediby important is each person in the chain - The Closer in rushing the documents to the County Recorder - the Recorder in getting the documents of record, the Abstractor in checking the public record to new recordings.
As an educator for County Recorders, Abstractors, Closers and Title Personnel, I am always harping on how important it is to record in a timely manner. After all laws in most states explain that the first person to get to their document recorded at the Courthouse has legal rights over others. I stress with Recorders how important it is to be timely in recording. I stress with Closers in those states that do not close in escrow how important it is to record ASAP. And I stress with Abstractors how important it is to be thorough in checking the record.
I was recently told by a customer that their policy was NOT to bother to re-check the record if the existing work was 3 mos old or less. Alot can happen in 3 mos. Alot can happen in three hours - as the article exemplifies. I am saddened by those who do not think it necessary to re-check the public records at the time of closing to see if anything has been filed in the interim that would afftect title. In my opinion, they are being negligently irresponsible. In my opinion, check the Gap, or Pay the Consequences.
But, in a case like this one, even the most prudent Abstractors, Recorders and Closers would likely not help the loss.
Taking 5 loans in one day is a classic example of the danger in table-funding closings. In “table-funding,” the closer disburses funds immediately upon signing documents, and the danger of interim recordings, known as “the gap period,” is assumed. Under this scenario, the title insurer or closer is at tremendous risk. Will Underwriters in table-fund states re-think the way of doing business by requiring a closing in escrow or perhaps pushing e-recording – or will the traditional marketplace way of doing business continue to dictate…. time will tell.
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08.13.07
Posted in Education at 12:28 pm by Jeanne
The Florida Legislature is looking for Revenue. County Appraisers have pointed out the state is missing Millions in revenue by a “loop-hole” in the system that allows parties to bypass paying state deed tax due on the sale.
An article in the Palm Beach Post points to 3 examples in particular that “cost” FL revenue in the amount of $4.2 million. They argue that arranging transactions as transfers of assets in a corporation, rather than sales of real property should be illegal.
In three specific sales, the $600 million sales prices on the commercial real estate reportedly paid 70 cents each in documentary stamp taxes. By comparison, critics argue it would take 1,500 sales of homes priced at $400,000 to funnel the same amount into state coffers.
I can’t say I agree. It appears the State is grasping at straws. The US has always structured its tax law in such a way that we all strategically “play the game” of how to legitimately, i.e. legally, avoid taxes. After all isn’t that why many corporations are set up in a Certain tax-beneficial states? Isn’t that the purpose of most trusts? I think the Assessor and Recorder do not understand the system – or should I call it the game.
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08.07.07
Posted in Education, Land Title Technical Stuff, Value of a title searcher at 9:17 pm by Jeanne
FULL abstracts of title still exist. In many parts of the Midwest, each and every recorded document is “abstracted” into a book that is “continued” every time a property is sold, and handed off from owner to owner.
While some of the large Underwriters and Real-estate-company-owned title companies have tried hard to get rid of abstracts, the Bar Associations and many other knowledgeable people want to keep them. They are history, they represent the essence of title. In my opinion, the abstract is still the ideal information product. It shows every document - every easement- who holds it, what it is for, when it will expire, and its exact location. The same with Restrictions, Deeds, etc. I still love the traditional abstract, and those who take the time and care to prepare such an awesome product. A full abstract tells “The whole recorded truth.”
I believe the reason that some want to get rid of abstracts is that it is faster and cheaper to do without them. We all love faster, cheaper. But more importantly, without an abstract, there is no evidence of the fact that many searches being done today are of horribly poor quality. The poor quality of the search is then translated into the poor quality of the title product given to the homeowner.
I am also saddened by the shortcuts taken on title commitments. I had a call from a real estate agent the other day who asked my opinion on concerns he had on a title commitment from a large affiliated business title agent. His buyer was a Sr. VP for a major company, buying an Owner’s Policy on a very costly home. In looking at the commitment, I saw exactly what he was talking about. The areas of greatest concern for me were:
1) The Commitment specifically excluded any coverage assessments for Utility, water, sewer… and other assessments levied PRIOR to closing against current or prior owners, even though they DID charge the seller both for an “assessment search” and for an “evaluation” of that assessment search.
2) The policy generically excluded “Covenants, Conditions and Restrictions,” which I believe are one of the MAJOR reasons one buys an Owner’s Policy, especially in the swank area where this buyer was purchasing. (Seems to me the title agent was just too lazy to do his job.)
3) The policy generically excluded “Utility and Drainage Easements of Record, if any.” Again, I think the Title Industry owes it’s customers some kind of due diligence for a decent search. After all, wouldn’t YOU want to know if there was an easement in favor of six different parties over your property to get to the lake and park their boats? Or a 50 foot pipeline across the middle of the back yard? YIKES.
4) They did catch one recorded easement. (After all, the property was Torrens.) But, even after it was specifically requested, the Title Agent absolutely refused to provide any assistance as to its location (although they did charge for a plat drawing and inspection that did not show the easement.) How sad. After all, if you can’t figure out an easement, what the @%#! are you doing in the title business?
These (non-abstract) mini-searches and resulting title policies do, however, fit the current risk-underwriting philosophy, which is “Take all the short-cuts you can. Go for quick and easy (forget the quality that is due the homebuyer) and then let the Homeowner take the “hit” when easements, restrictions or assessments become a problem. No wonder the title industry is being chewed up and spit out by the media.
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