11.17.07
Posted in Industry News, Regulation of Insurers and Banks at 1:16 pm by Jeanne
Florida’s Chief Financial Officer has announced that First American Title Insurance Co. must sever its business relationship with 84 limited partnership title-agencies in Florida and have its business activities closely monitored for one year.The agreement also requires First Am. to pay $5 million in penalties and costs to settle charges that it paid kickbacks to builders, bankers, real estate agents and brokers for referral business.
The settlement agreement follows a yearlong investigation by federal and state agencies — the U.S. Department of Housing and Urban Development, the state Department of Financial Services and the Office of Insurance Regulation. They found First American in violation of the Florida Insurance Code and federal law.
Future of the 87 affiliates is unknown.
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Posted in Industry News, Judgment Searches, Land Title Technical Stuff at 1:02 pm by Jeanne
Nobody is thrilled about all the short sales and deeds in lieu. After all, Lenders do not want to accept less than they are owed and they are concerned that buyers may be getting below-market deals at their expense. Congress, HUD, FNMA, etc. are leaning on lenders have to figure out a way to reduce foreclosures. Public pressure and perceptions are driving the change as well. The lending industry has a major black eye. And, of course, the Borrowers do not want to lose that all-important credit rating, not to mention loss of their home. The international market is pulling out from buying pools of mortgages, seeing them as an untrustworthy investment. But, right now short sales, foreclosures and deeds in lieu are a fact of life.
Lenders are speculating that they may be buried by borrowers who could pay but don’t want to pay. They are requiring borrowers to demonstrate a financial hardship, such as a job loss or illness. Looking at pay stubs, bank accounts. Rather like the reverse of reviewing the loan all over again – to see the person can’t qualify. Even then, they’re skeptical when a deal is on the table.
In addition, title insurance companies are being asked to review the deal as well. After all, while a deed in lieu of foreclosure saves the lengthy and expensive process of foreclosure, it brings in all intervening liens. That means if there are judgments because credit cards are behind and there are corresponding judgments against the borrower, or there are outstanding child support liens, medical assistance liens, State or Federal Tax Liens, or a host of others, these liens will have priority over the deed in lieu, making the transaction very sticky, and perhaps impossible.
I am seeing droves of advertisements for books and classes to “Buy Foreclosures and Make Money!” I pity the person who believes these ads and loses their shirts on a business that is over the heads of most professionals in the industry.
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11.14.07
Posted in Industry News at 2:49 pm by Jeanne
Fidelity National Title Group has announced the launch of Cyberhomes– an online destination for home evaluation and neighborhood information. Cyberhomes includes more than 100 million property, ownership, sales and mortgage records, covering more than 85 percent of the United States population. More than 575,000 new ownership records are added every month, and the data is enhanced with more than ten years of proprietary property information.
Cyberhomes evaluations give users access to most of the same information that real estate agents and appraisers use to evaluate homes. In addition it offers comprehensive community information – such as listings, property records, and in some instances community factors - including such things as school statistics (average test scores, student to teacher ratio), quality of life indicators (average commute times, air/water quality), weather, local economy (sales tax, recent job growth) and population facts (households with children, registered voters). Users can find this information by simply typing in an address when they enter the site.
Fidelity National is also a leading provider of specialty insurances, including flood, homeowners and home warranty insurance. Through its minority-owned subsidiary, Sedgwick CMS, Fidelity is a large provider of outsourced insurance claims management services to large private and public sector entities.
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11.12.07
Posted in 60 second title work at 5:00 pm by Jeanne
The Real Estate Market has crashed. Most of our abstracting, searching and examining work is now foreclosures or other serious title problems. The Title Underwriters have cut their biggest expense – staff. So there should be some opportunities for us. Why - because Underwriters LOVE volume-related expenses – i.e. if they don’t have an order, they don’t have the expense.
But it seems to me that the Big Five have changed our Industry. They are no longer looking for the quality many of us are used to providing. (Funny, we thought quality work done in the best interest of the consumer was our goal. We thought identifying and solving problems to keep title losses low was the goal.) But our Underwriters have become risk underwriters, not risk-avoidance underwriters, and they are looking for cheap. While they don’t openly advocate cheap, they are quietly changing to overseas outsourcing.
To be honest, for some reason, I don’t have a problem with Title Plants being posted outside the U.S. so long as- it is just the Indices; the actual documents are available online to look at; and the quality of work is good. Perhaps I am a fatalist. After all, Public and Private Title Plants all over the US have successfully been posted outside the Country for years. The County Administrators point to the cost savings and the volume-related expense. And I remember times when the Public Record in the Recorders office was behind, like way behind, like a year behind. That was a nightmare. So, posting it outside the Country caused them to catch up and stay caught up. That is good. Original Document copies were sent via internet, input (overnight US time) and returned the next day. Fast is good. Quality – not too bad. Perhaps not as good as done by seasoned staff, but current. And that is worth a lot, especially in the crazy market we had. And, as county administrators advised, it meant recording fees did not have to continue to rise, and they did not have to fight for tax increases to keep hiring and training staff to keep up with the heavy-volume market.
But now I see the fairly simple mass data input being combined with “Artificial Intelligence” (AI) where some believe a computer can ID the problems from the data input records to do most of the underwriting and create title work. Enough so that they claim they can do most titles without needing human intervention, or at least minimum human intervention. So back comes the outsourcing. It would seem to me that using staff in India, China, the Philippines in combination with AI are taking our profession down a new path. I do not believe that quality title abstracting, title searching, title examining, or title insuring can be done in 15 minutes by artificial intelligence with a minimum of oversight. Quality can only be accomplished with the human intervention of someone who is extremely familiar the specific location of the property being searched. There are just too many State, County and Municipal issues. What is customary in one state is a problem in another. Laws vary, laws change. Title Standards vary and change. The use of Artificial Intelligence, Outsourcing title abstracting and exams, and Title work in 60 seconds is an insult to the industry and damnation of the product.
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Posted in Industry News at 11:48 am by Jeanne
It’s much worse than I thought. The number of sub-prime mortgages isn’t just 5-10 percent, in most counties nationwide it is 30 percent or more. And in some areas it is higher than 50 percent! See the NY Times Map as a reality check for the bad news, and as a foretaste of the things to come.
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11.10.07
Posted in Industry News at 4:57 pm by Jeanne
Old Republic International, parent of Old Republic National Title, has purchased significant shares in both MGIC and PMI Group, Inc. as abbounced on Nov. 9th by Bloomberg
Old Republic has long been in the Private Mortgage Insurance Business with its subsidiary, Republic Mortgage Insurance Company, better known as RMIC, which has been a significant competitor with Magic and PMI, but is now related.
It appears to be a happy circumstance for MGIC and PMI, who Bloomberg reports as having lost more than 65 percent of their market value in the last year. Presumably due in part to Piggy-back loans, where an 80 percent first mortgage and a twenty percent second mortgages were place on real estate accounting for the full value of the property, in order to avoid the cost of purchasing Private Mortgage Insurance. And with the over-appraisal of many homes and declining values, Piggy-back loans are likely a thing of the past, and PMI will return. A good buy for Old Republic and one that the stock market approved of based on the jump in stock values for all involved.
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