03.20.08
Does Title Industry Need More Government Oversight?
Yesterday, My Fox News in Minnesota, reported a MN Commerce Department raid, where officials found thousands of mortgage closings that were never completed at two additional title companies - Title Source Mortgage Company and Home Sweet Home Equity. The raid showed that “more than 3,000 homes nationwide” were affected. The Commerce Department revoked the license of the companies, whose owners allegedly spent some of the money for a suite at the Minnesota Vikings games, and $20,000 in political contributions.
I am not sure what all that means, but I would estimate that once again, the title insurance underwriter(s) will be up to their proverbial necks with trouble from owners, lenders and the secondary market, because:
• Thousands of homeowners have unfiled deeds. Of record, they have no title to their houses. They will be hard pressed to sell their homes, refinance, etc.
• Unwarranted Foreclosures will be forced. Money collected to pay off mortgages was likely not sent to the appropriate lender, causing these houses to be forced into foreclosure, through no fault of the owners.
• Unpaid monetary items on each closing will be a huge problem. Taxes, assessments, homeowner association dues, child support liens, mechanic’s liens, and other title issues, while collected at these closings, will remain unpaid on these homes until the title mess is cleaned up on each home. Penalties and interest accrue on many of these daily.
• Likely hundreds of lenders have unsecured mortgage loans on these 3,000 properties, because the mortgages have not been recorded at the respective county. These lenders will have loans unsalable on the secondary market, because no mortgage notes and collateral packages have been provided to the end lender. And, at a mere $260,000 per transaction, that would be about $780,000,000. worth of headaches on this one title agent.
I have long been outspoken in my concerns about the quality of title work, and signing of inept and unethical title agents, but hand in hand goes the similar responsibility about the quality and integrity of closing the transaction. Title Agents need to be both knowledgeable and ethical. Title agents handle Billions of dollars each year of the public’s money. The licensing and oversight of Title Agents is obviously not being appropriately handled by the five national title underwriters.
It seems to be time for state legislatures to step in. Why not fund State oversight of title companies by assessing significant enough penalties to really make them do the right thing. Title companies need oversight of funds, regular education and continuing education in laws and ethics, and they need a big stick to make it happen.
new homes for sale said,
April 29, 2008 at 4:04 am
new homes for sale…
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