05.31.08
Posted in Industry News, Money and Finance at 4:27 pm by Jeanne
A recent study by the FHA has unearthed a big surprise – in 2007, lower-income borrowers had higher credit scores than higher-income borrowers. The analysis showed that borrowers with median incomes of $48,756 year had credit scores that were a better credit risk than Borrowers with average incomes of $53,388. Even in studying loans with the minimum 3 percent down, lower income clients had were statistically more likely to repay. The study is now causing a major shift in FHA lending.
The FHA always has required at least a 3 percent down payment, full documentation of income and assets, and has never allowed prepayment penalties. Historically it used a fixed approach to pricing home loans, but now plans to shift to a risk-based premium tied to FICO credit scores and down payments, similar to the private sector approach of matching down payments and credit scores with the loan rate.
Under the old FHA system, buyers with first-rate credit scores paid the same as borrowers with bad credit scores, paying 1.5 percent premiums up front, and 0.5 percent annually. That created a disadvantage for borrowers who presented low risks and a subsidy for borrowers who were more likely to default. Under the new FHA Premium system, low-income borrowers with higher credit scores will benefit by lower rates.
Under the new system, starting July, on a 30-year loan with down payment of 10% or more, borrowers with FICO scores above 680 will qualify for the lowest premiums – 1 ¼% of the loan amount up front with annual renewal premium payments of ½%. Borrowers with down payments under 5% and poor credit scores (500 to 559) will be charged premiums of 2 ¼% up front and 0.55% annually. Every borrower will continue to receive the same market-based interest rate.
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05.30.08
Posted in Mortgage and title Fraud at 9:20 pm by Jeanne
The Hometown Annapolis newspaper reports that the Maryland insurance commissioner suspended the license of a local title company owner on May 29th, claiming the woman absconded with up to $3 million in mortgage settlements. The owner has not been seen since the company’s underwriter, conducted an audit at her Severna Park office on May 19th. Security Title, her underwriter, has agreed to pay back any and all losses.
The audit was done after the underwriter was informed of unpaid liens on property closed by the agent.
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Posted in Education at 10:46 am by Jeanne
Bloomberg recently said:
In the midst of the worst surge in mortgage defaults in seven decades, foreclosures in U.S. towns where soldiers live are increasing at a pace almost four times the national average, according to data compiled by research firm RealtyTrac Inc. in Irvine, California.
As I read on, my blood is flowing. I am angry. I come from a very strong military family. My brother served in the military, my three uncles (brothers) are buried in military graves, my father-in-law and sister-in-law served, I have cousins, nieces, nephews all currently serving or recently having served in the military. It is a difficult life, moving every couple of years, it is a sacrifice for our country. And I believe a sacred trust. America is still the greatest country on earth. with all its flaws (and yes, there are many), we are still the best of the worst.
Istock.com pointed out that
Active-duty military members have a permanent change of station once every two years. That is, they are reassigned to a different location on a permanent basis every 24 calendar months. Of course with the War On Terror going, they could be deployed at any point in time, and that doesn’t change where your family lives - but a permanent change of station order does.
Read these articles, it is a travesty that needs correcting and we have a duty to correct, just as these brave soldiers feel a duty to their country.
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05.19.08
Posted in Land Title Technical Stuff at 4:30 pm by Jeanne
Betty from the DOT called today, asking about the widening of a road. As I understand it, the area next to the existing road that they want to widen was originally dedicated to the City for a Public Park on an 1880’s plat. More recently, there was a replat (i.e. a new plat filed on top of the old plat) by some individuals, but no vacation of the 1880’s plat shows of record. Question is – does the City still own the Parkland?
Although I am not an attorney, (just a title examiner and an abstractor), I recommended she try a couple of things:
• First, Contact the City to see if they have a record of a City Council Meeting where the council passed a Resolution to vacate the 1800’s plat. After all, it is not uncommon for a City, after authorizing the vacation of a plat to forget to file it with the County Recorder. If the city does have record of a resolution to vacate it, look to be sure the resolution specifically states that the Dedicated Park, roads, easements, etc. were vacated and file it in the land records.
• Second, if no vacation can be located at the City, take a good look at the new plat.
o See if the City signed off on the new plat, which may effect a ratification of the plat, and resolve the problem.
o Watch for specific language on the Replat as to the intent of the City in signing the new plat. If still in doubt of ownership after reviewing the new plat, talk to the City attorney or to legal counsel at the DOT.
Good luck - I’d love to hear how it turns out!
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05.12.08
Posted in Education at 11:20 am by Jeanne
A small group(15 of us) gathered for two days last week to go through the annual MN “Principles of Abstracting, Searching and Land Records Management” seminar. Three County Recorders, one auditor-treaurer, one Indian Reservation, 3 abstractors, 2 IT software professionals who work with land records, 4 title insurance people and me. The group was really a quick study. I have never moved so seamlessly through a class, especially teaching legal descriptions, where I could read a line, and the class drew the description as we went along - WOW!
Comments on the program evaluation were excellent, including my favorite - “Stangely enough, I will strongly recommend this class to others…”
Thanks everyone. I enjoyed your comraderie and hope to see you all again!
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05.03.08
Posted in Industry News at 2:36 pm by Jeanne
I sometimes feel that life in the title industry is like life in a soap opera! Times are always either TOO good or TOO bad. We are always looking to hire, or looking to fire. For those who follow the Title Industry as a whole, lots of news arrived May 1st as the status of the industry swung once again the 1st quarter. There were a few positives and certainly many signs of corrections made. Here are some updates:
TradingMarkets reported that Title insurers as a whole again saw significant job declines, down 12.1% from March 2007 to 87,100. Title insurance employees saw weekly earnings fall 5.4%
HousingWire said LandAmerica posted a net loss of $24.2 million in the 1st quarter. The company cut 300 employees during the quarter, and has cut staffing by 25.4 percent of staff since the start of 2007. The company’s lender services division, that houses default outsourcing businesses, posted pretax earnings of $10.1 million, with increased demand for its lien monitoring, appraisal, foreclosure and reconveyance services as a driving factor. No surprise here. Meanwhile, it reports Stewart Title revenues at fell 25.9 percent, driving a net loss of $22.3 million for the first quarter.
However, First American posted a small profit in spite of the fact that its revenue fell 22 percent. Factors contributing to the poor revenue stream were the obvious decline in the number of title orders closed, decreases in the average revenue per order (housing prices are dropping after all) and the reduction of certain agency relationships (certainly a good thing.) On the other hand, profitable results demonstrate that the company made deep cuts to its expenses in the 1st quarter including salary and other personnel costs, which, according to PRNewswire, were down 26 percent from the same quarter of 2007. Also, First American’s information services group, that supplies information on defaults also had significant increased volume.
Yet, Demotech, reports that the financial solvency of the industry as a whole has rarely been better saying
2007 results provided dramatic observations for the Title insurance industry, with premiums decreasing by 14 percent as losses increased 32 percent over 2006 results. While the recent financial challenges are not to be minimized and recent forecasts point to a long and slow recovery, from a historical perspective, the Title industry remains near its peak. Since 1995, the industry increased its Direct Written Premiums and Policyholders’ Surplus an unprecedented 228 percent and 129 percent, respectively. This broader perspective reveals a cyclical industry in a down cycle, but also reveals an industry that is maintaining exceptional financial stability and is still near record performance.
For those of us who have seen the pendulum swing over the last 35 years, this swing in the market is nothing new. However, we have never seen mortgage defaults at such extremes, or the immediate horizon so bleak. Many in the trade will move on to other occupations – by choice, or not. Much of this will actually improve the industry, by weeding out the week and inexperienced, and illuminating for Underwriters those title agents who were problem children because of their ethics, or rather lack of ethics. Have we hit bottom yet? Who knows, probably not. It still looks depressing out there. But, being an optimist, I look forward to a sunrise with better times. As the proverb says…and this too shall pass.
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