06.26.08
Posted in Industry News, Mortgage and title Fraud at 9:36 am by Jeanne
A Philidelphia online Newspaper, RoxReview has a must read story about title theft and how they plan to combat the bad guys. Here is an excerpt about the ploy:
…thieves find houses that are vacant and obviously have not been looked after.
They use public records to learn when taxes and water bills have last been paid to make sure the properties’ owners have had little involvement or have not been paying any attention to them…
(then) a house thief simply gets some legal stationery, types up a deed and gets the property transfer notarized … He then presents that paperwork to the city’s Records Department, pays some fees and in a matter days becomes listed as the owner of record.
The article suggests title insurance as a protection from the problem, but it wants the government to do more. Learn what laws or regulations Philadelphia is considering to curb the growing problem.
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06.12.08
Posted in Important new HUD program changes, Industry News, Mortgage Problems, RESPA, Regulation of Insurers and Banks at 4:28 pm by Jeanne
We all know the bad apple loan officer, title agent or appraiser. We all know the consumer, who anzious to move into that new home, signed on for a bad deal. Well, RESPA is looking to help out that consumer.
The vast majority of consumers shop for a mortgage focusing not on rates or settlement costs or other loan features, but on the one key number that signals to them whether they can afford the loan: the grand total that they will have to pay each month for their home. Most people know how much income they take home each month, and they try to figure out whether out of that monthly amount, the monthly mortgage payment will fit into their budget.
The new RESPA rules propose that the GFE disclose the monthly total of principal, interest, and mortgage insurance. I believe the GFE also disclose the estimated monthly payment for property taxes and insurance as well and for any adjustable rate mortgages, the GFE should provide the grand total both for the initial monthly payment and for the maximum monthly payment that could be reached under the loan terms.
The proposed RESPA law is designed to improve the life of the consumer, by requiring advance disclosure of accurate settlement costs, including higher enforcement of the existing law that requires delivery of the HUD-1 settlement statement three days prior to closing. It seeks to penalize those who hand out “bad” Good Faith Estimates (i.e. those where the estimated charges on the GFE bore little or no relationship to the actual charges shown on the HUD-1 closing statement.)
In the past, RESPA has had none of the proverbial “teeth” to enforce the law. So that, theoretically, handing out a blank piece of paper that said Good Faith Estimate with just about anything filled in would qualify. The proposed law would create a new GFE form to assist a line-by-line comparison between the GFE and the HUD-1 at closing. The plan is to better monitor compliance with newly defined tolerance limits that restrict the allowable differences between estimated and actual closing costs. The rule would also clarify and update consistent escrow account requirements and mortgage servicing transfer provisions for lenders.
To put teeth in the plan, HUD says it plans to seek legal amendments to RESPA to obtain specific enforcement authority including money penalties; the ability to obtain court orders to prohibit actions; and authority to require restitution for violations as well as the ability to further amend and enforce disclosures. They will be focusing particularly on the GFE and Special Information Booklet; loan servicing; prohibition against kickbacks; illegal referral fees; unearned junk fees; title insurance, and escrow account fees. RESPA will also seek such authority for HUD and State Regulators.
The proposed rule does not include the packaging or bundling stipulations that proved controversial in 2005 and provides a 12-month transition period for compliance once finalized. The proposed rule will also allow RESPA disclosures to be given to consumers in electronic form (so long as the consumer consents.) And will permit documents to be retained in electronic form, so long as certain requirements for document retention are met.
While HUD estimates that consumers will save on average $518 to $670 per transaction, industry insiders speculate the changes may actually cost consumers more per closing. I think it will make everyone a bit more honest, or at least a bit more careful in our disclosures.
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06.06.08
Posted in 60 second title work, Industry News at 3:46 pm by Jeanne
The future of a Title Plant is no longer in Title Insurance; it is in Real Estate Information (REI). Real Estate Information is a huge market, much bigger than title insurance. After all, real estate is our country’s biggest asset by far. Every day we see examples of farming REI - First American just signed a contract with the SBA to develop a way to farm information to quickly identify properties and owners in a flood, hurricane or other natural disaster. On June 4th, Prudential launched free property-valuation and property-profiles for consumers on its new web site where one can simply key in a residential address to get property data. However, besides the standard deed, mortgage and judgment information found in title plants, census information has been added on neighborhoods by zip code. This includes meaningful data that really tells you about a neighborhood: median age; percentage of homes rented vs. owned; average family size; average salary; average household income; home values; taxes; year built; amenities; density of housing; distance to colleges; average education of people in the zip code (% with hi-school, college or post grad); climate by month; and much, much more. Everything you want to know about that new house and you are considering.
By taking advantage of technology and implementing direct operations with vastly expanded and consistent data, underwriters can still produce title plants, but no longer just for title insurance, but rather to farm and package Real Estate Information for all sorts of needs. Finding new uses for the information and selling that information, title plants have become not a burden, but a piece of a serious REI revenue making machine. And, by replacing agent data with underwriter REI technology and owned branches, the insurers are building a long term solution both to off-setting the expense of the old title plant, and to the challenge of staffing, because fewer personnel can now be busy mufti-tasking. One minute producing title commitments and policies, the next minute putting out a report for a Credit collection agency of the judgments recently recorded that need to be collected. Underwriters can use REI to help control costs and to improve revenue. As I have said in the past – that is their job. They owe it to their stockholders to control costs and to make money.
REI companies make sense. Technology can and does do remarkable and wonderful things for us every day. So, if you are still running your title plant like you did 20 years ago – with books and paper; by going to the courthouse to get name searches and taxes; if you are still using microfilm; you better give it up –NOW. Think about what you have, or you may be putting yourself out of business.
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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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05.03.08
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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04.20.08
Posted in Industry News, Mortgage and title Fraud at 12:56 pm by Jeanne
Thieves knowledgeable in searching the public record, and recording documents, secretly stole title to 25 vacant parcels by searching the land records, creating matching documents, forging signatures, and recording them. The fraud workers transferred properties worth more than $23 million from the rightful owners into names of “straw” buyers. One of the Counties involved says it received about 1,000 complaints about deed forgeries on properties in the last few years. Although the district attorney’s office in Riverside County, CA successfully prosecuted the forgery ring, the rightful landowners learned that it takes a lot of grief, money and time to undo a phony transaction once filed with the county recorder. Albert and Joy Rivera, scammed owners of the real estate with forged deeds filed to a straw buyer, said they feel lucky that they got their land back six months ago after 3 stressful years and paying out $20,000 in lawyer fees.
Among eight defendants who pleaded guilty in the fraud cases, the notary was sentenced to prison for 3 years, 4 months, while the real estate agent who helped to find vacant parcels, got 9 years, 4 months. The last defendant, thought to be the instigator, got 15 years 4 months in state prison as his sentence.
Los Angeles County, CA has obtained legislation to notify residents when deeds are recorded against their property. “I think we have a very successful program and it is a good model for other counties to implement,” said Mr. Herrera, director of the Los Angeles County Department of Consumer Affairs. The legislation allows charging a fee to fund the program.
Another remarkable story for WHY people should purchase a title policy. To see the more details of the story see FRAUD CASES
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