…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.

Builder Incentives

Any ideas on how to give an incentive to get a builders business RESPA legal? As an incentive for the builder to give me his business, I would like to purchase the buyers home warranty. Is there a way to show this transaction on the hud that I am paying for it, or does it have to disclose that the builder is paying it but then I slip him under the table which I know is a violation of RESPA. Does any one have any ideas to get a builder’s business and for those of you who are successful with builders?? Ahh….other than giving good service!!!!

I have always used a ABA (affiliated business agreement) or AMA (affiliated marketing agreement) where I would give the builder half a point to a point once the loan sells. Always seems to work when you dangle the carrot in their face.

I used to work for Countrywide and for their builders they give major incentives for the builder to send them business. Some include but aren’t limited to: Having a seasonal crawfish boil where the originator and branch office cover the total expense for the party, cut all lender fees except the origination, hosting wine and dinner parties for the builders realtors and office staff. And from what I understood when I was working for C/W, to make it RESPA legal, all the builder had to do was put up a C/W banner at their model homes and the builder and C/W called it a JOINT MARKETING AGREEMENT.

Not only do we need RESPA reform, we need RESPA Education and some serious RESPA enforcement.

It is UNBELIEVABLE to me that conversations like this are taking place online. Are these people CRAZY? Do they not take RESPA seriously? Do they want to go to JAIL? Obviously, they have no ethics. Go get em RESPA police. They deserve whatever they get.

Have Americans become arrogant, because we think we are the best? We have lost a proud focus on what our parents and grandparents taught us - to evaluate and plan for what is most important to us. We should learn to SAVE for a rainy day. We should PLAN for retirement. We should BUDGET our expenses. We should TEACH our children good habits about money. We are not setting a good example.

Point in case - How much time have you spent educating your children about money? Do you know if they can define “interest rate?” How about “Annual Percentage Rate.” Can they tell you how long it takes to pay off a credit card when they only make the minimum payment with a 21% interest rate? Can they tell you how much that $1,000 hi-def TV really cost on that same credit card?

And the older we get, the worse it gets, apparently. We are lazy. On the most important decision of most people’s lives, their mortgage (note I didn’t say house.) Studies from the FTC show us that in reviewing standard mortgage documents:

• Half the borrowers surveyed couldn’t correctly identify the loan amount.
• Nine in 10 couldn’t figure out the total up-front loan costs.
• Two-thirds did not recognize that they would have to pay a penalty if they paid off the mortgage within the first 3 years. And 95% didn’t know how much that penalty would be.
• Three-quarters did not know when substantial charges for FHA or PMI insurance had been included in the loan and monthly payments.
• One in five couldn’t correctly identify an annual percentage rate, the amount of cash due at closing or the monthly payment, nor did they know if their payment included charges for taxes and insurance.

And why can’t we read and interpret these documents? Partially, because we do not educate our children about economics. Not in the home. Not in school. At home, we are setting bad examples. At school, only 17 states require students to take an economics class to graduate from high school and only seven states require a basic personal-finance course, according to a survey by the National Council on Economic Education

With the economy as it is, and all the worry about gasoline prices, we have more than just oil to worry about. We need to take a better look at our priorities. Let’s look in the mirror and recognize where we are going. Then stop, and think, where do we really want to be.

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.

Under the proposed new rule, closers would be reading from and providing a copy of a ‘‘closing script’’ to borrowers; known as the Miranda RESPA . The script might read something like this:

Miranda RESPA Script

You have the right to provide payments,
Any prepayments you make can and will be held against you with a prepayment penalty.
You have the right to have an attorney present, to ask questions during closing.
If you cannot afford an attorney, a Miranda Script will be provided for you.

We have the right to raise the rate.
Anything our documents say can and will be used against you in a court of law.
We have the right to have an attorney draft and slip in loan terms
If you cannot afford payments, an attorney will be appointed to foreclose.

Do you think HUD can successfully create a Miranda Script to explain a hundred pages of complex mortgage documents?

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.

I started in the title business in 1976. We believed then that abstracts of title were doomed and could be replaced at any moment with title insurance, or something else. We were right – it just took about 20 years longer than we thought. (Things changed a lot slower then.) In those days, the insurer insured the policies and the agent brought in the business and sold the policies. Today, with technology, things are changing at warp speed. The Underwriter is completely in the driver’s seat and there is no choice, title agents, so get used to it.

Insurers have changed the way business is done. The public wanted title work faster and cheaper. The insurers accommodated the public. Experienced, long-term agents with high quality standards were forced to undermine their standards in order to compete. The thorough, thoughtful search of the past is gone, replaced by a quick and dirty rendition put out with a cursory title search, i.e. risk underwriting.

The independent agent that was once the cornerstone of the title industry is disappearing, partially due to the surge in affiliated businesses that shepherded the business away; partially due to a very poor market; and also because Underwriters have been growing by gobbling up agencies and turning them into branches. Underwriters today are no longer dependent on local agents. The days of title underwriters worrying about quirks in each county are gone, again, risk underwriting. And in the future they will be even less dependent, as technology and electronic recordings allow information to be recorded and made available within minutes, perhaps even with little human intervention. Moreover, due to high agency defalcations and the claims in the last few years, it makes sense. Underwriters can have more control over day to day operations. Plus, by replacing an agent’s traditional title plant with the underwriter’s superior Real Estate Information (REI) technology, adding flood information, tax information, assessor information, maps and more it becomes salable as many products instead of one.

Yes, I believe the days of the independent, non-affiliated title agent are limited. But then again, I thought abstracts would be gone overnight, and it took 20 years.