10.08.08
Posted in Education, Land Title Technical Stuff, Licensing at 6:30 pm by Jeanne
In Minnesota, title companies and those doing land title searches generally take and pass a state licensing examination. Counties do not need to allow you into the public record without it. No license, the county can make you wait at the counter for assistance. Theory being that the records could be damaged, altered, mis-filed, etc. Well, the exam is not the proverbial “piece of cake.” Here is a typical question from an exam taker. I get these quite often.
Hi Jeanne
I have taken your abstracting and exam classes in the past and tried to pass the abstracting test a few months ago and FAILED twice. I am wondering if you have any suggestions for me??? (Name withheld)
Dear XXX, Good to hear from you.
Do you recall anything from the exam that was especially puzzling for you?
I have heard from others that the questions use a lot of negative and kind of trick questions like “which of the following is the least likely…”, or “which one of the following is not…” For those, you need to be extra careful: for example if they asked:
Which of the following is most likely to be deleted in a name search against Mary Charlotte Jones
-
- Marie C. Jones
- Mary Charlotte Jonas
- Marie Cathleen Jones
- Mary Jones
You need to try to decide what names you would NOT show if you found a judgment. So, the one that is most clearly different is c, because the middle name is clearly not the same, and although Mary and Marie are different, and Jones and Jonas are different, they pretty much sound the same. So best answer, the one that is most different, is c.
Another type of negative Q to look out for:
A quit claim deed is not used
-
- to give no claims as to the validity of title
- to give up any interest one may have in real estate
- to warrant title to property
- to convey title to real estate
You have to think through each answer:
a. Does a QCD give no claims as to the validity of title? Yes
b. does a QCD give up any interestone may have in real estate Yes
c.does a QCD warrant title to property No
d.does a QCD convey title to real estate Yes.
It goes against how we think, but, because the Question says a QCD is NOT used to…, the answer is C.
Other questions may seem to be tricks, as they are hard to follow. For example
Which of the following is least likely to be shown in Joint Tenancy?
-
- A and B→ C and D
- E→ F and G
- G, H and I → J, K
- K→L, M→ N
Key to this question is how many people do you have to have for joint tenancy? Answer is at least 2, so only d. fits the bill because others are deeds to only single parties, so they can’t be JT’s. What comes to mind is that someone is always a T in C unless specified otherwise, and none of these say “as JT.”
Other suggestions are study up on the terminology, as they may split hairs, or substitute similar words - encroachment for encumbrance, etc.
If you have specific areas you do not understand, please let me know. Thanks, Jeanne
P.S. XXX, I am going to post your Q on the blog without your name to see if we get any other responses… keep an eye out.
Permalink
10.06.08
Posted in 60 second title work, Education, Industry News, Mortgage and title Fraud at 9:10 pm by Jeanne
A Connecticut Judge has thrown out claims that Hayley Kissel assisted her deceased husband, Andrew Kissel, a wealthy real estate developer, in fraudulently obtaining mortgage money according to a new WTHN news and a Hartford Paper article.
Mr. Kissel was murdered in 2006, leaving an estate that owed more than $20,000,000 to several banks, based on the fraudulent mortgages. Kissel initially took out legitimate mortgages on properties, but then created and recorded fraudulent releases. He would then go to another bank to borrow money, and repeat the process. The lawsuit claims Mrs. Kissel was aware that her husband was forging and recording bogus releases to obtain more funds, but kept quiet to maintain her lifestyle. And, because she did not speak up, Kissel was able to repeat the scam, causing losses to the title companies.
Both Chicago Title and Fidelity National Title Insurance companies, which insured title for the lender’s, are suing Mrs. Kissel. They allege that because she was aware of her husband’s conduct, she was complicit in the activity by not reporting it. The judge disagreed. A jury will now have to decide if Mrs. Kissel, who has significant assets, has been unjustly enriched by her husband’s theft and is therefore responsible for some of the losses incurred by the title underwriters.
Author comment: Granted, I have not seen the documentation, but this appears to have all the red flags signs of perpetrated fraud. Honestly, when is the last time the title person legitimately saw a large mortgage paid off PRIOR to a mortgage closing, as it appears to have been in this case.
Permalink
10.05.08
Posted in Education at 5:31 pm by Jeanne
I read a news article today called home buyers can now purchase title insurance directly. It’s from the Pittsburgh Post gazette. You can read the article here.
I felt compelled to respond and here’s my response:
Mr Grant,
I am a neutral, land title educator. I teach and write about title insurance. I read your article, and wish to comment. It is a very good thing you tell the consumer that s/he can “shop” title companies for savings. That is true - significant money CAN be saved. Under Federal Law, however, the Real Estate Settlement Procedures Act (RESPA) this is not new, a homeowner has always legally been able to choose their own title company. However, most people have been reluctant to do so, as they do not understand the title product, and prefer to “just have the real estate agent” (or attorney) handle that.
The article you post however, is misleading, in that much of the expense involved in using a title company has to do not with the premium charged, but rather with the other fees charged. For example it is common for a title company to charge Closing Fees, Abstracting fees, document preparation fees, Administrative fees, recording fees, courier fees, tax,assessment and/or name search fees, and much, much more.
Your statement saying “Mr. Dwyer said Entitle Direct has filed, as required, premium rates with Pennsylvania’s state insurance department that are 35 percent lower than most other title insurance companies in the state.” leads one to believe that Entitle Direct will be less expensive than its ompetitors. In reality, his statement may be true, or it may just be a marketing ploy to bring in business, as his other fees may more than compensate for the reduced premium. To be fair to the consumer, I think this needs to be mentioned. But I do appreciate your telling people they can shop for the best price, as in this market, more than ever, every dollar counts for the consumer,
What do you think?
Permalink
10.04.08
Posted in Education, Industry News, Land Title Technical Stuff at 10:17 am by Jeanne
A recent case out of the U.S. Court of Appeals 11th Circuit (on appeal from the United States District Court for the Southern District of Florida; D. C. Docket No. 07-20494-CV-KMM) is of particular interest to the title insurance industry, abstractors and title searchers. Hon Realty, a Florida Corp., claimed First American Title Insurance Co was responsible, under terms of its title policy, for a money lien by the city. The Lien was not recorded with the respective county.
First American Title searched title, prepared a title commitment, closed the loan, and issued a title policy on the date of closing. An enforcement order regarding a lien for the violated ordinance had been issued prior to closing, but had not been recorded with the Miami-Dade County Clerk of Court until two weeks after closing. The question is whether the term “public records” (as used in the contractual language in the title policy) included information available at the city, but not yet recorded with the county.
First American argued, according to statute, that there a is no constructive notice until a lien is filed with the Clerk of Court. Hon Realty argued that because the enforcement order for the Lien was available at this city it should be construed as public record. The Court of Appeals disagreed, citing Florida statute 695.11, the states recording statute for liens filed against real estate. which says the Lien is not constructive notice until made part of the Official Record.
We believe the circuit court judges made a good decision. By reading the statute exactly as it was written, it is clear what the abstractor and title company are responsible for. The title insurance industry, abstractors and searchers are already burdened with a significant search process, made more complex by the variety of liens and places to search, which vary by state, county, township, and city. Had the city correctly followed the statute and promptly recorded the lien, there would have been no issue and First American would easily have located and paid the lien. Kudos to the 11th circuit
Permalink
10.01.08
Posted in Education, Land Title Technical Stuff, Privacy and Public Records, Regulation of Insurers and Banks at 1:07 pm by Jeanne
As of Nov. 1, 2008, compliance with the Fair and Accurate Credit Transactions Act (FACT Act) will be mandatory. The legislation requires that banks develop policies and procedures consistent with Customer Information Program rules to identify potential instances of identity theft. Creditors and financial institutions are obligated to implement a written program that would satisfy the requirements to detect, prevent and mitigate identity theft. They need to know the suppliers and vendors assisting them due due diligence to comply. But how does that afect you as a small title company or abstractor?
It would be in your best interest to take a FACT Act course so that your company can say “Yes, we are familiar with and compliant with the FACT Act.”Question by Jeanne Johnson to Fact Act Consultant:
Does the FACT Act apply to Title Companies and Closers of real estate transactions that handle private information such as SSN’s, DOB, and other private information?
Response:
Title and real estate closing companies would only be directly covered by the Red Flag regulations if they also engaged in activities that would make them “creditors” under the rule.
They would be indirectly affected, however, if they are service providers for creditors since the creditors are required to make sure that their service providers have identity theft prevention policies to protect their customers’ information. They may well be asked for a contractual agreement to that effect.
Melanie Berg
Wolters Kluwer Financial Services
Product Manager
6815 Saukview Drive
P.O. Box 1457
St. Cloud, MN 56303
1-800-397-2341 ext. 105732
320-240-5732 tel
320-469-6365 cel
melanie.berg@wolterskluwer.com
www.WoltersKluwerFS.com
Permalink
09.30.08
Posted in Education, Industry News, Money and Finance, Mortgage and title Fraud, RESPA, Regulation of Insurers and Banks at 4:04 pm by Jeanne
Ever since the Enron mess, the government has required banks to give consumers reports that show a truer reflection of the current asset value on their books. This means when the value of a house drops, resulting change in the loan to value the loan will be considered a “bad loan.” Even though the homeowner may be current on all payments, the loan is now reported, on paper, as a bad investment.
For example, let’s say newly married Tom and Mary take out a mortgage with 5% down. So they have a 95% loan to value mortgage on their $200,000 home. So the the house is purchased for $200,000, the mortgage is $190,000, they put $10,000 down. They have conscientiously made all payments on time for the last 3 years. However, in the last three years their home’s value has dropped by 10%, reducing its asset book value to $180,000. The bank (or FNMA/FHLMC) depending on who holds the loan) must now must report the lower asset value on their books. This means they do not show enough value on the books to cover their loan in case of foreclosure.
In reality, if Tom and Mary continue to pay, there’s no problem. Except, it looks bad on the books, and the confidence level of the mortgage holder may wane.
But the financial institution now files its required report, and the investors see that the assets protecting their (mortgage backed) securities are no longer enough to repay the loan in the event of foreclosure. Remember, Tom and Mary are paying their mortgage on time, each and every month- as are the vast majority of people with a mortgage. Yet, if the loan to value is short because the house value dropped, the lender believes it may be in trouble and in need of funds to shore-up his balance sheet for the investors who purchased the securities backed by these mortgages. To some extent, it is a matter of confidence. Just as it is in the stock market. If Tom and Mary make payments, as most homeowners do, no problem. But what if they don’t. The mortgage holder’s confidence wanes. Will Tom and Mary continue to make their payments?
However, it gets worse. When people have taken out second and third mortgages worth significantly more than the property is currently worth, they made bail. This leaves the investor holding the bag, particularly because of the recent change in moving away from Private Mortgage Insurance. For many years PMI protected the lenders against falling asset value, by double checking the likelihood of repayment, and writing insurance against default. But in order to save the money on PMI, many took out first and second mortgages simultaneously (known as piggybacks) in order to circumvent PMI payments. The banks got a slightly higher yield on these loans, but much higher exposure because there is no PMI to fall back on.
There is no doubt that poor lending practices and greed are primary causes of this mess. Consumers lied on unethical and illegal loan applications, lenders were negligent in checking loan applications, financial advisers told the public to take out second and third mortgages to pay for cars and boats, to pay down credit cards, etc., and regulators, they did nothing. All of this has led to a tightening of credit that ought to help alleviate the problem in the future. However, today, tightening credit is a disaster for the average consumer. Because although most of us pay our bills on time, the system no longer trusts us to pay. The system doesn’t have the safety net of enough value in our houses, tightening credit. So legitimate, needed credit will be almost impossible to get. The parents wanting to send their child to college will not be able to pay because they can’t get a loan. The car that breaks down cannot be fixed because the owner can’t afford to fix it and can’t get a loan. The small business that has the cash flow problem and can’t get a loan, will be unable to make payroll, putting people out of jobs.
It’s not over. Our next round will be rise in rates for adjustable-rate home equity lines of credit (HELOC). Because of the dropped value of homes, many of these loans are now subprime. Many of these adjustable rate mortgages are set by the LIBOR. LIBOR went up 50% last week. A tightening of credit. Now, when they go to refinance out of this expensive adjustable-rate product, they will be in trouble because there’s no longer enough equity in their house to cover it. We got ourselves into this one. In order to get new computers, new cars, new boats, and the latest television sets, we all borrowed unwisely. Recognizing that we could write off the interest on that second mortgage, and recognizing that it had a lower interest rate than our credit cards, we bought, and bought, and bought. Those with 2nd and 3rd ARM’s are in trouble. They will have to make some tough decisions. Take a second job, sell the new boat, take Johnny out of that private school? But as consumers, we knowingly put ourselves there. In most cases, we have no one to blame but ourselves. Somehow we believed that the value of our house would always go up, up, up and we could sell it tomorrow for much more than we paid for today.
This will be a difficult lesson for us all. Our parents and grandparents worked hard to pay off the mortgage. Remember the black and white movies where a grandma and grandpa danced as they tore up the mortgage? Where mom and dad saved to buy a new couch or dining room set. It’s a scene from the past. Somewhere along the line we lost the vision to own things free and clear, and the desire to be mortgage free. We saw our home only as an asset to be borrowed against for a new car or TV set. But I believe we are smart people, and that we can learn from hard knock lessons. Let’s hope the government steps up and bales us out from this disaster once again, there is no other way. Let’s hope we all learn from this. We must all pay our own way, as we go.
Permalink
« Previous entries · Next entries »