MN Closer Pre-License Seminar June 4, 2012
Minnesota State Required
8 Hour Closer Pre-license Course:
“Closing the Residential Transaction”
June 4, 2012 St Paul, MN
Closing the Residential Transaction presents an overview of the closing process. This course is designed for those wishing to obtain their Minnesota Closer License and/or anyone desiring a better understanding of the closing process, principles and procedures guiding the closing of real estate sales and mortgage transactions.
The course addresses:
The role of Closers, Lenders and Real Estate Agents in the closing process
Purpose and use of Title Insurance and reading Title Work
Drafting of Legal Documents and handling Legal Issues relating to closing
The impact of federal laws and regulations on the closing process
Documents present or executed at closing
Avoiding common issues for litigation in residential real estate transactions
Closing the Residential Transaction discusses the law as it relates to real estate and fixtures, types of estates, types of multiple or co-ownership interests and drafting documents. It explains how to identify problems at the closing state, and includes an important discussion of the important role of the closer as a neutral third party in detecting and correcting errors to assure a smooth closing.
Owner of Troese Title Companies Sentenced to Prison in $2.838 Million Mortgage Fraud Scheme
Press Release
| Targeted News Service |
BALTIMORE,Feb. 7– The U.S. Attorney for the District of Maryland issued the following news release:
U.S. District JudgeWilliam M. NickersonsentencedStephen J. Troese, Sr., age 72, ofDavidsonville, Maryland, today to a year and a day in prison followed by three years of supervised release for wire fraud arising from a scheme to defraud lenders and a title insurance company of$2,838,231.
The sentence was announced byUnited StatesAttorney for the District of Maryland Rod J. Rosensteinand Special Agent in Charge Richard A. McFeely of theFederal Bureau of Investigation.
According to his plea, Troese practiced as a title attorney and was variously an owner, part owner, or the controlling figure of a number of title companies that did business in theBaltimore,AnnapolisandWashington, D.C.metropolitan areas, includingTroese Title Services, Inc.(Troese Title), located inCamp Springs, Maryland;Troese/Hughes Title Services, Inc.(Troese/Hughes), located inGreenbelt, Maryland; andTroese/Prestige Title Services, Inc.(Troese/Prestige), located inEllicott City, Maryland. These companies performed title searches, provided title insurance, and conducted settlements. Troese Title, Troese/Hughes and Troese/Prestige each had an agency agreement with Chicago Title enabling them to provide title insurance, which meant that Chicago Title was liable for title defects to homeowners and lenders.
Troese Title and Troese/Hughes, which Troese formed in 1994 with co-defendantJames Kevin Hughes, shared a joint escrow account for the receipt and disbursement of funds in connection with real estate closings carried out by both title companies. Co-defendantBrenda Lukenichwas the escrow accountant for the joint escrow account as well as for most of Troese’s other title companies.
By 2005, the joint escrow account had developed a shortfall of more than$2 million, partly as a result of several major employee errors and embezzlements. Sometime in 2006, the joint escrow account was split into two new accounts and the existing balance from the joint account was divided between the new Troese Title and Troese/Hughes accounts, effectively assigning a$1 millionescrow shortage to each company.
In approximately 2006, the real estate industry started to slow, resulting in a steep decline in business for Troese Title and Troese/Hughes, further aggravating the problem of the shortfall in the escrow accounts.
In 1994, Troese had refinanced his home, claiming that the$655,000loan would be used to pay off the previous first and second mortgages. In fact, the mortgages were not paid off. InFebruary 2006, Troese again refinanced his home, representing that the loan of$964,533.26, would be used to pay off the two existing mortgages. Again, the mortgages were not paid off, but instead the funds were used to help cover the existing shortfall in the Troese Title escrow account. Troese concealed the fact that the mortgages were not paid off by continuing to make the monthly mortgage payments on all three loans. The resulting loss to Chicago Title was$937,183.47, which it was required to pay to satisfy the two previous mortgages and pass clear title to the new lender.
InMay 2008, Chicago Title terminated its agency agreements with Troese Title and Troese/Hughes, which had a significant number of mortgage pay-offs that had not been made because the escrow accounts were depleted as a result of theft, errors and omissions.
In the spring of 2008, Troese entered into new agency agreements with Chicago Title for three title companies, including Troese/Prestige. Thereafter, Troese/Prestige also served the clientele of Troese/Hughes and Troese Title. Troese/Prestige conducted settlements, but instead of using the lender money that was wired into Troese/Prestige’s escrow account as directed in the HUD-1 settlement statements, the money was transferred into escrow accounts at Troese/Hughes and Troese Title to cover the mortgage pay-off checks that were still outstanding for those entities.
In the summer of 2008, Chicago Title received information that a mortgage had not been paid off and audited Troese/Prestige. The escrow account did not contain enough money to cover the outstanding mortgage pay-offs. Chicago Title, as the title insurer, was forced to make the mortgage pay-offs, to pay off funds that had not been made by Troese/Prestige, and one mortgage that still had not been paid off by Troese Title. In total, the loss to Chicago Title stemming from the Troese/Prestige pay-offs was approximately$1.7 million.
The total loss attributed to Troese as a result of the above schemes was$2,838,231.
James Kevin Hughes, age 53, ofCrownsville, Maryland, andBrenda Lukenich, age 51, ofHughesville, Maryland, previously pleaded guilty to wire fraud and mail fraud, respectively. Hughes and Lukenich each face a maximum sentence of 20 years in prison at their sentencing, scheduled forFebruary 15, 2012andFebruary 28, 2012, respectively.
The Maryland Mortgage Fraud Task Forcewas established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the Task Force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available at the Department of Justice.
Another Possible Defalcation with Troubled Title Company
The Daily Times, Farminton, NM
New Mexico Title Co. closed abruptly on Jan. 30 when it stopped accepting title work and interim manager Quentin Smith sent employees home. For days afterward, a phone message said that the business was closed. Customers began to stream in to inquire about their escrow accounts and the status of their real estate transactions.
Several New Mexico Title Co. customers told The Daily Times they had not received expected disbursements from escrow accounts, or that their payments to escrow accounts were not properly credited.
Edward Blinzler, a local businessman, filed a complaint with state regulators after an expected escrow disbursement did not appear. He has an escrow account with New Mexico Title for payments from a couple who bought a house from him. The homebuyers’ check has cleared their bank, he said.
Mamouth US Supreme Court Case for Title Insurers
From The Supreme Court Blog comes an interesting and important title case. The case began in Cleveland and is scheduled to be argued before the U.S. Supreme Court this fall. The outcome could determine whether lawyers can file a new sort of consumer lawsuit against title companies on behalf of those who haven’t actually suffered any actual title damages or even a financial loss .
The lawsuit, First American Financial Corp. v. Edwards involves a homeowner named Edwards, who bought a house in September 2006 and paid for a title insurance policy from First American Title. A few years before that, First American had paid the firm that closed the transaction $2 million for a minority stake in the company and they made an agreement to exclusively sell First American title policies according to reports at Forbes.com. First American claimed there were no financial damages to Edwards.
However, the case appeared to violate RESPA laws, which prohibit title insurers from paying kickbacks or anything of value for referrals. The Supreme Court will review the case and its decision could mean that any violation of the RESPA law, regardless of injury or financial damages, could subject title underwriters who have practiced co-ownership with agents to enormous class action lawsuits.
Beware – Two More Scams for Title Closers
Scam One: The Florida Land Title Association reports having been hit with a new fraud of a type that could easily catch any of us. A couple left their closing with a check for their proceeds. A couple of hours later, they returned to the closing office with the check and asked for a wire transfer instead. The closer voided the check and processed the wire. Unfortunately, the couple had used their smart phone and deposited the check before returning to the branch.
Even normal “Positive Pay” protections would not have caught this as the original check had already been approved for payment.
Scam Two: Similar Scam could be used for closing, so beware: Nigeria has extradited a man accused of scamming more than 80 law firms and lawyers out of $31 million in a debt collection ruse.
Nigeria’s anti-graft agency announced the extradition of Emmanuel Ekhator to the United States on Friday, the Associated Press reports. He is one of several people accused of participating in a fraud ring. Charging documents say the ring not only collected $31 million in the scam, it also tried without success to defraud 300 other lawyers and firms out of $100 million.
The scam worked this way: One scammer would contact a law firm for help collecting a debt. Another person posing as the debtor would send a fake check to the law firm, which would take its fee before sending the remainder to the client. If the scam goes according to plan, the so-called client gets the money before the fake check is discovered.
According to a superseding indictment (PDF), victims included several Pennsylvania law firms, a Canadian law firm and an Alabama law firm.
Closer Woes and Underwriter NOs
Another amazing story of fraud in the Title Industry. An underwriters nightmare, and a closer clearly over her head. Palm Beach Post
MN Commerce Commissioner Wants to Send Message to Title Insurers
The Minnesota Department of Commerce has charged three title insurance companies and mortgage originators for alleged offenses ranging from misappropriating funds to charging fees for services not provided.
Albert Lea Abstract Company, sister companies Meredian Financial Corporation and Fortis Title Solutions Corporation, and New Millennium Title Group received enforcement actions last week that outlined alleged abuses and violations of Minnesota Law.
“We want to send a clear message today that companies doing business in our state must act responsibly and abide by our laws,” Commerce Commissioner Mike Rothman said in a statement. “These scams and swindles not only hurt consumers, but threaten healthy competition in the marketplace.” Read more at the Twin City Business Magazine
FEDERAL REGULATION OF TITLE INSURANCE – WHY NOT?
There has been much discussion about regulating insurance, including title insurance at the federal level.
Of all the lines of insurance, none are as inexorably entwined in state and local laws as title insurance. Local practices regarding real estate vary from state to state and even county to county within a state. The abstracting, examining and underwriting of title insurance involves a review and assessment of these state and local-specific records, so that title policies can only be properly issued in connection with inherently understood local transactions. I believe it would represent an enormously burdensome and expensive undertaking for a federal agency to establish federal regulations that would reflect variations in the real property law of all 50 states. State regulators are much closer to local practices and can respond to changes in the marketplace more quickly. Therefore, I believe state regulation remains the most effective form of supervision for our industry.And since when is a “bigger government agency” better than local government?
Over Six Hundred Counties Now Record Electronically
E-Recording, although not new, is finally coming into its own. I am not sure it’s for everyone as I do not know the costs involved for small businesses. But I am sure that as time passes, it will become as simple as faxing documents into the Courthouse through some type of secure transmission. Per the Property Records Industry Association Press Release:
The number of counties electronically recording documents surpassed 600
during the month of February, according to Richard Bramhall, president of the
Property Records Industry Association (PRIA). “Between April 2010 and
February 2011, the number of counties committing to the eRecording process
increased by 20 percent,” said Joan McCalmant, Linn County (Iowa) recorder
and PRIA Technology Committee co-chair. “As the PRIA eRecording
standards continue to mature, the number of counties leveraging this
technology is rapidly expanding.”
According to PRIA’s tracking system, it took from the late 1990s until August
2006 to reach the 200 eRecording counties mark. That number has now more
than tripled in the ensuing four and a half years. “It’s exciting to see so many
counties embracing this technology and, along with the technology, the PRIA
standards,” Bramhall said.
PRIA, the national standard-setting body for the land records industry,
maintains a list of counties that have implemented eRecording technology and
posts the list on the association’s website. The list includes counties whose
implementations have been confirmed by PRIA. “We are confident the actual
number of eRecording counties is higher than what we publish, but the list is
limited to those counties that have been accurately verified,” said Technology
Consultant Mark Ladd. The names of the eRecording counties are available to
the public, while PRIA members have access to a more detailed list which
includes contact information for the counties, as well as the individual county’s
technology vendor(s). The list is continually updated by the PRIA Technology
Consultant who tracks down reports of new eRecording-enabled counties from
a variety of sources.
“PRIA has worked diligently to develop XML standards and promote industry
adoption of this important technology,” said Technology Committee Co-chair
Kate Teal of Ernst Publishing. “eRecording is experiencing unprecedented
success with recorders who have installed the technology. It is also providing a
competitive edge to the firms that submit documents to the recorders
electronically, as it decreases turnaround time and allows firms to more rapidly complete the transaction process.”
Keeping the Right Documents for Taxes
The Washington Post has a good article for our clients and a reminder for us of the paperwork involved in closing a real estate transaction. It discusses what documentation should be kept and why along with some good pointers. It reminds us that the key documents are the HUD-1 settlement statement, the promissory note, the deed of trust (mortgage), the truth-in-lending disclosure and the deed. It highly recommends an Owner’s Policy of Title Insurance, and suggests that you should also keep copies of all paid invoices for all major repairs, improvements and additions that affect your cost basis in the home. I.e. capital improvements, that include the following: building an addition, replacing the roof, paving a driveway, installing central air conditioning, and rewiring. IRS Publication 551 , available at IRS.gov, provides detailed information for determining increases and decreases to your home’s cost basis.
Home Closing 101: An Educational Initiative of the American Land Title Association
