ALTA REVISED SURVEY STANDARDS TAKE EFFECT FEB. 23, 2011
New Survey Standards have been approved by the American Land Title Association (ALTA) and the National Society of Professional Surveyors (NSPS.) The purpose of the Minimum Standards is to set nationally recognized uniform standards for land surveys and to assist title insurance companies, surveyors and lenders to use nationally recognized uniform standards to assist title insurance companies, surveyors and lenders.
The new standards discourage the drafting of new legal descriptions and also require:
• a reference to any title commitment be included on the face of the survey
• a vicinity map
• more detailed information regarding easements and right-of-way lines
• use of a standard certification.
See more at ALTA.org
Twin City Attorney Disbarred
A Twin Cities lawyer who pleaded guilty last year to federal fraud and money-laundering charges, Trent C. Jonas, has lost his license to practice in Minnesota. Authorities said Mr Jonas siphoned about $5.3 million from more than 3,000 mortgage transactions through Jonas’ title insurance companies, Title Source and Zen Title. More at The StarTribune
MD Regulator Suspends Title Insurance License
Maryland insurance regulators have suspended the license of Beltway Title and Abstract Inc. of Crofton and related settlement companies due to misappropriation of funds. The company used more than $1 million that was set aside to pay mortgages or closing expenses for clients to cover its business expenses. Acting State Insurance Commissioner Beth Sammis says, “We’re going to work with the industry and all producers to find the best way to ensure that Marylanders can have faith that when they close on a house, it’s done properly.” Read story from Baltimore Post
Real Source Title Owner Sentenced
Disbarred Attorney, Jason Fischer, was co-owner of Real Source Title, an agency with offices in: Burnsville and Mahtomedi Minnesota; Hudson, Wisconsin and Illinois. His underwriter was Old Republic National Title. Fischer admitted that he began illegally stealing money from his company’s escrow accounts to himself and other business ventures beginning in 2006 and continuing into 2009. Fischer drained the entire title agency escrow account leaving no funds to pay fifteen mortgages that Real Source Title was responsible to pay. This left the mortgagors with ruined credit and foreclosure issues on loans they thought were paid. Fischer admitted to his theft in Wisconsin State Supreme Court acknowledging that he misappropriated over $2 million dollars from his company’s escrow accounts including nearly $500,000 in a restaurant venture where Fischer had an ownership interest as well as around $350,000 for personal use. Fischer was sentenced to more than four years in federal prison for stealing more than $3 million from a real estate title and escrow company that he co-owned. More at MPLS STAR TRIBUNE
Minnesota Department of Commerce Seeks Information on Escrow Accounts
The Minnesota Department of Commerce(Department) is conducting an informal investigation regarding
the interest or other monies earned on title trust and escrow accounts. Please submit detailed responses
to the following questions no later than February 28, 2011.
An officer of the agency must attest to the accuracy of the responses and sign the responses. Failure to
comply with this subpoena may result in legal action being taken against your company to compel
compliance pursuant to Minn. Stat. §45.027, subd. 3 (2008), and may be subjected to civil penalties of up
to $10,000 per violation.
Please direct any inquiries concerning the above questions to the undersigned.
Thank you for your cooperation.
Kerry Banks
Minnesota Department of Commerce
kerry.banks@state.mn.us
Phone: 651-296-9082
Fax: 651-296-4328
SURVEY
Company Name (as licensed):
Company NAIC Number (if underwriter)/License Number (if agency):
Mailing Street Address:
City:
State:
Zip Code:
Date:
As an officer of the company to whom this letter is addressed, who is authorized to sign on behalf
of the company, I do hereby attest to the accuracy of the above responses.
Company Officer:
Company Officer Title:
Company Officer Telephone Number:
Company Officer E-mail Address:
We are seeking Minnesota specific information only. Responses provided should only reflect
monies related to Minnesota transactions. If you are unable to provide Minnesota-specific
information, please provide a detailed explanation, in the space provided under question number
15 below, of what other states are included in your figures as well as the approximate
percentage that reflects Minnesota transactions.
Trust Account Questions
1. Is your company’s trust account an interest-bearing account? Y/N
2. If your company’s trust account is interest-bearing, is the interest a fixed or variable rate?
2a. If fixed, what is the interest rate?
2b. If variable, please describe how the interest rate is calculated and provide the rate,
effective 12/31/2010.
3. Please provide the average daily balances for your company’s trust account, whether
interest-bearing or not, for the following months:
February, 2010:
May, 2010:
August, 2010:
November, 2010:
4. What does your company do with any interest earned from the trust account? Please select
the best option and provide a detailed explanation of how the money is returned, used,
donated or otherwise treated. If you select option “d,” please include a breakdown, by
percentage, of how each option is applied.
a. The interest earned is returned to the buyer/seller/borrower
b. The company keeps the interest
c. The company donates the interest
d. A combination of the above
e. Other
5. If applicable, approximately how much interest did your company’s trust account earn
during the calendar year 2010?
Escrow Account Questions
6. Does your company maintain any interest-bearing escrow accounts? Y/N
7. If your company’s escrow account is interest-bearing, what monies are typically deposited
into such accounts?
8. If your company’s escrow account is interest-bearing, is the interest a fixed or variable
rate?
8a. If fixed, what is the interest rate?
8b. If variable, please describe how the interest rate is calculated and provide the rate,
effective 12/31/2010
9. Please provide the average daily balances for your company’s escrow account(s), whether
interest-bearing or not, for the following months:
February, 2010:
May, 2010:
August, 2010:
November, 2010:
10. What does your company do with any interest earned from escrow accounts? Please select
the best option and provide a detailed explanation of how the money is returned, used,
donated or otherwise treated. If you select option “d” please include a breakdown, by
percentage, of how each option is applied.
a. The interest earned is returned to the buyer/seller/borrower
b. The company keeps the interest
c. The company donates the interest
d. A combination of the above
e. Other
11. If applicable, approximately how much interest did your company’s escrow account earn
during the calendar year 2010?
Other/Combined Questions
12. If your company’s trust or escrow account is not interest-bearing, do those accounts
provide your company with value in some other way (through account analysis, short term
CD’s, value-added accounting, etc.)? Y/N
13. If your answer to question 11 is yes, please describe the nature of the value provided.
14. If your answer to question 11 is yes, please quantify to the best of your ability the value
provided during calendar year 2010.
15. Does your company contract out any closing and/or settlement services?
If “yes,” please complete the following:
15a. What types of services do you contract out, and when do you contract these services?
15b. From whom do you contract out these services? Please provide name and contact
information for ALL entities with which you contract.
15c. For services contracted, are escrow monies (other than title premiums) ever returned
to the agency for disbursement?
16. Please provide any additional information you may deem necessary to support or explain
the answers you supplied above.
Title Insurance and Closing Company $4 Million in Theft
Out of Maryland, another title company default. Some things here, however, are distinctive. Yes, the owner/ operators of the companies involved and their affiliated businesses used $4 million dollars of other people’s money. But much of the money used sounds like just plain bad management. After all, the money was not traced to extravagant homes, cars and the like, but much of it is chalked up to poor management, lots of errors that needed to be covered up, theft by employees, along with likely not cutting expenses fast enough when the market went south. A common error in the Title Insurance Business. Another surprise is the longevity of the companies that were started in the 1980′s and 1990′s. Unusual for most defalcations. However, there are also the standard themes, such as money being short in the escrow accounts for a number of years before claims were brought. Read more here from two local papers:Annapolis paper.Baynet Paper
Closers Can Relate to the Judges Wit in Divorce Case
Having closed a number of homes where husbands and wives were in the middle of a contentious divorce or separation, I know all real estate closers and title insurance closers have their fanciful divorce stories. For me – from the wife who refuses to have the husband declared dead – even though the husband “went out for cigarettes” more than thirty years ago, to the husband who brings his soon-to-be wife to closing only to sit across from his soon-to-be ex-wife. But this judge made good fun of the over-the-top feud between husband and wife. Go Judge See Story Here.
Closing and Equitable Title
Another good Equitable Title Post for mortgage and title closers. Shows what can happen when intentions to maintain an interest are not turned into reality because the language was not clearly spelled out when creating the deed. Creating legal documents is much more than filling in the blanks. A portion of the lawsuit reads:
The first lender intended to retain a security interest on the second parcel for the two remaining loans. As we explain below, that is not what happened, and we must address the issue of whether the title and sub-escrow company is liable to the first lender.
Read more from Leagle.com here
Changes in Closing Under the Consumer Financial Protection Bureau
The new Consumer Financial Protection Bureau (CFPB) published the first of a series of five question interviews with Treasury officials. Elizabeth Warren, Special Assistant to the President, is the lead administrator of the CFPB and answered the Questions below. This is of special interest to closing professionals because the CFPB will play a key role for Title Insurers and Closers in revising the closing process. A simplification of Documents would be greatly appreciated. For mortgage closers, the explanation process at closing has become quite complex and overly burdensome because, for most people, the mortgage process and mortgage fees are buried in a foreign language.
Q&A
1) With hundreds of problems in the consumer financial products and services marketplace that the CFPB could chose to focus on, how do you decide where to dive in and begin? What have your top priorities been out of the blocks?
Credit cards are a top priority because they are the most widely held credit product in the country. Four out of five families have a credit card and 50 million American families cannot pay off their credit card debt each month in full.
Mortgages are the other top priority because they are the single most important financial decision that most families will make. We have learned from recent history that a bad mortgage can not only destabilize an entire family, but that enough of them can destabilize the entire economy.
2) You frequently cite streamlining disclosures as a way to level the playing field and give families better tools to make the choices that are best for them. When will consumers start seeing a difference?
Consumers can already see a difference. Look at what the banks are advertising right now and see how often phrases like “simplicity,” “no tricks” and “clarity” are showing up. The industry recognizes that these consumer credit markets have to change.
3) Your first week on the job, you and Secretary Geithner held a mortgage disclosure forum at Treasury and just this week, the CFPB implementation team held a follow up symposium. What have you learned from these sessions?
The current disclosures increase costs for lenders while providing very little benefit for consumers. We want to reverse that and decrease the costs of disclosure while increasing the value to consumers. The way to do that is to make that disclosure clearer and more usable for consumers.
4) You’ve spoken a lot about how the consumer credit market is “broken.” How do we know the market isn’t working and what can the CFPB do to fix it?
When a family cannot tell the cost in full of a credit card, when it is not possible to determine the risks of a mortgage in advance, and when people can’t directly compare three or four products– apples to apples – to tell which costs the most and which bears the most risk, then the market is broken.
This agency will drive toward making the costs clear, making the risks clear, and making it easy for consumers to compare one product with another. When they can do that, credit markets will work for families.
5) What roles will personal responsibility and financial education play in the consumer credit market once the CFPB is stood up?
I believe in personal responsibility, but it only works when prices and risks are clear up front and not buried in pages and pages of incomprehensible fine print. But, I also believe in American families. When they have better information they will make good decisions and those good decisions will make families stronger and ultimately will make the entire economy stronger.
Watch Out for Equitable Mortgages
When I teach title examination, closing, title abstracting, and other real estate classes, you have all heard me talk about “Equitable Mortgages,” i.e. A deed is given that has specific language in it that lessens the full impact of the conveyance. A typical example might be an owner deeding a lot to a builder who is going to build them their dream home. Such deed might contain the restriction that “this deed is being given as security. ” That language implies that the persons conveying have an expectation to get it back and in fact it becomes equal to a mortgage (equitable mortgage) in terms of closing, laws, etc. Here is a must read new article from Minnesota that points out such problems. Here is a Press Release by 24/7 that gives a couple examples of the complications with such a deed. It is a MUST READ for title people.
Home Closing 101: An Educational Initiative of the American Land Title Association
