These classes are all available at Classes.Landrecs.com.
For information on new classes contact me.
Daniel Deaibes was sentenced recently to 24 months for his role in a scheme to steal title to Southern California homes and then “sell” the properties to unsuspecting buyers – before the buyers realized who the true owners were.
From September 2012 through their arrest in November 2014, Deaibes and his co-conspirators, including co-defendants Mazen Alzoubi and Mohamed Daoud, fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million that actually never belonged to them. On at least 10 occasions, they were successful—earning illicit proceeds of nearly $2.2 million.
Deaibes pleaded guilty in March 2015 to participating in the fraud and was sentenced today by U.S. District Judge Cynthia Bashant. As part of this plea, Deaibes admitted that he used aliases to deceive escrow and title officers into believing that he was “John Moran,” and that he was the true owner of property that was being marketed for sale. In fact, “John Moran” did not exist, and Deaibes and his co-conspirators planned to fraudulently sell the properties, divert the proceeds to their own bank accounts, and then quickly disburse the money overseas. On at least three occasions, Deaibes, posing as “Moran” and presenting a fake driver’s license, appeared before notaries to sign title documents and property deeds.
To make it appear that they owned these properties, the co-conspirators generated forged deeds that made it appear the true property owner had sold his or her home to a sham real estate “investment” business the co-conspirators controlled. They forged the true owners’ signatures on the deeds, and used forged notary stamps to make them appear legitimate. In reality, though, the true owners were entirely unaware of the pretend sales. Once the fraudulent documents were recorded in the chain of title, Alzoubi (using aliases and stolen identities) listed the properties for sale, posing to buyers, escrow companies, and title officers as the new owner. In this way, the co-conspirators collected all the proceeds of the sale, and the true owners were left with nothing.
Alzoubi, the ringleader of the fraudulent scheme, assumed multiple fake identities to keep the scheme going. He also posed as real people, pretending on one occasion that he was an attorney for one of the true owners. (Unbeknownst to Alzoubi at the time, he was talking to an undercover federal agent.) As a result of his greater role in the scheme, Alzoubi was charged with, and in January 2016 pleaded guilty to, aggravated identity theft, which carries a mandatory sentence of two years in prison in addition to his sentence for the fraud and money laundering. His sentencing is scheduled for November 7, 2016, at 9:00 am, before Judge Bashant.
Mohamed Daoud also pleaded guilty, in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme. They used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties. Daoud received approximately $270,000 in proceeds. In December 2015, before he was sentenced, Daoud fled the country and is now a fugitive.
Most of the properties the co-conspirators “sold” were post-foreclosure properties owned by banks or institutions such as Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are governmentsponsored enterprises with a mission to provide liquidity, stability, and affordability to the United States housing and mortgage markets. As part of this mission, Fannie Mae and Freddie Mac purchase residential mortgages in the secondary market, enabling lenders to replenish their funds to finance additional single family loans. Fannie Mae and Freddie Mac can become the property owners if they own the mortgage loan at the time a home is foreclosed.
“Schemes like this one undermine the public’s confidence in their most personal and important investment, their homes,” said U.S. Attorney Laura Duffy. “I am committed to prosecuting people who continue to prey on the victims of the devastating mortgage meltdown, and sending those criminals to prison.”
“This scheme was designed to literally rip home ownership right out of the hands of innocent victims, and for those victims the costs were far greater than a title to a house,” said Leslie P. DeMarco, Special Agent in Charge, Western Region. “This scheme is callous and the perpetrators deserve the punishment set out for them. FHFA-OIG remains committed to our relentless pursuit of individuals who try to profit from the aftermath of the housing crisis.” “
Fraud targeting a family’s home, the heart of a family’s financial investment, has a ripple effect through our nation’s economy,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI is committed to investigate and uncover schemes by those who defraud homeowners.”
In addition to his jail sentence, Deaibes was ordered to pay $1,819,591 in restitution to the victims of the fraud.
It’s been a tough election. Regardless of your political persuasion, half of the US population is now in turmoil over the election results. Remember, we are a strong nation and our peaceful transition with new leadership is a testament to who we are. Let us be open-minded and look for the good. Let us accept the outcome and work together for the public good to keep this “one nation, indivisible, with liberty and justice for all.” We owe it to ourselves, our founding fathers, our fellow Americans, our posterity, and our role in the world as a good leader. As a reminder of who we are here’s a great short video by Lee Greenwood.
On October 31st, the CFPB issued updates to lenders on use of Service Providers. This appears to allow a bit more flexibility for the lender to handle day to day affairs with its Servie Providers and is good news for title companies, abstracting and closing companies. The update states:
“The Bureau is reissuing its guidance on service providers, formerly titled CFPB Bulletin 2012-03, Service Providers to clarify that the depth and formality of the risk management program for service providers may vary depending upon the service being performed—its size, scope, complexity, importance and potential for consumer harm—and the performance of the service provider in carrying out its activities in compliance with Federal consumer financial laws and regulations. This amendment is needed to clarify that supervised entities have flexibility and to allow appropriate risk management.”
Lenders continue to be advised to:
take steps to review Service Providers and should include, but are not limited to:
- Conducting thorough due diligence to verify that the service provider understands and is capable of complying with Federal consumer financial law;
- Requesting and reviewing the service provider’s policies, procedures, internal controls, and training materials to ensure that the service provider conducts appropriate training and oversight of employees or agents that have consumer contact or compliance responsibilities;
- Including in the contract with the service provider clear expectations about compliance, as well as appropriate and enforceable consequences for violating any compliance-related responsibilities, including engaging in unfair, deceptive, or abusive acts or practices;
- Establishing internal controls and on-going monitoring to determine whether the service provider is complying with Federal consumer financial law; and
- Taking prompt action to address fully any problems identified through the monitoring process, including terminating the relationship where appropriate.
For more information pertaining to the responsibilities of a supervised bank or nonbank that has business arrangements with service providers, please review the CFPB’s Supervision and Examination Manual: Compliance Management Review and Unfair, Deceptive, and Abusive Acts or Practices.
Excellent Article in The Atlantic today on the CFPB
After a spate of recent activity which has included introducing long-awaited regulations for payday lenders and prepaid cards and a nearly $200 million fraud settlement from Wells Fargo, the Consumer Financial Protection Bureau must now face a new challenge—more oversight.
On Tuesday, a Washington, D.C. circuit court found the structure of the CFPB to be unconstitutional. More specifically, the court took issue with the inability for other arms of the government to review or rebuke the Bureau’s judgements or actions and the unilateral power imbued in the CFPB’s director—currently Richard Corday.
The judgement states:
The Director enjoys significantly more unilateral power than any single member of any other independent agency. By “unilateral power,” we mean power that is not checked by the President or by other colleagues. Indeed, other than the President, the Director of the CFPB is the single most powerful official in the entire United States Government, at least when measured in terms of unilateral power.
The court then goes on to proclaim that the director of the CFPB is given more power and autonomy than the speaker of the house, senate majority leader, or even a Supreme Court justice.
Mobile Notaries and Real Estate Transactions
An Advisory from the Minnesota Department of Commerce
What Is a Mobile Notary?
“Mobile Notary” is not a term recognized under Minnesota law. Rather, it is a term of art used in the title insurance and real estate closing industries. In these industries, “mobile notaries” are notaries public typically hired as independent contractors on a case-by-case basis by title insurance companies, real estate closing companies, real estate signing companies and similar businesses. They meet with mortgage borrowers (or the buyers or sellers of residential real estate) to obtain signatures on various documents needed to complete the closing of a real estate-related transaction.
What Mobile Notaries May Do
A properly commissioned notary public is vested with certain powers and responsibilities that are more fully described in Chapters 357, 358 and 359 of the Minnesota Statutes. See Minn. Stat. §§ 357.17, 358.41 to 358.50 and 359.01 to 359.12.
What Mobile Notaries Should Not Do
The Minnesota Department of Commerce recently conducted an audit of the services provided by people who advertised and identified themselves as “mobile notaries” in Minnesota. Based on the audit results, the Department learned that many mobile notaries are engaged in activities that exceed the scope of their notary commission and/or require a real estate closing agent license.
Therefore, the Commerce Department is cautioning notaries public that the following are some activities that may require a real estate closing license:
– Obtaining or charging fees to obtain signatures on documents that do not require notarization and which are purely real estate closing documents, including HUD-1 Settlement Statements and notices of loan rescission rights. Compare Minn. Stat. §§ 357.17, 359.04 and 82.55, subd. 4.
– Receiving or taking temporary possession of funds paid by the borrower to fund and close the transaction. Compare Minn. Stat. §§ 359.04 and 82.55, subd. 4 and 26.
– Providing any explanation to the borrowers (or buyers or sellers) about the various documents that are being signed. Compare Minn. Stat. §§ 359.04 and 82.55, subd. 4.
Charging fees for services that are not contemplated or authorized by Minn. Stat. §
357.17. For example, the Commerce Department survey found that mobile notaries
routinely charge fees for travel and for printing documents.
What This Means for You as a Mobile Notary
While it is within the authorized power of a commissioned notary public to take and certify
acknowledgments of deeds and mortgages, they may be exceeding the scope of their notary
commissions and engaging in unlicensed activities as real estate closing agents by providing
services incident to the sale or loan of residential real estate. Compare Minn. Stat. §§ 359.04
and 82.55, subd. 4.
Subject to limited exceptions, persons acting as real estate closing agents in Minnesota must
first obtain a real estate closing agent license. See Minn. Stat. § 82.641.
The Minnesota Department of Commerce has not taken the position that all mobile notaries
must be licensed real estate closing agents. Some mobile notaries are limiting their services
and fees to those authorized by law and/or are exempt from the licensing requirement based
on Minn. Stat. § 82.641, subd. 6.
However, the Commerce Department cautions mobile notaries that they should not provide
services or charge fees that exceed the scope of their notary commission and/or constitute
activities requiring a real estate closing agent license unless they first obtain a real estate
closing agent license from the Department of Commerce.
WASHINGTON, DC–(Marketwired – September 28, 2016) – Over 40 percent of American homebuyers feel taken advantage of or are confused by the calculation of title insurance fees on the Consumer Financial Protection Bureau’s (CFPB) new mortgage disclosures, according to a new study by the American Land Title Association (ALTA).
In July, ALTA partnered with Survata, a national market research company, to collect data on consumer experiences related to their purchase of title insurance and the new CFPB mandated mortgage disclosures. A nationally recognized leader in online consumer research, Survata works with universities, advertising companies and Fortune 500 companies to gather consumer data to help organizations make informed decisions.
ALTA’s survey, which polled 2,000 current and prospective homeowners (planning to buy within the next year), revealed that homeowners find the CFPB’s new mortgage disclosures confusing or deceiving.
“We’ve heard countless stories from ALTA members about consumer confusion at the closing table and this survey confirms our concern from the consumer’s point of view,” said Michelle Korsmo, ALTA’s chief executive officer. “The Bureau’s goal was to make the process of getting a mortgage easier and to help consumers understand the key features, costs and risks of a loan. Unfortunately, results of ALTA’s consumer survey reveal the CFPB’s mortgage disclosures are not meeting this objective. Since the true cost of title insurance is not reflected in TRID, when a consumer learns that the disclosed price of title insurance is wrong and misleading, the consumer loses confidence in the process and feels taken advantage of.”
10% is 10% Too Many
The survey found that over 30 percent of homebuyers find the new Closing Disclosure confusing. More troubling, another 10 percent of homebuyers feel taken advantage of when reviewing the current calculation of an owner’s title insurance policy on the Closing Disclosure.
“It is unacceptable for any homebuyer to feel mistreated as they consider the true costs of homeownership,” said Korsmo. “This is equivalent to everyone living in the entire metro area of Milwaukee, Wisconsin, feeling deceived during their mortgage transaction. The CFPB should address this issue and amend the rules to accurately disclose the cost of protecting a consumer’s property rights with title insurance.”
“A” for Effort — But Misses the Mark on Fixing Disclosures
Along with measuring consumer reactions to the inaccurate disclosure of title insurance costs, ALTA now has a broader understanding about what consumers actually want from their mortgage disclosures.
According to ALTA’s survey, the most important factor homeowners want on their Closing Disclosure is a detailed breakdown of all the costs for a service. Secondly, consumers want the ability to easily compare cost estimates to final fees on the disclosure. Third, homeowners want to compare the disclosures to the actual costs they will pay and confirm that the seller is paying the accurate amount.
“While the CFPB has accomplished some of the things most important to homebuyers, consumers would value their mortgage disclosures more if the CFPB showed the accurate costs of title insurance instead of the incremental costs,” Korsmo stated. “The CFPB has an obligation to make this simple change to more accurately disclose the cost of title insurance. We strongly urge the Bureau to make this change in this rulemaking to ensure that the millions of Americans purchasing property this year better understand their financial investment in their home.”
Consumer Education Continues
Consumers make the decision to protect their property rights with title insurance prior to arriving at the closing table. Consumer education remains critical for the land title insurance industry as well as the CFPB as ALTA’s survey also indicates that the most important factor for consumers in making the decision to purchase an owners title insurance policy is a full understanding of the benefit of the service to them.
“ALTA and its members are committed to educating consumers about how title insurance provides peace of mind by protecting their property rights,” Korsmo continued. “An equal commitment from the Bureau is needed to ensure that confusion over the price of title insurance does not undercut these efforts. Consumers will benefit from having the actual cost of title insurance disclosed on the mortgage disclosures. This is not only supported by ALTA’s research, but also by our members’ experiences everyday at closing tables across the country.”
The American Land Title Association, founded in 1907, is the national trade association representing 6,100 title insurance companies, title and settlement agents, independent abstracters, title searchers, and real estate attorneys. With offices throughout the United States, ALTA members conduct title searches, examinations, closings, and issue title insurance that helps protect the property rights of millions of American homebuyers every year.
Contact: Wayne M. Stanley
Direct Office Line: 202-261-2932
Email: [email protected]
Sounds like alphabet soup with all the acronyms, but Fannie Mae and Freddie Mac have published the new, redesigned Uniform Residential Loan Application forms. So the long-standing 1004 Loan Application that we all know (and often had signed at closing) will soon be history. The press release reads:
WASHINGTON, DC – Fannie Mae (FNMA/OTC) and Freddie Mac today announced the publication of the redesigned Uniform Residential Loan Application (URLA), the standardized form used by borrowers to apply for a mortgage loan. This is the first substantial revision made to the form in more than 20 years and the changes will allow lenders to deliver an easier, more consumer-friendly loan application experience. The redesigned URLA form includes a reorganized layout, simplified terminology, and new data fields that capture necessary information in an easy-to-read format. Additionally, the GSEs worked together to create a common corresponding dataset, called the Uniform Loan Application Dataset (ULAD) to ensure consistency of data delivery.
“The redesigned URLA is the result of extensive collaboration with industry stakeholders,” said Andrew Bon Salle, Executive Vice President, Single-Family Business, Fannie Mae. “We are proud to be a part of this effort that enables lenders to better serve their customers by providing ease and clarity to borrowers during the loan origination process.”
The documents are being published now, in an effort to provide the industry with ample time to become familiarized with the URLA and ULAD updates and plan necessary changes to their systems. Lenders may begin using the redesigned URLA on January 1, 2018. A timeline for required use of the redesigned URLA and ULAD will be established at a later date.
Revisions made to the URLA form and corresponding ULAD include:
The GSEs collaborated closely with lenders, technology solution providers, mortgage insurers, trade associations, housing advocates, borrower groups, and other government agencies (CFPB, FHA, VA, and USDA-RD), throughout the URLA project from the initial requirements gathering, reviews of the form revisions, and contributions to the data. For the first time, the GSEs conducted extensive consumer and lender usability testing across the U.S. to gather their feedback on the URLA designs. The designs were updated based on the responses gathered and were used in subsequent usability testing and industry outreach.
Today’s announcement is part of the Uniform Mortgage Data Program (UMDP), a larger joint initiative undertaken by the GSEs, under FHFA direction, to standardize single-family mortgage data in the U.S.
To learn more about the redesigned, consumer-friendly URLA and corresponding dataset – ULAD visit – https://fanniemae.com/singlefamily/uniform-residential-loan-application.
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased 11 basis points to a seasonally adjusted rate of 4.66 percent of all loans outstanding at the end of the second quarter of 2016. This was the lowest level since the second quarter of 2006. The delinquency rate was 64 basis points lower than one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The percentage of loans on which foreclosure actions were started during the second quarter was 0.32 percent, a decrease of three basis points from the previous quarter, and down eight basis points from one year ago. This foreclosure starts rate was at its lowest level since the second quarter of 2000.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 1.64 percent, down 10 basis points from the previous quarter and 45 basis points lower than one year ago. The foreclosure inventory rate was at its lowest level since the second quarter of 2007.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.11 percent, a decrease of 18 basis points from previous quarter, and a decrease of 84 basis points from last year. The serious delinquency rate was at its lowest level since the third quarter of 2007.
Marina Walsh, MBA’s Vice President of Industry Analysis, offered the following commentary on the survey:
“Mortgage performance improved again in the second quarter primarily because of the combination of lower unemployment, strong job growth, and a continued nationwide housing market recovery. The mortgage delinquency rate tracks closely with the nation’s improving unemployment rate. In the second quarter of 2016, the mortgage delinquency rate was 4.66 percent, while the unemployment rate was 4.87 percent. By comparison, at its peak in the first quarter of 2010, the delinquency rate was 10.06 percent and the unemployment rate stood at 9.83 percent.
“In addition, the delinquency rate of 4.66 percent for the second quarter of 2016 was lower than the historical average of 5.36 percent for the time period 1979 to the present. Among the various loan types, the delinquency rate improved for conventional loans as well as FHA loans. The FHA delinquency rate dropped to 8.46 percent, its lowest level since 2000.
“The percentage of new foreclosures initiated in the second quarter was 0.32, the lowest rate since 2000, and 13 basis points below the historical average of 0.45 percent. FHA loans saw a 15 basis point drop in the percentage of new foreclosures, which pushed the rate down to 0.48 percent, its lowest level since 1993.
“Continuing a downward trend that began in the second quarter of 2012, the foreclosure inventory rate fell again to 1.64 percent in the second quarter of 2016. The FHA foreclosure inventory rate dropped 26 basis points from the previous quarter to 2.15 percent, its lowest level since 2001.
“Of the 50 states and Washington, DC, 47 states either had no change or saw declines in the foreclosure inventory rate in the second quarter of 2016. New Jersey and New York had the highest percentage of loans in foreclosure, at 5.97 and 4.48, respectively. Florida’s percentage of loans in foreclosure dropped to 2.72, a significant improvement over 2011, when it was the state with the nation’s highest percentage of loans in foreclosure at 14.49 percent. California’s percentage of loans in foreclosure was 0.66, the eighth lowest among all states in the nation.”
Real estate professionals experiencing trouble receiving copies of the closing disclosure under federal closing rules that took effect last year for residential real estate transactions should see relief under proposed changes and clarifications to the rules the federal government released today.
The Consumer Financial Protection Bureau, which revised longstanding closing procedures last year under an initiative it calls Know Before You Owe, said today it understands that it’s customary for real estate sales associates, brokers, and other third-party service providers to receive copies of the closing disclosure that goes to the customers during the transaction. The closing disclosure replaced the HUD-1 Settlement Form last year on Oct. 3 when the new procedures took effect. After the new procedures took effect, some lenders and settlement agents cited privacy concerns and refused to share the closing disclosure with real estate professionals, making it hard for them to advise their clients.
“The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents,” the CFPB said in its announcement of its proposed changes.
“REALTORS® have reported challenges gaining access to the Closing Disclosure ever since the new closing procedures went into effect, despite a long history of access to the substantively similar HUD-1,” NAR President Tom Salomone said in a statement released today. “The CFPB acknowledged that concern by making it clear that it is appropriate and accepted for creditors and settlement agents to share the closing disclosure with consumers, sellers, and their agents. That’s a significant victory that will help REALTORS® continue to provide the expert service their clients have come to expect.”
The proposed changes address three other areas of the closing procedures. They would allow housing finance agencies to charge recording fees and transfer taxes without losing their existing exemptions from disclosure requirements, extend the Know Before You Owe requirements to transactions involving cooperative units, and restore treatment of finance charges to the way they were treated prior to the Know Before You Owe changes.
The agency will be taking comments on the changes until October 18. Access the proposal.
The problem real estate professionals faced obtaining the closing disclosure from lenders is examined in the June 21 Voice for Real Estate news video from NAR.
Author Comment: Hallelujah! What a pain it has been losing the ability to double check items for our customers. Having to contact the buyers and sellers to get their permission, then contacting the attorneys and title companies has been a great deal of effort, but worth it. many times I have helped correct errors on closing statements for Buyers and Sellers (and closers, attorneys and title companies) because, we all know, closings are very complex, and there is much room for error, so I greatly appreciate the CFPB for seeing the value in allowing those of us who are closely involved in getting closing statements for review.