30 Years in the Title Insurance and Title Education Business - Real Estate Land Title and Title Insurance Expert. - Educator and author re: Real Estate Information, Abstracting, Closing, Title Examination, Title Policies, Title Plants, legal descriptions - Subject Matter Expert, Educator, Author, Public Speaker Expert Witness on Land Title. Title Insurance and Closing Issues

Mortgage Bankers Assoc. Cuts 2017 Forecast

MBA Cuts 2017 Q1 Origination Forecast

MBA Forecast

Following the Federal Reserve’s decision to raise rates a quarter point, the Mortgage Bankers Association (MBA) lowered its origination forecast for the first quarter of 2017.

“We have adjusted the path of interest rates upwards a bit more quickly in 2017 reflecting the fact that the recent rate increase following the election has been sustained,” the MBA reported.

The total volume of one- to four-family mortgage loan originations is expected to reach $352 billion in the first quarter, according to the MBA’s December Mortgage Finance Forecast. This is down from the $365 billion in first-quarter volume the MBA had predicted in November. The lower forecast remains higher than the $350 billion in origination volume recorded in the first quarter of 2016.

The biggest drop off will be experienced in the refinance channel as rates have moved higher, forcing a more rapid decrease in an already slow refinance market. The MBA reported that refinance volume is now expected to reach $140 billion in the first quarter, down from the November forecast of $145 billion. The MBA also projected that purchase origination volume will total $212 billion, down from its prediction of $220 billion last month.

“We still forecast $1.10 trillion in purchase mortgage originations during 2017, an 11 percent increase from 2016,” the MBA reported. “Strong household formation coupled with further job growth, rising wages, and continuing home price appreciation will drive growth in purchase originations in the coming years.”

Title Insurance Costs Exceed Estimates by Thirty Percent

RedVision/Accenture have put out a study on the changing costs for Title Insurers due to what it aptly calls “Multiple Disruptive Forces” including such things as regulatory changes, digital operations, industry convergence, and a subdued economic outlook. The benchmark study focuses on the true costs of title insurance origination and finds that the true cost is about 30% higher than their study participants estimated.

From my perspective, it’s a thoughtful analysis. I think the ultimate thought would be to have all the information simply digitally dumped into an automated system that would spit out a title commitment. But, as we all know, as the chain of title is put together, there are many stops involved and many places to collect data, all with different systems:Treasurers, Auditors, Assessors, County Recorders, Cities, plats/surveys, etc.etc. And while I know there are inefficiencies in manually obtaining data, and I recognize that much of the information can be downloaded, I believe we are light-years away from a one-stop automated process.

In order to have a “good” title product, someone has to actually LOOK at the data as it will not simply download into the appropriate category. There are too many variables. A good search needs to verify the physical signatures on that deed, look for recitals in documents, review divorce decrees, etc. Yes, streamlining is very important, but so is the knowledge of those persons who examine the instruments. On the other hand, if the industry wishes to become completely automated, it could choose to do so and become like a casualty underwriter – don’t check past history, just prepare and reserve for much higher claims.

HOA Payment Status Will Show on Credit Reports

Equifax, one of the three major credit reporting agencies, has announced that it will begin collecting HOA payment histories and account status though Sperlonga, a credit aggregator. Equifax says the HOA payment reporting will go live in October.

Thoughts on TRID

The “TRID Rule” is short for the TILA-RESPA Integrated Disclosure where the Consumer Financial Protection Bureau (CFPB) consolidated the number of required disclosure forms from four to two. Under the original Truth in Lending Act (TIL) and Real Estate Procedure Act (RESPA), consumers received four different disclosure forms that were federally required and had overlapping information. The multiple forms led to more confusion for consumers and missed the mark of making the information more understandable. These two new mandatory disclosure forms – the Loan Estimate and Closing Disclosure – are required on most residential mortgages. Their goal is to reduce paperwork and eliminate confusion for the consumer

The LE The Loan Estimate form replaces the Good Faith Estimate and initial Truth-in Lending form and is intended to guide consumers by highlighting important information. The first page of the form shows the interest rate, monthly payment, and total closing costs, allowing for an easy comparison of mortgage loans, so consumers can select the best loan for their situation.

The CD The Closing Disclosure form replaces the HUD 1 Settlement Statement and the final Truth-in Lending form on many loans. It does not apply to loans such as HELOCS or CASH sales. The CD outlines the costs of taxes and insurance, information about changes that can occur to the interest rate and payments, and includes warnings to consumers about prepayment penalties and other important items. This information can effectively be used to assist potential home buyers in deciding how much they can afford to spend on a new home and what loan fits them best.

Thoughts – What do you think, are your customers saying they have used it successfully, or are they still relying on “professionals” to help them get the right loan? Certainly, the intent is good, but until we can get the hundred plus pages of loan documentation to a manageable level, I’m not convinced that it will be used by most borrowers. The typical loan process is still too complicated for the typical consumer to wrap their heads around.

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$7 Billion being Paid to Settle Mortgage Claims

Citigroup will pay a total of $7 billion, including a record $4 billion fine to the Department of Justice (DOJ) for charges related to the packaging, marketing, sale, and issuance of residential mortgage-backed securities (RMBS.) The deal was reached after months of negotiations – between Citigroup and a division of the Financial Fraud Enforcement Task Force consisting of state and federal authorities, and financial regulators.

Why it matters: The settlement arguably is the product of a hard-line approach taken by the Department of Justice, providing the largest civil penalty ever. U.S.

Attorney General Eric Holder characterized Citi’s conduct as “egregious,” adding that “the bank’s activities contributed mightily to the financial crisis that devastated our economy in 2008.” Holder also stated that the deal does not absolve Citi or its employees of possible criminal charges.

Read more at Lexology and Citibank

CFPB Turns Three and Shows its Stuff

This is a great article from Lexology, showing the power and focus of the CFPB. Early on I was not a fan of the CFPB,
but as time goes by, their policing powers have been excellent. Good for the consumer and good for “cleaning up” the
type of problems we had that ended in the crisis of 2008.

Among the details the article shows some of the results of the CFPB police:

Penalties / Consumer Relief Obtained
• Amount of penalties ordered to be paid in enforcement actions (total): $150 million
• Highest civil money penalty ordered to date: $27.5 million
• Amount ordered to be returned to consumers: $4.6 billion (more than half of which is mortgage servicing related).

To read the entire article, click here

Mortgage Fraudsters Continue to Pay

Mortgage fraudsters continue to pay as can be seen in yet another federal trial. The FDIC and CFPB are hard at work with the DOJ and a host of others continuing to clean up the mortgage debacle from the 2008 Crash. I hope that the severe penalties and continuing cleanup will make other fraudsters think twice. It seems you can’t regulate ethics, but perhaps punishment will suffice.

After an 11-day trial, a jury found a husband and wife guilty of conspiracy and bank fraud that totaled $49.6 million.
Domenico “Dom” and Mae Rabuffo were convicted of participating in an elaborate scheme to defraud banks of tens of millions of dollars in connection with a development known as Hampton Springs in Glenville’s Big Ridge community. The crimes are alleged to have occurred between 2003 and 2008.
Dom Rabuffo, 77, of Miami, and Mae Rabuffo, 75, of Fort Lauderdale, Fla., and Williston Park, N.Y., were found guilty of conspiracy to commit bank fraud and wire fraud affecting a financial institution. Dom Rabuffo was charged with multiple counts of bank fraud.
Sentencing by Chief U.S. District Judge Kevin Moore is expected to take place Sept. 25. They each face a maximum of 30 years in prison for each count.
read more at the Sylva Herald

IRS manual now over 70,000 pages – SERIOUSLY?

My friend Kathy Howe sent me this and I thought I’d share it. I was surprised at the statistics.

IRS manual now over 70,000 pages

“The income tax system in the United States is a sprawling mass of provisions spread across dozens of volumes and has been called everything from a ‘disaster’ to an ‘abomination.'”

That’s how the Tax Foundation begins its report “Putting a Face on America’s Tax Returns.”
The report discloses that it takes Americans up to 7 billion work hours each year to complete the paperwork required by the IRS, and it costs individual and corporate taxpayers more than $165 billion annually to comply with the income tax code.
In 1913, the federal income tax started as four pages of forms and instructions. Today, the tax code spans more than 70,000 pages.
A year before the United States entered World War II, excise taxes on such items as gasoline and cigarettes were the largest source of revenue for the federal government, followed by Social Security payroll taxes, then corporate income taxes.
Today, individual income taxes are the top source of revenue, expected to amount to $1.38 trillion this year, followed by social insurance taxes ($1.02 trillion), corporate income taxes ($380 billion), and excise taxes ($93 billion).

“While only about 14 percent of taxpayers earn more than $100,000, they pay the vast majority of all income taxes in America today.”
About half of all tax filers earn less than $30,000 a year — 26 percent earn less than $15,000, and 21 percent make between $15,000 and 30,000. Just 3 percent of filers earn between $200,000 and $499,000, and only 1 percent make $500,000 or more.
Taxpayers earning less than $100,000 a year account for 18 percent of all income taxes, while those earning more than $100,000 pay more than 80 percent of the taxes.
Those earning $1 million or more annually make 11 percent of all income, but pay 23 percent of income taxes, while those earning between $200,000 and $1 million account for 17 percent of income and 32 percent of income taxes.
Filers making $30,000 or less receive more back from the IRS than they pay in income taxes due to the Earned Income Tax Credit and other preferences. They account for 11 percent of income and minus-6 percent of income taxes paid.
Looked at another way, the top 1 percent of earners pay 37.4 percent of income taxes, the top 10 percent pay 70.6 percent, and the bottom 90 percent pay 29.4 percent.
The bottom 20 percent of earners receive $8.13 in federal spending for every dollar they pay in federal taxes. The top 20 percent receive $0.25.

Title Insurers Warned Of Too Many Blanket Exceptions

A Wisconsin State Journal article writes that the Wisconsin Insurance Commissioner Ted Nickel has warned homebuyers in a bulletin that they need to be careful about “blanket exceptions” in title insurance policies.

He wrote that title insurance companies

“have begun to use broad ‘blanket exceptions’ in their title insurance policy form for owners and (consumers), which exclude from coverage the most common encumbrances … that could generally be discovered during a public records search.”

The majority of title insurance policies exclude coverage of the type of information that cannot be found in public records, but there have been some that exempt even public record search results, Nickel said, leaving “little to no coverage for the consumer and does not warn the consumer that the title they are purchasing may have defects.”

The commissioner’s office said title insurance policies typically exclude coverage of “encumbrances” that can’t be discovered via a public records search. But state law says that a policy can be rejected that is “misleading because its benefits are too restricted to achieve the purposes for which the policy is sold.”

Info On Home Closing

Home Closing 101: An Educational Initiative of the American Land Title Association