Title Insurance

Reimagining Land Records and GIS


An event, “Reimagine Land Records – Join the Conversation” orchestrated by the Legislative Committee of the Minnesota State Bar Association, Real Property Section, took place on October 20th. In attendance were an assortment of County Recorders and other County Officials, Land Surveyors, Abstractors, Attorneys, GIS Specialists, Teachers, Land Records Information Systems (LIS) Software Companies and Title Companies.

The session started out with a slide as to what constitutes land records and it was broken down three general categories and who maintains the records and uses them.

Objects (Improvements – roads, physical easements, buildings, etc.
Land Rights (Ownership, estates, government rights, liens, easements, restrictions, etc.)
People (Title, liens that tie to people, etc.)

Discussion revolved around Layers of Information needed by land title specialists and how they can be mixed and used by all most effectively. We all have a stake in this – Homeland Security; FEMA; DOT; Federal, State and local authorities; and hundreds of other entities. My takeaway of the future from the event is as follows:

CLOSINGS OF THE FUTURE

In the not too distant future, we will feel light-years ahead of today. For those of us who remember typing abstracts on electric typewriters, and getting fax machines in the office, it is truly amazing. Even those who daily toil creating and printing documents, watching people sign, making copies of the signed documents, preparing them for delivery back to the lender and to the respective counties, cutting checks, etc. will see an amazing change.

THERE WILL BE NO PAPER. Documents and closings will be “Born Digital.” They will be created in a secure electronic commerce cyber-system, and emailed to the client through a secure web portal. The closer, a licensed, e-sign notary (perhaps hundreds of miles away from the clients,) will see the clients using a web-cam, review their drivers licenses against the online faces, and e-sign their notary as the clients click through, and e-sign the mortgage, deeds, and other documents.

NO PERSONAL HANDSHAKES when meeting, no paper, no file folders, no copies, no notary stamps or checks, just cyberspace. If owners need information, it will all reside in the cloud, or on their computer or flash drive.

THE FUTURE OF LAND RECORDS AND GIS

The digitally signed documents will then be electronically submitted back to the lender, with digital copies for the title company, and of course an e-signed digital copy will go directly to the appropriate county (with e-fees) where the documents will move though departments to verify, and reside digitally.

Someday, when the owner takes a future home equity line or sells the property, a title searcher will simply go to a computer to look up the digital documents in cyberspace. But there will be only one place to look up all needed information for each piece of real estate.

A Geographic Information System, accessed by a PIN number (a smart number that ties to Sec- Twp-Rng-1/4 -1/4 and parcel) will open up a Pandora’s Box of information. We will be able to access anything you can imagine about real estate – the physical properties of buildings; terrain; topography; zoning; ownership rights, title and interests; roads; utilities; flood information; zoning; Homeland security; layer after layer.

Records from the – Treasurer, Auditor and Assessor that include current and delinquent taxes (Green Acres, etc.); type of property (single family 3BR, 3BA, 2 story, 2300 sq ft….home); Register of Deeds and Registrar office information (with the ownership, restrictions, easements, mortgages, etc.); District Court files (showing judgments, divorces and court filings against the owners); Death and Probate Court documents; Health and Human Services information (maps of wells and lien information); Federal District Court filings; Dept. of Transportation (updates on roads and widening of streets); Department of Natural Resources; Wind farms; Detailed utility information; FEMA flood maps; City zoning data; Trash bills; Photos of the property with GIS overlays and on and on.

And the records will solve problems besides title searches for many – FEMA, 911, DOT, Homeland Security, Minnegasco, Xcel, public utilities, – when a hurricane or tornado blows through, FEMA can overlay the GIS of the hurricane and know the owners names and rough amount of damage to the property. 911 will have better access to helping people,, because they will estimate number of people impacted, where the nearest hospitals are, and fastest routes to get people there. The DOT will estimate road damage will know where to concentrate their efforts. Gas and electric companies will know where the gas and power are out, and how to proceed as quickly and effectively as possible to make needed repairs.

It’s hard to believe, but the pieces are already there, it’s just (just???) that all the pieces need to be joined into one access point. The future of GIS is coming and it will be interesting.

CFPB Charges Title Company with $1.25 million Dollar Fine

The CFPB takes RESPA matters seriously. While many states, like Minnesota, require a disclosure form describing the relationship between lenders, real estate agents, title companies, appraisers, etc., those who do not disclose those relationships are up for serious fines.
Read the full article here CFBP RELEASE

FinCEN Advisory on Money Laundering Scams

FinCEN Advisory

See Advisory HERE

License Renewals for MN are Due by June 30th

Real estate agents, abstracters, closing agents and brokers are reminded that they must renew their licenses on or before June 30th. So please check your license for renewals.

Information from the Commerce Department on MN state licensing can be found here.

Pulseportal information can be found here.

OCC Adds Information for Third Party Vendors

On June 7th, the OCC added bulletin 29 to third-party relationships to clarify the way lenders should interact with third party vendors, to us, that means how lenders deal title and closing providers.

    Get the entire OCC bulletin here

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As a part of the lengthy bulletin, it stated the lender is responsible for ongoing monitoring.

Ongoing Monitoring
Ongoing monitoring for the duration of the third-party relationship is an essential component of the bank’s risk management process. More comprehensive monitoring is necessary when the third-party relationship involves critical activities. Senior management should periodically assess existing third-party relationships to determine whether the nature of the activity performed now constitutes a critical activity.
After entering into a contract with a third party, bank management should dedicate sufficient staff with the necessary expertise, authority, and accountability to oversee and monitor the third party commensurate with the level of risk and complexity of the relationship. Regular on site visits may be useful to understand fully the third party’s operations and ongoing ability to meet contract requirements. Management should ensure that bank employees that directly manage third-party relationships monitor the third party’s activities and performance. A bank should pay particular attention to the quality and sustainability of the third party’s controls, and its ability to meet service-level agreements, performance metrics and other contractual terms, and to comply with legal and regulatory requirements.
The OCC expects the bank’s ongoing monitoring of third-party relationships to cover the due diligence activities discussed earlier. Because both the level and types of risks may change over the lifetime of third-party relationships, a bank should ensure that its ongoing monitoring adapts accordingly. This monitoring may result in changes to the frequency and types of required reports from the third party, including service-level agreement performance reports, audit reports, and control testing results. In addition to ongoing review of third-party reports, some key areas of consideration for ongoing monitoring may include assessing changes to the third party’s
• business strategy (including acquisitions, divestitures, joint ventures) and reputation (including litigation) that may pose conflicting interests and impact its ability to meet contractual obligations and service-level agreements.
• compliance with legal and regulatory requirements.
• financial condition.
• insurance coverage.
• key personnel and ability to retain essential knowledge in support of the activities.
• ability to effectively manage risk by identifying and addressing issues before they are cited in audit reports.
• process for adjusting policies, procedures, and controls in response to changing threats and new vulnerabilities and material breaches or other serious incidents.
• information technology used or the management of information systems.
• ability to respond to and recover from service disruptions or degradations and meet business resilience expectations.
• reliance on, exposure to, or performance of subcontractors; location of subcontractors; and the ongoing monitoring and control testing of subcontractors.
• agreements with other entities that may pose a conflict of interest or introduce reputation, operational, or other risks to the bank.
• ability to maintain the confidentiality and integrity of the bank’s information and systems.
• volume, nature, and trends of consumer complaints, in particular those that indicate compliance or risk management problems.
• ability to appropriately remediate customer complaints.
Bank employees who directly manage third-party relationships should escalate to senior management significant issues or concerns arising from ongoing monitoring, such as an increase in risk, material weaknesses and repeat audit findings, deterioration in financial condition, security breaches, data loss, service or system interruptions, or compliance lapses. Additionally, management should ensure that the bank’s controls to manage risks from third-party relationships are tested regularly, particularly where critical activities are involved. Based on the results of the ongoing monitoring and internal control testing, management should respond to issues when identified including escalating significant issues to the board.

Title Agent Charged with Negligence and Compensatory Damages

A Connecticut title agent was held liable for $77,500 that was paid by a Title Underwriter to clear title to property it insured, as well as more than $20,000 in compensatory damages for fees and expenses incurred in negotiating the settlement. The case showcased liability by the agent for a negligent title search, and breach of duty to the underwriter.

Read the case here.

Minnesota Considers New Ag Tax Credit for Farmers

Author Comment:  In spite of Green Acre taxes, Minnesota Farmers face heavy real estate taxes on farmland, causing them to vote against independent school district referendums. So look for a new tax search to follow along with deferred Green Acre and Open Space  Taxes.   Lt. Gov. Tina Smith is working to help resolve this. 

Daily Globe | January 20, 2017

Smith called the current situation a perfect storm. Farmers are suffering from low commodity prices, high land values and, for many, crushing health care costs. The prospect of their property taxes increasing by hundreds or thousands of dollars sent many to the polls in November to vote down building bond referendums like the one for ISD 518.

“The farm economy has been struggling for the past few years. Rising property tax bills are not what’s needed across the state,” said Minnesota Agriculture Commissioner David Frederickson. Noting that property taxes have increased by 114 percent for Minnesota farmers in the past decade, Frederickson said a majority of levy referendums in rural Minnesota failed in 2016, while the majority of levy referendums posed to city dwellers passed.

Read More on this

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.”

CFPB Updates Use of Service Providers

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.[3]

 

 

 

Court Rules Consumer Financial Protection Bureau’s Structure Is Unconstitutional

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.

Read entire article at The Atlantic

Info On Home Closing

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