Minnesota

Banks Pursue Deficiency Judgments

The American Bar Journal has a good article on banks going after borrowers for the shortages between mortgage dollars borrowed and what the homes can be sold for. Under the terms of mortgage notes, the borrower promises to repay the entire debt borrowed. But with so many houses under water, the lenders are losing money, and so they are are looking to the borrowers for the difference. Forty-one states in the US allow this.  So we need to watch name searches for deficiency judgments.  But will this just force more people into bankruptcy – or will they really recoup some money?

FNMA Mae has specific rules pertaining to the right to file deficiency judgments. Will they follow up?

Update on Minesota Foreclosures

Here is a very interesting report by the Minnesota Homeownership Center on Minnesota foreclosures, detailing the history of foreclosures by County over the last two years. It also has a map showing foreclosure rates by County. The goal is to get help to homeowners in foreclosure where it is most needed. See the report for solid information as to the marketplace in Minnesota.

Annual Principles of Abstracting Class slated for May 4-5

The annual Minnesota “Principles of Abstracting and Land Records Management” two day course is being offered on May 4th and 5th in St Paul, MN at the Country Inn and Suites. The course is designed for County Recorders, Title Insurers, Abstractors, and those who deal in land titles. Participants have included Homeland Security professionals who place towers on various sites, Dept of Transportation professionals who deal in Right of Way projects, Bureau of Indian Affairs, and various Utility companies that place easements such as Excel Energy and  Comcast.

The two day course will help prepare attendees to improve their land title search skills, stay in touch with changes in laws, or prepare for the state abstractor licensing examination.  Topics this year include foreclosures, short searches and comprehensive name searching. You can register by mail or online at http://www.landrecs.com/pages/seminar-list.php

MN Dept Commerce Takes Action against Embezzeling Closer

Used with Permission of Robert Franco, Source of Title
The Minnesota Department of Commerce has summarily suspended the real estate closing license, resident insurance producer license and Notary Public commission of Kuntee Singramdoo and charged her with embezzling over $230,000 in real estate closing proceeds and using the money to pay off her own creditors or her family members’ creditors.

Singramdoo, a resident of Lakeville, was an independent closer hired by Walsh Title & Real Estate Services, where she provided real estate closing services, sold title insurance policies and notarized real estate documents. The Commerce Department complaint alleges that Singramdoo engaged in a pattern of misappropriating, converting and/or embezzling settlement proceeds by issuing Walsh Title checks for her own benefit or for the benefit of her family members.

The alleged embezzlement includes at least 184 checks issued between February 2004 and June 2007 to 24 different creditors including $68,109 to U.S. Bank, $48,863 to Wells Fargo, $800 to JC Penney, $4,764 to Macy’s, $6,286 to Goodman Jewelers, $800 to Bloomingdale’s, $6,866 to Honda, $2,734 to American Express and $2,323 to Discover.

Singramdoo admitted under questioning from Commerce Department investigators that she embezzled the funds but at this time has only paid back $10,000 to Walsh Title.

Singramdoo accomplished the embezzlement by entering her own creditors on the HUD-1 mortgage loan form as if the debts belonged to the buyer or seller and subsequently issued checks directly to the creditors in her name. She also changed HUD-1 mortgage loan documents after closings to reflect the fraudulent payments.

“This brazen embezzlement scheme is a warning to everyone to pay close attention to the loan documents you are signing during the closing of a mortgage,” said Glenn Wilson, the commissioner of Minnesota’s Department of Commerce.

Definition of Marriage Changed in Dictionary

I caught a Closer Licensing Course last week.  Among the many issues that we discussed in drafting legal documents, was a conversation about marital status.  We talked about the fact that in Minnesota, you are either married or not.  If you are separated, you are still married.  If you are divorced, you are not married.  We also talked about the fact that marriage is recognized anywhere within the United States.  If you are married in Pennsylvania, we accept that marriage in Florida.  But the question came up as to whether or not we recognize marriage between two men or two women?  My response was that I had not run across that issue.  I suggested that they may want to talk to their underwriter.  Rule of thumb however it is that we accept marriages created anywhere within United States.

Interestingly enough, I saw a blog articles today in the Adjunct Law Prof that Marriage is no longer limited to opposite-sex unions, according to Merriam-Webster’s Collegiate Dictionary, which defined marriage as “the state of being united to a person of the same sex in a relationship like that of a traditional marriage,” in a post.

Any thoughts from title insurance underwriters or title agents?  Has anyone come across this issue? What was the response? And how does that affect title searches? We always searched Mrs. John Smith if we knew Mary Smith was married to John Smith. How do we search Jim Jones, married to Tom Brown?

 

Who Has to Sign the Mortgage Documents?

One of the most common sources of confusion at closing seems to be who must sign the mortgage docs. It seems to befuddle even experienced closers of title companies and title agencies. Does the Deed have to match the Mortgage and does the Mortgage have to match the Note? Many are sure that when there is a husband and wife, the closer should prepare the Warranty Deed in both names in joint tenancy, and then prepare the mortgage to exactly match the names on the Warranty Deed. They are not quite sure about signatures on the Mortgage Note, however, because lenders sometimes require others to sign the Note as well.

Truth is, in Minnesota (not necessarily all states) it takes “one to buy and all to sell,” meaning a person can buy real estate without their spouse going into title. There may be good reason for that. Say one spouse has significant financial exposure due to the business she owns. The husband may want to go into title in his name alone, so that should a bad business climate come along and the wife has judgments filed against her, the judgments will not attach to the property.

Also, far as joint tenancy – that may not be the best solution for all spouses. For example, Harry and Mabel, both elderly, have lost their spouses. A winter romance comes along and they decide to be married. They pool their funds and buy a home together. Both wish for their children to inherit their respective halves upon their death. They want to take title not as joint tenants, but as tenants in common.

However, Minnesota, as many states do, has an automatic interest of the spouse in the homestead. Now how do we know if they are living in the property as their homestead? Answer is: we don’t. Therefore, to be prudent, we ask spouses to subordinate any interest they might have, by signing the mortgage. They don’t have to be in title to sign the mortgage. But by signing the mortgage, we have cleared the potential interest.

Best Practice: ALL parties who show in title must sign all mortgages, and rule of thumb is to get their spouses to sign as well. Yes, I recognize that some real estate is unlikely to be homestead, but to be safe, get your underwriter to sign off on not getting the spouse’s signature. After all, that apartment building could also contain the apartment that your client claims as home.

As far as the Mortgage Note, it is simply a personal pledge to repay the full amount of the debt. So if son and daughter-in law, for example, need a little assistance in buying their first home, Mom and Dad may help it happen by, in effect, guaranteeing the loan. Mom and Dad sign the Mortgage Note but do not have to go into title (unless the lender demands it.)

As a disclaimer, this is NOT intended as legal advice, and those who prepare legal documents should be careful to seek legal advise to fulfill the intentions of the title holders. This is merely information from a seasoned closer and title examiner who has seen problems crop up due to misunderstanding how it the documentation works.

Video Helps those Facing Foreclosure

Hennepin County Taxpayer Services, in partnership with Minnesota Home Ownership Center and Hennepin County Public Affairs Dept. , is offering a web-based, mortgage foreclosure Video Workshop. The web-based video gives residents 24/7 access to the same foreclosure information offered at workshops at Hennepin county libraries.  The workshop helps homeowners worried about foreclosure, and renters affected by property owners’ foreclosures – to understand the foreclosure process, their rights, and how they can find assistance. 

 

The video is easy to access over the internet, offering valuable information that can be viewed at a convenient time and private location. I was impressed with the content. The 1 hour video is a very realistic look at the foreclosure process. It walks consumers through each step, telling them what to expect.  It warns them of a number of fraud schemes that are most likely to occur once the notice of foreclosure has been published in the newspaper.  Foreclosure scams to look out for include a buyback scheme, where someone comes in asking for a deed to the property, and telling you you can lease the property from them; someone coming to a homeowner and asking for a fee to negotiate a better deal with the lender; or anyone promising a quick and easy sale.

The video is well worth the time for any one behind on even a single payment on their mortgage.  It’s an excellent tool that explains what paperwork is needed for review, how to contact legitimate nonprofit free counselors for assistance, and how to talk to or lender when you get behind in payments. It also addresses the needs and rights of renters who are losing a place to live because the owner is in foreclosure, even though the renter has made every payment on time.

 

Kudos to Hennepin county and the Minnesota home ownership center. Continue reading

Short Sales and Foreclosure Education

The Minnesota Home Ownership Center put out new Fact Sheets of Interest to Title Insurers, Closers, and anyone dealing with foreclosures.

 

Here is an excerpt from one fact sheet

 

“…In other words, debt forgiveness (short sale, deed-in-lieu, permanent loan

modification, etc) still counts as income and lenders are required to issue

Form 1099-C to the homeowner whose debt was forgiven. It is then the

taxpayer’s burden to tell the IRS that they qualify for an exception to paying

tax on this income. To do so, they need to fill out a special form (Form 982),…

 

A good explanation for a difficult time.

 

The Minnesota Home Ownership Center oversees a statewide network of non-profit Mortgage Support Advisors that offer free and confidential services to struggling home owners. For more information, visit hocmn.org or call 651-659-9336 (866-462-6466 outside of the metro area). 

Difficult Abstractor License Exam

 

In Minnesota, title companies and those doing land title searches generally take and pass a state licensing examination. Counties do not need to allow you into the public record without it. No license, the county can make you wait at the counter for assistance. Theory being that the records could be damaged, altered, mis-filed, etc. Well, the exam is not the proverbial “piece of cake.” Here is a typical question from an exam taker. I get these quite often.

Hi Jeanne

I have taken your abstracting and exam classes in the past and tried to pass the abstracting test a few months ago and FAILED twice. I am wondering if you have any suggestions for me???  (Name withheld)

Dear XXX, Good to hear from you.

Do you recall anything from the exam that was especially puzzling for you? 

 

I have heard from others that the questions use a lot of negative and kind of trick questions like “which of the following is the least likely…”, or “which one of the following is not…” For those, you need to be extra careful:  for example if they asked:


Which of the following is most likely to be deleted in a name search against Mary Charlotte Jones

  1.  
    1. Marie C. Jones
    2. Mary Charlotte Jonas
    3. Marie Cathleen Jones
    4. Mary Jones

You need to try to decide what names you would NOT show if you found a judgment. So, the one that is most clearly different is c, because the middle name is clearly not the same, and although Mary and Marie are different, and Jones and Jonas are different, they pretty much sound the same. So best answer, the one that is most different, is c.

Another type of negative Q to look out for:

A quit claim deed is not used

  1.  
    1. to give no claims as to the validity of title
    2. to give up any interest one may have in real estate
    3. to warrant title to property
    4. to convey title to real estate

You have to think through each answer:
a. Does a QCD give no claims as to the validity of title?  Yes
b. does a QCD give up any interestone may have in real estate Yes
c.does a QCD warrant title to property No
d.does a QCD convey title to real estate Yes.

It goes against how we think, but, because the Question says a QCD is NOT used to…, the answer is C.

Other questions may seem to be tricks, as they are hard to follow. For example

Which of the following is least likely to be shown in Joint Tenancy?

  1.  
    1. A and B→ C and D
    2. E→ F and G
    3. G, H and I → J, K
    4. K→L, M→ N

Key to this question is how many people do you have to have for joint tenancy? Answer is at least 2, so only d. fits the bill because others are deeds to only single parties, so they can’t be JT’s. What comes to mind is that someone is always a T in C unless specified otherwise, and none of these say “as JT.”

Other suggestions are study up on the terminology, as they may split hairs, or substitute similar words – encroachment for encumbrance, etc.

If you have specific areas you do not understand, please let me know. Thanks,  Jeanne

P.S. XXX, I am going to post your Q on the blog without your name to see if we get any other responses… keep an eye out.

RESPA Transaction Fees and Admin Fees in the News Again

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Info On Home Closing

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