title industry

Real Estate Titles US – Inexpensive Title Education

A new online education company, RealEstateTitles.us (RETUS) has been formed specifically for title professionals. Its purpose is to provide high quality, inexpensive education for those involved with real estate titles. That includes: Closers, Abstractors and Title Searchers, County Recorders, Real Property Attorneys, Title Examiners, Title Agencies and Title Insurance Underwriters. The company offers primarily Professional Development courses for its customers, as most states have no education requirements for these professionals, but also offers some continuing education classes for those states that require CE. Additional License and Pre-license courses are planned for the future.

“RETUS Online courses provide quality education at lower costs for the consumer, as they don’t have to spend money for hotels, meals or travel, and they have the flexibility of working on their own timeframe. Even 15-20 minutes can be very worthwhile in studying important title concepts- and they can enter and exit courses as time allows.” 

The online courses have all been prepared by subject matter experts in the land title field, some being written or edited by Jeanine W. (Jeanne) Johnson. Courses coming soon include

  •  “A Settlement Agents Guide to Closing,” which will cover the full spectum of closing, including the newest changes to the HUD-1 Settlement Statement;
  •   “Introduction to Title Insurance and Land Titles,” that gives a history of title insurance and is a primer of key concepts in the title industry;
  •  “Real Property Ownership and Land Title Use,” which covers legal descriptions, platting, land use controls, rights of the government in planning. Especially helpful in dealing with new construction, land development and commercial properties.

Take a free test drive of the new title education courses for your state by clicking on your state, then the information button on the US MAP.

To Fix the Housing Crisis: Get Rid of Title Insurance?!!

Reuters has an interesting, albeit confusing, article referring to a Fix for the Housing Crisis by reinventing  or getting rid of the title insurance industry. It is a great example of just how misunderstood the title industry is. (Thankfully, Reuter’s says the views expressed are the author’s own.)

The author, Elena Panartis, an institutional economist states:

The United States has a broken registry system, and instead of ever fixing it allowed a title insurance industry to arise as a substitute. Title insurance is non-transparent and (at best) inconsistently regulated, yet it is the main system through which information about property valuation flows. Plus, you have to pay for the information. This leads to all sorts of problems, and fuels speculation.

Some examples of the author’s confusion:

·         She confuses the Australian and Canadian Torrens Systems with the U.S. recording system. Only a few counties in the U.S. have the state sponsored Torrens indemnity program

·         She does not recognize there are 50 separate state recording systems for both land title and liens against people that affect title, and  that title companies simplify these into a single, understandable title product for the secondary market

·         She suggests that title companies set values for property rather than insuring market values established by willing buyers and sellers or an appraiser. Not true.

·         She seems to think information obtained from public offices is free. Not only not free, often difficult to obtain from the myriad of places to search.

It seems we need to do a lot more education with economists to explain what title insurance does and how it makes the housing market safer for the public and better for the economy. The author is a teacher at the university level. She should be more careful in what she says. She does not know the product , nor does she how the systems work.

What does Mortgage Modification mean to the Title Industry?

The Title Insurance industry has slowed to a crawl. Most of the business at the closing table is either a foreclosure or a short sales. And with Congress’ plan to modify existing mortgages, even that pittance will be drying up. 

Congress plans to modify existing mortgages to lower rates so borrowers can afford their monthly payments.  How does this affect the title industry you ask? In the past, when mortgages were modified, title policies were still in the picture, because intervening liens were a concern. For example, let’s say Sam Smith wanted to modify the terms of his loan by increasing the loan amount. You were the first mortgage lender. If you modified the loan, you had to worry about what that would do to your 1st lien position. If there was a second mortgage or a tax lien on the property, changing the terms of your loan might bump you into second place or third place. The title industry therefore stepped forward with updates to the policies. we checked for intervening liens, we got subordination agreements from the secondary lien holders, we recorded lots of documentation, and endorsed the policy with matching fees for our work.

So, how is this different? Think about it. Titles on all of these troubled loans have already been insured. But this time, they likely won’t need to be insured again. The new loan modification law will generally decrease the interest rate and that will be an advantage to any secondary lien holders, putting them in a stronger position. Therefore, the modification should stand on its face, and no endorsements should be needed. So, there won’t be any need for that title review, or an endorsement to the policy, or new title insurance premium fees. Their might be a pittance for sitting down with the consumer to sign the modification agreement and record it (and with the new RESPA law, title companies won’t even be able to mark up the recording fee.)

Loan modifications are good for the consumer, and good for the economy. They help neighborhoods. They keep banks out of the painful REO business. But they provide little role for title companies. Ouch – another big ding for an already hurting industry.

Are Abstractors to Blame for Offshoring?

by Robert Franco | 2008/11/26 | Source of Title, Used with Permission

A couple of recent (Source of Title) posts regarding offshoring have stirred up some controversy.  Sunil Ojha started a blog defending the practice of searching titles from India.  In Misunderstanding and Clearification (sic) of Same and Resolved Your Real Issue, OJha explains why offshoring makes good business sense and how it can be done effectively.  Whether you agree or disagree, the real question is why is anybody offshoring to begin with?  There is no doubt that offshoring cuts costs and that is attractive to companies looking for any advantage in today’s business environment.  But, abstracting was always a localized practice that required a particular knowledge of state and local real property laws to produce a reliable product.  Why would anyone trade quality for savings?  More importantly, have they? 

Source of Title Blog ::

Let’s start with a basic premise that it is possible to reliably search an online title plant.  I am the first to say that I have some doubts about online records, but it is possible.  The real problem that I have with online records is that not all of the information we search is available electronically; thus, the so called “thin-title” plants are incomplete.  However, title plants are the norm in some parts of the country, and even required in some places.  If they are complete, there should be no problem using them for abstracting purposes.

So the real difference between searching a title plant from India and searching a title plant locally, is the skill and knowledge of the abstractor.  As I have stated many times, there are vast differences between the states that have a huge impact on the status of title.  I believe that I have a strong understanding of the real property laws in Ohio, but I would never even consider tyring to do a search in another state. 

Some of the biggest differences between the states could be dower, community property laws, state Medicaid recovery laws, recording statutes, etc.  Anyone can find deeds, mortgages and liens, and report their volumes and pages, and recording dates.  That is the simple part.  But, understanding how those documents affect title is what makes the local examiner such a value to the industry.

I think it is a given that just as I would not be competent to abstract in any state other than Ohio, a searcher in India could not be competent to search multiple states.  It is conceivable that an Indian searcher could learn one or two states, and develop a sufficient level of competence.  Varun Sharma points out that this is exactly what they do in India (see comments).

There are different teams working on different states doing online title searches all at the same time and they are trained on state specific laws and nuances because they are experience in conducting searches in that particular State only.

Even then, it takes several months or even years of on-the-job training to really develop the necessary skills to become a competent, professional abstractor.  I would imagine it would require even more time for someone in another country, who is completely unfamiliar with our laws and culture, to grasp the concepts.  Based on a previous statement made by the head of an Indian outsourcing company, I have my doubts about the quality of training they receive.

Just when Mr Kanth was wondering about the next steps, he met the president of a title company based out of Baltimore in 2003-2004. He told Mr Kanth that there was a refinance boom in the US which resulted in a huge backlog in terms of production. Incidentally, his brother M Sujay Kanth, who is now the COO of ESS, happened to be in the US to explore business opportunities. They took up this opportunity. This was their first break. They met with the title official and looked at the process. “Initially, we had no clue of what was going on and it was very hard to grasp. We took it as a challenge and Sujay got trained in their office for about 40 days after which we started the transition to my India office from 2004,” the doc said.

 

Forty days of training is hardly suffient.  Regardless, to assume that searching titles from India is worse than using local abstractors, it must also be assumed that all local abstractors are well trained and educated in their state’s real property laws.  I believe that is a fallacy.  Basically, there is no difference between a search completed by an unqualified local abstractor and one completed by an unqualified Indian abstractor – except the latter is cheaper, of course. 

Before I continue, let me first acknowledge that there are still some very knowledgeable, local abstractors who provide very valuable services in this industry.  However, I believe that has become more the exception than the rule.  Many abstractors learned to abstract by trial and error, an online course, or from another searcher that doesn’t have the proper knowledge of abstracting.  I believe that this started with the “equity loan,” or “current owner,” searchers.  Once upon a time, they were used to provide very basic information for non-insured products.  Then, they slowly began to expand into “full searches” used for issuing title insurance.  I will never forget the first time I heard one of these searchers say “a full search is nothing more than a really good current owner with a chain of title.” 

Soon, the title industry began embracing current owner searches for title insurance purposes.  Current owners were much cheaper because these searchers, mostly out of ignorance, were taking shortcuts that a professional abstractor would never consider.  As the title industry began to lower the standards for its search requirements, the unskilled searchers flourished.  For better or worse, these over-simplified searches became the norm and everybody wanted them cheaper and faster.  The demand for skilled, professional abstractors dropped dramatically. 

Today the line between “searcher” and “abstractor” is blurred and the two terms have become interchangeable.  I wonder how many abstractors are really qualified to provide reliable title evidence. 

With the modern technological advance of electronic imaging, a title plant can be used to search titles from anywhere in the world.  If the local abstractors are really just finding documents and copying down pertinent information on a report, without a true understanding of the impact of those documents on the title, why not have that function done in India?  It is certainly cheaper… and since they can search around the clock, it is probably faster.

I do not agree with the practice of offshoring.  As Pat Scott said (see comments), “The title search is the foundation of the industry.  It is not a clerical task to be outsourced.” However, it would seem that the depth of knowledge of the local abstractors is not what it used to be.  If the industry were to suddenly stop offshoring and begin demanding quality abstracts, there would be a lot of local abstractors out of work, just the same.  The problem is that there is no way to know which ones are well qualified.  Because there are very few states with any sort of meaningful licensing, anyone can call themselves an abstractor. And, many who probably believe themselves to be professional abstractors just don’t know how much they don’t know.

My basic point is that the level of skill and knowledge between the average local abstractor and the Indian abstractor are probably not as far apart as you may think.  Title searching has been dumbed-down for so long that there are probably few left who care to educate themselves beyond what is necessary to copy recording information from filed documents.  There being little difference between the services provided here in the USA and overseas, it is not that hard to see why so many companies are offshoring title searches.  By failing to maintain a superior knowledge, the abstractors have probably made the offshoring decision much easier for those who chose to embrace it.  It basically turns on an issue of costs and profits.

Again, I am not saying that there aren’t still good, local abstractors out there.  I am merely pointing out that many of them have noticed that they are losing work to cheaper, untrained, incompetent competition; not just in India, but right there in there own counties.

Robert A. Franco
SOURCE OF TITLE

Can Massive Legislation be Far Behind?

From the Providence Journal

The former owner of a title insurance firm in East Providence pleaded guilty yesterday to a federal fraud charge for looting more than $1.3 million from company accounts and using the money for vacations, hair care, cosmetics and clothing. The FBI launched an investigation into the missing money in April 2007 amid allegations that owners may have emptied more than $800,000 from client accounts at Title America Closing Services LLC, an agent for Stewart title.

 “We see a steady stream of these types of cases,” Connell, the spokesman for U.S. Attorney Corrente, said.

Can massive legislation be far behind, because the title insurance industry  seems to be unable to police itself and the FBI, Secret Service, State Regulators and others are all getting involved to prosecute and clean up the messes.

Why Become a NALTEA Certified Abstractor?

 The Louisiana Land Title Association presents:

“Why Become a NALTEA National Certified Abstractor?”  

Jeanine W. Johnson from the National Association of Land Title Examiners and Abstractors (NALTEA) will be giving a presentation at the Louisiana Land Title Association (LLTA) Conference in New Orleans on December 5th, telling the LLTA about NALTEA and its National Certified Abstractor (NCA) designation and education program.The presentation is designed to encourage LLTA members to join NALTEA and show their level of expertise at the national level. The NCA certification will help them be recognized by national companies as an expert in the field of abstracting and will them to better understand the needs and language of out-of-state customers. In addition, NALTEA helps its members stay current on national real estate trends and changes, and gives an important national voice to independent Abstractors and Examiners.
The 2 hour program is a portion of the educational seminar given at the NALTEA conference in New Orleans earlier this year. The seminar will highlight the study guide “Principles of Abstracting and Land Records Management” National Edition, the same manual that was approved by NALTEA and provided to those who were preparing to take the NALTEA certified abstractor exam at the conference.

While every state handles land titles a bit differently, the seminar will focus on variations of a theme including things like “What is the difference between a mortgage and a deed of trust?” and “What are the most common forms of ownership used in the U.S.? ”

Jeanne Johnson is an active associate member of NALTEA. After having spent thirty years in the title industry she has been an author and subject matter expert for various publishers relating to title insurance, abstracting, title examination, and closing and she is now a full time educator for the land title industry and owner of

www.RealEstateTitles.us (RETUS) a content-specific website with reasonable, online education for the abstracting, title insurance, closing and land title industries.

Secret Service Investigates Misappropriation of Closing Funds

“The mission and of the United States Secret Service is to safeguard the nation’s financial infrastructure and payment systems to preserve the integrity of the economy, … “ And that statement is being put to use in another instance where a Title Company appears to have absconded with funds from the public. This time, Pennsylvania’s Priority Search, Inc. is being investigated by the Secret Service for allegedly not appropriately disbursing settlement funds. After Priority Search, Inc was recommended by a local real estate agent, the transactions moved forward, and at first seemed normal, but according to Pennsylvania’s Times Leader newspaper: (see full article)

Michael Bogdon borrowed more than $170,000 to buy a house in Rice Township, and the cash was given to Priority Search around the time of the Aug. 22 property closing.

Bogdon gutted and remodeled the home since then and was in a state of disbelief when the seller showed up at his doorstep about two weeks ago to inform him that Priority Search had never turned over the money.

Some of the funds were supposed to pay off the sellers’ old mortgage, and now the sellers – who are retirees – have outstanding mortgages on both their former and new houses, Bogdon said.

After the secret service investigation announcement was made public, the number of others stepped forward with similar missing funds problems having to do with Priority Search, Inc.  This was clearly not an isolated incident.  But misuse of closing funds happens not only in Pennsylvania, misuse of closing funds seems to have become a weekly occurrence across the country.  Many title insurance and land title professionals are now concerned with this state of affairs.  Specifically, a number of professionals are currently working on, or have recently completed, state legislation to licensed settlement agents.  All seem to agree it would be a good idea to know who is handling the settlement funds, and what their background is.  It is unfortunate that the industry hasn’t such problems, that kudos to those were working toward a solution.  I believe licensing is in the best interest of the public, and of the title industry. 

Audits and Title Insurance Fraud

Interestin article on the Grapevine Thread in Mortgage Compliance about what it’s like to go through title insurance Fraud investigation. You have to wonder why they are asking…

 There are many fraud scams in the Title Business these days, and auditing is one way of catching them. Most Underwriters will tell you exactly what they are going to audit if you ask. Primarily it runs to What info do you have in the file to back-up your title work -like an abstract or title search. Who did the work? Did you have an old title policy? Do you have payoff letters?

 Then they will look closely at the Documentation for the loan – Does the HUD match all the checks written? Does that match the title work. Red flags are checks written for even amounts. Checks written for items NOT shown on the title work, such as large checks written to individuals. Checks NOT written for mortgage payoffs is another.

They will be sure the HUD-1 balances. They will look to see policies have all been accounted for and paid to the underwriter. They will particularly watch related businesses where checks are written to the same parties over and over. They will contact your bank to see that the info you provide matches bank records.

Fraud has been a HUGE issue in the title industry recently, and with the downtun in business, it is rearing its ugly head. Every time a scheme is uncovered another rears up.

Have you been exposed to any audit issues.

Title Industry and the Bailout

As Americans, we are always trying to fix everything.  Instead of doing something right the first time, we think we can just fix a terrible job. Every time there’s a problem- be it legal, technological, economic or moral, we just want a quick fix. 

Even when we clearly see serious problems with what is happening around us -things like insider trading, Enron, pushing bad mortgages on people, collusion within related businesses, we want to overlook the root cause and just fix it.  Well, here we are again at election time.  And I am sick about the fixing that Congress is doing and the lack of ethics among our highest elected officials.  My first thought is, throw the bums out.  All of them.  They’re not doing their jobs.

Our legislators pamper private interests instead of doing what they were hired to do – looking out for the public good. They take bid trips and trade favors. They take sides, one party against the other. What happened to a sense of the common good for the people? What happened to “of the people, by the people, and for the people? ” There’s a growing disparity between the rich and the poor in the U.S. and around the world, medical costs are out of control, the poor have no insurance, Social Security is in trouble, we’re having to rescue the banks.  These are not new problems.  These are old wounds that have not been doctored.  Our legislators have let us down.

And the response to lack of morality?  Let’s just fix it with a new code of ethics!  Politicians talk about ethics and pass legislation requiring students to take ethics classes.   Do we really think we can fix everything by having someone spends 60 minute in an ethics class?  Are we now trying to assign responsibility for morality to a gov’t agency? Professional groups follow suit – land title associations, mortgage banking associations and others form ethics committees, and write fancy new ethics codes.   Do we really think we can fix everything by having someone acknowledge a new ethics code?

We now talk about regulations for the mortgage and title industry and rules for consumer protection.  We talk about beefing up the regulators.  Yes, the regulators are guilty, but we would not need that regulation if everyone were ethical.  The root cause of our problem is greed and a lack of ethics.  All of us in the mortgage and title industries have seen this train wreck coming for a long time.  Too many mortgages written too fast. CEO’s who simply say they wrote bad loans because they were paid more for them.  Loans the consumer couldn’t possibly repay.  Where was the morality along the way? 

But we are guilty too, we have become a society in moral disorder.  Somewhere along the way, with easy credit and eyes bigger than our pocketbooks, we seem to have completely lost our way.  Many signed mortgages they could not afford, knowing those loan applications were fraudulent.  We borrowed money to seek affluence and material things, rather than focusing on the truly important things in life like family, friendship and goodwill.  This bailout, or rescue plan, whatever you want to call it, is merely a symptom of our greed. 

It will take much more than a bailout for our country to recover.  This will not be an easy fix.  The fix will come only when we recognize and deal with the fact that ethical behavior and living our lives in a moral fashion is everyone’s responsibility and can only be done over a very long time in a variety of ways.  Ethics is not a fix, it is a daily soul searching to do the right thing.  Only when we find our character will this country be healed.

Info On Home Closing

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