Title Insurance

Who is Responsible for Who Gets Paid?

Whos on FirstWho to pay?  It starts to feel a little like “Who’s on first, What’s on second and I-don’t-know is on third” when we start to look at complicated mortgage transactions these days. We have mortgages, deeds of trust, lenders, assignees, beneficiaries, lender’s servicing agents, trustees, securities, exchange securities, and more.  

Here, as happens, title companies are charged with collusion in a complicated Ponzi scheme. I question how we legitimately know who should be paid in some of these complicated transactions.  Should the check for a payoff go to the Lender holding the Mortgage or to the Servicing Agent, in hopes it will be properly credited? Did the title company know the scheme?

From Lexology Title Insurance Article by Carlton Fields, an interesting read:

Escrow Agent: Where payments are disbursed to lender’s servicer and escrow agent has not knowledge of servicer’s scheme to defraud lender, lender fails to state a cause of action against escrow agent — Fazeli v. Williamson, No. H036951 (Cal. App. March 27, 2014) (affirming escrow agents’ objections)

Online Land Title Classes Now Available

With a great deal of effort, I am proud to announce arrival of new online courses for the title industry. My first few are now available and I will have a number of others in the near future.

As you know, I specialize in teaching title insurance, title abstracting, title examination, legal descriptions and all things “geek” in the title world.  I love land titles. I love the history. I love the mystery of finding the ownership and all the title issues. Insuring title, closing title, etc. Every title is different and I love it all from the search through the closing.

Try them out and look for more Classes to come online soon.

Best Regards,  Jeanne

CFPB Issues Report on “Pain Points” at Closing

There were few surprises in the Report Issued by the CFPB  from those who elected to respond to the “Request for Information” about closings.  It’s too complicated, and becoming more complicated by the day.

The 69 page report reviewed information it received from its recent  public Survey-about the challenges consumers face when closing on a home. The Bureau identified several “pain points” consumers regularly experience during the closing process. Consumers reported being frustrated by (among other things)

  • The short amount of time to review a large number of closing documents
  •  Not understanding the documents and the legalese terms;
  • The lack of resources providing explanations about closing documents, which are full of technical jargon; and
  • Errors in the quantity of paperwork resulting in long delays.

Our legislators, while hoping to make things clearer for the consumer, continue to make the process more complicated. In my opinion, the average consumer does NOT want to know the maximum amount they could pay for a loan, including principle and interest, points and expenses if they keep the loan for thirty years as disclosed on a TIL.  How many people keep the same house for thirty years with the same mortgage? But that is a requirement under the TIL law.

In CFPB’s defense, it oversees just a small piece of the process and has been mandated to combine the HUD-1 and TIL – a difficult undertaking. And it has  made excellent strides in asking the stakeholders for advice.  Lenders, states, counties, title companies, attorneys and others all impact the process and have input that the CFPB is considering and taking seriously.  I hope that the results will be as good as the process involved.

Just a thought for e-closings – Why not make the detailed  information available to those who wish to review such information without requiring that all the information be covered.  It’s overwhelming to read 100 pages and if the consumer knows that a FNMA mortgage is a standard form for the state and CANNOT be modified, there should be some comfort in that.

But right now, it’s too much noise- like the mail I get from the bank almost daily.  Every mailing includes multiple pages of disclaimers from the bank. There is so much “noise” in all the mail, that we miss the point. Who reads all that jargon.  I think the average consumer wants to know the monthly outgo – i.e. what is the total monthly PITI?  After that, the mortgage Note and mortgage deed, and title deed need to be explained. But to spend an hour going over a hundred pages of disclosures is just too much – both for the closer and the consumer. I love the idea of the consumer being able to read the documents online and choose the level of understanding, with an explanation to clarify the point of each document BEFORE the table closing.

E-closing would make all our jobs easier and the consumer much more comfortable with the process.  What do you think?

 

The Future of E-Closing

A great article about the CFPB’s thoughts on the future of E-Closing at Lexology.  See it here 

ALTA Comments on CFPB Report on Consumer Experiences at Closing

Press Release

Our members strongly support efforts to identify and alleviate the pain points consumers have experienced during the home closing process,” said Michelle Korsmo, ALTA’s chief executive officer. “While we are focused on technology and the ability for us to receive, sign and return, and retain electronic documents, we cannot lose sight of the importance of personal interaction during the closing process. At the end of the day, consumers are not buying a home from a computer.”The American Land Title Association (ALTA), the national trade association of the land title industry, released the following statement today from CEO Michelle Korsmo in response to the Consumer Financial Protection Bureau’s report on consumer experience during the mortgage closing process:

“Improving the closing the process through technology by providing electronic documents to the homebuyer will help give the consumer more to time to digest the information about their purchase prior to the closing. We agree with the CFPB that any implementation of new technology in the home closing process should not reduce opportunities for consumers to ask information or replace the ceremony of the closing process which indicates the importance of the transaction. Based on our members’ unique vantage point working with all the parties at the closing table, the Bureau should not only focus on technological innovations but also on improving consumer education about the closing process. The new integrated mortgage disclosure forms that the CFPB developed and will be implemented in August 2015 will help ensure the personal interaction and explanation remains part of the closing experience for consumers.”

“We look forward to continuing to work on this important initiative with Director Cordray and staff at the CFPB on this important consumer initiative.”

American Ingenuity is Still at Work in Courthouses

I was in Michigan last week speaking to an amazing group. The company developed special cameras, made in Germany, to take to Courthouses around the country to image public records. The amazing thing is that their cameras read the humps and bumps in those enormous tract books by refocusing the images as they cross the page. In other words, they don’t have to take the books apart. They work in teams, 24/7, traveling with the cameras to wherever they are needed. Some of the team scan the pages, others carefully proof the images for clarity, and they can even create the grantor grantee books and tract books. I am very proud of these people. Lets keep our jobs in the US and lets continue to invent new and better ways of doing the same old tasks.

State of Delaware Sues MERS

In a new twist, the State of Delaware is suing MERS under the Unlawful and Deceptive Trade Practices Act (UDTPA.) The suit claims that MERS has left for borrowers “no public trail by which anyone can identify the principals or verify the propriety of the (mortgage) transfer.” The private and obscure nature of their database makes it difficult for consumers “to know of or challenge inaccuracies in the MERS System”  i.e. – who the heck holds the mortgage and who the heck has the right to foreclose?  Read more at Delaware Online

Mamouth US Supreme Court Case for Title Insurers

From The Supreme Court Blog comes an interesting and important title case. The case began in Cleveland and is scheduled to be argued before the U.S. Supreme Court this fall. The outcome could determine whether lawyers can file a new sort of consumer lawsuit against title companies on behalf of those who haven’t actually suffered any actual title damages or even a financial loss .

The  lawsuit, First American Financial Corp. v. Edwards involves a homeowner named Edwards, who  bought a house in September 2006 and paid for a title insurance policy from First American Title. A few years before that, First American had paid the firm that closed the transaction $2 million for a minority stake in the company and they made an agreement to exclusively sell First American title policies according to reports at Forbes.com.  First American claimed there were no financial damages to Edwards.

However, the case appeared to violate RESPA laws, which prohibit title insurers from paying kickbacks or anything of value for referrals. The Supreme Court will review the case and its decision could mean that any violation of the RESPA law, regardless of injury or financial damages, could subject title underwriters who have practiced co-ownership with agents to enormous class action lawsuits.

LA Court Makes Good Call on Title Policy Coverage

The Louisiana Court made a good call in MGD Partners vs. First American Title, when MGD sued for bad title when the Parrish refused to issue building permits for a new subdivision of homes. Apparently the site had previously been used as a bombing range in WWII.   Read the Case at LEGAL

Thoughtful Article Relates Directly to the Title Business

We all know the title business has changed. Not long ago title insurance was a thorough, labor intensive search of title that uncovered and then repaired title for the homeowner. Now it is an outsourced take-a-quick-peek-at-the-last-deed-of-record and put out a title commitment. Then when all those unresolved problems show up, let’s-just-insure-over-all-those-title- problems-until-they-go-away! I personally feel that the title underwriters have taken a shortcut by no longer researching the title. Yes, it does save the shareholders money up front, but in the long run, will it cost more in claims than the savings.

Forbes Magazine has a great article, Why Amazon Can’t make a Kindle” on what can happen with outsourcing. I see a lot of parallels with the title industry as we outsource posting of title plants and preparation of title commitments. We are losing the skilled trade abstractors, closers, and examiners to save a buck. No one is teaching basic skills any more. I’ll be interested in what you think.

Info On Home Closing

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