Tuesday, December 13, 2011
Saturday, December 3, 2011
NAILTA Announces Opposition to "MERS 2" Proposal
The National Association of Independent Land Title Agents (NAILTA) has announced that it is opposed to a provision in legislation offered by Senator Bob Corker (R-TN) that would create "MERS 2", a federal mortgage registry modeled after and designed to replace the existing bank-owned MERS mortgage registry.
In its position paper on the Corker bill, Senate Bill 1834, NAILTA says that it "is opposed to any reconstituted MERS system because the MERS model is a deeply flawed system that continues to harm consumers, small business owners, and county governments across the United States."
According to NAILTA, "[A]ny consideration of creating a new MERS without having successfully resolved the well-known flaws and inadequacies of the previous MERS system is a foolhardy exercise. S.B. 1834 proposes no solution to the prevalent flaws with the current MERS system. Instead, it merely seeks to establish MERS 2.0 based upon the MERS in use on the date of enactment." One of those purported flaws in MERS is that it "fails to reconcile 50 states worth
of mortgage recording and foreclosure law."
NAILTA claims that MERS, a system "built by the mortgage industry, for the mortgage industry" according to its founders, has harmed the land title industry in particular by shifting the business of title insurance away from title professionals and toward banks. NAILTA says that MERS has also damaged land title records and deprived local governments of fees used for general purposes such as public safety.
NAILTA characterizes MERS 2 as a Federal Torrens title system-- subject to the considerable expense and difficulty of reconciling states' differing recording and foreclosure laws into one system. MERS failed because of the same pitfall, and consumers, county governments, and title agents have borne this expense while only the owners of MERS have benefited, according to NAILTA.
NAILTA has contacted Senator Corker's office and requested a meeting with the Senator, to express its "deep reservations and opposition concerning MERS and the specific problem we have with [the MERS 2] provision."
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Banks Face Foreclosure Charge Again - Zacks.com
In yet another major setback for the foreclosure settlement, Massachusetts Attorney General (AG) Martha Coakley filed a lawsuit against – JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corporation (BAC - Analyst Report), Citigroup Inc. (C - Analyst Report), Wells Fargo & Company (WFC - Analyst Report) and Ally Financial Inc. – for alleged violation of foreclosure practices. Further, Mortgage Electronic Registration System Inc. (MERS) and its parent company have also been named as defendants.
Allegations
The lawsuit alleges that these five major mortgage servicers used various deceiving foreclosure practices to fast track foreclosures without properly following the rules. Some of the procedures followed by these banks included use of ‘robo-signers,’ misleading homeowners in relation to loan modification processes, utilizing flawed documents and illegally foreclosing a property.
Additionally, MERS, which provides database for mortgage servicers, has been accused of sloppy record keeping, hiding the identities of the holders of mortgage debt from borrowers and evading fees. The lawsuit also charges these banks for utilizing the MERS database without paying registration fees to the government.
Motives
Ms. Coakley commented that the primary motive behind the lawsuit is to provide proper accountability for the roles played by the banks in unlawful and illegal foreclosures. Additionally, the lawsuit aims to give proper and enforceable relief to the homeowners whose property had been wrongly foreclosed by the misconducts of the mortgage servicers.
Responses from the Banks
The officials of all these five alleged companies stated that they would fight the lawsuit. They have also expressed that a joint resolution would have been a better way to deal with foreclosure mess and the present lawsuit jeopardizes chances for broader relief.
The Story Behind
It all started more than a year ago, when JPMorgan, Bank of America and Ally Finance Inc. temporarily suspended foreclosures across the country, following the detection of faulty foreclosure paperwork. Following this, the U.S. bank regulators, along with the state AGs, geared up to take actions against mortgage servicers.
The banks and regulators along with the AGs were in the middle of settlement deal designed to provide new guidelines for foreclosure practices across the nation. However, several obstacles appeared in the settlement agreement between the mortgage servicers and the AGs.
Ms. Coakley along with the AGs of New York and Delaware has been vocal in arguing that banks should not be exempted from future liability. Some other states including Minnesota, Nevada and Kentucky have been raising concerns regarding the extent of civil protection that should be given to the banks as a part of the settlement deal.
Though at present the talks have ceased, differences have cropped up between the banks and the AGs over the amount of money (nearly $25 billion) that should be placed in the reserve account for those home owners with wrongly foreclosed property.
Still a Long Way to Go
The banks have been hoping to put the foreclosure matter behind them with the agreement to settle the issue with the state AGs. However, with the Massachusetts lawsuit their plans to avoid the legal issues have been jeopardized. Apart from Massachusetts, the AGs of California, New York, Delaware and Nevada have pulled themselves out of the settlement talks and have started their own investigations.
Additionally, the banks already facing a large number of litigations related to mortgages could face further liabilities if other states also follow the suit and start their own inquiries.
However, whatever be the case, either through settlement talks or lawsuits, clearing the foreclosure clutter will go a long way to resolve the mess. However, we are optimistic that various counteractive measures, if implemented correctly, would prevent yet another foreclosure crisis. But most importantly, it would leave a lasting impact on lenders, forcing them to be extra cautious during housing transactions
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Cleveland home buyer's beef leads to Supreme Court case - Cleveland Business News - Northeast Ohio and Cleveland - Crain's Cleveland Business
The U.S. Supreme Court today hears arguments in a major consumer case that traces its origins to a lawsuit a Cleveland home buyer filed against her title insurance company.
Reuters says the dispute, which pits big business against consumer groups, gets at a fundamental question: whether a person has to suffer legal harm to sue a company over an alleged kickback it got.
The Cleveland home buyer, Denise Edwards, “sued her title insurance company under a 1974 federal real estate settlement law that bars kickbacks and certain referral fee arrangements,” Reuters reports. The news service says Ms. Edwards paid First American Financial Corp $455 for title insurance as part of a home purchase in 2006 while the seller paid an additional $273. She alleges that First American “had an arrangement with her Ohio settlement agency to refer title insurance business exclusively to First American — the alleged kickback.”
Reuters notes that her attorneys argued that Congress, in adopting the 1974 law, “created a sufficient basis for her to sue and that courts have long recognized an individual's interest to receive services free of kickbacks or other conflicts of interest.”
Backing the title company are organizations representing home builders, title insurance companies and mortgage bankers, as well as the U.S. Chamber of Commerce.
The story, unfortunately, doesn't do a good job explaining their view of the case. But Kevin Walsh, a University of Richmond assistant law professor, tells Reuters that oral arguments before the court could provide clues on whether the justices are likely to rule broadly or narrowly.
"A broad ruling could either vindicate or constrict statutory damages provisions in laws designed to protect information privacy, to regulate debt collection and to set standards for credit reporting," he says, citing other laws that could be affected.
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Friday, December 2, 2011
New settlement disclosure form to replace HUD-1 | Inman News
Federal regulators are asking for industry input on prototypes for a new, unified settlement disclosure form that will replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form currently in use.
The Consumer Financial Protection Bureau -- which has also been asking for feedback this year on a unified loan disclosure form that consumers will receive when they apply for a mortgage -- says it plans to test a number of different designs for a new settlement disclosure form over the next few months.
The bureau will accept industry and consumer feedback until Nov. 16 on its initial prototypes for a redesigned settlement disclosure form. Based on that feedback, the bureau will fine-tune the prototypes and seek additional comments.
Consumers currently get two disclosure forms whenever they apply for a mortgage, and two more at the closing table.
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Supervision and Examination Manual – Version 1.0 > Consumer Financial Protection Bureau
This first edition of the CFPB Supervision and Examination Manual is a guide to how the CFPB will supervise and examine consumer financial service providers under its jurisdiction for compliance with Federal consumer financial law.
The Manual is divided into three parts. The first part describes the supervision and examination process. The second part contains examination procedures, including both general instructions and procedures for determining compliance with specific regulations. The third part presents templates for documenting information about supervised entities and the examination process, including examination reports.
To fulfill its statutory mandate to consistently enforce Federal consumer financial law, the procedures in this manual are designed to be used by examiners to examine supervised entities that offer similar types of consumer financial products or services, or conduct similar activities. While all supervised entities must operate in compliance with applicable laws, the CFPB will tailor its expectations of how that is accomplished to fit particular entity profiles.
In this first edition, we have incorporated examination procedures developed under the auspices of the Federal Financial Institutions Examination Council (FFIEC) for many of the laws now generally enforced by the CFPB, including the Truth in Lending Act, Real Estate Settlement Procedures Act, and the Fair Credit Reporting Act. The CFPB will also use the Uniform Consumer Compliance Rating System established by the Federal Financial Institutions Examination Council.
Our Manual will also include examination procedures organized by product and line of business, beginning with procedures for reviewing mortgage servicing. We expect to continually update the Manual as compliance requirements evolve.
A dynamic supervision program depends on continual enhancement. Contributions from all stakeholders are critical in the accomplishment of this goal. The CFPB welcomes feedback and suggestions for improvements from examiners, the banking industry, nonbank financial services companies, federal and state agencies, consumer and community groups, and the general public.
Click Here to see the manualNew Jersey Title Insurance Linkedin Group
National Mortgage News - RESPA Rated Toughest Compliance Task
Of the thousands of financial regulations on the books, which is the most burdensome? Dodd-Frank? Truth in Lending? Basel III?
According to panelists at the National Mortgage News' 13th annual Mortgage Technology conference in Miami, the Real Estate Settlement and Procedures Act hands down the clear winner.
Moderator Avi Naider, chairman of ACES Risk Management Corp., Ft. Lauderdale, said one top five bank has spent 200,000 hours in IT time trying to comply with RESPA. "That's a tremendous number," he said.
Angie Kolb, director or compliance product marketing at Dorado, a CoreLogic company based in San Mateo, Calif., lenders still struggle everyday with RESPA and the variety of interpretations that come with the consumer protection law.
"The hardest part is getting your hands around it," Kolb said, noting that FAQ's are still being published. "Even small items like where to put funding fees are part of the back-and-forth conversation."
Melanie Feliciano, chief legal officer with Doc Magic, and Noel Wells, a regional manager with Premier Home Mortgage, agreed. "Other regulations have had an impact," said Feliciano, "but RESPA presents the greatest compliance burden."
The panelists also agreed on another point: That technology is wonderful, but the human touch can't be forgotten. "Technology is not always the answer to everything," said Naider. "While the tools are out there, you can't forget the human skill set."
"You have to have people interpret the data," added Kolb. "Technology cannot supplant human beings."
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How do you spell RESPA Violation? « Monday Morning With Matey
How many times have you viewed a listing on the MLS and seen: transaction, compliance, storage, processing or statutory compliance fees? These fees range any where from $195 to believe it or not $795. No matter how you say it or print it, there is no way around it, they are a violation of RESPA. I have heard all kinds of excuses: They are sanctioned by NAR. My attorney says it is legal. FR hotline says it’s OK. Or even better: Everyone else is charging it (reminds me when I was little and the excuse was everyone else is doing it).
Sooner or later, we will begin to get audited by HUD for RESPA violations. It is just a matter of time. Already many Buyers are complaining 
about paying the fee, some have even sued the real estate company and won. It is just the beginning. There are several court cases that have set a precedent and the Buyers have won their case, along with their legal fees being paid. So save yourself the aggravation and discontinue the practice and you might just save yourself money in the long run. No matter what you call it, remember it is a violation of RESPA.
Look to the right and you will see the Featured Link of The Week – it’s a question and answer regarding these fees and it’s available for download.
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Supreme Court Hears Arguments On Whether RESPA Violation Is An Injury In Fact
WASHINGTON, D.C. -- The U.S. Supreme Court heard arguments on Nov. 28 on whether a property owner suffered an injury in fact under the Real Estate Settlement Procedures Act (RESPA) when she bought title insurance from a company that allegedly paid kickbacks to get business from title insurance agents in Ohio (First American Financial Corp. v. Denise P. Edwards, No. 10-708, U.S. Sup.).
(Transcript. Document #85-111223-001T.)
Denise P. Edwards sued First American Financial Corp. in the U.S. District Court for the Central District of California. She alleged that First American violated RESPA's anti-kickback provision by entering into exclusivity agreements with thousands of title insurance agencies that are authorized to sell First American title insurance policies. Under RESPA's remedies, Edwards seeks treble damages for the $455 cost of her title insurance.
The District Court denied First American's motion to dismiss for lack of standing. On appeal, the Ninth Circuit U.S. Court of Appeals affirmed.
Questions Presented
The Supreme Court agreed to hear two questions: whether the Ninth Circuit erred in holding that Edwards has standing to sue under RESPA when she does not claim that the violation affected the price, quality or other characteristic of the settlement services, and whether Edwards has standing to sue under Article III, Section 2, of the U.S. Constitution when she does not have an injury in fact.
Justice Stephen G. Breyer questioned whether Edwards was suing because she was exposed to a transaction that Congress "said was harmful." Aaron M. Panner of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington, arguing for First American, said no, because Edwards paid the only rate for title insurance that is available under Ohio state law.
Justice Ruth Bader Ginsburg said Edwards' claim "does seem to fit the bill of restitution, unjust enrichment cases, where the plaintiff doesn't have to prove any harm, she just gets back what the defendant should not have received." Panner said Edwards is not "worse off" because there is no allegation that the insurance was lacking.
'Prearranged, Tied Product'
Justice Sonia Sotomayor said Panner seems to be arguing that "Congress can't ever presume damages or injury, that even in those cases plaintiff has to come in and prove that they would have paid less." She continued: "So what more does this plaintiff have to allege other than, if I had been told that this was a prearranged, tied product between the mortgage and the title company, but that I had a right to get an untied product even at the same price, and I would have exercised that right if I had known - would that be enough?"
Panner said that is not what Edwards is alleging. He said a "violation of the statutory right does not create an injury for constitutional purposes."
Justice Breyer told Panner "there is no doubt that the plaintiff here suffered the harm that Congress sought to forbid. That harm was being engaged in a transaction where the title insurance company was not chosen on the merits, but partly in terms of a kickback." He asked what was unconstitutional about that.
Panner said there was no injury in fact under Article III "and Congress cannot create that injury legislatively."
Trust Violation?
Justice Antonin Scalia asked if Congress could create a trust relationship between title insurance agents and property purchasers that would constitute an Article III injury in fact. "If you become a trustee by contract you get one result, but if you are a trustee by government decree so that you must be a trustee, contract or not, somehow the situation changes?" he asked.
Justice Elena Kagan said Panner's argument that there is a difference depending on the source of the law is "very much inconsistent with our case law." She said her reading of Edwards' complaint is that she doesn't have to prove injury because "there's been a judgment made that these kinds of practices tend to decrease service and tend to increase price and therefore I don't have to prove those matters. And that's the exact same judgment that is made in the trust cases, for example."
Panner said that Congress could broaden the law to require enforcement of violations by the executive branch. "But what Congress cannot do is to dictate in advance that a particular practice has cause injury to a particular plaintiff."
'Duty Of Loyalty'
Jeffrey A. Lamken of MoloLamken LLP in Washington, arguing for Edwards, said that breaches of a duty of loyalty by taking kickbacks have been a part of common law for which a plaintiff can sue without showing an economic harm.
Justice Scalia told Lamken: "There is no duty of loyalty owned here." The justice added: "I'm not even sure it's proper to call it a kickback. It's a commission."
Lamken told Justice Scalia that Congress gave consumers a right to "freedom from a particular conflict of interest, and that is the kickbacks that undermine their incentive to serve your best interest, that undermine their incentive to choose the insurer that provides the best quality and the best service."
Justice Samuel A. Alito Jr. said he doesn't see a fiduciary relationship and doesn't see where a duty of loyalty comes from. He added that he does not see an injury in fact.
Permit Private Suits?
Justice Scalia told Lamken: "The issue isn't whether Congress can achieve that result [of legal protection]. It's whether they can achieve it by permitting private suits."
Chief Justice John G. Roberts Jr. questioned whether Edwards suffered an injury in fact or an injury in law. He said he thinks it is the latter.
The chief justice also told Lamken that Edwards claim of "potential value" "sounds to me like possible future injury."
'Circular'
Justice Anthony M. Kennedy told Lamken, "[i]t's circular for you to say that he was denied something that he is entitled to. The question is whether there is an injury. The Constitution requires an injury."
Appearing on behalf of the federal government, Assistant Solicitor General Anthony A. Yang of the U.S. Department of Justice in Washington, told the court: "When an individual has a statutory right to a kickback-free referral in a financial transaction, she participates in a particular financial transaction in which her right is violated and she pays money for the service unlawfully referred, she has sustained an Article III injury in fact based on, as this Court in its repeatedly explained test, an invasion of a legally protected interest."
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Insurance News - American Land Title Association Appoints Christopher Abbinante as President [Manufacturing Close - Up]
The American Land Title Association (ALTA), a national trade association representing members of the title insurance industry, announced that veteran land title insurance industry professional Christopher Abbinante has been named president for the 2011-2012 year.
"It is a privilege to represent an industry whose purpose is to protect consumers against legal challenges to their homeownership," Abbinante said. "I am honored to serve as president of a growing and vibrant association, now representing more than 4,000 member companies. The American Land Title Association is committed to constantly improving its representation and service to our industry."
The 11-member ALTA Board of Governors is responsible for creating association policy, managing the financial health of the association, and ensuring the overall welfare of the association.
According to a Nov. 1 release, Abbinante, formerly the president of Eastern Operations for Fidelity National Title Group, Inc., has been involved in the title industry for over 35 years. During that time, he has worked with agents and direct operations across the United States, Canada, and the Caribbean.
Abbinante started in the land title industry in 1975, working for a law firm in Chicago that also had a small title agency. In 1976, he joined Chicago Title, serving in many different capacities. In 2001, Chicago Title became part of the Fidelity National Financial Family of Title Companies. Abbinante now focuses on Fidelity's Canadian operations as well as with U.S.-based operations located primarily in the eastern and central parts of the country.
"Chris is the right person to lead our association through the challenges we currently face. His talents as a title insurance executive are well regarded throughout the industry and he inspires confidence as we work to better serve consumers," said Michelle Korsmo, chief executive officer of ALTA.
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WFG National Title Names Ravi Bapodra to Lead TitleNet | Mortgage News | Daily National and State Headlines
WFG National Title Insurance Company has announced Ravi Bapodra as its new VP and managing director of TitleNet. The Williston Financial Group family of title insurers is currently licensed and operating in 40 jurisdictions nationwide. TitleNet, a division of WFG National Title, is a national provider of title, closing and settlement services comprised of a national network of independent providers using a centralized technology platform. The operation processes residential and commercial transactions, as well as loss mitigation, default and real estate-owned (REO) transactions.
Bapodra will oversee the growth of TitleNet and maintain its relationship with its network of independent providers and clients. He comes to WFG National Title and TitleNet with 13 years of industry experience. He was most recently vice president of default product services with one of the nation’s largest title underwriters. He has spent the majority of his career in executive positions with two other large national underwriters.
“Ravi excels at harnessing the strength of independent businesses, and connecting them to national and regional banks, REO firms, GSEs and other companies to meet or exceed their performance standards, the concept at the core of the TitleNet model,” said Joseph Drum Esq., EVP of WFG National Title. “His role will be to allow our independent agencies to do what they do best, while supplementing them with top-flight resources, guidance and coordination. Our agencies will quickly find Ravi and TitleNet to be outstanding assets.”
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Title Insurers’ Struggles Expected to Continue as NAIC Steps Up Oversight | PropertyCasualty360
The National Association of Insurance Commissioners has decided to ramp up its oversight of title insurers.
The problem stems from problems at small and regional title companies, not the four large title companies, according to Paul Bauer, a vice president and senior credit officer on the insurance team at Moody’s Investors Service.
Bauer, who covers three of the large title insurers, says the larger ones are more prepared to weather the current storm caused by the housing crisis than the small ones.
“They have more scale and more flexibility from a cost-management standpoint,” he says.
He adds that title insurers are “different from other [property and casualty] insurers because a lot of what needs to be done is expense management.”
The NAIC’s decision for increased oversight was made by the Title Insurance Task Force at the NAIC’s Fall National Meeting, which ended here Sunday.
The decision follows the failure of three title insurance companies so far in 2011.
The task force plans to work with other NAIC working groups to modernize solvency regulation of the industry. These efforts will include looking at recent industry failures, developing risk-based capital requirements, early warning tools, and risk-focused examination guidelines.
The core title insurance industry problem is that it “continues to deal with the aftermath of the great housing price bubble and its painfully slow deflation,” Bauer says in an April report.
He adds, “We expect title insurance companies to be challenged over the medium term by a shrinking revenue base and lower income due to a drop in mortgage refinancings accompanied by only a mild, if any, uptick in overall home-sale transactions.”
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