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Mortgage settlement: The irresponsible are rewarded - baltimoresun.com

2012-02-13T21:00:00.001-05:00

Once again, the responsible borrowers who didn't gamble on real estate values, who acted responsibly, who didn't speculate get the shaft, and the irresponsible, the speculators and the greedy get rewarded ("Md. joins national mortgage settlement," Feb. 9).

And how are the banks going to recover this money? They will pass the cost onto the responsible customers and borrowers. The furor about robo-signing is a joke. Has anyone said that the "victims" did not owe the money? How is it that someone who owes money all of a sudden doesn't owe it because of paperwork irregularities?

Every individual and every family that has lived within its means, honored its debts and lived within its budget should be infuriated by what is nothing more than transfer payments to the irresponsible, the ignorant and the greedy.

Thomas F. McDonough, Towson

via baltimoresun.com

I agree with this guy.

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Freddie Mac's Regulator 'Completely Puzzled' By Allegations Of Conflict : The Two-Way : NPR

2012-02-04T10:50:00.001-05:00

Steve Inskeep speaks with Edward DeMarco

Saying he is "completely puzzled by the notion that there was something immoral that went on here," the man at the top of the agency that regulates Freddie Mac has explained why he believes the taxpayer-owned mortgage company did nothing wrong when one of its arms, as NPR and ProPublica have reported, "placed multibillion-dollar bets against American homeowners being able to refinance to cheaper mortgages."

Edward DeMarco told Morning Edition co-host Steve Inskeep in an interview broadcast on today's show that Freddie Mac's actions were "in the class of ordinary business transactions." The "reverse floaters" in Freddie Mac's investment portfolio, which as NPR has reported "brought in more money for Freddie Mac when homeowners in higher interest-rate loans were unable to qualify for a refinancing," did not affect the agency's efforts to stabilize the mortgage market, DeMarco said.

Instead, DeMarco characterized the investments as part of Freddie Mac's effort to make sure it doesn't lose money. And he said one of his major responsibilities, is to "make sure Fannie Mae and Freddie Mac undertake activities that don't cause further losses to the American taxpayer."

DeMarco is acting director of the Federal Housing Finance Agency (FHFA) — the agency that regulates Freddie Mac and Fannie Mae.

As we reported Thursday, two key senators "who have taken the lead on legislation aimed to help homeowners refinance at historically low interest rates," are critical of FHFA's oversight of Freddie Mac. One of them, Democratic Sen. Barbara Boxer of California, laid much of the blame on DeMarco and accused him of not looking out for American homeowners who want to refinance at today's historically low interest rates.

DeMarco told Steve, though, that "not only I, but my staff think of the average homeowner on a daily basis" and believe that their efforts to stabilize the mortgage market and prevent losses at Freddie Mac and Fannie Mae are good for all Americans in the long run.

via npr.org

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Fannie Mae: Don't Expect 'Normal' Housing Market Until 2015 - The Home Front (usnews.com)

2012-02-04T10:45:00.001-05:00

Americans will have to wait a few more years for the housing market to return to "normal," an industry expert said Thursday.

"We're five years through a 10-year adjustment cycle," said Doug Duncan, vice president and chief economist at government mortgage giant Fannie Mae, who expects the housing market to stabilize sometime around 2015.

The path to stabilization, however, will be fragmented regionally, Duncan said, primarily along foreclosure and delinquency fault lines. "Two-thirds of households underwater are in 5 states," Duncan said, states which likely face more pain before any gains. "It's a very regional issue going forward."

As the impact of the housing crisis continues to reverberate through the country, the picture has changed. Where local and national housing markets were once virtually identical, they've now begun to diverge as employment prospects have changed in certain parts of the country.

While an oversupply of housing remains an obstacle for a housing market recovery, the lack of demand will be the more immediate issue going forward, Duncan says.

"There's been a focus on the supply side, but no one wants to buy. The level of application activity has been flat," he said. "From our perspective, it's really a demand problem going forward."

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The incremental improvement the market has seen is largely thanks to investors, Duncan said, who can circumvent the mortgage minefield and pay for properties in cash.

Only a significant improvement in the jobs picture—to the tune of 300,000 jobs a month—will help drive lagging household formation, which has been on the decline for decades now, and drum up demand for housing. "We're expecting 150,000 [jobs added] tomorrow," Duncan said of the Labor Department's jobs report. "That's not robust enough to dramatically improve the employment picture."

How will we know we have a "normal" housing market again?

"I define it when construction returns to the level that would see additions to the housing stock to accommodate [demographic] growth," Duncan said.

Until then, the United States will likely remain plagued by too much supply and too little demand for housing.

"The headline on housing is [there will be] a little bit of improvement, but this is not the year in which housing is going to break out," Duncan added.

via usnews.com

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Distressed Home Sale Prices Drop 4.7 Percent in 2011 | Mortgage News | Daily National and State Headlines

2012-02-04T10:43:00.001-05:00

CoreLogic has released its December Home Price Index (HPI) report showing that distressed sales home prices in the U.S. decreased 4.7 percent in 2011 (compared with December 2010). This year-end report shows that home prices continued the trend of year-end decreases, the fifth consecutive year with a decrease in the HPI. The HPI, excluding distressed sales, showed that home prices decreased by 0.9 percent in 2011, giving an indication of the impact of distressed sales on home prices in 2011.

The report also shows that national home prices including distressed sales decreased 1.4 percent on a month-over-month basis, the fifth consecutive monthly decline. However, the HPI excluding distressed sales posted its first month-over-month gain since July 2011, rising 0.2 percent.

The December drop in home prices follows a decline of 4.3 percent in November 2011, compared to November 2010. Excluding distressed sales, year-over-year prices declined by two percent in November 2011 compared to November 2010. Distressed sales include short sales and real estate-owned (REO) transactions.

“While overall prices declined by almost five percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales in the market recede, we will see continued downward pressure on prices,” said Mark Fleming, chief economist for CoreLogic.

Highlights of the HPI include:

►Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).

►Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).

►Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).

►Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).

►Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.

►The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).

►Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 81 are showing year-over-year declines in December, one more than in November.

via nationalmortgageprofessional.com

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2012 State of the industry

2012-01-20T15:12:00.001-05:00

October Research has published there 2012 "State of the Industry". It is available for free at http://www.thetitlereport.com/TTR/IndustryReport2012.aspx . It contains sections about:

Real Estate
Gradual housing recovery expected, but sleeper issues creeping up

Title Insurance
Distressed market to define title insurance business in 2012

Homebuilders
Homebuilders in 2011: Bubble states hold down housing starts

Mortgage
Consumer confidence improves, but mortgage markets remain constricted

Appraisal
Appraisal industry battles continue into 2012

Settlement Services Law
Business-changing issues loom in 2012

RESPA
RESPA in 2012: The evolution of a titan

The Dodd-Frank Act
Dodd-Frank in 2012: big issues, little certainty

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Fannie Mae Predicts 'Moderate Growth' in 2012

2012-01-18T22:19:00.001-05:00

The U.S. economy is projected to grow 2.3 percent for the year, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.

Growth will be affected by “fiscal policy issues and political economic uncertainty,” according to Fannie Mae.

The upcoming presidential election, the healthcare debate, and the sovereign debt crisis in the euro zone are three wild cards causing concern for Americans.

Recent improvements in employment have elevated consumers from their “summer rut,” and the housing market is showing some positive indicators, though movement is slow.

“We’re entering 2012 with decent momentum, especially on the employment side,” said Doug Duncan, Fannie Mae’s chief economist.

However, Duncan suggests this momentum will fade over the first half of this year amid “policy changes and challenges that involve the global economy, the domestic economy, and the housing sector.”

Duncan predicts “a year of moderate growth edging away from the 2011 threat of a double dip.”

via dsnews.com

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From ALTA Advocacy Update by Michelle Korsmo, ALTA CEO (1/17/12) | Property Records Education Partners (PREP)

2012-01-18T22:17:00.001-05:00

Housing Policy & Data
Rates for 30-year fixed-rate conventional mortgages fell 2 basis points to a new record low of 3.89% last week. The latest Beige Book from the Federal Reserve Banks continues to show a growing economic recovery led by consumer spending. However, the news was not all bright, as continued weakness in the housing market holds back a robust economic recovery. In the latest round in the Federal Reserve’s push for a broader mortgage refinancing program, a new study from the Federal Reserve Bank of New York shows that the economic benefit of home-loan refinancing to consumers far exceeds the effect of lost returns to investors who provide the residential financing. In the paper, the New York Fed argues that government or foreign investor (who own about 47% of securities backed by residential mortgages) spending on U.S. goods and services doesn’t depend “to any significant degree” on the income from their bonds. Meanwhile, another 8.3% of MBS are held by insurance and pension funds whose spending would spread out over a long period of time. However for distressed homeowners, 50 cents of every dollar saved in a mortgage payment is recycled back through the economy as additional spending.

In December banks filed their lowest number of foreclosures since November 2007. Foreclosures were down 35% in 2011, due to significant delays related to documentation and legal issues. However, these low numbers may only be temporary since there is a backlog of 3.5 million seriously delinquent mortgages. If banks get more aggressive on foreclosures, it could have a further dampening effect on home values. Analysts continue to get more bullish on home builders as evidence points to a resurgence in new construction in 2012. On Wednesday, Lennar Corp. reported that its fourth-quarter orders surged 20% from a year earlier, far surpassing analysts’ expectations. (Some analysts admitted they thought orders would decline.) Meanwhile, the latest National Association of Home Builders/First American Improving Markets Index shows that the number of areas showing improving market conditions jumped to 76 in January, up from 41 a month earlier. Could the market’s appetite for private label mortgage securities be returning? Redwood Trust Inc., the only company to issue so-called private label mortgage bonds since the housing market collapsed three years ago, sure hopes so as it prepares for its fourth such deal since 2008. The new issue of at least $405 million is larger than the two it sold in 2011. The market for privately issued residential mortgage-backed securities, which during the boom funded most of the U.S. housing market, has shrunk to $1.1 trillion outstanding from $2.4 trillion in 2007. Despite extremely stringent underwriting criteria (the mortgages have an average loan-to-value ratio of 62.8%, and average credit scores of 770), Redwood is adding large credit enhancements to warrant the necessary AAA rating.

via prepchapters.org

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U.S. stocks rise with builder sentiment - Market Snapshot - MarketWatch

2012-01-18T22:15:00.001-05:00

NEW YORK (MarketWatch) — U.S. stocks rose Wednesday, sending the S&P 500 Index to a close above 1,300 for the first time since July 28, on improved sentiment in housing and as Goldman Sachs Group Inc.’s earnings beat expectations.

“We started off on a positive footing because certain financial earnings weren’t as bad as investors had feared, but most of the uptick came from home-builders’ confidence reaching a level not seen since 2007,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Click to Play

Newmark: Curb your enthusiasm

Mean Street host Evan Newmark urges bankers and traders on Wall Street to lower their expectations when it comes to earnings and prosperity. (Photo: AP)

“Now we have two areas, jobs and housing, which are critical foundations, and both are seeing signs of improvement. Plus, the euro /quotes/zigman/4867933/sampled EURUSD +0.01% is back above $1.28 — if you’re going to use a barometer for progress in the EU, the euro is as good as any,” Ablin added.

The Dow Jones Industrial Average /quotes/zigman/627449 DJIA +0.78% rose 96.88 points, or 0.8%, to 12,578.95.

The S&P 500 /quotes/zigman/3870025 SPX +1.11% added 14.37 points, or 1.1%, to 1,308.04, with the technology sector, and chip manufacturers in particular, gaining after circuit maker Linear Technology Corp. /quotes/zigman/74810/quotes/nls/lltc LLTC -0.06% said it expects revenue to rise as much as 8% in its third quarter. Read more on Linear Tech’s results leading rally in chip stocks.

Web portal Yahoo Inc. /quotes/zigman/59898/quotes/nls/yhoo YHOO -0.38% 3.2% rose on news that co-founder Jerry Yang is severing all ties to the company he co-founded. Read more about Yahoo.

Microsoft Corp. /quotes/zigman/20493/quotes/nls/msft MSFT +0.32% , International Business Machines Corp. /quotes/zigman/230066/quotes/nls/ibm IBM +0.59% , Intel Corp. /quotes/zigman/20392/quotes/nls/intc INTC +0.12% and General Electric Co. /quotes/zigman/227468/quotes/nls/ge GE +0.05% are among the heavyweights still on tap to report this week, and results from any “could give the market a lift or dampen it,” according to Fred Dickson, chief investment strategist at Davidson Cos. in Lake Oswego, Ore.

The Nasdaq Composite Index /quotes/zigman/123127 COMP +1.53% climbed 41.63 points, or 1.5%, to 2,769.71.

For every stock losing ground about four gained, with less than 800 million shares trading hands on the New York Stock Exchange. NYSE composite volume was about 4 billion.

Building blocks

Investor sentiment and the euro /quotes/zigman/4867933/sampled EURUSD +0.01% were bolstered by reports the Greek government might reach a deal with its private creditors over a debt swap in coming days. Also, the International Monetary Fund is proposing hiking its lending capability by as much as $500 billion. Read more on the IMF and also read WSJ article on Greek debt talks resuming.

Goldman Sachs /quotes/zigman/188479/quotes/nls/gs GS +0.18% shares jumped 6.8% after the investment bank reported results that beat Wall Street’s expectations, while Bank of New York Mellon Corp. /quotes/zigman/445224/quotes/nls/bk BK -0.05% shares slid after its earnings fell 26% Read analysis of Goldman earnings.

“Goldman Sachs broke a trend” of earnings disappointments from the banking sector, said Dickson.

Stock-index futures had retained modest gains after the government reported wholesale prices unexpectedly fell last month, data supportive of the Federal Reserve’s benign view on inflation. Read more on wholesale prices.

A measure of builder confidence in the housing sector rose for a fourth consecutive month in January to hit its highest level since mid-2007, with builder-related shares including PulteGroup Inc. /quotes/zigman/129784/quotes/nls/phm PHM -0.38% and Lennar Corp. /quotes/zigman/232035/quotes/nls/len LEN +0.22% advancing more than 4%. Read more on home builders.

Separately, figures from the Federal Reserve had U.S. industrial production rebounding last month, climbing 0.4% after a revised 0.3% drop in November. Read more on industrial output.

“Investors are weighing a combination of some reasonable economic data, and data we saw from overseas looked OK, so no bad European news,” remarked Davidson’s Dickson.

/quotes/zigman/4867933/sampled

Add EURUSD to portfolio EURUSD

USD/EUR

1.2865

+0.0001 +0.0048%

Volume: 0.0000

Jan. 18, 2012 10:13p

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Dow Jones Industrial Average

12,578.95

+96.88 +0.78%

Volume: 154.17m

Jan. 18, 2012 4:30p

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S&P 500 Index

1,308.04

+14.37 +1.11%

Volume: 675.85m

Jan. 18, 2012 4:33p

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Add LLTC to portfolio LLTC

Linear Technology Corp.

$ 33.30

-0.02 -0.06%

Volume: 11.52M

Jan. 18, 2012 7:48p

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Add YHOO to portfolio YHOO

Yahoo! Inc.

$ 15.86

-0.06 -0.38%

Volume: 35.70M

Jan. 18, 2012 7:59p

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Microsoft Corp.

$ 28.32

+0.09 +0.32%

Volume: 64.86M

Jan. 18, 2012 7:59p

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International Business Machines Corp.

$ 181.07

+1.07 +0.59%

Volume: 4.60M

Jan. 18, 2012 6:11p

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Intel Corp.

$ 25.42

+0.03 +0.12%

Volume: 62.70M

Jan. 18, 2012 7:59p

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General Electric Co.

$ 19.03

+0.01 +0.05%

Volume: 52.91M

Jan. 18, 2012 7:47p

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NASDAQ Composite Index

2,769.71

+41.63 +1.53%

Volume: 0.00

Jan. 18, 2012 5:30p

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USD/EUR

1.2865

+0.0001 +0.0048%

Volume: 0.0000

Jan. 18, 2012 10:13p

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Goldman Sachs Group Inc.

$ 104.50

+0.19 +0.18%

Volume: 17.97M

Jan. 18, 2012 7:59p

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Bank of New York Mellon Corp.

$ 20.29

-0.01 -0.05%

Volume: 16.06M

Jan. 18, 2012 4:42p

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PulteGroup Inc.

$ 7.91

-0.03 -0.38%

Volume: 22.74M

Jan. 18, 2012 5:25p

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Lennar Corp. Cl A

$ 23.05

+0.05 +0.22%

Volume: 9.17M

Jan. 18, 2012 5:54p

Kate Gibson is a reporter for MarketWatch, based in New York.

via marketwatch.com

Nice to see some good news

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Voters Oppose Policies That Threaten American Homeownership

2012-01-13T16:12:00.001-05:00

A group convened on the steps of the South Carolina State House Thursday to express their support of homeownership and their opposition to policy changes that might threaten American homeownership.

The group – consisting of Realtors, housing industry professionals, politicians, business leaders, and community leaders – assembled to encourage elected officials “to protect homeownership from threats including scaling back or eliminating the mortgage interest deduction, reducing access to affordable mortgages and loans for home buyers and small businesses, and the foreclosure crisis,” according to an announcement on the National Association of Home Builders’ (NAHB) website.

The outlook expressed at the rally mirrors widespread sentiment uncovered in a recent NAHB survey conducted earlier this month.

About three-fourths of American voters said it is “appropriate and reasonable” for the federal government to promote homeownership through tax incentives.

This view was shared by Democrats (84 percent), Republicans (71 percent), and Independents (71 percent) alike.

“Those running for office in November need to understand that voters will not look kindly on any candidates who seek to dismantle the nation’s long-term commitment to homeownership,” said Bob Nielson, president of NAHB.

In fact, while 73 percent of voters object to an elimination of the mortgage interest deduction, 68 percent claim they are less likely to vote for a candidate who proposes an elimination of the deduction, according to the NAHB survey. This assertion was consistent across party lines.

The majority of survey respondents also opposed revisions that would limit the reach of the mortgage interest tax deduction, including a reduction in the deduction amount, deduction limits for households earning more than $250,000 per year, exclusion of second homes and home equity loans, and reductions for homeowners with mortgages loans greater than $500,000.

“With the 2012 election season in full swing, candidates running for the White House and Congress would be wise to heed the will of the American voters, who have expressed broad support for government policies that encourage homeownership and oppose efforts to make it more difficult to get a home loan and to tamper with the mortgage interest deduction,” said Celinda Lake, president of Lake Research Partners, one of the firms that conducted the survey on behalf of NAHB.

While Americans continue to harbor concern for the mortgage interest tax deduction, another mortgage-related tax deduction recently slipped out of existence.

A mortgage insurance premium tax deduction expired at the start of the year, according to Bloomberg Businessweek.

via dsnews.com

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FICO Study Finds That Nearly Half Foresee Mortgage Delinquencies on the Rise | Mortgage News | Daily National and State Headlines

2012-01-13T16:10:00.001-05:00

Thu, 2012-01-12 12:48 — NationalMortgag...

FICO’s quarterly survey of bank risk professionals found growing concern for the stability of the student loan market and deepening fears about the nation’s housing sector. The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), shows that bankers expect delinquencies on most types of consumer loans to rise, balances on credit cards to grow, and global economic forces to put increasing pressure on the U.S. economy. The survey included responses from 312 risk managers at banks throughout the U.S. in November 2011.

Regarding mortgages, 47 percent of respondents expected mortgage delinquencies to rise and 13 percent expected delinquencies to decrease. That is slightly more pessimistic than last quarter. When asked about credit cards, 45 percent expected delinquencies to rise while 21 percent expected a decline. That is also more pessimistic than last quarter and another sign of deteriorating confidence among bankers. In addition, 54 percent of respondents expected credit card balances to increase. These expected increases are likely due to higher spending by some consumers and financial stress for other consumers who are unable to pay down their balances.

Student loan debt now exceeds credit card debt in the U.S., with experts estimating that $750 billion in student loans are outstanding. In FICO’s survey, 67 percent of respondents expected delinquencies on these loans to rise. That is 19 percentage points higher than last quarter. Only eight percent of respondents expected a decline in delinquencies.

“Evidence is mounting that student loans could be the next trouble spot for lenders,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “A significant rise in defaults on student loans would impact lenders as well as taxpayers, who could be facing big losses due to these defaults. Our survey results underscore the ongoing challenges that millions of American households face as they try to cope with their debt during these uncertain times.”

Survey respondents were also asked about global issues that could put pressure on the U.S. economic recovery. When asked about the most likely trigger for a possible double dip in the U.S. economy, the Eurozone debt crisis was cited most often (38.8 percent), just edging out U.S. government policies (38.4 percent). Another 19 percent are most concerned about the lack of spending and investment by U.S. companies.

Survey respondents were also asked about the economic growth of China as it relates to the future strength of U.S. consumers. Sixty-five percent of respondents felt that the global influence of Chinese consumers would overtake that of U.S. consumers within 5-10 years. By contrast, 28 percent felt that U.S. consumers would continue to wield more influence for another 20 years or longer.

“Whether it’s debt trouble in Europe or economic growth in Asia, there are significant implications for the near-term and long-term strength and health of the U.S. economy,” said Jennings. “There are risks, challenges and opportunities all around us. To compete in this increasingly complex global environment, we’re seeing more U.S. companies embrace innovative analytic technologies to help them understand and navigate the global playing field.”

Auto lending had a fairly balanced outlook with 33 percent of respondents expecting an increase in delinquencies, 22 percent expecting a decrease, and 45 percent expecting no change in the level of delinquencies.

via nationalmortgageprofessional.com

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Fed Pushes Refinancing, But Obstacles Abound - Developments - WSJ

2012-01-11T21:44:00.001-05:00

By Alan Zibel

: Associated Press; Fed Chairman Ben Bernanke

Does the Federal Reserve have good ideas for the housing market? That’s been the question since the Fed published its paper on housing last week.

Critics see the Fed’s foray into housing policy as an irresponsible deviation from the central bank’s mission of managing interest-rate policy. Supporters of more aggressive action to stabilize the housing market argue that the Fed is playing a valuable role in pushing the Obama administration and regulators to do more.

All of this debate ignores something that’s become increasingly clear: Due to practical and political limitations, changes to the government’s response to the foreclosure crisis are likely to involve tweaks on the margins rather than a massive revamp.

The Fed’s paper delved into detail about ways the Obama administration could encourage more “underwater” homeowners who owe more on their loans than their properties are worth to refinance at today’s ultra-low rates. Here are some issues to consider:

So what did the Fed suggest on refinancing?

In their paper, Fed officials suggested ways to further revamp a program launched in February 2009 that allowed homeowners with mortgages backed by government controlled mortgage-finance companies Fannie Mae and Freddie Mac to refinance if their properties have sunk dramatically in value.

The initiative, called Home Affordable Refinance Program, or HARP, is already being expanded under changes rolled out in October that have been dubbed HARP 2.0.

Why aren’t those changes sufficient?

Fed officials have applauded the changes rolled out by the Obama administration and the Federal Housing Finance Agency but say more could be done to both improve HARP and reach borrowers who currently aren’t eligible for the program. They say the program could be expanded to help an additional 1 million to 2.5 million homeowners who don’t have loans backed by Fannie or Freddie.

Doing so, however, is tougher than it sounds. As the Fed paper notes, Congress would need to change the rules by which Fannie and Freddie operate — an unlikely proposition the current environment of hyper-partisan gridlock.

By law, Fannie and Freddie are barred from buying new loans in which borrowers owe more than 80% of their home’s current value — unless the borrower pays for mortgage insurance. The HARP program allows those loans to be refinanced because Fannie or Freddie already guarantee them and are on tap for losses if the borrower defaults. But Fannie and Freddie are unlikely to be able to take on new “underwater” loans that they did not already guarantee.

The Fed paper, however, argues that allowing these borrowers to refinance through HARP would aid the economy and housing market, and therefore benefit Fannie and Freddie. Allowing those homeowners to refinance could reduce borrower’s payments “potentially reducing pressure on the housing market,” the Fed paper said.

What would expanding refinancing further mean for Fannie and Freddie?

Doing so would require a “potentially large” expansion of Fannie and Freddie’s balance sheet. That’s likely to be a tough sell at a time when many policy makers want to deemphasize Fannie and Freddie. “This may be the most politically unpalatable of the recommendations,”” wrote Rob Rowan, an analyst with Fitch Ratings.

Furthermore, a massive refinancing proposal, which has long been rumored, is unlikely to come to pass, largely because it could dry up investment in the market for mortgage-backed securities, which needs to keep humming so Americans can obtain home loans.

What else did the Fed propose?

The Fed paper also suggested some more tweaks. Regulators further reduce fees that Fannie and Freddie charge for higher-risk borrowers who refinance (those fees were already cut in the October announcement).

Fannie and Freddie could also “more comprehensively” waive their right to send back defaulted bad loans to lenders if they are refinanced through HARP. The paper noted that Fannie has taken steps to streamline refinancing by reducing that “putback” risk for all loans — including borrowers who owe less than 80% of their home’s current value. Establishing the same requirements for Fannie and Freddie, the paper said, “could facilitate more refinancing among this group of borrowers.”

Brad German, a Freddie Mac spokesman, defended his company’s policy. “We believe we have struck a balance where we are providing a streamlined refinance opportunity for borrowers while also maintaining our rights as investors to enforce quality,” he said

via blogs.wsj.com

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Nearly One Million Loan Mods Granted Through November | Mortgage News | Daily National and State Headlines

2012-01-11T21:39:00.001-05:00

Tue, 2012-01-10 10:40 — NationalMortgag...

HOPE NOW has released its November 2011 data showing that permanent loan modifications totaled almost 84,000 for the month, bringing the total for 2011 to approximately 969,000. Since HOPE NOW began tracking foreclosure prevention data in 2007, member mortgage servicers have completed 5.13 million total permanent loan modifications for homeowners nationwide. Additionally, HOPE NOW Executive Director Faith Schwartz announced the cities for homeowner outreach in the first quarter of 2012 that include expanded efforts to assist at-risk military homeowners as well.

“The mortgage industry and its partners have worked hard for homeowners nationwide," said Schwartz. "With almost one million loan modifications completed in the first 11 months of 2011 and over five million since 2007, it is clear that efforts to assist at-risk families via all available channels are bearing some fruit."

Homeowner events are already in the advanced stages of planning for Charlotte, N.C.; Miami, Fla.; Tampa, Fla.; Las Vegas; Sacramento, Calif. and Los Angeles in the first quarter of 2012.

"There are more alternatives to foreclosure than ever before for homeowners through federal programs, proprietary modifications, and state level initiatives such as Hardest Hit Funds," said Schwartz. "Mortgage servicers and non-profit, housing counselors are using all tools at their disposal to find options that fit each individual homeowner’s situation whenever possible. The emphasis continues to be on improving the customer experience through enhanced technology, single point of contact and leveraging all tools available to assist with foreclosure prevention, which in some cases includes graceful exits."

Since HOPE NOW began reporting data in 2007, the mortgage industry has completed 5.13 million loan modifications for homeowners. This includes approximately 4.22 million proprietary modifications and 909,953 completed under the Home Affordable Modification Program (HAMP). From January through November 2011, there were approximately 969,000 modifications, 639,000 proprietary and 330,303 completed under HAMP.

"As we move into the heart of the first quarter of 2012, HOPE NOW, its government, non-profit and state partners have already planned multiple face to face outreach events in key markets," said Schwartz. "Additionally, HOPE NOW has worked with several military partners to implement events geared towards a specialized segment of at-risk military homeowners who have a unique set of mortgage challenges."

Of the 84,000 loan modifications for the month of November, approximately 57,000 were proprietary and 26,877 were HAMP modifications. According to the survey data, the inventory of 60 day plus delinquencies is 2.77 million for November 2011, up from the 2.65 million reported in October. Foreclosure starts for November 2011 decreased from the previous month—166,000 compared to 209,000. Completed foreclosure sales increased for the month—71,000 compared to 64,000.

Key loan modification data points for November 2011:

All loan modifications
Total modifications were approximately 84,000:
►57,000 were proprietary.
►26,877 were completed under HAMP.

Total permanent loan modifications for homeowners in 2011 are approximately 969,000:
►639,000 were proprietary
►330,303 were completed under HAMP

Proprietary loan modification characteristics (November 2011):
►Loan modifications with reduced principal and interest payments accounted for approximately 68 percent (39,000) of all proprietary modifications.
►Loan modifications with reduced principal and interest payments by 10 percent or greater accounted for approximately 66 percent (38,000) of all proprietary modifications.
►Fixed-rate modifications (initial fixed period of five years or more) accounted for approximately 83 percent (47,000) of all proprietary modifications.

via nationalmortgageprofessional.com

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Five Issues for Housing in 2012 - Developments - WSJ

2012-01-06T16:17:00.001-05:00

By Nick Timiraos

: Associated Press

Trying to figure out where the housing market is headed in 2012 offers a strong sense of déjà vu: The market feels just as it did at the beginning of 2011, when many pundits optimistically predicted that housing would finally hit bottom. The housing market didn’t deteriorate in 2011, but it didn’t firm up either amid an economic recovery that struggled to find its footing.

So what does 2012 hold? For one, the story will be local. While many housing markets rose together during the boom and fell together during the bust, they’re exiting the downturn at different speeds, and so it’s not very useful to talk about a “national” housing market.

With that caveat in mind, here’s a look at five key issues that will help determine whether prices stabilize and sales improve in the coming year:

1. Confidence and jobs: The housing market badly needs the economy to add more jobs to stimulate demand for home purchases and to prevent mortgage delinquencies from rising. The good news is that with prices down by 30% from their peak and mortgage rates at their lowest recorded levels, housing is more affordable than it has been in decades. But many would-be buyers are worried about buying today if prices are going to be lower tomorrow. Others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back.

2. Foreclosures: Whether home prices hit a floor this year also relies on how banks manage a huge overhang of foreclosed homes that they haven’t yet taken back and resold. Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital. Because banks are faster to cut prices to unload inventory than are mom-and-pop sellers, home values can fall further as the share of distressed sales rises.

This is one by reason why policymakers at the Federal Reserve and elsewhere are talking about converting some of those foreclosed homes into rental properties. Look for some pilot programs where government entities test the concept in 2012.

3. Rents: Apartment rents are rising as vacancy rates drop to levels that are already lower than the low point in 2006 during the previous economic cycle. If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge.

4. Mortgage credit and rates: Federal policymakers have taken extraordinary steps to keep mortgage rates low and federal-backed entities are responsible for backing nearly nine in 10 new mortgages. But it’s still hard for many buyers to get a loan because banks are demanding lots of documentation of borrowers’ incomes, and appraisals are tanking some deals. When appraisals come in below agreed upon sales prices, sellers must drop prices or buyers must put down more cash. Banks will need to put their legacy-loan problems behind them before there’s much easing in lending standards.

Other wildcards remain on the lending and rates front: will the Federal Reserve initiate another round of buying mortgage-backed securities—a step known to some as “quantitative easing”—to lift the economy? Will continued litigation and demands that banks buy back defaulted loans from mortgage titans Fannie Mae and Freddie Mac lead them to be more stingy with mortgage credit? And will other lenders move in to fill that void? Will the government do more to juice up refinancing programs? Will rates rise as the government attempts to draw back private capital by raising the fees that Fannie and Freddie charge to lenders?

5. Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012. Dodd-Frank Act lending rules that have yet to be spelled out by regulators will influence how banks price loans that are bundled and sold into securities. Another set of rules will determine how banks must satisfy provisions for them to determine that a borrower has the ability to repay a mortgage.

Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments. This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.

Readers, what issues do you think are most worth watching in the coming year?

Follow Nick @NickTimiraos

via blogs.wsj.com

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Mortgage demand fell at year-end, purchases sag | Reuters

2012-01-05T15:55:00.001-05:00

Wed Jan 4, 2012 8:22am EST

(Reuters) - Demand for loans to buy homes and refinance mortgages slid in the final week of 2011, even as mortgage rates dipped, an industry group said on Wednesday.

Applications for U.S. home mortgages fell 4.1 percent in the week ended December 30, weighed down by a 9.6 percent drop in purchase loan requests and a 2.5 percent decline in refinancing requests, seasonally adjusted data from the Mortgage Bankers Association showed.

Average 30-year conforming mortgage rates dipped to the year's low of 4.07 percent from 4.10 percent the prior week, and well below 4.82 percent at the end of 2010.

The slide to near-record-low borrowing rates has spurred more homeowners to seek refinancing, propelling that index up more than 60 percent in 2011.

But demand for loans to buy homes fell in the year, as borrowers struggled to come up with enough cash for down payments or stayed on the sidelines due to worries about unemployment. Some buyers had also leapt into the market in 2010 to take advantage of a first-time buyer tax credit.

The MBA said it does not expect any quick rebound in the mortgage market.

"As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase," Michael Fratantoni, MBA's vice president of research and economics, said in a statement. "Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February."

Bob Moulton, president of Americana Mortgage Group in Manhasset, New York, said the company's pipeline of loan requests is off to a better start in 2012 than the same time a year ago, boosted by refinancing.

But caution prevails with a big overhang of unsold homes and the presidential election looming, he said.

Refinancing applications represented about 82 percent of total mortgage activity in the latest week, the highest share of the year.

"It's going to be another couple of years until these short sales and foreclosures are flushed out of the system, so you might see a little weakness in prices this year," Moulton added. "We're feeling a little better about 2012 than 2011, but you're always waiting for the next shoe to drop."

The MBA released data for two weeks on Wednesday, rather than one, because of the Christmas and New Year holidays.

In the week ended December 23, total mortgage demand climbed 0.3 percent, with refinancing up 0.5 percent and purchase applications down 0.1 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

via reuters.com

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Real estate fraud case sees another banker plead guilty - Tampa Bay Business Journal

2012-01-05T15:52:00.001-05:00

Tampa Bay Business Journal

Date: Wednesday, January 4, 2012, 7:29am EST

A former Washington Mutual loan officer is the latest to plead guilty to helping Craig Adams and Rich Bobka in their real estate flipping fraud, the Sarasota Herald-Tribune reports.

Edward M. Bangasser is the third industry insider to plead guilty to being part of the conspiracy.

In indictments, Adams, Bobka and their associates are accused of perpetuating false information on actual sale prices, sellers and buyers and down payment sources as they resold properties in Sarasota County at inflated prices. This happened over 10 years resulting in defaulting on more than $100 million in loans, the report said.

The trial is expected to last another month.

via bizjournals.com

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Refis Comprise 82 Percent of Overall Apps in Final Week of 2011 | Mortgage News | Daily National and State Headlines

2012-01-05T15:46:00.001-05:00

Refis Comprise 82 Percent of Overall Apps in Final Week of 2011

Wed, 2012-01-04 11:54 — NationalMortgag...

The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the weeks ending Dec. 23, 2011 and Dec. 30, 2011, finding that mortgage apps for the week ending Dec. 30, 2011 decreased 3.7 percent from the week ending Dec. 16, 2011 (two weeks prior), according to data from the MBA. The results include adjustments to account for the Christmas and New Year's Day holidays.

The Refinance Index decreased 1.9 percent compared to the week ending Dec. 16. The seasonally adjusted Purchase Index decreased 9.7 percent compared with levels reported two weeks ago. The Market Composite Index, a measure of total mortgage loan application volume was 39 percent higher in the last two weeks of 2011 than in the last two weeks of 2010, on a seasonally adjusted basis.

The refinance share of mortgage activity for the week ending Dec. 30, 2011 increased to 81.9 percent of total applications. This is the highest refinance share in 2011.

"Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity," said Michael Fratantoni, MBA's vice president of research and economics. "Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011."

►For the week ending Dec. 30, the average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,500 or less) was 4.07 percent, with points at 0.53 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This was the lowest 30-year fixed rate in 2011.

►The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,500) was 4.41 percent, with points at 0.44 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 30-year FRMs backed by the FHA was 3.96 percent, with points at 0.71 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 15-year FRMs was 3.37 percent, with points at 0.50 (including the origination fee) for 80 percent LTVs.

►The average contract interest rate for 5/1 ARMs was 2.91 percent, with points at 0.48 (including the origination fee) for 80 percent LTVs.

"As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase," said Fratantoni. "Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February."

via nationalmortgageprofessional.com

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National Flood Insurance program ends Friday

2011-12-13T21:29:00.001-05:00

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NAILTA Announces Opposition to "MERS 2" Proposal

2011-12-03T17:30:00.001-05:00

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."

via sourceoftitle.com

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Banks Face Foreclosure Charge Again - Zacks.com

2011-12-03T17:29:00.001-05:00

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

via zacks.com

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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

2011-12-03T17:26:00.001-05:00

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.

via crainscleveland.com

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New settlement disclosure form to replace HUD-1 | Inman News

2011-12-02T14:59:00.001-05:00

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.

via inman.com

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Supervision and Examination Manual – Version 1.0 > Consumer Financial Protection Bureau

2011-12-02T14:58:00.001-05:00

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 manual

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National Mortgage News - RESPA Rated Toughest Compliance Task

2011-12-02T14:55:00.001-05:00

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."

via nationalmortgagenews.com

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How do you spell RESPA Violation? « Monday Morning With Matey

2011-12-02T14:42:00.001-05:00

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.

via mateyforfr.wordpress.com

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Supreme Court Hears Arguments On Whether RESPA Violation Is An Injury In Fact

2011-12-02T14:40:00.001-05:00

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."

via lexisnexis.com

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Insurance News - American Land Title Association Appoints Christopher Abbinante as President [Manufacturing Close - Up]

2011-12-02T12:08:00.001-05:00

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.

via insurancenewsnet.com

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WFG National Title Names Ravi Bapodra to Lead TitleNet | Mortgage News | Daily National and State Headlines

2011-12-02T12:07:00.001-05:00

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.”

via nationalmortgageprofessional.com

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Title Insurers’ Struggles Expected to Continue as NAIC Steps Up Oversight | PropertyCasualty360

2011-12-02T12:06:00.001-05:00

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.”

via propertycasualty360.com

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FHA LENDING LIMIT UPDATE

2011-11-26T07:17:00.001-05:00

by traditionta

FHA Update:

On November 18, 2011, the President signed into law H.R. 2112, Consolidated and Further Continuing Appropriations Act 2012 (HR2112). Section 238 of HR 2112 re-establishes the FHA loan limit at the higher of the dollar limit in Section 203(b)(2) or the dollar limit prescribed in Section 202 of the Economic Stimulus Act of 2008 for Forward mortgages.

Forward Mortgages:

Therefore, effective for all Forward mortgages with a case number assigned on, or after, November 18, 2011 through December 31, 2011, the loan limits referenced in Mortgagee letter 10-40 shall be in effect.

As a reminder, Mortgagee Letter 11-29 still applies to the time period 10/1/11 through 11/17/11:

• Loans that did not have credit approval on, or before, 9/30/11 are subject to the lower limits that were in effect 10/1/11 through 11/17/11.

• Loans that had credit approval on or before 9/30/11 and FHA to FHA refinances may be eligible for exceptions to those loan limits as defined in Mortgagee Letter 11-29.

The Department will be issuing a Mortgagee Letter by mid-next week that will include more detailed guidance and applicable updated loan limit tables for 2012. We expect supporting system changes to be completed within that same time frame.

HECM:

Lenders are reminded that the maximum claim amount for HECMs is not affected by HR 2112 and the maximum claim amount for HECM remains at $625,500 as stated in Mortgagee Letters 10-40 and 11-29. This loan limit will remain the same for 2012 and will be included in the pending Mortgagee Letter.

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FHA LENDING LIMIT UPDATE

2011-11-26T07:04:00.001-05:00

FHA LENDING LIMIT UPDATE

by traditionta

FHA Update:

Forward Mortgages:

As a reminder, Mortgagee Letter 11-29 still applies to the time period 10/1/11 through 11/17/11:

• Loans that did not have credit approval on, or before, 9/30/11 are subject to the lower limits that were in effect 10/1/11 through 11/17/11.

• Loans that had credit approval on or before 9/30/11 and FHA to FHA refinances may be eligible for exceptions to those loan limits as defined in Mortgagee Letter 11-29.

HECM:

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Warren: New Mortgage Forms to Empower Consumers.

2011-11-10T14:33:00.001-05:00

By Maya Jackson Randall and Alan Zibel

Figuring out the true cost of a home loan over the long haul is a confusing process for consumers, forcing them to sift through a complicated stack of purchasing paperwork.

The lack of clear disclosures was a key problem during the housing market’s boom, consumer advocates say. Many consumers didn’t understand the terms of “exotic” home loans such as interest-only mortgages, or “pick a payment” loans that allowed for the principal balance to increase over time. Some didn’t even realize they had more garden-variety adjustable-rate loans whose interest rate reset at market rates after an initial teaser period.

The government’s new consumer protection agency is trying to correct this problem and simplify the entire process. The Consumer Financial Protection Bureau, which officially launches in July, on Wednesday published two prototype mortgage disclosure forms. (View the first and second.)

The forms are designed to give consumers a clear idea of how much their monthly loan payments – as well as their tax and insurance bills – could rise over time.

“This is about empowering consumers,” said Elizabeth Warren, the White House adviser charged with setting up the bureau. “It is always good for consumers to know the real cost of a mortgage.”

In the coming months, the agency will hold interviews with consumers, lenders and brokers around the country. The consumer bureau is also inviting feedback from the public:

The project is a major undertaking for the fledgling agency. Previous attempts to streamline mortgage disclosures have stumbled partly due to intense opposition from interest groups and lawmakers.

The Dodd-Frank financial overhaul, which created the consumer bureau, directed the agency to combine the mortgage documents and propose new mortgage disclosure requirements by July 2012. Currently, home buyers receive two sets of mortgage disclosure forms when they apply for a loan: a two-page form required by the Truth in Lending Act of 1968, or TILA, and the three-page Good Faith Estimate required by the Real Estate Settlement Procedures Act of 1974 or RESPA.

When they are eventually made final, the consumer protection bureau’s forms will replace those disclosures, which have been criticized for being difficult to understand and containing overlapping information.

David Stevens, chief executive of the Mortgage Bankers Association, said in a statement that his group supports simplifying disclosures, but warned that such changes could be expensive to the industry. He noted that 18 months ago, the industry “expended considerable costs” on a previous set of changes to mortgage forms. “We need to make sure that this new form is highly beneficial to consumers who will bear the implementation costs,” he said.

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Designing the Mortgage Form of the Future.

2011-11-10T14:32:00.001-05:00

By Maya Jackson Randall

Buying a home produces enough documents to make your head hurt — or your hand from signing all of them.

So this explains the ongoing federal effort to simplify documents borrowers receive during the home-buying process with new forms that make closing costs and final loan details easier for consumers to understand.

The U.S. Consumer Financial Protection Bureau hopes to slash by 50% the intimidating stack of papers, but the bureau’s latest initiative on closing documents could actually put another sheet of paper in the hands of consumers.

The bureau has unveiled two draft mortgage forms. One of the bureau’s prototypes is six pages. The other is five. In comparison, the current closing documents usually include a two-page Truth in Lending disclosure form and a three-page form called a HUD-1 Settlement.

But the agency doesn’t seem worried about the one-sheet difference. It’s mostly focused on consolidating information in a way that makes the costs and terms of a loan easier to understand. It also says its hands are slightly tied because the 2010 Dodd-Frank law has required more information to be disclosed to homebuyers.

“Basically, we’ve boiled down content that could have filled 10 pages into five or six,” the bureau says on its web site. “Unfortunately, we don’t control most of what you receive at closing, so our page reduction efforts can only go so far. For now, we’re working on consolidating these forms and making this disclosure better.”

The consumer bureau said its combined forms could help consumers determine if the terms and costs they were quoted by a lender are indeed what they are being charged at closing. The bureau also wants to help make it easier for consumers to understand exactly what their payments will be over the life of the loan.

There’s still a long road ahead for this piece. The bureau will start testing the prototypes Tuesday in Des Moines, Iowa, engaging in conversations with consumers, lenders and brokers. The bureau said it expects to conduct four rounds of testing and revisions through February 2012. It then plans to start seeking more formal comments on draft forms in July 2012.

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INCREASE IN MORTGAGE APPLICATIONS NOTED

2011-11-01T07:35:00.001-04:00

New post on Title Tracks: News From The World Of Title Insurance

by traditionta

lAST WEEK, the Mortgage Bankers Association said the refinance index climbed 4.4% from the previous week, while the seasonally adjusted purchase index jumped 6.4%.

Mortgage applications rose 4.9%. Refinancing applications accounted for 77.3% of this activity.

The average interest rate on a 30-year, FRM backed by the FHA fell to 4.11% from 4.12%, while the 15-year, FRM increased to 3.62% from 3.61%.

In addition, the average contract interest rate for 5/1 ARMs increased to 3.11% from 3.08%.

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INCREASE IN MORTGAGE APPLICATIONS NOTED

2011-11-01T07:27:00.001-04:00

New post on Title Tracks: News From The World Of Title Insurance

by traditionta

lAST WEEK, the Mortgage Bankers Association said the refinance index climbed 4.4% from the previous week, while the seasonally adjusted purchase index jumped 6.4%.

Mortgage applications rose 4.9%. Refinancing applications accounted for 77.3% of this activity.

The average interest rate on a 30-year, FRM backed by the FHA fell to 4.11% from 4.12%, while the 15-year, FRM increased to 3.62% from 3.61%.

In addition, the average contract interest rate for 5/1 ARMs increased to 3.11% from 3.08%.

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Court rules that semicolon in statute means that force-placed insurance provision of RESPA is not yet effective - Lexology

2011-10-07T10:52:00.001-04:00

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In Williams v. Wells Fargo Bank, N.A., Judge Cecilia M. Altonaga of the United States District Court for the Southern District of Florida, ruled that a semicolon contained in the Dodd-Frank Wall Street Reform and Consumer Protection Act means that force-placed insurance provisions contained in the amendments to the Real Estate Settlement Procedures Act (“RESPA”) are not yet in effect. Williams v. Wells Fargo Bank, N.A., S.D. Fla., No. 11-21233-CIV-ALTONAGA/Simonton, September 19, 2011. The Plaintiffs in this case brought claims against Wells Fargo for violation the RESPA amendments, alleging that Wells Fargo unlawfully charged homeowners for force-placed insurance after the homeowners’ property-insurance policies lapsed. The Plaintiffs alleged that Wells Fargo violated the RESPA amendments by using the force-placed insurance to generate kickbacks from a third-party insurer. The Plaintiffs rely on the RESPA amendments that require charges on forced insurance payments to be “bona fide and reasonable,” alleging that these amendments took effect on June 2, 2010 (one day after the Dodd-Frank Act was signed into law).

However, the Court disagreed. Rather, Judge Altonaga held that the new “bona fide and reasonable” standards for force-placed insurance take effect only after the new Consumer Financial Protection Bureau (“CFPB”) finalizes rules to implement Dodd-Frank’s mortgage reforms, or early 2013, if the CFPB fails to finalize its implementing regulations. In particular, the Court looked to Section 1400(c) of the Dodd-Frank Act entitled “Regulations; Effective Date.” The Plaintiffs argued that Section 1400(c) sets the effective date only for those provisions that explicitly mandate implementing rules, and because the RESPA “bona fide and reasonable” amendments do not require any implementing rules, they took effect on June 22, 2010. The Court rejected this argument holding that the semicolon actually showed that the effective dates apply broadly, not just to certain sections. Judge Altonaga ruled that the plain language of Section 1400(c), in particular, the semicolon in the title, indicates that “Effective Date” is not used as a subcategory of “Regulations.” Rather, the semicolon “suspends the thought regarding regulations and begins a new thought involving effective dates.” As such, section 1400(c) addresses both the regulations that are required to be implemented as well as the effective dates for all sections—not only the effective dates of those sections that call for regulations. Based on this interpretation, Judge Altonaga dismissed the Plaintiffs’ RESPA claims because the amendments were not in effect prior to Wells Fargo’s issuance of the force-placed insurance policies.

via lexology.com

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We got here one mortgage at a time

2011-09-22T18:33:00.001-04:00

by KERRI PANCHUK

September 15th, 2011, 1:49 pm

Raj Date, special adviser to the Consumer Financial Protection Bureau, pulled the bureau into a more public role when addressing the National Constitution Center in Philadelphia on Thursday. Date told the crowd one of the CFPB's chief goals is to oversee the mortgage lending space by fleshing out and enforcing mortgage rules drafted in the Dodd-Frank Act passed in 2010. Date took over as special adviser to the Treasury secretary on the CFPB and as acting leader in the wake of Elizabeth Warren's departure in August. President Obama nominated Richard Cordray, a former Ohio state attorney general, to serve as the agency's director last month.

But with Cordray not yet confirmed by the Senate, Date is the agency's most public leader in the wake of Warren's departure. "We are the first agency accountable for making sure that consumer finance markets work for American families," Date told the Philadelphia crowd. "To carry out that mission, the law gives us a wide range of tools — from supervision, to rulemaking, to research, to financial education, to enforcement, to the ability to handle consumer complaints." He stressed that the "Know Before You Owe" campaign continues to be deeply entrenched in surveying the marketplace and analyzing feedback on sample mortgage disclosure applications.

Date stressed oversight of the mortgage space remains a top concern. "The Wall Street Reform Act requires us to tackle some tough problems with tight deadlines," Date said. "In particular, in the first stages of the bureau’s life, the law lays out a specific agenda in a specific market — mortgages. And that makes sense. First, the mortgage market is enormous. At some $10.4 trillion, it’s more than 10 times the size of the next biggest consumer lending market, and more than twice the size of the consumer deposit market." Date stressed that fixing the mortgage space will be a tough job since excessive home lending became the "epicenter of the global financial crisis." "The truth is we got into this mess one lousy mortgage at a time," he said.

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Do you think the Government should guarantee home mortgages?

2011-09-13T13:04:00.001-04:00

Read this testimony presented today before the Senate Banking, Housing & Urban Affairs Committee on Housing Finance Reform

WallisonTestimonySeptember2011.pdf Download this file

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CFPB - Round 4 - New TIL/GFE Form Prototypes

2011-09-13T12:48:00.001-04:00

by Wyatt Bell | 2011/09/13 |

The CFPB has issued the 4^th round of proposed changes to the TIL/GFE combined format. These may be viewed at CFPB website: Know Before You Owe

Wyatt Bell's Blog ::

Any thoughts that "itemization" may reappear for title fees and policies have ended in the latest revisions to the proposed GFE forms.

Round4-jasmine

Round4-nandina

Notice that items A through F have been discontinued in this version of the forms. Items A through F, which appeared in previous versions, would have corresponded with the GFE# numbering system currently in use.

It may be that the CFPB understands the enormous cost of implementing new HUD calculations and forms and is dovetailing into the current HUD 1/1A forms for minimal changes. I would expect the Department of Housing and Urban Development (HUD) to begin entering the picture with new HUD 1/1A forms which will still need revision to fit with the proposed changes.

After all the energy expended in explaining the difficulties with "non-itemization" it appears the "non-itemization" proponents have won!

Keep in mind the forms are the same. The differences are in the loan quote information. The Nandina has the lower "Estimated Cash to Close" while the Jasmine has the lower APR. If one is looking at out-of-pocket they may be tempted towards the higher cost loan which is counter-intuitive. This example has a mere $88.00 difference in "Estimated Cash to Close".

However, in the real world as the "Estimated Cash to Close" vs. the loan terms becomes wider it will be more difficult to choose. Does one pay more at settlement for less payments??

That's the problem with these prototypes. The terms are framed very simply - there's no empirical evidence that these forms will result in prospective borrower(s) choosing the most favorable loan terms! Many other factors are at play, especially since "non-itemization" hides potential advantages!

And it must also be considered that even though the Nandina APR is higher it may, indeed, turn out to be lower! The adjustment begins at the 4th year which means the interest rate could actually be lower from years 4, 5 and 6 whereas the Jasmine is stuck at 3.75% for the full 7 years. Just look at the bond market for the last 30 years - interest rates have been on a downtrend the whole way! And with The Fed stating they are holding rates at or near 0% into 2013 one could arguably go for the higher loan APR.

The APR adjustment is based upon the assumption that the initial rate will increase which is not always the case. How much refi business has been generated over the last 2 decades because rates decrease?

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Current CFPB authority - Lexology

2011-09-07T20:13:00.001-04:00

Because the Director of the CFPB has not yet been appointed and confirmed, some of the authority that was delegated to the CFPB under the Dodd-Frank Act cannot yet be invoked. The Inspector General of the Department of the Treasury and the Federal Reserve Board issued a joint letter on January 10, 2011, regarding CFPB authority with and without a Director in place. Without a Senate-confirmed Director by the designated Transfer Date, the two agencies concluded that section 1066(a) of the Dodd-Frank Act grants the Secretary of the Treasury the authority to carry out the functions of the Bureau found under subtitle F of title X. On the designated Transfer Date, subtitle F grants the Bureau the authority to: (1) prescribe rules, issue orders, and produce guidance related to the federal consumer financial laws that were, prior to the designated Transfer Date, within the authority of the FRB, OCC, OTS, FDIC, and NCUA; (2) conduct examinations (for federal consumer financial law purposes) of banks, savings associations, and credit unions with total assets in excess of $10 billion, and any affiliates thereof; (3) prescribe rules, issue guidelines, and conduct a study or issue a report (with certain limitations) under the enumerated consumer laws that were previously within the authority of the FTC prior to the designated Transfer Date; (4) conduct all consumer protection functions relating to the Real Estate Settlement Procedures Act of 1974, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and the Interstate Land Sales Full Disclosure Act that were previously within the authority of HUD prior to the designated Transfer Date; (5) enforce all orders, resolutions, determinations, agreements, and rulings that have been issued, prior to the designated Transfer Date, by any transferor agency or by a court of competent jurisdiction, in the performance of consumer financial protection functions that are transferred to the Bureau, with respect to a bank, savings association, or credit union with total assets in excess of $10 billion, and any affiliates thereof; and (6) replace the FRB, OCC, OTS, FDIC, NCUA, and HUD in any lawsuit or proceeding that was commenced by or against one of the transferor agencies prior to the designated Transfer Date, with respect to a consumer financial protection function transferred to the Bureau.

The Treasury Secretary is not permitted to perform certain newly established Bureau authorities if there is no confirmed Director by the designated Transfer Date. Accordingly, without a Senate-confirmed Director, the Treasury is not permitted to exercise the Bureau’s authority to: (1) prohibit unfair, deceptive, or abusive acts or practices under subtitle C in connection with consumer financial products and services; (2) prescribe rules and require model disclosure forms under subtitle C to ensure that the features of a consumer financial product or service are fairly, accurately, and effectively disclosed, both initially and over the term of the product or service; (3) prescribe rules under section 1022 relating to, among other things, the filing of limited reports to the Bureau for the purpose of determining whether a nondepository institution should be supervised by the Bureau; and (4) supervise nondepository institutions under section 1024, including the authority to (a) prescribe rules defining the scope of nondepository institutions subject to the Bureau’s supervision, (b) prescribe rules establishing record-keeping requirements that the Bureau determines are needed to facilitate nondepository supervision, and (c) conduct examinations of nondepository institutions.

While there are some who do not agree with the Treasury’s analysis, there appears to be a consensus that the CFPB can perform all consumer financial protection functions of the FRB, OCC, OTS, FDIC, FTC, NCUA, and HUD in connection with issuing regulations under existing consumer financial protection laws. It cannot, however, carry out new functions provided to the CFPB under the Dodd-Frank Act, such as prohibiting unfair, deceptive, or abusive acts or practices in connection with consumer products and services; prescribing rules and requiring model disclosures to ensure that features of consumer financial products or services are fairly, accurately, and effectively disclosed; or supervising non-depository institutions.

via lexology.com

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Current CFPB authority - Lexology

2011-09-07T20:04:00.001-04:00

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Banks Overwhelmed by Mortgage Refinancing After Job Cuts - Businessweek

2011-09-03T09:04:00.001-04:00

September 02, 2011, 11:31 AM EDT

By Jody Shenn and Prashant Gopal

(Adds mortgage-bond performance in ninth paragraph.)

Sept. 2 (Bloomberg) -- Mortgage rates near historic lows have sparked a refinancing boom that has U.S. lenders struggling to handle the surge.

“There’s just so much volume,” said Kristin Wilson, a senior loan officer in Bloomington, Minnesota, for Fairway Independent Mortgage Corp., who has seen clients seeking lower rates climb to about half of her business from 20 percent a month ago. “We can’t just ramp up by hiring inexperienced people because they don’t know what they’re doing.”

The lending logjam extends to the nation’s biggest banks, which fired thousands of mortgage workers after interest rates rose in November through February, chilling refinancing demand. Now, the time needed to close a loan has as much as doubled to 60 days, according to Wilson and other bankers, and lenders are holding some mortgage rates higher than they could be to slow the torrent of customers, data show.

Refinancing applications are up 83 percent from this year’s low in February, according to an index compiled by the Mortgage Bankers Association, a Washington-based trade group. After topping 5 percent that month, the average rate on 30-year fixed loans fell two weeks ago to 4.15 percent, the lowest in surveys dating back to 1971 by Freddie Mac, the second-largest U.S. mortgage-finance company.

Compounding the delays are stricter underwriting and disclosure requirements implemented in the past few years, which leave no room for shortcuts, said Stew Larsen, head of the mortgage unit at San Francisco-based Bank of the West. Wells Fargo & Co., the largest U.S. home lender, is no longer hiring temporary staff and outsourcing firms when applications jump because of separate rule changes, according to Franklin Codel, head of national consumer lending at its mortgage unit.

Obstacle for Obama

“The industry has come a long way in terms of automation, but it’s still a people-driven industry,” Larsen said. “Mortgage insurers, appraisers and title companies, all those surrounding industries, they downsized as well.”

Lenders’ capacity to handle loan applications could be an obstacle for the Obama administration, which is weighing options for spurring a housing recovery, including steps to promote refinancing for underwater borrowers, or those who owe more than their property is worth. Almost 27 percent of single-family homeowners with mortgages have negative equity, according to Zillow Inc., a Seattle-based real estate data provider.

Mortgage Bonds Underperform

Refinancing can provide a boost to the economy by reducing monthly mortgage payments and putting more money in the hands of consumers. Banks can profit from making new loans at lower rates because the existing, more expensive mortgages are mostly held by investors in the form of bonds or by other lenders. The refinancing bank collects fees and other revenue.

The $5.3 trillion of mortgage securities with government- backed guarantees underperformed U.S. Treasuries last month by the most since 2008 on speculation that the government will ease refinancing rules. That could speed up repayment of the mortgage bonds and deprive investors of their higher yields.

Refinancing is a cyclical business tied to yields on Treasuries, and lenders sometimes don’t let their rates fall as low as possible to avoid being overwhelmed. Today’s mortgage rates could be lower, based on their recent relationship with yields demanded by investors buying mortgage-backed bonds.

Yield Spreads

The difference between the average rate on a 30-year fixed loan and Fannie Mae-guaranteed bonds widened last month to more than 100 basis points, or 1 percentage point, from an average of 60 basis points in the first half, according to data compiled by Bloomberg and Bankrate.com, a North Palm Beach, Florida-based financial-information provider. The gap, which never exceeded 75 basis points in the decade through 2007, shows that banks have increased their margins on average.

“With the consolidation of the mortgage-lending industry during the housing bust, there is a lack of capacity to meet a surge in refinancing,” Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said in an e-mail. “Mortgage lenders have been slow to lower primary lending rates, which is likely due in part to their lack of capacity.”

When the books close at Fairway Independent Mortgage, Wilson’s employer, August may turn out to have been the second- busiest month in the company’s 15-year history, said Dan Cutaia, president of capital markets and risk management. The Sun Prairie, Wisconsin-based lender operates in 47 states and originated $4 billion of mortgages last year.

Looming Test

The test for banks will come in a couple months when newly approved borrowers expected to close, Cutaia said.

“We took in all this volume,” he said. “Now we have to do the best we can to have them processed, underwritten and closed.”

A smooth process requires underwriters, title insurance companies and appraisers to work quickly. The turnaround time for an appraisal, usually five business days, now is as long as 14 days in some parts of the country and probably will get longer because of new valuation requirements that will take some getting used to, according to Betty Graham, senior vice president of operations at Frisco Lender Services LLC, a unit of Fairway in Fort Wayne, Indiana.

New York Condos

In New York City, managing agents at condominiums and cooperative apartment buildings are swamped by requests for information from appraisers, said Norman Calvo, president and chief executive officer of Universal Mortgage Inc. in Brooklyn.

Calvo said his refinancing work has tripled since June, and borrowers who took on new loans a few months ago are applying to lower their rates again.

“It was one of our greatest months in more than 10 years, and it keeps on coming,” Calvo said.

Mortgage companies, which kept their loan-servicing operations lean during the housing boom, similarly were unequipped to handle the avalanche of defaults in the four years since the crash, resulting in paperwork snafus that continue to delay foreclosures and the recovery of the property market.

One proposal to expand the administration’s refinancing program for homeowners hit by the decline in property values would remove the cap on negative equity and exempt participants from risk-based fees charged by Fannie Mae and Freddie Mac. The mortgage-finance companies would also be required to inform all of their borrowers that the program is available, according to legislation filed by U.S. Senators Barbara Boxer, a California Democrat, and Johnny Isakson, a Georgia Republican.

Bob Walters, chief economist for Detroit-based Quicken Loans Inc., the largest online lender, said mortgage companies in the past depended on independent brokers to field borrower applications. The number of brokers dwindled after the housing bubble burst, he said.

Slashing Jobs

“All of a sudden now we see a smaller universe of people handling the volume,” Walters said. “So what’s happening is when the volume hits, people hit capacity much quicker.”

Bank of America Corp. said Aug. 31 that it plans to sell or shut its correspondent-mortgage unit, which buys loans from smaller companies, a move that may exacerbate the crunch. Earlier this year, the Charlotte, North Carolina-based bank joined lenders across the industry in cutting staff added during a refinancing boom that crested in October.

In April, Wells Fargo, based in San Francisco, said it aimed to cut 4,500 employees from its mortgage unit, and Bank of America, its biggest competitor, said it trimmed its mortgage workforce by 1,500 employees and 2,000 contractors.

Wells Fargo’s Codel said the bank shut a handful of refinancing offices it had opened around the country that employed as many as 300 back-office workers each. The company is now reaching out to staff it let go and holding job fairs in an effort to add employees within a few weeks.

Warning Customers

Mortgage-industry jobs fell to 239,100 on June 30 from 259,700 at year-end and more than 500,000 in 2003, according to Department of Labor data cited by Bank of America bond analysts and MortgageDaily.com, an industry-news website. MortgageDaily.com says the data are skewed by how individuals at some firms are counted, and puts net layoffs this year at more than 2,200, including those in lending and servicing divisions.

While Bank of the West held its mortgage staff steady earlier this year, it’s also being challenged by higher volumes, telling consumers a refinancing is likely to take 45 days, said Larsen, whose 137-year-old bank is owned by France’s BNP Paribas SA. Its customers can usually close within 30 days.

Keeping rates higher than the bank might otherwise to ward off business is “certainly in the playbook, but that’s not something we’ve had to go with yet,” Larsen said. “Some lenders do that more than others.”

Managing Expectations

Wells Fargo has sometimes offered less competitive rates because “we look at it all around the country and there are times when we do that to control volume,” Codel said. The bank has stopped offering the option to lock in rates for 30 days, as a way to curb consumer expectations that loans will close that quickly. Longer rate locks, which it continues to provide, can cut down on applications because they carry higher rates, he said.

Both Wells Fargo and Bank of the West said they often extend rate locks if consumers can’t close on time because of processing delays.

Meeting Demand

Bank of America can cope with refinancing demand with its current staffing, partly by moving work among different departments, Terry Francisco, a Calabasas, California-based spokesman for the lender, said in an e-mail. Some local offices aren’t as inundated as call centers working with online applicants, he said.

“We seek to price competitively but not at a level that will cause volumes to spike and disrupt our ability to close loans within a customer’s requested closing date,” Francisco said.

Lenders’ decisions on pricing depend on several issues, including their ability to handle volume and their own costs to borrow money, said Doug Lebda, founder and chief executive officer of Charlotte, North Carolina-based Tree.com Inc., which runs the LendingTree mortgage website.

“In a market that is very volatile, there are wide varieties of pricing,” Lebda said. “Now it’s more important than ever to comparison shop.”

--Editors: Larry Edelman, Kara Wetzel

To contact the reporters on this story: Jody Shenn in New York at jshenn@bloomberg.net; Prashant Gopal in New York at pgopal2@bloomberg.net

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; Alan Goldstein at agoldstein5@bloomberg.net

via businessweek.com

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the doctrine of merger of title

2011-08-08T22:54:00.001-04:00

I saw this question posted online:

The mortgage crisis has brought with it a record number of foreclosures. Not surprisingly, deeds in lieu of foreclosure have also become much more common. Generally, the doctrine of merger of title holds that when a greater and lesser estate coincide and meet in the same person, the lesser estate is merged with the greater. The question then becomes, does the deed in lieu have the effect of extinguishing the lender's mortgage lien?

I asked Phil Noce of Elite Title what he thought. He answered this way:

I remember researching this issue in my younger days at Chicago Title. If the deed makes a specific reference that it is for the purpose of satisfying the existing mortgage, nothing further will be required. If it is just a deed to the lender without such a reference the question of intent comes into play and the title companies have always taken the position that the mortgage must be cancelled of record. I have seen deeds which stated that the mortgage is to remain open.

The main problem with a deed in lieu of foreclosure is junior liens. In a foreclosure junior liens can be cut off, but if the lender accepts a deed in lieu of foreclosure that lender takes subject to all outstanding liens. That is why it is necessary to do a search to make sure the are no other liens before such a deed is accepted.

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I don't know if this is true but it's funny

2011-08-07T00:36:00.001-04:00

Rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years.

With a community rich with history stretching back over two centuries,
houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership. Here's a great letter an attorney wrote to the FHA on behalf of a client: You have to love this lawyer...

A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply:
(Actual reply from the FHA):

"Upon review of your letter adjoining your client's loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin."

Annoyed, the lawyer responded as follows:

(Actual response):

"Your letter regarding title in Case No.189156 has been received. I note that you wish to have title extended further than the 206 years covered by the present application.

I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased by the United States from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France , which had acquired it by Right of Conquest from Spain . The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen
Isabella.

The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus's expedition. Now the Pope, as I'm sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana . God, therefore, would be the owner of origin and His
origins date back to before the beginning of time, the world as we know it, and the FHA. I hope you find God's original claim to be satisfactory. Now, may we have our loan?"

The loan was immediately approved. And you want our government running the health care?

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HUD and FNF Settle RESPA Kick-Back Charges to the Tune of $4.5 Million

2011-07-12T10:38:00.001-04:00

From: National Mortgage Professional

Mon, 2011-07-11 17:25

The U.S. Department of Housing & Urban Development (HUD) has announced an agreement with Fidelity National Financial Inc. (FNF) to settle allegations the title company paid real estate brokers and other settlement service providers improper kickbacks or referral fees in violation of the Real Estate Settlement Procedures Act (RESPA). HUD claimed FNF and its affiliates and subsidiaries engaged in a widespread and years-long campaign to pay real estate brokers kickbacks for the referral of real estate settlement services, including home warranties and title insurance. FNF agreed to cease this practice and pay HUD $4.5 million to resolve the complaint.

“RESPA is very clear that paying fees or providing anything of value for the simple act of referring business is a violation of law,” said Acting FHA Commissioner Robert Ryan. “This agreement should be a signal to others that these business practices won’t be tolerated.”

HUD alleges that Fidelity National Financial Inc. (FNF), through its subsidiaries, paid fees for the referral of settlement service business in violation of Section 8 of RESPA. To facilitate these payments, real estate brokerages entered into “Application Service Provider Agreements” which provided the real estate brokerages access to TransactionPoint, a web-based platform that automates the real estate transaction from listing to closing. This online system also allows the brokers to select real estate settlement providers for a particular real estate transaction. The real estate brokerages, in turn, entered into Sub-License Agreements with subsidiaries of FNF to enable FNF’s subsidiaries to be listed in TransactionPoint as a provider of settlement services. As part of the Sub-Licensee Agreement, HUD alleges that FNF’s subsidiaries paid the real estate brokerages a fee for each referral of real estate settlement services.

RESPA was enacted in 1974 to provide consumers advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. Section 8 of RESPA prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business.

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RESPA Technical Corrections and Claifying ammendments

2011-07-11T11:24:00.001-04:00

the government printing office has just published this information about the new GFE

This final rule makes technical corrections and certain clarifying amendments to HUD’s RESPA regulations promulgated by a final rule published on November 17, 2008. The majority of the regulations promulgated by the November 17, 2008, final rule became applicable on January 1, 2010. Now that the regulations have been in use for a little over one year, HUD has identified certain needed technical corrections, which this rule will make, and certain other regulatory provisions in which additional clarification would be helpful.

FR-2011-07-11.pdf Download this file

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MBA Requests Meeting With Warren On RESPA And TILA

2011-07-09T08:28:00.001-04:00

The Mortgage Bankers Association (MBA) is requesting a meeting with presidential adviser Elizabeth Warren to discuss the second set of prototypes integrating Real Estate Settlement and Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures released by the Consumer Financial Protection Bureau (CFPB) on June 27.

In a letter to Warren by Stephen A. O'Connor, MBA's senior vice president for public policy and industry relations, the trade group states that a direct meeting, rather than a request for comment, would provide lenders a better understanding of the direction of the project so they could offer more informed comments and would offer stakeholders an opportunity to explain challenges under RESPA and TILA and the practical concerns posed by the current prototypes.

"The MBA has long been committed to greater transparency in the mortgage process and appreciates that the [CFPB] is treating this initiative as a high priority and moving expeditiously," O'Connor wrote. "Nevertheless, we do not believe the weeklong comment period provided, which included the July 4 holiday, was sufficient. This is especially so considering that comments are sought on the presentation of closing costs. This is a matter that the Department of Housing and Urban Development considered for several years through two successive rulemakings that engendered tens of thousands of comments."

via mortgageorb.com

I can't understand why especially in this time of fiscal austerity that we need another gov't agency(CFPB) to take another look at something HUD spent an exhaustive amount of time on just a couple years ago.

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FDIC’s Mark Pearce Statement on Mortgage Servicing | LoanSafe.org

2011-07-09T08:20:00.001-04:00

To put this in context, we are tracking the following foreclosure and mortgage-related cases: (1) borrower class actions – 67 pending class-action suits in 23 states challenging foreclosures based upon robo-signing, defective assignments, reliance upon the Mortgage Electronic Registration Systems (MERS), or the misapplication of payments; (2) class action cases related to the Home Affordable Modification Program (HAMP) – 57 class actions in 25 states alleging impropriety in processing loan modifications regarding HAMP, as well as another 24 class actions in 18 states alleging misconduct under non-HAMP modification programs; (3) investor actions – 21 investor suits in 12 states alleging foreclosure and securitization misconduct that seek to “put back” defaulted loans to the loan originator and damages based upon failure to properly form the securitization trusts, misrepresentation regarding underwriting and other misrepresentations, robo-signing, or the use of MERS; and (4) Attorney General initiated suits – three suits brought by the Attorney General of Ohio against GMAC, and the Attorneys General of Nevada and Arizona against Countrywide and Bank of America. Additional investigations have just recently been undertaken. Absent a settlement with the state Attorneys General, more suits by state Attorneys General are likely to be filed.

Although no major judgments have been rendered to date, most of these cases are in the initial phase of litigation. If judgments are rendered for plaintiffs in these cases they could materially forestall the foreclosure process and create considerable uncertainty. Absent resolution to the mortgage servicing practices, claims and investigations regarding past practices will continue to proliferate, likely deferring the recovery of housing and mortgage markets.

via loansafe.org

It is no wonder the market is sluggish. This is taken from recent testimony by FDICs Mark Pearce. If lenders are dealing with these issues, they are going to be reluctant to approve new loans.

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Wells Fargo v. Commonwealth: the death knell for equitable subrogation? - Lexology

2011-07-04T13:44:00.001-04:00

Frost Brown Todd LLC
USA
June 26 2011

Lenders, title insurance companies and their agents should be aware that on April 21, 2011, the Supreme Court of Kentucky issued a decision that could have a significant effect on Kentucky courts’ application of the doctrine of equitable subrogation in Kentucky. Wells Fargo Bank, Minnesota, N.A. v. Commonwealth, --- S.W.3d ---, 2011 WL 1620578 (Ky. Apr. 21, 2011). While not often litigated at the appellate level (in part because of its widely accepted application), the doctrine of equitable subrogation has long been a reliable tool used by lenders and their title insurance companies to ensure that mortgage loans intended to have first priority actually receive that first priority position. But the Wells Fargo decision limits the doctrine’s application to such an extent that it could threaten the viability of equitable subrogation in Kentucky on a going-forward basis.

via lexology.com

Where is your state on Equitable Subrogation?

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Consumer Financial Protection Bureau requests comment on which non-bank companies should be directly supervised under the Dodd-Frank Act

2011-07-04T13:05:00.001-04:00

Do title agencies fall under this scrutiny by Dodd-Franks?

CFPB_request_for_comment.pdf Download this file

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U.S. Supreme Court to hear title insurance kickback case - Boston Real Estate - Boston.com

2011-06-29T22:55:00.001-04:00

Richard D. Vetstein talks about how a title insurance case has made its way to the US Supreme Court.

In a case closely watched by the title insurance and real estate settlement services industry, the United States Supreme Court has agreed to hear a class action which will decide whether consumers can sue under the Real Estate Settlement Practices Act (RESPA) over a title insurance referral arrangement that allegedly violated RESPA’s anti-kickback provisions. The case’s outcome could shield title insurers, banks and other lenders from litigation under RESPA and a wide range of federal and state laws. If First American wins this case, we could see title insurance companies in Massachusetts taking a much more active role in the operations of their favorite and most profitable agents.
The case is Edwards v. First American Title Co. For more coverage of the case, read the SCOTUS Blog summary here.

No kickbacks
Class action attorneys file hundreds of cases each year on behalf of borrowers alleging violations of RESPA, which prohibits “any fee, kickback or thing of value,” in exchange for a business referral. RESPA also forbids that a “portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service” be paid for services that are not actually rendered to the customer. If a violation of the statute is proven, a court can award a plaintiff treble damages, or triple the amount, for any charge paid.

In a lawsuit filed in 2007, Denise Edwards claimed her title insurer, Tower City Title Agency LLC of Highland Heights, Ohio, entered into a “captive insurance agreement” with First American Title that was illegal under RESPA. The lawsuit said that because First American paid $2 million for a 17.5 percent minority interest in Tower City in 1998, it received the majority of the local agent’s referral business which violated RESPA. The suit sought class action status on behalf of all consumers who purchased title insurance through a title agency that was subject to an exclusive referral agreement with First American, and damages of up to $150 million.
The case went up to the 8th Circuit Court of Appeals which sided with Edwards that “the damages provision in RESPA gives rise to a statutory cause of action whether or not an overcharge occurred.”

Supreme Court review
The Supreme Court will review the constitutional issue of whether consumers must prove they were actually injured under RESPA and other truth in lending laws. A favorable ruling for First American could mean a significant dent in costly class action suits under RESPA and TILA. Oral argument is expected in the Fall term, in October.

Massachusetts impact: cozier agent relationships?
Beyond curtailing or expanding consumers’ ability to bring all sorts of claims under RESPA and Truth in Lending (TILA), a favorable result for First American could enable title companies to get into much cozier relationships with attorney agents in Massachusetts.

Massachusetts is a so-called attorney agency state, where attorneys issue title insurance policies. Title insurance companies in Massachusetts cannot (yet) legally invest in or own law firms (although this rule is being challenged nationally). So we don’t have a “captive insurance agreements” or the like. Certainly, some attorney agents prefer to give their business to one or two particular title insurance companies, but to my knowledge, there’s no formal agreement among insurers and agents here in Mass.

If First American wins this case, we could see title insurance companies in Massachusetts considering captive insurance agreements and taking a much more active role in the operations of their favorite and most profitable agents. We will see….

via boston.com

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Consumer agency seeks more feedback on loan disclosures | Inman News

2011-06-25T21:52:00.001-04:00

Bureau: More than 13K comments on draft forms for simplified mortgage disclosure

By Inman News, Friday, June 24, 2011.

Inman News™

The Consumer Financial Protection Bureau has received more than 13,000 comments on two draft proposals for a simplified mortgage disclosure form it's in the process of developing, and will be asking for additional comments on revisions it plans to post next week.

When the new loan disclosure form is finalized, it will replace the separate forms borrowers are currently provided to satisfy requirements of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The TILA disclosure form in use today, developed by the Federal Reserve, focuses on loan terms. The "Good Faith Estimate," or GFE, developed by the Department of Housing and Urban Development to satisfy RESPA requirements, is designed to help borrowers also evaluate trade-offs between a loan's interest rate and settlement service charges.

more...

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NY Appellate Division | Bank of NY v Silverberg – MERS Does NOT Have The Right to Foreclose on a Mortgage in Default or Assign That Right to Anyone Else | Foreclosure Fraud - Fighting Foreclosure Fraud by Sharing the Knowledge

2011-06-25T21:44:00.001-04:00

The ubiquitous Mortgage Electronic Registration Systems, nominal holder of millions of mortgages, does not have the right to foreclose on a mortgage in default or assign that right to anyone else if it does not hold the underlying promissory note, the Appellate Division, Second Department, ruled Friday. “This Court is mindful of the impact that this decision may have on the mortgage industry in New York, and perhaps the nation,” Justice John M. Leventhal wrote for a unanimous panel in Bank of New York v. Silverberg, 17464/08. “Nonetheless, the law must not yield to expediency and the convenience of lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules that govern real property.” The opinion noted that MERS is involved in about 60 percent of the mortgages originated in the United States.

via 4closurefraud.org

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PrivoCorp - Loan Processing Experts, Contract Mortgage Processing: Florida: Sales Up, Prices Down - Contract Loan Processing : Licensed Mortgage Processor : Best Net Branch Processing : Fastest Conventional FHA Processor : Outsource Mortgage Processing

2011-06-25T08:30:00.001-04:00

According to a report in National mortgage news,

Florida saw a 3% increase in single-family existing home sales on a year-over-year basis in May, but the median sales price fell by 5%, according to the state's Realtor group.

There were 17,228 single-family sales statewide in May, up from 16,790 one year prior. Sales in the Miami area were up 20%, year-over-year. The markets with the largest amount of sales, Tampa-St. Petersburg-Clearwater with 2,749, and Orlando, with 2,476, were down 6% and 5% respectively when compared with May 2010.

Florida's Realtors noted that the $135,500 median sales price for a single-family home was up nearly 3% over April. The Fort Myers-Cape Coral area had a 19% increase in median price when compared with May 2010, while the Panhandle metro areas of Fort Walton Beach and Pensacola were up 5% and 1% respectively.

But the median price did not go up all across the Panhandle as Panama City was off by 14%. Other areas with a large drop in median price include Gainesville, down 18%, as well as Fort Lauderdale and Ocala, each off by 17%.

Existing condominium sales in Florida increased by 17% over May 2010 to 8,338 from 7,104 and the statewide median sales price increased over the same time frame by 2% to $98,200.

In Miami, condo sales were up by 46%, and the 1,420 units sold during the month topped the 875 single family homes sold there. There were also more condos sold in the Fort Lauderdale area than single-family homes, 1,537 compared with 1,142.

Read more Visit - http://www.nationalmortgagenews.com/dailybriefing/2010_372/fla-sales-up-price...:e1421:92746a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=NMN_Daily_Briefing_062111

via blog.privocorp.com

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American Land Title Association Market Share Analysis Shows Industry Improvement

2011-06-15T20:55:00.001-04:00

WASHINGTON--(BUSINESS WIRE)--

The first quarter of 2011 showed improvement for the title insurance industry, according to the American Land Title Association's (ALTA) First-Quarter Market Share Analysis.

“The industry remains in a strong financial position as operating loss for the industry decreased to $11 million in the first quarter of 2011, compared to a loss of $124 million in the first quarter of 2010,” said Kurt Pfotenhauer, Chief Executive Officer of ALTA. “Meanwhile, the industry has $8.3 million in admitted assets and more than $4.75 million in statutory reserves.”

According to the Market Share Analysis, first-quarter 2011 title insurance premiums increased 8.7 percent compared to the same period in 2010 and are up 13.4 percent compared to the first quarter of 2009.

“After 13 consecutive quarters in which title premiums Written declined from the prior year's equivalent quarter, the third quarter of 2009 ended this string with an increase of 1.4 percent over third quarter of 2008,” Pfotenhauer said. “Since then, quarterly premiums written have fluctuated up and down in no discernible pattern.”

The states generating the most title insurance premiums during the first quarter of 2011 were California ($307 million, up 2 percent compared to the first quarter of 2010), Texas ($246 million, up 22.2 percent), New York ($165 million, up 17.7 percent), Florida ($159 million, up 6 percent) and Pennsylvania ($110 million, up 25.3 percent). Overall, 41 states and the District of Columbia reported increases in title insurance premiums written during the first three months of 2011 when compared to the same period in 2010. Alaska, Kansas and West Virginia all experienced more than a 30 percent jump in title insurance premiums written during the first quarter of 2011 versus the first quarter of 2010.

In terms of market share, the Fidelity Family of title insurance underwriters captured 33.7 percent of the market during the first quarter of 2011, while the First American Family garnered 27.7 percent, the Old Republic Family recorded 13.5 percent and the Stewart Family had 12.5 percent. Meanwhile, regional underwriters held 12.6 percent of the market during the first quarter of 2011, up from 10.7 percent market share during the same period a year ago.

ALTA expects to release its second-quarter 2011 Market Share Analysis around Sept. 1. Click here to view the complete First-Quarter 2011 Market Share Analysis.

About ALTA

The American Land Title Association, founded in 1907, is a national trade association representing more than 3,800 title insurance companies, title agents, independent abstracters, title searchers, and attorneys. With offices throughout the United States, ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.

American Land Title Association
Jeremy Yohe, 202-261-2938
Cell: 202-590-8361
jyohe@alta.org

When it comes to investing, you cannot settle for anything less than the fastest and most efficient news feed. That is why we created Benzinga Pro. Sign up for a free trial today!

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National Title Company Breaks into the Reverse Market | Reverse Mortgage Daily

2011-06-15T20:53:00.001-04:00

National Title Company Breaks into the Reverse Market

June 13th, 2011 | by Alyssa Gerace Published in News, Reverse Mortgage | 4 Comments

There’s a new reverse mortgage title company in town. America’s Reverse Title, based in Clearwater, Florida and launched in 2010, sees the reverse mortgage market as poised for growth, and says its national title experience will lend itself to expansion in the reverse market.

America’s Reverse Title, or “ART,” is one of several companies housed under the National Title Network corporation, which primarily includes refinancing as well as both forward and reverse mortgage title divisions. Vice President of Sales Chris Beard says founders William Baumgart and Paula Pautauros entered the reverse title industry at a strategic time, especially with the slowdown of the refinancing market.

“With reverse mortgages, there’s less fallout on the purchase side. Once the counseling is started, [the loan] usually goes through, and on the title side as well. Plus, the senior market is going to be growing in the next 15-20 years, and we’re going to see a continued growth,” said Beard. ”I think what differentiates us is our long term title experience in the industry, reverse-trained closers, flat service fees, nationwide coverage and commitment to build strong relationships with our reverse producers.”

Baumgart and Pautauros are the former founder/CEO and senior vice president, respectively, of TransContinental Title Company, which was sold to First American Corporation in 2006.

National Title Network already works with some large lenders, including TD Bank and Mortgage Investors, and now ART is pursuing Wells Fargo reverse producers, Beard says. ART’s services include providing property reports, title searches, title insurance, deed recording, escrow agency and all other services required to close mortgages, and the company expects the majority of the its closings will be refinances in which borrowers obtain a reverse mortgage loan. ART can close in all 50 states as well as the Dominican Republic.

Written by Alyssa Gerace

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The_Cynic 2 days ago

What odd comments.
With so few HECMs for Purchase what is the significance of this statement: "With reverse mortgages, there’s less fallout on the purchase side?" Compared to what? That response always comes up when the issue of high costs arise. It is at least as appropriate here.

Then comes: "Once the counseling is started, [the loan] usually goes through...." Where is this stuff coming from? James Veale has stated that using a four month lag principle HUD stats show that in the last 39 months only 74% of all apps which received FHA case numbers (that means AFTER counseling) ever got endorsed. When I was in school that was a C at best. Would they say the same if the rate was only 50%? Worse, recently I calculated that the conversion rate is dropping slightly down closer to 73%.

So how is that a great pull through or conversion rate? These folks seem to be novices in the reverse world. Their overenthusiastic statements seem to bear that out.

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dean810 1 day ago

HECM Reverse loans have Less fallout than traditional forward purchase loans , thanks for the negativity!

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dean810 1 day ago

"With reverse mortgages, there’s less fallout on the purchase side?" Compared to what?
As compared to traditional forward purchase loans - higher rentention of closings. I'm sure some reverse professionals could appreciate some enthusiasim over negativity

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The_Cynic 1 day ago in reply to dean810

Dean,
Huh? HECM drop out rates are lower than the drop out rate for forward mortgages --- following counseling? I did not know those borrowers took counseling. It seems you have stumbled into a new truth. That is exactly what I meant by compared to what.

Not long ago RMD ran a survey on the percentage of borrowers who do not close a HECM following counseling. Well over 50% of respondents believed it was 20% or less. The truth is it is 27% following FHA Case Number assignment alone. The only stats I have are those related to FHA Case Number assignments. It does not include counselees who never reach the assignment stage.

Facts are facts. It is not negativity. Interpreting our endorsement rate as a C is not negative. It seems you are calling the forward drop out rate as worse. But again, compared to what?

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Know Before You Owe > Consumer Financial Protection Bureau

2011-06-15T20:50:00.001-04:00

Every day, consumers shopping for mortgage loans get a mortgage disclosure with basic facts about the loan they’ve applied for. You see the disclosure before you sign on the dotted line – it’s what you know before you owe. We need your help in designing a single, simpler disclosure.

We’ve already had one round of feedback on our draft redesigns (Design 1, Design 2) and we received more than 10,000 comments from consumers, designers, housing counselors, lenders, and industry stakeholders across the nation. We’ll be revising these drafts, and asking for more feedback, in late June.

We'll be in touch!

-->

Please help us spread the word!

What Is A Mortgage Disclosure Form?

For most Americans, buying a home means taking out a mortgage loan. If you recently applied for a mortgage loan, you received two forms required by federal law: A two-page Truth in Lending disclosure form and a three-page Good Faith Estimate. They’re supposed to help you pick the mortgage product that’s best for you. But if you’ve actually applied for a mortgage recently, what you probably remember most are lots of technical terms and long lists of fees.

These disclosures don’t work if they give you too much information or if the information they provide isn’t what you need. They don’t work if they drown you in detail or leave out crucial information, like warnings about hidden risks. Can the cost of your loan go up? When, why, and by how much? Complicated disclosures can make it hard to answer or even ask the right questions, and many consumers don’t know what to ask until it’s too late.

Why Are You Combining The Two Forms?

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the Consumer Bureau, mandated that we combine these two forms into one.

It’s also because that’s what you’ve told us can help make markets work better for consumers. From our early outreach to community banks, to our discussions with everyday American families, we’ve heard that this is an area where the CFPB can make a real difference.

We are making this project a priority because today, the two current forms have overlapping information and can be confusing to consumers. They also needlessly drive up costs and the regulatory burden on lenders. So, we are going to combine the two forms into one and make them simpler to understand. That’s right – fewer, simpler government forms! We’ve been talking to lots of experts about what makes a form easy to use and understand.

In the end, a new disclosure will have to work for the consumers and lenders who rely on them every day. We need to hear your voice from the beginning of the process. So, as we work to create a better disclosure form, we will show you early drafts throughout the process, and give you a quick, simple way to give us your opinion on what works and what doesn’t.

How Can I Get Involved Right Now?

We know your time is valuable. There are three ways you can get involved right now:

Sign Up

Enter your e-mail address in the form at the top of this page, and we’ll let you know when it’s time to weigh in.

Spread the word

Do you know someone who owns a home, or may be thinking of buying one? Maybe your friend is a graphic designer who is passionate about conveying information, or your uncle is a tax attorney who knows how government forms could be made better. If you’ve reached this page, then you’ve discovered an important way for others in your life to make a real difference for consumers.

Please let them know, via Twitter, Facebook, or

e-mail

or just by talking about it at home, at school, with your faith community, or anywhere else you happen to be.

Learn more

Read the blog posts we've written about this process.

via consumerfinance.gov

Have you seen this? The new Consumer Financial Protection Bureau has it's own website now. They are talking about combining forms used at closing and are asking for input. I suggest we give it to them.

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New York Appeals Court Rejects MERS Foreclosure - Daniel Fisher - Full Disclosure - Forbes

2011-06-15T20:39:00.001-04:00

By DANIEL FISHER

Image by Getty Images via @daylife

A New York appeals court has thrown out a foreclosure proceeding involving MERS, the national registry for mortgages that tracks millions of individual loans behind mortgage-backed securities. The case sets a bad precedent for MERS in New York, but may not cause upheaval nationwide.

In a 7-page ruling issued Friday, the New York appellate court threw out Bank of New York’s foreclosure suit against Stephen and Frederica Silverberg, who were allegedly behind on $479,000 in loans. Bank of New York is the trustee for the trust containing mortgages, one them presumably the Silverberg’s, that were bundled together and sold to investors as bonds. Unfortunately for the bank, the court ruled that MERS, the bookkeeping entity set up to keep track of those mortgages in land-records offices around the country, couldn’t give BONY the authority to foreclose because it didn’t possess the underlying note, or Silverberg’s promise to pay.

“A transfer of the mortgage without the debt is a nullity, and no interest is acquired by it,” the court ruled.

Public Citizen said the decision could have “far reaching consequences,” but not everyone agrees this is a big deal. Even the lawyer for the Silverbergs, Stephen Silverberg himself, acknowledged his was an unusual situation. Bank of New York “admitted it didn’t have the note” proving it was the rightful owner of the collateral, Silverberg told me.

“They’ve had three years to find it and they haven’t,” he said. Without both the note and the mortgage, or legal document establishing the home as collateral for the note, the court said a lender can’t foreclose.

Judges in other states have made similar rulings, but in states with non-judicial foreclosure rules the courts aren’t involved. MERS was formed in 1993 by lenders to track mortgages and serve as a nominee in land records. That way, the lenders would have a central registry and wouldn’t have to pay transfer fees each time the underlying loans were sold and packaged into pools. The pools, in turn, are managed by a trustee who processes the payments and routes the money to holders of various securities created from them.

The New York appeals court acknowledged it could be creating trouble for those investors.

This Court is mindful of the impact that this decision may have on the mortgage industry in NewYork, and perhaps the nation. Nonetheless, the law must not yield to expediency and the convenienceof lending institutions. Proper procedures must be followed to ensure the reliability of the chain of ownership, to secure the dependable transfer of property, and to assure the enforcement of the rules thatgovern real property.

Silverberg, who represents other homeowners in foreclosure actions, was similarly unapologetic. He declined to say whether he was paying his mortgage, or intended to do so.

“The question here is some bank is coming forward saying the homeowner owes them hundreds of thousand of dollars but can’t present any evidence of ownership,” he said. “In New York, in order to evict the owner you must prove you have right to do so. This is the law and no apologies for enforcing your rights. They really pushed when they had nothing behind them.”

via blogs.forbes.com

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U.S. Supreme Court Poised To Decide whether To Review RESPA Standing Case

2011-06-12T08:33:00.001-04:00

The U.S. Supreme Court is poised to rule on whether it will review a case in which the U.S. Court of Appeals for the Ninth Circuit held that the plaintiff did not need to show she was overcharged to have standing to assert a claim based on a violation of the Real Estate Settlement Procedures Act’s (RESPA) anti-kickback prohibition.

RESPA Section 8 prohibits the payment or receipt of kickbacks in exchange for referrals of “business incident to or part of a real estate settlement service” and imposes statutory damages equal to three times the amount of the charge for the settlement service. In First American Financial Corporation v. Edwards, the Ninth Circuit ruled that the plaintiff could assert a RESPA claim whether or not an alleged unlawful referral agreement between her settlement agent and her title company increased the amount she paid for the title insurance. According to the Court, the plaintiff’s allegation that her title insurance payment was based on an unlawful referral agreement established sufficient injury to give her standing.

In response to a Supreme Court invitation, the Acting U.S. Solicitor General filed an amicus curiae brief on May 19, 2011, to provide the Obama administration’s view on the case. The brief urged denial of the certiorari petition on the grounds that the Ninth Circuit had correctly decided the case. It also disagreed with the title company’s argument that the RESPA question presented a circuit conflict because decisions of the Seventh and Fifth Circuits have interpreted Section 8 to provide a cause of action only to a plaintiff who has suffered concrete economic injury. According to the brief, the Seventh Circuit did not adopt the title company’s Section 8 reading and the Fifth Circuit’s decision was nonprecedential. The brief argued that because the Ninth Circuit’s ruling was consistent with the only precedential court of appeals decisions, those issued by the Third and Sixth Circuits, there was no conflict warranting Supreme Court review.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs). The Group has been actively involved in defending many RESPA cases, including cases raising the standing issue. For more information, please contact group Chair Alan S. Kaplinsky, 215.864.8544 or kaplinsky@ballardspahr.com; Vice Chair Jeremy T. Rosenblum, 215.864.8505 or rosenblum@ballardspahr.com; John L. Culhane, Jr., 215.864.8535 or culhane@ballardspahr.com; Martin C. Bryce, Jr., 215.864.8238 or bryce@ballardspahr.com; Mercedes K. Tunstall, 202.661.2221 or tunstallm@ballardspahr.com; Keith R. Fisher, 202.661.2284 or fisherk@ballardspahr.com; Barbara S. Mishkin, 215.864.8528 or mishkinb@ballardspahr.com; or Mark J. Furletti, 215.864.8138 or furlettim@ballardspahr.com.

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The MERS/Treasury Settlement Agreement

2011-06-12T08:19:00.001-04:00

Very weak language, but then again MERS is a corporate animal that is truly too big to fail. The larger question is how we all allowed this to get so out of control and past the point of no return. The next question is, where do we go from here? How do people get back to work? How do Americans regain any respect or trust for our government? How do our courts step back into a very messy public space and restore order?

The emperor has no clothes, that is the cancer. This is merely a symptom…..read from the consent agreement….

In connection with services provided to Examined Members related to tracking,and registering residential mortgage loans and initiating foreclosures (“residential mortgage andforeclosure-related services”), MERS and MERSCORP:

(a) have failed to exercise appropriate oversight, management supervision andcorporate governance, and have failed to devote adequate financial, staffing, training, and legalresources to ensure proper administration and delivery of services to Examined Members; and

(b) have failed to establish and maintain adequate internal controls, policies,and procedures, compliance risk management, and internal audit and reporting requirements withrespect to the administration and delivery of services to Examined Members.

By reason of the conduct set forth above, MERS and MERSCORP engaged inunsafe or unsound practices that expose them and Examined Members to unacceptableoperational, compliance, legal, and reputational risks.

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Title Junction, Cape Coral And Fort Myers Title Insurance Company, Focuses On Continuing Education

2011-06-12T08:10:00.001-04:00

June 10, 2011

Jennifer Ferri of Fort Myers and Cape Coral escrow company, Title Junction, is attending a continuing education seminar on June 14th. The knowledge will allow Ferri to better serve clients with their Fort Myers and Cape Coral title insurance needs.

June 10, 2011 /24-7PressRelease/ -- Summer may mean taking a break for many people, but not for Jennifer Ferri of Title Junction. Ferri will be busy enhancing her knowledge of real estate title contract ethics for title agents and Florida's promulgated rates and rate calculations.

Jennifer Ferri is the owner and operator of Title Junction, serving all of Florida and located in Fort Myers. Real estate title insurance, escrow and notary services and real estate closings are just some of the services offered by Title Junction. Ferri's dedication to professional continuing education has been instrumental to the success of the company, based in Fort Myers. Title insurance is just one service provided by Title Junction, where customers can also receive assistance with For Sale By Owner and commercial and residential property contracts, and many real estate financing services including refinancing, FHA and VA loans, reverse mortgages and more.

On June 14th, Ferri will participate in an educational seminar provided by Title Junction's underwriter, Old Republic National Title Insurance Company. The seminar will cover ethical issues for title agents with the new 2010 FAR/BAR contract and a discussion of promulgated rates and rate calculations.

The FAR/BAR contract forms are the most widely used residential real estate contract forms in Florida. They are contracts that have been approved by both the Florida Association of Realtors (FAR) and the Florida Bar Association (BAR). The new 2010 forms have updated "As is" clauses and several new riders.

Promulgated rates are the rates charged by title insurance companies for title insurance. The cost generally varies according to the insurable value of the property. Rates are set by the State of Florida, Department of Insurance.

"Continuing education courses serve two purposes for me: I am kept abreast of changes in law and policies in the industry and this knowledge allows me to better serve my clients. At Title Junction, customer service is our number one priority. One way that we provide exceptional service is by being available for questions. The concerns may be about the entire real estate closing process or just portions of it such as the promulgated rates, escrow or contracts. If I'm well-educated on the subjects then I can better guide my clients and help them feel comfortable with the closing process," explained Ferri (www.title-junction.com).

Title Junction has been serving the state of Florida and the Fort Myers and Cape Coral escrow and title insurance markets for over five years. The company handles residential and commercial real estate closing transactions, refinancing, short sales, and foreclosures. Notary public duties, acting as a courtesy witness during closings and handling escrow funds are additional services provided by Title Junction.

About Title Junction:

Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral, and the entire state of Florida. The company handles a number of real estate title services for both commercial and residential properties. Employees of Title Junction can also act as a witness in courtesy closings, an escrow agent or a notary public. The company was founded in 2005.

Media Contact:

Jennifer Ferri

jferri@title-junction.com

6313 Corporate Court, Suite 120-C

Fort Myers, FL 33919

239.415.6574
http://www.title-junction.com/

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American Land Title Association Supports Federal Regulators’ Extension of Comment Period for Qualified Residential Mortgage | Business Wire

2011-06-12T08:02:00.001-04:00

June 06, 2011 06:28 PM Eastern Daylight Time

WASHINGTON--(BUSINESS WIRE)--The American Land Title Association (ALTA), the national trade association of the land title insurance industry, announced its support of federal regulators’ decision to extend the comment period for the Risk Retention and Qualified Residential Mortgage (QRM) provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The deadline to submit public comments on the QRM was to expire June 10.

“ALTA strongly encourages regulators to protect consumers and investors by drafting a QRM that does not unnecessarily restrict credit and transfers legal title risks to state regulated insurance companies”

“ALTA strongly encourages regulators to protect consumers and investors by drafting a QRM that does not unnecessarily restrict credit and transfers legal title risks to state regulated insurance companies,” said Kurt Pfotenhauer, Chief Executive Officer of ALTA. “Investors and consumers deserve a gold standard that includes protection of their legal right to the property. Due to the complexity of the proposed rule and its interconnections with other rules still being developed by regulators, this extension is appropriate. Once we have the opportunity to understand how this rule will work in the new scheme required under last year’s financial overhaul, we will better be able to provide regulators with the necessary commentary to avoid any unintended consequences which could ultimately harm consumers and investors.”

A portion of the Dodd–Frank Act sets out a new requirement that forces lenders to retain 5 percent risk for any loans they sell on the secondary market. Exempted from the act’s risk-retention requirements, however, are mortgage-backed securities composed entirely of certain high-quality, lower-risk QRMs. Proposed rules would require future homebuyers to put down at least 20 percent of the purchase price of a home and meet strict income requirements to qualify for the loan with the lowest interest rates.

ALTA joined 11 other trade associations warning federal regulators in a whitepaper that the proposed QRM definition will harm many creditworthy borrowers while hampering the housing recovery. Congress rejected establishing high minimum down payments because they are not a significant factor in reducing defaults compared to other underwriting and product features. The three sponsors of the QRM provision, Senators Landrieu, Hagan and Isakson, sent letter to the regulators saying they specifically rejected a minimum down payment standard for the QRM. The letter was signed by 160 members of Congress, including 40 Senators.

The justification of qualified residential mortgages is to generate a finance structure that encourages responsible lending and borrowing. However, ALTA believes that the proposed regulation misses the mark because it does not require lenders to undertake common-sense underwriting steps to identify and establish who possesses the legal right to the property.

“Underwriting the real property that will serve as collateral for the mortgage loan is a fundamental part of the underwriting process and can be achieved by utilizing a title search backed by a title insurance policy to investigate, identify, and analyze the state of title to the collateral, thus reducing risk of loss for investors,” Pfotenhauer said.

About ALTA

via businesswire.com

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Surety and Title Insurance Stocks In Spotlight (MTG, MBI, RDN, AGO) from BestofOTC.com

2011-06-12T08:01:00.001-04:00

(EMAILWIRE.COM, June 10, 2011 ) NEW YORK, NY - MGIC Investment Corp. (NYSE: MTG) fell 3.45% to $5.60. The stock has a 52-week range of $5.41-$11.79.

The stock has average daily volume of 3.61 million shares. At Current market price, the market capitalization of the company stands at $1.13 billion.

MBIA Inc. (NYSE: MBI) added 1.78% to $8.02. The stock has a 52-week range of $5.24-$14.96.

MBIA Inc. together with its subsidiaries, operates the financial guarantee insurance business.

Radian Group Inc. (NYSE: RDN) lost 1.95% to $3.52. Radian Group Inc. is a credit enhancement company.

The stock has average daily volume of 3.83 million shares. At Current market price, the market capitalization of the company stands at $468.56 million.

Assured Guaranty Ltd. (NYSE: AGO) slid 0.87% to $14.86. Assured Guaranty Ltd. is a holding company that provides, through its operating subsidiaries, credit protection products to the public finance, infrastructure and structured finance markets in the United States, as well as internationally.

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via benzinga.com

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Real: Clearer mortgage disclosure forms proposed | ScrippsNews

2011-05-29T10:51:00.001-04:00

The new consumer finance regulator has proposed simplified mortgage disclosure forms, aiming to ensure that borrowers receive clear and easy-to-understand information about home loans when they apply for credit.

The Consumer Financial Protection Bureau released two alternative mortgage disclosure forms, each taking only the front and back of a sheet of paper. The forms would combine and replace the current two-page Truth in Lending Act disclosure and the three-page good faith estimate required under the Real Estate Settlement Procedures Act, or RESPA. The bureau, created by last year's Dodd-Frank financial reform law, will test the prototypes and incorporate feedback through September. It's calling the effort the "Know Before You Owe" project.

"A home loan is the biggest financial commitment most Americans will make in a lifetime," says Elizabeth Warren, who runs the bureau. "With a clear, simple form, consumers can better answer two basic questions: Can I afford this mortgage? And, can I get a better deal somewhere else? That's good for American families and the markets they depend on."

The prototypes emphasize the monthly loan payment, interest rate, potential cautions and other loan features.

Under Dodd-Frank, the bureau must propose new rules for simplified mortgage forms before July 2012. Staff started drafting the prototypes "quickly out of the gate" in consultation with federal regulators who have been working on streamlining the forms for years, Warren says.

The agency expects five rounds of evaluation and revision, with consumer testing in five cities and input from the industry, before the forms are finalized this fall. Then, the bureau will publish proposed regulations and a draft model form to solicit more comment and run quantitative tests before the rules are final.

Financial industry executives praise the move. "We think it's a great step," says Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable. "If everybody fully understands the product ... both the consumer and the lender win."

The Mortgage Bankers Association's more guarded response notes that the industry spent significant money 18 months ago on RESPA changes -- costs borne by consumers.

"Making mortgages easier to understand for prospective borrowers has been a long-term priority for the mortgage industry and we are pleased to see the initial prototypes take a step in that direction," MBA President David H. Stevens said in a statement, noting the challenge of "trying to strike the right balance between simplification and providing as much information as possible to help borrowers make the most informed choices."

Alex J. Pollock, a resident fellow at American Enterprise Institute who proposed a one-page form in 2007, notes the average mortgage closing form is 80 to 85 pages, which could be boiled down. He says the proposed forms don't include the ratio of debt to income, a key factor in whether individuals can afford a loan.

"The real object of this is not to give someone a piece of paper that they passively consume but to get them to actively think about the borrowing commitment," Pollock says.

Even as Warren prepares the new consumer bureau to assume regulatory power July 21, Wall Street lobbyists and their Republican allies in Congress seek to curb the bureau's power. Pending House legislation would replace the director position with a five-member bipartisan commission and make it easer for other regulators to overturn CFPB rules. President Barack Obama is expected to appoint Warren as director during an upcoming congressional recess, given that 44 Republican senators have pledged to block any director nomination.

"This is all part of a unified campaign to weaken and delegitimize the agency," says David Arkush, director of Public Citizen's Congress Watch division, which supports the bureau and Warren as director. "If you had some basic consumer protections in the financial services arena, there's a really good chance the housing bubble wouldn't have gotten as large as it got and you wouldn't have had so many predatory lending and mortgage abuses."

x x x x

With interest rates on U.S. Treasuries continuing to fall and a new study showing continuing declines in home prices nationally, mortgage rates edged slightly lower this week.

The benchmark fixed-rate 30-year mortgage dipped by 2 basis points, averaging 4.75 percent in the latest Bankrate weekly survey. A basis point is one-hundredth of 1 percentage point.

Another popular home loan product, the 15-year fixed-rate mortgage, made an identical decline, falling 2 basis points to an average of 3.93 percent. With 30-year jumbo mortgages, or generally those for more than $417,000, the average rate was 5.21 percent, off by a single basis point.

With adjustable-rate mortgages, the 5/1 ARM was 3.45 percent, off 3 basis points.

(Distributed by Scripps Howard News Service. Reach Katherine Reynolds Lewis at editors(at)bankrate.com.)

REAL ESTATE WATCHMust credit bankrate.com

via scrippsnews.com

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The MERS Morass, Part III

2011-05-29T10:48:00.001-04:00

Our most recent blog entry in our series on MERS discussed the decision of the bankruptcy court for the Eastern District of New York in In re Agard. A mere one day after Agard was decided, however, the bankruptcy court for the District of Kansas came to the opposite conclusion as to MERS’s status as agent. In In re Martinez, the debtor filed an adversary proceeding seeking a determination of secured status as to MERS and the purported lender of her home mortgage loan. In seeking such determination, the debtor sought to strip the mortgage from the property such that it would no longer encumber the property because, the debtor argued, she owed no debt to MERS. The court found that the debtor’s objection to the secured proof of claim filed by the purported lender was also ripe for decision because the debtor argued that, as the lender did not hold the mortgage intended to secure the note, the lender’s obligation (and, thus, claim) was in fact unsecured.

As in Agard, there had been a state court foreclosure judgment against the debtor, but here that judgment had been dismissed by an appellate court, which found that no evidence existed in the record before it that gave MERS standing to foreclose. The appellate court held that because MERS did not hold the note, the debtor’s failure to pay it did not result in pecuniary injury to MERS. Importantly, the appellate court had not made a finding as to the standing of the lender, which had been joined in the action as a third party defendant, and made no findings about whether the lender was the holder of the note. Unlike in Agard, however, the bankruptcy court refused to apply res judicata to the state appellate court decision, holding that, because in that action the debtor had insisted MERS was the lender’s agent but in this action challenged its status as such, MERS could not be bound by an earlier decision in which it did not have a full and fair opportunity to litigate the claim.

In Martinez, the debtor argued that the lender’s claim was unsecured because the note was split from the mortgage by the naming of MERS as the lender’s “nominee” on the mortgage. The court stated that the central issue of the case, therefore, was what effect, if any, such granting of the mortgage to MERS had on the lender’s right to enforce the terms of the note.

After addressing the res judicata issue by examining applicable Kansas case law, the court considered the merits of the case, noting that under the Restatement (Third) of Property (Mortgages), the transfer of an obligation secured by a mortgage also transfers the mortgage unless the parties to the transfer agree otherwise. A mortgage may only be enforced by, or on behalf of, a person entitled to enforce the note, which the comments to the Restatement recognize may be an agent or trustee with responsibility to enforce the mortgage at the mortgagee’s direction. Such relationship may arise from the terms of the assignment, a separate agreement, or other circumstances, and, the comments reflect, courts “should be vigorous in seeking to find such a relationship” to prevent a windfall to the mortgagor and frustration of the noteholder’s expectation of security.

Thus, contrary to the debtor’s position that the mortgage and note were split ab initio, MERS and the lender argued that the mortgage and the note were never split because MERS was the lender’s agent and, even under the law set forth in the Restatement, the mortgage still effectively secured the note. This argument had been made in, and accepted by, the bankruptcy court for the Western District of Missouri in In re Tucker, and the Martinez court adopted the analysis and holding from that case as being consistent with the Restatement. In particular, the Martinez court found that the under the Restatement, assignment of the note to one entity and assignment of the mortgage to another entity renders the mortgage unenforceable and the note unsecured absent an agency relationship between the holder of the note and the holder of the mortgage.

The Martinez court, like the Agard court, stated, therefore, that whether the lender and MERS were able to enforce the note and mortgage hinged on their relationship. If an agency relationship existed, the lender, as principal, could direct MERS to assign the mortgage to it so that the mortgage would be united with the note and enable the lender to commence foreclosure proceedings, or the lender could assign the note to MERS, thus uniting it with the mortgage and enabling MERS to commence foreclosure proceedings on the lender’s behalf. The court noted that although the Kansas Supreme Court had addressed the relationship between MERS and its members in another cases (likening MERS to a “straw man”), the Kansas Supreme Court had not specifically held that no agency relationship existed.

In direct contrast to the conclusion reached by the Agard court, the Martinez court held that, under Kansas law, an agency relationship did exist between MERS and the lender. The court noted, and relied on the fact, that the Western District of Missouri bankruptcy court had found an agency relationship existed between MERS and the lender under Missouri law in Tucker. Looking at language in the Martinez mortgage appointing MERS as nominee for the lender and its successors and assigns, which was identical to such language in the Agard mortgage, as well as at language of the MERS agreements, the Martinez court found that sufficient undisputed evidence existed to establish that MERS was acting as an agent for the lender.

Further, the court found that the agreement between MERS and the lender was sufficient to create an express agency relationship, but even if not, their actions were sufficient to establish an implied agency. The court found an agency relationship notwithstanding that the parties did not use the word “agent” and used the word “nominee” instead, which the court found to have a “nearly identical legal definition[]” as “agent” even though the Black’s definition of “nominee” states that it is one who is designated to act for another, “usu[ally] in a very limited way.” Notably, the Agard court used the Black’s definition of “nominee,” among other sources (including the Kansas Supreme Court, whose decision the Martinez court distinguished for other reasons), to differentiate a “nominee” from an “agent.” The Martinez court observed, however, that under Kansas law an agency relationship could be created even if the principal specifically denied that the agent was in fact such.

The Martinez court did not address whether, under Kansas law, a separate standard existed for creation of an agency relationship when the principal sought to authorize the agent to convey an interest in real property. The Agard court addressed this question, though, and found that, because MERS’s members purported to convey to MERS interests in real property, the agency relationship had to be committed to writing under New York law. Unlike the Martinez court, the Agard court refused to “cobble together” the various documents at issue so as to draw an inference that an agency relationship existed. Based on the Martinez court’s finding that the actions of MERS and the lender were sufficient to establish an implied agency, it is not clear from the decision whether, under Kansas law, such “cobbling” would even be necessary so as to establish an agency relationship committed to writing in the real property conveyance context.

The court therefore denied summary judgment to the debtor on its motion to determine the secured status of the lender and overruled the debtor’s objection to the lender’s proof of claim, finding that because MERS held the mortgage as agent for the lender, the note and mortgage were never split and remained enforceable. MERS was required to act on behalf of and at the direction of the lender, thus eliminating the concerns raised in the Restatement as to the enforceability of the note. The court held that the lender’s interest was secured and that it had the right to enforce the mortgage through its agent, MERS, or on its own (by directing its agent to assign the mortgage to it). The court accordingly entered summary judgment in favor of MERS and the lender.

The debtor subsequently filed a motion for reconsideration or to alter or amend judgment on the basis that the purported lender had sold its beneficial interest in the note to another MERS member prior to bankruptcy and that the purported lender was in fact merely the servicer which no longer had any beneficial interest in the note. The servicer, which had also occupied that role throughout the bankruptcy case, retained possession of the note. The debtor sought discovery to determine to whom the note was ultimately sold, including whether the other MERS member who purchased the note prepetition had packaged it into a securitization trust.

In its ensuing decision, the court found, however, that the result of the case would not change. MERS still held the mortgage as agent, and pursuant to the MERS agreements, it could take instructions from either the note holder or the servicer, and the servicer here (which had been the purported lender) was both. The court revised its initial opinion accordingly as well as to reflect that MERS held the mortgage as an agent but not as agent for the servicer qua original purported lender. The court did not state for whom MERS held the mortgage as agent in light of this clarification but merely that, pursuant to the MERS agreements, it could take instruction from the note holder or servicer. Interestingly, though, in a footnote, the court noted that in seeking discovery, the debtor sought to raise a theory, detailed in the Tucker case, which questioned whether downstream purchasers of the note from the original lender, the purchaser, and all subsequent assignees of the note were MERS members such that there was no gap in the chain of title. The court, however, ruled that it was too late for the debtor to raise this theory because she knew of it when she moved of summary judgment and elected not to raise it at that time.

The contrary results in Agard and Martinez point out the weaknesses in each case and raise questions as to the future viability of MERS. Why did the Agard court fail to consider the Restatement and be “vigorous in seeking to find [an agency] relationship” between MERS and its members? Conversely, was the Martinez court too cursory in analyzing the mortgage language, MERS agreements, and Kansas law to conclude that an express or implied agency relationship existed?

Following the posting of the first part of this series, we received an email from the Honorable Margaret Mann of the United States Bankruptcy Court for the Southern District of California, suggesting that the answer to whether MERS is the agent of the lender “may be somewhere in the middle.” Judge Mann also pointed us to a recent decision she issued regarding MERS. Before we ask some additional questions about MERS and its future, we will therefore discuss Judge Mann’s decision in In re Salazar in the next part of this series.

444 B.R. 231 (Bankr. E.D.N.Y. 2011)

444 B.R. 192 (Bankr. D. Kan. 2011)

441 B.R. 638 (Bankr. W.D. Mo. 2010)

2011 WL 1519877 (Bankr. D. Kan. 2011)

2011 WL 1398478 (Bankr. S.D. Cal. 2011)

via business-finance-restructuring.weil.com

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NY appellate court scrutinizes the MERS standing issue

2011-05-29T10:44:00.001-04:00

From Housing Wire

A decision by New York's 2nd Appellate Division may not have a direct impact on the issue of when Mortgage Electronic Registration Systems has standing in foreclosure cases, but it contains persuasive language that could be a shot across the bow when it comes to jurisdiction relating to MERS.

In Aurora Loan Services v. Steven Weisblum, the appellate court overturned a lower court's decision to dismiss claims the Weisblum family made against Aurora. The appellate court concluded that Aurora's motion for summary judgment should have been denied and said Aurora failed to comply with the Real Property Actions and Proceedings Law under the Home Equity Theft Prevention Act.

While the decision was not directly based on MERS, attorneys say language in the decision could impact later court rulings because it gives an appellate court's view on how MERS operated in this particular transaction.

"We have not seen that from a New York appellate court up to now," said Anthony Laura, an attorney with Patton Boggs. "I would caution, though, that it is commentary on MERS' standing. It is not the holding of the case."

On the MERS standing issue, which is not what the case was decided on, the Weisblums argued that Aurora did not have standing because it failed to provide evidence of MERS' authority to assign the first mortgage note tied to the home.

The court said "Aurora failed to provide a copy of the first note but submitted a copy of the original first mortgage and a series of assignments culminating in the purported assignment of the first note and mortgage to Aurora. The first mortgage was originally held by MERS, as nominee for Credit Suisse; the mortgage document recites that the lender on the first note is Credit Suisse, but there is nothing in this document to establish the authority of MERS to assign the first note."

The court goes on to say MERS later assigned the first mortgage with the underlying note and then made successive mortgage assignments.

"While, in some circumstances, the assignment of a note may effect the transfer of the mortgage as an inseparable incident of the debt, here the assignment instruments purport to do the opposite, without any evidence that MERS initially physically possessed the note or had the authority from the lender to assign it."

The case also outlined what is needed for a foreclosing party to have an equitable interest in a mortgage — namely the plaintiff has to be both "the holder or assignee of the subject mortgage, holder or assignee of the underlying note — either by physical delivery or a written assignment prior to the commencement of the action that led to the plaintiffs filing a complaint."

The court ruled Aurora failed to make this showing.

The case "is an effort to see problems with the MERS structure and how it has operated, so it has some level of importance," Laura said. "A couple of things that everyone needs to take away from this case: It is a clear signal from this appellate court that it is scrutinizing the MERS structure."

At the same time, the decision has no precedential value outside the New York appellate jurisdiction.

Write to Kerri Panchuk.

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New Loan Disclosure Forms Unveiled

2011-05-19T11:18:00.001-04:00

By:Peter King | May 18, 2011

In one of its first concrete actions meant to benefit consumers, the new Consumer Financial Protection Bureau (CFPB) has released two versions of a simplified mortgage disclosure form to be provided to borrowers.

The new form is intended to replace two documents currently provided to borrowers, the Truth in Lending Disclosure and the Good Faith estimate. Those forms, which are required by law, provide a borrower with specific information about the mortgage they are seeking, including the interest rate, monthly payment, loan fees and, in the case of an adjustable-rate mortgage, the maximum monthly payment the loan can reset to over time.

The present forms are two and three pages long, respectively, and present much of the same information. Both versions of the proposed form present most of the same information in a single document with more simplified language.

“The current forms can be complicated and difficult for consumers to use,” said Elizabeth Warren, acting head of the CFPB. “They are also redundant and can be costly for lenders to fill out. With a clear, simple form, consumers will be in a better position to answer two basic questions: Can I afford this mortgage and can I get a better deal somewhere else?”

The bureau is posting the two proposed versions of the form on its web site, under the project heading Know Before You Owe, to obtain feedback from consumers and the mortgage industry before committing to a final design.

The CFPB plans to conduct evaluations of the draft forms over the summer. The final form and accompanying rules for use are due to be released by July 2012 for public comment.

The new agency was directed to create a new mortgage disclosure form by last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act, which also created the CFPB itself.

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Dodd-Frank Ranks as Highest Compliance Concern for Lenders in 2011

2011-05-01T08:08:00.001-04:00

According to QuestSoft’s third annual compliance survey of lenders, the Dodd-Frank Act ranks as the greatest mortgage compliance concern in 2011. The series of laws passed last year replace the Real Estate Settlement Procedures Act (RESPA) as the highest concern, which topped the list the previous two years.

The survey polled 405 lenders on their level of concern for regulatory changes affecting the mortgage industry in 2011. Seventy percent of lenders responded to the implementation of new regulations under the Dodd-Frank Act as the most significant compliance concern. Rounding out the top three identified concerns were RESPA fee tolerance rules (50 percent cited major concern) and other RESPA issues (46 percent cited major concern).

“It was no surprise to see Dodd-Frank changes as the highest ranking compliance concern among lenders, since the changes will significantly impact lenders of all sizes and the associated rules are being announced right now,” said Leonard Ryan, president of QuestSoft. “It is also interesting to see that even a year after the RESPA’s major overhaul; lenders are still concerned with how to comply with fee tolerance rules and other RESPA-related loan disclosure issues.”

Loan officer compensation, which officially became active in April, and SAFE Act changes, both tied as the fourth highest concern, with 40 percent of lenders citing these regulations as a major concern. Though loan officer compensation received fewer medium concern percentage points, it placed fourth due to more survey participants indicating they were subject to the ruling.

Surprisingly, concern for the multi-state exams that many lenders will face this year remained at the bottom of the list for the second consecutive year; with only 19 percent of respondents citing them as a major concern.

“Although multi-state exams are not required for all lenders, more than half of QuestSoft’s clients will be mandated to partake in state-level exams and be required to export exact loan information on all originated loan files to the agency conducting the exam,” Ryan said. “It does appear that lenders are continuing to place their focus on the most immediate changes based on nationally published deadlines. Unfortunately for them, many state examiners are beginning to request the data for exams and giving lenders only a few days to comply. Therefore, lenders should prepare now to adhere to these long-term compliance protocols.”

QuestSoft provides lenders with multiple software tools to handle federal, state and local lending regulations. Compliance EAGLE is an automated compliance review tool that evaluates a loan file for fulfillment with the full range of mortgage lending regulations, including RESPA, Home Mortgage Disclosure Act (HMDA), Truth in Lending Act (TILA), Community Reinvestment Act (CRA), flood determination requirements and other consumer and predatory lending laws in seconds. Other products offered include HMDA RELIEF and CRA RELIEF, which provide lenders, banks and credit unions specially designed tools to ease the collection, analysis and reporting of HMDA and CRA data.

AVAILABLE SIDEBAR TABLE:

In a survey of 405 lenders, the level of concern cited for compliance issues in 2011:

	High Concern	Medium Concern	Low Concern
Dodd/Frank Changes	70%	22%	6%
RESPA Fee Tolerances	50%	36%	11%
Other RESPA Issues	46%	39%	12%
Loan Officer Compensation Rules	40%	24%	20%
SAFE Act- Nationwide Mortgage Licensing System	40%	41%	17%
Increased Fair Lending Exam Scrutiny	36%	39%	19%
July 21, 2011 Launch of CFPB	36%	41%	16%
Increased CRA Exam Scrutiny	27%	35%	20%
State Consumer Lending Laws	25%	45%	23%
Fraud – Borrower Identity	25%	42%	31%
Risk Retention/ Qualified Mortgages	24%	42%	24%
Fraud – Income Verifications	24%	43%	30%
Fraud – Loan Flipping, Collateral	22%	39%	36%
Multi-State Exam Process (LEF)	19%	29%	24%

Totals may not add up to 100% due to rounding or responses of “Not Applicable”

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The MERS Decision Story

2011-05-01T07:25:00.001-04:00

Fallout from the Michigan Court of Appeals decision tossing out two foreclosures by MERS is sweeping the state of Michigan. Had a call yesterday from someone whose closing was canceled at the last minute, because, MERS had done the foreclosure and quit claimed the property to the bank, which had agreed to sell the home to the caller. My realtor wife advised me title companies across Michigan are backing out of deals and canceling closings.
Because, if a MERS foreclosure is in the chain of title, it is, as they say in the title business, "clouded."In my caller's case, MERS foreclosed, the homeowners left and bought a new house, the redemption period expired, the
bank sold the house. But, under the Michigan Court of Appeals decision, the former homeowner could sue to get the foreclosure sale set aside, putting the home back into his name. And he would win. So, title companies, who issue insurance guaranteeing to the buyer, and the buyer's mortgage company, that the seller does indeed have good title to the property. No title policy, no mortgage; no mortgage, no sale.
No telling how far back this can go, what if MERS foreclosed 3, 5, even ten years ago?
Not sure off the top of my head how long they have been around. I have been blogging about MERS for years.
As filing fees for real estate documents increased, the mortgage companies decided to skip paying those annoying fees every time they bought a mortgage.
They had to pay to have it recorded with the county register of deeds, to put the world on notice that there was a lien on the property.
So, the initial mortgage was recorded in the name of MERS, as "nominee".
Then, every time the mortgage was sold or assigned, nothing else was recorded with the county, just on MERS records.
So, MERS had no actual interest in the mortgages, could not collect any money due on them, and, that is why the court threw out the foreclosures last week.

via stopcreditor.com

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Insurance News - 2010 Ends Four-Year Decline in Title Insurance Premiums, American Land Title Association Market Share Analysis Shows

2011-05-01T07:13:00.001-04:00

WASHINGTON--(BUSINESS WIRE)-- The American Land Title Association (ALTA) reported that its 2010 Year-end and Fourth-Quarter Market Share Analysis is now final.

According to the analysis, the title insurance industry generated $9.61 billion in title insurance premiums in 2010, up 0.2 percent from 2009. Premiums were up 2.2 percent after changes in accounting principles were applied to 2009. During the fourth quarter of 2010, the industry reported $2.7 billion in title insurance premiums, up 7.6 percent from the same period in 2009.

“After four consecutive years of declining title insurance premiums written, 2010 showed a leveling off,” said Kurt Pfotenhauer, chief executive officer of ALTA. “Despite the difficult operating conditions, the industry remains in a very strong financial position.”

While title insurance premiums increased slightly, total operating income fell .6 percent for the fifth consecutive year. In addition, loss and loss adjustment expense increased 9 percent in 2010 compared to 2009, while operating expenses declined only .8 percent. This left an operating loss of over $206 million in 2010 compared to an operating loss of $134 million in 2009.

“The industry’s total assets remain at over $8.8 billion with cash and invested assets growing over year-end 2009 to almost $7.7 billion,” Pfotenhauer said. “While statutory reserves fell slightly as a result of claims settlements, reserves remain at over $4.9 billion.”

On a state-by-state basis, 29 states, plus the District of Columbia, showed fourth-quarter 2010 written premiums increasing over fourth-quarter 2009 and 21 states recording decreases. Six states were up over 30 percent, five between 20 and 30 percent and eight between 10 and 20 percent. Only two states were down over 20 percent, with the remaining 19 states down less than 10 percent. The six largest states all recorded increases, with Texas (No. 2) at plus 17.6 percent and New York (No. 4) up 21.2 percent.

For the full year, 29 states recorded decreases from 2009 levels, but 20 of those declined less than 10 percent and eight of the remaining were under by less than 20 percent. Of the 21 states and the District of Columbia showing year-over-year increases, 19 were up less than 10 percent, two were up less than 20 percent and the District of Columbia recorded an increase of 34.7 percent.

via insurancenewsnet.com

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Fidelity National's 1Q profit soars on cost cuts - BusinessWeek

2011-05-01T07:10:00.001-04:00

JACKSONVILLE, Fla.

Title insurer Fidelity National Financial on Thursday said its first-quarter profit more than doubled on strong refinance activity in the quarter, topping Wall Street's expectations.

The majority of Fidelity National's business comes from its role as the nation's largest provider of title insurance, which guarantees to homebuyers that there aren't problems with a home's ownership history and that the seller is legally able to sell the property.

Its revenue in that segment edged up to $1.10 billion from $1.08 billion, as it closed 12 percent more orders than in the 2010 first quarter. That largely was the result of brisk refinance activity early in the quarter, the company said. Revenue in its specialty insurance business rose 8 percent to $96.1 million.

The company also said it laid off 600 employees during the period as part of its $50 million cost savings program.

For the three months ended March 31, Fidelity National said net income rose to $42.5 million, or 19 cents per share, from $16.5 million, or 7 cents per share, in the prior-year period.

Revenue slipped less than a percent to $1.208 billion from $1.213 billion in the previous year.

Analysts expected, on average, a profit of 11 cents per share on revenue of $1.206 billion, according to FactSet.

Shares closed down 28 cents at $14.90 on Thursday.

via businessweek.com

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Social Media Tactics for Real Estate | Why About Marketing

2011-04-26T22:45:00.001-04:00

Social Media Tactics for Real Estate

Build and engage your audience

Find out which tools, tactics, and approaches really work for social networking

Understand how to identify and find your audience online

Keep you and your services at the top of your audience’s mind

Join Online Marketing Consultant and Coach Dave Wirsching for this free 1 hour webinar to understand how Real Estate Professionals can best use social networks.

During the webinar you will learn:

Why Social Networking is an important part of your marketing mix

Which Social Networks you should use and why

The ACE approach to building your audience

5 Tactics you should be using

What tools you can use to monitor and manage your social network

Session Information

Date: May 3, 2011

Time: 12:30-1:30PM EST

Cost: Free

via whyabout.com

I've met Dave and I believe he knows what he is talking about. This should be a worthwhile presentation.

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Title Industry Changes Affect Surveying

2011-04-16T11:43:00.001-04:00

Part One of this article focused on three major changes in the land title industry and what caused them. This article will focus on three areas in which those changes have impacted the boundary surveyor and how they can be mitigated.
Preliminary Title Reports
The poor quality of many preliminary title reports provided to the boundary surveyor today has been a growing problem. Frequently preliminary title reports are issued for a parcel without a thorough title search being conducted by the title company. This results in a multitude of "blanket exceptions" to insurance coverage that lack specific document references in the preliminary title report. According to Dan Dolan, during the boom times land title companies would often only search for matters impacting title to a parcel from the last date the parcel was insured. No search was performed prior to the date of the last preliminary title report. This is a practice that continues, which results the perpetuation of hidden land title issues.
In many cases, a boundary surveyor will ask the land title company that has issued a preliminary title report for assistance in locating a document that is related to an encumbrance on the property. Frustratingly, in many cases, the land title company's only response is often to issue a new preliminary title report with a blanket exception for the encumbrance the land surveyor mentioned, with no reference to a specific document that would assist the surveyor.
In the past, a boundary surveyor could often call a land title officer with a local title plant and request assistance in locating a document related to a parcel of real property. The surveyor would frequently be provided with a recording reference for the document, or a copy of the document itself, for a very small cost or for no charge. This practice is on the decline, and is not likely to continue. In some cases, title companies refuse to search for and provide documents related to parcels of real property within a project site, even when they are offering their services to the same client the boundary surveyor is working for. The explanation typically provided to the boundary surveyor is, "We can't find what you need."
Junior-senior rights often come into play when attempting to resolve parcel boundaries. The ability to properly determine junior-senior rights usually depends on the ability to define chainof-title for the parcels involved. This typically requires a search for documents related to the parcels that can extend back several decades and sometimes all the way back to the time of patent. Whereas, in the past title companies could be relied upon to provide or assist with these chain-of-title searches, now the boundary surveyors must conduct such searches themselves, or seek the services of a third-party freelance land title consultant. This creates challenges, as title companies control the geographically indexed land title records that make these types of searches more efficient.
Mike Quartaroli, a land surveyor practicing for many years in the California Central Valley, summarizes some of the most important impacts of the changes in the land title industry on boundary surveyors. He explains that a land surveyor's relationships are with people, not with companies. In most cases the people in the land title industry with which land surveyors have established relationships are leaving (or being forced to leave) their profession. Another impact is a lack of attention to detail by title companies as they struggle to adapt to changing economic conditions.
Consequences of the Changes
There are several negative consequences of the land title industry changes on the land surveying community, title industry, and the public. The first is that the quality of land title in America will suffer over the long run. More land title problems will slip through the cracks, only to be buried by time and ignorance. Inevitably this will make the property American citizens and organizations own worth less, and will increase the cost of buying and selling property.
Secondly, more land title problems will result in more claims against the land title companies. This will drive the companies to further reduce costs, which impacts the quality of the services they provide. It will also drive them to avoid more and more liability when issuing title insurance on a parcel. This will result in more and more "blanket exceptions" to title insurance policies. The buyers of property will eventually be paying for title insurance that insures very little, even less than it does today.
The third negative consequence is for the boundary surveyor. The work of the boundary surveyor will become more difficult and more expensive. Despite their best efforts, some boundary surveyors will become entangled in the litigation that results when parcels are sold and land title problems are only discovered after the purchase.
Ways to Mitigate the Impacts
The situation with the decline in the title industry is not entirely hopeless. There are a number of ways that the boundary surveyor may mitigate, or at least minimize, the impacts. A few of these things involve individual efforts by the boundary surveyor, while others involve efforts by land surveyors as a profession and a community.
When it comes to doing a "deed search", ask yourself the following: How familiar am I with the local clerk and recorder's office? When was the last time I personally looked for a transaction in a grantor/grantee index? What other historical property ownership information is available in the area in which I practice?
Did I personally visit the site of the last parcel for which I performed a boundary survey, with the specific purpose of searching for and identifying potential land title issues like gaps, overlaps, encumbrances, and encroachments?
It would be prudent to take steps to start building your own collection of historical land title records by keeping digital copies of the maps and deeds obtained for each project. Organize the documents in a logical way and index them geographically. Maintain good relationships with local organizations that deal with these types of records, such as museums, historical societies, local land attorneys, utility companies, and government agencies. Keep all tools in the toolbox when land title conflicts are encountered, including the boundary line agreement, quitclaim deed, boundary line adjustment, easement, and license agreement. These tools only work when all parties to a land title conflict are willing to cooperate, but often a boundary surveyor can play a key role as mediator and problem solver in these situations.
Exercise discipline and maintain a realistic view of the land title industry. It is important to remember they are in business to make money selling insurance, not to solve the boundary surveyor's problems.
Take steps to reduce liability and risk related to land title issues by keeping good notes and documenting the work done to research land title issues for each project. Clearly define what title research will be done under your scope of work and what steps can and will be taken when problems are found. Educate your client about the current state of the land title industry, informing them about the quality of the preliminary title reports and other title documents used to do your work. Provide them with a realistic view of what land title insurance is really worth and what protection it is providing.
Finally, there are steps that boundary surveyors can take together to reduce the impacts of the changes to the land title industry. It is possible for a group of boundary surveyors within an area of practice to collaborate on the collection and maintenance of historical land records. The same dynamics that make it easier for title companies to consolidate and offshore land title services make it easier for boundary surveyors to share land title records with one another. This concept of cooperation for the mutual benefit of the profession can extend beyond just land records. Imagine a system in which boundary surveyors could report possible land title problems like overlaps, unrecorded or unidentified encumbrances, encroachments, ambiguous deed calls, and lack of adequate property corner monuments to the community. This sort of reporting system could be easily accessed online, from the comfort of each boundary surveyor's office. Imagine the value this would provide to the larger boundary surveying community and local land owners. It might even provide the incentive for parcel owners to fix these problems sooner rather than later.
What Does the Future Hold?
The trends of consolidation and offshoring in the land title industry are likely to continue. The problems that result from these trends, such as loss of local land title knowledge and poor quality land title services, will also continue. Boundary surveyors will continue to do more of their own land title research and deal with more land title problems.
The future will also provide opportunities for greater collaboration. This includes collaboration among surveyors, governments, nonprofit organizations, and utility companies that maintain historical land title records. Hopefully boundary surveyors will take advantage of these opportunities. Should they fail to do so, perhaps a new type of professional will emerge—one that is paid to deal with the title problems that land title companies ignore, but that will ultimately need a resolution.
Eventually the land title insurance industry may cease to exist in the American economy. Many other industries are currently struggling to survive the challenges of a great recession and a digital age. If land title companies do not find a way to provide a quality insurance project at a reasonable price, the market will demand other solutions to ensure that real property in America can be sold quickly and with as little risk as possible to buyers and sellers. Perhaps a form of the ALTA survey will become more prominent as a product that offers the value of real research, real measurement, real analysis, and real on-the-ground inspection of land title issues, something much more tangible and often more valuable than an insurance policy with more exceptions and loopholes than the tax code.
As professionals involved in land use, planning, management, development, and land transactions, boundary surveyors must develop a strategy to mitigate the impacts of title industry changes. They must act as problem solvers for their clients, not just problem reporters. The public will benefit the most if the boundary surveyors find ways to mitigate the impacts of the land title industry changes to give buyers and sellers of real property in America as accurate a picture land title as possible. Ultimately, an educated public will seek to place trust in the hands of skilled boundary surveyors, rather than the hands of insurance companies.

via amerisurv.com

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Outlook Still Negative for Title Insurers

2011-04-16T11:35:00.001-04:00

A Moody's report predicts that U.S. title insurers will continue to struggle for the next 12 to 18 months.

Insurance Networking News, April 11, 2011

Alex Vorro

Optimism regarding the title insurance industry is rather low right now. Given the fact that U.S. title insurers are still attempting to extract themselves from the housing bubble explosion, a new report from Moody's Investors Service predicts that they will remain challenged over the next 12 to 18 months.

"Over the medium term, we expect title insurers to be pressured by a shrinking revenue base and lower income due to a drop in mortgage refinancings," says Paul Bauer, Moody's VP and author of the report, "accompanied by only a mild, if any, uptick in home sales."

Moody's believes that the credit profile of the industry will be driven by four factors:

• Interest rates

• Total number of home sales

• Legal or political developments

• Potential consolidation

Interest rate trends are the primary driver of refinancing volume, Moody's says, with the industry benefiting when rates decline, as they did in 2010. Steady or rising rates, on the other hand, would cause a drop-off in refinancings.

"The Moody's economic forecast is for mortgage rates to go up this year, with the 30-year fixed rate rising to about 6% from 5%," Bauer says. "This scenario would prompt a significant drop in mortgage refinancings, and therefore title insurance revenue."

Though home sales are likely to show slight improvement, the agency expects they will remain sluggish this year, resulting in continued, reduced title revenue from policies issued upon purchase of a home. While this revenue source will likely be stronger than revenues from mortgage refinancings, it nonetheless is likely to remain weak, since home prices have yet to correct to a level at which buyers are willing to enter the market.

In terms of regulatory and political changes, Moody's asserts that the picture remains unclear at best for the industry, since title insurance is a key element of the mortgage finance market, which itself faces an uncertain future. Though the rating agency doesn't see any immediate risk for title insurers, the contentious real estate environment and murky future of mortgage finance could lead to adverse developments.

Additionally, given declining revenues, the industry could see further consolidation, with a potential for distressed sales or even failures among smaller companies, Moody's says. Consolidation could also add operational risks and reduce financial flexibility for companies that acquire others.

Despite the pressures, Moody's thinks title insurers' ratings are not likely to move downward.

"We believe our ratings are correctly positioned to reflect the cyclicality of the industry, including periods of decline," Bauer says. "And our rated companies have the operational flexibility to shrink if needed, and the capital adequacy to meet some volatility on the loss side."

via insurancenetworking.com

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Consumer Financial Protection Board Proposes new HUD1

2011-04-09T22:52:00.001-04:00

Take a look at this and tell us what you think.

disclosure_form.pdf Download this file

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Federal Reserve Board yields to the Consumer Financial Protection Bureau on proposed mortgage disclosure rules - Lexology

2011-04-09T22:40:00.001-04:00

From Jones Day

The Federal Reserve Board (the "Board") recently announced that it will not seek to finalize mortgage disclosure rules proposed in August 2009 and September 2010. The Board's decision recognizes the forthcoming transfer of Truth in Lending Act ("TILA") and Real Estate Settlement Procedures Act ("RESPA") rulemaking authority to the Consumer Financial Protection Bureau ("CFPB") pursuant to the Dodd-Frank Act. Indeed, the Board considered the likelihood that CFPB would seek advance notice of proposed rulemaking on similar issues. Now that the CFPB's launch is approximately five months away, the Board's move could foreshadow a rulemaking quiet period for those agencies that will lose rulemaking authority to the CFPB.

The Proposed Rules

The proposed rules focused primarily on new, more expansive disclosures to consumers prior to assuming home-secured loan obligations. Two of the proposed rules, released contemporaneously in August 2009, expanded the required disclosures for home equity lines of credit and closed-end mortgages, respectively. The rules would have required more disclosures on "potentially risky loan features" such as adjustable interest rates, amortization, and payment schedules. The third proposed rule, released in September 2010, changed disclosures on a mortgagee's right to rescind and the rescission procedure.

Receiving the most attention from consumer advocacy groups was the proposed rule modifying the rescission process for borrowers who did not receive mandated disclosures. The proposed rule would have required borrowers to pay their principal balance prior to rescission. This proposal would have altered current procedure in certain jurisdictions, requiring a creditor to release its security interest before the borrower is obligated to repay the loan (enabling the borrower to obtain another mortgage or negotiate a loan modification). Among the comments of the consumer advocacy groups was a request to postpone rulemaking until the CFPB's plans for a combined TILA-RESPA disclosure rule could be considered.

In a statement released on February 1, 2011, the Board acknowledged that "a combined TILA-RESPA disclosure rule could well be proposed by the CFPB before any new disclosure requirements issued by the Board could be fully implemented." In fact, the U.S. Treasury Department—the agency charged with establishing the CFPB—is considering advance notice of proposed rulemaking "as a means of gathering information and input, before the transfer date." Given the timetable to promulgate disclosure rules, the Treasury may seek advance comment on this very issue.

via lexology.com

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Obama creates new consumer protection board -- now he has to staff it - The Oval: Tracking the Obama presidency

2011-04-09T22:32:00.001-04:00

President Obama has signed a new Bureau of Consumer Financial Protection into law, but he will take some time before deciding who will lead it.

"I do not expect an imminent announcement on that," said White House spokesman Robert Gibbs.

Lawmakers who backed the new Wall Street regulation bill are touting Elizabeth Warren, the former Harvard law professor who came up with the idea of the consumer protection board in the first place.

Others wonder if Warren can win Senate confirmation. "There's a serious question about it," said Sen. Chris Dodd, D-Conn., who helped write the new financial regulations, speaking on NPR.

Some conservatives say Warren -- who currently chairs a federal bailout watchdog committee -- may be too anti-business. Senate Minority Leader Mitch McConnell, R-Ky., declined to comment on Warren's confirmation prospects, saying he will wait to see who Obama nominates.

"If it had been up to me, we wouldn't have created that agency in the first place," McConnell said. "It will be a massive bureaucracy."

Gibbs said Warren is one of the names under consideration.

After all, the new bureau is something that Warren "thought should be put in place to ensure that consumers were on equal footing with big banks," Gibbs said, adding that she would be "a terrific nominee."

"I have seen comments by those that questioned whether she could be confirmed," Gibbs said. "And I don't agree with those at all."

via content.usatoday.com

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