Saturday, October 30, 2010

The "Mortgagegate" Scandal: Congratulations America, You're Now in the Title-Insurance Business

The “Mortgagegate” Scandal: Congratulations America, You’re Now in the Title-Insurance Business

[Editor's Note: On Wednesday, in the latest development in the "Mortgagegate" scandal, Fidelity National Financial Inc., the largest U.S. title-insurance firm, reversed course and said it wouldn't require an indemnity agreement before insuring individual foreclosed properties. Money Morning's Shah Gilani, a retired hedge-fund manager, warns that there's a deep game being played, and provides investors with detailed insights, and advice on the steps to take.]

By Shah Gilani, Contributing Editor, Money Morning

U.S. taxpayers already own pieces of such problem-plagued companies as General Motors Corp., Chrysler LLC, American International Group Inc. (NYSE: AIG), Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC). Now the increasingly problematic "Mortgagegate" saga could land American taxpayers in the trouble-ridden title-insurance business.
On Oct. 8, Bank of America Corp. (NYSE: BAC) indemnified Fidelity National Financial Inc. (NYSE: FNF) against any losses that Fidelity might sustain in litigation over title insurance it writes on foreclosed homes - the same homes, coincidentally, that Bank of America wants to sell to new buyers.
This arrangement amounts to U.S. taxpayers, who are the ultimate backers of the Federal Deposit Insurance Corp. (FDIC), backstopping a giant, publicly held title-insurance company, which is backstopping a huge commercial bank, so that the bank can sell properties that it might not have proper title to.
It sounds like a Wall Street version of the "Six Degrees of Kevin Bacon," but it's no game - it's a daisy-chain scheme that once again sets American households up as the biggest losers.

via moneymorning.com

Click throught to the original article on this one. This guy got some interesting feedback

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A.M. Best Special Report: Title Results Rebound in 2009 and 2010, but Challenges Remain

OLDWICK, N.J.--(BUSINESS WIRE)--After the real estate market freefall in 2008—when title insurance revenues fell sharply and most major title insurance underwriters posted net losses—operating results rebounded in 2009, although total industry written premiums declined from 2008 levels. During the first quarter of 2010, however, title insurance revenues—helped partly by federal policy and tax incentives—improved compared with the similar period in 2009.

While revenues were down in the second quarter of 2010, most major underwriters posted positive operating margins through the first six months of the year. Despite economic uncertainties and housing market challenges—particularly given recent foreclosure processing issues—A.M. Best Co. has revised its rating outlook for the title sector to stable from negative, given strengthened capitalization and improved operating performance trends.

In 2009, the industry reported:

An approximate 22% increase in surplus, due to improved operating performance as well as capital contributions.

Title insurance direct premiums written were down about 9%, year over year; a smaller decline compared with that of 2008.

A yearly net income of $429 million, compared with a net loss of $416 million in 2008, driven by a pretax operating gain of $418 million.

The net underwriting loss of $96 million was far smaller compared with 2008’s relatively large underwriting loss of $688 million. As a result, the industry’s combined ratio (known as composite ratio) improved to 102.9% from 109.1% in 2008.

Investment income improved to $552 million from $380 million in 2008, which more than offset the modest underwriting loss resulting in an operating gain.

Access a copy of this special report. BestWeek subscribers can download a PDF copy of all special reports as well as the associated spreadsheet data. Non-subscribers can access an excerpt of each special report and purchase individual reports and spreadsheet data.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

via businesswire.com

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American Land Title Association Names Anastasi as President

WASHINGTON--(BUSINESS WIRE)--The American Land Title Association (ALTA) announced that veteran land title insurance industry professional Anne L. Anastasi has been named president for the 2010-2011 year.

“Anne is as passionate and articulate a spokesperson for the title industry as you could ever hope to find, but she also has other qualities such as the ability to listen and great judgment, that will distinguish her leadership”

Anastasi is president of Hatboro, Pa.-based Genesis Abstract, LLC. Prior to opening her own company in 1994, she served as vice president of a regional land title insurance underwriter. In 1999, Anastasi served as the first female president in the 80-year history of the Pennsylvania Land Title Association.

"I am honored to serve ALTA as its president, especially at this time,” Anastasi said. "The importance of title insurance in assuring property rights has been amplified with the recent foreclosure issues stemming from lending processing errors. This has afforded us a great teaching opportunity to explain the repairing and closing process so that people purchasing a home or those refinancing their mortgages will understand that title insurance is not just a product but a valuable process that protects their investment.”

Anastasi is a renowned national speaker, covering topics such as title insurance, customer service, sales and motivation. She has been the keynote speaker at 46 title industry state conventions and has addressed audiences for ALTA, Real Estate Services Providers Council (RESPRO), bar associations and mortgage bankers.

“Anne is as passionate and articulate a spokesperson for the title industry as you could ever hope to find, but she also has other qualities such as the ability to listen and great judgment, that will distinguish her leadership,” said Kurt Pfotenhauer, chief executive officer of ALTA. “Given the challenges facing the title industry, we are blessed to have a leader of such quality."

via businesswire.com

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Title Insurance No Longer an Issue in Foreclosure-Gate - Daniel Indiviglio - Business - The Atlantic####

Although the mortgage market mess persists, one aspect of the fiasco appears to have worked itself out. Several major title insurance companies were demanding that mortgage servicers take on liability for title problems, but dropped that request on Thursday. This matters a lot, because it could mean that purchasers of foreclosed homes won't shy away from buying due to the fear of not getting title insurance.

Elizabeth Razzi of the Washington Post reports that three big title insurers, First American Financial, Old Republic International and Stewart Information Services, are no longer demanding indemnifications from banks and servicers on foreclosed properties. Those three firms make up more than half of the title insurance market.

Calculated Risk explains why this is so important:

This is means that the buyers of REO (lender Real Estate Owned) will be able to obtain title insurance, and that the new owner can sell the property. There was some concern that buyers would shy away from REOs.

So the demand problem is partially solved. Although some buyers might still worry about purchasing a foreclosed home, it won't be due to a lack of title insurance. Instead, they may fear title insurers' ability to back up a flood of claims if many titles are bad. Since that's likely less of a concern, however, this new development should prevent a plummet in foreclosed property sales.

But it doesn't fix the supply problem. Some banks and servicers are still investigating their documentation and procedures and halting some foreclosures temporarily. This will reduce the number of defaulted properties that hit the market, which will further delay the sector's recovery. Housing cannot move confidently forward until all properties from bad mortgages have been absorbed by the market.

via theatlantic.com

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Wednesday, October 20, 2010

Where Is The Housing Recovery? - Intelligent Investing - Ideas from Forbes Investor Team - Forbes

Posted by John Mauldin

We are going to quickly review a few charts from Gary Shilling’s latest letter, where he reviewed the housing market in depth. Bottom line, the housing market has not yet begun to recover and it is not only going to take longer but the decline in prices may be greater than many have forecast. I wrote three years ago that it could be well into 2011 before we get to a “bottom.” That may have been optimistic, given what we will cover in this letter.

via blogs.forbes.com

This seems to be a realistic view of the market. I'm not sure we've seen the bottom and I certainly haven't seen any increase in activity.

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Addressing concerns raised by providers of a common form of mortgage loan assistance, the Department of Housing and Urban Development (HUD) decided to exempt certain silent second lien mortgage loans from the requirements to provide a good faith estimate and HUD-1 under the Real Estate Settlement Procedures Act (RESPA).

State housing agencies, nonprofit organizations and similar entities often provide mortgage assistance to home buyers by extending a second lien mortgage loan for down payment and/or closing cost purposes. The loans, commonly referred to as “silent seconds,” often provide for no interest rate or periodic payment, often are either forgiven or require repayment based on certain events, and often have no or minimal fees. The loans pose disclosure issues for purposes of the good faith estimate and HUD-1 under RESPA. For example, the documents require the disclosure of various loan terms, including the repayment terms.

Requests for an exemption from the good faith estimate and HUD-1 requirements were made to HUD by administrators of various silent second programs. The administrators advised that producing good faith estimates and HUD-1s is difficult for silent seconds, and that the disclosures provided for in the documents are of little benefit to borrowers given the nature of silent seconds.

HUD decided to use its exemption authority under RESPA to exempt silent seconds meeting certain conditions from the requirements to provide a good faith estimate and HUD-1. The conditions are as follows:

The loan is a subordinate lien loan; and

The purpose of the loan is:

Down payment, closing cost or other similar homebuyer assistance, such as principal or interest subsidies; or

Property rehabilitation assistance; or

Energy efficiency assistance; or

Foreclosure avoidance or prevention; and

The loan carries a zero percent interest rate; and

The repayment terms are as follows:

Repayment is forgiven, incrementally or at a date certain; or

Repayment is forgiven, incrementally or at a date certain, subject to certain ownership and occupancy conditions (e.g., the recipient must maintain the property as his or her primary residence for five years); or

Repayment is deferred for a minimum of 20 years; or

Repayment is deferred until sale of the property; or

Repayment is deferred until the property is no longer the primary residence of the recipient; and

The total of the settlement costs assessed to the recipient for the subordinate loan is less than one percent of the amount of the subordinate loan and includes, at most, charges for the following items:

Recordation fee;

Application fee; and/or

Housing counseling fee; and

At or before settlement the recipient/mortgagor receives a written disclosure that effectively describes the loan terms, repayment conditions and any costs associated with the loan.

The exemption for qualifying silent seconds applies only to RESPA sections 4 and 5 —the good faith estimate and HUD-1 Settlement Statement. The exemption does not apply to any other RESPA sections, including section 8.

Silent seconds also pose issues with regard to disclosures under the Truth in Lending Act (TILA). The Federal Reserve Board has not issued any similar exemption for silent seconds with regard to TILA disclosures.

via lexology.com

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Tuesday, October 19, 2010

Just Do It!

I liked this article from Robert Reich.

Art

For the present, however, it is enough to know that neither the government under which you live nor the capitalistic or competitive system of industry can keep you from [being successful]. When you enter upon the creative plane of thought you will rise above all these things…

Wallace Wattles, circa 1910, from The Science of Getting Rich

In the past I have said to myself (and others), “Just wait until the economy recovers and the real estate market turns around…then business will be good again.” Usually everyone agrees with me and we then go on to speculate which year the good times will come: 2011, 2012, 2013, or later?

I started to realize more a year ago this kind of thinking did me or our title agent customers no good. It occurred to me no matter what the economic or political environment the country is (or was) in there are always obstacles to success. When the market was at its peak, the industry was too competitive; when the market was at its lowest business had dried up. If it wasn’t any of those things then it’s the end of the month, the beginning of the month, mid-month, Christmas, Thanksgiving or summer vacation. Let’s not forget Spring Break and Fridays.

There is opportunity in front of all of us every day. It is there when subprime lending is prevalent, and when it is not. It doesn’t matter if short sales abound, if foreclosures are halted, when the Democrats are in the White House, or the Republicans. Opportunity and success is what you make it and most times it doesn’t walk through your front door to the sound of the king’s trumpets. It is much more subtle than that.

I refuse anymore, now that I have learned my lesson, to listen to anyone who wants to be pessimistic and tell me success is not possible. Yes, the landscape has changed. Yes, the real estate market nationwide will close fewer transactions this year than several years ago. SO WHAT? There has never been a greater opportunity to win market share than there is right now. Some of your competition has gone out of business and has “orphaned” their customers. Some of your competition has decreased its customers service and has left their customers vulnerable to you.

Don’t procrastinate starting new initiatives and trying new things. The challenges of this market is exactly that, challenges—no more no less. Be as Wallace Wattles said 100 years ago, “…upon the creative plane of thought”. Think new marketing ideas, brainstorm new concepts, make new plans and take calculated chances.

Now is the time. Not next year, not 2013…now. Increase your business by two orders in October, 5% in November and 10% for the quarter. It doesn’t matter if you are the senior person in the office or if you were hired yesterday. And don’t listen to that person who has been saying, “It will be 2015 until market gets back on its feet”.

As Michael Jordan told Nike, “Just Do It!”.

Robert L. Reich
Digital Docs.net

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Saturday, October 16, 2010

Old Republic Title Won’t Insure Chase Foreclosures - CBS MoneyWatch.com

Old Republic National Title, one of the country’s largest title insurance companies announced that it won’t insure homes that have been foreclosed on by J.P. Morgan Chase.

The New York Times obtained a company memo that said Old Republic would not write policies on foreclosed Chase properties until “objectionable issues have been resolved.” Earlier last week, the company said it would not write title policies for homes that had been foreclosed by GMAC mortgage, which is now owned by Ally Bank.

Late last week Bank of America said it would also freeze foreclosures in certain states while it reconfirmed that the foreclosure documents had been prepared and executed correctly. It’s likely that Old Republic will stop writing title policies on these foreclosures as well.

If other major title companies follow suit, and stop writing these policies, it could turn into the watershed event that actually sends the already crippled housing market into a tailspin.

Why? Let’s back up for a moment.

Title is the ownership in a property. A chain of title is a list of all owners in the property going back to when the land was first developed or, in the case of some East Coast properties, when the King of England first granted large tracts of land to homeowners.

via moneywatch.bnet.com

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Top 4 Mid-Cap Stocks In The Surety & Title Insurance Industry With The Highest Dividend Yield (ORI, FNF, CLGX, AGO) | Benzinga.com

Below are the top mid-cap surety & title insurance stocks on the NYSE and the NASDAQ in terms of dividend yield.

Old Republic International Corp (NYSE: ORI) has a dividend yield of 5.00%. ORI's shares closed at $13.85 yesterday.

Fidelity National Financial Inc (NYSE: FNF [FREE Stock Trend Analysis]) has a dividend yield of 4.90%. FNF's shares closed at $14.67 yesterday.

CoreLogic Inc (NYSE: CLGX) has a dividend yield of 4.80%. CLGX's shares closed at $18.13 yesterday.

Assured Guaranty Ltd (NYSE: AGO) has a dividend yield of 0.90%. AGO's shares closed at $21.87 yesterday.

via benzinga.com

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Real Estate Journal Online » News Archive » Title Insurances Finally Get Attention Amidst Foreclosure Freezing

Have you ever heard of anyone collecting title insurance? Perhaps none; yet if you are going to buy a home or refinance a mortgage, a title insurance gets the largest chunk in the itemized estimate for closing costs and fees. Though most home buyers and refinancers don’t bother to question this anymore because of the tiresome process of asking and shopping for better insurance providers, the recent buzz on foreclosure freezing by some banks and mortgage providers bring to light the immense importance of title insurance.

A title insurance is supposed to cover a home buyer from cases wherein other people turn up after the house has been bought and claims rights to the house. Title insurance providers run a title search and sift through government filings related to the property prior to it being bought to lower the chances of insurance being claimed later on. But if the insurers miss something and someone else do turn up later on, insurers would have to provide legal counsel or settle with whoever is claiming.

Sounds like title insurers are indeed champions of home buyers and refinancers, right? Not really; the truth is, they are more concerned about lenders, real estate agents, and lawyers who can give them more business. Though kicking back money from companies and brokers who send insurers business is technically not allowed, there’s nothing much everybody can do since title insurance is required if there’s mortgage involved.

via rejournalonline.com

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Florida Foreclosure Mess in Orlando

The Florida Attorney General has begun investigations into the 4 largest "Florida Title Mills" that churn 80% of Florida's Foreclosures...in Florida, about 1/3 of all sales are foreclosures... Per a paralegal that was deposed, one Florida Title Mill grew from 200 employees to 1,100...IN LESS THAN ONE YEAR...thats a huge payroll to support. Not only are the "Big 4" accused of signing 18,000 documents a week without reading them, they are also accused of submitting fraudulent document to the courts.

A study of foreclosure court documents by Richard Kessler, an attorney in Sarasota, Florida found errors such as missing or improperly handled documents in about three-fourths of the cases. The mistakes may allow former owners and other claimants to contest the legality of pending and previously completed foreclosures.

via activerain.com

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### Seven Things Coming From The Nationwide Stoppage of Foreclosures | How To And Tips Today

The stop foreclosure message seems to have taken hold in light of the recent hoopla surrounding the “robo signing” mess created by mortgage lenders who have been caught red handed filing bogus and fraudulent affidavits in order to steamroll over distressed homeowners and take their homes through foreclosures that are in many cases illegal.

Major mortgage holders who have been very active in their bank foreclosure departments have now brought home foreclosures to a halt. J.P. Morgan Chase, GMAC and Bank of America, among others are leading the way in a massive foreclosure stoppage across America. Chase and GMAC have stopped foreclosures in 23 states. Bank of America in response to increasing pressure from congressional inquiry and court cases has now announced it is stopping home foreclosures in all 50 states. It is only a matter of time that other lenders will follow suit.

via howtoandtipstoday.com

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Thursday, October 14, 2010

American Land Title Association Supports FHFA's Policy Framework for Resolving Potential Foreclosure Process Deficiencies

ALTA NEWS

Contact: Jeremy Yohe

Office: 202-261-2938

Phone: 202-590-8361
E-mail: jyohe@alta.org

Immediate Release

American Land Title Association Supports FHFA’s Policy Framework for Resolving Potential Foreclosure Process Deficiencies

Washington, D.C., Oct. 13, 2010 — The American Land Title Association (ALTA) supports the Federal Housing Finance Agency’s (FHFA) four-point policy framework for resolving potential foreclosure process deficiencies.

This framework will assist the land title industry to continue insuring Real Estate Owned (REO) properties based upon companies’ individual risk assessments.

“ALTA supports FHFA’s outline for an orderly and expeditious resolution of foreclosure process issues that will provide greater certainty to homeowners, markets and other stakeholders,” said Kurt Pfotenhauer, chief executive officer of ALTA.

With respect to the clearing of title for REO properties, FHFA’s blueprint requires mortgage servicers to review their processes and procedures and verify that their documents, including affidavits and verifications, are completed according to legal requirements. When a foreclosure process deficiency is identified, it should be remediated. The FHFA directs mortgage servicers to address any issue and take actions as may be required to ensure that title insurance is available to the purchaser of the property.

“Title insurers are looking to lenders to provide appropriate indemnities,” Pfotenhauer said. “We will continue to work with federal and state regulators, Fannie Mae, Freddie Mac and lenders to bring certainty to the marketplace, and we will continue to offer the title industry’s perspective on this issue.”

# # #

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.

Visit ALTA online at www.alta.org for news and resources for the Title Industry.

2010 Annual Convention

Oct. 13–16

Manchester Grand Hyatt

San Diego, Calif.

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Foreclosure problems might lead to drop in filings | HeraldTribune.com

Data released from California-based RealtyTrac Inc. showed that Southwest Florida's foreclosure rate dropped 9 percent last month from August and 4 percent from a year ago.

"We're going to see a huge reduction," said Jack McCabe, a Deerfield Beach-based real estate consultant. "That reduction may not be apparent in the current numbers because banks have only begun to halt foreclosures in the past few weeks. But beginning next month, we should see foreclosures drop by 50 percent or more."

Nationwide, foreclosure filings still increased 3 percent to 347,420 in September from the previous month, and 1 percent from a year ago, RealtyTrac data showed.

In Florida, filings were up 5 percent from August and 8 percent from September 2009.

The situation among Southwest Florida's three counties was mixed, with filings rising sharply in Sarasota and falling sharply in Charlotte.

via heraldtribune.com

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Lexology - Short sales: let the agent beware

If a transaction is a short sale, the real estate agent handling the sale might be liable to the buyer if that fact is not disclosed up front. This week a California Court of Appeal issued a decision which imposes a duty upon a seller’s agent to disclose that the seller’s existing loans far exceed the contract purchase price. Holmes v. Summer, __ Cal.App.4th. ___ (2010 Daily Journal D.A.R. 15614) (filed October 6, 2010).

In this case the seller’s agent listed for sale a residential property for $749,000. The property was subject to three deeds of trust totaling debts of $1,140,000, thus the sale would have to be a “short sale.” No disclosure of the existing loan amounts were made in the MLS listing or to the buyer prior to executing the purchase contract.

The purchase contract provided that the buyer would purchase the property free and clear of any liens. After entering into the contract the buyer sold the buyer’s existing home in order to purchase the property. The seller was not able to get the three lenders to agree to a 35% reduction in the existing loans, and then defaulted on the obligation to sell the property free and clear of liens. Instead of suing the seller for a breach of the contract and failure to disclose the problem with the loans up front, the buyer sued the seller’s agent. The trial court surmised that the seller was broke and thus the buyer went after the agent’s “deep pockets.”

The trial court dismissed the buyer’s case, holding that the agent had no duty to disclose the loan information. The Court of Appeal reversed that decision. It held that in this instance the listing agent had a duty to disclose to the buyer the existence of deeds of trust of record and the extent to which the property was “underwater.” Furthermore, the disclosure had to be made before the buyer signed the purchase contract. The Court of Appeal indicated that where there was such a substantial over encumbrance of the property “there is a duty on that agent or broker to disclose the state of affairs to the buyer, so the buyer can make an informed choice whether or not to enter into the transaction that has a considerable risk of failure.”

This conflicts with another duty of real estate agents, i.e., the duty not to disclose clients’ confidential information. The court stated that both the “duty to disclose and the duty to maintain client confidentiality is clearly involved [in this case].” The court opined that deeds of trust, being in the public record, are not “confidential information” and that the basic duty of an agent to treat each party to the transaction “honestly and fairly” trumps the agent’s duty of confidentiality to the seller. To avoid the conflict, the court suggested the agent must obtain the seller’s permission to disclose such confidential information to a buyer before the buyer enters into a contract to purchase the property. Otherwise, the agent would be proceeding at his or her own “peril of liability in the event the transaction goes awry due to the undisclosed risks involved.”

This case involved facts about existing loans that made a short sale extremely unlikely to succeed. What if the loans were smaller? What if there were fewer lenders? What if the seller has a pending divorce or bankruptcy? Is a listing agent required to disclose such confidential information to the buyer? This decision might open the floodgates to other claims against listing agents for failure to disclose confidential information about a seller’s financial situation or other relevant circumstances that might make it difficult for the seller to consummate the sale. It is going to be important for agents to carefully assess the risks and rewards when selling distressed properties, and to beware of this disclosure obligation

via lexology.com

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Florida AG Weighs In on Foreclosure Moratorium « The Washington Independent

By Annie Lowrey 10/12/10 4:32 PM

Earlier today, the White House reiterated that it opposes a blanket moratorium on foreclosures, preferring to work with servicers and lenders to sort out the mortgage paperwork fiasco while letting the 50 state attorneys general file charges, if they see fit. (There is no federal regulator of mortgage servicers; each state has its own.)

This afternoon, Florida Attorney General Bill McCollum — who is considering charges on behalf of Floridians, residents of the state most impacted by the foreclosure crisis — agreed that a full freeze might not help. He wrote and released letters to major servicers, expressing concern over the widespread fraud. Here is one letter, to the head of Litton Loan Servicing:

As Attorney General of the State of Florida, I am writing you to express my concern for Florida’s economic future and the credibility of Florida’s judicial foreclosure system as a result of the actions of your company — actions that have affected the integrity of title to real property for Florida’s homeowners as well as the foreclosure process in Florida.

I was distressed to learn from media reports that your company may have engaged in filing faulty affidavits in foreclosure cases in Florida courts with regard to ownership of promissory notes and affidavits that attested to personal knowledge of facts when, in fact, the affiant had no such personal knowledge. The net effect of these actions, among other things, has been to cast a shadow on the title to these properties which is of such proportions that at least one major title company is now refusing to write title insurance on foreclosed properties. Even more disturbing in that some of these foreclosed properties have already been sold and resold, and now their titles are in question, which may substantially slow the economic recovery for the citizens of Florida.

All of this has been compounded by the impact of the recently announced moratoria on foreclosures by several mortgage servicers and the plethora of private litigation that has privately commenced. In my view, the moratoria and the private litigation are counterproductive to obtaining the swift solution necessary to address this serious problem facing Florida’s already fragile economy.

via washingtonindependent.com

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US insurer Fidelity National to offshore more work to India - The Economic Times

CHENNAI: Spotting an opportunity to cut its costs by around 30 per cent with increased productivity, US-based insurer Fidelity National Title Group Inc has decided to scale up its business process outsourcing (BPO) and software development activities in India.
The company had set up its captive BPO company Fidelity National Financial India in Bangalore three years back.
The $4.6 million revenue Fidelity National Financial India has around 800 employees searching and confirming property titles in the US for its insurance parent.
"We will be increasing the headcount by 1,000 to 1,800 starting next year for our BPO operations so that we can shift work like accounts payable, legal operations here. We are also planning to expand the software development team here," Senior Vice President Andy Giddings told IANS.
According to him, the insurer has decided to develop software for its core title insurance business back home out of India in May and formed a small team of 25 people.
"We will be expanding that team by adding 100 more software engineers during the first quarter of the next year. We have around 15 different software applications and we expect the number to go down with the development of integrated programmes," Giddings said.
About BPO activity in India, he said the company has now graduated from doing indexing and data entry to detailed property title searches and other value added transactions like title policy underwriting and engineering, database management, mortgage and tax services.
"We have also changed the systems and procedures which in turned improved the productivity as well as the job content for the employees. The utilisation rate is around 90 percent whereas the average for other captive BPOs is around 50 percent," added Country Head of Indian Operations Sameer Dhanrajani.

via economictimes.indiatimes.com

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Disputes May Affect 9 Million Foreclosures, Morgan Stanley Says - Bloomberg

As many as 9 million U.S. mortgages in the foreclosure pipeline or already through the process may face legal challenges because of questions about the validity of documents, according to Morgan Stanley.

About 2.5 million homes have been repossessed since 2005 and another 6.5 million mortgages are in foreclosure or may be soon, Morgan Stanley’s Oliver Chang, Vishwanath Tirupattur and James Egan wrote in a note today. The validity of documents used to verify ownership and payment obligations may be in question for each of those loans, Chang said.

“We are talking about some pretty big numbers,” Chang, a San Francisco-based housing strategist, said in a telephone interview today. “There’s a lot of developing aspects” to determine the actual impact, he said.

Lawmakers, state attorneys general and consumer groups have pressed mortgage firms to follow Bank of America Corp., which last week suspended all foreclosures to check whether faulty documents were used to confiscate homes. A worst-case scenario, in which questions of legitimacy arise beyond procedural issues and a freeze extends to all states and servicers, would lead to “a torrent” of eventual foreclosures, retroactive litigation on home seizures and a delay in the housing recovery, Morgan Stanley said.

In addition to Bank of America’s halt, JPMorgan Chase & Co. and Ally Financial Inc.’s GMAC Mortgage unit froze seizures or evictions in 23 states. There are about 3.3 million mortgages in foreclosure or more than 60 days past due in those states, according to New York-based Morgan Stanley.

via bloomberg.com

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“FORECLOSURE MESS” COULD LAST FOR YEARS SAYS REPORT | BREAKING NEWS | Sky Valley Chronicle Washington State News

(NATIONAL) -- The scope of what is being called in some circles “Foreclosuregate” keeps expanding and lenders and loan servicers including JPMorgan Chase and Ally Financial are facing an explosion in homeowner lawsuits and state attorney general investigations over claims of falsified mortgage documents, according to a report by Bloomberg Buisnessweek.
In addition lawmakers in both houses of Congress have called for investigations
Adding to the mess is that “procedural mistakes” in the handling of mortgage documents have clouded titles establishing ownership of the homes, a problem that could plague both buyers and sellers of those homes for years.
In December 2009, a GMAC employee said in a deposition that a team of 13 people signed about 10,000 documents a month without verifying their accuracy.
In lawsuits across the country, homeowners claim lenders and servicers have used falsified documents to foreclose on homes, sometimes when the banks didn't even hold titles to the properties.
THE MERS PROBLEM
The Mortgage Electronic Registration Systems (MERS) based in Reston, Virginia faces its own mounting legal challenges.
MERS was created by the mortgage banking industry to handle “mortgage transfers” between member banks but a lawsuit filed on Sept. 28 in federal court in Louisville on behalf of all Kentucky homeowners claims that MERS was much more than “transfer” house. It claims MERS was part of a conspiracy to create false promissory notes, affidavits, and mortgage assignments to be used in illegal mortgage foreclosures.
Similar class actions have been filed on behalf of homeowners in Florida and New York.
Adding to the confusion and complexity of the case is that title insurers may also end up in court bringing and defending lawsuits because they could be held responsible if foreclosures are reopened.
In that case, title insurers might be going after the banks or whoever assured them there was a clear title.
And individuals who purchased homes in foreclosure sales face their own worries, as paperwork errors raise questions about the validity of the titles needed to prove ownership.
The problem? Defective documentation has created millions of “blighted titles” that may plague the nation for the next decade, according to one attorney, Richard Kessler of Sarasota, Fla., who conducted a study that he says found errors in about three-fourths of court filings related to home repossessions.
WHO REALLY DOES OWN THAT HOUSE?

via skyvalleychronicle.com

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Foreclosure sales may stall if title insurance becomes scarce - Sun Sentinel

October 08, 2010|Diane C. Lade, Sun Sentinel

Sales of foreclosed properties, already stalled by mounting evidence of widespread flawed documentation practices by lenders and attorneys, may hit another roadblock: New buyers might not be able to get the title insurance required for a mortgage.

New House Title, owned by a large Tampa foreclosure law firm under state investigation, this week denied coverage for a 2009 Deerfield Beach condo foreclosure that its own attorneys had handled, citing potentially defective court filings.

The New York Times last week also claimed Old Republic National Title, the fourth largest title insurer in the country, had sent a memo to its agents in some states saying the company would not cover homes foreclosed on by JPMorgan Chase until "objectionable issues have been resolved." Earlier, the company had taken the same stand on homes foreclosed by GMAC Mortgage, now owned by Ally Bank.

Louis Spagnuolo, vice president of mortgage banking at WCS Lending in Boca Raton, said title insurers are becoming very selective about they'll cover as the foreclosure crisis deepens. He predicted major underwriters soon will put a moritorium on policies for foreclosures by troubled lenders.

via articles.sun-sentinel.com

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Lakeland FL Foreclosures vs. Lakeland FL Short Sales – Lenders and Title Insurance

Lakeland FL Foreclosures vs. Lakeland FL Short Sales – Lenders and Title Insurance
For the past week we heard that banks such as JP Morgan Chase, Bank of America - now all 50 states, and GMAC suspended foreclosures in over 20 states including Florida. Florida Judges halting foreclosures, primarily due to fraudulent and improper paperwork and rubber-stamping or “robo-signing” without reviewing the documents. Title Insurance Company stopped issuing owner’s title policy on foreclosed properties making it impossible to buy a foreclosure.
Most owners who have stowed away their Owner’s Title Insurance Policy may want to find it and dust it off, especially with all this foreclosure mess where there is no real assurance of rightful ownership.
When it comes to the Lakeland Foreclosure market I noticed a decline in foreclosed homes being actively marketed. For the past seven days only, there were 47 foreclosed homes yanked (temporarily off market) primarily for reasons of paperwork issues as I indicated before.

via activerain.com

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Thursday, October 7, 2010

Obama won't sign bill that would affect foreclosure proceedings

By Jia Lynn Yang

Washington Post Staff Writer
Thursday, October 7, 2010; 2:34 PM

Amid growing furor over the legitimacy of foreclosure proceedings, White House officials said Thursday that President Obama will not sign a two-page bill passed by lawmakers without public debate after critics said the legislation could loosen standards for foreclosure documents.

The bill, named the Interstate Recognition of Notarizations Act, would require courts to accept document notarizations made out of state. Its sponsors intended the effort to promote interstate commerce. But homeowner advocates warn the new law could allow lenders to cut even more corners as they seek to evict homeowners.

White House press secretary Robert Gibbs said the president did not believe Congress meant to undermine consumer protections regarding foreclosure challenges. Still, Obama will use a "pocket veto," which will effectively kill the legislation.

Democratic leaders on the Hill were scrambling to figure out how the bill managed to sail through both chambers of Congress without any objection. The episode may prove embarrassing for Democrats who in recent weeks have been calling for federal investigations into flawed paperwork, forged documents and other kinds of misconduct in foreclosure proceedings initiated by big lenders.

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RESPA: HOME EQUITY PROTECTION ACT OF 2010 SEEKS TO BAN PRIVATE REAL ESTATE TRANSFER FEES (ALSO KNOWN AS "CAPITAL RECOVERY FEES") :: RESPA Lawyer Blog

US House Representative Maxine Waters and Rep. Albio Sires introduced a bill called the "Home Equity Protection Act of 2010" on Wednesday. The bill seeks to amend the Real Estate Settlement Procedures Act "RESPA" by prohibiting the collection of private transfer fees, also known as capital recovery fees or resale fees.

Often a housing or condominium developer establishes a legal covenant which requires the purchaser of a home in a large subdivision or condominium to pay a private transfer fee back to the developer or are allocated to the homeowners or condominium associations maintenance funds when they sell their home. The fees sometimes are often around one (1) percent of the sales price and the private transfer fee can often last as long as 99 years.

The private transfer fees have been controversial because some home buyers have claimed they were unaware of the restriction and in some cases the covenant doesn't require the homeowners signature at all. The proponents of making the private transfer fees illegal believe the fee strips the homeowners of their equity when they sell their property. Those in favor of keeping the private transfer fees intact believe it helps keep condominium and homeowners associations afloat by giving them needed capital to operate.

The Federal Housing Finance Agency proposed a similar rule which could prohibit Fannie Mae and Freddie Mac from insuring or purchasing mortgages that include private transfer fees. Several trade associations, including the National Association of Realtors and American Land Title Association, have applauded the legislation and are in favor of banning the private transfer fees.

via respalawyer.com

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Property Value Declines Now Becoming Property Tax Collection Declines, But Down Just 1.8 Percent in 2010 (Yet Values Have Plummeted in Many Markets Since 2006-- Wall Street Journal

From: Ted C. Jones
Sent: Thursday, October 07, 2010 5:35 AM
Subject: Property Value Declines Now Becoming Property Tax Collection Declines, But Down Just 1.8 Percent in 2010 (Yet Values Have Plummeted in Many Markets Since 2006-- Wall Street Journal

http://online.wsj.com/article/SB10001424052748703735804575535893686052782.html?mod=WSJ_WSJ_US_News_5

While it’s no surprise that property tax collections are down in 2010, and are expected to drop even more in 2011 and 2012, what is a shock is just how little total property tax collections declined—just 1.8 percent in 2010. Property tax collections grew 4.9 percent in 2009 even though property values declined.

Since the peak U.S. home prices recorded in 2006 (based an average of the monthly median existing home sales price of $222,000), prices dropped 22.2 percent in 2009 to an average monthly median of $172,742. And for the first eight months of 2010 that remains little changed with an average $173,700 price (a year-over-year gain of less than 6/10ths of 1 percent). Commercial real estate values, as proxied by the MIT Real Estate Group analysis of the National Council of Real Estate Investment Fiduciaries (see my blog August 27, 2010 http://blog.stewart.com/?p=636), are down at least 27 percent from the peak.

So why so little decline in property tax collections when values are down 20+ percent and taxes off less than 2 percent? Property tax collections are based on both the assessed value of the real estate and the property tax rate. And yes, you got it, property tax rates rose in the face of declining property values. Property tax rates, however, are not equal across the country. To get an idea of how widely they range and to view the relative burden of property taxes on homeowners, The Tax Foundation reports annually respective tax rates and burdens across the country. Comparative property tax rates can be seen at http://taxfoundation.org/taxdata/show/1888.html. The Tax Foundation ranks the top 792 country property taxes as a percentage of the home value. Nationwide, 2009 saw an average rate of 1.04 percent, up from 0.96 percent in 2008 (an increase of 8.33 percent). Wow. The report, which can be downloaded as an Excel file, includes data for 2005 through 2009.

So what can we conclude regarding property taxes? There will be continued pressure by local governments to raise the tax rate despite declining real estate values. One would hope, however, that local and state governments would place as much vigor in reducing spending as they do in increasing tax rates—in addition to accurately appraising properties.

And for consumers, visit with local real estate specialists, find out your realistic market values and appeal you property tax assessment if they taxing authority has you overvalued. While you can’t, on an individual basis, dispute the property tax rate, assessed values should be based on realistic market values.

Ted

Ted C. Jones, PhD

Senior Vice President-Chief Economist, Stewart Title Guaranty Company

Director of Investor Relations, Stewart Information Services Corporation

P Please consider the environment before printing this e-mail.

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JPMorgan, Bank of America Face `Hydra' of Foreclosure Probes - Bloomberg

Officials in Ohio and Connecticut, along with Florida, Texas, North Carolina, Iowa and Illinois, said they are investigating mortgage foreclosure practices. Photographer: Jacob Kepler/Bloomberg

Play Video

Oct. 6 (Bloomberg) -- Joseph Murin, former president of government-run mortgage bond insurer Ginnie Mae, talks about the outlook for the housing market. Murin speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Audio Download: Fried Ineterview on Mortgage Lending

Audio Download: Fried Sees Fewer Residential Mortgage Lenders: BLAW

JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc., defending allegations of fraudulent home foreclosures from customers and Congress, may face the most financial peril from investigations by state attorneys general.

Authorities in at least seven states are probing whether lenders used false documents and signatures to justify hundreds of thousands of foreclosures, and the number of these inquiries will grow, according to state officials and legal experts.

“You’re going to see a tremendous amount of activity with all the AGs in the U.S.,” Ohio Attorney General Richard Cordray said in an interview. “We have a high degree of skepticism that the corners that were cut are truly legal.”

Cordray announced today that he filed a lawsuit against Ally in state court, claiming its GMAC unit committed fraud and violated state consumer law by filing false affidavits in foreclosure proceedings.

via bloomberg.com

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Wednesday, October 6, 2010

US insurer Fidelity National to offshore more work to India

from

Chennai, Oct 5 (IANS) Spotting an opportunity to cut its costs by around 30 percent with increased productivity, US-based insurer Fidelity National Title Group Inc has decided to scale up its business process outsourcing (BPO) and software development activities in India.

The company had set up its captive BPO company Fidelity National Financial India in Bangalore three years back.

The $4.6 million revenue Fidelity National Financial India has around 800 employees searching and confirming property titles in the US for its insurance parent.

'We will be increasing the headcount by 1,000 to 1,800 starting next year for our BPO operations so that we can shift work like accounts payable, legal operations here. We are also planning to expand the software development team here,' Senior Vice President Andy Giddings told IANS.

According to him, the insurer has decided to develop software for its core title insurance business back home out of India in May and formed a small team of 25 people.

'We will be expanding that team by adding 100 more software engineers during the first quarter of the next year. We have around 15 different software applications and we expect the number to go down with the development of integrated programmes,' Giddings said.

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Is A 90 Day “Mortgage Meltdown” Foreclosure Moratorium Imminent As The RoboSigning Scandal Goes Mainstream?

Tyler Durden
Zero Hedge
Oct 5, 2010

The Massive Mortgage Mess as we affectionately call it seems to be getting new names with each passing day – the latest one is, quite appropriately, RoboSigning Scandal (funny how after the stock market, “robotic” technology will soon becoming equated with the biggest mortgage scam in history). During today’s Kudlow segment, CNBC’s Diana Ollick who is by and far the company’s best (and only) investigative reporter, confirms various so far unfounded rumors, that the government is planning to institute a 90 day foreclosure moratorium as it deals with the realization of just how big and pervasive the mortgage problem is, and even worse, will soon be. It is so bad that even a typically ebullient Larry Kudlow is forced to note that this is the “housing equivalent of the credit financial meltdown” and that “this is going to go on for ever.” The biggest issue that is now developing, as we noted last week, is the fact that title insurers (firms such as Fidelity National, First American, Stewart Info and Old Republic) are refusing to insure mortgages in foreclosure or otherwise, uncertain as to who actually owns the title. And for all those who believe this will merely keep prices artificially high, we have very bad news – the problem with the title insurers walking away on fears of lawsuits is that no lender will be willing to write a mortgage without title insurance, meaning that suddenly the up-front component of home purchases will either necessarily have to surge, or home prices will have to plunge by a like amount, as there is simply not enough equity (read money) to cover the resulting debt deficiency. Alas, this mess is just starting, and as people realize how bad it is, it very well may lead to a total collapse in the housing market.

via prisonplanet.com

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Tuesday, October 5, 2010

Top 10 Closer Mistakes. #9 Guaranteeing the Reputation of Others

From Knight-Barry Title Group

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Saturday, October 2, 2010

Foreclosure Errors May Cloud Ownership of U.S. Homes - BusinessWeek

October 01, 2010, 6:37 PM EDT
By Kathleen M. Howley

Oct. 1 (Bloomberg) -- U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership.

“Defective documentation has created millions of blighted titles that will plague the nation for the next decade,” said Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions.

Attorneys general in at least six states are investigating borrowers’ claims that some of the nation’s largest home lenders and loan servicers are making misstatements in foreclosures. JPMorgan Chase & Co. is asking judges to postpone foreclosure rulings, while Ally Financial Inc. said Sept. 21 its GMAC Mortgage unit would halt evictions. The companies said employees may have completed affidavits without confirming their accuracy.

Such mistakes may allow former owners to challenge the repossession of homes long after the properties are resold, according to Kessler. Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.

via businessweek.com

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[SPAM] American Land Title Association Comments on Recent Announcements Regarding the Foreclosure Process

ALTA NEWS

Contact: Jeremy Yohe

Office: 202-261-2938

Phone: 202-590-8361
E-mail: jyohe@alta.org

Immediate Release

American Land Title Association Comments on Recent Announcements Regarding the Foreclosure Process

Washington, D.C., Oct. 1, 2010 — The American Land Title Association (ALTA) has issued the following statement regarding title insurance on foreclosed properties:

Several lenders have halted foreclosures and the sale of real estate owned properties (REO) due to possible flaws in documentation used in the foreclosure process. This has, in turn, raised questions about the validity of title to properties that have already been foreclosed, resold and on which a title insurance policy has been issued. ALTA believes these questionable foreclosures will ultimately have little adverse impact on the new owners of REO properties or on the title insurance claims.

“If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge,” said Kurt Pfotenhauer, chief executive officer of ALTA. “However, it is unlikely that a court will take property from an innocent current homeowner and return it to a previous homeowner who failed to make payments on the loan subject to the foreclosure.”

Though laws may vary on a state by state basis, in general, the buyer of a property that has been through foreclosure has numerous defenses available to assure their continued ownership.

The alleged deficiency in the foreclosure process may not be accurate.
The alleged deficiency in the foreclosure process may not have harmed the previous owner.
The foreclosure judgment is a final court order. It is likely too late for a technical objection to the foreclosure process to be raised by the previous owner.
Because the new owner purchased in good faith, they may be protected under the law.

These same legal defenses should significantly limit the title industry’s claims exposure. And in the event that a court does set aside a foreclosure due to a defect in documentation, the foreclosing lender would be required to return to the new homeowner all funds obtained from them, resulting in no loss under the title insurance policy.

“ALTA will be asking lenders to acknowledge that all appropriate procedures have been followed by the lending community before foreclosed properties are resold on the market,” Pfotenhauer said. “On foreclosures, it is especially important that all documentation is in order. Commitment to accuracy and quality assurance is the foundation of title insurance. This commitment ensures fewer problems for homeowners and lenders, and should give shareholders confidence in their investment.”

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