Tuesday, December 13, 2011
Saturday, December 3, 2011
NAILTA Announces Opposition to "MERS 2" Proposal
The National Association of Independent Land Title Agents (NAILTA) has announced that it is opposed to a provision in legislation offered by Senator Bob Corker (R-TN) that would create "MERS 2", a federal mortgage registry modeled after and designed to replace the existing bank-owned MERS mortgage registry.
In its position paper on the Corker bill, Senate Bill 1834, NAILTA says that it "is opposed to any reconstituted MERS system because the MERS model is a deeply flawed system that continues to harm consumers, small business owners, and county governments across the United States."
According to NAILTA, "[A]ny consideration of creating a new MERS without having successfully resolved the well-known flaws and inadequacies of the previous MERS system is a foolhardy exercise. S.B. 1834 proposes no solution to the prevalent flaws with the current MERS system. Instead, it merely seeks to establish MERS 2.0 based upon the MERS in use on the date of enactment." One of those purported flaws in MERS is that it "fails to reconcile 50 states worth
of mortgage recording and foreclosure law."
NAILTA claims that MERS, a system "built by the mortgage industry, for the mortgage industry" according to its founders, has harmed the land title industry in particular by shifting the business of title insurance away from title professionals and toward banks. NAILTA says that MERS has also damaged land title records and deprived local governments of fees used for general purposes such as public safety.
NAILTA characterizes MERS 2 as a Federal Torrens title system-- subject to the considerable expense and difficulty of reconciling states' differing recording and foreclosure laws into one system. MERS failed because of the same pitfall, and consumers, county governments, and title agents have borne this expense while only the owners of MERS have benefited, according to NAILTA.
NAILTA has contacted Senator Corker's office and requested a meeting with the Senator, to express its "deep reservations and opposition concerning MERS and the specific problem we have with [the MERS 2] provision."
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Banks Face Foreclosure Charge Again - Zacks.com
In yet another major setback for the foreclosure settlement, Massachusetts Attorney General (AG) Martha Coakley filed a lawsuit against – JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corporation (BAC - Analyst Report), Citigroup Inc. (C - Analyst Report), Wells Fargo & Company (WFC - Analyst Report) and Ally Financial Inc. – for alleged violation of foreclosure practices. Further, Mortgage Electronic Registration System Inc. (MERS) and its parent company have also been named as defendants.
Allegations
The lawsuit alleges that these five major mortgage servicers used various deceiving foreclosure practices to fast track foreclosures without properly following the rules. Some of the procedures followed by these banks included use of ‘robo-signers,’ misleading homeowners in relation to loan modification processes, utilizing flawed documents and illegally foreclosing a property.
Additionally, MERS, which provides database for mortgage servicers, has been accused of sloppy record keeping, hiding the identities of the holders of mortgage debt from borrowers and evading fees. The lawsuit also charges these banks for utilizing the MERS database without paying registration fees to the government.
Motives
Ms. Coakley commented that the primary motive behind the lawsuit is to provide proper accountability for the roles played by the banks in unlawful and illegal foreclosures. Additionally, the lawsuit aims to give proper and enforceable relief to the homeowners whose property had been wrongly foreclosed by the misconducts of the mortgage servicers.
Responses from the Banks
The officials of all these five alleged companies stated that they would fight the lawsuit. They have also expressed that a joint resolution would have been a better way to deal with foreclosure mess and the present lawsuit jeopardizes chances for broader relief.
The Story Behind
It all started more than a year ago, when JPMorgan, Bank of America and Ally Finance Inc. temporarily suspended foreclosures across the country, following the detection of faulty foreclosure paperwork. Following this, the U.S. bank regulators, along with the state AGs, geared up to take actions against mortgage servicers.
The banks and regulators along with the AGs were in the middle of settlement deal designed to provide new guidelines for foreclosure practices across the nation. However, several obstacles appeared in the settlement agreement between the mortgage servicers and the AGs.
Ms. Coakley along with the AGs of New York and Delaware has been vocal in arguing that banks should not be exempted from future liability. Some other states including Minnesota, Nevada and Kentucky have been raising concerns regarding the extent of civil protection that should be given to the banks as a part of the settlement deal.
Though at present the talks have ceased, differences have cropped up between the banks and the AGs over the amount of money (nearly $25 billion) that should be placed in the reserve account for those home owners with wrongly foreclosed property.
Still a Long Way to Go
The banks have been hoping to put the foreclosure matter behind them with the agreement to settle the issue with the state AGs. However, with the Massachusetts lawsuit their plans to avoid the legal issues have been jeopardized. Apart from Massachusetts, the AGs of California, New York, Delaware and Nevada have pulled themselves out of the settlement talks and have started their own investigations.
Additionally, the banks already facing a large number of litigations related to mortgages could face further liabilities if other states also follow the suit and start their own inquiries.
However, whatever be the case, either through settlement talks or lawsuits, clearing the foreclosure clutter will go a long way to resolve the mess. However, we are optimistic that various counteractive measures, if implemented correctly, would prevent yet another foreclosure crisis. But most importantly, it would leave a lasting impact on lenders, forcing them to be extra cautious during housing transactions
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Cleveland home buyer's beef leads to Supreme Court case - Cleveland Business News - Northeast Ohio and Cleveland - Crain's Cleveland Business
The U.S. Supreme Court today hears arguments in a major consumer case that traces its origins to a lawsuit a Cleveland home buyer filed against her title insurance company.
Reuters says the dispute, which pits big business against consumer groups, gets at a fundamental question: whether a person has to suffer legal harm to sue a company over an alleged kickback it got.
The Cleveland home buyer, Denise Edwards, “sued her title insurance company under a 1974 federal real estate settlement law that bars kickbacks and certain referral fee arrangements,” Reuters reports. The news service says Ms. Edwards paid First American Financial Corp $455 for title insurance as part of a home purchase in 2006 while the seller paid an additional $273. She alleges that First American “had an arrangement with her Ohio settlement agency to refer title insurance business exclusively to First American — the alleged kickback.”
Reuters notes that her attorneys argued that Congress, in adopting the 1974 law, “created a sufficient basis for her to sue and that courts have long recognized an individual's interest to receive services free of kickbacks or other conflicts of interest.”
Backing the title company are organizations representing home builders, title insurance companies and mortgage bankers, as well as the U.S. Chamber of Commerce.
The story, unfortunately, doesn't do a good job explaining their view of the case. But Kevin Walsh, a University of Richmond assistant law professor, tells Reuters that oral arguments before the court could provide clues on whether the justices are likely to rule broadly or narrowly.
"A broad ruling could either vindicate or constrict statutory damages provisions in laws designed to protect information privacy, to regulate debt collection and to set standards for credit reporting," he says, citing other laws that could be affected.
New Jersey Title Insurance Linkedin Group
Friday, December 2, 2011
New settlement disclosure form to replace HUD-1 | Inman News
Federal regulators are asking for industry input on prototypes for a new, unified settlement disclosure form that will replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form currently in use.
The Consumer Financial Protection Bureau -- which has also been asking for feedback this year on a unified loan disclosure form that consumers will receive when they apply for a mortgage -- says it plans to test a number of different designs for a new settlement disclosure form over the next few months.
The bureau will accept industry and consumer feedback until Nov. 16 on its initial prototypes for a redesigned settlement disclosure form. Based on that feedback, the bureau will fine-tune the prototypes and seek additional comments.
Consumers currently get two disclosure forms whenever they apply for a mortgage, and two more at the closing table.
New Jersey Title Insurance Linkedin Group
Supervision and Examination Manual – Version 1.0 > Consumer Financial Protection Bureau
This first edition of the CFPB Supervision and Examination Manual is a guide to how the CFPB will supervise and examine consumer financial service providers under its jurisdiction for compliance with Federal consumer financial law.
The Manual is divided into three parts. The first part describes the supervision and examination process. The second part contains examination procedures, including both general instructions and procedures for determining compliance with specific regulations. The third part presents templates for documenting information about supervised entities and the examination process, including examination reports.
To fulfill its statutory mandate to consistently enforce Federal consumer financial law, the procedures in this manual are designed to be used by examiners to examine supervised entities that offer similar types of consumer financial products or services, or conduct similar activities. While all supervised entities must operate in compliance with applicable laws, the CFPB will tailor its expectations of how that is accomplished to fit particular entity profiles.
In this first edition, we have incorporated examination procedures developed under the auspices of the Federal Financial Institutions Examination Council (FFIEC) for many of the laws now generally enforced by the CFPB, including the Truth in Lending Act, Real Estate Settlement Procedures Act, and the Fair Credit Reporting Act. The CFPB will also use the Uniform Consumer Compliance Rating System established by the Federal Financial Institutions Examination Council.
Our Manual will also include examination procedures organized by product and line of business, beginning with procedures for reviewing mortgage servicing. We expect to continually update the Manual as compliance requirements evolve.
A dynamic supervision program depends on continual enhancement. Contributions from all stakeholders are critical in the accomplishment of this goal. The CFPB welcomes feedback and suggestions for improvements from examiners, the banking industry, nonbank financial services companies, federal and state agencies, consumer and community groups, and the general public.
Click Here to see the manualNew Jersey Title Insurance Linkedin Group
National Mortgage News - RESPA Rated Toughest Compliance Task
Of the thousands of financial regulations on the books, which is the most burdensome? Dodd-Frank? Truth in Lending? Basel III?
According to panelists at the National Mortgage News' 13th annual Mortgage Technology conference in Miami, the Real Estate Settlement and Procedures Act hands down the clear winner.
Moderator Avi Naider, chairman of ACES Risk Management Corp., Ft. Lauderdale, said one top five bank has spent 200,000 hours in IT time trying to comply with RESPA. "That's a tremendous number," he said.
Angie Kolb, director or compliance product marketing at Dorado, a CoreLogic company based in San Mateo, Calif., lenders still struggle everyday with RESPA and the variety of interpretations that come with the consumer protection law.
"The hardest part is getting your hands around it," Kolb said, noting that FAQ's are still being published. "Even small items like where to put funding fees are part of the back-and-forth conversation."
Melanie Feliciano, chief legal officer with Doc Magic, and Noel Wells, a regional manager with Premier Home Mortgage, agreed. "Other regulations have had an impact," said Feliciano, "but RESPA presents the greatest compliance burden."
The panelists also agreed on another point: That technology is wonderful, but the human touch can't be forgotten. "Technology is not always the answer to everything," said Naider. "While the tools are out there, you can't forget the human skill set."
"You have to have people interpret the data," added Kolb. "Technology cannot supplant human beings."
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How do you spell RESPA Violation? « Monday Morning With Matey
How many times have you viewed a listing on the MLS and seen: transaction, compliance, storage, processing or statutory compliance fees? These fees range any where from $195 to believe it or not $795. No matter how you say it or print it, there is no way around it, they are a violation of RESPA. I have heard all kinds of excuses: They are sanctioned by NAR. My attorney says it is legal. FR hotline says it’s OK. Or even better: Everyone else is charging it (reminds me when I was little and the excuse was everyone else is doing it).
Sooner or later, we will begin to get audited by HUD for RESPA violations. It is just a matter of time. Already many Buyers are complaining 
Look to the right and you will see the Featured Link of The Week – it’s a question and answer regarding these fees and it’s available for download.
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Supreme Court Hears Arguments On Whether RESPA Violation Is An Injury In Fact
WASHINGTON, D.C. -- The U.S. Supreme Court heard arguments on Nov. 28 on whether a property owner suffered an injury in fact under the Real Estate Settlement Procedures Act (RESPA) when she bought title insurance from a company that allegedly paid kickbacks to get business from title insurance agents in Ohio (First American Financial Corp. v. Denise P. Edwards, No. 10-708, U.S. Sup.).
(Transcript. Document #85-111223-001T.)
Denise P. Edwards sued First American Financial Corp. in the U.S. District Court for the Central District of California. She alleged that First American violated RESPA's anti-kickback provision by entering into exclusivity agreements with thousands of title insurance agencies that are authorized to sell First American title insurance policies. Under RESPA's remedies, Edwards seeks treble damages for the $455 cost of her title insurance.
The District Court denied First American's motion to dismiss for lack of standing. On appeal, the Ninth Circuit U.S. Court of Appeals affirmed.
Questions Presented
The Supreme Court agreed to hear two questions: whether the Ninth Circuit erred in holding that Edwards has standing to sue under RESPA when she does not claim that the violation affected the price, quality or other characteristic of the settlement services, and whether Edwards has standing to sue under Article III, Section 2, of the U.S. Constitution when she does not have an injury in fact.
Justice Stephen G. Breyer questioned whether Edwards was suing because she was exposed to a transaction that Congress "said was harmful." Aaron M. Panner of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington, arguing for First American, said no, because Edwards paid the only rate for title insurance that is available under Ohio state law.
Justice Ruth Bader Ginsburg said Edwards' claim "does seem to fit the bill of restitution, unjust enrichment cases, where the plaintiff doesn't have to prove any harm, she just gets back what the defendant should not have received." Panner said Edwards is not "worse off" because there is no allegation that the insurance was lacking.
'Prearranged, Tied Product'
Justice Sonia Sotomayor said Panner seems to be arguing that "Congress can't ever presume damages or injury, that even in those cases plaintiff has to come in and prove that they would have paid less." She continued: "So what more does this plaintiff have to allege other than, if I had been told that this was a prearranged, tied product between the mortgage and the title company, but that I had a right to get an untied product even at the same price, and I would have exercised that right if I had known - would that be enough?"
Panner said that is not what Edwards is alleging. He said a "violation of the statutory right does not create an injury for constitutional purposes."
Justice Breyer told Panner "there is no doubt that the plaintiff here suffered the harm that Congress sought to forbid. That harm was being engaged in a transaction where the title insurance company was not chosen on the merits, but partly in terms of a kickback." He asked what was unconstitutional about that.
Panner said there was no injury in fact under Article III "and Congress cannot create that injury legislatively."
Trust Violation?
Justice Antonin Scalia asked if Congress could create a trust relationship between title insurance agents and property purchasers that would constitute an Article III injury in fact. "If you become a trustee by contract you get one result, but if you are a trustee by government decree so that you must be a trustee, contract or not, somehow the situation changes?" he asked.
Justice Elena Kagan said Panner's argument that there is a difference depending on the source of the law is "very much inconsistent with our case law." She said her reading of Edwards' complaint is that she doesn't have to prove injury because "there's been a judgment made that these kinds of practices tend to decrease service and tend to increase price and therefore I don't have to prove those matters. And that's the exact same judgment that is made in the trust cases, for example."
Panner said that Congress could broaden the law to require enforcement of violations by the executive branch. "But what Congress cannot do is to dictate in advance that a particular practice has cause injury to a particular plaintiff."
'Duty Of Loyalty'
Jeffrey A. Lamken of MoloLamken LLP in Washington, arguing for Edwards, said that breaches of a duty of loyalty by taking kickbacks have been a part of common law for which a plaintiff can sue without showing an economic harm.
Justice Scalia told Lamken: "There is no duty of loyalty owned here." The justice added: "I'm not even sure it's proper to call it a kickback. It's a commission."
Lamken told Justice Scalia that Congress gave consumers a right to "freedom from a particular conflict of interest, and that is the kickbacks that undermine their incentive to serve your best interest, that undermine their incentive to choose the insurer that provides the best quality and the best service."
Justice Samuel A. Alito Jr. said he doesn't see a fiduciary relationship and doesn't see where a duty of loyalty comes from. He added that he does not see an injury in fact.
Permit Private Suits?
Justice Scalia told Lamken: "The issue isn't whether Congress can achieve that result [of legal protection]. It's whether they can achieve it by permitting private suits."
Chief Justice John G. Roberts Jr. questioned whether Edwards suffered an injury in fact or an injury in law. He said he thinks it is the latter.
The chief justice also told Lamken that Edwards claim of "potential value" "sounds to me like possible future injury."
'Circular'
Justice Anthony M. Kennedy told Lamken, "[i]t's circular for you to say that he was denied something that he is entitled to. The question is whether there is an injury. The Constitution requires an injury."
Appearing on behalf of the federal government, Assistant Solicitor General Anthony A. Yang of the U.S. Department of Justice in Washington, told the court: "When an individual has a statutory right to a kickback-free referral in a financial transaction, she participates in a particular financial transaction in which her right is violated and she pays money for the service unlawfully referred, she has sustained an Article III injury in fact based on, as this Court in its repeatedly explained test, an invasion of a legally protected interest."
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Insurance News - American Land Title Association Appoints Christopher Abbinante as President [Manufacturing Close - Up]
The American Land Title Association (ALTA), a national trade association representing members of the title insurance industry, announced that veteran land title insurance industry professional Christopher Abbinante has been named president for the 2011-2012 year.
"It is a privilege to represent an industry whose purpose is to protect consumers against legal challenges to their homeownership," Abbinante said. "I am honored to serve as president of a growing and vibrant association, now representing more than 4,000 member companies. The American Land Title Association is committed to constantly improving its representation and service to our industry."
The 11-member ALTA Board of Governors is responsible for creating association policy, managing the financial health of the association, and ensuring the overall welfare of the association.
According to a Nov. 1 release, Abbinante, formerly the president of Eastern Operations for Fidelity National Title Group, Inc., has been involved in the title industry for over 35 years. During that time, he has worked with agents and direct operations across the United States, Canada, and the Caribbean.
Abbinante started in the land title industry in 1975, working for a law firm in Chicago that also had a small title agency. In 1976, he joined Chicago Title, serving in many different capacities. In 2001, Chicago Title became part of the Fidelity National Financial Family of Title Companies. Abbinante now focuses on Fidelity's Canadian operations as well as with U.S.-based operations located primarily in the eastern and central parts of the country.
"Chris is the right person to lead our association through the challenges we currently face. His talents as a title insurance executive are well regarded throughout the industry and he inspires confidence as we work to better serve consumers," said Michelle Korsmo, chief executive officer of ALTA.
New Jersey Title Insurance Linkedin Group
WFG National Title Names Ravi Bapodra to Lead TitleNet | Mortgage News | Daily National and State Headlines
WFG National Title Insurance Company has announced Ravi Bapodra as its new VP and managing director of TitleNet. The Williston Financial Group family of title insurers is currently licensed and operating in 40 jurisdictions nationwide. TitleNet, a division of WFG National Title, is a national provider of title, closing and settlement services comprised of a national network of independent providers using a centralized technology platform. The operation processes residential and commercial transactions, as well as loss mitigation, default and real estate-owned (REO) transactions.
Bapodra will oversee the growth of TitleNet and maintain its relationship with its network of independent providers and clients. He comes to WFG National Title and TitleNet with 13 years of industry experience. He was most recently vice president of default product services with one of the nation’s largest title underwriters. He has spent the majority of his career in executive positions with two other large national underwriters.
“Ravi excels at harnessing the strength of independent businesses, and connecting them to national and regional banks, REO firms, GSEs and other companies to meet or exceed their performance standards, the concept at the core of the TitleNet model,” said Joseph Drum Esq., EVP of WFG National Title. “His role will be to allow our independent agencies to do what they do best, while supplementing them with top-flight resources, guidance and coordination. Our agencies will quickly find Ravi and TitleNet to be outstanding assets.”
New Jersey Title Insurance Linkedin Group
Title Insurers’ Struggles Expected to Continue as NAIC Steps Up Oversight | PropertyCasualty360
The National Association of Insurance Commissioners has decided to ramp up its oversight of title insurers.
The problem stems from problems at small and regional title companies, not the four large title companies, according to Paul Bauer, a vice president and senior credit officer on the insurance team at Moody’s Investors Service.
Bauer, who covers three of the large title insurers, says the larger ones are more prepared to weather the current storm caused by the housing crisis than the small ones.
“They have more scale and more flexibility from a cost-management standpoint,” he says.
He adds that title insurers are “different from other [property and casualty] insurers because a lot of what needs to be done is expense management.”
The NAIC’s decision for increased oversight was made by the Title Insurance Task Force at the NAIC’s Fall National Meeting, which ended here Sunday.
The decision follows the failure of three title insurance companies so far in 2011.
The task force plans to work with other NAIC working groups to modernize solvency regulation of the industry. These efforts will include looking at recent industry failures, developing risk-based capital requirements, early warning tools, and risk-focused examination guidelines.
The core title insurance industry problem is that it “continues to deal with the aftermath of the great housing price bubble and its painfully slow deflation,” Bauer says in an April report.
He adds, “We expect title insurance companies to be challenged over the medium term by a shrinking revenue base and lower income due to a drop in mortgage refinancings accompanied by only a mild, if any, uptick in overall home-sale transactions.”
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Saturday, November 26, 2011
FHA LENDING LIMIT UPDATE
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.
New Jersey Title Insurance Linkedin Group
FHA LENDING LIMIT UPDATE
FHA LENDING LIMIT UPDATE
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.
New Jersey Title Insurance Linkedin Group
Thursday, November 10, 2011
Warren: New Mortgage Forms to Empower Consumers.
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.
Title Insurance Industry Free ClassifiedsNew Jersey Title Insurance Linkedin Group
Designing the Mortgage Form of the Future.
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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Tuesday, November 1, 2011
INCREASE IN MORTGAGE APPLICATIONS NOTED
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%.
New Jersey Title Insurance Linkedin Group
INCREASE IN MORTGAGE APPLICATIONS NOTED
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%.
New Jersey Title Insurance Linkedin Group
Friday, October 7, 2011
Court rules that semicolon in statute means that force-placed insurance provision of RESPA is not yet effective - Lexology
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.
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Thursday, September 22, 2011
We got here one mortgage at a time
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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Tuesday, September 13, 2011
Do you think the Government should guarantee home mortgages?
Read this testimony presented today before the Senate Banking, Housing & Urban Affairs Committee on Housing Finance Reform
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CFPB - Round 4 - New TIL/GFE Form Prototypes
by Wyatt Bell | 2011/09/13 |
The CFPB has issued the 4th round of proposed changes to the TIL/GFE combined format. These may be viewed at CFPB website: Know Before You Owe
Any thoughts that "itemization" may reappear for title fees and policies have ended in the latest revisions to the proposed GFE forms. 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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Wednesday, September 7, 2011
Current CFPB authority - Lexology
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.
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Current CFPB authority - Lexology
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.
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Saturday, September 3, 2011
Banks Overwhelmed by Mortgage Refinancing After Job Cuts - Businessweek
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
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Monday, August 8, 2011
the doctrine of merger of title
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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Sunday, August 7, 2011
I don't know if this is true but it's funny
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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