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HUD No. 11-292

Lemar Wooley

(202) 708-0685 FOR RELEASE

Wednesday

December 28, 2011

FHA EXTENDS WAIVER OF ANTI-FLIPPING REGULATIONS THROUGH 2012

WASHINGTON – In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration Commissioner Carol J. Galante today extended a temporary waiver of FHA’s anti-flipping regulations through 2012. Read FHA’s anti-flipping waiver.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Galante. “FHA remains a critical source of mortgage financing and stability and we must make every effort to promote recovery in every responsible way we can.”

With certain exceptions, FHA rules prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, FHA temporarily waived this regulation through January 31, 2011, and later extended that waiver through the remainder of 2011. The new extension will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The extension announced today is effective through December 31, 2012, unless otherwise extended or withdrawn by FHA. All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions:

All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction;

In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value; and

The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

FHA research finds that in today’s market, acquiring, rehabilitating and reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

Read FHA’s anti-flipping waiver.

Art Oswald

Learntitle.com, LLC dba CyberLearnPro.com

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The richest man is not the one with the most stuff - it is the one with a satisfied mind.

 

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NCOIL TO TAKE TOUGH LOOK AT TITLE INSURANCE REGULATION

FOR IMMEDIATE RELEASE CONTACT: Susan Nolan Candace Thorson NCOIL National Office 518-687-0178 NCOIL TO TAKE TOUGH LOOK AT TITLE INSURANCE REGULATION, WEIGHS NEED FOR MODEL LAW Point Clear. Alabama. November 18. 2012-lawmakers at the NCOIL Annual Meeting kicked off their review of the title insurance market and committed to exploring possible model legislation in 2013. The special November 16 panel discussion held by the Property-Casualty Insurance Committee responded to strong legislator interest in the issue at the Summer Meeting and focused on cost and competition concerns, among other things. Participating in the discussion were Commissioner Joe Murphy (MA) who overviewed various National Association of Insurance Commissioners (NAIC) title insurance efforts; Justin Ailes of the American land Title Insurance Association, who outlined how title insurance works and its economic impacts; and Robert Holman representing the National Association of Independent land Title Agents (NAILTA) who spoke to conflict-of-interest concerns, among other items. Sen. Carroll Leavell (NM), who served as NCOIL President at the time of the discussion, asserted after the debate that "We need to pay close attention to anything that costs homebuyers money-particularly in today's troubled market and particularly when there are very real concerns over unfair pricing. That's a major motivation in looking at this issue." Rep. Steve Riggs (KY), P-C Committee Chair, commented that: Title insurance plays a necessary role in the proper functioning of real estate markets around the country. The coverage can protect both lenders and consumers and prevent much difficulty down the road. But-like all forms of insurance-it must be properly regulated. State laws must exist to ensure that consumers know what they're buying, know their options, and know that they're paying a fair price. Our investigation into the effectiveness of title insurance oversight will identify any regulatory gaps. During the course of the discussion, Mr. Ailes said that title insurers in 201 1 had a combined ratio-in other words, the amount of expenses and losses as related to premium earned -- of 112.7 percent, compared to the rest of the p-c industry's ostensibly healthier 108.3 percent. He explained that title insurance covers against past events, rather than-like auto insurance, for instance-possible future losses, and that the title insurance industry was working on best practices to enhance efficiencies and consumer protections. Mr. Holman said consumers should be concerned about consolidation and anti-competition, noting that just four companies write a significant majority of coverage in the U.S. He said that arrangements between title insurers and entities such as realtors and settlement lawyers limit consumer choice and help increase prices. He also commented that improvements and protections were warranted. At the conclusion of the Committee meeting, the group adopted a 2013 Committee charge to investigate title insurance concerns and take a position as appropriate. Title insurance-which is primarily a U.S. phenomenon-protects lenders from liability and losses related to land title disputes. Lenders require their borrowers to purchase title insurance on lenders' behalf in order to secure a loan. The borrower can buy title insurance for himself if he chooses-at an additional cost. The NCOIL Annual Meeting took place from November 15 to 18 in Point Clear, Alabama. The 2013 Spring Meeting will be held March 8 to lain Washington, DC. NCOIL is an organization of state legislators whose main area of public policy interest is insurance legislation and regulation. Most legislators active in NCOIL either chair or are members of the committees responsible for insurance legislation in their respective state houses across the country. More information is available at www.NCOIL.org. For further details, please contact the NCOIL National Office at 518-687-0178 or by e-mail at cthorson@NCOIL.org.

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Shelley Stewart Appointed to National Insurance Committees - The Southern Title Column

(DAYTONA BEACH, FL – November 26, 2012) – As a result of her active involvement in federal, state, and local issues impacting the real estate industry, Shelley Stewart, president of Southern Title Holding Company and past president of the Florida Land Title Association, has been named to two national committees that will guide the policies of the insurance industry.

Stewart, who has presided as president of Southern Title since its founding in 1995, will serve as an agent liaison on the National Association of Insurance Commissioners (NAIC) Industry Liaison Committee. The committee meets bi-annually to discuss issues of common interest to state regulators and insurance industry representatives.

At the American Land Title Association annual convention in October, Stewart was named to the ALTA Government Affairs committee, which is charged with developing strategies to achieve the group’s federal legislative and regulatory objectives.

Stewart has taken an active role in the real estate title industry, serving as President of the Florida Land Title Association (FLTA) in 2010. She was recently named Associate VP with the Florida Home Builders Association, and has held leadership positions in the Florida Association of Mortgage Brokers, Mortgage Bankers Association, Women’s Council of Realtors, the Volusia-Flagler Title Association, the Daytona Beach Board of Realtors, and the East Coast Building Industry Association.

About Southern Title

Southern Title is Volusia County’s leading independent title agency, providing real estate closing services to buyers, sellers, REALTORS®, lenders, builders, investors, throughout Florida since 1995. Voted “Best Title Company” by readers of the Daytona Beach News-Journal, Southern Title is staffed with a team of experienced professionals, including 8 Certified Land Closers and 1 Certified Land Searcher, designations indicating the highest level of achievement in the title insurance industry. All Southern Title closing officers are licensed by the state of Florida. For more information, please view our website at www.stitle.com, or call Lisa Blythe at (386) 316-3141 or lblythe@stitle.com.

 

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Housing Recovery Benefits Title Insurance Industry: Fitch

by Tory Barringer
of DSNews.com

The period’s underwriting combined ratio reached 90.7 percent, a level not seen since 2006.

“The title insurance industry is benefitting from an improving housing market that is showing less home inventory and increasing home prices nationally,” Fitch says in its report.

While mortgage originations are expected to fall off somewhat in 2013, Fitch notes that the drop will mostly be driven by a decline in refinance activity, which will be offset by growing purchase originations. As the agency points out, “purchase orders typically bring in twice the revenue of refinance orders for title insurers.”

Additionally, open order counts for title underwriters were 20 percent higher at third-quarter 2012 compared with the same period in 2011. According to Fitch, the order flow should provide a “strong pipeline of activity for the first half of 2013 and a cushion against a potentially weaker second half in an uncertain economic environment.” As a result, revenue is expected to grow in 2013, though at a more modest rate than in 2012.

While capital strength varies from company to company, Fitch says it continues to view the industry as “adequately capitalized.”

The biggest threat to the industry at this point, Fitch says, is Washington’s potential failure in avoiding the fiscal cliff. If that were to occur, economic growth would fall off drastically, leading to sustained mortgage and real estate market activity declines and a “return to sizeable title insurer operating losses and capital deterioration.”

On the other hand, if the cliff can be avoided and the housing market is allowed to grow further, Fitch anticipates an improvement in industry capitalization to historical levels.

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Simplifile and Erxchange Partner to Expand E-Recording Nationwide

PROVO, Utah (PRWEB) November 27, 2012

Simplifile, the largest and leading provider of electronic recording (e-recording) services, today announced that Simplifile has entered into a partnership agreement with Erxchange, a leading electronic recording solution, to extend the Simplifile e-recording network into 31 new counties previously only available through Erxchange. The newly formed partnership also enables Erxchange customers to submit documents into the Simplifile e-recording network of more than 790 recording jurisdictions nationwide.

Three new counties are currently accessible through the Simplifile network - Cook County, Ill., Hidalgo County, Texas, and Bell County, Texas – and the remaining 28 counties will become available in the coming weeks and months. Thousands of existing Simplifile e-recording customers, including title companies, banks, attorneys, lien filers, and other organizations, can immediately take advantage of the partnership.

Erxchange customers that submit documents through Simplifile will now have access to Simplifile’s 24/7 technical support, an assigned account representative, free training courses and API support for system integration - and benefit from Simplifile’s unmatched document type support.

“Our partnership with Erxchange will ensure that all of our mutual customers will have access to the best resources to electronically record documents across the county,” said Paul Clifford, President of Simplifile.

“As more submitters can e-record nationally through various jurisdictions, Simplifile’s and Erxchange’s mutual goal of widespread e-recording adoption will be met,” said Jason Miley, business manager at Erxchange. “This partnership enables both companies to provide its customers with unparalleled opportunities for e-recording.”

About Simplifile

Simplifile is the nation’s largest and fastest-growing e-recording service. Simplifile supports thousands of e-recording customers that include title companies, banks, attorneys, lien filers, and other organizations that create and submit documents to more than 790 local, state, and federal government jurisdictions. Simplifile’s electronic document services save time and the expense associated with traditional document submission methods.

Simplifile is focused on building the industry’s largest and easiest-to-use network. As such, Simplifile provides a streamlined and scalable approach to electronic recording for organizations of all shapes and sizes. More information about Simplifile may be found at simplifile.com or by calling 800-460-5657.

About Erxchange

Erxchange is a leading electronic recording solution that has been serving the mortgage industry for a decade. Hundreds of title companies, mortgage banks, mortgage brokers, fee attorneys and other submitting organizations use Erxchange to reduce costs and improve service levels. More information on Erxchange can be found at http://www.erxchange.com.

“Simplifile” is a registered service mark of Simplifile, LC.

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Title agents are wary of third-party vetting firms

By Harvey S. Jacobs,

The Washington Post  

 A debate is raging among real estate professionals over the role of third-party firms that vet the reliability of settlement service companies working for lenders.

Seizing on the already jittery lending community, a number of start-up firms created something called third-party vetting companies. The mission of these for-profit firms is to fill the supervisory gap between lenders and the firms they hire to oversee real estate closings for consumers.

For a fee, these “vetters” purport to conduct a due diligence investigation into the settlement service providers’ practices and procedures and generate a low-, medium- or high-risk index score that they then make available to lenders and others in the mortgage-lending industry.

These lenders then can withhold business from settlement agents receiving a high-risk score. The vetting companies’ goal is to monitor in an ongoing and uniform manner that settlement service providers comply with all applicable laws and rules and follow the industries’ best practices. In return for that fee, settlement service providers, such as settlement agents, are “promised” preferential access to lenders’ settlement business.

On its face, this business model may seem beneficial in offering more oversight protection for consumers, but there are serious flaws with this unregulated practice.

Promising to deliver settlement business in exchange for paying a fee is illegal under the Real Estate Settlement Procedures Act.

These anti-kickback provisions were enacted to protect consumers from picking up the tab for such referral fees, which are passed along as higher settlement costs. But Andrew Liput, president and chief executive of Secure Settlements, a third-party vetter, says his firm offers a valuable service and does not violate the provision. “Since we are providing vetting services to settlement agents with no guarantee of referral business or even a guarantee of a ‘low-risk’ index score, we are not accepting payments in exchange for referrals,” he said.

But settlement agents are already “vetted” by at least three levels of government oversight and private industry. In many states and the District, selling title insurance requires a license from the insurance commission. To obtain a license, the settlement agent must complete a detailed application, provide financial and personal data and post a fidelity bond. Before a surety company will issue that bond, it conducts a detailed background check, runs a credit report and analyzes the applicant’s business and personal creditworthiness.

Most important, before a settlement agent can become an agent for a title underwriter, he must satisfy that title underwriter’s rigorous screening, education and training protocols. Underwriters audit their agent’s accounts at least annually. These audits are then used to identify and address any deficiencies in the settlement agent’s practices and procedures. “The more that consumers know about the protections that already exist in the title industry, the better,” said Michelle Korsmo, president of the American Land Title Association (ALTA), the title industry’s trade association.

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