Free Webinar for Real Estate Professionals on May 3, 2011 at 12:30PM EST. Discussion will be why you should be using social networks and how to maximize the use of Social Networking.
For further details and registration, go to our website at www.eaglelandtitle.com
Effective February 23, 2011 – The minimum standard detail requirements for ALTA/ACSM Land Title Surveys were recently revised. The last revision was in 2005. Surveys using these standards are commonly referred to as “ALTA surveys” and are frequently used when title insurance is involved and especially in commercial real estate transactions.
The following is an overview of the significant changes to the ALTA/ACSM Standards.
Provided by Albert J. Myers, P.S., Myers Surveying Company, Inc., Bexley, OH 43209. (614) 235-8677. Mr. Myers involvement in professional organizations is extensive. He has also served on the ALTA/ACSM national commitee since the 1980′s. In 1982 he was elected President of the Professional Land Surveyors of Ohio (PLSO). He has also served as State PLSO President-elect, State PLSO Treasurer and PLSO’s Past Presidents’ Chairman. In addition, A.J. was Chairman of the State PLSO Professional Standards Committee and currently chairs the State PLSO Interprofessional Affairs Committee.
The new standards were reviewed and approved by The Board of Governors, American Land Title Association on October 13, 2010 (with input from the Lenders Council) and the Board of Directors, National Society of Professional Surveying (a member organization of the American Congress on Surveying and Mapping (ACSM)) on November 15, 2010.
The document was re-organized to consolidate subject matters within the appropriate sub-sections. For example, information concerning plat or maps was somewhat scattered in various sections in the 2005 Standards. All data dealing with plats or maps is now consolidated into Section 6 of the 2011 Standards.
The following are highlights of the 2011 changes by section:
Section 1 Adds a new sentence at the end to better define what constitutes the ALTA/ACSM survey.
Section 2 Adds non-traditional survey sites (i.e. marinas, etc) and instructs the surveyor on procedures. States the client may need to secure permission for surveyor to enter upon subject and adjoining properties.
Section 3 Provides definitions to the surveyor and procedures with respect to Cross Jurisdictional issues standards of Care, Boundary Resolution and Measurement Standards. Changes term Relative Positional Accuracy to Relative Positional Precision.
Section 4 Adds “most recent title commitment” and “current record description of adjoiners” and “documents necessary to ascertain, if possible, the junior/senior relationship pursuant to Section 6.B.vii (gaps and overlap).
Section 5 Requires surveyor to add the location and character of access, as observed in the field, by parties other than the apparent occupants of the surveyed property.
Requires all buildings to be located by measurement “perpendicular to the nearest perimeter boundary” Requires surveyor to provide more detailed information with respect to any water boundary.
Section 6 Specifies information the surveyor shall set forth on the plat of survey.
Section 7
Table “A” Changes
Most of the changes will have a minimal effect on the title insurer. The exceptions may be Section 4, 7, 6.B.vii, and Table A items 6 and 21.
Item 4 – I do not know what ramifications for the title insurer are created by the requirement for all adjoining deeds to be provided to the surveyor. If the adjoining deeds are recorded plat lots in a subdivision plat, no deeds are required unless Table A item 13 is required. I cannot recall a single instance where the title company would not provide the deeds necessary to solve a junior/senior issue.
Item 6.B.vii – This sector requires the surveyor to analyze deeds for gap and overlaps. New last sentence requires notification to the insurer and the client prior to issuance of final plat so a resolution of the problem may be addressed.
Item 7 – The certification is usually never an issue with the title insurer. Legal counsel for the lender will frequently insist on a “long form” certification. These certifications usually create unnecessary liability to the surveyor. One typical phrase the long form contains is “all utilities necessary for the operation of the premise …..” No surveyor could sign off on this language. If the surveyor inserts any certification other than the ALTA/ACSM certificate, then the plat may NOT be identified as an ALTA/ACSM Land Title Survey.
Table A – Item 6 requires all zoning information be provided to the surveyor by the title insurer.
Table A – Item 21 Provides, if checked off by the client or insurer, the surveyor to maintain a professional liability insurance policy. I would guess that most insurers think all surveyors maintain the insurance. At a recent meeting of surveyors from all over Ohio, very few in the room indicated that they have professional liability insurance. Is a title insurer in violation of state laws if they direct business to a non-insured surveyor?
The new 2011 Standards hold great promise for better, more complete, more precise, and more accurate surveys. It is essential that lenders, title insurers, attorneys and others, who order, use and rely upon surveys become familiar with the new 2011 Standards.
For more information click here.
At one time or another, you have undoubtedly had to deal with lengthy and cumbersome mortgage disclosure documents – pages numbering 10 or more, long documents, small print and verbiage that confuses more than explains. This may all be coming to an end as the Consumer Financial Protection Bureau is beginning the process of developing and eventually testing a simpler mortgage disclosure document that condenses all that gibberish down to just two pages. The goal is to make the document easier to understand, which will help borrowers compare deals from multiple lenders.
Who doesn’t feel lost when they attempt to read through an entire mortgage disclosure document? The process seems daunting, making the thought of going through it multiple times not worth the possibility of finding a better deal. The looming question is, by having only two pages (still most likely filled with small print), will you change your behavior and be willing to spend time comparing mortgage deals to save money?
In this economy, the logical answer appears to be yes. However, there are many experts who feel that consumer behavior isn’t so easily changed. Of course, consumer behavior can be changed and has been in somewhat similar circumstances recently. During the late 1990’s, when the internet exploded with websites offering online quotes for insurance products, consumers benefited from heavier competition and lower prices. The convenience of getting rate quotes online simplified comparison shopping and consumers took advantage. Competition became fierce, prices dropped or stabilized and profit margins of insurance companies took a staggering blow.
A second possible effect of simplified mortgage disclosure documents is the benefit to small lenders. The high cost of complying with current regulations and producing all the paper work needed lends itself to larger companies who can take advantage of economies of scale and top of the line technology. If the new regulations resulting from the Dodd-Frank Act reduce the cost of doing business, local banks and lenders will be more competitive against larger corporations. Furthermore, if consumers begin digging deeper when comparing financing packages, smaller lenders will get their product in front of more borrowers.
Of course, with such complicated legislation, it will take some time. Bids on constructing the document and testing it for consumer use have already been received. The bureau must have something on the table for public comment by July 2012. However, in an effort to beat the deadline, vendors are required to have the work completed by January 15, 2012.
The verdict is still out as to whether simplified mortgage documents will reduce mortgage financing costs for borrowers, whether small lenders will benefit, or if it is even possible to produce a readable mortgage document. However, there is no harm in the attempt and plenty to gain for borrowers, even if it is only reducing the headache of reading through the documents.
January 27, 2011-
The Ohio Association of Independent Title Agents (OAITA) today released findings from a two year study of Ohio’s real estate consumers concerning their settlement service preferences. Here are the highlights from the Executive Summary:
More than three out of four real estate consumers depend upon a referral to select their title insurance agent and/or escrow agent.
Those real estate consumers who independently select their own title insurance agent/escrow agent primarily depend upon “word-of-mouth” or reputation to find their selection, not media advertising methods.
Real estate consumers are most impacted to choose a title insurance agent by the referrals of real estate agents/brokers and mortgage companies and brokers.
Real estate consumers do not become more comfortable with the title insurance services offered by a title insurance agent when they know that the party who referred them to the title insurance agency owns a financial interest in the agency.
Nearly three out of every four real estate consumers think it is important or very important for a title insurance agent to be a neutral third party in determining what matters may affect their title.
Real estate consumers do not prefer title insurance agents that share ownership with a real estate firms, mortgage companies, banks, or others.
Real estate consumers believe it is a conflict of interest for a referral source to receive a share of the profits from selling title insurance or providing escrow services.
Real estate consumers believe it is a conflict of interest for a referral source such as a bank, real estate firm or mortgage company to provide compensation to their employees for referring their settlement work when they get a financial benefit from the referral.
To find out more about the OAITA and the SPS they conducted, please click here.
Is now a good time to refinance? That is an important question facing many home owners today. Fluctuating interest rates, shaky home values and a struggling economy have many looking for ways to cut expenses. There are few better ways to save money each month than by cutting back on your most significant monthly bill—your home mortgage.
Common Reasons to Refinance
Home owners face varied circumstances and thus there are multiple reasons to consider refinancing a home mortgage. Probably the most common is to lower monthly mortgage payments by reducing interest rates. Here are a few more common reasons to refinance.
Gain equity more quickly
To help decide if now is a good time to refinance, you need to consider which of these goals you wish to achieve and if current conditions will allow you to achieve these goals.
Calculating the Break-Even Point
The break-even point is the point at which the cost of refinancing is offset by the savings it offers. Determining the break-even point is a simple calculation in which you divide the total cost of refinancing by the monthly savings. For example, if closing costs are $3,000 and you save $150 each month through refinancing, you will make up the cost of refinancing in 20 months. If you combine this figure with the overall savings in interest payments over the life of the loan, you have some solid figures from which to base your refinancing decision.
The Best Time to Refinance
If you can significantly lower your interest rates, then it is time to at least consider refinancing. In addition to the overall savings you will see and your break-even point, there are two other issues to consider: How long do you intend to stay in the home and how much time is left on the life of the current loan. The optimum time to refinance is when you can achieve one or more of the goals mentioned above while also meeting your break-even point before selling your home or the term of the loan expires.
The Risk May be in Not Taking Action
Waiting may actually be more risky than going ahead with the process of refinancing. If you are in a region where home values are dropping, waiting may put you in a situation where the value of your home decreases to at or near your loan principle. Most lenders, in the wake of the housing market crumble, no longer offer refinancing above 90 percent of a home’s value.
Perhaps most risky is allowing current low interest rates to slip away. In the past months, interest rates have dropped to their lowest points in recent history; however, they are beginning to creep upward and are expected to rise in the near future. By not locking in these current low rates, you may miss out on tremendous future savings. Due to the fluidity of interest rates and their expected climb in the near future, the time for you to act may be now.
As highlighted in a recent blog post by Slade Smith at the Source of Title. (see below the entire Blog post with permission to reprint below)
Controlled Business Arrangements: From the Outhouse to the Penthouse at ALTA (subscription required)
Once upon a time, The American Land Title Association, otherwise known as ALTA, the primary national advocate for the title insurance business, actually actively and vociferously fought controlled business arrangements.
Back in these times long ago, title insurance business were often pressured to pay kickbacks to other real estate related business that referred them title work. Owners of title businesses generally did not like these kickback arrangements– they were the ones who were pressured to pay them to just to get business, and they were the ones that lost out when they did not play ball. Plus, these payments were giving the title industry a black eye– for instance, in the early 1970s, the title industry was the subject of some not so friendly scrutiny by Congress that cast the title business in an unfavorable light. It was probably not much fun to be pressured to unethically pay out part of your profits to compete for business and be considered sleazy by association even if you held the line.
ALTA, as the professional association speaking for these businesses, therefore had advocated for provisions in The Real Estate Settlement Procedures Act (RESPA), passed in 1974, which outlawed kickbacks from title companies to the businesses that referred business to them.
A controlled business– a business engaged in a line of work where the work flow came from other businesses, not consumers, and which got some or all of its business from referrals from its own owner– was seen as a highly suspect arrangement by most in the title insurance industry back in those times. The thought was that if realtors, lenders, and builders were allowed to own their own title companies, they could lock up most of the business, since they, not consumers, typically decided where title business went. Independent title agencies without a ownership tie-in with a source of business would be shut out of the market, the thought went.
Moreover, it was easy to see how a controlled business arrangement could be set up to deliver a payment to a referrer of title business that looked an awful lot like a kickback. For instance, a realtor or a lender would take a partial ownership interest in a title agency, basically do nothing for that agency except refer it business, yet just take what amounted to a kickback from the agency’s coffers.
With kickbacks now explicitly illegal, the issue of controlled businesses became much more important in the title industry. The players in the real estate business who had been used to receiving the money were now facing stiff new penalties under RESPA if they accepted kickbacks the old fashioned way. They’d be looking for a way to get around that.
in 1976, Coldwell Banker, a real estate brokerage, attempted to license a wholly owned title insurance business in California. The insurance commissioner nixed the idea, saying that the arrangement was anticompetitive. Coldwell Banker appealed, but the commissioner’s ruling was upheld. A controlled business had been put out of business on competitive grounds. Did this mean that controlled business arrangements were illegal under RESPA? It was enough of a threat to controlled business arrangements that efforts arose to amend RESPA to explicitly legalize them.
Not surprisingly then, in the late 1970s and early 1980s, the fight over against legalizing controlled business in the title insurance industry was a primary and sustained focus of ALTA’s lobbying efforts. They were, after all, fighting for the interests of their members.
ALTA pounded the table on controlled business arrangements year after year. ALTA’s President in 1979, Robert C. Bates, said that the financial inducements inherent in controlled business arrangements were “as harmful as the payment of outright kickbacks.” In 1981, another ALTA President, James L. Boren, Jr., testified before a Congressional committee and described the evils of controlled business arrangements. In 1982, when President Reagan himself proposed that rules prohibiting realtors from selling title insurance should be lifted, Boren’s successor as ALTA President, Fred B. Fromhold, wrote a letter to the President on behalf of ALTA’s membership, expressing “shock and dismay.” If such restrictions were lifted, title business would have to be bought rather than earned, Fromhold said.
But President Reagan had run on a platform of deregulation, and so despite this advocacy, RESPA was amended in 1983, with explicit language that legalized “affiliated” businesses arrangements in the title insurance industry if certain conditions were met.
Still, there was considerable uncertainty over what separated a legal controlled business arrangement from an illegal one. So HUD issued a series of opinions, outlining what kind of ownership arrangements would be considered tantamount to an illegal kickback arrangement. But these opinions really did not resolve the issue definitively, and the issue remained confused and contentious, and there were various ongoing efforts to change or clarify the rules.
ALTA remained involved. When legislative attempts were made to further weaken regulations regarding controlled business arrangements, ALTA continued to advocate against these attempts. For example, in a 1993 Congressional hearing on RESPA reform which concentrated on the controlled business issue, another past ALTA president, Roger N. Bell, appearing on behalf of ALTA, argued strongly against new HUD rules which allowed a business to pay bonuses to its employees for referrals to controlled businesses. “it is already difficult to compete with the controlled business company,” Bell told the committee. “Now, the regulations could be the last nail in the coffin for many independent small businesses such as mine.”
It’s hard to avoid the implication of Bell’s statement– that several nails had already been driven into the coffin of the independent small businesses by the emergence of controlled businesses in the title industry.
Who had been hammering in those nails?
Ironically, as it turns out, more than a few metaphorical nails had been driven in by none other than current ALTA President, Anne Anastasi, according to some independent title agents.
Anastasi is president of Troon Management Corp., “the only independent management team in the country, dedicated to the creation and facilitation of title Affiliated Business Arrangements,” according to its website. Catering to builders, realtors, banks, and attorneys, Troon has helped set up controlled title business arrangements in thirty major cities in sixteen states, it says.
Anastasi personally established her first title industry controlled business arrangement in 1984, before the ink was dry on the legislation legalizing them– one of the first controlled business arrangements in the country, according to the Troon website.
Troon’s consulting service promises a “plan of action” to set up an controlled business from a two day consulting session. During this session, the correct, compliant answers will be provided for the questions your would-be business partners are likely to have, Troon says. From only two unspecified numbers provided by your potential partners in the arrangement, Troon promises to calculate financial projections and scenarios for the venture.
Troon’s mottoes imply the urgency of setting up controlled business arrangements for title businesses. “If you wait you may not have enough partners or the right partners left,” the site says. Another motto stresses that those setting up a controlled business arrangement should not be too “piggish,” or “your competition will easily steal your clients.”
Anastiasi’s role in promoting controlled business arrangements has not escaped the wrath of certain independent title agents. “[T]he title insurance industry is now led by someone who makes a living destroying competition in the title insurance industry,” according to a November post on the Ohio Association of Independent Title Agent’s blog.
As reposted from the Ohio Assocaition of Independent Title Agents (OAITA) Blog below:
The recent foreclosure crisis that has kicked up across the United States has claimed another victim — the title insurance industry.
At the beginning of October, the American Land Title Association (ALTA) was busy promoting the solidarity of the title insurance industry in the face of accusations that banks had manipulated the foreclosure process to obtain titles to foreclosed real estate.
ALTA issued several press releases indicating that anticipated losses in light of the use of “robo-signers,” invalid affidavits, forged assignments and standing issues would cause no tangible harm to the title insurers who issued title insurance insuring the buyers of those foreclosed properties.
Those releases are located here and here.
ALTA was hoping to use the strength of the title insurance policy to convince banks to indemnify title insurers against claims or damages relating to the illegal methods the banks utilized to process hundreds of thousands of foreclosure cases across the United States.
Recent ALTA advocacy updates sent to ALTA members referred to “behind-the-scenes” efforts on the part of ALTA’s Underwriter Section to negotiate the terms and particulars of an industry-wide indemnification.
In part, this was thought necessary because although no lawsuit has yet gone this far, there is no question that class action litigation will take the banks to task on the procedures they employed to foreclose millions of homeowners. The claims could result in courts employing equitable principles to invalidate prior foreclosures and to create situations that would necessitate title insurers hiring cadres of defense attorneys to defend the soon-to-be-filed class actions that are now being organized. Regardless of whether the claims will prevail, there is no doubt that actions will be filed and no doubt that title insurers will have enormous defense costs.
As the national underwriter-controlled advocacy group is apt to do, ALTA was preceded in the indemnity effort by its largest member, Fidelity National, which organized its own indemnification program with Bank of America several weeks ago. The industry was merely trying to emulate that effort with the other banks then-reviewing their own foreclosure practices across the United States (i.e. GMAC Mortgage, JP Morgan Chase, Wells Fargo, etc.).
Unfortunately, as is the primary weakness of ALTA, the other national underwriters who have significant stakes in the title insurance industry decided not to follow suit with the indemnity requirement and/or decided that the opportunity to grab market share from Fidelity National’s disgruntled lenders — who were being prodded for indemnities they did not want to sign — was too good to pass up.
It was only a matter of time before the whole greedy mess of humanity known as the ALTA foreclosure indemnity effort and its facade of solidarity came crumbling down.
This morning, First American, the nation’s second largest national underwriter, announced in its 3Q 2010 earnings call that it would not require the indemnities originally sought by the industry.
Following suit and realizing that its own colleagues were circling the shark-infested waters, Fidelity National decided to reverse course on its pursuit of foreclosure indemnities. With the exception of the Bank of America matter, they too are now out of the foreclosure indemnity business.
To the casual observer, it appears as though the title insurance industry — once again — lost its nerve to use its oft-ignored leverage to force the banks to accept responsibility for their actions. The problem with the foreclosure crisis is not that individual homeowners have the ability to question millions of recent foreclosures due to procedural technicalities. It is well known that these claims will most likely fail. The problem is the fact that the banks and their authorized agents, attorneys and representatives committed obvious criminal acts. Forging affidavits and presenting them as evidence is a crime in every state. These are criminal actions that the title insurance industry has no indemnity against.
Sure, there was tortious conduct in the process of obtaining title and, yes, it is probable that insurers could reject such claims when made, but if the title insurers could not stand up to the banks when they had the leverage — with banks staring down 50 separate investigations from the state attorney generals — does anyone think that the title insurers will actually deny these claims when the banks start making them when the lawsuits start arriving in the mail?
Yeah, me neither.
Furthermore, what strikes me as ironic is that the title insurance industry was only willing to pursue indemnification from the banks when they knew the banks were each reviewing their own procedures. Once the banks announced — without any independent verification from a reputable watchdog — that all was always well and that there were no problems with their foreclosure processes, the title insurance industry immediately lost its will to dig deeper or demand anything to assure it that the bank’s procedures would not create problems for title insurers.
This is institutional negligence at its worst.
It’s like taking a borrower’s word that he or she paid off their own mortgage and there would be no need for the title agent to order an independent payoff and the title agent being comfortable with that representation.
Hello? That doesn’t work in our 9-to-5 business. It sure as hell shouldn’t work in this foreclosure situation either.
Sadly, ALTA indicated that it was going to update its members as to how the foreclosure indemnity efforts were progressing. I am eagerly awaiting a report. After First American and Fidelity effectively quit on the venture, I can’t imagine that ALTA is going to tout the solidarity angle anymore.
Which leads me to my familiar question.
Title insurance industry, why are you so short-sided?
Do you really think that the banking community — or any referral source community — is ever going to respect you if you can’t even keep your biggest four underwriters on the same page on an issue so obviously beneficial to the solvency of the industry that it mandates holding your ground?
And to ALTA. What good are you if you are always late to the dance and leaving too early?
Can someone please answer these questions for me?
Directly from the Ohio Housing Finance Agency (OHFA) website:
President Obama established the Housing Finance Agency Innovation Fund for the Hardest-Hit Markets in February 2010 to provide financial assistance to families in the states most impacted by the downturn of the housing market. On August 4, the U.S. Department of Treasury (U.S. Treasury) announced the approval of the Ohio Hardest-Hit Fund (Ohio HHF) plan for $172 million. Subsequently on August 11, U.S. Treasury announced another round of funding which allocated $148 million to help unemployed and underemployed homeowners pay their mortgage. The Ohio Housing Finance Agency (OHFA) will administer the program and use the total allocation of $320 million in federal foreclosure prevention funding to help families who have fallen behind on their mortgage loans, or are having trouble making monthly payments. Homeowners experiencing a financial hardship may begin submitting applications online or over the phone on September 27, 2010.
OHFA has worked with Governor Ted Strickland, the Department of Commerce and the Save the Dream Ohio partners to develop a comprehensive, statewide strategy. The plan aims to assist 26,000 unemployed and underemployed homeowners who are experiencing financial hardship and are at-risk of mortgage loan default or foreclosure. Ohio HHF program options will assist homeowners with financial hardships who have been unable to qualify for existing loan modification and foreclosure prevention programs. Available programs will include:
• Rescue Payment Assistance will provide a payment to a participating homeowner’s servicer to help bring the homeowner current on his or her delinquent mortgage. The payment could cover principal, interest, fees, delinquent taxes or escrow shortage and homeowners insurance.
• Partial Mortgage Payment Assistance will support unemployed homeowners by providing partial mortgage payments while they search for a job or participate in job training.
• Modification Assistance with Principal Reduction will provide a payment incentive to servicers to reduce a participating homeowner’s mortgage principal to the level necessary to achieve a loan modification with a target of a 115 percent loan-to–value ratio or less. This program should increase the number of loan modifications that are approved and available to both Home Affordable Modification Program (HAMP) eligible and non-HAMP eligible borrowers.
• Transitional Assistance will offer an incentive to servicers to complete short sales and deed-in-lieu agreements to help homeowners exit their homes gracefully. This will allow homeowners who cannot sustain homeownership to pursue alternatives to foreclosure, reducing the negative impact on their credit rating and losses to the servicer.
If a homeowner uses Ohio HHF to stay in their home and then sells or refinances their home within five years, the assistance would be repayable from the net proceeds.
The Ohio HHF plan will launch September 27, 2010, but borrowers who are in need of immediate assistance should visit the Save the Dream Ohio website at www.savethedream.ohio.gov or call the hotline at (888) 404-4674 to get free assistance and speak directly with a housing counselor.
Directly from the Ohio Legislative Service Commission website:
Click here for more information.