There’s a home price recovery… but it’s really, really slow – Dec. 5, 2012

If Congress can’t agree on a fiscal cliff deal, a recession is likely, and that would hit the housing recovery hard.


Just about everybody agrees that the housing market is finally recovering — but don’t expect big price gains.

Nearly two-thirds of the nation’s housing markets will see price declines for the year through next June, according to analytics firm Fiserv (FISV). Overall, the gains will be just 0.3%.

One big factor that could weigh on prices: The fiscal cliff.

If Congress can’t agree on a deal to halt a series of tax increases and spending cuts, a recession is likely, and that would hit the housing recovery hard.

In addition, if the Bush-era tax cut on capital gains is allowed to expire — allowing the rate to increase to 20% from 15% on Jan. 1 — it would take a significant bite out of the profits high-end sellers would realize and give them less to spend on buying a new home, said Celia Chen, an economist and housing market analyst for Moody’s Analytics.

“Even people who do have the resources to buy homes will be more nervous,” she said.

Related: Home prices: Your local forecast

But even if we avoid the fiscal cliff, there are other factors weighing on home prices.

In order to raise more tax revenue, Congress is considering putting a cap on the mortgage interest tax deduction, a key tax break aimed at encouraging homeownership — mainly among the upper-middle class.

Most of the benefit of this deduction goes to wealthier households. Mortgage borrowers with incomes of $250,000 or more realize an average annual tax savings of $5,460, according to the Tax Policy Center. Meanwhile, those making less than $40,000 a year, save just $91.

Capping the deduction would discourage buyers from buying bigger, more expensive homes, said Chen.

But it’s not just the high-end of the market that could get squeezed.

With Congress distracted by the fiscal cliff, there is a real chance that the Mortgage Debt Forgiveness Act of 2007 could expire come January 1. If the act were to lapse, struggling homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

Related: Most affordable cities for homebuying

That means homeowners will be on the hook for thousands of dollars in taxes that they likely can’t afford. That will force more people who could have sought a less damaging alternative, like a short sale, to choose foreclosure instead.

Fiserv’s estimates assume that about half of the fiscal cliff tax hikes and spending cuts will occur, said Stiff. The forecast does not take into account any change to the mortgage interest deduction. Should that deduction expire, Stiff said home prices might be even weaker over the short-term.

Fiserv expects home prices to start heating up again next fall. Between June 2013 and 2014, it expects prices to climb 3.4% and to continue to grow at an annual rate of about 3.3% over the five years through June 2017. To top of page

Home prices: Biggest winners and losers
These cities will see the biggest swings in home prices through the 12 months ending June 30, 2013, according to Fiserv’s estimates.
City Forecast change
Medford, Ore. 8.7%
Yuma, Ariz 6.2%
Syracuse, N.Y. 5.2%
Hagerstown, Md. 5.2%
Pittsfield, Ma 4.9%
Naples, Fla. -7.6%
Fort Lauderdale, Fla. -7%
Orlando, Fla. -6.9%
San Jose, Calif. -5.9%
Phoenix -5.8%
Source: Fiserv

First Published: December 5, 2012: 5:25 AM ET

Interesting comments about the effect of the fiscal cliff

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Fitch: U.S. Title Insurance Industry s Combined Ratio Reaches 90 Percent – Insurance Networking News

Industry continues to benefit as home inventories and distressed sales decline and prices stabilize.

Insurance Networking News, November 27, 2012

Chris McMahon

Amidst some impressive financial numbers, the U.S. title insurance industry remains stable, according to a report titled “2013 Outlook: U.S. Title Insurance Industry,” from Fitch Ratings. The outlook reflects the belief that rating actions will balance approximate current levels over the next 12 to 18 months as financial performance has improved and capital levels remain adequate.

Fitch said the industry is adequately capitalized, although capital strength varies considerably from company to company. Fitch’s view is based on a non-risk adjusted approach, such as net written premiums to surplus and a risk adjusted approach via Fitch’s Risk Adjusted Capital model.


On a GAAP basis, operating profit margins rose to 10.3 percent in the first nine months of 2012, vs. 6.1 percent last year. Earnings improved for all underwriters and First American Financial and Fidelity National Title posted the highest margins. For the first nine months of the year, title revenues increased by more than 15 percent, as refinancing activity exceeded expectations and housing markets stabilized. The underwriting combined ratio reached 90.7 percent, a level unmatched since 2006, as growth reduced expense ratios and claims experience improved.

The title insurance industry continues to benefit from a recuperating housing market, which shows less inventory and higher home prices. According to the National Association of Realtors, U.S. housing prices rose this year, and many markets demonstrated year-over-year price increases for the first time since the housing crisis began in 2007. Economists attribute the price increase to declining inventory and fewer distressed sales.

The Mortgage Bankers Association of America forecasts mortgage originations to decline to $1.3 billion in 2013 and $1 billion in 2014, from $1.7 billion in 2012. The decline is driven by a projected decline in refinance activity over the next two years, which is expected to be somewhat offset by greater purchase activity.

For more information on related topics, visit the following channels:

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Failing to deliver title insurance opens up a number of risks

October 16, 2012
By: TimLemieux
Category: Real estate
This article by Kathleen Waters (President & CEO at LAWPRO) originally appeared in the Oct 5 issue of The Lawyers Weekly published by LexisNexis Canada Inc.

Hundreds of real estate malpractice claims find their way to LAWPRO every year. Some involve complex and exotic fact situations, but many do not.

At the heart of most claims is the lawyer’s failure to deliver something the client has requested or expected. Where the deliverable is at the heart of the deal – keys or money – the client will promptly draw the lawyer’s attention to a failure to deliver. Deliverables that are less connected to the client’s immediate needs, like a title insurance policy, are easier to overlook.

Failing to secure title insurance when instructed to do so is perhaps the easiest way to increase your risk when acting on a real estate deal. From the lawyer’s (and LAWPRO’s) perspective, it’s also emerging as a dangerous exposure.

Why? When a lawyer is asked to secure title insurance and doesn’t, he or she effectively becomes responsible for everything the policy would have covered, even if the range of insurance protection exceeds the normal standard of practice in the “opinion on title” world.

Consider a lawyer who makes a different kind of error?—?for example, assume we are in the “old days” and the lawyer forgets to search with the local municipality for building department work orders. The purchaser-client discovers post-closing that there is building non-compliance at the property, but no work order has been issued. In the Ontario conveyancing world pre-title insurance, that would likely have been the end of the matter in terms of the lawyer’s exposure: From a causation perspective, the lawyer is off the hook because there is no way the lawyer could have uncovered the issue by making the standard search.

But many title insurance policies cover a purchaser (and lender) where the non-compliance existed at closing and a work order is issued at a later date. In today’s world, where the lawyer is instructed but fails to secure title insurance, the alleged error becomes failure to obtain the title insurance and the non-existence of a work order as of closing becomes irrelevant.

How does title insurance get missed? Often in haste. One of the advantages of using title insurance to protect a deal is that it can permit shorter closing periods by eliminating some search-related delays. Rushing a transaction may mean that the title policy is applied for, but the deal is closed before the policy coverage is actually bound. If signs of a problem emerge after closing, the insurer may decline to proceed with the policy or insist on exclusions. After all, the insurer did not bind itself, in our example, to issue a policy.

This “error” is more likely in situations where there is uncertainty about the legal effect of the insurer’s response to the application. Title insurers vary in their procedures. An insurer may respond to certain applications for insurance by issuing the policy itself, such that it takes immediate effect on closing without the need for any other action on the insured’s part. Some lawyers may, by their own actions, be authorized to bind the insurer, provided they stay within the terms of their firm’s agreement with the insurer. In other cases, an insurer might issue a “binder” that provides temporary coverage pending finalization of the terms, disclosure of information, or satisfaction of conditions. An insurer may, for example, call this binding of coverage “pre-approval.”

After the coverage is bound, it’s common for insurers to require the insured (meaning, his/her lawyer) to take certain actions as a precondition to the negotiated coverage taking effect. For example, to secure TitlePLUS title insurance coverage, the insured is always required to submit the registration number for the transfer (or mortgage), so we know the deal was closed and registration occurred.

The dangerous claims mentioned above typically arise in situations where the client (whether the lender or the purchaser) has instructed the lawyer to obtain title insurance, the lawyer has taken the initial step of contacting the insurer about coverage, but then has failed to realize that the coverage has not been bound before closing. By “bound”, I mean a contractual agreement that allows the insured to insist upon issuance of the policy, subject to payment of the premium and satisfaction of clearly defined pre-conditions to issuance (if any).

What kinds of loss can this problem apply to? Consider, for example, an instance of identity fraud: A lender requests title insurance as a condition of making a mortgage loan, the lawyer undertakes to obtain the insurance, the mortgage funds are advanced, and it later comes to light that the “owner” who obtained the mortgage was actually a fraudster, and the real owner of the property has no knowledge of the mortgage transaction.

Before the advent of title insurance, a lawyer who handled a transaction that turned out to be based on identity fraud would likely not be liable for the loss if he or she had taken reasonable steps to guard against fraud (for example, checking the mortgagor’s identification). The essence of a good fraud has always been how hard it is to detect.

With the advent of title insurance, which provides coverage for fraud, the situation is markedly different: In instructing the lawyer to obtain title insurance, the lender is no longer relying on the lawyer’s reasonable efforts to investigate the identity of the borrowers?—?????????it is purchasing protection against loss regardless of flaws in that process. The risk of identity theft is intended to be moved to the insurance company. The lawyer’s failure to obtain the insurance is causally linked to the lender client’s loss, if the mortgage proves to be unenforceable.

Sobering? We hope so. But the solution is conceptually straightforward, if time-consuming on occasion: Follow through fully on title insurance instructions; be sure you understand the legal effect of the insurer’s response to the policy application, whichever insurance company you chose to deal with; consider before closing whether any conditions on the insurance binder or pre-approval are acceptable to you and your client, seeking instructions if necessary; comply with all conditions of coverage; and give the client prompt notice of issuance of the policy.


Good article for real estate attorneys

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ALTA President available for Comment on Fiscal Cliff

For Immediate Release                                            


American Land Title Association President Available for Comment on

Fiscal Cliff Discussions and Mortgage Interest Deduction



Washington, D.C., December 3, 2012 — American Land Title Association President Frank Pellegrini will be available from 2 p.m. to 4 p.m. Eastern on Tuesday, December 4, to discuss the fiscal cliff and how the effects of sweeping changes in the tax code, including potential modification or exclusion of the mortgage interest deduction, would slow a housing recovery and make buying a home more expensive for first-time buyers.


To schedule an interview, please contact Wayne Stanley at 202-261-2932 or Interviews will be scheduled on a first come, first serve basis.





About ALTA


The American Land Title Association, founded in 1907, is a national trade association representing more than 4,000 title insurance companies, title agents, independent abstracters, title searchers, and attorneys. ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.



Wayne Stanley

Manager of External Communications

American Land Title Association

202-261-2932 |



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Replace this with the title of your post

HUD No. 11-292

Lemar Wooley

(202) 708-0685 FOR RELEASE


December 28, 2011


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, LLC dba

551 404 5341

Skype: art.oswald


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


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Riparian and Other Water Issues in Title course approved in New Jersey

3 credits

Click Here to Enroll

Tidelands or Riparian lands refers to lands flowed by the tide (and sometimes includes lands formerly flowed by the tide). The State of New Jersey holds title in fee simple to all lands currently or formerly flowed by the tide, unless it has already conveyed its ownership.

Tidelands claims in New Jersey are found in all counties except Warren, Hunterdon, Sussex and Morris

This course discusses:

Riparian Screenshot
  • Legislation related to Tidelands
  • the Division of Land Use Regulation
  • Bureau of Tidelands management
  • What Title Insurance insures in regard to Tidelands
  • A Statement of No Interest
  • Licenses
  • Grants

3 credits

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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 For further details, please contact the NCOIL National Office at 518-687-0178 or by e-mail at

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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, or call Lisa Blythe at (386) 316-3141 or


shelley stewartsmall

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Demotech Review of Third Quarter Title Underwriter Data is Promising

Demotech Completes Review of Third Quarter Title Underwriter Data

Columbus, Ohio, November 28, 2012:

Demotech, Inc. has affirmed the Financial Stability Ratings® (FSRs) assigned to most Title underwriters based on a review of third quarter 2012 statutory financial data. In addition to the affirmations, please note the following: •The FSR assigned to Attorneys Title Guaranty Fund, Inc. (CO) remains under review. •The FSR assigned to First American Title Insurance Company of Oregon (NAIC # 50504) was withdrawn as a result of the company merging into First American Title Insurance Company (NAIC # 50814) effective October 31, 2012. Douglas A. Powell, Senior Financial Analyst, stated, “Aggregate underwriting results were positive, making this the third consecutive quarter the industry has reported a net underwriting gain on a year-to-date basis. Thirty-two Title underwriters reported a net underwriting gain through the third quarter 2012, while only 11 Title underwriters reported a net underwriting loss. The profitability of Title underwriter operations is encouraging. Moreover, Title underwriters as a whole continue to maintain adequate levels of policyholders’ surplus while increasing direct premiums written period over period.”

FSRs are a leading indicator of the financial stability of Title underwriters and present Demotech’s opinion of the ability of an insurer to meet its insurance related obligations based upon an assessment of financial information. FSRs are not an endorsement of any particular insurer or its products. Insureds and agents need to independently evaluate their relationship with a particular insurer as well as the applicability of that insurer’s products to the needs of the insured or agent. Visit for a complete list of the FSRs assigned to Title underwriters.

About Demotech, Inc.

Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Since 1985, Demotech has served the insurance industry by assigning accurate, reliable and proven Financial Stability Ratings® (FSRs) for Title underwriters and Property & Casualty insurers. FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer. Demotech’s philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Visit for more information.

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Housing Recovery Benefits Title Insurance Industry: Fitch

by Tory Barringer

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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