RESPA Rules on Agents

This article is a good summary what you need to ask yourself if there is a chance of a RESPA violation.  The article comes from Raealtor Mag

A home sale cannot be conditioned on the use of a specific title insurance company. Violators can face stiff penalties.
It’s not unusual for a listing agent to have a favorite closing agent and want the buyer to close the transaction using that agent, along with the agent’s title insurance and settlement services. What many practitioners don’t realize, however, is that Section 9 of the Real Estate Settlement Procedures Act prohibits sellers from conditioning the home sale on the use of a specific title insurance company, and in fact violators can be subject to penalties, with the most -typical being a fine of up to three times the amount of the title insurance fee.




Examination of title to Florida real property, ranging in complexity, to determine status and to establish chain of title;

  • Abstract and analyze deeds, deeds of trust/mortgages, easements, judgments, tax assessments, mineral reservations, and other applicable instruments;
  • 4+ years title experience;
  • Ability to work in an accurate, detail-oriented and highly productive manner;
  • Working knowledge of basic real estate title concepts;
  • Foreclosure title experience a plus;
  • Working knowledge of legal documents and how they affect title to real property;
  • Familiarity with title insurance commitment and policy format and all procedures required to prepare same—including abstracting, title examinations, survey analysis, etc.;
  • Familiarity with ATIDS; DataTrace/DataTree; General PC Proficiency; Microsoft Office Suite; Internet Explorer;
  • Familiarity with sectional and metes and bounds legal descriptions;
  • Ability to perform basic mathematical calculations and tasks requiring detail, concentration, and accuracy;
  • Ability to communicate professionally, both verbally and in writing;
  • Ability to work both independently and contribute in every aspect to a team environment.
  • Verifying ownership and encumbrances of real property;
  • Preparing professional reports;
  • Reviewing reports for accuracy.

See Post Here

A New And Different Housing Bubble Is Taking Shape

From Business Insider
Wolf Richter
March 19

We have seen it for several years now: foreclosure sales—there were 5 million since the peak of the housing bubble—have become the hunting grounds for investors with two goals: hanging on to these homes until the Fed’s flood of money drives up their value; and defraying the expenses of ownership by renting them out. And funds have a third goal: collecting management fees.

Read more:

Subject Matter Experts needed for Continuing Education Courses

I am looking for a subject matter expert that can help to develop a title continuing education course about agency risk management.  Given the inevitable enforcement of the CFPB to look at how lending institutions monitor their vendors(read title agencies) title agents will need to know what is required in order to be in compliance.

Learntitle is approved in several states so the course will have wide appeal.  Compensation will be a portion of the enrollment fee.

If you are interested, please contact me by responding to this post or sending me an email at




The Consumer Mortgage Choice Act (H.R. 1077) reintroduced

This is an interesting discussion over on Linkedin in the American Land Title Association Group.

The Act provides for exclusion of fees charged by creditor’s affiliates from the 3% Dodd-Frank “points and fees” threshold used to determine which loans qualify as Qualified Mortgages (QMs).

Check it out

4506-T electronic signatures begin | HousingWire

On Jan. 2, President Obama used an autopen to sign the fiscal cliff bill, while vacationing in Hawaii. This may be a sign as to the trend for the 2013 mortgage market: electronic.

Five days after President Obama signed the bill, the Internal Revenue Service will begin accepting electronic signatures on the common mortgage origination document, Form 4506-T.

The tax return transcript is a requirement for the majority of all mortgage originations and loan modifications. Lenders use the form to verify the income of borrowers.

4506-T forms were the last remaining documents in the loan origination process that required a handwritten paper signature.

“The actual e-signing of the 4506-T is minimal. This has been the hold out document so to speak. The excitement is that ‘now I can do my total origination up front electronically,’” said Kelly Purcell, executive vice president of eSignSystems

Income Verification Express Service vendors play a large part in the loan underwriting process, including income verification with the IRS. The IVES vendor is the last submitting party to the IRS that is responsible for sending the 4506 Form to the IRS, getting it back and pushing the information back to the lender.

Because of the credit crisis, virtually every loan or loan modification being processed today requires a 4506-T, Purcell told HousingWire. In 2006, there were only approximately one million 4506-T forms processed, while today there are more than 20 million.

“They needed a cost effective method to handle the volume of these requests,” said DocMagic eServices director Tim Anderson.

This is the beginning of an electronic trend, as the benefits behind this become more evident, according to Anderson.

There are a number of electronic signature requirements that will ensure security for those using the newest technology, he added. And, it is important to also keep in mind that these electronic signatures will save significant time and money. For Anderson, that time is now.

“I’m excited. 2013 is the year for adoption,” added Anderson.

Another step toward totally electronic closings.

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Mortgage industry fares well in fiscal cliff deal, debt forgiveness law survives | HousingWire

The mortgage industry can breath a sigh of relief with the final fiscal cliff deal bringing back a popular tax break on mortgage insurance premiums and debt forgiveness for borrowers who go through a short-sale or some other type of debt reduction.

A topic that is still up for discussion and likely to surface later in the year is whether the popular mortgage interest tax deduction will be part of a long-term deficit reduction plan.

Still, the deal passed by the Senate and House on Jan. 1 is one that leaves room for hope in the housing market.

The American Taxpayer Relief Act of 2012 apparently extends a law that expired at the end of 2011, which allowed for the deductibility of mortgage insurance premiums, according to a research report from Isaac Boltansky with Compass Point Research & Trading. The law now applies to fiscal years 2012 and 2013.

“The law dictates that eligible borrowers who itemize their federal tax returns and have an adjusted gross income (AGI) of less than $100,000 per year can deduct 100% of their annual mortgage insurance premiums,” Compass Point said.

“Certain borrowers with AGIs above $100,000 may benefit from the deductibility as well but are subject to a sliding scale. The tax break covers private mortgage insurance as well as mortgage insurance provided by the FHA, the VA, and the Rural Housing Service. In 2009, about 3.6 million taxpayers claimed the mortgage insurance deduction,” the research firm added.

One of the more watched provisions of the fiscal cliff was the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire on Dec. 31.

The fiscal cliff deal extends it for another year, meaning homeowners who experience a debt reduction through mortgage principal forgiveness or a short sale are exempt from being taxed on the forgiven amount.

“The amount extends up to $2 million of debt forgiven on the homeowner’s principal residence,” Compass Point Research & Trading said. “For homeowner’s to qualify, their debt must have been used to ‘buy, build, or substantially improve’ their principal residence and be secured by that residence. The law, which was passed in 2007 with a 5-year sunset provision, will now be in effect until Jan. 1, 2014.”

Another minor win for housing is a provision tied to the government’s plan to increase the capital gains tax rate from 15% to 20% for individuals who earn more than $400,000. While in theory, this is harder on higher-income homeowners, Compass Point sees a silver lining through an exclusion.

Compass Point notes the law “states that only gains of more than $250,000 for individuals ($500k for households) are subject to taxes on the excess portion of capital gains. Point being, in order for an individual homeowner to be impacted by the increased capital gains tax rate they would need to have an adjusted gross income above $400,000 and gain more than $250,000 from the sale of the property. Since this exclusion threshold remained intact, the impact of the capital gains tax increase is limited.”

Title Insurance Industry Free Classifieds

New Jersey Title Insurance Linkedin Group

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

Click Here to Enroll

Seventh Circuit – “created or suffered” exclusion of a title insurance policy with a mechanic’s lien endorsement – Lexology

As a matter of first impression, the Seventh Circuit recently issued an opinion interpreting a “created or suffered” exclusion in a title insurance policy with a mechanic’s lien endorsement. See 695 F.3d 725 (7th Cir. 2012). In interpreting the exclusion, the court held that a title insurance company breached its duty to defend a construction lender under a mechanic’s lien endorsement to a title insurance policy.

In this case, the lender agreed to lend $95.5 million to finance the construction of an ethanol production plant. The lender was to disburse the loan in installments. To protect its mortgage, the lender purchased title insurance. The title insurance company was required to perform a title search after the lender made each loan disbursement. The lender paid an extra premium for a mechanic’s lien endorsement which insured against “enforcement or attempted enforcement” of a mechanic’s lien claim having priority over or sharing on a parity with the mortgage. The mechanic’s lien endorsement also required the title insurance company to defend the lender “in litigation in which any third party asserts a claim…alleging a defect, lien or encumbrance or other matter insured against by this policy.”

After $87 million of the loan had been disbursed, a dispute arose between the owner and the general contractor, which resulted in the general contractor filing a $6 million mechanic’s lien against the property. Suspecting a lien had been filed, the lender requested that the title insurance company perform a title search. The title insurance company updated the title search and disclosed the existence of the general contractor’s lien and, at that point, made an express exception from coverage.

After the lender filed suit to recover the $95.5 million due under the loan and to foreclose on its mortgage, the general contractor asserted a counterclaim against the lender, claiming that it was entitled to enforce its lien against the entire property and claiming priority over the lender’s lien. Although the title insurance company initially acknowledged the contractor was seeking a judgment determining that its lien was prior to and superior to the lender’s mortgage, it denied the lender’s request for defense and indemnification. After settling with the contractor, the lender then sued the title insurance company for breaching its duty to defend and indemnify under the title insurance policy and the mechanic’s lien endorsement.

In conducting its analysis, the Seventh Circuit noted that many title insurance policies insure only against mechanic’s liens arising before the endorsement date and for which labor or materials have already been furnished. However, the endorsement at issue in this case covered any claim “arising from construction contracted for and/or commenced on the land prior to, at, or subsequent to the effective date.” The court held that under the terms of the policy and endorsement, the title insurance company was required to defend against any enforcement or attempted enforcement of a claim asserting priority over or parity with the mortgage, regardless of the merits of the attempted enforcement. Although the contractor had little chance of success of prevailing on its counterclaim under Indiana law, the insurer still had a duty to defend the lender since the counterclaim was an attempt to enforce a claim of priority over a mortgage.

Of notable interest, the title insurance company also argued that coverage was excluded under the policy since it excluded from coverage claims “created, suffered, assumed or agreed to or by the Insured claimant.” As explained by the court, the “created or suffered” exclusion is standard in title insurance contracts and “apparently, one of the most litigated clauses in the field.” The title insurance company argued that the lender “created, suffered, assumed, or agreed to the lien” when the lender decided not to disburse the remaining $8.5 million in funds under the loan. Although the court recognized that First American Title Ins. Co. v. Action Acquisitions, LLC, 187 F.3d 1107 (Ariz. 2008) may support this argument, the “overwhelming weight of authority is to the contrary.” Rather, the “‘created or suffered’ language is intended to protect the insurer from liability for matters caused by the insured’s own intentional misconduct, breach of duty, or otherwise inequitable dealings.” Noting that neither Indiana nor the Seventh Circuit had ever defined the “created or suffered exclusion”, the court predicted that Indiana would adopt the majority view that the exception only applies when the insured was guilty of intentional misconduct, breach of duty, or otherwise inequitable dealings and does not apply when the insured is innocent of any conduct causing the loss or was simply negligent in bringing about the loss. Here, there was no allegation or evidence that the lender engaged in deliberate, dishonest, or illegal dealings.

The court also rejected the title insurance company’s claim that the lender breached a duty to the title insurance company to distribute the entirety of the loan proceeds. Id. at 733- 734. In distinguishing Brown v. St. Paul Title Ins. Corp., 634 F.2d 1103 (8th Cir. 1980) and Bankers Trust Co. v. Transamerica Title Ins. Co., 594 F.2d 231 (10th Cir. 1979), both of which involved title insurance policies and mechanic’s lien endorsements similar to the one at issue, the court noted a “critical” factual difference in those cases. There, the insured lenders had each “agreed to make adequate funds available to pay the developers and their contractors.” The court found it significant that in those cases, the title insurers assumed the responsibility for securing the lien waivers and actually disbursing the loan funds to the various contractors. These agreements with the title insurance companies clearly contemplated that the lenders would make adequate funds available to the title insurance company to satisfy claims. However, in this title insurance policy, there was nothing that required the lender to disburse the entirety of the funds. Because there was not a disbursement agreement with the title insurance company, the lender did not have a duty to disburse all of the funds. Therefore, the claim did not fall within the “created or suffered” exclusion as defined and interpreted by the court.

Construction Law Update

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New Jersey Title Insurance Linkedin Group