2012 State of the industry

October Research has published there 2012 "State of the Industry".  It is available for free at http://www.thetitlereport.com/TTR/IndustryReport2012.aspx .  It contains sections about:

Real Estate
Gradual housing recovery expected, but sleeper issues creeping up

Title Insurance
Distressed market to define title insurance business in 2012

Homebuilders
Homebuilders in 2011: Bubble states hold down housing starts

Mortgage
Consumer confidence improves, but mortgage markets remain constricted

Appraisal
Appraisal industry battles continue into 2012

Settlement Services Law
Business-changing issues loom in 2012

RESPA
RESPA in 2012: The evolution of a titan

The Dodd-Frank Act
Dodd-Frank in 2012: big issues, little certainty

 

Cleveland home buyer's beef leads to Supreme Court case - Cleveland Business News - Northeast Ohio and Cleveland - Crain's Cleveland Business

CFPB - Round 4 - New TIL/GFE Form Prototypes

by Wyatt Bell | 2011/09/13 |

The CFPB has issued the 4^th round of proposed changes to the TIL/GFE combined format. These may be viewed at CFPB website: Know Before You Owe

Wyatt Bell's Blog ::

Any thoughts that "itemization" may reappear for title fees and policies have ended in the latest revisions to the proposed GFE forms.

Round4-jasmine

Round4-nandina 

Notice that items A through F have been discontinued in this version of the forms. Items A through F, which appeared in previous versions, would have corresponded with the GFE# numbering system currently in use.

It may be that the CFPB understands the enormous cost of implementing new HUD calculations and forms and is dovetailing into the current HUD 1/1A forms for minimal changes. I would expect the Department of Housing and Urban Development (HUD) to begin entering the picture with new HUD 1/1A forms which will still need revision to fit with the proposed changes.

After all the energy expended in explaining the difficulties with "non-itemization" it appears the "non-itemization" proponents have won!

Keep in mind the forms are the same. The differences are in the loan quote information. The Nandina has the lower "Estimated Cash to Close" while the Jasmine has the lower APR. If one is looking at out-of-pocket they may be tempted towards the higher cost loan which is counter-intuitive. This example has a mere $88.00 difference in "Estimated Cash to Close".

However, in the real world as the "Estimated Cash to Close" vs. the loan terms becomes wider it will be more difficult to choose. Does one pay more at settlement for less payments??

That's the problem with these prototypes. The terms are framed very simply - there's no empirical evidence that these forms will result in prospective borrower(s) choosing the most favorable loan terms! Many other factors are at play, especially since "non-itemization" hides potential advantages!

And it must also be considered that even though the Nandina APR is higher it may, indeed, turn out to be lower! The adjustment begins at the 4th year which means the interest rate could actually be lower from years 4, 5 and 6 whereas the Jasmine is stuck at 3.75% for the full 7 years. Just look at the bond market for the last 30 years - interest rates have been on a downtrend the whole way! And with The Fed stating they are holding rates at or near 0% into 2013 one could arguably go for the higher loan APR.

The APR adjustment is based upon the assumption that the initial rate will increase which is not always the case. How much refi business has been generated over the last 2 decades because rates decrease?

Current CFPB authority - Lexology

the doctrine of merger of title

I saw this question posted online:

 

The mortgage crisis has brought with it a record number of foreclosures.  Not surprisingly, deeds in lieu of foreclosure have also become much more common.  Generally, the doctrine of merger of title holds that when a greater and lesser estate coincide and meet in the same person, the lesser estate is merged with the greater. The question then becomes, does the deed in lieu have the effect of extinguishing the lender's mortgage lien? 

 

I asked Phil Noce of Elite Title what he thought.  He answered this way:

I remember researching this issue in my younger days at Chicago Title.  If the deed makes a specific reference that it is for the purpose of satisfying the existing mortgage, nothing further will be required.  If it is just a deed to the lender without such a reference the question of intent  comes into play and the title companies have always taken the position that the mortgage must be cancelled of record.  I have seen deeds which stated that the mortgage is to remain open.

 

The main problem with a deed in lieu of foreclosure is junior liens.  In a foreclosure junior liens can be cut off, but if the lender accepts a deed in lieu of foreclosure that lender takes subject to all outstanding liens.  That is why it is necessary to do a search to make sure the are no other liens before such a deed is accepted.

 

 

I don't know if this is true but it's funny

Rebuilding New Orleans caused residents often to be challenged with the task of tracing home titles back potentially hundreds of years.

With a community rich with history stretching back over two centuries,
houses have been passed along through generations of family, sometimes making it quite difficult to establish ownership. Here's a great letter an attorney wrote to the FHA on behalf of a client:   You have to love this lawyer...

        A New Orleans lawyer sought an FHA loan for a client. He was told the loan would be granted if he could prove satisfactory title to a parcel of property being offered as collateral. The title to the property dated back to 1803, which took the lawyer three months to track down. After sending the information to the FHA, he received the following reply:
        (Actual reply from the FHA): 

        "Upon review of your letter adjoining your client's loan application, we note that the request is supported by an Abstract of Title. While we compliment the able manner in which you have prepared and presented the application, we must point out that you have only cleared title to the proposed collateral property back to 1803. Before final approval can be accorded, it will be necessary to clear the title back to its origin."

         Annoyed, the lawyer responded as follows: 

        (Actual response):

        "Your letter regarding title in Case No.189156 has been received. I note that you wish to have title extended further than the 206 years covered by the present application.

        I was unaware that any educated person in this country, particularly those working in the property area, would not know that Louisiana was purchased by the United States from France in 1803, the year of origin identified in our application. For the edification of uninformed FHA bureaucrats, the title to the land prior to U.S. ownership was obtained from France , which had acquired it by Right of Conquest from Spain . The land came into the possession of Spain by Right of Discovery made in the year 1492 by a sea captain named Christopher Columbus, who had been granted the privilege of seeking a new route to India by the Spanish monarch, Queen
Isabella.

        The good Queen Isabella, being a pious woman and almost as careful about titles as the FHA, took the precaution of securing the blessing of the Pope before she sold her jewels to finance Columbus's expedition. Now the Pope, as I'm sure you may know, is the emissary of Jesus Christ, the Son of God, and God, it is commonly accepted, created this world. Therefore, I believe it is safe to presume that God also made that part of the world called Louisiana . God, therefore, would be the owner of origin and His
origins date back to before the beginning of time, the world as we know it, and the FHA. I hope you find God's original claim to be satisfactory. Now, may we have our loan?" 

        The loan was immediately approved. And you want our government running the health care?

New Jersey Title

I heard today that New Jersey Title was closed down by the Dept of Banking and Insurance.  Anybody have details?

Is your driveway a principal use?

What will be the title implications of this decision?

From :

• Lexology
• Porzio Bromberg & Newman PC
• Gregory S. Ricciardi

According to the  New Jersey Supreme Court, in certain circumstances the answer is yes.  On June 16, 2011, the Court held that a driveway is a principal use where, pursuant to local zoning, the driveway does not meet the definition of an accessory use.  Moreover, depending on the circumstances, you may need difficult to obtain and costly variances to get your driveway approved.  How could this happen?    

The answer lies in the curious case of Nuckey v. Borough of Little Ferry Planning Bd.  These are the facts. A developer owns multiple lots and wants to build a hotel.  One of the lots has no highway access. To remedy this issue, the developer proposes to build a driveway on an adjacent lot that would continue across the corner of another lot owned by the same principals as the developer.  This proposed driveway would provide the needed highway access for the hotel.  Sounds like a simple accessory use right? Herein lies the rub.

The local land use ordinance in this case defines an accessory use as “ a use which is customarily incidental and subordinate to the principal use of a lot or a building and which is located on the same lot.”  Because the driveway serves a different lot, it cannot be accessory.  Therefore, the driveway is a principal use. 

This, however, is not the end of our story.  It turns out that there was a pre-existing, non-conforming use on the same lot as the proposed driveway.   As a result, the proposed driveway was deemed a second principal use and the expansion of the pre-existing, non-conforming use.  Thus the developer was required to obtain use variances pursuant to  N.J.S.A. 40:55D-70(d)(1) and  (d)(2) respectively.

But wait, despite these facts, aren’t we just talking about a driveway?  Surely there must be some de minimis exception for a small driveway?  This is precisely the argument that was raised by the developer.  In fact, the de minimus argument was successful in the Appellate Division.  However, the Supreme Court reversed, concluding that the courts have never applied the de minimis rationale in considering the need for a use variance to permit an otherwise prohibited use.  Where, as here, the zoning ordinance permits only one principal use, the addition of an entirely new principal use is prohibited and, by its very nature, cannot be inconsequential. Put plainly, “[a]lthough access may be a reason for granting a variance, it is not a justification for dispensing with one. “

This case serves as a reminder that every land use matter is truly unique.  Even something as simple as a driveway, traditionally an accessory use, can turn out to be a legal conundrum.

HUD and FNF Settle RESPA Kick-Back Charges to the Tune of $4.5 Million

Wells Fargo v. Commonwealth: the death knell for equitable subrogation? - Lexology