To:  All Members of NAILTA

From:       Robert B. Holman, Esq., Chairman of NAILTA Policy and Legislative Committee

Date: June 7, 2010

Re:   HUD Seeks Public Comment on Affiliated Business Arrangements (AfBAs)

View the official notice by following this link: http://www.nailta.org/memo-to-members06-07-2010.pdf

The U.S. Department of Housing and Urban Development (HUD) has issued the attached Advance Notice of Proposed Rulemaking (ANPR) regarding the definition of "required use" in the affiliated business arrangement portion of RESPA known as Section 8.  This is the first meaningful attempt to address affiliated business arrangement issues since 1996.  As an organization dedicated to the preservation of independent title insurance agents and agencies, we want to alert each of you to an opportunity to have your voice heard on this important subject.   

As the enclosed suggests, HUD is seeking public comment to strengthen and clarify the prohibition against the "required use" of affiliated settlement service providers in residential mortgage transactions under section 8 of RESPA.  HUD has received complaints that some homebuyers are committing to use a builder's affiliated mortgage lender in exchange for construction discounts or discounted upgrades, without sufficient time to research their contracts or to comparison shop.  While this is a narrow review, the ANPR suggests that HUD will entertain actions in addition to or as an alternative to rulemaking that would better address concerns with affiliated business arrangements in residential mortgage transactions.

The public comment period will remain open until September 1, 2010.

To make your voice heard, you can send your written comments to the following by regular U.S. Mail:

Regulations Division

Office of General Counsel

Department of Housing and Urban Development

451 7th Street SW

Room 10276

Washington, DC 20410-0500

or make your comments via email to the following:

www.regulations.gov

In the normal course following the Administrative Procedures Act, after HUD collects data in this ANPR proceeding, HUD's next steps would be one of three: (i) HUD could decide to no longer pursue the matter, (ii) HUD could decide to continue to deliberate without taking further action at that time, or (iii) HUD could issue a Notice of Proposed Rulemaking, which would include for comment the actual text of the new proposed rule.

Again, we encourage each of you to prepare your own public comments and file them with HUD.  Make sure to include the fact that you are a member of NAILTA in your letter to HUD.  We want to show our strength in numbers! 

If you do not wish to file your own separate comments, but would like to have NAILTA complete a form letter comment for your agency, please let us know and we will be happy to oblige our members. 

NAILTA will be presenting its own official and separate comment on the ANPR prior to the deadline. 

If you have any questions about the ANPR, affiliated business arrangements or our stance on either, please feel free to contact me via email rholman@generaltitleco.com or by telephone at (800) 344-7445 or by contacting NAILTA's Public Relations Committee Chairman, Harvey Pollack, at hpollack@nailta.org or HAP@landtitleservices.net.

 

July 1st, 2010 NJ Senate Bill 2229 is scheduled for debate by the Senate Commerce Committee in the next legislative term. This bill would bring real competition to the title insurance industry and allow title companies to offer lower prices to consumers. As it stands now title insurance rates are regulated by the state. This of course is under the guise that it is done to protect consumers from paying too much but in reality it is designed to protect the profits of title insurance companies. Senate Bill 2229 would force title insurance companies to compete for customers and would require they adjust prices in a way that benefits consumers instead of their bottom line. Many companies are against this bill because they understand that their old business practices will have to change or they will not make the huge profits they are currently reaping. First we have to look at how title insurance works in New Jersey at this moment. Basically the law states that there is a set rate for title insurance and all title companies must charge this rate. The real reason for this is not to keep title companies from overcharging clients but in reality it is to restrict competition and it allows title companies to gouge customers. This is because they all charge the same premium but many title companies simply add on “junk” fees and extra charges to boost their bottom line and pay illegal kick backs to other professionals for business referrals. This arrangement is good for them as it keeps a consumer driven competitor from offering lower premiums, even though some new companies have cut out the junk fees and do offer a lower rate for title insurance and closing services. How would Senate Bill 2229 change this? By allowing title insurance companies to offer discounted premiums the state would open the market to competitive forces. The would result in a free market for consumer driven title companies to thrive while the traditional anti-consumer forces would be forced to change or risk going out of business. New entries to the industry would now be able to offer lower premiums along with cutting out the “junk” fees, which they are already doing. This scares traditional title insurers and they are fighting the passage of this bill. Who is against this bill? The NJLTA has come out strongly against this bill. The reason they give is that it would force title insurers to lower their rates to a point where they would no longer be able to survive. Of course this argument makes no sense. Why should the title insurance industry be unlike any other? If someone can offer a lower price while still making a profit why should they be denied the right to do so? The real reason they are against it is because they realize that it will force them to change their business practices and actually focus on offering the consumer the lowest prices and the best service. They want to continue making their nice profits on the backs of New Jersey consumers. Who is supporting this bill? Along with consumers, who stand to benefit with lower closing costs, new title insurance companies dedicating to bringing the industry more in line with the needs of consumers support the passage for Senate Bill 2229. These new companies are attempting to move the title industry into the 21st century by working directly with consumers in a variety of ways. Their business model is to offer the lowest price they can to the consumer while still being able to run their business. By not engaging in the illegal kick backs they can pass that savings on to the consumer while still being able to run a profitable business. Support of Senate Bill 2229 would change the title insurance industry in New Jersey in a way that would benefit consumers and companies that embrace a free market. The title insurance industry is changing and title companies need to embrace this or they will die. The Internet has increased the amount of information available about everything and title insurance is no different. As consumers become more educated they will begin to demand change and those who fight are doomed to failure. Those who embrace it have an opportunity to succeed at a high level. New title companies are embracing this change and will move the industry forward for the benefit of consumers. Senate Bill 2229 is a step in the right direction for New Jersey and its passage will guarantee that consumers will gain more control over their closing and save money on title insurance and closing costs. Mark Pilatowski is a title industry insider and has followed the litigation surrounding the title industry for the past few years. Because of the problems with other title companies he joined the team at My Closing Space [http://www.myclosingspace.com]. myClosingSPACE offers Title insurance [http://www.myclosingspace.com] and closing services direct to the consumer without the junk fees and kickbacks that other title companies charge. Article Source:http://EzineArticles.com/?expert=Mark_Pilatowski

The Journey to the e-Mortgage/eClosing City

In June, 2006, I started on my journey down the eClosing/eMortgage road hoping by now,   I would have reached the ever elusive Emerald City.  My Emerald City is that glittering Green world that shimmers without paper and inefficiencies that plague our Title and Lending institutions. 

I had such high hopes in June 2006 when I put together the first eClosings with Lenders for my company.  What a glorious day of excitement and hope. The excitement stemmed from turning a paper laden process into a celebration around the closing table with Buyers, Sellers and Realtors that took 16 minutes to complete.

The buyer was thrilled because she only had to sign her name a couple times. One signature captured on a Signing pad was applied to all previously reviewed documents except the Note and Mortgage.   She commented on how nice it was not to have to sign 40-60 pieces of paper as she had in the past.  She was appreciative of being able to review her loan closing documents prior to the closing in the comfort of her own home without the pressures of people watching her.  

The Seller commented on the brief time the closing took. Obviously, electronically signing her handful of documents and having the opportunity to review everything prior to the closing made the closing stress free. 

The Realtors were impressed because there were no surprises and all parties were relaxed.  They commented, this was much better than the traditional paper closings which took anywhere from one hour to an hour and a half. 

The Lender was thrilled as he knew he had a quality set of closed documents with each document having the signatures in the right places.  No signatures missing, no middle initials missing, no documents left behind when shipping.  It provided a more efficient funding procedure and improved data integrity.

The Settlement Agent spent 15 minutes in a closing and did not have to make copy or shipping packages for all parties.  Everybody had secure access to their pertinent documents housed within the online file.    

Yes, that 1^st  eClosing in 2006 impressed all parties and then just as quickly as it happened, someone clicked their heels and collectively decided to return to the catatonic like processes that create time wasting, inefficient pothole craters on the road to the glimmering paperless eCity .

I reflect back on that June day and sometimes wonder if it really happened or was I struck in the head during a tornado and imagined all of it.   No, I know it happened, I was there, media covered it, so there is proof!    Fast forward to 2010, 4 years later....

Are we any closer to adopting eClosings and eMortgages?  The answer is a quiet, deflated, but hopeful, Yes.   Every time we seem to make progress along our yellow brick road, flying Monkey's swoop down and change our focus and halt our progress forward.  Our flying monkeys have been the economy and the new HUD. 

The economy was an enormous distraction for all parties. It is difficult to implement new processes when one is trying to concentrate on staying vital with reduced staffs and shrinking budgets.  Just as the snow fell on the poppies and marketing efforts began to awaken, the HUD /RESPA  Monkey flew in to divert focus and again halt eClosing efforts.  However, this flying monkey has turned out to be somewhat helpful as electronic processes can focus on accuracy and make certain the timeframe requirements are met.

There has been progress and at times I can see the glittering light at the end of the road. I am experiencing a renewed interest from settlement agents looking at ways to market that set themselves apart in their marketplace.  They are beginning to realize it is time to embrace processes that can create efficiencies as well as build strong partnerships with their customer base. 

The eClosing/eMortgage function addresses current needs of the Lenders, Realtors and Settlement Agents.  The ability to create and support a paperless file from the point of sale throughout the closing is paramount in directing and fulfilling a better process for all parties involved.

eClosings will benefit the Lenders by allowing all parties to collaborate throughout the process, monitoring progress in real time. The Lender will see improved data integrity, a more quality product, a better experience for the customer, less phone calls and faxes throughout the process, reduction in post closing errors, a reduction in overnight fees and paper costs.  In addition the Lender's customers will experience a better customer experience and allow all parties the ability to contribute to a green initiative.

eClosings will benefit the Settlement agent by allowing for the collaboration throughout the process which eliminates surprises at the closing table.  The Settlement agent will also realize benefits with a reduction in paper and overnight fees, supporting the Green initiative, less post closing issues after the fact, spending less than 20 minutes at the closing table enabling an ability to do more closings in a day with less stress.  Thus the Agent will have the advantage of building strong partnerships with Lenders which will provide a far more convenient closing for everyone.

So why isn't everyone trying to figure out ways to support eClosings?  It is still a process that is new and for the most part, all parties can still function and do function in the paper world.  There are Lenders who have realized the many benefits of eClosing and demand that their loans be supported in an eClosing environment.

Certainly, there are many pieces and moving parts of deploying an eClosing environment. Those pieces and parts are all available, legal and compliant today.  An office can support a complete eMortgage or in most cases a hybrid eMortgage/eClosing.

The complete eMortgage is where all loan documentation is created, executed, transferred and stored electronically.  But, the reality is that most transactions are hybrid eMortgages.  In the hybrid process we have to wet sign some documents due to external factors; i.e....county does not support eRecording; state does not allow eNotatarization; or Note is not a SMART Doc.  However, in a hybrid eClosing we are able to still support 95% of the file in a paperless scenario.  Being a pioneer in this "e" environment requires an office to embrace a change in known processes, mindset, philosophies and requires, a "CAN DO" attitude. 

Over the next several blogs I am going to examine the pieces and parts necessary to engage in this new frontier and hopefully many of you will want to take this road to that "e"Emerald City, and it will be a journey that will be "e"xciting. "e"fficient,  "e'ducational , "e"asy  and  absolutely

"e" seamless journey!  

Nancy G. Pratt

Director of Business Development/eStrategy Manager

PropertyInfo Corporation /eMortgage Solutions

I am happy to introduce Nancy Pratt as a guest author on this blog.  I've known Nancy for a few years and have always been impressed with her knowledge of the industry.  I am excited that she has agreed to post here occasionally to share some of her insight.

Nancy G Pratt, the Business Development Director of eMortgage Services at PropertyInfo Corp., is responsible for the strategic planning and decision-making process to create revenue producing business development programs that promote and sell eMortgage solutions throughout the lender customer segments.  Pratt is responsible for targeting and calling on direct sales opportunities as well as defining other potential distribution partners to embed our technology and offer as a service.

 Nancy most recently served as Director of Lender Solutions for Stewart Title Guaranty in Region H.  In this capacity she was responsible for the Marketing initiative for Stewart's Regional Order Center. (ROC)  The Regional Order Center facilitated National Title orders for nationwide lenders, and established consistent distribution and fulfillment of Stewart's services across the country.  In addition, Pratt provided solutions for Foreclosure Attorneys, Mortgage Servicing Portfolio Retention plans, Commercial Cell Tower clients, as well as supporting Stewart Agents and Affiliates in a 17 state Region.

 As Director of Lender Solutions, Pratt brought the 1^st eClosings with Lenders to Stewart and the first eClosings in the state of Indiana.

 Nancy has over 22 years of experience in the Mortgage Industry, working in multiple positions in Management, Operations and Origination.  She also served as Education liaison for a Mortgage Company where she was responsible for FHA/VA training of Loan Officers in a multi state area.

 Nancy is a member of ILTA, MISMO eMortgage workgroup, MISMO ResTech workgroup, MISMO Reverse Mtg workgroup, MISMO ROI workgroup and has served as Past President for South Central Mortgage Bankers and Chairman of the Legislative Committee. 

Pratt graduated from Utah State University with a Bachelors degree in Political Science.  She lives in Indianapolis, Indiana and has one son.

 

 

Art Oswald

The New Jersey Supreme Court has decided that attorneys in New Jersey need more education.  Beginning in January of 2010, attorneys will be required to obtain 24 hours of continuing education every 2 years.  That's good for me.  I have an online Leaning Management System and would like to host as many courses as I can for Attorneys to take.  I need authors.  If you are an attorney and have a presentation that you would like to develop into an online course, let me know.  Once the course is developed and online, you will recieve a royalty everytime someone enrolls.  Hope to hear from your.  Email art@learntitle.com

The New Jersey Land Title Institute has had Ethics and Fraud in Title Insurance approved for continuing education credit online. Fraud along with ethics is something we are hearing and talking a lot about these days. This course will look at both of these issues in the title industry. This course is will provide 1 Ethics CE credit and 2 Title CE credits. It will review the following: (a) Making Ethics Personal (b) The Title Industry Consumer Initiative (c) Understanding Compliance in New Jersey (d) Understanding Compliance – Federal (e) Confronting Pressure & Temptation (f) Managing Funds (g) Recognizing Fraud Go to http://njlti.net/catalog/coursedetails.asp?caid=10&crid=41 to enroll

Continuing Education for Title Agents
Free classifieds for the Title Industry

Learntitle.com, LLC has had “Mortgage Issues in Title” approved for 2 credit hours of continuing education credit in New Jersey. The major lien disclosed on the county level is a mortgage. A mortgage is a limited conveyance of real property, the purpose of which is to create a security interest for an underlying debt, usually a mortgage note. Understanding the mortgage, how it is recorded, and how to remove it from the record is a core understanding of the Title Insurance industry. Go to learntitle.net to enroll.

Stewart Title Continuing Education has had "The Mysteries of the New HUD-1 Uncovered" course approved for 2 credit hours in Pennsylvania.  The course discusses the relationship between the HUD-1 and the Good Faith Estimate.  The HUD-1 now has a 3^rd page.  It contains costs that cannot change, costs that can only change by 10%, and costs that may change to whatever they turn out to be.  The new HUD-1 will be required by January 1, 2010 so the approval of this course is timely.  Go to http://www.stewartce.com to enroll.  Stewart agents receive a discount off the price of the course

Stewart Title of New Jersey has made available another online course. This course covers the entire New Jersey Rate Manual as amended March of 2009. It discusses: 1. Definitions 2. Methods Of Operation 3. General Rules 4. Schedule Of Rates 5. Examination Charges 6. Closing Or Settlement Charges 7. Miscellaneous Charges 8. Reserved For Future Use 9. Government Or Charitable Transactions 10. Endorsements The course has been approved for 3 hours of continuing education credit. If you have not taken a course from Stewartce, and you are a Stewart agent, please request a discount code before you register for the course. Request a code by Clicking Here

Stewart Title Continuing Education School has released "Pa Title Commitment Requirements" This course discusses the requirements listed on Schedule B1 of a Title Insurance commitment. The course is goof for 3 credits.

you can Enroll here