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The Legal Description Edition
December 9, 2013
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Digging in: First thoughts on new mortgage disclosures
Posted Date: Monday, December 9, 2013
The wait is finally over. The Consumer Financial Protection Bureau (CFPB) released the new mortgage disclosure forms and their implementing rule on Nov. 20. The final rule provides answers to many of the industry’s long-standing questions about the RESPA/Truth in Lending Act (TILA) proposal released last year.
The final rule, which takes effect in August 2015, includes several changes in response to industry comments. For instance, the bureau made important changes to the proposed definition of business day. The CFPB also decided to put off finalizing a proposal to change the annual percentage rate (APR) calculation. However, other debated provisions remained unchanged in the final rule. For instance, title insurance is still described as “optional” on the bureau’s Closing Disclosure.
Under the Dodd-Frank Act, the CFPB was charged with integrating the RESPA and TILA mortgage disclosures. In May 2011, the CFPB released its first group of integrated mortgage disclosure form prototypes — two months before the agency opened its doors. The agency then spent 14 months releasing prototypes and requesting feedback from the public. The bureau published its 1,099-page proposed rule on July 9, 2012. The proposal suggested new integrated disclosure forms, as well as new timing requirements, modified tolerance levels, new definitions and record keeping requirements. Many in the industry were concerned that some of the proposed changes were impractical and would hinder consumer’s access to mortgage loans.
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Securing your network
Posted Date: Monday, December 9, 2013
Computer hacking has become a lucrative profession and title agents are easy targets. They hold millions of dollars for consumers and lenders and have very few protections for their networks. For this reason, there are many tools out there designed to help agents protect the funds, and personal information, they are given every day, placing a fortress around their networks. Because of the potential risks, regulators are telling lenders to ensure that the third-parties they use for settlements have robust cyber security systems protecting their networks and keeping consumers’ personal information, and money, secure.
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Agency sues professional liability insurer for failing to defend insurer’s suit
Posted Date: Thursday, November 21, 2013
After being sued by their underwriter for engaging in an alleged fraudulent scheme, members of a title agency turned to their professional liability insurance provider to defend them. The professional liability provider denied coverage because the original suit was outside of the policy coverage. The case eventually went before the 8th U.S. District Court of Appeals.
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Fraudster gets four years for mortgage fraud
Posted Date: Monday, November 18, 2013
A man who claimed to be the victim of a mortgage fraud scheme was sentenced to four years in prison. As part of the scheme, he and his fellow fraudsters provided lenders with inflated appraisals and title reports with fake liens. Read on for more details.
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Property owners sue title company over undisclosed right of way
Posted Date: Monday, November 18, 2013
Buyers bought property in Pulaski County, Ark., and received title insurance from a national title insurer. The transaction used a survey that had been prepared a year before hand. After the sale, another firm was hired to perform a survey in preparation for a proposed hotel development. This survey discovered that the property owners owned less land than described in the previous survey, due to a right of way given to the Arkansas State Highway Commission.
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FDIC says insurer was negligent in hiring, training, supervising employees
Posted Date: Thursday, October 24, 2013
The Federal Deposit Insurance Corp., as receiver for a bank, sued an underwriter for, among other things, vicarious liability for negligent hiring, training and supervision of employees. The employees at issue allegedly engaged in a flip transaction in connection with four different transactions funded by the bank.
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Title insurer sues Chicago, CTA over ownership of vacant parcel
Posted Date: Monday, November 18, 2013
After purchasing a condominium and the vacant parcel behind it, the owner discovered that the vacant parcel may have been vested in the City of Chicago and the Chicago Transit Authority. His title insurer paid his claim and sued the former owner of the property and filed additional claims against the city and the CTA.
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Insurer, attorney agent dispute indemnity, contract
Posted Date: Wednesday, October 30, 2013
A national title insurer sued an attorney-agent seeking to recover losses it suffered as a result of errors made during several real estate closings. The agent raised several counterclaims, including breach of contract, refusal to settle accounts, breach of fiduciary duty, negligence, setoff and recoupment. The case eventually went before the Court of Appeals of Georgia on the parties’ cross appeals.
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Florida legislature introduces title insurance bill
Posted Date: Monday, November 18, 2013
The Florida legislature introduced a bill that specifies that title insurance may be sold only by licensed and appointed agents and agencies and revising the application requirements for a title insurance agency license.
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Ohio updates recording statute
Posted Date: Thursday, November 21, 2013
The Ohio General Assembly passed a bill that updates the Revised Code to reflect how county recorders record and maintains instruments filed in the county recorder’s office. Read on for more details.
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Attorneys may be permitted to have trust accounts at credit unions
Posted Date: Thursday, November 21, 2013
Lawmakers and other government entities have been concerned that community banks and credit unions are overburdened by regulations. The House Financial Services Committee approved two bills proponents said would ease existing regulatory burdens for them. One of make it easier for attorneys to have their trust accounts through credit unions.
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Washington AG sues company for misleading consumers
Posted Date: Monday, November 25, 2013
The Washington Attorney General’s Office filed a Consumer Protection Act lawsuit against a Bellflower, Calif., company that misled property owners into purchasing copies of their deeds from them.
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New commissioner appointed for D.C. department of insurance
Posted Date: Monday, November 18, 2013
The Washington, D.C. deputy mayor for planning and economic development appointed an acting commissioner for the district’s Department of Insurance, Securities and Banking. Read on for more details.
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Sixth Circuit declares AfBA test unconstitutional
Posted Date: Tuesday, December 3, 2013
The 6th U.S. Circuit Court of Appeals issued a long-awaited decision in the case of Carter v. Welles-Bowen, in which plaintiff homeowners allege they received title insurance services from sham affiliated businesses who provided few substantive services during the transaction, in violation of RESPA. The homeowners’ argument hinged on the U.S. Department of Housing and Urban Development’s 10-factor sham affiliated business test, which was previously held unconstitutionally vague by the U.S. District Court for the Northern District of Ohio.
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Title co. owners, attorneys, others indicted in Operation Mad House
Posted Date: Tuesday, December 3, 2013
A couple who owned a now-defunct suburban title company, a disbarred attorney and an attorney are among nine defendants who have been indicted in two separate mortgage fraud cases, federal law enforcement officials announced. Seven defendants were charged together in one case, and two in the second case, together alleging schemes to fraudulently obtain at least four residential mortgage loans totaling more than $1 million from lenders.
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Closing process 2.0
Posted Date: Monday, December 9, 2013
In addition to releasing the forms and final rule, the CFPB announced a new "Know Before You Owe" information gathering initiative aimed at overhauling the real estate closing process.
CFPB Director Richard Cordray said the bureau will study technologies that could lead to paperless "eClosings." He also said the bureau would work to reduce the stack of paperwork borrowers are confronted with at the closing table.
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Assuring accuracy through technology
Posted Date: Monday, November 25, 2013
Bulletins by the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency have made lenders responsible for the actions of their third-party providers. Lenders, in turn, will start to place more requirements on the shoulders of their title providers. Technology can assist title companies in assuring accuracy and transparency in their work product while also helping them grow.
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Man sentenced for illegal flipping scheme in Conn.
Posted Date: Thursday, November 21, 2013
A Connecticut man was sentenced to twelve months and one day in prison, followed by five years of supervised release for his role in a scheme in which he and co-conspirators performed illegal property flips.
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Mortgage disclosure forms released - Updated
Posted Date: Wednesday, November 20, 2013
The wait is finally over. The Consumer Financial Protection Bureau (CFPB) released the new mortgage disclosure forms and their implementing rule. The final rule provides answers to many of the industry’s long-standing questions about the RESPA/Truth in Lending Act (TILA) proposal released last year.
The final rule, which takes effect in August 2015, includes several changes in response to industry comments. For instance, the bureau made important changes to the proposed definition of business day. The CFPB also decided to put off finalizing a proposal to change the annual percentage rate (APR) calculation. However, other debated provisions remained unchanged in the final rule. For instance, title insurance is still described as “optional” on the bureau’s Closing Disclosure.
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