First Appraisers, Next Title Agents?

Tanta, who writes for one of the best economic / mortgage lending web sites out there, Calculated Risk, has an excellent review of the proposed new Fannie rules for appraisals.   I think her analysis is spot on, and she goes one step further to point out another suspect relationship in the lending industry:

1. So much for “synergy.” I only hope that if this puts a stop to large lenders buying appraisal firms (and destroying appraiser independence), we can next move on to large lenders buying title companies (and destroying escrow officer independence).

Thanks Tanta!

Busy in Florida

From the Orlando Business Journal (paid):

A Tavares company is one of 23 Central Florida firms and/or individuals under investigation by the state for title insurance fraud.

The Florida title fraud cases being investigated so far this year involve agents misappropriating escrow funds, says state Chief Financial Officer Alex Sink’s office.

John Corbett, law enforcement captain for the department, declines to share any details about the 23 local fraud investigations…….

Twenty three in one state is not a small number.

Will Civil Suits Clean up Real Estate?

The participants and those who regulate them appear unwilling/unable to police the real estate industry.   As reformers begin to despair, hope for reform comes from an unexpected source: the multitude of civil cases, both large and small,  that in aggregate may motivate the leaders of the real estate industry to clean up their mess.

Minnesota Dept of Commerce Shuts 6 Sham ABAs

Press release here. 

The Minnesota Department of Commerce announced today it has taken action against another kickback scheme in which a title insurance company set up sham affiliated businesses with real estate agents, mortgage originators and developers in order to get around state and federal laws prohibiting direct payments for referrals. The Department revoked the insurance producer licenses from six title companies and fined Premier Title Insurance Agency $175,000 for participating in the kickback scheme.  According to the consent order, Premier Title Insurance allegedly created and controlled sham affiliated businesses and paid kickbacks or other things of value to its referral partners for the referral of title insurance business and real estate closings.

First American Downgraded

Yesterday Fitch announced the downgrade of First American’s issuer default and senior unsecured debt ratings.

The ratings were downgraded because the company said it expects to lose up to $50 million when it reports fourth-quarter quarter earnings Feb. 28, Fitch said in a statement. First American is also likely to increase reserves for loses in its title insurance unit, which will hurt earnings, Fitch said in a statement.

Fitch placed both ratings on a negative outlook.

Further evidence that the claims issue is far from over. 

Their issuer default rating was reduced to “BBB+” from “A-” and the senior unsecured debt rating reduced to “BBB” from “BBB+.”   It’s important to note that both ratings are still investment grade.

The Other Side of New Mexico Title Insurance

A number of title insurance and real estate bloggers had publicly fretted over the apparent disservice being done to the consumers of New Mexico when Title Insurance reform wasn’t placed on the legislative calendar.  I refrained from jumping in largely because I know little about the system of title insurance in NM, and couldn’t comment on the facts.  I was troubled that the reporting I had reviewed appeared to be one sided and very light on statistical evidence, but I didn’t have any evidence to refute it.  It appears the issue may not be so cut and dry as others would have you believe.

Now the other side of the story is being presented, though apparently not getting much media attention.  In a letter to the editor in Alamogordo Daily News, a Title Insurance Professional points out some of the popular facts appear to have been misrepresented:

Nashville Title Agency Placed in Receivership

The Nashville Post is reporting that Forsythe Title & Escrow Services is missing a significant amount of their escrow funds:

According to a complaint filed in Sumner County Chancery Court, Forsythe Title & Escrow Services cannot explain numerous discrepancies in its escrow accounts, and the receiver appointed to investigate its finances suspects professional misconduct.

Pennsylvania Suit Against Commonwealth Granted Class Action Status

Excellent Law.com analysis here.

The suit alleges that anytime Commonwealth Land Title’s agents discovered in the title search that an insurance purchaser had refinanced the property within the past three or 10 years, they should have known that a prior insurance policy had been issued and that the discounts should have been automatically applied.

PA title agents know this is a vaguely worded section of the title insurance rating manual.   Unfortunate it has to be resolved via class action.

Suit against Fidelity Granted Class Action Status

The Toledo Blade is reporting that yesterday a suit against Fidelity National Title for misapplication of rates has been granted class action status.

But in a written opinion issued in U.S. District Court, Judge James Carr said: “The interests of fairness, efficiency, and judicial economy are all best served by a class action. Certification in this case is important because each individual class member’s claim may be small, resulting in a diminished incentive to sue to enforce his or her rights.”