Did I Just See a RESPA Violation?

Recently, while photo copying HUD1 Settlement Statements at a real estate office, and for all eyes to see (my eyes were not wandering!), there on the wall was taped an advertisement, a glossy pitch from a mortgage lender soliciting the real estate agents. I have summarized below:

Individual Goal

Refer 4 loan applicants from August 1 through November 1 and get a $200 gift certificate for personal marketing

Office Goal

Just one referral gets you invited to a group dinner:

Refer 9 loan applicants – dinner at the “not so exciting” restaurant

Refer 18 loan applicants – dinner at the “okay this is getting better” restaurant

Refer 27 applicants – dinner at the “yes, I have arrived, fancy “schmancy” steak house

Does this advertisement violate Section 8 or any other section of RESPA? I would appreciate your opinion, maybe I am missing something.

Every day the independent title insurance agent struggles to compete with others who are not playing fairly and with the controlled businesses.

At this time, I have to direct you to Ethical Practices in Real Estate. Douglas R. Miller’s superb writing and on-the-mark insight into CBA’s, kickbacks, and ethics in the real estate industry is phenomenal. An absolute must read!

No surprise – claims are increasing

From the LandAmerica 1st Quarter 2007 results discussion section:

The provision for policy and contract claims as a percentage of operating revenue was 6.5% in first quarter 2007 compared to 5.6% in first quarter 2006. The increase in the claims provision ratio was primarily due to an increase in the frequency of claims reported which resulted in upward development in policy years 2004 through 2006. Since the Company is subject to liability on claims for an extended time period, slight changes in claims experience for more recent policy years can have a significant effect on the amount of liability required for potential claims.

If you read this and other title insurance blogs, this shouldn’t come as a surprise – the industry is having pay the piper for the problems ignored in the past few years.   Claims have a long tail – it takes years for them to materialize.  Expect to see more reserves and claims going forward.

Also don’t be surprised to see that two of the culprits – sham ABAs and signing agents quickly fall from favor with title insurance underwriters.

GAO Report on Title Insurance is Out

http://www.gao.gov/new.items/d07401.pdf

Haven’t read the detail, but here’s the summary:  Title Insurance is a big mess, it needs fixed, and everyone should help.

 Glad to see our tax dollars helped develop such a comprehensive and insightful recommendation.  Hopefully the full report has more in the way of concrete recommendations.

Is this a RESPA Issue?

This just in.  The California Bankers Association is offering a discounted/bundled set of closing services through FirstClose.   The highest value/margin product in the offering is Title Insurance.  It only makes sense to discount or offer at cost the other services to attract the title order.

Question:  If discounts are a thing of value, is it a RESPA violation to offer them in conjunction with title insurance?

Thoughts are welcome.