Clearing Title

Defalcation in Progress - Call the Secret Service!

noreply@blogger.com (Dave Wirsching) — Sat, 22 Nov 2008 11:50:00 +0000

Looks like a lot of consumers left in the cold. Glad to hear the Secret Service is on the case.

List of victims growing | Wilkes-Barre News | The Times Leader

More property buyers and sellers have come forward with complaints about a Kingston title search company that is under investigation by the U.S. Secret Service.

Dean said he also verified Friday that the insurance company representing Priority Search has filed a lawsuit against the company and its principals – Elizabeth Sichler and Robert E. Marsh – in the Luzerne County Court of Common Pleas.

Bogdon gutted and remodeled the home since then and was in a state of disbelief when the seller showed up at his doorstep about two weeks ago to inform him that Priority Search had never turned over the money.

Bogdon said the Realtor had chosen Priority Search as the title company. He recently learned that Priority Search also failed to pay the property taxes as required.

Posted from Diigo. The rest of my favorite links are here.

LandAmerica Left for Dead

noreply@blogger.com (Dave Wirsching) — Sat, 22 Nov 2008 11:30:00 +0000

After a merger agreement that pointed out the dire situation of LandAmerica, Fidelity ends their shotgun wedding, leaving an all-too publicly wounded LandAmerica to fend for itself.

Fidelity National Financial, Inc. Announces the Termination of Definitive Merger Agreement with LandAmerica Financial Group, Inc. - MarketWatch

FNF today announced the termination of its definitive merger agreement with LandAmerica Financial Group, Inc., pursuant to its contractual due diligence termination right.

If another solution doesn't present itself in the near term, we will get to witness what happens when a large underwriter becomes insolvent. It won't be good for the industry or the policy holders.

Posted from Diigo. The rest of my favorite links are here.

$2M Defalcation

noreply@blogger.com (Dave Wirsching) — Fri, 21 Nov 2008 11:44:00 +0000

It looks like we'll be seeing a new wave of defalcations as the market gets tighter and tighter:

Woman Accused Of Taking $2M From Job - News Story - WNEM Saginaw

A Grand Blanc woman has been charged with 17 felony counts related to her embezzlement of more than $2.24 million from her employer.Genesee County prosecutor David Leyton said that Melissa Bosek, 32, of Grand Blanc, concocted a scheme of using bank deposits, wire transfers, and checks to steal money from Bell Title, a Michigan title company with offices located around the state.

When a audit was completed, Leyton said 13 checks totaling $2,244,676.10 was taken from Bell Title's account, made payable to the bank and then deposited directly into Title Michigan's account which had remained opened.

Posted from Diigo. The rest of my favorite links are here.

Fidelity Aquires LandAmerica

noreply@blogger.com (Dave Wirsching) — Fri, 07 Nov 2008 13:56:00 +0000

Today's big news:

Fidelity National Financial, Inc. (NYSE: FNF) and LandAmerica Financial Group, Inc. (NYSE: LFG) today announced the signing of a definitive merger agreement under which FNF will acquire LFG.

Prepare Now!

noreply@blogger.com (Dave Wirsching) — Wed, 05 Nov 2008 18:15:00 +0000

It’s always darkest before the dawn, or so the cliché goes.

The despair is palpable – speak to most people, especially small business owners, and their assessments are dire – “slowest I’ve ever seen;” “we have nothing to do,” “it just keeps getting worse.” Week after week bad news piles upon more bad news. It’s easy to give up hope.
Clichés hold an element of truth. In the Navy, I spent many nights and early mornings on watch. Just when it felt like the sky couldn’t get any darker, a brightening would begin to appear on the horizon. Dawn was approaching. Right now you have a choice – you can give in to the market and give up hope or you can look towards the dawn and get ready for the day. Just take care to avoid trouble.

Every morning there is a period of “twilight.” At sea twilight is the most dangerous of times. In the dim light, danger is difficult to see. Warnings – markers, buoys and lighthouses - are competing with the sun and aren’t easy to spot. Like the sea, this time is full of hazards, and the dangers can be difficult to see. Beware of easy answers, quick solutions and the ever-present shortcuts. They won’t get you through the night, and they might put you at risk. Ignore these perils and your “ship” could end up on the rocks.

At sea, the sun appears and moves rapidly above the horizon. Exactly when will the sun rise? While knowing the precise second the sun rises has little benefit, being ready for the new day is a great advantage. In your market, like the sunrise, there is little advantage in knowing the exact moment when the market turns. The distraction of “watching the horizon” and waiting for that moment is costly. Your time is better used in preparing.

Conserve your resources, but prepare now for your market’s eventual rise. Whether it is rapid or slow, those who are prepared will profit the most. Take time now to assess your market, your clients, and build your plan. Expand your contacts, strengthen your relationships, and broaden your market reach. Be ready to take advantage of the new day.

If planning for the future is the last thing you want to do, then it’s your cue to start planning. It may be dark now, but the sun will rise – it always does.

This was also posted on the Why About Marketing marketing blog.

Independent Title Agents Gather

noreply@blogger.com (Dave Wirsching) — Thu, 23 Oct 2008 09:42:00 +0000

A group of independent title agents are exploring starting a new, national group to represent our interests. An organizational meeting is planned for Novemeber 17th outside of Pittsburgh, PA.

If you are an independent title agent and care about your future, you must make time to attend. Representatives from OH, IN and PA have already registered to attend.

Visit the OAITA blog for more information.

Six-Percent Just Isn’t Enough

noreply@blogger.com (Francine D'Elia Wirsching) — Fri, 10 Oct 2008 02:10:00 +0000

I have to thank Al Heavens, real estate writer for The Philadelphia Inquirer for finally putting into print the reason that real estate giants and builders have Affiliated and Controlled Business Arrangements (AfBAs and CBAs). And it is not one-stop shopping. Sure, like we ever believed that one. As one real estate agent told me, she opened her own title agency after realizing that she was leaving money on the table.

In his column of October 5, 2008, Mr. Heavens writes that history shows HUD is forever trying to reform RESPA, consumers are filing complaints against builders, and the builders' affiliates are proclaiming to be "saviors."

But, here is the part that got my attention. Mr. Heavens states, "Before we disclose whom HUD is riling these days, we need to mention that mega builders and real estate giants don't make much money on the plain-vanilla home sale, even when sales volume reaches boom levels. They make their money from ancillary businesses – primarily mortgages and title insurance." I may be incorrect, but I am guessing that when Mr. Heavens refers to "real estate giants" he is referring to the very large real estate brokerages, like those in Southeastern Pennsylvania that dominate the market and have their own title and lending operations.

Title insurance agencies owned by real estate brokerages and builders exist only as profit centers. The individual real estate agents are under tremendous pressure from management, like it or not, to steer the consumer into the affiliated title agency. The pressure and tactics are so great that most agents won't even consider referring a buyer to an "outside" agency. Check out Pull Back the Curtain of Smoke and Mirrors to read why agents use the in-house title agency. Not one has the best interest of the consumer in mind.

Where is the system of checks and balances, not to mention fiduciary responsibility when one party has control over sales, approving financing, and insuring title? Heavens writes, "Builders can document hundreds of sales that were to have been financed by outside lenders, but that failed to take place as promised." He goes on to quote Debra Still, President and CEO of Pulte Mortgage L.L.C. who appeared last month before a House subcommittee about those promised sales which as she testified, "were subsequently 'saved' by the builder's affiliated mortgage and title company at the 11th hour." She continues with, "…where financing has become unstable and uncertain, these relationships have taken on greater importance."

Funny, when others cannot, the entity with the most at stake miraculously can "save" a deal using its own lender and title agent. Could it be that there are fewer controls at the controlled entities? Could it be that the controlled entities are operating under looser guidelines than everyone else? Could it be that they just look the other way?

Why is HUD allowing the builders and real estate brokers to have control over mortgage lending and title insurance? Isn't it interesting, especially with the current real estate crisis that the builders are lobbying to maintain control of the other two entities in the transaction that offer independent oversight. There might be more than a drive for a profit "bump" at work here – maybe they'd like to silence anyone who'll get in the way of closing a deal.

The Ohio Association of Independent Title Insurance Agents is suing the Director of the Ohio Department of Insurance for "the spread of kickbacks and referral schemes in the real-estate industry." Take a look at the press release.

Back to Mr. Heaven's column, I just cannot resist the reference to not making much money.

Let's break this down, housing prices have soared through the roof over the years and for the most part, the six percent commission has remained the same. In addition to the commission earned, brokers are charging anywhere from $275 to $495 to buyers and sometimes also to sellers. These administrative/broker services/conveyancing fees cover the services that the real estate agency traditionally performed for their clients without charge. More than a few real estate agents are embarrassed to charge this fee to their clients but in most cases have no choice.

And I strongly question that the builders have not made any money from sales. In fact, until last year, investing in home builders was one of the best bets in the stock market. I'm sure that didn't arise from title and mortgage fees.

Affiliated and Controlled Businesses are not good for the consumers, the independent business owners, the E & O providers, and the title insurance underwriters (don't let their silence fool you, either they have yet to realize it or have and are not letting on). HUD should be asking where the claims in this industry are coming from and WHY. I don't have concrete data, but I have my suspicions.

We can only hope that more consumers will continue to file related complaints and HUD will see the importance of changing RESPA by ending any form of Affiliated or Controlled Businesses.

To read Al Heaven's complete story go to Builder, buyer, lender, law.

Call to Action - You Can Make a Difference

noreply@blogger.com (Francine D'Elia Wirsching) — Tue, 30 Sep 2008 13:53:00 +0000

A quick shout out to Independent Title Insurance Agents. Ohio is calling, please answer the call.

Please support the efforts of the Ohio Association of Independent Title Agents in bringing together like-minded Independent Agents across America to form a National Association. And if you cannot make it to the Convention on October 6, 2008, please contact the organizers to let them know you are interested in joining this national movement.

If you don't think AfBA's are a problem, please take a look at Pull Back the Curtain of Smoke and Mirrors and if don't have the time to read the entire post, just take a look at the quotes which will give you a sneak peak into what motivates a referring party to use their affiliates. It is not pretty.

Unfortunately, I am not able to make it to Ohio but a few of my colleagues will be there and will bring with them a wealth of information we have been discussing for quite some time.

Thank you Ohio!! Here is the link to the information on the Convention .

Problems are Going to Crop up Everywhere

noreply@blogger.com (Dave Wirsching) — Tue, 09 Sep 2008 09:52:00 +0000

Things are tough out there. People will be trying anything and everything to make ends meet, which brings me to yesterday's e-mail solicitation (click to enlarge):

The author deserves an A+ for effort. It's a decent letter. While they don't appear to have a title license they appear to have some relevant experience. Looks can be deceiving.

What's utterly lacking is an understanding of the services they are allowed to perform. Preparing Contracts and Deeds in Pennsylvania is considered the practice of law and is prohibited.

I really can't blame them – they probably don't know better. Over the last several years the primary requirement for a job in the title industry has been a heartbeat. Which would be OK, if anyone ever bothered with training. Based on my experience at the interview table, the little training that was delivered was based more on urban legend than on good practices, regulations, and the law.

There is a whole "generation" of people with title insuarance on their resumes. Most have several years experience, but have very little understanding or knowledge of the Title Insurance profession.

Imagine the consumer who purchases a defective "dollar deed" from the above author. Who's going to clean up that mess? Fun times ahead.

Stop the Manipulation

noreply@blogger.com (Dave Wirsching) — Thu, 28 Aug 2008 12:02:00 +0000

The international association of Used Car Dealers (yes, I made that up) must be thrilled about the housing industry's latest attempt to capture the title as least trusted profession by further eroding the industry's credibility (no offense to used car dealers). Here's the latest:

http://www.righttimetobuy.org/

The perpetual bottom calling and "it's always the right time to buy" messaging are destroying an entire industry's reputation. Buyers who find this site on the net are also literate enough to read the news. You have to willfully ignore the home price decline statistics available almost every day.

And what about honesty? Buried deep in the site:

"We don't sell any financial or real estate products or services…"

Really? Just a few sentences later:

"We're a consortium of companies, organizations, and individuals involved in the local home building and buying industries."

Deceit and manipulation don't sell, no matter how you package it.

I understand sites like this are sprouting up all over the country. Thanks for making it harder to gain the consumer's trust.

Thanks to Ardell for pointing out the site.

RESPA Changes Back to OMB

noreply@blogger.com (Dave Wirsching) — Wed, 27 Aug 2008 20:28:00 +0000

Word is out that HUD's proposed changes to RESPA have been modified and sent back to the OMB for review.

Hard to say what the new timeline would be.

Independent Agents Taking Charge of their Destiny

noreply@blogger.com (Francine D'Elia Wirsching) — Mon, 25 Aug 2008 13:57:00 +0000

It seems that a state boundary line is no boundary at all when it comes to the disdain of AfBAs. Independent agents in Ohio are being called on to join The Ohio Association of Independent Title Agents www.oaita.org.

Can Pennsylvania be far behind?

Pull Back the Curtain of Smoke and Mirrors

noreply@blogger.com (Francine D'Elia Wirsching) — Thu, 21 Aug 2008 23:33:00 +0000

Title insurance for most consumers is a once or twice in a lifetime experience. Consumers, unfortunately, only know that they need it and may not understand the role of the professional licensed to sell the insurance. As an industry, we have failed to educate and clearly define the product and our role in the settlement process.

One of the little known facts that all consumers should be aware of is that when it comes to title insurance, you have a choice in selecting your settlement services provider. Unfortunately, too many loan originators and real estate agents bamboozle their clients into their affiliated businesses which leave them with effectively no choice at all.

The consumer's best interests are not always being served by the party making the referral to the affiliated title insurance agency. The consumer may be paying more for services than otherwise would be charged by another provider and may not be referred to the most knowledgeable and experienced professional.

Affiliated Business Arrangements exist only to allow the referring party to be compensated. These companies are known as AfBAs and have the blessing of HUD when the entity is formed and operated according to a laundry list of requirements. Yes, a legal kickback.

Some title insurance professionals are hoping that one day the Secretary of HUD and the Pennsylvania Insurance Commissioner (and Commissioners throughout the country) will take a closer look at what is really going on in the industry and inside the AfBAs, including noncompliance, claims, inexperienced staff and absentee license holders. We are seeing some movement toward transparency as insurance Commissioners in more than a few western states are exposing the pitfalls of Affiliated Business Arrangements and are reining them in.

I'm happy to pull back the curtain on the AfBAs. Here are a few excerpts from actual conversations I have had with real estate agents and a conveyancer referring to their company shop.

You provide excellent service but my broker tells me that he cannot pay me the higher commission split if I do not refer my customers to the affiliated title agent.

When I transferred to XYZ Real Estate Company, I was given three free mortgage applications (from the affiliated lender) to give to my customers.

I am part of a team where we earn points for the number of title insurance applications and mortgage applications we refer to the affiliates. The team with the most points wins a prize.

All real estate transactions are entered onto a transmittal form and not only does the broker receive a copy but the affiliated title agency does also. If an outside title agent is used, the real estate manager will call the agent into the office and reprimand him or her and make the agent change the title insurance provider to the affiliate.

You cannot imagine the pressure we are under to use the affiliates.

I gave them your name as the buyer's title agent because I am sick and tired of them ramming our company down my throat.

Our commission split is not affected but they do keep track of how many times we use the title and mortgage companies and then give us relocation deals based on our support of the affiliated businesses.

I hate that we have an affiliated title agency; I keep telling them that it is not a good idea. Who needs more risk?

Can you guarantee closing? This from a real estate agent whose company will pay $500 to the purchaser if the transaction does not close on the date in the Agreement of Sale but conditioned upon the purchaser using the affiliated mortgage lender and title agent.

As stated by a real estate agent and relayed to me by a loan officer: I use
the affiliated title agency because I have the opportunity to buy-in.

The bottom line question: Are AfBAs really good for the consumer? To find the answer you have to question the motivation of the person making the referral. Does the person making the referral have the best interest of the consumer in mind or will she or her employer, whether a real estate or lending entity, benefit economically from the referral.

There is no place like home, so you better wake-up and stop clicking your heals, hope won't bring you home; It's time for all of us, consumers, licensed title professionals, Secretary of HUD and State Insurance Commissioners, to tear-down the curtain and start asking the tough questions.

HUD Blunders Ahead Despite Objections from All Quarters

noreply@blogger.com (Dave Wirsching) — Wed, 20 Aug 2008 11:36:00 +0000

Nearly every stakeholder in the RESPA Reform process has voiced reservations about HUD's proposed changes to RESPA. If HUD's letter to Congress is to be believed, HUD appears to be intent on implementing change despite widespread criticism of its flaws.

See the response here.

It’s Getting Scary Out There

noreply@blogger.com (Dave Wirsching) — Sun, 17 Aug 2008 23:26:00 +0000

The other night we received two separate offers - the first one suggested a merger (from a company I've never heard of). The second offer was to assist in our "market expansion" by forwarding title orders to another agency for markets in which we don't have a presence. Curious, I checked them out. Both are attorney run and are quasi-regional (licensed in multiple states, but with only one or two offices).

The first offer looked and felt like bottom fishing. We were offered up front cash and a quick merger. Who do they think they'll catch? What do you think will happen to the "merged" agent after the merger?

The second offer was slick and well written. I went to their website to see what they were all about. It was hard to put my finger on, but there was something that bothered me about their content. I studied their qualifications and background – got that nagging feeling of something left unsaid. Then it hit me - the website was light on the depth and detail and way too heavy on the marketing speak and logos. My impression – they are marketing/money machine that's not really interested in the industry, their partners or the consumer, just in how much they can squeeze out of it/them.

Title Agents - everyone needs to be careful out there – lots of things that go bump in the night.

240 Representatives send a Letter to HUD

noreply@blogger.com (Dave Wirsching) — Tue, 12 Aug 2008 16:06:00 +0000

A majority of Representatives urge HUD to scrap the RESPA reform (ALTA - Industry News):

More than 240 of members of the House of Representatives have signed a letter urging federal regulators to withdraw their proposed changes to the Real Estate Settlement Procedures Act (RESPA) and work with the Federal Reserve on simplified disclosure forms instead.
"To expedite this process, we also ask that you discard the hundreds of pages of HUD's current proposed RESPA rule that have not previously been the subject of public comment and cover a number of subjects beyond disclosures," the letter said – an allusion to incentives HUD proposes to create for packaging settlement services such as title insurance with loans.
The letter, which also warned of the impact of the rule changes on small businesses, was signed by 128 Democrats, 113 Republicans, and Texas independent Ron Paul, according to a copy posted on the Web site of the American Land Title Association.

Pennsylvania Title Agent Pleads Guilty in Defalcation

noreply@blogger.com (Dave Wirsching) — Fri, 08 Aug 2008 10:41:00 +0000

A Pennsylvania Attorney and Title Agent who had previously lost his notary now has pleaded guilty to improperly converting funds to his own use (Centre Daily Local News - State College and Centre County Centre Daily)

A State College lawyer is facing almost two years in prison when he is sentenced in the coming months after having pleaded guilty to stealing more than $300,000 entrusted to him for real estate closings.
William F. Donovan, 62, of 180 Legion Lane, pleaded guilty last week to converting $309,335 for his own use from two real estate transactions while working as a title agent for T.A. Title Insurance Co.,...
Instead of properly remitting these fees at real estate closings, Donovan converted $156,398.37 for his own use on Dec. 19, the lawyer admitted in court.
Five days later Donovan stole another $152,937 that came into his possession through his work as a title agent, court documents indicate.
In April, Donovan admitted to an FBI agent that he converted the funds for his own benefit, according to court documents.

But why was someone who had already been suspended for improper notarization still around as a Title Agent?

The plea is the latest of legal and professional problems for Donovan, who was suspended as a notary public in 2006 through most of 2007 after notarizing documents that were not properly signed and for which principals were not present, according to the secretary of the commonwealth

The Market Punishes LandAmerica

noreply@blogger.com (Dave Wirsching) — Wed, 30 Jul 2008 18:53:00 +0000

At last check LandAmerica (LFG) is down 34% trading at $11.00. It's up considerably from today's low of $9.01. Bad news and a downgrade took their toll (click to enlarge):

Whoops - Talk about getting it wrong

noreply@blogger.com (Dave Wirsching) — Wed, 30 Jul 2008 18:45:00 +0000

RBC Capital markets did a VERY abrupt about face on LandAmerica (LFG) today. Just in case you didn't notice the upgrade, here's a Yahoo! Finance screen shot (click to enlarge):

I would guess there is an analyst having a difficult time explaining how they missed the huge write off.

Land America Posts A Significant Loss

noreply@blogger.com (Dave Wirsching) — Wed, 30 Jul 2008 18:42:00 +0000

Land America presented a loss much greater than expected by analysts last night (UPDATE 1-LandAmerica posts wider-than-expected Q2 loss Markets Markets News Reuters)

...posted a wider-than-expected quarterly loss as residential mortgage originations and commercial revenue declined, and the company slashed its dividend by 83 percent.
The insurer posted a loss of $50.0 million, or $3.29 a share, compared with earnings of $7.9 million, or 42 cents a share, last year. Total revenue fell 29 percent to $712.4 million.
Analysts on average had expected the company to post a loss of 71 cents a share, before special items, according to Reuters Estimates.
"Adverse claims development from past periods has masked the significant cost reductions we have achieved over the past six quarters leading to a disappointing bottom line," Chief Executive Theodore Chandler said in a statement.

Stewart Posts another Loss

noreply@blogger.com (Dave Wirsching) — Wed, 30 Jul 2008 14:19:00 +0000

Stewart joins others in the industry in posting disappointing Q2 results (Stewart Information Services posts 2Q loss - Forbes.com)

For the period ended June 30, the Houston-based company posted a loss of $26.6 million, or $1.47 per share, compared with a profit of $10.1 million, or 55 cents per share, during the same quarter the previous year.
Revenue fell 25 percent to $428.5 million from $573.4 million. The majority of the decline came from the title insurance business. During the second quarter, revenue from title insurance fell to $414.2 million from $546.9 million during the second quarter in 2007.

Philadelphia Existing Home Sales Statistics

noreply@blogger.com (Dave Wirsching) — Sat, 26 Jul 2008 00:30:00 +0000

Here's a quick summary of the key statistics being reported in Philadelpia

Some housing sales statistics better in Phila., some worse - Philadelphia Business Journal:

The median sale price of houses in the Philadelphia area was down less than 1 percent in June compared to June 2007, according to the latest Prudential Fox & Roach HomExpert Market Report, but the number of sales was down considerably, and the number of days houses spent on the market was up.
In the Philadelphia area, including South Jersey, the median sale price was $239,900 in June, down a half percent from $241,000 in June 2007, according to the HomExpert report. In May 2008 the median was $228,000. The number of homes sold was down 28 percent to 6,257. In May 5,385 houses were sold. Average number of days on the market was up 16 percent, from 59 to 69.

Land America put on a Negative Credit Watch

noreply@blogger.com (Dave Wirsching) — Sat, 26 Jul 2008 00:23:00 +0000

Land America received a not-so-welcome gift from S&P late Friday (S&P places LandAmerica ratings on negative watch):

NEW YORK (Associated Press) - Credit ratings agency Standard & Poor's on Friday placed the counterparty credit of LandAmerica Financial group Inc. and its title insurance's counterparty credit and financial strength ratings on a negative watch.
LandAmerica's title insurance unit is currently rated "A-" for both counterparty credit and financial strength by S&P. The ratings are considered investment-grade.
LandAmerica's counterparty credit rating is currently "BBB-." That rating is the considered the lowest investment-grade rating.
A negative watch means there is a 50 percent chance the ratings could be cut in the next three months.
The review is based on deterioration in profitability in the greater title insurance sector and macroeconomic factors weighing on the industry right now, such as declining mortgage originations, S&P said in a statement.

Old Republic Posts a Q2 Loss

noreply@blogger.com (Dave Wirsching) — Thu, 24 Jul 2008 18:43:00 +0000

Old Republic Int'l falls to 2nd-quarter loss - Forbes.com

Old Republic International Corp. said Thursday that it moved to a loss in the second quarter, missing Wall Street's estimates, due to continued weakness in the insurer's mortgage guaranty and title insurance lines.
For the period ended June 30, the company reported a loss of $45.4 million, or 20 cents per share, compared with a profit of $115.1 million, or 49 cents per share, in the year-ago period.

Fidelity Q2 Profit Plummets 92%

noreply@blogger.com (Dave Wirsching) — Wed, 23 Jul 2008 20:59:00 +0000

Fidelity National 2nd-qtr profit falls 92 pct Markets Bonds News Reuters

Fidelity National Financial Inc (FNF.N) which controls one of the largest U.S. title insurers, said on Wednesday second-quarter profit tumbled 92 percent as the housing slump cut into home sales and refinancings.