Rain City Guide

Elusive Value: Title and Escrow

When I was a brand new loan processor in the early 1980s, Safeco Title so badly wanted our business that my rep, Dan Crittenden, arranged for then title officer Steve Jewitt to come into our office once a month (or once a week? Can’t remember) and give me an hour long class on title insurance until I had all the basics down pat. Steve switched companies halfway through and was replaced by Doug Pittman, junior title officer who was just promoted into the very big shoes of Steve Jewitt.

I will never forget how that title company went out of its way to educate me. Back then, it was the loan processor’s job to clear title before we sent our file over to escrow.

Title and escrow ARE required topics now for brand new loan originators who are seeking licensure under a mortgage broker and consumer loan company. The new course they’ll have to take is 20 hours long and the curriculum is directed by the federal SAFE Act.

The VERY FIRST thing I do (i guess this is blatant self promotion. my apologies.) is draw a big circle on the white board and write down a list of all of us involved in a transaction from the real estate agent to the appraiser, LO, escrow, title, home inspector, funder, etc. We are all part of the mortgage machine and it’s the client who is in the center when it’s a refi. With a purchase, it’s the buyer and seller.

LOs and also Realtors tend to think they are the center of the circle (universe) because it’s all they know when they’re brand new.

An LO or Realtor is not on the opposing team of the escrow company.

Tim, there are a plethora of “free” title and escrow classes taught for Realtor clock hours by all the title companies all over the state.

The best one yet is where the escrow closer instructor creates a mock signing appointment and the Realtor is taught what happens during signing.

I think that title and escrow classes taught by real estate attorneys can also be very good. I believe the Sea King Co Assoc of REaltors offers a class like this about once a month.

Escrow Trenches: nutty funding conditions

I was wondering earlier if the agent “credit” question from Ardell had anything to do with the new changes coming to us via RESPA in Jan. Found this in HUD’s FAQ PDF:

6) Q: How should payments by the seller or real estate agent that are for settlement services included on the GFE be shown on the HUD-1?
A: If a seller or real estate agent pays for a charge that was included on the GFE, the charges should be listed in the borrower’s column, with an offsetting credit reported in Lines 204-209 of the HUD-1, identifying the party paying the charge. For a seller-paid charge, the charge should also be listed in Lines 506-509. For a charge paid by the real estate agent, the name of the person paying the charge must also be listed.

FTC Considers Total Ban on Upfront Loan Modification Fees

Hi Susan,

Today, the government has chosen NOT nationalized the banks. Seeing as how the banks are still in charge, they are not going to slash principal balances on loan mods for fear of investor lawsuits.

You want to force the banks to “give” the homeowner the best modification?

There are many consequences of doing that.

One consequence would be that we will likely see a gi-normous amount of people defaulting so they can get their principal balance slashed.

Another consequences would be that no investor would ever want to buy our mortgages. We return to 1950s style lending. 50% down and rates go up.

Merit Financial Banned from the Industry for Five Years. Scott Greenlaw: Not Banned.

Hi Sonja,

Thanks for the update. I checked out the new loan originator website and though it says “The Greenlaw Team” it appears as though it’s just a one man shop.

FTC Considers Total Ban on Upfront Loan Modification Fees

Hi home owner, it sounds like you’re a loan mod salesman and not a homeowner but I suppose you could be both. Thanks for stopping by RCG. Maybe a solution is for this particular homeowner to sell that house right now and begin rebuilding his/her credit today instead of “hoping” that the economy picks up over the next five years. During those 5 years this homeowner can be renting a comparable home for a lot less than the modified payment, and will also be working on re-establishing credit. Comparably, in 5 years this homeowner may still be underwater with negative equity and now their payment is getting ready to go up again.

How many people’s “modified” mortgages are going to explode on them 5 years from now? In 2014 are we going to have another wave of foreclosures?

Probably not since over 50% of all loan mods redefault within the first six months.

In a way, we do agree on one point. Perhaps loan mods help the banks more than they help the homeowner.

Predatory Upfront Loan Modification Fees

Update:

“California has joined nearly two dozen other states in prohibiting foreclosure rescue companies from collecting advance fees for helping homeowners negotiate mortgage loan modifications.

Gov. Arnold Schwarzenegger on Oct. 11 signed into law a bill, SB 94, that prohibits any person from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services.”

Predatory Upfront Loan Modification Fees

Hi Dan,
No editing was done by me today; I’ve been at the WA State Realtor convention these past two days.

“Sorry but I have never seen a Free HUD counselor offer to dig in this deep, they don’t have the time.”

I’m afraid you are right, Dan.

Question for you. At the state Realtor convention yesterday, one of the attorney/speakers said that negotiating the modification of a legal contract between two parties, for a fee, would be a definition of the practice of law.

What’s going on in your state regarding regulating loan modification firms and what they can/cannot do without it being considered as practicing law?

Thanks.

FTC Considers Total Ban on Upfront Loan Modification Fees

Hi Nick,

Yes, those fees are quite modest. First thing to do is to check with your broker or manager to make sure that your company knows that you are earning this fee income while being licensed. The broker (if your company is licensed under a mortgage broker) or your manager (if your company is licensed as a consumer loan lender) is directly responsible for your actions. This is why it’s important to work WITH your broker or manager. They probably know the answers to these questions for your state.

You can also check with your state’s regulator to see what kind of rules and provisions have been put in place in your state.

Thanks for stopping by raincityguide!

New Rule on Home Blogging & Zillow

If I’m a buyer searching through homes for sale, and I see that a seller has elected not to show the Zillow Zestimate, then that would make me suspicious and curious as to what the seller has to hide, and send me right to Zillow to look it up for myself. Zillow’s Zestimates aren’t perfect but I have yet to meet one homeowner in the Seattle area who does not know their Zillow Zestimate.

FTC Considers Total Ban on Upfront Loan Modification Fees

Hi Lisa,

Nobody screwed me over. Fake sympathy is so disingenuous.

So who are these grass roots organizations that you claim exist? Please post the link here.

I have actually been directly involved in exposing predatory lending behavior since 2001 and wrote the industry’s first comprehensive code of ethics in 2005. Do your homework.

The loan mod industry is on track to never be taken seriously especially anyone operating in California. The only people who can change that are the practitioners.

FTC Considers Total Ban on Upfront Loan Modification Fees

“Problem is the people who are hurting people are more often not licensed so they do not fall under any rules.”

Nice try. Incorrect. Do some research on the loan mod companies….in California….who were licensed and what they did to consumers.

Further, companies that are un-licensed DO fall under state and federal consumer protection laws.

A retail loan originator waits until the close of escrow to be paid on a refi or purchase.

A loan mod salesman can wait until the close of the loan mod to be paid….and in my opinion, it would be far better to hold back payment until 6 monthly ontime payments have been made.

at a 50% re-default rate, sometimes loan mods are not the most compassionate answer. Sometimes the home owner is better off selling the home and re-entering the housing market as a renter. There is no shame in renting.

FTC Considers Total Ban on Upfront Loan Modification Fees

Steven,

a loan mod salesman is just a salesman. To compare a salesman to that of a professional such as a doctor or lawyer would not be an accurate comparison. It’s like comparing an apple to a chair. Two completely different categories.

A fiduciary such as an attorney would definintely be responsible for making sure the loan modification would be in his/her client’s best interests and would also be held to a much higher standard when compared to a salesman.

A fiduciary would need to look outward at the economy and help the homeowner analyze his/her prospects for present and also future earnings in order to support the modified loan payment.

We could definitely take the doctor analogy and play with it. If a patient needed an invasive procedure and the doctor had knowledge that the patient was going to put himself/herself in a worse off position after the procedure, the doctor would have to stop and consider this fact before moving forward.

I’ve never been a loan originator, Steven and I’m not asking loan mod salesmen to work for free.

By the way, were you and your firm aware that in WA state, loan originators who collect a fee for performing loan mod services owe fiduciary duties to their clients?

Just thought you might want to know.