Tuesday, November 17, 2009

Seasoned Settlement Attorney Returns to FTE

CONTACT: Nikki Smith
Main line: 202-362-1500
Direct line: 202-274-1517
E-mail: nikki@federaltitle.com
Website: www.federaltitle.com

Retired Marine brings steadfast work ethic and 20 years of title experience to Federal Title's closing table

Washington, D.C. – Pens around Catherine E. Schmitt's office have a way of disappearing. That's the running joke around the office anyway, because this retired Marine and newest member of Federal Title & Escrow Company's team of closing attorneys can do a lot more with a pen than push paper.

Catherine Schmitt, formerly the managing attorney for Monarch Title – Georgetown and Bethesda – rejoins the ranks of Federal Title's talented staff after a five-year hiatus. She brings with her 20 years of title experience and a steadfast work ethic sharpened by her service with the U.S. Marine Corps. She says the most rewarding aspect of her work is the time she spends developing relationships with her clients.

“I am a loyal customer of Catherine”, says Tom Buerger of Re/Max Allegiance. “She is always there for me – whether it is as an expediter for a quick settlement, as a counselor to allay the fears of my first-time homebuyers or as a resource to solve potential issues before they become a problem that will delay settlement. She is my attorney-on-call.”

Schmitt’s clients vary from new homebuyers to seasoned investors, but one thing her clients have in common is they understand the settlement process.

"Buying and refinancing a home are big decisions,” says Schmitt. “The settlement process is an opportunity to educate clients. It's a time for them to ask questions, so they can feel comfortable and informed."

Schmitt earned two Bachelor’s degrees from the University of Maryland and has her Juris Doctorate from Drake University Law School in Des Moines, Iowa, the same institution that produced Federal Title's founder and president, Todd Ewing.

"Catherine works hard and is dedicated to her clients.” Ewing says. “She is a model of customer service, and I am very excited to welcome her back to our team.”

Homebuyers seeking advice from Schmitt about title insurance or the settlement process need only venture up Wisconsin Avenue to Federal Title’s Friendship Heights office.

Reach Catherine E. Schmitt at 202-362-1500 or e-mail her at catherine@federaltitle.com.


About Federal Title & Escrow Company:
In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Federal Title recognizes consumer-driven market pressures, as exemplified by the new RESPA rule, and seeks to offer home buyers substantial closing cost savings and a streamlined settlement process.

Federal Title has a reputation of being technically innovative and always at the forefront of the latest real estate trends. Years ago the company made a bold move by eschewing all Affiliated Business Arrangements and established its REAL Credit Program, which saves home buyers up to $2,000 on closing costs.

Now Playing: Closing Costs Explained Visually


Friday, October 23, 2009

Amendment to delay RESPA implementation withdrawn

An amendment that would have required HUD's secretary of housing to delay implementation of the new RESPA rule for at least six months was quietly dropped this week.

Federal Housing Commissioner David Stevens denied the request, saying the industry will have 14 months to prepare for the changes before they become mandatory.

Learn more ...

Thursday, October 22, 2009

Congress passes amendment clarifying reach of CFPA

The American Land Title Association applauded Congress' passage of an amendment that clarifies the oversight of the Consumer Financial Protection Agency.

"Congress recognized that title insurance is best regulated by a comprehensive, well established state regulatory system," ALTA CEO Kurt Pfotenhauer told Reuters.

Title insurance providers are still subject to federal regulation, however, in the form of the Real Estate Settlement Procedure Act. RESPA changes go into effect Jan. 1, 2010, and HUD has no plans to delay the implementation.

Learn more ...

Tuesday, October 20, 2009

Title Report highlights our 'unique business model'

With new legislation around the Real Estate Settlement Procedures Act slated to take effect Jan. 1, 2010, many in the industry have concerns about how these changes will impact their daily work routine. More accountability, full disclosures -- the new RESPA rule has placed a lot of lenders in particular on the hook.

A few weeks back Todd Ewing spoke with The Title Report editor Jennifer Kovacs about Federal Title's approach to the changes.

"There's a hard push with the RESPA reforms toward what we've been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they're going to demand all title companies provide a guaranteed quote for their services," Ewing said.

Below is the article in full:

Title company's unique anti-AfBA business model pays off

About nine years ago, Federal Title & Escrow Co., which serves the Washington, D.C. metro market, decided it was time to quit a bad habit.

“We kicked the [affiliated business arrangement] joint venture addiction and replaced that relationship with a pro-consumer model that we now call the REAL Credit program,” Todd Ewing, Federal Title president, told The Title Report.

It was after about five years in business that the company put everything on the line for what felt right.

“If anyone is really honest about it, the affiliated business arrangements (AfBAs) are not consumer friendly, they’re just not. You got too many hands in the pie. So the consumer ends up losing,” Ewing said.

Federal Title’s REAL Credit program is simple: If title work is ordered through the company’s Web site, the consumer receives a credit that reduces the overall cost. Just like AfBAs, which caused the company to lose a good chunk of its revenue to the referral source, this program comes at a loss to Federal Title — but one not linked to a conflict of interest.

“Our REAL Credit represents in dollars what we used to pay over to our AfBA joint venture referral partners, only now we just pay it over to the homebuyer,” Ewing said. “I don’t want to be beholden to the interest of the referral source. I’d rather be beholden to the interest of the consumer. So we developed the concept, and it’s worked really well.”

The model
While not involved in any joint ventures, Federal Title does still rely on its referral sources. The company has a network of real estate agents and lenders who can also take advantage of the pro-consumer platform.

For example, when a real estate agent goes online to order services through Federal Title, an automated e-mail is sent to the homebuyers that tells them their agent just saved them $1,200 for ordering online, which then puts the agent in a great light.

“That goes a long way,” Ewing said.

In the first three years of the program, Federal Title saw a 50-percent increase in transaction volume and since has continued to grow its referral base.

“What happened is real estate agents realized that they wanted to extract themselves from that conflict of interest potential [with AfBAs]. And if they can look good and we can look good, then they’re going to come. And we’re obviously providing a cost-savings proposition to the homeowners,” Ewing said.

In fact, as word has spread about the credit, it’s not just industry partners who are referring business to Federal Title — consumers are discovering the company on their own.

Cost savings
Federal Title is able to stay above water and still offer the credit thanks to the increase in transaction volume that it’s seen over the years. However, the key to the program is that services must be ordered online.

The automated system is one that’s allowed Federal Title to see a significant savings.

The process starts with a transparent, instant online quote available from the company’s Web site. Federal Title was the first title company to provide the service in 2002, thanks to its proprietary software.

“A lot of our competition just couldn’t believe we were doing it. They were fearful. They were, like, ‘Why would you do that? Why would you guarantee that? You don’t know, things could change [from the quote].’ Well, we were willing to do it. Very few things change, frankly, and we ask the right questions,” Ewing said.

The user gets a guaranteed quote from the Web site on a modified HUD-1 form that shows the costs for title insurance, settlement fees, government recording charges, etc., Ewing said.

Then the person seeking the quote is able to order services online from there. Through asking detailed questions, Federal Title is able to limit its liability at the same time it cuts down on mistakes and automatically populates forms a title agent would normally need to process.

“All of that results in a cost-savings to us,” Ewing said.

Federal Title processes about 3,000 transactions a year, and the average savings to consumers through the REAL Credit program is $750. “It adds up, doesn’t it?” he said.

Federal Title has tried streamlining processes even further in the past, through outsourcing title work and surveys, but Ewing said the company has decided to bring all of its services back in-house and rely on its technology instead.

“None of it has really panned out for us. There’s nothing better than a home-grown title report. I don’t see that changing anytime soon,” he said.

Technological focus
Federal Title offers a variety of services, from deed transfers to a 1031 exchange to wills and estate planning, but Ewing said the majority of its business remains traditional real estate closings.

And while the bulk of that business is ordered online, Ewing said there’s always been some who would rather fax over the necessary forms. “We still have a few of those, but after nine years, given the changes in technology, I think people are adapting,” he said.

The industry, too, is adapting to the business model Federal Title has taken on, something Ewing said is apparent in the RESPA final rule and its goal of transparency in real estate closings.

“There’s a hard push with the RESPA reforms toward what we’ve been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they’re going to demand all title companies provide a guaranteed quote for their services,” he said.

Ewing added that he expects lenders also to begin seeking instant, electronic quotes for title work that doesn’t throw off any specified tolerances, as dictated by the RESPA final rule and the Truth in Lending Act. “Who wants to call up and ask for numbers?” he said.

Federal Title also is using its technology platform as a vital part of its expansion efforts. The company recently partnered with a law firm in Coral Gables, Fla., to offer its expertise in marketing as well as technology to grow the company in that region. Federal Title is also seeking like-minded partners for opportunities on the East Coast, potentially in North and South Carolina and Georgia, Ewing said.

However, Federal Title is also using the technology arena to grow its footprint at home. The company is focused on developing its Web site’s blog to reach consumers who are technologically savvy and use the Internet to investigate the home buying process before jumping in.

“With the blogging atmosphere and everything that is available to the average consumer and the consumer’s appetite for that, we see a great opportunity not to be beholden to our traditional referral system. So that’s exciting for us,” Ewing said.

Issue Date: October 19, 2009
Questions/comments? E-mail Jennifer Kovacs at jkovacs@octoberresearch.com.

Tuesday, September 1, 2009

Decipher the FAQs of the New RESPA Rule

A Frequently Asked Questions report released by the Department of Housing and Urban Development regarding implementation of the new RESPA rule has raised more questions from an industry in need of interpretation and guidance.

"Lenders and title companies were looking to HUD to address the more difficult practical circumstances they will face in completing the new GFE and HUD-1," said Phil Schulman, an attorney with Washington, D.C.-based K&L Gates in an interview with the Title Report. "For the most part, they merely restate the instructions already contained in the regulations."

Decipher the FAQs with mortgage banking and consumer finance expert Holly Spencer Bunting, an associate with K&L Gates, who will present an in-depth overview of the components of HUD's final RESPA rule and the new HUD-1 and GFE disclosure forms.

Her presentation is followed by a complimentary lunch and will take place Wednesday, September 16 in the Dogwood Room at the Kenwood Golf & Country Club in Bethesda.

Only 15 spots remain! If you have not reserved your spot or believe a colleague could benefit from this free event, please respond as soon as possible. We are limited to the first 100 guests, and time is running out.

Sign me up >>>

The last day to RSVP is Tuesday, September 8. Don't miss this wonderful opportunity to gain a full understanding of the new RESPA rule and enjoy a free lunch compliments of Federal Title.

10 Things You Should Know about Title Insurance: Referral Fees Increase Premiums

Referral fees increase the cost of title insurance. The General Accounting Office recently reported that 5 percent of title insurance premiums went toward insurance claims. A far greater percentage (some reports claim 50 percent or more), went to real estate agents and mortgage lenders for referral fees. This practice is illegal and punishable by imprisonment and/or a fine, yet it's very difficult to regulate.

Home buyers' best protection against exorbitant title costs is education, simply knowing they have the right to choose their title company, asking about discounts and learning about what options are available . Not all title companies shell out referral fees, or kickbacks. In fact, some title companies cut out the middle man and credit the home buyer instead when he/she orders settlement services online directly from them.

Monday, August 31, 2009

10 Things You Should Know about Title Insurance: Refinances Need a New Policy

If you're planning to refinance, your lender will require a title insurance policy. There are plenty of reasons to refinance such as reducing your interest rate and mortgage payment or consolidating debt. While a new owner's policy may not be necessary if you plan to refinance, your mortgage lender will still want to ensure the investment is protected, so you will likely need to purchase a new lender's title insurance policy. Here is an example of a title insurance rate card for a refinance.

Saturday, August 29, 2009

10 Things You Should Know about Title Insurance: APR Includes Settlement Costs

Settlement costs factor into your loan's Annual Percentage Yield (APR). Home buyers should know the settlement process can be delayed due to recent changes to the Truth in Lending Act (effective Aug. 1, 2009). If the actual APR differs from the estimated APR by more than 0.125 percent, your mortgage lender must issue a new initial disclosure that reflects the accurate rate and wait a minimum of 3 business days to close the deal. To avoid surprises at the closing table, invest five minutes of your time at the beginning of the transaction to obtain a guaranteed quote online for settlement services.

Friday, August 28, 2009

Top 10 Title Insurance Claims for DC (1-5)

Title insurance claims arise more often that you might think. Below is a list of the most common title insurance claims for the District of Columbia, compiled by Elisabeth Zajic, vice president and senior counsel for First American Title Insurance Company in D.C.

For further reading, the Underwriter Bulletins contain a wealth of information geared more toward the industry but still valuable for anyone who's planning to buy a home.

1. Fraud.

I. Uninsured recent no-consideration "gift deeds" to a family member may be forged or obtained through undue influence, enabling the grantee to sell or arrange for a cash-out refinance of the property and abscond with the cash value of the equity. Fraudulent intra-family conveyances represent a large percentage of claims in the District of Columbia.

II. Mortgage foreclosure "specialists" scout out properties for which a foreclosure notice has been filed but with a lot of equity, often titled in elderly persons. They offer to "save" the home and end up taking a deed to the property.

III. Flip transactions, both legal and illegal, remain extremely popular in D.C. Remember that even if your flip transaction is not otherwise fraudulent, there must be full disclosure to all parties of all pertinent details of the transaction.

IV. When a property is acquired without purchase money financing and the new owner subsequently refinances, taking out the cash value of the equity in the property, pay special attention. This is unusual and the refi frequently follows a deed which was forged or fraudulently obtained.

V. Don't forget the basics. Compare the signatures on your documents against signatures of record and on ID. Give careful scrutiny to powers of attorney and be sure to verify the signature of the principal. Don't blindly assume that all notarized documents are valid.

VI. Trust your instincts. If the deal doesn't "feel" right, it probably isn't.

2. Recording. The failure to record promptly is a major cause of claims.

3. Real Property Taxes. In ascertaining tax status for a D.C. closing, you should proceed as follows:

I. In addition to ordering a tax certificate, you should now check the D.C. Tax Rates and Revenues website for every closing, and document your file with printed copies of the account information. The site information for receivables is updated regularly, with effective dates displayed. Your last check of the site should be done just before closing.
II. The date shown on non-real property tax receivables is particularly important because the Office of Tax and Revenue (OTR) has reached an agreement with the D.C. departments and agencies generating these receivables whereby, unless the liens are either recorded or posted on the website prior to transfer of the property, they will be unenforceable against a bona fide purchaser and will become a personal liability of the seller instead of a real property lien.

III. Order tax certificates. Although the website is a great resource, it does not, at present, create a legal estoppel as to unreported taxes and assessments, as does the tax certificate. The turn-around time for tax certificates is very good at present.

IV. Investigate charges or assessments incurred by previous owners before paying them. OTR is presently seeking to collect a number of previously unbilled tax and assessment liabilities, including, but not limited to, vacant and abandoned property liens, homestead audit liens and Clean City liens. If the taxes were previously unbilled and the property has transferred to a bona fide purchaser, OTR will not enforce the liabilities against the present owner. Instead, the tax will become a personal liability of the former owner responsible for the delinquency, and OTR will provide you with a corrected bill waiving charges.

4. WASA. Claims on D.C. Water and Sewer Authority liabilities have risen dramatically in recent years. One reason for this unfortunate trend is the WASA procedure, which dictates that a new account be established for any given property each time that a final bill is requested. The new account will be opened regardless of whether the old account(s) are paid or not.

I. When handing a sale, order a final bill from WASA. Do not rely on verbal information given to you by WASA. Expect a written response in five business days or more.

II. Never rely on WASA receivables posted on the tax website. The website will show lien amounts only, not account balances. Even the lien amounts cannot be used as payoff figures, as they do not include current penalty and interest charges.

III. Do not rely on a D.C. Tax Certificate for WASA receivables. WASA does not recognize any legal estoppel for water and sewer service charges. Because of problems in this regard, WASA charges will henceforth be specifically excepted to in Tax Certificates.

IV. In the event that a WASA lien has been filed at the Office of the Recorder of Deeds, order a separate payoff statement for the WASA lien. Do not assume that the lien payoff amount will be included in the WASA response to your request for a final bill.

V. WASA must also be contacted for lien payoff balances.

More Info: Water & Sewer Authority Charges

5. Tenants first right of purchase under TOPA. The Tenant Opportunity to Purchase Act gives a tenant or tenants' association a first right of purchase in connection with any sale of residential real property.

Generally, title insurance protects against loss arising from real property interests, constructive notice of which is imparted through recording. TOPA rights are not a matter of record, and traditionally, title insurance would not provide protection against loss or damage arising from the their exercise.

However, under TOPA, a tenant or tenant organization claiming non-compliance with the Act will seek to set aside the transaction. If they are successful, the result will be a total failure of the title. Purchasers and lenders look to the title insurance industry for protection from this risk, and we have endeavored to meet this need, on a "special risk" basis only.

More Info: Under TOPA – A New Law and Underwriting Guidelines
More Info: D.C. Tenant's First Right of Purchase under TOPA

View 6 - 10 >>>

Talking Title Insurance: Investigate Closing Costs Early

Your title insurance expenses are largely dependent on the cost of the home you plan to purchase. Sometimes homebuyers, especially first-timers, don't anticipate the added expense to the end of their real estate transaction. They may feel sucker punched by the settlement process.

Mortgage lenders require title insurance. ... If you were loaning somebody hundreds of thousands of dollars, you would probably want to protect your investment, too. And that's what title insurance does.

Still, some people believe title insurance is a racket.

"Title insurance is the biggest rip off of all the parasitic rip offs built in to the housing industry," reads one comment on a recent Kiplinger's article (which, by the way, misses the mark on title insurance premiums).

Title insurance itself is not a rip off at all. In the grand scheme of things, it's a small fraction of the money you're putting up to buy the property. As in 1 percent, according to the American Land Title Association. Furthermore, title insurance claims arise more often than you might think.

If there's a claim against your property and you don't have title insurance, you will have to pay to represent yourself in court. Once you finish paying the attorney's fees, you could still end up losing your property. Do you want to risk losing your home AND the money you paid for it?

More likely "the viking" probably allowed himself to get ripped off.

Conduct a little Internet research, and you'll find local title companies that offer competitive rates and generous discounts for escrow services. Homebuyers should note, however, title insurance premiums are set by the provider – not the title insurance agent.

For example, if 10 companies all use First American Title Insurance products, all 10 companies will charge the same insurance premium. Costs for settlement fees, title abstractor and examination fees, recording fees (which vary by location) and other fees that may apply may vary by company and may be negotiable.

Start investigating closing costs early in the home buying process. Get a free quote for title & escrow services from a local title insurance company like Federal Title. Understand the difference between an lender's policy and an owner's policy as well as the standard versus expanded policy.

If you know what questions to ask your real estate agent and mortgage lender about the closing process, you're chances of negotiating a great deal increase.

10 Things You Should Know about Title Insurance: Fixed v. Variable Rates

Some closing costs are fixed while others are variable. The cost of your title insurance policy and government recordation fees are dependent on the purchase price of your home, and the bulk of settlement costs are typically paid by the home buyer. However, the seller doesn't get off scot-free. Seller fees include a fee for mortgage release procurement and deed preparations. The settlement fee is often split between buyer and seller. Home buyer fees include a title examination/abstractor fee, location survey fee and a fee to process paperwork. A title company may charge additional fees unique to each transaction, but the extent of the fees should be disclosed up front.

Thursday, August 27, 2009

Closing Costs Explained Visually 'Good Introduction' to Settlement Process

If you're shopping for a home and haven't had a chance to watch this quick introduction to title insurance, you may want to check it out. While "Closing Costs Explained Visually" is targeted toward consumers, real estate experts are also finding it useful.

"Rather than a detailed step-by-step dissertation on title and escrow -- which many consumers really need before the home buying begins -- the two-minute Federal Title & Escrow Co. video is useful as a primer to get you into the basics of the process," writes Broderick Perkins, editor of Deadline News and the Real Estate News Examiner blog.

After a proper intro to the settlement process from Federal Title, home shoppers may then want to read Perkins' thorough three-part title insurance series for a better understanding of today's title insurance industry.

My favorite installment: Part 3 - Shop Around for Title, Escrow Services.

Title insurance companies sometimes get a bad rep, but we're not all bad. Some companies are committed to giving their customers the lowest rate possible on insurance premiums. Federal Title for one is saving home buyers as much as $2,000 through our REAL Credit Program.

As a home buyer, the more you know about the settlement process, the more you'll be able to save on closing costs.

Mortgage Lenders, Closing Agents Effected Most by New RESPA Rule

CONTACT:  Nikki Smith                       
Main line:  202-362-1500
Direct line: 202-274-1517
E-mail: nikki@federaltitle.com
Website: www.federaltitle.com

Expert to dissect consumer disclosure, anti-kickback statute at upcoming Q&A session. Free event.

Washington, D.C. – Mortgage banking and consumer finance expert Holly Spencer Bunting will address controversy surrounding the reformed Real Estate Settlement Procedures Act during a presentation and Q&A session next month.

The new RESPA rule, which aims to connect the dots between estimated closing costs set forth in the good faith estimate and actual closing costs disclosed in the HUD-1 form, will mostly impact mortgage lenders and closing agents.

"The rule continues to stir controversy," Bunting said.

While there's hope the U.S. Department of Housing and Urban Development will delay implementation, settlement service providers are gearing up for Jan. 1, 2010 effective date, she added.

Mortgage lenders and real estate agents are encouraged to attend the free luncheon event, beginning at 10 a.m. Wednesday, September 16 at the Kenwood Golf & Country Club in Bethesda, Md., presented by Federal Title & Escrow Company.

"At its core, the Real Estate Settlement Procedures Act, is a consumer disclosure and anti-kickback statute intended to alert consumers about their settlement costs and to prohibit kickbacks that could increase mortgage costs," said Todd Ewing, president of Federal Title.

Claims that fraud, deception and general consumer ignorance led to the disastrous outcome of the real estate lending bubble fueled the overhaul of the home buyer protection statute. Bunting will provide an in-depth overview of the components of HUD's final RESPA rule and the new HUD-1 and GFE disclosure forms.

About the Holly Spencer Bunting:
Bunting is an associate with the Washington, D.C. office of K&L Gates. She represents companies in mortgage lending, title insurance and real estate industries in connection with regulatory compliance matters, according to her biography on the company's website.

Her articles have appeared in a variety of publications including "The Review of Banking and Financial Services," "Mortgage Banking and Consumer Credit Alert," and "The Banking Law Journal."

About Federal Title & Escrow Company:
In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Federal Title recognizes consumer-driven market pressures, as exemplified by the new RESPA rule, and seeks to offer home buyers substantial closing cost savings and a streamlined settlement process.

Federal Title has a reputation of being technically innovative and always at the forefront of the latest real estate trends. Years ago the company made a bold move by eschewing all Affiliated Business Arrangements and established its REAL Credit Program, which saves home buyers up to $2,000 on closing costs.

Now Playing: Closing Costs Explained Visually


10 Things You Should Know about Title Insurance: Location Weighs In

Who pays for title insurance depends on where you live. Sometimes it's the buyer who pays, sometimes it's the seller. And sometimes the cost is split between the two. In the Washington Metro Area, for example, title insurance premiums are generally paid by the home buyer. It's important to note that title insurance is regulated largely on the state level. If you're conducting a little Internet research, be sure to use regional qualifiers in your search (e.g. state, county, etc.).

Wednesday, August 26, 2009

Top 10 Title Insurance Claims for DC (6-10)

Title insurance claims arise more often that you might think. Below is a list of the most common title insurance claims for the District of Columbia, compiled by Elisabeth Zajic, vice president and senior counsel for First American Title Insurance Company in D.C.

For further reading, the Underwriter Bulletins contain a wealth of information geared more toward the industry but still valuable for anyone who's planning to buy a home.

View the Top 5 >>>

6. Mortgagors holding over after foreclosure. A claim will almost invariably arise when title derives from foreclosure and the mortgagor (borrower) whose property interest was extinguished in the foreclosure sale remains in possession of the property. The claim is precipitated when the successful bidder at the foreclosure sale seeks to evict the former owner/mortgagor in an action for possession, who will respond with a plea of title seeking to invalidate the foreclosure sale. The plea of title gives rise to a duty of defense and indemnification to the foreclosure sale buyer who purchased an owner's title insurance policy.

Because of the near certainty of litigation giving rise to a duty of defense under the title policy issued, First American Title Insurance will not insure title out of foreclosure when the mortgagor remains in possession of the property. Foreclosure requirements listed in your commitment for title insurance should be amended as follows:

I. Recording of Notice of Foreclosure in the Office of the Recorder of Deeds for the District of Columbia pursuant to which captioned property is sold to the proposed insured.

II. Proof of mailing of the notice by certified mail with return receipt to the record owner, complying with the District of Columbia Code and the terms of the Deed of Trust relating to notice of sale.

III. Proof of Publication of Notice in the Washington Post of other English language newspaper with general circulation in the District of Columbia. The proof also must establish that the notice was published five times within a 10-day period.

IV. Certificate of Sale and Auctioneer's Report

V. True copy of Deed of Trust note.

VI. Copy of Affidavit in compliance with Soldier's and Sailor's Civil Relief Act of 1940.

VII. Proof of notice of the sale to all junior lienholders known or of record.

VIII. Proof that possession of the premises has been surrendered to the insured owner/or assigns.

More info: Mortgagors Holding over after Foreclosure

7. Survey issues. A surprising number of claims in D.C. are caused by survey issues. They frequently involve bitter disputes between neighbors, resulting in lengthy and expensive litigation.

In D.C. survey coverage is not given to owners based on a house location survey except with special approval. When a house location survey is provided for closing, the general survey exception should remain in the owner's policy, including Eagle policy. You should read the plat into the owner's policy as well as the loan policy, taking specific exception to matters adverse to title shown on the plat. The survey should be reviewed with the buyer(s) by the settlement officer, who should point out those survey matters which exception is taken. The buyers should sign off on a copy of the plat to be maintained in the settlement file.

8. Disclosure issues. Recently, there has been a surge of litigation stemming from claims of breach of the duty of reasonable care by settlement attorneys who fail to advise purchasers of real property of the title consequences of certain matters of record. Various types of historic preservation easements given by prior owners of record have proven to be particularly problematic. These are not title insurance claims, but claims of negligence on the part of settlement attorneys.

Without going into lengthy discussion of the duty of care of a settlement attorney or settlement company, all of you should be sensitive to directing attention to matters of record which will affect the use and enjoyment of the property by the new owners, such as survey matters, easement issues and restrictive covenants. If possible, it is a good idea to send a copy of the title insurance commitment and survey to the buyers in advance of closing.

If, for whatever reason, you are not providing title insurance coverage for matters which a buyer could reasonably expect such coverage, you must disclose that fact and get a written waiver of coverage. These matters could include TOPA rights, mortgagors holding over after foreclosure, title to parking spaces, easement rights, pending litigation and unpaid taxes and assessments, although this list is by no means comprehensive.

9. Parking space claims. We have dozens of them!

For example, a parking space is listed in the contract but overlooked in the title order and neither conveyed nor insured. If the contract references parking, we have a claim even if the space is not included in the legal description in the policy.

OR – limited common element parking spaces are not properly assigned by amendment to the condo docs and the appropriate exception is not taken in the policy.

OR – the A & T number for the parking space is not included in the FP-7C and the tax bills continue to go to the prior owner, who does not, of course, pay the bills or forward them. The parking space is then sold at tax sale, and we have a claim.

*Pay attention to parking spaces! In many areas of D.C. they are now worth a small fortune!

10. Eagle policy schedule of caps and deductibles. Don't forget to include it when issuing Eagle policies! If the schedule of limitation of liability is not included with the policy, the argument can be made that there is no limitation on liability, thereby drastically increasing the potential amount of coverage for certain risks.

View the Top 5 >>>

Washington Post Shows No Love for Title Insurance

By Nikki Smith
Marketing Director
Federal Title & Escrow Co.

The Washington Post ran an article in last Sunday's paper called Easing the Pain of Closing Costs. Considering closing costs pertain largely to the title insurance and escrow services, I was a little surprised to see just three sentences about choosing the right title company. See below:

Find cheaper title insurance. Title insurance protects against challenges to your ownership, with separate coverage for your lender and for you. But as much as 80 percent of the premium goes to paying commission to a title agent. Shop around for title insurance.

I wanted to throw in my two cents in the comments section at the WaPo website but the comments section has been closed! So since I already went the trouble of cobbling some thoughts together, I'll leave them here:

Where's the love for title insurance? Three sentences is all?!?

If somewhere down the road a title defect comes to light, title insurance is all a home buyer has to protect his/her real estate investment. In DC, the most common title defect is a result of fraud.

Lenders require home buyers to purchase a lender's title insurance policy, while an owner's policy is optional. So there is an opportunity to save some money there.

You can choose between standard coverage or enhanced coverage, too. Some title companies may downplay the standard option, but in many cases a standard policy is sufficient. And it's cheaper.

The main thing for home buyers to know if they have the right to choose: Home buyers choose the policy, and they can choose what title company handles the settlement. So don't let a mortgage lender or real estate agent steer you toward a title company without doing a little cost comparison of title companies on your own. Lots of companies offer online quotes. Some title companies (like Federal Title) offer extra savings just for ordering services directly from them online.

This video is a good introduction to the overall process.

... Anyway, the article represents title insurance unfairly. Yes, it can cost thousands of dollars on top of the sale price of your home (around 3-6 percent extra depending on where you live), but the peace of mind is worth it in the long run.

Here's a final thought: If closing costs are outside your budget, consider offering the seller more money for the home in exchange for him/her covering settlement and escrow fees.

10 Things You Should Know about Title Insurance: Standard v. Enhanced Coverage

Ask about "standard" title insurance vs. "enhanced" title insurance. Some title companies push enhanced title insurance without providing the consumer with a proper disclosure that a less expensive standard policy is available. For many home buyers a standard policy will suffice. It costs less, too. Compare standard vs. enhanced title insurance, and make sure to ask your title company what types of insurance products they offer. Talk with your lender and settlement attorney to determine what policy is appropriate for your home investment.

Tuesday, August 25, 2009

10 Things You Should Know about Title Insurance: It's a One-time Fee

Title insurance is a one-time fee. Unlike other types of insurance, there is no ongoing premium to pay for title insurance. Your mortgage lender is required to provide you with a Good Faith Estiamte for closing costs, including title insurance, and factor those costs into the initial disclosure. This three-minute video explains closing costs in laymen's terms: Closing Costs Explained Visually.

Monday, August 24, 2009

10 Things You Should Know about Title Insurance: It's Required

Your mortgage lender will require title insurance. This isn't one of those cases where you can skirt the extra expense and hope for the best. If you are borrowing money for a real estate investment, your mortgage lender will want to make sure it's protected. Title insurance protects your money if it turns out the seller didn't legally have the right to sell the property in the first place. At minimum, you will be required to purchase a lender's policy. An owner's policy, while recommended, is not required.

Friday, August 21, 2009

New RESPA Rule FAQs - Good Faith Estimates

1) Q: What happens if a GFE is not provided to a borrower?

A: In a transaction involving a federally related mortgage, the loan originator is required to provide a GFE to the borrower. Failure to provide a GFE as required is a violation of Section 5 of RESPA.

2) Q: When will the use of the new GFE and HUD-1 forms be required?
A: The new GFE and HUD-1 forms must be used as of January 1, 2010. The new GFE and HUD-1 forms may be used before this date. Please note that if a loan originator issues a GFE on the new form, then the settlement agent must use the new HUD-1 form and the tolerances and other requirements in the revised RESPA regulations will apply.

3) Q: If a GFE is issued on the old form prior to January 1, 2010, and the loan will close after January 1, 2010, which HUD-1 form is to be completed by the settlement agent?

A: If a GFE is issued on the old form prior to January 1, 2010, then the old HUD-1 form must be used even if closing will occur after January 1, 2010. For GFEs issued on the old form, the loan originator has the option to reissue the GFE (with the same terms and charges) on the new form, in which case the settlement agent must complete the new HUD-1 form.

4) Q: When does a loan originator have to issue a GFE?

A: A loan originator must issue a GFE no later than 3 business days after the loan originator receives an application or information sufficient to complete an application. Application is defined as the submission of a borrower‘s financial information in anticipation of a credit decision relating to a federally related mortgage loan, which shall include the following: (1) borrower‘s name, (2) borrower‘s monthly income; (3) borrower‘s social security number to obtain a credit report; (4) property address; (5) estimate of value of the property; (6) loan amount and (7) any other information deemed necessary by the loan originator.

5) Q: What is a loan originator?

A: "Loan originator" means a lender or a mortgage broker.

6) Q: What fees can a loan originator charge before issuing a GFE?

A: Prior to issuing a GFE, the loan originator may, at its option, collect a fee limited to the cost of a credit report.

7) Q: I am a mortgage broker. Can I provide the GFE?

A: Yes, a mortgage broker can provide the GFE, however the lender is ultimately responsible for ascertaining that the GFE was provided to the applicant.

8) Q: There are not enough lines on the GFE or the HUD-1 to show all of the charges that are appropriate for some of the categories. Where should these charges be listed?

A: Additional lines may be added to Blocks 3, 6 and 11 of the GFE. Additional lines may also be added to the HUD-1.

9) Q: Is a GFE a loan commitment?

A: No, the GFE is not a loan commitment. A GFE is an estimate of settlement charges a borrower is likely to incur to obtain a specific loan.

10) Q: At what point can a loan originator charge a loan applicant fees for services other than the cost of obtaining a credit report?

A: After a loan applicant both receives a GFE and indicates an intention to proceed with the loan covered by the GFE, the loan originator may collect fees beyond the cost of a credit report for origination-related services.

11) Q: If the borrower is taking out two loans to finance the purchase, how should the loan originator disclose the charges from each loan on the GFE and the HUD-1?

A: Each loan must have a separate GFE and a separate HUD-1. However, the principal amount of the second loan and a brief explanation of the second loan should be listed on Lines 204 – 209 of the HUD-1 for the first loan.

12) Q: What are processing and administrative services?

A: Processing and administrative services are those services required to perform the functions involved in title service and origination service. Processing and administrative services include, but are not limited to the following: document delivery, document preparation, copying, wiring, preparing endorsements, document handling and notarization.

*The preceding Q&A was originally published on the HUD website.

10 Things You Should Know about Title Insurance: Shop and Compare

It's easy to save money on title services. Ask for quotes from several title companies and compare them with your real estate agent's or mortgage lender's recommendation. By shopping around and asking about discounts, a lot of times the home buyer can save thousands on closing costs.

Thursday, August 20, 2009

10 Things You Should Know about Title Insurance: The Right to Choose

You have the right to choose your title company. In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Don't let your mortgage lender or real estate agent steer you toward their preferred title company without doing your homework first. You could save thousands of dollars – yes, thousands – by selecting a title company on your own.

New RESPA Rule FAQs - HUD-1 Forms

1) Q: How are courier and overnight delivery fees shown on the HUD-1 Settlement Statement?

A: Courier and overnight delivery fees are considered to be fees for administrative or processing services. They are part of a primary service, such as the origination service or title service, and may not be separately itemized.

2) Q: Does voluntarily using the HUD-1 in a transaction that otherwise is not subject to RESPA result in RESPA applying to the transaction?

A: No, using the HUD-1 form does not subject a transaction to coverage under RESPA.

3) Q: Does "conducting a settlement" (from the definition of "title service") have the same meaning as "conducting the closing"?

A: Yes. The terms "conducting a settlement" and "conducting the closing" have the same meaning under HUD's RESPA regulations and are subject to identical requirements under the regulations.

4) Q: What if at closing the seller is paying for a settlement service that was listed on the GFE, such as the Owner‘s title insurance policy? How is this shown on the HUD-1?

A: If the seller is paying for a service that was on the GFE, such as Owner‘s title insurance, the charge remains in the borrower‘s column on the HUD-1. A credit from the seller to the borrower to offset the charge should be listed on the first page of the HUD-1 in Lines 204-209 and Lines 506-509 respectively.

5) Q: If there are additional government recording fees, such as to record a power of attorney or road maintenance agreement, are they included in Line 1201 of the HUD-1 or can they be charged separately?

A: Line 1201 is used to record the total government recording charges. Additional items the lender requires to be recorded, other than those already enumerated in Line 1202, must be itemized on Line 1206. The charges for these additional items must be stated outside the column.

6) Q: How do settlement agents get the information to prepare page 3 of the HUD-1? Do they have to search through all of the loan documents to get this information?

A: The lender is required to transmit the information necessary to complete the HUD-1. The instructions for completing the HUD-1 state that the lender must provide information to the settlement agent in a format that permits the settlement agent to simply enter the necessary information to complete the loan terms section on page 3 of the HUD-1 without having to refer to the loan documents.

7) Q: Is it a violation of the tolerance if some of the items in the 10% category in the Comparison Chart exceed 10%, but other items in the category do not exceed 10%?

A: The tolerance applies to the total of all charges shown in the category ―Charges That in Total Cannot Increase More Than 10%.‖ A tolerance violation of this category means that the total of all actual charges in this category exceed the total of all estimated charges in this category by more than 10%.

*The preceding Q&A was originally published on the HUD website.

Wednesday, August 19, 2009

New RESPA Rule FAQs - General Information

1) Q: When does the new RESPA Rule take effect?

A: The November 2008 RESPA Rule was effective January 16, 2009. Implementation of the provisions are as follows:

2) Q: When does the revised required use definition take effect?

A: The revised required use definition was withdrawn by a separate final rule published May 15, 2009.

3) Q: Can a loan originator e-mail a GFE to a borrower?

A: Yes; as long as the borrower consents and the other specific requirements for consumer disclosures under the Electronic Signatures in Global and National Commerce Act (ESIGN) are met, a loan originator may e-mail, fax, or send by other electronic means the GFE (and other RESPA disclosures, such as the HUD-1/1A). See section 101(c) of ESIGN, 15 U.S.C. 7001(c); also see 24 CFR 3500.23. The loan originator may also continue to deliver the GFE to the borrower by hand delivery or by placing it in the mail, as provided by RESPA.

4) Q: RESPA and HUD‘s RESPA regulations require that certain records be retained for a period of time. Can those records be retained electronically?

A: Yes, if the person responsible for retaining records under RESPA and HUD's RESPA regulations meets the specific requirements and limitations applicable to the retention of electronic documents set out in the Electronic Signatures in Global and National Commerce Act (ESIGN), that person's responsibility will be satisfied by the retention of electronic records. See sections 101(d) and (e) of ESIGN, 15 U.S.C. 7001(d) and (e); also see 24 CFR 3500.23.

5) Q: Can we translate the GFE and the HUD-1 into languages other than English?

A: Yes, it is permissible to translate the GFE and the HUD-1 as long as the form has been translated accurately.

*The preceding Q&A was originally published on the HUD website.

Tuesday, August 18, 2009

How Well Do YOU Understand RESPA?

At its core, the Real Estate Settlement Procedures Act, better known as RESPA, is a consumer disclosure and anti-kickback statute intended to alert consumers about their settlement costs and to prohibit kickbacks that could increase the cost of getting a mortgage.

New RESPA regulations were published in November 2008 and are scheduled to take effect Jan. 1, 2010. To prepare for the changes, Federal Title & Escrow Company is hosting a free event for 100 guests, which will feature a presentation by mortgage banking and consumer finance expert Holly Spencer Bunting.

To attend this free event and learn more about RESPA, contact the marketing department at Federal Title.

Wondering just how savvy you are when it comes to RESPA? Take this RESPA Quiz created by Realtor.org and test your knowledge of the law.

Monday, August 17, 2009

Federal Title President Joins Expert Click Community

Todd Ewing, president of Federal Title & Escrow Company is among the newest members of the Expert Click community. Expert Click connects journalists and experts in a variety of fields. For information about the title insurance business, how to calculate closing costs and laws and regulations like the Real Estate Settlement Procedure Act, or RESPA, visit Todd's profile.

RESPA Reform Expert to Shed Light on Upcoming Changes

Mortgage banking and consumer finance expert Holly Spencer Bunting will educate real estate agents, mortgage lenders and members of the media about upcoming changes in RESPA regulations during a complimentary luncheon next month.

Federal Title & Escrow Company is hosting the event in the Dogwood Room at the Kenwood Golf & Country Club in Bethesda, Md. on Wednesday, September 16 beginning at 10 a.m.

Bunting is an associate with the Washington, D.C. office of K&L Gates, concentrating on issues of federal and state regulatory enforcement, according to the firm's website. She represents companies in the mortgage lending, title insurance and real estate industries in connection with regulatory compliance matters and defends clients subject to government audits, investigations and enforcement proceedings.

Additionally, Bunting advises clients about federal and state consumer credit and protection laws and regulations, including the Real Estate Settlement Procedures Act (RESPA). Consequently, Bunting has delivered several presentations on RESPA and compliance and written several articles about the consumer protection statute, including "Finally, a Final RESPA Rule," and "RESPA's New Average Charge Provisions – Available for Some."

Friday, August 14, 2009

Free RESPA Reform Luncheon, Presentation

Are you still chewing over the details of the new RESPA rule, wondering how the changes will affect your daily work routine?

Federal Title & Escrow Company invites you to hear the real story on RESPA and enjoy complimentary lunch in the Dogwood Room at the Kenwood Golf & Country Club in Bethesda on Wednesday, September 16 at 10 a.m.

Mortgage banking and consumer finance expert Holly Spencer Bunting will discuss the new RESPA rule, which goes into effect on the first of the year. Bring your questions for a Q&A session immediately following the presentation.

Here's what Holly had to say about her upcoming presentation:

Despite the U.S. Department of Housing and Urban Development's ("HUD" or "Department") publication of its final rule to amend the Real Estate Settlement Procedures Act ("RESPA") in November 2008, the rule continues to stir controversy as the effective date for the new HUD-1 Settlement Statement and Good Faith Estimate draws closer. While there is still hope that HUD will delay implementation of the new forms until the Department coordinates its efforts with the Federal Reserve, settlement service providers are gearing up for the January 1, 2010 effective date. This session will provide an in-depth overview of the components of HUD's final RESPA rule and the new HUD-1 and GFE disclosure forms.

Space for this free event is limited to the first 100 guests, so reserve your spot today! Last day to RSVP is Tuesday, September 8.

Thursday, August 13, 2009

MD 1st Time Homebuyers: True/False

STATEMENT: As long as you have not owned a principal residence in Maryland in three years, you qualify as a Maryland First Time Homebuyer.
FALSE: The code does not provide a reset clause – if you have ever previously owned a principal residence in Maryland, no matter when, you are not eligible for the exemption.

STATEMENT: If you have previously owned a property in Maryland, but have never lived in that property, you qualify for the exemption.
TRUE: The requirement is that you must not have previously owned a principal residence in Maryland. Previously owning a non-principal residence does not disqualify you, as long as the property that you are purchasing will be your principal residence.

STATEMENT: It does not matter how you title the property, you will receive the exemption as long as you are a Maryland First Time Homebuyer.
FALSE: If the purchaser is a Trust, a Partnership, an LLC, or a Corporation, it can not qualify as a Maryland First Time Homebuyer.

STATEMENT: If two people are buying a principal residence, as long as one of the buyers has never previously owned a principal residence in Maryland, they can receive the exemption.
FALSE: Every purchaser who intends to live at the property as a principal residence must have never previously owned a principal residence in Maryland.

STATEMENT: While I qualify for the exemption, my parents who will be on title only to help me get the loan disqualify me since they already own a principal residence in Maryland.
FALSE: The Maryland Code will still allow the exemption as long as the parents sign an affidavit stating that they are a co-maker or guarantor of a purchase money deed of trust and that they will not occupy the residence as their principal residence.

Friday, August 7, 2009

What Do TILA Changes Mean for Lenders, Title Agents?

Changes to the Truth in Lending Act (TILA) now require lenders to provide consumers "early disclosure" of good faith estimates of mortgage loan costs and a minimum seven-day waiting period between disclosure and closing.

This means it's all the more important for lenders to obtain an accurate settlement fee quote from their title agent as early as possible.

The Federal Reserve has highlighted the major changes in the truth in lending early disclosure requirements in the chart below:

To avoid delays in the closing process, lenders must be precise. The new requirements also call for an additional three business days of wait-time before consummating a loan transaction should the APR reflected in the initial disclosure vary by more than an eighth of one percent (.125%).

A guaranteed quote, such as the one offered by Federal Title & Escrow Company, will ensure there are no surprises – or closing delays – at the end of a real estate transaction.

Wednesday, August 5, 2009

Don’t Let your Vacant Listing Go Third Class

Selling a property that the owner has already vacated? If the property is located in the District of Columbia, you will want to register the property as vacant with the city so that it can be exempt from paying additional property taxes.

The Real Property Classification Clarification Emergency Act of 2002 created a Class 3 property tax rate for vacant commercial and residential properties in the District of Columbia. Vacant property is taxed at $10.00 per $100 of assessed value – by comparison, a Class 1 residential property is taxed at $0.85 per $100 of assessed value!

Sellers who move out of a property before it is sold run the risk of having their property reclassified as vacant. The Department of Consumer and Regulatory Affairs (DCRA) inspects properties regularly to determine whether or not they are vacant. Individuals are also encouraged to report vacant properties to the DCRA. So a property that takes some time to sell and has already been vacated by the owners is particularly vulnerable to being reclassified.

Fortunately, by registering the property with the DCRA, an exemption does apply. A form needs to be completed with exemption category 5 checked and a small fee submitted. Also, supporting attachments must be submitted, such as the listing agreement with the realty agent contact information and documents showing ownership (either the Deed or HUD-1 Settlement Statement will typically suffice). The code allows for an exemption from Class 3 status for up to one year.

Here is the link to the form: (http://dcra.dc.gov/dcra/frames.asp?doc=/dcra/lib/dcra/2009_vacant_property_form_fillable.pdf)

Usually doing something first class costs you money, but in the District of Columbia, you want your property to receive the Class 1 treatment. So when vacating a listing, remember to register to get your Class 1 status – it will save a ton of money!

Thursday, July 16, 2009

"AS-IS" IS "AS-IS" For Termites

[. . . All clauses in this Contract pertaining to Property condition, termites or compliance with city, state or county regulations are hereby deleted from this Contract. . . .] - AS-IS para. #3, Addendum of Clauses, GCAAR Regional Sales Contract
Yes, it means what it says. Read it, live it, and breathe it when you set out to present your next "As-Is" sales contract.
  • It means that if the purchaser discovers infestation and structural damage resulting from wood destroying insects - tough luck - purchaser pays for the treatment and repairs.
  • It means para.#16 of the Regional Sales Contract, "Termite Inspection" is DELETED - POOF! GONE!

Caveat: A seller cannot hang his/her hat on the "As-Is" clause if the seller intentionally or negligently misrepresented a material condition or fact; or if the seller fraudulently concealed a material condition or fact; or if the seller made a false promise of a character likely to influence, persuade, or induce.

Wednesday, July 15, 2009

Location Survey - WHY?

The GCAAR Regional Sales Contract makes only one reference to the survey and is found in para.#19 as follows: "The title report and survey, if required, will be ordered promptly . . . ." Note the key phrase "IF REQUIRED." What does that mean?

"IF REQUIRED" means if required by the purchaser's lender. Nearly all mortgage lender underwriting will require the title insurer to issue a lender's title insurance commitment without exception to survey matters. In other words, a lender will not accept a title insurance policy without coverage for survey matters.

Tuesday, July 14, 2009

Taking Advantage of your Tax Appeal

The decrease in home prices does have some advantages, one of which is the opportunity to challenge property tax assessments. Often I find myself seated at closing with a homebuyer who has purchased a property for far less than the county or city assessed value. While challenging a tax assessment after closing may not be the most exciting way to spend your time, it does have the potential to save you thousands of dollars.

In Maryland, if a property is purchased between January 1 and June 30, the new homeowner has 60 days from the settlement date to file an appeal. If the homeowner misses this 60 day window, there are two more options: an appeal within 45 days of receiving an assessment notice (typically every three years) or a “Petition for Review” by January 1 of any year. The initial review will take place at the Supervisor’s Level, which is typically an informal, 15 minute meeting. If the homeowner disagrees with the decision, an appeal can be made to the Property Tax Assessment Appeal Board. If still dissatisfied, a further appeal can be made to the Maryland Tax Court. Here is the link to the Maryland Department of Assessments and Taxation, http://www.dat.state.md.us/.

In the District of Columbia, an appeal must be filed within 30 days of the date of the assessment notice (taxes are assessed annually) and it must be received no later than April 1. A new owner may file a petition for administrative review. The initial appeal can be conducted in person, in writing, or by telephone. If the disputed assessment can not be resolved, the homeowner can appeal for a Board level review, and if the homeowner is still not satisfied, a final appeal can be made to the Superior Court of the District of Columbia. Here is the link to the DC Office of Tax and Revenue appeals page, http://otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594359.asp.

You should be prepared to provide comparables or other data to prove that the property assessment is too high. When appealing after a purchase transaction, a HUD-1 Settlement Statement or an appraisal may be helpful. Every property owner is entitled to obtain, free of charge, their property worksheet and a sales list for the area where the property is located. Most importantly, during the appeal, focus on the points that specifically affect the property value – do not argue about percentage increases, past values, or values of properties in other jurisdictions

Don’t be intimidated by the tax appeal process; typically at the first appeal level you will meet one on one with an appraiser in a non-adversarial setting. Also, most appeals are resolved at the first appeal, especially if you have done your research, therefore appealing to a review board or the tax court is not generally needed. So use your right to Tax Appeal, it’s not as difficult as it seems and the reward will be worth it.

Thursday, June 11, 2009

Power of Attorney Pitfalls

In my 18 years as a settlement attorney, I can point to an improper Power of Attorney (“POA”) form as one of the most common causes of a delayed closing. You have no doubt encountered clients who are too busy or physically unable to make it to closing. You’ve heard “My mom gave me Power of Attorney,” “I gave my husband Power of Attorney,” “Grandma is in the nursing home – I have Power of Attorney.” Simple enough – right? Wrong.

So often, clients find POA documents online or stationary stores. We are frequently presented with general “checklist” POA forms and clients are dismayed to learn that we cannot accept them for the purpose of insuring title. When it comes to conveying or encumbering real property by Power of Attorney, make sure your client has the proper legal authority well before the closing date.

Many states specifically address, by statute, the use of Power of Attorney and impose very specific requirements. Title insurance underwriters go beyond the state’s statutory requirements with even stricter guidelines for Power of Attorney usage. I think it’s helpful to first understand the definition of an “attorney.”

ATTORNEY: A person legally appointed by another to act as his or her agent in the transaction. . . . www.dictionary.com.

It’s also important to understand the two specific parties in the Power of Attorney. The PRINCIPAL is the person granting another the power to act in their stead; the one who signs the POA document. The ATTORNEY-IN-FACT is the receiver of the power from the Principal.

In order to satisfy most title insurers, a POA form to be used for the purpose of conveying or encumbering real property must meet the following requirements:

RECENT: The document needs to have been executed by the Principal within a year of the transaction at which it is being used. While exceptions are made on a case-by-case basis, it is rare that a title insurance underwriter will accept an aging POA because of risk of fraud or marketability issues.

SPECIFIC: The document must grant the Attorney-in-Fact the powers required to effect the transaction and should recite the specifics of that transaction (i.e., property address, convey or encumber). A document giving the Attorney-in-Fact the ability to “handle real estate transactions” is too vague and too general.

DURABLE: The document must state that the Power of Attorney will not terminate upon the disability of the Principal. It is not acceptable for the document to be entitled “Durable Power of Attorney” and not recite the above durability language specifically with the text.

ORIGINAL: The document must be an original. A copy of the POA is not acceptable. The POA must be recorded with the clerk’s office and the clerk requires original documents to be recorded.

To be absolutely certain that your client’s Power of Attorney is acceptable, please forward to our office for review prior to closing. If you would like to have sample POA forms recommended by our office, please feel free to contact us and we will gladly provide those forms.

Thursday, June 4, 2009

Transparency in Title Charges


On average, title charges (i.e., settlement or closing fee, title insurance) comprise 70% of the total variable closing costs*. Since title charges do vary significantly from title company-to-title company in DC, MD, VA, and FL, it is very important for a home buyer to comparison shop.

Ever wonder why most title companies force you to make contact with them in order to get a quote for title charges? Seriously, with today's technology, why won't your title company allow you to anonymously get a customized quote for their services so you can do some comparison shopping? Why do you have to contact them and wait for them to call or email you back with a quote?

Where is the demand from consumers on title companies? After all, mortgage lenders are soon to be required (by law - see http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm) to provide a Good Faith Estimate (GFE) that is subject to a "no tolerance" increase for originiation and lender costs. Shouldn't similar demands be placed on title companies?

Most title companies hope that the referring party sends the contract and/or title order and doesn't encourage the consumer to comparison shop for title services. In this instance, the consumer is a captive audience and will be charged accordingly. When the referring party does encourage the consumer to shop, most title companies force the consumer to call them or email them before they will provide a quote for services. They want to "feel you out" over the phone or via email to determine how hard you are shopping. If they sense a "hard" shopper, the price goes down; if they sense a "soft" shopper, the price may go up. In other words, their title charges are not consistent across the board and vary depending on how hard they have to try. Further, there is a belief among these same title companies that if they can just get you on the phone or make direct contact with you, they can "reel you in" and sell you on their service (even if the company's charges are above market). If you are like me, you really don't want to talk with anyone and have to haggle - JUST GIVE ME YOUR PRICE SO I CAN COMPARE AGAINST OTHERS!

Whether you are a "hard" shopper or a "soft" shopper, the charges are consistent and available online 24/7 at http://www.federaltitle.com/. You don't have to talk to us! We are so confident of our service and pricing, that we allow consumers to obtain, ANONYMOUSLY, a guaranteed quote for services using our QuickQuote https://www.federaltitle.com/titleagents/QuickQuote/Default.aspx feature. Give it a try and you will see that Federal Title & Escrow Company is the most transparent and consumer-friendly title company in the market.

*Accurately defined, "variable closing costs" are those non-recurring costs for which you can shop. Examples of variable closing costs include lender charges (i.e., appraisal fee, underwriting fee, tax service fee, flood certification, document preparation fee); title company charges (i.e., settlement or closing fee, title insurance premium); or ancillary services (i.e., location survey, property inspection, termite report, home warranty).

Items such as transfer taxes, recordation taxes, stamp tax, prepaid interest and escrow/reserves for taxes/insurance are not considered "closing costs" because these items do not vary among service providers and cannot be "shopped."

Wednesday, May 27, 2009

Going Green - Federal Title ditches paper copies for USB Flash Drive

Federal Title Goes Green
The average closing takes approximately 200 sheets of paper. There are loan documents, closing documents, title and deed documents, letters to buyers, letters to sellers, letters to lenders etc. By using a USB Flash Drive to store your (borrower's) documents, we can reduce this number by an average of 32%. Let's do a quick translation of what you are saving*:

  • One tree provides 17 reams of paper (approximately)

  • In an average month at Federal Title, we can save 15 reams of paper by using a USB Flash Drive

  • In an average month at Federal Title, we can save almost THREE tons of water by using a USB Flash Drive

  • The average cost of a wasted page is $0.06

So by using Federal Title & Escrow Company, you are helping the environment by saving trees, water and energy. We will provide a complimentary flash drive or can load the documents on a flash drive you provide. Rather have it on email? We offer that option as well.

What is a flash drive and who can use it?
It is a small memory stick that is placed in your computer's USB port, from there you open it and can see all of your closing documents. We convert your package to Adobe PDF for simple browsing. With this easy paper reducing process, you simply print out the papers you need and browse the others.

What are the advantages of having your closing documents on a USB Flash Drive?
You can easily:

  • Email any of the documents as needed

  • Print any of the documents as needed

  • Browse your settlement documents

  • Store 50-75 sheets of paper in an area the size of your thumb

  • Add any other real estate documents to the Flash Drive so you have everything together

Federal Title clients already have an advantage of being tech savvy, you have ordered online, received an email copy of your closing costs and eliminated sending faxes back and forth. Take that savviness one step further by putting all of your closing documents on a USB Flash Drive - walk out of closing knowing you have saved trees, water, energy but most importantly, time.

*Information was calculated by referencing http://www.printgreener.com.

Tuesday, May 19, 2009

Closing Costs Explained Visually

Finally - our new video!!
We have been working on producing a video that explains closing and settlement costs, visually. Buying a house is a huge financial committment and one that should not be taken lightly. The number one question we get from buyers and borrowers is "How much is this going to cost?" While there is no easy way to answer this question, we have created a suite of tools to get buyers and borrowers started.

But this new video is the one we are most excited about, take a look and let us know what you think.

Thursday, February 12, 2009

Transparent Title Companies - Where are they?

By Ann Herdon Eskew


* Delivered an instant, online, guaranteed closing cost quote to you and your clients - specific to the transaction;
* Was independent and gave back part of its revenue to your home buyer; instead of giving money back to your broker through an Affiliated Business Arrangment;
* Allowed you to submit the transaction order entirely online.

Very few title companies offer a Web 2.0 experience when it comes to delivering service. In fact, most still cling to fax machines and land lines -- taking orders over the phone, quoting fees/costs over the phone. Further, many title companies have no room to significantly lower their fees to your client because they are kicking back 30% to 50% of the transaction revenue to a broker by way of an Affiliated Business Arrangment.

I am proud to say that my company, Federal Title, has remained independent for the last 13 years. We have grown to be the largest independent title company in the Washington, DC metro area. Our growth is directly attributed to our ability to deliver instant, online, and guaranteed closing cost quotes to agents, home buyers, and mortgage lenders. It is also attributed to our REAL Credit Program in which we give back part of our revenue to the home buyer rather than a referral source. The consumer loves transparency and savings and we deliver.

Thursday, February 5, 2009

Federal Title enters Miami-Dade market

Federal Title & Escrow Company Enters Miami-Dade Market with Its "Guaranteed Closing Costs" and "Anti-Kickback" Business Model

Coral Gables, Fla., February 5, 2009 - Seeking to assure a more transparent settlement transaction that delivers a guaranteed quote for closing costs and directs a financial benefit to the home buyer instead of the referral source, Federal Title & Escrow Company introduces to the Miami-Dade market an unprecedented model that empowers the consumer. While many title companies share their revenue with real estate brokerages as a reward for the referral, Federal Title instead gives part of its revenue back to the consumer. The announcement comes on the heels and in the spirit of the U.S. Department of Housing and Urban Development's proposed rule to reform the Real Estate Settlement Procedures Act ("RESPA").

Federal Title's Market Entry

Federal Title & Escrow Company, an independent provider of real estate settlement services based in Washington, DC, proudly announces its expansion into the Miami-Dade market with the opening of its newest office in Coral Gables, FL.

The new Coral Gables office is part of the company's expansion plans to introduce its "guaranteed closing costs" and "anti-kickback" model in other markets. The model is supported by the company's proprietary online technology that delivers instant online closing costs specific to the consumer's transaction. The office will be managed by the law firm of Bales & Bales, P.A., a Coral Gables-based law practice.

Consumer-Friendly Business Model

In the majority of today's real estate transactions, real estate brokerages profit from title insurance premiums charged to home buyers or sellers by participating in joint ventures with title companies (also known as "Affiliated Business Arrangements"). Such arrangements require the participating title company to share its revenue with the real estate brokerage. Individual real estate agents are urged by their companies to refer home buyers and sellers to the joint venture title company in order that the brokerage may profit from the referral.

"For too long, at the expense of the consumer, title companies have been beholden to the financial interests of their referral sources. Legal and illegal kickbacks in the real estate transaction have fostered distrust with consumers and posed ethical dilemmas for real estate agents," said company president, Todd Ewing, adding that Federal Title does not share its revenues with referral sources. Instead, the company gives back part of its revenue to the home buyer through its innovative REAL Credit ProgramTM.

Attorney Amy Bales, manager of the Coral Gables office, added: "Our ability to deliver an instant, online, and guaranteed quote for closing costs along with substantial savings to the home buyer through our REAL Credit Program will give our agent and mortgage lender referral sources a distinct advantage over others. The Miami-Dade area real estate market is in dire need of a face-lift. Our real estate community needs to deliver more transparency to the consumer and raise the bar of ethics," said Bales.

About Federal Title & Escrow Company

Federal Title & Escrow Company (miami.federaltitle.com) (www.federaltitle.com) provides real estate settlement services for residential and commercial real estate transactions in Florida, Washington, DC, Maryland, and Virginia. Federal Title is committed to establishing long-term relationships with real estate agents and mortgage lenders who embrace transparency and high ethics.

Headquartered in Washington, DC, Federal Title is the largest independent title company in the Washington DC metro area. Through its proprietary and innovative AQGTM technology, Federal Title delivers online guaranteed closing cost quotes for the benefit of home buyers and referral sources. Through its REAL Credit ProgramTM, Federal Title gives back part of its revenue to the home buyer instead of referral sources.

# # #