|
News By Edition
|
RESPA News Monthly Edition
RESPA News Monthly May 2014
|
|
CFPB eClosing initiative receives favorable reviews
Posted Date: Thursday, April 24, 2014
During a public forum on April 23, the Consumer Financial Protection Bureau (CFPB) announced that it is launching a new electronic closing (eClosing) pilot program to research avenues to make closings less complex for borrowers. October Research, LLC attended the forum and spoke with attendees and others in the industry about the bureau’s initiative. Though there is much work to do ahead, many are in favor of the eClosing program.
“I’ve never been more excited or optimistic about the concept of electronic closings becoming a marketplace reality than I am today,” said Mary Schuster, president of op2 and chief product officer at RamQuest. “Seeing so many different stakeholders come together, encouraged by a progressive regulator who encourages and facilitates what can be accomplished, is exciting. To some it might a seem nothing short of miraculous, given the long road many of us have been down together in the quest for a modern, effective and efficient digital closing."
The program is set to begin this fall.
|
|
|
Florida warns title agents to stay compliant or face the consequences
Posted Date: Monday, April 7, 2014
RESPA Section 8(a) states that it is a violation for a person to give or receive a thing of value in exchange for a referral of real estate settlement service business. In its March edition of Insurance Insights, the Florida Department of Financial Services (DFS) warned title insurance agents that providing inducements for the sale of title insurance is a violation of RESPA and Florida law.
The minimum state penalty for this sort of illegal act is a fine of $1,500 and one year probation. In addition, RESPA Section 8(d) provides that a person who violates the law could be fined up to $10,000 and/or face imprisonment for up to one year.
|
|
|
Mortgage disclosures: Get ready to itemize
Posted Date: Monday, March 24, 2014
The Consumer Financial Protection Bureau’s (CFPB) final rule implementing the new RESPA/Truth in Lending Act (TILA) integrated mortgage disclosure forms doesn’t go into effect until August 2015. Getting ready for the forms, however, is going to take time. Along with the disclosures come various changes to the way the current forms are filled out and presented to the consumer. Knowing the regulation’s specific mandates can help keep you compliant in the future.
Itemization of fees and charges
When the Department of Housing and Urban Development implemented the 2010 Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms, it bundled the title and closing costs together with the philosophy that consumers are more interested in what the total cost is going to be.
In its final rule, the CFPB decided to unbundle the costs, itemizing the charges separately so that consumers know exactly what they are paying for each service.
|
|
|
New CFPB guide answers mortgage disclosure questions
Posted Date: Thursday, April 3, 2014
The Consumer Financial Protection Bureau’s (CFPB) final integrated mortgage disclosure form rule is a massive 1,888-page regulation. It can be tricky to find specific answers to your questions. The CFPB released guidance on March 31 that provides a summary of the final rule. The guide is 89 pages and offers answers to technical compliance questions such as timing, delivery and revisions to the forms.
The document is designed to be a small entity compliance guide, meeting the requirements of the Small Business Regulatory Enforcement Fairness Act of 1996, which requires the bureau to issue guidance to help small entities comply with new regulations. However, the bureau indicated that the guide is also meant to provide an easy-to-use summary of the RESPA/Truth in Lending Act (TILA) rule in general.
The guide explains that if an application from a consumer is received on or after Aug. 1, 2015, the new disclosure forms must be used. For an application received prior to that date, the current Good Faith Estimate (GFE) and HUD-1 Settlement Statement should be used.
In addition, the new disclosures cannot be used before the effective date.
|
|
|
|
SoftPro celebrates 30th anniversary
Posted Date: Thursday, April 10, 2014
SoftPro, a provider of title, closing and escrow software, is celebrating its 30th anniversary. The company says that over the years it has strived to find ways to use emerging technologies to help its customers work faster and more cost effectively.
A lot has changed in the 30 years since computer programmer and entrepreneur, Loren Harrell, launched SoftPro, a provider of title, closing and escrow software. In 1984 Steve Jobs had just released the Macintosh — the first PC with a graphical interface — and IBM made it possible to store and have instant access to a warehouse worth of data on one of its new 3480 cartridge tapes. There was a thirst for applications that would boost productivity and lower costs, particularly in the labor and paper intensive title and closing industry.
|
|
|
Stewart purchases LandSafe from BofA
Posted Date: Thursday, April 17, 2014
Stewart Title Guaranty Co., a provider of real estate services, announced it has reached an agreement with Bank of America to purchase its LandSafe Title businesses. A Stewart spokesperson said the acquisition of LandSafe, a title and closing products and services provider, is consistent with Stewart’s strategies to expand its mortgage and title operations and enhance the service Stewart offers to its mortgage customers.
“The LandSafe Title businesses purchase, coupled with the recent acquisition of the DataQuick title and collateral valuation business lines and Wetzel Trott joining Stewart, rounds out Stewart’s mortgage and title services expansion,” the spokesperson said.
|
|
|
Federal court says delivery companies subject to RESPA
Posted Date: Thursday, April 17, 2014
Two borrowers filed a lawsuit against their title insurer, alleging the company had an agreement with numerous national delivery companies to refer the carriers to do overnight delivery services in exchange for kickbacks. The title insurer argued that delivery companies are not subject to RESPA, but the court disagreed.
Melissa Henson closed escrow on her home in February 2012. Chicago Title Co., a subsidiary of Fidelity National Financial, handled the escrow and charged Henson an overnight delivery fee of $13.81.
Keith Turner refinanced his home on Sept. 11, 2012. Lawyers Title, another Fidelity subsidiary, handled the escrow, and Turner was charged $19.98 for overnight deliveries.
Henson and Turner sued Fidelity, alleging that the company violated RESPA when it received marketing fees from delivery carriers UPS, Federal Express and OnTrac in exchange for the referral of business. The plaintiffs contended that Fidelity used its escrow subsidiaries to refer overnight delivery business to the carriers and, in turn, received a referral fee disguised as a “marketing fee.”
|
|
|
Supreme Court denies review of Article III standing case
Posted Date: Monday, March 24, 2014
In June 2012, the U.S. Supreme Court had the opportunity to determine whether a plaintiff has Article III standing to sue for an alleged RESPA violation if the plaintiff did not incur actual damages — the case was First American Financial Corp. v. Edwards. After agreeing to review the matter, the Court later declined to decide the issue.
On March 10, the Court denied certiorari in Charvat v. Mutual First Federal Credit Union (No. 12-2790), a case that contained a strikingly similar dispute.
|
|
|
Borrowers file RESPA suit, claim they were unaware of improper fees
Posted Date: Monday, April 7, 2014
A couple filed a lawsuit against their loan originator and servicer, claiming that they were charged improper fees and that the defendants accepted payments for services they did not perform. Because the case was filed five years after the closing, the defendants argued the plaintiffs’ claims were barred by RESPA’s statute of limitations. The U.S. magistrate judge reviewed the equitable tolling doctrine and the discovery rule, but determined that neither applied and recommended dismissal of the plaintiffs’ claims.
David and Robin Veres obtained a mortgage loan from defendant Wells Fargo Bank. Wells Fargo then securitized the plaintiffs’ loan and placed it into a trust, naming defendant HSBC USA NA as the trustee.
|
|
|
Mortgage complaints on the rise
Posted Date: Thursday, April 3, 2014
The Consumer Financial Protection Bureau (CFPB) announced that consumer complaint volume nearly doubled from 91,000 complaints received in 2012 to 163,700 complaints received in 2013.
“Consumer complaints have become central to the work of this agency,” said CFPB Director Richard Cordray. “They enable us to listen to, and amplify, the concerns of any American who wants to be heard. They are also our compass. They make a difference by informing our work and helping us identify and prioritize problems for potential action.”
|
|
|
State bill seeks to expand RESPA required use prohibition
Posted Date: Thursday, April 10, 2014
A new bill proposed in the Louisiana Legislature significantly extends RESPA’s required use prohibition. The bill was introduced in the Louisiana Senate on March 10 and was referred to the Committee on Commerce, Consumer Protection and International Affairs. Many in the real estate, title and mortgage industries are concerned that the bill’s language is too broad and will have severe unintended consequences.
The text of the bill states that no contract to sell or purchase residential property in Louisiana can contain “any provision requiring the purchaser of such residential property, as a condition of such sale, to use a specific provider of settlement services.”
Critics say that the broad language of the bill exposes lenders, title agents and others to legal liability for many commonplace practices.
“The way the bill is written, it’s going to hurt so many people with the unintended consequences,” said Mike Anderson, president of Louisiana-based Essential Mortgage. “It’s totally unnecessary. There is already a prohibition against required use under RESPA, and the Consumer Financial Procedure Bureau (CFPB) is cracking down on RESPA violators.”
|
|
|
Proposed bill creates CFPB small business advisory board
Posted Date: Thursday, April 10, 2014
U.S. Representatives Robert Pittenger, R-N.C., and Denny Heck, D-Wash., introduced HR 4383 in the House on April 3. The bill, titled the “Bureau of Consumer Financial Protection Small Business Advisory Board Act,” will establish a small business advisory board to help advise the bureau.
HR 4383 mandates that the director of the Consumer Financial Protection Bureau (CFPB) will create a small business advisory board to provide feedback on the impact new regulations have on smaller companies and provide information on emerging practices that concern small businesses.
|
|
|
Fannie Mae forecasts economy growth in coming months
Posted Date: Thursday, April 24, 2014
In its April 2014 Economic Outlook, Fannie Mae’s Economic & Strategic Research Group said that the economy is expected to gain momentum in the second quarter. The group said that government spending and diminishing drag from a slowdown in inventory stockpiling contribute to the growth, as well as consumer and business capital spending, relief from fiscal policy concerns and improvements in the housing sector.
Even with improvement, however, the housing sector may not be moving as quickly as other segments of the economy.
|
|
|
CFPB receives award for Loan Estimate form
Posted Date: Thursday, April 24, 2014
For changing long, complicated forms that help people when they are shopping for home loans into shorter, more easily understood forms, the Consumer Financial Protection Bureau’s Loan Estimate Form was honored with the Center for Plain Language’s Grand ClearMark Award as the best example of clear, concise communication. The award was presented at the Center for Plain Language’s fifth annual national ClearMark Awards, April 22, at the National Press Club in Washington, D.C.
|
|
|
NBA record-holder to share journey from auto mechanic to All-Star
Posted Date: Thursday, April 24, 2014
At an age when most NBA All-Stars’ time in a garage is spent weighing what Lamborghini or Ferrari to add to their fleet, Mark Eaton was an auto mechanic talking to customers about whether they wanted regular or high-performance motor oil in their Fords and Chevys. However, the 7-foot-4-inch Eaton would go from a mechanic to a 12-year career with the Utah Jazz where he was named the NBA’s Two-Time Defensive Player of the Year and selected to play in the 1989 All-Star Game. Continue reading to see how Mark is bringing his lessons for personal and professional success to the 2014 National Settlement Services Summit (NS3) in June.
|
|
|
CFPB unveils eClosing initiative
Posted Date: Wednesday, April 23, 2014
The Consumer Financial Protection Bureau (CFPB) met with the public Wednesday to discuss the mortgage closing process. The agency announced that it will launch a new electronic closing (eClosing) pilot program in order to explore new avenues to make closings less complex for consumers.
“As part of our Know Before You Owe initiative, we are making a commitment to work with the various stakeholders to use technology in order to improve the mortgage closing experience for consumers,” CFPB Director Richard Cordray said in his opening comments. “We strongly believe that electronic closing solutions — known as eClosings — can lead to more knowledgeable consumers and a much better process for everyone involved.”
Developing a more streamlined and efficient closing process is the next phase in the CFPB’s Know Before You Owe initiative that began in May 2011, when the bureau released its initial RESPA/Truth in Lending Act integrated mortgage disclosure prototypes.
|
|
|
RESPA kickbacks: Know the law, be compliant
Posted Date: Monday, April 21, 2014
RESPA can be a tricky statute to understand. If you haven’t read the statute in a while, now may be a good time to take a look and refresh your memory. You may know that kickbacks are prohibited, but what exactly does that mean? An in-depth look at Section 8(a) could help you avoid violations in the future.
Section 2607(a) of RESPA, also known as RESPA Section 8(a), prohibits kickbacks in exchange for referrals.
Specifically, the section states: “No person shall give and no person shall accept any fee, kickback or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”
Congress believed that a referral fee paid from a settlement service provider would ultimately come out of the consumer’s pocket. So, the idea was that prohibiting kickbacks would save consumers money.
|
|
|
Attorney suspended for fraudulent cash disbursements
Posted Date: Monday, April 21, 2014
While serving as a settlement agent in a real estate transaction, a New Jersey attorney prepared and forwarded a HUD-1 Settlement Statement to the lender, knowing that the document contained false entries. He was suspended from practice for one year in New Jersey, and the New York Grievance Committee applied to the courts for reciprocal discipline.
Attorney William Gahwyler served as a settlement agent in a real estate transaction where he represented the buyer and seller and was supposedly helping to keep the seller’s property out of foreclosure.
|
|
|
New mortgage disclosure form instruction guide
Posted Date: Monday, April 21, 2014
Not sure how to navigate the new integrated mortgage disclosure forms? The Consumer Financial Protection Bureau (CFPB) released a new 95-page guide with instructions on how to complete the forms. This is meant as a companion to the small entity compliance guide that the CFPB released in March.
The guide provides an explanation of the general requirements in the RESPA-Truth in Lending Act integrated disclosure forms final rule.
|
|
|
Couple sues loan officer for aiding and abetting RESPA violation
Posted Date: Monday, April 21, 2014
A couple sued their loan officer when they were denied a home equity line of credit. They claimed that the bank violated a duty of care established under RESPA and that the loan officer aided and abetted the breach. The defendant argued that RESPA does not permit secondary liability for violations.
Michael and Jennifer Grady obtained a $1.3 million loan with Washington Mutual in July 2008 secured by a first position lien on their home. They also had a $500,000 home equity line of credit (HELOC) with CitiBank secured by a second position lien on their home.
Later that month, the plaintiffs approached defendant Jonathan Levin, as assistant vice president and loan officer for the Bank of Elmwood, seeking to restructure their debt by paying off their two existing loans with a new loan that could be secured by a first position lien on their property. They also wanted the bank to issue a new $500,000 HELOC and said they did not want the first loan unless they could also get the second.
|
|
|
HUD released March Housing Scorecard
Posted Date: Thursday, April 17, 2014
The Department of Housing and Urban Development and the Department of the Treasury released the March edition of the Housing Scorecard. The latest data show progress among key indicators. In February, foreclosure starts continued their downward trend and, in January, house prices remained stable. While there are positive trends in the housing market, administration officials caution that the economy is still recovering.
|
|
|
Mortgage broker steals escrow funds, sentenced to prison
Posted Date: Thursday, April 17, 2014
A California mortgage broker was sentenced to 21 months in prison for defrauding his clients of escrow funds. He was also ordered to pay $72,000 in restitution to the victims of his fraud scheme.
Steve Kessedjian, 51, of Los Angeles, was sentenced by U.S. District Judge Lawrence O’Neill to 21 months in prison for defrauding clients of escrow funds, U.S. Attorney Benjamin Wagner announced.
|
|
|
CFPB holds mortgage closing process forum
Posted Date: Monday, April 14, 2014
The Consumer Financial Protection Bureau notified the public in early January that it is considering making changes to the mortgage closing process. Now, the bureau is planning to hold a public forum to discuss the issue.
October Research, LLC will be attending the April 23rd forum in Washington, D.C. Come back to www.respanews.com for live coverage throughout the day.
The CFPB published a notice in the Federal Register on Jan. 3, requesting information from the public about the mortgage closing process. The bureau said it wanted to develop a more streamlined and efficient closing process and sought information on “key consumer pain points” associated with closings and how those pain points can be addressed by market innovations and new technology.
The agency said its request was part of the next phase in its Know Before You Owe initiative, a project that began in May 2011 when the agency posted the first two prototype Loan Estimate forms online.
The deadline for comments regarding the closing process was Feb. 7. The bureau received approximately 466 comments with a variety of suggestions on how the closing process can be improved.
|
|
|
Title firm sued for alleged inappropriate fees
Posted Date: Monday, April 14, 2014
A borrower filed a lawsuit against the title company who conducted the closing for her refinance loan, alleging that the company charged her inappropriate fees. The fees were paid by a lender credit, and the title agency argued that, because the plaintiff did not actually pay the fees, she did not have standing to sue. The plaintiff claimed that under Edwards v. First American Corp., she has standing under RESPA even if she did not have an actual injury. The court disagreed, and granted the defendants’ motion to dismiss.
Patricia Clements filed a lawsuit against LSI Title Agency Inc., attorney William Fair and the Law Offices of William Fair, alleging violations of state and federal law when the defendants assisted her in the refinancing of her mortgage.
|
|
|
Court reviews qualified written request requirements
Posted Date: Monday, April 14, 2014
After losing their home to foreclosure, a couple sued their loan servicer and the Federal National Mortgage Association (Fannie Mae), alleging the defendants violated RESPA Section 6 by failing to adequately respond to their qualified written requests (QWR). The defendants filed a motion to dismiss, arguing that the plaintiffs’ letter did not constitute a QWR. The court disagreed with the defendants, denying the motion as to the plaintiffs’ RESPA claims.
Ian and Mona Stewart granted a mortgage to Mortgage Electronic Registration Services Inc. (MERS) secured by their primary residence in June 2005.
The Stewarts sent a letter titled “qualified written request” to their loan servicer, Nationstar Mortgage LLC, in October 2011. The letter requested a loan modification and information on the securitization of their loan and the identity of the true owner of the loan.
|
|
|
General contractor pleads guilty in mortgage fraud scheme
Posted Date: Monday, April 14, 2014
Eric Brown of Philadelphia, Pa., pleaded guilty to 20 counts in connection with a mortgage fraud scheme involving KREW Settlement Services. Brown pleaded guilty to conspiracy, two counts of Federal Housing Administration loan fraud, 12 counts of loan fraud and three counts of tax evasion.
Between May 2004 and February 2009, Brown and his co-conspirators allegedly inflated purchase prices on loan documents for more than 100 Philadelphia properties, resulting in more than $20 million in fraudulent loan proceeds.
|
|
|
HUD-1 inaccuracies lead to mortgage fraud conviction
Posted Date: Thursday, April 10, 2014
After being convicted of mortgage fraud, Annette Trujillo argued that she should be acquitted because there was a lack of evidence. An appeals court relied on changes Trujillo made to a HUD-1 Settlement Statement and her failure to collect cash-to-close payments in order to find that the trial court did not err in denying her motion for acquittal.
Trujillo was convicted of bank and wire fraud in connection with two real estate closings she conducted in 2007 and was sentenced to 65 months in prison followed by three years of supervised release.
|
|
|
The winners of the RESPA News St. Patrick’s Day giveaway are …
Posted Date: Monday, April 7, 2014
October Research wishes to thank all of our e-mail update readers who registered to win great prizes in our special St. Patrick’s Day Give-Away.
And congratulations to our prize winners!
Six-month digital subscriptions to
RESPA News
Becky Bockoven
BB&T
Sharlene Shineldecker
Transnation Title
Registrations to attend the recent October Research, LLC webinar, Qualified Mortgage and the Ability to Repay: Solutions to Implementation Issues.
Maria Deandrade
Columbia Title
Caroline Staples
Sigma Financial
William Kahalley
Surety Land Title, Inc.
|
|
|
Mortgage fraud scheme lands broker in prison
Posted Date: Monday, April 7, 2014
Mortgage broker, Mark Bowe, Jr., was sentenced to 42 months in prison, followed by five years of supervised release after pleading guilty to conspiracy to commit bank and wire fraud. Bowe was also ordered to pay $604,551 in restitution.
The indictment alleged that between 2003 and 2008, Bowe was a licensed mortgage broker operating through mortgage companies located in Raleigh, N.C. Bowe allegedly participated with others, including developer David Johnson, developer Arthur Barnes, real estate broker Mark Tkac, and attorney James Taggart in a real estate flipping scheme that defrauded various banks and lenders.
|
|
|
Monthly Newsletter |
Cover Story:
|
|