http://www.respanews.com/ME2/Console/XmlSyndication/Display/RSS.asp?xsid=1F2480FE66374D4087543E2028BBEB27 RESPA News Headlines http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=BEDA5CC9F8114A478BEF9D58FE923307  — Department of Housing and Urban Development in HUD releases another round of final rule guidance, further clarifies existing FAQs Thu, 02 Sep 2010 00:00:00 EST BEDA5CC9F8114A478BEF9D58FE923307 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=A0AB29AF96964BA699E840B0E5CBA8BD eLynx, a portfolio company of American Capital, released its new eHUD service, a component of the Electronic Closing Network (eCN), that makes it easier for lenders and closing agents to comply with RESPA regulations governing Good Faith Estimates (GFE) and HUD-1 Settlement Statement forms. Recent changes to RESPA regulations limit the differences allowed between the fees disclosed on the GFE and the amounts collected from the borrower at the closing table. These controls require that lenders and settlement agents work closely to negotiate fees and limit differences on the HUD-1 while preparing mortgage documents. In the past, preparing the HUD-1 was a manual process that required numerous phone calls and faxes. eLynx’s new eHUD service provides a mechanism for lenders and settlement agents to collaborate electronically and in real-time. All parties can quickly and transparently negotiate the fees on a HUD-1 before reaching the closing table. The eHUD service also automatically compares the fees to the original GFE, identifying differences that exceed the allowable amount. This allows lenders and settlement agents to improve their RESPA compliance, the company stated. “Because we are already a trusted partner tasked with transferring information between lenders and settlement agents, we are in a unique position to offer a solution to this problem,” said Sharon Matthews , eLynx president and CEO. “Now lenders can avoid costly surprises and remain compliant easily, while at the same time settlement agents will have the information they need to present a professional image at the closing, earning them more business.” eCN has rapidly gained industry acceptance since it was released last year, with more than 1 million loans processed through the system and more than 100,000 settlement agents registered to use it. Based in Cincinnati , eLynx provides a network for electronic document collaboration and distribution services for the financial services industry. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 30 Aug 2010 00:00:00 EST A0AB29AF96964BA699E840B0E5CBA8BD http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=6F32045B393D455D9DD84247166A17D5 — from the Department of Housing and Urban Development’s interpretive rule Thu, 26 Aug 2010 00:00:00 EST 6F32045B393D455D9DD84247166A17D5 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=05F35C29633C443687F57827969FEC33 Public records and real estate visionary Carl R. Ernst , founder and former chief executive of Ernst Publishing Co., a company that will process more than 120 million transactions in 2010, died. He was 68. In this article: Carl Ernst Ernst Publishing Co. The Uniform Commercial Code Filing Guide The Real Estate Recording Guide Good Faith Estimate HUD-1 Settlement Statement “We are deeply saddened by the loss of our founder, our leader and mentor,” said Gregory Teal , president and chief executive of Albany, N.Y.-based Ernst Publishing. “It was his vision and understanding of the mortgage and real estate businesses that enabled our company to prosper over the past 20 years. We will miss his wisdom, leadership, experience and business insight.” Ernst relinquished day-to-day control of the company in 2008. In 1981, he joined the board of directors of InfoSearch, a public record industry pioneer, and became its general manager in 1984. The company would become the largest public record database provider and Uniform Commercial Code searching firm in the United States. Ernst gained a national reputation for his expertise on the subject. The Uniform Commercial Code has impacted commercial lending and real estate transactions since its inception in 1971. Ernst participated in the sale and valuation of the company to Prentice Hall before becoming president of InfoSearch in 1986. A year later, he took over Prentice Hall Online, a combination of InfoSearch, Statewide Information Systems and other public record databases. He then merged the databases, creating the first national database of public records. This database is still active today, owned and managed by Lexis/Nexis Corp. Between 1987 and 1992, Prentice Hall Online amassed millions of public records throughout the nation. This database became a critical application for credit reports, lending, regulatory and law enforcement investigations.  After leaving the company in 1992, he acquired the rights to “The Uniform Commercial Code Filing Guide” (UCC Guide) to which most law firms, financial institutions and public record search/file firms subscribe. In 1995, Ernst created “The Real Estate Recording Guide Inc.,” which details addresses, fees and local practices necessary to record deeds, mortgages and related documents in the 3,600 county recording offices in the U.S. In 1992, he officially formed Ernst Publishing Co. LLC as the parent company to both the UCC Guide Inc. and The Real Estate Recording Guide. Under Ernst’s leadership, Ernst Publishing became the first company in the United States to standardize national land recording office fees and related information for all jurisdictions across the country. Today, the company has more than 1,000 clients and will process more than 100 million transactions this year. Since the 1990s, Ernst was a passionate advocate of the electronic recording of real estate documents, with a goal of increasing accuracy and efficiency for lenders, title agents and county recorders. He has also been credited with defining the three levels of electronic recording that have emerged as the industry standard. In addition, Ernst was an early participant in efforts to establish nationwide data and interface standards for recording offices, including the first XML standard development in California. That effort was a precursor to the national standard-setting activities of the Public Records Industry Association, an organization he helped to create. He was an early proponent of migrating publishing to the Web. In 2006, the Ernst Web site was accessed as many as 100,000 times a week by financial institutions and title companies that wanted to obtain county recording information as well as recording fee and tax calculations. Ernst acquired the “National Release Guide,” a periodical that explains the law of each of the 50 states and Puerto Rico regarding release of mortgages and the reconveyance of deeds of trust. During his career, he continued to work toward the creation and establishment of Revised Article 9, testifying before Congress. He subsequently testified in countless hearings, appearing as an expert witness on public record applications and privacy issues. In addition to his role at Ernst Publishing, from 1992 to 1998, he was editor-in-chief of BRB Publications Inc., a publisher of local, state and federal agency information that helps professionals find and search public records. He was also a member of the board of directors for Merlin Information Services. When the new Good Faith Estimate and HUD-1 Settlement Statement forms took effect in January, Ernst talked to the media about the mortgage lending community having to either invest in research departments or hire an outside vendor, such as his company, to calculate accurate recording and transfer taxes. Ernst, an entrepreneur, certified public accountant, computer programmer, pilot and avid skier, attended Princeton University and graduated from Russell Sage College in 1967. Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 23 Aug 2010 00:00:00 EST 05F35C29633C443687F57827969FEC33 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=AC8510AAB121483781150C222DC65C11 — from Gunter, et al., v. Chase Bank USA, N.A. Thu, 19 Aug 2010 00:00:00 EST AC8510AAB121483781150C222DC65C11 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=6652DBAFAE4B4228BFF87B96E8E6DE4E Recent cases of corporate identity theft and cyber fraud have put title agents on the alert concerning the safety of their overall business as well as their escrow accounts. Agents are scrambling to put more effective controls in place to build a stronger bulwark around their companies. What can agents do to ensure the safety of both their identity and their accounts against internal and external threats? On Sept. 16, October Research Corp. will host a Webinar to outline what agents can do to put in place protocols to prevent internal escrow fraud as well as cyber fraud. Information about the Webinar, “Combating Internal Fraud: People, Processes and Technology Firewalls,” can be found at www.octoberstore.com . The Webinar will feature RynohLive President Dick Reass, Agents National Title Insurance Co. CFO Brent Scheer and RynohLive COO Rafael Toledo Jr . and will be moderated by The Title Report editor Jennifer Kovacs . Toledo, who has more than 25 years of experience in criminal investigations, both as a police officer and a private legal investigator, will share some dire warnings for title agents about new fraud schemes he is seeing in the marketplace. “A national bank called us recently and had a unique situation,” Toledo recalled. “They loaned some money to a borrower whose identity had been stolen. But here was the interesting piece: The title agent and policy they received were also fraudulent. The identity of the agent had been stolen.” Toledo recounted that the fraudsters had gone online to a state licensing site and changed the address of the tile company and the registered agent under that company’s name. Once they did that, it appeared that they were operating a legitimate title company using a legitimate underwriter. “They opened a checking account using the agent’s stolen identity and then processed a loan like they were a title agent for a borrower who had great credit — whose identity was stolen as well. When the money was sent by the bank to the title agent to close, they stole the money and sent the bank a fraudulent closing protection letter and policy. The bank didn’t find out until 30 or 60 days later when there was no payment,” Toledo said. According to Reass, there are many things agents can and should be doing to protect their accounts. “It’s a combination of account management, what you need to do to work effectively with your bank to protect your company, and what you can do to put up better firewalls against cyber fraud,” he said. During the Webinar, Reass and Toledo will cover a wide range of topics including the necessity of three-way reconciliation and daily reconciliation; the importance of choosing the right software, procedures and bank; the need for the entire staff to be thoroughly grounded in what are truly “good funds;” and other basic internal processes that can prevent agents from becoming a target for internal or external threats.   Combating Internal Fraud: People, Processes and Technology Firewalls will air Thursday, Sept. 16, 2010, at 2 p.m. ET. To register or to order a recording of the Webinar, visit www.octoberstore.com or call (877) 662-8623, ext. 7221 for more information. About October Research Corporation Founded in 1999, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . Located in Richfield , Ohio , the company also has the October Seminars division, which produces educational audio seminars, Webinars, videos and live events. CONTACT: Syndie Eardly, Seminars Director                         October Research Corporation                         Phone: (330) 659-6101, ext. 6619                         E-mail: seardly@octoberresearch.com                         Web site: www.octoberresearch.com Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 19 Aug 2010 00:00:00 EST 6652DBAFAE4B4228BFF87B96E8E6DE4E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=B19530B5E1E04C609B9B40496B7A636C After the demise of captive reinsurance and the shutting down of hundreds of illegal affiliated business arrangements, it was only a matter of time before the regulators started looking at marketing and workshare agreements. HUD’s June 25 interpretive rule regarding home warranty company compensation arrangements with real estate agents is the latest salvo in an ongoing query into marketing agreements that is motivating nervous agency owners to look at their agreements with a more critical eye. What exactly did HUD say in the June 25 interpretive rule that has now muddied the waters about HUD’s intentions around marketing agreements? On Sept. 1, October Research Corp. will host a Webinar to outline what HUD had to say in its interpretive rule and what elements of the rule could leave current marketing agreements in a precarious position. The speakers will also address the outright assault on the way home warranty companies and real estate agents currently work together to deliver this important product to market. Information about the Webinar can be found at www.octoberstore.com . The Webinar discussion will include K&L Gates partner Phil Schulman and National Association of Realtors’ Director of Real Estate Services Ken Trepeta and will be moderated by RESPA News editor Kelly McCarel . The one-hour Webinar will feature an in-depth analysis of the rule, plus a look at the seven most troubling issues that have emerged from the interpretive rule. “Read narrowly, the interpretive rule states the obvious — namely, that a settlement service provider cannot pay a fee for the referral of a settlement service,” Schulman said. “The imprecision, however, with which HUD crafted this interpretation leaves us questioning what the department is really trying to say.” Trepeta agreed that the rule leaves many unanswered questions and has forced settlement services providers to re-evaluate the agreements they currently have in place. One of the concerns, Trepeta noted, is around what HUD didn’t say. “One of the concerns we have heard from a number of real estate agents is that the interpretive rule doesn’t mention the flat fee agreements between home warranty companies and real estate agents,” Trepeta said. “It creates a lot of uncertainty around how this rule might apply to those agreements as well.” During the Webinar, Schulman and Trepeta will address: What is an interpretive rule and what weight does it carry; An overview of HUD’s June 25 interpretive rule; What new elements the rule introduces; Analysis of the “gray” areas and industry concerns; and Actions listeners should take to review current marketing agreements. HUD’s Interpretive Rule and the Future of Marketing Agreements will air Wednesday, Sept. 1, 2010, at 2 p.m. ET. To register or to order a recording of the Webinar, visit www.octoberstore.com or call (877) 662-8623, ext. 7221 for more information. About October Research Corporation Founded in 1999, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . Located in Richfield , Ohio , the company also has the October Seminars division, which produces educational audio seminars, Webinars, videos and live events. CONTACT: Syndie Eardly , Seminars Director                         October Research Corporation                         Phone: (330) 659-6101, ext. 6619                         E-mail: seardly@octoberresearch.com                         Web site: www.octoberresearch.com Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 16 Aug 2010 00:00:00 EST B19530B5E1E04C609B9B40496B7A636C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=2057FBEA7E0E4A8A952E00B5DFF208B3 October Research Corporation announced Aug. 17 that it has created a new page on RESPAnews.com to provide the mortgage, real estate and settlement services industries with relevant updates, analytical features, research tools, special reports and breaking-news stories regarding the new Dodd-Frank Wall Street Reform and Consumer Protection Act. In June 2009, when the U.S. Treasury first proposed creating a new government consumer protection agency that would oversee RESPA and other consumer protection statutes, RESPA News immediately began rolling out a wave of coverage on what turned into a massive, more than 2,000-page bill to reform the nation’s financial regulatory structure. On July 21, this sweeping legislation became law, and predictions swiftly surfaced from trade associations and members of the legal community that it will result in thousands of pages of new regulations, along with numerous reports and studies. RESPA News is expanding its coverage to include any news related to the Dodd-Frank Act. “We understand that RESPA is an integral piece to this behemoth bill, and while we will continue to provide the important RESPA news of the day as we have for the past seven years, we know this bill will affect our readership on a larger scale. That is why we are expanding our coverage to include a Dodd-Frank resource and news site for our readers,” said Mark Kuhar , October Research Corporation’s director of editorial services. While the existing Dodd-Frank Act information on RESPAnews.com  comprises an already comprehensive resource, the site is being expanded to provide the industry with the information it needs to stay abreast of the creation of the new Consumer Financial Protection Bureau, its rulemakings and the taking over of existing consumer financial protection statutes. It will include news pieces and updates on the agencies named in the Act and their directives under it and it will also provide news reports regarding how the various portions of the Act affect the different industries it reaches. Coverage will also include mortgage reform and other news impacting the financial services sector. “The potential impact of this law on the various markets we reach is enormous,” said October Research Corporation COO Chris Casa . “Because of this, we will create comprehensive information portals for each of our market publications. RESPA News will feature a comprehensive Dodd-Frank Act resource that will provide our customers with a wealth of knowledge and a means to follow the important updates of the regulatory reform measures coming out of this new law.” For more information and to view the Dodd-Frank news resource, go the RESPAnews.com homepage.   About October Research Corporation Founded in 1999, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . Located in Richfield , Ohio , the company also has the October Seminars division, which produces educational audio seminars, Webinars, videos and live events. CONTACT: Mark Kuhar, Director of Editorial Services                         October Research Corporation                         Phone: 330-659-6101, ext. 6500                         Email:  mkuhar@octoberresearch.com                         Web site: www.octoberresearch.com Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 16 Aug 2010 00:00:00 EST 2057FBEA7E0E4A8A952E00B5DFF208B3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=FA24FBE4C6AA403FA95F5AF8350BEC05 — from the Department of Veterans Affairs Circular 26-10-9 , July 30, 2010 Thu, 12 Aug 2010 00:00:00 EST FA24FBE4C6AA403FA95F5AF8350BEC05 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8E51B2AC2F684A7DADCF6B4F04839A2E — from Statement of Policy 1996-2 , Department of Housing and Urban Development Thu, 05 Aug 2010 00:00:00 EST 8E51B2AC2F684A7DADCF6B4F04839A2E http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=EC6A355AEFC34D3EAFC447784BCD3F2F — from the Department of Housing and Urban Development's RESPA final rule FAQs Wed, 28 Jul 2010 00:00:00 EST EC6A355AEFC34D3EAFC447784BCD3F2F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=E7B19144B2714EE8802504CB01571101 October Research Corp. announced the launch of an online video initiative designed to inform and educate visitors within its suite of industry Web sites. Each of the company’s media products, The Title Report, The Legal Description, Valuation Review and RESPA News , will soon feature video interviews with industry experts, innovators and thought leaders in the settlement services industry. “We are pleased to expand into video in order to enhance the market presence of our media products and better meet the information needs of our readers, subscribers and advertisers,” said company COO Chris Casa . “Online video offers immediate access to cutting edge information and opinions, with a deeper level of engagement. We believe our video initiative will deliver an enriched relationship with our audience.” The Title Report , the leading publication for the title insurance industry, will be the first to offer an industry video-cast, which will feature October Research Corp. Editor Kelly McCarel interviewing well-known RESPA legal authority Phil Schulman of Washington, D.C.-based K&L Gates. The video will launch Aug. 2, and will be sponsored by LPS SoftPro. “LPS SoftPro is excited to be the founding sponsor of this video series and proudly supports October Research’s efforts to provide informative and educational content to the industry,” said Tim Conley , vice president of sales and marketing at LPS SoftPro. “We anticipate this new delivery medium to be very well received.” October Research Corp. is the nation’s leading provider of market intelligence, news and regulatory information in the title insurance, property appraisal, mortgage and real estate industries. The company is based in Richfield , Ohio . Visit www.octoberresearch.com for more information. Contact: Chris Casa, COO, at (330) 659-6101, ext. 6715. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 23 Jul 2010 00:00:00 EST E7B19144B2714EE8802504CB01571101 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=08A799497BE9479489640E6492B59B2F — from the RESPA final rule, issued Nov. 17, 2008 Thu, 22 Jul 2010 00:00:00 EST 08A799497BE9479489640E6492B59B2F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=CB00C2688DB04BC3B8419072C4BF2F54 — from the RESPA statute Fri, 16 Jul 2010 00:00:00 EST CB00C2688DB04BC3B8419072C4BF2F54 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=217B47509BAD4682A531BD1C5DBCDA08 — from the RESPA statute, under "Timely Payments (§ 3500.179(k))" Thu, 08 Jul 2010 00:00:00 EST 217B47509BAD4682A531BD1C5DBCDA08 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=63E7C1E0610A4596ABC4B62AB9AD3EB9 More than 300 real estate settlement services professionals traveled to Cleveland June 14-16 to attend the 6th annual National Settlement Services Summit and 4th annual National Compliance Summit. The events — held at the Key Center Marriott Hotel — featured 15 powerful educational sessions, more than 40 speakers and over 30 sponsors. “We are extremely pleased with the attendance at this year’s conference, as well as the unique balance of underwriters and title agents,” said Barb Casa , publisher and CEO of October Research Corp., producer of the conferences. “We played host to title agents, company presidents, appraisers, technology providers and attorneys from 38 states.” October Research is publisher of The Title Report, The Legal Description, RESPA News and Valuation Review . During this year’s event, the company announced the establishment of the Joe Casa Awards for Leadership, Innovation and Philanthropy, named after its late founder. The first awards will be presented at next year’s conference. Highlights of the conference included keynote addresses by Joe Murin , chairman of Washington, D.C.-based The Collingwood Group LLC and former head of Ginnie Mae, and Phil Schulman , nationally recognized RESPA attorney and a partner at Washington, D.C.-based K&L Gates. Murin spoke about liquidity in the market, prospects for economic recovery and the role of settlement services providers in the changing landscape. “This time around, things will be very different,” he said. “That means each and every one of us who wants to truly be in the business of supporting the mortgage industry is going to have to be serious about the way in which we conduct business. We need to understand that transparency will hold us all accountable for the integrity of our work, the quality of our products and the efficiencies of our process. Without that commitment and dedication, I might suggest to you another line of work,” he said. On the second day of the conference — The National Compliance Summit — Schulman spoke about the shifting focus in Washington from laissez-faire governing of the real estate and settlement services industry to one of risk management. He gave several examples, pointing out how current efforts in Washington , such as RESPA reform, proposed TILA reform and the Consumer Financial Protection Agency will affect the settlement services industry. For more coverage of the conference sessions, visit www.thetitlereport.com , www.thelegaldescription.com , www.respanews.com or www.valuationreview.com . October Research Corporation is the nation’s leading provider of market information, business news and regulatory information for professionals in the real estate settlement services industry. For more information, contact Chris Casa , COO, at (330) 659-6101, ext. 6715, or chriscasa@octoberresearch.com . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 08 Jul 2010 00:00:00 EST 63E7C1E0610A4596ABC4B62AB9AD3EB9 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=528931F5587C4B52BA8D01546435DB67 — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions Thu, 01 Jul 2010 00:00:00 EST 528931F5587C4B52BA8D01546435DB67 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=D0758C7EF5844D53A53F29008E36CFF3 — from the Department of Housing and Urban Development’s final rule frequently asked questions Fri, 25 Jun 2010 00:00:00 EST D0758C7EF5844D53A53F29008E36CFF3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=CA481A2426394D828E3E12373E1ED016 — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions Fri, 11 Jun 2010 00:00:00 EST CA481A2426394D828E3E12373E1ED016 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=2160D9159B89407F872A26E369737914 — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions guide Fri, 04 Jun 2010 00:00:00 EST 2160D9159B89407F872A26E369737914 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=DA1F9FB6B0764E8A95609FCB527D86E2 — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions Fri, 28 May 2010 00:00:00 EST DA1F9FB6B0764E8A95609FCB527D86E2 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=EC40D6B42F654F39BB256F0F3A39D76C A California federal court judge allowed a plaintiff to proceed with one of four claims brought by a homeowner against several defendants, who allegedly violated RESPA and had no authority to foreclose on the plaintiff’s property. The case is Harriet Davidson v. Countrywide Home Loans Inc., BAC Home Loans Servicing LP, Mortgage Electronic Registration System Inc., Landsafe Title Corp., ReconTrust Co., N.A. as Trustee, and Does 1-5 (No. 09-CV-2694-IEG (JMA)) . According to court records, on or about Feb. 13, 2007, the plaintiff Harriet Davidson entered into two promissory notes in the total amount of $528,650, secured by property located in San Diego , Calif. Two deeds of trust were recorded on Feb. 21, 2007. Defendant Countrywide Home Loans Inc. is the original lender under the notes and the current beneficiary of record. Defendant BAC Home Loans Servicing LP is purportedly the current servicer. Defendant Mortgage Electronic Registration System, Inc. (MERS) is named as the beneficiary under the trust deeds as nominee for Countrywide. Defendant ReconTrust Co. is named as the trustee of the trust deeds. Defendant LandSafe Title Corp. is purportedly the “attorney in fact” for ReconTrust. On May 8, 2009, LandSafe published and recorded a notice of default and election to sell against the property. The trustee sale was scheduled for Dec. 2, 2009. Davidson said that on Oct. 9, 2009, she submitted a qualified written request (QWR) to BAC, requesting copies of the loan documents. BAC allegedly has not responded to this request. Davidson further alleged that on the same day, her counsel submitted a demand letter to BAC pursuant to California Civil Code § 2943, but again, BAC allegedly has not responded. The basis for Davidson’s claims is that the notes are unsecured as a result of being “bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the trust deeds.” She contended that the defendants have no interest in the trust deeds or the property and have no authority to foreclose. On Dec. 2, 2009, Davidson filed a complaint in the U.S. District Court, Southern District of California, which asserted four causes of action including: a violation of RESPA, 12 U.S.C. § 2605, for failure to respond to the QWRs, a violation of California Civil Code § 2943, quiet title and declaratory relief. In addition to damages and attorney’s fees and costs, she sought a determination of title in favor of herself and an order releasing the trust deeds and stopping the trustee sale. On Dec. 23, 2009, the defendants filed a motion to dismiss the complaint for failure to state a claim, seeking dismissal of all four causes of action. Valid RESPA claim The court denied the defendants’ motion to dismiss Davidson’s RESPA claim. Pursuant to RESPA, a borrower may send a QWR to the loan servicer of a federally related mortgage loan requesting information relating to the servicing of such loan. A QWR is defined as: a written correspondence, other than notice on a payment coupon or other payment medium supplied by the servicer, that includes, or otherwise enables the servicer to identify, the name and account of the borrower; and includes a statement of the reasons for the belief of the borrower, to the extent applicable, that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower. The defendants argued that Davidson’s allegations were insufficient because she did not attach the alleged QWR to the complaint, nor did she allege facts showing that the QWR met the statutory requirements. Because of this, the defendants argued that the court could not consider the two documents without converting their motion to a motion for summary judgment. Davidson attached a copy of the QWR to her opposition. She also attached a letter from BAC in response to the QWR, dated Jan. 11, 2010. Chief Judge Irma E. Gonzalez disagreed with the defendants. She said that since the authenticity of the QWR is not in dispute the court may properly consider it in deciding the motion to dismiss. However, Gonzalez noted in her March 16 opinion that the Jan. 11 letter cannot be considered by the court because it is not referenced in Davidson’s complaint. While the defendants agreed that the letter qualifies under RESPA § 2605(e) (1)(B), they argued that is was sent to them in an untimely manner. “This argument fails. Defendants contend that plaintiff was required to send the QWR within one year of the loan dates, citing to 24 C.F.R. § 3500.21(e) (2)(ii), which states: ‘A written request does not constitute a qualified written request if it is delivered to a servicer more than one year after … the date of transfer of servicing [or other circumstances not applicable here].’ Defendants interpret the regulation to mean that when the loan servicing has never been transferred, a borrower can only make a QWR to the loan servicer within the first year after entering into a loan. This interpretation is unsupported by the language of the statute,” Gonzalez said. The defendants also argued that the BAC had 60 days after the receipt of Davidson’s QWR to respond, but that the 60 days could not have elapsed by the time she filed the complaint on Dec. 2, 2009. Davidson, however, contended that BAC was required to respond within 20 days. Gonzalez said that both parties are correct. “The parties are referring to two different statutory requirements: the loan servicer must provide a written response acknowledging receipt of the QWR within 20 days, and the loan servicer must take certain action within 60 days after receipt of the QWR. Failure to comply with either provision is a violation of the statute,” she said. However, she noted that the defendants incorrectly state that Davidson filed the complaint on Nov. 23, 2009. Regarding the other three claims, the court granted the defendants their motion to dismiss Davidson’s claim for violation of California Civil Code § 2943(b) (1). It also ruled that Davidson’s quiet title claim was not supported by any factual allegations or the law. The court also dismissed the declaratory relief claim. Court opinion Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 25 May 2010 00:00:00 EST EC40D6B42F654F39BB256F0F3A39D76C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=52BC31140E1141F9A9C30A9B94F7CCF2 OpenClose Mortgage Software, a West Palm Beach, Fla.-based developer of Web-based, end-to-end mortgage lender software, announced May 24 it developed document publishing functionality and added it to its loan origination software, LenderAssist. The company said the new document delivery system greatly improves disclosure tracking and compliance practices. The new tool allows LenderAssist users to publish disclosure documents, including the 1003, the new Good Faith Estimate and the Truth in Lending form in a traceable, secure and compliant method. “Document publishing solves problems of form traceability and accountability,” the company said in a statement. “Traditionally, mortgage documents are either hand-delivered or sent through the mail but there’s no way of knowing if they’ve been read, signed or returned. E-mailing documents is considered less secure as e-mail accounts are more open to theft and/or tampering.” According to OpenClose, the new function sends the borrower a unique hyperlink via e-mail to a secure encrypted site. From there, the borrower acknowledges acceptance of the electronic documents. The borrower inputs a security code and the last four digits of his Social Security number and then views and/or downloads the documents electronically. The system sends automatic reminders to the originator (or designated employee) for seven days if the borrower has not accepted the electronic view. Jason Regalbuto , president of OpenClose, said the procedure adheres to the new RESPA rules. “With RESPA, a lender has at the most 72 hours to provide disclosures and many of our customers want those disclosures to go out immediately,” Regalbuto said. “So our top concern is making sure lenders who use our new document publishing remain compliant.” Regalbuto added that as with any new feature in OpenClose, the company made the new functionality easy and convenient for both the originator and borrower so that people will want to use it. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 25 May 2010 00:00:00 EST 52BC31140E1141F9A9C30A9B94F7CCF2 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=5CAADB2E606C4B6D8CA42F9D8BE0CC8B The title insurance industry continues to keep a careful watch on the dramatic changes that are being considered on Capitol Hill, knowing that anything that affects the lending industry is likely to have a residual affect on title agents. K&L Gates Attorney Phil Schulman will be joined by Gary Cunningham , principal of The Collingwood Group, Washington, D.C., and former HUD deputy assistant secretary for Regulatory Affairs and Manufactured Housing at HUD, and Don Partington , executive vice president, Legal and Strategic Affairs at Fidelity National Financial to take your questions about new and proposed laws and regulations at the National Compliance Summit in Cleveland on June 15 and 16. The June 16 session, Open Forum on Regulatory Realities, will follow Schulman’s opening keynote address, which will focus on the changes to RESPA, the proposed changes to the Truth in Lending Act (TILA), the Home Valuation Code of Conduct and the Federal Housing Administration. “Congress, the regulators and the American public are interested in risk management and putting in place laws and regulations to limit losses and to make sure that people are dotting I’s and crossing T’s, whether that is on Wall Street or in the banks or lender shops,” Schulman said. Schulman said these are times when companies need to be paying attention to what the regulators are asking for and make sure they have a high level of quality control in place in their processes. During the open forum discussion, Partington will be addressing the impact of the TILA rules and the proposed CFPA as well as the tremendous regulatory and legislative activity at the state level. “Agents need to pay attention to the new regulations being proposed concerning how rates are determined for title insurance,” Partington said. “The NAIC is looking to put the expenses for title agents into the computation and Washington State is leading the way in this effort.” This year, the National Settlement Services Summit and the National Compliance Summit have been combined for a two-day extravaganza of information, education and networking at the Marriot at Key Center , Cleveland ’s state-of-the-art conference facility. The combined Summits are expected to attract nearly 400 industry professionals from across the country. More than 35 companies have signed on as sponsors for the 2010 National Settlement Services Summit and National Compliance Summit. Several sponsorships are still available. For more information, contact Glen Stout at gstout@octoberresearch.com or (330) 659-6101, ext. 6556. For more information about the Summits, visit:   www.octoberseminars.com/ns3. About October Research Corporation Founded in 1999 and located in Richfield, Ohio, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . The company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events. CONTACT: Syndie Eardly , Seminars Director                         October Research Corporation                         Phone: 330-659-6101 Ext. 6619                         Email: seardly@octoberresearch.com                         Web site: www.octoberresearch.com   Fri, 21 May 2010 00:00:00 EST 5CAADB2E606C4B6D8CA42F9D8BE0CC8B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=D08880F45D7F4384BBAE20F248272C17 — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions Fri, 21 May 2010 00:00:00 EST D08880F45D7F4384BBAE20F248272C17 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=FB122DA2114B4FEEB4F0AD54FACB5D8F The American Bankers Association (ABA) released a RESPA final rule compliance guide for its membership with the objective of creating a comprehensive and standard approach for implementing the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms within the industry. Since the Department of Housing and Urban Development (HUD) issued its RESPA final rule in November 2008, the industry has been hit with a vast amount of written and oral guidance. Rod Alba , vice president and senior regulatory counsel for the ABA , said the industry needed an all-encompassing resource that included the rule’s requirements and HUD’s accompanying guidance. Utilizing outside legal counsel, bank compliance and regulatory experts, the ABA said it composed the guide in a way that makes sense to the mortgage industry. “It’s an easy tool for the compliance professional,” Alba told RESPA News . “Rather than engaging in HUD’s FAQs and long questions and answers that may or may not hit the specific item that you’re looking for, we took the most basic approach.” The 82-page guide, titled, “ABAWorks on RESPA – A Guide to Understanding the New Mortgage Disclosures,” is currently offered to ABA members exclusively, but the association may open it to others in the future. “We are going to look outside the ABA membership to start expanding and reaching out to other stakeholders in this process, so that everyone can have input and we can truly begin to create an industry standard,” Alba said. “ ABA is currently looking at making this resource available to non-members and is considering the right formula by which to do that.” The guide is divided into three parts: a review of the amendments to Regulation X; instructions for filling out the new GFE; and instructions for filling out the new HUD-1. Alba noted the guide incorporates the final rule language, the preamble to the rule, HUD’s frequently asked questions and other HUD guidance in a unique way. “We use the actual picture of a block or of a line from the forms and after the picture, we put the instructions of how the elements fit into it and what the different guidance and instructions are, as well as other offerings from HUD regarding that particular block or line,” he said. The guide was released in April, and Alba said it will be updated as needed to include the latest guidance. Additional information will also be added at a later date regarding the HUD-1/A and average cost pricing. “This is being released with the absolute pledge that we are going to be updating it a lot,” he said. While the ABA promises to stay abreast of the latest guidance from HUD, sources close to RESPA News have indicated that HUD is not going to issue any more updates to its final rule frequently asked questions guide. When asked about this, Alba confirmed this but said there is more to the story. “My sources at HUD said that they are going to take a rest from the FAQs not because there aren’t more questions to answer but because there are too many that went out,” he revealed. “They want to let the dust settle and allow the industry to digest everything that’s been done, and at some point in the future, come out with more.” Alba led the project team tasked with developing the guide. Banking professionals that contributed to it included Gary Dubrow , senior vice president, deputy general counsel of Acacia Federal Savings Bank in Falls Church, Va., Brenda Hughes , senior vice president, real estate administrator of First Federal in Twin Falls, Idaho, Jennifer Norton , assistant vice president and mortgage operations manager of Renasant Bank in Birmingham Ala. and John Topczewski , vice president and compliance officer of Johnson Financial Group in Racine, Wis. Compliance consultants on the project included Howard Lax , partner with Lipson, Neilson, Cole, Seltzer & Garin PC in Bloomfield Hills, Mich., Jed Mayk , shareholder of Stevens & Lee in Philadelphia, Jack Konyk , executive director, government affairs of Weiner, Brodsky, Sidman Kider PC in Washington, D.C., Ralph Wutscher , principal with Kahrl Wutscher LLP in Chicago, Rich Andreano , partner with Patton Boggs LLP in Washington, D.C., David Dickinson , president of Bankers Compliance Consulting in Central City, Neb., Timothy Meredith , partner with Hudson Cook LLP in Hanover, Md. and Penny Paplanus , managing director of Cognitive Options Group LLC in Greensboro, N.C. ABA members can download a copy of the guide at www.aba.com . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 21 May 2010 00:00:00 EST FB122DA2114B4FEEB4F0AD54FACB5D8F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=FC65E6ADD7AC43F1B0E38AFA18E4C027 — from the Department of Housing and Urban Development’s RESPA final rule frequently asked questions Thu, 13 May 2010 00:00:00 EST FC65E6ADD7AC43F1B0E38AFA18E4C027 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=57ECDB6C8304498B8D614D357C86CF91 TSS Software Corp., a software provider for the real estate and settlement services industries, introduced a new version of its title and settlement system, TitleExpress. This version includes several enhanced HUD-1 Settlement Statement form features, including improved itemizations to comply with the recent circular issued by the Department of Veterans Affairs (VA) in response to the new RESPA rule, which became effective Jan. 1. Released on Jan. 7, the VA circular provided guidance on fees and charges a veteran may pay when obtaining a VA-guaranteed loan. The circular also announced new documentation requirements for lenders and the elimination of a previously required disclosure statement. The TitleExpress 2010 HUD-1 features quick processing of Page 3 using simple data entry on Page 2. The latest release enhances that functionality by providing additional itemizations and flexible formatting options. According to the circular, all VA loan applications taken on or after May 1, 2010, must have either an itemization of the fees in the “Our Origination Charge” line listed in empty 800 lines on the HUD-1 or listed on a separate itemization page. TSS said its new TitleExpress version adds the functionality to insert the itemizations into additional lines in the 800 section. In addition, it provides a separate page for itemization of fees. To see the circular, go here . According to TSS, the new version also provides options for the display of text, such as payee names and descriptions, that are required in certain state jurisdictions. “This new release incorporates not only important feedback from our customers, but changes that have been clarified by HUD in the last quarter. Our development team has done a fantastic job with this new release,” said Barbara Miller , president and chief operating officer of TSS. TitleExpress version 6.13.9 is now available to current TSS Support Customers in the Online Support Center at www.iwantTSS.com . Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 13 May 2010 00:00:00 EST 57ECDB6C8304498B8D614D357C86CF91 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=852C2AA3BEEB4A9692FA0FE0AC256D33 The new RESPA rule has changed title agent-client relationships in ways that have closed down some marketing channels for agents, while opening a host of others. In a “Strategic Marketing under RESPA” Webinar on May 20, industry experts will share six strategies for redefining marketing objectives to expand relationships with existing clients, while attracting new clients through a variety of channels.   Sponsored by October Research Corp.’s Seminars Division, “Strategic Marketing under RESPA” will air on Thursday, May 20, from 2-3:30 p.m. To register, visit www.octoberstore.com . The Webinar will feature Anne M. Wenninger Gehring , vice president compliance manager of retail lending for Marshall & Ilsley Bank; Michele Cope , escrow manager for Colorado Escrow & Title; Todd Ewing , founder and president for Federal Title & Escrow Co.; Loretta Salzano , founding partner of Franzén & Salzano; and Susan Simpson , operations director for Passport Title Services. The new RESPA rule has forced lenders and title agents to retool every facet of their procedures from the first request for a title search, to the finalization of the loan package back to the lender’s desk. Real estate agents underestimating the impact the rule would have on them, largely avoided training opportunities but are now seeking insight from their title insurance providers. Agents who are prepared, flexible and willing to take on an educational role in their local market will discover a significant marketing advantage. “Agents should be reaching out to clients and potential clients before they even get a deal,” advised Salzano. “The idea is to use this is as a marketing opportunity. This is not about just talking to them on a per-loan basis, but about establishing a relationship with your partner so they know they can rely on you.” The panelists will outline six strategies that will cover such topics as information delivery, educational outreach, building trust, consumer outreach, third-party provider lists and fee guarantees. “There are a lot of pitfalls to be aware of, especially if the title companies are using fee calculators,” Simpson warned. “In certain jurisdictions, whether it is state-by-state or sometimes even county-by-county, there are subtle nuances in calculations of transfer and recording taxes that dramatically affect the zero-tolerance issues for that lender.” Gehring agreed and noted that the tolerance issues demand a higher level of communication between title agents and lenders. “The flow of information is critical as early as possible,” Gehring said. “But we’ve had situations where the numbers haven’t been accurate. There are a lot of different ways to get to the right answer, and if not done correctly, it could create tolerance issues for us.” During the May 20 Webinar, the panelists will address: Strategy #1: Fee Quotes/Guarantees: What internal resources you need to re-evaluate how fee quotations are prepared. How to build a technology platform to provide client access to fee information. What you need to know about RESPA compliance issues surrounding fee guarantees. Strategy #2: Educational Outreach: The importance of assessing educational opportunities in your client base. How to build viable educational products for clients. How to use one-on-one meetings to add value to your services. Strategy #3: Information Delivery: How to tune into the needs of your clients to deliver timely information. Strategies for optimizing critical communication processes. What internal processes need to be revamped to assure clients are getting information in the form that is most helpful to them.   Strategy #4: Maximizing Opportunities: The parameters of the third-party provider lists under RESPA. Which methods will be most successful in ensuring your place on provider lists. How you can inspire your clients to educate consumers about the lists. Strategy #5: Building Trust: How to ferret out problems within the loan instructions. Methods to optimize client communication over problematic instructions. The best way to address potential violations within the instructions. Strategy #6: Consumer Pathways: Identifying opportunities to reach out to consumers. How to maximize your marketing opportunities at the closing table. Finding new pathways to build a viable direct-to-consumer channel. To register or for more information about the October Seminar’s “Strategic Marketing under RESPA” Webinar, go to www.octoberstore.com. October Seminars is a division of October Research Corp. About October Research Corporation Founded in 1999 and located in Richfield, Ohio, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . The company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events. CONTACT: Syndie Eardly , Seminars Director                         October Research Corporation                         Phone: 330-659-6101 Ext. 6619                         Email: seardly@octoberresearch.com                         Web site: www.octoberresearch.com Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 11 May 2010 00:00:00 EST 852C2AA3BEEB4A9692FA0FE0AC256D33 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=438AFB37E00A4C89935ACB308989520F A California federal court judge dismissed a portion of a RESPA claim and allowed part of it to proceed, ruling that the yield spread premium (YSP) payments paid to the mortgage broker by the lender may be in violation of RESPA if the payments were unreasonably high in relation to the goods and services performed by the broker or if the goods or services were not performed for the YSP payment. The judge dismissed the plaintiff’s claims that the broker and lender violated RESPA and the Truth in Lending Act (TILA) by failing to disclose the YSP on the plaintiff’s two loans. The case is Robert Bassett, et al., v. Michael Ruggles, et al., (No. CV-F-09-528 OWW/SMS) . The plaintiff, Robert Bassett , filed a lawsuit against Michael Ruggles , an alleged real estate agent in California , and several other parties involved in an alleged scheme over a mortgage loan transaction for property Bassett purchased in December 2006 in Fresno , Calif. According to Bassett, Infinity Group Services, a licensed mortgage broker, and Flagstar Bank concocted a scheme by which Infinity established itself as a lender for his mortgage transaction, even though Flagstar was actually the lender and Infinity was the mortgage broker. Under this purported scheme, Flagstar controlled all aspects of the loan approval and development process, established the terms and conditions of the loan, created the loan documents and provided the loan funding to Infinity in advance of the loan closing. Bassett alleged that on or after the loan closing, Infinity transferred the loan to Flagstar. Because of the scheme, Bassett claimed that Infinity marketed itself to consumers claiming it would obtain mortgages for a flat fee of less than $1,000. Bassett further claimed that neither Infinity nor Flagstar disclosed at any time that Flagstar would “secretly pay a kickback” to Infinity of several thousand dollars when Infinity “tricked” him into signing a loan document for an above-par loan. According to Bassett, he initially contacted Infinity for help in securing financing for the property. Infinity and Kahram Zamani , an alleged licensed mortgage broker with Infinity and the broker of record for the transaction, agreed to serve him in a fiduciary capacity as real estate brokers. Bassett discussed a loan with Ruggles, an authorized representative of both Infinity and Zamani. Ruggles prepared the loan application for Bassett on or about Nov. 29, 2006. Ruggles also provided a Good Faith Estimate (GFE). According to court records, Infinity was identified on the GFE as the loan broker. Bassett claimed that at the time of the GFE, Ruggles indicated that Infinity would not be paid any additional compensation by the lender. Within seven days of issuing the GFE, Bassett said that Flagstar, the identified lender, assumed total control over the loans and allegedly provided Infinity with underwriting findings. Ruggles allegedly told Bassett that the loans he had obtained for him would be financed at a fixed rate of approximately 4 percent, and that the total monthly payments due on the loans would be approximately $2,100. Contrary to this, the actual loans were in the amount of $388,000 and $97,000, respectively, with the larger as a negative amortization adjustable rate loan with an initial interest rate of 7.125 percent. The initial monthly payment amount was $1,333.75, and the loan contained a prepayment penalty provision of 36 months. The smaller loan was a fixed rate loan with an interest rate of 8.75 percent and a monthly payment of $753.10. According to Bassett, Flagstar prepared the promissory note with Infinity identified as the lender. However, after Bassett executed the note and it was notarized, outside of Bassett’s presence, Flagstar allegedly added ‘Pay to the order of Flagstar Bank, FSB without recourse’ to the note. Flagstar then had Infinity President and CEO Zamani sign the conveyance. Bassett said he did not receive a copy of the note with this conveyance language. Bassett alleged that prior to the close of the loan, Flagstar agreed to pay Infinity the following YSPs: $8,163.52 as a premium on the loan in the amount of $388,000 and $970 as a premium on the loan in the amount of $97,000. These payments were not disclosed to Bassett, and according to his complaint, Flagstar knew that Infinity had no intention of disclosing them. Flagstar and Infinity allegedly agreed to have the yield spread premium paid outside of the escrow so that Bassett would not discover it. Basset, suspecting a YSP payment was made, had his lawyer request that Flagstar provide the appropriate documentation. Flagstar responded, indicating that it would not offer the requested documents without a court order. Bassett then filed suit in the Fresno County Superior Court on Jan. 26, 2009. The case was removed to the U.S. District Court, Eastern District of California on March 19, 2009. In his complaint, Bassett alleged fraud against Ruggles and Flagstar; breach of fiduciary duty against Ruggles; conspiracy to breach fiduciary duties against Ruggles and Flagstar; violation of RESPA against Ruggles and Flagstar; violation of TILA against Ruggles and Flagstar; professional negligence against Ruggles; and unfair business practices against Ruggles and Flagstar. Ruggles and Flagstar filed a motion to dismiss Bassett’s second amended complaint (SAC), and Flagstar moved for a motion to strike portions of it. Both Infinity and Zamani have filed for bankruptcy. RESPA claim unsettled There are two parts to Bassett’s RESPA claims. First, Bassett claimed that the defendants violated RESPA by not disclosing the YSP payments. Second, Bassett claimed that Infinity received an illegal YSP payment for referring Bassett’s mortgage loan to Flagstar and the amounts paid to Infinity did not represent payment for services actually performed, nor were the amounts related to the value of goods or services received by Bassett. “The premium paid by Flagstar to [Infinity] was payment to [Infinity] solely for the fact that [Infinity] tricked the Bassetts into signing loan documents for loans with higher interest rates than what the Bassetts qualified for and for including a prepayment penalty on one of the loans. No aspect of the premium payment represented any service rendered to the Bassetts,” the complaint stated. “In doing the things alleged herein, the defendants caused the Bassetts to incur excessive costs and fees, to pay unearned fees and to be parties to a transaction that included illegal kickbacks and/or referral fees.” On April 15, District Judge Oliver W. Wanger dismissed with prejudice a portion of Bassett’s RESPA Section 8 claims, ruling that no private right of action exists under the statute for failing to deliver required disclosures. However, Wanger allowed the second part of the claim to proceed, noting that under Section 8, a YSP could violate RESPA if it is either unreasonably high in relation to the services actually performed or if the services were not performed in relation to the fee. According to Wanger, this claim could not be resolved at this stage of the proceedings. The defendants moved to dismiss to the extent that Bassett alleged that Flagstar violated RESPA by making YSP payments, which did not represent payment for services actually performed and were not reasonably related to the value of goods or services received by the Bassetts. According to the defendants, Bassett’s allegation is conclusory, self-serving and belied by other allegations in the SAC. In addition, the defendants contended that the allegation that “no actual goods or services were rendered for the premium payment,” is not the legal standard for a violation of RESPA. The question is whether the “yield spread premium is unreasonably high in relation to the goods and services provided by the mortgage broker.” Wanger said the court could not resolve this claim at this time. “The motions to dismiss the action are denied on this ground; whether the alleged yield spread premium was unreasonably high in relation to the goods and services performed by the mortgage broker or whether goods or services were in fact rendered for the alleged yield spread premium are alleged and present factual questions to be resolved at summary judgment or trial,” Wagner said. Regarding the TILA claim, Wagner dismissed it, finding that the failure to disclose a YSP on the Truth in Lending form is not a violation of TILA and Bassett has not alleged facts sufficient to show that Flagstar can be held liable under TILA as either a creditor or assignee of the mortgages. Regarding the state law claims of fraud, breach of fiduciary duty, professional negligence and unfair business practices, Wagner ruled that the Home Owners’ Loan Act preempted these claims related to the non-disclosure of the YSP. Finally, Wagner denied the defendants’ motion to strike portions of the complaint, noting that the facts are disputed. Court opinion Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 11 May 2010 00:00:00 EST 438AFB37E00A4C89935ACB308989520F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=262BD61BBE4044968CD9CB443F6B292C A California federal judge granted a defendant lender's motion to dismiss four of five claims brought against it by a plaintiff borrower who filed suit after his property went into foreclosure. Two of the five claims were brought under RESPA and one survived the motion to dismiss. The case is Modesto Ortega v. Wells Fargo Bank; Primary Financial Services LLC; First American Loanstar Trustee Services; and Does 1-20 (No. 09 CV 1531 JM (NLS)) . In April 2007, the plaintiff, Modesto Ortega , purchased a home in Calipatria , Calif. , with financing obtained from Wells Fargo Bank. Ortega, who does not speak English, negotiated the loan in Spanish with Claudia Suarez-Narvaez , a Wells Fargo employee. According to Ortega, all of the loan documents were in English. At some point, Ortega stopped making payments on the mortgage, and the property went into foreclosure and was sold at a trustee’s sale. Ortega filed a lawsuit in the U.S. District Court, Southern District of California for federal and state law claims arising out the transaction. In response to Wells Fargo’s motion to dismiss, Ortega filed a first amended complaint (FAC). He alleged five claims: Intentional misrepresentation; Violation of RESPA, 12 U.S.C. § 2605 and 24 C.F.R. § 3500; Violation of the Truth in Lending Act (TILA), 15 U.S.C. § 1601-1666j and 12 C.F.R. § 226; Violation of RESPA, 12 U.S.C. § 2601 et seq.; and Violation of California Civil Code Section 1632. Wells Fargo once again moved to dismiss the complaint. Ortega filed an opposition and a motion for leave to file a second amended complaint. In its reply, Wells Fargo urged the court to deny Ortega’s motion. What the court decided In an opinion issued Feb. 23, District Judge Jeffrey T. Miller dismissed the intentional misrepresentation claim, denied Wells Fargo’s motion to dismiss the RESPA, 12 U.S.C. § 2605, qualified written request (QWR) claim and granted Wells Fargo’s motion to dismiss the RESPA, 12 U.S.C. § 2601 et seq., TILA and California Civil Code claims. Regarding the intentional misrepresentation claim, Ortega said that during the loan application process, Wells Fargo, through its agent Suarez-Narvaez, submitted the application based upon stated income instead of Ortega’s actual income. In addition, Ortega noted that Suarez-Narvaez submitted the loan unsigned by the plaintiff. “Ortega’s complaint fails to meet the particularity standards imposed by Rule 9,” Miller said. “Although Ortega attributes false statements to a particular person, Suarez-Narvaez, the details of the false statements are still missing. The complaint still fails to allege what was said, how those statements were false and how they damaged Ortega. In addition, Ortega fails to allege that anyone made false statements to him. Therefore, Ortega’s claim for intentional misrepresentation is insufficiently pled.” Ortega’s first RESPA claim alleged that Wells Fargo violated 12 U.S.C. § 2605(e), which requires that a loan servicer respond to a borrower’s QWR by acknowledging receipt within 20 days and responding to the request within 60 days. According to Ortega, he sent a QWR to Wells Fargo through his counsel on May 20, 2009, seeking information about his loan, including amounts owed, trustees, note holders and payment history. Court documents indicated that Wells Fargo responded to this request on June 26, 2009, but did not fully provide the requested information. “Ortega has sufficiently pled a claim for violation of Section 2605(e),” Miller said. “Contrary to Wells Fargo’s assertion, Ortega need not attach a copy of the QWR to his complaint in order to put Wells Fargo on notice of the claim against it. In addition, Section 2506(e) specifically allows an agent of the borrower to submit a QWR on behalf of the borrower, therefore it was appropriate for Ortega’s counsel to send the QWR.” Ortega’s second RESPA claim against Wells Fargo is for its alleged violation of 12 U.S.C. §§ 2601-2617. According to Ortega, Wells Fargo failed to provide required disclosures during the settlement of his loan, including an initial and final Good Faith Estimate, a notice of assignment, sale, or transfer of servicing rights, and an escrow account disclosure. Miller granted Wells Fargo’s motion to dismiss these claims, noting that a private right of action is not available, and even if it was, the plaintiff’s claims fall outside RESPA’s one-year statute of limitations. Miller also granted Wells Fargo’s motion to dismiss the TILA claim (without leave to amend) based on TILA’s one-year statute of limitations. According to Miller, Ortega did not state any facts suggesting that equitable tolling would apply to this claim. Regarding Ortega’s claim that Wells Fargo allegedly violated California Civil Code § 1632(b) by not negotiating the loan to him in Spanish, Miller said Ortega failed to allege that Wells Fargo either acted as the real estate broker or had a principal-agent relationship with the broker who negotiated the loan. Miller said Ortega therefore cannot bring this claim against Wells Fargo. He granted the motion to dismiss for the claim. The court also denied Ortega’s motion for leave to amend his complaint insofar as he intended to file the already proposed second amended complaint. Miller said the proposed complaint did not address the deficiencies of the first amended complaint, but because amendment of Ortega’s claims is not necessarily futile, the court would allow him to submit a new second amended complaint. Court opinion Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 11 May 2010 00:00:00 EST 262BD61BBE4044968CD9CB443F6B292C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=AD9D195AF60D4B62B49DEE3F977E4AA1 — from the Department of Housing and Urban Development's RESPA final rule FAQs Fri, 07 May 2010 00:00:00 EST AD9D195AF60D4B62B49DEE3F977E4AA1 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F09F0870F85B4C71802CA4465A0E10D7 As lenders and originators continue to struggle with the challenge of RESPA’s new “changed circumstances” caveat to the Good Faith Estimate (GFE), RESPA experts are advising that originators have a thorough grounding in how to do the analysis on whether an incident is indeed a changed circumstance under the Department of Housing and Urban Development’s (HUD) definition. During a May 18 “Changed Circumstances” Webinar, produced by October Seminars, RESPA attorneys will walk listeners through what that analysis should encompass, and provide tips on how to navigate the complicated challenges between lenders and third-party originators. The Webinar, “Changed Circumstances: Understanding the New GFE Rules” will air Tuesday, May 18 from 2-3 p.m., and will feature Stevens & Lee attorneys Paul Schieber and Jed Mayk . To register for the Webinar, go to www.octoberstore.com . “Despite how expansively they wrote the new regulation, HUD’s view when it comes to the origination charge — the instances where that amount can increase — is much narrower as far as what is a changed circumstance,” Mayk said. “That has been a big issue out there.” Changed circumstances continues to confound many in the lending industry, and some experts fear this part of the RESPA final rule will result in legal trouble for those who do not handle them in a manner compliant with RESPA. The final rule states that lenders are bound by the fees disclosed in the GFE, except in the case of a changed circumstance, which allows fees to be changed and the GFE to be reissued. But what exactly qualifies as a changed circumstance? On May 18, Schieber and Mayk will provide expert training on changed circumstances, explaining HUD’s new rule, looking at the relevant analysis available on incidents surrounding changed circumstances, and providing tips on how to compliantly address changed circumstances when they do arise, both in the early stages of loan origination as well as at the closing table. The relationship between mortgage brokers and lenders, and how it has changed because of the new RESPA rule; The binding effect and timing requirements of the GFE and what mortgage brokers and lenders have to do to be in the three-day window from the time the application is received; Different trends between lenders and mortgage brokers in terms of issuing the GFE, including who is controlling the forms content; and How the Mortgage Disclosure Improvement Act impacts the new requirements under RESPA. Schieber said he will also review the issues surrounding provider lists during the one-hour Webinar, and the challenges lenders face in deciding whose providers list they can rely on. “I f you are a lender are you going to have the broker provide the services providers list or are you going to give the broker a required list of service providers that they have to give to the consumer with the GFE?” Schieber asked. “There are implications to either decision that must be considered.” To register or for more information about the October Seminar’s “Changed Circumstances” Webinar, go to www.octoberstore.com . October Seminars is a division of October Research Corp.   About October Research Corporation Founded in 1999 and located in Richfield, Ohio, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . The company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events.   CONTACT: Syndie Eardly , Seminars Director                         October Research Corporation                         Phone: 330-659-6101, ext. 6619                         E-mail: seardly@octoberresearch.com                         Web site: www.octoberresearch.com   Fri, 30 Apr 2010 00:00:00 EST F09F0870F85B4C71802CA4465A0E10D7 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=037672338DBE48FB87F503C93DC8A65A — from the RESPA final rule Thu, 29 Apr 2010 00:00:00 EST 037672338DBE48FB87F503C93DC8A65A http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=2748187F93CA4745AE439E87E69796DD The Work Number, a service of Atlanta-based Equifax and a source for employment and income verifications for the mortgage industry, conducted a survey of its mortgage and banking customers on the impact of the new RESPA regulations on their loan origination volume and process. On April 26, the company issued the results of the survey, which reached 3,000 of its customers in efforts to determine how lenders, brokers and borrowers are reacting to the new changes that took effect Jan. 1. Based on the information collected, only 56 percent of respondents have adapted to the new RESPA changes and have completely implemented the technology necessary to comply with the regulations, according to The Work Number. The new RESPA rule requires lenders and brokers to provide customers with a standard Good Faith Estimate (GFE) that clearly discloses all loan terms and closing costs. Closing agents are then required to provide borrowers with the new HUD-1 Settlement Statement form that compares consumers’ final costs with the originally quoted costs. The final price for several services, including the credit report, must be within 10 percent of the quoted price or lenders may face penalties. The results also showed that approximately 72 percent of respondents stated that borrowers are confused about the multiple sets of documents they receive for disclosure and 79 percent said it now takes longer to take an application and disclose terms to the borrower. One participant said his financial services firm is experiencing some negative impacts of the new RESPA rule. “The first is absorbing the cost when we are unable to recoup additional fees from incorrect GFE fee quotes. Any disclosure change mandates a waiting period of three-business days before closing. Re-disclosure not only impacts the lender but more so the borrowers on purchases. Usually disclosure errors are found at or just before closing, thus postponing the borrower from taking possession of their new home,” the participant said. Regarding the impact on lenders’ volume of applications, the results indicated that 74 percent of respondents are not seeing any backlog of applications to be processed as a result of the new regulations. According to The Working Number, many lenders are taking fewer applications, but that is due to economic factors (interest rate and unemployment) rather than any RESPA impact. Another survey participant said, “RESPA is forcing us to implement new compliance policies, while a down turn in volume (outside of RESPA), allows us to manage the changes without impacting application volume. Currently, our main concern is the impact on profitability due to incorrect fee quotes and re-disclosure impact on the borrower.” The Work Number also asked questions about any downstream effects of RESPA on verification of the borrower’s application information in underwriting. Lenders stated that the volume of requests for borrower verification of employment and income has not changed for 57 percent of respondents, but 37 percent are seeing more requests for verified borrower information. The timing of these requests has not changed for 66 percent of respondents, but 23 percent are performing employment and income verification sooner in the loan process to rapidly mitigate any risk posed by RESPA, which allows for only a credit report at application. Approximately 66 percent of respondents are requesting the tax verification 4506-T, verification of income and verification of employment just prior to underwriting. “In the current environment of ever-changing regulatory requirements, it is crucial that lenders have a reliable third party source to provide verified information when implementing technology solutions to meet the government requirements,” said Janet Ford , senior vice president of The Work Number. “It is our mission to work with our customers to ensure our solutions meet their internal requirements, enable them to remain in compliance with new guidelines and regulations and help them manage risk.” Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 27 Apr 2010 00:00:00 EST 2748187F93CA4745AE439E87E69796DD http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=871B748CD899483D9298E1199552D8DF — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions  guide Thu, 22 Apr 2010 00:00:00 EST 871B748CD899483D9298E1199552D8DF http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=21CFA277F3364025BDA476C4E8E893ED On April 19, Hawaii became the newest state to adopt legislation that prohibits the owner of REO property to require the use of a certain title insurer or escrow agent as a condition of the sale. The bill, SB 2910 , was introduced by Sen. Brian Taniguchi , D- District 10 (including Manoa, Mo’ili’ili, McCully and Makiki). The new law states that “in connection with a judicial foreclosure or foreclosure by power of sale of residential property improved by four or fewer dwelling units, no foreclosing mortgagee or mortgagee who acquires the property through a foreclosure proceeding shall require, directly or indirectly, as a condition of selling the property, that the buyer purchase an owner’s title insurance policy covering the property or escrow service in connection with the sale of the property from a particular title insurer or escrow depository.” The bill does not prohibit a buyer from agreeing to accept the services of a title insurer or an escrow depository recommended by the foreclosing mortgagee, if written notice of the right to make an independent selection of those services is first provided to the buyer by the foreclosing mortgagee. A mortgagee who violates the new law will be liable to a buyer in an amount equal to three times all charges incurred in the purchase of the title insurance or escrow service. However, a transaction subject to the law will not be invalidated solely because of the failure of any person to comply with any provisions of the bill. The law will go into effect on July 1. Comments or questions? Contact Andrea Golby: agolby@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 20 Apr 2010 00:00:00 EST 21CFA277F3364025BDA476C4E8E893ED http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=5BF52D6D5BB249F287D390A36DC963EA — from the RESPA statute Thu, 15 Apr 2010 00:00:00 EST 5BF52D6D5BB249F287D390A36DC963EA http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=C82643FDCC6847D8BEF770385760E7A4 — Vicki Bott, deputy assistant secretary, Single Family Housing, Department of Housing and Urban Development, statement from HUD’s video Webcast, “RESPA 2010 Implementation Consistency” on March 18, 2010 Fri, 09 Apr 2010 00:00:00 EST C82643FDCC6847D8BEF770385760E7A4 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=0DA9F14F0DB6416D8F804AEFC198C8DB In the past three months, the Department of Housing and Urban Development (HUD) has made itself visible to the industry in efforts to aid in the implementation of the RESPA final rule. Consistent with its promise to get questions answered and provide guidance, HUD representatives have been out at trade association events and featured on training Webinars and Webcasts. In addition, HUD continues to update its guidance materials, which are presented as frequently asked questions on HUD’s RESPA homepage. While these efforts have paid off for some members of the lending and title communities, HUD said it is still seeing inconsistencies and problems with the way the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms are being implemented.   To address these issues, HUD conducted a video Webcast on March 18, titled, “RESPA 2010 Implementation Consistency.” During the presentation, Vicki Bott , deputy assistant secretary of Single Family Housing at HUD, said, among other things, that for the past few months the industry has been unclear on whether it is permissible for loan originators to use worksheets prior to issuing a GFE. Bott said HUD is allowing this practice, but cautions against certain restrictions.   In an hour-and-a-half long program designed as a follow up to HUD’s December Webinar that educated the industry on how to implement the new GFE and HUD-1 forms, Bott said while the industry is two-and-a-half months into implementation and doing a “great job,” there are some inconsistencies that must be addressed and some sections of the forms with which the industry continues to struggle.   “We really want to highlight the known implementation inconsistencies and provide guidance to the industry to correct those and move toward a consistent implementation of the GFE and HUD-1,” she said.   The contents of the Webcast mirrored discussions that took place on Feb. 18 in a meeting at HUD between HUD’s RESPA team and the nation’s major lenders.   They include:   Inconsistencies in the implementation of blocks 1, 4 and 5 on Page 2 of the GFE; Inconsistencies with different investor or lender requirements of third-party originators; and Inconsistencies in moving the fees from the GFE to the HUD-1 at closing. HUD also addressed the use of worksheets, prequalifications and preapprovals, loan officer compensation, administration and processing fees, originator compensation in the HUD-1, itemization of fees and credits, transfer taxes and how HUD has defined its 120-day restrained enforcement period.   Worksheet parameters   According to Bott, HUD is allowing loan originators to use worksheets in certain situations in which a consumer wants information, but isn’t ready to shop for a loan. However, she warned that if a consumer asks for a GFE and discloses the information the originator needs to complete a GFE, then a GFE must be issued.   “The customer has the decision, of ‘do I want to provide the information and get a GFE or would I rather have the generic worksheet because I’m not quite sure if I should purchase a refinance in today’s rate environment,’” Bott said.   HUD has identified two different types of worksheets some loan originators are issuing to consumers. One is a quote rate worksheet, which consumers who might not be ready to shop for a loan would use to determine if the rate was right for them. Loan originators have used this worksheet in the past few months to include general fees associated with the rate to help the consumer understand some of its costs. Bott said this particular type of worksheet is acceptable.   However, she warned that if this type of worksheet is used, it should not look like a GFE, it will most likely contain less information than a GFE, and the loan originator should make it very clear to the consumer that it’s not a GFE.   “We have seen worksheets that are called ‘Good Faith Estimates of Closing Costs.’ This could confuse the customer and definitely leave the customer to believe it’s a GFE and potentially have all the accountability around the fees that the GFE would provide. A worksheet should never be used in lieu of a GFE,” she said.   Also, if a consumer has provided elements to the loan originator that are required by the lender’s policy to generate a GFE, then the GFE, not a worksheet, must be issued.   “You can’t provide a worksheet, let the customer believe their fees are bound and then deliver the GFE at a different time during the loan process,” she said.   In addition to the worksheet not resembling the GFE, Bott advised against using the consumers “intent to move forward” as a basis for whether a worksheet or GFE is given.   “A consumer should not have to show intent to move forward to receive a GFE,” she said. “At the point the loan originator is collecting information, the determination of whether to give the generic worksheet or the GFE should not be based on the consumer’s intent to move forward with that particular originator. What it should be based on is, ‘has the originator received the information that they’ve defined to be a RESPA application that requires them then to provide the GFE to the consumer?’” she noted.   The second type of worksheet HUD is seeing being used in the industry is a comprehensive worksheet given to the consumer in conjunction with the GFE that further explains fees associated with the consumer’s transaction, such as cash-to-close and seller credits. Bott said this is acceptable by HUD as well, but warns that what the loan originator discloses in the worksheet should match the terms disclosed in the GFE.   “In other words, if you’ve quoted title in your GFE as $1,000, you shouldn’t bring it over to your worksheet that you’re using in conjunction to show cash-to-close as $500. You’re padding the GFE and you’re really telling the customer, ‘I don’t think it’s going to cost that much.’ You’ve got to keep those aligned to not confuse the customer,” Bott said.   According to Bott, a worksheet is not acceptable to use during a prequalification or preapproval process for a consumer wishing to refinance.   “Why? Because by virtue of the fact that it’s a refinance, if you have all the other elements [except the property address], the property address still exists,” Bott said. “You know [the property] is there. The customer has provided the needed information. You need to provide the GFE. As long as they’ve met all other elements that that lender requires and property address is the only one that isn’t there, you would not be able to provide a worksheet on a refinance.”   Specifics on restrained enforcement   On Nov. 13, 2009, HUD announced that for the first four months of 2010, the staff of the Mortgagee Review Board (MRB) will exercise restraint in enforcing new regulatory requirements under RESPA. The MRB instructed its staff to exercise restraint in considering actions against FHA-approved lenders who have demonstrated that they are making a good faith effort to comply with the RESPA final rule.   HUD has reiterated in speaking engagements and to the press on what this means, but no formal guidance has been issued on this.   “We wanted lenders to implement and implement with ease, without worrying about potential enforcement that could be worrisome to them as they’re trying to get RESPA right,” she said.   Bott reminded the industry that HUD’s restrained enforcement regarding the new RESPA rule covers only a lender or broker and only if they’ve implemented the new RESPA forms in good faith.   “The new forms must be used. They must be used as long as it’s a Jan. 1, 2010, forward RESPA transaction. Lenders should also be abiding by the intent of RESPA. Fee categories should be used. Tolerances should be managed too. The restrained enforcement was for those inconsistencies where we knew lenders may not know where a particular fee went and some errors may have been made,” she noted.   Bott added that during the restrained enforcement period, HUD still expects that the consumer will reap the benefits of the new GFE and HUD-1 forms. She also indicated that HUD provided for this reprieve not only for loan originators and lenders, but also for HUD, in order to give its RESPA team time to understand the inconsistencies in the industry and help it through the challenges.   According to Bott, in HUD’s next round of FAQs, which she says will be released “very shortly,” HUD will address worksheets as well as provide more guidance on its 120-day restrained enforcement period.   In part two of this series, RESPA News will cover HUD’s most recent guidance on clearing up inconsistencies in preapprovals, filling out block 1 on Page 2 of the GFE (loan originator compensation and disclosing the yield spread premium), administration and processing fees, and float to lock. Stay tuned!   Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Fri, 26 Mar 2010 00:00:00 EST 0DA9F14F0DB6416D8F804AEFC198C8DB http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=64D269F81A4342DFBC1BF09C7C07FD9D — from the RESPA final rule Thu, 25 Mar 2010 00:00:00 EST 64D269F81A4342DFBC1BF09C7C07FD9D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8F628166F4334157B4658B7D880BEAF9 An April 14 training Webinar hosted by October Research Corp. will walk managers through the critical process changes that must take place in light of a recent case of first impression regarding notary oversight practices. In addition, the National Notary Association’s (NNA) new Model Notary Act and efforts by the National Conference of Commissioners on Uniform State Laws (NCCUSL) to adopt a revised version of the Uniform Law on Notarial Acts (ULONA) have also shone the spotlight on the pressing need for companies who manage notaries to update their practices, and will be reviewed during the Webinar. Presenting during the one-hour training Webinar on April 14 from 2-3 p.m. ET, will be Chuck Faerber , NNA vice president of notary affairs; Bill Anderson , NNA vice president of best practices and e-notarization; and David A. Shean, CSEO/CEI/CNSA, of Escrow Essentials and First Class Signing Services. To register for the “Notary Liability: Assessing oversight risk after the Vancura decision” Webinar, visit www.octoberstore.com , or call (877) 662-8623, ext. 7221 for additional information. During the Webinar, Anderson will address an Illinois appellate court’s decision in the recent case of Vancura v. Katris , which set a precedent for expanding notary employer liability, affirming the finding of employer direct liability for negligent training and supervision. “This is the first time the legal theory of an employer’s liability or responsibility to train and supervise an employee has been applied to notaries,” Anderson said. “It is going to have a far reaching impact. Right now it is somewhat limited to Illinois in that you have two appellate court decisions based upon it in Illinois . But because it is an appellate court decision, any court can pick it up and use it as a basis for an opinion. This is something that is going to be critical for employers as they consider their exposure to liability going forward.” Changes to state law are also imminent, according to Faerber, and the employers will need to understand new legal parameters for managing their notaries in order to retool their oversight processes. “The model notary act is barely out the door and we have had tremendous response from the states,” Faerber said. “This is something that is going to have an impact on the laws of many states over the next decade and I think notaries from across the country need to be aware of the provisions they are likely to see in new state laws that will be coming along in the next couple of years.” Faerber will also address the proposed provisions in ULONA, which is slated to be presented to NCCUSL at its annual meeting in August. Shean, who is the AEA & CEA closing practices committee chair of the American Escrow Association, emphasized the importance of employers being proactive in understanding the new demands that Vancura and updates to state law will place on them as they assess their risk exposure. “The bottom line is that education promotes a better product and better service to our customers,” Shean said. “And the education we are talking about here is critically important. If we don’t do the job correctly, we are going to be affected; we are going to be in court and that’s not where we want to be.” To register for “Notary Liability: Assessing oversight risk after the Vancura decision” or to order a CD of the program, go to www.octoberstore.com or call (877) 662-8623, ext. 7221 for more information. About October Research Corporation Founded in 1999, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . Located in Richfield , Ohio , the company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events. CONTACT:    Syndie Eardly , Seminars Director                         October Research Corporation                         Phone: 330-659-6101 Ext. 6619                         Email: seardly@octoberresearch.com                         Web site: www.octoberresearch.com Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 22 Mar 2010 00:00:00 EST 8F628166F4334157B4658B7D880BEAF9 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=FCB77FE7CEEC448EBEE528FBC85B6788 A Louisiana federal judge dismissed a class action complaint against Wells Fargo Bank N.A., ruling that the plaintiffs’ claims are barred by the doctrine of res judicata because their RESPA excessive fee claims were already ruled on in their bankruptcy cases. The case is Irby Fitch , Brittany Fitch, Dorothy Stewart, et al. v. Wells Fargo Bank N.A. f/k/a Wells Fargo Home Mortgage Inc. (Nos. 08-1639, 09-3466) . Plaintiffs Irby Fitch, Brittany Fitch and Dorothy Stewart filed a class action lawsuit in the U.S. District Court, Eastern District of Louisiana, against Wells Fargo on April 14, 2008, claiming violations of RESPA, 12 U.S.C. §§ 2601, et seq., and various state laws. The Fitches and Stewart alleged that Wells Fargo improperly assessed and collected broker price opinion (BPO) fees in excess of the actual costs and that Wells Fargo’s collection and handling of the fees caused them to incur late charges, delinquencies or default. On Aug. 18, 2009, the court consolidated the complaint with a similar putative class action filed by Troy Lynn Morrison ( Troy Lynn Morrison v. Wells Fargo Bank N.A., Civ. A. No. 09-3466 ). Wells Fargo’s motion for summary judgment concerns plaintiffs’ Chapter 13 consumer bankruptcy cases currently pending in the U.S. Bankruptcy Court for the Eastern District of Louisiana ( In re Stewart, Bankr.No. 07-11113 ; and In re Fitch, Bankr.No. 07-11319 ). Wells Fargo contends that the plaintiffs have already litigated their BPO claims in bankruptcy court and are precluded from doing so again in this court. Stewart bankruptcy Stewart filed for Chapter 13 bankruptcy protection on June 12, 2007. As the servicer of Stewart’s home mortgage, Wells Fargo filed several proofs of claim asserting rights to amounts allegedly owed by Stewart under her mortgage agreement. Of particular relevance to this case is a claim asserting a right to $1,013 in “other amounts for inspection fees, appraisal fees, NSF check charges and other charges.” Stewart objected to this claim on Aug. 23, 2007, following litigation and orders requiring Wells Fargo to account for pre-petition fees and costs and to disclose post-petition accrued charges and fees. The bankruptcy court issued a decision on April 10, 2008. The decision found that Wells Fargo charged BPO fees in violation of the terms of Stewart’s mortgage and RESPA. A BPO is a method for determining the value of a mortgaged property. The bankruptcy court assessed damages and sanctions in the amount of $27,350 and ordered Wells Fargo to file an amended proof of claim. On April 18, 2008, Wells Fargo appealed the bankruptcy court’s decision to the district court. One of the issues on appeal was whether Wells Fargo violated Stewart’s mortgage or otherwise acted improperly by assessing and collecting certain fees, costs and charges, including BPO fees. On Aug. 7, 2009, Judge Helen Berrigan affirmed the bankruptcy court’s decision. Wells Fargo then appealed Berrigan’s decision to the 5th U.S. Circuit Court of Appeals on Sept. 4, 2009. The appeal is currently pending. Wells Fargo filed amended proofs of claim on April 28 and June 27, 2008, that include two authorized BPO fees in the amount of $50 each. It does not appear that Stewart has objected to these proofs of claim. Fitch bankruptcy The Fitches’ bankruptcy follows a similar pattern of events and outcomes, however, Wells Fargo’s amended proofs of claim filed on May 2 and 6, 2008, do not include any BPO fees, according to the court. The Fitches filed for Chapter 13 bankruptcy protection in July 2007. As the servicer of their home mortgage, Wells Fargo filed proofs of claim asserting rights to amounts allegedly owed by the Fitches under their mortgage agreement. On Sept. 5, 2007, the Fitches objected to a claim, which asserted a right to $380 in “other amounts for inspection fees, appraisal fees, NSF check charges, and other charges.” The Fitches also submitted to Wells Fargo a qualified written request under RESPA seeking information about their loan balance. On Oct. 12, 2007, the bankruptcy court disallowed Wells Fargo’s claims for appraisal and property inspection fees, including BPO fees, because Wells Fargo allegedly did not respond with sufficient proof of those amounts. On April 18, 2008, after further litigation, the bankruptcy court assessed $3,500 in damages under RESPA and ordered Wells Fargo to file an amended proof of claim. Wells Fargo then appealed the bankruptcy court’s decision to the district court. Two of the issues on appeal are whether the bankruptcy court erred in finding Wells Fargo liable under RESPA and disallowing certain BPO fees. Wells Fargo’s appeal was ultimately consolidated with its appeal in the Stewart litigation and rejected by Berrigan. Like it did in the Stewart case, Wells Fargo appealed the Fitch case to the 5th Circuit. Court decision The doctrine of res judicata bars the litigation of claims that have already been litigated or should have been raised in an earlier suit. Wells Fargo asserted that the plaintiffs’ claims are barred by this doctrine because their claims were already ruled on in their bankruptcy cases. District Judge Sarah S. Vance agreed and on Feb. 1, 2010, granted Wells Fargo’s motion to dismiss the case. Vance noted that a bankruptcy judgment will bar a subsequent suit when: The parties are identical in the two actions; The prior judgment was rendered by a court of competent jurisdiction The prior judgment was final and on the merits; and The same claim or cause of action was involved in both cases. “There is no dispute that the parties in this action and the Stewart and Fitch bankruptcies are identical,” Vance said. “The parties dispute the other three prongs of the res judicata analysis. ” Regarding the point that prior judgment was rendered by a court of competent jurisdiction, Vance found that the bankruptcy court had core jurisdiction to determine Stewart’s BPO claims, and although the Fitches’ BPO claims could and should have been raised as core proceedings in their bankruptcy case, they were not, and are now barred by res judicata . “It is clear that core proceedings may give rise to res judicata . It is less clear whether non-core proceedings give rise to res judicata . The court need not resolve this debate because Stewart’s BPO claims were core proceedings,” Vance said. Vance further noted that the bankruptcy court’s jurisdiction was core in regards to Stewart’s objection to Wells Fargo’s proofs of claims on the grounds that the proofs included illegal BPO fees. “Litigation ensued bearing directly on the ‘allowance or disallowance’ of these BPO fees. Indeed, the bankruptcy court disallowed all of Wells Fargo’s BPO fees except two in the amount of $50 each. Because Stewart’s BPO claims were direct challenges to Wells Fargo’s proofs of claim, they were core proceedings that the bankruptcy court had jurisdiction to determine,” Vance opined. Vance then turned to the third point of the res judicata analysis and determined that the bankruptcy court’s prior decision was final and on the merits. “If a debtor in bankruptcy files an objection to a creditor’s proof of claim, the bankruptcy court must allow or disallow the claim after determining its proper amount. A bankruptcy court decision allowing or disallowing a proof of claim pursuant to § 502 gives rise to res judicata in subsequent litigation,” Vance said. In this case, the bankruptcy court found that Wells Fargo had charged certain BPO fees in violation of the terms of Stewart’s mortgage and RESPA. The bankruptcy court “allowed” two BPO fees in the amount of $50 each, and “disallowed” seven others. Vance added that the fact that Wells Fargo’s appeal is still pending before the 5th Circuit does not alter the judgment’s finality. Vance also ruled that the doctrine of res judicata applies to this case because the same claim or cause of action was involved in both cases, thereby fulfilling the fourth point in the analysis. Upon consideration of this fourth point, Vance determined whether or not the two actions are “based on the same nucleus of operative facts.” She indicated that the determination is a practical weighing of various factors, including “whether the facts are related in time, space, origin or motivation, whether they form a convenient trial unit and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.” “Stewart contends that the BPO claims raised in this action are more extensive in scope than the BPO claims raised in her bankruptcy case. She points out that she raises RESPA, fiduciary duty and state law claims that were not raised in her bankruptcy case. Although true, this fact does not help Stewart,” Vance noted. “It is not the type of relief requested, substantive theories advanced, or types of rights asserted that determines the application of res judicata . Instead, the issue is whether the two actions are based on the same nucleus of operative facts. As already discussed, Stewart’s BPO claims before this court are based on the same nucleus of operative facts as the BPO claims that she already litigated before the bankruptcy court. Specifically, both involve the same debtor-creditor relationship, the same mortgage agreement, and the same overcharges.” Also, Vance said that to the extent Stewart argued that the bankruptcy court lacked core jurisdiction to determine the RESPA, fiduciary duty and other state law claims, Stewart is mistaken and could have raised all of these claims either as direct challenges to Wells Fargo’s proof of claims or as counterclaims against Wells Fargo. Vance’s ruling on the Stewart case applies to the Fitches’ case as well. Court opinion Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Mar 2010 00:00:00 EST FCB77FE7CEEC448EBEE528FBC85B6788 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=A863E979FBF544BC9DB2C3077BF43B3C — from the RESPA statute Thu, 18 Mar 2010 00:00:00 EST A863E979FBF544BC9DB2C3077BF43B3C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=C56902F53AD6494794AD248EEFB9975C The 6th U.S. Circuit Court of Appeals has agreed with a trial court’s decision to deny class certification after borrowers settled with a title agency and its affiliated businesses over alleged illegal kickback charges. The case is Calvin R. Pettrey and Nikki Pettrey v. Enterprise Title Agency Inc., First USA Title Agency LP and John Desantis (No. 08-4125) . Calvin and Nikki Pettrey filed a lawsuit in the U.S. District Court for the Northern District of Ohio on May 26, 2005, against Enterprise Title Agency Inc., First USA Title Agency LP and John DeSantis . The Pettreys alleged that the defendants had engaged in a fraudulent scheme in which Enterprise Title Agency charged customers for services that were not performed and then used that money to give kickbacks to real estate agents who referred business to Enterprise . On the basis of these allegations, the Pettreys asserted a violation of RESPA, 12 U.S.C. § 2607; negligent misrepresentation under Ohio law; a violation of the Ohio Consumer Sales Practices Act; and civil conspiracy under Ohio law. They also sought damages and attorneys’ fees and costs. After initiating the case, the Pettreys filed for class certification, but on Dec. 19, 2006, the district court denied the motion. The Pettreys then filed a motion for reconsideration, but the district court denied that motion as well. The Pettreys next sought interlocutory review of the district court’s decision to deny class certification, but the 6th Circuit denied interlocutory review on June 5, 2007. The Pettreys then entered into a settlement agreement and released all of their individual claims for damages, attorneys’ fees and costs against the defendants. However, the Pettreys specifically did not settle their right to appeal the denial of class certification, their claims for attorneys’ fees and costs attributable to class claims and their right to seek injunctive relief on behalf of the class. Pursuant to the settlement agreement, the defendants paid the Pettreys $4,287 in damages and $20,048 in costs and fees. The latter figure represented the full amount of costs and fees that the Pettreys had incurred in pursuing both individual and class claims. On July 21, 2008, in light of the settlement, Judge Patricia Gaughan , of the U.S. District Court for the Northern District of Ohio, dismissed the Pettrey’s class certification action with prejudice. The Pettreys appealed the decision, but on Oct. 27, 2009, the 6th Circuit upheld Gaughan’s ruling, stating that the appeal was rendered moot by the borrowers’ settlement of their claims. “This appeal must be dismissed for lack of jurisdiction because there is no justifiable case or controversy under Article III of the Constitution,” said Judge Amul R. Thapar , of the U.S. District Court, Eastern District of Kentucky (sitting in the 6 th Circuit by designation). “Article III conditions the exercise of federal judicial power on the existence of a live, ongoing case or controversy. If a case in federal court loses its character as an actual, live controversy at any point during its pendency, it is said to be moot. When that happens, the case is no longer within the jurisdiction of the federal courts, and therefore must be dismissed. Such is the case here.” However, the court noted two cases in which the U.S. Supreme Court has allowed plaintiffs to appeal denials of class certification after the plaintiffs’ individual claims had become moot. “These cases, however, are distinguishable from the case at hand, and therefore inapplicable,” Thapar ruled. The court pointed to Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980) , in which a group of plaintiffs sued a bank for charging interest in excess of the rate allowed under the National Bank Act. After the plaintiffs’ motion for class certification was denied, the bank tendered to each plaintiff the maximum amount that they could have received under the statute. The plaintiffs objected to this tender because they desired to appeal the denial of class certification. Over the plaintiffs’ objections, the district court entered judgment in favor of the plaintiffs in the amounts tendered by the bank and then dismissed the action. The court of appeals reversed, finding that the case was not moot and that class certification should have been granted. The Supreme Court then granted certiorari for the purpose of determining whether the case was moot. “The Supreme Court implicitly held that the dispute over class certification was a live controversy, and it explicitly held that the plaintiffs retained a personal stake in the issue of class certification despite the fact that they had prevailed on the merits of their individual claims. Specifically, the Court found that the plaintiffs retained a personal stake in the case because they would be able to shift part of the costs of litigation to the class members if they prevailed in their attempt at class certification,” Thapar noted. Similarly, in United States Parole Commission v. Geraghty, 445 U.S. 388, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980) , the Supreme Court allowed a plaintiff to appeal the denial of class certification even though the plaintiff’s individual claims had become moot. “The case at hand is distinguishable from both Roper and Geraghty ,” Thapar noted. “First, it is doubtful that there is a live controversy here because the named plaintiffs’ claims were voluntarily relinquished, whereas they were involuntarily terminated in both Rope r and Geraghty . Indeed, the Geraghty court recognized the distinction between a voluntary relinquishment of claims and an involuntary termination of claims when it expressly declined to express a view ‘as to whether a named plaintiff who settles the individual claim after denial of class certification may, consistent with Article III, appeal from the adverse ruling on class certification.’” In addition, the court said that unlike in Geraghty , no members of the putative class have come forward in an attempt to preserve the live nature of the case. “Most importantly though, this case is distinguishable from Roper and Geraghty because the named plaintiffs in those cases retained personal stakes in their respective litigation after their individual claims had been terminated … by virtue of the fact that they could have shifted the litigation costs to their fellow class members if they had succeeded in obtaining class certification. In this case, however, the plaintiffs have no litigation costs that can be shifted to putative class members,” Thapar opined. To the contrary, as part of the settlement, the defendants agreed to pay all attorneys’ fees and costs incurred by the plaintiffs in pursuing both their individual and class claims. In turn, the plaintiffs released all of their individual claims for attorneys’ fees and costs. Thapar also noted that the Pettreys would face severe difficulties on the merits of the class certification issue if the court determined the case was not moot. This is because it appears to the court as though the Pettreys have little, if any, incentive to advocate on behalf of the putative class. Court opinion Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 15 Mar 2010 00:00:00 EST C56902F53AD6494794AD248EEFB9975C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=76ED5705CE27449980075723A66C05A6 — from the Department of Housing and Urban Development's final rule frequently asked questions guide Thu, 11 Mar 2010 00:00:00 EST 76ED5705CE27449980075723A66C05A6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=53AC821EF48A439FA46C22FCF51CAA38 The nation’s top RESPA attorneys have reported that the new RESPA forms are confusing and complicated and have brought a level of frustration to the title and lending communities that is continuing even through the third month of implementation. To top that, many industry professionals believe the Department of Housing and Urban Development (HUD) has been inconsistent at times with its guidance. Is there hope for this new rule? Phillip Schulman , a partner of Washington, D.C.-based K&L Gates is one attorney of many who sees the rule as others do. However, he believes the industry will eventually work through the issues. “There are portions of the regulations that differ from the frequently asked questions. There are differences between the answers in the frequently asked questions and even differences between the advice you get orally and what’s in the frequently asked questions,” Schulman said. “If it were easy, we wouldn’t have 50 pages of frequently asked questions. It is tough.” In a presentation given on Feb. 23 to nearly 200 mortgage brokers at the National Association of Mortgage Brokers’ 2010 Legislative and Regulatory Conference in Washington, D.C., Schulman said although he believes the industry is challenged with applying the new rule to certain disclosure scenarios, the industry will eventually adapt to the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms. “We are in the infancy of trying to work ourselves through these issues,” Schulman said. “I feel confident that if we relax, work our way through them, then probably by the middle of the year or certainly by Fall, things will settle down and we will all be comfortable with this rule.” Schulman presented what he calls his top 10 takeaways of the new rule. In the list, he provided examples of current trends in the marketplace because of the rule requirements. Schulman’s top 10 No. 1: According to Schulman, the first important thing to remember about the new forms, especially for lenders and mortgage brokers, is that the lender is bound by the GFE. “That means that if [the mortgage broker] puts [a fee] down on the GFE that goes into the zero tolerance [category] and the [aggregate of the fees in that category are out of tolerance], the lender is going to have to write a check to the consumer,” Schulman said. He added that lenders are also bound by the list of settlement service providers that is given to the consumer by the broker. Because of these binding effects, Schulman said he is seeing emerging trends. “Some lenders are telling brokers, ‘we don’t want you issuing the GFE. You take the application and get it to us within 24 hours and we will hand out the GFE, because it’s our money that’s on the line.’ Some lenders are saying, ‘here’s a copy of our Good Faith Estimate, here’s a copy of our list of identified vendors. If you’re going to broker a loan to us, this is the GFE we want you to use.’” Schulman added that some lenders are choosing a third option of having the broker issue their own GFE, but are indicating to the brokers that if they make a mistake which would cause the lender to cure an overcharge to the consumer, the lender is requiring the broker to then reimburse them for the curing. No. 2: The new rule requires the disclosure of all borrower-paid fees on the GFE even if the seller has agreed to pay the fee. Many in the industry have asked HUD for guidance on this, especially for fees in which HUD says must be disclosed as borrower-paid even though particular states may require the seller to pay it. Schulman said when determining fee disclosures on the GFE, if the fee is typically paid by the borrower, even if the seller agrees to pay it, the fee must be disclosed on the GFE. But, if the fee is a seller-paid fee it doesn’t belong on the GFE, except if it’s a title insurance charge. If it’s a title charge, the fee is always disclosed on the GFE. “If you have a fee or charge on the GFE that is typically paid for by the borrower, even though on the sales contract the seller has agreed to pay it, HUD says put it on the GFE and six weeks or eight weeks from now, they will get a credit on the HUD-1,” Schulman explained. “If the seller always pays a fee then you wouldn’t put it on the GFE because we don’t put down seller costs on the GFE, we only put down buyer cost. But then there is an exception to the exception. And the exception to the exception is no matter who’s paying for the title insurance, always put down the title charges in blocks 4 and 5 on the GFE.” These fee requirements have caused some confusion in the marketplace. “In many communities, the seller always pays the owner’s title policy. So, naturally if you’re a loan officer and you know that seller fees don’t go on the GFE, you leave it off. But, by leaving it off, the lender then must disclose the fee in the 10 percent tolerance bucket. If it trips the bucket, the lender will have to write the consumer a check. That seems to me to be unjust enrichment and a windfall for the borrower, because here the seller is paying for the owner’s title policy and the borrower’s still going to get a check because the loan officer or mortgage broker didn’t put down the owner’s title policy charges on block 5 of the GFE. That is the rule.” Ivy Jackson , director of the Office of RESPA and Interstate Land Sales at HUD, also spoke at the NAMB gathering. In reply to questions about seller paid fees, she said HUD created the new forms so that on a national level, if there is any situation in which the borrower would pay a fee, it would be disclosed on the forms. “In Florida , I had someone very upset, because ‘everyone knew that the seller always paid for the owner’s title insurance.’ And, at the same time, the guy sitting next to him was shaking his head, saying, ‘Not in my county.’ And it was right next door,” Jackson said. “People think about things in terms of what’s happening in their jurisdiction or area and that’s not always true across the board. If the seller does end up paying, you can come back with a credit. [By disclosing it as a borrower fee], it makes it easier for the borrower to compare one Good Faith Estimate to another.” No. 3: Schulman’s third takeaway regarding what to remember about the new forms focused on the written list of settlement service providers that the mortgage broker or lender is required to give to the consumer. HUD has indicated that the list is intended to give consumers options for shopping for their settlement service providers. According to Schulman, lenders need to note that the companies the mortgage broker chooses to put on the list are the providers the lenders are bound to as well. In addition, if the borrower chooses a provider from the list, then the fee becomes part of the 10 percent tolerance category and is included in the aggregate of fees in that category. Schulman said to avoid overages in the tolerances categories, many brokers and lenders are tending to list just one provider option for the consumer. “I don’t know if this is a good thing or not,” Schulman commented. “They’re putting down only one pest control provider. They’re putting down only one homeowner’s insurance agent and so forth. I’m not sure that does a favor to the consumers. But that is what’s happening in practice.” The other trend Schulman said he is seeing is that lenders who are affiliated with a settlement service provider are listing only their affiliated company. “So that’s the way that’s shaking out in the marketplace. You’re not going to see too many lenders and brokers putting down multiple providers,” he added. No. 4: Schulman’s fourth takeaway and one in which he disagrees with, and believes is causing grave concern in the lending community, is that the fee disclosed on Page 2, block 1 of the GFE, “our origination charge,” cannot change unless the loan amount or loan product changes. HUD has indicated that if the borrower is “floating” and then decides to lock the rate, this is not considered a change in circumstance and therefore the origination fee cannot change. Schulman says he disagrees with this. “If the borrower is ‘floating’ and then decides to lock, isn’t that a borrower requesting a change? I think it is. I don’t see how it couldn’t be. The regulations say that borrower requested changes are a changed circumstance and therefore you could issue a new GFE and one would think you would be able to change the amount in block 1, because if you are now at 5.5 percent instead of 6 percent, that’s going to affect the origination charges. HUD says no,” Schulman commented. He added that in HUD’s final rule frequently asked questions report, there is also conflicting guidance. “If you go to Page 25, question 3 it says, ‘you can’t issue a changed circumstance unless it complies with the definition’ and it talks about the regulations. In the regulations, borrower requested changes under 3500.7(f)3 says that ‘a borrower requested change is a changed circumstance.’” No. 5: Number five on Schulman’s top 10 list is how to deal with consumers who are having difficulty understanding why a fee is disclosed on the GFE that the seller has agreed to pay. “This is the feedback I’m getting. I’m told that consumers are not happy. They’re saying, ‘I was told specifically by my seller that he was going to pay for the appraisal and credit report. I was told specifically that I didn’t have to pay the transfer fees,’” Schulman said. “The lender would then tell the borrower that is correct. The seller did agree to pay and at closing the borrower would see a credit for the charge.” According to Schulman, this has not been well received by consumers. To help the consumers understand, he recommends using an asterisk as a way to let them know that they will be given a credit at closing regarding any fees for which the seller has agreed to pay. At the bottom of the GFE form, Schulman advises to identify the asterisk with the following language: “Seller, lender or other third party to pay these fees on behalf of the borrower.” Schulman added that another option would be to offer a summary sheet to the consumer that explains what party has agreed to pay which costs. No. 6: Next on Schulman’s list was an answer to the question of whether or not using the HUD-1 would bind a closing agent to the rules and requirements of the HUD-1 under RESPA. Schulman said no. “If you’ve got a RESPA-covered transaction, meaning a purchase money mortgage, a federally-related mortgage loan, a refinance transaction or a reverse mortgage, you have to use the HUD-1. You have to use the GFE. But, if it’s a non-covered transaction, such as an all-cash deal, investor loan, temporary financing, commercial loan or a multi-family loan, you don’t have to use the HUD-1. You don’t have to use the GFE. If you do use it, this doesn’t make it a RESPA transaction. It is outside of RESPA,” Schulman explained. No. 7: Schulman said a question he is often asked is if a lender can charge fees to the consumer at the closing table that were not disclosed on the GFE. According to HUD this is acceptable, but Schulman warns that it could result in tripping a tolerance violation, thereby resulting in an overage and having to issue a check to the consumer. “A lot of people are told that if you didn’t put it on the GFE, you can’t charge it. That’s not true. You can charge fees on the HUD-1 that aren’t on the GFE, just be sensitive to the tolerances. If it’s in the zero tolerance and you forgot it, no sense putting it on the HUD-1 because it’s out of tolerance and you have to write the borrower a check for the identical amount. But if it’s one of the fees that goes in the 10 percent bucket, maybe you would put it on the HUD-1, because even though it may be a higher estimate than what was put on the GFE, it may not trip the 10 percent tolerance,” Schulman said. He added that lenders can also give out multiple GFEs to a consumer for disclosing fees for the different loan options available to them. No. 8: Number eight on his list was essentially advice to lenders that with their closing instructions to the closing agent, they should include information about which tolerance categories to place fees. He recommends creating a proforma HUD-1 Page 3 that would aid the closing agent in filling out this part of the form. No. 9: Schulman’s ninth takeaway focused on the use of average charges and how to handle a situation in which an average charge charged to consumers for a particular fee is higher than the actual charges. He said the overage is not refunded to the consumer but is credited to the next average charge period. (For more on the average charge concept and guidelines for usage, see: Can average charge pricing work for you? ) No. 10: Schulman’s final takeaway regarded HUD’s 120-day period of reprieve for enforcement of the new forms. Consistent with HUD’s parameters on this, Schulman said as long as the industry is using the new forms and making a good faith effort to comply, up until April 30, HUD’s Mortgagee Review Board will restrain enforcement actions. “If you have been trying and you make a mistake, I think HUD will give you a pass for 120 days,” Schulman said. “While you may get a reprieve from HUD, the consumers are not giving you a reprieve, the state regulators are not giving you a reprieve and the plaintiff class action bar is not giving you a reprieve. So, I think you need to work hard to get it right the first time.” Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 09 Mar 2010 00:00:00 EST 53AC821EF48A439FA46C22FCF51CAA38 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F7AF32FE9C434D15A196B9E076EFCC54 Chris Casa, chief operating officer of October Research Corp., announced March 9 that the company has hired veteran editor Mark Kuhar as director of editorial services for the company’s publishing division. In this article: October Research Corp. Mark Kuhar Syndie Eardly October Seminars division RESPA News The Title Report National Settlement Services Summit Kuhar most recently held the position of editor-in-chief of two monthly healthcare trade magazines for Advanstar Communications in North Olmsted , Ohio . Prior to that, he spent more than a decade working for Questex Media in Cleveland as editor-in-chief/associate publisher of Pit & Quarry , a national trade magazine serving the construction-materials markets; and Portable Plants & Equipment , a bi-monthly national trade magazine serving the portable-production and recycling markets. Kuhar has additional experience in the home-remodeling and occupational safety and health markets. He also brings to the company expertise in new product development, marketing, production, design, digital media and event management. Kuhar replaces current editorial director Syndie Eardly , who was transitioned in January to the position of seminars director for the company. “This is an exciting time for October Research as we recognize our customer’s tremendous need for additional information and training in light of the vast changes to the business and regulatory environment in the real estate, mortgage and settlement services industries,” Casa said. “We are pleased to add Mark’s considerable publishing skills to our staff as we seek to expand our editorial reach into the marketplace, enhance our industry presence and grow our media portfolio. We are equally delighted that we can apply Syndie’s deep knowledge of industry concerns and issues to the challenge of growing what has become an increasingly vital information-delivery system for our customers.” Kuhar will oversee the company’s four newsletters — The Title Report , The Legal Description , Valuation Review and RESPA News — including the daily e-news campaigns and the bi-weekly print editions, as well as the development of ancillary print- and digital-media products. In her new position, Eardly will oversee content development for October Research’s annual National Compliance Summit and National Settlement Services Summit . She will also expand the Webinar division to provide a wider variety of in-depth training for the real estate, mortgage, title and appraisal segments. About October Research Corporation Founded in 1999 and located in Richfield , Ohio , October Research Corp. is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . The company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events. For more information about October Research, visit:   www.octoberresearch.com . MEDIA CONTACT:   Chris Casa, Chief Operating Officer                                     October Research Corporation                                     Phone: 330-659-6101 Ext. 6715                                     E-mail: chriscasa@octoberresearch.com                                     Web site: www.octoberresearch.com Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 09 Mar 2010 00:00:00 EST F7AF32FE9C434D15A196B9E076EFCC54 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=283DC8416F834B97BB6BCBBC0D8ACC96 Following a rapidly growing trend of title companies launching online calculators that lenders are able to use to receive quotes for the Good Faith Estimate (GFE), two more businesses this week announced similar initiatives.   The Accurate Title Group LLC (ATG) released its TAG Good Faith Estimate Calculator, a product it said comes directly in response to the RESPA final rule and its new GFE and HUD-1 Settlement Statement forms, as Patriot Title LLC has added a GFExpress Quote to its own Web site.   The TAG GFE calculator provides instant, accurate calculations for purchase, refinance and home equity transactions in all 50 states and all counties for title insurance premiums, endorsements, CPL fees, search, closing fees, recording costs and transfer taxes.   “We quickly assessed the available market and saw an opportunity to divert our IT priorities to leapfrog the competition on fee disclosure,” said ATG’s Chief Information Officer Mike Cullen . “It is exciting to streamline the development of technology to provide more accurate, detailed and comprehensive fees faster than any other product available today. We see this as a step towards a fully automated, instant HUD-1.”   The TAG GFE is a user-friendly tool that is helping to quickly grow its national market share by simplifying GFE and HUD-1 preparation for high volume mortgage and home equity processors, the company stated. It also ensures GFE compliance and advises lenders of how fees are customarily split between sellers and buyers throughout the country, enabling lenders to confidently quote and close purchase transactions nationally.   When ATG provides the settlement services in combination with the TAG GFE, a lender is assured of accurate disclosures.   The TAG GFE is built so it can be quickly accessed via the ATG Web portal or via a loan origination XML interface. An overview of the product can be found here .   Meanwhile, Patriot Title LLC has added a GFExpress Quote icon on the home page of its Web site, www.patriottitlellc.com . The GFExpress Quote also is a GFE calculator for title fees, premiums, recording fees and transfer taxes. Because the primary goal of this RESPA reform is to better inform consumers to allow them to make better home financing decisions, lenders are now required to deliver a GFE and Truth in Lending statement to prospective borrowers within three days after they apply for a loan. A lender’s capability to provide an accurate GFE is crucial under the new HUD-1 rules, so Patriot Title’s new online GFExpress Quote Calculator provides immediate, detailed quotes designed to help accurately complete the new GFE, it stated. Patriot Title through its online product provides appropriate title-related costs required under the new HUD-1 rules. The GFExpress Quote calculator provides title fees, title insurance premiums, recording fees and applicable transfer taxes in the GFE format that can be easily downloaded, e-mailed and printed.   Comments or questions? Contact Jennifer Kovacs: jkovacs@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 05 Mar 2010 00:00:00 EST 283DC8416F834B97BB6BCBBC0D8ACC96 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=9180C1C6E47D4CACA4FCB09004578990 In a recent talk given to a group of mortgage brokers, Ivy Jackson , director of the Office of RESPA and Interstate Land Sales at the Department of Housing and Urban Development (HUD), said the new Good Faith Estimate and HUD-1 Settlement Statement forms were designed with the intent of building communication lines among industry members that use the forms, as well as between members and consumers. Jackson said the lack of communication and understanding in the industry in the past played a part in the recent mortgage downturn. Jackson spoke at the National Association of Mortgage Brokers’ 2010 Legislative and Regulatory Conference that took place in Washington , D.C. , Feb. 21-24. She was one of four speakers on a RESPA panel who provided helpful comments to the broker community regarding implementation of the new forms. Phillip Schulman , partner of Washington, D.C.-based K&L Gates LLP, Matt Dolan , director of the Federal Policy Group, a practice within Washington, D.C.-based Clark & Wamberg LLC, and Mike Anderson , CRMS, NAMBPAC chairman, were among the other panel members. RESPA News was live at the conference, which allowed for nearly 200 attendees to voice their views on current legislation, regulations and the RESPA final rule. According to Jackson, because of the way the new forms are designed, one thing everyone using them will need to develop is better communication channels.  HUD has said that the main reason behind the creation of the new forms was for the consumer to better understand the loan terms in order to easily allow for comparison shopping. Therefore, mortgage brokers, lenders, title agents and others involved in the mortgage loan transaction process will need to open up and be better communicators to consumers about their loans through the use of the new forms. “The Good Faith Estimate form was developed to communicate to the consumer exactly what kind of loan they were getting,” Jackson said. “That is why the first page of the Good Faith Estimate answers important questions like, what is the interest rate? What is the payment? Can it go up, and if it can, how high? Can the balance of the loan go up? We believe that these types of questions were not answered completely to the consumers or communicated and that is one of the areas that got us into trouble in the market.” Another area of communication that will be generated out of use of the new forms is the explanation of what is disclosed at the front end on the GFE and what the actual costs are at settlement. Because the new GFE and HUD-1 forms were designed to better match each other, Jackson said this should help closing agents communicate final fees better at the settlement table. While communication to the consumer is key and the new forms were designed to aid in this, Jackson said lenders and mortgage brokers are also being forced now to better communicate with each other. “If there is good communication between the lenders and brokers, when [the broker] originates a loan and gives out a Good Faith Estimate, [the broker] understands what fees the lender wants to charge,” Jackson said. “All of the origination, processing, doc prep, anything of nature of those types of charges of admin fees go into the top block on [Page 2 of] the GFE. Except for very extenuating circumstances, once you put that charge down, it cannot be changed.” Mortgage brokers and lenders must also maintain open lines of communication with settlement service providers to ensure the fees they are disclosing comply with the new tolerance rules. Jackson said after the new forms were announced, she had some loan originators ask her how to get an estimate of a service fee from a third party to disclose to the consumer on the GFE. She said these types of questions are proof that consumers were not getting good estimates in the past and the industry needed a standardized form that required loan originators to provide a more accurate estimate of fees. “[They] apparently hadn’t thought about what the charge might have been in the past on the Good Faith Estimate,” Jackson noted. “[They’ve] just been putting something down.” Jackson added that the new forms have opened up communication from HUD’s RESPA office as well and this has been beneficial for both HUD and industry members. “We have been going out and speaking — whether it’s doing a Webinar or going out and speaking to a group at the state level — and going through the GFE and HUD-1 to answer questions that come up,” Jackson said. Jackson said HUD’s RESPA Web site has also ramped up as an informative resource since the launch of the final rule and now plays host to the RESPA final rule frequently asked questions guide, which contains more than 250 questions regarding requirements for filling out the GFE and HUD-1. She added that updates to the FAQs will continue. On numerous occasions, HUD has spoken publicly about what it means when it says it will restrain enforcement of the new forms for the first 120 days. Jackson reiterated HUD’s position at the conference about what it means to act in good faith to avoid an enforcement action. “What we would be looking at during this [120 days] is that you’re giving out the new Good Faith Estimate. If you’re not using the new Good Faith Estimate then I don’t think you could say that you’re trying to comply in good faith.” Second, Jackson said HUD will restrain enforcement as long as there is no general harm to the borrower during the loan origination process. “So the boxes might be mixed up or something might be delayed a little bit in getting back to the consumer, but if the borrower ultimately is not charged more at the end of the day then that would be something we would look to,” Jackson said. Jackson said the 120 days gives the industry a chance to seek out more information from HUD regarding specific disclosure scenarios and allows the industry a chance to perfect their processes and systems and develop their communication channels. She added that her staff will continue to remain available to answer questions about the new forms. Stay tuned for an article on RESPAnews.com showcasing RESPA attorney Phillip Schulman’s presentation to conference attendees, which includes “top takeaways” of the new GFE and HUD-1 forms. Comments or questions? Contact Kelly McCarel: kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 05 Mar 2010 00:00:00 EST 9180C1C6E47D4CACA4FCB09004578990 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=4FED079B51A044D3B40CF9B62B380235 — from General Counsel Helen Kanovsky, of the U.S. Department of Housing and Urban Development, in a letter to attorney Jay Varon of Foley & Lardner in Washington, D.C. Fri, 05 Mar 2010 00:00:00 EST 4FED079B51A044D3B40CF9B62B380235 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=40F40B3C357E4A6DA3E9CD43C1BDE706 Chris Casa, chief operating officer of October Research Corp., announced today that TSS Software Corp. has signed on for a second year as the naming sponsor for this year’s combined National Settlement Services Summit and National Compliance Summit, to take place in Cleveland, Ohio, June 15-16. In this article: October Research Corp. TSS Software Corp. National Settlement Services Summit National Compliance Summit Barbara Miller changing marketplace “This is a volatile time for title agents and the mortgage industry in general. But we at TSS believe that these are the times in which true leaders and successful businesses find a way to adjust and even thrive,” said Barbara Miller , TSS president and chief operating officer.   The theme of this year’s combined Summits, “Embracing Evolution,” highlights the main component of the Summit ’s content, an emphasis on educating agents on the importance of immersing themselves deeply in the needs of the changing marketplace in order to emerge with creative solutions that will forge stronger connectivity with their partners. “Right now, the leaders of the industry are at the forefront of things, gathering information on new practices and regulations, networking with peers, and proactively building new products and processes that allow them to adapt and succeed in a changing marketplace,” Miller said. “That is why the Summit is a natural partner for TSS again this year. Cleveland has become the anticipated gathering place each year for the settlement services industry’s best and brightest. We look forward to being the presenting sponsor again, and look forward to meeting and renewing acquaintances with the thought leaders of this industry.” “We are pleased to partner with TSS Software Corp. again this year for the Summits,” said Casa. “Especially in these turbulent times, TSS consistently embodies the ideas we will be bringing to market at the Summit : the importance of actively embracing the changing marketplace in ways that build stronger businesses.” “It takes a tremendous amount of effort, planning and financial commitment to bring an event like we have to market,” Casa added. “The opportunity to have this level of education, thought sharing and general networking with 400 of the industry’s best could not come to fruition if it were not for companies like TSS stepping up to the plate. We are fortunate to have companies in the space that understand and push to move the industry forward.” The Summit expects to attract nearly 400 professionals from across the country for the two-day meeting at the Marriott at Key Center , which is Cleveland ’s state of the art conference facility. Currently, nearly 20 companies have signed on as sponsors for the 2010 National Settlement Services Summit and National Compliance Summit. Several sponsorships are still available. For more information contact Glen Stout at gstout@octoberresearch.com or (330) 659-6101, ext. 6556. For more information about the Summits, visit:   www.octoberseminars.com/ns3 . About October Research Corporation Founded in 1999 and located in Richfield, Ohio, October Research Corporation is the nation’s leading provider of market intelligence, industry news and regulatory information for professionals in the real estate, settlement services and mortgage industries. Publications include The Title Report, The Legal Description, Valuation Review and RESPA News . The company also has the October Seminars division, which produces educational audio seminars, Webinars, Podcasts, videos and live events. Media contact: Syndie Eardly (330) 659-6101, ext. 6619 seardly@octoberresearch.com Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 25 Feb 2010 00:00:00 EST 40F40B3C357E4A6DA3E9CD43C1BDE706 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=4E0C5A44D262438BA9EB1211A24976C3 — from the Department of Housing and Urban Development’s Nov. 17, 2008, RESPA final rule Thu, 25 Feb 2010 00:00:00 EST 4E0C5A44D262438BA9EB1211A24976C3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=BB8E0FC0C318406C8727128D17DDFF52 Under the new RESPA final rule, loan originators must provide borrowers with a written list of settlement services providers at the time the Good Faith Estimate (GFE) is issued. While that much is clear, title agents around the country are finding that the way lenders are using the list varies from one to another. And the regulation itself provides little guidance to address the growing issue. According to the RESPA final rule, borrowers may choose a provider from the list issued by the lender or shop for settlement services providers on their own. If the borrower chooses a company from the list, the fee charged on the HUD-1 Settlement Statement will fall under the 10 percent tolerance category. The total aggregate of fees in this category must fall within 10 percent of the original estimates used on the GFE. If a borrower decides to shop for services and chooses an outside provider, that HUD-1 fee does not fall within the 10 percent tolerance. Prior to the rule being implemented on Jan. 1, lenders as a matter of business practice traditionally compiled lists of approved providers — those who met certain requirements such as holding E&O insurance or being bonded. However, the lists of today are much different. Some lenders are only putting one provider down, at times an affiliate, while others are providing a wider selection of companies. “The list is referenced in the rule, but it is not well defined. The format isn’t even promulgated. There is not a whole lot of direction out there,” said Mary Schuster , director of industry and legislative affairs for RamQuest Inc. and member of the American Land Title Association’s RESPA Implementation Task Force. “This lender list is one of the most misunderstood pieces of this new rule. We suspected that pre-implementation, and that is absolutely being validated.” However, to further muddy the waters, Schuster said loan originators are fearful of the tolerance restrictions and have leaned toward working to control the lists so no additional charges will fall into their laps when the loans close, despite the fact that if consumers are encouraged to shop off the list, those tolerances won’t apply. “There are a lot of factors that have all created this storm around these lists,” she said. “However, some agents were prepared for the downpour and have excelled in their local markets at educating lenders on the rule itself, as well as the lists, and adapting their marketing methods to make sure their company names are offered to consumers. How it’s being used Don Booher , president of Colorado Escrow & Title, said he’s seeing four different scenarios for how the list is being used in his market: lenders are listing only one provider, often their affiliated title company; others are providing a list of two or three companies, but indicating the one they prefer; some are issuing a comprehensive list, including every company in the area; or lenders are not providing a list at all and consumers are told to choose. Pamela L. Weeks-Doffin , a closing manager in the residential division of WACO Title Co. Inc., said she is also seeing a variety of practices among the loan originators in the Springdale ,  Ark. , market. “We have some putting just one, some are trying to limit it to three and still some are listing every title company that would provide them with fees and rates. Right now, the latter seems to be the trend. We should know a true trend in the first quarter once we all get over the implementation shock of the reform,” Weeks-Doffin said. What is becoming clear to some agents just a few weeks into the process is that lenders are afraid of answering to those tolerance limitations and are managing their lists with that in mind. For example, Booher said he believes it’s concerning to the banks that they have to answer for someone else’s quote. But thanks to most states mandating that fees be filed with departments of insurance, there is little room for title fees to change aside from what RESPA permits under changed circumstances, which allow lenders to reissue the GFE without answering to tolerances. “The fees are what they are. The fact that they think title’s going to cause them grief in the first place is a little far-fetched,” Booher said. John Dwyer Sr. , president and general counsel of Beltway Title and Abstract Inc. of Crofton, Md., said he is generally seeing just two variations on the lists: The first is lenders are only including their affiliates, and the second is that they are including one title company that is out of the geographic area altogether to sway borrowers to shop on their own.  “It is obvious that the list is not being used as the [Department of Housing and Urban Development (HUD)] intended, and very possibly in a manner that HUD may have to address in the future,” he said. Schuster said there does appear to be a misunderstanding in the lending community of what the lists were intended to be versus how banks may prefer them to be. And without full understanding of when title and settlement services fall into the 10 percent tolerance bucket, lenders appear so far to be managing the process closely to avoid being forced to cure violations. “Many lenders may think that title and settlement is always a 10 percent item, therefore, they are responsible for it and will control it very tightly,” she said. How this is different Before the new rule was implemented, most title agents did their due diligence work with the lenders to make sure they were added to their approved provider lists. And while in theory the list of providers under the new RESPA rule may appear to be similar to what the lenders offered to their customers in the past, agents are finding its nuances differ greatly. “It was less formal before, and those approved provider lists had gotten fairly large. Most of them didn’t have that high of a hurdle; you had to meet some basic demands. Those approved provider lists were much larger than today’s approved provider lists. Once you factor in the tolerance, that can cause them to make decisions that they might not otherwise make because of this fear,” Schuster said. Dwyer said he is finding lenders that recommended Beltway Title before are now not doing so out of fear of the tolerance issues. However, that isn’t due to his company not being prepared for implementation — Dwyer himself had demanded that all settlement officers and processors know as much as he did regarding RESPA issues prior to Jan. 1 and training was begun in June 2009 — but rather due to the overall failure of the industry in general to be prepared. “Having had over a year to get ready for this beast, the vast majority of local lenders and title companies still had little or no training before December 2009. Even with HUD’s help, which came ‘too little, too late’ with the initial posting of the FAQs on Aug. 24, 2009, there was still little or no training. Now, one month into 2010, very few lenders have any kind of grasp of the issues embodied in the rule or how to properly prepare the HUD-1 and GFE,” Dwyer said. While the creation of the lists may at times be dictated by a fear of tolerance violations, Weeks-Doffin said she sees a positive side to the growing trend in that lenders are being more discerning in deciding who is recommended to perform settlement services. “I see originators being more cautious and truly looking at the reputation and business practices of the title companies they have on their provider list. It will no longer be who can close it the fastest and the cheapest. It will be, ‘Who can close it properly and who can I trust to give me an accurate quote of their fees at GFE time?’ I, for one, think that is long overdue,” she said.   The consumer factor The new rule stops short of dictating how many providers must be given to consumers through the list, but it also stops short of providing any script for what should happen after the list is given. For example, a list can be issued with one provider listed that also happens to be the lender’s affiliate. The loan officer is able to say that is the company the lender prefers to use and not offer any other suggestions. “That is not technically incorrect,” Schuster said. “But I think it’s a little different than what we had hoped.” Again, because of the perception on the lending side that title fees must meet tolerance guidelines no matter what, Schuster said it’s not quite apparent yet whether originators are encouraging consumer choice at all and may be instead choosing to control the settlement provider very tightly. “The intention was for the lenders to have a laissez faire attitude with title and settlement, and not all are taking that. They are instead taking the route of ‘here is our affiliate’ or ‘here is who we recommend,’” she said. Booher said that in the Colorado market, he is finding lenders failing to go the extra step to let consumers know that it is their decision whether to shop for services. “Ultimately, the goal of RESPA was to have the consumer become informed and involved in the process so they understood that the choice was really theirs. In this situation, you would hope that when they provide them with the list of one, they follow up with some explanation,” he said. “That’s what you would hope would happen, but what we’re finding in that scenario is that choice is shut down.” However, Weeks-Doffin said that she believes consumers take the time to carefully select their real estate agents and lenders and, therefore, will rely on those individuals to make recommendations regarding settlement, regardless of whether they are encouraged to shop. “They choose the ones who have a good reputation and have earned their trust. Because of that, why would they question the recommendations of title companies given by them? There will be exceptions to this of course, but on average, I don’t see the majority of consumers varying from the list provided by their lending institution and/or Realtor,” she said. Adjusting marketing and breeding awareness Because consumers may be likely to choose providers presented to them, agents are finding it more important than ever to be selected to appear on the lists. Weeks-Doffin said that if the trend in her area of lenders listing every title company that provides fees and rates to them continues, then the issue will take care of itself. “I don’t see the list ever truly dictating the business. If anything, it will bring us all to the game to play,” she said. However, she added that it would be a bad practice to not be mindful of anything that may direct customers to your business. “Keeping track of the trend these lists take on will certainly be something I know the entire title industry will be doing. Being on those lists will be all of our goals; that really hasn’t changed. Didn’t we all want to be on their lists before the reform?” However, Booher, on the other hand, is primarily seeing shorter lists in his market, which makes appearing on them more competitive. And when addressing marketing changes, he said it was important to note that business in Colorado that was once nearly entirely directed by selling agents is being shifted toward the lender and, possibly, the consumer. Unsure now of how it will pan out, Booher said he is directing marketing more toward delivering a RESPA message. “I do want to be on the list, because I think by being on the list, you have a higher probability of being chosen as this starts to transition. Ultimately, I am in favor of the consumer being more involved in the choice,” he said.   Marketing strategies toward lenders must be adjusted in an effort to appear on the lists. There are challenges even to that, though. For example, some agents are finding that the local branch officers who once established business relationships are now being replaced by corporate executives dictating what companies will appear on provider lists. “Corporate officers are sometimes calling the shots in fear of the tolerances and not necessarily in favor of the consumer. In some instances, the loan officers are not allowed to recommend anyone other than the name on the list. This doesn’t just hurt the relationship of trust built over many years, it kills it,” Dwyer said. But there are still methods available today to bring new vigor to marketing practices in the local market, especially through stressing RESPA education — something Booher, Weeks-Doffin and Dwyer have each addressed through large-scale seminars and one-on-one meetings. “Gone are the days of cookies and candy dropped off at lenders’ offices. We now need to educate more than ever before. Educate the lenders: that has never been an issue before. We also need to educate the real estate community by holding meetings to explain the new HUD-1, the GFE and how they should respond to the new set of questions being asked by clients at the closing table,” Dwyer said. Schuster said that agents can also take on a consultative role in that process by relating to lenders the ins and outs of the RESPA reform, including when fees are restricted by the 10 percent tolerance and how to encourage consumers to shop off of the lists, which would alleviate any tolerance concerns. “Those title and settlement agents who have taken a proactive approach in their market with this, who have been out telling their loan originators, ‘Here’s what we can do, either get me on the list or have title services selected by the consumer.’ Those who have been engaged in that dialogue with loan originators are generally having a better time than those who have sat back and said, ‘We’ll see what happens,’” she said. Booher said the tactic he’s taking is to calm down the real estate community as a whole and try to make clients feel more RESPA confident. And while the message is being taken to current customers, he’s hoping new opportunities will arise as well, especially as Realtors and lenders begin passing that information being shared along to the consumers. “Ultimately, I do believe the consumer will have more of a role in this than before,” he said. Comments or questions? Contact Jennifer Kovacs: jkovacs@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 25 Feb 2010 00:00:00 EST BB8E0FC0C318406C8727128D17DDFF52 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=0BCCE8732BC2438EBEABBCE6D5BB6D7F Washington, D.C.-based Federal Title & Escrow Co. has launched a new Good Faith Estimate (GFE) quote tool for title insurance services that is intended to shield lenders from RESPA tolerance violations. According to a statement released by the company, the new offering is an online quote system designed to aid lenders in preparing accurate GFEs for consumers. In addition to the new offering, Federal Title is guaranteeing the accuracy of the quote. “Our online quote is accurate to the penny, or we’ll pay the difference,” said Todd Ewing , president of Federal Title. The final RESPA rule requires that lenders provide accurate GFEs to consumers and be held to certain tolerance rules. Federal Title said it is taking some of the pressure off the lenders with its new GFE-based quote system. “If a lender uses the system to prepare a Good Faith Estimate and winds up in violation of the tolerance limitations, Federal Title will pay the difference between the quote and the final HUD-1 executed on the day of settlement,” Ewing said. The company is calling this service the Zero Tolerance Guarantee. Fees included in the guarantee are for line items 1100 and 1200 on the HUD-1 Settlement Statement, also known as “title charges” and “government recording and transfer charges.” These charges include transfer and recordation taxes, recording fees and title insurance premiums. “As the final RESPA rule that took effect at the beginning of this year aims at transparency, the title insurance industry is beginning to shift toward the same business model Federal Title adopted some time ago,” Ewing said. “Lenders are not only seeking instant, electronic quotes for title work that don’t throw off any specified tolerances, they’ve come to expect them. With so much information available through a few taps of the keyboard, who wants to call up and ask for numbers?” In addition to the new product, Federal Title said it has also launched a revamped Web site that includes an informative blog, convenient search functionality and improved navigation. Federal Title is a licensed, full-service title insurance and closing company, offering online and offline closing solutions for the residential real estate industry. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 22 Feb 2010 00:00:00 EST 0BCCE8732BC2438EBEABBCE6D5BB6D7F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=B3E3269EF9A64CC8A708FDBEC59A7878 Homeowners in Rhode Island have filed a class action lawsuit against a lender and mortgage broker for allegedly charging and splitting an unearned yield spread premium (YSP) fee in violation of Section 8 of RESPA. Plaintiffs Jennifer and Martin McElroy filed the lawsuit on Feb. 12 in the U.S. District Court, District of New Jersey against Parsippany, N.J.-based Maverick Funding Corp. and Warwick, R.I.-based Homeland Funding Solutions Inc. The McElroys refinanced their home in Charlestown , R.I. , through Maverick. According to the suit, Maverick, as the lender in the transaction, paid a YSP to Homeland, which operates as a lender and mortgage broker. According to the plaintiffs, the YSP was an “unearned fee” under RESPA because it was a charge other than for services actually performed. “Having already been paid a loan origination fee and a mortgage broker fee, with Maverick being paid an underwriting fee, Homeland simply had no other services to perform to earn the YSP on the loan,” the lawsuit states. “Alternatively, the YSP was not disclosed on the HUD Settlement Statement because Maverick and Homeland conspired to split the unearned fee and did split it in violation of RESPA 12 U.S.C. § 2607(b).” In addition, the plaintiffs claim that the defendants violated the Racketeering Influenced and Corrupt Organizations Act and the New Jersey Consumer Fraud Act. They also allege breach of implied covenant of good faith and fair dealing; fraud through concealment; unjust enrichment; and negligence. The McElroys’ loan application was taken on or about Feb. 25, 2009. The application indicated that the McElroys wanted to refinance the first and second loans on their home totaling $270,000 with a new fixed rate FHA mortgage in the amount of $278,000. The loan had an interest rate of 5 percent and a term of 30 years. The plaintiffs claim that the purpose of the loan was not only to refinance, but also to obtain a limited cash-out rate/term. The lawsuit states that the McElroys’ $14,000 cash out portion of the loan was not paid to them directly, but instead was used by Maverick to pay “exorbitant, illegal, unearned and undisclosed closing costs to Homeland.” The HUD-1 Settlement Statement indicates that Maverick received an underwriting fee of $895, loan origination fee of $2,793 and loan discount fee of $2,504.93. The plaintiffs claim that the YSP was not disclosed. “Unearned fees were imposed and collected on the loan in the form of a yield spread premium paid to Homeland from Maverick as compensation from Maverick, which Maverick failed to disclose on the Settlement Statement,” the lawsuit states. “Although the YSP was paid by Maverick to Homeland, it was in effect paid by [the McElroys] because its payment was made possible by their promises to pay a higher interest rate over the life of their loan.” According to the plaintiffs, because Homeland served as a loan originator in the transaction, it should not have received a yield spread premium. “The fee listed on the HUD Settlement Statement [and] paid to Homeland as a mortgage broker fee, in truth, is an excessive loan origination fee disguised as a mortgage broker fee,” the lawsuit states. “Thus the mortgage broker fee was unlawfully charged … as an unearned fee as that term is defined under RESPA.” Payments classified as unearned fees under RESPA occur in, but are not limited to, cases where: Two or more persons split a fee for settlement services, any portion of which is unearned; or One settlement service provider marks up the cost of the services performed or goods provided by another settlement service provider without providing additional, actual, necessary and distinct services, goods or facilities to justify the additional charge; or One settlement service provider charges the consumer a fee where no nominal, or duplicative work is done, or the fee is in excess of the reasonable value of goods or facilities provided or the services actually performed. The plaintiffs claim that the defendants acted in concert to carry out the alleged scheme. “Defendants charged plaintiffs a yield spread premium and charged the members of the class such fees. The undisclosed and unearned fees were split by the defendants or kept by Homeland to refer settlement service business to Maverick,” the lawsuit states. The plaintiffs claim that as a result of the agreement, the McElroys’ loan was referred to Maverick by Homeland. Also, Homeland received YSPs without providing any goods or services of the kind typically associated with mortgage transactions. The plaintiffs claim that if Homeland did provide such goods or services, the total compensation paid to Homeland was not reasonably related to the total value of the goods or service actually provided. “Had the total compensation paid to Homeland been fully and lawfully disclosed on the Settlement Statement, [the McElroys] would have realized that the loan sold [to them] by Maverick and Homeland was exorbitantly expensive and they would have shopped elsewhere and found a cheaper loan from an honest lender,” the lawsuit notes. The plaintiffs seek class certification for all persons to whom the defendants made federally-related residential mortgage loans or provided brokerage services or settlement services during the class period and on whose loans the defendants charged and collected unearned fees, split unearned fees or failed to disclose yield spread premiums. The plaintiffs seek to incorporate in the class residences located in the states in which the defendants conducted business during the class period including: New Jersey, Rhode Island, Connecticut, Massachusetts, Pennsylvania, Maine, Florida, Delaware, Maryland, Indiana, Vermont, Tennessee, North Carolina, New Hampshire and California. If held liable under RESPA, the defendants could be responsible for paying class members three times the amount of the “unearned” fee charged to them. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 19 Feb 2010 00:00:00 EST B3E3269EF9A64CC8A708FDBEC59A7878 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=766940626546471288A19C2BA9426C42 — from the RESPA statute Thu, 18 Feb 2010 00:00:00 EST 766940626546471288A19C2BA9426C42 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=FFCB41657FBF41D5A7A591D3134DBB0D Legislation currently under consideration by the California General Assembly seeks to amend the Buyer’s Choice Act, which was adopted late last year. The Buyer’s Choice Act, which went into effect immediately upon adoption in October 2009, prohibits the owner of real estate owned (REO) property from requiring that as a condition of the sale, the buyer purchase title insurance or escrow services from a particular title insurer or escrow agent. Under the new law, a buyer may still agree to accept the services of a seller-selected title insurer or escrow agent, as long as the seller has provided them with a written notice of their right to make an independent selection of those services. Under the proposed legislation, AB 1750 , which was introduced by the original bill’s author, Assemblymember Cathleen Galgiani , D-Livingston, a seller of REO property would be required to provide a standard independent selection form to the buyer before the buyer agrees to accept the seller-recommended title insurer or escrow agent. The bill would require that the standard form include the following language: “No seller of single-family residential real property containing four or fewer units shall require, directly or indirectly, as a condition to selling the property, that title insurance covering the property or escrow services provided in connection with the sale of the property be purchased by the buyer from any particular title or escrow provider. This selection does not prohibit the buyer from agreeing to accept the services of a title or escrow provider recommended by the seller, provided that written notice of the right to make an independent selection is first provided by the seller to the buyer.” The form must also indicate the buyer’s choice for title and escrow service providers or indicate that they are choosing the seller’s recommendations. The form must then be signed by the buyer and submitted to the REO seller. AB 1750 also states that “a seller may not condition approval of the sale of residential real property that is in foreclosure on the selection made by the buyer as indicated on the independent selection form.” Under the proposed legislation, the Department of Financial Institutions, the Department of Corporations, the Department of Real Estate and the Department of Insurance would develop a single standard complaint form for the purposes of reporting a violation of the act and make that form available on each department’s Web site. The Buyer’s Choice Act is very similar to RESPA, because RESPA already prohibits a seller from requiring the buyer to purchase services from a particular company as a condition of the sale, regardless of whether or not the property was required by foreclosure. The bill does differ from federal law by applying to escrow agents as well as title insurers. In addition, it only applies to properties acquired as a result of foreclosure and would apply to both federally-backed and non-federally-backed loans. Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Feb 2010 00:00:00 EST FFCB41657FBF41D5A7A591D3134DBB0D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=013C8613B05D4A11AD3F0C385113AA9D Stewart Title Co. and Stewart Title Guaranty Co., wholly-owned subsidiaries of Stewart Information Services Corp., announced on Feb. 17 the availability of their new RESPA-compliant online rate calculators for lender customers. Stewart reported that calculators are rolling out nationwide through Stewart Title offices and through Stewart Title Guaranty’s network of agencies. The RESPA final rule went into effect on Jan. 1, and with it came the requirement of loan originators to provide residential customers with a new standardized Good Faith Estimate (GFE). The GFE gives customers an estimate of their settlement charges and a summary of loan terms. The new RESPA rule requires, among other things, that title fees fall within a tolerance level group that cannot vary more than 10 percent in aggregate, making it crucial that the estimates received by lender customers from their title agencies are accurate. “In an effort to continue to improve our customer’s experience and in light of new RESPA regulations, we are pleased to announce new online rate calculators for our Stewart Title Co. operations,” said Stewart Morris Jr. , president of Stewart Title and chairman of PropertyInfo Corp. “Lender ExpressQuote, Stewart Title’s new rate calculator, will allow our lender customers to quickly generate reliable electronic quotes for title service fees, title premiums, recording fees and transfer taxes. These quotes are easily downloaded and e-mail-compatible in the new lender-friendly GFE format.” “Additionally, our independent agencies will be able to offer their lender customers the same online calculator capabilities via GFExpressQuote,” said George Houghton , executive vice president, Agency Services Group for Stewart Title Guaranty Co. “GFExpressQuote will allow our agencies to private-label the closing cost calculator and offer it on their company Web site for their lender customers to receive quotes and place their orders directly with the agency.” Features of the Stewart ExpressQuote calculators include: 24/7 availability; Built-in geographical intelligence to allow for unique state requirements, such as transfer taxes; Access to a repository for all quotes generated within a one-year time period; Downloadable quotes available on the spot; and Visual representation that shows exactly where the pricing is placed in the GFE. Stewart’s Lender ExpressQuote is now available at a growing number of Stewart Title affiliate operations. Lender customers can access new online quoting capabilities at http://www.stewart.com/lenderexpressquote or through local Stewart Title office Web sites. GFExpressQuote for independent agencies is available at http://stewart.com/gfexpressquote or through participating agency Web sites. Both Lender ExpressQuote and GFExpressQuote are powered by PropertyInfo Corp., a Stewart company which develops, supports and distributes technology for the real estate industry. Stewart Information Services Corp. provides title insurance and related information services required for settlement by the real estate and mortgage industries throughout the United States and international markets. Stewart also provides post-closing lender services, automated county clerk land records, property ownership mapping, geographic information systems, property information reports, flood certificates, document preparation, background checks and expertise in tax-deferred exchanges. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 18 Feb 2010 00:00:00 EST 013C8613B05D4A11AD3F0C385113AA9D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=44FBA8A2490C4C289EB95C5668EAB8E7 A California federal court revised a recent ruling, now declaring that an actual damages claim under RESPA must be related to the RESPA violation itself and not incorporated as other damages named in the suit. The plaintiffs claimed that the defendant loan servicer failed to respond to a qualified written request (QWR) and, as a result, suffered statutory and actual damages under RESPA. The case is Parveen A. Lal and Jodi L. Wright v. American Home Servicing Inc. and lender Doe (No. 2:09-cv-01585-MCE-DAD) . According to plaintiffs Parveen Lal and Jodi Wright , around June 28, 2006, they entered into a mortgage loan for $821,750 with Paramount Equity Mortgage. The loan was initially serviced by Paramount and later serviced by defendant American Home Mortgage Servicing Inc. The mortgage note has since allegedly been sold to an unknown holder. On March 10, 2009, the plaintiffs sent a letter to American Home Mortgage stating that they were not provided notice of their right to cancel their loan under the Truth in Lending Act (TILA) and that pursuant to TILA they were rescinding their loan. The plaintiffs additionally requested that American Home Mortgage indicate its relationship to the loan and identify the true owner of the mortgage note. The plaintiffs also directed the defendant to stop its attempts to collect on the loan and to cease all future collection communications. According to the plaintiffs, American Home Mortgage has failed to respond to the letter or comply with its terms. The plaintiffs filed suit, alleging several state and federal law violations against American Home Mortgage in connection with the foreclosure of their home. The U.S. District Court for the Eastern District of California denied in part and granted in part the plaintiffs’ complaint, allowing them leave to amend. The plaintiffs subsequently submitted their first amended complaint. American Home Mortgage filed a motion to dismiss portions of the first amended complaint for failure to state a claim upon which relief may be granted. In his Jan. 19 opinion, District Judge Morrison C. England Jr. granted the motion. Actual and statutory damages According to the plaintiffs, American Home Mortgage violated RESPA, 12 U.S.C. § 2605(e), which requires that loan servicers timely respond to QWRs from borrowers. The plaintiffs claimed that American Home Mortgage did not respond to their QWR and, as a result, are entitled to both statutory and actual damages. The plaintiffs alleged that they were harmed by “[being] unable to name the real party in interest to this suit.” They also incorporated all preceding sections of their complaint into their RESPA claim, alleging that they were harmed because of having to file suit. "In regards to actual damages, this court previously held that the ‘incorporated damage’ of having to file suit was sufficient actual damage for a RESPA claim,” England noted. “Since the initial order in this case, the court has revised its position and agrees with defendant’s contention that the loss alleged must be related to the RESPA violation itself.” England added that RESPA, as codified at 12 U.S.C. § 2605(f)(1)(A), authorizes “actual damages to the borrower as a result of the failure [to comply with RESPA requirements]. Therefore, allegations made under a separate cause of action are insufficient to sustain a RESPA claim for actual damages as they are not a direct result of the failure to comply. Nor does simply having to file suit suffice as a harm warranting actual damages. If such were the case, every RESPA suit would inherently have a claim for damages built in.” England also rejected the plaintiffs’ argument that they were harmed by the defendants by not being able to name the real party of interest in the suit. “Under RESPA, a borrower may not recover actual damages for nonpecuniary losses,” England said. “Consequently, plaintiffs have failed to sufficiently plead a claim for actual damages.” Regarding the plaintiffs’ claim that they are entitled to recover statutory damages, the court noted that even though the plaintiffs have pled that American Home Mortgage has acted in a pattern or practice of noncompliance with RESPA 12 U.S.C. § 2605(f)(1)(b), they have stated no facts to support the claim. The plaintiffs only assured the court that at trial they will present other customers who also did not receive QWR responses from American Home Mortgage. “Simply stating a legal conclusion with the promise to later produce facts is tantamount to simply stating a bare legal conclusion. A plaintiff cannot rely simply on stock legal conclusions, but must allege facts that are sufficient to ‘raise a right to relief above the speculative level,’” England said. “Here, plaintiffs’ complaint lacks the requisite facts necessary to sustain a claim for statutory damages.” England allowed the plaintiffs leave to amend for the actual damages claim. England granted American Home Mortgage’s motion to dismiss the plaintiffs’ TILA rescission claim, Rosenthal Fair Debt Collection Practices Act (RFDCPA) claim (with leave to amend) and slander of credit claim (with leave to amend). “If no amended complaint is filed within said 20-day period, without further notice, plaintiffs’ remaining claims for slander of credit, RFDCPA and actual damages under RESPA will also be dismissed without leave to amend,” England concluded. Court opinion Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 16 Feb 2010 00:00:00 EST 44FBA8A2490C4C289EB95C5668EAB8E7 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=9475E6D39A174E6C942D25F271E190DF An Ohio federal judge denied a plaintiff partial summary judgment regarding the plaintiff’s claim that he was required to use his lender’s affiliated title company. The plaintiff filed the case on behalf of himself and a class of individuals. The case is Matthew G. Wyman v. Park View Federal Savings Bank, et al. (No. 1:09 CV 1851) . On Nov. 6, 2009, the plaintiff, Matthew Wyman , filed a one-count amended complaint against defendants Park View Federal Savings Bank (PVF) and PVF Title Services LLC (PVF Title) in the U.S. District Court for the Northern District of Ohio, Eastern Division. Wyman alleged that his mortgage lender, PVF, “routinely and habitually refers its borrowers to PVF Title for the purpose of obtaining settlement services incident to the closing of federally related mortgage loans.” Wyman claimed that PVF’s actions are in violation of RESPA Section 8, 12 U.S.C. § 2607(a) and 24 C.F.R. § 3500.14, because PVF and PVF Title have an affiliated business arrangement (AfBA) and fail to comply with all of the conditions set forth in 12 U.S.C. § 2607(c)(4) and HUD Regulation X. Wyman has brought the action on behalf of himself and a putative class of individuals who: 1) applied for a federally related mortgage loan from PVF, in which the loan was approved, funded and settled in the ordinary course; 2) was referred by PVF to PVF Title for purposes of obtaining settlement services; 3) was required by PVF to use PVF Title for settlement services related to the loan; and 4) paid settlement service charges to PVF Title in connection with the loan settlement occurring within the applicable statute of limitations. On Oct. 27, 2009, Wyman filed a motion for partial summary judgment, requesting that the court grant judgment in his favor on the issue of ‘required use’ and the defendants’ failure to comply with the affiliated business arrangement exemption to liability under RESPA’s Section 8(a). Wyman alleged that “there are no genuine issues concerning the fact that PVF required him to purchase title insurance from PVF Title, and therefore he is entitled to partial summary judgment in his favor as a matter of law.” PVF and PVF Title filed oppositions to Wyman’s motion. In the court ruling, issued Jan. 29, District Judge Donald C. Nugent noted that at issue in the case is an alleged violation of Section 8(a) of RESPA, which prohibits the award of kickbacks or fees for the referral of a settlement service involving a federally related mortgage loan. Section 8(a) provides that “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.” Nugent noted that there is a limited exception to this rule that applies to AfBAs. RESPA defines an AfBA as “an arrangement in which (A) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1 percent in a provider of settlement services; and (B) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the selection of that provider.” Citing the Department of Housing and Urban Development’s Statement of Policy 1996-2, Nugent added that a referral of an AfBA is not prohibited if: a disclosure is made of the existence of the affiliated business relationship to the person referred and such person is provided with a written estimate of the charge or range of charges generally made by the provider to which the person is referred; such person is not required to use any particular provider of settlement services; the only thing of value that is received from the arrangement is a return on the ownership interest or franchise relationship; and the provider of settlement services must be a “bona fide provider” of such services. Wyman moved for summary judgment solely on the issue of “required use.” He asserted that PVF and PVF Title are affiliates, seeking to avoid Section 8(a) liability by qualifying for the safe harbor provision outlined in Section 8(c)(4) of RESPA. Wyman argued that the safe harbor provision is inapplicable, however, because PVF required him to use PVF Title for settlement services. Nugent disagreed and denied Wyman’s motion for partial summary judgment. “‘Required use’ is defined in pertinent part as ‘a situation in which a person must use a particular provider of settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service.’ Here, plaintiff is entitled to summary judgment on this issue only if he is able to demonstrate that, as a condition of obtaining his mortgage, PVF required him to use PVF Title as his settlement service provider. Accordingly, plaintiff must demonstrate that there are no genuine issues concerning the fact that PVF required him to purchase title insurance from PVF Title,” Nugent said. He concluded that Wyman did not satisfy this burden. “The affidavit of Anne Johnson , the senior vice president of PVF, supports defendants’ position that PVF did not require plaintiff to use PVF Title as a condition for the loan,” Nugent noted. “In addition, the affiliated business arrangement disclosure provided to and signed by plaintiff explicitly states that he was not required to use PVF Title. Based upon this evidence, there is, at the very least, a genuine issue of material fact concerning whether PVF required plaintiff to use PVF Title.” Court opinion Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 16 Feb 2010 00:00:00 EST 9475E6D39A174E6C942D25F271E190DF http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=6E9E1755CD5A4FEEBEF3686527F4BCF8 — from the RESPA statute Thu, 11 Feb 2010 00:00:00 EST 6E9E1755CD5A4FEEBEF3686527F4BCF8 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=147A7A3EC36D49B6B71343E2C8E318A0 While reports of committee talks ensue, a major decision took place this week that could ensure the viability of a new Consumer Financial Protection Agency (CFPA) as part of the reform package. Dodd announced this week that he is no longer working with Sen. Richard Shelby , R-Ala., on bi-partisan efforts for the legislation and will instead begin talks with the newcomer to the committee, Bob Corker , R-Tenn. Dodd had been working with Shelby on bi-partisan efforts for the financial reform package for more than a year, but the partnership came to a halt last week when Dodd said he had hit an impasse with the senior Republican. According to an article in Reuters , this move by Dodd will cut Shelby out of the loop, and possibly increase the likelihood of a new CFPA. Shelby is against this type of agency, which, if created, would pull all consumer financial protection laws (including RESPA and the Truth in Lending Act) from existing regulators and house them under one roof. In addition, the agency would have control over new regulations in the financial services sector. The agency, initially proposed by President Obama , has been paramount in the disagreements between Dodd and Shelby during the drafting stages of the financial regulatory reform legislation. According to Reuters , Corker has also opposed the proposed agency, having referred to it as “a tremendous overreach” and “way out of bounds.” However, Reuters also reported that Corker admitted to CNBC on Feb. 11 that he is willing to work with Democrats on financial reform and that the Dodd-Shelby impasse would lead “toward a legislative train wreck.” Those in favor of a CFPA say it will centralize consumer protection laws and allow for the enforcement of those laws more effectively. They believe that the Federal Reserve Board and others did a poor job of consumer protection that resulted in abusive mortgages and ultimately, the recent financial crisis. Those opposed, including banks and Wall Street, have called the CFPA an unnecessary governmental behemoth that would intrude on the private sector and negatively impact bank profits due to enforcing increased administrative burdens. Although Obama has personally met with Dodd regarding the inclusion of a CFPA in the legislation, Dodd has discussed the possibility of downgrading it. He has mentioned that it could be created as a division of the Treasury Department. According to a report in The Wall Street Journal , to win Senate approval for the legislation, Dodd may need to make this compromise with the Republican members, many of whom oppose a CFPA. Republicans opposed have said that the same federal agency assigned to supervise the financial health of lenders should also oversee consumer protection and the two should not be separated. Rep. Barney Frank , D-Mass., who was successful at getting his financial regulatory reform legislation passed in the U.S. House in December ( HR 4173 ), continues to rally efforts toward a new CFPA (see House passes hefty financial reform legislation ). Recently, he commented on remarks made by Elizabeth Warren , a Harvard law professor and advocate for the consumer protection proposal. “I welcome Elizabeth Warren’s forceful op-ed in today’s Wall Street Journal , making a strong case for increased consumer protection in the financial industry,” Frank said. “No one familiar with the track record of the bank regulatory agencies with respect to protecting consumers can deny the need for an independent agency if we are going to have effective consumer protection. Bank regulators have traditionally treated their responsibilities for consumer protection as a second priority.” Warren wrote in her commentary that Wall Street executives “might have had some thoughtful suggestions for how to better shape a consumer agency. Instead, they have unleashed lobbyists who are determined to do anything to kill the consumer agency.” Frank said that those who cite safety and soundness as a major reason to oppose increased consumer protection “have it backwards. The inability to protect consumers from abuse was a major cause of the financial crisis from which we are just emerging.” Frank added that Warren importantly notes the example of Citigroup’s unsuccessful and unilateral attempt to bring fairness to credit card practices. “This experience demonstrates that competitive pressures will obstruct reform unless it is done by thoughtful legislation and regulation that applies to all,” he continued. Dodd is expected to present a version of the legislation to committee members in late February. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 11 Feb 2010 00:00:00 EST 147A7A3EC36D49B6B71343E2C8E318A0 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=69EA5CC0EE824572A9928A5ADC8001CA — from the RESPA statute, Section 3500.12 Fri, 05 Feb 2010 00:00:00 EST 69EA5CC0EE824572A9928A5ADC8001CA http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=B204E258F1FE4E399C87ADC793DD6A64 The Washington D.C. district court dismissed a RESPA claim against Homecomings Financial, determining that the plaintiff’s Section 8(b) claim in the amended complaint failed to properly relate back to the original complaint, and was therefore time barred. The court did, however, agree to hold in abeyance a ruling on the plaintiff’s ECOA claim giving her an opportunity to amend her complaint to state a claim for disparate impact under ECOA. The case is Shauna Palmer v. Homecomings Financial LLC , and is being heard in the U.S. District Court, District of Columbia.   RESPA allegations On April 26, 2007, Shauna Palmer refinanced her existing first mortgage loan on her home in Washington , D.C. , with a loan from Homecomings. Although her credit score exceeded 700, Palmer was given a loan with an adjustable rate of nearly 9 percent, although she believes she qualified for a fixed rate of around 6 percent. Palmer paid $19,000 in points and fees in connection with the loan. Palmer claims that she was not given an opportunity to read the loan documents at closing and was not informed what her broker's total compensation would be prior to the closing. Palmer alleges generally that the terms of the loan were unlawful, predatory and discriminatory.  Palmer initiated a lawsuit on March 13, 2008, when she filed a complaint in the Superior Court for the District of Columbia . After Palmer filed an amended complaint on Oct. 9, 2008, Homecomings removed the case to federal court on Oct. 27, 2008.  Palmer's third amended complaint asserts two claims: 1) that Homecomings violated provisions of RESPA by giving kickbacks to Palmer's mortgage broker for the referral of business to Homecomings and giving the broker a split of the settlement charges other than for services actually performed; and 2) that Homecomings violated the Equal Credit Opportunity Act (ECOA) by discriminating against Palmer on the basis of her race and/or sex. Homecomings has moved to dismiss on the ground that each of these claims is barred by the statute of limitations in their respective statutes. Palmer contends that her RESPA and ECOA claims are timely because they relate back to earlier pleadings that were timely filed. Homecomings has also moved to dismiss the ECOA claim on the ground that Palmer has failed to state a claim for relief.   The RESPA claim Palmer's third amended complaint alleges two separate violations of RESPA, giving kickbacks to mortgage brokers for the referral of business in violation of § 2607(a) and splitting settlement charges with brokers for services not actually performed in violation of § 2607(b). Although the allegations appeared for the first time in her Oct. 9, 2008, amended complaint, Palmer argued that the claims relate back to the filing of her original complaint, which was filed within a year of the closing.   “The Supreme Court has recently clarified that relation back is improper when the amended claim asserts a new ground for relief supported by facts that differ in both time and type from those the original pleading set forth,” said District Judge Colleen Kollar-Kotelly . “The key question is whether the defendant had reasonable notice of the new claim based on the original pleading.”  Palmer argued that relation back is appropriate because her original complaint stated a RESPA claim and the amended complaint merely elaborated upon that claim.   Kollar-Kotelly noted, however, that RESPA was mentioned only briefly in the original complaint, and that the claim asserted in the original complaint cites RESPA Section 6, 12 U.S.C. § 2605, relating to the servicing of mortgage loans, not a violation of RESPA Section 8, as asserted in the amended complaint.   “Careful scrutiny of the original Complaint reveals, however, that Palmer did not include any allegations pertaining to excessive fees or the arrangement between Homecomings and any mortgage broker,” the judge said. “Indeed, the only statements that could plausibly be interpreted as pertaining to misrepresentations made at the closing are conclusory allegations embedded in the counts for the other listed causes of action.”   Kollar-Kotelly concluded that the RESPA claim asserted in the amended complaint differed in both time and type from the original claims and consequently did not relate back to the filing of her original complaint and is time-barred.   ECOA claim Palmer's third amended complaint raised, for the first time, a claim under the Equal Credit Opportunity Act, which she claims also related back to her earlier complaint.   As with the RESPA claim, Homecomings contended that Palmer's ECOA claim does not relate back because it is not based on the same conduct, transaction or occurrence as that alleged in the earlier pleading. According to the court, unlike the original complaint, however, the amended complaint filed in October 2008 states claims directly related to the refinancing transaction that underlies Palmer's ECOA claim.   Homecomings contended that Palmer's ECOA claim must be dismissed because the allegations in her third amended complaint do not state a claim for relief under the statute and are too conclusory to show that her claim is plausible. Palmer disputed this and argued that she has properly pled a disparate impact claim under the ECOA.   “Palmer does not argue that she is asserting a disparate treatment claim, and it is not apparent from the third amended complaint that she intended to assert one,” the judge said. “In her opposition brief, Palmer explicitly argues that she ‘states a disparate impact claim under the ECOA,’ defines the prima facie case for only a disparate impact claim, and never uses the phrase ‘disparate treatment.’ Although the third amended complaint might possibly be construed to state a claim for disparate treatment, ‘[t]he court's role is not to act as an advocate for the plaintiff and construct legal arguments on [her] behalf in order to counter those in the motion to dismiss.’”   The court noted specifically that Palmer's disparate impact claim is deficient because it does not sufficiently plead a connection between the discretionary pricing policy and a disparate impact on a protected group.   “Most significantly, Palmer only alleges a disparate impact on herself. She does not actually allege that Homecomings' policies have had a discriminatory impact on a whole protected class, nor does she allege any facts relating to the discriminatory impact of such policies. At least one court in this district has dismissed a disparate impact claim where the plaintiff failed to allege any sort of statistical disparity. Palmer's allegations simply do not amount to a claim of disparate impact under the ECOA.”  In conclusion, the court said that because it appeared that the deficiency in Palmer's third amended complaint may be technical, i.e., she failed to allege that other African-American females were adversely affected by the allegedly discriminatory policy, it would afford Palmer an opportunity to cure the defect. Court opinion Comments or questions? Contact Syndie Eardly : seardly@octoberresearch.com .                         Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 29 Jan 2010 00:00:00 EST B204E258F1FE4E399C87ADC793DD6A64 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=9C5CC37286254F68A161B2FA6D77114F — from the Department of Housing and Urban Development’s RESPA final rule Thu, 28 Jan 2010 00:00:00 EST 9C5CC37286254F68A161B2FA6D77114F http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=00AC7CED982F43DE84699C785247811D There has been a tremendous amount of speculation in the media on the status of the Consumer Financial Protection Agency (CFPA) since the U.S. House approved it as part of the Wall Street Reform and Consumer Protection Act ( HR 4173) on Dec 11. For now, the CFPA remains intact as part of HR 4173, which was referred to the Senate Committee on Banking, Housing and Urban Affairs on Jan. 20 for consideration. In this article: Christopher Dodd Wall Street Reform and Consumer Protection Act U.S. Senate HR 4173 Barney Frank Restoring American Financial Stability Act of 2009 Consumer Financial Protection Agency As we await the bill’s markup by the committee, as well as the markup of Sen. Christopher Dodd ’s, D-Mass., companion bill, it will continue to get interesting as the Senate debates its contents and developments occur behind the scenes. According to a report in The Huffington Post , at one point, Dodd was moving toward compromising away the CFPA in order to gain Republican support for other provisions of the bill. President Obama intervened, calling Dodd to the White House to gain his support of the proposed agency. “What’s interesting about Obama’s move last week is not just that he is supporting tough reform legislation, but that he got involved personally, calling Dodd to the White House and extracting his support. Until now, Obama has been mostly hands-off when it comes to financial reform, leaving the details to Tim Geithner and Larry Summers ,” the report noted. The CFPA was first introduced by the Obama administration on June 17 as part of Obama’s major financial regulatory overhaul plan. Under the plan, the CFPA would have the sole job of looking out for the financial interests of Americans by banning unfair practices and enforcing rules. The elimination of a CFPA from the bill has become a sticking point in negotiations with Republican members of the House and Senate, but something Obama, and consumer advocates want included. The CFPA is designed to take consumer protection regulation and oversight authority from other financial services regulators. It would oversee RESPA, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Community Reinvestment Act, the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act and numerous other consumer protection statutes. RESPA would no longer be governed under the Department of Housing and Urban Development. Those in favor of the CFPA have said that it would be beneficial for RESPA and TILA to be regulated by the same agency. With the Federal Reserve Board overseeing TILA, many times the two statutes conflict, particularly in the ways in which they require disclosure of information to consumers in the mortgage loan transaction process. Those opposing have said that creating a behemoth financial protection agency would be an ineffective and counterproductive move by our government. Some are worried that the recent win by Scott Brown , R-Mass., to the U.S. Senate will give Republicans more influence on the financial reform issues, which have been dominated by the Democrats. Investment News reported that “the stunning result in Massachusetts will give Republican members of the Senate Banking Committee a stronger hand in shaping financial reform. Already in jeopardy is the administration’s proposal for a consumer financial protection agency.” Dodd has indicated that he would be willing to extract the CFPA from the bill as long as an existing agency, such as the Treasury Department formed a consumer protection division. Rep. Barney Frank , D-Mass., the original sponsor of HR 4173 and strong advocate for the establishment of a CFPA, has been working closely with Dodd on the reform package. He has issued numerous statements on the reform, including what it entails and why it’s necessary. His most recent announcement came out on Jan. 21 and hammered the media for reporting some inaccuracies about the bill. “Yesterday’s New York Times reported that [the CFPA] ‘exempted smaller community banks, credit unions, retail merchants …’ Not true. All of those institutions will be subject to all rules issued by the agency with respect to the extension of credit. They also will be subject to agency enforcement. The exemption for smaller financial institutions is only with respect to examination which will continue to be the responsibility of the institutions’ prudential regulators,” Frank said. Frank added that the exemption is limited to institutions with less than 2 percent of bank assets. However, he added that the CFPA will have back-up inspection authority and may independently take enforcement action on these smaller financial institutions. “Consumer protection has long been a weak link in our system of financial regulation and the meltdown of the subprime mortgage market is only the most dramatic example of the consequences of our failure in this area. The president’s position on closing this gap is of great importance,” Frank said. In addition to banks, the agency will also have authority with respect to payday lenders and check cashing firms, and independent mortgage brokers and lenders. While the title insurance industry was eliminated from regulatory oversight by the CFPA under HR 4173, the industry would still be overseen by the CFPA under the Senate version, the Restoring American Financial Stability Act of 2009. The direction of this bill is relatively unknown. Each bill is more than 1,000 pages long and includes several provisions. As these bills continue to move toward adoption, RESPA News will continue to report on them as they relate to the mortgage, real estate and settlement services industries and RESPA. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 27 Jan 2010 00:00:00 EST 00AC7CED982F43DE84699C785247811D http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=86BD6F3088C146FBAA00FEB265438087 Credit Plus Inc., a Salisbury, Md.-based credit information provider, has announced the offering of a single-price credit report, of which the price will be based upon a lender’s business model. The new pricing option will assist lenders and mortgage brokers in achieving compliance with the new Good Faith Estimate (GFE) that became effective Jan. 1, 2010, according to a company statement. The new RESPA rules require lenders and brokers to provide customers with a standard GFE designed by the Department of Housing and Urban Development to disclose the loan terms and closing costs. Closing agents are required to provide borrowers with a new HUD-1 Settlement Statement that was designed to compare consumers’ final costs with the originally quoted costs. The aggregate total for several services, which includes the credit report fee, must be within 10 percent of the quoted price. “Offering the option of a single-price credit report provides much-needed flexibility in today’s mortgage environment,” said Greg Holmes , national director of sales and marketing at Credit Plus. “We believe the single pricing structure will facilitate compliance with the new HUD regulations, particularly the Good Faith Estimate.” The Credit Plus single-price credit report will include: Supplements lenders can customize; Potential score improvement alerts; Unlimited secondary use fees; and Unlimited Fannie Mae and Freddie Mac reissue fees. “Long-run and short-run, our single-price credit reports mean lenders and mortgage brokers have one less thing to worry about,” said Holmes. Lenders and brokers who do not wish to purchase single-price credit reports will continue to have the ability to purchase credit reports within Credit Plus’ traditional price structure. Credit Plus offers scoring tools, tax return verifications, flood reports and other services in addition to credit reports. For more information, visit www.creditplus.com . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 25 Jan 2010 00:00:00 EST 86BD6F3088C146FBAA00FEB265438087 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F5554D59DBC94C56B5172E5515992EB9 — The Department of Housing and Urban Development's answer to a question concerning disclosing loan terms on the new Good Faith Estimate. Source : HUD's final rule frequently asked questions report issued Aug. 13, last revised Dec. 30. Thu, 21 Jan 2010 00:00:00 EST F5554D59DBC94C56B5172E5515992EB9 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=3B66F299735342B19A216A02F7A928FF On Jan. 5, 2010, Judge G. Murray Snow , of the U.S. District Court, District of Arizona, issued a court ruling in the case of Cesar Silvas v. GMAC Mortgage LLC , allowing the plaintiff to proceed on one of his three RESPA claims. Snow also determined that the plaintiff properly alleged a violation of the Fair Housing Act (FHA) against First National Bank of Arizona and GMAC Mortgage, who purportedly targeted the plaintiff for predatory loans because of his Latino heritage. Eleven other claims brought against the defendants were dismissed. The case citation is Cesar F. Silvas v. GMAC Mortgage LLC; Mortgage Electronic Registration Systems Inc.; First National Bank of Arizona; Residential Funding Co. LLC; Residential Accredit Loans Inc.; GMAC-RFC Securities; Rali Series 2007-QA3 Trust; Deutsche Bank Trust Company Americas; HSBC Bank USA, N.A.; Executive Trustee Services LLC; John Does and Jane Does 1-1000; ABC Corps. I-XX; and XYZ Partnerships I-XX (No. CV-09-265-PHX-GMS) . In January 2006, the plaintiff, Cesar Silvas , refinanced a home in Chandler , Ariz. Silvas claimed that he applied for a fixed rate loan with a mortgage payment of $972.22 per month. However, at closing, the mortgage had a variable rate feature, interest for only five years, monthly payments of $2,112.99 for an initial 60-month interest only, monthly payments of $3,171.30 for the remaining 239 months of the loan term and a yield spread premium of $1,408.65. Silvas then executed an adjustable rate note and deed of trust. The note listed First National Bank as the lender, and the deed of trust listed Mortgage Electronic Registration Systems Inc. (MERS) as the beneficiary. According to court records, First National issued an allonge to the note for the loan in the amount of $375,641.00 to an unspecified entity. The defendants then placed Silvas’ mortgage in a mortgage loan pool, and the defendants also created cross-collateralization agreements regarding the loan. According to Silvas, Residential Accredit Loans Inc., through its affiliate, Residential Funding, purchased Silvas’ loan. The court also noted that in September 2008, MERS issued a statement of breach or non-performance and that Executive Trustee Services LLC recorded a notice of trustee’s sale. Silvas filed suit in state court in January 2009, and the lawsuit was later removed to federal court. During the lawsuit’s pendency, Silvas’ home was non-judicially foreclosed. In April 2009, the court granted the defendants’ motion for a more definite statement from Silvas regarding his claims. At that time, the court ordered Silvas to follow certain procedures when filing a second amended complaint, including curing deficiencies and specifically alleging the conduct that gave rise to the alleged claims and the injuries that he suffered. According to the defendants, Silvas failed to comply with the order, but Snow said he cannot dismiss Silvas’ complaint solely based on this assessment. In his second amended complaint, Silvas filed 13 claims against the defendants including: violations of RESPA; breach of contract; injunctive relief; conspiracy to commit fraud using the MERS system; claim for quiet title; violations of the Truth in Lending Act (TILA); violations of the Home Ownership and Equity Protection Act (HOEPA), violations of the FHA; violations of the Unfair and Deceptive Acts and Practices and the Arizona Consumer Fraud Act; civil conspiracy; violations of the Fair Debt Collection Practices Act (FDCPA); violations of the Fair Credit Reporting Act (FCRA); and declaratory relief. The defendants filed a motion to dismiss the complaint, and Snow granted the motion for all claims except the RESPA claim alleging that the defendants did not respond appropriately to a qualified written response submitted by Silvas and the FHA claim. Snow also considered a motion by the plaintiffs to “reconsider set aside foreclosure proceeding and void any granting and conveyance of the property.” This request was denied. Snow also denied Silvas’ motion for leave to join additional parties to the case and denied without prejudice his motion for leave to amend the complaint. The eight defendants who filed the motions to dismiss include: GMAC Mortgage; MERS; Residential Funding; Residential Accredit Loans; GMAC-RFC Securities; RALI Series 2007-QA3 Trust; Deutsche Bank Trust Company Americas; and Executive Trustee Services. Two defendants, First National Bank and HSBC Bank USA , N.A. have not joined in any motions. RESPA survives Silvas asserts three RESPA claims against First National and GMAC. These includes a Section 2604 claim for failure to give required disclosures, a Section 2605(e) claim for failure to respond to his qualified written request, and a Section 2607(a) claim for the defendants’ alleged acceptance of kickbacks and referral fees. “Plaintiff’s Section 2604 claim fails because RESPA does not provide a private right of action for disclosure violations,” Snow ruled. “Plaintiff’s Section 2607 claim also fails because plaintiff has alleged no facts supporting such a claim. The complaint states only that ‘RESPA and Regulation X prohibit kickbacks and referral fees under 12 U.S.C. § 2607 and 24 C.F.R. § 3500.14(b) respectively.’ This statement is a legal conclusion; it does not specify who accepted kickbacks, what those kickbacks were, or the circumstances surrounding the transaction. Even after the court’s April 23 order explained the importance of alleging specific facts, plaintiff has failed to do so sufficiently to survive a motion to dismiss, and the court need not address defendants’ other arguments regarding section 2607.” Silvas’ Section 2605 claim survived the motion to dismiss, however. Section 2605(e) requires that “if any servicer of a federally related mortgage loan receives a qualified written request from the borrower (or an agent of the borrower) for information relating to the servicing of such loan, the servicer shall provide a written response” and “provide the borrower with a written explanation or clarification that includes … information requested by the borrower ... and ... the name and telephone number of an individual employed by, or the office or department of the servicer who can provide assistance to the borrower.” “The complaint asserts GMAC is a servicer subject to section 2605 requirements, that plaintiff sent a letter to GMAC on Aug. 27, 2008, that the letter was a ‘qualified written request’ under RESPA, that GMAC received the letter on Sept. 2, 2008, that Foreclosure Defense Group sent another qualified written request to GMAC on Nov. 3, 2008, and that GMAC failed to respond to these inquiries,” Snow said. “This is sufficient factual support to put GMAC on notice of the claims against it.” Snow noted that although the complaint does not list the contents of the letters to demonstrate that they were actually qualified written requests, Silvas submitted a copy of the Aug. 27 letter, which is labeled “qualified written request.” Even absent that document, Snow said that the complaint identifies the letters’ senders, recipients and dates of dispatch sufficiently to raise a plausible claim for a section 2605 violation. “The court considers this for the motion to dismiss because the complaint refers to the document, the document is central to plaintiff’s RESPA claim and neither party questions its authenticity,” Snow added. Fair Housing Act claim Regarding the FHA claim, Snow determined that Silvas has properly stated a claim by asserting that First National and GMAC violated the FHA by intentionally targeting him for predatory loans based on his Latino heritage. The FHA prohibits “any person or other entity whose business includes engaging in residential real estate related transactions to discriminate against any person ... in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status or national origin.” Silvas alleged, among other things, that the “loan transaction subject to this action is a ‘real estate related transaction’ and that ‘defendants intentionally targeted plaintiff based on plaintiff’s race and/or national origin ... making plaintiff susceptible to deceptive lending practices.’” The defendants argued that Silvas did not specify sufficient facts or law on this claim. Snow disagreed. “Plaintiff’s complaint alleges that defendants targeted plaintiff because of his race in order to get him to agree to predatory lending terms. Whether plaintiff can prove these allegations is an issue for summary judgment, not a motion to dismiss ,” Snow said. The defendants also filed a motion for sanctions, indicating that Silvas improperly filed his surreply. Snow denied this motion, noting that the court is reluctant to sanction pro se litigants if less drastic alternatives exist. “Defendants do not cite which subsection of Rule 11(b) plaintiff supposedly violated, but defendants do contend plaintiff’s actions have ‘needlessly driven up the costs of this litigation,’” Snow said. “It is mere speculation, however, to say that this pro se plaintiff filed the surreply ‘for any improper purpose, such as to harass, cause unnecessary delay or needlessly to increase the cost of litigation’ in violation of Rule 11(b). It is equally plausible that plaintiff merely misunderstood the local rules. ” Court opinion Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 19 Jan 2010 00:00:00 EST 3B66F299735342B19A216A02F7A928FF http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=A646F774DFBB40EA8CC87A4F0BD3F6BD — from the Department of Housing and Urban Development's RESPA final rule frequently asked questions guide Fri, 15 Jan 2010 00:00:00 EST A646F774DFBB40EA8CC87A4F0BD3F6BD http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=83A57BF4306B47C29623DEF8C3A5FD59 A  California federal judge said he could not consider kickback claims brought by the borrowers of a refinance transaction against their lender because the claims were not submitted in the first amended complaint, but rather in the opposition to the defendant’s motion to dismiss. The judge allowed the plaintiffs’ qualified written request claim to proceed, dismissed all seven of their state law claims and allowed the plaintiffs leave to amend on their Truth in Lending Act (TILA) claims. The case is Steve Lopez and Carmen Lopez v. Wachovia Mortgage, World Savings Bank, Comstock Mortgage, David Mendoza, Adrian Del Rio and Does 1-20 inclusive (No. 2:09-CV-01510-JAM-DAD) . In June 2006, the plaintiffs, Steve and Carmen Lopez obtained an adjustable rate mortgage loan from Wachovia Mortgage (formerly known as World Savings Bank) to refinance their property located in Elk Grove , Calif. The Lopezes allege that they did not receive the required loan disclosures, the disclosures were not clear and the mortgage brokers (not parties to this motion) misled them regarding the loan terms. The Lopezes defaulted on the loan in February 2009. According to the court, they were notified by Wachovia in March 2009 of its intent to foreclose. The plaintiffs claim that in April 2009, they sent Wachovia a letter, which qualified as a written request under RESPA, 12 U.S.C. § 2605. The letter demanded that Wachovia rescind the loan under a provision of the Truth in Lending Act (TILA). The Lopezes filed suit and on Oct. 15, 2009, the court granted in part and denied in part Wachovia’s motion to dismiss the Lopezes’ first amended complaint. The second amended complaint alleged RESPA and TILA violations; a violation of the California Rosenthal Act; negligence; breach of fiduciary duty; fraud; violation of the California Business & Professions Code; breach of contract; and breach of implied covenant of good faith and fair dealing. On Nov. 20, 2009, Judge John A. Mendez , of the U.S. District Court, Eastern District of California, ruled on the matter, granting in part and denying in part Wachovia’s motion to dismiss the claims. RESPA claims The Lopezes allege that Wachovia violated RESPA by failing to make correct disclosure requirements, failing to respond to their qualified written request (QWR), and engaging in a practice of non-compliance with the requirements of the mortgage servicer provisions as set forth in RESPA 12 U.S.C. § 2605. Wachovia argued that the Lopezes failed to state a claim under RESPA because the first amended complaint did not specify what provision of RESPA was violated. According to the court, in the plaintiffs’ opposition, they alleged a violation of RESPA section 2605(e)(2) for Wachovia’s failure to respond to a QWR; a violation of section 2607 (receiving kickbacks); and a violation of 2603(b) for failure to provide an itemized list of charges before closing. Mendez dismissed all the RESPA claims, except the QWR claim. “There is no private right of action for violations of § 2603(b),” Mendez said. “RESPA provides for a private right of action for claims brought under sections 2605, 2507 and 2608 only. Accordingly, defendants’ motion to dismiss with respect to the section 2603(b) claim is granted with prejudice.” Regarding the claim that Wachovia was involved in illegal kickback activity, Mendez said that the court cannot consider this allegation because the claim was raised in the opposition to Wachovia’s motion and not in the first amended complaint. However, Mendez said that the Lopezes have stated a claim against Wachovia for not responding appropriately to the Lopezes’ qualified written request (section 2605(e)(2). The Lopezes also alleged that they incurred damages from this violation. Mendez allowed the Lopezes to proceed with this claim. TILA claims The Lopezes allege that Wachovia violated TILA, 15 U.S.C. § 1601 et seq., and seek damages and rescission. The alleged violations include: failing to provide required disclosures; failing to make required disclosures clearly and conspicuously in writing; failing to timely deliver to the Lopezes required notices; placing terms prohibited by TILA into the transaction; and failing to disclose all finance charge details. Mendez dismissed the TILA claims with leave to amend. He noted that although the defendants have provided evidence that the claims are time-barred by TILA’s one-year statute of limitations, the Lopezes may be entitled to have the limitations equitably tolled. “Plaintiffs consummated their loan in June 2006, but their complaint was not filed until May 25, 2009, well over a year after the consummation of the transaction,” Mendez noted. “The first amended complaint (FAC) alleges that ‘The misrepresentations and allegations stated herein were all discovered within the past year such that any applicable statutes of limitations are extended or should be extended pursuant to the equitable tolling doctrine or other equitable principles.’ Beyond this conclusory statement, the FAC does not contain any relevant dates or similar information to provide a basis from which to allege equitable tolling.” The Lopezes also claim that the loan should be rescinded under TILA because of Wachovia’s failure to provide the required disclosures. Wachovia argues that this claim should be dismissed because the Lopezes do not allege their ability to tender the full amount of the loan. According to Mendez, the 9th U.S. Circuit Court of Appeals has held that rescission under TILA “should be conditioned on repayment of the amounts advanced by the lender.” “Here, plaintiffs’ claim under TILA for rescission fails because the FAC contains no allegations that plaintiffs are able to tender the full amount of the loan principal,” Mendez said. “Accordingly, plaintiffs’ claim for rescission under TILA is dismissed with leave to amend.” State law claims Regarding the Lopezes’ state law claims, Wachovia argues that they are preempted by the Home Owner’s Loan Act (HOLA), since Wachovia is a federally regulated savings bank, subject to the regulations of the Office of Thrift Supervision (OTS) and operated under the laws of HOLA. Mendez agreed. “All seven claims are preempted by HOLA because each cause of action is based upon allegations pertaining to defendants’ lending operations,” he said. “Plaintiffs make allegations regarding the terms of credit provided by defendant, disclosures that were or were not provided by defendant, defendants’ underwriting standards, and defendant’s marketing and servicing of the loans.” Mendez noted that “these activities are matters committed by Congress to regulation by a federal agency” and dismissed the state law claims with prejudice. Mendez allowed the Lopezes 20 days from the date of the ruling to file a third amended complaint. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 15 Jan 2010 00:00:00 EST 83A57BF4306B47C29623DEF8C3A5FD59 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=D87BB67E76AB44CD81598B9558D34F5B The Department of Housing and Urban Development (HUD) and the state of Alaska ’s Division of Insurance (DOI) announced on Jan. 12 that they have settled with Alyeska Title Guaranty Agency over alleged violations of RESPA and Alaska ’s anti-rebating law. HUD and the Alaska DOI claim that Alyeska paid a sham employee for referring consumers to the title company. Under the terms of the settlement, Alyeska has agreed to cease the alleged sham employment arrangement and pay up to $155,000 to the U.S. government and the state of Alaska . “Consumers are the ones who ultimately foot the bill from unethical practices in mortgage transactions,” said David H. Stevens , HUD’s assistant secretary for Housing and Federal Housing commissioner. “Working closely with our partners in Alaska , we hope this settlement will send a clear message that we have zero tolerance for unethical behavior in mortgage lending.” After a joint investigation, HUD and the Alaska DOI alleged that since at least 2003, Alyeska maintained a sham employment arrangement with Kirk Wickersham , owner of FSBO System Inc. According to HUD, Wickersham, as a “title marketer,” was paid a percentage of Alyeska’s title insurance premiums in exchange for referrals he made to Alyeska. HUD also claims that Wickersham did not provide any actual services to Alyeska and that Alyeska and Wickersham created the arrangement to disguise payments of referral fees to Wickersham. Alyeska terminated its relationship with Wickersham on Jan. 14, 2009, and claims that it does not have similar relationships with other individuals. “This action should serve as a warning that we expect strict adherence to both RESPA provisions and Alaska insurance statutes and regulations by those involved in the title insurance and real estate industry,” said Linda Hall , director of the Alaska DOI. HUD claims that the alleged actions are a violation of Section 8 of RESPA, which prohibits a person from giving or accepting anything of value in exchange for the referral of settlement service business. RESPA also prohibits a person from giving or accepting any part of a charge for services that are not performed. The State of Alaska ’s anti-rebating statute (AS § 21.66.310) prohibits title companies and their agents from giving anything of value, directly or indirectly, as an inducement to obtaining title insurance business. In addition, state law prohibits a person in the real estate services industry, or any other person, from receiving, directly or indirectly, any rebate, reduction, or a special favor or advantage, or a monetary consideration or inducement. In agreeing to the settlement terms, Alyeska denied any wrongdoing or that its conduct violated RESPA or Alaska statutes. The terms of payment state that within 30 business days of the Jan. 11 effective date of settlement, Alyeska must pay $25,000 each to the U.S. Treasury and the Alaska DOI. Then, within one year of settlement, Alyeska must make payments in the same amount to the two parties. Finally, within two years of settlement, Alyeska must make a third payment of $55,000 to HUD and the Alaska DOl, split equally. However, according to HUD, this third payment may be waived provided that Alyeska fully complies with the terms of the agreement and does not violate the Alaska insurance code or regulations, or any provisions of RESPA and its implementing regulations. Click here for a copy of the settlement agreement. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 13 Jan 2010 00:00:00 EST D87BB67E76AB44CD81598B9558D34F5B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=DA3504BEB24349E4B1ED3FE0A8F810CE — from the RESPA statute Fri, 08 Jan 2010 00:00:00 EST DA3504BEB24349E4B1ED3FE0A8F810CE http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=352B3F6DF961497FBCAC879084CAF8AA The Real Estate Services Providers Council Inc. (RESPRO) has developed a Model Good Faith Estimate (GFE) cost indemnification agreement and model services agreement for its members to use now that the Department of Housing and Urban Development’s (HUD) new RESPA disclosures have taken effect.   “RESPRO’s new model RESPA agreements are designed to reduce our members’ up-front legal costs when they implement HUD’s new RESPA disclosures and requirements on Jan. 1,” said RESPRO Executive Director Sue Johnson .   HUD’s new RESPA disclosures will, for the first time, subject mortgage originators to liability if certain final closing costs exceed those estimated on the Good Faith Estimate (GFE), which is provided three days after the loan application. When a loan originator permits a borrower to shop for third-party settlement services, HUD requires the loan originator to provide the borrower with a written list of settlement service providers along with the GFE. If the borrower uses a settlement service provider on this list, the final cost for that service cannot exceed 10 percent of the estimated cost on the GFE.   RESPRO’s model GFE cost indemnification agreement identifies the responsibilities of both the loan originator and the third-party settlement service provider if the final cost of a settlement service subject to HUD’s new 10 percent tolerance requirement exceeds the new limit. Its model services agreement is an alternative form that can be used in states with laws and/or regulations that restrict indemnifications.   Before being finalized, RESPRO’s model RESPA agreements were discussed and reviewed by its mortgage and title task forces, thereby allowing RESPRO members from those industries to provide separate industry perspectives and recommendations on their content.   According to Johnson, the model agreements are exclusive for its members and can be modified.   “RESPRO’s diverse membership often can reach a consensus on RESPA issues that otherwise could create an inherent conflict among two or more industries,” Johnson said.   RESPRO members can download the model GFE cost indemnification agreement and/or services agreement from RESPRO’s Web site at www.respro.org .   Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 05 Jan 2010 00:00:00 EST 352B3F6DF961497FBCAC879084CAF8AA http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=B8FE9A3502594DD08D7E2AFB4E30B90B The Department of Housing and Urban Development (HUD) removed its 1 percent origination fee cap on loans insured by the Federal Housing Administration (FHA), according to a mortgagee letter sent out on Dec 30. The letter indicated that the FHA is lifting the cap in accordance with HUD’s new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms, which went into effect on Jan. 1. Mortgagee Letter 2009-53 clarifies how fees and charges for Federal Housing Administration (FHA)-insured loans must be disclosed on the new GFE and HUD-1. At the top of Page 2 on the new GFE, loan originators must disclose the sum of all fees and charges from origination-related services, including all compensation paid to the lender and/or broker. In recognizing that this bundled way of disclosing origination fees will most often result in a sum that would exceed the 1 percent cap, HUD said it is lifting the restriction, effective Jan. 1. According to Phil Schulman , a partner with Washington, D.C.-based K&L Gates, this letter is welcome news for FHA lenders who are ready to comply with RESPA’s new GFE and HUD-1 forms. He cautioned however, that lenders will still be held to certain standards for their fees. “Before FHA lenders get excited about unlimited origination charges, HUD reminds lenders that their fees must continue to be ‘fair and reasonable’ for the origination services performed in connection with FHA loans,” Schulman said. “Moreover, HUD makes clear that it intends to issue additional guidance on the amount of fees that FHA lenders may charge their borrowers.” Schulman said he expects HUD will issue this additional guidance early in the year. “Don’t be surprised if this additional guidance results in a percentage cap on the overall amount of fees that can be charged to the FHA borrower,” he said. Howard Lax , a partner with Michigan-based Lipson, Neilson, Cole, Seltzer & Garin, PC, said it is important to note that the FHA commissioner “retains the authority to set limits on the amount of any fees that mortgagees charge borrowers for obtaining an FHA loan.” HUD also stated in the letter that lenders must continue to adhere to their state law requirements. “Although the new GFE requires that lenders provide an aggregated cost for origination services, if a government program or state law requires that lenders provide more detailed information to specify distinct origination fees and charges, lenders may itemize these charges in the empty 800 lines of the HUD-1, to the left of the column,” the letter said. Lax said this statement is consistent with information provided previously by HUD in its final rule frequently asked questions report, which asked: “If state law requires further itemization of loan originator fees such as a commitment or underwriting fee, how should these fees be listed on the HUD-1?” HUD’s answer was: “If state law requires further itemization of loan originator fees than required under RESPA, those fees may be treated as other required disclosures and itemized on Line 808 and additional lines in the 800 series on the HUD-1 with the charge listed outside the borrower‘s column.” Lax explained further, “Hence, the 800 series on the HUD-1 may be filled in differently for government loan programs and loans in some states, and you will have to program your system to break out doc prep and other fees for loans that require individual fee disclosures by law or regulation. But there will be no itemization of these fees for other loans.” In addition, the letter states that limits remain on the amount of origination fees charged in connection with Home Equity Conversion Mortgages and Section 203(k) Rehabilitation loans. According to Lax, a day after the mortgagee letter was issued, HUD sent out a revised version to correct information that was in direct conflict with a statement made by HUD in its FAQ report. Lax said the original letter, issued on Dec. 30, stated that the new GFE and HUD-1 forms must be used for all loans “closed” on or after Jan. 1, 2010. The revised version was corrected to read: “The new forms must be used for mortgages that originated on or after Jan. 1, 2010.” The revised version replaced “closed” with “originated” to remain consistent with HUD’s previously issued FAQ. “HUD’s FAQ requires lenders to use the old HUD-1 Settlement Statement for loans closing in 2010 when a GFE is issued on the old form in 2009,” Lax said. Click here for a copy of Mortgagee Letter 09-53. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 05 Jan 2010 00:00:00 EST B8FE9A3502594DD08D7E2AFB4E30B90B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=E8ED309D2FB94C379209BCB6F1DB3CE6 In this article: Cypress Software Systems Good Faith Estimate loan origination software RESPA compliance Cypress Software Systems, a North Richland Hills, Texas-based loan origination software provider, announced Dec. 21 that it is offering consulting services as well as enhanced versions of its Mark IV automated loan software and Mark IV Mortgage Module to help financial institutions quickly achieve compliance with the new RESPA rule. The RESPA rule, which went into effect Jan. 1, requires lenders to use a new standardized Good Faith Estimate (GFE) and revised HUD-1 Settlement Statement form. The forms were designed by the Department of Housing and Urban Development to provide clearer disclosures of closing costs to consumers. Cypress ’ Mark IV is a software platform that automates the consumer loan application and decision process, and helps institutions with risk management issues. According to a company source, service associates electronically input application information while interviewing customers. The software then retrieves credit reports, analyzes the capacity for repayment and deploys the institution’s loan policies. “The result is a quality loan decision that meets all federal requirements, provides the highest levels of risk management available in the industry and ensures consistency within the loan portfolio,” the company source said. According to Janette VanMeter , senior vice president of Stillwater National Bank in Tulsa , Okla. , Cypress ’ products have proved beneficial at her institution. “Consumer protection is a big deal throughout the industry and among government regulators, and the Regulation Z and RESPA acts are likely only the first steps in what is expected to be sweeping reform,” VanMeter said. “Among the partners who have helped us gain compliance, Cypress and its Mark IV consumer loan processing software has been among the most beneficial. They have put safeguards in place that will guarantee our compliance, so we don’t have to necessarily know and understand every aspect of each new rule and regulation.” VanMeter said Stillwater has been a user of Cypress ’ software since 2002 and she thinks the provider has done an “over-the-top” job with its RESPA compliance updates and training. “Any bank who is not compliant should strongly consider automated lending solutions like Cypress ’ Mark IV,” she noted. John Misiora , vice president and manager of consumer loans at Centier Bank of Merrillville , Ind. , said that while the information and tools provided by the federal government have helped some, they do not address all the issues. He added that software providers have had to step in to fill that void. “Despite the information provided by federal agencies, we were still struggling with some gray areas. For example, if the government provided sample GFEs addressing various scenarios, it would have saved a lot of headaches,” Misiora said. “ Cypress has addressed these lapses and has handled the regulatory changes very well in its latest version of Mark IV and the Mark IV Mortgage Module.” Cypress said its updates to the Mark IV consumer lending platform and Mark IV Mortgage Module provides user-friendly navigation through the regulatory changes, thereby helping loan officers manage loans from application entry through underwriting. “In light of the recent credit crisis, the finance industry will expectedly be hit with new rounds of federal regulations in the months and years ahead,” said Stephen G. Sargent , president and CEO of Cypress Software Systems. “At Cypress , our people and our technology help financial institutions mitigate the impact of these regulations by working in tandem with the institution to create a lending process that is quickly adaptable to changes, while boosting overall efficiency and competitiveness.” Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 04 Jan 2010 00:00:00 EST E8ED309D2FB94C379209BCB6F1DB3CE6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=1FC72AB576F445A7A1919A72366D2252 A California federal court denied a lender’s motion to dismiss RESPA and Truth in Lending Act (TILA) claims against it, saying the facts as set forth in the complaint did not foreclose equitable tolling as a matter of law. The case is: Elija V. Madrid v. J.P. Morgan Chase Bank, N.A., Chase Home Finance LLC FKA Chase Manhattan Mortgage Corporation, Trident Financial Group, Ndex West LLC, Does 1 through 100 (U.S. District Court, for the Eastern District of California, No. 09-cv-00731-JAM-GGH) . The facts Elija V. Madrid purchased her home in Antelope, Calif. , in March 2006, acquiring two adjustable rate loans from JP Morgan Chase. Chase Home Financing was assigned as the beneficiary under the Deed of Trust in July 2008. She eventually defaulted on the loan and a trustee’s sale was scheduled for Oct. 22, 2008. The property was not sold at that time, and in March 2009, Madrid filed a complaint against the defendants, along with an ex parte motion for a temporary restraining order and a preliminary injunction to block a future foreclosure sale of the subject property. The temporary restraining order and the preliminary injunction were denied by the court. Additionally, Madrid filed for Chapter 7 bankruptcy on March 30, 2009. Defendants argued that Madrid lacked standing because she is in Chapter 7 bankruptcy proceedings. However, at the Aug. 12, 2009, hearing it was established that Madrid ’s bankruptcy case was discharged. Thus the court determined Madrid had standing to proceed with the action. The defendants then filed a motion to dismiss the allegations. What the court decided The court found that the allegations in the complaint did not foreclose equitable tolling as a matter of law, and denied defendant’s motion to dismiss the TILA claim for damages as well as one of the RESPA claims. “Plaintiff alleges that she received the Note and two Truth in Lending Disclosure Statements (TILDS) on the same day that contained contradictory terms and did not clearly and conspicuously disclose the terms of her loans,” the court noted. “The nature of these allegations makes plausible plaintiff’s inability to discover the alleged disparity between the disclosure documents and the actual terms of her loan.” Madrid further alleged that the defendants failed to provide her with a Good Faith Estimate and made her pay an illegal yield spread premium in violation of RESPA. “Similar to TILA, 12 U.S.C. § 2614 imposes a one-year statute of limitations on RESPA claims, which defendants argue bars plaintiff’s claims,” the court noted. “However, equitable tolling applies to RESPA claims, and equitable tolling must be considered when the complaint ‘adequately alleges facts showing the potential applicability of the tolling doctrine.’ Therefore, this court declines to dismiss plaintiff’s claim at this stage of the litigation and will permit the parties to engage in a fact-based inquiry as to whether equitable tolling applies.” The court noted that Madrid alleged that the yield spread premium was an unearned fee in violation of 12 U.S.C. § 2607 and averred that the allegation was sufficient to overcome a motion to dismiss. “Plaintiff's second claim under RESPA is that defendants failed to provide her with a Good Faith Estimate within three business days of her initial application as required,” the court said. “However, courts are clear that there exists no private right of action for violation of 12 U.S.C. § 2604(c). Thus, defendants’ motion to dismiss plaintiff’s RESPA claim under section 2604(c) is granted.” Madrid ’s complaint also included 10 state law claims all of which were dismissed, several with leave to amend. The following was the court’s determination: California Civil Code § 1916.7 claim: Motion granted without prejudice; Fraud claim: Motion granted without prejudice; Void Contract claim: Motion granted with prejudice; Covenant of good faith/fair dealing claim: Motion granted without prejudice California Business & Professions Code § 17200 et seq. claim: Motion granted with prejudice; Unjust Enrichment claim: Motion granted without prejudice; Slander of Title: Motion granted with prejudice; Quiet Title: Motion granted without prejudice; Civil Conspiracy: Motion granted with prejudice; and Declaratory Relief: Motion granted with prejudice. The court also granted the defendant’s motion to dismiss a cause of action for preliminary and permanent injunctive relief, noting that the claim for injunctive relief is grounded in Madrid ’s claims of fraud and misrepresentation, as well as her allegation that defendants “failed to make good faith reasonable efforts to attempt to make a mortgage work out plan.” “Plaintiff’s allegation that defendants did not negotiate a mortgage work out plan does not state a claim, and cannot be used as the basis for injunctive relief,” the court said. “The allegations of fraud and misrepresentation upon which plaintiff also relies for injunctive relief have been dismissed with leave to amend, as plaintiff failed to plead fraud with required particularity. Accordingly, the cause of action for injunctive relief is also dismissed, with leave to amend.” Court opinion Comments or questions? Contact Syndie Eardly : seardly@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks.   Fri, 18 Dec 2009 00:00:00 EST 1FC72AB576F445A7A1919A72366D2252 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8C5760EC6B4A4D55BDEA50D1C1BF1606 — from the Department of Housing and Urban Development's Frequently Asked Questions on the RESPA final rule Fri, 18 Dec 2009 00:00:00 EST 8C5760EC6B4A4D55BDEA50D1C1BF1606 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=1F64D9B3950C48208D037C4E53029F6B Columbia, S.C.-based Avista Solutions announced on Dec. 18 that its Avista Agile suite of products, whether for retail, wholesale or correspondent lending, has been updated to comply with the new RESPA rules that go into effect on Jan. 1, 2010. Avista Solutions provides loan origination software solutions for the mortgage industry. Avista reported that at the heart of the RESPA changes is the consumer concern that the initial transaction outlined in the Good Faith Estimate (GFE) can change by the time the loan is closed, with unexpected fees showing up on the HUD-1 Settlement Statement.  The new RESPA rules require that the documents be consistent, and if there are changes, they be supported by specific documented changes in the circumstances of the loan. If the interest rate or amount financed changes, for example, additional fees may be incurred that constitute a valid change in circumstances, and this information has to be re-disclosed and specified on the settlement statement. “Avista Solutions provides side-by-side comparison screens for users to check for variances between the GFE and HUD-1 easily and quickly,” the company stated. “All changes of circumstance can be tracked and are instantly available for review.” According to Avista, since its suite of products is Web-based, the changes to the system were made centrally by the company as part of its December compliance update. The company has indicated that this centralized software management approach will make it easy for Avista’s clients to ensure they have the most current software available. “We designed our system to provide the most modern, up to date loan origination technology in the business,” said Mark Phlieger , co-founder and CEO of Avista Solutions. “Not only does this mean that lenders no longer have to pay huge purchase costs to have the best system, it also means that important changes like the new RESPA requirements can be implemented with virtually no technology effort on their part. We take care of the software, enabling them to take care of their customers.”    Avista’s client base is comprised of regional and community banks, mortgage bankers and credit unions. For more information, visit www.AvistaSolutions.com. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks Fri, 18 Dec 2009 00:00:00 EST 1F64D9B3950C48208D037C4E53029F6B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=2F98193040A44F0CAA95B7A66DE70D65 LenderLive Network Inc., a Denver-based provider of business process outsourcing and technology to the financial industry, confirmed on Dec. 16 its completion of all software upgrades and modifications necessary for ensuring its services are compliant with the Department of Housing and Urban Development’s RESPA final rule, set to take full effect on Jan. 1, 2010. The new rule requires that lenders and brokers provide consumers with a standard Good Faith Estimate (GFE) — which discloses key loan terms and closing costs — and closing agents will be required to provide consumers with a new HUD-1 Settlement Statement. “We want our clients to be confident in the fact that all of our services and technology are compliant with the forthcoming regulatory changes, assuring them that we have made the adjustments to eliminate any burden or incompliance,” said Rick Seehausen , president and CEO of LenderLive. “Entering 2010 will no doubt be a time of great transition for the mortgage industry, but our customers can rely on LenderLive to support the same scalable, cost effective solutions that keep them current and competitive in the mortgage market.” LenderLive said it has updated its documents to reflect the new RESPA changes and minimize the transitional burden on its customers in complying with new reporting procedures. In preparation of the newly required fee and income disclosures, the company has updated the GFE and Truth in Lending Act forms and has ensured that all forms meet the federal and state compliance regulations. LenderLive has offered the single-family mortgage loan industry with private-label service and technology solutions to originate, process, underwrite and close loans on behalf of its clients since 1996. For more information, visit www.lenderlive.com . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 16 Dec 2009 00:00:00 EST 2F98193040A44F0CAA95B7A66DE70D65 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=89E1A30848FF4791B0CF163A9AF0A763 Byte Software, a Kirkland, Wash.-based provider of loan origination software for banks, credit unions, mortgage bankers and mortgage brokers, released BytePro version 4.1, which contains features to meet the new RESPA requirements. The additions include the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms which are required for loans originated on or after Jan. 1, 2010. According to a company statement, the technology in BytePro 4.1 helps originators comply with some of the more complex aspects of the new RESPA requirements. For instance, BytePro captures and tracks the fee amounts that are disclosed on the GFE when it is first delivered to the borrower. This enables the software to provide alerts when there is a tolerance violation and also ensures that reissued GFE’s contain only fee changes that are the result of bona-fide “changed circumstances.” Version 4.1 also contains several new forms directly related to the new RESPA rules: A GFE Acknowledgement form; A Changed Circumstance form; A Shoppable Providers List; and A Closing Cost Estimate Worksheet, which provides the same detailed breakdown of costs that is contained on the pre-existing GFE. In addition, BytePro version 4.1 contains a number of other important new features: Higher priced mortgage loans, as defined by Section 35 of the Truth in Lending Act, are identified automatically; The maximum mortgage amount calculations for Federal Housing Administration streamlined refinances have been updated; and The 1008 Transmittal has been revised as required by Fannie Mae effective Jan. 1, 2010. “From tracking tolerance violations to identifying higher priced mortgage loans, BytePro demonstrates how technology can be employed to help companies comply with recent regulatory changes,” said Joe Herb , general manager of Byte Software. Founded in 1985 by mortgage professionals, Byte Software is a wholly-owned subsidiary of CBCInnovis, a provider of real estate settlement services and fraud prevention solutions. To learn more visit www.bytesoftware.com . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 14 Dec 2009 00:00:00 EST 89E1A30848FF4791B0CF163A9AF0A763 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=0643105E546F4F89A7322900306A48F3 Loan originators and closing agents need to begin using the new Good Faith Estimate (GFE) and HUD-1 Settlement Statements mandated by the Department of Housing and Urban Development (HUD) by Jan. 1, 2010. Minneapolis, Minn.-based Dexma has recently informed all of its lender-customers that the Dexma software they are using is now compliant with these new RESPA regulations. According to Dexma, over the past several months, it has applied extensive enhancements to its software to help lenders comply with the new RESPA rules, which have been ever-changing in response to frequent HUD updates. HUD requires loan originators to provide borrowers a standard GFE that clearly discloses key loan terms and closing costs and closing agents must provide borrowers with a new HUD-1. To allow its customers to comply, Dexma has made significant changes to the settlement costs screens and editors in its Web-based mortgage platforms. “As with any regulatory change, enabling our customers to be compliant on day one of the new regulations was very important to us,” said Sheila Plunkett , Dexma’s EVP sales and marketing. “However, this isn’t just any regulatory change and we know it is top-of-mind with our customers. Allowing our customers to be compliant provides them with an important competitive advantage in an ever-changing mortgage marketplace.” Dexma has implemented the changes in a way that’s consistent with its philosophy of allowing customers to configure the software to fit their business. Fees, loan terms and important dates that will appear on new GFE and HUD-1 screens can all be configured. A new GFE screen allows originators to compare the fee amounts, interest rates and points that were disclosed to the borrower on the GFE to those on the final loan and alerts them to any fee variances. According to the new RESPA rule, loan originator fee amounts charged to the borrower at settlement cannot change from what was quoted to them on the GFE unless there’s a valid “change in circumstances.” The new ruling also states that lenders must store a record of changes in circumstances for at least three years. To account for this, Dexma said it created new functionality to allow the originator to document any valid change in circumstance and re-disclose to the borrower on a revised GFE. In addition, a new change history screen in the Dexma platform displays any changes made to the disclosed interest rate and fees, along with the reason for the change. A record of the changes in circumstances will be available for three years. According to Dexma, any attempt to generate a new GFE automatically redirects the loan originator to the GFE details page if the fee amounts, interest rate or points on the loan are different from those originally disclosed to the borrower on the GFE. The loan originator must document any change in circumstances prior to requesting the GFE. Dexma said the software will continue to support both the old and new versions of the GFE and HUD-1, because if the original GFE was issued prior to Jan 1, 2010, but the loan closes after Jan 1, the closing agent must use the old version of the HUD-1. The Dexma Lending Suite is a fully integrated Web-based platform that enables loans to stay on one system from the point of sale through origination, processing and now, secondary marketing with the addition of the Dexma Secondary Marketing Center . As with any Dexma upgrade, the RESPA enhancements are released automatically and customers never need to worry about whether they have the latest version of the software, Dexma said. For more information, visit http://www.dexma.com . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 14 Dec 2009 00:00:00 EST 0643105E546F4F89A7322900306A48F3 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=EBBEAA9ADAD149BB8C8D866A5FC3DFAF — from the RESPA final rule Thu, 10 Dec 2009 00:00:00 EST EBBEAA9ADAD149BB8C8D866A5FC3DFAF http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=A9D877CDC7AD4A97A8B7E35C7C2EAAB1 Following the lead of agents in California , Florida title agents are spearheading an effort to introduce and enact legislation that would encourage shopping for title insurance and prohibit real estate owned (REO) property sellers from requiring buyers to use a specific title agent as a contingency of the sale.   Bob Booth , president of Community Land Title Corp., is spearheading the effort to draft bill language and find a sponsor in the legislature and has done significant research of the situation in Florida .   “It’s dizzying: A select group of lender-directed title agents appear to be handling a minimum of 90 percent of the REO sale transactions in the state. A sampling of 195 REO deeds recorded in the public records of St. Lucie County, Fla. in the month of August 2009 revealed that it happened in 188 of those transactions; or about 96 percent of the time,” Booth said.   “State laws in  Florida currently do not provide Florida homebuyers with any legal right to afford them an opportunity to shop around and select their own title insurance company,” Booth added. “Lenders and asset management companies are almost never allowing homebuyers to have any say in the matter. In fact, they are oftentimes flatly declining to even accept a homebuyer’s offer to purchase a foreclosed home unless the homebuyer agrees to go with the title company selected for them by the lender or the asset management company.”  A recent presentation on the proposed Florida Homebuyer’s Choice Act states that the bill would be similar to California ’s AB 957 , which was signed into law in October.   “Their emergency act mirrored that of current federal law, the Real Estate Settlement Procedures Act, which prohibits a seller of a residential property from requiring or influencing a homebuyer to purchase title insurance or closing services from a company chosen by the seller. California ’s bill essentially expanded these same federal laws into California state law to govern the sale of foreclosed homes,” the presentation states.  “An Act similar in nature is proposed for the protection of the citizens of the state of Florida; a byproduct of the Act would also enable thousands of small businesses located throughout every community in the state the ability to compete to provide title insurance products and closing services at more competitive prices and deliver homebuyers the level of closing services that only local title insurance companies can provide. The Act would include a time limit of approximately 5 years as a lifespan and would include a vehicle to provide Florida homebuyers the right to accept a lender’s chosen title company or escrow agent, provided proper written disclosure is first provided to the prospective homebuyer,” the presentation continues.   Though the Florida Land Title Association (FLTA) has not taken a stand on the issue, FLTA president Shelley Stewart acknowledged the concern.   “There is concern that closings are being handled by outside companies that require the Florida consumer to pay more for services than those that would be normally charged by a local title agent, or are paying fees which are not compliant with state regulation. The FLTA stands behind the enforcement and advancement of legislation and regulations, both at the state and federal level that provides for full disclosure to the consumer and consumer choice,” she said.  She added that as legislation develops, FLTA committees will review any proposed bills and determine if the association is in favor or opposed to each specific piece of legislation. She also emphasized the need for state-focused legislation on the issue, as property laws are different from state to state.   “Real estate practices can be different from county to county, which is why local knowledge is so critical,” Stewart said. “We need to assure that there is a component of specific local industry expertise that the consumer benefits from. Legislation crafted for California and their practices would be different than for Florida , although some of the goals are the same.”   She also said that all state and national land title associations strive to make sure RESPA is being complied with.  “The goals to close any ‘loopholes’ or ways to avoid compliance with the RESPA federal requirements due to go into effect on Jan. 1, 2010, which result in lack of transparency or excessive fees to the consumer, are shared by all legitimate members of state and national land title associations,” she added.   Booth said the effort in Florida has been gaining steam, sponsorship appears likely and he anticipates a bill being considered by the legislature in the next session, which convenes in March. Comments or questions? Contact Andrea Golby : agolby@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 10 Dec 2009 00:00:00 EST A9D877CDC7AD4A97A8B7E35C7C2EAAB1 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F4BC21853E7E4E1D8F9735B26FB02CE6 A bipartisan bill will be introduced this week in the House of Representatives by Reps. Melissa Bean , D-Ill., and Shelley Moore Capito , R-W.Va., that is intended to bring greater transparency to the mortgage lending process by allowing borrowers more time to review their closing documents. The Borrowers’ Right to Inspect Closing Documents Act of 2009 would require that borrowers receive their closing documents at least three business days before their scheduled closing. The American Land Title Association (ALTA) announced its support for the bill. “U.S. Reps. Melissa Bean and Shelley Moore Capito have listened to consumers who want more time to review their closing documents so that circumstances don’t pressure them into agreeing to a bad loan or excessive closing costs,” said Kurt Pfotenhauer , ALTA’s chief executive officer. “ALTA strongly supports the representatives’ efforts and the passage of this bill.” Currently under RESPA, consumers have the right to request and review a draft HUD-1 Settlement Statement 24 hours before closing. According to ALTA, many borrowers are not aware of this option, nor is there a corresponding requirement that this preliminary HUD-1 Settlement Statement be complete. The proposed bill would require the lender to provide to the settlement agent the completed promissory note, deed of trust or other mortgage instrument, all items needed to complete the uniform settlement statement and the final closing instructions at least four business days before the scheduled date of settlement. This would allow the settlement agent to make the documents available to the borrower three days prior to closing. “The Borrowers’ Right to Inspect Closing Documents Act will strengthen RESPA by helping consumers help themselves,” Pfotenhauer said. “The proposal amends RESPA to give borrowers the time they need to review their final closing documents before they get to the closing table.” According to the bill’s sponsors, borrowers often do not see the final terms of their home purchase until they reach the closing, and at this time they are confronted with a myriad of complex forms that are not easily comprehensible, even to industry professionals. In addition, borrowers often feel rushed during the settlement process and are unable to intelligently ask questions about the meaning of certain disclosures and the costs that they are incurring in connection with the transaction. “Buying a home is one of the most important financial investments a family will ever make,” said Capito, the ranking Republican on the Financial Services Subcommittee on Housing and Community Opportunity. “And with a decision of this magnitude, consumers deserve the time necessary to fully review their closing documents. By offering consumers time for proper review, we’re providing the transparency and information necessary for making sound financial decisions.” Both Bean and Capito noted the importance of ensuring that consumers have an adequate opportunity to educate themselves about the terms and components of their mortgage documents prior to closing. “The financial crisis was touched off by an explosion in sub-prime loans, many of which were confusing to borrowers who didn’t understand the terms and wound up in loans they couldn’t afford,” Bean said. “When making the biggest single investment of their life, homebuyers deserve the time to fully inspect the details of the loan and ask questions about just what they’re committing to. This measure is part of the broad reforms to Wall Street regulation that I’ve been advocating for all year.” Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 08 Dec 2009 00:00:00 EST F4BC21853E7E4E1D8F9735B26FB02CE6 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=A7698190DEB54369A423CFE57D9EA531 With only a few weeks left and a lot of hope lost from those wishing that the Department of Housing and Urban Development (HUD) would delay the Jan. 1 implementation deadline for the new Good Faith Estimate and HUD-1 Settlement Statement forms, industry members have been swarming the Webinars and conference calls hosted by software companies, individual trainers and mortgage educators to learn not only how to fill out the forms, but also how to deal with the underlying deep issues that will arise during consumer transactions, because of the very different ways fees are disclosed on the new forms. In a seminar hosted by RESPA News on Oct. 6, a panel of three attorneys went through many of the deep details that could erupt into big problems for lenders and title agents, if they don’t plan for and work through them prior to issuing the new GFE to consumers. Titled, “The New GFE: Countdown to Compliance,” the seminar offered a forum for attorneys James Milano, Vincent Danzi and Howard Lax to roll up their sleeves and get into the substantial elements of the form that seem to be raising the most concern. Here we discuss two featured topics of the seminar: curing the GFE and tightening fee estimates to avoid tolerance violations. Curing the GFE The new GFE was designed by HUD with three tolerance provisions for fees the loan originator discloses to the borrower: a zero percent tolerance, 10 percent tolerance and no tolerance. The zero percent tolerance is a category of charges that cannot increase at settlement. These include: the origination charge; the credit or charge for the specific interest rate chosen; the adjusted origination charges; and transfer taxes. The 10 percent tolerance is defined on the new GFE as: the required services that the lender selects; title services and lender’s title insurance (only if the lender selects them or the borrower uses companies identified by the lender); owner’s title insurance (if the borrower uses companies the lender identifies); and government recording charges. The no tolerance category, or rather the charges that can change when the borrower gets to the closing are: lender-required services that the borrower chooses without the lender’s input; title services, lender’s title insurance (if the borrower chooses companies not identified by the lender); escrow account deposit; daily interest charges; and homeowner’s insurance. What does this mean? According to Milano, a partner with Washington, D.C.-based Weiner, Brodsky, Sidman, Kider, if for instance, at settlement the title agent compares the GFE and HUD-1 line items for the borrower, and the aggregate of the fees that fall under the 10 percent tolerance category are over in amount by 10 percent, then the lender must cure that tolerance for the remaining amount that is over 10 percent within 30 days after the closing. However, many title agents are questioning their role in this curing process, since they will be the ones to first see that the lender is out of tolerance. So who is responsible to ensure the borrower receives a check? “Curing the tolerance is the lender’s responsibility,” Milano said. “The lender has 30 days to do that after closing. The lender should advise the settlement agent of the changes. But if the lender does not do so, that doesn’t mean that the settlement agent is in violation of RESPA for not providing an accurate HUD-1. The lender cures the tolerance violation by doing so itself or it can instruct the settlement agent to send the reimbursement to the borrower with the revised HUD-1 reflecting those adjusted charges.” Milano added that it is also the lender’s responsibility to provide the settlement agent with all of the information that an accurate HUD-1 requires and to advise the settlement agent of any changes that would necessitate a revised HUD-1. Then the title agent comes back into the picture. “After the lender informs the settlement agent, the settlement agent would then correct the HUD-1 and provide copies of the corrected HUD-1 to the borrower, the lender and the seller, if it was a purchase money transaction,” he said. A participant asked the speakers for advice on what procedure to take for the following situation: A borrower at closing sees that the fees in the 10 percent tolerance category fall within the 10 percent tolerance, however the fees are different than what was quoted on the GFE. The borrower is unhappy with this different quote and either threatens to cancel the closing or demands a refund. “If it is within tolerance but the borrower complains and threatens to walk, then it is really a business decision for the lender to make at that point to appease the borrower,” Milano advised. “The lender could make adjustments, but I do not think the lender is required to do so under the law.” Lax, a partner with the Bloomfield Hills, Mich.-based law firm of Lipson, Neilson, Cole, Seltzer & Garin warned title agents that they should be cautious of any terms the lender might set regarding curing tolerances. “I would be careful, if I was a title agent, to watch the closing instructions to make sure the lender doesn’t sneak in a contract or an instruction that the title agent has to pay out-of-tolerance fees,” he said. Tightening up the estimate Danzi, general counsel of Equity Settlement Services Inc., a national title and settlement services provider headquartered on Long Island, N.Y., noted that to avoid a tolerance violation, a loan originator could take the approach of overestimating the fees, but this suggestion doesn’t come without warnings. “If money is no object, which might not be the case for your customer, then compliance with the tolerances can be achieved by overestimation,” Danzi said. “It is important to know that there is not a ‘cannot change’ category but a ‘cannot increase’ category. Even transfer taxes, which HUD apparently finds ascertainable at the GFE stage of mortgage origination, may decrease at settlement.” Danzi noted that this approach, while it prevents the possibility of having to cure a tolerance, may cause the lender to be at a competitive disadvantage if the borrower decides to shop other lenders for the best loan and the GFE “betrays the transaction as more costly than it actually will be.” Danzi then recommended that loan originators take the following steps for certain fees in order to remain both competitive and within the required tolerances: “The first one I will talk about is the title insurance premium,” Danzi noted. “The most widely applicable discounts will be in the title insurance premium for things such as refi, reissue, substitution, expedited, etc. Those are all title insurance rate types that represent some measure of discount for the normal full rate. There are two elements to presenting the charge correctly: get the requisite information and apply the rules of that premium type correctly.” Danzi said that the loan originator should be made aware of information that will enable it to tighten its title insurance estimate further while settlement agents need to be aware that the lender may request more information from them. “If you are the title or settlement agent, a good way to start might be to give your lender clients a questionnaire for each state or region for which they have ordered a rate quote from you,” Danzi said. “In that questionnaire, I would cover current vesting, changes in vesting, date the property was purchased, amount of last transaction, obtaining proofs of prior policy and the identity of the old and new lender. There could be other appropriate information depending on the geography.” Regarding transfer taxes, Danzi said like title insurance, lenders should keep in mind any changes that could affect the quote. “There are usually exemptions that can be applied to these taxes to reduce the cost to the consumer and those costs are going to be quoted on the GFE,” Danzi said. “So if you have a situation where you know there is going to be a transfer of real estate, it is important to know: Has there been a change in the legal vesting of the property? Are the borrowers going through a divorce? Is there anything that is going to affect how much equity the lender is truly being assigned in the closing transaction?” Danzi said that if a borrower is quoted title-related figures or transfer taxes on the GFE that do not take into account any subsequent changes, the figures are going to become inaccurate. “But I think that these challenges are an opportunity as well. Loan originators are being held responsible for things they have never been held responsible for before. And many lenders are going to decide that the quickest and surest way to get up to speed in this area is going to be with a partnership with an outside provider — namely the title agent or settlement agent. Title insurance providers are in a unique position to be this partner,” he added. Danzi said increased communication is key in successfully implementing the RESPA changes. “At base, you have a new rule that imposes new liability on a lender for estimating charges that are rather nuanced and that require local geographic expertise.” Want to hear more? Click here to purchase the full audio recording of this seminar. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 08 Dec 2009 00:00:00 EST A7698190DEB54369A423CFE57D9EA531 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=21453712F8454784B4D5326DC5DC6F47 — from the RESPA final rule Fri, 04 Dec 2009 00:00:00 EST 21453712F8454784B4D5326DC5DC6F47 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F59207470A944638BBE6724B17E8946B Marketing agreements certainly have their place in the real estate industry. They are one way to test whether or not you want to enter into a deeper business relationship with another company. It is also a way to generate leads to possible customers. And of course, it is a way to promote your company and get business referrals. However, it is often difficult to get these agreements established in a compliant, yet profitable manner. “After all, that is what Section 8(a) of RESPA is all about,” said Phil Schulman , partner with Washington D.C.-based K&L Gates, during a recent Real Estate Services Providers Council seminar. “You can go to jail for paying someone a referral fee. You can be fined three times the amount of the settlement services for paying someone a referral fee.” Though it can be difficult to navigate the rough waters of compliance and profitability when it comes to marketing agreements, Schulman and Jay Varon , a partner with the Washington, D.C. office of Foley and Lardner LLP, gave some practical tips for establishing and maintaining marketing agreements that do both. 8(c)(2) exception Section 8 of RESPA has been used over and over since the establishment of RESPA to prevent payment being received for the referral of business. Schulman pointed out that the one exemption to that is Section 8(c)(2) of RESPA, which states that RESPA does not prohibit payments for services rendered or goods provided. The Department of Housing and Urban Development (HUD) has a two part test to determine whether an entity is paying for a service that has been rendered or goods that were actually provided. First HUD states that the entity that is being paid must perform actual, necessary and distinct services, services that are real and services that are distinct from the services the provider is already getting paid for. Second, the amount of payment has to be commensurate with the service provided. In other words, the service provider must be paid fair market value for the services that they perform. Schulman said there are two ways to measure fair market value. The first way is to look at what the street price is for the service being provided and pay the service provider that price. “For example, you are a title company and you need a witness closer to go and get a buyer’s signature on a mortgage,” he said. “In your city it costs $125 to hire a notary. If you were to pay a real estate agent $125 to be the notary, then one would say $125 would be fair market value because that is the street price.” The other way to establish fair market value would be to pay the service provider what it costs to provide the service internally. For example, a mortgage company that has 10 branches — as well as a joint venture with a real estate broker— agrees to provide payroll, accounting and tax services for the joint venture. If the mortgage company charges each of its branches $275 a month for that service and charges the joint venture the same amount, that would constitute fair market value as well.  Determining fair market value Though marketing agreements have come under scrutiny in the last few years, many have commented that HUD has given very little guidance on the subject, leaving the door open for some interpretation and confusion. In general, there are many things that, for instance, a real estate broker can do to promote a certain mortgage broker or title agent and get paid for it. For instance, they can put up a rack of brochures in their office or at an open house, place a banner ad on their Web page or allow the mortgage broker or title agent to come to their staff meetings and give a presentation about the industry. “All of those things are real services and presumably if you pay a flat fee based on the value of those services, you are going to be compliant,” Schulman said. “The hard part is determining what the fair market value is for those services.” Schulman said to determine fair market value, a number of factors need to be taken into consideration. How big is the agent? Is it one office with 20 agents, or is it 20 offices with 1,000 agents? “Obviously, the more agents the company has, the more exposure your brochure will get at open houses, the more people are probably contacting the Web site and the more people are passing through the office to see your signage,” Schulman said. “All of these things are taken into account.” Because of all of the different variables that go into pricing services that fall under marketing agreements, Schulman suggested that those who have large marketing agreements seek advice from a business that specializes in pricing services. Elements to be cautious about Varon reiterated the fact that marketing agreements have been under a lot of scrutiny in recent years, on both the federal and state level. He also reminded attendees that they can pay for concrete services, but not referrals. He noted that some of the things that have come into marketing agreements have come very close to being payments for referrals. “Even something like preferred provider arrangements that have long been a mainstay in terms of marketing agreements, in today’s environment, I would avoid them because it sounds a lot like an endorsement,”   Varon said. “And just what is a preferred provider? You are not going to do any more functions or less functions. You are really saying, ‘I am going to pay you a certain amount of money so that you will call me your preferred provider.’ It sounds like a referral and if you attach independent money to that justification, I think you can at least expect an inquiry on that kind of thing.” Another thing state regulators don’t often like is access agreements, allowing the mortgage company or the title agent to have free access to real estate brokers’ offices. Varon said that some regulators believe that everyone should have free access. “You want to take account of what the regulators are going to look at, as well as what you think is appropriate,” Varon said. “The key is to value these goods and services. It is pretty easy to value a banner ad on a Web site or a sign because you have market parameters. Valuing things such as market access to offices or access to meetings is much tougher. In general, I think you should be conservative in this area.” One should also be cautious about paying for leads. Varon said there is informal predicate that says that the sale of a lead is not a referral, however, that predicate can be easily underminded. For example, if there is an open house, the open house is filled with the mortgage broker’s signs and brochures, the real estate agent is talking at the open house about the mortgage broker as the agent’s preferred lender and the mortgage broker pays for the names of the people that were at the open house, that could be construed as a referral and not a lead. “The notion that you can buy leads is predicated on the fact that you are soliciting them blind for good names,” Varon said. “There is a danger of paying for leads at the same time you are promoting the people you are selling them to. So be careful.” Renegotiations When it is time to renegotiate, Schulman said to take caution and make note of some basic do’s and don’ts. For example, if a mortgage broker and a real estate agent set up an agreement in which the real estate broker says he can give the mortgage broker 120 deals a year, yet provides the mortgage broker 250 deals a year, the real estate broker cannot ask the mortgage broker to double the marketing agreement for the next year based on that fact. However, Schulman said there were situations during renegotiation that can be taken into account. For example, if the real estate broker expanded after the initial negotiation took place, this would be a basis for raising the price of the marketing agreement. It would also be the same in reverse.  The view from HUD Although HUD has not provided guidance in terms of a statement of policy or a settlement agreement regarding marketing agreements, an assistant general counsel at HUD wrote a letter in February 2008 regarding marketing agreements in response to an individual in Texas asking about marketing agreements between home warranty companies and real estate brokers. In the letter, the assistant general counsel wrote that, in his view, it was “difficult to establish that services provided by a real estate broker or agent merit additional compensation that is in accordance with Section 8 and HUD’s regulations.” Schulman said that although HUD has not withdrawn the letter, they haven’t promoted it or relied on it to take any actions. They have also taken no enforcement actions to date on marketing agreements. There have, however, been two class action lawsuits recently filed against home warranty companies, having to do with the fact that the home warranty company was paying the marketing fee on a per transaction basis, not a flat fee. “The bottom line is, if you do these things properly, if [marketing agreements] are drafted properly, if there are real services and the amount you pay is fair market value, you should be OK. It’s when you are paying and the real estate broker doesn’t perform the service, when you are paying more than would be reasonably appropriate or when you start paying on a per transaction basis, then you start opening yourself to enforcement actions and class actions,” Schulman said. Above all, Varon and Schulman were in agreement that those entering marketing agreements should take precautions. “Sometimes you may set up the best agreements in the world, but they are not followed,” Varon said. “One of the things I’ve advised my clients to do, especially if they are the one paying the fee, is enforce some kind of recording requirements that says that ‘I am supposed to perform these services. I certify that over the last quarter I have done this. Here is a sample of the banner ad we have; here is a sample of the signage we have,’ so that everybody knows they were done in accordance with the agreement and you don’t run into the situation where you’ve got the best agreement in the world, but people aren’t following it.” Comments or questions? Contact Andrea Golby : agolby@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Fri, 04 Dec 2009 00:00:00 EST F59207470A944638BBE6724B17E8946B http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=67D4FB5E5FD34ABBAB682BFF934D84AC In a case filed in the U.S. District Court, Northern District of California, San Jose Division, a judge granted in part and denied in part Wachovia Savings Bank, FSB’s motion to dismiss a complaint brought against it by a borrower who is alleging RESPA, Truth in Lending Act (TILA) and California Translation Law (CTA) violations, claiming that he received a mortgage with less favorable terms than he had initially understood because the documents were in English and the dealings with the bank were conducted in Spanish. The case is: Bernardo Reyes v. Premier Home Funding, Inc., et al. (No. C 08-04606 JW) . On Oct. 3, 2008, Berardo Reyes filed a lawsuit against Premier Home Funding Inc., World Savings Bank, FSB (Wachovia), Wachovia Bank, N.A. and Joel Madera Candelario , alleging violations of RESPA’s anti-kickback provision over a yield spread premium (YSP) payment, TILA, 15 U.S.C. § 1601, et seq., and the CTA , Cal. Civ.Code § 1632. Wachovia filed a motion to dismiss the complaint and on June 17, 2009, District Judge James Ware issued his opinion on the matter. Language barrier According to the complaint, Reyes is a 44-year-old man of Mexican heritage who cannot speak or write any English. He purchased a home in San Jose , Calif. , in February 2000. In August 2007, Reyes began discussing the possibility of refinancing his home with Candelario, a representative of California-based Premier Home Funding who is not licensed as a real estate broker or salesperson in California . Reyes claims that all discussions about the refinance were conducted in Spanish and Candelario informed him that he could refinance his home with a new loan that would give him a fixed monthly payment of less than $1,530, including principal and interest, for five years, a fixed interest rate for five years, no prepayment penalty, $30,000 cash and a limit of $4,000 in fees associated with the loan. Reyes agreed to the refinance terms. In his complaint Reyes alleges that the defendants, without his knowledge, inflated his income and provided a false job title on his loan application form. On Oct. 5, 2007, without previously providing him with a Good Faith Estimate, Reyes said he was presented with the loan documents to sign, but they were in English. According to Reyes, the terms of the documents were summarized verbally to him in English and the description was similar to what he previously discussed with Candelario. That same month, Reye’s wife was instructed by Candelario to sign several English-language documents that turned out to be disclosures required under TILA. According to Reyes, the terms on the loan that he actually received were different than what was promised to him by Candelario. The loan contained the following terms: a fixed interest rate for only one year; four monthly payment options, the lowest of which was greater than $1,530 and did not cover the monthly accrued interest; and a three-year prepayment penalty. The fees associated with the loan were $14,912.50, not $4,000. Wachovia Mortgage paid Premier $7,500 as a YSP, and the loan also provided a cash pay-out of $17,602.51, not $30,000. Reyes alleges seven causes of action including: violations of RESPA against Premier, Candelario and Wachovia, claiming that the YSP payment was an illegal kickback or an illegal split of settlement services fees; violations of TILA against Wachovia, claiming he is entitled to rescission of the loan; violation of the CTA, Cal. Civ. Code § 1632 against all defendants; fraud against Premier and Candelario; and violations of the following against all defendants: California Business & Professions Code §§ 17200, et seq., negligence and unjust enrichment. Wachovia moved to dismiss each of the causes of action brought against it on the following grounds: Reyes’ RESPA claim lacks merit; Reyes has not adequately alleged the ability to tender repayment of his loan for rescission; Reye’s claims under the CTA and for negligence are preempted under the federal Home Owners’ Loan Act (HOLA); the CTA does not apply to Reyes’ loan; and Wachovia did not owe Reyes a duty of care as is necessary to state a claim for negligence. RESPA claim survives Ware allowed the RESPA claim to proceed, denying Wachovia’s motion to dismiss on the matter. “In this case, plaintiff alleges that Wachovia paid Premier a yield spread premium of $7,500,” Ware noted. “Plaintiff further alleges that this payment was an illegal kickback or an illegal split of settlement service fees in violation of §§ 2607(a) and (b) of RESPA. While defendant contends that the $7,500 fee was a reasonable fee for services rendered to Wachovia under § 2607(c), such a determination is a question of fact subject to evidence at a later stage in this litigation.” RESPA prohibits the giving or receiving of referral fees or kickbacks as part of a real estate settlement service; however, fees paid for services actually performed in the making of a loan are permissible. Ware noted that the 9th Circuit has adopted the two-part test articulated by the Department of Housing and Urban Development (HUD) for determining whether payments from a lender to a mortgage broker are permissible under RESPA. HUD has indicated that the payment must be for goods actually furnished or services actually performed, and the payment must be reasonably related to the value of the goods actually furnished or services actually performed. Ware added that in taking Reye’s allegations to be true, he has adequately stated a claim against Wachovia for violations of RESPA. TILA claim fails Regarding the TILA violations, Wachovia argues that Reyes’ request for rescission is not viable because he has not tendered repayment of the loan and has not alleged the ability to do so. Ware agreed and noted that Reyes has failed to adequately allege that he is entitled to rescission. “Notably absent from plaintiff’s complaint is any allegation that he attempted to tender, or is capable of tendering, the value of the property pursuant to the rescission framework established by TILA,” Ware opined. “Nor does plaintiff allege that such equitable circumstances exist that conditioning rescission on any tender would be inappropriate.” Ware granted Wachovia’s motion to dismiss, but allowed Reyes leave to amend the complaint. Under a TILA loan disclosure violation, a borrower has two remedies. TILA gives a borrower the right to rescind any credit transaction in which a security interest is created in the borrower’s home and TILA also gives a borrower a right to civil damages. CTA claim and HOLA Wachovia contends that the CTA is preempted under 12 C.F.R. § 560.2 because it imposes requirements on the content of credit-related documents that must be disclosed by Wachovia. The court however denied Wachovia’s motion. Regulation 12 C.F.R. § 560.2(b)(9) expressly preempts state laws imposing requirements on federal savings associations regarding “disclosure … including laws requiring specific statements, information, or other content…” The CTA provides in relevant part: “Any person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, orally or in writing, in the course of entering into any of the following, shall deliver to the other party to the contract or agreement and prior to the execution thereof, a translation of the contract or agreement in the language in which the contract or agreement was negotiated, which includes a translation of every term and condition in that contract or agreement.” “As applied in this case, the Court finds that the requirements of the CTA are not preempted by § 560.2(b)(9) under step one of the preemption analysis,” Ware opined. “The CTA is not a state law seeking to require any sort of ‘disclosure.’ The CTA requires a translation of the contract; it does not require any specific statements, information or other content to be disclosed.” In addition, Ware said that the CTA affects lending, and that Section 1632(b)(2) and (b)(4) require a translation for contracts regarding “a loan or extension of credit.” “This requirement makes the CTA presumptively preempted,” Ware said. “However, the CTA clearly falls within the limitation on preemption contained in 12 C.F.R. § 560.2(c), which accepts generally applicable “contract and commercial laws” that only affect lending incidentally. The CTA applies generally to all businesses, not just lending institutions, engaging in a wide range of commercial contracts that extend beyond lending. Thus, the Court finds the CTA is a generally applicable law under 12 C.F.R. § 560.2(c) and not preempted under HOLA.” Wachovia also contends that Reyes’ claims for unfair competition and common law negligence are preempted by HOLA because Reyes bases his claims on violations of other statutes regulating lending disclosures, namely TILA, RESPA and the CTA . Ware granted in part and denied in part, ruling that Reyes’ unfair competition claims are preempted to the extent they are based on violations of TILA and RESPA, but the unfair competition claim based on the CTA is not preempted under HOLA. “Since TILA governs the disclosures that are required for certain loans, an unfair competition claim based on TILA is within the preempted category of state laws regulating loan ‘disclosures.’ Since RESPA governs the fees that are prohibited in connection with certain loans, an unfair competition claim based on RESPA is within the preempted category of state laws regulating ‘loan-related fees.’ However, to the extent plaintiff's unfair competition claim is based on violations of the CTA , the court finds plaintiff’s claim is not preempted. The CTA is a generally applicable state law that only incidentally affects lending,” Ware said. Summary of decision The court denied Wachovia’s motion as to Reyes’ claims for violations of the CTA and violations of RESPA. The court granted Wachovia’s motion as to Reyes’ claims for unfair competition and negligence on preemption grounds to the extent they are based on violations of TILA, RESPA or other laws specifically regulating lending. Since such claims are preempted, dismissal is with prejudice. However, the court denied Wachovia’s motion as to Reyes’ claims for unfair competition to the extent they are based on violations of the CTA . Finally, the court granted Reyes leave to amend his negligence and TILA claims. Court opinion Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 03 Dec 2009 00:00:00 EST 67D4FB5E5FD34ABBAB682BFF934D84AC http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=F9F08DE5A3D64BA2B2CDD5889B221D40 There is little time left between now and the Jan. 1, 2010, deadline for implementation of the RESPA final rule. The settlement services and lending communities have been rocked by these changes, and many unanswered questions on how to use the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms remain. In an effort to lend a helping hand to the industries it serves, October Research Corp. is partnering with financial services advisory firm The Collingwood Group LLC and its team of Washington experts. Together, the companies will offer an alternative to bird’s eye-level training programs and offer Webinars that provide line-by-line explanations of the forms, how to use them and how they will change business practices. If you’re tired of one-hour sessions that only skim the surface of how this RESPA reform will change the industry as we know it, these Webinars are not to be missed. The two-part “RESPA 2010 Webinar Series: Questions Answered” will feature: An introduction from Brian Montgomery , managing director of The Collingwood Group and former U.S. Department of Housing and Urban Development (HUD) assistant secretary for housing — Federal Housing Administration (FHA) commissioner, who oversaw and directed the development and publication of the rule; An explanation of the key issues addressed by the rule and insight into the deliberations and decisions that surrounded it by Gary Cunningham , principal with The Collingwood Group and former deputy assistant secretary for regulatory affairs at HUD, who led HUD’s efforts to develop the rule, GFE and HUD-1; and A line-by-line training on the forms by must-have RESPA compliance trainer Christopher Cruise , national marketing director for 1st National Title LLC. In two individual sessions, lenders, loan officers, mortgage brokers, title agents, attorneys, Realtors, settlement services providers and anyone else who needs to understand the new GFE and HUD-1 forms will benefit from in-depth training as well as an extensive Q&A period. “I have been studying and teaching RESPA for almost 20 years and this year has been one of the most exciting ever,” Cruise said. “The information that attendees will get from this Webinar will be down-to-earth, line-by-line and authoritative. I know the final rule, know the FAQs and know the forms. You’ll leave this Webinar absolutely confident in your ability to sell more loans using the new GFE and HUD-1.”   The first part of the series, which will focus on the GFE form, will be held from 1 to 3:30 p.m. EST on Tuesday, Dec. 15. The second part of the series, which will focus on the HUD-1 form, will be held from 1 to 3:30 p.m. EST on Thursday, Dec. 17. The price for each Webinar is $149 or $275 for a combination of the two. The events will be produced by October Seminars and hosted by RESPA News and its sister publication The Title Report . More information regarding the series and registration for it is available at www.OctoberStore.com , or contact Jennifer Cannon , senior account representative at October Research, at jcannon@octoberresearch.com or 330-659-6101, ext. 7221. The Collingwood Group is a senior team of seasoned financial services executives providing business advisory services to boards of directors and executives of firms in the financial services industry. The firm provides clients with extraordinary insights and capabilities in the world of federal departments, agencies, GSEs, trade groups, news media and all those constituencies that make Washington , D.C. , a uniquely challenging business environment. Richfield, Ohio-based October Research is the nation’s leading provider of market intelligence, business news and state-by-state legal and regulatory information for the real estate services industry. Newsletters published by October Research include: The Title Report, The Legal Description, Valuation Review, RESPA News and Real Estate Insider . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 01 Dec 2009 00:00:00 EST F9F08DE5A3D64BA2B2CDD5889B221D40 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=E1E4BC809266418DB674A20932160B10 With all of the regulator scrutiny over workshare arrangements in the past few years, it is understandable that people would be cautious about entering into them. If you establish them with caution and take note of the different compliance issues, however, you should have nothing to worry about. Recently, RESPA attorneys Jay Varon , a partner with Foley & Lardner, and Phil Schulman , a partner with K&L Gates, provided some tips for establishing compliant workshare arrangements. Schulman used a hypothetical situation as an example. In the example, a New Jersey title agent who is licensed in New Jersey but whose company does business nationwide refers a transaction to a California title agent. The California title agent then contracts with the New Jersey title agent to perform certain services for them. This is a legal practice under Section 8(c)(2) of RESPA as long as they are actual, necessary and distinct from services they would otherwise get paid for. “You can contract out noncore services,” Schulman said. “So the New Jersey title agents should not be preparing a commitment; they shouldn’t be determining insurability; they shouldn’t be clearing underwriting objections. They could be scheduling a closing; they could take the title order; they could OK the payoffs; they could clear liens; they could act as a liaison between the customer and the California title agency. The servicer must be paid fair market value for the services the company provides. Schulman said this can be done in one of two ways. The California agent can calculate the internal cost of providing the service and pay the New Jersey agent that amount, or pay the New Jersey agent the street price of providing the service, if the service is routinely contracted out. “What I have suggested for clients that use workshare agreements is to create in the workshare agreement certain functions and designate a dollar amount for each of them,” he said. “Let’s say that each of these four things that I’ve mentioned are $20 a piece. Then you tell the New Jersey title agent, ‘If you do all four, I’ll pay you $80. If you do just one of them, I’ll give you $20. … That is a little bit safer.” Schulman and Varon both shared some concerns about workshare arrangements, however, because of the regulators’ responses to them. Many state regulators, as well as the Department of Housing and Urban Development, see no business purpose for such arrangements. “After all, the California title agent has their own employees. They do the ordering of payoffs themselves. They do the scheduling of the closing themselves. Why are they using a New Jersey title agent to perform these services when they don’t go out into the marketplace to get them otherwise,” Schulman noted. “The short answer is under Section 8(c)(2) of RESPA, there is no legal requirement that there be a business purpose for the payment. The legal requirement is that the activity be actual and necessary and the payment be commensurate with [the value of the services].” Schulman said that sometimes, however, it may be best not to take on the regulators. He said he had a client once who was asked by the Illinois Insurance Commissioner to terminate the company’s workshare agreements or the commissioner would terminate the company’s license. The commissioner didn’t care about Section 8(c)(2) of RESPA and the client ended up terminating the workshare agreements because the company decided it didn’t want to take on the regulators. “I think the business purpose is a compliance litigation variable,” Varon said. “The business purpose was a big issue in the captive reinsurance cases because that insurance is billions and billions of dollars. The state regulators and HUD asked, ‘What is the business purpose of these captive reinsurance agreements?’ They didn’t buy the argument that it was laying off the risk, because they felt that there wasn’t that much risk in the title policy to begin with because the purpose of the title policy was to reduce the risk in the first place.” “In the right circumstances, the regulator throws away [Section 8(c)(2)] and asks about business purpose,” Varon added. “If I were to do anything like a workshare agreement or a captive reinsurance agreement or anything that is new and controversial, one, I would try to come up with a good business purpose and put it into the agreement, and two, I would be cognizant of the risks because sometimes it’s not worth fighting the regulators.” Comments or questions? Contact Andrea Golby : agolby@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 24 Nov 2009 00:00:00 EST E1E4BC809266418DB674A20932160B10 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8BF7E4EEEBCA4F519E3F56DBBC71049C MRG Document Technologies (MRG), a Dallas-based provider of mortgage technologies to banks, credit unions and other lenders, announced that it has completed the drafting of the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement forms required by the Department of Housing and Urban Development’s RESPA final rule. MRG said it is prepared to have institutions in compliance by the Jan. 1, 2010 deadline. The RESPA changes were enacted by the Department of Housing and Urban Development (HUD) to ensure consumers receive more accurate estimates of closing costs, as well as a clearer comparison of the GFE and HUD-1 forms. The GFE will display the estimated total settlement costs on the first page and lay out the terms of the loan in an easy to understand manner, according to HUD. With the new forms, HUD intended for consumers to be able to comparison shop among loan originators and match up the estimated costs to the actual costs at closing, creating a more transparent, and better overall lending experience. “Although these changes represent a good deal of preparation for lenders, we expect to see increased consumer confidence in the lending process as a result,” said Laura LaRaia , an attorney and director of customer service at MRG. “As lenders prepare for the Jan. 1 deadline, implementing the forms developed by MRG will drastically improve the efficiency and accuracy of their compliance program in this time of transition. By outsourcing the production of the forms, financial institutions can focus on other aspects of the changes, such as training for the procedural adjustments.” MRG offers a browser-based system for the preparation and delivery of compliant document packages, electronic disclosures, loan modifications and other services for mortgage lenders, banks and credit unions nationwide. MRG said it is guaranteeing its products are in compliance with the most recent legislative and regulatory changes. For more information about MRG, visit www.mrgdocs.com . Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com .   Affordable reprints of this article are available. Click here for more information.   Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 24 Nov 2009 00:00:00 EST 8BF7E4EEEBCA4F519E3F56DBBC71049C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=9C92A59D6A1641B78E38A35D2F6A64C5 On April 2, the U.S. District Court, Western District of Missouri, Western Division, denied a lender and homebuilder’s motion to dismiss RESPA Section 8 claims brought by a homeowner who alleged the lender made an illegal “thing of value” payment to the homebuilder in exchange for the referral of business. In addition, the court ruled that the second part of the plaintiff’s claim holds merit in that the homebuilder’s “kickback” payment to the lender violated Section 8 because it was duplicative, unearned and not for any performed services, since the loan originators had already received commission for their loan work. The defendants filed a motion for the court to reconsider its decision based on the claim that RESPA does not apply to the facts of the case and on July 30, the court denied in part and granted in part the motion. The case is: Lela Walter v. Clarion Mortgage Capital Inc., et al. (No. 08-0536-CV-W-GAF) . The case involves an alleged arrangement between Rob Hartman , a supposed employee of Clarion Mortgage Capital Inc. and defendant D. Michael Phelps Sr. , the owner of KC Builders Inc., wherein Hartman and Clarion received referrals from Phelps for settlement services as well as a $2,500 payment. In return, Hartman secured full payment for Phelps and KC Builders on construction contracts prior to any work being completed. In October 2004, Phelps approached the plaintiff, Lela Walter , regarding construction work on her home. Phelps quoted a price of $11,000 for mechanical and electrical work to be done by KC Builders. Because Walter could not afford the construction, Phelps assured her that he could get the work financed. Walter proceeded to sign a contract written by Phelps and filled out a credit application. A few days later, Hartman, the loan originator, met with Walter. She was subsequently approved for the loan, which was paid out in the amount of $13,500 in a check issued to KC Builders on Nov. 10, 2004. Hartman allegedly told Walter that payment to KC Builders would be withheld until after the work was completed. However, that same day, KC Builders deposited the check for $13,500 and paid $2,500 to Hartwell Mortgage Group, a corporation wholly owned by Hartman and his partner. According to court documents, Walter was unaware of this $2,500 payment and such payment did not compensate Hartman for origination of the loan or for providing any settlement services as Hartman was paid a commission by Clarion for such services. In his opinion on April 2, District Judge Gary Fenner denied the defendants’ motion to dismiss based on the following: “The evidence would support a jury’s finding that the check KC Builders wrote to the Hartwell Group on Nov. 10, 2004, in the amount of $2,500 with plaintiff’s name in the memo line, was connected to the federally related loan. Further, Hartman…[was] allegedly paid this amount in addition to their commission from Clarion for originating the loan. A reasonable inference can be made that the $2,500 payment was therefore duplicative, unearned, and not in exchange for any performed services.” However, the defendants filed a motion for reconsideration and on July 30, 2009, Fenner granted the defendants’ motion to dismiss the RESPA Section 8(b) claims and denied their motion to dismiss the Section 8(a) claims. Pursuant to RESPA’s Section 8 provision prohibiting kickbacks and unearned fees, persons are barred from giving or accepting (a) “any fee, kickback, or thing of value pursuant to any agreement or understanding ... 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” or (b) “any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed” (12 U.S.C. § 2607(a), (b)). “Under the facts as pled by plaintiff, there can be no question that Clarion, through Hartman, gave a thing of value to Phelps in the form of a full advance payment for construction work in exchange, in part, for a referral of plaintiff’s loan origination to Clarion. Plaintiff has also asserted facts that Phelps gave Hartman, through Hartwell Mortgage Group, a kickback of $2,500 in conjunction with the agreement or understanding between Phelps and Hartman. Thus, plaintiff has stated a plausible claim for relief under § 2607(a),” Fenner noted. “However, plaintiff does not establish Clarion gave any portion, split or percentage of its charges associated with originating plaintiff’s loan to Phelps or KC Builders. While Plaintiff has stated facts that Phelps and/or KC Builders shared a portion of the loan proceeds with Hartwell Mortgage Group, she has not asserted Clarion or Hartman shared any portion of the charges for settlement services paid to them by plaintiff with Phelps or KC Builders,” Fenner opined. Based on this assessment, Fenner ruled that a Section 8(b) claim has not been established. “For these reasons, Clarion’s motion to dismiss is granted with regard to the § 2607(b) RESPA claim and denied with regard to the § 2607(a) RESPA claim. While Plaintiff may possess a claim or claims based on the $2,500 payment from Phelps to Hartwell Mortgage Group under some other theory ( i.e. , § 2607(a)), such payment does not fall within the confines of § 2607(b),” he concluded. Court opinion Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Thu, 19 Nov 2009 00:00:00 EST 9C92A59D6A1641B78E38A35D2F6A64C5 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8BEECAF6DF3A4B4CA6D80FAA6690BA61 Contained within the RESPA final rule are changes HUD made that are in addition to what the industry is facing in using the new Good Faith Estimate and HUD-1 Settlement Statement forms. One of these changes, which has been welcomed by many in the industry, is permission by HUD to use a new pricing mechanism called average charge pricing. On Sept.4, RESPA News covered this concept in-depth (see: Can average charge pricing work for you? ). Here, we are following up with a brief summary of what two RESPA attorneys relayed to members of the Real Estate Services Providers Council at the organization’s RESPA Regulatory Compliance Seminar on Nov. 5 in Chicago . The two attorneys, Jay Varon , a partner with Chicago-based Foley & Larder LLP and Phil Schulman , a partner with Washington, D.C.-based K&L Gates, agree that this consent by HUD for settlement service providers to use an average charge for services they do not perform themselves can be beneficial. Before HUD began allowing the use of average prices in January, the industry was getting hammered by class action lawsuits, Schulman said. He offered the following hypothetical: A title agent would assume that a mortgage would have 10 pages to it. At approximately $2 a page, the total the agent charged the consumer to record a mortgage was $20. If it turned out that the mortgage was only eight pages and therefore $16 to record, the title agent would have $4 extra. However, in the very next transaction, they may have charged $20, but the actual cost to record was $24 and the agent would simply assume that cost. A series of lawsuits ensued and even HUD brought a case against a lender who overcharged for a credit report. According to Schulman, this raised concern in the industry and much discussion centered on it at the round table discussions held prior to the drafting of the RESPA final rule. HUD listened and decided to allow settlement service providers to charge an average of a particular cost if it is not their own by doing the following: During a period of up to six months, a settlement service provider can take the average of, for example, what the recording charge was. For instance, from January to June, the average cost of recording a document was $20; For the next six months, say from July to December, the settlement service provider is allowed to charge every consumer $20 to record the mortgage. At the end of the six-month period, the settlement service provider must recalculate what the average charge was and use the new average charge for the following six months. Schulman pointed out that HUD did build in some regulatory oversight to the average charge provision. First, HUD requires settlement service providers who use the average charge to keep their calculations and the information that they relied on to get the average for up to three years. Second HUD states that if it turns out that the average, although done legitimately, was overestimated or was actually higher than the real charge for that six-month period, HUD requires that the excess be subtracted from the average for the next six months. “Here is an example: If you told the customer [the recording fee] was $20, but when you go back for that six-month period, you find out the real charge was $18, HUD says you don’t need to refund the extra money, but for the next six months, where the average charge turns out to be $18, you must subtract the $2 you had as excess. Now you charge $16 for the next six-month period,” Schulman said. Though HUD allows average charges, some states, such as New York , require settlement service providers to list the actual charge for the service. Schulman stated that HUD instructs providers in those states to follow the state law, not the RESPA rule. During the session, one attendee asked Schulman and Varon how detailed these average charges are supposed to be and what method to use when calculating an average charge. “HUD doesn’t tell you what method you are supposed to use for the average charging,” Schulman said. “They only say that you have to keep whatever method you [used to calculate the charge], so you can at least justify it.” “The only caveat is, if you have to make separate charges on the HUD-1,” Varon said. “If you are lumping different kinds of recording charges, I do think you have to break them out.” Comments or questions? Contact Andrea Golby : agolby@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Wed, 18 Nov 2009 00:00:00 EST 8BEECAF6DF3A4B4CA6D80FAA6690BA61 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=2988E86AC8894488A396ADECFDE4679A — from the RESPA final rule Wed, 18 Nov 2009 00:00:00 EST 2988E86AC8894488A396ADECFDE4679A http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=937FDA29CACA46ABADC51739A2CA4352 — from HUD’s 2001 Policy Statement and “ How to price your fees under RESPA ” Fri, 13 Nov 2009 00:00:00 EST 937FDA29CACA46ABADC51739A2CA4352 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=EB9E4BA202CA4364B7D196030A2E3E9C With the new Good Faith Estimate (GFE) and HUD-1 Settlement Statements being implemented in less than two months, industry members have a lot of questions that need answered. Many of the questions revolve around how to stay within the new tolerance rules. During the Real Estate Services Providers Council RESPA Regulatory Compliance Seminar in Chicago on Nov.5, RESPA attorneys Phil Schulman and Jay Varon , answered some of these lingering questions. Schulman pointed out that the GFE is the centerpiece of RESPA reform and the Department of Housing and Urban Development’s (HUD) attempt to address what it saw as consumers’ number one concern: getting to closing and having to pay more than they expected to in settlement costs. The tolerance rules are a way for HUD to “hold the lenders’ feet to the fire. “They want to take the ‘estimate’ out of good faith estimate and make it the good faith accurate,” Schulman, a partner at K&L Gates, said. “The way they do that is through the tolerances.” The buckets He said that there are three tolerance “buckets.” The first is the zero tolerance bucket. These fees cannot change a penny. Included in this bucket are: the lender’s origination charges; the borrower’s credit or charge (points) for the specific rate chosen; the adjusted origination charges; and the transfer taxes. The second bucket is the 10 percent tolerance bucket. The aggregate of these fees can differ no more than 10 percent from what is listed on the GFE. They include: required services that the lender selects (such as the appraisal, tax services and flood services) title services and lender’s title insurance (if the lender selects them or the borrower uses the companies the lender identifies); owner’s title insurance (if the borrower uses companies the lender identifies); required services that the borrower can shop for if the borrower uses companies the lender identifies; and government recording fees. The third bucket is the no tolerance bucket: There is no tolerance for the charges listed in this bucket. They include fees that the lender could not know three days after application, including the initial deposit for the borrower’s escrow account, the daily interest charges and the borrower’s homeowners insurance policy. Also included in this bucket are any required services that the borrower can shop for, if the borrower did not use companies the lender identified. Lender recommendations HUD requires each lender to identify at least one vender for each of the services listed on the GFE. If the consumer selects the lender-identified vender, that charge gets included in the 10 percent tolerance bucket. Schulman said he believes that in practice, this means that lenders will go to title agencies, appraisers and other settlement service providers and say that in order to be a listed provider, the identified settlement service provider will have to agree that they will not raise their prices without giving the lender at least 60 days notice. Many industry members have said that the tolerance provisions will make it easier for affiliated business arrangements to start and flourish because lenders will identify their affiliates as a way to ensure compliance within the 10 percent tolerance. Schulman and Varon had differing opinions on this topic. Schulman said a lender will always choose its affiliate in order to promote their affiliate and because they can be sure their affiliate is not going to change their prices between the time the GFE is issued and the closing. Varon, a partner at Foley & Lardner, said that, in his opinion, it depends on whether the lender wants to have to make sure the fee is within the 10 percent tolerance. And in some instances, the real estate broker or the builder have already identified an affiliate title agency that the consumer has agreed to use. In those cases, a lender may decide to put a non-affiliate on the list instead. Schulman noted that, because HUD’s frequently asked questions report states that the mortgage broker’s GFE is the binding GFE, the lender must also adhere to the mortgage broker’s list of identified settlement service providers. Enforcement The big question that is looming as Jan. 1 gets closer is “what happens if a lender does exceed the tolerance?” “When HUD put the proposed rule out for comment, it indicated that it was going to seek legislation to give HUD greater enforcement tools and penalties for violations of the GFE and HUD-1,” Varon said. He noted that HUD has not been granted that power and there are no penalties, as of now, that HUD has statutory authority to impose. “However, HUD is very good at getting the industry to do what it wants and comply with the rules,” Varon said.   Varon said that if a lender exceeds the tolerances during the normal course of a transaction, that is going to be disclosed and the lender will cure the tolerance violation within the 30-day window. “I think [tolerance violations will be cured], not only because it is right, but because there are other penalties that can come into play,” he said. He noted that state attorneys general, for instance have enforcement power under RESPA and can bring unfair practice class actions on behalf of the consumers in their state. There is also the private class action bar. It’s when the tolerance violation is not clear that there could be some discrepancies, according to Varon. “I think there will be pressure to adhere to the tolerances,” Varon said. “What I worry about is that in a clear situation, the lenders will do something to cure the tolerances at the closing table or within 30 days, but there can be bona fide disputes that occur in this opening period. The lender may think there is a changed circumstance and there could be a disagreement about that. “I think there will be a lot of discussion in the early days between lenders and closing agents because the closing agents are going to need to know what is going to happen if the lender doesn’t cure,” Varon added. “Lots of questions are going to be directed at the closing agent.” Comments or questions? Contact Andrea Golby : agolby@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Tue, 10 Nov 2009 00:00:00 EST EB9E4BA202CA4364B7D196030A2E3E9C http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=B1A7E8B83F4D40AD87CA8FE8C9CECC75 A Florida homeowner forced into foreclosure filed a class action lawsuit against KB Home, Countrywide Financial and LandSafe Appraisal Services, claiming the three conspired to rig housing prices in Florida , South Carolina and North Carolina , costing home purchasers millions of dollars. Filed in the U.S. District Court, Middle District of Florida, Orlando Division, on Oct. 30, the lawsuit claims the three companies employed a well-planned scheme to control the typically independent appraisal process, jacking up home values, which, in turn, were used to determine the value of other homes sold by KB, affecting thousands of homeowners. The law firm of Hagens Berman Sobol Shapiro filed the suit against KB Home, Countrywide and LandSafe alleging a widespread and complicated inflation scheme. This is the third lawsuit Hagens Berman has filed against the defendants for their alleged illegal appraisal practices, having filed similar suits for homeowners in California , Arizona and Nevada . “Since we filed the first lawsuit in May, we’ve heard from homeowners and industry insiders who have validated our conclusions that Countrywide and LandSafe were gaming the system, causing thousands of homeowners to overpay for their home purchases by tens of thousands of dollars,” said Steve Berman , managing partner of Hagens Berman. Berman noted that since the first suit was filed, he has heard from hundreds of homeowners, many desperate to dig out of the financial hole that the suit contends KB and Countrywide put them in through the alleged scheme. “No one wants to learn they overpaid for a home, and certainly not because the builder and the appraiser rigged the game,” Berman noted. According to the 109-page complaint, Countrywide funneled all its KB customers’ home appraisals to a single person at LandSafe, an appraisal subsidiary of Countrywide, who in turn would deliver an appraisal value at whatever KB and Countrywide ordered. The named plaintiff, Stephanie Sullivan , purchased her home in 2006 for $426,000. An appraisal conducted a year later reported her home was worth $310,000 and cited that the market was not the reason for the lower value, but rather an inaccurate and fraudulent appraisal. In 2007, Sullivan’s husband was laid off and they were unable to pay the mortgage. According to the complaint, the Sullivans tried to work with Countrywide to modify the loan but the company refused, filing a lien on the home instead and eventually foreclosing, which pushed the Sullivans into bankruptcy. The suit claims all KB homes in the Southeast segment were targeted by the scheme, and between 2006 and 2008, more than 19,000 homes were delivered to the area. At an average price of $225,000 a home, and conservatively assuming an average inflated appraisal of $30,000 per home, that amounts to almost $600 million in inflated contract prices, the suit states. The lawsuit lists several claims against the defendants including violations of RESPA, violations of the Racketeer Influenced and Corrupt Organizations Act, violation of the California unfair competition law, violation of the Florida deceptive and unfair trade practices act, and unjust enrichment. “By charging appraisal fees far in excess of the actual cost of the appraisal charged by a third party, and in transactions in which it has not performed the appraisal, LandSafe has engaged and continues to engage in the practice of receiving a portion, split and percentage of a fee for the rendering of a real estate settlement service, other than for services actually performed, all in violation 12 U.S.C. § 2607 and Regulation X, 24 C.F.R. § 3500.14,” the lawsuit states. In addition, the lawsuit alleges that Countrywide received a “thing of value” from LandSafe when it was “given control over the appraisal process” and resulting pricing, all in violation of RESPA. The lawsuit represents anyone who used Countrywide and LandSafe to finance a home purchased through KB Home in Florida , South Carolina or North Carolina . In July 2005, KB settled an investigation with the Department of Housing and Urban Development (HUD) for $3.2 million. The payment settled 13 underwriting violations found by HUD and resulted in the largest administrative penalty payment in the agency’s history. One week prior to the announcement of the HUD settlement, KB announced it was selling its mortgage arm to Countrywide and together the companies formed Countrywide-KB, a joint venture that exclusively provides loans to KB home purchasers, the suit states. In October 2007, KB and its captive title reinsurance company, Westview Co., settled with HUD for $456,000 over alleged RESPA referral fee and kickback violations. Comments or questions? Contact Kelly McCarel : kmccarel@octoberresearch.com . Affordable reprints of this article are available. Click here for more information. Comment Box - October Research Corporation is not responsible for the comments posted on its web sites by readers. We will do our best to remove comments that include profanity, personal attacks or other inappropriate remarks. Mon, 09 Nov 2009 00:00:00 EST B1A7E8B83F4D40AD87CA8FE8C9CECC75 http://www.respanews.com/ME2/Audiences/dirmod.asp?sid=49D9906DABAA4BC4816B18591E9F8494&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=42A0547CBBCE43B6BA8AB1E1F8EA0ABE&tier=4&id=8221A812CAD74DCBAF84193B32F7C127 — from the RESPA final rule Fri, 06 Nov 2009 00:00:00 EST 8221A812CAD74DCBAF84193B32F7C127