The "Deed Scam" was discussed here on Source of Title more than a decade ago, and it hasn't gone away.  It refers to the official looking letter that warns you that you need a certified copy of your deed and then offers to get it for you... for $70.00, or more.  Considering I can get a certified copy for about $6.00 at the court house, I have always felt that this was nothing but a scam.  And, I'm not alone. 

Undeterred by the several states that have banned the use of private transfer fees, Freehold is apparently still trying to find a way to securitize them.  The Wall Street Journal has reported that Freehold has approached several Wall Street banks to develop the securities, but has not yet struck a deal.

With so many homeowners in foreclosure, there are plenty of potential victims for scammers to prey on.  They are easy to find and desparate enough to be willing to try anything.  It is a dream come true for con artists who have a plethora of scams to run on unsuspecting homeowners who are in need of help.  The myriad of government programs, often complex in nature, make it easy for them to make their scam sound legitimate.  Homeowners need to be aware of the variety of schemes designed to rip them off.

There are certainly variations in custom from state to state, and even county to county.  In some locations, the seller is required to furnish an owner's policy to the buyer, in others the buyer pays for it if owner's coverage is desired.  I have always wondered about this difference and I thought it would be worth taking a closer look to see which makes more sense.  Add a comment and let us know what the custom is in your area and what you think about it.

The 6th Circuit recently ruled on an important case that will make it much easier to sue sham Affiliated Business Arrangements ("AfBA") for RESPA violations.  This may clear the way for private actions that will clean up the title industry - something the HUD and state regulators have been unable, or unwilling to do.  The court directly addressed the issue of whether a plaintiff must allege a concrete injury, such as an overcharge, in order to have standing to sue over a RESPA violation.  The answer - NO, an overcharge is not necessary for the plaintiff to have standing to bring the suit. 

Mandamus: A command by order or writ issuing from a court of law of competent jurisdiction, in the name of the state or sovereign, directed to some inferior court, tribunal, or board, or to some corporation or person, requiring the performance of a particular duty therein specified, which duty results from the official station of the party to whom the writ is directed, or from operation of law.  (Ballentine's Law Dictionary)

The Ohio Association of Independent Title Agents ("OAITA") has filed a Petition For Writ Of Mandamus with the Ohio Supreme Court asking the court to force the Ohio Department of Insurance ("ODI") to enforce laws that it has been ignoring.  Quite simply stated, the OAITA believes that the existing laws prohibit affiliated business arrangements ("AfBA") in Ohio, but the ODI has been lax in its enforcement and it has allowed many sham operations to become licensed and receive a share of title insurance premiums through a split of "profits."

In a press release, the OAITA stated:

The suit is the first of its kind in the United States and is an important step towards reducing the overreaching power and influence a bank, realtor and mortgage broker has over a homeowner’s real estate transaction and, in particular, a homeowner’s statutorily protected choice of title insurance provider.

This is a novel suit and brilliant in its simplicity.  There have been laws on the books for a long time prohibiting banks, Realtors and mortgage brokers from engaging in the title insurance business.  But, powerful lobby groups have been trying to find creative ways around them for years.  The Department of Housing and Urban Development ("HUD") carved out exceptions to the Real Estate Settlement Procedures Act ("RESPA") to allow for AfBA's, effectively eviscerating the anti-kickback provisions of Section 8. Everyone seems to have forgotten about the state laws... until now.  The OAITA has put this issue center-stage in Ohio and I'm sure it will draw national interest, especially from the lobby groups that have been successful in obtaining a share of the title revenue for doing nothing more than directing their customers to purchase their title insurance from an affiliated title agency.

It is, perhaps, the greatest documentary I have ever seen.  It's from 2006, but I just saw it for the first time last night on ShowTime.  You really have to watch this movie - everyone should see this movie.  If you don't have ShowTime, its available on DVD.

Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders, by James Scurlock, provides an excellent perspective on what consumer debt is doing to America.  The government's solution to our economic problems has been to encourage its citizens to keep spending to spur the economy.  While cheap, easy credit has kept our economy growing, those days are coming to a close.  Americans cannot afford to continue to prop up the economy at the expense of the individual; they are maxed out. 

The Supreme Court of South Carolina is considering adopting guidelines or "best practices" for attorneys conducting residential or commercial real estate closings in South Carolina. The guidelines were developed by the South Carolina Bar Task Force on Closing Responsibilities.  While I do firmly believe that more attorney involvement in the real estate closing process would be a good thing for consumers and our industry, South Carolina may be going overboard with their proposed guidelines.

Consider doing without: The risk of a title-related problem is so low that J. Robert Hunter, insurance director for the Consumer Federation of America, said people should think about not buying an owner's policy.

That advice may not be practical in Southern California, since home sellers here customarily provide the policy (and good luck trying to sell your house if you refuse to pay for title insurance). But in other locales, including the Bay Area, the buyer traditionally pays for the title insurance, so this may be an option there.

"Everybody has a different level of tolerance of risk," Hunter noted. "If you can't sleep at night, well sure, go ahead and get it. But just understand it's not a good economic risk."