A bank lost another mortgage because they made an error in recording their mortgage-- as is all too common, they attached the wrong legal description.  However, in this unusual case, the bank caught the error before anybody else and applied to the court to get the incorrect legal description fixed, but a judge still voided it. 

In reading the facts of the case, I thought the court got it wrong, resulting in a very unfair decision.  See what you think.

In a stunning decision, the Federal 6th Circuit Court of Appeals has ruled that under RESPA, sham affiliated business arrangements are legal.  Apparently referrers of settlement service business, prohibited by RESPA from receiving kickbacks for referrals, can now cash in on referrals by setting up shell businesses which serve no other purpose than to distribute money for referrals to the referrer,  There's no longer any need to make the affiliated business even look like a bona fide business with employees, an office, and work being performed. 

Can this decision possibly be correct?  I certainly do not think so.  I think the court missed something that was right under its nose.

Last year, a senior vice president at First American made the following claim:

In my opinion, during the boom years leading up to the real estate crash, government regulators, lending institutions, appraisers and ratings agencies, loosened their risk management criteria or relaxed their standards of ethical business conduct. The title insurance industry did not.

And here I was all excited because I thought there was GUARANTEED big news to write about today.

Well, so much for the notion that our little industry might make headlines for once.  The Supreme Court did not reach a decision in the RESPA Section 8 class action case First American v. Edwards.  The "decision" consisted of nine words: "The writ of certiorari is dismissed as improvidently granted."

This week, title insurance rating agency Demotech published a study, "Escrow Theft: Today's Challenge in Title Insurance", in which Demotech compares title insurance claims ratios for each state from 2004 to 2011 to its own ranking of the strength of each state's title agent regulations.  From that data Demotech concludes that states with stronger title agent regulation have lower rates of escrow theft. 

Unfortunately, the study falls well short of actually showing any link between title agent regulations and lower losses due to escrow theft.

When your cable goes out*, you start a title agency.

in early 2001, Lisa Rotolo got her title agent's license and opened her own firm.

When you start a title agency, you help close shady deals for free.

[Rotolo], the title agent key to Southwest Florida's expansive flipping fraud scheme acknowledged Monday that she helped close millions of dollars in fraudulent deals, though unlike others in the conspiracy only for her standard fees.