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Clearly... I'm Not Charging Enough.

rfranco@sourceoftitle.com — Wed, 21 Jul 2010 10:48:51 EST

I recently read an article on HeraldNet entitled Real Estate Attorneys Worth the Expense. As a real estate attorney, I naturally like to read things like that. Having been in the title business for many years before going to law school, I am left with the impression that nobody believes they need an attorney in a real estate transaction. Though the article makes a good point... something really caught my attention and made my jaw drop.

The article began with a question about how to approach a transaction without a Realtor. "Are there individuals who will, for a fee, direct us through the needed paperwork and legal steps?"

The tone of the article started out rather well...

Answer: Yes, there are professionals who will handle the paperwork and legal steps in a real estate transaction, namely lawyers.

That may seem obvious, but you’d be surprised how many home buyers and sellers fail to seek legal advice in real estate deals involving hundreds of thousands of dollars.

When buyers are struggling to scrape together the cash to cover the down payment and closing costs for the purchase of a home, they hate to spend an extra couple of hundred dollars on legal fees. But in my opinion, that is money well spent — especially when you don’t have a real estate agent to represent your interests.

This was written by a real estate broker, and so far, so good... right? Then, this:

As a licensed real estate broker, I have occasionally helped my mortgage clients by drawing up a purchase and sale contract for them at a nominal fee when they were buying a home directly from the owner. In those cases, I was simply acting as a facilitator and not representing either party. The advantage is that I am using all the latest multiple listing association forms which are constantly reviewed and updated by lawyers, so the buyer and seller each have some level of legal protection. You may be able to find a local real estate agent who is willing to do this for you, but don’t pay thousands of dollars for this service. For example, I typically charge $1,000 to write up a purchase and sale agreement between a home seller and buyer after they have verbally agreed on the terms, and that fee is usually split 50/50 between the buyer and seller.

This is where my jaw dropped. He starts by saying that people "hate to spend an extra couple of hundred dollars on legal fees." Okay... I get that. It wasn't much of a surprise. But then he proceeds to say that he charges $1,000 to fill out a form! Wow!

First, I need to comment on another matter he raised, then I'll get back to the price. He said that he uses the "latest multiple listing association forms, so the buyer and seller each have some level of legal protection." In my opinion that isn't worth much (let alone, $1,000). Forms are great (as a starting point), but they are one-size-fits-all and not everyone is the same size, so to speak. A form isn't worth much, if you don't understand it and you don't customize it to fit each particular situation. And, if you make changes to the form, you are providing legal services.

Okay... that said, let's get back to the price. I was shocked that someone would charge $1,000 to fill out a form. And even more surprised that someone would pay that much for such a service.

I have prepared sales contracts for individuals who were entering a real estate sale without a Realtor. I typically charge $350 and I actually draft the Purchase Agreement... I don't use a stock form. Furthermore, I advise my clients about the required disclosures and liability aspects of the deal. For that fee, I also include the Inspection Addendum to the Purchase Agreement, the Lead Based Paint Disclosure Statement, the HUD Lead Paint Disclosure and Brochure, and the Ohio Residential Property Disclosure. And... for another $50, I'll even prepare the deed!

Maybe I'm selling myself short, but if I charged $1,000, even for all that I provide, I would not be able to sleep at night. Maybe this guy is in a more affluent area of the country than I am... maybe the cost of living is higher and, like all things, it just costs more. But I still have to say that $1,000 to fill out a form sounds out of line to me.

But... at least he is honest about it...

However, I still think that you are better off hiring a real estate attorney because for roughly the same amount of money you would be able to get some legal advice to protect your interests rather than just hiring somebody to fill out the forms for you.

Maybe I'm just off the mark on what such services cost these days... who knows. But, in any regard, I am pleased to see someone writing about the value of a real estate attorney in a land sale transaction. All too often, people forego legal advice in the single largest investment most of them will ever make.

I'm reminded of one of my early blogs, A Simple Transaction, in which a judge pointed out the complexity of real estate transactions and expressed surprise that lawyers aren't involved in them anymore.

Apparently someone has taken the advice of Dick the Butcher in Shakespeare's Henry VI, Part II and "kill(ed) all the lawyers." Nowhere in this transaction does there appear to be the participation of any lawyers... At one time a real estate transaction consisted of a deed, a note and a mortgage; took about fifteen minutes to complete; and had the participation of an attorney for all parties to the transaction. The last time the Court checked, we were still in the City of New York where people do not even verify the score of the Yankee game without consulting counsel, and yet, lawyers have effectively been eliminated from real estate closings involving the refinance of mortgages and secondary loans, including home equity lines of credit. One could conclude therefore that these transactions have no legal implications. That, however, would be far from the truth. The borrowing of money secured by a mortgage is often a complex transaction with serious legal implications for all of the parties involved, especially the borrowers who are pledging their home as security.

I do believe that it is a good idea to have legal representation at any real estate closing. The transactions and paperwork have gotten more complex and significant legal rights are at issue.

Robert A. Franco
SOURCE OF TITLE

I AM BOILING MAD...

CHARLENE PERRY — Mon, 19 Jul 2010 16:03:44 EST

If you have looked at a relatively recent issue of The Baltimore Sun you would be led to believe that all Maryland title agents are crooks. Well, I am here to tell you that is just not so.

Recently there have been several articles in our local daily paper, The Baltimore Sun, that would make one believe that ALL title agents are crooks and are not to be trusted. I am here to tell you that that is just not so.

An article written by Jay Hancock dated June 20, 2010 is so blatently accusatory of the whole industry that it just made my blood boil. His statement "It's the lesser-known side of the mortgage disaster. As lenders foisted billions of dollars in mortgage debt on unqualified borrowers buying overpriced houses, too often there was a sticky-fingered settlement agent standing nearby".

While it is true that the title agent who is the focus of Mr. Hancock's article has been tried, found guilty, sentenced and fined you cannot use this or other articles written by Mr. Hancock on this subject to make a determination that we are all crooks and just doing all we can to swindle people out of their hard earned money. YES I AM FURIOUS!!

Those of us in the title industry as a whole are honest, hard working and dedicated to doing our best to see to it that the transactions get to the closing table, that the settlement itself is run smoothly, and that the funds are disbursed as disclosed on the HUD-1. One would think from reading this article that we all just sit around trying to figure how we can dupe hard working people out of their money to the benefit of ourselves and our families.

In another statement within the same article Mr. Hancock says "Title insurance, which is usually required by mortgage companies, protects people from the risk of buying property from somebody who doesn't own it. Title companies also handle real estate settlements, which means agents briefly gain custody of hundreds of thousands of dollars during the ownership transfer. In Maryland, it seems, it has been all too easy for title companies to help themselves, too". How dare he insinuate that we all "dip" into the funds entrusted to us for purposes of disbursments to various people and entities. Mr. Hancock makes a statement in yet another article on July 1, 2010 that "there has been a boom in settlement fraud".

I cannot deny the fact that there are a few bad apples in every industry. How many times have we heard stories about Brokers who have absconded with escrow funds held for earnest money deposits. Does that make all Brokers crooks, well of course not. Does that create a boom in settlement fraud? Well of course not.

Don't believe everything you read in the paper. Most title agents are exactly what they appear to be- hard working, honest people doing the best job they can to make your transactions run more smoothly.

Wells Fargo Sued in Federal Court for Failing to Modify Mortgages Under HAMP

rfranco@sourceoftitle.com — Mon, 19 Jul 2010 13:49:36 EST

Homeowners, finally fed up with unfulfilled promises of HAMP modifications, have filed suit against Wells Fargo in the U.S. District Court in Massachusetts. As is common across the county, lenders are placing homeowners in HAMP trial period plans and even after the homeowner complies with all of the terms of the plans they are denied a permanent modification.

A HAMP modification consists of two stages. First, a participating servicer is required to gather information and, if appropriate, offer the homeowner a Trial Period Plan. The Trial Period Plan consists of a three-month period in which the homeowner makes mortgage payments based on a formula that uses the initial financing information provided.

There used to be a written Trial Period Plan Agreement that was executed by the homeowners and the servicer. The agreement described the homeowner's duties and obligations under the plan and promises a permanent modification once the homeowner successfully completes the trial period. Currently, it seems as though the written agreement has been abandoned and in its place homeowners simply receive a letter that they have been approved for the trial period plan - making the first required trial period payment is considered acceptance by the homeowner.

Unfortunately, very few trial period plans actually make it to the permanent modification stage - despite the homeowners' compliance with all of their requirements under the plan. Often times, these plans drag out for several months beyond the three-month trial period to the detriment of the homeowner. What many homeowners fail to realize is that while they are making reduced payments under the plan, their delinquency continues to grow.

The lawsuit alleges that by failing to offer the permanent modifications, homeowners are left in limbo, wondering if their homes can be saved" and "preventing them from pursuing other avenues of resolution, including using the money they are putting toward Trial Period Plan payments to fund bankruptcy plans, relocation costs, short sales or other means of curing their default."

The first cause of action alleges breach of contract. Essentially, that the Trial Period Plan Agreement constitutes a valid offer and that by executing the agreement and returning it along with the supporting documentation, Plaintiffs accepted the offer. Alternatively, the argue that return of the agreement by Plaintiffs constituted an offer and that it was accepted when Wells Fargo accepted payments thereunder.

It is also claimed that the payments constituted valid consideration because in doing so, Plaintiffs "gave up the ability to pursue other means of saving their homes."

Thus, a binding contract was formed and the failure to offer a permanent modification when the homeowners completed the plan constitutes a breach of contract.

In the second cause of action, it is alleged that Wells Fargo breached the implied covenant of good faith and fair dealing. Implied in every contract is a duty of good faith and fair dealing. "The purpose of the covenant is to guarantee that the parties remain faithful to the intended and agreed expectations of the parties in their performance." It is alleged that Wells Fargo breached this duty by:

failing to perform loan servicing functions consistent with its responsibilities;
failing to properly supervise its agents and employees including without limitation, its loss mitigation and collection personnel and its foreclosure attorneys;
routinely demanding information already in its files;
making inaccurate calculations and determinations of the homeowners' eligibility for HAMP;
failing to follow through on written and implied promises;
failing to follow through on contractual obligations; and,
failing to give permanent modifications and other foreclosure alternatives to qualified homeowners.

I expect that more of this type of litigation will be used across the country. It is appalling to see what lenders, and their servicers, are doing to homeowners. Under the guise of a federal program, they are promising modifications and taking many months of additional payments from homeowners and then continuing with foreclosure. This amounts to a windfall to the lenders who are collecting those payments that they otherwise would not get. Homeowners could be using that money to relocate, file bankruptcy, or seek other avenues to save their homes.

I agree with the Plaintiffs in this case. It is a breach of contract and a breach of the duty of good faith and fair dealing. When homeowners accept a Trial Period Plan and do everything they are asked to do under the agreement and are denied a permanent modification, they should have some redress in a court of law.

Unfortunately, foreclosure mills continue to ram homeowners through the foreclosure process without a care. Because many homeowners do not seek representation, they lose their home despite their best efforts to workout a modification. This really amounts to giving away money to the lenders who fail to live up to their duties under the HAMP Trial Period Plan agreement.

As I am now representing homeowners in foreclosure, I will be keeping a close eye on this case and any others that may pop up.

Robert A. Franco
SOURCE OF TITLE

TIPICS in Maryland

CHARLENE PERRY — Tue, 13 Jul 2010 14:26:12 EST

Maryland has clarified it law as it relates to a title insurance producer and a title insurance producer independent contractor. (TIPIC)

Beginning on July 1, 2010 Maryland will require that a title insurance producer may only use a TIPIC if the TIPIC holds an appointment with a title insurer with which the contract of title may be placed. Beginning July 1, 2010:

The Title Insurance Producer is:

The legal principal of the TIPIC and;
Liable for all actions of the TIPIC, including unintentional conduct, that occurs within the scope of the TIPIC's employment.

The TIPIC must be covered under the title insurance producer's blanket fidelity bond and blanket surety bond or letter or credit;

The Recorded Mortgage must include the following information on any paper which will be recorded:

The name, address and license number of the title insurance producer; and
The name, address and license number of the TIPIC

A TIPIC, a licensed title insurance producer that acts solely on behalf of another title insurance producer when providing escrow closing or settlement services that may result in the issuance of a title insurance contract and is covered under that title insurance producer's blanket fidelity bond and blanket surety bond or letter of credit, is not required to file a blanket fidelity bond and a blanket surety bond or letter of credit with the Commissioner.

H.R. 4229 Borrower's Right to Inspect Closing Documents Act of 2009

CHARLENE PERRY — Tue, 13 Jul 2010 14:07:40 EST

I know this bill has been floating along for a while now and I have meant to comment on it. I generally agree with this proposal and hope that it sees passage

H.R. 4229-Borrowers' Right to Inspect Closing Documents Act of 2009.

This bill was introduced in the house in December 2009 and has been assigned to the Committee on Financial Services. The focus of this bill is to enable the borrowers to review their entire closing package three days prior to closing. The bill would make it the responsibility of the lender to provide the closing package to the title agent no less than 4 days prior to closing and then would require the title agent to deliver the package to the borrower 3 days prior to closing. The bill would allow for delivery via electronic communication or by any other method chosen by the borrower, including coming to the title agent's office to review the documents.

I actually agree conceptually with this bill, but I am concerned about the exemptions named in the proposed bill, particularly that provision that allows for exemption for settlements under which the requirements of this [subsection] is impractical. Well, that is just so very broad that every single transaction could qualify under the exemption. I can think of any number of ways in which the lender could come with a scenerio in which they could claim the "impractical" exemption.

I took some time last night to read a few blogs on this subject and some of the responses to the bill. In most cases, lenders were crying foul and Realtors were applauding the attempt of congress to at least TRY to give the consumer an opportunity to see documents in a timely enough fashion to enable them to ask questions, get clarification, etc.

We all know that current RESPA rules REQUIRE that the borrower be provided an opportunity to review the HUD-1 24 hours prior to closing. Now seriously, how often does that happen in an ordinary closing transaction?

As an REO specialist I will tell you that we always have the final HUD-1 no less than 3 days prior to closing because our sellers require that much time to get the HUD-1 approved and signed off. I have rarely had a lender tell me they absolutely cannot accomodate that because we tell them from day one if they miss the deadline the closing will be delayed and they, the lender, will pay any penalty that may be assessed by the seller. I have in fact had instances where the lenders have paid a per diem penalty on behalf of a buyer. You can be sure that those lenders will not likely miss a deadline again. I would suggest that if the lender can produce final closing intstructions and a final HUD to me 3 days prior to closing, they can certainly present the entire closing package, and I have in fact had lenders do just that.

I received just last month a letter from a lender advising me that they are going ahead with their commitment to deliver the final closing package 3 days prior to closing. They are being proactive and acting in the best interest of the consumer. They made it clear that title agents doing business with them would have to adhere to their new guidelines as far as delivery of our preliminary HUD, title binder, etc. so that they in turn can get us the closing package early. Now, what lender do you think I recommend?

I just don't buy into the notion that the lenders are overwhelmed and that this would cause any hardship to them as was stated in many of the responses I read last night. Nor can it be said with any truth that this law would cause any closing delays. If we all know from the beginning what the requirements are we can all work together to make it happen. I hope that we all follow this bill and, if you support the bill, make your support known to the sponsers or your local representatives.

LET'S PLAY TITLE FRAUD

CHARLENE PERRY — Wed, 07 Jul 2010 14:38:03 EST

Seriously, why do people think that everyone is crooked and willing to participate in their schemes??

I have been working with a realtor for 4 months now on a short sale transaction that finally got lenders (2) approval in the middle of June. Upon hearing from the lenders that the transaction was approved the Listing agent Realtor called me to schedule the closing and advised that the seller would be calling me later that day. I did in fact receive a call from the seller that day and was absolutely STUNNED to hear what they had to say.

The property that was encumbered by the mortgage contained about an acre and a half of land and had a house on it. The seller called to tell me that it was their desire to "sell" only half of the property to the buyer (the half containing the house); pay the lenders off and then went on to say that they were going to sell the other half of the property to another person. I advised them that I could not be a party to this transaction as they were attempting to defraud their lenders who had FINALLY approved the short sale transaction.

Their realtor called me later that day to ask why I had a problem with this transaction structure! SERIOUSLY. What was not clear to this realtor? The lenders had used the ENTIRE property as collateral for their loans and as such expected that the seller would not attempt to split the property in two, sell one half of it to get the lenders off of their back and then sell the other half, which would then be unencumbered by any mortgages to another?!! After some discussion I was advised that the realtor was going to see if they could find a title agent who would handle this transaction. Some time later the next day the Realtor called to advise that they were able to find a title agent to handle the matter and asked that I sell my work to the title agent that was going to handle the matter. And that's what I did.

I received a check in the mail today from the title agent who handled the transaction and can only assume from the delivery of the check that the matter had been closed in accordance with the seller's plan. I am almost tempted at this point to contact the lenders to make them aware of this fraud.

This is an absolute case in which there is no question that the selller, the buyer, the realtors and the title agent knew what the seller was trying to do and not only did they encourage it, they actually found the resources on behalf of the seller in order to make this transaction work.

It has never been my practice to participate in any transaction in which I did not have a "warm and fuzzy feeling" about the entire transaction. I have always relied upon "gut" feelings and so far as I know have never knowingly been involved in a transaction in which one of the parties was attempting to commit a fraud. Not that we independent title agents can afford to turn away business these days, but this was a deal that I could not get off of my desk fast enough!! Use your intuition. If it doesn't feel right DON'T DO IT!! Integrity is not something that you can get back easily once lost.

I might just periodically check on this property to see what, if anything, ever comes to light about the way in which this was handled.

Law firm gets slammed for a typo

CHARLENE PERRY — Tue, 06 Jul 2010 15:52:07 EST

I read this post today by David Pardue relating to an error made by a paralegal at what I can only assume was a foreclosure mill. I am glad to see that the court held with the law and did not rescind this sale.

georgiarealestatelitigationblog.blogspot.com

A mortgage company lost its appeal of a doomed effort to rescind a foreclosure sale after it made a six figure mistake in calculating the minimum bid. Decisions One Mortgage Co. LLC v. Victor Warren Properties, Case No. A10A0247, 10 FCDR 1990, Decided June 14, 2010. In this case the company conducted a foreclosure sale and Warren Properties was the high bidder. The winner tendered the funds and received a receipt for the payment for the property. Several weeks later, however, the company sent the funds back with a letter stating that it had rescinded the sale. Warren had to file a lawsuit to enforce the sale.

Decision One pleaded for the court to use its equitable power to rescind the sale. It submitted an affidavit of a paralegal for the company that was the servicer of the nonjudicial foreclosure process for the law firm that represented Decision One in the foreclosure sale. The affidavit stated that prior to the foreclosure sale date the servicer was informed by another entity via a program known as MortgageServ of the total debt amount and the servicer was instructed to calculate the opening bid. Due to a "clerical error" the affiant mistakenly calculated the opening bid at $27,750 when in fact the opening bid should have been $333,000. When the law firm received the results of the high bid of only $54,000 it was apparent that a mistake had been made. In other words, Warren bought the property for $279,000 less than the minimum bid was supposed to be. Now that is a steal!

The Court of Appeals made short work of Decision One's argument for equity to intervene. Decision One relied upon a prior case where a contractor was permitted to rescind a bid based on a unilateral miscalculation after establishing four factors: (1) enforcement of the mistake would have been unconscionable; (2) the mistake related to the substance of the consideration; (3) the mistake occurred regardless of the exercise of ordinary care; and (4) the other party had not been prejudiced. Here, the court held that Decision One had made no effort to establish that ordinary care had been exercised or that Warren would not be prejudiced by the rescission. Thus, it upheld the sale of the land.

We can only hope that more and more judges take the position that these law firms conducting the bullk of the foreclosures in the nation are not going to be allowed to have the court correct their errors. Errors happen in all facets of our business. But I would guess that when you or I make a mistake we don't seek out a kindly judge to try to "make it right". We own our mistakes, take corrective measures to ensure that the same mistake is not made over and over again and move on. It is with interest that I note that Decision One was trying to rely upon the fact that they excercised "ordinary care". I would think that "ordinary care" would mean that someone other than the paralegal had to review the information presented relating to the opening bid. Even if we assume that someone was having a "dyslexic day" and I mean no disrespect by that statement as I will readily admit I have dyslexic days all the time, (just ask my assistant how many times she has corrected me) this error was not simply a clerical error.

This is a good representation of the fact that these foreclosure mills are just pushing paper out the door in their effort to get the foreclosures filed and acted upon so that they can move on to the next transaction.

Rule No. 1 - When less is more, or, How many counties do you list in?

david@david-case-attorney.com — Thu, 01 Jul 2010 11:49:28 EST

In the SOT directory, or other directories, how many counties do you claim to cover? If you purport to cover more than one primary county, plus perhaps a few adjoining ones, you may be shooting yourself in the foot.

I've heard that potential clients prefer using true local experts if they can find them, and thus avoid contacting title vendors who claim to cover large numbers of counties. The other day, quite by chance, I "overheard" a conversation that confirmed this.

A national vendor called me while I was out so the call went to voicemail. After the vendor left his message he failed to disconnect. He kept on talking, unaware that his call was still being recorded. What ensued was a lengthy and fascinating conversation between this person and a trainee who was being mentored on how to evaluate potential title vendors, contact them, and respond to certain questions the vendors might raise such as fees, payment, etc.

As they talked, they were going down the list for the county they called me about and simply rejected out of hand any vendor whose listing indicated that they covered more than a handful of counties. Didn't even give them a call. They were out. Period.

Let those who have ears listen. I sure did!

Unemployment in the Third Depression Era

rfranco@sourceoftitle.com — Wed, 30 Jun 2010 13:42:49 EST

The end of May, federal unemployment benefits began to expire leaving 1.2 million jobless Americans cut off. The House passed a bill providing a six-month extension, but the Senate has not been able to pass such legislation... despite three attempts. All of the Senate Republicans have blocked the effort.

This will certainly worsen our already troubled economy as well as pile on to our crippled housing market. One economist has noted that we may be setting the stage for a Third Depression. While our Congressman are busy playing politics, Americans are suffering... and it is going to get worse.

Never before have our Congressmen let let federally extended unemployment benefits expire with unemployment above 7.2%. Yet, we could see an unprecedented end to benefits with an unemployment rate at nearly 10%.

The Republicans are taking a hard line position that we can't extend benefits because it would add too much to our expanding national debt. I'm a fiscally conservative Republican, but even I see this for what it is... political gamesmanship. Many of these same Republicans had no problem with nearly doubling our national debt under Bush's term in office. When George W. Bush took office, the debt stood at $5.7 trillion - we added another $4.9 trillion before he left.

Ken Rogoff, a Harvard Professor, recently told CNN's Christine Romans that he doesn't get it either.

I'm very concerned about it Christine. I'm a fiscal conservative, I think this is nuts. This is a once in every half century event. People are going to have to have a tough time finding jobs for a long time and it has a lot of physiological effects on people's health. Unemployment insurance is really one of the most important parts of the whole stimulus trying to help the people who really need it. I just don't understand this.

Later in the same interview, Romans made a very good point.

The reason why they can pay the mortgage right now is because one of the spouses is still getting that unemployment check. With out that unemployment check though they would be on the edge. I wonder Ken, if you take away that check then; do you pay for it somewhere else in society and the cost to the tax payer through the housing market or through other social safety nets?

And Chrystia Freeland, Reuters Global Editor at Large, boiled that down its essence.

People who are living on those benefits are people who have a very strong propensity to spend as the economist say. So that money is going to go directly into the economy.

Without the unemployment benefits, we will see a sharp rise in foreclosures. Even modification cannot help those that cannot pay even a lesser payment. That will take a toll on our housing market that we just cannot afford right now.

In addition, it will place a higher burden on the states to provide services - causing tax increases and even higher unemployment. As explained in a NY Times editorial:

Meanwhile, the states face a collective budget hole of some $112 billion, but neither the House nor the Senate has a plan to help. The House stripped a provision for $24 billion in state fiscal aid from its earlier spending bill. The Senate included state aid in its ill-fated bill to extend unemployment benefits; when that bill failed, the promise of aid vanished as well.

As a result, 30 states that had counted on the money to help balance their budgets will be forced to raise taxes even higher and to cut spending even deeper in the budget year that begins on July 1. That will only worsen unemployment, both among government workers and the states’ private contractors. Worsening unemployment means slower growth, or worse, renewed recession.

Some Republicans seem to believe that we need to cut unemployment benefits to force the unemployed to go back to work. The counter-point, of course, is "back to work where?" There just aren't any jobs available.

Recently Senate Candidate Sharon Angle was widely criticized in the media for saying "we have put in so much entitlement, in to our government, that we have really spoiled our citizenry." A poor choice of words, perhaps. I don't really think she meant to say that the masses of unemployed have been so spoiled by their meager unemployment benefits that they just don't want to go back to work. In fact, she has clarified her position by saying that what we need is a "supplement" that will pay people some lesser amount if they take an entry level position that may pay less than they were receiving on unemployment.

I don't really disagree with Angle's idea for supplemental under-employment benefits, but something needs to be done quickly. Why? Because we don't want to end up in a Third Depression.

Paul Krugman, A NY Times columnist and Economics Professor at Princeton University, recently wrote "We are now, I fear, in the early stages of a third depression." Krugman has an impressive biography - B.A. from Yale, Ph.D. from MIT, and a Nobel Prize for Economics.

[G]overnments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.

In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer.

But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps.

In the face of this grim picture, you might have expected policy makers to realize that they haven’t yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy.

He concluded his editorial with a gloomy prediction. "And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."

Ending federally extended unemployment is just ludicrous! Both Democrats and Republicans had no problem casting our nation in to deeper and deeper debt to bailout AIG, GM, Chrysler, and countless banks... but when it comes to providing direct assistance to the people who need it, who will put that money directly in to our struggling economy, they want to draw some sort of line in the sand. Really?? Does that make any sense?

The root of our problem started when the mortgage market went belly-up - we still haven't figured out a solution, despite throwing hundreds of billions of dollars at the banks who caused the mess. Credit is still pretty tough to come by for most regular people. Cutting unemployment benefits will mean that fewer people can afford to keep their homes, worsening our housing crisis.

Maybe our Congressmen just don't understand the importance of unemployment benefits. The salary for the rank-and-file members of the House and Senate is $147,000 per year. And, most of them probably don't even need it. How can they possibly relate to the average Joe who lost his $12 an hour job and needs an unemployment check to keep a roof over his head and provide food for his family?

I get that Republicans want to see President Obama and the Democrats fail. The problem is that the rest of America will likely get it too. Come election time, they won't look favorably on political maneuvering that cut the only support many Americans had in the midst of a recession where jobs just aren't available.

Today's title defect...

CHARLENE PERRY — Wed, 30 Jun 2010 11:45:19 EST

As usual coming out of a foreclosure we have reviewed the title and found a defect....

I have long ago learned that you have to READ every document that is presented to you in a title report when the property has been foreclosed upon. This situation is no different, but for the fact that the foreclosure attorney did not READ the title deed.

The title deed clearly states that the property is owned by A & B as tenants by the entirties, with REMAINDER to C. A predeceases B. B then dies and the property is foreclosed upon. A P/R was appointed in the Estate and the P/R got notice in the forclosure, but... the remainderman did not.

I took this to the foreclosure attorney and he readily admitted that he did not notify the remainderman and that he would make an attempt to try to locate this person, offer a sum of money, and get a waiver of notice. Relatively easy fix, right? NO. The reminderman is evidently living on the streets, according to the f/c attorney and he cannot be located by reasonable means. So where does that leave us? Well this is the proposed fix:

The f/c attorney, with approval from underwriting counsel ,is going to "self insure" both the lender's and owner's title policy, offering a letter to the underwriter stating that if this remainderman comes forth and files a claim against the property that he will defend the action and pay out any sums of money necessary up to the limits of the policy.

Naturally, because the seller is only offering "insurable title" this meets the contract demand and the buyer is going to asked to accept this as the resolution. We note that the underwriter is requiring that the buyer be noticed of this title defect and made to seek independent counsel.

While this will afford the buyer and the lender wtih a policy of title insurance, it is a clear indication of the things that lurk out there that the consumer is unaware of in the ordinary course.

Would I, as a consumer, take this resolution? No. But that's because I know the possible ramifications of this action. The remainderman still has a good bit of time left to make a claim as the foreclosure just recently ratified and the f/c attorney has advised that he was told that the remainderman is a "junkie". So can that "junkie" status be used as a defense to extend out the statute of limitations based on their "disability"?

Now, as a practical matter there really is no equity here so there really isn't anything that the remainderman can claim they lost, but I get so weary of having to bring to the attention of the foreclosure mills all of these "little" issues surrounding their foreclosure action. And too, I feel for the consumers who are reliant upon these mills to conduct their closings for them in the current "cradle to grave" environment. Had we not been selected by the buyer to do this closing for them, the lack of notice would never have been discovered.

HUD REMINDS INDUSTRY THAT THE HUD-1 IS NOT A DISBURSEMENT DOCUMENT

CHARLENE PERRY — Tue, 29 Jun 2010 16:10:41 EST

From ALTA this morning.

HUD Reminds Industry New HUD-1 Not a Disbursement Document

June 29, 2010

The HUD-1 is a consumer disclosure document, not a disbursement document, HUD officials reminded industry professionals.

During the Virginia Land Title Association’s Annual Convention, Teresa Payne, associate deputy assistant secretary of Regulatory Affairs and Manufactured Housing, said HUD has no problem with an addendum to the HUD-1 or HUD-1A, which outlines the component fees that add up to line 1101, as long as the “administrative and service fees” are not detailed.

HUD has stated it does not want to see breakdowns for copy fees, delivery fees, notary fees, wire fees, binder fees, etc.

“We get a lot of questions saying ‘why isn’t my specific charge shown?’” said Andrew Fay, compliance specialist for the Office of RESPA. “Essentially, all the charges are shown, but some are rolled up.”

Lenders are encouraged to use worksheets appropriately, as additional information for the borrower as to total funds needed at settlement, seller credits, total monthly payment, etc. The GFE form is not an appropriate form to use for pre-approvals. Lenders may not refuse to accept information from the consumer to avoid issuing a GFE. The GFE should be issued as soon as possible in the process, according to Payne

Now, is it just me? I feel it is important that the consumer be given a statement from me itemizing what I am charging them for. I generally give the buyer an attachment to the HUD-1 which outlines my fees as shown on 1101. Now we are told that this is not allowed? Perhaps I missed something in my original 20 or so hours of training on this new form.

I must ask, what is it that makes HUD want to be so very secretive about as it relates to the title fees? As I have said all along, the new HUD does not allow the consumer to compare an apple to an apple when it comes to fees other than those being charged by the lender and those fees relating to the lender's title policy.

As we all know most consumers will not really care about the "line item" fees, they are interested only in the bottom line, so this will not make that big a difference. It just makes me wonder. What are title agents, with the help of HUD, trying to hide, mask, bury, camouflage, cloak, cover, disguise, duck, veil, withhold, suppress or obscure by not issueing a simple document that outlines the fees being charged to them by their title agent. Alas, with this new statement, we will never know.

Foreclosure Prevention Scams: Be Aware!

rfranco@sourceoftitle.com — Tue, 29 Jun 2010 14:47:13 EST

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.

First, it is important to note that there is help available for homeowners facing a potential foreclosure. If you are behind on your mortgage and think that you may be in danger of losing your home, you should talk to your lender and ask for help. There are programs available, such as the Home Affordable Modification Program and ALT MOD, that your lender can (and should) discuss with you. You may also want to talk to an attorney to help you understand the process.

If you get served with a foreclosure complaint, you need to file an answer. At this point, you should definitely consult an attorney. If you simply ignore the foreclosure you could quickly lose your home by default judgment.

It is also important to note that if you are in a foreclosure situation, others may know about it - foreclosures are public records and it can make it easy for scammers to find you. They may contact you by mail, telephone, or e-mail and describe themselves as "foreclsoure consultants" or "mortgage consultants" offering "foreclsoure prevention" or "foreclosure rescue" services.

The scam artists use simple and straight-forward messages, like:

“Stop Foreclosure Now!”

“We guarantee to stop your foreclosure.”

“Keep Your Home. We know your home is scheduled to be sold. No Problem!”

“We have special relationships within many banks that can speed up case approvals.”

“We Can Save Your Home. Guaranteed. Free Consultation”

“We stop foreclosures everyday. Our team of professionals can stop yours this week!”

Once they have your attention, they use a variety of tactics to get your money.

The Office of the Comptroller of Currency published Consumer Advisory CA 2009-1 describing several common scams:

Foreclosure “rescue” and refinance fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even “guarantee” to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly — along with significant, up-front fees — and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don’t follow that advice.

Remember that your mortgage lender should be the starting point for finding options to avoid foreclosure. You also should consider contacting qualified and approved credit counselors.

Fake “government” modification programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists’ claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer.

The scam artist’s name or Web site may be very similar to those of government agencies. The scam artist may use such terms as “federal,” “TARP,” or other words or acronyms related to official U.S. government programs. These tactics are designed to fool you into thinking the scam artist is somehow approved by, or affiliated with, the government. The government is taking actions to stop this fraud, but you also need to protect yourself. So be wary of claims offering “government-approved” or “official government” loan modifications. Your lender will be able to tell you whether you qualify for any government initiatives to prevent foreclosure. You do not have to pay anyone to benefit from them.

Leaseback/rent-to-buy schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. If you do not comply with the terms of the rent-to-buy agreement, you will lose your money and face eviction. The agreement may be very hard to comply with, because it may require, for instance, high up-front and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. They simply want your home and your money.

Remember that transferring your title does not change your payment obligations — you will still owe your mortgage debt. The difference will be that you will no longer own your home. If payments are not made on the mortgage, your lender has the right to foreclose, and the foreclosure and any other problems will appear on your credit report.

Bankruptcy scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true — but only temporarily. Filing bankruptcy brings an “automatic stay” into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years.

Debt-elimination schemes. Scammers may claim to be able to “eliminate” your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that “secret laws” can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims.

A friend of mine from law school recently told me about a client that came to see him after her house was sold at sheriff's sale. She told him that she had been working with a "debt restructuring/negotiating firm" to help her keep her home. She paid them $1,000 for their "services." While they were "working with her lender" she was served with a Foreclosure Complaint. She called them and was told "not to worry about it because it wasn't a Notice of Sale." She believed them.

Next she was served with a Default Judgment Entry because she did not file an answer in her foreclosure case. Again, they said "don't worry about it." Then, she received a Notice of Sale and they told her that "they weren't really going to sell her home because they were still working out a deal."

Last week, her home was sold at sheriff's sale - the lender bought it back. The debt restructuring/negotiating firm told her that they had evidence, in the form of a forensic audit, of numerous violations by the lender of predatory lending laws. Of course, they wouldn't share this evidence with her unless she paid them another $1,000.

Remember, a foreclosure is a legal proceeding and you should "worry about it." You need to file an answer, and you should consult with an attorney. If it is possible to keep your home, you need to be proactive and communicate with your lender. Be vary wary if anyone tells you that you should not contact your lender or an attorney. And, you should be even more sceptical if anyone tells you not to make your payments, or worse - to make your payments directly to them!

Here is a list of "red flags" published by the Federal Trade Commission:

If you’re looking for foreclosure prevention help, avoid any business that:

guarantees to stop the foreclosure process – no matter what your circumstances

instructs you not to contact your lender, lawyer, or credit or housing counselor

collects a fee before providing you with any services

accepts payment only by cashier’s check or wire transfer

encourages you to lease your home so you can buy it back over time

tells you to make your mortgage payments directly to it, rather than your lender

tells you to transfer your property deed or title to it

offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale

offers to fill out paperwork for you

pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately.

There is legimate help available. First, I recommend consulting with an attorney. See if you can find one willing to give you a free consultation before you retain them.

Second, you can contact the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE). HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. More information about HOPE NOW is at www.hopenow.com.

Third, if you think you may have been a victim of a scam, conact your state's Attorney General's office. Many attorney generals are actively pursuing scams that prey on homeowners. In Ohio, for example, Ohio Attorney General Richard Cordray announced lawsuits against two Ohio foreclosure rescue businesses for failing to provide services for which consumers paid, as a part of a national mortgage fraud sweep dubbed "Operation Stolen Dreams."

Energy Boom Fuels Region's Re-emergence As Industrial Powerhouse

bossman@jbizinfo.com — Fri, 25 Jun 2010 01:02:10 EST

Energy innovation and technology continues to create thousands of much-needed jobs all across the Commonwealth and in southwestern Pennsylvania in particular. But could opposition from environmental groups and the prospect of politicians seeking new sources of tax revenue slow or perhaps even stall that economic progress?

Southwestern Pennsylvania has a long, proud history as an energy-producing region. Readily available (and seemingly endless) supplies of energy from coal, oil and natural gas were among the chief reasons that men such as Henry Clay Frick, George Westinghouse and their contemporaries selected this region as the place in which to bring their innovations and ideas to fruition and to seek their great fortunes in the late 19^th and early 20^th centuries.

Today, we still have the immense deposits of coal, along with the largest known reserve of natural gas shale and dozens of local firms involved in the development of alternative energy sources like wind farms and solar power. All that, plus the nation’s only domestic manufacturer of nuclear power generation equipment all right in our own back yard, and it’s easy to see why this region has so rapidly become a beehive of activity for industries and international investors seeking to capitalize on these vast energy resources. It’s also been a boon for a lot of abstractors and examiners across the region, myself included, who felt the pinch of the recession when many of the smaller local title agencies and mortgage brokers closed their doors.

Current estimates are that the Marcellus Shale, the huge rock formation which runs throughout most of the Appalachian Basin, contains enough natural gas to meet the energy needs of the entire nation well into the next decade. Interest in Marcellus gas has attracted billions of dollars in international investment from firms in China and Great Britain. Westinghouse Electric Company LLC, which recently relocated its corporate headquarters to a brand-new 775,000 square-foot facility in Cranberry Township, Butler County, plans to hire as many as 1,000 people, according to a recent article in the Pittsburgh Tribune-Review. Company officials cite the rapid expansion of the nuclear energy industry worldwide as the reason for that growth.

Just last year, as a paralegal consultant at Westinghouse’s Legal & Contracts Group, I had the privilege of working closely with many of the attorneys and other professionals involved in contract negotiations for the company’s AP1000 nuclear reactor program. Four AP1000 plants are currently under construction in China, with a total of 12 units scheduled to go online in that country sometime in 2014 or 2015. Here in the US, the AP1000 reactor design has already received preliminary approval from the Nuclear Regulatory Commission and at this writing, NRC license applications for the construction of fourteen reactors at seven power plants across the country are pending.

A recent Penn State University study sponsored by the Marcellus Shale Coalition predicts that natural gas producers will spend over $8 billion in 2010, generating about $790 million in state and local tax revenues and creating more than 88,000 jobs, more than double the numbers from 2009. But critics in the environmental movement have expressed concerns over the method of extracting natural gas from shale formations by a process known as “fracking” (short for “fracturing”).

Gas drilling by Cabot Oil & Gas of Houston, Texas caused problems in a small township in Susquehanna County when methane gas seeped into the water supply through a cracked underground casing in one of Cabot’s gas wells. In response, the state Department of Environmental Protection ordered Cabot to plug the wells and gave the company 30 days to supply the affected residents with water treatment systems at its own expense. In addition, Cabot was hit with nearly a quarter million dollars in fines and has been barred from drilling any new wells for at least a year.

As you can well imagine, all this talk of jobs, energy production and environmental hazards has become fodder for local candidates on both sides of the aisle seeking to score political points with their respective constituencies. Senator Bob Casey, Jr. (D-PA), for example has introduced a bill that would remove the long-standing exemption from the federal Clean Water Act that allows hydrofracking. Critics of the bill contend that there has never been an instance of contamination of ground water by fracking.

A proposed three-year moratorium on leases for gas drilling on state-owned lands has passed in the state House of Representatives. Lame duck Governor Edward G. Rendell (D-PA) has promised that he will sign the bill if it reaches his desk. Rendell also advocates a severance tax on natural gas production, a measure supported by Allegheny County Executive and Democratic gubernatorial nominee Dan Onorato. His Republican challenger, Attorney General Tom Corbett opposes the moratorium, saying that it will discourage energy development and cost the state jobs. Corbett instead favors a tax on the royalties produced by oil and gas leases on public lands, rather than a severance tax as a means of raising revenue.

In my view, regulation and oversight is best handled by the state authorities, who are closer to the concerns of the citizens and are therefore in a better position to respond to any issues that may arise. Believe me, having clean water to drink is just as important to me as it is to anyone. No one in their right mind wants to have to deal with dirty air or water. At the same time, however, I’m also a big fan of having a job, being able to pay my bills, taking hot showers and keeping warm in the dead of winter. I dunno, call me crazy.

INMATES GET CREDIT AS FIRST TIME HOMEBUYERS

CHARLENE PERRY — Wed, 23 Jun 2010 17:57:30 EST

By Sandra Block, USA TODAY

Despite efforts by the IRS to combat scams

By Sandra Block, USA TODAY

Despite efforts by the IRS to combat scams, thousands of individuals — including nearly 1,300 prison inmates — have defrauded the government of millions of dollars in home buyer tax credits, Treasury's inspector general reported Wednesday.

Some lenders really do try to do the right thing,

CHARLENE PERRY — Wed, 23 Jun 2010 17:40:02 EST

I can't tell you how pleased I was to receive this letter from a lender who really understands the way things can be done...

I received a letter today from a lender with whom we do business here in Maryland. This lender has taken it upon themselves to send us and other title agents with whom they do business a letter describing their new closing guidelines based on Fannie Mae's "Loan Quality Initiative". The lender was kind enough to send us a copy of Fannie Mae's Announcement SEL-2010-1 which includes FAQ's relating to this new initiative.

The letter describes new policies that this lender has put into place to enable them to have their pre-Funding Review Auditors review and examine the entire loan closing package, prior to closing. They are asking that we schedule the closing date with them seven (7) days in advance of closing, they are asking for our commitment and preliminary HUD-1 four (4) days prior to closing and they are promising a FINAL FEE SHEET three (3) days prior to closing. What a welcome change this is. Title agents, Realtors and especially buyers will very much appreciate these changes.

In the ordinary course you know that we often don't get the closing package until the date of closing, borrowers are scrambling at the last minute to get to the bank for their certified funds and everyone is just a nervous mess right up to the moment of closing. It does not have to be this way and I applaud this lender for being pro-active and making these changes.

It has always been my pleasure to recommend this lender and you can be sure that I won't hesitate to continue to do so.