Throughout 2013, members of the Board of Governors and the Section Executive Committees have traveled across the country talking to title professionals in almost every state about ALTA’s “Title Insurance and Settlement Company Best Practices.” Probably the two most frequent questions members of the Board get during these road-show events are (1) “What do lenders think about the Best Practices?” and (2) “What does the assessment look like and when can I get certified?” This week, the answer to both of these questions became much clearer.
On Tuesday, we hosted a roundtable discussion along with the Mortgage Bankers Association centered about the Best Practices and vendor management in general. The roundtable brought together members of ALTA’s Best Practices Task Force and representatives from both national and regional lenders for a day of great discussion about whether the Best Practices could fit lenders’ needs as they work to set up their risk management and vendor management programs. In addition, the conversation covered lenders’ relationships with settlement agents and how they can assist with consumer protection.
There was a lively back and forth between both groups. The lenders confirmed for us that the Best Practices covered the issues that most concerned them. In some instances, the lenders stated that they would like more detail (including listing the federal and state laws covered by Best Practice #4), but overall, they were happy with the breadth and scope of the Best Practices.
Beyond providing feedback on the usefulness of the Best Practices, the roundtable also provided a good discussion on ALTA’s proposed assessment and certification program. Most important, from the lenders perspective, is their need to ensure that the assessment provides consistent results and sufficient detail so that they can trust that results of a certification and draw appropriate conclusions. The lenders were also quite candid about their desire for some tiering in this program because they do not want to be part of a program that puts small providers out of business. Everyone in the room felt the day was well spent and we discussed holding a follow-up meeting with more lenders once more details of the assessment program are ready.
All this feedback was extremely helpful as the Internal Auditing Committee met in Dallas on Thursday and Friday to finalize a draft of the proposed assessment program for the Best Practices Task Force and Board to consider. The committee worked diligently to address some outstanding questions. The work they have put into creating an assessment for the Best Practices has been very intense and intellectually challenging. Chair Kirsten Pollock of Investors Title Insurance Company and the rest of the committee have the Board, the Task Force and my personal thanks and appreciation.
FHA Considering No Longer Charging Extra Interest in Mortgage Payoff
In the wake of the new Qualified Mortgage rulemaking, the Federal Housing Administration is expected to end its practice of charging borrowers interest on their mortgages after they’ve paid off the loan.
Under existing FHA policy, when a consumer sells a home or refinances an FHA loan, the consumer is required to pay interest for the entire month, even if the closing takes places during the first few days of the month. This practice has come under fire, most recently from Senator Ben Cardin (MD), because of the cost to consumers, since the interest charges can add up to hundreds of dollars.
While efforts to get rid of the long-standing policy have failed in the past, it appears that this recent push is likely to be successful because of a change in the law provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the Consumer Financial Protection Bureau’s new “qualified mortgage” rule, the charging of interest after the loan is repaid “is the functional equivalent of a prepayment penalty.” The law prohibits prepayment penalties on Qualified Mortgages, which most experts believe will be the bulk of loans available in the coming years.
If you have any questions about this potential change in FHA policy, please contact ALTA’s legislative and regulatory counsel Steve Gottheim at firstname.lastname@example.org or 202-261-2943.
ALTA to Meet with Senate Banking Committee Members as Signs of a Potential Bipartisan GSE Reform Bill Emerge
Rumors have begun spreading through Washington that a bipartisan group of senators is preparing a piece of compromise legislation to wind-down Fannie Mae and Freddie Mac and replace them with a government reinsurer of mortgage securities behind private capital. Senators Bob Corker (TN) and Mark Warner (VA) are behind the effort and are receiving input from other senators on a bill that is expected to be introduced later this summer.
ALTA (along with other trade groups representing small lenders and service providers) is setting up meetings with Corker’s and Warner’s staff members, as well as other key senators on the Senate Banking Committee, to discuss this latest movement on GSE reform. The goal of these meetings is to discuss some basic principles that should underlie any reform effort, such as fair access for all market participants and the need for standardization. These meetings credential ALTA as a resource and a thought leader and will help keep us in the conversation as discussions heat up.
Early indications of the unreleased Corker-Warner bill are that Fannie and Freddie would be liquidated within five years and the U.S. Treasury would assume responsibility for their existing mortgage guarantees. A new government reinsurance agency would be created to build the common securitization platform under construction at the GSEs. It would offer insurance on mortgage-backed securities that would step in after private financiers take a first-loss position adequate to cover price declines as steep as those seen during recessions over the past century. The program would also work to help small lenders issue securities. If you have any questions about this GSE reform please contact ALTA’s vice president of government and regulatory affairs Justin Ailes at email@example.com or 202-261-2937.
Tips for getting better E/O coverage is the subject of our next Title Topics webinar, to be held this Thursday, June 13 at 2:00 p.m. EDT. Jean-Claude Mazzola and Matthew Baron of Wilson Elser will discuss the purpose of E&O coverage, features of the policy, types of errors that typically give rise to claims, specific claims scenarios and various “best practices” tips to help you manage risk and prevent losses for your business. Click here to register.
Registration is now open for our next Title Agents Executive Committee Meeting (the Large Agents Meeting), being held July 14 – 16 at the Hilton Burlington, located in Burlington, VT. The Large Agents Meeting provides an unparalleled opportunity for large, independent agents to meet with peers and exchange ideas, experiences and opinions on issues that affect business today. The agenda is developed by title agents, for title agents. The discussion flows freely since there are only agents in attendance. Click here to see the schedule and register.
To date, TIPAC has raised $288,655 from 316 contributors. If you have any questions about TIPAC please contact Jessica McEwen at Jessica@alta.org or 202-261-2935.
I hope this ALTA Advocacy Update is useful to your work this week. Your comments and questions are always welcome. I can be reached at firstname.lastname@example.org.
Michelle L. Korsmo