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Archive for October, 2009

          The Title & Escrow School has received approval for their online RESPA Reform Seminar. With the new changes to RESPA taking affect on January 1, 2010, it is important that all land title and escrow professionals understand these changes and be able to implement them into their company’s operation.  The new rule requires a new HUD-1 Settlement Statement, with a page 3. This page 3 includes two items.  First, it includes a comparison of information contained on the Good Faith Estimate (GFE) and the HUD-1 Settlement Statement.  Second, it includes a disclosure of the terms and certain provision of the new mortgage loan.

          The Real Estate Settlement Procedures Act (RESPA) has been modified by a rule published November 17, 2008. While certain provisions took affect on January 1, 2009 (delayed until April 16, 2009), compliance with the major provisions, requirements and modified forms will become effective on January 1, 2010.  RESPA is a consumer protection statute that involves most professionals associated with a real estate transaction.  The focus of the new rule supports the concept that a consumer can shop for a mortgage loan among loan originators.  However, the implementation of the new rule’s provision will affect all those associated with the closing of a residential real estate transaction.

          This Online CE course has been prepared to help land title professionals better understand the recent changes to RESPA. As part of the course, you will review the new Good Faith Estimate form and the new HUD-1 Settlement Statement form. This seminar will help those involved in a closing of a real estate transaction to understand the new changes and to be able to prepare the new settlement statement. The seminar has been approved for 3 hours of CE credit by the Utah Insurance Department.

          A RESPA Reform seminar has also been approved for a classroom presentation in both a 2 and 3 hours CE format.  This seminar will be excellent training for a staff meeting or other types of training meeting.  The Title & Escrow School will present this seminar in any appropriate location.  We provide handouts and all the equipment necessary for a professional training seminar.  We can also provide this seminar as a sponsored CE seminar to your clients.  Seminars can be provided to real estate agent and and mortgage lenders.  This seminar has also been approved for CORE CE credit by the Utah Division of Real Estate for both real estate agent and mortgage lenders.  Both a 3 hour and a 2 hour CE seminar is available.

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Fraud Prevention

A few years ago I attended a seminar in New Orleans.  A large segment of this seminar concerned the detection of fraud by a title and escrow company.  The presenter, who was an investigator, discussed a number of situations which had resulting in large losses.  In many cases the loss was a direct result of fraud.  The presenter also discussed how in almost every case, the fraud could have been prevented if the title and escrow company would have followed a few basic guidelines.  One suggestion that was make included the review of the endorsements on trust account checks.

Fraud often occurs on multiple transactions.  The fraudsters develop a friendly relationship with others involved in the real estate transaction including the escrow officer or other individual in the title and escrow company.  Over time they develop a relationship of trust.  The title and escrow company is not aware of any problems and may not be held liable for any damages.  However, in many fraud cases, everyone involved in the transaction gets sued.  The cost of defending this type of suit is very expensive.

A review of the endorsements on trust account check will often disclose questionable actions which occur after the closing.  When a trust account check is endorsed over to another party associated with the transaction, or made payable to a third party, it may be a red flag of potential problems.  This is especially true when the endorsement to a third party becomes a regular practice.  It would be impossible to review all the different types of third party endorsements and the problems associated with each.  The closing of a real estate transaction with a title and escrow company should be a safeguard.  Through the review of trust account check endorsements, the habits and practices of your clients can be watch.

A Recent Example:  A New Jersey state grand jury indicted two real estate agents on October 22, 2009 and charged them with first-degree money laundering, first-degree conspiracy, two counts of second-degree theft by deception and third-degree failure to file corporate tax returns, among other crimes.  The state attorney general accusing these individuals and their real estate company of stealing more than $600,000 from home sellers in connection with 11 home sales.  The accused individuals were also charged with defrauding three mortgage companies of $641,800 by falsifying the earnings of applicants for three home loans.  Many of the checks issued by the title companies handling the property sales were written to the home sellers, but these indited individuals convinced the sellers to sign the checks over to them for payment of business expenses and fees.  These activities occurred between August 2006 and February 2008.

If the title companies had been reviewing the endorsements on their trust account check, many of these fraudulent transactions could have been prevented.  Title and escrow companies have a unique position in the transaction.  They have information which is not available to others.  While the review of endorsements on trust account check may reveal a problem that has already occurred, it will give them a better understanding of their client’s practices and may prevent future fraudulent transactions.

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Hello All

As a land title professional trainer, the title and escrow industy is special to me. I have been involved in almost every aspect of this industry for over 39 years. Besides being licensed in title insurance, I am also a professional trainer and consultant for real estate, mortgage lending, title insurance and escrow. I hope to make this an important blog for our industry. My postings will include current events, new laws and regulations, changes and updates, concerns, and information about my seminars, together with other pertinent information. If you have any comments or suggestions, I would appreciate them.

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