Resources, revised legislation, court cases, and industry trends continue to require constant vigilance.

District of Columbia Recorder of Deeds: The last newsletter reported the repeal of the $250 penalty for late-filed Deeds of Trust. That report appears to have been a touch premature. Bill 14-662 (the emergency bill) is expected to be signed by the Mayor this week and become temporary law, hopefully to be followed by Bill 14-667 and permanent provisions thereafter. Other provisions thereof: Lower Income Abatement qualification will now be limited to first-time buyers of houses less than $250,000 (and there may be yearly audits thereafter to determine continued eligibility); there will be a transfer/recordation tax exemption for ex-spouse transfers pursuant to separation agreement or divorce. The Mechanic's Lien Amendment Act, which became law in March, requires filing of liens within 90 days, action within 6 months. To file the Notice, the lienor will have to show eligibility. See 49 DCR 198 (January 11, 2002). Ideas the Recorder's Office is considering: transfer/recordation tax on co-op transfers; imposition of 1.1% recordation tax on the "excess" if, in a residential purchase, the loan amount exceeds the purchase price (i.e. to fund construction) as is currently imposed on commercial transactions.

Documents recorded at the DC Recorder of Deeds are available on line. See http://countyrecords.landata.com/washdc/. Although the service is free now, fees are being considered for subscription or copies without subscription. When entering instrument numbers for earlier years, the first two digits would be the year, followed by 3 zeros (not 4), followed by the instrument number (usually 5 digits).

Settlement Companies, please wake up. HUD has made it clear that they think that, if you overcharge for messenger/recording fees, etc., that it is a violation of RESPA. Plaintiff's lawyers are assembling to file class actions against title companies for overcharges or for charging for services not rendered. If that does not strike fear enough in your heart, the U.S. House is considering HR4627, Real Estate Settlement Fairness Act, which would prohibit unearned fees in connection with a residential mortgage. If you have an "overhead" charge that may include copies, messenger, etc., it should be either included in your settlement fee and not represented as a fee paid to a third party.

D.C. Companies Must Get Master Business Licenses

Until now, title companies and other businesses did not need to be licensed in D.C. That has changed. All businesses in D.C. that earn more than $2000/yr (including non-profits) will be required to secure such a license. The online application process does not work, but the site has some helpful information at: www.brc.gov. There is a $500 penalty for non- compliance. You will need a Certificate of Occupancy ("C of O") number if you are operating in the District of Columbia. If you are an out-of-state entity transacting business in DC without a District address, insert this number as your C of O number: 212345. The deadline for application varies: if you are a newly registering entity, the deadline is August 31, 2002. If you are an existing licensee with expiration after August 31, you may wait until your license expiration date. If you are an existing licensee with an expiration date before June 30, you must renew by June 30, 2002. If your expiration date is between July 1, 2002 and August 31, 2002, you must renew by expiration date.

HUD is using Baltimore as a test for their aggressive enforcement of predatory lending laws, especially flipping. In 2001 alone, there were40 indictments, 27 successful prosecutions and $2.7million in insurance recoveries. They target: flipping, charging excessive financing fees, inflating appraisals, packing loans with credit insurance, special memberships, etc., charging prepayment penalties, and conspiracies between lenders and home improvement contractors to solicit suspect loans.

Please feel free to circulate this newsletter to others in the industry, both within and outside your office.

Sincerely,

Real Property and Asset Management Group
Jackson & Campbell P.C.