Jackson & Campbell P.C. Newsletter     October 2002      Dear Real Estate Professional: In previous newsletters, we reported a D.C. Court of Appeals decision upholding a lower court's ruling that the insured under a title insurance policy may not recover costs of defense when a lawsuit against the insured, on its face, failed to allege matters under the insured's policy, even though an inquiry by the title underwriter may have revealed coverable issues. The insured had argued that the duty to defend, being broader than the duty to indemnify, was triggered by imputed knowledge of the public records. That case, John Stevens v. United General Title Ins (D.C. App. No. 00-CV-1235) was denied an "en banc" hearing which is welcome news to the insurance industry. HUD has issued proposed regulations to RESPA that include a packaging concept for settlement services. Independent or small title companies should be VERY wary of these regulations because you will be unable to discount your services to be competitive with larger companies. It is a busy, busy time for the industry, but you should stop for a few moments and respond to HUD before the October 28 deadline, indicating your opposition! Your employees and even your customers stand to lose. We suggest you mail a letter to HUD, with a copy to ALTA by fax/email. Note that HUD will not accept fax or email. Go to www.ALTA.org for fill-in- the-blank letter for your use. Copies of the letters can be sent to ALTA by e-mail (jim_maher@alta.org) or fax (202) 223-5843. You will regret it later if you do not make your voice heard. Link to ALTA For Details on "Action Plan" and sample letters Title defalcation prosecutions (in which Jackson & Campbell specializes) and related enforcement actions are springing up everywhere: Chicago Title recently filed suit in South Carolina against a title company alleging "civil conspiracy" to divert title insurance premiums away from Chicago using "an elaborate scheme of check kiting, lies and deception". In Minnesota, a former title company employee pled guilty to stealing $2.4 million which she may have spent gambling. HUD recently cracked down on schemes all over the country involving inflated appraisals, false or forged loan applications, false sales to "straws". In DC, a 39-count indictment was handed down against 5 defendants charging them with buying foreclosed or distressed properties at low prices and then flipping them to unqualified straws at inflated prices and preparing false documents to show that the straws were financially qualified to borrow and purchase. Additionally, the defendants are claimed to have used aliases and other information to get funding from DC's housing program and under Section 8. Piercing the Corporate Veil. Old Republic Title was successful in piercing the corporate veil against a settlement company that failed to record deeds or other documents in more than 250 closings, and diverted the money. The Court held that Old Republic showed that the owners were in complete control of the corporation and that the control was exercised to commit a fraud which resulted in harm to the Plaintiff (Old Republic), thus the corporate veil was "pierced" and the directors/owners were held personally liable. Freddie Mac Vendor Services Seeks Title Companies Freddie Mac is putting together a network of settlement service providers. In the future, customers may apply for loans on-line, and be able to select their preferred title company. If you are not, at least, on that list, you may lose out on a business opportunity. For information: 1-866-982-5151 or eservices@freddiemac.com. D.C. enters a new round on foreclosure law. Council Member Sharon Ambrose introduced new legislation converting the District into a judicial foreclosure jurisdiction with laws very similar to those of Maryland. The new law is separate from the predatory lending provisions that had been bundled into an earlier law that was rescinded soon after its passage last year in response to an outcry from lenders, customers and the title industry. Under the current proposal, the only defenses to a foreclosure action would be that the debt and interest have been paid, there was no default, or fraudulent action on the part of the lender. Increase in D.C. Recordation/Transfer Tax Proposed: Effective January 1, 2003 the rates for both the DC Transfer Tax and the Recordation tax may each go up from 1.1% to 1.5% with only a single exception: homestead property under $250,000 wherein the Deed is recorded within 30 days (other exceptions discussed i.e. first-time buyer exemption is not included in the current draft legislation). The Recorder of Deeds reports that, if this legislation is passed (next vote is November 7 and then it has to go to Congress again), they will new FP7(c), a prototype of which may be distrubuted at the next DCLTA meeting. There is NO truth to the rumor that, in lieu of the new FP-7(c), you will be able to write a hand-written note (cursive, not printed) in dark red ink on a 3" X 5" index card and rivit it securely to the front of the deed so as to obscure the name of the grantee. 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. email: RKaufmann@JacksCamp.com voice: (202) 457-1600 web: http://www.JacksCamp.com       Forward email This email was sent to RKaufmann@JacksCamp.com, by Jackson & Campbell P.C.. Update your profile |Instant removal with SafeUnsubscribe™ | Privacy Policy. Powered by