Jackson & Campbell, P.C. Title Newsletter October 26, 2001
Dear Title Professional: In the District of Columbia, the Predatory Lending Act will rear its ugly head the day before Halloween (on October 30, 2001). From that day forward Deeds of Trust should be accompanied by Form 205(b). For new subscribers to this newsletter, we have provided a link below to a suggested form of notification to your lenders (perhaps to accompany each binder). We also provide to you a link to an excellent summary of the Act, prepared by Elisabeth Zajic, VP and Counsel for First American Title Co. If anyone wants a more exhaustive review on the Act, please click "Reply" and advise us. On a more productive note, Councilmember Sharon Ambrose appears to be keenly aware of the effect of the unrealistic speed with which the Act has taken effect and is weighing whether to propose some legislative remediation in the near future.
RESPA Enforcement: Maryland and Virginia have noted an increase in enforcement action for RESPA violations, specifically penalizing for payments by title companies for referrals. In California, penalties were levied against title companies totaling $4 Million with an additional $11 Million in the wings. Below see a link to a recent Washington Post Article.
Abandoned Escrow Accounts: Amounts remaining in title company escrow accounts many years do not become the property of the title company. Virginia, Maryland and DC each have statutes that require that "abandoned" funds be reported and paid to the state. In California $22.7 million (which includes treble damages!) is being collected from a title company that allegedly pocketed dormant escrow accounts. See State of California v. Old Republic Title, San Francisco Co. (CA) Superior Court No. 993507.
Competition Looms for Title Insurance: A mortgage insurance company, Radian Guaranty, is rolling out a product for lenders in refinance/HELOCs whereby the lender can get "Radian Lien Protection" in lieu of title insurance. As its name suggests, this mortgage insurance company proposes to insure the lenders against liens undisclosed by the borrower. There is no intention on Radian's part to do title searches -- the company will accept the financial risk based upon receipt of a premium much less than a title insurance premium, provided that the borrower has a high credit score. Radian is no slouch in the industry with over 3,500 lender clients. Through Radian's "ExpressClose" subsidiary, the consumer would tap into a bundle of services, mostly through the internet, bypassing the traditional title industry. Challenges to this alternative insurance are sure to arise.
Link to Summary of Predatory Lending Act
Link to Wash Post Article on RESPA
Link to Suggested Notice for Title Company to Send to Lender about Form 205(b)
To AOL and others who cannot see the links above, they are: Link to the summary of the Predatory Lending Act: http://www.JacksCamp.com/news/Zajic_bulletin_01-15.pdf. Link to the Post Article: http://www.washingtonpost.com/wp-dyn/articles/A22349-2001Oct19.html Link to the Notification to Lender Re: Form 205(b): http://www.jackscamp.com/news/NoticeToLenders.pdf
Please feel free to distribute this newsletter to others in your organization or have them subscribe for their own copy.Sincerely,
Real Property and Asset Management Group
Jackson & Campbell P.C.
RKaufmann@JacksCamp.com
http://www.JacksCamp.comcall us :: (202) 457-6710
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