ALTA TitleTopics Mortgage Satisfaction: What s the Problem? Presentation by Daniel R. Morris, Esq. January 2013

Transcription

1 ALTA TitleTopics Mortgage Satisfaction: What s the Problem? Presentation by Daniel R. Morris, Esq. January 2013

2 Facts on Mortgage Release Problems; Who is Affected; Why the Problem Exists; What is Being Done to Fix It; Who Regulates Mortgage Releases; and How Effective They Are. Q&A 1/25/2013

3 Release/Satisfaction Facts 55% - 80% of Title Insurance Claims are Related to Unreleased Mortgages 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Claims Related to Unreleased Mortgages

4 Release/Satisfaction Facts 36% of Fully Paid Mortgages Remain Unreleased After Statutory Period

5 Release/Satisfaction Facts 37% of Payoffs are HELOCs 5.8% of HELOCs Remain Open w/ Balance $2,800 Average Balance

6 Release/Satisfaction Facts 14.2% - 20% of Paid Mortgages Remain Unreleased After 1 Year 25% 20% 15% 10% 5% 0% Unreleased After 1 Year

7 What Caused This? Nationalization of Loan Servicing 50 States 3,600 +/- Land Record Systems Custom and Culture Secondary Market Pressures to Sell Loans Originating Lender Pressure to Get Title Policy

8 How Releases Work Payoff Lender Cashier Dept. v. Loss Mitigation Dept. Don t Talk to Each Other Verifies Sufficiency and Orders Release Outsource v. Reconveyance Dept. Title Discrepancies (legacy) Jurisdiction Order of Priority* Minimum Statutory Compliance Deliver Release Title/Escrow Satisfaction of the Obligation Payoff/Short Sale Letter Verify Receipt, Sufficiency Confirm No Objection Confirm Funds Debited Check off Requirement Issue Title Policy Follow Up?

9 Priority by Penalty Statutory Mandates VA 90 Days: $500 PA 60 Days: up to amount of mortgage SC 90 Days: half mortgage amount or $25K (lessor of) KY 30 Days: 15 days $100/day; 45 days $500/day No Maximum!

10 Compliance v. Complete Lender s Perspective Compliant Cost Center Lost Revenue Minimize Liability Risk Manage Call Centers Compliance Send to Borrower Send to S/A Send to Court of Land Record (w/ or w/o Recording Check) Lost Sent to Wrong S/A or Wrong Court of Land Record Room Rejected by Clerk

11 Compliance v. Complete Title Perspective Complete A Properly Executed Release and Recorded Satisfaction Instrument If we don t follow up: Title Claims Who is Insured? Title Agent Relationship w/ Title Company Potential Fraud Tarnished Reputation

12 Release Tracking Costs No One is Immune to the Cost of Title Clean-up 20 Hours Incoming Inquiries The average post closer responds to incoming inquiries on nearly 20% of all previously closed files taking up to 1 hour per closing. 4 Hours HELOCs 37% of paid-off loans are HELOCs that need to be verified as properly terminated, and nearly 6% of these remain open after closing Hours! Per 100 closings or 140 payoffs. That is one full-time employee per 100 closings. 16 Hours Searches 7 to 10 minutes per online search. Time increases when doing searches in land records. 10 Hours Ensure Data Accuracy & Create Disbursement Package The time here is approximately 6 minutes per payoff. 20 Hours Prior Unreleased 20% of all closings have prior unreleased liens that will need to be cleaned up prior to closing. The time spent per closing is 1 hour. 65 Hours Lender Contact 36% of title searches will not produce a release and need Lender contact (1 hour per payoff); and 5% of all closing will require Demand to Lender (3 hours per Demand).

13 Duties to Release Payoff Lender Statutory TX No Statute MD No Penalty Contractual Mortgage and Deed of Trust Title/Escrow None!

14 Who Can Release? Lender, Servicer, Note Holder MERS? Title Company Settlement Agent Attorney Affidavit Liability?

15 Who Regulates? Federal HUD Regulates the Lenders RESPA Regulates Title Companies and Settlement CFPB Enforces Regulation State Insurance Departments Self Regulating Bodies

16 Questions & Answers

17 TitleNews December 2012

18 Contact Me Daniel R. Morris, Esq. require Release Tracking