I am pleased to announce the launch of the new NAILTA-PAC section of the NAILTA website nailta.org/nailta-pac. Over the past few months, we have been hard at work to developing our part of the website to make it informative, useful to practitioners, and easy to navigate. We hope that it serves its purpose to proactively educate our members on important legislative happenings as well as keeping our members up-to-date of the happenings in Washington, as well as any legislative happenings throughout the United States that have an impact on the title industry. Our portion of the website builds on the framework established by the founding members of our Association and enables us to focus more on legislative issues. Our mission is to connect, inspire, support, motivate, and strengthen our industry. As you review and use our revitalized website, you will find that it is redesigned to help us fulfill that mission. Please note that we added important new features that provides NAILTA members with access to: Legislative watch – this will include multiple postings regarding local, state and national items of importance to the title industry Elected Official contacts – allows you to find your legislator quickly Donor listing and guidelines – allows you to see who has donated and explains the different levels of contributions The NAILTA-PAC portion of the website will be updated regularly with blog posts, member profiles, current topics in the member online community, special announcements about the annual conference and other vital news. I encourage you to check the website on a regular basis, and spread the word to others. I am excited about this new advance for NAILTA and we promise a strengthened connection to you, the extended NAILTAC family. We hope that you see it as a useful tool. Sincerely, Van Winton Chairman
Purchase apps down 11% from last year Mortgage application activity for the week ending Sept. 26 was fell 0.2% on a seasonally adjusted basis, according to the Mortgage Bankers Association. Mortgage refinance volume fell 0.3% week-to-week, while purchase applications were flat. Purchase applications are down 11% year-over-year and are running about 30% lower than historical norms. Last week’s interest rate decline did not have any effect in apps. “Although total purchase application volume was little changed, conventional purchase applications were at the highest level since July,” said Michael Fratantoni, chief economist for the MBA. “On the other hand, government application volume fell for the week, with declines in purchase applications for FHA, VA, and Rural Housing Service loans.” While the average interest rate for government loans is slightly lower than those for conventional loans, FHA insurance premiums, as well as average credit scores, have increased and are sidelining some lower-income borrowers. “Mortgage activity remained relatively level last week as rates started to show improvement after increasing in early September,” said Quicken Loans vice president Bill Banfield. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.33% from 4.39% for 80% loan-to-value ratio loans. Mortgage rates ticked up Tuesday. Changes could be coming with the bad housing news from Monday and the release of the monthly jobs report on Friday. The refinance share of mortgage activity remained unchanged at 56% of total applications from the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.6% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.28% from 4.30%, with points decreasing to 0.15 from 0.22 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.07% from 4.08%, with points decreasing to 0.04 from 0.09 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.55% from 3.56%, with points remaining unchanged from 0.26 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. The average contract interest rate for 5/1 ARMs increased to 3.31% from 3.20%, with points increasing to 0.51 from 0.40 (including the origination fee) for 80% LTV loans. The effective rate increased from last week. Trey Garrison is the Senior Financial Reporter for HousingWire.com. Trey has served as real estate editor for the Dallas Business Journal, and was one of the founding editors of D CEO Magazine. He has been an editor for D Magazine — considered among the best city magazines in the United States — and a contributor for Reason magazine. RECENT ARTICLES BY TREY GARRISON MBA: Mortgage credit availability unchanged in September Gallup: Payroll to population holds steady at 44.8% Jobless claims down to 287,000 for week Foreclosure inventory down 32.8% from August 2013 Planned job cuts in September at lowest level since 2000
By QUENTINFOTTRELL PERSONAL FINANCE REPORTER American house prices are undervalued by around 3% on average, new research finds, but they’re still overvalued (and undervalued) by double-digit percentages in many metro areas. Home prices are edging slowly back to normal in the third quarter of 2014, after being undervalued by as much as 5% on average last June, but they vary dramatically in the country’s 100 largest metro areas, according to real-estate website Trulia. In the first quarter of 2006 at the peak of the housing market bubble, U.S. house prices were overvalued by 34% before dropping to 13% in the first quarter of 2012. Also see: 10 best U.S. cities to live in “The more prices are overvalued relative to fundamentals, the closer we are to a housing bubble and the bigger the risk of a price crash,” says Jed Kolko, chief economist at Trulia. But sharply rising prices themselves do not necessarily indicate a bubble. Instead, Trulia analyzed home prices in 100 metro areas relative to fundamentals such as jobs, income growth and household formation and rents. The most overvalued market in the U.S. was Austin, Texas (overvalued by 19%), followed by Los Angeles (15%), Orange County (15%), San Francisco (12%) and Riverside-San Bernardino (11%). In fact, the median price for single-family homes in Austin jumped 11% year-over-year in August to $247,500 and the average price rose 9% to $311,414, according to data released last week by the Austin Board of Realtors. Also see: Half of Americans can’t afford their house Austin is actually more overvalued in 2014 than it was in 2006 (when it was only 2% overvalued); the same is true for Houston, which was overvalued by 8% in the third quarter of 2014 versus just 1% in 2006. Other overvalued markets have at least cooled in the intervening years: Los Angeles was 73% overvalued, Orange County was 66% overvalued and San Francisco was 46% overvalued in 2006. Almost all of the most undervalued metro areas are in the Midwest and New England, Trulia found. Dayton, Ohio, was undervalued by 21% (versus 8% in the first quarter of 2006), Cleveland was undervalued by 19% (versus 13% in 2006) and Detroit was undervalued by 18% (compared with 33% in 2006). Price gains in the Midwest have generally outpaced those in New England. Seven of the top 100 metro areas are overvalued by more than 10%, the highest number since the first quarter of 2009. The last time that many metro areas were overvalued was the second quarter of 2000, early in the housing market bubble. Still, Kolko says a housing bubble should not be a top housing worry in 2014, as the market is still held back by weak construction and young adult employment. More from Quentin Fottrell: Landlords are getting even meaner College grads face high hurdles to buying first homes America’s recession-torn construction belt
U.S. office rents and occupancies inched higher in the third quarter, as a gradual improvement in the overall economy is translating into a sluggish recovery in the office sector. Average rents sought by landlords reached $29.62 a square foot in the quarter, up 0.4% over the second quarter and 7.7% since the postdownturn nadir reached in 2010, according to real-estate research firm Reis Inc. REIS +0.46% Businesses took on an additional 7.2 million square feet in the quarter, a small increase that left the average vacancy rate at 16.8%, the same as the second quarter and down from a postdownturn peak of 17.6% in 2010, according to Reis, which used data from 79 metropolitan areas. In typical recoveries, vacancies tend to fall and rents tend to rise more quickly, particularly five years after a recession. Yet the vacancy rate today remains well above the 12.5% reached at the market’s peak in 2007. That has been good news for tenants because slack demand has made it difficult for landlords to raise rents. “We’re dealing with still-elevated vacancy rates, and that makes it more challenging for landlords,” said Ryan Severino, an economist at Reis. Rents are poised to rise about 3% in 2014, up from 2.1% in 2013 and 1.8% in 2012, he said. Commercial real-estate markets can vary greatly by location. Cities with strong technology or energy markets have been booming, setting off waves of new construction and pushing rents up rapidly. For instance, rents in the San Jose, Calif., region, which includes Silicon Valley, increased 6.7% over the past 12 months to an average of $26.93 a square foot, making it the fastest-growing region in the country, according to Reis. San Francisco rents rose 5.1%—third fastest in the U.S.—as companies including Uber Technologies Inc. expanded rapidly into new space. Rents in Dallas and Houston, both of which have enjoyed growth from the energy sector, increased 5.2% and 4.4%, respectively, over the past 12 months. Growth in many other cities, including New York, has come largely from those sectors. MediaMath Inc., a software company that helps companies buy advertisements, has about 300 employees in Manhattan, roughly double what it had a year ago. After it ran out of space in its main Midtown Manhattan office, it had to lease another space a few blocks away, forcing employees to shuttle between the two locations. In July, it signed a lease for 106,000 square feet at 4 World Trade Center, the new 72-story skyscraper in lower Manhattan. That is up from the 90,000 square feet it currently occupies in three locations. “We’re certainly anticipating growing pretty quickly,” said Joe Zawadzki, the company’s chief executive. Despite the sluggish growth overall, many executives in the property sector see the pendulum gradually swinging in favor of landlords. Dennis Friedrich, who heads the office division of the property giant Brookfield Property Partners L.P., said he has observed a change in the attitudes of large companies that are considering what to do with their real estate. “The larger tenants have really come off the sidelines,” said Mr. Friedrich, who signed leases with major tenants in recent months including department-store owner Hudson’s Bay Co. Write to Eliot Brown at firstname.lastname@example.org
Sep 30 2014 Bureau Orders Michigan Title Insurance Agency to Pay $200,000 WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) ordered Lighthouse Title, a Michigan title insurance agency, to pay $200,000 for illegal quid pro quo referral agreements. “Today’s action sends a clear and simple message, that quid pro quo agreements for real estate referrals are illegal,” said CFPB Director Richard Cordray. “The Consumer Bureau will continue to take action to ensure that the mortgage market is a level playing field where everyone plays by the rules.” The Bureau found that Lighthouse Title violated the Real Estate Settlement Procedures Act (RESPA), which prohibits, among other things, providing something of value to any person with an agreement or understanding that the person will refer real estate settlement services. Lighthouse Title offers title insurance and other mortgage-related services to consumers. Lighthouse Title entered into marketing services agreements (MSAs) with various companies, including, for example, real estate brokers, with the understanding that the companies would refer mortgage closings and title insurance business to Lighthouse. The agreements made it appear as if the payments would be based on marketing services the companies were supposed to provide to Lighthouse. However, Lighthouse actually set the fees it would pay under the MSAs, in part, by considering the number of referrals it received or expected to receive from each company. The CFPB’s investigation found that the companies on average referred significantly more business to Lighthouse when they had MSAs than when they did not. Under the terms of today’s consent order, Lighthouse Title will pay a civil money penalty of $200,000. The company also is required to terminate immediately any existing MSAs with companies in a position to refer business to Lighthouse, and is prohibited from entering into new MSAs with any such companies. A copy of the Bureau’s consent order is available here: http://files.consumerfinance.gov/f/201409_cfpb_consent-order_lighthouse-title.pdf
As the congress continues to lash out at the Dodd-Frank Bill and attempt to diminish its effectiveness, certain members of congress continue to wage the fight for preservation of the law, maintaining the integrity of the settlement process and protecting the consumer. NAILTA is proud to be a supporter of Congressman Ellison and members of the Democratic Caucus who continue to speak out in defense of our industry. Keith Ellison General Leave on H. R. 5461 September 16, 2014 Mr. Ellison. Mr. Speaker, I oppose The Insurance Capital Standards Clarification Act of 2014 (H.R. 5461). While I support efforts to provide flexibility under the Dodd-Frank Act’s Collins amendment by explicitly stating that regulators are not required to apply minimum leverage capital and risk-based capital requirements to firms with state-regulated insurance operations, this bill does more than that. It contains The Mortgage Choice Act of 2013, (H.R. 3211). Mr. Ellison. Mr. Speaker, as I stated during the hearing and the mark up on The Mortgage Choice Act of 2013 (H. R. 3211), there are serious concerns about steering consumers into buying title insurance with hidden commissions and inflated costs. I bought two homes in my life. Like most homebuyers, I was asked to sign a bunch of papers with lots of fees such as origination charges, appraisal fees, scoring fees, recording charges, tax service fee and title insurance. Like most consumers, I chose my title insurance provider based on referral: I did not comparison shop. For most of us, title insurance is the most expensive of the closing cost fees – sometimes running in the thousands of dollars. These fees are poorly understood by homebuyers. This can lead to paying higher fees than is necessary or appropriate. When Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, we required the newly created Consumer Financial Protection Bureau (CFPB) to do a better job at protecting consumers when buying a home. We know that the housing finance system had too much predatory and discriminatory lending. African Americans and Latinos were frequently charged much higher interest rates than they qualified for. Homeowners were refinanced into high fee and interest rates they could not afford. The result was more than five million foreclosures and a colossal loss of wealth. In response to the new law, the CFPB wrote rules to protect people buying homes from products which would strip their wealth. One of those rules defined a Qualified Mortgage (QM) standard which was established in Dodd-Frank. As part of that QM standard, the CFPB established a “points and fees” bright line limit for mortgages that qualified under the Ability to Repay provision. The CFPB established a limit on “points and fees” – which account for a loan’s origination costs – that exceed 3 percent of the loan amount – although it can be up to 8 percent for lower cost homes. Because of concerns that the affiliated title insurance system was leading to higher costs for borrowers in a market based on reverse competition, the CFPB wisely chose to require title insurance charges from affiliated title agents be within the points and fees cap. H. R. 3211 reverses the CFPB’s decision. By excluding affiliated title insurance firms from within the points and fees cap, H. R. 3211 restores an incentive to overcharge homebuyers. We know how hard it is to get people into homes. Homebuyers need to save thousands of dollars for a downpayment. So why should we make it easier to let them get overcharged as much as a thousand or more dollars on title insurance? Some say that as much as half or more of a title insurance premium goes to the referral agent. Why would we want to preserve this practice of overpricing title insurance to fund referral commissions? At the Financial Services hearing that included this bill, I requested that we hear from independent land title agents as well as from groups like the Consumer Federation of America, the Center for Responsible Lending, Americans for Financial Reform and its 100 affiliates and the AFL-CIO. I requested that the National Association of Independent Land Title Agents be invited to testify. I have heard concerns directly from title agents in my state that some referral sources ask to share ownership of their business. Since title insurance is based on referrals, when realtors, homebuilders and mortgage brokers refuse to provide referrals to a title agent firm, the firm may not be able to survive financially. Unfortunately, these independent unaffiliated title agents were not invited to testify nor was there another hearing on the bill. Many organizations opposed the bill including the AFL-CIO, Alliance for a Just Society, Americans for Financial Reform, Center for Economic Justice, Center for Responsible Lending, Connecticut Fair Housing Center, Consumer Action, Consumer Federation of America, Consumers Union, Empire Justice Center, Home Defenders League, The Leadership Conference on Civil and Human Rights, NAACP, National Association of Consumer Advocates, National Association of Independent Land Title Agents, National Consumer Law Center (on behalf of its low income clients), National Council of La Raza, National Fair Housing Alliance, New Economic Project, Public Citizen, Woodstock Institute and Center for Responsible Lending. These concerns about hidden referral commissions are not hypothetical. Last month, the Consumer Financial Protection Bureau (CFPB) fined RealtySouth, the largest real estate firm in Alabama for violations of the Real Estate Settlement and Practices Act (RESPA). RealtySouth improperly steered consumers to its affiliated firm, TitleSouth LLC. In addition, The CFPB has taken action against Borders & Borders PLC in Kentucky for funneling kickbacks to shell companies. In June, the CFPB fined Stonebridge Title Services in New Jersey for paying illegal kickbacks to referral sources. Some who support H.R. 3211 say there are some fixed costs in lending that could result in lower valued mortgages to need to pay loans higher than the Qualified Mortgage guideline of points and fees established by smaller loans. However, the Consumer Financial Protection Bureau already provided for flexible definitions based upon the amount of a borrower’s […]
Last week, the House Financial Services Committee (HFSC), in a surprise move, convened a full committee hearing on 15 pending bills including HR 3211 and “voice-voted” HR 3211 onto the House floor for further consideration. The Chairman of the HFSC, Rep. Jeb Hensarling (R-TX), ordered the voice vote on HR 3211 instead of a roll call vote, or the typical voting pattern for committee legislation because he suspected that several Republican members on the committee would vote “no” and thereby jeopardize the chances HR 3211 can move successfully in the House and the Senate. The voice-vote was called with barely twenty members present. It was a procedural passage of the bill.
Congress has introduced two pieces of bipartisan legislation known as the 21st Century Glass-Steagall Act – H.R. 3711 (co-sponsored by Rep. John Tierney (D-MA) and Walter Jones (R-NC)) and S. 1282 (co-sponsored by Sen. Elizabeth Warren (D-MA) and John McCain (R-AZ)) in an effort to reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest as well as reinstating certain Glass-Steagall Act protections that were previously repealed in 1999 by the Gramm-Leach-Bliley Act (GLB). Both bills would act to prohibit banks from becoming an affiliate of an insurance company, including a title insurance company.
Last week, we updated you on our progress with H.R. 3211, the so-called Mortgage Choice Act, that is being pushed through Congress by RESPRO, the banking lobby and others with affiliated business interests in the title insurance industry.
RESPRO and the banking lobby continue their efforts to push the Mortgage Choice Act in Congress. The bill now has 26 co-sponsors, the vast majority of which are Republicans, and RESPRO has succeeded in getting the Ranking Minority Member, Rep. Maxine Waters (D-CA) to take a neutral position on the measure, thereby guaranteeing that if the matter comes up for a vote in the House Financial Services Committee that she will not organize support to block it.
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