OLTA is a statewide trade association representing the title insurance and abstracting industry in Oklahoma. Founded in 1907 and proudly serving our membership through regulatory and legislative advocacy, continuing education and up-to-date information in keeping with our mission to enhance and protect the industry.
What is Title Insurance?
When you buy a home, you receive a title to the property, meaning you are now the full legal owner of that property. Title insurance for real estate provides protection against loss if a covered defect is found in the title to real property. You can purchase it for a one-time premium, paid in most cases at closing.
Title insurance usually covers four types of “hidden” risks: errors, liens, ownership claims, and invalid deeds. If a claim is made against your property, the title insurance company will negotiate with the other party to settle the claim, defend you in court if necessary, pay any incurred legal costs, and satisfy any covered claims. Having title insurance can save you time, money, even your home.
What’s Happening Now – News from OLTA and ALTA
FHA to Cease Insuring Mortgages With PACE Assessments
December 7, 2017
The Department of Housing and Urban Development (HUD) announced today (Dec. 7) that that it was reversing guidance issued last year that the Federal Housing Administration would stop insuring mortgages on properties that include Property Assessed Clean Energy (PACE) assessments.
The new policy goes into effect in 30 days.
“FHA can no longer tolerate putting taxpayers at risk by allowing obligations like these to be placed ahead of the mortgage itself in the event of a default,” said HUD Secretary Ben Carson. “Assessments such as these are potentially dangerous for our Mutual Mortgage Insurance Fund and may have serious consequences on a consumer’s ability to repay, or when they attempt to refinance their mortgage or sell their home.”
The new guidance states that “FHA is concerned about the potential for increased losses to the Mutual Mortgage Insurance Fund due to the priority lien status given to such assessments in the case of default. FHA is also concerned with the lack of consumer protections associated with the origination of the PACE assessment, which are far less comprehensive than that of traditional mortgage financing products. FHA’s involvement with accepting properties with PACE assessments may indirectly help to overshadow potential consumer abuses.”
The FHA said it would continue to monitor this risk to determine whether further action is warranted.
In July 2016, HUD issued guidance that outlined circumstances under which it will insure mortgages on properties that included PACE assessments. Following that announcement, ALTA joined other trade associations sharing concern over HUD’s PACE policy. In the letter, the groups said the guidance provides that delinquent PACE loan amounts will retain a first lien position. This would allow any PACE loan amount to hold a senior priority and undermine the lender’s (and the government’s) collateral position and disrupt the very nature of secured lending. The trade groups also believe the guidance raises several consumer protection issues.
Contact ALTA at 202-296-3671 or email@example.com.
E-Mortgages: Reshaping the Way You Do Business
December 5, 2017
The electronic mortgage you knew has changed. Consumer expectations of the mortgage process are evolving. With the help of industry players, lenders are meeting increased digital demands by transitioning into new e-mortgage strategies. The new e-mortgage age has increased adoption, but not without growing pains, misconceptions and overcoming barriers.
This transition is essential to the future of the mortgage industry. In fact, surveys by Fannie Mae’s Economic and Strategic Research Group found that consumers want a fully mobile retail experience in nearly all aspects of their lives, including their financial and mortgage activities.
This need will only sharpen as more young buyers enter the market. The National Association of Realtors (NAR) indicates buyers 36 years and younger (millennials/Gen Yers) are the largest share of homebuyers at 34 percent—and have been for the past four years.
E-mortgages will be a comparison factor for these buyers—and for your existing and future business partners. To remain competitive, businesses should be well on their way to full adoption. ALTA asked Shane Hartzler, director of eMortgage strategy and operations at Fannie Mae, to help us define this business imperative and explain how it benefits buyers and the mortgage industry.
ALTA: What’s the difference between an e-closing and an e-mortgage?
Hartzler: An e-mortgage occurs when the mortgage loan documentation (specifically the promissory note, or e-note) is created, executed, transferred and stored electronically. An e-closing is broader in which some mortgage loan documents are executed electronically in a secure digital environment, while other key documents are printed to paper and wet-signed (e.g., note, security instrument).
Keep in mind, e-mortgages are produced by the e-closing process only if the promissory note is signed electronically. Therefore, not all e-closings result in e-mortgages, but all e-mortgages are the product of e-closings.
ALTA: Why are e-mortgages advantageous?
Hartzler: We think there are three main benefits of e-mortgages. First, e-mortgages save time and money by automating manual processes and reducing cycle time from origination through delivery and funding. They eliminate paper, shipping and storage fees. Second, e-mortgages speed up funding through e-note delivery, maximizing capital. Finally, e-mortgages can minimize risk by reducing operational errors, eliminating missing signatures, documents and fees, and improving data quality and validation.
ALTA: What are the typical steps of an e-mortgage delivery?
Hartzler: We look at the e-mortgage delivery process as three main steps. Keep in mind that delivering e-notes follows a similar process to closing a loan. However, there are some unique steps for “e.” For instance, during closing, a lender would have the borrower and notary electronically sign the e-note and other documents through an e-closing system. The e-closing system then tamper seals the documents, which is an automated method of ensuring that the data in the note can’t be changed or manipulated.
Then, after closing, the e-note gets registered on the MERS eRegistry system within one business day.
Finally, when delivering to Fannie Mae, the lender transmits the e-note and other investor documents to using MERS e-delivery. The lender initiates Transfer of Control and Location to Fannie Mae via the MERS eRegistry. Then, the lender submits delivery data to Fannie Mae, including a special feature code (508: eMortgage) that identifies that it is an e-note. The loan is then certified and funded, assuming all requirements have been met.
Most e-mortgages follow this general process and can take as little as a few minutes or up to three days based on the lender’s operational procedures.
ALTA: What is the MERS eRegistry? Are lenders required to be members to deliver e-mortgages?
Hartzler: The MERS eRegistry is the system of record identifying the owner and location of the e-note. The MERS eRegistry allows e-notes to be registered and uniquely identified for tracking and verification. Fannie Mae’s technology is integrated with the MERS eRegistry.
Lenders, servicers and warehouse banks must use the MERS eRegistry to deliver e-mortgages and must become MERS members to use it. Access to the MERS eRegistry requires system integration and a testing cycle.
ALTA: What should title and settlement companies be doing now to get ready?
Hartzler: Settlement providers should talk with their lender partners about changes in process and/or training they may need to make to support this transition. They should discuss:
- What technology will be required to support the e-closing process (mobile or in-office)?
- How will agents be trained?
- What are the impacts on the closing and post-closing procedures?
- Where does electronic notarization of recordable documents fit into the lender’s plans and in what states/jurisdictions is it permissible?
ALTA: Is there anything else you’d like to tell our members?
Hartzler: Yes, Fannie Mae is committed to addressing barriers to e-closings and supporting all industry stakeholders during this transition. We believe that e-closings provide significant benefits to settlement agents, including better-educated borrowers, shorter closings and operational efficiencies. But we also understand that until technology solutions and standards mature, this transition remains challenging. For example, settlement providers will need to accommodate individual lender e-closing requirements and train agents to conduct e-closings on multiple platforms.
Despite these challenges, Fannie Mae believes now is the time that settlement companies should learn and prepare for e-mortgages, so title agents can hit the ground running when your partners are ready. In other words, the time for “e” is now.
For more information, visit Fannie Mae’s website at www.fanniemae.com/singlefamily/emortgage.
Contact ALTA at 202-296-3671 or firstname.lastname@example.org.