The title industry is benefitting these days from the record low mortgage interest rates as many rush to take advantage of new historical lows. Although about one third of parties applying for a new loan are not approved due to credit or appraisal issues, many are taking advantage of locking into shorter term loans including ten year mortgages. Existing home sales were up in August partially fueled by the low rates. Meanwhile, the American Land Title Association (ALTA), our industry’s national trade group, is joining with the National Association of REALTORS®, the Homebuilders and the Mortgage Bankers Association to urge passage of a one year extension to temporary high cost conforming loan limits for Fannie, Freddie and FHA. Although the deadline is October 1st and action is not expected by that date, the groups vowed to continue to work to extend the limits to help an already crippled housing industry.
One of the hot issues our industry has faced is the onset of PTF’s or Private Transfer Fees. A PTF is a fee which is established when a developer agrees to add a covenant to title that requires a future owner to pay a percentage of the selling price (usually 1%) to a designated trust for the next 99 years. It then becomes a lien on the property like an HOA assessment. To date, 38 states, including Illinois, have acted to ban or severely limit PTF’s because of the negative impact on closing costs and depressing home prices in those communities that require their payment. The net result of PTF’s is that the sellers earn less money on their most important investment and they eat into seller’s equity at a time when home prices have not been appreciating.
The land title industry, both here in Illinois and across the country, continues to be involved in mortgage fraud prevention. Most recently, our company participated with another title company and a number of local, state and federal agencies to shut down a ring of perpetrators of mortgage fraud that the FBI and HUD had been tracking for over a year. As fraud is the second leading cause of title claims, the title industry remains on the frontline of preventing fraud and maintaining the integrity of real estate transactions.
Finally, ALTA has been reviewing and commenting on new prototypes for combined mortgage disclosure forms required under the Truth in Lending Act (TIL) and RESPA. The latest round of revisions from the Consumer Financial Protection Bureau may lead to more changes to the HUD-1 Settlement Statement. Finding harmony between simplifying disclosures for consumers and facilitating the closing by the industry continues to be a challenge. The land title industry is vital to the US economy as we reduce risks to lenders by giving banks the confidence to lend. Our work assures homeownership rights and provides assurances from the private sector necessary for capital to be utilized in the economy. And at no cost to taxpayers, the title industry collects over $3 billion per year in delinquent real estate taxes and over $1.8 billion in back income taxes. Now that’s a deal no taxpayer could argue with!
Until next time: “A person learns by two things. One is reading. The other is association with smarter people.” – Will Rogers