From the Director
The Iowa Legislature has adjourned its shortened session for the year. While the state economy, budget, jobs and education were major agenda items, there were some bills of interest to those of us in the real estate business.
Of note, the Division of Banking sponsored a bill requiring escrow closing companies to be licensed. While the end bill was not quite as stringent as the proposal, it is a very good piece of legislation. Independent escrow companies will need to register with the Division of Banking and will need a surety bond. Attorneys, real estate brokers, banks and credit unions are exempt from the new licensing requirements. More details will be available in the coming months. The Title Guaranty Settlement Conference will be August 24 at the West Des Moines Sheraton - a good time to learn more!
We were disappointed that the revision to the Mechanic's Lien statute did not pass this year. We believe that the changes would have been good for contractors, sub contractors, the real estate community and the home buying public. We will continue to work with the real estate industry to improve Iowa's mechanics lien statute.
We look forward to the increase in home buying activity that traditionally accompanies warmer weather.
Loyd W. Ogle, Director
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Coming Events
In addition to the Regional Academies mentioned in this issue, we have other events on the schedule for 2010.
The Settlement Conference will be August 24 at the West Des Moines Sheraton Hotel. We will have information regarding the new legislation requiring registration for escrow/closing companies, updates on RESPA and the Good Faith Estimate and much more.
The Title Guaranty Annual Conference is slated for November 9, 2010 at the Coralville Marriott Hotel. As always, we'll have a full schedule of speakers and workshops of interest to our partners.
Mark your calendar now and plan to participate. |
Law Intern Program
One of the advantages of our proximity to Drake University Law School is the opportunity to hire law interns interested inlearning more about this segment of the law. Each year, weselect two second year law students to work in our offices during the school year as well as through the summer. They learn to issue Title Guaranty Commitments and Certificates and the underwriting requirements for each. The internship provides students with exposure to transactional real estate work for both residential and commercial property issues. Our current interns were encouraged to meet and develop relationships with other attorneys and professionals throughout the state of Iowa. Opportunities to be involved in the legislative process are also available.
This year, one of our interns actively lobbied legislators and industry groups about two bills she had researched during her internship--the revision of Iowa's mechanic's lien statute and regulation of independent escrow agents, which passed this session.
We will soon be saying good bye to our current interns, Angela Kenyon Davis and Ashley Watts, as they are both preparing for finals and the upcoming bar exam. Several of our previous interns are currently practicing real estate law in Iowa. We wish Angela and Ashley much success in their chosen field. |
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Coming May 2010!
Once again Title Guaranty will host a series of Regional Academies around the state. This year, the schedule is: May 12 Cedar Rapids Crowne Plaza May 14 Dubuque Grand River Center May 21 West Des Moines Jordan Creek Holiday Inn
Each location will include a real estate update from Dan Moore and a session with Marcia Olson on maintaining Iowa's title standards. Complete information for each site is available on our Website. The West Des Moines session will feature special sessions on issues related to Commercial Transactions. We have been approved for six (6) hours state CLE credits for each session. Online registration is available now.
For more information, contact Linda Berg 515.725.4893.
Underwriting Guidelines for Obtaining Mechanic's Lien Coverage On New Construction
With the advent of Spring, you can almost hear the sounds of pneumatic nail guns and electric power saws ushering in a rebirth of home building in Iowa. A recent article in The Des Moines Register* cited a 43 percent decline in building permits in the Des Moines area from 2007 to 2009, and a decrease in new home listings from 2,380 in January 2008 to 1,029 in January 2010. But the article goes on to say that "some Iowa homebuilders are cautiously optimistic this year because of declining inventories [of new homes], improving consumer confidence and a recovering state economy."1 There is speculation that the perception of a shortage of new homes currently on the market will spark an increase in new home construction this year. With a potential increase in closings on new construction, this may be a good time to review Title Guaranty's underwriting guidelines for granting mechanic's lien coverage.
In order to provide mechanic's lien coverage, Title Guaranty has always required final mechanic's lien waivers from everyone who has provided services, labor, or materials to a property within 90 days prior to closing. This requirement applies to all types of construction from a new home built from the ground up to the addition, upgrade, improvement, or remodeling of an existing home. When reviewing a construction project for mechanic's lien coverage, Title Guaranty generally requires four things:
1. Composite Mortgage Affidavit signed by the seller and the buyer. 2. Affidavit of General Contractor signed by the builder, stating that all work has been completed and all subcontractors have been paid. 3. Sworn Statement of the General Contractor or some other list of everyone that has provided labor or materials to the property within 90 days prior to closing. 4. Lien waivers from everyone that has provided labor or materials to the property within 90 days prior to closing.
Copies of the Composite Mortgage Affidavit, Affidavit of General Contractor, Sworn Statement of the General Contractor, Partial Lien Waiver, and Final Lien Waiver may be downloaded from the New Construction tab on our Web site.
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RESPA/Good Faith Estimate Revised Rules
The recent revisions to the Good Faith Estimate and the Real Estate Settlement Procedures Act are intended to allow borrowers an opportunity to compare closing costs and loan programs before making a loan decision. As a result, many of the fees that are a traditional part of the real estate transaction must be disclosed up front, and many of them are not allowed to change or may only change within a small "tolerance". All fees related to title work (abstracting, attorney's title opinion, Title Guaranty premium, closing fee) are included in the group that cannot vary in aggregate more than 10% from the amount disclosed on the Good Faith Estimate. Any charges in excess of the tolerance must be refunded to the borrower by the lender. It is more important than ever to be able to provide the lender with realistic estimates of the cost for these services.
Another area that is frequently missed is a requirement to disclose to the borrower in a purchase transaction the cost of Owner's Title coverage, even if the lender does not require this coverage as a condition of the loan. When lenders select Title Guaranty and the property is owner occupied and valued less than $500,000, this coverage is available for free and $-0- may be disclosed. If a lender does not use any title coverage, they must still disclose the cost the borrower would incur if they choose to buy Owner's Coverage - in this case it would be $110 from Title Guaranty. If title insurance is purchased from an out of state vendor, the cost of Owner's Coverage must also be disclosed. Please note that "N/A" should not be used in place of a dollar amount, even if it is $-0-.
It is also necessary to disclose on the HUD-1 how much of the title premium is paid to the underwriter and title agent respectively. When the transaction includes Title Guaranty, 100% of the premium is paid to the underwriter.
Complete information and FAQ's are available from HUD. The Frequently Asked Questions section is updated regularly. |
Title Guaranty Commercial Services is Growing
Title Guaranty's Commercial Services Division continues to pick up steam. As the program diversifies, we are pleased to bring more transactions into the Title Guaranty system. Our recent transaction portfolio includes retail, industrial, office and urban developments, nature conservancies, multi-family housing projects, agricultural, wetlands, senior living facilities, hotels, churches, and schools.
The commercial team is excited to sponsor this year's Des Moines Regional Academy, which will feature presentations from some of Iowa's most distinguished commercial real estate attorneys, including Jim Wine and Tony Colacino with the Nyemaster Goode Law Firm, and Chris Pose with the Connolly Law Firm. These sessions will be of interest to anyone involved in commercial real estate here in Iowa. Visit our Web site to register for the Regional Academy.
As Title Guaranty's commercial team works to inform our partners in the real estate industry about the services available through the commercial department, please remember we offer:
- Owner, Investor, and Lender Coverage on the industry-standard 2006 ALTA forms
- Competitive pricing and service
- Staff committed to friendly service and customer satisfaction
- Escrow, closing, and construction disbursement services
- Knowledgeable underwriting attorneys on staff
- Demotech A' Rating
- Re-insurance with Stewart Title
With a full range of services available, local knowledge and expertise, and competitive pricing, we are determined to be the leading provider of commercial title coverage here in Iowa. As our commercial services continue to expand, we encourage you to consider Title Guaranty for your commercial title needs. For more information, please visit our new commercial Web site or contact Matt Veldey or Becky Petersen.
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