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Title Guaranty Newsletter

Spring 2011 Volume 6 Number 4

 

FromtheDirector
From the Director

 

 

 

 

 

I don't have to remind anyone it's springtime.  We look forward to an increase in purchase transactions that traditionally occurs as the weather warms.   We have seen a lot of refinance activity the last few years fueled by historically low interest rates, and we will continue to keep an eye for an increase in interest

rates which will slow the refinance market. 

 

It's been a hectic few weeks as the Iowa Legislature wraps up its work for the session.  While some issues remain pending, one bill has generated much public comment.   SF400, signed by the Governor on March 30, 2011, creates a few exceptions to the rule in Iowa Code Section 561.13 which says a conveyance or encumbrance of a homestead is void if the spouse does not sign the document.  For example, a court may now consider whether the non-signing spouse was unjustly enriched as a result of the transaction.  Other factors for consideration include whether the mortgage is a purchase money mortgage as defined in Iowa Code Section 654.12B and whether the non-signing spouse's interest was terminated by a dissolution decree. 


The case of the Ankeny couple nullifying their mortgage and receiving their home free and clear got a lot of media attention.  In that case, although the mortgage documentation had indicated the borrower was single, he was in fact married, and his spouse failed to execute the mortgage.  Therefore, the Court ruled the mortgage was void.  Title Guaranty will continue to require all title holders and their spouses to sign the mortgage.   Contact Title Guaranty underwriters if you feel an exception to this rule is warranted on a particular transaction.

 

 Another bill which has garnered wide industry support, H.F. 675 (overhaul of mechanics lien law) is still under consideration by the legislature at the time of this writing.  Title Guaranty has worked on this bill in cooperation with the real estate and construction industry for several years.

 

Implementation of closing company licensing begins July 1, 2011.  Title Guaranty worked closely with the real estate industry the last several years to pass a bill regulating companies who provide escrow and closing services.We will share information from the Division of Banking as it becomes available.


We've scheduled the annual Settlement Conference for June 23 at the West Des Moines Sheraton Hotel.  Topics include the new closing company licensing law, title issues, mortgage fraud and an update on RESPA with clarification of some of the more frequent errors on the HUD-1 Settlement Statement.

 

We hope to see many of you there!

 

Loyd W. Ogle,

 

 Director

 

 

 

 

 

AnnualSave the Date!


Title Guaranty will hold its Annual Conference on November 3, 2011 at the Downtown Des Moines Marriott Hotel.  Watch for more information!
                     In This Issue: 
  From the Director 
  Closing Company Licensing  
  Commercial Services Spotlight
  Form 900 - New Guidelines
  Guest Article - Robert Douglas, Esq. 
  Annual Conference   
 

                                             

PavingTitle Guaranty Setlement Conference - June 23, 2011 

 

 

 Closing Company Licensing - Coming July 1, 2011

In 2010, the governor signed Senate File 2348 requiring the licensing of closing companies who provide real estate closing services on Iowa properties.   The licensing process will be administered by the Iowa Division of Banking (IDOB).  Failure to comply is considered a class "D" felony.  

 As we get closer to the registration deadline, we've asked the IDOB to provide additional information.  Here are some of the most common FAQs:

Q. Who needs to register? 

A.  Any company who provides real estate closing services.  Individuals do not need to register unless the individual is acting as a sole proprietor and has not formed any type of business entity.  See Iowa Code Section 535B.2, for a complete list of groups that are exempt from the licensing requirement, including banks, licensed real estate brokers, and attorneys whose conduct is already regulated by the Supreme Court.

Q.  How will registration be handled?

A.   Registration will be handled online through the NMLS, the Nationwide Mortgage Licensing System.

Q.  When will registration be available?

A.  We anticipate that the registration site will be operative by May 1, 2011.

Q.  What are the requirements for registration?

A.    1) Application through the NMLS
       2) Officers, directors and others in a position of
           authority must submit to fingerprinting and
           background checks
       3) Recently prepared financial statement
       4) Surety Bond in the amount of $25,000

Q.  Are there fees involved?

A.   The application fee is $500, plus you must remit an NMLS processing fee of $100. Renewal fees are due December 1st each year and are $200 + NMLS processing fee.

Q.  Do I need a bond?

A.  Yes, the law requires a $25,000 surety bond.

Q.  I just do notary closings.  Do I need to register? 

A.  No.  Solely providing notary functions is not considered a "closing service."  Closing services are defined as"administrative and clerical services required to carry out the conveyance or transfer of real estate or an interest in residential real estate located in Iowa to a purchaser or lender, including preparing settlement statements, determining that closing documents conform to the parties' contract, satisfying lender's instruction, conducting a closing conference, receiving and disbursing funds and completing form documents and instruments in accordance with instructions of the parties."

Title Guaranty will post updates on our Web site as more information is available.  Information will also be available at http://www.idob.state.ia.us/.  Don't miss the Division of Banking's presentation at our upcoming Settlement Services Conference!  

 

SpotlightTitle Guaranty Commercial Services 


Lakeview Medical Park  
 

Lakeview Medical Park, located in West Des Moines, is a 5-story medical office building built as the first in a series of medical buildings located in Iowa Methodist's Lakeview Medical Park.  The project provides an attractive alternative to medical providers and patients as the medical park is easily accessible.  The 115,000 square foot building, developed by Hubbell Realty Company, is an inviting facility with state-of-the art mechanical and security systems.  The building is conveniently located right off the interstate and enjoys a high level of visibility on University Avenue, a major thoroughfare.    
 

As part of a refinance transaction, Title Guaranty Commercial provided title coverage to the lender and was entrusted to handle the escrow and closing.

 

Leasehold Owner: Lakeview Medical Office Building, L.C.  

Developer: Hubbell Realty Company 

Attorney:  Nyemaster Goode Law Firm, Des Moines, Iowa

                                                                                                   

 Title Guaranty's Commercial operations are expanding!  Please visit our website at www.TitleGuarantyCommercial.com or call Becky Petersen at 515.725.4981 for more information. 

 
 
Form900New Guidelines for Using Forms 900/901

The Title Guaranty Board recently approved changes to the rules for using Title Guaranty Report of Title Form 900.  The Form 900 is designed for situations where there is no transfer of title, such as the refinance of an existing mortgage or when the borrower obtains a second mortgage or line of credit and the lender requests coverage for that mortgage.  The form is not appropriate when a borrower is obtaining purchase financing.  Here are the basic criteria for using Form 900, along with a few clarifying notes:

 

  • Mortgage secures an amount not more than $1,000,000 
  • Mortgage secures residential property
    •  1-4 Family residence
    •  No evidence of farming operation
    •  "Mixed Use" will be deemed agricultural and ineligible  for       Form 900/901 
      (      The number of acres is no longer a major consideration of        whether a property is residential or ag land.) 
  • The deed vesting title in the borrower:
    • shows documentary transfer tax computed on the full value of the property (hereinafter referred to as the "recorded full value deed") or
    •   is a tax, guardian, executor, administrator, receiver, referee assignee, or sheriff deed that has been recorded in the applicable county recorder's office for more than 10 years, and no action against said deed is found (refer to Iowa Code section 614.22), then the deed may be relied upon as the "root" for the search;
  • The current transaction is not a construction loan;
    • The Form 900 may be used when refinancing a construction loan into the end loan.
  • Name searches are run on the grantees in the recorded full value deed and any subsequent owners; 
  • No court proceeding or recording regarding the legal description or possible encroachment exists that would require preparation of an abstract or abstract update
    • There must be no change in the legal description since the last full value deed
    •  A refinance that involves only a portion of the property last transferred by a full value deed will be ineligible for the Form 900/901 and the abstract must be re-continued. This scenario arises when an abstract covers a large parcel of several acres (usually an acreage) and the borrowers wish to refinance only a small part of the parcel, usually where the house is located.   
  • The current transaction is not a payoff or refinancing of a real estate installment sale contract. This is a change to the prior rules. 
  • The Form 900 may be used when the owner obtains financing with no current mortgage on the property. 
  • The Form 900 may be approved if there is a prior Title Guaranty certificate covering the same property. 

A Title Guaranty Report of Title Form 900  may be used in other non-purchase financing transactions with written approval from underwriting.  Please contact Bob Skelley (515) 725-4984 with questions on specific transactions or scenarios.

DouglasRapid Certificate - Guest Article

Robert J. Douglas,

Davis Brown Law Firm

As an Iowa attorney whose practice has included abstract examination for more than 28 years, one of the biggest changes to my practice arose with the creation of Iowa Title Guaranty, and my decision to become a participating attorney in the program.  While it is hard to change practice habits, the creation of Title Guaranty has provided Iowa real estate attorneys with valuable new tools to meet the ever more demanding expectations of our clients.

 

In reflecting on this part of my practice, one of the main issues of my lender clients is the ability to receive their final title policy, or certificate, in a timely fashion. If the loan has been sold by the lender, they have agreed to a certain delivery date for the final title work, and face fines and/or an obligation to repurchase a loan if the delivery date is not met. As a title examiner, I am only giving an opinion of documents shown in the abstract or official records of the county in which the land is located.  Many times, final abstracting is held up waiting for releases of mortgages paid off at closing.  Even though Iowa Code Section 535B.11(5) requires most mortgage releases to be filed within 45 days after receipt of payment, this is not often complied with, especially by out of state mortgage lenders.  Even when complied with, having to wait up to 45 days for a release to update an abstract can still create problems for the lender in meeting its title certificate delivery date  obligations. 

 

Title Guaranty has two programs that work hand in hand to facilitate the delivery of a final title certificate in a timely fashion.

 

First is the ability to issue a "Rapid Certificate," which allows participating attorneys (and other Title Guaranty field issuers) to issue a final Title Guaranty Certificate without waiting for a mortgage paid off at closing to be released of record.  As long as the field issuer has documentation the mortgage was paid off (i.e. payoff statement, cancelled check, or wire receipt) a special endorsement is issued with the final certificate to guaranty over the old mortgage. This allows for the field issuance of a Title Guaranty Certificate in a timely fashion. Theoretically, a final certificate could be issued immediately after closing since all of the documentation required is available at the time of closing. With the prompt receipt of the necessary documentation regarding payoff of the old mortgage, a participating attorney can deliver the final certificate within a week or two of closing, which is well within most delivery deadlines for mortgage lenders.

 

Title Guaranty will follow-up with the attorney to verify that the appropriate releases are ultimately filed.  But, in the meantime, the final Title Guaranty Certificate has been issued meeting the lender client's needs.

 

The second program, the Mortgage Release Program, is a useful tool for anyone involved in real estate transactions looking to clean-up a prior unreleased mortgage.  Documentation needed to issue a "Rapid Certificate" is the same information needed for submitting an application to Title Guaranty for an administrative release of mortgage as authorized under Iowa Code Section 16.92(2)(a).  Basically, you need  proof the mortgage was in fact paid off. The Mortgage Release Program is also helpful where there are missing assignments.  The Mortgage Release Program works hand-in-hand with the Rapid Certificate Program to assure that the records are ultimately cleaned up and a mortgage release is recorded.  There is no charge for the administrative release if done in conjunction with a "Rapid Certificate."  The benefits are two-fold;  the final certificate is issued timely and we are all assured that ultimately, a release of the mortgage will be recorded.  It truly is a win-win product.

 

Bob Douglas is a senior shareholder of the Davis Brown Law Firm in the Real Estate and Financial Institutions Divisions. His practice encompasses Banking, Real Estate Development and Management, and Real Estate Planning. He is currently based in the West Des Moines office and is the past President of the Firm's Board of Directors.