Welcome to the First Edition of Virginia Title Center's Title Notes E-Blast.  It is our hope that you will find the information contained herein to be useful and timely.  Please let us know what you think.  We want to hear from you.
Thank you, Patti Dickerson, Director of Marketing & Communications
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April 2013
Title Notes E-Blast

So How Does Title Insurance Really Work?

Ever had a client ask you to explain exactly what Title Insurance is and is not, and why they need it? Not sure about the covered risks and exclusions? Ever wonder what happens in the event of a claim? What the options are for resolving a claim?


This Live Webinar - Title Insurance: Covered Risks, the Claims Process and Best Practices -will be conducted on Tuesday, May 7th beginning at 2 p.m. It will provide you answers to these questions and more! Webinar hosted by Virginia Title Center and presented by Michael J. Kelly, Esq, Senior Claims Counsel, Investors Title Insurance Company.


Space is limited. Click here to reserve your Webinar seat now!

The Dodd-Frank Mortgage Storm:
Preparing for Impact Workshop on May 16 

Do the ever changing regulations have your head spinning? If so, then this workshop is for you! 

Registration is now open for The Dodd-Frank Mortgage Storm: Preparing for Impact Workshop on May 16th. This event is hosted by the Virginia Mortgage Lender's Association and will take place at the VHDA Office in Glen Allen, VA from 8:45 a.m. to 4:15 p.m.  Lunch is included in the $125 registration fee. 

The recently finalized rules under Dodd-Frank pose incredible risk and complexity for mortgage organizations. You won't want to miss the opportunity to hear from experienced attorneys from Reed Smith, one of the largest and most reputable law firms in the country as they break down key provisions of the Dodd-Frank rules that become effective for all of us in January of 2014.


Space is limited. Please click here for a working event agenda and the event reservation form.  Members of the Virginia Title Center staff look forward to seeing you there.


A bill has passed in Virginia that will raise the grantor tax in many cities and counties in Virginia effective July 1, 2013.  Details are as follows:


Grantor tax increase from .10%  to .25% in the counties of Arlington, Fairfax, Loudoun and Prince William; the cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park; the towns of Dumfries, Herndon, Leesburg, Purcellville and Vienna. Also, the counties of Gloucester, Isle of Wight, James City, Southampton, Surry and York; the cities of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg.


The bill has passed and has been signed into law by the Governor.  Many counties are unaware of the upcoming changes but are expecting a briefing at the end of the month. Click here to read more. 

by Richard Owen, Executive Director Virginia Mortgage Lender's Association


Under Dodd/Frank and the final rules issued on January 10, 2013 by the Consumer Financial Protection Bureau, a creditor must make a reasonable good faith determination that a consumer has the ability to repay the mortgage loan. That concept makes sense right? Lenders already do that don't they? We have at least 5 "C's" in credit don't we and isn't "Capacity" one of them? So, what's the problem?


A creditor that fails to comply with the rule has "strict liability" under Regulation Z/Truth in Lending (statutory damages, attorney's fees, etc.)  Consumers may bring legal action against the lender up to three years after a violation occurs and may be entitled to damages equal to all finance charges/fees paid during that time period. Also, a consumer may assert "Ability to Repay" violations against a creditor, assignee, or other holder, as a defense in foreclosure (limited to three years of finance charges/fees). The rule requires a creditor to consider 8 very specific underwriting criteria and a Qualified Mortgage (QM) is one of 4 ways to comply with the ability to repay standard.   A loan is a Qualified Mortgage if it does not have: Negative amortization, Interest-only payments, Balloon payments (there is an exception on the table), and the points and fees that exceed 3% of the loan amount (higher thresholds for loans under $100,000).


Given the liability issue, most lenders will want to make what are called "prime" qualified mortgages because those loans contain key safe harbor protections vs. only a rebuttable presumption of compliance. Generally, there are three alternative standards to meet the QM requirements:

  1. Total ("back-end") DTI ratio cannot exceed 43% and must follow all other guidelines in the rule and in accordance with Appendix Q (yes, you know the regulations are overly burdensome when there is an Appendix Q to a 804 page rule);
  2. For now, a loan that is eligible to be purchased by Fannie Mae or Freddie Mac (or eligible to be insured/guaranteed by FHA or VA);
  3. Certain loans with a balloon payment, made by small creditors serving rural or underserved areas. (Anyone looked at the USDA Rural Housing Boundaries lately?)

As you take all that spare time you have to read the 804 pages, think about this possibility: the focus in the regulation on "Capacity" nearly eliminates any subjectivity that was left in mortgage lending. So, what happens to Character, Conditions, Collateral, Capital? Sadly, my answer is that they get replaced with a new "C"-Compliance.  


Let Richard Owen know if you have other thoughts. Thanks!

TITLE TIP: Know Your Insurer and Coverage  
by Bobby Fothergill, Vice President, Agency Manager, Virginia Title Center, LLC

Just as the economy continues to recover from a downturn and a depressed real estate market, many title underwriters are recovering from past significant losses as a result of low volume and increased claims activity.  These losses had an impact on the liquidity of underwriters and led to numerous changes in underwriting guidelines.


Because of this, we have learned that it is important for lenders and homeowners to understand both the financial strength of the underwriters who are issuing title policies on their behalf as well as the coverage they may or may not be receiving.


Banks should be regularly monitoring the financial statements of title underwriters. When comparing the level of intangible assets, the leverage, and the liquidity of these balance sheets, it is evident that many companies carry a significant amount of debt and goodwill. As indicated by the losses reported by many national title underwriters, that goodwill ends up getting expensed through the income statement in down markets. In addition to looking at financials, banks can stay current on rankings published by title insurance ratings firms such as Demotech or LACE.


From a title insurance coverage standpoint, most of us know that there are situations too numerous to list that can cause a title disaster for the bank or its customer. Significant claims can and do arise from such things as mechanics liens, tax liens, encroachments, easements, and other defects impacting the title to real property. Since most title policies come with standard exceptions to coverage, banks need to understand the types of language in title insurance policies that can have a direct impact on their lien position and their customers' ownership rights in a property.


We are noticing that some title underwriters have been placing overly broad standard exceptions on policies that take away key protections from the bank and the bank's customer.   Often, banks and homeowners will see language on their policies that does not provide protection.


For example, when someone is buying a home where construction has been recently completed, there should be no exception on the owners' policy for mechanics liens. An exception listed as "Any lien or right to a lien for services, labor, or materials heretofore or hereafter furnished, imposed by law and not shown by the public records" does not provide coverage in this situation. 


Another red flag found on title policies would be a survey exception listed as "Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land.  The term encroachment includes encroachments of existing Improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land. Paragraph 2 (c) of the Covered Risks is hereby deleted." 


Finally, some policies are being issued with an exception that reads "Any matter first appearing in the public record prior to (date)." The exception is the result of a shortened search and removes the title coverage for everything recorded prior to the date in the exception.


One of the keys to mitigating title risk is to ensure your processors and risk managers have guidelines and understand how to evaluate a title policy for coverage. Virginia Title Center is fortunate enough to be an issuing agent for Investors Title Insurance Company, an underwriter that carries no debt on its balance sheet and has been consistently recognized as one of the most financially sound title insurance carriers in the industry. Please contact the agency should you need any information related to their position of strength that is unrivaled.


"From a personal perspective, Virginia Title Center handled the entire closing for the refinance of my personal residence.  The service, thoroughness with explaining everything and overall process was all handled in a most satisfactory fashion."


"As a Commercial Lender I have always found the staff at Virginia Title Center to be accessible, quick to respond, and competitive on pricing.  However, the major difference between VTC and other Title Companies is the high level of experience and overall depth of knowledge exhibited by the staff."


John D. Meade, III, Senior Vice President, Regional Manager

First Bank & Trust Company

Patti Dickerson Joins Virginia Title Center

Please join us in welcoming Patti Dickerson to the VTC Family. Following 8 years most recently as Regional Sales & Marketing Manager for SunTrust Bank Western Virginia, 8 years as Relocation Director for Boone & Company/Long & Foster Real Estate, 3 years at Roanoke Regional Chamber of Commerce, and 6 years at Blue Ridge Beverage Co., Patti joined VTC on March 4th as the Director of Marketing & Communications. Patti will be primarily responsible for implementing a communications plan to leverage key marketing channels to support and grow the sales effort. Patti, her husband and daughter live in Roanoke. Please welcome Patti.
What Topics Are On Your Mind?

Virginia Title Center wants to provide you with pertinent information in future E-Blasts. What questions are on your mind regarding the real estate and mortgage lending industry? What Hot Topics would you like to receive greater insights and clarity? Send Patti your thoughts.
Patti L. Dickerson                                      
Director of Marketing & Communications
Virginia Title Center, LLC
"where going the extra mile
     is nothing extra at all..."

Give Patti a call today!
"The future depends on what we do in the present." 
- Mahatma Gandhi -
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4502 Starkey Road, Suite 200, Roanoke, VA 24018
20 Bobby's Way, Suite 101, Staunton, VA 24401