Welcome to the October Edition of Virginia Title Center's Title Notes E-Blast. It is our hope that you will find the information contained herein to be relevant and timely. Please let us know what you think. We want to hear from you.
Director of Marketing & Communications
Title Notes E-Blast
NOVEMBER 12th - 2:00 PM
The Latest in Properly Structuring Commercial Real Estate 1031 Exchanges
This webinar will provide participants with a working knowledge of the rules and logistics of like-kind exchange transactions, including:
- Recognizing what transactions might qualify
- Paper trail requirements
- The role of the qualified intermediary
- Constructive receipt rules
- Identification rules
- Red flags to look for, and more!
Since people are finally starting to sell property at a profit, once again, and due to higher tax rates that might result, there is a growing need to become familiar, once again, with this beneficial transaction.
Tune in at 2:00 p.m. on November 12 for this FREE webinar, where Carol Hayden, Executive Vice President with Investors Title Exchange Corporation will discuss these issues and answer your questions about facilitating 1031 Exchanges in today's environment.
|Carol Hayden, EVP Investors Title Exchange Corporation
More About Carol Hayden
Carol is a Title Attorney in the Commercial Services Division, and serves as 1031 Exchange Counsel. Carol grew up in Raleigh, North Carolina. She received a music degree from Temple University, and her Juris Doctor from North Carolina Central University. She has worked in the title insurance industry since 1993. Her experience in the industry includes residential and commercial real estate underwriting, facilitating like-kind exchange transactions, and claims administration. Carol has contributed to North Carolina Lawyers Weekly and has conducted numerous seminars for attorneys, realtors, and CPAs. Carol joined Investors Title in 1997, where she now serves as Executive Vice President of Investors Title Exchange Corporation (ITEC), and as Claims Counsel for Investors Title Insurance Company (ITIC). Carol is a member of the tax and real property sections of the North Carolina Bar Association. She is also a member of the Federation of Exchange Accommodators (FEA), Triangle Commercial Real Estate Women (TCREW), Wake County Real Property Lawyers Association (WCRPLA), and serves on the Board of Directors for the TCF Real Estate Foundation, a non-profit organization.
Click here to reserve your seat!
CFPB Compliance Myths That Deserve Debunking Article written by Jonathan L. Pompan, Venable LLP
When it comes to the Consumer Financial Protection Bureau's ("CFPB" or the "Bureau") compliance expectations, it is important to separate myth from fact. These days, the CFPB is moving full-steam ahead on examining non-banks and banks, dozens at a time, and is not leaving any stone unturned for potential unfair, deceptive or abusive acts or practices in violation of the Consumer Financial Protection Act or other consumer financial laws that fall under its scope. Myth #1: Only large financial institutions are subject to CFPB supervision and examination.
No provider of consumer financial products and services, or their service providers, should assume they are beyond the reach of the CFPB. The CFPB can examine any entity, regardless of size, based on regulatory authority to supervise "risky" financial products and services that it believes are causing harm to consumers. This authority is in addition to the CFPB's ability to supervise larger market participants in the debt collection, credit reporting, and student loan servicing markets, as well non-bank businesses in the private student loan, mortgage, and small dollar loan markets. (The CFPB also supervises banks with over $10 billion in assets). Myth #2: An audit program is sufficient to catch non-compliance.
The CFPB expects a proactive approach to compliance. This means not only having a detailed audit program, but also a system for proactively preventing and detecting potential non-compliance with the law before a consumer harm occurs.
The CFPB examines: Board of Director and management oversight; compliance programs; consumer complaint responses; and compliance audits. In addition, the CFPB reviews such areas as operations, marketing and lead generation, third party relationships, internal controls, consumer interaction, information sharing and privacy, and payment processing.Myth #3: The CFPB only cares about policies and procedures.
Wrong. The CFPB expects written policies and procedures that institutions will design and offer consumer financial products in accordance with federal consumer financial laws and maintain effective systems and controls to manage compliance responsibilities. This means the CFPB will focus both on policies and procedures and actual acts and practices, including consumer level transactions. The CFPB has released a comprehensive Supervision and Examination Manual, and several additional guidance documents and bulletins that shed light on all of the different ways their examiners oversee companies.Myth #4: Companies are not responsible for the actions of their service providers.
As the CFPB stated in its Bulletin 2012-03, the CFPB expects non-banks and banks to "oversee their business relationships with their service providers in a manner that ensures compliance with Federal consumer financial law." The CFPB considers a "service provider" to be "any person that provides a material service to a covered person in connection with the offering or provision by such covered person of a consumer financial product or service." For more information about the CFPB expectations for effective vendor management, see the CFPB Bulletin 2012-03.Myth #5: The CFPB will give companies that are supervised and licensed by other regulators a pass.
Wrong. All of the CFPB administrative proceedings brought about by the CFPB to date have been against entities that were already regulated on the Federal or state level prior to the creation of the Bureau. For example, the CFPB has entered into consent orders with several banks regulated by the OCC, and mortgage related providers regulated by states. In addition, the CFPB has brought lawsuits against licensed attorneys, debt relief providers, mortgage assistance relief service providers, and others. The Bureau also has stated it is in the process of investigating companies and service providers in virtually all consumer product and service markets.
Is Work Killing You? Improve Your Work Health
Excerpt from an Interview with Tom Rath, bestselling
author of books such as "StrenghsFinder 2.0" and
"Eat Move Sleep"
Written by Anita Bruzzese, a syndicated columnist for Gannett/USA Today
... Tom Rath says that many of the poor health choices made by savvy career professionals are rooted in a "good-natured and dedicated work ethic," that has them grabbing a packaged snack to eat on the go or skipping a workout when pressed for time - or forgoing sleep to complete a project.
But all those small things can cause big problems, he says.
"If you look at any of these little decision points in a day, investing in healthy food, a brief walk, or an extra 30 minutes of sleep can make or break a day," he says. "The challenge for all of us is to think about how making better decisions in the moment can actually increase our productivity, energy, and well-being throughout the day."
For example, some of the tips in the book include:
- Getting off your keester. As soon as you sit down, electrical activity in your leg muscles shuts off and the number of calories you burn drops to one per minute. Enzyme production, which helps break down fat, plunges by 90%. After two hours of sitting, your good cholesterol drops by 20%. Rath suggests taking short walks throughout your day, which can also help jumpstart creativity and make you more focused.
- Forgetting the snooze button. If you're hitting the snooze button every morning trying to get more sleep, you're making a mistake because studies show those broken chunks of sleep don't count toward the total amount of restorative sleep. One simple way to stop such a bad habit is putting the clock across the room, he says.
- Being smarter when dining out. Studies show that when dining out with a group of four or more people, you increase your consumption by 75%. The first person ordering sets the tone, which means that a colleague who orders fried chicken, for example, will prompt others to give into temptation and make an unhealthy choice. Try being the first one to order something healthy, and you're likely to influence others.
- Mixing it up. Many workers complain of chronic back, neck or wrist pain that comes from sitting at a desk and computer all day. Try switching a computer mouse to your non-dominate hand, or switching the phone from ear-to-ear while talking. Rath says he has trackpads on the left and right side of his computer to force himself to use both arms interchangeably. "Doing this for a few years eliminated my chronic wrist and shoulder pain," he says.
If you need more help in figuring out your health status and improving it, Rath also offers a free assessment on eatmovesleep.org . You can use it to build a personalized plan based on the content of the book.
Rath says he hopes that the book and the assessment will lead "to a few small behavioral changes that contribute to better days. It is these small choices that accumulate over time and eventually help people to live longer and healthier lives."
CFPB Hits Two Lenders with Thousands in Penalties over HMDA Data
Washington Federal, Mortgage Master respond to allegations
by Kerri Ann Panchuk, Web Editor of HousingWire.com - October 9, 2013
The Consumer Financial Protection Bureau fired a shot across the bow Wednesday, announcing thousands in penalties against two mortgage lenders for failing to accurately collect and report data on certain mortgages, as required under the Home Mortgage Disclosure Act.
The two targeted firms - Mortgage Master out of Walpole, Mass., and Washington Federal out of Seattle - will have to pay $425,000 and $34,000 in penalties, respectively, after the CFPB claimed it had found numerous data errors in the firms' mortgage applications.
The lenders released statements, with both highlighting the administrative nature of the alleged errors.
"After a rigorous audit, which took over a year, the Consumer Financial Protection Bureau raised a matter concerning our reporting under the Home Mortgage Disclosure Act," said Paul Anastos, president of Mortgage Master.
"Their finding was related to administrative errors in our reporting system, and the audit confirmed that no borrowers were harmed in any way, nor did any borrowers need to be refunded. We agreed to settle this matter with the CFPB and the state of Massachusetts," he added.
Washington Federal released its own statement, saying "We agreed to a consent order because we did not believe that the technical issues involved or the small penalty justified litigation. We are, however, disappointed with the harshness of the language in the CFPB's press release, which in our view is not consistent with prior discussions, including their repeated statements to us that the order is the equivalent of a traffic ticket."
The two firms entered into consent orders, agreeing to pay penalties while making adjustments to ensure compliance with the CFPB's guidelines under HMDA.
The penalties show not only the CFPB's power, but the compliance areas it considers non-negotiable in the data collection process.
In this case, the CFPB is asserting its power under HMDA-an act that forces lenders to make certain loan information available to the public. HMDA information is often used to determine whether a lender is in compliance with other mortgage-related laws such as the Equal Credit Opportunity Act, the Fair Housing Act and the Community Reinvestment Act.
"When financial institutions report inaccurate information, it obstructs the purpose of the Home Mortgage Disclosure Act and makes it more difficult for the CFPB to discover and stop discriminatory lending," said CFPB Director Richard Cordray. "Today we are sending a strong signal that no mortgage lending institution - whether bank or nonbank - should be able to mislead the public with erroneous data."
HMDA has been around since 1975, but Dodd-Frank transferred enforcement authority to the CFPB in 2010.
The CFPB's takeaway from the probes was that Mortgage Master and Washington Federal had systems that "were inadequate and that they had severely compromised mortgage lending data."
The CFPB claims it found significant data errors on 20,015 Mortgage Master loan applications filed in 2011, while Washington Federal allegedly had 5,785 applications with issues.
The firms are required to collect and resubmit their 2011 HMDA data, while developing compliance systems.
Washington Federal candidly expressed its reaction to the CFPB's press release on this issue.
"For the record, the consent order relates to very technical interpretations of application data, such as date of application, on a sample of files reviewed during an examination occurring over a year ago," Washington Federal said. "While we differ with their conclusions, we also realize that the CFPB has the final say and we will strive to meet their expectations in future examinations. Here at Washington Federal, we look forward to continuing our nearly 100-year track record of doing the right thing for our clients."
Dodd-Frank and Community Banks:
Your Guide to 12 Critical Issues
The American Bankers Association prepared this guide, which highlights 12 of the most important Dodd-Frank issues that will see action, to help community bankers prepare for, respond to and manage regulatory pronouncements that could have a significant impact on their institutions.
Each issue page includes sections on why it matters, what to watch out for and-most important of all-how bankers can get involved to influence the outcome. A list of ABA resources that can help bankers track and analyze the issues and tackle some of the compliance challenges associated with them is also included, in addition to a listing of staff issue experts for all Dodd-Frank issues. As always, ABA encourages bankers with questions or concerns to contact the issue expert on staff, as indicated on each issue page.
Download your Copy of Dodd-Frank and Community Banks: Your Guide to 12 Critical Issues
The Changing Face of Banking
article by Stephen M. Klein, Graham & Dunn PC
Chocolate and iPads at Your Branch
Umpqua Bank, headquartered in Roseburg, Oregon, just opened its flagship store in San Francisco. Among the amenities are coffee and chocolate tastings, iPads and computers for customer use, and mobile concierge services. This reflects Umpqua's new approach to branches and recognition of the need to utilize technology effectively. Whether others do it Umpqua's way or differently, the key to success is the recognition that bank branches and delivery systems will continue to change.
The Pace of Change is Astounding
As we all know, change is inevitable. However, what's startling to me is the rapid pace of change we are experiencing. Just the other day, I read a story about the unveiling of smartwatches, watch-like devices that will allow you to take pictures, surf the internet, etc., similar to a modern-day Star Trek scenario. They will be available this fall.
Recognizing that hard copies of books, magazines and newspapers may soon be historical relics, we all must be willing to adapt to change. It is unclear just what bank branches and delivery systems will look like in the future, but one thing for certain is that they will be different.
Thinking Outside the Box
One key advantage of community banks is their ability to be nimble and responsive. While the big banks have more economic and human resources, they don't have a lock on ideas. You may not want to be on the bleeding edge, but thinking creatively and untraditionally may be a huge advantage going forward. I am willing to wager that in just five years, the way bank branches look and operate, and the manner in which banks deliver products and services, will be vastly different.
I think there will be an advantage for those banks that plan for and adapt to the future proactively. Will a mobile bank calling officer replace the more traditional in-branch mode? What kind of interactive technologies will best serve your existing and potential customers? And, why not call them clients, instead of customers? (Sounds a bit more upscale, doesn't it?)
Survival Isn't Enough
Mere survival shouldn't be the goal for most community banks. The bar should be much higher. With consolidation inevitable, those community banks that choose independence should strive to excel. I really think there could be a renaissance for community banks on the horizon. Your success is only limited by your imagination. The face of banking will undoubtedly change. Are you willing to do the same?
The Key to Customer Satisfaction?
Just Take Care
written by Linda Coles, Speaker, Author,
Trainer and Content Creator. Author of "Start with Hello," founder of The Say Hello Project (reprinted from LinkedIn - October 9, 2013)
It's easy to grumble and groan about bad customer service, we all do it and we all experience it so when something really rather cool happens, I take note of it.
Over the last few weeks I have either heard stories of or have actually experienced myself a few things I would like to share. I share them because there might be an idea or two here that you can use for your own business.
- The real estate agent that carries a roll of red carpet in his car boot so that when he is showing people into a property, they have to walk up the red carpet. How do you think that makes them feel?
- I went to an appointment at an accountancy firm, to be greeted with not only a tray with teapot, cup, saucer and milk jug, but also a variety of chocolate biscuits. My own accountant who I pay each year has never offered me a drink yet.
- When my car goes in for service, the customer care team call about 1 week later to see if everything was satisfactory, and just as importantly, what can they do better next time?
- My car signage was peeling off after only 12 months and I thought I would have to get the remainder removed at my cost. The signage company simply said bring it in and we will do it all again for you. No trouble.
- The vet called to see how Molly my goat was after her visit.
- The dentist called to see how my sore tooth was after an investigative appointment couldn't find the cause. They had me back in the chair all fixed the following day.
Today I received a condolence card signed by the vet and her team after Molly had to be put to sleep.
It's the little things, the little touches of detail that make an experience special and stand out, even a sad one. It doesn't take much, it just takes care.
Your turn: What special experience have you encountered of recent? Let us know.
TITLE TIP: WHEN TO USE AN ARMS-LENGTH OR CURRENT OWNER TITLE SEARCH
provided by Gail Duffy, Title Services Manager, Virginia Title Center
Unsure about the benefits of requesting an Arms-length (Purchase Money) or Current Owner Search for a client during a refinance? Read on!
An arms-length transaction is a vesting deed with a simultaneous mortgage from an institutional lender. To complete an arms-length search the searcher must go back to the last link in the chain of title that includes a deed and a simultaneous purchase money mortgage in favor of an institutional lender. An arms-length purchase money transaction is considered as a good root to begin a title search for certain transactions because there is a high probability that title insurance was issued on the previous purchase money transaction.
In order to insure a property without a limited title search exception, an arms-length search is only acceptable on residential refinance or foreclosure transactions. This type of search is less expensive and takes less time than a full 40 year search. Savings can be up to $50 depending on the location of the property.
If the limited title search meets the requirements identified in the Residential Property Refinance Search Standards and a 2006 ALTA Loan policy is being issued on 1 to 4 family residential property, the following exception will appear in the commitment and final policy if the recording information for easements, restrictions, etc. is not supplied:
1. Covenants, conditions, or restrictions, if any, appearing in the Public Records; however, this policy insures against loss or damage arising from:
(a) the violation of those covenants, conditions, or restrictions on or prior to Date of Policy;
(b) a forfeiture or reversion of Title from a future violation of those covenants, conditions, or restrictions, including those relating to environmental protection; and
(c) provisions in those covenants, conditions, or restrictions, including those relating to environmental protection, under which the lien of the Insured Mortgage can be extinguished, subordinated, or impaired.
As used in paragraph 1(a), the words "covenants, conditions, or restrictions" do not refer to or include any covenant, condition, or restriction (a) relating to obligations of any type to perform maintenance, repair or remediation on the Land, or (b) pertaining to environmental protection of any kind or nature, including hazardous or toxic matters, conditions, or substances, except to the extent that a notice of a violation or alleged violation affecting the Land has been recorded or filed in the Public Records at Date of Policy and is not referenced in an addendum attached to this policy
2. Any easements or servitudes appearing in the Public Records; however, this policy insures against loss or damage arising from (a) the encroachment, at Date of Policy, of the improvements on any easement, and (b) any interference with or damage to existing improvements, including lawns, shrubbery, and trees, resulting from the use of the easements for the purposes granted or reserved.
3. Any lease, grant, exception, or reservation of minerals or mineral rights or other subsurface substances appearing in the Public Records; however, this policy insures against loss or damage arising from (a) any affect on or impairment of the use of the Land for residential one-to-four family dwelling purposes by reason of such lease, grant, exception or reservation of minerals or mineral rights or other subsurface substances, and (b) any damage to existing improvements, including lawns, shrubbery, and trees, resulting from the future exercise of any right to use the surface of the Land for the extraction or development of the minerals or mineral rights or other subsurface substances so leased, granted, excepted, or reserved. Nothing herein shall insure against loss or damage resulting from contamination, explosion, fire, fracturing, earthquake or subsidence.
For more information on arms-length or current owner searches, please contact Gail Duffy at 1.800.468.5811 or by e-mail.
VTC TEAMMATE FEATURE
Kara Ramsey, Title Insurance Underwriter
|Kara Ramsey, Title Insurance Underwriter, Staunton Office
Kara started her career in the real estate industry in 2000, starting off as an abstractor before spending three years as a real estate legal assistant.
From there, she spent time as a title insurance agent for Southern and Chicago Title, all in the Charlottesville, VA area.
Kara's move to the Valley brought her to VTC as a title insurance underwriter and settlement processor in the Staunton office.
Kara and her husband currently reside in Waynesboro, VA. Kara enjoys travelling, and often spends her weekends where she once lived, Washington DC. She enjoys visiting local vineyards and learning about every aspect of wine making.
You can say hello to Kara by e-mail or call her at 800.468.5811.
Click here to view information about other members of the VTC team.
The Battle of its vs. it's vs. its'
To use it's or its or its': that is the question. And it's a question that commonly confuses many a would-be writer. This is the mistake seen most commonly and glaringly used in government documents, slide shows, and billboards, and one that is so small-seeming that it is frequently skipped over. But it's also a very easy rule to get on top of. Read on and you'll never get it wrong again.
It's: This form is used exclusively as a contraction of 'it is' or 'it has'. When making contractions, the apostrophe takes the place of any missing letters (in this case, the 'i' in is and the 'ha' in has). That's it, folks: only use it's when you really mean it is or it has. Easy trick: read the sentence back to yourself, replacing it's with it is or it has. If the sentence no longer makes sense, you're using the wrong form.
Its: Usually, possessive pronouns are made using apostrophes, as in 'Sarah's toy phone' or 'the man's love of modern art'. But not with its. When you are making its possessive, you leave out the apostrophe: 'its weakness' or 'its pumpkin face'. Remember, the apostrophe-using it's is ONLY used when you mean it is or it has.
Its': Its' does not exist. We see it all the time, and we've probably all used it at some point, but there is no such thing as its'. So delete it from your memory bank.
1031 Exchanges: What are the benefits of Exchanging v. Selling?
A Section 1031 exchange is one of the few techniques available to postpone or potentially eliminate taxes due on the sale of qualifying properties. By deferring the tax, you have more money available to invest in another property. In effect, you receive an interest free loan from the federal government, in the amount you would have paid in taxes. Any gain from depreciation recapture is postponed. You can acquire and dispose of properties to reallocate your investment portfolio without paying tax on any gain.
To learn more about 1031 Exchanges, the process, and how it may benefit your client, register for the FREE webinar on November 12th at 2:00 p.m. presented by Carol Hayden, Executive Vice President of Investors Title Exchange Corporation.
IN THE WORDS OF A VTC CLIENT
"I just wanted to let you know how much we appreciate everything you [Laura Lesando] do for us. We are royal pains but you take such gracious care of us. Virginia Title is a very lucky company to have such a wonderful employee as you.
... Thank you again for everything. You have been a life saver more than once for me."
Carolyn J. Angell
MainStreet BankShares, Inc.
Visit the VTC testimonials page on our website to view additional client comments.
**Remember to offer your borrowers Owners' Coverage on their most valuable investment. It's a one time premium with a lifetime of security. In addition, they will receive a reduced premium rate when they obtain it simultaneously with your Lender's Coverage.**
WANTED: YOUR FEEDBACK
What Topics Are On Your Mind?
Virginia Title Center wants to provide you with pertinent information in future E-Blasts and Webinars. 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
1.800.468.5811 or 540.772.0585
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