Fewer hands in the pie means more pie to go around

Happy Pi Day! What better day than Pi Day to remind homebuyers about all the hands in their "pie" so to speak when it comes to real estate closings.

It's no surprise that everyone wants a piece of the proverbial pie, from the real estate agent's commission to the lender's fees to the government's taxes and, yes, even the title company's charges.

Having to share some of your pie is a fact of life. Having to give up all of your pie is a tragedy of life.

Just like homebuyers, we don't like having to give up our entire pie. That's why we have held firmly as an independent title company – we will not share our pie, or profits, with referral sources through Affiliated Business Arrangements or Marketing Service Agreements.

Not all title companies feel the way we do. They happily share their pie with their referral sources because they believe they can make it up by taking more pie from unassuming homebuyers. Unfortunately, they are often right.

Homebuyers who understand how much dough is at stake, however, are often surprised by the cost difference between one title company to the next. When made fully aware of these differences, most homebuyers choose to spend less.

With fewer hands in the pie, as our company founder Todd Ewing likes to say, there's more pie for everybody. In this case it means a cost savings of up to $750 for our clients.

The cost savings we extend to our homebuyers is part of our revolutionary REAL Credit™ program, which reflects costs passed through to consumers who close with other, affiliated title companies. To date, the cost savings hovers above $8 million.

That's a lot of pie.

Refinancing home loan will require new lender's title insurance policy

Refinancing home loan will require new lender's title insurance policy

For those who closed with Federal Title in the recent past and who may be considering refinancing their mortgage, we'd like to let you know we can provide you substantial savings on your closing costs.

In addition to providing a reissue rate discount on your title insurance premium, Federal Title also offers repeat clients a $200 credit applied toward settlement fees. When you order settlement services through our website, you can save an additional $100.

We'd like to remind you that it's your legal right to choose your own settlement service provider. Often times borrowers are not aware or informed of this right and end up spending more on closing costs than they should.

Get a free and anonymous Quick Quote from us and see how it stacks up to your mortgage lender's title company.

As you may know, we are the leading independent title company serving the DC metro area, and our settlements are conducted by licensed attorneys – not inexperienced notaries. Our online reviews tell our story.

Close It!™ House of the Week: Lots of living space, an assigned parking space

We're headed over toward American University this week to check out a 1-bedroom condo in the AU-Tenleytown neighborhood. The unit, which is on the second level of a garden-style condo building, offers a spacious 732 square feet of living space and an assigned parking space. It's listed at $274,900.

This condo has an updated bathroom and a kitchen that features granite countertops, dishwasher and an electric stove. The unit has hardwood floors throughout as well as large windows that let in plenty of sunlight. The condo building is located near Glover Archbold Park, where trails and nature await. The culture and nightlife of the city are also not far away.

Assuming a homebuyer puts down 20 percent on a conventional loan, her cash to close number will be approximately $63,741.43. Monthly payments will then be around $1,733.42 per month, which includes the HOA fee. For a complete picture of the cash to close, including the seller's side of the transaction, try the Web version of Close It™ or download the free Close It™ iOS app.

'Grave concerns' about use of Marketing Service Agreements: CFPB

'Grave concerns' about use of Marketing Service Agreements: CFPB

Having determined Marketing Service Agreements involve "substantial legal and regulatory risk," the Consumer Financial Protection Bureau issued a word of caution to the mortgage industry in a compliance bulletin published Thursday.

"We are deeply concerned about how marketing services agreements are undermining important consumer protections against kickbacks," CFPB Director Richard Cordray said in a separate statement about the bulletin. "Companies do not seem to be recognizing the extent of the risks posed by implementing and monitoring these agreements within the bounds of the law."

Marketing Service Agreements, or MSAs as they are commonly known, are usually framed as payments for advertising or promotional services, according to the bulletin, but sometimes payments are actually disguised as compensation for referrals.

"It appears that many MSAs are designed to evade RESPA's prohibition on the payment and acceptance of kickbacks and referral fees," according to the bulletin.

MSAs often involve lenders, real estate agents and third-party settlement service providers such as title companies, and they undermine the primary purpose of RESPA, which is to eliminate "kickbacks or referral fees that tend to increase unnecessarily the costs of settlement services."

Offering a thing of value in exchange for a business referral, whether it's a written or an oral agreement, is a compliance risk that leaves participants vulnerable to civil and criminal penalties, according to the bulletin.

The bulletin goes on to state RESPA violations have resulted in penalties upward of $75 million since the CFPB began taking enforcement actions.

Here at Federal Title, we've been leery of MSAs for some time. They seem to have become increasingly popular over the last couple years as the CFPB has cracked down on their not-so-distant cousin the Affiliated Business Arrangement.

CFPB proposes effective date of Oct. 1 for new mortgage disclosure rules

Title companies and lenders who are bracing for one of the biggest shake-ups of the mortgage industry in decades may have a couple more months to prepare. 

The director of the Consumer Financial Protection Bureau announced a proposed amendment to push the effective date of the new mortgage disclosure rules from August 1, 2015 to October 1, 2015

The proposed amendment is up for public comment, and a final decision will be made afterwards; however, for all intents and purposes the new effective date is now October 1, 2015.

The CFPB discovered an "administrative error" in meeting the requirements of federal law, which ultimately resulted in the effective date being pushed into the fall. 

In a statement issued yesterday regarding the Know Before You Owe mortgage disclosure rule, Director Richard Cordray said:

"The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until October 1, 2015. We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time." 

Implementation of the new mortgage disclosure rules is expected to cost settlement service providers $67.8 million and lenders $207 million over the next five years, bringing the total cost to $1.3 billion.

Representatives from the American Land Title Association, American Bankers Association and Finance Policy Center for the Urban Institute testified before Congress last May, asking for a "hold harmless" period through the end of this year. 

So far efforts to establish a hold harmless period have been unsuccessful, while the proposed amendment is expected to go final shortly. 

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  • What are closing costs?

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  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

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Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.