August 2010


Dear ,

Mid-summer is the eye of the storm in the advocacy world. This summer, campaign fundraising slowed to accommodate the various legislator conferences taking place around the country. The TLTAPAC maintained a presence at each of the summer conferences and I was able to attend the American Legislative Exchange Council (ALEC) in San Diego earlier this month. This was a great opportunity to visit with Legislators while they were literally miles away from the distractions and demands of their daily lives. 

But summer is over and the storm is approaching as the next few weeks will bring a flurry of activity for TLTA staff and volunteers. The Legislative Committee met last week to discuss the TLTA legislative agenda for the 82nd Legislative Session which begins in January. Please take the time to review the committee roster and when you see the members, consider thanking them for their service as they will be working hard on behalf of the industry in the coming weeks and months.

If you have any suggestions for changes to the Texas statutes that would make life easier for the title professionals of Texas, we want to hear from you. You can send your suggestions to either me or Tedrah Hutchins, or join us at one of our 15 Regional Town Hall Meetings that we are holding across the state. The meetings kicked off last week in the Valley and will continue through the fall. Review the schedule and make plans to join us when we are in your neighborhood. This is a great opportunity to get an in-person update about TLTA activities, as well as exchange information with colleagues. 

I also want to point out a new feature in this month’s Dateline called the “Compliance Corner.” The Compliance Corner is where we will communicate relevant compliance issues within TDI regulations. We’re in active dialogue with TDI staff to identify areas where compliance seems difficult or lacking so that we may address issues with education or even by working to revise rules.

One of the issues we are currently working on with TDI is the implementation of H.B. 4338. We are still awaiting a notice for a hearing to address the bill’s implementation and last week, TLTA sent a letter to the Commissioner again emphasizing the importance of the Deposit Plan proposal to the overall success of the new minimum capitalization regimen envisioned by H.B. 4338. TLTA remains hopeful that we will be persuasive on this front and thus help implement a workable system.

TLTA also sent a letter last week to TDI outlining suggestions to streamline the licensing process. The TLTA recommendations contain long-term solutions but also some short-term measures, which if implemented, may help provide some immediate relief to our members with applications pending at the Department.

It’s also worth noting that TLTA will be further developing our strategies for a potential rule hearing this winter. The Regulatory Committee met this week to begin putting together agenda items for the 2010 biennial hearing. We’re seeking housekeeping items to improve the Basic Manual so if you are aware of a particular problem please let us know.

On the federal front, Congress has shifted into campaign mode. Traditionally, this means that we have seen the end of Earth-shattering legislation for the year. However, this Congress may still want to shatter the remaining pieces, so stay tuned as we carefully watch the progress of bills which may threaten the real-estate market such as H.R. 2454, or the “Cap and Trade” bill. The bill, as it passed the House, does not require “retro-fitting” as some have claimed. However, it may encourage ordinances such as the one recently passed by the City of Austin, which requires energy audits and significantly pushes up the costs of a home sales transaction. The original version of this ordinance required retro-fitting older homes before they could be sold. Given that this is a policy being promoted in the U.S., it may be prudent to remain diligent that it is not either financially encouraged or mandated by Washington D.C. 

Also, the Federal Reserve announced the adoption of rules related to Regulation Z (Truth in Lending). As you may recall TLTA commented on the proposed rules expressing our concern that inclusion of title fees in the APR may hurt many Texans. The adopted rules did not include the APR provision, however, they indicated that that is a change which may still come.

Finally, the Private Transfer fee issue has been a hot topic nationally. Recently, the Federal Housing Finance Agency proposed rules which would effectively end the use of private transfer fees on residential properties. However, there has been some push back from the home owners’ association industry as their private transfer fees would also be part of the ban. The TLTA Board recently reaffirmed its opposition to the practice of private transfer fees. 

Until next time, enjoy the rest of your summer and if you have any questions please do not hesitate to contact me.

Sincerely,

Aaron Day

FEDERAL NEWS

Administration Bringing Back the Homebuyer Tax Credit?

After a worse than expected falloff in home sales during the month of July, buzz about a possible revival of the federal homebuyer tax credit has begun to surface. Sales of previously owned homes plummeted 27 percent last month, hitting their lowest mark in 15 years. New home sales also took a dive, dropping nearly 13 percent. Both reports were clear indications of the frailty of the housing market post-stimulus. HUD Secretary Shaun Donovan says the July numbers were worse than was expected and are cause for concern, and he's not ruling out a return of the tax credit incentives. Read the full article.

Geithner: Fundamental Change Coming to Housing Finance System

The U.S. Treasury Department held its first conference last week on housing finance reform and the future of Fannie Mae and Freddie Mac. Treasury Secretary Timothy Geithner said in his opening remarks that “fundamental change” is coming and that the Department has so far received over 300 comments in designing a new housing finance system. He posed four major questions for reform:
What is the role of the federal government in providing stability in the housing market in good times and in bad, including insurance or guaranty? Geithner said he believed the government could provide a “carefully designed guaranty.”
What is the government’s role in providing affordable housing accessibility?
How can the government ensure a well-functioning securitization market?
How can we best manage the transition, the winding down of the government-sponsored enterprise's and weaning the housing markets from government assistance programs?
Geithner said the solutions must be bi-partisan and that the process must be more than an “elegant funeral” for Fannie Mae and Freddie Mac. HUD Secretary Shaun Donovan also said that the federal government must have a “smaller footprint” in the housing markets. Panelists who spoke included the heads of Wells Fargo's and Bank of America's home loan divisions; Bill Gross, co-founder of PIMCO, the world's biggest bond fund; and Lewis Ranieri, chairman of Ranieri and Co. Inc. and co-creator of the mortgage-backed security.

Geithner promised there would be more conferences in the future, including regional conferences. TLTA will continue to monitor the housing finance reform conferences and any developments that might impact our members. Read morefrom the conference.

Fed Adopts Rules Banning Yield Spread Premiums

The Federal Reserve this month moved to end a controversial lending practice that many believe helped propel the housing boom to unsustainable heights and then accelerated its collapse. The Fed announced that it was adopting new rules banning yield spread premiums, which allowed mortgage brokers and lenders to gain additional profit from loans by charging borrowers higher-than-market interest rates. Reaction to the change was muted. The recent package of financial reforms passed by Congress this summer had also already addressed the issue. Read the New York Times article.

FHFA Proposes New Restrictions on Transfer Fees

The Federal Housing Finance Agency (FHFA) recently proposed guidance for public comment that would restrict Fannie Mae, Freddie Mac and the Federal Home Loan Banks from investing in mortgages with private transfer fee covenants. The guidance would extend to mortgages and securities purchased by the Federal Home Loan Banks or acquired as collateral for advances in addition to mortgages and securities purchased or guaranteed by the Enterprises. 

Private transfer fee covenants require a private transfer fee upon each resale of the property. FHFA has expressed concerns about the fees in congressional testimony and other statements. A Notice of Proposed Guidance that has been sent to the Federal Register for publication details these concerns and seeks public comment on the proposal. In July, the TLTA Board reaffirmed its opposition to private transfer fees. View FHFA’s full statement and the Notice of Proposed Guidance here.

Federal Reserve Announces Changes to Reg. Z

The Federal Reserve Board last week proposed new rules for home mortgage transactions. The proposal includes significant changes to Regulation Z (Truth in Lending) and represents the second phase of the Board's comprehensive review and update of the mortgage lending rules in the regulation. The proposed changes reflect the results of consumer testing by the Board, which will begin accepting public comment. The latest proposal would: 
Change the disclosures consumers receive for reverse mortgages and impose rules for reverse mortgage advertising
Prohibit certain practices in the sale of financial products with reverse mortgages
Change the disclosures that explain a consumer's right to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right
Ensure that consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan
TLTA will continue to monitor changes to Reg. Z and keep you posted of any new developments. Read the Federal Reserve Board’s full statement here.

NAIC Title Insurance Task Force Adopts Stat Plan

The National Association of Insurance Commissioners Title Insurance Task Force this week adopted a proposed title insurance agent statistical plan as well as a revised Quarterly and Annual Statement Instructions for underwriters. As we previously reported, the NAIC undertook a project to create a model statistical plan to gather information about agents and title companies. The plan is much like the Texas statistical report but it won't be as comprehensive. The purpose of the NAIC plan is to learn more about the relative costs of title insurance services across the nation.

TLTA and ALTA both worked to provide constructive input, with the goal of producing information that gives regulators a better understanding of our industry while avoiding confusion about how the title industry works and why the services cost what they do.

It is not anticipated that the report by NAIC will threaten or change the Texas plan that is currently working and it will be up to individual states to adopt the plan if they wish. TLTA will monitor this issue and work closely with TDI. If you have any questions, please contact Aaron Day at 512.472.6593.

FHA Delays Mortgage Insurance Premium Structures

The Federal Housing Administration (FHA) has decided to push back the implementation date for new premium structures on FHA mortgage insurance to October 4. The move comes after lenders complained that they need more than five weeks to update loan disclosures and computer systems.

FHA Commissioner David Stevens has said that upfront premiums for FHA mortgage insurance would be rolled back from 2.25 percent to 1 percent on September 7, while annual premiums would nearly double. Read the full article.

HUD Revises Settlement Cost Booklet

This week, HUD provided a revised version of the Settlement Cost Booklet under the federal Real Estate Settlement Procedures Act.

HUD has not provided any guidance to the changes, and TLTA is reviewing the changes. HUD also revised the booklet in July.

The previous changes added the following statement in the discussion regarding a survey on page 20: “Even if not required by your lender, information provided by a current property survey, such as the true property lines and any encroachments, can alert you to any problems with the property.” 

TLTA Webinar on Financial Reform Legislation

Join us on September 8 when TLTA offers the webinar: The New Financial Reform Law: How it Impacts the Title Industry, Real Estate and Your Business. A large section of the 2,300-page bill is devoted to reform of the mortgage market and in the coming months, will begin to affect financial markets - and you need to know what impact it will have on your business.

ALTA President Kurt Pfotenhauer will open the Webinar with remarks and James E. Hyland of the Pennsylvania Avenue Group will discuss how this new law will affect our industry, the economy and your business - possibly for years to come. Hyland has served as TLTA’s Legislative Counsel in Washington D.C. for six years and has worked under U.S. Senator Kay Bailey Hutchison (R-TX) and the U.S. Senate & House Financial Services Committee Staff for 12 years. Sign up for this important Webinar today!

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REGULATORY NEWS

COMPLIANCE CORNER

No Need to Turn in Tax Withholding Report Until Rule Adopted 

TLTA has confirmed with TDI that proof of payroll tax payment as laid out in H.B. 4338 does not need to be submitted until after the rulemaking process has been completed. TLTA anticipates an agent insolvency hearing will be called some time this fall by Commissioner Mike Geeslin.

Licensing Task Force Submits Streamlining Proposal to TDI

TLTA recently submitted a proposal to TDI with the goal of making process and regulatory changes to streamline the agent licensing process. In the proposal, TLTA made several recommendations including:
Ending the requirement that the underwriter inspect all existing agent title plants when that agent adds or removes a county
Creating a place on the TDI website to post the status of license applications to decrease delays relative to agents receiving feedback about applications
Implementing use of digital technology and taking advantage of e-mail and scanned copies of documents whenever possible
Reducing the licensing backlog at TDI by establishing a rule whereby license applications may be deemed approved after a reasonable period of time
TLTA will provide updates as we continue this process. If you have any questions, please contact TLTA at 512.472.6593. Read the full proposal.

TEXAS LEGISLATIVE NEWS

Texas to Continue Seller Financing De Minimis Exemption Under SAFE Act

Doug Foster, Commissioner of the Texas Department of Savings and Mortgage Lending, has written that the Department will continue to allow the statutory seller finance de minimis exception, which has long been allowed under Texas statute but had been placed in doubt since the recent passage of the Texas SAFE Act.

The federal SAFE Act requires mortgage loan originators to be licensed in each state. During the 81st Legislative Session the legislature passed the Texas version of this requirement. Since the passage of the new law, the status of the de minimis exemption, which allows for a limited number of transactions each year without a license, has been in question. The exception says that no license is required to seller finance transactions of five or less in a 12-month period. Read the full story.

Senate IGR Committee to Hold Working Group Meeting

The Senate Intergovernmental Relations Committee (IGR) is scheduled to hold a working group meeting on September 9 to further discuss the inability for hurricane victims to establish clear title, which has proved to be a significant barrier to their obtaining post disaster federal aid. 

Committee Chair Senator Royce West Chairman reached out to TLTA to assist the committee in its interim discussions and TLTA volunteers Richard Black, Guy Robert Jackson and Roland Love have agreed to be a resource and participate in the meeting. If you have any questions, please contact Aaron Day at aaron@tlta.com or Tedrah Hutchins at tedrah@tlta.com.

November Voter Deadlines Approaching

Last Day to Register to Vote – October 4
First Day of Early Voting – October 18
Last Day of Early Voting – October 29
Election Day – November 2
Visit the Texas Secretary of State’s website for more voting information. You can also get involved in TLTA's Voter Registration Initiative here.

JUDICIARY NEWS

Higher Court Reverses Section 8 Fee Claim Dismissal

The 3rd Circuit ruled this month that a lower court was wrong to dismiss a RESPA Section 8(b) claim. In the case of Tubbs v. North American Title Agency Inc., the plaintiffs alleged that the recording fee charged to them by their title company was in violation of RESPA Section 8(b) because the plaintiffs were already charged for that same service by their lender. Read more here.

AG Issues Opinion on Property Tax Lien Lenders

In January, Representative Burt Solomons filed a request for opinion with the Attorney General’s office inquiring whether “a property tax lien lender with a property lien secured by a priority lien, with the power to force sale, perfected prior to the property owner’s 65th birthday has the right to continue collections and even forced sale under Texas Tax Code §§ 36.06 and 36.065 after a property owner turns 65 or must they wait to complete the collections until 181 days after the owner no longer owns and occupies the property?”

At the end of July, the AG’s office issued Opinion GA-0787 which states “…the property tax lender will have the same rights with regard to the tax lien as the taxing unit possessed prior to the transfer of the lien. Likewise, if the taxing unit is prohibited from continued collection efforts, foreclosure or sale, the property tax lender in your proposed hypothetical would be prohibited from the same.” View full AG opinion.

TLTAPAC

Committee Leadership Challenge

At the Summer Board meeting, the TLTA Board of Directors and Committee Chairs kicked-off the annual TLTAPAC fundraising drive by contributing over $24,000. They then challenged TLTA’s 18 Committees to collectively match or exceed the Board’s effort throughout the year. So far, the Education Committee is in the lead with $2,310 with more committee meetings scheduled over the next few weeks.

Why I Give…

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Celia
Goode-Haddock
University Title 
Company

• My livelihood and that of my staff depends on a healthy title insurance industry free of onerous regulations. This does not just happen on its own. It takes all of us doing our part to support the industry that supports us.

• The TLTA staff does an outstanding job of educating our legislators and contributions from the TLTAPAC make senators and representatives more receptive to the message.

• For many years I have been politically active locally, statewide and nationally and I know that elected officials are more receptive to those who support them financially.


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TLTAbay Coming Soon!

The TLTAbay Online Auction is an annual fundraiser benefiting the TLTAPAC. The auction will begin at 10:00 a.m. on Thursday, November 4, 2010 and end at 4:00 p.m. on Friday, November 12, 2010. 

We need your help to secure auction items and ensure another spectacular year. Suggested donation items include: electronics, gift cards, sporting event tickets, travel vouchers, vacations, spa packages, services and jewelry.

Donate an item or contact Ryan Poulos for more information. 

NEWS TO KNOW

Industry Stats


Indicator Release Date Latest Release Change from Previous Release
30 Year Fixed Mortgage Rates 8/12/10 4.44% -0.05
15 Year Fixed Mortgage Rates 8/12/10 3.92% -0.03
10 Year Treasury Rate 8/13/10 2.68% -0.06
Existing Home Sales (in millions) 7/22/10 5.37 -5.1%
New Home Sales 7/26/10 330,000 23.6%
Supply of Housing Inventory 7/26/10 7.6 months 0.7 months