The real estate industry, being rooted in practices developed over generations, is slow to change. In today’s business climate, inflexibility can prove disastrous. But, last month, the South Carolina Supreme Court moved its real estate industry toward modernity by endorsing a national lender’s internet-refinancing process, which the court found satisfies the state’s existing requirements for attorney involvement. Continue Reading Internet Refinancings Take Critical Step Forward

If your company must publically file its service rates, you should consider attacks that plaintiffs’ lawyers have launched against other fee schedules. Also, keep in mind ripple effects that market-conduct examinations can have. A recent decision from a California appellate court highlights these dangers. Continue Reading Class-Action Trolls Covet Weak Spots in Your Filed Rates

Several clients of a prominent Ohio real estate brokerage, who claimed they were cheated by having to pay both a percentage-based commission and a $225 administrative fee, recently lost their effort to certify a class action. The ruling offers other real estate businesses valuable guidance about avoiding potential class liability. Continue Reading Real Estate Broker Defeats Class Liability for Allegedly Fraudulent Commission Fees

Rank-and-file employees in the real estate industry are normally—and understandably—loathe to add yet another form to the flood of documents parties already face at closing. But, once in a while, a lawyer’s insistence on using a new disclosure will pay off and a previously unwelcome paper will successfully ward off a massive legal attack. As the result of a recent court ruling, M&T Bank Corp. finds itself in that very position, thanking its forward-thinking attorneys. Continue Reading Disclosure Form Thwarts Lawsuit Over Alleged RESPA Violation

Nowadays, a crook can steal infinitely more money with a laptop computer than a gun. Hardly a week goes by without news of some large company’s computers being hacked. Given the real estate industry’s increasing reliance on internet commerce (and the seeming inevitability of e-closings), it was only a matter of time before cyber criminals turned their attention to home sales. Now, they have. Continue Reading Internet Thieves Target Escrow Industry

Wells Fargo Bank, N.A.’s former practice of charging more for broker price opinions (BPOs) than it paid for them could lead to class liability, a federal court in California ruled last month. The lone claim approved for class certification is a doozy: one count under the federal Racketeering Influenced and Corrupt Organizations Act (RICO). That disco-era statute, seldom invoked nowadays, is being dusted off and used by plaintiffs’ lawyers as a last-ditch effort to rescue seemingly doomed class actions. Continue Reading Wells Fargo Facing Class Action Over Alleged Racketeering

 

Prospect Mortgage LLC, a nonbank lender headquartered in Sherman Oaks, California, and the Multi-State Mortgage Committee (MMC), a representative body of state mortgage regulators representing the examination interests of combined states relating to lenders operating in multiple states, announced a $10.1 million settlement between Prospect and 50 state mortgage regulators. Continue Reading Prospect Mortgage Forfeits $10.1 Million to Resolve Dispute Over Undisclosed Fees

 

Systemic failures to serve notices of mortgage payment changes resulted in Wells Fargo Bank, N.A., having to pay $81.6 million in restitution earlier this month. Payment change notices (PCNs) are required for borrowers who file Chapter 13 bankruptcy and try to cure their existing mortgage delinquencies. Other mortgage servicers with lax PCN procedures should take heed of Wells Fargo’s costly lesson.

Continue Reading Wells Fargo Pays $81.6 Million Due to Faulty Mortgage Servicing

 

Last month, RealtySouth, an Alabama brokerage and subsidiary of HomeServices of America, Inc., defeated claims that it violated the Real Estate Settlement Procedures Act (RESPA). RealtySouth supposedly pays incentive fees to its brokers who steer business to its affiliated title company, TitleSouth. Whether this represents a lawful means of encouraging referrals among related entities remains to be seen. At the very least, affiliated real estate companies should be aware of the decision.

Continue Reading RealtySouth and Title Affiliate Dodge Allegations of Violating RESPA

With a recent ruling by a federal appellate court in Philadelphia, the string of victories for Mortgage Electronic Registration Systems, Inc. (MERS), continues unabated. Once again, a would-be class of county recorders challenged MERS’s practice of not recording mortgage transfers, and once again, an appellate court rejected the officials’ arguments. This much is clear: instead of fighting in court, county recorders are better off trying to change state laws.

In Montgomery County, Recorder of Deeds v. MERSCORP, Inc., officials claimed that state municipalities had lost nearly $100 million in recording fees as a result of MERS. The company, which was created in the 1990s, designates itself as the nominee of record for its members’ loans. That practice allows its members to transfer ownership of mortgage notes among themselves without having to record assignments—or to pay the resulting fees. Most of the nation’s larger lenders are MERS members. This system accelerates the selling and packaging of mortgage loans into mortgage-backed bonds.

In this recent ruling, the United States Court of Appeals for the Third Circuit found that Pennsylvania law does not require that all land conveyances be recorded. Instead, the statute at issue merely provides that unrecorded interests might be subordinated to a later bona fide purchaser for value. The Third Circuit noted that its holding was supported by decisions from at least two other federal courts, which  interpreted similar laws in Illinois and Minnesota. Earlier posts in this blog examined related opinions interpreting Kentucky law.

At this point, it looks like only legislative changes will turn the tide against MERS. Whether county recorders and other interested constituents have enough clout to accomplish that remains to be seen. It is unlikely. Unanswered is whether MERS members derive unfair benefits from recording processes that were never designed with private registration systems in mind. That at least is debatable.