November 1 2010

Patton Boggs

Sources with close ties to the Federal Housing Administration (FHA) are saying that the agency is likely to soon begin taking steps to address faulty foreclosures of FHA-insured mortgages as a result of the recent foreclosure furor. Significant action is expected against FHA-approved mortgagees and mortgage servicers who did not follow FHA’s prescribed loss mitigation requirements and foreclosure procedures. The Department of Housing and Urban Development (HUD) has already taken a more vigorous enforcement approach over the last several months and has apparently been galvanized into action on the foreclosure front by the wave of publicity about improper foreclosure procedures. If it intends to come down heavily on FHA-approved mortgagees/servicers, it has the means to do so.

HUD’s Mortgagee Review Board (MRB) will likely be the principal instrument of any assault on faulty foreclosures of FHA-insured loans. The MRB has been much more active under this Administration and now will probably wade into the foreclosure crisis. It can impose probation, suspension or termination (withdrawal) of FHA approval as sanctions on erring mortgagees and servicers. In addition, it has the authority, which it frequently uses, to collect civil money penalties from mortgagees/servicers for violations of HUD regulations and guidance. Presumably, HUD could take even more serious action outside the MRB’s scope if it discovers major misconduct, such as fraudulent filings.

Mortgagees who service FHA-approved mortgages should be concerned about the likelihood of FHA action. Loss mitigation and foreclosure procedures and case files of foreclosures should be carefully reviewed.

After the real estate market freefall in 2008-when title insurance revenues fell sharply and most major title insurance underwriters posted net losses-operating results rebounded in 2009, although total industry written premiums declined from 2008 levels. During the first quarter of 2010, however, title insurance revenues-helped partly by federal policy and tax incentives-improved compared with the similar period in 2009.

While revenues were down in the second quarter of 2010, most major underwriters posted positive operating margins through the first six months of the year. Despite economic uncertainties and housing market challenges-particularly given recent foreclosure processing issues-A.M. Best Co. has revised its rating outlook for the title sector to stable from negative, given strengthened capitalization and improved operating performance trends.

Posted via email from Title Insurance
Continuing Ed for Title Agents

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Ted C. Jones, Stewart Title’s Chief Economist, Discusses Realities of Economic Recovery

November 5, 2010 admin

November 4, 2010-Houston-

During the Institute for Regional Forecasting’s biannual economic and real estate forecast, Ted C. Jones, chief economist, Stewart Title, addressed many people’s questions regarding the future of the national and local economies and whether or not the national stimulus plan has really worked and if, indeed, the U.S. economy is really out of a recession.

The presentation, “History May Not Repeat Itself, But it Certainly Does Rhyme” – Mark Twain, held at the Hyatt Regency Houston Hotel in downtown Houston, provided the newest economic statistics on the global, national and local economies and included Jones’ interpretation of what they all mean, especially to Houstonians and the regional economy.

Jones questioned whether an economic recovery could be realized without adding jobs. While he does see job growth in the future, he said it would likely be ‘tepid’ nationwide in the coming 18 to 24 months. With statistics and an analysis of trends and econometric models, Jones dissected the current state of affairs of the global, national and local economies. In contrasting Houston’s economic performance in the past decade, Jones noted that while the U.S. lost 1.9 million jobs since September 2000, Houston added 300,000 jobs.

He indicated that the national economy basically is sputtering on fumes regarding job growth. He noted that deficit spending at a national level is not sustainable. The U.S. had $10.7 trillion of national debt (excluding Social Security, Medicare and Medicaid commitments) at the end of 2008 and is projected to grow an additional $10.53 trillion by 2020-and that assumes that there are no new Federal programs, that cap and trade does not pass, and that health care is essentially revenue neutral.

The national economy remains on life support from government spending. As the Federal Reserve System heads into a second round of quantitative easing (known as QE2), it shows little progress has been made by the multi-trillion dollar stimulus in the past 21 months. Just as University of Houston economist Barton Smith stressed the need for an exit plan by both the Federal Reserve Bank and the U.S. government in his economic forecast last May, Jones reiterated that no true recovery can be proclaimed until all of these economies can start growing again without life support.

via uh.edu

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Continuing Ed for Title Agents