NAILTA Supports: The 21st Century Glass-Steagall Act: H.R. 3711 and S. 1282:

Congress has introduced two pieces of bipartisan legislation known as the 21st Century Glass-Steagall Act – H.R. 3711 (co-sponsored by Rep. John Tierney (D-MA) and Walter Jones (R-NC)) and S. 1282 (co-sponsored by Sen. Elizabeth Warren (D-MA) and John McCain (R-AZ)) in an effort to reduce risks to the financial system by limiting banks’ ability to engage in certain risky activities and limiting conflicts of interest as well as reinstating certain Glass-Steagall Act protections that were previously repealed in 1999 by the Gramm-Leach-Bliley Act (GLB). Both bills would act to prohibit banks from becoming an affiliate of an insurance company, including a title insurance company. In this way, banks that currently own or have holding company structures that own or control financial interests in title insurance companies, whether closely-held or jointly-held, would have to terminate those relationships to comply with the bill mandate. Both bills are currently in committee in their respective chambers and their future is uncertain. NAILTA has researched the bills and the predecessor legislation from which they originate from and has drafted the enclosed position paper in favor of the bipartisan legislation. For more information on NAILTA’s position regarding H.R. 3711 and S. 1282, please click here....

The Sprint to January 10th: HFSC Won’t Vote on H.R. 3211 This Year

Last week, we updated you on our progress with H.R. 3211, the so-called Mortgage Choice Act, that is being pushed through Congress by RESPRO, the banking lobby and others with affiliated business interests in the title insurance industry. We are happy to report that according to our contacts from within the House Financial Services Committee (HFSC), H.R. 3211 will not be voted on in the committee prior to the end of the year. That means that with the exception of four Congressional business days in January prior to January 10th, the qualified mortgage rule will most likely go into effect without H.R. 3211 and affiliate fees will thereby count against the 3% cap for qualified mortgages. The fact that no vote is scheduled is good news. However, as with any successful endeavor in Washington DC, there are far too many well-entrenched and well-financed foes to celebrate the failure of RESPRO and their allies to get H.R. 3211 passed before January 10th. Instead, with H.R. 3211 sitting on the books for the 113th Congress, we fully expect that the affiliated business arrangement lobby, which includes title insurance underwriters and large AfBA title agencies from within the title insurance industry, to continue their efforts to get their law passed. In short, it isn’t over yet. The bill still has 26 co-sponsors, the vast majority of which are Republicans, and RESPRO has succeeded in getting the Ranking Minority Member, Rep. Maxine Waters (D-CA) to take a neutral position on the measure, thereby guaranteeing that if the matter ever comes up for a vote in the House Financial Services Committee that she will...

The Sprint to January 10th: Update on HR 3211

RESPRO and the banking lobby continue their efforts to push the Mortgage Choice Act in Congress. The bill now has 26 co-sponsors, the vast majority of which are Republicans, and RESPRO has succeeded in getting the Ranking Minority Member, Rep. Maxine Waters (D-CA) to take a neutral position on the measure, thereby guaranteeing that if the matter comes up for a vote in the House Financial Services Committee that she will not organize support to block it. The Mortgage Choice Act is the pro-affiliated business arrangement bill that is designed to modify the Dodd-Frank Act’s qualified mortgage provision and exempt all points and fees charged by those affiliates from the 3% cap on points and fees for qualified mortgages. If the bill does not pass, the qualified mortgage provision will go into effect on January 10, 2014 thereby requiring all affiliate fees to count against the 3% cap. Who is Fighting For H.R. 3211? RESPRO, the National Association of Realtors, the Mortgage Bankers Association, the National Association of Credit Unions, Quicken Loans, and others linked to the lending industry. Each of these trade organizations has an army of lobbyists who are pushing members of Congress to sponsor and endorse H.R. 3211. The argument in favor of H.R. 3211 is potently naive. Lenders and affiliates are telling Congress that without the bill they will not be able to lend to lower income Americans. Not to be outdone by the ridiculousness of the first argument, they are also telling them that consumers prefer affiliates because they are cheaper and faster than independent providers. The rebuttal to that argument is elementary. First,...

HUD Ten Part Test Held Unconstitutional in Court of Appeals

U.S. Court of Appeals Issues Ruling in Carter: Shortly before everyone left for their Thanksgiving holiday, the United States Sixth Circuit Court of Appeals in Cincinnati, Ohio issued a decision in the closely-watched Carter v. Welles Bowen Title, et al., case. The Carter case centered on the issue of whether the 1996-2 HUD Policy Statement, otherwise known as the Ten Part Test, was unconstitutional because it was too vague to be enforced. The Ten Part Test was created as a policy statement by HUD to help its enforcement of RESPA’s prohibition against sham affiliated business arrangements. In other words, under RESPA, any controlled business arrangement must satisfy the basic requiremetns of disclosure, non-restricted consumer choice and investment tied to ownership interests in order to qualify as a valid entity. Anything else would not be considered a bona fide provider of settlement services. Carter sued an Ohio controlled business arrangement consisting of a real estate firm and title company which was co-owned through a holding company also co-owned by Chicago Title Insurance Company, a well-known title insurance underwriter. The main allegation for the Plaintiff in the case was that the title agency and its ownership structure was nothing more than a sham conduit for illegal referral payments in violation of RESPA Section 8 and the 1996-2 HUD Policy Statement. The case has had a long procedural history winding its way through to the Court of Appeals on two separate occasions. The most recent of which focused on a lower court ruling that the Ten Part Test was unconstitutional as it was void for vagueness and thereby unenforceable. This prior ruling...

CFPB files amicus brief in well-known Edwards v. First American kickback case

On Monday this week, the Consumer Financial Protection Bureau(CFPB) files amicus brief in well-known Edwards v. First American kickback case. From the CFPB website – This case concerns the types of evidence a private plaintiff needs to put forward to demonstrate that a defendant paid for a referral in violation of the Real Estate Settlement Procedures Act (RESPA). The Bureau filed a brief arguing that, when a referral agreement is entered into as part of a transaction involving the sale of ownership interests, a plaintiff could prove that the defendant paid for the referral without necessarily showing that the defendant overpaid for those ownership interests. The brief also argued that, when a plaintiff receives multiple referrals to the same settlement provider, the plaintiff is not required to prove that the unlawful referral was the one that influenced the plaintiff’s decision to select that provider.   Click here for...

H.R. 1077 is Dead; Replaced with H.R. 3211

Never underestimate a determined opponent. On September 28, 2013, shortly before Congress shut down, a bipartisan group of representatives from the House Financial Services Committee introduced a RESPRO-sponsored piece of legislation known as H.R. 3211, the Mortgage Choice Act. Instead of proceeding on H.R. 1077, known as the Consumer Mortgage Choice Act, the new bill strips out the provisions regarding lender-paid compensation to mortgage brokers and loan level price adjustments charged by Fannie Mae and Freddie Mac and focuses solely on the naked attempt by the affiliated business arrangement lobby to except affiliated service charges from the 3% qualified mortgage cap.  H.R. 1077 is effectively dead, but in its place is proof that the affiliate provider’s efforts were never about the American consumer — but rather only for the benefit of banks and affiliated service providers supported by RESPRO. RESPRO and the banking lobby are now “all-in” on trying to find a way to raise the cost of residential real estate closings because on the affiliate provider side of a residential real estate mortgage transaction they can hide referral payments and kickbacks from consumers without running afoul of the 3% QM cap.  It is a desperate effort to profiteer at the consumer’s unsuspecting expense. H.R. 3211 is no longer teasing lawmakers with the idea that it helps American consumers, either.  It is an “all-out” assault against lower-priced and more qualified independent service providers.  Fortunately, there is still time to act. Independent land title agents defeated H.R. 4323 and H.R. 1077.  We can do the same to H.R. 3211.  We need your help. Enclosed here is a list of all of the current members of the...