Mortgage fraud always surprises me….

and you’d think by now title agents would STOP enabling or colluding to defraud lenders.

You know, younger, inexperienced, or stupid title agents might make the argument that they didn’t understand that having two settlement statements was mortgage fraud. Though they’d still be held accountable by authorities, someone might have believed them a year or two ago.

Now, anyone in this business who doesn’t know that sending a lender a HUD-1 that does not match up with disbursements is mortgage fraud is an absolute criminal or ignoramus and deserves to at least lose their license.

I had an interesting chat with a real estate agent in New York yesterday. Seems she represented a seller in a transaction which included a seller assist. All went well until the closing. The seller did not attend. The real estate agent also did not attend because the seller was represented by an attorney who said he would attend. Turns out he did not. For some reason no one on the seller side reviewed or approved the HUD-1 prior to closing.

Who signed the HUD-1 for the seller? Get this. The title agent signed for the seller and did so without authority.

The real problem is that the mortgage lender capped the seller assist and rather than contacting all parties to renegotiate the contract, this title agent created and signed a HUD-1 matching the mortgage lender instructions, THEN disbursed funds based on the contract.

WHAT? Yes, the HUD-1 was a total fabrication meant to satisfy the mortgage lender.


The real estate agent, once she discovered what had happened has been demanding that the title agent either undo the transaction or remit the balance owed to the seller so that funds do match up with the HUD-1.

I suggested that she report the facts to the Attorney General, the FBI, the state insurance department, the mortgage lender and the title underwriting company, oh, and also the Dept. of HUD.

We need to clean our business of title agents who are unable or unwilling to walk the straight and narrow line of fidelity. We need to have ZERO tolerance for bad guys or we won’t get this situation in the mortgage market under control.

MORAL OF THE STORY FOR CONSUMERS: Control your transaction. Review the HUD-1 before you close and make certain that the movement of money is correctly shown. There is no such thing as “off HUD” disbursements. Anything paid outside of closing must be disclosed on the HUD-1 as POC so that there is a money trail. Do NOT allow a professional in the transaction to convince you otherwise. To do so is to collude to defraud a mortgage lender. I have no idea if the buyer in this transaction or their real estate agent knew what happened, but even if they did not, they can be held accountable for mortgage fraud.

blogging and Facebook

Just wanted to report that the hyper-localized blog, Ligonier Living, has been going strong since March. It’s a blast and community participation continues to grow.

An interesting development is the crossover into Facebook. While we, the community contributors and me, continue to add links and create posts about businesses who still have no web presence, we’re also integrating Facebook links into Ligonier groups and somehow this is tying our community together in a really neat way. Ligonier Living has become a wonderful communication tool for our little town and a nice soft sell platform for the title agency.

Thanks again to Todd for teaching me how to do this and leading the way. ;)

Hi, folks, and Merry Christmas!

I’m sorry I haven’t been posting but there really hasn’t been much I wanted to say that would add value to your conversation here at Lenderama.

Anywho, I’m back with two messages.

First, I find the LandAmerica situation scary and fascinating. The 1031 Exchange program was surprisingly vulnerable. The strength of the title insurance reserves was refreshingly solid. Policy holders are safe. I am rooting for approval for the Fidelity bid and was happy when Fidelity set up reinsurance covering new business. We also write for Old Republic and so have backup, if needed.

Big news isn’t over in title but we’re pretty near the end of the cycle which follows the tail of mortgage lending.

Second, I’m just plain sick and tired of negativity and the media. I am convinced that we have cycled through most of what needed to flush out of real estate and mortgage lending and we are where we should be, the first to cycle out of trouble. Real estate always leads the cycle. The natural force of that economic reality would probably be gushing now if not for the fear peddlers. As it is, I still see it as a force that can’t be stopped and am just awaiting that crack in the emotional dam.

So, until then, be well, be merry and count your blessings. I am.

Ohio independent title agents decide to sue.

Contact person: Robert B. Holman, Esq.
(440) 232-9911



The Ohio Association of Independent Title Agents (OAITA) ( has filed a lawsuit
with the Ohio Supreme Court against Mary Jo Hudson, Director of the Ohio Department of
Insurance. OAITA, an association of independent title insurance agents in Ohio, seeks to prevent
the spread of kickbacks and referral schemes in the real estate industry by asking the Ohio
Supreme Court to compel the Director of the Ohio Department of Insurance to enforce currently
existing rules prohibiting banks, realtors and mortgage brokers and their subsidiaries from
engaging in the business of title insurance.

OAITA is represented in the newly-filed lawsuit by Columbus attorney E. Bruce Hadden, Medina attorney Gregory W. Happ and Oakwood Village attorney Robert B. Holman. The lawsuit alleges that Director Hudson failed to enforce current administrative rules based on long-standing Ohio statutes that prohibit banks, realtors or mortgage brokers, or any of their subsidiaries, from unlawfully steering Ohio homeowners and their real estate transactions to title insurance agencies owned all or in part by those same banks, realtors or mortgage brokers. The suit alleges that ownership of title insurance agencies by banks, realtors or mortgage brokers, known as controlled business arrangements, creates dangerous conflicts of interest by allowing those banks, realtors and mortgage brokers to obtain kickbacks and referral fees for steering Ohio homeowners to their own controlled title agencies. The lawsuit alleges that such conflicts of
interest violate Ohio statutes and that Director Hudson has failed to construe newly enacted rules in accordance with the long-standing law. The suit is the first of its kind in the United States and is an important step towards reducing the overreaching power and influence a bank, realtor and mortgage broker has over a homeowner’s real estate transaction and, in particular, a
homeowner’s statutorily protected choice of title insurance provider. The lawsuit is important
since many homeowners do not even realize such a choice exists. By permitting banks,
mortgage brokers and realtors to move into the title insurance business, the lawsuit alleges that
the ODI’s inaction has helped to feed the pervasive greed that has overwhelmed the real estate
industry in recent years. Considering the well-known impacts of the mortgage industry meltdown and the rise in foreclosures across the country, homeowners across Ohio are well-served by the OAITA’s action.

Independent title insurance agents serve as important checks and balances on the power of
banks, realtors and mortgage brokers to unlawfully steer homeowners’ real estate transactions to controlled entities. Members of OAITA are independent title insurance agents who refuse to give kickbacks or referral fees to banks, realtors and mortgage brokers for the real estate transactions they close. Instead, independent title agents: (1) help to reduce the cost of title insurance by not engaging in elaborate schemes to reward referral parties at the homeowners’ expense; (2) help to lessen the likelihood of real estate related litigation involving homeowners by not allowing referral party pressure to dictate closing requirements; and, (3) help restore trust and integrity in the fiduciary relationship that exists between homeowners and their settlement providers by insuring that only disinterested title agents provide title insurance services, not their referral parties.


Traditional title examination involves the judicial use of technology while not replacing human expertise. That said, it takes a bit of time and a bit of money and that’s where we’re caught in this crazy Catch 22. People want you to do all the work and pretty darn fast – almost never fast enough but if for some reason they change their mind, then they wonder WHY we processed it in the first place. HUH?

It only happens when the title order comes from a real estate agent or mortgage lender on behalf of a consumer. You see, consumers are pretty darn smart. They select our company for quality of service, expertise and fair price. Consumers understand when they place the order directly that the ordering of those services is a hiring decision. I explain Choose and Save and the value of placing a deposit up front versus being billed for cancellation should the transaction not close. Consumers make their choice – deposit up front or not – but either way they get it and if the deal falls thru, they understand they owe us for services rendered and always pay.

In the case of real estate agents and mortgage lenders, they don’t always get it – many do, but many don’t.

Here’s the case on my mind today. I received a call from a loan officer on August 20th – we had done business with him before but not for some time as he switched to working for a mortgage lender that is owned by a real estate company who also owns a title agency and he normally routes his business to the affiliated companies. In this case, he needed a speedy and efficient title agent, this client was a family friend, and so he chose our office. That’s very nice and we are happy to help. So…..

I ordered the abstract – a full 60 year search from a qualified expert abstractor with whom we have worked for years. [cost $130] I assigned the file to one of our closing coordinators, MC.

On 8/21, MC called the buyer and left a voice mail explaining who she was and giving him a courtesy heads up and a 48 hour window to opt into the Choose and Save Program. MC also created letters to the seller and buyer and to all municipal agencies. She created a file and faxed title confirmation sheets to the loan officer and real estate agents asking if they had preference for closing time, location or closer. MC cut checks payable to the various municipal agencies and sent them out with the lien letter requests. [cost for lien letters $165]

BTW – The “hello letter” MC created and mailed to the buyer on 8/21 contains – in bold – a heads up that we are processing a title order on their behalf and that if we are NOT to be doing so that they need to contact our office immediately as we have advanced money for abstract and lien letters and there will be a title cancellation fee for services rendered. There is an extremely small window in which we can cancel these things if there has been some kind of mistake.

After completing a full traditional title examination, we produced a title insurance commitment and mailed it to the buyer on 8/29 including copies of maps found at the courthouse and our plotting and a letter which reiterated that there would be a title cancellation fee should the transaction not close.

On 9/5 we received a call that the transaction was being cancelled due to property inspection issues. MC informed the buyer that we would be sending an invoice for $300 for title cancellation and he went crazy. Why had we done all of this work when he hadn’t decided fully to buy the property. I spoke with him suggested he should have that conversation with the professionals who handled his transaction as they ordered the title work on his behalf with full authority pursuant to the terms of the sales agreement he had signed. [PAR agreements include two clauses in which the buyer agrees to pay for title search, examination and cancellation. The clauses are in there to protect real estate agents from loss if the order the work and the deal goes south.]

The loan officer called and wanted to know why we were charging a fee, and I gave him all of the info I have just given to you. We had the pleasure of dolling out $295 to process the file, did a heck of a lot of work in the 7 to 10 day period following receipt of the order so that they would have their title commitment in time to meet their needs. We were only asking for $300.

The loan officer said he would be paying the invoice and I said that’s fine.

There are a few difficult issues here but the big one really is setting expectations. The buyer had conflicting expectations. On the one hand the buyer had a fast timeline expectation and that’s why the loan officer called upon us because he knew we could perform. On the other hand, the buyer had reservations about the structure and had a property inspection contingency. What the professionals in his transaction failed to do was to explain that in order to stay on target with his fast timeline expectation, it would be necessary to more forward and order services from a title agent while awaiting results of a home inspection. I feel certain that the buyer understood completely that he needed to pay the home inspector. He simply did not understand that he would also have to pay for title work – even though he had signed an agreement to do so.

If the consumer had placed the title order himself directly with our office, I would have had the chance to set the expectations in reality. I do it all the time and it works. We get loads of calls from consumers whose lender or real estate agent suggested they call us to place the order. That’s the smart way to do it. It recognizes the relationship between the buyer of services and the provider of services.

So, I’m tossing this post up here for the benefit of real estate agents and loan officers and consumers. Please understand that the ordering of title is the purchase of services. You wouldn’t go to a restaurant and order a meal, then cancel it after it was already prepared and placed on the table before you, would you?