Charles Jones Blog
I think we can all agree that 2010 was a challenging, and interesting year in the title industry. This year we saw new HUD revisions take effect, issues with private transfer fee covenants, homebuyer tax credit, historically low interest rates, slight increase in home prices, and in Pennsylvania title producers experienced the data call! It was quite a year!
The title industry was impacted by the revised HUD form. Title software providers hurried to integrate the new form with their software in time for the January start date. Having title fees included with other charges for the Good Faith Estimates further complicated a shrinking market. Title producers had to be even more diligent in their quotes and document preparation.
In 2010, the industry attempted to tackle the issue of private transfer fees, where developers collect a portion of a property’s sale price every time it is sold -- even after the initial sale. These fees are not always obvious or filed in the same way, and thus can cause concerns for the buyer and may result in title claims. But, there may be relief. According to the Title Report (Nov. 2, 2010), the US House of Representative introduced HR 6260 which seeks to prohibit these fees. In December, New Jersey addressed the issue with the passage and signing of A2861. In Pennsylvania, material progress was made, as final language was achieved with the sponsor of the bill. The PLTA believes that bill has broad, cross-industry support and will be introduced early next year.
In Pennsylvania, the Department of Insurance issued a data call to select agents requiring completion of detailed questionnaire on their business. This is similar the data call that the National Association of Insurance Commissioners (NAIC) has been considering nationally. According to ALTA Title News (June 2010), “The department said failure to respond to the request may result in revocation of an agent’s license. The department also indicated that in general, absent any specific exemptions that may apply, responses to this request may be considered public records under Pennsylvania’s Right to Know Law.” The American Land Title Association(ALTA) has been addressing the proposition of the national data call with the NAIC, and only time will tell how it may impact the industry. But, some believe that some form of a data call will be nationally adopted sooner rather than later. It appears that those on the national scene are working with the industry, which we hope will produce a process that it relatively painless.
The year also brought more foreclosures and those that do that type of business benefited. But, overall the industry suffered as borrowers struggled to qualify for primary or refinance mortgages. But, as we neared summer, some agents saw a motivation to buy as seasonality set in along with the use of the government’s homebuyer tax credit. And, did you all hear a short sigh of relief go through the industry? Short because once the homebuyer tax credit expired, sadly, so did most of the purchase business. And, what happened with home prices? Sort of a mixed bag, as Kiplinger’s reports, “After a drop of about 30% from their peak in 2006, home prices are, on average, up by about 5% this year. Even so, 20% of mortgage holders owe more on their loan than their house is worth” (Nov. 8, 2010)
But, as the summer was nearing an end mortgage rates decreased, and, refinancing activity picked up as consumers responded to the historically low rates. What a relief for those struggling to keep doors open and staff employed. Who would have thought we would ever see rates as low as 4.23% for a 30 year fixed fee mortgage?!
We experience a lot in 2010 and it is hard to believe that it is coming to a close. But, the industry made it through another challenging year.
Patrick T. Roe
Senior Vice President, Marketing & Sales