The mortgage closing transaction is the single largest financial transaction in the lives of most consumers, and it is also the riskiest stage of the mortgage process for lenders. While the vast majority of lawyers, notaries and title agents are experienced, ethical and diligent professionals, for a few, the role of closing agent is too tempting a lure for selfish criminal intent. This monthly column addresses the good, the bad and the ugly …
January has brought us a New Year and new final regulations, including the qualified mortgage (QM). To say that lenders are scrambling to comply would be an understatement. Welcome to the age where compliance is one of the pillars of success in our industry!
You can’t make this stuff up!
►A closing agent in California called a lender to explain that he would be unable to attend the scheduled closing as he was arrested on the way there! He left his bail money on the closing table!
►A Massachusetts attorney died two days before the closing. No one knew. The borrower showed up, the seller showed up, and the title company showed up. Unfortunately, the money and documents never made it and since the borrower had never even met the attorney he had no idea how to reach him. RIP!
►A New Jersey title agency has dutifully been issuing CPLs in connection with mortgage transactions, apparently unaware that its underwriter terminated their agency relationship. I won’t tell if you won’t tell.
►A settlement agent showed up at a closing in Texas. Everyone was present but the transaction had to be adjourned. None of the other participants spoke English and the agent could not communicate with them. Could you repeat that?
In response to the huge security breach at Target that potentially exposed millions of consumers to identity theft, the U.S. Senate is taking steps to draft and pass new data security legislation. So much personal data flows around the closing table! Graham-Leach-Bliley requires banks to safeguard borrower data, and for mortgage lenders, that includes settlement agents who routinely handle a borrower’s financial and identity information. The HUD-1 is a veritable treasure trove of lucrative criminal material if it falls into the wrong hands. Lenders need to manage to whom they deliver personal data and monitor them to protect consumers.
Paperless has been a goal for techies in the industry for quite some time. It took forever for some, but with LOS systems, most lenders today are creating paperless loan files. When it comes to the closing, however, that has always been another story. Some companies, Doc Magic for example, have created amazing tools to allow for electronic document signing, yet to date, lenders and investors remain anchored to a physical closing file. The table has been set for a seamless, paperless closing in the very near future.
On a lighter side
Following the problems in the sub-prime lending market in America, uncertainty has now hit the Japanese financial community. In the last month, Origami Bank has folded, Sumo Bank has gone belly up and Bonsai Bank has announced plans to cut some of its branches. Karaoke Bank is up for sale and will likely go for a song, Kamikaze Bank was suspended after they nose-dived, 500 staffers at Karate Bank got the chop, and analysts report that there is something fishy going on at Sushi Bank where it is feared that staff may get a raw deal.
Andrew Liput has been a corporate, real estate and banking attorney for more than 25 years He is the founder, chief executive officer and president of Secure Settlements Inc., the first data intelligence and risk analytics firm to offer specialized vendor management services addressing settlement agent risk to mortgage lenders and banks nationwide. He can be reached by e-mail at [email protected].
This article originally appeared in the February 2014 edition of National Mortgage Professional Magazine.
