Dear ITLA Members,
The ALTA 150th Annual Convention was held October 7th through 10th in Boston, just four days after the of the long awaited CFPB TRID Rule, now known as “Know Before you Owe Rule” became effective. This is the second ALTA convention that I have had the privilege to attend and just like last year, I was amazed and in awe of the enormous amount of work, support and initiatives the ALTA Board of Governors, employees and its many committee volunteers provide to the title industry.
In addition to many informative committee meetings, the convention was packed with General Sessions and Professional Development Sessions that largely centered on the challenges and opportunities ahead of us this coming year, as we continue to implement “Know Before You Owe” and continue to educate ourselves and our customers about cyber-security risks.
One very strong message spoken at the ALTA convention, is that our industry must do a better job explaining why title insurance is so beneficial to homebuyers. No law requires a homebuyer to acquire title insurance and the consumer will need help to understand the value of the owner’s title insurance policy in order for them to make an informed decision about whether or not to purchase it. We must speak directly to homebuyers about the value of title insurance and it is important that the message to the consumers is unified, clear and concise. To assist with this task, the ALTA created the Homebuyer Outreach Pro-gram (HOP) to help ALTA members easily communicate the benefits of owner’s title insurance with homebuyers, Realtors® and other real estate clients. HOP provides professionally-designed customizable PowerPoint presentations, letterhead templates and digital marketing resources for your homebuyer communications. In addition, the ALTA offers workshops, webinars and training sessions to help its members learn the best way to communicate directly with homebuyers and how to utilize all of ALTA’s Homebuyer Guide resources with ease. You can learn more at: http://www.alta.org/homebuyer.
Although it may seem overwhelming at times, thanks to the tireless efforts of our industry leaders both locally and at a national level, you can take comfort in the fact that you are not in this alone. The ALTA offers an enormous amount of information and tools to help its membership that can be found at www.alta.org/.
At the November ILTA Liaison meeting in Boise we discussed that many lenders are modifying their closing instructions and shifting liability onto settlement and closing agents. Remember to thoroughly read all lender closing instructions carefully. Some lenders are modifying instructions to hold settlement agents liable for violations of any laws at
the federal, state or local level including tolerance violations, etc. They are adding indemnity language or hold
harmless language that the settlement agent should not agree to provide. Some of the key items that you should look for include any increase in liability and additional responsibilities to the settlement agent that are not within the typical scope of work or function. Also keep an eye out for any timing requirements that cannot be met. If you are not able to comply with all of the lender’s requirements, be sure to address the issue before signing the lender’s instructions and closing the transaction.
The ILTA strives to keep its membership informed about issues that affect the title industry at a local level. You can learn about important issues at www.idaholandtitle.com where the ILTA posts minutes of the monthly liaison meetings, quarterly newsletters, and “alerts” about important local issues such as proposed new legislation, Department of Insurance rule changes and more. I encourage you to stay informed and get involved. You can contact the ILTA via email at *protected email*.
COMMENTS AND PARTICIPATION WANTED
As reported in the November Liaison Minutes there are two issues that working Committees are being formed. The issues affect members differently based on the market size and geographic location of members. The Board seeks comments from all members and Committees comprised of members representing all market sizes and geo-graphic locations. The issues reported in the November Liaison Minutes are:
1. Closings done in Counties different than where the property is located – Jim Scanlon from the Department of Insurance advised that from his northern Idaho trip an issue regarding escrow fees and CPL’s came up. The scenario regards title only orders where the escrow is retained by the referring outfit (in state i.e. from Boise or out of state). Out of state escrow companies are regulated by the Department of Finance. If in state, there is a question whether the escrow should be charged where the land is located or where the escrow is closed. Consumer issues have developed where the escrow is closed in a County where the property is not located and the escrow fee is greater than if closed in the County where the property is located. The scenario that has come to light is not where the matter is closed out of County for convenience or at the direction of the consumer but where the referring entity is retaining the escrow to generate escrow income. In these cases it appears that the consumer is not given notice or choice in the matter and could be paying more for service they could obtain locally in the County where the property is located. An additional issue this scenario creates is possible invalid CPL’s. A Committee is being formed to review this matter that will include Jim and a Department of Finance contact. Input and participation from Counties that are impacted/concerned with this scenario are encouraged to submit comments and/or volunteer to be a part of the Commit-tee. Please contact myself or a Board member if you have interest and please submit your comments so that your voice is heard.
2. Rule 56 Updates – In prior Liaison Minutes we discussed possible review of Rule 56 updates. Possible areas of discussion include trade association donations, marketing allowances, educational functions and technology advances. These issues affect members differently. Your Board wants all voices heard. If you have comments on these issues please submit your comments. You are also encouraged to volunteer to work on the Committee reviewing these issues. Please contact myself or a Board member if you can participate on the Committee.
by Matt Ryden
Kawamura v. Kawamura, Idaho Supreme Court Docket No. 42112 (August 24, 2015)
This case involves the characterization of real property held by married persons as separate or community prop-erty. Most significantly, the case continues the evolution of evidentiary rules applicable to such “characterization of property” disputes.
Facts: Jessica and Eric Kawamura married on August 4, 2001, and moved into home which Eric had acquired before the marriage. In 2002, Eric sold this home and used the proceeds, along with a $52,000 gift from his grandparents, to acquire “Home Two.” Home Two was titled in Eric’s name. The parties lived in Home Two until acquiring “Home Three” in December 2008. They paid for Home Three with (a) $172,000 in proceeds from the sale of Home Two and (b) a $78,750 loan from Eric’s parents. The grantees in the warranty deed were “Eric Kawamura and Jessica Kawamura, husband and wife.”
Procedural Background: In 2011, Jessica filed for divorce. At trial, the magistrate court held that Home Three was Eric’s separate property, despite the language in the deed to the contrary, because it was purchased with the proceeds of the sale of Eric’s separate property. The Court found that although the loan from Eric’s parents was partially repaid from Eric’s salary, which was community property, there was no claim for community reimbursement because the equity in the home had decreased.
On Jessica’s initial appeal, the District Court reversed, finding that the language of the warranty deed conveying Home Three to the couple “as husband and wife” was conclusive. The ruling was based on the “parol evidence rule,” which prohibits consideration of outside evidence (such as the character of the funds used to acquire the property) when the language of the deed is unambiguous. Eric appealed to the Idaho Supreme Court.
Holding: The Supreme Court agreed with Eric that the District Court was misguided in its exclusion of outside evidence. The Court rejected the notion that an unambiguous warranty deed is conclusive as to the characterization of real property. Instead, it noted:
Whether a specific piece of property is characterized as community or separate property depends on when it was acquired and the source of funds used to purchase it. The character of property vests at the time the property is acquired.
Upon considering the outside evidence, however, the Court upheld the District Court’s determination that the home was community property because: (a) the property was acquired during the marriage and was therefore presumptively community property; (b) the community was liable for repayment of the loan from Eric’s parents; and (c) both Eric and Jessica were identified as grantees. The single fact of the source of the down payment was in-sufficient to overcome the presumption of community property.
2015 ALTA Annual Convention Summary – Boston
The 2015 ALTA annual convention was held at the Westin in Boston October 7-10. While it’s been said before – the ALTA convention is a meeting worth attending. The ALTA convention has grown quite significantly in attendance over the past few years this year topping 1,000 in attendance. The convention is professionally pro-duced with video cameras, photographers, full stage, giant video screen approximately 15’x40′, teleprompters, multiple national speakers, fife and drum intros, etc. The energy and vibe are different than our regional Pacific NW convention – not better but very different with representatives from all the states, underwriters and vendors. In fact, regarding our much smaller regional convention I received several compliments at the ALTA convention regarding the content, speaker line up, and events we produced in Coeur d’ Alene earlier this summer. That said, the ALTA convention still carries a very different vibe and energy and is a unique experience worth attending, especially if you have not attended before.
Quite evident from the start was the evolution from last year regarding consumer studies and surveys. This year was scripted and the theme and message was uniform throughout from speaker to meeting to speaker as opposed to last year where convention was a bit Trump like in its spontaneity and the differing messages from some of the speakers. This year it was clear the past ALTA slogan “Protecting the American Dream Since 1907” was done and gone. ALTA concluded from studies that consumers don’t care about that idea and concept. Con-sumers don’t care about jargon and what and how we do what we do. What consumers do care about is why we do what we do. They care that what we do provides “Peace of Mind” and security and assurance regarding their real estate transaction. The new ALTA slogan has changed to a modern “Protecting Your Property Rights”. AL-TA went as far to promote that when asked what we do or in generally describing title insurance we simply state we provide peace of mind. This will undoubtedly lead to follow up in the order of what do you mean. That is when you can generally describe how title insurance protects property rights. As Cindy noted in her article ALTA has launched the Homeowner Outreach Program (“HOP”) and a Homebuyer Guide together with an overhauled HomeClosing 101. The direction is to increase consumer education on closings and the benefits of title insurance to create a more informed consumer.
Future ALTA goals include a focus on cyber security fraud protection. It is clear “bad guys” are getting more sophisticated with wire fraud, e-mail breaches and scams. This is an area every office needs to review as it is potentially the biggest threat facing the title industry in the next few years. Another goal that continues to devel-op is grass roots and the TAN initiative as it is an effective means of reaching legislators for the desired action we need. Convention attendees came face to face with grass roots action as ALTA lobbyists interrupted meetings to secure grass roots connections as issues came up regarding the House bill with a safe harbor to January for TRID closings. The White House had threatened to veto the bill so a super majority passage was needed to remove the threat of veto. ALTA was able to make a number of connections and during the meetings we were advised the bill passed with enough votes to protect against veto and now moves to the Senate. The bill is necessary due to CFPB’s reluctance to create a specific safe harbor timeline. The CFPB has said they are looking for good faith efforts and that compliance could be different for different players. These concepts along with verbiage used like “reasonable”, “purely” and “clearly” with no definition or parameters causes concern and the need for legislation.
Other focus areas are the NAIC concern with data breaches. The NAIC saw huge data breaches in the healthcare field and are ramping up focus on all data breaches. This dovetails with ALTA Best Practices and cre-ating secure working environments. The NAIC is concerned with what is being done to protect against data breaches. Another area of focus is a trend to strict liability. Colorado is facing legislation to implement strict lia-bility on underwriters . There was a recent Utah Supreme Court case that held an underwriter strictly liable for agent escrow actions. We previously reported and discussed a recent Washington Supreme Court case that held an underwriter responsible for its independent agent’s marketing activity violations. Other states seem interested in exploring this concept. Other meetings focused on updates regarding the CFPB and unanswered issues – i.e. rate calculations that show inaccurate information and how that reconciles with a better informed consumer.
Speakers supported ALTA themes. Don Neal from 360 Live Media discussed the lens you view your busi-ness. For example, Tesla does not view itself in the car business but the energy business. Apple does not view itself in the computer business but in the lifestyle marketing business. He suggested similar thought needs to go into viewing the title business because no one cares what you do or how you do it until they know what and why your business is important. They need to know why your business matters before they care about it. Neal dove-tailed with the ALTA theme of protecting your property rights from risks and threats that leads to peace of mind – the security and assurance to sleep at night is the what and why it matters for the title industry. Neal also focused on another theme that consumers are seeing our business much earlier than in previous times due to technology. Instead of learning about our business at the closing table consumers are discovering us at the kitchen table as they go online and investigate and search. Neal equated the title industry to AAA, Costco and H&R Block that view themselves in the business of providing peace of mind. Neal also continued a theme that has been said in previous conventions- telling our story. The better you can tell a story versus facts that our business provides peace of mind and then how it does that the more effective we will be in helping consumers and producers of title business understand our business and the value we provide. It’s similar to some of the more effective TV com-mercials that don’t focus as much on the product as much as they convey a story as to what they believe their im-age/message is regarding the lens they view themselves.
Mark Scharenbroich author of Nice Bike further supported the theme of telling our story by focusing on passion and connections. He stressed 1) having core values, and 2) the importance of relationships. Treat people the way you would want to be treated and make connections. It’s more important to be interested than interest-ing. You make connections by making it personal and making a remarkable experience – developing a story. This is made easier if you have a passion and joy in your work like it’s your last performance and you over deliver. Make it a habit for your business to deliver a baker’s dozen. Scharenbroich equated business to a journey . Jour-neys are different but he believes connections are key and “Thank you” are powerful words of making the connec-tion personal.
Michael Abrashoff author of It’s Your Ship was the closing speaker and also focused on relationships (internal ones) and best practices. Abrashoff took command of the USS Benfold which was one of the worst ranked ships in the Navy’s fleet and turned it into the top performing ship in the fleet. Abrashoff advised not to obsess over things you can’t control but over things you have control over. He reviewed the processes in place and asked questions and analyzed what works and doesn’t work. He also observed the best practices of others. Key findings for him were that people want to be treated with respect and dignity and people will follow leaders with integrity. Through his openness his crew came to believe and know that their ideas and input were not only solicited but would be heard, respected, and appreciated whether or not they were used. Abrashoff learned that his crew viewed past regimes as a tree of monkeys with the hierarchy such that the sailors were at the bottom.
Sailors advised as you look down you see smiling faces looking back but as the sailors look up they see some-thing quite different. Absrashoff changed the culture from one of strict hierarchy and rigidness to one of cama-raderie and esprit decor where his crew felt a unity of purpose and felt respected and appreciated.
We further heard from John Hollenbeck who was installed as the new ALTA president. John spoke in Coeur d’ Alene. His goals for his presidency to meet the changes and challenges our industry is facing include 1) continuing to implement TRID; 2) advancing the adoption of ALTA Best Practices; 3) speaking directly to homebuyers about the value of title insurance; 4) promoting regulatory compliance with an emphasis on market conduct, and 5) expanding our focus on cyber-security risks.
November 2015 Newsletter – DOWNLOAD PDF