Friday, April 22, 2016

UPDATE: SIX MONTHS INTO TRID REQUIREMENTS



It’s a new day!

Six months into the new TRID rules and in my experience and opinion, the transition appears to be going pretty smoothly. The Lenders issuance of their Loan Estimate and Closing Disclosure, along with complying with disclosure requirements seems to be working out too. Most Lenders I am working with are ready to close on time (many before the date of closing). Perhaps due to concerns of delayed closings and the possibility of disappointing their Clients has them working harder and expediting every file (which is GREAT NEWS!)

While there have been internal hiccups with computer software, at banking institutions and escrow companies, we are working around them. For the most part, this has not affected our Clients and the closing of their transactions. We continue to rely on our tried and true methods of operation for closing transactions, while some of the larger institutional Lenders are still working on getting their automated systems up and operating (they appear to be having continued difficulties). Again, this has not affected my transactions to date, though may affect others.

In my humble opinion, I expected the Escrow Industry to shoulder a heavier burden due to the new TRID requirements, though, in my personal experience, I have found that the Lenders are acting more independently and are carrying their own burden (which in years past is not the norm). Lenders and Mortgage Brokers had increased their demands on escrow holders to such an extent, Escrow Companies spent an extensive amount of time responding to repetitive (and quite frankly excessive and burdensome) requests for revised documentation. As of right now that process is being kept outside of escrow and in the lenders office, where it rightly belongs. However, I reserve the right to amend this statement in future, as it will not surprise me if, in time, Lenders and Mortgage Brokers shift more responsibilities and burden to escrow, as it has always been their M.O. (modus-operandi).

My hope is that things will continue to move in a positive direction. We do have a few challenges in the Industry and I have been doing some volunteer work with the Escrow Institute of California. The nice thing is that I know a lot more of what is happening in the Industry in California, as well as the nation. The Escrow Institute of California’s Board members are some of the most sophisticated and intelligent people I have ever met! In May 2016, they will personally meet with congressional representatives in Washington D.C. and lobby support and awareness for California’s Department of Business Oversight’s Escrow Licensees, whose members are one of the nation's most highly regulated (and ironically Lenders are demanding of additional and unnecessary regulation).

We are living in an exciting time, dealing with changes that have been thrust upon us. Many in the Industry, myself included, have tugged along providing services just like in years past. It is now that we must wake up and open our eyes! We must stay informed and connected. To educate ouselves and do all that we can to continue to be a strong, relevant mainstay in our communities and Industry.

You may find the following links of interest:

Consumer Financial Protection Bureau (CFPB) http://www.consumerfinance.gov/


Escrow Institute of California http://www.escrowinstitute.org/

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
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Thursday, April 21, 2016

BEWARE - You and Your Clients Are a Target For This Real Estate Scam



Originally posted to Real Estate, The Economy, and News on March 24, 2016

Cyber-criminals are finding new methods every day to steal personal and financial information. Their techniques range from phishing scams to buffer overflow techniques and brute-force password hacking. Banking institutions have found themselves under attack far more than usual in recent years, and have in turn begun to incorporate stronger security measures in an attempt to block hackers. As a result, many scammers/hackers have moved on to what they believe are "easier targets." focusing on normal people rather than financial institutions, Just last week, the Federal Trade Commission and the National Association of Realtors issued a warning to consumers that they must be hyper-vigilant in order to avoid recent phishing schemes that have been targeting closing costs on real estate transactions.

The National Association of Realtors, along with the Federal Trade Commission, issued their statement warning people to be on the look-out for a specific scheme targeting those involved in a real estate transaction. First, the hackers gain access to the email account of a customer, real estate agent, or escrow officer, and use the information to keep up-to-date on the transaction and determine the closing date. When they have figured out the closing date, the scammer sends an email that has been masked in such a way that they are able to impersonate the escrow company, title company, or real estate agent, telling the customer that the wiring instructions had a last-minute change. If the customer takes the bait, they send their funds to the scammer's account, which can be emptied in minutes.

Sepulveda Escrow utilizes encrypted and secure email when sending documents with sensitive and confidential information. In addition, documents can be returned via email through this secure portal. Sepulveda Escrow has also instituted new procedures to contact Clients directly to confirm details, rather than relying on email or contact through a third party. (Please see end of this blog for some helpful tips.)

It is imperative to know that cyber criminals don't always need to be able to break through firewalls or use high-tech software to get your personal information or access your computer's data. Quite often, hackers use more subtle tricks to gain access. Phishing schemes are one of the most common ways by which they trick potential targets. One example of phishing is when a hacker sends a mass email to a group of people and makes it look like the email comes from a bank or other online payment platform. The email requests that the recipient verify their login information by following a link. The link leads to a page that closely resembles the actual login page for the financial institution, but when the user inputs their login information, the hacker records the username and password, thereby enabling them to access the account and steal their money.

Another example of phishing is when a hacker contacts a target or a group of targets under the guise of an Official informing them that they have been the victim of a scam. They then tell the recipient that they can help them fix the damage, but first ask for certain sensitive information like Social Security number or bank information, to "verify" what data had been "stolen."  While you may look at this and think that the scheme is too obvious to be effective, statistics show that approximately 0.4% of recipients fall prey to such attacks. In other words, if a mass email is sent to 10,000 people, about 40 of them will have their information successfully stolen.

While phishing is historically the easiest and most effective method by which hackers are able to steal personal or financial information, there are several other methods. A buffer overflow attack, used by more sophisticated hackers, involves inputting many lines of code into an online form in order to overload the system and allow the hacker to steal data inputted by previous customers. A brute-force password hack involves a computer program that inputs all kinds of combinations of letters, numbers, and symbols, until the correct password has been found and the hacker has gained access to an email or other kind of online account.

Finally, hackers often package viruses or worms into free online software or as attachments to mass emails. Such viruses can enable the hacker to record keystrokes, thus giving them access to many of your passwords, or enable them to access built-in microphones or webcams on laptops. Simply opening such an email or downloading an infected attachment can lead to a virus being installed on your computer or mobile device. Fortunately, anti-virus software can often help to detect and remove these viruses, but hackers are constantly finding new ways to avoid detection by your anti-virus program. The best way to avoid getting such viruses is to be careful when downloading anything, and to avoid opening any emails that seem suspicious or come from unknown or unreliable sources.

Here are some tips to help you avoid being affected by similar scams. First and foremost, if something doesn't look right or feels even a little bit suspicious, don't hesitate to double-check it. Don't rely too much on emails. Instead, pick up the phone and call your escrow officer or realtor to make sure that everything you have received is correct. Don't open email attachments you aren't expecting. Additionally, you shouldn't trust financial information that has been sent via email, nor should you send any of your own financial information via email, because it usually isn't secure. In general, wiring instructions are sent by fax or encrypted email message. When inputting personal information on a website, check the address for "https," of which the "s" stands for secure, meaning that your information will be better protected.

Be very careful when opening attachments or downloading anything from an email, no matter who sent it to you. Just because you recognize the email address, doesn't mean that the message actually came from the person you associate with that email address. It's possible that a scammer could have hacked a friend's email, or could have disguised their email to appear as if the message came from a friend's email address. Proceed with caution. Being aware and cautious can save you a lot of hassle in the long run. 

Biggest Tip: Following up on the phone after sending an email may seem burdensome, but we at Sepulveda Escrow find that it is always worthwhile to go the extra mile to avoid financial losses and potential lawsuits.

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
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Sunday, November 1, 2015

The New Standard Practice: Our Latest Adventure



So here I am writing a post in my Blog called Escrow Experts, thinking that in this new Lending environment, I am anything but an expert. Learning as I go along and putting into action that which I learned in theory these last many months. The nice thing is that I am amongst good company. Throughout the nation, my peers, all respected professionals, are in the same proverbial “boat”.

As a quick reminder, as of October 3, 2015, we will no longer use the HUD1 Closing Settlement Statement, which has been phased out in exchange for the new Closing Disclosure.

There will be so much more liability on the lenders' shoulders, that the lenders will be issuing the Closing Disclosure based on an accumulation of fees provided to their office by the Settlement Provider (Escrow Holder). Consequently, the situation is now such that all fees as provided to the Lender must be actual, with little to no room for inflated Estimates as we have provided in the past. This creates quite a challenge, as in Escrow, we never really know what will be required of our office until the very end.

Consequently, effective October 3, 2015, Sepulveda Escrow Corporation has a new fee schedule, whereupon our office has done our best to keep our fees as close and reasonable as our previous schedule of fees, with the exception of including a small increase for archive fees and cost of living.

I also want to take this opportunity to explain something of great importance. During the last several years, our office has put a new protocol in place due to the terms and conditions in the lenders Instructions, and which some of you may not be aware of. Lenders require the Escrow company to be fully responsible and liable for the actions of the notary public performing the signing and notarization of the Loan documents (most require a One Million Dollar Errors and Omissions Policy of Insurance). Due to this burden of liability, our office requires Buyers to sign their loan documents in our office, and during our hours of operation. Doing so protects the Buyer on an even higher level by avoiding the documents being handled by outside notaries, Agents or Mortgage Brokers. (In the event of extenuating circumstances, such as out of State Buyers, our office has in place a Nationwide Signing and Notary Company who we employ to accommodate the signing). Each and every Manager of a direct Lender with whom I have spoken agrees with this as a necessary practice, and as such Sepulveda Escrow adapted this as company protocol.

While signing in escrow during office hours may not be as convenient as signing in one’s home at any hour of the day or night, every Buyer benefits in countless ways coming into escrow. It is a great comfort to meet and know the very person responsible for conducting the closing transaction which applies their hard earned money into homeownership.

Here at Sepulveda Escrow Corporation, we consider these changes in our Industry a challenge; preferring to accept this as an exciting opportunity to learn and incorporate new procedures into our every-day routine. And with that let me wish each and every one of us the best of luck, whether you navigate through these new times as an Agent, Broker, Mortgage Broker, Lender, Seller, Buyer or Escrow Officer. CHEERS!

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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.
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Wednesday, July 29, 2015

TRID Presentation Powerpoint Slides - July 16, 2015 SRAR Lunch and Learn










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Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
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TRID PRESENTATION NOTES FOR JULY 16, 2015 SRAR LUNCH AND LEARN






MELISSA MOTKIN, SEPULVEDA ESCROW CORPORATION
TRID PRESENTATION NOTES FOR THE JULY 16, 2015 
SRAR LUNCH AND LEARN

Here is a brief overview of how and why we are at the crossroads of such a dramatic change in our Industry.

As we all know, in the Fall of 2008 our Country suffered a severe financial crisis. We witnessed the fall and closure of many Institutions. There was an overall loss of wealth, which affected companies and individuals, along with serious unemployment. It was understood that large parts of our financial system operated with little to no Oversight.

President Obama signed the Dodd-Frank Act of 2010 to make sure that a crisis like this never happens again and to prevent the excessive risk taking that led to the financial crisis. The law also created a watchdog to prevent the exploitation of Consumers, which they thought would build a safer and more stable financial system, one that provides a robust foundation for lasting economic growth and job creation. This reform is designed to make sure that everyone follows the same set of rules. It demands accountability and responsibility from everyone. Helping Consumers to avoid the payment of hidden fees and penalties, along with loans they cannot ultimately afford. Cracking down on abusive practices in the mortgage industry, making sure Contracts are easier to read so people know what they are signing. Home Buyers will receive more information about the costs, and the risks, so that they can make better financial decisions. This consumer watchdog will be looking out for just regular people as they interact with the financial system.

This Consumer Watchdog organization is now known as the Consumer Financial Protection Bureau, the C.F.P.B., an entity created by the Dodd-Frank Act.

In short, its intent is to lower risk, promote transparency and protect the American public.

While the Dodd Frank Act also affects student loans and investment banking, specific to the mortgage industry, it mandates the combination of TILA and RESPA, the Truth in Lending Act with the Real Estate Settlement Procedures Act, combining the Loan Disclosures and Good Faith Estimates and the HUD1 Settlement Statement disclosure, into a single disclosure. The HUD1 will be replaced by the Closing Disclosure, in most transactions.

Most consumer mortgages are affected by this rule, with the exception of,



    • Home Equity Lines of Credit 
    • Reverse Mortgages 
    • Mortgages secured by a Mobile Home 
    • Commercial Loans 
  • where for the time being, the HUD1 shall continue to be utilized, though I do understand that the CFPB will be working on its replacement in time. 

    With these new regulations also comes a whole new vocabulary of terms. T.R.I.D. is an acronym for TILA RESPA INTEGRATED DISCLOSURES. That’s TILA for the Truth in Lending Act and RESPA for the Real Estate Settlement Procedures Act. 

    The Initial Truth in Lending Statement and Good Faith Estimate shall be replaced by a Loan Estimate. The Final Truth in Lending Statement and the HUD-1 are replaced with a Closing Disclosure, or C.D. as it will be commonly referred as. The regulation requires delivery to the Buyer, now known as the Consumer, three (3) business days prior to signing. (See attached List of New Terms and Acronyms). 

    Lenders must have the following to accept and begin processing a new loan;

    Six (6) items required to issue Loan Estimate:
    1. Consumers Name 
    2. Consumers Income 
    3. Consumers SSN (to obtain credit report) 
    4. Property Address 
    5. Estimated Value of the Property 
    6. Requested Mortgage Loan Amount 


    Some other new Industry terms include:

    • The signing shall be considered the closing and shall now be known as the date of Consummation; Our Lender will now be referred to as the Creditor and our Escrow Agent will now be called a Settlement Provider.
    Also, once the Consumer signs the promissory note and loan documents, he becomes legally obligated to the Creditor. While the date of consummation effectively means date of Closing, there is still some need for clarification on this front as the Lender has not yet funded the loan and the deeds have not yet been recorded.



    • TO AVOID DELAYS IN THE CLOSING DUE TO REQUIREMENT OF REDISCLOSURE IT IS RECOMMENDED TO:

    • Buyer to begin process well before entering into Contract 
    • Avoid last minute changes which will impact the Closing Disclosure 
    • Disclose to Lender Seller Credits 
    • Disclose to lender any Buyer paid Broker Admin Fees 
    • Comply with City ordinances prior to Appraisal, ie. Smoke detectors, carbon monoxide detectors, water heater strapping ALL to avoid need for Appraiser to return to the property. 
    • HOA Contact information 
    • Obtain HOA Documents before beginning loan process 
    • Buyer paid Termite Inspection/Repairs 
    • Avoid Additional costs at time of Walk Through 
    • Buyer paid Home Warranty 
    • Reimbursement for Broker Paid Costs 

    HOW THIS AFFECTS REAL ESTATE PROFESSIONALS
    1. Closings may take longer because of the three (3) business day review periods 
    2. Your contact information and license number must appear on the Closing Disclosure form 
    3. Your Clients may receive multiple Loan Estimates due to: 
      1. Changed Circumstances
      2. Multiple applications for different loan products with the same lender
      3. Multiple applications with different lenders
    4. Clients may receive multiple Closing Disclosures, some with three (3) business day waiting period and some without; 
    5. Some before closing and some after closing 
    6. Buyers lenders title policy will not show separately as a charge 
    7. Last minute changes will impact the Closing Disclosure delivery time, ultimately affecting the date of closing 


    In closing,
    • The new disclosures are intended to simplify the previously used forms. Last-minute concessions, changes to Agreement 
    • Requires Lenders to ensure borrowers have ability to repay their mortgage.
    • Prohibits steering incentives, dual compensation and levels the playing field for qualification and screening standards 
    • Protects Consumers from detrimental actions by mortgage servicers and provides Consumers with Better tools, information and protections for consumers facing foreclosure 
    1. Personal delivery of Closing Disclosure will help to expedite the closing 
    2. Electronic or email delivery are considered “mailbox” delivery. The CD must be sent Six (6) business days prior to Consummation (loan document signing). Mailbox rule gives three (3) business days for delivery, with a three (3) day review period, for a total of Six (6) business days. 

    Keep in mind that the Lenders are being held Legally Responsible for the actions or inactions of their Service Providers where Consumers are harmed as a result of failing to comply with Consumer Financial Law.

    Understanding the Lenders position is important and as Industry Professionals we must manage our expectations and the expectations of our Clients to be realistic so as to avoid disappointment. CFPB imposed Daily penalties $5,000.00 (failure to follow laws), $25,000.00 (gross negligence) , $1,000,000.00 (intentional violations)


    Possible scenarios of delayed closing. 
           Multiple loan Estimates due to: 
      1. changed circumstances 
      2. different loan products (programs) 
      3. applying with different Lenders
    Nationwide Learning Curve


  • New Word for the times! FLEXIBILITY, more so than ever 
  • Include additional wording in Contract allowing for additional time and cooperation of the parties, in the event extension is necessary due to re-disclosure 
  • Not to under estimate time period 
  • Avoid putting Lenders and Mortgage Brokers in a position to fail 
  • Utilize handouts of CFPB Toolkit and Closing Check List



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    Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on Facebook, Twitter, LinkedIn, and Google+.
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    GET “YOUR HOME LOAN TOOLKIT” HERE



    4/9/15 - The CFPB (Consumer Financial Protection Bureau) has distributed a Home Loan Toolkit which is beneficial to each and every Consumer purchasing a new home with new loan financing. Obtain your Toolkit at http://files.consumerfinance.gov/f/201503_cfpb_your-home-loan-toolkit-web.pdf

    The Toolkit advertises that after you complete the tools the kit provides you will;

    ~ “know the most important steps you need to take to get the best mortgage for your situation”.
    ~ “better understand your closing costs and what it takes to buy a home”.
    ~ “see a few ways to be a successful homeowner“.

    The following are a list of Sections in the Toolkit which are of interest to all;

    ~ “Choosing the Best Mortgage for You”
    ~ “Your Closing”
    ~ “Owning your Home”

    The CFPB offers a hotline where you can speak to a housing counselor at http://www.consumerfinance.gov/find-a-housing-counselor
    In addition, you can find additional tools and resources at http://www.consumerfinance.gov/owning-a-home and find answers to common questions at http://www.consumerfinance.gov/askcfpb

    Please also feel free to call our Escrow Expert at (818) 838-1831 as we at Sepulveda Escrow are always happy to assist you as well.

    Wishing you all the best in homeownership.

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    Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
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    EDUCATE YOURSELF NOW AND BE PREPARED FOR NEW CLOSING PROCEDURES



    4/7/15 - The world as we know it is changing!, That is the Real Estate, Mortgage and Lending Industries will be changing effective August 1, 2015 and it is imperative that we prepare ourselves as much as possible. This will affect your real estate closing time frame and it is best that we plan ahead when preparing your Purchase Contract (and Escrow Instructions).

    Under the new rules of TRID (TILA/RESPA Integrated Disclosure) which the Consumer Financial Protection Bureau (CFPB) has put in place, the Consumer must receive a Closing Disclosure three (3) business days before the consummation date. The referred to consummation date is defined as the date the Consumer signs the new loan documents.

    It is important to be aware that in the event the Buyer, now being called and referred to as “The Consumer”, does not receive the Closing Disclosure within this specific time framework, the closing will be delayed.

    TIP: While we will all be subject to a “learning curve”, it is of the utmost urgency that we do all that we can to prepare as much as possible to avoid complications at closing. While we will have to deal with issues at the time they occur, it may be prudent to incorporate into your Purchase Agreement and Escrow Instructions a provision for an extension to the closing date, due to delays in Buyers receipt of the Closing Disclosure (and prepare the Sellers to be more flexible in regard to the date of closing).

    The good news is that we have the entire country coping simultaneously with the same concerns and issues, which I believe should lend us support while we learn as we go along.

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    Find out more about us at www.sepulvedaescrow.net. Any Questions? Contact our Escrow Expert! Sepulveda Escrow Corporation (818) 838-1831. Follow our company on FacebookTwitterLinkedIn, and Google+.
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