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Decisions . . . Decisions . . . Decisions . . .

The August 1, 2015 implementation date for the new loan and closing disclosures will be here before we know it. Prior to that time, lenders will need to be making a number of process related decisions. Each decision is sure to have an effect on the ability of lenders to be compliant with the new regulations. Of equal importance, each decision will also be judged by the marketplace in the context of how reliable the lender is at meeting time frames and how easy they are to work with.

Two critical decision areas are:

  1. Is the lender going to prepare and deliver the closing disclosure (f/k/a HUD‐1) to the borrower or is the lender going to delegate that responsibility to the settlement agent? Or will the lender choose some combination of both?
  2. Is the lender going to confirm receipt of the closing disclosure by the borrower three days prior to closing or is the lender going to mail the closing disclosure seven days prior to closing. If the lender chooses to mail the disclosure, receipt of it by the borrower is presumed. Clearly less regulatory risk and record keeping, but possibly more process issues surrounding working that far ahead.

Wells Fargo and Bank of America announced that they will prepare and deliver the closing disclosure in order to minimize the regulatory risk. As both of those institutions have run afoul of the CFPB in recent times, minimizing the regulatory risk is probably very important to them.

John Bethell Title will be prepared to close transactions under all the above scenarios. As your decision making evolves, we are available to consult with you about the best way to integrate our respective responsibilities in the most cost effective and compliant manner. Don’t hesitate to let us know how we can help.


We’re pleased to announce that Liz Bunton has been promoted to manager of our closing department. Liz joined us three and half years ago as a transaction coordinator. She is well respected and liked by her teammates and our clients. Liz will lead, manage, and be accountable for all aspects of our Anxiety Free Closing process and for delivering upon our promise to provide an outstanding closing experience to our clients every day.

~John

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The 2014 purchase market tried but could not match an Andrew Luck game winning drive. Instead it ended just short of beating 2013. You will recall that after a frigid first quarter the purchase market started down over 10% year over year. Fueled by lower interest rates and stronger consumer confidence the fourth quarter of 2014 was up more than 11% from the previous year. The strong year end resulted in a year over year difference of only 2.7% down. Quite the pick me up heading into 2015, don’t you think?

Looking at the deed numbers (see chart page 13), I still think we’re below a normal market. We haven’t had even 2100 transactions since 2008, a year which due to the subprime mess had only three quarters of activity. The market prior to 2008 was juiced by the subprime market. Homebuyer tax credits inflated the market (another football reference in case you missed it) in 2008 and 2009. Assume that a normal market is 2400 or 2500 transactions. That might indicate a pent up demand of three to four thousand transactions has been created since 2007. Definitely a nice thought.

I also noticed in the sales disclosure data (charts pages 16 and 17) that the decline in the 2014 market is solely attributable to properties that the buyer indicated would not be their primary residence. That would be investment, vacant land and commercial transactions in most cases. Primary residence sales have climbed modestly each of the last four years.

A stronger recovery in the new construction market will be required to reach normal levels. With a stronger economy and more confident job prospects, the next few years look much better for the purchase market.

The mortgage side of things however is not so rosy. In fact, mortgage originations are at their lowest level since possibly the mid-1990’s. Fortunately for the survivors, the number of mortgage providers is also at a low level compared to eight years ago and before. Those that are left are sharing what market there is with fewer competitors.

I’m feeling really good about 2015. I think there’s a much better chance that it will exceed our expectations than fall short. And if that happens, we will be right in the middle of the CFPB regulatory changes to the loan disclosure and closing processes! Oh joy! Oh rapture!
~John Bethell

 

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Our Referral Promise

We are grateful for the opportunity to work with you and your client. We promise that our team will create a closing experience for you and your client that is outstanding. Your opportunity to gain a referral will be enhanced by the closing experience that you and your clients receive at John Bethell Title. If you don’t agree let us know and we will do whatever we can to make things right.

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Change to Wire Transfer Procedures

Effective immediately we are changing our protocol for furnishing wire transfer instructions. We are confident that our new process will improve the safety and security of our client’s funds.

We are discontinuing the practice of including wire instructions with our title insurance commitments.

Clients of yours that require wire instructions should be instructed to contact us directly. We will send them an encrypted email containing the instructions. If your client’s email platform supports Transport Layer Security (TLS), the email will be delivered securely and your client will be able to read it as a normal email. Clients with email platforms that do not support TLS will automatically be given a link to our secure website to download the instructions via an https secured communication. There is no requirement to create an account or login or provide any personal information.

If you have been in the habit of routinely forwarding our email wire instructions to your clients we ask that you discontinue that practice unless you are able to send them in a secure encrypted manner. That will allow us both to avoid any unpleasant circumstances should your email become compromised.

We are now encrypting all emails containing non-public personal information.

I encourage you to let our team know should you or your clients experience any problems in receiving or retrieving encrypted emails. Many information technology implementations experience a few glitches before seamless functionality is achieved. We appreciate your patience while we apply this safer level of communication.

John Bethell
November 19, 2014

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Takeaways from the 2014 Third Quarter numbers:

Life without refinances is tough. Mortgage lending is down considerably from previous years. (chart pages 7, 11 & 12) It’s all missing refinance business as the purchase market is fairly steady. Earlier in the year refinancing was only 15% of our new title orders, the lowest rate that I can remember. During the third quarter refinance orders comprised 25% of our new orders. The increasing trend is continuing thanks to recently lower interest rates.

The upper end of the purchase market is doing better. Sales disclosures for owner occupied homes under $200,000 are holding steady and the number between $200,000 and $500,000 is up considerably over recent years. (chart page 14) Sales disclosures of non-owner occupied properties continue to be soft. (Chart page 15)

New Foreclosures continue to decline: New filings for foreclosures are at their lowest point since I began tracking them in 2007. (chart page 16) Sheriff’s Deeds are more recently declining but not yet reflecting the decline in new filings. This is mostly a timing situation as the foreclosure process is considerably lengthened from prior to 2009.

The date to remember is August 1, 2015. That’s when the CFPB changes to the closing process are set to become mandatory. That’s nine months from now. If you’ve not talked with your mortgage origination and processing software vendor about the changes, do not hesitate any longer. These are much bigger changes than what we went through in 2009 with the last RESPA rewrite. There is a number of process and notice related decisions that we will probably have to make together.

Earlier this year John Bethell Title upgraded its closing production software and network infrastructure in anticipation of the changes. We feel quite confident with our vendor and hope to see how the new forms look in our system early next year. In addition to being able to prepare the forms, our system will offer a number of opportunities to share closing data with you in a secure format that will improve the closing and disclosure processes.

Let us know when you’re ready to discuss the changes.

~John Bethell

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Click Here to Access the Report

Our Referral Promise

We are grateful for the opportunity to work with you and your client. We promise that our team will create a closing experience for you and your client that is outstanding. Your opportunity to gain a referral will be enhanced by the closing experience that you and your clients receive at John Bethell Title. If you don’t agree let us know and we will do whatever we can to make things right.

read more

Click Here to Access the Report

Feedback Survey

Obtaining feedback about your client’s and your experience with John Bethell Title during the transaction is an important part of our Feedback Loop. In addition to calling Realtors and Lenders on a regular basis, we also created an online Customer Survey for our website. If you or your clients would like to tell us about the experience with us, we’d love to hear from you. The survey is just a few questions and shouldn’t take more than five minutes to complete. Click here to take the survey.

The Feedback Loop is just one of our processes that helps us make certain that we’re doing the best possible job for you.

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I am almost always surprised when I compile our quarterly statistical reports. This quarter is no exception. I already knew that the overall sale market in Monroe County is down around 8% to 10% from 2013 according to the number of recorded deeds that we post to our data base. (page 16) After compiling data from the Indiana Department of Local Government Finance Sales Disclosure Data base for the first half of 2014 I now know why. The charts on pages 14 and 15 show the number of sales disclosures by quarter for sales designated as the buyer’s primary residence (page 14) and those that are not designated in that manner (page 15).

Sales of properties that the buyers intend to live are up slightly over 2013─about 2%. Close to my own expectations for the overall market when I projected 2014 for our company. However, properties not so designated, which are almost exclusively sales of investment, commercial and some vacant land properties are down a surprising 22%!

We’ve all heard noise from various sources about the increasingly difficult mortgage qualification process. It looks to me that in Monroe County that might only be affecting investors and not home buyers. The number of foreclosures (page 19) continues to be moderate, so their effect is unchanged. It could also be that price increases as the market recovers is reducing the number of good deals for investors.

I included a chart from our annual report that shows recorded deeds by year since 2004 (page 17). I continue to wonder what a “normal” market will look like. The peak of this chart is the 2004-2007 era─also known at the age of irresponsible lending and borrowing. Sub-prime lending clearly inflated property sales in Monroe County, just as it did almost everywhere else. Sales in 2008 and 2009 were juiced by federal homebuyer tax credits. Things bottomed out in 2010 and 2011, before starting to recover.

I had thought that somewhere around 2400 to 2500 sales transactions would be where normal lies. Now I’m not so sure. Deed recording in the second half of this year will have to be up over eight percent over 2013 just to have equal full year comparisons. With stricter financing rules, less homebuilding and the economy not adding a lot of jobs, 2200 sales might be our new normal. Quite a far cry from the subprime golden era, don’t you think?

~John Bethell

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Click Here to Access the Report

Feedback Survey

Obtaining feedback about your client’s and your experience with John Bethell Title during the transaction is an important part of our Feedback Loop. In addition to calling Realtors and Lenders on a regular basis, we also created an online Customer Survey for our website. If you or your clients would like to tell us about the experience with us, we’d love to hear from you. The survey is just a few questions and shouldn’t take more than five minutes to complete. Click here to take the survey.

The Feedback Loop is just one of our processes that helps us make certain that we’re doing the best possible job for you.

read more

Click Here to Access the Report

Feedback Survey

Obtaining feedback about your client’s and your experience with John Bethell Title during the transaction is an important part of our Feedback Loop. In addition to calling Realtors and Lenders on a regular basis, we also created an online Customer Survey for our website. If you or your clients would like to tell us about the experience with us, we’d love to hear from you. The survey is just a few questions and shouldn’t take more than five minutes to complete. Click here to take the survey.

The Feedback Loop is just one of our processes that helps us make certain that we’re doing the best possible job for you.

read more