April 2010_Title News_Solving the Creditors Rights Quagmire

8/7/2019 April 2010_Title News_Solving the Creditors Rights Quagmire

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April 2010

Official Publication of the

American Land Title Association

Solving the CreditorsRights Quagmire

An Argument for the Nationwide Prohibition

of Creditors Rights Coverage


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www.alta.org > April 2010 > Title

Fu

2010 Stewart Title Guaranty Company. All rights reserved.

(866) 608-6657 stewart.com/agencyservices

We can help you maintain compliance and grow your business.

In todays market you need technology specically designed to meet the needs of title agencies.

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compliance with the new HUD-1; improve productivity and communications; as well as enhance the

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that this technology will constantly be updated and given the highest quality support. So once you have

Stewart technology you can concentrate on your customers and not your computers.

To nd out more about this technology and why Stewart is the right partner for you, visit us

at the ALTA Business Strategies Conference, May 2-4, 2010, or contact your agency services

manager through stewart.com/agencyservices.

Why is Stewart the right choice for title agencies?

17

MArkeT sTATisTics

Nearly 25 Percent of AllResidential PropertiesUnderwaterThe number of homes upside down isconcentrated in five states, according toFirst American CoreLogic.

18

sTATe PresiD eN T PrO F iL e

Amy KasparOhio Land Title Association

20

iNsiDe ALTA

2010 Federal Conference andLoy Day RoundupMore than 175 title insuranceprofessionals attended the largest ALTAFederal Conference and Lobby Day, heldFeb. 28-March 3 at the Marriott MetroCenter in Washington, D.C.

24

ruN N iN g O ur usiN ess

Calif. Title Aency FindsDifferentiator to CaptureMarket ShareAs a regional firm, Western Resources Titlecould not match the marketing budgets oflarger competitors. The company optedto provide accurate, up-to-date real estateinformation, to maintain its existing clientbase and attract new prospects.

8

cO ver sTO r

Solvin theCreditors RihtsQuamirey Roer Howard, Esq

An argument for thenationwide prohibitioncreditors rights coverag

TtlNw volm 89, Nmb 4

Dpm

4

Calendar of Events

5

From the Editors Desk

6

ALTA News

26

Industry News

28

New Memers

29

TIPAC Contriutors

30

The Last Word


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itleNews > April 2010 > www.alta.org

PUbLISHERKurt Pfotenhauer

EDITOR IN CHIEFJeremy Yohe

DESIgN/ELECTRONICPRODUCTION MANAgER

Shawn Sullivan

PRESIDENTMark E. WinterStewart Title guarantyWashington, DC

PRESIDENT-ELECTAnne L. Anastasi, CLTPgenesis Astract, Inc.Hatboro, PA

TREASURERJohn HollenbeckFirst American Title Insurance Co.Santa Ana, CA

CHAIR, FINANCE COMMITTEEDiane EvansLand Title guarantee CompanyDenver, CO

CHAIR, TITLE INSURANCEUNDERWRITERS SECTIONChristopher AbbinanteFidelity National Title groupJacksonville, FL

bOARD REPRESENTATIES,TITLE INSURANCEUNDERWRITERS SECTIONPeter BirnbaumAttorneys Title guaranty Fund, Inc.Chicago, IL

Robert ChapmanOld Repulic National Title Insurance Co.Minneapolis, MN

CHAIR, AbSTRACTERS AND TITLEINSURANCE AgENTS SECTIONFrank PellegriniPrairie Title, Inc.Oak Park, IL

bOARD REPRESENTATIES,AbSTRACTERS AND TITLE AgENTSSECTIONHerschel BeardMarshall County Astract Co.Madill, OK

Jack Rattikin, IIIRattikin Title CompanyFort Worth, TX

IMMEDIATE PAST PRESIDENTMichael B. PryorLenders Title CompanyLittle Rock, AR

assc iatin F F ic ers

CHIEF ExECUTIE OFFICERKurt Pfotenhauer

SENIOR ICE PRESIDENTAND CHIEF OF STAFFMichelle L. Korsmo

DIRECTOR OF COMMUNICATIONSJeremy Yohe

DIRECTOR OF EDUCATION& TECHNOLOgKelly Romeo, CAE

DIRECTOR OF gOERNMENT AFFAIRSJustin Ailes

DIRECTOR OF MEETINgS

Cornelia Horner, CMP

assc iatin staF F

Members Call Toll Free: 800-787-ALTA Members Fa Toll Free: 888-FAx-ALTAisit ALTA Home Pae: www.alta.or E-mail Feedback to: [email protected]

www.alta.org > April 2010 > Title

from the editors desk

As the title industry continues its pursuit of educating policymakers on thevalue title insurance provides to the ecient transfer of property and theeconomic health of the United States, there was a signicant announcementby the Texas attorney general that paid homage to the title industry.

In an announcement that a Southern Texas developer has been charged withdefrauding first-time homebuyers by selling houses that were encumbered byundisclosed liens, Texas Attorney General Greg Abbott indicated homebuyerscan protect their property rights by making sure a title company is involved in thetransaction and independently determines who owns the property and checks for liensor outstanding debts for which the buyer could be held liable.

Its alleged that the builder, Casa Linda Homes, sold residential properties thatwere encumbered by delinquent property tax liens, third-party lender liens ormechanics liens. The builder was able to carry out the alleged fraud, in part, becausethe houses were owner financed by Casa Linda Homes. As a result, purchaserswere not warned about the undisclosed liens, because Casa Linda did not requirehomebuyers to purchase title insurance.

This is a perfect example of how an owners title insurance policy could have protected the interests ofthe homebuyers. We applaud the Texas attorney general for recognizing the value title insurance providesto consumers and encourage policymakers across the country to engage with title professionals in their stateto become educated on the preventive measures title agents take to eliminate claims and protect consumers.This is a message ALTA members must share with their state policymakers.

Spearheaded by ALTA President Mark Winter, ALTA has launched a Personalized PolicymakerEducation program to help change this dynamic and help policymakers learn about the important role youplay in the mortgage transaction process.

ALTA members are encouraged to reach out to their U.S. Senator, U.S. Congressman, or state regulatorto ask them to come to your office to learn what the industry does to protect the real estate transaction.These visits to your office should take about an hour and should include a 30 to 45 minute office tour and afive to 15 minute drop-in on a closing.

ALTA has created a soup-to-nuts outline on how to conduct the tour. All you have to do is schedule theappointment. Speaking of appointments, ALTA carried the industrys value proposition to Capitol Hill

holding more than 160 meetings with Congress. Read more about the Federal Conference on page 22.I have to say, ALTA members represented the industry in grand fashion and piqued the interests of manylegislators and their staff. We have the ear of decision makers. We are making a difference even if itseducating one policymaker at a time.

TitleNews is pulished monthly y theAmerican Land Title Association.

Send address chanes to TitleNews,American Land Title Association, 1828 LStreet, N.W., Suite 705, Washinton, DC20036.

Anyone is invited to contriute articles,reports and photoraphs concernin issuesin the title industry. The association, however,reserves the riht to edit all material sumit-ted. Editorials and articles are not statementsof ALTA policy and do not necessarily reflectthe opinions of the editor or the ALTA.

Reprints: Apply to the editor for permissionto reprint any part of the maazine. Articlesreprinted with permission must carry the fol-

lowin credit line: Reprinted from TitleNews,the monthly maazine of the American LandTitle Association.

2010 American Land Title Association

AL TA eveN Ts

May 2-4 Business StrategiesConference

St. Louis, MO

October 13-16 2010 AnnualConvention

San Diego, CA

sTATe cO N veN TiO N s

April 15 - 18 Oklahoma

May 2 Iowa

May 6 - 10 New Mexico

May 23 - 25 California

June 2 - 6 Arkansas

June 4 - 6 Virginia

June 7 - 8 Wyoming

June 9 - 12 New Jersey

June 9 - 12 Pennsylvania

June 10 - 11 South Dakota

June 17 - 20 New England (CT,ME, MA, NH, RI, VT)

June 23 - 25 Texas

July 18 - 20 Michigan

July 22 - 23 Illinois

August 5 - 7 Northwest(ID, MT, OR, UT, WA)

August 12 - 14 Kansas

August 15 - 18 New York

August 19 - 21 Minnesota

September 9 - 12 Dixie Land(AL, GA, MS)

September 9 - 11 North Dakota

September 12 - 14 Ohio

September 15 - 16 Nebraska

September 15 - 17 Colorado

September 16 - 17 Missouri

September 16 - 18 North Carolina

September 16 - 18 Indiana

September 22 - 24 Maryland

November 3 - 5 Florida

December 1 - 2 Louisiana

alnda

One Informed Policymaker at a Time

Jeremy Yohe


4/17

itleNews > April 2010 > www.alta.org www.alta.org > April 2010 > Titl

alta news

alta news

ALTAs RESPA Implementat ion

Taskforce, in conjunction

with ALTAs Land Title

Institute, has completed an

update to its instructional

CD, Closin Real Estate

Transactions in 2010: The

New RESPA Rule, gFE, and

HUD-1. The CD includes

line-y-line instructions

on the forms, as well as a

companion uide. Those

who purchased the oriinal

CD will receive the update

for free. Otherwise, the CD

costs $99 for memers and

$149 for non-memers.

Contact Kevin Russell at

[email protected] order

online at www.alta.org .

Upd o resPa ruliuol cD avlbl

The American Land Title

Association joined 12 other

trade associations, includin

the National Association of

Realtors, in sumittin a

letter to Sens. Chris Dodd

and Richard Shely askin

the U.S. Senate Committee

on bankin to consider the

enormous challenes facincommercial real estate

and the uniqueness of the

markets that nance the $6

trillion sector when eplorin

nancial reulatory reform

proposals.

The inaility to secure

nancin could easily

result in increased loan

defaults, or the forced sa

of properties at reatly

depressed prices, creatin

a ripple effect of nancial

losses and more jo

layoffs, the letter said.

The entire letter can e

found at www.alta.org .

aLta Ug avod o sz F all rom osuzd cd Mk ocomml rl e


Association has launched

its latest memer enet

proram, The Memer

Conferencin Proram

from InterCall.

As the worlds larest

conferencin services

provider, InterCall can help

usinesses save time and

money with world class

conferencin solutions from

simple Audio-conferencin

to cuttin ede We-

conferencin platforms

such as WeE and

Microsoft Live Meetin.

ou will receive

eclusive memer pricin

on oth audio and we

conferencin with rates a

low as $.05 per minute o

toll free audio-conferenci

There are no contracts to

sin or minimum spendin

requirements, so sin up

today. Call the Memer

Conferencin center at

1-800-514-2818 from 8

a.m. to 8 p.m. EST, or vi

www.alta.org to enroll.

aLta nw MmbBf Pogm


Associations board of

governors approved

Charleston, S.C., as the

site of the 2011 Annual

Convention. ALTA is in theprocess of neotiatin a

contract with Charleston

Place, which offers a lend of

18th century style and 21st

century comfort. Charleston

Place is situated in the

heart of Charleston, one of

Americas oldest cities.

For the siteenth

consecutive year, readers

ofCond Nast Traveler

maazine honored

Charleston as a Top 10

travel destination in the

United States. Charlestonwas honored with a No. 2

slot topped only y San

Francisco.

Charleston offers horse-

drawn carriae rides,

mansions and museums,

and neary, historic

monuments such as Fort

Sumter, where the rst

shots of the Civil War were

red. A few miles from

the city are a numer of

manicent old plantation

houses, such as the 18th

century Middleton Place.Charleston offers famous

olf courses desined y

Jack Nicklaus and Tom Fazio,

top-rated tennis courts,

pristine eaches, monumental

attleships and eautifully

preserved architecture. The

citys mild climate allows

visitors to enjoy most of the

sihts year-round. Many visit

Charleston for its faulous

food. The city claims to have

the est rits youll ever have,

prepared in ways you never

imained. isitors can alsoenjoy festive dockside oyster

roasts, hih-end restaurants

and outdoor cafes.

aLta aou 2011 aul covo s


Association board of

governors recently voted to

oppose a certain variation of

a private transfer fee (PTF)

covenant after spendin

the past several months

studyin the impact on the

transfer of real estate.

ALTAs board voted to

oppose private transfer fee

covenants in a Feruary

conference call and

reinforced its position y

adoptin a policy in March.

The board noted private

transfer fee covenants cost

consumers money and will

result in increased costs

of underwritin, claims,

escrow services and

compliance for the land title

industry.

ALTA opposes

covenants that do not

run with the land, unduly

urden the property or

unreasonaly restrain

the transferaility of real

property. Such covenants

are not leitimate property

rihts ecause they do not

enet property owners,

the policy states.

These covenants require

a fee (usually 1 percent of

the sale price) e paid to a

developer or their trustee

each time a property is

sold for a set period of time

(usually 99 years). These

are not like covenants

where proceeds enet

homeowners associations,

environmental conservation

efforts or charitale

oranizations that use

revenues to enet property

owners.

Utah is on the vere of

ecomin the fourth state

to an the use of private

transfer fee covenants,

which require consumers

to pay thousands of dollars

to third parties that hold no

ownership interest in the

property for the riht to uy

or sell real estate. The ill,

which awaits the overnors

sinature, declares certain

covenants, restrictions,

areements and other

instruments and documents

that oliate a future uyer

or seller to make a payment

upon the transfer of real

property to e void and

unenforceale. The ill does

not impact private transfer

fees already recorded.

Florida, Missouri and

Kansas already prohiit

these private transfer fees,

while Teas and California

limit the use. Ohio has a ill

pendin that would prohiit

private transfer fees.

Pv t F Hd t oPopy, aLta Bod colud

Do you have a white paper,

est-practices uide or how-

to on a suject of importance

to title professionals and

small-to-medium size

usiness owners? The ALTA

Technoloy Committee

is lookin for a few ood

papers to pulicize for the

enet of your fellow ALTA

memers.

sTrucTure AN D

cO N TeN T guiD eL iN es:

Sumissions should

strive to provide easily

identiale sections of

information/advice for

owners/manaers(Eecutive

Summary) and

information/

advice for IT

specialists. The

paper should also

strive to answer the

followin questions:

What is it (asic denitionof the product, service, orconcept)?

How does it work?

Do I need an IT person toset this up or can I do itmyself?

Why do I need it?

How does it help me?

How does the investmentpay off?

If you have a paper and

would like to share your

epertise, forward your

paper to the committees

staff liaison, Kelly Romeo,

at [email protected].

thology commaou cll o Pp


5/17

itleNews > April 2010 > www.alta.org www.alta.org > April 2010 > Titl

by Roger Howard, Esq.

Adecade ago, title insurance underwriters might have agreed on whatconstitutes a reasonable creditors rights underwriting risk. at isnot the case today. e recent sharp rise in fraudulent conveyanceactions brought by unsecured creditors has exposed the uncertainty

and risks inherent in creditors rights coverage.Previously, title insurers comfortably underwrote creditors rights coverage,

a form of title insurance that protects lenders from the invalidation of liensunder federal or state fraudulent conveyance actions. During the heady dayswhen credit was plentiful, and the real estate market was rosy, creditorsrights coverage was all but a condition of closing for commercial lenders. >>

solvg h

cdo rghQugmAn argument for the nationwideprohibition of creditors rights

coverage.


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TitleNews > April 2010 > www.alta.org www.alta.org > April 2010 > Title

cover story

ut in 2007 when the real estatearket crashed, multi-million

ollar loan deals collapsed. Lendershose secured-loan collateral wasow vulnerable to impairmentnder fraudulent conveyance lawsmmediately sought refuge underhe coverage of creditors rightsrotection provided by title insurers.When major creditors rightsaims began to appear, title insurersok notice. But it wasnt until 2010,the wake of the Tousa decision

nd after the claims arising from theveraged deals of 2007 had run their

ourse that the title insurancedustry took action.

Dvlopmhe title insurance industry hasken the following action regardingeditors rights:

Prior to 2010, four states had entirelyeradicated creditors rights coveragefrom their underwriting: Florida, NewYork, New Mexico and Texas.Eective February 1, 2010, Pennsylva-nia revoked ALTA Endorsement No.21, which was the armative ALTAendorsement for creditors rightscoverage. New Jersey, Delaware andOregon quickly followed suit.On February 4, 2010, the CaliforniaLand Title Association voted to de-certify CLTA Endorsements No. 131and 131-06, its counterparts to theALTA creditors rights endorsements.In the second week of February, 2010,First American Title Company andthe entire Fidelity Group includingChicago Title, Fidelity, Ticor, LawyersTitle and Commonwealth an-nounced that creditors rights coverageis no longer availableEective March 8, 2010, ALTA votedto withdraw/decertify ALTA Endorse-ment No. 21. But even if Endorsement

No. 21 is no longer available, titleinsurers that have not revoked credi-tors rights coverage can still underwritecreditors rights by drafting their ownarmative endorsements un-less regulators implement statewideprohibition of creditors rights coverage(as in Florida, New York, New Mexicoand Texas).

Clearly, title insurers intend to stopissuing creditors rights coverage. Inrepealing creditors rights coverage,Fidelity and First American exhibitedbold leadership in the title insurancemarketplace but there is noguarantee how long the prohibitionwill last, or if the rest of the industrywill follow. Absent clear guidancefrom state regulators, the titleinsurance marketplace will remainuneven and worst of all, uncertain.

Will the revocation of creditorsrights coverage become an industry-wide standard? And if so, for howlong? Can the industry self-regulatecreditors rights coverage?

The simple answer is no. Titleinsurers are businesses and maysuccumb to market pressures whenmajor clients make demands. Stateregulators can and should ensure thatthe leadership taken by the two largesttitle companies becomes a permanent,industry-wide standard. It is timefor regulators to solve the creditorsrights quagmire once and for all by

implementing statewide prohibitionsto effect a nationwide ban on creditorsrights coverage.

vvw o cdorgh covgCreditors rights coverage providesthe purchaser of real property or

its lender with insurance that thetransaction will not be unwound or setaside by a creditor on the basis of thetransaction constituting a fraudulentconveyance under federal bankruptcylaws. Under federal bankruptcylaw, a conveyance is constructivelyfraudulent if it meets the followingtests. First, the conveyance must: (i)be made while the grantor is insolvent,(ii) make the grantor insolvent,or (iii) leave the grantor withunreasonably small capital to continueits business. Second, the insolventor undercapitalized grantor musthave received less than reasonablyequivalent value for its conveyance.

If a lender purchases a loan policyof title insurance including creditorsrights coverage, the lender is entitledto indemnity from its title insurerfor loss suffered if the lenderssecurity interest in the real propertyis invalidated. Frequently, that lossis the value of the property that couldhave been foreclosed on, if the lienhad not been invalidated.

cover story

Lenders typically request creditorsrights protection as protection frompost-closing challenges to title, or tothe validity, enforceability or priorityof an insured lien. If a loan secured byreal property is deemed by a court tobe a fraudulent conveyance and thelien is invalidated, then the insuredlender loses its security interest in thereal property collateral. If the lenderobtained creditors rights coverageunder its policy of title insurance,the lender may tender a claim toits title insurer for the loss that theinsured suffered due to the potentialinvalidation of the lien.

edom no. 21Prior to 1990, lenders title policieswere silent regarding coverage forclaims arising under creditors rightslaws. At that time, the most commonALTA title policy form was known asthe 1970 policy. Beginning in 1990,ALTA adopted language expresslyexcluding creditors rights coveragefrom its form policies. ALTA addedthe creditors rights exclusion to theform policy because title insurersdid not consider creditors rightscoverage to be title insurance. Lenders,however, were concerned that the1990 creditors rights exclusion wouldallow the insurer to deny coverage forany avoidance claim even wherethe basis of the claim was solely thefailure of the title insurer to recorddocuments properly. In 1992, ALTAresponded by adopting an amendedcreditors rights exclusion, clarifyingthat coverage could not be denied forcertain recording defects.

Over time, and in response tomarket pressure, many title insurersendorsed over the 1992 creditorsrights exclusion to satisfy thedemands of insistent lenders. ALTAstandardized this approach in 2004

by adopting Endorsement No. 21,affirmatively providing creditors rightscoverage for commercial transactions.Endorsement No. 21 specificallyinsures against loss or damageresulting from a fraudulent transfer.Nevertheless, four states NewYork, Texas, Florida and New Mexico did not adopt Endorsement No. 21because they determined that creditorsrights coverage poses an unacceptablerisk to title insurers. These statesonly allow policies to be issued withcreditors rights exclusions; they do notpermit Endorsement No. 21 (or anyother endorsement) to remove thoseexclusions.

In early 2010, ALTA voted towithdraw Endorsement No. 21, bleft open the possibility that titleinsurers could once again endorseover the creditors rights exclusionusing their own endorsement. Shothereafter, the states of New JerseyPennsylvania, Delaware and Oregmoved to withdraw EndorsementNo. 21. Regardless of whetherEndorsement No. 21 or similarcreditors rights endorsements areavailable, title insurance companiestill have the legal option to issuecreditors rights coverage by draftitheir own affirmative creditors rigendorsement unless they are in

n It is time for regulators to solve the

creditors rights quagmire once and

for all by implementing statewideprohibitions to effect a nationwide

ban on creditors rights coverage.

ALTA board Approves Chanes toSeveral Policy Forms

In meetin market demands and chanes, the ALTA board of governors

approved recommendations to revise seven eistin forms, adopt four

new forms and decertify one form durin a meetin on Fe. 3. A 30-day

comment period ended March 8.

The ollowing orms are impacted by the Board actions:

Decertifed Form:

ALTA Endorsement 21-06

Creditors Rights: The eistin ALTA

Endorsement Form 21-06 (Creditors

Rihts) is desined for issuance

with an Owners Policy or Loan

Policy when insurin with respect

to voidaility of an estate or interest

or the lien of the Insured Mortae

ecause of the occurrence on or

efore Date of Policy of a fraudulent

transfer or a preference under

federal ankruptcy, state insolvency,

or similar creditors rihts laws,

suject to the terms and provisions

of the endorsement and suject to

the Eclusions from Coverae and

other terms of the policy. Revision

or decertication and withdrawal

of the Form was discussed with

enet of outside antitrust counsel.

The ALTA Forms Committee was

unale to arrive at areement on th

applicale terms and concluded tha

developin a new or revised standa

ALTA form is not achievale or in

the industrys est interest, due to

a lack of unanimity amon industry

participants aout the onoin nee

for and terms of a standardized

industry endorsement. Decerticat

of the form will not affect the aility

each title insurer to separately decid

what coverae or endorsement, if

any, it will e willin to provide.

continued on page


7/17

www.alta.org > April 2010 > TitleN

cover story

state expressly prohibiting any and allforms of creditors rights.

tl iu should noUdw cdo rghcovg

Ld Hold all h cd

Title companies cannot matchthe teams of experts assembled bylenders. Lenders diligence teamsinclude accountants, solvencyexperts (who would typically providea solvency opinion), investmentbankers and lawyers. These expertspossess extensive knowledge andsophistication regarding financialanalysis, and they have access toall of the lenders files includingfiles from other experts engaged bythe lender. Additionally, the expertsengaged by lending institutionsreceive very large fees and performcomprehensive financial analysis.Notably, more and more of thelenders outside teams of expertsrefuse to provide written opinionsregarding creditors rights claims.Additionally, these experts includeliability limits in their retentionagreements and limit the contentof their opinions to such an extentthat the lenders seek additionalindemnity from title insurers. Thusthe true creditors rights experts the lenders and their diligence t eams have succeeded in shifting theunderwriting risk to title insurancecompanies that are left to assess theviability of these transactions andopine on creditors rights issues.

Ld Do Povd tm o

Pop Udwg

In addition to lacking the expertiseand financial resources of the lendersand their diligence teams, title insurersare also severely disadvantaged by

the lack of time in which they mustconduct their review. Repeatedly,lenders request creditors rightscoverage shortly before a closingdeadline, many months after thelenders team of professionals vettedthe solvency issues. Further, theprediction of the solvency of thegrantor after a transaction requiresthe title insurance company to analyzethe future of the borrowers businessas well as the future of the externaleconomy. By that stage, the lenderssolvency experts have already spentmonths conducting such analysis, sothe title insurers financial analysis isduplicative.

tl comp Lk a o

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To underwrite creditors rights coverageproperly, the title insurer must conductrigorous due diligence with respect toboth the borrower and the transaction.The title insurer must determinewhether the grantor received reasonablyequivalent value for the transfer, wassolvent at the time of the transfer, willremain solvent despite the transfer andwill have sufficient capital to carry onits business.

When the grantor is a publiccompany, title companies are furtherhandicapped by SEC disclosurerequirements that prevent title insurersfrom receiving material nonpublicinformation, while the lenders and theiranalysts do receive it. Lenders receiverecent nonpublic financial results,which are absolutely essential to ameaningful analysis of the solvency ofthe grantor. Title insurance companieshave less time to digest the data theyreceive, as well as less bargaining powerto receive the most vital informationavailable.

Additionally, making adetermination of solvency requires

knowledge of the fair market valueof the transferors assets, but thatinformation is difficult or impossibfor title insurers to obtain. GAAPfinancial statements report book vafor each asset and not fair marketvalue. A title insurance company thneeds an independent appraisal of market value of the transferors asseand must also assess the potential ea bankruptcy could have on thoseassets. Further, the recent Tousa cademonstrates that even apparentlyqualified appraisers and expertscan disagree and that a bankruptcyjudge may make his or her ownindependent determination of solvIf solvency experts cannot agree onproper analysis, then it is extremelydifficult, if not impossible, for titleinsurance companies to make accurassessments of a transferors solven

iu F o cov h r

A title company must incur diligencosts at the underwriting stage, andin turn exposed to massive legal decosts whether or not the insuredsuffers a loss. The cost of defendincreditors rights claim is often milliof dollars, even if the lender insuredultimately prevails on the merits.Understanding the underwriting andefense costs of offering creditorsrights coverage, title insurancecompanies should increase premiumsubstantially from current market rBut title insurance premiums are ostate-regulated, and in some states,insurance companies are prohibitedfrom charging a material premium providing creditors rights coveragegeneral, there is only a nominal chafor title insurers to underwrite credrights. As a result, title insurancecompanies are not compensated foeither the expensive underwriting o


8/17


cover storycover story

ALTA board Approves Chanes to Several Policy Forms

Revised Forms:

ALTA Endorsement 4-06 Condominium: The eistin

ALTA Endorsement Form 4-06 (Condominium) is

desined for issuance with an Owners or Loan Policy

insurin title to a condominium unit. Pararaph 4 has

een modified to clarify that the endorsement insures

priority of the lien of the Insured Mortae over any

lien for chares and assessments provided for in the

eistin condominium statutes and condominium

documents.

ALTA Endorsement 5-06 Planned Unit

Development: The eistin ALTA Endorsement Form

5-06 (Planned Unit Development) is desined for

issuance with an Owners or Loan Policy insurin

title to a lot or tract in a planned unit development.

Pararaph 2 has een modified to clarify that the

endorsement insures priority of the lien of the Insured

Mortae over any lien for chares and assessments

in favor of any association of homeowners that are

provided for any eistin document at Date of Policy.

ALTA Endorsement 10-06 Assignment: The eistin

ALTA Endorsement Form 10-06 (Assinment) is

desined for issuance when the lien of the I nsured

Mortae is assined. The Form has een modified

to clarify the endorsement y addition of the defined

term Assinee and y addition of a creditors rihts

eception that is consistent with the creditors rihts

eclusion in the ALTA Loan Policy.

ALTA Endorsement 10.1-06 Assignment And Date

Down: The eistin ALTA Endorsement Form 10.1-06

(Assinment and Date Down) is desined for issuancewhen the lien of the Insured Mortae is assined. The

Form has een modified to clarify the endorsement

y addition of the defined term Assinee and

y addition of a creditors rihts eception that is

consistent with the creditors rihts eclusion in the

ALTA Loan Policy.

ALTA Endorsement 28-06 Easement - Damage or

Enorced Removal: The eistin ALTA Endorsement

Form 28-06 (Easement - Damae or Enforced

Removal) is desined for issuance when an eistin

uildin encroaches into or over an easement

ecepted in Schedule b of the Owners or Loan Policy.

The Form has een modified in the introductory

pararaph of the endorsement to clarify that it provides

insurance with respect to eercise of the easement in

accordance with its terms that results in damae to an

eistin uildin located on the Land or that results in

enforced removal or alteration of that uildin.

ALTA Expanded Coverage Residential Loan Policy:

The eistin ALTA Epanded Coverae Residential

Loan Policy is desined for issuance when insurin the

lien of the Insured Mortae encumerin title to an

improved one-to-four family residence. The Policy has

een modified to include a creditors rihts eclusion

in order to e consistent with the eistin Covered

Risk that provides insurance only with respect to

certain issues arisin out of prior transactions and to

e consistent with the ALTA Loan Policy.

ALTA Homeowners Policy: The eistin ALTA

Homeowners Policy of T itle Insurance is desined for

issuance when insurin title to an improved one-to-

four family residence and when the Insured is a Natural

person. The Policy has een modified (1) to include

a creditors rihts eclusion in order to e consistent

with the eistin Covered Risk that provides insurance

only with respect to certain issues arisin out of prior

transactions and to e consistent with the ALTAOwners Policy, and (2) to epand the Continuation

of Coverae in Section 2 of the Conditions, y also

insurin an Estate Plannin Entity (as newly defined)

to whom the Insured transfers Title and y insurin

anyone who receives Title y a transfer effective on the

death of the Insured, as authorized y law.

for their assumption of significantadditional risk of loss and defense costs.

cdo rgh covg

cd iu

Title insurance differs from othertypes of insurance, such as credit,property, or casualty insurance,because it is based upon a prior searchof land title records and a reviewof recorded documents regardinga specific property. The coveragetypically provided by title insurancecompanies pertains to title defects,liens and other encumbrances. Incontrast, creditors rights coverage isnot underwritten by an examinationof title, and the determination ofinsurability cannot be based on theresults of a title search. Creditorsrights coverage is not title insurance;it is credit insurance because creditorsrights claims are a financial risk ratherthan a title risk. The New YorkInsurance Department recognizedthis fact when it issued an opinion insupport of a statewide creditors rightsexclusion, because the risks associatedwith creditors rights coverage areoutside the purpose and scope of titleinsurance.

Volo o MoolroBecause creditors rights coverageis credit insurance and not titleinsurance, title insurers should

be prohibited from underwritingcreditors rights because many statesexpressly impose restrictions known as monoline restrictions ontitle insurance companies to prohibitthem from issuing any other kind ofinsurance. For example, CaliforniaInsurance Code 12360 provides:An insurer which anywhere in theUnited States transacts any class ofinsurance other than title insurance

is not eligible for the issuance of acertificate of authority to transact titleinsurance in this State, nor for therenewal thereof. These monolinerequirements have been imposed toprotect the title insurance industry;legislators wanted to ensure that thetitle insurance industry could not becontaminated by the much higherrisks of other insurance lines. Non-title underwriting specifically,creditors rights coverage shouldbe universally prohibited, so thatunderwriting practices are congruentwith state monoline restrictions.

UpdblyThe risks of offering creditors rightscoverage cannot be assessed accurately.The recent Tousa ruling demonstrates

that fraudulent conveyance claimsare extremely unpredictable. InOctober 2009, the bankruptcy judgein Tousa held that when subsidiariesgranted liens in connection with

borrowings that were for the benefitof their parent company, there wasno reasonably equivalent value.Further, the judge rejected thedebtors own financial statements(including prior audits), appraisals ofnationally recognized companies and asolvency opinion from an establishedfirm, and concluded that the debtorwas insolvent before and after thefinancing transaction.

Thus, the judge discounted monof financial analysis by teams ofexperts, and invalidated liens total$500 million. There have beenmany professionals speaking abouthe Tousa decision, but the lessonlearned by the title insurers is that cannot predict what a BankruptcyJudge with 20/20 hindsight willhold when presented with afraudulent conveyance claim. Such

an unpredictable risk of a potentialarge exposure is inappropriate forinsurers.

coluoAs larger title insurers absorb smones, a risk that once was spreadacross a group of title companiesis now shared by only three or foutitle insurers. In multi-million dotransactions, there is simply too mrisk to concentrate among relativefew insurers. The most efficientsolution to the creditors rightscoverage issues is for title insuran

The Last Word

Look for more discussion on

creditors rihts coverae as Joh

Holleneck, ALTAs treasurer,

offers another perspective in The

Last Word on pae 30.

n The New York Insurance

Department recognized the risks

associated with creditors rights

coverage are outside the purpose

and scope of title insurance.

continued on page 16


9/17


cover story market statistics

gulators nationwide to ban thesuance of creditors rights coverage.In 2010, real estate values remain

epressed and many companies arebankruptcy. With the benefit of

ndsight to reflect upon the risend fall of the real estate market,ow is the time to revisit the issuef creditors rights coverage. Indays market, prudence dictates that

nderwriters must be conservativend meticulous; title insurers cannotfford to be cavalier in underwritingeditors rights coverage the riskse just too high.

Therefore, in the states that stillpermit title insurance companies toprovide creditors rights protection,it is urgent for state regulatoryauthorities and the Department of

Insurance to act swiftly to prohibitthis type of coverage.

The industry cannot rely ontitle insurers, who face significantcompetitive market pressures, to self-regulate the abolition of creditorsrights. When the global real estateeconomy recovers from the currentrecession, market pressures willcompel title insurance companies toresume issuance of creditors rights

coverage. Because title insuranceis a vital component of a healthyreal estate market, regulators mustintervene. A nationwide prohibitionof creditors rights coverage would

rescue the title industry from thecreditors rights quagmire.

ALTA board Approves Chanes to Several Policy Forms

Adopted Forms:

ALTA Endorsement 29-06 Interest Rate Swap

Endorsement - Direct Obligation: The new ALTA

Endorsement Form 29-06 (Interest Rate Swap

Endorsement - Direct Oliation) is desined for issuance

when insurin the lien of the Insured Mortae that secures

a Swap Oliation. A Swap Oliation is dened as a

monetary oliation under the interest rate echane

areement and is often evidenced y a master areement

and conrmation(s). The endorsement is desined so that

it may e issued on or after Date of Policy as the Swap

Oliations and applicale areements are eecuted.

The endorsement does not insure with respect to rihts

or oliations set, created, or conrmed after the Date

of Endorsement. The new Form will enet industry

participants and customers y providin a standardized

endorsement that insures aainst loss y reason of the

invalidity, unenforceaility, or lack of priority of the lien of the

Insured Mortae as security for the Swap Oliation at

Date of Endorsement.

ALTA Endorsement 29.1-06 Interest Rate Swap

Endorsement - Additional Interest: The new ALTA

Endorsement Form 29.1-06 (Interest Rate Swap

Endorsement - Additional Interest) is desined for issuance

when insurin the lien of the Insured Mortae that secures

a Swap Oliation that is considered Additional Interest.

ALTA Single Transaction Indemnity Letter: Use of

a sinle transaction indemnity letter can facilitate and

speed the closin of the new transaction and provide a

predictale form that can e requested y a susequent

title insurer. This indemnity could e used in commercial

or residential transactions that are not a lready covered

y a Model Inter-Underwriter Indemnication Areement

or y a similar mutual indemnity areement, and could

also e used in transactions to replace the Model or other

mutual indemnity. The new form is desined for issuance

if a second title insurer is c alled upon to insure aainst a

specic defect, lien, encumrance, or other matter ased

upon an indemnity from a prior title insurer whose policy

insured aainst the matter. There is a need for the new

ALTA Sinle Transaction Indemnity Letter to provide a

standardized and predictale Indemnity Letter. The new

form will enet industry participants and customers y

standardized form of indemnity that can e promptly

produced.

ALTA Single Transaction Indemnity With Perormance

Letter: This new form differs from the ALTA Sinle

Transaction Indemnity Letter ecause it provides that the

indemnitor additionally arees to undertake reasonale

efforts to eliminate the Indemnied Matter within a

reasonale time.

First American CoreLogicreported that more than 11.3million, or 24 percent, of allresidential properties with

mortgages, were in negative equity

at the end of the fourth quarter of2009, up from 10.7 million and23 percent at the end of the thirdquarter of 2009. An additional 2.3million mortgages were approachingnegative equity at the end of lastyear, meaning they had less than vepercent equity. Together, negativeequity and near-negative equitymortgages accounted for nearly 29

percent of all residential propertieswith a mortgage nationwide.

D Hghlgh: Negative equity continues to be

concentrated in ve states: Nevada,which had the highest percentagenegative equity with 70 percent of allof its mortgaged properties underwa-ter, followed by Arizona (51 percent),Florida (48 percent), Michigan (39percent) and California (35 per-cent). Among the top ve states, theaverage negative equity share was 42percent, compared to 15 percent forthe remaining 45 states. In numerical

terms, California (2.4 million) anFlorida (2.2 million) had the largnumber of negative equity mortgaccounting for 4.6 million, or 41cent, of all negative equity loans.

e net increase in the number onegative equity borrowers in Q42009 was 620,000, with the larg-est percentage increases occurrin

in Nevada, Georgia and ArizonaAmong the states with the highenegative equity shares, Californiathe smallest increase in the negatequity share, which only rose 0.4percent to 35.1 percent. In numecal terms, Florida had the largestincrease in the number of negativequity borrowers rising by morethan 141,000, followed by Georg(65,000) and Illinois (55,000).

nly 25 P o all avMogg Udw

Roger Howard leads the Real

Estate Transactions roup at

the Los Aneles law firm

glaser, Weil, Fink, Jacobs,

Howard & Shapiro, LLP.

Howard has been practicin real estate and

business law for more than 35 years and is a

reconized epert on title insurance.

Q4 2009 Negative Equity For Top 15 CBSAs*

CBSA Name

Properties Witha MortgageOutstandingMortgages

NegativeEquity

Mortgages

Near**Negative

EquityMortgages

NegativeEquity Share

Near*Negativ

Equity Sh

Los Angeles-Long Beach-Glendale CA 1,551,801 419,437 58,580 27.0% 3.8%

Chicago-Joliet-Naperville I L 1,541,578 373,483 82,191 24.2% 5.3%

Atlanta-Sandy Springs-Marietta GA 1,236,393 385,068 100,004 31.1% 8.1%

New York-White Plains-Wayne NY-NJ 1,122,019 116,721 34,170 10.4% 3.0%

Washington-Arlington-Alexandria DC-VA-MD-WV 991,545 311,699 49,732 31.4% 5.0%

Phoenix-Mesa-Glendale AZ 978,242 564,764 37,423 57.7% 3.8%

Houston-Sugar Land-Baytown TX 931,105 116,263 56,789 12.5% 6.1%

Philadelphia PA 901,881 69,350 32,150 7.7% 3.6%Riverside-San Bernardino-Ontario CA 870,134 477,648 33,350 54.9% 3.8%

Dallas-Plano-Irving TX 742,941 112,038 58,262 15.1% 7.8%

Tampa-St. Petersburg-Clearwater FL 686,827 332,968 28,182 48.5% 4.1%

Baltimore-Towson MD 637,796 105,713 31,675 16.6% 5.0%

Seattle-Bellevue-Everett WA 637,017 95,959 32,914 15.1% 5.2%

Denver-Aurora-Broomfield CO 635,902 149,353 51,927 23.5% 8.2%

San Diego-Carlsbad-San Marcos CA 598,717 196,747 25,789 32.9% 4.3%

*Ranked y numer of active mortaes. This data only includes properties with a mortae. Non-mortaed properties are y definition noincluded. Only markets with 50,000 or more loans are included.

** Defined as properties in neative equity or within 5% of ein in a neative equity position. Source: First American CoreLoic


10/17


state president profile

What facet of your job do you find theost rewarding and why?find it rewarding to be trulyving the American dream as theranddaughter of immigrants. Iarted with a briefcase and an idea. Irew my business to the point wherewas able to sell it to a publicallyeld company. I find it mostwarding to provide my employeesith good jobs and be able to giveack to an industry both on t heate and national level that hasven me so much.

f you could have dinner with one personhistory, who would it be and why?

would like to have dinner with thealai Lama. I am a totally fascinatedith his vision, wisdom and tenacity.

Whats your favorite book or movie,nd why?The Wind in the Willowsby Kennethrahame because it reminds me ofy childhood.

If you werent in the title industry, whatwould you be doing?Event planning.

Tell us about one thing that people in theindustry would never guess about you?I wear old, worn-out clothes when Iam at home.

iduy iu:

What are the major issues impacting theindustry in your state?In addition to the down housingmarket which is affecting the industry

across the country, OLTA has twicein the past year faced challengesfrom the Ohio Legal AssistanceFoundation (OLAF), which receivesa portion of its funding fromthe interest on title agent IOTAaccounts. OLAF twice tried to gainadditional authority and revenuefrom these accounts. OLTA PastPresident Kevin Eichner testified onbehalf of the Association regarding

this issue. OLTA was successful inthwarting these challenges both timesby demonstrating the detrimentalfinancial effect it would have onconsumers purchasing homes.

Has any recent legislation been enactedin your state impacting the industry?Are there any pending bills that loom onthe horizon, and what impact could ithave?Recently, Senate Bill 124 wassigned by Gov. Strickland. Thislaw changed the transfer on deathdeed to an affidavit and also clarifiedlanguage in the statute regardingthe standardization of recordeddocuments. OLTA worked closelywith the Recorders Association todevelop mutually agreeable language.Currently, House Bill 292 wouldoutlaw transfer fee covenants whichhave been pervasive in other states. I tpassed the Ohio House in Decemberand is currently being debated in theSenate.

What advice do you have for agentslooking to compete in the new market?It is critical in t he current business

environment that agents look at theircomplete operation and structurethemselves to make every dollarcount. Doing business the old waydoes not work anymore. Agents needto reach out and network with theirfellow agents to stay relevant anddiscover new opportunities.

ho Ld tlaoo

resident: Amy Kaspar

tle: CEO/Presidentompany: Kasparnet, Inc.

dustry eperience: 35 years

ducation: bowlin green State University

state president profile

How many members does the state LTAhave? Has membership held steady the pastfew years? What are you doing to growmembership and keep members engaged?OLTA has nearly 900 membersacross the state. Membershiphas declined the past two years,coinciding with the decline in the realestate market and consolidation ofunderwriting companies. We have a

core group of members dedicated tostrengthening Ohios title industry.Membership renewals this year arearriving in the office at a rate of 10percent higher than the same periodlast year. OLTA keeps membersengaged through our strong advocacyefforts in the state legislative andregulatory arenas and by presentingeducation to address the challengesthey face every day in their offices.

How do you see RESPA reform and thenew GFE/HUD-1 forms impacting theindustry?Everyone is still working through theimplementation and the title industrywas more prepared for the changesthan the others involved in real estatetransactions. OLTA presented two

RESPA seminars in December. Wwere hoping for 100 attendees ateach program and ended up withmore than 250 at each. We planntwo RESPA workshops in Marchand already weve had more than register.

Approved LTI Courses:

Title101

Title201

EthicsintheTitleIndustry

CE Approved States:

ARKSMDMOMTNE

NMOKTNUTVAWIW

Need CE???Online CE Approved Courses Available Anytime! No travel required!Ethics CE Credits Also Available!

How do I earn credits?Signuporadistancelearningcourse,takeitinitsentirety,requestandpassthewrittenfnalexam(additional$50FinalExamFeeapplies).

Mentionthisadandtake50%ooallexamees!

AdditionalInormation:www.alta.org/lti/continuing.cm

1828 L Street, NWSuite 705Washington, DC 2003Phone: 202.331.7431Fax: 202.223.5843www.landtitleinstitute

LTI is the Educational Subsidiary of thAmerican Land Title Association

Prole ourState Leader

ALTA is prolin the president

of state land title associations. If

you would like to have your state

association included, contact

Jeremy ohe at [email protected].


11/17


inside alta

The Federal Conferenceallowed attendees to meetwith congressional leadersand discuss the importance

f the industry, sharing how federalecisions impact the future of yourusiness. e future of the mortgagearket, RESPA reform and a

otential agent data call were all hotpic discussions.ALTA President Mark Winterid the Federal Conference may

erhaps be the most important set ofeetings that ALTA holds each year.ttendees made a time and effort

ommitment because they understandhe importance of advocacy for thetle insurance industry, he added.There was a constant theme thate heard during the conference,

nd its the need for trust. Trust isquired to rebuild the real estate

ommunity, Winter said. Whate heard from HUD and NAICfficials is that regulators are turning

our industry for answers. We haveome a long way and are showingadership. We should all be proud ofur efforts.

During his presentation,Federal Housing AdministrationCommissioner David Stevens agreedthat trust must be re-established inthe mortgage community. Stevenspaid homage to the difficult tasksettlement agents have in thecomplex world of real estate finance.

You are the only people that reallyknow whats in the documents, hesaid. Nobody else is there to explainit, so the settlement agent is thereto explain it all. When it comes tounderstanding the GFE, people areexpecting the title industry to be theexperts.

Its a very unique time, becauseyou are the ones who are thecommunicating vehicles for theentire industry. To protect the legalrights of all participants involved,its a complex role the title insuranceindustry plays.

HUD applud tliduy eoOfficials with the U.S. Departmentof Housing and Urban Development(HUD) addressed nearly 175 title

insurance professionals who packed infor the general session seeking answersto issues surrounding the new GFE/HUD-1 forms.

Ivy Jackson, director of the officeof RESPA; Barton Shapiro, deputydirector, of RESPA Interstate LandSales; and Laura Gipe, compliancespecialist; participated on a panelmoderated by Dan Wold, chairmanof ALTAs RESPA ImplementationTaskforce.

The HUD officials complimentedALTA and its taskforce for proactivelyworking with the department and otherstakeholders in finding solutions andproviding education to the new rule.

Its been a pleasure to work withthe group, Jackson said. Instead ofputting your head in the sand or goingto the Hill and hoping that the rulemight be stopped, the title insuranceindustry has been at the forefront ofthis.

Wold also congratulated members ofthe Taskforce on being an invaluableasset in addressing issues surroundingthe rule.

Our goal has not been to arguepolicy, but to simply figure out thesenew rules and serve our members aswell as possible, he said.

Jackson said the department has beeninundated with e-mails from those inthe industry seeking guidance. HUDhas answered nearly 4,000 e-mails sincethe beginning of the year.

We have been trying to makesure we get through the back log ofquestions and get answers up to datethrough the FAQs, Jackson said.

2010 Fdlco dLobby Dy roudupMore than 175 title insurance professionals attendedhe larest ALTA Federal Conference and Loy Day.

inside alta

HUD provided guidance to agentsconcerned their lender clients arerunning afoul of the Rule. Concernsshould be handled in this fashion: Share the appropriate section of the

Rule or an FAQ with the lender,document your attempt.

Require the lender to make the de-mand in writing, document your le.

Follow the lenders instruction as longas it is not something egregious andcriminal like handling a fee that theyforgot to put on their GFE o thesheet.

Document your le.If you know that its fraud, then

you should stop, Jackson said. If itsa difference on what line a numbershould be put on, go ahead andproceed and just document your files.

naic Pl tll tl iduyipu ndd o D cllInsurance regulators discussed theNational Association of InsuranceCommissioners efforts to create anational title agent data call and itsimpact on the industry during the2010 ALTA Federal Conference andLobby Day.

Members of the NAIC StatisticalPlan Working Group offeredattendees an opportunity for dialoguewith the presenters on challenges andopportunities of such a plan.

The panel included Joe Bieniek,senior regulatory services advisor,NAIC; Paula Sisneros, directorof compliance and investigations,Colorado Department of RegulatoryAgencies; and Dudley Ewen, chiefmarket conduct examiner, MarylandInsurance Department. The sessionwas moderated by Frank Pellegrini,chair of ALTAs Agents andAbstracters Section. Pellegrini alsoleads a group of ALTA membersworking with the NAIC in developing

a potential call. Those who have inputon the data call should e-mail JustinAiles at [email protected].

The panel indicated the purpose ofthe agent data call is to gather a betterunderstanding of whats happeningat the agent level. Sisneros said theinformation the group is seeking fallsinto four buckets: risk avoidance;business profit; business expense; andloss. The group expects to examine,among other things, number ofpolicies, number of cancelled orders,amount of premium, premium split,salaries, rent, title plant costs, claimslosses and deductibles to insurers.

Lglv, rguloyiu adddSeveral legislative and regulatoryissues impacting the industry andALTAs efforts to protect theindustrys interests were addressed atthe Government Affairs Committeemeeting during the FederalConference.

A full room at the Marriott MetroCenter listened as Kurt Pfotenhauer,chief executive officer of ALTA,touched on the proposed ConsumerFinance Protection Agency, theproposed Borrowers Right to InspectClosing Documents Act, GSE reformand mortgage liquidity, Estate Tax,RESPA Reform, TILA Rulemaking,the NAICs efforts to create an agentdata call, and efforts at the statelevel to create government-run titleoperations.

Wh Hou BgMany attendees were fortunate toparticipate in a visit to the WhiteHouse and hear Elizabeth Vale,executive director of the White HouseBusiness Council, and Peter Swire,special assistant to the president foreconomic policy, National Economic

Policy, discuss the Administrationagenda for financial regulatory refoin 2010. As the attendees enteredthe White House, President Obamlanded on the South Lawn in theMarine One helicopter.

Lobby DyOn March 3, attendees held morethan 160 meetings with Membersof Congress, Senators and/or theistaffs, marking the associations laLobby Day.

In the House, ALTA membersurged support for the Borrowers Rto Inspect Closing Documents Acthe Senate, ALTA members arguthat providers of title insurance anreal estate settlement services, whiare state regulated and do not lendcredit, should not be swept up intofederal financial regulatory reformMany Senate offices were sympathto this view. This understandingis critical to ALTAs advocacy onthe proposed Consumer FinancialProtection Agency.

Shonna Cardello, president ofWhite Rose Settlement Services iPennsylvania, attended the FederaConference for the first time. The17-year industry veteran said shewas impressed with the high-ranking officials who took timeout of their schedule to meet andengage in dialogue with ALTAmembers. Cardello joined five othPennsylvania ALTA membersmeeting six legislators and staff frothe Keystone State.

The meetings were invaluableshe said. To be able to educateCongress on what we do every dainvigorating. We were able to mapersonal contact with the legislatstaff and I plan to keep in touch wthem as our industry changes.


12/17


2010 federal conference highlights

Federal Housing Administration Commissioner David Stevens agreed that

trust must be re-established in the mortgage community. Stevens paid

homage to the difcult task settlement agents have in the complex world of

real estate nance.

April 2010 > www.alta.org

new members

www.alta.org > April 2010 > TitleN

ALiFOrNiAilliam Jourdanorthern California Title Companyed Bluff

LOriDAarlyn Wienerarlyn J. Wiener, P.A.oca Raton

ristin Weissalmetto Title, LLCeminole

eOrgiAohn Bennettrigin Title & Escrow, Inc.ecatur

ohn G. Aldridge, Jr.ecurity Title & Abstract, LLClanta

DiANAichael Wilsondvantage Title, Inc.afayette

erry Leugerstle Services, LLCdianapolis

OuisiANAhomas Daiglentebellum Title, LLCaincourtville

heila Bonnettehoice Title, Inc.a Place

andy Olsonlson & ONeill, DBA Prime Titleafayette

AssAcHuseTTsnda Condinoenner Pellegrino, LLPpringfield

m Marie Phelanm Marie Phelan, LLC

evereArLANDhip McLeodlshore Title Services, LLChestertown

yron L. Huffmanyron L. Huffman, P.C.olumbia

aniel Harveyotton Duck Title Companyaltimore

ally McCashMalley, Miles, Nylen & Gilmore, P.A.alverton

MicHigANTrisha L. PoynterMBS Title AgencyBay City

Thomas KleinMember Advantage Title Agency, LLCAda

Patti DegennaroSurovell Settlement & Title Agency, LLCAnn Arbor

MissOuriCarol CockrellTitan Title & Closing of MissouriSpringfield

MississiPPi

Jennifer SignsBalch & Bingham LLPGulfport

MONTANAR. Mark JosephsonSweet Grass Title Co.Big Timber

NerAskAClint JohnsonSouthwest Title Co.Imperial

Ne JerseSarah Powers KirnLand Transfer Services, LLCMoorestown

OHiODeb HobbsBenchmark Escrow & Title Agency LLCCincinnati

Judd UhlOxford Title Agency ,Inc.Cincinnati

Jeffery WhitmanWhitman Title Security Inc.Findlay

PeNNsLvANiAMargaret IannuzziCorporate Settlement Services, LLCFeasterville Trevose

Alan PakulaIntegrity One Abstractof Pennsylvania, LLCNewtown

George MacDonaldKMF Settlement Services, LLCYork

Heather HagertyLincoln Closing Services, LLCGlenside

PeNNsLvANiA cONT.Dave WierzbickiPower Settlement ServicesWest Lawn

R. Joseph LandySullivan Trail Abstract, Inc.Sayre

rHODe isLANDEdward Avila, EsqRoberts, Carroll, Feldstein & Peirce, Inc.Providence

TeNNesseeCheryl YoungMontgomery Title, LLCMurfreesboro

TexAsEdith HillGray County Title Company, Inc.Pampa

virgiNiAScott WheatleyExecutive Settlement Services, LLCFairfax

ao Mmb

cOLOrADOLawrence CastleCastle Meinhold & StawiarskiDenver

kANsAsKaren PanterCollier Abstracts, Inc.Smith Center

MArLANDMichael N. Russo, Jr., EsquireAnnapolis

Teresa R. WilliamsMid-Atlantic Title Consultants, LLC

Marriottsville

TexAsCecil PattonFinancial Software InnovationsAustin

virgiNiAKenny CollierPrecision Reconciliation Services, LLCSandy Hook

tipac contributors

Diamond Club$5,000

Christopher AbbinanteFidelity National Financial

Anne AnastasiGenesis Abstract, LLC

Terry BryanFirst American Title Alaska

Diane EvansLand Title Guarantee Company

Parker KennedyFirst American Title Insurance Company

Frank PellegriniPrairie Title, Inc.

Kurt PfotenhauerAmerican Land Title Association

Mike PryorLenders Title Company

Mark WinterStewart Title Guaranty Company

Emerald Club$2,500 - $4,999

J. Herschel BeardMarshall County Abstract Co.

Mike ConwayFirst American Title Insurance Company

John HollenbeckFirst American Title Insurance Company

Steven NapolitanoFirst American Title Insurance Company

Platinum Club Members$1,000 - $2,499

William Burding, Jr.Orange Coast Title Company

Robert BurgessChicago Title Insurance Co.

Rob ChapmanOld Republic NationalTitle Insurance Company

Cara DetringPreferred Land Title Company

Blake HanbyWaco Title Co.

Carolyn Hoyer-AbbinanteWisconsin Title

John KorsmoKorsmo Consulting

Michelle KorsmoAmerican Land Title Association

Gregory KosinGreater Illinois Title Company

Randy LeeStewart Title Guaranty Company

Richard PattersonConnecticut Attorneys Title Insurance Co.

Jack Rattikin, IIIRattikin Title Company

Brenda RawlinsFirst American Title Insurance Company

John RobichauxIronclad Title, L.L.C.

Alfred Santoro Jr.Esquire Title Services, LLC

William VollbrachtLand Title Guarantee Company

John Voso, Jr.Old Republic NationalTitle Insurance Company

Tony WinczewskiCommercial Partners Title, LLC

Gold Club Members$500-$999

Peter BirnbaumAttorneys Title Guaranty Fund, Inc.

Chris BramwellFirst American Title Insurance Company

Jules Carville, IIICarville Law Oce

Wayne CondictFirst American Title Insurance Company

Nancy FarrellVenture Title Agency, Inc.

Wendy GibbonsStewart Title Guaranty Company

Mark GreekFirst American Title Insurance Company

Linda LarsonOld Republic NationalTitle Insurance Company

Ted LovecAmerican Title and Escrow

Esther Ronnie SemlakBurnet Title

J. Scott StevensonNorthwest Title

Silver Club Members$250-$499

David Baum

Chicago Title Insurance CompanyDennis W. BilaCorporate Settlement Solution

Nat FinkelsteinFinkelstein & Horovitz PC

Alison GareaKasparNet, Inc.

Sue GeigleProfessional Title Solutions Inc.

Ella GowerMiller Starr Regalia PLC

Karen JohnerNorth Dakota Guaranty and Title Comp

Amy KasparKasparNet, Inc.

Wesley LasseigneLenders Title Company

Timothy McDonnellOld Republic NationalTitle Insurance Company

Matt MorrisStewart Title Guaranty Company

Richard ReassReliant Title

W. Gary RobisonLand Title Guarantee Company

Kelly Lyn RomeoAmerican Land Title Association

Elissa Buonarota SantoroEsquire Title Services, LLC

James SibleyTitle Data, Inc.

Dale WildeConsolidated Abstract Co.

John WilesWiles Abstract & Title Company

TIPAC would like to thank our 2010Clu Level Contriutors. Thanksto you we are well on our way toreachin this years oal. Thank you!


16/17

TitleNews > April 2010 > www.alta.org

the last word

Changing Timesetreat rom creditors rights coverage does not signal the end o innovation.

r

arely does ALTA modify its policy and endorsement forms to reduce coverage.But the associations recent decertication of the ALTA 21-06 Endorsementform, and the announcement by several title insurers that creditors rightscoverage is no longer available, emanates from a growing concern among title

surers and their regulators that creditors rights coverage is no longer appropriate.The ALTA 21-06 Endorsement provided protection to a purchaser or a lender if ansured transaction was later set aside under bankruptcy or other insolvency laws relatingfraudulent or preferential transfers.Its important to point out that the basic ALTA policy forms themselves provideme coverage relating to creditors rights protection against previous transactions at is to say, transfers in the back chain, being unwound because of the application

f creditors rights laws. This coverage is unaffected by the decertification of the ALTA1-06 Endorsement.But what is the concern? Why is this happening now? And does this recent

evelopment suggest that other title insurance coverages will be narrowed, or eveniminated?Several factors contributed to the recent determinations to pull back coverage, including the sensitive

ature of the analysis necessary to underwrite the risk, the cost to defend creditors rights claims when theyise, recent unfavorable court decisions and the economic climate, especially as it relates to the commercialal estate market.Its unlikely that the reduction of creditors rights coverage will spread to other policy or endorsement

overages. And even while title insurers adjust underwriting standards to reflect market conditions and claimsxperience, we in the title industry must continue our long tradition of innovation.Innovation keeps title insurance relevant, provides value to our insureds and helps grease the wheels of theal estate transaction. This innovation generally starts with ALTAs member companies, then culminatesa standardized ALTA policy or endorsement form when its clear that the marketplace will benefit by a

niform product.The first ALTA title policy was a loan policy, adopted in 1929. Since then, ALTA has promulgated atast 30 major revisions or completely new policy forms, not to mention scores of standardized endorsements.he changes over the years have served various purposes rarely meant to reduce or eliminate coverage most always designed to either clarify or expand coverage.So the passing of creditors rights coverage is not the end of innovation, its merely reflective of the issueslating to this specific risk. Both ALTA and its member title insurers understand that meaningful coverages,

nd continual innovation in product development, underlie the value of title insurance.

John Hollenbeck

Treasurer, ALTA


17/17

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