Flat Fee Recording in Michigan

Jienelle R. Alvarado an Attorney at our sister company, Schneiderman & Sherman, P.C. is the author of the below article on flat rate recording in Michigan published in the DSNews.

law BH

Michigan’s governor recently signed bills SB-0599 and HB-5165 into law, which amend MCL 600.2567 and MCL 565.412. These amendments, which take effect on October 1, 2016, modify the fees associated with recording mortgages, assignments, judgments and other documents in the majority of counties for the State of Michigan.

At the present, to record a mortgage, the county charges $14.00 for the first page ($15.00 in Wayne County) and $3.00 for each additional page.Effective October 1, 2016, however, the fee for recording a mortgage, assignment, release, deed or judgment for the majority of Michigan counties is $30.00 (“flat fee”), regardless of the number of pages.[1] Charter counties, such as Macomb and Wayne, have the right to opt out of the changes and, instead, create their own home rule charters tailored to their unique circumstances as specified in the Charter County Act, MCL 45.501 et seq.

Proponents of the flat fee highlight benefits to consumers, lenders, settlement agents and the register of deeds (“ROD”). For example, the flat fee provides consumers certainty as to the cost of recording real estate documents. With respect to the recording of mortgages, in most instances, consumers benefit from the $30.00 cap. In addition, the flat fee will reduce the ROD’s burdens of counting pages and rejecting recording submissions based on an incorrect page count. Most importantly, perhaps, is the benefit all parties to a real estate transaction should experience. Specifically, the flat fee should expedite the closings of real estate transactions otherwise delayed as a result of lender compliance with Consumer Financial Protection Bureau (“CFPB”) regulations. Specifically, the CFPB regulations require lenders to provide consumers with exact recording charges, as part of the Closing Disclosure document (“CD”), not less than three days before closing. The page length of a mortgage, however, can vary based on the lender, the type of real estate, the size of the real estate’s legal description, the number of signing parties, the type of mortgage loan, and/or whether a lender prepares a mortgage for print on letter or legal size paper. Consequently, the lender may not have an accurate page number count three days before closing. If the recording charges the lender states in the CD turn out to be incorrect, the parties cannot close on schedule. Therefore, starting October 1, 2016, consumers, settlement agents, and lenders should see substantially fewer real estate closing delays with respect to instrument recording fee calculation.

—————————–

[1] As has always been the case, if a discharge or assignment attempts to discharge or assign multiple mortgage liens in the same county by single discharge or assignment, the county will continue to charge an additional $3.00 per mortgage that is discharged or assigned by that single discharge or assignment.

Best Homes Title – In the News…

Legal League 100 Names New Advisory Council Chairman

Neil-Sherman-8305d11c

Neil R. Sherman

Neil R. Sherman, managing attorney at Detroit-based Schneiderman & Sherman PC, has been elected as chairman of the advisory council of the Legal League 100, a membership group comprised of default servicing law firms and service providers.

Sherman focuses his practice in the areas real estate law, and specifically bankruptcy, foreclosure ,and eviction processes. He is a member of the American Legal and Financial Network and is acting chair for Manufactured Housing Committee. He is also a member of the Mortgage Bankers Association, Michigan Mortgage Lender’s Association, and the State Bar of Michigan. He is also the president of Best Homes Title Agency and is  a licensed title agent and is a faculty member for Sterling Education Services.

Sherman, of Bloomfield Hills, earned his Bachelor of Arts in psychology at the University of Western Ontario and his juris doctor from the Michigan State University Detroit College of Law.

Neil Sherman Named New Advisory Council Chairman for Legal League 100

The Legal League 100 Announces New Advisory Council Chairman and Council Members

Dallas, Texas, April 21, 2016 –The Legal League 100, a membership group comprised of default servicing law firms and service providers, announced that Neil R. Sherman, managing attorney at Detroit-based Schneiderman & Sherman P.C., has been elected as Chairperson to the group’s Advisory Council. The announcement came at the close of the League’s successful Spring Servicer Summit, which was held April 14 in Dallas, Texas. He replaces Glen Rubin, managing partner at Rubin Lublin, LLC, who stepped down at the end of his term.

The Legal League 100 Advisory Council was introduced in December 2011 as a means to progress the reach of the Legal League 100 to a higher-level so legislative changes and servicer involvement is heightened. The Advisory Council is comprised of a Chairperson, Vice-Chairperson, and seven advisory council members, who are all members of the Legal League 100.

“The Advisory Council works diligently to promote the interests of the Legal League 100 throughout the industry,” said Ed Delgado, President and CEO of the Five Star Institute and Ex-Officio of the Legal League 100. “Neil is passionate, creative, and just the leading figure the Legal League 100 needs as law firms face today’s contracted market and landscape of heightened regulation. I am looking forward to seeing what new innovations Neil and the Advisory Council bring to the organization.”

Other leadership changes to the Advisory Council include Michelle Garcia Gilbert of Gilbert Garcia Group, P.A., being elected to the role of Vice Chairperson and Roy A. Diaz of SHD Legal Group, P.A., and David G. Marowske of Potestivo & Associates, P.C., being elected to Advisory Council general positions. Jeffrey B. Fisher of BP Fisher Law Group, Erin M. Laurito of Laurito & Laurito, LLC, and Richard Nielson of Nielson & Sherry, PSC, were all re-elected to Advisory Council general positions. The newly-elected and re-elected members will join current Advisory Council members Adam Codilis of Codilis and Associates, P.C., and J. Anthony Van Ness of Van Ness Law Firm, PLC.

In addition, the Legal League 100 announced that Stephen M. Hladik, Partner, Hladik, Onorato & Federman, LLP, was elected as the Government Affairs Subcommittee Chairperson.

About the Legal League 100
The Legal League 100, created in collaboration with the Five Star Institute, is a membership group for default servicing law firms and select service providers. The Legal League 100 acts as an advocate on behalf of its members to affect change in the industry from Wall Street to Washington, D.C. Made of up leaders in the default servicing industry, the Legal League 100 is committed to supporting the mortgage servicing industry through education, communication, and relationship development. It supports its multifaceted membership by serving as a leading force for industry standards, education, and market research.

About the Five Star Institute
The Five Star Institute (FSI) fosters education and collaboration within the mortgage banking industry and supports lenders, servicers, asset managers, service providers, agents, brokers, and other industry segments. Five Star Institute publications include DS News, a monthly-magazine and online resource dedicated to default servicing, and MReport, which serves the broader mortgage field. FSI also hosts the yearly Five Star Conference and Expo, the largest event in mortgage servicing. To learn more about Five Star membership groups and opportunities, visit TheFiveStar.com.

Best Homes Title Receives Fidelity Circle of Excellence Award

Congratulations to Best Homes Title Agency as a recipient of the 2015 Fidelity National Circle of Excellence award. We accept this award on behalf of our entire team throughout the State of Michigan. Thank you. Thank you.

20160520_111443

4th Quarter Commercial Corner-The Recording and Perfecting of a Lost Mortgage by Affidavit

While the recording of Lost Document or Lost Mortgage Affidavits has been a long standing practice, when such an original document appears to have been lost between execution and the intended recording, Case Law and Bankruptcy Trustee challenges have left a lack of clarity as to the validity, enforceability and priority of such Affidavits.  But, after a great deal of hard work spearheaded by the Michigan Land Title Association, the Michigan Legislature recently (finally) passed a series of laws (Public Acts 347, 348 and 349 of 2014), resulting in revisions to MCL 565.201(6) and MCL 565.451a.

The statutes set forth requirements for the contents of such Affidavits which must be followed, including a statement by the affiant that “to the best of the affiant’s knowledge, the original mortgage was delivered from the mortgagor to the mortgagee.”  Additionally, the affiant must state that he/she either mailed a copy of the affidavit and unrecorded mortgage by first-class mail or registered mail, return receipt requested, to the mortgagor at their last known address, or personally served a copy of said documents on the mortgagor.

These statutes, designed to eliminate ambiguities and confusion regarding such recorded documents, are retroactive, and apply to mortgages already recorded in this manner.  This serves to codify common practices and should result in fewer title claims and more security for mortgage lenders.  Congratulations to the MLTA and all who were involved with this effort.

Know Before You Owe

In our last issue we mentioned the Dodd Frank Act and the resulting Consumer Financial Protection Bureau (CFPB).  In the CFPB’s efforts to provide easier-to-use mortgage disclosure forms, improve consumer’s understanding  and ability to shop for mortgages, and to prevent surprises at the closing table, the CFPB has created its Know Before You Owe program, and will be combining the elements of the Real Estate Settlement Protection Act (RESPA) and the Truth-in-Lending Act (TILA) into a new Loan Estimate (replacing the GFE) and a Closing Disclosure, which will replace the HUD-1 in August, 2015.  The CFPB also created the Qualified Mortgage (QM) rules for lenders, which we discussed in our last issue, focused on the consumers’ ability-to-repay.

But, real estate investors and individual sellers, considering seller financing as part of their transaction, should know that the QM rules may also apply to them!  The CFPB has issued rules regarding seller financing, which includes carry-back mortgages and land contracts.  Investors and Realtors should be aware of these rules, as they may impact the sellers’ options and obligations.

Essentially, there are two different rules applying to seller financing, which may allow a seller to avoid being characterized as a “loan originator” under the CFPB regulations.  A lender/seller may qualify under the 3-Propety Exclusion (within a 12 month period) or the One-Property Exclusion (1 property in 12 months).  In the 3-Propety Exclusion, the seller financed mortgage (or land contract) must fully amortize (no balloon payment or negative amortization), have a fixed rate of interest or a rate that adjusts no sooner than 5 years, and the lender/seller must determine that the consumer/buyer has a reasonable ability to repay.  The lender/seller may be a natural person or an organization, but must be the owner of the property.  The lender/seller may not be a builder.

In the One-Property Exclusion, only natural persons, their estates or trusts may be the lender/seller (again, they must be the owner).  The repayment schedule may have a balloon payment, but may not have negative amortization.  There is no obligation relative to the buyer’s ability to repay.  It may be a fixed rate financing or adjustable rate with reasonable annual and lifetime limits on rate increases.  The National Association of Realtors issued a bulletin entitled Impact of Loan Originator Final Rule on Seller Financing, which includes more detail on this subject.  Seller (and Realtor) beware.

3rd Quarter Commercial Corner

Third Party Sheriff’s Sale Purchaser Opportunity to Secure During Redemption

Of possible interest to Third Party Sheriff’s Sale Purchasers (or prospective purchasers), seeking to protect and secure their purchased property, in January of this year, MCL 600.3240(13) became effective, which allows a sheriff’s sale purchaser to inspect the interior of the foreclosed property during the redemption period and initiate an action for possession if the inspection indicates that the property is damaged.  MCL 600.3237 and MCL 600.3238, effective June 19, 2014, replace MCL 600.3240(13) and outline the steps a sheriff’s sale purchaser must take in order to lawfully inspect the interior of the foreclosed property and commence an action for possession, during the redemption period.
Before inspecting the interior of the property, the purchaser must serve the mortgagor with two pre-inspection notices.  The second of which must be at least seventy-two (72) hours in advance of the date of inspection.  If the initial inspection of the interior reveals actual or imminent damage to the property, or the inspection is unreasonably refused, the purchaser can then send a notice of the purchaser’s intent to commence an action for possession, unless the property is repaired within seven (7) days after the mortgagor’s receipt of the notice.  MCL 600.3238(11) provides examples of “damage,” including but not limited to local ordinance violations, exterior conditions that present risk of criminal activity on the property, stripped plumbing, electrical wiring, siding, or other metal material, missing or destroyed structural aspects.
The current version of the law provides the investor (third party purchaser), or its counsel, and the courts with greater guidance as to how an investor puts itself in a position to remediate conditions on a “damaged” property prior to expiration of redemption.  With this greater guidance and clarity, local communities will hopefully begin to see investors bid more aggressively on at risk properties.

2nd Quarter Commercial Corner

Endorsements, which add or modify the coverage provided by a title policy, have become more uniform over the years, being sanctioned by the American Land Title Association. Endorsements that were once created and filed locally in Michigan have given way to nationally standardized language.  As such, they are periodically reviewed and occasionally revised by the ALTA forms committee.  While such revisions may often be minor language adjustments, every so often more dramatic changes in the coverage are approved by the ALTA and promulgated nationally.

A prime example of this is the recent revisions of the ALTA 9 Endorsement, once identified as the Restrictions, Encroachments, Minerals (“R.E.M.” or “Comprehensive”) Endorsement.  This Endorsement was first used in the 1980’s to bundle affirmative coverages, which most lenders routinely requested in connection with matters shown on Schedule B of the Loan Policy or were not covered by that policy.  It insured the holder of the indebtedness (the lender) against loss or damage resulting from a number of potential adverse matters.

Those matters included possible violations of covenants, conditions and restrictions (CC&Rs), encroachments of the improvements onto adjoining land or into easements on the land, and damage to existing improvements as a result of the exercise of mineral rights for extraction or development. Similar, although more limited coverage of this sort was later provided with Owner’s Policies – the ALTA 9.1 for improved land and the ALTA 9.2 for unimproved land.

The ALTA forms committee has carved up and created several variations of the former ALTA 9, resulting in a virtual menu of ALTA 9 Endorsements, including variations when the property is under development or has existing improvements.  The issue of enforceable “Private Rights” is another issue that may be afforded coverage for a Loan Policy.  And, the new ALTA 9.1 and 9.2 Endorsements now only provide CC&R coverage.  There are separate endorsements created to deal with coverage for encroachments and the exercise of mineral rights.  Through this all, the basic ALTA 9 for Loan Policies is still intact. But, it becomes rather clear that the endorsement landscape is a continually changing one.  Check with your experienced commercial title professional at BHT Commercial, if you have any endorsement or title coverage questions.