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CONTACT: John
Mechem
Tina
Stow
(202) 557-2924
770-752-3985
jmechem@mortgagebankers.org
tina.stow@choicepoint.com
Mortgage Bankers Association
Releases
2006 MARI Mortgage Fraud
Report
WASHINGTON, DC (May 16, 2007) - The Mortgage
Bankers Association (MBA) today announced that the Mortgage Asset Research
Institute, LLC (MARI®), a ChoicePoint® (NYSE: CPS) Service, has delivered its Ninth
Periodic Mortgage Fraud Case Report to MBA. The report examines the current state of
residential mortgage fraud and misrepresentation in the United States
based on participating lenders' reports to MARI.
MBA has been a leader in raising the
national profile of mortgage fraud against lenders and bringing together all
those who are affected by fraud to help find solutions. MBA is leading an effort to obtain an
additional $6.25 million annually for the FBI to hire additional investigators
and prosecutors solely responsible for dealing with cases of fraud against
lenders. In addition, in March, MBA
signed an agreement with the FBI to promote the use of the FBI's Mortgage Fraud
Warning Notice.
"Fraud against mortgage lenders is a
growing concern to all who have a stake in our industry," said John M. Robbins,
CMB, Chairman of the MBA. "While we
continue to try to get our arms around the full scope of the problem, the MARI
report significantly helps the industry better understand where we need to focus
efforts in defending our companies and communities against mortgage fraud as it
increases in frequency across the nation."
Some highlights in the report
include the following:
- The number of reports in MARI's
Mortgage Data Industry Exchange (MIDEX®) database pertaining to 2006
originations is approximately 30 percent higher than the number of reports in
the 2005 book of business at the same time last year. Additionally, incidents of mortgage
fraud are now more evenly distributed across nearly all states whereas, in
prior years, reports tended to be concentrated in relatively few
states.
- There are changes in the rankings
of the states in terms of their mortgage fraud experience, with Florida taking over the top spot and Georgia
showing the greatest improvement from prior years' rankings.
- The most common types of fraud
found to date in 2006 originations are in the areas of employment history and
claimed income.
- California's reported fraud had been quite
low in the past few years, and some industry experts have suggested that its
problems were masked by high real estate appreciation. The recent slowdown in its housing
market may explain California's return to high ranking in this
year's report.
"Collaboration is the key for the
mortgage industry as it continues its efforts to fight mortgage fraud against
lenders," said Merle D. Sharick, Vice President and National Manager of Business
Development for MARI. "MARI is
pleased to be part of this effort by disseminating current data to MBA members
through our annual fraud report."
MARI provides MBA members the annual
reports as well as discounted fees to participate in MARI's database, the
Mortgage Industry Data Exchange (MIDEX).
The MIDEX system allows mortgage lenders, insurers and agencies to
exchange information about companies and professionals that have been involved
in loan transactions containing alleged fraud or material misrepresentations.
MARI also offers the Mortgage Fraud
Alert System (MFAS). This system
issues periodic alerts to subscribers about suspicious activities related to
mortgage lending.
A full copy of the report is
available on both MBA's website, www.mortgagebankers.org and on MARI's website, http://www.mari-inc.com/reports.html.
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The Mortgage Bankers Association
(MBA) is the national association representing the real estate finance industry,
an industry that employs more than 500,000 people in virtually every community
in the country. Headquartered in
Washington, D.C., the association works to ensure the
continued strength of the nation's residential and commercial real estate
markets; to expand homeownership and extend access to affordable housing to all
Americans. MBA promotes fair and ethical lending practices and fosters
professional excellence among real estate finance employees through a wide range
of educational programs and a variety of publications. Its membership of over
3,000 companies includes all elements of real estate finance: mortgage
companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits,
life insurance companies and others in the mortgage lending field. For
additional information, visit MBA's Web site:
www.mortgagebankers.org.
About Mortgage Asset Research
Institute
The Mortgage Asset Research
Institute, LLC (MARI) is a premier provider of mortgage fraud prevention
solutions and information services to the mortgage and financial services
industries. MARI's 600+ subscribers
represent the entities involved in over 80% of the wholesale mortgages
originated in the United
States.
MARI's Mortgage Industry Data Exchange (MIDEX) service assists lenders in
identifying mortgage and real estate professionals that have been associated
with fraudulent activity or serious misrepresentation. For more information about MARI's
services to combat mortgage fraud, go to www.mari-inc.com.
About
ChoicePoint
ChoicePoint (NYSE: CPS) provides
businesses, government agencies and non-profit organizations with technology,
software, information and marketing services to help manage economic and
physical risks as well as identify business opportunities. Each year, we help more than 100 million
people who are seeking to obtain jobs, fairly priced home and auto insurance,
and who wish to rent apartments.
Our authentication and anti-fraud tools improve efficiency and instill
confidence in the decision-making process for our customers and consumers. Consumers have free access to the
reports we create at www.ChoiceTrust.com.
Learn what we do to protect consumer privacy by visiting
www.PrivacyatChoicePoint.com and, for more information on our company, go to www.ChoicePoint.com.
MARI, MIDEX and ChoicePoint are
registered trademarks of ChoicePoint Asset Company.
Property
Tax Update
Representative Dean Cannon, House Chair
of the Joint Select Committee on Property Tax Relief and
Reform, updated members on the status of negotiations between
the House and Senate for property tax proposals in a memo to
House members today.
Dear Members:
I would like to take a few moments of
your time to provide an update on where we are on property
taxes.
In the final days of Regular Session,
Senator Webster and I focused on one particular approach which
has the potential to provide the levels of relief and reform
that our members seek and which also appears to be favorably
viewed by our partners in the Senate. As you may already know,
Speaker Rubio recently publicly discussed this methodology upon
which we hope to base a consensus product for property tax
relief and reform. Under this approach, homestead exemptions
would be dramatically increased based on a percentage of value
(as opposed to a flat dollar amount.)
Here is one example of how this might
work:
- On the home's first $300,000 in just
value, 80% of the value of the property would be exempt from
property taxes.
- On the next $700,000 in just value,
70% would be exempt.
- On just value above $1,000,000, 30%
would be exempt.
Under the above "tiered"
example, about 90% of existing homestead property owners would
benefit under the plan. Furthermore, the relief is targeted
proportionally to the homestead properties that have been
treated most unfairly as a result of the inequities created by
the Save Our Homes amendment, i.e., people who recently
purchased their home will receive greater relief than those
longstanding homestead owners who have been living in their
homes longer and receiving the valuation protection provided by
the Save Our homes amendment.
It's important to note that the above
tiered structure is only one example of how the percentage
based exemption methodology could be implemented. There are
several variables and options to be considered, including what
percentage(s) to use and to what the percentage exemption will
be applied, e.g., should the exemption be based upon a flat
statewide percentage, a percentage that varies county-by-county
like median home value, or a percentage based upon a tiered
structure similar to the one above, or some combination or
variation of these approaches.
With respect to the small percentage of
homeowners who may be better off under the existing Save Our
Homes structure than a percentage-based exemption, our goal
would be to "grandfather" their existing benefit.
Although they may not receive a reduction in their current
property taxes, they would no longer be trapped in their homes,
unable to move. The new larger homestead exemption would allow
longstanding homestead owners to move without an excessive
higher tax penalty, achieving a great reduction in the
inequities created by the Save Our Homes and practical
portability.
We may also be able to provide relief
to non-homestead property owners through this percentage-based
exemption approach as well. Both non-homestead residential
properties and commercial and industrial properties could be
granted an exemption equal to a percentage of their value and
would consequently see property tax savings in addition to
those achieved through a statutory roll-back and cap.
Although relief for the taxpayers
remains our goal, we should also recognize that this approach
will affect local governments differently than our original
rollback plan with which you are familiar. Under that plan,
local governments which had significant increases in revenues
which were not attributable to growth generally experienced the
largest cuts. Under this new approach, jurisdictions whose
property mix is heavily homestead residential may experience
different levels of reductions in property tax revenues as
compared to those jurisdictions whose property mix is
non-homestead residential, depending ultimately on what
percentages are set for the various exemptions.
Having identified conceptual common
ground for the basic foundation for a plan, we still have much
work to do. Among the remaining goals are providing targeted
relief for the elderly poor, affordable housing, and working
waterfronts. We will also need to incorporate the revenue and
millage cap mechanisms and address the challenges faced by
fiscally-constrained counties and cities, school districts,
hospital taxing districts, and children's service councils. We
are working daily on these and all the remaining issues in
addition to negotiating with the Senate over what level of
relief will be provided to Florida's taxpayers.
Based on agreement between the
Speaker's office and Senate President's office, the joint
meeting in Tallahassee scheduled for 1:00 on May 21, 2007, will
be devoted entirely to a presentation and discussion of the
details of the percentage-based exemption methodology and how
it may be implemented. Once that foundation is laid, we will be
positioned to address the remaining issues before us. For our
meeting on June 4, 2007, we will address the remaining issues
(such as relief for the elderly, affordable housing, working
waterfronts, protections for critical special districts, etc.)
which will allow us to tailor our work product and target those
taxpayers who need relief the most while protecting essential
government services. Over the coming weeks, I believe we will
craft a plan which both chambers and both parties can support
but, most importantly, that will provide meaningful property
tax relief and reform for the citizens of Florida.
Thank you for your time.
Dean Cannon
State Representative
District 35
Eric D. Prutsman, Esq.
Prutsman & Associates, P.A.
P.O. Box 10448
Tallahassee, FL 32302-2448
850.894.6601 (office)
850.894.6604 (fax)
850.210.2525 (cell)
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MBAF
LEGISLATIVE UPDATE
February 2, 2007
By Eric Prutsman
The
Legislature’s much heralded property insurance reform
Special Session is complete. For a detailed summary of all of
the changes passed by the Legislature and signed into law by
Governor Crist, click on the following link:
http://www.flsenate.gov/Publications/2007A/Senate/reports/summaries/pdf/sessum07A.pdf
Below is brief summary of the main items in the
legislation, followed by an update of what to expect from the
Florida Legislature during the 2007 Regular Session:
Florida Hurricane Catastrophe Fund
The act substantially increases the amount of hurricane
losses covered by the Florida Hurricane Catastrophe Fund (Cat
Fund), which is a tax-exempt state fund administered by the
State Board of Administration (SBA). The Cat Fund reimburses
insurers for a portion of their residential hurricane losses
in exchange for a premium that is much lower than what private
reinsurers charge. This results in lower premiums to
policyholders and enables a greater number of policies to be
written. The Cat Fund helps stabilize the property insurance
market, particularly after an active hurricane period, as
Florida experienced in 2004 and 2005, that was followed by
increased costs and lower availability of private reinsurance.
Mandatory Rate Filings to Reflect Savings Due to Expanded
Cat Fund Coverage
All residential property insurers are required by the act
to make a rate filing with the Office of Insurance Regulation
(OIR) reflecting the savings or reduction in loss exposure to
the insurer due to the expanded Cat Fund coverage. The OIR
must calculate a presumed factor to be used in the required
rate filings to reflect the impact to rates of the changes,
using generally accepted actuarial techniques and standards.
The OIR may contract with an appropriate vendor to advise the
office in determining the presumed factor or factors.
Each insurer’s rate filing must take into account the
presumed factor for any policy written or renewed on or after
June 1, 2007, to reflect all expanded Cat Fund coverage
options available to the insurer, whether or not the insurer
purchases the coverage. Additional costs to the insurer for
private reinsurance or loss exposure that duplicates the
expanded Cat Fund options may not be factored in the rate. An
insurer may not obtain a rate increase due to the election of
coverage options from the Cat Fund.
Rates for Coverage from Citizens
The requirements, standards, and procedures for
establishing rates for Citizens’ policies are substantially
revised, in an attempt to provide immediate rate relief to
Citizens’ policyholders while establishing a long term
standard based on actuarial soundness, rather than
noncompetitiveness or collecting sufficient premium to have
reserves and reinsurance to cover a specified probable maximum
loss. Specifically, these changes are as follows:
• Deletes the requirement added in 2006 that Citizens charge
rates sufficient to purchase reinsurance to cover specified
levels of probable maximum loss for each of its three
accounts. This has the effect of avoiding the 56.5 percent
average premium increase for Citizens’ High-Risk-Account (HRA)
that was under consideration by Citizens.
• Deletes the requirement that Citizens’ rates be
non-competitive and no lower than the top 20 insurers. In
certain areas, this requirement resulted in rates that are
higher than the actuarially sound rate.
• Rescinds the approved, actuarially sound rate increase
that took effect January 1, 2007, and requires Citizens to
provide refunds to persons who have paid this rate. This has
the effect of avoiding an average 23.1 percent rate increase
in the HRA for homeowners’ policies.
• Freezes rates at the December 31, 2006 level for the
remainder of 2007, except for any rate decreases implemented
under the January 1, 2007 rate filing and any further rate
decreases that may be approved during 2007 (such as a rate
decrease for a policy change like the sinkhole exclusion
pending before OIR).
Expanded Eligibility for Commercial Coverage in Citizens
The act authorizes Citizens to provide commercial
nonresidential (i.e., business) coverage, by including such
coverage within the Commercial Lines Account (CLA), currently
limited to commercial residential coverage. This authorizes
multiperil coverage for commercial property in all areas of
the state, except that non-wind coverage would be provided
under the CLA for commercial property obtaining wind-only
coverage in the HRA. The act is silent on the limits of
coverage that would be offered. The act specifies that the
plan of operation may establish limits of coverage (for all
policies and accounts), which would be determined by the
Citizens board and subject to approval by the Financial
Services Commission. The act also provides that the plan of
operation may require commercial property to meet specified
hurricane mitigation construction features as a condition of
eligibility for coverage.
Coverage Exclusions; Deductibles
The act includes three provisions that would allow
policyholders to significantly reduce their windstorm coverage
and to assume the risk of loss, in exchange for a lower
premium, as follows:
• Requires insurers to make available to policyholders the
option to exclude windstorm coverage, if the policyholder
personally writes a statement that he/she does not want such
coverage and provides documentation of approval by any
mortgage or lien holder.
• Eliminates maximum allowable deductibles, but requires a
written statement by the policyholder and approval by a
mortgage or lien holder if the deductible is in excess of 10
percent for a home valued at less than $500,000. Insurers are
still required to offer annual hurricane deductibles of 2
percent, 5 percent, and 10 percent of policy limits, with
certain exceptions. The act allows, but does not require, the
offer of a higher deductible.
• Requires insurers to make available to policyholders the
option to exclude coverage for contents, if the policyholder
personally writes a statement that he/she does not want such
coverage.
Nonrenewal Restrictions; Timely Payment of Claims; Other
Requirements
The act imposes the following requirements on property
insurers:
• Requires 100 days written notice of nonrenewal of a
residential property policy, rather than 90 days. However,
notice is required by June 1, or at least 100 days notice,
whichever is earlier, for a nonrenewal effective between June
1 and November 30 (hurricane season).
• Requires property insurers to pay or deny a claim within
90 days of the receipt of the claim, unless the failure to pay
the claim is caused by factors beyond the control of the
insurer that reasonably prevent payment.
• Prohibits property insurers from denying coverage based
solely on the age of the structure and requires consideration
of wind resistance of the structure.
• Requires insurers to allow personal lines residential and
commercial policyholders to pay premiums on a quarterly or
semiannual installment plan.
• Requires an insurer to provide the policyholder the option
of selecting an appropriate reduction in the policy’s
hurricane deductible or selecting the appropriate discount
credit or other rate differential.
Auto Insurers or Affiliates Must Write Homeowners Insurance
Effective January 1, 2008, the act requires insurers
writing private passenger automobile
insurance in Florida and that write homeowners’ policies in
other states, to write homeowners’ coverage in Florida,
unless an affiliate writes homeowners insurance in Florida.
Florida Building Code
The act requires that the Florida Building Code be revised
as follows, in order to repeal the so-called “Panhandle
exemption” and other changes to strengthen the windstorm
resistance requirements of the code.
Catastrophic Ground Cover Collapse Coverage; Sinkholes
The act requires property insurers to provide coverage for
catastrophic ground cover collapse, defined as geological
activity that:
• Results in the abrupt collapse of the ground cover that is
clearly visible to the naked eye;
• Results in structural damage to the building and its
foundation; and
• Results in the insured structure being condemned and
ordered to be vacated by the appropriate governmental agency.
What to expect from the 2007 Legislature
Property tax reform. Property tax reform. Property tax reform.
Without question, now that the Legislature has tackled
property insurance reform, next on the list of legislative
targets is lowering property taxes for Floridians. Expect
to see dozens of bills filed that address the issue from a
variety of angles. Doubling the homestead exemption,
altering how property is valued, and providing for the
portability of a home’s property tax valuation, are just a
few of the ideas we are planning to see debated.
And, it’s been a few years since we’ve seen predatory
lending legislation, but plan on reviewing legislation that is
being developed by the Office of Financial Regulation that
is currently in draft form. Eliminating
residential mortgage fraud also will be on the docket, as
three bills have already been filed to address the issue:
HB 349 by Representative Gelber, SB 240 by Senator
Bullard, and SB 349 by Senator Margolis, each create the
Florida Residential Mortgage Fraud Act, creating criminal
penalties for committing mortgage fraud. The legislation
as filed is identical to existing legislation in Georgia on
mortgage fraud. The MBAF will be reviewing this legislation
and working with the sponsors to assist them in passing a bill
that effectively reduces mortgage fraud in Florida.
As bills continue to be filed, we will provide additional
updates and status reports on legislation that is of interest
to the members of MBAF.
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