Kerrie: Well it’s good to be back after our little hiatus.

Jim: Hiatus? I didn’t think that a hiatus was healthy.

Kerrie: No, silly. You’re thinking of a hiatal hernia. A hiatus is like a vacation. So tell our readers what have you’ve been up to?

Jim: I’ve been doing a lot of research.

Kerrie: Not in merry old England again, I hope.

Jim: No, just keeping up with a lot of changes in the law that will affect closing practices. How about you?

Kerrie: Shoe shopping. And by the way what happened to our old title to the article “Opinions of Title”?

Jim: You know what they say about opinions – opinions are like…

Kerrie: Yes, everyone has one and they all stink. So tell me something I don’t know.

Jim: Well, the new Predatory Lending Law that took effect January 1, 2007 is going to change how we close residential transactions here in Southwest Ohio.

Kerrie: How so? I thought that law was aimed at mortgage brokers and loan officers and brought residential mortgage transactions under the coverage of the Ohio Consumer Sales Practices Act.

Jim: True, but there were some provisions that affect title companies and will add more forms to the closing transaction.

Kerrie: More forms! What can they possibly add that is not already covered?

Jim: The new law requires that closing protection be offered to all parties in a residential mortgage transaction which includes title insurance.

Kerrie: Lenders always get closing protection letters from the title insurance company that covers losses from failure to follow closing instructions and mishandling of closing funds. What’s new?

Jim: While it has always been available to sellers and buyers, albeit unbeknownst to them, the law now requires that the title agency give notice of the protection to all parties to the transaction. Closing protection is now a “title insurance product” which must be paid for. As usual, the lenders will continue to require it for their own protection and the borrowers will continue to pay for it.

Kerrie: Albeit aside, why would sellers and buyers want this “unbeknownst” closing protection?

Jim: Erpenbeck! Sellers and buyers can obtain protection against theft of the closing funds and failure to follow written instructions that the title agent has agreed to. And that is the rub. The protection requires written instructions from the seller and/or buyer and with round table closings there are no written instructions from the seller and buyer as there are in escrow closings.

Kerrie: So there will be more forms or the closing protection is useless.

Jim: Right. I think that the closing agents are going to move closer to escrow type closings regardless of the long-standing general opposition to this type of closing in our region. With all of the changes, the trial lawyers will be looking to file claims against the mortgage brokers and will bring the title agents in the litigation. Everyone will be adding forms to protect themselves from litigation, if that is even possible.

Kerrie: Sounds like you are mad at the trial lawyers again. Is that all the dirt you’ve got?

Jim: No, but we can dish some more in later columns.