Fall 2016 Massachusetts Spotlight

Fall 2016

Massachusetts

S P O T L I G H T C O N N E C T I N G W I T H O U R A G E N T S T H R O U G H C O M M U N I C AT I O N

I T ’ S N E A R LY A Y E A R …

TRID IN PERSPECTIVE By: Ruth Dillingham, Senior Underwriting Counsel, Corporate Underwriting In the year since the TRID Rule was implemented in October 2015, we have seen that some things about conducting residential closings have changed. And, we have seen that some things have not, but have become more focused for the lender as well as the conveyancer. In this article, we will look at both, as well as speculate about some of the challenges that lie ahead.

What hasn‘t changed?

First and foremost, the Gramm-Leach-Bliley Act (GLBA) of 1999 and its regulations regarding privacy protections did not change due to the new TRID Rule. However, their importance has been highlighted by the format of the disclosures given to the borrower as part of the closing transaction. Formerly, the protected personal information about the loan itself was on a separate disclosure (the Truth-in-Lending form) which was not seen by a seller. With the advent of the Closing Disclosure, all of that information is contained on the CD and can potentially be shared with the seller (if the full 5-page document is given to both parties). This has led to concerns about protecting a borrower’s Non Public Information, which in turn has led to the frequent use of the Seller-only CD. One additional issue has been the concern of sharing the CD with a real estate agent. While agents need to have ‘a form’ to show the particulars of the closed transaction, closing attorneys are leery of giving them so much information about the borrower’s loan. And some lenders have prohibited the practice of sharing the CD altogether. Each office and each lender have learned that they need to coordinate in order to have policies in place for GLBA compliance.

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In This Issue

1-2

It’s Nearly a Year ... TRID in Perspective

3-5

10 Questions About FIRPTA

6

Is Someone Pretending to Be You and Communicating with Your Customers?

6

Notice of Right to Purchase Owner’s Policy of Title Insurance

7

Asked & Answered

7

Over-Limit Authorization Request

8

AgentNet® - Easily Reset Passwords and Obtain Forgotten User IDs

9

News Brief

10

Employee Spotlight

11

Massachusetts Underwriting Communications

12

Barnstable County Excise Tax Advisory

13

Improving Lender Title Policy Delivery Addressing Missing Policy Requests

14

Pass-Thru Marketing Program

14

Contact Information

Another issue that isn’t new is that of Tolerances and Changed Circumstances. The idea that certain fees could not rise over a capped amount without a valid reason has been part of the lending landscape since 2010 when the last Real Estate Settlement Continued on next page

The information contained in this document was prepared by First American Title Insurance Company (“FATICO”) for informational purposes only and does not constitute legal advice. FATICO is not a law firm and this information is not intended to be legal advice. Readers should not act upon this without seeking advice from professional advisers. First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates. ©2016 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF

I T ’ S N E A R LY A Y E A R … T R I D I N P E R S P E C T I V E Continued

Procedures Act (RESPA) changes took effect. What has changed is the expansion of the items in the Zero Tolerance fee category (where no increase is permitted from the fee quoted on the Loan Estimate to the Closing Disclosure without a documented change of circumstance). With all of the lender’s fees and potentially the attorney’s fee in this group, there have been some times when lenders have pushed back on increases and some times when closing attorneys felt the pushback was misplaced.

Finally, Vendor Management has been a staple of lender concerns since 2012, and the new TRID Rule did not change that either. But with increased concerns about the liability that the new Rule imposes on them, lenders are looking more strategically at their business partners and at the role of ALTA Best Practices compliance in selecting those who will conduct their closings. Another component of this has been the increased scrutiny of Service Level Agreements and Closing Instructions, as lenders attempt to push some (or most) of their potential liability onto the closing attorneys.

What has changed?

The relationship between the lender and closing attorney.

Clearly, collaboration is the way to get the transaction closed and in many instances, for the closing attorney, that has meant learning the business processes of a lender. As they have grappled with Loan Origination Systems that were not fully functional on day one, as well as deciding how to orchestrate a closing process in which they deliver the CD, lenders have faced a large task. Some items that might have seemed minor are in fact, major recurring issues such as: explaining and accounting for fees, how to show seller credits (itemize or lump sum), how to show credits from the lender (by type or as a general) and how to have consistent fee names.

Lender’s compliance concerns with their increased liability have driven much of the discussions when there is no ‘black or white’ answer to a situation. Unfortunately, the CFPB has not issued much in the way of guidance or clarification and has not issued FAQs. An exchange between the CFPB and the Mortgage Bankers Association in late December highlighted this situation as the MBA pointed out numerous fact patterns that rendered a loan unsalable in the secondary market. The CFPB responded that those examples were only technical errors. Technical or not, if the loan cannot be sold, the lender considers the error fatal. It is hoped that the assurance from the CFPB of a Notice of Proposed Rule Making this summer will address some of these issues in an amendment to the Rule.

First American Title | Massachusetts Spotlight | Fall 2016

What challenges lie ahead?

Closing attorneys will need to continue to learn about lender issues in order to be responsive to client concerns.

Increases in fees, the addition of fees, itemization of components of fees, and timing of information exchanges all impact the lender’s compliance obligations under the Rule.

While it is a change from past procedures, it is here to stay.

Another issue arising from treatment of fees is that of quoting a lump sum amount or itemization of component fees. There are both practical and legal considerations to be taken into account. On a practical side, there is the requirement of alphabetizing, as well as coordination of naming conventions.

The lender and closing attorney need to agree on where the fee is placed, as well as its tolerance category. From a legal perspective, the type of fee (even by its name) can mean that the amount is, or is not, included in the finance charge, with the consequence of an impact on the APR. And of course, RESPA has not gone away. Unearned or duplicative fees may not have the same Section 8 concerns of the past, but CFPB is not shy of bringing actions where they consider an act to be an unfair, deceptive or abusive action or practice.

What possible ‘Pain Points’ lie ahead?

We know that eventually the CFPB and the Agencies (Fannie Mae and Freddie Mac) will end their hold harmless periods and lenders will feel the impact as investors insist on buybacks or fail to fund a transaction that is deemed out of compliance with the Rule.

Also, with additional scrutiny in the form of bank examinations and audits, lenders are rightfully concerned about penalties being assessed by their regulators as well as lawsuits due to private rights of action under TILA where no such civil liability existed under RESPA. Some of these issues may be addressed in revisions to the Rule, and to that end, First American Title and ALTA are monitoring the CFPB carefully and will be providing comments on the needed revisions once the proposed rule is issued. We will, of course, keep our attorney agents advised of that as well.

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10FIRPTA TOP

QUE S TIONS ABOUT

1. WHAT IS FIRPTA?

United States tax law requires that all persons, whether foreign or domestic, pay income tax on the disposition of U.S. real property interests. Domestic persons or entities typically are subject to this tax as part of their regular income tax; however, the U.S. needed a way to collect taxes By: Wade Wallace from foreign persons on the sale Underwriting Counsel of U.S. real property interests. The First American Title Foreign Investor in Real Property Act (“FIRPTA”) was enacted to provide such a mechanism and requires that a buyer withhold and remit to the IRS a certain percentage of the sales price in anticipation of the taxes that will be due from the foreign seller on such transaction.1 FIRPTA applies in nearly all transactions, residential and commercial, in which a foreign owner of a U.S. real property interest sells By: Jennifer Bloodworth such interest. The amount withheld is Sr. Underwriting Counsel First American Title not the tax itself, but is payment on account of the taxes that ultimately will be due from the seller.

2. WHAT ARE THE WITHHOLDING REQUIREMENTS? Unless an exemption or reduced rate applies, FIRPTA requires that the buyer withhold fifteen percent (15%) of the sales price in all transactions in which the seller of a U.S. real property interest is a “Foreign Person.”

3. WHO IS A “FOREIGN PERSON”?

FIRPTA defines a “Foreign Person” by defining who is not a Foreign Person, so it is important to understand the following definitions: a. A “Foreign Person” is defined as any person other than a “United States Person.”

First American Title | Massachusetts Spotlight | Fall 2016

b. A “United States Person” is any of the following: (i) a U.S. Citizen; (ii) a resident alien who has a Green Card; (iii) a resident alien who meets the Substantial Presence Test; (iv) a domestic (U.S.) corporation, partnership or other legal entity (except a “Disregarded Entity” as defined by IRS Regulations), trustee or other fiduciary; (v) a Disregarded Entity, the owner of which qualifies as a “United States Person” under (i), (ii), (iii), or (iv), above; or (vi) a foreign entity which has elected to be treated as a domestic corporation (as evidenced by acknowledgement copy of election furnished by IRS). c. The Substantial Presence Test: Under FIRPTA, a Foreign Person is considered a U.S. Person for the calendar year of sale if they are present in the United States for at least: i. 31 days during year of sale AND ii. 183 days during the 3 year period that includes year of sale and the 2 years preceding year of sale, but only counting: a. All days during year of sale; b. 1/3rd of the days during the first preceding year; and c. 1/6th of days during the second preceding year.

When counting days, you may not include the days that a Foreign Person is present in the U.S. as a representative of a foreign government (e.g. foreign diplomat), as a teacher or student under a “J”, “Q”, “F” or “M” Visa, or as a professional athlete in a charitable sports event.

d. A “Disregarded Entity” is any single-owner domestic business entity (such as a single-member limited liability company) other than a corporation, unless it has elected to be treated as a domestic association for tax purposes.

4. WHAT IF THE SELLER IS A DOMESTIC LLC? Single-Member LLC: A single-member domestic limited liability company, while a recognized legal entity, is considered a “Disregarded Entity” for tax purposes. Accordingly, if the Page 3

Top TEN Questions About FIRPTA (continued) seller is a single-member limited liability company, then you have to look to the identity of the sole member of the limited liability company. If the sole member is a “Foreign Person,” then the FIRPTA withholding rules apply in the same manner as if the foreign sole member was the seller.

Multi-Member LLC: A domestic limited liability company with more than one owner is not considered a “Disregarded Entity” and is taxed differently than single-member limited liability companies. Accordingly, the FIRPTA rules regarding withholding do not apply to multi-member domestic limited liability companies.

5. WHAT ARE SOME EXCEPTIONS TO THE WITHHOLDING REQUIREMENTS? While there are several exceptions to FIRPTA withholding requirements that eliminate or reduce the required withholding, the most common exceptions are discussed below. a. Seller not a “Foreign Person.” One of the most common and clear exceptions under FIRPTA is when the seller is not a Foreign Person. In this case, the seller must provide the buyer with an affidavit that certifies the seller is not a Foreign Person and provides the seller’s name, U.S. social security number or taxpayer identification number (“TIN”), and address. b. Personal Residence Exemption. Under the Personal Residence Exemption, no withholding is due when (1) the buyer is acquiring property that will be used as the buyer’s residence, (2) the sales price is $300,000 or less, and (3) the buyer elects to waive withholding.

See additional requirements set forth, below, under “Reduced Rate of Withholding.” c. Reduced Rate of Withholding: This new exception, which went into effect February 16, 2016, is similar to the Personal Residence Exemption, but provides for a reduced rate instead of a full exemption.2 Under this exception, a reduced withholding equal to ten percent (10%) of the sales price is due when (1) the buyer is acquiring property that will be used as the buyer’s residence, (2) the sales price is more than $300,000 but not more than $1,000,000, and (3) the buyer elects to waive withholding.

In order to qualify for, either, the Personal Residence Exemption or the Reduced Rate of Withholding, the buyer or a member of the buyer’s family must have definite plans to reside at the property for at least 50% of the number of days the property is occupied by any person during each of the two 12-month periods following the date of closing. If the buyer fails to meet the occupancy requirements, the buyer may become liable to the IRS for the difference between the amount that was actually withheld, if any, and the amount that should have been withheld, plus interest and penalties.

Under this exception, the buyer is not required to First American Title | Massachusetts Spotlight | Fall 2016

make this election, even if the facts may support the exemption or reduced rate and the settlement agent should advise the buyer that, neither, the exemption nor the reduced rate automatically applies. Instead, if the buyer opts to invoke the exemption or the reduced rate, the buyer must make an affirmative election to do so. This election should be in the form of an affidavit from the buyer setting forth the buyer’s decision and, if applicable, the facts that entitle the buyer to the exemption or reduced rate. d. Seller Obtains Withholding Certificate. In some cases, the seller has applied for and received a withholding certificate from the IRS that reduces or eliminates the withholding requirement. A buyer relying on this exception must obtain a copy of the Withholding Certificate and retain a copy in buyer’s records for five (5) years. e. Foreign Corporation or Single-Member LLC has “checked the box.” There is an exception for foreign corporations or single-member limited liability companies that are subject to FIRPTA withholding that have “checked the box” on the applicable IRS form to be taxed as a domestic corporation. Domestic corporations are not subject to the withholding rules under FIRPTA, so withholding will not be required in cases where entities otherwise subject to withholding have elected to be taxed as a domestic corporation.

Importantly, to take advantage of this exemption from withholding, the entity must file Form 8832 with the IRS, obtain IRS approval, and provide evidence of this status to the buyer. The buyer will need to retain a copy of this approval in buyer’s records for 5 years.

6. ARE TINS REQUIRED FOR ALL PARTIES? IRS regulations require all buyers and foreign sellers of U.S. real property interests to provide their TINs, names, and addresses on withholding tax returns, applications for withholding certificates, notice of non-recognition, and other related IRS documents when disposing of a U.S. real property interest.

While it is best practice to have the TINs for all parties at the time of closing, it is possible to close without the TINs under the following guidelines: 1. If the buyer does not have a TIN, the buyer must remit the proper withholding forms within 20 days after closing; however, the buyer will also need to remit, to a separate address in a separate package, a properly completed application (Form W-7) for a TIN simultaneously with remitting the withholding forms. Please refer to the instructions for each form for further instructions and mailing addresses.

2. If the seller does not have a TIN, the buyer must remit the proper withholding forms within 20 days after closing, but the seller’s TIN information will be left blank. While

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Top TEN Questions About FIRPTA (continued) the TIN is not necessary for closing, it should be noted that the seller will have to obtain a TIN in order for the IRS to process the funds and, in fact, upon receipt of the withholding documentation, the IRS will follow up with the seller instructing the seller to apply for a TIN. For this reason, many settlement agents provide the friendly advice that the seller submit its separate application for a TIN by the time of closing.

Additional information can be found in the IRS publication entitled “ITIN Guidance for Foreign Property Buyers/Sellers,” which is available at www.irs.gov.

7. WHAT IF THIS IS A SHORT SALE OR THERE ARE OTHERWISE INSUFFICIENT PROCEEDS FOR WITHHOLDING? There are times, such as short sales, when the proceeds from the sale are insufficient for withholding under FIRPTA. However, FIRPTA withholding requirements are based on the sales price, not the seller’s proceeds, so there is no automatic exemption for transactions in which the seller is receiving zero or insufficient proceeds. In these cases, the seller will need to apply for an exemption or reduced withholding from the IRS. As with applying for a TIN, this process can take some time, so it is imperative that the settlement agent raise these issues with the foreign seller as early as possible in the process.

8. WHAT IF LESS THAN ALL SELLERS ARE FOREIGN PERSONS? The analysis of whether the buyer must withhold funds under FIRPTA must be undertaken with respect to each seller separately, even if the seller is a married couple. Generally, withholding is required for each Foreign Person based on such person’s percentage of ownership. For example, if there are four joint owners, each owning a 25% interest, and one of the sellers is a Foreign Person, then the buyer is required to withhold only 25% of the required withholding. If the seller owns the real property interest as a married couple, the IRS deems each spouse to own 50%. In this case, if only one spouse is a Foreign Person, then withholding only as to such spouse’s one-half interest is required.

the event the buyer does not properly withhold, the buyer may be liable to the IRS in an amount equal to the amount of taxes that should have been withheld, plus interest and penalties.

While the buyer has the ultimate liability to the IRS, the collection and disbursement of funds to the IRS as part of the closing process creates a responsibility and potential liability for the settlement agent if the matter is not properly handled and documented. Accordingly, it is important that your file reflect specific written direction from the buyer if anything other than fifteen 15% is being withheld. For example, if a buyer elects to waive the withholding or withhold a reduced rate, settlement agents should obtain an affidavit from the buyer setting forth the buyer’s decision and, if applicable, the facts that entitle the buyer to the exemption or reduced rate along with an acknowledgment that the buyer has been given the opportunity to obtain independent tax or legal advice.

10. HOW IS THE WITHHOLDING SUBMITTED AND REPORTED? Generally, the funds withheld must be forwarded, together with IRS Forms 8288 and 8288-A, to the IRS within 20 days after the closing date. However, if an application for a withholding certificate is submitted to the IRS before the date of a sale and the application is still pending with the IRS on the closing date, the correct withholding tax must be withheld, but does not have to be reported and paid immediately. The amount withheld (or lesser amount as determined by the IRS) must be reported and paid within 20 days following the day on which a copy of the withholding certificate or notice of denial is mailed by the IRS.

MORE QUESTIONS? If you have any further questions about FIRPTA withholding, please feel free to contact your local First American underwriter; however, please understand that First American cannot provide legal advice to any party regarding FIRPTA. This article is intended as informational only and should any party need legal advice, the settlement agent should advise such party to engage legal counsel.

9. WHO IS RESPONSIBLE FOR COMPLYING WITH FIRPTA? While the seller is the party subjected to the tax, it is up to the buyer to withhold the appropriate percentage of the sales price when purchasing U.S. real property from a “Foreign Person.” In

FIRPTA uses the phrase “amount realized,” which typically is the sales price; however, if you or any of the parties involved have any questions, the buyer should consult with legal counsel of buyer’s choosing to ensure that the proper figure is being used when calculating the withholding amount.

1

2 This amount recently was increased from 10%.

According to the strict reading of the effective date for recent amendments to FIRPTA, the fifteen percent (15%) withholding applies to transactions in which the closing, or disposition of real property, occurs on or after February 17, 2016; however, it has come

First American Title | Massachusetts Spotlight | Fall 2016

to our attention that the IRS may be interpreting the language to mean that February 16, 2016, is the effective date. While this is ultimately up to the buyer to decide, we recommend using the date that the IRS will be using.

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Is Someone Pretending To Be You and Communicating With Your Customers?

By: Michele Green, SVP, Senior Business Counsel-Agency Division

We have received numerous reports from agents around the country about fraudsters impersonating our agents and attempting to steal money from unsuspecting consumers and lenders. Although you have been hearing from us on these issues for over a year now, please realize that the threats have not lessened and are not going away.

Just in the last couple of weeks: • An agent called their local First American Title office and reported, “I have a closing coming up and, like I always do, I have communicated with my client via email about how they are to provide required funds for closing. After exchanging emails, it was decided that they would bring a cashier's check to closing. Unbeknownst to me, my clients subsequently received another email that LOOKED like an email from my office – it even had my letterhead! The email instructed my clients to wire the funds for closing to a new account and provided wire instructions. Just by chance, my clients were confused about how to complete the wire, and called my office to ask about it. Thank goodness! We quickly figured out that a fraud was being attempted and caught it before any of my clients’ funds were lost.”

• Another First American Title agent called her local office in a complete panic – She received a call on a Monday from the bank that holds her escrow account letting her know that it was overdrawn. The last week had been a busy one, but the agent was sure that all had gone smoothly. After going over her account records, she realized that one of the lender funding wires from one of the closings conducted last week never made it into her account. When she contacted her lender client, she was told the lender had received “her” email notifying the lender of a change in wire instructions for her escrow account. She hadn’t sent any such email, and in the flurry of closings during a busy week, she hadn’t verified the receipt of each and every wire, especially since this lender had emailed her indicating that the wire had been sent.

In both cases, cyber criminals hacked into an email account of one of the parties to the transaction and monitored email traffic about the closing. At the right time, the fraudsters created “spoof” emails that appeared to be from the agent, and had communicated with clients and customers in order to misdirect closing funds. How can you protect yourself and your clients? One way that we know can help: CONSIDER HOW YOU PROVIDE YOUR WIRING INSTRUCTIONS TO YOUR CLIENTS AND CUSTOMERS! Across the country, many of our agents have decided to provide wire instructions via hard copy only – and with a notation on that hard copy that states essentially “If you receive an email or any other communication that appears to be from my office and that contains new, revised or altered bank wire instructions, consider it suspect and call our office at a number you trust.

It is extremely unlikely that our bank wire instructions will change.” No matter how you get the message across to your clients, let them understand that if anyone tells them how or where to send their money, those instructions need to be confirmed by a phone call to your known phone number – NOT by email.

NOTICE OF RIGHT TO PURCHASE OWNER’S POLICY OF TITLE INSURANCE Below are links to the Notice of Right to Purchase Owner’s Policy of Title Insurance. First American Tile has provided a copy of the documents to all major 3rd-party software providers. There are two versions of the document: • One for transactions involving a mortgage on a residential property.

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/Notice-of-Right-to-Purchase-Owners-Policy-PT.pdf

• One for cash transactions involving Massachusetts residential property.

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA_NoticeofRights.pdf

First American Title | Massachusetts Spotlight | Fall 2016

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Asked

& Answered

From Your Massachusetts Underwriting Team

1.

2.

I’m missing a discharge from a lender who is no longer in business, has not been merged into another lender, or closed by governmental action; in short, obtaining a discharge is a dead end. What do I do? One solution to this problem is by discharging the mortgage by one of the alternative methods provided by MGL c. 183, Sec. 55.

These methods are commonly referred to as a “discharge by affidavit.” The key to successfully discharging by an alternative method is to obtain the necessary affidavits with substantiation and provide notice, if required. The statute provides a number of different options. For a further discussion on the various options, see the January 2009 Eagle News on AgentNet® or https://registration.firstam. com/creativeservices/Newsletters/2016_MA_Summer/ MA_MortgageDischargeAct.pdf to read the article.

Title is in the name of X as Trustee of an inter vivos revocable trust, which does not name a successor trustee. X has died. How can I convey the property interest out of the trust? Under the recently enacted Mass.

Uniform Trust Code, MGL c. 203E, Sec. 704, a new trustee can be appointed in a case of total vacancy of the office of trustee by 100% of the beneficial interests in the trust—i.e., all of the beneficiaries. If the beneficiaries are not identified in the body of the recorded trust or in the MGL c. 184 §35 certificate, a petition to the probate court may be necessary to establish authority of those claiming to be beneficiaries to appoint the new trustee. An easy alternative is to use the promulgated forms by the Probate Court to have the court appoint a trustee. See Probate Court Forms MPC266, Petition for Resignation/Removal/Appointment of Successor Trustee and MPC 782, Decree and Order on Petition for Resignation/ Removal/Appointment of Successor Trustee.

3.

There is an Order of Conditions on title issued by the local Conservation Commission and there is no Certificate of Compliance. How should this be listed on the title policy? An Order of Conditions does not need to be listed as an exception on a title policy, unless there is a recorded notice setting forth a violation or an intention to enforce. It is worthy to note that, the Massachusetts Court of Appeals in Lyon v. Duffy, 77 Mass.

App. Ct. 860, held that an Order of Conditions (OOC) has no effect on the marketability of title, and does not create a defect, lien or encumbrance on title. For a further discussion on Orders of Conditions, see the February 2008 Eagle News on AgentNet or https://registration.firstam. com/creativeservices/Newsletters/2016_MA_Summer/ OrdersofConditions.pdf to read the article.

4.

Borrower is obtaining a construction loan with the intent to build a single family home on a vacant parcel. The to-be-built single family home is appraised at $X. Can I issue an owner’s policy for the appraised amount before construction even begins? Yes. You may issue an ALTA Owner’s Policy for the improved appraised value, but you must add the following pending improvement language to Schedule B-1 of the policy:

NOTE: Pending improvements to the insured premises, this Policy insures to the extent of the current value of the property at date of Policy, but increases as to the extent of improvements are made in good faith and without notice or knowledge of any defects in or objections to the title.

AUTHORIZATION REQUEST New Request

OVER-LIMIT AUTHORIZATION REQUEST

Amendment/Supplement to Original Request Dated:

Email:

Phone:

Policy Form Type Owners Lenders ALTA CLTA Extended Standard Fee Leasehold Named Insured

Policy Form Year 1992 2006 _______ Policy Amount $ Report Attached Preliminary report Title commitment

POLICY 2

Policy Form Type Owners Lenders ALTA CLTA Extended Standard Fee Leasehold Named Insured

Policy Form Year 1992 2006 _______ Policy Amount $ Report Attached Preliminary report Title commitment

POLICY 3

Will submit later Policy Form Type Owners Lenders ALTA CLTA Extended Standard Fee Leasehold Named Insured

Policy Form Year 1992 2006 _______ Policy Amount $ Report Attached Preliminary report Title commitment

To access the form: https://registration.firstam.com/creativeservices/states/MA/Forms/HiLi_AuthorizationRequest.pdf Once you fill it out, please send the form along with the copy of a commitment or the specimen policy to any member of our underwriting team for speedy approval.

First American Title | Massachusetts Spotlight | Fall 2016

If yes, attach a copy of existing policy(ies).

POLICIES REQUESTED: Complete one box for each policy (each row)

Will submit later

As you know, any time an agent issues a policy over his or her agency contract limit, our underwriting department needs to review and approve the transaction. In order to simplify this process, we have created a fillable PDF form for a quick and efficient approval process.

Fax:

PROJECT INFORMATION: Title Order No. County: Estimated Closing Date: Exceptions to be in: Policy 1: Policy 2: Policy 3: Project name (if any): Is this a reissue of existing policy?

Yes No Current use: Raw Land 1-4 Residential Multi-Family Shopping Center Commercial Industrial Other (describe): Who is in possession?

Tenants per leases Owner Unknown Has there been an inspection?

Yes No Ordered Is there a survey?

Yes No Ordered

POLICY 1

JUST A REMINDER

Agent or Branch Name: Address: Contact Name:

Will submit later Additional Information Preliminary Reports/Title Commitments are attached (Required) High Risk Information Completed on Page 2. (Required) Mechanic’s Lien Risk Addendum is attached (Form 1065) Reinsurance Addendum is attached. (Form 2000.A) Additional Information is attached.

Reissue is involved and copies of existing policies are attached

Submitted By: First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, First American Title, and firstam.com are registered trademarks or trademarks of First American Financial Corporation and/or its affiliates.

Endorsements

Policy 1

2

3

Type Access Physically Open Street Address/Improv. Type Comprehensive/REM Contiguity Doing Business Encroachment, Improvements Remain Environmental Lien Fairway First Loss Foundation Inflation Interest Rate Swap Last Dollar Mechanic’s Lien Navigational Servitude Neg. Amortization Non-Imputation Revolving Credit Separate Tax Parcel Shared Appreciation Street Address Subdivision Compliance Surface Entry - Minerals Surface Entry - Water Survey Tie-In/Aggregation Usury Variable Interest Zoning

Form*

Other: *Reference the endorsement form number.

IF THE ENDORSEMENT IS ALTERED IN ANY WAY, PLEASE SPECIFY AND ATTACH A COPY.

Dated: AMD: 02/2014 ©2014 First American Financial Corporation and/or its affiliates. All rights reserved.  NYSE: FAF

Page 7

AgentNet

ÂŽ

Easily Reset Passwords and Obtain Forgotten User IDs A recent enhancement to AgentNet enables users to change their password and obtain forgotten User IDs without having to contact the Agency Service Center (ASC) for assistance.

Retrieve Forgotten Password From the login page, click I Forgot My Password. Enter your User ID, click Submit, and a security question will appear for you to answer. When you answer the security question correctly, a temporary password will be emailed to you.

Retrieve Forgotten User ID From the login page, click I Forgot My User ID. An email containing your User ID will be sent to the email address on file.

Change Password Select the Profile tab from the AgentNet home page. Select Change Password at the bottom of the page. You will be prompted to enter your current password then create and confirm your new password.

Note: Passwords need to be reset every 365 days.

Note: An AgentNet account will be locked after five unsuccessful attempts to enter a password. If you do get locked out, contact the Agency Service Center at 866.701.3361 for assistance.

First American Title | Massachusetts Spotlight | Fall 2016

Page 8

News Brief

RESIDENTIAL

LENDERS WIN WHEN ORIGINATORS ATTEND THE CLOSING While lenders have long touted the value have having the originator of a mortgage loan attend the closing, a recent analysis from STRATMOR Group uncovered added benefits.

By: Brian Honea, MReport, August 17, 2016 Read more: http://www.themreport.com/news/data/08-17-2016/7772642

BUYERS ARE WILLING TO PAY EXTRA FOR SMART HOMES Could “smart home” technology — features such as network-connected thermostats, security devices, appliances and lighting — help you sell your home faster and for more?

By: Kenneth R. Harney, The Washington Post Writers Group, August 26, 2016 Read more: http://newsok.com/article/5515376

HARP EXTENDED INTO 2017; FHFA PLANS NEW REFINANCE PROGRAM The Federal Housing Finance Agency announced it extended the Home Affordable Refinance Program until Sept. 30, 2017 in order to create a smoother transition period for a new refi product it is planning to launch toward the end of 2017.

By: Brena Swanson, HousingWire, August 25, 2016 Read more: http://www.housingwire.com/articles/37868-harp-extended-into2017-fhfa-plans-new-refinance-program

DO YOU KNOW THE MOST POPULAR HOME STYLES? Brush up on your home architecture knowledge with this infographic below spotlighting the features and differences between some of the most popular home styles today.

By: Daily Real Estate News, REALTOR®Mag, August 18, 2016 Read more: http://realtormag.realtor.org/daily-news/2016/08/18/do-you-knowmost-popular-home-styles

WRITING DOWN CONSTRUCTION DETAILS IS A NECESSITY Good, written details for a construction project begin with an accurate quote from the contractor, which details the scope of work, products used, assignment of responsibilities and time schedule.

COMMERCIAL

COMMERCIAL REAL ESTATE OUTLOOK: 2016.Q3 NAR’s latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets.

By: National Association of REALTORS®, 8/29/2016 Read more: http://www.realtor.org/reports/commercial-real-estate-outlook

ECONOMY WATCH: WHY US CRE MIGHT BENEFIT FROM BREXIT Now that it’s been a few months, is the impact of Brexit showing up in markets as far afield from the U.K. and the EU as the commercial real estate market in the United States?

By: Dees Stribling, Commercial Property Executive, 8/26/2016 Read more: https://www.cpexecutive.com/post/economy-watch-why-us-cre-mightbenefit-from-brexit

CBRE: YEAR-OVER-YEAR CRE ORIGINATIONS SHOW POSITIVE MOMENTUM After a sluggish start in the first quarter of this year, the second quarter saw a 2.1 percent increase in commercial real estate loan originations across the U.S., up by 5.7 percent year-over-year, according to data provided to Commercial Observer from CBRE. By: Danielle Balbi, Commercial Observer, 8/19/2016 Read more: https://commercialobserver.com/2016/08/cbre-year-over-year-creoriginations-show-positive-momentum

IS SUBURBAN OFFICE MARKET SET FOR A COMEBACK? Big city office markets are posting the strongest performance in decades, with the U.S. unemployment rate falling to less than 5.0 percent and office vacancy in many regions in the single digits.

By: Robert Carr, National Real Estate Investor®, 8/19/2016 Read more: http://nreionline.com/office/suburban-office-market-set-comeback

REAL ESTATE TO GET ITS OWN STOCK CATEGORY Real estate companies have been included in a category with banks and insurance firms since 1999 in stock markets across the globe. But that soon will change.

By: Daily Real Estate News, REALTOR®Mag, 8/31/2016 Read more: http://realtormag.realtor.org/daily-news/2016/08/31/real-estate-get-itsown-stock-category

By: Don Magruder, Daily Commercial, August 20, 2016 Read more: http://www.dailycommercial.com/homes/article_995007b4-5b4911e6-be14-bba744b21c8c.html

First American Title | Massachusetts Spotlight | Fall 2016

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e e y o l p m E

SPOTLIGHT CERISE K. POTTS, ESQ. Agency Sales Representative One of the newest members of our Massachusetts team, Cerise is toujours prete a donner de l’aide a ses clients (always willing to assist to her customers).

An Agency Sales Representative, Cerise is proficient in French and studied in Lyon, France, the fall of 2011 to complete her LLM in International Law. As the liaison between First American Title and our agents, Cerise enjoys fielding questions and educating agents about policy types and rates, software, AgentNet® capabilities and functionality, marketing tools, and of course, TRID! Cerise joined First American Title in 2015 and has learned a lot about the title industry in her first year.

“I don’t know everything, and I’m the first to admit it.

However, I am willing to find an answer, or to put an agent in touch with someone who may have an answer.”

Before moving to Massachusetts in 2015, she practiced law with a firm in Baton Rouge, Louisiana, and focused on commercial construction litigation and real estate transactional work. Cerise is a licensed attorney in both Louisiana and Massachusetts.

Cerise grew up sailing competitively in single-handed or double-handed dinghies, but lately enjoys cruising on a 33-foot sailboat that belongs to her fiancé’s parents.

Fishing for striped bass around the South Dartmouth area is another favorite pastime, along with anything she can do with her dog, a Great Pyrenees named Gretel. Cerise enjoys live music and leans towards indie music, classic rock and live jazz in New Orleans. Any brass band is fun!

Cerise may be reached at 617.634.2775 or cpotts@firstam.com First American Title | Massachusetts Spotlight | Fall 2016

CHRISTINE KUMIEGA PROVOST Branch Counsel and Senior Underwriting Counsel Christine recently celebrated her 10th anniversary with First American Title and has over 30 years of experience in the industry… but in her words, “I’m not that old!” She serves as Branch Counsel and Senior Underwriting Counsel and her responsibilities include underwriting all types of transactions from complex commercial, multi-site and multi-state collaborations to residential.

Christine loves her job and feels that it’s hardly work when she is putting together the title puzzles and honing her problem-solving skills. She enjoys delivering presentations, interacting with agents at trainings, seminars, and roundtables and she is a frequent author of educational articles. Christine operates in a ‘judgementfree zone’ and encourages customers to be inquisitive about their transactions. “There are no dumb questions; we are all in this together, and collaboration makes us efficient and wise.” She is a member of the American Land Title Association, Massachusetts Real Estate Bar Association, Hampden County Bar Association – Real Estate Section, and the First American Title Insurance Company Bankruptcy Practice Group.

An avid gardener and self-professed foodie, Christine enjoys traveling and spending time with her awesome husband, Lloyd, and her family. She is active in her community and volunteers at THRIVE New England, a diverse organization currently developing a whole-person aftercare program for child victims of human trafficking.

Christine may be reached at 800.579.0462 or cprovost@firstam.com Page 10

MASSACHUSETTS U N D E R W R I T I N G C O M M U N I C AT I O N S 2015* MA-2015-001-Advisory Title: Claims Notification Email Scam Written by: Massachusetts Underwriting Department Date Issued: March 18, 2015

MA-2015-001-Standard Title: Insuring foreclosures in light of the Pinti Decision Written By: Gene Gurvits, Senior Underwriting Counsel Date Issued: August 17, 2015

MA-2015-002-Advisory Title: Check Scam Written By: Massachusetts Underwriting Department Date Issued: September 29, 2015

MA-2015-003-Advisory Title: Fraudulent Diversion of Payoff Checks Written By: Massachusetts Underwriting Department Date Issued: November 9, 2015

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2015-001-Advisory-ClaimNotificationEmailScam.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2015-002-Advisory-CheckScam.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2015-001-Standard-PintiUnderwritingStandardwithREOSalesRiskAssessment.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2015-003-Advisory-FraudulentDiversionofPayoffChecks.pdf

MA-2015-002-Standard Title: Amendment to M.G.L. c. 244, Section 15 - Act Clearing Titles to Foreclosed Properties Written By: Gene Gurvits, Senior Underwriting Counsel Date Issued: December 3, 2015

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA-2015-002Standard-AmendmenttoM.G.L.c.244Section15-ActClearingTitlestoForeclosedProperties.pdf

2016 YTD* MA-2016-001-Caveat Title: W.J. Bradley Mortgage Capital, LLC and Related Companies Written By: Massachusetts Underwriting Department Date Issued: March 23, 2016

MA-2016-001-Standard Title: Insuring Access over Railroad Rights of Way Issued By: Massachusetts Underwriting Department Date Issued: April 6, 2016

MA-2016-002-Standard Title: Access Through Native American Lands Issued By: Massachusetts Underwriting Department Date Issued: May 13, 2016

MA-2016-003-Standard Title: Series LLCs Written By: Massachusetts Underwriting Department Date Issued: June 21, 2016

MA-2016-004-Standard Title: Financial Abuse of Elders and Dependent Adults Issued By: Massachusetts Underwriting Department Date Issued: June 22, 2016

MA-2016-001-Advisory Title: Changes to FIRPTA Withholding Requirements Issued By: Massachusetts Underwriting Department Date Issued: June 30, 2016

MA-2016-005-Standard Title: Statutory Trusts Imposed by the Perishable Agricultural Commodities Act (“PACA”) and by the Packers and Stockyards Act (“PSA”) Issued By: Massachusetts Underwriting Department Date Issued: July 1, 2016

MA-2016-002-Advisory Title: FRAUD ADVISORY – Imposter Calls Posing as Closing Attorney Issued By: Massachusetts Underwriting Department Date Issued: July 12, 2016

MA-2016-006-Standard Title: Matricula Consular Identification Card and Foreign Identification Forms Issued By: Massachusetts Underwriting Department Date Issued: August 4, 2016

MA-2016-007-Standard Title: OFAC Guidance Issued By: Massachusetts Underwriting Department Date Issued: August 12, 2016

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-001-Caveat-W.J.BradleyMortgageCapital,LLC.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-002-Standard-AccessThroughNativeAmericanLands.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-004-Standard-FinancialAbuseofEldersandDependentAdults.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-005-Standard-StatutoryTrustsImposedbyPACAandbyPSA.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-006-Standard-MatriculaConsularIdentificationCard.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-001-Standard-InsuringAccessoverRailroadRightsofWay.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-003-Standard-SeriesLLCs.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-001-Advisory-ChangestoFIRPTAWithholdingRequirements.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-002-Advisory-TelephoneScam.pdf

https://registration.firstam.com/creativeservices/Newsletters/2016_MA_Summer/MA2016-007-Standard-OFAC_Guidance.pdf

Underwriting Communications are located in AgentNet® and can be accessed by performing a search of the Content Library using the title of the communication.

*

First American Title | Massachusetts Spotlight | Fall 2016

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COMMONWEALTH OF MASSACHUSETTS BARNSTABLE COUNTY REGISTRY OF DEEDS P.O. BOX 368, BARNSTABLE, MA 02630 P: 508.362.7733 | F: 508.362.5065 www.barnstabledeeds.org

John F. Meade Register of Deeds

To:

Barnstable County Registry of Deeds Customers

From:

John F. Meade, Barnstable Register of Deeds

Date:

May 12, 2016

Re:

Barnstable County Excise Tax Advisory Effective July 1, 2016

Per Ordinance 16-05 of the Barnstable County Assembly of Delegates, effective July 1, 2016 the Excise Tax rate for the Barnstable County share of the Excise assessment will increase to $3.06 per $1,000.00 of stated consideration from the present $2.70 per $1,000.00 of stated consideration.

The net effect of this increase is that the total combined State and County Excise Tax rate in Barnstable County will be $6.48 per $1000.00 of stated consideration or $3.24 per $500.00.

In Barnstable County as of July 1, 2016 the Excise Tax Rate will be: $3.06 per $1,000.00 – Barnstable County Excise $3.42 per $1,000.00 – State Excise $6.48 per $1,000.00 – Total Excise Due To calculate the tax, multiply the stated consideration for the deed by .00648. If the stated consideration does not end in an even $500.00 or $1,000.00 round the consideration up to the next $500.00 and then calculate the tax.

First American Title | Massachusetts Spotlight | Fall 2016

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IMPORTANT NOTICE

Improving Lender Title Policy Delivery Addressing Missing Policy Requests Lenders are increasing their focus on timely receipt of the lender’s title policy.

In 2015, First American Title received over 19,000 requests from lenders for copies of loan policies issued by agents. 2016 is on pace to surpass that volume. As an indication of the lending industry’s response to new pressures, these request come from lenders of all sizes and types.

How Is First American Title Helping?

Our goal is for lenders to consider First American Title title agents as the best. In keeping with this goal, we formed a dedicated team to handle missing policy requests. This team responds to lender policy requests and works with title agents. If the title agent has already provided a copy of the policy to First American Title, we will provide a copy to the lender without contacting the agent. If we are not able to locate a copy of the policy in our records, an email will be sent making the agent aware of the lender request.

What Can I Do As A Title Agent?

1) Recognize the increasing importance of timely policy delivery.

2) Review lender closing instructions for the exact location to send the policies. We frequently find that while the title agent has sent the policy, the lender, or the Compliance Division of the lender, can not locate it.

3) Upload policies using the Policy Upload feature in AgentNet®. This will allow First American Title to respond directly to a lender's request for a missing policy copy. Contact your Sales Representative or visit the User Guide tab in AgentNet for details.

4) Verify the accurate loan number appears on the face of the Loan Policy.

5) Check with your software vendor for available “event tracking” or operational reports for tracking aging policy delivery.

6) Know that any email you receive from our Policy Procurement Team has your best interests in mind.

Together, we can address lender needs and continue our position as having the best title agents in the industry. First American Title will continue to support our title agents and their lenders to maintain a strong focus on excellence.

First American Title | Massachusetts Spotlight | Fall 2016

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FIRST AMERICAN TITLE

Pass-Thru Marketing Program over 100 pieces

First American Title agents have access to of professionally designed marketing material that you can use to secure your position as a valuable resource and industry expert.

Since its launch in 2011, the Pass-Thru Marketing Program has helped thousands of First American

agents across the country educate their business partners and consumers about a wide-range of topics. From first-time homebuyers and the value of an Owner’s Policy to FIRPTA, TRID and cyber fraud, the Pass-Thru Marketing Program has what you need.

Material can be customized with your company logo and contact information then downloaded for print, posting online or distribution by email.

• • •

Consumer education Agency education/job-aids Industry reference material

• •

Bi-lingual marketing/education Activity sheets/coloring books for children

• •

Holiday and note cards And so much more!

Log into AgentNet® and access the Pass-Thru Marketing Program today!

Program not available in CA

GENERAL OFFICE INFORMATION 185 Dartmouth Street, 5th Floor Boston, MA 02116 617.345.0088

86 Willow Street, Unit 7 Yarmouth Port, MA 02675 508.778.4770

1 Monarch Place, Suite 1120 Springfield, MA 01144 413.733.2526

UNDERWRITING CENTRAL CONTACT | 866.916.0967 STATE MANAGER AND STATE COUNSEL Scott Mainwaring, VP, Massachusetts State Manager 617.772.9208 | srmainwaring@firstam.com

First American Title | Massachusetts Spotlight | Fall 2016

Jutta Deeney, Esquire, VP, Massachusetts State Counsel 617.772.9221 | jdeeney@firstam.com

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