In Case You Missed It: From the Desk of Katherine Prifti

by Katherine Prifti, Regional Underwriting Director

Hope you are all enjoying this beautiful weather and finally some sun! As always, I wanted to share some important information from the last couple weeks.

1. FinCEN Geographic Targeting Order

The FinCEN Geographic Targeting Order was renewed again for Massachusetts, and it is effective from April 25, 2023, through October 21, 2013. Remember, you must file a GTO if all the following conditions are met:

• Residential 1-4 family property

• Property is located in either Suffolk or Middlesex County

• Cash purchase of $300,000 or more

• The purchaser is a Legal Entity (corporation, limited liability company, partnership or other similar business entity)

For further information, see First American Title National Underwriting Communication, “NA-2023-007-Standard-FinCEN Geographic Targeting Order."

FATIC can assist with filing the GTO for your transaction if applicable. If you need further information on this please reach out to your Agency Sales Representative.

2. Choctaw American Insurance, Inc.

First American has issued an amended standard for insuring transactions involving Choctaw American Insurance. This program assists aspiring homeowners who are unable to qualify for conventional mortgage financing or cannot meet down payment requirements. Trio and the tribal entity provide investment capital to facilitate the acquisition of single-family homes.

The homes are acquired in the name of the tribal entity then leased to the aspiring homeowner. The lease contains an option in favor of the tenant giving them the right to a future purchase of the home. The terms of the financial arrangement are memorialized in a Contract for Seller Financing between the tribal entity and the tenant.

The tribal entity is the borrower under the purchase money loans, which are typically FHA loans. An FHA loan may be assumed by a subsequent qualifying purchaser. During the pendency of their lease, the tenant is provided with counseling and credit management services in an effort to prepare them to assume the existing loan or obtain other conventional mortgage financing at the time they exercise their option to purchase.

The term of the lease is one to five years. Trio acts as the property manager during the pendency of the lease. The tenant may exercise their option to purchase the home after they have established the ability to make on time lease payments for a minimum of 24 months. Trio and the tribal entity share the proceeds from the sale, pursuant to a distribution schedule set forth in the Program Agreement.

This amendment to our Underwriting Standard states that Trio is authorized to execute documents on behalf of Choctaw American Insurance, Inc. and to sign the Consent & Waiver of Choctaw American Insurance, Inc.

For all the requirements of insuring transaction involving Choctaw American Insurance Inc. and Trio see attached National Underwriting Communication "NA-2023-002(1) Supplement to NA-2023-002 Transactions Involving Choctaw American Insurance, Inc. and Cedar Band Housing Finance Agency."

3. First Republic Bank

We have seen that JP Morgan Chase is adding riders to First Republic mortgages. The mortgage document being recorded will list as mortgagee/lender First Republic. The rider is trying to amend the mortgage by changing any reference to the lender from First Republic Bank to list JP Morgan Chase.

Having the rider added to the mortgage doesn’t invalidate the mortgage. We will insure this loan. On the Loan Policy the Insured will be First Republic Bank, ISAOA. In the future there will need to be a recordable assignment of mortgage from First Republic Bank to JP Morgan Chase. And a recordable release/satisfaction as applicable, from JPMorgan Chase.

Additionally, First American put out a communication dealing with bank failures, see "NA-2023-003-Standard-FDIC Bank Receiverships" for further guidance.

As a reminder, the First American Massachusetts Underwriting Team is here for you. Please reach out to any of the underwriters on our team with any questions you may have. We look forward to hearing from you.

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.