Monday, December 31, 2007

Happy New Year!


Welcome, 2008.

TCSPICE is still for sale. She's a sweetie.

TCSPICE is being retired from our fleet at 101,000 miles. Price reduced to $9500.00.

2005 Minicooper automatic with navigation

SUPER GAS MILEAGE





unguarded money

If state regulators and the public truly understood how unguarded are the staggering amounts of money in title agencies and 1031 exchange companies, I suspect they'd take seriously the need for tighter control.

Here's a title agent who caused great harm:

The money is helping relieve some frustration that claimants displayed during Athey's sentencing. Cheryl McElhaney of Wyoming, Mich., spoke through tears during the sentencing as she addressed how Athey's actions had affected her.

"I am unable to ever recover," she said. "This is a life sentence. This is a lifetime debt now for me. By virtue of Nicole Athey's crime, I have become a criminal as well with collection agencies. Oh, what this low-life criminal has stolen from us.

"In terms of people devastated, probably less than 20 were seriously affected by it," she said. "A lot were under $200 (but) it could mean the difference between having your house or losing everything for people with low income."

Consumers should carefully select their title agent and not simply allow the Realtor or mortgage lender to make the selection. This doesn't mean that your Realtor or mortgage lender can't be relied upon for a good referral. I mean, simply, that you should also ask questions and shop around some before making your own decision.

Regulators who have not already done so, should reform auditing standards and licensure criteria so that bad actors lose the easy entry into the business and all players are more carefully monitored.

I don't know who is supposed to be keeping an eye on 1031 exchange agents but I do know title underwriters are supposed to watch their agents and they have been doing a poor job of it.

Nicole Athley could not have abused the escrow account to this extent if Stewart had been prudently monitoring her. Yes, Stewart has suffered a loss, but I have to say that title underwriters have taken the position of recent years that defalcations are a cost of doing business. It's right up there with fines and penalties imposed by the states. So far, they are able to absorb these costs and still not change their methodology.

This is an industry who has refused to police itself. Isn't it time somebody did?

Friday, December 28, 2007

posterchild for jerk predators

Honestly, I read comments like this and want to toss this child into detention and that's what regulators ought to do. Listen to this unkind creature:

Now you’ve got to be kidding me. Let me guess you work retail? The reason brokers will be around is because we’re smarter than you. We realize that the costs you’ll endure will always make us more profitable obviously depending on scale. I can work from my home with a $800 laptop, $350 all in one, and a couple of online accounts (credit,point,leads). Make $6000/mo selling 2 loans to some small start up regional bank only charging my borrower 1.5% ysp beat your rate by .5 and your costs by .5% or more(average LA 250K). You and all the other retail/bank people just don’t understand that we were 75% of the business coming in up until recently, you can’t believe how many of us kept in touch with our old clients. Is it going to be tougher to find 2 clients a month YES will I still play 4-5 rounds of golf a week YES…Good luck with your PREDICTIONS career, your going to need it.

Aaron makes this comment on a blog article that laments the future faced by mortgage brokers following the subprime crisis.

Aaron is a classic predator type who is wired differently than the good guys. He sees mortgage lending through his predator eyes and thinks he's smarter than the rest because he captures a couple of juicy meals each month that support his lazy ass. Can you imagine how corrupted the pricing of mortgage loans has become when two - TWO - transactions can support one person. This isn't how it used to be and mortgage lenders and lawmakers ARE working to restore some sense of reason and sanity.

Consumers, I've got some advice. Yes, it will be hard to separate the good mortgage brokers from the predators. Here's one easy test. Look for a mortgage broker who can offer FHA mortgages. Even if you are not in the market for an FHA mortgage, knowing your mortgage broker is APPROVED by the FHA adds loads of credibility.

The FHA requires net worth and audited statements. The FHA also audits the business practices of their approved mortgage lenders.

So, don't stop using mortgage brokers, just stop being easy prey for predators.

Thursday, December 27, 2007

if you are 62 or older and facing foreclosure, read this

interesting post from Calculated Risk. Here's a blurb:

The WSJ (sub only, I'm afraid) had a piece yesterday on a process it never actually names--the "short refi" (related to the "short sale"). What makes these short refis--refinance transactions where the new loan is less than the balance due on the old loan, with the old lender agreeing to call the loan paid in full and write off the difference--so unusual is that the old loans are nasty high-rate subprime loans to old people, and the new loans are reverse mortgages.

CORRUPTION IN THE TITLE INSURANCE INDUSTRY

The business of title insurance moves in tandem with mortgage lending and what we are experiencing is a parallel version of the subprime mortgage collapse. It simply isn't being noticed because it's not on TV.

Wednesday, December 19, 2007

query: how to talk to HUD anonymously

That's easy. Use this link.

In CE for two days.....

and got this great tip today from Rebecca Bowman who is both an engineer and an attorney. She's a terrific instructor who places much emphasis on really getting to know the parcel. She uses Google Earth as an extra tool in her toolbox for a fast peek and I think that's really neat.

Last week I was trying to locate a driveway and a roadway without the help of a drawing. A shot from the heavens would have helped. Thanks, Rebecca!

Sunday, December 16, 2007

query: what does one do when your bank sells your mortgage to another bank

The best course of action is to watch all transactions very carefully. Most of these servicing transfers happen without incident, so don't be too nervous. The terms of your mortgage will not change.

Potential problems are payments in transit during the time the file is being setup with the new servicer. Also, there can be some confusion with property taxes or homeowners insurance if you have an escrow. So, keep an eye on due dates and check in to make certain your account has made the transition without incident.

Federal rules govern the procedures the banks must follow when they sell your loan. You should expect to receive a "hello" letter from the new bank and a "goodbye" letter from the old bank. Each of these letters must provide a toll free customer service number for your use and most importantly, a very special address for written correspondence.

This very special address is different than a payment address. Federal rules require that any written correspondence you mail to this address be logged and tracked. Use of this address helps the consumer get a prompt response to any inquiry concerning the servicing of their mortgage loan.

It happens to most of us, so you're not alone. ;)

query: must a mortgage company be informed about a life estate deed

If the life estate deed exists before you put the mortgage on record, it will impact the mortgage lien position. Most mortgage lenders will want the life estate extinguished or they may consider having the owner of the life estate sign the mortgage to validate the lien and allow it to take priority over the life estate.

If you already have a mortgage in place and wish to create a life estate, you'll need to review the terms of your mortgage. Look for a "due on sale" clause. This type of clause would give the lender the right to demand payment in full if you transfer any ownership interest without their permission.

I would presume the life estate deed would be created by an attorney, so your attorney can review your mortgage and give you the proper advice.

Thursday, December 13, 2007

query: what title insurance documents need to be executed at the closing

I have to presume each state may have it's own version, but I would expect to at least have an owner/seller affidavit and a buyer affidavit. These affidavits bind the parties legally to disclosures of issues that would impact the validity of lien position or the title itself. We have to presume that the parties to a transaction, having personal knowledge of their own circumstances would advise the title insurer of items missed in the title search and not resolved on the HUD-1 statement.

For instance, let's say you are selling property and you know you had not yet paid the 2007 school tax. If you did not see this tax dealt with on the HUD-1 you would be obligated to raise the issue with the title insurer.

Tuesday, December 11, 2007

hmmm...I have 4 or 5 abandoned escrows for PA inheritance taxes on my desk

The escrows have expired. The amounts we collected are likely more than the actual tax that might be owed. The folks whose money we are holding decided not to follow up and file inheritance tax returns.

Well, I'll just be sending all of this cash to the PA Dept. of Revenue at the end of the month.

Go figure.

Monday, December 10, 2007

query: spouse non-title right to rescind

When a spouse is not vested in title, marital rights may create a right to rescind. [This is an issue determined by state law.] The mortgage lender, in these cases, will require that the non-vested spouse sign both the Right of Rescission and the Reg Z disclosure.

Saturday, December 08, 2007

query: can a lender foreclose if all parties can't be notified

Yes. The abandonment of property is not uncommon and so notification rules include court approved procedures for these situations. If certified mail isn't acknowledged as received, they will often approve posting a notice on the dwelling.

Friday, December 07, 2007

Did you know that your Realtor or mortgage lender probably thinks you are clueless doormat and a total dolt?

I have been arguing for over a year that consumers CAN READ AND THINK and if you just give them a place with information available THEY CAN MAKE THEIR OWN DECISIONS concerning what services they want for closing and title insurance. IT'S YOUR MONEY.

I believe shopping for title insurance and closing services is no more hard than shopping for a Realtor or mortgage lender or a washing machine. Heck, buying a car is more expensive and more complicated than picking a title insurer and closing service. If the info is there, you can decide.

Realtors and mortgage lender seem to think that they should do the shopping for you.

This means that they can play the referral fee game or the favor game but what it doesn't necessarily mean is that you will get quality service at a fair price.

I BELIEVE YOU ARE CAPABLE AND FREE TO DECIDE FOR YOURSELF.

Would you help me and comment here on the subject? You can be anonymous but I AM interested in your opinion.

query: what does successors and assigns mean on an insurance policy

Successors and assigns is for legal entities what heirs and assigns is for human beings.

These phrases follow the name of a person or an entity in a legally binding document so that the rights or obligations will survive the death or demise of the person or entity.

For instance, when you purchase real estate your deed will show that the property was conveyed to YOU, your heirs and assigns. This means that the ownership would survive your death by flowing to your heirs and also that you can assign or sell your ownership to another person.

The insurance policy has a mortgagee clause in which the mortgage lender is identified in case of loss. If the house burns down, the mortgage lender wants the insurance company to work through them to protect their collateral.

Let's say your mortgage lender is a bank and that bank is merged into another bank, the new bank would be a successor.

Let's say your mortgage lender sells your mortgage to another bank, in that case, the new bank would be an assign.

Does that make sense?

Tuesday, December 04, 2007

query: what does post-closing mean

Post-closing literally means after closing. It's a catch all phrase for jobs or tasks that take place AFTER the actual closing. Post-closing includes the final takedown/bringdown of title and recordation of documents, the issuance of title policies, disbursement of funds not disbursed at the closing table, stuff like that.

Sometimes lenders and title agents use it in their day to day lingo like "Oh, we'll take care of that post-closing." That just means they'll do it later and won't postpone the closing for the sake of whatever it is they need to do.

Monday, December 03, 2007

I received this question via e-mail. What are your thoughts?

I am hopeful you are able to provide some direction.
We just closed on a house in PA. Here’s a quick recap of the situation:
Sellers needed to pay about $2500 for repairs to bring property “to code.”
Our mortgage lender said there couldn’t be any type of credit on the settlement statement for repairs.
We asked for that $2500 to be taken off the selling price of the house. Our agent told us the $2500 couldn’t be taken off the selling price (later, after talking with our mortgage lender the lender stated this is not true).
Our agent told us the $2500 would be handled “behind the scenes” by not charging the total amount of taxes to us that would have typically been required to pay back to the seller. Therefore the amount of taxes recorded on the settlement statement are less the $2500.


Here's my opinion. I just wish everyone would have been up front and clear about the options. The Realtor had an obligation to adjust to consider adjusting the sale price if that is what the buyer wanted to do. The seller could have said no, but at least the parties would have discussed it.

I am leery when anyone suggests doing something "behind the scenes" as they are most typically suggesting mortgage fraud.

So my question now is - - can the HUD be adjusted to reflect the true charge of the taxes? We owe them for the taxes they paid – and they owe us for the repairs. The money is basically a wash - - - except for how it impacts us when we file our income taxes and itemize our deductions. In that situation the $2500 that we will truly outlay does have a financial impact for us.
Thank you for your time.



If what you are saying is that you owe the seller taxes "off HUD", then a fraud has been perpetrated on the mortgage lender. You may wish to consult an attorney.

The so-called professionals you relied upon lead you astray.

Sunday, December 02, 2007

query: why do I have to sign a quit claim deed to get a reverse mortgage

I find this query extremely disturbing. I can think of no reason that you would need to sign a quit claim deed to get a reverse mortgage.

Please contact your attorney or at the very least have someone you trust - NOT THE MORTGAGE LENDER OR TITLE AGENT - review the situation.

You can also contact HUD's predatory lending section directly for assistance using this e-mail address:

hsg_predlend@hud.gov

query: what does paid in arrears mean as related to property taxes

Paid in arrears means you are paying for a period of time that has already past. The subject as it relates to property taxes usually comes up when we explain tax prorations.

At closing, the settlement agent will calculate what taxes have been paid by the seller as of that date, then work out credits and/or debits between buyer and seller so that both have paid their fair share as of the date of closing.

Today is December 2nd. If I were prorating the school taxes on a parcel of ground in western PA, I would have the buyer reimburse the seller from today thru June 30, 2008. That is because the fiscal school tax year runs from July 1st thru June 30rd. The tax bills come out at the end of the summer and so often sellers and buyers think we should prorate as of the tax bill due date. We prorate on the fiscal year, whatever that is.

I like to use the analogy of the federal income tax. Though your payment to the IRS is due by April 15th of 2008, you are actually paying and reporting on taxes for the prior year.

I hope this answers your question. If not, please ask again but give me the context of the question.

Saturday, December 01, 2007

Yes, there is hope and yes, this is a great idea.

Talk of freezing the interest rates for some subprime borrowers -- somewhat heretical when floated by FDIC chief Sheila Bair in October -- now seems like a good idea even to Wall Street investors in securities backed by subprime mortgages.

The Bush administration has been negotiating with members of its HOPE NOW coalition of lenders and loan servicers to engage in wholesale loan modifications, and an agreement is expected soon.

by Inman News blog

Friday, November 30, 2007

query: what happens when a title company closes

I am interested to hear from readers on this one. Are there specific procedures in your state? As far as I can tell, it's pretty haphazard or perhaps I should say each situation is unique?

The title underwriters will perform an audit to make certain they have accounted for all policy jackets and that the premiums for issued policies have been remitted.

If the title company is closing without a successor taking over, I'm not certain who takes custody of the remaining escrows. A responsible title agent would make arrangements for someone to take their files and accounts. It's sort of like a law office closing. Someone at least takes the records.

If a title company closes without warning, perhaps due to defalcation, the title underwriters and bond companies and perhaps the state would step in to resolve accounts and protect the public.

What do you think, readers. Do we have anyone who's been through this that might want to comment anonymously?

Tuesday, November 27, 2007

query: life insurance agent made a mistake on irrevocable trust

I just need to ask this question because I'm a humble title insurance agent and not a life insurance agent - why is a life insurance agent preparing a trust? Is that usual?

Anyway, the trustee will have to amend the trust to fix it. Perhaps you'd want to have an attorney handle it this time around.

We do run into errors in trusts when reviewing them for title insurance. We only notice or comment on errors that relate to title, BTW.

We had a transaction last month in which it was discovered that the wrong property had been deeded into the trust. In that case, their attorney considered doing a corrective deed but it made more sense to simply have the estate deed the property directly to the buyer.

We had another transaction in the office today in which the trust set up a life estate for a sibling of the settlor. We asked that the sibling join in the deed to extinguish her interest, even though it wasn't cited in a deed. The attorney for the trustee opted instead to simply amend the trust and remove the life estate provision. This was not an error in the trust but I raise it as an example of a last minute correction used to quickly resolve in issue.

Saturday, November 24, 2007

query: what happens to a mortgage after it closes

That's a really good query. Thanks. Good post-closing functions are key to running an efficient title agency and loan servicing operation. Let's take a look at post-closing from the perspective of both the title agent and the mortgage lender.

Let's start at the point where the "closer" takes the documents back to their office following closing. The "closer" will perform a final review to make sure they haven't missed any signatures or conditions. The "closer" makes notes for post-closing clarifying any issues that may have arisen at the closing table. [For instance, let's say the sellers paid a water bill which was listed as owing on the HUD. The note would direct post-closing to verify that payment so they can void the check to the water company and refund the money to the seller.] The "closer" turns the entire file over to post-closing.

Post-closing once again audits the entire document package trying to find any errors. They check notary seals, dates, addresses and names; they also check money. Post-closing is the final balancing point to be certain that proper amounts were received from the mortgage lender and the buyer. The checks are verified against the final signed HUD-1 to be certain no changes made were missed.

Once satisfied that the transaction has been properly closed, the original Deed (conveyance) and Mortgage/Deed of Trust are sent for final bringdown and recording at the courthouse. Certified copies of these documents will be combined with the other original documents and organized in whatever format the lender has requested. Each lender has its own set of instructions for final delivery of documents. Post-closing must be very detail oriented and able to read and follow intricate instructions.

Mortgage loan payoffs and payments from the HUD-1, anything that has not already been disbursed, will be processed by post-closing along with any related letters such as tax collector notifications and mortgage satisfaction requests.

Short form loan policies are created for delivery with the loan package. The file information is logged for the title underwriter.

While all of this is taking place, the post-closer is making copies all the documents for record retention.

At this stage, the loan package, the recording package and all other payments and notfications are sent out via courier or US mail. The file then awaits the return of recorded documents and upon receipt, the final delivery of the original mortgage goes to the lender and the owner policy is issued to the buyer along with their original deed. Copies of both title policies along with a check for the insurance premium are mailed to the title underwriter.

Finally, the entire file is scanned for storage and the paper contents are shredded.

That's the perspective of the title agent, now let's look at the mortgage lender.

The document delivery receipt area of a mortgage lender will usually be in the secondary marketing center. At this location the file will be audited for adherence to the closing instructions. The original note will be routed to custodial care and placement in a pool destined for sale in the secondary mortgage market.

A copy of the note and the remainder of the document package will move through the various lender procedures with applicable data on taxes and insurance and the repayment program being entered into the servicing computer. The file will be scanned and the original documents will be placed in storage. Quality control will pull certain percentages - at least 10% - of the transactions for yet another review.

You should expect to wait at least 30 days before your file is completely accessible by your mortgage servicer's customer service center. In the interim, your title agent or mortgage origination center will be your contacts for issues that need immediate attention.

Friday, November 23, 2007

query: the future of title insurance

Boy, you and me both, we could sure use a crystal ball now couldn't we?

We "traditional" title examiners and agents are operating in a strange industry quagmire in which our supposed leaders and purveyors of what we have to sell - the big title insurance companies - seem to be hell bent on destroying our product - title insurance.

This product which found its roots in the hands of carefully trained attorneys and conveyancers and examiners who had a love for the land and a respect for the quality and integrity of the conveyance process may not survive.

Title insurance has been bastardized by the so-called leaders of our industry and has been reduced to a vehicle for the payment and collection of referral cashola and laid out as the base for the creation of gold plated data silos.

Now, instead of spending energy and creative thought on the education and ethical conduct of title professionals, these "leaders", who are scofflaws themselves, expend all effort in the creation of more referral affiliations and teach how to skirt laws in the quest for cash and data for the silos.

It's a crime against the industry, it's a crime against consumers who deserve and need a quality product provided by ethical, well trained professionals, and it's a crime against those of us who chose what was once an honorable profession. We who made careers, loving and learning the laws governing real estate, have been sacrificed upon the rock of prostituted standards which sits in the church of greed.

I have hope that the future of title insurance will be saved by state and federal regulators who have the ability and motive to rein in the outlaws of title. We're not too far gone to restore a quality product of use to the consumer and we haven't yet lost the professionals who can train and mentor those who come behind us.

query: what does spouse mean

A spouse is a partner in marriage, husband or wife.

Monday, November 19, 2007

Thursday, November 15, 2007

query: FHA loan, husband not on loan, can I add him to title

I paraphrased that one. ;) This is FHA's rule, not a state issue. Unless the guidelines have changed, FHA lenders want the vesting on title to match the loan. So, it's likely that the mortgage lender will not allow your husband to go on title.

query: title insurance agent model act pa escrow

This is probably what you are looking for.

Wednesday, November 14, 2007

Where do people find these idiots? Here's a story about a bunny, a treestand, a frog and Mr. Wacko.....

Does that sound too harsh? Maybe it's got to sound harsh because we've got this crazy deal that looks like a scam on the one hand and on the other, absolute incompetency. I can't figure out if they are all just plain dumb or if somebody is really trying to get one over on the other. It's bizarre. Here's the story:

A young lady contracts to purchase a house. She is probably a subprime candidate and might have gotten approval a few months ago, but now she can't. Her mortgage loan was rejected and the Realtor can't find a lender to take her.

Enter Mr. Wacko, the licensed mortgage broker (Yes, we checked.) who offers special private financing. Mr. Wacko finds investors who purchase the real estate then sell it to the "buyer" in a rent to own program. So, it's really not financing but that's what he calls it.

I forgot to mention that the property in question is REO. The giant lender who owns this property insists that the contract with our young lady be released and a new contract be drawn with the new buyers. The Realtor complies.

The buyers in the new contract read as follows: [Don't worry, these aren't their real names.]

ACME Partners, Bugs Bunny, partner
Harold and Maude Treestand
Barney and Molly Frog

There is a letter attached to the sales agreement which was included in the submission to the REO attorney. The letter indicates that the parties wish to take title as tenants in common and that they wish to have an equal three way split of ownership.

The big REO attorneys don't believe in faxing proposed deeds. They deliver the original signed deed via courier on the day of closing. Our buyers wanted a mid-morning closing and they wanted us to travel to them which was one whole county beyond the property location and the offices of both Realtors. We agreed but noted that we wouldn't have the deed in hand. We'd fax a copy for their review to the table. That was the plan.

We received the deed and I noted the grantee section read as follows:

ACME Partners, Bugs Bunny, Harold and Maude Treestand (husband and wife), Barney and Molly Frog (husband and wife) as tenants in common

This bothered me. The buyers were not represented by legal counsel. They were relying heavily on Mr. Wacko, the licensed mortgage broker, who brought them into the deal. BTW - It's a cash deal.

I am not an attorney. I am a licensed title agent. When I read that grantee section, I see FOUR entities in title - one partnership, one individual, and two married couples. I am fairly confident that it is the intention of the parties that Bugs Bunny is not taking title as an individual but in some relationship to the partnership. I can't give legal advice. My title policy will match the deed and therefore these folks have to decide how they want to take title. I can't advise them, but when I see a situation in which I think they are off course, I try to make it PRETTY obvious that there is an issue they should look very carefully at and perhaps seek legal advice.

So, we made an extra first page of the deed and typed "Manner of ownership is acceptable" next to the grantee section and asked the closer to have them initial it. We asked the closer to make certain they took time to read it and decide if it was correct.

They didn't like it. They wanted us to add language delineating the three way ownership. I said I'd be happy to but before deciding on that language I wanted them to look again at the partnership and I asked if they had an attorney. Mr. Bunny said yes and he said that he was happy with the way his name and the partnership were typed on the deed and so I said fine.

I still felt uncomfortable because it's a crappy grantee section and I do not under any circumstances want to leave this work in a file without some evidence that I had not created the deed in this manner. I wanted a paper trail so that it was clear that these folks had approved and chosen their language themselves.

So, I asked them to simply write down the words they would like us to add to the deed to delineate their ownership shares. At this point Mr. Bunny put Mr. Wacko on the phone and Mr. Wacko insisted that we use the language of his letter. I said that though I could type the contents of the letter in that section, we really only need them to describe in a few words the ownership split. Mr. Wacko got all bent out of shape and refused. He insisted that we draft language and he would review and approve it and I refused.

We didn't close.

This case got even more complex when I spoke with the Realtor who informed me that this partnership was set up between Mr. Bunny and his child and spouse, Harold and Maude Treestand, so that when Mr. Bunny dies there won't be any inheritance tax. I told the Realtor these folks really need legal advice. I get the distinct impression that Mr. Wacko is out there putting these deals together and I don't think he has a clue how far out of his league he really is.

This will sound cruel, but I really think Mr. Wacko is ignorant and perhaps just plain dumb and he thinks he's really smart and he is leading all of these people into transactions involving large sums of money and giving all kinds of advise outside of the license of a mortgage broker. Frankly, I think he's practising law without a license. That's not my business and I don't see any fraud. I see stupidity but no fraud so as long as I document that we aren't causing the stupidity, I'm fine.

The REO attorney has asked them to suggest language and they have thus far refused to provide it and so we wait. In the meantime, these folks are under contract with no contingencies and a $100 per day penalty if they don't meet the closing deadline which is coming up fast.

YOI. Double YOI.

PS I love bunnies. I have nothing against treestands though I prefer treehouses. I love frogs, especially those little green tree frogs. I love licensed mortgage brokers - it's the lulus like Mr. Wacko that drive me nuts.

PPS Yes, I agree that the title of this post is only loosely related to the story because I made up a bunch of names but it's late and I'm only half of a creative brain tonight and we have to settle for almost interesting. Sorry!!!

query: title insurance failed to find lien

and hence, the word insurance is oh so important!

You've hit the nail on the head. Human error is one of the two huge reasons for buying title insurance. The other huge reason is theft by fraud.

So, you order title insurance. What happens next? The title insurer has an abstract of title performed either by machine or by an experienced human. The abstract will likely be reviewed by an experienced human examiner who reviews the abstract for accuracy and makes decisions about insurability. The examiner will prepare your title insurance commitment.

If your title company uses fully automated title, they will skip this step and just spit out the poop from the garbage in garbage out machine and plop it electronically into a title insurance commitment form. The poop just plops out and populates all the fields of that form. [Can you tell I don't like fully automated title?]

BTW - Which form of title examination would you prefer? Experienced human professional examiner or plopped out poop from a machine? Human? Good answer - now remember that when you are shopping for title insurance. Ask your title agent if THEY prepare the title commitment or does it come electronically and just plop into their system. If your title agent does not have the expertise to prepare a title commitment, you don't want them messing around with your transaction. They are likely profiteers in the business for a buck and have no professional interest in the honorable profession of land conveyance. Trust me, you want someone who really cares about good title.

So, if the abstractor makes an error and does not find a lien, the title INSURANCE will cover you. If there was no chance of an error, you wouldn't pay for insurance, you'd just pay for a search.

Tuesday, November 13, 2007

query: what happens to a mortgage after property has been subdivided

oooooooooo.....hmmmm...

The preferred query would be - what happens to a mortgage BEFORE property has been subdivided. Well, maybe all is not lost is the sub-divided property hasn't yet been sold. The big issue is to deal with the mortgage BEFORE portions of the property is sold.

First, realize that the mortgage has priority over the subdivision. That's not a big deal because it's unlikely that the mortgage lender will care that you have divided up their collateral into smaller pieces on paper. They WILL care if you start selling those pieces. So what do you do?

Before you transfer or sell a portion of the collateral securing a mortgage, contact the mortgage lender and request a RELEASE. The mortgage lender will likely re-appraise the property. They may or may not require that you pay a portion of the mortgage balance in exchange for the RELEASE. In any case, your attorney or the title agent handling the sale of the property will take care of having the release recorded.

If you have already subdivided and sold a portion of the property, contact the lender now and you can still have that release processed.

query: title company tax mistake

As with any mistake, the title company must rectify it first by protecting the insured, then by recovering losses from the person who should have paid the tax.

Remember that the owner of the real estate has personal knowledge of the taxes and has an obligation to speak up if the title company makes a mistake on the settlement statement. It's not a case of finders keepers. The owner/seller affidavit creates a legally binding acknowledgement that all taxes have been paid at or before closing.

query: what happens after the preliminary title search

The search is examined by the title insurer who then issues a title insurance commitment. Once the transaction closes, the title insurance policies can be issued.

query: what does non-vested spouse mean

It means that the spouse is not a deeded owner of the property. For instance, John Smith buys property as a single man, then later marries. His spouse may have marital rights, depending on state law, but she is not vested in title - her name is not on the deed.

Sunday, November 11, 2007

query: referral fee from a notary public

Setting aside state statutes that may prohibit referral fees, if the underlying transaction falls under RESPA, a referral fee is unlawful.

RESPA rules apply in most transactions involving a mortgage.

query: an insurance agent explains policy I tell him I am not interested am I required to sign a waiver

In Pennsylvania, yes, you are required to sign a waiver. I'm not sure about other states.

Even if the state has no waiver requirement, in a purchase transaction, I would probably refuse to close without a signature on a waiver of some kind. A purchaser who forgoes an owner policy and only pays for a loan policy may be confused and think they have some kind of protection when they have none. The waiver makes the lack of protection abundantly clear and gives the title agent a record of disclosure.

Another angle on that topic is the practice of some title agents and attorneys who don't really explain an owner policy and simply toss a waiver on the nose of the buyer for signature at the closing table. You can't believe how many people I have met who thought they bought title insurance and later found that they had only purchase a loan policy.

When Realtors and lenders are too chicken to quote pricing for an owner policy and low ball an estimate using just a premium for loan policy they are NOT serving the best interests of the homebuyer.

Just for fun, go to our title premium calculator. Plug in your sale price and calculate the premium. Now plug in your loan amount. What's the difference between the premiums? Not much, is it? Pennsylvania is a simultaneous issue state. That means that we issue both the owner policy AND the loan policy at the same time and for the same premium which is based on the higher of the two - loan amount or sale price.

Let's say the sale price is $150,000 and the loan amount is $125,000.

The basic rate to issue both policies would be $1108.75. If the homebuyer did NOT want an owner policy, we would issue a loan policy at the premium for $125,000 which is $983.75. At that level the homebuyer gets NO protection at all. Their entire $150,000 is at risk.

Why would you skimp on the extra $125 and go completely naked on title protection? No informed person would and so we have to assume they have been misinformed and try our best to help them understand. That's why the waiver is so important if used properly and given with a strong explanation.

Saturday, November 10, 2007

query: if I buy land does it have to be surveyed

First, I recommend that anyone buying real estate have an up to date survey whether or not there is a building on the land, but that's not your question.

If the land is part of a larger piece and has not yet been subdivided, then yes you must have it surveyed. A professional surveyor will also guide you through the subdivision process.

If the land has already been adequately described in the public record and there is no mortgage lender or title company setting forth a requirement for a survey, then it's your choice, get one or not.

I recommend viewing a current or at least reasonable current survey to make certain you know exactly where the lot lines sit. Every piece of real estate I have purchased had physical lot line characteristics at the site that did not match the survey and so in each case I was surprised to find where the real boundaries were. Having an accurate survey in hand is the only way to know exactly what you are purchasing.

Friday, November 09, 2007

query: will most mortgage lenders accept properties that are in a revocable or irrevocable trust

I would say many lenders will deal with the revocable trust because they'll see it as a tax vehicle and not really as a form of ownership. You should expect to provide a full copy of the trust. You should be prepared to sign the promissory note both as an individual and as trustee.

Realize that many lenders may not be familiar with trusts and therefore won't want to deal with it so you may have reduced availability of mortgage products.

I've never been involved in a mortgage for property in an irrevocable trust. I would presume that you could mortgage the property so long as the trust document allows, but there may be mortgage underwriting restrictions I am not aware of.

Shop around. I guess, is really the best advice.

Thursday, November 08, 2007

query: what does a seller pay for on a settlement statement and what does a buyer pay for on a settlement statement

The distribution of costs on a settlement statement will be determined by local custom or the negotiated terms of the sales agreement. I'll give you an idea based on Pennsylvania.

Seller pays for:
  • deed prep in most counties [buyer pays in some]
  • taxes and lienable municipal charges that are currently due and payable
  • outstanding liens and mortgages
  • courier and/or banking fees related to mortgage payoffs
  • one-half of the transfer taxes
Buyer pays for:
  • mortgage lender charges, if any
  • title insurance & closing services letter
  • courier for document return to lender, if any
  • document preparation or settlement fee
  • one-half of the transfer taxes
  • reimbursement for lien letters in most counties [seller pays in some]
There is usually a proration of taxes so that each party has paid their fair share as of the date of closing.

All of these items are negotiable except where prohibited by law. We do have transactions in which either party has agreed to cover all of the costs. So, talk with folks in your locality to get a better handle on what goes on in your county and state.

Wednesday, November 07, 2007

query: what happens to mechanics lien on a foreclosure

Check your state rules and consult a competent real estate attorney, but I believe that a mechanics lien would be divested with good notice.

Tuesday, November 06, 2007

query: when to cancel title insurance

There is no need to cancel your title insurance. It's a one time premium.

The loan policy will automatically cease when the mortgage is paid off.

The owner policy will stay in effect and protect you for as long as you have an interest to defend. It even survives the sale of the property. If you sell the property and at some point you are contacted by someone with a claim related to issues that would have been covered under your policy, the title insurer will STILL defend you even though you no longer own the property. This is because title insurance insures backwards. So if the issue in question occurred before the policy was issued and you are at risk, contact your title insurer to see if it's covered

query: does the buyer get a temporary title policy from ALTA

Title insurance comes in two stages.

First, you will receive a title insurance commitment. The commitment is NOT insurance. It's sort of like a mortgage approval letter. It tells you the title has been approved for insurance subject to certain conditions which must be cleared before the policy is issued. These conditions are listed on Schedule B1. The commitment will also list items which will remain as exceptions to your insurance coverage. You'll find these exceptions listed on Schedule B2. BE SURE YOU GET A COPY OF YOUR TITLE INSURANCE COMMITMENT BEFORE YOU CLOSE AND BE CERTAIN THAT YOU UNDERSTAND IT.

Okay, once you close and the deed has been recorded, the insurer will issue your owner policy. You typically receive the policy with the original deed in the mail 30 to 60 days following closing depending on local custom.

If you don't receive it within 60 days, contact the insurer. It's possible that the documents are taking longer to come back from the courthouse. If this is the case and you want to confirm that your deed was recorded and that a policy is forthcoming, you can ask for a copy of the recorder's receipt and a "marked up" commitment.

Monday, November 05, 2007

query: is there anything funny about title insurance

You must be kidding me! That's a riot. LOL

No. Sorry, can't think of one single funny thing about title insurance.

I can think of a million gazillion laughs we have had over the years but none truly related to title insurance.

Closings? Yes, plenty of hilarity there, but title insurance is pretty ho ho hum..........

safety net in play today to protect an elderly customer

I received an odd phone call at the end of the day today. The Derry Township municipal authority called me because they had in hand a request for a lien letter for a customer they knew to be an elderly lady. They called because a young woman had come into their office today with the elderly lady's credit card. The young woman wanted to use the card to pay for her own utility bill, NOT the elderly lady's bill.

To the credit of the municipal authority's manager, they refused to take it for payment and called our office. I explained that I couldn't release any information from our files but they asked if we could make a call to family or to the lady's attorney - anyone who is looking out for her interest.

We reviewed the file and noted that the transaction we have in process is a FHA reverse mortgage. We know the loan officer and have great respect for him so we called to ask about the persons who have power of attorney. He shared that the persons who have power of attorney appear to be trustworthy relatives and noted that the elderly lady has in home nursing care. He suggested we call the family which we did.

The lady's relative was very thankful as she suspected something was amiss. She looked into it and confirmed that the young lady who was watching over the elderly lady today had convinced her to "help" and had actually taken the credit card for her own use.

I am amazed and thankful to the Derry Township municipal authority for NOT ignoring the matter and I am happy that we were able to assist in protecting this nice lady.

How about that????

query: what is a title company prepared lien certificate in lieu of title insurance

Bullshit. Truly, why would any title insurer offer to sell you a lien certificate when they are in the business of selling title insurance? It just doesn't make any sense and I wouldn't place any trust in that piece of paper. Someone is blowing smoke in your eyes.

query: buying a title underwriter

Well, you've got me stumped there.

query: insure over a lis pendens

Don't bother to try. You won't find an underwriter that stupid. Even I tried to suggest insuring with an escrow of all proceeds which was far beyond the equity in question. The bottom line is that the insured transaction may be rescinded by the court and nobody wants to jump in that pea soup.

Friday, November 02, 2007

query: is title insurance refundable

I'm going to just say no because I can't think of a single reason why it would ever be refunded - other than by an order of court in a settlement of some kind. So, in the general realm of title insurance, I would say no, it's not refundable.

query: undisclosed seller concessions

The "undisclosed" part of your query implies there is a third party to whom the concession would have meaning. If that third party is a mortgage lender, the lack of disclosure is mortgage fraud.

Mortgage fraud is a crime. Do you look good in stripes?

Thursday, November 01, 2007

query: if you pay your loan off early you will not be entitled to a refund of part of the finance charge

Tonight we have two mighty long queries, oh but this one I could type with my eyes closed. It's been a long time since I uttered these words but I did so in every closing I ever performed.

This phrase comes verbatim from the Reg Z. Let's look at it again - just so I can say it for old times sake. ;)

If you pay your loan off early you will not be entitled to a refund of part of the finance charge.

Contrast this with the alternative.....

If you pay your loan off early you may be entitled to a refund of part of the finance charge.

Oh, this is so exciting! Well, you know what I mean....

Most people when they read this phrase look at the total of payments at the top of the form and get real nervous. Don't worry about it. The disclosure is not saying you'll have to pay all of that interest. Your mortgage interest is paid in arrears, not in advance.

For instance, let's say you are closing in August and your first mortgage payment is due in October. When you make October's payment, you are actually paying the interest for September. When you make the payment in November, you are actually paying the interest for October and so on. Because you are not paying your interest in advance, there is nothing to refund. Get it?

In fact, when you payoff the mortgage, you'll be playing catch up with the interest. This is always a surprise to most folks as they expect their payoff to match the principal balance. It doesn't.

Let's say you are selling your property in December and so the payoff is taking place in December. The last mortgage payment you made was November. Well, the November payment actually paid the interest for ????? - that's right, October. Sooooo, your mortgage lender will add interest for November and the odd days of December into the payoff figures. Make sense?

OK, now let's consider the alternative version of your query. Under what circumstances might you be entitled to a refund of part of the finance charge? You'd have to be paying the sort of finance charge that is paid in advance and that is usually mortgage insurance - either FHA or conventional private mortgage insurance. The mortgage insurance may be paid ahead and a portion of that insurance may be refundable should you payoff your mortgage loan early.

Thank you for a good query.

query: forced by mortgage broker in a refinance loan to sign all the closing documents that had all the documents had the dates forged

Yoi! Well, first let me say that this is not a title insurance matter unless the title agent or their representative assisted in the forged signing. If that's the case, you may wish to contact the title company.

I personally think your best bet is to pursue the matter under truth in lending rules and you should seek the assistance of an attorney. Your attorney can look into your right to cancel the transaction or other options.

If you don't want to hire an attorney you might want to raise the case with your state attorney general.

Wednesday, October 31, 2007

query: what does insure over mean

When a title insurer used the phrase "insure over" that means they will NOT place an exception for the item in the title insurance policy.

For instance, let's say there is an unsatisfied mortgage on title that is 60 years old. A title insurer would likely decide to simply insure over the mortgage rather than pursue satisfaction.

So, "insure over" means there is a problem but the problem isn't a very high risk and so the title insurer decides to take the risk of providing coverage even though they have knowledge of a flaw on title.

This concept helps you to understand the difference between marketable title and perfect title. If title insurers where trying to perfect title, they would fix all problems no matter how small. That's not what we do. We can "insure over" items that cause minimal risk and therefore insure marketable title, not perfect title.

Tuesday, October 30, 2007

query: seller assist versus credit

Most mortgage loan programs prohibit direct credits of cash from the seller to the buyer.

Most mortgage loan programs will allow the seller to assist the buyer with all or part of the closing costs.

Money is money, agreed, but in the world of mortgage loan underwriting they have to account for all sources and the buyer may only use their own cash for a down payment and so you have the restriction.

Most seller credits are for repairs. We suggest that you simply have the work done prior to closing.

query: how to show insured first mortgage when doing a policy for a second mortgage

Easy. Your first mortgage is listed as an exception on Schedule B.

Monday, October 29, 2007

query: title insurance irrevocable trust

Insuring title for property currently vested in an irrevocable trust is not hard, you just need to confirm the terms of the trust.

You'll need a signed copy of the full trust and any amendments. If the trustee has a signed memorandum/certificate of trust, take a look at that first. Many attorneys will prepare this short certificate which outlines the important parties and powers. A signed copy of this certificate can be relied upon. Some folks will record a copy of the certificate as an exhibit with the deed.

BTW I have found that trustees who do not have a certificate of trust are sometimes reluctant to give us a copy of the full trust. We just tell them we need it and wait until they comply.

I strongly suggest that you let your title underwriter walk you through your first trust transaction or two just to be safe. There are just a few issues to keep an eye on that you'll not want to miss.

We reviewed an interesting case last week in which two real properties were supposedly deeded into a trust. Turned out that one was and the other was not. The attorney who had prepared the deeds used the wrong legal description for one of the properties. The settlor is deceased so the successor trustee now has to raise an estate and will be signing the deed into our insured in the capacity of successor trustee and executrix of the estate.

query: what does raise an estate mean

I recommend that you hire an attorney. Raising an estate simply means that you go to the Register of Wills at the courthouse and open an estate file. There are many possible issues to be considered. Your attorney will walk you through the process and prepare the necessary paperwork.

snot nosed kid running a sham

A nice young lady called me today representing a title agency whose name suspiciously sounds a lot like a real estate office in Allegheny County.

She was looking at a title report and asked about an outstanding commonwealth lien filed against a prior owner - just checking to see if we had paid the lien as we had insured title two years ago. She implied they were getting ready to close ASAP and so I asked her to fax her title commitment since I did not see reference to a lien on the HUD or our cover notes. We have a file scanned that is over 200 pages and I'd need time to look, etc., etc. and if there is a valid lien out there I'd like to have her commitment in hand to deal with it, etc., etc., etc.

Five seconds, maybe two, after I hung up, I get another call, this time from a threatening brassy young lady who just wanted to tell me that she was ordering a payoff on that lien no matter what and I'd better be prepared to get a call from our insured......breathe........ok.......

......so, as I now had the abstract scrolled up and in front of me,

I asked, "Oh, do you mean the Commonwealth of Pennsylvania lien filed against Mr. ?" "Yes." she said.

"Oh", I said, "and are you showing the vesting as Mr. & Mrs. as husband and wife?" "Yes", she said.

"Unless you have evidence of a divorce we missed, the lien doesn't stick. It doesn't penetrate the tenancy by the entireties."

She had absolutely no idea what I was talking about. I suggested she call her title company and she reluctantly agreed though she snarled through her teeth that she was sure I was dead wrong.

In the course of the conversations both women told me they had to order the title commitment. Gee, isn't the preparation and issuance of the title commitment a core service performed by the title agent?

So, this likely Realtor owned controlled business arrangement is manned by a couple of inexperience, untrained women who are prepared to force a seller, my insured, to pay for a lien that is not valid. They were prepared to push him to pay for this lien without giving any opportunity for a reasonable defense from his title company.

Granted, our insured has an obligation to say no and call us himself but let's just say that these women are pushy - the one certainly was - and they convince him he has no alternative.

These women my friends, are dangerous. These woman are title agents owned and operated by a Realtor whose sole interest is closing the deal fast and without regard to the interests of the parties involved.

It's a down right dirty shame that snot nosed sham operators can get away with this crap and no one is doing a damn thing about it. The title underwriter who is doing all the work for this sham operation should at the very least tell them to NOT pretend in any way that they understand anything. They should keep their mouths shut and just cash the checks.

Oh, I forgot. It's entirely possible that they are looking at a title underwriter title report that was automatically generated and perhaps they are looking at conditions generated by a machine.

So you combine a machine generated title report with a snot-nosed-brat-don't know-nothing sham operator and what do you get?

A consumer in the hands of an imbecile predator.

Gee, what a rosy future.

Thursday, October 25, 2007

query: are property surveys required in Pennsylvania

You know it's funny, in PA, title insurance customs evolved differently in Philadelphia and Pittsburgh. We have or used to have a kind of east vs. west mentality.

east - no surveys
west - surveys
east - reissue rate regardless of eligibility
west - basic rate regardless of eligibility
east - special warranty deed
west - general warranty deed

Each side thought the other was crazy or they had no idea that anybody ever did anything differently at all, they lived in a metro title vacuum.

After vendor management style title insurance became vogue, the title underwriters did some education and now most folks do special warranty deeds, watch eligiblity for discounts and issue loan policies with survey coverage WITHOUT getting a survey.

So, a title insurer MAY require a survey in PA but most don't.

query: why must HUD-1 be signed

The HUD-1 is signed so that the parties have acknowledged and agreed to the movement of money in the transaction. The settlement agent signs to certify that they have or will disburse funds as noted on the HUD-1.

The HUD-1 is a settlement statement designed to aid consumers in a federally related mortgage transaction. It is not required nor it is always used or signed in transactions that do not fall under the federal regulations.

For instance, though we use a HUD-1 in cash transactions, I would still close even if the HUD-1 was not signed. I prefer a signature but I would not require a signature.

query: what happens if there is an issue with title insurance after it is issued

I'm not sure what you mean but let me take a stab at it.

If you find an error in the policy, you can contact the title company and request a corrective endorsement. You have to be certain however that it's a true error. We have to hope that you really read the title commitment before you closed because some things can't be fixed or changed later without a lot of effort, if at all.

For instance, let's say you are in your new home and you receive your title policy and now you finally have time to sit and relax and read it and OH MY HEAVENS you find the property described is not the property you thought you were buying. Yes, this happens, especially in cases were the sellers own more than one parcel. In that case, the title agent would have to research the title again, obtain a corrective deed then correct the policy. You should expect to pay for the extra work because you had an obligation to read and review prior to closing.

I hope that helps.

query: florida title defect incorrect legal description need corrective deed original grantor not available

Is the original grantor not available because of death? If so, the estate or heirs can sign a corrective deed. If you just can't find the original grantor you'll need to hire an attorney to perform a quiet title action and correct the record.

Wednesday, October 24, 2007

Are home warranties worth it?

Home warranties have been on my mind lately. It seems to me that much attention has been paid to the cost of title insurance and related claims but no one thinks twice about the home warranty.

Let's say you are purchasing a home here in western PA at a cost of $100,000. The title insurance premium at reissue would be $772.88. That one time premium pays for the examination of title and owner coverage up to $100,000. In the title business there is a true risk of catastrophic loss and therefore the title company could be forced to pay a claim up to the $100,000 mark. Title insurance has no expiration. Owner coverage continues so long as you have an interest to defend.

Got it? It's $772.88 for examination and insurance.

Now let's consider the physical components of the structure. A home inspection would cost about $400 and home warranty around $400, too. So to examine and then insure certain of the physical components of the structure you'd have to pay roughly $800.

Read this article. Here's a blurb:

By Tuesday, she had been referred to five plumbers. Four of them wouldn't call her back and the one who did said he couldn't come out for four days.

The customer service representatives at First American were unsympathetic, she said.

"There was no hurry, no urgency," she said. "I would be on hold for 45 minutes at a time."

So Ledford got estimates on her own from two plumbers.

But she said First American told her that it wouldn't pay the bill because she had to use one of the plumbers it referred to her.

After two days of missed work, endless phone calls and no running water, Ledford had enough and called The Watchdog.

After some research, we gave her the name of the company's chief operations manager and a number for corporate headquarters.

Suddenly, Ledford starting getting some help.

Shortly after leaving a message for the executive, Ledford received a call back from Rebecca Richwine, a claims analyst for the company.

Richwine apologized profusely, Ledford said, but more importantly, by late Wednesday afternoon she got Ledford an authorization code to use a plumber outside First American's referral network.

Four days after the pipe burst, it was fixed and the water was turned back on.

Ledford had to pay the $350 plumbing bill out of pocket and submit a claim for reimbursement. She received the check last week.

Richwine told The Watchdog that Ledford did everything she was supposed to do under the terms of her warranty contract.

I have some questions. Perhaps you, dear Reader, have the answers.

  • How often are claims made against home warranties?
  • How long does the warranty last?
  • Does the Realtor earn a portion of the warranty premium as a commission or referral fee?
  • If a referral fee or commission is earned, is it disclosed to the consumer?

Tuesday, October 23, 2007

Meet Mr. Much Ado's cousin Mr. I'll Insure Over Anything Because I'm An Idiot

Yes, it's the lovely Laurel Highlands again, the water coolers of certain law offices must brimming with wacko Kool-Aid.

We have a local tax collector who flew the coop over some domestic issue - can't be found - can't get tax certificates. [It's rural country title insurance routine crapolla.] The last time this happened it took a year before the authorities had to step in an take over. In that time, checks were lost, unaccounted for and tax claim finally had to eat mucho bucks. We had to mail all tax payments via certified mail just to have evidence that we sent something to that house and so here we go again into LaLaLand - rural tax collector running from the bruiser-style.

Transaction supposed to close today. We set up escrow pending evidence of payment of current year taxes - tax certificate or tax receipts.

Mr. I'll Insure Over Anything BIAI refuses to close with an escrow. He wants me to accept his letter with his personal guaranty - I have dealt with this law firm before and I wouldn't lend them a dime. - or he won't close.

I offer to take his letter if the seller can substantiate in any way that he paid the taxes - cancelled checks, etc. Seller has no cancelled checks so Mr. I'll Insure Over Anything BIAI earns his name by saying "I'll insure it if you won't!"

I respond by saying I'll postpone closing.

The real shame is that IF the buyer and the lender decide they want to move the transaction to a crappy title provider and I call the crappy title provider's underwriter to protest, they won't give a damn either.

We are living in "Crappyland" and I'm not going to fret anymore about it this morning. Chips fall......

Monday, October 22, 2007

If you cancel your mortgage, they can't foreclose.

Read this.

Did your loan officer or "closer" really follow the federal guidelines? If not, you might be able to cancel your mortgage. If you cancel your mortgage, they can't foreclose. It might not lead to anything but if it's your house you are trying to save, it's worth having an attorney take a peek at your paperwork. Isn't it?

Talk this over with your attorney if you think you might have a case. If you are successful, you might have to repay the principal but could you recoup the interest, closing costs and fees? At the very least you may be able to delay the foreclosure process OR gain the upper hand in renegotiating mortgage terms.

I am very interested in the comments of others. Has anyone out there been directly involved in a TILA case like this?

This looks like a good link. Here's another good link. And another.

Sunday, October 21, 2007

query: how to file a claim

Sorry! I thought I had covered this but perhaps not directly. It's important so thanks for raising the issue.

First, get your owner title insurance policy in front of you. Make a copy of it to submit with the claim. If you can't find your policy, make a copy of your HUD-1 Settlement Statement. The HUD-1 is proof that you paid for an owner policy.

Look for the name and address of the actual title underwriter, not the agent. Some but not all policy jackets will have this information prominently posted, some will not. If you can't find it, look for a large office of the title underwriter in the closest metropolitan area. You can find it on-line if you Google their name.

Now, write a letter explaining the nature of the claim. Include all supporting data such as a letter you may have received from someone asking for money. Be specific and be sure to sign the letter.

Mail the letter along with supporting documentation and a copy of your policy to the title underwriter via certified mail. You want to get a prompt response and by sending it certified mail you will get their attention. BTW - send it to the attention of "claims department". that will get it to the proper person.

I suggest that you also call your title agent or attorney to let them know you are making a claim. WHY? Well, if they are responsible providers, they will likely jump on the issue and try to resolve it ASAP because they want to help you. Under no circumstances should you let them talk you out of making a formal claim. It's your right to do so and the sooner you get it started, the sooner you will get an answer.

Your responsiblity in any claim situation is to mitigate damages. That means you cannot delay contacting the title underwriter. Give them an opportunity to step up to the plate and defend you before you give anyone any money.

Once you have the signed receipt back from the post office confirming that your letter has arrived, if you haven't heard from anyone, follow-up with a phone call and find out who is assigned to your case.

If the claim is rejected and you feel the rejection is not fair, you can contact an attorney or the state attorney general or the state insurance commission for assistance.

There ARE circumstances that are NOT covered by title insurance and your title insurer should be able to clarify that in a way that you understand. IF, however, it's not clear and you think they are brushing you off, then pursue the matter.

Good luck!

Saturday, October 20, 2007

this still floors me

Read this:

"I did a loan app for them the first of October and the lady wouldn't sign the docs. They told me NOT under any circumstances, to contact the borrower but to just show up. That should have been a red flag then - but since it was just a loan app I didn't think too much about it. When I arrived, in pouring down rain, she answered the door and said she didn't know I was coming then she said that she forgot I was coming - she was in the middle of dinner with some of her friends and family. She invited me in, we sat down and she looked at the first page and said that was not what she wanted. We called the L/O and they talked about five minutes then she stated again she wasn't going to sign."; and

then answer this question for me:

Does Ohio have a licensing law for mortgage lenders? Is this it?

"A person wishing to register under the Ohio Mortgage Loan Act must submit an application, a fingerprint card, a registration fee and a nonrefundable investigation fee. The Division must investigate the financial condition, responsibility, experience character and general fitness of the applicant, including requesting a criminal background check. The applicant must have assets of at least fifty thousand dollars per branch office readily available for use in the business and a net worth of fifty thousand dollars."

How, pray tell, does an unlicensed notary public fit into the mortgage origination scenario?

Shouldn't this citizen of Ohio be protected against having their home invaded unannounced by an unlicensed individual attempting to take their very personal information and perhaps attempting to coerce them into signing mortgage application documents?

I just don't get it. Am I missing something here?

Oh, the lender is in Ohio but the property is in Florida. OK.

Doesn't Florida have a licensing law to protect its citizens? Is this it?

An individual person who acts as an associate for either a licensed mortgage broker business or any lender licensed under Chapter 494, F.S. A licensed mortgage broker is authorized to solicit mortgage loans on behalf of a borrower, to accept an application, and to negotiate terms and conditions of a mortgage loan on behalf of a lender.

I just don't get it. Am I missing something here?

Where does a notary fit into the licensing structure for originating mortgage loans in Florida?


query: do I need title insurance to buy land in Pennsylania

It's not a state specific question, really. In every real property purchase, title insurance is all about the land anyway. It's just a matter of value. A house is an improvement on the land that adds value so the amount of the title insurance should be high enough to cover that extra value.

Title to the land is what you are insuring - whether or not it has improvements, so you just need to decide if you want to protect your investment or not.

I suggest buying the title insurance from a competent provider. It's a one time premium. You can use the calculator link here on our blog to figure out the cost. I assure you it's worth it.

BTW - I also suggest you have the land surveyed, especially if you intend to build. A surveyor will map out the location of easements and building setback lines so that you can visualize the location of planned improvements before you break ground. It's also a good idea to have the surveyor set flags at the location of the proposed foundation so the builder sets it in its proper place. You sure don't want to be forced to move the house once its built. Hey, it happens. ;)

query: can a title company sue a seller after closing of property

Yes. Suing the seller is a routine part of claims management.

When you sell real property you give a warranty to the buyer. You also sign certain legally binding affidavits for the title company. The warranties and affirmations made by affidavit give the title company a legal pathway right back to you.

There is nothing wrong with that - after all you have personal knowledge of the property and an obligation to tell the truth. If you cause damage, you should expect the title company to seek recompense from you.

Friday, October 19, 2007

query: does a quiet title always give a clear title

No. The words "quiet title" refer to a legal procedure for removing certain rights or claims that might threaten the title to real estate. The court action is specific. A successful quiet title action will only clear that specific item. There may be other clouds on title unrelated to that which was the concern of the action to quiet title.

Always have a FULL title examination performed by a competent title insurer. Always buy an owner policy in case someone makes a mistake.

This is the only thorough way to protect the title of you real estate.

Thursday, October 18, 2007

query: when not to buy title insurance

You should always buy title insurance. I would prefer that you be selective about the provider because competence in the examination phase means you are likely to not have to suffer through a claim process, BUT suffering through a claim process is far better than defending title completely on your own and with your dime.

Here's an example. I stumbled onto this case today through a Google alert. [Love those things.]

It's a lawsuit filed by First American Title Insurance Company seeking recompense for a title claim. It's a case in which the buyers had to suffer through a claim process but in the end they got to keep their house and their legal fees were covered. Kudos to First American for protecting the insured.

This case is in Tennessee. Each state has its own customs but reviewing the case the only I found odd was that the seller selected the title examiner. See if you can follow this....

Merrill is the buyer.
Harris is the seller and I have reason to believe also the builder.

It's a cash purchase at $345,000.00.

The seller selected or arranged for Paramount to perform title examination and closing.

Paramount order an abstract from Atkins.

Harris has TWO mortgages against the subject property. One for $200,000 and the other is a blanket mortgage which means it covers more than one property. The blanket mortgage is $248,000.

Atkins misses the blanket mortgage in the search.

Paramount proceeds to close the transaction apparently blind to the fact that there is another substantial mortgage lien against the property.

Merrill buys an owner policy. Merrill - YOU ARE SO SMART! This is a cash buyer who was smart enough to protect his $345,000 investment by paying a one-time premium of $815.00 for title insurance.

Bottom line, FATIC paid close to $300,000 to protect the title. Merrill made a wise purchase.


query: what happens to lender insurance in a foreclosure

The lender who successfully bids at sheriff sale and takes title to the property becomes the owner. At that point the loan policy in a way converts to an owner policy for the benefit of the lender, now owner.

Up until that point the function of the loan policy is to protect the lender's lien viability and position.

I have a good example on my desk. Yesterday I spoke with a mortgage lender who has a $90,000 mortgage against the property I am hoping to insure. Here's the weird thing about this transaction. The parties have informed us that a short sale is pending. When I examined title, I noticed that the sale price is only $5000.00 and I thought "What the hey?" Then I noticed that the $90,000 mortgage is in second position. YOI.....

So when I spoke with this lender, she confirmed that yes they were agreeing to a $5000 short sale - all proceeds to them - and I asked if she had an agreement with the lender in first position.

After a long pause, she said NO, they are in first. To which I replied, well your foreclosure attorney agrees that they have a valid lien because they were served in the now forestalled foreclosure action.

She immedately recognized a "title problem" and said she'll get back to me.

It's hard to say whether they really knew about the first mortgage or not. That might be why they agreed to such a small amount in the short sale. If they had gone to foreclosure they'd have to pay the first mortgage holder off and maybe the property isn't worth so much.

They might have been hoping that the buyer - being a cash buyer -would forego professional title work and not find the first mortgage at all. It wouldn't have been this lender's problem. All they are doing is negotiating a reduced payoff. If the buyer had proceeded to close without finding the first mortgage, he's have been stuck with it or at least with a claim against the seller and lots of luck there....

I think I've kinda wondered off the subject but you can see how title issues work their way through a foreclosure or short sale process.

Be smart. Buy title insurance from a competent provider.


Hmmmm I wonder if that lender would have a claim against their loan policy that would net them a whole lot more than the short sale.....afterall I bet they are insured in first position.

query: are referrals ever ok under RESPA

You can make referrals. You just can't give or take referral fees.

Wednesday, October 17, 2007

Builders and Realtors CANNOT force you to use their affiliated company!

You can say that again, Ken Harney. This is a great article. Here's a blurb:

Under the federal Real Estate Settlement Procedures Act (RESPA), builders and realty brokers are prohibited from requiring customers to use their own affiliates or subsidiaries for mortgage, title or other settlement-related services. They can recommend affiliates -- provided they also disclose the relationship -- but they cannot force consumers to use them.

Consumers should not allow themselves to be bullied by builders, lenders, or Realtors who own affiliated companies. Make your own decisions. The law is on YOUR side.



Tuesday, October 16, 2007

query: sue title company for giving clear title when it wasn't - didn't catch unreleased lien

Real property transactions are fraught with risk. This is why it's so very important that we in the industry maintain our tradition of expert title search and examination.

You know, it might surprise you but there has been a trend in this business to hire abstractors with very little experience or even to rely upon computer generated searches. Then these less than adequate searches may or may not be reviewed by an experienced title examiner.

Title insurance companies think this is acceptable because you are insured and you can make a claim. What they are not considering is the trouble you are experiencing and that really makes me angry.

It takes time to file a claim. Transactions and lives are put on hold while facts are sorted through. Sometimes you might reach a settlement but not like the outcome. For instance, what if you are faced with having to take a monetary settlement instead of keeping the beautiful home you put so much love into?

Land and the homes we make are so much more important to us than economic rationality. I'm not saying that you shouldn't be smart. In fact, I AM saying you SHOULD be very careful who does your title work.

Consumers who really care must consider price AND quality when selecting their title insurer.

So, to answer your query, make a claim on your title insurance policy. Let your title insurer go to bat for you and if they made a mistake that's covered as an unreleased lien would normally be covered, they'll fix it for you.

query: who is responsible for preparing a mortgage payoff statement

The mortgagee [lender] prepares the payoff statement. It's not a rule, just custom based on the logic of who sets the terms for the release of the security underlying the note.

query: what can I do if an attorney's title opinion is found to be incorrect

Well, if you opted not to buy an owner title insurance policy, you're at the mercy of the attorney.

Let's hope the attorney is still alive, willing to make good and able to make good. You might have to hire another attorney to press the issue. I guess it all depends how much money is at stake whether or not you choose to pursue the matter.

query: incorrect payoff on the HUD-1

I hear ya, but I'm not sure what the question really is.

Did you read the HUD-1 before you signed it?

Do you mean that it's the wrong lender being paid off or the wrong figure or the wrong mortgage?

The title professional in charge of the transaction is obligated to correct any errors, but the mortgagor whose mortgage is being paid off has obligations, too. You have personal knowledge of your own business and so you must read documents and verify that the mortgage being paid on the HUD is correct.

If title insurance is being issued as part of the transaction, you likely signed an owner/seller affidavit in which you affirmed that you had reviewed the HUD-1 and that there were no mortgage obligations not being paid on the HUD. This document ties you to the HUD-1 and legally binds you to responsible review and correction as needed.

Mistakes do happen. Human beings make mistakes. People must watch each other's back to avoid mistakes. The owner/seller affidavit formalizes that concept and binds the owner/seller to the process of looking for errors on the HUD-1 before the transaction is completed.

buyer beware when hiring a notary public

Be explicit. Are you buying notarial services OR are you buying "signing agent" services?

You see, things are very confused in the notary business these days. Let me take a moment to explain.

Each state has its own set of laws concerning the closing of a real property transaction - purchase or refinance.

In all states, attorneys may perform the transaction.
In many states, attorneys ONLY may perform the transaction.

Many states license title insurance agents and/or producers. In those states these licensed title professionals may perform all or part of the transaction.

Here's where it gets confused. A few documents in a real property transaction require the seal of a notary public, therefore most attorneys and title professionals must by necessity also be notaries. Got that?

Enter the National Notary Association [NNA] and other notary groups who got the idea somewhere - probably from a big subprime lender - that notaries could perform real property transactions. They decided to "pretend" that the closing wasn't a closing at all so they could "pretend" that they weren't breaking any laws. They decided to call these notaries "signing agents" and started recruiting and offering advertising and marketing plans and "certification" courses - none of which had any basis in law or licensure.

This mass marketing and recruitment of notaries started about 15 years ago and has mushroomed to the point where it's not about teaching existing notaries, they actually recruit people to BECOME notaries just because they think there is big money in the real estate business.

So, if you need a notary seal on a few documents, you must be VERY careful that the notary you hire is only charging you to seal the documents and isn't adding "signing agent" fees because many don't know the difference.

Here's an example I found on the notary forum, Notary Rotary:

"What would you charge for signing a set of 1st docs on an out of state land purchase? The signing will be here and the client has all the docs. Travel would only be about a mile."

Now, I'm going to guess that the "client has the docs" means that the homebuyer is already working with an attorney or title professional in the state where they are purchasing the real estate. They are already paying the attorney or title professional to perform the real property transaction.

The homebuyer is simply involved in a remote closing, which means that they are signing documents and returning them to their attorney or title professional to complete the transaction. There are a few documents in the package that require a notary seal. This means that those few documents must be signed before a notary - just those few documents.

States regulate the fees a notary may charge per seal. The fee is usually $2 or $5. So, let's say this homebuyer has 5 documents that require notarization. If the homebuyer drives to the notary's office, the total cost for notarization will likely be $25.

Want to bet this notary will attempt to charge more, and for what?

As I post this item, there are two responses on Notary Rotary. The first implies the notary should charge, the "basement" rate -whatever the means. The second response seems to indicate that the notary should charge for time while the homebuyer reads the documents.

Homebuyer - if you are already paying an attorney or title professional to perform your transaction, review your documents and have them answer your questions before you go to the notary public. Take ONLY the documents that need notary seals to the notary's office. Do not give them any excuse for thinking they are providing "signing agent" services. Really - the situation with notaries is out of control. I know it sounds ridiculous, but it's true.

Be very careful when hiring notaries in a real property transaction. Be specific about services and get a written quote before you hire.

Monday, October 15, 2007

Thanks for the feedback CM!

Hello Diane.

What a wonderful crew you have there!

We just put on a “rush” closing for today (due to an unexpected family situation for our borrower). Diane H., John Conway, the borrower and me have all been working together all morning to get this to happen. Everyone has been so courteous, patient and accommodating.

I needed to let you know how great it is to be able to count on that skilled, professional and pleasant group of employees you have.

Thank you.

[P. S. Readers who know my philosophy on rushes need no reminder that we already have title done on this transaction. They are just giving a last minute jump onto the calendar. CM is a lender.]

Sunday, October 14, 2007

Fort Ligonier Days and Las Vegas

[An accusation filed with the state Department of Corporations, which issues finance licenses, says that in April and May, Sadek obtained markers worth $1.02 million for gambling at the Wynn Las Vegas and Bellagio casinos based on funds from his company, Platinum Coast Escrow.]

I read this account of an escrow agent out of control and it took me back to the day - a few years ago when Sue Dougherty's checks started bouncing.....

It was the Friday of Fort Ligonier Days, the second weekend in October, and I had allowed most of the staff the day off. Gina had offered to work because she lived in town and didn't have to worry about parking. We both manned the phones and hoped for a quiet day.

It was pretty quiet so around 4 o'clock I thanked Gina and let her take off to join her friends. That's when I got the phone call.

A panic stricken mortgage broker in Indiana County called to say the title agent she normally used had tapped the escrow account, gone to Las Vegas and all of the checks were bouncing. The mortgage broker had a transaction that HAD to close that weekend for some reason or other and she wanted desperately to know if we could do it........

I remember loads of phone calls back and forth with Nancy, the escrow office manager, trying to get the abstract and lien letters and then frantic calls to the mortgage lender to see if we could switch the file. It was an hour during which I really tried to help these folks because nothing galls me more than a thief in my business and I feel for consumers who suffer in their hands.

Two members of my staff were intimately involved with Sue. JC used to work for her. MW was a loan originator who referred title work. Everybody loved Sue and no one wanted to believe she was a thief.

JC worked there long enough to see that something just wasn't right. He left the position without another lined up just to get out. He started working for our office roughly three months before Sue's house of cards fell down.

MW came to work for us several months later. She recalls sitting in Sue's office demanding money for her borrowers and sellers and telling them she wasn't going to leave until she got it.

Sue blamed everybody but herself. She insisted it was the fault of her employees or her business partner. Most people believed her, but her employees knew the truth. JC knew the truth.

I notice in the article about Sadek and Platinum Escrow that a former employee had tried to speak out and was fired.

[A wrongful termination lawsuit filed against Sadek in 2006 also accused him of using $1 million in escrow funds for gambling markers at the Bellagio. In a May 2 interview, Sadek denied using escrow funds, saying that "the check was a mistake and never cashed and never written out of the company."]

Sue's in jail now and she owes close to a million to Stewart Title. She harmed many people but I think there are still people who want to believe it wasn't her fault. I would not be surprised if she tried to open another title agency when she gets out. Maybe she'll go to another state that has lousy licensing laws.

You know, there are states that don't pay attention to whose watching all of that money. That's a crime of sorts in my book as I believe states have an obligation to protect the public and the sooner states embrace the idea that the business of title insurance and real estate conveyance is one demanding a high level of trust, the less we'll hear about crooks like Sue and Sadek.

Saturday, October 13, 2007

query: is it legal to charge the borrower for an appraisal if the loan doesn't close

Yes.

The appraiser did the work and so the appraiser must be paid. The work was done on behalf of the borrower and so it makes sense that the borrower should pay for the appraisal even if the transaction does not close.

Prudent appraisers are asking for payment at the door before they even start the appraisal.

It's the appraiser's job to place a value on the property and it's entirely possible that the appraisal report will cause the deal to fall apart. The appraiser must still be paid.

query: TIRBOP referral fees

Referral fees are not covered in the TIRBOP guidelines. The issue is dealt with in our anti-gift/kickback law concerning the business of insurance referrals in Pennsylvania. I can't find the link at the moment but it's somewhere on Title Insurance Talk or Radical Title Talk.

query: lawyer didn't provide title commitment

Was the lawyer reviewing the title commitment on your behalf or was the lawyer the title agent issuing the title commitment?

If the lawyer was hired by you to review the work of the title agent, the lawyer might have thought his own review on your behalf was sufficient. A lawyer acting on your behalf is your fiduciary, hired to protect you. I would have preferred that the lawyer share a copy with you so you understood the property rights before you closed, but you hired the lawyer and the two of you should review your expectations of the agreed work relationship.

If the lawyer was the actual title agent issuing the title commitment, he had a duty to release a copy of the title commitment to you prior to closing. If the lawyer was the title agent AND your legal representative, he was performing under a conflict of interest. A lawyer can't or shouldn't serve more than one master. In this case the lawyer would be representing the title company and your interest would be secondary. This is a common problem. Doug Miller, a lawyer who blogs, discussed thid very issue. Here's a link.

in an odd turn of events

I understand the PLTA instructors in Pittsburgh last Monday informed the class that TIRBOP regulations require the imposition of a title commitment cancellation fee.

I am overjoyed.

I also understand that the instructors raised the issue that giving free title commitments to lenders in exchange for referrals is a likely RESPA violation.

Thank you, PLTA instructors, for having the guts to have this truth discussed openly and for the benefit of your membership.



Friday, October 12, 2007

Are you the kind of person who votes with dollars?

Do you try to buy Made in the USA products?

If this is a major concern for you, ask questions about your title insurance provider.

For instance, First American Title Insurance Corporation has an outsourcing philosophy that promotes the use of offshore employees even for things as simple as YOUR title search.

Isn't it weird that their list of global resources has India as part of the United States?

Global Resources

To best serve your needs, First American offers business process outsourcing from our operations in the following locations:

  • United States – Santa Ana, California; Dallas, Texas; San Antonio, Texas; Denver, Colorado; Rochester, New York; Austin Texas. India – Bangalore, Mangalore, Hyderabad
  • Canada – Toronto
  • United Kingdom – Leeds, London, Bromley
  • Australia – Sidney, Melbourne
  • New Zealand – Adelaide
  • Philippines - Manila


Funny, that name, First American.........maybe they should consider changing the brand from our symbolic eagle to.....I don't know. Do you have a good idea for a company who keeps closing offices "here" and replacing them with offices "there"...hmmmm...........?