Monday, July 30, 2007


We are so happy with the reaction to our Choose & Save Program. We've decided to extend the benefits to the seller side of the HUD-1. See our FEE sheet. Starting today, sellers whose buyers select the Choose & Save option, will receive FREE DEED PREP plus FREE COURIER plus FREE BANKING RELATED FEES.

This is such a good deal!

Sunday, July 29, 2007

query: is unfiled quit claim deed still valid if someone dies

Deeds that have been signed and are properly acknowledged before a notary are not impacted by the death of one of the parties unless there is some clause or estate related to that person's death.

As with any deed, the ownership interest is vulnerable until the deed has been recorded.

Be careful when working with a Power of Attorney. A Power of Attorney ceases upon the death of the principal.

Let me give you two examples.

Let's say Mr. Smith signed a deed in the morning at the closing table. The transaction closed and funds were disbursed. Mr. Smith dies in the afternoon before the deed is recorded. Is the deed he signed in the morning valid? Yes.

Now let's say Mr. Smith has given a Power of Attorney to his daughter. The daughter uses the POA to sign the sales agreement. Prior to closing, Mr. Smith dies. The daughter cannot proceed to close using the POA. She must raise an estate and the transaction will be completed by the fiduciary in charge of the estate. The fiduciary is the executor/excutrix or administrator/administratrix depending on whether or not Mr. Smith had a will.

Saturday, July 28, 2007

query: how to write a title insurance claim letter

This is a very good question. Thank you.

Start by finding your owner policy. You likely received it by mail with the original recorded deed.

If you can't find your policy, you'll want some evidence that you purchased an owner policy. A copy of the title insurance commitment along with the HUD-1 Settlement Statement showing a premium paid for owner coverage will suffice.

The policy or commitment will give you the name of the title company. You are looking for the big underwriter's name, like Chicago Title or First American Title. If you are lucky, the policy will also give you their address. If not, Google it.

Your letter should be addressed to the title company with a copy to your title agent or attorney, whoever performed the transaction for you. Send the letter to the attention of the Claims Department and the salutation To Whom It May Concern.

Make reference to your owner policy number and property address.

Be very detailed in the description of the claim. You don't have to write a novel but don't skip over important facts.

Include good contact information for you including address, phone numbers, fax, if any, and your e-mail address.

Be sure to sign the letter.

Include a oopy of the policy or if you can't find it, the other evidence. Also include any correspondence related to the claim. For instance, if you have received a tax bill or some demand for payment, include that.

As I mentioned before, a full copy should be sent to the title agent or attorney who handled your transaction.

It's not a bad idea to send this letter registered mail.

One more thing, if the matter causing you to make a claim has a time deadline, for instance a tax sale or court date, don't procrastinate. You have an obligation to mitigate damages and give the title company an opportunity to defend the title. I'd recommend calling them AND sending the letter.

Thursday, July 26, 2007

query: can 2nd lender refuse to release lien on short sale


query: do I really need title insurance rip off

Did you cough before you said rip off? That's how I heard it. ;)

Anyway, here's another way to look at it.

Do you really need homeowners/fire/hazard insurance?
Do you really need health insurance?
Do you really need auto insurance?
Do you really need life insurance?
Do you really need disability insurance?

It's really a matter of your personal taste or tolerance for risk. You may purchase title insurance and never need it, or you may skip it, suffer a loss and wish you had paid the one time premium.

Everybody seems to understand the need for fire insurance because we see fire on the evening news. It's a very easy to understand situation.

What about folks who go through a disaster that isn't covered by their homeowners insurance? That's harder to understand and makes the policy seem like a rip off.

Media coverage of title insurance doesn't help because it's hard for those outside of the business to understand why some situations are covered and some are not.

The new 2006 ALTA title policies are better. The language is easier for most people to understand, that is, if you take the time to read it or are even given a courtesy copy to review.

So, do you need the coverage? No, not unless you have a title problem, but do you want to take that chance? That's the real question. Real estate is often the largest investment a person has and why you would want to gamble with the validity of ownership if beyond me, but it is a personal choice and this is a free country.

Sorry, but I had to cough before I said free. Shoulda said almost or used to be.......damn commies....

query: can you get title insurance if there is a pending lien on the property

Yes. Depending on the nature of the pending lien, it may be covered by the insurance or be an exception. Talk with your title insurer and they can give you a specific opinion.

Here are a couple of examples.

Let's say there is a pending law suit, not an action in equity, in which no judgment has been entered. If we record the deed prior to the filing of a judgment, the judgment has no impact on title and your title insurance policy won't contain an exception for that item.

Now, let's consider the action in equity. This type of pending law suit specifically involves the real property and the plaintiff files a lis pendens to give the public notice. In this case, the lis pendens or public notice takes priority and even though the matter hasn't yet been reduced to a judgment, we would have to postpone the closing or put an exception into the title insurance policy.

Wednesday, July 25, 2007

query: how often must you pay for title insurance and what does it do?

I'll answer the second question, first. Read through most of this blog and also check out this blurb.

Now to the first question. You pay for title insurance once. That is, once for each policy.

Your owner policy stays in place and protects you as long as you have an interest to protect.

Loan policies, on the other hand, expire when the underlying mortgage is paid in full. If you get another mortgage, you'll pay for another loan policy. That's why regulators encourage or require discounts in certain refinance transactions.

Are you considering a short sale to avoid foreclosure?

Here's a really good article you should read.

The most interesting section, I think, is the part about the IRS. Broderick Perkins says....

"The deal isn't over until the tax collector sings.

The difference between your home's value and the balance on your mortgage is considered a forgiveness of debt and unless you work out a deal with the lender to repay the difference over time, the amount will be considered taxable income."

Tuesday, July 24, 2007

query: what is a marked-up title commitment first american

Well, it doesn't matter who the title underwriter is, First American or another, the mark-up is pretty much the same.

As we've discussed before, the title commitment is a promise to insure subject to certain conditions outlined in Schedule B 1 and certain exceptions outlined in Schedule B 2.

Lenders and consumers should have received a copy of the title insurance commitment to read and approve prior to closing.  The mark-up of the commitment is done by hand, would be available immediately after closing and precedes the issuance of the actual policies.

The mark-up of the title commitment by the title agent or insurer is done in two stages. Schedule B 1 is marked "complied with" or "okay" - or some such indication that the conditions have been cleared. Anything not cleared on Schedule B 1 would then be added to Schedule B 2 as an exception to coverage.

Next Schedule B 2 is marked up and the notes are a little more complicated. The title agent will review each exception and, if needed, make a note. For instance, our gap coverage clause would be marked "out" which means it will not show as an exception in the final policies. The exception for possession of the premises would be marked "owner only" meaning that it will not be an exception in the loan policy but would remain as an exception in the owner policy. Exceptions being removed through endorsements would have the endorsement number noted in the margin next to the exception. Exceptions which remain in the policies without limitation are left unmarked.

This final mark-up lays out the instructions for preparation of the final policies and when coupled with a fully executed HUD-1 form is evidence of insurance.

query: how can I check to make sure my title policy has not been altered

Once issued, a title policy coverage cannot be altered unless you request a change. Keep the original policy in a safe place. If you are attempting to make a claim and you believe the title company has altered the policy, contact your state insurance department.

This raises the issue of reviewing the title commitment prior to closing. If you have not taken the time to review the title commitment before you close, you really have no idea what the policy will contain. So, a prudent consumer will review the title commitment prior to the closing and then review the policy upon receipt after closing. Make sure there have been no changes that you have not already agreed to.

Any title agent or company who is unwilling to provide a copy of the title commitment prior to closing should not be trusted. You are purchasing title insurance and have every right to review the proposed coverage before you make the purchase.

Monday, July 23, 2007

query: trying to refinance found lien not found in title search

I'm really hoping you purchased an owner policy when you had the title searched.

If yes, contact the title insurer immediately and they will step in and assist you. BTW - I suggest contacting both the title agent and the title underwriter. The title underwriter is the company whose name is on the policy. Do so verbally and in writing. Call and get the fax number. Fax a copy of your owner policy along with the material on the lien. Make sure you give them your name and phone number - legibly. Most title agents are responsible but there are some who are not. If you get no prompt response, contact you state insurance department.

If not, you are on your own. You'll likely get no help from the title searcher because they can't really guarantee their work.

Sunday, July 22, 2007

query: title vesting corporation versus individual

Well, there are a few issues and you would be wise to discuss the purchase with your attorney. It's no big deal to take title in the corporate name, Just make sure you get the name right.

It's more complicated to mortgage property owned by a corporation and it's more complicated to sell property owned by a corporation.

In either case, you'll need a corporate resolution authorizing the action and identifying the officer who may sign documents.

The title agent insuring title to the mortgage lender or the prospective buyer will have to consider any corporation related liens that may attach to the property. In PA we have to get a corporate lien certificate from the state.

If your books are in order and you are paying your taxes, it's not much different than taking title as an individual.

query: divest affiliated business title insurance

If you've decided being an owner in an affiliated title insurance agency is a bad idea, get out of it. Ask the other partners or owners if they can buy your interest. If they can't or won't, then decide whether you can simply walk away from the investment. If so, you can surrender your ownership back to the partnership, LLC, or corporation. Get some advice from your accountant.

Realtors all over the country are deciding to opt out of the joint ventures or affiliations not just over RESPA concerns, but also because of the heightened profile of their fiduciary duty to the consumer.

There are some affiliated title agencies that give good value to the consumer and actually are RESPA compliant, but they are rare.

Friday, July 20, 2007

query: what is final HUD document

Do you mean the final HUD-1 settlement statement? If you take a peek at our home page* you will find some sample HUD-1 forms. Now these samples are not complete HUD-1 forms, but they'll show you what the form looks like. [update:  We changed our web site in 2012.  You can see a sample HUD-1 here.]

The final HUD-1 will have all lender fees, title charges, prorations, and other settlement costs along with the purchase price, deposits, and mortgage info. It's a two page document that shows you where all the money goes.

If you look at the first page, you'll see it's divided into two sides. The left side is the buyer side and the right side is the seller side.

On the second page, you'll see two columns on the right. The first is the buyer column and the second is the seller column.

Settlement charges are itemized on page two. The total of each column is then entered on page one and the remainder of the transaction is worked out.

Each side has a final bottom line figure with either cash "from" or cash "to" each party.

FINALLY.....  ;)  The phrase final HUD-1 is meant to distinguish between preliminary or draft HUD-1 forms that may have been circulated prior to closing.  A final HUD-1 is the official document which has been approved by all parties and is signed at the closing and becomes the formal record of the movement of money for the transaction.

*[UPDATE:  The HUD-1 form was amended with a new version adopted in 2010.  Here is a copy of the HUD booklet which explains the new Good Faith Estimate and HUD-1 form.]

query: teller check versus cashiers check

A teller check is the same as a cashiers check in my book.

query: do FHA lenders pull a second credit report before closing


Actually, any lender, conventional, FHA, or VA, who has a gut red flag rising, will re-verify whatever is bothering them before closing. This means that an underwriter who suspects foul play has a right to take precautions. They may run another credit report, re-verify employment, have another appraisal done, whatever red flag is nagging at their gut, they have a right to check out.

So, the word is, if you are up to no good, they may catch you.

query: obtaining funds back on bank certified check if deal falls thru

If the check is still in your hands, take it back to the bank and have them undo the transaction. If you can't get the check back from the closing agent, you may not be able to stop payment. That's why title agents get certified funds, so the check is good and can't be stopped. Call your bank and they can advise you.

Now, if the closing agent has deposited the funds and the deal falls thru and they refuse to return your money, contact the title underwriter listed on your title commitment or contact the state insurance department.

Thursday, July 19, 2007

query: does an unfiled deed have validity

Yes, an unfiled deed is valid but not protected. Recording a deed in the public records gives constructive notice to others that you are the rightful owner of that land. This notice prohibits the owner of record from selling the property to another. It also protects the land from liens and judgments of the owner of record.

Be smart and record your deed promptly.

query: I have a problem..a judgment was entered between the date of closing and the date the deed was filed

If you purchased owner coverage, the problem is the title insurer's. Gap coverage will protect you between the date of closing and recordation.

Look at the HUD-1 settlement statement to find out if owner coverage was purchased. The HUD-1 provides evidence of payment even if you haven't yet received the owner policy. The title premium will be in the 1100 section of the HUD.

If you did not pay for an owner title policy, yes, you do have a problem because the judgment may have attached to the property.

If you are not satisfied with the information you are receiving from the company who handled the closing, you may wish to contact the state insurance department or an attorney.

query: does title insurance cover appraisals

No, title insurance does not cover appraisals. The appraisal is an assessment or opinion of value. Title insurers do not insure value, they insure the marketability of title and defined ownership of the real property.

While we're on the subject, it's important to know that title insurance also does not cover the condition of the structures. We often get calls from consumer who have had water problems in the basement after their first big rain or the furnace doesn't work, you name it.

When buying real estate, there are numerous real risks, many of which you can insure. You can buy mine subsidence insurance, hazard insurance, a home warranty, and title insurance. You can also have the house vetted by a home inspector and you can have the land surveyed.

You or your mortgage lender will have the value considered by an appraiser. The mortgage lender will check flood maps.

Each and every one of these steps helps to reduce potential risk but can't eliminate all risk. So, if you find later that the value of the property can't be supported or you find six inches of water in the basement, these are risks not covered by title insurance. It could be just chalked up to bad luck with the market or the movement of the water table. If you suspect foul play, you may wish to consult an attorney.

Wednesday, July 18, 2007

Housing Wire is very interesting today.....

Take a moment to read today's addition. Follow the link to

This is the important part:

"Stock-market bears say such a fire sale could force some selling of all types of securities -- which could lead to a ratcheting up of lending standards and reduce the liquidity that's been such a boon to the stock market."

My reaction, exactly. Before hitting that link, I had just chatted with JC and said the same thing, almost verbatim. I'm not telling you this to get credit, I've got to tell you this because if it's so self evident to even ME, it's pretty darn self-evident.

Let's prepare ourselves for an embrace of traditional lending standards. There is no other way to restore faith and trust in the integrity of mortgage lending. If we are to retain investor confidence in any form, we must assure the market that real risk assessment will take place in the mortgage loan approval process. Matching truly qualified borrowers with lending products that make sense for their financial situation requires thoughtful examination by a trained human underwriter.

I don't propose a return to the stone age, but I would certainly consider losing FICO scores and vendor managed quality control programs. A dose of good old fashioned due diligence is what we need to recover and recover we will. ;)

query: do judgment liens attach to after acquired property in Pennsylvania

There are three types of liens I pay attention to when considering after-acquired property. IRS liens, which of course now penetrate tenancy by the entireties, PA unemployment compensation liens, and domestic relations liens.

The domestic relations liens are kind of spacey because title underwriters are all over the map on their advice. I simply insure a first position purchase money mortgage over a domestic relations lien but won't insure a second position if a subordinate mortgage is closing concurrently with the first.

Monday, July 16, 2007

Consumers and title insurers in Indiana should take note.....

According to Paul Ogden, managing attorney for the Indiana state insurance division, RESPA is not as strict as the Indiana state law and that's causing confusion.

He says, "
In Indiana it is custom for the Seller to pay for the Buyer's title insurance policy. Indiana has a statute that is much more restrictive than Section 9 of RESPA. Under Indiana law, the seller and the lender have no say over the title agent the buyer picks to close the transaction, or to make the selection of a title agent or an insurer a condition of the sale or the mortgage. The seller and lender only have a right to veto the insurer (not the agent) selected by the buyer."

Here's a link. You'll have to scroll down to the statute:

For more information, contact:

Paul K. Ogden

Managing Attorney, Title Insurance Division

Indiana Department of Insurance

311 W. Washington Street, Suite 300

Indianapolis, IN 46204

(317) 234-5154

Thank you, Mr. Ogden, for sharing this information.

Wednesday, July 11, 2007

query: how does being late on your mortgage affect you

Well, besides adding personal stress to your life, the lender will report late payments to the credit bureau.

Having a recent history of late mortgage payments may affect your ability to get another mortgage.

You will be charged a late fee - usually 5% of the monthly payment.

Worst case, of course, if you allow late payments to get out of hand, you may face the loss of the property through foreclosure.

Most mortgage payments are due on the first day of the month and have a 15 day grace period. As long as the lender receives your payment by the 15th, you are still on time.

If you are stuck in a situation - temporary - in which you may have trouble making a payment, call your lender and ask if they will accept a payment of interest only or a partial payment. Don't count on them saying yes because it's rare, but some lenders are open to this rather than skipping a full payment.

query: effect of quit claim deed non-borrowing spouse

This always bothers me. I'd much rather have a non-borrowing spouse sign the mortgage to allow the lien rather than deed away their rights to the property. As an alternative, they could also record a subordination of their rights to the mortgage lender. The repeated use, however, by lenders of the quit claim deed in these situations may spell trouble for folks facing estate or divorce issues, etc.

Remember, the non-borrowing spouse is giving away all rights to the property. Do consumers really think this through when they are emotionally charged with the whole prospect of buying a new home.? Sounds like a good time to consult a competent attorney.

BTW- The FHA program is one that our friends at HUD should revisit in this regard. There is some rule in the FHA program that forces lenders to require a quit claim deed rather than allow the non-borrowing spouse to subordinate their rights.

Wednesday, July 04, 2007

query: disclosure to new homebuyer on fence replacement need

Say what you mean and mean what you say, period. Any disclosure, agreement, easement - whatever - should be complete enough to cover issues, but not so long as to obscure the intent of the parties. I find it helpful to keep the language simple and easy to understand. For instance:

The undersigned buyer understands that the fence in the rear of the property located at _____ is in a state of disrepair, needing full replacement. Buyer and seller have agreed that the buyer will accept the fence in this condition and that the seller will have no further liability in the matter.

Here's a good test when writing any kind of agreement or disclosure. After you write it, have someone who is not familiar with the issue or taken part in any conversation related to the issue read your language. Do they understand the problem and the remedy? Do they understand your intentions without further explanation? If so, you've done a very good job of it. If not, you are not alone. It's really difficult to write something from the perspective of someone who doesn't already have the facts. It's just too easy to assume that because you and the other person have discussed the issue, you have both come to the same conclusions.

Writing out the issue and the agreed conclusion in a way that someone not involved will understand does two things for you. It tests that you and the other party have really come to a "meeting of the minds" and it gives a judge or some other arbitrator clear guidelines for understanding the original intention of the disclosure or agreement.

You have to assume the worst case scenario. Assume that you and the other party will have an argument leading to some outside intervention to resolve differences. If the words you put to paper cannot be understood by an outside party, the conclusion they draw to resolve the dispute may not be anywhere near the original agreement.

Tuesday, July 03, 2007

query: how to deal with mortgagors that overcharge for escrow accounts

Hmmm, I presume you mean mortgagees? LOL Everyone has problems with mortgagors vs. mortgagees. The mortgage lender is the mortgagee.

OK, I have two suggestions for consumers who are not getting reasonable responses from mortgage servicing departments.

First, find out the official mailing address for servicing related issues. This address is like a golden key to unlock access to management intervention in a problem. This is a very special address. It's likely not the address you use for payments and it may not be the address on the mortgage or note. Call customer service and ask for the official mortgage servicing address set aside specifically for consumer written correspondence. Federal regulations require each mortgage servicer to set aside one official address for this purpose.

Once you have the address, mail a letter using registered or certified mail. It has to be snail mail, not phone calls, faxes or e-mail. Make sure you clearly spell out your problem and make sure you include your account number and a way for the mortgage lender to contact you.

Each mortgage lender has a clerk whose job it is to log mail received at this address. This person must track the length of time it takes the mortgage lender to respond to your problem. This method is the tool given to consumers by the federal government to cut through voice mail hell and corporate BS. It truly is the golden key to customer service in a mortgage servicing transaction.

Wait at least two weeks, then if that method doesn't get a response, contact your congressman - federal. Tell their office that you used the federally mandated method and got no acceptable response. They should intercede on your behalf or at least offer some assistance.

You may also get some help from your state banking department. They license mortgage lenders doing business in your state.

Bottom line, try the golden key, first. It usually works.

query: should checks be made out to non-borrowing spouse

In my opinion, no. If there is a cash back check coming out of a refinance, I make it payable to the borrower(s).

This raises the issue, too, of spouses selling property. I only make seller proceeds checks payable to vested owners. I do NOT include a non-vested spouse as a payee.

Monday, July 02, 2007

query: what to date documents

This is another good question and I presume it's being asked for situations in which you are signing on a day that is NOT the date of closing. Well, I have my opinion and I will share it, however, realize that the mortgage lender will really make the final decision.

Let's start by saying we really have two dates. We have the actual date of signature and we have the effective date of the document. In a perfect world mortgage lenders and recorders of deeds would understand the difference.

In that case, we could type on the first page of a Note, let's say, the word "effective" next to the date and then that date could be the date of closing. We could also type the word "effective" date on the first page of the Mortgage and leave the notary section as the actual date the document was signed. Everybody would understand that though folks signed the documents on an earlier date, the effective date was later.

Run this method by the mortgage lender. Hopefully, they will understand.

query: does FHA insurance payoff my home if I die

Good question and one often asked by folks considering the FHA program.

The answer is no. FHA mortgage insurance should not be confused with mortgage life insurance.

The FHA mortgage insurance protects the mortgage lender if you default on the loan and the property goes into foreclosure.

If you would like mortgage life or disability insurance, you should talk with your personal insurance agent. It's a separate product.