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......., 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


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...........?

loan servicers calling borrowers who are not late

We are hearing reports from all over the country that mortgage loan servicers are calling borrowers who are not late.

Most notes allow for a due date of the first of the month and a 15 day grace period. Some mortgage loan servicers - mostly subprime lenders in trouble - are calling borrowers on the first or second day of the month to check on the payment. The persons making the calls infer that there is a problem and this is causing some distress and worry.

My advice? Check the terms of your note. If you have a grace period and your payment arrives within the grace period, don't worry.

These folks are in trouble and trying to get as much cash into their doors as quickly as possible.

It's their problem, not yours.

Thursday, October 11, 2007

query: does PA require title insurance

No, the Commonwealth does not require title insurance. PA does regulate and license title insurers.

Wednesday, October 10, 2007

RESPRO data is a rotten potato in the GAO stew

"The GAO's cite of the RESPRO study is causing immeasurable damage to our industry and real estate consumers. Little could the GAO have known that this one small cite in the GAO Report would be embraced as the GAO's stamp of approval of One Stop Shopping across the Nation.
Here's the GAO study. See footnote 25 on page 35:
The State of Washington is only the latest to fall prey to the GAO's reliance on the RESPRO study for the propositions that One Stop Shopping benefit consumers and don't cost more. Every state that has recently investigated ABA's has cited the GAO report for the same conclusions.
I ask you to please write Patrick Ward at the GAO ( ) to encourage him to make a very public retraction of the GAO's reliance upon the RESPRO study because of the tainted data. If you know anyone else that can help, it is my belief that this small request, if complied with, could change everything.
We want one thing from Mr. Ward as there is only one thing he can give us. We want a retraction of any cites and reliance upon the RESPRO study. We want him to publicly state that it was an error to rely on that study as it was based upon an unreliable source of evidence. That the following statements in the GAO are hereby retracted... And we want him to get this information into the hands of the regulators and legislators who are now heavily relying upon the GAP study. Please only focus on that issue.
Please do not use this forum to discuss the problems with One Stop Shopping. The GAO only provides reports to Congress and they are not concerned and can do nothing about the actual issues. Their report is in error and that's what needs to be addressed."

by Doug Miller

query: is title insurance mandatory in New Jersey?

I am not aware of any state that requires title insurance. Iowa is the only state run program I can think of and even they, I believe, don't rquire coverage.

The purchaser of real estate decides what level of protection they want to rely upon. If after having purchased property they find a lien or other problem and they don't have title insurance coverage, they must rely upon the seller to honor the warranties given in the deed.

Most sellers don't understand the warranties or refuse to honor them and so the purchaser must hire an attorney and attempt a legal settlement.

Monday, October 08, 2007

overcharges in Somerset PA, competition, and fiduciary duties

A local bank recently opened its own title agency. The ABA is an agent of Chicago Title.

I have an opportunity to review a settlement statement and I see that both buyer and seller paid attorneys $150 each for document preparation and other services. I see that the buyer paid notary fees of $20 and that both parties paid combined courier fees of $35.50.

Lastly, I see a mortgage payoff on the seller side of an institutional mortgage that, based upon the figures alone, seems highly likely to have been originated within the last 10 years. With that info in mind, I checked the title insurance premium and see that the buyer was charged a basic rate rather than the reissue rate for which he clearly would have been eligible.

The basic rate is $958.75 and the reissue rate would have been $862.88.

I can tell from the structure of the fees on the settlement statement that the bank owned title agency is operating under the agency program and not the approved attorney program and that means that TIRBOP rates apply including required discounts.

If these consumers had used our Choose & Save Program, the seller would have saved $165.50 and the buyer would have saved $265.87.

Isn't that amazing?

so much truth flowing on Calculated Risk

Read the whole piece here. My favoriate blurb follows:

In fact, I have some sympathy with the view that mortgage lenders "perform a valuable social service through their loans." That's why, when they stop doing that and become predators, equity strippers, and bubble-blowers instead of valuable social service providers, I like seeing BK judges slap them around. Everybody talks a lot about moral hazard, and the reality is that you're a lot less likely to put a borrower with a weak credit history, whose income you did not verify and whose debt ratios are absurd, into a 100% financed home purchase loan on terms that are "affordable" only for a year or two, if you face having that loan restructured in Chapter 13. If you are aware that your mortgage loan can be crammed down, I'm here to tell you that you will certainly not "forget" to model negative HPA in your ratings models, and will probably pay more than a few seconds' attention to your appraisals. You might even decide that, if a loan does get into trouble, you're better off working it out yourself, via forbearance or modification or short sale, rather than hanging tough and letting the BK judge tell you what you'll accept. That would be a major bummer, right?

Saturday, October 06, 2007


FDIC Chairman Sheila Bair stands up and rocks!

"Keep it at the starter rate. Convert it into a fixed rate. Make it permanent. And get on with it," Federal Deposit Insurance Corp. Chairman Sheila Bair said in prepared remarks at an investor's conference.; and

Bair proposed that servicers convert only those ARMs that haven't reset yet and only for borrowers who are current in their payments and occupy their homes. Loans taken out by speculators who don't live in the homes they bought would not qualify for the automatic conversion.

Friday, October 05, 2007

have a great weekend....

Thursday, October 04, 2007


As the title agent in a real property transaction, we are charged with disbursing net proceeds to the seller. We send each seller a pre-closing questionnaire while we are processing the title order. As part of that routine inquiry we give the seller three choices for their proceeds:
  1. our TCS escrow check
  2. cashiers check
  3. wire
We charge a banking related service fee of $25 for the cashiers check or wire. This fee is waived if the buyer uses our Choose & Save program.

We had two odd happenings this week related to seller proceeds which I would like to share. In each case, if the seller had discussed their needs with us ahead of time, we could have helped them avoid the trouble.

I'll start with the simple happening first. We had a seller request a cashiers check which we provided. The seller intended to use the funds to purchase another piece of real estate. The seller made the mistake of depositing the check in his bank account rather than simply holding the check and endorsing it over to the attorney or title agent handling his purchase. His problem is that his bank has a hold on the money and he can't access it. Since the cashiers check has already been deposited, we can't help him. He has to wait it out. If he had discussed his plans and needs with either our office or his bank, he likely would not be in this pinch.

A cashiers check is good funds but your bank decides how and when you have access to those funds.

Our second happening is more interesting. Our sellers were a husband and wife. There was nothing eventful at all about their transaction other than the request for a cashiers check. As usual, no big deal, we had the check ready for them at the table. It was joint ownership and so the check was issued in both of their names.

Here's what we didn't know:
  • We didn't know the husband was about to file divorce.
  • We didn't know that the wife was leaving that day with her boyfriend to travel across country and that they had no money and were planning to CASH the proceeds check.
  • We didn't know that the husband was under house arrest.
  • We didn't know that the husband had agreed that the wife should receive all of the proceeds.
  • We didn't know that neither of the sellers had bank accounts.

So, here's what happened:

Immediately after closing, the Realtor - knowing the full situation - walks the couple across the street to the bank. The Realtor had already made arrangements with the bank manager to open an account for the sellers, cash the check giving her $1000 and deposit the balance of the proceeds into the new account. The plan was that the funds would be wired to the wife when she got settled on the west coast. Got that?

OK, so these guys are in a real hurry because it's been almost an hour since Mr. Seller left the house - remember he's under house arrest - and he wants to get home before the police arrive.

They present their ID and the bank manager starts to open an account then WHAMMY! she is stopped in her tracks. She CAN'T open an account because Mrs. Seller is "red flagged" in the system. Mr. Seller quickly endorses the back of the check, leaves and goes home.

Mrs. Seller decides to drive to OUR bank - the bank who issued the cashiers check - and see if THEY will cash the check. Our bank will be very happy to cash the check provided she opens an account which she CAN'T because she's "red flagged" - soooooooooo, we get the first of several screaming calls that we have to help her, etc.

We explain that we can't change banking rules, etc., we suggest she open an account. It this point you must understand that we did NOT understand that she really COULDN'T open an account. The impression we had was that she did not WANT to open an account because she was afraid that they would confiscate some of the proceeds. Frankly, I'm thinking two things - babe - you're on your own; and I want to take another close look at that file!

Anyway, she makes it out to the west coast and can't open an account out there because the check has been endorsed by her husband who is still back HERE under house arrest. So I suggest she send the check back to me and we'll figure something out.

We'll get her husband to sign a release and I'll wire the funds.


query: does foreclosure wipe out a non-borrowing spouse's interest in property

Yes. I would hope, however, that you would have an attorney review the matter before the property goes to the sheriff's sale.

It is entirely possible that the lender did not account for the interest of the non-borrowing spouse and might have created a non-valid mortgage lien. If that were the case, the lender might have a claim against their loan policy as they may not be able to foreclose.

Wednesday, October 03, 2007

the TOOTs keep coming!

"Hi Diane, I just wanted to thank you in helping with the closing paper work and working with me thru the issues it entailed. Last evening at closing, with Michel, was one of the most professional transactions I've ever been a party of. It was exceptional. The Closing Specialists saved me money and made a big transition for me painless. Thank you all. Please forward this to any supervisors so that they may see how pleased I was with all of your services. Thank you." JF

Thank YOU, JF, for taking the time to comment. Diane Hostetler is one of our THREE Dianes.

DH is a meticulous coordinator and Michel Wright is a first class on-staff closer. I am truly privileged to work with them both.

Soldiers and angels...that's what it takes.

FHA sued over charity gift program

Two big gift funds providers are suing the FHA according to Reuters. Here's the blurb:

"On Monday, HUD announced that it would ban some third-party funders from helping prospective borrowers meet a required downpayment test. Since HUD announced its plans, two of the largest such funders, AmeriDream Inc of Maryland and Nehemiah Corp of Sacramento, California have sued the federal agency saying the new rule is capricious."

The feedback I've heard from FHA lenders is that they think the program is great and they hope HUD will be forced to keep it available.

Tuesday, October 02, 2007

query: title insurance in a cash deal

You better believe it! Whose got the most to lose if there's a title problem? YOU, you alone, so why the heck wouldn't you cover those hard earned dollars with a one time premium for title insurance?

I'm always thunderstruck when a cash buyer skips title insurance because nobody is forcing him to buy it.

Mortgage lenders force borrowers to buy loan policies because they KNOW it's the smart and prudent thing to do.

Yes, I know, there's a bunch of stupid lenders out there in the news, but trust me, the smart ones require title insurance.

query: how to fight title insurance exclusions - assumed suffered or agreed

Deal with exclusions before you buy the insurance. Exceptions to title insurance coverage are set forth in the title insurance commitment.

Conscientious consumers will read the commitment, including the jacket, and ask questions until they are satisfied and understand.

Conscientious title insurers will provide a copy of the title commitment with pertinent attachments to the purchaser automatically and without delay.

Conscientious consumers will DEMAND a copy of the title commitment before closing so they CAN deal with exceptions before buying title insurance.

Conscientious consumers will FIRE creepy title insurers who refuse or cannot produce a title commitment and answer questions about coverage prior to closing.

So, if unfortunately you are stuck with exclusions or exceptions that make you unhappy, think back to whether or not you were given an opportunity to review the title commitment before you closed.

Even if you were pushing for a fast closing and got the commitment at the table, you still had the chance to postpone. [Some folks push for a fast track closing without considering potential damage to themselves.]

If you had NO opportunity to consider these exclusions/exceptions before you purchased the title insurance, I think you should have a chat with the title company and if necessary hire an attorney to have that chat for you.

If you were given an opportunity to review the commitment and didn't or didn't ask questions, shame on you.

As a post script I have to say I'm not sure if I caught the right drift with your query, so if I'm off target, try again. ;)

query: what does a title company really do

That's kinda like asking what does a hospital really do. They do lots of stuff related to illness.

A title company does lots of stuff related to the ownership and finance of real property.

query: TIRBOP waiver of spousal rights

Never heard of it and frankly if you are planning to validate a lien you had better do it on the instrument itself. Anything less does not a valid lien make.

query: insurable access

Good point and one most people don't really consider. Read the title insurance policy - including the jacket - very carefully. Insured access may or may not be insured vehicular access.

Unless vehicular access is specified, the insured access may be minimal aka by foot.

Title examiners look for access to and from a public roadway. If the insured land abuts a public roadway, that's access. How do we know if the public roadway is down a fifty foot cliff from the house and your real driveway goes over the land of a neighbor? We don't and that's another very good reason to purchase a survey.

A surveyor will draw that driveway and identify ownership of the land beneath. Once your title insurer reviews the survey, the title policy will accurately deal with rights of way for access, as needed.


Tooting the TCS horn - just gotta share this nice customer comment:

"Excellent service. The Closing Specialists have provided the best customer service that I have ever received from any business regardless of field of expertise!"

Wow! Thank you. We appreciate you taking the time to tell us because we try so very hard to please.

Your friends at TCS


conflicts of interest and attorneys

Doug Miller, an attorney, hit the target on his blog. Here are a couple of blurbs:

"The problem with fiduciaries in controlled business relationships isn't limited to just Realtors. It includes attorneys as well. If an attorney represents a client in a residential real estate closing and then also issues the title insurance and performs the closing, that attorney has just created an insurmountable conflict of interest. Most ethics opinions require attorneys not to use their law practice to steer clients into another business. For example, it would be unethical for me to have both a real estate brokerage and a law practice and refer people from one to the other. "; and

"Attorneys, as fiduciaries, may not "sell" their clients anything, they must act with due diligence, avoid conflicts of interest, must not have secret profits, must not engage in self dealing, they have a duty of full accounting and on and on... The duties of a fiduciary are immense. Sometimes I wonder why real estate agents want to fall into this category... "

Nicely said, Doug.