Wednesday, January 31, 2007

Last day of the month and we're dealing with a crazy lender from California....

Had a closing scheduled for 8:30 am this morning. Late yesterday afternoon, the lender stopped communicating with us, we had no documents or final HUD, and so we contacted the borrower and asked to re-schedule the appointment for later in the day.

What happened yesterday afternoon? Here's a behind the scenes peek into the world of a title agent:

Having preliminary instructions in hand Tracey, a member of our HUD Team, prepared a draft HUD-1 settlement statement. She noticed that the loan amount was odd, it had cents, and so asked the lender if it was correct. The lender rep. replied that it was not a final loan amount and that she would get final figures to us along with documents.

From 3pm EST on, Tracey attempted to reach this lender rep. We only had one contact, but Tracey also hit zero and attempted to find another person in the lender's office for assistance. No one was available to help, thus the request to delay closing.

I was in the office until roughly 6pm last night and by the time I left, we still had not received documents for the file.

This morning, documents arrived via e-mail around 9:30. The sender hit the send button last night at 7:19pm, 4:pm in California. I can't account for the delay in delivery, but that's one of the ongoing issues with web document delivery. Sometimes it's instantaneous and sometimes it's not. At any rate, this lender could have returned Tracey's call to at least say she was sending documents.

With documents now in hand, Tracey reviewed the package and instructions. She revised the HUD-1 Settlement Statement to reflect the adjusted loan amount, e-mailed and faxed it to the lender. The bottom line showed the borrower owing a little over $200 to close. The lender wanted the cash requirement to zero out so she reduced the loan amount by $200. Tracey respectfully had to argue with her for awhile so that she would understand that the loan amount should be increased to reduce the cash requirement. The lender finally understood, revised the instructions and e-mailed us another set of documents which took over an hour to arrive in our office.

The transaction successfully closed early in the afternoon and Tracey had the opportunity to sit with the borrowers and help them understand the delay.

This peek into the back office is being provided to help you understand some of the give and take that occurs between a title agent and a mortgage lender. Once documents and instructions are received, the final HUD preparation and approval may take 30 minutes or with revisions, 8 hours. It is not unusal to revise HUD-1 Settlement Statements several times before the package is released to the closer.

Monday, January 22, 2007

RESPA and Seller Liability

Buyers and Realtors should know that RESPA prohibits a seller from requiring that a buyer use a particular title company. That is, if the transaction falls under the purview of RESPA.

Sellers who attempt to intimidate the buyer should read this web page.

Class action attorneys have their eyes you. Corporate sellers, beware!

Saturday, January 20, 2007

The property has been in the family for decades.

"The seller has assured me the title is clear."

This homebuyer should be thankful that his mortgage lender ordered title insurance. The transaction should have closed before the end of December and here we are in late January, hoping to close by month end. What happened? An unforseen title issue.

Our seller is the executrix of her father's estate. We'll call her father, Edward Smith. Mr. Smith was married to Mary Doe. The house and land we are attempting to convey and insure was Mary's family home. Her parents, John and Nancy Smith, purchased it when Mary was a little girl. Mary and her two sisters and three brothers grew up in that house. Each one in their own time, got married and moved on, all except Mary. Mary stayed at home, caring for her father after her mother's death.

John, her father, amended his will, giving Mary the right to purchase the family home for $7000 upon his death. If she did not wish to purchase it, the ownership would go to her siblings to share and share alike.

John Smith died. Mary did not follow the instructions in the Last Will and Testament. She did not purchase the property and this is where the critical error takes place. Mary went to the justice of the peace and had a new deed prepared. The justice of the peace was not well trained and prepared a crappy deed.

The Grantor section read: John Smith, deceased, and Mary Smith. The Grantee was Mary Smith. Mary had no right to execute a deed on her deceased father's behalf and there was no accounting for the interests of her siblings.

Mary stayed on in the house and then married Edward. They hired an attorney and deeded the property in both of their names as husband and wife, tenants by entireties. They had one child, a daughter, and raised her in the house. Mary died, then Edward, and now their daughter is selling the property. It's a burden to her and she would like to close as soon as possible.

When we raised the issue of the flawed conveyance from her grandfather to her mother, she was surprised but understood. Her aunts and uncles were now deceased and though it was a job, she thought she could find all of her cousins. Thankfully, this is a family that stayed reasonably in touch. One of her cousins lives in China but was coming home over the holidays and so was able to sign the deed right away. There are about ten grandchildren, all thank goodness are still living, who must sign the deed. All have agreed to simply quit claim their interests over to Edward's estate. We're just in a holding pattern while the deed circulates all over the country for signature. Well, actually two deeds. Her attorney drew up two deeds to make it go a little faster and that was a good idea but it does still take time.

This title story will have a happy ending. We'll be able to insure title for our homeowner and lender and there was no litigation necessary. It could have been a messy situation, but these folks were lucky.

Just because a property has been owned by one family successively over generations does not mean it has a clear title. Be careful and have an expert examine and insure any real estate purchase.

Thursday, January 11, 2007

Transfer Taxes - Updated Deviations

Most municipalities charge 1% of the sale price when ownership transfers. Be sure to check this list of deviations for your municipality.

Buyers and seller customarily split transfer taxes, but the matter is entirely negotiable.

The Commonwealth of Pennsylvania charges 1% of the sale price.

When estimating costs be sure to account for both municipal and state taxes.

Saturday, January 06, 2007

Title Insurance Overcharges in PA

The article noted in the previous post has a footnote to visit a web site for information on Title Insurance Overcharges in PA. This link takes you to a class action attorney's site who offers free consultations. I'm not crazy about attorneys who do this kind of work. They make a lot of money under the guise of helping folks. I'd like to offer an alternative solution for recovery of title insurance overcharges.

Both this blog and Radical Title Talk include lots of info to help you identify title insurance overcharges. If you believe you have been overcharged, I suggest contacting the actual title insurance company named on your title insurance policy. Don't deal directly with the person who handled your closing, go higher. Management wants to know if an employee makes a mistake and will make full restitution to you. This way you won't have to go through a law suit and pay an attorney.

If you'd rather not contact the title insurance company or believe you are not being treated fairly, then complain to the PA Department of Insurance. You can do this on-line here.

I am always available to help you determine if you have been overcharged. You can call me or send an e-mail. I often get calls from consumers who are not my customers who just want to know if what they are experiencing is normal.

Overcharges are sometimes just innocent mistakes and sometimes willful misconduct. Either way, we need to fix it and if you need help, call me.

Capital Ingenuity Corporation has it all wrong.

Read this article.

They say they provide sem services for attorneys and law firms. I must confess my ignorance. I have no idea what sem services are. I hope they are not educational services because Capital Ingenuity Corporation sure doesn’t know anything about title insurance.

I don’t even understand the point they are trying to make in this article so it’s hard to even comment except to say I think they are under the illusion that better land record systems would eliminate all title problems. Have I got it right? Wait a minute; I wonder if sem systems are document storage. I’ll bet that’s the angle. These guys are probably making an argument that they can solve all the world’s title woes if we’d just let them organize the land records system. That’s a laugh.

If you have any idea what sem is and would like to help me understand what these folks are trying to say, I’d be happy to hear from you.

Wednesday, January 03, 2007

Dog fence point of contention with neighbor.

I just heard from one of our customers this morning who wants to install a fence for their dog and is limited by an easement along one side of the lot.

We closed their purchase transaction in November of 2005. As usual we recommended they get a survey before closing. They opted not to. We searched title and disclosed an easement along the border of their lot. We sent them the title commitment for review two weeks before closing.

A survey was ordered a year AFTER closing in anticipation of the installation the dog fence. The surveyor correctly pointed out the easement which is 60 feet in length and 2 feet in width. They don’t want to lose that much space for their dog but hesitate putting the fence over the easement as the neighbor will object. Hmmmmmmm...

I don’t know why it’s so hard to believe but you really should get a survey BEFORE you buy real estate.

We go to great lengths to help consumers understand the importance of a survey. Here’s the survey disclosure we send when we process a title insurance order:

WOULD YOU LIKE TO HAVE THE PROPERTY SURVEYED?

RE: 123 Test Street, Latrobe, PA 15650

The Closing Specialistsâ have been hired to perform the title insurance and closing services for this transaction on behalf of 1st National Bank of Testville, at your expense. As part of the title search review, we will determine whether or not a current updated property survey is required in order to resolve problems with the title and provide a clear title insurance policy. Typically, a current updated property survey is not required, so you may then decide whether or not to have a property survey performed on your behalf.

A current updated survey will confirm the boundaries of the property and show the location of all structures, driveways, etc. which may affect your use and enjoyment of the property. If you are purchasing property, obtaining a current updated survey prior to closing will confirm the actual real property, which you are about to purchase. We highly recommend that you obtain a current updated survey. Please indicate your preference below:

( ) I/We do not wish to have the property surveyed and understand that a property survey will not be performed unless THE CLOSING SPECIALISTSâ, LP requires it for purposes of obtaining a clear title policy. Further, I/We hereby hold THE CLOSING SPECIALISTSâ, LP, the mortgage lender and the real estate agent/broker, if any, harmless from any liability whatsoever as a result of my/our decision to forego a property survey.

( ) I/We do wish to have the property surveyed prior to closing and understand that it is our responsibility to order and pay for the survey.

Acknowledged and agreed to by: (signatures)

NOTE - If a survey is required to issue a title policy, we will contact you prior to closing. An explanation of the title issue will be provided. At that time, you can let us know how you want to handle it.

TCS does not order surveys, but we can help you find a surveyor. Let us know if we can help.


Here’s the language that accompanies the title insurance commitment:

We have processed the title insurance order for the real estate you are purchasing. This is a courtesy copy of our commitment to insure the title. You do not have to respond to this mailing.

As you review the commitment you will note in Schedule B, Section 1 that there are requirements to be met. Our staff here at The Closing Specialistsâ will clear these matters prior to closing. Schedule B, Section 2 contains exceptions to the title insurance coverage. Item 1 will be cleared by The Closing Specialistsâ for your closing. All other exceptions will appear in your title insurance policy. If you have decided to purchase the property without a current updated survey, please note that Item 2 is the standard exception for matters that might be disclosed by an accurate survey of the premises.

This title commitment will remain in effect until your new deed is recorded. At that time we will convert the commitment into an owner title insurance policy. Your policy along with the recorded deed to your new home will be mailed to you as soon as it is available from the courthouse.

We have advanced funds for abstract of title and lien letters on your behalf. There is a commitment cancellation fee for services rendered should you decide to cancel the title commitment before the owner title insurance policy is issued.

Should you want additional information or have any questions, please feel free to contact me at 888-680-5177 x104.

The easement was noted twice in the title insurance commitment as follows:

\Right of way for an easement along the southerly boundary line to Frederick W. Wright, et al., as set forth in Deed Book 503, page 178.

\Right of way for an easement along the rear of line to Frederick W. Wright, et al., as set forth in Deed Book 622, page 186.

I realize this is a lot of boilerplate text but it’s important and shouldn’t be ignored. The moral of the story is that consumers have an obligation to pay attention to what we are telling them and shame on them if they don’t.

Be a smart consumer. Buy title insurance. Buy a survey. Buy a home inspection. And for heavens sake, READ the reports these professionals give you!