Sunday, December 28, 2008

What about title insurance and refinancing?

SHOP SHOP SHOP SHOP

Get the message?

If you are in Pennsylvania and refinancing, you'll not get a better deal than our CHOOSE AND SAVE program.

Most title companies use independent notaries and you'll end up paying a signing fee or closing fee of some kind. If you are in our market area, we'll come to you at no extra charge. We close 8 to 8 Monday thru Friday and 10 to 5 on Saturday.

So, shop for title insurance and closing services. Do not just go wherever your mortgage lender wants you to go.

Here's our easy to use title insurance premium calculator. Look at those discounts for refinancing!

good article on Mercury

LINK

Wednesday, December 24, 2008

perfect title versus insurable title

We've chatted before about automation in title searching and I think you know that I tried the First American Eagle Search/Fast Web system for awhile and decided I don't like that kind of search.  I'm a hands on kinda examiner.  I want a full search and all the raw data to review for myself.  Anyway....

Recently I recieved a call from an insured owner who we closed while using the automated search product.  He was trying to sell his property and the buyer's title agent had found a life estate.  I checked our file and we hadn't dealt with the matter because it wasn't disclosed in the automated search product.  Nevertheless, I told him I knew First Am would indemnify his buyer's title insurer so he didn't have anything to worry about.

I contacted the title agent, got a copy of the title commitment and faxed a request to First Am for indemnification.  The attorney from First Am called me with a question or two, grumbled about whether or not to issue the indemnification, why I don't know, but conceded to doing so.

As a follow up, I had a copy of the deed in question pulled and reviewed and I checked the Social Security Death Index and found that the party vested with the life estate had died in 1997.  That meant that any potential inheritance tax risk had nine years remaining.  I also considered the facts and came to the conclusion that the life estate was probably the only asset of the deceased.  No estate had been filed and so the risk as I considered it was minimal and so the issuance of indeminity, giving insurance to the buyer, would be customary, reasonable and a good solution.

Then I got word that the buyer's attorney wasn't happy with indeminity.  I chatted with the title agent who said they, the title company, would accept indemnification but the buyer and the buyer's attorney wanted the problem fixed.

I called the insured owner and asked if he had an attorney because in my mind, his attorney needed to advocate on his behalf based upon the terms of the sales agreement.  Our insured owner asked about filing a claim with the title company.  I said that he could file a claim , however, he hadn't suffered a loss related to the life estate.   His problem was one of marketable title.  I called his attorney.  Never got a call back.  I called the buyer's attorney and discussed the concept of "perfect" title versus marketable title and insurable title.

Consider if you will, perfect health versus insurable health.  If you want to buy life insurance, the insurance underwriter will examine your lifestyle, current state of health, etc. and make a determination whether or not to issue the policy.  They will NOT expect you to have perfect health, rather they are assessing the level of risk and determining if they wish to insure.  Get it?

Title insurance underwriting is the same.  We don't find perfection in title.  We don't expect it.  We look for insurable title and that's what marketability is based upon.

I explained to the attorney that, while the insured buyer is welcome to file a claim, it is unlikely that the title company will pay inheritance tax when no lien has been filed by the Department of Revenue.  Insuring against the potential lien is customary and reasonable.  He agreed, said he would explain that to his buyer and asked me to shoot him an e-mail with that explanation and that I did.

I heard nothing further from the title agent, the buyer's attorney and never heard from the insured owner's attorney so I presumed case closed.  Then the other day I received a mysterious hard to understand voice mail which when I listened carefully, I'm pretty sure it was our insured owner.  He said the deal fell thru and I owed him $55,000 and his attorney would be contacting me.

I'll report back if I ever hear from these folks again, but I'm posting this for a few reasons.  First, realize that perfection in title is an unreasonable expectation and so attorneys and buyers must embrace the concept of marketable and insurable title.  Second, attorneys representing consumers must communicate with all parties and they have a duty to control their clients.  That means that the attorney for our insured owner should have been actively engaged in the resolution and advocating on behalf of his client based upon the terms of the agreement of sale which called for marketable title, not perfect title.  Further, if they wished to pursue a resolution from the title company beyond the offered indemnification, they could and should have done so.

I have a feeling that somewhere, earlier in the transaction, when the title was reviewed, someone blew the life estate issue WAY out of proportion and created an insurmountable fear in the buyer.  Title agents and attorney need always to remember that consumers rely upon us to help them grasp the realities of real property.

I know this post is getting really long and I don't like to write or even READ long posts but here's another case just to drive this point home.  We just closed a purchase transaction of vacant land, several acres, in a rural setting.  The buyer freaked out because we reported that mineral rights had been reserved by a prior owner.  He wanted absolute insurance that surface operations would not take place on the land.  The deal almost fell thru until we got him to understand that unless he purchased property in a highly and closely developed area, this risk was present in virtually all parcels of land.  A core risk you take purchasing large parcels in our market is that someone may own the mineral rights and they may use them.  Commercial developers will pay for the necessary mineral rights searches and surveys, however, residential purchasers rarely do.  This buyer, once he grasped that reality, he decided to accept the risk.  We have this conversation over and over with out of town mortgage lenders who freak out over mineral rights.

So, to stop this beating of the issue, let's just remember that title to real property is not expected to be perfect, just insurable, which means reasonable risk.

Tuesday, December 23, 2008

using a power of attorney to convey

If you intend to sell real estate using a Power of Attorney, here are a few tips:

  1. Provide a legble copy to the buyer's title agent or attorney for review prior to closing.
  2. Be prepared to give the ORIGINAL power of attorney up at closing so it can be recorded prior to the deed.  If you wish, you may record the document yourself, however, you must do so well in advance of the closing so that the recordation can be verified.
  3. Make certain that the document is acknowledged in front of a notary, that it specifically gives the power to convey real estate and that it meets the statutes of the state in which it was created.  It pays to have the document prepared by a competent attorney.

Friday, December 19, 2008

roller coaster ride over...Fidelity purchase approved

Dec 19 (Reuters) - Fidelity National Financial Inc (FNF.N: Quote, Profile, Research, Stock Buzz) said it received approval under the Hart Scott Rodino Act for the purchase of two underwriting units from bankrupt title insurer, LandAmerica Financial Group Inc (LFGRQ.PK: Quote, Profile, Research, Stock Buzz). Read more...

money is on sale...time to buy or refi!!!

Check out our title premium calculator for Pennsylvania rates. Use our Choose and Save program and you'll get the most affordable title insurance and settlement service available in Pennsylvania.

We are determined to give consumers the best in service and value. Here's our service area map. If you are buying or refinancing in our market, we'd sure like to give you a quote.  Don't just follow the lead of your mortgage lender or real estate agent.  If they aren't leading you to our Choose and Save program, you're not getting the best deal in Pennsylvania.  YOU have a choice. It's YOUR money.

When you choose The Closing Specialists, you get an expert title search and examination performed by experience human beings.  Does that sound like a hilarious and ridiculous pitch?      Got news for you.  There are lots of title agencies out there who have little or no experience and they order their searches by computer and let someone else do the thinking for them.  Lots of that work is outsourced to foreign countries.  Can you believe that?  It's true.

We only use experienced abstractors who work in the county where the real estate is located. We do our own title examination and we use only on-staff closers.  Our staff is experienced and we consider YOU, the consumer, our customer.  YOU pay for our services, not the mortgage lender or the real estate agent.  It's YOUR transaction.  We focus on YOU.



WE STAY OPEN SO YOU CAN CLOSE.

Wednesday, December 10, 2008

query: HUD-1 signing requirements on Sheriff's sale

In my neck of the woods, the Sheriff does not sign a HUD-1.  Most purchases at Sheriff's sale are for cash so there is no HUD-1.  

If the buyers are getting a mortgage, there will be a HUD-1 prepared, however all costs will be on the buyer side.  The buyer needs to discuss this with their lender up front so the lender has had an opportunity to think through the issues.  

When we do this kind of closing, the lender pre-funds the loan, we meet the buyers at the courthouse, sign the mortgage docs, then walk over to the Sheriff's office to exchange the proceeds check for the deed.  That's it.

Monday, December 08, 2008

had an interesting call today from a lady who didn't know where else to turn....

She was the executrix of an estate and had sold real estate in 2005 to a buyer who used a now closed title agent.  Follow?

Anyway, I recognized the name of the agency as one of the regional multi-ABA machines.  You know the kind - one address - and fifteen million so-called title agencies under one roof?

So, she has to file a revised inheritance tax return for reasons unrelated to the real estate transaction and she is wondering how she can find out how much inheritance tax this now defunct title agency paid to the state.  Luckily, she had in hand a copy of the HUD-1 which showed an escrow.

It's always interesting to me that folks allow money to go into escrow and never follow-up.  Yes, large sums are abandoned, especially inheritance tax escrows.

Anyway, I suggested that the title agency might have remitted the entire sum to the PA Dept. of Revenue if she had not resolved the escrow and that she might check with the Department.  If they had not received payment, she might check with the title company which we were able to identify from the HUD-1 as First American.  I gave her the phone number of the Pittsburgh First American office just in case.

Lastly and again, just in case, I gave her the toll-free hotline for the PA Dept. of Insurance....just in case.

Friday, December 05, 2008

query: has title insurance ever paid off on an easement dispute

Easements are one of the most common exceptions to coverage - UNLESS - you see the words "together with" in the legal description. If you see "together with" or some other language citing the easement in the legal description in the policy, then the insurer has INSURED that you have rights to the easement. If the only reference to the easement is found in exceptions, it likely is not covered.

In the case of shared driveways, it really depends how they were set up. If I can see a clear legal right of use, I will insure the right. If not, the only mention of the driveway is as an exception.

In our area, the access to the land is insured from a public roadway. That access may or may not be on and over the shared driveway.

okay, title folks, what do YOU think about this one...

Earlier this year we insured a purchase of property in a REO transaction.  The county tax claim bureau sent a tax certificate to the Sheriff's office but the Sheriff forgot to pay the taxes out of the proceeds.  Our abstractor noticed this and discussed it with the Sheriff's folks and they said sorry but the lenderr who bought back the property at the sale took it subject to the delinquent taxes.

Our abstractor checked tax claim and reported taxes owing for years 2003 thru 2008.  The REO seller paid the taxes at closing and we insured.

Last month our insured buyer got a notice from tax claim that 2002 taxes are still due and will move to a tax sale later in the year.

Our abstractor goes back to see what happened.  You need to know that the structure on our insured real estate is a doublewide.  Turns out that this doublewide was on a rented lot in 2002 and was assessed with its own parcel number in 2002.  

Tax claim says the old parcel number for the DW was merged into the parcel for our insured land when the trailer was moved.  We checked.  There is no notation of a merger.  There is nothing an abstractor could have been expected to find to tell them this.  It was an entirely different tax parcel number on different land.  It could have been a different DW.  There's really no way to know.

What do you think?   Any thoughts?

Right now the matter is in the hands of our underwriter's claim department but I am curious to hear your comments.

Monday, December 01, 2008

I think we share the same goal but I have a differing view on the new RESPA rule.

ClosingCorp says:

Under the Good Faith Estimate provision of the new rule, a mortgage lender can "guarantee" to its customers that the price of its designated vendors' settlement services will not increase by more than 10 percent at closing. If, however, borrowers elect to shop for their own real estate closing service providers, they have no such protection. "It should be no surprise that a borrower, when faced with this choice, will decline to shop for settlement service providers and be relegated to use those vendors preselected by the lender," the company said in its comments on the rule filed last May. ClosingCorp urged that HUD provide consumers who prefer to shop for their own real estate settlement services with clear information as to what services they can shop for; explain that they may find lower rates or more acceptable providers on their own; and even refer consumers to online or other resources that will assist them in comparing vendors and prices, or even initiating a transaction. Alternatively, HUD could provide these links and references on a newly-created consumer assistance page on its own Web site.


I agree that consumers should be encouraged to shop but I think the folks at ClosingCorp are missing the value the 10% tolerance brings to the GFE. Loan originators have had very little motivation to get their settlement service quotes right. These new tolerances at least pull the quotes into some sort of reality when the loan originator is making a referral.

Remember, that just giving a quote doesn't obligate the consumer to use that company BUT having this price quote in hand will give consumers reliable figures with which to go out and comparison shop. Isn't that great? It's a major step forward in consumer centric disclosures.

Loan originators who would prefer not to make a referral, don't have to give an accurate quote, they just tell consumers to go find someone to do the job.

Either way, the consumer has more information and more power than they did under the old rules.

THANK YOU HUD!

Wednesday, November 26, 2008

news alert on LandAm

On Monday, November 24, 2008, the Nebraska Department of Insurance filed petitions for rehabilitation for Commonwealth and Lawyers Title under the Nebraska Insurance Code. Hearings on the petitions are set for later today.
The Company expects that rehabilitation orders will be entered quickly and that the rehabilitations will function as a temporary administrative step to assist the transition of Lawyers Title's and Commonwealth's businesses to the family of companies owned by Fidelity National Financial, Inc. ("FNF"). Lawyers Title and Commonwealth will continue to operate and serve customers during the completion of the sale. Both underwriters are entirely solvent.
Under the Stock Purchase Agreement, Fidelity and Chicago Title will pay the Company $298 million in total for Commonwealth, Lawyers Title and United. The closing of the transactions under the Stock Purchase Agreement are subject to approvals by the Bankruptcy Court, the Nebraska Department of Insurance, and other state and federal regulatory agencies. The Company intends to work with FNF toward a closing as early as late December 2008 and will request expedited approval from the Bankruptcy Court.

Read more....

good general query via e-mail

Hi,
I read your blog about title insurance. It is very helpful.
I have 2 questions to ask:
1. I did not buy title insurance at the purchase. can I buy it now (later)?
2. My friend bought a house, and after closing he was noticed there was an unsettled mortgage made by previous owner against the house. The title company's search did not find and report the said mortgage. If my friend did have the title insurance, will the title company be held for the liabitiy?
Thank you in advance. Looking forward to your reply.
John

Both are great questions, John.

Yes, you can buy owner title insurance later if you did not buy it when you made the purchase. The title agent will need to re-examine title and then the premium should be based upon market value of the property. In PA, if you don't have a current appraisal, we would work out a market value using the tax assessment. Also, in PA our title rates are regulated. They may not be in your state, so be sure to shop around and get quotes in writing.

Unsettled or unsatisfied mortgages are one of the most common post-closing issues title insurance companies deal with. Your friend should call their title agent and also file a formal claim directly with the title underwriting company. That's the company whose name and logo are on the policy jacket.

Tuesday, November 25, 2008

executive management memorandum to agents on the LandAmerica status...

To our Agent Partners:

Many of our customers, particularly our customers involved in commercial transactions, have been contacting us with questions about the financial strength of LandAmerica's two major title insurance companies, Commonwealth Land Title Insurance Company and Lawyers Title Insurance Corporation.

It is important to remember that while an affiliate of these underwriters, LandAmerica 1031 Exchange Services Company, Inc. ("LES"), had problems liquidating guaranteed securities, our title insurance companies continue to do business and have adequate surplus and reserves to meet our customers' needs.

These problems do not affect our title insurance companies, as LandAmerica underwriters, Lawyers Title and Commonwealth, have over $300 million in combined statutory surplus. We have put together the attached spreadsheet, which was taken from publicly filed documents, to allow you to see for yourselves that the underwriters remain competitive with other major U. S. title companies.

We hope you will continue to place your title, closing and escrow orders with LandAmerica.

Our talented employees remain available to assist you and service your accounts. And our underwriters have the financial strength to back those orders. Plus, if we are liable for a claim, we can pay it. We have some of the industry's most stringent requirements for reserves in place to protect our policyholders. The LandAmerica underwriters' claims reserves are back by over $1.1 billion in cash and investments.

We appreciate your business, and we are working hard to earn your continued trust. Please call and we'll be happy to answer any questions you may have.

I am very happy to hear this.

The situation does not affect LandAmerica's title insurance subsidiaries, the company said. The assets of those "highly regulated companies" are "completely separate" from the 1031 exchange company, and are "more than sufficient" to meet obligations to policyholder and escrow customers.

Monday, November 24, 2008

There is an eerie silence today, isn't there?

Is there hope? I have hope.

Here's what I think. I think the folks at the top of Fidelity, First Am, Old Rep, and Stewart ought to consider what the failure of a major underwriter means to THEM and then do something to stop it.

Insurance is all about trust and stability. If an industry shows vulnerability beyond the capabilities of the public's ability to comprehend, the industry is doomed.

Doomed.

Do we want more doom?

Doom da doom doom doom doom.


I don't but I can't do a darn thing about it.



I have hope that decision-makers at the highest levels in the big title insurance firms are thinking big picture and not just selfish survival.

Saturday, November 22, 2008

plans off

Fidelity National Financial Inc. has called off its plan to acquire troubled rival LandAmerica Financial Group Inc., the companies said Friday, a development that casts doubt on LandAmerica's long-term prospects.

Fidelity and LandAmerica both issued terse statements at 8 p.m. Eastern Time Friday saying Fidelity had exercised its right to back out of the deal during a due diligence period.

Read more...

Thursday, November 20, 2008

NAMB ------- GET OVER IT

The National Association of Mortgage Brokers (NAMB) is up in arms over the recently updated Real Estate Settlement and Procedures Act (RESPA). The U.S. Department of Housing and Urban Development’s (HUD) revision to the Good Faith Estimate (GFE), a simplified three-paged document designed to help borrowers better understand the terms and conditions of their home loan, has the NAMB President Marc Savitt promising, “We are not going to stand for this,” wrote National Mortgage News.

When NAMB came into the mortgage wholesale seen, as I remember, they walked, talked and acted like hard money lenders. NAMB put their hard money arms out and while trying to go their membership, swallowed up the business of wholesale origination and took the framework of traditional and reputable mortgage brokers with them.

NAMB whether you encouraged bad practices or simply did nothing to stop them, I don't give a darn. All I can say is that you marched the business of mortgage brokerage to a cliff and played the horns till everyone fell off.

You are not needed here anymore. Go away. Mortgage lenders can try to re-build wholesale mortgage lending without anymore of your bright ideas. Consumers were not well served by your counsel or your membership. I hope you have no political pull with the new administration. I hope the Obama administration puts the interests of consumers first and your greedy needs last.

foreclosure rescue - PLEASE resist the temptation to pay for this kind of help.

Here's a blurb from The Daily Mortgage Fraud News:

In the following press release Illinois Attorney General Lisa Madigan today (11/18/200) announced that she has filed seven new lawsuits against so-called mortgage “rescue” companies and warned consumers about an alarming rise in these scams that prey on vulnerable homeowners on the verge of foreclosure. Madigan urged consumers to use caution when seeking help if they are at risk of losing their homes and to seek reputable sources for assistance.

“Consumers need to resist offers of a ‘rescue,’” Madigan said. “These scam artists prey on desperate homeowners who are struggling to save their homes. I urge consumers to avoid ‘rescue’ offers and, instead, reach out to trusted sources for help. My office assists homeowners attempting to avoid foreclosure. Anyone looking for help should call us immediately.”



I just came in contact with one of these scams this week. A reader of this blog contacted me to ask about an offer a "rescue" company had made to some people in foreclosure. These folks were being asked for $2000 up front, non-refundable, all for this company to try to save them but with no promises.

Wisely, our fellow reader recognized the signs of a scam and assisted these folks by encouraging them to call their lender directly. Guess what? They got a mortgage loan modification AND they didn't pay their desperately needed $2000 for the privilege.

GREAT JOB YOU ANGEL!!! I am so proud of you.

Wednesday, November 12, 2008

Here it is.

WASHINGTON - For the first time in more than 30 years, the U.S. Department of Housing and Urban Development today issued long-anticipated mortgage reforms that will help consumers to shop for the lowest cost mortgage and avoid costly and potentially harmful loan offers. HUD will require, for the first time ever, that lenders and mortgage brokers provide consumers with a standard Good Faith Estimate (GFE) that clearly discloses key loan terms and closing costs. HUD estimates its new regulation will save consumers nearly $700 at the closing table. Read more....

interesting, eh?

The Obama administration is likely to try to go well beyond the new Respa rules and look more comprehensively at disclosures lenders are required to make to borrowers, said Howard Glaser, a mortgage industry consultant who served as a senior HUD official in the Clinton administration. "This won't be viewed as sufficient to restore borrower confidence in the mortgage process," Mr. Glaser said. Read more...

Sunday, November 09, 2008

On the FNF/LandAm merger...

FNF - of all the major title companies I have been watching - has done the best job of navigating rough financial seas and reorienting itself to a new way of doing business.  I have continued to be impressed with CyberHomes.

It's no secret that I don't like automated title examination and outsourcing but I am enough of a realist to know that much of the consuming marketplace wants these kinds of services, even if they don't understand them.

The folks I have worked at LandAm are title experts and hard working producers.  If they find a place in the new FNF structure, I'll be very happy for them, but sometimes being forced to find a new path can be a good thing, even if it's scary in the short run.  No matter what, I know these good people will land on their feet.

I'm also very happy that consumers insured through LandAm are safe and that management chose the right course by seeking a merger rather then crash land.

The Closing Specialists is an agent for both LandAm and Old Republic.  We're continuing to deliver policies to LandAm but are directing new commitments into Old Republic until we get clear notice on how the merger will impact our operations.

If anyone gets useful information, please share it with an e-mail or comment.  ;)


Friday, November 07, 2008

FNF buys LANDAM...thanks, Tim for heads up


Fidelity National Financial, Inc. and LandAmerica Financial Group, Inc. Announce the Signing of a Definitive Merger Agreement

Jacksonville, Fla. and Richmond, VA -- (November 7, 2008) -- Fidelity National Financial, Inc. (NYSE:FNF) and LandAmerica Financial Group, Inc. (NYSE:LFG) today announced the signing of a definitive merger agreement under which FNF will acquire LFG. Under the terms of the merger agreement, LFG shareholders will receive 0.993 shares of FNF common stock for each share of LFG common stock.

Wednesday, November 05, 2008

Thanks, Alicia.

She sent us this really nice note:

"It was the easiest part of the entire process. Everything was handled very efficiently & professionally. Big thanks & great job to both Michelle and John."

Tuesday, November 04, 2008

the case of the revised subdivision

This isn't a matter which has been resolved but I thought I'd mention it as an example of how things can get royally confused in a real estate title.  ;)

In early 1979 a developer got formal planning authority approval for and recorded a subdivision.  Later that year, the developer revised the subdivision.  I can't tell why.  I can't tell whether the developer submitted the revision for formal planning authority approval and was rejected.  All I can tell you is that the revised subdivision was not recorded.  

So, for reasons which remain clouded, the developer seems to have deeded some lots based upon the original recorded plan and at least one lot, if not more, based upon the unrecorded revised plan.

What makes this case especially irksome is that many - if not most - of the recorded documents in the two chains I reviewed reference the recorded plan, but also use the word revised.  I think it's just all screwed up.

Now my insured buyer has a neighbor who recognizes the lot lines described in the original approved plan.  My insured buyer wants to use the lot lines as revised.

It's a classic boundary line dispute and I post it just to show how a sloppy developer is causing grief even close to 20 years later.

Our insured buyer will find no relief in title insurance for this dispute.  In PA there is no boundary line dispute coverage in an owner policy.  We did recommend that he get a survey and he chose not to.  A survey may have raised the issue.  I have reason to believe that the neighbor did approach the buyer and raised the issue prior to closing so I do not think he went into the transaction without a heads up.  Also, the owner policy does not insure subdivision approval.

If the dispute ever goes to court, it will be interesting to see if the unrecorded revised plan has standing.


Monday, November 03, 2008

your choice as a consumer

If you decide to buy title insurance, and I strongly recommend that you do, select the provider carefully.

First, make certain that the title insurer is actully performing the title examination themselves and not farming it out to a computer or a vendor clerk will likely do a cursory review or no review.

It is important to realize that most of the premium you pay for title insurance is for the pre-insurance examination of title, the purpose of which is to find and eliminate reasonable risk of claims.

Why care about the risk of claim, if you are insured?  Well, the process of making a claim isn't pleasant and in the end you might end up with some money and not the home that you love.

Second, carefully review the work product of the title insurer before you close.  That means get the title commitment and read it.  Look carefully at the exceptions to coverage and understand what you are buying before you close.

If you are dealing with an expert title insurer, you'll get clear information.  If you are dealing with someone who got into the business cause they thought it was a gold mine and not a profession, you'll get wishy washy answers.  Use your intuition and select your provider very carefully.  The gold miners will skip all the work steps and issue an empty title policy void of examination and full of widely generalized exceptions that boot out most, if not all claims.

Be a careful shopper.


Friday, October 24, 2008

final RESPA rule out in two weeks?

WASHINGTON (10/24/08)—Changes to the Real Estate Settlement Practices Act, known as RESPA, will be out within the next two weeks, according to Federal Housing Administration (FHA) Commissioner Brian Montgomery. Read more.....

just filed a title claim for a customer

There was a typographical error in a deed filed in 1946 which changed the lot number.  All of the deeds filed since then for this lot carried forward the mistake.

A full search in our area is 60 years.  This transaction was processed in 2005 and we ordered a full search from First Am.  They apparently only did a 59 year search.  Had they gone back for a full search, they would have pulled the prior deed in the chain, dated 1937, and discovered the error.

They will fix the problem for our customer.  They have assigned an attorney and they did so promptly when notified.  I appreciate that.

This case proves two points.  First, there is a reason why we do full searches.  We are looking fo mistakes with the job of fixing them.  Secondly, even when a search does not discover an item that is covered under title insurance, the policy will still protect you.

Monday, October 20, 2008

what does a possible takeover in title insurance mean for our future?

If a giant lender decides to buy a giant title insurer, then we are facing a giant bundling concept.

No doubt models are changing, they have to. Fidelity - with Cyberhomes - has decided to change the point of sale by capturing the consumer before the real estate agent has a chance to.

Looks like we might have a giant lender deciding to offer consumers one stop pricing - all services included without affiliation, but with full ownership. Does that fly in insurance circles? Probably.

My plan is still the same. I'm planning to offer boutique title services at a local level with the emphasis on quality and traditional services.

We'll see where all of this leads. Should be interesting.

Sunday, October 19, 2008

FHA Wiki - This is a great idea.

Consumers, lenders, title agents, and real estate agents are always looking for a reliable source for FHA program info.  The FHA on-line resources have really come into their own.  Take a look at this Wikipedia run by FHA.gov.


Here's a good one:  How do I determine when the annual MIP will be cancelled?

For loans closed on or after January 1, 2001, FHA's annual MIP will be automatically terminated under the following conditions: 1. For mortgages with terms more than 15 years, the MIP will be terminated when the Loan to Value (LTV) ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the LTV reaches 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. 2. For mortgages with terms 15 years and less and with LTV ratios of 90% and greater, the MIP will be terminated when the LTV ratio reaches 78%, irrespective of the length of time the borrower has paid the MIP. 3. Mortgages with terms 15 years and less and with LTV ratios of 89.99% and less will not be charged MIP. Read more....

Friday, October 17, 2008

being prepared for closing

Take a moment to check your identification documents.

You'll need a CURRENT photo ID that has been issued by the state or federal government.

I have also noticed that lenders are asking for copies of social security cards.

So, take both to closing.

Thursday, October 16, 2008

Am I interpreting the tea leaves correctly?

Has First American been taken over by a large financial institution? Speak! Speak!

Wednesday, October 15, 2008

query: in PA what are the procedures for signing over a house that was inherited.

Seek legal advice from a competent estate attorney.  You must make certain that matters concerning the estate are properly resolved including the filing of an inheritance tax return.

Tuesday, October 14, 2008

query: what happens if you get caught with occupancy fraud

Getting caught in mortgage fraud of any kind is serious.  

Let's talk about occupancy and why mortgage lenders care about it.  It's all about basic human needs and survival.  When the chips are down and times get tough, you still need a roof over your head.  People tend to protect that roof and let other investments go south.

Mortgage lenders and their underwriters rate risk.  They know from experience that second homes and investment properties go into foreclosure more easily than primary residences.  To offset that extra risk, the mortgage lender will normally require a higher down payment and/or a higher interest rate.  

If you have lied to a mortgage lender and borrowed money for a second home or investment property but signed legal documents indicating that the property would be your primary residence and you get caught, you may face criminal prosecution and incarceration.  If you're lucky, the mortgage lender will simply raise your interest rate and demand that you come up with the higher down payment.

What if you intended to live in the property but circumstances beyond your control forced you to move somewhere else?  You should contact your lender and explain the circumstances and let them decide if they will allow you to retain the same structured terms.

Lenders are very good at catching occupancy fraud.  Never let a real estate agent or a mortgage loan officer give you a wink and a nod indicating that it's no big deal.  Mortgage fraud is always a big deal.

query: what happens if mortgage is not subordinated

Let's talk about mortgage lien priority. Mortgages tend to fall into two categories - primary and subordinate. The most common form of subordinate mortgage is the home equity loan. Most consumers have the home equity loan or HELOC as a second mortgage recorded after their main mortgage. The main mortgage is in first position. First position gives the main mortgage lender lien priority in the event of a foreclosure. First position gets paid first.

So, let's say you have two mortgages, your main mortgage and a HELOC. You decide to refinance your main mortgage but you like your HELOC and don't want to pay it off and satisfy it. The problem is that your HELOC will move up to first position when you payoff your main mortgage and that would put your NEW main mortgage in second position. THAT won't make your main mortgage lender very happy at all, so they will require that your HELOC lender agree to subordinate their position, allowing your new main mortgage lender to basically skip in front of them in line.

This subordination is done with a legal document signed by the HELOC lender. The subordination document is usually recorded when you record the new main - first - mortgage.

As a consumer, you sort of have to keep an eye on the refinance process if you intend to leave a HELOC or any subordinate mortgage in place. It might take time to get the subordination approved and so you should contact your HELOC lender and get the process started. Don't rely on the title agent to do this because they might not know you intend to keep the loan until late in the transaction. That's the other thing - make sure YOU tell the title agent that you intend to have a subordination and also make sure you have told your new main mortgage lender.

What happens if the transaction closes and no one did a subordination? The title agent - who likely insured first position for your new main lender - will have to fix it. They'll have to go to the other lender and ask for the subordination. This can still be done post closing but it's risky because the lender might not agree. If the lender doesn't agree, then the new main lender who wants first position may have a claim against the loan title insurance policy.

Claims are based on losses but the lack of lien priority may impact the saleability of the mortgage paper and though the lender hasn't suffered a loss in a foreclosure, you still have the question of whether or not the title agent followed the lender's written instructions. The title insurer will work all of this out with the mortgage lender.

As the consumer, your obligation is to cooperate, as needed, to assist in the resolution of getting the subordination. Why? Well, your new main mortgage was likely subject to the subordination and you have to satisfy that condition even if it is post closing.

Thursday, October 09, 2008

received this nice e-mail this morning....nice way to start the day ;)

Thank you for your and your teams’ excellent work regarding my home purchase. I have completed your survey and you should be receiving it in the mail soon.

Also, I really appreciate the guidance, counseling, and service provided regarding the sewer easement survey situation. I come from a military background and currently serve and attention to detail as we say, wins wars. I know this is only a home purchase but that is what professionals are all about!!



Wednesday, October 08, 2008

nice try, CentRealTech

EL DORADO HILLS, CA, October 08, 2008 /24-7PressRelease/ -- CentRealTech Inc. announced today that they have released an Industry White Paper which presents a compelling case for the implementation of a Web based, automation solution for the labor intensive Title Production Process used by most title companies today. The title industry is going through one of the toughest times in its history with the direct impact of the housing slump, the subprime mortgage collapse and the regulatory/consumer group pressures to reduce premiums. Read more...


What a bunch of hooey. Real people buying real property want a real title examination behind their title insurance. That's what real people think they are buying when they pay for title work in a real estate closing.

Automation is crappy product with no thought and just because you can do it cheaply is not a good reason to do it at all.

The best thing the title underwriters can do - hopefully having learned from all of the claims they are processing right now - is to restore traditional human title examination and start educating the troops.

Monday, October 06, 2008

The Pittsburgh Post Gazette has it totally wrong on this one.

Here's the headline:

Home buyers can now purchase title insurance directly

Here's a link to the article.


First of all, any regular reader of Title Insurance Talk knows that consumers have ALWAYS been able to buy their title insurance directly.

I am a pro-consumer title insurance advocate and so when I heard of the ENTITLE marketing plan, I was interested. I have been encouraging my fellow title professionals to market directly to the consumer for years.

When I looked at the details of the ENTITLE offer, I found that they have a set of flat fees which consumers must pay in additional to the title insurance premium. Unless the consumer is involved in a high priced transaction, say, over $200,000, they pay MORE in flat fees than the so called 35% savings implied in the advertising.

In PA - most transactions are under $200,000 and so consumers who fall for the 35% savings ploy are being ripped off.

I have contacted both the Dept. of HUD and also the PA Dept. of Insurance and complained that ENTITLE is misleading consumers.

The best tactic for any consumer is to shop around and get your quotes in writing. Compare the entire transaction - title premium and flat fees.

Our Choose and Save program is the least expensive way to buy title insurance and settlement services in the Commonwealth of PA.

The folks at ENTITLE must be laughing all the way to the bank - at the expense of our citizenry and that MAKES ME REALLY MAD.

Friday, October 03, 2008

INDEPENDENT TITLE AGENTS FILE LAWSUIT AGAINST OHIO DEPARTMENT

Contact person: Robert B. Holman, Esq.
OAITA
(440) 232-9911

SUBJECT: INDEPENDENT TITLE AGENTS FILE LAWSUIT AGAINST OHIO DEPARTMENT
OF INSURANCE DIRECTOR ALLEGING FAILURE TO ADEQUATELY PROTECT OHIO
HOMEOWNERS

FOR IMMEDIATE RELEASE

The Ohio Association of Independent Title Agents (OAITA) (www.oaita.org) has filed a lawsuit
with the Ohio Supreme Court against Mary Jo Hudson, Director of the Ohio Department of
Insurance. OAITA, an association of independent title insurance agents in Ohio, seeks to prevent
the spread of kickbacks and referral schemes in the real estate industry by asking the Ohio
Supreme Court to compel the Director of the Ohio Department of Insurance to enforce currently
existing rules prohibiting banks, realtors and mortgage brokers and their subsidiaries from
engaging in the business of title insurance.

OAITA is represented in the newly-filed lawsuit by Columbus attorney E. Bruce Hadden, Medina attorney Gregory W. Happ and Oakwood Village attorney Robert B. Holman. The lawsuit alleges that Director Hudson failed to enforce current administrative rules based on long-standing Ohio statutes that prohibit banks, realtors or mortgage brokers, or any of their subsidiaries, from unlawfully steering Ohio homeowners and their real estate transactions to title insurance agencies owned all or in part by those same banks, realtors or mortgage brokers. The suit alleges that ownership of title insurance agencies by banks, realtors or mortgage brokers, known as controlled business arrangements, creates dangerous conflicts of interest by allowing those banks, realtors and mortgage brokers to obtain kickbacks and referral fees for steering Ohio homeowners to their own controlled title agencies. The lawsuit alleges that such conflicts of
interest violate Ohio statutes and that Director Hudson has failed to construe newly enacted rules in accordance with the long-standing law. The suit is the first of its kind in the United States and is an important step towards reducing the overreaching power and influence a bank, realtor and mortgage broker has over a homeowner’s real estate transaction and, in particular, a
homeowner’s statutorily protected choice of title insurance provider. The lawsuit is important
since many homeowners do not even realize such a choice exists. By permitting banks,
mortgage brokers and realtors to move into the title insurance business, the lawsuit alleges that
the ODI’s inaction has helped to feed the pervasive greed that has overwhelmed the real estate
industry in recent years. Considering the well-known impacts of the mortgage industry meltdown and the rise in foreclosures across the country, homeowners across Ohio are well-served by the OAITA’s action.

Independent title insurance agents serve as important checks and balances on the power of
banks, realtors and mortgage brokers to unlawfully steer homeowners’ real estate transactions to controlled entities. Members of OAITA are independent title insurance agents who refuse to give kickbacks or referral fees to banks, realtors and mortgage brokers for the real estate transactions they close. Instead, independent title agents: (1) help to reduce the cost of title insurance by not engaging in elaborate schemes to reward referral parties at the homeowners’ expense; (2) help to lessen the likelihood of real estate related litigation involving homeowners by not allowing referral party pressure to dictate closing requirements; and, (3) help restore trust and integrity in the fiduciary relationship that exists between homeowners and their settlement providers by insuring that only disinterested title agents provide title insurance services, not their referral parties.
-END

Wednesday, October 01, 2008

interesting reading on Housing Wire ..the inside view

“If the federal government wants to get into the asset management business, we all may as well write the check for taxpayer losses right now,” said another managing director at a distressed-loan purchasing specialist. “This business is much harder than it looks, and the issue isn’t as simple as holding to maturity or a desire to be aggressive on loan modification.”

Some sources, as a result, expected that the Treasury proposal could end up being a boon for distressed mortgages. “They’ll find out they need to churn and burn whatever they buy,” one source suggested. “That could mean the market for whole loans will really start moving, with the pricing hurdles removed.”

read more...

Tuesday, September 30, 2008

query: can a copy of a deed be recorded in Pennsylvania

Yes, and depending on the reason for the recordation, you have two choices.

If you wish to have a copy recorded as a stand alone instrument, you'll need to get a court certified copy.   You get this from the Recorder's office in which the original deed was recorded.  The Recorder of Deeds will create a copy, then stamp and seal it as a certified copy of the original document. 

If you are only trying to get a copy of a deed on record for informational purposes, you could add it as an exhibit in another instrument in which you are citing the purpose of inserting the deed.  This is a fuzzy way to get something on record and the parties on the exhibit will not be entered into the index.  We use this method to get some items on record when the original is not in recordable form and would not really stand up on its own.  For instance, let's say there is a legal right of way on record for a private drive but no maintainance provisions.  If a mortgage lender wants a maintenance agreement and has directed the borrowers to make one and you have been handed a ridiculous - consumer created - document that the lender says is A-okay by them, you can record it as an exhibit with the deed. 

query: title company sued for not following lenders instructions

The Closing Services Letter aka Closing Protecton Letter, commonly refered to as CPL - when issued - gives lenders additional title insurance protection over and including adherence to the lender's written instructions.

Note that I put the word written in bold.

If you are a mortgage lender and you want to create any kind of a legal obligation for following your instructions, first, put them in writing, including any amendments, even last minute changes.  Also, make sure you have a CSL or CPL in place.

If you are a title insurer, agent or company employee, make certain that you get any and all lender instructions in writing, even the last minute stuff.  E-mails and/or fax can suffice.  Make absolutely certain that you are reading  the instructions and if there is anything in there that you CAN'T or WON'T do, request an amendment BEFORE you close.

mark to market

Correct me if I'm wrong, but memory tells me strict accounting mark to market rules came out of the S & L crisis as a solution to prevent failure due to the overstated value of assets.

I don't think we should take lightly any vacation of mark to market rules. 

The core and substance of the Paulson Plan - namely the creation of a reverse auction system in which the Treasury acts as the buyer of last resort for mortgage backed securities to help troubled institutions get this hard to value paper off their books - is a sound plan.  I think the public and congress over-reacted and so I'd have to say the administration didn't do such a great job selling it.

What we have here is a pricing mechanism failure.  Rather than masking the problem with a mark to market vacation - which BTW might not be so easy to undo - the auction system could jump start a real market and other buyers might follow.  That's a real fix in which taxpayers are NOT bailing out but buying mortgage backed paper that likely has value far above the purchase price.

I would hope that policiticians could demonstrate leadership and good statesmanlike qualities and help their constituents understand simple business concepts rather than the easy role of demagogue.


Friday, September 26, 2008

That video is interesting but I'm not sure I buy that

the Community Reinvestment Act is the culprit. Most of the paper written - bought and sold - in sub-prime and Alt-A was NOT originated under a CRA program.

I don't claim to be a brainiac, rocket scientist or economist. I'm a street level, street trained mortgage lender and title agent. I lived through what happened at street level and had sufficient exposure to the inner workings of wholesale lending and secondary market operations to get a feel for how it should work and where it went wrong.

I just don't buy into blaming one political party over another because each administration we lived through added their own twang to the song and frankly any sanity in the mortgage industry or securities industry could have ignored politics and held firm to quality in due diligence. That's the job of underwriters and management, not politicians.

As for the Paulson Plan, I can only say this. How we got here isn't as important to me as not dying while we fight out who to blame and stupid politics. We can worry about that stuff once our damaged ship at sea in a hurricane makes land. For now, I'm listening to three people - Paulson, Bernanke and Bair. Why? Because over the last year I have watched them and they have not disappointed me with their critical decision making as they have attempted to bring us home and out of harms way.

I trust that they know the monetary system and have a gut instinct for how all this is moving without perhaps being able to verbalize it. I trust that their intuition senses danger and that they have a very hard time dealing with politicians who don't understand and have to act like they do.

This is not a time for pure democracy. This is not a time for populist decision making. This is a time for leadership and hard resolve and fast action to save our economy from severe damage.

I trust the warnings. I'm willing to trust the plan. Call me an idiot if you want to, that's okay but my guts are talking and I do like to listen to those guts even if I can't articulate their message in any way you can understand.

this is interesting

I'm going, are you?

“The National Compliance Summit promises to deliver useful legal knowledge applicable to title companies’ business immediately,” said Syndie Eardly, editorial director at October Research Corporation. “This two-day seminar will provide attendees with the latest legal and regulatory information, including RESPA reform, closing scripts and required use, new enforcement and regulations, litigation updates and fiduciary duty, duty to non-insured and fraud.”

The 2009 National Compliance Summit for Title Companies will be held inside the modern Westin Casuarina Las Vegas Hotel, Casino & Spa. An advance registration discount is being offered to all October Research customers until midnight, EST, December 31, 2008. For more information, call toll free 877.662.8623, ext. 6104, or to register, visit www.octoberseminars.com/ncs09

Senator McCain...

step up to the plate and support the plan.


Sarah would.

Thursday, September 25, 2008

excellent

______________________________
____
NEWS ALERT
from The Wall Street Journal

Sept. 25, 2008

Congress reached an agreement in principle on a $700 billion package to bail out the financial industry, leaders from both parties said Thursday. They plan to present the deal to the White House later Thursday, hoping for a vote within days. Lawmakers said there were few hurdles remaining. "There really isn't much of a deadlock to break," said Democratic Rep. Barney Frank, chairman of the House Financial Services Committee. Republican Sen. Bob Bennett said the plan is one that can "pass the House, pass the Senate (and) be signed by the president."

one of those days when I regret ever having done business with First American

I have a transaction we closed and insured through First American using their "Fast Web" title abstract program. This was before I realized what a piece of crap search product it was. This transaction closed in 2005. I had bought into the idea that FATIC would back the abstract and relieve me of the abstract liability. Gee what a deal.

I am now advised that the lot number in my deed and the prior deed is purportedly incorrect. FATIC only provides a current deed with the search and so I called their Quakertown office to get the chain data and perhaps copies of prior documents. They were kind enough to take the call right away and were able to look at the archive immediately. That was impressive, BUT their file as a naked as my file is. They have no chain back beyond the last deed.

UNFREAKINGBELIEVABLE.

They charged me $135 for a full search and they did a stupid-ass current owner which probably cost them $10.

So, I have two choices. I can pass off my customer to FATIC's claim office and say FATIC - YOU figure it out; OR

I can pay an abstractor to research the title -at my own expense - and try to figure out what reality is and how to fix it.

You know me by now. What do YOU think I'm gonna do?

That's right. I'm gonna pay - out of my pocket - to have the title searched back to find the problem and fix it IF it is a reasonably easy fix. If it's a fix that involves a quiet title action, I'll pass it on to FATIC to pay that bill and handle it. I'm hoping - for the sake of my customer - that it's something I can work out.

NOW HEAR THIS ALL YOU FOLKS WHO SAY TITLE INSURANCE ISN'T WORTH IT. Any fix that I do myself is done because the consumer bought owner coverage. If I fix this without turning it into FATIC it will NEVER show up as a claim. GOT THAT?

The work done by traditional title insurance agents in claim avoidance is what you pay for when you buy title insurance.

I'd like to know who did the underwriter audits.

In the following press release Acting United States Attorney Terrence Berg announced that a 45 year-old Macomb man who embezzled over $2.2 million while working as a bookkeeper for a now-defunct Michigan title company was sentenced to 37 months in federal prison on 9/18/2008. Joined in the announcement was FBI Special Agent in Charge Andrew G. Arena.

Eric McAlpine was an independent contractor performing bookkeeping functions for American Title Works, a title agency with offices in Clinton Township, Livonia and Southfield. Over the course of five years, McAlpine stole checks totaling over $800,000 that were made payable to American Title Works and funded by buyers and sellers of real estate, and/or from lending institutions that granted loans to buyers. McAlpine also stole checks totaling almost $1.5 million that were drafted from American Title Works escrow accounts. As a result of McAlpine’s embezzlement from its escrow accounts, American Title Works went out of business resulting in the loss of employment for its almost 30 employees.

Read more.....

Wednesday, September 24, 2008

thank you

NEWS ALERT
from The Wall Street Journal

Sept. 24, 2008

Republican presidential candidate John McCain said he will "suspend" his campaign on Thursday, and asked to delay Friday night's debate against Democratic candidate Barack Obama, so he can return to Washington to deal with the financial crisis. Congress is currently considering a $700 billion bailout plan that is drawing increased scrutiny from lawmakers.

white papers and electronic signings

Funny you should mention this, October Research.

Why have lenders been slow to adopt this technology when so many consumers use online banking and more will in the future? According to a whitepaper by First American Equity Loan Services, many lenders have said there are a number of issues that are preventing them from utilizing electronic signing of mortgage documents.

I was just thinking about it over lunch. All those gazillion white papers Fannie and Freddie and everyone else did on the paperless mortgage transaction...are they all for naught? I doubt that anyone really cares right now. Who survives and how they do business will take place in a clean slate environment.

Guess we'll find out then, whenever then is.

news heard on the street.....

Fidelity has announced a 10% pay cut for all its employees, across all
brands (Fidelity, Chicago, Ticor..) for 6 months.

Why I love reading the Wine Dog...

I care about this big bail out. It’s a socialist solution to a capitalist problem. It won’t work. The solution is simple. Banks will figure it out. Re-write the loans or go under. It’s simple shit. We don’t need to be bailing out these guys and their bad decisions. We’re not bailing out the individuals who made bad decisions. Why are we bailing out businessmen who made bad decisions? Screw them. No golden parachutes, you’re an asshole, you made bad decisions have fun living on $1800 a month.
Read more...

query: I cannot find my title insurance policy.

Unfortunately, that may be a problem.  Hopefully, you have your HUD-1 Settlement Statement.  The HUD-1 will identify the settlement agent/title agent on the first page in the top section.  Start by contacting the title agent.  They are the ones who issue the policy in most instances.

If the title agency is no longer in business or not helpful, look on page two of the HUD-1 in the 1100 section.  You should see the name of a title insurance company near the title insurance premium.  If the HUD-1 was prepared properly, that is the title underwriter.  The title underwriter is a huge company and they will have an almost impossible time finding your policy BUT having a HUD-1 in hand showing that you paid a premium for a policy is evidence of insurance.

If the title agent is out of business, there's a good chance they never sent a title policy to you anyway, so having the HUD-1 as proof of payment is important.  If you also have a copy of your title insurance commitment, you've got an open and shut case and the title underwriter can't ignore you.

Consumers, are you seeing the picture, here?  YOU, unfortunately, must be a careful shopper for title insurance services.  I know, that stinks, but it is reality.  I run a great title insurance agency in a business full of shoddy characters.  It didn't used to be that way but title insurance failed at the same time the mortgage business failed.  They allowed thieves and creeps and ignorant slobs into our business with very little oversight.  The system is still flushing out the bad so be careful.

Always get your title insurance commitment BEFORE you close and review it carefully.  Make sure you understand what is and what is not covered.  Put it in a safe place.

Always get your HUD-1 - fully signed by everyone - at closing.  Put it in a safe place.

Always follow-up after closing - give it 60 days or so - to make certain you get your owner policy.  Check to make certain the exceptions are the same as those in the commitment - nothing added that was not expected.  Put it in a safe place.

Got it?

Tuesday, September 23, 2008

Is it true?

I find it absolutely reprehensible that neither Senators McCain or Obama have plans to return to Washington to vote on the Paulson Plan.

Monday, September 22, 2008

I find it easy to ignore establishment bravado

trashing the federal bailout of credit markets and RESPA reform.

You kids trashed the house. The party is over and Mommy and Daddy have to clean up your mess. If you don't like it, lump it.

Sunday, September 21, 2008

query: what happens once a loan goes through the underwriters

Loan application files that have moved through the underwriting department come out with status marked, denied, approved with conditions, or suspended.

If your loan application has been denied, the lender must send you a notice called an ADVERSE ACTION.  You can appeal the decision by providing evidence that disputes the basis of the denial.  You won't get a chance to talk with the underwriter so if you are making an appeal, you must write clearly and concisely in a way that makes your case for approval logically and with reason.  Emotional appeals will not work.  The underwriter is interested in your ABILITY to repay, your WILLINGNESS to repay, and numerous other items such as the acceptability of the COLLATERAL, the house and land, and EQUITY AND RESERVES - are you investing savings in the transaction and do you have money to fall back on in hard times.

If your loan application is approved - it will always have conditions.  They may be simple conditions like getting a hazard insurance policy or there may be a long list of conditions that seem onerous.  There can be 20 items listed that you must provide prior to closing in order to meet current underwriting rules.  Don't panic and don't get mad.  Just deal with the reality that lenders are being very careful in this lending environment.  It's not about you.  It's about learning a new, more conservative way to lend.

If your loan application is suspended, that's not bad news.  It means they'd like to approve it but they don't have enough information.  Cooperate, stay calm, and give them as much as they ask for and more.  Help them approve your application.

Remember, the lending staff really wants to make the loan but they are under strict guidelines and can't bend, so stay calm and work together as a team.

Finally, no one, NO ONE, should assume they will be approved or that they will be approved within a controlled timeframe.  That means that YOU must remain flexible with moving plans.  In fact, until all of the ducks are in a row, all conditions cleared, I wouldn't make definite plans.  Stay flexible.

I spoke the other day with a woman whose job depended on her having access to highspeed internet service.  She had set up cancellation on the service to her home and also set up new service installation at the new house BEFORE final approval.  She was very angry that the date she had in mind wasn't likely to happen and she wanted everyone to change reality so that it would.  I calmly explained that we had her title file ready and as soon as the lender was ready, we would close.  She had applied for a state bond program and the lender has no control over the timely response of the state underwriters.  I suggested that she undo the cancellation of the internet service to her present home so that she would have a fall back position since it was unlikely that the deadline would be met.  She refused.  That's her decision, however, an adult must learn to go with the flow and not stand and stomp their feet and say they are unhappy.  For heavens sake, if my job depended on internet availability, I'd leave all options open, wouldn't you?

query: my name is not on house title, what happens if my husband dies

For a concern as serious as this, I suggest you consult an attorney.  First, an attorney will understand the laws of your state, and secondly, everyone should have a WILL, preferably prepared by a competent estate attorney.  Your concerns for all assets and children, if you have them, can be taken care of with a WILL.

So, with that in mind, in PA, if your name is not on the house title and your husband dies, the house along with his other assets go into his estate.  If he has a WILL, the terms of the WILL guide the distribution of assets.  If he dies without a WILL, as his spouse, it is likely that you would inherit his property but there could be complications, particularly if there are family disputes.  The best advice is to handle your estate planning and concerns with a competent estate attorney.

Saturday, September 20, 2008

they don't own the land.....didn't buy title insurance...tsk tsk tsk

How do you know your home and the land it sits on belongs to you? One Oklahoma couple was shocked when they tried to sell their home and found they didn't own the land it's built on.

Dennis and Teresa Fine raised three children in their home near Peggs. After 27 years, when they tried to sell their one and only home, they found out the land it's on belongs to the state.

"It was definitely a shock," Dennis says. "We've lived here for nearly 27 years and bought it from the U.S. government. So, I didn't think there would be a problem with the title."

Their modest home has three bedrooms and two baths and sits on just over an acre of land. They have re-financed the home several times and are the third family to own it. They can't understand how the land ownership problem wasn't discovered before.

"Not until this time, not until we tried to sell it."

Read more...

Thursday, September 18, 2008

query: door to nowhere fha deck

LOL...it took me a minute to get this query. ;)

Both the FHA and VA have trouble with the "door to nowhere" situation. You know what I mean. You planned to put up a deck but never did or maybe you HAD a deck, took it down and never replaced it. Basically, you have a door in a wall and nothing on the other side.

Prior to closing, you'll need to fix it. Some will tell you that you've got to put that deck up. Well, not necessarily. If you'd prefer a cheaper option, ask if your can install a bar across the door, or perhaps one of those fake balconies on the outside - a railing close to the house. In the old days we were allowed to nail or bolt the door shut but I don't know if that would fly anymore.

Anyway, that's the deal. Hope it helps.

it's about freakin time!

WSJ reports:

The Dow Jones Industrial Average soared 400 points amid reports that regulators are considering a Resolution Trust-like mechanism to help banks unwind soured credit holdings and stepping up action against short sellers. New York Attorney General Andrew Cuomo said that he has starting a "wide-ranging investigation" into short selling and British regulators barred short sales of financial stocks. Calpers and other large holders said they are no longer lending out shares of Morgan Stanley and Goldman Sachs.

Wednesday, September 17, 2008

ah - what a breath of fresh air.......

Finally, let me make one more comment about the path forward before I take questions. Yesterday there was a hearing on the Hill where we heard numerous legislators assail proposed reforms to the Real Estate Settlement Procedures Act (RESPA). The unnecessary complexity of mortgages has significantly contributed to our housing crisis. We must do something to make mortgages more understandable and the process more transparent. That's why we have been seeking new regulations to require all mortgage lenders and brokers to clearly display an estimate of all settlement services, fees, and charges. They must not be hidden in the fine print. Borrowers would know their closing costs, interest rate and monthly payment amount. They would know whether or not the rate or principle balance would increase over time. They would know if there are prepayment penalties or any balloon payments. The rule would require a clear statement that would itemize closing costs and lock in certain charges at settlement. This would offer greater transparency and certainty, allowing Americans to shop and compare.

We have gone through a lengthy public comment period. We are committed to striking a balance between the needs of consumers and those in business of homeownership. But, I believe it is absolutely reprehensible that so many people in Congress today are fighting to stall progress, especially when they know so many families are in trouble because they didn't understand the terms of their mortgage. Our goal is to get RESPA completed by the end of this year and then provide the industry with a full year to implement that the rule. I firmly believe this will be a big step forward for restoring trust and transparency between the industry and the homeowner.


Read the whole speech...

HUD - no show....or maybe brave when it comes to bullies

I love that our system of government ismade of checks and balances.  It's such a great protection against bullies.

HUD is trying very hard to pass rules which protect the consumer in a real estate transaction.  They are pushing against the machine, the real estate and mortgage and title insurance establishments.  The political pressure is tough because these guys give lots and lots of money to politicians.

Politicians don't know much about this business.  They listen to their contributors and champion their causes.

Who speaks for the consumer here?  Well, HUD is being brave.  They are standing up and fighting and I applaud their valiant effort.


Tuesday, September 16, 2008

Radical RIP

Gone, gone, gone, but not forgotten.  Radical Title Talk was a labor of love and it served my venting needs well.  Time to move on.  I know, I know, you've heard that before - at least twice.  I'm not leaving.  I'm just taking one blog off my plate.

Tuesday, September 09, 2008

What happens if a title company fails?

That's a really big question and it has two completely different sets of answers. Why? Well, the words title company are used interchangeably to describe two very different kinds of title companies. So, for you to fully understand the answers, you first need to understand the difference between a title agency and a title underwriter [the real title company].

Title insurance is written through AGENCY or DIRECT operations. When you focus on those two words, I think you can start to see the difference. DIRECT means you are dealing with an EMPLOYEE of the title underwriter/company. AGENCY means you are dealing with a person or entity who is an independent company - meaning NOT the real title company - who has been authorized to write title insurance on behalf of the title underwriter/company. Get it?

If you are in the mortgage business, this may seem like a model that matches the mortgage broker/mortgage lender model. If you look at it in that light, it's similar but you'd have to add delegated underwriting and then it's more in the ballpark.

The failure of the Mercury Companies "empire" - their nationwide structure of multiple and huge title agencies - which most people thought of as title companies - has people scratching their heads and thinking through the ramifications of failure. I'll talk about some of the issues. It's a much bigger subject than a single post could cover and frankly, I'm not an expert in failure - LOL - but I've witnessed it from afar and with interest.

The failure of a TITLE AGENT is almost always due to mismanagement of the books - either by theft or absolute negligence. In most states, the only one really watching the operations of a title agent is the title underwriter. This is one area that I think could be improved. I would prefer that states set an audit requirement as part of licensing so that we have a more secure and regular method of checking the operations of a title agent but that's a different topic. In the meantime, if the title underwriter hasn't noticed bad management by an agent, a failure can happen without any notice. A consumer or mortgage lender caught up in this kind of failure is apt to suffer inconvenience in most cases and in some, real financial loss. When a title agency fails, the real title company - the title underwriter - comes in and takes over. Their employees will sort things out - often with the state regulators keeping an eye on things.

All title insurance policies that have been written by the failed agent are honored because the agent had the authority to bind the title underwriter/company. Where it gets sticky is that agents who are doing a bad job with the money are usually doing a bad job with the policies, too. That means that they might have closed your transaction and failed to create a policy or pay the real title company. How do you protect yourself as a consumer? ALWAYS get a copy of the title insurance commitment PRIOR to closing and ALWAYS get and retain a fully signed copy of the HUD-1 Settlement Statement. The commitment is binding and identifies the real title company. That's important if the title agent wrote for more than one company. The HUD-1 is your evidence that you paid for the insurance. Even if the title agent failed to remit that premium to the title underwriter/company, your payment will be honored. Remember that you should receive your actual title insurance policy - reasonably - within 90 days after your closing. Keep track and if you don't get it - follow up. If the title agent is not cooperating, contact the real title company directly.

While I believe every consumer should shop for a title agent and make the selection based upon strength and expertise - it's sometimes hard to figure out which company is run by a negligent or crooked manager. I've posted tips for shopping but you should also rely on your guts and then take heart that there is a different, much stronger and more heavily regulated title underwriter/company sitting behind every title agent and that is the strength of the system.

The big question I have been asked is what happens if a title underwriter - the real title company fails. First, you need to know that underwriters as insurance companies, are strictly regulated and monitored. They must maintain reserves and those reserve requirements adjust as the risk of claims adjust. All of this activity is monitored by states and private rating companies. Fitch is a good source if you are interested. Finally, most states have some sort of arrangement for overseeing the dissolution of failed insurers. So, I'm not worried about the failure of the real title companies. There are lots of eyes watching their every move and authorities will step in to protect the system and the consumer if a company goes out of control but the likelihood is pretty slim.

Hope that helps and if there is anyone out there who would like to add to the discussion, please do.


Monday, September 08, 2008

query via e-mail - Would the "marked up" policy have been as good as a policy without the exceptions?

Hi Diane!
I found your blog in a search for title insurance info.  It was much more interesting and informative than anything else that I found.  I have a question that I hope you can help me with.  It's actually more of a situation.  We were in the process of purchasing a feed mill.  We had the winning bid at an auction. Yeah!  There was a commitment for title insurance before the sale and the buy sell that we signed stated that the seller had until Aug 23, 2008 to provide title insurance but they were given an extra 30 days if there were issues that could be cleared up in that time.  The title had never been looked at before, that we are aware of, and there were exceptions dating in the late 1800's.  They told us that anything older than 40 years could be written off but the other exceptions may need a "quiet title."  They said that this would take 2-3 months to clear up.  Then they said they found everything that they needed....and then they didn't...you get my point.  I'm sorry that this is going on, and on, and on.  We were scheduled to close on 3 different occasions but then the title insurance would not be ready. On the last scheduled day for our closing the title office emailed a copy of the title insurance to me.   The "title lady" had assured me that it was finally clean (she assured me at least 4 times).  Two of the exceptions that she told me were gone were still there!  Argh!!!  When I called her she said that they would be cleared up when the seller brought in some paperwork.  Well, not exactly.  It would be cleared up when the two documents were recorded but they could give us a "marked up" policy and that would give us coverage for those two exceptions when they were recorded which would take possibly 1 week but more likely 2 weeks.  The two weeks would put us at the end of their 30 days.  We opted not to go through with the purchase and lost our down payment.  The "title office lady" said that the "marked up" policy was binding and "as good as" a policy without the exceptions.  All that to ask you....Would the "marked up" policy have been as good as a policy without the exceptions? 
Thanks for your time and any help that you can give me.
Cheryl
PS We will not be going to any auctions anytime soon.

Cheryl:  Thank you for your kind words and thanks for reading.  This is a great query because there's good advice for consumers and title insurance agents.

First, let's chat a moment about exceptions.  They said there were exceptions going back to the 1800s and that those older than 40 years could be written off.  Exceptions listed in a title insurance commitment are items that your title insurance will not cover.  These are often rights that have been previously granted to another party - for instance a right of way.  The fact that an exception is older than 40 years does not make it passable.  A right of way established in the 1800s is still a right of way. I just wanted to make that clear before saying that the folks who were handling your file could have communicated more clearly, but perhaps they did not understand or weren't sure.

How does a consumer stay in control of communication when applying for title insurance?  You do it with the title insurance commitment.  It should take no more than 2 weeks to produce a title insurance commitment.  The consumer should get a copy and read it as soon as it is available.  You are looking for three things.

First, make sure that the property identified is the one you are planning to purchase.  Mistakes happen and this is your chance to fix it before it is too late.

Next, look at Schedule B I.  This is where the title agent will identify problems found in title that they intend to resolve prior to the issuance of the policy.

Schedule B II list items that will most often survive and be REAL exceptions in your final title policy.

Before we get to the essence of your query, I would like to suggest to title agents that they make certain that the consumer gets the title insurance commitment AND that if there are unusual or complicated circumstances that you correspond with the parties in WRITING.  E-mail is so very easy and it's such a great tool for keeping everyone on the same page.  If the consumer is having a hard time understanding your concerns or suggested solutions, putting your thoughts on paper will often clear the air.

Now, finally, to your real question, Cheryl.  The title agent is correct.  A marked-up title insurance commitment is binding.  Evidence of payment of a premium [your HUD-1] combined with a copy of a marked-up title insurance commitment gives you standing with the title company.  That said, it sounds like the title issues in your planned purchase were complex and given the inconsistent communication and the lack of clarity, I'd have wanted your attorney to review the entire situation before closing.  You still might want to have an attorney review what transpired.  Perhaps there is a basis for getting back your downpayment.  It sounds like the seller will have an easier time of it since you really laid the groundwork for the fix.  Good luck and don't forget to ask for the title commitment and don't let them give you any crap!  ;)

PS  Fonts are wacked out tonight.  Yoi.


Sunday, September 07, 2008