Friday, May 30, 2008

query: what If I dont agree with the charges in HUD and walk away from closing

That's a good one. If it's a refinance, that's easy, just rescind, but if you are thinking about walking away from a purchase it raises all sorts of issues.

There are several parties to every transaction besides the seller and the buyer. All parties have a duty one to another to act in good faith. I would hope that a buyer would be a good consumer and get quotes from all settlement service providers up front. Remember, you don't go shopping at the closing table. You make all of your selections up front. If you skip the shopping obligations, don't expect sympathy from anyone at the closing table. Even if you have shopped and gotten quotes, there are always unforeseen circumstances. Be patient and listen to the explanations. You may find that there is a valid reason for an additional charge.

So, if you are acting in good faith and not just trying to weasel out of costs you had already agreed to absorb, and a provider is not living up to their agreement, you can threaten to walk away.

Making the threat will often push the bad actor into making good, especially when all other parties in the transaction are looking at them and wondering if they are nuts.

If no one agrees to change the figures and you want to walk away, I would advise taking a break and getting legal advice from your own attorney, not the attorney working for the title company or real estate agency or the seller or the lender. Walking away from a closing is potentially defaulting on a contract and you may have legal obligations.

Thursday, May 29, 2008

query: post closing audit reveals a small mistake on the HUD-1

When a post closing audit reveals a small mistake on the HUD-1 form, both the mortgage lender and the title agent should make determinations on their own behalf whether the mistake creates a regulatory compliance issue. If so, they must remedy the situation and circulate a corrected HUD-1 to all parties for signature. Remember we are talking about a small mistake, one that isn't material to the parties but could be of concern to auditors and regulators. The lender will make decisions about compliance issues concerning lending and the title agent will make decisions concerning their own settlement and title insurance fees.

If the small mistake does not impact regulatory or legal issues and it also does not impact the transaction of the seller or the buyer in any material way, you may rectify the matter without circulating a full HUD-1 for execution.

For instance, the lender might notice an error in the borrower's current address. If the lender raise an issue post closing, let them decide whether or not they want a new HUD-1 executed by all. In the cases of small errors like this, most mortgage lenders will either make note and let it go or have you prepare a corrected HUD-1 and justs have the borrower's initial the correction.

If the title agent charged an amount for recording fees that is an overcharge, a post closing refund is sufficient and a new HUD-1 is not required, again, unless the mortgage lender wants it. The title agent should keep a record of the refund with the file in case the file is pulled for an audit.

Saturday, May 24, 2008

query: title business states don't need lawyer

Your query comes from Pennsylvania. In PA we have a history of non-attorney conveyancers. the modern version is the licensed title insurance agent who is enabled by law to perform a conveyance and prepare documents in conjunction with the issuance of a title insurance policy.

The title agent should not prepare a sales agreement. The title agent should not advise you in matters of law. The title agent should not advocate on your behalf. If you do not need these services, you do not need to hire a lawyer.

Beyond these issues, the entire conveyance can be handled by a licensed title insurance agent.

It's interesting to note that both attorneys and non-attorneys may act as title agents. The issue of conflict of interest is hotly debated when the title agent is also an attorney. Is it in the interest of the consumer to hire an attorney to act as their legal advisor and also their title agent?

Keep in mind that the licensed title agent is acting as an agent or representative of the title insurance company. Their first duty is to the title insurance company and the interests of the title insurance company and your interests may conflict. For this reason savvy consumers do not mix the relationships. That does not mean that you should refrain from hiring a title agent who is also an attorney. It simply means that you should not use that person as your legal advisor. If you feel the need for an advisor hire another attorney. Also, keep an eye on the fees being charged so that you are only paying for title insurance services and not legal services.

Friday, May 23, 2008

on the subject of RESPA reform

I listened to some of yesterday's testimony on RESPA in the House Small Business Committee hearing.

I've read many of the public comments posted on RESPA.

Here are a few random thoughts......

Hold in your hand a closed mortgage loan file. Measure its depth and tell me how many of those forms are required by HUD or even the federal government? Some, but not many. Most of the forms and disclosures I see in files have been designed by mortgage lenders to either secure their interests, cover their concerns over law suits, route to various and sundry departments for servicing or other needs, instructions to settlement agents, etc. then we have the group of disclosures created by title companies and settlement agents to cover their various housekeeping and legal concerns. And, of course, don't forget the voluminous sales agreement and agency disclosures and multi-list disclosures.

Mortgage lenders, title companies and real estate brokers never hesitate to subject the consumer to another form if it suits their fancy. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to create software to support new procedures or forms if it suits their fancy. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to seek legal counsel and pay attorneys if it suits their fancy. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to create training seminars to cover new forms and procedures if it suits their fancy. In fact, there's a whole cottage industry that thrives on maintaining a constant environment of change just so they can sell tickets to seminars and summits. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to subject appraisers and settlement agents to procedural changes and documentation changes which cost money and time and training if it suits their fancy. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers didn't hesitate to pay many thousands of dollars in illegal kickbacks, gifts, etc. as documented in the ridiculous number of lawsuits, settlements, and regulatory actions of these last two or three years if it suits their fancy. It was a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to spend millions to create super automated systems that replace human underwriters, appraisers, and title examiners if it suits their fancy. It's a cost of doing business.

Mortgage lenders, title companies and real estate brokers never hesitate to create affiliations which shut out independent small business owners if it suits their fancy. It's a cost of doing business.

The consumer is alone. Not a one, but HUD, is trying to find a better way to comparison shop.

These "folks" just don't want anybody to monkey around with the referral net.

They want to control the point of sale.

They do not want to empower the consumer.

They do not want the consumer to have information.

The freedom consumers are enjoying in some of the new real estate shopping platforms is the new world.

Perhaps we need not depend upon HUD for consumer relief. Politicians tied to old school back room deals will likely put the kabash on the HUD effort.

Consumers have power even if HUD can't help.

Consumers can and will demand access to information.

In my market I am there, giving it freely and will continue to do so.

Like minded title agents and other providers, let's create our own free platforms and little bits of freedom here on the internet.

For now we have free speech. Let's use it.

Consumers have the power.

shopping for title insurance and settlement services in Pennsylvania

I was lucky enough to receive a HUD-1 from a competitor who does business in my county. It's a friendly competition. I haven't seen their fees for awhile and so I was curious. These numbers provide a terrific shopping comparison and it's a real life example so let's take a peek.

There is a mortgage and the transaction is a purchase. The sale price is $118,500.00.

The title premium is state regulated and so we would be charging the same amount as our competitor. In this case the state regulated title fees are:

TITLE INSURANCE INCLUDING LOAN & OWNER $858.38 reissue rate applies

So, I hear you asking the question. Why should you shop if these items are state regulated? Well, Pennsylvania allows optional fees and though there is guidance on the types of fees, the amounts are not regulated. The optional fees vary.

BTW - The HUD-1 Settlement Statement indicates that the closing took place in the office of the title agent so there was no travel. I also know that the closing took place during normal business hours - after 9am and before 5pm.

The following are the optional fees charged to the BUYER by our competitor:
  • settlement fee $135.00
  • document preparation $135.00
  • notary $20.00
  • electronic doc retrieval & wire $40.00
  • overnight fees $25.00
The following are the optional fees charged to the SELLER by our competitor:
  • settlement fee $135.00
  • document preparation $135.00
  • notary $10
The total optional fees charged by our competitor in addition to the state regulated minimum title premium is $635.00.

If the consumers had used the service of The Closing Specialists under our Choose and Save Program, the total optional fees charged in addition to the state regulated minimum title premium would have been ZERO.

Can I give you any more clear demonstration of the value of shopping for title insurance and settlement services?

Thursday, May 22, 2008

RESPA discussion

RESPA - opening remarks Ivy Jackson of HUD

RESPA discussion

watch the HouseSmallBizDems's RESPA videos


RESPA discussion GFE

RESPA reform committee hearing

query: what does alt-a mortgage stand for

I'll give you my take, though if there is a reader out there who has a formal definition, please toss in your two cents.

Before the rise of subprime lending, we distinguished mortgage loans as saleable or not. That meant that the underwriting and documentation met the high standard of the agencies - FNMA, FHLMC or GNMA - and therefore could be sold either through securitization or as whole loans. Loans that did not meet these tough new standards remained in the portfolio of the lender. They might be sold but without the blessing of meeting agency guidelines, the attributes on the loans would be considered package by package, loan by loan.

When subprime style lending entered the secondary mortgage market, this paper was called, B, C, D paper. In other words, it wasn't as good as the paper that met agency guidelines, which would now be called A paper or prime.

Alt-A, in my view, implies that the paper is not quite prime, it is missing some key underwriting documentation - mostly likely verification of income.

Wednesday, May 21, 2008

We have a county in our market area with a legal advisor who is a lunatic.

I will refrain from naming the county.

I cannot for the life of me understand how an attorney cannot get the concept of estoppel by deed.

We have an insured transaction in which an error was discovered in the first of three deeds being recorded. A corrective deed was filed upon discovery and the correction served to correct the chain of warranty deeds and our insured's interest is whole.

At issue is the tax assessor's position that our insured does not own the entire property.

The attorney for the seller prepared two of the three deeds including the one which he corrected. We are of the that everything was done correctly and the seller's attorney sees no reason to do extra work just to satisfy a lunatic.

Do you think lunatic is a harsh word?

Well, our insured has just found out that since 2005, the monies paid on his behalf by his mortgage lender for taxes have not been processed. Apparently they take his one third - the only part they think he owes - and refuse to accept his money to pay the taxes on the remaining two thirds. They want a check written by the seller.

Our insured has received certified mail notice that they intend to have a tax sale and STILL they will not accept his money.

I advised him to hire an attorney and pronto.

Lunacy. Utter lunacy.

Tuesday, May 20, 2008

query: at what point in a transaction do you purchase title insurance

Great question. I'd like to give you the long and the short answer.

The short answer is that you purchase the title insurance at the closing. It's one of the many charges paid on the HUD-1 Settlement Statement.

The long answer is that you should shop for your title insurer at the same time you shop for a mortgage or select a property. Price of services and quality of examination and service vary.

Once you have selected your title insurer, control the order. Tell your real estate agent and mortgage lender who you wish to use. Place the order then work with your title insurer through the title commitment review and closing. They will issue the policy after your documents are recorded.

Monday, May 19, 2008

don't faint or anything but I finally submitted my RESPA comments ;)

May 19, 2008

Regulations Division
Office of General Counsel
Department of Housing and Urban Development
451 Seventh St., SW., Room 10276
Washington, D.C. 20410-0001

Re: Real Estate Settlement Procedures Act (RESPA):
Proposed Rule to Simplify and Improve the Process of Obtaining Mortgages and Reduce Consumer Settlement Costs, 08-01015 [FR-5180-P-01; RIN2502-AI61]

To Our Friends at HUD:

I know that sounds cheesy, but I want to express in the strongest possible terms how very much I appreciate the obvious hard work that went into this proposal. I appreciate the lengths to which you tried to balance the impact on our collective industry with the overriding need to create new regulatory consumer protection.


A fully informed consumer, having in hand reliable data in user-friendly form, is empowered to make choices that serve his own self-interest and general welfare. I trust the ability of a fully informed consumer to make his own choice. I trust the mechanics of a fair and free marketplace, which is the likely outcome of such full disclosure. To this end, I support the jewel of this proposal; the Uniform Good Faith Estimate tied to HUD-1 enhanced by the addition of the Closing Script.


I have experimented with the forms using real life transactions and found them easy to use and explain. I’ve had members of my staff use the first part of the Closing Script in real closings. [We did not think it fair to use the GFE/HUD comparison, as those rules are not in effect.] Without exception consumers said they found the information easy to understand and helpful. That part of the script took no more than two minutes to read verbatim. We created Word documents and so the completion was quick. Our software includes the flexibility to use merge fields with Word and so if we had desired, even without programmer assistance, we could have made the job even easier.

The script was prepared at the same time as the HUD-1 form. The closers said the script simply replaced similar verbiage they might have used when reviewing the Note and so it added no time to the closing itself. The hardest part seemed to be really reading it verbatim. I insisted that no one ad lib and so we practiced by reading it to one another a couple of times so that it wasn’t awkward at the closing table.

As a manager, I like the script as a training tool and as a safe procedure. I know that the correct words are being used to describe the mortgage terms.

There are some who object to the Closing Script as somehow crossing the line into the unauthorized practice of law. I just don’t see it. The script is meant to be prepared by the Settlement Agent with information provided by the Lender. This is no different than the HUD-1 form that is prepared by the Settlement Agent with information provided by the Lender. The script is designed to be read verbatim which means the reader is not advising or offering an opinion. The script is part of the HUD-1 and unless reading the HUD-1 could be construed as the unauthorized practice of law, I just don’t buy that argument.

There are many who would like the public to believe that notaries who are not employees of the Settlement Agent do not explain documents at a signing. Though there are some who religiously limit their role to obtaining signatures, most offer some explanation. Consumers deserve an explanation that is correct and easy to understand. Frankly, they deserve at least a small explanation and in those cases in which a notary is not saying anything, reading a mandatory script containing reliable information is preferable. So, acknowledging that customs do vary from state to state and region to region, I cannot see any problem having the person who is obtaining the signatures and is sitting in front of the borrower read the script.

Infact, the Mortgage Bankers Association has been working hard with the American Land Title Association to create Uniform Closing Instructions [UCI]. The UCI contain a definition for the party who obtains the signatures and creates certain duties for that individual including the monitoring and reporting of mortgage fraud. The person in the current draft is known as the Closing Employee.

I am encouraged that both the UCI and this RESPA reform proposal create a duty for the closer to the consumer and to the mortgage lender. Afterall, the closer is typically an extension of the title insurance transaction and in that role, with the proposed insured interests being both that of the mortgage lender and the consumer, it makes sense that there exists some sort of fiduciary duties.

The proposed rule is weak in its guidance as to what the parties should do if there is a problem with the terms when the script is read. Do we close or not? Is the consumer given the choice and if they choose to close, what, if any, are the remedies? It seems to me that the burden is on the lender to comply and that it is in their power to review all terms and make corrections prior to the closing. In this case, then the reading of the script is merely the final safety net and NOT the preferred time for lenders to talk with their borrowers. With that in mind, the objections of some, that the burden of the script should rest on the shoulders of the lender and not the closer seems to ignore the reality that mortgage lenders today already carefully monitor the APR and high cost loan calculations and make last minute adjustments to avoid closing a loan that is out of compliance. Why? Because they fear the remedies.


I have suggestions for improving the Good Faith Estimate [GFE] but first I must say that I applaud the manner in which you have handled the discount versus yield spread and the impact on rate from the perspective of the consumer. I believe consumers will understand the seesaw effect on the rate and make their choices easily. I am pleased that you underplay the matter in the loan origination fee section and focus the attention of the consumer on the bottom line.

I do suggest that you add a summary section for cash to close. This final summary is missing and unless you define its form, the uniformity you hope to give the consumer will be lost. A summary would encapsulate what we might normally see on page one of the HUD-1. Something like sale price less mortgage less hand money less seller assist, etc. equals cash to close.

On the issue of seller assists, if it’s within HUD’s power to instruct, I would suggest that mortgage lenders use a flat credit for a seller assist rather than move buyer fees to the seller side of the HUD-1. I think having buyer fees on the seller side of the HUD-1 under this new system would be too confusing.

I would strongly prefer that the settlement costs in the shopping chart be adjusted so that they do not include estimated escrows, hazard insurance, transfer taxes and recording fees. These items are unique to the property and the date of closing and not the loan originator. It has been my experience that unscrupulous loan originators will lowball escrows to make a GFE more attractive. Perhaps you could call those costs “comparable costs” or something like that.

Finally, on the GFE, recording fees are a moving target that most settlement agents have a hard time figuring even with documents in hand. Setting any kind of tolerance is simply creating a predictable failure on virtually every GFE. There may be some places in this great country wherein a loan originator easily predicts the recording costs but they have to be few and far between.


I will limit my comments on this subject by saying that I laud your intentions as I believe you are hoping for some cost savings for consumers, however, these provisions of the rule are ripe with multiple configurations of unintended consequences. It’s just too obscure. Too much can be read into these parameters and the possibility for harm far outweighs any conceivable benefit for the consuming public. With as much intensity as I can express within this format, I implore you to just strike the ideas, please.


As a final note, I must say that should you successfully implement refined versions of the proposed GFE and HUD-1 enhanced by the Closing Script, honest professionals can and will adapt and eventually find them ordinary and comfortable. Predators and those who depend upon obscure and unreliable disclosure to make their credit kill, will be forced to shape up or ship out and you will therefore, whether you planned to or not, help us restore the public trust.


Diane Cipa
General Manager
The Closing Specialists
204 West Main Street
Ligonier, PA 15658

Sunday, May 18, 2008

query: what are endorsements 100, 300, 900

These are endorsements, or extra coverage, on the loan policy. These are Pennsylvania filed endorsements. Number 100 covers the lender for issues related to unknown violations of restrictive covenants, conditions, etc. Number 300 covers the lender for unknown matters that might have been discovered by a current up to date survey of the premises. Number 900 covers the lender for environmental issues aka ALTA 8.1.

These are the most typical endorsements required by mortgage lenders in Pennsylvania and they each run $50.

web site interruption

Note: The Closing Specialists web site is experiencing technical difficulties and will be back up as soon as possible.

Saturday, May 17, 2008

query: when to toss a title insurance policy

If you lost the house to foreclosure, toss it. No one is going to make a claim against you. If you have sold the property by deed, you have given a warranty to the buyer and their heirs and assigns. Oh, you'd probably be safe tossing it after 60 years. In the meantime, it doesn't take up much space, so I'd just keep it with your important records. Remember that your owner policy continues to defend you even after you have sold the property.

Friday, May 16, 2008

query: order title what does that mean

Hmmm, good question. When you order title, you are giving basic transaction information to a title agent and asking them to complete a title examination and issue a title insurance commitment. It's possible that you won't be placing the order directly. Your real estate agent or your mortgage lender may be ordering title on your behalf. Be careful and make sure you have shopped for the services as cost and quality differ.

Realize that the title agent is performing valuable services and even if the transaction does not close, you will be billed for services rendered. It won't be for the entire title insurance premium, but rather the costs of title search, examination and perhaps lien letters/tax certifications.

If you are applying for a mortgage loan, it's like the appraisal. The mortgage lender will not approve the mortgage without having a professional appraisal and a professional title examination in the form of a title insurance commitment.

query: day of closing how long does it take

I budget one hour for every closing. Some take longer, some are shorter. It really depends on the parties and whether they chat amongst themselves or have a dispute.

A closing in which all parties just want to get the heck out of the room and there are no disputes is normally over in about 30 minutes.

I never want to rush anyone. Our closers are trained to give the consumer the time they need to understand the transaction and be comfortable closing. We budget the hour and adjust as needed.

Wednesday, May 14, 2008

query: what if attorney does not pay for title insurance

We do unfortunately have circumstances in which an attorney or title insurance agent fails in their duties and steals the premium. They ought to go behind bars for a good long time.

The way you handle this situation is to prove that you purchased the title insurance.

Let me talk about being a smart title insurance consumer. Make absolutely certain that you do these two things before you close:
  • Get and review carefully the title insurance commitment.
  • Review the HUD-1 Settlement Statement to be certain that it clearly shows the name of the title company issuing the insurance and that the name matches the name of the company on the title commitment. Also make certain that the HUD-1 shows that you have paid for owner coverage.
A title insurance company - the underwriter - is responsible for the acts of its agents. If you can demonstrate that you dealt with an agent who was able to produce a title insurance commitment for that underwriter and that you paid the premium, they should cover your case and issue a policy. If you have any problems, contact your state insurance department.

Good luck. I hope that helps.

I do not agree with that first sentence.

Most title insurance policies don’t cover unrecorded real estate documents. This means your title insurance policy is worthless if ADRE determines years later there was a mistake. It doesn’t matter how insignificant the mistake. A minor mistake such as a clerical error empowers ADRE to declare a prior land ownership transfer illegal. Who will finance property without title insurance covering these unrecorded documents?

There are numerous items covered by title insurance that are not recorded. Frankly, I'd like to talk with local "professional" title examiners and ask them how they handle the ADRE issue. In our area, if we are aware of unrecorded risks like these, we obtain letters from the government office certifying that there is no unrecorded issue pending.

If it's not predictable and it's really a government agency out of control, then I would understand title companies putting standard exceptions for this ADRE issue into their policies. If that's the case, the lender and the consumer would have an opportunity to review exceptions prior to close. In any case, I would think citizens should lobby for government relief from an out of control ADRE.

What do you think?

Tuesday, May 13, 2008

query via e-mail on the subject of PA inheritance tax escrows

Hello Diane,

I'm from out of state and I've gone through multiple home purchases, sales and refis, but I have NEVER come across this before. I was wondering if you could shed some light on this topic of escrowing for PA inheritance tax.

My Mom passed away several months ago. She had no significant assets other than a modest home which was worth less than $250,000. I am going to settlement shortly and was just advised by the settlement agent that 4.5%
of the home's gross selling price (not the net proceeds) would have to be withheld/escrowed for Pennsylvania Inheritance Tax.

I have calculate that my Mom's estate will owe less than $4,000 in PA. inheritance tax, but the title company will be escrowing almost $10,000! The title company said that they will release the balance of the funds after the
Dept. of Revenue in Harrisburg provides me with a Notice of Appraisement saying the inheritance taxes have been satisfactorily paid -- in about 3 months!

The title company is claiming that all title companies are doing this now. They have been left with unpaid inheritance taxes in the past, which is why they require this of all estates, regardless of the size.

I think this is simply outrageous and was wondering what is your experience with this? The title company also said they would NOT accept a receipt even if I paid the inheritance tax at the County courthouse before settlement!

Thank you in advance


Steve from VA

Hi, Steve:

It's an issue we have to deal with and we have all been burned. I handle it in a few different ways. Whether or not the buyer's title agent will be more flexible, I can't tell you.

First, let me explain the title risk so you understand that it is real. Inheritance tax on the entire estate - not just the amount owing for this real estate - remains as an unfiled lien against the real estate for a bit over 20 years.

The PA Dept. of Revenue can file a lien against any real estate owned in the Commonwealth during that period IF there is any outstanding inheritance taxes owed, period.

What you CAN do if you want to move quickly and aren't ready to file the full inheritance tax return is ask the PA Dept. of Revenue for a release for this property.

If you are able to file the inheritance tax return now, I would get it to the Register of Wills with payment for any taxes owed. Offer to have the attorney for the estate provide a personal guaranty to cover any problems with the calculations or give a personal guarantee yourself.

Frankly, we do take the personal guarantee letters from the attorneys if we feel comfortable, however, a title agent is not required to take these letters. Their underwriter may prohibit the practice. Underwriters have various opinions on the risk of the letters.

In cases where we do escrow, we escrow 6% of the gross sale price so this title agent is a bit more lenient than we are. Remember that it's more than simply the tax that might be owed on this property that could force a lien.

If you are unable to work out any other solution and have to escrow, ask that they place the money in an interest bearing account. They are required to do so at your request. Also, the state requires that the escrow agreement be in writing and that the title agent charge a $25 fee to set-up the escrow. Read the agreement carefully with your attorney. Ours is irrevocable.

I hope this helps. FYI - Every year I have to send escrow money to the Dept. of Revenue because people abandon it. It's amazing. ;) Good luck and thanks for the question.


Anybody else with suggestions for Steve?

Monday, May 12, 2008

Visit this blog post about "back-up loans", please.

Here's the post.

Here's a blurb:

Whether it's a different rate, has closing costs thousands of dollars higher, thousands of dollars added to your loan amount that they conveniently "forgot" to tell you about, has a pre-payment penalty when they told you it didn't, is a completely different kind of loan than they told you about in the first place, or even all of the above, the loan isn't what got you to sign up. In some cases, they don't have a loan at all, and are stringing you along in hopes that they will have a loan Real Soon Now.

The author of the post is doing a swell job of explaining in clear, easy to understand, terms just WHY we need the transparent disclosures HUD is proposing.

If we had a uniform GFE tied to the new HUD with the script, these liar loan originators would not be able to operate. Mortgage lenders would out them and fix them or toss them.

Why should consumers be forced to waste the time of loan originators by setting up back-ups?

Why should the secondary market pipeline be filled with the bilge of multiple locks to accommodate the back-up?

It's so simple. Just fix the problem that's broken - the disclosures and the expectations for accuracy. Add to that a bit of teeth to HUD's bite and you've got order.

Sunday, May 11, 2008

query: how much to pay for title insurance

I can only help you with Pennsylvania. Remember that in Pennsylvania, title insurance is considered the buyer's cost. We have a simultaneous issue, which means that one premium covers both the owner and loan policy.


Note that you will see a BASIC rate and a REISSUE rate. These are the two main rates we use for a purchase transaction. You will also see two REFINANCE rates which may be used as applicable.

There are other discounted rates available under our regulated agency program. We review each file carefully to see which rate applies to your policy.

query: voiding a cashiers check

The remitter - meaning the person who bought the cashiers check at the bank - takes the cashiers check back to the bank and explains why they are not using it. The bank will void the check.

So, if you have taken your money for closing and had a cashiers check drawn by your bank and the closing does not take place, you take the check back to the bank and they will undo it for you.

query: voiding a cashiers check

The remitter - meaning the person who bought the cashiers check at the bank - takes the cashiers check back to the bank and explains why they are not using it. The bank will void the check.

So, if you have taken your money for closing and had a cashiers check drawn by your bank and the closing does not take place, you take the check back to the bank and they will undo it for you.

Saturday, May 10, 2008

query: does spouse have to sign a rider

A rider to the mortgage instrument is a part of the mortgage and so I would have the spouse sign the rider.

The purpose of having a non-vested spouse sign the mortgage is to validate the lien. If there is a dispute later and the spouse attempts to stop a foreclosure, would the lack of signature on the rider impact the lender's ability to foreclose? Maybe. Maybe not, but why take the chance?

query: signing of HUD papers by bank owned seller - how long

With all the foreclosures and REO being sold, we have to deal with this issue all the time. How long does it take to get a seller signed HUD-1 from a bank? In my experience it takes anywhere from one to five day with most in the two to three day category.

The trick is to read the instruction letter provided by the attorney representing the bank/seller. This letter let's us know the typical procedure and timeline expectations.

When we receive a title order for REO property, we carefully review the target date for closing, the time requirements of the seller and whether or not we logistically can meet all targets. This is an important step because the buyer is typically under some kind of daily penalty for closing late - usually $100 per day.

If we've received the order without sufficient time to process title and get the HUD to the bank/seller, we contact everyone immediately and have them process an extension.

Once we are sure we can reasonably meet all deadlines, we mark the file with the target dates and our coordinators make certain that the file moves forward within those guidelines.

This usually works but sometimes there are problems. For instance, if the real estate agent or the mortgage lender doesn't understand that we need figures ahead of closing, and they want to make a last minutes adjustment to the HUD, they may not be able to do so without postponing the closing.

So, the bottom line is that whoever the settlement agent is, they should know early in the transaction what the timelines are and then adjust the game plan to match those expectations.

Friday, May 09, 2008

What do you think of these anonymous comments concerning RESPA reform?

Diane - your support of these changes is based upon the assumption that
the vast majority of consumers will exercise their right to shop. If
they shop, they will create a competitive marketplace, and therefore the
rules changes will work. Your fundamental assumption is flawed and
therefore your analysis of the rules is flawed also.

This isn't about power of referral or the consumer, it’s about
motivation. Your faith in consumer's motivation to shop is misplaced.

Take autos, for example. High value, important purchase. There is a
vast amount of credible and useful information available to consumers
that they could use to make an informed decision. Yet, as any auto
dealer will tell you, the vast majority fail to use the information and
walk right into the dealer to make a purchase.

Do you think that real estate services, with less credible shopping
information and a lower frequency of use, are somehow going to radically
different? If you think so, why?

There will always be a segment of consumers who shop, but I can't see
them being the majority. Without the majority of consumers shopping
there won’t be a significant enough marketplace for competition. Without competition the RESPA reforms become toxic to everyone but the
large lenders and affiliates.

Monday, May 05, 2008

query: do I need title insurance on a condominium

Yes. Condominium ownership is still ownership in real estate it's insurable. You purchase title insurance on a condominium for all the same reasons you would purchase it for all real estate.

query: can you mortgage a life estate

Technically, yes, but you may have a hard time finding a lender willing to do it.

"closing script" chat and how the quality of the closer is important to the consumer

I raised the issue of the RESPA proposed closing script on Radical Title Talk and the comments that followed are well worth your perusal so I am linking it here.

Sunday, May 04, 2008

query: when not to buy title insurance

I would skip the purchase of title insurance if the money, time and effort invested in the real estate meant nothing to me and I cared not whether I truly owned and had control of the land.

query: my wife forged my name on a mortgage

Contact an attorney.

The mortgage lender through the settlement company had a duty to verify the identity of the person signing the document. They would do that by having the document notarized. The notary public would have asked for federal or state issued photo identification.

The mortgage is of public record so you should be able to look at a copy and see which notary public witnessed the signature.

If you are still married, questions will arise about whether or not you allowed her to sign the mortgage or had personal knowledge of the transaction.

Those are starting points for piecing things together but you need an attorney to protect your real estate, so don't dilly dally. Good luck.

Friday, May 02, 2008

For the sake of comparison, here's a link to a "closing script" for a more complicated mortgage loan.

The loan being described in this "closing script" is an adjustable rate mortgage with a "teaser" rate. That means the consumer is being given an artificially lower rate in the beginning.

Read this script and see if you don't agree with me that these words spoken so directly at closing would help a consumer truly understand the impact of the "teaser" rate. We've read many stories on the papers about consumers who did not understand that their rate would change or were never told because they were working with a predator mortgage lender who was being assisted by a predator closer.

The beauty of the proposed RESPA reform is that specific words, tested as easily understood by consumer, are mandatory. That means that predators can't survive if they are forced to follow these rules. This type of mandatory disclosure will serve the public AND the financial infrastructure that supports mortgage lending by making certain that all parties close with a meeting of the minds. Any consumer who has been mislead, can stop the closing at this point and the mortgage lender is burdened with fixing the problem.

Do you see how the consumer can't be rushed through a signing without full understanding. Even those who refuse to read or can't read will be given these precious few minutes if clarity to verify what they are doing before signing on any piece of paper. Isn't that wonderful?

Here's the link.

Here's a link to the "closing script" for a fixed rate mortgage.

As a consumer, you do rely upon the professional at the closing table to assist you in understanding your loan documents and terms. Even if you have discussed these terms at length with your mortgage lender, you must still verify before signing that what you bargained for is what you are getting, right? That's what the "closing script" is all about.

Here's a link to the script.

The "closing script" is a key part of the proposed RESPA reform. It will become part of the HUD-1 form and actually must be read out loud at the closing by the closer at the table or the notary assisting you in signing. It's mandatory.

Why is the industry all up in arms about the script?

Some are offended. Some think it will take too much time. Some want to charge you more because they think the script is a hassle. Some don't think a closer should give the consumer so much information.

Isn't that a heap of hooey? I think these folks who object to the script are selfish or nuts or whiners or predators. I realize I am offending many in my business, but I am just sick over what has happened to the great business of real estate. This is my chosen career and the irresponsible masses that took control of it have done much harm to consumers and our economy. Many many many people are hurting because of this widespread irresponsible behavior.

Let's do what's right. Let's adjust disclosure so that consumers get good information in an easily understood format and in a way that is mandatory so that EVERYONE is safe.

Thursday, May 01, 2008

RESPA comment by Karen Wiener, Citizens' Housing and Planning Association

Citizens' Housing and Planning Association (CHAPA) is a non-profit umbrella
organization for affordable housing and planning activities in Massachusetts.
CHAPA has over 1,500 organizational and individual members, including
homebuyer counselors, lenders, real estate brokers, and a wide array of non-profit
and for-profit organizations. We applaud the proposed RESPA rule, believing it
will have a tremendous impact on increasing borrowers’ understanding of the
process and ability to obtain the best possible loan product.

We particularly support the proposed revision of the GFE and HUD-1, including
the clear language rather than legalese; the sections that clearly depict the loan
details, origination charges, and settlement fees; the comparison chart showing
charges that can and cannot change at closing; the “trade-off table,” and
the “shopping chart.” We also welcome the proposed earlier provision of the GFE
in the process, and the requirement of an oral “closing script” to be read at

These features help educate borrowers and give them the opportunity to
compare “apples to apples” when shopping for a loan. They clearly translate the
yield spread premium into the total service charge for the lender/broker, and offer
borrowers an important tool to help them avoid predatory loans.

In sum, the proposed RESPA rule change would greatly benefit consumers, and
CHAPA strongly supports it. and The Closing Specialists

You know, sometimes I think that these two companies are the ONLY TWO on the entire globe who understand title insurance from the perspective of the consumer and who CARE about the consumer.

Here's the only other consumer oriented RESPA news I have found and I want to thank you Here's a blurb:

HUD has responded to the GAO recommendations, and while the proposed RESPA reforms are designed to help consumers shop more intelligently and better understand where their closing costs are going, they will not immediately affect what the study also revealed 62 percent of all consumers did not know they could purchase their own title insurance and closing services.

This will change once RESPA reforms are passed, says Schmidt. With simplified and standardized forms, consumers will begin to shop for the best values. That will force title insurance companies to actively market to consumers. Involved consumers will make the industry more transparent, more honest, and more market friendly.