Wednesday, April 07, 2010

what about these title agents who fail to issue policies, eh?

Hi Diane,
I came across your blog sometime last year and really enjoy reading it as it helps to understand what goes on in the world of title. I recently began job in the mortgage industry. This company grew fast and could not keep up the pace of processing the incoming final documents (recorded mortgage and title policy) so I was hired to get the company back on track. After clearing out bins and bins of final docs I noticed a trend. We had not received all of our final document for closing that closed earlier that year. We began to send out letters and emails and found that quite a few title policies simply had not been processed or were "in line" to be processed. Its like if we had not asked for it then we wouldn't have gotten it. Some agents went out of business and now were having to deal with the underwriter of the policy and that's another mess and our investors are giving us deadlines on these final docs so its just one big mess. I'm loosing patience with these agencies. The closing instructions clearly state the delivery date for these docs (which is usually 120 days from closing). I guess my question is, Whats the best way to handle these agents that don't perform on the back end? Everyone is eager to close loans and get paid but the work isn't finished till the policy is issued I feel.

-Frank

Hi, Frank:  A title agent who does not promptly issue a policy is not trustworthy and I would take them off the approved list.  I think a well worded letter to title agencies that says failure to perform will result in being taken off the approved list will get results.  It's a moving forward plan but it will be effective.

On the other hand, we issue short form loan policies which are delivered with the documents immediately following closing.  Since most lenders aren't used to immediate delivery, they often overlook the policy and come back to us for duplicates.  We issue lots and lots of duplicate copies of loan policies because the original isn't noticed in the up front package.  It is possible that this might be a small part of the problem and a decision to
require "short form" policies coupled with a good system to check for them in the original document delivery package will eliminate the [future] post closing backlog.

If you have your policy in hand, getting recorded docs isn't as much of an issue because when an agency goes out of business, you can always just get a recorded doc from the courthouse.  If for some reason the documents weren't recorded, you have the policy in hand which along with a CSL or CPL will compel the title underwriter to come to your rescue.


Good luck and let me know how it works out, okay?


Diane

1 comment:

Diane Cipa said...

Just want to amplify the coverage under a Closing Service Letter aka Closing Protection Letter. Mortgage lenders received coverage related to losses caused by the failure of the title agent to follow the lender's written closing instructions. If you are suffering losses for this reason - extra fees or penalties from your investors, etc. - I would file a claim with the underwriter. Take a look at the CSL/CPL you have on file for that transaction or title agent. Rules differ state by state. Some states have transaction specific letters and others have umbrella letters that cover all transactions closed by a specific title agent.