Tuesday, July 27, 2010

just a note to say hello

Our two most interesting cases pending now are one involving a Power of Attorney for a buyer and another in which the neighbor stepped forward on the eve of closing to say the driveway is on his property.

Both are cases of info coming in really late in a transaction and so both are delayed while we work out solutions.

In the case of the Power of Attorney, the buyers told the loan officer that they intended to use a POA because the husband is employed by the military and working in a war zone.  He comes home once a month and was sitting right in front of the loan officer while they had this conversation.  Did she think to call us or her manager?  No.  She told them it shouldn't be a problem and asked that they send a copy of the POA to her.  Well, when we finally heard about it and had a copy in our hands, we noted that it was a general POA rather than a specific POA which is preferred when used by a borrower in a mortgage transaction.

As the title agent, the risk to an insurer when using a general POA for a mortgage is that the principal may challenge the validity of the mortgage on the grounds that they did not intend that the agent mortgage the real property.  It's a stretch but it's a risk.  I figured I'd reduce that risk by asking the mortgage lender to approve the general POA in writing after I had notified them in writing that it was a general POA and not the usual specific.  If they said okay, then I had a paper trail for the title insurer to fight off a claim on that issue.  The notice to the lender in writing - via email - fulfilled my fiduciary duty by raising the general versus specific issue to be sure the lender was making an informed decision.

The underwriting guidelines for the mortgage program absolutely require a specific POA, no wiggle room.  So we did a fast prep of a specific POA including a military style notary acknowledgment and emailed it to the buyer.  He, of course, if now back in the war zone and transporting this document back to us is likely to take 14 days.  Their contract was for a July 31st closing so they are looking for an extension.

In the case of the driveway, folks were supposed to go out and take a look see last night.  I am waiting for a call.  As always, we have so far recommended to the buyer THREE times in writing that she get a survey.  She has signed our survey hold harmless.  Our position as title insurer is that we don't care about the driveway because she has total frontage on a public road and therefore our insurance of access is covered.  As the fiduciary for the lender, however, we want to know just how much of the driveway is on the neighbor's property.  If access to the driveway is totally blocked, then the lender's collateral may be diminished and they'll likely want a right of way.  The lender is part of the email conversation on this pending issue so they have been fully informed.

We did find on record a survey done a few years ago which shows the house but not the driveway.  We can see that the surveyor located or set three pins on the front lot line.  I suggested that they take a metal detector out there last night and see if they can find the pins.  The neighbor may be entirely wrong about the location of the lot line and the driveway.

If we are talking major blockage and the lender or buyer want it resolved, we will require a survey along with a right of way.  If its just a tip of the driveway, we'll settle that with signed disclosure and written acceptance by both lender and buyer.

That's it for now.  Back to work!  ;)

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