Does propane reimbursement count in the minimum investment seller assist calculations?

Diane,

We closed on our property December 23.  The agreed upon contract was $325,000 and seller concessions of $5,000.  At the closing table, we found out that due to the terms of our loan, we had to have 5% down into the purchase price which would decrease the seller concessions to approximately $2700. We were contacted by the seller's agent yesterday b/c she forgot to have the propane in the tank figured into closing, which would mean we owe an additional $1100.  It was in the contract that we would pay for the propane in the tank, but I didn't know if this additional amount would in any way affect the amount of closing costs they paid. We want to do what is right, but we don't want to be taken advantage of, and we want to make sure we ask all of our questions before agreeing to pay for the propane in the tank.

Thanks in advance,

Melanie

Hi, Melanie:  I always feel bad to hear that this news comes at the closing table but it's not rare.  These types of calculations by lender closing departments often happen within hours of the closing.  There is always the option of postponing closing while the contract is renegotiated.  Most people don't want to delay and go back through underwriting so they close and the seller gets more money than they bargained for.

On the propane, that's personal property which wouldn't be figured into the underwriting minimum closing investment.

As for what to do now, I will answer this from the perspective of a former mortgage underwriter.  Since the sales contract you presented to the mortgage lender was the basis for the loan approval,  I would ask the lender - in writing - if they care if you renegotiate the propane clause in a way the forgives you paying the seller for the gas.  They may or may not care but having an email or letter in your file will protect you if your file is selected for a quality control audit and someone thinks perhaps you tried post closing to get around their closing cost guideline using the gas.

Good luck and I wish you well in your new home. 

Diane

Is flood zone determination covered by title insurance?

query via email:

Hi, Diane.

I just bumped into your blog on http://titleinsurancetalk.blogspot.com/2007/10/query-how-to-file-claim.html
and would like to ask your opinion on a title insurance problem we are having. 

We have a situation with our property which bought 2 years ago. We are doing the backyard drainage landscape project this year. During the process of applying for permit with our town, it was discovered that our property is in a flood zone, thus imposed some limitations on what we could do on our backyard. The flood determination provided at closing time was wrong by stating the property is not in a flood zone. The mortgage company now also realized the mistake and is requesting us to buy flood insurance on our property.

My question is - with the scale of the matter, should we file claim directly with the title insurance company, or, should we have an attorney represent us to go after the title company?

Thanks a lot!
G


Hi, G:  I don't think this is a title insurance matter.  Unless your state is different than most, the title insurer doesn't check or insure the status of flood zones.  I would look at your sales agreement with an attorney.  The seller may have been obligated to inform you of the status.  You may also want to look at your HUD-1 Settlement Statement to see who you paid to perform the flood certification.  This is the company who made the error.  There may be an affiliation between the mortgage lender and the flood certification company.  If so, that might give your attorney an angle for negotiation with the lender.  So, your best course is to explore the obligations of the parties to your sales contract and those that provided flood related service as part of the mortgage application process.  Don't forget to use certified mail for all communication and don't be afraid to contact the Attorney General's office for help or the state banking regulator if you feel you are getting stone-walled.  Good luck!

Diane

on Southern Title

Southern Title voluntarily suspended the issuance of new title policies on Sept. 15. The SCC issued an order of suspension Sept. 19.

An impairment order was issued by the SCC on Nov. 4 because the company no longer met minimum capital and reserve requirements.

Virginia Commissioner of Insurance Jacqueline K. Cunningham has been appointed deputy receiver in an effort to rehabilitate the company.

Policyholders with questions about the receivership can call the SCC's Bureau of Insurance at (804) 371-1502.

Read more in Times Dispatch.

states file amicus brief on RESPA...GOOD!!!!

The attorneys general also argued that it would be senseless to assume Congress carved out an exception that would allow brokers and lenders to charge unearned fees as long as they did not share them with another party.

“[T]he harm to the consumer — and the abusiveness of the broker or lender’s practice — is the same regardless of whether an unearned fee is divided,” the attorneys general argued.

They told the Court that a straightforward application of Section 2607(b) is necessary to protect consumers and argued that unearned fees are by definition abusive.

Read more in RESPANews.

query: can you pay a title for title insurance and they don't provide one

Hmmmm...popular subject this weekend.  Yes, it is possible to pay a title insurance company for title insurance and then they fail to provide a policy.  It shouldn't happen but it does.

I received another query via email this weekend from a real estate agent representing a seller with a PA inheritance tax matter and a refusal from their title insurance company to deal with the matter.  Why?  They have no record of an owner policy.

The good news?  The seller has evidence that they paid for an owner policy.  These folks saved their HUD-1 Settlement Statement and it clearly shows, according to the real estate agent, that they paid a premium for owner coverage.  In PA, since we have simultaneous issue and the title company does acknowledge that they issued a loan policy, this should be a slam dunk when they see they HUD-1.

So, be a smart consumer and keep your eyes on documents and save them because you never know when you might need evidence.  ;)

query: when does a "repair credit" not go on the hud

If there is a repair credit from seller to buyer and there is a mortgage lender involved in the transaction the credit goes on the HUD-1, period, end of story.  Any other suggestion, even if it comes from a representative of the lender is collusion to defraud the lender.  What?  How could a lender representative collude to defraud itself?  Well, just test the representative.  Ask for written instructions telling you to place handle a repair credit OFF the HUD-1.  Bet your bottom dollar you won't get that in writing because the lender representative knows they would be in trouble with their employer by working outside of underwriting guidelines.  They want YOU to take the risk and will make you feel like a fool for not playing along.  Don't play that game.  It leads to jail and other bad stuff.

The easiest way to handle a repair credit is to ask the lender if it can be converted to a seller assist with closing costs.  This can be done so long as the seller isn't already giving a seller assist that is at the limit of the mortgage underwriting guidelines.  If that's the case then they'll just have to make that repair or forget it - no cash credit allowed.

Lender underwriting guidelines are real.  You have to trust that there is a reason that monies moving from seller to buyer are limited.   So, stay on HUD.  Off HUD is for bad guys and I'm sure you aren't wearing a black hat. ;)

query via email concerning a pending tax sale and a title insurance claim

Hello Diane,
My name is Gerald and I noticed your Blog re: Title Ins. said to email you with questions and  . . . .  ok here goes - 
100% DISABLED Person living on fixed - (lower income) 

1) My First time for a Title insurance claim - I have NO IDEA what to expect or ask for - ? My home is paid for but am facing Tax default / Tax Sale March 20, 2012. I paid 85,000 in 2005 for a cabin on one acre in So CAL. The assessor had me WAY overassessed (from 2004- 40,000 up to 125,000. in 2006 - isn't that illegal %? ) just got it down to 92 then 70 for last year and now33,000 for 2010 - all these changes just this year and now they insist it all be paid(with 18% interest!!) IMMEDIATELY or be FORCE-ABLY REMOVED by the County Sheriff! They are treating me like a squatter!? - I PAID CASH! My entire life savings invested here in this humble abode.

2) I have never received a formal title to the property because the description was wrong that was entered when it changed ownership, (due to clerical error?) and numerous attempts to get to the Escrow company [redacted] . . . . finds they went outta biz! . .. thus I placed a title insurance claim with First American recently. - it is supposedly in process - waiting for their investigation . . .. they say expect a month? - for what ? criminy 10 minutes of explanation and I can sleep again without having looky loos rooting thru my backyard hoping to buy the place for a sweet 9 grand. Is this an appropriate Title insurance claim? What kind of numbers should I expect them to pay - medical also?, Every Attorney I speak to loses it after the second paragraph.

I have always fully intended to take advantage of a State program for postponement, (it was a check box on the original sales offer form - replacement of disabled home) - but, as you might be aware - the taxes had to be paid up before the CA state deferrment program would letme apply . ..  now the state cancelled the program for Elderly and disabled prop tax deferment - http://www.sco.ca.gov/ardtax_prop_tax_postponement.html

so it was a catch 22 -  I do owe taxes but the amount is higher than I think it should be because of the incorrect info: (ie: Cabin w/o bath VS. 1 bed 3/4 bath still incorrectly listed) I don't feel rightabout paying another cent for taxes till I get a real title - ?  The County will not take the "title in lieu" - nor accept the recent postponement Legislation AB1090 that I was praying would save me.

The Tax Collector INSISTS on $9,143.00 on or before March 20, 2012 or they are throwing my disabled ass on the street - ! I don't have credit to borrow it and they won't take payments. HUD EDA FHA  no one can assist  - DisabiltyrightsCA.org tells me it's way out of their field. My health is now becoming critically endangered - multiple heart attacks.
- Any thoughts? Is there a way to expedite correcting this kind of Title Insurance Claim without going to court for several years?  I simply do not have the life left in me. AAARRRGGHHH!

-at wits end and losing my grip,
appreciatively yours,

Gerald

Happy Holidays

Hi, Gerald:  Wow.  Thanks for sending the email.  I don't really have a solution to offer you but I think I may be able to add clarity which may assist an attorney to better understand and perhaps offer more helpful advice, okay?

Let's talk about title insurance.  There are a couple of details in your described situation which cause me to believe you may not have a successful claim. Don't let that stop you from trying, and I would welcome comments from other title insurance professionals who may have a differing opinion.

The coverage for title insurance goes backwards from the date of the policy.  Claims are based on losses that happen because of things that took place before the policy was issued.  So, look at Schedule B in the owner policy.  This is where exceptions to coverage are listed.  I would be surprised if you do not see an exception for property taxes which are not yet due and payable. That means your title insurer would not even think about covering taxes that were billed after your purchase in 2005.  This would include tax bills, if any, issued retroactively for prior years.  Again, the key phrase is not yet due and payable.  We cannot be expected to discover and insure tax bills that don't yet exist when issuing coverage.

If, however, any of the outstanding taxes moving you to this tax sale were due and payable PRIOR to your purchase and the title insurance agency failed to find them and have them paid, those would be taxes typically covered in a title insurance claim.  The way to nail this part of your concern with an attorney is to look carefully at Schedule B in your owner policy. and compare exceptions for taxes with the original due dates for tax bills you have outstanding.

The other matter you raise that is an incorrect description.  The only detail you mention, though, is a difference in the dwelling - Cabin w/o bath VS. 1 bed 3/4 bath.  Go back to your title insurance policy and locate the legal description of the insured property.  This is usually on Schedule A but it may be on Schedule C.

I would be very surprised if the legal description in your policy includes any reference to the type of dwelling.  I say this because title insurance is about insuring land ownership.  The fact that a dwelling or some other structure sits on the land impacts value and therefore the amount of coverage but we don't insure what that dwelling is or its condition.  You establish the value by telling the title insurer what you agreed to pay for the property.  You bought an owner policy in the amount of $85,000.  Your ownership of the land described in the legal description is insured up to $85,000.  If the title insurance agent DID include a detailed description of the dwelling, then you may have a claim, but again, I would be surprised to see any reference to a structure in the description.  The way to nail this part of your concern with an attorney is to look carefully at Schedule A or C - find the legal description - and see if there is an affirmative statement of the type of dwelling.

I don't think the one month estimate of time for claim review with First American is unreasonable.  The onus is on the consumer to make a timely claim and to notify their title insurer as soon as they have a potential claim so that there is a chance of defending you successfully and mitigating damages.

I hope this clarity does help in your discussions with an attorney.  If your review indicates no hope for a successful claim, then that may clear the air for a discussion with an agency for the disabled to simply concentrate on helping you relocate or find some emergency loan assistance.

I wish you well.  

Diane

legislation moving on home warranties

H.R. 2446, RESPA Home Warranty Clarification Act of 2011, sponsored by Rep. Judy Biggert H.R. 2446 provides clarity to existing law that home warranties are not subject to the Real Estate Settlement Procedures Act (RESPA). The bill also requires that homeowners receive a specific written notice about the payment arrangement for any individual selling, advertising or performing a homeowner warranty inspection for the repair or replacement of home system components or appliances.


Read more in Insurance News.

query: what happens when the warranty forgotten on hud 1 statement

I'm guessing this is a home warranty, the type that real estate agents sell.  Though the home warranty benefits the buyer, it's the seller who usually pays for it as an inducement to help move the property.  The real estate agent may also receive a commission for selling the home warranty.

If the title/settlement company failed to put the invoice for the home warranty on the HUD-1 Settlement Statement, it's likely because they were unaware of the warranty purchase or did not receive an invoice on time.

In Pennsylvania, real estate agents typically add language to the sales contract indicating that the seller will pay for the warranty.  The problem is that title agents do not always receive entire copies of contracts and some do not look through the pages for additional contingencies.  If the invoice isn't presented prior to HUD-1 preparation and the parties fail to do a good pre-closing HUD-1 review, items like this can slip through.

So, what do you do post [after] closing?  If it was the case that the seller was to have paid for the home warranty, then contact the title/settlement company and the real estate agent pronto.  The real estate agent had a responsibility to get the invoice to the company preparing the HUD-1.  If they did, then the company preparing the HUD-1 had a responsibility to put that figure on the HUD-1.

The bottom line is that someone needs to contact the seller ASAP - before they spend all of the proceeds money.  If the seller is unwilling at this point to ante up, then whoever made the error, in my opinion - either the real estate or title/settlement agent - ought to pay for the warranty and pursue the seller for reimbursement.

If we made such an error, that's how we would handle it.  I do think, though, that this is a good reminder to EVERYONE to have their thinking caps on and engaged while reviewing the HUD-1.  Don't assume it is right and if you find an error before or during the closing and you fail to raise it, you may be out of luck later.

query: what happens when I get to settlement and the title company have wrong figures

I call this a STOP DROP and ROLL moment.  What better reason to make sure you get the HUD-1 to review prior to closing, eh?

Well, in all fairness, perhaps there was a change after the pre-closing review.  Unless you intend to live with the error, use your leverage by not closing until the figures are corrected.  Trust me.  After you close, your file will go on the back burner.  While you are at the closing table, everyone is motivated to do what it takes to close, so insist upon a fix or a clear explanation of why the figures on the HUD are okay.

There are some circumstances where we close with figures that are less than perfect and the parties decide it's in their best interest to close rather than await a fix.  For instance sometimes a lender will set up property tax reserves on the HUD in a way that doesn't jive with the actual due dates of the taxes.  It might take 24 hours to have this fixed. If the buyer has the family in the car and furniture in a moving van, they may choose to close and have the escrow account resolved after closing.

So, use your judgment but if you think there is a mistake, stand your ground for a resolution that suits you.  It's your transaction.

query: where the hell is my hud statement

Many search engine queries that arrive here on Title Insurance Talk are folks looking for their HUD-1 statements.  This one gave me a few chuckles.  Thanks. ;)

My friend was steered against his will and used the incident to teach the title agent a lesson or two.

I have a long time friend who is a savvy consumer of real estate.  He, like me, comes from a family familiar with the business of real estate from the inside.  So any provider of settlement services had better be on the up and up or else. ;)

Since we introduced our Choose and Save Program several years ago, we've processed many transactions for my friend who has argued with me that we aren't charging enough.  He may be right but I like the structure of the program and am convinced it's a good win-win for The Closing Specialists and our customers.  We get alot of repeat business through this program. ;)

At any rate, my friend was assisting his son and daughter-in-law through a refinance and planned as usual to take advantage of Choose and Save.  When they selected a mortgage lender, the loan officer presented a REPSA affiliated business disclosure.  My friend drew a big X over the form and added the language that they would be using The Closing Specialists for title insurance and closing.  The loan officer said okay.

Three weeks later my friend called to say the file was in underwriting and that he wanted to await the final approval before placing the order through Choose and Save.  He was waiting because there is a $300 non-refundable deposit paid when you order title in our program.  I said he needed to check with his lender because a file in underwriting typically has a title insurance commitment in place.  He checked and yes, the loan officer had forgotten and placed the title order with his affiliated company.

There were some other complications including a rate lock expiration and so I said that though I'd like the business, I'd also enjoy helping them get the title agency to give them pricing that was equal to our Choose and Save plan. The day before closing, my friend obtained the draft HUD.  We identified the fees that would have been waived under Choose and Save and he insisted that the title agency waive the fees.  They objected but the loan officer absorbed the cost.  The savings was around $250.

Then we checked the title insurance premium.  Since my friend's son had an unsatisfied mortgage with a local bank on record that had been originated within the last two years, we new they qualified for the PA refinance rate of 70% of reissue rate.  Check our title premium calculator to see the difference.  The title agent wanted to charge the reissue rate and was refusing to follow TIRBOP rules.  It took a few emails of the language in section 2.8 of TIRBOP and finally my friend had to read the sentence word by word and get the title agent to understand the simple language contained in the rule.

My friend offered to close in protest and resolve the matter post closing with the appropriate regulatory authority and with that the HUD-1 was adjusted by the title agent and they moved forward with a closing priced as it would have been if he used our Choose and Save Program.

Let this be a lesson to consumers to not give up and to stand your ground.  You can shop for title insurance and settlement services.  Do not allow someone to make these decisions for you.  ;)

spousal waiver versus having the non-vested spouse simply sign the mortgage

In Pennsylvania and some other states, a spouse may not be vested in title but may have marital rights to real property.  In these circumstances, when the marital rights may take priority over an insured mortgage, the title agent may require that the non-vested spouse sign the mortgage.  Their signature on the mortgage does not make them a borrower.  It simply allows the mortgage lien to be put into a position on the public record which has priority over their marital rights.

Why do title agents have this requirement?  Well, if a foreclosure takes place, the mortgage lender must be able to enforce their lien authority and take possession of the property.  If there is a spouse whose rights take priority over the mortgage, the lender can be blocked in court.

We deal with one local bank whose lending rules call for a spousal waiver form rather than having the non-vested spouse sign the mortgage document.  We argued against the use of the spousal waiver form because, even if recorded, it may not be discovered at a later date during a foreclosure thus creating the possibility of a title insurance claim by the lender.

We offered a compromise by agreeing to use the form but including it as an exhibit with the mortgage document when recording rather than recording it as a separate document.  A title searcher working for a foreclosure attorney might miss a separately indexed document but they will surely find the mortgage being foreclosed upon.  The local agreed and so we have been able to move forward insuring these transactions by including the spousal waiver as an exhibit in the mortgage document.

This has lead to numerous objections by Recorder of Deeds offices who get confused and think that we want the spousal waiver indexed.  We don't.  We want them to consider it a page in a mortgage and we ask for no additional notations on record.  A few counties have refused to record our mortgage in this way and we have asked them to cite a statute which would support their refusal.  They can't and so they always record the document.  I have had to speak with the a couple of solicitors who always support our position and instruct the ROD to record the document with an exhibit.  I am including this information for the benefit of those who would like to use the method of recording a spousal waiver as an exhibit but meet with opposition.  Stick to your guns.  You will prevail.

So, in wrapping up I think it's better to have the non-vested spouse sign the mortgage document.  It's the easier method but if your mortgage lender objects and wants a spousal waiver, then I highly recommend that you record it as an exhibit and not as a separate exhibit.  In this way you do your part to avoid a claim if the property ever goes to foreclosure and in the end that's what we do for a living.  We do our best to avoid creating future problems for our insured lenders and consumer.  ;)

query: who underwrites for "XYZ" title

Well, I hid the name of the agency in the query. ;)

Contact the state insurance department and ask for the name of the underwriter(s) who sponsored the agency in the licensing process.  Title insurance agents represent underwriters and so the identity of the underwriter(s) for whom the title agent issues policies is known to the regulating agency.

query: title agency pocketed fee and never purchased insurance

You may still have evidence of insurance.  Look for the title commitment.  If you don't have a copy, ask your mortgage lender for a copy from their file. Next look at your HUD-1 Settlement Statement.  Does it say that you paid a premium for title insurance?

A copy of a fully signed HUD-1 combined with a copy of the title commitment can be used to show evidence of insurance.  If the title company won't accept this, then contact the state department of insurance or the attorney general's office.  The title company is responsible for the actions of their agents and if they had a crook out there taking your money, that's their problem, not yours.

fraud in the chain

A title insurance company was forced to pay a man more than $90,000 after a woman fraudulently signed the man's name to papers, in effect deeding his property to another person without his knowledge or consent, according to a recently filed lawsuit.

Ticor Title Insurance Company filed a lawsuit Nov. 7 in St. Clair County Circuit Court against Yvette Reed, Diane Lee, Joseph Reed, Alfredo Vallejo Jr., RLI Corp., CNA Surety and All-American Escrow and Title Services.


Read more in Madison Record.

The owner of this property had an owner policy and so was able to have the title insurer defend the title and settle with a defrauded owner.  We have chats with folks all the time who are trying to understand the value of title insurance, especially after they have gone to the courthouse and looked at documents and decided that maybe there is no need for the insurance.


Just the other day I had a chat with a consumer getting ready to plunk down over one million dollars in cash for a home that had been constructed a few years ago.  His logic was that he would be the second owner and it was in a reputable plan so how risky could it be?


I explained that the biggest sources of claims against title insurers are those that can't be found in a competent search by a professional.  These are FRAUD, ERROR, and MALFEASANCE.


In the case outlined in the article, a notary enabled a fraud.  The fraud wasn't in the current transaction.  It was in a past transaction.  Unless a title examiner had reason to suspect the fraud, the deed on record would be considered legitimate.  Once the damaged person - the victim of fraud - stepped forward and made a claim of ownership, the insured property owner was able to file a claim and have his title insurer take over the matter.


If the home owner had neglected to purchase an owner policy, the owner would have been entirely alone facing the defense of ownership.  They would have had to hire an attorney and file suit against their seller - a long and costly affair.


Our cash plunking consumer made the right choice and decided to purchase the insurance.  ;)

query: After I submit the conditions to the underwriter, will they scrutinize my file again

They may, especially if the underwriter is getting an off vibe that something is amiss.  Even if they don't and you close, they may still do a post closing quality control re-verification and re-underwriting.

So....be truthful.  ;)

"simmering below the surface" removing escrow responsibilities from title agents

If title agents don't move the money, who will and how much more will it cost the consumer?

This isn't a problem of changing roles, it's a problem of setting enforceable standards for escrow management and then policing the agents.

Defalcations were rare back in ye ole days before affiliated businesses and the subprime mentality of no oversight.

Hey, NAIC, ALTA and state insurance regulators - can you not just do a better job of vetting licensees? 

insurable title

Two title agents, an underwriting attorney and a real estate agent had a chat yesterday concerning insurable title.


Back in 2004 we issued an owner policy - insuring over an unsatisfied mortgage.  We had discovered the mortgage and requested a release.  It was a hefty developer's line of credit.  We were offered indemnification and accepted it.


Our insured owner is now selling his property and the buyer's title agent had a big freak out over the unsatisfied mortgage and had the real estate office contact me.  I looked at the file,  noticed that our underwriter at the time is now a part of the underwriter who had issued the indemnification and figured there was a good chance that the new insurance was being written under the same company.  I faxed over the indemnification letter.


The response was that they are writing through a different underwriter who will NOT accept indemnification, so I requested a copy of their title commitment.


I emailed the title commitment, the indemnification letter, and the owner policy to the underwriting attorney who had issued the indemnity in 2004.  She responded that they would issue a new indemnification or would offer to insure the buyer through any of their companies.


The real estate agent responded with a question:
"Your indemnification will only be for the current owner’s policy amount, which was $110,000.00, correct?" 


The underwriting attorney responded:
"Yes, that is correct.  Your proposed commitment indicates that you will be insuring for $108,500.00 so I’m not understanding why your underwriter will not accept an indemnity letter."


The real estate agent responded:
"They might be okay but the buyer might have a concern.  I’ll  let you know.  Thank you."


I responded:
"I'm sure your buyer has a copy of their sales contract.  The definition of marketable title being granted by the seller in the PAR contract is premised on insurability by a reputable title company at regular rates.  You have that so I am hopeful this closing will move forward."

consumers..you have the power

Take a moment to read the question being posed to readers of the ALTA newsletter.  Now notice how many title insurance folks do NOT market to you directly for their business.  What does that mean to you?  It means that the real estate agent or the mortgage lenders are their perceived consumers and thus more important to these providers than YOU the real consumer, the one who pays the bill.


In order to produce a marketplace in which the actual consumer of title insurance and settlement services - YOU -  benefits, you need to use your good buying skills to force this industry to pay attention to what YOU desire - quality service, convenience and a lower price.


Until you start using the buying skills taught to you by your parents - you know, the way you buy a dishwasher or a car - you will perpetuate a real estate closing world in which attorneys, title agents, notaries, mortgage lenders and real estate agents are catered to rather than YOU.


It's YOUR transaction.  YOU have the power to create the marketplace that serves YOU.  If a whole bunch of YINZ [LOL I couldn't resist.] pressure the local market, guess what?  You all start to reap the benefits.  ;)


The other item I'd like you to notice is how many title insurance folks said they TRIED to reach out to consumers but had no results.  That's because the collective YOU aren't out there shopping.  If YOU were out there shopping YOU would find the title insurance folks who are also trying to create a more competitive marketplace.  Most of us don't like the way title insurance is sold and want to change the system but until consumers start shopping around nothing will change.  YOU have the power.






Does your company do any direct marketing to consumers? If you do, please leave a comment describing how you reach out to the consumer.

Yes	29.41%
No	55.88%
We plan to in the near future	14.71%
We have in the past but saw no results	35.29%

query: are dry closings the mortgage brokers fault

A dry closing is any closing that is suspended for some reason causing the funds and documents to be held in escrow while a problem is resolved.  It is important to remember that a dry closing isn't really a closing at all.  It's an ALMOST closing - close but no cigar.

As each transaction is unique so are the reasons and the blame.

query: do I have to have title insurance for a HUD loan

If by HUD you mean FHA, then yes, you will be required to purchase a LOAN policy of title insurance.  I suggest that you also buy an OWNER policy so you are protected as well as the lender and HUD.

KICKBACK disguised as "work share"

The previous post is an email I sent to our agency rep who is also responsible for the bank owned title agency.  She could not understand why we objected to this kind of treatment from this mortgage lender and wouldn't just close the deal.  If we walk away from the transaction we lose roughly $170 in out of pocket cash for the abstract and lien letters.  If we close the deal as proposed by FNB we net about $150 after paying for abstract and our closer.  None of this takes into consideration our overhead and other employee time.  It's a LOSS either way so I say forget it.  We quoted our fees at the outset.  The consumer had the opportunity to opt into Choose and Save and get a better deal.  This bank owned title agency wants money for nothing.  They perform no work under this "work share" arrangement other than to retype the title commitment we have already created.  I call this a KICKBACK.  What do YOU call it?

just sharing a bit of what consumer don't know about those bank owned title agencies.....

Just a follow up on this FNB situation.  I spoke with John this morning and he said you have some kind of list for an agency work share deal with FNB that mimics the approved attorney program.  Presumably that deal doesn't pre-define who gets what share of the premium.

Anyway.  As you know we offer consumers the most affordable option in PA for obtaining title insurance and settlement services through our Choose and Save Program.  We work for less and the consumer pays less.  We think it's a win-win.  We made a business decision that we would NOT work through these lender owned programs who overcharge consumers while making us work for even less than we would earn under C & S.

The title order in question was placed with us after JC spoke with the LO and gave her our normal fees.  So we are in a position of FNB coming in after we processed the order and expecting us to conform.  In a case where we would normally be earning roughly $1100 they want us to do all the work and take $473.  We refuse.

We are giving them THREE options:

1.  Let us close the deal as sole agent.

2.  Let us close deal under work share and we will reduce our earnings to a level equal to what it would be under our C & S program.

3.  Tell the borrower to go elsewhere and start over with a different company.  We will not release our abstract or lien letters.  We have no relationship with FNB to burn.  Cathy Cook burned it a long time ago.  As I have already released my title commitment, I am emailing you this information because I will be wholly unhappy and will file a complaint with OR if FNB uses our work product to close and insure this transaction.  They bargained outside of good faith and I'd rather eat the cost of the abstract and lien letters than to do any additional work as a slave taking crumbs.  

query - does title insurer have a duty to audit agents and report fraud

Would I be too unkind to say that any title insurer who does not audit its agents is a fool?  There may not be a legal requirement to report fraud but I would certainly hope that the title insurer severs its contract with a fraudulent agent.  I think the title insurer would be doing a service to the industry to report the fraud and have the fraudster taken out of the position of trust they enjoy.

What do you think?

query: title underwriter cannot find policy

Interesting.  Hard to say whether the underwriter had a failure of good document protection or the agent failed to remit.

Might seem strange but this isn't that unusual of a happenstance.  You see, unless the title insurance agent SENDS a copy of the policy to the underwriter, they don't have a copy.  Title insurance agents create policies after the closing.  They then send the premium along with a copy of the policy to the underwriter.  Agents are supposed to do this pronto but some don't.  Some title agents do bad things like use the premium money for operating expenses and then go out of business before ever sending your policy to the underwriter.

What can YOU do as a consumer to solve this problem?  You can present a copy of your title insurance commitment and HUD-1 form.  The underwriter will look to see their name on both and then - even if the commitment isn't "marked-up" - should accept both documents as evidence of insurance.

If you didn't get a copy of your title insurance commitment prior to closing, your mortgage lender may have a copy.  If you paid cash, you'll have to try to make your case with just the HUD-1 form.  If the HUD-1 doesn't list the underwriter, you may not be able to make the case that you are insured through this company because the agent may have represented more than one underwriter.  In that case, seek help from an attorney, the state insurance regulator, or state attorney general.

The query raises the big issue of selection of settlement service providers - title insurance agents - and being a smart consumer.  Please shop for your provider and ask questions up front.  Look for professional demeanor and ask about getting a copy of the title insurance commitment prior to closing.  If you have any reluctance in the response, move on to another provider.  Make sure you review your commitment prior to closing, then when you review your HUD-1 form make certain the name of the underwriting company in the 1100 section of the form MATCHES the company on your commitment.

Good luck!

First American fined in CO

The market conduct examination found 20 separate violations, including: failure to require agents to keep adequate documentation and records in title underwriting files, failure to require agents to remit title premiums within the required contractual period, and failure to provide evidence of written instructions from all necessary parties when First American's agent or direct operation provided closing and settlement services; failure to ensure agents were duly licensed prior to transacting business; failure to provide anti-fraud statements and failure to charge rates in accordance with the rates on file with the Division of Insurance.


Read more in the Denver Post.

query: how do I get a copy of my HUD appraisal

A consumer may get a copy of the appraisal used for their mortgage application by making the request in writing and sending it to their mortgage lender.  If you do not get cooperation from the mortgage lender you can request help from the Consumer Finance Protection Bureau or the state mortgage licensing agency.  In Pennsylvania that would be the PA Department of Banking.

query: difference between a title commitment and title policy

A title commitment is like a mortgage commitment letter.  It's an approval to insure where the mortgage commitment letter is an approval to lend.  Both commitments set out terms and conditions.

A title commitment is typically in a standard format created by ALTA - American Land Title Association.  There is a jacket which gives definitions and other important information.  Schedule A sets out the proposed insurance coverages and reports who currently owns the land being insured.  Schedule B 1 sets out conditions which must be cleared prior to the closing or issuance of the insurance.  Schedule B 2 identifies potential exceptions to coverage.  Somewhere on Schedule A or in a Schedule C you will see a legal description.

It is really important that the consumer and the mortgage lender receive and review the title commitment as soon as possible and PRIOR to closing.

After closing, the title policy will be issued, often after the recorded documents have been returned from the courthouse.  Consumers and lenders should expect to receive the title policy within 60 days after closing.

comments went into spam can

Oops.  Sorry to commentators whose comments went into my spam can!  It's fixed and those awaiting moderation have been posted.  ;)

read your mortgage document before you sign that oil and gas lease

Did you know that your mortgage contains promises made by you to protect the collateral and NOT to store hazardous waste on the property?  If you sign an oil and gas lease without the approval of your mortgage lender you may be in default and subject to foreclosure - even if you are making your mortgage payments on time.

mobile home titles

If you are the owner of a mobile or manufactured home, please take the time to verify the status of the vehicle title.  Get evidence in hand showing that you either have the vehicle title or certificate of origin or evidence of surrender.  Having no hard evidence in place may impact your ability to refinance or sell your property.

Every year we work on transactions which are delayed while the vehicle title evidence is processed.  In Pennsylvania the system is cumbersome.  If you have time, and do not have the original title or evidence of surrender in hand, work on doing that now, before you have a deadline with a refinance or sale transaction. ;)

ah...the semicolon

Here's a blurb concerning a judicial interpretation of the Dodd Frank Act based upon the use of a semicolon:

Judge Altonaga ruled that the plain language of Section 1400(c), in particular, the semicolon in the title, indicates that “Effective Date” is not used as a subcategory of “Regulations.” Rather, the semicolon “suspends the thought regarding regulations and begins a new thought involving effective dates.” As such, section 1400(c) addresses both the regulations that are required to be implemented as well as the effective dates for all sections—not only the effective dates of those sections that call for regulations. Based on this interpretation, Judge Altonaga dismissed the Plaintiffs’ RESPA claims because the amendments were not in effect prior to Wells Fargo’s issuance of the force-placed insurance policies. Read more on cfsbulletin.

I love it.  Presumably lawmakers carefully chose the way in which the language of the law was crafted.  If so, the careful interpretation by the court enforces the intention of the law.  If not, then shame on the sloppy lawmakers for not using the language properly.  WORDS HAVE MEANING as does the punctuation which creates the structure by which we capture the nuanced intention of the author.  Like vitamins and exercise which keep our bodies fit, using the language carefully keeps our brains fit and in this case, protects the pocketbook.  ;)

Jan is curious.

I know someone that recently borrowed against a home his mother owns and has title to.  The father is deceased.

The son has been living in the home for many years.  Even while the father was still alive.  Now they have found it necessary to

borrow against the home’s equity, I’m sure that’s due to the mother’s old age illnesses and the son’s inability to work.   They

borrowed over $86,000.00.  In reading the mortgage note, the SON signed as a“non vested spouse”.  How can this be if he is the son? 

Is that legal?  I also noticed that the note was notarized by a long time friend of the family and the witnesses are neighbors.  The lender

is from out of state.  The notary knows for a fact that this man is this woman’s SON and not her spouse.  What do you think is going on????

Signed,

Jan

Hi, Jan:  It's hard to say whether there was an intention to defraud the lender.  Often people don't read documents.  Even if the lender knew the correct circumstances, they may have made an error in the preparation of the final Note.  If the title agent or notary isn't doing a good job of checking documents they may not notice it.  Since the son isn't working, I doubt that the lender used his financial strength to approve the loan.  He isn't vested in title and so his permission isn't needed to create a lien.  His position - in my opinion as a non-attorney blogging title insurance agent - by being on the paperwork is more of a personal guarantor.   Why the lender added him I don't know but they may have had a reason that is not discoverable by public record.

Diane

computers and me.....finding my inner geek

I saw my first Radio Shack TRS-80 Model I at a friend's house many moons ago.  It was also at that house on the same day that I saw HBO for the first time.  It all seemed so fantastic - a computer that fit on a table top and a commercial free movie on a TV screen.  I'm guessing that was 1977.  I was a newbie selling real estate back then.  The "computer" in our office was a MLS terminal and I can't really remember it having a screen.  It seems in retrospect to have been more like a tele-type machine.

In 1978 I moved into mortgage banking as an originator for a S & L.  We had no computers.  We had no fax machines. We had IBM Selectric typewriters for the processors.  Originators had hand held calculators.  We had P & I books and Reg Zs and GFEs were all manually calculated and hand filled forms.

In 1980 I moved to a private mortgage banker in a super cool building with a heliport.  This was high tech mortgage lending and there were some computer terminals on desks.  I didn't have one.  Originators were still operating in full manual mode.  I had a company car though and that was pretty neat.

Move on to the S & L Crisis and I met the Radio Shack TRS-80 Models II & III. In fact, I became intimately acquainted with these units because I took a one year hiatus from mortgage banking while the world of real estate moved through installment land contracts and seller financing because consumers could not afford double digit interest rates.  I worked at a Radio Shack computer center.  I didn't know it at the time but this one year stint laid a foundation for computer hardware logic that has served me well.  Yes, much has changed but strangely lots of what geeks chat about is basically the same or similar to what I learned back in ye olden days from Tandy.

I used all of that training when in the late 80s and through the 90s - being self-employed - I had to setup technology for my offices - all pre-network independent workstations.  In 2000 when it was time for a network, I let go and hired a pro to set it up and assigned the management of IT to my operations manager.

We had a Windows 2000 server with clients running Windows 98.  We eventually upgraded the clients to Windows XP Pro and tweaked the system here and there, but other than that - as long as it was running and served our purposes, I was happy.

I'm a frugal business person.  I use technology as a tool.  I see no need to constantly upgrade and change unless there is a good reason to do so.  About three years ago I got a good reason to do so.  The local computer guru - when called to fix the server - told me he could no longer get parts for our motherboard.  Though it was working now, I would have to plan for a new server.  I asked for a written estimate.

During these last three years I noticed a slow degradation of the network - oddities that couldn't be explained to me by my IT pro or employee.  I felt vulnerable.  Our local pro was always overworked and not that good at doing things like coming when he said he would or getting me that estimate.

My IT employee needed to move on.  She's a terrific artist and started a gallery.  I decided to take over the network.  I upgraded the backup system on our title archives.  I started working my way around all the workstations - cleaning and defragging and updating.  I still didn't understand the network and planned to take a course.

One day I noticed an anomaly in Displaysoft.  It wasn't updating properly so I called for technical support.  I love Displaysoft and I love their support team.  We tried a fix on two workstations.  She noticed that the network was set up in an odd way and asked if I would give her access at the server.  I did.  While she was remotely connected I heard her say to a co-worker, "Wow, I'm actually inside of a Windows 2000 Server." I realized then what an antique we were using. She didn't even know how it SHOULD be set up - it was so old that she had never been trained on the software but she managed to get our Displaysoft updating properly and I called our local computer pro for that estimate again.  I really didn't push the matter because I still felt like I needed to understand networks before a new one was set up so I took my chances and let it go.

Then, of course, the server failed.  One morning I showed up at the office and slowly heard everyone asking everyone else if they could get in.  We couldn't.  The Internet was functional but we could not access the server.  I called the local pro for emergency service and we started to implement our emergency protocol.

Do you have an emergency protocol?  What's your backup for functionality if systems or the power fails? Depending on the nature of the emergency we have a few emergency low tech tools on hand. We have three old fashioned phones that we plug into lines that bypass our central phone system.  These work without power and give us access to the outside world and allow us to at least answer the incoming calls.  Cell phones can be used for outgoing.   We  have two typewriters to use in a pinch.  Our email is in the cloud so if we have Internet, we have email.  Backup versions of documents also reside in the cloud so we can do some work while the server is down.  We have a single station version of Displaysoft that can be used if we lose our server.  Any data entered into this stand alone must later be entered into the server but in the interim, we can perform and prep closings.

While my staff assessed their tasks in emergency mode, I called our local pro again.  It immediately became clear to me that he wasn't coming.  We had a failure of our server followed by a failure of local tech support.

I called a regional tech service company who did a terrific job of remote troubleshooting and assessment.  I thought it might be the power supply.  He agreed and started for our office with his tool kit in hand - a trip of about 20 miles.

It wasn't the power supply.  This fellow was a good hardware problem solver.  He said what he needed was an old computer with a similar processor.  I gave him access to our retired computers awaiting recycling.  He found one that worked.  He replanted the guts of our server into that little workstation and VOILA we were in business.  I was impressed. My staff was impressed.  Our total downtime was only about three hours.  WHEW.

I asked for an estimate for a new server.  He got it to me the next day.  With some tweaking we bought a system that meets our needs.  It runs on Windows 2008 server.  After he set the system up, we were left with a few problems hanging.  Our HP 5si wasn't working properly.  One of our scanners was offline and the  McAfee software on our old server wouldn't load onto the new server.  He asked that we run the system for a few days, add any problems to this list and he would come back to work through the various fixes.

I made a decision to put my computer hat back on and try to fix all of these problems myself.  I went to Barnes and Noble and spent $120 on three books.  I am happy to say that the days of Radio Shack have connected with the level of expertise I need to run this new system and I was able to call this fellow and say I've got it all running.  We are pleased as punch with the system.  I am slowly improving efficiency of each client - workstation - and the staff reports daily that their computers are running faster than ever.

I may yet take a course - but make that a hardware course.  I'm finding my inner geek.

two spaces after a period

Blogger no longer word wraps with forgiveness of the two space generations like me. So, please forgive me when you see those out of format little spaces at the start of lines.  This is one old habit I'm not trying to break.  It's on automatic pilot - two spaces and me.

Southern Title suspends issuance of policies mainly because of a defalcation.

I spoke recently with the Pennsylvania rep for Southern Title.  He had made the jump from New Jersey Title and was busy signing up agents who were left without an underwriter when New Jersey Title stopped writing new business.

Both regional title insurance underwriters were hit by substantial defalcations.  I am convinced that the system of title insurance underwriting is capable of withstanding title claims - good years and bad.  It's the defalcations that put the entire system at risk.  If underwriters do not get serious about the money that flows through the hands of agents, then regulators ought to focus their eyes on the major weakness of the system.  This is where consumers are most likely to be harmed and the largest vulnerability - in my opinion - to the entire system.

Bonding isn't enough.  We need mandatory annual audits of the escrow accounts.  The audits must be performed by independent CPA firms following some uniform standards. I believe the FHA audit requirements for their approved lenders provide a framework for file review.  General audit guidelines for reconciliation of accounts should cover the agent obligation for a triple reconciliation.  Add to that checks for escheat compliance and a system for monitoring and protecting good funds moving into and out of the agency and you shut down the opportunities for bad agents or stupid agents to play with the money in escrow.  Yes, these audits are expensive.  I have to say, however, that the cost of the audit would most definitely be less than the cost of eating the cost of producing title commitments for files that don't close.  Just consider it a cost of doing business and if you complain to me about that audit being too expensive then we can chat about cancellation fees and RESPA because I am sick and tired of the same stupid game being played over and over and over.  Defalcations will kill the business of title insurance.  It's time to take our medicine.

Virginia Business - News: Title insurance company suspends sales of new policies

Virginia Business - News: Title insurance company suspends sales of new policies

lenders on the RESPA hot seat for reinsurance partnerships

In exchange for the their business, companies such as Citigroup Inc, Wells Fargo & Co, SunTrust Banks Inc. and Countrywide allegedly required reinsurance partnerships on generous terms that violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices.

During a two-day presentation in the summer of 2009, HUD's team presented DOJ attorneys with a thick binder of evidence that major banks had engineered a decade-long kickback scheme, people familiar with the investigation say.

Read more on Bank Investment Consultant.

NAIC Title Insurance Task Force report

a must read for title agents

on robosignings

NEW YORK (AP) — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

The suspect documents could create legal trouble for homeowners for years.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

Read more o the AP.

procedures

Having managed lots of folks over my career I respect that individuals think and learn differently, that we aren't automotons and need some degree of personal discretion in our work.  I also know that mandatory procedures are necessary to maintain quality of service and product and, of course, meet contractual and legal requirements.  This is a constant managerial task - finding balance in the workplace with just enough procedural framework within which capable individuals perform their tasks.

As managers we always start with the right individual in the right position, presumably with enough training or experience to meet expectations.  Through trial and error, we learn where and how to implement or improve the procedures.

One of the important procedures we created is the "setting of the table" for closings. A TCS closer is expected to ask for the following at the start of a purchase closing - valid photo ID, good funds and the original deed.  Missing any one of these critical components would cause a closing failure so there is no sense starting until you know you have them in hand.  The "setting of the table" procedure has at least given parties more time to cure a deficiency and have a successful closing.  If someone forgot to pick up the deed from an attorney's office, they can run out and do the job while the others proceed and get the closing started.   If a consumer was confused or forgot to bring funds in the form of a cashiers check, they can run to the bank while the closer explains the HUD-1 to the sellers.  Whatever, the important point is that the procedure is a good one - a tool for avoiding or resolving problems.  It doesn't make anyone's job harder, it simply creates a framework around which a closer can perform.  Everyone does their closing a bit differently.   Closings take on the personality of the closer, but still, the closer works within a simple procedural framework.

I'm chatting about procedures this morning because yesterday I had a holy moly moment while reviewing a 2004 transaction.

A local attorney called to say he had discovered two items in a title we had processed and wondered if I could help him.  First, his sellers - our insured buyers - had informed him that they had a mortgage to payoff but he could not find the document on record.  Also, he had found an unsatisfied mortgage dated 1988.

At first I thought what most title insurance agents would think - maybe there was a indexing error with the mortgage and satisfaction - something that couldn't have been discovered prior to the issuance of the policy.  I said I'd check the file and call back.

Upon review I found - much to my horror - that both items SHOULD have been discovered by my staff prior to closing the transaction.

Let's talk about the unsatisfied 1988 mortgage first.  Back in 2004 when we processed this title order, we ordered a 60 year search.  We always place the order with a written request.  The title order clearly indicated a 60 year search. The abstractor must have misunderstood and did a current owner search.  Okay, they made an error.  We're all human, however, this error ought to have been discovered by our title agent who performed the examination and created the title insurance commitment.  An important PROCEDURE was skipped.  During title examination, the title agent MUST review the title chain and confirm that the search meets our requirements for that transaction.  If the agent had looked at the chain he would have noticed that search only went back to 1996.  No wonder the unsatisfied mortgage went undiscovered.

Now for the mortgage the attorney could not find in the index.  I looked aghast at the document in our scanned file and immediately knew what had happened.  Our buyer was a limited partnership.  It was a commercial loan transaction.  Unlike a residential mortgage loan, when a commercial lender closes, they typically bring the documents to the closing table and explain them directly to the borrower.  PROCEDURE would call for a pre-closing review of the mortgage document by our professional staff.  This procedure had been skipped on this transaction.  No one noticed that the commercial lender had mistakenly prepped his documents entirely in the name of the individuals who were guaranteeing the loan and had failed to include the vested entity as a mortgagor.

Thankfully the matters are being resolved with the payoff and indemnification with follow up for a satisfaction.

I'm posting this for you as a training opportunity as it was for my staff yesterday.  We live and work in a business that requires constant vigilance.  No matter how busy we are, we must take a zen attitude and focus on the file in front of us, respecting our procedures as they are the tools that help us avoid the holy moly moments and keep our consumers safe.

Holy moly.

all is right with the world, the mortgage banking world, that is

WAH?  That's right and do you know how I can tell?  Everyone is complaining about underwriters.  That's a sign of normalcy and that's what has been missing for over a decade.

Ah, the sweet sound of prudence.

New York takes aims at steering by real estate broker to affiliated title agencies

A law aiming to prevent improper quid pro quos for title insurance agents just got a new set of sharp teeth -- causing a furor in the already embattled industry. 

In late May, the Office of the General Counsel of the state's Insurance Department issued an opinion about whether it's legal for a residential brokerage to place lawyers on "recommended" lists, which are distributed to homebuyers, in exchange for those lawyers referring clients to the brokerage's title insurance affiliate. 


Read more on The Real Deal.

Fitch on ORI

The affirmation of ORI's ratings reflects operating performance of its core property/casualty (P/C) as well as title insurance operations that remain in line with Fitch's expectations and similar rated peers. The Negative Outlook reflects the continued uncertainty of mortgage market exposure on ORI's operations.


Read more on Market News.

query: how do you correct a HUD-1 post closing

So long as you have the consent of the mortgage lender, if there is one, and all parties, you simply create a new version of the HUD-1.  I like to put a bold easily found notation on the top of the first page that says something like:

REVISED August 16, 2011 to correct the blah blah.

You could also say that the earlier version of the HUD-1 is null and void.  Have folks initial this statement on the first page to document consent and acknowledge they understand there is only ONE HUD-1 form.

The very important part about correcting a HUD-1 post closing is that you must make certain the correction matches with the actual flow of money.  The HUD-1 form is an official record of the movement of the money and it must be accurate.

complying with privacy rules when managing a request for post closing data

This happens infrequently but enough that it warrants a post.  I received a request from a consulting company who is performing a post closing audit.  In this case they are performing the audit for a private mortgage insurance company.

Presented as evidence of the authority to make the request is the typical quality control authorization signed by most borrowers at closing.  By signing the form the borrower grants permission to the lender to reverify application data.  It specifies that the lender may present the form to any party named in the loan application.

The consulting company making the request for private data is not the lender.  My title agency is not a party named in the loan application.  The form presented no basis under which I might release this private information and so the request was denied.

It's not that we don't want to be helpful.  We do.  If the proper document had been presented I would have provided a pdf response tout suite.  I do have the information this individual seeks.  It is sensitive and very private - the type of information the consumer may even be surprised to know I have in my file.  Even so, I am a guardian and take that job seriously.

query: should sheriff sign a HUD-1 for sheriff sales

I have never heard of a HUD-1 form being used by a sheriff.  I wouldn't expect to see documents that you would normally see in a real estate transaction.  This isn't a typical consumer transaction.  Read everything carefully and unless you have some experience with sheriff sales, I'd seek the advice of a competent real estate attorney.

query: if I pay off my mortgage early is title insurance refundable

No.   The loan policy protected the lien position for the mortgage lender.  It was a one time non-refundable premium.

RESPRO continues fight for fair treatment

Just the RESPA News headline is enough to make me chuckle.

query: what is a fully executed HUD-1

Thank you for the query.  This one really points to the regular use of industry lingo that is unfamiliar to most consumers.  We toss around phrases like this and just expect that people know what the heck we are talking about, eh?  ;)

HUD-1 refers to a form created by the federal government under the Real Estate Settlement Procedures Act, RESPA.  The form is used in most real estate related closings as a balance sheet for the movement of the money.  It's an official receipt and record of money part of the transaction.  Some old fashioned attorneys might want to use a different home-brewed form if they are closing a transaction that isn't subject to RESPA rules.  I suggest you ask them to use a HUD-1 instead because it's uniform and if you ever have to produce your settlement statement as evidence, the HUD-1 will be recognized.  People might not believe you had a closing if you can't produce a HUD-1 to prove it.

There are three versions of the HUD-1 in general use.  The old [pre-2010] style two page HUD-1 is often used for cash transactions and commercial mortgage transactions.  The current [RESPA 2010] three page HUD-1 is used for most residential mortgage transactions.  There is a HUD-1a form used for home equity loans.

Fully executed means signed by everyone.  In a purchase transaction, everyone means, the buyers, sellers and settlement agent.  In a refinance transaction, everyone means the borrowers and the settlement agent.