Wednesday, April 25, 2012

hey the neighbor is digging up my yard!

Hi Diane,
I ran across your blogspot while trying to research about my title insurance problem.
I bought my house in Sept 2009 my neigbor bought his house Apr 2010.  When I purchased my house I was told and assumed we had a common driveway, because the begining of the driveway is completly on my neigbors property.  A portion of the driveway in front of the neigbors house is on my property.  There have been multiple surveys with no major disagreement other than an inch or two.  It doesn't look like there is an easement for either of us to use each others property.   The neighbor has been verbally abusive and taking pictures of us working in our yard.  He even dug up a portion of our yard in front of his house (adverse posession) ?  A week or so ago, he sent a letter via an attorney for us to stop trespassing on his property (the beginning of the driveway giving us access to garage and house).  Now to my question.  Should the title company have caught this?  Can the title company say we negotiated an easement for you, take it or leave it?  At this point, I do not want an easment, I would rather have my own driveway because my stress level will only continue due to the neighbor.  Will the title company ask what I want or my opinion?

Hi, R:  

First and without delay, open a claim with your title insurance company.  Go directly to the company on your policy and not to the agent who did your closing.  They may or may not cover access to your driveway but it doesn't cost anything to get a response.  Every state is a bit different in how they handle matters such as property line disputes.  In PA it would likely not be covered but I understand that many other states include this type of coverage for owners and so the second part of your claim is the section of your land that the neighbor is trying to use.  They may help you here.

When you look at your title insurance policy, look at the legal description of the property.  If it included a clause that says "together with" and then talks about your driveway, there is a good chance that they have insured your use of the driveway.

You should also review Schedule B as this will show exceptions to your coverage.

I would not expect them to do anything about changing the driveway to one solely on your lot.   

If title insurance does not cover the matter, then you'll need to hire an attorney to sort things out with your neighbor.

I guess the bottom line is that your best bet for help will be a property line dispute and unless you see the "together with" clause, you are unlikely to get help with the driveway.

Hope this helps.  Good luck!


Monday, April 23, 2012

The HUD-1 was different!

Hi Diane,

I found your blog while looking for an answer to a question about my own closing that took place in NJ two weeks ago.

I was given a copy of all the documents, including HUD-1, by the lender's attorney just before we began signing. Later on, I was reviewing the documents and I could not match the numbers. I contacted the attorney for the seller and obtained a photocopy of the signed HUD-1. The numbers on that signed form matched against the check that I wrote. But sure enough, the numbers were different from the copy of the HUD-1 that I received at the closing.

I am not alleging, nor suspecting any wrongdoing, but I would like to know what happened so I could get comfortable with the numbers. If there were at least two different HUD-1 forms, then I want to be sure the correct form was used. The difference is substantial, around $4,000.

Can you offer any advice, what should I do in this case?


Hi, A:

It is not uncommon for a HUD-1 to change before and during closing.  Sometimes there are last minute changes, however, every party should walk out of the closing with a fully executed final version.

It's possible that the attorney had clerical help making the copies and that person inadvertently included one of the earlier drafts.  

If you are curious, you could pursue an explanation, but since the one you signed matches up then I have to presume it was the one reviewed at the table and the final version.

Hope this helps.  ;)


What about those liens discovered after closing?

Hi Diane,

I short sold my house in July 2011 and it was found in the County Tax Bill that the City had a Lien on the property for past due sanitary charges. I was not aware of the charges or lien. Chicago Title was used by the buyer for title search and they did not find any liens on the title either. Now the Title Company has paid the lien in full but are requesting me (Seller) to pay them the lien amount or they will use Attorney and collection and I will incur additional charges. I was always been told that if there are any liens found after the Close of Escrow it is the responsibility of the Title Insurance Company. Are they allowed per Law in the State of California to recover any amounts they paid for failing to find the lien prior to close of escrow. Please let me know what is your recommendation.


Hi, Anon:

From the perspective of the buyer who purchased the insurance, yes, the liens discovered post closing would be the responsibility of the title insurance company, however this insurance does not extend to the seller.

Even if you were unaware of the lien, the responsibility still rests with the owner of the real estate.  If a foreclosure had taken place, depending on the laws of your state this lien may or may not have survived foreclosure.  In Pennsylvania, the mortgage lender who foreclosed would have had to pay it.

So, in the short sale, only the mortgage lien was released.  Any other liens, even if found after closing, stay attached to the real estate.  For this reason, title companies insist upon warranty deeds and affidavits.  In these documents you would have given a personal guaranty of title.  It is the warranties in the deed and other affidavits you signed at closing would be the basis for legal action against you.  If you did not sign any affidavits or give a warranty deed, you might have a defense.  In either case, you may wish to talk with an attorney.  Some times the size of the lien determines how much effort the title company wants to expend in collection.  Having an attorney at your side does present a more formidable challenge.  

Good luck and I wish you well.


Friday, April 20, 2012

affinity relationship?

This kind of cracks me up.  

First it was called controlled business.  

Then the folks setting up referral nets didn't like the sound of that so that, so...

They changed the name to affiliated business.

Then the folks setting up referral nets didn't like the sound of that so that, so...

They started calling it joint ventures.

Then the folks setting up referral nets didn't like the sound of that so that, so...

Now they want to call it affinity relationships.


"What's in a name? That which we call a rose
By any other name would smell as sweet."

"If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck."

Hey, it's still controlled business. ;)

Thursday, April 19, 2012

query: what does cpl stand for in a title company

CPL stands for Closing Protection Letter which is also known as a Closing Services Letter.  This letter is an extension of title insurance over the written instructions given to the title agent or attorney and also over the monies being remitted on behalf of the party to whom the letter is issued.

Most mortgage lenders require a CPL or CSL.  The form varies by state with some allowing the title underwriter to issue one per lender and some requiring that the letter be case specific.

In Pennsylvania there is a $75 charge for the issuance of a Closing Services Letter.  The CSL is case specific and is covers both the mortgage lender and the homebuyer.

Wednesday, April 18, 2012

open your mail! ;)

This is a shot in the dark, however, any information would be helpful.  I have a fairly confusing situation.  I refinanced my home in 2007.   When we originally bought our home in 2000 it was listed as 2 parcels.  2 years later we went through the proper process of obtaining a building permit to put a manufactured home on the 'empty' parcel for my father-this was signed off through the county.  Little did we know that their had been a financial segregation (FS) put into place by previous owners, this was supposed to have been 'lifted' at the time of sale but was not, in addition the county should not have allowed a building to be placed on the FS parcel.  My original lender routinely paid the taxes for both parcels per my request  without any questions asked.  When I refinanced in 2007 I asked for the same convenience of having my taxes and insurance paid with my P&I payment.  It was recently brought to my attention that my new lender had not been paying on the taxes for the 'other' parcel.  It appears that there was a mix-up in the legal description; the lenders legal description does not encumber both parcels, however, the county legal description does encumber both parcels.  In order to avoid foreclosure on the property the lender paid the back taxes and gave me 1 year to pay them back, raising my mortgage payment another $1400.  This has proven to be a financial hardship.  In discussion with my mortgage company somebody had suggested that I file a claim with the title company.  I did contact the title company and they are saying that they have documentation by the lender requesting that the 'other' parcel be removed from the deed of trust.  I am confused as to who is responsible for this mess.  The lender, the title company or both?  I apologize for the lengthy question.  There are many factors that further complicate this situation such as the county not having lifted the original financial segregation and the fact that I chose not to open my tax statements assuming that they were getting paid along with my parcel/home taxes until it was too late.



Morning, T:

I'm not sure about the FS because we don't have that in PA, however, on the issue of the taxes and encumbering the second lot, I can comment.

Lenders do not pay taxes on land that they have not mortgaged and so the current lender cannot be faulted for not not paying them for you.

There may have been some reason why the lender did not want the second lot in their mortgage.  We don't know, but the real problem in all of this is just basic communication and taking the time to read documents you sign.

Presuming there were no written [pre-closing] disclosures that described the land or the tax figures, there were at least two documents presented at closing that, if read, would have alerted you.  The mortgage document contained a description of the land.  The initial escrow statement gave you tax figures.

In a refinance transaction, the title company is insuring the lender and they are taking their instructions from the lender.  There is a presumption that you and the lender are on the same page.  A good title agent will keep their eyes and ears open for possible misunderstandings and help the lender and consumer resolve potential errors, however, this is a courtesy and good service and not part of the insurance.  I don't see a title insurance claim here.

If you've not read the book or seen the movie, I recommend looking for The House of Sand and Fog.  It's about a title insurance claim and based on a true story in which the homeowner neglected to read her mail.

Humans can have misunderstandings and consumers have an obligation to read over documents or risk being legally bound in an unexpected circumstance. This seems to be a hard lesson learned.  I wish you well.


Friday, April 13, 2012

query: how is wealth used in mortgage underwriting

If a mortgage borrower has a high net worth, the underwriter may be slightly more lenient because of having reserves upon which to fall back on if you get in trouble.  Otherwise, it doesn't play a role.  Wealthy people get into financial pickles as often as those with little.

Thursday, April 05, 2012

Wow...that's so 1978! Didn't they know you have to ignore pregnancy?

The settlement agreement signed by Nashville, Tenn.-based Magna Bank requires the bank to pay one woman $14,085 for allegedly requiring her to return to work before her loan application was approved.
Irvine, Calif.-based Home Loan Center agreed to pay a Las Vegas woman $15,000 for denying her application to refinance her mortgage because she was on maternity leave.

When you refinance, why do you have to pay for title insurance and closing services all over again?

I just had a chat with one of our pending refinance consumers.  He wanted to know why he was paying for title insurance again.  I explained that his owner policy wasn't being rewritten but the loan policy was.

He asked, well doesn't the loan policy just tell the lender that he is the legal owner of the property?  I said, no, the loan policy tells the mortgage lender that their mortgage is in first position.  What we do, then when we examine title for a refinance is to confirm ownership and then check for intervening liens and unfiled liens.

He wondered if that wasn't just a 20 minute visit to the courthouse.  I said know that it also involved checking with sources outside of the courthouse, including municipal authorities.

For folks who are not in this business, it appears that we don't do much in a refinance transaction but the reality is that we have to do almost all of the work we did in the purchase transaction.  We still have to set up the file, order title and lien letters, examine title, create the title commitment and policy, create the HUD-1, perform and coordinate the closing which normally takes place in the consumer's home.  Then, of course, we do the post closing work of remittances and document storage.  That takes resources and several people - all of whom must be paid.

Think of it like a roof.  The first person, the builder, created the roof.  When a new roof is needed some years later, the next person doesn't have to redo everything but they do replace almost everything and so you have to pay for materials and labor even though there is already a roof structure on the house.

In Pennsylvania, since we have filed title insurance rates, there are special discounts for consumers in a refinance. For this consumer's case, the title services would have been about $1800 is we were charging the basic rate.  With the refinance discount, the title services will only be around $1300. I pointed out that the lender had given a conservative quote on the Good Faith Estimate of $1800 and so our fees were already worked into the refinance game plan.

The explanation did seem to help our refinance consumer and I hope it has also helped you.  ;)