Thursday, July 19, 2012

query: what does the effective date mean in a title insurance commitment?

The effective date is the "cover" date of the search on which the title insurance commitment is based.  The cover date is the date through which the courthouse records were available.

For instance, let's say the abstractor goes to the courthouse to do the search on July 15 but the available records in the Recorder's office are really behind - perhaps only indexed through June 30.  [That really would be terrible, but it happens.]  The cover date of the search and the effective date of the title insurance commitment would be June 30 even though the physical search took place on July 15.

Wednesday, July 18, 2012

query: what is the liability to a title company if a heloc winds up in a first position through their error

That's easy.  A mortgage lender who is insured in first position but finds that they are in a subordinate position can make a claim against the loan policy.  This type of discovery typically surfaces during a foreclosure action.

The liability of the title insurer is whatever it takes to fix that up to the amount of the loan policy.

query: tirbop rule regarding unlicensed person using a licensed person's signature

I confess.  This query has me fascinated.  An unlicensed person is using a licensed person's signature?

TIRBOP rules don't cover this.  They are a rating bureau and cover pricing for the title insurance and related services.

This is licensing matter and you probably want to chat with the PA Department of Insurance.

You should also chat with the title underwriter with whom the licensee has their agency.

It is unlikely that the state or the underwriter would be happy about an unlicensed party signing the name of the licensee.  The whole idea of licensure is that a fully trained, tested, and responsibly vetted person is serving the consumer.  A licensee may certainly have staff who assist in this endeavor but no one would want unlicensed staff to act in their place.

Sunday, July 15, 2012

query: how do underwriters find out about a pending lawsuit?

The most common place pending lawsuits are discovered is in the county prothonotary office.  Suits may also be discovered in the federal Pacer system.

These search results are usually given to an underwriter as part of a credit or title report.

Saturday, July 14, 2012

What does E & R mean?

I'd like to find out what E&R means with regard to a title search and title insurance.  The documents I received at closing supporting the title insurance use this abbreviation numerous times.  Thanks..........A

Hi, A:

I'm thinking they must mean exceptions and reservations.  I strongly advise that you ask for details about WHAT exceptions and reservations they are referring to.  Here's what these words mean in title insurance:

RESERVATIONS are rights retained/reserved by a seller.  For instance a seller may reserve the right to use a well.  A seller may reserve the oil and gas rights.  A seller may reserve a life estate.  To simply refer to reservations without identifying the nature of the reservation doesn't tell you anything.

EXCEPTIONS is an even more general terms which refers to any right you are not getting.  The entire Schedule B2 of our title insurance commitment and Schedule B of your title policy is full of exceptions.  These can include anything such as rights of way, easements, restrictions on the land, etc.

Hope this helps. You have a right to obtain copies of documents that contain the language of any reservations or exceptions.  Ask your title agent to send you a pdf of any document found in the search that identifies an exception or reservation.  This is the only way to understand the limits of the ownership you will enjoy.


Tuesday, July 10, 2012

CFPB proposes changes to the disclosures to protect consumer. Read and comment! ;)

For most Americans, buying a home means taking out a mortgage loan. The Dodd-Frank Act requires us to combine the Truth in Lending and Real Estate Settlement Procedures Act disclosures. You receive these disclosures after you apply for a mortgage and shortly before you close on the mortgage. We decided to involve the people who will actually use the new forms – consumers, lenders, mortgage brokers, settlement agents – in combining and improving them. These are the results so far.

Sunday, July 08, 2012

What do you do when you find errors after closing?

Hello Diane,
I bought a house in Florida 5 years ago. I recently discovered that my HUD is incorrect. I do fault myself for not paying more attention even though I was being rushed through the process by the title company on the day of closing.
It has become apparent that my purchase payment is $7,000 more than my purchase contract and the property address is also incorrect. The address and parcel ID on the Warranty Deed is also incorrect although the legal description is correct. What can I do about this now?
I thank you in advance for your time and look forward to your reply.

Hi, M:

I would write a letter to the company who handled the transaction with a copy going to your mortgage lender and real estate agent, if applicable.  Ask for an explanation of the $7000 purchase payment discrepancy.  There may have been a misunderstanding which their explanation will resolve.  If, however, they cannot explain it and you believe there was an error or some kind of fraud, you should follow with another letter which would be a formal demand for correction.  I always believe a demand letter should be sent via certified mail.  This shows you are serious.  If you aren't satisfied, you could hire an attorney to assist or perhaps talk with the Florida attorney general's office.  They should have some formal mechanism for handling consumer complaints.  It works like the Better Business Bureau but has teeth.

As for the deed, I would request that whoever insured your purchase transaction - the title company - create a corrective deed.  In my opinion it could be a deed from you to you simply to correct the parcel ID and address.  Since the legal description is correct, I don't see any reason they would have to go back to the seller.

You can handle both of these problems in the same letters, however, be sure to keep it easily understood that there are two issues and that you want them both resolved.

Good luck and I hope this helped.  ;)


Friday, July 06, 2012

active duty military family gets into a mortgage payoff horror

hello, i came across your website and yours is the only one that came close to what i'm dealing with. my situation seems really bizarre and i'm hoping you can help. ANY advice you can give me is greatly appreciated because i have a court date in a few weeks and i have to appear alone because my husband is deployed in afghanistan. i'm scared to death to go to court over this! here's the story:

we owned a secondary home that my father lived in (not as a rental). the neighbor approached me last summer and wanted to buy it so after careful consideration, i decided to sell it to him. my husband was deployed then as well, so i did everything with a POA. this is a very small town in West Virginia, and i am friends with both the buyer and the broker. the broker called me to tell me when the closing was and when i asked what i needed to bring to the closing other than the POA, she said (and i quote), "nothing but your pretty face, we take care of everything".

so that's what i did. i brought the POA and showed up to the closing, signed all the paperwork, and they handed me a check. when i looked at the check, i noticed it had a clerical error. i showed them the error and they cut another check. i turned over the keys to the house and went back home (to my primary residence a couple of hours away).

flash forward three weeks later, my husband returns from afghanistan. he is looking over the paperwork and says to me, "they paid off the wrong house, w. they paid off THIS house, not the other house". he shows me the HUD-1 settlement paperwork that we all signed and sure enough, it shows the physical address of my primary home as well as the payoff amount for my primary home. both mortgages were held by [lender redacted] and evidently when the broker called for the payoff amount, she was either given the wrong one by [lender redacted] or something, i'm not sure. but either way it happened. so my husband calls her, tells her what she did, and she said, "oh my god you're right. i'll have to look into this and call you back".

she called him back a few days later but he was gone again - deployed in the US for three weeks with no access to his cell or personal email. she sent him several emails and when he never responded she emailed me and said "we paid off the wrong house and as a result, you were overpaid by $8k at the closing. i reversed the payoff on your primary home but am holding the money in a non-interest bearing account until you pay back the money you were overpaid. when we receive it, we will pay off the mortgage on the home you sold".

now mind you almost a month has gone by. there is no more money. i had $4k in my checking account so i drove 2 hours back there, gave her a check for $4k and wrote a post-dated check for the remaining. i said, "i need to figure out how this happened, it just doesn't seem right". she said she was sorry about the mix up but stressed how important it was for me to pay back the remaining balance sooner than the date on the post-dated check. she said that with each passing day the situation was getting worse. i explained that i used the money to pay my daughter's tuition and to buy her a car - that was the only reason i sold the house in the first place! she said again that i REALLY needed to hurry up and pay the balance to her so she could straighten it out. 

i went home and started telling some people about this and they all said, "do not let her cash that second check!". the more i thought about it the more mad i became. i know people make mistakes but this was huge. to make matters worse, since she reversed the payoff on the wrong house but didn't apply it to the house i sold, i was still responsible for both mortgages! i had automatic payments set up for both so both were taken out in june and in july. so now i sold i house in june but have made two payments on it. AND the new owners were making payments on it!

i emailed her and told her not to cash the second check and that i needed her to contact [lender redacted] and get the two payments back that i made on the house i "sold". i did not hear back from her and another month rolled around and with it another mortgage payment. i finally wrote an email to her and the bank she represents, as well as the law firm that handled the closing. i explained the situation and again told them to get the THREE mortgage payments that i had made on a house i sold three months prior and i would be glad to pay them any monies still owed. at that point i received a reply from the bank's attorney that basically said i was scamming the bank and refusing to pay back money that didn't belong to me. i was furious.

i called [lender redacted] myself and explained what was going on. they said they had never heard of anything like this before and they were astonished that the bank, the broker, AND the attorney handling the closing could make such a huge mistake. that said, i was told by [lender redacted] that i was still legally responsible for the mortgage and there was nothing they could do. and then another month rolled around and i made yet ANOTHER mortgage payment on a home i sold (five months prior).

i finally got sick of it and called [lender redacted] back and stopped the automatic mortgage payments. the following month i received a notice of late payment and the month after that i received a certified letter stating i was now two months behind and foreclosure procedures would begin and that my credit was being ruined. i thought, "oh well, i hope it DOES go to foreclosure court and the new owners are kicked out of their home! then they can sue!"

fortunately it didn't come to that and i received a payoff notice from [lender redacted] in january 2012...7 months after i sold the property and over $4k in mortgage payments, not to mention homeowners' insurance and property taxes. i just was thankful it was over.

but it wasn't.

i was served with a civil complaint and am being sued for unjust enrichment in the amount of $3840. i don't even know how that amount was calculated. in fact, the complaint says "approximately $3840". it goes on to say that the defendant "should have known the amount she received was more than she was entitled to" and says "the defendant refuses to pay the money back and spent money that didn't belong to her". 

i cannot believe the audacity! so now i have to appear in court by myself as i cannot afford a lawyer to represent me. i filed an answer and counterclaim seeking the mortgage payments back, but i don't know if i have a chance in court because i'm going up against a law firm and a bank in magistrate court in a small town where they all know each other.

any advice? i'm nervous as hell :(

thanks so much,

Wow, W.  Thank you for contacting me and I hope I can help.  First, please contact the Consumer Finance ProtectionBureau.  This is the new federal department and they have a special section that helps veterans and families with active duty service personnel.  I'm not certain if they can help, but again, since they have taken on a special task of protecting the military, they may.

Here's what's bothering me about what you have told me.  

1.  The buyer purchased the property using the services of an attorney and got title insurance.  Whoever was writing the title insurance and performing the closing was responsible for the accuracy of the mortgage payoff.  I'm appalled that they allowed the real estate agent to obtain your mortgage payoff letter.  I am also appalled that the attorney or title agent did not check the payoff letter to make certain it was for the correct property.  This is a normal security step and part of a competent title examination/insurance routine.  In my opinion, the lack of pre-closing review of the mortgage payoff letter was negligence.

2.  [lender redacted] should not have given a payoff letter to anyone who did not have your permission.  Did you sign a document giving your real estate agent permission to get the payoff letter?  Take a look at it and see if it has the property address on it.  Just because you had two mortgages with [lender redacted] and gave a person authorization to obtain private information for ONE account does not mean that you gave permission to access another account.  When mortgage payoff letters are requested, this is typically done by fax or phone.  The party ordering the payoff letter usually has to have the account number and the last four numbers of your social security number.  Did you provide this information to the real estate agent?  If you gave them the wrong account number, that still doesn't mean the attorney shouldn't have checked it but it does help explain how the problem started.

3.  Title insurance companies are trained to deal with these types of problems.  Real estate agents are not. I am horrified that the real estate agent was the one who reversed the mortgage payoff and held the money in escrow, refusing to release it to [lender redacted] as payment on the correct mortgage.  What should have happened is that the money - even though not enough for a payoff - should have been immediately directed towards the correct mortgage as well as the $4000 you returned from the proceeds.  Then, if you were unable to return the other proceeds, the title insurance company would have advanced the balance to protect their client, the person who bought the house.  You should not have made any payments on the mortgage for the house you sold.  When the dust settled you would still owe back the additional money but it would have been a lower amount as you wouldn't have advanced the other payments plus additional interest and fees would not have accrued on the [lender redacted] payoff.  Whoever orchestrated the methodology of correcting the error of not checking the mortgage payoff did a terrible job and created a much more expensive solution.  I would try to find out who made the decision to hold your money in escrow and not forward it to [lender redacted].  They had no business holding your money while interest was accruing on your mortgage.

There is no doubt that you owe money back into the transaction is you were unjustly enriched by the payoff letter error, however, I do think you need to carefully calculate how much that would have been if they had done it correctly on the day of closing versus what they are asking for now and how much extra you paid in the meantime with the additional interest and fees accruing plus extra monies you may have paid in additional mortgage payments.  It is possible that the extras that accrued because of the combined negligence of the parties would offset your unjust enrichment.  You appear to have suffered financial damages due to their negligence and that's got to be a part of determining the bottom line of what you owe, if anything.

I also suggest that you try to get an attorney.  See if a support group for military families can make a suggestion or perhaps CFPB can help there.

You may also want to contact the state real estate commission, department of insurance, state bar association, and state banking department and file complaints about the inappropriate and negligent services provided by the real estate agent, attorney, title insurance agent/company, and perhaps [lender redacted].  I am not certain whether [lender redacted] made any errors but certainly once the error was discovered they could have done a better job of suggesting ways to resolve it.

This is a terrible story of incompetence by a real estate agent and a closing attorney/title insurance agent.  I hope it works out for you.  Good luck.


Wednesday, July 04, 2012

query: what if a title company gave a verbal on title insurance but refuses to give written

Well, that's ridiculous.  I'm presuming you are talking about the title insurance commitment which is issued prior to closing.  You are PAYING for this work product and you are entitled to receive a copy for your review prior to closing.

If your title insurance agent is refusing to provide a copy of the title insurance commitment, FIRE THEM and go find a professional title agent who respects you, the consumer - YOU, the one who pays their salary.

If you're in a time pinch and can't afford to lose the time of going to another title agency, then find out who the regulator for title insurance is in your state - probably the Department of Insurance.  Call them and complain.  Perhaps they will call your title agent and educate them on consumer rights.  Good luck and I wish you success.