Friday, June 28, 2013

ahem...WAH? That's not the way they do it in their office? Seriously?

Jiminy crickets.  We just had a closing and found out at the closing table that the seller wanted to reserve oil, gas, and coalbed methane rights.

We had carefully reviewed the sales agreement and found it silent on the issue.  We sent the deed to the seller and agents prior to closing for a review. Nobody raised the issue.  The only reply was that the sale price had changed and no one had given us that information. We made that correction and moved forward to closing.

It wasn't until the deed was presented at the closing table that the seller, thank heavens, asked if he was reserving these rights. He was told that no reservation language had been added to the deed and so that any rights he had were being transferred to the buyer.

The seller said that was not his intention and interestingly, the agents said that's not how it works in their office.  They told our closer that in their office the sales contract and deed do not convey these rights. WAH?

They are using the standard PAR agreement of sale.  They failed to use the Oil, Gas, Mineral addendum which was created for this purpose.  They also failed to add any language in lieu of the addendum speaking to the desire of the seller to reserve these rights.

BTW At the closing table, this appeared to be the first time that the buyers were hearing of the reservation.  What were these real estate agents thinking?  How many other transactions have passed through their office without clarity on oil, gas and mineral rights?

Bottom line, folks, silence doesn't do it.  If you intend to reserve something - anything - you have to add language expressing the reservation.

Saturday, June 08, 2013

mistake in refinance not discovered until after rescission period

Hello Diane,

I noticed your blog online back in 2007 regarding Title/Escrow questions.  

My husband and I refinanced our home a couple of months ago.  We told the lender that we did not want the loan balance to increase.  When all of the documents were prepared and we were shown the HUD-1 for approval, our loan balance went up by $5000.  We were not happy with this and decided that we didn't want the loan.  But our lender assured us that we were going to get $3000 back to borrower that we could then apply to principle.  We felt better about this because then our new loan would only be increasing by $2000.  So we decided to go forward with the loan.  The next day we signed all of the documents and the HUD-1 stating that our new loan was $398,000 (up from $393,000) and we were going to receive a check for $3000.  

About 10 days later we received a check in the mail for $1500 instead of $3000.  There was no explanation as to why the check was short by $1500.  When we talked to the lender about this, she asked the title company to explain why the check was short.  At first there was no response from the title company.  Finally, after several attempts to get their response, the title company said there was an error and that $1500 was credited twice and should have only been credited once. 

My question is this:  

I understand that mistakes can be made in preparing documents, but we based the whole purchase of our loan on the fact that we were getting $3000 back.  We would not have purchased this loan had we known that we were only getting $1500 back.  Also, if there was an error, shouldn't the title company have notified us within the 3 day rescission period so that we could have the opportunity to back out of the loan based on accurate calculations?  If the title company didn't know of the mistake until after the 3 day rescission period, shouldn't they have then given us another 3 days to rescind based on the accurate information?  Was it right for them to go ahead and fund the loan without notifying us of the error?  Did they just assume that we wouldn't care and would buy the loan anyway?  Basically, we were sold a loan and signed documents based on false pretenses.  They had a price tag on their loan and we bought it at that price.  If they put the wrong price tag on their loan shouldn't they be held responsible for what the price tag stated?  They are telling us now that they put the wrong price tag on the loan but are now forcing us to buy it at the higher price.  We never would have bought this loan based on their new calculations and they never gave us a chance to rescind based on accurate calculations. 

Any clarification on this would be much appreciated!



Hi, Amy:  I would make a giant stink out of this.  I would immediately send a certified letter to the lender - Attn:  Compliance Officer. Copy the letter to the title company, the loan officer, the Consumer Finance Protection Bureau, the state insurance department, the state banking department.  Insist that you want to be made whole. If you have copies of email conversations  with the lender and the title company send them with the letter.

The HUD-1 Settlement Statement is to have a comparison of the Good Faith Estimate versus the HUD-1.  I find it very hard to believe that the error did not come to the attention of the mortgage lender when they did their pre-closing approval of the HUD-1.  They are supposed to check this comparison which is on page 3 of the HUD-1.

The other mistake is that the title company did not check to make certain the transaction balanced before they did the closing.  If an amount was credited twice this would have been revealed in the balancing stage.

Good luck and let me know how it works out for you.


municipal charges survive foreclosure

We closed a purchase transaction yesterday involving REO property being sold by a lender to a cash buyer.

There was a last minute snafu when the seller paused for several hours to decide if they wanted to pay outstanding water and sewer charges.  These totaled roughly $3000 on a small transaction. They did eventually close, however, we had to adjust the schedule and wait while they faced reality.

We had to wonder how it was that they hadn't understood that municipal charges do survive foreclosure and if they didn't pay them, who would?