Tuesday, December 31, 2013

Nisha wonders if a post closing request for proration of HOA fees is out of line.

Hi Diane,

I came across your blog while finding any answer for my recent issue.

I closed on my home on Jun 24, 2013 as buyer. 

As per the listing agent of the seller, she told us that seller has paid HOA due in advance for 2013 and we don't need to pay for this year. This was our verbal understanding.

Same reflected in HUD statement. 

But now almost after 5-6 months, we got an email from seller asking for us to prorate this amount. Can you please advise us. They are saying that they did not notice this during closing. They are also saying that they will go to lower court if we did not pay.

Thanks & regards,


Hi, Nisha:  It is customary to prorate the HOA fee but not required.  Take a look at your sales contract.  Typically the contract will include language in which the parties agree to prorate taxes and items such as the HOA fee.  

This is one of those unfortunate situations in which everyone would have preferred it to be done correctly at closing but the error isn't discovered until later.  If you are unable to pay the seller the prorated amount, offer to make payments.  Most courts would see this as an act of good faith especially if the title agent failed to do an agreed proration at closing.

If you truly believe you should not have to pay the proration, ask the seller to show you where in the sales contract a proration agreement was outlined.

Thanks for checking in.  Good luck and Happy New Year!


Friday, December 13, 2013

We stand our ground and we do business with lenders and real estate brokers who want quality of service.

Quality of service means that we all work together to maintain integrity of standards to protect consumers, the mortgage lender and the title insurance underwriter.

This sometimes does mean that we choose to not do business with providers who have a different idea.

About a month ago we received a title order from a mortgage broker that we thought had gone out of business.  It was a sub-prime shop known to bend rules.  I was leery but we agreed that they might have cleaned up their act and that we would watch the transaction closely so we processed the order.

Turns out the transaction is a FHA mortgage and the mortgage broker - with the help of an employee of the mortgage lender - were coaching the buyer on how to avoid the FHA prohibition against using funds to acquire a separate but adjoining property which is also a commercial property. They expected us to close a concurrent transaction for the adjoining property being sold to the buyer by the same seller for $1.

NOT GOING TO HAPPEN.  We explained the hows and whys of mortgage fraud to the consumer, real estate agent and mortgage broker. This transaction could only take place if the mortgage lender put in writing that they were aware of the concurrent transaction and approved of it.  The mortgage broker, of course, said the mortgage lender "didn't want to know" about the concurrent transaction so that would not happen.  I said that we would refuse to close and insure the deal.

Interestingly when the real estate agent and I discussed the details of the structuring of the transaction to this point, the real estate agent said she was conferring with her broker who told her to make certain that the mortgage lender was approving everything.  What they hadn't considered was a rogue employee. They thought they had lender approval for the concurrent transaction and were shocked when told the lender "didn't want to know" about it and thus would not actually approve the transaction as is was truly structured.

I am sorry to know that there are employees on the front lines of FHA lending operations who don't get the reality of compliance with the FHA guidelines.  It's not okay to "not know" about something that you clearly know about. It's not okay to direct people to handle things "off HUD" or in a separate transaction. It's not okay to hide material facts from your employer or the mortgage underwriter.  You put your whole organization and everyone's jobs at risk because the FHA can shut you down.

We won't be accepting any new title orders from that mortgage broker.  We only deal with honest companies, not fraudsters.

Monday, December 02, 2013

and now for something completely different... ;)

My friend, Joe Stierheim, is a good storyteller. His novels are easy to read, relaxing page turners with a positive spin. Joe always makes me think. These types of stories are hard to come by with all the focus on killing and guns in entertainment. This novel is the back story of a mountain man. I met this character in another novel by Joe and he was so interesting that he decided to explore what it was that made the man.

You might enjoy this book or one of Joe's other novels which are available on Amazon.com.

The mysterious Mountain Man is seen by three men on a photographing trip in the Cascade Mountains. News articles appear in local newspapers and then are repeated in national papers and on TV. The legend of the Mountain Man of the Cascades is resurrected. Is he real or is he fiction, only a myth? At the end of his expedition to the remote sections of the Cascades, only Jeff Baker, nature photographer, knows. And he is not telling—for very good reasons.