Thursday, January 31, 2008

query: what happens if a title company never records a deed

The parties in the transaction are at risk and should take steps to resolve the matter pronto!

The title company should step up and fix the problem but if they are not cooperating, hire an attorney and get it fixed. Ultimately, if damages were suffered, there is a likely claim against the title policy, but in the interim, fix the problem. Don't wait.

Tuesday, January 29, 2008

query: can I get my title policy from my mortgage lender

Your mortgage lender will have a copy of the loan policy on file. They do not receive a copy of the owner policy, so if you need it to file a claim, the loan policy won't help you. If you have lost your title policy and need to make a claim, ask for a copy of the HUD-1 Settlement Statement which will prove that you paid for an owner policy.

If you are looking for a copy of any title policy just to get a discount on a new policy, the loan policy should suffice. Some lenders will provide a copy readily upon request, other lenders won't. Again, you may be able to use a copy of the HUD-1 Settlement Statement as proof of coverage.

Good luck!

query: does a spouse have to sign the TIL

If the spouse is a borrower, yes, absolutely they have to sign the TIL.

If the spouse is not a borrower but the lender has determined that state law creates a need for the spouse to join in the mortgage in order to validate the lien, the lender may require that the spouse sign the TIL and the Right to Cancel.

Monday, January 28, 2008

received a lovely card today and decided to share it

Dear Ms. Cipa:

For the 2nd time in 6 years my husband and I used your services to close our mortgages and for the 2nd time I have to tell you how much we LOVE your company! Everything is so easy with The Closing Specialists. Not to mention how inexpensive it is! We can't say enough about the professional & courteous service we received from everyone we dealt with at The Closing Spec. Whether on the phone or in person; especially Michel Wright, who was just great at our closing this time. We had a few issues, but they were easily handled by Michel & your staff to make our closing happen.

We will not hesitate to use CS again and recommend you to our friends & family. Thanks for the Great Service.


DM & C R

[That was so nice and the picture of the little bird on the front is really pretty. Thanks for taking the time to send this note, Mr. & Mrs. R. dc]

Sunday, January 27, 2008

blogging and anger

My entree into the blogosphere was absolutely seated in anger.

In the late summer of 2006, my product and livelihood - title insurance - was under attack. Major media outlets smelled a rat and reports of multi-million dollar fines and penalties and class action law suits fanned the flames of what might have been the beginning of the end for title insurance as a product.

Our trade association, ALTA, and our state chapter, PLTA, seemed incapable of launching any kind of an effective defense and so I poked my toe into the Internet and started reading and commenting and decided almost immediately that a blog would be the most effective tool for communication.

What was my message? What did I need to say?

I needed to explain title insurance in a way that consumers and the industry would understand. I needed to defend title insurance as a critical component in a real property transaction.

I started with Title Insurance Talk as a consumer facing discussion, then launched Radical Title Talk to scream at industry insiders who were killing us with corruption.

You see, it wasn’t the product - title insurance - that was the problem, it was the delivery system. The business of selling title insurance to the consumer - even if only a loan policy - has become so corrupted that the product itself is beginning to lose its identity and resembles an icon whose link is lost.

Layer upon layer of money and revenue sharing is squeezed into the title insurance transaction and the consumer is virtually forced to contribute to a payola system of referrals without much chance of opting out or encountering free competition that would provide them with a valid choice that in the end would improve quality or price.

All the focus on money has pushed search standards and expertise out the door. The product being purchased in most transactions now is but a shadow of what was before.

We read on ALTA and title insurance sites about the work done to clear title, but does anybody really understand how rarely these services are performed now?

There are so few qualified abstractors and so few experienced examiners and so few shops that write title insurance with the expected services behind the policy that, well, I just don’t know what to say.

Sometime after starting both blogs, two new products came to market, TitleSmart and Next Ace. TitleSmart is a fully automated product. Next Ace is very close to fully automated. Distressed by the potential damage to public records, I launched a third blog, Coalition Petition.

Blogging in anger for long periods is not healthy nor enjoyable. I believe it has been necessary. Ed Rybczynski captured the need well in his Title-opoly post, Radical Title Talk: The Voice of A Repressed Industry.

I have tried to walk away from Radical Title Talk twice - once last May and most recently last week.

Why can’t I step away? I can’t because Radical is a place where plates spin in a way they don’t spin elsewhere and for some reason in subtle ways, the spins make a difference.

With each blog, like you, I have an idea who is reading. When the secondary market started to collapse, I felt I needed to reach out to some of the readership and get their attention. You might think that’s egotistical but how do I know who understands the mortgage market and who does not these days. I always believe I should do my part and so I did so at first through Coalition Petition with this post, followed by this post which I simultaneously put up on Coalition Petition and Radical.

The mortgage crisis brought me back into Radical and I promised myself that I would leave it when things settled down once again.

Recently I have taken some comfort in the likely intervention by HUD and state regulators in the area of title insurance and thought I might just lay down arms and allow less vitriolic discussions to move the cause forward.

Well, the earth shook beneath that comfort on Friday and Radical awoke once again. I couldn’t decide whether to vomit or cry. I did neither.

I’m going to await the news of this next week to see whether or not duty calls. You see we each must ask ourselves when faced with certain circumstances…

if not you, who? if not now, when?

Friday, January 25, 2008

If you are a consumer who believes they have been

overcharged for title insurance, please send a copy of the HUD-1 Settlement Statement to me along with a note or letter explaining why you think you were overcharged. Please withhold any private data of yours or the seller. I don't need that.

I am trying to compile as much information as I can on the pricing practices of title insurers.

At issue are whether or not consumers are getting the appropriate discounted premiums [reissue rate] and are they paying fees that have been padded.

For instance, when charging for lien letters and tax certifications, a consumer should only pay for the out of pocket costs. Some title insurers add a little for themselves.

Also, many consumers - especially in refinance transactions - are paying for a signing service or notary signing agent who comes to the house for the signing of loan documents. These fees may be marked up or padded and I am attempting to compile data on this issue.

If you would like to help in the effort, please mail the information to:

Diane Cipa
204 West Main Street
Ligonier, PA 15658

Wednesday, January 23, 2008

Well, that was a one day hiatus.

Trust me, I do intend to take a blogging break, BUT no one gets under my skin more than Anne Anastasi and ALTA.

I'm sitting here reading her "point of view" message in the ALTA publication, Title News, and she has the audacity, THE AUDACITY, to say this:

"Ninety-nine percent of the title community in this country are appalled at the thought of giving a kickback, 99% do not run sham operations and wouldn't think of charging the consumer a penny more than the proper rate."

Let's you and I have a good ole insane laugh together, shall we? WE know, you and me, WE know the truth.

I'm just gonna leave it at that because I don't need to offer further explanation to anyone on either side on the issue. We ALL know the truth.

Monday, January 21, 2008

taking a break

Please excuse me while I take a break from blogging. I've been at this game for over a year now and frankly, I can't think of much more to say on the subject of title insurance.

Judging from the search engine queries that lead you here, we've covered the most frequently asked questions. So, thank you for reading. Be safe, be careful, and be well.

Sunday, January 20, 2008

query: does Bank of America require a title insurance policy

When I've closed transactions for them, they required a title insurance loan policy.

query: can a title agent pad title insurance rates

Can they? Yes. Is it lawful? Well, that depends on state laws and regulations. In Pennsylvania, we have regulated title insurance rates. Title agents are obligated under the agency procedure to adhere to TIRBOP guidelines and set their rates accordingly. Here's a link to our title insurance rate calculator which only shows you four of the potential rates here in PA. We do have other rate levels that we might be obligated to charge in certain circumstances.

Now, the big question is whether or not the title agent you are working with is following their state guidelines. I can tell you I have looked at many many HUD-1 settlement statements prepared by other title agents in which they have failed to charge the correct state regulated premium. The most common failure is giving a reissue rate discount when the consumer is eligible for it.

How do you protect yourself? You shop. If you simply called at least three title insurers and got written quotes, you can compare responses and make an informed decision.

Be careful amd don't simply look at the title insurance premium. Look at other fees. Lien letters and tax certifications are one item often padded by an agent. Also, if they are using a notary signing service to come to your home for closing, they often pad that fee.

Be careful. Be smart.

Wednesday, January 16, 2008

query: PA title insurance who pays

Title insurance in Pennsylvania is customarily paid by the buyer. It's an all-inclusive rate and we have a simultaneous issue premium that covers both the loan and owner policy. Base the premium on the higher of sale price or loan amount.

query: manual approval underwriter letter

Hmmm.... this query kind of warms my heart because it shows me that you are out there embracing traditional mortgage lending and trying to recreate what was almost lost. Thank you for engaging in manual as opposed to automated mortgage loan underwriting.

I don't have a sample for you but I do remember drafting and amending my underwriter approval sheets over the years. I wish I still had a copy to share. Perhaps a reader out there can point us to a link.

query: who holds the title to title insurance

Title to real estate isn't transferred like a vehicle title, so there isn't a "title" per se.

Title or ownership of real estate is transferred by a deed which is a legal document. The deed identifies the seller and the buyer and also the real estate. The deed should be recorded at the county courthouse so that the public has notice of the transfer.

The title insurance policy will identify who is vested in title, meaning who owns the property according to the records at the courthouse.

If the title insurance policy is an owner policy, it will show the vested owner as the insured, which means that the insurance is for the benefit of the owner.

If the title insurance policy is a loan policy, it will show the mortgage lender as the insured, which means that the insurance is for the benefit of the mortgage lender.

If you purchase a title insurance policy, follow-up to make certain that you actually receive the policy after closing. Keep it in a safe place in case you need to make a claim.

Sunday, January 13, 2008

query: house burns down before closing

I can't truly answer this query because I sell title insurance, not fire insurance, however, it reminds me of days gone by.

Back in the day, when real estate industry professionals weren't trying to hustle you through a transaction at lightening speed and make you sign fifteen million pages of disclosures that you never read or understand, the pros understood and cared about covering your bases.

Back in those days, the real estate agent knew and understood that the homebuyer should get a hazard insurance binder immediately, as soon as there was an accepted agreement of sale. Why? Well, to protect your equitable interest.

So, if the house burns down before you close, and you do not have a hazard insurance binder in place and you have suffered losses, consider having an attorney review the contract and advise you of any hopes of recovery.

As an afterthought, I must say that I shouldn't blame the lack of hazard insurance binders on the real estate sales community. For all I know, the insurance industry might have discontinued the practice. In any case, if binders are available, a prudent purchasers should consider the option.

Saturday, January 12, 2008

let's chat about corrective instruments

I have a case that closed in 2005, I believe. The homeowner - our insured - is having difficulties with the tax assessor. The tax assessor does not understand how a corrective instrument works.

Here's what happened.

The property was vested in a deceased individual. The daughter of the deceased was the executrix of his estate. For reasons not material to this discussion, the attorney for the estate advised the daughter to deed the property from the estate into her name as an individual before conveying the property to our insured.

For some crazy reason my office was asked to prepare the deed from the daughter into our insured and the estate attorney prepared the deed from the estate to the daughter.

The error occurred in the deed from the estate to the daughter. We reviewed the deed as did the attorney and neither of us noticed the error.

The origin of the error comes from HOW the deceased acquired full title. He acquired it in pieces with the last portion being a 1/3 interest. When the attorney had his paralegal type the legal description into the deed, she typed it verbatim from the last recorded deed and so inadvertently typed in a reference to the interest being 1/3, which language was buried in the starting lingo of the description.

So, the estate - which DID own 100% of the property - only conveyed 1/3 of the property to the daughter. The deed from the daughter, a warranty deed, conveyed the 100% interest over to our insured.

To its credit, the tax assessment office discovered the error. We contacted the estate attorney who prepared and recorded a corrective deed which corrected the legal description in the deed from the estate to the daughter.

The corrective deed had the effect of correcting the entire transaction. There is no question that our insured has full title in the premises. There is no clouding of the index that could cause problems because the corrective deed is clearly noted as such and any abstractor reading the instruments could put two and two together and yet.........

...and yet, the legal counsel for the tax assessment office cannot.

These folks insist that our insured only owns a 1/3 interest and are refusing to change the assessment records unless and until a new deed is prepared and recorded from the daughter into our insured.

The estate attorney was unresponsive to this request and I can hardly blame him. It's extra work with no purpose and it's being requested by the "grand poobah of title" himself who holds court and lords over the county making its citizens suffer through his legally challenging whims.

I don't know how the story will end but I have advised our insured that it is not a title issue. If he can get the assessment office to put their reasoning in writing, perhaps we can get the estate attorney to respond, however, beyond the courtesy of attempting resolution, I can't be much more help.

I'll report back as the wheel of poobahdom in rural Pennsylvania spins.

Just in case you miss this comment on Radical Title Talk,

I've got to share it here. Chris Johnson shared his favorite nightmare closing. Here it is:

My nightmare title story has all of your favorite elements: First American, a "bought in" title group, an attempt to commit title fraud via a simultaneous closing, a construction loan, 4 different liens that were not reported in the schedules, a lender shortsale (with a forclosure days away), a Realtor that would only use their title company...and a known criminal who had her appraiser's license revoked as the "marketer," for this JV title company.

Disaster was averted, but we had our own title company perform a search.

The funny thing? The listing agent has unsurprisingly been indicted in May.

Anybody else have some fun stories to share?

Friday, January 11, 2008

If you are a Pennsylvania title agent

and you haven't ever filed an escheat report with the state, please do so.

Uncleared checks and expired escrows have to be turned over. The Department of the Treasury is doing a statewide audit. It's a random selection but they intend to be thorough, so don't procrastinate.

query: Countrywide what happens to mortgages

Don't worry. There are federal rules governing the servicing of your mortgage. Bank of America does a good job of it. You need to read every letter you get in the mail and pay close attention, ok?

Wednesday, January 09, 2008

secret message to Somerset

It's the estoppel by deed issue again.

Tuesday, January 08, 2008

query: what do you do when a title company overcharges you

If the title company refuses to refund the overcharge, report them to the regulating body at the state level. This is usually the Department of Insurance. Check your state web site or call your state representative's office for help.

The regulator will probably need a copy of the HUD-1 form so have that handy.

BTW - I do wish more consumers would check their rates more carefully. You would be shocked how common overcharges are in this business.

One of the hidden overcharges is in tax certifications or lien letters. In most transactions, the title agent may only charge the actual out of pocket expenses. Some companies pad these fees. You can ask for an itemization of these charges and if you suspect an overcharge, contact the state.

Of course, the reissue rate is the most common area of concern. Many consumers are eligible for a discounted title premium but some title agents will conveniently forget to give the discount.

query: making someone use seller's title company in PA

I'm unaware of any PA statute prohibiting a seller from negotiating the requirement in a contract. If the buyer agrees, then I guess they use the seller's title company.

Now, that said, if the transaction falls under RESPA, then the seller may only select the title company IF the seller is paying for the title insurance.

Transactions that fall under RESPA are most typically residential 1 to 4 family dwellings that are being mortgaged by an institutional lender.

Monday, January 07, 2008

query: can title companies prepare deeds in PA

The answer is yes so long as the title company is the issuing agent for the title policy on the transaction. If not, the title company is engaging in the unauthorized practice of law.

Here's a Radical post touching the subject.

Saturday, January 05, 2008

query: non-vested spouse did not sign the note

This is normal if the non-vested spouse is not obligated to repay the Note. The only reason a mortgage lender or title insurer will have the non-vested spouse sign the Mortgage is to validate the lien aka permit the lien to take priority over their marital rights, if applicable. In these cases, language should be added to the Mortgage clarifying the purpose of the signature and I usually include a clear statement that the non-vested spouse is NOT a borrower under the Note.

query: do I notify my mortgage company of an easement extinguishment

I'm impressed that you even ask the question. If the easement was for the benefit of your property and added value, you should notify your lender and obtain their permission to extinguish the rights.