Happy New Year to YOU.

PITTSBURGH DAD: TWAS THE NIGHT BEFORE CHRISTMAS

interesting twist on a claim

Not long ago I posted about a new owner wanting to make a claim on the policy of the person who sold her the property.

Our insured did call us and we opened a claim for him but informed the new owner that we wouldn't be communicating with her.

The claims attorney noticed that the new owner is the same person who had been foreclosed upon by the lender who sold the property to our insured.

Guess what?  Shortly after our closing he deeded the property to her for a buck.

Well, isn't that interesting.  The claim was denied.

Working with an elderly seller whose attorney is semi-retired and a nice fellow....

who just won't let us do our job.  This transaction made me realize just how hard it might be for me one day to continue to do business when the methods morph beyond my ability or willingness to comply.

While the buyer, lender, and real estate agents were all wanting to move forward, we had to adjust the workflow to the timing of another era.

It wasn't unpleasant and certainly not laziness or procrastination.  These fellows worked at the polite speed of days gone by.

In addition, when we found a problem - an unsatisfied line of credit with a bank no longer in business - the seller's attorney would not give us the information we could have used to resolve the matter in a few days.  He decided to handle it himself and visit the bank that he thought had taken over the branch files.  They couldn't help him at the branch level and so when time ran out, our options were to postpone closing or set up an escrow and let him work it out post closing. He opted for an escrow and so closed.

The whole experience made me think of my bosses and mentors of days gone by.  It also made me think about how well I will deal with the changing nature of business as time marches on.

making claim on a prior owner's owner policy

No can do.

If you have a title problem and you do not have an owner title insurance policy, you cannot make a claim on the title policy of a prior owner.  You have to take action against the prior owner and the prior owner, if they choose to file a claim, may contact their title insurance company.

A couple of weeks ago I was contacted by a consumer who we insured back in 2006.  At issue were unpaid delinquent taxes from 2005.  I asked him to send me a copy of the statement he had received showing taxes outstanding.

I always want to see the correspondence a consumer has received.  Sometimes there is a misunderstanding that can be resolved simply by reading the statement.

In this case, he had the current owner send me the statement and the new owner of the property contacted me.  I explained that all of my communications would be with our insured, even though he didn't own the property anymore.  She would have to deal directly with the prior owner, our insured.

I did some preliminary work and found that the 2005 delinquency statement we had obtained did not include 2005 school tax.  Apparently during 2005 the school district was in the process of changing collection services and though both the municipality and the local tax collector directed us in writing to the company we contacted, the 2005 school tax data was not yet in their hands.

I opened a claim in the name of our insured and the matter is under review by a claims attorney.

interesting article...never heard of a lender buying an owner policy following foreclosure

Should a Lender Obtain an Owner’s Title Insurance Policy after Foreclosure? - Spilman Thomas and Battle

How can we educate our Realtors and loan officers to understand "off HUD" is a big deal and not an option?

There is a BIG disconnect in our business.  The disconnect is that folks just don't get that the INVESTORS in the mortgage backed securities market and the rating companies are depending on an agreed set of underwriting criteria for the underlying mortgage loans.

Anytime a Realtor or loan officer or any lending personnel decide to move "OFF HUD" to avoid the agreed set of underwriting criteria, they are committing MORTGAGE FRAUD.  Period. End of story.

UPDATE:  I was asked to elaborate on this.  I think we need a secondary market primer given to Realtors and loan officers so that they can understand how program guidelines play a part in the assessment of risk when pools of mortgages are priced for sale in the secondary market.

Say for instance that a program allows for a seller assist of 3%.  The risk analysis is based then upon the buyer/borrower having a minimum down payment plus cash reserve, and a portion of their closing costs.  They have something to lose and therefore are less likely to walk away if they fall on hard times.  If, unknown to the mortgage underwriter, the seller gives the buyer/borrower a sum of $3000 under the table presumably to cover repairs or what not, the buyer/borrower may net have NO investment in the transaction and the risk on this mortgage is then substantially higher.

Does that make sense?  Can you see now how moving items "OFF HUD" and outside of the program guidelines defrauds the mortgage lender who makes representations and warranties concerning the loans contained in a pool and how it ultimately defrauds the investor who buys the securities backed by such a pool of mortgages?

It was not the system of pooling mortgage and making securities that caused the Great Recession.  It was the failure to adhere to program guidelines that were in place to protect investors and keep the system honest.

I just ordered this book.

Will report back with a review after reading.

R's tax proration discussion continued

Hello Diane

Thanks for the info.  I looked at the sales contract from this past summer...here's what I found about prorated taxes:

"PRORATIONS: Taxes for the current year, maintenance fees, assessments, dues and rents will be prorated through the closing date (Jun 26, 2012).  The tax proration may be calculated taking into consideration any change in exemptions that will effect the current year's taxes.  If taxes for the current year vary from the amount prorated at closing, the parties shall adjust the prorations when tax statements for the current year are available (in this case they were available Oct 1).  If taxes are not paid at or prior to closing, Buyer will be obligated to pay taxes for the current year."

So in this case, taxes were not paid at or prior to closing.  But I didn't take ownership of the property until Jun 26, yet I could still be liable for taxes owed during a period when I didn't even own the property?  My other frustration is that this stipulation in the contract is buried in the fine print...and if I don't happen to find this phrase on closing day, I'm stuck with all taxes?  I'm no expert on closing contracts.  If I was, why would I pay the closing agent to do anything?  I guess my other question...who should have made me aware of this?  My realtor/agent, the title company representative, or the building/owner?

And knowing this verbiage from the contract now, how would you proceed?

Thanks

R

Hi, R:  This is not unusual.  We all as consumers sometimes ignore the boilerplate in contracts but that doesn't mean that those words have no meaning.  As a buyer you are on your own unless you hire an attorney specifically representing you or you have a true buyer's agent.  The title agent, even if they are an attorney, is not acting the capacity of buyer counsel.  In fact, typically the sales contract is already negotiated before the title agent enters the transaction.  Buyers need to read their sales contracts and if they aren't sure, they need to hire an attorney to advise them.

You might still at least contact the title agent by email or phone to ask them how or why they calculated the prorations.  See if their explanation makes sense now that you have read that portion of the sales contract. If they clearly demonstrate that they were following the instructions contained in the contract, you have your answer. 

You might also want to talk with your real estate agent to see how they interpret this language in the sales contract.  Perhaps the agent can shed light on local custom or may even agree with you that there was an error.

I hope this information is helpful and I thank you for sharing your experience as I am posting it on the blog because I think it will help other home purchasers.

D

R wants to know if a tax proration error is covered by title insurance

So I bought a house on Jun 26, that was the day we closed.  I just got the property tax bill from our county and it was rather high, and I don't remember any credits coming my way at closing from the Jan 1-Jun 25 timeframe.  I went back to look and still don't see anything.

My question for you -- since I didn't take ownership until Jun 26, I assume I'm not liable for property taxes from Jan 1-Jun 25, right?  Should those have been prorated and charged to the seller at closing?  Even if they were estimated at the time since final property tax bills aren't issued until Oct 1?

And if this was a human error of some sort, who's responsible for the screw up?  The title company?  And how would I go about getting reimbursed so I'm not stuck with the entire 2012 calendar year tax bill?  Can I invoke title insurance for human error?  I assume these are the types of things title insurance is used for?

Your thoughts?

Thanks

R

Hi, R:  The method of prorations for taxes and whether or not prorations take place is set out in the sales contract.  The title agent would look at the contract and set up prorations or not based on what buyer and seller agreed to.  In the absence of such instruction from a contract, a title agent would typically do whatever is the custom for that area.  The responsibility of the buyer and seller, then, is to review these figures and then by signing the settlement statement, acknowledge acceptance.

If the county tax bill is based on a calendar year, and the bill doesn't come out until October for this calendar year, then it would make sense that the seller would have given you a credit for January 1 thru June 26.  This credit would be on page one of the HUD-1 on the bottom half of the page.

If the county tax is based on a fiscal year, the dates may be different and it is possible that the October bill is for a fiscal year that started after June 26 but in that case you would have given the seller a credit for the county tax to adjust for what they had paid beyond closing to the end of the fiscal year.

Tax prorations are typically not covered by title insurance.  However, they may be covered by a Closing Services Letter if you are in an area where such letters cover consumers.  In PA the letters DO cover buyers.  The basis of a claim under the letter is that the title agent did not follow the written instructions.  In that case you would have to show that you gave written instructions for prorations and as I mentioned before, these are typically in the sales contract.

If there is no basis for a title insurance claim you could speak with an attorney and consider suing the title agent for negligence. Again, though, I think you'd have to show that they were given instructions and did not follow them.

Prorations of taxes are not mandatory as part of a real estate transaction.  They are negotiated by agreement between buyer and seller.

Hope this helps. ;)

Diane

tip for preparing your Power of Attorney

First, if you are an adult with children and/or property, please take the time to have two documents prepared by an attorney - a Last Will and Testament and a Power of Attorney. People become disabled or die unexpectedly so please do not wait until you are old to make important decisions and codify them in writing.  You probably also want to add a Living Will or Healthcare Directive.

Second, if you already have these documents, remember to look at them every few years and make changes as needed with your attorney's assistance.

I am not an attorney but as a title insurance agent I read a lot of wills and power of attorney documents.  After reading so many I've given thought to my own documents and made some changes.   The one big change I'd like to talk about in this post concerns powers given to another person to manage your affairs.

This is on my mind today as a loved one is in the hospital and we just reviewed important documents.

When you ask your attorney to prepare a Power of Attorney document, it will likely be a General Power of Attorney which gives broad powers to your agent/attorney in fact to pretty much do just about anything with your property.  Presumably this person will act in your best interest and I think you might presume that they will do so only when you have given permission, right?

What if you are perfectly capable of making decisions but your family or this person decides that they want to make a decision for you without your knowledge?

We had a case in our office recently in which an elderly lady living in an assisted care facility owned a country cottage, one that she loved according to her family.  She had no children.  She had executed a General Power of Attorney document giving power to her nephew. The nephew listed the cottage for sale and signed a sales contract without ever discussing it with his aunt. His aunt is lucid, just too old to live alone, has no children with whom she might reside. Had she considered that he might make major decisions on her behalf without discussing them with her?  Probably not.

When we received the title order and saw a the Power of Attorney document we asked if his aunt was capable of signing the deed. That's when he revealed that she was unaware of the sale but that she was capable. He said she really loved the cottage and thought that selling it would upset her. We insisted that he get her permission for the sale and that she sign the deed herself.  She consented and we closed the transaction.  I have no idea how that conversation went, but she might have felt compelled to complete it since the transaction had moved so far along.  What if she had been contemplating one last stay in the cottage or just looked forward to maybe spending an afternoon or two there?  I can imagine that, can't you?

At any rate, this could be avoided by creating a Power of Attorney which only goes into effect after one or two [you choose the number] doctors write a letter stating that you are mentally incapable of making decisions.  This way you have a document in place in case you are still alive but incapable of managing your affairs but while you are alive and still capable you are not giving broad powers to another person to act in your stead. You have given power but limited it to the time when you are incapable to manage things yourself.

Again, I raise this as something for you to consider when you work with your attorney in creating these very important documents.  I have noticed over time that very few Power of Attorney documents contain this limitation.  I'm not sure why, but I think it's a good idea and so my personal document does contain such a limitation.

eAppraiseIT ..... "BADddd"

The settlement is based on 10,000 appraisals for WaMu in 2006 and 2007, and related communications with employees. Emails show a pattern of favoritism that created a "proven appraiser list" for Washington Mutual.

One email produced during trial stated: "The appraisal list that eAppraiseIT ... is using has been totally scrubbed. But instead of keeping good appraisers, they went for the BADddd ones." 

http://www.housingwire.com/news/new-york-ag-settles-wamu-appraisal-case

Ask your title insurance agent how they guard your private data.

This is one of those things that really bugs me about the title insurance business.  Beyond the broad federal privacy laws there are no rules that govern how we guard YOUR most private financial data.  There are no guidelines for storage or disposal.  Doesn't that bug you, too, as a consumer?

Add to that - even operating with privacy laws, your information may go to parties who are not subject to licensure and may have been subjected to little or no vetting.   That's even more disconcerting to me.

Consider this.  When you apply for a mortgage loan, you provide your full employment information, all or most of your banking accounts and your outstanding debts.  All of this information, along with your residence, marital status and social security number is typed onto a form 1003, the uniform residential loan application.

This 1003 form and often attached exhibits such as tax returns or bank or credit statements are given to the title insurance agent as part of the closing documents, usually so that you can sign these documents at the closing.

If the title insurance agents uses its own employees to conduct the closing, these documents at least do not leave their care.  If however, the title insurance agent uses notary signing agents who are not employees, these documents containing your full financial data move into the care of yet another entity who is in most states not licensed.

Even when dealing directly with one of the super large title underwriters you may experience your data moving to such an unlicensed entity or even overseas - off shore - for processing.

Now that I've explained how your most private personal financial information can move about, I'd like to tell you how our office, The Closing Specialists, handles this information.

1.  We only use on staff, fully trained and well experienced, closers.
2.  We hire a secure shredding service to routinely pick up trash that contains sensitive information.  We have shredding disposal boxes on every floor excepts the main floor which is open to the public so that employees can easily dispose of document copies or faxes which do no move into your permanent file.
3.  Your full permanent file is retained in our on-site storage until it is scanned and then it is also given to the secure shredding service.
4.  Your scanned documents may only be accessed by an employee.  Requests coming in from outside of our office are screened by a manager.  Requests must be in writing and the party making the request must meet privacy law requirements for access before a document is released.
5.  Off site backups of this data are stored in a bank safe deposit box.
6.  When we have a need for a hardware repair or upgrade to the system in which this data is stored, the work takes place on site and the old equipment is retained by us and stored in a locked room which can only be accessed by management.

We take our role as custodian and guardian of your personal data very seriously.  Frankly, I don't even think we ought to have access to this information as it isn't really a part of the title insurance transaction however, for now mortgage lenders don't see this as a security risk and so since we receive the data and we recognize ourselves that it IS a security risk, we guard your data.

So, when you are deciding between title insurance agents, think about how you guard YOUR personal information and then realize that your choice of title insurance agent is a part of that security plan.

on the evolution of our industry

Diane,
I am the branch manager of a title insurance office. I've enjoyed your blog for the last year or so and I am wondering what your thoughts are on the CFPB proposed changes to the Truth in Lending and RESPA act disclosures and their effect on our industry. I understand and applaud the goal of protecting consumers but I am concerned that these proposed changes will hurt small title offices. 
Your thoughts?

Hi, T:

Thanks for your kind words about the blog. I take a long view of this business. I've been in and around it since 1973.  It's always been in a state of constant change.  Interestingly, though, the community of people just keep playing musical chairs and manage to find places in the ever changing evolution.  So, I don't worry too much about the possibility that small agencies such as mine might be effected.  We've always tried to roll with the punches, stay honest, and serve the needs of consumers, lenders, and real estate agents.  Somehow, doing that we've been able to find niches in large and small markets that have allowed us to survive.

I have already discussed with my staff that it is possible that the evolution of the industry might eliminate or severely change the role of a title agency.  If we can't find a way to get rid ourselves of the lousy agents and maintain professional integrity, then like mortgage brokers before us, the business model may be considered too risky and the good guys will be tossed out with the bad.  I have assured my staff that they ought not to worry because no matter what, the work of moving real estate will march on.  It is a necessary function and there will always be a place for well trained people who know how it works.  We'll just move into some other position.  Some of us will use our skills to create new businesses that function within a new workplace model.

We need not to be buggy whip makers trying to protect the way we make our living.  We can evolve.  Don't be afraid.  ;)

Diane

There's blood on the walls!

I know we're not the only folks in this business who enjoy the company of a dog or cat in the office.  When well behaved they are great stress relievers for us and some consumers.

We currently have two feline office mates.  Other than Gracie being a shedding long hair, these cats are no trouble at all.

This morning, however, we had a big surprise or should I say JC had a big surprise. He walked into his office and started working.  DH came in and asked what was that all over his printer - it looks like blood.  That's when they noticed blood spattered all over his office walls and everything else.  There were little bits of blood everywhere.

Best we can think it that a bat came in and had a confrontation with Gracie and KC.  We can't find anything else, but WHOOBOOY, what a creepy discovery!

What's the best way to learn this business?

Hi Diane,

I came across your name online as I'm doing some research regarding being a title closer. I've just begun this career and I am still in the learning phase. I've done about 5 or 6 closings on my own but am looking for more knowledge. My experience and background are not in finance or real estate so it's all very new to me. I'm looking for someone to answer some ABC's: how to mark up a report, as well as to explain what each document means (especially if clients ask as well as for my own knowledge). Any advice or guidance you have is greatly appreciated. 

Best, 

C

Hi, C:

The only way to learn is to apprentice at the side of a knowledgeable title agent.  Find one and work for them.

Good luck.

Diane

acting as a scrivener versus legal counsel

Every state is a bit different.  In Pennsylvania we have licensed title insurance agents who may or may not be an attorney.

Non-attorney title agents are permitted to create documents that are directly related to the title insurance policy being issued for the transaction but they perform this task as a scrivener.  Much care must be taken to assure that the non-attorney title agent does not engage in the unauthorized practice of law.

How do we handle that in our office?  We look at the sales contract and mortgage commitment letter - as applicable - and incorporate the language of any special conditions into the document.  Where such language is not already crafted, we ask the parties to draft it.  Put in writing what you want the document to say and we'll insert it.  Sometimes it is the mortgage lender who crafts language and sometimes it is the buyer or seller who craft language.

The basic rule about being a scrivener is that you are a scribe.  You write what they tell you.  You fill in the blanks.

There are many documents we will not create even when related to our title insurance transaction.  We keep it simple.

Even attorneys often choose to note that they are acting as a scrivener.  We see this on deeds all the time.  It means that the attorney likely did not examine title or act in an advising capacity.  It simply means they acted as a scribe and prepared the deed in the manner requested by the consumer.

So - keeping this explanation useful for a consumer - keep in mind that there are limits in authority or professional relationships and if you expect the person handling your case to act as an advocate or legal adviser, then you need to voice that expectation. You will pay for that service and you will need to formally establish that kind of a relationship with an attorney in writing.  Legal counsel is a special type of service.  It identifies conflicts of interest and specific tasks.  The price for such service is beyond that of simple deed preparation.

The bottom line is that to be a savvy consumer you must understand what you are paying for.  If you are capable of representing yourself by thinking through your transaction and making your own decisions, using a scrivener - attorney or non-attorney title agent is the least expensive path.  If you expect and desire legal advice or advocacy - someone to think for you, then expect to pay for services beyond simple document preparation and/or title insurance.

RESPA 2010....lenders are more accurate and closing costs have dropped!

"This is the second year in which lenders are required to estimate third-party fees within 10 percent of the final cost. It seems like they're getting more accurate, which helps explain the sharp decrease in these fees over the past year," said Greg McBride, CFA, Bankrate.com's senior financial analyst. "The main lesson of this survey for consumers is to shop around for at least three different estimates. While no one is going to move to a new state just because closing costs are lower, it's important for people to realize that there is variation even within their neighborhood, and that they can save by being an educated consumer."

http://www.marketwatch.com/story/mortgage-closing-costs-dropped-seven-percent-over-past-year-2012-08-06

Title insurance does NOT cover the seller.

Last week I was contacted by a seller in a transaction we had closed last month.  He was concerned because he had received a notice of tax sale for the property and thought we had paid all of the delinquent property taxes.  I asked him to fax or email the tax sale notice which he did.

The first thing I noticed was that it was for a different tax map number. My immediate concern was that this may have been a parcel that they intended to sell but had not clearly identified it as part of the transaction.  The tax sale notice was for a Lot No. 108.

Our file was scanned so I was able to quickly determine that we had insured the conveyance for two lots - 107 and 108 - but they were both a part of ONE tax assessment and it was a different tax map number than the number on the tax sale notice.

Ah-oh...a merger...an undiscovered merger - likely not discoverable by a regular title search.

If you don't operate in the rural counties of Pennsylvania, you might think a merger of a two tax parcels would be clearly notated by the tax assessment office and thus easily discovered. That is the case in some counties but not all. In the rural county in which this property is located, the tax assessment office makes no such notation and so unless an abstractor stumbles onto something, they won't find it.

I asked our abstractor to re-check the assessment and get back to me.  He did and reported that in 2010 our seller had sent a letter to the tax assessor asking that the two lots be merged into one tax assessment.  The following year -2011 - both lots were billed under one number.

The delinquent taxes we collected from the seller at our closing were for years 2009 through 2011.  We did not know at the time of closing that there was outstanding additional taxes for years 2009 and 2010 under a different map number.  It would have been helpful if the seller had noticed but he didn't.

I contacted the seller and advised that he needed to pay the tax.  He refused and insisted that the title insurance should cover this error.  I explained that the title insurance protects the buyer and the lender.  I further explained that the seller gave a warranty to the buyer and signed affidavits for us that acknowledged he is responsible for the taxes and that if he doesn't pay, we will pay and then sue him.  I said this nicely, not in an angry way but with no wiggle room.

To help him better understand I said that if we had known about the tax parcel merger, he would have paid this additional money the month before at closing, right?  He's just paying it now, instead of then, nothing more, nothing less, just a month later.

So, I contacted the lender and the buyer - they know I am giving the seller a week to pay before we step in and take care of it.  I am hopeful the seller will ante up, but either way, the owner and lender are protected.

This is a good example of a title insurance claim - one that doesn't get logged at the title company or show up in the statistics.  We just resolve it and move on.

We've been very busy lately. The market in Pennsylvania has kicked into gear.

I'm so happy that I had a chance to update our web site before things got crazy.  I use our title premium calculators all the time.  I don't even have a rate card on my desk anymore.

I'm particularly tickled that the web site is smart phone ready. Thanks, Blogger.

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.

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.

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.

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.

Diane

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.


http://www.consumerfinance.gov/knowbeforeyouowe/#rule

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.

M

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.  ;)

Diane

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,

w

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.

Diane.

Here are the new "tentative" common level ratio factors. I'll get another version up if they change.

PA Common Level Ratio Factors

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.

tax amount calculated incorrectly on HUD-1

A tax amount was calculated incorrectly on my hud-1 statement in my favor.  The settlement lawyer called me and requested that I pay the money back; which I believe I should.  However, there is no correction being made on my statement.  My question is:  Shouldn’t I get a corrected Hud-1 statement to show my true settlement cost.  Also is this even legal without a correction?

I would really appreciate an answer as I researched this and can’t find anything that covers this situation, I am being harassed at my job and receiving phone calls on my cell asking for the money.

I not really sure what’s the right thing to do.

Thank you,

L

Hi, L.  If the taxes that were incorrect impact the prorations on HUD-1 keep an eye on the 1099 if one is being issued to the IRS.  You want to be certain correct figures are given to the IRS.  Otherwise, I think you should expect a letter from the attorney explaining what happened and evidence to support the tax figures.  You are honorably correct that you need to make right an error but I wouldn't give money unless I had documentation for my records.  You can use the letter and evidence in addition to your HUD-1 statement as a formal record for your tax preparer.  These things are often resolved without redoing the HUD-1 statement.

Thanks for reading and sharing.  Hope this helps.  ;)

Diane

PS  Hmmm..not to confuse - when I mentioned the IRS 1099 I was presuming you were the seller.  If you were the buyer and you had a mortgage lender, then your mortgage lender needs to be part of the decision whether or not to create a corrected HUD-1. If they don't care, get that in writing - email is fine.  ;)

abandoned road ownership dispute

Hi Diane,
We own a property that sits on an abandoned town road in Connecticut. In the original deed dated 1947, the owner of the land from which our property was originally subdivided, transfered all right, title, and interest to the center line of the road to our property boundary as extends along the length of the boundary along the road. This language is consistent throughout our title lineage. Our neighbor who is the grandson of the woman who was the original seller on the deed in 1947 and shares the same sir name, inherited a very large remaining land plot, previously a farm, in 1963 when this seller died. In his probate deed, he does not acknowledge the sale of this portion of the road and adjoining property and refers exclusively to the co-ordinates on a newly created subdivision map which he ordered dated 1963 excluding any language in his deed as to his boundary as the center of the road  and makes it appear that the road is an "easement" vs. abandoned road that he created to run through "his property".  In past history, he has tried unsuccessfully to relocate this road to afford him enough land acreage to secure a building lot which the road is preventing him from procuring as it stands. Recently he decided to build on a portion of land on the other side of our road (he has enough land for one lot) and submitted a map to the zoning department claiming ownership of the entire road and adjacent property to our property line...this map was certified by the zoning department with no reference to the language of our deed or our stated boundary as the center of the road and is subsequently he is claiming all the property from the center of the line of the road to our boundary which is about 15 feet from the road and 250 ft along our boundary.  Our attorney has requested that the surveyor acknowledge our deed, and revise the map accordingly but the owner and surveyor who are friends, are ignoring our request. My attorney is advising us to do a "quiet title action" to clarify the language in our deed but this will cost us a lot of money and put our deed up for question before a judge. My attorney asserts that there is a "cloud" over our deed due to this situation. My question is....will our current mortgage lender's (major bank) title insurance have their attorney fight to clarify this for us, or will our title insurance pay their attorney to defend our title to remove this cloud over our deed. Because we are still under mortgage for 18 years, do we have the right to defend this title that the bank technically still owns? 
Thanks,
J


Hi, J:  I would suggest doing two things:


1.  The surveyor is working for the other landowner.  You need to get help in another direction.  Have your attorney send a letter to the municipality advising them of the boundary line dispute - include the evidence you have in your chain of title.  Your attorney should warn them to delay approval due to pending legal action and suggest that they may be at risk of a lawsuit should they proceed with approval of your neighbor's application after having received constructive notice of the dispute. I suggest this be sent via certified mail.  You could also write this letter yourself if you prefer.  Remember I am not an attorney but I think this approach will be helpful because most municipalities are afraid of lawsuits and most try to treat citizens fairly.  If they show favoritism to this other landowner, you could recruit assistance from the local media to shed light on that.


2.  The loan policy does not cover you and would not cover the lender in this case unless they were foreclosing.  ASAP open a claim with YOUR owner title insurance company.  Their legal department will look at the situation and make a determination whether to defend your title.  Key to this is to review your owner policy and look at the legal description - often on Schedule C.  Does it include the disputed area?  If it does, then they have insured that you own this land and you have standing to expect coverage.  If you do not see this disputed land in the legal description, there is likelihood that you won't be covered.  In either case, open the claim and let them review your case.


There may be state law which specifies how abandoned town roads move in ownership.  Be sure that your attorney has researched this angle because recitation of such a law, if it is in your favor, might help resolve the matter favorably for you.


Hope this helps.  Good luck!
Diane

sample of a HUD-1

Test HUD0001 We get many requests to this blog for a sample of a HUD-1.  I decided to post our "test" HUD.  It's not based on a real transaction.  We keep this one on hand for training and the figures you see may be from differing scenarios.  So, please don't try to make logical sense out of the numbers.  This is meant to help you visualize what the form looks like and also see the placement of items like the seller assist.  Hope you find it a useful tool.  ;)

Diane

a new letter from Steve Adkins in response to a WSJ article

To the Editor:

As a real-estate title examiner with decades of involvement in efforts to bring some transparency to the real-estate settlement and title insurance processes, I read with great interest the editorial "Consumer Bureau Brushback" [June 4], particularly the aside, "The consumer bureau now enforces Respa, thanks to Dodd-Frank" (after nearly 40 years of lobbying and lawyering, Respa, the 1974 Real Estate Settlement Procedures Act, could better be called the Real Estate Specialinterests Protection Act).

Barney Frank has a history with title insurance reform, and for homeowners it isn't a good one.  He singlehandedly extinguished the most promising attempt to date.

In January 2006, Rep. Michael Oxley, then-chairman of the House Financial Services Committee, directed that the Government Accountability Office investigate title insurance to determine where the homeowner's premium dollar alights.  In its preliminary report, the GAO related that it found that 80-85% of the premium is retained by settlement agencies, but it hadn't been able to follow the money past that.

The title industry asserts that most of the premium is used for extensive and exacting title examination and risk elimination.  On April 26, 2006, the president of the American Land Title Association swore before Mr. Oxley's committee that "premiums mainly pay for searches of public records...most of the premium goes toward identifying and eliminating the bulk of the risks the insurance is intended to cover."  But when the GAO's final report was issued in April 2007, it still hadn't been able to find where the premium dollar comes to rest.  State and federal regulators couldn't tell the GAO, and the title insurers couldn't confirm the ALTA's assertion (so much for the industry's claim that it is highly regulated).

By then, Mr. Frank had succeeded Mr. Oxley as chairman of Financial Services, and Poof! -- the reform effort disappeared.

Had Mr. Frank directed the GAO to resolve the matter, the GAO would have found that when a new home is purchased from a builder, most of the title premium takes a path to that builder, via an agency controlled by the builder.  In the case of a resale, the premium takes a path to the realtor, via an agency controlled by the realtor.  And often in the case of a refinance, there is a similar path to the mortgage lender.  The prominent title-insurance blogger Diane Cipa recently marveled at the ever changing terms applied to the various contrivances and mechanisms -- first, they were "controlled businesses"; then, "affiliated businesses"; then, "joint ventures"; and now, they are "affinity relationships." But whatever the term, the result is the same.  Entities that can direct the settlement to an agency that they control, pocket the title insurance premium.  Bless 'em in their legitimate lines of business, but when it comes to title insurance, builders, realtors, and mortgage lenders are the unholy trinity of profiteers.  And there's enough vigorish to make Sonny Corleone blush.

While the Consumer Financial Protection Bureau now has oversight of Respa, Respa's present configuration was formulated by David H. Stevens, as Federal Housing Administration commissioner and assistant HUD secretary in charge of housing.  Before his appointment by President Obama, Mr. Stevens was the CEO of the realtor Long & Foster, where his duties included management of its settlement and title insurance adjuncts.  In connection with that, he also headed the Real Estate Services Provider Council (RESPRO), a lobbying group for realtors, builders, and mortgage lenders, whose purpose is to convince politicians that the diversion of the title insurance premium to RESPRO's members is a good thing for the homeowner.  (Mr. Stevens was confirmed by the Senate in July 2009, with nary a complaint from any consumer advocate.  As FHA commissioner, he had many areas of concern other than title insurance, but still...  Stevens has since left his government position and presently heads the Mortgage Bankers Association.)

So with RESROB..er, RESPRO...guarding the chicken house, don't expect any meaningful reform of title insurance from Respa or the consumer bureau.  I suggest a much more direct route.  The Department of Justice should conduct forensic audits of the settlement operations of a few RESPRO members and their like -- I suggest Mr. Stevens' own Long & Foster as the representative realtor, and NVR, Inc., which has a policy of avoiding title liability by foisting special warranty deeds on its naive customers, as the representative builder -- and determine where the title insurance premium dollar alights.  The auditor will find that the premium doesn't go for extensive examination and risk elimination, as asserted by the industry.  Rather, the auditor will find that nearly all of the premium comes to rest in the pockets of the companies' executives and owners.  Respa, schmespa, it's a matter of simple fraud; one product (an examination-backed assurance that the homeowner's title will not be challenged) is represented, and a lesser product (a promise to defend, if the title should be challenged) is delivered.  Prosecute and fine accordingly -- Long & Foster has directed 100,000 settlementts a year, the amounts diverted run into real money.  Then, with Mr. Frank no longer in congress to protect them, the special-interest third-party interlopers in the title insurance business will be forced to take note.

Sincerely yours,

Steve Adkins

3502 Cobb Drive

Fairfax, VA 22030-2918

703-980-8177

landtitleinstitute@yahoo.com

did the gas rights move with the deed?

Hello,

I follow your blog and appreciate you helping people on the web. I have a concern when it comes to my dads property and oil rights. MY grand parents left the property and gas rights to my dad back in 1981 in a will. The deed was never transferred or recorded until 2000. The estate attorney (whom i wont mention) copied and passed all legal descriptions and didn't transfer the gas rights to the property. They are still in the estates name in which my dad was the administer and transferred to my dad in a will. 

How can we fix this issue. we have 2 storage wells on the property and dominions wont send checks anymore in the estate name and need my dad to have a deed with gas rights. I was considering a correction deed? just to give gas rights, the family is all willing to sign off on this, its just really tough as i dont know where to go.?

I know a title search is pretty expensive and we dont have alot of money at this point. Any helpful info would be great.

Thanks.
H


Hi, H:

In PA if the gas rights are owned by the seller and not mentioned in a deed, they move with the property.  Our deeds convey everything the seller owns unless they expressly reserve something.  I would be surprised if it doesn't work in the same way where you live.  If that is the case, then it would just be a matter of changing the name on the gas lease to the new owner, your father.  Try contacting the gas folks and explaining this.  See if they will simply change the name.  If the person you are speaking with isn't sure, suggest they confer with their legal counsel.  If that doesn't work, then get an attorney who specializes in real estate to look at your deed and write a letter to the gas folks.  I don't think this will be hard to resolve so I don't think you should have to pay for large legal fees.  

Don't be too hard on the estate attorney as simply taking the legal descriptions from prior deeds is the norm.  ;)

Good luck.

Diane

We have our PA title insurance calculators ready to go with the new rates. Bookmark them!

PA TITLE INSURANCE RATES FOR PURCHASE

PA TITLE INSURANCE RATE FOR REFINANCE

These title insurance rates impact all closings starting with a July 1, 2012 closing date on the HUD-1.

refinancing tips

Refinancing is what you do when you put a mortgage on a piece of real estate you already own. Mortgage lenders call it a refinance even if you own the real estate free and clear. Use this handy TCS refinance guide to understand the process and avoid common pitfalls. We at TCS have had lots of experience closing refinance transactions. We’d like to help you be an educated consumer.

1. ORDER A PAYOFF LETTER

If you have an existing mortgage, the very first step is to ask your mortgage lender for a payoff letter. All of the calculations you and your new lender figure will be based on how much you owe. Do NOT skip this step. There may be a small fee to get the letter, but it’s worth it.

Don’t just check your current principal balance, it’s not the same as a payoff. Why? Well, mortgage interest is paid in arrears. That means that your September payment actually paid the interest for August, so you are always one month behind in interest. When you payoff your mortgage, the lender will play catch up and add the remaining interest to bring you current. AVOID THE MOST COMMON REFINANCE PITFALL by getting a payoff letter up front.

2. THE HIDDEN AFFECT OF PROPERTY TAXES AND HOMEOWNERS INSURANCE

Timing and pre-planning a refinance will help you AVOID THE SECOND MOST COMMON REFINANCE PITFALL – getting caught in a cash crunch because your money is tied up in an escrow account at the time of closing.

If your existing mortgage lender has money set aside in an escrow account, look closely at the payoff letter to determine how they will handle these funds. Some mortgage lenders will give you an immediate credit for the escrow balance and this reduces the amount of the payoff. That’s great, but most lenders will simply mail you a refund check 2 to 3 weeks after the mortgage has been paid off. If it looks like you’ll be getting a refund check, it is very likely that you will have to bridge the gap and come up with cash at closing to set up your new escrow account for the new mortgage lender. Here’s a tip – most mortgage loan officers don’t really understand this scenario, so YOU really need to plan ahead yourself.

Timing again is the key to AVOIDING THE THIRD MOST COMMON REFINANCE PITFALL - a cash squeeze related to property taxes. If you are closing your refinance transaction at the same time the property taxes are due, you could get caught in a title guarantee “Catch 22”. Here’s how it works. Let’s say the county property tax is due at discount on March 31st. You are planning to close on March 20th. The tax collector is reporting the tax as unpaid. Your existing mortgage lender has debited your escrow account to pay for the tax and may or may not have actually mailed the check to the tax collector. Since the tax has NOT been officially paid, TCS has to collect the tax from you at closing to guarantee payment for your new mortgage lender. It’s a real “Catch 22” and the only way to avoid it is to plan the closing date around the payment of the tax. Closing would need to either take place before your existing lender debits your account OR closing should be delayed until the tax payment has been posted by the tax collector. This is often easier said than done because you may be up against a rate lock expiration with your new mortgage lender and can’t delay closing.

The good news is that in either case, when you have to ante up cash at closing to cover tax or insurance related payments, you will always eventually be made whole. Refunds are processed as the payments are made and posted. If you have the cash available to ride through the refund process, that’s okay, but if you don’t, this information will help you to plan to avoid this kind of a last minute snag.

3. THINK ABOUT WHEN YOUR NEW MORTGAGE PAYMENTS WILL START.

Refinancing often gives you a one or two month break from having to pay a mortgage payment. For instance, let’s say you are closing on February 5th and haven’t yet made a mortgage payment for February. Well, your existing mortgage will be paid off before the end of a typical 15 day grace period and it’s likely that your new mortgage payments won’t start until April 1st. Make a note to discuss this with your new lender and keep any possible cash flow benefit in mind just in case you need to come up with unexpected cash to close due to tax or insurance related payments.

4. WHAT IS THE PURPOSE OF THE REFINANCE?

Your new mortgage lender will want to know. Are you just reducing the rate/term or do you actually need to pull cash equity out of the property? Each mortgage loan program has specific guidelines relating to the length of time you have owned the property, how much cash you can pull out, etc. Be prepared to estimate the value of your property and discuss why you want to refinance. This will help your new mortgage lender find a program that’s right for you. An appraisal ordered by the new mortgage lender will ultimately set the current market value, but you have to consider possible options should the value come in lower or higher than expected, later on you and your lender can adjust the loan amount accordingly.

BOTTOM LINE – DO SOME HOMEWORK TO AVOID EXTRA STRESS, THEN REAP THE BENEFITS OF REFINANCING. WE AT TCS ARE HERE TO HELP YOU DO JUST THAT.

replace a lost owner policy with a duplicate original

Hi Diane,

I saw your blog and hope you might be able to answer this question.  I bought my home 7 1/2 years ago and title work

was done at that time.  By who I can't remember and I inadvertently destroyed the original policy while getting rid of old paperwork.

I did contact the closing attorney but his office might not have those records.  Is there a way to obtain a copy of the original policy?

It seems even though there was clear title when I bought it, now in selling there are judgements from the previous owners.

Any help would be deeply appreciated.

Sincerely,

A

Hi, A:  If the closing attorney was the one who issued the title insurance, you can request a duplicate original policy directly from the attorney.  If he is uncertain how to issue a duplicate, he should call the title company underwriter.  They all have a procedure for producing duplicate originals.  Mortgage lenders often make this request when their loan policies get lost in transit.

I would be really surprised if the attorney doesn't have any records from 7 1/2 years ago.  Everyone uses computers now and even if he destroyed the paper files, I can't imagine that there isn't something in his software.

Frankly, I've never encountered an attorney who didn't keep all their paper files. I call law offices all the time to ask questions about old files when we are trying to resolve title problems.   It's just a matter of giving them time to go find the file as it might be stored off site.  You might offer to pay for their effort.

Hope this helps. ;)

Diane


PS  You should also look for the HUD-1 Settlement Statement which should show that you paid for coverage and it should also identify which title insurance company was paid.  The attorney may have records of checks issued from the closing funds which could tell you who got the title insurance premium.

Finally, if you cannot establish proof that you have title insurance, you may want to hire a competent title insurance attorney to review those judgments.  I find often that sellers are asked to pay for liens that are expired or not valid.  Defend yourself before paying.  Delay closing until you have exhausted your defense.  If you close and pay the judgments expecting to recoup damages later there is a good chance of getting no help.