Saturday, December 06, 2014

Houston, we have a problem......and I can't find my title policy!

Hi Diane, Hope you can help me with this one. I am about to sell my home in which I bought late 2006 and was a HUD home, the title company was a franchise to a large company still in business nation wide First American title company but looks like the office did the title went out of business like I have been told by the currant title company that handle the transaction for the sale of my home they said the old title company made a mistake/error regarding previous home foreclosure that was turned to HUD because the loan was FHA. I lost all the paper work/documents the one I got from the old title company and the currant title company asked for such document and told that I lost them. They will not disclose what kind of error but told they discovered the error and the old title company did not. Now I am not sure if my home will be sold and closing date will be in few days and not sure of the nature of the error it can be something to do with the loan from the bank who gave the loan with FHA approval for the previous owner but what I know the bank tried to sell the home before turned over to HUD, my question, who will be held responsible for this kind of error if the sale of my home will not take place? Is it the parent title company since one of it's offices/franchise went out of business? What should be done and keep in mind that I lost all documents regarding my title insurance. My home is in PA since I know each state has it's own law.

Any help you can give will be appreciated and thank you for your time reading this email.

Best regards,


Morning M,  I have two thoughts.  First, the title agent who says they found an error has an obligation to be specific about their finding.  Tell them you want an email explaining the problem and a copy of the title insurance commitment they issued for the new buyer so you can see exactly what they reported as a problem.  If you are working with a real estate agent they should be able to help you get this information.

Next, the parent of the old title agency you worked with is the actual title insurer.  Contact First American immediately and file a claim giving them all information you have available.  Without a copy of your title insurance policy or your HUD-1 settlement statement, they might give you a hard time but if so, you could also contact the PA Dept of Insurance and explain that you lost the paperwork and that First American should have a system in place to be able to find your insurance policy with your name and address.  That's a last resort, though.  Try to get First American to figure out who has the custody of your old file.  If the title agent you used was owned by them, First American may have your file in their custody.  So contact them asap and file a claim.

Once a claim is open, First American will either show the new title agent that they are incorrect, or offer indemnification, or step up and fix the problem.  If it's a problem that has to be fixed, it might take time.  If that happens, they may offer to give your buyer title insurance while they do the fix. That is a legitimate offer that the buyer can consider.

Good luck!