unreleased mortgage and title insurance in action

"In one way or another, we believe that the title insurance companies will fix the problem," Davis said. "Title insurance is bought because it is conceivable that mistakes were made on the title search."

Nielsen said the title company that worked for William Ryan Homes on the sale was aware of the Maple Lawn mortgage, "but it (the title company) had the understanding that the mortgage would be released from those lots."

I read this story with interest and wondered why the attorney or title insurance agent didn't control the release.

Maybe they trusted someone to clear the title. I like to use the Ronald Reagan approach, "Trust, but verify."

So, if you heard us ask for a copy of the signed release and a letter from the lender approving the release for consideration and promising to record upon receipt, then you'll know that we DID trust but we didn't forget to VERIFY.

Consumers should choose quality title expertise.

Look for demonstrative knowledge when selecting a title insurer. Call and ask some questions. Ask if they are just doing current owner searches or will they perform a full search? Do they even understand the question?

query: difference between cashiers check and certified check

A cashiers check aka teller check is issued by the teller at the bank. It's not your personal check. The bank will type one of THEIR checks and the teller will sign it. You will be noted as the remitter.

A certified check is YOUR check which has been stamped certified by the teller. The teller freezes these funds in your account. The check can't bounce.

Both types of checks can be forged. It's easier to forge a certified check so many title agents will no longer take certified checks.

Many title underwriters require a wire for this reason. If we continue to see claims due to forged cashiers and certified checks, look for a switch to ALL WIRE funding at some point in the future.

living in each other's houses?

I just met with neighbors to sign their lots/houses to each other......the one neighbor purchased their lot and then built a new home on their lot in 1961.  The other neighbor bought their lot and home in 2015 (since 1960, the property has been transferred 4 times).

The legal descriptions/lots showed that the homeowner in 1960 and 1961 built their homes on the wrong lots!!!

Thank goodness each current owner understood the circumstances and cooperated with each other to transfer the correct lots to each other.  Problem solved.

I just ask myself...why wasn't this caught sooner?  

hey...give your lender a break!!!

Your lender gave you the money in exchange for your promise to repay it with interest.  Don't get mad when they get grumpy when you want them to modify terms without cause, okay?

I closed a transaction last week and the sellers were just fuming over their mortgage lender.  First the mortgage payoff letter included $1200 in interest.  What crooks!  I calmly explained that since the February mortgage payment hadn't yet been paid, the lender was collecting the interest owed for the month of January.

In case you didn't know, mortgage interest is paid in arrears.  That means you are always paying for the previous month so when you pay off a mortgage, you will always be playing catch up with the interest.  It's normal and should be expected.

Okay, so they weren't happy about that but they did understand.  Then they started really expressing anger that their mortgage lender wouldn't allow them to freeze their payments.  I couldn't quite understand what that meant.  Turns out that they thought it was completely acceptable to stop making mortgage payments once they decided to sell the property.

What?

Yes, when they decided to sell, they called their mortgage lender and asked for a freeze in the payment process.  Of course the lender said no.

Mind you there is no financial distress here, no subprime crapola, no default pending,  just a simple unrealistic expectation that their mortgage lender would go along with this plan.

The property being conveyed was an investment property with a positive cash flow.  I just couldn't get any clarity on why they thought their mortgage lender should take a vacation in the promise of repayment other than the news of mortgage modifications out there in the media.

I'll probably not see this kind of pretzel logic again...

Irish Blessing

May the road rise to meet you
May the wind be always at your back
May the sun shine warm upon your face
and rains fall soft upon your fields
and until we meet again
may God hold you in the hollow of his hand

query: difference between effective date and issued date on the title commitment

The title searcher (abstractor) will note a cover date on the title search.  This is the date through which the courthouse records are up to date in their system.  The abstractor can not go further in time than the records allow.  The cover date would be the effective date of the title commitment.  The date of issuance would be the date the commitment is issued by the agent.

For example, I may be examining a title search (abstract) today, March 11th, with a cover date of March 3rd. My effective date of the title commitment is March 3rd even though I am issuing the commitment today.

query: who is responsible for sending out the title insurance policy to the buyer

The issuing title agent, attorney or title underwriter is responsible for sending policies to the lender and the buyer. You should have a copy of the title insurance commitment in your hands before you close. Whoever issued the commitment, will issue the policy. Sixty days is a reasonable period to wait after closing without getting worried. After sixty days, make inquiries.

Some attorneys and title agents have bad habits. Some never issue policies. What crooks!

BTW - If you are trying to determine whether the title insurer you are working with is a good guy or a bad guy, ask about the title commitment and when you will receive a copy. The answer to that question is very revealing. It will separate the knowledgeable and dependable from those who are neither.

Owner's Policy questions

Questions about an Owner's Policy?

An owner title insurance policy will protect the homebuyer from many of the risks, but not all. Let me explain...

Owner title insurance does not cover the condition of the structure. A smart homebuyer will take the time to hire professional inspectors and look at their reports before the closing. Keep in mind the age of the house and be realistic about your expectations. Every good home inspector will point out all the flaws they find. You, the homebuyer, will need to decide which ones are really important and then negotiate with the seller for repair.

A consumer should also buy a current up to date survey, making sure the surveyor actually does field work and research. The drawing should accurately show the location of easements, rights of way, and improvements/structures. It’s not safe to rely on the seller’s knowledge of lot line locations. They may be mistaken. Owner title insurance typically does not cover the location of structures or lot lines. So if you close without a survey and find out later that the garage is actually on your neighbor’s property or that lovely area for a garden is not yours, you’re on your own. You’ll either go to court or take your lumps.

I am amazed when a transaction falls apart because the buyer insisted that the seller make the house perfect. Unless you are buying a brand new home, try to keep your expectations realistic. It probably took a long time to find the right house in the right neighborhood at the right price. Don't blow the deal seeking perfection. A willing buyer negotiating with a willing seller will usually find the right balance and resolve their concerns.

Here's some language we use at closing to make sure both buyer and seller have reached an understanding:

"The undersigned buyer(s) and seller(s) agree that all terms and conditions of the sales agreement have been satisfied or waived.

The undersigned buyer(s) confirms that they have had an opportunity to inspect the premises to their satisfaction and that they have personally reviewed and accepted any inspection reports issued by contractors performing tests on their behalf including but not limited to septic dye test, termite/pest inspection, home inspection, etc.

For purposes of holding the real estate agents, real estate companies, Lender, its successors and assigns, and The Closing Specialists® harmless, buyer(s) agrees to accept property in "as is" condition. Representations and warranties from the seller are still being relied upon by the buyer(s) and are not hereby waived.

Buyer(s) and seller(s) further agree to hold harmless all/any real estate agents, real estate companies, Lender, its successors and/or assigns, and The Closing Specialists® from further liabilities and/or remedies related to the physical condition of the premises."

I know it's boring stuff, but signing this document at closing is a sort of "speak now or forever hold your peace" moment. We really do not want you to close until you are satisfied.

Do your homework before you go to the closing table. Order your survey and inspections as soon as the agreement is accepted. Review any concerns directly with the surveyor or inspector. Negotiate repairs, if necessary. Do a final walk thru right before closing to make sure the condition of the house is broom clean and as agreed. Then close knowing you have done as much as possible to protect your interests and enjoy your new home!

Seller should shop around for fees too!

query: does the seller get overcharged on settlement costs

Yes, indeed they do. Sellers, like buyers, should shop for settlement service providers or at the very least make certain that the settlement agent being hired by the buyer isn't overcharging on the seller side.

We see this in the Pittsburgh metro market all the time. A buyer hires a settlement agent. The settlement agent charges the seller a settlement fee. Why? Does the seller have to pay? No, not unless they bargained for the service.

Seller should ask around and find out what is customary in their market and also whether there are options to reduce their settlement costs.

Off to a new start

Diane (Cipa) Anderson retired June 30, 2016, and I have just recently taken over the "Title Insurance Talk" blog.

"(s)he leaves big shoes to fill, but they're pointed in the right direction."        Ed West

I was nervous at first, since blogging is new to me, but that nervousness has turned into determination and I will give it my best shot.

So welcome to the next chapter...

You should shop for your title insurance agent as you would any other consumer services, by comparing:

1. Costs
2. Convenience – when and where will you close?
3. Service & expertise – how long will it take to process and how long have they been in business?

How do you do a cost comparison?
Any reputable title insurance agent will provide a quote in writing.
The difference in cost may be negligible or significant but you won’t know unless you check it out!

Who should you call for quotes?
Start by asking friends and family for the name of someone they used. Surely you know someone who recently purchased or refinanced a home. Ask your real estate agent or mortgage lender for a recommendation. Check the yellow pages or do an on-line search. We have a title insurance rate calculator on our website, that fee will only be for the Loan and/or Owner's Policy.

To get comparable quotes, you’ll need a short fact sheet and give these essential facts to each company. Remember you need to compare apples to apples to make an intelligent decision.

Here’s a list of questions to ask before getting quotes. Write your answers down and make sure each title insurance agent you speak with considers this set of facts, as they will affect the actual costs in a title transaction:

Is this a purchase or refinance transaction?
If you are refinancing, when did you last mortgage the property?
What is the purchase price?
What is the mortgage amount?
Are you closing a second mortgage at the same time?
In what county is the property located?
In what specific municipality is the property located?

The following list includes typical title related charges. Use it as a guide as you speak with title insurance agents:

Title insurance premium
Title search
Endorsements
Closing Protection letter
Notary fees
Wire fees
Courier fees
Settlement fee
Document preparation fee
Attorney fee
Tax certification/lien letters
Recording fees
Deed transfer taxes/local
Deed transfer taxes/state
Other?

I suggest you verbally discuss the quote then ask each title insurance agent to send you a quote by fax or e-mail.

Make sure the quote is in writing.
Make sure the quote is itemized.
Make sure the quote includes all fees relevant to the title portion of the transaction.

Pennsylvania is a regulated state but there are unregulated fees that will affect your cost. Unless you drill down and get a full quote you can’t really compare.

What I find most interesting when comparing costs are the tax certifications and lien letters. Federal and state laws and regulations clearly prohibit padding the costs of tax certifications and lien letters. We are only permitted to collect reimbursement for out of pocket expenses. You’d be surprised how many closing statements I have seen with lien letters padded an extra $10, $20, or even $50. It’s a carefully hidden income stream for less than honest title insurance agents and attorneys. Be on the lookout for it.

Remember that actual costs may change if the facts of your case change. So keep that in mind and be sure to compare apples to apples when shopping.

Why I am leaving this business....

t r i d

Hi, Folks:  You haven't seen a post from me in some time and I have been pedaling as fast as I can dealing with the monster called TRID.

The disclosure is terrific but the collaboration process is more than I am willing to live with. I don't need that kind of stress.

Since my last post, I have sold my interest in the title insurance agency to Becky Sherry.  Becky will be taking over this blog soon.

I want to say thanks for reading.  Title Insurance Talk has been a labor of love.  Take care.  Live long and prosper.  ;)

Diane

taxes are the topic this week

In one case, the seller told the buyer that the property had a homeowner exclusion which allowed for a discounted rate.  Turns out that wasn't true.  Homeowner exclusions are generally processed once a year by the tax assessor.  Miss the cycle and you pay more tax.  This buyer can apply for the exclusion but got stuck paying for the extra tax for at least this year.


In the other case, a buyer of a condo in a converted building just received a bill from the tax assessor for a catch up period back to the conversion.  This assessment change was pending at the time of the sale but it's not determined if anyone knew who could have informed the buyer.

In both cases, the buyers were careful when they closed.  It's hard to say if either case is worth pursuing the seller or filing a claim against title insurance.  It doesn't cost anything to try a claim, however, title insurance does not cover tax bills that are not yet due and payable. A case would have to be made that the title agents had evidence in hand before closing that these taxes were incorrect or incomplete information.

I wish these homeowners much luck and am posting their situations just to keep you all informed about things that can and do happen.

TRID.....

I love the Closing Disclosure forms.  I have to say it.

What is killing me is the collaboration process.  It's like a bomb went off in the industry and we are working with systems and procedures cobbled together in the aftermath of the explosion.

I continue to hope that there will be a normalcy soon.

[HAHA Just noticed I said that "bomb" comment in a previous post.  Just goes to show THAT'S EXACTLY HOW IT FEELS!]

TRID - the beast moves on....

Well, it's November 23rd and I'm getting to like TRID.  I think when everyone gets the hang of it, we'll all be happy.

just a note to say TRID implementation was like exploding a bomb in the middle of the real estate market....

Everyone just needs to take a breath because ALL transactions are on the slo mo trail, even cash.

We have software issues and every lender we are working with also has software issues.

the trouble with TRID!!!!

Is that it was wholly unnecessary.

Yikes....first TRID closing scheduled

So, how are ya? Feeling like the title world is about to change?  Yea. I hear ya.  Me, too.

Okay, so we have a bunch of TRID transactions in process.  We like to use colors in our office so TRID transactions are in green file folders.  Everything else is in our usual blue.

FYI - We use these colors because the are CALMING colors and every title insurance office needs as many calming influences as we can get, right?

Well, one of these little greenies made its way to "clear to close" status today and here's what happened.

The loan officer said the consumer's expectations were to close on November 6th.  I checked with the lender's closing department and they have a straight "need 10 days notice to schedule" plan in place for TRID closings.  I don't disagree.  I think that's smart so I called everyone and explained the reality of TRID and they said okay to the new date.  PHEW!  Step one okay.

I'll report back as we move through the process.

Keep calm and carry on!

TRID black hole...interesting article

According to the CHLA’s letter, the TRID rules stipulate that a that a lender deliver the Loan Estimate to the borrower within 3 days after receipt of a loan application and at least 7 days before consummation, which is defined as when the loan documents are signed.

The CHLA warns that after the Loan Estimate is delivered to a borrower, a change in in circumstances like the borrower needing to push the closing date could place lenders between a rock and a hard place.

http://www.housingwire.com/articles/34817-community-lenders-warn-cfpb-on-trid-black-hole

follow the link to an article worth reading if you are a lender or title insurer

It is this holding that resulted in most of the substantial increase in the disgorgement amount ordered by the Director. The ALJ had held that the RESPA violations occurred at the time of the closing of the underlying loans, and thus limited disgorgement to those loans that had closed after July 21, 2008 (three years prior to the CFPB’s gaining its authority to bring administrative enforcement actions). Director Cordray instead included all payments made by the mortgage insurers to Atrium after July 21, 2008, regardless of when the underlying loans closed. This substantially expanded the number of payments subject to disgorgement.

http://www.jdsupra.com/legalnews/cfpb-issues-final-decision-in-in-re-phh-54552/