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,

M

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!

Diane

lost policy and title agents are out of business...what to do...what to do?

Diane,

I came across you website in surfing the net trying to find info on obtaining an owners title policy that I cannot find. 

How do I get a copy of my policy ??  I have an endorsement page from Chicago Title but do not have the other parts of the policy(it is officially stamped and has pres. Signatures).  I am doing a re-fi right now and would like the re-issue credit. I have called Chicago title and they say there records do not go back that far to 1997.

Chicago title is telling me that the paper is just an endorsement and without the other papers they cannot send me a new policy. I told them that if I had the policy I would not be calling them.

The title company that performed the closing is out of business by mismanagement(Flagler Title)

I have two first pages of the hud not the second crucial page that may have listed the company.

I do have a survey from 2005 that lists Chicago Title as the underwriter and Olympia Title was the title company. I called Olympia and they cannot find any records. 

If no one has a record how can I protect my house against any title defects ? without purchasing a new policy ? I would think I would have to have a policy as I  re-financed in 2005. But the title in that one I think is the lenders . I did manage to track some down from that hud and called but those companies say no policy as well. Lender First Choice which is now out of business . They were pretty big.  I called the companies that were their major underwriters but no luck.

How do I know if I am getting the run around. Why would their records not go back that far especially since it is the reason they exist is to protect title . Some people never move or re-fi .

Any suggestions are welcome.

Thanks,

J

Hi, J:  This is one of the weaknesses in our system of title insurance.  They rely on the consumer to retain copies and that just doesn't make sense to me.  

You've got two issues here:

1.  getting evidence of owner coverage

2.  getting that reissue discount

You may want to contact the state department of insurance to find out what the requirements are to be eligible for the reissue rate. If you were in Pennsylvania, we would not need a copy of your policy to give you the discount.  We could base the eligibility on the date of your last transaction and even that will change on July 1. They may be able to use the information from your last refinance.

As for the owner policy, without at least a copy of the HUD showing evidence of payment of an owner policy premium, it's hard to say if Chicago would honor it.  On the other hand, you have an endorsement in hand.  Look very carefully at that endorsement.  It should give the policy number and insurance companies do keep track of the policy numbers.  When a title agent goes out of business they audit the policy numbers assigned to that agency and account for each one.  Someone has to have that record. If it doesn't have a policy number it may not be a valid endorsement and you're back to square one.

I think at that point the best you can do is file complaints with the Department of Insurance and perhaps the Attorney General.  Your insurance agent seems to have taken your money and not given you a policy.  They were authorized to do business by one of the big underwriters and if nothing can be done for you, perhaps you can help improve the regulations in your state for other consumers.  Good luck and thanks for reading.  ;)

Diane

query: I cannot find my title insurance policy.

Unfortunately, that may be a problem.  Hopefully, you have your HUD-1 Settlement Statement.  The HUD-1 will identify the settlement agent/title agent on the first page in the top section.  Start by contacting the title agent.  They are the ones who issue the policy in most instances.

If the title agency is no longer in business or not helpful, look on page two of the HUD-1 in the 1100 section.  You should see the name of a title insurance company near the title insurance premium.  If the HUD-1 was prepared properly, that is the title underwriter.  The title underwriter is a huge company and they will have an almost impossible time finding your policy BUT having a HUD-1 in hand showing that you paid a premium for a policy is evidence of insurance.

If the title agent is out of business, there's a good chance they never sent a title policy to you anyway, so having the HUD-1 as proof of payment is important.  If you also have a copy of your title insurance commitment, you've got an open and shut case and the title underwriter can't ignore you.

Consumers, are you seeing the picture, here?  YOU, unfortunately, must be a careful shopper for title insurance services.  I know, that stinks, but it is reality.  I run a great title insurance agency in a business full of shoddy characters.  It didn't used to be that way but title insurance failed at the same time the mortgage business failed.  They allowed thieves and creeps and ignorant slobs into our business with very little oversight.  The system is still flushing out the bad so be careful.

Always get your title insurance commitment BEFORE you close and review it carefully.  Make sure you understand what is and what is not covered.  Put it in a safe place.

Always get your HUD-1 - fully signed by everyone - at closing.  Put it in a safe place.

Always follow-up after closing - give it 60 days or so - to make certain you get your owner policy.  Check to make certain the exceptions are the same as those in the commitment - nothing added that was not expected.  Put it in a safe place.

Got it?