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10 Things You Should Know about Title Insurance: Refinances Need a New Policy

August 31, 2009 Leave a comment

If you’re planning to refinance, your lender will require a title insurance policy. There are plenty of reasons to refinance such as reducing your interest rate and mortgage payment or consolidating debt. While a new owner’s policy may not be necessary if you plan to refinance, your mortgage lender will still want to ensure the investment is protected, so you will likely need to purchase a new lender’s title insurance policy. Here is an example of a title insurance rate card for a refinance.

10 Things You Should Know about Title Insurance: APR Includes Settlement Costs

August 29, 2009 Leave a comment

Settlement costs factor into your loan’s Annual Percentage Yield (APR). Home buyers should know the settlement process can be delayed due to recent changes to the Truth in Lending Act (effective Aug. 1, 2009). If the actual APR differs from the estimated APR by more than 0.125 percent, your mortgage lender must issue a new initial disclosure that reflects the accurate rate and wait a minimum of 3 business days to close the deal. To avoid surprises at the closing table, invest five minutes of your time at the beginning of the transaction to obtain a guaranteed quote online for settlement services.

Top 10 Title Insurance Claims for DC (1-5)

August 28, 2009 Leave a comment

Title insurance claims arise more often that you might think. Below is a list of the most common title insurance claims for the District of Columbia, compiled by Elisabeth Zajic, vice president and senior counsel for First American Title Insurance Company in D.C.

For further reading, the Underwriter Bulletins contain a wealth of information geared more toward the industry but still valuable for anyone who’s planning to buy a home.

1. Fraud.

I. Uninsured recent no-consideration “gift deeds” to a family member may be forged or obtained through undue influence, enabling the grantee to sell or arrange for a cash-out refinance of the property and abscond with the cash value of the equity. Fraudulent intra-family conveyances represent a large percentage of claims in the District of Columbia.

II. Mortgage foreclosure “specialists” scout out properties for which a foreclosure notice has been filed but with a lot of equity, often titled in elderly persons. They offer to “save” the home and end up taking a deed to the property.

III. Flip transactions, both legal and illegal, remain extremely popular in D.C. Remember that even if your flip transaction is not otherwise fraudulent, there must be full disclosure to all parties of all pertinent details of the transaction.

IV. When a property is acquired without purchase money financing and the new owner subsequently refinances, taking out the cash value of the equity in the property, pay special attention. This is unusual and the refi frequently follows a deed which was forged or fraudulently obtained.

V. Don’t forget the basics. Compare the signatures on your documents against signatures of record and on ID. Give careful scrutiny to powers of attorney and be sure to verify the signature of the principal. Don’t blindly assume that all notarized documents are valid.

VI. Trust your instincts. If the deal doesn’t “feel” right, it probably isn’t.

2. Recording. The failure to record promptly is a major cause of claims.

3. Real Property Taxes. In ascertaining tax status for a D.C. closing, you should proceed as follows:

I. In addition to ordering a tax certificate, you should now check the D.C. Tax Rates and Revenues website for every closing, and document your file with printed copies of the account information. The site information for receivables is updated regularly, with effective dates displayed. Your last check of the site should be done just before closing.
II. The date shown on non-real property tax receivables is particularly important because the Office of Tax and Revenue (OTR) has reached an agreement with the D.C. departments and agencies generating these receivables whereby, unless the liens are either recorded or posted on the website prior to transfer of the property, they will be unenforceable against a bona fide purchaser and will become a personal liability of the seller instead of a real property lien.

III. Order tax certificates. Although the website is a great resource, it does not, at present, create a legal estoppel as to unreported taxes and assessments, as does the tax certificate. The turn-around time for tax certificates is very good at present.

IV. Investigate charges or assessments incurred by previous owners before paying them. OTR is presently seeking to collect a number of previously unbilled tax and assessment liabilities, including, but not limited to, vacant and abandoned property liens, homestead audit liens and Clean City liens. If the taxes were previously unbilled and the property has transferred to a bona fide purchaser, OTR will not enforce the liabilities against the present owner. Instead, the tax will become a personal liability of the former owner responsible for the delinquency, and OTR will provide you with a corrected bill waiving charges.

4. WASA. Claims on D.C. Water and Sewer Authority liabilities have risen dramatically in recent years. One reason for this unfortunate trend is the WASA procedure, which dictates that a new account be established for any given property each time that a final bill is requested. The new account will be opened regardless of whether the old account(s) are paid or not.

I. When handing a sale, order a final bill from WASA. Do not rely on verbal information given to you by WASA. Expect a written response in five business days or more.

II. Never rely on WASA receivables posted on the tax website. The website will show lien amounts only, not account balances. Even the lien amounts cannot be used as payoff figures, as they do not include current penalty and interest charges.

III. Do not rely on a D.C. Tax Certificate for WASA receivables. WASA does not recognize any legal estoppel for water and sewer service charges. Because of problems in this regard, WASA charges will henceforth be specifically excepted to in Tax Certificates.

IV. In the event that a WASA lien has been filed at the Office of the Recorder of Deeds, order a separate payoff statement for the WASA lien. Do not assume that the lien payoff amount will be included in the WASA response to your request for a final bill.

V. WASA must also be contacted for lien payoff balances.

More Info: Water & Sewer Authority Charges

5. Tenants first right of purchase under TOPA. The Tenant Opportunity to Purchase Act gives a tenant or tenants’ association a first right of purchase in connection with any sale of residential real property.

Generally, title insurance protects against loss arising from real property interests, constructive notice of which is imparted through recording. TOPA rights are not a matter of record, and traditionally, title insurance would not provide protection against loss or damage arising from the their exercise.

However, under TOPA, a tenant or tenant organization claiming non-compliance with the Act will seek to set aside the transaction. If they are successful, the result will be a total failure of the title. Purchasers and lenders look to the title insurance industry for protection from this risk, and we have endeavored to meet this need, on a “special risk” basis only.

More Info: Under TOPA – A New Law and Underwriting Guidelines
More Info: D.C. Tenant’s First Right of Purchase under TOPA

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Talking Title Insurance: Investigate Closing Costs Early

August 28, 2009 Leave a comment

Your title insurance expenses are largely dependent on the cost of the home you plan to purchase. Sometimes homebuyers, especially first-timers, don’t anticipate the added expense to the end of their real estate transaction. They may feel sucker punched by the settlement process.

Mortgage lenders require title insurance. … If you were loaning somebody hundreds of thousands of dollars, you would probably want to protect your investment, too. And that’s what title insurance does.

Still, some people believe title insurance is a racket.

“Title insurance is the biggest rip off of all the parasitic rip offs built in to the housing industry,” reads one comment on a recent Kiplinger’s article (which, by the way, misses the mark on title insurance premiums).

Title insurance itself is not a rip off at all. In the grand scheme of things, it’s a small fraction of the money you’re putting up to buy the property. As in 1 percent, according to the American Land Title Association. Furthermore, title insurance claims arise more often than you might think.

If there’s a claim against your property and you don’t have title insurance, you will have to pay to represent yourself in court. Once you finish paying the attorney’s fees, you could still end up losing your property. Do you want to risk losing your home AND the money you paid for it?

More likely “the viking” probably allowed himself to get ripped off.

Conduct a little Internet research, and you’ll find local title companies that offer competitive rates and generous discounts for escrow services. Homebuyers should note, however, title insurance premiums are set by the provider – not the title insurance agent.

For example, if 10 companies all use First American Title Insurance products, all 10 companies will charge the same insurance premium. Costs for settlement fees, title abstractor and examination fees, recording fees (which vary by location) and other fees that may apply may vary by company and may be negotiable.

Start investigating closing costs early in the home buying process. Get a free quote for title & escrow services from a local title insurance company like Federal Title. Understand the difference between an lender’s policy and an owner’s policy as well as the standard versus expanded policy.

If you know what questions to ask your real estate agent and mortgage lender about the closing process, you’re chances of negotiating a great deal increase.

10 Things You Should Know about Title Insurance: Fixed v. Variable Rates

August 28, 2009 Leave a comment

Some closing costs are fixed while others are variable. The cost of your title insurance policy and government recordation fees are dependent on the purchase price of your home, and the bulk of settlement costs are typically paid by the home buyer. However, the seller doesn’t get off scot-free. Seller fees include a fee for mortgage release procurement and deed preparations. The settlement fee is often split between buyer and seller. Home buyer fees include a title examination/abstractor fee, location survey fee and a fee to process paperwork. A title company may charge additional fees unique to each transaction, but the extent of the fees should be disclosed up front.

Closing Costs Explained Visually ‘Good Introduction’ to Settlement Process

August 27, 2009 Leave a comment

If you’re shopping for a home and haven’t had a chance to watch this quick introduction to title insurance, you may want to check it out. While “Closing Costs Explained Visually” is targeted toward consumers, real estate experts are also finding it useful.

“Rather than a detailed step-by-step dissertation on title and escrow — which many consumers really need before the home buying begins — the two-minute Federal Title & Escrow Co. video is useful as a primer to get you into the basics of the process,” writes Broderick Perkins, editor of Deadline News and the Real Estate News Examiner blog.

After a proper intro to the settlement process from Federal Title, home shoppers may then want to read Perkins’ thorough three-part title insurance series for a better understanding of today’s title insurance industry.

My favorite installment: Part 3 – Shop Around for Title, Escrow Services.

Title insurance companies sometimes get a bad rep, but we’re not all bad. Some companies are committed to giving their customers the lowest rate possible on insurance premiums. Federal Title for one is saving home buyers as much as $2,000 through our REAL Credit Program.

As a home buyer, the more you know about the settlement process, the more you’ll be able to save on closing costs.

Mortgage Lenders, Closing Agents Effected Most by New RESPA Rule

August 27, 2009 Leave a comment
FOR IMMEDIATE RELEASE

CONTACT:  Nikki Smith                       
Main line:  202-362-1500
Direct line: 202-274-1517
E-mail: nikki@federaltitle.com
Website: www.federaltitle.com

MORTGAGE LENDERS, CLOSING AGENTS EFFECTED MOST BY NEW ‘CONTROVERSIAL’ RESPA RULE
Expert to dissect consumer disclosure, anti-kickback statute at upcoming Q&A session. Free event.

Washington, D.C. – Mortgage banking and consumer finance expert Holly Spencer Bunting will address controversy surrounding the reformed Real Estate Settlement Procedures Act during a presentation and Q&A session next month.

The new RESPA rule, which aims to connect the dots between estimated closing costs set forth in the good faith estimate and actual closing costs disclosed in the HUD-1 form, will mostly impact mortgage lenders and closing agents.

“The rule continues to stir controversy,” Bunting said.

While there’s hope the U.S. Department of Housing and Urban Development will delay implementation, settlement service providers are gearing up for Jan. 1, 2010 effective date, she added.

Mortgage lenders and real estate agents are encouraged to attend the free luncheon event, beginning at 10 a.m. Wednesday, September 16 at the Kenwood Golf & Country Club in Bethesda, Md., presented by Federal Title & Escrow Company.

“At its core, the Real Estate Settlement Procedures Act, is a consumer disclosure and anti-kickback statute intended to alert consumers about their settlement costs and to prohibit kickbacks that could increase mortgage costs,” said Todd Ewing, president of Federal Title.

Claims that fraud, deception and general consumer ignorance led to the disastrous outcome of the real estate lending bubble fueled the overhaul of the home buyer protection statute. Bunting will provide an in-depth overview of the components of HUD’s final RESPA rule and the new HUD-1 and GFE disclosure forms.

About the Holly Spencer Bunting:
Bunting is an associate with the Washington, D.C. office of K&L Gates. She represents companies in mortgage lending, title insurance and real estate industries in connection with regulatory compliance matters, according to her biography on the company’s website.

Her articles have appeared in a variety of publications including “The Review of Banking and Financial Services,” “Mortgage Banking and Consumer Credit Alert,” and “The Banking Law Journal.”

About Federal Title & Escrow Company:
In an industry contaminated by affiliated business arrangements, kickbacks and other referral incentives, the Internet returns the power to the people. Federal Title recognizes consumer-driven market pressures, as exemplified by the new RESPA rule, and seeks to offer home buyers substantial closing cost savings and a streamlined settlement process.

Federal Title has a reputation of being technically innovative and always at the forefront of the latest real estate trends. Years ago the company made a bold move by eschewing all Affiliated Business Arrangements and established its REAL Credit Program, which saves home buyers up to $2,000 on closing costs.

Now Playing: Closing Costs Explained Visually

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