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Our new title insurance video on YouTube

December 14, 2010 Leave a comment
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Seasoned Settlement Attorney Returns to FTE

November 17, 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

DC TITLE COMPANY WELCOMES SEASONED SETTLEMENT ATTORNEY TO ITS TEAM OF CLOSING EXPERTS
Retired Marine brings steadfast work ethic and 20 years of title experience to Federal Title’s closing table

Washington, D.C. – Pens around Catherine E. Schmitt‘s office have a way of disappearing. That’s the running joke around the office anyway, because this retired Marine and newest member of Federal Title & Escrow Company‘s team of closing attorneys can do a lot more with a pen than push paper.

Catherine Schmitt, formerly the managing attorney for Monarch Title – Georgetown and Bethesda – rejoins the ranks of Federal Title’s talented staff after a five-year hiatus. She brings with her 20 years of title experience and a steadfast work ethic sharpened by her service with the U.S. Marine Corps. She says the most rewarding aspect of her work is the time she spends developing relationships with her clients.

“I am a loyal customer of Catherine”, says Tom Buerger of Re/Max Allegiance. “She is always there for me – whether it is as an expediter for a quick settlement, as a counselor to allay the fears of my first-time homebuyers or as a resource to solve potential issues before they become a problem that will delay settlement. She is my attorney-on-call.”

Schmitt’s clients vary from new homebuyers to seasoned investors, but one thing her clients have in common is they understand the settlement process.

“Buying and refinancing a home are big decisions,” says Schmitt. “The settlement process is an opportunity to educate clients. It’s a time for them to ask questions, so they can feel comfortable and informed.”

Schmitt earned two Bachelor’s degrees from the University of Maryland and has her Juris Doctorate from Drake University Law School in Des Moines, Iowa, the same institution that produced Federal Title’s founder and president, Todd Ewing.

“Catherine works hard and is dedicated to her clients.” Ewing says. “She is a model of customer service, and I am very excited to welcome her back to our team.”

Homebuyers seeking advice from Schmitt about title insurance or the settlement process need only venture up Wisconsin Avenue to Federal Title’s Friendship Heights office.

Reach Catherine E. Schmitt at 202-362-1500 or e-mail her at catherine@federaltitle.com.

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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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Title Report highlights our ‘unique business model’

October 20, 2009 Leave a comment


With new legislation around the Real Estate Settlement Procedures Act slated to take effect Jan. 1, 2010, many in the industry have concerns about how these changes will impact their daily work routine. More accountability, full disclosures — the new RESPA rule has placed a lot of lenders in particular on the hook.

A few weeks back Todd Ewing spoke with The Title Report editor Jennifer Kovacs about Federal Title’s approach to the changes.

“There’s a hard push with the RESPA reforms toward what we’ve been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they’re going to demand all title companies provide a guaranteed quote for their services,” Ewing said.

Below is the article in full:

Title company’s unique anti-AfBA business model pays off

About nine years ago, Federal Title & Escrow Co., which serves the Washington, D.C. metro market, decided it was time to quit a bad habit.

“We kicked the [affiliated business arrangement] joint venture addiction and replaced that relationship with a pro-consumer model that we now call the REAL Credit program,” Todd Ewing, Federal Title president, told The Title Report.

It was after about five years in business that the company put everything on the line for what felt right.

“If anyone is really honest about it, the affiliated business arrangements (AfBAs) are not consumer friendly, they’re just not. You got too many hands in the pie. So the consumer ends up losing,” Ewing said.

Federal Title’s REAL Credit program is simple: If title work is ordered through the company’s Web site, the consumer receives a credit that reduces the overall cost. Just like AfBAs, which caused the company to lose a good chunk of its revenue to the referral source, this program comes at a loss to Federal Title — but one not linked to a conflict of interest.

“Our REAL Credit represents in dollars what we used to pay over to our AfBA joint venture referral partners, only now we just pay it over to the homebuyer,” Ewing said. “I don’t want to be beholden to the interest of the referral source. I’d rather be beholden to the interest of the consumer. So we developed the concept, and it’s worked really well.”

The model
While not involved in any joint ventures, Federal Title does still rely on its referral sources. The company has a network of real estate agents and lenders who can also take advantage of the pro-consumer platform.

For example, when a real estate agent goes online to order services through Federal Title, an automated e-mail is sent to the homebuyers that tells them their agent just saved them $1,200 for ordering online, which then puts the agent in a great light.

“That goes a long way,” Ewing said.

In the first three years of the program, Federal Title saw a 50-percent increase in transaction volume and since has continued to grow its referral base.

“What happened is real estate agents realized that they wanted to extract themselves from that conflict of interest potential [with AfBAs]. And if they can look good and we can look good, then they’re going to come. And we’re obviously providing a cost-savings proposition to the homeowners,” Ewing said.

In fact, as word has spread about the credit, it’s not just industry partners who are referring business to Federal Title — consumers are discovering the company on their own.

Cost savings
Federal Title is able to stay above water and still offer the credit thanks to the increase in transaction volume that it’s seen over the years. However, the key to the program is that services must be ordered online.

The automated system is one that’s allowed Federal Title to see a significant savings.

The process starts with a transparent, instant online quote available from the company’s Web site. Federal Title was the first title company to provide the service in 2002, thanks to its proprietary software.

“A lot of our competition just couldn’t believe we were doing it. They were fearful. They were, like, ‘Why would you do that? Why would you guarantee that? You don’t know, things could change [from the quote].’ Well, we were willing to do it. Very few things change, frankly, and we ask the right questions,” Ewing said.

The user gets a guaranteed quote from the Web site on a modified HUD-1 form that shows the costs for title insurance, settlement fees, government recording charges, etc., Ewing said.

Then the person seeking the quote is able to order services online from there. Through asking detailed questions, Federal Title is able to limit its liability at the same time it cuts down on mistakes and automatically populates forms a title agent would normally need to process.

“All of that results in a cost-savings to us,” Ewing said.

Federal Title processes about 3,000 transactions a year, and the average savings to consumers through the REAL Credit program is $750. “It adds up, doesn’t it?” he said.

Federal Title has tried streamlining processes even further in the past, through outsourcing title work and surveys, but Ewing said the company has decided to bring all of its services back in-house and rely on its technology instead.

“None of it has really panned out for us. There’s nothing better than a home-grown title report. I don’t see that changing anytime soon,” he said.

Technological focus
Federal Title offers a variety of services, from deed transfers to a 1031 exchange to wills and estate planning, but Ewing said the majority of its business remains traditional real estate closings.

And while the bulk of that business is ordered online, Ewing said there’s always been some who would rather fax over the necessary forms. “We still have a few of those, but after nine years, given the changes in technology, I think people are adapting,” he said.

The industry, too, is adapting to the business model Federal Title has taken on, something Ewing said is apparent in the RESPA final rule and its goal of transparency in real estate closings.

“There’s a hard push with the RESPA reforms toward what we’ve been doing all along, which is full disclosure. Mortgage lenders are not just going to expect it, they’re going to demand all title companies provide a guaranteed quote for their services,” he said.

Ewing added that he expects lenders also to begin seeking instant, electronic quotes for title work that doesn’t throw off any specified tolerances, as dictated by the RESPA final rule and the Truth in Lending Act. “Who wants to call up and ask for numbers?” he said.

Federal Title also is using its technology platform as a vital part of its expansion efforts. The company recently partnered with a law firm in Coral Gables, Fla., to offer its expertise in marketing as well as technology to grow the company in that region. Federal Title is also seeking like-minded partners for opportunities on the East Coast, potentially in North and South Carolina and Georgia, Ewing said.

However, Federal Title is also using the technology arena to grow its footprint at home. The company is focused on developing its Web site’s blog to reach consumers who are technologically savvy and use the Internet to investigate the home buying process before jumping in.

“With the blogging atmosphere and everything that is available to the average consumer and the consumer’s appetite for that, we see a great opportunity not to be beholden to our traditional referral system. So that’s exciting for us,” Ewing said.

Issue Date: October 19, 2009
Questions/comments? E-mail Jennifer Kovacs at jkovacs@octoberresearch.com.

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.

Top 10 Title Insurance Claims for DC (6-10)

August 26, 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.

View the Top 5 >>>

6. Mortgagors holding over after foreclosure. A claim will almost invariably arise when title derives from foreclosure and the mortgagor (borrower) whose property interest was extinguished in the foreclosure sale remains in possession of the property. The claim is precipitated when the successful bidder at the foreclosure sale seeks to evict the former owner/mortgagor in an action for possession, who will respond with a plea of title seeking to invalidate the foreclosure sale. The plea of title gives rise to a duty of defense and indemnification to the foreclosure sale buyer who purchased an owner’s title insurance policy.

Because of the near certainty of litigation giving rise to a duty of defense under the title policy issued, First American Title Insurance will not insure title out of foreclosure when the mortgagor remains in possession of the property. Foreclosure requirements listed in your commitment for title insurance should be amended as follows:

I. Recording of Notice of Foreclosure in the Office of the Recorder of Deeds for the District of Columbia pursuant to which captioned property is sold to the proposed insured.

II. Proof of mailing of the notice by certified mail with return receipt to the record owner, complying with the District of Columbia Code and the terms of the Deed of Trust relating to notice of sale.

III. Proof of Publication of Notice in the Washington Post of other English language newspaper with general circulation in the District of Columbia. The proof also must establish that the notice was published five times within a 10-day period.

IV. Certificate of Sale and Auctioneer’s Report

V. True copy of Deed of Trust note.

VI. Copy of Affidavit in compliance with Soldier’s and Sailor’s Civil Relief Act of 1940.

VII. Proof of notice of the sale to all junior lienholders known or of record.

VIII. Proof that possession of the premises has been surrendered to the insured owner/or assigns.

More info: Mortgagors Holding over after Foreclosure

7. Survey issues. A surprising number of claims in D.C. are caused by survey issues. They frequently involve bitter disputes between neighbors, resulting in lengthy and expensive litigation.

In D.C. survey coverage is not given to owners based on a house location survey except with special approval. When a house location survey is provided for closing, the general survey exception should remain in the owner’s policy, including Eagle policy. You should read the plat into the owner’s policy as well as the loan policy, taking specific exception to matters adverse to title shown on the plat. The survey should be reviewed with the buyer(s) by the settlement officer, who should point out those survey matters which exception is taken. The buyers should sign off on a copy of the plat to be maintained in the settlement file.

8. Disclosure issues. Recently, there has been a surge of litigation stemming from claims of breach of the duty of reasonable care by settlement attorneys who fail to advise purchasers of real property of the title consequences of certain matters of record. Various types of historic preservation easements given by prior owners of record have proven to be particularly problematic. These are not title insurance claims, but claims of negligence on the part of settlement attorneys.

Without going into lengthy discussion of the duty of care of a settlement attorney or settlement company, all of you should be sensitive to directing attention to matters of record which will affect the use and enjoyment of the property by the new owners, such as survey matters, easement issues and restrictive covenants. If possible, it is a good idea to send a copy of the title insurance commitment and survey to the buyers in advance of closing.

If, for whatever reason, you are not providing title insurance coverage for matters which a buyer could reasonably expect such coverage, you must disclose that fact and get a written waiver of coverage. These matters could include TOPA rights, mortgagors holding over after foreclosure, title to parking spaces, easement rights, pending litigation and unpaid taxes and assessments, although this list is by no means comprehensive.

9. Parking space claims. We have dozens of them!

For example, a parking space is listed in the contract but overlooked in the title order and neither conveyed nor insured. If the contract references parking, we have a claim even if the space is not included in the legal description in the policy.

OR – limited common element parking spaces are not properly assigned by amendment to the condo docs and the appropriate exception is not taken in the policy.

OR – the A & T number for the parking space is not included in the FP-7C and the tax bills continue to go to the prior owner, who does not, of course, pay the bills or forward them. The parking space is then sold at tax sale, and we have a claim.

*Pay attention to parking spaces! In many areas of D.C. they are now worth a small fortune!

10. Eagle policy schedule of caps and deductibles. Don’t forget to include it when issuing Eagle policies! If the schedule of limitation of liability is not included with the policy, the argument can be made that there is no limitation on liability, thereby drastically increasing the potential amount of coverage for certain risks.

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