This article some great points but a few things to point out--title insurance rates are set by the title insurance company here in GA; we use Old Republic Title as they offer solid service/reliability and great common-sense underwriting (and fair fees too!). For the record, most title companies in GA do not offer re-issue rates so ignore that part of the story.
One other comment that needs to be 'tweaked' is about closing on the last day of the month. YES you'd save the most in interest if you close the last day of the month or close to it (call me and I will explain). BUT how much is your time worth? Or better yet-how much is your STRESS level worth? I can guarantee that MOST closing issues are due to rushed deals such as on month-end or for FRIDAY closings. If it were me (after 20 years doing closings) I'd prefer to close the week of the 25th or so on a Wednesday. Why Wednesday? People think they have to close on Friday so they can move the next day. If there is a problem with your closing (perhaps your wire didn't come in time) then you won't fund. If you have no money, you're not getting keys! Back when I closed for a National builder, if you don't have money, you don't get keys (actually the best policy). Did they care about that $150/hour moving company idling in the cul-de-sac? NO. If you close on Wednesday, you STILL move on Friday and you also have 2 bonus days to 'fix' problems like missing wires, walk-through issues, etc.
Finally, DO check into the firm where you're 'told' to close. Are they customer-service driven like us? If not, why are you closing there??? Give us a call today and schedule YOUR closing with US!
Showing posts with label title issues. Show all posts
Showing posts with label title issues. Show all posts
Thursday, January 22, 2015
Thursday, August 14, 2014
Does Closed = Cancelled?
In my last newsletter I referenced common title problems (Click HERE to read). One common title problem is definitely Open Loan Deeds, as noted. As a consumer, however, a "closed" account doesn't always mean the same thing as "cancelled" to a dirt lawyer. As an example, if you take out one purchase loan, the lender is in first lien position. If you have a second mortgage or Home Equity Line Of Credit (HELOC) taken out/recorded after that 1st mortgage, that loan is in second lien position. Quite often banks don’t cancel out the old loans once they get paid off (first OR second), but open/leftover HELOCs seem to be the more common problem.
For example, let’s say you closed a HELOC with a local bank for $25,000. You later increased the loan to $50K for some home repairs. Then it’s time for college so you raised it again to $75K. Finally, daughter is getting married so let’s just go for an even $100K (total line of credit, hopefully NOT the wedding bill!). Add all that up—even though the bank properly shows you only have an open line for $100K within their system, the public records will show (total) liens in the amount of $250,000 on their face IF they didn’t cancel each loan on the public records! SO we would need to contact the bank and work on obtaining releases or cancellations for EACH open loan (because every one of those HELOCs were secured by a Security Deed on the public records). Not every bank is this slack; I could name names but I’ll behave. At the end of the day, unless the bank has failed or been sold off, this can be somewhat simple. Sometimes (IF you have an owner’s title policy!) the Title Underwriter allows us to ‘insure over’ an open loan deed if it does not seem that they would have a valid claim against the title but that won’t work for HELOCs due to their revolving status so be vigilant!
Another HELOC example is that of the ‘free’ equity line offered at closing, back when houses actually had equity ("hey, you’ve just taken out a mortgage with us, do you want a small equity line as well, just in case?"). That’s great; so now you have a mortgage that you pay monthly, and you never draw any funds out of that equity line and it just sits there. When you go to sell your home, the attorney’s office asks for all your open loan info. Don’t fret; you’re not the only one who forgot about that 2nd loan—even if the balance is zero, all we need is a written payoff from the lender and they typically require a few dollars as junk fees to cancel out the loan on the public records. However, sometimes people want to keep that line open—if you’re selling the house, too bad. As it’s secured by the house, it has to be cancelled in the public records or you cannot transfer clear title to the new owner. At the end of the day, it's our job to make sure your title is clean so that there are no future title issues. We appreciate your business!
For example, let’s say you closed a HELOC with a local bank for $25,000. You later increased the loan to $50K for some home repairs. Then it’s time for college so you raised it again to $75K. Finally, daughter is getting married so let’s just go for an even $100K (total line of credit, hopefully NOT the wedding bill!). Add all that up—even though the bank properly shows you only have an open line for $100K within their system, the public records will show (total) liens in the amount of $250,000 on their face IF they didn’t cancel each loan on the public records! SO we would need to contact the bank and work on obtaining releases or cancellations for EACH open loan (because every one of those HELOCs were secured by a Security Deed on the public records). Not every bank is this slack; I could name names but I’ll behave. At the end of the day, unless the bank has failed or been sold off, this can be somewhat simple. Sometimes (IF you have an owner’s title policy!) the Title Underwriter allows us to ‘insure over’ an open loan deed if it does not seem that they would have a valid claim against the title but that won’t work for HELOCs due to their revolving status so be vigilant!
Another HELOC example is that of the ‘free’ equity line offered at closing, back when houses actually had equity ("hey, you’ve just taken out a mortgage with us, do you want a small equity line as well, just in case?"). That’s great; so now you have a mortgage that you pay monthly, and you never draw any funds out of that equity line and it just sits there. When you go to sell your home, the attorney’s office asks for all your open loan info. Don’t fret; you’re not the only one who forgot about that 2nd loan—even if the balance is zero, all we need is a written payoff from the lender and they typically require a few dollars as junk fees to cancel out the loan on the public records. However, sometimes people want to keep that line open—if you’re selling the house, too bad. As it’s secured by the house, it has to be cancelled in the public records or you cannot transfer clear title to the new owner. At the end of the day, it's our job to make sure your title is clean so that there are no future title issues. We appreciate your business!
Monday, April 21, 2014
Common Title Issues
When we sit down to close a transaction, hopefully it’s a very smooth and simple event. What ‘should’ happen is the review of a LOT of documents, tons of signing, initialing and some witty banter around the closing table. The concept of ‘all the attorney did was shove papers at me and said sign here’ is actually somewhat how a closing should be—however, hopefully all parties walk out of my closing with some semblance of understanding what just happened and what they signed! What you may not know is how much that actually happens behind the scenes prior to closing. One major thing that I have to do is clean titles. Let’s talk about common issues (and some NOT so common ones!).
Open Loan Deeds. Open loan deeds are the bane of closing attorneys’ existence! The role of the closing attorney is to convey clear title to the buyer and insure that the lender is in the proper ‘position’ as it relates to liens. If a loan was previously closed out but not cancelled in the public records, we have to ‘get rid of it’ and get in cancelled, released or obtain clearance from our title company that we can move forward. This topic will be covered in a follow-up newsletter, but suffice it to say that this issue creates a lot of confusion with clients! As an example, you know, the bank knows, and even I know that a loan was closed out in the bank’s system—but regardless of that fact, if it’s open in the public records, it is not ‘closed’ for title purposes and we must clean it up prior to closing.
Tax Liens. Ah, death and taxes… If you don’t pay your property taxes the county gets fussy. They will file tax liens on your property and can even SELL the property in a tax sale. We have to get proper written payoffs and pay any liens to clear the title. Usually this is a simple situation; it’s a bit more work if the taxes have been sold to a collector. If you have Federal or State income tax liens, we MUST get a payoff from the proper Federal or State agency. Tax liens (both property and income) don’t ‘go away’ and have to be cleared.
HOA or Condo liens. What if you have a Homeowner’s Association and you owe them money? We have to get payoffs from that HOA. If it’s professionally managed, that can be a simple call or email. If you have to call Fred the treasurer, as long as someone can find out how to reach Fred (and if he calls back) then we can obtain a payoff or release. That can be troublesome at times.
Contractor’s liens. So you added on a bathroom and you didn’t pay the contractor. Guess what? They can slap a lien on your house! The good news for most owners is that the lien process is VERY detailed and if they screw it up, the lien is not valid. So pay your contractors on time and you shouldn’t have to worry! If not, then we’ll have to get a written payoff as well.
Divorce or other legal proceedings. These can be liens against property so we have to research to see confirm the status of any lawsuit. As long as something is ‘open’ we have to more or less ask ‘permission’ to close (ditto for Probate and Bankruptcy situations).
These are just a few items that we deal with on a daily basis, though it seems like new 'stuff' shows up every day! Even after 20 years, I am surprised to learn something new more often than you'd think. Someday I'll tell you about the gentleman refinancing who didn't own his condo... (it's a long story ; )
Open Loan Deeds. Open loan deeds are the bane of closing attorneys’ existence! The role of the closing attorney is to convey clear title to the buyer and insure that the lender is in the proper ‘position’ as it relates to liens. If a loan was previously closed out but not cancelled in the public records, we have to ‘get rid of it’ and get in cancelled, released or obtain clearance from our title company that we can move forward. This topic will be covered in a follow-up newsletter, but suffice it to say that this issue creates a lot of confusion with clients! As an example, you know, the bank knows, and even I know that a loan was closed out in the bank’s system—but regardless of that fact, if it’s open in the public records, it is not ‘closed’ for title purposes and we must clean it up prior to closing.
Tax Liens. Ah, death and taxes… If you don’t pay your property taxes the county gets fussy. They will file tax liens on your property and can even SELL the property in a tax sale. We have to get proper written payoffs and pay any liens to clear the title. Usually this is a simple situation; it’s a bit more work if the taxes have been sold to a collector. If you have Federal or State income tax liens, we MUST get a payoff from the proper Federal or State agency. Tax liens (both property and income) don’t ‘go away’ and have to be cleared.
HOA or Condo liens. What if you have a Homeowner’s Association and you owe them money? We have to get payoffs from that HOA. If it’s professionally managed, that can be a simple call or email. If you have to call Fred the treasurer, as long as someone can find out how to reach Fred (and if he calls back) then we can obtain a payoff or release. That can be troublesome at times.
Contractor’s liens. So you added on a bathroom and you didn’t pay the contractor. Guess what? They can slap a lien on your house! The good news for most owners is that the lien process is VERY detailed and if they screw it up, the lien is not valid. So pay your contractors on time and you shouldn’t have to worry! If not, then we’ll have to get a written payoff as well.
Divorce or other legal proceedings. These can be liens against property so we have to research to see confirm the status of any lawsuit. As long as something is ‘open’ we have to more or less ask ‘permission’ to close (ditto for Probate and Bankruptcy situations).
These are just a few items that we deal with on a daily basis, though it seems like new 'stuff' shows up every day! Even after 20 years, I am surprised to learn something new more often than you'd think. Someday I'll tell you about the gentleman refinancing who didn't own his condo... (it's a long story ; )
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