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Overlooking the obvious

Mar 29, 2006

Common title problemsChris Naadentitle policies, advice Every mortgage lender, whether in a purchase or refinance transaction, wants to close their file on time, without delays, confusion or mistakes, and get paid at the start of the month. Once in a while though, files become entangled in a web of problems, most of which are simple to diagnose. Solving them is another story. Here are some of the most common problems and advice to help eliminate these issues. Statement of information A title policy checks two sources of information to clear title. The first is the property records index, of which most is public information. Property profiles are created by packaging data from the property records index. The second is the general index. The general index may only be accessed with a title insurance company license and is private information pertaining to names and Social Security numbers. To create a preliminary title report, the title company needs enough information about the borrower to check both indices. The document the lender provides is called the statement of information. The statement of information is that long and very daunting document included with most packages when docs are delivered to escrow after signing. It is invariably the form that borrowers find most difficult to fill out. If the document is incomplete, the title company is unable to clear the general index and may not have a complete picture of your client's financial background. Also, if the title officer receives it on the day of recording, the lender and borrower run the risk of finding a last minute lien and causing a delay in the closing. Especially when your borrowers are paying off liens, judgments and mortgages in the same payoff, an accurate statement of information should be provided to the title company as soon as possible to avoid conflict in closing the deal. Stale or dated payoff demands Every mortgage broker has worked with a borrower who, for some reason or another, couldnt quite close the loan when he wanted to and had to close later than expected. In most of these cases, the payoff demand provided by escrow to the title company will expire and a new demand must be ordered. Many title companies will take a verbal, which is a statement of the new amount not written on paper and is not guaranteed to be correct. There are many mortgage bankers who, for a host of reasons, cannot promptly verify the payoff amount of the old mortgage, whether on paper or verbally. Many of them feel that the liability of human error is too great with a verbal and maintain a no-verbal policy. They will state that the new amount may take 48 to 72 hours or so. If the lender receives funding before the new demand is received (which is quite common in these circumstances) and instructs escrow to tell the title company to make a payoff, some companies will hold the sum of proceeds in a pre-authorized debit until they receive the new demand of paper. This is to ensure that they are not short of funds when the new demand is received. The loan will then proceed to close and the old mortgage will be paid off. The pre-authorized debit is disbursed in the direction appointed by escrow when the new demand on paper is received. Chris Naaden is a title representative with Alliance Title Company in Irvine, Calif. and assists lenders with refinancing. He may be reached by e-mail at [email protected].
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Mar 29, 2006
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