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@example.com.