www.sourceoftitle.com/blog_user.aspx?uniq=16119

Yes, I am a proud independant title agent. I love that I answer to no one other than myself (and of course the underwriter) and that I make decisions based on my experience and work ethic when it comes to issuing a title policy for a consumer. 

So, having said that, you may wonder as to the title of this discussion. I have absolutely no intention of joining or forming an AfBA but I am seriously concerned about the future of independants in today's market.

Over the last 2 months I have made a very dedicated effort to gain a foothold in a few of my local real estate offices and mortgage lender's offices.   I have met with resistance in some cases and absolute rudeness in others. It has only been those agencies that are independantly owned where I have been welcomed with warmth. All of the other agencies have either taken my literature and said they would distribute it (haha into the garbage bin) or they have actually refused to even accept my literature because of their affiliations with title agencies.

How then are we to remain an active and viable presence in the marketplace?  I wish I had some answers but I am totally stumped. I have read more books than I can count on marketing a small service related agency. I have implemented some of the ideas which I thought made sense and am constantly writing and blogging about issues relating to title specifically and real estate generally. I spend at least an hour a day touching base with my current clients, a quick e-mail or a quick phone call to say HI.  I honestly believe that I work my marketing plan daily without fail.  All to no avail!!

One of the problems that I am personally facing has to do with "give aways" and "enticements". I realize that rules differ from state to state but in Maryland we are absolutely prohibited from giving anything to realtors or lenders to entice business.  Not to mention RESPA. I personally like these rules, but I don't believe that a lot of agencies are following the rules to the "letter of the law". We are allowed to "give" a thing of value to the consumer (through the realtor) but these days everyone's pricing is just about the same and unless you want to work for free there is just not a lot of wiggle room.

It is not enough anymore to say with absolute confidence and conviction that you are an EXPERT in your field and that you are looking out for the best interest of the consumer, that just does not seem to matter these days.  It's all about how the realtor or lender will "benefit" from a referral, whether as a result of an AfBA or an enticement that is made against the rules.

So, if anyone has any really good suggestions as to how to get the proverbial "foot in the door" could you please share? 

The Maryland General Assembly has recently ended it's session for the year and the Maryland Land Title Association was following many of the bills very closely.  Of particular interest to everyone in Maryland was the passage of HB 472 FORECLOSURE PROCEDURES-FORECLOSURE MEDIATION. 

These new rules will significantly alter the time lines for foreclosures in Maryland. 

The passage of this bill will significantly change the way in which foreclosures for OWNER OCCUPIED HOMES which are being used as PRINCIPAL RESIDENCE are handled in Maryland.  New rules will now require that the lender must provide, or attempt to provide, the homeowner with loss mitigation alternatives to foreclosure such as loan modification, a short sale, a deed in lieu of foreclosure or any other alternative that is intended to make it easier for the homeowner to transfer ownership of the property, or to lessen the harmful impact of foreclosure.

Foreclosure attorneys will now be required to provide the homeowner, along with the initial notice of intention to foreclose an application for loss mitigation.  The application must include a description of the eligibility requirements, instructions for completing the application and a telephone number to confirm receipt of the application.

In addition to several other new rules affecting the foreclosure filing the homeowner is now presumed to have a right to mediation unless good cause is shown.

The state will use its Office of Administrative Hearings (OAH) for mediation purposes. At the time of a mediation hearing a representative of the lender must be present and must have the authority to "settle the matter"  or be able to contact a person with authority during the mediation meeting.

In order to pay for additional mediators there will bean additional $300 filing fee paid a the time of initial filing of foreclosure.

Good Morning to all!!

I wanted to share with you a very interesting conversation I had this morning with a first time home buyer in the State of Maryland. 

The buyer called me after reading a few of my blogs here in Activerain relating to the Fannie Mae addendum.  She is purchasing a Fannie Mae property here in Maryland and she is taking a loan through HomePath.  See FAQ's in the link

https://www.fanniemae.com/homepath/homebuyers/faq.jhtmler

Her questions to me were in relation to whether or not she was able to use her own title agent, and whether or not she would lose the seller's credit if she did not use the seller's title agent and whether or not she, as a first time home buyer, would be responsible for the payment of the full amount of transfer taxes and stamps.    This poor woman was just beside herself because she received a letter from Fannie Mae's "Preferred Settlement Agent" (In a letter delivered to the buyer, that's what they labeled themselves).

After reading my blogs she became increasingly confused because she was of the belief that she:

a) Had an absolute right to select her own title agent

b) Was absolutely going to get the 3.5% seller concession as offered by Fannie Mae through the HomePath program; and

c) Was not required to pay the entire portion of transfer taxes and stamps on the transfer

As a Fannie Mae vendor this title agent should be aware of the wording in the new addendum, but the letter that was sent to the poor buyer states as follows:

Please note that Fannie Mae is strictly enforcing section 2(b) of the Fannie Mae Amendment to Please Purchase Agreement.  Section 2(b) states that the buyer must utilize the seller's choice of title company if the seller (Fannie Mae) is paying the buyer's closing costs, including the lender's and owner's title insurance policies. If the buyer is paying their own closing costs, they may choose to use another title company; however, it is preferred by Fannie Mae and makes for a smoother closing process if the buyer uses the preferred closing agent.  This will prevent unnecessary delays and ensure a timely closing for all parties.

And, this is the language from Item 2(B) of the Fannie Mae Addendum:

2.  Time is of the Essence: Settlement Date:

a) It is agreed that time is of the essence with respect to all dates specified in the Agreement.  This means that all deadlines are intended to be strict and absolute.

b) The closing shall take place on a date ("Settlement Date") on or before ___________________,2010 ("Expiration Date"), unless extended in writing signed by the Seller and the Purchaser or extended by the Seller under the terms of the Agreement. The closing shall be held at a place so designated and approved by the Purchaser. The Purchaser has the right to make an independent selection of their own attorney, settlement company, escrow company, title company and/or title insurance company in connection with the closing.  (emphasis added)  The date the closing takes place shall be referred to as the Settlement Date for purposes of this Agreement. If the closing does not occur by the Expiration Date, or in any extension, the Agreement is automatically terminated and the seller may retain any earnest money deposit as liquidated damages.

 Please see the blog I posted here some months ago that specifically address just these same questions.

https://activerain.com/blogsview/1529549/faq-the-new-fannie-mae-addendum-

I sent a copy of this title agent's letter to Fannie Mae and immediately got a response advising that in fact the information that I had provided was correct.  I wonder how many other poor unsuspecting buyers who have elected to use this particular "Preferred Settlement Agent" have actually LOST money as a result of the fact they this "Preferred Settlement Agent" is misinterpreting or worse, mis-repreenting the Fannie Mae addendum.  Sadly for those folks there is not a lot that can be done for them at this juncture, but for future reference, please advise all of your buyers that if they receive a letter advising that they will lose their seller concession if they elect NOT to use the seller's title agent they should contact me and I will be happy to get them the correct information.

It is always my pleasure to answer all of your questions relating to the purchase of an REO property.  Please feel free to call on me.

Sincerely

Charlene

I realize that this is not Monday, but seriously it feels like it.  You know how Monday's can just aggravate the hell out of you? Well that is the kind of day I am having today.

The day started with a query from a listing agent on a property that was being "sold" by Fannie Mae and the buyers agreed to use the seller's title agent for closing services.   The property was to have gone to closing on Monday of next week, BUT, it turns out that the foreclosure attorney made a mistake in the foreclosure and ended up having to file a motion in the court to revise the report of sale to correct the file AND the trustee's deed is not on record yet.   This will cause a closing delay for at least 30 to 45 days. 

Needless to say the buyer and the buyer's agent were not happy to hear this and now the buyer wants to back out and the buyer's agent want her commission!  The question that was presented to me was relating to whether or not the "seller" in this instance actually had the right to sell the property in the first place given the fact that the foreclosure has a technical error and the foreclosure attorney did not file his trustee's deed into Fannie Mae.

I do foreclosure transactions every day and on 9 out of 10 of these transactions I end up having to record the trustee's deed simultaneously with the deed from the seller (the bank) to the new buyer.  So, I don't really think that that's the problem in this case.  The problem is that the foreclosure attorney erred in the actual foreclosure case as will sometimes happen,  BUT more importantly NOBODY looked until it was too late!!! 

It wasn't until the property went to sale to a third party that any one bothered to really check the status of the foreclosure and the trustee's deed.  At that point in time it's a little late to be finding out that there is a defect in the foreclosure or that the Trustee's deed remains unrecorded. 

I have stated many many times here in these blogs that it is never a good idea to use  the services of the seller's foreclosure mill title company to conduct the out sale of these properties.  You must remember that the foreclosure attorney is NOT doing a title search that is consistent with industry standards when they go to foreclosure, they are searching only from the date that the foreclosed party took title forward.  So, anything that occurred prior to that date will not be discovered by the foreclosure attorney.  AND, more importantly, the title agent that is tasked with performing the settlement for the new buyer is going to use the foreclosure attorney's title report, they are not going to spend any time or money researching the title other than to see if the trustee's deed is on record, and that can be done from the comfort of their lap-top on-line. 

So in the instant case the delay has caused the buyer harm, he has lost money he spent on a home appraisal, home inspection, termite report, location survey moving expenses, etc.  Can he be reimbursed, NO. His only recourse is to request a contract cancellation and his deposit refunded.  Can the Realtor be paid her commission?  NO.  So she is out too!!  No one wins in these situations.  

How many times does this have to happen before the big banks, including FANNIE MAE, FREDDIE MAC, HUD, VA, etc. see that the current way in which they are doing business, insisting on the use of their retained attorneys for outsales is just not helping the consumer or the real industry as a whole? 

Have you any idea the number of claims that have been filed related to the purchase of property that was was conveyed out of a foreclosure?  Do you have any idea how that affects us all?  Well, as the number of claims rise, the premiums for title insurance must rise as well, thus making it even more expensive for the consumer.   Do you know when these errors show up?   Usually not when the consumer makes that initial purchase, but after they have gone to settlement and want to re-sell or refinance their homes.  

And this was just one call that I took today

ABA's in the title industry
by CHARLENE PERRY | 2010/04/02 |

Today I took a call from a local auctioneer and investor

CHARLENE PERRY's Blog :: Edit blog entry

He called to see if we were interested in acquiring new business.  Well what small independant title agent is not interested in acquiring new business? 

His first question to me was "do you have the forms necessary to form an ABA?" I responded that we did not and that I was not interested in forming an ABA. He then took on quite an attitude with me! He stated that he has been averaging 900 deals a year and that he was looking for a new title agent and queried why I was not willing to pay him for referrals. RESPA clearly states that it is not legal for a title agent to provide anything of value in exchange for a referral. I can only hope that his current title agent is not "paying him" for his referrals.

I investigated forming an ABA with a realtor about 2 years ago.  I sat down with underwriting counsel, forms in hand, and went over each and every of the underwriter's requirements for forming a "legitimate" ABA using their guidelines. 

The requirements were so stifling it became evident to me that although the underwriter would not state that we could not form an ABA it was clear that they were not particularly happy about ABA's in general. At the end of our meeting I decided that an ABA just was not going to work for me. 

I know that times have changed and that ABA's are being used more and more in the real estate industry, and I understand that we must all work hard to acquire referrals and then to keep those referrals as clients.  Why though is it not possible for someone just to make a referral to a firm because they are happy with the level of service and expertise being offered to the consumer? At what point did everyone become so mercenary? 

I make referrals every day to realtors, lenders and other service providers relative to real estate transactions. Why do I refer them?  Because they do an excellent job for the consumer.  What do I ask in return? I do not ask for a "piece of thier pie" I simply ask that if they have found our services to be excellent that they do the same for me and make a referral. 

I personally have problems with realtor, lender and title company ABA's in general. Ultimately it is the consumer who loses out in these type agreements.  As a consumer I don't want my title agent tied in with my realtor and lender.  Who is going to offer checks and balances? We all know that in an ABA situation the realtor will refer the deal to the lender who in turn refers the deal to the title agent. So now you have 3 entities who are "affiliated" involved in the deal. Let us suppose now that the title is somehow defective, and seriously, have you seen any titles of late that don't have ANY issues? So the title agent calls the realtor to advise that there is a title issue; let's assume it's correctable but it will take time. The realtor then calls the lender who states "OH NO the lock is going to expire.  This deal has to close on time." Now the lender calls the title agent and "gently" urges the title agent to write over whatever defect that have discovered, otherwise, neither the realtor the lender nor the title agent will get any of the pie. Now in and of itself that is not unusual, but, we must also remember that the fees to the consumer in these "affiliate" deals are usually higher than they would be had the buyer not agreed to use "affiliate" entities because each of these entities is getting their fee as well as a portion of the "bump" added on for the ABA partners to split.

I am not in a position to turn down legitimate business, but neither am I in a position to lose my license in an effort to make an extra $50.00 per deal or to pay for referrals. And, as I have stated, I just don't think ABA's are good for consumers. 

So today, I may have lost some business, but, tonight I will sleep well knowing that I did not violate my own code of ethics and I did what small bit I could to protect the consumer.

Old Republic Title has announced a new rate increase for the State of Maryland that will become effective on April 1, 2010.  This rate increase is consistent with the rate increases that were granted to all other major title underwriters here in Maryland.  On April 1, 2010 the rates will be published and I will provide the link to those rates as soon as they are available on-line. 

Of important note with the new increase is the information relating to re-issue rates.  As you all know a title policy MUST be given reissue rates, if applicable.   

The guidelines for qualification for reissue rate have changed.  Please be advised that in order to qualify for a reissue rate on a refinance, the borrower must provide a copy of the current owner's policy or a signed HUD-1 providing proof of payment for an owner's title insurance policy. In order for a buyer to qualify for a reissue rate on a purchase transaction, the seller must provide their existing title policy or a signed HUD-1 providing proof of payment for the owner's policy.   The requirement that the current policy must have been issued within the last 10 years has been eliminated.

Call on The Preferred Title Group, Inc for all of your title and settlement needs in Maryland.

WOW!!

Thank you all for reading my post relating to the new Fannie Mae Addendum, titled NPDC FORM 001 DATED 11-30-09.  I will attempt here to answer some of the questions that have been presented to me over the last week or so from many of you who have called or e-mailed your questions to me.  I want to thank each and every one of you for taking the time to read my blog and to invite you to continue to feel free to call on me.  Naturally, I will be happy to assist you with all of your title and settlement needs here in Maryland too!

Let me start out by saying a few things:

• I am not an attorney
• I CANNOT give you a copy of the Addendum
• I am not a Realtor
• I ONLY work in Maryland
• I DO NOT know Fannie Mae rules outside of Maryland

So, with that being said, here goes:

Why was the form changed?

The form was changed to enable Fannie Mae to sell their properties in a more traditional way when acting as sellers of foreclosed properties.

What are the most pertinent changes affecting buyers:

The most pertinent changes that affect your buyer are (in no particular order)

• An affirmative statement that specifically states that the purchaser has the right to choose the place of closing and the right to make an independent selection of their own attorney, settlement company, escrow company, title company and /or title insurance company in connection with their closing.
• A statement allowing the seller to terminate the contract if the purchaser changes his financing or choice of lender.  (This would typically cause a delay in the settlement date) so I can only assume that is the purpose of this language.
• A clarification as to the acceptance date; The term Verbal Acceptance has been changed to read "Acknowledgment of Sufficient Offer", which occurs on the "Acknowledgment Date" Acknowledgment date refers to the date that the seller has deemed the offer to be materially sufficient.  Fannie Mae uses the Acknowledgment date to calculate many dates. 
• TRANSFER TAXES: Seller will pay if usual and customary for a seller to pay if the Fannie Mae exemption is not recognized.
• CLOSING COSTS:  Without going into a long winded discussion the gist of it is that any closing costs negotiated to be paid by the seller on behalf of the buyer are EXCLUSIVE of any transfer taxes and stamps paid by the seller, if those transfer taxes and stamps are usually  and customarily paid by the seller. 
• Re-Key, this is not an actual change, but a clarification.  The buyer will be charged at closing the cost of re-keying the property to a Master Fannie Mae key.  This being said, the buyer should still be reminded that they are going to want to change the locks immediately after their settlement as those master keys are used statewide.
• AND FINALLY, this form is being used throughout the nation. 

Please feel free to comment on this blog and to contact me with any questions you may still have relating to this new addendum.  Wishing you all the best in your REO transactions.  

Sincerely

Charlene

I was very pleased to learn last Friday that Fannie Mae is using a new addendum for their REO properties.

As you may know all banks use their own addenda for REO sales.  For many years now Fannie Mae has been using basically the same addendum which stated that the buyer MUST use the seller's title agent and that the cost of transfer taxes and stamps would be bourne in full by the buyer.  Fannie Mae is in fact EXEMPT from the payment of transfer taxes and stamps, although some local jurisdictions push the entire burden on the buyer without taking the exemption into account.   The burden on the consumer for the payment of all transfer taxes and stamps, as you might imagine, can sometimes make or break a deal.

The addendum has been dramatically changed in that it now states "The closing shall be held at a place so designated and approved by the Purchaser".  This is an absolute turnaround from previous versions wherein it stated that the purchaser MUST use seller's title agent! Additionally, the contract no longer states that regardless of local custom Fannie Mae will NOT pay any portion of the transfer taxes and stamps!  These two major changes have long be awaited by those of us who do REO work in Maryland. 

The net effect of this new addendum is that the buyer can now make his/her own selection as to title agent and will then be better protected against any prior title defects.  The fact is that the seller's title agents do not do 60 year title searches because they are not required to.  In most cases the title agent who is "representing" the seller is merely acting as a liasion between Fannie Mae and the buyer.  Even in cases where the seller's title agent is doing the closing they still don't do a full title search. I have been told time and again that the only thing they (the seller's title agent) do is to get the title report from the foreclosure attorney who has reviewed title from the date of the foreclosed deed of trust forward. 

Additionally, and most importantly as far as the consumer is concerned,  is that Fannie Mae will split the transfer taxes and stamps, AND, they won't use those transfer taxes and stamps costs as part of the buyer's closing cost credit!! This is a huge win for the consumer. 

It is my hope and belief that with the advent of the new HUD-1 all REO sellers will be forced to make the same changes in their addendum, specifically as it relates to the purchaser selecting their own title agent.  I would urge those of you who do a lot of REO work to review any addendum that comes across with the contract to see if your seller has made similiar changes.

Well, I guess you know I just have to comment on this!

In an article in today's Washington Post written by Brady Dennis it has been announced that AIG is planning on issuing bonuses to employees of their Financial Products Division, with an additional tens of more millions worth of  bonuses to be paid out in March. Some of the employees who stand to benefit by these bountiful bonuses don't even work for AIG any longer, but yet......

We are reminded by Mr. Dennis that "the Financial Products Division is the unit whose risky derivatives deals brought the insurer to the brink of collapse in 2008."  We don't need Mr. Dennis to remind us however of the consequences to the American public of these risky deals. Nor do we need to be reminded that some of these same folks received bonuses in March of 2009 worth $168 MILLION DOLLARS.

According to the article, AIG received $180 BILLION DOLLARS in loans, stock investments and other commitments from the Federal Reserve and the Treasury Department. Need I remind you that I and I would assume that all of you received neither a loan, a stock investment, nor any other commitment from the Federal Reserve nor any other government agency to help you keep your company afloat. 

It is imperative that you all read the article written by Mr. Dennis.  After reading this article I was absolutely enraged!

As we struggle every day to make the most of the limited resources we have and to scratch out some semblance of a decent living these folks just continue to hold their hand out and expect that it will be filled to overflowing with bailout monies. And guess what?  It's working.

It was with great interest that I read an article written by Jamie Smith Hawkins of the Baltimore Sun today. 

It seems that Anne Arundel County, Maryland has decided to enforce a particular aspect of Maryland Real Property law which authorizes them to collect recordation taxes on not only the sales price, which is the norm, but also on the forgiven debt in a situation where the sales prices is less than what the seller owes on their current debt, your typical "short sale"

According to the article written by Ms. Hawkins the county only began requiring these additional funds last week without any warning to title agents or Realtors thus creating a situation where the deed recordings will be held up until it is determined exactly how much the county is looking for and from whom the funds will be collected.  As you might imagine this is going to be a huge problem given that the closings have already taken place, funds have been disbursed and sellers have likely moved on. 

In Maryland it is customary for the cost of documentary stamps to be split between buyer and seller.  The additional sums that the county is asking for will be based on the current county rate of $7.00 per thousand.  In addition to the documentary stamps the county will collect transfer taxes on the forgiven amount based on their current which equals 1% of the sales price.

In a situation where you already have a seller who is in financial distress and usually a buyer who is just barely able to get approval given today's stricter underwriting guidelines why does the Anne Arundel County  think that this is the prime time to begin to "follow the law" according to Richard Drain, the Anne Arundel County controller.

This is nothing more than yet another attempt by the County to squeeze all they can from those who can least afford it. According to the article no other county in the State of Maryland is "following the law". Even Montgomery County, famous to squeezing consumers dry is not collecting on the forgiven debt at this time, waiting instead for "further clarification". 

Maryland already has one of the highest closing costs rates in the nation.  This is not the time to begin to further tax our consumers and to put additional burden on those who are already suffering.

As was stated by Mike Davis, associated broker with Champion Realty in Annapolis, the county thinks this will allow them to collect more money, but what will actually happen is the deals are going to fall through

It was a curious day in that I took 3 calls from different people all of whom wanted to removed a party from title. In response to their inquiry as to the cost involved I explained to them that there would be a fee for our services as well as the fees for transfer taxes and stamps.  All of these people were stunned to learn that the deed removing a party from title would be considered a "transfer of title" and as such would be subjected to transfer taxes.

In Maryland that is a substantial sum of money.

With the start of the New Year comes renewal time for insurance policies here in my office.  

It was with some surprise that I took delivery of a certified letter today from my E & O carrier, AIG, (remember them? ) stating that my E & O policy will be increasing by 125% over last year's cost. Why you may ask?  Well let me reiterate directly from the letter delivered to me:

Dear Policyholder:

"This letter is to inform you that the above captioned policy may be renewed with an increase in the expiring premium from $___________ to an amount not to exceed $_______________.   Please be advised that the reason for this action is due to loss experience and market conditions on this class of business. "

The actual amount of the increase is exactly 125%. So now, let me make sure I understand this statement. Loss experience I would guess is due to some defalcations and market conditions would be due to the fact that the economy, particularly the real estate industry, is in the dumps.   I can appreciate the fact that they have had to pay out claims due to defalcation and yes, even can understand a slight increase due to that.  What I don't get though is why they would increase the policy holder's premium due to "market conditions" when they know full well that the real estate industry as a whole is suffering through this economic downturn much more than most other industries. 

It is difficult enough for those of us who choose to remain in the real estate title industry as small independent agents, not part of ABA's or members of some other type of partnerships which undermine the integrity of the industry, to remain afloat in today's economic climate.

Too, given the fact that AIG started the ball rolling with the government bail-outs we are all too familier with by now, I would think that they would do whatever they could to try to keep our cost down, not raise them in a time when we could barely make the premium payments last year, since we members of the general public through our tax dollars and those tax dollars of our children and grandchildren bailed them out of their hole!! 

And, just because I'm curious; what how much of the bailout monies were given to your business? Mine was exactly ZERO DOLLARS !! However, the cost of my unemployment insurance went up by more than triple. Not because I laid anyone off, but because my state's coffers are running dry, so local business had to pick up the tab, whether or not they contributed to the drain on the funds. 

 So, what is a small independent title agent to do? The only thing we can do; pay the piper!! Who will suffer as a result? The consumer of course!  For every increase in our day to day operational costs there has to be a corresponding cost increase for our services which must be passed on to the consumer, thus making it even more difficult to stay competitive.

For now we can only hope that the cost of our Fidelity and Surety Bonds don't increase by 125% too, that the cost of other day to expenses stays somewhat the same as has been in the last year and that we won't be forced to "price ourselves out" of the ever shrinking market available to small independent title agents.

I really appreiciate the opportunity to rant, and welcome your comments.

Charlene Perry

The Preferred Title Group, Inc.

With the new year comes the required use of the new GFE and the new HUD-1.  For months now we have all been talking about the new HUD-1 and what it's impact will be on the residential real estate market.

I was honestly of the impression that most of my peers has availed themselves of the training being offered by the various title underwriters and by HUD-1, but I fear that  I was mistaken in that belief.

In a recent conversation with a local title agent we got to talking about the new HUD-1 and she advised that she has not even seen the new HUD-1.  When I asked whether or not she had or was going to take any training on the new HUD-1 she advised "no, we will figure it out".  Well I am sure that she and those in her same situation will figure it out.  But, at what cost?

The new HUD-1 and the accompanying GFE are so much different than the ones we are all used to seeing that I, along with every person in my office, all took training totalling about 15 hours so that we would have a better understanding of the new forms.  In addition we had to upgrade all of our hardware so that the new software could be loaded and utilized beginning on January 1, 2010.

I really haven't decided whether or not I think the new forms are going to help or hinder the buyer's decision making process, but I do know for a certain fact that the end result is going to be a costlier settlement fee, more time at the settlement table and many, many more questions relating to the HUD-1 at the time of closing.

With the new rules comes new responsibilities on the part of the Realtor and the Mortgage professional. The mortgage professional will be tasked with either advising the buyer which title agent they must use, or they will be have to provide a list of title agents to the buyer so that the buyer can select their own agent. The Realtor will play in a role in the selection of title agent.  Buyers rely on the realtor to assist them in selecting companies known to the realtor to be able to get the transaction closed, coordinate with the lenders and ease the fears and concerns of the buyers.  I would urge all realtors to have ready a list of fees for at least three (3) title agents to be provided to the buyer so that the buyer can truly make an informed decision as to which title agent will work for them. 

Unfortunatley, due to the cost to title agents for implementing the new forms into their systems, the closing costs to be paid by buyers is going to increase. Buyers and Realtors are reminded that the cost quoted by the title agent for settlement services to be provided, DOES NOT include the cost of buyer's title insurance.

Buyers, Realtors and lenders may contact us directly for a quote for title insurance based on each individual transaction.

In a recent conversation with the "seller's" title agent on a file we are handling on behalf of a very smart buyer (they opted to use their own title agent, not the seller's) I had occasion to shake my head and really just laugh because this borders on the ridiculous.  The call went like this:

SELLER'S TITLE AGENT (STA):    "Do you have everything you need from me for your closing on this property, which is scheduled for later this week?" 

ME:    Well, is the sale ratified?

STA:    I think so, just a moment let me look. (rifling of papers). Yes, I have a fully executed contract so, yeah, the sale is ratified.

ME:    No, I was referring to the foreclosure sale.  Has that ratified with the court yet?

STA:    "Ummm...I don't know, hold on, let me look. (more rifling of paper).  "Hm.. I really don't know, let me ask the Asset Manager"

At this juncture it is painfully clear that the seller's title agent has not even pretended to have gotten a title report on the property, but instead is just reliant upon the foreclosure attorney to "spoon feed" contracts to the title agent, who, by the way, is owned by the foreclosure attorney firm.  At no point does the seller's "title agent" refer to the court docket entries, nor do they refer to the Trustee's Deed from Trustee to the seller. 

It is so very important in a REO transaction that you do not let the seller try to force you into using their "title agent".  More often than not these days the "title agent" is nothing more than a foreclosure attorney owned/managed firm who is being tasked simply with the coorination of closing on REO properties.  They do not run their own independent title reports, they do not question any of the filings in the foreclosure file,in short, their sole purposed is to conduct the closing, charging the buyer, by the way, for full title services. It cannot be stressed enough that these foreclosure attorney firms are working for the seller. They are providing only insurable title, not marketable title. 

The seller will try to convince you that it is "cheaper" for you to use the services of the seller's title agent, but as a point in fact, the seller's title agent is going to charge far more for far less service than an independant title agent, specializing in REO resale will charge.  Even if  the seller is paying your settlement fees you lose because the fees that the title agent charge will eat into your other allowable fees, thus causing you pay more out of pocket. 

Call on The Preferred Title Group, Inc. for your Maryland REO closings.  Experience a better way to get your REO transactions to closing.

Well we all survived the long weekend.  It looks like all of our REO clients happily closed their months out on Friday so that this last day of the month is not too bad at all.  With the end of the year and the Christmas Holiday coming up we want to remind you all of a few things.  

• Please remember that effective December 1, 2009 our office hours will be 8:30 a.m. to 4:30 p.m. eastern time. 
• Please be reminded that effective December 1, 2009 you will see FLAT FEE pricing on our HUD-1 settlement statements and on our estimates will be based on flat fee pricing.  Our new flat fee will be $800.00. Remember, the flat fee DOES NOT include the fee for title insurance.  Please have the buyer or thier lender call our office or send me an e-mail for an accurate quote for title insurance.
• Please take note of our Holiday Schedule.   We will be CLOSED on Thursday, December 24 and Friday December 25.  We will close at 3:00 p.m. on Thursday the 31st of December and will be closed on Friday, January 1, 2010.  Please schedule your closing accordingly.

In almost every REO deal the bank will counter offer with their own addendum which will contain significant changes to your offer.  Some of the terms you will see in the counter-offer will include such items as:

• In the event of a conflict the bank's terms will prevail.  What does that mean, well it means that the original contract is basically uselss and the seller's addendum will represent the entire agreement between the parties
• The bank will deliver a "Special Warranty Deed.  Meaning, the bank only has to clear title issues for the time period in which it was the owner of the property.  Any title issues that existed prior to the bank's ownership become the problem of the new owner and their title insurer.
• You MUST use the the bank's title agent.  If you go for this you are getting only what the bank is willing to give, which is not marketable title, but merely insurable title.  You are NOT REQUIRED to use the bank's title agent and you are urged NOT to use the bank's title agent UNLESS you know for a certain fact that the title agent has completed a full 60 year title examination and has cleared all prior title issues. It is definately in your best interest to use a neutral title agent to insure to yourself that you are not buying into a problem that you will need to deal with in the future. 

Protect your client.  Call on us to complete your REO transaction.  With more than 50 years combined experience, most of it in transferring REO properties, we will provide your buyer the assurances of good and marketable title that the seller's title agent is not in a position to offer.

Well, I wish I could say that it's been a month of no title issue relating to seller's title agents not doing what needs to be done to clear title.  In the past month we have had delays on at least 5 files due to the fact that the seller's title agents did not clear title.  Of course, as is always the case, these were all properties being transferred out of foreclousre.  In one particular instance we found that the foreclosure sale was not even ratified yet and the seller's title agent was nagging us to get the deal to the closing table.  When we brough to their attention the fact that the sale was not ratified they seemed surprised. When asked if they knew about the ratification issue we were advised that they assumed it had ratified since the seller had signed the contract and the foreclosure attorney had requested that the title agent prepare a deed!!  Did they bother to pull title?  NO.   This is yet another reason why you don't want to rely on the seller's title agent to do your closing unless you know for a certain fact that they have actually gotten a full title report and have researched the foreclosure.  Rely on us to insure to you that the foreclosure has been completed, that the sale has ratified with the court and that the seller is actually in a postiion to convey clear title to you.

the role of the realtor in the short sale.doc (34,5 kB)

The buyer is reliant upon you, the realtor, to guide them in their selection of a reputable title agent.  If you are representing a buyer in an REO transaction, you will be told by the listing agent that that the buyer MUST use the seller's title agent.  That is patently untrue. The buyer always has the choice of selecting their own title agent to protect their interest and in fact should select their own title agent. 

In the recent past the REO sellers, Freddie Mac, Fannie Mae and others were assigning title tasks to a third party title agent, one who was not in any way affiliated with the foreclosure attorney, thus giving the buyer assurances that there were checks and balances in place to assure the buyer that the title that was being transferred to them had been researched throughly and that all reasonable steps had been taken to offer marketable title to the new buyer.   Recently, with the push for "cradle to grave" transactions, that practice is all but unheard of.  The REO sellers have started having the foreclosure attorney act as the title agent in the outsale to your new buyer.  This practice is causing more and more delay in closings and is going to create a nightmare in the future in as much as title claims and title issues that will arise in the future. 

You need to remember that the foreclosure attorney is only researching title from the date of the foreclosed deed of trust forward.  They are not looking at anything in the chain of title behind the deed of trust.  Some of the issues that can remaining lurking are items such as unreleased prior deeds of trust, judgments against prior owners that may still affect the property and so on. 

So the title agent, who is owned or operated by the foreclosure attorney now takes that title report from the foreclosure attorney and issues a title binder and policy insuring the new buyer.  The title agent does not research the foreclosure itself to insure that nothing was missed, they don't research any restrictions filed in the land records, they don't research judgment reports for parties who held title prior to the foreclosed party.  In short, they write a binder, prepare the HUD-1 and deed and have a notary attend the settlement on behalf of the seller.

I currently have two files on my desk coming out of foreclosure that cannot proceed to closing because of the lack of oversight and research on the part of the foreclosure attorney and/or their title agent.  In one case, the IRS was not notified of the pending foreclosure and now the property cannot proceed to closing until the IRS lien is paid off. Had the buyer not elected to have the title researched by an independent title agent, very well versed in tranferring title out of foreclosure, and had they elected to use the seller's title agent for closing, this matter would have been totally overlooked by the seller's title agent, title would have conveyed, and the new buyer would now be the proud owner of a new home with a IRS lien against it.  

In the other case, the foreclosure attorney prepared a deed into the wrong seller.  Had we not noticed this the deed into the new buyer would have been defective and the buyer would be the proud of a debt to a bank on a property he did not own.

Don't let your buyer take any chances with the biggest purchase of their life.  Use the services of a title agent specializing in REO transfers to research the title on behalf of your buyer. 

Please feel free to comment and to add your own nighmare stories of REO transaction gone awry due to lack of oversight and research.