Title Insurance Woes

Vicki Dimmich
Vicki Dimmich

Title Insurance Woes

Our title company sent out an email this week talking about changes in the way title insurance policies work. This is important, since this policy both states that you have title to your property and insures against the title company having missed someone who has previous claim to your property. Many of you have heard us tell our story of the young man who bought a house in the city to rehab for cash, through a reputable title company with title insurance. The previous owner's estate (and the house) was then foreclosed upon by Fannie Mae. The title company had missed this and had to make good on the insurance policy. This is why the policy is important! Make sure you own your house! (There's a lot more going on here, and it's currently in litigation as to who owns what where and for how long and who is paying, which we can/will not go into.)  

 

Title Underwriting: Has it changed?:

The recent refinance boom brought about many questions regarding clearance of title issues.

The sins of the past rose up to haunt us once again.  Unreleased deeds of trust from many years ago showed up on title once again, however, this time the automatic move to "insure over" the problem was not always an option.  

 When title commitments are produced, whether it is for a refinance or purchase transaction it is always a good idea to read through it to make sure there are no surprises listed.  One of the most common surprise that is found is an old deed of trust that has presumably been paid off but not released.  The first course of action should always be to try and secure a release of that deed of trust.  Regardless of whether that lender is still in business or not, someone has an obligation to release that loan.  While it may take a little research and energy- you can often get releases on old liens in enough time for closing.  That being said, there are still times when obtaining the release (even after numerous attempts) is not an option.  In these cases, there are times when the old Deed of Trust may be able to be insured over.  However, the underwriter of the new title policy will be the one to determine what evidence it will require in order to make that decision.

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