Rely on pros to cure title troubles |
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Even when borrowers are unaware of them, title troubles
unnerve lenders. "It happens all the time. It's awful,"
says Ellen Bitton, president of Park Avenue Mortgage in New York
City. When problems can't be fixed on time, the transaction has
to be delayed, whether it's a refinance or a property sale. "In
the worst case, a seller could pull the deal or a buyer could pull
the deal if you're not ready, willing and able to complete the transaction,"
Bitton says.
X, Y, Z thwart A-B deal
Bitton's bête noir is the bank that loses documents that prove
that a previous loan was paid off in a refinance, or that the loan
was sold from one bank or investor to another. In an amusing instance
of how confusing this can get, here's her description of what can
happen. It makes sense, if you can follow it:
"Here's an example," she says. "Bank
X buys Bank Y, which has a mortgage to Mr. A. Bank X then sells
the mortgage to Bank Z. Mr. A wants to sell the house to Mr. B.
In order to sell and take out a new mortgage, when Bank Y sold the
loan -- when it was taken over by Bank X -- but because they did
not record it correctly, it's still showing as two mortgages as
well as one."
Precisely.
It can be an adventure to repair these problems in
time for closing, because a real estate transaction is local, but
some of the players are national, and there are no national standards
governing who gets what documents and when. Maher laments that a
title agent might ask an out-of-state loan servicer for a document,
only to find that the servicer sends it to the county recorder instead
of the title agent who requested it. That's understandable when
you realize that in California, the nation's biggest housing market,
most documents are supposed to go straight to the county recorder.
It might be cheaper for a servicer to adopt California's standards
nationally, even if that trips up settlement agents elsewhere.
Class-action lawsuits led to state laws that streamlined
the title process, says Irene Genders, president of the California
Escrow Association and area escrow manager for Orange Coast Title
in San Bernardino. "We don't see as many holdups as other states
might have," she says.
Stay in touch
The experience of Pande and Misra in Los Angeles seems to be an
exception caused by their unusually rapid series of refinances.
Bitton and Green, both of whom are mortgage brokers,
stress that it's important for clients to cooperate with them. "We
ask at the outset: 'Would you like us to order the loan documents?'"
Bitton says. The correct answer is yes.
Green says a conscientious mortgage broker or loan
officer will stay in contact with the settlement agent, making sure
everything will be ready on time for closing. If you don't trust
the lender to ride herd closely enough, you can try hiring a title
fixer.
Hire a fixer
Howard Gold, a real estate attorney in Wellesley, Mass., started
a company last year called National
Homestead that promises to search a home's title and fix any
problems, well before the closing date, for $295.
Now, that's exactly what the settlement agent does.
Gold says his service is different because he guarantees that title
problems won't delay closing, even if another lawyer or title agent
handles the closing.
"It gives the seller a great heads-up
and eliminates the chance of a last-minute surprise," Gold
says.
He adds that his company is seller-oriented, while
"there are so many title companies out there that are looking
out for the lenders and banks and themselves."
Going through his rapid-refinancing ordeal, Pande
didn't get the feeling that folks were looking out for him. "It
felt fishy," he says, "but we were so intent on crossing
this temporary stage, both my wife and I didn't bother to get to
the root of it."
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