Rely on pros to cure title troubles |
| By Holden
Lewis • Bankrate.com |
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Refinancing a mortgage four times in a year creates
enough stress. Add title problems, and you can hardly bear the anxiety.
It happened to Apurva Pande and his wife, Chinmaya
Misra. Both are architects in Los Angeles, and they bought a house
three years ago. The house was dilapidated, which meant that they
could afford it, and they could gut the interior and exercise their
designing muscles.
They wrestled with financing, and in about one year,
they refinanced four times, Pande says. Each time, they did cash-out
refinances.
It worked this way: They would work on the house,
increasing its value, then refinance the loan based on the greater
value. They would pay off the old loan and borrow a bigger amount,
taking the difference in cash, which they would use to pay for further
renovations. Then they repeated the cycle of remodeling and refinancing.
At least twice, "we were literally days away
from closing, if not less, before we would get this call about a
prior title that hadn't been cleared up," Pande says via e-mail.
"I think I aged five years faxing and refaxing titles (and)
proof of previous closures."
Title problems common
Pande and Misra make an extreme example. Few homeowners invite trouble
by refinancing four times in a year. But lots of people are afflicted
by the problem they encountered: missing or incomplete paperwork
that causes a delay -- or the threat of a delay -- in the closing
of a mortgage. Many observers blame today's title troubles on the
refinancing boom of 2003 and 2004, when lenders, title companies
and county recorders were overwhelmed with more paper than they
could handle.
It's up to professionals to fix title problems. But
you can do a few things to increase your odds of having a trouble-free
closing:
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Tips for a trouble-free closing |
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Avoid busiest days
Dan Green, a mortgage consultant with Mobium Mortgage in Chicago,
lays
down one rule to his clients: Never close on a Friday or the
last day of the month, especially in the afternoon and especially
in summer. (This month, June 2006, carries a triple whammy: The
last day of the month is a Friday, and it's in summer, when more
people are on vacation.)
Green discourages clients from closing on those days
and at those times because that's when title agents and closing
attorneys are at their busiest. Everyone wants to close at the end
of the month or on a Friday because those are convenient times to
move. When settlement agents are at their busiest, they don't have
as much time to deal with last-minute problems. "When something
goes wrong, you need to be sure that enough people are available,"
Green says.
Closing procedures vary by state and county. In many
places, title agents organize the paperwork and supervise the settlement.
In some other places, mainly in the Northeast, real estate attorneys
do that work.
They strive not to let anyone see them sweat. By the
American Land Title Association's reckoning, 36 percent of real
estate transactions require some type of corrective action. Usually
a document is missing, or a new or corrected document needs to be
filed. The repairs are done in the background, and in most cases
the consumer doesn't know about it.
"We like to have the typical borrower believe
that everything is going along hunky-dory," says James Maher,
executive vice president of ALTA, the title industry's Washington-based
lobbying group. "We don't want to have their confidence in
the system undermined."
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