Other types of insurance coverage focus on possible future events and charge an annual premium, such as flood insurance or hazard insurance. Title insurance protects against loss from hazards and defects already existing in the title and is purchased with a one-time premium.
Insuring a home’s title begins with a search of public land records affecting the property. The title agent or attorney working on behalf of the underwriter examines pertinent documents to determine whether the property is insurable. Those documents include deeds, wills, trusts, outstanding mortgages and judgments, property liens, highway or utility line easements, pending legal actions and notary acknowledgements.
When title problems are disclosed during the search process, they are corrected whenever possible to avoid future claims. According to surveys done by the American Land Title Association (ALTA), title problems consistently arise in one out of three real estate transactions (36%).
A new Real Estate designation is now available for Real Estate Investment Advisor (REIA). The first designation class date is Monday, October 15, 2012 from 8:00 am- 5:00 pm. It will be located at the Salt Lake Board of Realtors Office, 230 South Town Ridge Parkway Sandy UT. The 8-hour course will include 4 hours CORE and 4 hours Elective credit on Residential Real Estate Investing. The National Association of Real Estate Advisors (NAREIA) is sponsoring the course.
We are pleased to announce that James Seaman, Attorney at Inwest Title will be teaching the portion of the curriculum titled “Legal, Title & Closing Issues”.
Visit www.NAREIAGroup.org or the Salt Lake Board of Realtors for registration and more information. Inwest Title Services is thrilled to be a part of this new designation course.
For this and other information on Utah Title Companies, Utah Title & Escrow, or Title Insurance Quotes locate and contact your nearest Inwest Title office at www.inwesttitle.com.
The Utah Insurance Department (UID) has confirmed that it considers an Escrow Officer that processes or negotiates any short sale transaction(s) in violation of the insurance laws and are putting their license in jeopardy. The UID issued a June 21, 2010 Bulletin 2010-5 to put all Title Agencies and Insurers on notice of this fact.
The UID’s bulletin goes hand in hand with the Utah Division of Real Estate’s (DRE) position that the negotiation of a short sale falls under the province of a licensed real estate agent, and that all others (except attorneys) conducting such negotiations are in violation of Utah law by acting as unlicensed real estate agents. The DRE has commented on this issue several times in their quarterly newsletters.
The UID Bulletin cautions any dual licensed individuals (those holding title, real estate, and/or law licenses) that there are clear boundaries on when a licensee can negotiate a short sale while also handling the title work.
We agree with both the UID and URE’s positions since real estate agents are professional sales advocates who are in the best position to negotiate the terms of a short sale transaction.
In the last few weeks the Home Affordable Foreclosure Alternatives (HAFA) Program has come into play. This program will allow homeowners to avoid some of the negative impacts of a foreclosure by (1) providing financial incentives for both the Homeowner and Lender to participate, and (2) by requiring that both the first mortgage holder and all subordinate lien holders must fully release their liens and waive all future claims against the homeowner for any amounts still owed after the completion of the short sale or a deed-in-lieu of foreclosure.
To learn more about HAFA please watch this video produced by the US Treasury Department :
The financial incentives under HAFA are as follows:
Homeowner Relocation Assistance. Following the successful closing of a short sale or DIL, the homeowner who is selling their property will receive $3,000 to assist with relocation expenses.
Short sales – payment is received from the closing proceeds, and
Deed-in-Lieu of Foreclosure (DIL)- payment is received at time of closing or a check must be mailed within five business days of the homeowner’s vacancy and delivery of keys to the Lender or its agent.
Lender Incentive. The Lender will be paid $1,500 to cover administrative and processing costs.
Reimbursement for Subordinate Lien Releases. A maximum of $2,000 will be paid for allowing a portion of the short-sale proceeds to be distributed to or paid to subordinate lien holders. (3 to 1 matching basis = $6,000.00 to be paid to subordinate lien holders = $2,000 reimbursement). The subordinate lien holders must agree to release their liens and waive all future claims against the borrower.
Key provisions of HAFA for real estate agents assisting in a short sale:
Pre-Approval. Lenders are also require to pre-approve short sale terms, when requested, prior to the home being listed.
The pre-approved terms are contained within a Short Sale Agreement (SSA) which are effective for 120 calendar days. Lenders may extend the effective date by up to 12 months.
Fast Decisions. Once a Real Estate Agent submits a Request for Approval of Short Sale (RASS) the Lender must approval or deny it within 10 business days.
Mandatory Approvals. Approval must be granted if the net sale proceeds to the Lender are equal or exceed the preapproved minimum amount (as contained in the short sale approval).
No Commission Reductions. Lenders are prohibited from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
Up to 6% Commission Allowed. Real estate commission is not to exceed 6% of the contract sales price.
Standardized Forms to Request a Short Sale. Special forms must be used for Homeowners that qualify under HAFA, however they are readily available for download here-> HAFA Homeowner Forms .
How do you know if a Homebuyer qualifies for HAFA?
Principal Residence. The property is the homeowner’s principal residence. If you the homebuyer no longer lives in the residence there are a few exceptions where you may still qualify.
Short Sale Loan Prior to 1/1/09.The mortgage loan is a first lien mortgage originated on or before January 1, 2009.
Mortgage Delinquency or Default. The mortgage is delinquent or default is reasonably foreseeable.
Loan Principal Balance Limit. The current unpaid principal balance is equal to or less than $729,750, higher amounts apply to multiple unit buildings.
Income vs. Debt. The homeowner’s total monthly mortgage payment exceeds 31 percent of the homeowner’s gross income.
Participating Lender. The program may not be required of every loan or by every lender so check with your lender to see if this program is available to you.
What is a Short Sale? In a short sale, the servicer allows the borrower to list and sell the mortgaged property with the understanding that the net proceeds from the sale may be less than the total amount due on the mortgage. The short sale must be an arm’s length transaction with the net sale proceeds (after deductions for reasonable and customary selling costs) being applied to a discounted (“short”) mortgage payoff acceptable to the lender/servicer. When a lender/servicer accepts the short payoff they agree to release their trust deed from the property allowing the sale to the new buyer to be completed. In some circumstances the lender/servicer may (1) forgive any deficiency owed by the seller, or (2) require all or a portion of the remaining loan funds they did not receive from the short sale to be repaid by the seller at a later date. As a short sale can have significant legal and tax consequences you should consult with legal and tax professionals prior to engaging in this type of process.
What is a Deed-in-Lieu of Foreclosure? In a deed-in-lieu of foreclosure (DIL), the borrower voluntarily transfers ownership of the mortgaged property to the servicer in full satisfaction of the total amount due on the first mortgage. The servicer’s willingness to approve and accept a DIL is contingent upon the borrower’s ability to provide marketable title, free and clear of mortgages, liens and encumbrances. Generally, servicers require the borrower to make a good faith effort to sell the property through a short sale before agreeing to accept the DIL. However, under circumstances acceptable to the investor, the servicer may accept a DIL without the borrower first attempting to sell the property. With either the HAFA short sale or DIL, the servicer may not require a cash contribution or promissory note from the borrower and must forfeit the ability to pursue a deficiency judgment against the borrower.
**The information compiled above is from MakingHomeAffordable.com and Supplemental Directive 09-09 Revised. If you need additional details about HAFA we highly recommend you review these sources or call and speak with a counselor about this program at the Homeowner’s HOPE™ Hotline 1-888-995-HOPE (4673).
As HAFA has just been recently launched (and will run through December 31, 2012) check back as we will be blogging soon about the real world details of this program once we see it in action.