Ever since the new TRID rules came into effect in 2015 we have seen people opt-out and waive Owners Title Insurance on the final Closing Disclosure. Doesn’t help that Owners Title Insurance can be found under the “Other” section on the CD and “Optional.” It’s always been optional to obtain, but I feel they could have done a better job of not making it appear as a non-meaningful purchase. Every month, we have a handful of people that decide to waive Owners Title Insurance and find it as a useful way to save money on their real estate transaction. Waiving Owners Title Insurance may seem smart at first, but has a long-lasting impact on your largest asset, especially when you decide to sell your home. Before you decline his one time purchase–look yourself in the mirror and ask yourself these questions.
Recently in the last few months we have seen a ramp up of hacking attempts to steal money from homeowners trying to close on their real estate transaction. This hacker wire scam is fairly savvy and has worked on a few occasions. Most notably, last week in the Washington DC area, a family wired $1.5 Million to whom they thought was the Title Company closing their transaction. Turns out, it was hackers trying to steal their money, and they were successful. The Title Company and FBI are working together to get the people their money back. The case is ongoing.
With this serious issue happening more and more, I wanted to make our audience aware of how the hacker wire scam works, how to spot it, and how to protect yourself.
When a Realtor tells me they have a ratified purchase contract, it always make me smile. That means a Realtor has entrusted Stewart Title to handle their transaction and get their clients to closing. There are many things that happen between the day of contract ratification to closing. The lender has their job, the home inspector, appraiser, and the many items asked of the “soon to be” home buyer. The one role where many people are unsure of what happens behind the scenes is the Title Company. Ask most homeowners where they signed their closing documents and many don’t remember, let alone understand what this Title Insurance policy is all about.
When a there is a ratified purchase contract sent to Stewart Title, what happens next? What is the role of the Title Company, that ends with a homeowner signing documents?
I want to begin by saying Realtors are not “forced” to use the joint venture Title Company. With full access to the brokerage’s agents, office meetings, events, and a push from the Broker, the business capture rate on the real estate joint ventures is fairly high. Joint ventures between Title Companies and Realtor brokerages have existed for quite some time and are fairly prevalent today in the Washington DC/Northern Virginia area. Perhaps they exist in your market as well and maybe you currently participate in one. BUT…what if real estate joint ventures were told to disband and can no longer exist–effective tomorrow?
In the last few months, we have had some transactions in which the buyer has waved purchasing the Owners Title Insurance Policy. That is their right to do so as “technically” it is optional. What many buyers don’t take the time to learn are the many upsides and protections Title Insurance Policies provide. Not purchasing a policy on your largest asset can have lasting affects even after you sell the home.
We ran into a specific situation last week where the buyer didn’t purchase the Owners Title Insurance Policy, AND they also forgot to order their survey. The Realtor wanted to order a survey after closing, then inquired what would happen if there was a survey issue after the fact? I told her that the “Survey Exception” is part of the protections laid out in the Owners Policy…which her clients declined. She freaked out. Here are 3 major items that are helpful to buyers regarding Title Insurance Polices.
We have seen it many times…the managing real estate broker or office manager pushing hard for their agents to use certain vendors. Myself, have dealt with this when an agent says, “Wade, sorry…I wanted to send you the business but my office manager told me to use the Title Company where our office has the “relationship.” Ahh…the “relationship.” This is a very important aspect of this topic and we will address it a little later. In my experience, real estate brokers and office managers are there to help, inform, educate, and protect their Realtors. They are the greatest safety net and in many cases, a reason as to WHY an agent hangs their license at that particular real estate firm. Vendors however, are separate companies from the real estate brokerage and offer related services to the Realtors, such as Mortgage, Title Insurance, home inspection, technology, etc. With that said, can real estate agents be forced to use certain vendors?
On January 4th, 2017, the State of Virginia ruled that Title Company Home Warranties are no longer able to be provided to buyers at closing in return for business. If you don’t know this practice it goes like this: In many areas of the country, including the Northern Virginia, Washington DC, and Maryland areas, Title Companies have offered “FREE Home Warranties” for buyers who close business with them. Essentially, it was a marketing tactic by the Title Company to “induce” business. I have said for a very long time this is not a valid practice and should not be allowed. I wrote this blog back in April 2016 saying this exact thing and explaining how the Title Company Home Warranty isn’t really free. Someone does pay for it. Here is the ruling for you to check out for yourself.
I had a client closing last month where the buyer (last-minute) needed a real estate attorney to draft up a document/agreement. The buyer went to the attorney who also said: “Do you want me to look at your Title Insurance Policy?” The buyer said sure. The attorney then started saying things like…”hmm, that isn’t good” and ” oh wow” while taking a pen and striking out items. Keep in mind this was a $1.4M dollar home. The buyer got upset and told the Realtor that the Title Company was ripping him off and not providing proper title insurance coverage. This was all taking place at another place than the closing. After closing, my client was not happy. I had to explain to the client in detail a Title Commitment vs Title Insurance Policy. They are not the same. The attorney was striking out items in the Title Commitment (Schedule B)…not the policy that is sent to the buyer AFTER closing. Once I explained everything the client was fine. She said…“you should write a blog about that on your site, as it could help educate a lot of Realtors!” I agreed with her…so here you go:
We are now 6+ weeks into the new TRID/CFPB regulations, and Stewart Title is starting to have a steady stream of TRID closings. Many of the TRID closings have gone smooth and several still within the 30-35 day window lenders usually need. Those are the good things. The not so good things, are loan officers not fully educated on the process, issues with the lender completing the Closing Disclosure (CD) and the extra work hours that are being spent on the files due to this. Many Realtors are also not up to date on the procedures and wondering why their closings might possibly be delayed. There is also another issue we are starting to see with TRID closings, which we hope does not become a pattern. This is something that is being seen not only by us, but other title competitors in the local Northern Virginia/Washington DC market.
The CFPB/TRID regulations are almost here…are you ready? Educated? Many of us are, some of us need to learn more about the upcoming changes and how it will affect their business going forward. Stewart Title (Nationally) and our local offices have been on the forefront of the CFPB for quite some time. I remember hearing about it in 2013 and wondering…“The CFP what?” Kind of the same thing that went through my head back in 2008 back in Phoenix, AZ when I first heard a client tell me she was taking on a short sale listing. “What the heck is a short sale?” We all know what Short Sales are and how they affected our business. Here are top reasons to work with Stewart Title after TRID goes into affect on October 3rd, 2015.