I have seen an abundance of title issues for sellers/property owners in just the last 90 days. I am going to tell you a little bit about them and what you can do to avoid these issues at your closing.
Because of the high number of title companies that have close their doors in 2007/2008/2009/2010 a number of satisfactions have not been filed on liens that were paid off on a previous closing.
Sellers title issues when prior title company has folded:
This seller was looking at selling his home and when title work came in there were 3 liens that showed up on title that were not satisfied. One loan was from a private party and other two loans were lender loans. The liens were filed as unpaid mortgages and created a title cloud bad enough that 5 different title companies could not give us clear title.
The liens were paid off when the seller did a consolidation loan and a new mortgage was filed. However- no satisfactions had been filed. The borrower did NOT have a settlement statement showing the loans were paid off at his last closing. All of his documents were destroyed in a natural disaster. The title company had closed their doors and no longer existed 4 days after his refinance closing. The two mortgage companies had folded and had no information/would not provide a satisfaction. The private party with the third lien of $50,000 said he would not execute a satisfaction with out a settlement statement.
It took us hundreds of phone calls and a patient seller to get these items resolved. The turn time to resolve these issues--over 4 months. Even though this was an extremely difficult title cloud to clear--it is a common title issue I have seen more and more recently--so order your title work early to avoid these complications.
Title issues with prior bank owned properties that closed in 2007/2008/2009
I have had files where a buyer has bought a bank owned property and closed on it with out the seller filing the proper foreclosure paperwork. This could include missing a court date for the foreclosure, not filing the subsequent documents, not including/listing the spouse in the foreclosure etc...The older the foreclosure purchase the more difficult to resolve. It was like the banks had so many properties they didn't know how to keep track of them--but I will say they have come a long ways in the last few years and have done a much better job with clear title.
These to me are by far the worst title issues to resolve since the banks have been paid in full and seem to put these files in the bottom of their pile. In this instance I recommend starting title work before listing of the property. Estimated time we have seen to resolve these issues when working with the banks to clear title are 4 months to 3 years.
Title issues with sellers prior bankruptcy
I see on over half of the files where a seller has filed a bankruptcy. I often get a notification from a title company that the debt has been discharged in the bankruptcy but it does not dismiss the judgment lien on the property with out filing the proper paperwork. Many clients do not complete this extra paperwork after they file their bankruptcy because it is another/extra fee to do so but could do it on their own. The client goes on with their life and forgets about filing the judgement/lien paperwork.
I have walked many clients through this process many times and I can tell you it typically takes about a month to complete this process if all the paperwork is filed correctly ---the first time!
So my prediction is get your title work ordered as early as possible and CLEAR YOUR TITLE ISSUES ASAP.
Please keep in mind I am a local broker with previous underwriting experience. We are chartered differently then local banks and correspondent lenders so we do not have a minimum credit score and we can shop 44 investors guidelines with ONE credit pull. Also we take the good, bad and the ugly.
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