Monthly Archives: November 2015

Realtors can help clients by explaining owner’s title insurance

By | November 14, 2015 | Original Article

Some of the most frequent questions I’ve come across in my 20 years of experience with Placer Title Company comes from our consumers, you, the buyer.

What is title insurance? What does it provide to me as the consumer?

As we work hand-in-hand with our Realtor customers as well, we want to make sure that your customers understand and have the protection of title insurance for this huge purchase.

Make sure all of your clients are protected.

You’re a real estate agent, so you know that buying a home can be overwhelming for many of your clients. Homebuyers can easily feel confused and frustrated by the mounds of paperwork they have to sign. Plus, all the fees associated with closing can sometimes be a surprise even to an experienced buyer.

Owner’s title insurance is one of those items often misunderstood by homebuyers at closing, yet its value is tremendous. As an important adviser to your clients, you are in the position to help them understand the value of owner’s title insurance and the dangers that can be incurred without it.

What is title insurance?

Owner’s title insurance is a policy that protects homebuyers’ property rights. For the same reasons that the bank requires a lender’s insurance policy, a homebuyer obtains owner’s title insurance to protect their legal claims to the property.

How it protects your clients

Say, for example, your client recently purchased a new home from a builder, but the builder failed to pay the roofer. Wanting to be paid, the roofer filed a lien against the property.

Without owner’s title insurance, your client would be responsible for paying this existing debt; meaning they’d be paying the roofer out of pocket instead of purchasing something nice for their new home, like new living room furniture.

This is just one example of how owner’s title insurance protects homebuyers’ from various significant risks. With owner’s title insurance, your client would be protected from certain legal or financial responsibilities.

Enduring value

The good news is that owner’s title insurance protects homebuyers financially, as long as they or their heirs own the home. For a low, one-time fee – an average of 0.5 percent of purchase price – homebuyers can rest assured, knowing they are protected from inheriting existing debts or claims to their property.

State regulations and CFPB

Each state regulates its own title insurance costs. In addition, the Consumer Financial Protection Bureau regulates closing and settlement practices, which can affect title insurance.

Keep in mind that title insurance industry practices vary due to differences in state laws and local real estate customs. The party that pays for the owner’s title insurance policy varies from state to state, and sometimes even within a state.

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When it Comes to Photos, Know Before You Publish

Daily Real Estate News | Friday, November 13, 2015 | Original Article

Camera small

It’s second nature to include photos in your property listings. The more photos the better, right? But before you copy and paste those photos — or authorize anyone else to use them — you need to understand the basics of copyright law and apply your knowledge correctly when you contract with a photographer.

“Displaying photos of properties online is now a vital part of the real estate professional’s marketing plan,”  said NAR Associate Counsel Chloe Hecht at Thursday’s legal education seminar at the REALTORS® Conference and Expo in San Diego. “The Internet, however, makes copyright infringement easy,” because content available online can easily be taken, used, and distributed without authorization.

Real estate professionals need to consider that the rights to use a photo are linked to multiple factors, including who took the photo and under what terms, Hecht said. “Property listing photos are taken by different people with different roles in the transaction, and the rights to use those photos are transferred in different ways,” she said. “The result is a fractured landscape of authorship and conveyance.”

Hecht pointed to a pair of ongoing lawsuits to illustrate the perils of using photos without nailing down the copyright particulars in advance. In one case, Zillow is fighting a suit brought by VHT Inc., which alleges that Zillow has photos on its Digs home-design website that VHT says it owns.

In the other case, a Texas real estate broker and professional photographer is embroiled in a dispute with online real estate brokerage Redfin, both participants in the same Texas multiple listing service. The suit brings up whether the Digital Millennium Copyright Act protects website operators like Redfin, which hosts material posted by third parties. It also focuses on the ramifications of using a “share” button without getting permission from the originator of the material.

For guidance on how to capture your copyright, including sample agreements, visit realtor.org/capture.

— REALTOR® Magazine Daily News

Advice From the Pros

Be Careful What You Pin

Intellectual Property: Copyright It!

TRID: The Next Consumer Litigation Frontier?

“Title Snafus and You”

Title Snafus and You

Helping clients understand the complexities of title insurance keeps potentially small legal issues from snowballing.
September 2015 | By Aimee Hui | Original Article
Architect presenting home project

Your client is under contract to buy a condo. The seller’s disclosure statement mentions: “The deeded parking stall is space #8, but all present and previous owners have been using space #3.” The transaction closes smoothly, but afterward, your client receives a letter from another owner notifying her that the parking space she’s using isn’t hers. Your client notifies her title insurer, who denies coverage because space number eight was insured by the policy, her use of #3 was not insured, and the issue was disclosed by the seller. As a result, your client is left to address the issue at her own expense. A lawsuit will most likely be filed unless a compromise between the affected unit owners can be reached. Your client is left wondering why you didn’t help her catch this in the first place.

As you can see, it’s important for home buyers to be aware of title insurance matters during transactions. And while it is not your role as a real estate practitioner to offer advice about specific policies, it is helpful if you can point out issues that clients need to investigate further. After all, the seller’s disclosures may affect your client’s title insurance coverage for future claims. Here we clarify eight common misconceptions that consumers and real estate professionals may have about title insurance.

1. Title insurance only insures “clear title.” Policies typically cover defects, liens, or encumbrances on titles. But, depending on the form, they may also cover losses related to access, building permits, subdivision of the land, zoning, land use, encroachments, setbacks, easements, damage to structures, and supplemental tax assessments.

2. Title insurance covers matters shown in the policy. If an item is listed in Schedule B of the policy, any loss arising from that item is exempt from coverage. For example, if Schedule B of the policy lists a roadway easement in favor of the owner of the adjacent property, any dispute or loss arising from that easement is not covered by the policy.

3. Title insurance guarantees a property is free of liens and clouds against title. Title insurance is not a guarantee. It’s an insurance contract, indemnifying the insured for actual loss arising from matters covered under the policy’s terms. Not everything is covered. For example, if an insured person, before closing, knew of an unrecorded roadway easement in favor of her neighbor, the policy would not cover loss arising from the easement.

4. If a title issue is discovered, the title insurer must fix it so escrow can close on time. The title insurer has the right and obligation to investigate the claim, even if it was tendered under time constraints imposed by a pending escrow. The title insurer is not required to fix the problem so escrow can close on time, nor is the insurer liable for loss arising from delay or loss of the sale.

5. The title insurer won’t do anything if there’s no coverage under the policy. In cases where there’s no coverage for a claim, the title insurer has the right, but not the obligation, to address the claim and the insured has a duty to cooperate.

6. The title insurer will clear title if a covered title problem is discovered. The title insurer is not required to clear title. If a claim is covered, the title insurer has options it can exercise, such as 1) attempting to fix the problem; 2) filing a lawsuit; 3) negotiating a settlement with the insured or a third party; or 4) paying the insured’s compensable loss.

7. Only one title insurance policy is paid for at closing. If the property is purchased with a loan, two title policies are usually paid for at closing: an owner’s policy and a loan policy. The owner’s policy insures the person or entity that acquired title and the loan policy insures the lender.

8. Refinancing a loan does not require a new title insurance policy. The lender will generally require a new loan policy insuring the refinance mortgage. Sometimes an endorsement to the original policy or other arrangements may be made to reduce the cost of insuring the refinance mortgage.

Lenders Are Rethinking Their Priorities in a Post-TRID World

Lenders Are Rethinking Their Priorities in a Post-TRID World

By | | Original Article

After years of plowing resources into compliance projects, mortgage lenders surveyed by National Mortgage News are foregrounding core business initiatives in their plans for the coming year. High on to-do lists are projects aimed at improving the customer experience and seizing new business opportunities.

NMN, in partnership with SourceMedia Research, deployed a survey in September 2015 to a sample drawn from across the mortgage industry. The pool of more than 300 respondents includes C-suite and other senior-level professionals at mortgage origination and servicing firms of all sizes.

Mortgage originators entered 2015 with a major compliance hurdle looming — the Oct. 3 effective date to comply with the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rules. For many lenders, the work involved in meeting the requirements for accurate and timely delivery of new borrower forms amounted to a significant drain on resources.

When asked to gauge the difficulty of various TRID requirements, 44% of lenders assigned one of the top two ratings to the document changes of the new Closing Disclosure form. In addition, 39% of lenders gave that same rating to document changes of the new Loan Estimate form. Meanwhile, 19.2% of lenders assigned one of the two lowest rates to the difficulty of title agent vendor management.

Questions about the financial and time resources dedicated to preparing for TRID showed that for many, the effort was a considerable one. More than half said their firms spent four or more months preparing. Among those who provided a cost estimate of their firms’ TRID preparations, the respondent pool was split nearly evenly between firms that incurred less than or more than $50,000 in total direct costs related to TRID.

However, this figure is less reliable than the estimate of time spent; nearly a quarter of respondents said they did not know the direct cost figure associated with TRID prep work.

With the TRID deadline now met and the work associated with it completed, lenders appear to be taking a much broader view of what they would like to accomplish in 2016. At a very high level, respondents’ stated goals for 2016 suggest a fairly optimistic outlook.

But just as importantly, many companies’ 2016 goals include redirecting significant time and investment to initiatives aimed at improving core operations. Those planned improvements, in turn, reveal a potentially important shift in attitude taking shape, one in which higher-quality customer service comes to the fore as a common strategic objective.

In terms of strategic objectives, “improving customer service” had the largest increase in lender interest, with 65% of lenders naming it a high priority for 2016, up from 57% who called it a current high priority. Efforts to pursue first-time home buyers got a similar boost in attention.

These trends correspond with a dramatic shift in lenders’ goals for acquiring new technology — 44% of lenders selected “innovating to gain a competitive advantage” as the primary goal of their firms’ 2016 technology acquisition, up from 19% for 2015 — which points to a similarly dramatic shift in underlying strategic thinking. What’s more, that swing comes as the percentage of lenders who named “meeting compliance requirements” as the impetus for new technology purchasing dropped from 73% to 42% from 2015 to 2016.

The net impression gleaned from lenders’ 2016 outlooks is one of a year where participants in the business intend to fight harder for business opportunities and actively seek ways to differentiate themselves from competitors.