Jun 19, 2024 | Housing Analysis, Real Estate
| By Zachary Greenfield, Esq., Underwriting Counsel, Stewart Title Insurance Company
According to a recent study by consulting and actuarial group Milliman for the American Land Title Association, from 2013 to 2022, title insurance underwriters handled more than 200,000 claims and incurred approximately $4.4 billion dollars in claims losses and related expenses, 21% of which resulted from fraud and forgery claims. While the average claim cost for matters not involving fraud or forgery was $26,328, the average cost of each fraud or forgery claim was approximately $143,000.
The study grouped claims into 11 categories. The top four categories were as follows:
| Category |
Description |
Percent of all claims |
| Basic Risk |
fraud, forgery, undisclosed heirs, marital rights, competency, etc. |
24% |
| Special Risks |
mechanics’ liens, subordination of prior risks, underwritten risks, etc. |
21% |
| Escrow and Closing Procedures |
improper instructions, improper payments, failure to make a payment, failure to complete post-closing duties, etc. |
13.70% |
| Examination and Opinion irregularities |
irregular omissions, unforeseen risks, etc. |
11.90% |
The remaining categories included “apparent non-covered claims” (8%); “endorsement, title plan, search and abstract claims” (7.8%); “taxes and special assessment claims” (7%); “survey-inspection/description matters” (5.2%); “typing or policy review” (0.9%); “stakeholder and interpleader cases” (0.3%); and “disputed procedure” (0.2%), including matters such as foreclosures and government forfeitures.
Notably, the study found that in addition to being the most expensive type of claim, the frequency of fraud and forgery claims is on the rise. Whereas those claims represented 19% of all basic claims from 2013 to 2020, that figure rose to a staggering 44% in 2022. It is therefore now more important than ever to be on the lookout for potential title fraud. Your Stewart underwriters are always available to review any situations that you think might involve fraud or forgery. In this context, we urge you to follow the old adage, “if you see something, say something.” To view the full study, follow this link: Recent Study – Fraud & Forgery Link |
Jun 19, 2024 | Housing Analysis, Real Estate
By Mark A. Jones, Assoc. Senior Underwriting Counsel, Stewart Title Insurance Company
Whenever reviewing title examinations, when we see a traditional recorded mortgage, we all know the process of getting the mortgage released of record. The payoff is ordered, funds are collected at closing, the funds are
mailed or wired to the lender, and the lender then sends the release (hopefully) to the Registry of Deeds for recording. In contrast, an equitable mortgage is not “recorded” at the Registry of Deeds. An equitable mortgage is an inchoate lien, similar to an estate tax lien, that needs to be identified by a title examiner or attorney looking at the registry and probate records. An equitable mortgage typically arises when a divorce agreement and/or a judgment divides the marital assets, leaving one spouse the owner of real estate, but obligates the other spouse to pay a certain sum of money as part of the asset division. As the name suggests, the equitable mortgage is an equitable concept whereby if one party doesn’t satisfy their obligations, the other party’s assets are encumbered by the unsatisfied obligations. The following are some typical examples of situations where an equitable mortgage might arise and what would be required to insure.
Fact pattern 1: Divorce Agreement states Husband shall convey property to Wife and the agreement provides no payment of any funds by wife to the Husband.
Curative action: None. No equitable mortgage has been created as Wife has no financial obligation to the Husband. A conveyance by the Husband to the Wife will release his interest.
Fact pattern 2: Divorce Agreement states Husband and Wife shall list the property for sale and split the proceeds with the Wife getting 60% of the proceeds and Husband gets 40% of the proceeds. Both signed a deed for consideration to a third party buyer who is now selling.
Curative action: None. Both parties to the divorce have signed a deed for consideration and there is no need to go behind the transaction to determine if the parties received the pro rata share.
Fact pattern 3: Divorce Agreement states Wife shall convey the property to the Husband and Husband shall pay Wife $50,000. Wife conveys property to Husband for $1.00. No evidence of payment is filed in the probate or the Registry of Deeds. Five years later Husband goes to sell the property.
Curative action: As the record title fails to disclose evidence that the Husband’s financial obligation to pay the Wife the $50,000, the Wife may have an equitable mortgage encumbering the title. In order to insure we would require record title evidence of payment or a release from the Wife. Record title evidence can be satisfied by filing evidence of satisfaction of payment with the probate court in the divorce proceeding or by recording satisfactory documents with the Registry of Deeds.
Fact pattern 4: Divorce Agreement states Wife shall convey the property to the Husband and Husband shall pay Wife $50,000. Wife conveys property to Husband for $1.00. No evidence of payment is filed in the probate or the Registry of Deeds. Thirty-Five years later Husband goes to sell.
Curative action: Likely none, but check with an underwriter. Barring any extraordinary circumstances, we would generally not require evidence of payment or release from the wife. Although the traditional mortgage expiration statute (Mass Legislature Chapter 260, Section 33) of 35 years doesn’t specifically apply to an equitable mortgage, as there is no actual recorded mortgage, enough time has passed since the divorce that we would likely be comfortable insuring the property in this situation.
The above fact patterns are examples of common situations we see with divorce agreements. When reviewing a title with a divorce in the chain an Attorney should always be aware of any potential equitable mortgages that may arise. To add to the confusion, we often see situations where the agreement and/or judgment outlines the division of the property and then the parties do something completely different. Most divorce situations require a case by case analysis.
Oct 30, 2023 | Financial Reports, Mortgage Rates, Real Estate
As a mortgage officer, you understand the importance of staying proactive to build your business. In the mortgage industry, downtime can be an excellent opportunity to lay the groundwork for future success. With the right strategies, you can ensure that your pipeline remains strong, and your business continues to grow. In this blog post, we’ll explore five ideas to help mortgage officers make the most of their time and build their business effectively.
1. Strengthen Your Online Presence
In today’s digital age, your online presence is vital to attracting and retaining clients. Use your downtime to enhance your website, create engaging social media profiles, and share valuable content related to mortgages and real estate. Regularly updating your website with useful information, blog posts, and client testimonials can help you establish credibility and trust with potential clients.
2. Expand Your Network
Building strong relationships is a cornerstone of success in the mortgage industry. Use your free time to expand your network by attending industry events, joining local business groups, and participating in online forums or social media groups related to real estate and mortgages. Networking can lead to valuable referrals and partnerships that will boost your business.
3. Refine Your Customer Relationship Management (CRM) System
An efficient CRM system can help you keep track of your clients and potential leads. Take the time to evaluate your current CRM system, and if needed, invest in a more robust and user-friendly one. Ensure that you have a system in place for staying in touch with past clients, sending out regular updates, and offering valuable resources.
4. Offer Educational Workshops and Webinars
Hosting educational workshops or webinars is an excellent way to establish yourself as an expert in the mortgage field. These events can cover topics such as the mortgage application process, understanding interest rates, or tips for first-time homebuyers. By providing valuable information, you can attract new clients and strengthen your relationships with existing ones.
While downtime in the mortgage industry can be frustrating, it’s also an excellent opportunity to work on building your business for the future. By strengthening your online presence, expanding your network, improving your CRM system, and offering educational workshops, you can ensure that your business remains strong and continues to grow. With dedication and the right strategies, you can maximize your productivity during slower periods and set the stage for long-term success in the mortgage industry.
Oct 16, 2023 | Home Buyer Tips, Home Seller Tips, Real Estate
Introduction
For many people, buying a house ranks among the top three most stressful experiences in life, alongside major life events like marriage and starting a family. The process is often fraught with uncertainty, endless decision-making, and a rollercoaster of emotions. As a real estate agent, understanding and empathizing with the needs and stresses that keep your clients up at night can set you apart from the competition and make a profound difference in their journey. In this article, we’ll explore how you can become the real estate agent who truly rises above, making the home buying process as smooth and stress-free as possible for your clients.
Listen with Empathy
One of the most valuable skills a real estate agent can possess is the ability to listen actively and empathize with their clients. Homebuyers often grapple with a whirlwind of emotions, from excitement to anxiety. By creating an open and empathetic space for them to express their concerns and preferences, you can provide tailored solutions and ease their stress.
- Active Listening: Take the time to truly understand your clients’ goals, concerns, and what they envision in their dream home.
- Acknowledge Emotions: Be prepared to validate and acknowledge the emotional aspects of the home buying process, such as nervousness, anticipation, or even fear of making a wrong decision.
- Responsive Communication: Always respond to client inquiries and concerns promptly, ensuring they feel heard and valued.
Educate and Inform
A major source of stress for homebuyers is the fear of the unknown. Your role as a real estate agent includes being an educator. By providing comprehensive information and guidance throughout the process, you can alleviate many worries and uncertainties.
- Market Insights: Share in-depth knowledge about the local market, current trends, and pricing to set realistic expectations.
- Legalities and Contracts: Explain complex legal documents and contracts in simple terms, ensuring clients fully comprehend their obligations.
- Timeline and Process: Provide a clear, step-by-step roadmap of the home buying process, so clients are aware of what to expect at each stage.
Transparent Communication
Transparency is key in reducing anxiety for homebuyers. They need to trust that you’re always working in their best interests. Building this trust comes through open and honest communication.
- Pricing Discussions: Have candid conversations about the true costs of homeownership, including property taxes, maintenance, and potential unexpected expenses.
- Market Fluctuations: Address any concerns about market fluctuations and their potential impact on the home’s value.
- Timely Updates: Keep clients informed about the status of their transactions and any potential challenges that may arise.
Personalized Solutions
No two clients are the same, and their needs and stressors can vary significantly. Personalization is the key to ensuring their home buying journey is as smooth as possible.
- Property Selection: Tailor your property recommendations to match your client’s unique preferences, whether it’s about location, style, or budget.
- Problem Solving: Address individual concerns proactively. If a client is worried about the commute to work or the quality of local schools, help find solutions to these issues.
- Support Network: Recommend trusted professionals like mortgage brokers, inspectors, and lawyers who can provide additional support.
After-Care and Follow-Up
Stress doesn’t always end when the closing papers are signed. As a real estate agent who goes above and beyond, ensure you’re there for your clients even after the deal is done.
- Post-Closing Support: Offer assistance with the post-move period, providing resources and information to help them settle comfortably into their new home.
- Follow-Up Communication: Reach out periodically to check in on your clients’ satisfaction and address any concerns or questions.
In conclusion, understanding and alleviating the stress that comes with buying a home is a way to set yourself apart as a real estate agent. By actively listening, educating, communicating transparently, providing personalized solutions, and offering after-care, you can make the home buying process a positive and memorable experience for your clients. Your dedication to their well-being will not only foster trust and loyalty but also position you as a top-tier real estate agent who genuinely cares about their clients’ needs and concerns.
Sep 26, 2023 | Real Estate
Managing multiple debts can become overwhelming and burdensome. Juggling various loan payments with varying interest rates and repayment terms can lead to financial stress and missed opportunities. One solution that borrowers often consider is consolidating their debts through a mortgage refinance loan. While this approach can be beneficial for some, it’s crucial to carefully evaluate its pros and cons before deciding.
Understanding Debt Consolidation
Debt consolidation is the process of combining multiple debts, such as credit card balances, personal loans, and other unsecured debts, into a single loan. The goal is to simplify repayment by having one manageable monthly payment with potentially lower interest rates and extended repayment terms.
Pros of Consolidating Debts with a Mortgage Refinance Loan
Lower Interest Rates: One of the primary advantages of consolidating debt with a mortgage refinance loan is the potential for lower interest rates. Mortgage loans generally offer lower interest rates compared to credit cards and other unsecured loans.
Single Monthly Payment: Combining multiple debts into a single loan means you’ll have only one monthly payment to manage, reducing the chances of missing payments, and improving your credit score in the long run.
Extended Repayment Terms: Mortgage loans often come with longer repayment terms compared to other types of debt.
Potential Tax Benefits: In some cases, the interest paid on mortgage loans is tax-deductible. By consolidating debts into a mortgage refinance loan, borrowers might be able to benefit from certain tax deductions.
Cons of Consolidating Debts with a Mortgage Refinance Loan
Risk to Homeownership: When consolidating debts with a mortgage refinance loan, you’re essentially using your home as collateral. If you’re unable to make payments on the consolidated loan, you risk foreclosure, potentially losing your home.
Closing Costs and Fees: Refinancing a mortgage comes with closing costs and fees, which can add up to a significant amount. It’s essential to factor in these costs while assessing the overall financial impact of debt consolidation.
Long-term Cost: While lower interest rates and extended repayment terms can provide short-term relief, consolidating debts into a mortgage refinance loan may result in higher overall interest payments over the extended loan term.
Discipline Required: Debt consolidation is not a magic fix for financial issues. Without responsible financial habits, individuals may accumulate new debts, putting them in a more challenging position than before consolidation.
Consolidating debts with a mortgage refinance loan can be a viable option for some borrowers, offering lower interest rates, simplified payments, and potential tax benefits. However, it also comes with inherent risks and additional costs that must be carefully considered. Before deciding, it’s crucial to assess your financial situation, consult with a financial advisor, and explore other debt consolidation alternatives.
Sep 25, 2023 | Home Buyer Tips, Home Mortgage Tips, Real Estate
Recent reports from various title companies and other leaders in the real estate industry show that across the United States, systematic fraudulent schemes involving sophisticated seller impersonation efforts are targeting existing owners and prospective purchasers of vacant, unencumbered land. These schemes target both residential and commercial properties in rural and metropolitan areas alike.
The scammers orchestrating these schemes typically begin by searching various real property records to identify real estate that is free of any mortgage or other liens (often vacant lots or rental properties) and the identity of the property owner. Next, scammers will contact a real estate broker posing as the owner to list the property for sale (often at a below market value to generate immediate interest). Once a prospective buyer is identified, the closing process will begin. Although scammers typically will communicate only by email through this process, more sophisticated operations recruit individuals to participate in all transactional phases, including diligence phone conversations and even personal appearances at signings. When facilitating due diligence and closing efforts, scammers will forge notary stamps, signatures and even identification documents such as driver’s licenses. These falsified documents are provided to the title company or closing attorney at closing, the fraudulent deed is recorded and the buyer’s funds are wired to the scammer (often to an overseas account).
Red flags include:
- No outstanding mortgages – free and clear property
- Vacant land
- Seller in a rush to close
- Owner is a non-US citizen
- Sales amount is usually under $50,000
- County’s Property Appraiser records show the owner’s address to be outside of the U.S.
- Real estate agent never meets with principals and is hired by e-mail
- Sale documents are e-mailed to seller(no in-person closing or use of RON)
- Typographical errors and non-matching signatures
- Passport/ID appears suspect –cut and pasted photos, for example
- Notary acknowledgments are suspect and may claim to be f rom U.S. Embassy or an attorney/notary in South Africa or other foreign country
- Purported owner is not currently located at the owner’s address listed in the county’s tax records
- Wiring instructions use banks not located in the owner’s country of residence, as shown in county’s tax records, and/or list third-party payee/account owner
- Multiple foreign countries involved for one party(seller in one place, documents notarized in another, wire going to another country, for example)
- Documents sent to title company already executed without prior inquiry to title company about how they need to be completed and acknowledged.
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