The case for small to mid-size lenders using independent title review services

Recently, a residential lender asked us to work on its behalf reviewing the work of borrower selected title companies underwriting the lender’s title insurance. This lender had experienced post-closing title problems that adversely affected title, and this lender needed assistance with preventing future problems. This type of work is customarily handled by lender counsel on commercial loans, but is not part of the standard residential loan closing process. This review process is not to be confused with the services provided by “lender counsel”, but rather just a checklist of mutually agreed upon title review items between the lender and the third party title reviewer.

The objective of the review process is to identify and avoid title problems and developing mortgagee title insurance deficiencies, and in the process to likewise protect the integrity of the borrower’s owner’s title insurance policy.

At its core level, we offer mortgagee title review that will fine tune title commitments, correct loan amounts, identify and verify current mortgage payoffs and satisfactions, ascertain correct listing of mortgagee clauses, ascertain correct legal descriptions and folio numbers, review loan payoff amounts. And ensure that the final mortgagee loan policy does not contain improper exceptions.

We work constructively with the designated title and closing agent, and in the process add a review process for the protection of the lender. As listed below, our review process has identified cases of carelessness and at times willful indifference to developing title problems, thereby placing the lender at risk. Here are some examples of recent issues that have arisen during our review process:

Missing or incorrect lender/mortgagee clauses and incorrect loan amounts on title commitments.
23 municipal liens and code violations in excess of $120,000 that were not resolved prior to closing.
Unresolved per diem liens for uncured violations. These liens could exceed the face value of the loan policy.
Missing pages of a revised title commitment that deleted critical exceptions.
Title agent preparing to close with unresolved pending liens.
Expired Errors and Omission insurance for title agents/attorneys.
Proposed deeds with missing grantor (seller’s) marital status leading to potential title claims and missing buyers’ marital status (not required by Florida law, but helpful in confirming who should acknowledge the mortgage for the lender)
Lien search revealing open permits and code violations that are “in process” of becoming liens potentially during the gap period or immediately post closing
Survey missing lender/mortgagee information
Expired payoff letters.
Failure to collect past due property taxes.

Though some issues may appear minor on the surface, the post closing problems that may develop from minor issues that should be addressed before the closing, may lead to unexpected financial burdens on the borrower and affect the new lender’s (our client) loan position and marketability of the mortgage loan. Our main goal is to help prevent problems before closing.

For more information on our cost effective Lender Title Review services, please contact Yvette Betancourt at yvette@theclosingcompany.net or 305-521-2080 or Martyn Verster, Esq, at martyn@theclosingcompany.net or 305-279-2713 . Our credentials

Disclaimer: The Closing Company, Inc. is not a law firm and is not providing legal or tax advice in this post. For legal advice, please consult with a licensed Attorney. For tax advice, consult with a Certified Public Accountant. Hiring an attorney is an important decision which should not be based solely on advertising. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.