Vested Land Services Title Topics the Deed in Lieu of Foreclosure

From the Vested Land Services LLC newsletter Title Topics - Deeds in Lieu of Foreclosure

How is the deed in lieu transaction approached by a title agent?  This is from a recent edition of our client newsletter:

 We’ve been asked to insure a title that was obtained by deed in lieu of foreclosure.  Are there any special requirements when insuring a title which was obtained by deed in lieu of foreclosure?

Well, yes, there are. And there are some underlying legal issues, too.

       First, is the creditors’ rights problem.  If we are insuring the grantee under the deed in lieu of foreclosure’s title and we are issuing the ALTA 2006 Owner Policy, the pre-printed Creditors Rights Exclusion will cover this concern and no additional exception need be added; but, if we are using the ALTA 1987 Residential “Plain Language” Policy, we must include the following exception on Schedule B: 

 Consequences of an attack on the estate or interest insured herein under the Federal Bankruptcy Law or any creditors' rights law or state insolvency law. 

        If we are insuring a conveyance by the grantee under the deed in lieu of foreclosure we must run the deed in lieu of foreclosure grantor in upper courts through the date of the insured transaction; if that grantor has filed for bankruptcy protection after the date of the deed in lieu, the stop sign is illuminated and the bankruptcy proceedings have to be reviewed.

      Second, the mortgage for which the deed in lieu of foreclosure was given may remain open until the grantee in the deed in lieu of foreclosure conveys title.  In that subsequent transaction, the mortgage must be cancelled of record.

      Third, we cannot insure a title being conveyed by a deed in lieu of foreclosure which had been previously executed and held in escrow in case of a future default.  Only deeds in lieu of foreclosure which have been currently executed may form the basis for owners’ title coverage in favor of the grantee in the deed in lieu.

      Fourth, the realty transfer fee must be paid upon recording of deed in lieu if the underlying mortgage is not discharged.

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If you would like to be added to the Title Topics newsletter, please send me an email.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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VESTED LAND SERVICES LLC TITLE TOPICS

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

We issue a newsletter Vested Title Topics to our clients.  In each edition, we strive to provide our client base with information that affects their legal practice and the real estate industry, in general.

Our most recent edition is about "Daniel's Law." 

If you would like to be included in our email list, please send me an email.

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Reverse mortgages. Mom is dead, what happens to the mortgage?

Reverse mortgage payable when owner dies.

It's a common question- what happens when the  borrower dies?  The general rule is that the  death of the borrower accelerates the due date of the loan.  The loan must be satisfied through either a mortgage refinance or sale of the property.  Practically speaking, if the estate or its heirs do not want to keep the house, it will be listed for sale and the mortgage paid off at closing when title is transferred.

Here's how the question was posed in a recent column on NJMoneyHelp.com:

Q. I just found out my mother put a reverse mortgage on her house. I live with her. Would I have to move out if she dies? She is the only person on the deed and I’m her only beneficiary.
— Helping out

A. We’re glad you found out about the reverse mortgage so you can understand the consequences.

Keep in mind that each reverse mortgage is different, but we can give you a general idea of how they work.

A reverse mortgage can be taken out in a lump sum or your mom could have decided to receive monthly payouts, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.

“Either way, the mortgage company will have a first lien on the property for the amount it has given your mother plus accrued interest,” Gallo said.

Upon your mother’s passing, the mortgage becomes due and you would have to pay off the mortgage if you decided that you wanted to keep the house,” Gallo said. “You would need to take out a new mortgage in your name for the amount owed or come up with the cash from some other source.”

Most reverse mortgages are due within 30 days of the death of the borrower, but 90 day extensions may be granted, Gallo said.

If you are unable to pay off the mortgage, you would have to sell the home and pay off the reverse mortgage balance, Gallo said. Any remaining proceeds would be yours to keep.

“You would not be able to stay in the house without paying off the reverse mortgage,” Gallo said.

We recommend you review the legal documents for the mortgage so you can see exactly what your mother agreed to when she signed the documents.

Any  questions?  Give us a call.

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Virtual real estate closings - not really

Real Estate Transactions Go Virtual

The traditional real estate closings with a room full of people and stacks of documents are becoming a memory, as much of the process is now online.

The above is the heading of an article in The New York Times.  Some quotes:

Real estate transactions have gone largely digital as the pandemic has disrupted nearly every aspect of home buying, from house hunting to securing a mortgage, getting an appraisal, notarizing documents and signing the final closing documents.

Well, not so fast, pardner.  This is an oversimplification of the entire closing process.  First of all, we have to define what is truly digital.  In New Jersey, contracts have been signed digitally for several years. The column recognizes that but it's a fact that we cannot transfer title to a home or mortgage property without ink signatures.

An appraisal?  Well, lenders have ordered them remotely for years, and email just makes it easier for the  appraiser to deliver her final product.  Is that revolutionary?  I don't think so.

Notarizing of documents is done is some jurisdictions remotely, but the pitfalls are obvious to anyone who is trying to protect their property rights.

While some clients continue to prefer in-person closings, others are giving their lawyers power of attorney to sign the final documents for them or they’re executing closings on virtual platforms like DocuSign.

It is becoming quite common for sellers to sign their documents ahead of time and deliver them to a third party, usually a title insurance agent such as Vested Land Services, to be held until the buyer completes the mortgage and her loan funds.  While it's true that many seller's give their attorney a "power of attorney," we recommend that it be expressly limited to signing off on the closing statement and miscellaneous documents that may be required by the buyer's mortgage company.

By all means, read the complete article here.

Your comments are always welcome.

 

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Privately obtained flood insurance in the works?

The Federal Housing Administration (FHA) has published a proposed rule on its website that would allow a private flood insurance option instead of insurance through the National Flood Insurance Program (NFIP), when flood insurance is required by FHA.

In September, the White House signed a resolution that included an extension for the NFIP until September 30, 2021.

The changes would allow lenders to begin accepting private flood insurance policies for single-family insured loans for homes located in Federal Emergency Management Agency-designated Special Flood Hazard Areas (SFHAs), consistent with similar provisions in use by other industry participants.

“Our proposal would expand the options for obtaining flood insurance, rather than continuing to lock in borrowers to one federal option without any ability to comparison shop,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade. “We are also proposing important safeguards that will help protect borrowers, so their homes will have flood insurance coverage at a level at or above the level available through the National Flood Insurance Program.”

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The FHA also is seeking public comment on a proposal to institute a compliance aid for private flood insurance policies. According to an FHA press release, this would allow lenders to rely on the compliance aid to determine if a private flood insurance policy meets FHA’s requirements.

The FHA said it anticipates between 3-5% of FHA borrowers could obtain a private flood insurance policy for their FHA-insured mortgage if this option becomes available.

"This proposal will remove yet another unnecessary regulatory barrier to doing business with FHA and can also reduce costs to the federal government—costs that are ultimately born by the taxpayer,” said Deputy Assistant Secretary for Single Family Housing Joe Gormley. “Allowing participation by private insurers should generate the competition needed to ultimately reduce costs for consumers.”

The proposed rule will be published in the Federal Register in the coming days and will allow a 60-day public comment period following such publication. Comments should be submitted to FHA only through the methods specified in the notice to be published in the Federal Register.

The FHA added that this is only a proposal; "current flood insurance policies remain unchanged at this time, including the requirement that minimum flood insurance be obtained through the NFIP."

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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