What is title insurance?

Here's a great answer thanks to Florida's Title Guru:

Title insurance is a form of indemnity insurance for real property (land and improvements) offering both buyers and lenders insurance against loss arising from defects or unmarketability of title.  Examples of defects or unmarketability include matters such as outstanding liens, errors in property’s legal description, or gaps in ownership – all being things a buyer or lender should be concerned with.

Title insurance differs from other forms of insurance in two major ways.  First, title insurance is not casualty based.  An underwriter or agent will perform a search of the underlying lands to identify the owner, outstanding liens and any other matters that affect the real property.  A title commitment will be created based upon the results of this title search.  A title commitment details the property’s owner and legal description, requirements which must be satisfied in order to provide coverage (including releases of mortgage, judgments or other matters that cloud the title) and matters that will be excepted from coverage (such as easements, restrictions and other matters that run with the land).  This differs from casualty insurance which is typically provided without any due diligence (i.e. given without a title search or requirements to satisfy liens and defects in title).

The second major difference with title insurance is that it insures backwards in time.  Where other forms of coverage such as auto insurance and health insurance are purchased for events that may occur in the future, title insurance insures against loss arising from defects that already happened in the past.  An example of this could include a newly married couple who recently purchased a home, only to receive a call several months later from an elderly woman saying that her grandchildren sold her home without her approval.  If the grandmother was legally in title to the property, the newly married couple may not fully own the home.  An Owner’s Policy would typically cover against such a loss.

Title insurance is typically sold through a network of title agents who write the policies of a title insurance underwriter.  Similar to your neighborhood Allstate office (being an independent agent for Allstate, typically not owned by Allstate company), it is common for consumers, Realtors and mortgage brokers to work with the title agent of a title underwriter, not the underwriter directly.  The title agent will typically perform the closing and remit a portion of the title premium to the underwriter.

The two main forms of title insurance coverage are an Owner’s Policy and a Loan Policy.  An Owner’s Policy insures the buyer against adverse matters which occurred before they purchased the property, but may pop up as problems during their ownership.  As previously detailed, these could be in the form of previous mortgages not satisfied, lack of legal access to the property or owners not accounted for.  The coverage under an Owner’s Policy runs for as long as the owner(s) own the lands.  A Loan Policy is a little different in that it insures a lender that their lien of mortgage is both valid and superior in priority to all other matters not shown as an exception to title.

In addition to the coverages provided under an Owner’s and Loan Policy, the insured may also purchase additional coverage in the form of an endorsement.  Title endorsements vary from state to state but serve to offer coverage for survey elements, mineral rights, violation of restrictions, unpaid assessments and a host of other matters. 

Overall, title insurance can be an abstract concept to most consumers.  Most do not fully understand why they’re paying for it or the benefits they’re getting.  However, after with a little bit of research and question asking, most come to the understanding that title insurance is another form of asset protection that should be obtained.

Original article found on line at eNDORSEMENTS.

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

For your next title order 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 AT vested.com

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Need a mortgage? You need a home appraisal

While the New York Times article mentioned here is written with New York City it mind, this column about the home appraisal process is applicable to New Jersey homes, too.

BEFORE anyone can buy a house with a loan from a bank or refinance a mortgage, the lender needs an objective assessment of the property’s value — after all, the home is the bank’s collateral for the loan. Assessing the value is the job of the appraiser.

No mortgage is made without an appraisal.  In my experience the way an appraisal is made has run the gamut from a "drive-by" where the appraiser takes photos from outside the home and gets her information about similar homes (called "comparables" or "comps") from sales reports to the true appraisal where the appraiser physically inspects the home to count and measure rooms, gets a copy of the survey, interviews the homeowner, visits the municipal building department to determine if all improvements have been reported to the municipality and performs a thorough comparison between the subject property and its comparables.

The best thing a homeowner or broker can do to help the appraisal process is to prepare a one-page sheet for the appraiser that outlines the changes and repairs that the home has undergone since it was bought.

Read the full column.

For your next title order 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 AT vested.com

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Big win for homeowners thanks to housing lobby

Bloomberg.com reports "Housing Lobby’s Win Costing U.S. $600 Billion: Mortgages

Congressional efforts to reduce the U.S. deficit revived tax breaks for mortgage insurance and extended interest deductions for homeowners that will cost the government $600 billion over five years.

Among the provisions of the fiscal bill passed on January 1:

•  2007 tax break for homeowners whose debt is forgiven by lenders and preserved exemptions for profits on home sales, while maintaining mortgage-interest deductions

The moves could help a housing market that last year started to reverse a five-year slump that pushed the U.S. economy into the longest recession since the 1930s.

•  2013 Savings Homeowners will save about $100 billion this year from mortgage interest deductions  
• Borrowers with mortgage insurance, from private guarantors or the U.S. government, will be able to deduct their premiums. That perquisite had expired at the end of 2011. The change will apply retroactively to 2012 for homeowners making less than $110,000 a year and will remain in force this year. 

The bill also extended the ability for homeowners to avoid taxes when their debt is written off by lenders in so-called short sales, in which properties are sold for less than loan amounts, and in loan modifications meant to keep borrowers in houses. The forgiven amounts were treated as income before 2007 until the Mortgage Debt Relief Act was passed. That had been set to expire this week before the extension.

But beware.  Higher income hearings face a limit on deductions .

This week’s bill will also limit some mortgage-related deductions by reviving so-called Pease limitations for itemized filers including individuals earning more than $250,000 and couples with more than $300,000 in adjusted gross income. Taxpayers will gradually lose the value of deductions, reducing them to as little as 20 percent of what they had been, according to the NAR summary.

 Read the full story.

For your next title order 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 AT vested.com

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Need a mortgage modification, you'll have to start with a hardship letter

Getting a lender to modify your mortgage is not a Sunday walk in the park. Like many things in life, thought is required. As this column in the New York Times points out, getting started on the right foot is essential. Especially when it comes to explaining why you need the modification.

HOMEOWNERS having trouble paying their mortgages may try to elicit sympathy from their lenders in long, emotional letters laden with woe.

While lenders do not have a heart, they

[D]o look for what is known as a hardship letter when a borrower applies for a loan modification. Such a letter is a requirement for modification applications under the government’s Making Home Affordable program.

Tips on writing a good letter:  explain up-front, in simple language, why you missed payments and how you propose to correct the situation.  Get to it first, because

The lenders’ loss mitigators, faced with mountains of modification requests, are unlikely to spend time reading more than the first few lines of each letter.

Lot's of good information in it, so read the full column. And good luck to you.

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

If you would like to know what we can do for you 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 AT vested.com

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Using gifts for real estate purchase downpayment

The New York Times discusses the impact on your loan application when you receive a gift towards your cash needs for closing.

HOME buyers trying to scrape together enough money to cover the typical 20 percent down payment frequently look to relatives for help.

The number of first-time homebuyers who resort to the Bank of Mom and Dad is about 25%.  No surprise here as prices in the metro-New York area are high and first time home buyers are young couples who are, literally, just starting out.

There are some pitfalls to avoid when you receive a gift.

But mortgage lenders closely scrutinize cash gifts. That critical check from the parents may not count toward your home purchase if you can’t thoroughly document its source and intention.

Be certain that the money is transferred by check or wire as the paper trail is essential and must be able to be followed by the loan processor.  If possible, get the money into the buyer's account several months before the closing.  It might result in less questioning by the bank.  Also, donors should check on their gift tax liability.

Nothing is simple, is it?

Read the full article here.

For your next title order 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 AT vested.com

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