Title Insurance question

One simple reason.

The bank wants to know that you haven't done something that would affect title since they wrote the previous mortgage. And the main thrust of title insurance is to protect the mortgage holder.

B-)

But I bet they would be happy to save you a few bucks by telling you that you don't need to get a property survey.:-P

Yea, the property hasn't been surveyed since it was cut out of a larger piece in 1949+/-, and no corners have ever been set (except supposedly "oak stakes"). But, who needs corners?

In Utah you can't have a title company close a real estate deal unless there is title insurance. New law about 5 years ago. I'm sure there were lobbyists involved in the legislation. I found out the hard way when I had a cash sale going and thought it might be best to have a closing agent (vs meeting at the court house me with the deed and the buyer with a cashiers check). So at the closing I found out that about $3000 was going to be deducted from the proceeds. The buyer didn't care whether there was title insurance, he might have got stuck with it when he got a loan to build a house but on the other hand he may have not needed a loan (didn't to pay me). So title insurance is just the gift that keeps on taking. I don't even think they check the records that closely anymore. They know the risks, have insured most parcels many times without any loss. The few rare losses they take anymore barely ding their cash reserves.

I'd guess that under the rules to give you a loan the bank is required to get a new title insurance policy.

That makes sense EXCEPT that it is the same bank, if I didn't refi they would be stuck if I did change something.

I do not understand why a bank that doesn't sell its loans needs a new title policy just to refi the current loan at a different term (and a much lower interest rate).

We should find out who the lobbyists are for the title companies and hire them to lobby for surveyors.

New Loan = New Instrument = New Insurance

It all come out of your pocket to insure the bank does not lose a dime.

Paul in PA

The best part is at the closing when they ask you to sign a disclosure statement acknowledging that you have been told that the mortgage lender and title insurance company are owned by the same interests. And then they ask you to sign an owners affidavit of no change from the previous survey in order to remove the survey exception in the policy. And remember, you pay for all of it but it does not cover you, only the lender. If you want a policy to cover yourself, you will have to pay double and they will try to talk you out of it because that raises the closing cost above the federal guideline (same reason they talk you out of a survey). Yes, it's a strange industry. But yeah, the policy covers the specific loan, not any loan the lender might make on the same property. It is coverage of an equitable rather than legal interest in the property, and so disappears when that particular loan is satisfied. If you buy your own policy it will cover you until you sell the property (no matter how many different loans you go through), but it still doesn't do anything for any lenders.

Sounds like you paid for a "Lenders Policy" and the term of that policy is the term of the mortgage. So when you pay off the existing mortgage the policy dies and you need a new policy for the new mortgage.

If by some slim chance you paid for an "owners" policy, then that should stay in effect for as long as you own the property. You may have to assign it, but that's another matter.

C'mon, everyone here should know this drill by now.

It's the bank's money. You're asking to borrow it. So really, it's not the title company, but the bank, which is making you jump through hoops.

Banks need some assurances (evidence of typical bank actions in the past ten years or so notwithstanding). If something bad happens before you pay off the loan, it will be their house. If something happens to deflate the value of the house, they want to be protected against that, too.

Look at a typical Title Committment. They look for default judgments, outstanding loans, violations on the property, non-payment of utility bills, and all sorts of other items. If you are a corporation, they may look for additional info, corporate status, business dealings with certain foreign nations, all manner of otherwise intrusive questions.

They can make you get title insurance, they can make you get flood insurance, they can probably make you buy life insurance, if they decide to put it in the contract.

This is one of the reasons why everyone should school themselves on real estate-related practices in their area. It also helps to work with a small, locally-owned bank whenever possible.

First, if you start an all new mortgage, you need an all new title policy FOR THE LENDER. You only need a new OWNER'S POLICY if you are substantially increasing the amount of coverage payable to you.

Second, if you leave the old mortgage in place, the lender should work with you, up to the value of the existing title policy naming them as your lender. This will not normally allow you to take advantage of superduper-once-in-a-lifetime loan packages. Virtually all of the superduper variety will demand a new title insurance policy and several other things you previously did not need to do. That's life. You can pay out the bucks now and save them back over time or pay far less now but pay a bit more with each payment over the years of the mortgage.

I own several properties for which I paid cash and have no title policy whatsoever. As pointed out above, the odds of the company ever paying anything directly to you is miniscule if proper precautions are taken prior to finalizing a real estate transaction.

What if.....

.....you didn't get a deed, you got a certificate of title?

.....there was no such thing as adverse possession?

.....there was one entity for the entire state, or maybe even the entire country, that held all of title certificates and when a parcel of property changed hands; a surveyor, abstractor and title attorney looked at the transaction and gave it their blessing?

What if there was a place like LTSA in the United States?

The WIKI PAGE has a good explanation of what they do there.

Can anyone explain to me; why we aren't doing it like this?

Dougie

What if.....

I've looked at this before. Great idea!

It would be one huge knock down drag out with the lobbyists to get this legislation passed. It would shatter glass towers all over the place. Anyone who thinks derailing this gravy train is going to be easy should think again. But I'm 100% for it.

Let's change the wording

This is a question about my personal property. I bought land in 2001. I built a house on it in 2008, at which time I paid off the loan I used to purchase the property, and took out a new loan to build the house. At that time I had to get Land Survey. I don't remember if I got it the first time in 2001, I imagine I did. When I built the house, I had a construction loan, and then that became a 30 yr mortgage when construction was complete. I did 30 years because I still had my previous house, which I was paying on.

So, in early 2012 I sold my previous house. Now I want to refinance my mortgage at a 15 year term. I ask the current mortgage holder (a bank who never sells their mortgages) and they quote me a pretty decent rate (it would be a 15 year fixed rate jumbo loan). But, they say I need to get a new Land Survey. That is the majority of the closing costs.

Can someone explain why I need a new Survey? Seems like the whole Survey business is a big rip-off.

Y'all have a great week! B-)

Baaaaaaaaaaaad Boy

How dare you point the dirty finger in that direction!

Let's change the wording

Sure, I see more value in getting a NEW SURVEY than I do in getting NEW TITLE INSURANCE!

I am not sure about the laws in your Commonwealth or what your bank is willing to do but you might ask them if they can RECAST the existing mortgage with terms more suitable to you.

Let's change the wording

Me too, but the general public doesn't generally think like that.

Have a great week! B-)

> A Wikipedia article states that in 2003, the title insurance industry paid out $662 million in claims, and took in $15.7 billion in premiums.
>
> Also, interestingly, we are one of the few countries in the world that even has a title insurance industry.

Call your insurance commissioner...better yet ask, where did they work before becoming commissioner?...where will they work afterwards?

Does it become clear?

The better question to ask the bank: Why insist on title insurance without an ALTA survey?

Why insist on title insurance without an ALTA survey

Nothing here gets an ALTA survey (just a few exceptions for commerical properties); but every transaction gets title insurance.

It is to protect agaisnt issues with the transaction itself. If the buyer buys a house and the seller has a lien agaisnt his business and the house gets drug into a mess then title insurance will help (one would hope). If the property is sold and the easement to access it isn't filed then title insurance will pay (this one I know because I'm working through one example now). The easement got filed with the mortgage and not with the deed.

But without survey coverage many issues are excluded from title insurance. One example is a house with a deed written by a judge during a court battle. The deed was written poorly so that the westerly line of the property went through the living room of an existing house. Title insurance wouldn't pay to fix it-no survey coverage. Another example-a deed for a water pipeline easement was filed on the wrong lot by the city. Title insurance wouldn't clean it up-no survey coverage.

So you're correct: title insurance without a survey is not worth much but you still want to get it-just in case.