Don’t miss the 2012 Montgomery County Partners for Home Ownership Housing Fair on April 14, 2012 from 10 AM to 3 PM at Plymouth Whitemarsh High School in Plymouth Meeting, PA.

The fair will feature free admission, free workshops, free credit reports and door prizes including an iPad and a Kindle.

Come out and hear from industry professionals on topics ranging from Sheriff’s Sales to Understanding your Credit Score. Click here for details and the day’s agenda.

Please stop by the Community First Abstract booth to say hello!

Download the flyer if you’d like a copy.

Why is it so important to you, the consumer, to have a local title insurance professional conduct your real estate closing?

The old adage that all real estate is local is absolutely correct, no doubt about it. And that adage is no truer than in Pennsylvania. Each county and township has its own criteria to transfer real estate and record transactions.

It’s your choice

When refinancing or purchasing be sure to shop for your title insurance provider and by all means choose a local, independent, licensed provider. Choose someone in or around the county in which you live. Don’t settle on the real estate agent’s “in-house” title agency and don’t let your television, internet, or national lender choose for you (let’s call them “out-of-state” lenders). If you do, most likely, you will have a “mobile” notary or notary signing agent conducting your closing.

By hiring an independent, licensed title insurance agent who is located in your community, you are:

• adding a level of security in the protection of your financial information
• hiring an independent eye who is not affiliated with your lender or real estate agent
• saving money
• supporting business owners who pay taxes and give back to your community
• protecting the sanctity of the public record
• adding a wealth of knowledge and expertise to your transaction

See why out-of-state title agents cost you money and why you pay more for less!

When you file a mortgage application with an out-of-state lender (including the big national banks), the lender typically orders title insurance through an out-of-state title insurance agency located in some place like Nebraska. And in some cases, the lender has an ownership interest in the title agency so it is making money off your loan and your title insurance. That’s why they push so hard for you to use the “in-house” company.

How the real estate closing works

The Nebraska title insurance agent doesn’t have a physical presence in Pennsylvania so how will it handle your real estate settlement? Quite simple – but it is going to cost you! It will find a nearby person who is a Notary Public. This Notary may have a printer in the trunk of his car or on top of his clothes dryer. When he receives the call to show up at your closing, he prints the mortgage documents containing all your personal financial information and shows up at your door. Why your door? Do you think it is because he is making it convenient for you? No, it is because he doesn’t have a local office. And guess what, the only way he is paid is by charging you a settlement fee anywhere from $150 -$350 to come to your home. This is how the Notary gets paid – you pay him – not the title agency that contracted with him. And unlike if you used someone local, the fee is not included in the title insurance premium you are paying. In most cases, he has very limited knowledge and expertise. He is not employed by the title agency.

Save yourself money

How can you save money? You simply select a local provider and attend settlement in their office during normal business hours and not pay a closing fee.

Avoid risk

And don’t forget, the Notary Signing Agents as they are sometimes referred to don’t own a community business, don’t have an office in the Commonwealth of Pennsylvania, and do not have a title insurance license. They are NOT employed by a local business owner or a large title insurance underwriter. They are simply independent contractors. But what they do have is your personal financial information including your Social Security Number, income, and birth date. And without a business office, who else in their home has access to your financial information? And what protocols do they have in place to keep the information safe?

A local title insurance agent

The local title insurance agent is part of your community, who pays local and state taxes, sponsors your child’s little league team, pays your neighbor’s salary, supports your local business, and he or she knows the local rules and regulations. He or she is the independent eye that you want for your real estate transaction. A licensed agent is required to attend continuing education courses. They interact daily with the court house, Recorder of Deeds, and the local real estate industry.

Help yourself and your community. No one can remove your right to choose a title insurance provider. Use a local independent (not affiliated with your lender or real estate agent), licensed title insurance provider who has the knowledge and expertise that will benefit you.

The New York Times published an article last weekend on foreclosures and the importance of title insurance. The author, Ron Lieber, also has a related blog and he asked readers to share their experiences regarding title insurance.

There were many comments from consumers on their opinion of title insurance with some in favor and some not. You will find my response below on the importance of title insurance and why the consumer is better off shopping for a title insurance provider.

Unfortunately, the title insurance industry has failed to educate the consumer on the importance of the title insurance product so it is understandable that there is much confusion as to coverage and frustration over the cost. The role of the title insurer and its agents is to eliminate the risk of the hazard of litigation. In other words, all the due diligence work is done up front before the policy is issued so that a claim will hopefully never be made in the future – this is what the consumer is paying for. And just because a homeowner has a title insurance policy doesn’t mean that she is free from the aggravation and disruption that a claim will bring. The premium is paid one time but the policy has no end date. The policy is good as long as the policy holder retains title to the property. A casualty insurer sends its policy holder a renewal notice each and every year. A title insurer issues an Owner’s Policy of Title Insurance once, for one fee, and has no idea when that policy will expire.

The point is not to feel that you’ve gotten your monies worth if a claim is filed and paid, the point is that you got your monies worth when there is never a need to file a claim.

As far as shopping. It is quite simple. All real estate is local so use a local, licensed, independent title insurance agent. Keep your transaction free of potential conflict and hire a real estate agent, mortgage lender, and title insurance provider that are not affiliated. If applying for a mortgage through a national lender and not using a local representative, do not allow the lender to choose your title insurance provider. You will most likely end-up with a Notary Public at closing who has no knowledge of the title insurance profession as well as local ordinances.

A real estate transaction is one of the most important financial agreements a consumer will ever make in a life-time; unfortunately, we as a society have diminished its importance by eliminating the checks and balances.

Please share your thoughts in the comments section below:

There are three major categories of fees associated with a mortgage refinance transaction:

• Lender Fees
• Title Insurance and Settlement Fee
• Government Charges
  

This article will help you understand Title Insurance and other related fees as they apply in the state of Pennsylvania.

The majority of title insurance charges in Pennsylvania are “filed” or approved by the Pennsylvania Insurance Department. These are broken down in four areas:

• Title Insurance Premium
  
• Endorsements to the Title Insurance Policy
  
• Settlement Related Fees
  
• Other Fees
  

Title Insurance Premium

Sometimes referred to as the “title insurance rate,” in Pennsylvania the premium in a mortgage refinance transaction can fall into one of four distinct filed rate structures. The rate is determined by the type of transaction, the amount of insurance required, and the number of years since the last evidence of title insurance (Typically a Deed for value or mortgage filed by an institutional lender).

Mortgage refinance loans are eligible for the Basic rate or one of three discounted rates. The policy amount is equal to the loan amount. See the table below for a quick summary of rate qualifications. Negatively amortizing and reverse mortgage loans may be subject to increased policy limits as required by the mortgage lender.

Title insurance rate calculators are available to help you determine the appropriate rate for your refinance transaction.

Endorsements to the Title Insurance Policy and Closing Service Letter

Since your lender is requiring title insurance, it also may require additional title insurance coverage provided through endorsements to the policy. The rate for most Endorsements in Pennsylvania is $50 per Endorsement.

Most lenders also require a Closing Service Letter that provides additional protections to the lender. The filed rate for a Closing Service Letter is $75.

Settlement Related Fees

These items are “lightly” regulated or not regulated at all. You should pay careful attention to this category and insist on full disclosure of all charges when requesting a quote.

Settlement related charges include notary, overnight mail, tax and utility certifications, and possibly a fee for conducting settlement.

Notary fees should be charged on a per act basis. They are set by the Commonwealth of Pennsylvania.

Pennsylvania Title Agents are to be reimbursed only for their expenses – courier costs, certifications, and other out of pocket expenses. They are not permitted to mark up these items.

A settlement fee is allowable only in specific circumstances. There is no upper limit set by the state. In many cases this charge is not necessary to conduct your closing and only serves to add to the profit of the title agent. You should request it be waived, or negotiate a substantial discount. One way to avoid this charge is to schedule your settlement at the title agent’s office during business hours. Under those circumstances, the settlement fee is absolutely not allowed.

Other Fees

Occasionally other legitimate charges are required for your closing and allowable by the Insurance Department. You should pay attention to any additional items not described above. Often these are unnecessary or “junk fees” like release tracking.  You should shop for title insurance agents who promise no junk fees.

Your best bet is to compare the rates by requesting written title insurance quotes from at least two different title agents recommended by different sources. This should allow you to verify that you are receiving the best possible rates for your refinance transaction.