Earnest Money Instructions Clarified on New NWMLS Form 21

On September 27, 2011   /   Blog, Escrow  

NWMLS form 21 Clarifies Earnest Money InstructionsThe recent changes to paragraph b “Earnest Money” in the NWMLS Purchase and Sale agreement (Form 21) finally gives escrow the authorization they need to assist in the release of the earnest money upon termination of the agreement. We are very pleased with this change; it will not only eliminate delay but will result in happier buyers, sellers, brokers and happier closing agents.

The Old Paragraph B – Why the confusion?
Remember that Escrow is a neutral third party that can only follow written instructions agreed upon between the buyer and seller. In the former version of the NWMLS Form 21 paragraph b. the instructions for what a closing agent could do with Earnest Money was EXTREMELY limited.

Under the old agreement the parties had to agree in writing as to disbursement of the earnest money, in the absence of such an agreement (Rescission) the closing agent was instructed to commence an interpleader action within 30 days of the demand. These limited choices left everyone including the closing agent feeling very frustrated.

A New Paragraph B – Clear Instructions
The revisions made to the form as of 8/11, provides the closing agent with the clear and precise instructions they need in order to release the earnest money in a timely manner. Not only does it give clear instruction to the closing agent but the buyers and sellers have also been given clear notice of the process if there is a dispute with earnest money.

Upon termination of the agreement the parties shall execute a release form (Authorization to Disburse Earnest Money – Form 50), if either party fails to execute the form, the other party may make a written demand to the closing agent for the earnest money. The closing agent shall promptly deliver notice of the demand to the other party. If the other party does not object to the demand with 10 days of said notice the closing agent is authorized to disburse the funds to the party making the demand. In the event of dispute over the earnest money, the closing agent can still commence an interpleader action.

What do you think?  Will these revisions save you time and effort in the future?  Please share your thoughts by commenting below!

For your reference, we have included paragraph b. here:
nwmls form21 paragraph b

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Residential Title and Escrow Rate Calculator – TicorRates.com

On September 20, 2011   /   Blog, Escrow, Title Insurance  

Online rate calculators for title and escrow services have become indispensable tools for loan originators over the last couple years.  Why?  Because a higher degree of accuracy is now required when loan originators disclose settlement fees to consumers on the Good Faith Estimate or GFE.  And with settlement fees falling into three tolerance categories it’s critical for loan originators to know that the fees quoted by the title insurance and escrow provider will be accurate and won’t change by more than 10%.

Calculate rates for your GFE instantly! Try out the free title and escrow rate calculator today! Click here to try it now at TicorRates.com!

Therefore as a service to our clients Ticor has created an easy to use, online rate calculator.  View the calculator at http://ticorrates.com to try it out today!

TicorRates.com benefits:

  • It’s easy to use
  • 24/7 availablility
  • No need to log in
  • Calculate Fees in under a Minute
  • Quotes are valid for 60 Days

Here’s a 2-minute video tour of TicorRates.com
Click on the play button below to watch it now.

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A quick review of the GFE and HUD-1 Settlement Statement Changes

Last year significant changes were made to RESPA’s two primary disclosure forms (GFE and HUD-1 Settlement Statement) for the purpose of ensuring more timely and effective disclosures of the settlement costs of residential mortgage loans. One of the major changes was the addition of a third page to the HUD-1 which facilitates a side-by-side comparison of the settlement charges listed on the Good Faith Estimate vs. actual charges on the HUD-1 settlement statement.  In addition, the new HUD-1 makes it easier for lenders and settlement agents to identify tolerance violations with the settlement charges.

Charges that cannot increase on the HUD-1 Settlement Statement

  • Origination charge
  • Credit Charge
  • Adjusted origination charge
  • Transfer taxes

Charges that cannot increase in total by more than 10% on the HUD-1 Settlement Statement

  • Recording fees
  • Title Services
  • Any other required services that are provided by a company identified by the loan originator

Charges that can increase on the HUD-1 Settlement Statement:

  • The initial escrow deposit
  • Daily interest charges
  • Homeowner’s insurance
  • Any required services consumers purchase from providers not identified by the loan originator

What do you think? Is this calculator a time saver for your business?

Please share by commenting below!

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Is Title Insurance Worth It? Fraud Victims Covered…

On September 12, 2011   /   Blog, Title Insurance  

A senior escrow officer at one of our sister companies recently purchased an investment property for all-cash with her brother. After closing, they renovated the property and found tenants who would sign a long-term lease. Six months later, the property was foreclosed upon by Bank of America and the escrow officer and her brother almost lost their investment!

Title Insurance Claim Story

Fortunately for the escrow officer and her brother, they purchased title insurance at closing. They immediately notified the claims department of their loss. The claims officer began researching how the buyers could have lost the property to foreclosure when they had not mortgaged the property in the first place.

A Shell Game Indeed…
What he found was shocking. In 2010 the original owners fell on hard times and stopped making payments to Bank of America on both their mortgage and Home Equity Line of Credit (HELOC) as evidenced by more than one recorded Notice of Default in public records. Shortly thereafter the owners recorded a Substitution of Trustee and Deed of Reconveyance for each loan. These documents purportedly released the two Bank of America loans. They were supposedly signed by an authorized representative of BAC Home Loan Servicing, LP, but were not signed in the home office of Bank of America. Instead these two releases were signed, according to the notary, in Placer County, Calif.

Next, the property owners deeded their (now free and clear) piece of property to a company, called Atlus Equity, LLC, which subsequently listed and sold the property to our escrow officer and her brother for $190,000. The tenants living in the property received Notice of Trustee’s Sale and stopped making their monthly rent payments to save for an impending move once the foreclosure occurred.

“The claims department is standing by to write the check to Bank of America in exchange for their deed.”

In the meantime, the escrow officer and her brother have been working with the claims officer to settle with Bank of America to deed the property back to them. The Trustee’s Deed Upon Sale states the bank is due $189,000. The claims department is standing by to write the check to Bank of America in exchange for their deed.

Sadly, after a search in the claims system, we have discovered this same scam has been pulled by the same individuals at least five times leading up to this claim.

Moral Of The Story
There are specific elements that we are cautious of when examining title for free and clear property. Specifically, we investigate the event that led to mortgages being paid in full and review recorded lien releases and investigate their authenticity if they appear to be executed outside of the main lender office.

What do you think? Is title insurance worth it? Please share your thoughts by commenting below.

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Top 4 Domestic Partnership Questions

On September 6, 2011   /   Blog, Title Insurance  

A domestic partnership is a legal relationship between two adults who are not married. The status confers many of the rights and benefits also available to married couples in many aspects of life but it is not marriage under Washington law. Originally only a few of these affected real property, but as of 2008 many elements of real property ownership applicable to married persons now also apply to domestic partnerships.

1. Who qualifies for domestic partnership?

How does domestic partnership affect real estate ownershipDomestic partnerships can apply to persons of the same sex, but also to those of the opposite sex where at least one of them is 62 years old or older. This is important to those who want some of the benefits of marriage but who do not want to be married. For instance, a domestic partnership will allow inheritance of a home as if the couple were married, but preserve the single status of those persons who do not want the relationship to affect, for example, pensions or Social Security benefits. For those couples it is important that the legal relationship not be equivalent to marriage.

“Domestic partnerships can apply to persons of the same sex, but also to those of the opposite sex where at least one of them is 62 years old or older.”

2. How do domestic partnerships effect real estate ownership?

Broadening the treatment of real property to apply to domestic partnerships means that now interest in real property is equivalent to both homestead and community property for a married couple. (Please see previous post on community property & homesteads in WA by clicking here.) And, of course, if either partner dies without a will, title to real property will be treated the same as for a married couple in similar circumstances. (Please see May 2011 post regarding probates.)

3. How can I have a domestic partnership legally recognized?

In order for the domestic partnership to be legally recognized in Washington State a declaration of domestic partnership must be completed and filed with the Office of the Secretary of State, Corporations Division. It can be terminated automatically if the partners marry each other as recognized in Washington (which would only apply to domestic partners of the opposite sex). It can also be terminated voluntarily by filing a notice and affidavit with the registry and meeting certain other criteria. The final way it can be dissolved is by a court process similar to marriage dissolution.

4. Will Washington State recognize a same-sex marriage registered in another state?

Limited reciprocity rules apply to domestic partnerships. A legal union formed in another state that is “substantially equivalent” to a Washington domestic partnership will be recognized here as such. However, a same-sex marriage that is legal in another state is not recognized in Washington as either a marriage or a domestic partnership.

Washington State Domestic Partnership Resources:

Domestic Partnerships – WA State
Frequently Asked Questions
Domestic Partnership Declaration.pdf

Questions or comments? Please respond by leaving a message in the comment box below!

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