10 Tips for a Successful Signing Appointment

tips for a successful escrow signing appointment

Your escrow closing date is coming up and there is one more important appointment before closing, whether you are a Buyer or a Seller. That is your Signing Appointment!  Our Escrow professionals have provided some tips that will help you to prepare for it. Here are the top 10 things you can know and do to be fully prepared for this important milestone on the way to closing.

Signing vs. Closing

Remember: Your signing appointment is a crucial step towards closing escrow. For an explanation of the many steps that take place after signing, check out our related article. What happens between signing and closing.

Tips for a Smooth Signing Appointment

  • Please try to keep your schedule flexible. Once Escrow has received all the necessary documentation for closing they will be calling you to schedule the signing appointment which is usually 2 – 3 days before your closing date.
  • Signing appointments for sellers usually take between 15 and 30 minutes.
  • Signing appointments for buyers will be 45 to 60 minutes.
  • If you’re going to be traveling during the closing process, please be sure to let Escrow know.
  • If you are required to bring money to closing, remember that it must be in the form of a Washington State Bank Cashiers Check or Wire Transfer. Escrow cannot accept personal checks. These funds need to be received by the Escrow office 24 hours in advance of the recording/closing date indicated on your Purchase and Sale Agreement.
  • If you are receiving funds from your closing and choose to have funds wired, you will need to provide a deposit slip or voided check at time of signing.
  • A valid picture ID, such as a Driver’s License, is required for all persons who will be signing documents. Signatures will be notarized.
  • Sellers: Contact all your utility companies PRIOR to closing and make arrangements for your final bills.  Please note that Escrow does not transfer utilities from Seller to Buyer. (If your Purchase and Sale Agreement has instructed Escrow to handle lien-able utilities, such as water and sewer, Escrow must have the NAME AND ACCOUNT NUMBERS of the utilities being requested.)
  • Escrow will contact all parties upon the closing of the transaction.
  • Your agent will facilitate the exchange of property keys at that time.

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10 Tips for a Successful Escrow Signing Appointment

After Your Signing Appointment

Keep in mind that the date of signing is not your closing date. Closing usually occurs within 1-2 days after signing. Once the lender has reviewed all the documents, they will give authorization for the recording of the documents transferring title and will initiate a wire transfer for the loan funds being provided. Per the Purchase and Sale Agreement, closing occurs once documents have recorded and funds are available to the seller.

Per the Purchase and Sale Agreement, closing occurs once documents have recorded and funds are available to the seller.

Clear Communication is Key

Remember that communication and preparation are the keys to a successful closing.  Contact your Escrow team with any questions as early in the transaction as possible.  Arrive for your signing appointment on time and be prepared with the items noted here.

Related Article: What happens between signing and closing

Questions or comments? Please share below!

The Home Closing Process and Benefits of an Owner’s Title Insurance Policy

The segment does an outstanding job of illustrating how the work done by title insurance professionals provides consumers peace of mind when purchasing a home.



Questions or comments? Please share below!

Buying a house is an event that happens only a few times in a lifetime for most people. It’s an exciting time and the more you know about the process and what to expect during closing, the more relaxed you’ll be going through it. The American Land Title Association collaborated with the Designing Spaces television series to explain to homebuyers the Escrow closing process and the value of purchasing an owner’s title insurance policy.

The Story of a Stolen Payoff Check

stolen payoff check

In 2011, one of our sister branches processed a sub-escrow payoff for an independent escrow office on a residential refinance. Later they received a call from the escrow officer, on behalf of the borrower, claiming the prior loan was never paid off. The borrower had been receiving delinquency notices from his lender for payments on the old loan. The title officer pulled the file and confirmed a check for the payoff was sent on Nov. 22, 2011 and the check had cashed on Dec. 5, 2011. The title officer told the escrow officer they would call the lender to prove to them the loan had been fully paid.

The Check Never Made it to the Lender

Before the title officer made the call to the payoff lender, Wells Fargo Bank, she pulled a copy of the cancelled check so she would have it in hand. She viewed the check front and back and was shocked. The original check, numbered 870159622, was made payable to Wells Fargo Bank in the amount of $73,025.74. The check with the same number she held in front of her was payable to Bertha Flores Americ in the amount of $73,025.74! She viewed the endorsement on the check and, sure enough, the check had been deposited to the account of Bertha Flores Americ on Dec. 5, 2011!

Next, the title officer pulled the UPS tracking information for the package containing the payoff check. The tracking information indicated the delivery status for the package remained “undelivered.” The title officer’s heart sank.

The Payoff is Covered

She immediately contacted her manager and obtained a new, updated payoff figure from Wells Fargo Bank. She filed a loss to cover the new payoff amount and this time remitted the funds via wire transfer.

On the same day, the accounting center received two checks from their trust bank, Bank of the West, that were being rejected for payment because they did not have a matching positive pay record.

The first check was numbered 870169624 in the amount of $63,025.74 payable to Smooth Sailing Productions. The second check was numbered 870169626 in the amount of $9,025.74 payable to Michael S. Dittelman. The checks were deposited, but the bank refused to pay them.

The Moral of the Story

When possible, payoff funds should be sent via wire transfer and not by check. If the payoff lender demands a check, then the package containing the check should be sent by some traceable means. Additionally, someone in the office must be responsible for tracking that package to a successful delivery.

Then out of the blue, Peggy in our accounting center received a call from another check’s payee, named Michael Brunner, who had received check number 870169629 in the amount of $9,052.50. He had no idea why he received the check and was suspicious, because he had no transactions with our sister branch and his name was misspelled on the check. Peggy confirmed the check was counterfeit and Mr. Brunner mailed the check to Peggy’s attention.

A Duplicate Check was Created

Working closely with her accounting center, the title officer was able to determine the package containing the payoff check was stolen from the UPS delivery truck. The check was then used to make a duplicate of the original check payable to another payee. That check cleared the bank, since there was a positive pay record at the bank containing the valid check number and valid check amount. Positive pay does not match a check’s payee name. The other subsequent checks did not clear the bank, since there was no positive pay record to match the check numbers and check amounts.

The office’s management team worked quickly to file a claim with UPS for non-delivery of the package as well as a claim with Bank of America for acceptance of a counterfeit check. Bank of America honored the claim and reimbursed the trust account the $73,025.74 lost. The operation only took a loss for the additional days interest in the approximate amount of $200.

Questions or comments?  Please share below.

Mortgage Fraud Quiz

Mortgage Fraud Quiz

Mortgage fraud is a material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan. It continues to evolve as lenders and fraudsters alike adapt to changing economic conditions and government regulations. How much do you know about it? Take the quiz to find out.

1.  A title policy insures against:

    1. Fraud and forgery
    2. Principal and interest
    3. Madness and mayhem
    4. Metes and bounds

2.  A straw buyer is:

    1. Someone who purchases straws in bulk
    2. Someone with good credit who agrees to help someone with bad credit obtain a loan
    3. A first time home buyer
    4. Someone who is over 65

3.  Which of the following items are commonly fabricated in order to induce a lender to approve a loan:

    1. Employment verifications
    2. Mortgage loan applications
    3. Bank statements
    4. All of the above

4.  What document is the most forged document in a real estate transaction:

    1. Deed
    2. Power of Attorney
    3. Mortgage
    4. Purchase Contract

5.  Flopping occurs in what type of transaction:

    1. Refinance
    2. Deed in Lieu
    3. Bulk Sale
    4. Short Sale

6.  Which of the following steps can a settlement agent follow to assist in preventing fraud from occurring in one of their transactions:

    1. Disclose all receipts and disbursements on the HUD-1 Settlement Statement
    2. Make sure the funding lender has everything the settlement agent has
    3. Trust their escrow gut
    4. All of the above

7.  Proper identification should be issued by a governmental entity and include a physical description and (select all that apply):

    1. Include the bearer’s signature
    2. Include the expiration date
    3. Include the bearer’s weight
    4. Include the bearer’s photograph

8.  Which of the following is a red-flag warning of a possible fraudulent transaction (select all that apply):

    1. Purchase offer is more than the list price
    2. Unusual expenses paid by the seller
    3. Silent second mortgages
    4. Transactions not recorded on the HUD-1 Settlement Statement

9.  What are the two classifications mortgage fraud schemes are put into:

    1. Fraud for profit and fraud for housing
    2. Tit for tat
    3. Civil and criminal charges
    4. Tax evasion and wire fraud

10.  Who are usually the perpetrators in a fraud for housing scheme:

    1. Cops
    2. Industry professionals
    3. Drug dealers
    4. Ex-cons


Quiz Answers:

  1. A title policy insures against:
    Answer: Fraud and forgery
    The Covered Risks section of both an Owner’s and Lender’s title policy state the insured is covered for, “a defect in the title caused by…forgery, fraud…” Since this coverage is offered in all of the title polices available, fraud and forgery is of major concern to the title industry as well as our Company.
  2. A straw buyer is:
    Answer: Someone with good credit who agrees to help someone with bad credit obtain a loan
    Generally, a straw buyer is someone recruited by a perpetrator to take out a mortgage and purchase a house in their name. The straw buyer normally does not live in the house or have the intent to reside at the house. They often receive cash in exchange for the use of their credit and name.
  3. Which of the following items are commonly fabricated in order to induce a lender to approve a loan:
    Answer: All of the above
    Mortgage fraud schemes involve falsifying a borrower’s financial status by including material misstatements on documents the lender’s underwriter relies on, when evaluating the eligibility of a borrower. This is done by supplying fictitious employment verifications, mortgage loan applications and bank statements
  4. What document is the most forged document in a real estate transaction?
    Answer: Power of Attorney
    A Power of Attorney is written authorization to represent or act on another’s behalf in private affairs, business or some other legal matter. As a result, perpetrators sometimes forge the names of property owners in order to sell a property out from under the rightful owner or use the Power of Attorney to get a loan to strip all the equity from a property unbeknownst to the property owner.
  5. Flopping occurs in what type of transaction:
    Answer: Short Sale
    A flopping scheme requires the perpetrator to conceal or provide falsified information to the loan servicer. This is information the servicer needs to make informed short sale decisions. These concealments might include hiding the true parties to transaction, any contingent transactions or the true value of property.
  6. Which of the following steps can a settlement agent follow to assist in preventing fraud from occurring in one of their transactions:
    Answer: All of the above
    The settlement agent is often the best defense against mortgage fraud. Without them, the fraud might never be prevented. It is important the settlement agent fully disclose all receipts and disbursements on the HUD-1 Settlement Statement and material facts to the funding lender.
  7. Proper identification should be issued by a governmental entity and include a physical description and:
    Answer: Include the bearer’s signature and photograph
    Forged documents are often one of the many elements included in a mortgage fraud scheme. It is important to the lender and title company the borrower is property identified. Although the identification requirements for the purpose of notarizing vary from one state to the next, it is often the lender who requires the borrower present identification which contains all of these elements.
  8. Which of the following is a red-flag warning of a possible fraudulent transaction:
    Answer: A, B, C and D
    Although any one of these items alone might not be an indicator – combined they definitely have the makings of a scheme.
  9. What are the two classifications mortgage fraud schemes are put into:
    Answer: Fraud for profit and fraud for housing
    The FBI defines these two classifications. They state fraud for housing entails misrepresentations by the applicant for the purpose of purchasing a property for a primary residence. This scheme usually involves a single loan. Fraud for profit often involves multiple loans and elaborate schemes perpetrated to gain illicit proceeds from property sales.
  10. Who are usually the perpetrators in a fraud for housing scheme:
    Answer: Industry professionals
    Industry professionals are the ones most familiar with the ins and outs of the loan process – and most often the perpetrators involved in a fraud for housing scheme. The scheme could never occur without the cooperation of the real estate agents, loan officers, appraiser and settlement agent assisting in all the material misrepresentations which must be provided.

How did you do?  Please share your comments below!


Why Altered Checks for Earnest Money are Unacceptable

Altered Earnest Money Check

Settlement agents are regularly pressured into accepting altered checks (which they should not) for earnest money. This usually occurs when the buyer’s original offer to the seller indicates one escrow company and then, somewhere in the negotiations, the principals agree on another escrow company. Real estate agents do not want to go back and ask their buyer for a new check, so instead the check is altered and the buyer initials the changes. Accepting the check is done at the sole risk of the operation. In this story, our office accepted an altered check which proved to be risky.

The original check is altered

One of our sister offices received a fully executed Purchase and Sale Agreement, along with a personal check representing the earnest money. Per the agreement, the amount of earnest money due was $1,000. The check was originally written to Old Republic Title Co., but during negotiations the principals agreed to change the escrow and title company to ours. Rather than obtain a new check for $1,000, the buyer simply crossed through the original payee, wrote in our company name and initialed the change.

Transaction is cancelled
Earnest Money refund is requested

The settlement agent receipted-in the funds and began to process the transaction. About a month later the buyer decided he wanted to cancel the transaction. His real estate agent instructed the settlement agent to prepare cancellation instructions reflecting the earnest money as being refunded to the buyer. The settlement agent prepared the cancellation instructions and sent them to the listing agent.

At first, the seller was not sure they were willing to give the money back to the buyer. The real estate agents began negotiating for their respective clients. In the meantime, the buyer went to his bank, Wells Fargo, and tried to place a stop payment on his earnest money check. When the request was denied, he filed an Affidavit of Forgery, claiming the check was altered and cashed without his approval.

Earnest Money “refunded” twice

Simultaneously, the sellers signed mutual cancellation instructions agreeing to return the earnest money to the buyer. The settlement agent cut a check from the trust account to the buyer, representing the refund of the earnest money. The buyer deposited the refund into his account at Wells Fargo.

Shortly thereafter, our Operational Accounting Center (OAC) received notice from Bank of America that our trust account was debited $1,000 based on the fact the original earnest money check was altered. When a fraud report is filed, banks act quickly to freeze the amounts in question while they determine the merits of the report. Wells Fargo immediately contacted our bank, Bank of America, who reviewed the affidavit.

The risk of accepting altered checks

Anytime a settlement agent accepts an altered check, he or she subjects the instrument to questioning. As a matter of fact, accepting an altered or endorsed check is done solely at the operation’s own risk, since the banking agreements Our Company enters into offer no protection for these checks. The operation is on their own to prove they were entitled to negotiate the check.

Accepting an altered or endorsed check is done solely at the operation’s own risk…

The OAC quickly found this out. They contacted Bank of America upon receipt of the notice our account was debited. Bank of America referred back to the banking agreement. Neither Bank of America nor Wells Fargo would provide assistance since the office accepted and negotiated an altered check – even though they had already refunded the buyer their earnest money deposit.

The OAC filed an Affidavit of Claimant on the refund check disbursed to the buyer. The basis for the affidavit was the fact that the borrower had already collected the original earnest money deposit. The claim was denied.

The Borrower withdraws Affidavit of Forgery

Next the settlement agent contacted the buyer’s real estate agent. She explained the borrower needed to withdraw their Affidavit of Forgery since he had received his refund. The borrower finally withdrew it and their account received credit for the original deposit. Whew! All of this work for a $1,000 deposit on a cancelled transaction for which we will never be paid!

The Moral of the Story

When Our Company opens a trust account, a banking agreement is signed which outlines the bank’s and Our Company’s responsibilities. One of our responsibilities is to accept checks made payable to Our Company only. If an office deviates from the agreement and accepts a third-party-endorsed or altered check, the bank has no obligation to assist or defend them; which is exactly what occurred in this instance. Settlement agents should be aware of the risks when accepting personal checks which have been altered or endorsed, and request a replacement check.

Have you encountered a situation where an altered check was either used or not accepted? Please share your comments below!

What is bankruptcy? What options are available to the debtor and the creditors?

bankruptcy options
The purpose of bankruptcy is two-fold: (1) to give the debtor (the party filing bankruptcy) a fresh start and (2) to
pay creditors in an orderly fashion. Bankruptcy is governed by federal law which usually trumps state law when it comes to the actions of both the debtor and creditors.

Liquidation vs. Reorganization

There are essentially two types of bankruptcy – liquidation and reorganization. In a liquidation the debtor gives up trying to pay debts, and assets are turned over to a trustee who sells them to pay creditors. Reorganization offers the opportunity to pay off (usually in installments) or restructure debts based on a plan approved by the creditors and the court. Business entities can continue to operate and come out of bankruptcy in better shape.

Ultimately, no matter which type of bankruptcy it is, the individual debtor is discharged from personal obligation to pay most existing debts, which will not be liens on property acquired in the future.

The Life Cycle of Bankruptcy

Click the image below to view an article and infographic of the life cycle of bankruptcy.  The life cycle of bankruptcy
Click here to view a printable version of the lifecycle of bankruptcy infographic

The most common bankruptcy plans are:

Chapter 7

Chapter 7 is a liquidation, where a trustee is appointed. Certain assets (i.e. your personal residence) can be exempted. Unsecured creditors (for example, a creditor that does not have a mortgage on real property) may end up with nothing, and secured creditors may get less than what they are owed. Real estate transactions require court approval.

Chapter 11

Chapter 11 is a reorganization available to businesses and certain qualifying individuals. It results in a plan allowing for continuing operation of a business, and usually most secured creditors get paid in full and unsecured creditors may get something. There may or may not be a trustee, but if not, the debtor is usually allowed flexibility to do what a trustee would do if it was in the “normal (e.g., ordinary) course of business.” Real estate transactions usually require inclusion in the plan or a special court order. An exception to this rule might be a developer who can usually sell individual lots or houses without special approval.

Chapter 12

Chapter 12 is also a reorganization available to farmers and fishermen. This is shorter than a Chapter 11, and unsecured creditors get less protection.

Chapter 13

Chapter 13 is a “wage earner” reorganization available only to individuals, with a plan and a trustee. Creditors usually get partial payment, but can challenge the plan. The individual has to wait until the plan is completed (usually 3 years or less) for a discharge of debts, except in limited “hardship” situations.

Any type of bankruptcy can be converted to another type. It is important to remember that the bankruptcy court retains jurisdiction until it is closed. In some cases, the court can actually go back and void transactions that occurred even before the bankruptcy was filed. In a reorganization, the plan has to be completed and the case formally closed before the debtor is free from the bankruptcy.


Click the image below to download a printable version of this article.  What is bankruptcy and what options are available?
Bankruptcy Options

The automatic “stay”

One important effect of bankruptcy is an automatic “stay” of any actions of the debtor or creditors, including selling real property or foreclosing any liens. The court obtains immediate jurisdiction over all property, wherever located and no matter where the bankruptcy is filed. Whatever might have been in the works comes to a halt, and no one can proceed without court approval. Some debtors will attempt to file bankruptcy merely to forestall a foreclosure, but a creditor can request that the stay be lifted in order to proceed with a foreclosure, and if the property wouldn’t generate funds for the other creditors, then the court will usually lift the stay, allowing the lender to proceed.

Future blogs will address elements of a bankruptcy, including exemptions, abandoned property, sales “free and clear” and the effect of a discharge, some of which involve common misconceptions about bankruptcy.

Click the following link for a flow chart of the bankruptcy process.

Questions or comments? Please share below!

Condo, Townhome, PUD, or Plat? What they are, how they’re different, and how they’re identified.

Condo, Townome, PUD, or Plat.  How to tell the difference - http://www.flickr.com/photos/52847686@N07/5082458589/

Sometimes questions arise as to the exact nature of certain residential properties: It looks like a house but is it a condo, a townhome, built on a lot in a plat or what? Should I use a Residential Purchase & Sale Agreement or a Condominium Purchase & Sale Agreement form when I write up an offer?  No worries! Your Ticor Customer Service team is happy to help you clear up this sometimes murky issue.  Below are some tips to help you identify which type of residential parcel you’re working with.


Click the image below to download a printable version of this article.
How to tell the difference between a condo, plat, townhome, or PUD

Look at how it was recorded:

In the same way that you can’t judge a book by its cover, you can’t simply look at a home and know whether it’s part of a condo or some other form of subdivision (a/k/a “plat”). The answer may be found with how it was first recorded.

Look for land ownership differences:

The primary difference between a condo and other forms of development is the ownership of the land.

Condo:  An owner of a condo “unit” owns their dwelling but not the land it’s built on. In fact, condo owners typically don’t even own the walls, just the surface of them. Unit owners collectively share interests in the  “common elements”.  Typical common elements include interior hallways, building exteriors, elevators, landscaping, and recreational amenities like swimming pools. Parking may be assigned to specific units, may be held as separate tax parcels, may be common elements, or may be a combination. In Washington State condominiums are created under the provisions of the Washington Condominium Act (or the earlier Horizontal Property Regimes Act).

Plat: 1.) Generic term meaning any type of recorded subdivision.  2.) Specifically a recorded division of detached, single family homes.  Homeowners in a plat own the parcel of land and the structure(s) built on it, and may or may not also have an interest in common areas.  Common areas may be owned in percentage by some or all of the homeowners, or may be held by the Homeowners Association as a separate entity.

A PUD (Planned Unit Development – not to be confused with Public Utility District) is a type of subdivision where the homeowners individually own their lots, plus jointly belong to an association which owns and maintains significant common areas like streets and sidewalks.

Look at covenants and recorded plat documents

In each case, recorded plat documents and covenants typically specify the terms of  what is owned by the individual homeowners and what are common areas.

Your Ticor Customer Service team will be happy to provide legal descriptions, property profiles, or plat documents for you.

Sample legal descriptions

  • Lot 45, Hawthorn Park, according to the plat thereof recorded under Recording Number 200208285002, in Snohomish County, Washington.
  • Unit 422, Building 1, Queen Anne High School Condominium, Survey Map and Plans recorded in Volume 211 of Condominiums, page(s) 13 through 31, inclusive; Condominium Declaration recorded under Recording Number(s) 20051115002874 and amendments thereto, in King County, Washington.
  • Lot 13 and South 2.67 feet of lot 14, Marsh Commons PUD. according to the plat thereof recorded in Volume 144 of plats, page(s) 9 through 11, in King County, Washington;

Townhouses can be any of the above!

Townhomes (common-wall or zero-lot-line homes) can be recorded as a condominium, a regular plat, or a PUD.  It is also common in urban areas to see a residential lot short platted into several separate lots with a townhouse on each lot and perhaps a shared driveway. Townhome short plats include specific language about maintenance of the shared elements.

Here are some sample legal descriptions that can give a clue about how the townhomes were recorded:

  • Unit 11704, Silvercrest Townhouses Condominiums, a Condominium according to Declaration recorded under Auditor’s No. 9105310689 and amendment thereto recorded under Auditor’s No. 9110210556, and Survey Map and Plans recorded under Auditor’s No. 9105310690, in Pierce County, Washington.
  • Lot(s) 165, Silver Firs Townhouses, according to the plat thereof recorded in Volume 59 of Plats, page(s) 109 through 114, in Snohomish County, Washington.
  • Unit Lot B, Seattle Short Subdivision No. 3006904, recorded under Recording Number 20080205900009, in King County, Washington.


See if you can spot which of these photos is in a Condo, Plat, or PUD? (Three question quiz inserted below shows a picture and a multiple choice answer)

Enter your name and hit the ‘start’ button to take the 3-question quiz!


10 Tips for Saving Resources

Tips for saving energy and becoming more green

Every year on Earth Day we’re all reminded to look for ways to become more efficient, less wasteful, and more considerate of how our actions impact our environment.

If you’re looking for ways to become a little greener, check out the tips below:

Did you know?

Ticor has taken the steps necessary to earn a Green Certification for each of our Title & Escrow locations in the Puget Sound region.

We’re proud to be the first operation in the FNF family of companies to achieve complete green certification in our marketplace.

  1. Don’t print e-mail attachments! Save important files in an organized file structure on your computer hard drive for easy future reference. You’ll save paper and office space!
  2. Check your printer settings. Some studies have reported that resetting basic printer settings can save the average user 1,400 pages of wasted paper a year. You can also set the printer to print on both sides by default, further reducing paper usage. Check the manufacturer website on your user manual for details on changing your printer settings. Also, always use “print preview” before printing to avoid printing unusable pages.
  3. Send faxes directly to E-mail boxes. Faxing directly to a recipient’s inbox as opposed to their fax machine is an easy way to eliminate wasted paper.
  4. Recycle your office paper. If you have sheets of paper printed in error or no longer necessary, consider running them through your printer on the unprinted side for proofs and personal use.
  5. Turn off the lights when you leave a room if you’re going to be gone for more than 30 seconds. Put timers on lights if you have kids who forget to turn them off.
  6. Recycle! Some cities do, but if your city doesn’t, consider separating cans, glass, plastic, and paper and take it to a recycling center every month so that it is not such a chore. Have the kids help so they get used to the idea.
  7. Try to buy local foods whenever possible. Food that has to travel a long distance is not “green”. If you don’t have access to much local produce, or if you’re not sure, try to buy from a local Farmer’s Market if you can. It will be green as well as fresh.
  8. Go with rechargeable batteries when possible. Be sure to properly dispose of your used batteries – they must be recycled.
  9. Close your curtains! Heat and cool air loss from older windows can be substantial and the sun beating in the windows will warm the house causing the A/C to come on and work harder.
  10. Don’t leave the water running while brushing your teeth.

Do you have tips or suggestions on conserving energy or reducing waste?  Please share below!

Download tips for becoming more green

Click the image above to download the energy conservation tips.

HELOC Spending Spree – Was it Fraud or Ignorance?

Honest Mistake?

During a refinance transaction, a home equity line of credit was paid off – but not closed. Later the refinance lender foreclosed and sold the REO (bank owned) property to a new owner. One of our underwriters insured the refinance, issued the trustee’s sale guarantee and insured the new owner on the sale out.

The former property owner then ran up $172,622 in debt against his home equity line of credit, which was secured by a house he didn’t own. He made no payments, and the home equity lender started foreclosure!

HELOC fraudAs part of a refinance transaction the settlement agent paid, in full, a home equity line of credit (HELOC) in the amount of $149,392.71.

The lender’s payoff statement required the borrower, Mr. Gonzalez, to check either box:
[] Payoff Only
[] Payoff, Terminate and Satisfy/Discharge Mortgage

The payoff statement also provided:
If neither box is checked, the account will remain open and no satisfaction of mortgage will be filed.

The payoff statement further provided:
Notice to Borrower and Closing Agent: A Request to terminate/close your home equity line of credit account to satisfy the mortgage will be processed if (1) the second block is checked; (2) all amounts owed are paid in full; and (3) at least one borrower on the account signs this payoff request.

A Very Small Oversight

Gonzalez signed the payoff request, but due to an oversight on the settlement agent’s part, neither box was checked. As a result the payoff check and request were sent, but the HELOC was not frozen and no reconveyance of the deed of trust securing the loan was ever recorded.

Fast forward two years later: Gonzalez fell behind on his payments, and the refinance lender foreclosed, obtaining a Trustee’s Deed upon sale. Subsequently the lender re-sold the property to a new buyer. The sale transaction was handled by one of our offices. The preliminary report showed the HELOC still of record in first lien position as well as a recorded Notice of Default. A claims attorney allowed the title office to insure around the outstanding HELOC, since Our Company had insured the previous transactions involving the refinance lender, the trustee sale guarantee to the refinance lender, and now the ultimate re-sale to the new owner. An endorsement was issued to the final policy of title insurance deleting the exception of the HELOC loan.

The New Owner Files a Claim

The HELOC lender moved forward with its Notice of Default and set a date for Trustee’s Sale. When the new owner received the notices of an impending foreclosure, she opened a claim with Our Company, as she was about to lose her home. The claims department contacted the HELOC lender for a new payoff statement. When the payoff statement was received, the claims attorney noticed Gonzalez (the former owner) had run up $172,622 against his line of credit!

In order to protect the insured’s interest in the property, the Company paid the HELOC lender off again and this time demanded the HELOC be closed and the lien released. The claim was deemed an escrow loss and charged back to the operation dollar-for-dollar!

In an attempt to recoup our losses, the claims attorney sent a written demand to Gonzalez for reimbursement of the amount paid on his behalf to the HELOC lender. Gonzalez called in response to the letter and was friendly, but confused about what was happening. The claims attorney explained to him that Our Company expected full reimbursement for our losses. Gonzalez made it clear that he did not have the resources to pay back the Company. He stated he would retain an attorney.

Moral Of The Story

Does Gonzalez’s decision to run up the HELOC after he lost the property to foreclosure constitute fraud? Yes! Gonzalez intentionally charged $172,622 against a mortgage on a property he no longer owned.

It can be argued that many borrowers are oblivious and don’t understand that they can’t continue to draw on a line of credit after he/she has paid it off and/or no longer live at the property. The issue is that the bank continues to solicit the borrower to spend against the line of credit by providing debit cards and checks that enable more spending!

It is imperative that our settlement agents ensure the HELOC closure letter is signed and, more importantly, delivered to the payoff lender.

It is imperative that our settlement agents ensure the HELOC closure letter is signed and, more importantly, delivered to the payoff lender. There are plenty of instances where the payoff funds are transmitted via wire transfer and the payoff closure letter is not sent to the payoff lender at all, but rather left in the file. There are also plenty of instances where the HELOC payoff statement reflects a zero balance and, subsequently, the signed closure letter is not sent to the payoff lender.

When either instance happens, one of two things eventually occurs later – the lender never closes the line of credit and continues to solicit the borrower to charge against the available balance (which many borrowers do); or the lender continues to accrue annual fees. Either way, once the property is further conveyed, encumbered or foreclosed upon – the HELOC lender is contacted to release its lien and it insists on payment in full AGAIN! Settlement agents need to do their part to protect the Company from these types of losses by sending the closure letter.

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Mineral Rights Reservations and Residential Property

Mineral Rights Reservations & Title Insurance

The Smith’s offer has been accepted – a nice home in the suburbs, with schools and shopping nearby. The Realtor® has ordered the title report and it looks good…but what’s this? There is an exception for minerals. What does that mean? Is there gold in them thar hills? Will the Smiths wake up one morning and find an oil derrick next to the swing set in the back yard?

What’s Insured?

The Homeowner’s Policy includes very broad “mineral” rights coverage, as follows:

“This Policy insures You against actual loss… resulting from…:

“Your existing improvements (or a replacement or modification made to them after the Policy Date), including lawns, shrubbery or trees, are damaged because of the future exercise of a right to use the surface of the Land for the extraction or development of minerals, water or any other substance, even if those rights are excepted or reserved from the description of the Land or excepted in Schedule B.”

What exactly are minerals, and what can happen because of the reservation?

Ownership of land extends to the center of the earth, and that includes every substance under the surface. And of course, it’s not all just plain “dirt.” It can include many types of valuable substances. Technically oil, gas and similar substances (including natural gas, helium and nitrogen) are not minerals, but can be treated as such under some definitions – in other words, for most people, the definition probably is inclusive of anything that might be considered a mineral, unless the reservation language is explicit.

Ownership of land extends to the center of the earth,

There is a history of mining coal in some parts of western Washington, and with the price of gold at or near record highs, gold mining might make a comeback. More recent activities involve sand and gravel as well as vermiculite, gypsum and perlite.  But these areas are not widespread and residential areas are not necessarily built around them.

Ways mineral reservations might be used

A mineral reservation is a severed “subsurface” parcel in separate ownership from the rest of the land. Prior owners could have sold minerals to a third party or leased it for the purpose of extracting something and collecting rent and royalties. A former owner could have reserved minerals without expecting anything to come of it. Clearly, the owner of minerals would own them, but what that owner might want to take out of the ground could be difficult to determine, to say nothing of the right of access – the ability to actually start digging.

How title companies view mineral reservations

Mineral Rights Residential PropertiesMany mineral reservations are old and have never been actively enforced. Washington has a “dormant mineral” statute (RCW 78.22, et seq.) that allows the surface owner to attempt to terminate unused mineral rights after 20 years of nonuse. Because of the potential for constitutional challenges (and prior case law that said the surface owner can’t claim adverse possession against the mineral owner) title companies typically will not rely on the recorded affidavit to ignore the mineral reservation, but will show it along with the exception for the mineral reservation.

But, a reservation of “minerals” shouldn’t impact most residential transactions. Usually there is nothing valuable in the area. Even if that’s possible, the area probably is subject to stringent environmental, zoning and other land use laws that would preclude anyone from trying to look for or extract minerals. For this reason, title policy endorsements that provide both the owner and the lender coverage against loss due to the exercise of mineral rights are commonly offered in residential transactions. In commercial transactions or some rural areas the risk will be more carefully weighed, including reviewing whether the reservation precludes access from the surface (promising lateral access under the land only) or offers compensation for surface damage, particularly to improvements on the land.


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Mineral rights reservations and real estate

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