MBG Settlement Services
Congratulations on the potential sale or purchase of your new property! We say potential here because until a successful “settlement” of all the lending and other legal documents have been executed and satisfied at “closing,” no transfer can or will take place.
Although settlement is the final step in the buying or selling process, preparations for settlement should start as soon as possible after a contract for sale or purchase is accepted. In nearly all cases it is the buyer who selects the settlement company they would like to use. Just after the signing of the contract, the contract will need to be sent to the settlement services agent to start the process. For a property without any surprises, this process may take from 7-15 days depending on how fast the outside sources provide the necessary information back to the settlement company. It is important again to start this process early in case of a “cloud” on the title that must be resolved before transfer can take place. Being able to close and transfer the property on time can be critical for the seller buying and moving into another property or a buyer moving out of and into the new property. If anything gets delayed at any point of these transition type transactions, someone could be homeless for a while. It is important to make sure you and your agent or other representative have reviewed and developed a contingency plan in the event of such an occurrence.
Many times a buyer’s real estate agent or the lender might make recommendations as to which company could be used, however, the agent or lender needs to have “choice” in the matter. Many times, the lender being used will have a list of title and closing companies that they have a strong relationship (operational or business) and have used many times in the past. In sales that are a bit unusual, or in cases of foreclosure or repossession, having a good working relationship between all parties, agents, lenders, title and closing company, attorneys, etc. can be advantageous in getting the deal done in a timely and smooth manner.
What is title insurance? “Title insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. It is available in many countries but it is principally a product developed and sold in the United States. It is meant to protect an owner's or lender's financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy.
Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate. Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance.”* Title insurance can also protect the owner and/or lender from historical “hidden” defects such as: forged deeds, mistakes in recording of legal documents, undisclosed or missing heirs, previous transfers of property by individuals of unsound mind or an invalid or expired power of attorney, tax liens, and/or fraud.
The cost of title insurance in Pennsylvania is the same across the state and closing companies. It is based on the price of the home. A lower premium may be provided if a the seller had purchased title insurance for the property in a recent transaction. These cost will (or should) be shown on the lenders Good Faith Estimate and again will show up on the HUD-1 settlement statement- both required by law.
Buying properties in foreclosure: In nearly every project we have working on, when purchasing foreclosed properties, the corporate owner, inside their addendum documents (sales contract from the owner that overrides the initial sales contract) will have a $100.00 per day penalty for every day the property does not close. This penalty usually can be waived for up to 7 days if there is an issue, but provides support for the importance of working with a company that can deliver and close on time. Many times, the corporate owners will offer the buyer a free title or waive the $100.00 day penalty if they choose to use THEIR closing and title company. Not all companies are the same so we highly suggest that you consult your attorney with the corporate addendum you or your agent receive form the owner BEFORE you sign them. Having the owner conducing all the searches and do the closing may not be in your best interest- or may provide a limited or reduced protection. We offer the analogy that many times it can be like the fox guarding the hen-house.
MBG Settlement Services will:
- serve as the liaison to all parties, including your mortgage lender, real estate agent, municipal authorities, tax collectors and everyone else who may be involved in your important purchase.
- order the preliminary title report including reviewing the status of the title in the title commitment, resolve any exceptions to the title, and review the purchase agreement to identify any requirements in it in order to ensure compliance with them
- secure payoff demands/and or beneficiary statements from existing lenders and requesting full reconveyances of any deed of trust or mortgages to be paid off in escrow
- obtain instructions and loan documents from the new lender, obtaining documents to clear any outstanding liens against the property
- issue receipts for deposits of documents and holding funds in a separate account, prorating taxes, interest, rents, etc.
- prepare buyers and seller's escrow instructions and seeing that all documents are properly executed
- determine when everything is going to be completed so the transaction can close
- obtain an updated title insurance commitment to the date of closing, prepare the required checks, deeds, affidavits, and obtain any authorization letters needed
- prepare the deed of trust, mortgage notes, the Truth-in-Lending statement, and purchaser's affidavits
- prepare and deliver the HUD settlement statement in accordance with state and federal law
- conduct a post-closing review in which an audit of the loan documents are checked for completeness, accuracy, and recordability
- establish a time and place for the closing, conduct the closing, and ensure that all parties properly execute all appropriate documents and meet all commitments
- provide a licensed attorney who specializes in residential and commercial real estate law to conduct the closing. The closing usually takes less than an hour and is where the Sellers will sign the deed and other papers necessary to convey title. The Buyers will sign their mortgage papers and other necessary documents and will pay their closing costs and the balance of any down payment due. When pre-planned, documents can be pre-signed by either party who will not be present at the closing table
- record the necessary documents, such as grant deeds, deeds of trust, powers of attorney, substitutions of liability, and reconveyances in the Courthouse after settlement
- disburse all funds and relevant documentation to the proper parties and issue your new Title Insurance Policy (will receive in the mail)
Doing all these things, and doing them well, will help to make the purchase or sale of your property a pleasant, convenient, and on-time experience as possible
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- Call us at 724-368-3650 to find out more about our settlement services or to schedule a convenient time and place for your closing.
- Download and complete: MBG Settlement Services Worksheet. We will use this worksheet to assure a timely and stress free closing
- Know and protect your rights! Click this link: Real Estate Settlement Procedures Act (RESPA) to view the law that protects all consumers from abuses during the residential real estate purchase. Loan, and settlement process
- Fill out our easy to use on-line inquiry form: How can we help you?
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*Source: http://en.wikipedia.org/wiki/Title_insurance
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