Oh for God's sake Vesta!! Normally I will stick up for you, but sometimes, you have to
read the articles...not just make comments.
Bristol PAID CASH for the house...no bank is going to get a sheriff to come take it away from her, because she didn't get a bank loan.
ALSO....Bristol is the SECOND owner after the property was foreclosed. If the bank was going to admit to a mistake, it would have already happened during the time the first purchaser had the house. Even if the bank had made a mistake, the borrower would have gotten money from the bank, not the house back because the purchaser was allowed to buy it, and provided a "clear" title by the lender. If the title has a "cloud" over it, that the lender has not cleared up before putting the house on the market, the closing title company SHOULD have. Yes, mistakes are made, but usually not to extent that a buyer has to give back the house.
Title insurance. There are two kinds.
Mortgage title insurance - it is actually insurance on the loan itself.. This is required to be paid by the borrower in their house payment if the borrower obtains a loan for more than 80% of the sales price of the house. This particular title insurance benefits ONLY the lender! It doesn't do squat for the borrower. If a mortgage is less than 80% of the purchase price of the house, OR the mortgage has been paid down to less than 80% of the current value of the house - mortgage title insurance is not placed on the LOAN - not on the house itself. If anyone is paying it in their mortgage, they have the right to petition the lender to reevaluate the
current value of the house, to see if the PMI can be removed. Someone like me, or a licensed appraiser
hired by the lender - BUT PAID BY THE BORROWER, goes out to the house, does a market analysis on the property and takes a bunch of pictures for the lender, and determines the current fair market value of the house. If it is more than 20% of the remainder of the loan amount, a lender will usually remove the PMI. Which can be a significant amount depending on the amount of the initial loan. The cut-off point has always been 80% on a new loan, but I have heard - in the last couple of years - that some lenders are now requiring it to be 70-75% on an existing loan. It should only cost the borrower, the amount of the appraisal. I don't know if a borrower can request that it be done by a Realtor or not. We Realtors get paid a
fraction of what an appraiser gets paid to do one.
Title insurance on the house, is usually purchased at the time of closing (or within 30 days to get an extremely reduced rate). I always recommend that my buyers purchase it, particularly if they pay all cash or put down a significant amount of cash on the property. This insurance is to protect the homeowner, if something/someone shows up to negate any portio of the land sold with the house, or someone claiming ownership, lien or judgement against the property...prior to the new owner.
Two examples why I think title insurance should be purchased - when the ex and I got our house here in '83, we bought it from the builder. Interest rates were in the stratisphere at the time. We refinanced the house 2's within the first 2 or 3 years because the rates were really dropping. The THIRD time we refinanced - the title company finds out that the lot was not properly deeded over to the builder from the developer!!!! Fortunately, the developer was still alive and in the area (real close actually - he lived up the street!) and it was just a matter of the title company sending it over to the developer's office, them signing off on it, and the transfer being recorded at the county property office, PRIOR to us signing the new loan papers. And the best thing was that it all happened prior to my divorce when the ex quit-claimed it to me, or I could have been in a real mess when
I refinanced it.
Second example....I had a client purchase a property that was at the back of a subdivision. They were to be the second owners. First had been there about 5 or 6 years. When the original survey was done of the subdivision, the surveryor included part of the land of the adjacent property. No one knew this until my client's lender - who at that time was still insisting on a survey done on properties in a subdivision development (they have not been required here for years now - at least 10) - the new survey showed the error of the original surveyor. The true owner was willing to quit-claim the land - it was about 2 ft along the entire lot line - but it could not be done prior to closing. While documentation was provided at closing, title insurance - purchased by the buyer for the property itself....was obtained. In this case, the lender required it to be done, and the sellers were really decent about it, and they paid for it outside of closing.
If Bristol was smart.....or whomever advising her is....she obtained title insurance on her new house.
