Another Weapon to Defend Against Foreclosure – Title Insurance
This headline out of Missouri at first seems encouraging to the average homeowner trying to find anyway possible to keep from having their home taken from them. Like this family in the featured story, many homeowners have done everything possible to “keep a roof over their heads”, including selling all the family jewelry. But unlike this family in the midwest, most home owners battling foreclosure actually signed for and owe the money that the lender is trying to recover by foreclosing. Nevertheless, enjoy this feel good story broadcast on CBS affiliate KSHB: “Title Insurance Saves Blue Spring Family from Foreclosure.”
As real estate attorneys in Virginia, where just over 50% of all home buyers still enjoy the protections of an attorney closing, versus a “title agency closing” as experienced in the KSHB article, we can’t help but read between the lines and wonder:
1. If the Title Agency missed the outstanding lien when they searched title for these home owners, why isn’t the Title Agency liable and why isn’t the Agency’s malpractice insurance involved in paying off this “missed lien”?
2. Just how noble was the Title Insurance Company really? Weren’t they simply stopping a bad situation from becoming a total disaster, i.e., more expensive for the Title Company to take care of if the homeowners are foreclosed and kicked out of their home? And why wait to take care of the problem until the 11th hour? FOUR (4) days before the foreclosure auction and the Title Insurance Company finally decides to payoff the mortgage which was a “missed lien”?
3. Why did the homeowners have to make payments on a loan they never signed or from which they never got any money? It wasn’t their loan, so why did they start selling all their gold and possessions? Who was advising them? In Virginia, a call to the closing attorney would generally yield a world of easier remedies than selling everything you own and paying on someone else’s mortgage! A competent real estate attorney would advise immediately to file a claim on title insurance and if the mortgage company persisted in moving toward foreclosure, a court ordered injunction could be sought.
But I digress. If you are facing foreclosure, take the time to consult with foreclosure defense specialists in the practice of law. Many times, help can be found from unexpected places and areas of the law can be applied about which non-lawyers know very little. Until you consult with an attorney, don’t fall for these common sales pitches: (1) Just work with us! We are your mortgage company. We will treat you fairly. Why pay thousands extra to an attorney? Trust us! (2) Why pay more for an attorney when you can save $75 on average and use a “lay settlement agent”. We are just as qualified. Never mind that it is illegal in Virginia and in most states for us to give you legal advice. Please just don’t ask us any questions on the Fair Debt Collection Practices Act (FDCPA), foreclosure laws and regulations, or, God forbid, your constitutional rights. (3) a loan modification company asking for the lion’s share of their fee up front. Need I say more? (4) governmental or quasi-governmental entities set up to protect consumer debtors and can give you good guidance and educate you to your rights in certain situations but are either way too busy to help or don’t have the charter or ability to actually take action on your behalf; or finally (5) if you decide to short sell your home so that you can manage the loan burden on your own terms, beware of SSNs (short sale negotiators without law licenses or legal credentials). Many times they set up shop in your realtor’s office and pay very generous rent or other amounts of money to the broker to help him reduce his overhead and ‘thank him’ for his captive referrals. Don’t allow yourself to be a captive referral! Unless the real estate broker is going to pay the SSN out of the broker’s commission, You (or your lender) will pay for short sale negotiation services and you have the right to choose your negotiator. Why would you pay the same fee for a lay negotiator that cannot give you advice on the many areas of the law that might affect you during a short sale including: (a) bankruptcy law; (b) FDCPA; (c) title insurance law; (d) contract law; (e) land use law; etc.? Make sure to shop, get credentials, ask for a consultation and see if they can answer all your questions, ask for references of former clients, compare fees, compare professionalism, e.g., how much of the relationship with the SSN is in writing, etc.. Don’t assume anyone who is receiving rent or other potential benefit from the referral is looking out for your best interests when they refer you to a SSN. Make the effort to protect yourself! A bad choice of SSNs can have consequences that linger for a long time from the quality of the outcome and time required to sell your home to the damage to your credit.