In October 2018, a deed of trust which secured the construction loan for a home located in a luxury golf course neighborhood was released by a reconveyance recorded of public record. The release was not recorded as the result of an insured transaction, which caused Kim Pora, Escrow Associate with ServiceLink, to look closer at the details.
Kim reviewed the file carefully keeping in mind the following tips provided by her Underwriting Department:
- If a property is free and clear of any loan and the owner has owned it for less than 10 years, conduct appropriate due diligence to confirm the property is unencumbered. Some factors to consider: Was the prior transaction a cash purchase with no vendor's lien or deed of trust? Was the property recently foreclosed?
- If a deed of trust has been released of record without a corresponding sale or refinanced within the prior 12 months, contact the lender for confirmation that the deed of trust has been released. A "corresponding sale or refinance" would involve a conveyance of the land for value with an accompanying deed of trust or a refinance deed of trust. In either event, the new deed of trust should be in an amount sufficient to satisfy the released deed of trust.
- If the seller, buyer or third party presents a release for an outstanding deed of trust either at or prior to closing, contact the lender for confirmation that the loan has been released. Use independent means to obtain the lender's telephone number. Do not rely upon a number supplied by the parties to the transaction.
- Any time a recent quit claim deed is found in the chain of title, conduct appropriate due diligence to determine its validity (call the grantor, check with the notary, etc.).
Kim started her due diligence by looking over the signatures found on the deed of trust, grant deed and reconveyance. She noticed the same person signed a lot of the documents in the chain of title. She began to note the different entities involved in the purchase of the lot as the borrower and the lender, so she accessed the Texas Secretary of State website.
She discovered that one person, Homan Provement, was named as either the President, Trustee or Managing Member of at least nineteen entities. She did more research and discovered the same Homan was recently indicted for allegedly defrauding investors out of millions of dollars.
Kim also discovered there were four other orders opened on the same day with very similar parties and circumstances. The combined liability of these orders was $9,000,000.
Kim shared her findings with her management team and the orders were immediately cancelled. Management shared her story with us stating, "She exhibited a Bias for Action in looking at the data and taking the proper measures to ensure the Company's risk was minimized."
Way to go Kim! It is examples such as these which prove how prudent the underwriting requirements and thorough title examination are to protect the property rights of our customers. We thank you by presenting you with a $1,500 reward and a letter of recognition from the Company.
This article was provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration