A title insurance policy is the end product of a real estate transaction, but many do not realize how much work a closing officer puts into clearing the requirements established by a title officer in order for the title officer to issue the requested policy. Let me share a story about my friend, Angelo, which illustrates this. He had a cloud on his title that he knew nothing about until he applied for a home equity loan.
Angelo had owned his home for about 20 years, having been a customer of his bank for many years. The bank elected to only obtain a limited title report and not title insurance. They even planned to close the loan in–house and not use a settlement agent.
The limited title report came back and indicated there were two liens against Angelo's house: His current mortgage and an old mortgage which had been paid off three refinances ago. The lender on that old mortgage was no longer in business.
Angelo's banker told him he would have to clear the cloud on his title before they would close on his line of credit. Angelo searched the internet for the current servicer of that old loan.
Angelo contacted the new servicer and explained his situation. He even had copies of his HUD–1 Settlement Statement proving the loan had been paid. He was asked to fax the documentation so they could do some research.
Angelo promptly faxed his documents. A week later he called to follow up. The new servicer stated they had never received his fax. He faxed the documents again. He did this several times with no success. His bank would not approve his loan and he was getting nowhere with the new servicer, so he contacted an attorney.
The attorney was successful in obtaining a release of the old lien, but his services came with a price. Angelo paid the attorney more than $600 for his assistance.
Previously, Angelo did not understand how a cloud in title could impair his ability to tap into the equity of his own home. He also did not understand how valuable the services and expertise of a settlement agent and their staff were.
Now, Angelo understands that settlement agents know how to clear a cloud on title. He understands the effort a settlement agent puts forth in clearing the requirements set forth by a title officer. He understands how much work and time goes into obtaining a satisfaction of mortgage. Now, Angelo truly admires the very specialized talent escrow officers possess and the value of title insurance.