The new Loan Estimate and Title Insurance Fees

speedbumpIn just a few weeks, the Good Faith Estimate that was created by HUD in 2010 will be replaced by CFPB’s Loan Estimate. The Loan Estimate will also replace the “Reg Z/Truth in Lending” document. When the samples of the “Loan Estimate” where first revealed, I was pretty excited. It appeared to be a significant improvement over the well intended but flawed 2010 Good Faith Estimate, which caused a lot of confusion for consumers. As I’m learning more and more about CFPB’s Loan Estimate, I can see that we are all in for a huge adjustment as we deal with not only implementing new documents and procedures, but also dealing with the flaws to the document and the procedures to the document.

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Seattle Real Estate Chat: Title Insurance

On Episode 6 of Seattle Real Estate Chat, we’re joined by Barbie Van Horn of First American Title and Escrow.  Barbie address what title insurance is and why it’s important for Washington State home buyers. She also addresses sewer capacity charges for King County, Snohomish County and Pierce County.

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Buying a home together before you get married

Last month I read an interesting article from Coldwell Banker about couples who are buying homes together before they get married. A survey was conducted which “revealed that 1 in 4 young couples are buying a home together before tying the knot”.

“…buying a home together has become “the new engagement ring” for some young couples. The homebuying process forces couples to deal with their competing feelings of money and how to spend it, and that is why successfully purchasing a home with someone else is deemed a significant accomplishment in any relationship. It means the couple has been able to overcome their differences in an effort to create a better future together.”

The survey found that 24% of couples who buy a home before they are married are 18 – 24 years old. When I bought my first house, I was 21 years old and it was with my (then) fiance…many years ago! 🙂

When couples buy together, before they are married (or if they never plan on marrying), they need to consider how they will vest on title. This is important because if either person passes away, how they hold title (vesting) may determine what happens to the home. Most often, vesting is determined a home is purchased by the language on the deed. Two single people who own a home together have different rights than a married couple in Washington state.

I’m not an attorney and I’m feeling a bit like “Debbie Downer” discussing this tidbit…but it is important to consider. Here are two brochures provided by title companies that you can review with your attorney to discuss how to vest in title.

And don’t miss this video of Tim Daniels, Title Officer discussing different ways to take title for real property in Washington state.

If you are considering buying a home anywhere in Washington state and need help with your home loan mortgage, I’m happy to help you!

How to Shop for Title Insurance or Escrow in Washington

I’m often asked by my clients if they can select their title or escrow provider and the answer is a big YES!  Some feel that title and escrow fees are all within a close range and this simply isn’t the case. I have seen fees for these services vary by hundreds of dollars.

Here are some pointers you may find helpful if you are interested in shopping for your title or escrow provider:

Know how your rates are priced.  With escrow on a purchase transaction, you will need to provide the sales price and let the escrow company know if there’s going to be a second mortgage or if a courtesy signing may be required or if it’s a short sale. It’s important to ask the escrow company for ALL of their fees. I’ve received quotes from an independent escrow company in Ballard where they try to pad their quotes with a $200 “miscellaneous fee” just in case something “pops up” during the transaction.  Ask the escrow company if the fee is the “full” fee or your “half”. Typically, in Washington the buyer and seller split the escrow fee. 

NOTE: If your escrow provider is a title company, most offer a significant discount on their title fees when title and escrow are at the same company with a purchase. This discount often applies to both buyer and seller.  Using two different title companies for title and escrow services seems like money flying out the window to me.

If your transaction is a refinance, typically the escrow company just needs the loan amount. As with a purchase, ask for “all” their fees. Do they charge a reconveyance processing fee, wire fee or courier fees (also possible with purchase transactions). 

Have the escrow company provide your quotes in writing – they should be able to easily email this to you.

With title insurance, the company will need to know your sales price and loan amount. For a refinance, they just need your proposed loan amount. They will also need to know which county the property is located.  In Washington, the seller typically pays for the owners policy and the buyer pays for the lenders policy.  With a refinance, the buyer pays for the lenders policy.  

Ask for possible discounts. Some title companies will provide an additional discount if you title is placed electronically via their website.

Start early. You’ll want to obtain your quotes before your purchase and sales agreement is drafted.  If you’re involved with a purchase transaction, real estate agents will try to direct where the title and escrow services are placed. Sometimes this is a legitimate concern where the agent has received excellent service from their escrow and title team and/or it could be that one of the real estate brokerages have an ownership interest in the title or escrow company (see below). Regardless, the consumer does have the right to select these service providers.  Some title or escrow companies may insist on needing a signed purchase and sales agreement before providing a quote which is not needed if you provide the above information (sales price, loan amount and county the property is located in).

If your transaction is a refinance, let your mortgage originator know that you would like to shop for these services at your loan application.

NOTE: Mortgage companies may have ownership interest in an escrow company as well. You are not required to use them – it is your choice!

Ask for recommendations. Talk to your real estate agent and mortgage originators about who they like to work with and why. Does their company have an ownership interest in these providers? Will the escrow company do amazing back flips to make sure your transaction closes smoothly and on time?  Ask your family or friends who have recently closed a transaction, who they used for title or escrow providers.

Know the relationships. A few of the big real estate brokerages have interest in title and escrow companies. In the greater Seattle area, we have the following large real estate brokerages who continue to maintain an interest in title or escrow companies:

  • Coldwell Banker Bain: Rainier Title; and Escrow Professionals of Washington (EPOW
  • Windermere: CW Title (formerly known as Commonwealth of the Pacific)

According to Northwest Title Company’s website, one or more principals at Routh, Crabtree, Olsen, PS, a firm located in Bellevue which does significant REO (foreclosure) escrow business, have interest in Northwest Title Company.

Higher fees does not always equate to better service.  I’ve seen some escrow companies that charge significantly more than what I would consider to be a fair market price. They may try to justify this because they have attorneys on staff or because the property is a short sale or foreclosure – ask why.  I have no problem with anyone being compensated for work performed as long as it is a fair market price.

Some companies make it easier for you to shop than others with rate sheets or calculators posted on their websites. I still recommend giving the title or escrow company a friendly phone call followed up with an email to obtain your personal quote in writing. I’m amazed at the lack of service I sometimes find when I call a title or escrow company to obtain a quote for my Good Faith Estimates.

I used to have my preferred title and escrow providers listed on this blog, however DFI felt that this was a potential violation of respa since they viewed it as free advertising even though I had a link to all title and escrow companies and encouraged consumers to shop. 

Bottom line: consumers are paying for these services and are free to exercise their right to shop for and select their title and escrow providers. 

Will Other Big Real Estate Brokerages Abandon their Joint Ventures with Title, Escrow or Mortgage Companies?

I’m hearing this morning that local real estate brokerage, John L. Scott has decided to terminate their joint venture business arrangement with Rainier Title and Escrow.  After seven to eight years of touting that business arrangements like this benefit the consumer, apparently they’re singing another tune.

My stance has always been that arrangements such as this do not benefit the consumer. They can actually prevent consumers from receiving the lowest title and escrow rates and it discourages the consumer from shopping when the real estate agent does their best to please their broker and keep that title or escrow with their pre-arranged company. Typically the real estate companies who have business arrangements discourage their real estate agents from using any other company and will often make it difficult (if not impossible) for outside companies to attempt to have contact with their real estate agents.  

So if the argument big companies like John L. Scott, to hold interest in title and escrow companies, like Rainier, is that it’s an advantage for the consumer – what’s changed?  Could it possibly be that these arrangements are no longer the cash-cows they once were for the managing brokers?

It will be interesting to see if the other local real estate companies who have title and escrow business arrangements, like Windermere and Coldwell Banker Bain, follow John L. Scott.

To All the Rock Stars at The Talon Group

It was announced a few days ago that First American is pulling in The Talon Group and Pacific NW Title. I've been thinking about all the fun and informative videos the group at Talon have created and thought I'd share "Rock Star" with you.

We get to enjoy these brands for a few more weeks until they're official absorbed by First American on October 1, 2011, when they all "combine forces".

For the record, I have enjoyed working with my escrow and title teams at The Talon Group for these past seven (?) years. I think you are all rock stars!

First American Title Company absorbs The Talon Group and Pacific Northwest Title

This afternoon, I learned that the local operations of First American Title Insurance Company are merging their divisions of Pacific Northwest Title and The Talon Group into First American.

From First American Title's email announcement:

First American Title, Pacific Northwest Title and The Talon Group are combining forces effective October 1, 2011.  In Washington and Oregon counties where we currently operate under these multiple brands we will be consolidating into a single operation to serve you and your clients as First American Title Company.

According to Pacific Northwest Title's "Our Story" page, they were established as an independent title and escrow company in 1983 and was purchased by First American Title in 2004.

The Talon Group was actually created by First American Title as a new brand when they purchased Escrow Partners in 2003. This event strikes home for me as my husband has been an employee at The Talon Group in this area since it's inception. And as "a spouse" I've had the fortune to get to know many of excellent folks at Talon over the years.  

As someone who began in the real estate industry back at Safeco Title Insurance in '86 just prior to Chicago Title's acquisition, I understand what many of the employees must be feeling right now.  

For more information, please contact your local First American, Talon Group or PNW title rep.

Buying a Waterfront Home in Washington

Are you considering buying a waterfront home?  The greater Seattle area has some beautiful neighborhoods located along the Puget Sound, including West Seattle’s Alki neighborhood, Ballard, Magnolia, Normandy Park and Des Moines, to name a few.  

The Talon Group has created a great video that discusses buying waterfront property on homes located in Washington State. Chief Title Officer Tim Daniels addresses tide lands and what to look for on your title commitment when buying waterfront.

Nice life vest, Mr. Daniels!