Mortgage migraine: Missing paperwork
By HOLDEN LEWIS, bankrate.com
Sunday, June 25, 2006
Refinancing a mortgage four times in a year creates enough stress. Add title problems, and you can hardly bear the anxiety.
It happened to Apurva Pande and his wife, Chinmaya Misra. Both are architects in Los Angeles, and they bought a house three years ago. The house was dilapidated, which meant that they could afford it, and they could gut the interior and exercise their designing muscles.
They wrestled with financing, and in about one year, they refinanced four times, Pande says. Each time, they did cash-out refinances, using the resulting cash to pay for more renovations.
At least twice, “we were literally days away from closing, if not less, before we would get this call about a prior title that hadn’t been cleared up,” Pande says via e-mail. “I think I aged five years faxing and refaxing titles (and) proof of previous closures.”
Few homeowners invite trouble by refinancing four times in a year. But lots of people are afflicted by the problem they encountered: missing or incomplete paperwork that causes a delay — or the threat of a delay — in the closing of a mortgage. Many observers blame today’s title troubles on the refinancing boom of 2003 and 2004, when lenders, title companies and county recorders were overwhelmed with more paper than they could handle.
It’s up to professionals to fix title problems. But you can do a few things to increase your odds of having a trouble-free closing:
-- Avoid the busiest days for closings.
-- Keep in touch with your lender, settlement agent or both.
-- Hire a fixer.
Dan Green, a mortgage consultant with Mobium Mortgage in Chicago, lays down one rule to his clients: Never close on a Friday or the last day of the month, especially in the afternoon and especially in summer. Those days and times are when title agents and closing attorneys are at their busiest. They don’t have as much time to deal with last-minute problems. “When something goes wrong, you need to be sure that enough people are available,” Green says.
By the American Land Title Association’s reckoning, 36 percent of real estate transactions require some type of corrective action. Usually a document is missing, or a new or corrected document needs to be filed. The repairs are done in the background, and in most cases the consumer doesn’t know about it.
“We like to have the typical borrower believe that everything is going along hunky-dory,” says James Maher, executive vice president of ALTA, the title industry’s Washington-based lobbying group. “We don’t want to have their confidence in the system undermined.”
Even when borrowers are unaware of them, title troubles unnerve lenders. “It happens all the time. It’s awful,” says Ellen Bitton, president of Park Avenue Mortgage in New York City. “In the worst case, a seller could pull the deal or a buyer could pull the deal if you’re not ready, willing and able to complete the transaction,” Bitton says.
Bitton’s bete noir is the bank that loses documents that prove that a previous loan was paid off in a refinance, or that the loan was sold from one bank or investor to another. It can be an adventure to repair these problems in time for closing, because a real estate transaction is local, but some of the players are national, and there are no national standards governing who gets what documents and when.
Green says a conscientious mortgage broker or loan officer will stay in contact with the settlement agent, making sure everything will be ready on time for closing. If you don’t trust the lender to ride herd closely enough, you can try hiring a title fixer.
Howard Gold, a real estate attorney in Wellesley, Mass., started a company last year called National Homestead that promises to search a home’s title and fix any problems, well before the closing date, for $295.
Now, that’s exactly what the settlement agent does. Gold says his service is different because he guarantees that title problems won’t delay closing, even if another lawyer or title agent handles the closing.
“It gives the seller a great heads-up and eliminates the chance of a last-minute surprise,” Gold says.
He adds that his company is seller-oriented, while “there are so many title companies out there that are looking out for the lenders and banks and themselves.”
Going through his rapid-refinancing ordeal, Pande didn’t get the feeling that folks were looking out for him. “It felt fishy,” he says, “but we were so intent on crossing this temporary stage, both my wife and I didn’t bother to get to the root of it.”
© 2006 Naples Daily News and NDN Productions. Published in Naples, Florida, USA by the E.W. Scripps Co.
If you would like information on Naples Area Real Estate please go to www.bestrealestatenaples.com or you can email Jackie Belcher at JBelcher@AmerivestRealty.com
