Frequently Asked Questions (FAQ)
Settlements
Q: How much advance notice is needed before a closing is scheduled?
A: We need at least two weeks to properly prepare for closing from the time the contract (purchase) or loan application (refinance) is received.
Q: Who will be the person handling my closing prior to settlement?
A: Each of our processors handle certain loan officer and real estate agent's offices. Please e-mail us or give us a call and you will be connected with the correct person who can handle all your questions and needs.
Q: Do I need to attend settlement?
A: No. If you are not able to attend settlement at the date and time scheduled you may appoint someone to be your Attorney in Fact to sign on your behalf. If you are the borrower you will need to verify with your mortgage lender that a Power of Attorney will be acceptable. The Power of Attorney needs to be prepared in advance of closing and must be reviewed by the title company to ensure that the form used falls under the State of Maryland guidelines. The original Power of Attorney must be recorded with the Deed and Mortgage. Therefore, the original Power of Attorney will need to be released to the title company for the length of time it takes to have the instruments recorded. This can be anywhere from 2 weeks to 6 months.
Q: What do I need to bring to settlement?
A: You will need to bring any funds you may need for settlement in the form of a certified or cashier's check. You will also need to bring a current government issued photo ID. This is needed for notary purposes as well as to comply with the Patriot Act. You may also need to bring a copy of your homeowner's insurance policy with paid receipt if required by your mortgage lender.
Q: How much money do I need to bring to closing?
A: Your lender will provide you with a good faith estimate. You can use this information to determine the amount needed for your cashier's/certified check if we do not have the closing package from your lender far enough in advance of closing.
Q: Can I write a personal check at closing?
A: A personal check can only be written for $500.00 or less at the time of closing. We are required to have cash equivalent funds at settlement and therefore cannot accept personal checks in amounts greater than $500.00.
Q: Who does the settlement agent represent?
A: The settlement agent represents the mortgage lender. We are required to strictly adhere to their closing instructions.
Q: Do I need an attorney?
A: An attorney is not required to attend settlement in the State of Maryland but you can have your attorney attend closing or review your closing documents (if available) prior to closing.
Q: What is a short sale or VA compromise?
A: This is a settlement in which the seller owes more for the property than the present market value. The seller and their agent work with the current mortgage company to see if the lender will accept less than what is due to payoff the mortgage and release the lien they hold on the property.
Funds
Q: My bank is out of state. Can I wire my funds to settlement?
A: Yes. We can provide you with wiring information to have your funds wired to us prior to settlement. Funds will need to be wired at least one day in advance of settlement to ensure they have arrived for your scheduled date and time.
Q: Can my settlement proceeds be wired to another party after settlement?
A: Yes. You will need to provide us with wiring information in writing for the party to receive these funds prior to settlement.
Q: We are refinancing and will be getting cash back from the new loan. Will I be able to get that money on the day of settlement?
A: No. Lender's are required to give you three business days (including Saturday) to think about the transaction you just completed and decide if you want to continue with the new loan. After the three days have passed and your new mortgage lender has provided the loan proceeds to us the funds due back to you can be released.
Q: I am purchasing my home with a different title company/attorney's office than where I am selling my home. Will the other title company/attorney accept a check from Foote Title Group?
A: Not necessarily. A check issued from a title company/attorney's escrow account is not considered certified funds. You will need to verify with the other office that they will accept our check so that we can make other arrangements to have your funds sent to the next settlement office if they will not take our check. This is also true if you settled elsewhere and need to bring funds from another office to Foote Title Group for closing.
Title Insurance
Q: What is title insurance?
A: Title insurance is your policy of protection against loss if any of these problems – even a "hidden hazard" – results in a claim against your ownership.
Q: Why do I need title insurance?
A: To protect possibly the most important investment you'll ever make - the investment in real estate. A lender goes to great lengths to minimize the risk of lending money for the purchase of real estate. First, credit is checked as an indication of the borrower's ability to repay the loan. Then, the lender seeks assurance that the quality of the title to the property to be acquired and which will be pledged as security for the loan is satisfactory. The lender does this by obtaining a loan policy of title insurance.
Q: Are there different types of title insurance policies?
A: Yes. Basically there are two different types of policies – a loan policy and an owner’s policy. The loan policy protects the lender’s interest in the property as security for the outstanding balance under the buyer’s mortgage. The owner’s policy safeguards the buyer’s investment or equity in the property up to the face amount of the policy.
Q: What does Title Insurance protect against?
A: Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title:
• False impersonation of the true owner of the property
• Forged deeds, releases or wills
• Undisclosed or missing heirs
• Instruments executed under invalid or expired power of attorney
• Mistakes in recording legal documents
• Misinterpretations of wills
• Deeds by persons of unsound mind
• Deeds by minors
• Deeds by persons supposedly single, but in fact married
• Liens for unpaid estate, inheritance, income or gift taxes
• Fraud
Q: What Protection Does Title Insurance Provide Against Defects and Hidden Risks?
A: Title insurance will pay for defending against any lawsuit attacking the title as insured, and will either clear up title problems or pay the insured’s losses. For a one-time premium, an owner’s title insurance policy remains in effect as long as the insured, or the insured’s heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it. Owner’s title insurance, issued simultaneously with a loan policy, is the best title insurance value a property owner can get.
Q: How much could I lose if a claim is filed against my property?
A: That depends on the claim. In an extreme case, you could lose your entire home and property – and still be liable to pay off the balance of your mortgage. Most claims aren’t that dramatic, but even the smallest claim can cost you time, money, aggravation, and you may have to pay costs for a legal defense.
Q: How does title insurance protect my investment if a claim should arise?
A: If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense – and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up the face amount of the policy.
Q: If the builder of my home already has title insurance on the property, why do I need it again when I purchase the land from him?
A: Title policy insurance the builder has does not protect you. Also, a great many things could have happened to the land since the builder’s policy was issued. Liens, judgments and unpaid taxes for which prior owners were responsible may be disclosed after you purchase the property – causing you aggravation and costing you money.
Q: How long does my coverage last?
A: For a long as you or your heirs retain an interest in the property and, in some cases, even beyond.
Q: Does the loan policy protect me?
A: The loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale. But, this policy only protects the lender's interest. It does not protect the borrower. That is why a real estate purchaser needs an owner's policy, which can be issued at the same time as the loan policy, usually for a nominal one-time fee.
Q: What is the danger of loss?
A: If the lender has title insurance protection and the owner does not, what possible danger of loss exists? What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title.
The title insurance company pays the lender's loss and is entitled to take an assignment of the borrower's debt. The purchaser loses the down payment, other equity in the property that may have accumulated, and the property. And the balance on the note is still due!
Q: How can there be a title defect if the title has been searched and a loan policy is issued?
A: Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.
Q: How much is title insurance?
A: Please refer to the Closing Center for your area.
Title Searches
Q: What is a Title?
A: A title is the foundation of property ownership. It is the owner’s right to possess and use the property.
Q: What is a title search?
A: A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller’s right to transfer ownership, and to discover any claim, defects and other rights or burdens on the property.
Q: Why is transferring the title to real estate different from transferring the title to other items, such as a car?
A: Because land is permanent and can have many owners over the years, various rights in land may have been acquired by others (such as mineral, air or utility rights) by the time you come into possession of it, even if the land has never before been built upon. So in order to transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding.
Q: What kind of problems can a title search reveal?
A: A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.
Q: Are there any problems that a title search cannot reveal?
A: Yes. There are some "hidden hazards" that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you’ve purchased your home and can jeopardize your right to ownership.
Q: The owner of the property has a deed. Isn’t that proof of ownership?
A: Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It’s not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.
Q: Wouldn’t an abstract show property limitations and restrictions?
A: Maybe – and maybe not. An abstract is a history of the property title as revealed by the public records. Abstracts may contain errors and do not disclose "hidden hazards" that can threaten your property title if you do not have a title insurance policy.
Q: The owner of the property I want to purchase has lived in the home for only six months. He had a title search done six months ago. Why do I need another one?
A: Because the owner could, in a very short time, do many things to encumber the title. For example, he could grant easements or construct improvements that encroach on adjacent property. He could get married or divorced, or have a lien filed against the property. It is necessary to conduct an up-to-date title search to uncover any such problems.
Q: What about an attorney’s opinion?
A: An attorney’s opinion is based on a search of the public records. So, once again, even the most exhaustive search of these records may not reveal everything. Unlike a title insurance company, an attorney is not liable if you should suffer loss because of "hidden hazards" in the title.
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