Property Title & Short Sale FAQs

Property Title FAQs

Title insurance is insurance against loss resulting from defects in the title to real property. It protects the owner or lender’s financial interest in the property against defects against matters of the past. It will reimburse the insured for any monetary loss incurred, up to the amount of insurance. The premium in paid only once and remains in effect as long as the insured holds title. Just as lenders require fire and casualty insurance, they also require title insurance to protect their interest in the collateral of loans secured by real estate.
One of the most important investments you’ll ever make is buying a home. You want to be able to enjoy the benefits of ownership and be able to occupy and use the property as you wish, free from any boundary dispute, liens, assessments, code violations, and the list goes on. Without title insurance, you may not be protected from errors in public records, unpaid taxes, unsatisfied mortgages, mistakes made by prior searches by not finding hidden defects, all of which you could be held accountable. Your owner’s title policy insures that you will be defended against all claims and paid up to the amount of the policy to settle those claims.
A title search is a search of public records that determines whether the person selling the property has the right to sell it. The search begins with current owner(s) and usually extends back in time for 30 years. Documents searched include deeds, court records, property and name indexes, judgments, liens and assessments. Ownership interests, marital status, legal and mental capacity, judgments and liens are examined for accuracy, completeness and proper execution.

Short Sale FAQs

A short sale occurs when the mortgage loans, other liens and closing costs, against a property are greater than the proceeds from the sale, and the lender agrees to accept this lower payoff amount.
You must be able to prove a financial hardship, which can be loss of employment or income, divorce, relocation, job transfer, major illness and medical expense, or unexpected expenses. A short sale is for those who have to sell, not for those who want to sell. You must provide a hardship letter detailing the issues that brought you to this situation.
A seller will have to provide a hardship letter that explains why you are in a hardship and give details, and must be signed and dated. You will need to provide your last two months of bank statements, last two pay stubs, last two years of tax returns, last years W-2 form, a Third Party Authorization Letter, and a Financial Worksheet completed and signed.
Qualified homeowners can get $3,000 back from a short sale to use for relocation expenses, as part of the Making Home Affordable Plan.
Your credit can recover from a short sale in less than two years, but a foreclosure or bankruptcy will take 7 to 10 years. A foreclosure will affect your credit far more in the long term and in some states the lender can seek a deficiency judgment and can come after other property or assets you own. Consult your accountant regarding any tax liabilities.
You can stay until the closing. If you are facing foreclosure and you are actively working with your lender, you can sometimes get the lender to delay foreclosure which allows you to stay in the home for some time.
You need to be aware of anyone approaching you with something too good to be true. Unfortunately, there are unscrupulous individuals who may try to take advantage. Do not pay anyone up front fees to ‘negotiate’ your short sale. Do not sign a deed, power of attorney or anything that would transfer your ownership. Remember that anyone trying to purchase your home is looking for their own ‘best deal’ not yours.
There are many Realtors and Mortgage Brokers who negotiate and work short sales, but some lack the knowledge and experience necessary to properly execute one. You may also use your attorney to negotiate the short sale.
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