Tip 7-2012: REO (FREE Owners Title Insurance Is Never Free)
Prior Tucker Tips have cautioned against the attempt by REO Sellers ("Real Estate Owned" by the banks or Fannie Mae or Freddie Mac) to direct the Purchaser to use their REO's attorney or settlement company. These practices usually include a provision in the "REO Addendum" providing the Purchaser with a free owner's title insurance policy if they use the REO Seller's settlement agent.
NEVER FALL FOR THIS ATTEMPT TO DIRECT THE PURCHASER'S CLOSING TO THE BANK'S SETTLEMENT AGENT.
Here's why this is a Bad Practice:
1. In order to receive the Free Title Insurance, the Purchaser must allow the REO Settlement Agent or Attorney to represent both sides. This non-local law firm or settlement agency gets all of their business from the Bank, Fannie or Freddie. They want to represent the Purchaser so allegedly things will go smoother for their main client - the REO Seller. If there is a conflict with the closing - Do you really believe they will favor their new client (the Purchaser) over their larger regular client (the REO Seller)? Whose real interest are they looking out for?
2. This settlement agency or law firm which normally represents the Seller is never local. They may be from a nearby state like Maryland or from Virginia areas like Virginia Beach. All communications with them and the Purchaser, the Lender and the Realtor has to be through long distance, fax or email. The only time they appear locally is when they send someone (usually a notary) to the area to perform the signing of the closing documents. Is this a reasonable way to obtain a smooth closing? Do you really want the Purchaser to close with a notary at McDonalds?
Next weeks Tucker's Tip will discuss the real economic costs of the closing and the "Free Owners Title Insurance."
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.
Something Extra: Middle-aged racking up student debt faster than any other age group.
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville 434-973-7474 | Lake Monticello 434-589-3636
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