Bill Tucker's Real Estate Advice for Realtors & Lenders
Feb 23, 2012
Tip 8-2012: REO (Free Owner's Title Insurance is Never Free-Part 2)
Tip 8-2012: REO (Free Owner's Title Insurance is Never Free - Part 2)
Last week's Tip
discussed why the Purchaser of an REO property should select their own
attorney or settlement agent. Briefly, if the Purchaser uses the REO's
non-local law firm or settlement agent, these problems could occur:
A. The REO's settlement agent may not
have the Purchaser's best interest as their primary goal, as they
regularly represent their large REO Seller.
B. There can be numerous delays and
inconveniences for the Purchaser, their Lender and Realtor with the
actual closing, because the REO settlement agent is not local.
what about the "Free Owner's Title Insurance"? Is it worth the
inconveniences and potential conflicts? Absolutely NOT and Here's Why:
In order to get the "Free Owner's Title Insurance" the Purchaser still
has to pay additional title expenses (title search fee, binder fee, copy
charges and a lender's title insurance policy.) Sometimes these extra
expenses will exceed the cost of title insurance from our local title
2. In order to get the "Free Title"
the Purchaser has to hire the non-local settlement agent or law firm and
pay all of their fees for the closing. The fees for these settlement
services may equal or exceed the cost of our local real estate attorneys
and settlement companies.
3. The actual "Free Title
Insurance" policy can sometimes overlook several prior title problems.
Remember this title binder is being provided by the same REO bank which
may have created problems in the foreclosure process. It's like letting
the "fox guard the hen house". The Purchaser of an REO property needs
to have their own title search and policy.
For all of these reasons and others, Never allow an REO Purchaser to use the same settlement agent who represents the REO Seller..
The REO Purchaser needs a local real estate attorney and title insurance company representing only the Purchaser's interest.