First time home buyer, Best title insurance company

[Blue Collar Guy]

So my wife's dear niece and her husband, young couple, 2 small boys. Getting some kind of deal that they wont have to pay PMI, with a 3% down loan.

Now they call and say they arent required to buy title insurance. I only own this house, I have no clue about these things. I told them I was forced to buy it from someone the real estate recommended , I now know you can shop for this stuff, but I was already in sticker shock so I just wrote checks to everyone. I told them already you have to buy it, Its a FHA loan I think its a must. And you need to sleep good at night.

1) Am I right FHA requires it?

2)Best cheapest legit Title company. Property is in North Carolina, thanks

PS I tried getting online quotes but I have no clue what endorsements if any they need or what is standard.

 

[Blue Collar Guy]

Anyone? The kids are going to be calling me soon for advice on this.

 

[euro]

Yes, the lender will require title insurance. I suppose they may be able to shop around, but title insurance is not that expensive, so not worth the effort in my opinion

Alas, if every dollar counts:

http://www.bankrate.com/finance/insurance/4-ways-to-save-on-title-insurance-1.aspx

 

[bingybear]

I'm not really much help on North Carolina. When I lived in Maryland I ran across something called ground rent. This dated to much earlier times in MD where one person would own the land and someone would build a house on that land and pay rent for the use of the land. This was just so foreign for me that I avoided looking at any house under these conditions. It seemed to function well in MD.

I would find a real estate lawyer in NC and determine what is happening. I would think the purchaser would want to know... or maybe they do. When we purchased homes we got title insurance for us as well as the mortgage company. What one usually buys covers the lender, not the purchaser.

 

[Blue Collar Guy]

Yes, the lender will require title insurance. I suppose they may be able to shop around, but title insurance is not that expensive, so not worth the effort in my opinion

Alas, if every dollar counts:

4 Ways To Save On Title Insurance | Bankrate.com

Thank you, I think they said 900 dollars. These kids are putting down 5k and no PMI I dont know how they pulled that off. Something about the USDA

 

[Blue Collar Guy]

I'm not really much help on North Carolina. When I lived in Maryland I ran across something called ground rent. This dated to much earlier times in MD where one person would own the land and someone would build a house on that land and pay rent for the use of the land. This was just so foreign for me that I avoided looking at any house under these conditions. It seemed to function well in MD.

I would find a real estate lawyer in NC and determine what is happening. I would think the purchaser would want to know... or maybe they do. When we purchased homes we got title insurance for us as well as the mortgage company. What one usually buys covers the lender, not the purchaser.

OK thanks.

 

[bingybear]

maybe one of these

 

[euro]

Thank you, I think they said 900 dollars. These kids are putting down 5k and no PMI I dont know how they pulled that off. Something about the USDA

Yes, those USDA loans are a great deal if you qualify. Usually they are restricted to more rural locations, nor big cities.

 

[ERD50]

Thank you, I think they said 900 dollars. These kids are putting down 5k and no PMI I dont know how they pulled that off. Something about the USDA

My son & his wife just closed on a home. IIRC, they had 15% down, and I thought you needed 20 to avoid PMI. But he said their credit rating is excellent, so it was waived. News to me.

-ERD50

 

[FlaGator]

Title Insurance is regulated, and pricing approved by individual states, same as other insurance.

Lender will require it. Though it often seems unnecessary, when it hits the fan again, and borrowers start defaulting, there will be claims against title policies. Legitimate or not, they have to be addressed and litigated. All part of the cost.

Nothing to pick from as to title insurers. Your relative should go with the closing agent that has with a good relationship with their real estate agent. That source of ongoing business will ensure the closing agent stays on it to get it closed and cleaned up afterwards. The closing agent will likely be owned by the title insurance underwriter or one of their agents.

 

[Blue Collar Guy]

maybe one of these

Wow, that is some list. thanks

 

[Blue Collar Guy]

My son & his wife just closed on a home. IIRC, they had 15% down, and I thought you needed 20 to avoid PMI. But he said their credit rating is excellent, so it was waived. News to me.

-ERD50

Same here , I thought the 20 was standard too

 

[Blue Collar Guy]

Title Insurance is regulated, and pricing approved by individual states, same as other insurance.

Lender will require it. Though it often seems unnecessary, when it hits the fan again, and borrowers start defaulting, there will be claims against title policies. Legitimate or not, they have to be addressed and litigated. All part of the cost.

Nothing to pick from as to title insurers. Your relative should go with the closing agent that has with a good relationship with their real estate agent. That source of ongoing business will ensure the closing agent stays on it to get it closed and cleaned up afterwards. The closing agent will likely be owned by the title insurance underwriter or one of their agents.

OK, good to know, so in case of trouble down the line, stick with a proven trusted guy. I like that, Ill pass this on to them. thanks.

 

[travelover]

Recently sold in Michigan and had to pay for title insurance (local custom). The price was basically the same at all the companies I checked with. Your state may be different.

 

[bingybear]

Wow, that is some list. thanks

if you look at some of those, ... some guarantee the loan which may make PMI irrelevant. I don't know for sure... just guessing.

edit:-- note that this may make title insurance not required by the lender. I would still wonder if the owner may want insurance. But not knowing what is really going on, I would not have any good advice.

 

[Bamaman]

Use a real estate attorney to do the closing and he will handle the title insurance. They all have a company they do business with.

 

[Blue Collar Guy]

Use a real estate attorney to do the closing and he will handle the title insurance. They all have a company they do business with.

Yeah, I agree. She said the real estate had someone lined up. but they are balking at the 900 fee. Complicated by the fact they were told it wasnt mandatory in their situation. My wife sent them FlaGators response to about stick with the closing agents guy, its a reliable person to cry to if something rears its ugly head later on down the road.

I originally told them to shop around, but they really should get it required or not( I never heard of it not being required when you get a loan).

 

[Sweepssue]

The lenders policy protects the lender. They will want to have an owners policy to protect them. It protects against back taxes that the title company could have missed, a second mortgage lien or an inheritance issue. Where I live the seller provides it but it varies by area. I do home loans and through the years I have seen times where the back property taxes did not get paid and the owners policy covered it.

 

[Blue Collar Guy]

The lenders policy protects the lender. They will want to have an owners policy to protect them. It protects against back taxes that the title company could have missed, a second mortgage lien or an inheritance issue. Where I live the seller provides it but it varies by area. I do home loans and through the years I have seen times where the back property taxes did not get paid and the owners policy covered it.

Thank you! And welcome to the forum.

 

[MissMolly]

Title Insurance is regulated, and pricing approved by individual states, same as other insurance.

Lender will require it. Though it often seems unnecessary, when it hits the fan again, and borrowers start defaulting, there will be claims against title policies. Legitimate or not, they have to be addressed and litigated. All part of the cost.

Nothing to pick from as to title insurers. Your relative should go with the closing agent that has with a good relationship with their real estate agent. That source of ongoing business will ensure the closing agent stays on it to get it closed and cleaned up afterwards. The closing agent will likely be owned by the title insurance underwriter or one of their agents.

Title insurance does not protect the lender against the borrower defaulting. You are thinking of PMI (private mortgage insurance). Title insurance is just that - it insures the title is free of any liens or encumbrances. I worked in the industry for over 30 years. I cannot imagine any legitimate lender not requiring title insurance. Title insurance is not something you ordinarily shop for. Whatever contracts the closing agent has with whatever title company he works with is who will provide the title insurance.

 

[MissMolly]

First you say it's an FHA loan (Federal Housing Administration) then you say is a USDA loan (Rural Housing). These are two separate agencies. They are both government insured loans which is why there is no PMI (private mortgage insurance). PMI is carried on conventional loans, not government loans. With FHA loans there is MIP (mortgage insurance premium) that is usually paid monthly for a set term of months. USDA loans have a premium baked into the loan amount and it's paid upfront.

 

[FlaGator]

Originally Posted by FlaGator View Post
Title Insurance is regulated, and pricing approved by individual states, same as other insurance.

Lender will require it. Though it often seems unnecessary, when it hits the fan again, and borrowers start defaulting, there will be claims against title policies. Legitimate or not, they have to be addressed and litigated. All part of the cost.

Nothing to pick from as to title insurers. Your relative should go with the closing agent that has with a good relationship with their real estate agent. That source of ongoing business will ensure the closing agent stays on it to get it closed and cleaned up afterwards. The closing agent will likely be owned by the title insurance underwriter or one of their agents.

Title insurance does not protect the lender against the borrower defaulting. You are thinking of PMI (private mortgage insurance). Title insurance is just that - it insures the title is free of any liens or encumbrances. I worked in the industry for over 30 years. I cannot imagine any legitimate lender not requiring title insurance. Title insurance is not something you ordinarily shop for. Whatever contracts the closing agent has with whatever title company he works with is who will provide the title insurance.

No, I'm not thinking of PMI.

There were many claims filed against title insurance companies by mortgage lenders after the bubble burst in an effort to recoup losses from defective credit underwriting. This was probably the high point, but I recall there were others:

https://www.law360.com/articles/156418/bofa-sues-for-coverage-of-4-500-title-defect-claims (may be behind a pay wall)

First American sued for $535 million in loan losses – Orange County Register

IIRC, this was ultimately settled out of court, and the impact to FAF was modest.

The Lender's Policy insures the lender against prior (superior) liens. Nothing to do with borrower default, as properly described above.

As title insurance is a regulated insurance product, there is no benefit to price shopping-everyone will be the same. Other fees, such as closing and title searches are negotiable, but don't expect to find much difference.

Lenders are under intense scrutiny now by their regulators, so the risk of price padding and/or undisclosed fees is almost zero. If an overcharge happens, it will likely be caught in a audit and refunded.

 

[MissMolly]

Although the lenders turned to title insurance companies in an attempt to try to recoup their losses due to borrower defaults, I still stand by my statement that title insurance does not protect the lender against borrower default. The claims brought against the title insurance companies were related to defective deeds and improper underwriting/closing. Yes, the defaults were the impetus to proceed against the title companies, but the titles companies do not insure against borrower default. The article you linked to states "The First American entities issued policies on the 4,500 properties insuring the lender against undisclosed liens, missing owner signatures and legal property description errors, the suit said. The bank maintains that all of the properties involved in the suit had defective deeds." So all the claims were against the title, not the defaults.

 

[Cayman]

They will want to have an owners policy to protect them.

Sweepssue offers good advice, regardless of whether a lender requires title ins. or not. I wouldn't buy RE without an owners title ins. policy.

 

[Blue Collar Guy]

First you say it's an FHA loan (Federal Housing Administration) then you say is a USDA loan (Rural Housing). These are two separate agencies. They are both government insured loans which is why there is no PMI (private mortgage insurance). PMI is carried on conventional loans, not government loans. With FHA loans there is MIP (mortgage insurance premium) that is usually paid monthly for a set term of months. USDA loans have a premium baked into the loan amount and it's paid upfront.

IM not sure whats going on either, But I was told FHA loan, 3 % down, no PMI, then I was told they were getting some kind of GRANT from the USDA, Im totally clueless about either one.

Since you were in the business, did you ever hear about no Title Insurance required with a FHA loan? Im insisting(strongly recommending) they get at least owners title insurance.

When we bought our first and only house, I didn't do anything but write checks, and sign my name. I even was told to TIP(hahaha) a few people in cash at the closing. As usual I did what I was told.