Owners Title Insurance Cover a Refi ?

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Fillmore
Posts: 111
Joined: Fri Dec 04, 2020 10:36 am

Owners Title Insurance Cover a Refi ?

Post by Fillmore »

So when I went to the lending office last week to give them the info on that IORR, ( w'2 , financial statement and told them not currently rented) they said as part of the refi that I would have to get title insurance (lenders presumably) AGAIN for the same property at the same bank.

I have some time before I have to refi.

Was going over my docs and see I bought an owners title policy when I bought the place, would that satisfy the banks requirement ? Wouldn't my owners policy protect the bank as well as me ?
Normchad
Posts: 6104
Joined: Thu Mar 03, 2011 6:20 am

Re: Owners Title Insurance Cover a Refi ?

Post by Normchad »

Fillmore wrote: Mon Jul 08, 2024 6:24 pm So when I went to the lending office last week to give them the info on that IORR, ( w'2 , financial statement and told them not currently rented) they said as part of the refi that I would have to get title insurance (lenders presumably) AGAIN for the same property at the same bank.

I have some time before I have to refi.

Was going over my docs and see I bought an owners title policy when I bought the place, would that satisfy the banks requirement ? Wouldn't my owners policy protect the bank as well as me ?
The owners policy covers you, not the lender. I'm not surprised your re-fi lender is asking for another title policy to cover them. How else would they know/protect themselves if you've managed to get a bunch of liens on the property? They want a policy that will protect them. And almost all of that protection really comes from the "investigation part" of it, where they dig in and find out that you didn't get a bunch of liens. The lender wants to know they are first in line to get paid if you default....
Sam-I-Am-Not
Posts: 74
Joined: Sun Dec 20, 2020 10:50 am

Re: Owners Title Insurance Cover a Refi ?

Post by Sam-I-Am-Not »

Your owners policy covered you as of the date of closing only. Your prospective lender needs a policy to cover them and they need it cover the date they lend you the money.
invest4
Posts: 2058
Joined: Wed Apr 24, 2019 2:19 am

Re: Owners Title Insurance Cover a Refi ?

Post by invest4 »

https://madisonsettlements.com/owners-p ... rs-policy/

Owner’s Policy

* Covers the full purchase price

* Protects the owner for the full purchase price until the property is transferred. If owner dies, his/her heirs are automatically protected.

* Covers the owner for any issues or defects in the title that may occur.

* Protects the owner against title issues, i.e. fraud, forgery, prior liens, lack of access, erroneous legal description, improperly recorded deed, building encroachment on property, old right-of-way, another person claiming stake in the property. All issues could negatively affect owner’s enjoyment of property, as well as his/her ability to refinance, etc.

* Additional cost for Owner’s policy is a bargain considering the owner’s level of protection.

Loan Policy

* Only covers the amount of the mortgage

* Only protects the lender until the mortgage is satisfied. Does not cover the owner for the full purchase price.

* The lender is not responsible for the owner’s defense and remedy of title defects.

* The title company pays claim to lender only, while owner’s interest may be left uncovered by policy. Owner is left with no title company backing him/her up or paying for costly research or legal defense.

* Very little cost differential from Owner’s policy, especially since owner is not covered.
LotsaGray
Posts: 1584
Joined: Sat Mar 25, 2023 2:08 pm

Re: Owners Title Insurance Cover a Refi ?

Post by LotsaGray »

Normchad wrote: Mon Jul 08, 2024 6:32 pm
Fillmore wrote: Mon Jul 08, 2024 6:24 pm So when I went to the lending office last week to give them the info on that IORR, ( w'2 , financial statement and told them not currently rented) they said as part of the refi that I would have to get title insurance (lenders presumably) AGAIN for the same property at the same bank.

I have some time before I have to refi.

Was going over my docs and see I bought an owners title policy when I bought the place, would that satisfy the banks requirement ? Wouldn't my owners policy protect the bank as well as me ?
The owners policy covers you, not the lender. I'm not surprised your re-fi lender is asking for another title policy to cover them. How else would they know/protect themselves if you've managed to get a bunch of liens on the property? They want a policy that will protect them. And almost all of that protection really comes from the "investigation part" of it, where they dig in and find out that you didn't get a bunch of liens. The lender wants to know they are first in line to get paid if you default....
How would the bank know about liens? The same way they find old liens, they look them up in the county registry.

What the title insurance protects against is the title company messing up the search. Especially from things long ago. The new stuff is easy to find; it is the old stuff that bites you.
LotsaGray
Posts: 1584
Joined: Sat Mar 25, 2023 2:08 pm

Re: Owners Title Insurance Cover a Refi ?

Post by LotsaGray »

invest4 wrote: Tue Jul 09, 2024 6:48 pm https://madisonsettlements.com/owners-p ... rs-policy/

Owner’s Policy

* Covers the full purchase price

* Protects the owner for the full purchase price until the property is transferred. If owner dies, his/her heirs are automatically protected.

* Covers the owner for any issues or defects in the title that may occur.

* Protects the owner against title issues, i.e. fraud, forgery, prior liens, lack of access, erroneous legal description, improperly recorded deed, building encroachment on property, old right-of-way, another person claiming stake in the property. All issues could negatively affect owner’s enjoyment of property, as well as his/her ability to refinance, etc.

* Additional cost for Owner’s policy is a bargain considering the owner’s level of protection.

Loan Policy

* Only covers the amount of the mortgage

* Only protects the lender until the mortgage is satisfied. Does not cover the owner for the full purchase price.

* The lender is not responsible for the owner’s defense and remedy of title defects.

* The title company pays claim to lender only, while owner’s interest may be left uncovered by policy. Owner is left with no title company backing him/her up or paying for costly research or legal defense.

* Very little cost differential from Owner’s policy, especially since owner is not covered.
I wonder if there is some way to contractually subrogate the current owner policy (since in case described covers property until transfered.) I doubt the new lender is willing to do this but I still wonder if there is legally to do this even if mortgage company will not accept.
brian2013
Posts: 135
Joined: Mon Sep 30, 2013 9:45 am

Re: Owners Title Insurance Cover a Refi ?

Post by brian2013 »

LotsaGray wrote: Tue Jul 09, 2024 8:42 pm
Normchad wrote: Mon Jul 08, 2024 6:32 pm
Fillmore wrote: Mon Jul 08, 2024 6:24 pm

What the title insurance protects against is the title company messing up the search. Especially from things long ago. The new stuff is easy to find; it is the old stuff that bites you.
I just wanted to clarify this bit. Malpractice/Errors and omissions insurance is actually meant to cover things that are missed or "messed up" in the title search.

While title insurance would cover that as well, to some extent, title insurance is actually very important to cover things that a title search would not reveal at all.

An example would be a fraudulent deed in the chain of title. There's no way we can no that the Bob Jones who signed that deed 5 years ago is the actual right guy. Maybe the actual owner lives in another state and doesn't even know the property was sold.

Another example - in my area years ago, the Catawba Indian Nation sued claiming that they owned all the land in our area (actually quite a valid argument, IMO). It tied up real estate transactions for awhile and ultimately had to be resolved by politicians.

If you had title insurance, you were covered for that and could sell your property while that issue was ongoing. If you did not - no coverage and you had more problems!
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