|Title Company’s Timeline|
1. Receive title order
2. Do title search – 30-yr for residential purchase, 60 yr for a commercial
purchase – search back 30 yars and make sure that every lien that was
placed on the property has in fact been released. Those liens that are
found to have not been released bust be paid off at closing – from the sales
proceeds the seller is to receive, we subtract out the payoffs for these debts,
subtract our their closing costs (realtor fees, sales tax, deed preparation)
and the seller gets what is left over- this is called the sales proceeds. So, we
have to find out what liens need to be paid off I order for the title (deed) to be passed to the buyer free & clear.
3. Receive search back and prepare title report (title commitment) – list who
owns the property, exactly in what names, what liens are on the property, how many parcels there are to the property, the legal description of the property, etc. The commitment is a formal report to the lender that my title insurance company that I represent does in fact commit to insure the lender against loss that may result due to defects that may exist on the title that we did not find in our title search. SEE EXPLANATION OF TITLE INSURANCE.
Lenders know there are many, many types of title defects that are created
as a result of humans preparing deeds and lien documents, and that in the
US we depend on humans to accurately list documents on computer records,
etc. Humans make errors – intentional (fraud) and unintentional. A bullet
thru the brain, whether intentional or unintentional, has the same effect. In
the case of real estate, a bullet is a defect or problem that may result in loss
of money by a lender and/or a borrower. Lenders know the high incidence
rate of defects and the high cost of them and therefore require themselves to be protected against this risk of loss a the borrowers expense – Lenders Title Insurance. This protection makes lenders more readily willing to lend money to borrowers, and this protection is required on all conventional loans in the U.S.
4. Clear title – we help the lender to compare what liens we find of record on the property versus what liens the seller (or borrower, if a refinance) says should be of record against the property. This can be timely form a few minutes to several days…even weeks/months in rare &/or complex circumstances.
5. Get payoffs – for all liens we find that are valid, we get the lender or lien
holder to fax us a payoff statement in writing, so we can pay them off at
6. Get realtor commissions and all other fees from the realtors that need to be paid at closing by the buyer or seller. Ex: Termite report, home inspection,home warranty, seller-paid closing costs, etc.
7. Schedule the closing with all parties
8. We prepare the deed and set of title company documents.
9. Receive the lender’s closing instructions – this is 2 to 15 pages that list all the lender fees that are to be charged for the loan, and many other requirements that the lender may have for this particular loan – ex: Collect buyer cash to close in a cashiers check; Buyer can not bring more than X dollars in cash to close; sign tax returns at closing, or other document that they need, etc., etc.
10. Prepare the HUD (Settlement Statement) ASAP. This is a summary of
the transaction – it who is who is paying what and who is receiving what.
The buyers-side is on the left and seller-side is on the right. The HUD-
1 is a governmental form derived by the US Dept of Housing and Urban
Development – lenders, title and realtors al refer to this form as the HUD, and its also known as the settlement statement.
a. The buyer’s side shows all the monies they need to come up with
(purchase price, closing costs, etc.), and subtracts all the monies they
are getting credit for (loan amount the lender is giving them, good faith
deposit amount already paid, etc.). The difference is the amount of
check the buyer writes at the very end of the closing.
b. The sellers side show what they are getting – the sales price, less
their closing costs (realtor commissions, taxes, deed preparation fee to
Jett Title), and the difference is the amount of the check that they will
receive at the end of the closing.
11. We send the HUD up to the lender for approval, then to all realtors. Your realtor will review the HUD with you prior to closing. Note – the title company has NO control over when the lender will send us the closing instructions, and we can not complete the HUD until we receive them. The lender drives the bus until we have the instructions. Once we send the HUD up to the lenderfor approval, we have NO control over how long it takes to get the approval reply form the lender.
12. Only after the lender gives final HUD approval will they send us the loan
documents. We print them out and copy them for closing. These can be 75
to 150 pages for a single loan.
13. The lender then wires us the loan amount, which we must receive before
closing is finished. This wire and the borrowers check they write at the end
of the closing is where we get all the monies to pay all the closing costs and
liens that show on the HUD. All monies go into our escrow account, and then
we pay out 100% of those funds out of our escrow account for all the items
that are listed on the HUD. The HUD is a complete and detailed record of all
funds received and disbursed by the title company.