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Mortgage • It is common to hear people say they have taken out a mortgage when they have taken out a home loan. What they have really done, though, is taken a loan by signing a promissory note and a mortgage. The promissory note promises the borrower (also called the mortgagor) will pay back the loan to the lender (or the mortgagee) under specified terms. The mortgage provides security for the loan. It is a type of interest in the property and is recorded on the property title. In some states, the title to the property is actually held by the lender, with the lender giving most of the property rights to the borrower. In other states title is held by the borrower. If the borrower fails to repay the loan, the lender forecloses on the property, essentially taking away all rights to the property from the borrower.
Deed of trust • Whereas a mortgage is between two parties--the borrower and the lender-- a deed of trust is between three parties--the borrower, the lender and a neutral third party called a trustee. By using a deed of trust in the home loan process, the borrower and lender agree that title to the property will be held by a trustee until the loan is paid off. Most of the rights and responsibilities of owning the property are given to the borrower. In a foreclosure, the trustee is allowed to sell the property and give the proceeds to the lender.
Security deed • (also known as The security deed may be known by several different names including: • Deed to secure a debt; • Trust deed; and, • Land contract.) • A security deed functions in a similar fashion as a mortgage. The security deed is an interest in real estate which gives legal title of property to the lender of the mortgage for the term of the mortgage note.
Note (promissory note) • A promissory note is a legal and financial instrument, in which one party (client) promises in writing to pay a determinate sum of money to the other (lender).
Note Example: ***The Note will always contain the original loan amount that the lien was taken out for. **This will match up exactly with the lien amount listed on the title.
Abstract • A brief history of the transfers of a piece of land, including all claims that could be made against it. In Atlas a packet that will contain all of the recorded documents filed on the property. • (can also be titled as Search, or supporting documents in ATLAS)
Judgment • Legal – used in the context of legal trial, to refer to a final finding, statement, or ruling, based on a considered weighing of evidence, called "adjudication". See spelling note for further explanation.
Tax Lien • A tax lien is a lien imposed by law upon a property to secure the payment of taxes. A tax lien may be imposed for delinquent taxes owed on real property or personal property, or as a result of failure to pay income taxes or other taxes.
vesting • In law, vesting is to give an immediately secured right of present or future enjoyment. One has a vested right to an asset that cannot be taken away by any third party, even though one may not yet possess the asset. When the right, interest, or title to the present or future possession of a legal estate can be transferred to any other party, it is termed a vested interest.
Warranty deed • A general warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title (no liens on it) to a piece of real estate and has a right to sell it to the grantee (buyer). The guarantee is not limited to the time the grantor owned the property—it extends back to the property's origins.
Grant deed • A grant deed is used in some states and jurisdictions for the sale or other transfer of real property from one person or entity to another person or entity. Each party transferring an interest in the property, or "grantor", is required to sign it.
Quitclaim deed • A quitclaim deed (sometimes erroneously referred to as a "quick-claim" deed) is a legal instrument by which the owner of a piece of real property, called the grantor, transfers his or her interest to a recipient, called the grantee.[1] The owner/grantor terminates (“quits”) his or her right and claim to the property, thereby allowing claim to transfer to the recipient/grantee.
Divorce decree • Your final decree of divorce is the court’s formal order granting a termination of your marriage. If your case goes to trial and the judge issues a judgment, the judgment is confirmed when the decree is signed and dated by the judge and court clerk.
Fixed/adjustable rate rider • An adjustable rate rider is a document executed with a mortgage that allows the lender to increase the interest rate after an initial period such as 24 months. At that time there is a substantial increase in the interest rate that results in a substantial increase in the monthly payments.
Deed of trust states • Alaska, Arizona, California, Colorado, Idaho, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Oregon, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and the District of Columbia
Security deed states • Georgia and Connecticut
All other states use… • Mortgages!
TITLES Common questions and issues Special thanks to Donna Bonanni for assisting with this section.
Red Flags • “Record Release/Discharge – (in favor of) _” when this is seen, it is a judgment, and not a lien to be subordinated . When this happens, please problem pending review for the sub underwriter. Make sure you put the notes in the tracking for the UW to review.
Red Flags • “Record a release of LisPendens” – Currently legal litigation in process. Will need to 3rd party tracking and get more info from the client regarding the pending litigation. Once received, then problem pending review for the UW again
Red Flags • “Evidence of satisfaction or release of a Judgment filed” – Judgment that must be paid before the loan closes and not a lien to be subbed. THIS CANNOT BE SUBBED.
Trust Agreements • Sometimes titles are held in trust, or you will see revocable trust agreement, or trustee may appear. In these instances, not a red flag, but certain lender require additional documentation for these.
Trust Agreements • Wells Fargo Bank • Requires a trust certification document to be signed by the client. • Set 3rd party tracking to get signed • Should be documented in the matrix when required
Paid in full liens/judgments • When liens/judgments are paid in full, clients provide documents such as paid in full letter, or receipts etc.. • Must be resubmitted to Title Source so they can clear it from the title by marking the tracking item under review and stating where in LARS this can be found. • Title Source will research and remove from title if they can • The letter is not enough, Title Source must also remove from title. • Researching this can take up to 72 hours.
Judgment Search • When the verbiage shows “Various judgments and/or liens on record against the name _________ record satisfaction or submit evidence that the said above named is not our party” • This is when you need a judgment search and a not me affidavit.
Judgment Search • Example:
Judgment Search • Mark tracking item under review for Title Source to perform. • Title Source will upload to LARS • You need to send this as well as the not me affidavit signed and notarized by the client to the sub lender. • Check Title Source's tracking items and notes to see if this is being performed or worked on. If this has been cleared but not removed from title, mark tracking under review for Title Source to remove from title • Please do this before you send to the sub lender (if possible)
Not Me Affidavit • Title Source will get this for us • States that our client is swearing that none of the judgments we are asking about are theirs. This satisfies most lenders requirements, and need to be notarized.
Not Me Affidavit • Example:
UCC • Wording will tell you if it’s a UCC. “Record a full termination of financing statement” • All in the matrix • Find out requirements • Not a judgment • From solar companies, gas companies, electric companies, oil companies, etc.
UCC • Example:
Random Info • Texas and New Jersey • Superior court judgments are not part of this report. Results will be delivered by courier if applicable. • Mark sub tracking under review and ask for Title Source to remove this verbiage from title. They will remove it long enough for you to print the title before they put it back on. This satisfies most lenders (if they don’t see it, they don’t ask about it). If you send a title with this verbiage, the lender will require a not me affidavit and judgment search.
Random Info • Assignment of mortgage. • When a loan is sold from one lender to another. • Document called assignment of mortgage is recorded with the county just like all other mortgage documents.
Random Info • Vendors Lien • Claim held by lien holders on property that allows for repossession in certain circumstances and assures that the lien will be held until the subject is fully paid off • Don’t sweat it. • A sub is not needed • Basically this will be paid off with the refi
Random Info • Real estate security agreement • For our purposes this is the same as a vendors lien and should be treated as such.
Random Info • CDBG/Housing Authority • Sometimes called “forgivable loans”. As long as the client occupies the property for X amount of years, the loan disappears. • Generally only a prepared sub is required • VA, ID, and a few other states WILL NOT subordinate. When you run into a lender that will not subordinate, put in your notes who you spoke to, phone number for that lender, and why they will not subordinate. Status the tracking as Problem Pending Review, and email SubUW. ***Before sending this to SubUWand marking it “problem pending review” , please ask the lender if there is anything we can do to get them to sub. Sometimes its as easy as having the client make a payment.
HELOC vs. Installment loans • HELOC = Home Equity Line of Credit • Revolving based loan with a maximum amount and draw are taken in any amount at any time(similar to a credit card). Even when these have a 0 balance, we need a sub, unless line is closed • HEIL = Home Equity Loan • Set amount with set amount of payments made until paid off (similar to a regular personal loan, but secured by the property) • If these are closed, we do not need to sub. • Credit Report may state “Installment”
WHERE DO I SEND TITLE ISSUES? • QLMS loans (purple banner) – any title issue needs to be ordered by the CCS from the partner. Please put in your notes what needs to be correct and status the tracking as “problem” • All other loans – Please put in your notes what the issue is, and status the tracking as “Under Review”. • Remember to check the *TS tracking items to see if this issues is already being worked on before marking under review. • If you come across a title that has less liens than REO, please send this to SubUW, and status as “Problem Pending Review”
