What exactly is a title search? Well, it's not a search for a piece of paper. The object of a title search is to find out the status of a property. Does somebody own it? If so, who? And the title search process in a mortgage is to determine if the person who owns the title is the one selling the property. How is this done? By looking, ah… searching the public records to find out who is the legal owner. And there are many different sources where this information can be found: land records, tax liens, deeds, and court judgments. Title companies usually conduct these searches; they can be part of the mortgage Title Company Services, Mortgage Title Support Services, or a search done in order to secure Mortgage Title Insurance. An individual or a business can also order a Mortgage Title Search. A "clean" title (that is, a title that is not encumbered by liens or loans or judgments) is required for any real estate transaction.
Oddly enough, Building a Title report is a little like building a house brick by brick and beam by beam. Take a look at the recorded real estate documents to ensure the "seller" has the right to sell the property. Find out if any third party has an interest (meaning money) in the property, like a lien. See if there are any restrictions related to the land or its use. The types of searches include:
- A Current-Owner Search
- A Two-Owner Search
- A Full Title Report
Additional services might include:
- Legal & Vesting Deed
- Document Retrieval
- Property Tax;
- HOA Covenants
- Other Reports as Needed
Yeah. You're right, it's starting to get complicated!
How To Find The Best Company To Do The Search?
Now that we know what to expect from a title search let's discuss the critical elements in executing and receiving a title search.
Fast turn-around. In any market, hot or cool, speed is always essential. And while 30-45 days seems like a long time, it really isn't, considering all of the hoops a title search involves.
Customer service and support. If the search encounters a problem, something out of the ordinary, will the search company quickly find a solution or alternative?
Guaranteed accuracy. If problems or irregularities are discovered in the final review of the search, will the company quickly revise and correct them?
Expert solutions. Is your choice of title search company on the leading edge of all the new technology that enhances both accuracy and speed?
Risk reduction. Do they use those same tools to decrease or eliminate the risk of error?
Overall, your choice for a title search vendor must understand the requirements for a completed title search. They should continually analyze their review process, looking for inherent issues that might miss serious mistakes. They should be able to quantify the entire title search process, so you have a severe estimate of time and money. Do they check and double-check the results? Are they easily contacted for conferencing?
All of these factors play an essential part in choosing the right Mortgage Title Service.
How Can Lenders Improve the Process?
Really, there is only one way to make the title search system as accurate as possible without slowing it down.
Examine the sequence of title transfer. “You don't know where you are until you know where you've been. The more history of the title you know, the better your understanding of the current title you're investigating.
Acquire a detailed knowledge of the property. This means reaching beyond the title search and actually looking at its' history. What was there 20, 50, or 100 years ago?
Research the tax history of the property. Another critical factor that could alter the current title. Are there any liens or easements that could affect this transaction?
Special Considerations for The Search Process
Clean v. Dirty. Think this might be a "dirty" title? This is pretty self-explanatory, but why don't we look at some details. Finding out who owns the property is only the beginning. The current owner might not even know of an old claim against the property's title or the debts of any of the previous owners. The waters can be further muddied by unpaid property taxes, overdue Home Owner Association fees, and bills for home improvements. This is one reason why lenders routinely ask for both title searches and title insurance.
Buying Title Insurance. As mentioned above, there may be no choice involved in this. So, a title search should uncover the actual status of the title. But in this world, nothing is for certain, so lenders usually ask for additional safeguards for their investment. The lender is likely to make it a requirement for the Mortgage Loan. But are there other considerations when buying that insurance? Sure. Like who you buy that insurance from. Or what exactly does title insurance cover, and what doesn't it cover. Title insurance usually covers:
- Conflicting claims of ownership
- Outstanding lawsuits or liens
- Flawed or erroneous records
- Fraud or forgery
- Undisclosed easements or other things that reduce the value of the property
The Critical Requirement For A Skilled Title Search Team
The crucial need for an experienced and well-trained title search crew has been well-documented. The same might be said for all real estate back office tasks! The title search is but one of many steps in the mortgage process. To streamline the process and to increase profits, many lenders and brokers are turning to striking a deal with a Mortgage BPO, a Mortgage Processing Partner. A professional Third-Party Loan Processing Partner that specializes in Mortgage Processing, and can take on the following high-volume, high cost, time-consuming tasks:
- Background investigation
- Property assessment
- Accounting
- Financial checking
- Document examination
- Underwriting
- Pre-closing
- Title ordering
- Post-closing
Leaving you and your staff to do what you do best: sell mortgages!
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