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from Local Attorney, Michael H. Wasserman

Thursday, December 29, 2011

NEW TITLE COMPANY POLICY MAY ACTUALLY HELP BUYERS / LENDERS ESTIMATE CLOSING COSTS ACCURATELY

Title Insurance Companies owned by Fidelity National (including Chicago Title Insurance) have a announced a new policy that will, among other things, help Buyers, Mortgage Lenders, and Attorneys estimate closing costs more accurately.

Effective January 1st, 2012, the Fidelity companies will charge Buyers a flat rate to record closing documents with local county recorders of deeds.

County Recorders of Deeds keep the "official" public registry of all land title transfers and liens placed against real estate, such as mortgages, foreclosure proceedings, and the like. The Recorders charge fees based on the number of pages in any given document,

This causes problems for residential mortgage lenders who are obligated by federal regulations to give their borrowers accurate "good faith estimates" of their closing costs, but may not know exactly how many pages of mortgage paperwork a borrower will need to sign at closing,. This  happens because the loan originator may not know what end lender may be making the loan, what  loan product will be used, what riders may need to be attached to the mortgage, or what document preparation service or software will be used to generate the mortgage paperwork.

In turn, this causes problems for attorneys who also want to give their clients an estimate of the cash to closing (aka the "bottom line") for a closing.

And most importantly of all, it adds to the problems Buyers have trying to figure out precisely how much money they will need to fork over at the title company office to close the deal.

Going forward, Chicago Title, Fidelity National & Commonwealth will all be charging Buyers at flat rate to record deeds and mortgages based on the average recording charge per transaction, rather than based on the actual number of pages to be recorded.

For Cook County transactions, the (purchase) flat rate will be $143.00

In DuPage, Kane, and Lake  Counties, the fee will be $74.00

Kendall and McHenry County recordings will cost $86.00

Side effects? of course.

Cash  Buyers will end up paying more for recording than they would have under the old system, as the average recording fee is certainly skewed by multi-page mortgage documents that they do not have to record.

By that same token of course, Buyers using first & second  mortgages will likely receive a significant savings, again, because they will only be charged the average, and based on the additional second mortgage recording fees.  

No word from the other local major title companies at this time.