Tag: title fees

How to Avoid Title and Escrow Junk Fees

~ Carolyn Warren ~ 4 Comments

Susie asked me to write an update about junk fees imposed by settlement agents (title/escrow companies in the West). She has a good point. Fees have changed since I last posted on this topic in 2015.

Here is a snippet from an actual Closing Statement showing what I call “clean” fees, meaning no unnecessary bogus fees added to pad the profits of the settlement agent.

GOOD FEES!

 

The Lender’s Title Insurance is $827.14
The Escrow/Settlement/Closing fee is a flat $1,186.80

Notice that the Owner’s Title Insurance is blank, because the Seller pays that.
No doc prep fee, no email fee, no FedEx fee, no courier fee, no archive fee.

Fair and customary fees for the purchase price in Washington state. I like it!

This same company, First American, adds two fees that they do not charge in Washington for California. In CA, First American has a “new loan fee,” previously called a “loan tie-in fee.” They also like to add a notary fee, which can be waived if you go into their office to sign loan documents rather than have a notary drive out to your location after business hours–if you ask. I’ve seen them charge a notary fee even when the buyer drove into their office but also waive it when asked.

Why does the same company charge a notary fee in CA but not in WA? Because competing escrow companies in WA don’t charge extra for a notary.

BAD FEES!

Here is another snippet, this time from a purchase in California:

You see that this unfortunate buyer paid:

Escrow Fee: $1,225
Lender’s Title Insurance: $1,004
Loan Service Fee: $340
Recording Service Fee: $14
Signing Fee: $225
Special Courier Fees: $75
Owner’s Title Insurance: $1,929

My Comments on these Fees

Notice that the Buyer is paying both the Owner’s Title (typically paid by the current owner, the seller) and the Lender’s Title Insurance. Poor buyer paid $1,929 extra!

Loan Service Fee: $340  Added junk fee. What service are they providing that is not included in the title insurance and escrow closing? They are not the loan servicing company.

Recording Service Fee: $14  This is not the recording fee charged by the county, which was $375. It is an added nonsense fee to the escrow company. It’s like buying a hamburger and paying extra for the pickle.

Signing Fee: $225 to sign, even if they didn’t need to hire a notary outside of business hours.

Special Courier Fee: $75  Isn’t that special of them to charge $75 when FedEx overnight is $17.50! And why isn’t their $1,225 escrow fee enough to cover that in the first place?

The $50 Environment Fee at the top of the list is a county requirement, so all escrow companies are required to charge it. It’s not junk and it can’t be waived.

There is a lot more to say about this topic, but I hope by seeing these two examples, you can shop for a good title/escrow company, and then ask your Buyer’s Real Estate Agent to request your preferred company on the purchase offer.

To shop fees, you can use the online fee calculators. Locate them through Google, like this:
First American Title fees + zip code
Chicago Title fees + zip code
Fidelity Title fees + zip code
Old Republic Title fees + zip code

WARNING: If you sign a Purchase Contract that stipulates using a high-priced, fee-laden escrow/settlement company, then you have agreed to their fees. Once signed, you will not be able to get it changed.

Thank you for reading this post. I work hard to help good folks get good pricing on their mortgage loans.

 

 

What You Need to Know About Title Fees

~ Carolyn Warren ~ Leave a comment

Each title company has their own set of fees. Some charge one flat fee. Others add a couple junk fees. Some pile on a stack of fees that may add up to an extra $300 to $700.

The ones who charge multiple fees say, “We like to break it down for the buyer, so you know where everything goes.”

That sounds fine, but when the total of the break-down is significantly more than the flat-fee company, something is fishy.

And, there shouldn’t be double-charges. Such as a messenger fee and an overnight fee. Both of those fees are to transport the signed docs back to the lender. Which are you using, a messenger or FedEx overnight? And why are you charging $75 when Fedex overnight by 10:30 am (2 lbs) is $28.05?  3 lbs is $31.40.

Can You Object to Title Overcharges and Junk Fees?

You can always object to title fees, but if you’re far into the loan process or almost at closing, you have no leverage and will likely have no success. They will say no, and then what? It’s too late to start over with another title company.

The best solution is to know from the start which title company you want to use. That way, you write it in on your purchase offer.

The Law and the Seller

Federal lending law states that the choice of title company belongs to the Buyer. However, when a listing agent places the home on the Multiple Listing Service, he/she includes the legal description of the property, and they get that from the title company. Thus, the listing agent chooses a title company right from the start.

No actual work has yet been done by that title company, so at this point, it is no problem to switch companies. There is no reason you can’t say, “I’d like to use Y Title,” even though the listing shows X Title. Truly, it’s no problem.

How Do You Find Title Company Fees?

Use Google to search for your title company + zip code. Some companies have a fee calculator on their site you can use. For the others, call and ask. You don’t need a written quote. The title agent can provide the quote over the phone in just a few minutes.

Personally, I prefer to use the same company for both title and escrow settlement. This is because (1) many offer a 10 percent discount for doing so, (2) you avoid the sub-escrow fee, (3) avoid expensive little independent escrow companies–which in California can be double what the national title-and-escrow companies charge, and (4) possibly save time at closing.

If you are in a state where an attorney is used for settlement closing, then the above doesn’t apply to you. But do take the trouble to find a good and reasonably priced attorney.

When Good Folks Ask Me About their Closing Costs

I appreciate where people are coming from when they email me a list of their closing costs and ask, “Am I getting ripped off?” However, I cannot answer this question without seeing the actual Closing Disclosure. I don’t know the price of the home, their state and zip code (which affects the title cost), or what fees they might not have noticed hiding in a different section, or if the seller or lender are providing a credit. When I do a review, I spend time ahead of our consultation comparing local title fees for their exact situation, and this takes time out of my day. This is why I charge for my service. It’s not that I’m trying to be greedy, but a review-and-consult takes a good hour. If I do that for four people, that’s four hours of my day, so you get the idea.

I encourage you to do your research ahead of shopping for a house. That way, you will be empowered with knowledge and make a good choice for a title company right from the start.

Some Realtors say not to “rock the boat” and let the Seller choose the title company. In a super-competitive market where multiple offers are coming in, there’s some wisdom in that. If you’re bidding $25,000 over asking price, why worry about paying an extra $500 or even $1,000 for title? Your objective is to beat out five other buyers and get the house.

Thank you for reading. Remember, I am state licensed in California and Washington. (NMLS 1284134) I am a mortgage broker, so I am legally bound to find you the lowest interest rate, best pricing, and best loan program I have from my list of 50+ wholesale lenders. ApplyHere

Are You Paying Too Much for Title and Escrow?

~ Carolyn Warren ~ Leave a comment

I hate bogus, unnecessary fees. telecom-junk-fees-rip-off1

Take a look at this list one of my book readers sent me today. She is buying a home in Southern California. The title and escrow company was chosen by the real estate agent, even though federal law says it is Buyer’s choice.

See if you can pick out the unnecessary fees:

TITLE CHARGES

Lenders Policy for $844,000   —  $1,074
E Recording Service Fee  — $15
Sub Escrow Fee — $100
Messenger/Overnight — $30
Endorsements — $150

Ÿ ESCROW CHARGES

Escrow Fee — $2,302
Loan Tie-In Fee — $250
Email Document Fee — $100
Archive Fee — $50
Document Handling — $50
Notary/Sign up Fee — $200

Wow!!! What a lot of fees, right?

This is like going to a restaurant and ordering a hamburger. Then you get charged extra for mayo, ketchup, lettuce, pickle, salt, and the bun. I mean, come on! Isn’t your $15 hamburger enough without collecting more for every tiny thing that is standard and should be included?

Response to the Objection

When the home buyer objected to the real estate agent (the one who chose this over-priced title and escrow company), here is what the agent said:

“The escrow officer is an amazing person. I would trust her with my kid.”

That’s fine if you’re looking for a babysitter! But what’s that got to do with all her needless fees?

The only thing I’d find amazing about her is how she can get away with over-charging home buyers and convince real estate agents to send her business! Makes one wonder… as in illegal kickbacks…? Just musing, not accusing.

Folks, it doesn’t matter if the seller’s agent has already opened title with a certain company. FEDERAL LAW says you, the Buyer, get to choose the title and escrow company.

It’s easy to do a Google search for “title insurance” + zip code. Then make three phone calls and get a quick quote right over the phone. No need to ask for anything in writing. If you shop with three, you should find a good, fair title company to work with.

Don’t bother asking Yelp or other review sites. People who post there are like the real estate agent who chose this high-priced title company because the person is “amazing” or “friendly” or “good with kids.”

As always, thank you for stopping by my blog. If you have a topic you’d like me to write about, send your request here.

 

Can You Spot the Bogus Junk Fees?

~ Carolyn Warren ~ Leave a comment

This snippet of the Loan Estimate (page 2, left column) came to me last week from a home owner who was refinancing. He wanted to know if all the closing costs were legitimate, because he had a suspicion that there were bogus junk fees included. Take a look and see if you can spot the needless fees.

CLOSING COST DETAILS

A. Origination Charges
Administration Fee  $995
PIW Fee (FNMA only)  $75

B. Services You Cannot Shop For
Credit Report Fee  $35
Flood Certification Fee  $10
Tax Service Fee  $68

C. Services You Can Shop For
Title – Doc Prep  $150
Title – Endorsements  $125
Title – Fee/Sub-Escrow  $90
Title -Insurance/Lenders  $625
Title – Messenger/Courier  $50
Title – Misc. Fees  $25
Title – Recording Service  $13
Title – Settlement/Closing  $595
Title- Signing Fee  $175
Title – Wire Fee  $50

Under Section A, there is a lender fee that is competitive and appropriate. The PIW fee stands for Property Inspection Waiver. Because this home owner has so much equity in his home, an appraisal was not called for. The small fee is to pay for the online market evaluation. You could argue that the fee is unnecessary — and I wouldn’t disagree — but I am not going to complain about it, because it is saving the home owner a $350 appraisal report.

Under Section B, the three third party fees are for required services. No problem there.

Under Section C, we see a boatload of garbage. And it all comes from the title/escrow company the loan officer chose. (With a refinance, there is no sales contract that dictates the title/escrow company. In this case, it is the home owner’s choice; but if you don’t designate a certain company, the loan officer chooses.)

To prove that the so-called services were junk fees, I obtained a quote from a good national title and escrow company that I have worked with in several states over the past couple decades. The quote I obtained is for the same address, same loan amount.

There were only three fees: title insurance/lenders, settlement/closing, and recording.

Total savings: $893

Here are the offending fees, in red:

C. Services You Can Shop For
Title – Doc Prep  $150
Title – Endorsements  $125
Title – Fee/Sub-Escrow  $90
Title -Insurance/Lenders  $625
Title – Messenger/Courier  $50
Title – Misc. Fees  $25
Title – Recording Service  $13
Title – Settlement/Closing  $595
Title- Signing Fee  $175 (optional, if you require a mobile notary to come to you)
Title – Wire Fee  $50

Additionally, the title insurance and settlement/closing fees were less with the good company.

CONFRONTING THE LOAN OFFICER

Next, the home owner called the loan officer and politely said he wanted to switch to First American Title and Escrow.

The loan officer asked why and then said, “But those are not all of First American’s fees.”

So the home owner called First American and obtained a written quote. They were all the fees.

Confronted with the truth in writing, the loan officer offered to lower the cost of settlement/closing and waive the signing fee. But wait! How can he do that? He represents the mortgage company, not the neutral, third party escrow company. Right?

Wrong! The so-called neutral third-party escrow company was an affiliate company, also owned by the mortgage company. On top of that, the title company with the long list of garbage, was also owned by the mortgage company. Bedfellows!

My personal complaint in all of this scenario is the loan officer (a) chose an over-priced escrow and title company for his client, (b) tried to convince the client that the competitor’s fees were not all there, (c) and then finally came clean and waived some fees.

I ask you this: Would you consider this loan officer to be an honest advocate for the home owner?

Folks, just because it is 2016 and there are over 1,000 pages of new lending laws, it does not mean all the rip-offs are bygones.

The reason this home owner knew enough to contact me is because he had read Mortgage Rip-Offs and Money Savers. And while some of the content in the book is now outdated, it is still relevant and saving good folks hard-earned money today.

As always, thank you for stopping by my blog. If you think this information is important, please use social media to pass on the news.

If you need a loan in CA or WA, I am licensed (NMLS 1294134) and will serve you as a true home owner’s advocate.

Thank you.

 

 

Who Chooses the Title Company for a Mortgage?

~ Carolyn Warren ~ 1 Comment

realtor2When you buy a house or refinance your existing mortgage, title insurance is required. Title insurance protects the interested parties (you and the lender) from a whole host of possible problems:

* False liens and judgments. (This is common. Someone with a name similar to yours fails to pay a bill and next thing you know, it shows up as a lien on your property. Title insurance protects you and removes it.)

* False heirs claiming ownership. (As in, “My grandma used to live there and she willed the house to me.”)

* Mistakes and errors. (They happen.)

* Fraudulent claims. (Someone says you owe money when you don’t.)

It’s easy to see why title insurance is important: it protects your ownership in the property. But who chooses the title company?

If You Are the Buyer

For a purchase loan, your Purchase & Sale Contract states who the title company is. So, it is decided between the buyer and seller. In some states, it is seller choice. However, the buyer has the right to request a certain title company. If the seller is a private party, they will usually agree to the buyer’s request. If the seller is a bank, then the bank usually has a title company they work with for all their transactions, and they don’t want to switch.

If you are buying from a private party, chances are the seller (like most consumers) is not familiar with title companies; therefore, it ends up being the real estate agent who chooses.

Personally, I like to choose my own title company, because I want a company with a good reputation that doesn’t charge me a bucketful of junk fees. In recent years, some title companies and escrow companies have jumped on the junk fee bandwagon. In addition to their normal compensation, they have added on extra fees such as e-doc or email fee, doc prep. fee, wire fee, courier fee, archive fee, review fee, auxiliary fee, and whatever fee.

How annoyed would you be if you ordered a hamburger for $7.95 and then the restaurant charged you a pickle fee, ketchup fee, mayo fee, and mustard fee? You would say that is part of the hamburger and $7.95 should cover it all, right? The same goes for all the title and escrow add-on fees. It’s bogus, and this is why I like to choose my own title company.

If You are Refinancing

When you refinance, there is no seller or Realtor involved, so the title company is your choice alone. If you do not tell your loan office which title company you would like to use, the loan officer will choose one for you. The same goes for the escrow or closing agent. You need to designate who that should be.

Why It is Important to Choose

By choosing wisely, you could save yourself several hundred dollars. Why pay hundreds more when you could keep that money and use it on something for your home instead?

To see a list of required fees and bogus fees used in mortgage loans, please see Mortgage Rip-Offs and Money Savers, because unfortunately, unnecessary costs are still being tacked on to loans today.

Thank you to Jason Caldwell for writing this review 14 days ago: “The book is exactly what I am going through, loved the book I also emailed her also she responded with very in depth email. I mean she really cares. but I am a first time home buyer and well going through the loan process of first time home buyer. Everything in the book she mention of how the loan officer will react to questions is true. Some of them wouldn’t show me a Good faith Estimate.Cover.3D.Mortgage Rip-Offs
From my experience so far, Loan officers don’t depend and don’t want a return buyer. they want to sell you the loan make their high profits and be done.

The book not only tells you but show how they make their profits. how the today’s loan officers can bait and trick you at signing, yes you heard me right switch right at the signing table.

I recommend this book for anyone getting the a mortgage loan to read this book first. This should be a college text book. Ive read and i go back make my own notes. The book is that informed and that good.”