This appeared in the ISBA Bar Briefs Newsletter this past week. As a legal professional, this is ranks as one of the lowest of lows. You're asking, what in the world am I referring to? It's the case of a now-defunct title company called Counselor's Title Company.
What is a title company? It is place where real estate closings are conducted. The majority of mortgage lenders require an agency closing at a title company or by a title company agent that comes to an attorney's office and finalizes the transaction. The title company issues a Commitment for Title Insurance before the actual closing. After the closing, the title company will issue a Mortgagee Policy to the lender and an Owner's Policy to the buyer. If it is a refinance transaction, the title company will issue a new mortgagee title policy to the new lender.
In April of 2009, Jeff Franson of Mokena, Illinois, refinanced his home through Security National Mortgage Company. He originally had his mortgage through Chase Bank. Security National Mortgage gave Mr. Franson a better interest rate, so he took advantage of it. He closed on his refinance at Counselor's Title Company and at the closing a check was issued to his old lender (Chase Bank) in the amount of $93,702.51. In Illinois, you have a 72 hour clause in case you change your mind about the refinance and cancel the entire transaction all together.
On a sunny Saturday afternoon in October, 2009 while Mr. Franson was doing yard work, he was approached by a process server who handed him a Summons and Complaint to appear in court. The Plaintiff, Chase Bank was suing Franson in a foreclosure action. What happened? Well, the title company's check from Counselor's Title Company bounced. Mr. Franson and his attorney have been attempting to negotiate a deal to allow Franson to remain in his home, get the foreclosure off his credit reports. The Illinois Attorney General has opened an investigation of Counselor's Title Company which can not account for $1.6 million dollars that was supposed to pay off people's mortgages.
In order to avoid this scenario, below are some very helpful tips that you can do before you consider selling, buying or refinancing real estate:
1. Investigate the title insurance company you, your attorney or lender are going to use for the agency closing. It doesn't matter whether you are referred to the title company by a Realtor, Real Estate Broker, Mortgage Lender, or Attorney.
2. Ask the title company about their fees, which vary.
3. Be absolutely certain the title agency and the person handling the closing (commonly referred to as the Closing Agent) are registered with the appropriate state agency. In Illinois you can check them out with the Illinois Financial and Professional Regulation, telephone number (888) 298-8089. Be sure there are no disciplinary reports and/or action taken against the title company.
4. Call your applicable Consumer Fraud Hotline. Here in Illinois you can call the Illinois Attorney General at (800) 386-5438 to see whether or not a title company has complaints on file against them.
5. Contact the title company's underwriter to be sure they are indeed a registered agent of the title company.
Who do I trust for real estate closings and refinance closings? None other than Chicago Title and Trust Company. Years ago when I was a real estate paralegal my office used Chicago Title & Trust for our real estate client's closings. I can put my stamp of approval on CT&T.
This is just another sad fact of our society, where there is a great amount of money to be made, old man Greed pops up and pulls a fast one on decent, hard working, innocent, unsuspecting people.
Copyright, 2009, by Peeper Talk. All rights reserved.
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