Title Claims in Mortgage Settlement Services: A Walkthrough Guide

The lender estimates the loan, which includes the cost of title fees. The title fees contain the cost of settlement fees & title insurance. In other words, costs are based on due diligence mortgage, preparing settlement documents, & title insurance. Lenders seek the help of third-party providers working behind the scenes. 

In the guide, you will learn about the title and settlement services and also how the settlement service providers get you to closing.

What is a Title Claim?

The title means the owner’s legal rights after buying the property. The property must have a ” clear ” title before the customer purchases the home or opts for a refinance option; the property must have a “clear” title. This makes the property free from outstanding liens or debts. Banks working with third-party mortgages make them responsible for issues in Title. Anything that must be corrected by mortgage settlement services providers by taking corrective action. Moreover, the third-party providers deliver peace of mind to lenders. 

What Does the Title Company do?

As discussed above, the title company manages the title claims & prepares for the closing. Some manage the escrow account that holds funds that are set aside for refinance or home purchase until some specific conditions are met. For instance, if a borrower buys the home and makes an earnest money deposit, the funds are then kept in an escrow account of the company’s title. 

However, the title company may not appear during a loan transaction; however, work as a team with lenders. They play a pivotal role while working on the back of the lenders. 

 

Continue reading to know the steps of title companies that they take during a mortgage transaction:

  • Title search and examination

The first step involves some detective work that the title company performs. They do some research about the property’s history. This process is generally called a title search. The search reveals the former ownership details and finds out the concerns that impact the home sale or refinance. Moreover, the title company examines liens or judgments against the property in situations like bankruptcy cases, outstanding mortgages, overdue property taxes, divorce agreements, etc. Undoubtedly, the outstanding balances must be clear before the next transfer of ownership.

  •  Fix any errors and resolve title issues

Once the settlement service provider detects any issues, they start working to fix them as early as possible. For example, due to unpaid roofing bills, the title company may have an in-person meet with the current owner & contractor to resolve the problem. 

  • Issue title insurance

Once the property is free of title defects, they get the green light to work further for providing title insurance. With the assistance of settlement service providers, lenders are happy as everything complies with legislative & organizational objectives. 

  • Settlement and signing

With a clear title, the main work of lenders is completed. Now the title company can schedule a closing date. Some may also call it a settlement date. Here the title company and lender work together to prepare the closing document.

 Title and Settlement Services are Essential

The title settlement process requires great effort and skills. This is one of the reasons that financial institutes outsource their work. The mortgage service providers perform several functions that help lenders in many ways. The title services are pretty complex and need professional assistance for research and documentation. Make sure to look for reliable mortgage services that smooth the whole process. Plus, make the work quick. Start the mortgage journey with experienced yet authentic service providers.

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