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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: ild who wrote (11208)6/17/2003 1:14:41 PM
From: Mr. SunshineRead Replies (1) of 306849
 
TITLE INSURANCE

<<Question: when you refinance with the bank that originated your mortgage does the bank need new title insurance?>>

Yes, because it is a new loan. The new loan needs to be insured on its own merits, a new title insurance policy needs to be researched and issued. There may have been all kinds of title problems between loans. There is usually a discount if the previous title policy was issued less than 5 years before. Fair? A good deal? Probably not. Title companies have huge profit margins and seldom need to make payoffs, but that is the way the game is played, at least now. There is enough profit margin there that if you ask for a reduction in the rate you will likely get some price break.

<<Concurrent question: when you take out the mortgage the bank obtains the title insurance. When your loan is sold what happens to this title insurance? Does it get rewritten to a new loan owner?>>

The policy goes with the loan. If the loan is sold (say to Fannie Mae or Freddie Mac) the policy goes with it. If the loan is paid off (including refinancing) the title policy expires.

Note that there are basically two types of title insurance. One is for the buyer to protect the buyer's interest in the property, the other is for the lender. The lender's policy is only needed when there is a loan.

Hope that helps.
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