Q–You recently recommended that a questioner buy a mortgage lender’s title insurance policy plus an owner’s title policy to protect his home equity. You said the biggest cause of property loss is due to forged signatures on deeds.
Does this mean if someone challenges my home’s title, the title insurer will go with me to court? But what if the judge or jury rules for the title challenger? What good is title insurance if this happens?
A–Virtually every mortgage lender insists on a lender’s title insurance policy. Without it, mortgage lenders won’t approve a mortgage. The only exception is in the backward state of Iowa, where attorney’s title opinions are still used.
For a slight additional title insurance premium, home buyers can also obtain an owner’s title insurance policy to protect their equity. Title insurance is a one-time premium for as long as the owner, and heirs, own the property.
Forged signatures in the chain of title cause the biggest title losses because they are virtually impossible to detect until the defrauded title holder claims the property.
It is usually an ex-spouse, whose signature was forged on the deed. When the person discovers the swindle, he or she either claims the property or demands payment.
A homeowner with an owner’s title policy then turns the claim over to the title insurance company. If a monetary settlement is not reached, the case goes to trial. Should the property owner lose to the title claimant, the title insurer then pays the loss to the insured owner.
Of course, many other title risks are insured, such as liens due to unpaid property and income taxes, mechanics’ liens and judgment liens. For this reason, every property buyer should insist on an owner’s title policy, especially when buying from friends or relatives.
Q–I am presently paying $332.57 per month on a mortgage at 8.6 percent interest. I also have another $10,000 loan at 10.5 percent interest at $149 per month.
Should I cash in two CDs, which earn only 6 percent interest, to pay off these loans?
A–If cashing in your CDs to pay off those two loans will leave you house rich but cash poor, please don’t do it. However, if you have other liquid assets or a credit line for emergencies, then paying off your loans will be good “investments” at 8.6 and 10.5 percent.
———-
Have a question about real estate? You can write to Robert Bruss in care of Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611. Answers will be provided only through the column. Please note that laws vary from state to state and area to area. Consult an attorney for specific legal advice.
