While this specific list is for Florida Title Agents, the concepts exist regardless of the state you practice in. Here are 7 things you may be doing wrong as a title agent:
- Not giving reissue rate when applicable. Few title agents realize that they’re required to give the discounted “reissue rate premium” if applicable. This means that an agent should not just be waiting for an owner to suggest reissue rate, the agent should be asking if the owner has a copy of their owner’s policy. Reminder, reissue rate is available when the seller or mortgagor in the current transaction provides a copy of their owner’s policy and any one of the following three.
A) Current transaction is insuring unimproved land except for road, brides, utilities.
B) Current transaction is within three years from prior owner’s policy’s effective date.
C) Current transaction is a refinance insuring a mortgage executed by the owner’s policy insured.
Some agents go as far as having a Notice of Reissue Rate Form executed by the insured. This ensures that there was no miscommunication over reissue rate premium being applicable or not.
- Failing to identify when substitution rate is due on a mortgage modification transactions. The Florida Administrative Code provides 8 scenarios when you may endorse a Loan Policy and NOT trigger substitution rate premium. If the modification changes any terms not identified as one of the 8 exceptions, substitution rate premium is due. Most agents only review the proposed (To be recorded) modification and fail to review the underlying modified note. This failure could both come back on you as an agent and also result in missed potential revenue/premium due. Download our eBook on Mortgage Modifications: A Comprehensive Overview.
- Improperly removing county/city special assessment requirement. Most agents are under the belief that they may use a standard Owner’s Affidavit to remove the standard requirements/exceptions for county assessments and Chapter 159 municipal liens dealing with water, gas and sewer. While some underwriters allow this for refinances, most require that a separate municipal lien search be obtained to identify any unrecorded liens which may affect the property.
- Incorrectly “butler rebating” premium. Title premium is generally split with 70% going to the agent and 30% going to the underwriter. The agent is allowed to rebate, or give back, any portion of their 70% to the person/entity who paid for the premium (the insured under the policy). Premium is not allowed to go to another party. Additionally, all of the 30% underwriter share must go to the underwriter, it may not be rebated.
- Failing to secure excess limits authorization on large transactions. Most underwriter agency agreements require the title agent to get excess limits approval for transactions in excess of $1 million. Some underwriters make this a requirement on the title commitment, others do not. Make sure you’re complying with your underwriting agreement by obtaining this authorization.
- Endorsing a policy to increase the effective date without obtaining an Owner’s Affidavit. It is possible to increase a Loan Policy’s effective date through the recording of a mortgage modification/assignment/etc. When the effective date is increase, the underwriter is exposed to new matters existing between Date of Policy and new Date of Endorsement. The underwriter will then want the standard exceptions (possession, lien, survey, construction) re-imposed. To remove these, the agent will need to obtain an updated (or new) Owner’s Affidavit and Survey Affidavit.
- Issuing title endorsements without first meeting their requirements. Not many agents know that any mineral rights of entry must be removed before the Florida Form 9 (ALTA 9-06) Endorsement may be issued. Nor do they realize that an Affidavit of Loan Standing must be obtained for the new ALTA 10-06 Assignment of Mortgage Endorsement. Become an expert on all of the 2006 ALTA title endorsements coverage, requirements, costs by downloading our comprehensive Florida Title Endorsements eBook.
Feel free to share any matters you’ve seen title agents “forget” to obtain in our comments section below.