7 Specific Things You’re Doing Wrong As A Title Agent

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:

  1. 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.

  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

One Response to “7 Specific Things You’re Doing Wrong As A Title Agent”

  1. Many fine points made in the article. I should like to comment on Item 1 as it relates to Maryland title agents. Maryland is a filed rate state, so it is imperative to follow the dictates of an agent’s respective underwriter rate book/rate filings as they relate to the application of the reissue rate discount.

    In some instances, proof of an existing owner’s title policy is required- some underwriters require that a copy of same must be produced by the consumer and presented to the settlement agent prior to settlement in order to obtain the discounted rate.

    There are actually many excellent reasons for this type of requirement- one of which is to examine that policy to attempt to determine the quality of underwriting that was done in that previous transaction, and whether or not it might be advisable to search said title behind the transaction that resulted in the issuance of that policy.

    While there are many similarities in most rate filings, there are also some salient differences, particularly in this area. Do not assume that the practices and policies of one underwriter are identical to all others.

    Be sure to read your respective underwriter’s rate book, and if you are unsure as to how to interpret or apply a particular premium calculation, contact your agency representative or agency counsel- most regulators will not accept ignorance, assumptions or good intentions as a reasonable explanation for failure to properly apply title premium rates.

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