We’ve written in the past about the precautions and procedures that Cumberland Title uses to keep your information safe while it’s in our hands. But there are also some pretty simple but important steps that everyone can take to keep their personal workstations safe and secure from fraud.
These days, simply locking your office door isn’t enough to stay safe in today’s fast-paced business world. It’s important to remember that cyber thieves aren’t the only threats lurking, and that keeping our workstations themselves from falling prey to threats and risks is also important.
Here are a few steps you can take to keep your workspace protected:
For those of us who have been in a real estate closing – regardless of what side you’re on – you can appreciate that there are a LOT of checks and balances happening during that transaction, let alone an enormous amount of paperwork.
Aside from procuring the necessary documents, ordering payoffs, checking taxes and titles, and putting together all of the necessary documents, it is the title company’s responsibility to ensure that funding has been received. It is extremely important to note that the transaction cannot be completed until that check or wire is received. Even if all the paperwork has been signed and that’s all you’re waiting around for. No money = no completed transaction.
Likewise, if would be irresponsible for the title company to hand out any checks before the transaction has been officially funded. Any title company or settlement agency that plays by the rules knows that this is actually a violation of the Bar Rules governing attorneys, Maine’s statutes, and quite possibly a violation of most lender’s closing instructions. To do this would put many parties involved in the transaction in a very precarious – and culpable – position.
From the perspective of a title company, trust accounts are highly regulated as they contain money that does not belong to them. The money contained in them belongs to other people who have transacted business through their company. They should never be using funds from one customer to fund a transaction for another customer. And by handing out checks before funds are received, that is essentially the exact scenario that is happening.
One very important point to note here also, is that Maine is what’s called a “wet funding state”. In short, that means that closings are not even supposed to happen without funding that is available to the parties. Many other states have an escrow system when real estate is transferred, where it’s a matter of course that checks are not given at the table (dry funding states), and the closing is essentially done in escrow. But checks are not handed out in this case either.
From a customer service perspective, Cumberland Title aims for all of our closings to be smooth and error-free. Unfortunately, there are times when a wire is taking longer than anticipated to reach us before the conclusion of signing the closing documents, and rather than just saying, “Oh, I’m sure it’s on the way, let’s just call it good and get you all on your way”, we have to cross all the T’s and dot all the I’s in accordance to the law as well as the procedures we have in place that are designed to protect all parties involved in the transaction. This all amounts to both legal and ethical concerns, both State law as well as attorney Rules of Ethics.
As always, we are always here to answer your questions and shed light on the parts of the process that may seem unclear or confusing. We pride ourselves on our reputation for clear, concise, transparent transactions and communication. Please do not hesitate to reach out to us at 207.899.4900, or matthew@cumberlandtitle.com.
The Ins & Outs of Wiring Money
Funding – aka “the money” – is a very important part of the closing process when it comes to buying/selling a house. The buyer needs to have it, and the seller wants it. There are a couple of different ways that this can happen, either by check or by a bank wire.
Now a check is pretty self-explanatory, but let’s hit on a few important and key points of this type of transaction. The buyer check should not be a personal check made out to the seller. It should also not be a check made out to the buyer and then signed over to the title company (making it a third party check). It should be a bank check, or even more ideal – and to be as safe as possible – the funds should be given to the title company (if applicable) and they will present their check to the seller. This creates a nice paper trail that any auditor will tell you is good practice.
A wire is a little trickier. In simplest terms, a wire is when money is transferred electronically from one account to another, whether the same banking institution or not. I’m sure you’re thinking, “What’s so hard about that? Just type in a few account numbers and hit ‘send’.” Well, it’s not quite that easy.
Keep in mind that every banking institution has different rules and regulations in which they follow that meet their own internal best practices. And it’s also reasonable to believe a large global bank may have different policies than, say, a small credit union might.
Title companies also see their share of “back to back” closings where a seller closes on the sale of their house and then turns around an hour later and becomes the buyer in another transaction. As exciting as this can be for the seller/buyer in this scenario, they could just be setting themselves up for a headache by scheduling things so tightly.
Here’s some facts about wires that all title companies wish more people were aware of:
Both of these facts can be real game changers when it comes to the closing transaction.
Let’s say a seller just left the closing on the sale of their house and are heading right away to the closing on a home they are purchasing. If they deposit a check for proceeds to the house they just sold and try to write another check using those funds to purchase the new house, those funds may not all be available right away, as many banks need time for the check to “clear”, and only release a portion of a large sum immediately (please note, banks have differing policies on this).
Or, if the seller has funds wired into their account and then an hour or less later tries to wire funds to the new seller of the house they are buying, it can take hours for those funds to show up. And guess what happens at the closing when there is no funding? Well, in a nutshell, there is no closing. The seller doesn’t get paid, nor do the realtors, as the title company/attorney is not permitted to hand out any checks until the funding is in place and the transaction is completed.
Your takeaway today should be threefold. First, try to avoid back to back closings at all costs if you can. At least try and spread them out by a few hours to give some time for the dust to settle from the first one.
Secondly, if you can’t avoid back to back closings, at least try to have them both at Cumberland Title so that we can make sure the funds from the first closing are then used right away at the second closing.
And lastly, if you are going to do back to back closings at 2 different title companies, make sure you check with the both of them on what is the best way to accomplish this to avoid any issues. Generally speaking, we will accept a trust account check from another MAINE BASED title company if it can be made out directly to us.
There’s nothing worse than tears or frustration on what should be a happy occasion, so make smart choices and be prepared. Happy house hunting (or selling)!
Breaking Up With your Home: Handling Homeownership During A Divorce
Sometimes love is fleeting and marriages end, but that mortgage you agreed to pay together back when you were still in love is still your responsibility…until you find a way to divorce that, too.
Usually, the mortgage is the biggest liability a divorcing couple has to split, but divorcing your mortgage isn’t always easy.
As far as your mortgage lender is concerned, if the mortgage was taken out in both of your names, then you are still required – and expected – to pay that every month.
Here are a few options that you should consider when deciding how to handle the house & mortgage if you find yourself going through a divorce:
Selling the House
If neither party is interested in keeping the house, then selling it and splitting any profit after the mortgage is paid off from the proceeds is a decent and fairly straight forward option. Keep in mind other factors like the current housing market and how much is still owed on the mortgage versus what you are able to sell the home for. It needs to make sense to be able to sell the home for at least what is owed on it.
Keeping the House and Refinancing
Maybe one of the spouses has a strong preference to stay in the house versus selling it. In this case, they will need to make sure that the other spouse is off the hook from any financial responsibility to the house free and clear. The way to do this is for the spouse wishing to keep the house to refinance the current loan themselves.
In order for this to work, the mortgage should not be “under water”, the other spouse is not contesting that they agree to let the house go, and the spouse wishing to keep the house has sufficient credit and income to qualify for a loan and subsequently continue to make mortgage payments alone every month.
Keeping the Mortgage As Is
This is obviously a risky option, especially depending on how amicable the divorce actually is. But if neither spouse is able to refinance the loan on their own, they’re unable to sell the home, or to pay off the existing mortgage, you could leave the mortgage as is.
In this risky scenario, the spouse not living there would basically be “hoping” that their ex is making the payments each month. If not, both of their credit will get tainted as a result.
And here’s a pro tip: just getting yourself off of the Deed does not mean that you’re off the mortgage as well. This is a very important distinction that you should be aware of and understand up front.
And make sure also that the divorce decree specifically spells out who will be responsible for the mortgage and what happens if the spouse in the house misses a mortgage payment. Suggestions include that the divorce decree specifically state that the house must be sold or refinanced within a specific time period.
When a title company is contacted to facilitate the closing for a property transaction, there is a great deal of information that they must gather in order to accurately allocate all monies, and that the documents reflect the most current, up to date and accurate information.
One of the first things we do here at Cumberland Title is to send out a questionnaire to both the buyer and seller, as well as to each realtor. The information on each document asks for vital information that is required by the title company in order for them to accurately and expeditiously prepare the lengthy package of closing documents.
For example, some of the information asked on the seller’s questionnaire is whether they have any mortgages, loans, etc. that they are looking to pay off with the sale of the property. For obvious reasons, the title company needs to know this information. In the event that an existing mortgage is going to be paid off with part of the proceeds, the title company needs to know who holds the mortgage and the account number associated with this, as well as the seller’s signatures and social security numbers. Without this information, the title company is unable to order a “payoff” for the existing loan. Also worth mentioning, when a payoff is ordered, it can sometimes take up to a week to receive the requested information back, so having this information from the seller as far in advance as possible helps to prevent things like a closing being held up or pushed back simply because we didn’t receive the payoff figures in time, or the sellers had another loan to payoff that they never disclosed because they didn’t return the questionnaire. Even if there are no outstanding loans associated with the property, it is still vital to have that questionnaire returned stated that, so there are no questions and time isn’t spent trying to follow up with the seller or their real estate agent trying to get this information.
For buyers, again, every question asked on the form is information that is required by the title company before the final closing can happen. That includes knowing who has been chosen as the home owner’s insurance company. If you are having difficulty choosing one, perhaps your real estate agent can refer a few for you to call and check rates before you decide. Nonetheless, you will need to have this established before the closing so that your binder can be included in with the closing package.
Buyer’s will also be asked if they wish the Deed to be held as “joint tenants” or “tenants in common”. A quick way to differentiate between the two: if the buyers are spouses – for example – it is customary to choose “joint tenants”, that way if one of them passes away, the ownership transfers to the other surviving spouse. “Tenants in common” would be used if the buyers were business partners – for example – and if one passes, that person’s heirs/family could take over their share, versus all of it passing over to the other remaining names on the Deed.
As for the real estate agents, it is vital that we receive those questionnaires back also, as this ensures we have not only your most updated contact information so that we can keep them in the loop throughout the process, but it also ensures that the correct commission amounts get applied to the transaction so there are no unhappy people on closing day when the commission checks are handed out.
In a nutshell, the recurring theme here is “communication”. In order to ensure that the required information is transferred between parties for a smooth transaction and closing, it is vital that all of the information asked of you by the title company is given to them in a timely and accurate manner. And when in doubt, call them before just deciding not to return the form.
As always, Cumberland Title aims to make this as smooth and hassle free of a transaction as possible for all parties involved. If ever you have questions about the process itself or anything specifically on the questionnaire, please do not hesitate to reach out to us, matthew@cumberlandtitle.com or 207-899-4900.
In this episode of our free webinar, “Refinancing And Purchasing A Home In Maine”, we delve into the nitty gritty discussion of title insurance.
We tell you what it is, the different types offered, and why you need it, including examples of situations that have occurred where the homeowners were fortunate that they purchased title insurance to protect the most expensive investment hey may ever make.
Matthew also enlightens us as to what it’s like to be a homeowner in Africa where there is no such thing as Deeds or Title Insurance.
Don’t forget to send us your feedback and questions, as well as suggestions for topics you’d love to see in future episodes.
In our next episode, we open up the “mailbag” and answer your questions! You won’t want to miss it!
We’re recapping what we’ve learned so far in the past 3 episodes, as well as introducing a new topic.
The title company fees that show up on your closing statement are pretty substantial, but what exactly are they for? We break the charges down for you and explain them so that you understand exactly what you’re paying for.
This all leads up to what we’ll be discussing in our next episode, “What questions to ask when you’re shopping for a title company”. We’ll give you all the ammo you need to find the title company that will best serve your needs.
As always, if there is a particular topic that you would like to see covered, we’d love to hear from you and make that happen.
And don’t forget to subscribe to Cumberland Title’s YouTube page so all new episodes will show up in your inbox and you’ll never miss out on the latest scoop!