What is an Underwriter?
A title insurer is often referred to as an underwriter because they “underwrite” the risk associated with hidden defects covered by the title insurance policy. Some underwriters in the United States have been issuing title insurance since the last century, providing thousands of policies per day. They are required by law to maintain financial reserves guaranteed to be available in the event of a covered loss under a policy of title insurance. A portion of every premium dollar is deposited to that reserve account as determined by state regulation. Each underwriter operates in multiple states and territories and is subject to the oversight of the insurance regulating bodies in each state or territory. While the title insurance policy is the product of the underwriter, their multi-state activities make it difficult to be an expert on every local nuance. For that reason, most title policies are issued on behalf of the underwriter by a local agent.
Agents are highly skilled in researching and evaluating real estate records in their area of operation. Because they are community members and neighbors, they can be tremendously helpful to you. The agents review all relevant records for matters affecting title covered by the policy. The effect of those items is analyzed and a report or commitment for title insurance is written. The report or commitment is a statement of the company’s willingness to insure ownership of the record title, and of the outstanding liens, encumbrances and other matters affecting that title. The title insurance policy, when issued, will protect your interest in the property for as long as you own it (or have an interest in it). Each policy is a contract of “indemnity,” with the underwriter agreeing to reimburse you for actual financial losses sustained under its terms.


What is Escrow?
An escrow, sometimes referred to as a closing, is an arrangement in which an impartial third party, called an escrow holder, holds legal documents and funds on behalf of a buyer and seller and/or lender. The funds are distributed and documents are recorded only in accordance with the written instructions received from the parties, thus consummating the transaction.
People buying and selling real estate often open an escrow for their protection and convenience. The buyer can instruct the escrow holder to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The seller can instruct the escrow holder to retain possession of the deed for the buyer until the seller's requirements, including receipt of the purchase price, are met. Lenders regularly open an escrow to ensure that loan proceeds are not disbursed until the lender has a valid lien recorded against the borrower's property to secure their loan. All parties rely on the escrow holder to faithfully carry out their mutually consistent instructions relating to the transaction, or to advise them if any of the instructions are contradictory or cannot be completed.
Once all the terms and conditions of the written instructions of all parties have been fulfilled, and all closing conditions satisfied, the escrow is closed and the transfer of property and money is accomplished.


What is Title?
Different from other types of insurance that protect you against losses that may happen in the future, title insurance protects you, the insured, from matters or faults that occurred in the past that may affect your property.
Close scrutiny by the title insurer of property related recorded documents aids in the elimination of many possible hidden risks that can undermine the validity of title ownership. While the possibility of unidentified risks still exist after a transfer of title, the purchase of a title insurance policy protects the lender and buyer from invalid claims made against the title of a property, such as encumbrances and liens.


What is a Long Term Escrow?
A long term escrow is an arrangement to have a neutral third party service the contract between a buyer and seller. In doing so, the long term escrow company handles the details, such as retaining the original documents for safekeeping; accepting and distributing funds; calculating principal and interest; and retaining reserves for taxes and insurance. In addition, Sandpoint Title’s Long Term Escrow department provides appropriate parties with year-end tax statements and files 1098s and 1099s with the IRS as required.


What is the difference between a Warranty Deed versus a Quit Claim Deed?
A Warranty Deed contains guarantees or assurances by the grantor (seller) that the deed conveys good and unencumbered title. These guarantees are known as covenants of title. These covenants may vary somewhat in their scope, depending on local practice, but the covenants typically warrant:

  1. Covenant of seisin (The grantor has good title to the land being conveyed).
  2. Covenant against encumbrances (That there are no encumbrances on the land except as stated in the deed).
  3. Covenant for quiet enjoyment (That the grantee (buyer), will not be disturbed or evicted by a person having a better or superior title or lien).

A Quit Claim Deed purports to convey only the grantor’s current interest in the land (if any), rather than the land itself. Since this type of deed’s intent is to convey any interest the grantor has at present, its issuance excludes any implication that the grantor has good title or any title at all. A Quit Claim Deed does not obligate the grantor. If the grantor acquires title after executing the deed, they may retain such interest. If the grantor has no interest, none will be conveyed. If the grantor in a Quit Claim Deed has complete ownership in the land at the time of executing the deed, the deed transfers that ownership to the grantee. In essence, a person using a Quit Claim Deed is “quitting his claim” on a property.


What is the difference between a Mortgage and a Deed of Trust?
The mortgage is, in form, a conveyance of the land by the borrower to the lender, followed by description of the debt and includes a provision or clause to the effect that the mortgage shall be void on full payment of the debt. A mortgage involves only two parties, the borrower and the lender.
In the deed of trust, the borrower conveys the land not to the lender (beneficiary), but to the trustee, in trust for the benefit of the holder of the promissory note that represents the debt. The deed of trust has certain advantages: the crucial one being that in a number of states it can be foreclosed by a trustee’s sale under the power-of-sale clause without any court proceedings.


Do I get the keys to my new house when I come in to sign my papers?
Typically the process of going to the title company to sign documents (the signing) is thought of by the parties involved as the ‘closing’ and new buyers often anticipate getting the keys to their new home at that time. Although the signing is a very important part of the closing process, in reality, the transaction does not ‘close’ until the funds are provided to the title company (either with cash from the buyer or loan proceeds from the borrower’s new loan) and the deed to transfer title is recorded at the county courthouse. It is not unusual for this to occur a day or a few days after signing.


How does the Foreclosure process work? What is the difference between Judicial and Non-Judicial foreclosure?
A mortgage foreclosure is enforced in accordance to a court supervised foreclosure process, while a deed of trust foreclosure gives the lender the option to bypass the court system altogether by following the procedures outlined in the deed of trust and applicable state laws. This is known as a non-judicial foreclosure or trustee’s sale. If the trustee conducts a foreclosure sale, title is conveyed from the trustee to the new owner or, if there are no bidders at the trustee sale, the property reverts back to the beneficiary (lender). Title is transferred from the trustee to the new owner or lender using a Trustee’s Deed.


Judicial Foreclosure
This process requires the lender to file a lawsuit in order to obtain a judgment. A judicial foreclosure provides a “right of redemption” to the borrower even after the property is sold at auction. This allows the borrower to repay the lender after the foreclosure sale (within a certain time frame), which varies by state, and reacquire title to the property.


Non-Judicial Foreclosure
In the non-judicial procedure the lender issues proper notices and follows certain rules, and then if the borrower doesn’t bring the loan current, the property goes to a trustee’s sale. Unlike a judicial foreclosure, once the property is sold the borrowers have no right of redemption.
While the lender and/or state law will ultimately determine which security instrument is used to secure a loan, it is important for investors to understand the differences because it will impact the cost and duration of a foreclosure if the borrower does not repay the debt.

If I wanted to bid on a property at a Trustees Sale, do I have to have money in hand to bid?
Yes, certified funds above credit bid amount and up to the max you are willing to pay.


What is a REO?
The technical definition of this acronym is “Real Estate Owned”. It includes any real estate inventory that is held by any lender, after the foreclosure process is complete. In order to be a true REO, the vesting deed into the lender’s name has been recorded. The lender may be a large bank, mortgage lender, or mortgage insurance company, but it may also be a smaller investor as well. As long as the original owner is still in title to the property it is NOT a true REO. This situation is sometimes confused with short sale transactions, in that a short sale is NOT a REO, because the lender is not in title on the property.


How quickly can my REO transaction close?
There are some misconceptions that the process of purchasing a REO property takes longer, but in reality the time frame is very similar to that of purchasing a non-REO property. A REO closing can happen in as short a time as 2-3 working days assuming all the title work is clear, and if a new loan is involved, the loan package having already been received. Normally, the preliminary title work and title clearance for a REO property has been completed prior to a buyer going under contract. Once the contract is received, the deed can be ordered from the seller. In most cases, we receive that deed back in 1 or 2 days. Again, this would be if all title clearance issues have been resolved PRIOR to the property going under contract. There are times when the sellers enter into a contract with a buyer before all title issues have been resolved. In those cases, the closing cannot happen until the title issues are cleared. If a new loan is involved with a REO purchase the time frame to close would be consistent with that of a non-REO property, which requires leaving adequate time for the loan process to be completed before closing.


What is a Short Sale and how does it work?
By definition, a short sale means that the note holder is getting ‘shorted’ in funds due to them. In today’s market, many lenders are in a situation where the loan they originated in the past few years has a higher balance than the property is currently worth. When a homeowner wants or needs to sell the property, the lender agrees to accept a payoff amount that is “short” of the full funds owed to them. While the actual closing on a short sale transaction is the same as any normal sale transaction, the process of getting the lender’s approval can be quite extensive. Remember however, the actual owner of the property is still the seller, the lender is simply agreeing to accept less money than they are owed to pay off the loan. After providing all the requested documentation to the lender, they will review and agree to an amount that they will accept as their payoff. As part of that process, they have reviewed the estimated closing documents and approved those as well.  If there are any last minute changes to those documents or figures, that lender must re-approve before the sale can proceed. This approval process can take 3 weeks to 3 months or more, depending on the individual lender. The key to a successful short sale closing is patience!