Posted by CommLoanPA on 3/12/09 9:32pm
Msg #280529

Checking My Understanding

Back in my banking days I was taught that the Title Insurance Issuer's main function was to "insure" clear title to the buyer, and if a loan was involved, to the Lender. The title company was concerned if the current or previous owners had unpaid taxes, liens, or if there was a cloud on the title because of errors in prior deeds. The Title Insurance Issuer (the insurer) is interested only in the mortgage document, (including miscellaneous riders for adj rate loans, condominimiums, etc). It has to be properly executed, recordable, and contain a clear legal description, tax parcel #, etc. The Title Insurance Issuer is licensed by the Insurance Department (at least in PA) and really has no involvement as far as the other transaction docs are concerned...whether lender docs or broker docs. I'm confused because of the NR forum references to the *#*#@@ Title Company. Should our expletive deleteds be aimed at "Settlement Companies" or "Closing Companies" rather than "Title Companies?"

Reply by desktopfull on 3/12/09 9:46pm
Msg #280532

Here in Florida, the title company is the settlement company, they disburse the escrowed funds from the lender and make the arrangements to close the loan.

Reply by ReneeK_MI on 3/13/09 6:34am
Msg #280551

not exactly wrong ...not exactly right, either.

You're right in that we often say "Title Company" when we really mean the title agent, who is usually also the settlement agent. Technically speaking, the "Title Insurance Company" is the insuring underwriter of the policies issued by their agent. Then there are U/W companies who also act as their own 'agent', issuing their own policies (like First Am) AND acting as Settlement Agents.

The Settlement Agent is the disbursing party - whomever is receiving and doling out the funds according to the Settlement Statement/Hud. Again, this is usually the same title agent issuing the title insurance policy/ies.

However, one important aspect of the Settlement Agent's involvement is providing insured closing/settlement services - giving them a HUGE involvement in the transaction documents and transaction processes. Remember, the Closing Instructions (lender to agent) and the CPL's are contracts by which the Settlement Agent must adhere to & satisfy.

This is WHY closing packages are usually routed from lender TO agent, then agent TO us (even if it's just the link/password, etc). This is why pkgs usually go BACK TO agent, then from them TO lender, so agent can have that assurance of the processes being compliant.

Regardless - whatever we call them on the forums, we pretty much know who is being referenced. Title "company" is just a general label used.

Reply by CommLoanPA on 3/13/09 10:58am
Msg #280592

Thanks for the clarification. You're a good teacher. n/m

Reply by sue_pa on 3/14/09 12:53pm
Msg #280725

As others have said, when we say "title companies" we mean settlement agents.

The title company is the equivalent of State Farm. They are the actual insurer. The settlement agent is the equivalent of Ivan Insurance Agent, the guy with the office on your local corner.