Due Feb 7 – assingment 7: 220

  

the paper written is attached BUT… needs additional information as it is not long enough. 

This request is that you bring it to at least 3 full pages (adding at least ½ of a page) 

It MUST be minimum 3 FULL pages a

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The assignment description was: 

1. What is the importance of Qualifying a Title as part of the loan closing process?
 

2. What is Title Insurance and its role in real estate finance?
 

3. What is the Torrens System?
 

4. Find an internet example of a real-world title problem that impacted real estate finance. Discuss

Qualifying Title

Qualifying a title is a process used by lenders in real estate financing to determine the lien and advance the loan facility to the borrower by examining the public records and the legal history of the property (Karunaratne & Karunaratne, 2018). Equally, the lender depends on this process to be assured that the property which is offered as collateral is actually owned by the borrower. Therefore, qualifying a title is vital to the lender before advancing the loan to the borrower in the purchase of a house. This is for the reason that the lender needs to be sure that the title is insurable and marketable. Based on the insurability of the title, the lender uses three important methods to get the assurance that there are no other claims on the title. These methods include title insurance, abstract and opinion and the Torrens system. Abstractors conduct searches using public records to determine the ownership of the ownership of the property. Elsewhere, title insurance is used to guarantee the quality of the title until the date indicated in the title. On the other hand, using the Torrens system, the property owner is able to receive certification bearing the name of the state as the guarantor in the event that claims arise.

Before closing the loan process, it is important to qualify a title for various reasons. The lenders want to be sure that they are getting a clean deal; therefore, qualifying a title protects them from other financial obligation in the event that the title has problems or other claims arise on it. Equally important, it enables both the lender and the buyer of the property to know the insurability as well as the marketability of the property in question. Elsewhere, it enables both the lender and the buyer to know the actual value of the property. Moreover, qualifying the title makes it easier to identify some defects that could break the deal of purchasing the property. Furthermore, qualifying a title is important because in the event that a title has defects, there is a likelihood that the borrower would default or become less concerned about the loan.

Title insurance is a policy which covers losses of ownership interest in a property caused by defects in the title (Eaton & Gao, 2017). This is a requirement more especially if the property in question is under a mortgage. There are various types of title insurance; one of them is the lender’ title insurance that is catered for by the borrower but protects the interest of the lender. Title insurance plays a vital role in real estate financing in the sense that it protects the lenders in the event that the title has defects or other claims arising from it. Equally, it acts as a guarantee that the owner of the house has the title to the property that is on sale. Moreover, title insurance protects the lenders and the buyers against errors and omissions in the title as well as protecting them against forgeries perpetrated by the owner.

Torrens system is the fastest and easiest way of searching for the ownership of the title (Orth, 2017). When the house or landowner uses the Torrens system, he or she receives Torrens certifications from the States office with a guarantee that the State will be responsible in the event that other claims arise on the title. The Torrens system requires the property owner to go through the legal procedure whereby a sitting judge examines his or her title and issue a declaration that the names contained in the title document are the actual names of the bearer of the title and owner of the property.

An example of title problem is the sub-prime mortgage. The mortgage lenders issued loans to homeowners following the homeownership plan without proper consideration of the titles and some who did not qualify for the loans were able to acquire the mortgages to be able to finance the purchase of houses in the United States. In some cases, some titles were forged by those who were in need of acquiring houses. When the housing industry collapsed, the lenders had difficulties in recovering their money because some who had forged their titles could not show up. Equally, some defaulted and the lenders could not recover their money because the prices in the real estate had collapsed significantly.

In summary, qualifying a title is a process used by lenders in real estate financing to determine the lien and advance the loan facility to the borrower by examining the public records and the legal history of the property. Qualifying a title is important because lenders want to be sure that they are getting a clean deal; therefore, qualifying a title protects them from other financial obligation in the event that the title has problems or other claims arise on it. Title insurance is a policy which covers losses of ownership interest in a property caused by defects in the title. Torrens system is the fastest and easiest way of searching for the ownership of the title. When the house or landowner uses the Torrens system, he or she receives Torrens certifications from the States office with a guarantee that the State will be responsible in the event that other claims arise on the title.

Reference

Eaton, D., & Gao, X. (2017). A Study of Texas Commercial Title Insurance Prices.

Karunaratne, V. P., & Karunaratne, V. P. (2018). The current behavioural patterns witnessed by the customers/clients/players in the personal real estate market in Sri Lanka. International Journal of Social Economics, 45(1), 223-228.

Orth, J. V. (2017). Torrens Title in North Carolina-Maybe a Hundred Years Is Long Enough. Campbell L. Rev., 39, 271.