MORTGAGE BROKERS SHOULD HAVE THE BORROWERS REVIEW THE PRELIMINARY TITLE REPORTS CAREFULLY
If the borrower-buyer is buying into a home that is in a common interest development or planned unit development it should appear on the preliminary title report. The buyer should be cautioned then to get a copy of the covenants, conditions and restrictions to review. These clearly indicate a home owners association and the restrictions that the buyer would have to go through to make any additions, changes or improvements. Many HOA’s restrict the type of improvements, the color schemes and the styles. Check out the easements, not just the public ones for utilities but others that a neighbor might have. Check to make certain all liens are covered for payments that are listed in the report.
One very important thing−the preliminary title report does not bind the title company. If there is an error in it, the only remedy is usually refund of the cost of the preliminary title report. Remind the homeowner to be that when the actual title report arrives it should be checked to be certain there are not additions or deletions from the preliminary report. There have been cases where the title company missed a tax lien and the homeowner had to go through the aggravation of having to get the title company to remove it.
One last warning: Some homeowners are told that they can transfer the property to their revocable trust or any other entity after buying it. This raises two very serious potential problems:
- The transfer (even though to a revocable trust) is a voluntary transfer and can negate the title policy so that the homeowner is no longer covered. So to cure this have the homeowner checks with the title company to be sure there is still coverage and obtain the response in writing or obtain a 107.9 endorsement to add the trust to the title policy.
- The homeowner’s insurance policy is in the name of the homeowner to protect against liability and damages if the home is destroyed for some reason. When transferred to a revocable trust first check with the insurance company to see if there is still coverage. If not then get an endorsement to add the trust to the policy so there is still coverage. Otherwise the homeowner may wind up with “forced insurance” which is very very expensive or the lender calling in the note for making the transfer without consent of the lender. If a transfer is made to an entity that is not a living trust, this becomes even more imperative and could lead to litigation because of no coverage. This would occur if the home is partially or totally destroyed for some reason (e.g. tornado, earthquake, hurricane, fire, etc.) or the buyer is sued because someone suffers an injury on the property and because title is transferred without the homeowner’s policy being updated, the insurance he has could very likely deny coverage.
Look before you leap. Or contact competent legal counsel to check before any transfer is made, not after.
ARIZONA AG FILES TWO LAWSUITS AGAINST LOAN MOD COMPANIES ALLEGING COLLECTING ADVANCE FEES
On Aug. 15, Arizona Attorney General Tom Horne filed two suits against mortgage modification companies. One names Making All Homes Affordable LLC and its owner Albert Figueroa; the other is against La Paz Source LLC, La Placita Multi Services LLC, Maria Beltran, her husband Francisco Ramos and Beltran’s partner in La Placita, Arturo Gomez Leon.
The lawsuit against MAHA alleges that MAHA and Figueroa violated the Consumer Fraud Act by misrepresenting the nature and value of the MAHA program, which MAHA advertises exclusively in Spanish language media and sells in face-to-face meetings in MAHA’ office and at several “retail outlets” in Phoenix and Tucson, including at the office of La Placita.
The lawsuit alleges that MAHA salespersons tell potential clients that MAHA can help them obtain specific, favorable mortgage modifications, including lower interest rates and principal reductions. After homeowners pay MAHA nearly $1,900, homeowners discover that the MAHA program is nothing more than a do-it-yourself program, allowing them access to various standardized forms and information on MAHA’s website; forms and information that are available for free on government websites, such as www.makinghomeaffordable.gov. The lawsuit also alleges that MAHA uses dozens of fake consumer testimonials on its website and that MAHA charges its clients a fake sales tax of 9.3%.
Consumers have reported that La Paz Source promised to stop the foreclosure process, obtain loan modifications for its consumers and communicate with lenders/servicers on behalf of its clients. As La Paz Source, the defendants allegedly claimed they were authorized to conduct such business in Arizona when they were not duly licensed to conduct their business in Arizona. Oftentimes, La Paz Source charged very large upfront fees, which were prohibited by state and federal law, and then failed to provide the mortgage loan modification services required to earn those fees. In some cases, the clients lost their homes in the process.
In November of 2011, Defendants Beltran and Ramos dissolved La Paz Source, LLC. The same day that the Defendants dissolved La Paz, Beltran and Arturo Gomez Leon started La Placita which also held itself out as being a provider of mortgage loan modification services to Arizona consumers.
The defendants deceptively and willfully targeted the Spanish-speaking community to obtain a benefit through the exploitation of the consumers’ Spanish/English language barrier. The defendants provide contracts written only in English. Many times, the defendants verbally explain terms of the agreement to consumers, in Spanish, that are in direct contradiction to the written provisions of the contract provided in English.
The La Paz and La Placita defendants now claim to have changed their business model to that of a retail outlet for MAHA. (azagpr881513)