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Vincent J. Gallo, Esq.: In Defense of Title Closers.

posted Jun 17, 2015, 9:42 AM by Pete Weinman   [ updated Jun 17, 2015, 9:43 AM ]
June 16, 2015 

The new target is the Title Closer.  I will limit my discussion to only one aspect of the tasks undertaken by the Title Closer at a closing.  A Title Closer is entrusted with the task of obtaining mortgage payoff letter, and thereupon ensuring the accuracy of the mortgage payoff amount, calculating enough interest to ensure that the payoff amount is sufficient enough to satisfy the mortgage in full, establishing the last real estate taxes that were paid, establishing the last insurance premium that was paid, determining the amount still held in escrow that is to be refunded to the mortgagor once the mortgage is paid in full, and ensuring that these escrow funds are appropriately transmitted to the mortgagor since these monies belong to the mortgagor. The Title Closer is further entrusted with ensuring that the existing mortgage that is a cloud on title and of record with the Office of the County Clerk and/or Register is fully discharged of record, either directly with the Recorder’s Office or by transmittal to the Title Agency for recordation within the time frame established by law. The Title Closer is further entrusted with ensuring that the Satisfaction Piece is properly drafted and in precise form accurate and precise enough to ensure that it mirrors the mortgage that is of record to ensure that the mortgage will be fully discharged of record with no loose ends, at the risk of the mortgage remaining open of record and continuing to appear in that mortgagor’s credit report, to say the least.

At the closing, the Title Closer is entrusted with transmitting by over-night delivery the payment in full satisfactory to satisfy the mortgage in full, at the risk to the Title Closer of these funds being insufficient to satisfy the mortgage, in full, at the further risk of the Lender returning these funds back to the Title Agency as being insufficient to satisfy the mortgage, with the clock continuing to run on a per diem basis, at the risk to the Title Closer in having to go in pocket to make up the difference, so as to not cause the mortgage to satisfied late, causing a late fee to be imposed as against the mortgagor, as well as a “black mark” on the mortgagor’s credit report.

For this task, the Title Closer is paid what is referred to as a “pick up fee”.  This is a fee paid to the Title Closer, not for the ministerial task of placing the check in an over-night envelope, but instead to serve as a “quasi-insurer” to ensure that all of the above tasks are fully executed on, to full completion, at the risk of potentially costing the Title Closer a small fortune for failing to execute on all, and I do mean ALL, of these above tasks.

For this, in an effort to save a Seller the pickup fee charge of 275.00, more or less, the Department of Financial Services wants to eliminate this charge, thereby preventing a Seller who must pay off his or her mortgage at a closing from having to pay this charge.

That is admirable, if it did not, however, leave a void.  So who then will be entrusted with undertaking the entire above-described task through completion? Say, for argument’s sake, the Seller’s attorney is then entrusted with undertaking this task, and all of the risks attendant thereto. Will not the Seller’s attorney charge as an additional legal fee at least this amount that is the “going rate” charged by Title Closers? Attorneys, no doubt, are not expected to take on this additional risky task for free. So where is the savings? Add to that, what if the Seller’s attorney, in tribute to Nancy Reagan decides to “just say no”? Then who will take on this task? Again, the changes that are being advocated are commendable, except that these changes are being proposed with no formidable substituted procedure.  So while it may be easy to issue an edict as to what cannot be done, now the void still needs to be filled, and no solutions have been proposed as a reasonable substitute.

In an effort to find a substitute, perhaps tearing a page out of the Co-Op closing handbook, what if the Title Agency, in an effort to ensure that the open mortgage is satisfied, mimics the procedures in place for Co-Op closings, which is to require that the mortgage Lender whose mortgage is being satisfied physically requires that a representative of the payoff Lender personally attend the closing, with an original Satisfaction Piece in hand, in an exchange for a certified check or bank check for the entire mortgage payoff? That appears to be a formidable solution; except however, the “going rate” for such an attendee is in the area of $350.00, so where is the savings? Add to that the fact that if the closing extends beyond one hour, the attendee from the payoff Lender normally imposes a surcharge! Why not? He or she deserves to be paid for his or her time. What if the attendee, who is now another indispensable party to the closing, is running late, and the bank attorney seeks to impose an “over-time” charge? Add to that the fact that these additional charges, under the current and soon to be “new rules” will necessarily change the final figures on the Seller’s side of the HUD-1, and since these figures will need to be precise and exact, this will then necessarily cause the closing to have to be adjourned. That ought to make everyone happy. All of this seems to create a problem where, respectfully, there isn’t one. So while it may appear simple to issue an edict as to what cannot be done, that can only work if a formidable and workable alternative is clearly put out there that effectively and seamlessly fills the void.  Otherwise, as the adage so reads, “if it ain’t broke, don’t fix it”.