Posting for

Wednesday, September 9, 1998

by: Bert Rush

brush@firstam.com

RELEASES TO COME/CREDIT LINES/ESCROW AND CLOSING

Following our postings on this subject over the past few weeks, David Dickson (Memphis) sent in copies of docs involved in one of his pending claims. Get this:

A First American agent in eastern Tennessee handled a refinancing in which they were to pay off and obtain releases for two mortgages with related lenders (sub and parent). The second mortgage was a credit line.

The agent received from the existing lender a form "Home Equity Line of Credit Termination Request" for the borrowers' signatures. At closing the agent had the borrowers sign the form and, as I understand it, it was transmitted to the paid-off lender.

Problem is no one completed the termination request form, by filling in Account Name and Account Number information. Now the paid-off lender is threatening to foreclose the paid-off mortgage--which the borrowers have apparently maxed out again--and we'll be forced to argue that the incomplete form shoulda been good enough.

To view a copy of the form in question, just click on the locator below--I apologize for the copy quality (it's about as good as came to me), but it's easier to read (at least for me) when printed.

Another story you may want to tell in upcoming training meetings.

On another note, we discussed the widespread problem of unreleased credit lines at our weekly Staff Meeting yesterday. Park Kennedy believes the problem is serious enough that we should go to senior management of the lenders involved and tell them we're concerned. This may make some loan officers, and others, mad,but in the long run it's probably the best thing to do.

If a major lender ends up with major losses--or a major problem with regulators--because of gonzo lending practices--we should not be surprised to be drawn in (as title insurer for refinancing lenders) no matter how good our escrow and closing practices have been. A "potential" customer relations nightmare.

Stay tuned.

And on yet another note, this is our first attempt to send a posting on Novell GroupWise. If anything looks different (ie., lines "wrap" or contain encrypted codes, etc.) please let me know.

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