Jun 26, 2012 | Uncategorized
I have had a lot of questions recently regarding the topic of marketable vs. insurable title. They are both terms of art, in that they are unique terms to the legal and title industry. They are not easily defined with comparable examples.
When a title is marketable it means that the chain of ownership (title) to a particular piece of property is clear and free from defects. And as such, it can be marketed for sale without additional effort by the seller or potential buyer.
In contrast an insurable title does, or may have a known defect or defects in the chain of title. However, with an insurable title, a title insurance company has agreed in advance to provide insurance against the defects ever affecting the ownership or value of the property.
If a property does not have a current, valid title insurance policy and there is a defect in the chain of title, then the defect must be cured or repaired before a seller can convey marketable title. If there is a current policy, rather than curing or fixing the defect, which can be very expensive and time consuming, the title insurance company may elect to insure against any problem the defect may cause in the future. That is, the insurance company agrees to fix the problem only when – and IF – it ever becomes an immediate problem. Some defects in title may never become a problem or threaten the value or ownership of the property. Title insurance companies, like any insurance companies are in the business of risk management, and whenever possible would rather defer the risk then to pay to address/correct it.
One of the biggest problems with insurable title is that a buyer of a property accepting insurable title (rather than marketable title) is taking a risk of their own. It’s not that the defects may ever threaten the value or ownership of the property, but that upon resale of the property the next buyer may not be as willing to accept the insurable title and may demand a marketable title.
Be sure that you know the type of title the seller intends to convey before you sign a purchase contract.
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Jun 26, 2012 | Housing Analysis
Home resales slipped last month; a slight setback for the nation’s housing market’s recovery.
According to the National Association of REALTORS®, Existing Home Sales fell to 4.55 million units in May 2012 on a seasonally-adjusted annualized basis, representing a 2 percent drop from April.
An “existing home” is a home that’s been previously owned or occupied, and cannot be categorized as new construction.
Despite May’s retreat, however, as compared to last year at this time, Existing Home Sales by units are higher by 10 percent. In other words, like everything else in housing, the long-term statistical trend has been a positive one. (more…)
Jun 22, 2012 | Mortgage Rates
Mortgage rates have resumed their downward trend.
According to Freddie Mac’s weekly Primary Mortgage Market Survey, the national average 30-year fixed rate mortgage rate fell 5 basis points to 3.66% this week. The rate is available to “prime” borrowers who are willing to pay, on average, 0.7 discount points plus a full set of closing costs.
30-year fixed rate mortgage rates are down in seven of the last eight weeks but, depending where you live, the mortgage rates made available to you will vary. The Freddie Mac survey notes that mortgage rates vary by region.
For example, mortgage applicants in the West Region received the lowest rates from lenders, on average, but also paid the highest number of discount points. Discount points are a specific type of closing cost where (more…)
Jun 20, 2012 | Federal Reserve
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged within its current target range of 0.000-0.250 percent Wednesday.
For the fifth consecutive meeting, the Fed Funds Rate vote was nearly unanimous. Just one FOMC member, Richmond Federal Reserve President Jeffrey Lacker, dissented in the 9-1 vote.
The Fed Funds Rate has been near zero percent since December 2008.
In its press release, the Federal Reserve noted that the U.S. economy has been “expanding moderately” this year. Beyond the next few quarters, the Fed expects growth to “pick up very gradually”.
In addition, the Fed re-acknowledged (more…)
Jun 20, 2012 | Housing Analysis
Sometimes, the housing data headlines tell just half the tale. The stories on May’s Housing Starts figures are proving to be a terrific illustration.
Tuesday, the Census Bureau released its monthly Housing Starts report. A “housing start” is a home on which construction has started.
The report is separated by property type with a separate count for single family homes such as detached residences and town homes; for multiple-unit homes such as 2-unit, 3-unit and 4-unit structures; and, for buildings of 5-units of more such as new condominiums.
In May, Housing Starts fell 4.8 percent nationwide. This runs contrary to recent housing market statistics and home builder confidence data which both have suggested a recovery. (more…)
In contrast an insurable title does, or may have a known defect or defects in the chain of title. However, with an insurable title, a title insurance company has agreed in advance to provide insurance against the defects ever affecting the ownership or value of the property.