The Quill – April 2017

Quill Tip

Lien Waivers

We understand that Lien Waivers can be a little tricky these days.  What used to be fairly simple has become much, much more complicated.  It used to be that you had three options, Form 1, Form 2 or Form 3 (and Form 3 was rarely used).  Now we have Form 5, Form 6 and Form 7.  What happened to Form 4 you say?. . .we have no idea.

If a Lien Agent is appointed relative to the property, you can forget about Forms 1, 2 or 3.  When a Lien Agent is appointed, Form 5 comes into play.  Form 5 is signed by the owner of the property and only the owner of the property.  If there is not a Lien Agent appointed, you can forget about Form 5.

Now. . .here is the kicker. . .if you use a Form 5, you will have to also use a Form 6 or Form 7.  As we have already established, Form 5 is signed by the Owner.  Form 6 or Form 7 will have to be signed by the GC, any Design Professionals (such as architects) and any subcontractor who preserved its rights by filing a Notice of Potential Lien Claimant.  In other words, those subcontractors that posted to the LiensNC website.  Form 7 is a subordination, similar in many regards to the Form 3.  And since we established that Form 3 is rarely used, much the same can be said about Form 7.

So, and here is the main point of this month’s tip, if you have a Form 5 executed at closing, you will also need a Form 6 executed by the GC at a minimum and perhaps others, such as the Architect and any subs who preserved their lien rights.

Where in the World is the BT Koozie?

The Barrister’s Title koozie popped up on Ocean Isle Beach for spring break with Summer Hogan, BT’s sales coordinator.

Like our Facebook page to see other locations the BT koozie has made an appearance

Riddle

A man rode into town on Tuesday, and left two days later on Tuesday. How so?

Send your guesses to Summer by clicking here.

Good luck!

This was last month’s riddle and answer:

Why can’t you iron a four-leaf clover? “YOU SHOULDN’T PRESS YOUR LUCK”

Industry Updates

Second Mortgage Lien Payoffs: HAMP and HARP

For this month’s article, I am borrowing extensively, with permission, from an Underwriting Bulletin sent to us by North American Title (NATIC).  The Bulletin concerns certain liens that may appear on title that may be somewhat curious.  If you quiz the seller or borrower about the lien, they may be clueless about it.  Regrettably, I think there is a good reason for that, which the article hints at and I will discuss further below.  Here’s the bulletin, virtually unchanged by me, followed by a personal anecdote:

“Many U.S. homeowners sought and obtained mortgage debt relief during the “Great Recession” from a variety of federal programs, including Home Affordable Modification Program (HAMP) or Home Affordable Refinance Program (HARP), in order to prevent home loss due to foreclosure. The relief provided through HAMP and HARP often required the affected homeowner to execute a subordinate mortgage (Relief Mortgage) in favor of the debt relief providers, for example, HUD, to secure repayment of the relief provided at a future date. Many of these homeowners may not be fully aware of the impact of the relief provided (emphasis supplied by me) and the legal affect of the Relief Mortgage they executed earlier. Now, many of these homeowners are positioned to either refinance or sell their homes. As part of the sale or refinance of these homes, settlement agents must obtain payoff information for both the original mortgage as well as the Relief Mortgage and follow through after the closing to ensure that both are satisfied and discharged of record.

Several national underwriters, including NATIC, are experiencing claims due to the failure of settlement agents to satisfy and discharge both mortgage liens on the properties being refinanced or sold. In these scenarios, the title agent may have mistakenly concluded that the payoff provided by the first mortgage holder or its servicer included amounts due on the Relief Mortgage. It appears that many of the selling homeowners actually believed they were not obligated to make payments under the Relief Mortgage (emphasis supplied by me) and advised the title agent not to confirm payoff status with that second position lender or its servicer. Some title agents may have misconstrued the mortgage instruments and reached a mistaken conclusion that the mortgage to be satisfied was a reverse mortgage (a/k/a HECM or Home Equity Conversion Mortgage) and that no separate pay off information was necessary in order to secure release of the second mortgage.

Settlement agents who identify a Relief Mortgage in a title search or commitment must obtain a separate pay-off letter for the Relief Mortgage either from the lender or its servicer prior to the closing, and include a separate disbursement in full satisfaction of the Relief Mortgage on the closing statement. Very often, the Relief Mortgage will show HUD as the lender, and will involve NOVAD Management Consulting (NOVAD) as the  servicer. However, it is possible for a Relief Mortgage to be administered by the senior lender, or its servicer. If that is the case, the title agent must still obtain 2 distinct payoffs – one for the senior mortgage and one for the Relief Mortgage. You may need to send the senior lender or its servicer a description of both mortgages in order to secure a valid payoff and release. This is the only way to be certain you are securing both loan payoffs in advance of the closing.”

Click HERE to finish reading The Quill Article.

Then & Now

Holly Steiner – Then & Now

1. What did you want to be when you grew up?
I wanted to be a teacher – my sister and I would play “teacher and student”.  Since she was always the “teacher”, I wanted my own chance.

2. Who was your favorite super hero?
I never got into the whole superhero thing!  I just played with my cars and trucks.  🙂

3. What is your favorite childhood memory? 
Playing soccer at Disney Wide World of Sports Center against teams from across the country.

4. What was one thing you did that drove your parents crazy? 
Not very much but, I was a little dare devil.  My family and I were on vacation, driving through Yellowstone National Park and came across a pack of wild buffalo.  We were about 20 feet from them and I opened the van door.  All I wanted to do was pet them!

5. Did you have a childhood nickname?
Nope, but one of my friends would call me “Holly Berry”.

Click HERE to meet the rest of the BT Family!

Barrister’s Title All Star

Fritz Birkmaier

Meet Fritz Birkmaier, our abstractor of the month! The BT customer care team always raves about what a pleasure it is to work with Fritz. He takes his time to tell us all the information we need and is incredibly knowledgeable. Thank you Fritz for all that you do and congratulations on being one of our All Star!