The question of property title searches is something that
comes up on every real estate transaction. It used to be that, on a closing,
the real estate lawyer would perform a full property title search which would
include validating who the homeowners were and uncovering any encumbrances
against the property. These days, the real estate lawyer will often review the
property’s Parcel Register, which contains this information, and require the
buyer to purchase title insurance to protect them from any future issues that
could come up as it relates to a property’s title.
Applications typically come to lenders one of three ways:
the client applies directly because the lender has a retail presence, through a
mortgage broker or agent, or through a real estate broker or agent. While some
mortgage and real estate brokers and agents do the due diligence to validate
homeowner information, others do not.
In all cases, while the client or broker/agent may tell the
lender that the client owns the property, there could be other people on title
or some other information that may change the lender’s decision to lend.
In the extreme example, if this non- or incorrect disclosure
was intentional, this is a form of mortgage fraud. If it was an innocent
oversight, this may simply mean that more deals will be canceled at some point
in the underwriting process once it is identified that the home ownership
information is not what was disclosed on the application.
Some lenders don’t take the steps in the underwriting
process to validate homeowner information and leave it up to the real estate
lawyer to do so. This is usually because lenders don’t realize they can do it
themselves, or think that to do it they need a property title search which is
perceived by some to be costly. This can then lead to increased bad debt as a
result of fraud deals that leak through, reduced closure rates and an increased
cost to underwrite applications.
It saves lenders both directly financially and indirectly
financially to give their underwriting teams the capability to validate home
ownership information. So the question is: do you need a real estate lawyer or
a property title search to validate home ownership information? The answer is
no.
There are real estate tools available to lenders that enable
them to validate homeowner information. Doing so early in the transaction will
mean higher closure rates, happier partners (lawyers, appraisals etc…), reduced
cost of underwriting and more…
Thanks to technology, you no longer need to have a property
title search performed to validate homeowner information. Taking advantage of
technology that can enable you to be more agile will make you more competitive
and put you in a position to book more business and better business!
For more information about how you can validate homeowner information please visit www.purview.ca/lenders or call 1-855-787-8439. If you are already a Purview for Lenders client and are interested in learning more about how to validate homeowner information please click here to watch a brief training video.
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