Home Buying in Phoenix>Question Details

Denise, Home Buyer in Phoenix, AZ

If you are buying a Fannie Mae Property do you have to use the Fannie Mae selected Title company?

Asked by Denise, Phoenix, AZ Mon Feb 2, 2009

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It's not illegal for the bank to counter with their choice of title company. It's also not illegal for the bank to reject your offer because you didn't agree to the terms they wanted, whatever they may be.

What Lisa is referring to is the actual Title Insurance policy - if you're paying for the policy, you have the right to purchase it from whatever Title Insurer you choose even if it's different from the Title/Escrow company handling the details of the transaction. The purchase can be made separate from the rest of the escrow - it's a rather uncommon situation, but it's possible and has happened in the past.
2 votes Thank Flag Link Tue Feb 3, 2009
Denise,

Technically, as a buyer, you have the right to choose your own title company. But the seller in an REO always request (or should I say demand) that you use their title company. They can not force you to use their title company, but if you specify your own title company in the purchase contract most probably they will not accept your offer.

Unfortuanately if you want to buy an REO in AZ you have to play by their rules, and "forfeit" some of the rights you normally have as a buyer - including the fact that you need to use their title company.

Good luck!

Carlos
ABR - Accredited Buyer Representative
.
1 vote Thank Flag Link Tue Feb 3, 2009
Hi Denise,

The buyer in AZ has the legal right to use whatever title/escrow company they want to. However, if the buyer does not use the seller's preferred title company, the seller will probably not pay their portion of the title/escrow fees. So, your closing costs could increase. Also, if there are multiple offers, the seller may choose the buyer who is using their title company. Also, the seller's preferred title company is more familiar with the seller's required addendums/forms and possibly will have an easier time connecting with the seller.

Regardless of anything else, the buyer does have the legal right in AZ to choose their own title company, but you may want to use the seller's choice b/c of possible complications that may come up if you don't.

---
PAUL WELDEN
Buyer's Agent
HomeSmart
1 vote Thank Flag Link Tue Feb 3, 2009
Denise,

I've actually made offers on Fannie Mae REOs, and I ALWAYS use my own title company. Most banks will balk initially at the idea of you using another title company--as long as they have to pay. Many of them are open to it if you tell them you're paying for that expense.

If I were you, I'd insist on using my own title company, because problems occasionally arise when you don't. For example, Countrywide (and a few other lenders [which I don't remember at the moment]) specifies in the verbiage of its addendum that its title company can give the buyer a title abstract in lieu of a clean and free title. Although the 2 are closely related, they're not exactly the same thing, and there are legal implications for accepting one versus the other. (You'll need to check with a title attorney if you want to know what the difference is between the 2.)

Also, many in-house title companies (for the banks) are just as overloaded with cases as the loss mitigation department (the one's who handle the [pre-]forclosures and REOs), so you don't want your closing to contain the OOPS (due to someone's rushing around). After all, the closing agent/attorney is supposed to catch things that the lender, your realtor, you, and any other involved parties missed--before you close.

An improper or sloppy closing could end up costing you thousands of dollars down the line. (I learned that from one of my mentors [who happens to be a title attorney].)

I'll also include a link for a private lender who insists on using a title company from its approved list. I've also worked with others that have similar requirements.
1 vote Thank Flag Link Mon Feb 2, 2009
Denise, Have you checked thru the Fannie Mae site? It has a lot of info on the process ect..plus being able to view the properties..

http://reosearch.fanniemae.com/reosearch/

Good luck, Dunes
1 vote Thank Flag Link Mon Feb 2, 2009
Absolutely not !!! The Buyer chooses their Title Company. It is illegal for the Seller to force you to use their Title Company. If you choose to go with theirs though, make sure you check their fees against the one that you wanted to go with. I am hearing that some of them are charging ridiculous fees. Good Luck !!!
0 votes Thank Flag Link Tue Feb 3, 2009
Denise,

If you read your purchase contract, in the state of Arizona, seller choses title company.
but that doesn't mean you can't try to get your own title, that you want to work with.
I agree with Jonathan and Tobie.
0 votes Thank Flag Link Tue Feb 3, 2009
Hi Denise,
Although DP2 gives good advice, Always go through your contracts and pre audits before signing, I have to agree with Johnathon. I have worked with buyers on offers with over 30 banks this past year and have yet to find a bank that will let you choose the title company. This is supposed to be changing and some smaller banks may be open to alternate title companies but, with the foreclosure market being so compettive you will most likely lose the bid to another offer that is willing to use the banks title company. This can add some additional time to the closing process as most of these title companies are swamped right now but if you have a good realtor that is willing to follow up with them you will most likely have few problems. Good Luck!
0 votes Thank Flag Link Tue Feb 3, 2009
Hi, Denise ...

On a bank-owned property, the seller almost always dictates the title company. (And I say almost only to hedge my bets, but I've yet to see one where they were flexible on the subject.) You can attempt to counter but more often than not you're going to lose the house to someone playing by the lenders' rules.

For the record, I've also never encountered a buyers' lender with an "approved" list of title companies.
0 votes Thank Flag Link Mon Feb 2, 2009
No. In fact, your lender probably will insist that you go with one of their approved title companies. Even in that case, I still might not go with one of those title companies--unless I'm comfortable with them (after having interviewed them).
0 votes Thank Flag Link Mon Feb 2, 2009
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