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					       Chapter 6

                           Chapter Outline
   Obtaining the pay-off information
   Parties to a deed of trust
   Beneficiary demand vs. beneficiary statement
   Out-of-state beneficiaries
   Due-on-sale Clause
   FHA loan beneficiaries
   Maintaining the file calendar
   Requiring statement fee in advance
   Understanding the demand when it arrives
   Private party liens
   Tax liens
   Other seller liens & seller expenses
   The reconveyance
   Seller affidavit
   Contingencies
   Seller-caused escrow to fall out
               Chapter 6
At the conclusion of this chapter, you will be able
  1)     Understand the relationship between
  escrow and a lien holder versus the principals.
  2)     Give a definition for reconveyance.
  3)     Outline the steps for escrow to take to pay
  off a seller’s lien.
  4)     Differentiate between a demand and
  beneficiary statement.
  5)     Explain the lane guide and how it is used.
        Obtaining Pay-Off Information
   Lien information sheet - Seller completes
       name of each lender
       loan number
       mailing address
       approximate unpaid balance
   Write each lien holder - escrow officer
       request and obtain lien information
       terms of the loan for payoff or assumption
       detailed data required
       lender is not bound by agreements made by the
           Lien Information Sheet
Escrow Number ______________
Property Address: __________________________________________
    City:____________________________ CA Zip Code ___________
1st Trust Deed:
    Name of Lender: _________________________________________
    City: ______________________ State______ Zip Code:________
    Loan Number: __________________________________
     Phone (_____)___________________________________
    Unpaid Loan Balance: _____________________________
    Interest Rate: ________% Terms: ___________________
                 Parties to a Deed of Trust
   Mortgage system – Most other states
       mortgagee – the lender
       mortgagor - the borrower
   Trust deed system - California
       beneficiary (bank) - loans the funds
       trustor (debtor) - the borrower
       trustee (third party) – hold bare legal title
            loan default or
            loan payoff (Deed of Reconveyance)
         Escrow Instruction Clause
“You are instructed to provide title to the subject real
 property in the condition identified in the escrow
 instructions by the parties. You are not responsible for
 the contents or accuracy of any beneficiary demands
 and/or beneficiary statements delivered to you by the
 existing lien holders. You are not required to submit any
 such beneficiary statements and/or demand to the parties
 for approval before the close of escrow unless expressly
 instructed to do so in writing. Should the parties desire
 to pre-approve any such beneficiary statement and/or
 demand, the parties requesting the same shall deliver
 separate and specific written escrow instructions to you.”
        Beneficiary Demand vs.
         Beneficiary Statement
   liens of record – obtained from:
       the lien information sheet - seller
       preliminary title report – title company
   demand for payoff, or beneficiary
   beneficiary statement, current status of
    the loan
        Request for Payoff Demand–
           Beneficiary Demand
  Lender of record       -       ATTN: Loan Pay-off Department
  P. O. Box XXXX         -       RE: Loan #: XX-00000-XX
  Anytown, CA 90000
  Property address: 123 Elm Street, Somecity, CA 91234
  Title Vested as: Mr. And Mrs. I.M.A Borrower
  Legal description: Lot 12 in Tract 24 in pages 12 to 14 of book 32 in
  the office of the county recorder in a California County.
  Mary Belle Smith, Escrow Officer                 John James, Title Officer
  Escrow No. MBS-112                               Title Order No. 7-765432
  A California Escrow Company
  A California Title Company
  789 Maple Avenue
  Somecity, CA 91234
                   Beneficiary Statement
Property address: 123 Elm Street, Somecity, CA 91234
   Title Vested as: Mr. And Mrs. I.M.A borrower
   Legal description: Lot 12 in Tract 24 in pages 12 to 14 of book 32 in
   the office of the county recorder in a California County.
   Current unpaid balance: $___________________ Interest rate on
   the loan ______%
   The monthly payment is $______________Due on the ________
   day of each month.
   The next date a payment is due is _______ The amount of the late
   fee is $________
   The late fee is assessed and due on what day of each month
   The impound account status is:
         There is no impound connected with this loan _____
         There is an impound shortage of $_______________
         The impound account contains $________________
   The loan terms for assumption are: ___________________
   The loan terms for taking title subject to the existing title are:______
          Lane Guide
   complete street mailing address for a
    specific lender
   fax number
   telephone contact
   zip code of the verified address
   800 numbers
   special departments for collections,
    wholesale lending, REO, assumptions
   administrative offices.
                 Due on Sale
   Lender prohibits the buyer from taking over
    the seller’s existing unpaid loan balance
    under the terms and conditions given to the
owner carry back loan
acceleration clause

note and the trust deed terms
             FHA loan beneficiaries
   Borrower may assume the existing loan with
       credit report information
       employment information
       Pay loan assumption fee

Beneficiary entitled to 30 additional full
days of interest for loan payoff
        Maintaining the File Calendar
   date ordered
   date that each item was originally distributed
       faxed
       mailed
   allow adequate turn around time
   calendar would be marked with the follow-up
       a second request
       a phone-call follow up
              Advance Statement Fee
   Lender may charge a fee for furnishing
       the payoff information
       beneficiary statement
       trustee’s statement of the loan status
   Lender may not release any information on the
    status of the existing loan with an advance fee
   The advance fee payment:
       Paid thru escrow
       In case of Fallout:
            Trustee cost not paid and seller owes the funds
            Only buyer funds on hand
         Understanding the Demand
   Principal: Distribute a copy for approval
   Agents: Fax for review
   Last loan payment :
       Paid thru escrow or not?
       If not paid thru escrow, is a late fee due?
   Current status of the payment
   Interest charged on a per day basis (per
                    Private party liens
   beneficiary demands received
       Entered into the file to calculate seller’s
       Principals and agents to review
   beneficiary cannot be located
       reconveyance deed instructions can only be
        directed by the beneficiary.
       title insurance company requires
            a bond
            two and one half times the original principal loan
                    Tax liens
   Escrow officer pays any tax liens of record
   Tax payment one of the pre-printed clauses
   Tax Collector prepares and distributes tax
   Debit seller for property taxes every month
   EXCEPT: Apr 11-June 30 & Dec 11-30
        Other Seller Liens & Expenses
                Debt paid prior to clear title
   Mechanic’s lien
       Unpaid work performed or materials delivered for the property
       May create a cloud and clear the title
   Judgment lien
       given by a court against a person who is a party to a lawsuit
       a judgment award is recorded against the real and personal property
       judgment creditor can force the sale of real property
   Income taxes
   Other expenses
      documentary transfer tax

      commission
   Reconveyance deed
   Partial reconveyance
   The beneficiary notifies the trustee
   The reconveyance deed is executed
    by the trustee
   The trustee cannot act without
    written instructions from the
                        FULL RECONVEYANCE

Any Title Insurance Company, a corporation, Trustee under deed of trust
  executed by____________________________________________,
   Trustor, dated __________ and recorded as Instrument No. ___________,
  on ___________, 20XX, in Book _____, Page _____ of Official Records, in
  the office of the County Recorder of _____________________________
  County, California having been requested in writing, by the holder of the
  obligation secured by said deed of trust , to reconvey the estate granted to
  trustee under said deed of trust, DOES HEREBY RECONVEY to the person
  or persons legally entitled thereto, without warranty, all the estate, title, and
  interest acquired by trustee under said deed of trust:

   (legal description here)

   APN or AIN: xxx-xxx-xx
   AKA: __________________
               Seller Affidavit
   Notice of Default
   delinquent amounts
   bankruptcy, insolvency or similar
   litigation, arbitration, administrative
    action, government investigation
   special assessments
o   Increase of buyer’s deposit
o   Remove loan contingency
o   Approve completed inspection reports
o   Approve completed disclosure reports
o   Sale of the buyer’s current residence
      Seller caused escrow fall out
   The seller backs out due to sentimental reasons
    about the property
   The property the seller was attempting to
    purchase fell out of escrow
   A property defect, such as faulty plumbing or a
    leaky roof
   Failure to disclose, such as a change in school
   Seller dissatisfaction, such as lack of due
    diligence by the other parties
   Failure of parties on certain terms, such as seller
    points on a government loan
                Think About It!
             Priority Judgment Lien:
      The preliminary title report shows a judgment lien
against Thurston Miller on the escrow for Thurston and
Evelyn Miller. The escrow officer contacts the title officer
to determine additional information about the lien. The
title officer indicates that the lien appears to be non-
payment of child support with a lien date of September
20, 1985. Escrow recalculated the file and indicated that
with the amount of the lien showing on the judgment plus
estimated interest and additional court costs to obtain a
release of judgment lien should the amount be paid, that
the seller would net nothing. In fact, escrow indicates that
the seller would have to bring in $5,000 to close the
escrow. What steps should be taken?
                      Think About It!
1. Pull the copy of the Statement of Information (SI) to
   determine if Mr. Thurston lists any previous marriage.
2. Finding no previous marriage indicated on the SI, look at the
   other information contained on that document. Upon looking
   at the balance of the information, the SI shows his date of
   birth as January 25, 1980.
3. Notify the title officer with the facts found so they can
   determine that the lien might be seller’s father and is most
   likely not part of this escrow since this person in escrow
   would only have been 5 years old at the time of the lien.
4. Due to the confidentiality and the Right to Privacy Act, do
   NOT notify any principal of any lien that is not for that
   individual. The son may not know about the judgment lien,
   and you could be liable for the disclosure.

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