Short Form Policy Can Improve Delivery Time to Insureds
|June 6, 2013|
The fifth pillar of ALTA’s Title Insurance and Settlement Company Best Practices encourages title professionals to adopt and maintain written procedures related to title policy production, delivery, reporting and premium remittance. Having appropriate procedures for the production, delivery and remittance of title insurance policies ensures title companies meet their legal and contractual obligations.
A procedure to meet this best practice requires the issuance and delivery of policies within 30 days of settlement if terms and conditions of title insurance commitment have been satisfied.
To help meet the 30-day threshold, Craig Haskins of Knight Barry Title encourages title companies to consider issuing ALTA’s Short Form Policy at the closing table. Knight Barry Title issues Short Form Policies in more than 95 percent of the residential purchases and refinances the company closes.
“We issue the policy at the table and deliver it to the lender with loan package,” said Haskins, who is a member of ALTA’s Best Practices Task Force. “This has tremendously reduced our turn time to lenders. Improving delivery time can be a competitive advantage as lenders won’t have to chase down title companies to get their policies.”
While this varies from state to state, Knight Barry Title’s closers are licensed where they operate and “understand enough about title to be dangerous.”
“We aren’t asking them to examine title,” Haskins said. Knight Barry Title closers look to see if the mortgage on the commitment or tax balance has been paid off. If so, they are removed from the commitment and the policy is issued.
“With most software, you can delete what you’ve cured at the table and print out a final policy,” Haskins said. “Who knows best as to what’s being removed from the commitment for the policy other than the closing agent?”
Haskins pointed out that in most states, agents don’t have to wait for all releases to be recorded to issue a Short Form Policy. While this varies from state to state, “if a check has cleared and you know the lien is paid off, you should be in a safe position,” he said. If a title company is unsure on how to use a Short Form Policy, David Townsend of Agents National Title Insurance Company said agents should ask their underwriter to see what is allowed.
“Lenders I deal with understand the Short Form Policy and the advantage is they get it that day,” Haskins said. “For me, the benefit is that I don’t have any post-closing labor to type up the policy.”
Endorsements are built into the face of the policy so all standard lender/residential endorsements are referenced on Schedule A. Townsend added that if lenders are coming back after a closing and asking for an endorsement stating the recording information, this gives the agent an opportunity to educate the lender of the Short Form Policy.
“Probably what’s happening is someone in the lender’s processing department doesn’t understand what a Short Form Policy states and covers,” he said.