Elizabeth L. Faber Manager – Escrow Department and Claims … · 2020. 5. 18. · Elizabeth Faber...

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Roles and Responsibilities in Title Claims

Traci NallyATG

Champaign

Audio problems?Listen by phone: 877.691.9300Access Code: 7521231#

Elizabeth FaberATG

Chicago

Roles and Responsibilities in Title ClaimsMay 20, 2020

Presented by: Traci E. NallySenior Manager – Claims and LitigationAttorneys’ Title Guaranty Fund, Inc.

Elizabeth L. FaberManager – Escrow Department and Claims CounselAttorneys’ Title Guaranty Fund, Inc.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Title Claims and Attorneys

Overview of Title Insurance Claimants’ Responsibilities Member’s Responsibilities Title Company’s Responsibilities Policy Limitations Policy Limitations on Loss and Damages Claim Case Studies

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Traci NallyATG

Champaign


Elizabeth FaberATG

ChicagoTitle Insurance Overview


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Title Insurance Overview

Contract of Indemnity against actual damage or monetary loss or damage sustained or incurred by the insured. – Condition 8

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Title Insurance Overview

Parties to the Contract– Title Insurer– Insured

Named on Schedule A– Condition 1(d)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

2006 ALTA Policy Includes Successors

Operation of Law – Condition 1 (d)(i)(A)

Dissolution, Merger, Consolidation – Condition 1 (d)(i)(B)

Conversion to Another Entity – Condition 1 (d)(i)(C)

Deed with No Consideration– If stocks/shares of grantee are wholly-owned by Insured

Condition 1 (a)(i)(D)(1)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

2006 ALTA Policy Includes Successors

Grantee wholly owns Insured.– Condition 1 (a)(i)(D)(2)

Grantee is the trustee/beneficiary of a trust created by Insured for estate planning purposes.– Condition 1 (a)(i)(D)(4)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Insured Case Study

Background Facts– In 2007, Rosemary buys property and obtains an Owner’s

Policy of Title Insurance.– Later, Rosemary deeds the property to her and her husband,

Ronald, as trustees of their revocable trust.– Ronald gets into a dispute with the Homeowner’s Association.– Ronald submits a claim to the title company.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Insured Case Study

Issue– Is Ronald an Insured under the 2007 Policy?


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Insured Case Study

Angels v. NVR, Inc., __ F.Supp.3d __, 2020 WL 1443214 (D.Del. 2020) (not yet released for publication)– “Ronald and not the trust or either of its co-trustees

commenced the action and brought the claim. Thus, Ronald is not covered by the policy.”

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

What is Covered?

Covered Risks on Jacket– Title being vested other than as stated in Schedule A– Title defects– Unmarketable Title– No Access to the Insured Land


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

What is Not Covered?

Defects, Liens, Encumbrances, Adverse Claims– Created, suffered, assumed by Insured

Exclusions from Coverage 3(a)– Not known to ATG, but known to Insured

Exclusions from Coverage 3(b)– After Date of Policy

Exclusion from Coverage 3(c)– Results in no loss or damage

Exclusion from Coverage 3(d)– Matters specifically excepted on Schedule B

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Traci NallyATG

Champaign


Elizabeth FaberATG

ChicagoInsured Claimant’s Responsibilities


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Notice

Notify ATG in Writing When:– Litigation

Condition 3– Knowledge

Condition 3– Title is Unmarketable

Condition3

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Litigation (Condition 3)

Third Party asserting a claim Covered by the Policy, which is Adverse to the Insured– Liability limited to causes of action concerning matters insured

under the policy.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Knowledge (Condition 3)

Any claim that is Adverse to the title and might cause Loss or Damage for which ATG might be liable.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Unmarketable Title (Condition 3)

Title is Rejected as Unmarketable Encumbrance or cloud on title that would justify:

– purchaser not purchasing the property;– lender not funding a loan.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Sugar Cube House Marketability

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Where Notice Should be Sent

Mail to: – ATG

P.O. Box 9136Champaign, Illinois 61826-9136 Condition 18

Claims may also be emailed contemporaneously to:– [email protected]


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Failure to Provide Prompt Notice

If ATG is prejudiced, liability is reduced by the extent of the prejudice. – Condition 3

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Case Example: Late Notice

ATG Received NoticeOrganization: Attorneys’ Title Guaranty Fund, Inc.Fax: (217) 359-2014Date: December 27, 2000

Sale with an Omitted PINPLEASE TAKE NOTICE that the undersigned will bring on to

be heard the petitioner’s motion for reassignment before the Honorable Judge Jagielski in courtroom 1704 at the Richard J. Daley Civic Center, Chicago, Illinois 60602 on January 17 , 2001, at 10:00 a.m., or as soon thereafter as the same may be heard.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Case Example: Late Notice

Insured Claimant had received notice six months prior to delivering notice.

In that time, the redemption period on the tax sale has expired, prejudicing ATG.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cooperation

Insured shall secure to ATG the right to prosecute or provide a defense. – Condition 6(a)

When asked, the Insured shall aid ATG in securing evidence, obtaining witnesses, and effecting settlement. – Condition 6(a)

If ATG is prejudiced by Insured’s failure to cooperate, ATG’s obligations to the Insured under the policy terminates. – Condition 6(a)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Case Study: CooperationThis letter is to follow up on my previous correspondence. As you are aware, Attorneys’ Title Guaranty Fund, Inc. (“ATG”) gave a hold harmless to your client, CLIENTNAMECLIENT, for any losses that it might suffer as a result of a portion of the land being affected by property index number PINPINPINPIN. A copy of the letter dated April 12, 2005, which agreed to hold your client harmless from loss is enclosed for your reference. Pursuant to your requests for the situation to be corrected, ATG began the process of filing a petition for tax division. ATG prepared the Petition for Division and forwarded it to you for client’s signature. I have contacted you on three occasions regarding the Petition for Division; however, ATG still has not received an executed petition for tax division from your client. I have enclosed copies of the correspondence for your reference. ATG contacted the neighboring property owner and the neighboring property owner has executed the petition for tax division. Your client’s failure to cooperate in executing the petition for tax division absolves ATG of any further liability to try and resolve the matter.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cooperation

ATG may require the Insured claimant to: – submit to an exam under oath;– produce for examination, inspection, or copying all records,

whatever medium, that reasonably pertain to the loss or damage. Condition 6(b)

Failure to submit, unless prohibited by law or government regulation, shall terminate liability. – Condition 6(b)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Provide Proof of Loss

If ATG is unable to determine the amount of loss or damage.– Condition 4

Proof of Loss must include:– description of the defect, lien, encumbrance;– basis for calculating the amount of loss.

Condition 4

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Proof of Loss Example

In reference to correspondence from Attorneys’ Title Guaranty Fund, Inc. (“ATG”), dated August 28, 2018, in which ATG admitted liability under the terms and conditions of the above Owner’s Policy of Title Insurance (“Policy”) for loss or damage suffered as a result of the sewer easement under the insured land, attached is an appraisal evidencing proof of loss under Section 4 of the Conditions of the Policy.

As determined by the appraiser, the amount the value that the Title to the insured land is decreased due to the fact the insured land is traversed by a sewer easement, as provided under Section 8(a)(ii) of the Conditions of the Policy is $50,000.


Traci NallyATG

Champaign


Elizabeth FaberATG

ChicagoMember’s Responsibilities

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Member’s Responsibilities

Notice Cooperation


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Notice

Upon receipt of notice by an ATG member of a claim, the ATG member must notify ATG in writing of the claim.– ATG Admin. Reg. 9A

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Information Required in Notice

The name, address, and telephone number of the claimant and the claimant’s attorney, if any;

The commitment and policy numbers and copies of the commitment and policy if not previously forwarded to ATG; and

A description of the claim and copies of any documents, correspondence, surveys, title searches, or other writings, and other information supplied to or available to the ATG member relevant to the claim.– ATG Admin. Reg. 9(A)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Notice Timing

The notification of ATG under this Section must be made within three (3) business days of receipt of information about a claim by the ATG member– ATG Admin. Reg. 9(A)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Where to Send Notice

Mail claim notice by first class mail to:– ATG

P.O. Box 9136Champaign, Illinois 61826-9136 Condition 18


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Urgent Notice

If needed to prevent further loss, ATG member shall notify the closest ATG office by: – electronic mail– telephone– telephone facsimile transmission– overnight mail or other overnight delivery service

ATG Admin. Reg. 9(A)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cooperation

An ATG member shall cooperate fully in the investigation and resolution of a claim and shall supply any additional, new information that may come to the ATG member’s attention with such promptness as the circumstances permit.– ATG Admin. Reg. 9(A)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cooperation

The response to ATG under this subsection must be made within three (3) days of receipt of the request by the ATG member and must be mailed by first class mail to the ATG employee, agent, or other authorized person requesting the information.– ATG Admin. Reg. 9(A)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Sample Email to Member

Attorneys’ Title Guaranty Fund, Inc. (“ATG”) received the attached claim concerning the above property, which you issued. I’m preparing a preliminary review of the matter for the claims attorney and I need additional information.

ATG’s records do not contain any of the closing documents. Are you able to send a copy file for our review?

Thank you for your assistance in this matter.


Traci NallyATG

Champaign


Elizabeth FaberATG

ChicagoTitle Company’s Responsibilities

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Title Company’s Responsibilities

Investigation Determination of Liability Resolution


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Investigation

ATG may, with or without prior notice to the ATG member or members involved, investigate and resolve any claim in any manner that, in ATG’s sole discretion, it may deem advisable. – ATG Admin. Reg. 9A

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Determination of Liability

Denial of Liability– Based on Schedule B Exception– Exclusions from Coverage

Admission of Liability– Defend Title

Condition 5– Cure the Title Defect

Condition 5(b)– Pay the Insured the value of the loss

Condition 7– Issue a Hold Harmless Letter or Comfort Letter


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Options with Admitting Liability

Provide Coverage on Covered Matters Provide Reservation of Rights

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Matters Restricted to the Policy

Any claim of loss or damage arising out of the status of Title shall be restricted to the policy. Philadelphia Indem. Ins. Co. v. CTIC 771 F.3d 391 (7th Cir. 2014)– Title insurance company does not need to defend

non-covered claims


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Accepting in Part, Denying in PartATG admits liability, under the terms and conditions of the Policy, for loss or damage, which your clients might suffer as a result of the easement given by The Illinois National Bank of …

For the reasons set forth in this letter, ATG denies liability to your clients for case number CASENUMBER, filed in the Circuit Court of Sangamon County, Illinois. A complaint for an injunction to prevent trespass over an easement is not a covered risk under the Policy. Sabatino v. First American Title Insurance Co., 308 Ill.App.3d 819 (Ill. App. Ct. 2nd Dist., 1999). Further, any trespass on the plaintiff’s easement by your clients happened after the effective date of the Policy. Section 3 (d) of the Exclusions from Coverage in the Policy provides that the following matter is expressly excluded from the coverage of the Policy and ATG will not pay loss or damage, costs, attorneys’ fees, or expenses, which may arise by reason of:

3. Defects, liens, encumbrances, adverse claims, or other matters(d) attaching or created subsequent to the Date of Policy ...

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reservation of Rights

Title insurer avoids breaching its duty to defend while seeking to avoid estoppel of its right to deny liability under the policy.– Barlow Burke, Law of Title Ins. § 6.07

when uncertain about its duty to indemnify, [title insurer] reserves its rights to recover the costs of doing so if … it has no duty to do so.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reservation of Rights ExampleAttorneys’ Title Guaranty Fund, Inc. (“ATG”) has completed its investigation of your client’s claim under the above Loan Policy of Title Insurance (“Policy”). ATG admits liability, under the terms and conditions of the Policy, subject to the reservation of rights contained in this letter, and subject to the terms of my letter to you, dated January 30, 2018, a copy of which is enclosed, for loss or damage, which your client may suffer as a result of the Contractor’s Notice and Claim for Complaint, and eleven months after your firm entered its appearance in the case. While ATG makes no present judgment with respect to the defense that your firm has provided for your client, ATG does hereby reserve its rights under the Policy to retender the defense of the Complaint and/or deny liability for the Lien and Complaint, if it appears that your firm’s defense of the Complaint has prejudiced ATG’s duty to defend your client against the Complaint, under the terms of Condition 5 of the Policy.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Resolution

Defense of Title Cure Title Defect Settle


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Defense

ATG shall provide a defense, at its own costs, without unreasonable delay.

ATG is responsible:– for selecting counsel, subject to the right of the Insured to

object for reasonable cause. ATG is not responsible for

– fees of any other counsel;– matters not insured under the policy.

Condition 5(a)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Matters Not Insured Under the PolicyIn your letter dated September 1, 2016, you also stated your client is seeking compensation for expenses paid in connection with the permit and plumbing inspections required by the City of Chicago. In your email, sent October 19, 2016, you stated that a permit was not required for the original work completed by your client. You also stated that the requirement of the permit and inspections resulted from Cook County Case Number ##########. Based upon the pictures you have provided to ATG showing the work done to the bathroom, it appears your client built a new shower stall. It is our understanding that in cases of new plumbing, the City of Chicago requires a permit. While the request for a permit may have arisen during the course of the building violation case, it did not relate to the violations enumerated in the building code violation case but rather was a result of your client not obtaining a permit when the plumbing work began. It is the position of ATG that it is not responsible for the costs and expenses incurred in relation to the permit and inspection of the plumbing in the bathroom.

Exclusions from CoverageThe following matters are expressly excluded from coverage of the policy, and ATG will not pay loss or damages, costs, attorneys’ fees, or expenses that arise by reason of: 1. (a)Any law, ordinance, permit or governmental regulation (including those relating to building and zoning) restricting, regulating, or relating to:

(i) the occupancy, use, or enjoyment of the Land;


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cure Title

ATG has the right to prosecute any action that it opines is necessary to establish title, as insured, or prevent or reduce loss or damage.– Condition 5(b)

Exercise of this right is not an admission of liability or waiver of a policy provision.– Condition 5(b)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Cure Title

ATG may pursue litigation to final determination.– Condition 5(c)

ATG reserves the right to appeal any adverse judgment or order.– Condition 5(c)

ATG shall have no liability for loss or damage until there has been a final determination and dispositions of all appeals.– Condition 9(b)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Settlement of Claim

Settle with Parties Other than the Insured Settle with the Insured ATG is responsible for costs, attorney’s fees, expenses

incurred by the insured claimant if– authorized by ATG at the time of payment;– ATG is obligated to pay.

Condition 7 (b)(i-ii)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Pay Amount of Insurance

If exercised by ATG, all liability and obligations under the policy, including obligations to defend and prosecute, or continue litigation, terminate.– Condition 7(a)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Pay Amount of Insurance ExampleAs you know, Attorneys’ Title Guaranty Fund, Inc. (“ATG”) has been providing you with a defense against the complaint filed by Plaintiff as Cook County, Illinois Circuit Court Case No. 2017 CH 012345 (“Case”). Mr. Attorney, who ATG has retained to represent you in defending the Case, advises that Plaintiff is not amenable to a reasonable settlement and that the likelihood of prevailing at trial is not good.

This is to advise you that ATG has elected to exercise its option, under Section 7 of the Conditions of the Policy, to pay you the Amount of Insurance provided for under the Policy. As a result, ATG will have no further obligation to continue to provide representation or indemnification to you.

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Traci NallyATG

Champaign


Elizabeth FaberATG

ChicagoPolicy Limitations on Loss and Damage


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Loss and Damage

Actual Monetary Loss or Damage– Condition 8

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Speculative Loss ExampleAttorneys’ Title Guaranty Fund. Inc. (“ATG”) has reviewed your client’s demand for compensation for expenses incurred in connection to Cook County Case Number ############. In your letter dated September 1, 2016, you provided an expense report showing Labor performed by your client totaling 110.5 hours. Based on the hourly rate of $100 per hour in the itemization, your client is seeking $11,050 from ATG for your client’s time. Condition 8 of the Owner’s Policy of Title Insurance (“Policy”) provides:

8. Determination and Extent of Liability

This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the Insured Claimant who has suffered loss or damage by reason of matters insured against by this policy. (emphasis added)

It is the position of ATG that it is not responsible for the time your client allegedly spent regarding the matter since there was no actual monetary loss suffered.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Extent of Liability

Shall Not Exceed the Lesser of: – Amount of Insurance;– Difference between the value of the Title, as insured, and the

value of the Title, subject to the risk insured against. Condition 8 (a)(i)(ii)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Diminution in Value

May 5, 2020Attorney’s Title Guaranty Fund, Inc.One South Wacker Drive, 24th.Floor Chicago, Illinois 60606RE: A Detached Single-Unit PropertyAt your request, we have completed market value appraisals of the fee simple interest of the above referenced location as of April 20, 2020. The purpose of the following report is to outline the reasoning and the important factors considered in arriving at our opinion of value. Our opinion of value is for the subject property with and without a title defect. It contains data gathered in our investigation and describes the detail the analysis that resulted in our conclusion.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Diminution in ValueThis appraisal contains a hypothetical condition as it related to the appraisal of the subject property without the title defect. The hypothetical condition in this scenario is that the title defect is not present on the subject property. This is necessary in order to develop an opinion of the diminution in value (DIV) to the subject property as a consequent of the title defect.Based on the factors considered previously, it is our opinion that the market value of the fee simple interest in the subject property, without the title defect, as of April 20,2020, was:

ONE HUNDRED THOUSAND DOLLARS(WITHOUT TITLE DEFECT)

$100,000.00Based on the factors considered previously, it is our opinion that the market value of the fee simple interest in the subject property, with the title defect, as of April 20,2020, was:

EIGHTY THOUSAND DOLLARS (WITH TITLE DEFECT)

$80,000.00The diminution in value attributable to having the easement is the difference between these two values, which is $20,000.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Extent of Liability – Successful Resolution

If ATG resolves the title defect, lien, or encumbrance, by any method, ATG is not liable for any loss or damage caused to the Insured.– Condition 9(a)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Extent of Liability – Unsuccessful Litigation

If Title cannot be established, as insured: – Amount of Insurance is increased by 10%.– Insured can determine the date of loss as either:

Date of settlement; When the claim was made.

– Condition 8(b)(i)(ii)

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Voluntarily Assumed Liability

ATG is not liable for any loss or damage assumed by the Insured in settling a claim or suit without prior written consent by ATG.– Condition 9(c)


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reduction of Insurance

All payments shall reduce the Amount of Insurance by amount of the payment.– Exception: attorneys’ fees, costs, and expenses

Condition 10

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Liability Noncumulative

Amount of Insurance shall be reduced by any amount ATG pays under any policy insuring a mortgage to which exception is taken in Schedule B.

Amount paid is considered a payment to the Insured under the policy.– Condition 11


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Liability Noncumulative ExampleDear Insured Owner:

ATG has offered to pay an amount exceeding the Amount of Insurance of your Policy, $100,000, to the holder of the Mortgage that ATG insured, which is the subject of exception number 7, on your Policy, as follows:

7. Mortgage dated July 4, 2016, and recorded July 5, 2016, as Document No. 1612345678, executed by Insured Owner and given to Insured Lender to secure a note in the amount of $150,000.00 and such other sums as provided therein.

Accordingly, ATG offers to pay $100,000.00 on behalf of you to Insured Lender in full settlement of the above-listed claim and terminating ATG's obligations to you under the Policy.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Title Company’s Claim Loss Recovery Rights


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reimbursement for the Claims Loss

ATG will Attempt to Seek Reimbursement from: – the Responsible Party– the Member

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reimbursement from the Responsible Party

ATG will Attempt to Seek Reimbursement Based on Theory of: – Breach of Warranty of Title– Unjust Enrichment– Another Signed Agreement to be Responsible:

Title Indemnity (T.I.) agreement; Pro-Ration agreement; Personal Undertaking; or ALTA Statement, etc.

– Searchers and Surveyors Negligence


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Reimbursement from the Member

ATG will Attempt to Seek Reimbursement from the Member.– Claims Committee of the ATG Board of Directors approves.

ATG Administrative Regulation 9B

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Recovery from Member

An ATG member shall reimburse ATG for amounts paid by ATG in the investigation and resolution of a claim, hereinafter referred to as a “claim loss,” including, but not limited to, payments to the Insured, payments to adverse claimants, attorneys’ fees, and all other expenses and costs related to or arising from the claim in accordance with the provisions of this Regulation.– ATG Admin. Reg. 9B


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


No Recovery from Member if:– hidden defects;– errors by public officials in maintaining and indexing the public

records;– errors made by abstractors or title search companies

approved by ATG in their search and report of information in the public record;

– errors in ATG’s guidelines, procedures, and regulations that are relied upon by the ATG member;

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


No Recovery from Member if:– errors in surveys provided by land surveyors, properly

licensed, properly registered, or otherwise properly authorized to provide land surveys in the state where the land is located;

– underwriting determinations or title risks approved by ATG prior to issuance of the commitment, policy, or endorsement. ATG Admin. Reg. 9B


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

ATG Administrative Regulation 9B

Claim Loss Recovery from Members– All determinations whether to request reimbursement for a

claim loss from a member are first approved by the Claims Committee of the ATG Board of Directors.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


Recovery from Member Possible if: – grossly negligent errors by the ATG member in the title search

and report of information in the public record;– negligent errors made by the ATG member in examining the

title information provided in a title search, survey, affidavit, or other source of title information;

– negligent errors made by the ATG member in the preparation or review of a commitment or policy;


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


Recovery from Member Possible if: – negligent errors made by the ATG member in the closing of a

real estate transaction;– anytime the ATG member relied upon sources of title

searches or other title information that had not been approved by ATG at the time of the reliance;

– anytime the issuance of the commitment or policy constituted fraud, concealment, or dishonesty;

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


Recovery from Member Possible if: – anytime the issuance of the commitment or policy was based

upon an underwriting decision on an unusual risk that was made without contacting ATG for approval;

– anytime the ATG member failed to follow ATG procedures, guidelines, requirements, and Regulations with respect to the matter causing the claim loss. ATG Admin. Reg. 9B


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Claims Prevention Causes and Case Studies

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Wrong Account Paid

Claim May Arise If:– Payoff Request doesn’t specify the account number, and– Seller has:

unrecorded bridge loans affecting the subject land; multiple loans with the same bank affecting other land or

personal property.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Wrong Account Paid

Request should include: – loan number;– last four digits of the borrower’s social security number;– document number of the subject mortgage.

When reviewing the Payoff Letter, check: – loan number;– borrower’s information.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Unrecorded Loans

Mortgage on Title for $375,000 from Seven Years Ago with Chicago Bank– Payoff Request:

Sent to Chicago Bank Account Holder: Cameron Frye

– Payoff Statement Account Holder: Cameron Frye Account Number: 06111986 Amount: $355,000

– 06111986 is actually a loan for Cameron’s car.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Wrong Account Paid

Prevention– List the Document Number for the recorded mortgage.– Add more information on payoff request.

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Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

HUD Mortgages: A Tale of Two Letters

Home Equity Conversion Mortgage/Reverse Mortgage– Two mortgages will be recorded – Reverse Mortgage followed

by the Home Equity Conversion Mortgage The loan amounts will be the same. Account numbers will be the same. Secretary of Housing and Urban Development will be the lender.

– It is possible money will be owed to HUD.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

HUD Mortgages: A Tale of Two Letters

Prevention– A separate payoff letter needs to be obtained from the

servicer for HUD.

43


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Prior Mortgage Is Paid: “Scout’s Honor”

Claims may arise if Seller swears the mortgage has been paid off when, in actuality, it has not.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


Seller Cannot Provide:– Proof of payoff;– Release;– Prior policy;– Settlement Statement

44


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago


Prevention– Always ask your client to check again.– Contact your Title Insurance Underwriter.

They can help assist in obtaining a policy and hold harmless letter.

Make an underwriting decision.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Fraudulent Payoffs

Claims may arise because Payoff Letters are being altered to change the wire instructions for where the payoff should be sent.

45


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Fraudulent Payoffs

Face of the document remains the same.– Borrower’s Names, amount owed, property address,

and lender’s information are not altered.


Traci NallyATG

Champaign


Elizabeth FaberATG

Chicago

Fraudulent Payoffs

Prevention– Review the full payoff letter. Check for:

inconsistencies; demands that the payoff only be sent in a certain manner; typographical errors.

– Call the lender to verify information.

Date post:	30-Jan-2021
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Elizabeth L. Faber Manager – Escrow Department and Claims … · 2020. 5. 18. · Elizabeth Faber...

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