Title Company Won't Sign Shortsale Affidavit

Hi everybody, I am doing a Wells Fargo Short Sale (for the past 9 months :-(   Wells Fargo has a Short Sale Affidavit that Everybody in the transaction signs, including the closer at the title company.  This is a standard language document stipulating that it is an arms-length transaction, that the buyer or seller will not be recieving funds from the closing of the transaction, that the seller can cancel the transaction at any time prior to closing without paying commission, blah, blah, blah. 

 

The title company I am using has stated that they are not allowed to sign ANYTHING, per the Texas Dept of Insurance Procedural Rule 35.  And now Wells Fargo is saying they cannot move forward with the short sale approval until the title company signs this document.

 

Has anybody encountered this before?  How do I get around it?

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Permalink Reply by Jeff Payne on March 12, 2012 at 4:19am

Have you looked up the rule in question?  I would find a title company that understands short sales

 

Permalink Reply by Jerri Schick on March 12, 2012 at 5:49am

They are checking with the attorneys to see if they can sign this. 

 

I was afraid I would need to find a title company that would sign it.  Dang. 

Permalink Reply by Jerri Schick on March 12, 2012 at 6:11am

Just got confirmation from Texas American Title - They CANNOT sign the short sale affidavit.  So now I am looking for another title company.  This IS INSANITY.

Permalink Reply by Jeff Payne on March 12, 2012 at 6:18am

I would give them my best Donald Trump!  You're Fired! 

Where are you in Texas?

Permalink Reply by Jerri Schick on March 12, 2012 at 6:23am

I am in the Houston/Galveston area and it is Texas American Title Company that is giving me such a problem.  I will NEVER do another short sale with them again.

Permalink Reply by Jeff Payne on March 12, 2012 at 6:52am

I will check with some of my Texas buddies.

 

Permalink Reply by Jeff Payne on March 12, 2012 at 6:53am

You need to take the word short out of your last statement.

Permalink Reply by Jerri Schick on March 12, 2012 at 7:21am

Yes.  And I apologize to Texas American Title.  It is Southland Title Company, not TATCO, that is causing me grief.

Big Fat Rasberry on Southland Title!!!

 

Permalink Reply by Jerri Schick on March 12, 2012 at 9:38am

Okay, this is now reaching epic proportions.  I have called 3 other title companies in this area that I frequently work with on short sales and NONE of them say they are allowed to sign this document.

 

Is there any recourse?  Is this a new tactic by the banks to get out of doing short sales by requiring the IMPOSSIBLE.  If we can't comply the only option is deed in lieu or foreclosure.

 

Does anyone have any suggestions?

Permalink Reply by Smitty on March 12, 2012 at 11:04am

wow.  I'd like to know about this law in Texas.  '

 

This is what I would do.  Take a printout of the law and then see if any of the title companies will put it in writing for you and then take it all and send it all back to Wells fargo and tell them unless they make an exception to forego the ALT affidavit then this short sale will die pretty quickly.

 

We have some weird laws in Massachusetts about closing and I've been able to show them some things and get exceptions to the rule.

 

Other than that, I'm not sure what you can do.

Permalink Reply by Justin Berry on March 12, 2012 at 12:12pm

I have run into this before with different lender and have seen it solved 3 dfferent ways:

1) The title company gets an added indemnification from the parties that it truly was an Arm's Length transaction - then they feel comfortable signing it.

2) Lender allowing the title company not to sign it in advance.  Assuming everyone else signs it, I have seen lenders make an exception for title companies.  This requires heavy escalation.

3) Keep shopping title companies.  Our favorite here in Denver will only sign them if the language is soft enough and states "to the best of our knowledge".  Sometimes they won't sign that and in those instances we have a back-up company who will   

I feel strongly that Wells Fargo is closing many short sales in Texas every day with this exact addendum. Somebody must be closing them......

 Good Luck - keep us posted!

Permalink Reply by Jerri Schick on March 12, 2012 at 12:41pm

Thanks Justin, I wonder if your back-up title company also does business in Texas?

 

Here is the Procedural Rule 35 in it's entirety.  It seems pretty clear that title companies are not supposed to sign anything.

 

I wonder how do I escalate above the negotiator's boss I have now?

 

P-35. Prohibition Against Guaranties, Affirmations, Indemnifications, and Certifications.       No Title Insurance Company, Title Insurance Agent, Direct Operation, Escrow Officer, nor any employee, officer, director or agent of any such entity or person, shall issue or deliver any form of verbal or written guaranty, affirmation, indemnification, or certification of any fact, insurance coverage or conclusion of law to any insured or party to a transaction other than: (i) a statement that a transaction has closed and/or has been funded, (ii) issuance of an insured closing service letter, or any insuring form or endorsement promulgated by the State Board of Insurance, or (iii) certification of copies of documents as being true and exact copies of the original document or of the document recorded in the public records.

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