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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Sounds good! Thanks for updating us all on the final result.
It is not the fault of the title companies. Wells Fargo is taking an overly strict approach to language in the arms length affadavit.Freddie Mac and others have already softened the language to limit the liability of all parties to their individual actions and not for the actions of all other known and unknown parties.
Exactly Dave...the title company has nothing to do with this. They are caught in the middle unless they are underwriting the title policy themselves...WF requires it and the underwriter for the insurance policy; who of course has no knowledge of how the transaction went down and cannot verify that the transaction was arms length; is not willing to issue a title insurance policy and take on that liability. Keep in mind that if fraud takes place and the title company signed it could result in a title insurance claim. The underwriter simply won't take that liability on something they can't verify. We are lucky in FL not to be having this issue...yet anyways... Glad WF stepped up to the plate in this scenario.
Jerri I am in Dallas and have run into the same situation. I use Lawyers Title. This is definitely an issue now in Texas. I have seen this work three ways now. Title will put a rubber stamp on the doc stating they are not allowed to sign and sometimes it has gone through. The most common for me has been that the title company must sign. My approach has been that "the title companies need to approach this issue from a different level and stop holding my and every TX short sale hostage from closing" I have the closing agent take that statement to their underwriters and they have then signed the doc every time. Seems they don't want the potential liability of holding the file from closing. The last option I usually don't see s that WF backs down and lets the transaction close. Point in future for you is there is potentially more liability for them not closing instead of not signing until this all gets sorted out. Now my title agent just signs it knowing it will just slow the transaction if they don't.
I just got an email from the negotiator saying that her manager signed off on the affidavit. So it looks like we are on our way again (till the next uncrossed T is found). Wells Fargo is going to drive me to drinking.
Thanks to all for your responses and support!
Thank you,
MM
Wells Fargo waived the requirement by signing off on the document as is with only the stamped message regarding P-35 in lieu of the title company's signature.
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?
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!
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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