Florida Title Insurance Underwriters Short Sale Approval Warning

Attorneys Title Insurance Fund, a popular Florida Title Insurance Underwriter recently warned its agents about inappropriate estoppel letters from lenders on short sales.  These sellers’ lenders have been including language in the short sale approval estoppel letters that would allegedly void the sale subsequent to the closing upon the discovery of certain acts or information.  All real estate closing agents, buyers, sellers, and real estate agents should carefully review the short sale estoppel information.  Below is the notice:

FUND ALERT: Short Sale Estoppel Letters

TO:       ALL FUND MEMBER AGENTS

FROM:  Underwriting Department

RE:       Short Sale Estoppel Letters

Fund Agents are reporting receiving lender estoppel letters with onerous conditions on them. These letters are most often issued in the context of short sales. The objectionable conditions read along these lines:

If the property was acquired by any means of fraud, the lender reserves the right to pursue any and all actions available to it to offset its losses. If it is determined that Sellers and/or Buyers participated in any way to the fraud, this short sale will be void and the Note and Security instrument will remain in full force and effect.

Fund Agents are NOT authorized to close any transaction in reliance on this or any similarly worded estoppel letters. The new purchaser and lender cannot be insured where a prior lien holder retains the right to “renege” on its release.

The objectionable language in these estoppel letters must be deleted before they can be relied on to insure the purchaser and lender in the current transaction.

http://www.southptc.com/florida-title-insurance-rate.html

http://www.southptc.com/short-sale-miami-florida-attorney.html