When you are buying a bank owned property, or REO, buyers need to be careful. Some banks are offering incentives to the buyer to use their settlement company and/or their own company for the loan. There are some serious issues that can come up. One that was just brought to my attention recently involved a buyer who was told they would receive free title insurance if they used the settlement company the bank preferred.
The buyer's agent realised that the free title insurance was only the lender policy and not the full homeowners policy, and if the homeowner wanted the full policy, they would have to pay for it from their funds at the settlement table. The agent was able to delay settlement until the buyer could come up with the funds needed for the full policy. When buying a bank owned property, it is very important that the new homeowner have full protection on the title.
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