Refinance Information Letter

Alan B. Sharaf, Esq.
Betsy J. Kelley, Esq.
Michael R. Maloney, Esq.
Paula B. Olender, Esq.
Charles W. Clark, Esq.

Dear BORROWER:

We are pleased to inform you that our office has been selected by your lender to conduct the Refinance Closing for your property.   A paralegal from our office will call you to arrange for the time and place of the closing and to confirm the amount of money (if any) you will need to bring to the closing.   We will do all that we can to make sure that this important transaction goes smoothly for you.  Please share this letter with your attorney, or feel free to call Alan B. Sharaf at (617) 277-7887, Betsy J. Kelley at (508) 717-0407 or Michael R. Maloney at (508) 230-8060 with any questions.

Please review all sections below so that you are prepared for your closing.

1.  Deed: Please e-mail, fax or mail to this office a copy of your current deed as soon as possible.

2.  Closing Funds (if any): Your paralegal will tell you the day prior to your closing the amount of funds that you will need (if any).  Unfortunately, we do not know the amount of your closing costs until that time.  Even if you have a “No-Cost” closing, you may have to bring money to the closing to pay the last month’s interest on your “old” mortgage or to establish escrow accounts for your “new” mortgage.  All borrower closing funds in excess of $1,000.00 must be in the form of a cashier’s or bank check, drawn on a Boston area bank and made payable to yourself.  A personal check or a check from your own account is not acceptable for amounts in excess of $1,000.00.

3.  Certificate of Common Charges: 6(d) Certificates (For condominium units only) A certificate from the condominium association stating that there are no common charges, assessments or condo fees outstanding on your unit as of the last day of the month in which the closing occurs will ONLY be required if you have outstanding condo fees which result in a lien on your property. Otherwise, we do not require you to incur the expense of obtaining and recording a 6(d) Certificate. If required however, this document must be signed by a majority of the condominium trustees, which names appear in the Registry of Deeds as Trustees.  The Trustees’ signatures must be notarized, as this document will be recorded at the Registry of Deeds.

4. Hazard (Homeowner’s) Insurance: If you own a single-family or multi-family house you are responsible for bringing an original hazard insurance binder with a paid receipt showing that you have paid the current year’s premium, even if your Lender is escrowing homeowner’s insurance payments.  Depending on your policy renewal date, your Lender may require that you pay the next year’s premium at closing.  The insurance binder must name your Lender as loss payee.  Please refer to your commitment letter for the Lender’s name and address as it should appear on the insurance binder.

Please call us and provide us with the name and telephone number of your insurance agent. A copy of the binder must be faxed to your paralegal prior to closing.

If you own a condominium unit, your Lender will need to be named on the Condominium Certificate of Insurance as the loss payee for your unit.  Usually, the certificate can be obtained from the condominium Management Company or Condominium Trustees.  A copy of the binder must be faxed to your paralegal prior to closing.

5. Title Insurance: Your lender will require you to purchase Lender’s Title Insurance.  The cost of Lender’s Title Insurance is $2.50 per thousand dollars of the loan amount, rounded up to the next thousand dollars.  Lender’s Title Insurance protects only the Lender’s interest and remains in force until you pay off the loan.  Therefore, even if you purchased Lender’s and/or Owner’s Title Insurance at the time you bought the property, you will have to purchase the Lender’s Title Insurance for the refinance loan amount. The prior policy expires at the time you pay off the “old” loan.

*Please note that we offer and recommend an enhanced Lender’s and Owner’s Title Insurance Policy called Eagle policies.  The Eagle policies provide additional coverage, which includes protection for boundary disputes and limited protection for construction defects, zoning violations and prior building permit violations.  The cost of the Eagle policies is only 10% more than the regular title insurance policies.

The Eagle policy will also save you from paying for a plot plan.  Your lender will require an Eagle type title insurance policy or plot plan to be obtained for your closing.  The plot plan will cost you $150.00 and provides no insurance coverage against a boundary issue.  The Eagle title insurance protection costs only an additional $.25 per thousand of your loan amount.  On purchases under $1.5 million, the Eagle coverage is less expensive than the plot plan!

Therefore, an Eagle policy will be provided for you at closing unless you request the limited policy only.

Here is an example of the cost of regular title insurance based on a Refinance Loan Amount of $120,000.00:

Cost Lender’s Policy ($2.50/1000 x $120,000.00)               =       $300.00
Cost of Plot Plan                                                             =        $150.00
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Total                                                                                        $450.00

Cost of Lender’s Eagle Policy ($2.75/1000 x $120,000)      =       $330.00
No Plot Plan Required                                                      =       $    0.00
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Total                                                                                        $330.00

6.  “Good and Clear Record and Marketable Title, Free from Encumbrances”: Our office must certify to the Lender that they will have a good first (or second) lien on your property.  Therefore, we will conduct a title examination at the Registry of Deeds to determine whether there are any liens or encumbrances on the title, which would prevent this.  The Borrower(s) are responsible for all encumbrances on the title.  All title encumbrances and liens, which would affect the Lender’s priority on your title, must either be cleared prior to the closing or paid off from your closing proceeds.

Mortgages/Tax Liens: Please fill out your mortgage or lien account information on the attached sheet.  Provide us with information on those loans, which you will be paying off with your refinance.  You need not provide us with credit card information.  E-mail, fax or mail it to us as soon as possible.  If you have a home equity line of credit and will be closing it out and paying if off with your refinance proceeds, you must stop using it now.  This office must obtain a written payoff figure from your lender or municipality/government agency for each mortgage or lien that we find on the title.  We shall pay each lien from your proceeds of the sale.  We charge a $75.00 service fee plus a $20.00 express fee for each mortgage or lien that we pay off.

A current problem that is not uncommon in real estate sales is the existence of prior outstanding mortgages or missing assignments.  We will attempt to prepare the title abstract in advance to notify you of any title problems.  There will be a reasonable fee, which will not usually exceed Three Hundred Dollars and 00/100 ($300.00), for each missing assignment and missing discharge if this office agrees to undertake this task (provided that the missing instrument is from an institutional lender still in existence and readily accessible). If the bank from which we receive a payoff statement is not listed at the Registry of Deeds as the record holder of the mortgage, the intervening assignment must be obtained, or else a recorded discharge will show an incomplete chain of title.

If the title is not clear, the Lender may not complete your refinance.  THEREFORE IT IS VERY IMPORTANT FOR YOU TO RESOLVE ANY OUTSTANDING TITLE ISSUES PRIOR TO CLOSING.

Private Mortgages: We require a written payoff statement signed by the private mortgage holder and a discharge that has been signed and notarized prior to closing.  We will hold the discharge in escrow until the refinance mortgage is on record.  We will then release the payoff funds to the private mortgage holder or his/her agent.

Title Held by a Surviving Joint Tenant: If a Borrower holds title to the property with another individual who is deceased, you must obtain an original death certificate and an original M-792 Massachusetts Estate Tax Lien Release Certificate, or an appropriate affidavit, for the decedent at closing.  Please consult the attorney who is conducting the probate of the estate for more detailed information.

7. Homestead: Your refinance transaction will not invalidate any existing Declaration of Homestead that you may have on your property, However, if a new deed has been recorded subsequent to the recording of your Declaration of Homestead your old Homestead will be invalid and a new Homestead will be required. Furthermore, if you are married, your spouse is NOT a record title holder on your property, and you have a Declaration of Homestead on record at the Registry of Deeds, your spouse will be required to attend your refinance to sign a Subordination of Homestead, or in the alternative to sign your mortgage. Again this is true even if said spouse does not hold a title interest in the property and will not be required to sign any other documents.

If we do NOT find a Declaration of Homestead on record when we conduct the title examination of your property his office will automatically prepare a Declaration of Homestead for your further protection of your property, if it will be your principal residence.  Once this Declaration of Homestead is on record, it protects, in most circumstances, up to $500,000.00 of equity (over and above your mortgage amount) that you may have in the property from creditors.  Our fee for preparing this document is $75.00.  You must also pay the $35.00 recording fee to the Registry of Deeds.

8.  Photo Identification: Please bring a government issued picture I.D. with you to the closing.

9.  All Record Title Holders and Borrowers to Be Present at Closing: All record titleholders must be present at the closing to execute the necessary documents.  If you or another borrower cannot be at the closing, you must obtain permission from your Lender to sign for the absent borrower under a Power of Attorney, which we must prepare.  Please let us know as soon as possible if this is the case.   The absent borrower must execute and have notarized prior to closing a specific power of attorney authorizing the attorney in fact to sign any and all documents relating to the refinance of property.

10. Your Proceeds (if any): Your proceeds (if any) and loan payoffs will be issued by check from our Attorney’s Client Funds Trust Account.  Proceeds are generally available three business days after the date of the closing if you have not rescinded the loan.  Sundays and holidays do not count as business days, but Saturdays do count as business days for some lenders.  Your check will be held by our office until the new mortgage is recorded at the Registry of Deeds on that date.  You may pick up your proceeds check at our office after we notify you that the deed is recorded or we will overnight mail your proceeds check to you.

The closing itself usually takes 30 minutes. You will be asked to sign a settlement statement, promissory note, right of rescission, and mortgage and various other bank documents. If you have any special scheduling requests, please let your paralegal know as soon as possible, so that she can schedule your closing accordingly.  Also, our offices are child and infant friendly. Please do not feel that you have to arrange for a sitter, unless that would be more convenient for you.

We look forward to working with you. If you have any questions that your paralegal cannot answer, please feel free to contact us directly anytime.  It will be our privilege to serve as closing attorneys for your refinance.

Sincerely yours,

Alan B. Sharaf, Esq.,
Betsy J. Kelley, Esq.,
Michael R. Maloney, Esq.