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TJ, Esq.
TJ, Esq., Attorney
Category: Real Estate Law
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Experience:  JD, MBA
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fannie mae and freddie mac offer an incentive to buyers such

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fannie mae and freddie mac offer an incentive to buyers such that if buyers use their closing agent and title companies, then the buyers do not pay for title insurance. however, is this a case of 'you get what you pay for' -- meaning, would the title insurance be all but useless in the event that something goes wrong when the buyer goes to sell down the line. if it is the case that we'd get lesser service using one of the fannie/freddie title companies, and if we'd already bought using their title services, then would it be worth it to reinsure our title with our own title company?
Hello and thank you for the opportunity to assist you. My name is XXXXX XXXXX I will do my very best to answer your legal questions.

Q: however, is this a case of 'you get what you pay for' -- meaning, would the title insurance be all but useless in the event that something goes wrong when the buyer goes to sell down the line.
A: That would depend upon the terms of the title insurance policy. Since I haven't read the terms, I can't say one way or the other. However, I will point out that you will want to review the title insurance policy to be certain that you are a beneficiary in the event that there is a problem. Lenders always purchase title insurance policy to protect their own investment. However, the homeowner is not a beneficiary under those policies. Accordingly, you would want to review the policy to be sure that you are a beneficiary.

Q: if it is the case that we'd get lesser service using one of the fannie/freddie title companies, and if we'd already bought using their title services, then would it be worth it to reinsure our title with our own title company?
A: Whether or not it would be worth purchasing your own insurance depends on how risk adverse you are, and whether you can afford your own policy. A policy costs about $3.50 on average for every $1000. So, for example, if the house costs $300,000, then the policy will cost you about $1000. It is highly unlikely that you'd ever have a claim. On the other hand, if there is ever a cloud on the title, then it could be extremely costly to resolve, and the resolution may not be in your favor. In that scenario, the fee would be well worth it. But again, the vast majority of people never have a title issue.

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Customer: replied 3 years ago.

hi, but we are not given the chance to review the title policy before closing, do we? i mean, if we disagree with the title policy then it's too late to decide that we don't want to have fannie/freddie's title companies to insure the title. we'd just like to know if it's a good idea to agree to letting them be the closing agents in the first place.

Hello again.

Q: but we are not given the chance to review the title policy before closing, do we?
A: I am certain that if you ask for a copy of the policy, then they can provide you with a copy. You may also want to bluntly ask whether you are the beneficiary in the policy.

Q: we'd just like to know if it's a good idea to agree to letting them be the closing agents in the first place.
A: Yes, I think that it's a good idea to use their closing agents even if you ultimately decide to buy your own title insurance. Their closing agents are obviously used to working with Fannie and Freddie, and so things will likely move along very smoothly.
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