Thursday, February 26, 2009

Find people to evaluate long-term care needs

If you need care, you may find it a hard topic to raise with others because it seems like a blow to your self-esteem, a subject that means you are really “old.” You may also be reluctant to begin a process of giving up some of your independence or surrendering full control over your life. Remember, the first step in getting necessary care is to overcome your reluctance to talk about it. Once the discussion has begun, you can use the information in this book to organize and choose the right kinds of care.

Here are some of the people you can turn to for help in beginning to evaluate long-term care needs:

• Your personal physician is often a good place to start, not necessarily to moderate discussions but to define your medical needs and refer you to others who may be helpful in making arrangements.

• Traditional word-of-mouth is still one of the best ways to begin tackling any new problem. Friends and neighbors whose opinions you trust, and who may have already faced similar situations, are often a good source of information. The people at your local senior center may know of sources for long‑term care assistance. These word-of-mouth sources often let you know of “unofficial” personal care aides who would not be available through more formal channels.

• A clergy member may be able to help directly or to refer you and your family to professionals who can introduce alternatives and coordinate planning.

• County family service agencies, Area Agencies on Aging, or other senior information and referral services are experienced sources that can provide direct access to specific care providers and help you develop an overall care plan. These agencies can direct you to a counselor or social worker who specializes in long-term care for elders and can help you begin your discussions and planning.

• If residence in a nursing facility is not absolutely necessary, many people make use of the services of a professional geriatric care manager to see what at-home and other supportive services are available and to organize care from different providers.

• If you or your loved one has Alzheimer’s disease or a similar mental impairment, you can turn to organizations that specialize in providing information and referrals to people facing these difficult situations.

Monday, February 23, 2009

Understanding Waiting Period in Long Term Care Insurance

In order for you to understand the relative value of the waiting period in a particular company, you should ask these questions:

How many days during the week do I have to receive at least one day of professional home and community care that will be counted as seven toward completing the elimination period? With some insurers you only have to receive care at least one day to qualify for a seven-day credit.

How long a period do I have for completing my waiting period? If, for example, you chose a 90-day waiting period and you have the type of illness that in the initial stages does not require care every day some companies require that you have at least your 90 days of care during a 180- or 360-day period. If you do not qualify and have the appropriate number of days during that period of time your clock starts all over again and you must sustain treatment during your 90-day period during another 180- or 360-day period. This feature is becoming highly competitive and some companies are about to offer the ability to accumulate your waiting period during a 720-day period.

How often do I have to satisfy an elimination period to access benefits? Some companies provide that any elimination or waiting period longer than 30 days must be satisfied by you only once during your lifetime.

Just how different insurers treat this feature could be a significant factor in determination of the appropriate company to select for your long-term care insurance.

Friday, February 20, 2009

Reimbursement VS Indemnity in Long term care policies

Long-term care policies come in two basic models: reimbursement and indemnity. Choosing between these two types of policies is not nearly so simple.

Consider these questions:

1. How are your benefits paid?

Assume you have a $200 daily benefit. Reimbursement pays for only the covered service. If you spend $70 on a provider, you get $70 in reimbursement. The other $130 remains in your pool of benefits. As long as you have a documented service, indemnity will pay you the full $200 even if you spend only $70.

If you take the indemnity plan’s full $200 every day, you may run out of your money while you still need it. Your pool will run dry. A reimbursement plan keeps the money that you don’t spend in your pool of money, thus effectively stretching out the time limits on your benefits until you spend whatever is left.

The indemnity seller asks the customer, “Why should the insurance company tell you how to spend your money?” The reimbursement seller asks the customer, “Did you actually buy long-term care insurance to pay for airline tickets?” Reimbursement sellers argue that the insurance money was never intended to pay for services that any caring family member or friend would do for love and for free.

2. Who provides the service?

Reimbursement policies insist that you use licensed caregivers, although you may be able to purchase a rider to allow you to pay family members. An indemnity plan may let you pay family members or informal caregivers who cost less than licensed providers. Why buy a reimbursement policy, especially if you think you’ll have trouble finding a licensed caregiver? Because the policy usually allows for these conditions, and besides, the companies have developed networks of providers for practically every area of the country.

3. Which model costs less?

Indemnity sellers say that their claims don’t cost much to process, there is less overhead, and the premiums should be less. Sellers of reimbursement policies make the opposite case, arguing that premiums for reimbursement are lower because the claims costs tend to be lower; indemnity policies may cost more because claims costs are higher for indemnity insurers. In fact, as of this writing, the premium costs are almost the same. But a Life Plans consultant anticipates that this will shift as the indemnity insurers begin to play catch-up as their claims start to come due in 10 years.

Tuesday, February 17, 2009

Mechanics' Liens in Title Insurance

Mechanics' liens present a unique problem for title insurers. A mechanics' lien is established of record by the filing of a Notice of Lien, Claim of Lien or similar document. The priority of the lien, in many states, however, may date from the time of commencement of the work for which the lien is filed. Therefore, if work is commenced before the issuance of a title policy but the lien is filed after the date of policy the title search will not disclose and the policy will not reflect the existence of a lien that is, in fact, prior to the interest insured by the policy.

Many title policies except coverage of this risk with language that excepts to matters not shown in the public records as existing liens at the date of policy. The title insurance company may provide mechanics' lien insurance to the lender by issuance of a loan policy:

- Without exception, based upon priority of the mortgage over subsequently recorded mechanics' liens, because state law requirements are met (state law may provide that the construction mortgage has priority unless a notice of commencement is recorded before the mortgage, or a mechanics' lien is recorded before the mortgage, or visible commencement of construction occurs before the mortgage is recorded).

- With exception to unrecorded mechanics' liens (in many jurisdictions mechanics' liens have priority over or parity with the mortgage, in all or many cases, such as construction loans, or where visible commencement began before recordation of the mortgage).

- With a pending disbursement clause (which may limit priority coverage to authorized disbursements, or construction performed before a specified date). Pending disbursement clauses will vary. They may provide that the coverage increases as disbursements are made in good faith without knowledge of objections or other matters, they may include requirements for waivers and affidavits stating bills have been paid for the last draw, and they may require a continuation of the title examination.

Saturday, February 14, 2009

Gap in Title Insurance

There are a number of circumstances that create a "gap" between the examination of title and Date of Policy coverage. The following are examples of a "gap":

- The recorder's office may delay in recording instruments after they are filed or presented to the recorder. The courthouse examination at time of filing does not include those previously filed instruments not yet recorded. (In many states an instrument is record notice from filing or presentation to the recorder; in some states the instrument is not record notice until later recorded by the recorder). This is "gap."

- The title company's plant may be currently posted several business days prior to date of examination. This is a "gap."

- The title company may close and file for record without down dating, extending or continuing its prior search of the records. This is a "gap."

- The title company may close the real estate transaction and disburse, but fail to file the instruments for several days or weeks. This is a "gap."

- The title company may secure execution of the documents on a loan subject to right of rescission, but may not continue the examination when the mortgage is filed for record after the three day right of rescission expires. This is a "gap."

- In each case, there will be a difference in time between the date through which the last examination of title is made and the date of record notice (by filing or recording) of the insured's deed or mortgage. This is a "gap."

The gap between the date of filing or recording of instruments and the date through which a current examination will be made varies widely. In some locations, the examination customarily is done through time or recording, with no gap in the time between the examination and Date of Policy, or is done to within a few hours of the current filing. Most common is a gap of anywhere from a few days to about two or three weeks, if the title is down dated or continued until time of closing or filing. In a few counties sprinkled throughout the U.S., the gap ranges from two to eight months. For example, in the area around Atlanta the gap can be up to four months. In Minnesota, the switch to imaging has been followed by an increase in the gap to up to four months.

Wednesday, February 11, 2009

Examination of Title Insurance

Generally, an examination or search is not defined by law or regulation, although some states established the period of time that must be covered by a title plant. The period of examination is commonly based upon local custom and upon specific underwriting guidelines. Local custom may be evidenced by State Bar Standards or the period required for the root of title under a marketable record title act (although these acts contain numerous exceptions).

Title insurer guidelines will vary, depending upon the location or state of the land and upon whether the land is residential or other land. Typically, title companies will rely upon "starters," such as prior title policies issued by other title companies. While title policies may be a basis for examining forward, this will not generally be true of a prior short form loan policy, unless the new policy also is a short form loan policy.

Some title insurers will allow title insurance agents to start their title searches with prior commitments, loan policies and owner's policies issued by other title insurers, while other title insurers more commonly allow title insurance agents to start searches only with prior owner's policies and, in some cases, loan policies.

On residential transactions, some title companies will allow a 1-3 bona fide deed search (going back only one to three deeds in the chain), and name check and tax search, together with review of subdivision exceptions shown on a reference file and on the plat.

Some title companies will allow a search beginning with the most recent outstanding "first" bona fide mortgage or start with the first such mortgage before the most recent deed, subject to a general exception to restrictions or minerals. The practices vary among title companies, but short searches are common on residential transactions.

In some transactions, no additional search is merited if some requirements are made or if the product is narrowly designed.

Factual information set forth as exceptions and other specific provisions of commitments and policies of other title insurers that reflect the matters affecting marketable title do not merit copyright protection.

Sunday, February 8, 2009

Other Recent Competing Products with Title Insurance

Title insurance has always competed against warranties of title, title searches and title examinations, with or without abstracts of title. The advantage of title insurance over these alternatives has long been argued: a title insurer's deep pocket generally exists to pay a title insurance claim, but a deep pocket does not necessarily exist in a claim against a warrantor, searcher or examiner, although the warrantor may be financially strong or the searcher or examiner may have malpractice or errors or omissions insurance, subject to deductibles, maximum liability, and term of coverage.

More recently, two products have been offered that have competed with title insurance:

TOP (Title Option Plus). "The TOP program is embodied in three interrelated contractual agreements (furnished to Freddie Mac in lieu of a traditional title policy or attorney's title opinion)

The first contract, the Master Agreement, is a 'warranty' by NMI (Norwest Mortgage, Inc.) to Freddie Mac (and Fannie Mae) that those mortgages NMI sells to Freddie Mac (or Fannie Mae) are secured by a first lien. NMI's contractual undertakings under the Master Agreement protect Freddie Mac against any title claims or problems, including non-record risks, that may affect Freddie Mac's interest in the loan it has purchased. If a defect appears and cannot be cured, NMI agrees to repurchase the loan, if the claim cannot be otherwise resolved. (It is noted that NMI only warrants the title and priority of a lien, when the title search and title report is performed by ATI (American Land Title Company, doing business as ATI Title Company, a wholly owned subsidiary of NMI)).

The second contract is a title condition report prepared by ATI and furnished to NMI to verify that, as a matter of public record, NMI's mortgage is secured by a first lien. ATI remains liable for any on-record defects that are missed in the title search, while NMI assumes the risk of off-record defects. The third contractual arrangement is The Guarantee Agreement from Norwest (Norwest Corporation, the bank holding company which owns NMI) to Freddie Mac under which Norwest guarantees NMI's title-related obligations to Freddie Mac." TOP was generally, but not universally, determined to be title insurance transacted, sold, or marketed in violation of applicable insurance laws in most, but not all, jurisdictions that administratively or judicially considered it. The issue of the specific TOP product has apparently been rendered moot by formation in 1998 of a joint venture between First American Financial Corporation and Norwest Mortgage, Inc., involving ATI Title Company and two other subsidiaries, pursuant to which ATI Title Company will issue title insurance and will no longer offer the TOP product.

Mortgage Impairment Insurance. This type of insurance provided to a lender typically insures the lender against failure by the lender to have sufficient title insurance, not due to the lender's willful fault. Some of these policies also insure matters that may be asserted to be title insurance.

For example, some polices may insure against loss resulting from (1) failure to pay real estate taxes; (2) error, neglect, omission or breach of duty in actual performance or failure to perform activities, including obtaining a tax bill showing ownership, review of credit bureau report showing liens and property address, or owner's affidavit relating to title or impairment by discovery of a previously unknown property interest in the collateral; (3) perfection of a second lien mortgage could not be obtained despite timely filing of the mortgage; (4) loss by reason of defective title, if the insured required title insurance; (5) impairment of lien, due to an unknown interest, if the lender required a tax bill showing ownership, a credit report showing liens and property address, and/or an owner's affidavit of title, and presented the (second) mortgage for recording.

Typically this type of insurance is offered on junior home equity loans. It is sometimes offered on a surplus line basis. Some of the policies are written as master policies with a stated maximum limit of liability. Some policies are called equity or lending activities policies. This coverage should be contrasted with collateral protection insurance, which provides insurance because of a consumer's failure to provide evidence of insurance, and which excludes title insurance.

Thursday, February 5, 2009

Overview of Standard Title Insurance Forms (part 3)

The policies may be modified to provide additional coverages by three methods: (1) Schedule B affirmative insurance, or (2) endorsement, or (3) deletion of printed standard exceptions. Schedule B affirmative language usually consists of a specific insurance provision following and related to a specific exception. It is more a product of East Coast jurisdictions (although promulgated "express insurance" is available in Texas). Endorsements may provide insurance, as to a specific exception, changes in the Exclusions or Conditions and Stipulations, or, more generally, additional insurance.

The policies provide "extended coverage" if the more common standard exceptions are deleted. Those exceptions are typically the following:

(a) Rights or claims of parties in possession not shown by the public records.

(b) Easements, or claims of easements, not shown by the public records.

(c) Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the subject property.

(d) Any lien, or right to a lien, for services, labor, or material hereto or hereafter furnished, imposed by law and not shown by the public records.

(e) Taxes or special assessments which are not shown as existing liens by the public records.

Assignments of rents may be described in a Loan Policy in several ways: in Schedule A with the description of the insured mortgage, in Schedule B-I (generally not acceptable to the insured), in Schedule B-II (as subordinate), or in a "Note." The assignment may be subject of a CLTA Endorsement 104.6.

An attorney may be guilty of negligence in not recommending adequate title review or title insurance. Given this duty, the attorney advising a purchaser is likely guilty of malpractice if the attorney does not recommend:

(1) a title insurance policy, and

(2) extended coverage.

If the more extensive coverages of the ALTA Homeowner's Policy of Title Insurance are reasonably available, it would seemingly be negligent if the attorney failed to recommend the advantages of this policy.

Monday, February 2, 2009

Overview of Standard Title Insurance Forms (part 2)

The 1970 Owner's Policy (Form A), which did not insure as to unmarketability, is no longer issued. The 1970 Owner's Policy (Form B), which insures as to unmarketability of title, and the 1970 Loan Policy replaced earlier versions and are still available in most states. These forms were revised in 1984 to modify the governmental regulation exclusion, by providing that the exclusion did not apply if a notice of defect, lien or encumbrance was recorded in the local real property records.

The most current ALTA forms are the ALTA Owner's Policy (10-17-92) and ALTA Loan Policy (10-17-92). These forms replaced the recent "1990" ALTA policies and narrowed the creditors' rights exclusion by substitution of the "New York"creditors' rights language. The earlier ''1987" policies contained no express creditor's rights exclusion. Effective October 3, 1991, the "pre 1990 policies" (e.g., 1970 policies and 1970 revised 1984 policies) are no longer official ALTA forms (except for the Residential Owner's Policy), although they remain widely available upon request.

The 1992 policies are available throughout most of the United States; they are issued in modified form in some states. In Arkansas, Florida, Kansas, Missouri, New Jersey, and South Dakota (and in Alabama a notice is required, and in Kentucky and some other locations, arbitration is not enforceable) the arbitration clause is modified or deleted to remove compulsory arbitration; in Florida the coinsurance clause in the Owner's Policy is deleted; and in Texas a number of changes are made (e.g., modified mechanic's lien insuring provision; insurance of good and indefeasible title instead of marketable title; definition of access; slightly modified claims, creditor's rights, and arbitration provisions).

The 1970 policies remain available in most jurisdictions, but are not available in Michigan, New Jersey, New Mexico, New York, Pennsylvania, and Texas.

Search This Blog