Mistake by escrow company almost costs couple their home

Mistake by escrow company almost costs couple their home  »Play Video
It's one thing to lose your home because you stopped making payments on your loan or property taxes, but a local couple discovered their dream home was up for auction, because of a $60,000 mistake by the escrow company.

Hisham and Anna Othman were in near panic mode when they contacted me Wednesday. Records show someone at the escrow company dropped the ball more than a year and a half ago and left a huge lien against the title of their home.

The first red flag was in June, the Othmans says the notice of default they got in the mail was addressed to the previous owners, and since they've received other calls and mail for the previous owners, they thought it was another mistake.

"They had the wrong people." said Anna. "We just kind of brushed it off."

Five months later in August, they come home to find a trustee sale notice taped on their front door- saying their house was set to be sold at auction on the fourth of November. Hisham called the trustee attorney handling the foreclosure.

"Listen, you have the wrong person. We bought our house fair and square. We didn't have any lien against it," Hisham explained.

But court records show the previous owners had a lien against the house going back to 2007. The escrow company should have taken care of it when the Othmans bought the house in 2010. Proceeds of the transaction should have paid off the seller's second loan as well as the existing mortgage balance.

Hisham says he called the escrow company, the Talon Group, to find out what was going on.

"And they said, 'Don't worry. We're aware of the situation. Our legal department's working on it,'" he said.

The couple told the Problem Solvers they were going to file a title claim, but were told that wouldn't be necessary, that a claim had already been filed.

But for months, he says, nothing happened. Hisham learned the credit union that's owed the money, started filing claims with The Talon Group back in March- with no response.

"How could this have happened? How can you overlook such a large payment?" Hisham asked.

As soon as the Othmans explained their situation, I got on the phone and contacted the escrow company and its parent title company- leaving messages. Their only official response came from Talon Group's corporate headquarters after my third call. Assistant Vice President of Corporate Communications Steve Shultz called from California, apologizing and explaining that there's nothing he can tell me.

"No comment. Our policy is not to comment on claims or pending legal matters," he said.

Oddly enough though, within two days of my asking questions, the title company cut a check for more than $68,000, payable to the credit union that's been trying to get its money for most of the year. The foreclosure proceedings that had been allowed to drag on for months will stop this week.

The Othmans say everything suddenly started to change after the Problem Solvers got involved.

"I couldn't believe it. It was just over come with joy knowing that you finally were here to help assist us in this," Hisham said.

Michael Siderius, the trustee attorney handling the foreclosure, says escrow mistakes do happen, but he's troubled by the delays and lack of response in this case. Siderius said he notified the Talon Group in writing about the error and pending foreclosure back in June, with no response.

When I talked to him today, Siderius was in the process of delivering the check to the credit union. He told me the Othmans property records should be free of the public auction notice within the next couple of days and there should be no negative impact on their credit record because the defaulted loan at the center of the foreclosure action was never the Othmans' debt.

When you buy a home, you pay the escrow and title companies hundreds of dollars, typically around $800, to make sure all the paperwork is in order. You also pay for title insurance to insure the title is free of liens. If a pre-existing title problem is overlooked after the title has been determined clear, you file a claim. That's what insurance is for.

After his experience, Hisham Othman questions whether he should ask for his money back. He's filed complaints with the state attorney general, the state Department of Financial Institutions and the office of the Insurance Commissioner to help make sure this doesn't happen to anyone else.