Expert: Paul D. Friedman, M.A., Ph.D., J.D. - 6/8/2007

Question
I applied to refinance my home and take some cash out to get some contruction projects finished. The loan closed and I was notified I would receive a larger sum that I had expected. When I called my mortgage agent, I received an explanation that was legitimate so I didn't worry about it. When I looked at the figures from the mortgage co. that I had signed and compared to the closing statement mailed to me from the title co. there was a discrepancy in the figures. The biggest was the payoff of my original loan. There was 20K$ difference from what they should have paid and what they did pay. This resulted in a short payoff which my mortgage co refused. After they asked me for the money back, which I refused to do, the title co. eventually paid my mortgage and I have a new mortgage. But now they're sueing me to recoup their loss.
My question, if you can answer it, is: How can the title co make such a stupid mistake and then expect me to pay? I have been served in a lawsuit but it seems like we're having a meeting ie:mediation. I am seeking legal counsel, but my appointment isnt until next week. I just thot you might be able to shed some light on my options, or give me some insight. I realize you are not able to give me legal advice, but maybe some good advice none the less.
Thanks in advance.


Answer
John,

Generally, you sign an indemnification provision with the title company.  Your refusal to pay the amount is a breach of contract and they can then sue you pursuant to indemnification of their payment to the mortgage company.

My advice would be for you to speak to an attorney and plan on paying back the money.  You may also be obligated to pay for the title company's attorney's fees.  Your attorney can negotiate possibly a smaller amount or for you not to pay for their attorney's fees.

Very truly yours,

Paul D. Friedman, M.A., Ph.D., J.D.