Title companies no longer insuring some lenders' foreclosures

annkathrynOctober 21, 2010

Recently some title insurance companies stopped providing owners' title insurance to buyers of foreclosed properties. For example, Old Republic Title said it would stop insuring homes foreclosed by Ally Financial, Ally Bank or GMAC.

My question: are the title insurance companies ahead of the game in proactively halting the sale of title insurance on properties where they know that the lenders have lost or destroyed the original "wet ink" notes? Or are they way behind the power curve in the same way that ratings agencies belatedly started calling junk those CDOs that they'd originally rated AAA?

Will the cutback on title insurance to foreclosed properties spill over into the ability for buyers of non-foreclosed property to obtain title insurance? In other words, will title insurance now become more expensive and hard to get for everyone?

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earthworm

Probably true.
The consumer pays for everything, including criminal and near-criminal activity. I'd like to see our Senate do something for once and begin an investigation of the banks.
No excuse for "lost paperwork" and the sloppiness in record handling.

    Bookmark   October 22, 2010 at 8:34AM
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Billl

"In other words, will title insurance now become more expensive and hard to get for everyone? "

Probably not. There is going to be a short period of limbo until these issues work their way through the courts (or a settlement.) Once that has passed, the basic economics are unchanged.

    Bookmark   October 22, 2010 at 9:25AM
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brickeyee

The issue before the courts is going to be establishing what level of proof is adequate that the note exists (and the debt it thereby evidences), and how to establish ownership of the note.

It is a real mess (as Deutsche Bank found out after it closed the bond issuer (that did own the notes) to save money that backed the bonds issued.

The bondholders own a share of the now closed issuer, but NOT the underlying notes.
Ownership of the notes (and thus they debt they show) was in limbo till the court was convinced the the notes had indeed been assigned to Deutsche Bank.

Wall Street and the banks played fast and loose with ownership of the notes and are now going to pay a price (that could have been avoided with better record keeping).

The servicing of the notes became divorced from the ownership of the notes, with no real records of who held the 'wet ink' paperwork.

    Bookmark   October 22, 2010 at 11:16AM
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logic

brickeyee: "Wall Street and the banks played fast and loose with ownership of the notes and are now going to pay a price (that could have been avoided with better record keeping)."

Let's hope so. However, based upon the last few years, IMO, chances are slim and none that they will face a consequence that is meaningful.

They will somehow manage to come out of all of this with another slap on the wrist, which is apparently the standard Wall Street "punishment" for ongoing and willful theft, fraud and deception, while the bag that the rest of us is left holding becomes far heavier and onerous.

    Bookmark   October 22, 2010 at 11:40AM
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brickeyee

"They will somehow manage to come out of all of this with another slap on the wrist, which is apparently the standard Wall Street "punishment" for ongoing and willful theft, fraud and deception, while the bag that the rest of us is left holding becomes far heavier and onerous."

No disagreement here.

    Bookmark   October 22, 2010 at 3:40PM
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