Title companies no longer insuring some lenders' foreclosures
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?