Titles companies folded, will not require proof of legit title from banks.

[dixiegrrrrl]

From WaPo:

Three major title insurance companies - First American Financial, Old Republic International and Stewart Information Services - told Wall Street analysts in conference calls Thursday that they had decided not to demand written indemnifications from lenders re-selling foreclosed homes. Combined, the three companies account for 52 percent of the title insurance market.

snip:

"We have concluded that it is prudent to continue to insure sales of REO properties," said First American Financial chief executive Dennis J. Gilmore.

He said one reason for the decision was push-back from lenders who service mortgages.

"It's our understanding that in the marketplace, some servicers have indicated under no circumstances will they provide an indemnification," Gilmore said.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/28/AR2010102807356.html
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The "lenders/servicers" are the banks, and they are winning, folks. Your title will not be guaranteed.
So what is the reason for even having title insurers????

Read the above again. The banks refuse to provide proof of title and the title insurers just agreed to go along with the fraud!!!
I fear this is a clear indication that the fraud will be covered up all along the line.

[ixion]

1. uh, ISN'T THAT THEIR JOB?

I mean, they're job is to make sure everything is in order with the title. If they don't demand proof, doesn't that negate their stated purpose?

I'm sure they'll be happy to charge folks a few thousand for doing nothing, though. :eyes: :grr: :puke: :wtf:

[JuniperLea]

3. Exactly right...

What's the point of their existence if not to guarantee title?

Our real property is going the way of our money... to the top 2%... mark my words!

[jberryhill]

9. No, it's not their job

Their job is to pay out in the event that the title is not in order.

Is it the job of your auto insurer to make sure you don't have an auto accident?

[ixion]

10. their job is to guarantee the title

and if they can't verify it, they can't guarantee it.

[jberryhill]

16. It's "INSURANCE"

A "guarantee" is a willingness to assume the risk that a proposition is not true.

[snot]

21. But it's not a willingness to assume liability for what you know to be false.

In these cases, it's not that title MIGHT be defective; it's KNOWN to be defective.

[pokercat999]

15. Actually they INSURE the title so if a claim comes up later

they are stuck with the bill. I purchased a house in SC, the title insurance company made a tax mistake letting the former owner walk away from a pending tax bill. When the county sent me a past due notice I took it to the Title Company....they paid it. I have no idea weather they ever collected from the other party but the former owners were a young couple in the process of divorce.

It seems to me they have made the judgement call that the governments (state and Federal) involved are going to give the banks a pass on this also and the (the title companies) will be in the clear if prior claims arise.

[JuniperLea]

2. Which means they could take it all back any time they want...

Your monthly payments will amount to rent, and the bank owns your home. Remember, this isn't just folks who bought "bad" mortgages. This is anyone who got a loan or a refi in the past seven years or so. All of us.

[Bonhomme Richard]

4. You don't think they all sit on each others Boards. They are

taking the insurance risk that no one will challenge your title after they insure it. Not to mention they make their money insuring titles. If they don't insure their money stream stops. Forget too big to fail....it's become too big to even question the legality of their actions.

[dixiegrrrrl]

5. Good news, tho.

We can now own the Brooklyn Bridge!!!!!!

[flvegan]

6. Okay, hold on...

All the underwriters are doing is backing off forcing the lenders to INDEMNIFY the underwriters. This isn't going to impact anyone but the title underwriters who are taking this risk. The underwriters and their issuing agents will have to do some additional work to provide a Commitment and subsequent title insurance policy, but in the end, if you buy an owners title insurance policy your title will be guaranteed (unless they take Exception to the prior foreclosure case).

[fasttense]

18. That's a pretty big unless

Unless they take Exception to the prior foreclosure case? That's a pretty big unless.

[flvegan]

20. Yes it is.

I can't speak for all of the underwriters. I highly doubt that any of the big ones would do so, but it could happen and I didn't want to seem dishonest and leave the possibility out.

[jgraz]

7. What is the reason for title insurers? The same reason there always has been.

For title insurers to make money.

[jberryhill]

8. "So what is the reason for even having title insurers????"

They are not saying they will not insure.

The reason for having title insurers is to insure against title defects, not to guarantee that title is not defective.

Buying auto insurance doesn't prevent auto accidents either.

I don't understand your question. The point of insurance is to deal with risk. They are saying they are willing to absorb the risk of claims.

Think of what would happen if they said they would quit underwriting title risk.

[dixiegrrrrl]

11. Lemme re-phrase this.

the title insurers drew a line in the sand when the fraud became apparent, by saying they were not willing to assume the extra risk of defective titles on foreclosed homes. By doing this, they were calling out the banks fraud. They were apparently willing to put the fraud where it belonged, on the banks, i.e. to
make the servicers who created the fraud responsible for it.
They were saying they were not going to collude with fraud.
As the article says:

"Such indemnification agreements were drafted earlier this month with input from Fannie Mae and Freddie Mac and their regulator, the Federal Housing Finance Agency, along with the title industry's trade group, the American Land Title Association. They were seen as a way to keep the market for foreclosed properties working despite legal uncertainty."

Now, the banks apparently have the power to resist the agreements of Fannie, Freddie, their regulator and the title
association. The fraud will continue. The title companies will be responsible for the legal fees, which I assume will be passed onto the home buyer.
BUT THE FRAUD WILL CONTINUE. And the title companies will support that now, when just a few days ago they stated they were not going to support it.


If my title insurance allows my servicer to lie about owning my mortgage, that is an ethical issue for me.


"Buying auto insurance doesn't prevent auto accidents either."

Remember all the reported problems when auto insurers refused to pay the insured after an accident?


And, as the article stated, Fidelity National Financial, the largest title insurer,is continuing to require the agreement when doing foreclosure business with Bank of America, however.
Why would they refuse to do that is there is no problem?

[DirkGently]

13. "If my title insurance allows my servicer to lie about owning my mortgage, that is an ethical issue

for me."

That conclusion does not follow from this article. Your title insurance, if you have any, regards your ownership interest in your house. Your lender has a separate policy insuring the viability of its mortgage. If your servicer doesn't own your mortgage, the title insurer has no responsibility to the servicer under its policy, and doesn't care if the mortgage is unenforceable.

[jberryhill]

17. An insurer can decide to cover any risk they'd like to cover

I don't get the problem here. It is entirely up to an insurer to decide what they are going to cover and what they aren't.

Are you saying that my homeowner's company is in cahoots with the thieves because the insurance company will cover me against risk of theft?

"If my title insurance allows my servicer to lie about owning my mortgage, that is an ethical issue for me."

Your homeowner's insurance allows arsonists to burn down your house, too!

[DirkGently]

12. Problematic interpretation, especially re: title insurance.

Title insurers simply dropped their demand for formal indemnification from banks for fouling up title in the foreclosure. That doesn't change anything, and it doesn't mean "your title won't be guaranteed." This was a belt-and-suspenders proposal, not anything new or different, and not doing it likewise changes nothing.

The only situation being discussed is title coming out of foreclosure. That's not how most people buy their houses. In most cases, the buyer out of foreclosure is the bank, and anyone buying subsequently from the bank will receive, generally a Special Warranty Deed, which itself has language from the bank guaranteeing that it did nothing to foul up title, and will also generally get title insurance, which would still insure title. If an investor buys the property directly at the foreclosure sale, they either buy without title insurance, or they have title professionally examined before they buy, and do get title insurance. That's the way it's always been.

As for what title insurance is for, it didn't start as a way to fix the foreclosure crisis, and there's no reason to expect that title insurers would suddenly undertake to do that.

This was an issue between title insurers and foreclosing lenders as to who will bear the risk of a bad foreclosure. Title insurers will either issue a policy, or they won't. In most cases, they're saying they will. If you can't get a policy and don't want to assume the risk, just don't buy property coming out of foreclosure.

[bpj62]

14. Title Companies

The title of your post is incorrect. The title companies are still insuring both the owner and the lender in residential transactions. They were trying to remove some of the potential risk they take by forcing the banks to reduce the risk on some of these foreclosures by getting a indemnification from the REO department. When you by a home you have the choice of getting owners title insurance. The lender requires that you purchase lenders title insurance as a condition of lending you a purchase money deed of trust. If a claim is filed by the prior owner claiming an invalid foreclosure and you have and owners policy you will not lose your home. The underwriter will defend the suit on your behalf.

[fasttense]

19. And if the underwriter loses the suit, and the previous owners want the house back,

You lose the house.

But you get compensated for it. So, what do you get compensated? What you paid out? What about your moving expenses? Or do you get what the house is now worth, which may or may not be what you paid for it?

[DirkGently]

23. Most policies are limited to actual loss of the property alone, based on market

value at the time of the loss. Consequential damages (like moving expenses) are not generally covered.

But again, nothing has changed. And there's no indication anyone is coming back and trying to recover title after foreclosure. That would mostly have to be the borrowers, and they would have a problem in most cases, because they actually defaulted on the loan.

Edit: Loss is also limited to your equity in the property. If you owe more than it's worth, you wouldn't have a cognizable "loss."

[snot]

22. K&R'd. This is a big deal.