Here It Comes: Title Insurance Problems

Now we got trouble.

I am in receipt of a copy of a bulletin from Old Republic Title in which it states:

The Company will not insure title to any property which has been foreclosed by Ally Financial, Ally Bank or GMAC until further notice.

Oops.

I suspect this is going to spread fast, given that this "wee problem" is NOT specific to GMAC and Ally. In fact, JP Morgan/Chase has reported "similar discrepancies", and then today we had my report on a ruling from a court in which a counterfeit summons was issued not by the court, but by a law firm.

There isn't going to be any clean way to fix this folks. These bad affidavits and other forms of fraud upon the courts render these judgments voidable. Title companies are potentially on the hook if they write a policy on such a home and the title turns out be not just clouded but unmarketable as there's a valid claim that someone else holds!

This crap has to be cleaned up and the firms and individuals involved must face SEVERE sanction for these acts. If in point of fact, as I have suspected, there is no actual conveyance into the MBS trusts that ever took place (and as I noted, this too has been documented in at least some cases) then we have a ****storm of biblical proportions.

The institutions involved in this cannot be allowed to paper over it or "get away with it." Private property ownership is the foundation of this nation. If these banks and their agents have in fact done what it appears they have done, these institutions and firms must be dissolved and their principals prosecuted to the fullest extent of the law for each and every forged, counterfeit or fraudulent document, and the titles must be unwound, with funds returned to the sellers up the line, until a clear and clean status is regained.

Funny story for me, years ago, I was doing a refi. Set my appointment up for 1PM as I did not want to get caught in commute traffic from Dallas. I cooled my heals in the waiting room till after 3, when the closer came back from a long lunch. The embarrassed receptionist pointed to me and said, your 1PM is waiting for you. She said no problem this will only take a few minutes to do while casting an annoyed look at her for noting she was late. She came back with my closing file and we went into a conference room. That was when I put on my reading glasses to read every word and took out my calculator to check every calculation. I did find a math error which she had to fix herself as the staff had left! She kept babbling this is not necessary as any mistake will be fixed under the law that allows for that. We finished after 7PM. When I departed, I said I hope you enjoyed your lunch and have a nice late dinner date!

So now there are THREE big banks admitting their title integrity sucks so badly they had to suspend foreclosures:

(GMAC / Ally), (JpMorgan / Chase), and BofA.

Plus a fourth: Wells Fargo, now takes a different tack: stick all buyers with the added title risk...

The Market Ticker guy just said this...

Wells has been demanding releases from its buyers for title defects - so now by refusing to allow things to settle out in order to complete a short sale the buyer has to take a potentially-clouded or even unmarketable title for which they will have NO RECOURSE.
If you're doing business with Wells in any capacity at this point, you are, in my opinion, dumber than a box-o-rocks.

http://market-ticker.org/akcs-www?post=168041

Latest Real Estate Time Bomb: Title of Foreclosed Properties Clouded; Wells Fargo Dumping Risk on Hapless Buyers

Now We Got Trouble: Title Insurance

Ok, here we go.

As The New York Times is reporting:

The company, Old Republic National Title Insurance, told its agents Friday that it would not write policies on foreclosed Chase properties until “the objectionable issues have been resolved,” according to a memorandum sent out by the firm’s underwriting department.

I have a copy of the original memo in which they said they would not insure GMAC/Ally mortgages earlier in the week. I declined to name Old Republic because despite trying to get them on the phone and verify the authenticity of the document, the person identified as the contact point for questions refused to talk to me - and so did both their corporate relations AND legal departments.

However, since The Times will run with it, the cat's out of the bag along with the name.

I expect Bank of America will be added to this list shortly.

Without title insurance you cannot get a loan for a property. And you're an idiot to buy even for cash without a Title policy. If there's a problem you could easily find out that you bought an empty box - and have nothing.

One other, and very-important point. Most title policies are rather complex. Even though there are several large title firms and even more small ones, DO NOT take the fact that one or more will offer a policy as an indication that "all is ok." This is not necessarily true.

DO NOT BUY ANY REAL ESTATE IN THIS ENVIRONMENT WITHOUT AN ATTORNEY OF YOUR OWN SELECTION GOING OVER ANY PROFFERED TITLE POLICY BEFORE YOU PAY FOR IT AND CLOSE THE TRANSACTION, AND GET THEM TO EXPLAIN EXACTLY WHAT EXCLUSIONS AND CONDITIONS ARE IN THAT POLICY. WHEN WRITING OFFERS MAKE SURE THAT THE AVAILABILITY OF A TITLE INSURANCE POLICY ACCEPTABLE TO YOU IS ONE OF THE CONDITIONS OF THE SALE AND DO NOT WAIVE IT UNDER ANY CIRCUMSTANCES PRIOR TO CLOSING.

SOME BANKS HAVE "CAPTIVE" TITLE COMPANIES, AND IT WOULD NOT SURPRISE ME ONE BIT TO FIND THAT THEY, AND TITLE INSURERS GENERALLY, ARE EXCLUDING SOME POSSIBLE LOSSES, LEAVING THEM WITH YOU, ESPECIALLY FOR OWNER'S TITLE POLICIES.

SUCH A "CARVE OUT", IF IT EXISTS, COULD LEAVE YOU WITH NO TITLE COVERAGE IF THERE IS A PROBLEM WITH A PREVIOUS SALE OR FORECLOSURE.

THIS COULD RESULT IN LOSS OF THE HOUSE AND ALL MONEY YOU SPENT ON IT.

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