Post by S Armour on Oct 11, 2010 9:34:42 GMT 4
Old Republic to stop writing policies
for some foreclosures
10/2/2010
By Stephanie Armour,
Old Republic National Title Insurance, among the
nation's largest title insurance companies, will no
longer write new policies for homes foreclosed
upon by J.P. Morgan Chase and Ally Financial's
GMAC Mortgage unit –– a sign that concerns about
faulty foreclosure paperwork could now endanger
new sales of foreclosed homes.
Old Republic issued a bulletin to some agents
stating that "the company will not insure title to any
property which has been foreclosed by Ally
Financial, Ally Bank or GMAC until further notice,"
according to a Sept. 29 copy of the memo. The
concern is that other title companies will also refuse
to issue policies for major lenders, which could
have major ramifications for the housing industry.
And Maryln Weiner, a title agent and real estate
lawyer in Boca Raton, Fla., said she received a
bulletin saying that Old Republic would also not
insure title policy to a purchaser who has bought a
property from Chase when the bank has foreclosed
on the home and are now selling it to third parties.
"They won't insure it after completion after the
foreclosure," Weiner says. "This is going to set us
back years. It's really going to be a mess. I think
you're going to see actions to reopen foreclosures
that already took place. This will have tremendous
consequences and all title companies will do the
same thing. We've never seen anything like this
before."
Mark Stopa, a lawyer in Florida who represents
homeowners, says the implications are huge. Buyers
will not purchase homes that have been foreclosed
upon if they don't have insurance that it's a clear
title, he says.
"Would you buy the house? If there's questions
about the title, you can't sell it, so who's going to
buy it?" Stopa says.
And homeowners who have purchased properties
that were foreclosed upon could also find their
ownership challenged. A bank could have
foreclosed upon a property and sold it to a third
party. Later, the former homeowner may now come
forward and say the foreclosure judgment has to be
set aside because of faulty documents.
The current homeowner could find they no longer
have any right to a home they had paid for, Stopa
says, and in that case, they're likely to go to the titles
A pre-foreclosure sign is seen in front of a home in Miami on Sept. 16. The decision by Old Republic National Title Insurance to stop writing new polices for certain foreclosures could have major ramifications for the housing industry.
insurer and ask that their financial losses be
covered.
"That's why title insurers don't want to stick their
necks out," Stopa says.
And distressed homes, which include foreclosed
properties and that now make up a significant
number of housing sales, rose to 34% of sales in
August from 32% in July; they were 31% in August
2009, according to the National Association of
Realtors.
If homes that are foreclosed upon don't sell, that
will also lead to more housing inventory. About 1.9
million first-mortgage loan defaults, the first step in
the foreclosure process, are expected in 2010,
according to Moody's Analytics.