Sales of foreclosed properties, already stalled by mounting evidence of widespread flawed documentation practices by lenders and attorneys, may hit another roadblock: New buyers might not be able to get the title insurance required for a mortgage.
New House Title, owned by a large Tampa foreclosure law firm under state investigation, this week denied coverage for a 2009 Deerfield Beach condo foreclosure that its own attorneys had handled, citing potentially defective court filings.
The New York Times last week also claimed Old Republic National Title, the fourth largest title insurer in the country, had sent a memo to its agents in some states saying the company would not cover homes foreclosed on by JPMorgan Chase until "objectionable issues have been resolved." Earlier, the company had taken the same stand on homes foreclosed by GMAC Mortgage, now owned by Ally Bank.
Louis Spagnuolo, vice president of mortgage banking at WCS Lending in Boca Raton, said title insurers are becoming very selective about they'll cover as the foreclosure crisis deepens. He predicted major underwriters soon will put a moritorium on policies for foreclosures by troubled lenders.
Thursday, October 14, 2010
Foreclosure sales may stall if title insurance becomes scarce - Sun Sentinel
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