Tom Kelly, a real estate journalist from the Seattle area, quoted Ted Jones of Stewart title in a recent article. He used this quote:
Ted Jones, chief economist for Stewart Title, said he is concerned that interest rates could rise if title companies cannot prove the actual owner of a foreclosed property.
Given the inaccuracies in foreclosure processing, coupled with the inability of lenders to foreclose without both the deed of trust and promissory note in hand, title companies could walk away from deals because they fear lawsuits. Original notes are typically sold into the secondary market and are difficult to locate.
Now I’m confused. I didn’t think title companies had to prove ownership. I thought title companies based their decisions on public record. If the record says Mr. and Mrs. X own the property, then that’s who owns it. Or if the record says Lender ABC owns the property then thats who owns it. I think there is precedent for title companies not being responsible if there is an error in the public record. It seems a pretty big leap from the possibility of a mishandled forclosure for which a title company refuses to issue a policy to a rise in interest rates because a lender can’t get insurance. Really? How many deals is a title company going to refuse because of a “inaccurate foreclosure proceeding”? How will the title company know that the proceeding was faulty unless there is a complaint by the mortgagor.
Relax Ted. Do you really think mishandled foreclosures are going to cause interest rates to go up. Lenders are not going to let sloppy paperwork negate their foreclosures. If the homeowner didn’t make the payments then he needs to get out of the house. Title insurance companies are not going to walk away from title deals. They are insurance companies – they insure deals with the potential for problems. It is what they do.
I am a bit concerned about the MERS situation of trying to foreclose a mortgage without the original note. But I keep going back to the fact that if the homeowner didn’t make the payments, then he should not be in the property. Everything else is wrangling by the attorneys trying to make a buck on technicalities.
Posted via email from Title Insurance Anthony V. Weis, 45, Phoenix, Maryland, pleaded guilty to wire fraud in connection with a mortgage fraud scheme to defraud lenders of approximately $3.7 million in just eight months. According to Weis‘s plea agreement, Weis was the president and a shareholder of Maple Leaf Title LLC (MLT), a real estate title agency located in Towson, Maryland. Weis directed MLT employees in 13 real estate closings conducted between February and September 2009 to withhold the payoff checks from institutions that held the existing mortgage loan notes on the properties. In each instance, the settlement statement sent to the borrower’s lender falsely represented that the payoff was being made. In an effort to conceal the fraud scheme, Weis caused monthly mortgage payments to be made to the banks holding the mortgage notes. Believing that the bank had been paid off as a result of the settlement, the borrower stopped making monthly payments on that mortgage. And since that lender was receiving monthly payments, it had no reason to notify the borrower of any delinquency. However, because Weis was unable to send checks in every case where he had misappropriated the payoffs from escrow, a number of MLT clients received delinquency notices for non-payment of the mortgage note. A few were threatened with foreclosure and were forced to hire attorneys to prevent being ejected from their homes. Because the existing mortgages had not been paid off, the liens against the property were not removed and a title free of pre-existing liens and claims (clear title) could not be passed to the new lender and borrower. An insurance company had issued title insurance policies to the borrowers guaranteeing clear title. As a result of Weis‘s criminal conduct, the title insurance company ultimately paid out $3.7 million to financial institutions that held mortgage notes. Weis faces a maximum sentence of 30 years in prison followed by five years of supervised release and a fine of $1 million. U.S. District Judge Catherine C. Blake has scheduled sentencing for February 4, 2011, at 10:15 a.m. Posted via email from Title Insurance New service powered by Closing.com enables users to create Good Faith Estimates with real-time fees backed by a compliance guarantee, directly from Encompass360™ PLEASANTON, CA and LA JOLLA, CA – November 18, 2010 – (RealEstateRama) — Ellie Mae®, the enterprise mortgage origination technology provider for mortgage bankers, mortgage brokers, community banks, credit unions and other mortgage lenders, and Closing.com, the largest one-stop-shop for real estate closing services on the Web, have announced the launch of Encompass Assured GFE™ service powered by Closing.com’s SmartGFE® Service. With Encompass Assured GFE, Encompass360™ users can now create Good Faith Estimates, which are backed by a ClosingCorp compliance guarantee, directly from their Encompass360 systems. Posted via email from Title Insurance
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