October 01, 2010, 6:37 PM EDT
By Kathleen M. HowleyOct. 1 (Bloomberg) — U.S. courts are clogged with a record number of foreclosures. Next, they may be jammed with suits contesting property rights as procedural mistakes in those cases cloud titles establishing ownership.
“Defective documentation has created millions of blighted titles that will plague the nation for the next decade,” said Richard Kessler, an attorney in Sarasota, Florida, who conducted a study that found errors in about three-fourths of court filings related to home repossessions.
Attorneys general in at least six states are investigating borrowers’ claims that some of the nation’s largest home lenders and loan servicers are making misstatements in foreclosures. JPMorgan Chase & Co. is asking judges to postpone foreclosure rulings, while Ally Financial Inc. said Sept. 21 its GMAC Mortgage unit would halt evictions. The companies said employees may have completed affidavits without confirming their accuracy.
Such mistakes may allow former owners to challenge the repossession of homes long after the properties are resold, according to Kessler. Ownership questions may not arise until a home is under contract and the potential purchaser applies for title insurance or even decades later as one deed researcher catches errors overlooked by another. A so-called defective title means the person who paid for and moved into a house may not be the legal owner.
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American Land Title Association Comments on Recent Announcements Regarding the Foreclosure Process Washington, D.C., Oct. 1, 2010 — The American Land Title Association (ALTA) has issued the following statement regarding title insurance on foreclosed properties: Several lenders have halted foreclosures and the sale of real estate owned properties (REO) due to possible flaws in documentation used in the foreclosure process. This has, in turn, raised questions about the validity of title to properties that have already been foreclosed, resold and on which a title insurance policy has been issued. ALTA believes these questionable foreclosures will ultimately have little adverse impact on the new owners of REO properties or on the title insurance claims. “If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge,” said Kurt Pfotenhauer, chief executive officer of ALTA. “However, it is unlikely that a court will take property from an innocent current homeowner and return it to a previous homeowner who failed to make payments on the loan subject to the foreclosure.” Though laws may vary on a state by state basis, in general, the buyer of a property that has been through foreclosure has numerous defenses available to assure their continued ownership. These same legal defenses should significantly limit the title industry’s claims exposure. And in the event that a court does set aside a foreclosure due to a defect in documentation, the foreclosing lender would be required to return to the new homeowner all funds obtained from them, resulting in no loss under the title insurance policy. “ALTA will be asking lenders to acknowledge that all appropriate procedures have been followed by the lending community before foreclosed properties are resold on the market,” Pfotenhauer said. “On foreclosures, it is especially important that all documentation is in order. Commitment to accuracy and quality assurance is the foundation of title insurance. This commitment ensures fewer problems for homeowners and lenders, and should give shareholders confidence in their investment.” # # # About ALTA The American Land Title Association, founded in 1907, is a national trade association representing more than 3,800 title insurance companies, title agents, independent abstracters, title searchers, and attorneys. With offices throughout the United States, ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.
Jeremy Yohe | Director of Communications | American Land Title Association | 1828 L St N.W., #705 | Washington, DC. 20036| Ph: (202) 261-2938 | Fax: (202) 223-5843 / (888) FAX-ALTA (239-2582) 2010 Annual Convention Oct. 13–16 Manchester Grand Hyatt San Diego, Calif.
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American Land Title Association Applauds U.S. Representatives for Introducing Bill Protecting Consumers from Harmful Private Transfer Fees Known as the Homeowner Equity Protection Act, HR 6260 would amend the Real Estate Settlement Procedures Act (RESPA) to prohibit the collection of private transfer fees by for-profit third parties on all federally related mortgage loans. When a private transfer fee is placed on a property, it requires that every time the property is sold for the next 99 years, 1 percent of the sale price of the property must be paid to an independent third party. “We congratulate Rep. Walters and the co-sponsors for introducing this much-needed, consumer-protection bill,” said Kurt Pfotenhauer, chief executive officer of ALTA. “While traditional covenants have an accepted and beneficial role in the housing market by benefitting the land, these predatory instruments steal equity from American homeowners forcing them to pay a premium for the right to sell their own property.” The use of private transfer fees has already been restricted in 18 states, while the Federal Housing Authority has already confirmed that the government won’t insure mortgages backed by homes with private transfer fee covenants attached. The Federal Housing Finance Administration has issued a guidance that would restrict Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from investing in mortgages with these fees. “Since RESPA is a consumer protection statute, this amendment makes perfect sense to ban these fees because they add no benefit or value to a property, and are little more than a predatory scheme meant to take advantage of unsuspecting homeowners,” Pfotenhauer said. “ALTA thanks the representatives for recognizing the danger that these fees pose to homeowners and the real estate market.” # # # About ALTA The American Land Title Association, founded in 1907, is a national trade association representing title insurance companies, title agents, independent abstracters, title searchers, and attorneys. With offices throughout the United States, ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.
Jeremy Yohe | Director of Communications | American Land Title Association | 1828 L St N.W., #705 | Washington, DC. 20036| Ph: (202) 261-2938 | Fax: (202) 223-5843 / (888) FAX-ALTA (239-2582) 2010 Annual Convention Oct. 13–16 Manchester Grand Hyatt San Diego, Calif.
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[SPAM] American Land Title Association Comments on Recent Announcements Regarding the Foreclosure Process
** Immediate Release **
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American Land Title Association Applauds U.S. Representatives for Introducing Bill Protecting Consumers from Harmful Private Transfer Fees
** Immediate Release **
Washington, D.C., Sept. 29, 2010 — The American Land Title Association applauds U.S. Rep. Maxine Walters and co-sponsors Gwen Moore, Brad Sherman and Albio Sires for introducing a bill that protects consumers from a harmful real estate scheme that strips homeowners of equity in their house and depresses home prices.
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