USAToday.com has posted an article about how foreclosed homes could become harder to buy since Old Republic National Title Insurance has stopped insuring homes’ titles that have been foreclosed by GMAC Mortgage and JP Morgan Chase.
This started last week when the insurance company made the announcement, claiming that the main reason is because both mortgage companies have out a halt on foreclosures in 23 states. The company is also reviewing legal files that might not have been properly notarized or verified.
Generally, lenders won’t issue a mortgage without title insurance. This protects buyers by guaranteeing they have clear ownership of the property and protects both the homeowner’s and the lender’s financial interests if a dispute over ownership came up.
Old Republic’s action is the latest twist in a growing controversy that has called tens of thousands of foreclosure cases into question in the 23 states that require court approval. Bank of America said Friday that it, too, will stop foreclosures in those states while reviewing its records for the same problems tying up JPMorgan and GMAC foreclosures.
Representatives of the three servicers have given sworn statements in lawsuits that they signed thousands of foreclosure affidavits without signing them in a notary’s presence or verifying the supporting documents, as the law requires.
Questioning if foreclosures were carried out legally could lead to homeowners who had been evicted claiming that they still own their home, even after it had been put up for sale as a foreclosure and sold, according to Mark Stopa, a Florida attorney.
“The bank forecloses on a property, sells it to a legitimate third party,” Stopa says. “Two weeks later, the former homeowner says the paperwork was wrong and the judgment has to be set aside. The (new) owner is out.”
The American Land Title Association, which represents title insurance companies, says that errors in foreclosure paperwork would have just a very small effect on people who have purchased foreclosed homes. They can argue that they legally bought the home and the law will protect them. ALTA also says that it’s unlikely a court will take a home away from someone who recently bought a foreclosed home and return it to the original owner who was unreliable with making payments.
If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.
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