USA Today has posted an article that discusses Old Republic National Title Insurance’s decision to stop writing new policies for homes that have been foreclosed on by the companies JP Morgan Chase and GMAC Mortgage. Old Republic is one of the nation’s largest title insurance companies. One consequence of this is that sales of foreclosed homes could be endangered because of faulty foreclosure paperwork.
Stephanie Armour, author of the article, says that:
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.
Buyers are very reluctant to purchase homes that don’t have insurance of a clear title. Some homeowners who have already purchased foreclosed homes might also face problems by having their ownership challenged. If a bank foreclosed on a house and sold it to a third party, then the original homeowners might be able to come forward and demand the foreclosure judgment be overturned because of faulty documents.
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.
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.
You can join our Facebook Fan Page – Alabama Consumer Protection Attorneys where we share useful information about the same types of issues that we cover in this blog.