Any other President would have already had a full investigation of Mortgage industry. Not Obama lets go after Arizona not the biggest problem in the World not just America. As time goes on more information is coming out that the banking industry has been milking us for years. There lobbyist own Washington as things go on covering up fraud as the CEO of Chase and the other large banks get richer and richer. When will this stop. When will the Federal Government stop printing money to give to banks. As tax payers go broke.
Foreclosure mess highlights value of title insuranceWhen homebuyers and people refinancing their mortgages first see the itemized estimate for all the closing costs and fees, the largest number is often for title insurance.
This moment is often profoundly irritating, mysterious and rushed – just like so much of the homebuying process. Lenders require buyers to have title insurance, but buyers are often not sure who picked the insurance company. And buyers are so exhausted by the gantlet they’ve already run that they’re not interested in spending time learning more about the policies and shopping around for a better one.
Besides, does anyone actually know people who have had to collect on title insurance? It ultimately feels like a tax – an extortionate one at that – and not a protective measure.
But all of a sudden, the importance of title insurance is becoming crystal clear.in recent weeks, lenders such as GMAC Mortgage, JPMorgan Chase & Co. And Bank of America have halted many or all of their foreclosure proceedings in the wake of allegations of sloppiness, shortcuts or worse. And a potential nightmare situation has emerged that has spooked not only homeowners but also lawyers, title-insurance companies and their investors.
What would happen if scores of people who had lost their homes to foreclosure somehow persuaded a judge to overturn the proceedings? Could they somehow win back the rights to their homes, free and clear of any mortgage? They might not be able to move back into their home at that point. Banks, after all, have sold some of those foreclosed homes to nice young families reaching out for a bit of the American dream. Would those families be put out on the street? And then what?
The answer to that last question could depend on whether those new homeowners have title insurance, because people who buy a home without a mortgage can choose to go without a policy.
Title insurance covers you in case people turn up months or years after you buy your home saying that they, in fact, are the rightful owners of the house or the land, or at least had a stake in the transaction. (The insurance might cover you in other instances as well, relating to easements and other matters.)
The insurance companies or their agents begin any transaction by running a title search, sifting through government filings related to the property. They do this before you buy a home or refinance your mortgage to help sort out any problems ahead of time and to reduce the risk of your filing a claim later. But sometimes they miss things, and issues can arise later.
For example, the person doing the title search might not notice that a home-equity loan is still outstanding or that a contracting firm filed a lien against the owner years ago. That could create problems for you later, when you try to sell the home.
Then there are the psychodramas that can ensue. The previous owner’s previously unknown love child or long-lost heirs could show up saying that they never agreed to the sale of the property. Or perhaps there was fraud against a seller who was elderly or had a mental disability, or forgery of an estranged spouse’s signature. It’s rare, but it happens, and when it does, your title-insurance company is supposed to provide legal counsel or settle with whoever is making a claim.
Title-insurance companies would like you to believe that they are the good guys standing behind you. After all, you are the customer who owns the policy.
In fact, many title-insurance companies are more concerned about the real-estate agents, lawyers and lenders who can steer business their way. The title-insurance companies are well-aware that most people do not shop around for title insurance, even though it’s possible to do so – through a website such as entitledirect.com.
Although the title insurers are not supposed to kick back money directly to companies or brokers that send business their way, government investigations have turned up all sorts of cozy dealings that would make you shake your head in disgust. But because you have to buy the insurance if you need a mortgage, there is not much you can do except hold your nose.
For anyone considering buying a bargain home out of foreclosure soon, consider asking your title insurer whether special riders are available that can cover appreciation on your home in the event of a total loss, as in the evicted previous owner overturning a tainted foreclosure in court and reclaiming your house.
That said, if you can help it, stay away from foreclosed homes until the scene shakes out a little bit. Some people will undoubtedly make a fortune investing in these properties in the next few months. But if your down payment represents most of what you have, it’s hard to justify betting it all on a situation like this one.
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