Of the foreclosure debacle. I refer, of course, to title policy costs.
Title insurance is defined as protection against losses stemming from any problems connected to the title of a piece of property. So if there were homeowners’ association fees that went unpaid by a previous owner, or liens against the home placed by local tax assessors that weren’t detected during the title search conducted while the home was being purchased, those costs would be covered by title insurance. The insurance company will also cover all legal fees rising from the dispute.The last land transaction I made included a real surprise for the title policy cost. I'll bet losses in the foreclosure arena could prompt rate increases in healthier sectors like agriculture.
The problems that have arisen in the wake of the real estate craze early last decade stem from the fact that mortgages and titles changed hands so quickly and so many times that, in many instances, no one knows how to track down all the original paperwork.
In regions hard hit by foreclosures -- Florida, for example -- much of that paperwork isn’t showing up when title searches are being conducted on sales of foreclosed home. Consequently, lots of potential problems are going undetected.
“There is information that isn’t making it to the proper place quickly enough and it’s making it difficult to be certain that the title has completely cleared,” Epstein explained.
Epstein said there are cases in which mortgages were split up among several investors and those separate investors have foreclosed on the same mortgage at different times, leaving the current title holder in an uneasy state of legal and financial limbo.
That’s the sort of dispute that title insurance is designed to settle.
At least one large title insurer isn’t exactly embracing these issues. On Oct. 1, Old Republic National Title Insurance Co., a unit of Old United International Corp (ORI: 13.91 ,0.00 ,0.00%), announced it wouldn’t issue new policies on homes recently foreclosed by GMAC or JPMorgan Chase. [More]