Title Insurance with Key Title Corporation 63078

In a lawsuit filed in Charlotte, NC Bank of America claims that First American and it's subsidiaries have either denied payment or withheld payment on over $500 million worth of claims stemming from title defects, including vesting problems, legal description errors, intervening liens and other covered items.The law suit states that in at least 5500 instances they have to file claims under these title insurance "policies". All of these claims are related to Equity Lines of Credit or Home Equity Loan.

Bank of America claims that under the Fiserv QuickClose Lien Protection Insurance Program, a streamlined substitute for title insurance that they are entitled to coverages for these title defects.  Under the QuickClose Lien Protection Insurance Program no title search was performed, the program relied upon affidavits by the borrowers and a credit report to identify existing liens against the subject property. Having been in the title insurance business for more than 25 years, I can tell you without questions that affidavits are not worth the ink it took to print them! 

It wasn't until after the housing market began to deteriorate in 2007 that these title defects were discovered, and frankly, I'm almost surprised that they were discovered even then. 

Over the last 10 years I have seen a steady decline in the level of actual title "searching" being done.  Particularly in the case of foreclosures where the foreclosure attorney is only made to research the title from the date of the Mortgage of Deed of Trust being foreclosed upon forward.  In some of the cases discussed in the law suit such an abbreviated title "search" would not have even disclosed some of the problems facing BOA relative to their ability to foreclose these properties.  They claim instances of properties being vested in persons who did not execute their loan document (ie: property vested in Husband and Wife and only Husband signs the Deed of Trust), liens filed against the property prior to their deed of trust, and so on.

I will continue to monitor this lawsuit. I am very curious about the outcome.  I can only hope that all of these lenders who think that cheaper is better and shortcuts work will see this and open their eyes to the fact that title searches have been done for many many many years and for good reason!  You just cannot rely on affidavits given by someone who wants you to give them a loan, you are responsible to your company and to your investors to INSURE that you know all of the facts before offering to write a loan on a property.

Oddly enough whenever I am asked by a consumer whether or not they need a policy of title insurance to protect their interest my pat response has always been, well the lender REQUIRES it as a condition of making this loan to you, do you think they would take a chance on bad title?   Seems like, at least in the instant cases, they did.


Posted by

Charlene Perry
Key Title, Inc. 
35 Fulford Avenue
Bel Air, MD 20104

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