I am an REO title specialist. As such I have reviewed thousands of files for properties that have been foreclosed upon.
I have written here in this forum on many occasions about the use of foreclosure mills in foreclosure transactions. It seems that the public has finally been made aware through the mainstream media of the blatent disregard to following the rules that runs rampant in these foreclosure mills.
The focus of my practice here is clearing title for properties coming out of foreclosure and acting as seller's liasion in many cases or alternatively, acting on behalf of buyers of properties coming out of foreclosure. I would suggest that 90% of all files in my office are foreclosure files.
As you might imagine the memo delivered to me from Old Republic threw me into a tailspin. In this memo they advised that they would no longer insure any property that had been foreclosed upon in the name of GMAC/Ally. I called Underwriting Counsel this morning and was happy to hear from them that they are working on new bulletins that will further clarify their position. I was concerned with the fact that I have already issued commitments to my clients on some properties that were being/had been foreclosed by GMAC or others.
Maryland is not one of the 23 states where GMAC has halted their foreclosure actions YET. The affected states are:
I don't think that there is much doubt that Maryland and other states will be added to this list. We already know that other big lenders have taken the same course and have halted their foreclosures in these same states due to possible "technical errors" in the execution of the affidavits submitted in the foreclosure filings. JP Morgan/Chase has halted foreclosure actions and there are rumors that Citi, B of A and others may follow suit.
For some time now I have commented here and on blogs at http://sourceoftitle.com about the shoddy work being done by these foreclosure firms. I never particularly addressed the specific allegations that are being talked about today, but generally, these mills are dangerous to those of us in the industry and potentially disasterous to the consuming public.
It does not surprise me that the underwriters are running scared but I am surprised that it took them this long to see the "writing on the wall". How many claims do you suppose have already been filed alleging wrongdoing in these mass foreclosures? I can only imagine what the claim rate is going to be now given all the media attention that this issue is getting today.
I take great pains in underwriting these foreclosure files in an effort to insure that the ultimate buyer is not buying into a problem, but with all of the foreclosure files that I have reviewed I can honestly say that I never checked the signatures on the hundreds of affidavits to see whether the same person was signing on behalf of several different entities in the same capacity every time.
Naturally, my underwriting of these files will be even more stringent now. I will now have to go back to every single document I have on file for various entities which provide the necessary signing authority, make sure there is no overlap of names from entity to entity, etc. Even with more stringent underwriting of these files there is no guarantee that there won't be claims filed alleging fraud on the part of the foreclosure mills here in Maryland.
We can only do so much as title insurers and abstractors. What is our liability in these cases? Is it our place, as title insurance producers, to investigate the validity of the signature if we have been provided with a document from the foreclosure attorney with a list of persons named therein who have "signing authority" on behalf of the note holder/assignee in the foreclosure case? Are we to go back and forth between several dozen different "signing authority" documents we have on file from many different entities to insure that no one name appears on the same lists? How can we best protect ourselves if we choose to focus on title clearance in the foreclosure market?
Because of the large inventory of homes available on the open market that have been foreclosed upon it is inevidible that all of us will be underwriting files coming out of foreclosure. How many of us will balk at handling any transaction that is coming out of foreclosure. As always it is the consumer that will suffer in the end. And there is no end in sight.