AN OPEN LETTER OF CLARIFICATION TO MY REO CLIENTS

By
Title Insurance with Key Title Corporation 63078

Dear REO business partner: 

As you are all aware there has been much talk in the news over the last few days relating to whether or not the major title underwriters will allow policies to be issued on property that has been foreclosed upon in the name of JP Morgan/Chase, GMAC and others. 

On Thursday September 30, 2010 I received a bulletin from my underwriter, Old Republic National Title Insurance Company, advising that they would not allow us to write policy on these properties.  And then on Friday, October 1, 2010, I received an updated bulletin from ORT softening their position on the issuance of these polices.  ORT has taken the position that they will not underwrite policies of title insurance on these transactions in the following states ONLY:

Florida, New York, Ohio, Illinois, Pennsylvania, New Jersey, Connecticut, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Mexico, North Carolina, South Carolina, North Dakota , South Dakota, Oklahoma, Vermont and Wisconsin.  The Attorneys General of these states have opened investigations on allegations of improperly executed documents filed in the foreclosure proceedings. Maryland may get on board with these type investigations, but, at this writing, I have not seen or heard evidence of that.   

As of today, it is business as usual as it relates to files that we are currently handling or that you may ask us to handle in the future.  Naturally, as is always the case, the title will be run for a full 60 years back, all documents filed with the court will be reviewed and your ultimate purchaser will receive a policy of title insurance, with no additional premium added, to cover them against possible title defects, including defects in the foreclosure filing.  If, on the off chance, the prior owners file a law suit against the foreclosure firm/lender alleging improper filings, your buyer and their lender will still be fully protected up to the limits of the policy that we issue.  For more information on this please call me directly. 

As is always the case, and as I have mentioned previously, it is incumbent on you to advise the buyer that they should seek the services of an independent title agent, well versed in the transfer of REO property to afford them with the assurances that the title will have been researched and reviewed for a period time consistent with industry standards, (not from the date of the title deed to the foreclosed party forward) , that there is an independent set of eyes on the foreclosure transaction and that there is not an actual or perceived conflict of interest

If you have files in your inventory that other title agents cannot/will not issue title on, please call me and I will try to assist you in getting these files to closing in a timely fashion.   

CHARLENE PERRY

The Preferred Title Group, Inc.

3605 E. Joppa Road

Baltimore, MD 21234

410-663-7444

Posted by

Charlene Perry
Key Title, Inc. 
35 Fulford Avenue
Bel Air, MD 20104
410-803-4800

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Topic:
ActiveRain Community
Location:
Maryland Baltimore County Perry Hall
Tags:
title insurance
fannie mae
foreclosure
maryland foreclosures
title defects
title underwriting
fraudulent conveyances
foreclosure mills

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Rainmaker
376,927
Robin Dampier REALTOR®
Coldwell Banker King - Hendersonville, NC
Hendersonville & Western NC Real Estate Source

As if the real estate industry doesn't have enough troubles it appears this foreclosure issue is growing in leaps and bounds with incorrectly/unread foreclosure papers.  It will be more than just interesting to see how the situation will shake out and affect all.  Maybe more REO's will get Sold and Closed without so much nonsense envolved.

Good and timely info.

NC is one of the states mentioned.

Sue of Robin and Sue

Oct 04, 2010 05:14 AM #1
Rainer
67,851
Cynthia (Cindy) Vogt
Long & Foster Real Estate - Abington, PA

Something new every day.  What is the reasoning behind this decision?  Thanks for the heads up.

Oct 04, 2010 05:16 AM #2
Rainer
100,471
CHARLENE PERRY, CLTP
Key Title Corporation - Perry Hall, MD
Insuring the Past to Protect Your Future

Ladies

Thank you for reading my rants and ravings.  If you actually go back for at least 6 months and read some of my other blogs you will see that I have written about these type issues well before this past week's news.  It has long made me nervous for the consumer when the REO asset managers insist that the buyer use the services of the foreclosure firm or their affiliate title agency to convey title out of foreclosure.  There is asolutely no oversight to protect the consumer and there is an absolute conflict of interest in my opinion.

The reasoning for the "softening" of the position taken by ORT may have to do with the fact that if the ultimate purchaser of these REO properties gets pulled into litigation by a prior owner who is alleging fraud the ultimate purchaser would have recourse against the foreclosure mill or the lender who claimed to be the note holder at the time of foreclosure.  This would mean that the underwriters will not "take a hit" as it relates to claims ultimately because they would go back to the foreclosure mill or the alleged note holder to make the purchaser whole. 

It's complicated but at the end of the day, because of the great number of properties that are currently in REO portfolios the industry would be at a virtual standstill if there were no assurances being offered to the ultimate purchaser and to their lenders.  Of course, it remains to be seen how the other states in the nation will handle this.  I have heard rumours that Maryland may be opening an investigation, but at this point, I haven't seen any evidence of that.

~Charlene

Oct 04, 2010 05:26 AM #3
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Rainer
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CHARLENE PERRY, CLTP

Insuring the Past to Protect Your Future
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