Foreclosures, REO’s (real estate owned) and auctions on the courthouse steps have one thing in common:
A critical need for the buyer to make sure that they can get clear title, owner’s title insurance (owner’s policy) and, in the case of an auction on the courthouse steps, to ascertain beyond a reasonable doubt that the property is in fact insurable before having to risk a 10% deposit!
At Hallmark Abstract Service we devote a good deal of our time staying abreast of any and all new developments that occur in the area of foreclosures and the insurability of title on properties. As some recent court decisions around the country have shown, being absolutely certain that a buyer is getting clear title to the property is as critical as any other aspect of the transaction!
An example of transaction Hallmark Abstract Service declined to insure
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Example # 1- Non-insurable Title
Fremont Investment and Loan gave a mortgage to Mr. Green and recorded the mortgage in MERS as “nominee”.
Mr. Green stopped making payments and Fremont began a foreclosure action against Mr. Green (Fremont was the plaintiff).
While Fremont held the note the mortgage was never assigned back to Freemont.
Fremont then sold the loan to U.S. Bank.
Fremont had MERS assign the mortgage from MERS to U.S. Bank directly.
U.S. Bank continued with the foreclosure and got a deed through the referee at the foreclosure sale.
REASON FOR TITLE UNDERWRITER’S REFUSAL TO INSURE
According to the current interpretation of foreclosure law by the title companies, in order for this foreclosure to have been done legally, MERS would have had to assign the mortgage back to Fremont Investment before they started their action.
It is the opinion of the title companies that Fremont was not the holder of the mortgage at the time it started its foreclosure so it did not have the STANDING to foreclose and therefore unless the bank signs an indemnification agreement (which most are refusing to do) they will not insure the sale.
Hallmark Abstract Service of New York is always available for interviews on the subject of title insurance and the foreclosure crisis.
For information please contact Michael Haltman at mhaltman@hallmarkabstractllc.com or call him at 516.741.4723.
Hallmark Abstract Service: Have you ever been to a closing where the title wasn’t cleared? We haven’t!
