TITLE AGENT ERRORS AND OMISSIONS CLAIM AND TITLE POLICY

FROM FAQ RECENT ENTRY:

> Comment:
> Interesting idea, although flawed.
>
> Your title insurance company will only process a claim if there has been a loss (or an imminent danger of one. i.e., an attack on the title), and only then if it is not of the insured’s doing (or could have been prevented through action by the insured.)
>
> Since foreclosure is ostensibly always the insured’s fault (except of course in the rare case of forgery and intervening liens), you would be hard pressed to find any insurance company that would see it as an insurable loss or attack on title. The insured had an obligation to perform under the note they signed (ahem, which usually includes a “successors and/or assigns” clause), and failing to follow through on that creates an uninsurable loss – securitization or no.

ANSWER: My point, perhaps not articulate enough, is different from what you are addressing. If at the closing there was a pooling and service agreement already in existence and known to the title agent.

If at the item of the loan closing there was an assignment and assumption agreement already in place. If the investors had already purchased mortgage backed securities, that included a description of a “temporary” set of notes (See Lehman filings), that would be replaced by “real” notes and security instruments pledged as security to the holders of asset backed securities, and if the terms of the pledge within the SPV was an allocation of funds contrary to the terms of the note and mortgage, and if the title agent was aware of sufficient facts to put him on notice that (a) undisclosed third parties were involved in the transaction and (b) that undisclosed fees were being paid and (c) that this could create grounds for three-day rescission, but for the fact that the real “lender” has not been disclosed— assuming all of that, because that is actually what happened — does that not mean that there was actual knowledge by the title agent that there are dozens and perhaps hundreds of even thousands of people who have an equitable and legal interest in the security instrument encumbering the property.

I agree that the title policy does not require intervention of the carrier until there is a claim. But the errors and omissions carrier for the title agent when put on notice of the claim would have an immediate interest in mitigating the potential loss. It is not that there is a hypothetical cloud on title, it is real from the moment that the transaction was consummated.

5 Responses

  1. The MERS angle is a good one, I do not know any one who got a disclosure at settlement of who MERS was, is or pretends to be.

    If this is the case could it also be cosidered a TILA violation?

    Also if MERS is acting as nominee only with not financial interest who pays them, are the creators of mers not pay by proceeds from every single loan?

    If MERS was a vehicle to track securitization, then they should have disclosed that John Doe 1-1000,000 was also a pary with a direct interest in the transaction.

    It does not matter what happens, the Real Estate Business, the mortgage business, and the title business must change. Confidence in the market place not only depends on good loans but a system that asserts the consumers rights, that makes it almost next to impossible to launder money with under the table gifts, loans, and undisclosed seller contributions.

    Can any one of the great lawyers who browse this blog, venture into this area?

    Why not make the brokers commissions contingent on the quality of the loans and client retention rates.

    Who will qualify the next batch of mortgage backed securities, Moodys? Fitch?, who can attest to their transparency nowdays. They get paid by those who want a speciphic rating, if a mortgage closing table is corrupt and full of conflicts of interest, rest assured any of these rating firms lack the proper independent and objective position that they allegedly tell everyone they have.

    Title insurance companies should have held the lenders and investment bankers to higher standard, if they would not insure these faulty titles on short sales, they just think it is business as usual and they need to sell policies.

    If one of their lawyers would have at least thought of all the thousends of potential claims on any title out there from unknown and undisclosed players, they would not have issued those policies.

    The title insurance track looks good for MALPRACTICE CLAIMS????

    I am sure some one sat with some body at some time to discuss title issues and the seciuritization process. They just thought most judges will rubber stamp the foreclosure, most borrowers will walk away, and most real estate, and mortgae lawyers are not sufficiently sophisticated to challenge the new way of doing business, based on lies, cheating and blatant fraud.

    Would class actions against foreclosure mills also stall the killing of aMERICA?

    iF THEY ARE FORECLOSING WITHOUT PROPER AUTHORITY WHY NOT TAKE THEM TO TASK, IF ONE OF THESE LAW FIRMS IS TAKEN TO TASK THE REST WILL GET THE MESSAGE , YOU DO NOT STEAL SOME ONES HOME JUST BEACUSE SOME LENDER TELL YOU , YOU MAKE SURE YOU HAVE THE LEGAL AUTHORITY TO DO SO.

    ONCE IT COSTS THE MONEY THEY WILL GET THE MESSAGE.

  2. Oh man, I had a long comment here, but it was eaten! In a nut shell:

    While I can only speak for the state practices I know of, the title company is not usually complicit in the selling of mortgages to the secondary market. In fact, it only receives the same notices that the borrower signs at closing: that of the transfer of servicing rights.

    As much as I hate it when companies use this excuse, it works here: the title agent is merely doing what they are told, and holds no interest in misleading a borrower about the ultimate fate of their loan.

  3. Dear Mr. Garfield,

    How will the new bail out adventure of our great and inompetente federal leadership affect or benefit our cause?

    How will this obvious attempt to benefit the crooks will affect our cliams?

    I am having a seminar tomorrow with over 100 people registered in VA, MD and DC.

    What should I tell them about this new Federal Governement effort?

    I am veru much unsure of how to read it.

    Thanks

  4. That should have said:

    In fact,practically all of the players are part owners of MERS who is acting as their nominee to hide from the borrower the true owner of the note.

  5. Couldn’t you also tie in the fact that the Title Insurer failed to disclose their interest in MERS which was used to hide the fact that the loan was going to be securitized in the first place?

    In fact,practically all of the players are part owners of MERS who is acting as their nominee to hide from the lender the true owner of the note.

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