It hardly requires a crystal ball to foretell that this sparkling New Year will soon be sullied by the ongoing mortgage mess. Joining last year's headline-grabbing robosigners and rocket dockets will be this year's new players: the title insurance companies.
As New York Times columnist Ron Lieber recently wrote, title insurance companies will likely be the next institution to have their mettle tested by the mortgage fiasco, which is feeling more like a chronic condition than a crisis by now.
When we think of title insurance, if we bother to think of it at all, it's as the largest fee on our home settlement statement at closing. Unless we're buying the home outright, our mortgage lender requires us to purchase title insurance in case someone should turn up claiming to be the rightful owner of the property. Warning: spoiler alert.
The previously placid title insurance industry received a major wakeup call last fall when the mortgage giants put foreclosures on pause in light of some seriously sloppy paperwork being jammed through the courts by the foreclosure mills. They've all started up again, of course, but for title insurers, the nail-biting has just begun.
"What would happen if scores of people who had lost their homes to foreclosure somehow persuaded a judge to overturn the proceedings?" Lieber wonders. "Could they somehow win back their rights to their homes, free and clear of any mortgage?"
From kicked to the curb to full ownership? The thought fairly boggles the mind.
To make that billion-dollar question even more chilling is the fact that, in many cases, the banks have already sold said homes to new buyers -- new buyers with title insurance of their own. If the average title search is anywhere near as flawed as the document checks of the robosigners, we're in for some wild court cases.
Talk about a house of mirrors. Now don't you wish you'd taken Mama's advice and earned that law degree?
Although big mortgage managed to quickly sweep robogate under the rug, chances are the court cases smoldering beneath it are just now sparking up across the land.
Are you caught up in this mess, either due to foreclosure or because you bought one that's being challenged? If so, has your title insurance come into play?
I'd love to hear your story.
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