Posted on Monday, October 18, 2010
Stewart Title Guaranty Co. is taking a guarded stance when it comes to repossessed properties that may be the subject of foreclosure paperwork reviews.
The Associated Press, citing an internal memo obtained by the news agency, reports that the Houston-based title insurer has issued new guidelines to its agents that “make it difficult to write policies on property foreclosed upon” by companies who’ve issued foreclosure moratoria to ensure case files were processed correctly.
A spokesperson for Stewart explained to DSNews.com that the company is evaluating the situation with each customer on a case-by-case basis as the laws of each state may vary.
Stewart says the memo to agents was intended to provide “issuing offices and underwriters guidelines and standards to enable them to insure REO transactions in jurisdictions where foreclosing lenders or state attorneys general have not issued a moratorium. Stewart stands ready to insure these transactions in accordance with these guidelines,” the company said.
GMAC Mortgage, JPMorgan Chase, Bank of America, PNC Financial, and Litton Loan Servicing have all suspended foreclosures and REO sales in certain states in recent weeks.
GMAC reported Tuesday that after nearly two months of reviewing case files, so far, it has found “no evidence” of improper or unlawful foreclosures, but the examinations at GMAC and others are still ongoing.
With concerns over establishing clear title to a property growing, should former homeowners contest a foreclosure action, many say the market for distressed properties has all but come to a standstill.
According to the American Land Title Association (ALTA), these paperwork snafus have raised questions about the validity of title to properties that have already been foreclosed and resold.
But Kurt Pfotenhauer, CEO of ALTA, says he believes these questionable foreclosures will ultimately have little adverse impact on the new owners of REO properties or on the title insurance claims.
Stewart is not the only title insurer to shy away from issuing new policies on recently foreclosed homes where evidence of paperwork errors could potentially muddle property ownership.
Old Republic National Title Insurance issued a notice to its agents on October 1, prohibiting them from insuring titles on homes foreclosed by lenders conducting documentation reviews.
Pfotenhauer says ALTA will be asking lenders to acknowledge that all appropriate procedures have been followed before foreclosed properties are resold on the market. Such assurances could come in the form of warranties issued by lenders to the various title insurers.
Carrie Bay DSNEWS